EXHIBIT 10.7.1
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EXECUTIVE OFFICER EMPLOYMENT AGREEMENT
This Executive Officer Employment Agreement ("Agreement") is
entered into as of January 1, 1997, by and between Callaway Golf Company, a
California corporation (the "Company"), and Frederick R. Port ("Employee").
1. TERM. The Company hereby employs Employee and Employee
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hereby accepts employment pursuant to the terms and provisions of this
Agreement for the term commencing January 1, 1997 and terminating December 31,
1999 unless this Agreement is earlier terminated as hereinafter provided.
Unless such employment is earlier terminated, upon the expiration of the term
of this Agreement, Employee's status shall be one of at will employment.
2. SERVICES.
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(a) Employee shall serve as Executive Vice President,
International Sales, Licensing and Business Development of the Company, and
President of Callaway Golf International, a Division of the Company.
Employee's duties shall be the usual and customary duties of the offices in
which he or she serves. Employee shall report to the President and Chief
Executive Officer of the Company, or to such other person as the Chief
Executive Officer shall designate. Employee's title, position and/or duties
may be changed by the Board of Directors and/or the Chief Executive Officer of
the Company.
(b) Employee shall be required to comply with all policies
and procedures of the Company, as such shall be adopted, modified or otherwise
established by the Company from time to time.
3. SERVICES TO BE EXCLUSIVE. During the term hereof,
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Employee agrees to devote his or her full productive time and best efforts to
the performance of Employee's duties hereunder pursuant to the supervision and
direction of the Company's Board of Directors and its Chief Executive Officer.
Employee further agrees, as a condition to the performance by the Company of
each and all of its obligations hereunder, that so long as Employee is employed
by the Company, Employee will not directly or indirectly render services of any
nature to, otherwise become employed by, or otherwise participate or engage in
any other business without the Company's prior written consent. Employee
further agrees to execute such secrecy, non-disclosure, patent, trademark,
copyright and other proprietary rights agreements, if any, as the Company may
from time to time reasonably require. Nothing herein contained shall be
deemed to preclude Employee from having outside personal investments and
involvement with appropriate community activities, and from devoting a
reasonable amount of time to such matters, provided that this shall in no
manner interfere with or derogate from Employee's work for the Company.
4. COMPENSATION. The Company agrees to pay Employee:
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(a) a base salary at the rate of $550,000.00 per year, with
the opportunity to receive increases (but not decreases) in such base salary
in accord with the Company's plans and policies as they may exist from time
to time for its senior executive officers; and
(b) an opportunity to earn an annual bonus based upon
participation in the Company's Executive Bonus Plan as it may exist from time
to time.
5. EXPENSES AND BENEFITS.
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(a) Reasonable and Necessary Expenses. In addition to the
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compensation provided for in Section 4 hereof, the Company shall reimburse
Employee for all reasonable, customary, and necessary expenses incurred in the
performance of Employee's duties hereunder. Employee shall first account for
such expenses by submitting a signed statement itemizing such expenses prepared
in accordance with the policy set by the Company for reimbursement of such
expenses. The amount, nature, and extent of such expenses shall always be
subject to the control, supervision, and direction of the Company and its Chief
Executive Officer. Notwithstanding the foregoing, Employee shall also receive
a Special Expense Allowance of $20,000.00 per year to be used to cover the
actual costs of reasonable, customary and necessary expenses incurred in the
performance of Employee's duties hereunder, for which Employee shall not be
required to submit supporting documentation as might otherwise be required by
the Company.
(b) Vacation. Employee shall receive three (3) weeks paid
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vacation for each twelve (12) month period of employment with the Company. The
vacation may be taken any time during the year subject to prior approval by the
Company, such approval not to be unreasonably withheld. Any unused time will
accrue from year to year. The maximum vacation time Employee may accrue shall
be three times Employee's annual vacation benefit. The Company reserves the
right to pay Employee for unused, accrued vacation benefits in lieu of
providing time off.
