Document:

exv10w4

 

Exhibit 10.4

APTARGROUP, INC.

RESTRICTED STOCK AWARD AGREEMENT

     AptarGroup, Inc., a Delaware corporation (the “Company”), hereby grants
            
(the “Employee”) as of
             (the “Grant Date”), pursuant to
Section 4(d) of the AptarGroup, Inc. 2000 Stock Awards Plan (the “Plan”), a
restricted stock award (the “Award”) of
       shares of the Company’s Common
Stock, $0.01 par value (“Stock”), upon and subject to the restrictions, terms
and conditions set forth below. Capitalized terms not defined herein shall
have the meanings specified in the Plan.

     1. Award Subject to Acceptance of Agreement. The Award shall be null and
void unless the Employee shall accept this Agreement by executing it in the
space provided below and returning it to the Company.

     2. Rights as a Stockholder. The Employee shall not be entitled to any
privileges of ownership with respect to the shares of Stock subject to the
Award unless and until, and only to the extent, such shares become vested
pursuant to Paragraph 3 hereof and the Employee becomes a stockholder of record
with respect to such shares.

     3. Restriction Period and Vesting. (a) The Award shall vest (i) with
respect to
          shares of Stock subject to the Award on          , an
additional          shares of Stock subject to the Award on          , and the
remaining          shares of Stock subject to the Award on          , or (ii)
earlier pursuant to Section 3(c) or (e) hereof (the “Restriction Period”).

     (b) If the Employee’s employment by the Company terminates by reason of
retirement, the Award shall vest in accordance with Section 3(a)(i) or earlier
pursuant to Section 3(e) hereof; provided, however, that if the Employee dies
after such Employee’s termination of employment by reason of retirement, the
portion of the Award, if any, which is not vested as of the date of death shall
become fully vested as of the date of death.

     (c) If the Employee’s employment by the Company terminates by reason of
permanent disability or death, the Award shall become fully vested as of the
effective date of the Employee’s termination of employment or the date of
death, as the case may be. For purposes of this Agreement, “permanent
disability” shall mean the inability of the Employee to substantially perform
his or her duties for a continuous period of at least six months as determined
by the Committee.

     (d) If the Employee’s employment by the Company terminates for any reason
other than retirement, permanent disability or death, the portion of the Award,
if any, which is not vested as of the effective date of the Employee’s
termination of employment shall be forfeited and canceled by the Company.

 

 

     (e)(1) Notwithstanding any provision in this Agreement, in the event of a
Change in control (as defined in Appendix A) pursuant to paragraph (a)(3) or
(a)(4) of Appendix A in connection with which the holders of Stock receive
shares of common stock that are registered under Section 12 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), the Award shall become
fully vested as of the date of the Change in Control.

     (2) Notwithstanding any provision in this Agreement, in the event of a
Change in Control pursuant to paragraph (a)(1) or (a)(2) of Appendix A, or in
the event of a Change in Control pursuant to paragraph (a)(3) or (a)(4) of
Appendix A in connection with which the holders of Stock receive consideration
other than shares of common stock that are registered under Section 12 of the
Exchange Act, this Agreement shall be surrendered to the Company by the
Employee, the Award shall be canceled by the Company, and the Employee shall
receive, not later than the tenth calendar day following the occurrence of a
Change in Control pursuant to paragraph (a)(1) or (a)(2) of Appendix A or not
later than the tenth calendar day following the approval of the stockholders of
the Company contemplated by paragraph (a)(3) or (a)(4) of Appendix A, as the
case may be, a cash payment from the Company in an amount equal to the number
of unvested shares of Stock subject to the Award immediately prior to such
cancellation (but after giving effect to any adjustment pursuant to Section 5.3
in respect of any transaction that gives rise to such Change in Control or is
the subject of such approval of stockholders), multiplied by (i) in the case of
a Change in Control pursuant to paragraph (a)(1) of Appendix A, the greatest of
(x) the highest price paid per share by an Acquiring Person within the two-year
period immediately preceding the Stock Acquisition Date, (y) the Fair Market
Value of a share of stock on the date on which the Acquiring Person became such
and (z) the Fair Market Value of a share of Stock on the Stock Acquisition
Date, (ii) in the case of a Change in Control pursuant to paragraph (a)(2) of
Appendix A, the Fair Market Value of a share of Stock on the date on which such
Change in Control occurs, or (iii) in the case of a Change in Control pursuant
to paragraph (a)(3) or (a)(4) of Appendix A, the highest price per share of
Stock offered to stockholders of the Company in the transaction that is the
subject of the approval of stockholders giving rise to the Change in Control.
The Company may, but is not required to, cooperate with any person who is
subject to Section 16 of the Exchange Act to assure that any cash payment in
accordance with the foregoing to such person is made in compliance with Section
16 and the rules and regulations thereunder.

