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Exhibit 10.25    
    

MEMORANDUM OF UNDERSTANDING  

IN RE CUTTER & BUCK INC. SECURITIES LITIGATION

HAIMOWITZ V. CUTTER & BUCK, INC., ET AL.

        This
Memorandum of Understanding ("MOU"), dated as of June 13, 2003, contains the essential terms of a settlement (the "Settlement") (a) between defendants Cutter &
Buck Inc. ("CBUK"), Harvey N. Jones and Stephen S. Lowber (collectively, the "Class Defendants"), and the Lead Plaintiff Tilson Growth Fund (the "Class Plaintiff"), on behalf of itself and
members of the class (collectively, the "Class") in connection with In re Cutter & Buck Inc. Securities Litigation, No.
CV-02-1948L (the "Class Action"), pending in the United States District Court, Western District of Washington (the "Federal Court"); and (b) among defendants CBUK,
Frances M. Conley, Michael S. Brownfield, Larry C. Mounger, James C. Towne, Harvey N. Jones, Martin J. Marks and Stephen S. Lowber (collectively, the "Derivative Defendants") and Morris Haimowitz (the
"Derivative Plaintiff"), derivatively and on behalf of CBUK, in connection with Haimowitz v. Cutter & Buck Inc., et al.,
No. 02-2-32038-4SEA (the "Derivative Action"), pending in the Superior Court of the State of Washington for King County (the "State Court"), that was reached
as a result of CBUK's directors and officers liability insurers', Genesis Insurance Company ("Genesis"), Executive Risk Indemnity, Inc. ("E/Risk"), and Lumbermens Mutual Casualty Company
("Lumbermens") (collectively, the "Insurers"), refusal to consent to, and fund, a settlement that was agreed to in principle in connection with a mediation conducted on May 22, 2003 by the
Honorable J. Lawrence Irving (the "Special Settlement Master"). For purposes of this MOU only, the undersigned counsel for the Class Plaintiff and Derivative Plaintiff, Class Defendants and Derivative
Defendants (individually, a "Party," or collectively, the "Parties") represent that they have the power and authority to bind their respective Parties. 

        1.     For
settlement purposes only, the Class consists of: 

All
persons or entities who purchased or otherwise acquired the common stock or options of CBUK between June 1, 2000 and August 12, 2002, inclusive (the "Class Period"), and who were
injured thereby. 

Excluded
from the Class are the Class Defendants and the Derivative Defendants (collectively, the "Defendants"), and persons and entities related to Defendants, including any subsidiaries or
affiliates of CBUK; the officers and directors of CBUK during the Class Period; members of the individual Defendants' immediate families; any person, firm, trust, officer, director or any individual
or entity in which any Defendant has a controlling interest or which is related to, or affiliated with, any of the Defendants, and the legal representatives, agents, affiliates, heirs,
successors-in-interest or assigns of any such excluded person or entity. 

        2.     The
Settlement Amount of up to $7 million is a joint and several obligation of the Defendants to be paid by CBUK on behalf of all Defendants in settlement of the
Class Action and the Derivative Action as follows: (a) $4 million of the Settlement Amount shall be deposited into an interest bearing escrow account maintained by Milberg Weiss Bershad
Hynes & Lerach LLP not later than ten (10) business days following preliminary approval of the Settlement by the Federal Court; and (b) up to an additional $3 million of
the Settlement Amount shall be paid for the benefit of the Class Plaintiff and Derivative Plaintiff (collectively, the "Plaintiffs"), and the members of the Class, on a non-recourse basis
solely out of Plaintiffs' Share (as defined below), if any, of the Net Recovery (as defined below) from the claims asserted in the action brought by CBUK against Genesis and the other Insurers
captioned Cutter & Buck Inc. v. Genesis Insurance Company, et al., No. CV-02-2569P (the "Coverage Action"),
pending in the United States District Court, Western District of Washington. For purposes of this MOU, "Net Recovery" means the total funds, including any award of attorneys' fees, costs, and related
expenses, received by CBUK from Genesis and/or the other Insurers in connection with the Coverage Action, whether by way of settlement or final judgment through trial and any appeal, less the sum of:
(i) the total amount of all attorneys' fees, expert witness fees, and other costs and expenses 

 

incurred
by CBUK in instituting and prosecuting the Coverage Action (including all such fees and costs incurred prior to the date of this MOU, which approximate $430,000 through April 30,
2003); and (ii) $1 million. For purposes of this MOU, "Plaintiffs' Share" means fifty percent (50%) of up to $6 million of the Net Recovery, thereby providing Plaintiffs with a
maximum potential payment in connection with the Coverage Action of $3 million. Cutter & Buck alone shall retain the total Net Recovery in excess of Plaintiffs' Share. 

        If
the $4 million of the Settlement Amount to be paid by CBUK not later than ten (10) business days following preliminary approval of the Settlement by the Federal Court,
or any part thereof, is not paid into the escrow account by such date, interest on the unpaid balance, if any, will accrue at 4% per annum from such
date until that portion of the Settlement Amount is deposited into escrow. In the event that any portion of the Settlement Amount is not paid by CBUK, the other Defendants shall each have the option
of withdrawing from the Settlement. 

