1999 NON-EMPLOYEE DIRECTOR PLAN OF
ADAMS GOLF, INC.
1. PURPOSE. The purpose of this Plan is to advance the
interests of Adams Golf, Inc., a Delaware corporation (the
"Company"), by providing an additional incentive to attract and
retain qualified and competent directors, upon whose efforts and
judgment the success of the Company is largely dependent, through
the encouragement of stock ownership in the Company by such
persons.
2. DEFINITIONS. As used herein, the following terms shall
have the meaning indicated:
(a) "Board" shall mean the Board of Directors of Adams
Golf, Inc.
(b) "Committee" shall mean the committee, if any,
appointed by the Board pursuant to Section 12 hereof.
(c) "Common Stock" shall mean the common stock, par
value one tenth of one cent ($0.001) of the Company.
(d) "Date of Grant" shall mean the date on which an
Option is granted to an Eligible Person pursuant to this
Plan.
(e) "Director" shall mean a member of the Board.
(f) "Eligible Person(s)" shall mean those persons who
are Directors of the Company and who are not employees of
the Company or a Subsidiary.
(g) "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
(h) "Fair Market Value" of a Share on any date means
the closing price on the business day immediately preceding
such date. For this purpose, the closing price of a Share
on any business day shall be (i) if the Common Stock is
listed or admitted for trading on any United States national
securities exchange, the last reported sale price of the
Common Stock on such exchange, as reported in any newspaper
of general circulation, (ii) if actual transactions in the
Common Stock are included in the Nasdaq National Market or
are reported on a consolidated transaction reporting system,
the closing sales price of the Common Stock on such system,
(iii) if the Common Stock is otherwise quoted on the Nasdaq
system, or any similar system of automated dissemination of
quotations of securities prices in common use, the mean
between the closing high bid and low asked quotations for
such day of the Common Stock on such system, (iv) if none of
clause (i), (ii) or (iii) is applicable, the mean between
the high bid and low asked quotations for the Common Stock
as reported by the National Daily Quotation Service if at
least two securities dealers have inserted both bid and
asked quotations for the Common Stock on at least five (5)
of the ten (10) preceding days and (v) if none of clause
(i), (ii), (iii) or (iv) is applicable, the price determined
by the Board in the exercise of its good faith discretion.
(i) "Internal Revenue Code" or "Code" shall mean the
Internal Revenue Code of 1986, as it now exists or may be
amended from time to time.
(j) "Non-Employee Director" shall have the meaning set
forth in Rule 16b-3 of the Exchange Act or any successor
provision thereof.
(k) "Nonqualified Stock Option" shall mean an option
that is not an incentive stock option as defined in Section
422 of the Internal Revenue Code.
(l) "Option" (when capitalized) shall mean any option
granted under Section 4 of this Plan.
(m) "Optionee" shall mean a person to whom an Option
is granted under this Plan or any successor to the rights of
such person under this Plan by reason of the death of such
person.
(n) "Plan" shall mean this 1999 Non-Employee Director
Plan of Adams Golf, Inc.
(o) "Share(s)" shall mean a share or shares of the
Common Stock.
(p) "Subsidiary" shall mean any corporation or other
entity, whether domestic or foreign, in which the Company
has or obtains, directly or indirectly, a proprietary
interest of more than fifty percent (50%) by reason of stock
ownership or otherwise.
Other terms shall have the meanings set forth elsewhere herein.
3. SHARES AND OPTIONS.
(a) The maximum number of Shares to be issued pursuant
to Options under this Plan, shall be Two Hundred Thousand
(200,000) Shares. Shares issued pursuant to Options granted
under this Plan may be issued from Shares held in the
Company's treasury or from authorized and unissued Shares.
If any Option granted under this Plan shall terminate,
expire, or be canceled or surrendered as to any Shares, new
Options may thereafter be granted covering such Shares.
(b) Each Option granted hereunder shall be evidenced
by an option agreement (an "Option Agreement") and shall
contain such terms as are not inconsistent with this Plan or
any applicable law. Any person who files with the
Committee, in a form satisfactory to the Committee, a
written waiver of eligibility to receive any Option under
this Plan shall not be eligible to receive any Option under
this Plan for the duration of such waiver. Any Option
granted hereunder shall be a Nonqualified Stock Option.
(c) Neither the Plan nor any Option granted under the
Plan shall confer upon any person any right to continue to
serve as a Director.
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4. DISCRETIONARY GRANTS OF OPTIONS.
