<PAGE>
As Filed with the Securities and Exchange Commission on August 20, 1998
Registration No. 333-______
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
____________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
____________
CALLAWAY GOLF COMPANY
(Exact name of Registrant as specified in its charter)
2285 Rutherford Road
Carlsbad, California 92008-8815
(Address of principal executive offices)
California 95-3797580
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1998 EMPLOYEE STOCK INCENTIVE PLAN
1996 STOCK OPTION PLAN
1995 EMPLOYEE STOCK INCENTIVE PLAN
(Full title of the plan)
_____________
Donald H. Dye, Esq.
President and Chief Executive Officer
2285 Rutherford Road
Carlsbad, California 92008-8815
(760) 931-1771
(Name, address, and telephone number,
including area code, of agent for service)
_____________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Proposed Proposed
Maximum Maximum
Title of Amount Offering Aggregate Amount of
Securities to be Price Per Offering Registration
to be Registered Registered (1) Share (2) Price (2) Fee
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$.01 par value
- -----------------------------------------------------------------------------------------------------------------------
Callaway Golf 500,000 shares $11.97 $5,985,000 $1,766
Company
1998 Stock
Incentive Plan
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Newly reserved 3,000,000 shares $11.97 $35,910,000 $10,594
under the
1996 Stock
Option Plan
- --------------------------------------------------------------------------------------------------------
Newly reserved 1,600,000 shares $11.97 $19,152,000 $ 5,650
under the
1995 Employee
Stock Incentive
Plan
- --------------------------------------------------------------------------------------------------------
Total: 5,100,000 shares $61,047,000 $18,010
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) Pursuant to Rule 416, this Registration Statement shall cover, in addition
to the number of shares of Common Stock stated above, such indeterminate
number of shares of Common Stock as may be issued upon exercise of options
granted under such plan as a result of adjustment provisions thereunder.
(2) Estimated solely for purposes of determining the registration fee pursuant
to Rule 457(h), based on the average of the high and low prices of Callaway
Golf Company Common Stock as reported on August 13, 1998 on the New York
Stock Exchange, in respect of options to be granted under the plan.
================================================================================
2
<PAGE>
INTRODUCTION
------------
This Registration Statement on Form S-8 is filed by Callaway Golf
Company (the "Company") relating to 500,000 shares of the Company's common
stock, par value $.01 per share (the "Common Stock"), issuable to employees of
the Company under the Callaway Golf Company 1998 Stock Incentive Plan, 3,000,000
additional shares of the Company's Common Stock issuable under the Callaway Golf
Company 1996 Stock Option Plan and 1,600,000 additional shares of the Company's
Common Stock issuable under the Callaway Golf Company 1995 Employee Stock
Incentive Plan.
PART I
INFORMATION REQUIRED IN THE PROSPECTUS
--------------------------------------
ITEM 1. PLAN INFORMATION
The Registrant will send or give the documents containing information
specified in this Item 1 to employees, officers, directors or others as
specified by Rule 428(b)(1). In accordance with the rules and regulations of
the Securities and Exchange Commission (the "Commission") and the instructions
to Form S-8, the Registrant is not filing such documents with the Commission
either as part of this Registration Statement or as prospectuses or prospectus
supplements pursuant to Rule 424.
ITEM 2. REGISTRATION INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
The Registrant will send or give the documents containing information
specified in this Item 2 to employees, officers, directors or others as
specified by Rule 428(b)(1). In accordance with the rules and regulations of
the Commission and the instructions to Form S-8, the Registrant is not filing
such documents with the Commission either as part of this Registration Statement
or as prospectuses or prospectus supplements pursuant to Rule 424.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
--------------------------------------------------
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents, which previously have been filed by the
Company with the Commission, are incorporated herein by reference and made a
part hereof:
(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1997;
(b) All other reports filed by the Company pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), since the end of the latest fiscal year covered by the Annual Report
referred to in (a) above;
(c) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form S-1 (Registration No. 33-53732),
including any amendment or report filed for the purpose of updating such
description;
(d) The description of the Company's Rights contained in the Company's
Registration Statement on Form 8-A on June 27, 1995, including any amendment or
report filed for the purpose of updating such description.
