8-K/A

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K/A

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) : November 25, 2002

DECKERS OUTDOOR CORPORATION

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation)

0-22446	95-3015862
(Commission File Number)	(IRS Employer Identification No.)
495A South Fairview Avenue, Goleta, California	93117
(Address of principal executive offices)	(Zip code)
Registrant’s telephone number, including area code	(805) 967-7611

None
(Former name or former address, if changed since last report)

DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES
AMENDMENT NO. 1

The undersigned hereby amends its Current Report on Form 8-K filed with the Commission on December 9, 2002 (the “Current Report”) relating to the acquisition of the worldwide Teva patents, trademarks and other assets (the “Acquired Assets”) from Mark Thatcher, the Company’s former licensor and inventor of the Teva patents.

The Current Report is hereby amended to include the historical financial statements of Teva Sport Sandals, Inc. (“the Acquired Business”), the pro forma financial information and the related exhibits.

TABLE OF CONTENTS

Item 2. Acquisition or Disposition of Assets.
Item 7. Financial Statements and Exhibits.
	(a) Financial Statements of Acquired Business
	(b) Pro Forma Financial Information
	(c) Exhibits
SIGNATURE
EXHIBIT 2.1
EXHIBIT 2.2
EXHIBIT 23
EXHIBIT 99.1
EXHIBIT 99.2
EXHIBIT 99.3

DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES

Table of Contents

		Page
Item 2.	Acquisition or Disposition of Assets		1
Item 7.	Financial Statements and Exhibits
(a)	Financial Statements of Acquired Business		1
(b)	Pro Forma Financial Information		1
(c)	Exhibits		1
Signature			2

DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES

Item 2.     Acquisition or Disposition of Assets.

On November 25, 2002, the Company completed the acquisition of the Acquired Assets for an acquisition price of approximately $62.3 million, including transaction costs of $0.3 million. The Company paid cash in the amount of $43.0 million and issued to Mr. Thatcher subordinated notes of $13.0 million, preferred stock of $5.5 million, 100,000 shares of common stock currently valued at approximately $0.4 million and options to purchase 100,000 shares of common stock, valued at approximately $0.2 million. The $13.0 million of subordinated notes include a coupon interest rate of 7% and an additional 2% interest, which is to be accrued and paid at the maturity date in 2008. The $5.5 million of preferred stock pays no dividends unless dividends are declared and paid on the Company’s common stock, is callable by the Company within the next three years at face amount plus an additional 10% per year and is convertible into common stock by the holder after three years, if it is still outstanding, at a conversion price of $3.632 per share. In addition, the preferred stock provides the holder with the right to designate one member of the Company’s Board of Directors.

In connection with the acquisition, the Company entered into an employment agreement with Mr. Thatcher through November 2007, which provides for an annual base salary of $276,875. In addition, the Company received a non-compete covenant with Mr. Thatcher, which expires two years after termination of employment.

Item 7.     Financial Statements and Exhibits.

(a)	Financial Statements of Acquired Business.
	Financial statements for the Acquired Business required by this item are incorporated herein at Exhibit 99.2.

(b)	Pro Forma Financial Information.
	Pro forma consolidated financial statements for Deckers Outdoor Corporation and the Acquired Business required by this item are incorporated herein at Exhibit 99.3.

(c) Exhibits.

2.1	Asset Purchase Agreement dated as of October 9, 2002 by and between Deckers Outdoor Corporation and Mark Thatcher.
2.2	Disclosure letter related to the Asset Purchase Agreement.*
23	Consent Letter of KPMG LLP, Independent Certified Public Accountants.
99.1	Press release issued November 26, 2002, which was filed on December 9, 2002 as part of the initial filing of this Current Report on Form 8-K.
99.2	Audited financial statements of Teva Sport Sandals, Inc. for the fiscal year ended December 31, 2001 and the period from January 1, 2002 to November 25, 2002 (closing date) and the independent auditors’ report of KPMG LLP with respect thereto.
99.3	Unaudited pro forma consolidated financial statements for Deckers Outdoor Corporation and the Acquired Business.

* Certain information in this exhibit has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

1

DECKERS OUTDOOR CORPORATION
AND SUBSIDIARIES

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Deckers Outdoor Corporation
Date: February 7, 2003	/s/ M. Scott Ash
	M. Scott Ash, Chief Financial Officer

2 EX-2.1 3 v87441a1exv2w1.txt EXHIBIT 2.1 EXHIBIT 2.1 ===================================== ASSET PURCHASE AGREEMENT By and Among MARK THATCHER, an individual, TEVA SPORT SANDALS, INC., an Arizona corporation, and DECKERS OUTDOOR CORPORATION, a Delaware corporation Dated as of October 9, 2002 ===================================== TABLE OF CONTENTS

PAGE ARTICLE I DEFINITIONS............................................. 1 1.1. Definition of Certain Terms................................. 1 ARTICLE II SALE AND PURCHASE OF THE ASSETS......................... 3 2.1. Assets...................................................... 3 2.2. Excluded Assets............................................. 4 ARTICLE III THE CLOSING............................................. 5 3.1. Place and Date.............................................. 5 3.2. Escrow...................................................... 5 3.3. Purchase Price.............................................. 5 3.4. Other Equity Consideration.................................. 6 3.5. Allocation of Purchase Price................................ 6 3.6. Characteristics of the Transaction for Income Tax Purposes.. 6 3.7. Purchase Price Adjustment; Procedure........................ 6 3.8. Assumption of Liabilities................................... 7 3.9. Liabilities Not Being Assumed............................... 7 3.10. Lock-Up..................................................... 7 ARTICLE IV REPRESENTATIONS AND WARRANTIES.......................... 8 4.1. Representations and Warranties of the Sellers............... 8 4.2. Representations and Warranties of the Buyer................. 13 ARTICLE V CONDITIONS PRECEDENT.................................... 15 5.1. Conditions to Obligations of Each Party..................... 15 5.2. Conditions to Obligations of the Buyer...................... 16 5.3. Conditions to Obligations of the Sellers.................... 17 ARTICLE VI COVENANTS............................................... 18 6.1. Covenants of the Sellers.................................... 18 6.2. Covenants of the Buyer...................................... 19 ARTICLE VII TERMINATION............................................. 20 7.1. Termination................................................. 20 7.2. Effect of Termination....................................... 21 ARTICLE VIII INDEMNIFICATION......................................... 21 8.1. Indemnification............................................. 21 ARTICLE IX MISCELLANEOUS........................................... 24 9.1. Survival of Representations and Warranties, etc............. 24 9.2. Expenses.................................................... 24 9.3. Severability................................................ 24 9.4. Notices..................................................... 24 9.5. Miscellaneous............................................... 25

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EXHIBITS - -------- Exhibit A Note Exhibit B Certificate of Designation Exhibit C Stock Option Agreement Exhibit D Assignment and Assumption Agreement Exhibit E Stockholders Agreement Exhibit F Lease Agreement Exhibit G-1 Thatcher Employment Agreement Exhibit G-2 Kalinich Employment Agreement Exhibit H Non-Competition Agreement Exhibit I Subordination Agreement Exhibit J Escrow Agreement

-ii- ASSET PURCHASE AGREEMENT THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of October 9, 2002, by and among MARK THATCHER ("Thatcher"), TEVA SPORT SANDALS, INC., an Arizona corporation ("TEVA", together with Thatcher, the "Sellers"), and DECKERS OUTDOOR CORPORATION, a Delaware corporation (the "Buyer"). W I T N E S S E T H: WHEREAS, Thatcher and the Buyer are parties to the Teva License Agreement (the "License Agreement"), dated as of June 7, 1999, wherein Thatcher has granted to the Buyer certain rights in the Intellectual Property Assets (as defined below); WHEREAS, Thatcher is in the business of licensing, designing and developing certain Teva(R) brand products and other related products; WHEREAS, TEVA is in the business of selling certain Teva(R) brand products and other products (including, but not limited to, footwear), principally through mail order and the internet (the "Business"); and WHEREAS, the Buyer wishes to purchase or acquire from the Sellers, and the Sellers wish to sell, assign and transfer to the Buyer, as the case may be, all of Thatcher's Intellectual Property Assets (as hereinafter defined) and all of the assets of TEVA relating to or used in commerce in connection with the Business (collectively, the "Assets"). NOW, THEREFORE, in consideration of the mutual covenants, representations and warranties made herein, and of the mutual benefits to be derived hereby, the parties hereto agree as follows: ARTICLE I DEFINITIONS 1.1. Definition of Certain Terms. The terms defined in this Section 1.1, whenever used in this Agreement, shall have the respective meanings indicated below for all purposes of this Agreement. All references herein to a Section, Article, Exhibit or Schedule are to a Section, Article, Exhibit or Schedule of or to this Agreement, unless otherwise indicated. (a) Agreement: this Asset Purchase Agreement, including the Exhibits and Schedules hereto. (b) Applicable Law: all applicable provisions of all (i) constitutions, treaties, statutes, laws (including the common law), rules, regulations, ordinances, codes or orders of any governmental authority, (ii) governmental approvals and (iii) orders, decisions, injunctions, judgments, awards and decrees of or agreements with any governmental authority. (c) Assets: as defined in the preamble to this Agreement. (d) Assumed Liabilities: as defined in Section 3.8. (e) Buyer Indemnitees: as defined in Section 8.1(a). (f) Closing: as defined in Section 3.1. (g) Closing Date: as defined in Section 3.1. (h) Collateral Agreements: collectively, the Escrow Agreement, the Assignment and Assumption Agreement, the Lease Agreement, the Employment Agreements, the Stock Option Agreement, the Stockholders Agreement, and the Note. (i) Copyrights: any copyright that has been applied for or registered in connection with the Business and the Products, including, without limitation, those provided in Schedule 1.1(i). (j) Domain Names: all domain names used in connection with the Business and the Products, including, without limitation, those listed in Schedule 1.1(j). (k) Excluded Assets: as defined in Section 2.2. (l) Force Majeure: if a party's performance of the terms of this Agreement are prevented or delayed by the exercise of governmental authority, whether federal, state or county, or by riots, acts of God, war, adverse weather conditions, fire, unavoidable casualties or terrorist acts. (m) Indemnified Party: as defined in Section 8.1(d). (n) Indemnifying Party: as defined in Section 8.1(d). (o) Intellectual Property: collectively, all Copyrights, Domain Names, Marks, and Patents. (p) Intellectual Property Assets: collectively, all Intellectual Property, Know-how, Trade Dress, Unregistered Intellectual Property and Technology and any and all goodwill attributable to the Intellectual Property Assets. (q) Know-how: information that the Sellers have provided or shall provide to the Buyer to enable the Buyer to manufacture the Products. Know-how shall also mean all information relating to the design, production, distribution, marketing or sale of the Products that the Buyer has obtained in the past or shall obtain after entering into the Agreement, including without limitation all trade secrets, regardless of whether the Sellers have provided such information. (r) Marks: all trademarks for which registration has been applied for or registered or that are used in connection with the Business or the sale of the Products, including, without limitation, the marks listed in Schedule 1.1(r), together with the goodwill associated therewith. (s) Non-Intellectual Property Assets: all of the Assets, excluding the Intellectual Property Assets. 2 (t) Note: as defined in Section 3.3(b). (u) Patents and Patent Applications: all patents and patent applications covering or related to the Products, including, without limitation, those patents and patent applications listed in Schedule 1.1(u). (v) Person: any natural person, firm, partnership, association, corporation, company, trust, business trust, governmental authority or other entity. (w) Products: any product that is covered by or incorporates any feature of the Intellectual Property Assets and sold or under development by the Buyer, or to be sold or to be under development by the Buyer prior to the end of the Noncompetition Period, as defined in the Non-Competition Agreement (as defined below). (x) Purchase Price: as defined in Section 3.3. (y) Schedules: the disclosure schedules delivered by the Sellers' counsel to the Buyer's counsel prior to the date hereof. (z) Technology: conceptions, innovations, inventions, discoveries, processes, machines, manufactures, compositions of matter, improvements, designs, data and information, whether or not patentable, copyrightable or susceptible to any other form of protection relating to the Business or the Products. (aa) Trade Dress: the distinctive features of any Products. Without limiting the foregoing, such trade dress includes the distinctive appearance of certain sandals which include, but are not necessarily limited to, a general strap configuration, including heel strap, instep strap, toe strap, and lateral strap components (wherein the term "lateral strap" means a strap which in more than one place along the outer side of the foot connects to or intersects one or more sandal components), or a sandal with such a general strap configuration which includes a rectangular label located proximate to the intersection of the ankle strap and the lateral strap, or a sandal with such a general strap configuration which includes a rectangular label located on the back of the heel strap, or a sandal with such a general strap configuration which includes colored weaves located proximate to the top surfaces of any of the sandal's straps, or any combination thereof. (bb) Unregistered Intellectual Property: any and all unregistered Intellectual Property (including, without limitation, unregistered trademarks, service marks, trade names, copyrights, trade dress, trade secrets, and other like rights) relating to the Products, or the Business, or the License Agreement, together with the goodwill associated therewith but excluding any imagery of Mark Thatcher. ARTICLE II SALE AND PURCHASE OF THE ASSETS 2.1. Assets. Subject to and upon the terms and conditions set forth in this Agreement, at Closing (as defined below), the Sellers will sell, transfer, convey, assign and deliver to the Buyer, and the Buyer will purchase or acquire from the Sellers, all right, title and interest of the 3 respective Sellers, free and clear of encumbrances, in and to the Assets, including, without limitation, all of the following: (a) all Intellectual Property Assets; (b) all inventories of raw materials, work in process, finished products, goods, spare parts, replacement and component parts, and office and other supplies used in the Business (collectively, the "Inventories"); (c) all credits, prepaid expenses, deferred charges, advance payments, security deposits and prepaid items related to the Business; (d) all of the concept store, mail order and internet business, including all tangible and intangible assets related to the Business, and related Domain Names, all pertaining to marketing and sales of Teva(R) branded products or footwear; (e) any assignable licenses related to any of the foregoing, including those listed in Schedule 2.1(e); (f) any and all contracts, claims, rights, causes of action, judgments, proceedings, demands related to the Business and the Intellectual Property Assets; (g) all of the Sellers' customers and customer lists relating to Teva(R) brand products or footwear, or the Business or Products; (h) all records, files and information related to any of the foregoing (the "Records"); and (i) any and all other tangible and intangible assets which relate to the Business or Products, including inventory, receivables and furniture and equipment. The Sellers acknowledge that they shall not retain any rights in or to the Assets, including without limitation, the Intellectual Property Assets. 2.2. Excluded Assets. Notwithstanding anything herein to the contrary, the Sellers will retain and not transfer, and the Buyer will not purchase or acquire, the following (collectively, the "Excluded Assets"): (a) all of the Sellers' right, title and interest under or related to this Agreement, including, without limitation, the consideration delivered to the Sellers pursuant to this Agreement; (b) all cash, cash equivalents and short-term investments; (c) all minute books, stock records, corporate seals of TEVA, and other documents and things relating to organizational matters and the existence of TEVA as a corporation and tax returns of the Sellers; 4 (d) the corporate charter, bylaws, qualification to conduct business as a foreign corporation, arrangements with registered agents, taxpayer and other identification numbers; (e) all historical books of account, records, ledgers, or other documents or information relating to federal, state, local, city, or other taxes relating to the Sellers, the Assets, or the Business; (f) all of TEVA and Thatcher's right, title, and interest relating to any assets, right, and properties of TEVA, wherever located, whether tangible or intangible, not related to the Business or the Intellectual Property Assets; (g) all personnel records and other records that the Sellers are required by law to retain in their possession; (h) all claims for refund of taxes and other governmental charges of whatever nature; (i) all real property relating to the Business; and (j) all property and assets listed on Schedule 2.2. The Buyer will be entitled to access, upon 24-hour notice to the Sellers, and during normal business hours, to review and make copies for any internal use only items relating to Teva described in subparagraphs (e) and (g) above for a period of five (5) years. The Buyer agrees to keep such information confidential and not use such information for any reason or purpose other than for legitimate internal use. ARTICLE III THE CLOSING 3.1. Place and Date. The closing of the sale and purchase of the Assets (the "Closing") shall take place at 10:00 A.M. local time on any date not constituting a legal holiday in Arizona, which occurs on or before November 25, 2002, at the offices of Snell & Wilmer, L.L.P., One Arizona Center, Phoenix, Arizona 85004, or such other time and place upon which the parties may agree. The date on which the Closing actually occurs is herein sometimes referred to as the "Closing Date." 3.2. Escrow. Upon execution of this Agreement, the Buyer will wire transfer ONE MILLION DOLLARS ($1,000,000.00) in immediately available funds (the "Escrowed Funds") to Comerica Bank, the escrow agent (the "Escrow Agent"), pursuant to the Escrow Agreement, of even date herewith, executed by and among the Escrow Agent, the Sellers, and the Buyer, attached hereto as Exhibit J (the "Escrow Agreement"). 3.3. Purchase Price. On the terms and subject to the conditions set forth in this Agreement, the Buyer agrees to pay or cause to be paid to Thatcher and TEVA the Purchase Price (as defined below), and to assume or cause the Buyer to assume the Assumed Liabilities as provided in Section 3.8. The "Purchase Price" shall be comprised of and be payable as follows: 5 (a) At the Closing, by the wire transfer of FORTY-THREE MILLION DOLLARS ($43,000,000) (the "Cash") in immediately available funds to such bank account or accounts as per written instructions of the Sellers, given to the Buyer at least five (5) days prior to the Closing; (b) At the Closing, by the execution and delivery to Thatcher of the Subordinated Promissory Note (the "Note") in the principal amount of THIRTEEN MILLION DOLLARS ($13,000,000.00), in the form of Exhibit A attached hereto; and (c) At the Closing, by the issuance to Thatcher of ONE MILLION THREE HUNDRED SEVENTY-FIVE THOUSAND (1,375,000) shares of the Buyer's preferred stock, par value $0.01 (the "Preferred Stock Consideration"), with the rights and preferences described on Exhibit B attached hereto (the "Certificate of Designation"). 3.4. Other Equity Consideration. In addition to the Purchase Price, at the Closing, the Buyer shall issue to Thatcher (a) One Hundred Thousand (100,000) shares of the unregistered Common Stock (as defined below) (the "Common Stock Consideration"), (b) options to purchase an additional One Hundred Thousand (100,000) shares of the Common Stock, pursuant to the terms of the Stock Option Agreement, in the form of Exhibit C attached hereto (the "Stock Option Agreement"); and (c) the Employment Agreements attached hereto as Exhibit G-1 and Exhibit G-2 (the "Employment Agreements"). 3.5. Allocation of Purchase Price. The Purchase Price shall be allocated in accordance with Schedule 3.5. After the Closing, the parties shall make consistent use of the allocation specified in Schedule 3.5 for all tax purposes and in all filings, declarations and reports with any taxing authority, including the reports required to be filed under Section 1060 of the Internal Revenue Code. The Buyer shall prepare and deliver Internal Revenue Service ("IRS") Form 8594 to the Sellers within forty-five (45) calendar days after the Closing Date to be filed with the IRS. 3.6. Characteristics of the Transaction for Income Tax Purposes. The parties hereby agree that the Preferred Stock Consideration does not constitute "preferred stock" for purposes of Section 305 of the Internal Revenue Code. The parties further agree that the fair market value of the Preferred Stock Consideration on the date of issuance shall be mutually agreed upon by the parties as soon as reasonably practicable. 3.7. Purchase Price Adjustment; Procedure. The parties agree that the Purchase Price shall be subject to the following credits and adjustments: (a) Uncollected Receivables. Any amounts which are received by the Buyer or the Business after the Closing Date arising from the operation of, and sales of products from, the Business before the Closing Date shall be paid to Thatcher within fifteen (15) calendar days after the receipt of such amounts by Buyer or the Business. Thatcher shall have access to the Buyer's personnel, books and records in order to verify the adjustment amounts pursuant to this Section 3.7(a). (b) Accrued Royalties. Any royalty payments owing to any of the Sellers by any third-parties which have accrued as of the Closing Date, but are received by the Buyer after the Closing Date, shall be paid to Thatcher within fifteen (15) calendar days 6 after the receipt of such royalty payments by Buyer. Thatcher shall have access to the Buyer's personnel, books and records in order to verify the adjustment amounts pursuant to this Section 3.7(b). The License Agreement shall be automatically terminated and of no force or effect as of the Closing, provided that any payments accrued and due to Thatcher by the Buyer as of the Closing, arising from or under the License Agreement, shall be paid to Thatcher within fifteen (15) days after the Closing. (c) Prorations. Any rents, prepaid items and other applicable items with respect to the Assumed Liabilities shall be prorated as of the Closing Date and any amounts resulting from such proration shall be payable to the respective parties within fifteen (15) calendar days after the receipt of written notice of such proration. 3.8. Assumption of Liabilities. Subject to the terms and conditions set forth herein, at the Closing, the Buyer shall assume and agree to pay, honor and discharge when due any and all liabilities, obligations and commitments relating to the Assets or the Business for the period on or after the Closing Date, including those set forth on Schedule 3.8, (collectively, the "Assumed Liabilities"). 3.9. Liabilities Not Being Assumed. Notwithstanding anything herein to the contrary, the Buyer is not assuming any liability of the Sellers not part of the Assumed Liabilities, including any of the following liabilities or obligations, whether fixed or contingent, known or unknown, matured or unmatured, of the Sellers, which liabilities and obligations shall at and after the Closing remain the exclusive responsibility of the Sellers (the "Sellers' Retained Liabilities"): (a) all liabilities and obligations of the Sellers under this Agreement or with respect to or arising out of the consummation of the transactions contemplated by this Agreement; (b) except for the matters set forth in Schedule 4.1(e), all liabilities and obligations, claims, demands, suits or legal proceedings of the Sellers relating to or arising out of the Business before the Closing Date, as well as all costs incurred by the Sellers in connection with the matters set forth in Schedule 4.1(e) incurred prior to the Closing Date; (c) all tax liabilities for federal, state, local, city or other tax relating to the Sellers, the Assets or the Business for all periods on or prior to the Closing, and all tax liabilities of any person under Treasury Regulation Section 1.1502-6 (or similar provision of state, local, and foreign law); (d) any other liabilities unrelated to the ordinary course of operation of the Business; and (e) any liabilities related to the Excluded Assets. 3.10. Lock-Up. During the term of this Agreement the Sellers will not seek, entertain, encourage or negotiate with any third party a transaction involving the Sellers, the Business or the Intellectual Property Assets. 7 ARTICLE IV REPRESENTATIONS AND WARRANTIES 4.1. Representations and Warranties of the Sellers. As of the date hereof and as of the Closing Date, each of Thatcher and TEVA, jointly and severally, represents and warrants to the Buyer as follows: (a) Corporate Status; Authorization, etc. TEVA is a corporation duly organized, validly existing and in good standing under the laws of the State of Arizona, with full corporate power and authority to execute and deliver this Agreement and the Collateral Agreements to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by TEVA of this Agreement and the consummation of the transactions contemplated hereby, have been, and on the Closing Date will have been, duly authorized by all requisite corporate action of TEVA. TEVA has duly executed and delivered this Agreement and the Escrow Agreement and on the Closing Date will have duly executed and delivered the Collateral Agreements to which it is a party. This Agreement and the Escrow Agreement are, and on the Closing Date each of the Collateral Agreements to which TEVA is a party will be, valid and legally binding obligations of TEVA, enforceable against TEVA in accordance with their respective terms. Thatcher is the sole shareholder of TEVA and he has the complete power and authority to execute and deliver this Agreement and the Collateral Agreements to which he is a party, to perform his obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. Thatcher has duly executed and delivered this Agreement and the Escrow Agreement and on the Closing Date will have duly executed and delivered the Collateral Agreements to which it is a party. This Agreement and the Escrow Agreement are, and on the Closing Date each of the Collateral Agreements to which Thatcher is a party will be, valid and legally binding obligations of Thatcher, enforceable against Thatcher in accordance with their respective terms. (b) No Conflicts, etc. Except as provided in Schedule 4.1(b), to the Seller's knowledge, the execution, delivery and performance by each of the Sellers of this Agreement and each of the Collateral Agreements to which they are parties, and the consummation of the transactions contemplated hereby and thereby, do not and will not conflict with, contravene, result in a violation or breach of or default under (with or without the giving of notice or the lapse of time or both), give rise to a right or claim of termination, amendment, modification, vesting, acceleration or cancellation of any right or obligation or loss of any material benefit under, or result in the creation of any lien (or any obligation to create any lien) upon any of the Assets under (i) any Applicable Law applicable to any of the Sellers or any of the properties or assets of the Sellers (including, but not limited to, the Assets), (ii) in the case of TEVA, the articles of incorporation or bylaws or other organizational documents of TEVA, or (iii) any contract, agreement or other instrument to which either of the Sellers is a party or by which each of the Sellers or any of its properties or assets, including, but not limited to, the Assets, may be bound or affected. Except as provided in Schedule 4.1(b), no governmental or other third party approval, or other governmental or third party consent, is required to be obtained or made 8 by any of the Sellers in connection with the execution and delivery of this Agreement and the Collateral Agreements or the consummation of the transactions contemplated hereby and thereby. Further, the Sellers are currently not seeking, entertaining, encouraging or negotiating with any third party a transaction involving the Sellers, the Business or the Intellectual Property Assets. (c) Litigation. Except as provided in Schedule 4.1(e), there is no action, claim, suit or proceeding pending, or to the knowledge of either Seller, threatened, by or against or affecting any of the Sellers or the Non-Intellectual Property Assets in connection with or relating to the transactions contemplated by this Agreement or of any action taken or to be taken in connection herewith or the consummation of the transactions contemplated hereby which will have a material adverse effect on the Sellers or the Assets. (d) Non-Intellectual Property Assets. Thatcher and TEVA, as the case may be, have good title to all the Non-Intellectual Property Assets free and clear of any and all liens. The Non-Intellectual Property Assets are in all material respects adequate for the purposes for which such assets are currently used or are held for use, and are in reasonably good repair and operating condition (subject to normal wear and tear) and, to the knowledge of the Sellers, there are no facts or conditions affecting the Non-Intellectual Property Assets which could, individually or in the aggregate, interfere in any material respect with the use, occupancy or operation thereof as currently used, occupied or operated, or their adequacy for such use. (e) Intellectual Property. (i) Title. Schedules 1.1(i), 1.1(j), 1.1(r), and 1.1(u) contain a complete and correct list of all the Intellectual Property pertaining to or used in connection with the Teva(R) brand or footwear or related products. Thatcher owns full and complete title to all the Intellectual Property, free from any liens and free from any requirement of any past, present or future royalty payments or license fees (other than pursuant to the License Agreement); provided, however, that as to the Copyrights, the Buyer acknowledges that Thatcher has relied upon the investigation and registration efforts of the Buyer and the Buyer's statements made in such registrations. The Sellers have not granted any licenses or rights to the Intellectual Property, except as disclosed on Schedule 2.1(e). (ii) Transfer. Immediately after the Closing, the Buyer will own all of the Intellectual Property Assets, free from any liens and on the same terms and conditions as in effect prior to the Closing. (iii) No Infringement. Except as set forth on Schedule 4.1(e), to the knowledge of the Sellers, none of the Intellectual Property is being infringed by any other Person. (iv) Open Actions. Except as set forth on Schedule 4.1(e), there are no open litigation matters relating to the Intellectual Property. (v) No Intellectual Property Litigation. Except as set forth on Schedule 4.1(e), no claim or demand of any Person has been made nor is there any 9 proceeding that is pending, or to the knowledge of the Sellers, threatened which (A) challenges the rights of Thatcher in respect of any Intellectual Property, or (B) asserts that Thatcher or TEVA is infringing or otherwise in conflict with, or is required to pay any royalty, license fee, charge or other amount with regard to, any Intellectual Property. To the knowledge of the Sellers, none of the Intellectual Property is subject to any outstanding order, ruling, decree, judgment or stipulation by or with any court, arbitrator, or administrative agency. (vi) Due Registration. The Sellers' efforts to register, file or otherwise protect the Intellectual Property are detailed on Schedules 1.1(i), 1.1(j), 1.1(r), and 1.1(u). (vii) Other Protection of Intellectual Property. The Sellers have taken reasonable steps to protect and maintain their rights in and to the Intellectual Property. The Sellers have timely paid all filing, examinations, issuance, post-registration and maintenance fees, annuities and the like associated with or required with respect to any of the Intellectual Property. (f) Financial Statements. TEVA has delivered to the Buyer unaudited profit and loss statements of the Business for the twelve (12) month period ending on December 31, 2000, and December 31, 2001, respectively (the "P&L Statements"). The P&L Statements are complete and correct in all material respects, fairly reflect the assets, liabilities, and results of operations and financial condition of the Business, and have been prepared in accordance with internal accounting principles consistently applied. Since December 31, 2001, there has not been any material adverse change in the general condition of TEVA. (g) Absence of Certain Changes or Events. With respect to TEVA, since December 31, 2001, and except as set forth in Schedule 4.1(g), or as required hereunder, there has not been, to the knowledge of the Sellers: (i) Obligations. Any obligation or liability (fixed or contingent), in excess of $10,000, incurred except normal trade or business obligations and liabilities incurred in the ordinary course of business and obligations and liabilities in connection with this Agreement and the transactions contemplated hereby, none of which liabilities, in any case or in the aggregate, would have a material adverse effect on the Assets, financial condition, results of operation or prospects of the Business; (ii) Discharge or Satisfaction of Liens. Any discharge, cancellation or satisfaction of any lien, security interest or encumbrance or payment of any obligation or liabilities (fixed or contingent), other than pursuant to the terms of such obligation or in the ordinary course of business; (iii) Additional Liens. Any mortgage, pledge or subjection to any lien, security interest or other encumbrance of any of the Assets, other than mechanic's, materialman's and similar statutory liens or purchase money security interests arising in the ordinary course of business; (iv) Employee Plans. Any adoption of, or increase in, any bonus, incentive, compensation, pension, profit sharing, retirement, insurance, medical 10 reimbursement or other employee benefit plan, other than in the ordinary course of business; (v) Adjustments. Any write-offs, write-downs, inventories or accounts receivable of the Business, in excess of $10,000, other than in the ordinary course of business and consistent with prior practice; or (vi) Agreement to Act. Any agreement to take any action described in this subparagraph (g). (vii) Acquisition or Disposition of Assets. Any transfer, lease or other disposition of any of the Assets or the acquisition of any assets or properties in excess of $10,000, except in the ordinary course of business. (viii) Compromise of Debts or Claims. Any cancellation or compromise of any debt or claim, except in the ordinary course of business; (ix) Waiver of Material Rights. Any waiver or release of any rights of material value to the Business; (x) Employee Compensation. Except as otherwise required by law, any wage or salary increase applicable generally to any group or classification of the Sellers' employees or any entry into any written employment contract with any officer of the Sellers' employees or any loan made to such persons, other than in the ordinary course of business; (xi) Damage or Destruction. Any damage, destruction or loss (whether or not covered by insurance) which materially and adversely affects the Assets or the Business, with materiality for purposes of this provision being agreed to mean damage, destruction or loss in excess of $10,000. (h) Employee Compensation. Attached hereto as Schedule 4.1(h) is a list setting forth the employees of TEVA ("TEVA'S Employees"). The following has also been previously provided to Buyer: (i) Employee Compensation. The names and current annual rates of TEVA'S Employees as of the most recent payroll date; and (ii) Employee Compensation Plans and Benefits. All employment and consulting agreements, executive compensation plans, bonus plans, deferred compensation agreements, employee pension plans or retirement plans, employee profit sharing plan, employee stock purchase and stock option plans, group life insurance, hospitalization insurance or other plans or arrangements providing for benefits, whether or not subject to ERISA ("Employee Benefit Plan") to TEVA'S Employees and all severance benefits paid during the past twelve (12) months to former employees. (i) Assigned Contracts. True and complete copies of all contracts to be assigned to the Buyer (the "Assigned Contracts") have been provided or made available upon request to the Buyer. Except as set forth in Schedule 4.1(i), there are no disputes 11 with customers or vendors of the Sellers with respect to the performance by the Sellers under any Assigned Contracts which dispute or disputes involve payment by the Sellers, or performance of services or delivery of assets or properties of the Sellers, in excess of $10,000 individually or $50,000 in the aggregate. (j) Material Contracts. Schedule 4.1(j) sets forth a complete and accurate list of all material contracts in excess of $25,000 (the "Material Contracts") in which the Sellers are a party and which relate to the Assets and/or the Business. All of the Material Contracts are legally valid and binding, in full force and effect and enforceable against TEVA and/or Thatcher, as the case may be. To the Sellers' knowledge, each Material Contract is valid and enforceable in accordance with its terms for the periods stated therein against all other parties thereto. To the Sellers' knowledge, except as set forth in Schedule 4.1(j), the Sellers are not in default or breach under any of the Material Contracts, and the Sellers have not been notified of any claim that there is under any such Material Contract any existing material default or event of material default or event which with notice or lapse of time or both would constitute such a material default by the Sellers. To the Sellers' knowledge, there is no default or breach under any of the Material Contracts by any other party thereto. (k) Environmental. To the Sellers' knowledge, except as set forth in Schedule 4.1(k), the Sellers are in compliance with all applicable federal, state and local environmental protection, occupational, health and safety or similar laws, ordinances, restrictions, licenses and regulations, including those relating to pollution or protection of the environment (including ambient air, surface water, ground water, land surface or subsurface strata), and those relating to emissions, discharges or releases of pollutants, contaminants, chemicals or toxic or hazardous substances or wastes and those relating to the handling, treatment, presence, removal, storage, decontamination, clean-up, transportation or disposal of Hazardous Materials including, but not limited to, the Federal Water Pollution Control Act, Resource Conservation & Recovery Act, Safe Drinking Water Act, Toxic Substances Control Act, Clean Air Act, Comprehensive Environmental Response, Compensation and Liability Act, except for possible violations that do not and, so far as the Sellers can reasonably foresee, will not have a material adverse effect on the Assets or the Business. (l) Taxes. All taxes, whether estimated or actual, including, without limitation, income, property, sales, use, franchise, added value, employees' income withholding and social security taxes, imposed by the United States or by any foreign country, or by any other taxing authority, which are due or payable by TEVA with respect to the Assets, and all interest and penalties thereon, whether disputed or not (hereinafter, "Taxes"), have been paid in full, all tax returns required to be filed in connection therewith have been accurately prepared and duly and timely filed and all deposits required by law to be made by TEVA with respect to employees' withholding taxes have been duly made. No extension of time or requests therefor or for any waiver thereof have been made or are presently pending or effective with respect to any such returns, reports or Taxes. There is no material unassessed tax deficiency proposed or threatened against TEVA, nor is any action or proceeding pending or threatened by any governmental authority for assessment, reassessment or collection of any taxes or assessments affecting the Assets. 12 (m) Brokers, Finders, etc. All negotiations relating to this Agreement and the transactions contemplated hereby have been carried on without the participation of any Person acting on behalf of any of the Sellers in such manner as to give rise to any valid claim against the Buyer for any brokerage or finder's commission, fee or similar compensation. (n) Accredited Investor. Thatcher intends to hold the Common Stock Consideration and the Preferred Stock Consideration for his own account, for investment purposes only and not with a view to immediate resale or distribution, either in whole or in part. Thatcher represents that he is an "accredited investor" within the meaning of Rule 501 of Regulation D adopted by the Securities and Exchange Commission under the Securities Act of 1933 and is a resident of the State of Arizona. For purposes of Section 4.1 above, the term "knowledge" shall mean the actual knowledge of Thatcher or TEVA, or its counsel Snell & Wilmer, L.L.P., as the case may be, without any investigation. TEVA will be deemed to have knowledge of a particular fact or other matter if Thatcher, or its counsel Snell & Wilmer, L.L.P., has actual knowledge of such particular fact or matter, without any investigation. Furthermore, any information disclosed in any Schedule shall be deemed to be disclosed and incorporated into any other Schedule where such disclosure would be reasonably apparent. Furthermore, the Sellers' representations and warranties, including any items set forth in the Schedules, do not purport to disclose any agreements, contracts or instruments that may be entered into between any of the Sellers and the Buyer. No disclosure set forth in the Schedules relating to any possible breach or violation of any agreement, law or regulation, or any possible infringement of any intellectual property, shall be construed as an admission or indication that any such breach, violation, or infringement exists or has actually occurred. 4.2. Representations and Warranties of the Buyer. As of the date hereof and as of the Closing Date, the Buyer represents and warrants to the Sellers as follows: (a) Corporate Status; Authorization, etc. The Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, with full corporate power and authority to execute and deliver this Agreement and the Collateral Agreements to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by the Buyer of this Agreement and the consummation of the transactions contemplated hereby, have been, and on the Closing Date will have been, duly authorized by all requisite corporate action of the Buyer. The Buyer has duly executed and delivered this Agreement and the Escrow Agreement and on the Closing Date will have duly executed and delivered the Collateral Agreements to which it is a party. This Agreement and the Escrow Agreement are, and on the Closing Date each of the Collateral Agreements to which the Buyer is a party will be, valid and legally binding obligations of the Buyer, enforceable against the Buyer in accordance with their respective terms. (b) SEC Reports; Financial Statements. The Buyer has duly filed all reports (the "SEC Reports") to be filed by it with the Securities Exchange Commission (the "SEC") under the Securities Act of 1933 and the Securities Exchange Act of 1934, as 13 amended, and no such report, nor any report sent to the Buyer's shareholders generally, contains any untrue statement of material fact or omits to state any material fact required to be stated therein or necessary to make the statements in such report, in light of the circumstances under which they were made, not misleading at the time such reports were filed. The consolidated financial statements of the Buyer included in the SEC Reports complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC in respect thereof and fairly presented, in conformity with generally accepted accounting principles on a consistent basis (except as indicated in the notes thereto), the consolidated financial position of the Buyer and its consolidated subsidiaries, in each case as of the dates thereof and their consolidated results of operations and cash flows for the periods then ended (subject, in the case of unedited interim financial statements, to the absence of certain footnote disclosure and to normal year-end adjustments). Except as set forth in the SEC Reports, the Buyer has no material liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business, and (ii) obligations under contracts and commitments incurred in the ordinary course of business, which, in both cases, individually or in the aggregate, are not material to the financial condition or operating results of the Buyer and its subsidiaries taken as a whole. (c) No Conflicts, etc. The execution, delivery and performance by the Buyer of this Agreement and each of the Collateral Agreements to which it is a party, and the consummation of the transactions contemplated thereby, do not and will not conflict with or result in a violation of or under (with or without the giving of notice or the lapse of time, or both) (i) the certificate of incorporation or bylaws or other organizational documents of the Buyer, (ii) any Applicable Law applicable to the Buyer or any of its affiliates or any of its properties or assets or (iii) any contract, agreement or other instrument applicable to the Buyer or any of its affiliates or any of its properties or assets, except, in the case of clause (iii), for violations and defaults that, individually and in the aggregate, have not and will not materially impair the ability of the Buyer to perform its obligations under this Agreement or under any of the Collateral Agreements to which it is a party. No governmental approval or other governmental consent is required to be obtained or made by the Buyer in connection with the execution and delivery of this Agreement or the Collateral Agreements or the consummation of the transactions contemplated thereby. (d) Litigation. Except as set forth in the SEC Reports and for routine matters in the ordinary course of business, there is no action, claim, suit or proceeding pending, or to the Buyer's knowledge threatened, by or against or affecting the Buyer in connection with or relating to the transactions contemplated by this Agreement or of any action taken or to be taken in connection herewith or the consummation of the transactions contemplated hereby. (e) Capitalization. As of June 30, 2002, the authorized capital stock of the Buyer consists of: (i) 20,000,000 shares of common stock, par value $0.01 per share (the "Common Stock"), of which 9,329,647 shares are issued and outstanding, and (ii) 5,000,000 shares of preferred stock, par value $0.01 per share (the "Preferred Stock"), no shares of which are outstanding. All of the issued and outstanding Common Stock have been validly issued, and are duly authorized, fully paid, non-assessable and free of 14 preemptive rights. As of June 30, 2002, 3,000,000 shares of the Common Stock were available for issuance under the Buyer's option plans, of which approximately 1,465,210 were issuable upon or otherwise deliverable in connection with the exercise of options outstanding on such date. Except as set forth above, there are no outstanding (i) shares of capital stock or other voting securities of the Buyer; (ii) securities of the Buyer convertible into or exchangeable for shares of capital stock or voting securities of the Buyer; (iii) options or other rights to acquire from the Buyer and no obligations of the Buyer to issue, any capital stock, voting securities, or securities convertible into or exchangeable for capital stock or voting securities of the Buyer; or (iv) equity equivalents, interests in the ownership or earnings of the Buyer, or other similar rights (including stock appreciation rights). (f) Issuance of Stock. Based upon Thatcher's representations set forth in Section 4.1(n), the issuance of the Common Stock Consideration and the Preferred Stock Consideration are exempt from the registration requirements of any applicable state and federal securities laws, and neither the Buyer nor any authorized agent acting on its behalf will take any action hereafter that would cause the loss of such exemption. The shares of the Common Stock Consideration and the Preferred Stock Consideration to be issued hereunder, and the shares of Common Stock upon the conversion of the Preferred Stock Consideration when issued, will be validly issued, fully paid and nonassessable, and will be free of restrictions on transfer other than restrictions on transfer under the Stockholders Agreement and under applicable state and federal securities laws. (g) Brokers, Finders, etc. All negotiations relating to this Agreement and the transactions contemplated hereby have been carried on without the participation of any Person acting on behalf of the Buyer in such manner as to give rise to any valid claim against the Sellers for any brokerage or finder's commission, fee or similar compensation. (h) Knowledge of Buyer. Buyer is not aware of any facts or circumstances, or any items that are not listed by the Sellers in any schedules hereto, that would serve as the basis for a claim by Buyer against any of the Sellers based upon a breach of any representations and warranties of any of the Sellers contained in this Agreement or breach of any of the Sellers' covenants or agreements to be performed by any of them at or prior to Closing. ARTICLE V CONDITIONS PRECEDENT 5.1. Conditions to Obligations of Each Party. The obligations of the parties to consummate the transactions contemplated hereby shall be subject to the fulfillment on or prior to the Closing Date of the following conditions: (a) No Injunction, etc. Consummation of the transactions contemplated hereby shall not have been restrained, enjoined or otherwise prohibited by any Applicable Law, including any order, injunction, decree or judgment of any court or other governmental authority. No court or other governmental authority shall have determined any Applicable Law to make illegal the consummation of the transactions contemplated 15 hereby or the Collateral Agreements, and no proceeding with respect to the application of any such Applicable Law to such effect shall be pending. (b) Average Closing Price. The average closing price, as quoted on the Nasdaq Stock Market, for the Common Stock for the thirty (30) days preceding the Closing Date shall be equal to or greater than $2.62 per share. 5.2. Conditions to Obligations of the Buyer. The obligations of the Buyer to consummate the transactions contemplated hereby shall be subject to the fulfillment (or waiver by the Buyer) on or prior to the Closing Date of the following additional conditions, which the Sellers agree to use reasonable good faith efforts to cause to be fulfilled: (a) Representations, Performance. The representations and warranties of the Sellers contained in this Agreement and in the Collateral Agreements made pursuant to Section 4.1 (i) shall be true and correct in all respects (in the case of any representation or warranty containing any materiality qualification) or in all material respects (in the case of any representation or warranty without any materiality qualification) at and as of the date hereof, and (ii) shall be repeated and shall be true and correct in all respects (in the case of any representation or warranty containing any materiality qualification) or in all material respects (in the case of any representation or warranty without any materiality qualification) on and as of the Closing Date with the same effect as though made on and as of the Closing Date. The Sellers shall have duly performed and complied in all material respects with all agreements and conditions required by this Agreement and each of the Collateral Agreements to be performed or complied with by it prior to or on the Closing Date. (b) Closing Deliveries. Thatcher and TEVA, as the case may be, shall have delivered to the Buyer at the Closing the following: (i) the executed Assignment and Assumption Agreement, in the form attached hereto as Exhibit D (the "Assignment and Assumption Agreement"); (ii) the executed Stockholders Agreement, in the form attached hereto as Exhibit E (the "Stockholders Agreement"); (iii) the Property Lease Agreement, in the form attached hereto as Exhibit F (the "Lease Agreement"), in connection with the property located at 515 Beaver Street, Flagstaff, Arizona; (iv) certified resolutions of TEVA'S board of Directors and sole shareholder approving these transactions; (v) a Certificate of Amendment to TEVA'S corporate name deleting "Teva" from its name; (vi) the Employment Agreements; (vii) the Non-Competition Agreement attached hereto as Exhibit H (the "Non-Competition Agreement"); 16 (viii) any third party consents set forth in Schedule 4.1(b); and (ix) the Intercreditor and Subordination Agreement to be executed by Thatcher, the Buyer and Comerica Bank and the Buyer's mezzanine lender, in the form attached hereto as Exhibit I (the "Subordination Agreement"). 5.3. Conditions to Obligations of the Sellers. The obligation of the Sellers to consummate the transactions contemplated hereby shall be subject to the fulfillment (or waiver by the Sellers), on or prior to the Closing Date, of the following additional conditions, which the Buyer agrees to use reasonable good faith efforts to cause to be fulfilled. (a) Representations, Performance, etc. The representations and warranties of the Buyer contained in this Agreement and the Collateral Agreements in Section 4.2 (i) shall be true and correct in all respects (in the case of any representation or warranty containing any materiality qualification) or in all material respects (in the case of any representation or warranty without any materiality qualification) at and as of the date hereof and (ii) shall be repeated and shall be true and correct in all respects (in the case of any representation or warranty containing any materiality qualification) or in all material respects (in the case of any representation or warranty without any materiality qualification) on and as of the Closing Date with the same effect as though made at and as of such time. The Buyer shall have duly performed and complied in all material respects with all agreements and conditions required by this Agreement and the Collateral Agreements to be performed or complied with by it prior to or on the Closing Date. The Buyer shall have delivered to the Sellers a certificate, dated the Closing Date and signed by its duly authorized officer, to the foregoing effect. (b) Closing Deliveries. Thatcher and TEVA, as the case may be, shall have received from the Buyer the following: (i) the Purchase Price, including the Cash, the executed Note, the executed Stock Option Agreement, and the stock certificate(s) representing the Preferred Stock Consideration and the Common Stock Consideration; (ii) the executed Assignment and Assumption Agreement; (iii) the executed Stockholders Agreement; (iv) the executed Lease Agreement; (v) the Employment Agreements; (vi) the Subordination Agreement; and (vii) the Non-Competition Agreement. (c) Certificate of Designation. The Buyer shall have filed with the Delaware Secretary of State the Certificate of Designation. 17 (d) Corporate Proceedings. All corporate proceedings of the Buyer in connection with this Agreement and the Collateral Agreements and the transactions contemplated thereby, and all documents and instruments incident thereto, shall be reasonably satisfactory in substance and form to the Sellers, and their counsel, and the Sellers and their counsel shall have received all such documents and instruments, or copies thereof, certified if requested, as may be reasonably requested. ARTICLE VI COVENANTS 6.1. Covenants of the Sellers. (a) Further Assurances. Following the Closing, the Sellers shall, from time to time, execute and deliver such additional instruments, documents, conveyances or assurances and take such other actions as shall be necessary, or otherwise reasonably requested by the Buyer, to confirm and assure the rights and obligations provided for in this Agreement and in the Collateral Agreements and render effective the consummation of the transactions contemplated thereby. (b) Conduct of Business Prior to Closing. During the period prior to the Closing, the Sellers will operate the Business only in the ordinary course consistent with past practices. Without limiting the generality of the foregoing, the Sellers will: (i) use commercially reasonable efforts to: (A) preserve intact the present business organization and reputation and goodwill of the Business, (B) keep available (subject to dismissals and retirements in the ordinary course of business consistent with past practice) the services of the Sellers' Employees, (C) maintain the Assets in good working order and condition, ordinary wear and tear excepted, and maintain all of the Intellectual Property Assets, (D) maintain the good will of customers, suppliers, lenders and other persons to whom the Sellers sell goods or provide services or with whom the Sellers otherwise have significant business relationships in connection with the Business, (E) continue all current sales, marketing and promotional activities relating to the Business and (F) not dispose of, encumber or license any of its Intellectual Property Assets; (ii) except to the extent required by applicable law, (A) cause the Business and records to be maintained in the usual, regular and ordinary manner and (B) not permit any material change in any pricing, investment, accounting, financial reporting, inventory, credit, allowance, practice or policy of the Sellers that would adversely affect the Business, the Assets, the Intellectual Property Assets or the Assumed Liabilities; (iii) use commercially reasonable efforts to maintain in full force and effect until the Closing substantially the same levels of coverage as the insurance; (iv) comply, in all material respects, with all laws applicable to the Business and promptly following receipt thereof to give the Buyer copies of any notice 18 received from any party or other person alleging any violation of any such law or order; and (v) proceed to resolve all Intellectual Property Matters in the ordinary course of business; and (vi) comply with the other terms of this Agreement. 6.2. Covenants of the Buyer. (a) Further Assurances. Following the Closing, the Buyer shall cause it and its affiliates to, from time to time, execute and deliver such additional instruments, documents, conveyances or assurances and take such other actions as shall be necessary, or otherwise reasonably requested by the Sellers, to confirm and assure the rights and obligations provided for in this Agreement and in the Collateral Agreements and render effective the consummation of the transactions contemplated thereby. (b) Liability for Transfer Expenses, Costs, and Taxes. The Buyer shall be responsible for the timely payment of, and the Buyer shall indemnify and hold harmless the Sellers for, from and against, all sales, use, value added, documentary, stamp, registration, transfer, conveyance, excise, recording, license and other similar expenses, costs, taxes and fees ("Transfer Expenses"), arising out of or in connection with or attributable to the transactions effected pursuant to this Agreement and the Collateral Agreements, including, without limitation, any Transfer Expenses associated with the transfer and assignment of Intellectual Property Assets from Thatcher to the Buyer. (c) Assumption of Intellectual Property Matters. The Buyer acknowledges that it is aware of all of the currently pending opposition and cancellation actions in connection with the Intellectual Property Assets set forth in Schedule 4.1(e) and of the possibility of future oppositions, cancellations, challenges by third parties (including, without limitation, pirates), contests or other disputes arising with respect to or otherwise relating in any way to the Intellectual Property Assets (collectively, the "Intellectual Property Matters"). The Buyer agrees that, as of the Closing, the Buyer shall assume and be responsible for all of the Intellectual Property Matters. (d) Employee Matters. (i) Effective as of the Closing Date, the Buyer agrees to offer to retain those employees employed by the Sellers who are actively employed at the Closing (including those employees, if any, on sick leave or short-term leave of absence as of the Closing), on terms and conditions no less favorable than those provided to similarly situated employees of the Buyer. Each such employee who accepts employment with the Buyer will hereinafter be referred to as a "Transferred Employee." (ii) With respect to employee pension, welfare and fringe benefits provided by the Buyer to Transferred Employees after the Closing, (A) the Buyer will provide that service with the Sellers will be credited as service for purposes of the Buyer's plans, policies, programs, agreements and arrangements, and will 19 be recognized for purposes of participation, eligibility and vesting under the Buyer's plans, policies, programs, agreements and arrangements and (B) the Buyer will, subject to the coverage restrictions of the Buyer's benefit providers, cause its benefit providers to waive all waiting periods and pre-existing condition requirements under any plans that have any such requirements or restrictions, and to credit Transferred Employees under the Buyer's plans for any co-payments or deductibles actually paid by such employees under the Sellers' plans during the calendar year in which the Closing occurs. (iii) The Buyer shall be responsible for obligations relating to or arising in connection with the requirements of Section 4980B of the Code to provide continuation of health care coverage. (e) Customer Credits and Returns. The Buyer shall be responsible for any and all existing credit balances, accounts payable, liabilities, credits, or other amounts owed to customers of the Business prior to and as of the Closing Date, including, without limitation, those arising from (i) gift cards issued by Teva or (ii) products returned by customers (collectively, the "Customer Credits"). (f) Email Address. The Buyer agrees that Thatcher shall retain any and all interest and right to the email address "MThatcher@teva.com" (the "Retained Email Address") so long as Buyer owns the "Teva" domain. The Buyer agrees that, at its expense and as long as the "Teva" domain is controlled by Buyer, it will make available for Thatcher's use the Retained Email Address, maintain, service and take all reasonable actions to ensure Thatcher's full use and right to the Retained Email Address. If Buyer sells the "Teva" domain, Thatcher shall relinquish its interest in the Retained Email Address. (g) Lateral Control Footwear. The Buyer agrees that notwithstanding anything in this Agreement to the contrary, in the event that the Buyer does not offer for sale by June 30, 2006, any closed-end footwear incorporating Thatcher's "lateral control system" (the "LC Technology") which is designed in part to provide agility and lateral control support, ownership of the LC Technology with respect to any closed-end footwear shall immediately and automatically revert back to Thatcher without any further action by the parties. (h) Retention of and Access to Records. After the Closing Date, the Buyer shall provide the Sellers and their representatives reasonable access to all of the Records during normal business hours, and shall provide the Sellers thirty (30) day's prior written notice of any change in the location of the Records. The Buyer shall not dispose of any of the Records without first giving notice to the Sellers thereof and permitting the Sellers to retain or copy such Records as they may select. ARTICLE VII TERMINATION 7.1. Termination. This Agreement may be terminated at any time prior to the Closing Date: 20 (a) by the written agreement of the Buyer and the Sellers; (b) by the Sellers by written notice to the Buyer if the transactions contemplated hereby shall not have been consummated pursuant hereto by 5:00 p.m. Phoenix time on January 10, 2003; (c) by the Sellers by written notice to the Buyer if any of the conditions set forth in Section 5.1 or 5.3 above shall not have been fulfilled by 5:00 p.m. Phoenix time on January 10, 2003, unless such failure shall be due to the failure of the Sellers to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing; (d) by the Buyer by written notice to the Sellers if any of the conditions set forth in Section 5.1 or 5.2 above shall not have been fulfilled by 5:00 p.m. Phoenix time on January 10, 2003, unless such failure shall be due to the failure of the Buyer to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing; or (e) if a Force Majeure event occurs prior to the Closing Date, either the Buyer or the Sellers, at their option, can extend the Closing Date for up to ninety (90) additional days. If the transaction does not occur because of Force Majeure, then neither Section 7.2(b) nor (c) below shall apply. 7.2. Effect of Termination. (a) In the event of the termination of this Agreement pursuant to Section 7.1(a), this Agreement shall become void and have no effect, without any liability to any Person in respect hereof or of the transactions contemplated hereby on the part of any party hereto, or any of its directors, officers, employees, agents, consultants, representatives, advisors, stockholders or affiliates, except as specified in Section 9.2 and except for any liability resulting from such party's breach of this Agreement. (b) In the event of the termination of this Agreement pursuant to Section 7.1(b) and (c), the Sellers' sole remedy shall be to receive the Escrowed Funds, which amounts shall be immediately released to Thatcher by the Escrow Agent upon the written request of Thatcher, pursuant to the terms of the Escrow Agreement. (c) In the event of the termination of this Agreement pursuant to Section 7.1(d), the Buyer's sole remedy shall be to receive the Escrowed Funds and to offset from the royalty amounts owed to Thatcher under Article 5 of the License Agreement, up to an aggregate amount of $1,000,000. (d) In the event of the termination of this Agreement pursuant to Section 7.1, unless otherwise agreed upon by Thatcher and the Buyer, (i) the License Agreement and (ii) the Intellectual Property Option Agreement, dated as of June 7, 1999, executed by and between Thatcher and the Buyer, shall remain in full force and effect. 21 ARTICLE VIII INDEMNIFICATION 8.1. Indemnification. (a) By the Sellers. Each of the Sellers covenants and agrees to jointly and severally defend, indemnify and hold harmless the Buyer, its officers, directors, employees, agents, advisers, representatives and affiliates (collectively, the "Buyer Indemnitees") for, from and against, and pay or reimburse the Buyer Indemnitees for, any and all claims, liabilities, obligations, losses, fines, costs, royalties, proceedings, deficiencies or damages (whether absolute, accrued, conditional or otherwise and whether or not resulting from third party claims), including out-of-pocket expenses and reasonable attorneys' and accountants' fees incurred in the investigation or defense of any of the same or in asserting any of their respective rights hereunder (collectively, "Losses"), resulting from or arising out of: (i) any inaccuracy of any representation or warranty when made or deemed made by the Sellers herein or under any Collateral Agreement or in connection herewith or therewith; (ii) any failure of the Sellers to perform any covenant or agreement hereunder or under any Collateral Agreement or fulfill any other obligation in respect hereof or of any Collateral Agreement; (iii) any Excluded Assets; and (iv) any Excluded Liabilities; provided, however, that none of the Sellers shall be liable for any Losses unless and until the aggregate amount of all claims for Losses against the Sellers exceeds $50,000.00 and then only to the extent such aggregate amount exceeds $50,000.00; provided further, that the Sellers' combined liability under this Section shall be limited to the aggregate amount of $10,000,000.00. (b) By the Buyer. The Buyer covenants and agrees to defend, indemnify and hold harmless each of the Sellers and their respective officers, directors, employees, agents, advisers, representatives and affiliates (collectively, the "Seller Indemnitees") for, from and against, and pay or reimburse the Seller Indemnitees for, any and all Losses resulting from or arising out of: (i) any inaccuracy in any representation or warranty by the Buyer when made or deemed made or contained in this Agreement or any Collateral Agreement or in connection therewith; (ii) any failure of the Buyer to perform any covenant or agreement made or contained in this Agreement or any Collateral Agreement or fulfill any other obligation in respect thereof; (iii) the Assumed Liabilities; 22 (iv) the Intellectual Property Matters; and (v) any actions or omissions of the Buyer in connection with the operation of the Buyer's business after the Closing, including, without limitation, any Losses relating to or arising from any Product; provided, however, that the Buyer shall not be liable for any Losses unless and until the aggregate amount of all claims for Losses against the Buyer exceeds $50,000.00, and then only to the extent such aggregate amount exceeds $50,000.00; provided further, that the Buyer's total liability shall not exceed $10,000,000.00. (c) Indemnification Procedures. In the case of any claim asserted by a third party against a party entitled to indemnification under this Agreement (the "Indemnified Party"), notice shall be given by the Indemnified Party to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and the Indemnified Party shall permit the Indemnifying Party (at the expense of such Indemnifying Party) to assume the defense of any claim or any litigation resulting therefrom, provided that (i) the counsel for the Indemnifying Party who shall conduct the defense of such claim or litigation shall be reasonably satisfactory to the Indemnified Party, (ii) the Indemnified Party may participate in such defense at such Indemnified Party's expense, and (iii) the omission by any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its indemnification obligation under this Agreement except to the extent that such omission results in a failure of actual notice to the Indemnifying Party and such Indemnifying Party is materially damaged as a result of such failure to give notice. Except with the prior written consent of the Indemnified Party, no Indemnifying Party, in the defense of any such claim or litigation, shall consent to entry of any judgment or enter into any settlement that provides for injunctive or other non-monetary relief affecting the Indemnified Party or that does not include as an unconditional term thereof the giving by each claimant or plaintiff to such Indemnified Party of a release from all liability with respect to such claim or litigation. In the event that the Indemnified Party shall in good faith determine that the conduct of the defense of any claim subject to indemnification hereunder or any proposed settlement of any such claim by the Indemnifying Party might be expected to affect adversely the ability of the Buyer to conduct its business, or that the Indemnified Party may have available to it one or more defenses or counterclaims that are inconsistent with one or more of those that may be available to the Indemnifying Party in respect of such claim or any litigation relating thereto, the Indemnified Party shall have the right at all times to take over and assume control over the defense, settlement, negotiations or litigation relating to any such claim at the sole cost of the Indemnifying Party, provided that if the Indemnified Party does so take over and assume control, the Indemnified Party shall not settle such claim or litigation without the written consent of the Indemnifying Party, such consent not to be unreasonably withheld. In the event that the Indemnifying Party does not accept the defense of any matter as above provided, the Indemnified Party shall have the full right to defend against any such claim or demand and shall be entitled to settle or agree to pay in full such claim or demand. In any event, the Indemnifying Party and the Indemnified Party shall cooperate in the defense of any claim or litigation subject to this 23 Section 7.1 and the records of each shall be available to the other with respect to such defense. (d) Time Limitation. All claims for indemnification under Sections 8.1(a) and (b) must be asserted before 5:00 p.m. (Phoenix time) on the date of termination of the survival periods set forth in Section 9.1. (e) Exclusive Remedy. The indemnification remedies and other remedies provided in this Section 8.1 shall not be deemed to be exclusive. Accordingly, the exercise by any Person of any of its rights under this Section 8.1 shall not be deemed to be an election of remedies and shall not be deemed to prejudice, or to constitute or operate as a waiver of, any other right or remedy that such Person may be entitled to exercise. ARTICLE IX MISCELLANEOUS 9.1. Survival of Representations and Warranties, etc. The representations and warranties contained in this Agreement shall terminate eighteen (18) months after the Closing Date. 9.2. Expenses. Except for the Transfer Expenses set forth in Section 6.2(b), Thatcher, TEVA and the Buyer shall bear their respective expenses, costs and fees (including attorneys' fees) in connection with the transactions contemplated hereby, including the preparation, execution and delivery of this Agreement and compliance herewith, whether or not the transactions contemplated hereby shall be consummated. 9.3. Severability. If any provision of this Agreement, including any phrase, sentence, clause, section or subsection is inoperative or unenforceable for any reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatsoever. 9.4. Notices. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if (a) delivered personally, (b) mailed by first-class, registered or certified mail, return receipt requested, postage prepaid, or (c) sent by next-day or overnight mail or delivery or (d) sent by telecopy or telegram. (i) if to the Buyer, Deckers Outdoor Corporation 495-A South Fairview Avenue Goleta, CA 93117 Attn: Chairman Facsimile: 805-967-7862 with a copy to: 24 Joseph E. Nida Sheppard Mullin Richter & Hampton, LLP 800 Anacapa Street Santa Barbara, CA 93101 (ii) if to the Sellers, Mark Thatcher 1245 Cochran Flagstaff, AZ 86001 Teva Sport Sandals, Inc. P.O. Box 968 Flagstaff, AZ 86002 with a copy to: Snell & Wilmer, LLP One Arizona Center Phoenix, AZ 85004 Attn: Terry Roman, Esq. Facsimile: 602-382-6070 or, in each case, at such other address as may be specified in writing to the other parties hereto. All such notices, requests, demands, waivers and other communications shall be deemed to have been received (w) if by personal delivery on the day after such delivery, (x) if by certified or registered mail, on the seventh business day after the mailing thereof, (y) if by next-day or overnight mail or delivery, on the day delivered, (z) if by telecopy or telegram, on the next day following the day on which such telecopy or telegram was sent, provided that a copy is also sent by certified or registered mail. 9.5. Miscellaneous. (a) Headings. The headings contained in this Agreement are for purposes of convenience only and shall not affect the meaning or interpretation of this Agreement. (b) Entire Agreement. This Agreement (including the Schedules and Exhibits hereto) and the Collateral Agreements (when executed and delivered) constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof. (c) Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original and all of which shall together constitute one and the same instrument. (d) Governing Law, etc. This Agreement shall be governed in all respects, including as to validity, interpretation and effect, by the internal laws of the State of Arizona, without giving effect to the conflict of laws rules thereof to the extent that the 25 application of the law of another jurisdiction would be required thereby. The Buyer and the Sellers hereby irrevocably submit to the jurisdiction of the State of Arizona, or, if applicable, the United States District Court for the District of Arizona, agree that venue for any actions or proceedings shall properly lie in Maricopa County, Arizona, or if applicable, the District of Arizona, and hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or of any such document, that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that the venue thereof may not be appropriate or that this Agreement or any of such document may not be enforced in or by said courts, and the parties hereto irrevocably agree that all claims with respect to such action or proceeding shall be heard and determined in such a State or Federal court. The Buyer and the Sellers hereby consent to and grant any such court jurisdiction over the person of such parties and over the subject matter of any such dispute and agree that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 9.4, or in such other manner as may be permitted by law, shall be valid and sufficient service thereof. (e) Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns. (f) Assignment. This Agreement shall not be assignable or otherwise transferable by any party hereto without the prior written consent of the other party hereto. (g) No Third Party Beneficiaries. Except as provided in Section 8.1 with respect to indemnification of Indemnified Parties hereunder, nothing in this Agreement shall confer any rights upon any person or entity other than the parties hereto and their respective heirs, successors and permitted assigns. (h) Amendment; Waivers, etc. No amendment, modification or discharge of this Agreement, and no waiver hereunder, shall be valid or binding unless set forth in writing and duly executed by the party against whom enforcement of the amendment, modification, discharge or waiver is sought. Any such waiver shall constitute a waiver only with respect to the specific matter described in such writing and shall in no way impair the rights of the party granting such waiver in any other respect or at any other time. Neither the waiver by any of the parties hereto of a breach of or a default under any of the provisions of this Agreement, nor the failure by any of the parties, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder, shall be construed as a waiver of any other breach or default of a similar nature, or as a waiver of any of such provisions, rights or privileges hereunder. The rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies that any party may otherwise have at law or in equity. [Remainder of Page Intentionally Left Blank] 26 IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written. BUYER: DECKERS OUTDOOR CORPORATION, a Delaware corporation By: /s/ Douglas B. Otto ------------------------ Name: Douglas B. Otto Title: Chief Executive Officer SELLERS: TEVA SPORT SANDALS, INC., an Arizona corporation By: /s/Mark Thatcher --------------------- Name: Mark Thatcher Title: President and Chief Executive Officer /s/ Mark Thatcher ------------------ MARK THATCHER 27 EX-2.2 4 v87441a1exv2w2.txt EXHIBIT 2.2 PRIVILEGED - -------------------------------------------------------------------------------- Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as *****. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission. - -------------------------------------------------------------------------------- October 8, 2002 [SNELL & WILMER LETTERHEAD] Joseph E. Nida, Esq. Sheppard Mullin Richter & Hampton, LLP 800 Anacapa Street Santa Barbara, CA 93101 Re: Asset Purchase Agreement, by and among Mark Thatcher, Teva Sport Sandals, Inc., and Deckers Outdoor Corporation (the "Agreement") This Disclosure Schedule ("Schedule") is being delivered to you, as counsel to Deckers Outdoor Corporation, in connection with the Agreement. Unless the context otherwise requires, all capitalized terms used in this Schedule shall have the respective meanings assigned to them in the Agreement. The representations and warranties of the Sellers set forth in the Agreement are hereby excepted to the extent set forth hereafter. SCHEDULE 1.1(i). Copyrights.