        3.     CBUK
shall be solely responsible for prosecuting the Coverage Action through trial and any appeal; provided, however, that
CBUK may not enter into any settlement of the Coverage Action without the prior written approval of the Class Plaintiff, which approval may not unreasonably be withheld or delayed. In the event that
CBUK and the Class Plaintiff are unable to agree on the terms of a potential settlement of the Coverage Action, CBUK and the Class Plaintiff agree to submit to the following dispute resolution
procedure: 

        a.     CBUK
and the Class Plaintiff desire to resolve disputes concerning settlement of the Coverage Action without litigation. Accordingly, except for action seeking a
temporary restraining order or injunction related to the any such settlement, suit to compel compliance with this dispute resolution process, or entry and enforcement of any judgment on any
arbitration award, CBUK and the Class Plaintiff agree to use the dispute resolution procedures set forth below and in subparagraphs b. and c. herein as their sole remedies with respect to any
controversy or claim arising out of or relating to disputes concerning a settlement of the Coverage Action. At the written request of CBUK or the Class Plaintiff, CBUK and the Class Plaintiff will
appoint knowledgeable, responsible representatives to meet in person and negotiate in good faith to resolve any dispute concerning settlement of the Coverage Action. CBUK and the Class Plaintiff
intend that these negotiations be conducted by non-lawyer, business representatives. The location, format, frequency, duration and conclusion of these discussions shall be left to the
discretion of the representatives. Discussion and correspondence among the representatives for purposes of these negotiations shall be treated as confidential information developed for purposes of
settlement, exempt from discovery and production, which shall not be admissible in the arbitration described below. Documents identified in or provided with such communications, which are not prepared
for purposes of the negotiations, are not so exempted and may, if otherwise admissible, be admitted in evidence in the arbitration or lawsuit. 

        b.     If
the negotiations set forth in subparagraph a. above do not resolve the dispute within seven (7) days of the initial written request, CBUK and the Class
Plaintiff agree to work in good faith to settle the dispute by mediation before the Special Settlement Master. The mediation shall take place in Seattle, Washington. Unless the parties agree
otherwise, the first mediation session shall take place no later than fifteen (15) days after the initial written request to negotiate. The mediation shall continue until the dispute is
resolved or until such time as the Special Settlement Master makes a good faith determination that the likelihood of resolution is sufficiently remote that continuation of the mediation is not
warranted. 

        c.     If
a determination is made pursuant to subparagraph b. above that continuation of the mediation process is not warranted, the dispute shall be submitted to binding
arbitration with James A. Smith, Jr. as arbitrator. If Mr. Smith is unwilling or unable to serve as arbitrator, CBUK and the Class Plaintiff shall select another arbitrator my mutual agreement.
CBUK or the Class 

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Plaintiff
may demand such arbitration in accordance with the procedures set out in these rules. CBUK and the Class Plaintiff shall have the right to take the deposition of one individual, and any
expert witness designated by the other. CBUK and the Class Plaintiff shall also have the right to request production of relevant documents, the scope and enforcement of which shall be governed by the
arbitrator. Additional discovery may be only by order of the arbitrator, and only upon a showing of substantial need. The arbitrator shall be authorized to issue subpoenas for the purpose of requiring
attendance of witnesses at depositions. The arbitration hearing shall be commenced within thirty (30) days of the determination by the Special Settlement Master that mediation is not going to
be successful. The arbitration shall be held in Seattle, Washington, or such other location as mutually agreed upon by CBUK and the Class Plaintiff. The arbitrator shall control the scheduling so as
to process the matter expeditiously. CBUK and the Class Plaintiff may submit written briefs. The arbitrator shall rule on the dispute by issuing a written opinion within ten (10) days after the
close of hearings. The schedule specified in this subparagraph may be extended only upon mutual agreement of CBUK and the Class Plaintiff or by the arbitrator upon a showing of good cause. The award
rendered by arbitration shall be final, binding and a non-appealable judgment, and the award may be entered in any court of competent jurisdiction in the United States. CBUK and the Class
Plaintiff shall cooperate in connection with the foregoing procedure in order to use their respective best efforts to preserve the benefit of any proposed settlement of the Coverage Action. 

        4.     The
Settlement Amount does not include any damages or recovery of any kind on claims, if any, against any of the Defendants arising out of, based upon, or attributable or
in any way related to, (a) the Defendants gaining any profit or advantage to which they were not legally entitled; (b) return by the Defendants of any remuneration, compensation or
consideration paid to them by CBUK; (c) return or an accounting by the Defendants of profits made from the purchase and sale or sale and purchase by them of securities of CBUK within the
meaning of §16(b) of the Securities Exchange Act of 1934 and amendments thereto, or similar provisions of any state statutory law or common law; (d) unjust enrichment, restitution
or disgorgement of profits, benefits, compensation or consideration received or obtained by the Defendants from CBUK or in any way connected with their employment by CBUK; or (e) reimbursement
of the premium CBUK paid, and the additional costs it incurred, to obtain National Union Fire Insurance Company of Pittsburgh, Pennsylvania ("National Union") Directors, Officers and Corporate
Liability Insurance Policy No. 002799882 (the "National Union Policy"). 

        5.     In
response to and in settlement of the Derivative Action, the Derivative Plaintiff and CBUK agree that CBUK's current board of directors has or will adopt by resolution,
or other means as appropriate, the changes in CBUK's corporate governance set forth in Exhibit A to this MOU. 

        6.     Class
Plaintiff and Derivative Plaintiff each agree to settle the Class Action and the Derivative Action, respectively, in accordance with the terms hereof and to dismiss
the complaints in the Class Action and Derivative Action, respectively, with prejudice and without costs to any Party. 

        7.     Class
Plaintiff agrees to enter into the broadest form of release that releases all Released Claims, as defined in ¶8 below, against all Released Persons, as
defined in ¶9 below, in the Class Action. 

        8.     For
purposes of the Class Action, "Released Claims" mean all claims, demands, rights, liabilities and causes of action of every nature and description whatsoever, known
or unknown, whether or not concealed or hidden, including, without limitation, claims for negligence, gross negligence, breach of fiduciary duty or care and/or breach of duty of loyalty, fraud, breach
of fiduciary duty, or violations of any state or federal statutes, rules or regulations (collectively, "Claims") that have been, could have been, or in the future could be, asserted by the Class
Plaintiff or any member of the Class against any of the Class Defendants or Released Persons arising out of, based upon, or in any way 

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related
to both the purchase of CBUK common stock and/or options during the Class Period and the Claims, facts, transactions, events, occurrences, acts, disclosures, statements, omissions or failures
to act that were asserted, or that might have been asserted, in the original complaints, or in an amended complaint, in the Class Action. 