     4. Termination of Award. In the event that the Employee shall forfeit all
or a portion of the shares of Stock subject to the Award, the Employee shall
promptly return this Agreement to the Company for cancellation. Such
cancellation shall be effective regardless of whether the Employee returns this
Agreement.

     5. Additional Terms and Conditions of Award.

     5.1 Nontransferability of Award. During the Restriction Period, the
shares of Stock subject to the Award and not then vested may not be transferred
by the Employee other than by will, the laws of descent and distribution or
pursuant to Section 5(f) of the Plan on a beneficiary designation form approved
by the Company. Except as permitted by the foregoing,

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during the Restriction Period, the shares of Stock subject to the Award and not
then vested may not be sold, transferred, assigned, pledged, hypothecated,
encumbered or otherwise disposed of (whether by operation of law or otherwise)
or be subject to execution, attachment or similar process. Any such attempted
sale, transfer, assignment, pledge, hypothecation or encumbrance, or other
disposition of such shares shall be null and void.

     5.2. Withholding Taxes. As a condition precedent to the delivery to the
Employee of any shares of Stock subject to the Award, the Employee shall, upon
request by the Company, pay to the Company (or shall cause a broker-dealer on
behalf of the Employee to pay to the Company) such amount of cash as the
Company may be required, under all applicable federal, state, local or other
laws or regulations, to withhold and pay over as income or other withholding
taxes (the “Required Tax Payments”) with respect to the Award. If the Employee
shall fail to advance the Required Tax Payments after request by the Company,
the Company may, in its discretion, deduct any Required Tax Payments from any
amount then or thereafter payable by the Company to the Employee.

     5.3. Adjustment. In the event of any reorganization, recapitalization,
reclassification, merger, consolidation, or sale of all or substantially all of
the Company’s assets followed by a liquidation, which in any case is effected
in such a way that holders of Stock are entitled to receive securities or other
assets, including cash, with respect to or in exchange for Stock, or in the
event of any stock dividend, stock split, combination of shares or spin-off,
the number and class of shares subject to the Award shall be appropriately
adjusted by the Committee. The decision of the Committee regarding any such
adjustment shall be final, binding and conclusive.

     5.4. Compliance with Applicable Law. The award is subject to the
condition that if the listing, registration or qualification of the shares
subject to the Award upon any securities exchange or under any law, or the
consent or approval of any governmental body, or the taking of any other action
is necessary or desirable as a condition of, or in connection with, the vesting
or delivery of shares hereunder, the shares of Stock subject to the Award may
not be delivered, in whole or in part, unless such listing, registration,
qualification, consent or approval shall have been effected or obtained, free
of any conditions not acceptable to the Company. The Company agrees to use
reasonable efforts to effect or obtain any such listing, registration,
qualification, consent or approval.

     5.5. Delivery of Certificates. Subject to Section 5.2, as soon as
practicable after the vesting of the Award, in whole or in part, the Company
shall deliver or cause to be delivered one or more certificates issued in the
Employee’s name (or such other name as is acceptable to the Company and
designated in writing by the Employee) representing the number of vested
shares. The Company shall pay all original issue or transfer taxes and all
fees and expenses incident to such delivery, except as otherwise provided in
Section 5.2.

     5.6. Award Confers No Rights to Continued Employment. In no event shall
the granting of the Award or its acceptance by the Employee give or be deemed
to give the Employee any right to continued employment by the Company or any
Affiliate of the Company.

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     5.7. Decisions of Board or Committee. The Board of Directors of the
Company or the Committee shall have the right to resolve all questions which
may arise in connection with the Award. Any interpretation, determination or
other action made or taken by the Board of Directors or the Committee regarding
the Plan or this Agreement shall be final, binding and conclusive.

     5.8. Company to Reserve Shares. The Company shall at all times prior to
the cancellation of the Award reserve and keep available, either in its
treasury or out of it authorized but unissued shares of Stock, the full number
of unvested shares subject to the Award from time to time.

     5.9. Agreement Subject to the Plan. This Agreement is subject to the
provisions of the Plan and shall be interpreted in accordance therewith. The
Employee hereby acknowledges receipt of a copy of the Plan.

     6. Miscellaneous Provisions.

     6.1. Meaning of Certain Terms. As used herein, the term “vest” shall mean
no longer subject to forfeiture and all rights hereunder shall be deemed to be
vested. As used herein, employment by the Company shall include employment by
an Affiliate of the Company.

     6.2. Successors. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Employee, acquire any rights hereunder in
accordance with this Agreement or the Plan.

     6.3. Notices. All notices, requests or other communications provided for
in this Agreement shall be made in writing by (a) actual delivery to the party
entitled thereto, (b) mailing to the last known address of the party entitled
thereto, via certified or registered mail, return receipt requested or (c)
telecopy with confirmation of receipt. The notice, request or other
communication shall be deemed to be received, in the case of actual delivery,
on the date of its actual receipt by the party entitled thereto, in the case of
mailing, on the tenth calendar day following the date of such mailing, and in
the case of telecopy, on the date of confirmation of receipt; provided,
however, that if a notice, request or other communication is not received
during regular business hours, it shall be deemed to be received on the next
succeeding business day of the Company.