COUNTRY DOCKET # TYPE MATTER REGISTRATION NO. ------- -------- ---- ------ ---------------- United States 41919.0114 CP 70 Reg. No. VA 1,123,717 United States 41919.0001 CP ABSTRACT Reg. No. VA 881,368 United States 41919.0085 CP ABYSS Reg. No. VA 1,049,603 United States 41919.0002 CP AEGEAN BLUE Reg. No. VA 881,367 United States 41919.0005 CP ANASAZI Reg. No. VA 992,455 United States 41919.0003 CP ARAPAHOE Reg. No. VA 992,456 United States 41919.0004 CP ARGENTINA Reg. No. VA 992,457 United States 41919.0006 CP ARROWS BLUE Reg. No. VA 881,366 United States 41919.0007 CP AZTEC Reg. No. VA 846,052 United States 41919.0008 CP BALI Reg. No. VA 992,458 United States 41919.0086 CP BAMBOO Reg. No. VA 1,049,608 United States 41919.0009 CP BARBED WIRE Reg. No. VA 924,270 United States 41919.0137 CP BATIK Reg. No. VA 1,123,561 United States 41919.0010 CP BELT Reg. No. VA 924,250 United States 41919.0011 CP BIRDIE Reg. No. VA 924,269 United States 41919.0012 CP BLACK SPIRAL Reg. No. VA 768,780 United States 41919.0013 CP BLUE BATIK Reg. No. VA 768,788 United States 41919.0014 CP BLUE FROG Reg. No. VA 846,048 United States 41919.0087 CP BONEFISH Reg. No. VA 1,049,609 United States 41919.0015 CP BRAID Reg. No. VA 992,459

PRIVILEGED

COUNTRY DOCKET # TYPE MATTER REGISTRATION NO. ------- -------- ---- ------ ---------------- United States 41919.0016 CP BREAKERS Reg. No. VA 924,249 United States 41919.0017 CP BRIGHT DOMINO Reg. No. VA 846,050 United States 41919.0018 CP BRIGHT PYRAMID Reg. No. VA 768,789 United States 41919.0019 CP BROTHERS Reg. No. VA 768,782 United States CP BUDS Reg. No. VA 1,123,556 United States 41919.0020 CP BUMBLE BEE Reg. No. VA 924,248 United States 41919.0021 CP BUTTERFLY Reg. No. VA 992,460 United States 41919.0139 CP CAMO Reg. No. VA 1,123,553 United States 41919.0022 CP CAMOUFLAGE Reg. No. VA 881,365 United States 41919.0135 CP CHEVRON Reg. No. VA 1,123,547 United States 41919.0023 CP COLORADO Reg. No. VA 992,461 United States 41919.0083 CP COLUMBINE Reg. No. VA 1,025,795 United States 41919.0024 CP COMET Reg. No. VA 992,462 United States 41919.0088 CP CORNFLOWER Reg. No. VA 1,049,604 United States 41919.0109 CP COSMOS Reg. No. VA 1,085,260 United States 41919.0089 CP CURRENTS Reg. No. VA 1,049,594 United States 41919.0025 CP DECO Reg. No. VA 881,364 United States 41919.0128 CP DEE-ORE SUNSET Reg. No. VA 1,123,554 United States 41919.0026 CP DIAGONAL Reg. No. VA 881,363 United States 41919.0090 CP DIAMOND Reg. No. VA 1,049,593 United States 41919.0027 CP DRAGON Reg. No. VA 881,153 United States 41919.0122 CP DRAGONFLY Reg. No. VA 1,123,544 United States 41919.0028 CP EDGE Reg. No. VA 924,254 United States 41919.0029 CP EGYPTIAN Reg. No. VA 924,247 United States 41919.0120 CP EILAT Reg. No. VA 1,123,546 United States 41919.0030 CP EXOFISH Reg. No. VA 992,463 United States 41919.0031 CP FILIGREE TEAL Reg. No. VA 881,152 United States 41919.0032 CP FISH Reg. No. VA 881,151 United States 41919.0112 CP FLIGHT Reg. No. VA 1,085,258 United States 41919.0111 CP FLOWERS Reg. No. VA 1,085,257 United States 41919.0091 CP FOLK Reg. No. VA 1,049,595 United States 41919.0138 CP GEO TATTOO Reg. No. VA 1,123,559 United States 41919.0129 CP GRIP United States 41919.0033 CP GUATEMALA Reg. No. VA 893,327 United States 41919.0034 CP HAWAII Reg. No. VA 924,246 United States 41919.0136 CP HAWAII 2002 Reg. No. VA 1,123,560 United States 41919.0092 CP HAWON Reg. No. VA 1,049,596 United States 41919.0093 CP HEX Reg. No. VA 1,049,597 United States 41919.0035 CP HIBISCUS Reg. No. VA 992,464 United States 41919.0119 CP HOCKNEY Reg. No. VA 1,123,548 United States 41919.0036 CP HYDROGLYPHICS Reg. No. VA 924,265 United States 41919.0037 CP IGUANA Reg. No. VA 992,465

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COUNTRY DOCKET # TYPE MATTER REGISTRATION NO. ------- -------- ---- ------ ---------------- United States 41919.0038 CP INCA Reg. No. VA 992,466 United States 41919.0116 CP ISLAND Reg. No. VA 1,123,551 United States 41919.0115 CP JAPANESE FLOWER Reg. No. VA 1,123,716 United States 41919.0039 CP KID SPIRAL Reg. No. VA 768,779 United States 41919.0040 CP LADY BUG Reg. No. VA 924,245 United States 41919.0041 CP LAVA Reg. No. VA 924,244 United States 41919.0117 CP LEAVES Reg. No. VA 1,123,550 United States 41919.0131 CP LIGHTNING Reg. No. VA 1,123,564 United States 41919.0130 CP LIQUID Reg. No. VA 1,123,565 United States 41919.0042 CP LIZARD Reg. No. VA 768,786 United States 41919.0094 CP MALACCA Reg. No. VA 1,049,598 United States 41919.0095 CP MALAY Reg. No. VA 1,049,602 United States 41919.0043 CP MAMMOTH Reg. No. VA 992,467 United States 41919.0044 CP MARLIN Reg. No. VA 924,243 United States 41919.0096 CP MINERAL Reg. No. VA 1,049,601 United States 41919.0097 CP MOSAIC Reg. No. VA 1,049,599 United States 41919.0045 CP MOZAMBIQUE Reg. No. VA 768,783 United States 41919.0098 CP MULTI Reg. No. VA 1,049,607 United States 41919.0046 CP NATIVE SHIELD Reg. No. VA 768,785 United States 41919.0047 CP NAVAJO Reg. No. VA 846,054 United States 41919.0048 CP NEW AZTEC Reg. No. VA 924,242 United States 41919.0099 CP NEW DRAGON Reg. No. VA 1,049,600 United States 41919.0049 CP NEW SUN & MOON Reg. No. VA 924,266 United States 41919.0124 CP NIGHT Reg. No. VA 1,123,558 United States 41919.0050 CP OPPOSITE Reg. No. VA 924,251 United States 41919.0100 CP PARANG Reg. No. VA 1,051,665 United States 41919.0051 CP PEACOCK Reg. No. VA 768,784 United States 41919.0052 CP PERUVIAN Reg. No. VA 881,150 United States 41919.0110 CP PICTO Reg. No. VA 1,085,259 United States 41919.0053 CP PINK FLOWER POWER Reg. No. VA 924,241 United States 41919.0101 CP PLANET Reg. No. VA 1,051,666 United States 41919.0054 CP PSYCHEDELIC Reg. No. VA 846,051 United States 41919.0055 CP PURPLE VINE Reg. No. VA 846,049 United States 41919.0056 CP PUZZLE Reg. No. VA 846,047 United States 41919.0057 CP Q Reg. No. VA 881,149 United States 41919.0058 CP QUILT Reg. No. VA 846,055 United States 41919.0059 CP RAPIDS Reg. No. VA 992,468 United States 41919.0060 CP REPHIBIAN Reg. No. VA 924,267 United States 41919.0102 CP RETRO Reg. No. VA 1,051,663 United States 41919.0061 CP RIBBIT Reg. No. VA 924,274 United States 41919.0062 CP ROAD Reg. No. VA 924,253 United States 41919.0063 CP SAILFISH Reg. No. VA 924,268

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COUNTRY DOCKET # TYPE MATTER REGISTRATION NO. ------- -------- ---- ------ ---------------- United States 41919.0133 CP SALT Reg. No. VA 1,123,563 United States 41919.0064 CP SCORPION Reg. No. VA 846,056 United States 41919.0121 CP SENUFO Reg. No. VA 1,123,545 United States 41919.0065 CP SERPENT Reg. No. VA 768,781 United States 41919.0066 CP SHADOWS Reg. No. VA 992,469 United States 41919.0067 CP SNAKE Reg. No. VA 893,326 United States 41919.0103 CP SOUND Reg. No. VA 1,051,664 United States 41919.0123 CP SP Reg. No. VA 1,123,543 United States 41919.0068 CP SPIDER Reg. No. VA 846,053 United States 41919.0134 CP STARFISH Reg. No. VA 1,123,562 United States 41919.0069 CP STONEFLY Reg. No. VA 881,148 United States 41919.0070 CP SUN AND MOON BLUE Reg. No. VA 881,147 United States 41919.0071 CP SUNFISH Reg. No. VA 924,273 United States 41919.0072 CP SUNFLOWER Reg. No. VA 992,470 United States 41919.0073 CP TANGO Reg. No. VA 924,252 United States 41919.0074 CP TAPESTRY Reg. No. VA 992,451 United States 41919.0075 CP TATTOO Reg. No. VA 768,778 United States 41919.0076 CP TATTOO U Reg. No. VA 881,146 United States 41919.0104 CP TEC Reg. No. VA 1,049,606 United States 41919.0105 CP TERRA-FI Reg. No. VA 1,051,662 United States 41919.0125 CP TESLA Reg. No. VA 1,123,557 United States 41919.0108 CP TEVA ("TEVA TAN") Reg. No. VA 1,041,137 United States 41919.0118 CP TIE FLOWER Reg. No. VA 1,123,549 United States 41919.0077 CP TRIBAL MASK Reg. No. VA 768,787 United States 41919.0078 CP TRIBE Reg. No. VA 924,272 United States 41919.0079 CP TURTLE Reg. No. VA 924,271 United States 41919.0080 CP TWISTED Reg. No. VA 992,452 United States 41919.0106 CP UNIVERSE Reg. No. VA 1,049,605 United States 41919.0127 CP WATERCOLOR Reg. No. VA 1,123,555 United States 41919.0081 CP WAVE Reg. No. VA 992,453 United States 41919.0113 CP WHIRLPOOL Reg. No. VA 1,123,552 United States 41919.0107 CP Z Reg. No. VA 1,051,667 United States 41919.0132 CP ZIPPER United States 41919.0082 CP ZUMA Reg. No. VA 992,454

SCHEDULE 1.1(j). Domain Names.

