EMPLOYMENT AGREEMENT

 

THIS AGREEMENT

(the "Agreement") entered into as of the date signed by the parties below by and
between Adams Golf, Inc. and its subsidiaries with its principal place of
business at 2801 East Plano Parkway, Plano, Texas (the "Company") and Mr. Barney
Adams (the "Chairman");

 

RECITALS

WHEREAS

, the Company desires to employ the Chairman in the capacity of non-executive
Chairman of the Board of Directors.

WHEREAS

, the Chairman desires and is willing to accept employment with the Company on
the terms and subject to the conditions set forth below.

NOW THEREFORE

, in consideration of the promises and mutual covenants contained herein, the
parties agree as follows:

AGREEMENT

1. POSITION AND DUTIES

During the term of this Agreement the Company shall employ the Chairman as its
Chairman of the Board of Directors. The Chairman's duties shall be those
reasonably expected of a non-executive Chairman of the Board of Directors of a
similarly capitalized corporation. Additionally, the Chairman shall actively
participate in Public Relations efforts and consult on Research and Design as
directed by the Chief Executive Officer and the Board of Directors. The Chairman
shall use his best efforts to promote the best interest of the Company. The
Chairman shall devote his knowledge, skill and, substantially, his professional
time, attention and energies (reasonable absences for vacations and illness
excepted) to the Public Relations and Research and Design of Products business
forof the Company in order to perform such assigned duties faithfully,
competently and diligently. Notwithstanding the foregoing, it is understood and
agreed between the parties that the Chairman shall have no authority or duties
over operational or executive matters other than as a voting member of the Board
of Directors as provided in the by-laws.

2. TERM OF EMPLOYMENT

The Company agrees to employ the Chairman and the Chairman agrees to serve the
Company pursuant to the terms and conditions of this Agreement for a term of
three (3) years, commencing on January 1, 2003 and expiring on December 31,
2005, unless earlier terminated pursuant to this Agreement. Notwithstanding any
contrary clause in this Agreement, the Chairman shall serve at the pleasure of
the Board of Directors and may be terminated at any time in accordance with the
provisions of this Agreement and/or the Company's bylaws. The Chairman's
termination shall not, in any way, prejudice the Chairman's rights under this
Agreement.

3. PLACE OF EMPLOYMENT

The place of employment shall be at the Company's principal office currently
located in Plano, Texas; provided, however, that the Company may from time to
time require the Chairman to travel temporarily to other locations on Company
business.

COMPENSATION

The Chairman shall receive, for all services rendered to the Company as an
employee, the following compensation.

 

Base Salary
. The Chairman shall be paid an Annual Base Salary in the amount of Two Hundred
Forty Thousand ($240,000) dollars. The Chairman's Annual Base Salary shall be
payable in equal installments in accordance with the Company's general salary
payment policies, but no less frequently than monthly.
Incentive Compensation
. Each year, the Chairman shall be eligible for an annual bonus in the amount of
one-half (1/2) of his Annual Base Salary. Each annual bonus shall be contingent
upon the Company achieving positive annual net profit. If achieved, the annual
bonus shall be paid no later than January 20 of the following year.

 

(c) Employee Benefit Plans. The Chairman and his "dependents," as that term may
be defined under the applicable employee benefit plan(s) of the Company, shall
be included in all plans, programs and policies which provide benefits for
Company employees and their dependents on a basis commensurate with the
Chairman's position and authorities, duties, powers and responsibilities.

 

(d) Business Related Expenses: The Chairman is authorized to incur and shall be
reimbursed by the Company for any and all approved approved business related
expenses including, but not limited to, automobile, business travel,
entertainment, gifts and similar matters. All reimbursed expenses shall be
monitored by the Chief Executive Officer and are subject to approval at the sole
discretion of the Board of Directors.

5. TERMINATION

The Chairman's employment with the Company may be terminated only as follows:

By the Company Without Cause.
The Company may at any time terminate the Chairman's employment without Cause
upon sixty (60) days' prior written notice to the Chairman.
By the Chairman Without Good Reason.
The Chairman may at any time terminate his employment for any reason upon sixty
(60) days written notice to the Company.
By the Company For Cause.
The Company may terminate the Chairman's employment for Cause. In such event,
the Company shall give the Chairman prompt written notice (in addition to any
notice that may be required below) specifying in reasonable detail the basis for
such termination. For purposes of this Agreement, "Cause" shall mean any of the
following conduct by the Chairman:

 1. the deliberate and intentional breach of any material provision of this
    Agreement, which breach the Chairman shall have failed to cure within thirty
    (30) days after the Chairman's receipt of written notice from the Company
    specifying the specific nature of the Chairman's breach; or
 2. the deliberate and intentional engaging by the Chairman in gross misconduct
    that is materially and demonstrably harmful to the best interests, monetary
    or otherwise, of the Company; or

(3) conviction of a felony or conviction of any crime involving moral turpitude,
fraud or deceit.

