Document:

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                                                                   EXHIBIT 10.24

                             CALLAWAY GOLF COMPANY

                            1998 STOCK INCENTIVE PLAN

                    (AS AMENDED AND RESTATED AUGUST 15, 2000)

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                                TABLE OF CONTENTS

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<S>                                                                                         <C>
ARTICLE I      PURPOSE OF PLAN...............................................................1

ARTICLE II     EFFECTIVE DATE AND TERM OF PLAN...............................................1

2.1     TERM OF PLAN.........................................................................1
2.2     EFFECT ON AWARDS.....................................................................1
2.3     SHAREHOLDER APPROVAL.................................................................1

ARTICLE III    SHARES SUBJECT TO PLAN........................................................1

3.1     NUMBER OF SHARES.....................................................................1
3.2     SOURCE OF SHARES.....................................................................1
3.3     AVAILABILITY OF UNUSED...............................................................2
3.4     ADJUSTMENT PROVISIONS................................................................2
3.5     RESERVATION OF SHARES................................................................2

ARTICLE IV     ADMINISTRATION OF PLAN........................................................3

4.1     ADMINISTERING BODY...................................................................3
4.2     AUTHORITY OF ADMINISTERING BODY......................................................3
4.3     NO LIABILITY.........................................................................4
4.4     AMENDMENTS...........................................................................4
4.5     OTHER COMPENSATION PLANS.............................................................4
4.6     PLAN BINDING ON SUCCESSORS...........................................................5
4.7     REFERENCES TO SUCCESSOR STATUTES, REGULATIONS AND RULES..............................5
4.8     ISSUANCES FOR COMPENSATION PURPOSES ONLY.............................................5
4.9     INVALID PROVISIONS...................................................................5
4.10    GOVERNING LAW........................................................................5

ARTICLE V      GENERAL AWARD PROVISIONS......................................................5

5.1     PARTICIPATION IN THE PLAN............................................................5
5.2     AWARD DOCUMENTS......................................................................5
5.3     EXERCISE OF STOCK OPTIONS............................................................6
5.4     PAYMENT FOR AWARDS...................................................................6
5.5     NO EMPLOYMENT RIGHTS.................................................................7
5.6     RESTRICTIONS UNDER APPLICABLE LAWS AND REGULATIONS...................................7
5.7     ADDITIONAL CONDITIONS................................................................8
5.8     NO PRIVILEGES OF STOCK OWNERSHIP.....................................................8
5.9     NONASSIGNABILITY.....................................................................9
5.10    INFORMATION TO RECIPIENTS............................................................9
5.11    WITHHOLDING TAXES....................................................................9
5.12    LEGENDS ON AWARDS AND STOCK CERTIFICATES............................................10
5.13    EFFECT OF TERMINATION OF EMPLOYMENT ON AWARDS.......................................10
          (a)  Termination of Vesting.......................................................10
          (b)  Alteration of Vesting and Exercise Periods...................................10
          (c)  Leave of Absence.............................................................10
5.14    LIMITS ON AWARDS TO ELIGIBLE PERSONS................................................10

ARTICLE VI     AWARDS.......................................................................11

6.1     STOCK OPTIONS.......................................................................11
          (a)  Nature of Stock Options......................................................11
          (b)  Option Exercise Price........................................................11
          (c)  Option Period and Vesting....................................................11
          (d)  Termination..................................................................11
          (e)  Special Provisions Regarding Incentive Stock Options.........................12
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6.2     PERFORMANCE AWARDS..................................................................12
          (a)  Grant of Performance Awards..................................................12
          (b)  Payment of Performance Awards................................................12
6.3     RESTRICTED STOCK....................................................................12
          (a)  Award of Restricted Stock....................................................12
          (b)  Requirements of Restricted Stock.............................................12
            (i)   No Transfer...............................................................12
            (ii)  Certificates..............................................................13
            (iii) Restrictive Legends.......................................................13
            (iv)  Other Restrictions........................................................13
          (c)  Lapse of Restrictions........................................................13
          (d)  Rights of Recipient..........................................................13
          (e)  Termination of Employment....................................................13
6.4     STOCK APPRECIATION RIGHTS...........................................................13
          (a)  Granting of Stock Appreciation Rights........................................13
          (b)  Stock Appreciation Rights Related to Options.................................13
          (c)  Stock Appreciation Rights Unrelated to Options...............................14
          (d)  Limits.......................................................................14
          (e)  Payments.....................................................................14
6.5     STOCK PAYMENTS......................................................................14
6.6     DIVIDEND EQUIVALENTS................................................................15
6.7     STOCK BONUSES.......................................................................15
6.8     STOCK SALES.........................................................................15
6.9     PHANTOM.............................................................................15
6.10    OTHER STOCK-BASED BENEFITS..........................................................15
6.11    TERMINATION OF EMPLOYMENT...........................................................15

