EXHIBIT 10.10.1
AGREEMENT
This Agreement ("Agreement") is effective October 15, 1998 and is made by
and between Donald H. Dye ("Mr. Dye") and Callaway Golf Company (the "Company"),
a California corporation. Mr. Dye has been employed by the Company as President
and Chief Executive Officer pursuant to his Chief Executive Officer Employment
Agreement, which was entered into as of January 1, 1997 ("Employment
Agreement"). Mr. Dye has also served as a member of the Company's Board of
Directors, and as an officer of various subsidiaries and affiliates. The
Company and Mr. Dye desire to enter into this Agreement to establish certain
terms relating to Mr. Dye's termination as an employee and officer, his
resignation as a director, and his continued service to the Company as a
consultant.
WHEREAS Mr. Dye is being terminated from the Company as an employee and
officer pursuant to section 8(a) of the Employment Agreement, is prepared to
resign as a director, and is willing to provide certain services, releases, and
other consideration to the Company in exchange for the consideration provided
herein;
WHEREAS it would be in the best interests of the Company and its
shareholders to provide Mr. Dye with the consideration provided herein in light
of Mr. Dye's service to the Company and in exchange for the services, releases
and other consideration provided by Mr. Dye pursuant to this Agreement;
NOW THEREFORE IT IS AGREED as follows between Mr. Dye and the Company:
1. Termination. Mr. Dye hereby confirms that his termination as an
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employee and officer of the Company and its subsidiaries and affiliates, and his
resignation as a director of the Company, shall be effective immediately.
2. Severance. In addition to the severance benefits due Mr. Dye pursuant
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to section 8(a) of the Employment Agreement, and in exchange for Mr. Dye's
agreement and the other services, releases, obligations and consideration
provided herein, the Company agrees to provide Mr. Dye with additional severance
as follows:
(a) Benefits. The Company agrees (i) to pay any expense reimbursement
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accrued and unpaid as of the date of termination; (ii) to immediately vest the
20,000 shares of restricted stock granted to Mr. Dye by the Company on February
19, 1998 pursuant to the restricted stock grant agreement (the "Restricted Stock
Grant Agreement"); (iii) to convey to Mr. Dye the club membership in The Farms
golf club currently provided to Mr. Dye by the Company, at no cost to Mr. Dye
except that Mr. Dye shall be liable for any ongoing fees, dues and assessments,
as well as any taxes that might be due as a result of such conveyance; (iv) to
convey to Mr. Dye the laptop computer currently provided to Mr. Dye by the
Company, at no cost to Mr. Dye except that Mr. Dye shall be liable for any taxes
that might be due as a result of such conveyance, and further provided that the
Company will first remove any all data, software, or information belonging to
the Company, except that, to the extent possible, the
Company will not remove the Windows and Microsoft Office software, as well as
other software designated by mutual agreement of the Company and Mr. Dye; and
(v) to continue Mr. Dye's Scripps Executive Health annual physical examination,
at Company expense, until December 31, 2001.
(b) Stock Options. The Company agrees to amend the Callaway Golf Company
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Stock Option Agreement (1991 Incentive Stock Plan) entered into between Mr. Dye
and the Company with a grant date of December 4, 1995 (the "1995 Stock Option
Agreement") and the Stock Option Agreement (1991 Incentive Stock Plan) entered
into between Mr. Dye and the Company with a grant date of November 18, 1993 (the
"1993 Stock Option Agreement" by extending the expiration date of the stock
options granted to Mr. Dye pursuant to such agreements. The 1995 Stock Option
Agreement and the 1993 Stock Option Agreement shall be amended to provide that
the expiration date of the options granted pursuant to those agreements shall be
December 31, 2003.
3. Consulting Agreement. As further consideration, the Company agrees to
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offer, and Mr. Dye agrees to accept, a consulting position with the Company
pursuant to the terms and conditions of the agreement attached hereto as Exhibit
A (the "Consulting Agreement").
4. Releases.
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(a) In consideration of the Company's agreement to enter into this
Agreement, Mr. Dye hereby irrevocably and unconditionally releases and forever
discharges the Company, its predecessors, successors, subsidiaries, and
affiliates, as well as each and every past, present and future officer,
director, employee, representative, agent and attorney of the Company, its,
predecessors, successors, subsidiaries and affiliates, and their successors and
assigns, from any, every, and all charges, complaints, claims, causes of action,
and lawsuits including, but not limited to, those arising from or in any way
related to Mr. Dye's employment with the Company, including but not limited to,
actions based upon contract or tort, failure to progressively discipline Mr.
Dye, termination of Mr. Dye's employment, Mr. Dye's resignation as a director,
claims under the Age Discrimination in Employment Act of 1967 [29 U.S.C. 621 et
seq.], or breach of the Employment Agreement or any portion thereof, together
with any and all other claims based on the Company's employment of Mr. Dye, or
any other event occurring prior to the date of this Agreement.
(b) In consideration of Mr. Dye's agreement to enter into this Agreement,
the Company hereby irrevocably and unconditionally releases and forever
discharges Mr. Dye, his predecessors, successors, affiliates, representative and
attorney, and their successors and assigns, from any, every, and all charges,
complaints, claims, causes of action, and lawsuits including, but not limited
to, those arising from or in any way related to Mr. Dye's employment with the
Company, including but not limited to, actions based upon contract or tort,
together with any and all other claims based on the Company's employment or use
of Mr. Dye, or any other event occurring prior to the date of this Agreement.
