exv10w3



 







Exhibit 10.3




AMENDED & RESTATED EMPLOYMENT AGREEMENT




     This Employment Agreement (the “Agreement”) is effective as of February 28, 2006 (the
“Effective Date”), and is entered into by and between Peter Holmberg (“Holmberg”) and Ashworth,
Inc., a Delaware corporation (the “Company”).



     1. Employment. As of the Effective Date, the Company hereby employs Holmberg to serve
in the capacity of Executive Vice President of Merchandising, Design and Production, (“EVP-MD&P”).
The Company’s Board of Directors (the “Board”) and/or the Company’s Chief Executive Officer (the
“CEO”) may provide such additional designations of title to Holmberg as the Board and/or CEO, in
its discretion, may deem appropriate.



     Holmberg agrees to perform the executive duties and functions customarily associated with the
offices of EVP-MD&P and as specified from time to time by the Board and/or the CEO. Except for
legal holidays, vacations and absences due to temporary illness, Holmberg shall devote his time,
attention and energies to the business of the Company on a full-time basis. Holmberg represents
and warrants to the Company that he is under no restriction, limitation or other prohibition to
perform his duties as described herein.



     2. Employment Compensation And Benefits.




     a. Base Salary. Holmberg’s initial base salary shall be at the annual rate of
three hundred thousand dollars ($225,000). This salary level shall be reviewed at least
annually by the Board’s Compensation Committee on the basis of Holmberg’s performance and
the Company’s financial success and progress.




     b. Annual Bonus and Stock Options. Holmberg will be entitled to receive an
option for a minimum of 20,000 shares fiscal year 2005 granted on the date the agreement is
signed and vesting on the first anniversary of the date of grant. Holmberg will also be
eligible to earn an annual bonus up to a maximum of 50% of Base Salary based on the Company
achieving certain financial targets. The annual bonus will be paid following the close of
final accounting records for the previous fiscal year.




     c. Automobile Allowance. The Company shall pay Holmberg an automobile expense
allowance of one thousand dollars ($1,000) per month to defray the cost of business
automobile expense.




     d. Vacation. Holmberg shall be entitled to annual vacations in a manner
commensurate with his status as a key executive and in accordance with the Company’s
vacation policies in effect during the term of this Agreement.




     e. Expense Reimbursement. The Company shall reimburse Holmberg for all
reasonable amounts actually expended by Holmberg in the course of performing his duties for
the Company and in accordance with any Company-established guidelines where Holmberg tenders
receipts or other documentation reasonably substantiating the amounts as required by the
Company.



 








 







     f. Other Benefits. Except as otherwise provided in this Agreement, Holmberg
shall be entitled to receive all of the rights, benefits and privileges of an executive
officer of the Company under any retirement, pension, profit-sharing, group medical
insurance, group dental insurance, group-term life insurance, and disability insurance, and
other employee benefit plans which may be now in effect or hereafter adopted.



     3. Non-compete. Holmberg agrees that during the term of this Agreement Holmberg will
not, directly or indirectly, own, manage, operate, control, be employed by, participate in, or be
connected in any manner with the ownership, management, operation, or control of any business which
manufactures or sells golf-inspired sportswear which is substantially the same as that of the
Company and which is distributed in the same channels of distribution as the then current channels
of distribution of the Company, provided, however, that if Holmberg’s employment is terminated for
reasons which provide for severance compensation, the non-compete term shall be extended to the
period for which he receives such severance compensation.



     4. Termination.




     a. At Will. The Company shall employ Holmberg at will, and either Holmberg or
the Company may terminate Holmberg’s employment with the Company at any time and for any
reason, with or without cause.