ARTICLE VII    REORGANIZATIONS..............................................................16

7.1     CORPORATE TRANSACTIONS NOT INVOLVING A CHANGE IN CONTROL............................16
7.2     CORPORATE TRANSACTIONS INVOLVING A CHANGE IN CONTROL................................16

ARTICLE VIII   DEFINITIONS..................................................................16
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                              CALLAWAY GOLF COMPANY
                            1998 STOCK INCENTIVE PLAN

                                    ARTICLE I
                                 PURPOSE OF PLAN

        The Company has adopted this Plan to promote the interests of the
Company and its shareholders by using investment interests in the Company to
attract, retain and motivate employees and other persons, to encourage and
reward their contributions to the performance of the Company, and to align their
interests with the interests of the Company's shareholders. Capitalized terms
not otherwise defined herein shall have the meanings ascribed to them in Article
VIII.

                                   ARTICLE II
                         EFFECTIVE DATE AND TERM OF PLAN

        2.1 TERM OF PLAN

        This Plan became effective as of the Effective Date and shall continue
in effect until the Expiration Date, at which time this Plan shall automatically
terminate.

        2.2 EFFECT ON AWARDS

        Awards may be granted only during the Plan Term, but each Award granted
during the Plan Term shall remain in effect after the Expiration Date until such
Award has been exercised, terminated or expired in accordance with its terms and
the terms of this Plan.

        2.3 SHAREHOLDER APPROVAL

        This Plan shall be approved by the Company's shareholders within 12
months after the Effective Date. The effectiveness of any Awards granted prior
to such shareholder approval shall be subject to such shareholder approval.

                                   ARTICLE III
                             SHARES SUBJECT TO PLAN

        3.1 NUMBER OF SHARES

        The maximum number of shares of Common Stock that may be issued pursuant
to Awards shall be 500,000, subject to adjustment as set forth in Section 3.4.

        3.2 SOURCE OF SHARES

        The Common Stock to be issued under this Plan will be made available, at
the discretion of the Board, either from authorized but unissued shares of
Common Stock or from previously issued shares of Common Stock reacquired by the
Company.

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        3.3 AVAILABILITY OF UNUSED

        Shares of Common Stock subject to unexercised portions of any Award that
expire, terminate or are canceled, and shares of Common Stock issued pursuant to
an Award that are reacquired by the Company pursuant to the terms of the Award
under which such shares were issued, will again become available for the grant
of further Awards under this Plan.

        3.4 ADJUSTMENT PROVISIONS

        (a) If the outstanding shares of Common Stock are increased, decreased
or exchanged for a different number or kind of shares or other securities, or if
additional shares or new or different shares or other securities are distributed
in respect of such shares of Common Stock (or any stock or securities received
with respect to such Common Stock), including without limitation through merger,
consolidation, sale or exchange of all or substantially all of the assets of the
Company, reorganization, recapitalization, reclassification, stock dividend,
stock split, reverse stock split or spin-off, an appropriate and proportionate
adjustment may be made in (1) the maximum number and kind of shares subject to
this Plan as provided in Section 3.1, (2) the number and kind of shares or other
securities subject to then outstanding Awards, and/or (3) the price for each
share or other unit of any other securities subject to, or measurement criteria
applicable to, then outstanding Awards.

        (b) No fractional interests will be issued under this Plan resulting
from any adjustments.

        (c) To the extent any adjustments relate to stock or securities of the
Company, such adjustments shall be made by the Administering Body, whose
determination in that respect shall be final, binding and conclusive.

