Exhibit 10.16.2
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT is made as of this 18th day of July,
1996, by and between Callaway Golf Company, a California corporation (the
"Company"), and Xxxxxx X. Xxxxxx ("Indemnitee"), a director of the Company.
WHEREAS, the Company and Indemnitee recognize the increasing
difficulty in obtaining liability insurance covering directors, the significant
increases in the cost of such insurance and the general reductions in the
coverage of such insurance;
WHEREAS, although the Company currently has directors' liability
insurance, the coverage of such insurance is such that many claims which may be
brought against Indemnitee may not be covered, or may not be fully covered, and
the Company may be unable to maintain such insurance;
WHEREAS, the Company and the Indemnitee further recognize the
substantial increase in corporate litigation subjecting directors to expensive
litigation risks at the same time that liability insurance has been severely
limited;
WHEREAS, the current protection available may not be adequate given
the present circumstances, and Indemnitee may not be willing to serve as a
director without adequate protection;
WHEREAS, the Company desires to attract and retain the services of
highly qualified individuals, such as Indemnitee, to serve as directors of the
Company and to indemnify its directors so as to provide them with the maximum
protection permitted by law;
NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:
1. DEFINITIONS. The following terms, as used herein, have the following
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meaning:
1.1 Affiliate. "Affiliate" means, (i) with respect to any
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corporation, any officer, director or 10% or more shareholder of such
corporation, or (ii) with respect to any individual, any partner or immediate
family member of such individual or the estate of such individual, or (iii) with
respect to any partnership, trust or joint venture, any partner, co-venturer or
trustee of such partnership, trust of joint venture, or any beneficiary or owner
having 10% or more interest in the equity, property or profits of such
partnership, trust or joint venture, or (iv) with respect to any Person, any
other Person which, directly or indirectly, controls, is controlled by, or is
under common control with such Person or any Affiliate of such Person.
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1.2 Agreement. "Agreement" shall mean this Indemnification
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Agreement, as the same may be amended from time to time hereafter.
1.3 Code. "Code" shall mean the California Corporations Code, as
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amended.
1.4 Person. "Person" shall mean any individual, partnership,
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corporation, joint venture, trust, estate, or other entity.
1.5 Subsidiary. "Subsidiary" shall mean any corporation of which the
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Company owns, directly or indirectly, through one or more subsidiaries,
securities having more than 50% of the voting power of such corporation.
2. INDEMNIFICATION
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2.1 Third Party Proceedings. The Company shall indemnify Indemnitee
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if Indemnitee is or was a party or witness or other participant in, or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than action by or in the right of the Company) by reason of the fact that
Indemnitee is or was a director of the Company or any subsidiary of the Company,
by reason of any action or inaction on the part of Indemnitee while a director
of the Company or any Subsidiary, and/or by reason of the fact that Indemnitee
is or was serving at the request of the Company as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against all expense, liability and loss (including attorneys' fees),
judgments, fines and amounts paid in settlement (if such settlement is approved
in advance by the Company, which approval shall not be unreasonably withheld)
actually and reasonably incurred by Indemnitee in connection with such action,
suit or proceeding if Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in the best interests of the Company, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
Indemnitee's conduct was unlawful and provided, further, that the Company has
determined that such indemnification is otherwise permitted by applicable law.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent
shall not, of itself, create a presumption that Indemnitee did not act in good
faith and in a manner which Indemnitee reasonably believed to be in the best
interests of the Company or that Indemnitee had reasonable cause to believe that
Indemnitee's conduct was unlawful.
2.2 Proceedings by or in the Right of the Company. The Company shall
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indemnify Indemnitee if Indemnitee was or is a party or a witness or other
participant in or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Company or any Subsidiary to
procure a judgment in its favor by reason of the fact that Indemnitee is or was
a director of the Company or any Subsidiary, by reason of any action or inaction
on the part of Indemnitee while a director of the Company or a Subsidiary or by
reason
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of the fact that Indemnitee is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against all expense, liability and loss
(including attorneys' fees) and amounts paid in settlement (if such settlement
is court-approved) actually and reasonably incurred by Indemnitee in connection
with the defense or settlement of such action or suit if Indemnitee acted in
good faith and in a manner Indemnitee reasonably believed to be in the best
interests of the Company and its shareholders and provided, further, that the
Company has determined that such indemnification is otherwise permitted by
applicable law. No indemnification shall be made in respect of any claim, issue
or matter as to which Indemnitee shall have been adjudged to be liable to the
Company in the performance of Indemnitee's duties to the Company and its
shareholders, unless and only to the extent that the court in which such
proceeding is or was pending shall determine upon application that, in view of
all the circumstances of the case, Indemnitee is fairly and reasonably entitled
to indemnity for expenses and then only to the extent that the court shall
determine.
