Document:

EX-10.4

Exhibit 10.4

SEPARATION AND GENERAL RELEASE AGREEMENT

This SEPARATION AND GENERAL RELEASE AGREEMENT (this “Agreement”), dated as of October 24, 2007
(the “Effective Date”), is entered into by and between Ashworth, Inc., a Delaware corporation (the
“Company”), and Peter M. Weil (“Weil”).

RECITALS

A. Weil currently serves as the Company’s Chief Executive Officer and a Director of the
Company. Pursuant to this Agreement, Weil’s employment by the Company will end, and Weil will
resign as a Director of the Company.

B. The Company desires to engage Weil to provide consulting services to the Company pursuant
to this Agreement and Weil desires to provide such consulting services to the Company pursuant to
this Agreement.

C. The Company and Weil desire to enter into an agreement setting forth various terms and
conditions in connection with the ending of Weil’s employment with the Company.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants and promises contained in this
Agreement and for other good and valuable consideration the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:

	1.	 	Resignation.

Consistent with the Resignation (in the form attached hereto as Exhibit A) that Weil
has executed and delivered concurrently with this Agreement, the term of Weil’s employment with the
Company and tenure on the Company’s Board of Directors is hereby terminated. Weil shall not
receive a bonus for fiscal year 2007, but will be paid for all accrued and unused vacation as of
the Effective Date. The Company shall also reimburse Weil for all reasonable business expenses
incurred on or before the Effective Date that are reimbursable in accordance with Company policy
within 30 days after Weil’s submission of a properly documented request for the same.

	2.	 	Consulting Services.

After the Effective Date, on reasonable notice and subject to Weil’s availability, Weil shall
provide such consulting services as are reasonably requested by the Company and that are
commensurate with his prior position with the Company (the “Consulting Services”). The Consulting
Services shall include Weil remaining available to work on designated projects and assignments for
up to 10 days during the 90 days following the Effective Date. In providing the Consulting
Services, Weil shall report to the Chief Executive Officer of the Company and/or such individual or
individuals as the Chairman of the Board of Directors shall designate. Weil shall not be entitled
to any compensation for the consulting services beyond the payments, if any, pursuant to
Section 3. In providing the Consulting Services, Weil expressly agrees that he is an
independent contractor and shall not be considered to be an employee or agent of the Company in any
matter under any circumstances or for any purposes whatsoever. The Company shall not provide Weil
with any benefits, including pension, retirement, or any kind of insurance benefits, including
workers’ compensation insurance, on account of the Consulting Services; provided,
however, that the Company will reimburse Weil for all out-of-pocket expenses reasonably
incurred (and consistent with Company policies for its executives) in connection with such
consulting services.

	3.	 	Severance.

Provided that Weil signs and delivers to the Company concurrently with this Agreement (and
thereafter does not revoke) a Release of Claims in the form set forth on Exhibit B hereto,
Weil shall be entitled to receive the severance payment set forth in Section 9 of his employment
agreement with the Company dated November 27, 2006 (the “Employment Agreement”), which aggregate
severance payment of $400,000 shall be paid as follows: $100,000 on January 2, 2008, with the
balance of $300,000 paid in 19 equal semi-monthly installments on the 15th and last day of every
month. Applicable tax witholdings shall be made in accordance with law.

	4.	 	Cooperation; Covenants.

(a) If requested as part of the Consulting Services, Weil will cooperate and assist the
Company in any and all ongoing matters and in transitioning his duties, and Weil shall use his best
efforts to transition his duties and responsibilities to such individual or individuals as the
Chairman of the Company’s Board of Directors shall designate.

(b) Weil hereby reaffirms his obligation to adhere to the confidentiality provisions of the
Employment Agreement. Weil agrees and acknowledges that said confidentiality provisions will
remain in effect during his consulting assignment and thereafter.

(c) On the Effective Date, Weil shall return to the Company all of the Company’s property,
documents, books, records, reports, contracts, lists, computer disks (or other computer-generated
files or data) or copies thereof created on any medium, prepared or obtained by him in the course
of or incident to Weil’s employment with the Company.