5. Waivers. The Company and Mr. Dye each waive all rights under section
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1542
of the Civil Code of the State of California. Section 1542 provides as follows:
A general release does not extend to claims, which the creditor does not
know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with the
debtor.
6. Entire Agreement. This Agreement, the Employment Agreement, the
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Consulting Agreement, the 1993 Stock Option Agreement (as amended as provided
herein), and the 1995 Stock Option Agreement (as amended as provided herein)
constitute the entire agreement between the parties with respect to the subject
matter hereof and may not be modified or amended, except by written agreement
signed by all parties. This Agreement and the Employment Agreement shall be
deemed to be consistent with each other, and read together, it being understood
that, to the extent necessary to give effect to this Agreement, this Agreement,
shall be deemed to be "another instrument in writing executed by the parties"
pursuant to section 16 of the Employment Agreement. Each term, condition,
covenant or provision of this Agreement shall be viewed as separate and
distinct, and in the event that any such term, covenant or provision shall be
held by a court of competent jurisdiction to be invalid, the remaining
provisions shall continue in full force and effect.
7. No Admission of Liability. This Agreement and the release contained
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herein affect the settlement of claims which are denied and contested, and
nothing contained herein shall be construed as an admission by a party of any
liability of any kind to the other party.
8. Governing Law. This Agreement shall be construed and enforced in
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accordance with the internal laws of the State of California.
9. Binding Effect. This Agreement shall be binding upon and inure to the
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benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns.
10. The Company's Proprietary Information and Inventions. Mr. Dye
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acknowledges and understands that Sections 12 and 13 of the Employment Agreement
extend beyond the terms of Mr. Dye's employment with the Company. Mr. Dye
agrees to comply with such terms.
11. Return of Company Property. Subject to section 10 of the Employment
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Agreement, Mr. Dye acknowledges that he is obligated to and will return all
Company property in his possession upon demand by the Company.
12. Knowing and Voluntary Agreement. Mr. Dye has carefully read and fully
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understands all of the provisions of this Agreement. Mr. Dye knowingly and
voluntarily agrees to all the terms set forth in this Agreement. Mr. Dye
knowingly and voluntarily intends to be legally bound by the same.
13. Advice of Counsel. The Company hereby advises Mr. Dye in writing to
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discuss
this Agreement with an attorney before executing it, and Mr. Dye acknowledges
that he has either done so or has knowingly and voluntarily waived his right to
do so.
14. IRREVOCABLE ARBITRATION OF DISPUTES.
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(a) MR. DYE AND THE COMPANY AGREE THAT ANY DISPUTE, CONTROVERSY OR CLAIM
ARISING HEREUNDER OR IN ANY WAY RELATED TO THIS AGREEMENT, ITS INTERPRETATION,
ENFORCEABILITY, OR APPLICABILITY, OR RELATING TO MR. DYE'S EMPLOYMENT AGREEMENT,
EMPLOYMENT, OR THE TERMINATION THEREOF, THAT CANNOT BE RESOLVED BY MUTUAL
AGREEMENT OF THE PARTIES SHALL BE SUBMITTED TO BINDING ARBITRATION. THIS
INCLUDES, BUT IS NOT LIMITED TO, ALLEGED VIOLATIONS OF FEDERAL, STATE AND/OR
LOCAL STATUTES, CLAIMS BASED ON ANY PURPORTED BREACH OF DUTY ARISING IN CONTRACT
OR TORT, INCLUDING BREACH OF CONTRACT, BREACH OF COVENANT OF GOOD FAITH AND FAIR
DEALING, VIOLATION OF PUBLIC POLICY, VIOLATION OF ANY STATUTORY, CONTRACTUAL OR
COMMON LAW RIGHTS, BUT EXCLUDING WORKERS' COMPENSATION, UNEMPLOYMENT MATTERS, OR
ANY MATTER FALLING WITHIN THE JURISDICTION OF THE STATE LABOR COMMISSIONER. THE
PARTIES AGREE THAT ARBITRATION IS THE PARTIES' ONLY RECOURSE FOR SUCH CLAIMS AND
HEREBY WAIVE THE RIGHT TO PURSUE SUCH CLAIMS IN ANY OTHER FORUM, UNLESS
OTHERWISE PROVIDED BY LAW. A PROCEEDING TO COMPEL ARBITRATION UNDER THIS
PROVISION SHALL BE GOVERNED BY SECTION 3 OF CHAPTER 1 OF THE FEDERAL ARBITRATION
ACT SUCH THAT ANY COURT ACTION INVOLVING A DISPUTE WHICH IS NOT SUBJECT TO
ARBITRATION SHALL BE STAYED PENDING ARBITRATION OF ANY ARBITRABLE DISPUTE.
(b) ANY DEMAND FOR ARBITRATION SHALL BE IN WRITING AND MUST BE MADE TO THE
CHIEF LEGAL OFFICER WITHIN ONE (1) YEAR, OR, IF LATER, WITHIN THE TIME PERIOD
STATED IN THE APPLICABLE STATUTE OF LIMITATIONS, AFTER THE DISCOVERY OF THE
ALLEGED CLAIM OR CAUSE OF ACTION BY THE AGGRIEVED PARTY.