     b. Severance Payment and Benefits. If Holmberg’s employment is terminated
within two (2) years of the effective date of this Agreement as a result of a Qualifying
Termination, as defined below, and if Holmberg delivers a fully executed release and waiver
of all claims against the Company in the form attached hereto as Exhibit A, then, upon
expiration of any applicable revocation period contained in the Release Agreement, the
Company shall pay or provide Holmberg the following severance payment and benefits:




     i. Holmberg shall receive the equivalent of twelve (12) months of his then-current
base salary (the “Severance Payment”), which shall be payable in equal monthly
installments beginning on the first day of the first full month following Holmberg’s
Qualifying Termination and continuing on the first day of each month thereafter until
fully paid. The Severance Payment is in lieu of any severance payment benefits which
otherwise may at that time be available under the Company’s applicable policies;
provided, however, that nothing in this Agreement is intended to modify
or supercede the Agreement re: Change In Control entered into between Holmberg and the
Company as of September 16, 2005, and Holmberg shall be entitled to receive whatever
additional severance pay benefits, if any, for which he may qualify according to the
terms of his Agreement re: Change In Control with the Company.




     ii. For the twelve-month period following the Qualifying Termination of his
employment, Holmberg shall be entitled to continue to participate in the following
executive benefit programs which had been made available to him (including his family)
before the Qualifying Termination: group medical insurance, group dental insurance,
group-term life insurance, and disability insurance. The programs shall be continued in
the same way and at the same level as immediately prior to the Qualifying Termination.
Holmberg’s participation in each of such executive benefit programs shall be earlier
terminated or reduced, as applicable, if and to the extent


 









 







Holmberg receives benefits as a result of concurrent coverage through another
program.




     iii. Holmberg’s unvested stock options, as described in Paragraph 2(b) of this
Agreement, shall immediately become fully vested and exercisable. This provision only
applies to stock options Holmberg has been granted pursuant to this Agreement, and does
not apply to options provided from any other source or Ashworth.




     c. Qualifying Termination. Holmberg’s termination shall be considered a
“Qualifying Termination” unless:




     i. Holmberg voluntarily terminates his employment with the Company and its
affiliated companies. Holmberg, however, shall not be considered to have
voluntarily terminated his employment with the Company and its affiliated companies if
he elects to terminate his employment because his overall compensation plan is reduced
or adversely modified in any material respect or his authority or duties are materially
changed. For such purposes, Holmberg’s authority or duties shall be considered to have
been “materially changed” if, without Holmberg’s express and voluntary written consent,
there is any substantial diminution or adverse modification in his title, status,
overall position, or responsibilities.




     ii. The termination is on account of Holmberg’s death or Disability. For such
purposes, “Disability” shall mean a physical or mental incapacity as a result of which
Holmberg becomes unable to continue the performance of his responsibilities for the
Company and its affiliated companies for a period of three (3) months.




     iii. Holmberg is involuntarily terminated for “Cause.” For this purpose, “Cause”
shall mean:




     1. Holmberg’s willful and deliberate refusal to comply with a lawful,
instruction of the CEO or Board of Directors, which refusal is not remedied by
Holmberg within a reasonable period of time after his receipt of written notice from
the Company identifying the refusal, so long as the instruction is consistent with
the scope and responsibilities of Holmberg’s position;




     2. Holmberg’s act or acts of personal dishonesty;




     3. Holmberg’s conviction of a felony;




     4. Holmberg’s violation of the Company’s policies and/or code of conduct;




     5. Holmberg’s violation of any confidentiality or non-competition agreement
with the Company or any Affiliate of the Company; or




     6. The willful engaging by Holmberg in misconduct which is injurious to the
Company.




     d. Return of Materials. In the event of any termination of Holmberg’s
employment for any reason whatsoever, Holmberg shall promptly deliver to the Company all
Company property, including, but not limited to, documents, data, and other information
pertaining to Confidential Information, as defined below. Holmberg shall not take with



 








 







him any documents or other information, or any reproduction, summary or excerpt
thereof, electronic or otherwise, containing or pertaining to any Confidential Information.



