Document:

exv10w7

 

Exhibit 10.7

February 23, 2006

Mr. Winston Hickman

33711 Chula Vista

Dana Point, CA 92629

Re: Employment at Ashworth, Inc.

Dear Mr. Hickman:

In accordance with our recent discussions, we are pleased to confirm our offer to you of a position
with Ashworth, Inc. (the “Company”) upon the following terms and conditions:

	1.	 	Position; Reporting; Commencement: The position and title shall be Chief Financial
Officer & Executive Vice President and you shall report to the Chief Executive Officer. You
shall commence employment effective February 23, 2006. You will be required to observe the
Company’s personnel and business policies and procedures. In the event of any conflict, the
terms of this letter will control. Vacation shall be in accordance with Company policy.
	 
	2.	 	Base Salary; Reviews: You will receive a salary of $300,000 per annum and a 50%
target bonus per annum (Full Target Bonus), with the actual bonus payment subject to Board’s
discretion, less applicable withholding and deductions. Salary is payable every other Friday.
Employees are given annual performance reviews in or about May of each year which are a part
of the bases for evaluating annual salary increases.
	 
	3.	 	Business Expenses, Clothing Allowance, Cellular Phone Allowance. You will receive
reimbursement for normal, ordinary and reasonable business expenses upon your submission of
receipts substantiating the expenses claimed in accordance with Company policy. As part of
reasonable expenses, you will be entitled to reimbursement for business usage of your personal
automobile. You will receive a Clothing Allowance in accordance with Company policy. You will
be reimbursed up to $150.00 per month for use of your personal cellular phone.
	 
	4.	 	Stock Options: The Company will grant you 50,000 options to purchase shares of the
Company’s common stock at an exercise price equal to the closing share price the day before
your employment commences. The options will vest over a two-year period, i.e. 25,000 vesting
on the one-year anniversary of employment commencement and 25,000 vesting on the two-year
anniversary of employment commencement. Options will be exercisable for a period of time from
the vesting date as defined by the Company’s Stock Option Plan. You have an opportunity to
receive additional stock options each year during the annual review process. In the event of
a termination by the Company without “Cause” (as defined in Change of Control Agreement
referenced herein) or by you for “Good Reason” (“good reason” being determined in accordance
with the criteria set forth in Section 5(a) of the Agreement Re: Change in Control between you
and the Company, dated as of February 23, 2006), vesting will occur based on the number of
days worked divided by 730. For purposes of this calculation it shall be assumed you worked
weekends, holidays and vacation time.
	 
	5.	 	Savings Plan: You will be eligible to participate in the Company’s 401(k) Plan at
the first entry date following the completion of six months continuous employment with the
Company. Under the current provisions, you will be eligible as of October 1, 2006.

 

 

February 23, 2006

Mr. Winston Hickman

Page 2 of 4

	6.	 	Insurance Benefits: The Company will provide you with coverage under its group
medical, dental and life insurance policies as more specifically described in the group
insurance materials which will be provided to you upon your commencement of employment. The
cost of the medical and dental coverage will be shared between you and the Company, depending
on your plan and coverage elections. Under the current provisions, you will be eligible as of
April 1, 2006. The Company reserves the right to change, modify or eliminate such benefits or
coverages in its discretion. In addition, you will be immediately eligible for Ashworth’s
Exec-U-Care health benefits. This benefit reimburses you and your eligible dependents for
medical expenses not covered by your group major health plan or by any other group health
plan.

	7.	 	Severance: If you are terminated by the Company without Cause or you resign your
employment for Good Reason, the Company agrees to pay you a lump sum as follows:

	 	(a)	 	If such termination or resignation occurs either (i) after your six-month
anniversary with the Company, or (ii) prior to your six-month anniversary and Randall
Herrel is not the Company’s CEO at the time of your employment termination,
then the lump sum payment shall equal (y) the amount of your then-current annual base
salary, plus (z) a pro rata amount of your Full Target Bonus based upon the actual
number of days you worked in the relevant target bonus period divided by the total
number of days in your relevant bonus period (which shall be 365 days for bonus periods
beginning after November 1, 2006, and which shall be the number of days between
February 23, 2006 and October 31, 2006 for the initial bonus period). For purposes of
this calculation it shall be assumed that you worked weekends, holidays and vacation
days.
	 
	 	(b)	 	If such termination or resignation occurs prior to your six-month anniversary
with the Company and Randall Herrel is the Company’s CEO at the time of your employment
termination, then the lump sum payment shall equal (y) one-half of the amount of your
then-current annual base salary, plus (z) a pro rata amount of your Full Target Bonus
calculated as provided in paragraph (a) above.