        (d) The grant of an Award pursuant to this Plan shall not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part of
its business or assets.

        (e) No adjustment to the terms of an Incentive Stock Option shall be
made unless such adjustment either (i) would not cause such Option to lose its
status as an Incentive Stock Option or (ii) is agreed to in writing by the
Administering Body and the Recipient.

        3.5 RESERVATION OF SHARES

        The Company will at all times reserve and keep available shares of
Common Stock equaling at least the total number of shares of Common Stock
issuable pursuant to outstanding Awards.

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                                   ARTICLE IV
                             ADMINISTRATION OF PLAN

        4.1 ADMINISTERING BODY

        (a) This Plan shall be administered by the Board or by a Committee of
the Board appointed pursuant to Section 4.1(b).

        (b) The Board in its sole discretion may from time to time appoint a
Committee (which may be a subcommittee of an existing committee of the Board) of
not less than two Board members to administer this Plan and, subject to
applicable law, to exercise all of the powers, authority and discretion of the
Board under this Plan. The Board may from time to time increase or decrease (but
not below two) the number of members of the Committee, remove from membership on
the Committee all or any portion of its members, and/or appoint such person or
persons as it desires to fill any vacancy existing on the Committee, whether
caused by removal, resignation or otherwise. The Board may disband the Committee
at any time and revest in the Board the administration of this Plan.

        4.2 AUTHORITY OF ADMINISTERING BODY

        (a) Subject to the express provisions of this Plan, the Administering
Body shall have the power to implement, (including the power to delegate such
implementation to appropriate officers of the Company), interpret and construe
this Plan and any Awards and Award Documents or other documents defining the
rights and obligations of the Company and Recipients hereunder and thereunder,
to determine all questions arising hereunder and thereunder, and to adopt and
amend such rules and regulations for the administration hereof and thereof as it
may deem desirable. The interpretation and construction by the Administering
Body of any provisions of this Plan or of any Award or Award Document shall be
conclusive and binding. Any action taken by, or inaction of, the Administering
Body relating to this Plan or any Award or Award Document shall be within the
absolute discretion of the Administering Body and shall be conclusive and
binding upon all persons. Subject only to compliance with the express provisions
hereof, the Administering Body may act in its absolute discretion in matters
related to this Plan and any and all Awards and Award Documents.

        (b) Subject to the express provisions of this Plan, the Administering
Body may from time to time in its discretion select the Eligible Persons to
whom, and the time or times at which, Awards shall be granted or sold, the
nature of each Award, the number of shares of Common Stock or the number of
rights that make up or underlie each Award, the exercise price and period for
the exercise of each Award, and such other terms and conditions applicable to
each individual Award as the Administering Body shall determine. The
Administering Body may grant at any time new Awards to an Eligible Person who
has previously received Awards or other grants (including other stock options)
regardless of whether such prior Awards or such other grants are still
outstanding, have previously been exercised as a whole or in part, or are
canceled in connection with the issuance of new Awards. The Administering Body
may grant Awards singly, in combination or in tandem with other Awards, as it
determines in its discretion. The purchase price, exercise price, initial value
and any and all other terms and conditions of the

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Awards may be established by the Administering Body without regard to existing
Awards or other grants.

        (c) Any action of the Administering Body with respect to the
administration of this Plan shall be taken pursuant to a majority vote of the
authorized number of members of the Administering Body or by the unanimous
written consent of its members; provided, however, that (i) if the Administering
Body is the Committee and consists of two members, then actions of the
Administering Body must be unanimous, and (ii) if the Administering Body is the
Board, actions taken by the Board shall be valid if approved in accordance with
applicable law.

        4.3 NO LIABILITY

        No member of the Board or the Committee or any designee thereof will be
liable for any action or inaction with respect to this Plan or any Award or any
transaction arising under this Plan or any Award, except in circumstances
constituting bad faith of such member.