By the Chairman for Good Reason.
The Chairman may terminate his employment for Good Reason upon providing thirty
(30) days written notice to the Company after the Chairman reasonably becomes
aware of the circumstances giving rise to such Good Reason. For purposes of this
Agreement, "Good Reason" means any of the following conduct of the Company,
unless the Chairman shall have consented thereto in writing:

(1) material breach of any material provision of this Agreement by the Company,
which breach shall not have been cured by the Company within thirty (30) days
after Company's receipt from the Chairman or his agent of written notice
specifying in reasonable detail the nature of the Company's breach; or

(2) the assignment to the Chairman of any duties inconsistent in any material
respect with the Chairman's position including, but not limited to any
diminution of the Chairman's status and reporting requirements, authority,
duties, powers or responsibilities, excluding for this purpose any isolated,
insubstantial and inadvertent action respecting the Chairman not taken in bad
faith and which is remedied by the Company within thirty (30) days after receipt
of written notice from the Chairman to the Company; or

 1. the failure of the Company to obtain the assumption in writing of its
    obligations to perform this Agreement by any successor not less than five
    days prior to a merger, consolidation or sale as contemplated in Section 10;
    or
 2. a reduction in the Chairman's total compensation. For purposes of this
    subsection, a reduction in the overall level of compensation of the Chairman
    resulting from the failure to achieve corporate, business unit and/or
    individual performance goals established for purposes of incentive
    compensation for any year or other period shall not constitute a reduction
    in the overall level of compensation of the Chairman.

    Disability.
    In the event that the Chairman shall be unable to perform his duties
    hereunder on a full time basis for a period of sixty (60) consecutive
    calendar days by reason of incapacity due to illness, accident, physical or
    mental disability or otherwise, then the Company may, at its
    
    discretion, terminate the Chairman's employment if the Chairman, within ten
    (10) days after receipt of written notice of termination is given (which may
    occur before or after the end of the entire 60 day period), shall not have
    returned to the performance of all of his duties on a full-time basis.
    Death.
    The Chairman's employment shall terminate upon his death.
 a. Mutual Written Agreement. This Agreement and the Chairman's employment with
    the Company may be terminated at any time by the mutual written agreement of
    the Chairman and the Company.

COMPENSATION IN THE EVENT OF TERMINATION

In the event that the Chairman's employment terminates prior to the expiration
of this Agreement, the Company shall pay the Chairman compensation and provide
the Chairman and his eligible dependents with benefits as follows:

Termination By Company Without Cause or Termination By Chairman For Good Reason.
In the event that the Chairman's employment is terminated by (i) the Company
without Cause or (ii) the Chairman for Good Reason, then the Company shall
continue to pay or provide, as applicable, in accordance with the Company's
normal payroll practices, the following compensation and benefits to the
Chairman:

(1) the Annual Base Salary of the Chairman for one year

(2) continuing coverage for all purposes (including eligibility, coverage,
vesting and benefit accruals, as applicable), for the salary continuation period
described in subsection (a)(1) above, to the extent not prohibited by law, for
the Chairman and his eligible dependents under all of the employee benefit plans
in effect and applicable to Chairman and his eligible dependents as of the date
of his termination. In the event that the Chairman and/or his eligible
dependents, because of the Chairman's terminated status, cannot be covered or
fully covered under any or all of such plans, the Company shall continue to
provide the Chairman and/or his eligible dependents with the same level of such
benefits and coverage in effect prior to termination, payable from the general
assets of the Company if necessary. Notwithstanding the foregoing, the Chairman
may elect (by giving written notice to the Company prior to the termination of
his employment hereunder), on a benefit by benefit basis to receive in lieu of
continuing coverage, cash in an amount equal to the present value (using an 8%
annual discount rate) of the projected cost to the Company of providing such
benefit for such continuation period. The aggregate amount of cash to which the
Chairman is entitled pursuant to the preceding sentence shall be payable by the
Company to the Chairman within sixty (60) days after the date of the termination
of Chairman's employment hereunder;

The Chairman's subsequent death or disability shall in no way affect or limit
the Company's obligations under this Section.

