<SUBMISSION>
<ACCESSION-NUMBER>0000936392-08-000662
<TYPE>SC 14D9
<PUBLIC-DOCUMENT-COUNT>4
<FILING-DATE>20081020
<DATE-OF-FILING-DATE-CHANGE>20081020
<SUBJECT-COMPANY>
<COMPANY-DATA>
<CONFORMED-NAME>ASHWORTH INC
<CIK>0000820774
<ASSIGNED-SIC>2320
<IRS-NUMBER>841052000
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1031
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>SC 14D9
<ACT>34
<FILE-NUMBER>005-41392
<FILM-NUMBER>081131512
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>2765 LOKER AVE WEST
<CITY>CARLSBAD
<STATE>CA
<ZIP>92008
<PHONE>7604386610
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>2765 LOKER AVENUE WEST
<CITY>CARLSBAD
<STATE>CA
<ZIP>92008
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>CHARTER GOLF INC
<DATE-CHANGED>19920703
</FORMER-COMPANY>
</SUBJECT-COMPANY>
<FILED-BY>
<COMPANY-DATA>
<CONFORMED-NAME>ASHWORTH INC
<CIK>0000820774
<ASSIGNED-SIC>2320
<IRS-NUMBER>841052000
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1031
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>SC 14D9
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>2765 LOKER AVE WEST
<CITY>CARLSBAD
<STATE>CA
<ZIP>92008
<PHONE>7604386610
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>2765 LOKER AVENUE WEST
<CITY>CARLSBAD
<STATE>CA
<ZIP>92008
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>CHARTER GOLF INC
<DATE-CHANGED>19920703
</FORMER-COMPANY>
</FILED-BY>
<DOCUMENT>
<TYPE>SC 14D9
<SEQUENCE>1
<FILENAME>a50180sc14d9.htm
<DESCRIPTION>SCHEDULE 14D9
<TEXT>
<HTML>
<HEAD>
<TITLE>sc14d9</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<CENTER style="font-size: 1pt; width: 100%; border-bottom: 2pt solid #000000"></CENTER><!-- callerid=999 iwidth=455 length=0 -->

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<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 18pt">SECURITIES AND EXCHANGE
    COMMISSION</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 12pt">Washington, D.C.
    20549</FONT></B>
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 18%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=455 length=84 -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 18pt">SCHEDULE 14D-9</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 14pt"><FONT style="white-space: nowrap">(RULE&#160;14d-101)</FONT></FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 12pt">SOLICITATION/RECOMMENDATION
    STATEMENT UNDER SECTION&#160;14(d)(4)</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 12pt">OF THE SECURITIES EXCHANGE ACT
    OF 1934</FONT></B>
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>(Amendment No.&#160;&#160;&#160;&#160;&#160;&#160;&#160; )</B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 18%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=455 length=84 -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 18pt">ASHWORTH, INC.</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <FONT style="font-size: 12pt">(Name of Subject Company)
    </FONT>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 11pt">ASHWORTH, INC.</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <FONT style="font-size: 11pt">(Name of Person Filing Statement)
    </FONT>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 11pt">COMMON STOCK, $0.001 PAR VALUE
    PER SHARE</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <FONT style="font-size: 11pt">(Title of Class of Securities)
    </FONT>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 11pt">04516H101</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <FONT style="font-size: 11pt">(CUSIP Number of Class of
    Securities)
    </FONT>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 11pt">Halina Balys</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 11pt">Vice President, Corporate
    Secretary and Compliance Officer</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 11pt">2765 Loker Avenue
    West</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 11pt">Carlsbad, California
    92010</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 11pt"><FONT style="white-space: nowrap">(760)&#160;438-6610</FONT></FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <FONT style="font-size: 9pt">(Name, address and telephone number
    of person authorized to receive notices
    </FONT>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <FONT style="font-size: 9pt">and communications on behalf of the
    person filing statement)
    </FONT>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><I><FONT style="font-size: 11pt">Copies to:</FONT></I></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 11pt">Gibson, Dunn&#160;&#038;
    Crutcher LLP</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 11pt">3161 Michelson Drive,
    Suite&#160;1200</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 11pt">Irvine, California
    92612</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 11pt"><FONT style="white-space: nowrap">(949)&#160;451-3800</FONT></FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 11pt">Attention: Mark W. Shurtleff,
    Esq.</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <FONT style="font-family: Wingdings; font-variant: normal">&#111;</FONT>&#160;Check
    the box if the filing relates solely to preliminary
    communications made before the commencement of a tender offer.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
<TABLE border="0" width="90%" cellpadding="0" cellspacing="0">
<TR>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="76%"></TD>
</TR>
<TR><TD></TD><TD colspan="8"><A HREF="#000">Item 1. Subject Company Information.</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#001">Item 2. Identity and Background of Filing Person.</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#002">Item 3. Past Contacts, Transactions, Negotiations and Agreements.</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#003">Item 4. The Solicitation or Recommendation</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#004">Item 5. Persons/Assets Retained, Employed, Compensated or Used.</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#005">Item 6. Interest in Securities of the Subject Company.</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#006">Item 7. Purposes of the Transaction and Plans or Proposals.</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#007">Item 8. Additional Information.</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#008">Item 9. Exhibits.</A></TD></TR>
<TR><TD colspan="9"><A HREF="#009">SIGNATURES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#010">Annex A</A></TD></TR>
<TR><TD colspan="9"><A HREF="#011">Annex B</A></TD></TR>
<TR><TD colspan="9"><A HREF="a50180exv99wxeyx2y.htm">EX-99.(e)(2)</A></TD></TR>
<TR><TD colspan="9"><A HREF="a50180exv99wxeyx9y.htm">EX-99.(e)(9)</A></TD></TR>
</TABLE>
</CENTER>
<!-- /TOC -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>


<!-- link2 "Item 1. Subject Company Information." -->
<DIV align="left"><A NAME="000"></A></DIV>


<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Item&#160;1.&#160;&#160;Subject
    Company Information.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The name of the subject company is Ashworth, Inc., a Delaware
    corporation (the &#147;Company&#148;). The address of the
    principal executive offices of the Company is 2765 Loker Avenue
    West, Carlsbad, California 92010. The telephone number of the
    Company at its principal executive offices is
    <FONT style="white-space: nowrap">(760)&#160;438-6610.</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The title of the class of equity securities to which this
    Solicitation/Recommendation Statement on
    <FONT style="white-space: nowrap">Schedule&#160;14D-9</FONT>
    (together with the exhibits and annexes hereto, this
    &#147;Statement&#148;) relates is the common stock, $0.001 par
    value, of the Company (the &#147;Shares&#148;). As of
    October&#160;16, 2008, there were 14,746,844 Shares issued and
    outstanding.
</DIV>


<!-- link2 "Item 2. Identity and Background of Filing Person." -->
<DIV align="left"><A NAME="001"></A></DIV>


<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Item&#160;2.&#160;&#160;Identity
    and Background of Filing Person.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The filing person of this Statement is the subject company,
    Ashworth, Inc. The Company&#146;s name, business address and
    business telephone number are set forth in Item&#160;1 above.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This Statement relates to the tender offer by PHX Acquisition
    Corp., a Delaware corporation (the&#160;&#147;Purchaser&#148;),
    disclosed in a Tender Offer Statement on Schedule&#160;TO, dated
    as of October&#160;20, 2008 (as may be amended or supplemented
    from time to time, the &#147;Schedule&#160;TO&#148;), to
    purchase all of the outstanding Shares at a price of
    $1.90&#160;per Share (the &#147;Offer Price&#148;), net to the
    holder in cash (subject to applicable withholding tax, without
    interest, on the terms and subject to the conditions set forth
    in Purchaser&#146;s offer to purchase, dated as of
    October&#160;20, 2008 (as may be amended or supplemented from
    time to time, the&#160;&#147;Offer to Purchase&#148;), and the
    related letter of transmittal). The consideration offered per
    Share, together with all of the terms and conditions of the
    Purchaser&#146;s tender offer, is referred to in this Statement
    as the &#147;Offer.&#148; Purchaser is a wholly owned subsidiary
    of Taylor Made Golf Company, Inc., a Delaware corporation
    (&#147;Parent&#148;). adidas AG, a multinational apparel and
    sporting goods company headquartered in Germany, is the ultimate
    parent entity of Parent (&#147;adidas&#148;). The Offer was
    commenced by the Purchaser on October&#160;20, 2008 and expires
    at midnight, New York City time, at the end of November&#160;18,
    2008, unless it is extended or terminated in accordance with its
    terms. The Offer is conditioned on, among other matters, there
    being validly tendered and not withdrawn before the expiration
    of the Offer at least a majority of the Shares then outstanding
    on a fully diluted basis, as described in the Offer to Purchase
    (the &#147;Minimum Condition&#148;).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Offer is being made pursuant to the Agreement and Plan of
    Merger, dated as of October&#160;13, 2008, by and among the
    Company, Parent, and the Purchaser (as may be amended or
    supplemented from time to time, the &#147;Merger
    Agreement&#148;). The Merger Agreement provides that, following
    the consummation of the Offer, the Purchaser will merge with and
    into the Company (the &#147;Merger&#148;), and the Company will
    continue as the surviving corporation in the Merger and a wholly
    owned subsidiary of Parent. The Merger will be completed in one
    of two ways. If, following the consummation of the Offer, the
    Purchaser owns more than 90% of the Shares then outstanding,
    then the Merger will occur promptly after the consummation of
    the Offer. However, if, following the consummation of the Offer,
    the Purchaser owns more than 50%&#160;but less than 90% of the
    Shares then outstanding, then the Company will call and hold a
    special meeting of its stockholders to adopt and approve the
    Merger Agreement, and the Merger will occur promptly after any
    such stockholder approval. If the conditions to the Offer have
    been satisfied, Parent will have sufficient votes to adopt the
    Merger Agreement without the need for any of the Company&#146;s
    stockholders to vote in favor of such adoption. In the Merger,
    each outstanding Share (other than Shares held by Parent, the
    Purchaser, the Company, or stockholders who properly exercise
    appraisal rights, if any, under Section&#160;262 of the Delaware
    General Corporation Law (the &#147;DGCL&#148;)), will be
    converted into the right to receive the same consideration paid
    per Share pursuant to the Offer, without interest thereon (the
    &#147;Merger Consideration&#148;).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If, at a scheduled expiration date of the Offer, the Outstanding
    Liabilities (as defined in the Merger Agreement) of the Company
    on a consolidated basis exceed a threshold, which shall
    initially be $85&#160;million, then the Purchaser may elect to
    adjust the Offer Price downward and extend the Offer for an
    additional period of 10 business days (provided that the end of
    such 10 business day period is prior to 120&#160;calendar days
    after the commencement of the Offer). If the Purchaser so
    elects, the Offer Price will be reduced from $1.90 per share, on
    a <I>pro&#160;rata</I> basis, by the amount by which the
    Outstanding Liabilities exceed $85&#160;million. After any such
    adjustment, the new threshold for purposes of triggering a
    future adjustment right will be equal to the Outstanding
    Liabilities at the time of such adjustment, plus an additional
    $5&#160;million.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    1
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Schedule&#160;TO states that the principal executive offices
    of Parent and the Purchaser are located at 5545&#160;Fermi
    Court, Carlsbad, California 92008 and that the telephone number
    at such principal executive offices is (760) 918-6000. The
    Schedule TO further states that the principal executive offices
    of adidas are located at
    <FONT style="white-space: nowrap">Adi-Dassler-Str.&#160;1,</FONT>
    90174 Herzogenaurch, Germany and that the telephone
    number&#160;at such principal offices is
    <FONT style="white-space: nowrap">+49&#160;9132-842920.</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    A copy of the Merger Agreement is filed herewith as Exhibit
    (e)(1) and is incorporated by reference herein. A copy of the
    Offer to Purchase is filed herewith as Exhibit (a)(3) and is
    incorporated by reference herein, including the terms and
    conditions of the Offer, related procedures and withdrawal
    rights, the description of the Merger Agreement and other
    arrangements described and contained in Sections 1, 2, 3, 4, 12,
    14 and 15 of the Offer to Purchase. The Form of Letter of
    Transmittal is filed herewith as Exhibit&#160;(a)(4) and is
    incorporated by reference herein.
</DIV>


<!-- link2 "Item 3. Past Contacts, Transactions, Negotiations and Agreements." -->
<DIV align="left"><A NAME="002"></A></DIV>


<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Item&#160;3.
    Past Contacts, Transactions, Negotiations and
    Agreements.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Except as described in this Statement, or in the Information
    Statement of the Company attached to this Statement as
    Annex&#160;B, or incorporated herein by reference, to the
    knowledge of the Company, as of the date of this Statement,
    there exists no material agreement, arrangement or
    understanding, or any actual or potential conflict of interest,
    between the Company or its affiliates and (i)&#160;the
    Company&#146;s executive officers, directors or affiliates or
    (ii)&#160;adidas, Parent, the Purchaser or their respective
    executive officers, directors or affiliates.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">The
    Merger Agreement</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The summary of the Merger Agreement and the descriptions of the
    terms and conditions of the Offer, related procedures and
    withdrawal rights and other arrangements described and contained
    in Sections 1, 2, 3, 4, 12, 14 and 15 of the Offer to Purchase,
    which is filed herewith as Exhibit (a)(3), are incorporated
    herein by reference. Such summary and descriptions are qualified
    in their entirety by reference to the Merger Agreement, which is
    filed herewith as Exhibit (e)(1) and is incorporated by
    reference herein.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">The
    Exclusivity Agreement</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Company and adidas entered into a No Shop Agreement, dated
    as of September&#160;8, 2008 (the &#147;Exclusivity
    Agreement&#148;), in connection with the consideration of a
    possible negotiated transaction involving the Company. Under the
    Exclusivity Agreement, the Company agreed not to solicit
    alternative proposals for the acquisition of the Company from
    the date thereof through September&#160;29, 2008.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The foregoing summary is qualified in its entirety by reference
    to the Exclusivity Agreement, which is filed herewith as Exhibit
    (e)(2) and is incorporated by reference herein.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">The
    Stockholder Tender Agreement</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    David M. Meyer, Michael S. Koeneke, Knightspoint Partners II,
    L.P., Knightspoint Capital Management&#160;II&#160;LLC,
    Knightspoint Partners, LLC, Ramius Value and Opportunity Master
    Fund Ltd. (f/k/a Starboard Value and Opportunity Master
    Fund&#160;Ltd.) and Parche, LLC (collectively, the
    &#147;Knightspoint Group&#148;) entered into a Stockholder
    Tender Agreement and Irrevocable Proxy, dated as of
    October&#160;13, 2008, with Parent (the&#160;&#147;Tender
    Agreement&#148;), pursuant to which, among other matters, the
    Knightspoint Group members agreed to tender the Shares they hold
    pursuant to and in accordance with the Offer, subject to the
    terms and conditions of the Tender Agreement. The Knightspoint
    Group members signing the Tender Agreement own, in the
    aggregate, approximately 16% of the outstanding Shares of the
    Company as of the date hereof. The Board of Directors of the
    Company (the&#147;Board&#148;) has authorized indemnification of
    the Knightspoint Group members for legal expenses that may be
    incurred by them from any claims arising out of the Tender
    Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The foregoing summary is qualified in its entirety by reference
    to the Tender Agreement, which is filed herewith as Exhibit
    (e)(3) and is incorporated by reference herein.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    2
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Company
    Stock Options and Restricted Stock</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Merger Agreement provides that, at the effective time of the
    Merger, each outstanding option or similar right to purchase a
    Share granted under any of the Company&#146;s equity incentive
    plans, whether vested or unvested, that is outstanding
    immediately prior to the effective time of the Merger shall be
    cancelled, and each holder of such option will be entitled to
    receive in exchange for such option an amount in cash equal to
    the product of (a)&#160;the excess of the Offer Price over the
    exercise price per Share under such option and (b)&#160;the
    number of Shares for which such option is exercisable; provided,
    that if the exercise price per Share of any such option is equal
    to or greater than the Merger Consideration, then such option
    shall be cancelled without any cash payment being made.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As of October&#160;20, 2008, no director or officer of the
    Company holds an option to purchase Shares with an exercise
    price less than the Offer Price, so no payments will be made
    with respect to such options in the Merger.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Immediately prior to the effective time of the Merger, all
    unvested restricted stock grants or portions thereof made under
    the Company&#146;s equity incentive plans outstanding
    immediately prior to the effective time of the Merger shall
    vest, and along with all other vested restricted stock grants,
    shall be entitled to the Merger Consideration.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The only director or officer of the Company who currently holds
    an unvested restricted stock grant is
    Michael&#160;S.&#160;Koeneke, the Company&#146;s Chairman of the
    Board, who holds an unvested restricted stock grant of
    33,333&#160;shares.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Agreements
    with Certain Executive Officers and Directors</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under the terms of the Ashworth/Koeneke Agreement between the
    Company and Michael S. Koeneke (the Chairman of the Board),
    dated as of August&#160;6, 2008, the restrictions on all
    33,333&#160;shares of restricted common stock of the Company
    granted pursuant to the Agreement shall automatically and
    immediately lapse in the event of a change of control of the
    Company.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under the terms of the Ashworth/Meyer Agreement between the
    Company and David M. Meyer (a Board member), dated as of
    August&#160;6, 2008, Mr.&#160;Meyer is entitled to receive a
    cash payment of $150,000 upon a change in control of the Company.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Effective as of October&#160;15, 2008, Eric S. Salus (a Board
    member) and the Company entered into a consulting agreement
    whereby Mr. Salus has and will provide consulting services
    related to operational issues specified by the Board between
    September&#160;25, 2008 and October&#160;25, 2008, in exchange
    for a one-time cash payment of $30,000, payable upon the earlier
    of October&#160;25, 2008 and the date of a change in control of
    the Company.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    James G. O&#146;Connor (a Board member), solely in his capacity
    as a Board member and as requested by the Board in connection
    with the potential sale of Gekko Brands, LLC (a subsidiary of
    the Company) as described in Item&#160;4 of this Statement and
    the Ashworth/Koeneke and Ashworth/Meyer Agreements described
    above, provided additional work to the Company and has received
    a $14,000 cash payment from the Company therefor. There is no
    written agreement with Mr.&#160;O&#146;Connor relating to the
    foregoing.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under the terms of the Consulting Agreement between the Company
    and Fletcher Leisure Group, Ltd., a New&#160;York corporation
    (&#147;FLG&#148;), dated as of January&#160;11, 2008, pursuant
    to which Allan H. Fletcher serves as the Company&#146;s Chief
    Executive Officer, a termination of the Consulting Agreement by
    the Company either without cause or as a result of a change in
    control will result in the accelerated vesting of the 100,000
    non-qualified options to purchase Shares granted pursuant to
    such Consulting Agreement. Such non-qualified options to
    purchase Shares have an exercise price greater than the Offer
    Price, so no payments will be made with respect to such options
    in the Merger.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The foregoing summaries (except with respect to Mr.
    O&#146;Connor) are qualified in their entirety by reference to
    the agreements referenced above and the Company&#146;s equity
    incentive plans, which are filed herewith as Exhibits<BR>
    (e)(4)-(12) and are incorporated by reference herein.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    3
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Management
    Change in Control Plan</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On September&#160;19, 2008, the Company adopted a management
    change in control plan (the &#147;Plan&#148;) that provides for
    the payment of a maximum aggregate amount of $500,000 by the
    Company to certain management personnel in the event that the
    Company experiences a change in control (as defined in the
    Plan). Participants are eligible to receive payment under the
    Plan two months after a change in control, provided that certain
    conditions set forth in the Plan are satisfied.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Of the aggregate Plan amount, $200,000 is allocated to each of
    FLG and Eddie J. Fadel (the Company&#146;s President), $50,000
    is allocated to Greg W. Slack (the Company&#146;s Chief
    Financial Officer) and $50,000 is allocated to other management
    personnel to be approved by the Board or the Compensation and
    Human Resources Committee of the Board.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The foregoing summary is qualified in its entirety by reference
    to the Plan, which is filed herewith as Exhibit<BR>
    (e)(13) and is incorporated by reference herein.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Severance
    Arrangements</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under the terms of an Employment Letter between the Company and
    Mr. Fadel, dated as of May&#160;21, 2007, if Mr. Fadel&#146;s
    employment is terminated by the Company without cause and Mr.
    Fadel delivers and does not revoke a fully executed release and
    waiver of all claims against the Company, then upon expiration
    or any applicable revocation period in such release and waiver,
    Mr. Fadel would be entitled to a lump sum severance payment
    equal to fifty percent (50%) of Mr. Fadel&#146;s then-current
    annual base salary.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under the terms of an Employment Letter between the Company and
    Mr. Slack, dated as of October&#160;24, 2007, if Mr.
    Slack&#146;s employment is terminated by the Company without
    cause and Mr. Slack delivers and does not revoke a fully
    executed release and waiver of all claims against the Company,
    then upon expiration or any applicable revocation period in such
    release and waiver, Mr. Slack would be entitled to a lump sum
    severance payment as follows: (i)&#160;if such termination
    occurs on or prior to Mr. Slack&#146;s one-year anniversary of
    employment with the Company, then the lump sum severance payment
    would equal fifty percent (50%) of Mr. Slack&#146;s then-current
    annual salary; or (ii)&#160;if such termination occurs after Mr.
    Slack&#146;s one-year anniversary of employment with the
    Company, then the lump sum severance payment would equal one
    hundred percent (100%) of Mr. Slack&#146;s
    <FONT style="white-space: nowrap">then-current</FONT>
    annual base salary.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The foregoing summaries are qualified in their entirety by
    reference to the agreements referenced above, which are filed
    herewith as Exhibits (e)(14)-(15) and are incorporated by
    reference herein.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Indemnification</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Merger Agreement provides that, after the effective time of
    the Merger and for a period of six&#160;years thereafter, Parent
    will, or will cause the surviving company to, indemnify and hold
    harmless each current (as of the effective time of the Merger)
    and former officer, director and employee of the Company or its
    subsidiaries (the&#160;&#147;Indemnified Parties&#148;) against
    all claims, losses, liabilities, damages, judgments, inquiries,
    fines and fees, costs and expenses, including actual
    attorneys&#146; fees and disbursements, incurred in connection
    with any action, whether civil, criminal, administrative or
    investigative, arising out of or pertaining to the fact that
    such person is or was an officer, director, or employee of the
    Company or any of its subsidiaries or for matters existing or
    occurring prior to the effective time of the Merger, whether
    asserted or claimed prior to, at or after the effective time of
    the Merger, to&#160;the fullest extent permitted under
    applicable law and the certificate of incorporation and bylaws
    of the Company. In the Merger Agreement, Parent has agreed to
    maintain in effect, for a period of six years after the
    effective time of the Merger, all rights to indemnification and
    exculpation from liabilities for acts or omissions occurring at
    or prior to the effective time of the Merger and rights to
    advancement of expenses relating thereto now existing in favor
    of any Indemnified Party as provided in the certificate of
    incorporation or bylaws of the Company and its subsidiaries or
    in any indemnification agreement between such Indemnified Party
    and the Company. For a period of six years after the effective
    time of the Merger, Parent has also agreed, subject to a cap on
    annual premiums, to maintain one or more six-year prepaid
    &#147;tail&#148; insurance policies that are, taken as a whole,
    at least as favorable as the directors&#146; and
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    4
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    officers&#146; liability insurance and fiduciary liability
    insurance policies currently maintained by the Company and its
    subsidiaries.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The foregoing summary is qualified in its entirety by reference
    to the Merger Agreement, which is filed herewith as Exhibit
    (e)(1) and is incorporated by reference herein.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Representation
    on the Company&#146;s Board of Directors</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Merger Agreement provides that, after the Purchaser has
    caused payment to be made for the Shares tendered pursuant to
    the Offer (which would mean that the Minimum Condition has been
    satisfied), Parent will be entitled to designate the number of
    directors on the Board, rounded up to the next whole number, as
    is equal to the product of the total number of directors
    multiplied by the percentage that the aggregate number of Shares
    beneficially owned by Parent, the Purchaser and their affiliates
    bears to the total number of Shares then outstanding. Upon
    request of Parent, the Company has agreed to take all actions
    necessary, subject to compliance with applicable laws and the
    certificate of incorporation and bylaws of the Company, to cause
    Parent&#146;s designees to be elected or appointed to the Board,
    including increasing the size of the Board and/or seeking the
    resignation of one or more incumbent directors. The Company has
    also agreed to take all actions necessary, subject to compliance
    with applicable laws and the certificate of incorporation and
    bylaws of the Company, to cause individuals designated by Parent
    to have equivalent representation on each committee of the Board
    and on each board of directors of each subsidiary of the
    Company. Notwithstanding the foregoing, the Merger Agreement
    provides that we will use our commercially reasonable efforts to
    ensure that at least three of the members of the Board as of
    October&#160;13, 2008, who are independent (the
    &#147;Independent Directors&#148;), for purposes of
    <FONT style="white-space: nowrap">Rule&#160;10A-3</FONT>
    under the Securities Exchange Act of 1934, as amended (the
    &#147;Exchange Act&#148;), remain on the Board until the Merger
    has been consummated. If there are fewer than three Independent
    Directors on the Board for any reason, the Board will cause a
    person designated by the remaining Independent Directors to fill
    such vacancy who shall be deemed to be an Independent Director
    for all purposes of the Merger Agreement. In connection with the
    foregoing, the Company is providing to its stockholders an
    Information Statement pursuant to Section&#160;14(f) of the
    Exchange Act and
    <FONT style="white-space: nowrap">Rule&#160;14f-1</FONT>
    thereunder, which is attached as Annex&#160;B to this
    <FONT style="white-space: nowrap">Schedule&#160;14D-9.</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The foregoing summary is qualified in its entirety by reference
    to the Merger Agreement, which is filed herewith as Exhibit
    (e)(1) and is incorporated by reference herein.
</DIV>


<!-- link2 "Item 4. The Solicitation or Recommendation" -->
<DIV align="left"><A NAME="003"></A></DIV>


<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Item&#160;4.&#160;&#160;The
    Solicitation or Recommendation</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    At a meeting held on October&#160;12, 2008, the Board
    (i)&#160;determined that the Offer, the Merger, and the other
    transactions contemplated by the Merger Agreement were fair to,
    and in the best interest of, the Company and its stockholders;
    (ii)&#160;approved the execution, delivery and performance of
    the Merger Agreement and the consummation of the transactions
    contemplated by the Merger Agreement, including the Offer and
    the Merger, and declared its advisability in accordance with the
    relevant provisions of the Delaware General Corporation Law
    (the&#160;&#147;DGCL&#148;); (iii)&#160;resolved to recommend
    that the Company&#146;s stockholders tender their shares of
    common stock in the Offer and, if required by the DGCL, directed
    that the Merger Agreement be submitted to the stockholders of
    the Company for their adoption and approval; (iv)&#160;adopted a
    resolution rendering the limitations on business combinations
    contained in Section&#160;203 of the DGCL inapplicable to the
    Offer, the Merger Agreement and the other transactions
    contemplated by the Merger Agreement; (v)&#160;confirmed the
    acceleration of unvested stock options and restricted stock
    under the Company&#146;s equity incentive plans consistent with
    the terms of the Merger Agreement; and (vi)&#160;authorized
    indemnification of the Knightspoint Group for legal expenses
    that may be incurred by them from any claims arising out of the
    Tender Agreement.
</DIV>

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    <BR>
    5
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">THE
    COMPANY BOARD RECOMMENDS THAT THE STOCKHOLDERS ACCEPT<BR>
    THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE
    OFFER.</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Background
    of the Offer</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following chronology summarizes the key meetings and events
    that led to the signing of the Merger Agreement. During this
    period, representatives of the Company held many conversations,
    both by telephone and in person, about possible strategic and
    restructuring alternatives, including the sale of the Company,
    the sale of certain assets or subsidiaries of the Company, and
    capital raising or other investment transactions. The chronology
    below covers only the key events leading up to the Merger
    Agreement and does not purport to catalogue every conversation
    between representatives of the Company and other parties.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Company initially began exploring strategic alternatives
    toward the end of calendar year 2005 and, on November&#160;28,
    2005, engaged Houlihan Lokey Howard&#160;&#038; Zukin
    (&#147;HLHZ&#148;) to assist. On February&#160;22, 2006, HLHZ
    began reaching out to potential partners. As of May 2006, HLHZ
    had contacted 72 potential buyers (consisting of
    42&#160;strategic and 30 financial potential buyers). Of these,
    45 initially declined, and 27 executed a confidentiality
    agreement and received the information memorandum. Of these, 23
    declined after reviewing the information memorandum, and three
    submitted an initial bid. The Company received no final bids.
    The engagement with HLHZ was terminated on May&#160;16, 2007.
    Since that time, the Company&#146;s results of operations and
    financial position have substantially and continually
    deteriorated.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In April 2008, the Company elected to again explore available
    strategic alternatives.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On or about April&#160;7, 2008, Allan Fletcher, the
    Company&#146;s Chief Executive Officer, contacted Mark King,
    Parent&#146;s Chief Executive Officer, and asked whether Parent
    would be interested in submitting an offer to purchase the
    Company. On or about April&#160;11, 2008, Mr. King informed Mr.
    Fletcher that Parent was not going to pursue an acquisition of
    the Company. On or about April&#160;22, 2008, David M. Meyer,
    the Chairman of the Board at that time, met with Mr. King and
    encouraged him to re-engage in discussions with respect to a
    potential sale of the Company. Thereafter, Mr. King and Mr.
    Meyer worked to develop a plan for moving forward with
    discussions. On April&#160;30, 2008, the Company and Parent
    entered into a confidentiality agreement, which included a
    customary standstill provision.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On May&#160;5, 2008, the Company engaged Kurt Salmon Associates
    Capital Advisors, Inc. (&#147;KSA&#148;) as the Company&#146;s
    financial advisor as to strategic alternatives for its Gekko
    Brands, LLC (&#147;Gekko&#148;) subsidiary. In connection with
    such engagement, KSA established a virtual data room containing
    data with respect to Gekko.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On May&#160;23, 2008, Parent sent the Company an initial due
    diligence request for certain financial information.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On May&#160;29, 2008, the Board discussed certain strategic
    issues and alternatives. The Board approved amending the KSA
    engagement to include a potential sale of the entire Company,
    but KSA was not authorized to contact any third party about a
    potential sale of the Company absent further approval of the
    Board. On June&#160;4, 2008, the Company and KSA revised their
    engagement letter to include a strategic review of the whole
    Company, in addition to Gekko.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On June&#160;12, 2008, executive officers of the Company and KSA
    met with Parent to discuss its initial due diligence request. On
    June&#160;13, 2008, the Company provided to Parent certain
    information in response to the initial due diligence request.
    From June&#160;13, 2008 to August&#160;10, 2008, KSA and the
    Company assembled information in response to the initial due
    diligence request and prepared for a management presentation.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    At a meeting of the Board on July&#160;3, 2008, KSA participated
    via telephone and provided the Board with an update on the Gekko
    process. KSA reported that it had contacted 41 potential buyers
    regarding Gekko, 15 of which expressed interest, signed
    confidentiality agreements and received the information
    materials. Five of those parties submitted an indication of
    interest for Gekko. KSA also discussed plans to conduct a
    management presentation with Parent in August 2008. The Board
    gave KSA authorization to proceed with three parties in the
    Gekko process, and Gekko management presentations with these
    parties were held July&#160;9, 2008, July&#160;16, 2008 and
    July&#160;17, 2008.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On July&#160;14, 2008, KSA received an expanded data request
    from Parent and began assembling a separate virtual data room to
    address the request. On July&#160;22, 2008, members of the
    Parent team were granted access to the separate
</DIV>

