| (a) | Subject to the terms of this Agreement, the Company hereby engages FLG NY to
provide the Company with advisory and management consulting services that fulfill the
duties required of the Office of the Chief Executive Officer (“CEO”) of the
Company, through a management consultant designated by FLG NY (the “Management
Consultant”). The initial Management Consultant designated by FLG NY to fulfill
its contractual responsibilities under this Agreement will be Allan H. Fletcher. FLG
NY shall not designate a different Management Consultant to provide services under this
Agreement without the prior written consent of the Company. |
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| (b) | In order to maintain the safety and security of the physical premises of the
Company, FLG NY shall direct and cause the Management Consultant to perform contracted
management consulting services on working days and hours, prescribed by FLG NY, that
are to the maximum degree possible consistent with the Company’s working days and hours
of work provided by the Company’s executive employees. |
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| (c) | While remaining at all times solely as an employee of FLG NY, the Management
Consultant may nonetheless be permitted to use the Company’s email system and
letterhead and carry business cards identifying his responsibility or title at the
Company, and be referenced in the organizational chart of the Company. |
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| (d) | FLG NY will at all times during the term of this Agreement maintain compliance
with all federal, state and local laws, regulations and ordinances, including, without
limitation, U.S. employment, tax and immigration laws. |
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| (e) | FLG NY shall not, directly or indirectly, employ, use, request or otherwise
make available, the labor, talents or energy of any person not eligible for employment
by FLG NY under the terms and conditions of the Immigration Reform and Control Act of
1986 (the “Act”), as it shall now exist or hereafter be modified or amended, at
any time during the term of this Agreement. FLG NY shall supply all documents
requested by the Company that relate to the eligibility of any person employed by FLG
NY to provide services to the Company under this Agreement. |
| (a) | overseeing the development and execution by Company personnel of strategies and
actions approved by the Company’s Board of Directors; |
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| (b) | regularly reporting to the Company’s Board of Directors on the development and
execution of the Company’s business plan; |
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| (c) | overseeing the Company’s disclosure and disclosure controls, and signing the
Company’s filings with the Securities and Exchange Commission; and |
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| (d) | such other duties as are reasonably requested by the Board of Directors or
Chairman of the Company. |
| (a) | The Company will pay FLG NY a one-time fee of $75,000 upon execution of this
Agreement. |
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| (b) | The Company will pay FLG NY a monthly consulting fee of $9,000, payable in
arrears. |
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| (c) | FLG NY may receive a cash incentive fee, the amount of which, if any, will be
determined annually by the Company’s Compensation and Human Resource Committee based on
achievement of the Company’s objectives and FLG NY’s accomplishment of the prescribed
objectives for the CEO. The objectives for the Company and the CEO will be set out in
the Company’s annual business plan, to be developed by senior management of the Company
and approved by the Board of Directors. The target incentive fee for fiscal year 2008
will be $500,000, assuming full achievement of the Company’s 2008 business plan
objectives. If the Company terminates this Agreement without cause during a fiscal
year, the Company shall promptly pay FLG NY as soon as practicable (but no later than
90 days after the applicable fiscal year end) a pro-rata portion of any cash incentive
fee determined by the Compensation and Human Resources Committee to have been earned
for such fiscal year. |
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| (d) | Concurrent with the execution and delivery hereof, the Company will grant FLG
NY 100,000 non-qualified options to purchase shares of the Company’s common stock at an
exercise price of $5.48 per share. Options to purchase 50,000 shares of the Company’s
common stock will vest on October 24, 2008 and the remaining options will vest on
October 24, 2009. The option vesting will be accelerated and the options will become
immediately exercisable upon the Company’s termination of this Agreement either without
cause, as defined below, or as a result of a change in control. The foregoing options
will be exercisable for a period of time from the vesting date until the earlier of
(i) one year after termination of this Agreement, and (ii) ten years after the date of
grant. |
| (a) | normal, ordinary and reasonable business expenses (including business class
airfare) incurred by FLG NY in connection with the performance of FLG NY’s duties
hereunder, upon submission of receipts substantiating the expenses claimed in
accordance with Company policy; and |
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| (b) | rental of reasonable residential or hotel accommodations in the Carlsbad,
California area for the Management Consultant while he is providing services to the
Company at its headquarters in the event the Company does not itself make such
accommodations available. |
| (a) | FLG NY acknowledges that, in the course of FLG NY’s engagement by the Company,
it will have access to confidential information concerning the organization and
functioning of the business of the Company and that such information is a valuable
trade secret and the sole property of the Company. Accordingly, except as required by
law, legal process, or in connection with any litigation between the parties hereto
with respect to matters arising out of this Agreement, FLG NY shall not, and shall
cause the Management Consultant and other of its employees to not, disclose or furnish
any confidential information of the Company to any person other than an employee or
director of the Company, at any time during the term of this Agreement or thereafter.