Termination By the Company For Cause.
In the event that the Company shall terminate the Chairman's employment for
Cause, this Agreement shall terminate and the obligations of the parties shall
be as set forth in Section 7 of this Agreement.
Termination By The Chairman Without Good Reason.
In the event that the Chairman shall terminate employment hereunder other than
for Good Reason, this Agreement shall forthwith terminate and the obligations of
the parties shall be as set forth in Section 7 of this Agreement.
Disability.
In the event that the Company elects to terminate the Chairman's employment
pursuant to Section 5(e), the Chairman shall continue to receive, from the date
of such termination for a period of one year, one hundred percent (100%) of the
Annual Base Salary, in accordance with the payroll practices of the Company for
senior Chairman officers, reduced, however, by the amount of any proceeds from
Social Security and disability insurance policies provided by and at the expense
of the Company.
Death.
In the event of the death of the Chairman during the term of this Agreement, (i)
the Annual Base Salary to which the Chairman is entitled shall be paid, in
twelve (12) equal monthly installments following the date of death, to the last
beneficiary designated by the Chairman under the Company's group life insurance
policy maintained by the Company or such other written designation expressly
provided to the Company for the purposes hereof or, failing either such
designation, to his estate.
Mutual Written Consent.
In the event that the Chairman and the Company shall terminate the Chairman's
employment by mutual written agreement, the Company shall pay such compensation
and provide such benefits, if any, as the parties may mutually agree upon in
writing.

 

7. EFFECT OF EXPIRATION OF AGREEMENT OR TERMINATION OF CHAIRMAN'S EMPLOYMENT

Upon the expiration of this Agreement by its terms or the termination of the
Chairman's employment by the Company for Cause or the Chairman Without Good
reason, neither the Company nor the Chairman shall have any remaining duties or
obligations except that:

(a) The Company shall:

(1) pay the Chairman's accrued salary and any other accrued benefits through the
effective date of such expiration or termination;

(2) reimburse the Chairman for expenses already actually incurred through the
effective date of such expiration or termination;

(3) pay or otherwise provide for any benefits, payments or continuation or
conversion rights in accordance with the provisions of any employee benefit plan
of which the Chairman or any of his dependents is or was a participant or as
otherwise required by law;

(4) pay the Chairman and his beneficiaries any compensation and/or provide the
Chairman or his eligible dependents any benefits due through the effective date
of such expiration; and

(5) continue to remain bound by the terms of Section 12 hereof.

(b) The Chairman shall remain bound by the terms of Section 9,11 and 13.

COVENANTS AS TO CONFIDENTIAL INFORMATION AND COMPETITIVE CONDUCT

The Chairman acknowledges and agrees as follows: (i) this Section 8 is necessary
for the protection of the legitimate business interests of the Company, (ii) the
restrictions contained in this Section 8 with regard to geographical scope,
length of term and types of restricted activities are Reasonable, (iii) the
Chairman has received adequate and valuable new consideration for entering into
this Agreement, and (iv) the Chairman's expertise and capabilities are such that
this obligation and the enforcement of it by injunction or otherwise will not
adversely affect the Chairman's ability to earn a livelihood.

 

Confidentiality of Information and Nondisclosure.
The Chairman acknowledges and agrees that his employment by the Company under
this Agreement necessarily involves proprietary information pertaining to the
business of the Company and its related entities. Accordingly, the Chairman
agrees that at all times during the terms of this Agreement and at all times
thereafter, he will not, directly or indirectly, without the express written
approval of the Company, unless directed by applicable legal authority having
jurisdiction over the Chairman, disclose to or use, or knowingly permit to be so
disclosed or used, for the benefit of himself, any person, corporation or other
entity other than the Company:

 

any information concerning any financial matters, customer relationships,
competitive status, supplier matters, internal organizational matters, current
or future plans, or other business affairs of or relating to the Company or its
subsidiaries any management, operational, trade, technical or other secrets or
any other proprietary information or other data of the Company or its
subsidiaries, any other information related to the Company or its related
entities that the Chairman should reasonably believe will be damaging to the
Company or its related entities and which has not been published and is not
generally known outside of the Company.