(c) Benefits. During Employee's employment with the
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Company pursuant to this Agreement, the Company shall provide for Employee to:
(i) participate in the Company's health insurance
and disability insurance plans as the same may be modified from time to time;
(ii) receive, if Employee is insurable under usual
underwriting standards, term life insurance coverage on Employee's life,
payable to whomever the Employee directs, in the face amount of $3,000,000.00,
provided that Employee's physical condition does not prevent Employee from
reasonably qualifying for such insurance coverage;
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(iii) participate in the Company's 401(k) pension
plan pursuant to the terms of the plan, as the same may be modified from time
to time;
(iv) participate in the Company's Executive Deferred
Compensation Plan, as the same may be modified from time to time: and
(v) participate in any other benefit plans the
Company provides from time to time to senior executive officers.
(d) Club Membership. The Company shall pay the reasonable
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cost of initiation associated with Employee gaining privileges at a mutually
agreed upon country club. Employee shall be responsible for all other
expenses and costs associated with such club use, including monthly member
dues and charges. The club membership itself shall belong to and be the
property of the Company, not Employee.
(e) Estate Planning and Other Perquisites. To the extent
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the Company provides estate planning and related services, or any other
perquisites and personal benefits to other senior executive officers from time
to time, such services and perquisites shall be made available to Employee on
the same terms and conditions.
(f) Office Support. At its expense, the Company shall
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provide Employee, for Company business purposes, with a secretary, an office and
a mobile telephone. At its expense, the Company shall provide Employee, for
Company business purposes, with computers, facsimile machines and business
telephones for use at Employee's office and at two homes.
6. DISABILITY. If on account of any physical or mental
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disability Employee shall fail or be unable to perform all or substantially
all of Employee's duties under this Agreement for a continuous period of up to
six (6) months during any twelve month period during the term of this
Agreement, Employee shall be entitled to his or her full compensation and
benefits as set forth in this Agreement. If Employee's disability continues
after such six (6) month period, this Agreement is subject to termination
pursuant to the provisions of Section 8(e) hereof.
7. NONCOMPETITION.
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(a) Other Business. To the fullest extent permitted by
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law, Employee agrees that, while employed by the Company, Employee will not,
directly or indirectly (whether as agent, consultant, holder of a beneficial
interest, creditor, or in any other capacity), engage in any business or
venture which engages directly or indirectly in competition with the business
of the Company, or have any interest in any person, firm, corporation, or
venture which engages directly or indirectly in competition with the business
of the Company. For purposes of this section, the ownership of interests in a
broadly based mutual fund shall not constitute ownership of the stocks held by
the fund.
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(b) Other Employees. Except as may be required in the
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performance of his or her duties hereunder, Employee shall not cause or induce,
or attempt to cause or induce, any person now or hereafter employed by the
Company, or any subsidiary, to terminate such employment, nor shall Employee
directly or indirectly employ any person who is now or hereafter employed by
the Company for a period of one (1) year from the date such person ceases to
be employed by the Company.
(c) Suppliers. While employed by the Company, and for one
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(1) year thereafter, Employee shall not cause or induce, or attempt to cause or
induce, any person or firm supplying goods, services or credit to the Company
to diminish or cease furnishing such goods, services or credit.
(d) Conflict of Interest. While employed by the Company,
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Employee shall not engage in any conduct or enterprise that shall constitute an
actual or apparent conflict of interest with respect to Employee's duties and
obligations to the Company.
8. TERMINATION.
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(a) Termination at the Company's Convenience. Employee's
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employment under this Agreement may be terminated by the Company at its
convenience at any time upon giving 90 days or longer notice to Employee. In
the event of a termination at the Company's convenience, Employee shall be
entitled to receive (i) any compensation accrued and unpaid as of the date of
termination; (ii) the continued payment of base salary at the same rate and on
the same schedule as in effect at the time of termination for a period of time
equal to the greater of the remainder of the term of this Agreement or two
years; (iii) the payment of nondiscretionary bonuses pursuant to the Company's
Executive Bonus Plan, as it existed on the date of termination, for a period of
time equal to the greater of the remainder of the term of this Agreement or two
years; (iv) the immediate vesting of all unvested stock options held by
Employee as of such termination date; (v) the continuation of all benefits and
perquisites provided by Sections 5(c)(i) and (ii) hereof for a period of time
equal to the greater of the remainder of the term of this Agreement or two
years; and (vi) no other severance. At Employee's option, Employee may elect
in writing up to 60 days prior to termination to receive such payments and
benefits as provided by subsection (ii) of this section in a lump sum payment
representing all future payments due, discounted to their then present value at
the prevailing major bank prime rate as of the date of termination.