FLG NY shall not, and shall cause the Management Consultant and other of its employees
to not, use any confidential information of the Company for its or their own direct or
indirect benefit. |
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| (b) | For the purposes of this Agreement, information will not be considered
“confidential information” to the extent that such information: |
| (i) | is in the public domain, or hereafter becomes generally known
or available through no action or omission by FLG NY; |
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| (ii) | is furnished by the Company or an affiliate to any person
(other than a subsidiary or affiliate of the Company) without restriction on
disclosure, provided that information furnished by, or at the direction of, the
Management Consultant acting in his capacity as CEO under this Agreement will
be considered confidential information, notwithstanding the absence of any
restriction on disclosure; |
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| (iii) | becomes known to FLG NY from a source other than the Company,
or an affiliate of the Company, without a breach of this Agreement or any other
agreement with the Company, or an affiliate of the Company, and without any
restriction on disclosure; or |
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| (iv) | is within the general knowledge or skill of any FLG NY employee
to the extent acquired prior to this engagement. |
| (c) | During the term of this Agreement and for a period of one year after the
termination of this Agreement, FLG NY will not, and shall cause the Management
Consultant and |
other of its employees to not, directly or indirectly, provide services to any person or
entity that competes or is planning to compete with the Company; provided,
however, that neither (i) passive investment of up to 5% of the outstanding
voting securities or similar equity interest in a publicly held entity, nor (ii)
provision of services to affiliates of FLG NY, will constitute a breach of this
Agreement. |
| (d) | Excluding general employment solicitations directed at the public, during the
term of this Agreement and for a period of two years after the termination of this
Agreement, FLG NY will not, and shall cause the Management Consultant and other of its
employees to not, directly or indirectly: |
| (i) | solicit, induce or attempt to influence any person or business
that is an account, customer or client of the Company or any subsidiary to
restrict or cancel the business of any such account, customer or client with
the Company or any subsidiary; or |
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| (ii) | solicit any employee or sales representative of the Company or
any subsidiary or affiliate to leave his or her employment with or sales
representation of the Company or any subsidiary or affiliate. |
| (e) | If this Agreement is terminated, FLG NY shall return to an officer of the
Company any and all confidential information of the Company then in its or its
employees’ possession and shall provide passwords for computer files stored on the
Company’s computers used by the Management Consultant. |
| (a) | Nothing in this Agreement shall be construed as creating an employer-employee
relationship, a partnership, a co-employment relationship or a joint venture between
the Company and FLG NY or between the Company and the Management Consultant. FLG NY
shall exercise sole and exclusive control over its employees, consultants or
independent contractors who provide services to the Company on behalf of FLG NY,
including the Management Consultant, and over the labor and employee relations policies
and policies relating to wages, hours, working conditions or other conditions of its
employees, consultants or independent contractors. |
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| (b) | Notwithstanding any other term of this Agreement, the Management Consultant
will be supervised and directed in the performance and fulfillment of FLG NY’s
responsibilities under this Agreement solely by the Chief Executive Officer of FLG NY
(“FLG NY’s CEO”) and report regularly to FLG NY’s CEO concerning developments,
progress and challenges relating to or arising from the services of the Management
Consultant under this Agreement. FLG NY’s CEO shall not be the same person as the
Management Consultant. Accordingly, should the Company desire any changes in the
performance of the Management Consultant’s services provided on behalf of FLG NY to the
Company under this Agreement, the Company through its designated representative shall