(c) THE ARBITRATION SHALL BE CONDUCTED PURSUANT TO THE PROCEDURAL RULES
STATED IN THE AMERICAN ARBITRATION ASSOCIATION ("AAA") CALIFORNIA EMPLOYMENT
DISPUTE RESOLUTION RULES. THE ARBITRATION SHALL BE CONDUCTED IN SAN DIEGO BY A
FORMER OR RETIRED JUDGE OR ATTORNEY WITH AT LEAST 10 YEARS EXPERIENCE IN
EMPLOYMENT-RELATED DISPUTES, OR A NON-ATTORNEY WITH LIKE EXPERIENCE IN THE AREA
OF DISPUTE, WHO SHALL HAVE THE POWERS TO HEAR MOTIONS, CONTROL DISCOVERY,
CONDUCT HEARINGS AND OTHERWISE DO ALL THAT IS NECESSARY TO RESOLVE THE MATTER.
THE PARTIES MUST MUTUALLY AGREE ON THE ARBITRATOR. IF THE PARTIES CANNOT AGREE
ON THE ARBITRATOR AFTER THEIR BEST EFFORTS, AN ARBITRATOR FROM THE AMERICAN
ARBITRATION ASSOCIATION WILL BE SELECTED PURSUANT TO THE AMERICAN ARBITRATION
ASSOCIATION NATIONAL EMPLOYMENT DISPUTE RESOLUTION RULES.
(d) THE ARBITRATION AWARD SHALL BE FINAL AND BINDING, AND MAY BE ENTERED AS
A JUDGMENT IN ANY COURT HAVING COMPETENT JURISDICTION. IT IS EXPRESSLY
UNDERSTOOD THAT THE PARTIES HAVE CHOSEN ARBITRATION TO AVOID THE BURDENS, COSTS
AND PUBLICITY OF A COURT PROCEEDING, AND THE ARBITRATOR IS EXPECTED TO HANDLE
ALL ASPECTS OF THE MATTER, INCLUDING DISCOVERY AND ANY HEARINGS, IN SUCH A WAY
AS TO MINIMIZE THE EXPENSE, TIME, BURDEN AND PUBLICITY OF THE PROCESS, WHILE
ASSURING A FAIR AND JUST RESULT. IN PARTICULAR, THE PARTIES EXPECT THAT THE
ARBITRATOR WILL LIMIT DISCOVERY BY CONTROLLING THE AMOUNT OF DISCOVERY THAT
MAY BE TAKEN (E.G., THE NUMBER OF DEPOSITIONS OR INTERROGATORIES) AND BY
RESTRICTING THE SCOPE OF DISCOVERY TO ONLY THOSE MATTERS CLEARLY RELEVANT TO THE
DISPUTE. HOWEVER, AT A MINIMUM, EACH PARTY WILL BE ENTITLED TO ONE DEPOSITION.
(e) THE ARBITRATOR HAS NO AUTHORITY TO AWARD PUNITIVE DAMAGES.
(f) THE PREVAILING PARTY SHALL BE ENTITLED TO AN AWARD BY THE ARBITRATOR OF
REASONABLE ATTORNEYS' FEES AND OTHER COSTS REASONABLY INCURRED IN CONNECTION
WITH THE ARBITRATION, INCLUDING WITNESS FEES AND EXPERT WITNESS FEES, UNLESS THE
ARBITRATOR FOR GOOD CAUSE DETERMINES OTHERWISE.
THE PARTIES HAVE READ PARAGRAPH 14 AND IRREVOCABLY AGREE TO ARBITRATE ANY
DISPUTE IDENTIFIED ABOVE. ______ (MR. DYE'S INITIALS) ______ (INITIALED ON
BEHALF OF THE COMPANY)
15. Injunctive Relief. Mr. Dye understands that the nature of damages for
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breach of this Agreement may be such that specific performance is the only
remedy that will adequately compensate the Company for Mr. Dye's breach of this
Agreement. Mr. Dye hereby agrees to the entry of an injunction by the
arbitrator ordering such specific performance in the event of Mr. Dye's breach
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the dates
set forth below.
CALLAWAY GOLF COMPANY,
a California Corporation
/s/ Donald H. Dye By: /s/ Ely Callaway
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Donald H. Dye Ely Callaway
Chairman
Dated: ____________________ Dated: __________________________
EXHIBIT A
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is entered into as of October 16,
1998, between Callaway Golf Company ("Callaway Golf"), a California corporation,
and Donald H. Dye ("Consultant").
Recitals
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A. Callaway Golf is in the business of designing, manufacturing and
selling golf clubs and related products using trade secrets, patented procedures
and other proprietary information. Callaway Golf is currently marketing its
products in the United States of America and internationally.
B. Consultant has been a long-time employee of Callaway Golf with
expertise in various areas relating to Callaway Golf's business.
C. Callaway Golf desires to retain access to the services and expertise of
Consultant and believes that the experience and expertise of Consultant will be
of benefit to Callaway Golf; therefore, Callaway Golf desires to enter into this
Agreement with Consultant.
D. Consultant wishes to assist Callaway Golf in its business; therefore,
Consultant desires to enter into this Agreement with Callaway Golf.
NOW, THEREFORE, in consideration of the mutual promises contained herein,
the parties agree as follows:
1. Engagement. Pursuant to the terms of the Agreement between Consultant
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and Callaway Golf dated October 15, 1998 relating to Consultant's termination as
an employee (the "Termination Agreement"), Callaway Golf hereby engages the
services of Consultant as a consultant, and Consultant hereby accepts such
engagement, subject to the terms and conditions of this Agreement.
2. Term/Termination. The term ("Term") of this Agreement shall commence
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on October 16, 1998, and shall continue until December 31, 2001, unless
terminated in accordance with section 15 herein, or extended for the Extended
Terms as provided in Section 7. Consultant understands and agrees that the
provisions of sections 4, 12, and 19 of this Agreement shall survive termination
of the other provisions of this Agreement.
