Exhibit 10.49
CALLAWAY GOLF COMPANY
EXECUTIVE DEFERRED COMPENSATION PLAN
(AS AMENDED AND RESTATED EFFECTIVE AUGUST 22, 2000)
This Executive Deferred Compensation Plan ("Plan") has been
adopted by the Board of Directors of Callaway Golf Company, a Delaware
corporation ("Company"), effective August 1, 1994. This restatement of the Plan
incorporates all amendments to the Plan adopted and in effect through August 22,
2000.
1. PURPOSE
The primary purpose of the Plan is to provide deferred
compensation to a select group of management or highly compensated employees
through an unfunded "top hat" arrangement exempt from the fiduciary, funding,
vesting, and plan termination insurance provisions of Title I and Title IV of
the Employee Retirement Income Security Act ("ERISA"). More specifically, the
Company has adopted this Plan to provide Employees with the opportunity to defer
part or all of that portion of their Compensation including amounts they are
unable to defer, receive or take into account under any tax qualified deferred
compensation (i.e., 401(k), pension, profit sharing or stock bonus) plan which
the Company may now or hereafter maintain, as a result of the limits imposed by
Sections 401(a)(4), 401(a)(17), 401(k)(3), 401(m), 402(g) and 415 of the
Internal Revenue Code ("Code") on plans to which those sections of the Code
apply. To the extent that a separable part of the Plan is maintained for the
purpose of providing benefits in excess of those permitted by Section 415 of the
Code, that part of the Plan may be treated as an excess benefit plan within the
meaning of Section 3(36) of ERISA. The purposes of this Plan include the
deferral of payment of fees to be earned by outside directors, i.e., members of
the Board who are not officers or common-law employees of Callaway Golf, within
the meaning of Section 3121 of the Code.
2. DEFINITIONS AND CAPITALIZED TERMS
When used in this Plan document, the capitalized terms set
forth in alphabetical order herein have the definitions specified below unless
the context in which the term appears clearly requires a different meaning.
a. "ACCOUNT" refers to the bookkeeping entries established and
maintained by the Company or the Committee for the purpose of recording (i) the
amounts of Compensation deferred by an Employee under this Plan, (ii) any
hypothetical investment earnings, losses, interest accruals or administrative
expenses with respect to those amounts, and (iii) any distributions to an
Employee or Beneficiary.
b. "BENEFICIARY" refers to the person or entity selected to
receive any portion of an Employee's Account that has not been distributed from
the Plan at the time of the Employee's death. Such designation shall be on a
form provided or approved by the Plan Administrator. If an Employee fails to
designate a Beneficiary or no designated Beneficiary survives the Employee, the
Plan Administrator may direct payment of benefits to the following person or
persons in the order given below: the Employee's
(i) spouse,
(ii) descendants, per stirpes,
(iii) parents,
(iv) brothers and sisters, or
(v) estate of the Participant.
c. "BOARD" or "BOARD OF DIRECTORS" refers to the Board of
Directors of the Company.
d. "CODE" refers to the Internal Revenue Code of 1986, as
amended from time to time.
e. "COMMITTEE" or "ADMINISTRATIVE COMMITTEE" refers to the
officers of the Company who act on behalf of the Company in discharging the
Company's duties as the Plan Administrator. Notwithstanding any other provision
of the Plan document, any member of the Committee or any other officer or
employee of the Company who exercises discretion or authority on behalf of the
Company shall not be a fiduciary of the Plan merely by virtue of his or her
exercise of such discretion or authority. The Board shall identify the Company
officers who shall serve as members of the Committee. Because this Plan is a
"top hat" arrangement, neither the Company nor the Committee shall be subject to
the duties imposed by the provisions of Part 4 of Title I of ERISA.
f. "COMPANY," "CORPORATION" or "EMPLOYER" refers to Callaway
Golf Company, a Delaware corporation.
g. "COMPANY 401(K) PLAN" refers to the Callaway Golf Company
defined contribution plan intended to satisfy the requirements of Sections
401(a), 401(k), 401(m) and 414(i) of the Code. References to the Company 401(k)
Plan or to the Company Matching Contributions, below, are for purposes of
measurement only. Nothing in this Plan contemplates a transfer of contributions
or assets from the Company 401(k) Plan to this Plan or conditions participation
in this Plan upon an Employee's participation or nonparticipation in the Company
401(k) Plan.
h. "COMPANY MATCHING CONTRIBUTIONS" refers to contributions,
if any, made by the Company or any Subsidiary pursuant to Section 5.6 of this
Plan. Said contributions may be measured with reference to matching
contributions under the Company 401(k) Plan.
i. "COMPENSATION" refers to an Employee's gross salary,
including any commissions, bonuses or awards, payable by the Company or any
Subsidiary after an Employee first becomes eligible to participate in this Plan
and during the period through which such participation continues. For the 1994
Plan Year, the Compensation an Employee may defer under the Plan is limited to
bonuses earned in 1994 and determined after July 31, 1994. For outside
directors, Compensation refers to directors fees payable by the Company after
the outside director first becomes eligible to participate in this Plan and
during the period through which such participation continues. For the 1998 Plan
Year, the Compensation an outside director may defer under the Plan is limited
to fees first payable by Callaway Golf after December 31, 1997, for services to
be rendered after that date.
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j. "DISABLED" or "DISABILITY" refers to a physical or mental
condition of an Employee which (i) occurs after an Employee first defers
Compensation under this Plan, (ii) results from an injury, disease or disorder,
and (iii) renders the Employee totally and permanently incapable of continuing
in his or her customary employment with the Company or any Subsidiary. In
determining whether an Employee is disabled, the Committee may rely upon the
conclusions of any insurance carrier that has issued a policy of insurance
covering the Employee or upon the conclusions of any physician acceptable to the
Committee. An Employee will automatically satisfy the requirements under this
Plan, with respect to submission of evidence of disability, throughout the
period that he or she remains qualified for Social Security disability benefits.
Any Employee who believes that he or she is entitled to any advantage, benefit
or other consideration under the Plan as a result of being Disabled shall apply
to the Committee for such consideration and shall provide any evidence of
Disability which the Committee in its discretion may request in a manner
consistent with the Americans with Disabilities Act of 1990 and other relevant
laws.
k. "EFFECTIVE DATE" refers to August 1, 1994 (with respect to
Compensation first earned, determined or payable after that date) contingent
upon approval of the Plan by the Board of Directors of the Company.
l. "EMPLOYEE" refers to any employee, within the meaning of
Section 3121(d) of the Code, who is highly compensated or is a member of
management selected by the Board to participate in this Plan or in any other
executive deferred compensation arrangement maintained by the Company or any
Subsidiary. In determining whether an employee is described in the preceding
sentence, an employee shall be considered to be highly compensated if the
employee's annual Compensation exceeds $150,000 or such greater amount permitted
to be considered under Section 401(a)(17) of the Code. Where the Plan
Administrator considers appropriate in applying the provisions of this Plan, the
term Employee shall include only persons who are Participants or Inactive
Participants under the Plan. If the Board amends the Plan to allow participation
by outside directors or other independent contractors, the term Employee shall
refer to such outside director or independent contractor. Because the Board has
amended the Plan to allow participation by outside directors, effective November
1, 1997, the term Employee shall include references to members of Callaway
Golf's Board who are not officers or common-law employees of Callaway Golf,
within the meaning of Code Section 3121. To the extent necessary for the orderly
administration of the Plan, all definitions and other provisions of the Plan
shall be construed in a manner consistent with participation by outside
directors and with their deferral of the inclusion of fees into gross income for
federal and state income tax purposes.