2.3 Mandatory Payment of Expenses. To the extent that Indemnitee has
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been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Section 2.1 or 2.2 or the defense of any claim, issue
or matter therein, Indemnitee shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by Indemnitee in connection
therewith.
2.4 Enforcing the Agreement. If Indemnitee properly makes a claim
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for indemnification or an advance of expenses which is payable pursuant to the
terms of this Agreement, and that claim is not paid by the Company, or on its
behalf, within ninety days after a written claim has been received by the
Company, the Indemnitee may at any time thereafter bring suit against the
Company to recover the unpaid amount of the claim and if successful in whole or
in part, the Indemnitee shall be entitled to be paid also all expenses actually
and reasonably incurred in connection with prosecuting such claim.
2.5 Subrogation. In the event of payment under this Agreement, the
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Company shall be subrogated to the extent of such payment to all of the rights
of recovery of the Indemnitee, who shall execute all papers required and shall
do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Company effectively to bring
suit to enforce such rights.
3. EXPENSES; INDEMNIFICATION PROCEDURE
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3.1 Advancement of Expenses. The Company shall advance all expenses
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incurred by Indemnitee in connection with the investigation, defense, settlement
or appeal of any civil or criminal action, suit or proceeding referenced in
Section 2.1 or 2.2 hereof. Indemnitee hereby undertakes to repay such amounts
advanced only if, and to the extent that, it shall ultimately be determined that
Indemnitee is not entitled to be indemnified by the Company as authorized hereby
or that such indemnification is not otherwise permitted by applicable law. The
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advances to be made hereunder shall be paid by the Company to Indemnitee within
thirty (30) days following delivery of a written request therefor or by
Indemnitee to the Company.
3.2 Determination of Conduct. Any indemnification (unless ordered by
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a court) shall be made by the Company only as authorized in the specified case
upon a determination that indemnification of Indemnitee is proper under the
circumstances because Indemnitee has met the applicable standard of conduct set
forth in Sections 2.1 or 2.2 of this Agreement. Such determination shall be
made by any of the following: (1) the Board of Directors (or by an executive
committee thereof) by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, (2) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, (3) by the
shareholders, with the shares owned by Indemnitee not being entitled to vote
thereon, or (4) the court in which such proceeding is or was pending upon
application made by the Company or Indemnitee or the attorney or other person
rendering services in connection with the defense, whether or not such
application by Indemnitee, the attorney or the other person is opposed by the
Company.
3.3 Notice/Cooperation by Indemnitee. Indemnitee shall, as a
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condition precedent to Indemnitee's right to be indemnified under this
Agreement, give the Company notice in writing as soon as practicable of any
claim made against Indemnitee for which indemnification will or could be sought
under this Agreement. Notice to the Company shall be given in the manner set
forth in Section 10.3 hereof and to the address stated therein, or such other
address as the Company shall designate in writing to Indemnitee. In addition,
Indemnitee shall give the Company such information and cooperation as it may
reasonably require and as shall be within Indemnitee's power.
3.4 Notice to Insurers. If, at the time of the receipt of a notice
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of a claim pursuant to Section 3.3 hereof, the Company has director liability
insurance in effect, the Company shall give prompt notice of the commencement of
such proceeding to the insurers in accordance with the procedures set forth in
the respective policies. The Company shall thereafter take all necessary or
desirable actions to cause such insurers to pay, on behalf of the Indemnitee,
all amounts payable as a result of such proceeding in accordance with the terms
of such policies.
3.5 Selection of Counsel. In the event the Company shall be
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obligated under Section 3.1 hereof to pay the expenses of any proceeding against
Indemnitee, the Company shall be entitled to assume the defense of such
proceeding, with counsel approved by Indemnitee, upon the delivery to Indemnitee
of written notice of its election so to do. After delivery of such notice,
approval of such counsel by Indemnitee and the retention of such counsel by the
Company, the Company will not be liable to Indemnitee under this Agreement for
any fees of counsel subsequently incurred by Indemnitee with respect to the same
proceeding, provided that (a) Indemnitee shall have the right to employ separate
counsel in any such proceeding at Indemnitee's expense; and (b) if (i) the
employment of counsel by Indemnitee has been previously authorized by the
Company, (ii) Indemnitee shall have reasonably concluded that
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there may be a conflict of interest between the Company and Indemnitee in the
conduct of any such defense, or (iii) the Company shall not, in fact, have
employed counsel to assume the defense of such proceeding, then the fees and
expenses of Indemnitee's counsel shall be at the expense of the Company (subject
to the provisions of this Agreement).
