EXHIBIT 10.24
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Trust Agreement for the
Callaway Golf Company
Executive Deferred Compensation Plan
CALLAWAY GOLF COMPANY
0000 XXXXXXXXXX XXXX
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Trust Agreement for the
Callaway Golf Company Executive Deferred Compensation Plan
TRUST AGREEMENT
TABLE OF CONTENTS
ARTICLE PAGE
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ARTICLE 1 Name, Intentions, Irrevocability, Deposit and Definitions................................ 1
1.1 Name..................................................................................... 1
1.2 Intentions............................................................................... 1
1.3 Irrevocability; Creditor Claims.......................................................... 1
1.4 Initial Deposit.......................................................................... 2
1.5 Additional Definitions................................................................... 2
1.6 Grantor Trust............................................................................ 3
ARTICLE 2 General Administration................................................................... 3
2.1 Committee Directions and Administration Before Change in Control......................... 3
2.2 Administration Upon Change in Control.................................................... 4
2.3 Contributions............................................................................ 4
2.4 Trust Fund............................................................................... 4
2.5 Distribution of Excess Trust Fund to Employers........................................... 4
ARTICLE 3 Powers and Duties of Trustee............................................................. 5
3.1 Investment Directions.................................................................... 5
3.2 Investment Upon Change In Control........................................................ 5
3.3 Management of Investments................................................................ 5
3.4 Duty of Care............................................................................. 7
3.5 Securities............................................................................... 8
3.6 Substitution............................................................................. 8
3.7 Distributions............................................................................ 8
3.8 Trustee Responsibility Regarding Payments on Insolvency.................................. 11
3.9 Costs of Administration.................................................................. 13
3.10 Trustee Compensation and Expenses........................................................ 13
3.11 Professional Advice...................................................................... 13
3.12 Payment on Court Order................................................................... 13
3.13 Protective Provisions.................................................................... 14
3.14 Indemnifications......................................................................... 14
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Trust Agreement for the
Callaway Golf Company Executive Deferred Compensation Plan
ARTICLE 4 Insurance Contracts...................................................................... 15
4.1 Types of Contracts....................................................................... 15
4.2 Ownership................................................................................ 15
4.3 Restrictions on Trustee's Rights......................................................... 15
ARTICLE 5 Trustee's Accounts....................................................................... 16
5.1 Records.................................................................................. 16
5.2 Annual Accounting; Final Accounting...................................................... 16
5.3 Valuation................................................................................ 16
5.4 Delegation of Duties..................................................................... 17
ARTICLE 6 Resignation or Removal of Trustee........................................................ 17
6.1 Resignation; Removal..................................................................... 17
6.2 Successor Trustee........................................................................ 17
6.3 Settlement of Accounts................................................................... 18
ARTICLE 7 Controversies, Legal Actions and Counsel................................................. 18
7.1 Controversy.............................................................................. 18
7.2 Joinder of Parties....................................................................... 18
ARTICLE 8 Insurers................................................................................. 18
8.1 Insurer Not a Party...................................................................... 18
8.2 Authority of Trustee..................................................................... 18
8.3 Contract Ownership....................................................................... 19
8.4 Limitation of Liability.................................................................. 19
8.5 Change of Trustee........................................................................ 19
ARTICLE 9 Amendment and Termination................................................................ 19
9.1 Amendment................................................................................ 19
9.2 Final Termination........................................................................ 20
ARTICLE 10 Miscellaneous............................................................................ 20
10.1 Directions Following Change in Control................................................... 20
10.2 Taxes.................................................................................... 20
10.3 Third Persons............................................................................ 21
10.4 Nonassignability; Nonalienation.......................................................... 21
10.5 The Plan................................................................................. 21
10.6 Applicable Law........................................................................... 21
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Trust Agreement for the
Callaway Golf Company Executive Deferred Compensation Plan
10.7 Notices and Directions................................................................... 21
10.8 Successors and Assigns................................................................... 21
10.9 Gender and Number........................................................................ 21
10.10 Headings................................................................................. 22
10.11 Counterparts............................................................................. 22
10.12 Beneficial Interest...................................................................... 22
10.13 The Trust and Plan....................................................................... 22
10.14 Effective Date........................................................................... 22
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Trust Agreement for the
Callaway Golf Company Executive Deferred Compensation Plan
TRUST AGREEMENT
FOR THE
CALLAWAY GOLF COMPANY
EXECUTIVE DEFERRED COMPENSATION PLAN
THIS TRUST AGREEMENT ("Trust Agreement") is made and entered into as
of May 6, 2002, between Callaway Golf Company, Inc., a Delaware corporation (the
"Company"), and U.S. Trust Company, N. A. (the "Trustee"), to evidence the trust
(the "Trust") to be established, pursuant to the Callaway Golf Company Executive
Deferred Compensation Plan (the "Plan") that requires the establishment of a
trust, for the benefit of a select group of management, highly compensated
employees and/or Directors who contribute materially to the continued growth,
development and business success of the Company and those subsidiaries of the
Company, if any, that participate in the Plan (collectively, "Subsidiaries," or
singularly, "Subsidiary").
ARTICLE 1
NAME, INTENTIONS, IRREVOCABILITY,
DEPOSIT AND DEFINITIONS
1.1 NAME. The name of the Trust created by this Agreement (the "Trust") shall
be:
TRUST FOR THE CALLAWAY GOLF COMPANY
EXECUTIVE DEFERRED COMPENSATION PLAN
1.2 INTENTIONS. The Company wishes to establish the Trust and to contribute to
the Trust assets that shall be held therein, subject to the claims of the
Company's and the Subsidiaries' creditors in the event of their Insolvency
(as defined below) until paid to Participants and their Beneficiaries in
such manner and at such times as specified in the Plan or until the Trust
is terminated as provided herein. It is the intention of the parties that
this Trust shall constitute an unfunded arrangement and shall not affect
the status of the Plan as an unfunded plan maintained for the purpose of
providing supplemental compensation for a select group of management,
highly compensated employees and/or Directors for purposes of Title I of
ERISA (as defined below). In addition, it is the intention of the Company
and the Subsidiaries to make contributions to the Trust to provide
themselves with a source of funds to assist them in the meeting of their
liabilities under the Plan.
1.3 IRREVOCABILITY; CREDITOR CLAIMS. The Trust hereby established shall be
irrevocable. Except as otherwise provided in Sections 2.5 and 9.2, the
principal of the Trust, and any earnings thereon, shall be held separate
and apart from other funds of the Company and the Subsidiaries and shall
be used exclusively for the uses and purposes of the Participants and
their Beneficiaries and the general creditors of the Company and the
Subsidiaries as herein set forth and as provided in the
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Trust Agreement for the
Callaway Golf Company Executive Deferred Compensation Plan
Plan. The Participants and their Beneficiaries shall have no preferred
claim on, or any beneficial ownership interest in, any assets of the
Trust. Any rights created under the Plan and this Trust Agreement shall be
mere unsecured contractual rights of the Participants and their
Beneficiaries against the Company and the Subsidiaries. Any assets held by
the Trust will be subject to the claims of the Company's and the
Subsidiaries' general creditors under federal and state law in the event
of Insolvency as provided in Section 3.8.