     6.4. Governing Law. This Agreement and all determinations made and
actions taken pursuant hereto, to the extent not otherwise governed by the laws
of the United States, shall be governed by the laws of the State of Delaware
and construed in accordance therewith without giving effect to conflicts of
laws principles.

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     6.5.
Counterparts. This Agreement may be executed in two counterparts
each of which shall be deemed an original and both of which together shall
constitute one and the same instrument.

	 	 	 	 	 
	 	 	APTARGROUP, INC.
	 
	 	 	 	 
	

	 	By:
	 	Carl A. Siebel

President and Chief Executive Officer

Accepted this ________ day of

___________, 2004

_________________________

Employee

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	 	Appendix A

to AptarGroup, Inc.

Restricted Stock Award Agreement

for Employees

For purposes of this Agreement:

        (a) “Change in Control” shall mean:

        (1) the occurrence of a Stock Acquisition Date, as defined in the
Company’s Rights Agreement, dated as of April 6, 1993, and as amended from time
to time (provided that if a successor rights agreement is adopted, then as
defined in such agreement, and if the Company’s Rights Agreement is (i)
terminated or expires without a successor agreement thereto, then as defined in
the latest terminating or expiring rights agreement at the time of such
termination or expiration, or (ii) amended or a successor rights agreement is
adopted and, in either such case, does not define Stock Acquisition Date, then
as last defined in the Company’s Rights Agreement or successor rights
agreement).

        (2) individuals who, as of April 23, 1993, constitute the Board of
Directors (the “Incumbent Board”) cease for any reason to constitute at least a
majority of such Board; provided, however, that any individual who becomes a
director of the Company subsequent to such date whose election, or nomination
for election by the Company’s stockholders, was approved by the vote of at
least a majority of the directors then comprising the Incumbent Board shall be
deemed to have been a member of the Incumbent Board; and provided, further,
that no individual who was initially elected as a director of the Company as a
result of an actual or threatened election contest, as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended, or any other actual or threatened solicitation of proxies or
consents by or on behalf of any person other than the Board shall be deemed to
have been a member of the Incumbent Board;

        (3) approval by the stockholders of the Company of a reorganization,
merger or consolidation unless, in any such case, immediately after such
reorganization, merger or consolidation, (i) more than 60% of the combined
voting power of the securities of the corporation then outstanding and entitled
to vote generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals or
entities who were the beneficial owners of the outstanding securities of the
Company entitled to vote generally in the election of directors of the Company
(“Company Voting Securities”) immediately prior to such reorganization, merger
or consolidation and in substantially the same proportions relative to each
other as their ownership, immediately prior to such reorganization, merger or
consolidation, of the outstanding Company Voting Securities, (ii) no person
shall be an Acquiring Person, as defined in the Company’s Rights Agreement
dated as of April 6, 1993, and as amended from time to time (provided that if a
successor rights agreement is adopted, then as defined in such agreement, and
if the Company’s Rights Agreement is (i) terminated or expires without a
successor agreement thereto, then as defined in the latest terminating or
expiring rights

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agreement at the time of such termination or expiration or (ii) amended or
a successor rights agreement is adopted and, in either such case, does not
define Acquiring Person, then as last defined in the Company’s Rights Agreement
or successor rights agreement), and (iii) at least a majority of the members of
the board of directors of the corporation resulting from such reorganization,
merger or consolidation were members of the Incumbent Board at the time of the
execution of the initial agreement or action of the Board of Directors
providing for such reorganization, merger or consolidation; or

        (4) approval by the stockholders of the Company of (i) a plan of complete
liquidation or dissolution of the Company or (ii) the sale or other disposition
of all or substantially all of the assets of the Company other than to a
corporation with respect to which, immediately after such sale or other
disposition, (A) more than 60% of the combined voting power of the securities
thereof then outstanding and entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the outstanding Stock and the outstanding Company
Voting Securities immediately prior to such sale or other disposition and in
substantially the same proportions relative to each other as their ownership,
immediately prior to such sale or other disposition, of the outstanding Stock
and the outstanding Company Voting Securities, as the case may be, (B) no
person shall be an Acquiring Person, and (C) at least a majority of the members
of the board of directors thereof were members of the Incumbent Board at the
time of the execution of the initial agreement or action of the Board providing
for such sale or other disposition.

        (b) “Fair Market Value” shall mean the closing price of a share of Stock
on the New York Stock Exchange Composite Transactions on the date as of which
such value is being determined, or, if there shall be no sale on such date, on
the next preceding date for which a sale is reported; provided, however, that
if Fair Market Value for any date cannot be so determined, Fair Market Value
shall be determined by the Committee by whatever means or method as the
Committee, in the good faith exercise of its discretion, shall at such time
deem appropriate.