m. "ERISA" refers to the Employee Retirement Income Security
Act of 1974, as amended from time to time.
n. "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
o. "HARDSHIP" refers to an Employee's immediate and heavy
financial need caused by an unforeseeable emergency, as described in Treasury
Regulations Section 1.457-2(h)(4) and (5). In general, but without limitation,
the Plan Administrator shall approve a Hardship withdrawal from an Employee's
Account if the
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reduction does not exceed the amount needed to pay for the following
unreimbursed expenses: (i) medical expenses defined in Code Section 213(d) and
incurred (or to be incurred) during the calendar year by the Employee, or his or
her spouse or dependents (as described in Code Section 152) as a result of a
sudden or unexpected illness or accident; (ii) loss of a participant's property
as a result of a casualty or other extraordinary, unforeseeable circumstances
attributable to forces beyond the participant's control; and (iii) other costs
recognized by the Plan Administrator to pose an immediate and heavy financial
need on the Employee as a result of an unforeseeable emergency.
p. "INACTIVE PARTICIPANT" refers to an Employee who deferred
Compensation under the Plan during a previous Plan Year but who does not defer
any Compensation payable during the current Plan Year.
q. "INSOLVENCY" shall exist if Callaway Golf Company is (a)
unable to pay its debts as they come due or (b) subject to a pending proceeding
as a debtor under the United States Bankruptcy Code.
r. "PARTICIPANT" refers to an eligible Employee who elects to
defer under the Plan part or all of his or her Compensation payable during the
current Plan Year.
s. "PLAN" shall mean this Callaway Golf Company Executive
Deferred Compensation Plan, as amended from time to time.
t. "PLAN ADMINISTRATOR" refers to the Company.
u. "PLAN YEAR" refers to the calendar year; however, the first
Plan Year shall be the period beginning August 1, 1994 and ending December 31,
1994.
v. "SUBSIDIARY" refers to any corporation, partnership,
limited liability company or other entity, domestic or foreign, in which the
Company directly or indirectly owns 50% or more of the total combined power to
cast votes in the election of directors, managing partners, managers or similar
officials, and which has been included within the coverage of the Plan by the
Board of Directors, in its sole discretion.
w. "TERMINATION OF EMPLOYMENT" refers to an Employee's (i)
separation from service with the Company or any Subsidiary, (ii) refusal or
failure to return to work within five working days after the date requested by
the Company or any Subsidiary or (iii) failure to return to work at the
conclusion of a leave of absence. If the Board amends the Plan to allow
participation by outside directors or other independent contractors, the phrase
Termination of Employment shall refer to the cessation of all services rendered
to the Company or any Subsidiary by the outside director or independent
contractor. In the case of outside directors, Termination of Employment or
Termination refers to the voluntary or involuntary cessation of all services as
an outside director without the commencement or recommencement of service as an
officer or common-law employee of the Company, within the meaning of Code
Section 3121.
x. "TRUST" shall mean any trust or other vehicle established
by the Company to meet its obligations under the Plan.
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3. ELIGIBILITY
3.1 The Board or the Committee, in its sole discretion, may
designate from time to time those Employees of the Company or any Subsidiary who
are eligible to participate in the Plan for one or more Plan Years and the date
upon which each such Employee's participation may commence. All designated
Employees shall be notified by the Board or the Committee of their eligibility
to participate. An Employee shall cease to be eligible when the Employee ceases
both (i) to be a member of a select group of management and (ii) to be highly
compensated as described in Section 2(k) above. Additionally, at the discretion
of the Board or Committee, an Employee shall not be eligible to participate in
the Plan (a) while the Employee has an unpaid loan from any tax-qualified
deferred compensation plan maintained by the Company or any Subsidiary or (b)
during the Plan Year immediately following the Plan Year in which the Employee
takes a Hardship withdrawal from the Plan. The Effective Date of any such
ineligibility shall be the first day of the Plan Year coinciding with or next
following the date on which the Board or Committee provides the Employee with
notice of revocation of eligibility. An Employee's eligibility to participate in
the Plan does not confer upon the Employee any right to any award, bonus or
remuneration of any kind.
3.2 The Committee administering the Plan or in the case of
outside directors a subcommittee on which no outside director participates, in
its sole discretion, may designate from time to time those outside directors of
the Company who are eligible to participate in the Plan for one or more Plan
Years and the date upon which each such director's participation may commence.
All designated outside directors shall be notified by the Committee of their
eligibility to participate. An outside director shall cease to be eligible to
defer Compensation under the Plan when he or she ceases to be an outside
director or when the Committee, in its sole discretion, designates the outside
director as no longer eligible to participate in the Plan. An outside director's
eligibility to participate in the Plan does not confer upon the outside director
any right to any fee, remuneration or right to continued participation, election
or appointment of any kind.
4. DEFERRAL OF COMPENSATION
4.1 ELECTION TO DEFER
An Employee who is eligible to participate in the Plan may
elect to defer the receipt of Compensation by completing a deferral election
form provided or approved by the Company or Committee. Pursuant to the deferral
election form, an eligible Employee may elect to defer any whole percentage or
fixed dollar amount of his or her Compensation. An Employee who elects to
participate in the Plan must defer at least $2,000 in Compensation for each Plan
Year in which he or she remains eligible to participate. An outside director who
is eligible to participate in the Plan may elect to defer the receipt of
Compensation by completing a deferral election form provided or approved by the
Company or Committee. Pursuant to the deferral election form, an eligible
outside director may elect to defer any whole percentage or fixed dollar amount
of his or her Compensation. An outside director who elects to participate in the
Plan must defer at least $2,000 in Compensation for each Plan Year in which he
or she remains eligible to participate.
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4.2 DATE OF DEFERRAL
To the extent provided in Section 4.6, this Section 4.2 shall
not apply to the deferral election of an Employee or outside director made no
later than the end of the period described in Section 4.6, with respect to his
or her initial participation in the Plan (as determined under Section 3.1 or
3.2). An eligible Employee must submit his or her deferral election form to the
Committee no later than the last day of the deferral election period. The last
day of the deferral election period shall be (a) the last day preceding the
calendar year in which the eligible Employee will render the services for which
he or she will receive any part of the Compensation (including bonus) payable to
the Employee during that year or (b) with respect to the deferral of
Compensation earned during 1994 Plan Year, not later than 30 days after the
Effective Date. At the time of the deferral election, the Employee must specify
the form in which distributions shall occur under the Plan. An eligible outside
director must submit his or her deferral election form to the Committee no later
than the last day of the deferral election period. The last day of the deferral
election period shall be December 31st, the last day preceding the calendar year
in which the eligible director will render the services for which he or she will
receive any part of the Compensation payable during that calendar year. At the
time of the deferral election, the outside director must specify, on the Plan's
enrollment form, the event or date upon the occurrence of which distributions
are to commence under the Plan and the form in which such distributions shall be
made.