(a) At any time and from time to time during the term
of this Plan and subject to the provisions herein, Options
may be granted by the Committee to any Eligible Person for
such number of Shares as the Committee in its discretion
shall deem to be in the best interest of the Company and
which will serve to further the purposes of the Plan. Upon
the grant of an Option, the Company shall promptly deliver
to such Eligible Person an Option Agreement. Options
granted pursuant to this Section 4(a) shall vest according
to the vesting schedule provided in the Option Agreement and
shall be exercisable for the term provided in the Option
Agreement. In the event no term is provided in the Option
Agreement, such term shall be ten (10) years.
(b) The Options granted to Directors pursuant to
Section 4(a) herein shall be in addition to any other
benefits with respect to the Director's position with the
Company or its Subsidiaries.
5. OPTION PRICE. The option price per Share of any Option
granted pursuant to this Plan shall be one hundred percent (100%)
of the Fair Market Value per Share on the Date of Grant.
6. EXERCISE OF OPTIONS. Options may be exercised at any
time after the date on which the Options, or any portion thereof,
are vested until the Option expires pursuant to Section 7;
provided, however, that at least six months must elapse from the
date of the acquisition of the Option to the date of disposition
of the Option (other than upon exercise or conversion) or the
underlying Shares. An Option shall be deemed exercised when (i)
the Company has received written notice of such exercise in
accordance with the terms of the Option Agreement, (ii) full
payment of the aggregate option price of the Shares as to which
the Option is exercised has been made and (iii) arrangements that
are satisfactory to the Committee in its sole discretion have
been made for the Optionee's payment to the Company of the
amount, if any, that the Committee determines to be necessary for
the Company to withhold in accordance with applicable federal or
state income tax withholding requirements. Pursuant to
procedures approved by the Committee, tax withholding
requirements, at the option of an Optionee, may be met by
withholding Shares otherwise deliverable to the Optionee upon the
exercise of an Option. Unless further limited by the Committee
in any Option Agreement, the Option price of any Shares purchased
shall be paid solely in cash, by certified or cashier's check, by
money order, with Shares (but with Shares that have been owned by
the Optionee for at least six months and only if permitted by the
Option Agreement or otherwise permitted by the Committee in its
sole discretion at the time of exercise) or by a combination of
the above; provided, however, that the Committee in its sole
discretion may accept a personal check in full or partial payment
of any Shares. If the exercise price is paid in whole or in part
with Shares, the value of the Shares surrendered shall be their
Fair Market Value on the date the Shares are received by the
Company. An Option shall not at any time be exercisable with
respect to less than 100 Shares unless the remaining Shares
covered by the Option are less than 100 Shares.
7. TERMINATION OF OPTION PERIOD. The unexercised portion
of an Option shall automatically and without notice terminate and
become null and void at the time of the earliest to occur of the
following:
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(a) sixty (60) days after the date that an Optionee
ceases to be a Director regardless of the reason therefor
other than as a result of such termination by death of the
Optionee;
(b) one (1) year after the date that an Optionee
ceases to be a Director by reason of death of the Optionee
or six (6) months after the Optionee shall die if that shall
occur during the sixty-day period described in Subsection
7(a) herein; or
(c) the expiration date of the term of such Option.
8. ADJUSTMENT OF PROVISIONS.
(a) If at any time while this Plan is in effect or
unexercised Options are outstanding, (1) there shall be any
increase or decrease in the number of issued and outstanding
Shares through the declaration of a stock dividend, stock
split, combination of shares or through any recapitalization
resulting in a stock split-up, spin-off, combination or
exchange of Shares or (2) the value of the outstanding
shares of Common Stock of the Company is reduced by reason
of an extraordinary cash dividend, then and in each such
event:
(i) appropriate adjustment shall be made in the
maximum number of Shares then subject to being optioned
under this Plan, so that the same proportion of the
Company's issued and outstanding Shares shall continue
to be subject to being so optioned; and
(ii) appropriate adjustment shall be made in the
number of Shares and the exercise price per Share
thereof then subject to any outstanding Option, so that
the same proportion of the Company's issued and
outstanding Shares shall remain subject to purchase at
the same aggregate exercise price.
(b) Except as otherwise expressly provided herein, the
issuance by the Company of shares of its capital stock of
any class, or securities convertible into shares of capital
stock of any class, either in connection with a direct sale
or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the
Company convertible into such shares or other securities,
shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number of or exercise price of
Shares then subject to outstanding Options granted under
this Plan.
(c) Without limiting the generality of the foregoing,
the existence of outstanding Options granted under this Plan
shall not affect in any manner the right or power of the
Company to make, authorize or consummate (i) any or all
adjustments, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business;
(ii) any merger or consolidation of the Company; (iii) any
issue by the Company of debt securities, or preferred or
preference stock that would rank above the Shares subject to
outstanding Options; (iv) the dissolution or liquidation of
the Company; (v) any sale, transfer or assignment of all or
any part of the assets or business of the Company; or (vi)
any other corporate act or proceeding, whether of a similar
character or otherwise.
