Exhibit 10.4

Callaway Golf Company
Recipient:
Performance Unit Grant
Effective Grant Date:
 
Number of Units:
 
Plan: Amended and Restated 2004 Incentive Plan
 
 

CALLAWAY GOLF COMPANY, a Delaware corporation (the "Company"), has elected to
grant to you, the Recipient named above, a performance share unit award subject
to the restrictions and on the terms and conditions set forth below, in
consideration for your services to the Company. Terms not otherwise defined in
this Performance Unit Grant Agreement (“Agreement”) will have the meanings
ascribed to them in the Plan identified above (the “Plan”).
1.
Governing Plan. The Recipient hereby acknowledges receipt of a copy of the Plan
and a U.S. Prospectus for the Plan (the “Plan Prospectus”). This Performance
Unit Grant is subject in all respects to the applicable provisions of the Plan,
which are incorporated herein by this reference. In the case of any conflict
between the provisions of the Plan and this Performance Unit Grant Agreement
(the “Agreement”), the provisions of the Plan will control.

2.
Grant of Performance Unit. Effective as of the Effective Grant Date identified
above, the Company has granted and issued to the Recipient the Number of
Performance Units with respect to the Company's Common Stock identified above
(the “PSUs”), representing an unfunded, unsecured promise of the Company to
deliver shares of Common Stock in the future, subject to the claims of the
Company’s creditors and the terms, conditions and restrictions set forth in this
Agreement. Nothing contained in this Agreement, and no action taken pursuant to
its provisions, will create or be construed to create a trust of any kind or a
fiduciary relationship between Recipient and the Company or any other person.

3.
Restrictions on the PSU. The PSU is subject to the following restrictions:

(a)
No Transfer. The PSU and the shares of Common Stock it represents may not be
sold, assigned, transferred, pledged, hypothecated or otherwise disposed of or
encumbered until shares are actually issued when the restrictions set forth in
paragraph 4 expire, and any additional requirements or restrictions contained in
this Agreement have been satisfied, terminated or waived by the Company in
writing.

(b)
Cancellation of Unvested Shares. In the event Recipient ceases to provide
“Continuous Service” (as defined below) for any reason before the PSU vests
pursuant to paragraph 4 and the restrictions set forth in paragraph 3 expire,
this award shall be cancelled with respect to any then unvested shares (and any
related unvested dividend equivalents) and no additional shares of Common Stock
shall vest; provided, however, that the Board of Directors or a designated Board
committee (the “Board”) may, in its discretion, determine not to cancel and void
all or part of such unvested award, in which case the Board may impose whatever
conditions it considers appropriate with respect to such portion of the unvested
award.

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For purposes of this Agreement, “Continuous Service” means that the Recipient’s
service with the Company or its “parent” or “subsidiary” as such terms are
defined in Rule 405 of the Securities Act (each an “Affiliate” and together
“Affiliates”), whether as an employee, director or consultant, is not
interrupted or terminated. The Board shall have the authority to determine the
time or times at which “parent” or “subsidiary” status is determined within the
foregoing definition of Affiliate. A change in the capacity in which the
Recipient renders service to the Company or an Affiliate as an employee,
consultant or director or a change in the entity for which the Recipient renders
such service, provided that there is no interruption or termination of the
Recipient’s service with the Company or an Affiliate, shall not terminate a
Recipient’s Continuous Service. For example, a change in status from an employee
of the Company to a consultant of a subsidiary or to a director shall not
constitute an interruption of Continuous Service. To the extent permitted by
law, the Board, in its sole discretion, may determine whether Continuous Service
shall be considered interrupted in the case of any leave of absence approved by
that party, including sick leave, military leave or any other personal leave.
Notwithstanding the foregoing, a leave of absence shall be treated as Continuous
Service for purposes of vesting in the PSU only to such extent as may be
provided in the Company’s leave of absence policy, in the written terms of any
leave of absence agreement or policy applicable to the Recipient, or as
otherwise required by law.
4.
Lapse of Restrictions. The restrictions imposed under paragraph 3 will lapse and
expire, and the PSU will vest, in accordance with the following:

