Exhibit 10.30

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

Callaway Golf Company

2180 Rutherford Road

Carlsbad, CA 92008

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

TABLE OF CONTENTS

 

          Page

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Purpose

        1

ARTICLE 1

   Definitions    1

ARTICLE 2

   Selection/Enrollment/Eligibility    7

2.1

   Selection by Committee    7

2.2

   Enrollment Requirements    7

2.3

   Eligibility; Commencement of Participation    7

2.4

   Termination of Participation and/or Deferrals    8

ARTICLE 3

   Deferral Commitments/Company Matching Amounts/Company Contribution
Amounts//Vesting/Crediting/Taxes    8

3.1

   Minimum Deferrals    8

3.2

   Maximum Deferral    9

3.3

   Election to Defer; Effect of Election Form    9

3.4

   Withholding of Annual Deferral Amounts    10

3.5

   Annual Company Matching Amount    10

3.6

   Annual Company Contribution Amount    11

3.7

   Investment of Trust Assets    11

3.8

   Vesting    11

3.9

   Crediting/Debiting of Account Balances    12

3.10

   FICA and Other Taxes    14

3.11

   Distributions    15

ARTICLE 4

   Short-Term Payout/Unforeseeable Financial Emergencies/Change in Control
Withdrawal Elections    15

4.1

   Short-Term Payout    15

4.2

   Other Benefits Take Precedence Over Short-Term    15

4.3

   Withdrawal Payouts for Unforeseeable Financial Emergencies    15

4.4

   Distributions Upon a Change in Control    16

ARTICLE 5

   Survivor Benefit    16

5.1

   Survivor Benefit    16

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

ARTICLE 6

   Termination Benefit    16

6.1

   Termination Benefit    16

6.2

   Payment of Termination Benefit    16

ARTICLE 7

   Disability Waiver and Benefit    17

7.1

   Disability Waiver    17

7.2

   Continued Eligibility; Disability Benefit    18

ARTICLE 8

   Beneficiary Designation    18

8.1

   Beneficiary    18

8.2

   Beneficiary Designation; Change; Spousal Consent    18

8.3

   Acknowledgement    18

8.4

   No Beneficiary Designation    18

8.5

   Doubt as to Beneficiary    19

8.6

   Discharge of Obligations    19

ARTICLE 9

   Reserved    19

ARTICLE 10

   Cessation of Contributions Amendment or Modification    19

10.1

   Cessation of Contributions    19

10.2

   Amendment    19

10.3

   Plan Agreement    19

10.4

   Effect of Payment    20

ARTICLE 11

   Administration    20

11.1

   Committee Duties    20

11.2

   Administration Upon Change In Control    20

11.3

   Agents    21

11.4

   Binding Effect of Decisions    21

11.5

   Indemnity of Committee    21

11.6

   Employer Information    21

ARTICLE 12

   Other Benefits and Agreements    21

12.1

   Coordination with Other Benefits    21

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

ARTICLE 13

   Claims Procedures    21

13.1

   Presentation of Claim    21

13.2

   Notification of Decision    22

13.3

   Review of a Denied Claim    22

13.4

   Decision of Review    23

13.5

   Mediation    23

13.6

   Binding Arbitration    23

ARTICLE 14

   Trust    23

14.1

   Establishment of the Trust    23

14.2

   Interrelationship of the Plan and the Trust    23

14.3

   Distributions From the Trust    24

ARTICLE 15

   Miscellaneous    24

15.1

   Status of Plan    24

15.2

   Unsecured General Creditor    24

15.3

   Employer’s Liability    24

15.4

   Nonassignability    24

15.5

   Not a Contract of Employment    24

15.6

   Furnishing Information    25

15.7

   Terms    25

15.8

   Captions    25

15.9

   Governing Law    25

15.10

   Notice    25

15.11

   Successors    26

15.12

   Spouse’s Interest    26

15.13

   Validity    26

15.14

   Incompetent    26

15.15

   Court Order    26

15.16

   Distribution in the Event of Taxation    26

15.17

   Insurance    27

15.18

   Legal Fees To Enforce Rights After Change in Control    27

15.19

   Disclaimer    28

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

2005 CALLAWAY GOLF COMPANY EXECUTIVE DEFERRED COMPENSATION PLAN

 

Effective January 1, 2005

 

Purpose

 

The purpose of this Plan is to provide specified benefits to a select group of
management and highly compensated Employees and Directors who contribute
materially to the continued growth, development and future business success of
Callaway Golf Company, a Delaware corporation, and its subsidiaries, if any,
that sponsor this Plan. This Plan shall be unfunded for tax purposes and for
purposes of Title I of ERISA.

 

ARTICLE 1

Definitions

 

For purposes of this Plan, unless otherwise clearly apparent from the context,
the following phrases or terms shall have the following indicated meanings:

 

1.1 “Account Balance” shall mean, with respect to a Participant, a credit on the
records of the Employer equal to the sum of (i) the Deferral Account balance,
(ii) the vested Company Matching Account balance, and (iii) the vested Company
Contribution Account balance. The Account Balance, and each other specified
account balance, shall be a bookkeeping entry only and shall be utilized solely
as a device for the measurement and determination of the amounts to be paid to a
Participant, or his or her designated Beneficiary, pursuant to this Plan.

 

1.2 “Annual Base Salary” shall mean the annual cash compensation relating to
services performed during any calendar year, whether or not paid in such
calendar year or included on the Federal Income Tax Form W-2 for such calendar
ear, excluding bonuses, commissions, overtime, fringe benefits, stock options,
restricted stock, relocation expenses, unused and unpaid excess vacation days,
incentive payments, non-monetary awards, directors fees and other fees,
automobile and other allowances paid to a Participant for employment services
rendered (whether or not such allowances are included in the Employee’s gross
income). Annual Base Salary shall be calculated before reduction for
compensation voluntarily deferred or contributed by the Participant pursuant to
all qualified or non-qualified plans of any Employer and shall be calculated to
include amounts not otherwise included in the Participant’s gross income under
Code Sections 125, 402(e)(3), 402(h), or 403(b) pursuant to plans established by
any Employer; provided, however, that all such amounts will be included in
compensation only to the extent that, had there been no such plan, the amount
would have been payable in cash to the Employee.

 

1.3

“Annual Bonus” shall mean any compensation, in addition to Annual Base Salary,
relating to

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

 

services performed during any calendar year, whether or not paid in such
calendar year or included on the Federal Income Tax Form W-2 for such calendar
year, payable to a Participant as an Employee under any Employer’s annual bonus
and cash incentive plans, excluding stock options and restricted stock.

 

1.4 “Annual Company Contribution Amount” shall mean, for any one Plan Year, the
amount determined in accordance with Section 3.6.

 

1.5 “Annual Company Matching Amount” shall mean, for any one Plan Year, the
amount determined in accordance with Section 3.5.

 

1.6 “Annual Deferral Amount” shall mean that portion of a Participant’s Annual
Base Salary, Annual Bonus, Commissions and Directors Fees that a Participant
elects to have, and is deferred, in accordance with Article 3, for any one Plan
Year. In the event of a Participant’s Disability (if deferrals cease in
accordance with Section 7.1), death, or a Termination of Employment prior to the
end of a Plan Year, such year’s Annual Deferral Amount shall be the actual
amount withheld prior to such event.

 

1.7 “Annual Installment Method” shall be an annual installment payment over the
number of years (not to exceed 10) selected by the Participant in accordance
with this Plan, calculated as follows: The Account Balance of the Participant
shall be calculated as of the most recent Valuation Date. The annual installment
shall be calculated by multiplying this balance by a fraction, the numerator of
which is one, and the denominator of which is the remaining number of annual
payments due the Participant. By way of example, if the Participant elects a
10-year Annual Installment Method, the first payment shall be 1/10 of the
Account Balance as of the most recent Valuation Date. The following year, the
payment shall be 1/9 of the Account Balance as of the most recent Valuation
Date. Each annual installment shall be paid as soon as practicable after the
amount is calculated, but not later than thirty days after the Valuation Date.