(d) Upon the termination of his consulting assignment, Weil agrees to return to the Company
all of the Company’s property, documents, books, records, reports, contracts, lists, computer disks
(or other computer-generated files or data) or copies thereof created on any medium, prepared or
obtained by him in the course of or incident to the provision of the Consulting Services.

(e) Weil agrees that during the period of his consulting and until and for a period of one
year following the Effective Date, he will not, directly or indirectly, provide services, whether
as an employee, consultant, director, independent contractor, agent, owner or partner, to any
person, company or division that, as its primary business, designs and produces headwear or
golf-inspired apparel (such as Cutter & Buck, Adidas Golf, Nike Golf, Fidra, Greg Norman, Perry
Ellis Golf, Fairway and Greene, UnderArmour Golf, Sport Haley, E.P. Pro, Gear Golf, Tahama Legends
Golf, Antigua, Ben Hogan Apparel, Fila Golf, Oxford Gold, Ahead, Imperial, Pukka Headwear and
Titleist); provided, however, that Weil’s passive investment of up to five percent
(5%) of the outstanding voting securities or similar equity interest in a publicly held entity
shall not be deemed a breach of this Agreement. The parties intend this provision to be
enforceable under the “inevitable disclosure” doctrine given Weil’s knowledge of the Company’s
future plans.

(f) Weil hereby agrees that, until and for a period of two years following the Effective Date,
he will not directly or indirectly (a) solicit, induce, or attempt to influence any person or
business that is an account, customer or client of the Company or any subsidiary to restrict or
cancel the business of any such account, customer or client with the Company or any subsidiary, or
(b) solicit on his behalf, or on behalf of a third party, any then-current employee or sales
representative of the Company or its subsidiaries or affiliates, to leave his or her employment
with or sales representation of the Company or its subsidiaries or affiliates; provided, however,
that nothing herein shall be deemed to prohibit a general employment solicitation directed at the
public. This provision does not prohibit Weil, in his capacity as an officer, director or employee
of a company, from soliciting business from a customer of the Company.

(g) Weil agrees that he will not make, and will not induce or cause any other person or entity
to make, any statement that is disparaging of the Company or any of its affiliates, or any of their
respective directors, employees or distributors (except to the extent necessary to respond
truthfully to any inquiry from applicable regulatory authorities or to provide information pursuant
to legal process).

	5.	 	Equity Compensation.

Provided that Weil signs and delivers to the Company currently with this Agreement (and
thereafter does not revoke) a Release of Claims in the form set forth on Exhibit B hereto,
(i) Weil’s stock options issued under the Company’s 2000 Equity Incentive Plan (the “Equity Plan”)
shall, pursuant to the terms and conditions of the Equity Plan and Weil’s Stock Option Award
Agreements, be exercisable by Weil for an extended period of one year following the Effective Date
and (ii) all of Weil’s unvested options shall be accelerated and shall vest as of the expiration of
the seven-day revocation period described in the Release of Claims. Weil hereby acknowledges and
agrees that (i) the extension pursuant to this Section 5 of the exercise period of
incentive stock options held by him will cause such incentive stock options to cease to be
qualified as such, and such options will thereafter be treated as non-qualified stock options for
all purposes, including tax purposes, and (ii) Weil shall have the sole responsibility for
additional payments, tax or otherwise, owed by him as a result of such options ceasing to qualify
as incentive stock options. Notwithstanding the foregoing, in the event Weil breaches any of his
obligations under Section 4(e) or 4(f) prior to the first anniversary of the Effective Date, then,
in addition to all other remedies at law available to the Company, the exercise period for Weil’s
stock options under the Equity Plan shall automatically end on the later of (a) 180 calendar days
after the Effective Date, or (b) one day after Weil’s breach of either of the above-specified
Sections.

	6.	 	COBRA.

After the Effective Date, in accordance with federal and state COBRA regulations, if currently
enrolled in the Company’s group medical coverage, Weil will be offered the opportunity to continue
such coverage at Weil’s own expense. The Company will not pay any COBRA premiums for or on behalf
of Weil.