     5. Nondisclosure of Confidential Information. Holmberg acknowledges that during the
term of his employment with the Company, he will have access to and become acquainted with
information of a confidential, proprietary or secret nature which is or may be either applicable
to, or related in any way to, the present or future business of the Company, the research and
development or investigation of the Company, or the business of any customer of the Company
(“Confidential Information”). For example, Confidential Information includes, but is not limited
to, devices, secret inventions, processes and compilations of information, records, specifications,
designs, plans, proposals, software, codes, marketing and sales programs, financial projections,
cost summaries, pricing formula, and all concepts or ideas, materials or information related to the
business, products or sales of the Company and its customers and vendors. Holmberg shall not
disclose any of Confidential Information, directly or indirectly, or use them in any way, either
during the term of this Agreement or at any time thereafter, except as required in the course of
employment with the Company. Holmberg also agrees to comply with the Company’s policies and
regulations, as established from time to time for the protection of its Confidential Information,
including, for example, executing the Company’s standard confidentiality agreements. This section
shall survive termination of this Agreement.



     6. Non-Solicitation. Holmberg agrees that so long as he is employed by the Company
and for a period of two (2) years after termination of his employment for any reason, he shall not
(a) directly or indirectly solicit, induce or attempt to solicit or induce any Company employee to
discontinue his or her employment with the Company; (b) usurp any opportunity of the Company of
which Holmberg became aware during his tenure at the Company or which is made available to him on
the basis of the belief that Holmberg is still employed by the Company; or (c) directly or
indirectly solicit or induce or attempt to influence any person or business that is an account,
customer or client of the Company to restrict or cancel the business of any such account, customer
or client with the Company. This section shall survive termination of this Agreement.



     7. Section 409A Compliance.




     a. Notwithstanding any provision of this Agreement to the contrary, if, at the time of
Executive’s termination of employment with the Company, he is a “specified employee” as
defined in Section 409A of the Internal Revenue Code (the “Code”), and one or more of the
payments or benefits received or to be received by Executive pursuant to this Agreement
would constitute deferred compensation subject to Section 409A, no such payment or benefit
will be provided under this Agreement until the earliest of (A) the date which is six (6)
months after his “separation from service” for any reason, other than death or “disability”
(as such terms are used in Section 409A(a)(2) of the Code), (B) the date of his death or
“disability” (as such term is used in Section 409A(a)(2)(C) of the Code) or (C) the
effective date of a “change in the ownership or effective control” of the Company (as such
term is used in Section 409A(a)(2)(A)(v) of the Code) (the “Deferred Payment”). The
provisions of this Section 7 shall only apply to the extent required to avoid Executive’s
incurrence of any penalty tax or interest under Section 409A of the Code or any regulations
or Treasury guidance promulgated thereunder. In addition, if any provision of this
Agreement would cause Executive to incur any penalty tax or interest under Section 409A of
the Code or any regulations or Treasury guidance promulgated thereunder, the Company shall
reform such provision to maintain to the maximum extent practicable the original intent of
the applicable provision without violating the provisions of Section 409A of the Code.



 








 






     b. In the event the six-month delay described in this Section 7 applies, the Company
shall make an irrevocable contribution in the amount of the Deferred Payment to a rabbi
trust which shall take the form of the model rabbi trust described in Internal Revenue
Service Revenue Procedure 92-64, which amount (along with any net income received by the
trust) shall be paid by the trust to the Executive on the six-month anniversary of his
termination of employment, and the trust shall terminate at such time. The trustee shall be
chosen by the Company in its reasonable discretion. The Company shall pay the reasonable
expenses of establishing and maintaining the trust.



     8. Successors.




     a. This Agreement is personal to Holmberg, and without the prior written consent of the
Company shall not be assignable by Holmberg other than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by Holmberg’s
legal representatives.




     b. The rights and obligations of the Company under this Agreement shall inure to the
benefit of and shall be binding upon the successors and assigns of the Company.



     9. Governing Law. This Agreement is made and entered into in the State of California,
and the internal laws of California shall govern its validity and interpretation in the performance
by the parties hereto of their respective duties and obligations hereunder.



     10. Modifications. This Agreement may be amended or modified only by an instrument in
writing executed by all of the parties hereto.



     11. Entire Agreement. Except as otherwise set forth herein, this Agreement, together
with the exhibits attached hereto, supersedes any and all prior written or oral agreements between
Holmberg and the Company, and contains the entire understanding of the parties hereto with respect
to the terms and conditions of Holmberg’s employment with the Company; provided,
however, that this Agreement is not intended to supercede the Agreement re: Change In
Control between Holmberg and the Company, which they entered into as of September 16, 2005, or any
agreements which Holmberg may previously have entered into regarding the protection of trade
secrets and confidential information.