communicate such desired changes to FLG NY’s CEO so that FLG NY’s CEO may instruct the
Management Consultant in any change in the rendition of management consulting services
to the Company. |
| (a) | The Company shall own, and FLG NY hereby disclaims, any right, title or
interest whatsoever to, and in, all ideas, inventions, trade secrets, publications,
works of authorship, copyrights, copyright applications, moral rights, know-how,
drawings, sketches, configurations, models, prototypes, materials, machines, designs,
concepts, schematics, layouts, processes, patents, patent applications and improvements
(collectively, “Inventions and Intellectual Property”) that relate to: |
| (i) | the performance of this Agreement; or |
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| (ii) | the Company’s actual or anticipated business or products at the
time the Inventions and Intellectual Property are conceived or reduced to
practice. |
| (b) | FLG NY shall promptly and fully disclose any Inventions and Intellectual
Property to the Company. |
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| (c) | FLG NY hereby assigns to the Company all right, title, and interest to and in
any Inventions and Intellectual Property in the United States and elsewhere. FLG NY
shall execute or cause to be executed all such documents and take all such further
action as is necessary to confirm or fully vest all Inventions and Intellectual
Property in the Company, including by providing assistance in securing patents,
copyrights or other proprietary rights. |
| (a) | Neither FLG NY nor the Management Consultant will be entitled to any benefits
paid by the Company to its employees. |
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| (b) | The Company will regularly report amounts paid to FLG NY by filing Form
1099-MISC with the Internal Revenue Service, as required by law. FLG NY and the
Management Consultant will be solely responsible for any tax consequences applicable to
FLG NY or the Management Consultant by reason of this Agreement. The Company will not
be responsible for the payment of any federal, state or local taxes or contributions
imposed under any employment insurance, social security, income tax or other tax law or
regulation with respect to FLG NY’s performance of this Agreement. |
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| (c) | FLG NY shall pay, as and when they become due, all taxes owed as a result of
reimbursement of expenses, payment of consulting fees or the exercise of stock options,
or that otherwise become payable in the United States or any other city, state, country
or jurisdiction as a result of the performance of this Agreement. |
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| (d) | FLG NY hereby agrees to indemnify the Company from and against any and all
claims, losses, costs, fines, assessments, fees, liabilities, damages or injuries
(collectively, “Damages”) suffered by the Company as a result of any breach by
FLG NY of this Section 8. FLG NY further agrees to indemnify the Company for any
Damages suffered by the Company as a result of any legal determination that FLG |
NY or the Management Consultant is not an independent contractor. FLG NY acknowledges
and affirms that it has not received any tax or other legal advice from the Company in
connection with this Agreement. |
| (a) | The Company represents and warrants to FLG NY that: |
| (i) | it is a corporation duly authorized and validly existing under
the laws of the state of Delaware; and |
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| (ii) | this Agreement has been duly authorized by all necessary
corporate action and constitutes a binding agreement of the Company,
enforceable against the Company in accordance with its terms. |
| (b) | FLG NY represents and warrants to the Company that: |
| (i) | it is a corporation duly authorized and validly existing under
the laws of the state of New York; |
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| (ii) | this Agreement has been duly authorized by all necessary
corporate action and constitutes a binding agreement of FLG NY, enforceable
against FLG NY in accordance with its terms; and |
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| (iii) | the initial Management Consultant is not obligated to assign
Inventions and Intellectual Property to any entity other than FLG NY. |
| (a) | This Agreement will remain effective until terminated by either party. |
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| (b) | This Agreement may be terminated by: |
| (i) | either party, without cause, by providing written notice of
termination to the other party; |