        9.     For
purposes of the Class Action, "Released Persons" means each Class Defendant and each Class Defendant's past or present directors, officers, employees, partners,
members, principals, agents, representatives, associates, controlling shareholders, attorneys, accountants, auditors, consultants, advisors, custodians, personal or legal representatives,
predecessors, successors, parents, subsidiaries, divisions, joint ventures, assigns, spouses, marital communities, heirs, estates, related or affiliated entities, and any entity in which a Class
Defendant has a controlling interest, any members of their immediate families or any trust of which any Class Defendant is the settlor or which is for the benefit of any Class Defendant and/or
member(s) of his family; provided, however, Released Persons do not include any insurer of any Class Defendant, including without limitation, any of the
Insurers. 

        10.   Derivative
Plaintiff agrees to enter into a release that releases all Released Claims, as defined in ¶11 below, against all Released Persons, as defined in
¶12 below, in the Derivative Action. 

        11.   For
purposes of the Derivative Action, "Released Claims" means all Claims, known or unknown, whether not concealed or hidden, that have been, could have been, or in the
future could be, asserted against the "Released Persons," as defined below, which Claims arise out of, are based upon or attributable or in any way related to, or by reason of their factual or legal
relationship thereto, are in any way connected with, any of the facts, circumstances, allegations, claims, causes of action, representations, statements, financial statements, reports, disclosures,
prospectuses, offering circulars, transactions, events, occurrences, acts or omissions or failures to act, of whatever kind or nature, taking place prior to the execution date of a definitive
Stipulation of Settlement that were, or could have been, alleged in the Derivative Action, by, on behalf of, or for the benefit of (a) Derivative Plaintiff or any shareholder of CBUK, which are
of a derivative nature, or (b) CBUK. 

        12.   For
purposes of the Derivative Action, "Released Persons" means Defendants, and their respective marital communities and/or estates, if any, and their respective past,
present and future parent companies, subsidiaries, divisions, spouses, heirs, predecessors, successors, assigns, and any entity now or in the past controlled by them or controlling them. Released
Persons do not include, without limitation, Ernst & Young or any insurer of any Defendant, including the Insurers. 

        13.   For
purposes of the Class Action and Derivative Action, Released Claims do not encompass or include CBUK's Claims, if any, against any of the other Defendants arising
out of, based upon, or attributable or in any way related to, (a) gaining any profit or advantage to which such Defendants were not legally entitled; (b) return by such Defendants of any
remuneration, compensation or consideration paid to them by CBUK, (c) return or any accounting by such Defendants of profit made from the purchase and sale or sale and purchase by them of
securities of CBUK within the meaning of §16(b) of the Securities Exchange Act of 1934 and amendments thereto, or similar provisions of any state statutory law or common law;
(d) unjust enrichment, restitution or disgorgement of profits, benefits, compensation or consideration received or obtained by them from CBUK or in any way connected with their employment by
CBUK, (e) reimbursement of the premium CBUK paid, and the additional costs it incurred, to obtain the National Union Policy; (f) contribution by, or indemnification from, such Defendants
arising out of, based upon, or attributable or in any way related to, the Class Action or any other civil, criminal, administrative and regulatory proceeding; (g) return or reimbursement of any
amounts for which CBUK has indemnified such Defendants under CBUK's Articles of Incorporation or otherwise, (h) CBUK's obligation, if any, to indemnify its present or former directors or
officers to the extent required by its Articles of Incorporation and bylaws, any existing agreements, or any resolutions of its Board of Directors; (i) any loan, advance, indebtedness, note,
contract or agreement in which CBUK is a signator or party, or to which CBUK has or may 

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become
subrogated by contract, agreement, operation of law or otherwise; (j) or any obligation that may not be released by law (collectively, the "Non-Released Claims"), which
liability, if any, is expressly reserved, preserved and not released pursuant to this Settlement or dismissal of the Derivative Action with prejudice. 

        14.   This
Settlement is subject to, and conditioned upon, final approval of the Settlement by the Federal Court and approval of the dismissal of the Derivative Action by the
State Court. 

        15.   The
parties agree that they will cooperate to expeditiously prepare and execute a definitive Stipulation of Settlement and jointly seek preliminary and final Federal
Court approval of the Settlement as soon as practical. Thereafter, the Parties shall promptly seek approval by the State Court of the dismissal of the Derivative Action. 

        16.   The
Parties agree that they will cooperate to expeditiously prepare and execute a definitive "blow" provision providing that CBUK shall have the option to withdraw from
and void the Settlement as to all Defendants if 5% or more of the number of shares of CBUK common stock traded during the Class Period opt out. 

        17.   The
Parties agree that they will cooperate to expeditiously prepare and execute a bar order provision under the Private Securities Litigation Reform Act ("PSLRA") that
will be included in the Stipulation of Settlement providing that all future claims for contribution under any federal, state, or common law by any person or entity against any Released Persons in the
Class Action that arises out of the Class Action is barred under the PSLRA. 

        18.   All
costs of notice and administration of the Settlement shall be paid out of the Settlement Amount in the escrow account on a non-recourse basis. 

        19.   This
Settlement is not a claims-made settlement and, if all conditions under the Stipulation of Settlement are satisfied and the Settlement receives final
Federal Court approval and State Court approval for the dismissal of the Derivative Action, no Settlement consideration will be returned to Defendants. Allocation of the Settlement proceeds is the
sole responsibility of Class Plaintiff's counsel. 