All documents filed by the Company pursuant to Sections 13(a), 14 and
15(d) of the Exchange Act, subsequent to the date of this Registration Statement
and prior to the filing of a post-effective amendment hereto that indicates that
all securities offered hereunder have been sold or that deregisters all
securities then remaining unsold shall be deemed to be incorporated by reference
herein and to be a part hereof from the date of filing of such documents.
3
<PAGE>
For purposes of this Registration Statement, any statement contained
in a document incorporated or deemed to be incorporated herein by reference
shall be deemed to be modified or superseded to the extent that a statement
contained herein or in any other subsequently filed document that also is or is
deemed to be incorporated herein by reference modifies or supersedes such
statement in such document. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Seema L. Nene, Esq., who has rendered an opinion as to the validity of
the Common Stock being registered by this Registration Statement, is an employee
of the Company.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Section 317 of the California General Corporation Law (the
"CGCL"), the Company is, in certain circumstances, permitted to indemnify its
directors and officers against certain expenses (including attorneys' fees),
judgments, fines, settlements and other amounts actually and reasonably incurred
in connection with threatened, pending or completed civil, criminal,
administrative or investigative actions or proceedings (other than an action by
or in the right of the Company), by reason of the fact that such persons were or
are directors or officers of the Company, if such persons acted in good faith
and in a manner they 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 their conduct was unlawful. In addition, the
Company is in certain circumstances permitted to indemnify its directors and
officers who were or are parties or were threatened to be made parties to any
threatened, pending or completed action by or in the right of the Company to
procure a judgment in its favor by reason of the fact that such persons are or
were directors or officers of the Company, against expenses actually and
reasonably incurred by such persons in connection with the defense or settlement
of the action, if such persons acted in good faith and in a manner they believed
to be in the best interests of the Company and its shareholders.
As permitted by the CGCL, the Amended and Restated Articles of
Incorporation of the Company provide that the Company is authorized to provide
indemnification of its officers and directors for breach of duty to the Company
and its shareholders through Bylaw provisions or through agreements with the
directors or officers, or both, in excess of the indemnification otherwise
permitted by Section 317 of the CGCL, subject to the limits on such excess
indemnification set forth in Section 204 of the CGCL.
Under Section 204(a)(10) of the CGCL, the personal liability of a
director for monetary damages in an action brought by or in the right of the
corporation for breach of the director's duty to the corporation may be
eliminated, except for the liability of a director resulting from acts or
omissions involving intentional misconduct or a knowing and culpable violation
of the law, acts or omissions that a director believes to be contrary to the
best interests of the corporation or its shareholders or that involve the
absence of good faith, any transaction from which a director derived an improper
personal benefit, acts or omissions showing a reckless disregard for the
director's duty, acts or omissions constituting an unexcused pattern of
inattention to the director's duty, or the making of an illegal distribution to
shareholders or an illegal loan or guaranty.
As permitted by the CGCL, the Company's Amended and Restated Articles
of Incorporation provide that the liability of directors for monetary damages
shall be eliminated to the fullest extent permissible under California law.
The Company's Bylaws provide that the Company shall indemnify and hold
harmless any person who is or was a director or officer of the Company, or is or
was serving at the request of the Board of
4
<PAGE>
Directors of the Company as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, or other persons serving
the Company subject to limitations imposed by applicable law, from and against
any expenses, judgments, fines, settlements, and other amounts actually and
reasonably incurred in connection with any threatened, pending or completed
action or proceeding, whether civil, criminal, administrative or investigative
to the fullest extent permitted by applicable law. The Company's Bylaws further
provide that the Company shall advance to such persons expenses incurred in
defending any proceeding prior to the final disposition thereof to the fullest
extent and in the manner permitted by the law.