3. Services to be Performed by Consultant. During the Term and any
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Extended Terms of this Agreement, Consultant shall provide consulting services,
within his expertise, on matters related to the business of Callaway Golf as may
be requested by Ely Callaway, his successor, or his express designee from time
to time. Consultant shall maintain contact with
Callaway Golf through Mr. Callaway, or such person or persons as may be
designated by Mr. Callaway from time to time. Consultant represents that
Consultant has the qualifications and ability to perform the services, within
his expertise, in a professional manner without the advice, control, or
supervision of Callaway Golf. While the specific methods and manner of providing
the services shall be solely determined by Consultant, Callaway Golf shall have
the right to oversee, direct and give advice to Consultant regarding the general
extent, nature and scope of services to be performed by Consultant under this
Agreement. The services shall be provided by Consultant at such times and in
such locations as Callaway Golf and Consultant mutually agree upon from time to
time. Consultant will not be required to provide more than one hundred (100)
hours of service per year without additional compensation. Any additional hours
shall be compensated at the rate of $350 per hour. If required, Callaway Golf
shall, at no cost to Consultant, provide Consultant with office space,
secretarial assistance, and such other equipment or assistance necessary for
Consultant to provide the consulting services requested. Callaway Golf shall
approve any such expenses in advance, and in writing.
4. Assignment of Rights.
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(a) Callaway Golf shall own all deliverables delivered by Consultant
hereunder.
(b) As used in this Agreement, "Inventions," whether or not they have
been patented, trademarked, or copyrighted, means designs, inventions,
technologies, methods, innovations, ideas, improvements, processes, materials,
sources of and uses for materials, apparatus, plans, systems and computer
programs relating to the design, manufacture, use, marketing, distribution and
management of Callaway Golf's and/or its affiliates' products.
(c) All works of authorship produced under this Agreement shall be
"works for hire" produced exclusively for Callaway Golf, and all rights thereto
shall belong to Callaway Golf. As a material part of the terms and
understandings of this Agreement, Consultant hereby assigns to Callaway Golf all
works of authorship and all Inventions relating to the business of Callaway Golf
and/or its affiliates, and all intellectual property rights therein (including
without limitation all patent rights, copyrights, and trade secret rights),
which Consultant creates, develops, conceives and/or reduces to practice, either
alone or with anyone else, during the course of providing the Services under
this Agreement, regardless of whether they are suitable to be patented,
trademarked and/or copyrighted.
(d) Consultant agrees to disclose to the President and Chief Executive
Officer of Callaway Golf any work of authorship and/or Invention relating to the
business of Callaway Golf and/or its affiliates, which Consultant develops,
conceives and/or reduces to practice, either alone or with anyone else, during
the Term and any Extended Terms of this Agreement. Consultant shall make a
limited disclosure of such works of authorship and/or Inventions to Callaway
Golf, even if Consultant does not believe that Consultant is required under this
Agreement to assign Consultant's interest in such work of authorship and/or
Invention to Callaway Golf. Callaway Golf agrees to keep such information as
confidential information. If Callaway Golf and Consultant disagree as to
whether or not a work of
authorship and/or an Invention is included within the terms of this Agreement,
it will be the responsibility of Consultant to prove that it is not included
and/or that assignment to Callaway Golf is not required.
(e) The obligation to assign as provided in this Agreement does not
apply to any work of authorship or any Invention to the extent such obligation
would conflict with any applicable state or federal law. All provisions of this
Agreement relating to the assignment by Consultant of works of authorship and
Inventions are subject to the provisions of California Labor Code Sections 2870,
2871 and 2872.
(f) Upon Callaway Golf's request, at no expense to Consultant,
Consultant shall execute any and all proper applications for patents, copyrights
and/or trademarks, assignments to Callaway Golf, and all other applicable
documents, and will give testimony when and where requested to perfect the
title, copyrights, trademarks and/or patents (both within and without the United
States) in all works of authorship and Inventions assigned to Callaway Golf
hereunder.
(g) Consultant agrees that if in the course of performing the
consulting services, Consultant incorporates any other Invention owned by
Consultant or for which Consultant has the right to grant the rights granted in
this Section 4(g) ("Consultant Inventions"), into any report, presentation,
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recommendation, process, method, tooling, design, machine, equipment, product or
other item recommended, presented, developed, implemented or specified by
Consultant for or to Callaway Golf under this Agreement, Consultant hereby
grants to Callaway Golf a nonexclusive, transferable, royalty-free, perpetual,
irrevocable, worldwide license under said Consultant Invention to make, have
made, import, modify, and use any product or other item embodying or using said
Consultant Invention. Consultant will provide to Callaway Golf copies of all
patents and patent applications related to all such Consultant Inventions.
(h) Consultant agrees that if in the course of performing the services,
Consultant recommends the use of any third party Inventions which, to the
knowledge of Consultant, are or may be covered by patents held by third parties,
that Consultant will disclose such information to Callaway Golf.
5. Other Compensation. In addition to any compensation paid to Consultant
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pursuant to sections 3 or 7 of this Agreement, Callaway Golf agrees to pay
Consultant as follows:
(a) During the Term and any Extended Terms, Callaway Golf shall
reimburse Consultant for all reasonable, customary and necessary expenses for
travel and lodging incurred in the performance of the services to be provided
hereunder. Consultant shall account for such expenses by submitting a signed
statement itemizing such expenses prepared in accordance with the policies set
by Callaway Golf for reimbursement of such expenses. The amount, nature and
extent of such expenses shall always be subject to the control, supervision and
direction of Callaway Golf.
