Document:

IO Turbine, Inc. 2009 Equity Incentive Plan

 Exhibit 4.2 
 IO TURBINE, INC. 
 2009 EQUITY INCENTIVE PLAN 

(amended and restated on August 24, 2010) 
 1. Purposes of the Plan. The purposes of this Plan are: 
  

	 	•	 	 to attract and retain the best available personnel for positions of substantial responsibility, 

 

	 	•	 	 to provide additional incentive to Employees, Directors and Consultants, and 

 

	 	•	 	 to promote the success of the Company’s business. 

 The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock and Restricted Stock Units. 

2. Definitions. As used herein, the following definitions will apply: 

(a) “Administrator” means the Board or any of its Committees as will be administering the Plan, in
accordance with Section 4 of the Plan. 
 (b) “Applicable Laws” means the requirements
relating to the administration of equity-based awards under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Awards are, or will be, granted under the Plan. 
 (c)
“Award” means, individually or collectively, a grant under the Plan of Options, Stock Appreciation Rights, Restricted Stock, or Restricted Stock Units. 

(d) “Award Agreement” means the written or electronic agreement setting forth the terms and provisions
applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan. 
 (e) “Board” means the Board of Directors of the Company. 
 (f) “Change in Control” means the occurrence of any of the following events: 
 (i) Change in Ownership of the Company. A change in the ownership of the Company which occurs on the date that any one person, or more than one person acting as a group (“Person”),
acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than 50% of the total voting power of the stock of the Company, except that any change in the ownership of the stock of the Company as
a result of a private financing of the Company that is approved by the Board will not be considered a Change in Control; or 

 (ii) Change in Effective Control of the Company. If the Company has a
class of securities registered pursuant to Section 12 of the Exchange Act, a change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by
Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election. For purposes of this clause (ii), if any Person is considered to be in effective control of the
Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control; or 
 (iii) Change in Ownership of a Substantial Portion of the Company’s Assets. A change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any
Person acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 50% of the
total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions. For purposes of this subsection (iii), gross fair market value means the value of the assets of the Company, or the value of the
assets being disposed of, determined without regard to any liabilities associated with such assets. 
 For
purposes of this Section 2(f), persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.

 Notwithstanding the foregoing, a transaction will not be deemed a Change in Control unless the transaction
qualifies as a change in control event within the meaning of Code Section 409A, as it has been and may be amended from time to time, and any proposed or final Treasury Regulations and Internal Revenue Service guidance that has been promulgated
or may be promulgated thereunder from time to time. 
 Further and for the avoidance of doubt, a transaction will
not constitute a Change in Control if: (i) its sole purpose is to change the state of the Company’s incorporation, or (ii) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the
persons who held the Company’s securities immediately before such transaction. 
 (g)
“Code” means the Internal Revenue Code of 1986, as amended. Any reference to a section of the Code herein will be a reference to any successor or amended section of the Code. 

(h) “Committee” means a committee of Directors or of other individuals satisfying Applicable Laws
appointed by the Board, or by the compensation committee of the Board, in accordance with Section 4 hereof. 

(i) “Common Stock” means the common stock of the Company. 

  
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 (j) “Company” means IO Turbine, Inc., a Delaware
corporation, or any successor thereto. 
 (k) “Consultant” means any individual, including an
advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity. For the avoidance of doubt, the term “Consultant” shall not include any entity or any non-natural person. 

(l) “Director” means a member of the Board. 

(m) “Disability” means total and permanent disability as defined in Code Section 22(e)(3), provided
that in the case of Awards other than Incentive Stock Options, the Administrator in its discretion may determine whether a permanent and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Administrator
from time to time. 
 (n) “Employee” means any person, including officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company. 

(o) “Exchange Act” means the Securities Exchange Act of 1934, as amended. 

(p) “Exchange Program” means a program under which (i) outstanding Awards are surrendered or
cancelled in exchange for Awards of the same type (which may have higher or lower exercise prices and different terms), Awards of a different type, and/or cash, (ii) Participants would have the opportunity to transfer any outstanding Awards to
a financial institution or other person or entity selected by the Administrator, and/or (iii) the exercise price of an outstanding Award is reduced or increased. The Administrator will determine the terms and conditions of any Exchange Program
in its sole discretion. 
 (q) “Fair Market Value” means, as of any date, the value of Common
Stock determined as follows: 
 (i) If the Common Stock is listed on any established stock exchange or a national
market system, including without limitation the Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market of The Nasdaq Stock Market, its Fair Market Value will be the closing sales price for such stock (or the closing bid,
if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; 

(ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the
Fair Market Value of a Share will be the mean between the high bid and low asked prices for the Common Stock on the day of determination (or, if no bids and asks were reported on that date, as applicable, on the last trading date such bids and asks
were reported), as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or 

  
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 (iii) In the absence of an established market for the Common Stock, the Fair
Market Value will be determined in good faith by the Administrator. 
 (r) “Incentive Stock
Option” means an Option that by its terms qualifies and is otherwise intended to qualify as an incentive stock option within the meaning of Code Section 422 and the regulations promulgated thereunder. 

(s) “Nonstatutory Stock Option” means an Option that by its terms does not qualify or is not intended to
qualify as an Incentive Stock Option. 
 (t) “Option” means a stock option granted pursuant to
the Plan. 
 (u) “Parent” means a “parent corporation,” whether now or hereafter
existing, as defined in Code Section 424(e). 
 (v) “Participant” means the holder of an
outstanding Award. 
 (w) “Period of Restriction” means the period during which the transfer of
Shares of Restricted Stock are subject to restrictions and therefore, the Shares are subject to a substantial risk of forfeiture. Such restrictions may be based on the passage of time, the achievement of target levels of performance, or the
occurrence of other events as determined by the Administrator. 
 (x) “Plan” means this 2009
Equity Incentive Plan. 
 (y) “Restricted Stock” means Shares issued pursuant to an Award of
Restricted Stock under Section 8 of the Plan, or issued pursuant to the early exercise of an Option. 
 (z)
“Restricted Stock Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted pursuant to Section 9. Each Restricted Stock Unit represents an unfunded and unsecured obligation of
the Company. 
 (aa) “Service Provider” means an Employee, Director or Consultant. 