        4.4 AMENDMENTS

        (a) The Administering Body may, insofar as permitted by applicable law,
rule or regulation, and subject to Section 4.4(c), from time to time suspend or
discontinue this Plan or revise or amend it in any respect whatsoever, and this
Plan as so revised or amended will govern all Awards hereunder, including those
granted before such revision or amendment. Without limiting the generality of
the foregoing, the Administering Body is authorized to amend this Plan to comply
with or take advantage of amendments to applicable laws, rules or regulations,
including the Securities Act, Exchange Act, the IRC or the rules of any exchange
or interdealer quotation system upon which the Common Stock is listed or traded.
No shareholder approval of any amendment or revision shall be required unless
(i) such approval is required by this Plan or by applicable law, rule or
regulation or (ii) an amendment or revision to this Plan would materially
increase the number of shares subject to this Plan (as adjusted under Section
3.4).

        (b) The Administering Body may, with the written consent of a Recipient,
make such modifications in the terms and conditions of an Award as it deems
advisable. Without limiting the generality of the foregoing, the Administering
Body may, in its discretion with the written consent of the Recipient, at any
time and from time to time after the grant of any Award accelerate or extend the
vesting or exercise period of any Award as a whole or in part.

        (c) Except as otherwise provided in this Plan or in the applicable Award
Document, no amendment, revision, suspension or termination of this Plan or any
outstanding Award may impair or adversely affect any rights or obligations under
any Award theretofore granted without the written consent of the Recipient to
whom such Award was granted.

        4.5 OTHER COMPENSATION PLANS

        The adoption of this Plan shall not affect any other stock option,
incentive or other compensation plans in effect from time-to-time for the
Company, and this Plan shall not preclude the Company from establishing any
other forms of incentive or other compensation for

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employees, directors, advisors or consultants of the Company, whether or not
approved by shareholders.

        4.6 PLAN BINDING ON SUCCESSORS

        This Plan shall be binding upon the successors and assigns of the
Company.

        4.7 REFERENCES TO SUCCESSOR STATUTES, REGULATIONS AND RULES

        Any reference in this Plan to a particular statute, regulation or rule
shall also refer to any successor provision of such statute, regulation or rule.

        4.8 ISSUANCES FOR COMPENSATION PURPOSES ONLY

        This Plan is intended to constitute an "employee benefit plan," as
defined in Rule 405 promulgated under the Securities Act, and shall be
administered accordingly.

        4.9 INVALID PROVISIONS

        In the event that any provision of this Plan is found to be invalid or
otherwise unenforceable under any applicable law, such invalidity or
unenforceability shall not be construed as rendering any other provisions
contained herein invalid or unenforceable, and all such other provisions shall
be given full force and effect to the same extent as though the invalid and
unenforceable provision were not contained herein.

        4.10 GOVERNING LAW

        This Plan and any agreements hereunder shall be governed by and
construed in accordance with the internal laws of the State of Delaware and
applicable federal law.

                                    ARTICLE V
                            GENERAL AWARD PROVISIONS

        5.1 PARTICIPATION IN THE PLAN

        (a) A person shall be eligible to receive grants of Awards under this
Plan if, at the time of the grant of the Award, such person is an Eligible
Person.

        (b) Incentive Stock Options may be granted only to Eligible Persons
meeting the employment requirements of Section 422 of the IRC.

        (c) Notwithstanding anything to the contrary herein, the Administering
Body may, in order to fulfill the purposes of this Plan, modify grants of Awards
to Recipients who are foreign nationals or employed outside of the United States
to recognize differences in applicable law, tax policy or local custom.

        5.2 AWARD DOCUMENTS

        (a) Each Award granted under this Plan shall be evidenced by an
agreement duly executed on behalf of the Company and by the Recipient, or by a
confirming memorandum

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issued by the Company to the Recipient, setting forth such terms and conditions
applicable to the Award as the Administering Body may in its discretion
determine. Awards will not be binding upon the Company, and Recipients will have
no rights thereto, until such an agreement is entered into between the Company
and the Recipient or such a memorandum is delivered by the Company to the
Recipient, but an Award may have an effective date on or after the date of grant
but prior to the date of such an agreement or memorandum. Award Documents may
but need not be identical and shall comply with and be subject to the terms and
conditions of this Plan, a copy of which shall be provided to each Recipient and
incorporated by reference into each Award Document. Any Award Document may
contain such other terms, provisions and conditions not inconsistent with this
Plan as may be determined by the Administering Body.

        (b) In case of any conflict between this Plan and any Award Document,
this Plan shall control.