	7.	 	No Claims Filed.

Weil represents that he has not filed any complaints, charges or lawsuits against the Company
or against (1) any current or former officers, directors, shareholders, employees and agents of the
Company, (2) any current or former affiliate or related entity of the Company (including
subsidiaries and divisions), or (3) the current or former officers, directors, shareholders,
employees and agents of said affiliates or related entities (including subsidiaries and divisions),
that he will not file any lawsuit or claim against any of these entities or persons at any time
hereafter for any event occurring prior to the date of this Agreement, and that if any court
assumes jurisdiction of any lawsuit or claim against any of these entities or persons on behalf of
Weil, he will promptly request that the matter be dismissed with prejudice. This provision does
not affect Weil’s right to file a charge or complaint with the Equal Employment Opportunity
Commission, nor does it affect his statutory right to indemnification from the Company.

	8.	 	Release.

(a) As a material inducement for Company to enter into this Agreement, Weil hereby irrevocably
and unconditionally releases, acquits and forever discharges the Company and all of its current and
former subsidiaries, affiliates, divisions, successors, predecessors, related entities, assigns,
owners, stockholders, partners, directors, officers, employees, agents, representatives, attorneys
and all persons acting by, through, under or in concert with any of them (collectively
“Releasees”), from any and all known charges, complaints, claims, liabilities, obligations,
promises, agreements, damages, actions, causes of action, suits, rights, demands, costs, losses,
debts and expenses (including attorneys’ fees and costs) of any nature whatsoever (“Claim” or
“Claims”) which Weil now has, owns or holds, or claims to have, own or hold, or which Weil at any
time heretofore had, owned or held, or claimed to have had, owned or held, or which Weil at any
time hereafter may have, own or hold, or claim to have, own or hold, against any of the Releasees
relating to any event, act or omission that has occurred as of or prior to the date of this
Agreement. This Release shall not apply to any of the Company’s obligations under the terms of
this Agreement, to the Company’s obligations to Weil under any 401(k) or pension plan, to the
Company’s obligation to indemnify Weil under its Certificate of Incorporation, its Bylaws,
applicable law and/or contract or to any claim that may not be released as a matter of law.

(b) As a material inducement for Weil to enter into this Agreement, the Company hereby
irrevocably and unconditionally releases, acquits and forever discharges Weil and all of his
current and former attorneys, agents, representatives, successors and assigns, and all persons
acting by, through, under or in concert with any of them (collectively “Weil Releasees”), from any
and all known Claims which the Company now has, owns or holds, or claims to have, own or hold, or
which the Company at any time heretofore had, owned or held, or claimed to have had, owned or held,
or which the Company at any time hereafter may have, own or hold, or claim to have, own or hold,
against any of the Weil Releasees relating to any event, act or omission that has occurred as of or
prior to the Effective Date. This Release shall not apply to any of Weil’s obligations under the
terms of this Agreement or any law or contract relating to the Company’s indemnification of Weil.

	9.	 	Waiver of Age Discrimination Claims.

This Agreement is intended to satisfy the requirements of the Older Workers’ Benefit
Protection Act, 29 U.S.C. § 626(f). The following general provisions, along with the other
provisions of this Agreement, are agreed to for this purpose:

(a) Weil acknowledges and agrees that he has read and understands the terms of this Agreement,
and that his release of claims includes any and all claims arising under the Age Discrimination in
Employment Act.

(b) Weil acknowledges that this Agreement advises him in writing that he may consult with an
attorney before executing this Agreement, and that he has obtained and considered such legal
counsel as he deems necessary or appropriate, such that he is entering into this Agreement freely,
knowingly and voluntarily.

(c) Weil acknowledges that he has been given 21 days in which to consider whether or not to
enter into this Agreement. Weil understands that, at his option, he may elect not to use the full
21-day period.

(d) Weil shall have seven days after signing this Agreement to revoke this Agreement. This
Agreement will not become effective until the expiration of the revocation period. Weil
acknowledges and agrees that any revocation of this Agreement must be in writing and received by
the Company’s Secretary no later than 5:00 p.m. on the seventh day in order to be effective. If
Weil does not revoke acceptance within the seven-day period, this Agreement will become fully
effective and enforceable on the eighth day after the Agreement is signed.