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	 	Appendix A
	

	 	to AptarGroup, Inc.
	

	 	Restricted Stock Award Agreement
	

	 	For Employees

APTARGROUP, INC.

2000 Stock Awards Plan

BENEFICIARY DESIGNATION FORM

        You may designate a primary beneficiary and a secondary beneficiary. You
can name more than one person as a primary or secondary beneficiary. For
example, you may wish to name your spouse as primary beneficiary and your
children as secondary beneficiaries. Your secondary beneficiary(ies) will
receive nothing if any of your primary beneficiaries survive you. All primary
beneficiaries will share equally unless you indicate otherwise. The same rule
applies for secondary beneficiaries.

Designate Your Beneficiary(ies):

	 	 	 	 	 
	 

	 	Primary Beneficiary(ies): 
	 

	 

	 	 

	

	 	 	

	 	 	

	 
	 	 	 	 
	

	 	Secondary Beneficiary(ies): 
	 
	 
	 		

	 	 	

	 	 	

	 
	 	 	I certify that my designation of beneficiary set forth above is my free act and deed.

	 	 	 
	

	 	

	Name of Employee

	 	Employee’s Signature
	      (Please Print)
	 	 
	 
	 	 
	

	 	

Date

8<PAGE>

                                                                   EXHIBIT 10.47

                              SEPARATION AGREEMENT

      WHEREAS RONALD A. DRAPEAU ("Employee") is employed by CALLAWAY GOLF
COMPANY, a Delaware corporation, (the "Company") pursuant to a certain Second
Amended Executive Officer Employment Agreement entered into as of January 1,
2002, and amended from time to time thereafter (the "Employment Agreement"), and
has held positions as Chairman of the Board, Director, and Chief Executive
Officer of the Company;

      WHEREAS, at the request of the Board of Directors, Employee has resigned
as Chairman of the Board, Director and Chief Executive Officer effective August
2, 2004;

      WHEREAS the Company intends to terminate Employee's employment pursuant to
Section 8(a) of the Employment Agreement effective October 1, 2004; and

      WHEREAS the parties wish to enter into this Separation Agreement (the
"Separation Agreement") to document and reflect certain agreements and
understandings between them associated with the resignations and terminations
noted above;

      NOW THEREFORE this Separation Agreement is entered into and dated for
reference October 1, 2004, by and between the Company and Employee.

      1.    SEPARATION PAYMENTS. In consideration of the release, cooperation
and other consideration provided by Employee pursuant to this Separation
Agreement, and in addition to any payments due Employee pursuant to the
Employment Agreement, the Company shall:

            (a)   Pay to employee a one-time cash payment of five hundred
thousand dollars ($500,000.00) on or before November 5, 2004;

            (b)   Pay the costs of Cal-COBRA continuation health care coverage
for Employee and employee's spouse, to the extent such coverage is available,
for a period of up to eighteen (18) months.

            (c)   Provide an Appraised Value Offer for the Company or its
designee to purchase Employee's existing primary residence in Encinitas,
California, in accordance with the Home Purchase Procedures set forth in Exhibit
B to this Separation Agreement if, despite Employee's best efforts, such
residence has not been otherwise sold or contracted for sale by January 31,
2005. If Employee elects to accept the Appraised Value Offer, then Employee
shall cooperate fully with the Company to expedite and complete the sale
process. If Employee elects not to accept the Appraised Value Offer, Employee's
sole recourse shall be to elect not to have the Company purchase his residence
and thereby waive any rights he has under this Section 1(c) or any other promise
to have the Company purchase his residence. Employee acknowledges that Employee
has the duty to make known to the Company, its designee, or any other purchaser
the condition of the residence and associated property, particularly any defect
that might affect its value, habitability or desirability, and that Employee may
be held responsible for all expenses involved in correcting any defects not
properly disclosed.

            (d)   The Company shall otherwise comply with the terms and
conditions of the Employment Agreement.

      2.    EMPLOYEE CONSIDERATION. In consideration of the promises made by the
Company in this Separation Agreement, and in addition to any obligations imposed
pursuant to the Employment Agreement, Employee agrees as follows:

<PAGE>

            (a)   Release.