1.4 INITIAL DEPOSIT. The Company hereby deposits with the Trustee in trust
$100, which shall become the principal of the Trust to be held,
administered and disposed of by the Trustee as provided in this Trust
Agreement.
1.5 ADDITIONAL DEFINITIONS. In addition to the definitions set forth above,
for purposes hereof, unless otherwise clearly apparent from the context,
the following terms have the following indicated meanings:
(a) "Beneficiary" shall mean one or more persons, trusts, estates or
other entities, designated in accordance with a Plan, that are
entitled to receive benefits under a Plan upon the death of a
Participant.
(b) "Board" shall mean the board of directors of the Company.
(c) "Change in Control" shall having the meaning ascribed in the
applicable Plan.
(d) "Committee" shall mean the administrative committee appointed by the
Board or its designees to administer this Trust.
(e) "Director" shall mean any member of the board of directors of the
Company or any Subsidiary.
(f) "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as it may be amended from time to time.
(g) "Insolvent" shall have the meaning set forth in Section 3.8(a)
below.
(h) "Insolvent Entity" shall have the meaning set forth in Section
3.8(a) below.
(i) "IRS" shall mean the Internal Revenue Service.
(j) "Participant" shall mean a person who is a participant in the Plan
in accordance with its terms and conditions.
(k) "Payment Schedule" shall have the meaning set forth in Section
3.7(b) below.
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Trust Agreement for the
Callaway Golf Company Executive Deferred Compensation Plan
(l) "Plan" shall mean the Callaway Golf Company Executive Deferred
Compensation Plan.
(m) "Plan Year" shall mean the Plan Year chosen for this Trust Agreement
by the Board.
(n) "Trust Fund" shall mean the assets held by the Trustee pursuant to
the terms of this Trust Agreement and for the purposes of the Plan.
1.6 GRANTOR TRUST. The Trust is intended to be a "grantor trust," of which the
Company and the Subsidiaries are the grantors, within the meaning of
subpart E, part I, subchapter J, chapter 1, subtitle A of the Internal
Revenue Code of 1986, as amended, and the Trust shall be construed
accordingly.
ARTICLE 2
GENERAL ADMINISTRATION
2.1 COMMITTEE DIRECTIONS AND ADMINISTRATION BEFORE CHANGE IN CONTROL. Until a
Change in Control has occurred, this Section 2.1 shall be effective and
the Committee shall direct the Trustee as to the administration of the
Trust in accordance with the following provisions:
(a) The Committee members shall be identified to the Trustee by a
written notice from the Company's Chief Executive Officer or Chief
Financial Officer appointing the Committee. In the absence thereof,
the Board shall be the Committee. Persons authorized to give
directions to the Trustee on behalf of the Committee shall be
identified to the Trustee by written notice from the Committee, and
such notice shall contain specimens of the authorized signatures.
The Trustee shall be entitled to rely on such written notice as
evidence of the identity and authority of the persons appointed
until a written cancellation of the appointment, or the written
appointment of a successor, is received by the Trustee.
(b) Directions by the Committee, or its delegate, to the Trustee shall
be in writing and signed by the Committee or persons authorized by
the Committee, or may be made by such other method as is acceptable
to the Trustee.
(c) The Trustee may conclusively rely upon directions from the Committee
in taking any action with respect to this Trust Agreement, including
the making of payments from the Trust Fund and the investment of the
Trust Fund pursuant to this Trust Agreement. The Trustee shall have
no liability for actions taken, or for failure to act, on the
direction of the Committee. The Trustee shall have no liability for
failure to act in the absence of directions from the Committee where
the Committee's directions are required by this Trust Agreement.
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Trust Agreement for the
Callaway Golf Company Executive Deferred Compensation Plan
(d) The Trustee may request instructions from the Committee and shall
have no duty to act or liability for failure to act if such
instructions are not forthcoming from the Committee. If requested
instructions are not received within a reasonable time, the Trustee
may, but is under no duty to, act on its own discretion to carry out
the provisions of this Trust Agreement in accordance with this Trust
Agreement and the Plan.
2.2 ADMINISTRATION UPON CHANGE IN CONTROL. In the event of a Change in
Control, the authority of the Committee to administer the Trust and direct
the Trustee, as set forth in Section 2.1 above, shall cease, and the
Trustee shall have complete authority to administer the Trust.
2.3 CONTRIBUTIONS. Except as provided in any Plan, the Company and the
Subsidiaries, in their sole discretion, may at any time, or from time to
time, make additional deposits of cash or other property in trust with the
Trustee to augment the principal to be held, administered and disposed of
by the Trustee as provided in this Trust Agreement. Neither the Trustee
nor any Participant or Beneficiary shall have any right to compel such
additional deposits. The Trustee shall have no duty to collect or enforce
payment to it of any contributions or to require that any contributions be
made, and shall have no duty to compute any amount to be paid to it nor to
determine whether amounts paid comply with the terms of the Plan;
provided, however, that following a Change in Control, the Trustee shall
have the right, in its sole and absolute discretion, to compel a
contribution to the Trust from the Company and the Subsidiaries to make-up
for any shortfall between (i) the anticipated benefit obligations and
administrative expenses that are to be paid under the Plan and Trust and
(ii) the assets of the Trust Fund.
2.4 TRUST FUND. The contributions received by the Trustee from the Company and
the Subsidiaries shall be held and administered pursuant to the terms of
this Trust Agreement as a single fund without distinction between income
and principal and without liability for the payment of interest thereon
except as expressly provided in this Trust Agreement. During the term of
this Trust, all income received by the Trust, net of expenses and taxes,
shall be accumulated and reinvested.
2.5 DISTRIBUTION OF EXCESS TRUST FUND TO EMPLOYERS. Prior to a Change in
Control, in the event that the Committee determines that the Trust Fund
exceeds 125 percent of the anticipated benefit obligations and
administrative expenses that are to be paid under the Plan, the Trustee,
at the direction of the Committee shall distribute to the Company and the
Subsidiaries such excess portion of the Trust Fund.
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Trust Agreement for the
Callaway Golf Company Executive Deferred Compensation Plan
ARTICLE 3
POWERS AND DUTIES OF TRUSTEE
3.1 INVESTMENT DIRECTIONS. Except as provided in this Section and Section 3.2
below, the Committee shall provide the Trustee with all investment
instructions. The Trustee shall neither affect nor change investments of
the Trust Fund, except as directed in writing by the Committee or as
provided in Section 3.2 following a Change in Control, and shall have no
right, duty or responsibility to recommend investments or investment
changes; provided, that the Trustee may, pending the Committee's
investment direction or pending disbursement of cash from the Trust,
deposit cash on hand from time to time in any bank savings account,
certificate of deposit, or other instrument creating a deposit liability
for a bank, including the Trustee's own banking department, or those of
its affiliates if the Trustee is a bank, without such prior direction.