        20.   While
Defendants deny that the claims advanced in the Class Action or Derivative Action were meritorious, Defendants agree and the final judgments in the Class Action
and the Derivative Action (the "Litigation") will state, that the Litigation was filed in good faith and in accordance with the applicable Washington law and Federal Rules of Civil Procedure,
including Rule 11 of the Federal Rules of Civil Procedure and Washington Superior Court Civil Rule 11, and is being settled voluntarily after consultation with competent legal counsel. 

        21.   Attorneys'
fees and expenses awarded to Class Plaintiff's counsel shall, with Federal Court approval, be paid to Class Plaintiff's counsel immediately upon award,
notwithstanding the existence of any timely filed objections thereto, or potential for appeal therefrom, or collateral attack on the Settlement, subject to the obligation of Class Plaintiff's counsel
to make appropriate refunds or repayments to the Settlement fund plus accrued interest at the rate paid on the escrow account by the financial institution holding it, if and when, as a result of any
appeal and/or further proceedings on remand, or successful collateral attack, the fee or cost award is reduced or reversed. All fees and expenses of counsel for the Derivative Plaintiff shall be paid
solely out of the Settlement Amount in the escrow account. 

        22.   If
for any reason the Settlement does not become final as defined by the Stipulation of Settlement, or if the Stipulation of Settlement is canceled or terminated, any
and all contributions to the Settlement fund, including accrued interest, less costs of notice and administration and taxes, shall be returned to CBUK. 

        23.   Defendants
have denied, and continue to deny, that they have committed any violation of federal or state securities laws or other laws, and are entering into this MOU
solely because the 

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proposed
Settlement would eliminate the burden and expense of further litigation and the uncertainty of trial. The provisions contained in this MOU shall not be deemed or offered or received in
evidence as a presumption, a concession, or an admission of any fault, liability, or wrongdoing, and, except as required to enforce this MOU or this Settlement, they shall not be offered or received
in evidence or otherwise used in the Class Action or Derivative Action by any Party. The Stipulation of Settlement shall contain a comparable disclaimer of liability. 

        24.   The
Parties agree to cooperate in issuing a Press Release announcing this Settlement that will be drafted by CBUK subject to review and approval by Class Plaintiff's and
Derivative Plaintiff's counsel within 24 hours of presentment of the draft. Any disagreement concerning the contents of that Press Release shall be resolved by the Special Settlement Master. 

        25.   All
disagreements in preparation of the formal settlement documents shall be resolved by the Special Settlement Master. 

        26.   This
MOU may be executed via facsimile transmission and by multiple counterparts, each of which shall be deemed an original and all of which shall constitute one and the
same instrument. All such facsimilied counterparts shall be considered originals and one and the same instrument with the same force and effect as if all such Parties had executed a single copy of
this Agreement. 

        AGREED
TO ON JUNE 13, 2003: 

	

 	
 	

MILBERG WEISS BERSHAD

HYNES & LERACH LLP
	

 	
 	

/s/  KEITH PARK      
 Keith Park

Lead Counsel for Class Plaintiff
	

 	

 	

ROBBINS UMEDA & FINK, LLP
	

 	
 	

/s/  JEFFREY FINK      
 Jeffrey Fink

Counsel for Derivative Plaintiff
	

 	

 	

LANE POWELL SPEARS LUBERSKY LLP
	

 	
 	

/s/  LARRY S. GANGNES      
 Larry S. Gangnes

Counsel for Defendant Cutter & Buck Inc.
	

 	

 	

MCNAUL EBEL NAWROT HELGREN &

VANCE, P.L.L.C.
	

 	
 	

/s/  ROBERT SULKIN      
 Robert Sulkin

Counsel for Defendant Harvey N. Jones
	 	 	 

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BETTS, PATTERSON & MINES P.S.
	

 	
 	

/s/  JAMES NELSON      
 James Nelson

Counsel for Defendant Martin J. Marks
	

 	

 	

GRAY CARY WARE & FREIDENRICH LLP
	

 	
 	

Counsel for Defendant Stephen S. Lowber
	

 	

 	

DANIELSON HARRIGAN LEYH & TOLLEFSON
	

 	
 	

/s/  TIMOTHY LEYH      
 Timothy Leyh

Counsel for Defendants Frances M. Conley, Michael S. Brownfield, Larry C. Mounger and James C. Towne

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QuickLinks

Exhibit 10.25QuickLinks
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As Filed with the Securities and Exchange Commission on July 29, 2003.
 *Information has been omitted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange
Commission.

 
 

Exhibit 10.26    
    

ENDORSEMENT AGREEMENT  

        THIS AGREEMENT, made and entered into as of this 15th day of July, 2003, by and between CUTTER & BUCK INC., Cutter & Buck Inc., 701
North 34th Street, Suite

400, Seattle, Washington 98103 (the "Company"), and ESCH & STAM, INC., c/o IMG Worldwide, Inc., IMG Center, 1360 East 9th Street, Suite 100, Cleveland, Ohio 44114 ("Licensor"): 

WITNESSETH  

        WHEREAS, Annika Sorenstam ("Sorenstam") is recognized as a highly skilled professional golfer; 

        WHEREAS,
Company desires to obtain the exclusive rights to use the name, fame, image and athletic renown of Sorenstam in connection with the advertisement and promotion of certain of its
products as provided herein; and 

        WHEREAS,
Sorenstam has licensed all such rights to Licensor, along with the right to sublicense such rights to third parties. 

        NOW,
THEREFORE, the parties agree as follows: 

        1.    Definitions.    As used herein, the following terms shall be defined as set forth below: 

        (a)   "Contract
Period" shall mean that period of time commencing on January 1, 2004 and concluding December 31, 2006, unless terminated sooner as provided
herein. 