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    <BR>
    6
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    data room. On July&#160;29, 2008, in a telephonic Board meeting,
    KSA provided an update on the Gekko sale process, including an
    overview of the management presentations concluded earlier in
    the month and the challenges relating to each party&#146;s
    continuing interest. KSA also discussed a list of potential
    buyers for the Company, and the Board authorized KSA to reach
    out to two of the identified parties for a potential sale of the
    entire Company (&#147;Party A&#148; and &#147;Party B&#148;).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On July&#160;30, 2008, KSA contacted Party A and Party B. On
    July&#160;31, 2008, representatives of Parent visited the
    Company&#146;s distribution facility. Beginning July&#160;30,
    2008 and continuing into August, September and October 2008, the
    Company reached out to 20 additional parties in the Gekko
    process, including financial sponsor groups and other strategic
    parties, of which two attended management presentations and one
    submitted an indication of interest.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On August&#160;6, 2008, the Board approved the transition of
    Mr.&#160;Meyer from Chairman of the Board to Chairman of the
    Special Committee of the Board. In this new role, Mr.&#160;Meyer
    was primarily charged with overseeing the process for the
    potential sale of the Company or Gekko and working with KSA in
    that regard. On August&#160;11, 2008, Company management,
    Mr.&#160;Meyer and KSA conducted a management presentation to
    Parent.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On August&#160;14, 2008, KSA received an executed
    confidentiality agreement from Party A. On August&#160;18, 2008,
    KSA received an initial data request from Party A and, on
    August&#160;19, 2008, KSA opened a separate data room concerning
    the entire Company to Party A. On August&#160;21, 2008,
    representatives of Party A, the Company and KSA met at the
    Company&#146;s headquarters for a management presentation, and
    the Company requested a written indication of interest by
    September&#160;1, 2008. On August&#160;25, 2008, KSA met with
    representatives of Party A and discussed their additional
    information needs and reminded them that a written indication of
    interest was requested by September&#160;1, 2008.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On August&#160;27, 2008, the Company received a verbal
    indication of interest from Parent to acquire all outstanding
    shares of the Company&#146;s common stock for $5 to $6 per share
    in cash, with no financing contingency, and requesting a
    <FONT style="white-space: nowrap">45-day</FONT>
    exclusivity period. On August&#160;27, 2008, adidas followed up
    on the verbal offer with a letter of interest from adidas and a
    proposed exclusivity agreement between the Company and adidas.
    From August&#160;27, 2008 through the week of September&#160;1,
    2008, conversations and negotiations with respect to
    adidas&#146; indication of interest and proposed exclusivity
    agreement ensued.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On August&#160;28, 2008 and August&#160;29, 2008, the Board held
    a regularly scheduled meeting to review, among other matters,
    third quarter 2008 financial results. The Board focused in
    particular on liquidity challenges facing the Company and the
    substantial erosion of operating performance, including the
    Company&#146;s expected significant quarterly loss. At that
    meeting, Mr.&#160;Meyer updated the Board on the status of the
    search for potential acquirors of the Company and Gekko. That
    update included the proposal received by Parent, as well as the
    status of discussions with Party A and Party B.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Mr.&#160;Meyer noted that Parent appeared prepared to move
    forward with a potential transaction with an expeditious closing
    and had engaged a financial advisor, while Party A and Party B
    would require substantial additional due diligence, were not
    well-placed to absorb the losses and other challenges facing the
    Company, and would likely place conditions on its offer that
    could be difficult or impossible to satisfy. At the meeting, the
    Company&#146;s legal counsel, Gibson, Dunn&#160;&#038; Crutcher
    LLP (&#147;Gibson Dunn&#148;), advised the Board on its
    fiduciary duties in connection with a potential sale of the
    Company. Thereafter, the Board adopted a resolution authorizing
    KSA to contact additional parties that may be interested in
    acquiring the Company or any of its assets with such contacts to
    be approved by Mr. Meyer. Mr.&#160;Meyer was authorized to
    continue discussions with potential purchasers and to enter into
    an exclusivity agreement with Parent if he deemed advisable.
    Finally, the Board discussed alternatives if KSA and
    Mr.&#160;Meyer were unable to locate a suitable acquiror of the
    Company, including the potential restructuring of the Company
    and the need for a restructuring officer in connection
    therewith. KSA also provided an update on the potential sale of
    Gekko, highlighting the continued challenges of promptly
    advancing the interest of parties in the process, and that based
    on feedback from interested parties following their further
    diligence, the expected sale price would likely be lower than
    the price paid by Ashworth for Gekko in its 2004 acquisition.
    KSA also reported that two additional parties had been invited
    to attend a presentation by Gekko management.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On September&#160;3, 2008, the Company received a letter of
    interest from Party A indicating an interest to acquire all
    outstanding shares of the Company&#146;s common stock for $5 per
    share in cash. Party A&#146;s letter of interest was
</DIV>

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    <BR>
    7
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    expressly conditioned upon the continued effectiveness of the
    Company&#146;s license agreement with Callaway Golf Company
    (&#147;Callaway&#148;) subsequent to the closing, as well as
    termination of the Company&#146;s pending dispute with Callaway,
    both of which were considered highly uncertain and likely to
    result in significant delays. Financing, too, was considered a
    challenge with Party A, and Party A was also requesting a 60-day
    exclusivity period for continuing due diligence.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On September&#160;3, 2008, KSA received a signed confidentiality
    agreement from Party B and granted the party access to the
    separate data room. KSA requested that Party B submit an
    indication of interest letter and invited Party B to attend a
    management presentation as soon as possible. On
    September&#160;4, 2008, KSA received an indication of interest
    for $5 to $6 per share in cash from Party B.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On September&#160;8, 2008, a joint meeting of the Board and the
    Audit Committee of the Board was held. At that meeting,
    Mr.&#160;Meyer provided an update on the sale process generally.
    Mr.&#160;Meyer noted that KSA had been authorized to reach out
    to a Party C, who declined interest, and that Party A and Party
    B remained interested. Mr.&#160;Meyer provided an overview of
    the letters of interest from Parent, Party A and Party B, as
    well as an update on the potential sale process generally.
    Mr.&#160;Meyer then described the terms of the letters of
    interest of each party, noting that Parent&#146;s offer was only
    conditioned upon completion of due diligence, and that Parent
    was already close to completing due diligence, having begun four
    weeks earlier. Mr.&#160;Meyer also noted that there were
    concerns related to Party A&#146;s and Party B&#146;s ability to
    conclude a transaction in a timely manner. KSA provided
    preliminary observations on the $6&#160;per share indication of
    interest in the context of Company&#146;s operational
    performance, the present commercial environment, the liquidity
    challenges facing the Company and the Company&#146;s
    increasingly compromised position in several distribution
    channels. At this meeting, the Board authorized the Company to
    enter into an exclusivity agreement with Parent.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Also on September&#160;8, 2008, adidas submitted a written
    indication of interest indicating an all cash offer of
    $6&#160;per share, contingent on the Company having no more than
    $60&#160;million in debt. The indication also provided for the
    potential sale of Gekko prior to the closing at a mutually
    agreeable price and a 15-business-day exclusivity period. The
    exclusivity agreement was executed later that day, expiring on
    September&#160;29, 2008.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Also on September&#160;8, 2008, KSA informed Party A and Party B
    that the Company had entered into exclusive negotiations with
    another party and restricted Party A and Party B from accessing
    the Company&#146;s separate data room, but allowed continued
    access to the Gekko data room for Party A as well as the other
    potential buyers that were only evaluating the Gekko
    opportunity. On September&#160;9, 2008, KSA received a further
    data request from Parent and proceeded with the Company to
    compile the requested information. Over the weeks of
    September&#160;8, 15 and 22, 2008, the Company and KSA continued
    to respond to Parent due diligence requests.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On September&#160;9, 2008, Mr.&#160;Meyer transmitted to Parent
    an initial draft of the Merger Agreement that was prepared by
    Gibson Dunn. On the same date, the Company issued a press
    release announcing its financial results for the third fiscal
    quarter of 2008, in which the Company reported a net loss of
    $9.6&#160;million, or $0.65 per basic and diluted share. In that
    press release, the Company also announced that it was exploring
    strategic alternatives to enhance stockholder value, including a
    potential sale or merger of the Company, and that it had
    retained KSA as its financial advisor to evaluate strategic
    alternatives.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On September&#160;18, 2008, the Board held a special meeting to
    discuss the status of the sale process, the pending expiration
    of the Company&#146;s stockholder rights plan, or poison pill
    (the &#147;Rights Plan&#148;), and a potential management change
    in control incentive plan (the &#147;Change in Control
    Plan&#148;). At the meeting, KSA provided an update on the
    strategic review process to the Board. KSA discussed parties who
    had expressed interest since the announcement that the Company
    was exploring strategic alternatives. Upon review of the
    interested party profiles with KSA and based on the need to
    engage parties that offered the ability to move promptly with a
    high degree of certainty to close, the Board determined that
    none of the inquiring parties was of a profile that warranted
    further pursuit at that time.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    At this meeting, Gibson Dunn also advised the Board with respect
    to alternatives in connection with the Rights Plan, which was
    scheduled to expire on October&#160;5, 2008. While the Board
    indicated that it would not renew the Rights Plan in the current
    circumstances, the Board deferred consideration of whether to
    effect the early termination of the Rights Plan until it had
    reached a more definitive stage with respect to negotiations for
    a potential sale of the Company. The Board also adopted the
    Change in Control Plan to provide an incentive to management to
    work
</DIV>

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    <BR>
    8
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    expeditiously toward the completion of a transaction and, if
    desired by a purchaser, to provide post-closing transition
    services. Finally, KSA updated the Board that the Gekko sale
    process was not proceeding as promptly as desired and that
    continuing diligence requests were being addressed with
    interested parties.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On September&#160;19, 2008, Parent&#146;s legal counsel,
    Sheppard Mullin Richter&#160;&#038; Hampton LLP (&#147;Sheppard
    Mullin&#148;), provided a markup of the Merger Agreement that
    had been sent to Parent on September&#160;9, 2008.
    Mr.&#160;Meyer and Gibson Dunn reviewed the markup and provided
    a responsive draft to Sheppard Mullin on September&#160;24, 2008.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On September&#160;22, 2008, representatives from Parent, Gekko
    and KSA met at Gekko&#146;s Phenix City, Alabama location for a
    Gekko management presentation. On September&#160;23, 2008, KSA
    received further data requests from Parent and worked with
    members of the Company to compile the necessary data. On
    September&#160;24, 2008, additional requested information was
    provided to Parent.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On or about September&#160;26, 2008, Parent requested an
    extension of its exclusivity period. Mr.&#160;Meyer, however,
    declined on behalf of the Company to move forward with a
    potential extension, unless Parent confirmed its price
    indication and submitted a draft of the Merger Agreement
    containing terms more favorable to the Company, focused on speed
    and certainty of closing, prior to expiration of the exclusivity
    period on September&#160;29, 2008. On September&#160;29, 2008,
    Gibson Dunn and Sheppard Mullin had a conference call to discuss
    open issues on the Merger Agreement, but Parent did not submit
    the requested draft of the Merger Agreement before expiration of
    the exclusivity period, and it therefore expired on
    September&#160;29, 2008.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On September&#160;30, 2008, shortly after the Dow Jones
    Industrial Average&#146;s fall of approximately 778 points in
    one trading day, Parent informed Mr.&#160;Meyer that it would
    not be moving forward with the acquisition of the Company.
    Mr.&#160;Meyer was informed that Parent was discussing with
    adidas the possibility that Parent would submit a drastically
    reduced price indication in light of recent trends at the
    Company and adidas&#146; increasing discomfort with the
    acquisition. However, even that lower price indication was
    rejected by adidas, and Parent was further instructed not to
    pursue the Ashworth acquisition.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Meanwhile, on October&#160;1, 2008, KSA resumed dialogue with
    Party A and Party B. Party A confirmed continued interest and
    its access to the separate data room was restored. Party B
    informed KSA that it was focusing on other initiatives and was
    not interested in pursuing the opportunity further. KSA also
    received Board authorization to reach out to a Party D. From
    October&#160;1, 2008 through October&#160;9, 2008,
    Mr.&#160;Meyer and KSA continued discussions with Party A,
    submitted a draft Merger Agreement for review and comment, and
    emphasized the need to proceed promptly and the importance of
    certainty of close. However, Party A expressed a reluctance to
    move forward quickly, even at a significantly reduced price,
    citing market turmoil, the need for substantial additional due
    diligence and the large prospective earnings dilution it would
    incur as a result of a transaction.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On October&#160;2, 2008, the Board held a special meeting to
    review the status of the sale process. Mr.&#160;Meyer reported
    that Parent had terminated negotiations, but that he and KSA
    were reaching out to Party A and Party B to attempt to generate
    interest in moving forward with a transaction, in spite of the
    significant challenges that a transaction with either party
    would entail, especially with respect to the license agreement
    with Callaway. The Board also revisited the liquidity challenges
    facing the Company and the difficulty that the Company would
    face in attempting to secure any new credit facilities. KSA
    reported that no significant progress had been made with the
    interested parties in the Gekko process. KSA further reported
    that Gekko had recently learned that one of its largest
    customers was apparently planning to significantly curtail its
    purchasing from Gekko. KSA reported that it had notified
    interested parties of this negative development and that Gekko
    management was in the process of quantifying the impact of
    anticipated reductions with its key customer. At this meeting,
    the Board elected not to renew its Rights Plan in order to
    provide the most favorable circumstances for a potential
    acquiror to emerge.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On or about October&#160;6, 2008, Mr.&#160;Meyer contacted
    Mr.&#160;King and suggested that Parent re-consider termination
    of discussions and negotiations, even at a lower price than
    originally contemplated. Mr.&#160;King indicated that he would
    inquire whether adidas would be interested in pursuing a
    transaction at a reduced price.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On October&#160;8, 2008, the price of Company&#146;s common
    stock hit a 52-week low of $1.42, and closed at $1.62. After the
    market close, KSA received a verbal offer through Parent&#146;s
    financial advisor for $1.90 per outstanding share, subject to
    adjustment in the event that a then-undetermined liability
    threshold were exceeded, contingent
</DIV>

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    <BR>
    9
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    upon signing a definitive agreement by October&#160;11, 2008 and
    also contingent upon obtaining a
    <FONT style="white-space: nowrap">lock-up</FONT> of
    the Knightspoint Group shares. Parent also requested a renewed
    exclusivity period for negotiation. On behalf of the Company,
    Mr.&#160;Meyer refused to renew the exclusivity period, but
    negotiation of a definitive agreement resumed. On
    October&#160;8, 2008, Sheppard Mullin sent a revised Merger
    Agreement to Gibson Dunn that reflected the reduced purchase
    price of $1.90 per share, subject to adjustment, and, on
    October&#160;9, 2008, Gibson Dunn sent a responsive draft to
    Sheppard Mullin.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On October&#160;9, 2008, KSA received an executed
    confidentiality agreement from Party D. Discussions with Party D
    did not proceed beyond this initial stage before the
    October&#160;12, 2008 meeting of the Board described below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    During the morning of October&#160;10, 2008, the Board held a
    special meeting to discuss developments in the sale process.
    Gibson Dunn provided a summary of the status of negotiations
    with Parent. The Board observed that its liquidity challenges
    were worsening and that general market conditions were rapidly
    deteriorating. The Board also reviewed the status of
    negotiations with Party A. Mr.&#160;Meyer indicated that Party A
    was straightforward about the difficulty it faced moving forward
    with a transaction as proposed, including with respect to a
    large prospective earnings dilution and the inability to reduce
    substantial costs in the near term, and even suggested possibly
    acquiring the Company out of bankruptcy in a pre-packaged deal.
    Management present at the meeting communicated that vendors were
    expressing increasing nervousness about the financial position
    of the Company. Gibson Dunn advised the Board with respect to
    its fiduciary duties, including those arising when an entity
    enters the zone or vicinity of insolvency. Mr.&#160;Meyer
    indicated to the Board that he would contact Parent with a
    <FONT style="white-space: nowrap">counter-offer</FONT>
    of $3 per share or higher to assess whether Parent would be
    receptive to a higher price.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    During the afternoon of October&#160;10, 2008, Gibson Dunn
    attended a meeting at Sheppard Mullin&#146;s Costa Mesa offices
    to negotiate legal issues in connection with the Merger
    Agreement, including, among other matters, the terms and
    conditions of the proposed Offer, the circumstances for
    extending the proposed Offer, the Company&#146;s
    representations, warranties and covenants, the definition of
    &#147;material adverse effect&#148; and its impact on the rights
    of the parties in the proposed Merger Agreement, the obligations
    of the parties with respect to obtaining antitrust clearances
    and the termination rights of Parent and the Company, including
    the amount and under what circumstances the Company would pay a
    termination fee to Parent. Later that evening, Sheppard Mullin
    distributed another revised draft of the Merger Agreement. In
    the morning of October&#160;11, 2008, Gibson Dunn and Sheppard
    Mullin engaged in a conference call to discuss remaining legal
    issues in connection with the Merger Agreement. Later that
    evening, Gibson Dunn sent a revised Merger Agreement to Sheppard
    Mullin, to KSA and to the Board for review prior to its meeting
    the next morning. That night, Sheppard Mullin sent a responsive
    draft to Gibson Dunn with minor changes.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On October&#160;11, 2008, Mr.&#160;Meyer contacted Mr. King to
    communicate the
    <FONT style="white-space: nowrap">counter-offer.</FONT>
    Mr. King informed Mr.&#160;Meyer that there could be no increase
    to the price.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    During the morning of October&#160;12, 2008, Mr.&#160;Meyer
    instructed Gibson Dunn to address the minor changes in the draft
    Merger Agreement and distribute a further draft to Sheppard
    Mullin. Gibson Dunn did so. Mr. Meyer also contacted Mr. King to
    inform him that the Knightspoint Group would need the offer to
    be increased to $2.25 per share in order to enter into the
    Tender Agreement. Shortly thereafter, Mr. King informed Mr.
    Meyer that $1.90 per share was Parent&#146;s final offer and
    that Parent would not proceed at a higher price.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    At the October&#160;12, 2008 meeting, the Board reviewed
    attempts to secure a higher deal price. Despite these efforts,
    including the demand for $2.25&#160;per&#160;share made earlier
    that morning, Parent refused to increase the price and also
    threatened to walk away if the $1.90 per share offer price were
    not acceptable. Mr.&#160;Meyer advised that he did not believe a
    higher price could be obtained from Parent without risking
    collapse of the deal as adidas&#146; continuing commitment to
    proceed at even the offered price was uncertain in light of
    intensifying market turmoil (the Dow Jones Industrial Average
    fell a further 807&#160;points (approximately) over the
    preceding two trading days) and Ashworth&#146;s rapidly
    deteriorating business. Mr.&#160;Meyer also reminded the Board
    that Parent was uniquely situated to agree to a deal with the
    requisite speed and other accommodations the Company required to
    be reasonably assured of a successful close in view of
    significant liquidity and operational challenges, including
    those related to the license with Callaway. Next, Gibson Dunn
    provided a detailed description of the Merger Agreement and
    responded to questions. At the request of the Board in
    connection with its desire that any potential transaction have a
    relatively
</DIV>

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    <BR>
    10
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    high degree of likelihood that it would be consummated, Gibson
    Dunn also focused on the circumstances under which the Merger
    Agreement could or could not be terminated.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Mr.&#160;Meyer explained to the Board that Parent had refused to
    proceed with a transaction unless he and other members of the
    Knightspoint Group, the largest stockholder group of the
    Company, entered into the Tender Agreement with Parent.
    Mr.&#160;Meyer informed the Board that he and the other
    Knightspoint Group members were prepared to enter into the
    Tender Agreement in their capacities as stockholders (not, in
    the case of Mr.&#160;Koeneke and Mr.&#160;Meyer, in their
    capacities as members of the Board).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Board then re-reviewed the various strategic alternatives
    the Board had explored or pursued. This review included the
    inability to improve liquidity from the potential sale of the
    Company&#146;s Oceanside Embroidery and Distribution Center due
    in part to the approximately $8&#160;million of lease
    obligations that would be accelerated and to other valuation
    considerations. Improved liquidity from operational changes also
    was questionable in the
    <FONT style="white-space: nowrap">near-to-mid</FONT>
    term as a result of, among other matters, deteriorating market
    conditions. The Board also discussed the very difficult
    challenges of raising funds to meet future liquidity problems
    given current market conditions, as well as large and growing
    operating losses, highly negative sales and booking trends and
    uncertainty regarding the Callaway relationship. KSA noted that
    traditional sources of financing for soft goods suppliers were
    limited at this time.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    KSA then reviewed the Company&#146;s continued efforts to
    attract a buyer for Gekko. While an interested party was
    continuing to do diligence at a relatively slow pace, earlier
    indications of interest at acceptable price ranges had
    essentially been withdrawn, as a result of market and economic
    conditions as well as the very recent expected loss by Gekko of
    one of its largest customers. As a result of these
    circumstances, KSA advised that the Board should not expect a
    near-term Gekko transaction on favorable terms.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    KSA also summarized the Company&#146;s recent efforts to solicit
    buyer interest for the Company as a whole, recognizing the
    market&#146;s knowledge that the Company was receptive to being
    acquired (dating back to the process begun in 2005).
    Mr.&#160;Meyer reviewed with the Board discussions with the
    Chief Executive Officer of Party A as part of an effort to
    generate interest. In view of recent market turmoil, industry
    deterioration and Company-specific issues, the Chief Executive
    Officer of Party A had clearly lost keen interest to acquire the
    Company at a favorable price, citing potential dilution to Party
    A, an inability to significantly reduce Company costs in the
    near-term and other factors. In this regard, the Chief Executive
    Officer of Party A raised the possibility of acquiring the
    Company out of the bankruptcy court as part of a pre-packaged
    plan. Mr.&#160;Meyer finally noted the reality of the required
    consent of Callaway to retain the Callaway license agreement on
    a change in control and reviewed a range of other expected
    difficulties that could be expected in seeking a transaction
    with Party A.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    KSA discussed the acute concerns with respect to the
    Company&#146;s diminishing availability under its line of credit
    with Bank of America, as well as the challenging present credit
    environment for financing alternatives. KSA also reviewed with
    the Board the Company&#146;s current financial performance,
    including booking results for Spring&#160;2009, and discussed
    the Company&#146;s ongoing operating losses.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Finally, KSA led the Board in a discussion of KSA&#146;s
    financial analysis of the proposed transaction, which had been
    provided to the Board on October&#160;11, 2008. KSA rendered an
    oral opinion to the Board (which was confirmed in writing by
    delivery of KSA&#146;s written opinion dated October&#160;12,
    2008)&#160;to the effect that, as of October&#160;12, 2008 and
    based upon and subject to the procedures followed, assumptions
    made, qualifications and limitations on the review undertaken,
    and other factors considered by KSA in preparing its opinion,
    the Offer Price to be received by the holders of Shares in the
    Offer and the Merger was fair, from a financial point of view,
    to the Company&#146;s stockholders.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Board, management and outside advisors continued with
    further discussion of the Merger Agreement, alternatives that
    have been examined or pursued and the serious nature of the
    Company&#146;s liquidity position in the context of the current
    credit markets. The uncertainty of larger economic and market
    developments outside of the Company&#146;s control was also
    discussed. The Board also re-reviewed the process with Parent
    and the reasons why earlier price indications were no longer
    available.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    After extensive discussion, the Board (i)&#160;determined that
    the Offer, the Merger, and the other transactions contemplated
    by the Merger Agreement were fair to, and in the best interest
    of, the Company and its stockholders;
</DIV>

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    <BR>
    11
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;approved the execution, delivery and performance of
    the Merger Agreement and the consummation of the transactions
    contemplated by the Merger Agreement, including the Offer and
    the Merger, and declared its advisability in accordance with the
    relevant provisions of the DGCL; (iii)&#160;resolved to
    recommend that the Company&#146;s stockholders tender their
    shares of common stock in the Offer and, if required by the
    DGCL, directed that the Merger Agreement be submitted to the
    stockholders of the Company for their adoption and approval;
    (iv)&#160;adopted a resolution rendering the limitations on
    business combinations contained in Section&#160;203 of the DGCL
    inapplicable to the Offer, the Merger Agreement and the other
    transactions contemplated by the Merger Agreement;
    (v)&#160;confirmed the acceleration of unvested stock options
    and restricted stock under the Company&#146;s equity incentive
    plans consistent with the terms of the Merger Agreement; and
    (vi)&#160;authorized indemnification of the Knightspoint Group
    for legal expenses that may be incurred by them from any claims
    arising out of the Tender Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Subsequent to approval of the Merger Agreement by the Board, the
    Merger Agreement substantially in the form approved by the Board
    was executed and delivered by the Company, Parent and the
    Purchaser on October&#160;13, 2008. That morning, and prior to
    the opening of trading on the Nasdaq Stock Market, the Company
    and Parent issued a joint press release announcing that they had
    entered into the Merger Agreement.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Reasons
    for the Offer and the Merger</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In evaluating the Offer, the Merger and the Merger Agreement,
    the Board consulted with the Company&#146;s management, legal
    counsel and financial advisors. In reaching its decision that
    the Offer and the Merger are advisable and fair to, and in the
    best interest of, the Company&#146;s stockholders, and in
    reaching its recommendation that stockholders tender their
    Shares in the Offer, and, if applicable, vote in favor of the
    Merger, the Board considered a number of factors, including the
    following material factors, that the Board viewed as supporting
    its recommendation.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="3%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Strategic Alternatives to Sale
    Transaction.&#160;&#160;</I>Throughout the process that the
    Board conducted to evaluate strategic alternatives available to
    the Company, the Board considered possible alternatives to the
    proposed transaction with Parent, including continuing to
    execute on its strategic plan as an independent company, selling
    assets or subsidiaries of the Company and refinancing the
    Company&#146;s existing indebtedness through various capital
    raising and investment transactions. The Board also considered
    the strategic fit and the revenue base and financial resources
    of Parent, which it believed to be a significant benefit that
    could not be obtained by remaining an independent company. The
    Board concluded (after taking into account the current and
    historical financial condition, results of operations,
    competitive position, business prospects, opportunities and
    strategic objectives of each of the Company and Parent,
    including the potential risks involved in achieving those
    prospects and objectives) that on a risk-adjusted basis, the
    Offer Price is greater than the long-term value inherent in the
    Company as a stand-alone entity.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Solicitation of Other Parties Prior to Execution of the
    Merger Agreement.&#160;&#160;</I>The Board considered that it,
    with the assistance of KSA, had discussions with numerous third
    parties in connection with the Board&#146;s strategic review
    process, and determined that Parent&#146;s offer was the most
    attractive offer for the Company&#146;s stockholders resulting
    from that process.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Opinion of KSA.&#160;&#160;</I>The Board considered the oral
    opinion of KSA (which was confirmed in writing by delivery of
    KSA&#146;s written opinion dated October&#160;12,
    2008)&#160;with respect to the fairness, from a financial point
    of view, of the Offer Price to be received in the Offer and the
    Merger, taken together, by the holders of Shares (other than
    Parent, the Purchaser and their respective affiliates). The
    opinion of KSA is discussed in further detail below.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Timing and Certainty of Completion.&#160;&#160;</I>The Board
    considered the anticipated timing and relative certainty of
    consummation of the Offer, including the structure of the
    transaction as a tender offer for all Shares. This transaction
    structure may enable the Company&#146;s stockholders to receive
    the Offer Price and obtain the benefits of the transaction more
    promptly than might be the case in other transaction structures.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Ability to Respond to Certain Unsolicited Takeover
    Proposals.&#160;&#160;</I>The Board considered the
    Company&#146;s ability under certain circumstances to engage in
    negotiations or discussions with, and to provide
</TD>
</TR>

</TABLE>

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    <BR>
    12
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    <TD width="3%"></TD>
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</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>
</TD>
    <TD align="left">
    information to, any third party that, after the date of the
    Merger Agreement, makes a bona fide competing acquisition
    proposal.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="3%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Ability to Terminate the Merger Agreement to Accept a
    Superior Proposal.&#160;&#160;</I>The Board considered the
    Company&#146;s ability, following receipt of certain competing
    acquisition proposals after the date of the Merger Agreement
    that are more favorable from a financial point of view to the
    Company&#146;s stockholders, to change its recommendation with
    respect to the Offer and the Merger and terminate the Merger
    Agreement if certain conditions are satisfied, including if the
    Board determines in good faith (after consulting with the
    Company&#146;s outside legal counsel) that the failure to do so
    would be inconsistent with the Board&#146;s exercise of its
    fiduciary duties, notwithstanding that Company would be required
    to pay Parent a termination fee of $2,000,000.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition to those set forth above, the Board considered a
    number of additional factors, including the following
    potentially negative factors:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="3%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Discouraging Other Prospective Buyers.&#160;&#160;</I>The
    Board considered that entering into a definitive agreement with
    Parent, and that certain provisions of the Merger Agreement,
    such as the non-solicitation and termination fee provisions, may
    have the effect of discouraging other prospective buyers from
    pursuing a more advantageous business combination with the
    Company.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Transaction Costs.&#160;&#160;</I>The Board considered the
    significant costs involved in connection with entering into the
    Merger Agreement and completing the Offer and the Merger and the
    related disruptions to the operation of the Company&#146;s
    business, including the risk that the operations of the Company
    would be disrupted by employee concerns or departures following
    announcement of the Offer and the Merger.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Interim Restrictions on Business.&#160;&#160;</I>The Board
    considered that, pursuant to the Merger Agreement, the Company
    is required to obtain Parent&#146;s consent before it can take a
    variety of actions during the period of time between the signing
    of the Merger Agreement and the closing of the Merger.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Effect of Failure to Complete
    Transactions.&#160;&#160;</I>The Board considered the adverse
    effect on the Company&#146;s business and ability to attract and
    retain key management personnel if the Offer and the Merger were
    not consummated.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Interests of Management.&#160;&#160;</I>The Board considered
    the fact that some of the Company&#146;s executives may have an
    interest in the Offer and the Merger that are different from, or
    in addition to, those of the Company&#146;s stockholders, as a
    result of agreements referred to in Item&#160;3 of this
    Statement.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <I>Parent&#146;s Termination Right if a Majority of Shares are
    Not Tendered.&#160;&#160;</I>The Board considered Parent&#146;s
    right to terminate the Offer and the Merger Agreement in the
    event that the Minimum Condition is not met by 120&#160;calendar
    days after commencement of the Offer.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Board concluded, however, that many of these risks could be
    managed or mitigated by the Company or were unlikely to have a
    material effect on the Offer, the Merger or the combined
    company, and that, overall, the risks, uncertainties,
    restrictions and potentially negative factors associated with
    the Offer and the Merger were outweighed by the potential
    benefits of the Offer and the Merger.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Board did not assign relative weights to the foregoing
    factors or determine that any factor was of particular
    importance. Rather, the members of the Board viewed their
    position and recommendation as being based on the totality of
    the information presented to and considered by them. Individual
    members of the Board may have given different weight to
    different factors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The foregoing discussion of factors considered by the Board is
    not meant to be exhaustive but includes the material factors
    considered by the Board in approving the Merger Agreement and
    the transactions contemplated by the Merger Agreement and in
    recommending that stockholders accept the Offer, tender their
    Shares and approve the Merger Agreement and the Merger.
    Moreover, the foregoing is not meant to imply that the Merger
    Agreement and the transactions contemplated thereby were
    approved unanimously, as James&#160;B. Hayes opposed the
    transaction and Stephen&#160;G. Carpenter, who was not present
    at the meeting when the Merger Agreement was approved,
    subsequently indicated that he was opposed to the transaction.
</DIV>