(a)
Vesting Schedule. Subject to earlier cancellation, and subject to the
accelerated vesting provisions, if any, set forth in any agreement between
Recipient and the Company or its Affiliate, as the same may be amended,
modified, extended or renewed from time to time, the restrictions imposed under
paragraph 3 will lapse and be removed with respect to the number of PSUs, and in
accordance with the vesting schedule, set forth in Exhibit B (the “Vesting
Schedule”); provided, however, that to the extent required by Section 409A of
the Code and the regulations and other guidance thereunder, no shares subject to
this award shall vest prior to the date that is at least 12 months and 30 days
following the Effective Grant Date set forth above.         

The Board, however, may, in its discretion, accelerate the Vesting Schedule (in
which case, the Board may impose whatever conditions it considers appropriate on
the accelerated portion).
In addition, the restrictions imposed under paragraph 3 will automatically lapse
and be removed, and the PSU shall vest, immediately prior to any Change in
Control, if the Recipient is providing Continuous Service to the Company or its
Affiliate at that time, provided, however, that the Board, in its sole
discretion, may provide that such restrictions do not automatically lapse, and
the PSU not vest, immediately prior to any such Change in Control, and instead
provide that the PSUs shall continue under the same terms and conditions or
shall continue under the same terms and conditions with respect to shares of a
successor company that may be issued in exchange or settlement of such PSUs in
connection with a Change in Control. Notwithstanding the foregoing, if the Board
elects to provide that such restrictions do not lapse in connection with a
Change in Control and Recipient’s Continuous Service is terminated for any
reason within one year following such Change in Control, then such restrictions
shall lapse and be removed, and the PSU shall vest, immediately upon such
termination of Continuous Service. For purposes hereof, “Change in Control”
shall have the meaning set forth in Exhibit A attached hereto.

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(b)
Effect of Vesting. The Company will deliver to Recipient a number of shares of
Common Stock equal to the number of vested shares of Common Stock subject to the
PSU on the vesting date or dates provided herein; provided, however, that if
within the 30-day period following the Effective Grant Date, Recipient elects to
defer delivery of such shares of Common Stock beyond the vesting date, then the
Company will deliver such shares to Recipient on the date or dates that
Recipient so elects (the “Settlement Date”); provided further, that
notwithstanding any such deferral election, if Recipient ceases to provide
Continuous Service and has a “separation from service” with the Company for
purposes of Section 409A of the Code, then, subject to the provisions of Section
409A of the Code, all vested shares of Common Stock subject to the award shall
be delivered to Recipient as soon as administratively practicable after the date
of separation from service. If such deferral election is made, the Board will,
in its sole discretion, establish the rules and procedures for such deferrals.
Notwithstanding the foregoing, in the event that the Company (i) does not elect
to withhold shares otherwise issuable to Recipient to satisfy the Company’s tax
withholding obligation and (ii) determines that Recipient’s sale of shares of
Company stock on the date the shares subject to the award are scheduled to be
delivered, whether or not deferred (the “Original Distribution Date”), would
violate its policy regarding insider trading of the Company’s stock, as
determined by the Company in accordance with such policy, then such shares shall
not be delivered on such Original Distribution Date and shall instead be
delivered as soon as practicable following the next date that Recipient could
sell such shares pursuant to such policy; provided, however, that (A) if the
Original Distribution Date occurs before a Change in Control then in no event
shall the delivery of the shares be delayed pursuant to this provision beyond
the later of: (1) December 31st of the same calendar year of the Original
Distribution Date, or (2) the 15th day of the third calendar month following the
Original Distribution Date, and (B) if the Original Distribution Date occurs on
or after a Change in Control then in no event shall the delivery of the shares
be delayed pursuant to this provision beyond the 15th day of the third calendar
month following the Original Distribution Date.