Docket No. Country Domain Name Status - ---------- ------- ----------- ------ 41919.0400 ALPSANDALS.COM Registered Renewal Due 8/29/2009 41919.0401 SPORTSSANDALS.COM Registered Renewal Due 9/11/2009

-4- PRIVILEGED

Docket No. Country Domain Name Status - ---------- ------- ----------- ------ 41919.0402 TEVA.COM Registered Renewal Due 1/29/2010 41919.0403 TEVASANDALS.COM Registered Renewal Due 3/7/2010 41919.0404 Singapore TEVA.COM.SG Registered Renewal Due 12/17/2002 41919.0405 Singapore TEVASANDALS.COM.SG Registered Renewal Due 12/17/2002 41919.0407 Switzerland TEVA.CH Registered Renewal Due 41919.0408 TEVA.COM.TW Transferred from Distributor Renewal Due 3/13/03 41919.0409 TEVA.AT Registered Renewal Due 6/2/2003 41919.0410 Netherlands TEVA-SANDALS.NL Registered Transferred Renewal Due 41919.0411 SPIDERRUBBER.COM Registered Renewal Due 4/12/2011 41919.0412 Portugal TEVA.COM.PT Registered Renewal Due 6/12/2003 41919.0414 Europe TEVA-EUROPE.COM Registered Renewal Due 4/12/2011 41919.0415 GOLFSANDALS.COM Registered Renewal Due 6/29/2010 41919.0416 TEVA.INFO Registered Renewal Due 7/28/2006 41919.0417 TEVASANDALS.INFO Registered Renewal Due 7/28/2006 41919.0418 U.K. TEVASANDALS.CO.UK Registered Renewal Due 10/25/2003 41919.0419 TEVATHRIVE.COM Registered Renewal Due 6/26/03 41919.0420 TEVASANDALS.CH Registered Renewal Due 41919.0421 TEVA.BIZ Registered Renewal Due 3/26/04 41919.0422 TEVASANDALS.BIZ Registered Renewal Due 3/26/04

-5- PRIVILEGED SCHEDULE 1.1(r). Marks.

APPLICATION NO./ COUNTRY DOCKET # TYPE MATTER REGISTRATION NO. - ------- -------- ---- ------ ---------------- Algeria 31919.0922 TM TEVA Reg. No. 55,572 (Class 25--Footwear) Argentina 31919.0924 TM TEVA Reg. No. 1.640.236 (Class 25--Footwear) Argentina 31919.1424 TM HAND DESIGN Reg. No. 1.751.329 (Class 25--Clothing, Footwear, Headgear) Australia 31919.0901 TM TEVA Reg. No. A492978 (Class 25--Footwear) Australia 31919.1401 TM HAND DESIGN (Class 25--Clothing, Footwear) Reg. No. 757963 Australia 31919.8201 TM TEVA App. No. 898905 (Classes 9, 18, 24 and 35 all goods) Australia 31919.8501 TM TEVA App. No. 895895 (Class 25 clothing, footwear, headgear) Bahamas 31919.8539 TM TEVA App. No. 24029 (Local class 38 sandals, footwear, clothing, beach towels) Bahamas 31919.9639 TM TEVA App. No. 24030 (Local class 50 sunglasses) Bahrain 31919.8536 TM TEVA (Sandals) Reg. No. TM 24,995 Belize 31919.8596 TM TEVA (Class 25) App. No. Benelux 31919.0926 TM TEVA Reg. No. 508803 (Class 25--Footwear) Bolivia 31919.0327 TM TEVA & HAND DESIGN App. No. SM-2257-01 (Class 25) Bolivia 31919.9327 TM TEVA & HAND DESIGN App. No. SM-2255-01 (Class 9) Bolivia 31919.9427 TM TEVA & HAND DESIGN App. No. SM-2256-01 (Class 18) Bolivia 31919.9527 TM TEVA & HAND DESIGN App. No. SM-2254-01 (Class 24)

-6- PRIVILEGED

APPLICATION NO./ COUNTRY DOCKET # TYPE MATTER REGISTRATION NO. - ------- -------- ---- ------ ---------------- Brazil 31919.1428 TM HAND DESIGN App. No. 820760579 (Class 25--Clothing, Footwear) British Virgin 31919.0917 TM TEVA Reg. No. 1936 Islands (Footwear) British Virgin 31919.9617 TM TEVA (stylized) Reg. No. 3703 Islands (Local cl. 8, 24, 37, 38) Canada 31919.0903 TM TEVA Reg. No. TMA 394,327 (Footwear) Canada 31919.1403 TM HAND DESIGN Reg. No. TMA497,521 (Clothing, Footwear) Chile 31919.0933 TM TEVA App. No. 196,672 (Footwear) Chile 31919.1433 TM HAND DESIGN Reg. No. 526.929 (Class 25--Footwear) Chile 31919.7633 TM TVAS Reg. No. 577.314 (Class 25) China 31919.0934 TM TEVA Reg. No. 879295 (Class 25--Clothing, footwear) China 31919.1434 TM HAND DESIGN App. No. 2000130200 (Clothing footwear, headgear, neckties, gloves) China 31919.7734 TM TEVA (stylized) Reg. No. 1648704 (Class 16) China 31919.7834 TM HAND DESIGN Reg. No. 1672830 (Class 16) China 31919.8434 TM TEVA (block ltrs) App. No. 3025684 (Class 9)

-7- PRIVILEGED

APPLICATION NO./ COUNTRY DOCKET # TYPE MATTER REGISTRATION NO. - ------- -------- ---- ------ ---------------- China 31919.8634 TM TEVA (block ltrs) App. No. 3025683 (Class 18) China 31919.8834 TM TEVA (block ltrs) App. No. 3025682 (Class 24) China 31919.8934 TM TEVA (block ltrs) App. No. 3025681 (Class 35) Colombia 31919.0935 TM TEVA (Class 25--Footwear) App. No. 98.047.390 Colombia 31919.1435 TM HAND DESIGN Reg. No. 246916 (Class 25--Clothing, Footwear) Community 31919.0305 TM TEVA & HAND DESIGN Reg. No. 1202589 Trademark (Class 25--Clothing, Footwear, Headgear) Community 31919.1405 TM HAND DESIGN Reg. No. 592394 Trademark (Class 25--Clothing) Community 31919.8205 TM TEVA (Classes 25, 18, 24) App. No. 002034486 Trademark Costa Rica 31919.0942 TM TEVA (Classes 25, 24, 18, 9) Reg. No. 5221-7978 Czech Republic 31919.0943 TM TEVA (Class 25) App. No. 156312 Denmark 31919.0904 TM TEVA SPORT SANDALS (stylized) Reg. No. VR 07.393 1993 (Footwear) Dominican 31919.0951 TM TEVA (block ltrs) App. No. 530361 Republic (Class 25--Clothing, footwear) Dominican 31919.1451 TM HAND DESIGN App. No. 530365 Republic (Class 25--Clothing, footwear) Reg. No. 0120334 Dominican 31919.8451 TM TEVA (block ltrs) App. No. 530364 Republic (Class 9--Sunglasses) Reg. No. 0120292

-8- PRIVILEGED

APPLICATION NO./ COUNTRY DOCKET # TYPE MATTER REGISTRATION NO. - ------- -------- ---- ------ ---------------- Dominican 31919.8651 TM TEVA (block ltrs) App. No. 530349 Republic (Class 18--handbags, belts & accessories Reg. No. 0120340 Dominican 31919.8851 TM TEVA (block ltrs) App. No. 530350 Republic (Class 24--towels) Reg. No. 0120329 Dominican 31919.9051 TM HAND DESIGN App. No. 530366 Republic (Class 24--towels) Reg. No. 0120330 Dominican 31919.9151 TM HAND DESIGN (Class 18--handbags, belts & App. No. 530363 Republic accessories) Reg. No. 01203431 Dominican 31919.9251 TM HAND DESIGN (Class 9 sunglasses) App. No. 530367 Republic Reg. No. 0120293 Ecuador 31919.0344 TM TEVA & HAND DESIGN (Class 25--all goods) Reg. No. 15329-02 Ecuador 31919.0944 TM TEVA (stylized) Reg. No. 15331-02 (Class 25--all goods) Ecuador 31919.2544 TM TEVA (stylized) Reg. No. 5397-02 (Class 35--all services) Ecuador 31919.8444 TM TEVA (stylized) Reg. No. 15330-02 (Class 9--all goods) Ecuador 31919.8644 TM TEVA (stylized) Reg. No. 15332-02 (Class 18--all goods) Ecuador 31919.8844 TM TEVA (stylized) Reg. No. 15333-02 (Class 24--all goods) Egypt 31319.0945 TM TEVA Ser. No. 120,109 (Sandals) El Salvador 31919.0946 TM TEVA Ser. No. 11980/2001 (Class 25--Clothing, footwear, headgear) Fiji 31919.0993 TM TEVA Reg. No. 24980 (Local Class 38--Footwear) France 31919.0906 TM TEVA Reg. No. 1668894 (Class 25--Footwear) Germany 31919.0907 TM TEVA Reg. No. 2023116 (Class 25--Footwear) Honduras 31919.0952 TM TEVA App. No. 1199/2001 (Class 25)

-9- PRIVILEGED

APPLICATION NO./ COUNTRY DOCKET # TYPE MATTER REGISTRATION NO. - ------- -------- ---- ------ ---------------- Honduras 31919.8452 TM TEVA Reg. No. 83.322 (Class 9--all goods) Honduras 31919.8652 TM TEVA Reg. No. 83.321 (Class 18--all goods) Honduras 31919.8852 TM TEVA Reg. No. 83.319 (Class 24--all goods) Hong Kong 31919.0908 TM TEVA Reg. No. 04678 of 1995 (Class 25--Clothing, footwear) Hungary 31919.0336 TM TEVA & HAND DESIGN (Class 25) App. No. M0103259 Hungary 31919.8236 TM TEVA App. No. M0103258 (Classes 18, 9--all goods) Iceland 31919.0953 TM TEVA Reg. No. 1060/2001 (Classes 25, 18, 9--all goods except Class 9--sunglasses only) Iceland 31919.8553 TM TEVA (stylized) Reg. No. 1059/2001 (Class 25) India 31919.0956 TM TEVA App. No. 992164 (Class 25) India 31919.8456 TM TEVA App. No. 992161 (Class 9) India 31919.8656 TM TEVA App. No. 992162 (Class 18) India 31919.8856 TM TEVA App. No. 992163 (Class 24) India 31919.1456 TM HAND DESIGN App. No. 01058336 (Class 25) Indonesia 31919.2557 TM TEVA App. No. J00-2001.15784-15884 (Class 35)

-10- PRIVILEGED

APPLICATION NO./ COUNTRY DOCKET # TYPE MATTER REGISTRATION NO. - ------- -------- ---- ------ ---------------- Indonesia 31919.8457 TM TEVA App. No. D00-2001.15783-15883 (Class 9) Indonesia 31919.8657 TM TEVA App. No. D00-2001.27084.27294 (Class 18) Indonesia 31919.9857 TM TEVA App. No. D00-2001.27083.27293 (Class 38) Israel 31919.0909 TM TEVA (stylized) Reg. No. 94709 (Class 25--Footwear) Israel 31919.1409 TM HAND DESIGN Reg. No. 114575 (Class 25) Italy 31319.0959 TM TEVA Reg. No. 589514 (Class 25--Footwear) Jamaica 31919.8540 TM TEVA (stylized) Reg. No. 38,659 (Class 25--Clothing, footwear, headwear) Japan 31919.0910 TM TEVA (word plus phonetic) Reg. No. 3112428 (Clothing, Footwear) Japan 31919.0995 TM TEVA (stylized) Reg. No. 3,226,208 (Clothing) Japan 31919.0997 TM TEVA (Local Class 22 - Sandals) Reg. No. 2254974 Japan 31919.1410 TM HAND Reg. No. 4312115 (Clothing, Footwear) Japan 31919.8410 TM TEVA (Subset of Class 9) Reg. No. 4551283 Japan 31919.8610 TM TEVA (Class 18) Reg. No. 3124946 Japan 31919.9110 TM HAND DESIGN App. No. 2002-29829 (Class 18--leather goods namely bags, luggage, etc.)

-11- PRIVILEGED

APPLICATION NO./ COUNTRY DOCKET # TYPE MATTER REGISTRATION NO. - ------- -------- ---- ------ ---------------- Jordan 31919.8517 TM TEVA Reg. No. 51981 (Sandals) Korea 31919.0911 TM TEVA Reg. No. 273,572 (Local Class 27--Footwear) Korea 31919.8211 TM TEVA App. No. 2002-0005490 (Classes 9, 24--sunglasses, etc.; textile, towels, etc.) Korea 31919.8511 TM TEVA Reg. No. 0519319 (Multiple goods in Class 25) Korea 31919.8711 TM TEVA (Korean Letters) Reg. No. 0519316 (Class 25) Malaysia 31919.0954 TM TEVA App. No. 2001/09114 (Class 25) Malaysia 31919.8454 TM TEVA App. No. 2001/09113 (Class 9) Malaysia 31919.8654 TM TEVA App. No. 2001/09112 (Class 18) Malaysia 31919.8854 TM TEVA App. No. 2001/09111 (Class 24) Malta 31919.0355 TM TEVA & HAND DESIGN (Class 25--clothing, Reg. No. 34512 footwear, headgear) Malta 31919.0955 TM TEVA Reg. No. 34511 (Class 25--Clothing, footwear, headgear) Mexico 31919.0313 TM TEVA & HAND DESIGN App. No. 524907 (Class 25) Mexico 31919.0913 TM TEVA Reg. No. 400446 (Class 25--Footwear)

-12- PRIVILEGED

APPLICATION NO./ COUNTRY DOCKET # TYPE MATTER REGISTRATION NO. - ------- -------- ---- ------ ---------------- Mexico 31919.1413 TM HAND DESIGN Reg. No. 583,225 (Class 25--Clothing) Mexico 31919.8413 TM TEVA App. No. 524904 (Class 9--Sunglasses) Mexico 31919.8813 TM TEVA App. No. 524905 (Class 24--Towels) Mexico 31919.8913 TM TEVA App. No. 524906 (Class 35) Morocco 31919.0367 TM TEVA & HAND DESIGN Reg. No. 79573 (Classes 9, 18, 24, 25, 35--all goods/services) Morocco 31919.0967 TM TEVA (Class 25--Footwear) Reg. No. 14,696 Netherland 31919.8555 TM TEVA Reg. No. 01934 Antilles (Classes 9, 16, 18, 24, 25, 35--all goods/services) New Zealand 31919.0915 TM TEVA Reg. No. 186448 (Class 25--Footwear) New Zealand 31919.1415 TM HAND DESIGN Reg. No. 290031 (Class 25--Clothing, Footwear) Nicaragua 31919.0968 TM TEVA App. No. 2000-04476 (Class 25) Nicaragua 31919.1468 TM HAND DESIGN App. No. 2001-01584 (Class 25) Nicaragua 31919.8468 TM TEVA App. No. 2001-10587 (Class 9) Nicaragua 31919.8668 TM TEVA App. No. 2001-01585 (Class 18) Nicaragua 31919.8868 TM TEVA App. No. 2001-01583 (Class 24) Nicaragua 31919.9068 TM HAND DESIGN App. No. 2001-01583 (Class 24)

-13- PRIVILEGED

APPLICATION NO./ COUNTRY DOCKET # TYPE MATTER REGISTRATION NO. - ------- -------- ---- ------ ---------------- Nicaragua 31919.9168 TM HAND DESIGN App. No. 2001-01582 (Class 18) Nicaragua 31919.9268 TM HAND DESIGN App. No. 2001-01581 (Class 9) Norway 31919. TEVA SPORT SANDALS Reg. No. 169371 Norway 31319.0970 TM TEVA Reg. No. 174532 (Class 25--Footwear) Norway 31919.1470 TM HAND DESIGN Reg. No. 193410 (Class 25--Clothing, Footwear) Pakistan 31919.0992 TM TEVA App. No. 172498 (Class 25) Pakistan 31919.8492 TM TEVA (stylized) App. No. 172497 (Class 9) Pakistan 31919.8592 TM TEVA (stylized) App. No. 172496 (Class 25) Pakistan 31919.8692 TM TEVA (stylized) App. No. 172494 (Class 18) Pakistan 31919.8892 TM TEVA (stylized) App. No. 172493 (Class 24) Peru 31919.0973 TM TEVA (Class 25) Reg. No. 67796 Peru 31919.1473 TM HAND DESIGN Reg. No. 47935 (Class 25--Clothing, Footwear) Philippines 31919.0974 TM TEVA (stylized) Ser. No. 101496 (Class 25)

-14- PRIVILEGED

APPLICATION NO./ COUNTRY DOCKET # TYPE MATTER REGISTRATION NO. - ------- -------- ---- ------ ---------------- Philippines 31919.8574 TM TEVA (stylized) Reg. No. 58057 (Class 25--Footwear, sandals, slippers) Poland 31919.0975 TM TEVA App. No. Z-233348 (Classes 25, 24, 18, 9) Portugal 31919.0976 TM TEVA Reg. No. 279,454 (Footwear) Puerto Rico 31919.0938 TM TEVA & HAND DESIGN Reg. No. 52,515 (Class 25) Saudi Arabia 31919.0978 TM TEVA Reg. No. 546/38 (Sandals) Singapore 31919.0380 TM TEVA & HAND DESIGN App. No. T02/00458Z (Class 25--clothing, footwear & headgear) Singapore 31919.0980 TM TEVA Reg. No. T93/07535C (Class 25--Footwear) Singapore 31919.8580 TM TEVA App. No. T01/04699H (Class 25) Slovakia 31919.0936 TM TEVA No # assigned (Classes 25, 24, 18, 9, 35) Slovenia 31919.8139 TM TEVA Reg. No. 200170529 (Classes 25, 24, 18, 9--all goods) South Africa 31919.0981 TM TEVA Reg. No. 91/8643 (Class 25--Footwear) South Africa 31919.1481 TM HAND DESIGN App. No. 98/10654 (Class 25--Clothing, Footwear) Spain 31919.0982 TM TEVA Reg. No. 2,054,158 (Class 25-Footwear)

-15- PRIVILEGED

APPLICATION NO./ COUNTRY DOCKET # TYPE MATTER REGISTRATION NO. - ------- -------- ---- ------ ---------------- Sri Lanka 31919.0983 TM TEVA App. No. 77229 (Class 25) Sweden 31919.0919 TM TEVA Reg. No. 304 328 (Class 25) Sweden 31919.1419 TM HAND DESIGN Reg. No. 98-02392 (Class 25--Clothing, Footwear) Sweden 31919. TM TEVA SPORTS SANDALS Reg. No. 251116 Switzerland 31919.0984 TM TEVA Reg. No. 403624 (Class 25--Footwear) Switzerland 31919.8584 TM TEVA (stylized) Reg. No. 497204 (Classes 9, 18, 25 all goods) Taiwan 31919.0920 TM TEVA (stylized) Reg. No. 875801 (Class 25--Footwear) Taiwan 31919.1420 TM HAND DESIGN Reg. No. 164, 617 (Class 35) Taiwan 31919.2520 TM TEVA App. No. 90-9610 (Class 25) Taiwan 31919.8420 TM TEVA App. No. 90-47694 (Class 9--eyeglasses and their parts, etc.) Taiwan 31919.8520 TM TEVA Reg. No. 999843 (Class 25) (Associated w/RN 875801) Taiwan 31919.8620 TM TEVA App. No. 90-47693 (Class 18--leather bags, luggage, etc.) Taiwan 31919.8920 TM HAND DESIGN App. No. 90-9610 (Class 35) Tangiers 31919.0337 TM TEVA (stylized) & HAND DESIGN (Classes 9, Reg. No. 20967 18, 24, 25 & 35 all goods & services)

-16- PRIVILEGED

APPLICATION NO./ COUNTRY DOCKET # TYPE MATTER REGISTRATION NO. - ------- -------- ---- ------ ---------------- Tangiers 31919.8537 TM TEVA (Sandals) Reg. No. 14696 Thailand 31919.8586 TM TEVA (stylized) Reg. No. TM60505 (Class 25--Footwear) Thailand 31919.8686 TM TEVA (stylized) App. No. 457782 (Class 18) Tonga 31919.0994 TM TEVA App. No. T/M/00/00014 (Class 25) Trinidad & Tobago 31919.1441 TM HAND DESIGN App. No. 32197 (Classes 25, 24, 28, 9, 35) Trinidad & Tobago 31919.8541 TM TEVA (stylized) (Classes 25, 24, 9, 18, 35) App. No. 32196 Turkey 31919.0387 TM TEVA & HAND DESIGN (Classes 25,18,9) App. No. 2001/06727 Turkey 31919.0987 TM TEVA App. No. 2001/06727 (Classes 25, 18, 9) United Kingdom 31919.0921 TM TEVA Reg. No. 1463777 (Class 25--Footwear) United States 31919.0100 TM Design (Arrangement of Geometric Shapes) Reg. No. 2,311,393 (Tech Logo) (Footwear) United States 31919.0200 TM TEVA & HAND DESIGN (Clothes, Foot.) Ser. No. 75/591,242 (ITU)

-17- PRIVILEGED

APPLICATION NO./ COUNTRY DOCKET # TYPE MATTER REGISTRATION NO. - ------- -------- ---- ------ ---------------- United States 31919.0217 TM TEVA + HAND DESIGN (Clothes, foot.) Ser. No. 75/982,232 (Div. Appln of 75/591,242) United States 31919.0300 TM TEVA + HAND DESIGN (Clothes, Foot.) Reg. No. 2,321,025 United States 31919.0900 TM TEVA (Footwear) Reg. No. 1,394,947 United States 31919.1100 TM SPOILER (Class 25--Footwear) Reg. No. 2,418,240 United States 31919.1400 TM HAND DESIGN (Clothing) Reg. No. 2,072,410 United States 31919.1900 TM RICOCHET Reg. No. 2,548,729 (Class 25--Footwear, namely sandals) United States 31919.2200 TM TARANTULA Reg. No. 2,311,906 (Class 25--Footwear) United States 31919.2400 TM MUSH Reg. No. 2,329,271 (Class 25--Footwear) United States 31919.2500 TM TEVA Reg. No. 2,301,460 (Class 35--Retail stores) United States 31919.2700 TM CLOTHING FOR THE RIVER OF LIFE (Clothing) Reg. No. 2,058,612

-18- PRIVILEGED

APPLICATION NO./ COUNTRY DOCKET # TYPE MATTER REGISTRATION NO. - ------- -------- ---- ------ ---------------- United States 31919.3400 TM TEVA Reg. No. 2,377,458 (Class 25--Clothing, Footwear) United States 31919.4000 TM BRAIN DRAIN Reg. No. 2,011,112 (Class 25--Footwear) United States 31919.4100 TM FREE YOUR FEET. YOUR MIND WILL FOLLOW. Reg. No. 1,920,965 (Class 25--Footwear) United States 31919.4300 TM LIQUID FRAME (Straps for securing foot to Reg. No. 2,553,093 sandals and shoes, sold as integral component) United States 31919.4400 TM PRETTY RUGGED Reg. No. 2,065,631 (Class 25--Footwear) United States 31919.4500 TM RIVER RUBBER Reg. No. 2,014,052 United States 31319.5000 TM SPIDER RUBBER Reg. No. 2,406,569 (Class 25--Footwear) United States 31919.5100 TM TERRADACTYL Reg. No. 1,866,458 (Class 25--Footwear) United States 31919.5200 TM TERRA-FI Reg. No. 2,062,045 (Class 25--Footwear) United States 31919.5400 TM WET CLIMBER (Footwear) Reg. No. 2,029,264 United States 31919.5500 TM XPD (Footwear) Reg. No. 2,358,376

-19- PRIVILEGED

APPLICATION NO./ COUNTRY DOCKET # TYPE MATTER REGISTRATION NO. - ------- -------- ---- ------ ---------------- United States 31919.8400 TM TEVA (Class 9--sunglasses) Ser. No. 78/047,242 (ITU) United States 31919.8417 TM TEVA Ser. No. 75/982,664 (Div of (Class 9--sunglass retainers and Ser. No. 78/047242) headstraps) United States 31919.8500 TM TEVA (Class 25 expanded Foot.) Ser. No. 76/238,323 (Use-based) United States 31919.0937 TM TEVA (Classes 25, 24, 18, 9) No reg. # assigned Virgin Islands Venezuela 31919.0989 TM TEVA App. No. 13263/98 (Footwear) Venezuela 31919.1489 TM HAND DESIGN App. No. 13264/98 (Clothing, Footwear) Yemen 31919.8538 TM TEVA (Sandals) App. No. 13620

SCHEDULE 1.1(u). Patents and Patent Applications.

APPLICATION NO./ COUNTRY DOCKET # TYPE MATTER REGISTRATION NO. - ------- -------- ---- ------ ---------------- China 31919.3634 DP FOOTWEAR (Wraptor) Ser. No. 99312209.4 France 31919.3606 DP FOOTWEAR (Wraptor) Reg. No. 994635 Germany 31919.3607 DP FOOTWEAR (Wraptor) Reg. No. 499 06 922.6

-20- PRIVILEGED

APPLICATION NO./ COUNTRY DOCKET # TYPE MATTER REGISTRATION NO. - ------- -------- ---- ------ ---------------- Japan 31919.3610 DP FOOTWEAR (Wraptor) Reg. No. 1090957 South Korea 31919.1511 DP SPORT SANDAL FOR ACTIVE WEAR (Universal) Pat. No. 077,573 United Kingdom 31919.3621 DP FOOTWEAR (Wraptor) Reg. No. 2085164 United States 31919.3600 DP FOOTWEAR (Wraptor) Pat. No. D429,873 United States 31919.3617 DP FOOTWEAR (Wraptor) Ser. No. 29/112,515 United States 31919.3700 DP FOOTWEAR (Ricochet) Pat. No. 441,175 United States 31919.5800 DP SURFACE OF A FOOTWEAR SOLE (Kids' North Ser. No. 29/114,038 Rim/Kids' Ricochet) United States 31919.6000 DP FOOTWEAR (Wraptor CIP) Pat. No. D458,009 United States 31919.6100 DP TREAD SURFACE (Tsunami Out/Topsole) Pat. No. D459,864 United States 31919.6200 DP TREAD SURFACE (Vector Out/Topsole) Ser. No. 29/123,276 United States 31919.7200 DP FOOTWEAR (Mehari) Pat. No. D460,245 United States 31919.7300 DP FOOTWEAR (Terra Rover) Pat. No. D460,246 United States 31919.7400 DP FOOTWEAR (Psyclone) Pat. No. D459,863 United States 31919.7500 DP FOOTWEAR (XPD/Formula) Pat. No. D459,862

-21- PRIVILEGED

APPLICATION NO./ COUNTRY DOCKET # TYPE MATTER REGISTRATION NO. - ------- -------- ---- ------ ---------------- Australia 31919.1501 UP SPORT SANDAL (Universal) Pat No. 599880 Australia 31919.3501 UP FOOTWEAR SECUREMENT SYSTEM App. No. 17741/01 Australia 31919.3901 UP FOOTWEAR SOLE AND ARCH STRAPPING SYSTEM App. No. 58084/99 (Wraptor) Canada 31919.5603 UP FLEECE SOCK Ser. No. 2,227,352 China 31919.3934 UP FOOTWEAR SOLE AND ARCH STRAPPING SYSTEM App. No. 99810533.3 (Wraptor) European Union 31919.3905 UP FOOTWEAR SOLE AND ARCH STRAPPING SYSTEM App. No. 99945494.5 (Wraptor) Mexico 31919.3913 UP FOOTWEAR SOLE AND ARCH STRAPPING SYSTEM App. No. PA/a/2001/002347 (Wraptor) New Zealand 31919.1515 UP SPORT SANDAL FOR ACTIVE WEAR (Universal) Pat. No. 226061 PCT 31919.3516 UP FOOTWEAR SECUREMENT SYSTEM (Closed Ser. No. WO 01/35782 A1 Footwear) United States 31919.1500 UP SPORT SANDAL FOR ACTIVE WEAR (Universal) Pat No. 4,793,075 United States 31919.1600 UP SPORT SANDAL CONSTRUCTION (Original) Pat No. 4,584,782 United States 31919.3593 UP FOOTWEAR SECUREMENT SYSTEM (closed Wraptor) App. No. 10/130457

-22- PRIVILEGED

APPLICATION NO./ COUNTRY DOCKET # TYPE MATTER REGISTRATION NO. - ------- -------- ---- ------ ---------------- United States 31919.3800 UP SELF ADJUSTING FRAME FOR FOOTWEAR Pat. No. 6,128,835 (Liquid Frame) United States 31919.3900 UP FOOTWEAR SOLE WITH INTEGRALLY MOLDED SHANK Pat. No. 6,061,929 (Dual Density Shank) United States 31919.3993 UP FOOTWEAR SOLE AND ARCH STRAPPING SYSTEM Ser. No. 09/786,239 (Wraptor) United States 31919.5600 UP FLEECE SOCK Pat. No. 5,867,837

SCHEDULE 2.1(e). Assignable Licenses. 1. License Agreement, dated as of November 17, 2000, by and between Mark Thatcher and Itochu Corporation. 2. Licensing Agreement, dated as of March 28, 2001, by and between Mark Thatcher, Bison Designs, LLC, and Bison Weavers, LLC. 3. Licensing Agreement, dated as of December 4, 2000, by and between Mark Thatcher and Dunlop Manufacturing, Inc. SCHEDULE 2.2. Excluded Assets. 1. 1996 White Jeep Grand Cherokee 2. 2001 Chevy Diesel Truck and Camper 3. 2002 Subaru 4. 8 Indian Rugs 5. 3 Pictures of Ancient Sandals -23- PRIVILEGED 6. 1 Cedar Wood Bench 7. 1 Cedar Wood Table 8. All Furnishings in Thatcher's Arizona Office SCHEDULE 3.5. Allocation of Purchase Price. To be mutually agreed upon by the Sellers and the Buyer. SCHEDULE 3.8. Assumed Liabilities. 1. The Customer Credits (as defined in Section 6.2(e)). 2. Any and all liabilities under the Material Contracts (as defined in Section 4.1(j)) and the Assigned Contracts (as defined in Section 4.1(i)). 3. The Intellectual Property Matters (as defined in Section 6.2(c)). SCHEDULE 4.1(b). No Conflicts. The execution, delivery and performance of this Agreement and the Collateral Agreements may require certain consents, waivers or notices as set forth in the following items: 1. License Agreement, dated as of November 17, 2000, by and between Mark Thatcher and Itochu Corporation. 2. Licensing Agreement, dated as of March 28, 2001, by and between Mark Thatcher, Bison Designs, LLC, and Bison Weavers, LLC. 3. Licensing Agreement, dated as of December 4, 2000, by and between Mark Thatcher and Dunlop Manufacturing, Inc. 4. Commercial Lease, dated as of January 8, 2001, by and between Michael O. Holpuch and Joan Holpuch, dba MJ Properties, as lessor, and Teva Sport Sandals, Inc., as lessee. 5. ClientCare(R) Support and Maintenance Agreement for Sage Enterprise Suite(TM) Software Agreement, dated as of September 2001, by and between Sage Software, Inc., and Teva Sport Sandals, Inc. 6. Annual Software Maintenance Agreement, dated as of November 1, 2001, by and between Logicor Inc., and Teva Sport Sandals, Inc. 7. Select Merchant Payment Card Processing Agreement, dated as of December 4, 2000, by and between Paymentech, LLC, and Teva Sport Sandals, Inc. -24- PRIVILEGED 8. Dedicated Server Rental Agreement, dated as of November 14, 2000, by and between VScape International, Inc., and Teva Sport Sandals, Inc. SCHEDULE 4.1(e). Intellectual Property Matters.

Docket No. Country Marks/Other Party Description - ---------- ------- ----------------- ----------- 31919.8128 Brazil ***** ***** 31919.8133 Chile TEVA v. TEVA Cancellation action filed. Thatcher v. Carlos Capurro Bahamondes 31919.1434 China HAND DESIGN v. HAND DESIGN Cancellation action filed based on non-use on 7/21/01. Thatcher v. Changzhou Yonghen Garment Factory 31919.8134 China TEVA v. TEVA Opposition filed. Thatcher v. Luyisi Leather 31919.8134 China TEVA v. TEVA (class 24) Opposition filed. Thatcher v. Jiayi Enterprises Co. Ltd. 31919.8142 Costa Rica ***** *****

- ---------- ***** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. -25- PRIVILEGED

Docket No. Country Marks/Other Party Description - ---------- ------- ----------------- ----------- 31919.0943 Czech Republic EVA v. TEVA Opposition filed by Ombretta. Ombretta AG v. Thatcher 31919.8205 Europe--CTM TOVA v. TEVA Opposition filed by Tova. Tova Corporation v. Thatcher 31919.8205 Europe--CTM THEBAS v. TEVA Opposition filed by Textil. Textil Juan B. Mato S.A. v. Thatcher 31919.8205 Europe--CTM TEVA v. TEPA & DESIGN Opposition filed against class 25 appln. Thatcher v. Romaia-Comercio 31919.8205 Europe--CTM TEVA NAOT ***** 31919.8146 El Salvador TEVA v. TEVA Cancellation proceeding filed. Guatemala Thatcher v. Piel Y Calzado 31919.8107 France Trademark Investigation ***** 31919.8106 France TEVA, Reg. No. 1668894, dated ***** 6/3/91 Mark Thatcher 31919.0953 Iceland TESA v. TEVA Opposition filed by Tesa AG Germany. Tesa AG v. Thatcher 31919.8457 Indonesia TESA v. TEVA Opposition filed by Tesa AG to TEVA Class 9 application for sunglasses Tesa AG v. Thatcher only. 31919.8157 Indonesia TEVA v. TEVA Opposition filed on 7/19/01 by Thatcher against Class 18 application. Thatcher v. Mizuno Jauw 31919.8157 Indonesia ***** *****

- ---------- ***** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. -26- PRIVILEGED

Docket No. Country Marks/Other Party Description - ---------- ------- ----------------- ----------- 31919.8157 Indonesia ***** ***** 31919.8157 Indonesia ***** ***** 31919.8157 Indonesia TEVA, Appln No. D00-2001 00294-294 Opposition filed on 7/19/01 by filed 1/9/01 Thatcher against Class 18 Mizuno Jauw application. Evidence of use filed in support of opposition. 31919.8457 Indonesia TESA, Reg Nos. 371423 dated Opposition filed by Tesa AG to 6/15/95; 369245 dated 6/15/95; Thatcher's TEVA appln No. 371296 dated 6/15/95; 469371 dated D00-15783-15883 filed 7/23/01 in Class 6/15/95 9 (which covers only "sunglasses") Tesa AG alleging similarity between marks and alleged bad faith by Thatcher. Counter-opposition filed by associate 5/20/02 arguing differences in goods and marks. Evidence of use of TEVA mark filed. 31919.8109 Israel ***** ***** 31919.8109 Israel ***** ***** 31919.8410 Japan TESA v. TEVA Tesa AG atty advised opposition filed against Class 9 TEVA application. Tesa AG v. Thatcher 31919.8511 Korea TEVA v. TEBAS Brief filed against TEBAS appln in classes 18 and 25 on 10/25/01. Thatcher v. Shin Hong 31919.8111 Korea ***** ***** Mexico TEVA v. TEVHA 69 & Design Cancellation action filed 8/16/01 based on fact that conflicting Thatcher v. Sergio Tulio Ortiz registration granted in error due to Sahagun prior TEVA registration. 31919.8171 Panama ***** *****

- ---------- ***** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. -27- PRIVILEGED

Docket No. Country Marks/Other Party Description - ---------- ------- ----------------- ----------- ***** ***** 31919.8174 Philippines TEVA (stylized) v. REVA (stylized) Verified Opposition filed 6/5/02. Thatcher v. Jose Nilo J. Ocampo 31919.0974 Philippines TEVA v. TEVA (Stylized Cancellation action resolved by settlement in which Registration Thatcher v. Shoetown acquired from Shoetown by assignment to Thatcher 31919.8176 Portugal ***** ***** 31919.8182 Spain V TE VA Opposition to V TE VA applications for Radio Difusiones Classes 16, 35 and 38 filed. Spanish Trademark Office refused Thatcher oppositions based on visual and overall differences between marks and classes. No appeal filed. 31919.8119 Sweden ***** ***** 31919.8584 Switzerland ***** ***** Ombretta AG v. Thatcher 31919.8584 Switzerland TESA v. TEVA Tesa AG v. Thatcher 31919.8120 Taiwan TEVA v. TEVA (class 24) Opposition filed. Thatcher v. Jiayi Enterprise Co 31919.8186 Thailand TEVA v. TEVA (stylized) Purchased TEVA (stylized) Reg. No.

- ---------- ***** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. -28- PRIVILEGED

Docket No. Country Marks/Other Party Description - ---------- ------- ----------------- ----------- 60505 in class 25 and TEVA (stylized) Thatcher v. Hoberd Industry Co. Appln No. 457782 in class 18 from Hoberd Industry Co. (and son). 31919.8186 Thailand TEVA (stylized) & HAND DESIGN v. Opposition filed against Class 9 appln TEVA (stylized) & HAND DESIGN 4/29/02. Thatcher v. Mr. Tiva Leejarkpai 31919.1441 Trinidad & Tobago HAND DESIGN v. HAND DESIGN Opposition filed by Mode-Alive against Class 25 appln on 4/25/02. Mode-Alive v. Thatcher 31919.8187 Turkey TEVA & HAND DESIGN v. TEVA & HAND Opposition against Sualar filed DESIGN 9/18/01. Thatcher v. Sualar Gumusculuk Tekstil 31919.8188 Uruguay ***** ***** 31919.8189 Venezuela TEVA v. TEVA Cancellation action filed 4/9/01 and are awaiting publication of same. Thatcher v. Inversiones Zona C.A. (Mr. Spielberger) 31919.8150 Vietnam ***** *****

- ---------- ***** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. -29- PRIVILEGED

Docket No. Country Marks/Other Party Description - ---------- ------- ----------------- ----------- ***** John W. Baker v. Deckers Outdoor Unknown - Deckers is handling matter. Corporation TEVA Other issues: From time to time, various intellectual property pirates have attempted to take advantage of foreign laws permitting the acquisition of intellectual property rights, including trademark rights, by registration. Other pirates may currently exist or hereafter take actions. In most cases, when pressed, these pirates have alleged rights superior to Thatcher relative to, among other things, the TEVA mark. ***** *****

- ---------- ***** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. -30- PRIVILEGED *****

Docket No. Country Marks/Other Party Description - ---------- ------- ----------------- ----------- Clearance Issues Under the existing license agreement with Buyer, Buyer is responsible for product clearance and trademark clearance with respect to the designs and marks used on the products. From time to time, third parties have taken issue with some of the product designs, web names, secondary product names and the like. ***** Other claims may currently exist or hereafter arise. Once complete we should do a check with John. Watch Notices: Seller has instituted a worldwide watch with respect to the publication of other trademark applications/registrations. Various of the above-referenced matters where the description is identified as "No opposition filed" arose as a result of Sellers' receipt of a watch notice.