In addition, if you are terminated by the Company without cause or you resign your
employment for Good Reason, each of your options will vest based on the number of days you
have worked since the relevant option grant date divided by the total number of days in the
relevant option’s vesting period.

	8.	 	Confidentiality; Use of Licensed Software; Solicitation of Employees; Return of Property;
Termination: You acknowledge that, in the course of your employment with the Company, you
will have access to confidential information concerning the organization and functioning of
the business of the Company, and that such information is a valuable trade secret and the sole
property of the Company. Accordingly, except as required by law, legal process, or in
connection with your employment duties or any litigation between the parties hereto with
respect to matters arising out of this agreement, you agree that you will not, at any time
during your employment with the Company or after such employment, whether such employment is
terminated as a result of your resignation or discharge, disclose or furnish any such
information to any person other than an officer of the Company, and you will make no use of
any such information for your personal benefit.

The Company licenses the use of computer software from a variety of outside companies and,
unless authorized by the software developer, does not have the right to reproduce it. You
may use software only

 

 

February 23, 2006

Mr. Winston Hickman

Page 3 of 4

in accordance with the license agreement, whether on local area networks or on multiple
machines.

You agree that for a period of two years from the date of voluntary or involuntary
termination, you will not solicit on your behalf, or on behalf of a third party, any then
current employee of the Company, to leave his or her employment with the Company for
employment with another employer; provided, however, that nothing herein
shall be deemed to prohibit a general employment solicitation directed at the public.

Section 409A Compliance.

     (a) Notwithstanding any provision of this Agreement to the contrary, if, at the time of
your termination of employment with the Company, you are 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 you 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 your
“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 your 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 6 shall only apply to the extent required to avoid your 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 you 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 6 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 you on the six-month anniversary of your 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.

You further agree that in the event of such termination, whether voluntary or involuntary,
you will not remove from the offices of the Company any personal property that does not
rightfully and legally belong to you and that you will return on the date of your said
termination, to an authorized representative of the Company, any and all property belonging
to the Company. You also agree that you will provide passwords on request for personal
computer files.

	9.	 	At-Will Employment. You understand and agree that you are being employed for an
unspecified term and that this is an “at-will” employment relationship. This means that
either you or the Company may terminate your employment at will at any time with or without
cause or notice. This at-will aspect of your employment, which includes the right of the
Company to transfer,
discipline, demote and/or reassign, may not be modified, amended or rescinded except by an
individual written agreement signed by both you and the Company’s President. This letter
sets

 

 

February 23, 2006

Mr. Winston Hickman

Page 4 of 4

forth the entire agreement between the parties and there are no prior or
contemporaneous representations, promises or conditions, whether oral or written, to the
contrary.

This offer of employment is contingent upon the satisfactory completion of a background check,
verifying that the information provided by you on your application and resume is accurate and
correct. The Company reserves the right to withdraw an offer of employment, or to terminate
employment, at any time based on information arising from the background check.

If you are in agreement with the terms of this letter, please sign and return one copy to the Human
Resource Department and retain one copy for your files to effect the commencement of your
employment. If you have any questions, please contact me at your earliest convenience.

Sincerely,

	 	 	 
	/s/ Randall Herrel
	 	 
	 

Randall Herrel

	 	 
	Chairman & CEO
	 	 
	 
	 	 
	ACCEPTED AND AGREED TO THIS

24TH DAY OF FEBRUARY, 2006
	 	 
	 
	 	 
	/s/ Winston Hickman
	 	 
	 

Winston Hickmanexv10w8

 

Exhibit 10.8

AGREEMENT RE: CHANGE IN CONTROL

     This AGREEMENT RE: CHANGE IN CONTROL (this “Agreement”) is dated as of February 23, 2006 and
is entered into by and between Winston Hickman (“Executive”) and Ashworth, Inc., a Delaware
corporation (the “Company”).

     Background

     The Company believes that because of its position in the industry, financial resources and
historical operating results there is a possibility that the Company may become the subject of a
Change in Control (as defined below), either now or at some time in the future.