(c)
Payment of Taxes. If applicable, upon vesting and/or issuance of Common Stock in
accordance with the foregoing, Recipient must pay in the form of a check or cash
or other cash equivalents to the Company such amount as the Company determines
it is required to withhold under applicable laws as a result of such vesting
and/or issuance. In this regard, Recipient authorizes the Company and/or its
Affiliate to withhold all applicable tax-related items legally payable by
Recipient from his or her wages or other cash compensation paid to Recipient by
the Company and/or its Affiliate or from proceeds of the sale of shares of
Common Stock. Alternatively, or in addition, if permissible under applicable
law, the Company may (1) cause the Recipient to sell shares of Common Stock that
Recipient acquires to meet the withholding obligation for tax-related items,
and/or (2) withhold from the shares of Common Stock otherwise issuable to
Recipient upon or following the vesting of the PSU that number of shares having
an aggregate Fair Market Value (as defined in the Plan), determined as of the
date the withholding tax obligation arises, equal to the amount of the total
withholding tax obligation; provided, however, that, the number of shares so
withheld shall not have an aggregate Fair Market Value in excess of the minimum
required withholding. Recipient acknowledges that the ultimate liability for all
tax-related items legally due by Recipient is and remains Recipient’s
responsibility and that Company and/or its Affiliates (1) make no
representations or undertakings regarding the treatment of any tax-related items
in connection with any aspect of the PSU grant, including the grant or vesting
of the PSU, the subsequent sale of shares of Common Stock and the receipt of any
dividends; and (2) do not commit to structure the terms of the grant or any
aspect of the PSU to reduce or eliminate Recipient’s liability for tax-related
items.

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5.
Voting and Other Rights. Notwithstanding anything to the contrary in the
foregoing, until the issuance of shares of Common Stock pursuant to Section
4(b), the Recipient shall not have any right in, to or with respect to any of
the shares of Common Stock (including any voting rights or rights with respect
to Dividend RSUs, as defined below) issuable under this Agreement until the
shares are actually issued to the Recipient.

6.
No Dividends or Dividend Equivalent Rights. Recipient shall not be entitled to
any dividends or dividend equivalent rights unless and until the PSUs vest and
the shares underlying the PSUs are issued to the Recipient.

7.
Nature of Grant. In accepting the grant, Recipient acknowledges that:

(a)
the Plan is established voluntarily by the Company, it is discretionary in
nature and it may be modified, amended, suspended or terminated by the Company
at any time, unless otherwise provided in the Plan and this Agreement;

(b)
the grant of the PSU is voluntary and occasional and does not create any
contractual or other right to receive future grants of PSUs, or benefits in lieu
of PSUs, even if PSUs have been granted repeatedly in the past, and all
decisions with respect to future PSU grants, if any, will be at the sole
discretion of the Company;

(c)
Recipient’s participation in the Plan shall not create a right to Continued
Service with the Company or an Affiliate and shall not interfere with the
ability the Company or an Affiliate to terminate Recipient’s service
relationship at any time with or without cause;

(d)
Recipient is voluntarily participating in the Plan;

(e)
the PSU is an extraordinary benefit and is not part of normal or expected
compensation or salary for any purposes, including, but not limited to,
calculating any severance, resignation, termination, redundancy, end of service
payments, bonuses, long-service awards, pension or retirement benefits or
similar payments and in no event should be considered as compensation for, or
relating in any way to, past services for the Company or an Affiliate;

(f)
the future value of the underlying shares of Common Stock is unknown and cannot
be predicted with certainty, and if Recipient vests in the PSU and obtains
shares of Common Stock, the value of those shares may increase or decrease in
value; and

(g)
in consideration of the grant of the PSU, no claim or entitlement to
compensation or damages shall arise from termination of the PSU or diminution in
value of the PSU or shares of Common Stock acquired through vesting of the PSU
resulting from termination of Recipient’s Continuous Service by the Company or
an Affiliate (for any reason whatsoever) and Recipient irrevocably releases the
Company and its Affiliates from any such claim that may arise; if,
notwithstanding the foregoing, any such claim is found by a court of competent
jurisdiction to have arisen, then, by signing this Agreement, Recipient shall be
deemed irrevocably to have waived his or her entitlement to pursue such claim.