(e) Weil does not waive or release any rights or claims that he may have under the Age
Discrimination in Employment Act that arise after the execution of this Agreement. Weil also is
not waiving his right to file a complaint or charge with the EEOC (including a challenge to the
validity of this Agreement) or participate in any investigation or proceeding conducted by the
EEOC.

	10.	 	No Assignments or Transfers of Claims.

Weil and the Company each represent that he or it, as applicable, has not heretofore assigned
or transferred, or purported to assign or transfer, to any person or entity, any Claim or any
portion thereof, or interest therein, and each agrees to indemnify, defend and hold Releasees or
Weil Releasees, as relevant, harmless from and against any and all Claims, based on or arising out
of any such assignment or transfer, or purported assignment or transfer of any Claims or any
portion thereof or interest therein.

	11.	 	Tax Liability.

Weil represents and warrants that neither the Company nor its attorneys nor anyone affiliated
with the Company has made any representations regarding taxes, including the taxability of the
severance payments and stock options pursuant to Sections 3 and 5, and Weil has not
relied upon any such representation in entering into this Agreement. Weil further represents and
warrants that he shall be solely responsible for the payment of any and all federal, state and
local taxes which may become due, if any, as a result of such severance payments or stock options.
Weil shall hold the Company harmless from and indemnify it for the payment of any taxes (including
interest) or penalties, and any costs or attorneys’ fees related to such payment, if any, that may
be asserted against it by any government agency at any time as a result of such severance payments
or stock options.

	12.	 	No Amounts Owing.

Weil acknowledges and agrees that no compensation is or will be due to him from the Company,
other than as expressly set forth herein.

	13.	 	Waiver of Future Employment.

Weil agrees that he will not knowingly apply for or seek employment with the Company or any
subsidiary or affiliated companies. Weil further agrees that neither the Company nor any of its
subsidiaries or affiliated companies is obligated to offer employment to Weil, regardless of the
circumstances, at any time in the future.

	14.	 	Confidential, Trade Secret and Proprietary Information.

Without limiting the provisions of Section 4(b), Weil shall not publish, disclose, or
utilize any proprietary, trade secret or other confidential information belonging to the Company or
any third party doing business with the Company that Weil obtained in the course or scope of his
employment with the Company. Weil acknowledges that the Company’s proprietary, trade secret and
confidential information specifically includes, but is not limited to, the following non-public
information: pricing information, customer buying and selling habits and special needs,
confidential customer and vendor contact information, customer lease expiration, customer credit
information, the Company’s proprietary software, accounting records, marketing strategies, business
plans, unique methods and procedures regarding pricing and advertising, employee personnel
information, purchasing and leasing guidelines, collection procedures and payment histories.

	15.	 	Miscellaneous.

(a) No Third-Party Beneficiaries; Binding Effect. Except as provided herein, this Agreement
shall not confer any rights or remedies upon any person other than the parties and their respective
successors and permitted assigns. This Agreement shall be binding upon the Company and Weil and
upon their respective heirs, administrators, representatives, executors, successors and assigns,
and shall inure to the benefit of Releasees.

(b) Entire Agreement. This Agreement (including the documents referred to in this Agreement)
constitutes the entire agreement between the parties hereto and supersedes any prior
understandings, agreements, or representations by or between the parties, written or oral, to the
extent they are related in any way to the subject matter hereof.

(c) Assignment. This Agreement and the rights and duties hereunder are personal to Weil and
shall not be assigned, delegated, transferred, pledged or sold by Weil without the prior written
consent of the Company.

(d) Counterparts. This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original but all of which together will constitute one and the same instrument.
Delivery of an executed counterpart of a signature page to this Agreement by facsimile shall be
effective as delivery of a manually executed counterpart of this Agreement.

(e) Notice. Any notice, consent, payment, demand, or communication required or permitted to
be given by any provision of this Agreement shall be in writing and shall be (1) delivered
personally to the party to whom the same is directed, or (2) sent registered or certified mail,
return receipt requested, postage prepaid, or by nationally recognized overnight courier addressed
as follows:

	 	 	 
	If to Weil:

	 	to his address of residence
	
 
	 	in the records of the Company
	If to the Company:

	 	Ashworth, Inc.
	