(b) Termination at Employee's Convenience. Employee's
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employment under this Agreement may be terminated immediately by Employee at
his or her convenience at any time. In the event of a termination at the
Employee's convenience, Employee shall be entitled to receive (i) any
compensation accrued and unpaid as of the date of termination; (ii) severance
pay equal to the nondiscretionary
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cash bonus Employee would have earned under the then existing Executive Bonus
Plan in the fiscal year in which Employee's employment is terminated, prorated
in accordance with the number of days in such fiscal year that elapsed prior to
Employee's termination and payable at the same time and under the same terms and
conditions as any other nondiscretionary bonuses paid to officers in that fiscal
year; and (iii) no other severance.
(c) Termination by the Company for Substantial Cause.
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Employee's employment under this Agreement may be terminated immediately by
the Company for substantial cause at any time. In the event of a termination
by the Company for substantial cause, Employee shall be entitled to receive
(i) any compensation accrued and unpaid as of the date of termination;
(ii) severance pay equal to the nondiscretionary cash bonus Employee would have
earned under the then existing Executive Bonus Plan in the fiscal year in which
Employee's employment is terminated, prorated in accordance with the number of
days in such fiscal year that elapsed prior to Employee's termination and
payable at the same time and under the same terms and conditions as any other
nondiscretionary bonuses paid to officers in that fiscal year; and (iii) no
other severance. "Substantial cause" shall mean for purposes of this
subsection failure by Employee to substantially perform his her duties, breach
of this Agreement, or misconduct, including but not limited to, dishonesty,
theft, use or possession of drugs or alcohol during work, disloyalty and/or
felony criminal conduct.
(d) Termination by Employee for Substantial Cause.
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Employee's employment under this Agreement may be terminated immediately by
Employee for substantial cause at any time. In the event of a termination by
Employee for substantial cause, Employee shall be entitled to receive (i) any
compensation accrued and unpaid as of the date of termination; (ii) the
continued payment of base salary at the same rate and on the same schedule as
in effect at the time of termination for a period of time equal to the greater
of the remainder of the term of this Agreement or two years; (iii) the payment
of nondiscretionary bonuses pursuant to the Company's Executive Bonus Plan, as
it existed on the date of termination, for a period of time equal to the
greater of the remainder of the term of this Agreement or two years; (iv) the
immediate vesting of all unvested stock options held by Employee as of such
termination date; (v) the continuation of all benefits and perquisites
provided by Sections 5(c)(i) and (ii) hereof for a period of time equal to the
greater of the remainder of the term of this Agreement or two years; and (vi)
no other severance. At Employee's option, Employee may elect in writing up to
60 days prior to termination to receive such payments and benefits as provided
by subsection (ii) of this subsection in a lump sum payment representing all
future payments due, discounted to their then present value at the prevailing
major bank prime rate as of the date of termination. "Substantial cause" shall
mean for purposes of this subsection the elimination of Employee's position, a
reduction in Employee's base salary, a material reduction in Employee's
authority or responsibilities (including, but not limited to, any failure to
include Employee as a nominee for the Board of Directors at any election of
Directors during the term of this
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Agreement), or a material breach of this Agreement by the Company.