        (b)   "Contract
Territory" shall mean worldwide. 

        (c)   "Contract
Year" shall mean the consecutive 12-month period beginning on any January 1st during the Contract Period. 

        (d)   "Distributors
and Sublicensees" shall mean the distributors and sublicensees listed on the attached Exhibit A, and
any additional distributors and sublicensees approved in accordance with Section 2 below. 

        (e)   "Gross
sales" shall mean total revenues, under generally accepted accounting principles, from sales of the Licensed Products, but does not include any revenue from
sales, use or other transaction taxes, duties, handling, graphics, embroidery or shipping, returns, trade discounts, allowances, markdowns and customer chargebacks. 

        (f)    "Net
Sales" shall mean Gross Sales less revenue from Company sales force samples, value added services, and liquidation sales (Licensed Product sales at substantially
discounted prices and out of their ordinary distribution channel) of Licensed Products. 

        (g)   "Licensed
Products" shall mean the "Tournament Collection by Annika", the "Annika Collection by Cutter & Buck" line of Products, or other similarly named Product
lines using the Sorenstam Identification on the Products' affixed labels, hang tags or logos. 

        (h)   "Products"
shall mean women's apparel, including women's shirts, pants, sweaters, jackets and rainwear. 

        (i)    "Sorenstam
Identification" means the right to use, subject to the provisions hereof, Sorenstam's name, fame, nickname, initials, autograph, voice, video or film
portrayals, facsimile signature, photograph, likeness and image or facsimile image, and any other means of endorsement by Sorenstam used in connection with the advertisement and promotion of the
Company and the Products (including the Licensed Products). 

 

        2.    Grant of Rights.    In consideration of the remuneration to be paid to Licensor pursuant hereto, Licensor grants
to Company and to its authorized Distributors and Sublicensees the right and license during the Contract Period to use the Sorenstam Identification solely in connection with the advertisement,
marketing and promotion of the Products within the Contract Territory as set forth herein. Licensor agrees not to grant the right to use the Sorenstam Identification to anyone other than Company in
connection with the advertisement and promotion of Products. It is understood that Company, its authorized Distributors and Sublicensees may not use the Sorenstam Identification in connection with any
items for sale or resale, other than the Products as specified herein. The foregoing rights to use the Sorenstam Identification is limited to television, radio and print advertising, advertising
published over the Internet (provided such material is limited to advertising or Product promotion only), public relations and marketing materials, point-of-sale displays, free
standing inserts, videos shown to customers and consumers, catalogs for customers and consumers, direct mail (including e-mail) and billboards. Company shall ensure that all uses of
Sorenstam Identification comply with applicable law. The Company shall obtain Licensor's approval for any additional distributor and sublicensee, which approval will not be unreasonably withheld. 

        3.    Prior Approval.    Company agrees that no use of the Sorenstam Identification nor any item used in connection
with the Sorenstam Identification (including any Licensed Product) will be made hereunder unless and until the same has been approved by Licensor. Licensor agrees that any material, advertising or
otherwise, submitted for approval as provided herein may be deemed by Company to have been approved hereunder if the same is not disapproved in writing within ten (10) business days after
receipt thereof. Licensor agrees that it will reasonably cooperate with the Company and that any material submitted hereunder will not be unreasonably disapproved and, if it is disapproved, that
Company will be advised of the specific grounds therefor. If Company desires immediate approval of advertising material hereunder, Company shall have the right to directly contact Licensor's
authorized agent to obtain such approval. Company agrees to protect indemnify and save harmless Licensor, Sorenstam and their authorized agent, or any of them, from and against my and all expenses,
damages, claims, suits, actions, judgments and costs whatsoever, arising out of, or in any way connected with any advertising material furnished by, or an behalf of Company, except with respect to any
inaccurate information furnished by them expressly for use in such advertising. 

        4.    Remuneration.    In consideration of the endorsement rights and granted hereunder, Company shall pay to Licensor
the annual fees (the "Annual Fee") in the Contract Years as follows: 

	Contract Year
 
	 	Annual Fee*

	2004	 	$	[*]
	2005	 	$	[*]
	2006	 	$	[*]

One
half of the Annual Fee will be due on or before January 10 and July 10 of each Contract Year. 

        5.    Bonuses.    It is agreed that should Sorenstam achieve any of the accomplishments set forth in the following
schedule during the Contract Period, then Company will provide Licensor the additional 

2

 

remuneration
set forth below for each such accomplishment due to the increased value in the Sorenstam Identification. 

	Accomplishment
 
	 	Bonus Amount*

	Major win (Dinah Shore, U.S. Open, British Open, LPGA Championship)	 	$	[*]
	

LPGA Tour Win	
 	
$	

[*]
	

PGA Tour Top 20	
 	
$	

[*]
	

All Other Event Wins	
 	
$	

[*]

Bonus
payments under this Section 5 will be due within forty-five (45) days following the achievement of each of the accomplishments set forth above pursuant to the terms set
forth in Section 9 below. 

        6.    Royalty on Licensed Products.    

        (a)   Calculation of Royalty Fees.    In addition to the payments provided in Sections 4 and 5, Company will
pay to Licensor in U.S. Dollars a fee ("Royalty Fee") of [*]% of the Net Sales of Licensed Products sold by Company directly or through its Distributors or Sublicensees during
the Contract Term. Notwithstanding anything to the contrary contained herein, the Royalty Fee shall also be payable as provided herein for any Licensed Products sold during 2003 or in accordance with
Section 12(b). 

        (b)   Payment of Royalty Fee.    Company will account for and pay the Royalty Fee to Licensor within
forty-five (45) days following the end of each fiscal quarter during the Contract Period beginning with the quarter ending January 31,
2004. Amounts not paid when due will accrue interest from the date due until paid at the rate of one and one-half percent
(11/2%) per month or the maximum interest permitted by applicable laws, whichever is less. 

