Exhibit 10.1 EMPLOYMENT AGREEMENT This Employment Agreement (the " Agreement" ) is effective as of September 12, 2005 (the " Effective Date" ), and is entered into by and between Gary I. Schneiderman (" Schneiderman" ) and Ashworth, Inc., a Delaware corporation (the " Company" ). 1. Employment. As of the Effective Date, the Company hereby employs Schneiderman to serve in the capacity of Executive Vice President of Sales and Marketing (" EVP-S&M" ). The Company' s Board of Directors (the " Board" ) and/or the Company' s Chief Executive Officer (the " CEO" ) may provide such additional designations of title to Schneiderman as the Board and/or CEO, in its discretion, may deem appropriate. Schneiderman agrees to perform the executive duties and functions customarily associated with the offices of EVP-S&M and as specified from time to time by the Board and/or the CEO. Except for legal holidays, vacations and absences due to temporary illness, Schneiderman shall devote his time, attention and energies to the business of the Company on a full-time basis. Schneiderman represents and warrants to the Company that he is under no restriction, limitation or other prohibition to perform his duties as described herein. 2. Employment Compensation And Benefits . a. Base Salary . Schneiderman' s initial base salary shall be at the annual rate of three hundred thousand dollars ($300,000). This salary level shall be reviewed at least annually by the Board' s Compensation Committee on the basis of Schneiderman' s performance and the Company' s financial success and progress. b. Annual Bonus and Stock Options . Schneiderman will be entitled to receive an option for a minimum of 20,000 shares for each of fiscal years 2005, 2006 and 2007 with the options for fiscal year 2005 to be granted on September 12, 2005 and vesting on the first anniversary of the date of grant. Option grants for fiscal years 2006 and 2007 will be granted and will vest on the first anniversary of the date of grant. Schneiderman will also be eligible to earn an annual bonus on a Earnings Before Taxes (" EBT) in accordance with the executive bonus plan, and according to the following schedule: Ashworth Bonus Plan Target is 50% of base% of Ashworth' s salaryPlan Bonus % of Target 150% 165% 125% 135% 110% 115% 100% 100% 95% 75% 90% 60% 85% 50% Less than 85% Discretionary
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Under this plan, for example, Schneiderman' s " Target" bonus at 100% of Plan will equal 50% of his annual base salary, $150,000. The annual bonus will be paid following the close of final accounting records for the previous fiscal year. c. Non-compete/Retention Payment . Schneiderman acknowledges that the Company has offered upon certain conditions described herein to provide him with a non-compete/retention payment in the form of guaranteed minimum annual payments. Schneiderman understands and agrees that any portion of the payments described below that exceeds the bonus payment to which he would otherwise be entitled pursuant to Paragraph 2(b) of this Agreement shall be deemed vested and earned only upon the condition that Schneiderman remain with the Company from the effective date of this Agreement through the end of fiscal year 2006.Schneiderman will receive three guaranteed minimum non-compete/retention payments as follows. The first payment of $85,000 shall be made on September 12, 2005. The second payment of $85,000 shall be made on November 24, 2005. The third payment, in the amount of $40,000, shall be paid following the close of final accounting records for 2006. Each of these payments will be applied against any cash bonus award earned during the relevant fiscal year (as described in Paragraph 2(b)). Any portion of the payment amount that exceeds the actual amount Schneiderman earned according to the cash bonus plan will be considered an " advanced non-compete/retention payment" , and constitute the amount to be repaid by Schneiderman if he leaves the Company prior to the end of the 2006 fiscal year. For example, if the Company' s 2006 fiscal year performance for purposes of the executive cash bonus plan is less than 85% of Plan, and Schneiderman' s discretionary bonus is determined to be $30,000, Schneiderman' s advanced non-compete/retention payment would be $10,000.If Schneiderman does not fulfill the conditions for receiving the non-compete/retention payment by remaining with the Company through the end of fiscal year 2006, the Company will not have received the benefit of its bargain with regard to the non-compete/retention payment, in which case Schneiderman will not be entitled to the payment, and further, Schneiderman will be indebted to the Company for the amount advanced to him by the Company. Furthermore, in the event that Schneiderman fails to remain with the Company through the end of fiscal year 2006, Schneiderman agrees to repay the Company the full amount advanced to him by the Company by no later than 30 days after the date of his departure. Schneiderman further understands that if he refuses or is unable to repay to the Company the advanced funds, the Company may seek appropriate legal remedies to recoup the full amount of the outstanding debt, or offset any advanced funds against other payments owed, including but not limited to severance payments. d. Automobile Allowance . The Company shall pay Schneiderman an automobile expense allowance of one thousand dollars ($1,000) per month to defray the cost of business automobile expense. e. Vacation . Schneiderman shall be entitled to annual vacations in a manner commensurate with his status as a key executive and in accordance with the Company' s vacation policies in effect during the term of this Agreement. f. Expense Reimbursement . The Company shall reimburse Schneiderman for all reasonable amounts actually expended by Schneiderman in the course of performing his duties for the Company and in accordance with any Company-established guidelines where Schneiderman tenders receipts or other documentation reasonably substantiating the amounts as required by the Company.
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g. Club Membership . On September 12, 2005, the Company will pay Schneiderman up to $45,000 (grossed up for any applicable income taxes) to purchase a Club Membership at a Club of Schneiderman' s choosing. Schneiderman will be entitled to make use of such membership and the Company will pay the monthly dues of $630 beginning September 12, 2005 for the term of Schneiderman' s employment. Schneiderman agrees that at the end of his employment, he will reimburse the membership cost (current market value at the time of sale minus the club fee) to Ashworth. h. Other Benefits . Except as otherwise provided in this Agreement, Schneiderman shall be entitled to receive all of the rights, benefits and privileges of an executive officer of the Company under any retirement, pension, profit-sharing, group medical insurance, group dental insurance, group-term life insurance, and disability insurance, and other employee benefit plans which may be now in effect or hereafter adopted. 3. Non-compete . Schneiderman agrees that during the term of this Agreement Schneiderman will not, directly or indirectly, own, manage, operate, control, be employed by, participate in, or be connected in any manner with the ownership, management, operation, or control of any business which manufactures or sells golf-inspired sportswear which is substantially the same as that of the Company and which is distributed in the same channels of distribution as the then current channels of distribution of the Company, provided, however, that if Schneiderman' s employment is terminated for reasons which provide for severance compensation, the non-compete term shall be extended to the period for which he receives such severance compensation. 4. Termination . a. At Will . The Company shall employ Schneiderman at will, and either Schneiderman or the Company may terminate Schneiderman' s employment with the Company at any time and for any reason, with or without cause. b. Severance Payment and Benefits . If Schneiderman' s employment is terminated as a result of a Qualifying Termination, as defined below, and if Schneiderman delivers a fully executed release and waiver of all claims against the Company in the form attached hereto as Exhibit A, then, upon expiration of any applicable revocation period contained in the Release Agreement, the Company shall pay or provide Schneiderman the following severance payment and benefits: i. Schneiderman shall receive the equivalent of twelve(12) months of his then-current base salary (the " Severance Payment" ), which shall be payable in equal monthly installments beginning on the first day of the first full month following Schneiderman' s Qualifying Termination and continuing on the first day of each month thereafter until fully paid. The Severance Payment is in lieu of any severance payment benefits which otherwi ...
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