EXHIBIT c(4)
December 18, 1995
CONFIDENTIAL
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Xx. Xxxxxx X. Xxxx
0000 Xxxx Xxxx Xxxx
Xx Xxxxx, XX 00000
Dear Xx. Xxxx:
As you know, it is proposed that HCAC, Inc., a wholly-owned subsidiary
of American Brands, Inc., be merged with and into Cobra Golf Incorporated (the
"Company"). In order to induce you to remain in the employ of the Company
following the merger, the Company agrees that, in the event the contemplated
merger is consummated, the Company will provide you with the following
compensation subject to the terms and conditions hereof.
Services
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You agree to devote all of your business time, skill and energies to
promote the interests of the Company and its affiliates during the term of your
employment hereunder, which will be for a three year period following the
effective date of the merger (the "Closing Date"). It is contemplated that you
will serve as Vice Chairman Emeritus of the Company. You also agree to serve in
such other positions with the Company as may be reasonably assigned by its Board
of Directors consistent with your status as a senior executive and, at the
request of the Company, in director or officer positions with any affiliate of
the Company consistent with your status as a senior executive.
Salary
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Your salary for the years 1996, 1997 and 1998 shall be $350,000 per
annum. For each year after 1998, your salary shall be subject to review by the
Board of Directors of the Company and possible adjustment.
Expenses
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During your period of employment hereunder, the Company will pay all
reasonable business, travel and entertainment expenses incurred by you in
furtherance of or in connection with the Company's business. If any such
expenses are paid by you in
the first instance, the Company will reimburse you promptly upon receipt of a
satisfactory accounting therefor. In the event any such expenses that have been
paid are determined by the Board of Directors of the Company not to be incurred
in the ordinary course of business, you shall repay to the Company the amount of
such expenses.
Employee Plans
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You shall be eligible to participate in the Company's medical and life
insurance plans on the same terms and conditions as other similarly situated
employees, but you shall not be eligible to participate in other employee plans
for employees of the Company.
Severance
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Your employment may be terminated by the Company at any time provided
that you shall be entitled to the severance benefits hereinafter set forth. In
the event that the Company terminates your employment for reasons other than
Disability or Cause (as hereinafter defined), or you terminate your employment
for "Good Reason" (as hereinafter defined), you shall receive the following
severance in lieu of any further compensation:
(i) salary payable for a period of 24 months after notice of
termination of employment is given to you by the Company payable at the
Company's regular payroll periods; and
(ii) coverage under the Company's medical and life insurance plans
for the 24 month period following the date that a notice of termination of
employment is given or until you obtain new employment, whichever is
earlier. This continued coverage shall be on the same terms and conditions
and subject to the same limitations as medical and life insurance coverage
available to employees of the Company at your level at the date of
termination. In the event that your continued coverage is not permitted
under the terms and provisions of such plans, the Company shall arrange to
provide you with benefits that are substantially similar to those that you
would have been entitled to receive if you had remained covered during such
period. Your right to elect continued medical coverage after termination
of employment under COBRA rules shall be deemed satisfied by the coverage
provided in this clause (iv).
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In addition, you agree that, for a period of up to three years
following the aforesaid two year severance period, or for a period of up to
three years following the completion of the three year employment period, such
period of up to three years to be at the sole election of the Company, which
election shall be made within 30 calendar days after termination, you shall
render exclusive consulting services to the Company. You shall receive a
consulting fee for this additional period of exclusive consulting services
payable monthly at (i) an annual rate of $200,000, plus (ii) the amount not
otherwise payable in a previous year under this Agreement by reason of the
application of Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code") but only to the extent the amount set forth in this (ii) is
determined not to be an "excess parachute payment" under Section 280G of the
Code. You shall also be covered under the Company's medical and life insurance
plans during this additional consulting period. This continued coverage shall
be on the same terms and conditions and subject to the same limitations as
medical and life insurance coverage available to employees of the Company at
your level during the consulting period. In the event that your continued
coverage is not permitted under the terms and provisions of such plans, the
Company shall arrange to provide you with benefits that are substantially
similar to those that you would have been entitled to receive if you had
remained covered during such period.