        (c)   Royalty Report.    Company will deliver to Licensor, at the time each Royalty Fee payment is due, an itemized
statement ("Royalty Report") (i) indicating the total amount of Net Sales of all Licensed Products shipped during the previous fiscal quarter, and (ii) showing the number of Licensed
Products sold by category of Product. Company will furnish the required Royalty Report to Licensor whether or not any Licensed Products have been sold during the relevant fiscal quarter. The receipt
or acceptance by Licensor of any Royalty Report or of any payments made under this Agreement will not preclude Licensor from questioning the correctness thereof at any time. Licensor reserves the
right to audit the calculation of Net Sales provided in the Royalty Report at its own expense, and Company will cooperate with the Licensor in any such audit request. Should such an audit reveal a
shortfall in the calculation of Net Sales and the Royalty Fee, Company will promptly pay to Licensor the amount of the shortfall and, if the shortfall exceeds six percent (6%) with respect to the
period under the audit, Company will reimburse Licensor for the Licensor's reasonable costs associated with the audit. 

        (d)   Currency.    Whenever it becomes necessary under this Section 6 to convert a monetary amount from a
foreign currency to U.S. Dollars (whether for reporting, statements, or other purposes), such conversion will be made at the average of the currency exchange rates during the applicable reporting
period, as derived using the "FX History" Currency Tool, Interbank Rate, currently posted at www.oanda.com ("Conversion Tool"). A conversion for the
purpose of calculating a royalty payment pursuant to this Section 6 will be weighted according to the relative amount of net sales within each fiscal quarter. If the Conversion Tool is
discontinued or otherwise no longer available, the parties will use such other index or computation that replaces the Conversion Tool or otherwise will result in substantially the same conversion rate
as would be obtained by using the Conversion Tool. 

        8.    Services of Licensor.    (a) If Company desires to utilize the services of Sorenstam as a model in
connection with Company advertising to promote its Products or as a part of a special promotional 

3

 

appearance
for the Company, Licensor agrees, at the request of Company to provide the services of Sorenstam for two (2) days per Contract Year as mutually agreed upon and at places reasonably
convenient to her schedule. Each day shall not exceed three (3) hours unless otherwise agreed upon, Company agrees that it will reimburse Licensor for all reasonable travel, lodging and meal
expenses incurred by Licensor or Sorenstam in connection with such services. In addition, Licensor agrees that Sorenstam will appear at Company's booth at the 2004 PGA Show in Orlando, Florida at an
agreed upon time. Licensor agrees to use its best efforts to cause Sorenstam to make similar appearances at the PGA Show in 2005 and 2006. Company further understands that failure to utilize services
of Sorenstam pursuant to this section shall not result in any reduction in payments to Licensor hereunder nor may the obligation to provide services be carried forward or backward to any Contract
Year. Licensor will also arrange for Sorenstam to make at least one visit to the Company's headquarters and will use its best efforts to cause Sorenstam to make annual visits to the Company's
headquarter during the Contract Term. The obligations of Licensor to provide services of Sorenstam hereunder are subject to the condition that payments to Licensor are current and up to date. 

        (b)   Should
Company use Sorenstam in television advertising to promote Company's Products, Company will make all applicable required union scale and pension and welfare
payments. 

        (c)   During
the Contract Period, Sorenstam shall wear Company Products at all professional golf events and at all media appearances where appropriate. It is agreed that the
logo or name of Company (the "Company Logo") shall be affixed to the left chest locations of all Company Products which Sorenstam wears, when she plays professional golf. Company agrees that it will
be responsible for, and the cost of, affixing the Company Logo on all such Outerwear. Company acknowledges that other locations on Sorenstam's Products are reserved for Licensor's other sponsors,
which Licensor agrees shall not exceed three other sponsors without the Company's prior written approval, which approval shall not be unreasonably withheld. Furthermore, Company understands that if
Sorenstam participates in a special team event where there is an official uniform, then Sorenstam is permitted to wear such uniform during such event (e.g., Solheim Cup, World Cup, etc.). 

        (d)   During
each Contract Year, Company shall supply Sorenstam with sufficient quantities of Company's Products (at least 100 pieces of golf apparel) which are entirely
suitable for Sorenstam's use in tournament competition so she can wear such apparel while she plays professional golf. Company agrees to pay all charges in connection with the delivery of Products to
Sorenstam, including shipping charges, air freight charges and customs charges. Company agrees to reimburse Sorenstam's authorized agent for all such reasonable expenses incurred by it in connection
with the transfer of Products and Clothing to Sorenstam. 

        (e)   The
Company wants to obtain Sorenstam's styling, design and fabrication suggestions for the Licensed Products before each season is finalized. The parties also want to
ensure that the Company can meet each season's schedule for the Company's manufacture and sale of the Licensed Products. The Company and Sorenstam shall work together to meet those objectives,
including affording Sorenstam with the right and opportunity to review and comment on the design, color, materials and style of the Product Line for each season. The parties will work together to
develop the best way to facilitate that review, and the Company will, in good faith, consider any suggestions by Sorenstam before finalizing the Product Line, with such review and consideration to
constitute Licensor's approval as contemplated herein. 

        9.    Payments.    Licensor may elect to have payments made by check, wire transfer, or bank transfer. Unless such
election has been made in writing, all payments to be made by Company to Licensor under this Agreement shall be made by wire transfer (with no deductions in wire transfer 

4

 

fees)
to the account of Licensor (as set forth below), or to such other account as Licensor may instruct in writing, as follows: 

Mellon
Bank

1 Mellon Plaza

Pittsburg, PA

ABA 043-000-261

For credit to ML Account [*]* for further credit to Esch & Stam, Inc. Acct #[*]* 

Past
due payments hereunder shall bear interest at the rate of (a) one and one-half percent (11/2%) per month, or (b) the maximum interest rate permissible
under law, whichever is less. All amounts herein are in United States Dollars. 