4. ADDITIONAL INDEMNIFICATION RIGHTS; NON-EXCLUSIVITY
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4.1 Application. The provisions of this Agreement shall be deemed
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applicable to all actual or alleged actions or omissions by Indemnitee during
any and all periods of time that Indemnitee was, is, or shall be serving as a
director of the Company or a Subsidiary.
4.2 Scope. The Company hereby agrees to indemnify Indemnitee to the
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fullest extent permitted by law (except as set forth in Section 8 hereof),
notwithstanding that such indemnification is not specifically authorized by the
other provisions of this Agreement, the Company's Articles of Incorporation, the
Company's Bylaws or by statute. In the event of any changes, after the date of
this Agreement, in any applicable law, statute, or rule which expands the right
of a California corporation to indemnify a member of its board of directors,
such changes shall be, ipso facto, within the purview of Indemnitee's rights and
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the Company's obligations under this Agreement. In the event of any change in
any applicable law, statute, or rule which narrows the right of a California
corporation to indemnify a member of its board of directors, such changes, to
the extent not otherwise required by such law, statute or rule to be applied to
this Agreement shall have no effect on this Agreement or the parties' rights and
obligations hereunder.
4.3 Non-Exclusivity. The indemnification provided by this Agreement
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shall not be deemed exclusive of any rights to which an Indemnitee may be
entitled under the Company's Articles of Incorporation, its Bylaws, any
agreement, any vote of shareholders or disinterested directors, the Code, or
otherwise, both as to action in Indemnitee's official capacity and as to action
in another capacity while holding such office. The indemnification provided
under this Agreement shall continue as to Indemnitee for an action taken or not
taken while serving in an indemnified capacity even though he may have ceased to
serve in such capacity at the time of any action, suit or other covered
proceeding.
5. PARTIAL INDEMNIFICATION
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5.1 Partial Indemnity. If Indemnitee is entitled under any provision
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of this Agreement to indemnification by the Company for some or a portion of the
expenses, judgments, fines or penalties actually or reasonably incurred by
Indemnitee in the investigation, defense, appeal or settlement of any civil or
criminal action, suit or proceedings but not, however, for the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for that portion to
which Indemnitee is entitled.
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6. MUTUAL ACKNOWLEDGMENT
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6.1 Acknowledgment. Both the Company and Indemnitee acknowledge that
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in certain instances, federal law or public policy may override applicable state
law and prohibit the Company from indemnifying its directors under this
Agreement or otherwise. For example, the Company and Indemnitee acknowledge
that the Securities and Exchange Commission (the "SEC") has taken the position
that indemnification is not permissible for liabilities arising under certain
federal securities laws, and federal legislation prohibits indemnification for
certain ERISA violations. Indemnitee understands and acknowledges that the
Company has undertaken or may be required in the future to undertake with the
SEC to submit the question of indemnification to a court in certain
circumstances for a determination of the Company's right under public policy to
indemnify Indemnitee.
7. LIABILITY INSURANCE
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7.1 Obtaining Insurance. The Company shall, from time to time, make
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the good faith determination whether or not it is practicable for the Company to
obtain and maintain a policy or policies of insurance with reputable, insurance
companies providing the directors with coverage for losses from wrongful acts,
or to ensure the Company's performance of its indemnification obligations under
this Agreement. Among other considerations, the Company will weigh the costs of
obtaining such insurance coverage against the protection afforded by such
coverage. In all such policies of liability insurance, Indemnitee shall be
named as an insured in such a manner as to provide Indemnitee the same rights
and benefits as are accorded to the most favorably insured of the Company's
directors. Notwithstanding the foregoing, the Company shall have no obligation,
to obtain or maintain such insurance if the Company determines in good faith
that such insurance is not reasonably available, if the premium costs for such
insurance are disproportionate to the amount of coverage provided, if the
coverage provided by such insurance is limited by exclusions so as to provide an
insufficient benefit, or if Indemnitee is covered by similar insurance
maintained by a parent or Subsidiary of the Company.
8. SEVERABILITY
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8.1 Severability. Nothing in this Agreement is intended to require
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or shall be construed as requiring the Company to do or fail to do any act in
violation of applicable law. The Company's inability, pursuant to court order,
to perform its obligations under this Agreement shall not constitute a breach of
this Agreement. The provisions of this Agreement shall be severable as provided
in this Section 8.1. If this Agreement or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, the Company
shall nevertheless indemnify Indemnitee to the full extent permitted by any
applicable portion of this Agreement that shall not have been invalidated, and
the balance of this Agreement not so invalidated shall be enforceable in
accordance with its terms.