The term "Disability" means your physical or mental incapacity,
whether totally or partially, of performing the essential functions of your
position for a three consecutive month period. In such event, the Company may
terminate your employment with no further obligation. The term "Cause" shall
mean any of the following: embezzlement; fraud; dishonesty; breach of fiduciary
duty to the Company; deliberately disregarding the rules of the Company which
results in a material loss, damage or injury to the Company; unauthorized
disclosure of any of the secrets or confidential information of the Company; a
material breach of any agreement (including this Agreement) with the Company;
inducement of any representative that acts for the Company to terminate such
relationship which termination results in material damage to the Company; or
engaging in any conduct which constitutes unfair competition with the Company.
In the event that the Company terminates your employment for Cause, the Company
shall have no further obligations under this Agreement. "Good Reason" shall
mean the occurrence (without your express written consent) of any one of the
following acts by the Company:
(i) the assignment to you of any duties which would not be
commensurate with those of a senior executive officer or any change in your
title of Vice Chairman Emeritus, or
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(ii) relocation of the Company's principal executive offices to a
location outside the San Diego Metropolitan Area or the Company's requiring
you to be based anywhere other than the Company's principal executive
offices except for required travel on the Company's business to an extent
substantially consistent with your present business travel obligations.
In order to be a termination of employment by you for "Good Reason," such
termination must occur within three years of the Closing Date and must also
occur within 60 calendar days of the date that you are notified of the
occurrence giving rise to the "Good Reason."
You agree that during the period for which you are receiving severance
payments or consulting payments hereunder, you shall render exclusive consulting
services to the Company as the Company shall reasonably request, that your
consulting services to the golf industry shall be exclusively to the Company and
that you will not, during such period, directly or indirectly, for your own
account or for the account of others, either as an officer, director,
stockholder, owner, partner, promoter, employee, consultant, adviser, agent,
manager, or in any other capacity, assist or provide services to any person or
entity that is then in competition with the Company or its affiliates in the
golf industry.
Voluntary Termination
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If your employment is not terminated by the Company, but you
voluntarily terminate your employment, you agree that you shall render exclusive
consulting services to the Company as the Company shall reasonably request for a
period of up to three years following the date of your termination of
employment, such period to be at the sole election of the Company, that your
consulting services shall be exclusively to the Company, and that you will not,
during such period, directly or indirectly, for your own account or for the
account of others, either as an officer, director, stockholder, owner, partner,
promoter, employee, consultant, adviser, agent, manager, or in any other
capacity, assist or provide services to any person or entity that is then in
competition with the Company or its affiliates in the golf industry other than
the Company. You shall receive a consulting fee for the period that the Company
elects that you render exclusive consulting services hereunder as follows:
monthly payments at an annual rate of $100,000 if you terminate employment prior
to the first anniversary of the Closing Date; monthly payments at an annual rate
of up to $200,000 if you terminate employment on or after the first anniversary
but prior
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to the second anniversary of the Closing Date; and monthly payments at an annual
rate of up to $300,000 if you terminate employment on or after the second
anniversary of the Closing Date and up to the third anniversary of the Closing
Date, plus the amount not otherwise payable in a previous year under this
Agreement by reason of the application of Section 280G of the Code, but only to
the extent the amount set forth in this clause is determined not to be an
"excess parachute payment" under Section 280G of the Code. You shall also be
covered under the Company's medical and life insurance plans for the consulting
period. This continued coverage shall be on the same terms and conditions and
subject to the same limitations as medical and life insurance coverage available
to employees of the Company at your level during the consulting period. In the
event that your continued coverage is not permitted under the terms and
provisions of such plans, the Company shall arrange to provide you with benefits
that are substantially similar to those that you would have been entitled to
receive if you had remained covered during such period. Your right to elect
continued medical coverage under COBRA rules shall be deemed satisfied by the
coverage provided hereby.