The Company's Bylaws provide that indemnification provided for in the
Bylaws shall not be deemed exclusive of any other rights to which the
indemnified party may be entitled and that the Company may purchase and maintain
insurance on behalf of an agent of the Company against any liability asserted
against him or her or incurred by him or her in any such capacity or arising out
of his or her status as such, whether or not the Company would have the power to
indemnify him or her against such liabilities under such Bylaws.
The Company has entered into Indemnification Agreements with its
outside directors. These Indemnification Agreements require the Company to
indemnify each outside director if he or she is or was a party or other
participant in any suit or proceeding individually or in the right of the
Company or any subsidiary of the Company, by reason of (a) the fact that such
outside director is or was a director of the Company or any subsidiary, (b) any
action or inaction on the part of such outside director while a director of the
Company or any subsidiary, and/or (c) the fact that such outside director is or
was serving at the request of the Company as a director, officer, employee or
agent of another corporation or other enterprise. The indemnification extends
to all expenses, liabilities, judgments, fines and amounts paid in settlement
actually and reasonably incurred by the outside director in connection with such
action, suit or proceeding if the outside director acted in good faith and in a
manner he or she 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 that his or her conduct was unlawful. The Indemnification Agreements
require that, to the extent that the outside director has been successful on the
merits or otherwise in defense of any such action, suit or proceeding, the
Company indemnify such outside director against expenses actually and reasonably
incurred by him or her in connection therewith. The Company must further
advance, within 30 days of a written request, all expenses incurred by the
outside director in connection with the investigation, defense, settlement or
appeal of any such action or proceeding; provided, however, that the outside
director must repay such amounts advanced if it is ultimately determined that he
or she is not entitled to be indemnified by the Company. Under the
Indemnification Agreements, the outside directors are permitted to petition the
court to seek recovery of amounts due under the Indemnification Agreements and
to recover the expenses of seeking such recovery if he or she is successful.
The Indemnification Agreements also provide that the Company will indemnify the
outside directors to the fullest extent permitted by law. Absent the
Indemnification Agreements, indemnification that might be made available to
outside directors could be changed by amendments to the Company's Amended and
Restated Articles of Incorporation or Bylaws. Benefits under the
Indemnification Agreements are not available, however, to indemnify an outside
director (a) with respect to proceedings or claims initiated by the outside
director that are not by way of defense (unless authorized by the Board of
Directors); (b) with respect to liability for transactions from which the
outside director derived an improper personal benefit; (c) if the outside
director is determined to have committed acts of active and deliberate
dishonesty; (d) for expenses or liabilities that have been paid to the outside
director under an insurance policy maintained by the Company or otherwise by any
other means; or (e) for an accounting of profits realized from the purchase and
sale of securities within the meaning of Section 16(b) of the Securities
Exchange Act of 1934.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
5
<PAGE>
ITEM 8. EXHIBITS.
Exhibit No. Description
- ----------- -----------
4.1 Restated Articles of Incorporation of the Company (filed as an
exhibit to the Company's Registration Statement on Form S-8
(No. 33-85692), and incorporated herein by this reference)
4.2 Certificate of Amendment of Articles of Incorporation of the
Company effective February 10, 1995 (filed as an exhibit to the
Company's Annual Report on Form 10-K for the year ended December
31, 1994, and incorporated herein by this reference )
4.3 Bylaws of the Company, as amended May 10, 1996
4.4 Certificate of Determination of Rights, Preferences, Privileges and
Restrictions of Series A Junior Participating Preferred Stock
(filed as an exhibit to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1995, and incorporated herein by
this reference)
4.5 Rights Agreement by and between the Company and Chemical Mellon
Shareholder Services, as Rights Agent, dated as of June 21, 1995
(filed as an exhibit to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1995, and incorporated herein by
this reference)
4.6 Dividend Reinvestment and Stock Purchase Plan (filed as the
Prospectus in the Company's Registration Statement on Form S-3 (No.