 
	 	2765 Loker Avenue West
	
 
	 	Carlsbad, California 92010
	
 
	 	Attention: Secretary

or to such other address as any such party may from time to time specify by notice to the other
party. Any such notice shall be deemed to be delivered, given and received for all purposes as of:
(i) the date so delivered, if delivered personally or (ii) on the date of receipt or refusal
indicated on the return receipt, if sent by registered or certified mail, return receipt requested,
postage and charges prepaid or by nationally recognized overnight courier.

(f) Governing Law. This Agreement shall be governed by and construed in accordance with the
internal laws of the State of California without giving effect to any choice or conflict of law
provision or rule (whether of the State of California or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of California.

(g) Amendments and Waivers. No amendment of any provision of this Agreement shall be valid
unless the same shall be in writing and signed by the parties. No waiver by any party of any
default, misrepresentation or breach of warranty or covenant of this Agreement, whether intentional
or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach
of warranty or covenant of this Agreement or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.

(h) Severability. Any term or provision of this Agreement that is invalid or unenforceable in
any situation in any jurisdiction shall not affect the validity or enforceability of the remaining
terms and provisions of this Agreement or the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction.

(i) Expenses. Each of the parties will bear his or its own costs and expenses (including
legal fees and expenses) incurred in connection with this Agreement and the transactions
contemplated by this Agreement. Notwithstanding the foregoing, the parties agree that, in the
event either party breaches any provision of this Agreement, the breaching party shall pay all
costs and actual attorney’s fees and expenses incurred by the other party in conjunction with
enforcement of this Agreement to the extent permitted by law.

(j) Construction. The language of this Agreement shall be interpreted simply and in
accordance with its plain meaning. The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption
or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any
of the provisions of this Agreement. Any reference to any federal, state, local, or foreign
statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder,
unless the context requires otherwise. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or interpretation of this
Agreement. Unless otherwise expressly provided in this Agreement, any agreement, instrument or
statute defined or referred to in this Agreement or in any agreement or instrument that is referred
to in this Agreement means such agreement, instrument or statute as from time to time amended,
modified or supplemented, including (in the case of agreements or instruments) by waiver or consent
and (in the case of statutes) by succession of comparable successor statutes and references to all
attachments thereto and instruments incorporated therein. Unless the context clearly requires
otherwise, references to Sections are to the Sections of this Agreement.

(k) Arbitration. The Company and Weil agree that any dispute regarding the application,
interpretation or breach of this Agreement (including, but not limited to, any alleged
misrepresentation made herein) will be subject to final and binding arbitration before
JAMS/Endispute of Orange County, California pursuant to the then existing JAMS rules applicable to
any such dispute. Any resolution, opinion or order of JAMS/Endispute may be entered as a judgment
of a court of competent jurisdiction. This Agreement shall be admissible in any proceeding to
enforce its terms.

(l) Weil’s Acknowledgment. Weil acknowledges (1) that he has consulted with independent
counsel of his own choice concerning this Agreement (including without limitation all of the tax
implications to Weil) and has been advised to do so by the Company, and (2) that he has read and
understands the Agreement, is fully aware of its legal effect, and has entered into it freely based
on his own judgment.

1

IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.

ASHWORTH, INC.

By: /s/ David M. Meyer

David M. Meyer

Chairman of the Board

PETER M. WEIL

/s/ Peter M. Weil

2

EXHIBIT A

RESIGNATION

Date: October 24, 2007

To: Board of Directors

Ashworth, Inc.

From: Peter M. Weil

Subject: Resignation

This letter is to confirm my irrevocable resignation as a director and officer of Ashworth, Inc.
(the “Company”), effective as of the date hereof, together with all other director, employment and
trustee positions held with the Company and any of its subsidiaries or with their respective
employee plans.

I further confirm that my resignation is not a result of any disagreement with the Company as to
the Company’s operations, policies or practices.