                  (i)   Employee hereby irrevocably and unconditionally releases
and forever discharges the Company, its predecessors, successors, subsidiaries,
affiliates and benefit plans, and each and every past, present and future
officer, director, employee, representative and attorney of the Company, and
their successors and assigns (collectively referred to herein as the
"Releasees"), from any, every, and all charges, complaints, claims, causes of
action, and lawsuits of any kind whatsoever, including, to the extent permitted
under the law, all claims which Employee has against the Releasees, or any of
them, arising from or in any way related to circumstances or events arising out
of Employee's employment by the Company, including, but not limited to,
harassment, discrimination, retaliation, failure to progressively discipline
Employee, termination of employment, violation of state and/or federal wage and
hour laws, violations of any notice requirement, violations of the California
Labor Code, or breach of any employment agreement, together with any and all
other claims Employee now has against the Releasees, through the date of
execution of this Separation Agreement. EMPLOYEE ALSO SPECIFICALLY AGREES AND
ACKNOWLEDGES THAT EMPLOYEE IS WAIVING ANY RIGHT TO RECOVERY AGAINST RELEASEES
BASED ON STATE OR FEDERAL AGE, SEX, PREGNANCY, RACE, COLOR, NATIONAL ORIGIN,
MARITAL STATUS, RELIGION, VETERAN STATUS, DISABILITY, SEXUAL ORIENTATION,
MEDICAL CONDITION OR OTHER ANTI-DISCRIMINATION LAWS, INCLUDING, WITHOUT
LIMITATION, TITLE VII, THE AMERICANS WITH DISABILITIES ACT, THE CALIFORNIA FAIR
HOUSING AND EMPLOYMENT ACT, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967,
THE FAMILY MEDICAL RIGHTS ACT, THE CALIFORNIA FAMILY RIGHTS ACT OR BASED ON THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OR THE WORKER ADJUSTMENT AND RETRAINING
NOTIFICATION ACT, ALL AS AMENDED, WHETHER SUCH CLAIM BE BASED UPON AN ACTION
FILED BY EMPLOYEE OR A GOVERNMENTAL AGENCY.

                  (ii)  Employee waives all rights under section 1542 of the
Civil Code of the State of California. Section 1542 provides as follows:

            A general release does not extend to claims which the creditor does
            not know or suspect to exist in his favor at the time of executing
            the release, which if known by him must have materially affected his
            settlement with the debtor.

Notwithstanding such waiver, Employee understands that rights or claims under
the Age Discrimination in Employment Act of 1967 (29 U.S.C. Section 621, et
seq.) that may arise after the date this Separation Agreement is executed are
not waived.

                  (iii) Nothing in this Separation Agreement shall be construed
to prohibit the Employee from exercising Employee's right, if any, to file a
charge with the Equal Employment Opportunity Commission or from participating in
any investigation or proceeding conducted by the Equal Employment Opportunity
Commission. Employee understands and agrees that if Employee files such a
charge, the Company has the right to raise the defense that the charge is barred
by this Separation Agreement;

                  (iv)  The Company hereby advises Employee in writing to
discuss this release with an attorney before executing it. Employee further
acknowledges that the Company will provide Employee twenty-one (21) days within
which to review and consider this Separation Agreement, including this release,
before signing it. Should Employee decide not to use the full twenty-one (21)
days, then Employee knowingly and voluntarily waives any claims that he was not
in fact given that period of time or did not use the entire twenty-one (21) days
to consult an attorney and/or consider this release.

                  (v)   The parties acknowledge and agree that Employee may
revoke this Separation Agreement for up to seven (7) calendar days following
execution and that it shall not become effective or enforceable against either
party until any such revocation period has expired. The parties further
acknowledge and agree that such revocation must be in writing addressed to
Steven C. McCracken, Senior Executive Vice President, Chief Legal Officer and
Secretary, Callaway Golf Company, 2180 Rutherford Road, Carlsbad, California
92008, and received no later than midnight on the seventh day following the
execution of this Separation Agreement by Employee. If Employee revokes under
this section,

<PAGE>

the Separation Agreement shall not be effective or enforceable, and Employee
will not receive the consideration described in this Separation Agreement.

                  (vi)  If Employee does not revoke this Separation Agreement in
the timeframe specified above, the Separation Agreement shall become effective
at 12:01 a.m. on the eighth day after it is fully executed by the parties.

            (b)   Employee shall fully cooperate with the Company to effectuate
all actions reasonably required in connection with Employee's termination and
the effectuation of this Separation Agreement and the Employment Agreement,
including, but not limited to, cooperation in the preparation, signing and
filing of any and all documentation necessary to implement or record the
resignation of Employee from any and all boards or positions associated with the
Company or any of the Company's subsidiaries or affiliates, as well as
reasonable cooperation with the Company's legal counsel in connection with any
legal proceedings or litigation arising out of matters occurring during the time
Employee was employed by the Company. In addition, Employee reaffirms his
obligation to protect the Company's confidential information, and as a former
member of the "control group" of senior executives of the Company, Employee
recognizes that he cannot waive, and is required to specifically protect, the
Company's attorney-client communications and attorney work product that he
learned while employed by the Company. Employee agrees that in the event he is
contacted by anyone concerning the business of the Company he shall provide
notice to the Legal Department as provided in Section 3(f) of such contact, and
give the Company a reasonable opportunity to object, limit or otherwise guide
any disclosure of Company information in accordance with any applicable
privileges, laws and regulations.

            (c)   Employee shall otherwise comply with the terms and conditions
of the Employment Agreement.