Various third parties from time to time have tried to copy various aspects of the Products. In general, Seller has provided an IP Brochure to such parties advising such parties of Seller's intellectual property rights. A listing of recipients since mid 2000 is provided below:

Recipient Date --------- ---- ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00

- ---------- ***** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. -31- PRIVILEGED

Recipient Date --------- ---- ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 8/18/00 ***** 9/26/00 ***** 11/8/00 ***** 11/8/00 ***** 11/8/00 ***** 11/8/00 ***** 11/8/00 ***** 11/8/00 ***** 8/28/01 ***** 8/28/01 ***** 8/28/01 ***** 8/28/01 ***** 8/28/01

- ---------- ***** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. -32- PRIVILEGED

Recipient Date --------- ---- ***** 8/28/01 ***** 8/28/01 ***** 8/28/01 ***** 8/28/01 ***** 8/28/01 ***** 1/22/02 ***** 4/24/02 ***** 4/24/02

Other possible infringement issues include: Copyrights: Entity Subject Matter - ------ -------------- ***** ***** ***** ***** ***** ***** ***** ***** Patents: Entity Subject Matter - ------ -------------- ***** ***** ***** ***** ***** ***** SCHEDULE 4.1(g). Absence of Certain Changes or Events. None. SCHEDULE 4.1(h). TEVA's Employees. Hattley, Brittany Hautemulle, David Heath, Lindsey Hogan-Williams, Nancy Jeskewich, Barry - ---------- ***** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. -33- PRIVILEGED Kalinich, John Kasun, Cinda Kucipeck, Julie Mariassy, Kendra McEachern, Denise *Navarro, Raul *Navarro, Teresa O. Nix, Stephanie Norton, Galen A. Perritt, Steven T. Pitcher, Megan C. Schultz, Amanda Standing, Karen *Thatcher, Leslie *Thatcher, Mark - ---------- * Denotes those employees who are not Transferred Employees. SCHEDULE 4.1(i). Disputes-Assigned Contracts. None. SCHEDULE 4.1(j). Material Contracts. 1. License Agreement, dated as of November 17, 2000, by and between Mark Thatcher and Itochu Corporation. 2. ClientCare(R) Support and Maintenance Agreement for Sage Enterprise Suite(TM) Software Agreement, dated as of September 2001, by and between Sage Software, Inc., and Teva Sport Sandals, Inc. SCHEDULE 4.1(k). Environmental. None. -34- PRIVILEGED * * * * * Any information disclosed in any Schedule section above shall be deemed to be disclosed and incorporated into any other Schedule section where such disclosure would be reasonably apparent. Furthermore, the Sellers' representations and warranties, including any items set forth in the Schedules, do not purport to disclose any agreements, contracts or instruments that may be entered into between any of the Sellers and the Buyer. No disclosure set forth in the Schedules relating to any possible breach or violation of any agreement, law or regulation, or any possible infringement of any intellectual property, shall be construed as an admission or indication that any such breach, violation, or infringement exists or has actually occurred. Very truly yours, Snell & Wilmer Leonardo Loo -35- EX-23 5 v87441a1exv23.txt EXHIBIT 23 EX-23 INDEPENDENT AUDITORS' CONSENT The Board of Directors Deckers Outdoor Corporation: We consent to the incorporation by reference in the registration statement (No. 333-82538) on Form S-8 of Deckers Outdoor Corporation of our report dated January 10, 2003, with respect to the statements of assets acquired and liabilities assumed of Teva Sport Sandals, Inc. as of November 25, 2002 and December 31, 2001, and the related statements of earnings and cash flows for the period from January 1 to November 25, 2002 and the year ended December 31, 2001, which report appears in the February 7, 2003 current report on Form 8-K/A of Deckers Outdoor Corporation. KPMG LLP Los Angeles, California February 4, 2003 EX-99.1 6 v87441a1exv99w1.txt EXHIBIT 99.1 EX-99.1 For: DECKERS OUTDOOR CORPORATION Company Contact: Scott Ash Chief Financial Officer (805) 967-7611 Investor Relations: Integrated Corporate Relations, Inc. Chad A. Jacobs/Brendon E. Frey (203) 222-9013 DECKERS OUTDOOR CORPORATION ANNOUNCES THAT IT HAS COMPLETED THE ACQUISITION OF THE TEVA ASSETS GOLETA, Calif. (November 26, 2002) -- Deckers Outdoor Corporation (NASDAQ: DECK) today announced the Company completed the acquisition of the worldwide Teva patents, trademarks and other assets from Mark Thatcher, the Company's former licensor and the inventor of the Teva patents. As a result of the acquisition, Deckers now owns all of the Teva worldwide assets including all patents, tradenames, trademarks and all other intellectual property, as well as Teva's existing catalog and internet retailing business. The Company expects the transaction to be accretive to net income by approximately $1,000,000, or $0.03 per share, in 2003. Douglas Otto, Chairman and Chief Executive Officer of Deckers, stated, "We are pleased to have completed this major transaction which will allow us to maximize the true potential of the Teva brand. With the acquisition finalized, we believe the pieces are in place to take this company to the next level and we are dedicated to capitalizing on the opportunities that we have created." Mark Thatcher commented, "I look forward to working with Deckers under this new structure which will better support Teva's growth and the realization of both Teva's and Deckers' potential value." Deckers Outdoor Corporation builds niche products into global lifestyle brands by designing and marketing innovative, functional and fashion-oriented footwear, developed for both high performance outdoor activities and everyday casual lifestyle use. The Company's products are offered under the Teva, Simple and Ugg brand names. *This press release contains a number of forward looking statements, such as the Company's estimates regarding incremental net income and earnings per share expected to result from the Teva acquisition for the fiscal year ending December 31, 2003, Teva's growth potential and the potential future value to be realized by Teva and Deckers. These forward-looking statements are based on the Company's expectations as of today, November 26, 2002. No one should assume that any forward-looking statement made by the Company will remain consistent with the Company's expectations after the date the forward-looking statement is made. The Company intends to continue its practice of not updating forward-looking statements until its next quarterly results announcement. In addition, such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Many of the risks, uncertainties and other factors are discussed in detail in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2001. Among the factors which could impact results are the general economic conditions, world events and the strength or weakness in the retail environments in which the Company's products are sold, including the catalog and internet retailing market. In addition, the Company's sales are highly dependent on consumer preferences, which are difficult to assess and can shift rapidly. Any shift in consumer preferences away from one or more of the Company's product lines could result in lower sales as well as obsolete inventory, both of which could adversely affect the Company's results of operations, financial condition and cash flows. The Company is also dependent on its customers continuing to carry and promote its various lines. Availability of products can also affect the Company's ability to meet its customers' orders. Sales of the Company's Teva(R) products are very sensitive to weather conditions. Extended periods of unusually cold weather during the spring and summer could adversely impact demand for the Company's Teva(R) line. The success of the Company's expansion into new footwear categories, the addition of products outside of footwear including apparel, accessories and related products, and the overall success of the Company's ability to license the Teva name to other products is highly dependent on the popularity and consumer acceptance of the Teva brand in these new markets, as well as the Company's ability to identify and properly manage acceptable licensees. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the results of any revisions to any of the forward-looking statements contained in the 2001 Annual Report on Form 10-K, the Quarterly Reports on Form 10-Q or this news release. EX-99.2 7 v87441a1exv99w2.txt EXHIBIT 99.2 EX-99.2 FINANCIAL STATEMENTS INDEPENDENT AUDITORS' REPORT The Board of Directors Teva Sport Sandals, Inc.: We have audited the accompanying statements of assets acquired and liabilities assumed of Teva Sport Sandals, Inc. as of November 25, 2002 and December 31, 2001, and the related statements of earnings and cash flows for the period from January 1 to November 25, 2002 and the year ended December 31, 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Teva Sport Sandals, Inc. as of November 25, 2002 and December 31, 2001 and the results of its operations and its cash flows for the periods then ended in conformity with accounting principles generally accepted in the United States of America. KPMG LLP January 10, 2003 Los Angeles, California TEVA SPORT SANDALS, INC. Statements of Assets Acquired and Liabilities Assumed November 25, 2002 and December 31, 2001

ASSETS 2002 2001 ---- ---- Current assets: Accounts receivable $ 5,633 18,172 Inventories, net (note 3) 391,026 229,947 Prepaid expenses and other current assets 32,224 169,454 -------- -------- Total current assets 428,883 417,573 Property and equipment, net (note 2) 87,938 128,567 -------- -------- $516,821 546,140 ======== ======== LIABILITIES AND NET ASSETS ACQUIRED Current liabilities: Due to Deckers $ 50,000 -- Sales returns allowance 72,000 84,000 -------- -------- Total current liabilities 122,000 84,000 -------- -------- Commitments and contingencies (note 4) Net assets acquired $394,821 462,140 ======== ========

See accompanying notes to financial statements. TEVA SPORT SANDALS, INC. Statements of Earnings Period from January 1 to November 25, 2002 and for the year ended December 31, 2001

2002 2001 ---------- ---------- Revenues: Management fee (note 3) $ 1,530,451 1,318,898 Net product sales 4,018,314 3,706,176 ---------- ---------- Net revenues 5,548,765 5,025,074 Cost of goods sold from product sales (note 3) 2,086,536 1,915,594 ---------- ---------- Gross profit 3,462,229 3,109,480 Operating expenses 2,588,597 2,263,269 ---------- ---------- Earnings from operations 873,632 846,211 Interest income 53,213 34,300 ---------- ---------- Net earnings 926,845 880,511 ========== ==========

See accompanying notes to financial statements. TEVA SPORT SANDALS, INC. Statements of Cash Flows Period from January 1 to November 25, 2002 and for the year ended December 31, 2001

2002 2001 --------- --------- Cash flows from operating activities: Net earnings $ 926,845 880,511 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization of property and equipment 79,208 84,608 Changes in assets and liabilities: Trade accounts receivable 12,539 (29,757) Inventories (161,079) 14,985 Prepaid expenses and other current assets 137,230 (83,302) Sales returns allowance (12,000) 35,000 --------- --------- Net cash provided by operating activities 982,743 902,045 Cash flows used in investing activities - purchase of property and equipment (38,579) (46,768) Cash flows from financing activities: Due to Deckers 50,000 -- Distributions to shareholder (994,164) (855,277) --------- --------- Net cash used in financing activities (944,164) (855,277) --------- --------- Net change in cash and balance at end of year $ -- -- ========= =========

See accompanying notes to financial statements. TEVA SPORT SANDALS, INC. Notes to Financial Statements November 25, 2002 and December 31, 2001 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (A) BASIS OF PRESENTATION Teva Sport Sandals, Inc. (the Company) sells footwear and apparel through a catalog and an on-line website. On November 25, 2002, Deckers Outdoor Corporation (Deckers) acquired the worldwide Teva patents, trademarks and other assets from Mark Thatcher and certain assets and liabilities of Teva Sport Sandals, Inc.(the Acquisition). The assets and liabilities presented include only those acquired by Deckers. No adjustments have been made to the accompanying financial statements related to any step-up in basis or other impact resulting from the Acquisition. (B) REVENUE RECOGNITION Revenue from product sales is recorded when risk of loss and title passes to the buyer. Allowances for sales returns are provided when the related revenue is recorded. Billings for freight are included in revenue and costs of outgoing freight are included in cost of sales. (C) INVENTORIES All inventories represent footwear and apparel purchased for resale. Substantially all of the purchases of the Company's inventory were made from Deckers at market prices. Inventories are stated at the lower of cost or market. Cost is determined under the first-in, first-out (FIFO) method. (D) PROPERTY AND EQUIPMENT Property and equipment are carried at cost. Maintenance and repairs are charged to expense as incurred. Depreciation and amortization of property and equipment is computed on the straight-line method based upon the estimated useful lives of the assets, which range from three to seven years. (E) LONG-LIVED ASSETS The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. As part of an ongoing review of the valuation and amortization of long-lived assets, management assesses the carrying value of the Company's long-lived assets if facts and circumstances suggest that it may be impaired. If this review indicates that certain long-lived assets will not be recoverable, as determined by undiscounted operating cash flow analysis over the remaining useful life of the asset, the carrying value of the Company's long-lived assets would be reduced to its estimated market value. (F) INCOME TAXES The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The Company is treated as an S Corporation for both federal and state income tax purposes. The S Corporation provisions of the Internal Revenue Code require that federal corporate earnings flow through and be taxed solely at the stockholder level. TEVA SPORT SANDALS, INC. Notes to Financial Statements November 25, 2002 and December 31, 2001 (G) COMPREHENSIVE INCOME The Company reports comprehensive income under Financial Accounting Standards Board Statement No 130 (SFAS No 130), Reporting Comprehensive Income. The Company does not have any components of comprehensive income other than its net earnings, and accordingly, the Company's comprehensive income is equal to net earnings. (H) BUSINESS CONCENTRATIONS The Company sells three lines of product: Teva, Ugg and Simple, but does not design any of them. The Company's business is subject to the market acceptance of these lines. (I) ADVERTISING, MARKETING, AND PROMOTION COSTS Advertising production costs are expensed the first time the advertisement is run. All other costs of advertising, marketing and promotion are expensed as incurred. These expenses charged to operations for the periods ended November 25, 2002 and December 31, 2001 were $622,758 and $66,050, respectively. (J) FAIR VALUE OF FINANCIAL INSTRUMENTS The fair values of all of the Company's financial assets and liabilities acquired approximate the carrying values due to the relatively short maturities of these instruments. (K) USE OF ESTIMATES Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the balance sheet date and revenues and expenses during the reporting period to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ from those estimates. (L) NEW ACCOUNTING PRONOUNCEMENTS Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 144 ("SFAS 144"), "Accounting for the Impairment or Disposal of Long-Lived Assets," which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. While SFAS 144 supersedes Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," it retains many of the fundamental provisions of that statement. The adoption of this standard did not have a material impact on the Company's financial position or results from operations. TEVA SPORT SANDALS, INC. Notes to Financial Statements November 25, 2002 and December 31, 2001 In November 2001, the Emerging Issues Task Force ("EITF") issued EITF 01-9, "Accounting for Consideration Given by a Vendor to a Customer," which became effective for the first quarter beginning after December 31, 2001. EITF 01-9 requires certain consideration given by and to vendors or a customer be presented as a reduction of revenue rather than as a cost or an expense. The adoption of EITF 01-9 did not have a material impact on the Company's financial position or results from operations. On July 30, 2002, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 146 ("SFAS 146"), "Accounting for Costs Associated with Exit or Disposal Activities." SFAS 146 nullifies EITF Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." It requires that a liability be recognized for those costs only when the liability is incurred, that is, when it meets the definition of a liability in the FASB's conceptual framework. SFAS No. 146 also establishes fair value as the objective for initial measurement of liabilities related to exit or disposal activities. SFAS 146 is effective for exit or disposal activities that are initiated after December 31, 2002. The Company does not expect that the adoption of SFAS 146 will have a material impact on its financial position or results from operations. In November 2002, the FASB issued FASB Interpretation No. 45 ("FIN 45"), Guarantor's Accounting for Guarantees, Including Indirect Guarantees of Indebtedness of Others. FIN 45 elaborates on the disclosures to be made by a guarantor in its financial statements about its obligations under certain guarantees it has issued. It also clarifies that a guarantor is required to recognize, at inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The initial recognition and measurement provisions of FIN 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. The Company does not expect the adoption of FIN 45 will have a material impact on its financial position or results from operations. (2) PROPERTY AND EQUIPMENT Property and equipment consist of the following:

2002 2001 ---- ---- Machinery and equipment $365,516 326,937 Furniture and fixtures 28,907 28,907 -------- ------- 394,424 355,844 Less accumulated depreciation and amortization 306,485 227,277 -------- ------- $ 87,938 128,567 ======== =======

TEVA SPORT SANDALS, INC. Notes to Financial Statements November 25, 2002 and December 31, 2001 (3) RELATED PARTY TRANSACTIONS The Company provides services to its sole shareholder under a management agreement, including the management of his patent rights, copyrights and other intellectual property related to the Teva trademark. The Company is reimbursed for the costs of these services plus 5 percent. Management fees totaled $1,530,451 and $1,318,898 for the periods ended November 25, 2002 and December 31, 2001, respectively, and are recorded as revenue in the accompanying statement of earnings. Deckers loaned $50,000 to the Company immediately prior to the Acquisition. Such amount is unsecured and payable on demand. Substantially all of the purchases of the Company's inventory were made from Deckers at market prices. (4) COMMITMENTS AND CONTINGENCIES (A) LEASES The Company leases warehouse space under operating leases expiring through October 2005, which require monthly minimum rentals of $2,418. Rent expense paid under these leases in 2002 and 2001 were $19,175 and $24,194, respectively. Minimum rental commitments under operating leases are summarized as follows:

Year ending December 31: 2003 $29,016 2004 29,016 2005 24,180 ------- Total $82,212 =======

(B) LEGAL PROCEEDINGS The Company is party to routine claims and suits brought against it in the ordinary course of business. In the opinion of management, the outcome of such routine claims will not have a material adverse effect on the Company's financial condition, results of operations or liquidity. EX-99.3 8 v87441a1exv99w3.txt EXHIBIT 99.3 EX-99.3 DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES PRO FORMA UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS On November 25, 2002, Deckers Outdoor Corporation (the "Company") completed an acquisition (the "Acquisition") of the worldwide Teva patents, trademarks and other assets (the "Acquired Assets") from Mark Thatcher, the Company's former licensor and the inventor of the Teva patents. As a result of the Acquisition, the Company now owns all of the Teva worldwide assets including all patents, tradenames, trademarks and all other intellectual property, as well as Teva's existing catalog and internet retailing business, which includes the operations of Teva Sport Sandals, Inc. (the "Acquired Business"). The following unaudited pro forma condensed consolidated balance sheet assumes the acquisition of the Acquired Business occurred on September 30, 2002. The unaudited pro forma condensed consolidated statements of operations show the results of operations for the year ended December 31, 2001 and for the nine months ended September 30, 2002 as if the acquisition had occurred on January 1, 2001. See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2002 includes the consolidated balance sheet of the Company as of September 30, 2002 and the balance sheet of the Acquired Business as of November 25, 2002. The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2001 includes the consolidated statement of operations for the Company and for the Acquired Business both for the year ended December 31, 2001. The unaudited pro forma condensed consolidated statement of operations for the nine months ended September 30, 2002 includes the consolidated statement of operations for the Company and for the Acquired Business both for the nine months ended September 30, 2002. The unaudited pro forma condensed consolidated financial statements may not be indicative of either what the consolidated operations and financial position would have been had the Company had control of the Acquired Business's assets as of January 1, 2001 or the future results of operations of the consolidated companies. DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES Pro Forma Condensed Consolidated Balance Sheets September 30, 2002 (Unaudited)

DECKERS TEVA SPORT OUTDOOR SANDALS, PRO FORMA PRO FORMA CORPORATION INC. ADJUSTMENTS CONSOLIDATED ----------- ---- ----------- ------------ ASSETS Current assets Cash and cash equivalents $ 20,491,000 -- (11,555,000)(1) 8,936,000 Trade accounts receivable, net 15,783,000 6,000 11,000(1) 15,800,000 Inventories 18,058,000 391,000 18,449,000 Prepaid expenses and other current assets 1,283,000 32,000 1,315,000 Refundable and deferred tax assets 4,070,000 -- 4,070,000 ------------ ------- ---------- ----------- Total current assets 59,685,000 429,000 (11,544,000) 48,570,000 Property and equipment, at cost, net 3,592,000 88,000 3,680,000 Trademarks, net 118,000 -- 51,000,000(1) 51,118,000 Goodwill, net 6,782,000 -- 11,329,000(1) 18,111,000 Other intangible assets, net 2,269,000 -- (477,000)(1) 1,792,000 Other assets, net 448,000 -- 1,344,000(1) 1,792,000 ------------ ------- ---------- ----------- $ 72,894,000 517,000 51,652,000 125,063,000 ============ ======= ========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable and current installments of long-term debt $ 156,000 -- 156,000 Trade accounts payable 6,897,000 50,000 (50,000)(1) 6,897,000 Accrued expenses 7,864,000 72,000 7,936,000 ------------ ------- ---------- ----------- Total current liabilities 14,917,000 122,000 (50,000) 14,989,000 ------------ ------- ---------- ----------- Long-term debt, less current installments 41,000 46,042,000(1) 46,083,000 Stockholders' equity: Preferred stock -- -- 5,500,000(1) 5,500,000 Common stock 93,000 -- 1,000(1) 94,000 Additional paid-in capital 25,486,000 395,000 159,000(1) 26,040,000 Retained earnings 32,535,000 -- 32,535,000 Accumulated other comprehensive income (178,000) -- (178,000) ------------ ------- ---------- ----------- Total stockholders' equity 57,936,000 395,000 5,660,000 63,991,000 ------------ ------- ---------- ----------- $ 72,894,000 517,000 51,652,000 125,063,000 ============ ======= ========== ===========

See accompanying notes to unaudited pro forma condensed consolidated financial statements. DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES Pro Forma Condensed Consolidated Statements of Operations Year ended December 31, 2001 (Unaudited)

DECKERS OUTDOOR TEVA SPORT PRO FORMA PRO FORMA CORPORATION SANDALS, INC. ADJUSTMENTS CONSOLIDATED ----------- ------------- ----------- ------------ Net sales $ 91,461,000 5,025,000 (2,927,000)(2) 93,559,000 Cost of sales 52,903,000 1,916,000 (1,609,000)(2) 53,210,000 ------------ --------- ---------- ---------- Gross profit 38,558,000 3,109,000 (1,318,000) 40,349,000 Selling, general and administrative expenses 34,040,000 2,263,000 (5,344,000)(3) 30,959,000 Litigation costs 2,180,000 -- -- 2,180,000 ------------ --------- ---------- ---------- Income from operations 2,338,000 846,000 4,026,000 7,210,000 Other expense (income): Interest, net (308,000) (34,000) 5,342,000(4) 5,000,000 Other (165,000) -- -- (165,000) ------------ --------- ---------- ---------- Income before income taxes 2,811,000 880,000 (1,316,000) 2,375,000 Income taxes 1,185,000 -- (184,000)(5) 1,001,000 ------------ --------- ---------- ---------- Net income $ 1,626,000 880,000 (1,132,000) 1,374,000 ============ ========= ========== ========== Net income per share: Basic $ 0.18 0.15 Diluted 0.17 0.12 ============ ========== Weighted-average shares: Basic 9,247,000 9,347,000(6) Diluted 9,661,000 11,299,000(6) ============ ==========

See accompanying notes to unaudited pro forma condensed consolidated financial statements. DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES Pro Forma Condensed Consolidated Statements of Operations Nine months ended September 30, 2002 (Unaudited)

DECKERS OUTDOOR TEVA SPORT PRO FORMA PRO FORMA CORPORATION SANDALS, INC. ADJUSTMENTS CONSOLIDATED ----------- ------------- ----------- ------------ Net sales $ 73,355,000 4,774,000 (2,961,000)(2) 75,168,000 Cost of sales 41,472,000 1,798,000 (1,643,000)(2) 41,627,000 ------------ --------- ---------- ---------- Gross profit 31,883,000 2,976,000 (1,318,000) 33,541,000 Selling, general and administrative expenses 27,856,000 2,221,000 (4,603,000)(3) 25,474,000 Litigation costs 3,518,000 -- -- 3,518,000 ------------ --------- ---------- ---------- Income from operations 509,000 755,000 3,285,000 4,549,000 Other expense (income): Interest, net (58,000) (47,000) 3,912,000(4) 3,807,000 Other 73,000 -- -- 73,000 ------------ --------- ---------- ---------- Income before income taxes and cumulative effect of accounting change 494,000 802,000 (627,000) 669,000 Income taxes 237,000 -- 84,000(5) 321,000 ------------ --------- ---------- ---------- Income before cumulative effect of accounting change 257,000 802,000 (711,000) 348,000 Cumulative effect of accounting change, net of $843,000 income tax benefit (8,973,000) -- -- (8,973,000) ------------ --------- ---------- ---------- Net income (loss) $ (8,716,000) 802,000 (711,000) (8,625,000) ============ ========= ========== ==========

(Continued) DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES Pro Forma Condensed Consolidated Statements of Operations, Continued Nine months ended September 30, 2002 (Unaudited)

DECKERS OUTDOOR TEVA SPORT PRO FORMA PRO FORMA CORPORATION SANDALS, INC. ADJUSTMENTS CONSOLIDATED ------------- ------------- ----------- ------------ Basic income per common share before cumulative effect of accounting change $ 0.03 0.04 Cumulative effect of accounting change (0.97) (0.96) ------------- ---------- Basic loss per common share $ (0.94) (0.92) ============= ========== Average basic common shares 9,307,000 9,407,000(6) ============= ========== Diluted income per common share before cumulative effect of accounting change $ 0.03 0.03 Cumulative effect of accounting change (0.93) (0.80) ------------- ---------- Diluted loss per common share $ (0.90) (0.77) ============= ========== Average diluted common shares 9,642,000 11,271,000(6) ============= ==========

See accompanying notes to unaudited pro forma condensed consolidated financial statements. DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements The unaudited pro forma condensed consolidated balance sheet as of September 30, 2002 includes the consolidated balance sheet of Deckers Outdoor Corporation ("the Company") as of September 30, 2002 and the balance sheet of Teva Sport Sandals, Inc. ("the Acquired Business") as of November 25, 2002 on a historical cost basis. The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2001 includes the consolidated statement of operations for the Company and for the Acquired Business both for the year ended December 31, 2001 on a historical cost basis. The unaudited pro forma condensed consolidated statement of operations for the nine months ended September 30, 2002 includes the consolidated statement of operations for the Company and for the Acquired Business both for the nine months ended September 30, 2002 on a historical cost basis. Pro forma adjustments to reflect the impact of applying purchase accounting to the historical basis of the assets acquired and liabilities assumed and their pro forma impact on the results of operations are presented below. The allocation of the purchase price is preliminary and is subject to revision based upon the completion of fair value evaluations including the allocation to identifiable intangibles and goodwill. (1) Recognizes the acquisition of Teva by the Company for cash consideration of $43,000,000 and the issuance of a subordinated note to Mr. Thatcher of $13,000,000, preferred stock of $5,500,000, 100,000 shares of common stock valued at $367,000 and 100,000 stock options valued at $187,000. The cash consideration was financed through the use of existing cash on hand, $12,042,000 from the Company's revolving line of credit, $7,000,000 of senior debt provided by Comerica Bank and the issuance of $14,000,000 of senior subordinated notes to an unaffiliated third party.

DEBIT (CREDIT) --------------------------------------------------- ELIMINATE NET RECORD PURCHASE INTERCOMPANY PRO FORMA TRANSACTION AMOUNTS ADJUSTMENTS ----------- ------- ----------- Cash $(11,555,000) (11,555,000) Trade accounts receivable, net 456,000 (445,000) 11,000 Trademarks 51,000,000 51,000,000 Goodwill 11,329,000 11,329,000 Other intangible assets (477,000) (477,000) Other assets 1,344,000 1,344,000 Trade accounts payable -- 50,000 50,000 Long-term debt (46,042,000) (46,042,000) Preferred stock (5,500,000) (5,500,000) Common stock (1,000) (1,000) Additional paid-in capital (554,000) 395,000 (159,000) ------------ ------------ ------------ -- -- -- ------------ ------------ ------------

(2) Eliminates sales from the Company to the Acquired Business as well as the management fee paid to the Acquired Business by Mr. Thatcher during the respective periods reported.

TWELVE NINE MONTHS ENDED MONTHS ENDED DECEMBER 31, SEPTEMBER 30, 2001 2002 ------------ ------------- Intercompany sales to Acquired Business $1,609,000 1,643,000 Management fee 1,318,000 1,318,000 ---------- --------- Total pro forma adjustments to sales $2,927,000 2,961,000 ========== =========

DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements (3) Eliminates royalty payments made to Mr. Thatcher during the reporting periods, reverses contractual marketing costs that the Company was required to spend under the licensing agreement, reverses amortization expensed for the Teva license agreement and extensions and records amortization on new patents, trademarks and copyrights acquired in the Acquisition.

TWELVE NINE MONTHS ENDED MONTHS ENDED DECEMBER 31, SEPTEMBER 30, 2001 2002 ---- ---- Royalty expense $(4,194,000) (3,621,000) Contractual marketing costs (207,000) (256,000) Prior amortization on license fees and extension payments (1,190,000) (893,000) Additional amortization related to purchase agreement 247,000 167,000 ----------- ---------- Total pro forma adjustments to selling, general and administrative expenses $(5,344,000) (4,603,000) =========== ==========

(4) Eliminates prior interest income on excess cash balances during the reporting periods and records interest expense on new debt instruments, as referred to in Note 1 above. (5) Adjusts income taxes to the Company's tax rate for the period reported, which were 42.2% and 48.0% for the twelve months ended December 31, 2001 and for the nine months ended September 30, 2002, respectively. (6) Average basic common shares includes 100,000 shares of common stock issued to Mr. Thatcher in connection with the acquisition. Average diluted common shares also includes the potential dilutive impact of the conversion of the preferred stock (1,514,317 shares) and the impact of the 100,000 stock options, using the treasury stock method of accounting (23,537 and 16,410 shares for the twelve months ended December 31, 2001 and for the nine months ended September 30, 2002, respectively). -----END PRIVACY-ENHANCED MESSAGE-----

EX-2.1

                                                                     EXHIBIT 2.1

                     =====================================

                            ASSET PURCHASE AGREEMENT

                                  By and Among

                                 MARK THATCHER,

                                 an individual,

                            TEVA SPORT SANDALS, INC.,

                             an Arizona corporation,

                                       and

                          DECKERS OUTDOOR CORPORATION,

                             a Delaware corporation

                           Dated as of October 9, 2002

                     =====================================



                                TABLE OF CONTENTS



                                                                            PAGE
                                                                          
ARTICLE I          DEFINITIONS.............................................    1
         1.1.  Definition of Certain Terms.................................    1
ARTICLE II         SALE AND PURCHASE OF THE ASSETS.........................    3
         2.1.  Assets......................................................    3
         2.2.  Excluded Assets.............................................    4
ARTICLE III        THE CLOSING.............................................    5
         3.1.  Place and Date..............................................    5
         3.2.  Escrow......................................................    5
         3.3.  Purchase Price..............................................    5
         3.4.  Other Equity Consideration..................................    6
         3.5.  Allocation of Purchase Price................................    6
         3.6.  Characteristics of the Transaction for Income Tax Purposes..    6
         3.7.  Purchase Price Adjustment; Procedure........................    6
         3.8.  Assumption of Liabilities...................................    7
         3.9.  Liabilities Not Being Assumed...............................    7
         3.10. Lock-Up.....................................................    7
ARTICLE IV         REPRESENTATIONS AND WARRANTIES..........................    8
         4.1.  Representations and Warranties of the Sellers...............    8
         4.2.  Representations and Warranties of the Buyer.................   13
ARTICLE V          CONDITIONS PRECEDENT....................................   15
         5.1.  Conditions to Obligations of Each Party.....................   15
         5.2.  Conditions to Obligations of the Buyer......................   16
         5.3.  Conditions to Obligations of the Sellers....................   17
ARTICLE VI         COVENANTS...............................................   18
         6.1.  Covenants of the Sellers....................................   18
         6.2.  Covenants of the Buyer......................................   19
ARTICLE VII        TERMINATION.............................................   20
         7.1.  Termination.................................................   20
         7.2.  Effect of Termination.......................................   21
ARTICLE VIII       INDEMNIFICATION.........................................   21
         8.1.  Indemnification.............................................   21
ARTICLE IX         MISCELLANEOUS...........................................   24
         9.1.  Survival of Representations and Warranties, etc.............   24
         9.2.  Expenses....................................................   24
         9.3.  Severability................................................   24
         9.4.  Notices.....................................................   24
         9.5.  Miscellaneous...............................................   25


                                      -i-





EXHIBITS
- --------
                       
Exhibit A                 Note
Exhibit B                 Certificate of Designation
Exhibit C                 Stock Option Agreement
Exhibit D                 Assignment and Assumption Agreement
Exhibit E                 Stockholders Agreement
Exhibit F                 Lease Agreement
Exhibit G-1               Thatcher Employment Agreement
Exhibit G-2               Kalinich Employment Agreement
Exhibit H                 Non-Competition Agreement
Exhibit I                 Subordination Agreement
Exhibit J                 Escrow Agreement


                                      -ii-


                            ASSET PURCHASE AGREEMENT

         THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of
October 9, 2002, by and among MARK THATCHER ("Thatcher"), TEVA SPORT SANDALS,
INC., an Arizona corporation ("TEVA", together with Thatcher, the "Sellers"),
and DECKERS OUTDOOR CORPORATION, a Delaware corporation (the "Buyer").

                              W I T N E S S E T H:

         WHEREAS, Thatcher and the Buyer are parties to the Teva License
Agreement (the "License Agreement"), dated as of June 7, 1999, wherein Thatcher
has granted to the Buyer certain rights in the Intellectual Property Assets (as
defined below);

         WHEREAS, Thatcher is in the business of licensing, designing and
developing certain Teva(R) brand products and other related products;

         WHEREAS, TEVA is in the business of selling certain Teva(R) brand
products and other products (including, but not limited to, footwear),
principally through mail order and the internet (the "Business"); and

         WHEREAS, the Buyer wishes to purchase or acquire from the Sellers, and
the Sellers wish to sell, assign and transfer to the Buyer, as the case may be,
all of Thatcher's Intellectual Property Assets (as hereinafter defined) and all
of the assets of TEVA relating to or used in commerce in connection with the
Business (collectively, the "Assets").

         NOW, THEREFORE, in consideration of the mutual covenants,
representations and warranties made herein, and of the mutual benefits to be
derived hereby, the parties hereto agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

         1.1.     Definition of Certain Terms. The terms defined in this Section
1.1, whenever used in this Agreement, shall have the respective meanings
indicated below for all purposes of this Agreement. All references herein to a
Section, Article, Exhibit or Schedule are to a Section, Article, Exhibit or
Schedule of or to this Agreement, unless otherwise indicated.

                  (a)      Agreement: this Asset Purchase Agreement, including
         the Exhibits and Schedules hereto.

                  (b)      Applicable Law: all applicable provisions of all (i)
         constitutions, treaties, statutes, laws (including the common law),
         rules, regulations, ordinances, codes or orders of any governmental
         authority, (ii) governmental approvals and (iii) orders, decisions,
         injunctions, judgments, awards and decrees of or agreements with any
         governmental authority.

                  (c)      Assets: as defined in the preamble to this Agreement.

                  (d)      Assumed Liabilities: as defined in Section 3.8.



                  (e)      Buyer Indemnitees: as defined in Section 8.1(a).

                  (f)      Closing: as defined in Section 3.1.

                  (g)      Closing Date: as defined in Section 3.1.

                  (h)      Collateral Agreements: collectively, the Escrow
         Agreement, the Assignment and Assumption Agreement, the Lease
         Agreement, the Employment Agreements, the Stock Option Agreement, the
         Stockholders Agreement, and the Note.

                  (i)      Copyrights: any copyright that has been applied for
         or registered in connection with the Business and the Products,
         including, without limitation, those provided in Schedule 1.1(i).

                  (j)      Domain Names: all domain names used in connection
         with the Business and the Products, including, without limitation,
         those listed in Schedule 1.1(j).

                  (k)      Excluded Assets: as defined in Section 2.2.

                  (l)      Force Majeure: if a party's performance of the terms
         of this Agreement are prevented or delayed by the exercise of
         governmental authority, whether federal, state or county, or by riots,
         acts of God, war, adverse weather conditions, fire, unavoidable
         casualties or terrorist acts.

                  (m)      Indemnified Party: as defined in Section 8.1(d).

                  (n)      Indemnifying Party: as defined in Section 8.1(d).

                  (o)      Intellectual Property: collectively, all Copyrights,
         Domain Names, Marks, and Patents.

                  (p)      Intellectual Property Assets: collectively, all
         Intellectual Property, Know-how, Trade Dress, Unregistered Intellectual
         Property and Technology and any and all goodwill attributable to the
         Intellectual Property Assets.

                  (q)      Know-how: information that the Sellers have provided
         or shall provide to the Buyer to enable the Buyer to manufacture the
         Products. Know-how shall also mean all information relating to the
         design, production, distribution, marketing or sale of the Products
         that the Buyer has obtained in the past or shall obtain after entering
         into the Agreement, including without limitation all trade secrets,
         regardless of whether the Sellers have provided such information.

                  (r)      Marks: all trademarks for which registration has been
         applied for or registered or that are used in connection with the
         Business or the sale of the Products, including, without limitation,
         the marks listed in Schedule 1.1(r), together with the goodwill
         associated therewith.

                  (s)      Non-Intellectual Property Assets: all of the Assets,
         excluding the Intellectual Property Assets.

                                       2



                  (t)      Note: as defined in Section 3.3(b).

                  (u)      Patents and Patent Applications: all patents and
         patent applications covering or related to the Products, including,
         without limitation, those patents and patent applications listed in
         Schedule 1.1(u).

                  (v)      Person: any natural person, firm, partnership,
         association, corporation, company, trust, business trust, governmental
         authority or other entity.

                  (w)      Products: any product that is covered by or
         incorporates any feature of the Intellectual Property Assets and sold
         or under development by the Buyer, or to be sold or to be under
         development by the Buyer prior to the end of the Noncompetition Period,
         as defined in the Non-Competition Agreement (as defined below).

                  (x)      Purchase Price: as defined in Section 3.3.

                  (y)      Schedules: the disclosure schedules delivered by the
         Sellers' counsel to the Buyer's counsel prior to the date hereof.

                  (z)      Technology: conceptions, innovations, inventions,
         discoveries, processes, machines, manufactures, compositions of matter,
         improvements, designs, data and information, whether or not patentable,
         copyrightable or susceptible to any other form of protection relating
         to the Business or the Products.

                  (aa)     Trade Dress: the distinctive features of any
         Products. Without limiting the foregoing, such trade dress includes the
         distinctive appearance of certain sandals which include, but are not
         necessarily limited to, a general strap configuration, including heel
         strap, instep strap, toe strap, and lateral strap components (wherein
         the term "lateral strap" means a strap which in more than one place
         along the outer side of the foot connects to or intersects one or more
         sandal components), or a sandal with such a general strap configuration
         which includes a rectangular label located proximate to the
         intersection of the ankle strap and the lateral strap, or a sandal with
         such a general strap configuration which includes a rectangular label
         located on the back of the heel strap, or a sandal with such a general
         strap configuration which includes colored weaves located proximate to
         the top surfaces of any of the sandal's straps, or any combination
         thereof.

                  (bb)     Unregistered Intellectual Property: any and all
         unregistered Intellectual Property (including, without limitation,
         unregistered trademarks, service marks, trade names, copyrights, trade
         dress, trade secrets, and other like rights) relating to the Products,
         or the Business, or the License Agreement, together with the goodwill
         associated therewith but excluding any imagery of Mark Thatcher.

                                   ARTICLE II
                         SALE AND PURCHASE OF THE ASSETS

         2.1.     Assets. Subject to and upon the terms and conditions set forth
in this Agreement, at Closing (as defined below), the Sellers will sell,
transfer, convey, assign and deliver to the Buyer, and the Buyer will purchase
or acquire from the Sellers, all right, title and interest of the

                                       3



respective Sellers, free and clear of encumbrances, in and to the Assets,
including, without limitation, all of the following:

                  (a)      all Intellectual Property Assets;

                  (b)      all inventories of raw materials, work in process,
         finished products, goods, spare parts, replacement and component parts,
         and office and other supplies used in the Business (collectively, the
         "Inventories");

                  (c)      all credits, prepaid expenses, deferred charges,
         advance payments, security deposits and prepaid items related to the
         Business;

                  (d)      all of the concept store, mail order and internet
         business, including all tangible and intangible assets related to the
         Business, and related Domain Names, all pertaining to marketing and
         sales of Teva(R) branded products or footwear;

                  (e)      any assignable licenses related to any of the
         foregoing, including those listed in Schedule 2.1(e);

                  (f)      any and all contracts, claims, rights, causes of
         action, judgments, proceedings, demands related to the Business and the
         Intellectual Property Assets;

                  (g)      all of the Sellers' customers and customer lists
         relating to Teva(R) brand products or footwear, or the Business or
         Products;

                  (h)      all records, files and information related to any of
         the foregoing (the "Records"); and

                  (i)      any and all other tangible and intangible assets
         which relate to the Business or Products, including inventory,
         receivables and furniture and equipment.