(b) During any Extended Terms, Callaway Golf shall provide for
Consultant to participate in Callaway Golf's health insurance and disability
insurance plans as the same may be modified from time to time, and to receive,
if Consultant is insurable under usual underwriting standards and Consultant's
physical condition does not prevent Consultant from reasonably qualifying for
such insurance coverage, term life insurance coverage of Consultant's life,
payable to whomever the Consultant directs, in the face amount of $2,000,000.00,
such policies to be transferable to Consultant upon termination of this
Agreement without evidence of insurability. Callaway Golf shall also provide,
at its expense, for Consultant to participate annually in the Executive Health
Program at Scripp's Hospital. It is recognized that all or part of the expenses
associated with these benefits may be treated as taxable compensation to
Consultant, and that Callaway Golf shall not be responsible for any taxes that
may be due as a result.
(c) During the Term and any Extended Terms, Consultant shall be
allowed to purchase, in accordance with Callaway Golf's reasonable procedures,
golf equipment made by Callaway Golf and available generally to Callaway Golf's
customers at Callaway Golf's regular U.S. wholesale price so long as (i) such
golf equipment is for the personal use of Consultant or his immediate family, or
is to be provided by Consultant as a gift, and not in exchange for any
remuneration, services, barter, or other compensation, to another for the
other's personal use, and (ii) the total amount of such golf equipment purchases
by Consultant from Callaway Golf in any one calendar year does not exceed
$10,000.00.
6. Relationship of the Parties. Consultant enters into this Agreement as,
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and shall continue to be, an independent contractor. Under no circumstances
shall Consultant look to Callaway Golf as Consultant's employer, or as a
partner, agent, or principal. Except as otherwise specifically provided herein,
while Consultant is engaged as a Consultant pursuant to this Agreement, Callaway
Golf will not provide Consultant with benefits accorded to Callaway Golf
employees, regardless of whether Consultant is later re-classified as an
employee of Callaway Golf, including but not limited to:
. Workers' compensation insurance;
. Access to any type of employee benefit plan, including but not
limited to Callaway Golf's 401(k) and employee stock purchase
plans;
. Vacation leave and/or sick pay.
7. Extended Terms. At Callaway Golf's option, this Agreement may be
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extended for up to two (2) one-year Extended Terms for the calendar years 2002
and 2003. If Callaway Golf so elects, then Callaway Golf shall compensate
Consultant during any such Extended Term at the rate of $200,000.00 per year,
payable in equal monthly installments. Except as otherwise provided, the terms
and conditions of this Agreement shall continue to define the relationship
between Callaway Golf and Consultant, including the obligation of Callaway Golf
to pay Consultant additional compensation for hours of service beyond one
hundred (100) hours per year at the rate of $350 per hour.
8. Extent of Authority. Consultant shall have no authority or right to
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commit or bind Callaway Golf and/or its affiliates to any agreement or
arrangement or to obligate Callaway Golf and/or its affiliates in any manner.
9. Exclusive Dealings. During the Term and any Extended Terms of this
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Agreement, to the fullest extent permitted by law, Consultant agrees that he
will not, directly or indirectly, whether as agent, consultant, attorney, holder
of a controlling beneficial interest, or in any other capacity, engage in any
business or ventures that engages directly or indirectly in competition with the
business of Callaway Golf or its affiliates as of the date of this Agreement.
For purposes of this Section, an ownership interest in the stock of a publicly
traded company or a broadly based mutual fund shall not be prohibited.
10. Non-Solicitation. During the Term and any Extended Terms of this
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Agreement, Consultant agrees not to ask or encourage directly or indirectly any
employees or consultants of Callaway Golf, or any of its affiliates, to leave
their employment with or refrain from providing services to Callaway Golf, or
any of its affiliates. Consultant shall make any subsequent employer aware of
this non-solicitation obligation.
11. Conflict of Interest. During the Term and any Extended Terms of this
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Agreement, Consultant shall not engage in any conduct or enterprise that shall
constitute an actual or apparent conflict of interest with respect to
Consultant's duties and obligations to Callaway Golf and/or its affiliates.
12. Confidential Information and/or Trade Secrets.
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(a) Definition. As used in this Agreement, the terms "Confidential
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Information and/or Trade Secrets" mean all information, whether written or oral,
not generally available to the public, regardless of whether it is suitable to
be patented, copyrighted and/or trademarked, which is owned by or in the
possession of Callaway Golf and/or its affiliates, including but not limited to
(1) concepts, ideas, plans and strategies involved in Callaway Golf's and/or its
affiliates' products and businesses, (2) the processes, formulae and techniques
disclosed by Callaway Golf and/or its affiliates or contractors to Consultant or
observed by Consultant, (3) the designs, inventions and innovations and related
plans, strategies and applications which Consultant develops during the Term or
any Extended Terms of this Agreement in connection with the projects assigned to
Consultant by Callaway Golf, and (4) third party information which Callaway Golf
and/or its affiliates has/have promised to keep confidential. The terms
"Confidential Information and/or Trade Secrets" do not include the following:
(i) Information which, at the time of disclosure or observation,
had been previously published or otherwise publicly disclosed;
(ii) Information which is published (or otherwise publicly
disclosed) after disclosure or observation, unless such publication is a breach
of this Agreement or is otherwise a violation of the contractual, legal or
fiduciary duties owed to Callaway Golf and/or
its affiliates; or
(iii) Information which, subsequent to disclosure or observation,
is obtained by Consultant from a third person who is lawfully in possession of
such information (which information is not acquired in violation of any
contractual, legal, or fiduciary obligation owed to Callaway Golf and/or its
affiliates with respect to such information) and who is not required to refrain
from disclosing such information to others.