 

1.8 “Beneficiary” shall mean one or more persons, trusts, estates or other
entities, designated in accordance with Article 8, that are entitled to receive
benefits under this Plan upon the death of a Participant.

 

1.9 “Beneficiary Designation Form” shall mean the form established from time to
time by the Committee that a Participant completes, signs and returns to the
Committee to designate one or more Beneficiaries.

 

1.10 “Board” shall mean the board of directors of the Company or a committee of
the Board.

 

1.11 “Change in Control” shall mean the first to occur of any of a change in the
ownership of the Company, a change in the effective control of the Company, or a
change in the ownership of a substantial portion of the assets of the Company
(as these events are defined in Prop. Reg. § 1.409A-3(g), or as these
definitions may later be modified by final regulation or other regulatory
pronouncement).

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

1.12 “Claimant” shall have the meaning set forth in Section 13.1.

 

1.13 “Code” shall mean the Internal Revenue Code of 1986, as it may be amended
from time to time.

 

1.14 “Commissions” shall mean any compensation in addition to Annual Base Salary
and Annual Bonus relating to services performed during any calendar year,
whether or not paid in such calendar year or included on the Federal Income Tax
Form W-2 for such calendar year, payable to a Participant as an Employee under
any Employer’s commission agreement.

 

1.15 “Committee” shall mean the committee described in Article 11.

 

1.16 “Company” shall mean Callaway Golf Company, a Delaware corporation, and any
successor to all or substantially all of the Company’s assets or business.

 

1.17 “Company Contribution Account” shall mean (i) the sum of the Participant’s
Annual Company Contribution Amounts, plus (ii) amounts credited (net of amounts
debited) in accordance with all the applicable crediting provisions of this Plan
that relate to the Participant’s Company Contribution Account, less (iii) all
distributions made to the Participant or his or her Beneficiary pursuant to this
Plan that relate to the Participant’s Company Contribution Account.

 

1.18 “Company Matching Account” shall mean (i) the sum of all of a Participant’s
Annual Company Matching Amounts, plus (ii) amounts credited (net of amounts
debited) in accordance with all the applicable provisions of this Plan that
relate to the Participant’s Company Matching Account, less (iii) all
distributions made to the Participant or his or her Beneficiary pursuant to this
Plan that relate to the Participant’s Company Matching Account.

 

1.19

“Deduction Limitation” shall mean the following described limitation on a
benefit that may otherwise be distributable pursuant to the provisions of this
Plan. Except as otherwise provided, this limitation shall be applied to all
distributions that are “subject to the Deduction Limitation” under this Plan. If
an Employer determines in good faith prior to a Change in Control that there is
a reasonable likelihood that any compensation paid to a Participant for a
taxable year of the Employer would not be deductible by the Employer solely by
reason of the limitation under Code Section 162(m), then to the extent deemed
necessary by the Employer to ensure that the entire amount of any distribution
to the Participant pursuant to this Plan prior to the Change in Control is
deductible, the Employer may defer all or any portion of a distribution under
this Plan. Any amounts deferred pursuant to this limitation shall continue to be
credited/debited with additional amounts in accordance with Section 3.9 below,
even if such amount is being paid out in installments. The amounts so deferred
and amounts credited thereon shall be distributed to the Participant or his or
her Beneficiary (in the event of the Participant’s death) at the earliest
possible date, as determined by the Employer in good faith, on which the
deductibility of

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

 

compensation paid or payable to the Participant for the taxable year of the
Employer during which the distribution is made will not be limited by
Section 162(m), or if earlier, the effective date of a Change in Control.
Notwithstanding anything to the contrary in this Plan, the Deduction Limitation
shall not apply to any distributions made after a Change in Control.

 

1.20 “Deferral Account” shall mean (i) the sum of all of a Participant’s Annual
Deferral Amounts, plus (ii) amounts credited in accordance with all the
applicable crediting provisions of this Plan that relate to the Participant’s
Deferral Account, less (iii) all distributions made to the Participant or his or
her Beneficiary pursuant to this Plan that relate to his or her Deferral
Account.

 

1.21 “Director” shall mean any member of the board of directors of the Employer.

 

1.22 “Director Fees” shall mean the annual fees paid by any Employer, including
retainer fees and meeting fees, as compensation for serving on the board of
directors.

 

1.23 “Disability” (or, where the context requires, “Disabled”) shall mean a
period of disability during which a Participant is receiving income replacement
benefits for a period of not less than 3 months under an accident and health
plan sponsored by his or her Employer by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, as
determined in the sole discretion of the Committee. In addition, Disability
shall mean the inability to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months, as determined by the Committee in its sole
discretion.

 

1.24 “Disability Benefit” shall mean the benefit set forth in Article 7.

 

1.25 “Election Form” shall mean the form established from time to time by the
Committee that a Participant completes, signs and returns to the Committee to
make an election under the Plan. A Participant may determine, with respect to
each year’s Annual Deferral Amount, the time and manner in which such amounts
shall be distributed.

 

1.26 “Employee” shall mean a person who is an employee of any Employer.

 

1.27 “Employer(s)” shall mean the Company and/or any of its subsidiaries (now in
existence or hereafter formed or acquired) that have been selected by the Board
to participate in the Plan and have adopted the Plan as a sponsor.

 

1.28 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
it may be amended from time to time.

 

1.29 “Identification Date” shall mean the 12-month period ending each
December 31.

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

1.30 “Participant” shall mean any Employee or Director (i) who is selected to
participate in the Plan, (ii) who elects to participate in the Plan, (iii) who
signs a Plan Agreement, an Election Form and a Beneficiary Designation Form,
(iv) whose signed Plan Agreement, Election Form and Beneficiary Designation Form
are accepted by the Committee, (v) who commences participation in the Plan, and
(vi) whose Plan Agreement has not terminated. A spouse or former spouse of a
Participant shall not be treated as a Participant in the Plan or have an account
balance under the Plan, even if he or she has an interest in the Participant’s
benefits under the Plan as a result of applicable law or property settlements
resulting from legal separation or divorce.

 

1.31 “Plan” shall mean the 2005 Callaway Golf Company Executive Deferred
Compensation Plan, which shall be evidenced by this instrument and by each Plan
Agreement, as they may be amended from time to time.

 

1.32 “Plan Agreement” shall mean a written agreement, as may be amended from
time to time, which is entered into by and between an Employer and a
Participant. Each Plan Agreement executed by a Participant and the Participant’s
Employer shall provide for the entire benefit to which such Participant is
entitled under the Plan; should there be more than one Plan Agreement, the Plan
Agreement bearing the latest date of acceptance by the Employer shall supersede
all previous Plan Agreements in their entirety and shall govern such
entitlement. The terms of any Plan Agreement may be different for any
Participant, and any Plan Agreement may provide additional benefits not set
forth in the Plan or limit the benefits otherwise provided under the Plan;
provided, however, that any such additional benefits or benefit limitations must
be agreed to by both the Employer and the Participant.

 

1.33 “Plan Year” shall mean a period beginning on January 1 of each calendar
year and continuing through December 31 of such calendar year.

 

1.34 “401(k) Plan” shall be that certain Callaway Golf Company defined
contribution plan intended to satisfy the requirements of Sections 401(a),
401(k), 401(m), and 414(i) of the Code, as adopted by the Company.

 

1.35 “Separation from Service” shall mean the Participant’s termination of
employment from the Company, subject to the following conditions:

 

  a)

If the Participant takes a leave of absence from the Company for purposes of
military leave, sick leave, or other bona fide leave of absence, the
Participant’s employment will be deemed to continue for the first six months of
the leave of absence, or if longer, for so long as the Participant’s right to
reemployment is provided by either by statute or by contract. If the period of
the leave exceeds six months and the Participant’s right to reemployment is

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

 

not provided by either statute or contract, the Participant will be considered
to have incurred a Separation from Service on the first day of the seventh month
of the leave of absence.