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    <BR>
    13
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<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Intent to
    Tender</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    After reasonable inquiry and to the best knowledge of the
    Company, the directors and executive officers of the Company who
    own Shares intend to tender in the Offer all such Shares that
    each person owns of record or beneficially. See Item&#160;3 for
    a discussion of the treatment of outstanding stock options after
    consummation of the Merger.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Opinion of Kurt Salmon Associates Capital Advisors, Inc.</B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Overview.</B>&#160;&#160;Pursuant to an engagement letter,
    dated as of May&#160;5, 2008, as amended on June&#160;4, 2008
    (the &#147;Engagement Letter&#148;), the Company retained KSA as
    its exclusive financial advisor in connection with the Offer and
    the Merger (collectively, the &#147;Transaction&#148;).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Opinion.&#160;&#160;</B>At the meeting of the Board on
    October&#160;12, 2008, KSA rendered its oral opinion to the
    Board that, based upon and subject to the factors and
    assumptions set forth in its opinion, the Offer Price
    (<I>i.e.</I>, the right, in the case of the Offer, to receive
    for each share of Company common stock $1.90 in cash, and, in
    the case of the Merger, to convert each share of Company common
    stock into the right to receive $1.90 in cash, all as described
    in the Merger Agreement and summarized in KSA&#146;s written
    opinion) to be received by such holders, other than Dissenting
    Shares (as defined in the Merger Agreement) or any shares of
    Company common stock held in the treasury of the Company or
    owned by the Company or its affiliates, is fair, from a
    financial point of view, to the Company&#146;s common
    stockholders as of the date the Offer Price is to be received by
    such stockholders. KSA confirmed its oral opinion by delivering
    its written opinion, dated as of October&#160;12, 2008, to the
    Board.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>The full text of the written opinion of KSA, dated as of
    October&#160;12, 2008, which sets forth the assumptions made,
    procedures followed, matters considered, and qualifications and
    limitations on the review undertaken by KSA in rendering its
    opinion, is attached as Annex&#160;A to this Statement and is
    incorporated herein by reference. The summary of KSA&#146;s
    opinion below is qualified in its entirety by reference to the
    full text of the opinion, and the Company&#146;s stockholders
    are urged to read the opinion carefully and in its entirety. KSA
    provided its opinion to the Board in connection with, and for
    the purpose of, the Company&#146;s evaluation of the
    Transaction. KSA&#146;s opinion does not constitute a
    recommendation to any stockholder of the Company as to whether
    such stockholder should tender Shares in the Offer or how such
    stockholder should vote with respect to any matter.</B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In arriving at its opinion, KSA reviewed and analyzed such
    materials and considered such financial and other factors that
    it deemed relevant under the circumstances. In addition, KSA has:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="3%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reviewed the financial terms and conditions of the draft Merger
    Agreement provided to KSA and the Board by the Company&#146;s
    legal counsel on October&#160;11, 2008;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reviewed and analyzed certain financial and other data with
    respect to the Company, which was publicly available or made
    available to KSA from internal records of the Company;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reviewed and analyzed certain internal financial projections for
    the quarter ending October&#160;31, 2008 and fiscal year ending
    October&#160;31, 2009, on a stand-alone basis provided to KSA by
    the management of the Company;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reviewed and analyzed management&#146;s line of credit
    availability projection;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    compared the financial performance of the Company with that of
    certain other publicly traded companies deemed by KSA to be
    relatively and reasonably comparable to the Company or otherwise
    relevant to KSA&#146;s inquiry;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reviewed the financial terms, to the extent publicly available,
    of certain transactions deemed by KSA to be relatively and
    reasonably comparable or otherwise relevant to KSA&#146;s
    inquiry;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reviewed and analyzed the reported prices and trading history of
    the Shares from October&#160;10, 2003 to October&#160;10, 2008;
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    14
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="3%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    performed a discounted cash flows analysis for the Company on a
    stand-alone basis utilizing management&#146;s financial
    projection for the fiscal year ending October&#160;31, 2009 and
    applying certain sensitivity analysis for the fiscal years
    ending October&#160;31, 2010 and beyond; and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reviewed other financial studies, analyses and investigations
    KSA deemed appropriate, including KSA&#146;s assessment of
    general economic, market and monetary conditions.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    KSA also held discussions with the management of the Company
    concerning its business and operations, assets, present
    condition and future prospects, participated in discussions and
    negotiations among representatives of the Company and Parent,
    and undertook such other studies, analyses and investigations as
    KSA deemed relevant and appropriate.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    KSA relied upon and assumed the accuracy and completeness of all
    information supplied or otherwise made available to KSA,
    discussed with or reviewed by or for KSA, or publicly available,
    and KSA did not assume any responsibility for independently
    verifying such information and did not undertake an independent
    evaluation or appraisal of any of the assets or liabilities of
    the Company and was not furnished with any such evaluation or
    appraisal. KSA expressed no opinion regarding the liquidation
    value of the Company. In addition, KSA did not assume any
    obligation to conduct any physical inspection of the properties
    or facilities of the Company. With respect to the projections
    furnished to or discussed with KSA by the Company, KSA assumed
    that they had been reasonably prepared and reflect the best
    currently available estimates and judgment of the Company&#146;s
    management as to the expected future financial performance of
    the Company, and KSA expressed no opinion with respect to such
    forecasts or the assumptions upon which they were based. KSA
    further relied upon the assurances of senior management of the
    Company that they were not aware of any facts that would make
    such financial or other information relating to the Company
    inaccurate or misleading. KSA further assumed that all material
    governmental, regulatory or other consents and approvals
    necessary for the consummation of the Transaction will be
    obtained without any adverse effect on the Company or Parent and
    without reducing the contemplated benefits of the Transaction to
    the Company or the holders of Company common stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>KSA&#146;s opinion is necessarily based upon market, economic
    and other conditions as they exist and can be evaluated only as
    of the date of the opinion. It should be understood that
    subsequent developments may affect the opinion and that KSA
    assumed no responsibility to update, revise or reaffirm the
    opinion based upon events or circumstances occurring after the
    date hereof. Further, KSA expressed no opinions on matters of
    legal, regulatory, tax or accounting nature relating to or
    arising out of the proposed Transaction and relied, with the
    Company&#146;s consent, on the advice of the outside counsel and
    the independent accountants to the Company, and on the
    assumptions of the management of the Company, as to all
    accounting, legal, tax and financial reporting matters with
    respect to the Company and the Merger Agreement. Without
    limiting the generality of the foregoing, KSA did not undertake
    any independent analysis of any current, pending or threatened
    litigation, regulatory action, possible unasserted claims or
    other contingent liabilities to which the Company or any of its
    affiliates is a party or may be subject, and, at the direction
    of the Company and with its consent, KSA&#146;s opinion makes no
    assumption concerning, and therefore does not consider, the
    possible assertion of claims, outcomes or damages arising out of
    any such matters.</B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In accordance with customary investment banking practice, KSA
    employed generally accepted valuation methods in reaching its
    opinion. The following is a summary of the material financial
    analyses utilized by KSA in connection with providing its
    opinion.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><I>Projections.</I></B>&#160;&#160;The projections furnished
    to KSA for the Company were prepared by the management of the
    Company. The Company does not publicly disclose internal
    management projections of the type provided to KSA in connection
    with KSA&#146;s analysis of the Transaction, and such
    projections were not prepared with a view toward public
    disclosure. These projections were based on numerous variables
    and assumptions that are inherently uncertain and may be beyond
    the control of management, including, without limitation,
    factors related to general economic and competitive conditions
    and prevailing interest rates. Accordingly, actual results could
    vary significantly from those set forth in such projections.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><I>Comparable Public Companies
    Analysis.</I></B>&#160;&#160;Using publicly available
    information, KSA compared selected financial and operating data
    of the Company with similar data for selected publicly traded
    companies engaged in
</DIV>

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    <BR>
    15
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    businesses that KSA deemed to be relevant to the Company&#146;s
    business. The companies were selected, among other reasons,
    because they share similar business characteristics to the
    Company based on operational characteristics and financial
    metrics, on one hand, and because of their significant exposure
    to the apparel industry in the United States, on the other hand.
    However, none of the companies selected is identical or directly
    comparable to the Company. Accordingly, KSA made judgments and
    assumptions concerning differences in financial and operating
    characteristics of the selected companies and other factors that
    could affect the public trading value of the selected companies.
    Other companies were considered but not deemed relevant.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><I>Comparable Precedent Transactions
    Analysis.</I></B>&#160;&#160;KSA analyzed publicly available
    information regarding numerous apparel industry transactions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><I>Discounted Cash Flow Analysis.</I></B>&#160;&#160;KSA
    conducted a discounted cash flow analysis for the purposes of
    determining the fully diluted equity value per share for the
    Company&#146;s common stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The foregoing summary of certain material financial analyses
    does not purport to be a complete description of the analyses or
    data presented by KSA. The preparation of a fairness opinion is
    a complex process and is not necessarily susceptible to partial
    analysis or summary description. KSA believes that the foregoing
    summaries and their respective analyses must be considered as a
    whole and that selecting portions of the foregoing summaries and
    their respective analyses, without considering all of the
    analyses as a whole, could create an incomplete view of the
    processes underlying the analyses and its opinion. In arriving
    at its opinion, KSA did not attribute any particular weight to
    any analysis or factor (positive or negative), considered in
    isolation, that supported or failed to support its opinion.
    Rather, KSA considered the totality of the factors and analyses
    performed in determining its opinion. Analyses based upon
    forecasts of future results are inherently uncertain, as they
    are subject to numerous factors or events beyond the control of
    the parties and their advisors. Accordingly, forecasts and
    analyses used or made by KSA are not necessarily indicative of
    actual future results, which may be significantly more or less
    favorable than suggested by those analyses. Moreover, KSA&#146;s
    analyses are not and do not purport to be appraisals or
    otherwise reflective of the prices at which businesses actually
    could be bought or sold. None of the selected companies reviewed
    as described in the above summary is identical to the Company,
    and none of the selected transactions reviewed was identical to
    the Transaction. However, the companies selected were chosen
    because they are publicly traded companies with operations and
    businesses that, for purposes of KSA&#146;s analysis, may be
    considered similar to those of the Company. The transactions
    selected were similarly chosen because their participants, size
    and other factors, for purpose of KSA&#146;s analysis, may be
    considered similar to the Transaction. The analyses necessarily
    involve complex considerations and judgments concerning
    differences in financial and operational characteristics of the
    companies involved and other factors that could affect the
    companies compared to the Company and the transactions compared
    to the Transaction.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    KSA&#146;s opinion was provided to the Board in connection with
    the Board&#146;s consideration of the proposed Transaction and
    was only one of many factors considered by the Board in
    evaluating the proposed Transaction. Neither KSA&#146;s opinion
    nor its analyses were determinative of the Offer Price or of the
    views of the Board or the Company&#146;s management with respect
    to the proposed Transaction or the Offer Price. The type and
    amount of consideration payable in the proposed Transaction were
    determined through negotiation between the Company and Parent,
    and the decision to enter into the Offer and the Merger was
    solely that of the Board.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    KSA, as a customary part of its investment banking business,
    engages in the valuation of businesses and their securities in
    connection with mergers and acquisitions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In rendering its opinion, KSA assumed that the proposed
    Transaction will be consummated on substantially the same terms
    as described in the Merger Agreement, without any waiver of any
    material terms or conditions by the Company. Further, KSA
    assumed that, in all respects material to its analysis, the
    representations and warranties of the Company and Parent
    contained in the Merger Agreement are true and correct and that
    each of the parties to the Agreement will perform all of the
    covenants and agreements to be performed by it under the Merger
    Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    KSA&#146;s opinion addresses only the fairness, from a financial
    point of view, of the Offer Price to be paid to the holders of
    Company common stock in the proposed Transaction, and KSA did
    not express any views on any other terms of the proposed
    Transaction. Specifically, KSA&#146;s opinion did not address
    the Company&#146;s underlying business decision to effect the
    proposed Transaction as compared to any alternative business
    strategies that might exist for the
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    16
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Company, the financing of the Transaction or the effects of any
    other transaction in which the Company might engage.
    Furthermore, KSA expressed no opinion with respect to the amount
    or nature of any compensation to any officers, directors or
    employees of any party to the Transaction, or any class of such
    persons relative to the Offer Price to be received by the
    holders of Company common stock in the Transaction or with
    respect to the fairness of any such compensation.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    KSA did not express any opinion as to the price or range of
    prices at which the Company&#146;s common stock may trade
    subsequent to the public announcement of the Transaction.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    For services rendered in connection with the proposed
    Transaction, the Company has agreed to pay KSA a non-refundable
    retainer fee of $100,000, credited against a contingent success
    fee of 1.75% of the total Transaction consideration. The
    entirety of such contingent success fee will become payable only
    if the proposed Merger is consummated. In addition, the Company
    has agreed to reimburse KSA for its expenses incurred in
    connection with its services and will indemnify KSA against
    certain liabilities in connection with its services.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    During the prior two years preceding the date of this opinion,
    KSA provided a range of general management consulting services
    to an affiliate of Parent in Europe and Asia. Neither KSA nor
    its affiliates have had any other significant commercial or
    investment banking relationships with the Company, Parent or the
    Purchaser.
</DIV>


<!-- link2 "Item 5. Persons/Assets Retained, Employed, Compensated or Used." -->
<DIV align="left"><A NAME="004"></A></DIV>


<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Item&#160;5.&#160;&#160;Persons/Assets
    Retained, Employed, Compensated or Used.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">KSA</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Company has retained KSA as its financial advisor in
    connection with the Offer and Merger. The Company has also
    engaged KSA to provide a financial opinion in connection with
    the Merger Agreement, the Offer and the Merger, which is
    attached hereto as Annex&#160;A and is incorporated herein by
    reference.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    For services rendered in connection with the proposed
    Transaction, the Company has agreed to pay KSA a non-refundable
    retainer fee of $100,000, credited against a contingent success
    fee of 1.75% of the total Transaction consideration. The
    entirety of such contingent success fee will become payable only
    if the proposed Merger is consummated. In addition, the Company
    has agreed to reimburse KSA for its expenses incurred in
    connection with its services and will indemnify KSA against
    certain liabilities in connection with its services.
</DIV>


<!-- link2 "Item 6. Interest in Securities of the Subject Company." -->
<DIV align="left"><A NAME="005"></A></DIV>


<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Item&#160;6.&#160;&#160;Interest
    in Securities of the Subject Company.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Except as noted in the following sentence, no transactions in
    Shares have been effected during the past 60&#160;days by the
    Company or any subsidiary of the Company or, to the best of the
    Company&#146;s knowledge after a review of Form&#160;4 filings,
    by any executive officer, director or affiliate of the Company.
    On September&#160;12, 2008, David Meyer was granted an option to
    purchase 5,000 Shares at an exercise price of $3.30.
</DIV>


<!-- link2 "Item 7. Purposes of the Transaction and Plans or Proposals." -->
<DIV align="left"><A NAME="006"></A></DIV>


<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Item&#160;7.&#160;&#160;Purposes
    of the Transaction and Plans or Proposals.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Except as set forth in this Statement, the Company is not
    currently undertaking and is not engaged in any negotiations in
    response to the Offer that relate to: (i)&#160;a tender offer
    for or other acquisition of Shares; (ii)&#160;an extraordinary
    transaction, such as a merger, reorganization or liquidation,
    involving the Company or any subsidiary of the Company;
    (iii)&#160;a purchase, sale or transfer of a material amount of
    assets of the Company or any subsidiary of the Company; or
    (iv)&#160;any material change in the present dividend rate or
    policy, or indebtedness or capitalization, of the Company.
    Parent has indicated that it expects to provide its consent to
    the Company&#146;s continued exploration of a potential sale of
    Gekko, and the Company intends to continue such exploration. The
    Company has verbally agreed to use commercially reasonable
    efforts to cause Black Sheep Partners, a holder of less than 1%
    of the outstanding Shares, to enter into the Tender Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Except as set forth in this Statement, there are no
    transactions, resolutions of the Board, agreements in principle
    or signed contracts in response to the Offer that relate to one
    or more of the events referred to in the preceding paragraph.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    17
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->


<!-- link2 "Item 8. Additional Information." -->
<DIV align="left"><A NAME="007"></A></DIV>


<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Item&#160;8.&#160;&#160;Additional
    Information.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Delaware
    General Corporation Law.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Company is incorporated under the laws of the State of
    Delaware. The following provisions of the DGCL are therefore
    applicable to the Offer and the Merger.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: 'Times New Roman', Times">Short-Form&#160;Merger</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under Section&#160;253 of the DGCL, if Parent acquires, pursuant
    to the Offer or otherwise, at least 90% of the outstanding
    Shares, Parent will be able to effect the Merger after the
    completion of the Offer without a vote by the Company&#146;s
    stockholders. Under the terms of the Merger Agreement and
    subject to the conditions contained therein, Parent has the
    option, exercisable after its purchase of Shares pursuant to the
    Offer, to purchase from the Company such number of Shares that,
    when added to the number of Shares owned by Parent, will
    constitute one Share more than 90% of the outstanding Shares on
    a fully diluted basis, as described in the Merger Agreement. If
    Parent does not acquire at least 90% of the outstanding Shares
    pursuant to the Offer, such option or otherwise, a vote by the
    Company&#146;s stockholders will be required under the DGCL to
    effect the Merger. If a vote by the Company&#146;s stockholders
    is required, the Company will be required to comply with the
    federal securities laws and regulations governing votes of its
    stockholders. Among other matters, the Company will be required
    to prepare and distribute a proxy statement or information
    statement and, as a consequence, a longer period of time will be
    required to effect the Merger. This will delay payment of the
    Merger Consideration to stockholders who do not tender their
    Shares in the Offer. It is a condition to the completion of the
    Offer that more than 50% of the fully diluted Shares (together
    with the Shares that are directly or indirectly held by Parent),
    as described in the Merger Agreement, be tendered in the Offer.
    In addition, Parent and the Purchaser will cause all of the
    Shares acquired by them in the Offer or otherwise owned by them,
    if any, to be voted in favor of the adoption of the Merger
    Agreement. If the Minimum Condition is satisfied and the Offer
    is consummated, the Shares owned by Parent and the Purchaser
    would represent more than 50% of the outstanding Shares,
    comprising voting power sufficient to approve the Merger
    Agreement without the vote of any other stockholder.
    Accordingly, adoption of the Merger Agreement would be assured.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: 'Times New Roman', Times">Appraisal
    Rights</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Holders of Shares will not have appraisal rights in connection
    with the Offer. If the Merger is consummated, holders of Shares
    at the effective time of the Merger may have the right pursuant
    to the provisions of Section&#160;262 of the DGCL to dissent and
    demand appraisal of their Shares. If appraisal rights are
    applicable, dissenting stockholders who comply with the
    applicable statutory procedures will be entitled, under
    Section&#160;262 of the DGCL, to receive a judicial
    determination of the fair value of their Shares (exclusive of
    any element of value arising from the accomplishment or
    expectation of the Merger) and to receive payment of such fair
    value in cash, together with a fair rate of interest, if any.
    Any such judicial determination of the fair value of the Shares
    could be based upon factors other than, or in addition to, the
    amount of the Merger Consideration or the market value of the
    Shares. The value so determined could be more or less than the
    Merger Consideration. Holders of Shares should be aware that an
    opinion of an investment banking firm as to the fairness, from a
    financial point of view, of the consideration payable in a
    merger is not an opinion as to, and does not in any manner
    address, fair value under Section&#160;262 of the DGCL.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    With respect to the Merger, if no vote of the Company&#146;s
    stockholders is required because Parent effects the Merger
    pursuant to Section&#160;253 of the DGCL, then appraisal rights
    will be available in connection with such Merger.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Appraisal rights cannot be exercised at this time. If appraisal
    rights become available in connection with the Merger, the
    Company will provide additional information to the holders of
    Shares concerning their appraisal rights and the procedures to
    be followed in order to perfect their appraisal rights before
    any action has to be taken in connection with such rights.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    18
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: 'Times New Roman', Times">Merger
    Moratorium Law</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Section&#160;203 of the DGCL prevents an &#147;interested
    stockholder&#148; (generally defined as a person that
    beneficially owns 15% or more of a corporation&#146;s voting
    stock) from engaging in a &#147;business combination&#148;
    (which includes a merger, consolidation, a sale of a significant
    amount of assets, and a sale of stock) with a Delaware
    corporation for three years following the date such person
    became an interested stockholder unless:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="5%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (i)&#160;
</TD>
    <TD align="left">
    before such person became an interested stockholder, the board
    of directors of the corporation approved either the transaction
    in which the interested stockholder became an interested
    stockholder or the business combination;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (ii)&#160;
</TD>
    <TD align="left">
    upon consummation of the transaction in which the interested
    stockholder became an interested stockholder, the interested
    stockholder owned at least 85% of the voting stock of the
    corporation outstanding at the time the transaction commenced
    (excluding, for purposes of determining the number of shares
    outstanding, stock held by directors who are also officers and
    by employee stock plans that do not allow plan participants to
    determine confidentially whether to tender shares); or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (iii)&#160;
</TD>
    <TD align="left">
    following the transaction in which such person became an
    interested stockholder, the business combination is
    (x)&#160;approved by the board of directors of the corporation
    and (y)&#160;authorized at a meeting of stockholders by the
    affirmative vote of the holders of at least 66% of the
    outstanding voting stock of the corporation not owned by the
    interested stockholder.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Board approved the Merger Agreement and the transactions
    contemplated thereby for purposes of Section&#160;203 of the
    DGCL on October&#160;12, 2008, as described in Item&#160;4 of
    this Statement above. Therefore, the restrictions of
    Section&#160;203 of the DGCL will not apply to the Merger or the
    transactions contemplated by the Merger Agreement.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Antitrust
    Laws.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: 'Times New Roman', Times">United
    States</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under the
    <FONT style="white-space: nowrap">Hart-Scott-Rodino</FONT>
    Antitrust Improvements Act of 1976, as amended (the &#147;HSR
    Act&#148;), and the rules that have been promulgated thereunder
    by the Federal Trade Commission (the &#147;FTC&#148;), certain
    acquisition transactions may not be consummated unless certain
    information has been furnished to the Antitrust Division of the
    Department of Justice (the &#147;Antitrust Division&#148;) and
    the FTC and certain waiting period requirements have been
    satisfied. The purchase of Shares by Parent pursuant to the
    Offer is not subject to such requirements. Accordingly, neither
    Parent nor the Company will file a Notification and Report Form
    with respect to the Offer.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <I><FONT style="font-family: 'Times New Roman', Times">Foreign
    Competition Law Filings</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The purchase of Shares by Parent pursuant to the Offer may be
    subject to the competition laws of certain foreign countries,
    which may require the filing of information with, or the
    obtaining of approval of, regulatory authorities. As of the date
    hereof, Parent has advised the Company that Parent believes that
    it (and potentially the Company) will be required to make such
    filings in Germany, Austria, Turkey and Slovakia.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Top-Up
    Option.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The summary of the Top-Up Option in Section 12 of the Offer to
    Purchase is incorporated herein by reference.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    19
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->


<!-- link2 "Item 9. Exhibits." -->
<DIV align="left"><A NAME="008"></A></DIV>


<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Item&#160;9.&#160;&#160;Exhibits.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following Exhibits are filed herewith:
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
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    <TD width="10%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="6%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="84%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Exhibit No.</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Description</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    (a)(1)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Outline of Town Hall Meeting, dated as of October&#160;13, 2008,
    incorporated by reference to Ashworth, Inc.&#146;s preliminary
    communication filed under cover of Schedule 14D-9 on
    October&#160;14, 2008.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    (a)(2)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Joint press release issued by Ashworth, Inc. and Taylor Made
    Golf Company, Inc. on October&#160;13, 2008, incorporated by
    reference to Ashworth, Inc.&#146;s preliminary communication
    filed under cover of Schedule 14D-9 on October 14, 2008.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    (a)(3)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Offer to Purchase, dated as of October 20, 2008, incorporated by
    reference to Exhibit (a)(1)(a) to the Schedule TO of Taylor Made
    Golf Company, Inc. and PHX Acquisition Corp. filed on October
    20, 2008.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    (a)(4)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Letter of Transmittal, incorporated by reference to
    Exhibit (a)(1)(b) to the Schedule TO of Taylor Made Golf
    Company, Inc. and PHX Acquisition Corp. filed on October 20,
    2008.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    (a)(5)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Opinion, dated as of October 12, 2008, of Kurt Salmon Associates
    Capital Advisors, Inc. (attached hereto as Annex A).*
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    (a)(6)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Information Statement pursuant to Section 14(f) of the
    Securities Exchange Act of 1934 and Rule 14f-1 thereunder
    (attached hereto as Annex B).*
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    (e)(1)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Agreement and Plan of Merger, dated as of October&#160;13, 2008,
    by and among Taylor Made Golf Company, Inc., PHX Acquisition
    Corp. and Ashworth, Inc., incorporated by reference to Exhibit
    99.2 of Ashworth, Inc.&#146;s Current Report on Form 8-K filed
    on October 14, 2008.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    (e)(2)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    No-Shop Agreement, dated as of September 8, 2008, by and between
    Ashworth, Inc. and adidas AG.*
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    (e)(3)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Stockholder Tender Agreement and Irrevocable Proxy, dated as of
    October 13, 2008, by and between Taylor Made Golf Company, Inc.
    on the one hand, and David M. Meyer,
    Michael&#160;S.&#160;Koeneke, Knightspoint Partners II, L.P.,
    Knightspoint Capital Management II LLC,  Knightspoint Partners,
    LLC, Ramius Value and Opportunity Master Fund Ltd (f/k/a
    Starboard Value &#038; Opportunity Master Fund, Ltd) and Parche,
    LLC, on the other hand, incorporated by reference to Exhibit
    99.2 of Ashworth, Inc.&#146;s Current Report on Form 8-K filed
    on October 14, 2008.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    (e)(4)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Amended and Restated Nonqualified Stock Option Plan, dated
    November 1, 1996, incorporated by reference to Exhibit 10(i) to
    Ashworth, Inc.&#146;s Form 10-K for the fiscal year ended
    October 31, 2000.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    (e)(5)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Amended and Restated Incentive Stock Option Plan, dated as of
    November 1, 1996, incorporated by reference to Exhibit 10(j) to
    Ashworth, Inc.&#146;s Form 10-K for the fiscal year ended
    October 31, 2000.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    (e)(6)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Amended and Restated 2000 Equity Incentive Plan, dated December
    14, 1999, adopted by the stockholders on March 24, 2000,
    incorporated by reference to Exhibit 4.1 to Ashworth,
    Inc.&#146;s Form&#160;S-8 filed on December 12, 2000.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    (e)(7)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Form of Stock Option Agreement for issuance of stock option
    grants to each of Ashworth, Inc.&#146;s executive officers and
    non-employee directors on December 21, 2004, incorporated by
    reference to Exhibit 10.1 to Ashworth, Inc.&#146;s Form 8-K
    filed on December 22, 2004.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    (e)(8)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Non-statutory stock option plan and agreement, dated as of
    October 24, 2007, by and between Ashworth, Inc. and optionee,
    incorporated by reference to Exhibit 10.2 to Ashworth,
    Inc.&#146;s Form&#160;8-K filed on October 30, 2007.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    (e)(9)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Eric Salus Agreement (2008) between Ashworth, Inc. and Eric
    Salus, dated as of October&#160;8, 2008.*
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    (e)(10)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Consulting Agreement between Fletcher Leisure Group, Ltd. and
    the Company, effective January 11, 2008, incorporated by
    reference to Exhibit 10(ap) to Ashworth, Inc.&#146;s Form 10-K
    filed on January 14, 2008.
</TD>
</TR>
</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    20
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="10%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="6%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="84%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Exhibit No.</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Description</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    (e)(11)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Ashworth/Koeneke Agreement between Ashworth, Inc. and Michael S.
    Koeneke, dated as of August 6, 2008, incorporated by reference
    to Exhibit 10(f) to Ashworth, Inc.&#146;s Form 10-Q for the
    quarterly period ended July 31, 2008.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    (e)(12)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Ashworth/Meyer Agreement between Ashworth, Inc. and David M.
    Meyer, dated as of August 6, 2008, incorporated by reference to
    Exhibit 10(g) to Ashworth, Inc.&#146;s Form 10-Q for the
    quarterly period ended July 31, 2008.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    (e)(13)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Ashworth, Inc. Management Change in Control Plan, dated as of
    September 19, 2008, incorporated by reference to Exhibit 10.1 to
    Ashworth, Inc.&#146;s Form 8-K filed on September&#160;22, 2008.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    (e)(14)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Employment Letter, dated as of May&#160;23, 2007, between Edward
    J. Fadel and Ashworth, Inc., incorporated by reference to
    Exhibit&#160;10.1 to Ashworth, Inc.&#146;s
    <FONT style="white-space: nowrap">Form&#160;8-K</FONT>
    filed on May&#160;25, 2007.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    (e)(15)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Employment Letter, dated as of October 24, 2007, between Greg W.
    Slack and Ashworth, Inc., incorporated by reference to Exhibit
    10.3 to Ashworth, Inc.&#146;s Form 8-K filed on October&#160;30,
    2007.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Annex&#160;A
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Opinion, dated as of October 12, 2008, of Kurt Salmon Associates
    Capital Advisors, Inc.*
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Annex&#160;B
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Information Statement pursuant to Section 14(f) of the
    Securities Exchange Act of 1934 and Rule 14f-1 thereunder.*
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 2pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=455 length=60 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD valign="top">
    * </TD>
    <TD></TD>
    <TD valign="bottom">
    Filed herewith.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    21
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->


<!-- link1 "SIGNATURES" -->
<DIV align="left"><A NAME="009"></A></DIV>


<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">SIGNATURES</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    After due inquiry and to the best of my knowledge and belief, I
    certify that the information set forth in this statement is
    true, complete and correct.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 52%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Dated: October&#160;20, 2008
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 52%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    ASHWORTH, INC.
</DIV>

<DIV style="margin-top: 36pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 52%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="52%"></TD>
    <TD width="4%"></TD>
    <TD width="44%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    By:&#160;
</TD>
    <TD valign="bottom" align="left">
    <DIV style="display:inline; text-align:left;">/s/&#160;&#160;Allan
    H. Fletcher</DIV><BR>
    <DIV style="font-size: 2pt; margin-left: 0%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=115 iwidth=198 length=0 -->Name:&#160;Allan
    H. Fletcher<BR>
    Title:&#160;&#160;&#160;Chief Executive Officer
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    22
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <IMG src="a50180a5018001.gif" alt="KSA CAPITAL ADVISORS LOGO">
</DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>


<!-- link1 "Annex A" -->
<DIV align="left"><A NAME="010"></A></DIV>


<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="right" style="margin-left: 52%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Annex
    A</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>STRICTLY CONFIDENTIAL</B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    October&#160;12, 2008
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Board of Directors
</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Ashworth, Inc.
</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    2765 Loker Avenue
</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Carlsbad, CA 92008
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Members of the Board of Directors:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You have requested our opinion as to the fairness, from a
    financial point of view, to the holders of common stock, par
    value $0.001 per share (the &#147;Company Common Stock&#148;),
    of Ashworth, Inc. (the &#147;Company&#148;) of the Offer Price
    (as defined below) to be paid to such holders in the proposed
    Transaction (as defined below) pursuant to the Agreement and
    Plan of Merger (the &#147;Agreement&#148;), among the Company,
    TaylorMade-adidas Golf Company (the&#160;&#147;Acquiror&#148;)
    and its
    <FONT style="white-space: nowrap">wholly-owned</FONT>
    subsidiary, PHX Acquisition Corp.
    (the&#160;&#147;Acquisition&#160;Sub&#148;). Pursuant to the
    Agreement, the Acquiror will cause the Acquisition Sub to
    commence a tender offer (the&#160;&#147;Tender Offer&#148;) to
    purchase, on the terms and conditions set forth in the
    Agreement, all of the outstanding Company Common Stock, at a
    price per share of Company Common Stock of $1.90&#160;net to the
    holders of such Company Common Stock payable in cash
    (the&#160;&#147;Offer Price&#148;). The Agreement further
    provides that, following completion of the Tender Offer, the
    Acquisition Sub will be merged with and into the Company
    (the&#160;&#147;Merger&#148;) and each outstanding share of
    Company Common Stock, other than shares of Company Common Stock
    held in treasury or owned by the Acquiror and its affiliates and
    other than Dissenting Shares (as&#160;defined in the Agreement),
    will be converted into the right to receive an amount equal to
    the Offer Price payable in cash. The Tender Offer and Merger,
    together and not separately, are referred to herein as the
    &#147;Transaction&#148;.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Kurt Salmon Associates Capital Advisors, Inc.
    (&#147;KSA&#160;CA&#148;), as a customary part of our investment
    banking business, engages in the valuation of businesses and
    their securities in connection with mergers and acquisitions.
    KSA&#160;CA has acted as financial advisor to the Company in
    connection with the Merger and will receive a fee from the
    Company, the principal portion of which is contingent upon the
    consummation of the Merger. The Company has also agreed to
    reimburse our expenses and indemnify KSA&#160;CA against certain
    liabilities in connection with our services. During the prior
    two years preceding the date of this opinion, we have provided a
    range of general management consulting services to an affiliate
    of the Acquiror in Europe and Asia. Neither we nor our
    affiliates have had any other significant commercial or
    investment banking relationships with the Company, the Acquiror
    or the Acquisition&#160;Sub.
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <FONT style="font-size: 9pt; font-family: Arial, Helvetica">The
    Peachtree
    <FONT style="font-family: Symbol; font-variant: normal">&#239;</FONT>
    1355 Peachtree Street NE, Suite 900
    <FONT style="font-family: Symbol; font-variant: normal">&#239;</FONT>
    Atlanta, GA&#160;30309
    </FONT>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <FONT style="font-size: 9pt; font-family: Arial, Helvetica">PHONE
    404.892.0321
    <FONT style="font-family: Symbol; font-variant: normal">&#239;</FONT>
    FAX 404.253.0373
    </FONT>
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <FONT style="font-size: 8pt; font-family: Arial, Helvetica">www.ksacapitaladvisors.com
    </FONT>
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-1
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <IMG src="a50180a5018001.gif" alt="KSA CAPITAL ADVISORS LOGO">
</DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