      3.    OTHER MATTERS.

            (a)   Other Health Coverage. Should Employee wish to seek other
health care coverage in lieu of continuation coverage under COBRA and/or
Cal-COBRA, the Company agrees to meet and confer with Employee to discuss such
alternatives. Employee has no obligation to seek such alternative coverage, nor
does the Company have any obligation to modify or amend its commitments under
this Separation Agreement or the Employment Agreement regarding the costs of
continuation coverage.

            (b)   Change in Control. Should there be a Change in Control as
defined in Exhibit A to this Separation Agreement, then it is agreed that the
Company shall pay to Employee within thirty (30) days the net present value of
any remaining but unpaid payments pursuant to Sections 8(a), 19 and 20 of the
Employment Agreement.

            (c)   Employee's Estate. For purposes of clarification, the parties
acknowledge that unless otherwise specifically stated or forbidden by law, any
payments due Employee pursuant to this Separation Agreement or the Employment
Agreement are not excused upon the death of Employee, and shall be paid to
Employee's estate.

            (d)   Taxes. Any payments to Employee pursuant to this Separation
Agreement shall be subject to the usual and customary taxes, employee payroll
practices and all applicable withholding requirements.

            (e)   Entire Understanding. This Separation Agreement and the
Employment Agreement set forth the entire understanding of the parties hereto
with respect to the subject matter hereof, and no other representations,
warranties or agreements whatsoever as to that subject matter have been made by
Employee or the Company. This Separation Agreement shall not be modified,
amended or terminated except by another instrument in writing executed by the
parties hereto. This Separation Agreement replaces and supersedes any and all
prior understandings or agreements between Employee and the Company regarding
employment, with the exception of the Employment Agreement, the "Employee
Invention and Confidentiality Agreement" and the "Information Security Policy
and Agreement" entered into by Employee with the Company.

<PAGE>

            (f)   Notices. Any notice, request, demand, or other communication
required or permitted hereunder, shall be deemed properly given when actually
received or within five (5) days of mailing by certified or registered mail,
postage prepaid, to Employee at the address currently on file with the Company,
and to the Company at:

            Company:     Callaway Golf Company
                         2180 Rutherford Road
                         Carlsbad, California  92008
                         Attn:  Michael J. Rider
                         Senior Vice President and General Counsel

or to such other address as Employee or the Company may from time to time
furnish, in writing, to the other.

            (g)   Headings. The headings of the several sections and paragraphs
of this Separation Agreement are inserted solely for the convenience of
reference and are not a part of and are not intended to govern, limit or aid in
the construction of any term or provision hereof.

            (h)   Waiver. Failure of either party at any time to require
performance by the other of any provision of this Separation Agreement shall in
no way affect that party's rights thereafter to enforce the same, nor shall the
waiver by either party of any breach of any provision hereof be held to be a
waiver of any succeeding breach of any provision or a waiver of the provision
itself.

            (i)   Applicable Law. This Separation Agreement shall constitute a
contract under the internal laws of the State of California and shall be
governed and construed in accordance with the laws of said state as to both
interpretation and performance.

            (j)   Severability. In the event any provision or provisions of this
Separation Agreement is or are held invalid, the remaining provisions of this
Separation Agreement shall not be affected thereby.

            (k)   Counterparts. This Separation Agreement may be executed in one
or more counterparts which, when fully executed by the parties, shall be treated
as one agreement.

      4.    IRREVOCABLE ARBITRATION OF DISPUTES.

            (a)   EMPLOYEE AND THE COMPANY AGREE THAT ANY DISPUTE, CONTROVERSY
OR CLAIM ARISING HEREUNDER OR IN ANY WAY RELATED TO THIS SEPARATION AGREEMENT,
ITS INTERPRETATION, ENFORCEABILITY, OR APPLICABILITY, OR RELATING TO EMPLOYEE'S
EMPLOYMENT, OR THE TERMINATION THEREOF, THAT CANNOT BE RESOLVED BY MUTUAL
AGREEMENT OF THE PARTIES SHALL BE SUBMITTED TO BINDING ARBITRATION. THIS
INCLUDES, BUT IS NOT LIMITED TO, ALLEGED VIOLATIONS OF FEDERAL, STATE AND/OR
LOCAL STATUTES, CLAIMS BASED ON ANY PURPORTED BREACH OF DUTY ARISING IN CONTRACT
OR TORT, INCLUDING BREACH OF CONTRACT, BREACH OF THE COVENANT OF GOOD FAITH AND
FAIR DEALING, VIOLATION OF PUBLIC POLICY, VIOLATION OF ANY STATUTORY,
CONTRACTUAL OR COMMON LAW RIGHTS, BUT EXCLUDING WORKERS' COMPENSATION,
UNEMPLOYMENT MATTERS, OR ANY MATTER FALLING WITHIN THE JURISDICTION OF THE STATE
LABOR COMMISSIONER. 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)   EMPLOYEE AND THE COMPANY AGREE THAT THE ARBITRATOR SHALL HAVE
THE AUTHORITY TO ISSUE PROVISIONAL RELIEF. EMPLOYEE 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

<PAGE>

PRIOR TO THE EXPIRATION OF THE APPLICABLE STATUTE OF LIMITATIONS.