Any election by the Company that you provide exclusive consulting
services hereunder, shall be made within 30 calendar days of such termination.
Pursuant to such executive consulting arrangement, you shall not be required to
follow a specified work schedule and shall not be under the control of the
Company, but shall be available on policy or strategic planning questions,
either in person or by telephone, at your discretion, for up to a maximum of
twenty (20) hours a month at such times as the Company may reasonably request
during the consulting period.
Confidential Matters
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In view of the fact that your employment or consulting arrangement
with the Company will bring you into close contact with many confidential
affairs of the Company and its affiliates, including matters of a business
nature such as information about costs, profits, technology, markets, sales,
trade secrets, potential patents and other business ideas, customer lists, plans
for future developments and information of any other kind not known in the golf
industry generally, or industries in which other affiliates of the Company are
engaged (hereinafter, collectively, "Confidential Matters"), you agree:
(i) to keep secret all Confidential Matters of the Company and
affiliates of the Company, and not to disclose them to anyone outside of
the Company or its affiliates, or otherwise use them or use your knowledge
of them for your
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own benefit, either during the term of your employment or consulting
hereunder or during the period while you are receiving severance or
consulting payments hereunder; and
(ii) to deliver promptly to the Company at the termination of your
employment or consulting period, or at any time the Company may request,
all memoranda, notices, records, reports and other documents (and all
copies thereof) relating to the business of the Company or any of its
subsidiaries or affiliates, including but not limited to, Confidential
Matters which you may then possess or have under your control.
Parachute Agreements
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If any payments hereunder are determined to be "excess parachute
payments" under Section 280G of the Code, the payments will be reduced to the
extent that they will not constitute excess parachute payments.
Prior Agreements
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This Agreement supersedes your existing employment agreement with the
Company and any other prior agreement or understanding relating to your
employment and all rights thereunder will terminate.
Modification
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This Agreement may not be modified without prior written agreement of
the parties.
Governing Law
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This Agreement shall be governed by and construed in accordance with
the laws of the State of California without giving effect to principles of
conflicts of law. The parties hereto hereby consent and submit to the
jurisdiction of a state or federal court located in California.
Tax Withholding
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Any amounts payable hereunder shall be subject to applicable tax
withholding.
Specific Performance
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You hereby expressly agree and understand that the remedy at law for
any breach of this Agreement will be inadequate
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and is not readily susceptible to being measured in monetary terms. Accordingly,
it is acknowledged that the Company will be entitled to, among other remedies,
immediate injunctive relief and may obtain without bond a temporary order
restraining any threatened or further breach of this Agreement. However, nothing
in this paragraph shall be deemed to limit the Company's remedies at law or in
equity for any breach of this Agreement.
In the event that any party hereto reasonably retains counsel for the
purpose of enforcing or preventing the breach of any provision hereof, then, if
such matter is settled by judicial determination, the prevailing party shall be
entitled to recover all costs and expenses incurred thereby including, but not
limited to reasonable attorneys fees and costs associated with such litigation
as determined by the court.
The invalidity or unenforceability of any term of this Agreement shall
not affect the validity or enforceability of any other term of the Agreement,
which shall remain in full force and effect. If any provision should be deemed
invalid, illegal or unenforceable because its scope is considered excessive,
such provision shall be modified so that the scope of the provision is reduced
only to the minimum extent necessary to render the modified provision valid. In
no event, however, shall the Company be required to pay any salary, bonus,
severance or consulting compensation under this Agreement if you do not comply
with your exclusive consulting or non-compete obligation.
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If this letter sets forth correctly our agreement on the subject matter
hereof, please sign and return to me the enclosed copy of this letter, which
will then constitute our agreement on the subject.
Very truly yours,
COBRA GOLF INCORPORATED
By /s/ Xxxxx X. Xxxxxxxx
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Accepted and Agreed to
this 17th day of December, 1995
/s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
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