<TR>
    <TD width="50%"></TD>
    <TD width="50%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">    <FONT style="font-family: 'Times New Roman', Times">The Board of
    Directors
    </FONT></TD>
    <TD nowrap align="right">    <FONT style="font-family: 'Times New Roman', Times">
    October&#160;12, 2008
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Ashworth, Inc.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In connection with our role as financial advisor to the Company,
    and in arriving at our Opinion, we have reviewed and analyzed
    such materials and considered such financial and other factors
    that we deemed relevant under the circumstances. In addition, we
    have:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="5%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (i)&#160;
</TD>
    <TD align="left">
    reviewed the financial terms and conditions of the draft
    Agreement provided to us by the Company&#146;s legal counsel on
    October&#160;11, 2008;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (ii)&#160;
</TD>
    <TD align="left">
    reviewed and analyzed certain financial and other data with
    respect to the Company, which was publicly available or made
    available to us from internal records of the Company;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (iii)&#160;
</TD>
    <TD align="left">
    reviewed and analyzed certain internal financial projections for
    the quarter ending October&#160;31, 2008 and fiscal year ending
    October&#160;31, 2009, on a stand-alone basis provided to us by
    the management of the Company (the &#147;Projections&#148;);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (iv)&#160;
</TD>
    <TD align="left">
    reviewed and analyzed management&#146;s line of credit
    availability projection;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (v)&#160;
</TD>
    <TD align="left">
    compared the financial performance of the Company with that of
    certain other publicly-traded companies deemed by us to be
    relatively and reasonably comparable to the Company or otherwise
    relevant to our inquiry;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (vi)&#160;
</TD>
    <TD align="left">
    reviewed the financial terms, to the extent publicly available,
    of certain transactions deemed by us to be relatively and
    reasonably comparable or otherwise relevant to our inquiry;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (vii)&#160;
</TD>
    <TD align="left">
    reviewed and analyzed the reported prices and trading history of
    the Company Common Stock from October&#160;10, 2003 to
    October&#160;10, 2008.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (viii)&#160;
</TD>
    <TD align="left">
    performed a discounted cash flows analysis for the Company on a
    stand-alone basis utilizing management&#146;s financial
    projection for the fiscal year ending October&#160;31, 2009 and
    applied certain sensitivity analysis for the fiscal years ending
    October&#160;31, 2010 and beyond; and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    (ix)&#160;
</TD>
    <TD align="left">
    reviewed other financial studies, analyses and investigations we
    deemed appropriate, including our assessment of general
    economic, market and monetary conditions.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, we have had discussions with the management of the
    Company concerning its business and operations, assets, present
    condition and future prospects, participated in discussions and
    negotiations among representatives of the Company and Acquiror,
    and undertook such other studies, analyses and investigations as
    we deemed relevant and appropriate.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In preparing our opinion, we have assumed and relied on the
    accuracy and completeness of all information supplied or
    otherwise made available to us, discussed with or reviewed by or
    for us, or publicly available, and we have not assumed any
    responsibility for independently verifying such information or
    undertaken an independent evaluation or appraisal of any of the
    assets or liabilities of the Company or been furnished with any
    such evaluation or appraisal. We express no opinion regarding
    the liquidation value of the Company. In addition, we have not
    assumed any obligation to conduct any physical inspection of the
    properties or facilities of the Company. With respect to the
    Projections furnished to or discussed with us by the Company, we
    have assumed that they have been reasonably prepared and reflect
    the best currently available estimates and judgment of the
    Company&#146;s management as to the expected future financial
    performance of the Company, and we express no opinion with
    respect to such forecasts or the assumptions upon which they are
    based. We have further relied upon the assurances of senior
    management of the Company that they are not aware of any facts
    that would make such financial or other information relating to
    the Company inaccurate or misleading. We have further assumed
    that all material governmental, regulatory or other consents and
    approvals necessary for the consummation of the Transaction
</DIV>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <FONT style="font-size: 8pt; font-family: Arial, Helvetica">www.ksacapitaladvisors.com
    </FONT>
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-2
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <IMG src="a50180a5018001.gif" alt="KSA CAPITAL ADVISORS LOGO">
</DIV>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    will be obtained without any adverse effect on the Company or
    the Acquiror and without reducing the contemplated benefits of
    the Transaction to the Company or the holders of Company Common
    Stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This opinion is necessarily based upon market, economic and
    other conditions as they exist and can be evaluated only as of
    the date of this opinion. It should be understood that
    subsequent developments may affect this opinion and that we
    assume no responsibility to update, revise or reaffirm this
    opinion based upon events or circumstances occurring after the
    date hereof. Further, we express no opinions on matters of
    legal, regulatory, tax or accounting nature relating to or
    arising out of the proposed Transaction, and have relied, with
    your consent, on the advice of the outside counsel and the
    independent accountants to the Company, and on the assumptions
    of the&#160;management of the Company, as to all accounting,
    legal, tax and financial reporting matters with respect to the
    Company and the Agreement. Without limiting the generality of
    the foregoing, we have not undertaken any independent analysis
    of any current, pending or threatened litigation, regulatory
    action, possible unasserted claims or other contingent
    liabilities, to which the Company or any of its affiliates is a
    party or may be subject, and at the direction of the Company and
    with its consent, our opinion makes no assumption concerning,
    and therefore does not consider, the possible assertion of
    claims, outcomes or damages arising out of any such matters.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In rendering this opinion, we have assumed that the proposed
    Transaction will be consummated on substantially the same terms
    as described in the draft of the Agreement that was provided to
    us, without any waiver of any material terms or conditions by
    the Company. Further, we have assumed that, in all respects
    material to our analysis, the representations and warranties of
    the Company and Acquiror contained in the Agreement are true and
    correct and that each of the parties to the Agreement will
    perform all of the covenants and agreements to be performed by
    it under the Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This opinion addresses only the fairness, from a financial point
    of view, of the Offer Price to be paid to the holders of Company
    Common Stock in the proposed Transaction, and we do not express
    any views on any other terms of the proposed Transaction.
    Specifically, this opinion does not address the Company&#146;s
    underlying business decision to effect the proposed Transaction
    as compared to any alternative business strategies that might
    exist for the Company, the financing of the Transactions or the
    effects of any other transaction in which the Company might
    engage. Furthermore, we express no opinion with respect to the
    amount or nature of any compensation to any officers, directors,
    or employees of any party to the Transaction, or any class of
    such persons relative to the Offer Price to be received by the
    holders of Company Common Stock in the Transaction or with
    respect to the fairness of any such compensation.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We do not express any opinion as to the price or range of prices
    at which Company Common Stock may trade subsequent to the public
    announcement of the Transaction.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Based on and subject to the foregoing, it is our opinion that,
    as of the date the Offer Price to be received by the holders of
    Company Common Stock in the proposed Transaction is fair, from a
    financial point of view, to such holders.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The issuance of this opinion has been approved by a fairness
    opinion committee of KSA CA. This opinion is for the use and
    benefit of the Board of Directors of the Company. This opinion
    does not constitute a recommendation to any holders of Company
    Common Stock as to how such holder should vote in connection
    with the Transaction. This opinion may not be reproduced,
    summarized, excerpted from or otherwise publicly referred to or
    disclosed in any manner, in whole or in part, without KSA
    CA&#146;s prior written consent, except that the Company may
    include the opinion in its entirety in any disclosure document
    to be sent to the holders of Company Common Stock or filed with
    the United States Securities and Exchange Commission relating to
    the Transaction.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Very truly yours,
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    /s/ KURT SALMON ASSOCIATES CAPITAL ADVISORS, INC.
</DIV>

<DIV style="font-size: 2pt; margin-left: 0%; width: 60%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=455 length=276 -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    KURT SALMON ASSOCIATES CAPITAL ADVISORS, INC.
</DIV>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <FONT style="font-size: 8pt; font-family: Arial, Helvetica">www.ksacapitaladvisors.com
    </FONT>
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    A-3
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->


<!-- link1 "Annex B" -->
<DIV align="left"><A NAME="011"></A></DIV>


<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="right" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Annex&#160;B</FONT></B>
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">ASHWORTH,
    INC.<BR>
    2765 Loker Avenue West<BR>
    Carlsbad, California 92010<BR>
    <FONT style="white-space: nowrap">(760)&#160;438-6610</FONT></FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">INFORMATION
    STATEMENT PURSUANT TO<BR>
    SECTION&#160;14(f) OF THE SECURITIES EXCHANGE ACT OF 1934<BR>
    AND
    <FONT style="white-space: nowrap">RULE&#160;14f-1</FONT>
    THEREUNDER</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">GENERAL
    INFORMATION</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This information statement (this &#147;Information
    Statement&#148;) is being mailed to stockholders of Ashworth,
    Inc., a Delaware corporation (the &#147;Company&#148;), on or
    about October&#160;20, 2008, and relates to the tender offer
    being made by PHX Acquisition Corp. (the &#147;Purchaser&#148;),
    a Delaware corporation and a wholly owned subsidiary of Taylor
    Made Golf Company, Inc., a Delaware corporation
    (&#147;Parent&#148;), for all of the issued and outstanding
    shares of the Company&#146;s common stock, par value $0.001 per
    share (the &#147;Shares&#148;). Capitalized terms used and not
    otherwise defined herein shall have the meanings set forth in
    the Solicitation/Recommendation Statement on
    <FONT style="white-space: nowrap">Schedule&#160;14D-9</FONT>
    (the
    <FONT style="white-space: nowrap">&#147;Schedule&#160;14D-9&#148;)</FONT>
    filed by the Company with the Securities and Exchange Commission
    (the &#147;SEC&#148;) and mailed to the Company&#146;s
    stockholders, in each case, on October&#160;20, 2008. Unless the
    context indicates otherwise, in this Information Statement the
    terms &#147;us,&#148; &#147;we,&#148; and &#147;our&#148; refer
    to the Company.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You are receiving this Information Statement in connection with
    the possible election or appointment of persons designated by
    the Purchaser to a majority of seats on the Board of Directors
    of the Company (the &#147;Board&#148;). There will be no vote or
    other action by stockholders of the Company in connection with
    this Information Statement. Voting proxies regarding Shares are
    not being solicited from any stockholder in connection with this
    Information Statement. You are urged to read this Information
    Statement carefully. You are not, however, required to take any
    action in connection with this Information Statement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This Information Statement relates to the tender offer by the
    Purchaser, disclosed in a Tender Offer Statement on
    Schedule&#160;TO, dated October&#160;20, 2008 (as may be amended
    or supplemented from time to time, the
    &#147;Schedule&#160;TO&#148;), to purchase all of the
    outstanding Shares at a price of $1.90 per Share (the
    &#147;Offer Price&#148;), net to the holder in cash (subject to
    applicable withholding tax, without interest, on the terms and
    subject to the conditions set forth in the Purchaser&#146;s
    offer to purchase, dated October&#160;20, 2008 (as may be
    amended or supplemented from time to time, the &#147;Offer to
    Purchase&#148;), and the related letter of transmittal). The
    consideration offered per Share, together with all the terms and
    conditions of the Purchaser&#146;s tender offer, is referred to
    in this Information Statement as the &#147;Offer.&#148; The
    Purchaser is a wholly owned subsidiary of Parent. adidas AG, a
    multinational apparel and sporting goods company headquartered
    in Germany, is the ultimate parent entity of Parent
    (&#147;adidas&#148;). The Offer was commenced by the Purchaser
    on October&#160;20, 2008 and expires at midnight, New York City
    time, at the end of November&#160;18, 2008, unless it is
    extended or terminated in accordance with its terms. The Offer
    is conditioned on, among other matters, there being validly
    tendered and not withdrawn before the expiration of the Offer at
    least a majority of the Shares then outstanding on a fully
    diluted basis, as described in the Offer to Purchase (the
    &#147;Minimum Condition&#148;).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Offer is being made pursuant to the Agreement and Plan of
    Merger, dated as of October&#160;13, 2008, by and among the
    Company, Parent and the Purchaser (as may be amended or
    supplemented from time to time, the &#147;Merger
    Agreement&#148;). The Merger Agreement provides that, following
    the consummation of the Offer, the Purchaser will merge with and
    into the Company (the &#147;Merger&#148;), and the Company will
    continue as the surviving corporation in the Merger and a wholly
    owned subsidiary of Parent. The Merger will be completed in one
    of two ways. If, following the consummation of the Offer, the
    Purchaser owns more than 90% of the Shares then outstanding,
    then the Merger will occur promptly after the consummation of
    the Offer. However, if, following the consummation of the Offer,
    the Purchaser owns more than 50% but less than 90% of the Shares
    then outstanding, then the Company will call and hold a special
    meeting of its stockholders to adopt and approve the Merger
    Agreement, and the Merger will occur promptly after any such
    stockholder approval. If the conditions to the Offer have been
    satisfied, Parent will have sufficient votes to adopt the Merger
    Agreement without the need for any of the Company&#146;s
    stockholders to
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-1
</DIV><!-- END PAGE WIDTH -->
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    vote in favor of such adoption. In the Merger, each outstanding
    Share (other than Shares held by Parent, the Purchaser, the
    Company or stockholders who properly exercise appraisal rights,
    if any, under Section&#160;262 of the Delaware General
    Corporation Law (the &#147;DGCL&#148;)), will be converted into
    the right to receive the same consideration paid per Share
    pursuant to the Offer, without interest thereon (the
    &#147;Merger Consideration&#148;).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If, at a scheduled expiration date of the Offer, the Outstanding
    Liabilities (as defined in the Merger Agreement) of the Company
    on a consolidated basis exceed a threshold, which shall
    initially be $85&#160;million, then the Purchaser may elect to
    adjust the Offer Price downward and extend the Offer for an
    additional period of 10 business days (provided that the end of
    such 10 business day period is prior to 120&#160;calendar days
    after the commencement of the Offer). If the Purchaser so
    elects, the Offer Price will be reduced from $1.90 per share, on
    a <I>pro rata</I> basis, by the amount by which the Outstanding
    Liabilities exceed $85&#160;million. After any such adjustment,
    the new threshold for purposes of triggering a future adjustment
    right will be equal to the Outstanding Liabilities at the time
    of such adjustment, plus an additional $5&#160;million.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Merger Agreement requires us to cause the Parent Designees
    (as defined below) to be elected or appointed to the Board under
    certain circumstances described below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This Information Statement is being mailed to you in accordance
    with Section&#160;14(f) of the Securities Exchange Act of 1934,
    as amended (the &#147;Exchange Act&#148;), and
    <FONT style="white-space: nowrap">Rule&#160;14f-1</FONT>
    promulgated thereunder. The information set forth herein
    supplements certain information set forth in the
    <FONT style="white-space: nowrap">Schedule&#160;14D-9.</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    All information contained in this Information Statement
    concerning Parent, the Purchaser and the Parent Designees has
    been furnished to us by Parent, and we assume no responsibility
    for the accuracy of any such information.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">THE
    PARENT DESIGNEES</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Subject to the terms of the Merger Agreement, applicable law and
    applicable rules of the Nasdaq Stock Market
    (&#147;Nasdaq&#148;), after the Purchaser has caused the payment
    to be made for Shares tendered pursuant to the Offer
    representing at least such number of Shares as will satisfy the
    Minimum Condition, Parent will be entitled to designate the
    number of directors on the Board, rounded up to the next whole
    number, as is equal to the product of the total number of
    directors multiplied by the percentage that the aggregate number
    of Shares beneficially owned by Parent, the Purchaser and their
    affiliates bears to the total number of Shares then outstanding.
    Upon request of Parent, the Company has agreed to take all
    actions necessary, subject to compliance with applicable laws
    and the certificate of incorporation and bylaws of the Company,
    to cause Parent&#146;s designees to be elected or appointed to
    the Board, including increasing the size of the Board and/or
    seeking the resignation of one or more incumbent directors. The
    Company has agreed to take all actions necessary, subject to
    compliance with applicable laws and the certificate of
    incorporation and bylaws of the Company, to cause individuals
    designated by Parent to constitute at least the same percentage
    as is on the Board of each committee of the Board and each board
    of directors of each subsidiary of the Company. Notwithstanding
    the foregoing, the Merger Agreement provides that we will use
    our commercially reasonable efforts to ensure that at least
    three of the members of the Board as of October&#160;13, 2008,
    who are independent for purposes of
    <FONT style="white-space: nowrap">Rule&#160;10A-3</FONT>
    under the Exchange Act (the &#147;Independent Directors&#148;),
    remain on the Board until the Merger has been consummated. If
    there are fewer than three Independent Directors on the Board
    for any reason, the Board will cause a person designated by the
    remaining Independent Directors to fill such vacancy who shall
    be deemed to be an Independent Director for all purposes of the
    Merger Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Following the election or appointment of Parent&#146;s designees
    and until the effective time of the Merger, the approval of a
    majority of the Independent Directors (or if there shall be only
    one Independent Director, of such Independent Director) will be
    required to authorize any amendment or termination of the Merger
    Agreement by us, any extension of time for performance of any
    obligation or action thereunder by Parent or the Purchaser or
    any waiver or exercise of any of our rights under the Merger
    Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Parent has informed us that its designees (the &#147;Parent
    Designees&#148;) will be selected by Parent from among the
    individuals listed below. Parent has advised us that none of the
    Parent Designees to our Board have, during the past five years,
    (1)&#160;been convicted in a criminal proceeding (excluding
    traffic violations or misdemeanors), (2)&#160;been a party to
    any judicial or administrative proceeding that resulted in a
    judgment, decree or final order enjoining the person from future
    violations of, or prohibiting activities subject to, U.S.
    federal or state securities laws, or a finding
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-2
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    of any violation of U.S. federal or state securities laws,
    (3)&#160;filed a petition under federal bankruptcy laws or any
    state insolvency laws or has had a receiver appointed to the
    person&#146;s property or (4)&#160;been subject to any judgment,
    decree or final order enjoining the person from engaging in any
    type of business practice.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Parent has informed us that none of the Parent Designees is
    currently a director of, or holds any position with, the Company
    or any of our subsidiaries. Parent has informed us that none of
    the Parent Designees or any of their immediate family members
    (i)&#160;has a familial relationship with any directors, other
    nominees or executive officers of the Company or any of our
    subsidiaries or (ii)&#160;has been involved in any transactions
    with the Company or any of our subsidiaries, in each case, that
    are required to be disclosed pursuant to the rules and
    regulations of the SEC, except as may be disclosed herein. Each
    Parent Designee is a citizen of the United States, unless
    otherwise noted. The business address of each Parent Designee is
    5545&#160;Fermi Court, Carlsbad, California 92008.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="43%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="52%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Age</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Position</B>
</DIV>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Mark King
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    49
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Chief Executive Officer and President of Parent and the Purchaser
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    John Kawaja
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    47
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Executive Vice President of Parent
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Klaus Flock
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    40
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
     Chief Financial Officer of Parent and the Purchaser
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    William Reimus
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    45
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Senior Vice President, General Counsel and Secretary of Parent
    and Secretary of the Purchaser
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Blake McHenry
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    54
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Senior Vice President, Global Human Resources of Parent
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Bradford Barnett
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    45
</TD>
<TD>&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Senior Vice President, Global Operations of Parent
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Mark King.</I>&#160;&#160;Mr.&#160;King currently serves as
    Chief Executive Officer and President of Parent and the
    Purchaser. Mr.&#160;King joined Parent in 1981 and has held
    several positions including Regional Sales Manager, Vice
    President of Sales and President.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>John Kawaja.</I>&#160;&#160;Mr.&#160;Kawaja currently serves
    as Executive Vice President of the adidas Golf division of
    Parent. During the last five years, he has also held the titles
    of President and Senior Vice President&#160;&#038; General
    Manager of the adidas Golf division of Parent.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Klaus Flock.</I>&#160;&#160;Mr.&#160;Flock  is a citizen of
    Germany. Mr.&#160;Flock currently serves as the Chief Financial
    Officer of Parent and the Purchaser. Previously, from 2004 until
    2006, Mr.&#160;Flock served as the Managing Director for adidas
    Indonesia, located in Jakarta. From 2001 to 2004, Mr.&#160;Flock
    served as the Managing Director for adidas- Salomon
    International Sourcing Ltd. located in Hong Kong. From 1998 to
    2001, Mr.&#160;Flock served as the Vice President of Corporate
    Controlling for adidas- Salomon AG in Germany. Prior to serving
    as Vice President of Corporate Controlling, from 1996 to 1998,
    Mr.&#160;Flock served as the Head of International Finance for
    adidas America Inc. located in Portland, Oregon. Mr.&#160;Flock
    joined the adidas Group in 1994, where he served as the
    Marketing&#160;&#038; Logistics Controller for adidas AG in
    Germany.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>William Reimus.</I>&#160;&#160;Mr.&#160;Reimus currently
    serves as Senior Vice President, General Counsel and Secretary
    of Parent and Secretary of the Purchaser. Mr.&#160;Reimus joined
    Parent in 1997 and previously held positions including Vice
    President and General Counsel as well as Associate General
    Counsel. Previously, from 1993 until 1997, he worked as an
    attorney at an intellectual property law firm.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Blake McHenry.</I>&#160;&#160;Mr.&#160;McHenry currently
    serves as Senior Vice President, Global Human Resources of
    Parent and has held such title for the last five years.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Bradford Barnett.</I>&#160;&#160;Mr.&#160;Barnett currently
    serves as Senior Vice President, Global Operations of Parent.
    During the last five years, he has also held the titles of
    Senior Vice President, U.S. Operations; Chief Operating Officer;
    Vice President, Global Operations; and Senior Director,
    Operations of Parent.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">CERTAIN
    INFORMATION CONCERNING THE COMPANY</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As of October&#160;16, 2008, there were 14,746,844&#160;Shares
    outstanding. The Shares are the only class of our voting
    securities outstanding that is entitled to vote at a meeting of
    our stockholders. Each Share entitles the record holder to one
    vote on all matters submitted to a vote of the stockholders.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-3
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">DIRECTORS
    AND EXECUTIVE OFFICERS OF THE COMPANY</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Set forth below are the name, age, and position of each of our
    directors and executive officers as of October&#160;20, 2008.
    Below the table appears a brief account of each director&#146;s
    and executive officer&#146;s business experience.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="32%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="61%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Name</B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Age</B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Position</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Detlef H. Adler
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    50
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Director
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Paul A. Bourgeois
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    59
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Senior Vice President of Sales
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Stephen G. Carpenter
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    68
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Director
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Edward J. Fadel
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    53
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    President
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Allan H. Fletcher
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    65
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Chief Executive Officer
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    John M. Hanson, Jr.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    68
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Director
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    James B. Hayes
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    70
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Director
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Michael S. Koeneke
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    61
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Chairman of the Board of Directors
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    David M. Meyer
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    40
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Director
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    James G. O&#146;Connor
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    65
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Director
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    John M. Richardson
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    63
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Director
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Greg W. Slack
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    47
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Chief Financial Officer and Principal Accounting Officer
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Eric S. Salus
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    55
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Director
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Detlef H. Adler.</I>&#160;&#160;Mr.&#160;Adler is the Chief
    Executive Officer of the Seidensticker Group, which is both a
    supplier of woven shirts to the Company and a significant
    stockholder of the Company (owning approximately 5% of the
    outstanding shares). Mr.&#160;Adler has been with Seidensticker
    since 1994 and served as the Chief Financial Officer from 1994
    to 1996, when he was named its Chief Executive Officer. From
    1989 to 1994, he served as the Director of Finance for Goldwell
    AG, then a subsidiary of Kao Corp. Japan, where he oversaw the
    finance-related functions of all international subsidiaries.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Stephen G. Carpenter.</I>&#160;&#160;Mr.&#160;Carpenter was a
    commercial banker for 36&#160;years and has been retired since
    1998. He was with California United Bank and served as Chairman
    and Chief Executive Officer from 1994 to 1998 and President and
    Chief Executive Officer from 1992 to 1994. Prior to 1992,
    Mr.&#160;Carpenter served as Vice Chairman of Security Pacific
    Bank for three years, as Executive Vice President with Wells
    Fargo Bank for seven years, and as Senior Vice President of
    First National Bank of Boston for 17&#160;years. He also served
    as a director of the Los Angeles Board of the Federal Reserve
    Bank of San Francisco. Currently, Mr.&#160;Carpenter serves as
    the
    <FONT style="white-space: nowrap">non-employee</FONT>
    Chairman of California United Bank, a commercial bank formed in
    2004 and opened in June 2005.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>John M. Hanson, Jr.</I>&#160;&#160;Mr.&#160;Hanson is a
    certified public accountant. He was a stockholder and officer of
    the accounting firm John M. Hanson&#160;&#038; Co. from 1968
    until his retirement in 1998. He now practices as a tax
    specialist for a limited number of clients.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>James B. Hayes.</I>&#160;&#160;In July 2001, Mr.&#160;Hayes
    retired as President and Chief Executive Officer of Junior
    Achievement, Inc., a
    <FONT style="white-space: nowrap">not-for-profit</FONT>
    organization providing economic education for young people in
    the U.S. and throughout the world. Mr.&#160;Hayes served as
    Chairman of Junior Achievement&#146;s national board of
    directors from 1991 to 1993 and as a board member from 1987 to
    1995. Prior to 1995, Mr.&#160;Hayes had a
    <FONT style="white-space: nowrap">35-year</FONT>
    career in magazine publishing. He was Publisher of FORTUNE
    Magazine from 1986 to 1994. Mr.&#160;Hayes also served as
    Publisher of DISCOVER Magazine from 1984 to 1986, and
    Advertising Sales Director of MONEY Magazine from 1982 to 1984.
    He held a number of executive positions with SPORTS ILLUSTRATED
    from 1959 to 1982.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Michael S. Koeneke.&#160;&#160;</I>Mr.&#160;Koeneke is a
    Managing Member of Knightspoint Partners LLC, an investment firm
    he co-founded in 2003. Since 2004, Mr.&#160;Koeneke has served
    as a member of the Board of Directors of CPI Corp., a consumer
    services company that operates the Sears Portrait Studios.
    Mr.&#160;Koeneke served on the Board of Directors of Sharper
    Image Corporation from 2006 to 2008. Mr.&#160;Koeneke was the
    co-head and then the Chairman of Global Mergers and Acquisitions
    at Merrill Lynch&#160;&#038; Co. from 1993 to 2002. Prior to
    that, Mr.&#160;Koeneke was the Head of Global Mergers and
    Acquisitions at Credit Suisse First Boston.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-4
</DIV><!-- END PAGE WIDTH -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>David M. Meyer.</I>&#160;&#160;Mr.&#160;Meyer is a Managing
    Member of Knightspoint Partners LLC, an investment firm he
    <FONT style="white-space: nowrap">co-founded</FONT>
    in 2003. Mr.&#160;Meyer was appointed to the Board on
    May&#160;8, 2006. Since 2004, Mr.&#160;Meyer has served as
    Chairman of the Board of Directors of CPI Corp., a consumer
    services company that operates the Sears Portrait Studios, and
    served, from 2004 to 2005, as a member of the interim Office of
    the Chief Executive of CPI Corp. Mr.&#160;Meyer served on the
    Board of Directors of Sharper Image Corporation from July 2006
    to August 2007 and formerly served as Chairman of its
    Compensation Committee. From 1995 to 2002, Mr.&#160;Meyer served
    in various capacities at Credit Suisse First Boston, including
    as a director in the Mergers and Acquisitions and Global
    Industrial and Services Groups in the firm&#146;s London office.
    Mr.&#160;Meyer received a B.S. in Engineering/Operations
    Research from Princeton University in 1990 and an M.B.A. from
    Stanford University in 1995.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>James G. O&#146;Connor.</I>&#160;&#160;Mr.&#160;O&#146;Connor
    has over 40&#160;years of experience in automotive marketing,
    sales and service operations. In December 2004,
    Mr.&#160;O&#146;Connor retired from his position as Ford Motor
    Company Group Vice President for North America Marketing, Sales
    and Service. Mr.&#160;O&#146;Connor was responsible for
    overseeing Ford, Lincoln-Mercury and Ford Customer Service
    divisions, Dealer Development, Ford Performance Group, Global
    Marketing and export markets around the world. From 1998 to
    2002, he was Ford Motor Company Vice President and President of
    Ford Division and was responsible for the marketing, sales and
    distribution of all Ford branded cars and trucks in the U.S.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>John W. Richardson.</I>&#160;&#160;Mr.&#160;Richardson served
    as Executive Vice President and Chief Financial Officer of Qwest
    Communications International (&#147;Qwest&#148;), a global
    provider of a variety of telecommunications services, from
    April&#160;1, 2007 until September&#160;22, 2008.
    Mr.&#160;Richardson joined Qwest in April 2003 and served as the
    Senior Vice President and Controller until April 2004 when he
    was also designated the Chief Accounting Officer. From October
    2002 to April 2003, Mr.&#160;Richardson was an independent
    consultant. In October 2002, Mr.&#160;Richardson retired from
    Goodyear Tire&#160;&#038; Rubber Company (&#147;Goodyear&#148;),
    a worldwide manufacturer of tires, engineered products and
    chemicals, where he served as the Vice President of Finance of
    the North American Tire unit from 1999 to 2002.
    Mr.&#160;Richardson held general management and financial
    positions within the Goodyear operations in Great Britain and
    Ohio from 1967 to 1999. Mr.&#160;Richardson holds a Certified
    Public Accountant license from the state of Ohio (inactive) and
    received a B.B.A. degree from Ohio University in 1967.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Eric S. Salus.&#160;&#160;</I>Mr.&#160;Salus has 30 plus
    years of experience in retail. He has held a variety of senior
    executive positions with three divisions of the Federated
    Department Stores from 1997 to 2005. Most recently he served as
    the President of Macy&#146;s Home Store from 2004 to 2005 and
    was responsible for five separate operating divisions across the
    U.S. From 2003 to 2004, he served as the President of Bon
    Macy&#146;s, a company with 52 stores in five states. From 2000
    to 2003, Mr.&#160;Salus served as the Executive Vice President
    of Macy&#146;s Home Store and Cosmetics and from 1997 to 2000,
    he served as the Executive Vice President of Macy&#146;s Home
    Store. Prior to that, Mr.&#160;Salus held a variety of
    merchandising and marketing management positions with
    Dick&#146;s Sporting Goods and May Department Stores.
    Mr.&#160;Salus currently serves on the Board of Directors of
    Oneida Ltd. (a privately held dinnerware, flatware and giftware
    company) as well as the Board of Directors of The National
    Housewares Charity Foundation. Mr.&#160;Salus received a B.A.
    degree in Business from University of Missouri in 1975.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Allan H. Fletcher, Chief Executive
    Officer.</I>&#160;&#160;Mr.&#160;Fletcher was appointed Chief
    Executive Officer of the Company on October&#160;24, 2007.
    Mr.&#160;Fletcher is the founder of Fletcher Leisure Group, Inc.
    (&#147;FLG&#148;), which has been one of Canada&#146;s leading
    suppliers of branded golf apparel, sportswear and golf equipment
    for over 40&#160;years and is a long-standing business partner
    of the Company. Mr.&#160;Fletcher was responsible for the
    operations and strategic direction of FLG and served as its
    President until December 2003 when he became and continues to
    serve as the Chairman and Chief Executive Officer.
    Mr.&#160;Fletcher is also an officer of Fletcher Leisure Group,
    Ltd., a management consulting company serving the golf industry,
    which provides Mr.&#160;Fletcher&#146;s services to the Company
    under a consulting agreement. Mr.&#160;Fletcher&#146;s son, Mark
    Fletcher, currently serves as the President of FLG and FLG Ltd.
    and oversees their operations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Edward J. Fadel, President.&#160;&#160;</I>Mr.&#160;Fadel was
    appointed President of the Company effective May&#160;23, 2007.
    Mr.&#160;Fadel most recently served as Vice President of
    Merchandising at Greg Norman / Reebok. Previously, from 2005 to
    2006, he served as Chief Strategist of Apparel at Ahead, Inc.
    where he formulated apparel and headwear strategies for both the
    Ahead men&#146;s line and Kate Lord women&#146;s line. Prior to
    that, Mr.&#160;Fadel served as Senior Vice President of
    Merchandising and Design at the Company from 2002 to 2004.
    Mr.&#160;Fadel joined the Company in 2001
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-5
</DIV><!-- END PAGE WIDTH -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    and served as Vice President&#160;&#151; Callaway Golf Apparel
    Merchandising&#160;&#038; Design until his promotion in 2002.
    Mr.&#160;Fadel worked as a consultant with various apparel
    manufacturers from 2000 until 2001. Prior to that,
    Mr.&#160;Fadel founded and served as President of Elandale
    Golfwear, a women&#146;s sportswear producer, from 1995 to 2000
    and as President of Cutter&#160;&#038; Buck Big&#160;&#038; Tall
    (a division of The Jeremy Dold Co.) from 1992 to 1995.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Greg W. Slack, Chief Financial Officer and Principal
    Accounting Officer.&#160;&#160;</I>Mr.&#160;Slack was appointed
    Chief Financial Officer and Principal Accounting officer on
    October&#160;24, 2007. He had previously served as the
    Company&#146;s Vice President&#160;&#151; Finance, Corporate
    Controller&#160;&#038; Principal Accounting Officer until July
    2007. Prior to returning to the Company, Mr.&#160;Slack served
    as Vice President of Finance of Pivotstor LLC from
    August&#160;1, 2007 to October&#160;23, 2007. Mr.&#160;Slack
    initially joined the Company as Director of Internal Audit in
    October 2005, was promoted to Corporate Controller in February
    2006, promoted to Vice President&#160;&#151; Finance in July
    2006 and appointed Principal Accounting Officer in October 2006.
    From September 2004 until October 2005, Mr.&#160;Slack worked on
    the Company&#146;s Sarbanes-Oxley project as an independent
    consultant. Mr.&#160;Slack was with JMC Management, Inc. from
    December 2001 through August 2004, where he served as the Chief
    Financial Officer from January 2003 to August 2004 and as the
    Controller from December 2001 to January 2003. Prior to that,
    Mr.&#160;Slack held various accounting related positions at Bay
    Logics, Inc. and PricewaterhouseCoopers LLP. He holds a
    Certified Public Accountant license from the State of California
    and a B.S. degree in Accountancy from San Diego State University.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Paul A. Bourgeois, Senior Vice President of
    Sales.&#160;&#160;</I>Mr.&#160;Bourgeois was appointed Senior
    Vice President of Sales for all domestic sales channels on
    October&#160;1, 2007. Mr.&#160;Bourgeois most recently served as
    Vice President of Sales and Marketing for the E. Magrath/Byron
    Nelson Golf Division of VF Imagewear from May 2005 to September
    2007. He was responsible for developing all sales and marketing
    initiatives and working with merchandising and design on product
    development. Prior to this, he was Vice President of Sales for
    the Cutter&#160;&#038; Buck Golf Division and responsible for
    developing budgets, selling initiatives and all sales plans.
    Mr.&#160;Bourgeois spent nine years with Cutter&#160;&#038; Buck
    from June 1995 to April 2004 and was promoted to Vice President
    of Sales in March 2002.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">&#160;&#160;&#160;&#160;&#160;Former
    Officers as of October&#160;20, 2008:</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Peter M. Weil, Former Chief Executive Officer and
    Director.&#160;&#160;</I>Mr.&#160;Weil resigned his position as
    Chief Executive Officer and as a Director of the Company,
    effective October&#160;24, 2007. He previously served as a
    full-time consultant and member of the Company&#146;s Office of
    the Chairman (an interim executive body utilized until a new
    Chief Executive Officer was identified) from September&#160;12,
    2006 until October&#160;30, 2006, when he was appointed as Chief
    Executive Officer. Mr.&#160;Weil was appointed to the Board on
    May&#160;8, 2006 and continued to serve as a member of the Board
    until his resignation. During Mr.&#160;Weil&#146;s tenure as the
    Company&#146;s Chief Executive Officer, he was an inactive
    Partner of Lighthouse Retail Group LLC, a consulting firm
    specializing in improving operating and positioning strategies
    for retailers. From 1996 to 2004, Mr.&#160;Weil served as Senior
    Vice President/Director of Management Horizons (formerly,
    PricewaterhouseCoopers&#160;&#151; retail consulting group). His
    consulting clients have included Hewlett Packard, Disney, Brooks
    Brothers, Nordstrom, Family Dollar and Loblaws. Mr.&#160;Weil
    previously held Senior Vice President positions with
    Macy&#146;s, Marshalls and J Baker/Morse Shoe in merchandising
    and supply chain management. Mr.&#160;Weil holds an M.B.A. from
    the Harvard Business School and a B.A. from the University of
    Michigan.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Eric R. Hohl, Former Executive Vice President, Chief
    Financial Officer and Treasurer.&#160;&#160;</I>Mr.&#160;Hohl
    joined the Company in March 2007 as Executive Vice President,
    Chief Financial Officer and Treasurer and left his position with
    the Company effective October&#160;24, 2007. Mr.&#160;Hohl
    joined the Company from ISE Corporation where he served as Chief
    Financial Officer since April 2005. ISE Corporation designs,
    engineers and assembles hybrid and hydrogen drive systems for
    heavy duty vehicles. From March 2004 to April 2005,
    Mr.&#160;Hohl served as the Chief Financial Officer and Chief
    Operating Officer at B.B. Dakota, Inc., a women&#146;s apparel
    company. From September 2000 to February 2004, Mr.&#160;Hohl
    served as Chief Financial Officer for Ritz Interactive, Inc., an
    <FONT style="white-space: nowrap">e-commerce</FONT>
    company.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Gary I. (&#147;Sims&#148;) Schneiderman, Former
    President.&#160;&#160;</I>Mr.&#160;Schneiderman joined the
    Company in September 2001 and resigned from his position as
    President of the Company effective May&#160;21, 2007.
    Mr.&#160;Schneiderman served as Vice President of Sales for
    Ashworth and Callaway Golf apparel Retail Sales from September
    2001 until January 2004 when he was promoted to Senior Vice
    President of Sales and had the added responsibility for Callaway
    Golf apparel Green Grass Sales. In September 2005,
    Mr.&#160;Schneiderman was promoted to Executive Vice President
    of
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-6
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Sales, Marketing and Customer Service and, in September 2006, he
    was promoted to President. Prior to joining the Company,
    Mr.&#160;Schneiderman was with Tommy Hilfiger USA where he
    served in a number of capacities including as National Sales
    Manager for men&#146;s sportswear. Prior to 1990, he served as a
    Regional Sales Manager for Pincus Brothers Maxwell Tailored
    Clothing from 1985 to 1990.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Peter E. Holmberg, Former Executive Vice
    President&#160;&#151; Green Grass Sales and
    Merchandising.&#160;&#160;</I>Mr.&#160;Holmberg&#160;joined the
    Company in July 1998 and resigned from his position as the
    Company&#146;s Executive Vice President&#160;&#151; Green Grass
    Sales and Merchandising effective May&#160;21, 2007.
    Mr.&#160;Holmberg served as the Director of Corporate Sales from
    July 1998 until December 1999. He served as Vice President of
    Corporate Sales from December 1999 to August 2001 when he was
    promoted to Senior Vice President of Sales and had the added
    responsibility of Ashworth Green Grass Sales. Mr.&#160;Holmberg
    then served as the Senior Vice President of Merchandising and
    Design from May 2005 until September 2005 when he was promoted
    to Executive Vice President of Merchandising, Design and
    Production. He was appointed Executive Vice
    President&#160;&#151; Green Grass Sales and Merchandising on
    October&#160;25, 2006. Prior to joining the Company,
    Mr.&#160;Holmberg served as National Corporate Sales Manager for
    Cutter&#160;&#038; Buck, Inc. from 1995 to 1998 and as Regional
    Manager and Buyer for Patrick James, Inc. from 1992 to 1995.
    Mr.&#160;Holmberg was the proprietor of The Country Gentleman,
    an upscale retail store in Bellevue, Washington, from 1975 to
    1992.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Winston E. Hickman, Former Executive Vice President, Chief
    Financial Officer and Treasurer.&#160;&#160;</I>Mr.&#160;Hickman
    joined the Company on February&#160;23, 2006 as Executive Vice
    President, Chief Financial Officer and Treasurer and resigned
    from his position with the Company effective November&#160;17,
    2006. Mr.&#160;Hickman previously served as Executive Vice
    President and Chief Financial Officer of REMEC, Inc., a
    Nasdaq-listed designer and manufacturer of advanced wireless
    subsystems used in commercial and defense communications
    applications. Mr.&#160;Hickman joined REMEC in 2003 from
    privately-held Paradigm Wireless System, Inc. where, beginning
    in 2000, he was an investor, Chief Financial Officer and a
    member of the board of directors. Mr.&#160;Hickman has also
    served as a board member, Chief Financial Officer, and financial
    advisor to a number of public and private companies.
    Mr.&#160;Hickman served as Chief Financial Officer of Pacific
    Scientific Company, a NYSE-listed company with sales in excess
    of $300&#160;million. Prior to Pacific Scientific, he held
    senior financial positions at Rockwell International,
    Allied-Signal, and Vans, Inc. He currently serves as a member of
    the board of directors of SRS Labs, Inc., a Nasdaq-listed
    company, where he is Chairman of the Audit Committee.
    Mr.&#160;Hickman holds an M.B.A. from the University of Southern
    California and a B.A. from California State University, Long
    Beach.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">CORPORATE
    GOVERNANCE AND RELATED MATTERS</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Communicating
    with the Directors</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Stockholders may communicate with the Board, its Committees, the
    Chairman of the Board, or any other member of the Board by
    sending a letter, care of our Corporate Secretary, to 2765 Loker
    Avenue West, Carlsbad, CA&#160;92010. The Board&#146;s policy is
    to have all stockholder communications compiled by the Corporate
    Secretary and forwarded directly to the Board, the Committee or
    the director, as indicated in the letter. All letters will be
    forwarded to the appropriate party. The Board reserves the right
    to revise this policy in the event that this process is abused,
    becomes unworkable, or otherwise does not efficiently serve the
    purpose of the policy.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Director
    Independence</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Board of Directors has determined that each of
    Ashworth&#146;s directors, with the exception of Mr.&#160;Salus,
    is &#147;independent&#148; as defined in Rule&#160;4200(a)(15)
    of the listing standards of the Nasdaq Marketplace Rules. On
    June&#160;5, 2007, Eric S. Salus entered into an agreement with
    the Company, dated as of June&#160;1, 2007, whereby
    Mr.&#160;Salus would provide consulting services relating to
    corporate management and operations (the &#147;Salus
    Agreement&#148;). All assignments under the Salus Agreement were
    required to be approved by mutual agreement of Mr.&#160;Salus
    and the Chief Executive Officer of the Company. Mr.&#160;Salus
    had agreed to provide such services for five (5)&#160;business
    days per calendar month. The consulting engagement under the
    Salus Agreement was to continue until March&#160;30, 2008, but
    could be earlier terminated by either party with
    <FONT style="white-space: nowrap">60-days</FONT>
    notice. This agreement was terminated by the Company effective
    December&#160;31, 2007. Effective as of October&#160;15, 2008,
    Mr. Salus and the Company entered into a new
</DIV>