        5.3 EXERCISE OF STOCK OPTIONS

        No Stock Option shall be exercisable except in respect of whole shares,
and fractional share interests shall be disregarded. A Stock Option shall be
deemed to be exercised when the Secretary or other designated official of the
Company receives written notice of such exercise from the Recipient, together
with payment of the exercise price made in accordance with Section 5.4 and any
amounts required under Section 5.11. Notwithstanding any other provision of
this Plan, the Company and/or the Administering Body may impose, by rule and/or
in Award Documents, such conditions upon the exercise of Stock Options
(including without limitation conditions limiting the time of exercise to
specified periods) as may be required to satisfy applicable regulatory
requirements.

        5.4 PAYMENT FOR AWARDS

        (a) The exercise price or other payment for an Award shall be payable
upon the exercise of a Stock Option or upon other purchase of shares pursuant to
an Award granted hereunder by delivery of legal tender of the United States or
payment of such other consideration as the Administering Body may from time to
time deem acceptable in any particular instance.

        (b) The Company may assist any person to whom an Award is granted
hereunder (including without limitation any officer or director of the Company)
in the payment of the purchase price, withholding taxes or other amounts payable
in connection with the receipt or exercise of that Award, by lending such
amounts to such person on such terms and at such rates of interest and upon such
security (if any) as shall be approved by the Administering Body.

        (c) The exercise price for Awards may be paid by delivery of Common
Stock to the Company by or on behalf of the person exercising the Award and duly
endorsed in blank or accompanied by stock powers duly endorsed in blank, with
signatures guaranteed in accordance with the Exchange Act if required by the
Company, or retained by the Company from the stock otherwise issuable upon
exercise or surrender of vested and/or exercisable Awards or other equity Awards
previously granted to the Recipient and being exercised (if applicable) (in
either case valued at Fair Market Value as of the exercise date); or such other
consideration as the

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Administering Body may from time to time in the exercise of its discretion deem
acceptable in any particular instance; provided, however, that (i) the Company
and/or the Administering Body may allow exercise of an Award in a
broker-assisted or similar transaction in which the exercise price is not
received by the Company until promptly after exercise, and/or (ii) the
Administering Body may allow the Company to loan the exercise price to the
person entitled to exercise the Award, if the exercise will be followed by a
prompt sale of some or all of the underlying shares and a portion of the sale
proceeds is dedicated to full payment of the exercise price and amounts required
pursuant to Section 5.11.

        (d) Recipients will have no rights to the assistance described in
Section 5.4(b) or to the exercise techniques described in Section 5.4(c), and
the Company may offer or permit such assistance or techniques on an ad hoc basis
to any Recipient without incurring any obligation to offer or permit such
assistance or techniques on other occasions or to other Recipients.

        5.5 NO EMPLOYMENT RIGHTS

        Nothing contained in this Plan (or in Award Documents or in any other
documents related to this Plan or to Awards granted hereunder) shall confer upon
any Eligible Person or Recipient any right to continue in the employ of the
Company or any Affiliated Entity or constitute any contract or agreement of
employment or engagement, or interfere in any way with the right of the Company
or any Affiliated Entity to reduce such person's compensation or other benefits
or to terminate the employment or engagement of such Eligible Person or
Recipient, with or without cause. Except as expressly provided in this Plan or
in any statement evidencing the grant of an Award pursuant to this Plan, the
Company shall have the right to deal with each Recipient in the same manner as
if this Plan and any such statement evidencing the grant of an Award pursuant to
this Plan did not exist, including without limitation with respect to all
matters related to the hiring, discharge, compensation and conditions of the
employment or engagement of the Recipient. Any questions as to whether and when
there has been a termination of a Recipient's employment or engagement, the
reason (if any) for such termination, and/or the consequences thereof under the
terms of this Plan or any statement evidencing the grant of an Award pursuant to
this Plan shall be determined by the Administering Body and the Administering
Body's determination thereof shall be final and binding.

