EXHIBIT 10.50
CALLAWAY GOLF
COMPANY
FIRST AMENDED AND
RESTATED
CHIEF EXECUTIVE OFFICER
EMPLOYMENT AGREEMENT
This First Amended and Restated
Chief Executive Officer Employment Agreement
(“Agreement”) is entered into as of September 3,
2008, by and between Callaway Golf Company , a Delaware
corporation, (the “Company”) and George Fellows
(“Employee”).
Background
A. The Company and Employee are
parties to that certain Chief Executive Officer Employment
Agreement entered into as of July 29, 2005 (“Original
Employment Agreement”).
B. The Company and Employee desire
to extend the term of the Original Employment Agreement and to make
other changes thereto as hereinafter set forth, and further desire
to have all changes and amendments reflected in an amended and
restated agreement for ease of reference and use.
Agreement
In consideration of the foregoing
background and the mutual agreements and covenants set forth
herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and
Employee, intending to be legally bound, hereby agree as
follows:
1. TERM . The Company hereby
agrees to continue to employ Employee and Employee hereby accepts
continued employment pursuant to the terms and provisions of this
Agreement for the period as of the date first above written and
ending December 15, 2011, unless this Agreement is earlier
terminated as hereinafter provided. At all times during the term of
this Agreement, Employee shall be considered an 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.
2. TITLES; POSITIONS
.
(a) Employee shall serve as
President and Chief Executive Officer of the Company.
Employee’s duties shall be the usual and customary duties of
the offices in which Employee serves. Employee shall report solely
to the Board of Directors.
(b) So long as Employee continues to
meet the standards required of a Director, Employee shall continue
to be nominated for election as a Director at each subsequent
annual meeting of shareholders during the term of this Agreement.
Upon termination of this Agreement, unless the Company’s
Board of Directors determines otherwise, Employee shall resign as a
director of the Company, as well as from any positions as a
director or officer of any subsidiary or affiliate of the
Company.
3. SERVICES TO BE EXCLUSIVE .
During the term hereof, Employee agrees to devote Employee’s
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. 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. Nothing herein contained shall be deemed to preclude
Employee from having outside personal investments, involvement with
appropriate community and charitable activities, continuing to
serve on (i) the boards of directors of VF Corporation and
Jack in the Box, Inc. (which are public companies), (ii) the
board of directors of Aero Products International, Inc. (so long as
it remains a privately held company), and (iii) the California
Governor’s Council on Physical Fitness and Sports, or from
devoting a reasonable amount of time to such matters, provided that
such activities and service shall in no manner interfere with or
derogate from Employee’s work for the Company.
4. COMPENSATION .
(a) Base Salary . The Company
agrees to pay Employee a base salary at the rate of not less than
$925,000 per year (prorated for any partial years of employment),
payable in equal installments on regularly scheduled Company pay
dates as they may be adjusted from time to time.
(b) Annual Bonus . The
Company shall provide Employee an opportunity to earn an annual
bonus based upon participation in the Company’s applicable
bonus plan as it may or may not exist from time to time. Employee
acknowledges that currently all bonuses are discretionary. However,
and notwithstanding the foregoing, it is agreed that during the
term of this Agreement Employee shall have a target annual bonus
opportunity equal to 100% of Employee’s annual base salary
paid in the pertinent year, based upon the achievement of realistic
performance goals determined by the Board of Directors (or
appropriate committee thereof) in consultation with Employee. For
the sake of clarity, if Employee remains employed with the Company
through December 15, 2011, Employee shall be entitled to a
bonus payout for 2011, subject to the achievement of the applicable
performance goals, notwithstanding that Employee is not an Employee
on the last day of 2011.
(c) Long Term Incentives
.
(i) Effective as of the first
regularly scheduled meeting of the Compensation and Management
Succession Committee of the Board of Directors (or other similarly
empowered committee) on or after the date first above written,
Employee shall be granted the following long-term incentive
awards:
(A) a stock option
award with a grant date value of $1,000,000, with the number of
shares underlying the award determined by dividing $1,000,000 by
the value of a stock option for one share. The option value shall
be calculated based upon the Black-Scholes option valuation
methodology using the same assumptions the Company uses for
financial reporting purposes. The exercise price shall be the
closing price of the Company’s common stock on the date of
grant. Subject to earlier cancellation upon termination of
employment, the stock option shall be for a term of ten years and
shall vest in three equal annual installments with
1 / 3 vesting on each of the first
three anniversaries of the date of grant. Except as set forth below
in subsection (iii) of this section, the other terms of the
stock option shall be governed substantially by the terms of the
Company’s current form of stock option agreement for
officers.
