EXHIBIT c(7)
[TWM and JSV]
COBRA GOLF INCORPORATED
, 1996
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CONFIDENTIAL
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Mr.
[Insert Address]
Dear Mr. :
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.
Stay Bonus
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If you continue in employment with the Company through the effective
date of the merger (the "Closing Date") and for 30 days after the Closing Date,
you will be entitled to a stay bonus of $37,500 payable as soon as practicable
(but no later than 5 business days) thereafter. If you continue in employment
with the Company through the first anniversary of the Closing Date, you will be
entitled to an additional stay bonus of $37,500 payable as soon as practicable
(but no later than 5 business days) thereafter.
If the Company terminates your employment after the Closing Date for
reasons other than Disability or Cause (as hereinafter defined), or you
terminate your employment for "Good Reason" (as hereinafter defined), prior to
the date on which you would be entitled to either stay bonus, you shall be paid
the stay bonus upon your termination of employment. You will not be eligible
for the stay bonus if you terminate employment with the Company voluntarily, or
if your employment terminates by death or your employment is terminated by the
Company for Disability or
Cause, prior to the date on which you would be entitled to the stay bonus.
Salary
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Your salary shall continue at your current level and be subject to
annual review by the Board of Directors of the Company and possible adjustment.
Annual Incentive Bonus
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An annual incentive compensation program will be established
commencing for 1996 and continuing through 1997. The program will provide a
target bonus to you for 1996 equal to 35% of your base salary with an
opportunity to earn a maximum of 52.5% of your base salary, but only if
established operating company contribution goals are met. The operating company
contribution goals for 1996 will not be greater than as set forth on Schedule A.
Long Term Incentives
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The Company will also establish an enhanced long-term incentive plan
for the performance period 1996 through 1998. You will be awarded 150 units
under this plan. If the Company achieves $220 million of operating company
contribution (generally operating profit exclusive of amortization of
intangibles) during this performance period, the value of each unit to be paid
in early 1999 will be $500. If the Company achieves $250 million of cumulative
operating company contribution during this performance period, the value of each
unit to be paid in early 1999 will be $1,000. If the Company achieves $300
million of cumulative operating company contribution during this performance
period, the value of each unit to be paid in early 1999 will be $2,500. For
performance between $225 million of cumulative operating company contribution
and $250 million of cumulative operating company contribution, the value of each
unit will be interpolated between $500 and $1,000 and, for performance between
$250 million and $300 million of cumulative operating company contribution, the
value of each unit will be interpolated between $1,000 and $2,500.
You will also be eligible for stock options under the American Brands,
Inc. Long-Term Incentive Plan. The Company will recommend that you be granted
options for 1996 with respect to at least 4,000 shares of American Brands, Inc.
common stock.
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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 and to serve in such positions with the Company as may be
reasonably assigned by its Board of Directors consistent with the status of an
executive officer and your position as a Vice President. You also agree to
serve, at the request of the Company, in director or officer positions with any
affiliate of the Company consistent with the status of an executive officer.
Expenses
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During your period of employment hereunder, the Company will pay all
reasonable business and travel 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.
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, 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 12 months after notice of
termination of employment is given to you by the Company payable at the
Company's regular payroll periods;
(ii) your target bonus for the calendar year in which the notice of
termination is given, (or, if greater, the bonus paid to you with respect
to calendar year 1995), whether or not performance goals are achieved,
payable promptly following the calendar year in which the notice of
termination is given;
(iii) your target bonus for the calendar year in which the notice of
termination is given, whether or not performance goals are achieved,
multiplied by a fraction the
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numerator of which is the number of days in such calendar year through the
date that the notice of termination of employment is given and the
denominator of which is the number of days in such calendar year, payable
promptly following the calendar year in which the notice of termination is
given; and
(iv) coverage under the Company's medical and life insurance plans
for the 12 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 for a period of 18
months after termination of employment under COBRA rules shall be deemed
satisfied to the extent of the first 12 months thereof by the coverage
provided in this clause (iv).
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 other than to pay benefits
under the Company's disability plans. 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.
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For purposes of 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 an executive officer or your removal from the
office of Vice President;
(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; or
(iii) the failure by the Company to afford you with an annual
incentive bonus program.
In order to be a termination of employment by you for "Good Reason", such
termination must 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 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. 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.
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 12 months
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following the date of your termination of employment, such period to be at the
sole election of the Company, which election shall be made within 30 calendar
days of such termination, 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. You shall receive a monthly consulting fee for the period
that the Company elects that you render exclusive consulting services hereunder
at your base salary rate in effect on the date of your termination of employment
plus your target bonus for the one year in which you voluntarily terminate (or
the amount of your 1995 bonus if greater).
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 own benefit, either during the term of your employment
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 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.
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Termination of Agreement
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This Agreement will terminate on the second anniversary of the Closing
Date.
Prior Agreements
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This Agreement supersedes any 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 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.
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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.
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
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Accepted and Agreed to
this ___ day of December, 1995
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