3.2 INVESTMENT UPON CHANGE IN CONTROL. In the event of a Change in Control,
the authority of the Committee to direct investments of the Trust Fund
shall cease and the Trustee shall have complete authority to direct
investments of the Trust Fund. The person who was the Chief Executive
Officer of the Company immediately prior to the Change in Control or, if
not available or willing to assume such responsibility, the Company's next
highest ranking officer prior to the Change in Control (the "Ex-CEO")
shall notify the Trustee in writing when a Change in Control has occurred.
The Trustee has no duty to inquire whether a Change in Control has
occurred and may rely on the Ex-CEO's notification of a Change in Control;
provided, however, that if any officer, former officer, director, or
former director of the Company or any Subsidiary, or any Participant
notifies the Trustee that there has been or there may be a Change in
Control, the Trustee shall have the duty to satisfy itself as to whether a
Change in Control has in fact occurred. The Company and the Subsidiaries
shall indemnify and hold harmless the Trustee for any damages or costs
(including attorneys' fees) that may be incurred because of reliance on
the former chief executive officer's notice or lack thereof.
3.3 MANAGEMENT OF INVESTMENTS. Subject to Section 3.1 above, the Trustee shall
have, without exclusion, all powers conferred on the Trustee by applicable
law, unless expressly provided otherwise herein, and all rights associated
with assets of the Trust shall be exercised by the Trustee or the person
designated by the Trustee, and shall in no event be exercisable by or rest
with Participants or their Beneficiaries. The Trustee shall have full
power and authority to invest and reinvest the Trust Fund in any
investment permitted by law, exercising the judgment and care that persons
of prudence, discretion and intelligence would exercise under the
circumstances then prevailing, considering the probable income and safety
of their capital, including, without limiting the generality of the
foregoing, the power:
(a) To invest and reinvest the Trust Fund, together with the income
therefrom, in common stock, preferred stock, convertible preferred
stock, mutual funds, bonds, debentures, convertible debentures and
bonds, mortgages, notes, time certificates of deposit,
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Trust Agreement for the
Callaway Golf Company Executive Deferred Compensation Plan
commercial paper and other evidences of indebtedness (including
those issued by the Trustee or any of its affiliates), other
securities, policies of life insurance, annuity contracts, options
to buy or sell securities or other assets, and other property of any
kind (personal, real, or mixed, and tangible or intangible);
provided, however, that in no event may the Trustee invest in
securities (including stock or rights to acquire stock) or
obligations issued by the Company or the Subsidiaries, other than a
de minimis amount held in common investment vehicles in which the
Trustee invests;
(b) To deposit or invest all or any part of the assets of the Trust Fund
in savings accounts or certificates of deposit or other deposits
which bear a reasonable interest rate in a bank, including the
commercial department of the Trustee, if such bank is supervised by
the United States or any State;
(c) To hold, manage, improve, repair and control all property, real or
personal, forming part of the Trust Fund and to sell, convey,
transfer, exchange, partition, lease for any term, even extending
beyond the duration of this Trust, and otherwise dispose of the same
from time to time in such manner, for such consideration, and upon
such terms and conditions as the Trustee shall determine;
(d) To have, respecting securities, all the rights, powers and
privileges of an owner, including the power to give proxies, pay
assessments and other sums deemed by the Trustee to be necessary for
the protection of the Trust Fund, to vote any corporate stock either
in person or by proxy, with or without power of substitution, for
any purpose; to participate in voting trusts, pooling agreements,
foreclosures, reorganizations, consolidations, mergers and
liquidations, and in connection therewith to deposit securities with
and transfer title to any protective or other committee under such
terms as the Trustee may deem advisable; to exercise or sell stock
subscriptions or conversion rights; and, regardless of any
limitation elsewhere in this instrument relative to investment by
the Trustee, to accept and retain as an investment any securities or
other property received through the exercise of any of the foregoing
powers;
(e) To hold in cash, without liability for interest, such portion of the
Trust Fund which, in its discretion, shall be reasonable under the
circumstances, pending investments, or payment of expenses, or the
distribution of benefits;
(f) To employ such agents including custodians and counsel as may be
reasonably necessary and to pay them reasonable compensation; to
settle, compromise or abandon all claims and demands in favor of or
against the Trust assets;
(g) To cause title to property of the Trust to be issued, held or
registered in the individual name of the Trustee, or in the name of
its nominee(s) or agents, or in such form that title will pass by
delivery;
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Trust Agreement for the
Callaway Golf Company Executive Deferred Compensation Plan
(h) To exercise all of the further rights, powers, options and
privileges granted, provided for, or vested in trustees generally
under the laws of the State whose laws are applicable to this Trust
Agreement, as provided in Section 10.6 below, so that the powers
conferred upon the Trustee herein shall not be in limitation of any
authority conferred by law, but shall be in addition thereto;
(i) To borrow money from any source (including the Trustee) and to
execute promissory notes, mortgages or other obligations and to
pledge or mortgage any Trust assets as security;
(j) To institute, compromise and defend actions and proceedings; to pay
or contest any claim; to settle a claim by or against the Trustee by
compromise, arbitration, or otherwise; to release, in whole or in
part, any claim belonging to the Trust to the extent that the claim
is uncollectible;
(k) To use securities depositories or custodians and to allow such
securities as may be held by a depository or custodian to be
registered in the name of such depository or its nominee or in the
name of such custodian or its nominee;
(l) To invest the Trust Fund from time to time in one or more investment
funds, which funds shall be registered under the Investment Company
Act of 1940; and
(m) To do all other acts necessary or desirable for the proper
administration of the Trust Fund, as if the Trustee were the
absolute owner thereof.
Nothing in this section shall be construed to mean the Trustee
assumes any responsibility for the performance of any investment
made by the Trustee in its capacity as trustee under the operations
of this Trust Agreement; provided that the foregoing shall not
relieve the Trustee from liability for breaching its duty of care in
making an investment selection hereunder (other than at the
direction of the Committee). Notwithstanding any powers granted to
the Trustee pursuant to this Trust Agreement or to applicable law,
the Trustee shall not have any power that could give this Trust the
objective of carrying on a business and dividing the gains
therefrom, within the meaning of section 301.7701-2 of the Procedure
and Administrative Regulations promulgated pursuant to the Internal
Revenue Code of 1986, as amended.
3.4 DUTY OF CARE. The Trustee shall perform its duties hereunder with the
care, skill, prudence and diligence under the circumstances then
prevailing that a prudent person acting in like capacity and familiar with
such matters would use in the conduct of an enterprise of a like character
and with like aims; provided, however, that the Trustee shall incur no
liability to any person for any action taken pursuant to a direction given
by the Committee prior to a Change in Control which is contemplated by,
and in conformity with, the terms of the Plan or this Trust.
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Trust Agreement for the
Callaway Golf Company Executive Deferred Compensation Plan
3.5 SECURITIES. Voting or other rights in securities shall be exercised by the
person or entity responsible for directing such investments, and the
Trustee shall have no duty to exercise voting or proxy or other rights
relating to any investment managed or directed by the Committee. If any
foreign securities are purchased pursuant to the direction of the
Committee, it shall be the responsibility of the person or entity
responsible for directing such investments to advise the Trustee in
writing of any laws or regulations, either foreign or domestic, that apply
to such foreign securities or to the receipt of dividends or interest on
such securities.