(B) a restricted stock unit award
with a grant date value of $1,000,000 dollars, with the number of
underlying units being equal to $1,000,000 divided by the closing
price of the Company’s common stock on the date of grant.
Each unit shall represent the contingent right to receive one share
of the Company’s common stock. The restricted stock unit
award shall vest in full on December 15, 2011, subject to
earlier cancellation upon termination of employment. Except as set
forth below in subsection (iii) of this section, the other
terms of the restricted stock unit award shall be governed
substantially by the terms of the Company’s current form of
restricted stock unit agreement for officers.
(C) a cash unit award for 1,000,000
units, with each unit being a contingent right to receive $1 per
unit upon vesting. The cash unit award shall vest in full on
December 15, 2011, subject to earlier cancellation upon
termination of employment. Except as set forth below in subsection
(iii) of this section, the other terms of the cash unit award
shall be governed substantially by the terms of the Company’s
current form of service based cash unit agreement for
officers.
(ii) Commencing
January 1, 2009, and so long as Employee remains employed
under this Agreement, the Company shall provide Employee an
opportunity to participate in the Company’s applicable
long-term incentive plan for senior officers with an award value of
at least $3.2 million in each of 2009 and 2010 and $2.13 million in
2011. In each of those years, the Compensation and Management
Succession Committee (or other similarly empowered Committee) will
determine the type of awards to be granted to Mr. Fellows and
will approve the grant of such awards. The awards are to be granted
on the same date the long-term incentive awards are granted to the
other senior officers for the applicable year. The number of shares
underlying any stock option award will be determined based upon the
award value divided by the value of a stock option for one share.
The option value shall be calculated based upon the Black-Scholes
option valuation methodology using the same assumptions the Company
uses for financial reporting purposes. In each of 2009 and 2010, at
least 2 / 3 of the award value granted to
Employee will be allocated to awards that vest solely based upon
continued service and not upon performance criteria and at
least 1 / 2 of such service-based awards
(i.e. 1
/
3 of the entire award value) shall
be full value awards. In 2011, at least 1
/
2 of the award value granted to
Employee will be allocated to awards that vest solely based upon
continued service and not upon performance criteria. Except as set
forth below in subsection (iii) of this section, the other
terms of the awards will be governed substantially by the terms of
the Company’s then current form of award agreements for
senior officers.
(iii) With regard to the awards to
be granted under this Section 4(c) (the “New
Awards”), if Employee remains employed by the Company through
December 15, 2011, then the New Awards shall be permitted to
continue to vest in accordance with their applicable vesting
schedules subsequent to the termination of Employee’s
employment and Employee shall have up to three years after the
termination of employment (not to exceed the original ten year
term) to exercise any vested New Award stock options, all of the
foregoing provided and only for so long as Employee
(A) executes and delivers a fully effective release in the
form attached hereto as Exhibit B within sixty (60) days after
the date of termination of employment, (B) chooses not to
engage in any business or venture that competes with the business
of the Company or any of its affiliates, (C) does not harm,
injure or disparage the Company or its directors, officers,
employees, agents affiliates, vendors, products, customers or their
successors, and (D) continues to comply with Employee’s
post-termination obligations under this Agreement.
5. EXPENSES AND BENEFITS
.
(a) Reasonable and Necessary
Expenses . In addition to the compensation provided for in
Section 4, 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 in accordance with the policies and
procedures set by the Company from time to time 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.
(b) Paid Time Off . Employee
shall accrue paid time off in accordance with the terms and
conditions of the Company’s Paid Time Off Program, as stated
in the Company’s
Employee Handbook, and as may be modified from
time to time. Subject to the maximum accrual permitted under the
Paid Time Off Program, Employee shall accrue paid time off at the
rate of thirty (30) days per year. The time off may be taken
any time during the year subject to prior approval by the Company.