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    <BR>
    B-7
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    consulting agreement whereby Mr. Salus has and will provide
    consulting services related to operational issues specified by
    the Board between September&#160;25, 2008 and October&#160;25,
    2008, in exchange for a one-time cash payment of $30,000,
    payable upon the earlier of October&#160;25, 2008 and the date
    of a change in control of the Company. Due to these
    relationships, Mr.&#160;Salus does not qualify as an independent
    director under Nasdaq listing standards.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Seidensticker (Overseas) Limited (&#147;Seidensticker&#148;), a
    supplier of inventoried products to the Company, owned
    approximately 5% of the Company&#146;s outstanding common stock
    at October&#160;31, 2007. Additionally, the President and Chief
    Executive Officer of Seidensticker (Overseas) Limited was
    elected to the Board effective January&#160;1, 2006. During the
    years ended October&#160;31, 2007, 2006 and 2005, the Company
    purchased approximately $1,151,000, $1,571,000 and $5,800,000,
    respectively, of products from Seidensticker. The Company
    believes that the terms upon which it purchased the inventoried
    products from Seidensticker are consistent with the terms
    offered to other, unrelated parties.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Meetings
    and Committees of the Board</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Company has standing Audit, Compensation and Human
    Resources, and Corporate Governance and Nominating Committees,
    as well as the Special Committee, which are discussed below.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">The Audit
    Committee</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Audit Committee represents the Board in assessing the
    independence and objectivity of the Company&#146;s independent
    registered public accounting firm, the integrity of management,
    the appropriateness of accounting policies and procedures and
    the adequacy of disclosures to stockholders. In this regard, the
    Audit Committee assists the Board by reviewing the financial
    information disclosure, the internal control over financial
    reporting established by management, and the internal and
    external audit process. It is the Audit Committee&#146;s
    responsibility to select and retain the independent registered
    public accounting firm to audit the financial statements of the
    Company and its divisions and subsidiaries. The Audit Committee
    currently consists of Messrs.&#160;Hanson (Chairman), Carpenter,
    O&#146;Connor and Richardson. The Audit Committee has been
    established in accordance with the Nasdaq and Securities and
    Exchange Commission (&#147;SEC&#148;) rules and regulations, and
    all the members of the Audit Committee are independent as
    independence for audit committee members is defined under
    applicable Nasdaq listing standards and SEC rules and
    regulations. The Audit Committee and the Board has determined
    that each of Mr.&#160;John M. Hanson, Jr., the Audit Committee
    Chairman, and Mr.&#160;John W. Richardson qualifies as an
    &#147;audit committee financial expert&#148; within the meaning
    of SEC rules and regulations. The Audit Committee has the
    authority to retain legal and other advisors of its choice, at
    the Company&#146;s expense, which advisors report directly to
    the Committee. During fiscal year 2007, the Audit Committee met
    in person four times and met telephonically four times. The
    Audit Committee Charter is accessible via the Company&#146;s
    website at <U>www.ashworthinc.com</U> under the heading
    &#147;Investor Relations.&#148;
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">The
    Compensation and Human Resources Committee</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Compensation and Human Resources Committee assists the Board
    in discharging its responsibilities relating to the compensation
    of executive officers and outside directors and has the
    authority to administer the Company&#146;s equity incentive
    plans. The Compensation and Human Resources Committee currently
    consists of Messrs.&#160;O&#146;Connor (Chairman), Adler, Hayes,
    Meyer and Richardson, all of whom are independent directors as
    independence is defined under Nasdaq listing standards. The
    Compensation and Human Resources Committee has the authority to
    retain legal and other advisors of its choice, at the
    Company&#146;s expense, which advisors report directly to the
    Compensation and Human Resources Committee. During fiscal year
    2007, the Compensation and Human Resources Committee met in
    person four times, met telephonically once and took action four
    times by written consent in lieu of a meeting. The Compensation
    and Human Resources Committee Charter is accessible via the
    Company&#146;s website at <U>www.ashworthinc.com</U> under the
    heading &#147;Investor Relations.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Compensation and Human Resources Committee generally has
    responsibility for executive compensation matters, including
    developing the Company&#146;s overall compensation strategy,
    overseeing the overall compensation structure, policies,
    programs and human resource development, assessing whether the
    Company&#146;s compensation structure establishes appropriate
    incentives for management and employees, setting the base
    salaries of the
</DIV>

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    <BR>
    B-8
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    executive officers, approving individual bonuses and bonus
    programs for executive officers and granting equity awards to
    executive officers and other key employees. The Compensation and
    Human Resources Committee and the Board delegated authority with
    respect to the compensation of non-executive employees whose
    annual base salary is less than $200,000 to the Chief Executive
    Officer. The Compensation and Human Resources Committee
    periodically reviews the Company&#146;s compensation strategy to
    evaluate its effectiveness in attaining its goals, including the
    objectives discussed above.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Compensation and Human Resources Committee generally
    discusses compensation proposals for executive officers other
    than the Chief Executive Officer with our Chairman and our Chief
    Executive Officer. Other members of management are also
    sometimes asked to participate in discussions regarding
    compensation programs in general or to prepare proposals and
    gather data. Our Compensation and Human Resources Committee
    considers the recommendations of the Company&#146;s Chief
    Executive Officer regarding salary and incentive levels for
    other executive officers, but makes the final decision on
    executive compensation.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">The
    Corporate Governance and Nominating Committee</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The purpose of the Corporate Governance and Nominating Committee
    is to assist the Board by identifying qualified individuals to
    become directors of the Company, to consider and recommend to
    the Board the director nominees for each annual meeting of
    stockholders and to fill vacancies on the Board, to consider and
    recommend to the Board the composition of the Board, its
    committees and the chairpersons thereof, to monitor and assess
    the effectiveness of the Board and its committees, and to
    perform a leadership role in shaping and implementing the
    Company&#146;s corporate governance policies. The Company has
    adopted several corporate governance policies among which are
    policies specifying the minimum number of independent and total
    directors, limiting each director&#146;s service to a maximum
    number of public company boards, limiting the length of service
    for non-employee directors and designating stock ownership
    levels for the Company&#146;s directors and listed executive
    officers. The Corporate Governance and Nominating Committee
    currently consists of Messrs.&#160;Carpenter (Chairman), Adler,
    Hanson and Hayes, all of whom are independent directors as
    independence is defined under applicable Nasdaq listing
    standards. The Corporate Governance and Nominating Committee has
    the authority to retain legal and other advisors of its choice,
    at the Company&#146;s expense, which advisors report directly to
    the Corporate Governance and Nominating Committee. The Corporate
    Governance and Nominating Committee Charter is accessible via
    the Company&#146;s website at <U>www.ashworthinc.com</U> under
    the heading &#147;Investor Relations.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Corporate Governance and Nominating Committee considers
    stockholder nominations for candidates for membership on the
    Board when properly submitted in accordance with the
    Company&#146;s bylaws. The Corporate Governance and Nominating
    Committee will review and evaluate such stockholder nominations
    in the same manner as it evaluates all other nominees.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Company&#146;s bylaws provide that nominations for the
    election of directors may be made by any stockholder entitled to
    vote in the election of directors; <I>provided, however</I>,
    that a stockholder may nominate a person for election as a
    director at a meeting only if advance written notice of such
    stockholder&#146;s intent to make such nomination has been given
    to the Company&#146;s Secretary in accordance with the
    Company&#146;s bylaws. Each notice must set forth: (i)&#160;the
    name and address of the stockholder who intends to make the
    nomination and of the person or persons to be nominated;
    (ii)&#160;the class and number of shares of the Company&#146;s
    stock that are beneficially owned by the stockholder and a
    representation that the stockholder is a holder of record of
    stock of the Company entitled to vote at such meeting and
    intends to appear in person or by proxy at the meeting and
    nominate the person or persons specified in the notice;
    (iii)&#160;a description of all arrangements or understandings
    between the stockholder and each nominee and any other person or
    persons (naming such person or persons) pursuant to which the
    nomination or nominations are to be made by the stockholder;
    (iv)&#160;such other information regarding each nominee proposed
    by such stockholder as would be required to be included in a
    proxy statement filed pursuant to the proxy rules of the SEC had
    the nominee been nominated, or intended to be nominated, by the
    Board; and (v)&#160;the consent of each nominee to serve as a
    director of the Company if so elected.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition to stockholder nominations as described above, the
    Corporate Governance and Nominating Committee may utilize a
    variety of methods for identifying potential nominees for
    directors, including considering potential candidates who come
    to their attention through current officers, directors,
    professional search firms or
</DIV>

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    <BR>
    B-9
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    other persons. Stockholders may also recommend director nominees
    for consideration to the Corporate Governance and Nominating
    Committee by submitting the names and any relevant information
    to our Corporate Secretary at 2765 Loker Avenue West, Carlsbad,
    CA 92010. Once a potential nominee has been identified, the
    Corporate Governance and Nominating Committee evaluates whether
    the nominee has the appropriate skills and characteristics
    required to become a director in light of the then current
    make-up of the Board. This assessment includes an evaluation of
    the nominee&#146;s judgment and skills, such as experience at a
    strategy/policy setting level, financial sophistication,
    leadership and objectivity, all in the context of the perceived
    needs of the Board at that point in time. The Board believes
    that, at a minimum, all members of the Board should have the
    highest professional and personal ethics and values. In
    addition, each member of the Board must be committed to
    increasing stockholder value and should have enough time to
    carry out his or her responsibilities as a member of the Board.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">The
    Special Committee</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The purpose of the Special Committee is to review, analyze and
    consider strategic alternatives for the Company and to promptly
    report all conclusions and recommendations to the Company&#146;s
    full Board for the Board&#146;s information and consideration of
    any binding action. Except as expressly provided in its Charter,
    the Special Committee acting alone shall not have any power to
    act on behalf of or otherwise bind the Company in any way. The
    Special Committee currently consists of Messrs.&#160;Meyer
    (Chairman), Carpenter, Koeneke and Salus. The Special Committee
    has the authority to advise on and recommend to the full Board
    regarding the need for retaining any outside counsel, experts or
    other advisors it determines appropriate to assist it in the
    full performance of its functions. In September 2006, the
    Special Committee determined that future meetings would be held
    when strategic alternatives opportunities were presented. The
    Special Committee Charter is accessible via the Company&#146;s
    website at <U>www.ashworthinc.com</U> under the heading
    &#147;Investor Relations.&#148;
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Board and
    Committee Meetings</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    During fiscal year 2007, the Board met in person four times, met
    telephonically eight times and took action once by written
    consent in lieu of a meeting. During fiscal year 2007, the Audit
    Committee met in person four times and met telephonically four
    times; the Compensation and Human Resources Committee met in
    person four times, met telephonically once and took action four
    times by written consent in lieu of a meeting; the Corporate
    Governance and Nominating Committee met in person four times and
    met telephonically twice; and the Special Committee met in
    person once. During fiscal year 2007, each of the directors
    attended at least 75% of the aggregate number of the
    Board&#146;s meetings and meetings of the Committees on which he
    served.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Policy
    Regarding Director Attendance at Annual Meetings</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Company encourages director attendance at its Annual
    Meetings of Stockholders and requests that directors make
    reasonable efforts to attend such meetings. The Company&#146;s
    2007 Annual Meeting of Stockholders was attended by all of the
    members of the then-current Board.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Code of
    Ethics</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Company has adopted a Code of Business Conduct and Ethics
    that applies to all directors and employees, including the
    Company&#146;s principal executive, financial and accounting
    officers. The Code of Business Conduct and Ethics is posted on
    the Company&#146;s website at <U>www.ashworthinc.com</U> under
    the heading &#147;Investor Relations.&#148; The Company intends
    to satisfy the requirements under Item&#160;5.05 of
    <FONT style="white-space: nowrap">Form&#160;8-K</FONT>
    regarding disclosure of amendments to provisions of our Code of
    Business Conduct and Ethics that apply to our directors and
    principal executive, financial and accounting officers by
    posting such information on the Company&#146;s website.
</DIV>