         The Sellers acknowledge that they shall not retain any rights in or to
the Assets, including without limitation, the Intellectual Property Assets.

         2.2.     Excluded Assets. Notwithstanding anything herein to the
contrary, the Sellers will retain and not transfer, and the Buyer will not
purchase or acquire, the following (collectively, the "Excluded Assets"):

                  (a)      all of the Sellers' right, title and interest under
         or related to this Agreement, including, without limitation, the
         consideration delivered to the Sellers pursuant to this Agreement;

                  (b)      all cash, cash equivalents and short-term
         investments;

                  (c)      all minute books, stock records, corporate seals of
         TEVA, and other documents and things relating to organizational matters
         and the existence of TEVA as a corporation and tax returns of the
         Sellers;

                                       4



                  (d)      the corporate charter, bylaws, qualification to
         conduct business as a foreign corporation, arrangements with registered
         agents, taxpayer and other identification numbers;

                  (e)      all historical books of account, records, ledgers, or
         other documents or information relating to federal, state, local, city,
         or other taxes relating to the Sellers, the Assets, or the Business;

                  (f)      all of TEVA and Thatcher's right, title, and interest
         relating to any assets, right, and properties of TEVA, wherever
         located, whether tangible or intangible, not related to the Business or
         the Intellectual Property Assets;

                  (g)      all personnel records and other records that the
         Sellers are required by law to retain in their possession;

                  (h)      all claims for refund of taxes and other governmental
         charges of whatever nature;

                  (i)      all real property relating to the Business; and

                  (j)      all property and assets listed on Schedule 2.2.

         The Buyer will be entitled to access, upon 24-hour notice to the
Sellers, and during normal business hours, to review and make copies for any
internal use only items relating to Teva described in subparagraphs (e) and (g)
above for a period of five (5) years. The Buyer agrees to keep such information
confidential and not use such information for any reason or purpose other than
for legitimate internal use.

                                   ARTICLE III
                                   THE CLOSING

         3.1.     Place and Date. The closing of the sale and purchase of the
Assets (the "Closing") shall take place at 10:00 A.M. local time on any date not
constituting a legal holiday in Arizona, which occurs on or before November 25,
2002, at the offices of Snell & Wilmer, L.L.P., One Arizona Center, Phoenix,
Arizona 85004, or such other time and place upon which the parties may agree.
The date on which the Closing actually occurs is herein sometimes referred to as
the "Closing Date."

         3.2.     Escrow. Upon execution of this Agreement, the Buyer will wire
transfer ONE MILLION DOLLARS ($1,000,000.00) in immediately available funds (the
"Escrowed Funds") to Comerica Bank, the escrow agent (the "Escrow Agent"),
pursuant to the Escrow Agreement, of even date herewith, executed by and among
the Escrow Agent, the Sellers, and the Buyer, attached hereto as Exhibit J (the
"Escrow Agreement").

         3.3.     Purchase Price. On the terms and subject to the conditions set
forth in this Agreement, the Buyer agrees to pay or cause to be paid to Thatcher
and TEVA the Purchase Price (as defined below), and to assume or cause the Buyer
to assume the Assumed Liabilities as provided in Section 3.8. The "Purchase
Price" shall be comprised of and be payable as follows:

                                       5



                  (a)      At the Closing, by the wire transfer of FORTY-THREE
         MILLION DOLLARS ($43,000,000) (the "Cash") in immediately available
         funds to such bank account or accounts as per written instructions of
         the Sellers, given to the Buyer at least five (5) days prior to the
         Closing;

                  (b)      At the Closing, by the execution and delivery to
         Thatcher of the Subordinated Promissory Note (the "Note") in the
         principal amount of THIRTEEN MILLION DOLLARS ($13,000,000.00), in the
         form of Exhibit A attached hereto; and

                  (c)      At the Closing, by the issuance to Thatcher of ONE
         MILLION THREE HUNDRED SEVENTY-FIVE THOUSAND (1,375,000) shares of the
         Buyer's preferred stock, par value $0.01 (the "Preferred Stock
         Consideration"), with the rights and preferences described on Exhibit B
         attached hereto (the "Certificate of Designation").

         3.4.     Other Equity Consideration. In addition to the Purchase Price,
at the Closing, the Buyer shall issue to Thatcher (a) One Hundred Thousand
(100,000) shares of the unregistered Common Stock (as defined below) (the
"Common Stock Consideration"), (b) options to purchase an additional One Hundred
Thousand (100,000) shares of the Common Stock, pursuant to the terms of the
Stock Option Agreement, in the form of Exhibit C attached hereto (the "Stock
Option Agreement"); and (c) the Employment Agreements attached hereto as Exhibit
G-1 and Exhibit G-2 (the "Employment Agreements").

         3.5.     Allocation of Purchase Price. The Purchase Price shall be
allocated in accordance with Schedule 3.5. After the Closing, the parties shall
make consistent use of the allocation specified in Schedule 3.5 for all tax
purposes and in all filings, declarations and reports with any taxing authority,
including the reports required to be filed under Section 1060 of the Internal
Revenue Code. The Buyer shall prepare and deliver Internal Revenue Service
("IRS") Form 8594 to the Sellers within forty-five (45) calendar days after the
Closing Date to be filed with the IRS.

         3.6.     Characteristics of the Transaction for Income Tax Purposes.
The parties hereby agree that the Preferred Stock Consideration does not
constitute "preferred stock" for purposes of Section 305 of the Internal Revenue
Code. The parties further agree that the fair market value of the Preferred
Stock Consideration on the date of issuance shall be mutually agreed upon by the
parties as soon as reasonably practicable.

         3.7.     Purchase Price Adjustment; Procedure. The parties agree that
the Purchase Price shall be subject to the following credits and adjustments:

                  (a)      Uncollected Receivables. Any amounts which are
         received by the Buyer or the Business after the Closing Date arising
         from the operation of, and sales of products from, the Business before
         the Closing Date shall be paid to Thatcher within fifteen (15) calendar
         days after the receipt of such amounts by Buyer or the Business.
         Thatcher shall have access to the Buyer's personnel, books and records
         in order to verify the adjustment amounts pursuant to this Section
         3.7(a).

                  (b)      Accrued Royalties. Any royalty payments owing to any
         of the Sellers by any third-parties which have accrued as of the
         Closing Date, but are received by the Buyer after the Closing Date,
         shall be paid to Thatcher within fifteen (15) calendar days

                                       6



         after the receipt of such royalty payments by Buyer. Thatcher shall
         have access to the Buyer's personnel, books and records in order to
         verify the adjustment amounts pursuant to this Section 3.7(b). The
         License Agreement shall be automatically terminated and of no force or
         effect as of the Closing, provided that any payments accrued and due to
         Thatcher by the Buyer as of the Closing, arising from or under the
         License Agreement, shall be paid to Thatcher within fifteen (15) days
         after the Closing.

                  (c)      Prorations. Any rents, prepaid items and other
         applicable items with respect to the Assumed Liabilities shall be
         prorated as of the Closing Date and any amounts resulting from such
         proration shall be payable to the respective parties within fifteen
         (15) calendar days after the receipt of written notice of such
         proration.

         3.8.     Assumption of Liabilities. Subject to the terms and conditions
set forth herein, at the Closing, the Buyer shall assume and agree to pay, honor
and discharge when due any and all liabilities, obligations and commitments
relating to the Assets or the Business for the period on or after the Closing
Date, including those set forth on Schedule 3.8, (collectively, the "Assumed
Liabilities").

         3.9.     Liabilities Not Being Assumed. Notwithstanding anything herein
to the contrary, the Buyer is not assuming any liability of the Sellers not part
of the Assumed Liabilities, including any of the following liabilities or
obligations, whether fixed or contingent, known or unknown, matured or
unmatured, of the Sellers, which liabilities and obligations shall at and after
the Closing remain the exclusive responsibility of the Sellers (the "Sellers'
Retained Liabilities"):

                  (a)      all liabilities and obligations of the Sellers under
         this Agreement or with respect to or arising out of the consummation of
         the transactions contemplated by this Agreement;

                  (b)      except for the matters set forth in Schedule 4.1(e),
         all liabilities and obligations, claims, demands, suits or legal
         proceedings of the Sellers relating to or arising out of the Business
         before the Closing Date, as well as all costs incurred by the Sellers
         in connection with the matters set forth in Schedule 4.1(e) incurred
         prior to the Closing Date;

                  (c)      all tax liabilities for federal, state, local, city
         or other tax relating to the Sellers, the Assets or the Business for
         all periods on or prior to the Closing, and all tax liabilities of any
         person under Treasury Regulation Section 1.1502-6 (or similar provision
         of state, local, and foreign law);

                  (d)      any other liabilities unrelated to the ordinary
         course of operation of the Business; and

                  (e)      any liabilities related to the Excluded Assets.

         3.10.    Lock-Up. During the term of this Agreement the Sellers will
not seek, entertain, encourage or negotiate with any third party a transaction
involving the Sellers, the Business or the Intellectual Property Assets.

                                       7



                                   ARTICLE IV
                         REPRESENTATIONS AND WARRANTIES

         4.1.     Representations and Warranties of the Sellers. As of the date
hereof and as of the Closing Date, each of Thatcher and TEVA, jointly and
severally, represents and warrants to the Buyer as follows:

                  (a)      Corporate Status; Authorization, etc. TEVA is a
         corporation duly organized, validly existing and in good standing under
         the laws of the State of Arizona, with full corporate power and
         authority to execute and deliver this Agreement and the Collateral
         Agreements to which it is a party, to perform its obligations hereunder
         and thereunder and to consummate the transactions contemplated hereby
         and thereby. The execution and delivery by TEVA of this Agreement and
         the consummation of the transactions contemplated hereby, have been,
         and on the Closing Date will have been, duly authorized by all
         requisite corporate action of TEVA. TEVA has duly executed and
         delivered this Agreement and the Escrow Agreement and on the Closing
         Date will have duly executed and delivered the Collateral Agreements to
         which it is a party. This Agreement and the Escrow Agreement are, and
         on the Closing Date each of the Collateral Agreements to which TEVA is
         a party will be, valid and legally binding obligations of TEVA,
         enforceable against TEVA in accordance with their respective terms.

                  Thatcher is the sole shareholder of TEVA and he has the
         complete power and authority to execute and deliver this Agreement and
         the Collateral Agreements to which he is a party, to perform his
         obligations hereunder and thereunder and to consummate the transactions
         contemplated hereby and thereby. Thatcher has duly executed and
         delivered this Agreement and the Escrow Agreement and on the Closing
         Date will have duly executed and delivered the Collateral Agreements to
         which it is a party. This Agreement and the Escrow Agreement are, and
         on the Closing Date each of the Collateral Agreements to which Thatcher
         is a party will be, valid and legally binding obligations of Thatcher,
         enforceable against Thatcher in accordance with their respective terms.

                  (b)      No Conflicts, etc. Except as provided in Schedule
         4.1(b), to the Seller's knowledge, the execution, delivery and
         performance by each of the Sellers of this Agreement and each of the
         Collateral Agreements to which they are parties, and the consummation
         of the transactions contemplated hereby and thereby, do not and will
         not conflict with, contravene, result in a violation or breach of or
         default under (with or without the giving of notice or the lapse of
         time or both), give rise to a right or claim of termination, amendment,
         modification, vesting, acceleration or cancellation of any right or
         obligation or loss of any material benefit under, or result in the
         creation of any lien (or any obligation to create any lien) upon any of
         the Assets under (i) any Applicable Law applicable to any of the
         Sellers or any of the properties or assets of the Sellers (including,
         but not limited to, the Assets), (ii) in the case of TEVA, the articles
         of incorporation or bylaws or other organizational documents of TEVA,
         or (iii) any contract, agreement or other instrument to which either of
         the Sellers is a party or by which each of the Sellers or any of its
         properties or assets, including, but not limited to, the Assets, may be
         bound or affected. Except as provided in Schedule 4.1(b), no
         governmental or other third party approval, or other governmental or
         third party consent, is required to be obtained or made

                                       8



         by any of the Sellers in connection with the execution and delivery of
         this Agreement and the Collateral Agreements or the consummation of the
         transactions contemplated hereby and thereby. Further, the Sellers are
         currently not seeking, entertaining, encouraging or negotiating with
         any third party a transaction involving the Sellers, the Business or
         the Intellectual Property Assets.

                  (c)      Litigation. Except as provided in Schedule 4.1(e),
         there is no action, claim, suit or proceeding pending, or to the
         knowledge of either Seller, threatened, by or against or affecting any
         of the Sellers or the Non-Intellectual Property Assets in connection
         with or relating to the transactions contemplated by this Agreement or
         of any action taken or to be taken in connection herewith or the
         consummation of the transactions contemplated hereby which will have a
         material adverse effect on the Sellers or the Assets.

                  (d)      Non-Intellectual Property Assets. Thatcher and TEVA,
         as the case may be, have good title to all the Non-Intellectual
         Property Assets free and clear of any and all liens. The
         Non-Intellectual Property Assets are in all material respects adequate
         for the purposes for which such assets are currently used or are held
         for use, and are in reasonably good repair and operating condition
         (subject to normal wear and tear) and, to the knowledge of the Sellers,
         there are no facts or conditions affecting the Non-Intellectual
         Property Assets which could, individually or in the aggregate,
         interfere in any material respect with the use, occupancy or operation
         thereof as currently used, occupied or operated, or their adequacy for
         such use.

                  (e)      Intellectual Property.

                           (i)      Title. Schedules 1.1(i), 1.1(j), 1.1(r), and
         1.1(u) contain a complete and correct list of all the Intellectual
         Property pertaining to or used in connection with the Teva(R) brand or
         footwear or related products. Thatcher owns full and complete title to
         all the Intellectual Property, free from any liens and free from any
         requirement of any past, present or future royalty payments or license
         fees (other than pursuant to the License Agreement); provided, however,
         that as to the Copyrights, the Buyer acknowledges that Thatcher has
         relied upon the investigation and registration efforts of the Buyer and
         the Buyer's statements made in such registrations. The Sellers have not
         granted any licenses or rights to the Intellectual Property, except as
         disclosed on Schedule 2.1(e).

                           (ii)     Transfer. Immediately after the Closing, the
         Buyer will own all of the Intellectual Property Assets, free from any
         liens and on the same terms and conditions as in effect prior to the
         Closing.

                           (iii)    No Infringement. Except as set forth on
         Schedule 4.1(e), to the knowledge of the Sellers, none of the
         Intellectual Property is being infringed by any other Person.

                           (iv)     Open Actions. Except as set forth on
         Schedule 4.1(e), there are no open litigation matters relating to the
         Intellectual Property.

                           (v)      No Intellectual Property Litigation. Except
         as set forth on Schedule 4.1(e), no claim or demand of any Person has
         been made nor is there any

                                       9



         proceeding that is pending, or to the knowledge of the Sellers,
         threatened which (A) challenges the rights of Thatcher in respect of
         any Intellectual Property, or (B) asserts that Thatcher or TEVA is
         infringing or otherwise in conflict with, or is required to pay any
         royalty, license fee, charge or other amount with regard to, any
         Intellectual Property. To the knowledge of the Sellers, none of the
         Intellectual Property is subject to any outstanding order, ruling,
         decree, judgment or stipulation by or with any court, arbitrator, or
         administrative agency.

                           (vi)     Due Registration. The Sellers' efforts to
         register, file or otherwise protect the Intellectual Property are
         detailed on Schedules 1.1(i), 1.1(j), 1.1(r), and 1.1(u).

                           (vii)    Other Protection of Intellectual Property.
         The Sellers have taken reasonable steps to protect and maintain their
         rights in and to the Intellectual Property. The Sellers have timely
         paid all filing, examinations, issuance, post-registration and
         maintenance fees, annuities and the like associated with or required
         with respect to any of the Intellectual Property.

                  (f)      Financial Statements. TEVA has delivered to the Buyer
         unaudited profit and loss statements of the Business for the twelve
         (12) month period ending on December 31, 2000, and December 31, 2001,
         respectively (the "P&L Statements"). The P&L Statements are complete
         and correct in all material respects, fairly reflect the assets,
         liabilities, and results of operations and financial condition of the
         Business, and have been prepared in accordance with internal accounting
         principles consistently applied. Since December 31, 2001, there has not
         been any material adverse change in the general condition of TEVA.

                  (g)      Absence of Certain Changes or Events. With respect to
         TEVA, since December 31, 2001, and except as set forth in Schedule
         4.1(g), or as required hereunder, there has not been, to the knowledge
         of the Sellers:

                           (i)      Obligations. Any obligation or liability
         (fixed or contingent), in excess of $10,000, incurred except normal
         trade or business obligations and liabilities incurred in the ordinary
         course of business and obligations and liabilities in connection with
         this Agreement and the transactions contemplated hereby, none of which
         liabilities, in any case or in the aggregate, would have a material
         adverse effect on the Assets, financial condition, results of operation
         or prospects of the Business;

                           (ii)     Discharge or Satisfaction of Liens. Any
         discharge, cancellation or satisfaction of any lien, security interest
         or encumbrance or payment of any obligation or liabilities (fixed or
         contingent), other than pursuant to the terms of such obligation or in
         the ordinary course of business;

                           (iii)    Additional Liens. Any mortgage, pledge or
         subjection to any lien, security interest or other encumbrance of any
         of the Assets, other than mechanic's, materialman's and similar
         statutory liens or purchase money security interests arising in the
         ordinary course of business;

                           (iv)     Employee Plans. Any adoption of, or increase
         in, any bonus, incentive, compensation, pension, profit sharing,
         retirement, insurance, medical

                                       10



         reimbursement or other employee benefit plan, other than in the
         ordinary course of business;

                           (v)      Adjustments. Any write-offs, write-downs,
         inventories or accounts receivable of the Business, in excess of
         $10,000, other than in the ordinary course of business and consistent
         with prior practice; or

                           (vi)     Agreement to Act. Any agreement to take any
         action described in this subparagraph (g).

                           (vii)    Acquisition or Disposition of Assets. Any
         transfer, lease or other disposition of any of the Assets or the
         acquisition of any assets or properties in excess of $10,000, except in
         the ordinary course of business.

                           (viii)   Compromise of Debts or Claims. Any
         cancellation or compromise of any debt or claim, except in the ordinary
         course of business;

                           (ix)     Waiver of Material Rights. Any waiver or
         release of any rights of material value to the Business;

                           (x)      Employee Compensation. Except as otherwise
         required by law, any wage or salary increase applicable generally to
         any group or classification of the Sellers' employees or any entry into
         any written employment contract with any officer of the Sellers'
         employees or any loan made to such persons, other than in the ordinary
         course of business;

                           (xi)     Damage or Destruction. Any damage,
         destruction or loss (whether or not covered by insurance) which
         materially and adversely affects the Assets or the Business, with
         materiality for purposes of this provision being agreed to mean damage,
         destruction or loss in excess of $10,000.

                  (h)      Employee Compensation. Attached hereto as Schedule
         4.1(h) is a list setting forth the employees of TEVA ("TEVA'S
         Employees"). The following has also been previously provided to Buyer:

                           (i)      Employee Compensation. The names and current
         annual rates of TEVA'S Employees as of the most recent payroll date;
         and

                           (ii)     Employee Compensation Plans and Benefits.
         All employment and consulting agreements, executive compensation plans,
         bonus plans, deferred compensation agreements, employee pension plans
         or retirement plans, employee profit sharing plan, employee stock
         purchase and stock option plans, group life insurance, hospitalization
         insurance or other plans or arrangements providing for benefits,
         whether or not subject to ERISA ("Employee Benefit Plan") to TEVA'S
         Employees and all severance benefits paid during the past twelve (12)
         months to former employees.

                  (i)      Assigned Contracts. True and complete copies of all
         contracts to be assigned to the Buyer (the "Assigned Contracts") have
         been provided or made available upon request to the Buyer. Except as
         set forth in Schedule 4.1(i), there are no disputes

                                       11



         with customers or vendors of the Sellers with respect to the
         performance by the Sellers under any Assigned Contracts which dispute
         or disputes involve payment by the Sellers, or performance of services
         or delivery of assets or properties of the Sellers, in excess of
         $10,000 individually or $50,000 in the aggregate.

                  (j)      Material Contracts. Schedule 4.1(j) sets forth a
         complete and accurate list of all material contracts in excess of
         $25,000 (the "Material Contracts") in which the Sellers are a party and
         which relate to the Assets and/or the Business. All of the Material
         Contracts are legally valid and binding, in full force and effect and
         enforceable against TEVA and/or Thatcher, as the case may be. To the
         Sellers' knowledge, each Material Contract is valid and enforceable in
         accordance with its terms for the periods stated therein against all
         other parties thereto. To the Sellers' knowledge, except as set forth
         in Schedule 4.1(j), the Sellers are not in default or breach under any
         of the Material Contracts, and the Sellers have not been notified of
         any claim that there is under any such Material Contract any existing
         material default or event of material default or event which with
         notice or lapse of time or both would constitute such a material
         default by the Sellers. To the Sellers' knowledge, there is no default
         or breach under any of the Material Contracts by any other party
         thereto.

                  (k)      Environmental. To the Sellers' knowledge, except as
         set forth in Schedule 4.1(k), the Sellers are in compliance with all
         applicable federal, state and local environmental protection,
         occupational, health and safety or similar laws, ordinances,
         restrictions, licenses and regulations, including those relating to
         pollution or protection of the environment (including ambient air,
         surface water, ground water, land surface or subsurface strata), and
         those relating to emissions, discharges or releases of pollutants,
         contaminants, chemicals or toxic or hazardous substances or wastes and
         those relating to the handling, treatment, presence, removal, storage,
         decontamination, clean-up, transportation or disposal of Hazardous
         Materials including, but not limited to, the Federal Water Pollution
         Control Act, Resource Conservation & Recovery Act, Safe Drinking Water
         Act, Toxic Substances Control Act, Clean Air Act, Comprehensive
         Environmental Response, Compensation and Liability Act, except for
         possible violations that do not and, so far as the Sellers can
         reasonably foresee, will not have a material adverse effect on the
         Assets or the Business.

                  (l)      Taxes. All taxes, whether estimated or actual,
         including, without limitation, income, property, sales, use, franchise,
         added value, employees' income withholding and social security taxes,
         imposed by the United States or by any foreign country, or by any other
         taxing authority, which are due or payable by TEVA with respect to the
         Assets, and all interest and penalties thereon, whether disputed or not
         (hereinafter, "Taxes"), have been paid in full, all tax returns
         required to be filed in connection therewith have been accurately
         prepared and duly and timely filed and all deposits required by law to
         be made by TEVA with respect to employees' withholding taxes have been
         duly made. No extension of time or requests therefor or for any waiver
         thereof have been made or are presently pending or effective with
         respect to any such returns, reports or Taxes. There is no material
         unassessed tax deficiency proposed or threatened against TEVA, nor is
         any action or proceeding pending or threatened by any governmental
         authority for assessment, reassessment or collection of any taxes or
         assessments affecting the Assets.

                                       12



                  (m)      Brokers, Finders, etc. All negotiations relating to
         this Agreement and the transactions contemplated hereby have been
         carried on without the participation of any Person acting on behalf of
         any of the Sellers in such manner as to give rise to any valid claim
         against the Buyer for any brokerage or finder's commission, fee or
         similar compensation.

                  (n)      Accredited Investor. Thatcher intends to hold the
         Common Stock Consideration and the Preferred Stock Consideration for
         his own account, for investment purposes only and not with a view to
         immediate resale or distribution, either in whole or in part. Thatcher
         represents that he is an "accredited investor" within the meaning of
         Rule 501 of Regulation D adopted by the Securities and Exchange
         Commission under the Securities Act of 1933 and is a resident of the
         State of Arizona.

For purposes of Section 4.1 above, the term "knowledge" shall mean the actual
knowledge of Thatcher or TEVA, or its counsel Snell & Wilmer, L.L.P., as the
case may be, without any investigation. TEVA will be deemed to have knowledge of
a particular fact or other matter if Thatcher, or its counsel Snell & Wilmer,
L.L.P., has actual knowledge of such particular fact or matter, without any
investigation. Furthermore, any information disclosed in any Schedule shall be
deemed to be disclosed and incorporated into any other Schedule where such
disclosure would be reasonably apparent. Furthermore, the Sellers'
representations and warranties, including any items set forth in the Schedules,
do not purport to disclose any agreements, contracts or instruments that may be
entered into between any of the Sellers and the Buyer. No disclosure set forth
in the Schedules relating to any possible breach or violation of any agreement,
law or regulation, or any possible infringement of any intellectual property,
shall be construed as an admission or indication that any such breach,
violation, or infringement exists or has actually occurred.

         4.2.     Representations and Warranties of the Buyer. As of the date
hereof and as of the Closing Date, the Buyer represents and warrants to the
Sellers as follows:

                  (a)      Corporate Status; Authorization, etc. The Buyer is a
         corporation duly organized, validly existing and in good standing under
         the laws of the State of Delaware, with full corporate power and
         authority to execute and deliver this Agreement and the Collateral
         Agreements to which it is a party, to perform its obligations hereunder
         and thereunder and to consummate the transactions contemplated hereby
         and thereby. The execution and delivery by the Buyer of this Agreement
         and the consummation of the transactions contemplated hereby, have
         been, and on the Closing Date will have been, duly authorized by all
         requisite corporate action of the Buyer. The Buyer has duly executed
         and delivered this Agreement and the Escrow Agreement and on the
         Closing Date will have duly executed and delivered the Collateral
         Agreements to which it is a party. This Agreement and the Escrow
         Agreement are, and on the Closing Date each of the Collateral
         Agreements to which the Buyer is a party will be, valid and legally
         binding obligations of the Buyer, enforceable against the Buyer in
         accordance with their respective terms.

                  (b)      SEC Reports; Financial Statements. The Buyer has duly
         filed all reports (the "SEC Reports") to be filed by it with the
         Securities Exchange Commission (the "SEC") under the Securities Act of
         1933 and the Securities Exchange Act of 1934, as

                                       13



         amended, and no such report, nor any report sent to the Buyer's
         shareholders generally, contains any untrue statement of material fact
         or omits to state any material fact required to be stated therein or
         necessary to make the statements in such report, in light of the
         circumstances under which they were made, not misleading at the time
         such reports were filed. The consolidated financial statements of the
         Buyer included in the SEC Reports complied as to form in all material
         respects with applicable accounting requirements and the published
         rules and regulations of the SEC in respect thereof and fairly
         presented, in conformity with generally accepted accounting principles
         on a consistent basis (except as indicated in the notes thereto), the
         consolidated financial position of the Buyer and its consolidated
         subsidiaries, in each case as of the dates thereof and their
         consolidated results of operations and cash flows for the periods then
         ended (subject, in the case of unedited interim financial statements,
         to the absence of certain footnote disclosure and to normal year-end
         adjustments). Except as set forth in the SEC Reports, the Buyer has no
         material liabilities, contingent or otherwise, other than (i)
         liabilities incurred in the ordinary course of business, and (ii)
         obligations under contracts and commitments incurred in the ordinary
         course of business, which, in both cases, individually or in the
         aggregate, are not material to the financial condition or operating
         results of the Buyer and its subsidiaries taken as a whole.

                  (c)      No Conflicts, etc. The execution, delivery and
         performance by the Buyer of this Agreement and each of the Collateral
         Agreements to which it is a party, and the consummation of the
         transactions contemplated thereby, do not and will not conflict with or
         result in a violation of or under (with or without the giving of notice
         or the lapse of time, or both) (i) the certificate of incorporation or
         bylaws or other organizational documents of the Buyer, (ii) any
         Applicable Law applicable to the Buyer or any of its affiliates or any
         of its properties or assets or (iii) any contract, agreement or other
         instrument applicable to the Buyer or any of its affiliates or any of
         its properties or assets, except, in the case of clause (iii), for
         violations and defaults that, individually and in the aggregate, have
         not and will not materially impair the ability of the Buyer to perform
         its obligations under this Agreement or under any of the Collateral
         Agreements to which it is a party. No governmental approval or other
         governmental consent is required to be obtained or made by the Buyer in
         connection with the execution and delivery of this Agreement or the
         Collateral Agreements or the consummation of the transactions
         contemplated thereby.

                  (d)      Litigation. Except as set forth in the SEC Reports
         and for routine matters in the ordinary course of business, there is no
         action, claim, suit or proceeding pending, or to the Buyer's knowledge
         threatened, by or against or affecting the Buyer in connection with or
         relating to the transactions contemplated by this Agreement or of any
         action taken or to be taken in connection herewith or the consummation
         of the transactions contemplated hereby.

                  (e)      Capitalization. As of June 30, 2002, the authorized
         capital stock of the Buyer consists of: (i) 20,000,000 shares of common
         stock, par value $0.01 per share (the "Common Stock"), of which
         9,329,647 shares are issued and outstanding, and (ii) 5,000,000 shares
         of preferred stock, par value $0.01 per share (the "Preferred Stock"),
         no shares of which are outstanding. All of the issued and outstanding
         Common Stock have been validly issued, and are duly authorized, fully
         paid, non-assessable and free of

                                       14



         preemptive rights. As of June 30, 2002, 3,000,000 shares of the Common
         Stock were available for issuance under the Buyer's option plans, of
         which approximately 1,465,210 were issuable upon or otherwise
         deliverable in connection with the exercise of options outstanding on
         such date. Except as set forth above, there are no outstanding (i)
         shares of capital stock or other voting securities of the Buyer; (ii)
         securities of the Buyer convertible into or exchangeable for shares of
         capital stock or voting securities of the Buyer; (iii) options or other
         rights to acquire from the Buyer and no obligations of the Buyer to
         issue, any capital stock, voting securities, or securities convertible
         into or exchangeable for capital stock or voting securities of the
         Buyer; or (iv) equity equivalents, interests in the ownership or
         earnings of the Buyer, or other similar rights (including stock
         appreciation rights).

                  (f)      Issuance of Stock. Based upon Thatcher's
         representations set forth in Section 4.1(n), the issuance of the Common
         Stock Consideration and the Preferred Stock Consideration are exempt
         from the registration requirements of any applicable state and federal
         securities laws, and neither the Buyer nor any authorized agent acting
         on its behalf will take any action hereafter that would cause the loss
         of such exemption. The shares of the Common Stock Consideration and the
         Preferred Stock Consideration to be issued hereunder, and the shares of
         Common Stock upon the conversion of the Preferred Stock Consideration
         when issued, will be validly issued, fully paid and nonassessable, and
         will be free of restrictions on transfer other than restrictions on
         transfer under the Stockholders Agreement and under applicable state
         and federal securities laws.

                  (g)      Brokers, Finders, etc. All negotiations relating to
         this Agreement and the transactions contemplated hereby have been
         carried on without the participation of any Person acting on behalf of
         the Buyer in such manner as to give rise to any valid claim against the
         Sellers for any brokerage or finder's commission, fee or similar
         compensation.

                  (h)      Knowledge of Buyer. Buyer is not aware of any facts
         or circumstances, or any items that are not listed by the Sellers in
         any schedules hereto, that would serve as the basis for a claim by
         Buyer against any of the Sellers based upon a breach of any
         representations and warranties of any of the Sellers contained in this
         Agreement or breach of any of the Sellers' covenants or agreements to
         be performed by any of them at or prior to Closing.

                                   ARTICLE V
                              CONDITIONS PRECEDENT

         5.1.     Conditions to Obligations of Each Party. The obligations of
the parties to consummate the transactions contemplated hereby shall be subject
to the fulfillment on or prior to the Closing Date of the following conditions:

                  (a)      No Injunction, etc. Consummation of the transactions
         contemplated hereby shall not have been restrained, enjoined or
         otherwise prohibited by any Applicable Law, including any order,
         injunction, decree or judgment of any court or other governmental
         authority. No court or other governmental authority shall have
         determined any Applicable Law to make illegal the consummation of the
         transactions contemplated

                                       15



         hereby or the Collateral Agreements, and no proceeding with respect to
         the application of any such Applicable Law to such effect shall be
         pending.

                  (b)      Average Closing Price. The average closing price, as
         quoted on the Nasdaq Stock Market, for the Common Stock for the thirty
         (30) days preceding the Closing Date shall be equal to or greater than
         $2.62 per share.

         5.2.     Conditions to Obligations of the Buyer. The obligations of the
Buyer to consummate the transactions contemplated hereby shall be subject to the
fulfillment (or waiver by the Buyer) on or prior to the Closing Date of the
following additional conditions, which the Sellers agree to use reasonable good
faith efforts to cause to be fulfilled:

                  (a)      Representations, Performance. The representations and
         warranties of the Sellers contained in this Agreement and in the
         Collateral Agreements made pursuant to Section 4.1 (i) shall be true
         and correct in all respects (in the case of any representation or
         warranty containing any materiality qualification) or in all material
         respects (in the case of any representation or warranty without any
         materiality qualification) at and as of the date hereof, and (ii) shall
         be repeated and shall be true and correct in all respects (in the case
         of any representation or warranty containing any materiality
         qualification) or in all material respects (in the case of any
         representation or warranty without any materiality qualification) on
         and as of the Closing Date with the same effect as though made on and
         as of the Closing Date. The Sellers shall have duly performed and
         complied in all material respects with all agreements and conditions
         required by this Agreement and each of the Collateral Agreements to be
         performed or complied with by it prior to or on the Closing Date.

                  (b)      Closing Deliveries. Thatcher and TEVA, as the case
         may be, shall have delivered to the Buyer at the Closing the following:

                           (i)      the executed Assignment and Assumption
         Agreement, in the form attached hereto as Exhibit D (the "Assignment
         and Assumption Agreement");

                           (ii)     the executed Stockholders Agreement, in the
         form attached hereto as Exhibit E (the "Stockholders Agreement");

                           (iii)    the Property Lease Agreement, in the form
         attached hereto as Exhibit F (the "Lease Agreement"), in connection
         with the property located at 515 Beaver Street, Flagstaff, Arizona;

                           (iv)     certified resolutions of TEVA'S board of
         Directors and sole shareholder approving these transactions;

                           (v)      a Certificate of Amendment to TEVA'S
         corporate name deleting "Teva" from its name;

                           (vi)     the Employment Agreements;

                           (vii)    the Non-Competition Agreement attached
         hereto as Exhibit H (the "Non-Competition Agreement");

                                       16



                           (viii)   any third party consents set forth in
         Schedule 4.1(b); and

                           (ix)     the Intercreditor and Subordination
         Agreement to be executed by Thatcher, the Buyer and Comerica Bank and
         the Buyer's mezzanine lender, in the form attached hereto as Exhibit I
         (the "Subordination Agreement").

         5.3.     Conditions to Obligations of the Sellers. The obligation of
the Sellers to consummate the transactions contemplated hereby shall be subject
to the fulfillment (or waiver by the Sellers), on or prior to the Closing Date,
of the following additional conditions, which the Buyer agrees to use reasonable
good faith efforts to cause to be fulfilled.

                  (a)      Representations, Performance, etc. The
         representations and warranties of the Buyer contained in this Agreement
         and the Collateral Agreements in Section 4.2 (i) shall be true and
         correct in all respects (in the case of any representation or warranty
         containing any materiality qualification) or in all material respects
         (in the case of any representation or warranty without any materiality
         qualification) at and as of the date hereof and (ii) shall be repeated
         and shall be true and correct in all respects (in the case of any
         representation or warranty containing any materiality qualification) or
         in all material respects (in the case of any representation or warranty
         without any materiality qualification) on and as of the Closing Date
         with the same effect as though made at and as of such time. The Buyer
         shall have duly performed and complied in all material respects with
         all agreements and conditions required by this Agreement and the
         Collateral Agreements to be performed or complied with by it prior to
         or on the Closing Date. The Buyer shall have delivered to the Sellers a
         certificate, dated the Closing Date and signed by its duly authorized
         officer, to the foregoing effect.

                  (b)      Closing Deliveries. Thatcher and TEVA, as the case
         may be, shall have received from the Buyer the following:

                           (i)      the Purchase Price, including the Cash, the
         executed Note, the executed Stock Option Agreement, and the stock
         certificate(s) representing the Preferred Stock Consideration and the
         Common Stock Consideration;

                           (ii)     the executed Assignment and Assumption
         Agreement;

                           (iii)    the executed Stockholders Agreement;

                           (iv)     the executed Lease Agreement;

                           (v)      the Employment Agreements;

                           (vi)     the Subordination Agreement; and

                           (vii)    the Non-Competition Agreement.

                  (c)      Certificate of Designation. The Buyer shall have
         filed with the Delaware Secretary of State the Certificate of
         Designation.

                                       17



                  (d)      Corporate Proceedings. All corporate proceedings of
         the Buyer in connection with this Agreement and the Collateral
         Agreements and the transactions contemplated thereby, and all documents
         and instruments incident thereto, shall be reasonably satisfactory in
         substance and form to the Sellers, and their counsel, and the Sellers
         and their counsel shall have received all such documents and
         instruments, or copies thereof, certified if requested, as may be
         reasonably requested.

                                    ARTICLE VI
                                    COVENANTS

         6.1.     Covenants of the Sellers.

                  (a)      Further Assurances. Following the Closing, the
         Sellers shall, from time to time, execute and deliver such additional
         instruments, documents, conveyances or assurances and take such other
         actions as shall be necessary, or otherwise reasonably requested by the
         Buyer, to confirm and assure the rights and obligations provided for in
         this Agreement and in the Collateral Agreements and render effective
         the consummation of the transactions contemplated thereby.

                  (b)      Conduct of Business Prior to Closing.

                  During the period prior to the Closing, the Sellers will
operate the Business only in the ordinary course consistent with past practices.
Without limiting the generality of the foregoing, the Sellers will:

                           (i)      use commercially reasonable efforts to: (A)
         preserve intact the present business organization and reputation and
         goodwill of the Business, (B) keep available (subject to dismissals and
         retirements in the ordinary course of business consistent with past
         practice) the services of the Sellers' Employees, (C) maintain the
         Assets in good working order and condition, ordinary wear and tear
         excepted, and maintain all of the Intellectual Property Assets, (D)
         maintain the good will of customers, suppliers, lenders and other
         persons to whom the Sellers sell goods or provide services or with whom
         the Sellers otherwise have significant business relationships in
         connection with the Business, (E) continue all current sales, marketing
         and promotional activities relating to the Business and (F) not dispose
         of, encumber or license any of its Intellectual Property Assets;

                           (ii)     except to the extent required by applicable
         law, (A) cause the Business and records to be maintained in the usual,
         regular and ordinary manner and (B) not permit any material change in
         any pricing, investment, accounting, financial reporting, inventory,
         credit, allowance, practice or policy of the Sellers that would
         adversely affect the Business, the Assets, the Intellectual Property
         Assets or the Assumed Liabilities;

                           (iii)    use commercially reasonable efforts to
         maintain in full force and effect until the Closing substantially the
         same levels of coverage as the insurance;

                           (iv)     comply, in all material respects, with all
         laws applicable to the Business and promptly following receipt thereof
         to give the Buyer copies of any notice

                                       18



         received from any party or other person alleging any violation of any
         such law or order; and

                           (v)      proceed to resolve all Intellectual Property
         Matters in the ordinary course of business; and

                           (vi)     comply with the other terms of this
         Agreement.

