EXHIBIT 10.61
CALLAWAY GOLF
COMPANY
OFFICER EMPLOYMENT
AGREEMENT
This Officer Employment Agreement
(“Agreement”) is entered into by and between
Callaway Golf Company , a Delaware corporation, (the
“Company”) and Bradley J. Holiday
(“Employee”).
1. TERM . The Company hereby
employs Employee and Employee hereby accepts employment pursuant to
the terms and provisions of this Agreement for the period
commencing on the date that this Agreement is fully executed and
terminating March 31, 2007, unless this Agreement is earlier
terminated as hereinafter provided. If Employee is still employed
upon expiration of this Agreement, Employee’s status shall be
one of at-will employment. 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. TITLE . Employee shall
serve as Senior Executive Vice President and Chief Financial
Officer, of the Company. Employee’s duties shall be the usual
and customary duties of the offices in which Employee serves.
Employee shall report to the Chief Executive Officer or such other
person as the Chief Executive Officer shall designate from time to
time. The Board of Directors and/or the Chief Executive Officer of
the Company may change employee’s title, position and/or
duties at any time.
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, its Chief
Executive Officer or their designee. 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 and involvement with appropriate community or
charitable activities, or 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 .
(a) Base Salary . The Company
agrees to pay Employee a base salary at the rate of $500,000 per
year (prorated for any partial years of employment), payable in
equal installments on regularly scheduled Company pay
dates.
(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.
(c) Long Term Incentive . The
Company shall provide Employee an opportunity to participate in the
Company’s applicable long term incentive plan as it may or
may not exist from time to time.
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 and its Chief Executive Officer.
(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 three (3) times
Employee’s base salary, not to exceed a maximum of
$1,500,000.00 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.
(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 and not
Employee.
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.
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 OF EMPLOYMENT
.
(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 accrued and unpaid as of the date of
termination; (ii)
2
a cash payment equal to
Employee’s target bonus for the current year pro-rated over
the portion of the year actually employed; and (iii) the
immediate vesting of all unvested equity-based incentive awards
held by Employee as of the date of termination. 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 accrued and unpaid as of the date of termination; and
(ii) no other severance. “Substantial cause” shall
mean Employee’s (i) failure to substantially perform
Employee’s duties; (ii) material breach of this
Agreement; (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 .
(c) Termination by Employee for
Good Reason or Non-Renewal .
(i) 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 accrued and unpaid as of the date of termination;
(ii) a cash payment equal to Employee’s target bonus for
the current year pro-rated over the portion of the year actually
employed; and (iii) the immediate vesting of all unvested
equity-based incentive awards held by Employee as of the date of
termination. 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
a material breach of this Agreement by the Company.
(ii) Should this Agreement expire
pursuant to its terms and Employee becomes an at-will employee
pursuant to Section 1, and provided further that the Company
has not offered Employee a new employment agreement on
substantially the same or better terms and has not otherwise
terminated Employee’s employment for substantial cause or due
to permanent disability, then Employee shall have the option for
forty-five (45) days following the expiration of this
Agreement to terminate Employee’s employment due to the
Company’s non-renewal. In the event of a termination of
employment by Employee for non-renewal, Employee shall be entitled
to receive any compensation accrued and unpaid as of the date of
termination; a cash payment equal to Employee’s target bonus
for the current year pro-rated over the portion of the year
actually employed; and the immediate vesting of all unvested
equity-based incentive awards held by Employee as of the date of
termination. 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). It is expressly understood that if
Employee and the Company enter into a new written employment
agreement, or if the Company offers Employee a new written
employment agreement on substantially the same or better terms,
then Employee shall have no right or option to terminate employment
for non-renewal of this Agreement. It is further understood that
any termination of Employee’s employment by the Company
during any such forty-five day period for reasons other than
substantial cause or permanent disability shall be deemed to be a
termination by Employee for non-renewal pursuant to this
section.
(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
3
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 (3) 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
accrued and unpaid as of the date of termination; (ii) a cash
payment equal to Employee’s target bonus for the current year
pro-rated over the portion of the year actually employed;
(iii) 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; (iv) the
immediate vesting of all unvested equity-based incentive awards
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) the
payment of premiums owed for COBRA insurance benefits for a period
of 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
(iii) and (v) above, any amounts received by Employee
pursuant to disability or other insurance, or similar sources,
provided by the Company.