33-77024), and incorporated herein by this reference)
4.7 Callaway Golf Company 1998 Stock Incentive Plan effective February
18, 1998 (filed as an exhibit to the Company's Quarterly Report
filed on Form 10-Q for the quarter ended June 30, 1998, and
incorporated herein by this reference )
4.8 Callaway Golf Company 1996 Stock Option Plan (as amended and
restated through April 23, 1998) (filed as an exhibit to the
Company's Quarterly Report filed on Form 10-Q for the quarter ended
June 30, 1998, and incorporated herein by this reference)
4.9 Callaway Golf Company 1995 Employee Stock Incentive Plan (as
amended and restated through April 22, 1998)
5 Opinion of Seema L. Nene, Esq., Corporate Counsel to the Company,
as to the legality of the securities being registered
23.1 1 Consent of Independent Accountants
23.2 2 Consent of Seema L. Nene, Esq. (contained in Exhibit 5 hereto)
24 Power of Attorney (contained on signature page hereto)
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement;
6
<PAGE>
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933 each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by a final adjudication of such issue.
7
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement on Form S-8 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Carlsbad, State of California, on August 19,
1998.
CALLAWAY GOLF COMPANY
By: /s/ DONALD H. DYE
-------------------------------------
Donald H. Dye
President and Chief Executive Officer
By: /s/ DAVID A. RANE
-------------------------------------
David A. Rane
Executive Vice President,
Administration and Planning, and
Chief Financial Officer
POWER OF ATTORNEY
-----------------
Each person whose signature appears below constitutes and appoints
DONALD H. DYE, DAVID A. RANE AND STEVEN C. McCRACKEN his or her true and lawful
attorneys-in-fact and agents, each acting alone, with full powers of
substitution and resubstitution, for him or her and in his or her name, place
and stead, at any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, each acting alone, with full powers and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as full to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming that all said attorneys-in-fact and
agents, each acting alone, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Principal Executive Officers
and Directors:
/s/ ELY CALLAWAY Founder, Chairman and Chief August 19, 1998
- ----------------------------------- of Advertising, Press &
Ely Callaway Public Relations
/s/ DONALD H. DYE President and August 19, 1998
- ----------------------------------- Chief Executive Officer
Donald H. Dye
Principal Financial and
Accounting Officer:
/s/ DAVID A. RANE Executive Vice President, August 19, 1998
- ----------------------------------- Administration and Planning,
David A. Rane and Chief Financial Officer
</TABLE>
8
<PAGE>
<TABLE>
<S> <C> <C>
Other Directors:
/s/ WILLIAM C. BAKER Director August 19, 1998
- -----------------------------------
William C. Baker
/s/ VERNON E. JORDAN, JR. Director August 19, 1998
- -----------------------------------
Vernon E. Jordan, Jr.
/s/ BRUCE A. PARKER Director August 19, 1998
- -----------------------------------
Bruce A. Parker
/s/ FREDERICK R. PORT Director August 19, 1998
- -----------------------------------
Frederick R. Port
/s/ RICHARD ROSENFIELD Director August 19, 1998
- -----------------------------------
Richard Rosenfield
/s/ WILLIAM A. SCHREYER Director August 19, 1998
- -----------------------------------
William A. Schreyer
/s/ CHARLES J. YASH Director August 19, 1998
- -----------------------------------
Charles J. Yash
</TABLE>
9
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit No. Description
- ----------- -----------
4.1 Restated Articles of Incorporation of the Company.*
4.2 Certificate of Amendment of Articles of Incorporation of the
Company.*
4.3 Bylaws of the Company (as amended through May 10, 1996).*
4.4 Certificate of Determination of Rights, Preferences, Privileges and
Restrictions of Series A Junior Participating Preferred Stock.*
4.5 Rights Agreement by and between the Company and Chemical Mellon
Shareholder Services, as Rights Agent, dated as of June 21, 1995.*
4.6 Dividend Reinvestment and Stock Purchase Plan.*
4.7 Callaway Golf Company 1998 Stock Incentive Plan effective February
18, 1998.*
4.8 Callaway Golf Company 1996 Stock Option Plan (as amended and
restated through April 23, 1998).*
4.9 Callaway Golf Company 1995 Employee Stock Incentive Plan (as
amended and restated through April 22, 1998).