(e) Termination Due to Permanent Disability. Subject to
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all applicable laws, Employee's employment under this Agreement may be
terminated immediately by the Company in the event Employee becomes permanently
disabled. In the event of a termination by the Company due to Employee's
permanent disability, Employee shall be entitled to (i) any compensation
accrued and unpaid as of the date of termination; (ii) the continued payment of
base salary at the same rate and on the same schedule as in effect at the time
of termination for a period of time equal to the greater of the remainder of
the term of this Agreement or two years; (iii) severance pay equal to the
nondiscretionary cash bonus Employee would have earned under the then existing
Executive Bonus Plan in the fiscal year in which Employee's employment is
terminated, prorated in accordance with the number of days in such fiscal year
that elapsed prior to Employee's termination and payable at the same time and
under the same terms and conditions as any other nondiscretionary bonuses paid
to officers in that fiscal year; (iv) the immediate vesting of outstanding but
unvested stock options held by Employee as of such termination date in a
prorated amount based upon the number of days in the option vesting period that
elapsed prior to Employee's termination; (v) the continuation of all benefits
and perquisites provided by Section 5(c)(i) and (ii) hereof for a period of
time equal to the greater of the remainder of the term of this Agreement or two
years; and (vi) no other severance. Termination under this subsection shall be
effective immediately upon the date the Board of Directors of the Company
formally resolves that Employee is permanently disabled. Subject to all
applicable laws, "permanent disability" shall mean the inability of Employee, by
reason of any ailment or illness, or physical or mental condition, to devote
substantially all of his or her time during normal business hours to the daily
performance of Employee's duties as required under this Agreement for a
continuous period of six (6) months. At Employee's option, Employee may elect
in writing up to 60 days prior to termination to receive such payments and
benefits as provided by subsection (ii) of this section in a lump sum payment
representing all future payments due, discounted to their then present value
at the prevailing major bank prime rate as of the date of termination.
(f) Termination Due to Death. Employee's employment under
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this Agreement may be terminated immediately by the Company in the event of
Employee's death. In the event of a termination by the Company due to
Employee's death, Employee's estate shall be entitled to (i) any compensation
accrued and unpaid as of the date of termination; (ii) the continued payment of
base salary at the same rate and on the same schedule as in effect at the time
of termination for a period of time equal to the greater of the remainder of
the term of this Agreement or six months; (iii) severance pay equal to the
nondiscretionary cash bonus Employee would have earned under the then existing
Executive Bonus Plan in the fiscal year in which Employee's employment is
terminated, prorated in accordance with the number of days in such fiscal year
that elapsed prior to Employee's termination and payable at the same time and
under the same terms and conditions as any other nondiscretionary bonuses paid
to officers in that fiscal year; (iv) the immediate vesting of outstanding but
unvested stock
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options held by Employee as of such termination date in a prorated amount based
upon the number of days in the option vesting period that elapsed prior to
Employee's termination; and (v) no other severance. At Employee's option,
Employee may elect in writing at least 60 days prior to termination to receive
such payments and benefits as provided by subsection (ii) of this section in a
lump sum payment representing all future payments due, discounted to their then
present value at the prevailing major bank prime rate as of the date of
termination.
(g) Unless otherwise provided, any severance payments or
other amounts due pursuant to this Section 8 shall be paid in cash within thirty
(30) days of termination. Any severance payments shall be subject to usual and
customary employee payroll practices and all applicable withholding
requirements. Except for such severance pay and other amounts specifically
provided pursuant to this Section 8, Employee shall not be entitled to any
further compensation, bonus, damages, restitution, relocation benefits, or other
severance benefits upon termination of employment during the term of this
Agreement. The amounts payable to Employee pursuant to this Section 8 shall not
be treated as damages, but as severance compensation to which Employee is
entitled by reason of termination of employment under the applicable
circumstances. The Company shall not be entitled to set off against the amounts
payable to Employee hereunder any amounts earned by Employee in other employment
after termination of his or her employment with the Company pursuant to this
Agreement, or any amounts which might have been earned by Employee in other
employment had Employee sought such other employment. The provisions of this
Section 8 shall not limit Employee's rights under or pursuant to any other
agreement or understanding with the Company or with Employee's participation in,
or terminating distributions and vested rights under, any pension, profit
sharing, insurance or other employee benefit plan of the Company to which
Employee is entitled pursuant to the terms of such plan.
(h) Termination By Mutual Agreement of the Parties.
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Employee's employment pursuant to this Agreement may be terminated at any time
upon the mutual agreement in writing of the parties. Any such termination of
employment shall have the consequences specified in such agreement.
(i) Pre-Termination Rights. The Company shall have the
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right, at its option, to require Employee to vacate his or her office or
otherwise remain off the Company's premises prior to the effective date of
termination as determined above, and to cease any and all activities on the
Company's behalf.
9. RIGHTS UPON A CHANGE IN CONTROL.
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(a) If a Change in Control (as defined in Exhibit A hereto)
occurs before the termination of Employee's employment hereunder, then this
Agreement shall be extended (the "Extended Employment Agreement") in the same
form and substance as in effect immediately prior to the Change in Control,
except that the termination date
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shall be that date which would permit the Extended Employment Agreement to
continue in effect for an additional period of time equal to the full term of
this Agreement.