         6.2.     Covenants of the Buyer.

                  (a)      Further Assurances. Following the Closing, the Buyer
         shall cause it and its affiliates to, from time to time, execute and
         deliver such additional instruments, documents, conveyances or
         assurances and take such other actions as shall be necessary, or
         otherwise reasonably requested by the Sellers, to confirm and assure
         the rights and obligations provided for in this Agreement and in the
         Collateral Agreements and render effective the consummation of the
         transactions contemplated thereby.

                  (b)      Liability for Transfer Expenses, Costs, and Taxes.
         The Buyer shall be responsible for the timely payment of, and the Buyer
         shall indemnify and hold harmless the Sellers for, from and against,
         all sales, use, value added, documentary, stamp, registration,
         transfer, conveyance, excise, recording, license and other similar
         expenses, costs, taxes and fees ("Transfer Expenses"), arising out of
         or in connection with or attributable to the transactions effected
         pursuant to this Agreement and the Collateral Agreements, including,
         without limitation, any Transfer Expenses associated with the transfer
         and assignment of Intellectual Property Assets from Thatcher to the
         Buyer.

                  (c)      Assumption of Intellectual Property Matters. The
         Buyer acknowledges that it is aware of all of the currently pending
         opposition and cancellation actions in connection with the Intellectual
         Property Assets set forth in Schedule 4.1(e) and of the possibility of
         future oppositions, cancellations, challenges by third parties
         (including, without limitation, pirates), contests or other disputes
         arising with respect to or otherwise relating in any way to the
         Intellectual Property Assets (collectively, the "Intellectual Property
         Matters"). The Buyer agrees that, as of the Closing, the Buyer shall
         assume and be responsible for all of the Intellectual Property Matters.

                  (d)      Employee Matters.

                           (i)      Effective as of the Closing Date, the Buyer
                  agrees to offer to retain those employees employed by the
                  Sellers who are actively employed at the Closing (including
                  those employees, if any, on sick leave or short-term leave of
                  absence as of the Closing), on terms and conditions no less
                  favorable than those provided to similarly situated employees
                  of the Buyer. Each such employee who accepts employment with
                  the Buyer will hereinafter be referred to as a "Transferred
                  Employee."

                           (ii)     With respect to employee pension, welfare
                  and fringe benefits provided by the Buyer to Transferred
                  Employees after the Closing, (A) the Buyer will provide that
                  service with the Sellers will be credited as service for
                  purposes of the Buyer's plans, policies, programs, agreements
                  and arrangements, and will

                                       19



                  be recognized for purposes of participation, eligibility and
                  vesting under the Buyer's plans, policies, programs,
                  agreements and arrangements and (B) the Buyer will, subject to
                  the coverage restrictions of the Buyer's benefit providers,
                  cause its benefit providers to waive all waiting periods and
                  pre-existing condition requirements under any plans that have
                  any such requirements or restrictions, and to credit
                  Transferred Employees under the Buyer's plans for any
                  co-payments or deductibles actually paid by such employees
                  under the Sellers' plans during the calendar year in which the
                  Closing occurs.

                           (iii)    The Buyer shall be responsible for
                  obligations relating to or arising in connection with the
                  requirements of Section 4980B of the Code to provide
                  continuation of health care coverage.

                  (e)      Customer Credits and Returns. The Buyer shall be
         responsible for any and all existing credit balances, accounts payable,
         liabilities, credits, or other amounts owed to customers of the
         Business prior to and as of the Closing Date, including, without
         limitation, those arising from (i) gift cards issued by Teva or (ii)
         products returned by customers (collectively, the "Customer Credits").

                  (f)      Email Address. The Buyer agrees that Thatcher shall
         retain any and all interest and right to the email address
         "MThatcher@teva.com" (the "Retained Email Address") so long as Buyer
         owns the "Teva" domain. The Buyer agrees that, at its expense and as
         long as the "Teva" domain is controlled by Buyer, it will make
         available for Thatcher's use the Retained Email Address, maintain,
         service and take all reasonable actions to ensure Thatcher's full use
         and right to the Retained Email Address. If Buyer sells the "Teva"
         domain, Thatcher shall relinquish its interest in the Retained Email
         Address.

                  (g)      Lateral Control Footwear. The Buyer agrees that
         notwithstanding anything in this Agreement to the contrary, in the
         event that the Buyer does not offer for sale by June 30, 2006, any
         closed-end footwear incorporating Thatcher's "lateral control system"
         (the "LC Technology") which is designed in part to provide agility and
         lateral control support, ownership of the LC Technology with respect to
         any closed-end footwear shall immediately and automatically revert back
         to Thatcher without any further action by the parties.

                  (h)      Retention of and Access to Records. After the Closing
         Date, the Buyer shall provide the Sellers and their representatives
         reasonable access to all of the Records during normal business hours,
         and shall provide the Sellers thirty (30) day's prior written notice of
         any change in the location of the Records. The Buyer shall not dispose
         of any of the Records without first giving notice to the Sellers
         thereof and permitting the Sellers to retain or copy such Records as
         they may select.

                                   ARTICLE VII
                                   TERMINATION

         7.1.     Termination. This Agreement may be terminated at any time
prior to the Closing Date:

                                       20



                  (a)      by the written agreement of the Buyer and the
         Sellers;

                  (b)      by the Sellers by written notice to the Buyer if the
         transactions contemplated hereby shall not have been consummated
         pursuant hereto by 5:00 p.m. Phoenix time on January 10, 2003;

                  (c)      by the Sellers by written notice to the Buyer if any
         of the conditions set forth in Section 5.1 or 5.3 above shall not have
         been fulfilled by 5:00 p.m. Phoenix time on January 10, 2003, unless
         such failure shall be due to the failure of the Sellers to perform or
         comply with any of the covenants, agreements or conditions hereof to be
         performed or complied with by it prior to the Closing;

                  (d)      by the Buyer by written notice to the Sellers if any
         of the conditions set forth in Section 5.1 or 5.2 above shall not have
         been fulfilled by 5:00 p.m. Phoenix time on January 10, 2003, unless
         such failure shall be due to the failure of the Buyer to perform or
         comply with any of the covenants, agreements or conditions hereof to be
         performed or complied with by it prior to the Closing; or

                  (e)      if a Force Majeure event occurs prior to the Closing
         Date, either the Buyer or the Sellers, at their option, can extend the
         Closing Date for up to ninety (90) additional days. If the transaction
         does not occur because of Force Majeure, then neither Section 7.2(b)
         nor (c) below shall apply.

         7.2.     Effect of Termination.

                  (a)      In the event of the termination of this Agreement
         pursuant to Section 7.1(a), this Agreement shall become void and have
         no effect, without any liability to any Person in respect hereof or of
         the transactions contemplated hereby on the part of any party hereto,
         or any of its directors, officers, employees, agents, consultants,
         representatives, advisors, stockholders or affiliates, except as
         specified in Section 9.2 and except for any liability resulting from
         such party's breach of this Agreement.

                  (b)      In the event of the termination of this Agreement
         pursuant to Section 7.1(b) and (c), the Sellers' sole remedy shall be
         to receive the Escrowed Funds, which amounts shall be immediately
         released to Thatcher by the Escrow Agent upon the written request of
         Thatcher, pursuant to the terms of the Escrow Agreement.

                  (c)      In the event of the termination of this Agreement
         pursuant to Section 7.1(d), the Buyer's sole remedy shall be to receive
         the Escrowed Funds and to offset from the royalty amounts owed to
         Thatcher under Article 5 of the License Agreement, up to an aggregate
         amount of $1,000,000.

                  (d)      In the event of the termination of this Agreement
         pursuant to Section 7.1, unless otherwise agreed upon by Thatcher and
         the Buyer, (i) the License Agreement and (ii) the Intellectual Property
         Option Agreement, dated as of June 7, 1999, executed by and between
         Thatcher and the Buyer, shall remain in full force and effect.

                                       21



                                  ARTICLE VIII
                                 INDEMNIFICATION

         8.1.     Indemnification.

                  (a)      By the Sellers. Each of the Sellers covenants and
         agrees to jointly and severally defend, indemnify and hold harmless the
         Buyer, its officers, directors, employees, agents, advisers,
         representatives and affiliates (collectively, the "Buyer Indemnitees")
         for, from and against, and pay or reimburse the Buyer Indemnitees for,
         any and all claims, liabilities, obligations, losses, fines, costs,
         royalties, proceedings, deficiencies or damages (whether absolute,
         accrued, conditional or otherwise and whether or not resulting from
         third party claims), including out-of-pocket expenses and reasonable
         attorneys' and accountants' fees incurred in the investigation or
         defense of any of the same or in asserting any of their respective
         rights hereunder (collectively, "Losses"), resulting from or arising
         out of:

                           (i)      any inaccuracy of any representation or
         warranty when made or deemed made by the Sellers herein or under any
         Collateral Agreement or in connection herewith or therewith;

                           (ii)     any failure of the Sellers to perform any
         covenant or agreement hereunder or under any Collateral Agreement or
         fulfill any other obligation in respect hereof or of any Collateral
         Agreement;

                           (iii)    any Excluded Assets; and

                           (iv)     any Excluded Liabilities;

         provided, however, that none of the Sellers shall be liable for any
         Losses unless and until the aggregate amount of all claims for Losses
         against the Sellers exceeds $50,000.00 and then only to the extent such
         aggregate amount exceeds $50,000.00; provided further, that the
         Sellers' combined liability under this Section shall be limited to the
         aggregate amount of $10,000,000.00.

                  (b)      By the Buyer. The Buyer covenants and agrees to
         defend, indemnify and hold harmless each of the Sellers and their
         respective officers, directors, employees, agents, advisers,
         representatives and affiliates (collectively, the "Seller Indemnitees")
         for, from and against, and pay or reimburse the Seller Indemnitees for,
         any and all Losses resulting from or arising out of:

                           (i)      any inaccuracy in any representation or
         warranty by the Buyer when made or deemed made or contained in this
         Agreement or any Collateral Agreement or in connection therewith;

                           (ii)     any failure of the Buyer to perform any
         covenant or agreement made or contained in this Agreement or any
         Collateral Agreement or fulfill any other obligation in respect
         thereof;

                           (iii)    the Assumed Liabilities;

                                       22



                           (iv)     the Intellectual Property Matters; and

                           (v)      any actions or omissions of the Buyer in
         connection with the operation of the Buyer's business after the
         Closing, including, without limitation, any Losses relating to or
         arising from any Product;

         provided, however, that the Buyer shall not be liable for any Losses
         unless and until the aggregate amount of all claims for Losses against
         the Buyer exceeds $50,000.00, and then only to the extent such
         aggregate amount exceeds $50,000.00;

         provided further, that the Buyer's total liability shall not exceed
         $10,000,000.00.

                  (c)      Indemnification Procedures. In the case of any claim
         asserted by a third party against a party entitled to indemnification
         under this Agreement (the "Indemnified Party"), notice shall be given
         by the Indemnified Party to the party required to provide
         indemnification (the "Indemnifying Party") promptly after such
         Indemnified Party has actual knowledge of any claim as to which
         indemnity may be sought, and the Indemnified Party shall permit the
         Indemnifying Party (at the expense of such Indemnifying Party) to
         assume the defense of any claim or any litigation resulting therefrom,
         provided that (i) the counsel for the Indemnifying Party who shall
         conduct the defense of such claim or litigation shall be reasonably
         satisfactory to the Indemnified Party, (ii) the Indemnified Party may
         participate in such defense at such Indemnified Party's expense, and
         (iii) the omission by any Indemnified Party to give notice as provided
         herein shall not relieve the Indemnifying Party of its indemnification
         obligation under this Agreement except to the extent that such omission
         results in a failure of actual notice to the Indemnifying Party and
         such Indemnifying Party is materially damaged as a result of such
         failure to give notice. Except with the prior written consent of the
         Indemnified Party, no Indemnifying Party, in the defense of any such
         claim or litigation, shall consent to entry of any judgment or enter
         into any settlement that provides for injunctive or other non-monetary
         relief affecting the Indemnified Party or that does not include as an
         unconditional term thereof the giving by each claimant or plaintiff to
         such Indemnified Party of a release from all liability with respect to
         such claim or litigation. In the event that the Indemnified Party shall
         in good faith determine that the conduct of the defense of any claim
         subject to indemnification hereunder or any proposed settlement of any
         such claim by the Indemnifying Party might be expected to affect
         adversely the ability of the Buyer to conduct its business, or that the
         Indemnified Party may have available to it one or more defenses or
         counterclaims that are inconsistent with one or more of those that may
         be available to the Indemnifying Party in respect of such claim or any
         litigation relating thereto, the Indemnified Party shall have the right
         at all times to take over and assume control over the defense,
         settlement, negotiations or litigation relating to any such claim at
         the sole cost of the Indemnifying Party, provided that if the
         Indemnified Party does so take over and assume control, the Indemnified
         Party shall not settle such claim or litigation without the written
         consent of the Indemnifying Party, such consent not to be unreasonably
         withheld. In the event that the Indemnifying Party does not accept the
         defense of any matter as above provided, the Indemnified Party shall
         have the full right to defend against any such claim or demand and
         shall be entitled to settle or agree to pay in full such claim or
         demand. In any event, the Indemnifying Party and the Indemnified Party
         shall cooperate in the defense of any claim or litigation subject to
         this

                                       23



         Section 7.1 and the records of each shall be available to the other
         with respect to such defense.

                  (d)      Time Limitation. All claims for indemnification under
         Sections 8.1(a) and (b) must be asserted before 5:00 p.m. (Phoenix
         time) on the date of termination of the survival periods set forth in
         Section 9.1.

                  (e)      Exclusive Remedy. The indemnification remedies and
         other remedies provided in this Section 8.1 shall not be deemed to be
         exclusive. Accordingly, the exercise by any Person of any of its rights
         under this Section 8.1 shall not be deemed to be an election of
         remedies and shall not be deemed to prejudice, or to constitute or
         operate as a waiver of, any other right or remedy that such Person may
         be entitled to exercise.

                                   ARTICLE IX
                                  MISCELLANEOUS

         9.1.     Survival of Representations and Warranties, etc. The
representations and warranties contained in this Agreement shall terminate
eighteen (18) months after the Closing Date.

         9.2.     Expenses. Except for the Transfer Expenses set forth in
Section 6.2(b), Thatcher, TEVA and the Buyer shall bear their respective
expenses, costs and fees (including attorneys' fees) in connection with the
transactions contemplated hereby, including the preparation, execution and
delivery of this Agreement and compliance herewith, whether or not the
transactions contemplated hereby shall be consummated.

         9.3.     Severability. If any provision of this Agreement, including
any phrase, sentence, clause, section or subsection is inoperative or
unenforceable for any reason, such circumstances shall not have the effect of
rendering the provision in question inoperative or unenforceable in any other
case or circumstance, or of rendering any other provision or provisions herein
contained invalid, inoperative, or unenforceable to any extent whatsoever.

         9.4.     Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed by first-class, registered or certified mail, return
receipt requested, postage prepaid, or (c) sent by next-day or overnight mail or
delivery or (d) sent by telecopy or telegram.

                           (i)      if to the Buyer,

                                    Deckers Outdoor Corporation
                                    495-A South Fairview Avenue
                                    Goleta, CA 93117
                                    Attn: Chairman
                                    Facsimile: 805-967-7862

                                    with a copy to:

                                       24



                                    Joseph E. Nida
                                    Sheppard Mullin Richter & Hampton, LLP
                                    800 Anacapa Street
                                    Santa Barbara, CA 93101

                           (ii)     if to the Sellers,

                                    Mark Thatcher
                                    1245 Cochran
                                    Flagstaff, AZ 86001

                                    Teva Sport Sandals, Inc.
                                    P.O. Box 968
                                    Flagstaff, AZ 86002

                                    with a copy to:

                                    Snell & Wilmer, LLP
                                    One Arizona Center
                                    Phoenix, AZ 85004
                                    Attn: Terry Roman, Esq.
                                    Facsimile: 602-382-6070

or, in each case, at such other address as may be specified in writing to the
other parties hereto.

         All such notices, requests, demands, waivers and other communications
shall be deemed to have been received (w) if by personal delivery on the day
after such delivery, (x) if by certified or registered mail, on the seventh
business day after the mailing thereof, (y) if by next-day or overnight mail or
delivery, on the day delivered, (z) if by telecopy or telegram, on the next day
following the day on which such telecopy or telegram was sent, provided that a
copy is also sent by certified or registered mail.

         9.5.     Miscellaneous.

                  (a)      Headings. The headings contained in this Agreement
         are for purposes of convenience only and shall not affect the meaning
         or interpretation of this Agreement.

                  (b)      Entire Agreement. This Agreement (including the
         Schedules and Exhibits hereto) and the Collateral Agreements (when
         executed and delivered) constitute the entire agreement and supersede
         all prior agreements and understandings, both written and oral, between
         the parties with respect to the subject matter hereof.

                  (c)      Counterparts. This Agreement may be executed in
         several counterparts, each of which shall be deemed an original and all
         of which shall together constitute one and the same instrument.

                  (d)      Governing Law, etc. This Agreement shall be governed
         in all respects, including as to validity, interpretation and effect,
         by the internal laws of the State of Arizona, without giving effect to
         the conflict of laws rules thereof to the extent that the

                                       25



         application of the law of another jurisdiction would be required
         thereby. The Buyer and the Sellers hereby irrevocably submit to the
         jurisdiction of the State of Arizona, or, if applicable, the United
         States District Court for the District of Arizona, agree that venue for
         any actions or proceedings shall properly lie in Maricopa County,
         Arizona, or if applicable, the District of Arizona, and hereby waive,
         and agree not to assert, as a defense in any action, suit or proceeding
         for the interpretation or enforcement hereof or of any such document,
         that it is not subject thereto or that such action, suit or proceeding
         may not be brought or is not maintainable in said courts or that the
         venue thereof may not be appropriate or that this Agreement or any of
         such document may not be enforced in or by said courts, and the parties
         hereto irrevocably agree that all claims with respect to such action or
         proceeding shall be heard and determined in such a State or Federal
         court. The Buyer and the Sellers hereby consent to and grant any such
         court jurisdiction over the person of such parties and over the subject
         matter of any such dispute and agree that mailing of process or other
         papers in connection with any such action or proceeding in the manner
         provided in Section 9.4, or in such other manner as may be permitted by
         law, shall be valid and sufficient service thereof.

                  (e)      Binding Effect. This Agreement shall be binding upon
         and inure to the benefit of the parties hereto and their respective
         heirs, successors and permitted assigns.

                  (f)      Assignment. This Agreement shall not be assignable or
         otherwise transferable by any party hereto without the prior written
         consent of the other party hereto.

                  (g)      No Third Party Beneficiaries. Except as provided in
         Section 8.1 with respect to indemnification of Indemnified Parties
         hereunder, nothing in this Agreement shall confer any rights upon any
         person or entity other than the parties hereto and their respective
         heirs, successors and permitted assigns.

                  (h)      Amendment; Waivers, etc. No amendment, modification
         or discharge of this Agreement, and no waiver hereunder, shall be valid
         or binding unless set forth in writing and duly executed by the party
         against whom enforcement of the amendment, modification, discharge or
         waiver is sought. Any such waiver shall constitute a waiver only with
         respect to the specific matter described in such writing and shall in
         no way impair the rights of the party granting such waiver in any other
         respect or at any other time. Neither the waiver by any of the parties
         hereto of a breach of or a default under any of the provisions of this
         Agreement, nor the failure by any of the parties, on one or more
         occasions, to enforce any of the provisions of this Agreement or to
         exercise any right or privilege hereunder, shall be construed as a
         waiver of any other breach or default of a similar nature, or as a
         waiver of any of such provisions, rights or privileges hereunder. The
         rights and remedies herein provided are cumulative and are not
         exclusive of any rights or remedies that any party may otherwise have
         at law or in equity.

                  [Remainder of Page Intentionally Left Blank]

                                       26



         IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.

                                        BUYER:

                                        DECKERS OUTDOOR CORPORATION,
                                        a Delaware corporation

                                        By: /s/ Douglas B. Otto
                                        ------------------------
                                        Name:  Douglas B. Otto
                                        Title: Chief Executive Officer

                                        SELLERS:

                                        TEVA SPORT SANDALS, INC.,
                                        an Arizona corporation

                                        By: /s/Mark Thatcher
                                        ---------------------
                                        Name:  Mark Thatcher
                                        Title: President and Chief Executive
                                               Officer

                                        /s/ Mark Thatcher
                                        ------------------
                                        MARK THATCHER

                                       27

EX-2.2

                                                                      PRIVILEGED

- --------------------------------------------------------------------------------
Confidential treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as *****. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.
- --------------------------------------------------------------------------------


                                 October 8, 2002

                           [SNELL & WILMER LETTERHEAD]

Joseph E. Nida, Esq.
Sheppard Mullin Richter & Hampton, LLP
800 Anacapa Street
Santa Barbara, CA 93101

      Re:   Asset Purchase Agreement, by and among Mark Thatcher, Teva Sport
            Sandals, Inc., and Deckers Outdoor Corporation (the "Agreement")

         This Disclosure Schedule ("Schedule") is being delivered to you, as
counsel to Deckers Outdoor Corporation, in connection with the Agreement. Unless
the context otherwise requires, all capitalized terms used in this Schedule
shall have the respective meanings assigned to them in the Agreement. The
representations and warranties of the Sellers set forth in the Agreement are
hereby excepted to the extent set forth hereafter.

SCHEDULE 1.1(i).        Copyrights.




  COUNTRY                DOCKET #       TYPE                      MATTER             REGISTRATION NO.
  -------                --------       ----                      ------             ----------------
                                                                        
United States           41919.0114       CP       70                                Reg. No. VA 1,123,717
United States           41919.0001       CP       ABSTRACT                          Reg. No. VA 881,368
United States           41919.0085       CP       ABYSS                             Reg. No. VA 1,049,603
United States           41919.0002       CP       AEGEAN BLUE                       Reg. No. VA 881,367
United States           41919.0005       CP       ANASAZI                           Reg. No. VA 992,455
United States           41919.0003       CP       ARAPAHOE                          Reg. No. VA 992,456
United States           41919.0004       CP       ARGENTINA                         Reg. No. VA 992,457
United States           41919.0006       CP       ARROWS BLUE                       Reg. No. VA 881,366
United States           41919.0007       CP       AZTEC                             Reg. No. VA 846,052
United States           41919.0008       CP       BALI                              Reg. No. VA 992,458
United States           41919.0086       CP       BAMBOO                            Reg. No. VA 1,049,608
United States           41919.0009       CP       BARBED WIRE                       Reg. No. VA 924,270
United States           41919.0137       CP       BATIK                             Reg. No. VA 1,123,561
United States           41919.0010       CP       BELT                              Reg. No. VA 924,250
United States           41919.0011       CP       BIRDIE                            Reg. No. VA 924,269
United States           41919.0012       CP       BLACK SPIRAL                      Reg. No. VA 768,780
United States           41919.0013       CP       BLUE BATIK                        Reg. No. VA 768,788
United States           41919.0014       CP       BLUE FROG                         Reg. No. VA 846,048
United States           41919.0087       CP       BONEFISH                          Reg. No. VA 1,049,609
United States           41919.0015       CP       BRAID                             Reg. No. VA 992,459


                                                                      PRIVILEGED




  COUNTRY                DOCKET #       TYPE                      MATTER             REGISTRATION NO.
  -------                --------       ----                      ------             ----------------
                                                                        
United States           41919.0016       CP       BREAKERS                          Reg. No. VA 924,249
United States           41919.0017       CP       BRIGHT DOMINO                     Reg. No. VA 846,050
United States           41919.0018       CP       BRIGHT PYRAMID                    Reg. No. VA 768,789
United States           41919.0019       CP       BROTHERS                          Reg. No. VA 768,782
United States                            CP       BUDS                              Reg. No. VA 1,123,556
United States           41919.0020       CP       BUMBLE BEE                        Reg. No. VA 924,248
United States           41919.0021       CP       BUTTERFLY                         Reg. No. VA 992,460
United States           41919.0139       CP       CAMO                              Reg. No. VA 1,123,553
United States           41919.0022       CP       CAMOUFLAGE                        Reg. No. VA 881,365
United States           41919.0135       CP       CHEVRON                           Reg. No. VA 1,123,547
United States           41919.0023       CP       COLORADO                          Reg. No. VA 992,461
United States           41919.0083       CP       COLUMBINE                         Reg. No. VA 1,025,795
United States           41919.0024       CP       COMET                             Reg. No. VA 992,462
United States           41919.0088       CP       CORNFLOWER                        Reg. No. VA 1,049,604
United States           41919.0109       CP       COSMOS                            Reg. No. VA 1,085,260
United States           41919.0089       CP       CURRENTS                          Reg. No. VA 1,049,594
United States           41919.0025       CP       DECO                              Reg. No. VA 881,364
United States           41919.0128       CP       DEE-ORE SUNSET                    Reg. No. VA 1,123,554
United States           41919.0026       CP       DIAGONAL                          Reg. No. VA 881,363
United States           41919.0090       CP       DIAMOND                           Reg. No. VA 1,049,593
United States           41919.0027       CP       DRAGON                            Reg. No. VA 881,153
United States           41919.0122       CP       DRAGONFLY                         Reg. No. VA 1,123,544
United States           41919.0028       CP       EDGE                              Reg. No. VA 924,254
United States           41919.0029       CP       EGYPTIAN                          Reg. No. VA 924,247
United States           41919.0120       CP       EILAT                             Reg. No. VA 1,123,546
United States           41919.0030       CP       EXOFISH                           Reg. No. VA 992,463
United States           41919.0031       CP       FILIGREE TEAL                     Reg. No. VA 881,152
United States           41919.0032       CP       FISH                              Reg. No. VA 881,151
United States           41919.0112       CP       FLIGHT                            Reg. No. VA 1,085,258
United States           41919.0111       CP       FLOWERS                           Reg. No. VA 1,085,257
United States           41919.0091       CP       FOLK                              Reg. No. VA 1,049,595
United States           41919.0138       CP       GEO TATTOO                        Reg. No. VA 1,123,559
United States           41919.0129       CP       GRIP
United States           41919.0033       CP       GUATEMALA                         Reg. No. VA 893,327
United States           41919.0034       CP       HAWAII                            Reg. No. VA 924,246
United States           41919.0136       CP       HAWAII 2002                       Reg. No. VA 1,123,560
United States           41919.0092       CP       HAWON                             Reg. No. VA 1,049,596
United States           41919.0093       CP       HEX                               Reg. No. VA 1,049,597
United States           41919.0035       CP       HIBISCUS                          Reg. No. VA 992,464
United States           41919.0119       CP       HOCKNEY                           Reg. No. VA 1,123,548
United States           41919.0036       CP       HYDROGLYPHICS                     Reg. No. VA 924,265
United States           41919.0037       CP       IGUANA                            Reg. No. VA 992,465



                                       -2-

                                                                      PRIVILEGED




  COUNTRY                DOCKET #       TYPE                      MATTER             REGISTRATION NO.
  -------                --------       ----                      ------             ----------------
                                                                        
United States           41919.0038       CP       INCA                              Reg. No. VA 992,466
United States           41919.0116       CP       ISLAND                            Reg. No. VA 1,123,551
United States           41919.0115       CP       JAPANESE FLOWER                   Reg. No. VA 1,123,716
United States           41919.0039       CP       KID SPIRAL                        Reg. No. VA 768,779
United States           41919.0040       CP       LADY BUG                          Reg. No. VA 924,245
United States           41919.0041       CP       LAVA                              Reg. No. VA 924,244
United States           41919.0117       CP       LEAVES                            Reg. No. VA 1,123,550
United States           41919.0131       CP       LIGHTNING                         Reg. No. VA 1,123,564
United States           41919.0130       CP       LIQUID                            Reg. No. VA 1,123,565
United States           41919.0042       CP       LIZARD                            Reg. No. VA 768,786
United States           41919.0094       CP       MALACCA                           Reg. No. VA 1,049,598
United States           41919.0095       CP       MALAY                             Reg. No. VA 1,049,602
United States           41919.0043       CP       MAMMOTH                           Reg. No. VA 992,467
United States           41919.0044       CP       MARLIN                            Reg. No. VA 924,243
United States           41919.0096       CP       MINERAL                           Reg. No. VA 1,049,601
United States           41919.0097       CP       MOSAIC                            Reg. No. VA 1,049,599
United States           41919.0045       CP       MOZAMBIQUE                        Reg. No. VA 768,783
United States           41919.0098       CP       MULTI                             Reg. No. VA 1,049,607
United States           41919.0046       CP       NATIVE SHIELD                     Reg. No. VA 768,785
United States           41919.0047       CP       NAVAJO                            Reg. No. VA 846,054
United States           41919.0048       CP       NEW AZTEC                         Reg. No. VA 924,242
United States           41919.0099       CP       NEW DRAGON                        Reg. No. VA 1,049,600
United States           41919.0049       CP       NEW SUN & MOON                    Reg. No. VA 924,266
United States           41919.0124       CP       NIGHT                             Reg. No. VA 1,123,558
United States           41919.0050       CP       OPPOSITE                          Reg. No. VA 924,251
United States           41919.0100       CP       PARANG                            Reg. No. VA 1,051,665
United States           41919.0051       CP       PEACOCK                           Reg. No. VA 768,784
United States           41919.0052       CP       PERUVIAN                          Reg. No. VA 881,150
United States           41919.0110       CP       PICTO                             Reg. No. VA 1,085,259
United States           41919.0053       CP       PINK FLOWER POWER                 Reg. No. VA 924,241
United States           41919.0101       CP       PLANET                            Reg. No. VA 1,051,666
United States           41919.0054       CP       PSYCHEDELIC                       Reg. No. VA 846,051
United States           41919.0055       CP       PURPLE VINE                       Reg. No. VA 846,049
United States           41919.0056       CP       PUZZLE                            Reg. No. VA 846,047
United States           41919.0057       CP       Q                                 Reg. No. VA 881,149
United States           41919.0058       CP       QUILT                             Reg. No. VA 846,055
United States           41919.0059       CP       RAPIDS                            Reg. No. VA 992,468
United States           41919.0060       CP       REPHIBIAN                         Reg. No. VA 924,267
United States           41919.0102       CP       RETRO                             Reg. No. VA 1,051,663
United States           41919.0061       CP       RIBBIT                            Reg. No. VA 924,274
United States           41919.0062       CP       ROAD                              Reg. No. VA 924,253
United States           41919.0063       CP       SAILFISH                          Reg. No. VA 924,268



                                       -3-

                                                                      PRIVILEGED




  COUNTRY                DOCKET #       TYPE                      MATTER             REGISTRATION NO.
  -------                --------       ----                      ------             ----------------
                                                                        
United States           41919.0133       CP       SALT                              Reg. No. VA 1,123,563
United States           41919.0064       CP       SCORPION                          Reg. No. VA 846,056
United States           41919.0121       CP       SENUFO                            Reg. No. VA 1,123,545
United States           41919.0065       CP       SERPENT                           Reg. No. VA 768,781
United States           41919.0066       CP       SHADOWS                           Reg. No. VA 992,469
United States           41919.0067       CP       SNAKE                             Reg. No. VA 893,326
United States           41919.0103       CP       SOUND                             Reg. No. VA 1,051,664
United States           41919.0123       CP       SP                                Reg. No. VA 1,123,543
United States           41919.0068       CP       SPIDER                            Reg. No. VA 846,053
United States           41919.0134       CP       STARFISH                          Reg. No. VA 1,123,562
United States           41919.0069       CP       STONEFLY                          Reg. No. VA 881,148
United States           41919.0070       CP       SUN AND MOON BLUE                 Reg. No. VA 881,147
United States           41919.0071       CP       SUNFISH                           Reg. No. VA 924,273
United States           41919.0072       CP       SUNFLOWER                         Reg. No. VA 992,470
United States           41919.0073       CP       TANGO                             Reg. No. VA 924,252
United States           41919.0074       CP       TAPESTRY                          Reg. No. VA 992,451
United States           41919.0075       CP       TATTOO                            Reg. No. VA 768,778
United States           41919.0076       CP       TATTOO U                          Reg. No. VA 881,146
United States           41919.0104       CP       TEC                               Reg. No. VA 1,049,606
United States           41919.0105       CP       TERRA-FI                          Reg. No. VA 1,051,662
United States           41919.0125       CP       TESLA                             Reg. No. VA 1,123,557
United States           41919.0108       CP       TEVA ("TEVA TAN")                 Reg. No. VA 1,041,137
United States           41919.0118       CP       TIE FLOWER                        Reg. No. VA 1,123,549
United States           41919.0077       CP       TRIBAL MASK                       Reg. No. VA 768,787
United States           41919.0078       CP       TRIBE                             Reg. No. VA 924,272
United States           41919.0079       CP       TURTLE                            Reg. No. VA 924,271
United States           41919.0080       CP       TWISTED                           Reg. No. VA 992,452
United States           41919.0106       CP       UNIVERSE                          Reg. No. VA 1,049,605
United States           41919.0127       CP       WATERCOLOR                        Reg. No. VA 1,123,555
United States           41919.0081       CP       WAVE                              Reg. No. VA 992,453
United States           41919.0113       CP       WHIRLPOOL                         Reg. No. VA 1,123,552
United States           41919.0107       CP       Z                                 Reg. No. VA 1,051,667
United States           41919.0132       CP       ZIPPER
United States           41919.0082       CP       ZUMA                              Reg. No. VA 992,454


SCHEDULE 1.1(j).     Domain Names.



Docket No.           Country           Domain Name                               Status
- ----------           -------           -----------                               ------
                                                                        
41919.0400                             ALPSANDALS.COM                            Registered
                                                                                 Renewal Due 8/29/2009
41919.0401                             SPORTSSANDALS.COM                         Registered
                                                                                 Renewal Due 9/11/2009



                                       -4-

                                                                      PRIVILEGED



Docket No.           Country           Domain Name                               Status
- ----------           -------           -----------                               ------
                                                                        
41919.0402                             TEVA.COM                                  Registered
                                                                                 Renewal Due 1/29/2010
41919.0403                             TEVASANDALS.COM                           Registered
                                                                                 Renewal Due 3/7/2010
41919.0404           Singapore         TEVA.COM.SG                               Registered
                                                                                 Renewal Due 12/17/2002
41919.0405           Singapore         TEVASANDALS.COM.SG                        Registered
                                                                                 Renewal Due 12/17/2002
41919.0407           Switzerland       TEVA.CH                                   Registered
                                                                                 Renewal Due
41919.0408                             TEVA.COM.TW                               Transferred from Distributor
                                                                                 Renewal Due 3/13/03
41919.0409                             TEVA.AT                                   Registered
                                                                                 Renewal Due 6/2/2003
41919.0410           Netherlands       TEVA-SANDALS.NL                           Registered
                                                                                 Transferred
                                                                                 Renewal Due
41919.0411                             SPIDERRUBBER.COM                          Registered
                                                                                 Renewal Due 4/12/2011
41919.0412           Portugal          TEVA.COM.PT                               Registered
                                                                                 Renewal Due 6/12/2003
41919.0414           Europe            TEVA-EUROPE.COM                           Registered
                                                                                 Renewal Due 4/12/2011
41919.0415                             GOLFSANDALS.COM                           Registered
                                                                                 Renewal Due 6/29/2010
41919.0416                             TEVA.INFO                                 Registered
                                                                                 Renewal Due 7/28/2006
41919.0417                             TEVASANDALS.INFO                          Registered
                                                                                 Renewal Due 7/28/2006
41919.0418           U.K.              TEVASANDALS.CO.UK                         Registered
                                                                                 Renewal Due 10/25/2003
41919.0419                             TEVATHRIVE.COM                            Registered
                                                                                 Renewal Due 6/26/03
41919.0420                             TEVASANDALS.CH                            Registered
                                                                                 Renewal Due
41919.0421                             TEVA.BIZ                                  Registered
                                                                                 Renewal Due 3/26/04
41919.0422                             TEVASANDALS.BIZ                           Registered
                                                                                 Renewal Due 3/26/04



                                       -5-

                                                                      PRIVILEGED

SCHEDULE 1.1(r).     Marks.