/s/ Peter M. Weil

Peter M. Weil

3

EXHIBIT B

RELEASE OF CLAIMS

October 24, 2007

1. For valuable consideration, I irrevocably release Ashworth, Inc. (“Ashworth”) and its
subsidiaries, and their respective affiliates, directors, officers, agents and employees from any
and all known causes of action, claims, suits, demands or other obligations or liabilities, whether
known or unknown, suspected or unsuspected, that I ever had or now have as of the time that I sign
this Release which relate to or arise out of my hiring, employment with or termination of my
employment with Ashworth. The claims released include, but are not limited to, any and all claims
arising from or related to my employment with Ashworth and/or its affiliates, such as claims
arising under Title VII of the Civil Rights Act of 1964 (as amended), the Civil Rights Act of 1991,
the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Equal Pay Act,
the Fair Labor Standards Act, the California Fair Employment and Housing Act, the California Labor
Code, the Employee Retirement Income and Security Act of 1974 (except for any vested right I have
to benefits under an ERISA Plan), the state and federal Worker Adjustment and Retraining
Notification Act, and the California Business and Professions Code; any other local, state,
federal, or foreign law governing employment; and the common law of contract and tort. This
Release is not intended to, and does not, encompass (i) any right to compensation or benefits that
I have under my Separation and General Release Agreement with Ashworth, (ii) any claims I may have
for workers’ compensation benefits, (iii) any claims related to my COBRA rights, (iv) any rights I
may have to indemnification, and (v) any claims that may not be waived as a matter of law.

2. I represent and warrant that there has been no assignment or other transfer of any interest
in any claim by me that is covered by this Release.

3. I acknowledge that Ashworth has given me 21 days in which to consider this Release and
advised me to consult an attorney about it. I further acknowledge that once I execute this
Release, I will have an additional seven days in which to revoke my acceptance of this Release by
means of a written notice of revocation given to the Secretary. This Release will not be final and
effective until the expiration of this revocation period.

	 	 	 	 	 
	Dated:

	 	October 24, 2007
	 	Signed: /s/ Peter M. Weil
	
 
	 	 	 	 
	
 
	 	 	 	Peter M. Weil

4genelabs-ex10.htm

     

    
      EXHIBIT
        10.1

      

      

      

      October
        17, 2007

      

      

      

      Mr.
        Frederick W. Driscoll

      15
        Crestwood Road

      North
        Reading, MA 01864

      

      Re:  Employment
        with Genelabs Technologies, Inc.

      

      Dear
        Fred:

      

      On
        behalf of Genelabs Technologies, Inc. (“Genelabs” or the “Company”) I am very
        pleased to extend you this offer of employment with the Company as Chief
        Financial Officer, reporting to me.  This position is a full-time,
        exempt position commencing on November 1, 2007.  This offer will
        expire at 5:00 p.m. Pacific time on October 22, 2007 unless earlier accepted
        by
        you.

      

      Your
        employment is subject to proof of your legal right to work in the United
        States,
        and to your completing the Employment Eligibility Verification Form
        I-9.  Your employment also is subject to the completion of our
        standard pre-employment process, which includes an employment application,
        successful verification of your professional and character references, and
        a
        background check.

      

      Compensation

      

      
        	
                If
                  you accept this offer and begin employment, you will receive an
                  initial
                  base salary of $25,000 per month (equivalent to $300,000 per year),
                  paid
                  on a semi-monthly basis on our regular paydays.  Deductions
                  required by law or authorized by you will be taken from each
                  paycheck.  In lieu of relocation or other forms of financial
                  assistance, you will be paid a gross one-time bonus of $75,000,
                  which will
                  be divided into two equal payments of $37,500 each.  The first
                  payment will be made in conjunction with the pay period which most
                  closely
                  coincides with the completion of one month of employment (on or
                  about
                  December 1st) and the second after six months of employment (on
                  or about
                  May 1, 2008).  As a condition of receipt of this bonus, you
                  agree that in the event that you voluntarily end your employment
                  with
                  Genelabs within 12 months of your date of hire, you will immediately
                  reimburse Genelabs the full amount of bonus paid to you up to the
                  date of
                  your resignation.