        10.    Authorized Agent.    Licensor hereby designates IMG Worldwide, Inc., IMG Center, 1360 East 9th Street,
Suite 100, Cleveland, Ohio 44114, Attention: Mark Steinberg as its authorized agent for all purposes hereunder. All notices or submissions to be made or delivered Company to Licensor pursuant
to this Agreement shall be delivered to said address free of all charges such as, for example, shipping charges and customs charges. In the event that any such charges are paid by Licensor or by its
authorized agent, Company agrees to make prompt reimbursement. All notices or submissions to be made or delivered to the Company pursuant to this Agreement shall be delivered to 701 North
34th Street, Suite 400, Seattle, Washington 98103, Attention: Frances M. Conley. 

        11.    Default.    (a) If either party at any time during the Contract Period shall (i) fail to make any
payment of any sum of money herein specified to be made, or (ii) fail to observe or perform any of the covenants, agreements or obligations hereunder (other than the payment of money), the
nondefaulting party may terminate this Agreement as follows: as to (i) if such payment is not made within ten (10) business days after the defaulting party shall have received written
notice of such failure to make payment, or as to (ii) if such other default is not cured within thirty (30) days after the defaulting party shall have received written notice specifying
in reasonable detail the nature of such default. In order to be a sufficient notice hereunder, any such written notice shall specify in detail each item of default and shall specify the provision of
this Agreement which applies to each item of default, and shall specify in detail the action the defaulting party is required to take in order to cum each item of default. The termination rights set
forth in this section shall not constitute the exclusive remedy of the nondefaulting party hereunder, however, and if default is made by either party hereunder, the other may resort to such other
remedies as said party would have been entitled to if this section had been omitted from this Agreement, subject to the terms of this Agreement. Termination under the provisions of this section shall
be without prejudice to any rights or claims which the terminating party may otherwise have against the defaulting party, and if Company is the defaulting party, Company shall be responsible for any
and all payments due under the terms of this Agreement in addition to other liabilities set forth above. 

        (b)   If
Company shall become bankrupt or insolvent, or if Company's business shall be placed in the hands of a receiver, assignee or trustee, whether by voluntary act of
Company or otherwise, the Contract Period shall, at the election of Licensor, immediately terminate. 

        12.    Use of Sorenstam Identification After Termination.    

        (a)   Except
as provided in Section 12(b) below, from and after the termination of the Contract Period all of the rights of Company to the use of the Sorenstam
Identification shall cease absolutely and Company shall not thereafter use or refer to the Sorenstam Identification in advertising or promotion in any manner whatsoever. Except as provided in
Section 12(b) below, it is further agreed that following termination of the Contract Period, Company shall not advertise, promote, distribute or sell any item whatsoever in connection with the
use of any name, figure, design, logo, trademark or trade name similar to or suggestive of the Sorenstam Identification. 

5

 

        (b)   (i) As
long as the Company is not in material breach of the Company's obligations hereunder, and the quantities involved are not unreasonable in amount in the
commercial context of this Agreement, Company may liquidate and sell its inventory of Licensed Products (including any inventory then in production) for a period of one hundred and eighty
(180) days after the termination date of the Contract Period, subject to the Company's continued obligation to pay the Royalty Fee as provided in Section 6 above, and will deliver the
Royalty Report with respect to such liquidation sales within forty-five (45) days following the end of such 180-day period. 

        (ii)   If
Company has not disposed of all Licensed Products as provided in Section 12(b)(i) above by the end of the one hundred and eighty (180) day
period, Company, at its option, may either (a) remove or obliterate entirely from such Licensed Products (and any labels, tags, riders and the like) all references to any Sorenstam
Identification, then sell the same; or (b) destroy all such remaining Licensed Products. 

        13.    Trademarks.    Company agrees that it will not file, during the Contract Period or thereafter, any application
for trademark registration or otherwise obtain or attempt to obtain ownership of any trademark or trade name within the Contract Territory or in any other country of the world which consists of the
Sorenstam Identification or any mark, design or logo intended to obtain any rights to Sorenstam Identification or to identify products as being endorsed by Sorenstam. In the event that, prior to
commencement of the Contract Period, Company has filed one or more applications for registration of any such trademark, or otherwise has obtained any rights to such trademark, Company agrees to cause
such applications and/or trademarks to be assigned and transferred to Licensor forthwith. 

        14.    Reservation of Rights.    All rights not herein specifically granted to Company shall remain the property of
Licensor to be used in any manner Licensor deems appropriate. Company understands that Licensor bas reserved the right to authorize others to use Sorenstam Identification within the Contract Territory
and during the Contract Period in connection with all tangible and intangible items and services other than Products themselves. Licensor is not aware of any such rights which would conflict with the
nature or image of Company Products. 

        15.    Indemnity.    Company agrees to protect, indemnify and save harmless Licensor, Sorenstam and their authorized
agent or any of them, from and against any and all expenses, damages, claims, suits, actions, judgments and costs whatsoever, including reasonable attorneys' fees, arising out of, or in any way
connected with, actions or omissions of Company, any advertising material famished by, or an behalf of, Company or my claim or action for personal injury, death or other cause of action involving
alleged defects in Company's Products or services. Company agrees to provide and maintain, at its own expense, general commercial and, product liability insurance with limits no less then $3,000,000
and naming Licensor and Sorenstam as additional named insureds. Within thirty (30) days from the date hereof, Company will submit to Licensor evidence of such policy, requiring that the insurer
shall not terminate or materially modify such without written notice to Licensor at least twenty (20) days in advance, thereof. 