(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 Event of a
Termination Pursuant to Section 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 total amount equal
to 0.750 times the sum of Employee’s most recent annual base
salary and annual target bonus, payable in equal installments on
the same pay schedule as in effect at the time of termination over
a period of eighteen (18) months from the date 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, then
Special Severance shall consist of a total amount equal to 1.495
times the sum of the Employee’s most recent annual base
salary and annual target bonus, 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. All such Special Severance shall be subject to the
provisions of Section 9(c).
(iii) Additional Special
Severance . In addition to the Special Severance referenced
above, Employee shall be entitled to the payment of premiums owed
for COBRA and/or CalCOBRA insurance benefits and the continuation
of the tax and estate planning service benefit (on the
then-existing terms and conditions) through the period during which
Employee is receiving Special Severance. In addition, the Company
shall offer to provide, at Company expense, up to one (1) year
of outplacement services through a professional outplacement firm
of the Company’s choosing.
(iv) Conditions on Receiving
Special Severance and/or Additional Special Severance .
Notwithstanding anything else to the contrary, it is expressly
understood that any obligation of the Company to pay Special
Severance and/or Additional Special Severance pursuant
to
4
this Agreement shall be subject to
Employee’s continued compliance with the terms and conditions
of Sections 8 and 11; 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 the execution by Employee,
prior to receiving any Special Severance or Additional Special
Severance, of a release in the form attached hereto as Exhibit
B.
(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 in a total amount equal to 0.750 times the sum of
Employee’s most recent annual base salary and target bonus,
payable in equal installments on the same pay schedule in effect at
the time of termination over a period of eighteen (18) months
from the date 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 1.495 times the sum of Employee’s most
recent annual base salary and annual target bonus, 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. All such Incentive Payments shall be subject
to the provisions of Section 9(c).
(iii) 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.
(iv) 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 subsection 7(h)(iii)
above. In the event that subsection 7(h)(iii) 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, Additional Special Severance and Incentive Payments
. Any Special Severance, Additional 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
5
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) Treatment of Special
Severance and Incentive Payments; Catch-Up Payments . Any
Special Severance and Incentive Payments shall be subject to usual
and customary employee payroll practices and all applicable
withholding requirements. If required pursuant to Section 409A
of the Internal Revenue Code of 1986, or any regulations or other
binding guidance promulgated thereunder, to delay the payment of
any Special Severance or Incentive Payments for six (6) months
following termination, then on the day following the end of such
six-month period the Company shall make a Catch-Up Payment equal to
the total amount of such payments that would have been made during
the six-month period but for the application of Section 409A
plus interest calculated at the one-year Treasury Bill
rate.
(l) Forfeiture . If the
Company is required to prepare an accounting restatement due to
material noncompliance of the Company, as a result of the
intentional misconduct or gross negligence of the Employee, with
any financial reporting requirement under the United States
securities laws, 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 section
304, the Employee shall forfeit all of the following: any bonus
paid in the twelve (12) month period following the date of the
filing of the financial document embodying the restatement, any
gain on the sale of Company securities during that same period, the
right to receive Special Severance and Incentive Payments, and any
unvested and/or unexercised equity-based incentive
awards.
8. OTHER EMPLOYEE DUTIES AND
OBLIGATIONS .
In addition to any other duties and
obligations set forth in this Agreement, Employee shall be
obligated as follows:
(a) Compliance . 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, including but not limited to the
Company’s Code of Conduct.
(b) Trade Secrets and
Confidential Information .
(i) As used in this Agreement, the
term “Trade Secrets and Confidential Information” means
information, whether written or oral, not generally available to
the public, regardless of whether it is suitable to be patented,
copyrighted and/or trademarked, which is received from the Company
and/or its affiliates, either directly or indirectly, including but
not limited to concepts, ideas, plans and strategies involved in
the Company’s and/or its affiliates’ products, the
processes, formulae and techniques disclosed by the Company and/or
its affiliates to Employee or observed by Employee, the designs,
inventions and innovations and related plans, strategies and
applications which Employee develops during the term of this
Agreement in connection with the work performed by Employee for the
Company and/or its affiliates; and third party information which
the Company and/or its affiliates has/have agreed to keep
confidential.
(ii) While employed by the Company,
Employee will have access to and become fami