 

  b) If the Participant provides insignificant services to the Company, the
Participant will be deemed to have incurred a Separation from Service. For this
purpose, the Participant is considered to be providing insignificant services if
he provides services at an annual rate that is less than twenty percent of the
services rendered by such individual, on average, during the immediately
preceding three calendar years of employment (or such lesser period of
employment) or the annual remuneration for such services is less than twenty
percent of the average annual remuneration earned during the final three full
calendar years of employment (or such less period of employment).

 

  c) If the Participant continues to provide services to the Company in a
capacity other than as an employee, the Participant will not be deemed to have a
Separated from Service if the Participant is providing services at an annual
rate that is at least fifty percent of the services rendered by such individual,
on average, during the immediately preceding three calendar years of employment
(or such lesser period of employment) and the annual remuneration for such
services is at least fifty percent of the average annual remuneration earned
during the final three full calendar years of employment (or such less period of
employment).

 

1.36 “Short-Term Payout” shall mean the payout set forth in Section 4.1.

 

1.37 “Survivor Benefit” shall mean the benefit set forth in Article 5.

 

1.38 “Termination Benefit” shall mean the benefit set forth in Article 6.

 

1.39 “Termination of Employment” or “Terminate” shall mean the severing of
employment with all Employers, or service as a Director of all Employers,
voluntarily or involuntarily, for any reason other than Disability, death or an
authorized leave of absence. If a Participant is both an Employee and a
Director, a Termination of Employment shall occur only upon the termination of
the last position held. Notwithstanding the foregoing, a Termination of
Employment shall only occur under this Plan if such Termination of Employment
constitutes a “Separation from Service” under Code Section 409A (as defined
above).

 

1.40

“Trust” shall mean one or more trusts established pursuant to that certain
Master Trust

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

 

Agreement, dated as of May 6, 2002 between the Company and the Trustee named
therein, as amended from time to time.

 

1.41 “Unforeseeable Financial Emergency” shall mean an unanticipated emergency
that is caused by an event beyond the control of the Participant that would
result in severe financial hardship to the Participant resulting from (i) a
sudden and unexpected illness or accident of the Participant or a dependent of
the Participant, (ii) a loss of the Participant’s property due to casualty, or
(iii) such other extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Participant, all as determined in the
sole discretion of the Committee.

 

1.42 “Years of Service” shall mean the total number of years in which a
Participant has been employed by one or more Employers. For purposes of this
definition, a year of employment shall be a 365 day period (or 366 day period in
case of a leap year) that, for the first year of employment, commences on the
Employee’s date of hiring and that, for any subsequent year, commences on an
anniversary of that hiring date. The Committee shall make a determination as to
the number of Years of Service a Participant shall be deemed to have completed,
including whether any partial year of employment shall be counted, and any such
determination may, in the sole discretion of the Committee, take into account
any similar definitions or provisions contained in the Qualified Plan.

 

ARTICLE 2

Selection/Enrollment/Eligibility

 

2.1 Selection by Committee. Participation in the Plan shall be limited to a
select group of management and highly compensated Employees and Directors of the
Employers, as determined by the Committee in its sole discretion. From that
group, the Committee shall select, in its sole discretion, Employees and
Directors to participate in the Plan.

 

2.2 Enrollment Requirements. As a condition to participation, each selected
Employee or Director shall complete, execute and return to the Committee a Plan
Agreement, an Election Form and a Beneficiary Designation Form, all within
thirty (30) days after he or she is selected to participate in the Plan. In
addition, the Committee shall establish from time to time such other enrollment
requirements as it determines in its sole discretion are necessary.

 

2.3

Eligibility; Commencement of Participation. Provided an Employee or Director
selected to participate in the Plan has met all enrollment requirements set
forth in this Plan and required by the Committee, including returning all
required documents to the Committee within the specified time period, that
Employee or Director shall commence participation in the Plan on the first day
of the month following the month in which the Employee or Director completes all
enrollment requirements. If an Employee or a Director fails to meet all such
requirements within the period

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

 

required, in accordance with Section 2.2, that Employee or Director shall not be
eligible to participate in the Plan until the first day of the Plan Year
following the delivery to and acceptance by the Committee of the required
documents.

 

2.4 Termination of Participation and/or Deferrals. If the Committee determines
in good faith that a Participant no longer qualifies as a member of a select
group of management or highly compensated employees, as membership in such group
is determined in accordance with Sections 201(2), 301(a)(3) and 401(a)(1) of
ERISA, the Committee shall have the right, in its sole discretion, to
(i) terminate any deferral election the Participant has made for the remainder
of the Plan Year in which the Participant’s membership status changes, and
(ii) prevent the Participant from making future deferrals.

 

ARTICLE 3

Deferral Commitments/Company Matching Amounts/Company Contribution
Amounts/Vesting/Crediting/Taxes

 

3.1 Minimum Deferrals.

 

  (a) Annual Base Salary, Annual Bonus and Director Fees. For each Plan Year, a
Participant may elect to defer, as his or her Annual Deferral Amount, Annual
Base Salary, Annual Bonus, Commissions and/or Director Fees in the following
minimum amount:

 

Deferral

--------------------------------------------------------------------------------

   Minimum Amount

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Annual Base Salary, Commissions and/or Annual Bonus

   $ 5,000 aggregate

Director Fees

   $ 0

 

If an election is made for less than such minimums or if no election is made,
the amount deferred shall be zero.

 

  (b) Short Plan Year. Notwithstanding the foregoing, if a Participant first
becomes a Participant after the first day of a Plan Year, the minimum Annual
Deferral Amount shall be an amount equal to the minimum set forth above,
multiplied by a fraction, the numerator of which is the number of complete
months remaining in the Plan Year and the denominator of which is 12.

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

3.2 Maximum Deferral.

 

  (a) Annual Base Salary, Annual Bonus and Directors Fees. For each Plan Year, a
Participant may elect to defer, as his or her Annual Deferral Amount, Annual
Base Salary, Annual Bonus and/or Director Fees up to the following maximum
percentages for each deferral elected:

 

Deferral

--------------------------------------------------------------------------------

   Maximum Amount

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Annual Base Salary

   75 %

Commissions

   100 %

Annual Bonus

   100 %

Director Fees

   100 %

 

  (b) Short Plan Year. Notwithstanding the foregoing, if a Participant first
becomes a Participant after the first day of a Plan Year, or in the case of the
First Plan Year of the Plan itself, the maximum Annual Deferral Amount with
respect to Annual Base Salary, Annual Bonus and/or Director Fees shall be
limited to the amount of compensation not yet earned by the Participant as of
the date the Participant submits a Plan Agreement and Election Form to the
Committee for acceptance.

 

3.3 Election to Defer; Effect of Election Form.

 

  (a) First Plan Year. In connection with a Participant’s commencement of
participation in the Plan, the Participant shall make an irrevocable deferral
election of future compensation for the Plan Year in which the Participant
commences participation in the Plan, along with such other elections as the
Committee deems necessary or desirable under the Plan. For these elections to be
valid, the Election Form must be completed and signed by the Participant, timely
delivered to the Committee (in accordance with Section 2.2 above) and accepted
by the Committee. Notwithstanding the foregoing, with respect to the 2005 Plan
Year, Participants are required to submit the Election Form for the deferral of
Annual Base Salary earned after March 15, 2005, prior to March 15, 2005. The
deadline for submitting the Election Form for the 2005 Annual Bonus is June 30,
2005.

 

  (b) Subsequent Plan Years. For each succeeding Plan Year, an irrevocable
deferral election for that Plan Year, and such other elections as the Committee
deems necessary or desirable under the Plan, shall be made by timely delivering
to the Committee, in accordance with its rules and procedures, before the end of
the Plan Year preceding the Plan Year for which the election is made, a new
Election Form. If no such Election Form is timely delivered for a Plan Year, the
Annual Deferral Amount shall be zero for that Plan Year.

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

  (c) Revocation of 2005 Elections. On or before December 31, 2005, a
Participant may cancel his or her deferral election that was effective for the
2005 Plan Year. All amounts subject to the cancellation will be included in the
Participant’s taxable income in 2005.