(b) No Disclosure of Confidential Information and/or Trade Secrets.
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During the Term and any Extended Terms of this Agreement, Consultant will have
access to and become familiar with various Confidential Information and/or Trade
Secrets which Consultant acknowledges are owned and shall continue to be owned
solely by Callaway Golf and/or its affiliates or third party contractors.
Consultant agrees that Consultant will not, at any time, whether during or
subsequent to the Term and any Extended Terms of this Agreement, use any
Confidential Information and/or Trade Secrets for any purpose except in order
to: (1) perform Consultant's duties under this Agreement; (2) disclose
Confidential Information and/or Trade Secrets to third parties for which
Callaway Golf has given its written consent; or (3) disclose Confidential
Information and/or Trade Secrets pursuant to a governmental process in which
Consultant is compelled to do so. In the event Consultant believes that
Consultant is legally required to disclose any Confidential Information and/or
Trade Secrets, Consultant shall give reasonable notice to Callaway Golf prior to
disclosing such information and shall assist Callaway Golf in taking such
legally permissible steps as are reasonable and necessary to protect the
Confidential Information and/or Trade Secrets. If Consultant believes that it is
necessary for Consultant to disclose Confidential Information and/or Trade
Secrets, Consultant shall first obtain written consent to do so from Callaway
Golf, and the party to whom the disclosure is to be made shall execute a non-
disclosure agreement in a form acceptable to Callaway Golf before Consultant
shall make such disclosure.
(c) No Removal of Callaway Golf and/or its Affiliates' Documents or
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Information. Consultant understands and agrees that all books, records,
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customer lists and documents connected with the business of Callaway Golf and/or
its affiliates are the property of and belong to Callaway Golf and/or its
affiliates or third-party contractors. Under no circumstances shall Consultant
remove from Callaway Golf's and/or its affiliates' facilities any of Callaway
Golf's and/or its affiliates' books, records, documents, lists or any copies of
the same without Callaway Golf's and/or its affiliates' written permission, nor
shall Consultant make any copies of Callaway Golf's and/or its affiliates'
books, records, documents or lists for use outside Callaway Golf's and/or its
affiliates' office(s) except as specifically authorized by Callaway Golf.
Consultant shall return to Callaway Golf and/or its affiliates all books,
records, documents and customer lists belonging to Callaway Golf and/or its
affiliates upon termination of this Agreement.
(d) The provisions of Section 12 shall survive the termination or
expiration of this Agreement, and shall be binding upon Consultant in
perpetuity.
13. Surrender of Company Property. Consultant agrees that upon
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termination of
this Agreement in any manner, Consultant will immediately surrender to Callaway
Golf and/or its affiliates all property owned by Callaway Golf and/or its
affiliates.
14. Notices. Any notice, request, demand or other communication required
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or permitted hereunder shall be deemed properly given when actually received or
within five days of mailing by certified or registered mail, postage prepaid, to
the following addresses, or to such addresses as may be furnished from time to
time, in writing, to the other party:
Callaway Golf: Callaway Golf Company
2285 Rutherford Road
Carlsbad, CA 92008-8815
Attn: Ely Callaway, Chairman
Consultant: Donald H. Dye
P.O. Box 675870
Rancho Santa Fe, California 92061-6375
15. Termination.
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(a) This Agreement may be terminated by Callaway Golf for substantial
cause upon the occurrence of any of the following events:
(i) Death. This Agreement may be terminated upon the death of
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Consultant. Termination under this sub-section shall be effective on the date
of Consultant's death.
(ii) Permanent Disability. This Agreement may be terminated
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upon the permanent disability of Consultant. For purposes of this Agreement, and
subject to all applicable laws with respect to disabilities and the rights of
those who are disabled, "permanent disability" shall mean the inability of
Consultant, by reason of any ailment or illness, or physical or mental
condition, to perform his duties hereunder for a consecutive period of six (6)
months.
(iii) Failure to Substantially Perform Duties or Misconduct.
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This Agreement may be terminated for breach of this Agreement, or misconduct
associated with the performance of Consultant's duties as a consultant,
including, but not limited to, dishonesty, theft, disloyalty and/or felony
criminal conduct. Termination under this subsection shall be effective
immediately, upon the receipt by Consultant of written notice stating the cause
of such termination.