The Company reserves the right to pay Employee for unused, accrued
benefits in lieu of providing time off.
(c) Insurance . During
Employee’s employment with the 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 Employee
directs, in an amount equal to $3,000,000 in coverage, provided
that Employee completes the required health statement and
application and that Employee’s physical condition does not
prevent Employee from qualifying for such insurance coverage under
reasonable terms and conditions; and
(d) Retirement . Employee
shall be permitted to participate in the Company’s 401(k)
retirement investment plan, employee stock purchase plan and
executive deferred compensation plan pursuant to the terms of such
plans, as the same may be modified from time to time, to the extent
such plans are offered to other officers of the Company from time
to time.
(e) Estate Planning and Other
Perquisites . To the extent the Company provides tax and estate
planning and related services, or any other perquisites and
personal benefits to other officers generally from time to time,
such services and perquisites shall be made available to Employee
on the same terms and conditions.
(f) Country Club Membership .
Employee shall be provided with access to a country club in
accordance with the Company’s country club use policy, as
modified from time to time. The club membership itself shall belong
to, and be the property of, the Company, not Employee.
(g) Travel Allowance . On or
before the first payroll date in April of each year during the term
of this Agreement (commencing April 2009), Employee shall be paid a
lump sum of $67,500 to assist Employee with travel expenses not
reimbursed under the Company’s travel reimbursement
policies.
(h) Auto Allowance . During
the term of this Agreement, Employee shall be entitled to an auto
allowance of not less than $1,000 per month for expenses associated
with acquiring and maintaining an automobile of Employee’s
choice under the Company’s auto allowance policy for senior
officers.
(i) Relocation Allowance . If
Employee remains employed with the Company under this Agreement
through December 15, 2011, then the Company shall reimburse
employee for actual expenses incurred by Employee in relocating his
personal property to his residence in New York, New York up to an
aggregate amount of $15,000. To be eligible for reimbursement of
such expenses, such relocation must be completed by
December 31, 2012. Employee shall not be entitled to
reimbursement for any other relocation expenses.
6. TAXES . Employee
acknowledges that Employee is responsible for all taxes related to
Employee’s compensation except for those taxes for which the
Company is obligated to pay under applicable law or regulation, or
as provided in Section 9(c) of this Agreement. Employee agrees
that the Company may withhold from Employee’s compensation
any amounts that the Company is required to withhold under
applicable law or regulation.
7. TERMINATION .
(a) Termination by the Company
Without Substantial Cause . Employee’s employment under
this Agreement may be terminated by the Company at any time without
substantial cause. In the event of a termination by the Company
without substantial cause, Employee shall be entitled to receive
(i) any compensation (including Paid Time Off) accrued and
unpaid as of the date of termination; (ii) a lump sum amount
equal to Employee’s then current annual base salary pro rated
for service through the date of termination; and (iii) the
immediate vesting of all unvested long-term incentive compensation,
whether in the form of options, restricted stock, restricted stock
units, performance shares, cash units, stock appreciation rights or
otherwise constituted. Performance based awards that may vest
pursuant to this section will not be paid unless, and then only to
the extent that, the performance goals underlying such awards have
been satisfied at the end of the applicable performance period. Any
potential payment related to the accelerated vesting of such
performance based awards will be paid following the completion of
the relevant performance period and the evaluation of whether
the performance goals have been met, and any such payment will
be made to Employee at the same time other participants
receive payment. In addition to the foregoing and subject to the
provisions thereof, Employee shall be eligible to receive Special
Severance as described in subsection 7(g) and Incentive Payments as
described in subsection 7(h).
(b) Termination by the Company
for Substantial Cause or by Employee Without Good Reason .
Employee’s employment under this Agreement may be terminated
immediately and at any time by the Company for substantial cause or
by Employee without good reason. In the event of such a
termination, Employee shall be entitled to receive (i) any
compensation (including Paid Time Off) accrued and unpaid as of the
date of termination; and (ii) no other severance.