        5.6 RESTRICTIONS UNDER APPLICABLE LAWS AND REGULATIONS

        (a) All Awards granted under this Plan shall be subject to the
requirement that, if at any time the Company shall determine, in its discretion,
that the listing, registration or qualification of the shares subject to Awards
granted under this Plan upon any securities exchange or interdealer quotation
system or under any federal, state or foreign law, or the consent or approval of
any government or regulatory body, is necessary or desirable as a condition of,
or in connection with, the granting of such an Award or the issuance, if any, or
purchase of shares in connection therewith, such Award may not be exercised as a
whole or in part unless and until such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Company. During the term of this Plan, the Company will
use its reasonable efforts to seek to obtain from the appropriate governmental
and regulatory agencies any requisite qualifications, consents, approvals or
authorizations in order to

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issue and sell such number of shares of its Common Stock as shall be sufficient
to satisfy the requirements of this Plan. The inability of the Company to obtain
any such qualifications, consents, approvals or authorizations shall relieve the
Company of any liability in respect of the nonissuance or sale of such stock as
to which such qualifications, consents, approvals or authorizations pertain.

        (b) The Company shall be under no obligation to register or qualify the
issuance of Awards or underlying securities under the Securities Act or
applicable state securities laws. Unless the issuance of Awards and underlying
securities have been registered under the Securities Act and qualified or
registered under applicable state securities laws, the Company shall be under no
obligation to issue any Awards or underlying securities unless the Awards and
underlying securities may be issued pursuant to applicable exemptions from such
registration or qualification requirements. In connection with any such exempt
issuance, the Company may require the Recipient to provide a written
representation and undertaking to the Company, satisfactory in form and scope to
the Company and upon which the Company may reasonably rely, that such Recipient
is acquiring such Awards and underlying shares for such Recipient's own account
as an investment and not with a view to, or for sale in connection with, the
distribution of any such securities, and that such person will make no transfer
of the same except in compliance with any rules and regulations in force at the
time of such transfer under the Securities Act and other applicable law, and
that if shares of stock are issued without such registration, a legend to this
effect (together with any other legends deemed appropriate by the Company) may
be endorsed upon the securities so issued. The Company may also order its
transfer agent to stop transfers of such securities. The Company may also
require the Recipient to provide the Company such information and other
documents as it may request in order to satisfy the Company as to the investment
sophistication and experience of the Recipient and as to any other conditions
for compliance with any such exemptions from registration or qualification.

        5.7 ADDITIONAL CONDITIONS

        Any Award may also be subject to such other provisions (whether or not
applicable to any other Award or Recipient) as the Administering Body determines
appropriate, including without limitation provisions to assist the Recipient in
financing the purchase of Common Stock through the exercise of Stock Options,
provisions for the forfeiture of or restrictions on resale or other disposition
of shares of Common Stock acquired under any Award, provisions giving the
Company the right to repurchase shares of Common Stock acquired under any Award
in the event the Recipient elects to dispose of such shares, and provisions to
comply with federal and state securities laws and federal and state income tax
withholding requirements.

        5.8 NO PRIVILEGES OF STOCK OWNERSHIP

        Except as otherwise set forth herein, a Recipient or a permitted
transferee of an Award shall have no rights as a shareholder with respect to any
shares issuable or issued in connection with the Award until the date of the
receipt by the Company of all amounts payable and performance by the Recipient
of all obligations in connection with the exercise of the Award. Status as an
Eligible Person shall not be construed as a commitment that any Award will be
granted under this Plan to an Eligible Person or to Eligible Persons generally.
No person shall

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have any right, title or interest in any fund or in any specific asset
(including shares of capital stock) of the Company by reason of any Award
granted hereunder. Neither this Plan (or any documents related hereto) nor any
action taken pursuant hereto shall be construed to create a trust of any kind or
a fiduciary relationship between the Company and any person. To the extent that
any person acquires a right to receive an Award hereunder, such right shall be
no greater than the right of any unsecured general creditor of the Company.