3.6 SUBSTITUTION. Notwithstanding any provision of any Plan or the Trust to
the contrary, the Company and/or any Subsidiary shall at all times have
the power to reacquire the Trust Fund by substituting readily marketable
securities (other than stock, a debt obligation or other security issued
by the Company or any Subsidiary) and/or cash of an equivalent value and
such other property shall, following such substitution, constitute the
Trust Fund. Notwithstanding the foregoing, after a Change in Control, the
Trustee, the Company and/or any Subsidiary shall have no power to
substitute readily marketable securities for the Trust Fund.
3.7 DISTRIBUTIONS.
(a) The establishment of the Trust and the payment or delivery to the
Trustee of money or other property shall not vest in any Participant
or Beneficiary any right, title, or interest in and to any assets of
the Trust. To the extent that any Participant or Beneficiary
acquires the right to receive payments under any of the Plan, such
right shall be no greater than the right of an unsecured general
creditor of the Company and the Subsidiaries and such Participant or
Beneficiary shall have only the unsecured promise of the Company and
the Subsidiaries that such payments shall be made.
(b) Concurrent with the establishment of this Trust, the Company shall
deliver to the Trustee a schedule (the "Payment Schedule") that
indicates the amounts payable in respect of each Participant (and
his or her Beneficiaries), provides a formula or formulas or other
instructions acceptable to the Trustee for determining the amounts
so payable, specifies the form in which such amount is to be paid
(as provided for or available under the Plan), and the time of
commencement for payment of such amounts. The Payment Schedule shall
be updated annually and upon a Change in Control and from time to
time as is necessary thereafter. Except as otherwise provided
herein, prior to a Change in Control, the Trustee shall make
payments to the Participants and their Beneficiaries in accordance
with such Payment Schedule. After a Change in Control, the Trustee
shall make payments in accordance with the payment schedules
provided by the Administrator (as defined in Section 3.7(i)). The
Trustee, at the direction of the Committee or, after a Change in
Control, on its own volition, may make any distribution required to
be made by it hereunder by delivering:
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Trust Agreement for the
Callaway Golf Company Executive Deferred Compensation Plan
(i) Its check payable to the person to whom such distribution is
to be made, to the person, or, if prior to a Change in
Control, to the Company for redelivery to such person;
provided that before a Change in Control, the Committee may
direct the Trustee to deliver one or more lump sum checks
payable to the Company, and the Company shall prepare and
deliver individual checks for each Participant or Beneficiary;
or
(ii) Its check payable to an insurer for the benefit of such
person, to the insurer, or, if prior to a Change in Control,
to the Company for redelivery to the insurer; or
(iii) Contracts held on the life of the Participant to whom or with
respect to whom the distribution is being made, to the
Participant or Beneficiary, or, if prior to a Change in
Control, to the Company for redelivery to the person to whom
such distribution is to be made; or
(iv) If a distribution is being made, in whole or in part, of other
assets, assignments or other appropriate documents or
certificates necessary to effect a transfer of title, to the
Participant or Beneficiary, or, if prior to a Change in
Control, to the Company for redelivery to such person.
Notwithstanding the foregoing, if directed by the Committee
and upon receipt of such documentation satisfactory to the
Trustee, the Trustee shall pay all or part of a distribution
to which a Participant or Beneficiary would otherwise be
entitled under the terms of a Plan to the Company or
Subsidiary in satisfaction of amounts validly owed by the
Participant to the Company or Subsidiary for which the Company
or Subsidiary previously requested but did not receive
payment.
(c) If the principal of the Trust, and any earnings thereon, are not
sufficient to make payments of benefits in accordance with the terms
of the Plan, the Company and the Subsidiaries shall make the balance
of each such payment as it falls due. The Trustee shall notify the
Company and the Subsidiaries when principal and earnings are not
sufficient. To the extent that the total Trust assets available to
make benefit payments to Participants or Beneficiaries who are
currently entitled to payment are less than the liability of the
Plan, the Trustee shall make benefit payments proportionate to the
ratio of assets available to pay benefits to the total values of the
liabilities.
(d) The Company and the Subsidiaries may make payment of benefits
directly to Participants or their Beneficiaries as they become due
under the terms of the Plan. The Company and the Subsidiaries shall
notify the Trustee of their decisions to make payment of benefits
directly prior to the time amounts are payable to Participants or
their Beneficiaries.
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Trust Agreement for the
Callaway Golf Company Executive Deferred Compensation Plan
(e) Notwithstanding anything contained in this Trust Agreement to the
contrary, if at any time the Trust is finally determined by the IRS
not to be a "grantor trust" with the result that the income of the
Trust Fund is not treated as income of the Company or the
Subsidiaries pursuant to Sections 671 through 679 of the Internal
Revenue Code of 1986, as amended, or if a federal income tax is
finally determined by the IRS to be payable by one or more
Participants or Beneficiaries with respect to any interest in the
Plan or the Trust Fund prior to payment of such interest to any such
Participant or Beneficiary, the Trustee shall, upon direction by the
Committee (or upon application to the Trustee by a Participant or
Beneficiary after a Change in Control), distribute such share in a
lump sum to each Participant or Beneficiary entitled thereto,
regardless of whether such Participant's employment has terminated
(provided such Participant has a vested interest in his or her
accrued benefits under the Plan) and regardless of form and time of
payments specified in or pursuant to the Plan. Any remaining assets
(less any expenses or costs due under Sections 3.9 and 3.10 of this
Trust Agreement) shall then be paid by the Trustee to the Company
and the Subsidiaries in such amounts, and in the manner instructed
by the Committee. If the value of the Trust Fund is less than the
benefit obligations under the Plan, the foregoing described
distributions will be limited to a Participant's share of the Trust
Fund, determined by allocating assets to the Participant based on
the ratio of the Participant's benefit obligations under the Plan to
the total benefit obligations under the Plan. Prior to a Change in
Control, the Trustee shall rely solely on the directions of the
Committee with respect to the occurrence of the foregoing events and
the resulting distributions to be made, and the Trustee shall not be
responsible for any failure to act in the absence of such direction.
(f) The Trustee shall make provision for the reporting and withholding
of any federal, state or local taxes that may be required to be
withheld with respect to the payment of benefits pursuant to the
terms of the Plan and shall pay amounts withheld to the appropriate
taxing authorities or determine that such amounts have been
reported, withheld and paid by the Company and the Subsidiaries.
(g) Prior to a Change in Control, payments by the Trustee shall be
delivered or mailed to addresses supplied by the Committee and the
Trustee's obligation to make such payments shall be satisfied upon
such delivery or mailing. Prior to a Change in Control, the Trustee
shall have no obligation to determine the identity of persons
entitled to benefits or their mailing addresses. After a Change in
Control, the Trustee shall have such obligations.