 

3.4 Withholding of Annual Deferral Amounts. For each Plan Year, the Annual Base
Salary portion of the Annual Deferral Amount shall be withheld from each
regularly scheduled Annual Base Salary payroll in equal amounts over each pay
period, as adjusted from time to time for increases and decreases in Annual Base
Salary. The Commissions, Annual Bonus and/or Director Fees portion of the Annual
Deferral Amount shall be withheld at the time the Commissions, Annual Bonus or
Director Fees are or otherwise would be paid to the Participant, whether or not
this occurs during the Plan Year itself.

 

3.5 Annual Company Matching Amount. For each Plan Year, the Company, at its sole
discretion, shall determine whether to credit Participants with an Annual
Company Matching Amount. A Participant’s Annual Company Matching Amount, if any,
shall be a sum not to exceed all Pay Period Company Matching Contributions, if
any, for the Plan Year. For this purpose, a Pay Period Company Matching
Contribution shall mean an amount which, when added to the matching contribution
allocated to the Participant’s account under the 401(k) Plan for the same pay
period, equals the match the Participant would have received under the 401(k)
Plan during the corresponding plan year of the 401(k) Plan, if the portion of
Annual Base Salary elected to be deferred had instead been elected and
contributed as a salary deferral contribution under the 401(k) Plan (determined
as if the 401(k) Plan was not subject to the limitations imposed under Code
Sections 401(a)(17), 401(k)(3), 402(g) and 415). The Company shall, at its
discretion, determine when to credit any Plan Year’s Annual Company Matching
Amount. Notwithstanding any provision of this Plan to the contrary, the Company
shall have the right, in its sole and absolute discretion, to alter the manner
in which the Annual Company Matching Amount is calculated.

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

3.6 Annual Company Contribution Amount. For each Plan Year, an Employer, in its
sole discretion, may, but is not required to, credit any amount it desires to
any Participant’s Company Contribution Account under this Plan, which amount
shall be for that Participant the Annual Company Contribution Amount for that
Plan Year. The amount so credited to a Participant may be smaller or larger than
the amount credited to any other Participant, and the amount credited to any
Participant for a Plan Year may be zero, even though one or more other
Participants receive an Annual Company Contribution Amount for that Plan Year.
The Annual Company Contribution Amount, if any, shall be credited as of any date
within the Plan Year as selected by the Company. If a Participant is not
employed by an Employer as of such date, other than by reason of his or her
death while employed, the Annual Company Contribution Amount for that Plan Year
shall be zero.

 

3.7 Investment of Trust Assets. The Trustee of the Trust shall be authorized,
upon written instructions received from the Committee or investment manager
appointed by the Committee, to invest and reinvest the assets of the Trust in
accordance with the applicable Trust Agreement.

 

3.8 Vesting.

 

  (a) A Participant shall at all times be 100% vested in his or her Deferral
Account.

 

  (b) The Committee, in its sole discretion, will determine over what period of
time and in what percentage increments a Participant shall vest in his or her
Company Contribution Account. The Committee may credit some Participants with
larger or smaller vesting percentages than other Participants, and the vesting
percentage credited to any Participant for a Plan Year may be zero, even though
one or more other Participants have a greater vesting percentage credited to
them for that Plan Year. Absent the exercise of such discretion, a Participant
shall be fully vested upon attainment of age 62.

 

  (c) A Participant shall be vested in his or her Annual Company Matching Amount
in accordance with the following schedule:

 

Years of Service on Date
of Termination of Employment

--------------------------------------------------------------------------------

   Vested Percentage
of Annual Company
Matching Account

--------------------------------------------------------------------------------

Less than 1 year

   0%

1 year

   25%

2 years

   50%

3 years

   75%

4 or more years

   100%

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

Regardless of the number of Years of Service, a Participant shall be fully
vested upon attainment of age 62.

 

  (d) Notwithstanding anything in this Section to the contrary, except as
provided in subsection (e) below, in the event of a Change in Control, a
Participant’s Company Contribution Account and Company Matching Account shall
immediately become 100% vested (without regard to whether it is already vested
in accordance with the above vesting schedules).

 

  (e) Notwithstanding subsection (d) above, the vesting schedule for a
Participant’s Company Contribution Account and/or Company Matching Account shall
not be accelerated to the extent that the Committee determines that such
acceleration would cause the deduction limitations of Section 280G of the Code
to become effective. In the event that all of a Participant’s Company
Contribution Account is not vested pursuant to such a determination, the
Participant may request independent verification of the Committee’s calculations
with respect to the application of Section 280G. In such case, the Committee
must provide to the Participant within thirty (30) business days of such a
request an opinion from a nationally-recognized accounting firm selected by the
Committee (the “Accounting Firm”). The opinion shall state the Accounting Firm’s
opinion that any limitation in the vested percentage hereunder is necessary to
avoid the limits of Section 280G and contain supporting calculations. The cost
of such opinion shall be paid for by the Company.

 

3.9 Crediting/Debiting of Account Balances. In accordance with, and subject to,
the rules and procedures that are established from time to time by the
Committee, in its sole discretion, amounts shall be credited or debited to a
Participant’s Account Balance in accordance with the following rules:

 

  (a)

Election of Measurement Funds. A Participant, in connection with his or her
initial deferral election in accordance with Section 3.3(a) above, shall elect,
on the Election Form, one or more Measurement Fund(s) to be used to determine
the additional amounts to be credited to his or her Account Balance for the
first business day in which the Participant commences participation in the Plan
and continuing thereafter for each subsequent day in which the Participant
participates in the Plan, unless changed in accordance with the next sentence.
Commencing with the first business day that follows the Participant’s
commencement of participation in the Plan and continuing thereafter for each
subsequent day in which the Participant participates in the Plan, the
Participant may (but is not required to) elect, by submitting an Election Form
to the Committee that is accepted by the Committee, to add or delete one or more
Measurement Fund(s) to be used to determine the additional amounts to be
credited to his or her Account Balance, or

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

 

to change the portion of his or her Account Balance allocated to each previously
or newly elected Measurement Fund. If an election is made in accordance with the
previous sentence, it shall apply to the next business day and continue
thereafter for each subsequent day in which the Participant participates in the
Plan, unless changed in accordance with the previous sentence.

 

  (b) Proportionate Allocation. In making any election described in
Section 3.10(a) above, the Participant shall specify on the Election Form, in
increments of five percentage points (5%), the percentage of his or her Account
Balance to have gains and losses measured by a Measurement Fund.

 

  (c) Measurement Funds. From time to time, the Committee in its sole discretion
shall select and announce to Participants its selection of mutual funds,
insurance company separate accounts, indexed rates or other methods (each, a
“Measurement Fund”), for the purpose of providing the basis on which gains and
losses shall be attributed to Account Balances under the Plan. The Committee
may, in its sole discretion, discontinue, substitute or add a Measurement Fund
at any time. Each such action will take effect as of the first day of the
calendar quarter that follows by thirty (30) days the day on which the Committee
gives Participants advance written notice of such change.

 

  (d) Crediting or Debiting Method. The performance of each elected Measurement
Fund (either positive or negative) will be determined by the Committee, in its
reasonable discretion, based on available reports of the performance of the
Measurement Funds. A Participant’s Account Balance shall be credited or debited
on a daily basis based on the performance of each Measurement Fund selected by
the Participant, as determined by the Committee in its sole discretion, as
though (i) a Participant’s Account Balance were invested in the Measurement
Fund(s) selected by the Participant, in the percentages applicable to such day,
as of the close of business on such day, at the closing price on such date;
(ii) the portion of the Annual Deferral Amount that was actually deferred during
any day were invested in the Measurement Fund(s) selected by the Participant, in
the percentages applicable to such day, no later than the close of business on
the first business day after the day on which such amounts are actually deferred
from the Participant’s Annual Base Salary through reductions in his or her
payroll, at the closing price on such date; and (iii) any distribution made to a
Participant that decreases such Participant’s Account Balance ceased being
invested in the Measurement Fund(s), in the percentages applicable to such day,
no earlier than one business day prior to the distribution, at the closing price
on such date.