(b) Notwithstanding anything in this Agreement to the
contrary, if upon or at any time within one year following any Change in
Control that occurs during the term of this Agreement there is a Termination
Event (as defined below), Employee shall be treated as if he or she had been
terminated for the convenience of the Company and Employee shall be entitled to
receive the same compensation and other benefits and entitlements as are
described in Section 8(a) of this Agreement. Furthermore, the termination
events and consequences described in Section 8 shall continue to apply during
the term of the Extended Employment Agreement except that, in the event of a
conflict between Section 8 and the rights of Employee described in this Section
9, the provisions of this Section 9 shall govern.
(c) A "Termination Event" shall mean the occurrence of any
one or more of the following, and in the absence of the Employee's permanent
disability (defined in Sections 6 and 8(e)), Employee's death, and any of the
factors enumerated in Section 8(c) as providing to the Company "substantial
cause" for terminating Employee's employment:
(i) the termination or material breach of this Agreement by
the Company;
(ii) a failure by the Company to obtain the assumption of
this Agreement by any successor to the Company or any assignee of all or
substantially all of the Company's assets;
(iii) any material diminishment in the title, position,
duties, responsibilities or status that Employee had with the Company, as a
publicly traded entity, immediately prior to the Change in Control;
(iv) any reduction, limitation or failure to pay or provide
any of the compensation, reimbursable expenses, stock options, incentive
programs, or other benefits or perquisites provided to Employee under the terms
of this Agreement or any other agreement or understanding between the Company
and Employee, or pursuant to the Company's policies and past practices as of the
date immediately prior to the Change in Control; or
(v) any requirement that Employee relocate or any assignment
to Employee of duties that would make it unreasonably difficult for Employee to
maintain the principal residence he or she had immediately prior to the Change
in Control.
10. SURRENDER OF BOOKS AND RECORDS. Employee agrees that
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upon termination of employment in any manner, Employee will immediately
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surrender to the Company all lists, books and records of or connected with the
business of the Company, and all other properties belonging to the Company, it
being distinctly understood that all such lists, books, records and other
documents are the property of the Company.
11. GENERAL RELATIONSHIP. Employee shall be considered an
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employee of the Company within the meaning of all federal, state and local laws
and regulations, including, but not limited to, laws and regulations governing
unemployment insurance, workers' compensation, industrial accident, labor and
taxes.
12. PROPRIETARY INFORMATION.
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(a) Employee agrees that any trade secret or proprietary
information of the Company to which Employee has become privy or may become
privy to as a result of his or her employment with the Company shall not be
divulged or disclosed to any other party (including, without limit, any person
or entity with whom or in whom Employee has a business interest) without the
express written consent of the Company, except as otherwise required by law.
In addition, Employee agrees to use such information only during the term of
this Agreement and only in a manner which is consistent with the purposes of
this Agreement. In the event Employee believes that he or she is legally
required to disclose any trade secret or proprietary information of the Company,
Employee shall give reasonable notice to the Company prior to disclosing such
information and shall take such legally permissible steps as are reasonably
necessary to protect such Company trade secrets or proprietary information,
including but not limited to, seeking orders from a court of competent
jurisdiction preventing disclosure or limiting disclosure of such information
beyond that which is legally required. The Company shall reimburse Employee for
reasonable legal expenses incurred in seeking said orders.
(b) Except as otherwise required by law, Employee shall hold
in confidence all trade secret and proprietary information received from the
Company until such information is available to the public generally or to the
Company's competitors through no unauthorized act or fault of Employee. Upon
termination of this Agreement, Employee shall promptly return any written
proprietary information in his or her possession to the Company.
(c) As used in this Agreement, "trade secret and
proprietary information" means information, whether written or oral, not
generally available to the public; it includes the concepts and ideas involved
in the Company's products whether patentable or not; and includes, but is not
limited to, the processes, formulae, and techniques disclosed by the Company to
Employee or observed by Employee. It does not include:
(i) Information, which at the time of disclosure,
had been previously published;
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(ii) Information which is published after disclosure,
unless such publication is a breach of this Agreement or is otherwise a
violation of the contractual, legal or fiduciary duties owed to the Company,
which violation is known to Employee; or
(iii) Information which, subsequent to disclosure, is
obtained by Employee 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 the Company with respect to such
information, and is known by Employee) and does not require Employee to refrain
from disclosing such information to others.