(bb) “Share” means a share of the Common Stock, as adjusted in accordance with Section 13 of the
Plan. 
 (cc) “Stock Appreciation Right” means an Award, granted alone or in connection with an
Option, that pursuant to Section 7 is designated as a Stock Appreciation Right. 
 (dd)
“Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Code Section 424(f). 
 3. Stock Subject to the Plan. 
 (a)
Stock Subject to the Plan. Subject to the provisions of Section 13 of the Plan, the maximum aggregate number of Shares that may be subject to Awards and sold under the Plan is 3,990,969 Shares. The Shares may be authorized but unissued,
or reacquired Common Stock. 

  
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 (b) Lapsed Awards. If an Award expires or becomes unexercisable
without having been exercised in full, is surrendered pursuant to an Exchange Program, or, with respect to Restricted Stock or Restricted Stock Units, is forfeited to or repurchased by the Company due to the failure to vest, the unpurchased Shares
(or for Awards other than Options or Stock Appreciation Rights the forfeited or repurchased Shares) which were subject thereto will become available for future grant or sale under the Plan (unless the Plan has terminated). With respect to Stock
Appreciation Rights, only Shares actually issued pursuant to a Stock Appreciation Right will cease to be available under the Plan; all remaining Shares under Stock Appreciation Rights will remain available for future grant or sale under the Plan
(unless the Plan has terminated). Shares that have actually been issued under the Plan under any Award will not be returned to the Plan and will not become available for future distribution under the Plan; provided, however, that if Shares issued
pursuant to Awards of Restricted Stock or Restricted Stock Units are repurchased by the Company or are forfeited to the Company due to the failure to vest, such Shares will become available for future grant under the Plan. Shares used to pay the
exercise price of an Award or to satisfy the tax withholding obligations related to an Award will become available for future grant or sale under the Plan. To the extent an Award under the Plan is paid out in cash rather than Shares, such cash
payment will not result in reducing the number of Shares available for issuance under the Plan. Notwithstanding the foregoing and, subject to adjustment as provided in Section 13, the maximum number of Shares that may be issued upon the
exercise of Incentive Stock Options will equal the aggregate Share number stated in Section 3(a), plus, to the extent allowable under Code Section 422 and the Treasury Regulations promulgated thereunder, any Shares that become available
for issuance under the Plan pursuant to Section 3(b). 
 (c) Share Reserve. The Company, during the
term of this Plan, will at all times reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of the Plan. 
 4. Administration of the Plan. 
 (a) Procedure.

 (i) Multiple Administrative Bodies. Different Committees with respect to different groups of Service
Providers may administer the Plan. 
 (ii) Other Administration. Other than as provided above, the Plan
will be administered by (A) the Board or (B) a Committee, which Committee will be constituted to satisfy Applicable Laws. 
 (b) Powers of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator
will have the authority, in its discretion: 
 (i) to determine the Fair Market Value; 

(ii) to select the Service Providers to whom Awards may be granted hereunder; 

  
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 (iii) to determine the number of Shares to be covered by each Award granted
hereunder; 
 (iv) to approve forms of Award Agreements for use under the Plan; 

(v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder.
Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any
restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator will determine; 
 (vi) to institute and determine the terms and conditions of an Exchange Program; 
 (vii) to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan; 
 (viii) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws
or for qualifying for favorable tax treatment under applicable foreign laws; 
 (ix) to modify or amend each
Award (subject to Section 18(c) of the Plan), including but not limited to the discretionary authority to extend the post-termination exercisability period of Awards and to extend the maximum term of an Option (subject to Section 6(d));

 (x) to allow Participants to satisfy withholding tax obligations in a manner prescribed in Section 14;

 (xi) to authorize any person to execute on behalf of the Company any instrument required to effect the grant
of an Award previously granted by the Administrator; 
 (xii) to allow a Participant to defer the receipt of the
payment of cash or the delivery of Shares that otherwise would be due to such Participant under an Award; and 

(xiii) to make all other determinations deemed necessary or advisable for administering the Plan. 

(c) Effect of Administrator’s Decision. The Administrator’s decisions, determinations and
interpretations will be final and binding on all Participants and any other holders of Awards. 
 5. Eligibility.
Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, and Restricted Stock Units may be granted to Service Providers. Incentive Stock Options may be granted only to Employees. 

  
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 6. Stock Options. 

(a) Grant of Options. Subject to the terms and provisions of the Plan, the Administrator, at any time and from time
to time, may grant Options in such amounts as the Administrator, in its sole discretion, will determine. 
 (b)
Option Agreement. Each Award of an Option will be evidenced by an Award Agreement that will specify the exercise price, the term of the Option, the number of Shares subject to the Option, the exercise restrictions, if any, applicable to the
Option, and such other terms and conditions as the Administrator, in its sole discretion, will determine. 
 (c)
Limitations. Each Option will be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. Notwithstanding such designation, however, to the extent that the aggregate Fair Market Value of the Shares
with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), such Options
will be treated as Nonstatutory Stock Options. For purposes of this Section 6(c), Incentive Stock Options will be taken into account in the order in which they were granted, the Fair Market Value of the Shares will be determined as of the time
the Option with respect to such Shares is granted, and calculation will be performed in accordance with Code Section 422 and Treasury Regulations promulgated thereunder. 