            (d)   THE ARBITRATION SHALL BE CONDUCTED PURSUANT TO THE PROCEDURAL
RULES STATED IN THE NATIONAL RULES FOR RESOLUTION OF EMPLOYMENT DISPUTES OF THE
AMERICAN ARBITRATION ASSOCIATION ("AAA"). 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
FROM THE JUDICIAL ARBITRATION AND MEDIATION SERVICE WILL BE SELECTED PURSUANT TO
THE AMERICAN ARBITRATION ASSOCIATION NATIONAL RULES FOR RESOLUTION OF EMPLOYMENT
DISPUTES. 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. THE
ARBITRATOR SHALL ALLOW REASONABLE DISCOVERY AS PROVIDED IN THE CALIFORNIA
ARBITRATION ACT, BUT SHALL CONTROL THE AMOUNT AND SCOPE OF DISCOVERY.

            (g)   THE PROVISIONS OF THIS SECTION SHALL SURVIVE THE EXPIRATION OR
TERMINATION OF THE SEPARATION AGREEMENT, AND SHALL BE BINDING UPON THE PARTIES.

THE PARTIES HAVE READ THIS SECTION AND IRREVOCABLY AGREE TO ARBITRATE ANY
DISPUTE IDENTIFIED ABOVE.

                      /s/ RAD (EMPLOYEE)         /s/ WCB (COMPANY)

      IN WITNESS WHEREOF, this Separation Agreement is entered into and dated
for reference October 1, 2004, by and between the Company and Employee.

EMPLOYEE                                        COMPANY
                                                Callaway Golf Company,
                                                a Delaware corporation

/s/ Ronald A. Drapeau                       By: /s/ William C. Baker
--------------------------------                --------------------------------
Ronald A. Drapeau                               William C. Baker
                                                Chairman of the Board and
                                                Chief Executive Officer

Dated:   October 28, 2004                       Dated:   October 28, 2004

<PAGE>

                                                                       EXHIBIT A

                                CHANGE IN CONTROL

      A "Change in Control" means the following and shall be deemed to occur if
any of the following events occurs:

      1.    Any person, entity or group, within the meaning of Section 13(d) or
14(d) of the Securities Exchange Act of 1934 (the "Exchange Act") but excluding
the Company and its affiliates and any employee benefit or stock ownership plan
of the Company or its affiliates and also excluding an underwriter or
underwriting syndicate that has acquired the Company's securities solely in
connection with a public offering thereof (such person, entity or group being
referred to herein as a "Person") becomes the beneficial owner (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of
either the then outstanding shares of Common Stock or the combined voting power
of the Company's then outstanding securities entitled to vote generally in the
election of directors; or

      2.    Individuals who, as of the effective date hereof, constitute the
Board of Directors of the Company (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board of Directors of the Company,
provided that any individual who becomes a director after the effective date
hereof whose election, or nomination for election by the Company's shareholders,
is approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered to be a member of the Incumbent Board
unless that individual was nominated or elected by any Person having the power
to exercise, through beneficial ownership, voting agreement and/or proxy, 20% or
more of either the outstanding shares of Common Stock or the combined voting
power of the Company's then outstanding voting securities entitled to vote
generally in the election of directors, in which case that individual shall not
be considered to be a member of the Incumbent Board unless such individual's
election or nomination for election by the Company's shareholders is approved by
a vote of at least two-thirds of the directors then comprising the Incumbent
Board; or

      3.    Consummation by the Company of the sale or other disposition by the
Company of all or substantially all of the Company's assets or a reorganization
or merger or consolidation of the Company with any other person, entity or
corporation, other than (a) a reorganization or merger or consolidation that
would result in the voting securities of the Company outstanding immediately
prior thereto (or, in the case of a reorganization or merger or consolidation
that is preceded or accomplished by an acquisition or series of related
acquisitions by any Person, by tender or exchange offer or otherwise, of voting
securities representing 5% or more of the combined voting power of all
securities of the Company, immediately prior to such acquisition or the first
acquisition in such series of acquisitions) continuing to represent, either by
remaining outstanding or by being converted into voting securities of another
entity, more than 50% of the combined voting power of the voting securities of
the Company or such other entity outstanding immediately after such
reorganization or merger or consolidation (or series of related transactions
involving such a reorganization or merger or consolidation), or (b) a
reorganization or merger or consolidation effected to implement a
recapitalization or reincorporation of the Company (or similar transaction) that
does not result in a material change in beneficial ownership of the voting
securities of the Company or its successor; or

      4.    Approval by the shareholders of the Company or an order by a court
of competent jurisdiction of a plan of liquidation of the Company.