4.3 MULTIPLE ELECTIONS
An election to defer Compensation shall be effective on the
date an eligible Employee delivers a completed deferral election to the
Committee; provided, however, that, if the eligible Employee delivers another
properly completed deferral election form to the Committee prior to the close of
the deferral election period described in Section 4.2, the deferral election on
the form bearing the latest date shall control. After the last day of the
election period, the controlling election made prior to the close of the period
shall be irrevocable. An election to defer Compensation shall be effective on
the date an eligible outside director delivers a completed deferral election to
the Committee; provided, however, that, if the eligible outside director
delivers another properly completed deferral election form to the Committee
prior to the close of the deferral election period described in Section 4.2, the
deferral election on the form bearing the latest date shall control. After the
last day of the election period, the controlling election made prior to the
close of the period shall be irrevocable.
4.4 ANNUAL ELECTIONS
To the extent provided in Section 4.6, this Section 4.4 shall
not apply to a deferral election of an Employee or outside director made no
later than the end of the period described in Section 4.6, with respect to his
or her initial participation in the Plan (as determined under Section 3.1 or
3.2). In order to defer any portion of Compensation earned in any calendar year
after the 1994 calendar year, an eligible Employee must submit at least one
completed deferral election form during the 3-month period immediately preceding
the start of that calendar year. In order to defer any portion of Compensation
earned in any calendar year after the 1997 calendar year, an eligible outside
director must submit at least one completed deferral election form during the
3-month period immediately preceding the start of that calendar year.
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4.5 NO DEFERRAL ADJUSTMENTS
After an annual election has taken effect for any Plan Year, a
Participant may not increase or decrease the percentage or amount of
Compensation to be deferred during that Plan Year; except that a Participant
must cease deferrals under the Plan to the extent that such cessation may
relieve the Participant of one or more Hardships without any withdrawals under
this Plan. After an annual election has taken effect for any Plan Year, an
outside director may not increase or decrease the percentage or amount of
Compensation to be deferred during that Plan Year; except that an outside
director must cease deferrals under the Plan to the extent that such cessation
may relieve the outside director of one or more Hardships, as defined in Section
2 of the Plan, without any withdrawals under this Plan.
4.6 NEW ELIGIBLE EMPLOYEES AND OUTSIDE DIRECTORS
Notwithstanding any other provision of the Plan, an individual
who first becomes eligible to participate in the Plan, pursuant to Plan Sections
3.1 or 3.2, may submit his or her deferral election form to the Committee not
later than 30 days following the date of such eligibility. The Participant's
deferral election will be effective as to Compensation payable for services
rendered after the date the form is received by the Committee. The Participant
must specify, in the manner required by the Committee, the event or date upon
the occurrence of which distributions are to commence under the Plan and the
form of such distributions. An Employee or outside director who does not submit
a deferral election by the end of the period described in this Section 4.6 may
not elect to defer any portion of his or her Compensation until the following
January 1, in accordance with Sections 4.2 and 4.4.
5. DEFERRED COMPENSATION ACCOUNTS
5.1 MAINTENANCE OF ACCOUNTS
The Plan Administrator shall maintain one or more bookkeeping
Accounts with respect to any Compensation deferred by an eligible Employee under
Section 4 above. The Plan Administrator shall credit the Account with the full
amount of Compensation deferred in any payroll period. If the Compensation
deferred is subject to federal or state employment taxes (e.g., taxes under the
Federal Insurance Contributions Act or Federal Unemployment Tax Act), said taxes
shall be withheld and deducted from a portion of the Employee's Compensation not
deferred under this Plan. A Participant or Inactive Participant shall be fully
vested at all times in amounts deferred under Section 4 above, as adjusted for
any earnings, losses, interest accruals, administrative expenses or
distributions as described below.
5.2 INVESTMENT ELECTIONS
In accordance with rules, procedures and options established
by the Committee, a Participant shall have the right to express preferences with
respect to the investment of his or her Account, except for any period of time
during which the Company limits Account earnings to interest accruals under
Section 5.4 below. In accordance with procedures established by the Plan
Administrator, a Participant may change his or her investment preferences twice
each Plan Year. Such changes may be
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made, if at all, during the three-week period immediately following the
quarterly distribution of individual account statements. As a general rule, an
investment preference expressed by a Participant shall take effect on the first
business day of the month following the Participant's communication of such
preference. Ordinarily, a participant's communication occurs only when the
Committee, the Company, the Plan Administrator, the trustee of the Trust (or any
person designated by any of them to process or implement investment
instructions) receives actual notice of a Participant's investment preference. A
Participant may transmit such notice by any means of communication which the
Company may permit under the Plan, such as hand delivery, U.S. Mail, commercial
courier, telephone, facsimile or Internet. The Participant assumes any risk
posed by the means of communication which he or she selects.
Although the Company shall have the hypothetical obligation to
follow the Participant's investment preferences, the Company, in its sole
discretion, may satisfy its hypothetical obligation from time to time in one or
both of the following ways. First, the Company may invest assets hypothetically
allocable to the Participant's Accounts in the specific investments, in the
specific amounts and for the specific periods requested by the Participant; and
the Company must credit or charge the Participant's Accounts with the earnings,
gains or losses resulting from such investments. Second, the Company reserves
the right -- exercisable in its sole discretion at any time and from time to
time, without notice or Plan amendment -- to add, modify, suspend, terminate or
override (i) any investment preference communicated by a Participant, (ii) any
investment option made available to a Participant, or (iii) any means of
communicating investment preferences and other information under the Plan;
provided, however, the Company must credit or charge the Participant's Accounts
with the same earnings, gains or losses that the Participant would have incurred
if the Company had invested the assets hypothetically allocable to the
Participant's Accounts in the specific investments, in the specific amounts and
for the specific periods requested by the Participant.
If this Plan is determined to be subject to the fiduciary
provisions of Part 4 of Title I of ERISA, this Plan shall be treated as a Plan
described in Section 404(c) of ERISA and Title 29 of the Code of Federal
Regulations Section 2550.404c-1, in which Plan fiduciaries may be relieved of
liability for any losses which are the direct and necessary result of investment
instructions given by a Participant or Beneficiary.
5.3 INVESTMENT EARNINGS OR LOSSES
Except for any period of time during which the Company limits
bookkeeping Account earnings to hypothetical interest accruals under Section 5.4
below, any amounts credited to the bookkeeping Account of a Participant or
Inactive Participant as a result of the deferral of all or part of his or her
Compensation may increase or decrease as a result of the Company's investment of
such amounts during the Plan Year, as described in Section 5.2 above. A ratable
share of the Plan's hypothetical investment earnings or losses under this
Section 5.3 shall be credited to the bookkeeping Account of a Participant or
Inactive Participant, as determined in good faith by the Committee. At the sole
discretion of the Committee, for any Plan Year, the Committee may allocate to
the Participant's bookkeeping Account either (i) the full amount of the
Participant's share of the Plan's hypothetical investment earnings or losses or
(ii) the full amount of such share adjusted for any federal, state or local
income or employment tax consequences attributable to such hypothetical earnings
or losses. If
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the full amount of such hypothetical investment earnings or losses are allocated
to a Participant's Account, any federal, state or local income or employment tax
consequences attributable to such earnings or losses under this Section 5.3
shall be borne by or inure to the benefit of the Company. The Participant and
his or her Beneficiary understand and agree that they assume all risk in
connection with any decrease in the value of the Compensation deferred under the
Plan and invested in accordance with these Sections 5.2 and 5.3.
