Agreement Change In Control

AGREEMENT RE: CHANGE IN CONTROL


This AGREEMENT RE: CHANGE IN CONTROL (this "Agreement") is dated as of November 1, 2000 and is entered into by and between Terence W. Tsang ("Executive") and Ashworth, Inc., a Delaware corporation (the "Company").


BACKGROUND


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


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


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


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


AGREEMENT


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


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


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


(i) Except as provided by subparagraph (iii) hereof, the acquisition (other than from the Company) by any person, entity or "group", within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (excluding, for this purpose, the Company or its subsidiaries, or any executive benefit plan of the Company or its subsidiaries which acquires beneficial ownership of voting securities of the Company), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of forty percent (40%) or more of either the then outstanding shares of common stock or the combined voting power of the Company's then outstanding voting securities entitled to vote generally in the election of directors; or


(ii) Individuals who, as of the date hereof, constitute the Board of Directors of the Company (as of the date hereof the "Incumbent Board") cease for any reason to constitute at least a majority of the Board of Directors of the Company, provided that any person becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's stockholders, is or was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the Directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; or


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


(1) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into
voting securities of another entity) more than fifty percent (50%) of the
combined voting power of the voting securities of the Company or such other
entity outstanding immediately after such merger or consolidation, or


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


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


4. Effect of a Change in Control. In the event of a Change in Control, Sections 6 through 11 of this Agreement shall become applicable to Executive. These Sections shall continue to remain applicable until the third anniversary of the date upon which the Change in Control occurs. On such third anniversary date, and provided that the employment of Executive


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has not been terminated on account of a Qualifying Termination (as defined in Section 5 below), this Agreement shall terminate and be of no further force or effect.


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


(a) Executive voluntarily terminates his employment with the
Company and its affiliated companies. Executive, however, shall not be
considered to have voluntarily terminated his employment with the Company
and its affiliated companies if, following, or within ninety (90) days
prior to, the Change in Control, Executive's overall compensation is
reduced or adversely modified in any material respect or Executive's
authority or duties are materially changed, and subsequent to such
reduction, modification or change Executive elects to terminate his
employment with the Company and its affiliated companies. For such
purposes, Executive's authority or duties shall conclusively be considered
to have been "materially changed" if, without Executive's express and
voluntary written consent, there is any substantial diminution or adverse
modification in Executive's title, status, overall position,
responsibilities, reporting relationship, general working environment
(including without limitation secretarial and staff support, offices, and
frequency and mode of travel), or if, without Executive's express and
voluntary written consent, Executive's job location is transferred to a
site more than fifty (50) miles away from his place of employment ninety
(90) days prior to the Change in Control. In this regard as well,
Executive's authority and duties shall conclusively be considered to have
been "materially changed" if, without Executive's express and voluntary
written consent, Executive no longer holds the same title or no longer has
the same authority and responsibilities or no longer has the same reporting
responsibilities, in each case with respect and as to a publicly held
parent company which is not controlled by another entity or person.


(b) The termination is on account of Executive's death or
Disability. For such purposes, "Disability" shall mean a physical or mental
incapacity as a result of which Executive becomes unable to continue the
performance of his responsibilities for the Company and its affiliated
companies and which, at least three (3) months after its commencement, is
determined to be total and permanent by a physician agreed to by the
Company and Executive, or in the event of Executive's inability to
designate a physician, Executive's legal representative. In the absence of
agreement between the Company and Executive, each party shall nominate a
qualified physician and the two physicians so nominated shall select a
third physician who shall make the determination as to Disability.


(c) Executive is involuntarily terminated for "Cause." For this
purpose, "Cause" shall be limited to only three types of events:


(1) the willful and deliberate refusal of Executive to comply with
a lawful, written instruction of the Board of Directors, which refusal is
not remedied by Executive within a reasonable period of time after his
receipt of written notice from the Company


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identifying the refusal, so long as the instruction is consistent with the
scope and responsibilities of Executive's position prior to the Change in
Control;


(2) an act or acts of personal dishonesty by Executive which were
intended to result in substantial personal enrichment of Executive at the
expense of the Company; or


(3) Executi ...