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    <BR>
    B-10
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Report of
    the Audit Committee</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following report concerns the Audit Committee&#146;s
    activities regarding oversight of the Company&#146;s financial
    reporting and auditing process.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Audit Committee is solely responsible for the appointment,
    compensation and oversight of the work of the independent
    registered public accounting firm for the purpose of preparing
    or issuing an audit report or related work.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Audit Committee reviews the Company&#146;s financial
    reporting process on behalf of the Board. Management has the
    principal responsibility for the financial statements and the
    reporting process. The Company&#146;s independent registered
    public accounting firm opines on the conformity of our audited
    financial statements to accounting principles generally accepted
    in the United States of America.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In its oversight of the financial reporting process, the Audit
    Committee has reviewed and discussed with management and the
    independent registered public accounting firm the Company&#146;s
    audited financial statements. The Audit Committee has discussed
    with the independent registered public accounting firm the
    matters required to be discussed by Statement on Auditing
    Standards No.&#160;61 (Communication with Audit Committees), as
    amended by Statement on Auditing Standards No.&#160;89 (Audit
    Adjustments) and Statement on Auditing Standards No.&#160;90
    (Audit Committee Communications). Our independent registered
    public accounting firm also provided to the Audit Committee the
    written disclosures and the letter required by Independence
    Standards Board Standard No.&#160;1 (Independence Discussions
    with Audit Committees), and the Audit Committee discussed with
    the independent accountants that firm&#146;s independence. The
    Audit Committee has also considered whether the independent
    registered public accounting firm&#146;s provision of non-audit
    services to the Company is compatible with the independent
    registered public accounting firm&#146;s independence.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In reliance on the reviews and discussions referred to above,
    the Audit Committee recommended to the Board, and the Board has
    approved, that the audited financial statements be included in
    the Company&#146;s Annual Report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the year ended October&#160;31, 2007, for filing with the
    Securities and Exchange Commission.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">This
    report was submitted by<BR>
    the Audit Committee:<BR>
    John M. Hanson, Jr., Chairman<BR>
    Stephen G. Carpenter<BR>
    James G. O&#146;Connor<BR>
    John W. Richardson</FONT></B>
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-11
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">COMPENSATION
    OF DIRECTORS AND EXECUTIVE OFFICERS</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Compensation
    Discussion and Analysis</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Overview</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    During the last two fiscal years, the Company underwent
    significant management changes and reorganizations. As a result,
    the Compensation and Human Resources Committee re-evaluated the
    Company&#146;s executive compensation program. The Compensation
    and Human Resources Committee has considered designating a
    greater percentage of total compensation as at-risk
    performance-based compensation as an individual&#146;s position
    and responsibility increase. Thus, executive officers with
    greater roles in, and responsibility for, achieving the
    Company&#146;s performance goals should bear a greater
    proportion of the risk that those goals are not achieved and
    should receive a greater proportion of the rewards if the goals
    are met or exceeded. The Compensation and Human Resources
    Committee has also considered and is in the process of
    developing an executive compensation program that provides for
    greater at-risk performance-based compensation.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The goal of our executive compensation program is to attract,
    retain and motivate high quality individuals who are important
    to the long-term success of the Company and to align the
    interests of the Company&#146;s executive officers with those of
    the Company&#146;s stockholders in creating stockholder value.
    In order to motivate our executive officers and to achieve
    long-term stockholder value, our executive compensation program
    is designed to offer executive officers competitive compensation
    opportunities based on their personal performance, our corporate
    financial performance and their contribution to that corporate
    performance.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Executive compensation currently consists of three primary
    components: base salary; annual cash bonus; and equity incentive
    compensation. Compensation packages are determined based on
    consideration of the Company&#146;s strategic and financial
    goals, competitive forces, individual responsibilities and
    challenges and economic factors.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Process
    for Determining Executive Compensation</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Consideration of Comparator Companies and Benchmarking: The
    Compensation and Human Resources Committee does not set a
    specific benchmark percentage for management compensation
    purposes. From time to time, the Compensation and Human
    Resources Committee utilizes the Company&#146;s Human Resources
    department to collect and analyze compensation data from
    publicly available proxy statements for companies in the apparel
    business. The Compensation and Human Resources Committee reviews
    such data to gain a general sense of competitive conditions.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Executive
    Compensation Components</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    For the fiscal year ended October&#160;31, 2007, the principal
    components of compensation for executive officers were:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    &#151;&#160;&#160;cash compensation through fixed base salary;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    &#151;&#160;&#160;the opportunity to receive a cash performance
    bonus;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    &#151;&#160;&#160;long-term equity incentive compensation
    through the granting of stock options;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    &#151;&#160;&#160;retirement benefits through our 401(k) plan;
    and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    &#151;&#160;&#160;other employee benefits (including limited
    perquisites).
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Base
    Salary</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The base salary for executive officers is reviewed annually or
    in connection with significant changes in responsibility and is
    adjusted based on each individual executive&#146;s performance
    and potential taking into consideration the Company&#146;s
    strategic and financial goals, competitive forces, individual
    responsibilities and challenges and economic factors. The
    Compensation and Human Resources Committee has limited base
    salary compensation increases in recent years in an effort to
    shift a greater portion of the executive&#146;s compensation to
    at-risk
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-12
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    performance-based compensation. There were no base salary
    increases awarded to executive officers in fiscal 2007 due to
    the Company&#146;s financial performance and management changes.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following table provides the base salaries of our current
    and certain former executive officers as provided in their
    respective employment or consulting agreements.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="85%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="11%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Base Salary<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>per Agreement ($)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Executive Officers
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Allan H. Fletcher(1)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    108,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Edward J. Fadel
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    240,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Greg W. Slack
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    225,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Paul A. Bourgeois
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    200,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Former Executive Officers:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Peter M. Weil
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    400,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Gary I. &#147;Sims&#148; Schneiderman
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    300,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Eric R. Hohl
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    240,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Winston E. Hickman
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    300,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Peter E. Holmberg
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    225,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 2pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=455 length=60 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    Mr.&#160;Fletcher is serving as the Company&#146;s Chief
    Executive Officer pursuant to a consulting agreement between the
    Company and Fletcher Leisure Group, Ltd.
    (&#147;FLG&#160;Ltd.&#148;). Under the consulting agreement with
    FLG&#160;Ltd., the Company paid FLG&#160;Ltd. a one-time fee of
    $75,000 upon execution of the FLG Ltd. consulting agreement and
    will pay FLG&#160;Ltd. a consulting fee of $9,000 per month
    during the term of the FLG&#160;Ltd. consulting agreement.
    FLG&#160;Ltd. is also eligible to receive a cash incentive fee,
    the amount of which will be determined by the Company&#146;s
    Compensation and Human Resource Committee based on achievement
    of objectives for the Chief Executive Officer by FLG&#160;Ltd.
    and the Company set out in the Company&#146;s annual business
    plan. For the 2008 fiscal year, the target incentive fee will be
    $500,000, assuming achievement of all objectives.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Cash
    Incentive Compensation</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Company&#146;s bonus program rewards executive officers
    primarily based on the Company&#146;s overall performance
    against budget as well as for the executive&#146;s individual
    performance, as measured against standards established in
    consultation with each executive, the executive&#146;s
    contributions to the development and retention of employees and
    the executive&#146;s division&#146;s performance. Ashworth has
    undergone significant changes in management during fiscal year
    2007 and as a result of the Company&#146;s overall performance
    in fiscal year 2007, the Compensation and Human Resources
    Committee did not award any cash bonuses to executive officers.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-13
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following table provides the cash incentive opportunity of
    our current and certain former executive officers as provided in
    their respective employment or consulting agreements.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="64%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="34%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Cash Incentive Opportunity<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>per Agreement</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Executive Officers
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Allan H. Fletcher(1)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    $500,000
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Edward J. Fadel
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Up to a target of 40% of base salary
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Greg W. Slack
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Up to a target of 50% of base salary
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Paul A. Bourgeois
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Up to a target of 30% of base salary
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Former Executive Officers:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Peter M. Weil
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Up to a target of 50% of base salary
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Gary I. &#147;Sims&#148; Schneiderman
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Up to a target of 82.5% of base salary
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Eric R. Hohl
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Up to a target of 40% of base salary
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Winston E. Hickman
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Up to a target of 50% of base salary
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Peter E. Holmberg
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    Up to a target of 40% of base salary
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 2pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=455 length=60 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    Mr.&#160;Fletcher is serving as the Company&#146;s Chief
    Executive Officer pursuant to a consulting agreement between the
    Company and FLG&#160;Ltd. FLG&#160;Ltd. is eligible to receive a
    cash incentive fee, the amount of which will be determined by
    the Company&#146;s Compensation and Human Resource Committee
    based on achievement of objectives for the Chief Executive
    Officer by FLG&#160;Ltd. and the Company set out in the
    Company&#146;s annual business plan. For the 2008 fiscal year,
    the target incentive fee will be $500,000, assuming achievement
    of all objectives.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Long-Term
    Stock-Based Incentive Compensation</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Total compensation for executive officers also includes
    long-term incentives offered in the form of stock options that
    vest over time, which are generally provided through initial
    stock option grants at the date of hire and periodic additional
    grants. The Compensation and Human Resources Committee believes
    that stock options with vesting schedules are an appropriate
    form of long-term incentive compensation because value is
    realized only if the Company&#146;s stock price improves and the
    executives remain employed by the Company. The Company believes
    that this form of compensation aligns the interests of executive
    officers with those of the stockholders and provides a focus on
    the long-term performance of the Company.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Company did not make an additional annual grant of stock
    options to employees and executive officers during the fiscal
    year 2007 because the Company was undergoing significant changes
    in management. However, stock options were granted pursuant to
    the Company&#146;s Amended and Restated 2000 Equity Incentive
    Plan during fiscal year 2007 for new hires, including grants to
    Peter M. Weil on his appointment as the Company&#146;s Chief
    Executive Officer, Eric R. Hohl on his appointment as the
    Company&#146;s Executive Vice President and Chief Financial
    Officer and Edward J. Fadel on his appointment as the
    Company&#146;s President. A stock option was also granted
    pursuant to the Company&#146;s 2007 Nonstatutory Stock Option
    Plan to Allan H. Fletcher on his appointment as the
    Company&#146;s Chief Executive Officer. The stock option granted
    to Mr.&#160;Fletcher was subsequently terminated on
    January&#160;11, 2008. Mr.&#160;Fletcher is serving as the
    Company&#146;s Chief Executive Officer pursuant to a consulting
    agreement between the Company and FLG&#160;Ltd. Under the
    consulting agreement, the Company also granted FLG&#160;Ltd.
    options to purchase 100,000&#160;shares of the Company&#146;s
    common stock at an exercise price of $5.48 per share with half
    of the options vesting on October&#160;24, 2008 and the
    remaining half vesting on October&#160;24, 2009. See
    &#147;Agreements with Current Executive Officers.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Compensation and Human Resources Committee considers
    available market data regarding average stock option overhang
    percentages as well as individual responsibilities and duties
    when granting stock options to executive officers. It is the
    Company&#146;s intention to ensure that the number of shares
    subject to equity awards granted during any year (as a
    percentage of the Company&#146;s common stock outstanding) will
    not result in excessive dilution and will generally be in line
    with market conditions. The Company fixes the exercise price of
    the options at the
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-14
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    common stock&#146;s fair market value (the closing stock price)
    or higher on the date of the grant. The Company has
    &#147;open&#148; and &#147;closed&#148; trading windows during
    the fiscal year and the Compensation and Human Resources
    Committee generally grants stock options to directors and
    employees during such open trading windows. The Compensation and
    Human Resources Committee also grants stock options to employees
    pursuant to employment agreements and the grant date is
    generally the date of hire. The stock options generally expire
    ten years from date of grant and generally vest equally over two
    to three years for employees or quarterly over one year in the
    case of non-employee director stock options.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Company-Wide
    Benefits</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Benefits such as profit sharing (the &#147;401(k) Plan&#148;)
    and medical, dental, vision and Exec-U-Care insurance coverage
    are provided to executives under plans and policies that, except
    as noted below, apply generally to employees of the Company.
    Management reviews the performance and cost of these plans on an
    annual basis and makes changes as necessary. The Exec-U-Care
    program is designed to reimburse the covered employee for
    medical, dental and vision expenses that are in excess of
    coverage provided by the underlying health plans. The Company
    provides Exec-U-Care coverage for its employees at the vice
    president level and above. The annual maximum Exec-U-Care
    benefit for each executive officer at the executive vice
    president level and above is $100,000. The annual maximum
    Exec-U-Care benefit for each other employee covered by this
    program is $50,000. For the 401(k) Plan, the Board appoints a
    plan committee made up of members of management. That committee
    is responsible for the administration of the 401(k) Plan and
    presents any proposals for plan changes to the Board for their
    approval.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Employment
    Agreements</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Executive officers are generally hired under employment
    agreements that establish base salary compensation and
    eligibility for annual performance-based awards, long-term
    equity awards, severance and other benefits. The agreements are
    used to document the employment terms, promote retention and
    provide for various covenants that protect the Company. The
    agreements are prepared based on a standard template and the
    Compensation Committee reviews and approves executive employment
    agreements before they are executed.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Indemnification
    Agreements</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On December&#160;12, 2006, the Board approved a new form of
    indemnification agreement for its directors, executive officers,
    and other employees designated by the Board. The Board also
    authorized the Company to enter into the approved form of
    indemnification agreements with each of its non-employee
    directors and each of the executive officers. The form of
    indemnification agreement is expected to be used with future
    members of the Board and executive officers of the Company.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Termination
    Agreements</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Upon termination of the employment of a key executive, the
    Company and the executive generally enter into a separation,
    severance or release agreement (each, a &#147;Termination
    Agreement&#148;) to clarify the terms of the separation.
    Messrs.&#160;Weil, Hohl, Schneiderman, Holmberg and Hickman have
    each executed such a Termination Agreement in connection with
    their respective separations from the Company. The terms of such
    Termination Agreements were based on provisions of each of their
    original employment agreements. See the discussion following the
    &#147;Summary Compensation Table&#148; and the &#147;Grants of
    Plan-Based Awards For Fiscal Year 2007&#148; for further
    information.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Stock
    Ownership Guidelines</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Company has adopted Stock Ownership Guidelines (the
    &#147;Guidelines&#148;) for the Company&#146;s non-employee
    directors, the Chief Executive Officer and President
    (&#147;CEO&#148;), the Chief Financial Officer
    (&#147;CFO&#148;), the Executive Vice President
    (&#147;EVP&#148;) and the Senior Vice President
    (&#147;SVP&#148;) levels of executive management.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Guidelines are as follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    &#151;  each non-employee director&#160;&#151; three
    (3)&#160;times the annual retainer;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    &#151;  the CEO&#160;&#151; two (2)&#160;times the annual base
    salary;
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-15
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    &#151;  each EVP and the CFO&#160;&#151; one and a half (1.5)
    times the annual base salary; and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    &#151;  each SVP&#160;&#151; one (1)&#160;times the annual base
    salary.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The persons in positions covered by the Guidelines must retain
    stock acquired on option exercises equaling a value of at least
    50% of their net after-tax profits on each exercise of options
    granted on or after March&#160;24, 2004 until the individual
    ownership goal is achieved.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Compensation
    Committee Interlocks and Insider Participation</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The members of the Compensation and Human Resources Committee,
    Messrs.&#160;O&#146;Connor, Adler, Hayes, Koeneke, Meyer and
    Richardson, are not current or former officers or employees of
    the Company. There are no Compensation and Human Resources
    Committee interlocks between the Company and other entities
    involving Ashworth&#146;s executive officers and directors.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Compensation
    Committee Report</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Compensation and Human Resources Committee has reviewed and
    discussed the &#147;Compensation Discussion and Analysis&#148;
    set forth above with the management of the Company, and based on
    such review and discussion, has recommended to the Board that
    the Compensation Discussion and Analysis be included in the
    <FONT style="white-space: nowrap">Form&#160;10-K/A</FONT>
    to the Company&#146;s Annual Report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the year ended October&#160;31, 2007 and the proxy statement
    for the 2008 annual stockholders meeting.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>James G. O&#146;Connor, Chairman</B>
</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Detlef H. Adler</B>
</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>James B. Hayes</B>
</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>David M. Meyer</B>
</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>John W. Richardson</B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Compensation
    of Non-Employee Directors in Fiscal 2007</FONT></B>
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="60%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>All Other<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Compensation<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>(including<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Fees<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>perquisites<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Earned or<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>and other<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Paid in<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Option<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>personal<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Cash<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Awards<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>benefits)<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Total<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>($)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>($)(1)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>($)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>($)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Detlef H. Adler
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    39,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    29,442
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    68,942
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Stephen G. Carpenter
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    46,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    44,158
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    90,158
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    John M. Hanson, Jr.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    52,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    44,158
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    96,158
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    James B. Hayes
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    110,418
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    75,229
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    185,647
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Michael S. Koeneke
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,162
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5,443
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    9,605
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    David M. Meyer
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    43,833
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    99,846
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    143,679
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    James G. O&#146;Connor
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    47,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    44,158
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    91,658
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    John W. Richardson
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    41,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    29,438
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    70,938
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Eric S. Salus(2)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20,750
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    34,764
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    87,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    142,514
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 2pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=455 length=60 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    This column represents the dollar amount recognized as
    compensation expense for financial statement reporting purposes
    with respect to the 2007 fiscal year for the fair value of stock
    options granted during fiscal 2007 as well as prior fiscal
    years, in accordance with SFAS&#160;123R. Pursuant to SEC rules,
    the amounts shown exclude the impact of estimated forfeitures
    related to service-based vesting conditions. For additional
    information on the valuation assumptions with respect to the
    2007 grants, refer to Note (1)&#160;&#147;Stock-Based
    Compensation&#148; to the Company&#146;s Audited Consolidated
    Financial Statements set forth in the Company&#146;s
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the fiscal year ended October&#160;31, 2007.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-16
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD valign="top">
    (2) </TD>
    <TD></TD>
    <TD valign="bottom">
    Mr.&#160;Salus was paid $20,750 for his services as director and
    $87,000 for consulting fees. See &#147;Certain Relationships and
    Related Party Transactions.&#148;</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    During fiscal 2007, directors who were not employees of the
    Company each received annual cash compensation of $30,000, plus
    $1,000 for in-person attendance and $500 for telephonic
    attendance at each Board meeting or Committee meeting that is
    not in conjunction with a Board meeting. In January 2007,
    non-employee directors also received an annual grant of an
    option to purchase 10,000&#160;shares of the Company&#146;s
    common stock, vesting quarterly over a
    <FONT style="white-space: nowrap">12-month</FONT>
    period, at 2,500&#160;shares for each quarter during which they
    serve or served as directors. In addition, each director who
    served as the Audit Committee chairman, the Compensation and
    Human Resources Committee chairman, the Corporate Governance and
    Nominating Committee chairman, or the Special Committee chairman
    received additional annual cash compensation of $10,000, $7,500,
    $5,000 and $5,000, respectively, plus an option to purchase
    5,000&#160;shares of the Company&#146;s common stock, vesting
    quarterly over a
    <FONT style="white-space: nowrap">12-month</FONT>
    period, at 1,250&#160;shares for each quarter during which they
    serve or served as a committee chairman. All options have an
    exercise price equal to 100% of the common stock&#146;s fair
    market value (&#147;FMV&#148;) on the date of grant. All stock
    options granted to non-employee directors will vest immediately
    on or after a Change in Control. All directors receive
    reimbursement of expenses for attendance at each Board meeting
    and an annual $1,000 allowance for Company apparel.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On September&#160;12, 2006, Mr.&#160;Hayes was elected to serve
    as the Chairman of the Board and his compensation for all
    services as a director was changed to include a cash retainer of
    $50,000 per quarter, payable in monthly installments, and an
    additional quarterly grant of a stock option for
    5,000&#160;shares of the Company&#146;s common stock
    (<U>i.e.</U>, in addition to the option grants to all
    non-employee directors and with the first quarterly grant made
    on September&#160;12, 2006). The terms of such stock option
    grants include an exercise price of 100% of FMV on the date of
    grant, vesting on a daily basis, with week-ends and holidays
    included, over three months and an expiration date ten
    (10)&#160;years from the date of grant. Effective March&#160;1,
    2007, in view of his reduced time commitment,
    Mr.&#160;Hayes&#146; quarterly cash compensation was reduced to
    $18,750, payable in monthly installments. Mr.&#160;Hayes
    continued to receive the quarterly stock option grants described
    above. Mr.&#160;Hayes was compensated as Chairman of the Board
    until August&#160;31, 2007 at which time he ceased to be the
    Chairman of the Board but continued to serve as a
    <FONT style="white-space: nowrap">non-employee</FONT>
    director and was therefore compensated as any other non-employee
    director from September&#160;1, 2007 through October&#160;31,
    2007. Mr.&#160;Meyer was appointed Chairman of the Board
    effective August&#160;31, 2007 until August&#160;6, 2008, at
    which time he transitioned to Chairman of the Special Committee
    of the Board, and at which time Mr.&#160;Koeneke was appointed
    Chairman of the Board. On September&#160;13, 2007, in
    recognition of the time commitment associated with this
    position, in addition to the standard cash and equity-based
    compensation for all non-employee directors described above,
    Mr.&#160;Meyer received his first annual grant of stock options
    to purchase 100,000&#160;shares of the Company&#146;s common
    stock, vesting quarterly over a
    <FONT style="white-space: nowrap">12-month</FONT>
    period, with an exercise price of 100% of fair market value on
    the date of grant. Mr.&#160;Meyer will also be eligible to
    receive restricted stock in an amount to be agreed in the future
    as part of an incentive plan, the metrics of which have not yet
    been determined.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    No other arrangement exists pursuant to which any director of
    the Company was compensated during the Company&#146;s last
    fiscal year for any service provided as a director.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-17
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Executive
    Compensation</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Summary
    Compensation Table</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following information sets forth the total compensation for
    the Company&#146;s named executive officers for fiscal year
    ended October&#160;31, 2007.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="39%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="3%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="2%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="7%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="3%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="5%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=07 type=gutter -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=07 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=07 type=body -->
    <TD width="3%" align="left">&nbsp;</TD>	<!-- colindex=07 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>All Other<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Compensation<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>(including<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>perquisites and<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Option<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>other personal<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
    <B>Name and<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Fiscal<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Salary<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Bonus<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Awards<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>benefits)<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Total<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Principal Position</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Year</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>($)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>($)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>($)(1)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>($)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>($)</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Allan H. Fletcher(2)<BR>
    Chief Executive Officer
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    2007
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    &#151;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    &#151;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    3,393
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    &#151;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    3,393
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Edward J. Fadel(3)<BR>
    President
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    2007
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    107,077
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    &#151;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    43,640
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    12,440
</TD>
<TD nowrap align="left" valign="top">
    (4)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    163,157
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Greg W. Slack(5)<BR>
    Chief Financial Officer and Principal Accounting Officer
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    2007
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    151,619
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    44,250
</TD>
<TD nowrap align="left" valign="top">
    (6)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    &#151;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    1,040
</TD>
<TD nowrap align="left" valign="top">
    (7)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    196,909
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Paul A. Bourgeois(8)<BR>
    Senior Vice President&#160;&#151; Sales
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    2007
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    17,692
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    &#151;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    &#151;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    2,462
</TD>
<TD nowrap align="left" valign="top">
    (9)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    20,154
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Former Officers:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Peter M. Weil(10)<BR>
    Former Chief Executive Officer
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    2007
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    421,850
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    &#151;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    296,336
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    494,318
</TD>
<TD nowrap align="left" valign="top">
    (11)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    1,212,504
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Gary I. Schneiderman(12)<BR>
    Former President
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    2007
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    188,077
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    40,000
</TD>
<TD nowrap align="left" valign="top">
    (13)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    36,247
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    257,508
</TD>
<TD nowrap align="left" valign="top">
    (14)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    521,832
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Eric R. Hohl(15)<BR>
    Former Executive Vice President, Chief Financial Officer and
    Treasurer
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    2007
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    154,479
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    &#151;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    121,820
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    103,154
</TD>
<TD nowrap align="left" valign="top">
    (16)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    379,453
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Winston E. Hickman(17)<BR>
    Former Executive Vice President, Chief Financial Officer and
    Treasurer
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    2007
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    15,000
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    &#151;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    60,095
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    &#151;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    75,095
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Peter E. Holmberg(18)<BR>
    Executive Vice President&#160;&#151; Green&#160;Grass Sales and
    Merchandising
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    2007
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    141,923
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    &#151;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    &#151;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    127,067
</TD>
<TD nowrap align="left" valign="top">
    (19)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
&nbsp;
</TD>
<TD nowrap align="right" valign="top">
    268,990
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 2pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=455 length=60 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    This column represents the dollar amount recognized as
    compensation expense for financial statement reporting purposes
    with respect to the 2007 fiscal year for the fair value of stock
    options granted during fiscal 2007 as well as prior fiscal
    years, in accordance with SFAS&#160;123R. Pursuant to SEC rules,
    the amounts shown exclude the impact of estimated forfeitures
    related to service-based vesting conditions. For additional
    information on the valuation assumptions with respect to the
    2007 grants, refer to Note (1)&#160;&#147;Stock-Based
    Compensation&#148; to the Company&#146;s Audited Consolidated
    Financial Statements set forth in the Company&#146;s
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the fiscal year ended October&#160;31, 2007.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (2) </TD>
    <TD></TD>
    <TD valign="bottom">
    Mr.&#160;Fletcher was appointed Chief Executive Officer
    effective October&#160;24, 2007. Mr.&#160;Fletcher is serving as
    the Company&#146;s Chief Executive Officer pursuant to a
    consulting agreement between the Company and  FLG&#160;Ltd.
    Under the consulting agreement with FLG Ltd., the Company paid
    FLG&#160;Ltd. a one-time fee of $75,000 upon execution of the
    FLG&#160;Ltd. consulting agreement and will pay FLG&#160;Ltd. a
    consulting fee of $9,000 per month during the term of the
    FLG&#160;Ltd. consulting agreement. FLG&#160;Ltd. is also
    eligible to receive a cash incentive fee, the amount of which
    will be determined by the Company&#146;s Compensation and Human
    Resource Committee based on achievement of objectives set out in
    the Company&#146;s annual business plan. For the 2008 fiscal
    year, the </TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-18
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    target incentive fee will be $500,000, assuming achievement of
    all objectives. The Company also granted FLG&#160;Ltd. options
    to purchase 100,000&#160;shares of the Company&#146;s common
    stock at an exercise price of $5.48 per share with half of the
    options vesting on October&#160;24, 2008 and the remaining half
    vesting on October&#160;24, 2009. See &#147;Agreements with
    Current Executive Officers.&#148;</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (3) </TD>
    <TD></TD>
    <TD valign="bottom">
    Mr.&#160;Fadel was appointed President effective May&#160;23,
    2007.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (4) </TD>
    <TD></TD>
    <TD valign="bottom">
    Includes $6,955 for housing allowance, $5,077 for auto allowance
    and $408 for clothing allowance.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (5) </TD>
    <TD></TD>
    <TD valign="bottom">
    Mr.&#160;Slack served as Vice President of Finance, Corporate
    Controller and Principal Accounting Officer until his
    resignation on July&#160;29, 2007. Mr.&#160;Slack re-joined the
    Company as Chief Financial Officer and Principal Accounting
    Officer on October&#160;24, 2007.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (6) </TD>
    <TD></TD>
    <TD valign="bottom">
    Mr.&#160;Slack was paid a retention bonus of $44,250 in July
    2007 pursuant to an employment agreement.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (7) </TD>
    <TD></TD>
    <TD valign="bottom">
    Clothing allowance.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (8) </TD>
    <TD></TD>
    <TD valign="bottom">
    Mr.&#160;Bourgeois joined the Company on October&#160;1, 2007.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (9) </TD>
    <TD></TD>
    <TD valign="bottom">
    Includes $2,000 for housing allowance and $462 for auto
    allowance.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (10) </TD>
    <TD></TD>
    <TD valign="bottom">
    Mr.&#160;Weil&#146;s services as a Director and the
    Company&#146;s Chief Executive Officer terminated on
    October&#160;24, 2007.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (11) </TD>
    <TD></TD>
    <TD valign="bottom">
    Includes $400,000 for severance ($100,000 paid in January 2008
    with the balance to be paid in 19 semi-monthly installments),
    $78,741 for housing allowance (including a tax gross-up of
    $28,816) and $15,577 for auto allowance.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (12) </TD>
    <TD></TD>
    <TD valign="bottom">
    Mr.&#160;Schneiderman&#146;s employment with the Company
    terminated on May&#160;21, 2007.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (13) </TD>
    <TD></TD>
    <TD valign="bottom">
    Mr.&#160;Schneiderman was paid a retention bonus of $40,000 in
    January 2007 pursuant to an employment agreement.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (14) </TD>
    <TD></TD>
    <TD valign="bottom">
    Includes $230,769 for severance ($94,615 of which was paid after
    fiscal year-end), $16,154 for auto allowance ($9,231 of which is
    severance related), $408 for clothing allowance and $10,177 for
    club dues ($5,815 of which is severance related).</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (15) </TD>
    <TD></TD>
    <TD valign="bottom">
    Mr.&#160;Hohl was appointed Executive Vice President, Chief
    Financial Officer and Treasurer on March&#160;19, 2007.
    Mr.&#160;Hohl&#146;s employment with the Company terminated on
    October&#160;24, 2007.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (16) </TD>
    <TD></TD>
    <TD valign="bottom">
    Includes $96,000 for severance, paid in November 2007 pursuant
    to an employment agreement and $7,154 for auto allowance.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (17) </TD>
    <TD></TD>
    <TD valign="bottom">
    Mr.&#160;Hickman&#146;s employment with the Company terminated
    on November&#160;17, 2006.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (18) </TD>
    <TD></TD>
    <TD valign="bottom">
    Mr.&#160;Holmberg&#146;s employment with the Company terminated
    on May&#160;21, 2007.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (19) </TD>
    <TD></TD>
    <TD valign="bottom">
    Includes $112,500 for severance, $12,923 for auto allowance
    ($6,000 of which is severance related) and $822 for clothing
    allowance.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-19
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Grants of
    Plan-Based Awards for Fiscal Year 2007</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    There were no grants of non-equity incentive plan-based awards
    for fiscal year 2007. The following table provides information
    with regard to all option awards granted to each named executive
    officer during fiscal year&#160;2007.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="39%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="12%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="10%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="14%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>All Other Option<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Awards:<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Number of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Exercise or Base<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Full Grant Date Fair<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Securities<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Price of Option<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Value of Stock and<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Underlying Options<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Awards<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Option Awards<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Grant Date</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>(#)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>($)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>($)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Allan H. Fletcher(1)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10/24/07
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    100,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.48
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    207,390
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Edward J. Fadel(2)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5/23/07
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    40,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8.40
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    130,832
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Greg W. Slack
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Paul A. Bourgeois
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Former Officers:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Peter M. Weil(3)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    11/1/06
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    100,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7.10
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    284,790
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Gary I. Schneiderman
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Eric R. Hohl(4)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3/19/07
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    40,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7.60
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    121,820
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Winston E. Hickman
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Peter E. Holmberg
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 2pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=455 length=60 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    On October&#160;24, 2007, Mr.&#160;Fletcher was granted an
    option for 100,000&#160;shares, pursuant to the Company&#146;s
    2007 Nonstatutory Stock Option Plan as part of his compensation
    as the Company&#146;s Chief Executive Officer. Subsequent to the
    fiscal year-end, this option grant was terminated pursuant to
    the termination of Mr.&#160;Fletcher&#146;s employment
    agreement. Mr.&#160;Fletcher is serving as the Company&#146;s
    Chief Executive Officer pursuant to a consulting agreement
    between the Company and FLG&#160;Ltd. Under the consulting
    agreement with FLG&#160;Ltd., the Company granted FLG&#160;Ltd.
    options to purchase 100,000&#160;shares of the Company&#146;s
    common stock at an exercise price of $5.48 per share with half
    of the options vesting on October&#160;24, 2008 and the
    remaining half vesting on October&#160;24, 2009. See
    &#147;Agreements with Current Executive Officers.&#148;</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (2) </TD>
    <TD></TD>
    <TD valign="bottom">
    On May&#160;23, 2007, Mr.&#160;Fadel was granted an option for
    40,000&#160;shares as part of his compensation as the
    Company&#146;s President. Half of the options vest on
    May&#160;23, 2008 and the remaining half vest on May&#160;23,
    2009.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (3) </TD>
    <TD></TD>
    <TD valign="bottom">
    On November&#160;1, 2006, Mr.&#160;Weil was granted an option
    for 100,000&#160;shares as part of his compensation as the
    Company&#146;s Chief Executive Officer. On October&#160;24,
    2007, the Company entered into a separation and release
    agreement with Mr.&#160;Weil which provided for the acceleration
    of Mr.&#160;Weil&#146;s unvested stock options and an extension
    of the exercise period of such options until one year following
    Mr.&#160;Weil&#146;s separation.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (4) </TD>
    <TD></TD>
    <TD valign="bottom">
    On March&#160;19, 2007, Mr.&#160;Hohl was granted an option for
    40,000&#160;shares as part of his compensation as the
    Company&#146;s Executive Vice President and Chief Financial
    Officer. Effective October&#160;24, 2007, Eric R. Hohl left his
    position as Executive Vice President, Chief Financial Officer
    and Treasurer of the Company. Pursuant to the terms of his
    employment agreement, the vesting for the 40,000 stock options
    was accelerated and will be exercisable for 90&#160;days after
    his departure for incentive stock options and 180&#160;days
    after his departure for non-qualified options.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-20
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Outstanding
    Equity Awards At Fiscal 2007 Year-End</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following table provides information on option awards held
    by each executive officer as of October&#160;31, 2007.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="57%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="5%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="14" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Option Awards</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Number of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Number of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Securities<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Securities<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Underlying<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Underlying<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Unexercised<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Unexercised<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Option<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Options<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Options<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Exercise<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Option<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>(#)<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>(#)<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Price<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Expiration<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Exercisable</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Unexercisable</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>($)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Date</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Allan H. Fletcher(1)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    100,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.48
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10/24/17
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Edward J. Fadel(2)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    40,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8.40
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5/23/17
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Greg W. Slack
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Paul A. Bourgeois
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Former Officers:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Peter M. Weil
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,308
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    9.21
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10/24/08
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Peter M. Weil
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    12,900
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6.55
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10/24/08
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Peter M. Weil
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    100,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7.10
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10/24/08
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Gary I. Schneiderman
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    519
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10.75
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    11/21/07
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Gary I. Schneiderman
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,774
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7.03
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    11/21/07
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Gary I. Schneiderman
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,733
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6.55
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    11/21/07
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Eric R. Hohl
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    13,686
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7.60
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4/24/08
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Eric R. Hohl
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    26,314
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7.60
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1/24/08
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Winston E. Hickman
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Peter E. Holmberg
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=455 length=60 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    On October&#160;24, 2007, Mr.&#160;Fletcher was granted an
    option for 100,000&#160;shares as part of his compensation as
    the Company&#146;s Chief Executive Officer. Subsequent to fiscal
    year-end this option grant was terminated pursuant to the
    termination of Mr.&#160;Fletcher&#146;s employment agreement.
    Mr.&#160;Fletcher is serving as the Company&#146;s Chief
    Executive Officer pursuant to a consulting agreement between the
    Company and FLG Ltd. Under the consulting agreement with FLG
    Ltd., the Company granted FLG Ltd. options to purchase
    100,000&#160;shares of the Company&#146;s common stock at an
    exercise price of $5.48 per share with half of the options
    vesting on October&#160;24, 2008 and the remaining half vesting
    on October&#160;24, 2009. See &#147;Agreements with Current
    Executive Officers.&#148;</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>



<TR>
    <TD valign="top">
    (2) </TD>
    <TD></TD>
    <TD valign="bottom">
    On May&#160;24, 2007, Mr.&#160;Fadel was granted an option for
    40,000&#160;shares as part of his compensation as the
    Company&#146;s President. Half of the options vest on
    May&#160;23, 2008 and the remaining half vest on May&#160;23,
    2009.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-21
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Option
    Exercises and Stock Vested in Fiscal Year 2007</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following table provides information about options exercised
    by named executive officers during the year ended
    October&#160;31, 2007.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="74%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Option Awards</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Number of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Shares<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Value Realized<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Upon Exercise<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Upon Exercise<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>(#)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>($)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Allan H. Fletcher
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Edward J. Fadel
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Greg W. Slack
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Paul A. Bourgeois
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Former Officers:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Peter M. Weil(1)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Gary I. Schneiderman(2)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8,381
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3,338
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Eric R. Hohl(1)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Winston E. Hickman(3)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Peter E. Holmberg(2)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    40,755
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    48,970
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=455 length=60 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    Each of Mr.&#160;Weil&#146;s and Mr.&#160;Hohl&#146;s employment
    with the Company ended on October&#160;24, 2007.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>



<TR>
    <TD valign="top">
    (2) </TD>
    <TD></TD>
    <TD valign="bottom">
    Each of Mr.&#160;Schneiderman&#146;s and
    Mr.&#160;Holmberg&#146;s employment with the Company ended on
    May&#160;21, 2007.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>