              

      

      

      In
        addition to your base salary, you will also be eligible to participate in
        our
        discretionary incentive bonus program designed to provide a financial reward
        for
        achieving performance goals, currently as described in the Genelabs
        Technologies, Inc. Annual 

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

       

      Bonus
        Plan.  Measurement of achievement under this plan is based on the
        Company’s achievement of its objectives as determined by the Board of Directors
        and your individual performance against your goals as agreed to by you and
        me in
        consultation with the Board of Directors.  Currently the targeted
        bonus level for this position is 35% of base salary taking into account the
        performance criteria set forth above; however, you will not be eligible for
        a
        bonus payment under the bonus plan in 2008 because you are starting employment
        late in 2007.

      

      You
        will also be eligible to participate in the Company’s 2007 Omnibus Stock
        Incentive Plan (the “Stock Incentive Plan”).  The grant of an option
        to purchase up to 200,000 shares of the Company’s common stock under the Stock
        Incentive Plan will be recommended to the Company’s Board of Directors on your
        behalf and will be subject to their approval.  The date of the grant
        and the option exercise price will be in accordance with the terms of the
        Stock
        Incentive Plan.  All option grants are governed by the
        terms  of the Stock Incentive Plan and are subject to approval by the
        Board of Directors.

      

      As
        an officer of the Company, you will also enter into an Indemnity Agreement
        and
        an agreement setting forth certain benefits in the event of a change in control
        of the Company.

      

      Employee
        Benefits

      

      As
        a full-time employee, you will be eligible for our standard employee benefit
        programs including health, life and short and long-term disability insurance,
        flexible benefits, Employee Stock Purchase Plan (ESPP), and 401(k) tax deferred
        savings plan. Your eligibility for medical, dental, vision, and life insurance
        as well as the flexible benefits plan begin on your date of
        hire.  Disability, ESPP, and 401(k) eligibility commence after a
        waiting period.

      

      Genelabs
        reserves the right to modify, amend or discontinue any benefit plan at any
        time,
        in its sole discretion.  You may receive such other benefits as we may
        determine from time to time, in our sole discretion.

      

      Other
        Terms and Conditions of Employment

      

      Employment
        with Genelabs is at will.  “Employment at will” means that you are
        free to resign from your employment at any time, for any reason, with or
        without
        cause and with or without notice.  Similarly, Genelabs may terminate
        your employment at any time for any legal reason or for no reason, with or
        without cause and with or without notice.  By accepting this offer of
        employment, you agree that your employment is at will, and acknowledge that
        no
        one, other than the President and Chief Executive Officer, has the authority
        to
        promise you anything to the contrary.  Any such agreements must be in
        writing and signed by both you and the President and Chief Executive Officer
        to
        be effective.

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      
 

      We
        believe that your employment with Genelabs requires a significant
        commitment.  Employment with any other entity, or for yourself in
        competition with the Company or any of its subsidiaries, is not permitted
        with
        the sole and limited exception that you will be permitted to serve as a member
        of the board of directors of entities which you disclose to me and upon which
        we
        agree and the boards of any not-for-profit charitable or educational
        organizations on which you may serve now or in the future.

      

      Prior
        to commencing your employment with Genelabs you agree to provide to the Company
        a brief profile of all entities you currently serve as a board member including
        a brief profile of the entities’ business, list of officers, directors and major
        shareholders and copies of any and all indemnity agreements you have with
        the
        entities and their directors and officers liability insurance
        coverage.

      

      Upon
        commencement of employment you will also execute the Genelabs Technologies,
        Inc.
        Employee Invention and Confidentiality Agreement.

      

      The
        terms described in this letter replace all prior agreements, understandings,
        and
        promises between Genelabs and you concerning the terms and conditions of
        your
        employment with the Company.

      

      Fred,
        I personally look forward to working with you and hope that your association
        with Genelabs will be successful and rewarding.  Please indicate your
        acceptance of this offer by signing this letter below and returning it to
        me as
        soon as possible.  A copy of the letter is enclosed for your
        records.

      

      

      
        	 	 	
                Sincerely,

              	 
	 	 	 	 
	 	 	 	 
	 	 	
                James
                  A.D. Smith

              
	 	 	
                President
                  & Chief Executive Officer

              
	 	 	 	 

      

      

      
        	
                Accepted
                  and Agreed:

              
	 
	 
	
                _________________________

              
	
                Frederick
                  W. Driscoll

              
	 
	 
	
                _________________________

              
	
                Date

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