(d) Term of Option. The term of each Option will be stated in the Award Agreement; provided, however, that the term
will be no more than ten (10) years from the date of grant thereof. In the case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will be five (5) years from the date of grant or such shorter term as may be provided in
the Award Agreement. 
 (e) Option Exercise Price and Consideration. 

(i) Exercise Price. The per Share exercise price for the Shares to be issued pursuant to the exercise of an Option
will be determined by the Administrator, but will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant. In addition, in the case of an Incentive Stock Option granted to an Employee who owns stock
representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price will be no less than one hundred ten percent (110%) of the Fair Market Value per
Share on the date of grant. Notwithstanding the foregoing provisions of this Section 6(e)(i), Options may be granted with a per Share exercise price of less than one hundred percent (100%) of the Fair Market Value per Share on the date of
grant pursuant to a transaction described in, and in a manner consistent with, Code Section 424(a). 
 (ii)
Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator will fix the period within which the Option may be exercised and will determine any conditions that must be satisfied before the Option may be exercised.

  
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 (iii) Form of Consideration. The Administrator will determine the
acceptable form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator will determine the acceptable form of consideration at the time of grant. Such consideration may
consist entirely of: (1) cash; (2) check; (3) promissory note, to the extent permitted by Applicable Laws, (4) other Shares, provided that such Shares have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which such Option will be exercised and provided further that accepting such Shares will not result in any adverse accounting consequences to the Company, as the Administrator determines in its sole discretion;
(5) consideration received by the Company under cashless exercise program (whether through a broker or otherwise) implemented by the Company in connection with the Plan; (6) by net exercise, (7) such other consideration and method of
payment for the issuance of Shares to the extent permitted by Applicable Laws, or (8) any combination of the foregoing methods of payment. In making its determination as to the type of consideration to accept, the Administrator will consider if
acceptance of such consideration may be reasonably expected to benefit the Company. 
 (f) Exercise of
Option. 
 (i) Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder will be
exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share. 

An Option will be deemed exercised when the Company receives: (i) notice of exercise (in such form as the
Administrator may specify from time to time) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised (together with applicable tax withholding). Full payment may
consist of any consideration and method of payment authorized by the Administrator and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant or, if requested by the
Participant, in the name of the Participant and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a stockholder will exist with respect to the Shares subject to an Option, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised.
No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 13 of the Plan. 

Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan
and for sale under the Option, by the number of Shares as to which the Option is exercised. 
 (ii)
Termination of Relationship as a Service Provider. If a Participant ceases to be a Service Provider, other than upon the Participant’s termination as the result of the Participant’s death or Disability, the Participant may exercise
his or her Option within thirty (30) days of termination, or such longer period of time as is specified in the Award Agreement (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement) to the
extent that the Option is vested on the date of termination. Unless otherwise provided by the 

  
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Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If
after termination the Participant does not exercise his or her Option within the time specified by the Administrator, the Option will terminate, and the Shares covered by such Option will revert to the Plan. 

(iii) Disability of Participant. If a Participant ceases to be a Service Provider as a result of the
Participant’s Disability, the Participant may exercise his or her Option within six (6) months of termination, or such longer period of time as is specified in the Award Agreement (but in no event later than the expiration of the term of
such Option as set forth in the Award Agreement) to the extent the Option is vested on the date of termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified herein, the Option will terminate, and the Shares covered by
such Option will revert to the Plan. 
 (iv) Death of Participant. If a Participant dies while a Service
Provider, the Option may be exercised within six (6) months following the Participant’s death, or within such longer period of time as is specified in the Award Agreement (but in no event later than the expiration of the term of such
Option as set forth in the Award Agreement) to the extent that the Option is vested on the date of death, by the Participant’s designated beneficiary, provided such beneficiary has been designated prior to the Participant’s death in a form
acceptable to the Administrator. If no such beneficiary has been designated by the Participant, then such Option may be exercised by the personal representative of the Participant’s estate or by the person(s) to whom the Option is transferred
pursuant to the Participant’s will or in accordance with the laws of descent and distribution. Unless otherwise provided by the Administrator, if at the time of death Participant is not vested as to his or her entire Option, the Shares covered
by the unvested portion of the Option will immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan. 

7. Stock Appreciation Rights. 
 (a) Grant of Stock Appreciation Rights. Subject to the terms and conditions of the Plan, a Stock Appreciation Right may be granted to Service Providers at any time and from time to time as will be
determined by the Administrator, in its sole discretion. 
 (b) Number of Shares. The Administrator will
have complete discretion to determine the number of Shares subject to any Award of Stock Appreciation Rights. 

(c) Exercise Price and Other Terms. The per Share exercise price for the Shares that will determine the amount of
the payment to be received upon exercise of a Stock Appreciation Right as set forth in Section 7(f) will be determined by the Administrator and will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date
of grant. Otherwise, the Administrator, subject to the provisions of the Plan, will have complete discretion to determine the terms and conditions of Stock Appreciation Rights granted under the Plan. 

  
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 (d) Stock Appreciation Right Agreement. Each Stock Appreciation Right
grant will be evidenced by an Award Agreement that will specify the exercise price, the term of the Stock Appreciation Right, the conditions of exercise, and such other terms and conditions as the Administrator, in its sole discretion, will
determine. 
 (e) Expiration of Stock Appreciation Rights. A Stock Appreciation Right granted under the
Plan will expire upon the date determined by the Administrator, in its sole discretion, and set forth in the Award Agreement. Notwithstanding the foregoing, the rules of Section 6(d) relating to the maximum term and Section 6(f) relating
to exercise also will apply to Stock Appreciation Rights. 
 (f) Payment of Stock Appreciation Right
Amount. Upon exercise of a Stock Appreciation Right, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying: 

(i) The difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times

 (ii) The number of Shares with respect to which the Stock Appreciation Right is exercised. 

