EXHIBIT 10.1
EXECUTIVE OFFICER EMPLOYMENT AGREEMENT
This Executive Officer Employment Agreement ("Agreement") is entered
into as of August 11, 1997, by and between Callaway Golf Company, a California
corporation (the "Company"), and Ronald A. Drapeau ("Employee").
1. TERM. The Company hereby employs Employee and Employee hereby
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accepts employment pursuant to the terms and provisions of this Agreement for
the term commencing August 11, 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 of the Company,
and as President and Chief Executive Officer of the Company's wholly-owned
subsidiary, Odyssey Golf ("Odyssey"). Employee's duties shall be the usual and
customary duties of the offices in which he or she serves. As Executive Vice
President of the Company, 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. As President and Chief Executive Officer of Odyssey,
Employee shall report to the Board of Directors of Odyssey, or to such person as
the Board of Directors of Odyssey shall designate. Employee's titles, positions
and/or duties may be changed by the Board of Directors and/or the Chief
Executive Officer of the Company, or the Board of Directors of Odyssey,
respectively.
(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, Employee agrees
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to devote his or her full productive time and best efforts to the performance of
Employee's duties hereunder. 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 or one of its affiliates, 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 or its affiliates 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 or its
affiliates.
4. COMPENSATION. The Company agrees to pay Employee:
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(a) a base salary at the rate of $350,000.00 per year; 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.
(b) Vacation. Employee shall receive three (3) weeks paid vacation
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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 Company pursuant
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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 $1,000,000.00, provided that
Employee's physical condition does not prevent Employee from reasonably
qualifying for such insurance coverage;
(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 executive officers.
(d) Club Membership. The Company shall pay the reasonable cost of
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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 the Company
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provides estate planning and related services, or any other perquisites and
personal benefits to other executive officers from time to time, such services
and perquisites shall be made available to Employee on the same terms and
conditions.
6. DISABILITY. If on account of any physical or mental disability
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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 law, Employee
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agrees that, while employed by the Company or any of its affiliates, 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 any of its affiliates, or have any interest in any person,
firm, corporation, or venture which engages directly or indirectly in
competition with the business of the Company or any of its affiliates. 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.
(b) Other Employees. Except as may be required in the performance of
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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 of
its affiliates, to terminate such employment, nor shall Employee directly or
indirectly employ any person who is now or hereafter employed by the Company or
any of its affiliates for a period of one (1) year from the date Employee ceases
to be employed by the Company or any of its affiliates.
(c) Suppliers. While employed by the Company or any of its
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affiliates, and for one (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 or any of its affiliates to diminish or cease furnishing
such goods, services or credit.
(d) Conflict of Interest. While employed by the Company or any of its
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affiliates, 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 or any of its affiliates.
8. TERMINATION.
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(a) Termination at the Company's Convenience. Employee's employment
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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 six months; (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 six months; (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 six months; 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 employment
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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 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. Employee's
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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. Employee's
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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 six months; (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 six months; (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 six months; 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 a material breach of this Agreement by the Company.
(e) Termination Due to Permanent Disability. Subject to all
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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 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 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 six
months; 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 this
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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 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. Employee's
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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 right, at its
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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 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 upon
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termination of employment in any manner, Employee will immediately surrender to
the Company all lists, books and records of or connected with the business of
the Company or any of its affiliates, and all other properties belonging to the
Company or any of its affiliates, 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 employee
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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.
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12. PROPRIETARY INFORMATION.
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(a) Employee agrees that any trade secret or proprietary information
of the Company or any of its affiliates to which Employee has become privy or
may become privy to as a result of his or her employment with the Company or any
of its affiliates 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 or any of its affiliates, 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
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 or any of its affiliates 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 and
its affiliates' products, whether patentable or not; and includes, but is not
limited to, the processes, formulae, and techniques disclosed by the Company or
its affiliates to Employee or observed by Employee. It does not include:
(i) Information, which at the time of disclosure, had been
previously published;
(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 or its
affiliates, 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
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obligation owed to the Company or its affiliates 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 ideas
and improvements, whether or not patentable, relating to the design,
manufacture, use or marketing of golf equipment or other products of the Company
or its affiliates. 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 or its affiliates, 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 or its affiliates.
(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 or its affiliates;
(ii) for which Employee used any of the Company's or its
affiliates' 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 its affiliates or relates in any way to the Company's or its
affiliates' business or the Company's or its affiliates' current or 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
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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 shall inure
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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 entire
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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 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 communication
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required or permitted hereunder, shall be deemed properly given when
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actually received or within five (5) days of mailing by certified or registered
mail, postage prepaid, to:
Employee: Ronald A. Drapeau
2911 Candil Place
Carlsbad, California 92009
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 hereunder
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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 paragraphs of
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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 require
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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.
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(c) Applicable Law. This Agreement shall constitute a contract under
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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 of this
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Agreement is or are held invalid, the remaining provisions of this Agreement
shall not be affected thereby.
20. SUPERSEDES OLD EMPLOYMENT CONTRACT. Employee and the Company
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recognize that prior to the effective date of this Agreement they were parties
to a certain Employment Agreement effective October 14, 1996 (the "Old
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 Employment Agreement entirely, that the Old Employment Agreement shall no
longer be of any force or effect except as to Sections 7, 11, 12, 14 and 17
thereof, and that to the extent there is any conflict between the Old 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/ By: /s/
- ------------------------- ------------------------------
Ronald A. Drapeau 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,
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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.
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