     12. Dispute Resolution. Holmberg and the Company will utilize a system of binding
arbitration to resolve all disputes that may arise out of the employment context. Both the Company
and Holmberg agree that any claim, dispute, and/or controversy that either Holmberg may have
against the Company (or its owners, directors, officers, managers, employees, agents, and parties
affiliated with its employee benefit and health plans) or the Company may have against Holmberg,
arising from, related to, or having any relationship or connection whatsoever with Holmberg’s
seeking employment with, employment by, or other association with the Company, shall be submitted
to and determined exclusively by binding arbitration under the Federal Arbitration Act, in
conformity with the procedures of the California Arbitration Act (Cal. Code Civ. Proc. sec 1280 et
seq., including section 1283.05 and all of the Act’s other mandatory and permissive rights to
discovery). Included within the scope of this Agreement are all disputes, whether based on tort,
contract, statute (including, but not limited to, any claims or discrimination and harassment,
whether they be based on the California Fair Employment and Housing Act, Title VII of the Civil
Rights Act of 1964, as amended, or any other state or federal law or regulation), equitable law, or
otherwise. However, nothing herein shall prevent Executive from filing and pursuing proceedings
before the California Department of Fair Employment and Housing, or the United States Equal
Employment Opportunity Commission (although if



 








 




Holmberg chooses to pursue a claim following the exhaustion of such administrative remedies,
that claim would be subject to the provisions of this Agreement). In addition to any other
requirements imposed by law, the arbitrator selected shall be a retired California Superior Court
Judge and shall be subject to disqualification on the same grounds as would apply to a judge of
such court. To the extent applicable in civil actions in California courts, the following shall
apply and be observed: all rules of pleading (including the right of demurrer), all rules of
evidence, and all rights to resolution of the dispute by means of motions for summary judgment,
judgment on the pleadings, and judgment under Code of Civil Procedure Section 631.8. Resolution of
the dispute shall be based solely upon the law governing the claims and defenses pleaded, and the
arbitrator may not invoke any basis (including but not limited to, notions of “just cause”) other
than such controlling law. The arbitrator shall have the immunity of a judicial officer from civil
liability when acting in the capacity of an arbitrator, which immunity supplements any other
existing immunity. Likewise, all communications during or in connection with the arbitration
proceedings are privileged in accordance with Cal. Civil Code Section 47(b). As reasonably
required to allow full use and benefit of this agreement’s modification to the Act’s procedures,
the arbitrator shall extend the times set by the Act for the giving of notices and setting of
hearings. Awards shall include the arbitrator’s written reasoned opinion. Notwithstanding the
foregoing, the parties acknowledge and agree that this provision shall not preclude either party
from requesting temporary and/or preliminary injunctive relief to enforce Paragraphs 3, 5 or 6 of
this Agreement until such time as an arbitrator can assume jurisdiction and render a decision over
any such claims or requests.




     13. Notices. Any notice or communications required or permitted to be given to the
parties hereto shall be delivered personally or be sent by United States registered or certified
mail, postage prepaid and return receipt requested, and addressed or delivered as follows, or at
such other addresses the party addressed may have substituted by notice pursuant to this Section:



	 	 	 	 	 
	 

	 	Ashworth, Inc.
	 	Peter Holmberg
	 

	 	2765 Loker Avenue West
	 	2339 42nd Ave.
	 

	 	Carlsbad, California 92010
	 	Seattle, WA 98112
	 

	 	Attn: President	 	 






     14. Captions. The captions of this Agreement are inserted for convenience and do not
constitute a part hereof.



     15. Severability. In Holmberg 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 shall not affect any other provision of this Agreement,
but this Agreement shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein and there shall be deemed substituted for such invalid, illegal or
unenforceable provision such other provision as will most nearly accomplish the intent of the
parties to the extent permitted by the applicable law. In Holmberg this Agreement, or any one or
more of the provisions hereof, shall be held to be invalid, illegal or unenforceable within any
governmental jurisdiction or subdivision thereof, this Agreement or any such provision thereof
shall not as a consequence thereof be deemed to be invalid, illegal or unenforceable in any other
governmental jurisdiction or subdivision thereof.