At the discretion of the Administrator, the payment upon Stock Appreciation Right exercise may be in cash, in Shares of equivalent value,
or in some combination thereof. 
 8. Restricted Stock. 

(a) Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the Administrator, at any time and
from time to time, may grant Shares of Restricted Stock to Service Providers in such amounts as the Administrator, in its sole discretion, will determine. 
 (b) Restricted Stock Agreement. Each Award of Restricted Stock will be evidenced by an Award Agreement that will specify the Period of Restriction, the number of Shares granted, and such other
terms and conditions as the Administrator, in its sole discretion, will determine. Unless the Administrator determines otherwise, the Company as escrow agent will hold Shares of Restricted Stock until the restrictions on such Shares have lapsed.

 (c) Transferability. Except as provided in this Section 8 or as the Administrator determines,
Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction. 

(d) Other Restrictions. The Administrator, in its sole discretion, may impose such other restrictions on Shares of
Restricted Stock as it may deem advisable or appropriate. 
 (e) Removal of Restrictions. Except as
otherwise provided in this Section 8, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan will be released from escrow as soon as practicable after the last day of the Period of Restriction or at such other
time as the Administrator may determine. The Administrator, in its discretion, may accelerate the time at which any restrictions will lapse or be removed. 

  
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 (f) Voting Rights. During the Period of Restriction, Service
Providers holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares, unless the Administrator determines otherwise. 

(g) Dividends and Other Distributions. During the Period of Restriction, Service Providers holding Shares of
Restricted Stock will be entitled to receive all dividends and other distributions paid with respect to such Shares, unless the Administrator provides otherwise. If any such dividends or distributions are paid in Shares, the Shares will be subject
to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid. 
 (h) Return of Restricted Stock to Company. On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have not lapsed will revert to the Company and again will become
available for grant under the Plan. 
 9. Restricted Stock Units. 

(a) Grant. Restricted Stock Units may be granted at any time and from time to time as determined by the
Administrator. After the Administrator determines that it will grant Restricted Stock Units, it will advise the Participant in an Award Agreement of the terms, conditions, and restrictions related to the grant, including the number of Restricted
Stock Units. 
 (b) Vesting Criteria and Other Terms. The Administrator will set vesting criteria in its
discretion, which, depending on the extent to which the criteria are met, will determine the number of Restricted Stock Units that will be paid out to the Participant. The Administrator may set vesting criteria based upon the achievement of
Company-wide, business unit, or individual goals (including, but not limited to, continued employment or service), or any other basis determined by the Administrator in its discretion. 

(c) Earning Restricted Stock Units. Upon meeting the applicable vesting criteria, the Participant will be entitled
to receive a payout as determined by the Administrator. Notwithstanding the foregoing, at any time after the grant of Restricted Stock Units, the Administrator, in its sole discretion, may reduce or waive any vesting criteria that must be met to
receive a payout. 
 (d) Form and Timing of Payment. Payment of earned Restricted Stock Units will be made
as soon as practicable after the date(s) determined by the Administrator and set forth in the Award Agreement. The Administrator, in its sole discretion, may settle earned Restricted Stock Units in cash, Shares, or a combination of both. 

(e) Cancellation. On the date set forth in the Award Agreement, all unearned Restricted Stock Units will be
forfeited to the Company. 
 10. Compliance With Code Section 409A. Awards will be designed and operated in such a
manner that they are either exempt from the application of, or comply with, the requirements of Code Section 409A, except as otherwise determined in the sole discretion of the Administrator. The Plan and each Award Agreement under the Plan is
intended to meet the requirements of Code Section 409A and will be construed and interpreted in accordance with such intent, except as 

  
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otherwise determined in the sole discretion of the Administrator. To the extent that an Award or payment, or the settlement or deferral thereof, is subject to Code Section 409A the Award
will be granted, paid, settled or deferred in a manner that will meet the requirements of Code Section 409A, such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Code
Section 409A. 
 11. Leaves of Absence/Transfer Between Locations. Unless the Administrator
provides otherwise, vesting of Awards granted hereunder will be suspended during any unpaid leave of absence. A Participant will not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers
between locations of the Company or between the Company, its Parent, or any Subsidiary. For purposes of Incentive Stock Options, no such leave may exceed three (3) months, unless reemployment upon expiration of such leave is guaranteed by
statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then six (6) months following the first (1st) day of such leave, any Incentive Stock Option held by the Participant will cease to be treated as an Incentive
Stock Option and will be treated for tax purposes as a Nonstatutory Stock Option. 
 12. Limited Transferability of
Awards. 
 (a) Unless determined otherwise by the Administrator, Awards may not be sold, pledged, assigned,
hypothecated, or otherwise transferred in any manner other than by will or by the laws of descent and distribution, and may be exercised, during the lifetime of the Participant, only by the Participant. If the Administrator makes an Award
transferable, such Award may only be transferred (i) by will, (ii) by the laws of descent and distribution, or (iii) as permitted by Rule 701 of the Securities Act of 1933, as amended (the “Securities Act”). 