“Substantial cause” shall mean for purposes of this
subsection Employee’s (i) continued failure to
substantially perform Employee’s duties after a written
demand for substantial performance has been delivered to Employee
by the Board of Directors; (ii) material breach of this
Agreement that is not cured to the reasonable satisfaction of the
Board of Directors within thirty (30) days after delivery of
written notice describing the breach; (iii) misconduct,
including but not limited to, use or possession of illegal drugs
during work and/or any other action that is damaging or detrimental
in a significant manner to the Company; (iv) conviction of, or
plea of guilty or nolo contendere to, a felony; or
(v) failure to cooperate with, or any attempt to obstruct or
improperly influence, any investigation authorized by the Board of
Directors or any governmental or regulatory agency entity .
“Good Reason” shall have the meaning given to it in
subsection 7(c).
(c) Termination by Employee for
Good Reason . Employee’s employment under this Agreement
may be terminated immediately by Employee for Good Reason at any
time. In the event of a termination by Employee for Good Reason,
Employee shall be entitled to receive (i) any compensation
(including Paid Time Off) accrued and unpaid as of the date of
termination; (ii) a lump sum amount equal to Employee’s
then current annual base salary pro rated for service through the
date of termination; and (iii) the immediate vesting of all
unvested long-term incentive compensation, whether in the form of
options, restricted stock, restricted stock units, performance
shares, cash units, stock appreciation rights or otherwise
constituted. Performance based awards that may vest pursuant to
this section will not be paid unless, and then only to the extent
that, the performance goals underlying such awards have been
satisfied at the end of the applicable performance period. Any
potential payment related to the accelerated vesting of such
performance based awards will be paid following the completion of
the relevant performance period and the evaluation of whether
the performance goals have been met, and any such payment will
be made to Employee at the same time other participants
receive payment. In addition to the foregoing and subject to the
provisions thereof, Employee shall be eligible to receive Special
Severance as described in subsection 7(g) and Incentive Payments as
described in subsection 7(h).
“Good
Reason” shall mean for purposes of this subsection and
subsection 7(b) a material breach of this Agreement by the Company.
To terminate employment for Good Reason pursuant to this
subsection, Employee must within ninety (90) days after the
occurrence of the material breach giving rise to a termination for
Good Reason notify the Company in writing of the specific elements
of the material breach and that Employee intends to terminate his
employment pursuant to this subsection because of the material
breach. The Company shall have thirty (30) days following its
receipt of such notice (the “Cure Period”) to cure the
material breach and provide Employee with written notice of such
cure. Should the Company not cure the material breach and provide
the written notice to Employee required by this subsection, then
Employee shall have the option to terminate employment immediately
pursuant to this subsection, such option arising on the day
following the expiration of the Cure Period and terminating on the
90 th day following the expiration of
the Cure Period. If Employee chooses not to terminate employment
within the 90-day period following the expiration of the Cure
Period, Employee shall be deemed to have waived his right to
terminate this agreement based upon the material breach
asserted.
(d) Termination Due to Permanent
Disability . Subject to all applicable laws, Employee’s
employment under this Agreement may be terminated immediately by
the Company in the event Employee becomes permanently disabled.
Permanent disability shall be defined as Employee’s failure
to perform or being unable to perform all or substantially all of
Employee’s duties under this Agreement for a continuous
period of more than six (6) months on account of any physical
or mental disability, either as mutually agreed to by the parties
or as reflected in the opinions of three qualified physicians, one
of which has been selected by the Company, one of which has been
selected by Employee, and one of which has been selected by the two
other physicians jointly. In the event of a termination by the
Company due to Employee’s permanent disability, Employee
shall be entitled to (i) any compensation (including Paid Time
Off) accrued and unpaid as of the date of termination;
(ii) severance payments equal to Employee’s then current
base salary at the same rate and on the same schedule as in effect
at the time of termination for a period of six (6) months from
the date of termination; (iii) a lump sum amount equal to
Employee’s then current annual base salary pro rated for
service through the date of termination; (iv) the immediate
vesting of all unvested long-term incentive compensation, whether
in the form of options, restricted stock, restricted stock units,
performance shares, cash units, stock appreciation rights or
otherwise constituted, held by Employee that would have vested had
Employee remained employed pursuant to this Agreement for a period
of six (6) months from the date of such termination;
(v) if Employee makes a timely election for continued health
insurance coverage pursuant to COBRA, then (subject to
Employee’s continued eligibility for COBRA benefits) the
payment of premiums owed for such COBRA insurance benefits for a
period of up to twelve (12) months from the date of
termination; and (vi) no other severance. The Company shall be
entitled to take as an offset against any amounts due pursuant to
subsections (i) and (ii) above, any amounts received by
Employee pursuant to disability or other insurance, or similar
sources, provided by the Company. Performance based awards that may
vest pursuant to this section will not be paid unless, and then
only to the extent that, the performance goals underlying such
awards have been satisfied at the end of the applicable performance
period. Any potential payment related to the accelerated vesting of
such performance based awards will be paid following the completion
of the relevant performance period and the evaluation of
whether the performance goals have been met, and any such
payment will be made to Employee at the same time other
participants receive payment.