5.4 INTEREST ACCRUALS
During each Plan Year in which the Company does not invest an
Employee's deferred Compensation as described in Sections 5.2 and 5.3 above, any
amounts credited to the bookkeeping Account of a Participant or Inactive
Participant as a result of the deferral of all or part of his or her
Compensation shall accrue hypothetical interest compounded annually, as
consideration for the use or forbearance of money. The hypothetical accrual of
interest begins and the compounding of interest occurs on January 1 of each Plan
Year or, if later, the date on which an eligible Employee first defers
Compensation under the Plan. The rate at which interest accrues shall equal the
prime rate, plus one percent, offered to borrowers by a commercial bank in San
Diego, California on December 31st of the Plan Year during which the accrual
occurs. The Committee shall select the commercial bank before December 1 of the
Plan Year during which the accrual occurs. At the sole discretion of the
Company, for any Plan Year (i) the full amount of such hypothetical accrued
interest may be allocated to a Participant's Account or (ii) adjusted for any
federal, state or local income or employment tax consequences attributable to
such interest, prior to allocating such hypothetical interest to a Participant's
Account. If the full amount of such interest accruals are allocated to a
Participant's Account, any federal, state or local income or employment tax
consequences attributable to interest accruals under this Section 5.4 shall be
borne by or inure to the benefit of the Company.
5.5 INVESTMENT OF UNPAID BALANCES
The unpaid balance of all Accounts payable under the Plan
shall continue to be credited with the hypothetical investment earnings or
losses described in Sections 5.2 and 5.3 above or hypothetical accruals of
interest as described in Section 5.4 above. The unpaid balance of all Accounts
of any outside director under the Plan shall continue to be credited with the
hypothetical investment earnings or losses described in Sections 5.2 and 5.3 of
the Plan or hypothetical accruals of interest as described in Section 5.4 of the
Plan until said Accounts have been distributed in their entirety.
5.6 COMPANY MATCHING CONTRIBUTIONS
a. At the end of any Plan Year for which an eligible
Employee has deferred Compensation under this Plan, the Committee may add to his
or her Accounts no more than the lesser of (1) $25,000 or (2) an amount equal to
the Company Matching Contribution which the Employee would have received if (i)
the Employee had contributed, to the Company 401(k) Plan, the amounts deferred
under this Plan and (ii) the limitations described in Section 1 above did not
apply to the Company 401(k) Plan. Nothing in the preceding sentence shall
require the Company to make Matching Contributions to the Account of any
Participant in any Plan Year or
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create a presumption that Matching Contributions allocated under this Plan shall
be determined with reference to Matching Contributions under the Company 401(k)
Plan. Once credited to an Employee's Accounts under this Plan, the amounts
described in the preceding sentence shall accrue the hypothetical investment
return described in Sections 5.2, 5.3, 5.4 and 5.5 above, and shall be payable
in accordance with Section 7 below.
b. Subject to the provisions of Section 5.6(c) below,
an Employee shall be fully vested in amounts allocated to his or her Account as
described in Section 5.6(a).
c. Without regard to the number of years of service
an Employee has completed with the Company or any Subsidiary and without regard
to an Employee's Disability, if an Employee separates from service with the
Company or any Subsidiary as a result of the Employee's gross misconduct, within
the meaning of Part 6 of Title I of ERISA, regarding group health continuation
coverage, or if the Employee engages in unlawful business competition with the
Company or any of its subsidiaries, the Employee shall forfeit all amounts
allocated to his or her bookkeeping Accounts under Section 5.6(a) above and all
hypothetical earnings thereon. Such forfeitures will be used to reduce the
Company's obligation, if any, to make Matching Contributions to other
Participants or to defray the expenses of administering the Plan.
d. References to the Company 401(k) Plan or to
Company Matching Contributions are for purposes of measurement only. Nothing in
this Plan contemplates a transfer of contributions or assets from the Company
401(k) Plan to this Plan or conditions participation in this Plan upon an
Employee's participation or nonparticipation in the Company 401(k) Plan.
e. At the end of any Plan Year for which an eligible
outside director has deferred Compensation under this Plan, the Committee may
add to his or her Accounts no more than the lesser of (i) $25,000 or (ii) an
amount equal to the Company Matching Contribution which the outside director
would have received if (a) the outside director had been eligible to contribute
and had contributed, to the Company 401(k) Plan, the amounts deferred under this
Plan and (b) the limitations described in Section 1 of this Plan did not apply
to the Company 401(k) Plan. Nothing in the preceding sentence shall require the
Company to make Matching Contributions to the Account of any outside director in
any Plan Year or create a presumption that Matching Contributions allocated
under this Plan to outside directors shall be determined with reference to
Matching Contributions actually made under the Company 401(k) Plan or under this
Plan for Participants who are officers or common-law employees of the Company.
Once credited to an outside director's Accounts under this Plan, the amounts
described in the preceding sentences shall accrue the hypothetical investment
return described in Section 5.2, 5.3, 5.4 and 5.5 of the Plan, and shall be
payable in accordance with Section 7 of the Plan.
f. Subject to the provisions of Section 5.6(g) of the
Plan, an outside director shall be fully vested in amounts allocated to his or
her Account as described in Section 5.6(e) of the Plan.
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g. Without regard to the number of years of service
an outside director has completed with the Company and without regard to an
outside director's Disability, as defined in the Plan, if an outside director
resigns or is removed from service with the Company as a result of the outside
director's gross misconduct, as determined in good faith by the Committee, or if
the outside director engages in unlawful business competition with the Company
or any of its subsidiaries, the outside director shall forfeit all amounts
allocated to his or her bookkeeping Accounts under Section 5.6(e) of the Plan
and all hypothetical earnings thereon. Such forfeitures will be used to reduce
the Company's obligation, if any, to make Matching Contributions to other
Participants or to defray the expenses of administering the Plan.
5.7 DISCRETIONARY CONTRIBUTIONS
Apart from Compensation deferrals and Matching Contributions,
the Company may but need not make additional contributions in any amount at any
time for any Employee under this Plan. Except for limits on the amount and
timing of such Company contributions, these discretionary contributions shall be
subject to the same vesting, distribution, benefit election, investment
direction and other Plan provisions that apply to Matching Contributions.
5.8 COMPANY'S GENERAL ASSETS
Participant understands and agrees that all Compensation
deferred under the Plan and all amounts credited to a Participant's Account
under the Plan (a) are the general assets of the Company, (b) may be used in the
operation of the Company's business or in any other manner permitted by law, and
(c) remain subject to the claims of the Company's creditors. Participant agrees,
on behalf of Participant and his or her Beneficiary, that (i) title to any
amounts deferred under the Plan or credited to a Participant's Account remains
in the Company and (ii) neither Participant nor his or her Beneficiary has any
property interests whatsoever in said amounts, except as general creditors of
the Company. Each outside director understands and agrees that all Compensation
deferred under this Plan and all amounts credited to his or her Accounts under
the Plan (a) are the general assets of the Company, (b) may be used in the
operation of the Company's business or in any other manner permitted by law, and
(c) remain subject to the claims of the Company's creditors. Each outside
director agrees, on his or her own behalf and on behalf of his or her
Beneficiaries and dependents, that (i) title to any amounts deferred under this
Plan or credited to an outside director's Account remains in the Company and
(ii) neither the outside director nor his or her Beneficiaries, dependents or
successors have any property interests whatsoever in said amounts, except as
general creditors of the Company.