(h) Prior to a Change in Control, the entitlement of a Participant or
his or her Beneficiaries to benefits under the Plan shall be
determined by the Company and the Subsidiaries or such party as they
shall designate under the Plan, and any claim for such benefits
shall be considered and reviewed under the procedures set out in the
Plan.
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Trust Agreement for the
Callaway Golf Company Executive Deferred Compensation Plan
(i) Notwithstanding Section 3.7(h), upon and after the occurrence of a
Change in Control, the Plan shall be administered by an independent
third party (the "Administrator") selected by the Trustee and
approved by the Ex-CEO. The Administrator shall have the
discretionary power to determine all questions arising in connection
with the administration of the Plan and the interpretation of the
Plan and Trust including, but not limited to benefit entitlement
determinations; provided, however, upon and after the occurrence of
a Change in Control, the Administrator shall have no power to direct
the investment of Plan or Trust assets or select any investment
manager or custodial firm for the Plan or Trust. Upon and after the
occurrence of a Change in Control, the Company must: (1) pay all
reasonable administrative expenses and fees of the Administrator;
(2) indemnify the Administrator against any costs, expenses and
liabilities including, without limitation, attorney's fees and
expenses arising in connection with the performance of the
Administrator hereunder, except with respect to matters resulting
from the gross negligence or willful misconduct of the Administrator
or its employees or agents; and (3) supply full and timely
information to the Administrator or all matters relating to the
Plan, the Trust, the Participants and their Beneficiaries, the
Account Balances of the Participants, the date of circumstances of
the Retirement, Disability, death or Termination of Employment of
the Participants, and such other pertinent information as the
Administrator may reasonably require. Upon and after a Change in
Control, the Administrator may be terminated (and a replacement
appointed) by the Trustee only with the approval of the Ex-CEO. Upon
and after a Change in Control, the Administrator may not be
terminated by the Company.
3.8 TRUSTEE RESPONSIBILITY REGARDING PAYMENTS ON INSOLVENCY.
(a) The Trustee shall cease payment of benefits to Participants and
their Beneficiaries as provided in subsection (b) if the Company, or
any Subsidiary, is Insolvent (the "Insolvent Entity"). The Insolvent
Entity shall be considered "Insolvent" for purposes of this Trust
Agreement if:
(i) the Insolvent Entity is unable to pay its debts as they become
due, or
(ii) the Insolvent Entity is subject to a pending proceeding as a
debtor under the United States Bankruptcy Code.
For purposes of this Section 3.8, if an entity is determined to be
Insolvent, each Subsidiary in which such entity has an equity
interest shall also be deemed to be an Insolvent Entity. However,
the insolvency of a Subsidiary will not cause a parent corporation
to be deemed Insolvent.
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(b) At all times during the continuance of this Trust, as provided in
Section 1.3 above, the principal and income of the Trust shall be
subject to claims of the general creditors of the Company and its
Subsidiaries under federal and state law as set forth below:
(i) The Board and the chief executive officer of the Company shall
have the duty to inform the Trustee in writing of the
Company's or any Subsidiary's Insolvency. If a person claiming
to be a creditor of the Company or any Subsidiary alleges in
writing to the Trustee that the Company or any Subsidiary has
become Insolvent, the Trustee shall determine whether the
Company or any Subsidiary is Insolvent and, pending such
determination, the Trustee shall discontinue payment of
benefits to the Insolvent Entity's Participants or their
Beneficiaries. Prior to a Change in Control, the Trustee may
conclusively rely on any determination it receives from the
Board or the chief executive officer of the Company with
respect to the Insolvency of the Company or any Subsidiary.
(ii) Unless the Trustee has actual knowledge of the Company's or a
Subsidiary's Insolvency, or has received notice from the
Company, a Subsidiary, or a person claiming to be a creditor
alleging that the Company or a Subsidiary is Insolvent, the
Trustee shall have no duty to inquire whether the Company or
any Subsidiary is Insolvent. The Trustee may in all events
rely on such evidence concerning the Company's or any
Subsidiary's solvency as may be furnished to the Trustee and
that provides the Trustee with a reasonable basis for making a
determination concerning the Company's or any Subsidiary's
solvency. In this regard, the Trustee may rely upon a letter
from the Company's or a Subsidiary's auditors as to the
Company's or any Subsidiary's financial status.
(iii) If at any time the Trustee has determined that the Company or
any Subsidiary is Insolvent, the Trustee shall discontinue
payments to the Insolvent Entity's Participants or their
Beneficiaries, and shall hold the portion of the assets of the
Trust allocable to the Insolvent Entity for the benefit of the
Insolvent Entity's general creditors. Nothing in this Trust
Agreement shall in any way diminish any rights of Participants
or their Beneficiaries to pursue their rights as general
creditors of the Insolvent Entity with respect to benefits due
under the Plan or otherwise.
(iv) The Trustee shall resume the payment of benefits to
Participants or their Beneficiaries in accordance with this
Article 3 of this Trust Agreement only after the Trustee has
determined that the alleged Insolvent Entity is not Insolvent
(or is no longer Insolvent).
(c) Provided that there are sufficient assets, if the Trustee
discontinues the payment of benefits from the Trust pursuant to
Section 3.8(b) hereof and subsequently resumes such
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payments, the first payment following such discontinuance shall
include the aggregate amount of all payments due to Participants or
their Beneficiaries under the terms of the Plan for the period of
such discontinuance, without interest thereon to reflect delayed
payment, less the aggregate amount of any payments made to
Participants or their Beneficiaries by the Company or any Subsidiary
in lieu of the payments provided for hereunder during any such
period of discontinuance. Prior to a Change in Control, the
Committee shall instruct the Trustee as to such amounts, and after a
Change in Control, the Trustee shall determine such amounts in
accordance with the terms and provisions of the Plan.
3.9 COSTS OF ADMINISTRATION. The Trustee is authorized to incur reasonable
obligations in connection with the administration of the Trust, including
attorneys' fees, Administrator fees, other administrative fees and
appraisal fees. Such obligations shall be paid by the Company and the
Subsidiaries. The Trustee is authorized to pay such amounts from the Trust
Fund if the Company or the Subsidiaries fail to pay them within 60 days of
presentation of a statement of the amounts due that is not contested by
the Company in writing before the expiration of such 60-day period. If any
amounts payable hereunder are contested by the Company, the parties hereto
shall cooperate to determine whether such amount should be paid.
3.10 TRUSTEE COMPENSATION AND EXPENSES. The Trustee shall be entitled to
reasonable compensation for its services as from time to time agreed upon
between the Trustee and the Company. If the Trustee and the Company fail
to agree upon a rate of compensation, or following a Change in Control,
the Trustee shall be entitled to compensation at a rate equal to the rate
charged by the Trustee for similar services rendered by it during the
current fiscal year for other trusts similar to this Trust. The Trustee
shall be entitled to reimbursement for expenses incurred by it in the
performance of its duties as the Trustee, including reasonable fees for
legal counsel. The Trustee's compensation and expenses shall be paid by
the Company and the Subsidiaries. The Trustee is authorized to withdraw
such amounts from the Trust Fund if the Company or the Subsidiaries fail
to pay them within 60 days of presentation of a statement of the amounts
due that is not contested by the Company in writing before the expiration
of such 60-day period. If any amounts payable hereunder are contested by
the Company, the parties hereto shall cooperate to determine whether such
amount should be paid..