 

The Chairman acknowledges that all of the foregoing constitutes confidential
and/or proprietary information of the Company, which is the exclusive property
of the Company. Excluded from this confidential and/or proprietary information
of the Company shall be (i) information known by or generally available to the
public through no breach by the Chairman of this Agreement and which the public
may use without any direct or indirect obligation to the Company and (ii)
information that documentary evidence demonstrates was independently developed
by the Chairman.

(b) Restrictive Covenant. During the term of, and for a period of one (1) year
(the "Restrictive Period") after the termination of the Chairman's employment
other than by the Company Without Cause or by the Chairman With Good Reason, the
Chairman shall not render, directly or indirectly, services to (as an employee,
consultant, independent contractor or in any other capacity) any person, firm,
corporation, association or other entity which conducts the same or similar
business as the Company or its subsidiaries at the date of the Chairman's
termination of employment within the states in which the Company or any of its
subsidiaries is then doing business at the date of the Chairman's termination of
employment hereunder without the prior written consent of the Chief Chairman
Officer which may be withheld at his sole discretion. In the event that this
Agreement expires after termination and is not renewed by the parties, the
Restrictive Period shall not extend beyond the termination of employment unless
the Company pays the Chairman an additional amount equal to one year's Annual
Base Salary, in which case it shall extend for a period of one (1) year. In the
event the Chairman violates any of the provisions contained in this Section, the
Restrictive Period shall be increased by the period of time in which the
Chairman was in violation as determined by an Arbitrator or Court of competent
jurisdiction. The Chairman further agrees that at no time during the Restrictive
period will the Chairman attempt to directly or indirectly solicit or hire
employees of the Company or its subsidiaries or induce any of them to terminate
their employment with the Company or any of the subsidiaries.

(c) Company Remedies. The Chairman acknowledges and agrees that any breach of
this Agreement by him will result in immediate and irreparable harm to the
Company and that the Company cannot be reasonably or adequately compensated by
damages in an action at law. In the event of a breach by the Chairman of the
provisions of this Section 8 as determined by an Arbitrator or a Court of
competent jurisdiction, the Company shall be entitled, to the extent permitted
by law, immediately to cease paying or providing the Chairman or his dependents
any compensation or benefits provided pursuant to Section 4, Section 6 or
Section 7 of this Agreement as liquidated damages, and also to obtain immediate
injunctive relief restraining the Chairman from conduct in breach of the
covenants contained in this Section 8. Nothing herein shall be construed as
prohibiting the Company from pursuing any other remedies available to it for
such breach, including the recovery of damages from the Chairman.

9. AGREEMENT SURVIVES MERGER OR DISSOLUTION

This Agreement shall not be terminated by the Company's voluntary or involuntary
dissolution or by any merger in which the Company is not the surviving or
resulting corporation, or on any transfer of all or substantially all of the
Company's assets. In the event of any such merger or transfer of assets, the
provisions of this Agreement shall be binding on and inure to the benefit of the
surviving business entity or the business entity to which such assets shall be
transferred and to the Chairman and his heirs.

10. OWNERSHIP OF INTANGIBLES

All processes, inventions, patents, copyrights, trademarks, and other intangible
rights that may be conceived or developed by Chairman, either alone or with
others, during the term of Chairman's employment, whether or not conceived or
developed during Chairman's working hours, and with respect to which the
equipment, supplies, facilities, or trade secret information of the Company was
used, or that relate at the time of conception or reduction to practice of the
invention to the business of the Company or to the Company's actual or
demonstrably anticipated research and development, or that result from any work
performed by Chairman for the Company, shall be the sole property of the
Company. Chairman shall execute all documents, including patent applications and
assignments, required by the Company to establish the Company's rights under
this Section.

11. INDEMNIFICATION BY THE COMPANY

The Company shall, to the maximum extent permitted by law, indemnify and hold
the Chairman harmless against expenses, including reasonable attorney's fees
judgements, fines, settlements, and other amounts actually and reasonably
incurred in connection with any proceeding arising by reason of the Chairman's
employment by the Company. The Company shall advance to the Chairman any expense
incurred in defending any such proceeding to the maximum extent permitted by
law.