6. EFFECT ON EMPLOYEE BENEFITS
Amounts deferred under this Plan or distributed pursuant to
the terms of this Plan are not taken into account in the calculation of an
Employee's benefits under any employee pension or welfare benefit program or
under any other compensation practice maintained by the Company or any
Subsidiary, except to the extent provided in such program or practice.
11
7. PAYMENT OF DEFERRED COMPENSATION ACCOUNTS
7.1 INCOME TAX OBLIGATIONS
The Plan Administrator may make payments before they would
otherwise be due if, based on a change in the federal tax or revenue laws, a
published ruling or similar announcement issued by the Internal Revenue Service,
a regulation issued by the Secretary of the Treasury, a decision by a court of
competent jurisdiction involving a Participant, Inactive Participant or
Beneficiary or a closing agreement made under Section 7121 of the Internal
Revenue Code that is approved by the Internal Revenue Service and involves a
Participant, Inactive Participant or Beneficiary, the Plan Administrator
determines that the Participant, Inactive Participant or Beneficiary has or will
recognize income for federal income tax purposes with respect to amounts that
are or will be payable under the Plan before they are to be paid. If an Employee
is assessed federal, state or local income taxes by reason of, and computed on
the basis of, his or her undistributed deferred Compensation or undistributed
interest accruals, earnings or gains on his or her Account, the Employee shall
notify the Company in writing of such assessment and there shall be distributed,
within thirty (30) days following such notice, from the Employee's bookkeeping
Account deferred Compensation, accrued interest, earnings or gains in an amount
equal to such tax assessment, together with any interest due and penalties
assessed thereupon; provided however, that if the Company determines that such
assessment is improper, it may request that the Employee contest the assessment,
at the expense of the Company (which expense shall include all costs of appeal
and litigation, including legal and accounting fees, and any additional interest
assessed on the deficiency from and after the date of the Employee's notice to
the Company); and during the period such contest is pending, the sums otherwise
distributable pursuant to this Section 7.1 shall not be distributed.
7.2 IN-SERVICE WITHDRAWALS
A. WITHDRAWALS TO MEET HARDSHIPS
If at any time following the first anniversary of
participation in the Plan, an Employee incurs a Hardship, described in Section
2(o), the Employee may, by written notice to the Committee, request that all or
any specified part of his or her Account, but not less than $1,000 per
withdrawal, be paid to the Employee; and such distribution, if approved by the
Company, shall be made in a lump sum within thirty (30) days following the
Company's receipt of such notice. The Company shall have exclusive authority to
determine whether to make a Hardship distribution from an Employee's Account but
shall not unreasonably deny a request for such a distribution. The Company's
decision shall be final and binding on all parties. Any Hardship withdrawals
from an Account shall reduce the amount available for subsequent distributions
from the Account, as the Company in good faith may determine.
B. OTHER WITHDRAWALS
Prior to the termination of his or her employment, a
Participant may not withdraw any funds from his or her Account, except as
provided in Section
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7.2.a. above. Notwithstanding the foregoing, the Plan Administrator may make
in-service distributions upon the termination of the Plan.
7.3 TERMINATION OF EMPLOYMENT
Upon Termination of Employment of a Participant or Inactive
Participant, the Company shall distribute his or her Account under the Plan, as
elected by the Participant or Inactive Participant (at the time of his or her
deferral of Compensation) in a lump sum or in five, ten or fifteen substantially
equal annual installments. For terminations prior to January, 1, 1999, the
payment from the account shall occur or commence within 30 days after the first
day of the calendar year immediately following the calendar year in which the
Termination of Employment occurs. For terminations after December 31, 1998, the
payment from the Account shall occur or commence within the 30-day period
immediately following the Termination of Employment.
7.4 DISABILITY
Upon the Disability of a Participant or Inactive Participant
prior to Termination of Employment, the Company shall distribute his or her
Account under the Plan, as elected by the Participant or Inactive Participant,
in a lump sum or in five or more (but not more than 15) substantially equal
annual installments. The payment from the Account shall occur or commence within
30 days after the first day of the calendar year immediately following the
calendar year in which the Disability results in the Employee's Termination of
Employment. Prior to the death of the Participant or Inactive Participant,
during any period in which a Participant or Inactive Participant remains
Disabled, he or she (or his or her legal representative) may request Hardship
withdrawals from any undistributed portion of his or her Account. Any such
Hardship withdrawals shall reduce the amount available for subsequent
distributions from the Account, as the Company in good faith may determine.
7.5 DEATH PRIOR TO COMMENCEMENT OF DISTRIBUTIONS
Upon the death of a Participant or Inactive Participant prior
to the commencement of any distribution under Sections 7.3. or 7.4 above, the
Account of such Participant or Inactive Participant shall be distributed to his
or her Beneficiary, in a lump sum or in five or more (but not more than 15)
substantially equal annual installments, as elected at the time of the deferral
of Compensation under the Plan. The payment from the Account shall occur or
commence within 30 days after the first day of the calendar year immediately
following the calendar year in which the death of the Participant or Inactive
Participant occurs. During the period between the death of the Participant or
Inactive Participant and the commencement of distributions to the Beneficiary,
the Beneficiary may request Hardship withdrawals from any undistributed portion
of his or her Account. Any such Hardship withdrawals shall reduce the amount
available for subsequent distributions from the Plan, as the Company in good
faith may determine.
7.6 DEATH AFTER COMMENCEMENT OF DISTRIBUTIONS
Upon the death of a Participant or Inactive Participant after
the commencement of any distribution in accordance with Sections 7.3 or 7.4
above, the
13
balance remaining in the Account of such Participant or Inactive Participant
shall be distributed to his or her Beneficiary in accordance with the terms
elected by the Participant or Inactive Participant under Sections 7.3 or 7.4.
7.7 DEFAULT DISTRIBUTION
The Company or any Subsidiary shall accelerate the payment of
Accounts under the Plan as a lump sum payment (i) if an Employee terminates
employment with the Company or any Subsidiary at a time when the value of his or
her Account is less than $10,000 or (ii) if an Employee who has elected
installment distributions, terminates employment with the Company or any of its
subsidiaries and works for a competitor of the Company. Additionally, if a
Participant or Inactive Participant fails to make an election offered under
Section 7.3 or 7.4 above, the Committee shall distribute the Account in a lump
sum within 30 days after the Account first becomes payable under the Plan.
7.8 WITHHOLDING AND OTHER TAX CONSEQUENCES
From any payments made under this Plan, the Company shall
withhold any taxes or other amounts which federal, state or local law requires
the Company to deduct, withhold and deposit. The Company's determination of the
type and amount of taxes to be withheld from any payment shall be final and
binding on all persons having or claiming to have an interest in this Plan or in
any Account under this Plan. Any adverse consequences incurred by a Participant
or Inactive Participant with respect to his or her participation in the Plan or
in connection with a distribution from or vesting under the Plan shall be the
sole responsibility of the Participant or Inactive Participant.
7.9 PAYMENTS TO OUTSIDE DIRECTORS
A. PRE-TERMINATION WITHDRAWALS
Prior to Termination, as defined in Section 2 above,
an active or inactive Participant who is or was an outside director may make
withdrawals from his or her Account only in the event of (i) Hardship as defined
in Section 2 of the Plan, (ii) unanticipated income tax obligations with respect
to the Compensation deferred under this Plan or (iii) the Company's liquidation
of the Plan as permitted or required under Section 7 of the Plan.