8.
Electronic Delivery. The Company may, in its sole discretion, decide to deliver
any documents related to the PSU and participation in the Plan or future PSUs
that may be granted under the Plan by electronic means or to request Recipient
consent to participate in the Plan by electronic means. Recipient hereby

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consents to receive such documents by electronic delivery and, if requested, to
agree to participate in the Plan through an on-line or electronic system
established and maintained by the Company or another third party designated by
the Company.
9.
Taxable Event. The Recipient acknowledges that the issuance/vesting of the PSU
shares will have significant tax consequences to the Recipient and Recipient is
hereby advised to consult with Recipient’s own tax advisors concerning such tax
consequences. A general description of the U.S. federal income tax consequences
related to Stock Unit awards is set forth in the Plan Prospectus.

10.
Amendment. This Agreement may be amended only by a writing executed by the
Company and Recipient which specifically states that it is amending this
Agreement. Notwithstanding the foregoing, this Agreement may be amended solely
by the Board by a writing which specifically states that it is amending this
Agreement, so long as a copy of such amendment is delivered to Recipient, and
provided that no such amendment adversely affecting Recipient’s rights hereunder
may be made without Recipient’s written consent. Without limiting the foregoing,
the Board reserves the right to change, by written notice to Recipient, the
provisions of this Agreement in any way it may deem necessary or advisable to
carry out the purpose of the grant as a result of any change in applicable laws
or regulations or any future law, regulation, ruling, or judicial decision,
provided that any such change will be applicable only to rights relating to that
portion of the Award which is then subject to restrictions as provided herein.

11.
Miscellaneous.

(a)
The rights and obligations of the Company under this Agreement will be
transferable by the Company to any one or more persons or entities, and all
covenants and agreements hereunder will inure to the benefit of, and be
enforceable by the Company’s successors and assigns.

(b)
Recipient agrees upon request to execute any further documents or instruments
necessary or desirable in the sole determination of the Company to carry out the
purposes or intent of this Agreement.

(c)
Recipient acknowledges that the PSU award granted to Recipient under the Plan,
and its underlying shares of Common Stock, are subject to all general Company
policies as amended from time to time, including the Company’s insider trading
policies.

12.
Severability. The provisions of this Agreement shall be deemed to be severable
and the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof. If any provision of
this Agreement, or the application thereof to any person or any circumstance, is
held to be invalid or unenforceable under present or future laws effective
during the term of this Agreement, such provision shall be fully severed, and in
lieu thereof there shall automatically be added as part of this Agreement a
suitable and equitable provision in order to carry out, so far as may be valid
and enforceable, the intent and purpose of such invalid or unenforceable
provision.

13.
Governing Law. This Agreement will be governed by and construed in accordance
with the laws of the State of Delaware and applicable federal law.

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14.
Irrevocable Arbitration of Disputes.

(a)
You and the Company agree that any dispute, controversy or claim arising
hereunder or in any way related to this Agreement, its interpretation,
enforceability, or applicability, that cannot be resolved by mutual agreement of
the parties shall be submitted to binding arbitration. The parties agree that
arbitration is the parties’ only recourse for such claims and hereby waive the
right to pursue such claims in any other forum, unless otherwise provided by
law. Any court action involving a dispute which is not subject to arbitration
shall be stayed pending arbitration of arbitrable disputes.

(b)
You and the Company agree that the arbitrator shall have the authority to issue
provisional relief. You and the Company further agree that each has the right,
pursuant to California Code of Civil Procedure section 1281.8, to apply to a
court for a provisional remedy in connection with an arbitrable dispute so as to
prevent the arbitration from being rendered ineffective.

(c)
Any demand for arbitration shall be in writing and must be communicated to the
other party prior to the expiration of the applicable statute of limitations.

(d)
The arbitration shall be administered by JAMS pursuant to its Employment
Arbitration Rules and Procedures. The arbitration shall be conducted in San
Diego by a former or retired judge or attorney with at least 10 years experience
in employment-related disputes, or a non-attorney with like experience in the
area of dispute, who shall have the power to hear motions, control discovery,
conduct hearings and otherwise do all that is necessary to resolve the matter.
The parties must mutually agree on the arbitrator. If the parties cannot agree
on the arbitrator after their best efforts, an arbitrator will be selected from
JAMS pursuant to its Employment Arbitration Rules and Procedures. The Company
shall pay the costs of the arbitrator’s fees.