                                                                                                 APPLICATION NO./
COUNTRY              DOCKET #          TYPE                          MATTER                      REGISTRATION NO.
- -------              --------          ----                          ------                      ----------------
                                                                                     
Algeria              31919.0922        TM         TEVA                                           Reg. No. 55,572
                                                  (Class 25--Footwear)
Argentina            31919.0924        TM         TEVA                                           Reg. No. 1.640.236
                                                  (Class 25--Footwear)
Argentina            31919.1424        TM         HAND DESIGN                                    Reg. No. 1.751.329
                                                  (Class 25--Clothing, Footwear, Headgear)
Australia            31919.0901        TM         TEVA                                           Reg. No. A492978
                                                  (Class 25--Footwear)
Australia            31919.1401        TM         HAND DESIGN (Class 25--Clothing, Footwear)     Reg. No. 757963
Australia            31919.8201        TM         TEVA                                           App. No. 898905
                                                  (Classes 9, 18, 24 and 35 all goods)
Australia            31919.8501        TM         TEVA                                           App. No. 895895
                                                  (Class 25 clothing, footwear, headgear)
Bahamas              31919.8539        TM         TEVA                                           App. No. 24029
                                                  (Local class 38 sandals, footwear,
                                                  clothing, beach towels)
Bahamas              31919.9639        TM         TEVA                                           App. No. 24030
                                                  (Local class 50 sunglasses)
Bahrain              31919.8536        TM         TEVA (Sandals)                                 Reg. No. TM 24,995
Belize               31919.8596        TM         TEVA (Class 25)                                App. No.
Benelux              31919.0926        TM         TEVA                                           Reg. No. 508803
                                                  (Class 25--Footwear)
Bolivia              31919.0327        TM         TEVA & HAND DESIGN                             App. No. SM-2257-01
                                                  (Class 25)
Bolivia              31919.9327        TM         TEVA & HAND DESIGN                             App. No. SM-2255-01
                                                  (Class 9)
Bolivia              31919.9427        TM         TEVA & HAND DESIGN                             App. No. SM-2256-01
                                                  (Class 18)
Bolivia              31919.9527        TM         TEVA & HAND DESIGN                             App. No. SM-2254-01
                                                  (Class 24)



                                       -6-

                                                                      PRIVILEGED



                                                                                                 APPLICATION NO./
COUNTRY              DOCKET #          TYPE                          MATTER                      REGISTRATION NO.
- -------              --------          ----                          ------                      ----------------
                                                                                     
Brazil               31919.1428        TM         HAND DESIGN                                    App. No. 820760579
                                                  (Class 25--Clothing, Footwear)
British Virgin       31919.0917        TM         TEVA                                           Reg. No. 1936
Islands                                           (Footwear)
British Virgin       31919.9617        TM         TEVA (stylized)                                Reg. No. 3703
Islands                                           (Local cl. 8, 24, 37, 38)
Canada               31919.0903        TM         TEVA                                           Reg. No. TMA 394,327
                                                  (Footwear)
Canada               31919.1403        TM         HAND DESIGN                                    Reg. No. TMA497,521
                                                  (Clothing, Footwear)
Chile                31919.0933        TM         TEVA                                           App.   No. 196,672
                                                  (Footwear)
Chile                31919.1433        TM         HAND DESIGN                                    Reg. No. 526.929
                                                  (Class 25--Footwear)
Chile                31919.7633        TM         TVAS                                           Reg. No. 577.314
                                                  (Class 25)
China                31919.0934        TM         TEVA                                           Reg. No. 879295
                                                  (Class 25--Clothing, footwear)
China                31919.1434        TM         HAND DESIGN                                    App. No. 2000130200
                                                  (Clothing footwear, headgear, neckties,
                                                  gloves)
China                31919.7734        TM         TEVA (stylized)                                Reg. No. 1648704
                                                  (Class 16)
China                31919.7834        TM         HAND DESIGN                                    Reg. No. 1672830
                                                  (Class 16)
China                31919.8434        TM         TEVA (block ltrs)                              App. No. 3025684
                                                  (Class 9)



                                       -7-

                                                                      PRIVILEGED



                                                                                                 APPLICATION NO./
COUNTRY              DOCKET #          TYPE                          MATTER                      REGISTRATION NO.
- -------              --------          ----                          ------                      ----------------
                                                                                     
China                31919.8634        TM         TEVA (block ltrs)                              App. No. 3025683
                                                  (Class 18)
China                31919.8834        TM         TEVA (block ltrs)                              App. No. 3025682
                                                  (Class 24)
China                31919.8934        TM         TEVA (block ltrs)                              App. No. 3025681
                                                  (Class 35)
Colombia             31919.0935        TM         TEVA (Class 25--Footwear)                      App. No. 98.047.390
Colombia             31919.1435        TM         HAND DESIGN                                    Reg. No. 246916
                                                  (Class 25--Clothing, Footwear)
Community            31919.0305        TM         TEVA & HAND DESIGN                             Reg. No. 1202589
Trademark                                         (Class 25--Clothing, Footwear, Headgear)
Community            31919.1405        TM         HAND DESIGN                                    Reg. No. 592394
Trademark                                         (Class 25--Clothing)
Community            31919.8205        TM         TEVA (Classes 25, 18, 24)                      App. No. 002034486
Trademark
Costa Rica           31919.0942        TM         TEVA (Classes 25, 24, 18, 9)                   Reg. No. 5221-7978
Czech Republic       31919.0943        TM         TEVA (Class 25)                                App. No. 156312
Denmark              31919.0904        TM         TEVA SPORT SANDALS (stylized)                  Reg. No. VR 07.393 1993
                                                  (Footwear)
Dominican            31919.0951        TM         TEVA (block ltrs)                              App. No. 530361
Republic                                          (Class 25--Clothing, footwear)
Dominican            31919.1451        TM         HAND DESIGN                                    App. No. 530365
Republic                                          (Class 25--Clothing, footwear)                 Reg. No. 0120334
Dominican            31919.8451        TM         TEVA (block ltrs)                              App. No. 530364
Republic                                          (Class 9--Sunglasses)                          Reg. No. 0120292



                                       -8-

                                                                      PRIVILEGED



                                                                                                 APPLICATION NO./
COUNTRY              DOCKET #          TYPE                          MATTER                      REGISTRATION NO.
- -------              --------          ----                          ------                      ----------------
                                                                                     
Dominican             31919.8651       TM         TEVA (block ltrs)                              App. No. 530349
Republic                                          (Class 18--handbags, belts & accessories       Reg. No. 0120340
Dominican             31919.8851       TM         TEVA (block ltrs)                              App. No. 530350
Republic                                          (Class 24--towels)                             Reg. No. 0120329
Dominican             31919.9051       TM         HAND DESIGN                                    App. No. 530366
Republic                                          (Class 24--towels)                             Reg. No. 0120330
Dominican             31919.9151       TM         HAND DESIGN (Class 18--handbags, belts &       App. No. 530363
Republic                                          accessories)                                   Reg. No. 01203431
Dominican             31919.9251       TM         HAND DESIGN (Class 9 sunglasses)               App. No. 530367
Republic                                                                                         Reg. No. 0120293
Ecuador               31919.0344       TM         TEVA & HAND DESIGN (Class 25--all goods)       Reg. No. 15329-02
Ecuador               31919.0944       TM         TEVA (stylized)                                Reg. No. 15331-02
                                                  (Class 25--all goods)
Ecuador               31919.2544       TM         TEVA (stylized)                                Reg. No. 5397-02
                                                  (Class 35--all services)
Ecuador               31919.8444       TM         TEVA (stylized)                                Reg. No. 15330-02
                                                  (Class 9--all goods)
Ecuador               31919.8644       TM         TEVA (stylized)                                Reg. No. 15332-02
                                                  (Class 18--all goods)
Ecuador               31919.8844       TM         TEVA (stylized)                                Reg. No. 15333-02
                                                  (Class 24--all goods)
Egypt                 31319.0945       TM         TEVA                                           Ser. No. 120,109
                                                  (Sandals)
El Salvador           31919.0946       TM         TEVA                                           Ser. No. 11980/2001
                                                  (Class 25--Clothing, footwear, headgear)
Fiji                  31919.0993       TM         TEVA                                           Reg. No. 24980
                                                  (Local Class 38--Footwear)
France                31919.0906       TM         TEVA                                           Reg. No. 1668894
                                                  (Class 25--Footwear)
Germany               31919.0907       TM         TEVA                                           Reg. No. 2023116
                                                  (Class 25--Footwear)
Honduras              31919.0952       TM         TEVA                                           App. No. 1199/2001
                                                  (Class 25)



                                       -9-

                                                                      PRIVILEGED



                                                                                                 APPLICATION NO./
COUNTRY              DOCKET #          TYPE                          MATTER                      REGISTRATION NO.
- -------              --------          ----                          ------                      ----------------
                                                                                     
Honduras              31919.8452        TM        TEVA                                           Reg. No. 83.322
                                                  (Class 9--all goods)
Honduras              31919.8652        TM        TEVA                                           Reg. No. 83.321
                                                  (Class 18--all goods)
Honduras              31919.8852        TM        TEVA                                           Reg. No. 83.319
                                                  (Class 24--all goods)
Hong Kong             31919.0908        TM        TEVA                                           Reg. No. 04678 of 1995
                                                  (Class 25--Clothing, footwear)
Hungary               31919.0336        TM        TEVA & HAND DESIGN (Class 25)                  App. No. M0103259
Hungary               31919.8236        TM        TEVA                                           App. No. M0103258
                                                  (Classes 18, 9--all goods)
Iceland               31919.0953        TM        TEVA                                           Reg. No. 1060/2001
                                                  (Classes 25, 18, 9--all goods except
                                                  Class 9--sunglasses only)
Iceland               31919.8553        TM        TEVA (stylized)                                Reg. No. 1059/2001
                                                  (Class 25)
India                 31919.0956        TM        TEVA                                           App. No. 992164
                                                  (Class 25)
India                 31919.8456        TM        TEVA                                           App. No. 992161
                                                  (Class 9)
India                 31919.8656        TM        TEVA                                           App. No. 992162
                                                  (Class 18)
India                 31919.8856        TM        TEVA                                           App. No. 992163
                                                  (Class 24)
India                 31919.1456        TM        HAND DESIGN                                    App. No. 01058336
                                                  (Class 25)
Indonesia             31919.2557        TM        TEVA                                           App. No. J00-2001.15784-15884
                                                  (Class 35)



                                        -10-

                                                                      PRIVILEGED



                                                                                                 APPLICATION NO./
COUNTRY              DOCKET #          TYPE                          MATTER                      REGISTRATION NO.
- -------              --------          ----                          ------                      ----------------
                                                                                     
Indonesia            31919.8457         TM        TEVA                                           App. No. D00-2001.15783-15883
                                                  (Class 9)
Indonesia            31919.8657         TM        TEVA                                           App. No. D00-2001.27084.27294
                                                  (Class 18)
Indonesia            31919.9857         TM        TEVA                                           App. No. D00-2001.27083.27293
                                                  (Class 38)
Israel               31919.0909         TM        TEVA (stylized)                                Reg. No. 94709
                                                  (Class 25--Footwear)
Israel               31919.1409         TM        HAND DESIGN                                    Reg. No. 114575
                                                  (Class 25)
Italy                31319.0959         TM        TEVA                                           Reg. No. 589514
                                                  (Class 25--Footwear)
Jamaica              31919.8540         TM        TEVA (stylized)                                Reg. No. 38,659
                                                  (Class 25--Clothing, footwear, headwear)
Japan                31919.0910         TM        TEVA (word plus phonetic)                      Reg. No. 3112428
                                                  (Clothing, Footwear)
Japan                31919.0995         TM        TEVA (stylized)                                Reg. No. 3,226,208
                                                  (Clothing)
Japan                31919.0997         TM        TEVA (Local Class 22 - Sandals)                Reg. No. 2254974
Japan                31919.1410         TM        HAND                                           Reg. No. 4312115
                                                  (Clothing, Footwear)
Japan                31919.8410         TM        TEVA (Subset of Class 9)                       Reg. No. 4551283
Japan                31919.8610         TM        TEVA (Class 18)                                Reg. No. 3124946
Japan                31919.9110         TM        HAND DESIGN                                    App. No. 2002-29829
                                                  (Class 18--leather goods
                                                  namely bags, luggage, etc.)



                                      -11-

                                                                      PRIVILEGED



                                                                                                 APPLICATION NO./
COUNTRY              DOCKET #          TYPE                          MATTER                      REGISTRATION NO.
- -------              --------          ----                          ------                      ----------------
                                                                                     
Jordan               31919.8517         TM        TEVA                                           Reg. No. 51981
                                                  (Sandals)
Korea                31919.0911         TM        TEVA                                           Reg. No. 273,572
                                                  (Local Class 27--Footwear)
Korea                31919.8211         TM        TEVA                                           App. No. 2002-0005490
                                                  (Classes 9, 24--sunglasses, etc.;
                                                  textile, towels, etc.)
Korea                31919.8511         TM        TEVA                                           Reg. No. 0519319
                                                  (Multiple goods in Class 25)
Korea                31919.8711         TM        TEVA (Korean Letters)                          Reg. No. 0519316
                                                  (Class 25)
Malaysia             31919.0954         TM        TEVA                                           App. No. 2001/09114
                                                  (Class 25)
Malaysia             31919.8454         TM        TEVA                                           App. No. 2001/09113
                                                  (Class 9)
Malaysia             31919.8654         TM        TEVA                                           App. No. 2001/09112
                                                  (Class 18)
Malaysia             31919.8854         TM        TEVA                                           App. No. 2001/09111
                                                  (Class 24)
Malta                31919.0355         TM        TEVA & HAND DESIGN (Class 25--clothing,        Reg. No. 34512
                                                  footwear, headgear)
Malta                31919.0955         TM        TEVA                                           Reg. No. 34511
                                                  (Class 25--Clothing, footwear, headgear)
Mexico               31919.0313         TM        TEVA & HAND DESIGN                             App. No. 524907
                                                  (Class 25)
Mexico               31919.0913         TM        TEVA                                           Reg. No. 400446
                                                  (Class 25--Footwear)



                                      -12-

                                                                      PRIVILEGED



                                                                                                 APPLICATION NO./
COUNTRY              DOCKET #          TYPE                          MATTER                      REGISTRATION NO.
- -------              --------          ----                          ------                      ----------------
                                                                                     
Mexico               31919.1413         TM        HAND DESIGN                                    Reg. No. 583,225
                                                  (Class 25--Clothing)
Mexico               31919.8413         TM        TEVA                                           App. No. 524904
                                                  (Class 9--Sunglasses)
Mexico               31919.8813         TM        TEVA                                           App. No. 524905
                                                  (Class 24--Towels)
Mexico               31919.8913         TM        TEVA                                           App. No. 524906
                                                  (Class 35)
Morocco              31919.0367         TM        TEVA & HAND DESIGN                             Reg. No. 79573
                                                  (Classes 9, 18, 24, 25, 35--all
                                                  goods/services)
Morocco              31919.0967         TM        TEVA (Class 25--Footwear)                      Reg. No. 14,696
Netherland           31919.8555         TM        TEVA                                           Reg. No. 01934
Antilles                                          (Classes 9, 16, 18, 24, 25, 35--all
                                                  goods/services)
New Zealand          31919.0915         TM        TEVA                                           Reg. No. 186448
                                                  (Class 25--Footwear)
New Zealand          31919.1415         TM        HAND DESIGN                                    Reg. No. 290031
                                                  (Class 25--Clothing, Footwear)
Nicaragua            31919.0968         TM        TEVA                                           App. No. 2000-04476
                                                  (Class 25)
Nicaragua            31919.1468         TM        HAND DESIGN                                    App. No. 2001-01584
                                                  (Class 25)
Nicaragua            31919.8468         TM        TEVA                                           App. No. 2001-10587
                                                  (Class 9)
Nicaragua            31919.8668         TM        TEVA                                           App. No. 2001-01585
                                                  (Class 18)
Nicaragua            31919.8868         TM        TEVA                                           App. No. 2001-01583
                                                  (Class 24)
Nicaragua            31919.9068         TM        HAND DESIGN                                    App. No. 2001-01583
                                                  (Class 24)



                                      -13-

                                                                      PRIVILEGED



                                                                                                 APPLICATION NO./
COUNTRY              DOCKET #          TYPE                          MATTER                      REGISTRATION NO.
- -------              --------          ----                          ------                      ----------------
                                                                                     
Nicaragua            31919.9168         TM        HAND DESIGN                                    App. No. 2001-01582
                                                  (Class 18)
Nicaragua            31919.9268         TM        HAND DESIGN                                    App. No. 2001-01581
                                                  (Class 9)
Norway               31919.                       TEVA SPORT SANDALS                             Reg. No. 169371
Norway               31319.0970         TM        TEVA                                           Reg. No. 174532
                                                  (Class 25--Footwear)
Norway               31919.1470         TM        HAND DESIGN                                    Reg. No. 193410
                                                  (Class 25--Clothing, Footwear)
Pakistan             31919.0992         TM        TEVA                                           App. No. 172498
                                                  (Class 25)
Pakistan             31919.8492         TM        TEVA (stylized)                                App. No. 172497
                                                  (Class 9)
Pakistan             31919.8592         TM        TEVA (stylized)                                App. No. 172496
                                                  (Class 25)
Pakistan             31919.8692         TM        TEVA (stylized)                                App. No. 172494
                                                  (Class 18)
Pakistan             31919.8892         TM        TEVA (stylized)                                App. No. 172493
                                                  (Class 24)
Peru                 31919.0973         TM        TEVA (Class 25)                                Reg. No. 67796
Peru                 31919.1473         TM        HAND DESIGN                                    Reg. No. 47935
                                                  (Class 25--Clothing, Footwear)
Philippines          31919.0974         TM        TEVA (stylized)                                Ser. No. 101496
                                                  (Class 25)



                                      -14-

                                                                      PRIVILEGED



                                                                                                 APPLICATION NO./
COUNTRY              DOCKET #          TYPE                          MATTER                      REGISTRATION NO.
- -------              --------          ----                          ------                      ----------------
                                                                                     
Philippines          31919.8574         TM        TEVA (stylized)                                Reg. No.  58057
                                                  (Class 25--Footwear, sandals, slippers)
Poland               31919.0975         TM        TEVA                                           App. No. Z-233348
                                                  (Classes 25, 24, 18, 9)
Portugal             31919.0976         TM        TEVA                                           Reg. No. 279,454
                                                  (Footwear)
Puerto Rico          31919.0938         TM        TEVA & HAND DESIGN                             Reg. No. 52,515
                                                  (Class 25)
Saudi Arabia         31919.0978         TM        TEVA                                           Reg. No. 546/38
                                                  (Sandals)
Singapore            31919.0380         TM        TEVA & HAND DESIGN                             App. No. T02/00458Z
                                                  (Class 25--clothing, footwear & headgear)
Singapore            31919.0980         TM        TEVA                                           Reg. No. T93/07535C
                                                  (Class 25--Footwear)
Singapore            31919.8580         TM        TEVA                                           App. No. T01/04699H
                                                  (Class 25)
Slovakia             31919.0936         TM        TEVA                                           No # assigned
                                                  (Classes 25, 24, 18, 9, 35)
Slovenia             31919.8139         TM        TEVA                                           Reg. No. 200170529
                                                  (Classes 25, 24, 18, 9--all goods)
South Africa         31919.0981         TM        TEVA                                           Reg. No. 91/8643
                                                  (Class 25--Footwear)
South Africa         31919.1481         TM        HAND DESIGN                                    App. No. 98/10654
                                                  (Class 25--Clothing, Footwear)
Spain                31919.0982         TM        TEVA                                           Reg. No. 2,054,158
                                                  (Class 25-Footwear)



                                      -15-

                                                                      PRIVILEGED



                                                                                                 APPLICATION NO./
COUNTRY              DOCKET #          TYPE                          MATTER                      REGISTRATION NO.
- -------              --------          ----                          ------                      ----------------
                                                                                     
Sri Lanka            31919.0983         TM        TEVA                                           App. No. 77229
                                                  (Class 25)
Sweden               31919.0919         TM        TEVA                                           Reg. No. 304 328
                                                  (Class 25)
Sweden               31919.1419         TM        HAND DESIGN                                    Reg. No. 98-02392
                                                  (Class 25--Clothing, Footwear)
Sweden               31919.             TM        TEVA SPORTS SANDALS                            Reg. No. 251116
Switzerland          31919.0984         TM        TEVA                                           Reg. No. 403624
                                                  (Class 25--Footwear)
Switzerland          31919.8584         TM        TEVA (stylized)                                Reg. No. 497204
                                                  (Classes 9, 18, 25 all goods)
Taiwan               31919.0920         TM        TEVA (stylized)                                Reg. No. 875801
                                                  (Class 25--Footwear)
Taiwan               31919.1420         TM        HAND DESIGN                                    Reg. No. 164, 617
                                                  (Class 35)
Taiwan               31919.2520         TM        TEVA                                           App. No. 90-9610
                                                  (Class 25)
Taiwan               31919.8420         TM        TEVA                                           App. No. 90-47694
                                                  (Class 9--eyeglasses and their parts, etc.)
Taiwan               31919.8520         TM        TEVA                                           Reg. No. 999843
                                                  (Class 25)
                                                  (Associated w/RN 875801)
Taiwan               31919.8620         TM        TEVA                                           App. No. 90-47693
                                                  (Class 18--leather bags, luggage, etc.)
Taiwan               31919.8920         TM        HAND DESIGN                                    App. No. 90-9610
                                                  (Class 35)
Tangiers             31919.0337         TM        TEVA (stylized) & HAND DESIGN (Classes 9,      Reg. No. 20967
                                                  18, 24, 25 & 35 all goods & services)



                                      -16-

                                                                      PRIVILEGED



                                                                                                 APPLICATION NO./
COUNTRY              DOCKET #          TYPE                          MATTER                      REGISTRATION NO.
- -------              --------          ----                          ------                      ----------------
                                                                                     
Tangiers             31919.8537         TM        TEVA (Sandals)                                 Reg. No. 14696
Thailand             31919.8586         TM        TEVA (stylized)                                Reg. No. TM60505
                                                  (Class 25--Footwear)
Thailand             31919.8686         TM        TEVA (stylized)                                App. No. 457782
                                                  (Class 18)
Tonga                31919.0994         TM        TEVA                                           App. No. T/M/00/00014
                                                  (Class 25)
Trinidad & Tobago    31919.1441         TM        HAND DESIGN                                    App. No. 32197
                                                  (Classes 25, 24, 28, 9, 35)
Trinidad & Tobago    31919.8541         TM        TEVA (stylized) (Classes 25, 24, 9, 18, 35)    App. No. 32196
Turkey               31919.0387         TM        TEVA & HAND DESIGN (Classes 25,18,9)           App. No. 2001/06727
Turkey               31919.0987         TM        TEVA                                           App. No. 2001/06727
                                                  (Classes 25, 18, 9)
United Kingdom       31919.0921         TM        TEVA                                           Reg. No. 1463777
                                                  (Class 25--Footwear)
United States        31919.0100         TM        Design (Arrangement of Geometric Shapes)       Reg. No. 2,311,393 (Tech Logo)
                                                  (Footwear)
United States        31919.0200         TM        TEVA & HAND DESIGN (Clothes, Foot.)            Ser. No. 75/591,242 (ITU)



                                      -17-

                                                                      PRIVILEGED



                                                                                                 APPLICATION NO./
COUNTRY              DOCKET #          TYPE                          MATTER                      REGISTRATION NO.
- -------              --------          ----                          ------                      ----------------
                                                                                     
United States        31919.0217         TM        TEVA + HAND DESIGN (Clothes, foot.)            Ser. No. 75/982,232 (Div.
                                                                                                 Appln of 75/591,242)
United States        31919.0300         TM        TEVA + HAND DESIGN (Clothes, Foot.)            Reg. No. 2,321,025
United States        31919.0900         TM        TEVA (Footwear)                                Reg. No. 1,394,947
United States        31919.1100         TM        SPOILER (Class 25--Footwear)                   Reg. No. 2,418,240
United States        31919.1400         TM        HAND DESIGN (Clothing)                         Reg. No. 2,072,410
United States        31919.1900         TM        RICOCHET                                       Reg. No. 2,548,729
                                                  (Class 25--Footwear, namely sandals)
United States        31919.2200         TM        TARANTULA                                      Reg. No. 2,311,906
                                                  (Class 25--Footwear)
United States        31919.2400         TM        MUSH                                           Reg. No. 2,329,271
                                                  (Class 25--Footwear)
United States        31919.2500         TM        TEVA                                           Reg. No. 2,301,460
                                                  (Class 35--Retail stores)
United States        31919.2700         TM        CLOTHING FOR THE RIVER OF LIFE (Clothing)      Reg. No. 2,058,612



                                      -18-

                                                                      PRIVILEGED



                                                                                                 APPLICATION NO./
COUNTRY              DOCKET #          TYPE                          MATTER                      REGISTRATION NO.
- -------              --------          ----                          ------                      ----------------
                                                                                     
United States        31919.3400         TM        TEVA                                           Reg. No. 2,377,458
                                                  (Class 25--Clothing, Footwear)
United States        31919.4000         TM        BRAIN DRAIN                                    Reg. No. 2,011,112
                                                  (Class 25--Footwear)
United States        31919.4100         TM        FREE YOUR FEET. YOUR MIND WILL FOLLOW.         Reg. No. 1,920,965
                                                  (Class 25--Footwear)
United States        31919.4300         TM        LIQUID FRAME (Straps for securing foot to      Reg. No. 2,553,093
                                                  sandals and shoes, sold as integral
                                                  component)
United States        31919.4400         TM        PRETTY RUGGED                                  Reg. No. 2,065,631
                                                  (Class 25--Footwear)
United States        31919.4500         TM        RIVER RUBBER                                   Reg. No. 2,014,052
United States        31319.5000         TM        SPIDER RUBBER                                  Reg. No. 2,406,569
                                                  (Class 25--Footwear)
United States        31919.5100         TM        TERRADACTYL                                    Reg. No. 1,866,458
                                                  (Class 25--Footwear)
United States        31919.5200         TM        TERRA-FI                                       Reg. No. 2,062,045
                                                  (Class 25--Footwear)
United States        31919.5400         TM        WET CLIMBER (Footwear)                         Reg. No. 2,029,264
United States        31919.5500         TM        XPD (Footwear)                                 Reg. No. 2,358,376



                                      -19-

                                                                      PRIVILEGED



                                                                                                 APPLICATION NO./
COUNTRY              DOCKET #          TYPE                          MATTER                      REGISTRATION NO.
- -------              --------          ----                          ------                      ----------------
                                                                                     
United States        31919.8400         TM       TEVA (Class 9--sunglasses)                      Ser. No. 78/047,242 (ITU)
United States        31919.8417         TM       TEVA                                            Ser. No. 75/982,664 (Div of
                                                 (Class 9--sunglass retainers and                Ser. No. 78/047242)
                                                 headstraps)
United States        31919.8500         TM       TEVA (Class 25 expanded Foot.)                  Ser. No. 76/238,323
                                                                                                 (Use-based)
United States        31919.0937         TM       TEVA (Classes 25, 24, 18, 9)                    No reg. # assigned
Virgin Islands
Venezuela            31919.0989         TM       TEVA                                            App. No. 13263/98
                                                 (Footwear)
Venezuela            31919.1489         TM       HAND DESIGN                                     App. No. 13264/98
                                                 (Clothing, Footwear)
Yemen                31919.8538         TM       TEVA (Sandals)                                  App. No. 13620


SCHEDULE 1.1(u).     Patents and Patent Applications.



                                                                                                 APPLICATION NO./
COUNTRY              DOCKET #          TYPE                          MATTER                      REGISTRATION NO.
- -------              --------          ----                          ------                      ----------------
                                                                                     
China                31919.3634         DP        FOOTWEAR (Wraptor)                             Ser. No. 99312209.4
France               31919.3606         DP        FOOTWEAR (Wraptor)                             Reg. No. 994635
Germany              31919.3607         DP        FOOTWEAR (Wraptor)                             Reg. No. 499 06 922.6



                                      -20-

                                                                      PRIVILEGED



                                                                                                 APPLICATION NO./
COUNTRY              DOCKET #          TYPE                          MATTER                      REGISTRATION NO.
- -------              --------          ----                          ------                      ----------------
                                                                                     
Japan                31919.3610        DP         FOOTWEAR (Wraptor)                             Reg. No. 1090957
South Korea          31919.1511        DP         SPORT SANDAL FOR ACTIVE WEAR (Universal)       Pat. No. 077,573
United Kingdom       31919.3621        DP         FOOTWEAR (Wraptor)                             Reg. No. 2085164
United States        31919.3600        DP         FOOTWEAR (Wraptor)                             Pat. No. D429,873
United States        31919.3617        DP         FOOTWEAR (Wraptor)                             Ser. No. 29/112,515
United States        31919.3700        DP         FOOTWEAR (Ricochet)                            Pat. No. 441,175
United States        31919.5800        DP         SURFACE OF A FOOTWEAR SOLE (Kids' North        Ser. No. 29/114,038
                                                  Rim/Kids' Ricochet)
United States        31919.6000        DP         FOOTWEAR (Wraptor CIP)                         Pat. No. D458,009
United States        31919.6100        DP         TREAD SURFACE (Tsunami Out/Topsole)            Pat. No. D459,864
United States        31919.6200        DP         TREAD SURFACE (Vector Out/Topsole)             Ser. No. 29/123,276
United States        31919.7200        DP         FOOTWEAR (Mehari)                              Pat. No. D460,245
United States        31919.7300        DP         FOOTWEAR (Terra Rover)                         Pat. No. D460,246
United States        31919.7400        DP         FOOTWEAR (Psyclone)                            Pat. No. D459,863
United States        31919.7500        DP         FOOTWEAR (XPD/Formula)                         Pat. No. D459,862



                                       -21-

                                                                      PRIVILEGED



                                                                                                 APPLICATION NO./
COUNTRY              DOCKET #          TYPE                          MATTER                      REGISTRATION NO.
- -------              --------          ----                          ------                      ----------------
                                                                                     
Australia            31919.1501         UP         SPORT SANDAL (Universal)                      Pat No. 599880
Australia            31919.3501         UP         FOOTWEAR SECUREMENT SYSTEM                    App. No. 17741/01
Australia            31919.3901         UP         FOOTWEAR SOLE AND ARCH STRAPPING SYSTEM       App. No. 58084/99
                                                   (Wraptor)
Canada               31919.5603         UP         FLEECE SOCK                                   Ser. No. 2,227,352
China                31919.3934         UP         FOOTWEAR SOLE AND ARCH STRAPPING SYSTEM       App. No. 99810533.3
                                                   (Wraptor)
European Union       31919.3905         UP         FOOTWEAR SOLE AND ARCH STRAPPING SYSTEM       App. No. 99945494.5
                                                   (Wraptor)
Mexico               31919.3913         UP         FOOTWEAR SOLE AND ARCH STRAPPING SYSTEM       App. No. PA/a/2001/002347
                                                   (Wraptor)
New Zealand          31919.1515         UP         SPORT SANDAL FOR ACTIVE WEAR (Universal)      Pat. No. 226061
PCT                  31919.3516         UP         FOOTWEAR SECUREMENT SYSTEM (Closed            Ser. No. WO 01/35782 A1
                                                   Footwear)
United States        31919.1500         UP         SPORT SANDAL FOR ACTIVE WEAR (Universal)      Pat No. 4,793,075
United States        31919.1600         UP         SPORT SANDAL CONSTRUCTION (Original)          Pat No. 4,584,782
United States        31919.3593         UP         FOOTWEAR SECUREMENT SYSTEM (closed Wraptor)   App. No. 10/130457



                                      -22-

                                                                      PRIVILEGED



                                                                                                 APPLICATION NO./
COUNTRY              DOCKET #          TYPE                          MATTER                      REGISTRATION NO.
- -------              --------          ----                          ------                      ----------------
                                                                                     
United States        31919.3800         UP        SELF ADJUSTING FRAME FOR FOOTWEAR              Pat. No. 6,128,835
                                                  (Liquid Frame)
United States        31919.3900         UP        FOOTWEAR SOLE WITH INTEGRALLY MOLDED SHANK     Pat. No. 6,061,929
                                                  (Dual Density Shank)
United States        31919.3993         UP        FOOTWEAR SOLE AND ARCH STRAPPING SYSTEM        Ser. No. 09/786,239 (Wraptor)
United States        31919.5600         UP        FLEECE SOCK                                    Pat. No. 5,867,837


SCHEDULE 2.1(e).     Assignable Licenses.

1.    License Agreement, dated as of November 17, 2000, by and between Mark
      Thatcher and Itochu Corporation.

2.    Licensing Agreement, dated as of March 28, 2001, by and between Mark
      Thatcher, Bison Designs, LLC, and Bison Weavers, LLC.

3.    Licensing Agreement, dated as of December 4, 2000, by and between Mark
      Thatcher and Dunlop Manufacturing, Inc.


SCHEDULE 2.2.         Excluded Assets.

      1.    1996 White Jeep Grand Cherokee

      2.    2001 Chevy Diesel Truck and Camper

      3.    2002 Subaru

      4.    8 Indian Rugs

      5.    3 Pictures of Ancient Sandals


                                      -23-

                                                                      PRIVILEGED

      6.    1 Cedar Wood Bench

      7.    1 Cedar Wood Table

      8.    All Furnishings in Thatcher's Arizona Office

SCHEDULE 3.5.         Allocation of Purchase Price.

To be mutually agreed upon by the Sellers and the Buyer.

SCHEDULE 3.8.         Assumed Liabilities.

1.    The Customer Credits (as defined in Section 6.2(e)).

2.    Any and all liabilities under the Material Contracts (as defined in
      Section 4.1(j)) and the Assigned Contracts (as defined in Section 4.1(i)).

3.    The Intellectual Property Matters (as defined in Section 6.2(c)).

SCHEDULE 4.1(b).      No Conflicts.

      The execution, delivery and performance of this Agreement and the
Collateral Agreements may require certain consents, waivers or notices as set
forth in the following items:

      1. License Agreement, dated as of November 17, 2000, by and between Mark
Thatcher and Itochu Corporation.

      2. Licensing Agreement, dated as of March 28, 2001, by and between Mark
Thatcher, Bison Designs, LLC, and Bison Weavers, LLC.

      3. Licensing Agreement, dated as of December 4, 2000, by and between Mark
Thatcher and Dunlop Manufacturing, Inc.

      4. Commercial Lease, dated as of January 8, 2001, by and between Michael
O. Holpuch and Joan Holpuch, dba MJ Properties, as lessor, and Teva Sport
Sandals, Inc., as lessee.

      5. ClientCare(R) Support and Maintenance Agreement for Sage Enterprise
Suite(TM) Software Agreement, dated as of September 2001, by and between Sage
Software, Inc., and Teva Sport Sandals, Inc.

      6. Annual Software Maintenance Agreement, dated as of November 1, 2001, by
and between Logicor Inc., and Teva Sport Sandals, Inc.

      7. Select Merchant Payment Card Processing Agreement, dated as of December
4, 2000, by and between Paymentech, LLC, and Teva Sport Sandals, Inc.


                                      -24-

                                                                      PRIVILEGED

      8. Dedicated Server Rental Agreement, dated as of November 14, 2000, by
and between VScape International, Inc., and Teva Sport Sandals, Inc.

SCHEDULE 4.1(e).      Intellectual Property Matters.



Docket No.          Country                Marks/Other Party                     Description
- ----------          -------                -----------------                     -----------
                                                                        
31919.8128          Brazil                 *****                                 *****

31919.8133          Chile                  TEVA v. TEVA                          Cancellation action filed.

                                           Thatcher v. Carlos Capurro
                                           Bahamondes
31919.1434          China                  HAND DESIGN v. HAND DESIGN            Cancellation action filed based on
                                                                                 non-use on 7/21/01.

                                           Thatcher v. Changzhou Yonghen
                                           Garment Factory
31919.8134          China                  TEVA v. TEVA                          Opposition filed.

                                           Thatcher v. Luyisi Leather
31919.8134          China                  TEVA v. TEVA (class 24)               Opposition filed.

                                           Thatcher v. Jiayi Enterprises Co.
                                           Ltd.

31919.8142          Costa Rica             *****                                 *****


- ----------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.


                                      -25-

                                                                      PRIVILEGED



Docket No.          Country                Marks/Other Party                     Description
- ----------          -------                -----------------                     -----------
                                                                        
31919.0943          Czech Republic         EVA v. TEVA                           Opposition filed by Ombretta.
                                           Ombretta AG v. Thatcher

31919.8205          Europe--CTM            TOVA v. TEVA                          Opposition filed by Tova.

                                           Tova Corporation v. Thatcher
31919.8205          Europe--CTM            THEBAS v. TEVA                        Opposition filed by Textil.

                                           Textil Juan B. Mato S.A. v.
                                           Thatcher
31919.8205          Europe--CTM            TEVA v. TEPA & DESIGN                 Opposition filed against class 25 appln.

                                           Thatcher v. Romaia-Comercio
31919.8205          Europe--CTM            TEVA NAOT                             *****

31919.8146          El Salvador            TEVA v. TEVA                          Cancellation proceeding filed.
                    Guatemala

                                           Thatcher v. Piel Y Calzado
31919.8107          France                 Trademark Investigation               *****

31919.8106          France                 TEVA, Reg. No. 1668894, dated         *****
                                           6/3/91
                                           Mark Thatcher

31919.0953          Iceland                TESA v. TEVA                          Opposition filed by Tesa AG Germany.

                                           Tesa AG v. Thatcher

31919.8457          Indonesia              TESA v. TEVA                          Opposition filed by Tesa AG to TEVA
                                                                                 Class 9 application for sunglasses
                                           Tesa AG v. Thatcher                   only.
31919.8157          Indonesia              TEVA v. TEVA                          Opposition filed on 7/19/01 by
                                                                                 Thatcher against Class 18 application.

                                           Thatcher v. Mizuno Jauw

31919.8157          Indonesia              *****                                 *****


- ----------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.


                                      -26-

                                                                      PRIVILEGED



Docket No.          Country                Marks/Other Party                     Description
- ----------          -------                -----------------                     -----------
                                                                        
31919.8157          Indonesia              *****                                 *****
31919.8157          Indonesia              *****                                 *****
31919.8157          Indonesia              TEVA, Appln No. D00-2001 00294-294    Opposition filed on 7/19/01 by
                                           filed 1/9/01                          Thatcher against Class 18
                                           Mizuno Jauw                           application. Evidence of use filed in
                                                                                 support of opposition.
31919.8457          Indonesia              TESA, Reg Nos. 371423 dated           Opposition filed by Tesa AG to
                                           6/15/95; 369245 dated 6/15/95;        Thatcher's TEVA appln No.
                                           371296 dated 6/15/95; 469371 dated    D00-15783-15883 filed 7/23/01 in Class
                                           6/15/95                               9 (which covers only "sunglasses")
                                           Tesa AG                               alleging similarity between marks and
                                                                                 alleged bad faith by Thatcher.
                                                                                 Counter-opposition filed by associate
                                                                                 5/20/02 arguing differences in goods
                                                                                 and marks. Evidence of use of TEVA
                                                                                 mark filed.
31919.8109          Israel                 *****                                 *****
31919.8109          Israel                 *****                                 *****
31919.8410          Japan                  TESA v. TEVA                          Tesa AG atty advised opposition filed
                                                                                 against Class 9 TEVA application.
                                           Tesa AG v. Thatcher
31919.8511          Korea                  TEVA v. TEBAS                         Brief filed against TEBAS appln in
                                                                                 classes 18 and 25 on 10/25/01.
                                           Thatcher v. Shin Hong
31919.8111          Korea                  *****                                 *****
                    Mexico                 TEVA v. TEVHA 69 & Design             Cancellation action filed 8/16/01
                                                                                 based on fact that conflicting
                                           Thatcher v. Sergio Tulio Ortiz        registration granted in error due to
                                           Sahagun                               prior TEVA registration.
31919.8171          Panama                 *****                                 *****


- ----------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.


                                      -27-

                                                                      PRIVILEGED



Docket No.          Country                Marks/Other Party                     Description
- ----------          -------                -----------------                     -----------
                                                                        
                                           *****                                 *****
31919.8174          Philippines            TEVA (stylized) v. REVA (stylized)    Verified Opposition filed 6/5/02.
                                           Thatcher v. Jose Nilo J. Ocampo
31919.0974          Philippines            TEVA v. TEVA (Stylized                Cancellation action resolved by
                                                                                 settlement in which Registration
                                           Thatcher v. Shoetown                  acquired from Shoetown by assignment
                                                                                 to Thatcher
31919.8176          Portugal               *****                                 *****
31919.8182          Spain                  V TE VA                               Opposition to V TE VA applications for
                                           Radio Difusiones                      Classes 16, 35 and 38 filed. Spanish
                                                                                 Trademark Office refused Thatcher
                                                                                 oppositions based on visual and
                                                                                 overall differences between marks
                                                                                 and classes. No appeal filed.
31919.8119          Sweden                 *****                                 *****
31919.8584          Switzerland            *****                                 *****
                                           Ombretta AG v. Thatcher
31919.8584          Switzerland            TESA v. TEVA
                                           Tesa AG v. Thatcher
31919.8120          Taiwan                 TEVA v. TEVA (class 24)               Opposition filed.
                                           Thatcher v. Jiayi Enterprise Co
31919.8186          Thailand               TEVA v. TEVA (stylized)               Purchased TEVA (stylized) Reg. No.