(d) The provisions of this Section 12 shall survive the
termination or expiration of this Agreement, and shall be binding upon Employee
in perpetuity.
13. INVENTIONS AND INNOVATIONS.
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(a) As used in this Agreement, inventions and innovations
mean new ideas and improvements, whether or not patentable, relating to the
design, manufacture, use or marketing of golf equipment or other products of the
Company. This includes, but is not limited to, products, processes, methods of
manufacture, distribution and management, sources of and uses for materials,
apparatus, plans, systems and computer programs.
(b) Employee agrees to disclose to the Chief Executive
Officer and the Board of Directors of the Company any invention or innovation
which he or she develops, either alone or with anyone else, during the term of
Employee's employment with the Company, as well as any invention or innovation
based on proprietary information of the Company which Employee develops, whether
alone or with anyone else, within twelve (12) months after the termination of
Employee's employment with the Company.
(c) Employee agrees to assign any invention or innovation to
the Company:
(i) which is developed totally or partially while
Employee is employed by the Company;
(ii) for which Employee used any of the Company's
equipment, supplies, facilities or proprietary information, even if any or all
of such items are relatively minor, and have little or no monetary value; or
(iii) which results in any way from Employee's work
for the Company or relates in any way to the Company's business or the
Company's current or
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anticipated research and development.
(d) Employee understands and agrees that the existence of
any condition set forth in either (c)(i), (ii) or (iii) above is sufficient to
require Employee to assign his or her inventions or innovations to the Company.
(e) All provisions of this Agreement relating to the
assignment by Employee of any invention or innovation are subject to the
provisions of California Labor Code Sections 2870, 2871 and 2872.
(f) Employee agrees that any invention or innovation which
is required under the provisions of this Agreement to be assigned to the Company
shall be the sole and exclusive property of the Company. Upon the Company's
request, at no expense to Employee, Employee shall execute any and all proper
applications for patents, assignments to the Company, and all other applicable
documents, and will give testimony when and where requested to perfect the title
and/or patents (both within and without the United States) in all inventions or
innovations belonging to the Company.
(g) Employee shall disclose all inventions and innovations
to the Company, even if Employee does not believe that he or she is required
under this Agreement, or pursuant to California Labor Code Section 2870, to
assign his or her interest in such invention or innovation to the Company. If
the Company and Employee disagree as to whether or not an invention or
innovation is included within the terms of this Agreement, it will be the
responsibility of Employee to prove that it is not included.
14. ASSIGNMENT. This Agreement shall be binding upon and
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shall inure to the benefit of the parties hereto and the successors and assigns
of the Company. Employee shall have no right to assign his rights, benefits,
duties, obligations or other interests in this Agreement, it being understood
that this Agreement is personal to Employee.
15. ATTORNEYS' FEES AND COSTS. If any arbitration or other
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proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute or default in connection with any of its provisions, the
successful or prevailing party shall be entitled to recover reasonable
attorneys' fees incurred in such action or proceeding, in addition to any relief
to which such party may be deemed entitled, if, and only if, the arbitrator
finds that the non-prevailing party's position, taken as a whole, was frivolous
or baseless. The prevailing party in any such proceeding shall be entitled to
recover from the other party the reasonable costs and expenses of any such
proceeding (not including attorneys' fees).
16. ENTIRE UNDERSTANDING. This Agreement sets forth the
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entire understanding of the parties hereto with respect to the subject matter
hereof, and no other representations, warranties or agreements whatsoever as to
that subject matter
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have been made by Employee or the Company not herein contained. This Agreement
shall not be modified, amended or terminated except by another instrument in
writing executed by the parties hereto. This Agreement replaces and supersedes
any and all prior understandings or agreements between Employee and the Company
regarding employment.