5 Opinion of Seema L. Nene, Esq., Corporate Counsel to the Company,
as to the legality of the securities being registered.
23.1 Consent of Independent Accountants.
23.2 Consent of Seema L. Nene, Esq. (contained in Exhibit 5 hereto).
24.1 Power of Attorney (contained on signature page hereof).
* Incorporated by reference.
10
<PAGE>
Exhibit 4.9
-----------
CALLAWAY GOLF COMPANY
1995 EMPLOYEE STOCK INCENTIVE PLAN
(As Amended and Restated April 22, 1998)
1. Purposes of the Plan
The purpose of this 1995 Employee Stock Incentive Plan (the "Plan") of
Callaway Golf Company, a California corporation (the "Company"), is to provide
for grants of stock options and other stock-based incentive awards to broad
classes of employees of the Company and its Subsidiaries, thereby helping to
retain and motivate such employees, and to encourage the judgment, initiative
and efforts of such employees by further aligning their interests with those of
the shareholders of the Company.
2. Plan Awards
To carry out the purposes of the Plan, the Company will from time to
time enter into various arrangements with persons eligible to participate
therein and confer various benefits upon them. The following such arrangements
or benefits are authorized under the Plan if their terms and conditions are not
inconsistent with the provisions of the Plan: Stock Options, Restricted Stock,
Sales of Securities, Stock Bonuses, Performance Shares, Performance Units, Stock
Appreciation Rights, Phantom Stock, Dividend Equivalents and Other Stock-Based
Benefits. Such arrangements and benefits pursuant to the Plan are sometimes
herein referred to as "Awards." The authorized categories of benefits for which
Awards may be granted are defined as follows:
Stock Options: A Stock Option is a right granted under the Plan to
purchase a specified number of shares of Common Stock at such exercise price, at
such times, and on such other terms and conditions as are specified in the
Award. A Stock Option may but need not (a) provide for the payment of some or
all of the option exercise price in cash or by promissory note or by delivery of
previously owned shares (including the technique known as "pyramiding") or other
property or by withholding some of the shares that are being purchased; (b)
include arrangements to facilitate the grantee's ability to borrow funds for
payment of the exercise price; or (c) be an Incentive Stock Option.
Restricted Stock: Restricted Stock is Common Stock sold under the
Plan (other than through the exercise of a Stock Option) at a substantial
discount from its Fair Market Value or at its par value, but subject during
specified periods of time to such restrictions on its transferability and
repurchase rights as are expressed in the Award and as may constitute a
substantial condition of forfeiture while in effect.
Sales of Securities: A Sale of Securities is a sale under the Plan of
unrestricted shares of Common Stock or of debt or other securities that are
convertible into shares of Common Stock upon such terms and conditions as may be
established in the terms of the Award.
Stock Bonuses: A Stock Bonus is the issuance or delivery of
unrestricted or restricted shares of Common Stock under the Plan as a bonus for
services rendered or for any other valid consideration under applicable law.
Performance Shares: A Performance Share is an Award that represents a
fixed number of shares of Common Stock that vest at a specified time or over a
period of time in accordance with performance criteria established in connection
with the granting of the Award. Such criteria may measure the performance of the
grantee, of the business unit in which the grantee is employed, or of the
Company,
<PAGE>
or a combination of any of the foregoing. The vested portion of the Award is
payable to the grantee either in the shares it represents or in cash in an
amount equal to the Fair Market Value of those shares on the date of vesting, or
a combination thereof, as specified in the Award.