<TR>
    <TD valign="top">
    (3) </TD>
    <TD></TD>
    <TD valign="bottom">
    Mr.&#160;Hickman&#146;s employment with the Company ended on
    November&#160;17, 2006.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Executive
    Employment Agreements, Termination of Employment and Change in
    Control Arrangements</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Company previously entered into executive employment
    agreements with: Allan H. Fletcher, the Chief Executive Officer;
    Edward J. Fadel, the President; Greg W. Slack, the Chief
    Financial Officer; Peter M. Weil, former Chief Executive
    Officer; Winston E. Hickman, former Executive Vice President,
    Chief Financial Officer and Treasurer; Peter E. Holmberg, former
    Executive Vice President of Green Grass Sales and Merchandising;
    Gary I. &#147;Sims&#148; Schneiderman, former President; and
    Eric R. Hohl, former Executive Vice President, Chief Financial
    Officer and Treasurer. Messrs.&#160;Weil, Hickman, Holmberg,
    Schneiderman and Hohl ceased employment with the Company
    effective October&#160;24, 2007, November&#160;17, 2006,
    May&#160;21, 2007, May&#160;21, 2007 and October&#160;24, 2007,
    respectively.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Agreements
    With Current Executive Officers</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The employment agreement between the Company and
    Mr.&#160;Fletcher, dated October&#160;24, 2007, and the stock
    options granted to Mr.&#160;Fletcher under the 2007 Nonstatutory
    Stock Option Plan on October&#160;24, 2007 have been terminated.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Effective January&#160;11, 2008, the Company entered into a
    consulting agreement with FLG Ltd., under which FLG Ltd.
    provides the services of a management consultant to act as the
    Company&#146;s Chief Executive Officer (the &#147;FLG Ltd.
    Consulting Agreement&#148;). The initial management consultant
    designated by FLG Ltd. is Mr.&#160;Fletcher, and FLG Ltd. may
    not designate any other management consultant without the
    Company&#146;s written permission. The Company paid FLG Ltd. a
    one-time fee of $75,000 upon execution of the FLG Ltd.
    Consulting Agreement and will pay FLG Ltd. a consulting fee of
    $9,000 per month during the term of the FLG Ltd. Consulting
    Agreement. FLG Ltd. is also eligible to receive a cash incentive
    fee, the amount of which will be determined by the
    Company&#146;s Compensation and Human Resource Committee based
    on achievement of objectives set out in the Company&#146;s
    annual business plan. For the 2008 fiscal year, the target
    incentive fee will be $500,000, assuming achievement of all
    objectives. If the Company terminates the FLG Ltd. Consulting
    Agreement without cause during a fiscal year, the Company will
    pay FLG Ltd. a pro rata portion of the incentive fee determined
    by the Compensation and Human Resources Committee to have been
    earned for such fiscal year. In addition, the Company granted
    FLG Ltd. 100,000 options to purchase shares of the
    Company&#146;s common stock at an exercise price of $5.48 per
    share. Half of the
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-22
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    options vest on October&#160;24, 2008, and the remaining options
    vest on October&#160;24, 2009. The options will vest immediately
    upon termination of the FLG Ltd. Consulting Agreement without
    cause or a change of control of the Company and will terminate
    upon the earlier of one year after the termination of the FLG
    Ltd. Consulting Agreement and ten years after the date of grant.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Company will also reimburse FLG Ltd. for the rental of
    reasonable residential or hotel accommodations in the Carlsbad,
    California area while the management consultant is providing
    services to the Company at the Company&#146;s headquarters (if
    the Company does not itself make such accommodations available).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The FLG Ltd. Consulting Agreement contains terms customary for a
    consulting agreement regarding confidentiality of the
    proprietary information of the Company, the assignment of
    intellectual property to the Company, reimbursement of business
    expenses and FLG Ltd.&#146;s status as an independent contractor.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The FLG Ltd. Consulting Agreement may be terminated at will by
    either party. The Company may terminate the FLG Ltd. Consulting
    Agreement for cause in certain circumstances, with the result
    that the options granted under the FLG Ltd. Consulting Agreement
    will be terminated immediately and FLG Ltd. will not be entitled
    to a pro&#160;rata portion of the incentive fee earned during
    that fiscal year. Under the FLG Ltd. Consulting Agreement,
    &#147;cause&#148; means material breach of the FLG Ltd.
    Consulting Agreement by FLG Ltd., any act or acts of personal
    dishonesty by FLG Ltd. or the management consultant, the
    conviction of FLG Ltd. or the management consultant of a felony,
    violation of the Company&#146;s policies or code of conduct by
    FLG Ltd. or the management consultant, violation by FLG Ltd. or
    the management consultant of any confidentiality or
    non-competition agreement with the Company or any of the
    Company&#146;s affiliates, or the willful misconduct of FLG Ltd.
    or the management consultant that is injurious to the Company.
    If FLG Ltd. terminates the FLG Ltd. Consulting Agreement because
    the duties to be performed by FLG Ltd. are reduced in scope, the
    termination will be deemed a termination by the Company without
    cause.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In connection with Mr.&#160;Fadel&#146;s appointment as
    President, the Company entered into an employment letter (the
    &#147;Fadel Employment Letter&#148;) with Mr.&#160;Fadel that
    provides for compensation which includes: an annual base salary
    of $240,000; eligibility for up to a target bonus of 40% of base
    salary, with the actual payment subject to the Board&#146;s
    discretion and in accordance with any applicable bonus plan; the
    grant of options to purchase 40,000&#160;shares of the
    Company&#146;s common stock, with an exercise price equal to the
    closing price of the Company&#146;s common stock on May&#160;23,
    2007 and with half of the options vesting on each of the first
    two anniversaries of Mr.&#160;Fadel&#146;s employment with the
    Company (and which immediately vest upon Mr.&#160;Fadel&#146;s
    termination without cause); and, a monthly auto allowance of
    $1,000, a monthly housing allowance of $2,500 for 12&#160;months
    and coverage under the Company&#146;s benefits programs. If
    Mr.&#160;Fadel is terminated without cause as defined in the
    Fadel Employment Letter and he delivers a fully executed release
    and waiver of all claims against the Company, the severance
    provisions of the Employment Letter grant him a lump sum payment
    of 25% to 50% of his then current annual salary, depending on
    the timing and circumstances of his termination.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In connection with Mr.&#160;Slack&#146;s appointment as Chief
    Financial Officer, the Company entered into an employment letter
    with Mr.&#160;Slack (the &#147;Slack Employment Letter&#148;) on
    October&#160;24, 2007. The Slack Employment Letter provides for
    compensation consisting of, among other matters, an annual base
    salary of $225,000; eligibility for up to a target bonus of 50%
    of base salary at the discretion of the Board; a clothing
    allowance in accordance with Company policy; and an automobile
    allowance of $750 per month.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Slack Employment Letter also provides for a severance
    payment, in the event that Mr.&#160;Slack is terminated without
    cause and Mr.&#160;Slack delivers to the Company and thereafter
    does not revoke a release and waiver of all claims against the
    Company. In such case, the severance payment would be 50% of
    Mr.&#160;Slack&#146;s then-current annual base salary, if such
    termination occurs on or prior to the one-year anniversary of
    Mr.&#160;Slack&#146;s employment with the Company, or 100% of
    Mr.&#160;Slack&#146;s then-current annual base salary, if such
    termination occurs after Mr.&#160;Slack&#146;s one-year
    anniversary of employment with the Company.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On September&#160;20, 2007, the Company entered into an
    employment agreement with Paul Bourgeois (the &#147;Bourgeois
    Employment Agreement&#148;) appointing him as the Senior Vice
    President, Sales, effective October&#160;1, 2007. The Bourgeois
    Employment Agreement provides for compensation of $7,692 paid
    bi-weekly; a performance bonus opportunity of 30% of annual base
    salary under certain circumstances; an automobile expense
    allowance of
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-23
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    $500 each month; a clothing allowance in accordance with Company
    policy; and a residential allowance of $2,000 each month for a
    period of six months, which is reimbursable to the Company if
    Mr.&#160;Bourgeois resigns within the first two years of
    employment.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Agreements
    With Former Executive Officers</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On November&#160;27, 2006, the Company entered into an
    employment agreement effective as of October&#160;30, 2006 with
    Peter M. Weil (the &#147;Weil Employment Agreement&#148;)
    appointing him as the Company&#146;s Chief Executive Officer.
    The Weil Employment Agreement provided for compensation
    consisting of, among other matters: an annual base salary of
    $400,000; a performance bonus opportunity of 50% of annual base
    salary under certain circumstances; a grant of options to
    purchase 100,000&#160;shares of the Company&#146;s common stock,
    with 50% of the options vesting on each of the first two
    anniversaries of the grant date; eligibility to participate in
    the Company&#146;s 401(k) plan; coverage under the
    Company&#146;s medical, dental and life insurance benefits
    programs; a clothing allowance in accordance with Company
    policy; an automobile allowance of $1,250 per month; and an
    allowance for reasonable residential expenses, in lieu of moving
    expenses, until such time as the Compensation and Human
    Resources Committee or the Board takes further action, which
    included housing and all reasonable expenses (to be grossed up
    for taxes, if applicable). If Mr.&#160;Weil were terminated
    without Cause (as defined in the Weil Employment Agreement),
    then Mr.&#160;Weil would receive (1)&#160;severance compensation
    in an amount equal to 12&#160;months of his then current annual
    base salary and (2)&#160;accelerated vesting of all stock
    options granted under the Weil Employment Agreement.
    Mr.&#160;Weil&#146;s option vesting would also be accelerated as
    a result of a change of control. In the event that Mr.&#160;Weil
    became disabled (as defined in the Weil Employment Agreement)
    during the term of this Agreement for a continuous period up to
    90&#160;days, or upon termination of his employment as a result
    of his death, the Company was obligated to pay a pro rata share
    of the annual bonus in the year in which Mr.&#160;Weil was
    disabled or died.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On October&#160;24, 2007, the Company entered into a separation
    and release agreement with Mr.&#160;Weil (the &#147;Weil
    Separation Agreement&#148;). Under the Weil Separation
    Agreement, Mr.&#160;Weil is entitled to a severance payment of
    $400,000 paid as follows: $100,000 on January&#160;2, 2008, with
    the balance of $300,000 paid thereafter in 19 equal semi-monthly
    installments on the 15th and last day of every month. The Weil
    Separation Agreement, provided certain requirements are met,
    also provides for the acceleration of Mr.&#160;Weil&#146;s
    unvested stock options and an extension of the exercise period
    of such options until one year following Mr.&#160;Weil&#146;s
    separation.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On February&#160;23, 2006, the Company entered into an
    employment agreement with Winston E. Hickman (the &#147;Hickman
    Employment Agreement&#148;) which terminated in connection with
    his resignation effective November&#160;17, 2006. The Hickman
    Employment Agreement provided for: a base salary of $300,000; a
    target bonus of 50% of base salary, with the actual payment
    subject to the Board&#146;s discretion; the grant of options to
    purchase 50,000&#160;shares of the Company&#146;s common stock,
    with half of the options vesting on each of the first two
    anniversaries of Mr.&#160;Hickman&#146;s employment with the
    Company; and coverage under the Company&#146;s benefits
    programs. No bonus was awarded to Mr.&#160;Hickman for fiscal
    2006. The Hickman Employment Agreement also provided that if
    Mr.&#160;Hickman had been terminated without Cause or resigned
    under certain specified circumstances, Mr.&#160;Hickman would
    have been entitled to: a lump sum payment of either one-half or
    all of his then current annual salary, depending on the timing
    and circumstances of his termination or resignation; a pro rata
    bonus; and immediate vesting of a pro rata number of stock
    options.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In connection with Mr.&#160;Hickman&#146;s resignation effective
    November&#160;17, 2006 as Executive Vice President and Chief
    Financial Officer, the Company entered into a release agreement
    with Mr.&#160;Hickman (the &#147;Hickman Release
    Agreement&#148;) on November&#160;16, 2006 whereby
    Mr.&#160;Hickman provided a standard release of any claims,
    complaints and lawsuits against the Company and other related
    entities and persons. The Hickman Release Agreement also
    provided that Mr.&#160;Hickman will receive continuing medical,
    dental and Exec-U-Care insurance coverage for a period of
    18&#160;months from December&#160;1, 2006 through May&#160;31,
    2008 in exchange for ten (10)&#160;full days of consulting
    services to be provided by Mr.&#160;Hickman on reasonable and
    mutually agreed upon dates between November&#160;20, 2006 and
    May&#160;30, 2008, to assist with a professional transition of
    Executive Vice President and Chief Financial Officer
    responsibilities and to advise on related matters.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Effective October&#160;25, 2006, the Company and
    Mr.&#160;Holmberg entered into the Amended and Restated
    Employment Agreement (the &#147;Holmberg Employment
    Agreement&#148;). Under the Holmberg Employment
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-24
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Agreement, Mr.&#160;Holmberg was to receive an annual base
    salary of $225,000 and was eligible to earn an annual bonus up
    to a maximum of 40% of his annual base salary based and
    conditioned on the Company&#146;s achievement of certain
    financial targets. Among other matters, Mr.&#160;Holmberg also
    received an automobile allowance of $1,000 per month. If
    Mr.&#160;Holmberg were to be terminated within two years of the
    effective date of the Holmberg Employment Agreement as a result
    of a Qualifying Termination (as defined in the Holmberg
    Employment Agreement) and if Mr.&#160;Holmberg delivered and did
    not revoke a fully executed release and waiver of all claims
    against the Company, then the Company was obligated to pay
    Mr.&#160;Holmberg the equivalent of 12&#160;months of his
    then-current annual base salary, which was to be in lieu of any
    other severance payment benefits that otherwise may at that time
    be available under the Company&#146;s applicable policies;
    provided, however , that the Holmberg Employment Agreement was
    not intended to modify or supersede the change in control
    agreement between the Company and Mr.&#160;Holmberg.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On May&#160;25, 2007, the Company entered into a severance and
    release agreement with Mr.&#160;Holmberg (the &#147;Holmberg
    Severance Agreement&#148;) which provided for a modification of
    prior employment agreements and arrangements with
    Mr.&#160;Holmberg. Under the Holmberg Severance Agreement,
    Mr.&#160;Holmberg was entitled to a lump sum severance payment
    of $112,500 and an automobile allowance of $6,000 and agreed to
    provide a customary release of all claims against the Company.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On September&#160;7, 2005, the Company entered into an
    employment agreement with Gary I. &#147;Sims&#148; Schneiderman
    (the &#147;Sims Employment Agreement&#148;). The Sims Employment
    Agreement with Mr.&#160;Schneiderman provided for: a minimum
    base salary of $300,000; bonuses to be determined by the Board
    on the basis of merit and the Company&#146;s financial success
    and progress up to a maximum of 82.5% of his base salary; three
    guaranteed minimum non-compete/retention payments of $85,000 on
    September&#160;12, 2005, $85,000 on November&#160;24, 2005 and
    $40,000 following the close of final accounting records for
    2006; stock options to purchase 20,000&#160;shares for each of
    fiscal years 2005, 2006 and 2007; an automobile allowance of
    $1,000 per month and a club membership. The Sims Employment
    Agreement also provided that if a Qualifying Termination (as
    defined in the agreement) occurs, Mr.&#160;Schneiderman would be
    entitled to receive severance payments equal to 12&#160;months
    of his then-current annual base salary, an additional cash
    payment of $50,000, payment of insurance premiums for a period
    of 12&#160;months, and immediate vesting of all options.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On May&#160;25, 2007, the Company entered into a severance and
    release agreement with Mr.&#160;Schneiderman (the &#147;Sims
    Severance Agreement&#148;) which provided for a modification of
    prior employment agreements and arrangements with Mr.&#160;Sims.
    Under the Sims Severance Agreement, Mr.&#160;Schneiderman is
    entitled to the continuation of bi-weekly payments of his base
    salary, automobile allowance and club dues for nine
    (9)&#160;months, the continuation of his employee insurance
    benefits for twelve (12)&#160;months and a waiver of the
    requirement for Mr.&#160;Schneiderman to reimburse the Company
    for the cost of the club membership of $45,000. Mr.&#160;Sims
    agreed to provide a customary release of all claims against the
    Company. Mr.&#160;Schneiderman is also entitled to acceleration
    of 20,000 outstanding stock options that were not yet vested,
    which are deemed vested as of May&#160;21, 2007.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Effective March&#160;19, 2007, the Company and Eric R. Hohl
    entered into an employment agreement (the &#147;Hohl Employment
    Agreement&#148;) that appointed Mr.&#160;Hohl the Executive Vice
    President, Chief Financial Officer and Treasurer. The Hohl
    Employment Agreement provided for compensation which included:
    an annual base salary of $240,000; eligibility for up to a
    target bonus of 40% of base salary, with the actual payment
    subject to the Board&#146;s discretion and in accordance with
    any applicable bonus plan; the grant of options to purchase
    40,000&#160;shares of the Company&#146;s common stock, with an
    exercise price equal to the closing price of the Company&#146;s
    common stock on March&#160;19, 2007, and with half of the
    options vesting on each of the first two anniversaries of
    Mr.&#160;Hohl&#146;s employment with the Company; and coverage
    under the Company&#146;s benefits programs. If Mr.&#160;Hohl is
    terminated without cause as defined in the Hohl Employment
    Agreement and he delivers a fully executed release and waiver of
    all claims against the Company, the severance provisions of the
    Hohl Employment Agreement grant him: a lump sum payment of 25%
    to 50% of his then current annual salary, depending on the
    timing and circumstances of his termination and immediate
    vesting of the above stock options.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Effective October&#160;24, 2007, Eric R. Hohl left his position
    as Executive Vice President, Chief Financial Officer and
    Treasurer of the Company. Pursuant to the terms of the Hohl
    Employment Agreement, the vesting for 40,000&#160;stock options
    was accelerated and will be exercisable for 90&#160;days after
    his departure for incentive stock options and 180&#160;days
    after his departure for non-qualified options. Mr.&#160;Hohl
    delivered a fully executed release and
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-25
</DIV><!-- END PAGE WIDTH -->
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    waiver of all claims against the Company and subsequently
    received a one-time severance payment from the Company of
    $96,000.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Change in
    Control Agreements</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Additionally, the Company had entered into change in control
    agreements with the following former executives: Winston E.
    Hickman, Peter E. Holmberg and Gary I. &#147;Sims&#148;
    Schneiderman. The change in control agreements with
    Messrs.&#160;Hickman, Holmberg and Schneiderman terminated due
    to their resignations from the Company. The Company had also
    entered into a change in control agreement with Greg W. Slack
    during his prior employment with the Company as the Vice
    President of Finance, Corporate Controller and Principal
    Accounting Officer. Mr.&#160;Slack&#146;s change in control
    agreement terminated due to his resignation from the Company on
    July&#160;29, 2007. The Company did not enter into a new change
    in control agreement with Mr.&#160;Slack on his appointment as
    Chief Financial Officer on October&#160;24, 2007. Upon a
    qualifying termination in connection with a change in control,
    as defined in each agreement, the executive would be entitled to
    severance payments (generally equal to the executive&#146;s
    highest base salary with the Company in the prior three years,
    except that Mr.&#160;Slack, if his agreement were still in
    effect, would receive an amount that is equal to nine months of
    his highest base salary for the prior three years and
    Mr.&#160;Hickman, if his agreement were still in effect, would
    receive an amount equal to one and a half times his highest base
    salary for the prior three years), grossed up for applicable
    excise taxes imposed by Section&#160;4999 of the Internal
    Revenue Code of 1986, as amended. In addition,
    Mr.&#160;Hickman&#146;s change in control agreement, if it were
    still in effect, provides for the immediate vesting of all
    unexercised stock options and the continuation of insurance
    benefits for up to 18&#160;months. Effective as of
    February&#160;28, 2006, the employment and change in control
    agreements for each of the then-current executive officers were
    amended to comply with Section&#160;409A of the Internal Revenue
    Code, as amended.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Potential
    Payments Upon Termination or a Change in Control</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The table below reflects the amount of compensation to each of
    the named executive officers of the Company in the event of a
    termination of such executive officer&#146;s employment. The
    amount of compensation payable to each named executive officer
    upon involuntary
    <FONT style="white-space: nowrap">not-for-cause</FONT>
    termination, voluntary, good reason termination or following a
    change of control is shown below. The amounts shown assume that
    such termination was effective as of October&#160;31, 2007 and
    use the closing price of our common stock as of October&#160;31,
    2007 ($5.56), and thus include amounts earned through such time
    and are estimates of the amounts that would be paid out to the
    executive officers upon their termination. The actual amounts to
    be paid out can only be determined at the time of such
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-26
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    executive officer&#146;s separation from the Company. See
    &#147;Executive Employment Agreements, Termination of Employment
    and Change in Control Arrangements&#148; above for the material
    terms of the relevant agreements.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="38%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="32%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="6%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Involuntary,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Not-For-Cause or<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Change in<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Voluntary,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Control<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Good Reason<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>(Qualifying<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    <B>Potential Executive<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Termination<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Termination)<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name and Principal Position</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Benefits and Payments</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Total ($)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Total ($)</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="top">
    Allan H. Fletcher
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Cash Severance
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="top">
    Chief Executive Officer
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Bonus
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Stock option award&#160;&#151; unvested and accelerated(1)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Total
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
    Edward J. Fadel
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Cash Severance(2)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    120,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
    President
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Bonus
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Stock option award&#160;&#151; unvested and accelerated(1)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Total
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    96,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="top">
    Greg W. Slack
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Cash Severance(3)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    112,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="top">
    Chief Financial Officer and
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Bonus
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="top">
    Principal Accounting Officer
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Stock option award&#160;&#151; unvested and accelerated(1)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Total
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    112,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
    Paul A. Bourgeois(4)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Cash Severance
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
    Senior Vice President Sales
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Bonus
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Stock option award&#160;&#151; unvested and accelerated(1)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Total
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=455 length=60 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    The potential value realized by the executive officer (on a
    pre-tax basis) is calculated by multiplying the total number of
    stock options subject to acceleration times the difference
    between the closing price of the Company&#146;s stock on
    October&#160;31, 2007 and the exercise price, provided that the
    exercise price is lower. The exercise price for
    Mr.&#160;Fadel&#146;s stock options was $8.40.
    Messrs.&#160;Bourgeois and Slack did not receive any stock
    options.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (2) </TD>
    <TD></TD>
    <TD valign="bottom">
    Mr.&#160;Fadel would be entitled to a cash severance (on a
    pre-tax basis) equal to 50% of his then annual base salary based
    on achieving more than one year of service.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (3) </TD>
    <TD></TD>
    <TD valign="bottom">
    Mr.&#160;Slack would be entitled to a cash severance (on a
    pre-tax basis) equal to 50% of his then annual base salary based
    on achieving less than one year of service (i.e. a termination
    before October&#160;24, 2008) and a cash severance (on a pre-tax
    basis) equal to 100% of his then annual base salary based on
    achieving at least one year of service (i.e. a termination on or
    after October&#160;24, 2008). The value in this row assumes that
    the 50% severance amount applies.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (4) </TD>
    <TD></TD>
    <TD valign="bottom">
    Mr.&#160;Bourgeois&#146; employment agreement does not contain
    severance or change in control provisions.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-27
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The following table sets forth certain information regarding the
    beneficial ownership of common stock of the Company as of
    October&#160;16, 2008 (unless otherwise noted) by: (i)&#160;each
    person known by the Company to own beneficially more than 5% of
    the Company&#146;s outstanding shares of common stock,
    (ii)&#160;each of the Company&#146;s directors, (iii)&#160;the
    Company&#146;s named executive officers and (iv)&#160;all
    directors and executive officers of the Company as a group.
    Unless otherwise noted, each person listed below has sole voting
    power and sole investment power with respect to shares shown as
    owned by him, her or it. Information as to beneficial ownership
    is based upon statements furnished to the Company or filed with
    the Securities and Exchange Commission by such persons.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="45%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="3%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="6%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Shares<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Options(2)<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Total<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Percent Owned(3)<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name and Address(1)</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>(#)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>(#)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>(#)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>(%)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Detlef H. Adler
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    28,333
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    38,333
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Paul A. Bourgeois
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Stephen G. Carpenter
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    17,500
</TD>
<TD nowrap align="left" valign="bottom">
    (4)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    105,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    122,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Edward J. Fadel
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    40,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Allan H. Fletcher
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    200
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    50,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    50,200
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    John M. Hanson, Jr.&#160;
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    97,200
</TD>
<TD nowrap align="left" valign="bottom">
    (5)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    100,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    197,200
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.3
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    James B. Hayes
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    15,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    80,833
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    96,333
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Winston E. Hickman(6)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Eric R. Hohl(6)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Peter E. Holmberg(6)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    15,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    15,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Michael S. Koeneke(7)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    51,733
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    17,563
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    69,296
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.1
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    David M. Meyer(8)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    34,200
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    129,391
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    163,591
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    James G. O&#146;Connor
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    37,500
</TD>
<TD nowrap align="left" valign="bottom">
    (9)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    60,833
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    98,333
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    John M. Richardson
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    28,875
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    30,875
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Gary I. Schneiderman(6)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Greg W. Slack(10)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,400
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,400
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Eric S. Salus
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20,417
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    30,417
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Peter M. Weil(6)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    115,208
</TD>
<TD nowrap align="left" valign="bottom">
    (18)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    125,208
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    *
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    All executive officers and directors as a group (14 persons)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    331,233
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    756,453
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,087,686
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7.0
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Knightspoint Partners II, L.P.
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: 0pt; margin-left: 10pt">
    787 Seventh Avenue, 9th Floor, <BR>
    New York, NY 10019(11)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,500,786
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    146,954
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,647,740
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    17.8
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Heartland Advisors, Inc.
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: 0pt; margin-left: 10pt">
    789 North Water Street <BR>
    Milwaukee, WI 53202
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,699,390
</TD>
<TD nowrap align="left" valign="bottom">
    (12)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,699,390
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    11.5
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Diker Management LLC
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: 0pt; margin-left: 10pt">
    745 Fifth Avenue <BR>
    Suite&#160;1409 <BR>
    New York, NY 10151
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,338,813
</TD>
<TD nowrap align="left" valign="bottom">
    (13)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,338,813
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    11.3
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Dimensional Fund&#160;Advisors LP
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: 0pt; margin-left: 10pt">
    1299 Ocean Avenue <BR>
    Santa Monica, CA 90401
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,222,938
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,222,938
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    8.4
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    JPMorgan Chase&#160;&#038; Co.
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: 0pt; margin-left: 10pt">
    270 Park Avenue <BR>
    New York, NY 10017
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    965,280
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    965,280
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6.6
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-28
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="45%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="3%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="6%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="6%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Shares<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Options(2)<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Total<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Percent Owned(3)<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name and Address(1)</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>(#)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>(#)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>(#)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>(%)</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Disciplined Growth Investors, Inc.
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="color: #000000; background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: 0pt; margin-left: 10pt">
    100 South Fifth St. <BR>
    Suite&#160;2100 <BR>
    Minneapolis, MN 55402
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    848,897
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    848,897
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.8
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Seidensticker (Overseas) Limited
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: 0pt; margin-left: 10pt">
    Room&#160;728, Ocean Center <BR>
    5 Canton Road <BR>
    Tsimshatsui <BR>
    Kowloon, Hong Kong
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    713,980
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    713,980
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.9
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=455 length=60 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    *&#160;</TD>
    <TD></TD>
    <TD valign="bottom">
    Less than one percent.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    Unless otherwise indicated, the address for each stockholder is
    the same as the address of the Company.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (2) </TD>
    <TD></TD>
    <TD valign="bottom">
    Represents shares of common stock that may be acquired pursuant
    to currently exercisable stock options or stock options
    exercisable within 60&#160;days of October&#160;16, 2008.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (3) </TD>
    <TD></TD>
    <TD valign="bottom">
    Applicable percentage of ownership is based upon
    14,746,844&#160;shares of common stock outstanding as of
    October&#160;16, 2008, together with applicable stock options
    for such stockholder. Beneficial ownership is determined in
    accordance with the rules of the Securities and Exchange
    Commission and includes voting and investment power with respect
    to shares. Shares of common stock subject to options currently
    exercisable or exercisable within 60&#160;days after
    October&#160;16, 2008 are deemed outstanding for computing the
    percentage of ownership of the person holding such stock
    options, but are not deemed outstanding for computing the
    percentage ownership of any other person.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (4) </TD>
    <TD></TD>
    <TD valign="bottom">
    The shares are owned by the Stephen G./Jannell S. Carpenter
    Trust. Stephen G. Carpenter and Jannell S. Carpenter have shared
    voting and investment powers.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>



<TR>
    <TD valign="top">
    (5) </TD>
    <TD></TD>
    <TD valign="bottom">
    77,500 of these shares are owned by 7296 LTD, a family
    partnership. Mr.&#160;John M. Hanson, Jr. is the General Partner
    of 7296 LTD and has sole voting and investment powers.
    Mr.&#160;Hanson has direct ownership of the remaining
    19,700&#160;shares with sole voting and investment powers. All
    97,200&#160;shares are pledged in a broker margin account.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>



<TR>
    <TD valign="top">
    (6) </TD>
    <TD></TD>
    <TD valign="bottom">
    Each of Messrs.&#160;Hickman, Hohl, Holmberg, Schneiderman and
    Weil are no longer employed by the Company and the Company does
    not have updated information; therefore, the information
    presented here is as of each executive&#146;s termination date.
    Such termination dates are November&#160;17, 2006,
    October&#160;24, 2007, May&#160;21, 2007, May&#160;21, 2007 and
    October&#160;24, 2007, respectively.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>



<TR>
    <TD valign="top">
    (7) </TD>
    <TD></TD>
    <TD valign="bottom">
    Includes 200&#160;shares of common stock beneficially owned by
    Knightspoint Partners II, L.P. The General Partner of
    Knightspoint Partners II, L.P. is Knightspoint Capital
    Management II LLC. The sole Member of Knightspoint Capital
    Management II LLC is Knightspoint Partners LLC. Mr.&#160;Koeneke
    is a managing member of Knightspoint Partners LLC, and thus is
    deemed to beneficially own shares owned by Knightspoint Partners
    II, L.P. The 69,296&#160;shares beneficially owned by
    Mr.&#160;Koeneke are also included in the 2,647,740&#160;shares
    beneficially owned by the Knightspoint Group. (See footnote 11
    below.)</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>



<TR>
    <TD valign="top">
    (8) </TD>
    <TD></TD>
    <TD valign="bottom">
    Includes 200&#160;shares of common stock beneficially owned by
    Knightspoint Partners II, L.P. The General Partner of
    Knightspoint Partners II, L.P. is Knightspoint Capital
    Management II LLC. The sole Member of Knightspoint Capital
    Management II LLC is Knightspoint Partners LLC. Mr.&#160;Meyer
    is a managing member of Knightspoint Partners LLC, and thus is
    deemed to beneficially own shares owned by Knightspoint Partners
    II, L.P. The 163,591&#160;shares beneficially owned by
    Mr.&#160;Meyer are also included in the 2,647,740&#160;shares
    beneficially owned by the Knightspoint Group. (See footnote 11
    below.)</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>



<TR>
    <TD valign="top">
    (9) </TD>
    <TD></TD>
    <TD valign="bottom">
    The shares are owned by the James G. O&#146;Connor Revocable
    Trust. Mr.&#160;O&#146;Connor has sole voting and investment
    powers.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>



<TR>
    <TD valign="top">
    (10) </TD>
    <TD></TD>
    <TD valign="bottom">
    Mr.&#160;Slack was appointed the Chief Financial Officer and
    Principal Accounting Officer on October&#160;24, 2007.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>



<TR>
    <TD valign="top">
    (11) </TD>
    <TD></TD>
    <TD valign="bottom">
    This information is based upon a Form&#160;4 filed with the
    Securities and Exchange Commission on October&#160;12, 2007.
    This Form&#160;4 was filed jointly by Starboard Value and
    Opportunity Master Fund&#160;Ltd. (Starboard), RCG Starboard
    Advisors, LLC (&#147;RCG Starboard Advisors&#148;), Parche, LLC
    (&#147;Parche&#148;), Ramius Capital Group, LLC </TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    B-29
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    (&#147;Ramius&#148;), C4S&#160;&#038; Co., LLC
    (&#147;C4S&#148;), Peter A. Cohen, Jeffrey M. Solomon, Morgan B.
    Stark and Thomas W. Strauss (collectively, the &#147;Ramius
    Group&#148;). This information is also based upon a Form&#160;4
    filed with the Securities and Exchange Commission on
    October&#160;3, 2007. This Form&#160;4 was filed jointly by
    Knightspoint Partners II, L.P., Knightspoint Capital Management
    II LLC, Knightspoint Partners, LLC, Michael Koeneke and David
    Meyer (collectively, the &#147;Knightspoint Group&#148;). The
    Ramius Group and the Knightspoint Group are collectively the
    &#147;Reporting Persons.&#148; This information is also based
    upon a Form&#160;4 filed with the Securities and Exchange
    Commission on August&#160;8, 2008 by Michael S. Koeneke and a
    Form&#160;4 filed with the Securities and Exchange Commission on
    September&#160;16, 2008 by David M. Meyer. As of
    September&#160;16, 2008, the Reporting Persons owned an
    aggregate of 2,647,740&#160;shares. Each Reporting Person
    disclaims beneficial ownership of these securities except to the
    extent of its pecuniary interest, and this report shall not be
    deemed to be an admission that any Reporting Person is the
    beneficial owner of these securities for purposes of
    Section&#160;16 of the Exchange Act or for any other purpose.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>



<TR>
    <TD valign="top">
    (12) </TD>
    <TD></TD>
    <TD valign="bottom">
    This information is based upon a Schedule&#160;13G/A filed by
    Heartland Advisors, Inc. and William J. Nasgovitz with the
    Securities and Exchange Commission on February&#160;8, 2008.
    Mr.&#160;Nasgovitz is the President and principal stockholder of
    Heartland Advisors, Inc. Heartland Advisors, Inc. and
    Mr.&#160;Nasgovitz have shared dispositive power for
    1,699,390&#160;shares and shared voting power for
    1,617,001&#160;shares. Heartland Advisors, Inc. and
    Mr.&#160;Nasgovitz each specifically disclaim beneficial
    ownership of any of the shares reported in such
    Schedule&#160;13G/A.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>