17. NOTICES. Any notice, request, demand, or other
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communication required or permitted hereunder, shall be deemed properly given
when actually received or within five (5) days of mailing by certified or
registered mail, postage prepaid, to:
Employee: Frederick R. Port
c/o Callaway Golf Company
2285 Rutherford Road
Carlsbad, California 92008-8815
Company: Callaway Golf Company
2285 Rutherford Road
Carlsbad, California 92008-8815
Attn: Donald H. Dye
or to such other address as Employee or the Company may from time to time
furnish, in writing, to the other.
18. ARBITRATION. Any dispute, controversy or claim arising
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hereunder or in any way related to this Agreement, its interpretation,
enforceability, or applicability, or relating to Employee's employment, or the
termination thereof, that cannot be resolved by mutual agreement of the parties
shall be submitted to arbitration. The arbitration shall be conducted by a
retired judge from the Judicial Arbitration and Mediation Service/Endispute
("JAMS") office located in Orange County, California, who shall have the powers
to hear motions, control discovery, conduct hearings and otherwise do all that
is necessary to resolve the matter. The arbitration award shall be final and
binding, and judgment on the award may be entered in any court having
jurisdiction thereof. 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.
19. MISCELLANEOUS.
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(a) Headings. The headings of the several sections and
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paragraphs
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of this Agreement are inserted solely for the convenience of reference and are
not a part of and are not intended to govern, limit or aid in the construction
of any term or provision hereof.
(b) Waiver. Failure of either party at any time to
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require performance by the other of any provision of this Agreement shall in no
way affect that party's rights thereafter to enforce the same, nor shall the
waiver by either party of any breach of any provision hereof be held to be a
waiver of any succeeding breach of any provision or a waiver of the provision
itself.
(c) Applicable Law. This Agreement shall constitute a
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contract under the internal laws of the State of California and shall be
governed and construed in accordance with the laws of said state as to both
interpretation and performance.
(d) Severability. In the event any provision or provisions
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of this Agreement is or are held invalid, the remaining provisions of this
Agreement shall not be affected thereby.
20. SUPERSEDES OLD OFFICER EMPLOYMENT CONTRACT.
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Employee and the Company recognize that prior to the effective date of this
Agreement they were parties to a certain Officer Employment Agreement effective
July 20, 1995 (the "Old Officer Employment Agreement"). It is the intent of the
parties that as of the effective date of this Agreement, this Agreement shall
replace and supersede the Old Officer Employment Agreement entirely, that the
Old Officer Employment Agreement shall no longer be of any force or effect
except as to Sections 7, 12, 13, 15 and 18 thereof, and that to the extent there
is any conflict between the Old Officer Employment Agreement and this Agreement,
this Agreement shall control and both agreements shall be construed so as to
give the maximum force and effect to the provisions of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed effective the date first written above.
EMPLOYEE: COMPANY:
CALLAWAY GOLF COMPANY,
a California corporation
/s/ FREDERICK R. PORT By: /s/ DONALD H. DYE
- ------------------------ ---------------------------------
Frederick R. Port Donald H. Dye, President & CEO
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EXHIBIT A
A "Change in Control" means the following and shall be deemed to occur
if any of the following events occurs:
(a) 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 the Company and its subsidiaries and any employee benefit or stock
ownership plan of the Company or its subsidiaries and also excluding an
underwriter or underwriting syndicate that has acquired the Company'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 the Company's then outstanding securities entitled to vote
generally in the election of directors; or
(b) Individuals who, as of the effective date hereof, constitute the
Board of Directors of the Company (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board of Directors of the Company,
provided that any individual who becomes a director after the effective date
hereof whose election, or nomination for election by the Company'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 the Company'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 the Company's shareholders is approved by
a vote of at least two-thirds of the directors then comprising the Incumbent
Board; or
(c) Consummation by the Company of the sale or other disposition by
the Company of all or substantially all of the Company's assets or a
reorganization or merger or consolidation of the Company with any other person,
entity or corporation, other than
(i) a reorganization or merger or consolidation that would
result in the voting securities of the Company 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 the
Company, 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,
14
more than 50% of the combined voting power of the voting securities of the
Company 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
(ii) a reorganization or merger or consolidation effected to
implement a recapitalization or reincorporation of the Company (or similar
transaction) that does not result in a material change in beneficial ownership
of the voting securities of the Company or its successor; or
(d) Approval by the shareholders of the Company or an order by a
court of competent jurisdiction of a plan of liquidation of the Company.
15