Performance Units: A Performance Unit is an Award that represents a
fixed amount of cash that vests at a specified time or over a period of time in
accordance with performance criteria established in connection with the granting
of the Award. Such criteria may measure the performance of the grantee, of the
business unit in which the grantee is employed, or of the Company, or a
combination of any of the foregoing. The vested portion of the Award is payable
to the grantee either in cash or in shares valued at their Fair Market Value on
the date of vesting, or a combination thereof, as specified in the Award.
Stock Appreciation Rights: A Stock Appreciation Right is a right
granted under the Plan to receive a payment that is measured with reference to
the amount by which the Fair Market Value of a specified number of shares of
Common Stock appreciates from a specified date, such as the date of grant of the
Award, to the date of exercise. Payment of a Stock Appreciation Right may be
made in cash or in shares valued at their Fair Market Value on the date of
exercise, or a combination thereof, as specified in the Award. A Stock
Appreciation Right may but need not be granted in tandem with a Stock Option and
require the surrender of that Stock Option or a portion thereof in connection
with the exercise of the Stock Appreciation Right.
Phantom Stock: Phantom Stock is a cash bonus granted under the Plan
measured by the Fair Market Value of a specified number of shares of Common
Stock on a specified date, or measured by the excess of such Fair Market Value
over a specified minimum, which may but need not include a Dividend Equivalent.
Dividend Equivalents: A Dividend Equivalent is a right granted under
the Plan to receive an amount in cash equivalent to the dividends that are paid,
if any, on a specified number of shares of Common Stock during a certain period
of time.
Other Stock-Based Benefits: An Other Stock-Based Benefit is any
arrangement granted under the Plan not otherwise described above that (a) by its
terms might involve the issuance or sale of Common Stock or (b) involves a
benefit that is measured, in whole or in part, by the value, appreciation,
dividend yield or other features attributable to a specified number of shares of
Common Stock.
An Award may consist of one such arrangement or benefit or two or more
of them in tandem or in the alternative. Subject to the provisions of the Plan,
any Award granted pursuant to the Plan may contain such additional terms and
provisions as those administering the Plan for the Company may consider
appropriate. Among other things, any such Award may but need not also provide
for (i) the satisfaction of any applicable tax withholding obligation by the
retention of shares to which the grantee would otherwise be entitled or by the
grantee's delivery of previously owned shares or other property and (ii)
acceleration of vesting, lapse of restrictions, cash settlement or other
adjustment to the terms of the Award in the event of a merger, sale of assets or
change of control of the Company.
3. Stock Subject to the Plan
The kind and maximum number of shares of stock that may be sold or
issued under the Plan, whether upon exercise of Stock Options or in settlement
of other Awards, shall be 4,600,000 shares of Common Stock (this number reflects
all stock splits through April 22, 1998, and is subject to further adjustments
set forth hereinbelow). If the outstanding shares of stock of the class then
subject to the Plan are increased or decreased, or are changed into or are
exchanged for a different number or kind of shares or securities or other forms
of consideration, as a result of one or more recapitalizations, restructurings,
reclassifications, stock splits, reverse stock splits, stock dividends or the
like, appropriate adjustments shall
2
<PAGE>
be made in the number and/or kind of shares or securities or other forms of
consideration which may thereafter be sold or issued under the Plan and for
which Awards (including Incentive Stock Options) may thereafter be granted and
for which outstanding Awards previously granted under the Plan may thereafter be
exercised or settled.
If, on or before termination of the Plan, any shares of Common Stock
subject to an Award shall not be issued or transferred and shall cease to be
issuable or transferable for any reason, or if such shares shall have been
reacquired by the Company pursuant to restrictions imposed on such shares under
the Plan or the terms of an Award, the shares not so issued or transferred and
the shares so reacquired shall no longer be charged against the limitation
provided for in this Section 3 and may be again made the subject of Awards under
the Plan. The shares of stock sold or issued under the Plan may be obtained from
the Company's authorized but unissued shares, from reacquired or treasury
shares, or from outstanding shares acquired in the market or from private
sources.