- ----------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.


                                      -28-

                                                                      PRIVILEGED



Docket No.          Country                Marks/Other Party                     Description
- ----------          -------                -----------------                     -----------
                                                                        
                                                                                 60505 in class 25 and TEVA (stylized)
                                           Thatcher v. Hoberd Industry Co.       Appln No. 457782 in class 18 from
                                                                                 Hoberd Industry Co. (and son).
31919.8186          Thailand               TEVA (stylized) & HAND DESIGN v.      Opposition filed against Class 9 appln
                                           TEVA (stylized) & HAND DESIGN         4/29/02.
                                           Thatcher v. Mr. Tiva Leejarkpai
31919.1441          Trinidad & Tobago      HAND DESIGN v. HAND DESIGN            Opposition filed by Mode-Alive against
                                                                                 Class 25 appln on 4/25/02.
                                           Mode-Alive v. Thatcher
31919.8187          Turkey                 TEVA & HAND DESIGN v. TEVA & HAND     Opposition against Sualar filed
                                           DESIGN                                9/18/01.
                                           Thatcher v. Sualar Gumusculuk
                                           Tekstil
31919.8188          Uruguay                *****                                 *****
31919.8189          Venezuela              TEVA v. TEVA                          Cancellation action filed 4/9/01 and
                                                                                 are awaiting publication of same.
                                           Thatcher v. Inversiones Zona C.A.
                                           (Mr. Spielberger)
31919.8150          Vietnam                *****                                 *****


- ----------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.


                                      -29-

                                                                      PRIVILEGED



Docket No.          Country                Marks/Other Party                     Description
- ----------          -------                -----------------                     -----------
                                                                        
                                                                                 *****
                                           John W. Baker v. Deckers Outdoor      Unknown - Deckers is handling matter.
                                           Corporation
                                           TEVA                                  Other issues:     From time to time,
                                                                                 various intellectual property pirates
                                                                                 have attempted to take advantage of
                                                                                 foreign laws permitting the
                                                                                 acquisition of intellectual property
                                                                                 rights, including trademark rights, by
                                                                                 registration.     Other pirates may
                                                                                 currently exist or hereafter take
                                                                                 actions. In most cases, when pressed,
                                                                                 these pirates have alleged rights
                                                                                 superior to Thatcher relative to,
                                                                                 among other things, the TEVA mark.
                                           *****                                 *****


- ----------

***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.


                                      -30-

                                                                      PRIVILEGED

                                                                          *****


Docket No.          Country                Marks/Other Party                     Description
- ----------          -------                -----------------                     -----------
                                                                        
                                           Clearance Issues                      Under the existing license agreement
                                                                                 with Buyer, Buyer is responsible for
                                                                                 product clearance and trademark
                                                                                 clearance with respect to the designs
                                                                                 and marks used on the products. From
                                                                                 time to time, third parties have taken
                                                                                 issue with some of the product
                                                                                 designs, web names, secondary product
                                                                                 names and the like.
                                                                                 *****
                                                                                 Other claims may currently exist or
                                                                                 hereafter arise. Once complete we
                                                                                 should do a check with John.
                                           Watch Notices:                        Seller has instituted a worldwide
                                                                                 watch with respect to the publication
                                                                                 of other trademark
                                                                                 applications/registrations. Various
                                                                                 of the above-referenced matters where
                                                                                 the description is identified as "No
                                                                                 opposition filed" arose as a result of
                                                                                 Sellers' receipt of a watch notice.


      Various third parties from time to time have tried to copy various aspects
of the Products. In general, Seller has provided an IP Brochure to such parties
advising such parties of Seller's intellectual property rights. A listing of
recipients since mid 2000 is provided below:



               Recipient                                Date
               ---------                                ----
                                                     
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00


- ----------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.


                                      -31-

                                                                      PRIVILEGED



               Recipient                                Date
               ---------                                ----
                                                     
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    8/18/00
               *****                                    9/26/00
               *****                                    11/8/00
               *****                                    11/8/00
               *****                                    11/8/00
               *****                                    11/8/00
               *****                                    11/8/00
               *****                                    11/8/00
               *****                                    8/28/01
               *****                                    8/28/01
               *****                                    8/28/01
               *****                                    8/28/01
               *****                                    8/28/01


- ----------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.


                                      -32-

                                                                      PRIVILEGED



               Recipient                                Date
               ---------                                ----
                                                     
               *****                                    8/28/01
               *****                                    8/28/01
               *****                                    8/28/01
               *****                                    8/28/01
               *****                                    8/28/01
               *****                                    1/22/02
               *****                                    4/24/02
               *****                                    4/24/02


      Other possible infringement issues include:

Copyrights:

Entity                     Subject Matter
- ------                     --------------
*****                      *****
*****                      *****
*****                      *****
*****                      *****

Patents:

Entity                     Subject Matter
- ------                     --------------
*****                      *****
*****                      *****
*****                      *****

SCHEDULE 4.1(g).      Absence of Certain Changes or Events.

      None.

SCHEDULE 4.1(h).      TEVA's Employees.

      Hattley, Brittany

      Hautemulle, David

      Heath, Lindsey

      Hogan-Williams, Nancy

      Jeskewich, Barry

- ----------
***** Certain information on this page has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.


                                      -33-

                                                                      PRIVILEGED

      Kalinich, John

      Kasun, Cinda

      Kucipeck, Julie

      Mariassy, Kendra

      McEachern, Denise

      *Navarro, Raul

      *Navarro, Teresa O.

      Nix, Stephanie

      Norton, Galen A.

      Perritt, Steven T.

      Pitcher, Megan C.

      Schultz, Amanda

      Standing, Karen

      *Thatcher, Leslie

      *Thatcher, Mark

- ----------
      * Denotes those employees who are not Transferred Employees.

SCHEDULE 4.1(i).      Disputes-Assigned Contracts.

      None.

SCHEDULE 4.1(j).      Material Contracts.

1.    License Agreement, dated as of November 17, 2000, by and between Mark
      Thatcher and Itochu Corporation.

2.    ClientCare(R) Support and Maintenance Agreement for Sage Enterprise
      Suite(TM) Software Agreement, dated as of September 2001, by and between
      Sage Software, Inc., and Teva Sport Sandals, Inc.

SCHEDULE 4.1(k).      Environmental.

      None.

                                      -34-

                                                                      PRIVILEGED

                                    * * * * *

      Any information disclosed in any Schedule section above shall be deemed to
be disclosed and incorporated into any other Schedule section where such
disclosure would be reasonably apparent. Furthermore, the Sellers'
representations and warranties, including any items set forth in the Schedules,
do not purport to disclose any agreements, contracts or instruments that may be
entered into between any of the Sellers and the Buyer. No disclosure set forth
in the Schedules relating to any possible breach or violation of any agreement,
law or regulation, or any possible infringement of any intellectual property,
shall be construed as an admission or indication that any such breach,
violation, or infringement exists or has actually occurred.

                                               Very truly yours,

                                               Snell & Wilmer



                                               Leonardo Loo


                                      -35-

EX-23

EX-23


                         INDEPENDENT AUDITORS' CONSENT


The Board of Directors
Deckers Outdoor Corporation:

We consent to the incorporation by reference in the registration statement (No.
333-82538) on Form S-8 of Deckers Outdoor Corporation of our report dated
January 10, 2003, with respect to the statements of assets acquired and
liabilities assumed of Teva Sport Sandals, Inc. as of November 25, 2002 and
December 31, 2001, and the related statements of earnings and cash flows for the
period from January 1 to November 25, 2002 and the year ended December 31, 2001,
which report appears in the February 7, 2003 current report on Form 8-K/A of
Deckers Outdoor Corporation.




                                        KPMG LLP

Los Angeles, California
February 4, 2003

EX-99.1

EX-99.1

                    For:                    DECKERS OUTDOOR CORPORATION

                    Company Contact:        Scott Ash
                                            Chief Financial Officer
                                            (805) 967-7611

                    Investor Relations:     Integrated Corporate Relations, Inc.
                                            Chad A. Jacobs/Brendon E. Frey
                                            (203) 222-9013


         DECKERS OUTDOOR CORPORATION ANNOUNCES THAT IT HAS COMPLETED THE
                         ACQUISITION OF THE TEVA ASSETS


GOLETA, Calif. (November 26, 2002) -- Deckers Outdoor Corporation (NASDAQ: DECK)
today announced the Company completed the acquisition of the worldwide Teva
patents, trademarks and other assets from Mark Thatcher, the Company's former
licensor and the inventor of the Teva patents.

As a result of the acquisition, Deckers now owns all of the Teva worldwide
assets including all patents, tradenames, trademarks and all other intellectual
property, as well as Teva's existing catalog and internet retailing business.
The Company expects the transaction to be accretive to net income by
approximately $1,000,000, or $0.03 per share, in 2003.

Douglas Otto, Chairman and Chief Executive Officer of Deckers, stated, "We are
pleased to have completed this major transaction which will allow us to maximize
the true potential of the Teva brand. With the acquisition finalized, we believe
the pieces are in place to take this company to the next level and we are
dedicated to capitalizing on the opportunities that we have created."

Mark Thatcher commented, "I look forward to working with Deckers under this new
structure which will better support Teva's growth and the realization of both
Teva's and Deckers' potential value."

Deckers Outdoor Corporation builds niche products into global lifestyle brands
by designing and marketing innovative, functional and fashion-oriented footwear,
developed for both high performance outdoor activities and everyday casual
lifestyle use. The Company's products are offered under the Teva, Simple and Ugg
brand names.

*This press release contains a number of forward looking statements, such as the
Company's estimates regarding incremental net income and earnings per share
expected to result from the Teva acquisition for the fiscal year ending December
31, 2003, Teva's growth potential and the potential future value to be realized
by Teva and Deckers. These forward-looking statements are based on the Company's
expectations as of today, November 26, 2002. No one should assume that any
forward-looking statement made by the Company will remain consistent with the
Company's expectations after the date the forward-looking statement is made. The
Company intends to continue its practice of not updating forward-looking
statements until its next quarterly results announcement. In addition, such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Company, or industry results, to differ materially from any future results,
performance or achievements expressed or implied by such

forward-looking statements. Many of the risks, uncertainties and other factors
are discussed in detail in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2001. Among the factors which could impact
results are the general economic conditions, world events and the strength or
weakness in the retail environments in which the Company's products are sold,
including the catalog and internet retailing market. In addition, the Company's
sales are highly dependent on consumer preferences, which are difficult to
assess and can shift rapidly. Any shift in consumer preferences away from one or
more of the Company's product lines could result in lower sales as well as
obsolete inventory, both of which could adversely affect the Company's results
of operations, financial condition and cash flows. The Company is also dependent
on its customers continuing to carry and promote its various lines. Availability
of products can also affect the Company's ability to meet its customers' orders.
Sales of the Company's Teva(R) products are very sensitive to weather
conditions. Extended periods of unusually cold weather during the spring and
summer could adversely impact demand for the Company's Teva(R) line. The success
of the Company's expansion into new footwear categories, the addition of
products outside of footwear including apparel, accessories and related
products, and the overall success of the Company's ability to license the Teva
name to other products is highly dependent on the popularity and consumer
acceptance of the Teva brand in these new markets, as well as the Company's
ability to identify and properly manage acceptable licensees. Given these
uncertainties, prospective investors are cautioned not to place undue reliance
on such forward-looking statements. The Company disclaims any obligation to
update any such factors or to publicly announce the results of any revisions to
any of the forward-looking statements contained in the 2001 Annual Report on
Form 10-K, the Quarterly Reports on Form 10-Q or this news release.

EX-99.2

EX-99.2

FINANCIAL STATEMENTS



                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
Teva Sport Sandals, Inc.:

We have audited the accompanying statements of assets acquired and liabilities
assumed of Teva Sport Sandals, Inc. as of November 25, 2002 and December 31,
2001, and the related statements of earnings and cash flows for the period from
January 1 to November 25, 2002 and the year ended December 31, 2001. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Teva Sport Sandals, Inc. as of
November 25, 2002 and December 31, 2001 and the results of its operations and
its cash flows for the periods then ended in conformity with accounting
principles generally accepted in the United States of America.


                                        KPMG LLP

January 10, 2003
Los Angeles, California

                            TEVA SPORT SANDALS, INC.

              Statements of Assets Acquired and Liabilities Assumed

                     November 25, 2002 and December 31, 2001




                           ASSETS                            2002           2001
                                                             ----           ----
                                                                     
Current assets:
  Accounts receivable                                      $  5,633         18,172
  Inventories, net (note 3)                                 391,026        229,947
  Prepaid expenses and other current assets                  32,224        169,454
                                                           --------       --------
      Total current assets                                  428,883        417,573

  Property and equipment, net (note 2)                       87,938        128,567
                                                           --------       --------
                                                           $516,821        546,140
                                                           ========       ========

            LIABILITIES AND NET ASSETS ACQUIRED
Current liabilities:
  Due to Deckers                                           $ 50,000             --
  Sales returns allowance                                    72,000         84,000
                                                           --------       --------
      Total current liabilities                             122,000         84,000
                                                           --------       --------

Commitments and contingencies (note 4)

Net assets acquired                                        $394,821        462,140
                                                           ========       ========


See accompanying notes to financial statements.

                            TEVA SPORT SANDALS, INC.

                             Statements of Earnings

                 Period from January 1 to November 25, 2002 and
                      for the year ended December 31, 2001



                                                       2002            2001
                                                    ----------      ----------
                                                               
Revenues:
  Management fee (note 3)                          $ 1,530,451       1,318,898
  Net product sales                                  4,018,314       3,706,176
                                                    ----------      ----------
      Net revenues                                   5,548,765       5,025,074

Cost of goods sold from product sales (note 3)       2,086,536       1,915,594
                                                    ----------      ----------

          Gross profit                               3,462,229       3,109,480

Operating expenses                                   2,588,597       2,263,269
                                                    ----------      ----------
          Earnings from operations                     873,632         846,211
Interest income                                         53,213          34,300
                                                    ----------      ----------
          Net earnings                                 926,845         880,511
                                                    ==========      ==========


See accompanying notes to financial statements.

                            TEVA SPORT SANDALS, INC.

                            Statements of Cash Flows

                 Period from January 1 to November 25, 2002 and
                      for the year ended December 31, 2001



                                                                       2002           2001
                                                                    ---------       ---------
                                                                                
Cash flows from operating activities:
  Net earnings                                                      $ 926,845         880,511
  Adjustments to reconcile net earnings to net cash provided
    by operating activities:
      Depreciation and amortization of property and equipment          79,208          84,608
      Changes in assets and liabilities:
        Trade accounts receivable                                      12,539         (29,757)
        Inventories                                                  (161,079)         14,985
        Prepaid expenses and other current assets                     137,230         (83,302)
        Sales returns allowance                                       (12,000)         35,000
                                                                    ---------       ---------
          Net cash provided by operating activities                   982,743         902,045

Cash flows used in investing activities - purchase of property
  and equipment                                                       (38,579)        (46,768)

Cash flows from financing activities:
  Due to Deckers                                                       50,000              --
  Distributions to shareholder                                       (994,164)       (855,277)
                                                                    ---------       ---------
          Net cash used in financing activities                      (944,164)       (855,277)
                                                                    ---------       ---------
          Net change in cash and balance at end of year             $      --              --
                                                                    =========       =========


See accompanying notes to financial statements.

                            TEVA SPORT SANDALS, INC.
                         Notes to Financial Statements
                    November 25, 2002 and December 31, 2001

(1)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      (A)   BASIS OF PRESENTATION

            Teva Sport Sandals, Inc. (the Company) sells footwear and apparel
            through a catalog and an on-line website. On November 25, 2002,
            Deckers Outdoor Corporation (Deckers) acquired the worldwide Teva
            patents, trademarks and other assets from Mark Thatcher and certain
            assets and liabilities of Teva Sport Sandals, Inc.(the Acquisition).

            The assets and liabilities presented include only those acquired by
            Deckers. No adjustments have been made to the accompanying financial
            statements related to any step-up in basis or other impact resulting
            from the Acquisition.

      (B)   REVENUE RECOGNITION

            Revenue from product sales is recorded when risk of loss and title
            passes to the buyer. Allowances for sales returns are provided when
            the related revenue is recorded. Billings for freight are included
            in revenue and costs of outgoing freight are included in cost of
            sales.

      (C)   INVENTORIES

            All inventories represent footwear and apparel purchased for resale.
            Substantially all of the purchases of the Company's inventory were
            made from Deckers at market prices. Inventories are stated at the
            lower of cost or market. Cost is determined under the first-in,
            first-out (FIFO) method.

      (D)   PROPERTY AND EQUIPMENT

            Property and equipment are carried at cost. Maintenance and repairs
            are charged to expense as incurred. Depreciation and amortization of
            property and equipment is computed on the straight-line method based
            upon the estimated useful lives of the assets, which range from
            three to seven years.

      (E)   LONG-LIVED ASSETS

            The Company reviews long-lived assets for impairment whenever events
            or changes in circumstances indicate that the carrying value of an
            asset may not be recoverable. As part of an ongoing review of the
            valuation and amortization of long-lived assets, management assesses
            the carrying value of the Company's long-lived assets if facts and
            circumstances suggest that it may be impaired. If this review
            indicates that certain long-lived assets will not be recoverable, as
            determined by undiscounted operating cash flow analysis over the
            remaining useful life of the asset, the carrying value of the
            Company's long-lived assets would be reduced to its estimated market
            value.

      (F)   INCOME TAXES

            The Company accounts for income taxes under the asset and liability
            method. Deferred tax assets and liabilities are recognized for the
            future tax consequences attributable to differences between the
            financial statement carrying amounts of existing assets and
            liabilities and their respective tax bases.

            The Company is treated as an S Corporation for both federal and
            state income tax purposes. The S Corporation provisions of the
            Internal Revenue Code require that federal corporate earnings flow
            through and be taxed solely at the stockholder level.

                            TEVA SPORT SANDALS, INC.
                         Notes to Financial Statements
                    November 25, 2002 and December 31, 2001

      (G)   COMPREHENSIVE INCOME

            The Company reports comprehensive income under Financial Accounting
            Standards Board Statement No 130 (SFAS No 130), Reporting
            Comprehensive Income. The Company does not have any components of
            comprehensive income other than its net earnings, and accordingly,
            the Company's comprehensive income is equal to net earnings.

      (H)   BUSINESS CONCENTRATIONS

            The Company sells three lines of product: Teva, Ugg and Simple, but
            does not design any of them. The Company's business is subject to
            the market acceptance of these lines.

      (I)   ADVERTISING, MARKETING, AND PROMOTION COSTS

            Advertising production costs are expensed the first time the
            advertisement is run. All other costs of advertising, marketing and
            promotion are expensed as incurred. These expenses charged to
            operations for the periods ended November 25, 2002 and December 31,
            2001 were $622,758 and $66,050, respectively.

      (J)   FAIR VALUE OF FINANCIAL INSTRUMENTS

            The fair values of all of the Company's financial assets and
            liabilities acquired approximate the carrying values due to the
            relatively short maturities of these instruments.

      (K)   USE OF ESTIMATES

            Management of the Company has made a number of estimates and
            assumptions relating to the reporting of assets and liabilities and
            the disclosure of contingent assets and liabilities at the balance
            sheet date and revenues and expenses during the reporting period to
            prepare these financial statements in conformity with accounting
            principles generally accepted in the United States of America.
            Actual results could differ from those estimates.

      (L)   NEW ACCOUNTING PRONOUNCEMENTS

            Effective January 1, 2002, the Company adopted Statement of
            Financial Accounting Standards No. 144 ("SFAS 144"), "Accounting for
            the Impairment or Disposal of Long-Lived Assets," which addresses
            financial accounting and reporting for the impairment or disposal of
            long-lived assets. While SFAS 144 supersedes Statement of Financial
            Accounting Standards No. 121, "Accounting for the Impairment of
            Long-Lived Assets and for Long-Lived Assets to be Disposed Of," it
            retains many of the fundamental provisions of that statement. The
            adoption of this standard did not have a material impact on the
            Company's financial position or results from operations.

                            TEVA SPORT SANDALS, INC.
                         Notes to Financial Statements
                    November 25, 2002 and December 31, 2001

            In November 2001, the Emerging Issues Task Force ("EITF") issued
            EITF 01-9, "Accounting for Consideration Given by a Vendor to a
            Customer," which became effective for the first quarter beginning
            after December 31, 2001. EITF 01-9 requires certain consideration
            given by and to vendors or a customer be presented as a reduction of
            revenue rather than as a cost or an expense. The adoption of EITF
            01-9 did not have a material impact on the Company's financial
            position or results from operations.

            On July 30, 2002, the Financial Accounting Standards Board ("FASB")
            issued Statement of Financial Accounting Standards No. 146 ("SFAS
            146"), "Accounting for Costs Associated with Exit or Disposal
            Activities." SFAS 146 nullifies EITF Issue No. 94-3, "Liability
            Recognition for Certain Employee Termination Benefits and Other
            Costs to Exit an Activity (including Certain Costs Incurred in a
            Restructuring)." It requires that a liability be recognized for
            those costs only when the liability is incurred, that is, when it
            meets the definition of a liability in the FASB's conceptual
            framework. SFAS No. 146 also establishes fair value as the objective
            for initial measurement of liabilities related to exit or disposal
            activities. SFAS 146 is effective for exit or disposal activities
            that are initiated after December 31, 2002. The Company does not
            expect that the adoption of SFAS 146 will have a material impact on
            its financial position or results from operations.

            In November 2002, the FASB issued FASB Interpretation No. 45 ("FIN
            45"), Guarantor's Accounting for Guarantees, Including Indirect
            Guarantees of Indebtedness of Others. FIN 45 elaborates on the
            disclosures to be made by a guarantor in its financial statements
            about its obligations under certain guarantees it has issued. It
            also clarifies that a guarantor is required to recognize, at
            inception of a guarantee, a liability for the fair value of the
            obligation undertaken in issuing the guarantee. The initial
            recognition and measurement provisions of FIN 45 are applicable on a
            prospective basis to guarantees issued or modified after December
            31, 2002. The Company does not expect the adoption of FIN 45 will
            have a material impact on its financial position or results from
            operations.

(2)   PROPERTY AND EQUIPMENT

       Property and equipment consist of the following:



                                                      2002          2001
                                                      ----          ----
                                                             
Machinery and equipment                             $365,516       326,937
Furniture and fixtures                                28,907        28,907
                                                    --------       -------
                                                     394,424       355,844
Less accumulated depreciation and amortization       306,485       227,277
                                                    --------       -------
                                                    $ 87,938       128,567
                                                    ========       =======


                            TEVA SPORT SANDALS, INC.
                         Notes to Financial Statements
                    November 25, 2002 and December 31, 2001

(3)   RELATED PARTY TRANSACTIONS

      The Company provides services to its sole shareholder under a management
      agreement, including the management of his patent rights, copyrights and
      other intellectual property related to the Teva trademark. The Company is
      reimbursed for the costs of these services plus 5 percent. Management fees
      totaled $1,530,451 and $1,318,898 for the periods ended November 25, 2002
      and December 31, 2001, respectively, and are recorded as revenue in the
      accompanying statement of earnings.

      Deckers loaned $50,000 to the Company immediately prior to the
      Acquisition. Such amount is unsecured and payable on demand.

      Substantially all of the purchases of the Company's inventory were made
      from Deckers at market prices.

(4)   COMMITMENTS AND CONTINGENCIES

      (A)   LEASES

            The Company leases warehouse space under operating leases expiring
            through October 2005, which require monthly minimum rentals of
            $2,418. Rent expense paid under these leases in 2002 and 2001 were
            $19,175 and $24,194, respectively. Minimum rental commitments under
            operating leases are summarized as follows:



Year ending December 31:
                        
  2003                     $29,016
  2004                      29,016
  2005                      24,180
                           -------
    Total                  $82,212
                           =======


      (B)   LEGAL PROCEEDINGS

            The Company is party to routine claims and suits brought against it
            in the ordinary course of business. In the opinion of management,
            the outcome of such routine claims will not have a material adverse
            effect on the Company's financial condition, results of operations
            or liquidity.

EX-99.3

EX-99.3


                  DECKERS OUTDOOR CORPORATION AND SUBSIDIARIES
                   PRO FORMA UNAUDITED CONDENSED CONSOLIDATED
                              FINANCIAL STATEMENTS

On November 25, 2002, Deckers Outdoor Corporation (the "Company") completed an
acquisition (the "Acquisition") of the worldwide Teva patents, trademarks and
other assets (the "Acquired Assets") from Mark Thatcher, the Company's former
licensor and the inventor of the Teva patents. As a result of the Acquisition,
the Company now owns all of the Teva worldwide assets including all patents,
tradenames, trademarks and all other intellectual property, as well as Teva's
existing catalog and internet retailing business, which includes the operations
of Teva Sport Sandals, Inc. (the "Acquired Business").

The following unaudited pro forma condensed consolidated balance sheet assumes
the acquisition of the Acquired Business occurred on September 30, 2002. The
unaudited pro forma condensed consolidated statements of operations show the
results of operations for the year ended December 31, 2001 and for the nine
months ended September 30, 2002 as if the acquisition had occurred on January 1,
2001. See Notes to Unaudited Pro Forma Condensed Consolidated Financial
Statements. The unaudited pro forma condensed consolidated balance sheet as of
September 30, 2002 includes the consolidated balance sheet of the Company as of
September 30, 2002 and the balance sheet of the Acquired Business as of November
25, 2002. The unaudited pro forma condensed consolidated statement of operations
for the year ended December 31, 2001 includes the consolidated statement of
operations for the Company and for the Acquired Business both for the year ended
December 31, 2001. The unaudited pro forma condensed consolidated statement of
operations for the nine months ended September 30, 2002 includes the
consolidated statement of operations for the Company and for the Acquired
Business both for the nine months ended September 30, 2002.

The unaudited pro forma condensed consolidated financial statements may not be
indicative of either what the consolidated operations and financial position
would have been had the Company had control of the Acquired Business's assets as
of January 1, 2001 or the future results of operations of the consolidated
companies.

                           DECKERS OUTDOOR CORPORATION
                                AND SUBSIDIARIES
                 Pro Forma Condensed Consolidated Balance Sheets
                               September 30, 2002
                                   (Unaudited)



                                                      DECKERS          TEVA SPORT
                                                      OUTDOOR           SANDALS,             PRO FORMA            PRO FORMA
                                                    CORPORATION           INC.              ADJUSTMENTS          CONSOLIDATED
                                                    -----------           ----              -----------          ------------
                                                                                                     
                     ASSETS
Current assets

  Cash and cash equivalents                        $ 20,491,000                --           (11,555,000)(1)         8,936,000
  Trade accounts receivable, net                     15,783,000             6,000                11,000(1)         15,800,000
  Inventories                                        18,058,000           391,000                                  18,449,000
  Prepaid expenses and other current assets           1,283,000            32,000                                   1,315,000
  Refundable and deferred tax assets                  4,070,000                --                                   4,070,000
                                                   ------------           -------            ----------           -----------
          Total current assets                       59,685,000           429,000           (11,544,000)           48,570,000

Property and equipment, at cost, net                  3,592,000            88,000                                   3,680,000
Trademarks, net                                         118,000                --            51,000,000(1)         51,118,000
Goodwill, net                                         6,782,000                --            11,329,000(1)         18,111,000
Other intangible assets, net                          2,269,000                --              (477,000)(1)         1,792,000
Other assets, net                                       448,000                --             1,344,000(1)          1,792,000
                                                   ------------           -------            ----------           -----------
                                                   $ 72,894,000           517,000            51,652,000           125,063,000
                                                   ============           =======            ==========           ===========

      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Notes payable and current installments
          of long-term debt                        $    156,000                --                                     156,000
     Trade accounts payable                           6,897,000            50,000               (50,000)(1)         6,897,000
     Accrued expenses                                 7,864,000            72,000                                   7,936,000
                                                   ------------           -------            ----------           -----------
          Total current liabilities                  14,917,000           122,000               (50,000)           14,989,000
                                                   ------------           -------            ----------           -----------

Long-term debt, less current installments                41,000                              46,042,000(1)         46,083,000

Stockholders' equity:
     Preferred stock                                         --                --             5,500,000(1)          5,500,000
     Common stock                                        93,000                --                 1,000(1)             94,000
     Additional paid-in capital                      25,486,000           395,000               159,000(1)         26,040,000
     Retained earnings                               32,535,000                --                                  32,535,000
     Accumulated other comprehensive income            (178,000)               --                                    (178,000)
                                                   ------------           -------            ----------           -----------
          Total stockholders' equity                 57,936,000           395,000             5,660,000            63,991,000
                                                   ------------           -------            ----------           -----------
                                                   $ 72,894,000           517,000            51,652,000           125,063,000
                                                   ============           =======            ==========           ===========


See accompanying notes to unaudited pro forma condensed consolidated financial
statements.

                           DECKERS OUTDOOR CORPORATION
                                AND SUBSIDIARIES
            Pro Forma Condensed Consolidated Statements of Operations
                          Year ended December 31, 2001
                                   (Unaudited)



                                            DECKERS
                                            OUTDOOR          TEVA SPORT             PRO FORMA             PRO FORMA
                                          CORPORATION       SANDALS, INC.          ADJUSTMENTS          CONSOLIDATED
                                          -----------       -------------          -----------          ------------
                                                                                            
Net sales                                $ 91,461,000          5,025,000            (2,927,000)(2)        93,559,000
Cost of sales                              52,903,000          1,916,000            (1,609,000)(2)        53,210,000
                                         ------------          ---------            ----------            ----------
    Gross profit                           38,558,000          3,109,000            (1,318,000)           40,349,000

Selling, general and administrative
  expenses                                 34,040,000          2,263,000            (5,344,000)(3)        30,959,000
Litigation costs                            2,180,000                 --                    --             2,180,000
                                         ------------          ---------            ----------            ----------
    Income from operations                  2,338,000            846,000             4,026,000             7,210,000

Other expense (income):
    Interest, net                            (308,000)           (34,000)            5,342,000(4)          5,000,000
    Other                                    (165,000)                --                    --              (165,000)
                                         ------------          ---------            ----------            ----------
        Income before income taxes          2,811,000            880,000            (1,316,000)            2,375,000

Income taxes                                1,185,000                 --              (184,000)(5)         1,001,000
                                         ------------          ---------            ----------            ----------
        Net income                       $  1,626,000            880,000            (1,132,000)            1,374,000
                                         ============          =========            ==========            ==========


Net income per share:
    Basic                                $       0.18                                                           0.15
    Diluted                                      0.17                                                           0.12
                                         ============                                                     ==========

Weighted-average shares:
    Basic                                   9,247,000                                                      9,347,000(6)
    Diluted                                 9,661,000                                                     11,299,000(6)
                                         ============                                                     ==========



See accompanying notes to unaudited pro forma condensed consolidated financial
statements.

                           DECKERS OUTDOOR CORPORATION
                                AND SUBSIDIARIES
            Pro Forma Condensed Consolidated Statements of Operations
                      Nine months ended September 30, 2002
                                   (Unaudited)



                                                DECKERS
                                                OUTDOOR          TEVA SPORT           PRO FORMA            PRO FORMA
                                              CORPORATION       SANDALS, INC.        ADJUSTMENTS         CONSOLIDATED
                                              -----------       -------------        -----------         ------------
                                                                                             
Net sales                                    $ 73,355,000          4,774,000         (2,961,000)(2)        75,168,000
Cost of sales                                  41,472,000          1,798,000         (1,643,000)(2)        41,627,000
                                             ------------          ---------         ----------            ----------
  Gross profit                                 31,883,000          2,976,000         (1,318,000)           33,541,000

Selling, general and administrative
  expenses                                     27,856,000          2,221,000         (4,603,000)(3)        25,474,000
Litigation costs                                3,518,000                 --                 --             3,518,000
                                             ------------          ---------         ----------            ----------
    Income from operations                        509,000            755,000          3,285,000             4,549,000

Other expense (income):
  Interest, net                                   (58,000)           (47,000)         3,912,000(4)          3,807,000
  Other                                            73,000                 --                 --                73,000
                                             ------------          ---------         ----------            ----------
    Income before income taxes and
      cumulative effect of accounting
      change                                      494,000            802,000           (627,000)              669,000

Income taxes                                      237,000                 --             84,000(5)            321,000
                                             ------------          ---------         ----------            ----------
    Income before cumulative effect of
      accounting change                           257,000            802,000           (711,000)              348,000

Cumulative effect of accounting change,
  net of $843,000 income tax benefit           (8,973,000)                --                 --            (8,973,000)
                                             ------------          ---------         ----------            ----------
            Net income (loss)                $ (8,716,000)           802,000           (711,000)           (8,625,000)
                                             ============          =========         ==========            ==========



                                   (Continued)

                           DECKERS OUTDOOR CORPORATION
                                AND SUBSIDIARIES
      Pro Forma Condensed Consolidated Statements of Operations, Continued
                      Nine months ended September 30, 2002
                                   (Unaudited)



                                               DECKERS
                                               OUTDOOR           TEVA SPORT       PRO FORMA         PRO FORMA
                                             CORPORATION       SANDALS, INC.     ADJUSTMENTS      CONSOLIDATED
                                            -------------      -------------     -----------      ------------
                                                                                      
Basic income per common share before
      cumulative effect of accounting
      change                                $        0.03                                                 0.04
Cumulative effect of accounting change              (0.97)                                               (0.96)
                                            -------------                                           ----------
Basic loss per common share                 $       (0.94)                                               (0.92)
                                            =============                                           ==========
Average basic common shares                     9,307,000                                            9,407,000(6)
                                            =============                                           ==========

Diluted income per common share before
      cumulative effect of accounting
      change                                $        0.03                                                 0.03
Cumulative effect of accounting change
                                                    (0.93)                                               (0.80)
                                            -------------                                           ----------
Diluted loss per common share               $       (0.90)                                               (0.77)
                                            =============                                           ==========
Average diluted common shares                   9,642,000                                           11,271,000(6)
                                            =============                                           ==========


See accompanying notes to unaudited pro forma condensed consolidated financial
statements.

                           DECKERS OUTDOOR CORPORATION
                                AND SUBSIDIARIES
    Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements


The unaudited pro forma condensed consolidated balance sheet as of September 30,
2002 includes the consolidated balance sheet of Deckers Outdoor Corporation
("the Company") as of September 30, 2002 and the balance sheet of Teva Sport
Sandals, Inc. ("the Acquired Business") as of November 25, 2002 on a historical
cost basis. The unaudited pro forma condensed consolidated statement of
operations for the year ended December 31, 2001 includes the consolidated
statement of operations for the Company and for the Acquired Business both for
the year ended December 31, 2001 on a historical cost basis. The unaudited pro
forma condensed consolidated statement of operations for the nine months ended
September 30, 2002 includes the consolidated statement of operations for the
Company and for the Acquired Business both for the nine months ended September
30, 2002 on a historical cost basis. Pro forma adjustments to reflect the impact
of applying purchase accounting to the historical basis of the assets acquired
and liabilities assumed and their pro forma impact on the results of operations
are presented below. The allocation of the purchase price is preliminary and is
subject to revision based upon the completion of fair value evaluations
including the allocation to identifiable intangibles and goodwill.

(1)   Recognizes the acquisition of Teva by the Company for cash consideration
      of $43,000,000 and the issuance of a subordinated note to Mr. Thatcher of
      $13,000,000, preferred stock of $5,500,000, 100,000 shares of common stock
      valued at $367,000 and 100,000 stock options valued at $187,000. The cash
      consideration was financed through the use of existing cash on hand,
      $12,042,000 from the Company's revolving line of credit, $7,000,000 of
      senior debt provided by Comerica Bank and the issuance of $14,000,000 of
      senior subordinated notes to an unaffiliated third party.



                                                       DEBIT (CREDIT)
                                   ---------------------------------------------------
                                                         ELIMINATE             NET
                                   RECORD PURCHASE      INTERCOMPANY        PRO FORMA
                                     TRANSACTION          AMOUNTS          ADJUSTMENTS
                                     -----------          -------          -----------
                                                                  
Cash                                $(11,555,000)                          (11,555,000)
Trade accounts receivable, net           456,000           (445,000)            11,000
Trademarks                            51,000,000                            51,000,000
Goodwill                              11,329,000                            11,329,000
Other intangible assets                 (477,000)                             (477,000)
Other assets                           1,344,000                             1,344,000
Trade accounts payable                        --             50,000             50,000
Long-term debt                       (46,042,000)                          (46,042,000)
Preferred stock                       (5,500,000)                           (5,500,000)
Common stock                              (1,000)                               (1,000)
Additional paid-in capital              (554,000)           395,000           (159,000)
                                    ------------       ------------       ------------
                                              --                 --                 --
                                    ------------       ------------       ------------


(2)    Eliminates sales from the Company to the Acquired Business as well as the
       management fee paid to the Acquired Business by Mr. Thatcher during the
       respective periods reported.



                                               TWELVE          NINE
                                            MONTHS ENDED    MONTHS ENDED
                                            DECEMBER 31,    SEPTEMBER 30,
                                                2001            2002
                                            ------------    -------------
                                                      
Intercompany sales to Acquired Business      $1,609,000       1,643,000
Management fee                                1,318,000       1,318,000
                                             ----------       ---------
   Total pro forma adjustments to sales      $2,927,000       2,961,000
                                             ==========       =========


                           DECKERS OUTDOOR CORPORATION
                                AND SUBSIDIARIES
    Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements


(3)   Eliminates royalty payments made to Mr. Thatcher during the reporting
      periods, reverses contractual marketing costs that the Company was
      required to spend under the licensing agreement, reverses amortization
      expensed for the Teva license agreement and extensions and records
      amortization on new patents, trademarks and copyrights acquired in the
      Acquisition.



                                                                  TWELVE           NINE
                                                               MONTHS ENDED     MONTHS ENDED
                                                               DECEMBER 31,     SEPTEMBER 30,
                                                                   2001             2002
                                                                   ----             ----
                                                                          
Royalty expense                                                $(4,194,000)       (3,621,000)
Contractual marketing costs                                       (207,000)         (256,000)
Prior amortization on license fees and extension payments       (1,190,000)         (893,000)
Additional amortization related to purchase agreement              247,000           167,000
                                                               -----------        ----------
    Total pro forma adjustments to selling, general
          and administrative expenses                          $(5,344,000)       (4,603,000)
                                                               ===========        ==========


(4)   Eliminates prior interest income on excess cash balances during the
      reporting periods and records interest expense on new debt instruments, as
      referred to in Note 1 above.

(5)   Adjusts income taxes to the Company's tax rate for the period reported,
      which were 42.2% and 48.0% for the twelve months ended December 31, 2001
      and for the nine months ended September 30, 2002, respectively.

(6)   Average basic common shares includes 100,000 shares of common stock issued
      to Mr. Thatcher in connection with the acquisition. Average diluted common
      shares also includes the potential dilutive impact of the conversion of
      the preferred stock (1,514,317 shares) and the impact of the 100,000 stock
      options, using the treasury stock method of accounting (23,537 and 16,410
      shares for the twelve months ended December 31, 2001 and for the nine
      months ended September 30, 2002, respectively).