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

  (e) No Actual Investment. Notwithstanding any other provision of this Plan
that may be interpreted to the contrary, the Measurement Funds are to be used
for measurement purposes only, and a Participant’s election of any such
Measurement Fund, the allocation to his or her Account Balance thereto, the
calculation of additional amounts and the crediting or debiting of such amounts
to a Participant’s Account Balance shall not be considered or construed in any
manner as an actual investment of his or her Account Balance in any such
Measurement Fund. In the event that the Company or the Trustee (as that term is
defined in the Trust), in its own discretion, decides to invest funds in any or
all of the Measurement Funds, no Participant shall have any rights in or to such
investments themselves. Without limiting the foregoing, a Participant’s Account
Balance shall at all times be a bookkeeping entry only and shall not represent
any investment made on his or her behalf by the Company or the Trust; the
Participant shall at all times remain an unsecured creditor of the Company.

 

3.10 FICA and Other Taxes.

 

  (a) Annual Deferral Amounts. For each Plan Year in which an Annual Deferral
Amount is being withheld from an Employee Participant, the Participant’s
Employer(s) shall withhold from that portion of the Participant’s Annual Base
Salary, Annual Bonus and/or Commissions that is not being deferred, in a manner
determined by the Employer(s), the Participant’s share of FICA and other
employment taxes on such Annual Deferral Amount. If necessary, the Committee may
reduce the Annual Deferral Amount in order to comply with this Section.

 

  (b) Company Matching Amounts. When a participant becomes vested in a portion
of his or her Company Matching Account, the Participant’s Employer(s) shall
withhold from the Participant’s Annual Base Salary, Annual Bonus and/or
Commissions that is not deferred, in a manner determined by the Employer(s), the
Participant’s share of FICA and other employment taxes. If necessary, the
Committee may reduce the vested portion of the Participant’s Company Matching
Account in order to comply with this Section.

 

  (c) Other Amounts. When an Employee Participant becomes vested in a portion of
his or her Annual Company Contribution Amounts, the Participant’s Employer(s)
shall withhold from the Participant’s Annual Base Salary, Annual Bonus and/or
Commissions that is not deferred, in a manner determined by the Employer(s), the
Participant’s share of FICA and other employment taxes. If necessary, the
Committee may reduce the vested portion of the Participant’s aforementioned
amounts in order to comply with this Section.

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

3.11 Distributions. The Participant’s Employer(s), or the Trustee of the Trust,
shall withhold from any payments made to a Participant under this Plan all
federal, state and local income, employment and other taxes required to be
withheld by the Employer(s), or the Trustee of the Trust, in connection with
such payments, in amounts and in a manner to be determined in the sole
discretion of the Employer(s) and the Trustee of the Trust. The Employer(s) and
the Trustee of the Trust shall also be authorized to withhold any amount validly
owed to the Employer for which the Employer has previously requested but not
received payment.

 

ARTICLE 4

Short-Term Payout/Unforeseeable Financial Emergencies/Change in Control
Withdrawal Elections

 

4.1 Short-Term Payout. In connection with each election to defer an Annual
Deferral Amount, a Participant may irrevocably elect to receive a future
“Short-Term Payout” from the Plan with respect to such Annual Deferral Amount.
Subject to the Deduction Limitation, the Short-Term Payout shall be a lump sum
payment in an amount that is equal to the Annual Deferral Amount plus amounts
credited or debited in the manner provided in Section 3.9 above on that amount,
determined at the time that the Short-Term Payout becomes payable (rather than
the date of a Termination of Employment). Subject to the Deduction Limitation
and the other terms and conditions of this Plan, each Short-Term Payout elected
shall be paid out during a sixty (60) day period commencing immediately after
the last day of any Plan Year designated by the Participant that is at least
three Plan Years after the end of the Plan Year in which the Annual Deferral
Amount is actually deferred. By way of example, if a three year Short-Term
Payout is elected for Annual Deferral Amounts that are deferred in the Plan Year
commencing January 1, 2006, the three year Short-Term Payout would become
payable during a sixty (60) day period commencing January 1, 2010.

 

4.2 Other Benefits Take Precedence Over Short-Term. Should an event occur that
triggers a benefit under Article 5, 6, 7 or 8, any Annual Deferral Amount, plus
amounts credited or debited thereon, that is subject to a Short-Term Payout
election under Section 4.1 shall not be paid in accordance with Section 4.1 but
shall be paid in accordance with the other applicable Article.

 

4.3

Withdrawal Payouts for Unforeseeable Financial Emergencies. If the Participant
experiences an Unforeseeable Financial Emergency, the Participant may petition
the Committee to receive a partial or full payout from the Plan. The payout
shall not exceed the lesser of the Participant’s Account Balance, calculated as
if such Participant were receiving a Termination Benefit, or the amount
reasonably needed to satisfy the Unforeseeable Financial Emergency, taking into
account any additional compensation that would be available if the Participant
terminated his deferral election. Notwithstanding the irrevocability of the
elections described in subsections 3.3(a) and (b), a Participant’s deferral
elections shall be cancelled for the balance of

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

 

the current Plan Year if the Participant receives a hardship distribution under
the Employer’s 401(k) Plan or a distribution due to an unforeseeable emergency
under this Plan. If, subject to the sole discretion of the Committee, the
petition for a payout is approved, any payout shall be made within sixty
(60) days of the date of approval. The payment of any amount under this
Section 4.3 shall not be subject to the Deduction Limitation.

 

4.4 Distributions Upon a Change in Control. Notwithstanding any other election
made by Participants regarding when Plan benefits shall be distributed,
Participants may elect annually whether they wish to receive a lump sum payout
following a Change in Control with respect to amounts subject to that year’s
election. If such an election is made, distributions following a Change in
Control shall be paid as soon as practicable and in a lump sum cash
distribution. The Change in Control must relate to the Company or the
Participant’s employer if the Company owns a majority of the total fair market
value and total voting power of the stock of the Participant’s employer.

 

ARTICLE 5

Survivor Benefit

 

5.1 Survivor Benefit. Subject to the Deduction Limitation, if the Participant
dies before he or she experiences a Termination of Employment, the Participant’s
Beneficiary shall be entitled to receive the Termination Benefit described in
Section 6.2 as if Participant Terminated his or her employment with the Company
and the Election Form on file with the Company shall control the manner in which
Termination Benefit is paid. Should the Participant die after the Termination of
Employment, but before the Termination Benefit is paid in full, the unpaid
balance shall continue to be paid to the Beneficiary according to the Annual
Installment Method previously selected by the Participant.

 

ARTICLE 6

Termination Benefit

 

6.1 Termination Benefit. Subject to the Deduction Limitation, a Participant
shall receive a Termination Benefit, which shall be equal to the Participant’s
Account Balance if a Participant experiences a Termination of Employment prior
to his or her death or Disability.

 

6.2

Payment of Termination Benefit. A Participant, in connection with his or her
commencement of participation in the Plan, shall elect on an Election Form to
receive the Termination Benefit in a lump sum or pursuant to the Annual
Installment Method. The Termination Benefit will be paid not later than 60 days
after the end of the Plan Year in which the Participant terminates his or her
employment; provided, however, that distribution may not be made within 6 months
of the

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

 

Termination of Employment of a key employee (as defined in Code Section 416(i)
without regard to paragraph 5 thereof except that the compensation taken into
account to determine key employee status shall be the compensation paid to the
Participant during the 12 month period ending on the Identification Date). The
Participant may change his or her election, to the extent such change does not
accelerate the time of any scheduled payment under the Plan or fail to comply
with the provisions of Code Section 409A(a)(4)(C), to an allowable alternative
payout period by submitting a new Election Form to the Committee, provided that
any such Election Form is accepted by the Committee, in its sole discretion. The
Election Form most recently accepted by the Committee shall govern the payout of
the Termination Benefit. If a Participant does not make any election with
respect to the payment of the Termination Benefit, then such benefit shall be
payable in a lump sum. Any payment made shall be subject to the Deduction
Limitation. Notwithstanding the foregoing or anything in this Plan to the
contrary, to the extent a Participant’s Account Balance is less than $25,000 at
the time of Termination of Employment, the Committee shall cause the Termination
Benefit to be paid in a lump sum.