B. POST-TERMINATION DISTRIBUTIONS
On or after Termination as a result of death,
disability or other cessation of services as a director, an active or inactive
Participant who was an outside director (or his or her Beneficiaries) shall
receive distributions at the time and in the manner (lump sum or installments)
as permitted or required under Section 7 of the Plan.
C. INCOME AND SELF-EMPLOYMENT TAXES
Because outside directors are not common-law
employees of the Company, the Company has no responsibility to deduct, withhold
or deposit any federal, state or local income or employment taxes. Outside
directors are responsible for the
14
determination, computation and satisfaction of any income, employment, estate,
excise or other tax obligation with respect to the deferral of income, the
allocation of hypothetical investment return, or the vesting in or distribution
of Accounts under this Plan.
8. UNFUNDED STATUS OF PLAN
All amounts deferred under this Plan remain or become general
assets of the Company. All payments under this Plan shall come from the general
assets of the Company. The amounts credited to an Employee's Account are not
secured by any specific assets of the Company or any Subsidiary. This Plan shall
not be construed to require the Company or any Subsidiary to fund any of the
benefits provided hereunder or to establish a trust or purchase an insurance or
other product for such purpose. The Company or any Subsidiary may make such
arrangements as it desires to provide for the payment of benefits. Neither an
Employee, Participant or Inactive Participant nor his or her Beneficiary or
estate shall have any rights against the Company with respect to any portion of
any Account under the Plan except as general unsecured creditors nor against any
Subsidiary. No Employee, Participant, Inactive Participant, Beneficiary or
estate has an interest in any Account under this Plan until the Employee,
Participant, Inactive Participant, Beneficiary or estate has a right to receive
payment from the Account.
9. SUSPENSION OF PAYMENTS IN THE EVENT OF COMPANY'S INSOLVENCY
At all times during the continuance of any trust established
in connection with this Plan ("Trust"), if the Plan Administrator determines
that the Company's financial condition is likely to result in the suspension of
benefit payments from the Trust, the Plan Administrator shall advise
Participants, Inactive Participants and Beneficiaries that payments from the
Trust shall be suspended during the Company's insolvency. If the Trustee
subsequently resumes such payments, the Administrator shall advise Participants,
Inactive Participants and Beneficiaries that, if Trust assets are sufficient,
the first payment following such discontinuance shall include the aggregate
amount of all payments due to Participants, Inactive Participants and
Beneficiaries under the terms of the Plan for the period of such discontinuance,
less the aggregate amount of any payments made directly by the Company during
any period of discontinuance. At not time shall any insufficiency of Trust
assets relieve the Company of its obligation to make payments when due under the
Plan.
10. NON-ALIENATION OF BENEFITS
The interest of any Employee, Participant, Inactive
Participant or Beneficiary shall not be subject to sale, assignment, transfer,
conveyance, hypothecation, encumbrance, garnishment, attachment, anticipation,
pledge, alienation or other disposition prior to actual distribution from the
Plan; and any attempt to effect such disposition shall be void. No portion of
any Account shall, prior to receipt thereof, be subject to the debts, contracts,
liabilities, or engagements of any Employee, Participant, Inactive Participant,
or Beneficiary. Nothing in the preceding sentence shall prohibit the Company
from recovering from an Employee, Participant, Inactive
15
Participant or Beneficiary any payments to which he or she was not entitled
under the Plan.
11. LIMITATION OF RIGHTS
Nothing in this Plan document or in any related instrument
shall cause this Plan to be treated as a contract of employment within the
meaning of the Federal Arbitration Act, 9 U.S.C. 1 et seq., or otherwise shall
be construed as evidence of any agreement or understanding, express or implied,
that the Company or any Subsidiary (a) will employ any person in any particular
position or level of Compensation, (b) will offer any person initial or
continued participation or awards in any commission, bonus or other compensation
program, or (c) will continue any person's employment with the Company or any
Subsidiary.
12. NOTICE UNDER WARN
Any amounts paid (i) to any Employee under the Worker
Adjustment and Retraining Notification Act of 1988 ("WARN") or under any other
laws regarding termination of employment, or (ii) to any third party for the
benefit of said Employee or for the benefit of his or her dependents shall not
be offset or reduced by any amounts paid or determined to be payable by the
Company to said Employee or to his or her dependents under this Plan.
13. AMENDMENT OR TERMINATION OF PLAN
a. The Board of Directors may modify, suspend or terminate the
Plan in any manner at any time. Such modification, suspension or termination may
not reduce any accrued vested benefits allocated to a Participant's Account
under this Plan, but may modify, suspend or terminate future accruals or
allocations under the Plan and may alter any other aspects of the Plan.
b. In modifying, suspending or terminating the Plan, or in
taking any other action with respect to the implementation, operation,
maintenance or administration of the Plan, the Board of Directors may act by a
resolution of the Board.
c. This Plan shall terminate immediately if an impartial
arbitrator or court of competent jurisdiction determines that this Plan is not
exempt from the fiduciary provisions of Part 4 of Title I of ERISA. The Plan
shall terminate as of the date it ceased to be exempt.
d. Upon termination of the Plan, the Plan Administrator shall
distribute all Accounts, as determined by the Plan Administrator (i) in a lump
sum to all Participants or (ii) in accordance with the method designated by
Participants at the time of their deferrals.
16
14. ADMINISTRATIVE PROCEDURES AND DISPUTE RESOLUTION
14.1 PLAN ADMINISTRATOR
The Plan Administrator shall be the Company. The Board of
Directors may establish an Administrative Committee composed of any persons,
including officers or employees of the Company, who act on behalf of the Company
in discharging the duties of the Company in administering the Plan. No
Administrative Committee member who is a full-time officer or employee of the
Company shall receive compensation with respect to his or her service on the
Administrative Committee. Any member of the Administrative Committee may resign
by delivering his or her written resignation to the Board of Directors of the
Company. The Board may remove any Committee member by providing him or her with
written notice of the removal.
14.2 COMMITTEE ORGANIZATION AND PROCEDURES
a. The President or the Secretary of the Company may
designate a chairperson from the members of the Administrative Committee. The
Administrative Committee may appoint its own secretary, who may or may not be a
member of the Administrative Committee and may or may not be a person distinct
from the Secretary of the Company. The Committee secretary shall have the
primary responsibility for keeping a record of all meetings and acts of the
Administrative Committee and shall have custody of all documents, the
preservation of which shall be necessary or convenient to the efficient
functioning of the Administrative Committee. All reports required by law may be
signed by the Chairperson or another member of the Administrative Committee, as
designated by the Chairperson, on behalf of the Company.
b. The Administrative Committee shall act by a
majority of its members in office and may adopt such rules and regulations as it
deems desirable for the conduct of its affairs. If the Company, the Plan, any
Participant or Inactive Participant is or becomes subject to the Exchange Act,
the Securities and Exchange Commission or any national or regional securities
exchange, the Company and the members of the Administrative Committee shall take
any actions which are necessary or desirable for the maintenance, modification
or operation of the Plan in accordance with applicable rules thereunder.