3.11 PROFESSIONAL ADVICE. The Company and the Subsidiaries specifically
acknowledge that the Trustee and/or the Administrator may find it
desirable or expedient to retain legal counsel (who may also be legal
counsel for the Company generally) or other professional advisors to
advise it in connection with the exercise of any duty under this Trust
Agreement, including, but not limited to, any matter relating to or
following a Change in Control or the Insolvency of the Company or any
Subsidiary.
3.12 PAYMENT ON COURT ORDER. To the extent permitted by law, the Trustee is
authorized to make any payments directed by court order in any action in
which the Trustee has been named as a
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party. The Trustee is not obligated to defend actions in which the Trustee
is named, but shall notify the Company or Committee of any such action and
may tender defense of the action to the Company, Committee, Participant or
Beneficiary whose interest is affected. The Trustee shall defend any
action in which the Trustee is named, and for which the Company has
refused to provide defense of the action, and any expenses incurred by the
Trustee shall be paid by the Company and the Subsidiaries if required
under Section 3.13. The Trustee is authorized to pay such amounts from the
Trust Fund if the Company or the Subsidiaries fail to pay them within
sixty (60) days of presentation of a statement of the amounts due that is
not contested by the Company in writing before the expiration of such
60-day period. If any amounts payable hereunder are contested by the
Company, the parties hereto shall cooperate to determine whether such
amount should be paid.
3.13 PROTECTIVE PROVISIONS. Notwithstanding any other provision contained in
this Trust Agreement to the contrary, the Trustee shall have no obligation
to (i) determine the existence of any conversion, redemption, exchange,
subscription or other right relating to any securities purchased of which
notice was given prior to the purchase of such securities and shall have
no obligation to exercise any such right unless the Trustee is advised in
writing by the Committee both of the existence of the right and the
desired exercise thereof within a reasonable time prior to the expiration
of the right to exercise, or (ii) advance any funds to the Trust.
Furthermore, the Trustee is not a party to the Plan.
3.14 INDEMNIFICATIONS.
(a) The Company and the Subsidiaries shall indemnify and hold the
Trustee harmless from and against all loss or liability (including
expenses and reasonable attorneys' fees) to which it may be subject
by reason of its execution of its duties under this Trust, or by
reason of any acts taken in good faith in accordance with any
directions, or acts omitted in good faith due to absence of
directions, from the Company, the Committee or a Participant, except
that the Trustee will not be so indemnified if such loss or
liability is finally adjudged by a court of competent jurisdiction,
or is determined by any other proceeding mutually agreeable to the
Company and the Trustee, to have resulted from the Trustee's
negligence or misconduct, or breach of its duties under this Trust
Agreement. The indemnity described herein shall be provided by the
Company and the Subsidiaries.
(b) The Company and the Subsidiaries shall indemnify and hold the
Administrator harmless from and against all loss or liability
(including expenses and reasonable attorneys' fees) to which it may
be subject by reason of its execution of its duties under this
Trust, or by reason of any acts taken in good faith in accordance
with any directions, or acts omitted in good faith due to absence of
directions, from the Company, the Committee or a Participant, unless
such loss or liability is due to the Administrator's negligence or
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misconduct. The indemnity described herein shall be provided by the
Company and the Subsidiaries.
(c) The Trustee shall indemnify and hold the Company, Subsidiaries and
the Committee members harmless from and against all loss or
liability (including expenses and reasonable attorneys' fees) to
which they may be subject by reason of the Trustee's negligence or
misconduct, or breach of its duties under this Trust Agreement,
except that the Company, Subsidiaries and the Committee will not be
so indemnified if such loss or liability is finally adjudged by a
court of competent jurisdiction or is determined by any other
proceeding mutually agreeable to the Trustee and the Company, to
have resulted from the Company's negligence or misconduct, or breach
of its duties under this Trust Agreement.
(d) All releases and indemnities provided in this Trust Agreement shall
survive the termination of this Trust Agreement.
ARTICLE 4
INSURANCE CONTRACTS
4.1 TYPES OF CONTRACTS. To the extent that the Trustee is directed by the
Committee prior to a Change in Control to invest part or all of the Trust
Fund in insurance contracts, the type and amount thereof shall be
specified by the Committee. The Trustee shall be under no duty to make
inquiry as to the propriety of the type or amount so specified.
4.2 OWNERSHIP. Each insurance contract issued shall provide that the Trustee
shall be the owner thereof with the power to exercise all rights,
privileges, options and elections granted by or permitted under such
contract or under the rules of the insurer. The exercise by the Trustee of
any incidents of ownership under any contract shall, prior to a Change in
Control, be subject to the direction of the Committee.
4.3 RESTRICTIONS ON TRUSTEE'S RIGHTS. The Trustee shall have no power to name
a beneficiary of the policy other than the Trust, to assign the policy (as
distinct from conversion of the policy to a different form) other than to
a successor Trustee, or to loan to any person the proceeds of any
borrowing against such policy. Despite the foregoing, the Trustee may (i)
loan to the Company or any Subsidiary the proceeds of any borrowing
against an insurance policy held in the Trust Fund or (ii) assign all, or
any portion, of a policy to the Company or any Subsidiary if under other
provisions of this Trust Agreement the Company or any Subsidiary is
entitled to receive assets from the Trust.
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Trust Agreement for the
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ARTICLE 5
TRUSTEE'S ACCOUNTS
5.1 RECORDS. The Trustee shall maintain accurate records and detailed accounts
of all investments, receipts, disbursements and other transactions
hereunder. The Trustee shall separately account for the assets contributed
by the Company and each of its Subsidiaries. Such records shall be
available at all reasonable times for inspection by the Company and
Subsidiaries or their authorized representative. The Trustee, at the
direction of the Committee, shall submit to the Committee and to any
insurer such valuations, reports or other information as the Committee may
reasonably require and, in the absence of fraud or bad faith, the
valuation of the Trust Fund by the Trustee shall be conclusive.
5.2 ANNUAL ACCOUNTING; FINAL ACCOUNTING.
(a) Within 60 days following the end of each Plan Year and within 60
days after the removal or resignation of the Trustee or the
termination of the Trust, the Trustee shall file with the Committee
a written account setting forth a description of all properties
purchased and sold, all receipts, disbursements and other
transactions effected by it during the Plan Year or, in the case of
removal, resignation or termination, since the close of the previous
Plan Year, and listing the properties held in the Trust Fund as of
the last day of the Plan Year or other period and indicating their
values. Such values shall be either cost or market as directed by
the Committee in accordance with the terms of the Plan.
(b) The Committee may approve such account either by written notice of
approval delivered to the Trustee or by its failure to express
written objection to such account delivered to the Trustee within 60
days after the date of which such account was delivered to the
Committee.