4. Administration of the Plan
(a) The Plan shall be administered by the Board of Directors of the
Company (the "Board") or, in the discretion of the Board, a committee appointed
thereby (the "Committee"). Subject to the provisions of the Plan, the Board, or
the Committee, shall have full and final authority in its discretion to select
the eligible persons to whom Awards shall be granted hereunder, to grant such
Awards, to determine the terms and provisions of such Awards and the number of
shares to be sold or issued pursuant thereto. The Board (and the Committee)
shall also be empowered with full and final authority to adopt, amend, and
rescind such rules and regulations as, in its opinion, may be advisable in the
administration of the Plan. The Board or the Committee, as the case may be, may
delegate to Company officers or others its authority with respect to any Awards
that may be granted to eligible persons under the Plan, subject to applicable
legal requirements. The interpretation and construction by the Board or the
Committee of any term or provision of the Plan or of any Award granted
thereunder shall be final and binding upon all participants in the Plan.
(b) Pursuant to the authority described above, the Board or the
Committee may adopt such amendments to, and rules and regulations governing, the
Plan as may be considered advisable for purposes of compliance with applicable
federal or state securities laws. The Board of Directors has established the
following rules applicable to all Awards made pursuant to the Plan: No Award
granted hereunder (other than an Award expressly granting unrestricted shares)
may be transferred by the grantee except (i) by will or the laws of descent and
distribution, (ii) upon dissolution of marriage pursuant to a qualified domestic
relations order or division of community or marital property or (iii) with the
express written approval of the Board or Committee in its sole discretion. No
such permitted transfer shall, by itself, affect any vesting restrictions that
then apply to the Award.
(c) The Company may assist any person to whom an Award is granted
hereunder in the payment of the purchase price or other amounts payable in
connection with the receipt or exercise of that Award, by lending such amounts
to such person on such terms and at such rates of interest and upon such
security (if any) as shall be approved by the Board or the Committee.
5. Persons Eligible to Participate
Any person who is an employee, consultant or advisor of the Company or
any of its Subsidiaries and who is not an Officer of the Company may be eligible
to be considered for the grant of Awards under the Plan, as determined by the
Board or the Committee in its discretion.
6. Plan Effectiveness and Duration
3
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The Plan shall become effective as of the date designated by the
Board. Unless previously terminated by the Board, the Plan shall expire ten
years after its effective date, but such expiration shall not affect any Award
previously made or granted that is then outstanding.
7. Amendment and Termination
The Board may amend, alter or discontinue the Plan or an agreement evidencing an
Award granted under the Plan, but no amendment or alteration shall be made that
would affect any Award previously made or granted that is then outstanding,
without the grantee's consent; provided, however, that no such consent shall be
required if the Board determines in its sole discretion that such amendment or
alteration is not reasonably likely to significantly diminish the benefits
provided under such Award or that any such diminishment has been adequately
compensated. Notwithstanding the foregoing, if an amendment to the Plan would
affect the ability of any Stock Options granted under the Plan to comply with
Section 422 or other applicable provisions of the Internal Revenue Code (the
"Code"), and if the Committee determines that it is necessary or desirable for
any Stock Options theretofore or thereafter granted that are intended to comply
with any such provision to so comply, or otherwise is required under any
applicable law, rule or regulation, the amendment shall be approved by the
Company's shareholders to the extent required for such Stock Options to continue
to comply with Section 422 of the Code, or other applicable provisions of or
rules under the Code.
8. Certain Definitions
The authorized categories of benefits for which Awards may be granted
under the Plan are defined in Section 2 above. In addition, the following terms
used in the Plan shall have the following meanings:
Common Stock: Common Stock is the Company's common stock, as
constituted on the effective date of the Plan, and as thereafter adjusted as a
result of any one or more events requiring adjustment of outstanding Awards
under Section 3 above.