14.3 ADMINISTRATIVE AUTHORITY
The Company and the Committee have discretionary authority to
perform all functions necessary or appropriate to the operation of the Plan,
including without limitation authority to (a) construe and interpret the
provisions of the Plan document and any related instrument and determine any
question arising under the Plan document or related instrument, or in connection
with the administration or operation thereof; (b) determine in its sole
discretion all facts and relevant considerations affecting the eligibility of
any Employee to be or become a Participant; (c) decide eligibility for, and the
amount of, benefits for any Participant, Inactive Participant or Beneficiary;
(d) authorize and direct all investments and disbursements under the Plan; and
(e) employ and engage such persons, counsel and agents and to obtain such
administrative, clerical, medical, legal, audit and actuarial services as it may
deem necessary in
17
carrying out the provisions of the Plan. The Company shall be the
"administrator" as defined in Section 3(16)(A) of ERISA for purposes of the
reporting and disclosure requirements of ERISA and the Code. The President of
the Company, or in his or her absence, the Secretary of the Company shall be the
agent for service of process on the Plan.
14.4 EXPENSES
Reasonable expenses which are necessary to operate and
administer the Plan, including but not limited to expenses incurred in
connection with the provisions of Section 14.3 shall be paid directly by the
Company. Such expenses may not be charged against Participant Accounts or reduce
the amount of Compensation, investment earnings or interest accruals allocated
to Participant Accounts under the Plan. All reasonable costs incurred by a
Committee member in the discharge of the Company's or his or her duties under
the Plan shall be paid or reimbursed by the Company. Such costs shall include
fees or expenses arising from the Committee's retention, with the consent of the
Company, of any attorneys, accountants, actuaries, consultants or recordkeepers
required by the Committee to discharge its duties under the Plan. Nothing in the
preceding two sentences or in any other provisions of the Plan shall require the
Company to pay or reimburse any Committee member or any other person for any
cost, liability, loss, fee or expense incurred by the Committee member or other
person in any dispute with the Company; nor may any Committee member or other
person reimburse himself, herself or itself, for any such cost, liability, loss,
fee or expense, from any Plan contributions or from the principal or income of
any investment or other vehicle established by the Company to assist it in
meeting its obligations under the Plan.
14.5 INSURANCE
The Company may, but need not, obtain liability insurance to
protect its directors, officers, employees or representatives against liability
in the operation of the Plan. An Employee, Participant or Inactive Participant
may use his or her own funds to obtain any policy of insurance with respect to
the Company's payment of any amounts under the Plan.
14.6 CLAIMS PROCEDURE
a. A claim for benefits shall be considered filed
only when actually received by the Plan Administrator.
b. Any time a claim for benefits is wholly or
partially denied, the Participant, Inactive Participant or Beneficiary
(hereinafter "Claimant") shall be given written notice of such denial within 90
days after the claim is filed, unless special circumstances require an extension
of time for processing the claim. If there is an extension, the Claimant shall
be notified of the extension and the reason for the extension within the initial
90-day period. The extension shall expire within 180 days after the claim is
filed. Such notice will indicate the reason for denial, the pertinent provisions
of the Plan on which the denial is based, an explanation of the claims appeal
procedure set forth herein, and a description of any additional material or
information
18
necessary to perfect the claim and an explanation of why such material or
information is necessary.
14.7 APPEAL PROCEDURES
a. Any person who has had a claim for benefits denied
by the Plan Administrator, or is otherwise adversely affected by the action or
inaction of the Plan Administrator, shall have the right to request review by
the Plan Administrator. Such request must be in writing, and must be received by
the Plan Administrator within 60 days after such person receives notice of the
Plan Administrator's action. If written request for review is not made within
such 60-day period, the Claimant shall forfeit his or her right to review. The
Claimant or a duly authorized representative of the Claimant may review all
pertinent documents and submit issues and comments in writing.
b. The Plan Administrator shall then review the
claim. The Plan Administrator may issue a written decision reaffirming,
modifying or setting aside its former action within 60 days after receipt of the
written request for review, or 120 days if special circumstances require an
extension. The Claimant shall be notified in writing of any such extension
within 60 days following the request for review. An original or copy of the
decision shall be furnished to the Claimant. The decision shall set forth the
reasons and pertinent plan provisions or relevant laws on which the decision
rests. The decision shall be final and binding upon the Claimant and the Plan
Administrator and all other persons having or claiming to have an interest in
the Plan or in any Account established under the Plan.
14.8 ARBITRATION
a. Any Participant's, Inactive Participant's or
Beneficiary's claim remaining unresolved after exhaustion of the procedures in
Sections 14.6 and 14.7 (and to the extent permitted by law any dispute
concerning any breach or claimed breach of duty regarding the Plan) shall be
settled solely by binding arbitration at the Employer's principal place of
business at the time of the arbitration, in accordance with the Employment
Claims Rules of the American Arbitration Association. Judgment on any award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. Each party to any dispute regarding the Plan shall pay the fees and
costs of presenting his, her or its case in arbitration. All other costs of
arbitration, including the costs of any transcript of the proceedings,
administrative fees, and the arbitrator's fees shall be borne equally by the
parties.
b. Except as otherwise specifically provided in this
Plan, the provisions of this Section 14.8 shall be absolutely exclusive for any
and all purposes and fully applicable to each and every dispute regarding the
Plan including any claim which, if pursued through any state or federal court or
administrative proceeding, would arise at law, in equity or pursuant to
statutory, regulatory or common law rules, regardless of whether such claim
would arise in contract, tort or under any other legal or equitable theory or
basis. The arbitrator who hears or decides any claim under the Plan shall have
jurisdiction and authority to award only compensatory damages to make whole a
person or entity suffering foreseeable economic damages; and apart from such
foreseeable economic damages, the arbitrator shall not have any authority or
jurisdiction to make any award of any kind including, without limitation,
punitive damages,
19
unforeseeable economic damages, damages for pain and suffering or emotional
distress, adverse tax consequences or any other kind or form of damages. The
remedy, if any, awarded by such arbitrator shall be the sole and exclusive
remedy for each and every claim which is subject to arbitration pursuant to this
Section 14.8. Any limitations on the relief that can be awarded by the
arbitrator are in no way intended (i) to create rights or claims that can be
asserted outside arbitration or (ii) in any other way to reduce the exclusivity
of arbitration as the sole dispute resolution mechanism with respect to this
Plan.
c. The Plan and the Company will be the necessary
parties to any action or proceeding involving the Plan. No person employed by
the Company, no Participant, Inactive Participant or Beneficiary or any other
person having or claiming to have an interest in the Plan will be entitled to
any notice or process, unless such person is a named party to the action or
proceeding. In any arbitration proceeding all relevant statutes of limitation
shall apply. Any final judgment or decision that may be entered in any such
action or proceeding will be binding and conclusive on all persons having or
claiming to have any interest in the Plan.