(e)
The arbitration will be decided upon a written decision of the arbitrator
stating the essential findings and conclusions upon which the award is based.
The arbitrator shall have the authority to award damages, if any, to the extent
that they are available under applicable law(s). The arbitration award shall be
final and binding, and may be entered as a judgment in any court having
competent jurisdiction. Either party may seek review pursuant to California Code
of Civil Procedure section 1286, et seq.

(f)
It is expressly understood that the parties have chosen arbitration to avoid the
burdens, costs and publicity of a court proceeding, and the arbitrator is
expected to handle all aspects of the matter, including discovery and any
hearings, in such a way as to minimize the expense, time, burden and publicity
of the process, while assuring a fair and just result. In particular, the
parties expect that the arbitrator will limit discovery by controlling the
amount of discovery that may be taken (e.g., the number of depositions or
interrogatories) and by restricting the scope of discovery only to those matters
clearly relevant to the dispute. However, at a minimum, each party will be
entitled to at least one (1) deposition and shall have access to essential
documents and witnesses as determined by the arbitrator.

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(g)
The provisions of this Section shall survive the expiration or termination of
the Agreement, and shall be binding upon the parties.

THE PARTIES HAVE READ SECTION 14 AND IRREVOCABLY AGREE TO ARBITRATE ANY DISPUTE
IDENTIFIED ABOVE.
______ (Company)                            ______ (Recipient)
15.
Data Privacy. Recipient hereby explicitly and unambiguously consents to the
collection, use and transfer, in electronic or other form, of his or her
personal data as described in this document by and among, as applicable, the
Company and its Affiliates for the exclusive purpose of implementing,
administering and managing Recipient’s participation in the Plan.

Recipient understands that the Company and its Affiliates may hold certain
personal information about Recipient, including, but not limited to, Recipient’s
name, home address and telephone number, date of birth, social insurance number
or other identification number, salary, nationality, job title, any shares of
stock or directorships held in the Company, details of all PSUs or any other
entitlement to shares of stock awarded, canceled, exercised, vested, unvested or
outstanding in Recipient’s favor, for the purpose of implementing, administering
and managing the Plan (“Data”). Recipient understands that Data may be
transferred to any third parties assisting in the implementation, administration
and management of the Plan, that these Data recipients may be located in
Recipient’s country or elsewhere, and that the Data recipients’ country may have
different data privacy laws and protections than Recipient’s country. Recipient
understands that he or she may request a list with the names and addresses of
any potential recipients of the Data by contacting the local human resources
representative. Recipient authorizes the recipients to receive, possess, use,
retain and transfer the Data, in electronic or other form, for the sole purpose
of implementing, administering and managing Recipient’s participation in the
Plan, including any requisite transfer of such Data as may be required to a
broker or other third party with whom Recipient may elect to deposit any PSUs or
shares of Common Stock. Recipient understands that Data will be held only as
long as is necessary to implement, administer and manage Recipient’s
participation in the Plan. Recipient understands that he or she may, at any
time, view Data, request additional information about the storage and processing
of Data, require any necessary amendments to Data or refuse or withdraw the
consents herein, without cost, by contacting in writing the local human
resources representative. Recipient understands, however, that refusing or
withdrawing consent may affect Recipient’s ability to participate in the Plan.
For more information on the consequences of refusal to consent or withdrawal of
consent, Recipient understands that he or she may contact the local human
resources representative.

16.
Language. If you have received this Agreement or any other document related to
the Plan translated into a language other than English and if the translated
version is different than the English version, the English version will control.

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IN WITNESS WHEREOF, the Company and Recipient have executed this Agreement
effective as of the Effective Grant Date.

CALLAWAY GOLF COMPANY                RECIPIENT

By:        ____________                                    

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