     The Company believes that it is in the best interest of the Company and its stockholders to
foster Executive’s objectivity in making decisions with respect to any pending or threatened Change
in Control of the Company and to assure that the Company will have the continued dedication and
availability of Executive, notwithstanding the possibility, threat or occurrence of a Change in
Control. The Company believes that these goals can best be accomplished by alleviating certain of
the risks and uncertainties with regard to Executive’s financial and professional security that
would be created by a pending or threatened Change in Control and that inevitably would distract
Executive and could impair his ability to objectively perform his duties for and on behalf of the
Company. Accordingly, the Company believes that it is appropriate and in the best interest of the
Company and its stockholders to provide to Executive compensation arrangements upon a Change in
Control that lessen Executive’s financial risks and uncertainties and that are reasonably
competitive with those of other corporations.

     With these and other considerations in mind, the Compensation Committee of the Company has
authorized the Company to enter into this Agreement with the Executive to provide the protections
set forth herein for Executive’s financial security following a Change in Control.

     NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable
consideration the receipt of which is hereby acknowledged, it is hereby agreed as follows:

     Agreement

     1. Term of Agreement. This Agreement shall be effective from the date first written
above and, subject to the provisions of Section 4, shall extend to (and thereupon automatically
terminate) one (1) day after Executive’s termination of employment with the Company for any reason.
No termination of this Agreement shall limit, alter or otherwise affect Executive’s rights
hereunder with respect to a Change in Control which has occurred prior to such termination,
including without limitation Executive’s right to receive the various benefits hereunder.

     2. Purpose of Agreement. The purpose of this Agreement is to provide that, in the
event of a “Change in Control,” Executive may become entitled to receive certain additional
benefits, as described herein, in the event of his termination under specified circumstances.

     3. Change in Control. As used in this Agreement, the phrase “Change in Control” shall
mean:

          (i) Except as provided by subparagraph (iii) hereof, the acquisition (other than from the
Company) by any person, entity or “group”, within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”)

 

 

(excluding, for this purpose, the Company or its subsidiaries, or any executive benefit plan
of the Company or its subsidiaries which acquires beneficial ownership of voting securities of the
Company), of beneficial ownership (within the meaning of Rule 13d-3 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 the Company’s then outstanding voting securities entitled to vote
generally in the election of directors; or

          (ii) Individuals who, as of the date hereof, constitute the Board of Directors of the Company
(as of the date hereof the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board of Directors of the Company, provided that any person becoming a director
subsequent to the date hereof whose election, or nomination for election by the Company’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 the Company, as such terms are used in Rule 14a-11 of Regulation 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; or

          (iii) Approval by the stockholders of the Company of a reorganization, merger or consolidation
with any other person, entity or corporation, other than

          (1) a merger or consolidation which would result in the voting securities of the
Company 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 the Company or such
other entity outstanding immediately after such merger or consolidation, or

          (2) a merger or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no person acquires forty percent (40%) or more of the
combined voting power of the Company’s then outstanding voting securities; or

          (iv) Approval by the stockholders of the Company of a plan of complete liquidation of the
Company or an agreement for the sale or other disposition by the Company of all or substantially
all of the Company’s assets.

     4. Effect of a Change in Control. In the event of a Change in Control, Sections 6
through 12 of this Agreement shall become applicable to Executive. These Sections shall continue to
remain applicable until the third anniversary of the date upon which the Change in Control occurs.
On such third anniversary date, and provided that the employment of Executive has not been
terminated on account of a Qualifying Termination (as defined in Section 5 below), this Agreement
shall terminate and be of no further force or effect.

     5. Qualifying Termination. If within two (2) years following, or within ninety (90)
days prior to, a Change in Control Executive’s employment with the Company and its affiliated
companies is terminated by the Company or Executive resigns such termination shall be conclusively
considered a “Qualifying Termination” unless:

     (a) Executive voluntarily terminates his employment with the Company and its affiliated
companies. Executive, 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, Executive’s authority or duties shall be considered to have

 

 

been “materially changed” if, without Executive’s express and voluntary written
consent, there is any substantial diminution or adverse modification in his title, status,
overall position, or responsibilities, his position is no longer CFO of a publicly traded
company, or his place of employment moves twenty miles more distance from his home.

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

     (c) Executive is involuntarily terminated for “Cause.” For this purpose, “Cause” shall
mean:

     1. Executive’s willful and deliberate refusal to comply with a lawful,
instruction of the CEO or Board of Directors, which refusal is not remedied by
Executive 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 Executive’s position;

     2. Executive’s act or acts of material personal dishonesty;

     3. Executive’s conviction of a felony;

     4. Executive’s intentional material violation of any confidentiality

     5. Executive’s intentional material violation of any non-competition agreement
with the Company or any Affiliate of the Company; or

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

     6. Severance Payment. If Executive’s employment is terminated as a result of a
Qualifying Termination, the Company shall pay Executive within thirty (30) days after the
Qualifying Termination a cash lump sum equal to one and a half (1.5) times Executive’s annual base
salary (the “Severance Payment”).