        5.9 NONASSIGNABILITY

        Unless the Administering Body shall otherwise determine on a
case-by-case basis, no Award granted under this Plan shall be assignable or
transferable except (i) by will or by the laws of descent and distribution, or
(ii) subject to the final sentence of this Section 5.9, upon dissolution of
marriage pursuant to a qualified domestic relations order. Unless the
Administering Body shall otherwise determine on a case-by-case basis, during the
lifetime of a Recipient, an Award granted to such person shall be exercisable
only by the Recipient (or the Recipient's permitted transferee) or such person's
guardian or legal representative. Notwithstanding the foregoing, (i) no Award
owned by a Recipient subject to Section 16 of the Exchange Act may be assigned
or transferred in any manner inconsistent with Rule 16b-3, and (ii) Incentive
Stock Options (or other Awards subject to transfer restrictions under the IRC)
may not be assigned or transferred in violation of Section 422(b)(5) of the IRC
(or any comparable or successor provision) or the regulations thereunder, and
nothing herein is intended to allow such assignment or transfer.

        5.10 INFORMATION TO RECIPIENTS

        (a) The Company shall determine what, if any, financial and other
information shall be provided to Recipients and when such financial and other
information shall be provided after giving consideration to applicable federal
and state laws, rules and regulations, including without limitation applicable
federal and state securities laws, rules and regulations.

        (b) The furnishing of financial and other information that is
confidential to the Company shall be subject to the Recipient's agreement that
the Recipient shall maintain the confidentiality of such financial and other
information, shall not disclose such information to third parties, and shall not
use the information for any purpose other than evaluating an investment in the
Company's securities under this Plan. The Company may impose other restrictions
on the access to and use of such confidential information and may require a
Recipient to acknowledge the Recipient's obligations under this Section 5.10(b)
(which acknowledgment shall not be a condition to Recipient's obligations under
this Section 5.10(b)).

        5.11 WITHHOLDING TAXES

        Whenever the granting, vesting or exercise of any Award, or the issuance
of any shares upon exercise of any Award or transfer thereof, gives rise to tax
or tax withholding liabilities or obligations, the Company shall have the right
to require the Recipient to remit to the Company an amount sufficient to satisfy
any federal, state and local withholding tax requirements arising in connection
therewith. The Company may, in the exercise of its discretion, allow
satisfaction of tax withholding requirements by accepting delivery of stock of
the Company or by withholding a

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portion of the stock otherwise issuable in connection with an Award, in each
case valued at Fair Market Value as of the date of such delivery or withholding.

        5.12 LEGENDS ON AWARDS AND STOCK CERTIFICATES

        Each Award Document and each certificate representing shares acquired
upon vesting or exercise of an Award shall be endorsed with all legends, if any,
required by applicable federal and state securities and other laws to be placed
on the Award Document and/or the certificate. The determination of which
legends, if any, shall be placed upon Award Documents or the certificates shall
be made by the Company and such decision shall be final and binding.

        5.13 EFFECT OF TERMINATION OF EMPLOYMENT ON AWARDS

        (a) TERMINATION OF VESTING. Awards will be exercisable by a Recipient
(or the Recipient's successor-in-interest) following such Recipient's
termination of employment with the Company or any Affiliated Entity only to the
extent that installments thereof had become exercisable on or prior to the date
of such termination.

        (b) ALTERATION OF VESTING AND EXERCISE PERIODS. Notwithstanding anything
to the contrary herein, (i) the Administering Body may, in its discretion,
designate shorter or longer periods for the vesting or exercise of any Award, or
the lapse of transfer or other restrictions pertaining thereto, following a
Recipient's termination of employment with the Company or any Affiliated Entity;
provided, however, that any shorter periods determined by the Administering Body
shall be effective only if provided for in the Award Document that evidences the
grant to the Recipient of such Award or if such shorter period is agreed to in
writing by the Recipient; and (ii) the Administering Body may, in its
discretion, elect to accelerate the vesting of all or any portion of any Award
that had not become exercisable on or prior to the date of such termination or
to extend the vesting period beyond the date of such termination.

        (c) LEAVE OF ABSENCE. In the case of any employee on an approved leave
of absence, the Administering Body may make such provision respecting
continuance of Awards granted to such employee as the Administering Body in its
discretion deems appropriate.

        5.14 LIMITS ON AWARDS TO ELIGIBLE PERSONS

        Notwithstanding any other provision of this Plan, in order for the
compensation attributable to Awards hereunder to qualify as Performance-Based
Compensation, no one Eligible Person shall be granted any Awards with respect to
more than 250,000 shares of Common Stock in any one calendar year. The
limitation set forth in this Section 5.14 shall be subject to adjustment as
provided in Section 3.4 or under Article VII, but only to the extent such
adjustment would not affect the status of compensation attributable to Awards
hereunder as Performance-Based Compensation.