14.9 NOTICES
Any notice from the Company or the Committee to an Employee,
Participant, Inactive Participant or Beneficiary regarding this Plan may be
addressed to the last known residence of said person as indicated in the records
of the Company. Any notice to, or any service of process upon, the Company or
the Committee with respect to this Plan may be addressed as follows:
Chief Financial Officer
Callaway Golf Company
2285 Rutherford Road
Carlsbad, California 92008
14.10 INDEMNIFICATION
To the extent permitted by law, the Company shall, and hereby
does, indemnify and hold harmless any director, officer or employee of the
Company or any Subsidiary who is or may be deemed to be responsible for the
operation of the Plan, from and against any and all losses, claims, damages or
liabilities (including attorneys' fees and amounts paid, with the approval of
the Board, in settlement of any claim) arising out of or resulting from a duty,
act, omission or decision with respect to the Plan, so long as such duty, act,
omission or decision does not involve gross negligence or willful misconduct on
the part of such director, officer or employee. Any individual so indemnified,
shall, within 10 days after receipt of notice of any action, suit or proceeding,
notify the President of the Company (or in the President's absence, the Chief
Financial Officer of the Company) and offer in writing to the President (or
Chief Financial Officer) the opportunity, at the Company's expense, to handle
and defend such action, suit or proceeding, and the Company shall have the
right, but not the obligation, to conduct the defense in any such action, suit
or proceeding. An individual's failure to give the President (or Chief Financial
Officer) such notice and opportunity shall relieve the Company of any liability
to said individual under this Section 14.10. The Company may satisfy its
obligations under this provision (in whole or in part) by the purchase of
20
insurance. Any payment by an insurance carrier to or on behalf of such
individual shall, to the extent of such payment, discharge any obligation of the
Company to the individual under this indemnification.
15. MISCELLANEOUS
15.1 ALTERNATIVE ACTS AND TIMES
If it becomes impossible or burdensome for the Company or the
Committee to perform a specific act at a specific time required by this Plan,
the Company or Committee may perform such alternative act which most nearly
carries out the intent and purpose of this Plan and may perform such required or
alternative act at a time as close as administratively feasible to the time
specified in this Plan for such performance. Without limiting the foregoing,
neither the Company nor the Committee shall accelerate or delay distributions,
except as expressly permitted herein, such as upon termination of the Plan.
15.2 MASCULINE AND FEMININE, SINGULAR AND PLURAL
Whenever used herein, pronouns shall include both genders, and
the singular shall include the plural, and the plural shall include the
singular, whenever the context shall plainly so require.
15.3 GOVERNING LAW AND SEVERABILITY
This Plan shall be construed in accordance with the laws of
the State of California (exclusive of its provisions regarding conflicts of law)
to the extent that such laws are not preempted by ERISA or other federal laws.
If any provision of this Plan shall be held illegal or invalid for any reason,
such determination shall not affect the remaining provisions of this Plan which
shall be construed as if said illegal or invalid provision had never been
included.
15.4 FACILITY OF PAYMENT
If the Plan Administrator, in its sole discretion, determines
that any Employee, Participant, Inactive Participant or Beneficiary by reason of
infirmity, minority or other disability, is physically, mentally or legally
incapable of giving a valid receipt for any payment due him or her or is
incapable of handling his or her own affairs and if the Plan Administrator is
not aware of any legal representative appointed on his or her behalf, then the
Plan Administrator, in its sole discretion, may direct (a) payment to or for the
benefit of the Employee, Participant, Inactive Participant or Beneficiary; (b)
payment to any person or institution maintaining custody of the Employee,
Participant, Inactive Participant or Beneficiary; or (c) payment to any other
person selected by the Plan Administrator to receive, manage and disburse such
payment for the benefit of the Employee, Participant, Inactive Participant or
Beneficiary. The receipt by any such person of any such payment shall be a
complete acquittance therefor; and any such payment, to the extent thereof,
shall discharge the liability of the Company, the Committee, and the Plan for
any amounts owed to the Employee, Participant, Inactive Participant or
Beneficiary hereunder. In the event of any controversy or uncertainty regarding
who should receive or whom the Plan Administrator should select to receive
21
any payment under this Plan, the Plan Administrator may seek instruction from a
court of proper jurisdiction or may place the payment (or entire Account) into
such court with final distribution to be determined by such court.
15.5 CORRECTION OF ERRORS
Any crediting of Compensation or interest accruals to the
Account of any Employee, Participant, Inactive Participant or Beneficiary under
a mistake of fact or law shall be returned to the Company. If an Employee,
Participant, Inactive Participant or Beneficiary in an application for a benefit
or in response to any request by the Company or the Plan Administrator for
information, makes any erroneous statement, omits any material fact, or fails to
correct any information previously furnished incorrectly to the Company or the
Plan Administrator, or if the Plan Administrator makes an error in determining
the amount payable to an Employee, Participant, Inactive Participant or
Beneficiary, the Company or the Plan Administrator may correct is error and
adjust any payment on the basis of correct facts. The amount of any overpayment
or underpayment may be deducted from or added to the next succeeding payments,
as directed by the Plan Administrator. The Plan Administrator and the Company
reserve the right to maintain any action, suit or proceeding to recover any
amounts improperly or incorrectly paid to any person under the Plan or in
settlement of a claim or satisfaction of a judgment involving the Plan.
15.6 MISSING PERSONS
In the event a distribution of part or all of an Account is
required to be made from the Plan to an Employee, Participant, Inactive
Participant or Beneficiary, and such person cannot be located, the relevant
portion of the Account shall escheat in accordance with the laws of the State of
California. If the affected Employee, Participant, Inactive Participant or
Beneficiary later contacts the Company, his or her portion of the Account shall
be reinstated and distributed as soon as administratively feasible. The Company
shall reinstate the amount forfeited by reclaiming such amount from the State of
California, and allocating it to the Account of the affected Employee,
Participant, Inactive Participant or Beneficiary. Prior to forfeiting any
Account, the Company shall attempt to contact the Employee, Participant,
Inactive Participant or Beneficiary by return receipt mail (or other carrier) at
his or her last known address according to the Company's records, and, where
practical, by letter-forwarding services offered through the Internal Revenue
Service, or the Social Security Administration, or such other means as the Plan
Administrator deems appropriate.
15.7 EMPLOYEE ACKNOWLEDGMENT
By executing this Plan document or related enrollment or
election form, the undersigned Employee hereby acknowledges that Employee has
read and understood this Plan document. Employee also acknowledges that Employee
knowingly and voluntarily agrees to be bound by the provisions of the Plan, as
amended from time to time, including those Plan provisions which require the
resolution of disputes by binding out-of-court arbitration. Employee further
acknowledges that Employee has had the opportunity to consult with counsel of
Employee's own choosing with respect to all of the financial, tax and legal
consequences of participating in this Plan, including in particular the effects
of participation on any community property or other interest which
22
the Employee and his or her spouse, if any, may have in the Compensation
deferred and any amounts allocated to the Employee's Account under the Plan.
15.8 OUTSIDE DIRECTOR ACKNOWLEDGMENT
By participating in this Plan, any outside director agrees to
be bound by the terms of the Plan, as it may be maintained or amended by
Callaway Golf in its sole discretion at any time and from time to time,
including the dispute resolution and mandatory arbitration procedures of Section
14 of the Plan. Additionally, each outside director acknowledges and agrees that
nothing in his or her participation in the Plan and nothing in the
documentation, maintenance, administration, modification or termination of the
Plan renders or can render the outside director an employee for purposes of the
Employee Retirement Income Security Act or other federal, state or local laws.
IN WITNESS WHEREOF, the undersigned has executed this document
as of August 22, 2000.
CALLAWAY GOLF COMPANY
/S/ CHARLES J. YASH
-----------------------------------
Charles J. Yash
President
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