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9. REORGANIZATIONS.
(a) Notwithstanding anything contained in this Plan or
any Option Agreement to the contrary, in the event of a
Change of Control, as defined below, all or any of the
following may, in the sole discretion of the Committee,
occur with respect to any and all Options outstanding as of
such Change of Control:
(i) automatic acceleration of the vesting of such
Options so that such Options may be immediately
exercised in full on or before the relevant date fixed
in the Option Agreement;
(ii) upon exercise of an Option during the 60-day
period from and after the date of a Change of Control,
the Optionee exercising the Option may in lieu of the
receipt of Shares upon the exercise of the Option,
elect by written notice to the Company to receive an
amount in cash equal to the excess of the aggregate
Value (as defined below) of the Shares covered by the
Option or portion thereof surrendered determined on the
date the Option is exercised, over the aggregate
exercise price of the Option (such excess is referred
to herein as the "Aggregate Spread"); provided,
however, and notwithstanding any other provision of
this Plan, if the end of such 60-day period from and
after the date of a Change of Control is within six
months of the Date of Grant, such Option shall be
canceled in exchange for a cash payment to the Optionee
equal to the Aggregate Spread on the day which is six
months and one day after the Date of Grant of such
Option. As used in this Section 9(a), the term "Value"
means the higher of (i) the highest Fair Market Value
during the 60-day period from and after the date of a
Change of Control and (ii) if the Change of Control is
the result of a transaction or series of transactions
described in paragraphs (i) or (iii) of the definition
of Change of Control, the highest price per share of
the Common Stock paid in such transaction or series of
transactions (which in the case of paragraph (i) shall
be the highest price per Share as reflected in a
Schedule 13D filed by the person having made the
acquisition);
(iii) if an Optionee ceases to be a Director
regardless of the reason therefor other than death
following a Change of Control, any Option held by such
Optionee may be exercised by such Optionee until the
earlier of sixty (60) days after the Optionee ceases to
be a Director or the expiration date of such Option;
(iv) all Options become non-cancelable;
(v) if the Option shall remain exercisable after
any such Change of Control, from and after such Change
of Control, any such Option shall be exercisable only
for the kind and amount of securities and/or other
property, or the cash equivalent thereof, receivable as
a result of such Change of Control by the holder of a
number of shares of stock for which such Option could
have been exercised immediately prior to such Change of
Control.
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(b) "Change of Control" of the Company shall be deemed to
have occurred upon the happening of any of the following events:
(i) the acquisition, other than from the Company, by
any individual, entity or group (within the meaning of
Section 13(d)(3) of the Exchange Act) other than Royal
Holding Company, Inc. or B. H. Adams of beneficial ownership
of thirty percent (30%) or more of either the then
outstanding shares of Common Stock of the Company or the
combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors;
(ii) individuals who, as of January 1, 1999, constitute
the Board as of the date thereof (the "Incumbent Board")
cease for any reason to constitute at least a majority of
the Board, provided that any individual becoming a Director
subsequent to such date whose election, or nomination for
election by the Company's stockholders, was approved by a
vote of at least a majority of the Directors then comprising
the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose
initial assumption of office is in connection with an actual
or threatened election contest relating to the election of
the Directors (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act);
(iii) approval by the stockholders of the Company
of a reorganization, merger or consolidation of the Company,
in each case, with respect to which the individuals and
entities who were the respective beneficial owners of the
Common Stock and voting securities of the Company
immediately prior to such reorganization, merger or
consolidation do not, following such reorganization, merger
or consolidation, beneficially own, directly or indirectly,
more than sixty percent (60%) of, respectively, the then
outstanding shares of Common Stock and the combined voting
power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may
be, of the Company resulting from such reorganization,
merger or consolidation;
(iv) consummation by the Company of the sale or other
disposition by the Company of all or substantially all of
the Company's assets; or
(v) approval by the stockholders of the Company or any
order by a court of competent jurisdiction of a plan of
liquidation of the Company.
(c) If the Company shall consummate any merger,
consolidation or other reorganization not involving a Change of
Control (a "Reorganization") in which holders of shares of Common
Stock are entitled to receive in respect of such shares any
securities, cash or other consideration (including, without
limitation, a different number of shares of Common Stock), each
Option outstanding under this Plan shall thereafter be
exercisable, in accordance with this Plan, only for the kind and
amount of securities, cash and/or other consideration receivable
upon such Reorganization by a holder of the same
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number of shares of Common Stock as are subject to that Option
immediately prior to such Reorganization, and any adjustments
will be made to the terms of the Option in the sole discretion of
the Committee as it may deem appropriate to give effect to the
Reorganization.