(a) For purposes of this Agreement, Executive’s “base salary” shall equal the
Executive’s highest annual salary rate with the Company within the three-year period ending
on the date of Executive’s Qualifying Termination.

(b) The Severance Payment hereunder is in lieu of any severance payment that
Executive might otherwise be entitled to from the Company in the event of a Change
in Control under the Company’s applicable severance pay policies, if any, or under
any other oral or written agreement; provided, however, that
Executive shall continue to be entitled to receive the severance pay benefits under
the Company’s applicable policies, if any, or under another written agreement if and
to the extent Executive’s termination is not a Qualifying Termination after, or
within ninety (90) days prior to, a Change in Control.

     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 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 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 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.

     7. Health Care Benefits. The Company shall continue health care coverage for eighteen
(18) months Including Execu-Care benefits. For the eighteen-month period following the Qualifying
Termination of his employment, Hickman 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. Hickman’s participation in each of
such executive benefit programs shall be earlier terminated or reduced, as applicable, if and to
the extent Hickman receives benefits as a result of concurrent coverage through another program.

     8. Stock Options. Hickman’s unvested stock options shall immediately become fully
vested and exercisable.

     9. Indemnification for Excise Tax. In the event that Executive becomes entitled to
receive a Severance Payment in accordance with the provisions of Section 6 above, and such
Severance Payment and any other benefits or payments (including transfers of property) that
Executive receives, or is to receive, pursuant to this Agreement or any other agreement, plan or
arrangement with the Company in connection with a Change in Control of the Company (“Other
Benefits”) shall be subject to the tax imposed pursuant to Section 4999 of the Internal Revenue
Code of 1986, as amended (the “Code”)(or any successor thereto) or any comparable provision of
state law (an “Excise Tax”), the following rules shall apply:

     (a) The Company shall pay to Executive, within thirty (30) days after the Executive’s
Qualifying Termination, an additional amount (the “Gross-Up Payment”) such that the net
amount retained by Executive, after deduction of any Excise Tax with respect to the
Severance Payment or the Other Benefits and any federal, state and local income tax, FICA
tax, and Excise Tax upon such Gross-Up Payment, is equal to the amount that would have been
retained by Executive if such Excise Tax were not applicable. It is intended that Executive
shall not suffer any loss or expense resulting

 

 

from the assessment of any Excise Tax or the Company’s reimbursement of Executive for
payment of any such Excise Tax.

     (b) For purposes of determining whether any of the Severance Payments or Other Benefits
will be subject to an Excise Tax and the amount of such Excise Tax, (i) any other payments
or benefits received or to be received by Executive in connection with a Change in Control
of the Company or Executive’s termination of employment (whether pursuant to the terms of
this Agreement or any other plan, arrangement or agreement with the Company, any person
whose actions result in a Change in Control or any person affiliated with the Company or
such person) shall be treated as “parachute payments” within the meaning of Section
280G(b)(2) of the Code (or any successor thereto), and all “excess parachute payments”
within the meaning of Section 280G(b)(l) of the Code (or any successor thereto) shall be
treated as subject to the Excise Tax, unless in the opinion of tax counsel selected by the
Company’s independent auditors and acceptable to Executive such other payments or benefits
(in whole or in part) do not constitute parachute payments, or such excess parachute
payments (in whole or in part) represent reasonable compensation for services actually
rendered within the meaning of Section 280G(b)(4) of the Code (or any successor thereto),
(ii) the amount of the Severance Payments and Other Benefits which shall be treated as
subject to the Excise Tax shall be equal to the lesser of (A) the total amount of the
Severance Payments or Other Benefits or (B) the amount of excess parachute payments within
the meaning of Sections 280G(b)(l) and (4) of the Code (or any successor or successors
thereto), after applying clause (i), above, and (iii) the value of any non-cash benefits or
any deferred payment or benefit shall be determined by the Company’s independent auditors in
accordance with the principles of Sections 280G(d)(3) and (4) of the Code (or any successor
or successors thereto).