(b) Further, until the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, or after the Administrator determines that it is, will, or may no longer be relying upon the exemption from registration under the Exchange Act as set forth in Rule 12h-1(f) promulgated under the Exchange Act, an Option, or prior to exercise,
the Shares subject to the Option, may not be pledged, hypothecated or otherwise transferred or disposed of, in any manner, including by entering into any short position, any “put equivalent position” or any “call equivalent
position” (as defined in Rule 16a-1(h) and Rule 16a-1(b) of the Exchange Act, respectively), other than to (i) persons who are “family members” (as defined in Rule 701(c)(3) of the Securities Act) through gifts or domestic
relations orders, or (ii) to an executor or guardian of the Participant upon the death or disability of the Participant. Notwithstanding the foregoing sentence, the Administrator, in its sole discretion, may determine to permit transfers to the
Company or in connection with a Change in Control or other acquisition transactions involving the Company to the extent permitted by Rule 12h-1(f). 
 13. Adjustments; Dissolution or Liquidation; Merger or Change in Control. 
 (a) Adjustments. In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator,
in order to prevent diminution or 

  
 -12-

 
enlargement of the benefits or potential benefits intended to be made available under the Plan, will adjust the number and class of Shares that may be delivered under the Plan and/or the number,
class, and price of Shares covered by each outstanding Award; provided, however, that the Administrator will make such adjustments to an Award required by Section 25102(o) of the California Corporations Code to the extent the Company is relying
upon the exemption afforded thereby with respect to the Award. 
 (b) Dissolution or Liquidation. In the
event of the proposed dissolution or liquidation of the Company, the Administrator will notify each Participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised, an
Award will terminate immediately prior to the consummation of such proposed action. 
 (c) Merger or Change in
Control. In the event of a merger or Change in Control, each outstanding Award will be treated as the Administrator determines without a Participant’s consent, including, without limitation, that (i) Awards will be assumed, or
substantially equivalent Awards will be substituted, by the acquiring or succeeding corporation (or an affiliate thereof) with appropriate adjustments as to the number and kind of shares and prices; (ii) upon written notice to a Participant,
that the Participant’s Awards will terminate upon or immediately prior to the consummation of such merger or Change in Control (subject to the provisions of the proceeding paragraph); (iii) outstanding Awards will vest and become
exercisable, realizable, or payable, or restrictions applicable to an Award will lapse, in whole or in part prior to or upon consummation of such merger or Change in Control, and, to the extent the Administrator determines, terminate upon or
immediately prior to the effectiveness of such merger of Change in Control; (iv) (A) the termination of an Award in exchange for an amount of cash and/or property, if any, equal to the amount that would have been attained upon the exercise
of such Award or realization of the Participant’s rights as of the date of the occurrence of the transaction (and, for the avoidance of doubt, if as of the date of the occurrence of the transaction the Administrator determines in good faith
that no amount would have been attained upon the exercise of such Award or realization of the Participant’s rights, then such Award may be terminated by the Company without payment), or (B) the replacement of such Award with other rights
or property selected by the Administrator in its sole discretion; or (v) any combination of the foregoing. In taking any of the actions permitted under this subsection 13(c), the Administrator will not be obligated to treat all Awards, all
Awards held by a Participant, or all Awards of the same type, similarly. 
 In the event that the successor
corporation does not assume or substitute for the Award (or portion thereof), the Participant will fully vest in and have the right to exercise all of his or her outstanding Options and Stock Appreciation Rights, including Shares as to which such
Awards would not otherwise be vested or exercisable, all restrictions on Restricted Stock and Restricted Stock Units will lapse, and, with respect to Awards with performance-based vesting, all performance goals or other vesting criteria will be
deemed achieved at one hundred percent (100%) of target levels and all other terms and conditions met. In addition, if an Option or Stock Appreciation Right is not assumed or substituted in the event of a merger or Change in Control, the
Administrator will notify the Participant in writing or electronically that the Option or Stock Appreciation Right will be exercisable for a period of time determined by the Administrator in its sole discretion, and the Option or Stock Appreciation
Right will terminate upon the expiration of such period. 

  
 -13-

 For the purposes of this subsection 13(c), an Award will be considered
assumed if, following the merger or Change in Control, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the merger or Change in Control, the consideration (whether stock, cash, or other
securities or property) received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by
the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the
consent of the successor corporation, provide for the consideration to be received upon the exercise of an Option or Stock Appreciation Right or upon the payout of a Restricted Stock Unit, for each Share subject to such Award, to be solely common
stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or Change in Control. 

Notwithstanding anything in this Section 13(c) to the contrary, an Award that vests, is earned or paid-out upon the
satisfaction of one or more performance goals will not be considered assumed if the Company or its successor modifies any of such performance goals without the Participant’s consent; provided, however, a modification to such performance goals
only to reflect the successor corporation’s post-Change in Control corporate structure will not be deemed to invalidate an otherwise valid Award assumption. 

Notwithstanding anything in this Section 13(c) to the contrary, if a payment under an Award Agreement is subject to
Code Section 409A and if the change in control definition contained in the Award Agreement does not comply with the definition of “change of control” for purposes of a distribution under Code Section 409A, then any payment of an
amount that is otherwise accelerated under this Section will be delayed until the earliest time that such payment would be permissible under Code Section 409A without triggering any penalties applicable under Code Section 409A. 

14. Tax Withholding. 
 (a) Withholding Requirements. Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof), the Company will have the power and the right to deduct or withhold, or require
a Participant to remit to the Company, an amount sufficient to satisfy federal, state, local, foreign or other taxes (including the Participant’s FICA obligation) required to be withheld with respect to such Award (or exercise thereof).