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9. EXCEPTIONS
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9.1 Exceptions to Company's Obligations. Any other provision to the
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contrary notwithstanding, the Company shall not be obligated pursuant to the
terms of this Agreement for the following:
(a) Claims Initiated by Indemnitee. To indemnify or advance expenses
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to Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by Indemnitee and not by way of defense, unless said proceedings or
claims were authorized by the board of directors of the Company.
(b) Improper Personal Benefit. To indemnify Indemnitee against
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liability for any transactions from which Indemnitee, or any Affiliate of
Indemnitee, derived an improper personal benefit, including, but not limited to,
self-dealing or usurpation of a corporate opportunity.
(c) Dishonesty. To indemnify Indemnitee if a judgment or other final
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adjudication adverse to Indemnitee established that Indemnitee committed acts of
active and deliberate dishonesty, with actual dishonest purpose and intent,
which acts were material to the cause of action so adjudicated.
(d) Insured Claims; Paid Claims. To indemnify Indemnitee for expenses
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or liabilities of any type whatsoever (including but not limited to, judgments,
fines, ERISA excise taxes or penalties, and amounts paid in settlement) which
have been paid directly to Indemnitee (i) by an insurance carrier under a policy
of liability insurance maintained by the Company, or (ii) otherwise by any other
means.
(e) Claims Under Section 16(b). To indemnify Indemnitee for an
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accounting of profits in fact realized from the purchase and sale of securities
within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as
amended, or any similar successor statute.
10. MISCELLANEOUS
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10.1 Construction of Certain Phrases.
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(a) For purposes of this Agreement, references to the "Company" shall
include any resulting or surviving corporation in any merger or consolidation in
which the Company (as then constituted) is not the resulting or surviving
corporation so that Indemnitee will continue to have the full benefits of this
Agreement.
(b) For purposes of this Agreement, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on Indemnitee with respect to an employee benefit plan;
and references to "serving at the request of
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the Company" shall include any service as a director, officer, employee or agent
of the Company which impose duties on, or involves services by, such director,
officer, employee or agent with respect to an employee benefit plan, its
participants, or beneficiaries; and if Indemnitee acted in good faith and in a
manner Indemnitee reasonably believed to be in the best interests of the
participants and beneficiaries of an employee benefit plan, Indemnitee shall be
deemed to have acted in a manner "reasonably believed to be in the best
interests of the Company and its shareholders" as referred to in this Agreement.
10.2 Successors and Assigns. This Agreement shall be binding upon
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the Company and its successors and assigns, and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives and assigns.
Notwithstanding the foregoing, the Indemnitee shall have no right or power to
voluntarily assign or transfer any rights granted to Indemnitee, or obligations
imposed upon the Company, by or pursuant to this Agreement. Further, the rights
of the Indemnitee hereunder shall in no event accrue to the benefit of, or be
enforceable by, any judgment creditor or other involuntary transferee of the
Indemnitee.
10.3 Notice. All notices, requests, demands and other communications
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under this Agreement shall be in writing and shall be deemed duly given (i) if
mailed by domestic certified or registered mail with postage prepaid, properly
addressed to the parties at the addresses set forth below, or to such other
address as may be furnished to Indemnitee by the Company or to the Company by
Indemnitee, as the case may be, on the third business day after the date
postmarked, or (ii) otherwise notice shall be deemed received when such notice
is actually received by the party to whom it is directed.
If to Indemnitee: To the address set forth below the signature
line of Indemnitee on the signature page
hereof.
If to Company: Callaway Golf Company
0000 Xxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: General Counsel
10.4 Consent to Jurisdiction. The Company and Indemnitee each hereby
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irrevocably consent to the jurisdiction of the courts of the State of California
for all purposes in connection with any action or proceeding which arises out of
or related to this Agreement and agree that any action instituted under this
Agreement shall be brought only in the state courts of the State of California.
10.5 Choice of Law. This Agreement shall be governed by and its
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provisions construed in accordance with the laws of the State of California, as
applied to contracts between California residents entered into and to be
performed entirely within California.
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10.6 Counterparts. This Agreement may be executed in counterparts,
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each of which shall constitute an original and all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereby have executed this Agreement as
of the date first above written.
"Company" Callaway Golf Company, a California corporation
By: /s/ XXXXXX X. XXX
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(Signature)
Xxxxxx X. Xxx
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(Name)
President and CEO
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(Title)
"Indemnitee" Xxxxxx X. Xxxxxx
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(Name)
/s/ XXXXXX X. XXXXXX
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(Signature)
Address:
Xxxxxx, Xxxx & Xxxxxxxx
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000 Xxxxx Xxxxx Xxxxxx, 47th Floor
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Xxx Xxxxxxx, XX 00000
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