        16.    Special Right of Termination.    Company shall have the right to terminate this Agreement upon written notice
to Licensor if the commercial value of the Sorenstam Identification is substantially reduced because Sorenstam (i) has been charged with illegal or immoral conduct which could result in a
felony conviction and such charges have not been dismissed or terminated within ninety (90) days; or (ii) fails an officially sanctioned drug test or is criminally convicted of any
felony or drug related offense. Any termination pursuant to this paragraph shall become effective on the 30th day next following the date of receipt by Licensor of Company's written notice to so
terminate. 

        17.    Contract Extension.    Due to long product development lead times, Company and Licensor agree to begin
discussions for the renewal of this Agreement by July 1, 2005. 

6

 

        18.    Limited Liability.    Notwithstanding anything to the contrary herein, in the event Company incurs any
expenses, damages or other liabilities (including, without limitation, reasonable attorneys' fees) in connection with the performance or nonperformance of any term or provision hereof, Licensor's
liability to Company shall not exceed the remuneration, excluding reimbursement of expenses, actually paid to Licensor by Company. In no event will Licensor be liable for any indirect, incidental,
reliance, special or consequential damages arising out of the performance or nonperformance of this Agreement, whether or not Licensor had been advised of the possibility of such damages. It is
understood that Sorenstam is not a party hereto and has no liability hereunder but is an intended specific third party creditor beneficiary hereof. 

        19.    Waiver.    The failure of either party at any time or times to demand strict performance by the other of any of
the terms, covenants or conditions set forth herein shall not be construed as a continuing waiver or relinquishment thereof and each may at any time demand strict and complete performance by the other
of said terms, covenants and conditions. Any waiver of such rights must be set forth in writing. 

        20.    Severability.    If any provision of this Agreement shall be declared illegal, invalid, void or unenforceable
by any judicial or administrative authority, the validity of any other provision and of the entire Agreement shall not be affected thereby. 

        21.    Assignment.    This Agreement shall bind and inure to the benefit of Company and Licensor, and their respective
successors and assigns. 

        22.    Arbitration/Governing Law.    This agreement shall be governed by, and its provisions enforced in accordance
with, the laws of the State of Ohio, without regard to its principals of conflicts of laws. In the event a dispute arises under this agreement which cannot be resolved, such dispute shall be submitted
to arbitration and resolved by a single arbitrator (who shall be a lawyer not employed by or associated with either party to this agreement) in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect. All such arbitration shall take place at the office of the American Arbitration Association located in Cleveland, Ohio. Each party is entitled to
depose one (1) fact witness and any expert witness retained by the other party, and to conduct such other discovery as the arbitrator deems appropriate. The award or decision rendered by the
arbitrator shall be final, binding and conclusive and judgment may be entered upon such award by any court. 

        23.    Significance of Headings.    Section headings contained herein are solely for the purpose of aiding in speedy
location of subject matter and are not in any sense to be given weight in the construction of this Agreement. Accordingly, in case of any question with respect to the construction of this Agreement,
it is to be construed as though such section headings had been omitted. 

        24.    No Joint Venture.    This Agreement does not constitute and shall not be construed as constituting an
association, partnership, joint venture or relationship of principal and agent or employer and employee between Licensor and Company. Neither party shall have any right to obligate or bind the other
party in any manner whatsoever, and, except as expressly set forth herein, nothing herein contained shall give, or is intended to give, any rights of any kind to any person. 

        25.    Entire Agreement.    This writing constitutes the entire agreement between the parties hereto and may not be
changed or modified except by a writing signed by the party or parties to be charged thereby. 

7

 

        IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written. 

	CUTTER & BUCK INC.	 	ESCH & STAM, INC.
	

By	
 	

/s/  FRANCES M. CONLEY      
 Name:    Frances M. Conley

Title:      Chairman and CEO	
 	

By	
 	

/s/  DAVID ESCH      
 Name:    David Esch

Title:      

8

 
EXHIBIT A

  DISTRIBUTORS AND SUBLICENSEES  

	CONTACT INFORMATION
 
	 	REGION

	Caulfeild Apparel Group Ltd.

Tel: 416-636-5900

Fax: 416-636-8451

Contact: Paul Bickerton	 	Canada
	
Cutter & Buck Sportswear (Europe) Ltd.

Boland Ind. Est., Mallow Rd., Cork, Rep. of Ireland

Tel: +353 21 42111 60

Fax: +353 21 42111 66

Contact: Peter Dwyer, General Manager	
 	
Europe
	
The Seibu Department Stores, Ltd. and

Descente (sublicensee of Seibu)

Tel: 813-3455-0124

Fax: 813-3455-6119

Contact: Yoshio Ishii, General Manager	
 	
Japan
	
Pan-West Pte. Ltd.

Tel: 65-356-5553

Fax: 65-356-5557

Contact: Alan Loh, Regional Director	
 	
Singapore, Malaysia, Indonesia
	
Pinx International Co., Ltd.

Tel: 82-2-3471-9167

Fax: 82-02-598-1116

Contact: Ray Yoo, General Manager	
 	
Korea
	
Goarg Pty. Ltd.

Tel: 61-73-891-3400

Fax: 61-73-891-3899

Contact: Alan Goad	
 	
Australia/New Zealand
	
Global Golf

Tel: 27-1183-6011-1930

Fax: 27-11-803-0505

Contact: Langley Perrins	
 	
South Africa
	
Pro Golf International

Tel: 971-4-338-6477

Fax: 971-4-338-6416

Contact: Tiffany Davis	
 	
UAE, Saudi Arabia, Bahrain, Qatar, Kuwait, Oman

9

QuickLinks

Exhibit 10.26

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