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| (ii) | the Company, for cause, effective immediately, by providing
written notice to FLG NY specifying in reasonable detail the cause for
termination; or |
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| (iii) | FLG NY, for material breach of this Agreement by the Company,
if the Company has not cured such breach within 7 days of receiving written
notice thereof from FLG NY, by providing a written notice to the Company of
termination. |
| (c) | Any termination of this Agreement by FLG NY as a result of a reduction in the
scope of the duties to be performed by FLG NY (including the Management Consultant)
under this Agreement will be deemed a termination without cause by the Company for
purposes of the vesting of the stock options granted to FLG NY under this Agreement. |
| (c) | In the event of any termination of this Agreement, whether voluntary or
involuntary, or with or without cause, no additional payments or benefits will be
provided, other than the acceleration of the stock options granted pursuant to
Section 3(d) hereof under the specific circumstances described in Section 3(d) hereof
and the possibility of a pro rata share of the cash incentive fee as provided in
Section 3(c). |
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| (d) | For purposes of this Agreement, “cause” shall mean: |
| (i) | material breach of this Agreement by FLG NY; |
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| (ii) | any act or acts of personal dishonesty by FLG NY or the
Management Consultant; |
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| (iii) | the conviction of FLG NY or the Management Consultant of a
felony; |
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| (iv) | violation of the Company’s policies or code of conduct by FLG
NY or the Management Consultant; |
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| (v) | violation by FLG NY or the Management Consultant of any
confidentiality or non-competition agreement with the Company or any affiliate
of the Company; or |
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| (vi) | the willful engaging by FLG NY or the Management Consultant in
misconduct that is injurious to the Company. |
| (e) | The provisions of Section 5 will survive termination of this Agreement. |
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| (f) | If this Agreement is terminated in the middle of any month, the Company shall
promptly pay a prorated amount of the monthly consulting fee payable under Section
3(b). |
| (a) | All notices under this Agreement must be in writing and will be duly given
under this Agreement: (i) upon delivery, if delivered by overnight courier with
confirmation of delivery; or (ii) on the third business day after the postmark date, if
mailed by certified or registered mail to the address listed below with postage
prepaid. Addresses to either party are as provided below, or as subsequently modified
by written notice to the other party. |
| Attention: Chairman of the Board Ashworth, Inc. 2765 Loker Avenue West Carlsbad, CA 90210 |
| Attention: Chief Executive Officer Fletcher Leisure Group Ltd. 2002 Ridge Road Champlain, NY 12919 |
| (b) | This Agreement will be interpreted and enforced in accordance with the internal
laws of the State of Delaware. FLG NY hereby submits to the jurisdiction of, and
consents to the enforcement of this Agreement in, the federal and state courts located
in the State of Delaware. |
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| (c) | This Agreement may not be modified, amended or rescinded except by a written
agreement signed by both FLG NY and the Company’s Chairman of the Board. No waiver of
any of the provisions of this Agreement will be deemed or will constitute a waiver of
any other provisions hereof (whether or not similar); nor will such waiver constitute a
continuing waiver. |
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| (d) | This Agreement sets forth the entire agreement between the parties, and there
are no prior or contemporaneous representations, promises or conditions, whether oral
or written, to the contrary. |
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| (e) | This Agreement may be executed in counterparts, each of which will be deemed an
original, and both of which together will constitute the same document. |
| ASHWORTH, INC. | ||||||
| By: | /s/ David M. Meyer | |||||
| David M. Meyer | ||||||
| Chairman of the Board |
| FLETCHER LEISURE GROUP, LTD. | ||||||
| By: | /s/ Mark Fletcher | |||||
| Mark Fletcher | ||||||
| Chief Executive Officer |