(b) This Agreement may be terminated by Consultant upon the occurrence
of a Change in Control as defined herein. Such a termination by Consultant must
occur with ninety (90) days following a Change in Control, pursuant to
Consultant providing Callaway Golf with written notice of termination. Upon
termination of this Agreement by Consultant pursuant to this section, Consultant
shall be entitled to any compensation accrued and not yet
paid for services rendered, reimbursement for accrued expenses as provided in
section 5(a), and no other severance. A "Change in Control" means the following
and shall be deemed to occur if any of the following events occurs:
(i) Any person, entity or group, within the meaning of Section
13(d) or 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act") but
excluding Callaway Golf and its subsidiaries and any employee benefit or stock
ownership plan of Callaway Golf or its subsidiaries and also excluding an
underwriter or underwriting syndicate that has acquired Callaway Golf's
securities solely in connection with a public offering thereof (such person,
entity or group being referred to herein as a "Person") becomes the beneficial
owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
30% or more of either the then outstanding shares of Common Stock or the
combined voting power of Callaway Golf's then outstanding securities entitled to
vote generally in the election of directors; or
(ii) Individuals who, as of the effective date hereof, constitute
the Board of Directors of Callaway Golf (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board of Directors of Callaway
Golf, provided that any individual who becomes a director after the effective
date hereof whose election, or nomination for election by Callaway Golf's
shareholders, is approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered to be a member of the
Incumbent Board unless that individual was nominated or elected by any Person
having the power to exercise, through beneficial ownership, voting agreement
and/or proxy, 20% or more of either the outstanding shares of Common Stock or
the combined voting power of Callaway Golf's then outstanding voting securities
entitled to vote generally in the election of directors, in which case that
individual shall not be considered to be a member of the Incumbent Board unless
such individual's election or nomination for election by Callaway Golf's
shareholders is approved by a vote of at least two-thirds of the directors then
comprising the Incumbent Board; or
(iii) Consummation by Callaway Golf of the sale or other
disposition by Callaway Golf of all or substantially all of Callaway Golf's
assets or a reorganization or merger or consolidation of Callaway Golf with any
other person, entity or corporation, other than (1) a reorganization or merger
or consolidation that would result in the voting securities of Callaway Golf
outstanding immediately prior thereto (or, in the case of a reorganization or
merger or consolidation that is preceded or accomplished by an acquisition or
series of related acquisitions by any Person, by tender or exchange offer or
otherwise, of voting securities representing 5% or more of the combined voting
power of all securities of Callaway Golf, immediately prior to such acquisition
or the first acquisition in such series of acquisitions) continuing to
represent, either by remaining outstanding or by being converted into voting
securities of another entity, more than 50% of the combined voting power of the
voting securities of Callaway Golf or such other entity outstanding immediately
after such reorganization or merger or consolidation (or series of related
transactions involving such a reorganization or merger or consolidation), or (2)
a reorganization or merger or consolidation effected to implement a
recapitalization or reincorporation of Callaway Golf (or similar
transaction) that does not result in a material change in beneficial ownership
of the voting securities of Callaway Golf or its successor; or
(iv) Approval by the shareholders of Callaway Golf or an order by
a court of competent jurisdiction of a plan of liquidation of Callaway Golf.
16. Advertising Waiver. Consultant agrees to permit Callaway Golf and/or
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its affiliates, and persons or other organizations authorized by Callaway Golf
and/or its affiliates, to use, publish and distribute advertising or sales
promotional literature concerning the products of Callaway Golf and/or its
affiliates, or the machinery and equipment used in the manufacture thereof, in
which Consultant's name and/or pictures of Consultant taken in the course of
Consultant's provision of services to Callaway Golf and/or its affiliates,
appear. Consultant hereby waives and releases any claim or right Consultant may
otherwise have arising out of such use, publication or distribution.
17. Publicity; Use of Marks. Consultant shall not at any time use
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Callaway Golf's or its affiliates' names, trademarks or trade names in any
advertising or publicity without the prior written consent of Callaway Golf.
18. Assignment. Consultant shall not assign this Agreement or any of
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Consultant's rights hereunder without the prior written consent of Callaway
Golf. It is understood that this is a contract for the personal services of
Consultant. Any attempted assignment by Consultant in violation of this
paragraph shall be void.
19. IRREVOCABLE ARBITRATION OF DISPUTES.
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(a) CONSULTANT AND CALLAWAY GOLF AGREE THAT ANY DISPUTE, CONTROVERSY
OR CLAIM ARISING HEREUNDER OR IN ANY WAY RELATED TO THIS AGREEMENT, ITS
INTERPRETATION, ENFORCEABILITY, OR APPLICABILITY, OR RELATING TO CONSULTANT'S
PROVISION OF SERVICES TO CALLAWAY GOLF, OR THE TERMINATION THEREOF, THAT CANNOT
BE RESOLVED BY MUTUAL AGREEMENT OF THE PARTIES SHALL BE SUBMITTED TO BINDING
ARBITRATION. THIS INCLUDES, BUT IS NOT LIMITED TO, ALLEGED VIOLATIONS OF
FEDERAL, STATE AND/OR LOCAL STATUTES, CLAIMS BASED ON ANY PURPORTED BREACH OF
DUTY ARISING IN CONTRACT OR TORT, INCLUDING BREACH OF CONTRACT, BREACH OF
COVENANT OF GOOD FAITH AND FAIR DEALING, VIOLATION OF PUBLIC POLICY, AND
VIOLATION OF ANY STATUTORY, CONTRACTUAL OR COMMON LAW RIGHTS. THE PARTIES AGREE
THAT ARBITRATION IS THE PARTIES' ONLY RECOURSE FOR SUCH CLAIMS AND HEREBY WAIVE
THE RIGHT TO PURSUE SUCH CLAIMS IN ANY OTHER FORUM, UNLESS OTHERWISE PROVIDED BY
LAW. A PROCEEDING TO COMPEL ARBITRATION UNDER THIS PROVISION SHALL BE GOVERNED
BY SECTION 3 OF CHAPTER 1 OF THE FEDERAL ARBITRATION ACT SUCH THAT ANY COURT
ACTION INVOLVING A DISPUTE WHICH IS NOT SUBJECT TO ARBITRATION SHALL BE STAYED
PENDING ARBITRATION OF ANY ARBITRABLE DISPUTE.
(b) ANY DEMAND FOR ARBITRATION SHALL BE IN WRITING AND MUST BE MADE TO
THE CHIEF LEGAL OFFICER WITHIN ONE (1) YEAR, OR, IF LATER, WITHIN THE TIME
PERIOD STATED IN THE APPLICABLE STATUTE OF LIMITATIONS, WHICHEVER IS SHORTER,
AFTER THE DISCOVERY OF THE ALLEGED CLAIM OR CAUSE OF ACTION BY THE AGGRIEVED
PARTY.