 (b) Withholding Arrangements. The Administrator, in its sole discretion and pursuant to such procedures
as it may specify from time to time, may permit a Participant to satisfy such tax withholding obligation, in whole or in part by (without limitation) (i) paying cash, (ii) electing to have the Company withhold otherwise deliverable Shares
having a Fair Market Value equal to the minimum statutory amount required to be withheld, (iii) delivering to the Company already-owned Shares having a Fair Market Value equal to the statutory amount required to be withheld, provided the
delivery of such Shares will not result in any adverse accounting consequences, as the Administrator determines in its sole discretion, or (iv) selling a sufficient number of Shares otherwise deliverable to the Participant through such means as
the Administrator may determine in its sole discretion (whether through a broker or otherwise) equal to the amount 

  
 -14-

 
required to be withheld. The amount of the withholding requirement will be deemed to include any amount which the Administrator agrees may be withheld at the time the election is made, not to
exceed the amount determined by using the maximum federal, state or local marginal income tax rates applicable to the Participant with respect to the Award on the date that the amount of tax to be withheld is to be determined. The Fair Market Value
of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be withheld. 
 15.
No Effect on Employment or Service. Neither the Plan nor any Award will confer upon a Participant any right with respect to continuing the Participant’s relationship as a Service Provider with the Company, nor will they interfere in any
way with the Participant’s right or the Company’s right to terminate such relationship at any time, with or without cause, to the extent permitted by Applicable Laws. 

16. Date of Grant. The date of grant of an Award will be, for all purposes, the date on which the Administrator makes the
determination granting such Award, or such other later date as is determined by the Administrator. Notice of the determination will be provided to each Participant within a reasonable time after the date of such grant. 

17. Term of Plan. Subject to Section 21 of the Plan, the Plan will become effective upon its adoption by the Board. Unless
sooner terminated under Section 18, it will continue in effect for a term of ten (10) years from the later of (a) the effective date of the Plan, or (b) the earlier of the most recent Board or stockholder approval of an increase
in the number of Shares reserved for issuance under the Plan. 
 18. Amendment and Termination of the Plan. 

(a) Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan. 

(b) Stockholder Approval. The Company will obtain stockholder approval of any Plan amendment to the extent
necessary and desirable to comply with Applicable Laws. 
 (c) Effect of Amendment or Termination. No
amendment, alteration, suspension or termination of the Plan will impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant
and the Company. Termination of the Plan will not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination. 

19. Conditions Upon Issuance of Shares. 
 (a) Legal Compliance. Shares will not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares will comply with Applicable Laws
and will be further subject to the approval of counsel for the Company with respect to such compliance. 

  
 -15-

 (b) Investment Representations. As a condition to the exercise of an
Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if,
in the opinion of counsel for the Company, such a representation is required. 
 20. Inability to Obtain Authority. The
inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, will relieve the Company of
any liability in respect of the failure to issue or sell such Shares as to which such requisite authority will not have been obtained. 
 21. Stockholder Approval. The Plan will be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted by the Board. Such stockholder
approval will be obtained in the manner and to the degree required under Applicable Laws. 
 22. Information to
Participants. Beginning on the earlier of (i) the date that the aggregate number of Participants under this Plan is five hundred (500) or more and the Company is relying on the exemption provided by Rule 12h-1(f)(1) under the Exchange
Act and (ii) the date that the Company is required to deliver information to Participants pursuant to Rule 701 under the Securities Act, and until such time as the Company becomes subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, is no longer relying on the exemption provided by Rule 12h-1(f)(1) under the Exchange Act or is no longer required to deliver information to Participants pursuant to Rule 701 under the Securities Act, the Company shall
provide to each Participant the information described in paragraphs (e)(3), (4), and (5) of Rule 701 under the Securities Act not less frequently than every six (6) months with the financial statements being not more than 180 days old and
with such information provided either by physical or electronic delivery to the Participants or by written notice to the Participants of the availability of the information on an Internet site that may be password-protected and of any password
needed to access the information. The Company may request that Participants agree to keep the information to be provided pursuant to this section confidential. If a Participant does not agree to keep the information to be provided pursuant to this
section confidential, then the Company will not be required to provide the information unless otherwise required pursuant to Rule 12h-1(f)(1) under the Exchange Act or Rule 701 of the Securities Act. 

  
 -16-Notice of Grant and Agreement  for Stock Appreciation Right

 Exhibit 10.1 

 

			
	 NOTICE OF GRANT AND AGREEMENT
FOR
	  	CALLAWAY GOLF COMPANY
	 STOCK APPRECIATION RIGHT FOR:
	  	
		
	 ANTHONY S. THORNLEY
	  	ID: 95-3797580
		  	2180 RUTHERFORD ROAD
		  	CARLSBAD, CA 92008

  
  

PLAN: 2004 INCENTIVE PLAN 

 
  
 1. Grant of SAR. Effective September 1, 2011 (“Effective Date”), you have been granted a Stock Appreciation Right (“SAR”) with respect to shares of
Callaway Golf Company (the “Company”) Common Stock upon the following terms: 
  

							
	 UNDERLYING SHARES
	  	 STRIKE PRICE
	  	
SCHEDULED VESTING DATE
	  	
SCHEDULED EXPIRATION DATE

	 500,000
	  	 5.50
	  	JUNE 29, 2012	  	JUNE 29, 2016

 The SAR is granted to you pursuant to the terms and conditions of this Notice of Grant of SAR and SAR
Agreement (this “Agreement”), and the Company’s 2004 Incentive Plan (as amended and restated from time to time, the “Plan”), the provisions of which Plan are by this reference incorporated in this Agreement. In
the event of any conflict between the provisions of the Plan and the provisions of this Agreement, the provisions of the Plan shall be controlling. The Company has provided you with a copy of the Plan and a prospectus for the Plan. Capitalized terms
not otherwise defined in this Agreement, including Exhibit A attached hereto, will have the meanings ascribed to them in the Plan. 
 2. Exercise. As soon as administratively practicable following your exercise of the SAR, but not more than thirty days after your exercise, you shall receive a lump sum cash payment (the
“Cash Payment”). Subject to applicable tax withholdings, as discussed below, the Cash Payment shall be in an amount equal to the number of vested shares being exercised multiplied by the excess of (i) the per share Fair Market Value
(as defined in the Plan) as of the exercise date of the Company’s Common Stock exercised under the SAR, over (ii) the per share strike price listed above. In order to receive the Cash Payment, you must deliver a Notice of Exercise (in a
form designated by the Company) to the Secretary of the Company, or to such other person as the Company may designate, during regular business hours, together with such additional documents as the Company may then require. 