 

ARTICLE 7

Disability Waiver and Benefit

 

7.1 Disability Waiver.

 

  (a) Waiver of Deferral. A Participant who is determined by the Committee to be
suffering from a Disability shall be (i) excused from fulfilling that portion of
the Annual Deferral Amount commitment that would otherwise have been withheld
from a Participant’s Annual Base Salary, Annual Bonus, Commissions and/or
Directors Fees for the Plan Year during which the Participant first suffers a
Disability. During the period of Disability, the Participant shall not be
allowed to make any additional deferral elections, but will continue to be
considered a Participant for all other purposes of this Plan.

 

  (b) Return to Work. If a Participant returns to employment, or service as a
Director, with an Employer, after a Disability ceases, the Participant may elect
to defer an Annual Deferral Amount for the Plan Year following his or her return
to employment or service and for every Plan Year thereafter while a Participant
in the Plan; provided such deferral elections are otherwise allowed and an
Election Form is delivered to and accepted by the Committee for each such
election in accordance with Section 3.3 above.

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

7.2 Continued Eligibility; Disability Benefit. A Participant determined by the
Committee to be Disabled shall be deemed to have experienced a Termination of
Employment and shall receive a lump sum Disability Benefit equal to his or her
Account Balance at the time of the Committee’s determination. Any payment made
shall be subject to the Deduction Limitation.

 

ARTICLE 8

Beneficiary Designation

 

8.1 Beneficiary. Each Participant shall have the right, at any time, to
designate his or her Beneficiary(ies) (both primary as well as contingent) to
receive any benefits payable under the Plan to a beneficiary upon the death of a
Participant. The Beneficiary designated under this Plan may be the same as or
different from the Beneficiary designation under any other plan of an Employer
in which the Participant participates. A Participant’s designation of a spouse
as a Beneficiary shall automatically be revoked following the issuance of a
final judgment of divorce between the parties.

 

8.2 Beneficiary Designation; Change; Spousal Consent. A Participant shall
designate his or her Beneficiary by completing and signing the Beneficiary
Designation Form, and returning it to the Committee or its designated agent. A
Participant shall have the right to change a Beneficiary by completing, signing,
and otherwise complying with the terms of the Beneficiary Designation Form and
the Committee’s rules and procedures, as in effect from time to time. If the
Participant names someone other than his or her spouse as a Beneficiary, a
spousal consent, in the form designated by the Committee, must be signed by that
Participant’s spouse (with such signature witnessed either by a notary public or
a member of the Committee) and returned to the Committee. Upon the acceptance by
the Committee of a new Beneficiary Designation Form, all Beneficiary
designations previously filed shall be canceled. The Committee shall be entitled
to rely on the last Beneficiary Designation Form filed by the Participant and
accepted by the Committee prior to his or her death.

 

8.3 Acknowledgment. No designation or change in designation of a Beneficiary
shall be effective until received and acknowledged in writing by the Committee
or its designated agent.

 

8.4 No Beneficiary Designation. If a Participant fails to designate a
Beneficiary as provided in Sections 8.1, 8.2, and 8.3 above or, if all
designated Beneficiaries predecease the Participant or die prior to complete
distribution of the Participant’s benefits, then the Participant’s designated
Beneficiary shall be deemed to be his or her surviving spouse. If the
Participant has no surviving spouse, the benefits remaining under the Plan to be
paid to a Beneficiary shall be payable to the executor or personal
representative of the Participant’s estate.

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

8.5 Doubt as to Beneficiary. If the Committee has any doubt as to the proper
Beneficiary to receive payments pursuant to this Plan, the Committee shall have
the right, exercisable in its discretion, to cause the Participant’s Employer to
withhold such payments until this matter is resolved to the Committee’s
satisfaction.

 

8.6 Discharge of Obligations. The payment of benefits under the Plan to a
Beneficiary shall fully and completely discharge all Employers and the Committee
from all further obligations under this Plan with respect to the Participant,
and that Participant’s Plan Agreement shall terminate upon such full payment of
benefits.

 

ARTICLE 9

Reserved

 

ARTICLE 10

Cessation of Contributions Amendment or Modification

 

10.1 Cessation of Contributions. Although each Employer anticipates that it will
continue contributing to the Plan for an indefinite period of time, there is no
guarantee that any Employer will continue making contributions to the Plan
indefinitely. Accordingly, each Employer reserves the right to discontinue
funding contributions to the Plan (including the Participant’s Annual Deferral
Amount, the Annual Company Matching Amount, and the Annual Company Contribution
Amount), by action of its board of directors. Notwithstanding the cessation of
future contributions, payment of a Participant’s Account Balance shall be in
accordance with the person’s Election Form.

 

10.2 Amendment. The Employer’s Board delegates to the Chief Executive Officer,
or his designee(s), the authority to modify, amend, or restate the Plan as
appropriate in their discretion, as well as the authority to act on behalf of
the Employer in discharging the duties of the Employer in administering the
Plan; provided, however, that no amendment or modification shall be effective to
decrease or restrict the value of a Participant’s Account Balance in existence
at the time the amendment or modification is made, calculated as if the
Participant had experienced a Termination of Employment as of the effective date
of the amendment or modification. The amendment or modification of the Plan
shall not affect any Participant or Beneficiary who has become entitled to the
payment of benefits under the Plan as of the date of the amendment or
modification.

 

10.3 Plan Agreement. Despite the provisions of Sections 10.1 and 10.2 above, if
a Participant’s Plan Agreement contains benefits or limitations that are not in
this Plan document, the Employer may only amend or terminate such provisions
with the consent of the Participant.

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

10.4 Effect of Payment. The full payment of the applicable benefit under
Articles 4, 5, 6, 7 or 8 of the Plan shall completely discharge all obligations
to a Participant and his or her designated Beneficiaries under this Plan and the
Participant’s Plan Agreement shall terminate.

 

ARTICLE 11

Administration

 

11.1 Committee Duties. Except as otherwise provided in this Article 11, this
plan shall be administered by a Committee, which shall consist of those persons
appointed by the Chief Executive Officer of the Company. Members of the
Committee may be Participants under this Plan. The Committee shall also have the
discretion and authority to (i) make, amend, interpret, and enforce all
appropriate rules and regulations for the administration of this Plan and
(ii) decide or resolve any and all questions including interpretations of this
Plan, as may arise in connection with the Plan. Any individual serving on the
Committee who is a Participant shall not vote or act on any matter relating
solely to himself or herself. When making a determination or calculation, the
Committee shall be entitled to rely on information furnished by a Participant or
the Company.

 

11.2

Administration Upon Change In Control. For purposes of this Plan, the Company
shall be the “Administrator” at all times prior to the occurrence of a Change in
Control. Upon and after the occurrence of a Change in Control, the
“Administrator” shall be an independent third party selected by the Trustee and
approved by the individual who, immediately prior to such event, was the
Company’s Chief Executive Officer or, if not available or willing to assume such
responsibility, the Company’s highest ranking officer (the “Ex-CEO”). The
Administrator shall have the discretionary power to determine all questions
arising in connection with the administration of the Plan and the interpretation
of the Plan and Trust including, but not limited to benefit entitlement
determinations; provided, however, upon and after the occurrence of a Change in
Control, the Administrator shall have no power to direct the investment of Plan
or Trust assets or select any investment manager or custodial firm for the Plan
or Trust. Upon and after the occurrence of a Change in Control, the Company
must: (1) pay all reasonable administrative expenses and fees of the
Administrator; (2) indemnify the Administrator against any costs, expenses and
liabilities including, without limitation, attorney’s fees and expenses arising
in connection with the performance of the Administrator hereunder, except with
respect to matters resulting from the gross negligence or willful misconduct of
the Administrator or its employees or agents; and (3) supply full and timely
information to the Administrator or all matters relating to the Plan, the Trust,
the Participants and their Beneficiaries, the Account Balances of the
Participants, the date of circumstances of the Disability, death or Termination
of Employment of the Participants, and such other pertinent information as the
Administrator may reasonably require. Upon and after a Change in Control, the
Administrator may be terminated

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

 

(and a replacement appointed) by the Trustee only with the approval of the
Ex-CEO. Upon and after a Change in Control, the Administrator may not be
terminated by the Company.