12. DISCLOSURE OF CUSTOMER INFORMATION AND SOLICITATION OF OTHER EMPLOYEES
PROHIBITED

In the course of his employment, the Chairman will have access to confidential
records and data pertaining to the Company's customers and to the relationship
between these customers and the Company's account executives. Such information
is considered secret and is disclosed to the Chairman in confidence. During his
employment by the Company and for one (1) year after termination of that
employment, the Chairman shall not directly or indirectly disclose or use any
such information, except as required in the course of his employment by the
Company.

13. RESOLUTION OF DIFFERENCES OVER BREACHES OF AGREEMENT

Except as otherwise provided herein, in the event of any controversy, dispute or
claim arising out of, or relating to, this Agreement, or the breach thereof, or
arising out of any other matter relating to the Chairman's employment with the
Company, the parties may seek recourse only for temporary or preliminary
injunctive relief to the courts having jurisdiction thereof and if any relief
other than injunctive relief is sought, the Company and the Chairman agree that
such underlying controversy, dispute or claim shall be settled by arbitration
conducted in accordance with this Section 14 and the Commercial Arbitration
Rules of thc American Arbitration Association ("AAA"). The matter shall be heard
and decided, and awards rendered by a panel of three (3) arbitrators (the
"Arbitration Panel"). the Company and the Chairman shall each select one
arbitrator from the AAA National Panel of Commercial Arbitrators (the
"Commercial Panel") and AAA shall select a third arbitrator from the Commercial
Panel. The award rendered by the Arbitration Panel shall be final and binding as
between the parties hereto and their heirs, executors, administrators,
successors and assigns, and judgment on the award may be entered by any court
having jurisdiction thereof. Except as provided in Section 12 hereof, each party
shall bear sole responsibility for all expenses and costs incurred by such party
in connection with the resolution of any controversy, dispute or claim in
accordance with this Section 13; provided, however, the Chairman may recover his
costs and attorneys' fees in recovering compensation, stock and/or benefits to
which he is entitled under this Agreement.

14. WAIVER

The waiver by a party hereto of any breach by the other party hereto of any
provision of this Agreement shall not operate or be construed as a waiver of any
other or subsequent breach by a party hereto.

15. NON RELIANCE

Each party to this Agreement represents, warrants and acknowledges that in
entering into this Agreement that it has not relied upon any act,
representation, or warranty by any other party thereto, or by any of their
representatives or attorneys, except as may be expressly contained in this
Agreement. Each party further represents and warrants that it has thoroughly
discussed all aspects of this Agreement with his or its attorneys, that he/it
has had a reasonable time to review this Agreement, that he/it fully understands
the provisions of this Agreement and the effect thereof and that he/it is
entering into this Agreement voluntarily and of his/its own free will.

16. CONSTRUCTION OF AGREEMENT

(a) Governing Law. This Agreement shall be governed by and construed under the
laws of the state of Texas.

(b) Severability. In the event that any one or more of the provisions of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity,
legality or enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

Headings.
The descriptive headings of the several paragraphs of this Agreement are
inserted for convenience or reference only and shall not constitute a part of
this Agreement.

ENTIRE AGREEMENT AND INTEGRATION

This Agreement contains the entire agreement between the parties and supersedes
all prior oral and written agreements, understandings, commitments, and
practices between the parties, including all prior employment agreements,
whether or not fully performed by the Chairman before the date of this
Agreement. No amendments to this Agreement may be made except by a writing
signed by both parties.

 

18. NOTICES

Any notice to the Company required or permitted under this Agreement shall be
given In writing to the Company, either by personal service or by registered or
certified mail, postage prepaid, addressed to the legal department of the
Company at its then principal place of business. Any such notice to the Chairman
shall be given in a like manner and, if mailed, shall be addressed to his home
address then shown in the Company's files. For the purpose of determining
compliance with any time limit in this Agreement, a notice shall be deemed to
have been duly given (a) on the date of service, if served personally on the
party to whom notice is to be given, or (b) on the third business day after
mailing, if mailed to the party to whom the notice is to be given in the manner
provided in this section.

19. SEVERABILITY

If any provision of this Agreement is held invalid or unenforceable, the
remainder of this Agreement shall nevertheless remain in full force and effect.
If any provision is held invalid or unenforceable with respect to particular
circumstances, it shall nevertheless remain in full force and effect in all
other circumstances.

 

20. EXECUTION

Executed by the parties on February ____ 2003.

 

 

 

The Company

 

___________________________

By: Oliver Brewer

Chief Executive Officer and President of Adams Golf, Inc.

 

The Chairman

 

___________________________

By: Barney Adams