     (c) For purposes of determining the amount of the Gross-Up Payment, Executive shall be
deemed to pay federal income taxes at the highest marginal rate of federal income taxation
in the calendar year in which the Gross-Up Payment is to be made and state and local income
taxes at the highest marginal rates of taxation in the state and locality of Executive’s
residence on the date of the Executive’s Qualifying Termination, net of the maximum
reduction in federal income taxes which could be obtained from deduction of such state and
local taxes.

     (d) In the event that the Excise Tax is subsequently determined to be less than the
amount taken into account hereunder at the time of the Executive’s Qualifying Termination,
the Executive shall repay to the Company, at the time that the amount of such reduction in
Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such
reduction plus interest on the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code (or any successor thereto) (the “Applicable Rate”). In the event
that the Excise Tax is determined to exceed the amount taken into account hereunder at the
time of such Qualifying Termination (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall
make an additional Gross-Up Payment in respect of such excess (plus interest, determined at
the Applicable Rate, payable with respect to such excess) at the time that the amount of
such excess is finally determined.

     10. Rights and Obligations Prior to a Change in Control. Prior to the date which is
ninety (90) days before a Change in Control, the rights and obligations of Executive with respect
to his employment by the Company shall be determined in accordance with the policies and procedures
adopted from time to time by the Company and the provisions of any written employment contract in
effect between the Company and Executive from time to time. This Agreement deals only with certain
rights and obligations of Executive subsequent, or within

 

 

ninety (90) days prior to, a Change in Control, and the existence of this Agreement shall not
be treated as raising any inference with respect to what rights and obligations exist prior to the
date which is ninety (90) days before a Change in Control. Unless otherwise expressly set forth in
a separate written employment agreement between Executive and the Company, the employment of
Executive is expressly at-will, and Executive or the Company may terminate Executive’s employment
with the Company at any time and for any reason, with or without cause, provided that if such
termination occurs within ninety (90) days prior to or two (2) years after a Change in Control and
constitutes a Qualifying Termination (as defined in Section 5 above) the provisions of this
Agreement shall govern the payment of the Severance Payment and certain other benefits as provided
herein.

     11. Non-Exclusivity of Rights. Subject to Section 6(b) hereof, nothing in this
Agreement shall prevent or limit Executive’s continuing or future participation in any benefit,
bonus, incentive or other plan or program provided by the Company or any of its affiliated
companies and for which Executive may qualify, nor shall anything herein limit or otherwise affect
such rights as Executive may have under any stock option or other agreements with the Company or
any of its affiliated companies. Except as otherwise provided in Section 6(c) hereof, amounts
which are vested benefits or which Executive is otherwise entitled to receive under any plan or
program of the Company or any of its affiliated companies at or subsequent to the date of any
Qualified Termination shall be payable in accordance with such plan or program.

     12. Full Settlement. The Company’s obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be affected by any
set-off, counter-claim, recoupment, defense or other claim, right or action which the Company may
have against Executive or others. In no event shall Executive be obligated to seek other
employment or to take any other action by way of mitigation of the amounts payable to Executive
under any of the provisions of this Agreement. The Company agrees to pay, to the full extent
permitted by law, all legal fees and expenses which Executive may reasonably incur as a result of
Executive’s successful collection efforts to receive amounts payable hereunder, or as a result of
any contest (regardless of the outcome thereof) by the Company or others of the validity or
enforceability of, or liability under, any provision of this Agreement or any guarantee of
performance thereof (including as a result of any contest by Executive about the amount of any
payment pursuant to this Section).

     13. Successors.

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

     14. 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.

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

     16. Dispute Resolution: Executive 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 Executive agree that any claim, dispute, and/or controversy that either Executive

 

 

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
Executive, arising from, related to, or having any relationship or connection whatsoever with
Executive’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 Executive 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.

     17. 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.
	 	Winston Hickman
	 	 
	 

	 	2765 Loker Avenue West
	 	33711 Chula Vista	 	 
	 

	 	Carlsbad, California 92010
	 	Dana Point, CA 92629	 	 
	 

	 	Attn: President	 	 	 	 

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

     19. Severability. 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 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 case 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.

     20. 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.

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

	 	 	 	 	 	 	 
	Dated: February 24, 2006	 	ASHWORTH, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Randall Herrel, Sr.	 	 
	 

	 	 	 	 

     Mr. Randall L. Herrel, Sr.
	 	 
	 
	 	 	 	 	 	 
	 	 	Title: Chairman, President and CEO	 	 
	  
	 	 	 	 	 	 
	Dated: February 24, 2006	 	MR. WINSTON HICKMAN	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Winston Hickman
 

     Mr. Winston Hickman

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