(c) THE ARBITRATION SHALL BE CONDUCTED PURSUANT TO THE PROCEDURAL
RULES STATED IN THE COMMERCIAL RULES OF THE AMERICAN ARBITRATION ASSOCIATION
("AAA") IN SAN DIEGO, CALIFORNIA. THE ARBITRATION SHALL BE CONDUCTED IN SAN
DIEGO BY A FORMER OR RETIRED JUDGE OR ATTORNEY WITH AT LEAST 10 YEARS EXPERIENCE
IN COMMERCIAL DISPUTES, OR A NON-ATTORNEY WITH LIKE EXPERIENCE IN THE AREA OF
DISPUTE, WHO SHALL HAVE THE POWER TO HEAR MOTIONS, CONTROL DISCOVERY, CONDUCT
HEARINGS AND OTHERWISE DO ALL THAT IS NECESSARY TO RESOLVE THE MATTER. THE
PARTIES MUST MUTUALLY AGREE ON THE ARBITRATOR. IF THE PARTIES CANNOT AGREE ON
THE ARBITRATOR AFTER THEIR BEST EFFORTS, AN ARBITRATOR FROM THE AMERICAN
ARBITRATION ASSOCIATION WILL BE SELECTED PURSUANT TO THE COMMERCIAL RULES OF THE
AMERICAN ARBITRATION ASSOCIATION IN SAN DIEGO, CALIFORNIA.
(d) THE ARBITRATION AWARD SHALL BE FINAL AND BINDING, AND MAY BE
ENTERED AS A JUDGMENT IN ANY COURT HAVING COMPETENT JURISDICTION. IT IS
EXPRESSLY UNDERSTOOD THAT THE PARTIES HAVE CHOSEN ARBITRATION TO AVOID THE
BURDENS, COSTS AND PUBLICITY OF A COURT PROCEEDING, AND THE ARBITRATOR IS
EXPECTED TO HANDLE ALL ASPECTS OF THE MATTER, INCLUDING DISCOVERY AND ANY
HEARINGS, IN SUCH A WAY AS TO MINIMIZE THE EXPENSE, TIME, BURDEN AND PUBLICITY
OF THE PROCESS, WHILE ASSURING A FAIR AND JUST RESULT. IN PARTICULAR, THE
PARTIES EXPECT THAT THE ARBITRATOR WILL LIMIT DISCOVERY BY CONTROLLING THE
AMOUNT OF DISCOVERY THAT MAY BE TAKEN (E.G., THE NUMBER OF DEPOSITIONS OR
INTERROGATORIES) AND BY RESTRICTING THE SCOPE OF DISCOVERY TO ONLY THOSE MATTERS
CLEARLY RELEVANT TO THE DISPUTE.
(e) THE ARBITRATOR HAS NO AUTHORITY TO AWARD PUNITIVE DAMAGES.
(f) THE PREVAILING PARTY SHALL BE ENTITLED TO AN AWARD BY THE
ARBITRATOR OF REASONABLE ATTORNEYS' FEES AND OTHER COSTS REASONABLY INCURRED IN
CONNECTION WITH THE ARBITRATION, INCLUDING WITNESS FEES AND EXPERT WITNESS FEES,
UNLESS THE ARBITRATOR FOR GOOD CAUSE DETERMINES OTHERWISE.
THE PARTIES HAVE READ SECTION 19 AND IRREVOCABLY AGREE TO ARBITRATE ANY DISPUTE
IDENTIFIED ABOVE. _______ (CONSULTANT'S INITIALS) ______ (INITIALED ON BEHALF
OF CALLAWAY GOLF)
20. Disclosure of Others' Confidential Information. It is the
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understanding of both Callaway Golf and Consultant that Consultant shall not
divulge to Callaway Golf, its affiliates or its third party contractors any
confidential information or trade secrets belonging to others, nor shall
Callaway Golf seek to elicit from Consultant any such information. Consistent
with the foregoing, Consultant shall not provide to Callaway Golf, and Callaway
Golf shall not request, any documents or copies of documents containing such
information. Failure to comply with this obligation by Consultant shall be
grounds for immediate termination of this Agreement.
21. Applicable Law. This Agreement shall constitute a contract under the
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internal laws of the State of California and shall be governed in accordance
with the laws of said state as to both interpretation and performance.
22. Entire Agreement/Amendments. This Agreement and the Termination
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Agreement reflect the entire agreement between the parties relating in any way
to the subject matter hereof. No statement or promise or different
representations have been made which in any way form a part of or modify this
Agreement. No amendment or modification shall be valid unless in writing and
signed by the parties hereto.
23. Separate Terms. Each term, condition, covenant or provision of this
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Agreement shall be viewed as separate and distinct, and in the event that any
such term, covenant or provision shall be held by a court of competent
jurisdiction to be invalid, the remaining provisions shall continue in full
force and effect.
24. Waiver. A waiver by either party of a breach of any provision or
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provisions of this Agreement shall not constitute a general waiver or prejudice
the other party's right otherwise to demand strict compliance with that
provision or any other provisions in this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the date(s) set forth below to be effective as of the day and
year first set forth above.
CALLAWAY GOLF CONSULTANT
Callaway Golf Company,
a California corporation
By:_______________________________ ___________________________________
Ely Callaway Donald H. Dye
Chairman
Dated:____________________________ Dated: ____________________________