(c) The approval by the Committee of an accounting shall be binding as
to all matters embraced in such accounting on all parties to this
Trust Agreement and on all Participants and Beneficiaries, to the
same extent as if such accounting had been settled by a judgment or
decree of a court of competent jurisdiction in which the Trustee,
the Committee, the Company, the Subsidiaries and all persons having
or claiming any interest in any Plan or the Trust Fund were made
parties.
(d) Despite the foregoing, nothing contained in this Trust Agreement
shall deprive the Trustee of the right to have an accounting
judicially settled, if the Trustee, in the Trustee's sole
discretion, desires such a settlement.
5.3 VALUATION. The assets of the Trust Fund shall be valued at their
respective fair market values on the date of valuation, as determined by
the Trustee based upon such sources of information
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as it may deem reliable, including, but not limited to, stock market
quotations, statistical valuation services, newspapers of general
circulation, financial publications, advice from investment counselors,
brokerage firms or insurance companies, or any combination of sources.
Prior to a Change in Control, the Committee shall instruct the Trustee as
to the value of assets for which market values are not readily obtainable
by the Trustee. If the Committee fails to provide such values, the Trustee
may take whatever action it deems reasonable, including employment of
attorneys, appraisers, life insurance companies or other professionals,
the expense of which shall be an expense of administration of the Trust
Fund and payable by the Company and the Subsidiaries. The Trustee may rely
upon information from the Company and the Subsidiaries, the Committee,
appraisers or other sources and shall not incur any liability for an
inaccurate valuation based in good faith upon such information.
5.4 DELEGATION OF DUTIES. The Company or the Committee, or both, may at any
time employ the Trustee as their agent to perform any act, keep any
records or accounts and make any computations that are required of the
Company, any Subsidiary or the Committee by this Trust Agreement or the
Plan. The Trustee may be compensated for such employment and such
employment shall not be deemed to be contrary to the Trust. Nothing done
by the Trustee as such agent shall change or increase its responsibility
or liability as Trustee hereunder.
ARTICLE 6
RESIGNATION OR REMOVAL OF TRUSTEE
6.1 RESIGNATION; REMOVAL. The Trustee may resign at any time by written notice
to the Company, which shall be effective 60 days after receipt of such
notice unless the Company and the Trustee agree otherwise. Prior to a
Change in Control, the Trustee may be removed by the Company on 60 days
notice or upon shorter notice when accepted by the Trustee. After a Change
in Control, the Trustee may only be removed by the Ex-CEO on 60 days
notice or upon shorter notice accepted by the Trustee.
6.2 SUCCESSOR TRUSTEE. If the Trustee resigns or is removed, a successor shall
be appointed by the Company, in accordance with this Section, by the
effective date of the resignation or removal under Section 6.1 above. The
successor shall be a bank, trust company, or similar independent third
party that is granted corporate trustee powers under state or federal law.
After the occurrence of a Change in Control, a successor Trustee may not
be appointed without the consent of the Ex-CEO. If no such appointment has
been made by the effective date of the resignation or removal, the Trustee
may appoint a successor trustee or may apply to a court of competent
jurisdiction for appointment of a successor or for instructions. All
expenses of the Trustee in connection with the proceeding shall be allowed
as administrative expenses of the Trust.
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Trust Agreement for the
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6.3 SETTLEMENT OF ACCOUNTS. Upon resignation or removal of the Trustee and
appointment of a successor Trustee, all assets shall subsequently be
transferred to the successor Trustee in cash and/or in kind as directed
the Committee, or after a Change of Control, as determined by the Trustee
in consultation with the successor trustee. The transfer shall be
completed within 90 days after receipt of notice of resignation, removal
or transfer, unless the Company extends the time limit. Upon the transfer
of the assets, the successor Trustee shall succeed to all of the powers
and duties given to the Trustee in this Trust Agreement. The resigning or
removed Trustee shall render to the Committee an account in the form and
manner and at the time prescribed in Section 5.2. The approval of such
accounting and discharge of the Trustee shall be as provided in such
Section.
ARTICLE 7
CONTROVERSIES, LEGAL ACTIONS AND COUNSEL
7.1 CONTROVERSY. If any controversy arises with respect to the Trust, the
Trustee shall take action as directed by the Committee or, in the absence
of such direction or after a Change in Control, as it deems advisable,
whether by legal proceedings, compromise or otherwise. The Trustee may
retain the funds or property involved without liability pending settlement
of the controversy. The Trustee shall be under no obligation to take any
legal action of whatever nature unless there shall be sufficient property
in the Trust to indemnify the Trustee with respect to any expenses or
losses to which it may be subjected.
7.2 JOINDER OF PARTIES. In any action or other judicial proceedings affecting
the Trust, it shall be necessary to join as parties the Trustee, the
Committee, the Company and the Subsidiaries. No Participant or other
person shall be entitled to any notice or service of process. Any judgment
entered in such a proceeding or action shall be binding on all persons
claiming under the Trust. Nothing in this Trust Agreement shall be
construed as to deprive a Participant or Beneficiary of his or her right
to seek adjudication of his or her rights by administrative process or by
a court of competent jurisdiction.
ARTICLE 8
INSURERS
8.1 INSURER NOT A PARTY. No insurer shall be deemed to be a party to the Trust
and an insurer's obligations shall be measured and determined solely by
the terms of contracts and other agreements executed by it.
8.2 AUTHORITY OF TRUSTEE. An insurer shall accept the signature of the Trustee
to any documents or papers executed in connection with such contracts. The
signature of the Trustee shall be conclusive proof to the insurer that the
person on whose life an application is being made is
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eligible to have a contract issued on his or her life and is eligible for
a contract of the type and amount requested.
8.3 CONTRACT OWNERSHIP. An insurer shall deal with the Trustee as the sole and
absolute owner of any insurance contracts and shall have no obligation to
inquire whether any action or failure to act on the part of the Trustee is
in accordance with or authorized by the terms of the Plan or this Trust
Agreement.
8.4 LIMITATION OF LIABILITY. An insurer shall be fully discharged from any and
all liability for any action taken or any amount paid in accordance with
the direction of the Trustee and shall have no obligation to see to the
proper application of the amounts so paid. An insurer shall have no
liability for the operation of the Trust or the Plan, whether or not in
accordance with their terms and provisions.
8.5 CHANGE OF TRUSTEE. An insurer shall be fully discharged from any and all
liability for dealing with a party or parties indicated on its records to
be the Trustee until such time as it shall receive at its home office
written notice of the appointment and qualification of a successor
Trustee.
ARTICLE 9
AMENDMENT AND TERMINATION
9.1 AMENDMENT. Subject to the limitations set forth in this Section 9.1, this
Trust Agreement may be amended by a written instrument executed by the
Trustee and the Company. Notwithstanding the foregoing, no such amendment
shall conflict with the terms of the Plan or shall make the Trust
revocable after it has become irrevocable in accordance with Section 1.3
above.
(a) Writing and Consent. Any amendment to this Trust Agreement shall be
set forth in writing and signed by the Company and the Trustee. Any
amendment may be current, retroactive or prospective, in each case
as provided therein.