(e) Termination by Mutual
Agreement of the Parties . 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.
(f) Pre-Termination Rights .
The Company shall have the right, at its option, to require
Employee to vacate Employee’s office or otherwise remain off
the Company’s premises and to cease any and all activities on
the Company’s behalf without such action constituting a
termination of employment or a breach of this Agreement.
(g) Special Severance
.
(i) Amount in the Event of a
Termination Pursuant to Sections 7(a) or 7(c) . In the event of
a termination pursuant to Sections 7(a) or 7(c) of this Agreement,
Special Severance shall consist of (A) paying to Employee
severance payments at the rate of Employee’s then current
base salary from the date of termination until December 15,
2011 (prorated for any partial years), which payments shall be
payable in equal installments on the same pay schedule as in effect
at the time of termination; (B) if Employee makes a timely
election for continued health insurance coverage pursuant to COBRA,
then subject to Employee’s continued eligibility for such
COBRA and/or CalCOBRA insurance benefits, the payment of premiums
owed for such COBRA and/or CalCOBRA insurance benefits until the
later of December 15, 2011 or one year after the date of
termination; and (C) no other severance.
(ii) Amount in the Event of a
Termination Pursuant to Section 9 . In the event of a
termination pursuant to Section 9 of this Agreement, then
Special Severance shall consist of (A) a total amount equal to
3.0 times Employee’s then current annual base salary, payable
in equal installments on the same pay schedule as in effect at the
time of termination over a period of thirty-six (36) months
from the date of termination; (B) if Employee makes a timely
election for continued health insurance coverage pursuant to COBRA,
then subject to Employee’s continued eligibility for such
COBRA and/or CalCOBRA insurance benefits, the payment of premiums
owed for COBRA and/or CalCOBRA insurance benefits for a period of
thirty-six (36) months from the date of termination; and
(C) no other severance.
(iii) Amount in the Event of a
Subsequent Change in Control . Notwithstanding any other
provisions to the contrary, if a Change in Control (as defined in
Exhibit A) occurs within six (6) months following a
termination of Employee’s employment under this Agreement
pursuant to Sections 7(a) or 7(c), and that Change in Control is
the direct result of discussions or undertakings that were ongoing
as of the date of such termination, then the amount of Special
Severance shall be calculated in accordance with
Section 7(g)(ii).
(iv) Conditions on Receiving
Special Severance . Notwithstanding anything else to the
contrary, it is expressly understood that any obligation of the
Company to pay Special Severance pursuant to this Agreement shall
be subject to (A) Employee’s continued compliance with
the terms and conditions of Sections 8 and 11;
(B) Employee’s continued forbearance from directly,
indirectly or in any other way, disparaging the Company, its
officers or employees, vendors, customers, products or activities,
or otherwise interfering with the Company’s press, public and
media relations; and (C) Employee’s execution and
delivery of a fully effective release in the form attached hereto
as Exhibit B within sixty (60) days after the date of
termination of employment.
(h) Incentive
Payments.
(i) Amount in the Event of a
Termination Pursuant to Sections 7(a) or 7(c) . In the event of
a termination pursuant to Sections 7(a) or 7(c) of this Agreement,
Employee shall be offered the opportunity to receive Incentive
Payments at the rate of Employee’s then current base salary
from the date of termination until December 15, 2011 (prorated
for any partial years), which payments shall be payable in equal
installments on the same pay schedule as in effect at the time of
termination.