<TR>
    <TD valign="top">
    (13) </TD>
    <TD></TD>
    <TD valign="bottom">
    This information is based upon a Form&#160;4 filed by Diker
    Management, LLC with the Securities and Exchange Commission on
    October&#160;15, 2008, a Schedule&#160;13G filed by Diker
    Management, LLC, Diker GP, LLC, Charles M. Diker and Mark N.
    Diker, as a group, with the Securities and Exchange Commission
    on November&#160;27, 2007, a Form&#160;3 and a Form&#160;4 each
    filed with the Securities and Exchange Commission on
    November&#160;27, 2007 by Diker Management, LLC and a
    Form&#160;4 filed with the Securities and Exchange Commission on
    November&#160;29, 2007 by Diker Management, LLC. As of
    October&#160;15, 2008, Diker Management, LLC, Diker GP, LLC,
    Charles M. Diker and Mark N. Diker had the shared voting and
    investment power of the 1,338,813&#160;shares reported as
    beneficially owned, and, as affiliates of a registered
    investment advisor under the Investment Advisors Act of 1940,
    disclaim beneficial ownership of these shares.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>



<TR>
    <TD valign="top">
    (14) </TD>
    <TD></TD>
    <TD valign="bottom">
    This information is based upon a Schedule&#160;13G/A filed by
    Dimensional Fund&#160;Advisors LP with the Securities and
    Exchange Commission on February&#160;6, 2008. As of
    December&#160;31, 2007, Dimensional Fund&#160;Advisors LP has
    sole voting and investment power of the 1,222,938&#160;shares
    that it beneficially owns, and, as a company registered under
    the Investment Advisors Act of 1940, disclaims beneficial
    ownership of these shares.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>



<TR>
    <TD valign="top">
    (15) </TD>
    <TD></TD>
    <TD valign="bottom">
    This information is based upon a Schedule&#160;13G filed by
    JPMorgan Chase&#160;&#038; Co. and its wholly owned subsidiary,
    J.P. Morgan Investment Management Inc., with the Securities and
    Exchange Commission on February&#160;1, 2008. As of
    December&#160;31, 2007, JPMorgan Chase&#160;&#038; Co. had the
    sole voting and investment power of the 965,280&#160;shares
    reported as beneficially owned.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>



<TR>
    <TD valign="top">
    (16) </TD>
    <TD></TD>
    <TD valign="bottom">
    This information is based upon a Schedule&#160;13G/A filed by
    Disciplined Growth Investors, Inc. with the Securities and
    Exchange Commission on February&#160;7, 2008. As of
    December&#160;31, 2007, Disciplined Growth Investors, Inc. had
    the sole voting and investment power of the 848,897&#160;shares
    reported as beneficially owned.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>



<TR>
    <TD valign="top">
    (17) </TD>
    <TD></TD>
    <TD valign="bottom">
    This information is based upon a Schedule&#160;13G filed by
    Seidensticker (Overseas) Limited with the Securities and
    Exchange Commission on February&#160;21, 2001 and additional
    information provided to the Company by Seidensticker (Overseas)
    Limited. Seidensticker (Overseas) Limited has sole voting and
    investment power of the 713,980&#160;shares reported as
    beneficially owned.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>



<TR>
    <TD valign="top">
    (18) </TD>
    <TD></TD>
    <TD valign="bottom">
    All options held by Peter M. Weil will expire on
    October&#160;24, 2008 pursuant to the separation and general
    release agreement between the Company and Mr.&#160;Weil, dated
    as of October&#160;24, 2007.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">SECTION&#160;16(a)
    BENEFICIAL OWNERSHIP REPORTING COMPLIANCE</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Pursuant to Section&#160;16(a) of the Exchange Act, the rules
    promulgated thereunder and the requirements of Nasdaq, executive
    officers and directors of the Company and persons who
    beneficially own more than 10% of the common stock of the
    Company are required to file with the SEC and Nasdaq and furnish
    to the Company reports of ownership and change in ownership with
    respect to all equity securities of the Company.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-30
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Based solely on its review of the copies of such reports
    received by the Company and/or written representations from such
    reporting persons, the Company believes that its officers,
    directors and 10% stockholders complied with all
    Section&#160;16(a) filing requirements applicable to such
    individuals, except that Mr.&#160;Bourgeois inadvertently filed
    a late Form&#160;3, the initial statement of beneficial
    ownership, Mr.&#160;Hayes inadvertently filed a late Form&#160;4
    reporting one common stock purchase on January&#160;16, 2007 and
    Mr.&#160;Fletcher inadvertently filed a late Form&#160;4
    reporting the grant of one stock option and the cancellation of
    another one on January&#160;11, 2008. Mr.&#160;Bourgeois has
    since filed his initial statement of beneficial ownership and
    Mr.&#160;Hayes and Mr.&#160;Fletcher have since reported the
    transactions.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">CERTAIN
    RELATIONSHIPS AND RELATED PARTY TRANSACTIONS</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On September&#160;19, 2008, the Company adopted a management
    change in control plan (the &#147;Plan&#148;) that provides for
    the payment of a maximum aggregate amount of $500,000 by the
    Company to certain management personnel in the event that the
    Company experiences a change in control (as defined in the
    Plan). Participants are eligible to receive payment under the
    Plan two months after a change in control, provided that certain
    conditions set forth in the Plan are satisfied.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Of the aggregate Plan amount, $200,000 is allocated to each of
    FLG Ltd. and Eddie J. Fadel, $50,000 is allocated to Greg W.
    Slack and $50,000 is allocated to other management personnel to
    be approved by the Board or the Compensation and Human Resources
    Committee of the Board.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under the terms of the Ashworth/Meyer Agreement between the
    Company and David M. Meyer, dated as of August&#160;6, 2008,
    Mr.&#160;Meyer is entitled to receive a cash payment of $150,000
    upon a change in control of the Company.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In October 2007, the Company announced the appointment of Allan
    H. Fletcher to the position of Chief Executive Officer.
    Mr.&#160;Fletcher is the founder of FLG Ltd., which has been one
    of Canada&#146;s leading suppliers of branded golf apparel,
    sportswear and golf equipment for over 40&#160;years and is a
    long-standing business partner of the Company. The Company
    distributes
    Ashworth<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>

    and Callaway Golf apparel, headwear and accessories in Canada
    through two separate divisions operated by FLG Ltd.
    Mr.&#160;Fletcher was responsible for the operations and
    strategic direction of FLG Ltd. and served as its President
    until December 2003 when he became the Chairman of FLG Ltd.
    Mr.&#160;Fletcher&#146;s son, Mark Fletcher, currently serves as
    the President of FLG Ltd. and oversees its operations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Effective January&#160;11, 2008, the Company entered into a
    Consulting Agreement with FLG Ltd., under which FLG Ltd.
    provides the services of a management consultant to act as the
    Company&#146;s Chief Executive Officer. The initial management
    consultant designated by FLG Ltd. is Mr.&#160;Fletcher, and FLG
    Ltd. may not designate any other management consultant without
    the Company&#146;s written permission. For additional
    information see discussion under &#147;Agreements With Current
    Executive Officers&#148; above.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On January&#160;15, 2008, Sunice Holdings, Inc.
    (&#147;Sunice&#148;), a wholly owned subsidiary of Ashworth
    Inc., entered into a purchase agreement (the
    &#147;Agreement&#148;) with FLG Ltd. Under the Agreement, Sunice
    agreed to purchase certain trademarks and related assets of FLG
    Ltd. (the &#147;Acquired Assets&#148;), and FLG Ltd. agreed to
    provide certain services to Sunice in connection therewith. The
    aggregate consideration to be paid by Sunice for the Acquired
    Assets and certain non-competition covenants included in the
    Agreement was $50,000 plus a profit sharing amount to be paid
    during the ten years after the closing of the acquisition (the
    &#147;Profit Sharing&#148;). Under the Agreement, for the term
    of the Agreement FLG Ltd. agreed not to, directly or indirectly,
    sell or distribute golf related apparel or similar designs that
    are developed by FLG Ltd. for sale by Sunice to on-course and
    off-course golf specialty accounts, corporate accounts, and
    specialty retailers and department stores.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    After the closing of the acquisition of the Acquired Assets (the
    &#147;Closing Date&#148;), Sunice licensed to FLG Ltd. certain
    trademarks included in the Acquired Assets for limited
    circumstances and uses that do not materially impact
    Sunice&#146;s use of the trademarks within the United States,
    the United Kingdom, Ireland and Europe.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    FLG Ltd. has the right and option (the &#147;Re-Purchase
    Option&#148;) to purchase all of the Acquired Assets for a cash
    price that is generally based on Sunice&#146;s operating income
    for a period of time prior to the exercise of the Re-Purchase
    Option. The Re-Purchase Option shall be exercisable upon certain
    events during the term of the Agreement, including if Sunice
    fails to pay FLG Ltd. certain profit sharing amounts in the
    fiscal year ended
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-31
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    October&#160;31, 2009 or in any subsequent fiscal year, and
    during the 12&#160;month period following the tenth anniversary
    of the Closing Date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Agreement may be terminated by the non-breaching party in
    the event of a material breach of the Agreement that is not
    cured by the breaching party within 90&#160;days of notice of
    such breach, and under certain other circumstances.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On the Closing Date, Sunice and FLG Ltd. entered into a Service
    Agreement under which FLG Ltd. agreed to provide all designs for
    Sun Ice Golf Apparel for production, marketing and sale by
    Sunice, as requested by the Sunice. FLG Ltd. also agreed to
    identify and facilitate the requisite relationships with vendors
    for all sourcing aspects of the Sun Ice Golf Apparel.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Company leases its Phenix City, Alabama distribution
    facility from STAG II Phenix City, LLC, which purchased the
    building in fiscal 2006 from 16 Downing, LLC, which was a
    related party owned by certain members of Gekko Brands,
    LLC&#146;s management. Total payments under the operating lease
    for this facility made during the years ended October&#160;31,
    2007, 2006 and 2005 were $457,000, $400,000 and $400,000,
    respectively. The lease agreement requires monthly payments of
    $38,060 through June&#160;6, 2012.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Seidensticker (Overseas) Limited (&#147;Seidensticker&#148;), a
    supplier of inventoried products to the Company, owned
    approximately 5% of the Company&#146;s outstanding common stock
    at October&#160;31, 2007. Additionally, the President and Chief
    Executive Officer of Seidensticker (Overseas) Limited was
    elected to the Board effective January&#160;1, 2006. During the
    years ended October&#160;31, 2007, 2006 and 2005, the Company
    purchased approximately $1,151,000, $1,571,000 and $5,800,000,
    respectively, of products from Seidensticker. The Company
    believes that the terms upon which it purchased the inventoried
    products from Seidensticker are consistent with the terms
    offered to other, unrelated parties.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On September&#160;12, 2006, concurrent with his appointment to
    the Office of the Chairman, Mr.&#160;Weil, who is the former CEO
    and a former director of the Board, entered into an agreement
    with the Company to provide consulting services on corporate
    management and operations and decision-making within the Office
    of the Chairman (the &#147;Weil Agreement&#148;). Mr.&#160;Weil
    was paid approximately $48,000 for such services for the period
    of September&#160;12, 2006 through October&#160;29, 2006.
    Mr.&#160;Weil also received an option grant to purchase
    25,000&#160;shares with an exercise price of 100% of
    then-current fair market value, 12,900 of which vested and
    12,100 were terminated as of October&#160;30, 2006 pursuant to
    the terms of the Weil Agreement. The Weil Agreement was
    terminated upon Mr.&#160;Weil&#146;s appointment as Chief
    Executive Officer effective October&#160;30, 2006. Mr.&#160;Weil
    resigned from all his positions with the Company effective
    October&#160;24, 2007.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On June&#160;5, 2007, Eric S. Salus entered into an agreement
    with the Company dated as of June&#160;1, 2007 whereby
    Mr.&#160;Salus would provide consulting services relating to
    corporate management and operations (the &#147;Salus
    Agreement&#148;). All assignments under the Salus Agreement were
    required to be approved by mutual agreement of Mr.&#160;Salus
    and the Chief Executive Officer of the Company. Mr.&#160;Salus
    had agreed to provide such services for five (5)&#160;business
    days per calendar month. The consulting engagement under the
    Salus Agreement was to continue until March&#160;30, 2008, but
    could be earlier terminated by either party with
    <FONT style="white-space: nowrap">60-days</FONT>
    notice. This agreement was terminated by the Company effective
    December&#160;31, 2007.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In consideration of the time commitments associated with the
    duties under the Salus Agreement, Mr.&#160;Salus was to be
    compensated for the duration of service under this Agreement
    with (a)&#160;an upfront, non-refundable, one-time cash retainer
    of $25,000, and (b)&#160;an additional cash retainer of $15,500
    per month, payable at the end of each month of service. The
    foregoing cash compensation was in addition to, and not in lieu
    of, any and all cash compensation paid to Mr.&#160;Salus for his
    continuing service on the Board. Mr.&#160;Salus was reimbursed
    for reasonable
    <FONT style="white-space: nowrap">out-of-pocket</FONT>
    expenses incurred in connection with the performance of his
    services under the Salus Agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As additional compensation under the Salus Agreement, the
    Company granted to Mr.&#160;Salus a non-qualified stock option
    grant covering 10,000&#160;shares of Ashworth&#146;s common
    stock, with an exercise price equal to 100% of the fair market
    value of the common stock on the date of grant. The foregoing
    option would vest 50% on September&#160;30, 2007 and 50% on
    March&#160;31, 2008. Except in the context of a &#147;Change in
    Control&#148; as described below, vesting was to cease upon
    termination of the Salus Agreement, for any reason, and the
    vested portion of the option is to remain
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-32
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    exercisable for a period of five (5)&#160;years after the date
    of grant. The foregoing option grant was in addition to, and not
    in lieu of, any and all stock option grants to Mr.&#160;Salus
    for his continuing service on the Board.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In the event that the Company terminated the Salus Agreement
    prior to March&#160;31, 2008 but on or after a &#147;Change in
    Control,&#148; (a)&#160;all of Mr.&#160;Salus&#146;
    non-qualified stock options granted under the Salus Agreement
    were to become immediately vested, and (b)&#160;all monthly
    retainers that were due and those that would become payable
    assuming the Salus Agreement&#146;s term continued to
    March&#160;31, 2008 were to become immediately due and payable.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Effective as of October&#160;15, 2008, Mr. Salus and the Company
    entered into a new consulting agreement whereby Mr. Salus has
    and will provide consulting services related to operational
    issues specified by the Board between September&#160;25, 2008
    and October&#160;25, 2008, in exchange for a one-time cash
    payment of $30,000, payable upon the earlier of October&#160;25,
    2008 and the date of a change in control of the Company.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Review of
    Related Party Transactions</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    It is the responsibility and duty of the Company&#146;s Audit
    Committee to review and discuss with management and the outside
    auditors any transactions or course of dealings with related
    parties if the transactions are significant in size or involve
    terms or other aspects that differ from those that would likely
    be negotiated with outside third parties. The Audit Committee is
    responsible for reviewing and approving in advance all related
    party transactions as defined in SEC rules and reviewing
    potential conflict of interest situations where appropriate. The
    Company&#146;s Code of Business Conduct and Ethics (the
    &#147;Code of Conduct&#148;) sets forth standards applicable to
    all directors, officers and senior management of the Company and
    requires that employees and directors disclose any actual or
    potential conflicts of interest on an acknowledgement form
    attached to the Code of Conduct. The Code Conduct instructs
    directors to promptly submit the acknowledgment form to the
    chairman of the Audit Committee while employees are to submit
    the acknowledgment form to the Company&#146;s Human Resources
    representative. The Code of Conduct further states that any
    investments (stock ownership, etc.) in the business of a
    supplier, customer or competitor must not involve any conflicts
    of interest and must be disclosed on the attached acknowledgment
    form. In addition, any subsequent changes in an employee&#146;s
    status must also be promptly reported to the Company&#146;s
    Human Resources representative or Chief Financial Officer, as
    appropriate, and any subsequent changes in a director&#146;s
    status must be promptly reported to the chairman of the Audit
    Committee.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    B-33
</DIV><!-- END PAGE WIDTH -->
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(E)(2)
<SEQUENCE>2
<FILENAME>a50180exv99wxeyx2y.htm
<DESCRIPTION>EX-99.(E)(2)
<TEXT>
<HTML>
<HEAD>
<TITLE>exv99wxeyx2y</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="right" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Exhibit
    (e)(2)</FONT></B>
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">NO SHOP
    AGREEMENT</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This No Shop Agreement (this &#147;Agreement&#148;) is made as
    of September&#160;8, 2008 by and between Ashworth, Inc., a
    Delaware corporation (&#147;Ashworth&#148;), and adidas AG, a
    corporation organized under the laws of Germany
    (&#147;adidas&#148;).
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">RECITALS</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    By letter dated September&#160;8, 2008 (the &#147;Letter of
    Interest&#148;), adidas expressed a preliminary, non-binding
    indication of interest to acquire all of the outstanding common
    stock of Ashworth for a purchase price of $6.00 per share in
    cash payable directly to Ashworth shareholders (including for
    this purpose holders under Ashworth&#146;s equity incentive
    plans of options and any similar derivatives, to the extent such
    per-share purchase price exceeds the applicable per-share
    exercise price, and of restricted stock), as more particularly
    described in the Letter of Interest (the &#147;Proposed
    Acquisition&#148;).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In order to induce adidas to devote resources to finalizing due
    diligence and negotiating and executing a definitive agreement
    in connection with the Proposed Acquisition, Ashworth is willing
    to execute and deliver this Agreement.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">AGREEMENT</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    NOW, THEREFORE, for good and valuable consideration, the receipt
    and sufficiency of which both parties hereby acknowledge, the
    parties hereby agree as follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>    1.&#160;&#160;
</TD>
    <TD align="left">    Ashworth hereby agrees that from the date above until the
    earlier of (a)&#160;15 business days later and (b)&#160;the date
    that adidas notifies Ashworth in writing of its decision to
    terminate discussions with respect to a Proposed Acquisition (as
    such date may be extended by mutual agreement), neither Ashworth
    nor any of its directors, officers, employees, stockholders,
    affiliates, representatives or agents (collectively,
    &#147;Representatives&#148;) will: (i)&#160;solicit, encourage,
    initiate, agree to, or participate in any negotiations or
    discussions with respect to any offer, inquiry, indication of
    interest or proposal, whether oral or written, to directly or
    indirectly acquire Ashworth or any business or significant
    assets thereof (except Ashworth&#146;s subsidiary Gekko Brands,
    LLC and its subsidiaries (collectively, the &#147;Gekko&#148;)),
    whether by purchase of assets, joint venture, purchase of stock,
    merger or other business combination (any of the foregoing, a
    &#147;Competing Transaction&#148;); or (ii)&#160;disclose any
    information (other than information relating to the Gekko) not
    customarily disclosed in the ordinary course of the operation of
    Ashworth&#146;s business to any person concerning Ashworth and
    which Ashworth believes could be used for the purposes of
    formulating any offer, indication of interest or proposal for a
    Competing Transaction. For the avoidance of doubt, the foregoing
    shall not limit Ashworth&#146;s ability to publicly disclose
    that it is evaluating strategic alternatives (without reference
    to adidas, this Agreement or the Letter of Interest).
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>    2.&#160;&#160;
</TD>
    <TD align="left">    Ashworth will immediately cease and will cause to be terminated
    all existing discussions or negotiations with any parties (other
    than adidas or its affiliates and except for discussions
    pertaining to the Gekko), whether by Ashworth or its
    Representatives, which could reasonably be expected to lead to
    any Competing Transaction.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>    3.&#160;&#160;
</TD>
    <TD align="left">    adidas shall analyze and consider the Proposed Acquisition
    pursuant to the Letter of Interest and subject to the conditions
    contained herein and in the Letter of Interest. For the
    avoidance of doubt, the Letter of Interest is intended solely as
    a basis for further discussion and is not intended to be and
    does not constitute a legally binding obligation on the part of
    adidas or Ashworth to consummate the Proposed Acquisition. No
    legally binding obligations to consummate the Proposed
    Acquisition will be created, implied or inferred until a
    definitive agreement in form and substance satisfactory to
    Ashworth and adidas is executed and delivered by both parties
    (subject to any conditions that may be contained therein).
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">[signature
    page follows]</FONT></B>
</DIV>

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    IN WITNESS WHEREOF, the parties hereto have executed this
    Agreement as of the date first written above.
</DIV>

<DIV style="margin-top: 24pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    ASHWORTH, INC.
</DIV>

<DIV style="margin-top: 24pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="49%"></TD>
    <TD width="4%"></TD>
    <TD width="47%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    By:&#160;
</TD>
    <TD valign="bottom" align="left">
    <DIV style="display:inline; text-align:center; width:90%">/s/&#160;&#160;Allan
    H. Fletcher</DIV><BR>
    <DIV style="font-size: 2pt; margin-left: 0%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=115 iwidth=211 length=0 -->Allan
    H. Fletcher<BR>
    Chief Executive Officer
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 24pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    ADIDAS AG
</DIV>

<DIV style="margin-top: 24pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="49%"></TD>
    <TD width="4%"></TD>
    <TD width="47%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    By:&#160;
</TD>
    <TD valign="bottom" align="left">
    <DIV style="display:inline; text-align:center; width:90%">/s/&#160;&#160;Herbert
    Hainer</DIV><BR>
    <DIV style="font-size: 2pt; margin-left: 0%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=115 iwidth=211 length=0 -->Herbert
    Hainer<BR>
    President and Chief Executive Officer
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 24pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 49%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="49%"></TD>
    <TD width="4%"></TD>
    <TD width="47%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    By:&#160;
</TD>
    <TD valign="bottom" align="left">
    <DIV style="display:inline; text-align:center; width:90%">/s/&#160;&#160;Frank
    Dassler</DIV><BR>
    <DIV style="font-size: 2pt; margin-left: 0%; width: 100%;  align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=115 iwidth=211 length=0 -->Frank
    Dassler<BR>
    General Counsel
</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV><!-- END PAGE WIDTH -->
</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(E)(9)
<SEQUENCE>3
<FILENAME>a50180exv99wxeyx9y.htm
<DESCRIPTION>EX-99.(E)(9)
<TEXT>
<HTML>
<HEAD>
<TITLE>exv99wxeyx9y</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="right" style="margin-left: 53%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Exhibit&#160;(e)(9)</FONT></B>
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">ERIC
    SALUS AGREEMENT (2008)</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>THIS AGREEMENT, </B>dated as of October&#160;8, 2008 (the
    &#147;Effective Date&#148;), is between ASHWORTH, INC., a
    Delaware corporation and its successors or assignees
    (&#147;Ashworth&#148;), and ERIC SALUS, an individual
    (&#147;Mr.&#160;Salus&#148;).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>1.&#160;&#160;ENGAGEMENT OF SERVICES.</B>&#160;Ashworth is
    engaging the services, advice, expertise and counsel of
    Mr.&#160;Salus on operational issues as specified by the Board
    of Directors. Mr.&#160;Salus agrees to provide such services at
    the Company&#146;s headquarters in Carlsbad, California
    <FONT style="white-space: nowrap">and/or</FONT> at
    such other locations as Mr.&#160;Salus may choose for at least
    fifteen (15)&#160;working days (including partial days which may
    be aggregated to equal a full day) and his consulting engagement
    hereunder shall continue until October&#160;25, 2008;
    <U>provided</U>, <U>however</U>, that the parties acknowledge
    and agree that Mr.&#160;Salus has already provided consulting
    services to Ashworth since September&#160;25, 2008, and Mr.
    Salus shall accordingly be credited for the same in satisfying
    the fifteen (15)&#160;day service requirement. Ashworth will
    make its employees, facilities and equipment reasonably
    available to Mr.&#160;Salus in order for him to perform his
    duties under this Agreement. Mr.&#160;Salus may not subcontract
    or otherwise delegate or assign his obligations under this
    Agreement without Ashworth&#146;s prior written consent.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>2.&#160;&#160;COMPENSATION.</B>&#160;In view of the time
    commitments associated with his duties under this Agreement,
    Mr.&#160;Salus shall be compensated for all services under this
    Agreement with a cash retainer of $30,000, payable on the
    earlier of October&#160;25, 2008 and the date that Ashworth
    experiences a &#147;Change in Control.&#148; As used herein,
    &#147;Change of Control&#148; shall have the meaning given it in
    <U>Exhibit&#160;A</U> attached hereto and incorporated by this
    reference. The foregoing cash compensation will be in addition
    to, and not in lieu of, any and all cash compensation paid to
    Mr.&#160;Salus for his continuing service on the Board of
    Directors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Mr.&#160;Salus will promptly (out in any event within thirty
    (30)&#160;calendar days) be reimbursed for reasonable
    out-of-pocket expenses incurred in connection with the
    performance of services under this Agreement provided
    Mr.&#160;Salus submits verification of such expenses as Ashworth
    may reasonably require.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>3.&#160;&#160;NON-EXECUTIVE BOARD
    MEMBER.</B>&#160;Mr.&#160;Salus&#146;s relationship with
    Ashworth will be that of a non-executive board member and
    nothing in this Agreement should be construed to create a
    partnership, joint venture, or employer-employee relationship.
    Mr.&#160;Salus will not be entitled to any of the benefits that
    Ashworth may make available to its employees, such as group
    insurance, profit-sharing, vacation or retirement benefits.
    Mr.&#160;Salus will be solely responsible for all tax returns
    and payments required to be filed with or made to any federal,
    state or local tax authority with respect to his performance of
    services and receipt of fees under this Agreement. Ashworth will
    report amounts paid to Mr.&#160;Salus by filing
    <FONT style="white-space: nowrap">Form&#160;1099-MISC</FONT>
    with the Internal Revenue Service as required by law. Because
    Mr.&#160;Salus is a non-executive board member, Ashworth will
    not withhold or make payments for social security, make
    unemployment insurance or disability insurance contributions; or
    obtain worker&#146;s compensation insurance on
    Mr.&#160;Salus&#146;s behalf. Mr.&#160;Salus agrees to accept
    exclusive liability for complying with all applicable state and
    federal laws governing self-employed individuals, including
    obligations such as payment of taxes, social security,
    disability and other contributions based on fees paid to
    Mr.&#160;Salus, his agents or employees under this Agreement.
    Mr.&#160;Salus hereby agrees to indemnify and defend Ashworth
    against any and all such taxes or contributions, including
    penalties and interest.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>4.&#160;&#160;NO CONFLICT OF
    INTEREST.</B>&#160;Mr.&#160;Salus agrees during the term of this
    Agreement not to accept work or enter into a contract or accept
    an obligation, inconsistent or incompatible with
    Mr.&#160;Salus&#146;s obligations under this Agreement or the
    scope of his duties rendered for Ashworth. Mr.&#160;Salus
    warrants that there is no existing contract or duty on
    Mr.&#160;Salus&#146; part that may conflict with the terms of
    this Agreement or the performance thereof.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>5.&#160;GENERAL PROVISIONS.</B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>5.1&#160;&#160;Governing Law.</B>&#160; This Agreement will
    be governed and construed in accordance with the internal laws
    of the State of California. Mr.&#160;Salus hereby expressly and
    irrevocably consents to the personal jurisdiction of the state
    and federal courts located in San&#160;Diego County or Orange
    County, California for any lawsuit filed arising from or related
    to this Agreement and any suit arising from this Agreement shall
    be brought in those courts.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>5.2&#160;&#160;Severability.</B>&#160;In case any one or more
    of the provisions contained in this Agreement shall, for any
    reason, be held to be invalid, illegal or unenforceable in any
    respect, such invalidity, illegality or unenforceability
</DIV>

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    shall not affect the other provisions of this Agreement, and
    this Agreement shall be construed as if such invalid, illegal or
    unenforceable provision had never been contained herein.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>5.3&#160;&#160;Counterparts.</B>&#160;Facsimile transmission
    of any signed original of this Agreement will be deemed the same
    as delivery of an original. This Agreement may be executed in
    one or more counterparts, each of which shall be deemed an
    original and each of which together shall be deemed one and the
    same instrument.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>IN WITNESS WHEREOF,</B> the parties have caused this
    Agreement to be executed by their duly authorized representative
    as of the Effective Date.
</DIV>

<DIV style="margin-top: 22pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="50%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="48%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
</TR>
<!-- Table Width Row END -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
    <B>ASHWORTH, INC.</B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    <B>ERIC SALUS</B>
</TD>
</TR>
<TR style="line-height: 24pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -15pt; margin-left: 15pt">
    By:&#160;/s/ Michael S. Koeneke<BR>
    <DIV style="font-size: 2pt; margin-left: 0%; width: 100%; border-bottom: 1pt solid #000000"></DIV><DIV style="text-indent:0pt"><!-- callerid=208 iwidth=222 length=0 --></DIV>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
<DIV style="text-indent: -17pt; margin-left: 17pt">
    By:&#160;/s/ Eric Salus<BR>
    <DIV style="font-size: 2pt; margin-left: 0%; width: 100%; border-bottom: 1pt solid #000000"></DIV><DIV style="text-indent:0pt"><!-- callerid=208 iwidth=222 length=0 --></DIV>
</DIV>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Name:&#160;Michael S. Koeneke
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Eric Salus
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Title:&#160;&#160;Chairman
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV><!-- END PAGE WIDTH -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV align="right" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Exhibit&#160;A</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As used in this Agreement, the phrase &#147;Change in
    Control&#148; shall mean:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (a)&#160;&#160;Except as provided by subparagraph
    (c)&#160;hereof, the acquisition (other than from Ashworth) by
    any person, entity or &#147;group&#148;, within the meaning of
    Section&#160;13(d)(3) or 14(d)(2) of the Securities Exchange Act
    of 1934, as amended (the &#147;Exchange Act&#148;) (excluding,
    for this purpose, Ashworth or its subsidiaries, or any executive
    benefit plan of Ashworth or its subsidiaries which acquires
    beneficial ownership of voting securities of Ashworth), of
    beneficial ownership (within the meaning of
    <FONT style="white-space: nowrap">Rule&#160;13d-3</FONT>
    promulgated under the Exchange Act) of forty percent (40%) or
    more of either the then outstanding shares of common stock or
    the combined voting power of Ashworth&#146;s then outstanding
    voting securities entitled to vote generally in the election of
    directors;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (b)&#160;&#160;Individuals who, as of the date hereof,
    constitute the Board of Directors of Ashworth (as of the date
    hereof the &#147;Incumbent Board&#148;) cease for any reason to
    constitute at least a majority of the Board of Directors of
    Ashworth, Provided that any person becoming a director
    subsequent to the date hereof whose election, or nomination for
    election by Ashworth&#146;s stockholders, is or was approved by
    a vote of at least a majority of the directors then comprising
    the Incumbent Board (other than an election or nomination of an
    individual whose initial assumption of office is in connection
    with an actual or threatened election contest relating to the
    election of the Directors of Ashworth, as such terms are used in
    <FONT style="white-space: nowrap">Rule&#160;14a-11</FONT>
    of Regulation&#160;14A promulgated under the Exchange Act) shall
    be, for purposes of this Agreement, considered as though such
    person were a member of the Incumbent Board;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (c)&#160;&#160;Approval by the stockholders of Ashworth of a
    reorganization, merger or consolidation with any other person,
    entity or corporation, other than
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (i)&#160;&#160;a merger or consolidation which would result in
    the voting securities of Ashworth outstanding immediately prior
    thereto continuing to represent (either by remaining outstanding
    or by being converted into voting securities of another entity)
    more than fifty percent (50%) of the combined voting power of
    the voting securities of Ashworth or such other entity
    outstanding immediately after such merger or
    consolidation,&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    (ii)&#160;&#160;a merger or consolidation effected to implement
    a recapitalization of Ashworth (or similar transaction) in which
    no person acquires forty percent (40%) or more of the combined
    voting power of Ashworth&#146;s then outstanding voting
    securities;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

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    (d)&#160;&#160;Approval by the stockholders of Ashworth of a
    plan of complete liquidation of Ashworth or an agreement for the
    sale or other disposition by Ashworth of all or substantially
    all of Ashworth&#146;s assets.
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