(b) The Company and Trustee. In connection with the exercise of the
rights under this Section 9.1(b):
(i) prior to a Change in Control, the Trustee shall have no
responsibility to determine whether any proposed amendment
complies with the terms and conditions of the Plan and may
conclusively rely on the directions of the Committee with
respect thereto, unless the Trustee has knowledge of a
proposed transaction or transactions that would result in a
Change in Control; and
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(ii) after a Change in Control, the power of the Company to amend
this Trust Agreement shall cease, and the power to amend that
was previously held by the Company shall, instead, be
exercised by the Ex-CEO, with the consent of the Trustee.
(c) Taxation. This Trust Agreement shall not be amended, altered,
changed or modified in a manner that would cause the Participants
and/or Beneficiaries under any Plan to be taxed on the benefits
under any Plan in a year other than the year of actual receipt of
benefits.
9.2 FINAL TERMINATION. The Trust shall not terminate until the date on which
(a) Participants and their Beneficiaries are no longer entitled to
benefits pursuant to the terms of the Plan and all of the expenses of the
Trust have been paid, or (b) the Company obtains written approval of all
Participants and Beneficiaries with benefits accrued under the Plan at
such time to terminate the Trust. Upon termination of the Trust, any
assets remaining in the Trust shall be returned to the Company and the
Subsidiaries. Such remaining assets shall be paid by the Trustee to the
Company and the Subsidiaries in such amounts and in the manner instructed
by the Company, whereupon the Trustee shall be released and discharged
from all obligations hereunder. From and after the date of termination and
until final distribution of the Trust Fund, the Trustee shall continue to
have all of the powers provided herein as are necessary or expedient for
the orderly liquidation and distribution of the Trust Fund.
ARTICLE 10
MISCELLANEOUS
10.1 DIRECTIONS FOLLOWING CHANGE IN CONTROL. Despite any other provision of
this Trust Agreement that may be construed to the contrary, following a
Change in Control, all powers of the Committee, the Company and the Board
to direct the Trustee under this Trust Agreement shall terminate, and the
Trustee shall act on its own discretion to carry out the terms of this
Trust Agreement in accordance with the Plan and this Trust Agreement.
10.2 TAXES. The Company and the Subsidiaries shall from time to time pay taxes
of any and all kinds whatsoever that at any time are lawfully levied or
assessed upon or become payable in respect of the Trust Fund, the income
or any property forming a part thereof, or any security transaction
pertaining thereto. To the extent that any taxes lawfully levied or
assessed upon the Trust Fund are not paid by the Company and the
Subsidiaries, the Trustee shall have the power to pay such taxes out of
the Trust Fund and shall seek reimbursement from the Company and the
Subsidiaries. Prior to making any payment, the Trustee may require such
releases or other documents from any lawful taxing authority as it shall
deem necessary. The Trustee shall contest the validity of taxes in any
manner deemed appropriate by the Company or its counsel, but at the
Company's and the Subsidiaries' expense, and only if it has received an
indemnity
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Trust Agreement for the
Callaway Golf Company Executive Deferred Compensation Plan
bond or other security satisfactory to it to pay any such expenses. Prior
to a Change in Control, the Trustee (i) shall not be liable for any
nonpayment of tax when it distributes an interest hereunder on directions
from the Committee, and (ii) shall have no obligation to prepare or file
any tax return on behalf of the Trust Fund, any such return being the sole
responsibility of the Committee. The Trustee shall cooperate with the
Committee in connection with the preparation and filing of any such
return. After a Change in Control, the Trustee shall have such duties and
obligations.
10.3 THIRD PERSONS. All persons dealing with the Trustee are released from
inquiring into the decisions or authority of the Trustee and from seeing
to the application of any moneys, securities or other property paid or
delivered to the Trustee.
10.4 NONASSIGNABILITY; NONALIENATION. Benefits payable to Participants and
their Beneficiaries under this Trust Agreement may not be anticipated,
assigned (either at law or in equity), alienated, pledged, encumbered or
subjected to attachment, garnishment, levy, execution or other legal or
equitable process.
10.5 THE PLAN. The Trust and the Plan are parts of a single, integrated
employee benefit plan system and shall be construed together. In the event
of any conflict between the terms of this Trust Agreement and the
agreements that constitute the Plan, such conflict shall be resolved in
favor of this Trust Agreement.
10.6 APPLICABLE LAW. Except to the extent, if any, preempted by ERISA, this
Trust Agreement shall be governed by and construed in accordance with the
internal laws of the State of California. Any provision of this Trust
Agreement prohibited by law shall be ineffective to the extent of any such
prohibition, without invalidating the remaining provisions hereof.
10.7 NOTICES AND DIRECTIONS. Whenever a notice or direction is given by the
Committee to the Trustee, it shall be in the form required by Section 2.1.
Actions by the Company shall be by the Board or a duly authorized officer,
with such actions certified to the Trustee by an appropriately certified
copy of the action taken. The Trustee shall be protected in acting upon
any such notice, resolution, order, certificate or other communication
believed by it to be genuine and to have been signed by the proper party
or parties.
10.8 SUCCESSORS AND ASSIGNS. This Trust Agreement shall be binding upon and
inure to the benefit of the Company, the Subsidiaries and the Trustee and
their respective successors and assigns.
10.9 GENDER AND NUMBER. Words used in the masculine shall apply to the feminine
where applicable, and when the context requires, the plural shall be read
as the singular and the singular as the plural.
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10.10 HEADINGS. Headings in this Trust Agreement are inserted for convenience of
reference only and any conflict between such headings and the text shall
be resolved in favor of the text.
10.11 COUNTERPARTS. This Trust Agreement may be executed in an original and any
number of counterparts, each of which shall be deemed to be an original of
one and the same instrument.
10.12 BENEFICIAL INTEREST. The Company and the Subsidiaries are the true
beneficiaries hereunder in that the payment of benefits, directly or
indirectly to or for a Participant or Beneficiary by the Trustee, is in
satisfaction of the Company's and the Subsidiaries' liability therefore
under the Plan. Nothing in this Trust Agreement shall establish any
beneficial interest in any person other than the Company and the
Subsidiaries.
10.13 THE TRUST AND PLAN. This Trust, the Plan and each Participant's Plan
Agreement are part of and constitute a single, integrated employee benefit
plan and trust, shall be construed together as the entire agreement
between the Company, the Trustee, the Participants and the Beneficiaries
with regard to the subject matter thereof, and shall supersede all
previous negotiations, agreements and commitments with respect thereto.
10.14 EFFECTIVE DATE. The effective date of this Trust Agreement shall be May 6,
2002.
IN WITNESS WHEREOF the Company and the Trustee have signed this
Trust Agreement as of the date first written above.
TRUSTEE: THE COMPANY:
U. S. Trust Company, X. X. Xxxxxxxx Golf Company
a Delaware corporation,
By: /s/ Xxxxxx X. Xxxxxxxx /s/ Xxxxxxx X. Holiday
---------------------------------- ---------------------------------
XXXXXXX X. HOLIDAY
Its: Senior Vice President Executive Vice President and
Chief Financial Officer
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