(ii) Amount in the Event of a
Termination Pursuant to Section 9 . In the event of a
termination pursuant to Section 9 of this Agreement, Employee
shall be offered the opportunity to receive Incentive Payments in a
total amount equal to 3.0 times Employee’s then current
annual base salary, payable in equal installments on the same pay
schedule as in effect at the time of termination over a period of
thirty-six (36) months from the date of
termination.
(iii) Amount in the Event of a
Subsequent Change in Control . Notwithstanding any other
provisions to the contrary, if a Change in Control (as defined in
Exhibit A) occurs within six (6) months following a
termination of Employee’s employment under this Agreement
pursuant to Sections 7(a) or 7(c), and that Change in Control is
the direct result of discussions or undertakings that were ongoing
as of the date of such termination, then the amount of available
Incentive Payments shall be calculated in accordance with
Section 7(h)(ii).
(iv) Terms and Conditions for
Incentive Payments . Employee may receive Incentive Payments so
long as Employee chooses not to engage (whether as an owner,
employee, agent, consultant, or in any other capacity) in any
business or venture that competes with the business of the Company
or any of its affiliates. If Employee chooses to engage in such
activities, then the Company shall have no obligation to make
further Incentive Payments commencing upon the date which Employee
chooses to do so. For purposes of this Section, Employee shall not
be deemed to “own” an entity if Employee holds less
than 2% beneficial ownership interests of a firm, corporation or
venture.
(v) Sole Consideration .
Employee and the Company agree and acknowledge that the sole and
exclusive consideration for the Incentive Payments is
Employee’s forbearance as described in this subsection 7(h).
In the event that this subsection 7(h) is deemed unenforceable or
invalid for any reason, then the Company will have no obligation to
make Incentive Payments for the period of time during which it has
been deemed unenforceable or invalid. The obligations and duties of
this subsection 7(h) shall be separate and distinct from the other
obligations and duties set forth in this Agreement, and any finding
of invalidity or unenforceability of this subsection 7(h) shall
have no effect upon the validity or invalidity of the other
provisions of this Agreement.
(i) Treatment of Special
Severance and Incentive Payments . Any Special Severance and
Incentive Payments shall be subject to usual and customary employee
payroll practices and all applicable withholding
requirements.
(j) Other . Except for the
amounts specifically provided pursuant to this Section 7,
Employee shall not be entitled to any further compensation, bonus,
damages, restitution, relocation benefits, or other severance
benefits upon termination of employment. The amounts payable to
Employee pursuant to these sections shall not be treated as
damages, but as compensation to which Employee may be 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 pursuant to this Section 7 any
amounts earned by Employee in other employment after termination of
Employee’s 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 7 shall not limit Employee’s
rights under or pursuant to any other agreement or understanding
with the Company regarding 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.
(k) Compliance with
Section 409A . If Employee is a “specified
employee” within the meaning of 409A(a)(2)(B)(i) of the
Internal Revenue Code (the “Code”), any installment
payments by reason of termination will constitute separate
payments for purposes of Section 1.409A-2(b)(2)
of the Treasury
Regulations and thus, to the extent payable within the applicable
2 1 / 2 month period, will be payable
pursuant to the “short-term deferral” rule set forth in
Section 1.409A-1(b)(4) of the Treasury Regulations. It is
intended that if Employee is a “specified employee”
within the meaning of Section 409A(a)(2)(B)(i) of the Code at
the time of such separation from service, the foregoing provision
shall result in compliance with the requirements of
Section 409A(a)(2)(B)(i) of the Code since payments to
Employee will either be payable pursuant to the “short-term
deferral” rule set forth in Section 1.409A-1(b)(4) of
the Treasury Regulations or will not be paid until at least six
(6) months after separation from service.
(l) Forfeiture . If the
Company is required to prepare an accounting restatement due to
material noncompliance of the Company with any financial reporting
requirement under the United States securities laws as a result of
the intentional misconduct or gross negligence of the Employee, or
if the Employee is one of the persons subject to automatic
forfeiture under Section 304 of the Sarbanes-Oxley Act of
2002, then, in addition to any penalty prescribed by
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