You authorize the Company and/or its Affiliate to withhold all applicable tax-related items legally payable by you in connection with a
Cash Payment from your wages, your Cash Payment or other cash compensation paid to you by the Company and/or its Affiliate. You acknowledge that the ultimate liability for all tax-related items legally due by you is and remains your responsibility
and that Company and/or its Affiliate (a) makes no representations or undertakings regarding the treatment of any tax-related items in connection with any aspect of the SAR grant, including the grant, vesting or exercise of the SAR, or the Cash
Payment; and (b) do not commit to structure the terms of the grant or any aspect of the SAR to reduce or eliminate your liability for tax-related items. 

 3. Vesting. Subject to Section 4 (Term and
Termination) and Section 5 (Cancellation, Forfeiture and Rescission) of this Agreement, and subject to the accelerated vesting provisions, if any, set forth in any employment agreement between you and the Company or its Affiliate, as the
same may be amended, modified, extended or renewed from time to time, the SAR shall vest (and be exercisable) in full on the scheduled vesting date set forth above; provided, however, that if your Continuous Service terminates before such date, then
you will vest (and have the right to exercise) 1/12th of
the shares subject to the SAR for each month (or partial month) of Continuous Service as the Company’s Chief Executive Officer beginning June 29, 2011. The Board may, in its discretion, accelerate the vesting schedule (in which case it may
impose whatever conditions it considers appropriate on the accelerated portion). In addition, the entire SAR shall vest and become exercisable immediately prior to any Change in Control, if you are in the Continuous Service of the Company or its
Affiliate at that time or serving on the Board of Directors of the Company, provided, however, that the Board of Directors, in its sole discretion, may provide that such SAR does not vest and become exercisable immediately prior to any such Change
in Control, and instead provide that the SAR shall be assumed or that an equivalent SAR or right shall be substituted by a successor company, in which case the amount and price of such assumed or substituted SAR shall be determined by adjusting the
amount and price of the SAR consistent with the terms of the transaction giving rise to the Change in Control. For purposes hereof, “Change in Control” shall have the meaning set forth in Exhibit A attached hereto. 

4. Term and Termination. Subject to Section 3 (Vesting), if you cease for any reason to provide Continuous
Service to the Company as its Chief Executive Officer, that portion of the SAR which has not yet vested shall be immediately terminated. Subject to Section 5 (Cancellation, Forfeiture and Rescission) hereof, the SAR shall expire on the
earlier of (i) the scheduled expiration date set forth above or (ii) one year from the later of (a) the date on which you cease to provide Continuous Service to the Company as its Chief Executive Officer or (b) the date you cease
to serve as a member of the Board of Directors. 
 5. Cancellation, Forfeiture and Rescission. 

(a) If during your Continuous Service or during any period thereafter, you directly or indirectly disclose or misuse any
confidential information or trade secrets of the Company then: 
 (1) any unexercised portion of the SAR
is automatically cancelled as of the date you first committed the act or acts described above (the “Cancellation Date”); and 
 (2) any exercise of all or any portion of the SAR exercised on or after the Cancellation Date or during the “Look-Back Period” preceding the Cancellation Date shall be rescinded, and you
shall be required to pay to the Company, within ten days of receiving written notice from the Company, the amount of any gain realized as the result of any such rescinded exercise (the “SAR Gain”). 

The Company shall notify you in writing of any such rescission within two years of any such exercise. If you are still providing Continuous Service on
the Cancellation Date, the “Look-Back Period” is ninety days. If you are no longer providing Continuous Service on the Cancellation Date, the “Look-Back Period” is the longer of ninety days or the number of days elapsed from the
date of termination of your Continuous Service to the Cancellation Date. For purposes of this Agreement, an “indirect” use of the Company’s confidential information or trade secrets

 
shall be presumed to have occurred if you take a comparable position with a competitor in which case you shall have the burden of proving that no use or disclosure of confidential information or
trade secrets occurred or will occur. For purposes of this Agreement, and in the absence of proof of actual gain on the date of exercise, “SAR Gain” shall mean the New York Stock Exchange closing price on the date of exercise minus the
exercise price of the SAR, multiplied by the number of shares you purchased upon the exercise, without regard to any subsequent market price decrease or increase. 
 (b) You hereby agree that the Company may set off against any amount the Company may now or hereafter owe you the amount of any SAR Gain required to be paid by you to Company under this
Section 5. This Section 5 does not limit any other legal or equitable remedy available to the Company. As a condition of each exercise of all or any portion of the SAR, you will be required to certify to the Company on a form
of notice of exercise acceptable to the Company that you have not committed any of the acts described in paragraph (a) above. 
 You
acknowledge that you have read each provision of this Section 5 and have had an opportunity to ask questions with respect to this Section. You acknowledge that you understand that the Company is granting the SAR subject to the terms of
this Section 5. 