     16. Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which shall together constitute one in the same
Agreement.



 








 





[Remainder of page left blank intentionally, signatures on following page]




 








 








     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered effective as of the day and year first written above in Carlsbad, California.



	 	 	 	 	 
	 	ASHWORTH, INC.

 	 
	 	By:  	/s/
Randall L. Herrel, Sr.
 	 
	 	 	Randall L. Herrel, Sr. 	 
	 	Title:  	Chairman, President and CEO 	 
	 
	 	PETER HOLMBERG

 	 
	 	By:  	/s/
Peter Holmberg
 	 
	 	 	Peter Holmberg 	 
	 	 	 	 
	 







 








 








EXHIBIT A — RELEASE AGREEMENT





     I, Peter Holmberg, hereby enter into this Release Agreement (this “Agreement”), pursuant to
Paragraph 4(b) of my Amended & Restated Employment Agreement with Ashworth, Inc., a Delaware
corporation (the “Company”), in consideration for which the Company shall make the Severance
Payment as described in my Amended & Restated Employment Agreement entered into effective as of February 28, 2006 (the “Employment Agreement).




     1. The date of my Qualifying Termination is
                                        
, and I have received a final
paycheck for all wages due, including all accrued vacation, through that date. Other than the
Severance Payment as described in my Employment Agreement and whatever additional severance pay
benefits, if any, for which I may qualify according to the terms of my Agreement re: Change in
Control with the Company, the foregoing payments are the only amounts which I am entitled to
receive from the Company, and I hereby waive all other payments or claims for payments.



     2. As consideration for the Severance Payment as described in my Employment Agreement, I
hereby release the Company, its successors, affiliates, directors, employees and agents from any
and all claims or lawsuits (including but not limited to any and all claims or demands relating to
salary, wages, bonuses, commissions, stock, stock options, vacation pay, fringe benefits, expense
reimbursements, any and all tort claims, contract claims (express or implied), wrongful termination
claims, public policy claims, whistleblower claims, implied covenant of good faith and fair dealing
claims, retaliation claims, personal injury claims, emotional distress claims, invasion of privacy
claims, defamation claims, fraud claims, attorneys’ fees claims, all claims arising under any
federal, state or other governmental statue, law, regulation or ordinance including, but not
limited to, Title VII of the Civil Rights Act of 1964, as amended, the Americans with Disabilities
Act, the Family and Medical Leave Act, the California Fair Employment & Housing Act, the California
Labor Code, the Age Discrimination in Employment Act of 1967 (“ADEA”), the Older Workers’ Benefit
Protection Act (“OWBPA”)) which I may have based either on my employment, my termination, or any
other event occurring prior to the date of this Agreement. This Release is intended to settle any
and all claims that I may have against the Company. Accordingly, I waive any and all rights
conferred under Section 1542 of the California Civil Code, which provides: “A general release does
not extend to claims which the creditor does not know or suspect to exist in his favor at the time
of executing the release which if known by him must have materially affected his settlement with
the debtor.”



     3. I acknowledge and understand my continuing obligation (a) to maintain the confidentiality
of the Company’s trade secrets, confidential and proprietary information and (b) not to solicit the
Company’s customers or employees, as set forth in Paragraphs 3, 5 and 6 of my Employment Agreement.
I also warrant and represent that I have returned all Company materials as required in Paragraph
4(d) of my Employment Agreement.



     4. I acknowledge that I fully understand my right to discuss this Agreement with an attorney,
and I have carefully read and fully understand this entire Agreement, and I am entering into this
Agreement voluntarily.



     5. I understand that I shall have twenty-one (21) days from the date of receipt of this
Agreement to consider this Agreement, I shall have seven (7) days following the signing of this
Agreement to revoke it in writing, and this Agreement shall not be effective or enforceable until
this revocation period has expired.



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Dated:	 	 	 	 	 	PETER HOLMBERG
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Dated:	 	 	 	 	 	ASHWORTH, INC.
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Title: