Document:

Exhibit 10.16

 

WINDY
CITY INVESTMENTS HOLDING, L.L.C.

 

AMENDED
AND RESTATED UNITHOLDERS AGREEMENT

 

THIS AMENDED AND RESTATED UNITHOLDERS AGREEMENT (this “Agreement”)
is made as of December 14, 2007, effective as of November 13, 2007
(the “Effective Date”), by and among Windy City Investments Holdings,
L.L.C., a Delaware limited liability company (the “Company”) and certain
employees of the Company or its Subsidiaries (each, an “Executive” and
collectively, the “Executives”) as well as any other Person who, at any
time, acquires Units in accordance with the terms of this Agreement and the LLC
Agreement as determined by the Board (each, an “Other Unitholder” and
collectively, the “Other Unitholders”). 
The Executives and the Other Unitholders are collectively referred to
herein as the “Unitholders” and individually as a “Unitholder.”  Except as otherwise provided herein or
defined in the LLC Agreement (as defined below), capitalized terms used herein
are defined in Section 5 hereof.

 

WHEREAS, (i) on the Effective Date certain
Executives acquired Class A Units pursuant to Class A Purchase and
Exchange Agreements between each of them and the Company, (ii) certain
Executives are acquiring Class A Units on December 14, 2007 pursuant
to the separate Class A Purchase Agreements, and (iii) the Executives
are receiving Class B Units on December 14, 2007 pursuant to the
separate Class B Unit Grant Agreements;

 

WHEREAS, certain Other Unitholders may purchase Units
or other equity securities or interests in the Company from time to time in the
future;

 

WHEREAS, the Unitholders are parties to the LLC
Agreement;

 

WHEREAS, certain Unitholders and the Company entered
into this Agreement on November 13, 2007 and now desire to amend and
restate this Agreement as set forth herein;

 

WHEREAS, the Company has issued additional Units to
new Unitholders and such parties desire to enter into this Agreement to be
applicable to all Units issued since the Effective Date for the purposes, among
others, of (i) assuring continuity in the management and ownership of the
Company and (ii) limiting the manner and terms by which Units may be
transferred.

 

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

 

1.                                       Representations and Warranties. 
Each Executive represents and warrants that (a) such Executive is
the record owner of the number of the Units that he has been granted or has
elected to acquire as indicated on the Offering Schedule, (b) this
Agreement has been duly authorized, executed and delivered by such Executive
and constitutes the valid and binding obligation of such Executive, enforceable
in accordance with its terms, (c) such Executive has not granted and is
not a party to any proxy, voting trust or other agreement which is inconsistent
with, conflicts with, or violates any provision of this Agreement and (d) such
Executive has no claim in respect of, and waives any claim related to, equity
securities issued by Nuveen or its 

 

 

predecessors prior to the date hereof other than those claims for
payments in respect of such securities in the applicable amount calculated
pursuant to Section 2.2 or Section 2.5 of the Merger Agreement, and
waives any claim related to the promised issuance of equity securities of
Nuveen in the future pursuant to any agreement entered into prior to the
Restatement Date.

 

2.                                       Restrictions on Transfer of Units. 
The following transfer restrictions shall apply to any issued and
outstanding Class B Units and Stock (as defined below) in addition to, and
not in substitution for, any other transfer restrictions:

 

(a)                                  Transfer of Securities. 
No Executive shall Transfer any interest in Class B Units or Stock
(as defined below) without the prior written consent of the Board, except for
Transfers of Vested Class B Units (i) to a Permitted Transferee in
accordance with Section 2(c) hereof, (ii) in connection
with a Sale of the Company in accordance with the LLC Agreement, (iii) in
connection with any repurchase rights provided in Section 4, or (iv) with
respect to a Transfer of Stock, in accordance with Section 2(b)

 

(b)                                 Transfers Following an IPO by Executives. 
Shares of stock or other securities distributed in respect of, or
received on account of, the Class B Units (and any other shares of stock
or property subsequently received in respect of such stock or securities)
(collectively, “Stock”) held by an Executive or any Permitted Transferee
of such Executive (“Applicable Shares of Stock”) shall be subject to the
following restrictions on Transfer (in addition to, and not in substitution
for, any other restriction on Transfer applicable to such Applicable Shares of
Stock of such Executive or such Permitted Transferee): (i) no unvested
Applicable Shares of Stock may be Transferred, (ii) no Applicable Shares
of Stock may be Transferred during any Underwriter’s Restriction Period, (iii) commencing
upon the expiration of the Underwriter’s Restriction Period, if any, imposed in
connection with an IPO, no more than 33% of the aggregate number of shares of
Applicable Shares of Stock held by an Executive or his Permitted Transferee at
the end of the Underwriter’s Restriction Period may be Transferred by such Executive
or Permitted Transferee during any 12 consecutive months other than to a
Permitted Transferee, (iv) in the event an Executive’s employment with the
Company and its Subsidiaries is terminated at any time prior to an IPO in a
Disqualifying Termination, the initial 12-month period specified in clause (iii) above
applicable to such Executive and such Executive’s Permitted Transferees shall
commence on the six-month anniversary of the expiration of the Underwriter’s
Restriction Period imposed on other Executives in connection with the IPO and (v) in
the event an Executive’s employment with the Company (including as the “Company,”
the issuer of the Stock) and its Subsidiaries terminates after the IPO in a
Disqualifying Termination and prior to the third anniversary of the expiration
of the Underwriter’s Restriction Period, no vested Applicable Shares of Public
Stock held by such Executive and such Executive’s Permitted Transferees may be
Transferred during the six-month period commencing upon such termination of
employment (the “Termination Blackout Period”) and the Termination
Blackout Period shall be disregarded and ignored for purposes of determining
the number of Applicable Shares of Stock that may be Transferred by such
Executive and such Executive’s Permitted Transferees during any 12 consecutive
month period that includes the Termination Blackout Period.  Subject to any other agreement applicable to
Applicable Shares of Stock (including any registration rights agreement), the
Applicable Shares of Stock held by an Executive shall not be subject to
restrictions on Transfer under this Section 2(b) upon the
expiration of the longest period specified in this Section 2(b) that
is 

 

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applicable to such Executive. 
Upon the written request of any Executive, the Company shall promptly
inform such Executive of the number of vested Applicable Shares of Stock that
the Company calculates such Executive may Transfer consistently with this Section 2(b) subject
to the terms and conditions hereof.

 

(c)                                  Permitted Transfers. 
The restrictions set forth in Section 2(a) or Section 2(b) shall
not apply to any Transfer of Vested Class B Units or Stock by  an Executive (A) who is an individual
(i) in the event of such Executive’s death, pursuant to will or applicable
laws of descent or distribution, (ii) to such Executive’s legal guardian
(in case of any mental incapacity) or (iii) to or among his or her Family
Group, or (B) that is an entity, to or among its Affiliates; provided that
the restrictions contained in this Agreement and any other agreement applicable
to such Executive or such Vested Class B Units and/or Stock will continue
to be applicable to the Units and/or Stock after any Transfer pursuant to this Section 2(c),
subject to Section 8.  At
least 30 days prior (other than in the case of Transfers pursuant clauses (A)(i) or
(ii) above, in which case as promptly as practical following such
Transfer) to the Transfer of vested Units or vested Stock pursuant to this Section 2(c),
the Transferee(s) will deliver a written notice to the Company, which
notice shall disclose in reasonable detail the identity of such
Transferee.  Any Transferee of Vested Class B
Units or Stock pursuant to a Transfer in accordance with the provisions of this
Section 2(c) is herein referred to as a “Permitted
Transferee.”  Notwithstanding the
foregoing, (A) no party hereto shall avoid the provisions of this
Agreement or the LLC Agreement by (i) making one or more Transfers to one
or more Permitted Transferees and then disposing of all or any portion of such
party’s interest in any such Permitted Transferee or (ii) Transferring the
securities of any entity holding (directly or indirectly) Units or Stock and (B) if
and to the extent that the Board determines in good faith that the Transfer of
Vested Class B Units or Stock to a Permitted Transferee pursuant to this Section 2(c) would
have an adverse effect on the Company, including by causing the Company to
become subject to the reporting requirements of the Exchange Act, the Board may
delay, modify, or, if determined by the Board to be necessary to avoid such
adverse effect, prohibit any such Transfer pursuant to this Section 2(c).  Any Permitted Transferee shall be bound by,
and subject to, the terms of this Agreement to the same extent that Executive
would be bound by such terms if the Vested Class B Units or vested Stock
held by a Permitted Transferee were still held by Executive.

 

(d)                                 Implementation. 
The Company or its Subsidiaries may apply an appropriate legend on any
shares of Stock, issue stop orders or take such actions as are necessary or
appropriate to implement the provisions of this Section 2.

 

(e)                                  Termination of Restrictions. 
The restrictions set forth in this Section 2 shall continue
with respect to each Class B Unit and share of Stock until a Liquidity
Event other than an IPO.

 

3.                                       Holdback.  In connection
with any Public Offering, each Executive shall enter into any lockup, cutback,
or other limitations or transfer restrictions requested in good faith based
upon the then prevailing market precedent and public investor expectations by
the underwriters managing such Public Offering with respect to all of the Class B
Units granted to such Executive and any Stock received in respect of such Class B
Units.

 

3

 

4.                                       Repurchase Option. 
The vested Units held by an Executive, will be subject to repurchase, in
each case by the holders of Class B Units who are then employed by the
Company or its Subsidiaries, the Company and its Subsidiaries, and the Investor
Members pursuant to the terms and conditions set forth in this Section 4
(the “Repurchase Option”).  In
addition, the Repurchase Option and the principles and procedures of this Section 4
shall also apply with respect to the purchase of Class A Units underlying
Deferred Units that may later become subject to repurchase or cash settlement
by the Company or its subsidiaries pursuant to the terms of the applicable
purchase or grant agreement related to such Deferred Units.

 

(a)                                  Repurchase Priority. 
In the event of a termination of an Executive’s employment with the
Company or its Subsidiaries for any reason, first the holders of Class B
Units who are designated by the Chief Executive Officer of the Company  (subject to the consent of the Board, or any
subcommittee thereof, which consent shall not be unreasonably withheld,
conditioned or delayed) (“Designated Managers”), second the Company and
its Subsidiaries, and third the Investor Members shall have the right, but not
the obligation, to repurchase (as designated by the Chief Executive Officer in
the case of the Designated Managers and pro rata, in the case of the Investor
Members) all or any portion of the vested Units or vested shares of Stock then
held by such Executive or such Executive’s Permitted Transferees.

 

(b)                                 Repurchase Price. 
The price per vested Unit or share of vested Stock to be paid pursuant
to repurchases under this Section 4 shall be as follows: (1) in
the case of the repurchase of a vested Class B Unit or Stock received in
respect of Class B Units, after a termination by the Company for Cause,
90%, as applicable, of the Liquidation Value of such vested Unit or the Fair
Market Value of such vested Stock as of the date of repurchase; and (2) in
the case of a termination of Executive’s employment for any other reason or
under any other circumstances in which a repurchase option exists, the
Liquidation Value of such vested Unit or Fair Market Value of such vested Stock
as of the date of repurchase.  Any
amounts paid to repurchase a vested Unit or vested Stock under this Section 4
shall be paid in cash.

 

(c)                                  Repurchase Procedure.

 

(i)                                   As soon as practicable, but in any event
within 30 days, after the end of the calendar quarter in which the Company has
determined that there are Units or shares of Stock subject to repurchase
pursuant to this Section 4 (the “Available Equity”) the
Company shall give written notice (the “Available Equity Notice”) to
each Designated Manager setting forth the amount of Available Equity.  The Designated Managers shall be entitled to
repurchase all or any portion of the Available Equity by delivery of a written
notice (the “Designated Managers Repurchase Notice”) to the Executive
and Company within 120 days after (or, if later, within 60 days after the end
of the calendar quarter containing) the Executive’s Separation Date (the “Repurchase
Notice Period”).  The Designated
Managers Repurchase Notice shall set forth the amount of Available Equity to be
acquired and the time and place for the closing of the transaction.  A Designated Manager may condition his or her
election to purchase Available Equity on the election of one or more of the
other Designated Managers to purchase Available Equity.  If the Designated 

 

4

 

Managers elect to
purchase an aggregate amount of Available Equity in excess of the amount of
Available Equity specified in the Available Equity Notice, then the Available
Equity shall be allocated among the Designated Managers on a pro rata basis
according to the amount of Available Equity each Designated Manager elected to
purchase in their respective Designated Managers Repurchase Notice.

 

(ii)                                If for any reason the Designated Managers
do not elect to purchase all of the Available Equity, then the Company or any
of its Subsidiaries shall be entitled to repurchase all or any portion of the
Available Equity that was not purchased pursuant to Section 4(c)(i) (the
“Remaining Equity”).  As soon as
practicable after the Company has determined that the Designated Managers will
not purchase all of the Available Equity, but in any event within 150 days
after the beginning of the Repurchase Notice Period corresponding to such
Available Equity, or, if later, within 90 days after the end of the calendar
quarter containing the Executive’s Separation Date, the Company or any of its
Subsidiaries shall give written notice (the “Company Repurchase Notice”)
to the Executive and each Designated Manager setting forth the amount of Remaining
Equity it intends to purchase. 
Notwithstanding anything to the contrary in this Agreement, the Company
or any of its Subsidiaries may acquire such Remaining Equity with stock of
Windy Holdings with a Fair Market Value equal to the repurchase price determined
under Section 4(b) and then if Windy Holdings immediately
redeems such stock for cash.

 

(iii)                             If for any reason the Company and its Subsidiaries
does not elect to purchase all of the Remaining Equity, then the Investor
Members shall be entitled to repurchase all or any portion of the Remaining
Equity that was not repurchased by the Company and its Subsidiaries pursuant to
Section 4(c)(ii) above. 
As soon as practicable after the Company has determined that it will not
purchase all of the Remaining Equity, but in any event within 180 days after
the beginning of the Repurchase Notice Period corresponding to such Remaining
Equity, or, if later, within 120 days after the end of the calendar quarter
containing the Executive’s Separation Date, the Company shall provide an
Available Equity Notice to each Investor Member setting forth the amount of
Remaining Equity.  The Investor Members
may elect to purchase all or any portion of the Remaining Equity by giving
written notice to the Company within 30 days after the Available Equity Notice
has been delivered to the Investor Members by the Company.  If the Investor Members elect to purchase an
aggregate amount of Remaining Equity in excess of the amount of Remaining
Equity specified in the Available Equity Notice, then the Remaining Equity
shall be allocated among the Investor Members on a pro rata basis according to
the number of Class A Units owned by each Investor Member on the date of
the Available Units Notice.  Any Investor
Member may condition its election to purchase such Remaining Equity on the
election of one or more other Investor Members to purchase 

 

5

 

Remaining
Equity.  As soon as practicable, and in
any event within 10 days after the expiration of the 30-day period beginning on
the date the Available Equity Notice is delivered to the Investor Members
pursuant to this Section 4(c)(iii), the Investor Members shall
deliver a further Repurchase Notice (the “Investor Member Repurchase Notice”)
to the holders of such Remaining Equity and the Company setting forth the
amount of Remaining Equity to be acquired and the time and place for the
closing of the transaction.  At the time
the Investor Members deliver the Investor Member Repurchase Notice to the
holders of such Remaining Equity, the Company shall also deliver written notice
to each Investor Member setting forth the amount of Remaining Equity such
Investor Member is entitled to purchase and the time and place of the closing
of the transaction.

 

(d)                                 Notwithstanding anything to the contrary
contained in this Agreement, all repurchases of Units or Stock by the Company
and its Subsidiaries shall be subject to applicable restrictions contained in
the Act, as amended, or any successor statute and in the Company’s and its
Subsidiaries’ debt and equity financing agreements.  If any such restrictions prohibit the
repurchase of Units hereunder which the Company and its Subsidiaries is
otherwise entitled to make, the Company will provide written notice to the
Investor Members as soon as reasonably practicable after such determination and
the order of repurchase for the Company and its Subsidiaries and the Investor
Members as set forth in this Section 4(c) shall be reversed (i.e.,
the Investor Members will be substituted for the Company and its Subsidiaries
in Section 4(c)(c)(ii) above and the Company and its Subsidiaries
will be substituted for the Investor Members in Section 4(c)(c)(iii) above).  In such event, the period during which the
Company and its Subsidiaries may exercise such repurchase right under Section 4(c)(c)(iii) shall
be tolled during the period such restrictions are in effect and the Company and
its Subsidiaries shall be allowed to exercise their repurchase rights under Section 4(c)(iii) during
the 30-day period following the date such restrictions are no longer in effect;
provided, however, that such repurchase rights shall lapse and terminate if
such purchase is not consummated within such 30-day period following the end of
such tolling period.

 

(e)                                  Upon delivery of the full consideration
for the Units or Stock at the closing of a repurchase pursuant to this Section 4,
the holder of such Units or Stock from whom such securities are to be purchased
shall cease to have any rights as a holder of such securities, and such
securities shall be deemed purchased in accordance with the applicable
provisions hereof and the purchaser thereof shall be deemed the owner (of
record and beneficially) and holder(s) of such securities, whether or not
the certificate representing such Units or Stock has been delivered as required
by this Agreement.

 

(f)                                    Any election by the Company and its
Subsidiaries or the Investor Members (or, in each case, any of their designees)
to purchase Units or Stock pursuant to this Section 4 shall be
revocable by such Person (with respect to all or any portion of the Units
elected to be purchased) at any time prior to the closing of such purchase,
without any liability whatsoever to such Person in respect of the rights and
obligations in this Section 4.

 

6

 

(g)                                 The provisions of this Section 4
will terminate with respect to all Units upon the consummation of an IPO.

 

5.                                       Definitions.

 

(a)                                  For the purposes of this Agreement, the
following terms have the meanings set forth below:

 

“Accredited Investor” means an “accredited
investor” within the meaning of Regulation D of the Securities Act.

 

“Act” means the Delaware Limited Liability
Company Act, 6 Del. L. § 18-101, et seq.,
as it may be amended from time to time, and including any successor statute.

 

“Affiliate” has the meaning given such term in
the LLC Agreement.

 

“Agreement” has the meaning set forth in the
preamble.

 

“Board” means the Board of Managers of the
Company.

 

“Cause” has the meaning given such term in the
Executive’s Class B Unit Grant Agreement.

 

“Class A Unit
Purchase and Exchange Agreement” means the Class A Unit Purchase and
Exchange Agreement as may be in effect from time to time for holders of Class A
Units.

 

“Class A Units” has the meaning given term
in the LLC Agreement.

 

“Class A-Prime Units” has the meaning
given such term in the LLC Agreement.

 

“Class B Unit Grant Agreement” means the Class B
Unit Grant Agreement as may be in effect from time to time for holders of Class B
Units.

 

“Class B Units” has the meaning given such
term in the LLC Agreement.

 

“Company” has the meaning set forth in the
preamble.

 

“Deferred Units” means any Deferred Units
issued by a subsidiary of the Company and any Class A Units of the Company
or other property issued to the holders thereof in settlement thereof.

 

“Designated Managers” has the meaning given
such term in Section 4(a).

 

“Disability” means Executive’s inability, due
to illness, accident, injury, physical or mental incapacity or other
disability, to carry out effectively Executive’s duties and obligations to the
Company or any of its Subsidiaries or, if applicable based on Executive’s
position, to participate effectively and actively in the management of the
Company or any of its Subsidiaries for a period of at least 90 consecutive days
or for shorter periods aggregating at least

 

7

 

120 days (whether or not
consecutive) during any twelve month period, as determined in the reasonable
judgment of the Board. A Disability shall be deemed to have occurred on the
date that either Executive or Executive’s personal representative or legal
guardian, on the one hand, or the Company, on the other hand, provides notice
to the other party of the satisfaction of each of the requirements to
constitute a Disability set forth above or on such other date as the parties
shall mutually agree.

 

“Disqualifying Termination” shall mean a
termination of the Executive’s employment with the Company and its Subsidiaries
for any reason other than the Executive’s death, Disability, termination by the
Company or the Subsidiary without Cause or the Executive’s resignation for Good
Reason.

 

“Exchange Act” means the Securities Exchange
Act of 1934, as it may be amended from time to time, and including any
successor statute.

 

“Executive” means an Executive and/or its
Permitted Transferees.

 

“Fair Market Value” has the meaning given such
term in the LLC Agreement.

 

“Family Group” means, with respect to a Person
who is an individual, such Person’s spouse and descendants (whether natural or
adopted), and any trust, family limited partnership, limited liability company
or other entity wholly owned, directly or indirectly, by such Person or such
Person’s spouse and/or descendants that is and remains solely for the benefit
of such Person and/or such Person’s spouse and/or descendants and any
retirement plan for such Person.

 

“Good Reason” has the meaning given such term
in any employment agreement or benefit plan of the Company applicable to the Executive,
provided, however, that if no such agreement or similar arrangement shall apply
to such Executive, the concept of resignation with Good Reason shall not apply
to such Executive.

 

“Investor Members” has the meaning given such
term in the LLC Agreement.

 

“IPO” has the meaning given such term in the
LLC Agreement.

 

“Liquidation Value” has the meaning given such
term in the LLC Agreement.

 

“LLC Agreement” means the Company’s Amended and
Restated Limited Liability Company Agreement (as the same may be amended
supplemented or otherwise modified from time to time in accordance with its
terms.)

 

“Madison Dearborn” has the meaning given such
term in the LLC Agreement.

 

“Manager” has the meaning given such term in the
LLC Agreement.

 

“Merger Agreement” means that Agreement and
Plan of Merger entered into as of June 19, 2007 by and among Windy City
Investments, Inc., a Delaware corporation, Windy City Acquisition Corp, a
Delaware corporation, and Nuveen.

 

8

 

“Nuveen” means Nuveen Investments, Inc, a
Delaware Corporation.

 

“Offering Schedule” means (a) the Windy
City Investments Holdings, L.L.C. Equity and Deferred Unit Offering Schedule or
(b) Windy City Investments Holdings, L.L.C. Class B Unit Award
Schedule entered into by Executive, as the case may be.

 

“Other Unitholders” has the meaning set forth
in the preamble.

 

“Permitted Transferees” has the meaning set
forth in Section 2(c).

 

“Person” means any individual, partnership,
corporation, association, joint stock company, trust, joint venture, limited
liability company, unincorporated organization, governmental entity or
department, agency or political subdivision thereof.

 

“Public Sale” has the meaning given such term
in the LLC Agreement.

 

“Registration Agreement” has the meaning given
such term in the LLC Agreement.

 

“Restatement Date” has the meaning given such
term in the LLC Agreement.

 

“Sale of the Company” has the meaning given
such term in the LLC Agreement.

 

“Securities Act” means the Securities Act of
1933, as amended from time to time and any successor statute, and any rules or
regulations promulgated thereunder.

 

“Stock” has the meaning set forth in Section 2(b).

 

“Subsidiary” has the meaning given such term in
the LLC Agreement.

 

“Transfer” has the meaning given such term in
the LLC Agreement.

 

“Underwriter’s Restriction Period” means the
period during which an underwriter participating in a Public Offering requests
that Stock held by an Executive should be subject to lock up, cutback
provisions, transfer restrictions or other limitations that, in each case, are
imposed in good faith based on then-prevailing market precedent and public
investor expectations, it being understood that the Underwriter’s Restriction
Period shall end if the applicable underwriter waives future
compliance with the provisions, restrictions and limitations set forth above.

 

“Units” has the meaning given such term in the
LLC Agreement.

 

“Unitholders” has the meaning set forth in the
preamble.

 

“Vested Class B Units” has the meaning
given such term in the Class B Unit Grant Agreement.

 

“Windy Holdings” means Windy City Investments, Inc.,
a Delaware corporation and a direct, wholly-owned Subsidiary of Holdings.

 

9

 

6.                                       Notices.  Any notice
provided for in this Agreement must be in writing and must be personally
delivered, sent by telecopy or email with original to follow by overnight
courier service, by first class mail (postage prepaid and return receipt
requested) or reputable overnight courier service (charges prepaid) to the
recipient at the addresses indicated below:

 

	
  Notices
  to the Company:

  
	
   

  
	
  Windy
  City Investments Holdings, L.L.C.

  
	
  c/o
  Madison Dearborn Partners

  
	
  Three
  First National Plaza

  
	
  38th
  Floor

  
	
  Chicago,
  Illinois 60602

  
	
  Facsimile:
  (312) 895-1056

  
	
  Telephone:
  (312) 895-1000

  
	
  Electronic
  mail: mtresnowski@MDCP.com

  
	
  Attention:

  	
  General Counsel

  
	
   

  
	
  with
  copies to (which shall not constitute notice):

  
	
   

  
	
  Madison
  Dearborn Capital Partners

  
	
  Three
  First National Plaza

  
	
  38th
  Floor

  
	
  Chicago,
  Illinois 60602

  
	
  Facsimile:
  (312) 895-1056

  
	
  Telephone:
  (312) 895-1000

  
	
  Electronic
  mail: mtresnowski@MDCP.com

  
	
  Attention:
  

  	
  General Counsel

  
	
   

  
	
  and

  
	
   

  
	
  Kirkland &
  Ellis LLP

  
	
  200
  East Randolph Drive

  
	
  Chicago,
  IL 60601

  
	
  Facsimile:
  (312) 861-2200

  
	
  Telephone:
  (312) 861-2000

  
	
  Electronic
  mail: rporter@kirkland.com

  
	
  Attention:

  	
  Richard W. Porter, P.C.

  
	
   

  	
  Scott D. Price

  
	
   

  
	
  Notices
  to Executive:

  
	
   

  
	
  At
  the Executive’s address provided on the signature page hereto.

  

 

10

 

	
  with
  copies to (which shall not constitute notice):

  
	
   

  
	
  McDermott
  Will & Emery LLP

  
	
  227
  West Monroe Street, Suite 4400

  
	
  Chicago,
  IL 60606

  
	
  Facsimile:
  (312) 984-7700

  
	
  Telephone:
  (312) 984-2121

  
	
  Electronic
  mail: mharris@mwe.com

  
	
  Attention:

  	
  Mark A. Harris

  

 

or to such other address or to the attention of such
other Person as the recipient party has specified by prior written notice to
the sending party.  Any notice under this
Agreement shall be deemed to have been given when so delivered or, if sent by
telecopy the day of receipt, or if mailed, three days after deposit in the U.S.
mail (return receipt requested) and one day after deposit with a reputable
overnight courier service.

 

7.                                       Restrictive Legend. 
Each certificate evidencing Units or Stock shall be stamped or otherwise
imprinted with the legend set forth below, as well as any other legends that
may be required under the LLC Agreement or a Unitholder’s unit purchase
agreement with the Company.  Upon the
request of the holder thereof, the legend set forth below shall be removed from
the certificates evidencing any Units which cease to be Units in accordance
with the definition thereof.

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE PROVISIONS, AND CERTAIN
OTHER AGREEMENTS SET FORTH IN A UNITHOLDERS AGREEMENT BETWEEN THE COMPANY AND
EXECUTIVE DATED AS OF DECEMBER 14, 2007, A COPY OF WHICH MAY BE OBTAINED
BY THE HOLDER HEREOF AT THE COMPANY’S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE.”

 

8.                                       Transfer of Units. 
Prior to the Transfer of any Units or Stock (other than pursuant to a
Sale of the Company or after an IPO as permitted by Section 2(b))
to any Person, the Transferring holder of Units or Stock subject to this
Agreement shall cause the prospective Transferee to be bound by this Agreement
and to execute and deliver to the Company a counterpart of or joinder to the
LLC Agreement and the Unitholders Agreement (or other similar agreement) as a
condition to the effectiveness of such Transfer.  Upon the execution and delivery of such
counterpart or joinder by such Person, subject to the requirements of the LLC
Agreement, such Person’s acquired Units shall be Units under this Agreement and
such Person shall be a Unitholder hereunder with respect to such Units.

 

9.                                       Irrevocability: Binding Effect on
Successors and Assigns.  Executive hereby acknowledges
and agrees that, except as provided under applicable federal state, or foreign
securities laws, that Executive is not entitled to cancel, terminate or revoke
this Agreement, the LLC Agreement, or any agreements of Executive hereunder,
and that this Agreement, the LLC Agreement and such other agreements shall
survive the death or disability of Executive and shall be binding upon and
inure to the benefit of the parties and their respective heirs, executors,

 

11

 

administrators, successors, legal representatives and assigns.  If Executive is more than one person, the
obligations of Executive hereunder shall be joint and several and the
agreements, representations, warranties and acknowledgments herein contained
shall be deemed to be made by and be binding upon each such person and his, her
or its heirs, executors, administrators, successors, legal representatives, and
assigns (including subsequent holders of Units).  The agreements, representations, warranties
and acknowledgments herein contained shall be deemed to be made by and be
binding upon the Company and its successors and assigns (including the
surviving corporation to any merger or other reorganization of the Company).

 

10.                                 Survival of Covenants, Representations
and Warranties.  All covenants, representations and warranties
contained herein or made in writing by any party in connection herewith shall
survive the execution and delivery of this Agreement, the LLC Agreement, those
documents expressly referred to herein and the consummation of the transactions
contemplated hereby and thereby.

 

11.                                 Transfers in Violation of Agreement. 
Any Transfer or attempted Transfer of any Units or Stock in violation of
any provision of this Agreement, the LLC Agreement or other applicable
agreement shall be void, and such Transfer shall not be recorded on the
applicable books and any purported transferee of such Units or Stock shall not
be treated as the owner of such Units or Stock for any purpose.

 

12.                                 Severability. 
Whenever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
or any other jurisdiction, but this Agreement shall be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein.

 

13.                                 Successors and Assigns. 
Except as otherwise provided herein, this Agreement shall bind and inure
to the benefit of and be enforceable by the Company and its successors and
assigns and the Executives holding a majority of the vested Units.  In the event the Company is liquidated, then
the rights and benefits of the Company under this agreement shall adhere to and
be enforceable by Windy City Investments, Inc., which shall become the
Company for all purposes of this Agreement without further action by any
Unitholder.

 

14.                                 Complete Agreement. 
This Agreement, the LLC Agreement, the Class A Purchase and
Exchange Agreement, the Class B Unit Grant Agreement, the Registration
Agreement and those documents expressly referred to herein embody the complete
agreement and understanding among the parties with respect to the subject
matter hereof and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way.

 

15.                                 Counterparts. 
This Agreement may be executed in two or more counterparts, any one of
which need not contain the signatures of more than one party, but all such
counterparts taken together shall constitute one and the same Agreement.

 

12

 

16.                                 Descriptive Headings.  The
descriptive headings of this Agreement are inserted for convenience only and do
not constitute a part of this Agreement.

 

17.                                 No Strict Construction. 
The language used in this Agreement shall be deemed to be the language
chosen by the parties hereto to express their collective mutual intent, and no rule of
strict construction shall be applied against any person.  The term “including” as used herein shall be
by way of example, and shall not be deemed to constitute a limitation of any
term or provision contained herein.  Each
defined term used in this Agreement has a comparable meaning when used in its
plural or singular form.

 

18.                                 Governing Law. 
All questions concerning the construction, validity, enforcement and
interpretation of this Agreement and the exhibits hereto shall be governed by
the internal law, and not the law of conflicts, of the State of Delaware.

 

19.                                 WAIVER OF JURY TRIAL. 
AS A SPECIFICALLY BARGAINED FOR INDUCEMENT FOR EACH OF THE PARTIES
HERETO TO ENTER INTO THIS AGREEMENT (AFTER HAVING THE OPPORTUNITY TO CONSULT
WITH COUNSEL), EACH PARTY HERETO EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN
ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT
OR THE MATTERS CONTEMPLATED HEREBY.

 

20.                                 Remedies.  Each of the
parties to this Agreement shall be entitled to enforce its rights under this
Agreement specifically, to recover damages and costs (including reasonable
attorney’s fees) caused by any breach of any provision of this Agreement and to
exercise all other rights existing in its favor.  The parties hereto agree and acknowledge that
money damages would not be an adequate remedy for any breach of the provisions
of this Agreement and that any party may in its sole discretion apply to any
court of law or equity of competent jurisdiction (without posting any bond or
deposit) for specific performance and/or other injunctive relief in order to
enforce or prevent any violations of the provisions of this Agreement.

 

21.                                 Amendment and Waiver. 
Except as otherwise provided herein, any provision of this Agreement may
be amended or waived only with the prior written consent of Executive and the
Board (on behalf of the Company and the Investor Members); provided that
any provision of this Agreement may be amended with the approval of the
Executives holding a majority of the affected class of such Units to the extent
that the such amendment does not disproportionately and adversely change the
rights of an Executive (or group of Executives) as compared to other Executives
(or group of Executives).  For the
avoidance of doubt, amendments to the LLC Agreement and the Registration
Agreement shall be accomplished according to the terms of the LLC Agreement or
the Registration Agreement, respectively.

 

22.                                 Community Property. 
If, as of the date hereof, Executive is lawfully married and Executive’s
address or the permanent residence of Executive’s spouse is located in a
community property jurisdiction, Executive’s spouse shall execute and deliver
to the Company on the Effective Date the Consent in the form of Exhibit A
attached hereto.

 

23.                                 Business Days. 
If any time period for giving notice or taking action hereunder expires
on a day which is a Saturday, Sunday or legal holiday in the state in which the

 

13

 

Company’s chief executive office is located, the time
period shall be automatically extended to the business day immediately
following such Saturday, Sunday or holiday.

 

24.                                 Third-Party Beneficiary. 
The Company and Executive acknowledge that each of the Investor Members
is a third-party beneficiary under this Agreement and that the Investor Members
can enforce the provisions of this Agreement intended for the Investor Members’
benefit.

 

25.                                 Consent to Jurisdiction. 
Each party to this Agreement, by its execution hereof, (a) hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the State of Illinois for the purpose of any action, claim,
cause of action or suit (in contract, tort or otherwise), inquiry, proceeding
or investigation arising out of or based upon this Agreement or relating to the
subject matter hereof, (b) hereby waives to the extent not prohibited by
applicable law, and agrees not to assert, and agrees not to allow any of its
Permitted Transferees to assert, by way of motion, as a defense or otherwise,
in any such action, any claim that they are not subject personally to the
jurisdiction of the above named courts, that their property is exempt or immune
from attachment or execution, that any such proceeding brought in one of the
above named courts is improper, or that this Agreement or the subject matter
hereof or thereof may not be enforced in or by such court and (c) hereby
agrees not to commence or maintain any action, claim, cause of action or suit
(in contract, tort or otherwise), inquiry, proceeding or investigation arising
out of or based upon this Agreement or relating to the subject matter hereof or
thereof other than before one of the above named courts nor to make any motion
or take any other action seeking or intending to cause the transfer or removal
of any such action, claim, cause of action or suit (in contract, tort or
otherwise), inquiry, proceeding or investigation to any court other than one of
the above named courts whether on the grounds of inconvenient forum or
otherwise.  Notwithstanding the
foregoing, any party to this Agreement may commence and maintain an action to
enforce a judgment of any of the above named courts in any court of competent
jurisdiction.

 

*      *      *     
*

 

14

 

IN WITNESS WHEREOF, the parties hereto have executed
this Unitholders Agreement on the day and year first above written.

 

	
   

  	
  WINDY CITY INVESTMENTS
  HOLDINGS, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Vahe A. Dombalagian

  
	
   

  	
  Name:

  	
  Vahe A. Dombalagian

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [Executives]
  [Print Name]

  

 

Signature Page to Amended And
Restated Unitholders Agreement 

 

 

EXHIBIT A

 

SPOUSAL CONSENT

 

The undersigned spouse of
Executive hereby acknowledges that I have read the foregoing Unitholders
Agreement executed by Executive as of the date hereof and that I understand its
contents.  I am aware that the foregoing
Unitholders Agreement provides for the sale or repurchase of my spouse’s Units
under certain circumstances and/or imposes other restrictions on such
securities (including, without limitation, restrictions on transfer).  I agree that my spouse’s interest in these
securities is subject to these restrictions and any interest that I may have in
such securities shall be irrevocably bound by these agreements and further,
that my community property interest, if any, shall be similarly bound by this
Agreement.

 

 

	
   

  	
  Date:
                  
        , 2007

  
	
   

  	
   

  
	
   

  	
  Spouse’s Name:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:
                  
        , 2007

  
	
   

  	
   

  
	
   

  	
  Witness’ Name:

  	
   

  
				

 

A-1- -,

EXECUTIVE EMPLOYMENT 

AGREEMENT

 

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

RECITALS

WHEREAS, the Executive is and has been employed by the Company for the past six yeas as its Chief Executive Officer;

WHEREAS, the Company's Board of Directors desires assurance of the continued association and services of the Executive in order to retain his experience, skills, abilities, background, and knowledge, and is therefore willing to engage his services on the terms and subject to the conditions set forth below; 

WHEREAS, the Executive desires and is willing to continue employment with the Company on the terms and subject to the conditions set forth below;

NOW THEREFORE, in consideration of the premises and mutual covenants contained herein, the parties agree as follows: 

AGREEMENT

1. POSITION AND DUTIES
During the term of this Agreement, the Company shall employ the Executive as Chief Executive Officer.  The Executive's duties shall be those, which shall be prescribed by the Board of Directors from time to time which shall be those reasonably expected of a chief executive officer of a similarly capitalized corporation and those performed by his predecessor.  The Executive shall use his best efforts to promote the best interest of the Company. The Executive shall devote his knowledge, skill and, exclusively (other than as set forth below), all of his professional time, attention and energies (reasonable absences for vacations and illness excepted), to the business of the Company in order to perform such assigned duties faithfully, competently and diligently. Notwithstanding the foregoing, it is understood and agreed between the parties that the Executive may (i) engage in charitable and community activities, (ii) manage personal investments and affairs and (iii) serve on the boards of directors of a reasonable number of other corporations or the boards of a reasonable number of trade associations, so long as such activities and investments do not interfere or conflict with the Executive's performance of his responsibilities and obligations to the Company. 

2. TERM OF EMPLOYMENT
The Company agrees to employ the Executive and the Executive agrees to serve the Company pursuant to the terms and conditions of this Agreement for a term of three (3) years, commencing on January 1, 2008 and expiring on December 31, 2010, unless earlier terminated pursuant to this Agreement. Notwithstanding any contrary clause in this Agreement, the Executive shall serve at the pleasure of the Board of Directors and may be terminated at any time in accordance with the provisions of this Agreement.  The Executive's termination shall not, in any way, prejudice the Executive's rights under this Agreement. 

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

4.COMPENSATION 
The Executive shall receive, for all services rendered to the Company as an employee, the following compensation. 
A.Salary.   The Executive shall be paid an annual base salary for each respective year as stated below.  The Executive's Annual Base Salary shall be payable in equal installments in accordance with the Company's general salary payment policies, but no less frequently than monthly. 

 

2008:  Four-Hundred Twenty-Five Thousand ($425,000) dollars;

2009:  Four-Hundred Fifty Thousand ($450,000) dollars;

2010:  Four-Hundred Seventy-Five Thousand ($475,000) dollars;

 

B.Incentive Compensation.   
i.  Each calendar year, the Executive shall be eligible for two bonuses.  The first bonus is to be paid at the end of the first half of the calendar year but no later than July 20 and the second bonus is to be paid at the end of the second half of the year but no later than January 20 of the following year.  Each bonus shall be contingent upon the Company achieving certain revenue and EBITDA goals for the applicable half of the calendar year as agreed upon and stated in advance by the Board of Directors, The amount of each bonus shall be as follows:
(a)Thirty Seven and One-Half (37.5%) percent of Executive's annual base salary if the Company achieves its stated, conservative revenue and EBITDA goals;

(b)Fifty (50%) percent of Executive's annual base salary if the Company achieves its stated, negotiated target (annual board plan) revenue and EBITDA goals;

(c)One Hundred (100%) percent of Executive's annual base salary if the Company achieves revenue and EBITDA goals that are twenty (20%) percent over its stated, negotiated revenue and EBITDA goals;

(d)The Company shall prorate accordingly each of the Executive's incentive bonuses each calendar year based on the Company's revenue and EBITDA performance above its stated, conservative revenue and EBITDA goals and below the performance that would pay the Executive his maximum bi-annual bonus, as defined in C above. 

ii.When the Executive receives incentive compensation prior to the Company's financial results being verified by the Company's independent auditors and the independent auditors determine that the Company's financial results are other than the Company determined them to be resulting in a revised situation wherein the Executive was actually not entitled to receive his potential incentive compensation, then the Executive agrees to return all unearned incentive compensation forthwith.

iii.The Company's Board of Directors set the conservative and negotiated revenue and EBITDA goals for fiscal 2008 at the November 2007 Board meeting.  The Company's Board of Directors will establish the conservative (75% of annual bonus target) and negotiated target (annual board plan) (100 % of annual bonus target) goals annually for fiscal years 2009 and 2010 at the last Board meeting of 2008 and 2009, respectively.

C.Equity Participation. 
i.Each calendar year of this Agreement, the Executive shall be granted Two-Hundred Thousand (200,000) shares of the Company's restricted shares of common stock, One-Hundred Thousand (100,000) shares on the last trading day of June and One-Hundred Thousand (100,000) shares on the last trading day of December.  The Executive shall be solely responsible for all taxes associated with these grants.  

ii.At any time during the term of this Agreement, if a majority of the capital stock of the Company is to be sold or transferred to an entity not associated or owned by the Company or its affiliates or substantially all of the assets of the Company are to be sold or transferred to an entity not associated or owned by the Company or its affiliates, all of the Executive's potential equity grants shall accelerate and take place no later than the calendar day immediately preceding the sale or closing date of the sale or transfer transaction. 

D.   Long Term Incentive Payment. The Executive shall be eligible for a one time, long term incentive payment at the conclusion of this three (3) year Agreement contingent upon the Company achieving certain cumulative EBITDA goals during the contract period as stated below.    The long-term incentive payment, if any, shall be made as soon as administratively feasible but not later than February 15, 2011.
i.If the Company achieves a cumulative EBITDA of Seven-Million Five-Hundred Thousand ($7,500,000) dollars the Executive shall be granted an incentive payment of Seven-Hundred Fifty Thousand ($750,000) dollars. 

ii.If the Company achieves a cumulative EBITDA greater than Seven-Million Five-Hundred Thousand ($7,500,000) dollars but less than Twelve Million ($12,000,000) dollars the Executive shall be granted an incentive payment that is prorated accordingly between the two goals.

iii.If the Company achieves a cumulative EBITDA of Twelve Million ($12,000,000) dollars the Executive shall be granted an incentive payment of One-Million Five- Hundred Thousand ($1,500,000) dollars.

iv.Additionally, if the Company achieves a cumulative EBITDA that is greater than Twelve Million ($12,000,000) dollars, the Executive shall receive five (5%) percent of all cumulative EBITDA greater than Twelve Million ($12,000,000) dollars.

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

F. Expenses. The Executive is authorized to incur and shall be reimbursed by the Company for any and all reasonable and necessary business related expenses including, but not limited to, a company car, a local country club membership expenses for auto, business travel, entertainment, gifts and similar matters.   The company car and local country club membership are subject to the compensation committee's approval, which shall not be unreasonably withheld.

 

5.ABSENCES
The Executive shall be entitled to vacations in accordance with the Company's vacation policy in effect from time to time and to absences because of illness or other incapacity and shall also be entitled to such other absences as are granted to the Company's other senior executive officers or as are approved by the Board of Directors, which approval shall not be unreasonably withheld. 

6.TERMINATION 
The Executive's employment with the Company may be terminated only as follows: 

	By the Company Without Cause.  The Company may at any time terminate the Executive's employment without Cause upon sixty-(60) days prior written notice to the Executive. 

	By the Executive Without Good Reason.  The Executive may at any time terminate his employment for any reason upon thirty-(30) days written notice to the Company. 

	By the Company For Cause.  The Company may terminate the Executive's employment for Cause. In such event, the Company shall give the Executive prompt written notice (in addition to any notice that may be required below) specifying in reasonable detail the basis for such termination. For purposes of this Agreement, "Cause" shall mean any of the following conduct by the Executive: 

	The deliberate and intentional breach of any material provision of this Agreement, which breach the Executive shall have failed to cure within thirty (30) days after the Executive's receipt of written notice from the Company specifying the specific nature of the Executive's breach; or
	The deliberate and intentional engaging by the Executive in gross misconduct that is materially and demonstrably harmful to the best interests, monetary or otherwise, of the Company; or 
	Conviction of a felony or conviction of any crime involving moral turpitude, fraud or deceit. 

	By the Executive for Good Reason.  The Executive may terminate his employment for Good Reason upon providing thirty (30) days written notice to the Company no later than 90 days after the Executive reasonably becomes aware of the circumstances giving rise to such Good Reason. For purposes of this Agreement, "Good Reason" means any of the following conduct of the Company, unless the Executive shall have consented thereto in writing: 

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

ii.The assignment to the Executive of any duties inconsistent in any material respect with the Executive's position including, but not limited to any diminution of the Executive's status and reporting requirements) authority, duties, powers or responsibilities, excluding for this purpose any action respecting the Executive that is remedied by the Company within thirty (30) days after receipt of written notice from the Executive to the Company; or

	The failure of the Company to obtain the assumption in writing of its obligations to perform this Agreement by any successor  prior to a merger, consolidation or sale as contemplated in Section 10; or 
	A reduction in the Executive's total compensation, excluding for this purpose any reduction that is remedied by the Company within thirty (30) days after receipt of written notice from the Executive to the Company. For purposes of this subsection, a reduction in the overall level of compensation of the Executive resulting from the failure to achieve corporate, business unit and/or individual performance goals established for purposes of incentive compensation for any year or other period shall not constitute a reduction in the overall level of compensation of the Executive.
	The relocation of the Executive's place of employment to a site more than 75 miles from Plano, Texas.
	If the Company fails to set internal financial goals or adopt a stock option plan 

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

	Death.  The Executive's employment shall terminate upon his death. 
	 Mutual Written Agreement. This Agreement and the Executive's employment with the Company may be terminated at any time by the mutual written agreement of the Executive and the Company. 

	COMPENSATION IN THE EVENT OF TERMINATION 

In the event that the Executive's employment terminates prior to the expiration of this Agreement, the Company shall pay the Executive compensation and provide the Executive and his eligible dependents with benefits as follows: 
A.Termination By Company Without Cause or Termination By Executive For Good Reason.  In the event that the Executive's employment is terminated by (i) the Company without Cause  or (ii) the Executive for Good Reason, then the Company shall continue to pay or provide, as applicable and in accordance with the Company's normal payroll practices unless otherwise specified, the below stated compensation and benefits to the Executive.   The Executive's subsequent death or disability shall in no way affect or limit the Company's obligations under this Section. The Executive shall not be required to mitigate the amount of any payment provided for in this Section by seeking employment or otherwise. 
i. The Annual Base Salary of the Executive for a period of one (1) year after expiration of the notice period or termination, whichever is later; Full payment of the total amount of such Annual Base Salary for such period shall be made in a lump sum within fifteen (15) days after Executive's termination of employment;

	The equity participation for the twelve (12) month period following the date on which the Executive was terminated will be granted in full as of the date of termination;
	A payment equal in amount to two (2) semi-annual bonuses. This payment will be made within 15 days after Executive's termination of employment. The payment shall be calculated based on the potential semi-annual bonuses tied to the annual sales in effect at the time of termination and shall be paid irrespective of whether the Company achieved or was on track to achieve its internal financial goals for the calendar year and/or whether a semi-annual bonus had already been paid to the Executive in the calendar year of termination. 

iv. The long-term incentive payment for which the Executive was potentially eligible. This payment will be made within 15 days after Executive's termination of employment.    The payment shall be calculated as if the Company had achieved minimum cumulative EBITDA of Twelve Million ($12,000,000) dollars irrespective of whether the Company had achieved it or was on track to achieve it.  Additionally, if on the date of termination, the Company has achieved more than Twelve Million ($12,000,000) dollars of cumulative EBITDA, then the Executive shall also receive five ($.05) cents for every EBITDA dollar achieved over Twelve Million ($12,000,000) dollars.

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

B.Termination By the Company For Cause.  In the event that the Company shall terminate the Executive's employment for Cause, this Agreement shall terminate and the obligations of the parties shall be as set forth in Section 8 of this Agreement. 

C.Termination By The Executive Without Good Reason.  In the event that the Executive shall terminate employment hereunder other than for Good Reason, this Agreement shall forthwith terminate and the obligations of the parties shall be as set forth in Section 8 of this Agreement.  

D.Disability.  In the event that the Company elects to terminate the Executive's employment pursuant to Section 6(e), the Executive shall continue to receive, from the date of such termination for a period of one year, one hundred (100%) percent of the Annual Base Salary, in accordance with the payroll practices of the Company for senior executive officers, reduced, however, by the amount of any proceeds from Social Security and disability insurance policies provided by and at the expense of the Company. Additionally, the Executive shall receive a payment equal to both potential semi-annual bonuses in effect at the time for which the Executive was potentially eligible irrespective of whether company achieved its internal financial goals or was on track to achieve its internal financial goals.  Full payment shall be made within fifteen (15) days after Executive's termination of employment;

E.Death.  In the event of the death of the Executive during the term of this Agreement, (i) the Annual Base Salary to which the Executive is entitled shall be paid in full, within fifteen (15) days after Executive's death, to the last beneficiary designated by the Executive under the Company's group life insurance policy maintained by the Company or such other written designation expressly provided to the Company for the purposes hereof or, failing either such designation, to his estate. The parties expressly understand that this payment of salary shall be in addition to any insurance payments paid to Executive's survivors and/or estate under any insurance policies.  

F.Mutual Written Consent.  In the event that the Executive and the Company shall terminate the Executive's employment by mutual written agreement, the Company shall pay such compensation and provide such benefits, if any, as the parties may mutually agree upon in writing.

8. EFFECT OF EXPIRATION OF AGREEMENT OR TERMINATION OF EXECUTIVE'S EMPLOYMENT  

Upon the expiration of this Agreement by its terms or the termination of the Executive's employment by the Company for Cause or the Executive Without Good Reason, neither the Company nor the Executive shall have any remaining duties or obligations except that: 
A.The Company shall: 
 i.  Pay the Executive's accrued salary and any other accrued benefits through the effective date of such expiration or termination; 

ii.  Reimburse the Executive for expenses already actually incurred through the effective date of such expiration or termination;

iii. Pay or otherwise provide for any benefits, payments or continuation or conversion rights in accordance with the provisions of any employee benefit plan of which the Executive or any of his dependents is or was a participant or as otherwise required by law; 

iv. Pay the Executive and his beneficiaries any compensation and/or provide the Executive or his eligible dependents any benefits due through the effective date of such expiration; and 

v. Continue to remain bound by the terms of Section 12 hereof. 

B.The Executive shall remain bound by the terms of Sections 9, 11 and 13. 

	COVENANTS AS TO CONFIDENTIAL INFORMATION AND COMPETITIVE CONDUCT  

The Executive acknowledges and agrees as follows: (i) this Section 9 is necessary for the protection of the legitimate business interests of the Company, (ii) the restrictions contained in this Section 9 with regard to geographical scope, length of term and types of restricted activities are Reasonable; and (iii) the Executive has received adequate and valuable new consideration for entering into this Agreement.

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

 
i.Any information concerning any financial matters, customer relationships, competitive status, supplier matters, internal organizational matters, current or future plans, or other business affairs of or relating to the Company or its subsidiaries,

ii.Any management, operational, trade, technical or other secrets or any other proprietary information or other data of the Company or its subsidiaries, 

iii.Any other information related to the Company or its related entities that the Executive should reasonably believe will be damaging to the Company or its related entities and which has not been published and is not generally known outside of the Company. 

 

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

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

C. Company Remedies.  The Executive acknowledges and agrees that any breach of this Agreement by him will result in immediate and irreparable harm to the Company and that the Company cannot be reasonably or adequately compensated by damages in an action at law. In the event of a breach by the Executive of the provisions of this Section 9 as determined by an Arbitrator or a Court of competent jurisdiction, the Company shall be entitled, to the extent permitted by law, immediately to cease paying or providing the Executive or his dependents any compensation or benefits provided pursuant to Section 4, Section 6 or Section 7 of this Agreement as liquidated damages, and also to obtain immediate injunctive relief restraining the Executive from conduct in breach of the covenants contained in this Section 9. Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies available to it for such breach, including the recovery of damages from the Executive. 

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

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

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

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

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

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

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

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

17.CONSTRUCTION OF AGREEMENT
A.Governing Law. This Agreement shall be governed by and construed under the laws of the state of Texas. 

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

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

	IRC  409A.  Company and Executive intend that no payment under this Agreement shall be included in Executive's income under, or be subjected to the additional taxes imposed by, Section 409A of the Internal Revenue Code of 1986, as amended (the "Code").  Company and Executive each acknowledge that it is their understanding at the time this Agreement is entered into that none of the payments of cash or property provided for in this Agreement constitutes nonqualified deferred compensation subject to Section 409A of the Code, because all such payments qualify for the "short-term deferral" rule of Treas. reg.
1.409A-1(b)(4); provided, however, that the employee benefit plan continuation coverage provided for in Section 7(a)(5) and the continued payments to be made to Executive or his beneficiary under Sections 7(d) and (e) may be nonqualified deferred compensation subject to Section 409A of the Code, but these amounts are payable in accordance with a fixed schedule and on account of and following permissible payment events, and therefore comply with the requirements of Section 409A of the Code.  Company agrees that if at any time, based on changes in law, regulations, official Treasury or IRS guidance, or facts and circumstances, it determines that a payment to be made to or for the benefit of Executive, or to Executive's beneficiary, would be nonqualified deferred compensation under Section 409A of the Code and would violate Section 409A and be subject to inclusion in income and additional taxes under Section 409A on account of a failure to delay payment of such amount for six months under Section 409A(a)(2)(B)(i) of the Code, then Company shall delay making such payment for six (6) months, if it determines that such delay shall avoid the imposition of additional tax under Section 409A of the Code.  It shall be a breach of this Agreement for Company, on account of this Section 17(d), to initiate or continue any delay in any payment otherwise due Executive or his beneficiary, if Company has not made a good faith determination, informed by the advice of competent Section 409A legal counsel, that the delay or continuation of the delay is necessary to avoid a significant risk of the imposition of additional tax under Section 409A of the Code; provided, however, that if the Company determines that an amount otherwise required to be paid under this Agreement will be subject to the same amount of taxes under Section 409A of the Code, whether or not it is delayed for six months, then the Company shall have no right to delay the payment of such amount under this Section 17(d).  

	ENTIRE AGREEMENT AND INTEGRATION 

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

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

	SEVERABILITY 

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

21.EXECUTION 

 

The Company                               Executed on December 31, 2007.  

 

_/S/ Byron H. Adams __________________

By:  Byron H. Adams

Chairman of the Board of Directors of Adams Golf, Inc.

 

 

The Executive                             Executed on December 31, 2007.  

 

_/S/ Oliver G. Brewer III_________________

By:  Oliver G. Brewer III

Chief Executive Officer of Adams Golf, Inc.

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