 

11.3 Agents. In the administration of this Plan, the Committee may, from time to
time, employ agents and delegate to them such administrative duties as it sees
fit (including acting through a duly appointed representative) and may from time
to time consult with counsel who may be counsel to any Employer.

 

11.4 Binding Effect of Decisions. The decision or action of the Administrator
with respect to any question arising out of or in connection with the
administration, interpretation and application of the Plan and the rules and
regulations promulgated hereunder shall be final and conclusive and binding upon
all persons having any interest in the Plan.

 

11.5 Indemnity of Committee. All Employers shall indemnify and hold harmless the
members of the Committee, and any Employee to whom the duties of the Committee
may be delegated, and the Administrator against any and all claims, losses,
damages, expenses or liabilities arising from any action or failure to act with
respect to this Plan, except in the case of willful misconduct by the Committee,
any of its members, any such Employee or the Administrator.

 

11.6 Employer Information. To enable the Committee and/or Administrator to
perform its functions, the Company and each Employer shall supply full and
timely information to the Committee and/or Administrator, as the case may be, on
all matters relating to the compensation of its Participants, the date and
circumstances of the Disability, death or Termination of Employment of its
Participants, and such other pertinent information as the Committee or
Administrator may reasonably require.

 

ARTICLE 12

Other Benefits and Agreements

 

12.1 Coordination with Other Benefits. The benefits provided for a Participant
and Participant’s Beneficiary under the Plan are in addition to any other
benefits available to such Participant under any other plan or program for
employees of the Participant’s Employer. The Plan shall supplement and shall not
supersede, modify or amend any other such plan or program except as may
otherwise be expressly provided.

 

ARTICLE 13

Claims Procedures

 

13.1

Presentation of Claim. Any Participant or Beneficiary of a deceased Participant
(such Participant or Beneficiary being referred to below as a “Claimant”) may
deliver to the Committee a written claim for a determination with respect to the
amounts distributable to such

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

 

Claimant from the Plan. If such a claim relates to the contents of a notice
received by the Claimant, the claim must be made within sixty (60) days after
such notice was received by the Claimant. All other claims must be made within
180 days of the date on which the event that caused the claim to arise occurred.
The claim must state with particularity the determination desired by the
Claimant.

 

13.2 Notification of Decision. The Committee shall consider a Claimant’s claim
within a reasonable time, and shall notify the Claimant in writing:

 

  (a) that the Claimant’s requested determination has been made, and that the
claim has been allowed in full; or

 

  (b) that the Committee has reached a conclusion contrary, in whole or in part,
to the Claimant’s requested determination, and such notice must set forth in a
manner calculated to be understood by the Claimant:

 

  (i) the specific reason(s) for the denial of the claim, or any part of it;

 

  (ii) specific reference(s) to pertinent provisions of the Plan upon which such
denial was based;

 

  (iii) a description of any additional material or information necessary for
the Claimant to perfect the claim, and an explanation of why such material or
information is necessary; and

 

  (iv) an explanation of the claim review procedure set forth in Section 13.3
below.

 

13.3 Review of a Denied Claim. Within sixty (60) days after receiving a notice
from the Committee that a claim has been denied, in whole or in part, a Claimant
(or the Claimant’s duly authorized representative) may file with the Committee a
written request for a review of the denial of the claim. Thereafter, but not
later than thirty (30) days after the review procedure began, the Claimant (or
the Claimant’s duly authorized representative):

 

  (a) may review pertinent documents;

 

  (b) may submit written comments or other documents; and/or

 

  (c) may request a hearing, which the Committee, in its sole discretion, may
grant.

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

13.4 Decision on Review. The Committee shall render its decision on review
promptly, and not later than sixty (60) days after the filing of a written
request for review of the denial, unless a hearing is held or other special
circumstances require additional time, in which case the Committee’s decision
must be rendered within 120 days after such date. Such decision must be written
in a manner calculated to be understood by the Claimant, and it must contain:

 

  (a) specific reasons for the decision;

 

  (b) specific reference(s) to the pertinent Plan provisions upon which the
decision was based; and

 

  (c) such other matters as the Committee deems relevant.

 

13.5 Mediation. Should the parties be unable to resolve the dispute pursuant to
these procedures, the claim shall be referred to non-binding mediation,
conducted by the San Diego panel of Judicial Arbitration Mediation Services
(“JAMS”), in accordance with JAMS’ standard mediation rules. A mutually
agreeable mediator will be selected. The parties shall share all costs of the
mediation equally, including attorney fees. Not sooner than 20 days following
the mediator’s final determination, either party may request binding
arbitration.

 

13.6 Binding Arbitration. Following the expiration of the 20 day period
referenced in Section 13.5, either party may initiate binding arbitration by
making a written demand for it on the other party. Such binding arbitration
shall be conducted under the applicable rules of the American Arbitration
Association using a mutually selected arbitrator in San Diego County. The cost
of the arbitration shall be borne by the non-prevailing party or as otherwise
determined by the arbitrator.

 

ARTICLE 14

Trust

 

14.1 Establishment of the Trust. The Company shall establish the Trust, and each
Employer shall at least annually transfer over to the Trust such assets as the
Employer determines, in its sole discretion, are necessary to provide, on a
present value basis, for its respective future liabilities created with respect
to the Annual Company Contribution Amounts, Company Matching Contribution
Amounts, and Annual Deferral Amounts for such Employer’s Participants for all
periods prior to the transfer, as well as any debits and credits to the
Participants’ Account Balances for all periods prior to the transfer, taking
into consideration the value of the assets in the trust at the time of the
transfer.

 

14.2

Interrelationship of the Plan and the Trust. The provisions of the Plan and the
Plan Agreement shall govern the rights of a Participant to receive distributions
pursuant to the Plan.

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

 

The provisions of the Trust shall govern the rights of the Employers,
Participants and the creditors of the Employers to the assets transferred to the
Trust. Each Employer shall at all times remain liable to carry out its
obligations under the Plan.

 

14.3 Distributions From the Trust. Each Employer’s obligations under the Plan
may be satisfied with Trust assets distributed pursuant to the terms of the
Trust, and any such distribution shall reduce the Employer’s obligations under
this Plan.

 

ARTICLE 15

Miscellaneous

 

15.1 Status of Plan. The Plan is intended to be a plan that is not qualified
within the meaning of Code Section 401(a) and that “is unfunded and is
maintained by an employer primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employee”
within the meaning of ERISA Sections 201(2), 301(a)(3) and 401(a)(1). The Plan
shall be administered and interpreted to the extent possible in a manner
consistent with that intent.

 

15.2 Unsecured General Creditor. Participants and their Beneficiaries, heirs,
successors and assigns shall have no legal or equitable rights, interests or
claims in any property or assets of an Employer. For purposes of the payment of
benefits under this Plan, any and all of an Employer’s assets shall be, and
remain, the general, unpledged unrestricted assets of the Employer. An
Employer’s obligation under the Plan shall be merely that of an unfunded and
unsecured promise to pay money in the future.

 

15.3 Employer’s Liability. An Employer’s liability for the payment of benefits
shall be defined only by the Plan and the Plan Agreement, as entered into
between the Employer and a Participant. An Employer shall have no obligation to
a Participant under the Plan except as expressly provided in the Plan and his or
her Plan Agreement.

 

15.4 Nonassignability. Neither a Participant nor any other person shall have any
right to commute, sell, assign, transfer, pledge, anticipate, mortgage or
otherwise encumber, transfer, hypothecate, alienate or convey in advance of
actual receipt, the amounts, if any, payable hereunder, or any part thereof,
which are, and all rights to which are expressly declared to be, unassignable
and non-transferable. No part of the amounts payable shall, prior to actual
payment, be subject to seizure, attachment, garnishment or sequestration for the
payment of any debts, judgments, alimony or separate maintenance owed by a
Participant or any other person, be transferable by operation of law in the
event of a Participant’s or any other person’s bankruptcy or insolvency or be
transferable to a spouse as a result of a property settlement or otherwise.