10. TRANSFERABILITY OF OPTIONS. Each Option Agreement
shall provide that such Option shall not be transferable by the
Optionee otherwise than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order
and that so long as an Optionee lives, only such Optionee or his
or her guardian or legal representative shall have the right to
exercise the related Option.
11. ISSUANCE OF SHARES. No person shall be, or have any of
the rights or privileges of, a stockholder of the Company with
respect to any of the Shares subject to an Option unless and
until certificates representing such Shares shall have been
issued and delivered to such person. As a condition of any
transfer of the certificate for Shares, the Committee may obtain
such agreements or undertakings, if any, as it may deem necessary
or advisable to assure compliance with any provision of this
Plan, any Option Agreement or any law or regulation, including,
but not limited to, the following:
(i) A representation, warranty or agreement by
the Optionee to the Company, at the time any Option is
exercised, that he or she is acquiring the Shares to be
issued to him or her for investment and not with a view
to, or for sale in connection with, the distribution of
any such Shares; and
(ii) A representation, warranty or agreement to be
bound by any legends that are, in the opinion of the
Committee, necessary or appropriate to comply with the
provisions of any securities law deemed by the
Committee to be applicable to the issuance of the
Shares and are endorsed upon the Share certificates.
Share certificates issued to an Optionee who is a party to
any stockholder agreement or a similar agreement shall bear the
legends contained in such agreements.
12. ADMINISTRATION OF THE PLAN.
(a) This Plan shall be administered by a stock option
committee (the "Committee") consisting of not fewer than two
(2) Non-Employee Directors; provided, however, that if no
Committee is appointed, the full Board shall administer this
Plan and in such case all references to the Committee shall
be deemed to be references to the Board. The Committee
shall have all of the powers of the Board with respect to
this Plan. Any member of the Committee may be removed at any
time, with or without cause, by resolution of the Board, and
any vacancy occurring in the membership of the Committee may
be filled by appointment by the Board.
(b) The Committee, from time to time, may adopt rules
and regulations for carrying out the purposes of this Plan.
The Committee may at any time terminate this Plan or make
such modification or amendment thereof as it deems
advisable. Termination or any modification or amendment of
this Plan shall not, without consent of
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the Optionee, affect his rights under an Option previously
granted to him. The determinations and the interpretation
and construction of any provision of this Plan by the
Committee shall be final and conclusive.
(c) Any and all decisions or determinations of the
Committee shall be made either (i) by a majority vote of the
members of the Committee at a meeting or (ii) without a
meeting by the written approval of all of the members of the
Committee.
13. INTERPRETATION.
(a) If any provision of this Plan is held invalid for
any reason, such holding shall not affect the remaining
provisions hereof, but instead this Plan shall be construed
and enforced as if such provision had never been included in
this Plan.
(b) THIS PLAN SHALL BE GOVERNED BY THE SUBSTANTIVE
LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO DELAWARE
CONFLICT OF LAW PROVISIONS.
(c) Headings contained in this Plan are for
convenience only and shall in no manner be construed as part
of this Plan.
(d) Any reference to the masculine, feminine or neuter
gender shall be a reference to such other gender as is
appropriate.
14. SECTION 83(b) ELECTION. If as a result of exercising
an Option an Optionee receives Shares that are subject to a
"substantial risk of forfeiture" and are not "transferable" as
those terms are defined for purposes of Section 83(a) of the
Code, then such Optionee may elect under Section 83(b) of the
Code to include in his gross income, for his taxable year in
which the Shares are transferred to such Optionee, the excess of
the Fair Market Value of such Shares at the time of transfer
(determined without regard to any restriction other than one
which by its terms will never lapse), over the amount paid for
the Shares. If the Optionee makes the Section 83(b) election
described above, the Optionee shall (i) make such election in a
manner that is satisfactory to the Committee, (ii) provide the
Company with a copy of such election, (iii) agree to promptly
notify the Company if any Internal Revenue Service or state tax
agent, on audit or otherwise, questions the validity or
correctness of such election or of the amount of income
reportable on account of such election, and (iv) agree to such
withholding as the Committee may reasonably require in its sole
and absolute discretion.
15. EFFECTIVE DATE AND TERMINATION DATE. The effective
date of this Plan is February 3, 1999 and the effective date of
any amendment to this Plan is the date on which the Board adopted
such amendment; provided, however, if this Plan is not approved
by the stockholders of the Company within twelve (12) months
after the effective date, then, in such event, this Plan and all
Options granted pursuant to this Plan shall be null and void.
This Plan shall terminate on February 2, 2009, and any Option
outstanding on such date will remain outstanding until it has
either expired or has been exercised.
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