<PAGE>

                                                                       EXHIBIT B

                            HOME PURCHASE PROCEDURES

Callaway Golf will enter into a contract with a third party agency (the
"Relocation Company") to make an offer and, upon acceptance of the offer, to
purchase Employee's current home pursuant to an Appraised Value Offer according
to the procedures set forth below. If Employee accepts said offer, and if the
home is purchased by the Relocation Company on behalf of Callaway Golf, then
Callaway Golf will be responsible for any loss on the sale of Employee's home by
the Relocation Company and will retain all resale profits on the sale of the
home, if any are generated.

The Relocation Company will assist Callaway Golf and Employee in determining an
Appraised Value Offer for Employee's home. The Relocation Company will provide
Employee with a list of qualified relocation appraisers who are experienced in
determining a Selling Price for such a home. Employee will select three (3)
appraisers from the list (Employee may not select an appraiser who has appraised
the home within the last six (6) months). Employee shall notify the Relocation
Company of his choices, and Relocation Company will order two (2) appraisals
using two of the appraisers selected. In turn, each appraiser will contact
Employee (or the person Employee designates) to schedule an appointment to do
the appraisal.

The two appraisers will determine the Anticipated Selling Price of Employee's
home, which shall be defined as the price at which the property is anticipated
to sell in a competitive and open market transaction, assuming an arm's length
transaction, within sixty (60) days. In estimating the Anticipated Selling
Price, the appraisers will look at competing listings, recent comparable sales,
and other market variables through the eyes of a typical buyer.

In conjunction with the appraisal process, the Relocation Company will order all
appropriate inspections at Callaway Golf's expense. Other inspections may be
ordered, as recommended by the appraisers, realtors, or inspectors. Employee
will cooperate with the Relocation Company and any and all appraisers, it being
understood that an Appraised Value Offer cannot be made without the results of
all inspections.

The appraisers will contact the Relocation Company with the results of their
appraisals, including their Anticipated Selling Prices, and will follow up with
written appraisal reports. The reports will be reviewed for accuracy and
consistency by the Relocation Company. Approximately three (3) weeks from the
date the last appraiser visits Employee's home, the Relocation Company will
contact Employee to present an Appraised Value Offer and all inspection results,
including copies of all appraisals.

The Appraised Value Offer will be the average of the two (2) Anticipated Selling
Prices submitted by the appraisers, less an Estimated Commission fixed at six
percent (6%). If the two Anticipated Selling Prices differ by more than five
percent (5%), a third appraisal will be ordered (using the third appraiser
Employee properly selected from the list provided by the Relocation Company). If
three appraisals are needed, then the Appraised Value Offer will be the average
of the two (2) closest Anticipated Selling Prices, less an Estimated Commission
fixed at six percent (6%).

Employee shall have ten (10) days to accept the offer starting upon the day the
Appraised Value Offer is communicated to Employee. Employee shall communicate
his acceptance, in writing to the Relocation Company. If Employee chooses to
accept the Appraised Value Offer from the Relocation Company, Contracts of Sale,
a deed package, and all necessary documents required to sell Employee's home to
the Relocation Company will be forwarded to Employee. Prompt execution and
notarization of these documents will be required if Employee elects to accept
the Appraised Value Offer. If Employee has not previously terminated any
existing listing agreement, then Employee will be responsible for payment of any
commission owed to any agent upon sale to the Relocation Company. If Employee
does not accept the Appraised Value Offer within ten (10) days, it shall expire
by its own terms and Callaway Golf shall thereafter have no further duty to
assist Employee with the sale of Employee's home.

<PAGE>

If Employee accepts the Appraised Value Offer, Callaway Golf, through the
Relocation Company, will assume responsibility of all mortgage payments,
utilities, and maintenance of the home as of the date of possession. Possession
is defined as the day Employee fully executes the Contracts of Sale or vacates,
whichever is later.

Employee's Equity will be the Appraised Value Offer minus the mortgage balance,
mortgage interest prorations, tax prorations, costs of any repairs, and all
other liens against the property. The Equity will be paid to Employee directly
by the Relocation Company or Callaway Golf. Employee has no expectation of any
payments other than payment of the Equity.

Employee shall be responsible for all maintenance and repair of the property and
all expenses associated with the property, including mortgage payments, until
such time as Callaway Golf and/or the Relocation Company take possession. During
the implementation of these Home Purchase Procedures, Employee shall reasonably
cooperate with Callaway Golf and the Relocation Company in any efforts to secure
the sale of the property to a third party. It is acknowledged that the
Relocation Company will be marketing the property on behalf of Callaway Golf
during this time, and that Employee shall cooperate in keeping it in order and
scheduling showings.

Disclosure: it is the duty of the seller to make known or public to a buyer the
condition of the property, particularly with respect to any defect that could
affect its value, habitability, or desirability. Employee may be held
responsible for all expenses involved in correcting defect(s) or problems that
are not disclosed and subsequently discovered.

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