 

15.5

Not a Contract of Employment. The terms and conditions of this Plan shall not be
deemed to

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

 

constitute a contract of employment between any Employer and the Participant.
Such employment is hereby acknowledged to be an “at will” employment
relationship that can be terminated at any time for any reason, or no reason,
with or without cause, and with or without notice, unless expressly provided in
a written employment agreement. Nothing in this Plan shall be deemed to give a
Participant the right to be retained in the service of any Employer, either as
an Employee or a Director, or to interfere with the right of any Employer to
discipline or discharge the Participant at any time.

 

15.6 Furnishing Information. A Participant or his or her Beneficiary will
cooperate with the Committee by furnishing any and all information requested by
the Committee and take such other actions as may be requested in order to
facilitate the administration of the Plan and the payments of benefits
hereunder, including but not limited to taking such physical examinations as the
Committee may deem necessary.

 

15.7 Terms. Whenever any words are used herein in the masculine, they shall be
construed as though they were in the feminine in all cases where they would so
apply; and whenever any words are used herein in the singular or in the plural,
they shall be construed as though they were used in the plural or the singular,
as the case may be, in all cases where they would so apply.

 

15.8 Captions. The captions of the articles, sections and paragraphs of this
Plan are for convenience only and shall not control or affect the meaning or
construction of any of its provisions.

 

15.9 Governing Law. Subject to ERISA, the provisions of this Plan shall be
construed and interpreted according to the internal laws of the State of
Delaware without regard to its conflicts of laws principles.

 

15.10  Notice. Any notice or filing required or permitted to be given to the
Committee under this Plan shall be sufficient if in writing and hand-delivered,
or sent by registered or certified mail, to the address below:

 

Vice President & Controller

Callaway Golf Company

2180 Rutherford Road

Carlsbad, CA 92008

 

Such notice shall be deemed given as of the date of delivery or, if delivery is
made by mail, as of the date shown on the postmark on the receipt for
registration or certification.

 

Any notice or filing required or permitted to be given to a Participant under
this Plan shall be sufficient if in writing and hand-delivered, or sent by mail,
to the last known address of the Participant.

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

15.11  Successors. The provisions of this Plan shall bind and inure to the
benefit of the Participant’s Employer and its successors and assigns and the
Participant and the Participant’s designated Beneficiaries.

 

15.12  Spouse’s Interest. The interest in the benefits hereunder of a spouse of
a Participant who has predeceased the Participant shall automatically pass to
the Participant and shall not be transferable by such spouse in any manner,
including but not limited to such spouse’s will, nor shall such interest pass
under the laws of intestate succession.

 

15.13  Validity. In case any provision of this Plan shall be illegal or invalid
for any reason, said illegality or invalidity shall not affect the remaining
parts hereof, but this Plan shall be construed and enforced as if such illegal
or invalid provision had never been inserted herein.

 

15.14  Incompetent. If the Committee determines in its discretion that a benefit
under this Plan is to be paid to a minor, a person declared incompetent or to a
person incapable of handling the disposition of that person’s property, the
Committee may direct payment of such benefit to the guardian, legal
representative or person having the care and custody of such minor, incompetent
or incapable person. The Committee may require proof of minority, incompetence,
incapacity or guardianship, as it may deem appropriate prior to distribution of
the benefit. Any payment of a benefit shall be a payment for the account of the
Participant and the Participant’s Beneficiary, as the case may be, and shall be
a complete discharge of any liability under the Plan for such payment amount.

 

15.15  Court Order. The Committee is authorized to make any payments directed by
court order in any action in which the Plan or the Committee has been named as a
party. In addition, if a court determines that a spouse or former spouse of a
Participant has an interest in the Participant’s benefits under the Plan in
connection with a property settlement or otherwise, the Committee, in its sole
discretion, shall have the right, notwithstanding any election made by a
Participant, to immediately distribute the spouse’s or former spouse’s interest
in the Participant’s benefits under the Plan to that spouse or former spouse.

 

15.16  Distribution in the Event of Taxation.

 

  (a)

In General. If, for any reason, all or any portion of a Participant’s benefits
under this Plan becomes taxable to the Participant prior to receipt, a
Participant may petition either the Employer or the trustee of the Trust for a
distribution in an amount sufficient to pay the employment taxes imposed under
Code sections 3101, 3121 and the income taxes imposed under section 3401
attributable to such amounts that have become taxable. Upon the grant of such a
petition, a Participant’s Employer or the trustee shall distribute to the
Participant immediately available funds in an amount not to exceed the
afore-described

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

 

tax liability (which amount shall not exceed a Participant’s unpaid Account
Balance under the Plan). The tax liability distribution shall be made within
thirty (30) days of the date when the Participant’s petition is granted.

 

  (b) If, for any reason, all or any portion of the Participant’s benefits under
this Plan fail to meet the requirements of Code Section 409A or applicable
regulations thereunder, the Company shall pay the Participant an amount equal to
the amount included in the Participant’s income as a result of the failure. The
distribution shall be made within thirty (30) days of the date the failure is
discovered.

 

  (c) Any benefits distributed to a Participant in accordance with subsection
(a) or (b) shall reduce the Participant’s benefits under this Plan.

 

15.17  Insurance. The Employers, on their own behalf or on behalf of the trustee
of the Trust, and, in their sole discretion, may apply for and procure insurance
on the life of the Participant, in such amounts and in such forms as the Trust
may choose. The Employers or the trustee of the Trust, as the case may be, shall
be the sole owner and beneficiary of any such insurance. The Participant shall
have no interest whatsoever in any such policy or policies, and at the request
of the Employers shall submit to medical examinations and supply such
information and execute such documents as may be required by the insurance
company or companies to whom the Employers have applied for insurance.

 

15.18 

Legal Fees To Enforce Rights After Change in Control. The Company and each
Employer is aware that upon the occurrence of a Change in Control, the Board or
the board of directors of a Participant’s Employer (which might then be composed
of new members) or a shareholder of the Company or the Participant’s Employer,
or of any successor corporation might then cause or attempt to cause the
Company, the Participant’s Employer or such successor to refuse to comply with
its obligations under the Plan and might cause or attempt to cause the Company
or the Participant’s Employer to institute, or may institute, litigation seeking
to deny Participants the benefits intended under the Plan. In these
circumstances, the purpose of the Plan could be frustrated. Accordingly, if,
following a Change in Control, it should appear to any Participant that the
Company, the Participant’s Employer or any successor corporation has failed to
comply with any of its obligations under the Plan or any agreement hereunder or,
if the Company, such Employer or any other person takes any action to declare
the Plan void or unenforceable or institutes any litigation or other legal
action designed to deny, diminish or to recover from any Participant the
benefits intended to be provided, then the Company and the Participant’s
Employer irrevocably authorize such Participant to retain counsel of his or her
choice at the expense of the Company and the Participant’s Employer (who shall
be jointly and severally liable) to represent such Participant in connection
with the initiation or defense of any litigation or other legal action, whether
by or against the Company, the Participant’s Employer or any

 

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2005 Callaway Golf Company Executive Deferred Compensation Plan

Master Plan Document

Effective January 1, 2005

 

 

director, officer, shareholder or other person affiliated with the Company, the
Participant’s Employer or any successor thereto in any jurisdiction.
Notwithstanding anything in this Section or the Plan to the contrary, the
Company and/or the Participant’s employer shall have no obligation under this
Section to the extent there is a judicial determination or final mediation
decision that the litigation or other legal action brought by the Participant is
frivolous.

 

15.19  Disclaimer. It is the parties intention that this arrangement comply with
the provisions of Code Section 409A. Notwithstanding the foregoing as well as
the provisions of Section 15.16, the Company shall have no liability to any
Participant should any provision of the Plan fail to satisfy Code Section 409A.

 

IN WITNESS WHEREOF, the Company has signed this Plan document as of
                        , 2005.

 

“Company”

Callaway Golf Company, a Delaware corporation

By:

   

Title: 

   

 

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