Fair Market Value: The Fair Market Value of shares of stock shall be
calculated (a) during such time as the Company is not a publicly-traded company,
by the Board based on its good faith determination, and (b) at such times as the
Company is publicly-traded, on the basis of the closing price of stock of that
class on the day in question (or, if such day is not a trading day in the U.S.
securities markets, on the nearest preceding trading day), as reported with
respect to the principal market (or the composite of the markets, if more than
one) in which such shares are then traded; or, if no such closing prices are
reported, on the basis of the mean between the high bid and low asked prices
that day on the principal market or national quotation system on which such
shares are then quoted; or, if not so quoted, as furnished by a professional
securities dealer making a market in such shares selected by the Board or the
Committee; or if no such dealer is available, then the Fair Market Value shall
be determined in good faith by the Board.
Incentive Stock Option: An Incentive Stock Option is a Stock Option
that qualifies as an "incentive stock option" as defined under Section 422 (or
any applicable successor provisions) of the Code and that includes an express
provision that it is intended to be an Incentive Stock Option.
Subsidiary: A Subsidiary of the Company is any corporation,
partnership or other entity in which the Company directly or indirectly owns 50%
or more of the total combined power to cast votes in the election of directors,
trustees, managing partners or similar officials.
4
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Exhibit 5
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August 20, 1998
Callaway Golf Company
2285 Rutherford Road
Carlsbad, California 92008-8815
Re: Form S-8 Registration Statement;
5,100,000 Shares of Common Stock
-------------------------------------
Ladies and Gentlemen:
In connection with the registration by Callaway Golf Company, a
California corporation (the "Company"), of 5,100,000 additional shares of common
stock, par value $.01 per share (the "Shares"), of the Company to be issued upon
the exercise of options to be granted under the Company's 1998 Stock Incentive
Plan, 1996 Stock Option Plan, as amended, and 1995 Employee Stock Incentive
Plan, as amended (collectively, the "Plans"), under the Securities Act of 1933,
as amended (the "Act"), on a Registration Statement on Form S-8 filed with the
Securities and Exchange Commission on or about August 20, 1998 (as amended from
time to time, the "Registration Statement"), you have requested my opinion with
respect to the matters set forth below.
In my capacity as your counsel in connection with such registration, I am
familiar with the proceedings taken and proposed to be taken by the Company in
connection with the authorization, issuance and sale of the Shares, and for the
purposes of this opinion, have assumed such proceedings will be timely completed
in the manner presently proposed. In addition, I have made such legal and
factual examinations and inquiries, including an examination of originals or
copies certified or otherwise identified to my satisfaction of such documents,
corporate records and instruments, as I have deemed necessary or appropriate for
purposes of this opinion.
In my examination, I have assumed the genuineness of all signatures, the
authenticity of all documents submitted to me as originals, and the conformity
to authentic original documents of all documents submitted to me as copies.
I am opining herein as to the effect on the subject transaction only of
the General Corporation Law of the State of California, and I express no opinion
with respect to the applicability thereto, or the effect thereon, of the laws of
any other jurisdiction or any other laws, or as to any matters of municipal law
or the laws of any other local agencies within the state.
Subject to the foregoing, it is my opinion that as of the date hereof the
Shares have been duly authorized, and, upon the exercise of options and the
payment for Shares in accordance with the terms set forth in the Plans under
which such Shares will be issued and sold, the Shares will be validly issued,
fully paid and nonassessable.
I hereby consent to filing this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ SEEMA L. NENE
-------------------------------
Seema L. Nene, Esq.
Corporate Counsel
<PAGE>
Exhibit 23.1
------------
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated January 28, 1998, except as to Note
14, which is as of February 11, 1998, which appears on page 47 of the 1997
Annual Report to Shareholders of Callaway Golf Company, which is incorporated by
reference in Callaway Golf Company's Annual Report on Form 10-K for the year
ended December 31, 1997. We also consent to the incorporation by reference of
our report on the Financial Statement Schedule, which appears on page 21 of such
Annual Report on Form 10-K.
/s/ PRICEWATERHOUSECOOPERS LLP
PRICEWATERHOUSECOOPERS LLP
San Diego, California
August 14, 1998