                     (Holder)

 6. Nature of Grant. In accepting the grant, you acknowledge that: 

(a) the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or
terminated by the Company at any time, unless otherwise provided in the Plan and this Agreement; 
 (b) the grant of the
SAR is voluntary and occasional and does not create any contractual or other right to receive future grants of SARs, or benefits in lieu of SARs, even if SARs have been granted repeatedly in the past, and all decisions with respect to future SAR
grants, if any, will be at the sole discretion of the Company; 
 (c) your participation in the Plan shall not create a
right to Continued Service with the Company or an Affiliate and shall not interfere with the ability the Company or an Affiliate to terminate your service relationship at any time with or without cause; 

(d) you are voluntarily participating in the Plan; 
 (e) the SAR is an extraordinary benefit and is not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation,
termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company or
an Affiliate; 
 (f) the future value of the underlying shares of Common Stock is unknown and cannot be predicted with
certainty, and if the underlying shares of Common Stock do not increase in value, the SAR will have no value; and 

 (g) in consideration of the grant of the SAR, no claim or entitlement to compensation
or damages shall arise from termination of the SAR or diminution in value of the SAR or shares of Common Stock purchased through exercise of the SAR resulting from termination of your Continuous Service by the Company or an Affiliate (for any reason
whatsoever and whether or not in breach of local labor laws) and you irrevocably release the Company and its Affiliates from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent
jurisdiction to have arisen, then, by signing this Agreement, you shall be deemed irrevocably to have waived your entitlement to pursue such claim. 
 7. Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to the SAR granted under and participation in the Plan or future SARs that may be
granted under the Plan by electronic means or to request your consent to participate in the Plan by electronic means. You hereby consent to receive such documents by electronic delivery and, if requested, to agree to participate in the Plan through
an on-line or electronic system established and maintained by the Company or another third party designated by the Company. 

8. Taxable Event. You acknowledge that your receipt of the Cash Payment upon exercise of the SAR will have significant tax
consequences to you and you are hereby advised to consult with your own tax advisors concerning such tax consequences. A general description of the U.S. federal income tax consequences related to SAR awards is set forth in the Plan Prospectus.

 9. Amendment. This Agreement may be amended only by a writing executed by the Company and you which
specifically states that it is amending this Agreement. Notwithstanding the foregoing, this Agreement may be amended solely by the Board by a writing which specifically states that it is amending this Agreement, so long as a copy of such amendment
is delivered to you, and provided that no such amendment adversely affecting your rights hereunder may be made without your written consent. Without limiting the foregoing, the Board reserves the right to change, by written notice to you, the
provisions of this Agreement in any way it may deem necessary or advisable to carry out the purpose of the grant as a result of any change in applicable laws or regulations or any future law, regulation, ruling, or judicial decision, provided that
any such change will be applicable only to rights relating to that portion of the SAR which is then subject to restrictions as provided herein. 
 10. Miscellaneous. 
 (a) The rights and obligations of the
Company under this Agreement will be transferable by the Company to any one or more persons or entities, and all covenants and agreements hereunder will inure to the benefit of, and be enforceable by the Company’s successors and assigns.

 (b) You agree upon request to execute any further documents or instruments necessary or desirable in the sole
determination of the Company to carry out the purposes or intent of this Agreement. 
 (c) You acknowledge that the SAR
granted to you under the Plan, and its underlying Cash Payments, are subject to all general Company policies as amended from time to time. 

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

13. Irrevocable Arbitration of Disputes. 
 (a) You and the Company agree that any dispute, controversy or claim arising hereunder or in any way related to this Agreement, its interpretation, enforceability, or applicability, that cannot be
resolved by mutual agreement of the parties shall be submitted to binding arbitration. The parties agree that arbitration is the parties’ only recourse for such claims and hereby waive the right to pursue such claims in any other forum, unless
otherwise provided by law. Any court action involving a dispute which is not subject to arbitration shall be stayed pending arbitration of arbitrable disputes. 
 (b) You and the Company agree that the arbitrator shall have the authority to issue provisional relief. You and the Company further agree that each has the right, pursuant to California Code of Civil
Procedure section 1281.8, to apply to a court for a provisional remedy in connection with an arbitrable dispute so as to prevent the arbitration from being rendered ineffective. 

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

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

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

 (g) The provisions of this Section shall survive the expiration or termination of the Agreement, and shall be binding
upon the parties. 
 THE PARTIES HAVE READ SECTION 13 AND IRREVOCABLY AGREE TO ARBITRATE ANY DISPUTE IDENTIFIED ABOVE.

  

			
	              (Holder)
	 	             (Company)        

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

 IN WITNESS WHEREOF, the undersigned have executed this Notice of Grant of SAR and SAR
Agreement as of the Effective Date. 
  

									
	CALLAWAY GOLF COMPANY	  		  	ANTHONY S. THORNLEY	  	
					
	 By:
	 	  
	  		  	  
	  	

 EXHIBIT A 
 1. “Affiliate” means the Company’s “parent” or “subsidiary” as such terms are defined in Rule 405 of the Securities Act (together “Affiliates”). The
Board shall have the authority to determine the time or times at which “parent” or “subsidiary” status is determined within the foregoing definition of Affiliate. 

2. A “Change in Control” means the following and shall be deemed to occur if any of the following events occurs:

 (a) 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 subsidiaries and any employee benefit or stock ownership plan of the Company or its subsidiaries 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 

(b) 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 
 (c) Consummation by the Company of
the sale, lease, exchange or other disposition (in one transaction or a series of related transactions) 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 
 (i) 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 

 (ii) 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 

(d) Approval by the shareholders of the Company or an order by a court of competent jurisdiction of a plan of complete liquidation or
dissolution of the Company. 
 3. “Continuous Service” means that your service with the Company as it’s
Chief Executive Officer is not interrupted or terminated. A change in the capacity in which you render service to the Company shall terminate your Continuous Service. For example, a change in status from the Company’s Chief Executive Officer of
the Company to a non-employee director shall constitute an interruption of Continuous Service. To the extent permitted by law, the Board, in its sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of
any leave of absence approved by that party, including sick leave, military leave or any other personal leave. Notwithstanding the foregoing, a leave of absence shall be treated as Continuous Service for purposes of vesting in the SAR only to such
extent as may be provided in the Company’s leave of absence policy, in the written terms of any leave of absence agreement or policy applicable to you, or as otherwise required by law.

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