                                       10
<PAGE>

                                   ARTICLE VI
                                     AWARDS

        6.1 STOCK OPTIONS

        (a) NATURE OF STOCK OPTIONS. Stock Options may be Incentive Stock
Options or Nonqualified Stock Options.

        (b) OPTION EXERCISE PRICE. The exercise price for each Stock Option
shall be determined by the Administering Body as of the date such Stock Option
is granted. The exercise price shall be no less than the Fair Market Value of
the Common Stock subject to the Stock Option as of the date of grant. Subject to
approval by the shareholders, the Administering Body may, with the consent of
the Recipient and subject to compliance with statutory or administrative
requirements applicable to Incentive Stock Options, amend the terms of any Stock
Option to provide that the exercise price of the shares remaining subject to the
Stock Option shall be reestablished at a price not less than 100% of the Fair
Market Value of the Common Stock on the effective date of the amendment. No
modification of any other term or provision of any Stock Option that is amended
in accordance with the foregoing shall be required, although the Administering
Body may, in its discretion, make such further modifications of any such Stock
Option as are not inconsistent with this Plan.

        (c) OPTION PERIOD AND VESTING. Stock Options granted hereunder shall
vest and may be exercised as determined by the Administering Body, except that
exercise of such Stock Options after termination of the Recipient's employment
shall be subject to Section 5.13. Each Stock Option granted hereunder and all
rights or obligations thereunder shall expire on such date as shall be
determined by the Administering Body, but not later than l0 years after the date
the Stock Option is granted and shall be subject to earlier termination as
provided herein or in the Award Document. The Administering Body may, in its
discretion at any time and from time to time after the grant of a Stock Option,
accelerate vesting of such Stock Option as a whole or part by increasing the
number of shares then purchasable, provided that the total number of shares
subject to such Stock Option may not be increased. Except as otherwise provided
herein, a Stock Option shall become exercisable, as a whole or in part, on the
date or dates specified by the Administering Body and thereafter shall remain
exercisable until the expiration or earlier termination of the Stock Option.

        (d) TERMINATION. Unless determined otherwise by the Administering Body
in its sole discretion, Stock Options shall expire on the earliest of (i) one
year from the date on which the Recipient ceases to be an Eligible Person for
any reason other than death; (ii) one year from the date of the Recipient's
death; or (iii) with respect to each installment of such Stock Option, the fifth
anniversary of the vesting date of such installment. If a Recipient who is an
employee of the Company or any Affiliated Entity ceases for any reason to be
such an employee, that portion of the Stock Option that has not yet vested shall
terminate, unless the Administering Body accelerates the vesting schedule in its
sole discretion (in which case, the Administering Body may impose whatever
conditions it considers appropriate on the accelerated portion). Stock Options
granted to a Recipient who is not such an employee may be made subject to such
other termination provisions as determined appropriate by the Administering
Body.

                                       11
<PAGE>

        (e) SPECIAL PROVISIONS REGARDING INCENTIVE STOCK OPTIONS.

            (i) Notwithstanding anything in this Section 6.1 to the contrary,
the exercise price and vesting period of any Stock Option intended to qualify as
an Incentive Stock Option shall comply with the provisions of Section 422 of the
IRC and the regulations thereunder. As of the Effective Date, such provisions
require, among other matters, that (A) the exercise price must not be less than
the Fair Market Value of the underlying stock as of the date the Incentive Stock
Option is granted, and not less than 110% of the Fair Market Value as of such
date in the case of a grant to a Significant Shareholder; and (B) that the
Incentive Stock Option not be exercisable after the expiration of ten years from
the date of grant of such Incentive Stock Option, or five years from the date of
grant in the case of an Incentive Stock Option granted to a Significant
Shareholder.

            (ii) The aggregate Fair Market Value (determined as of the
respective date or dates of grant) of the Common Stock for which one or more
Stock Options granted to any Recipient under this Plan (or any other option plan
of the Company or any of its subsidiaries or affiliates) may for the first time
become exercisable as Incentive Stock Options under the federal tax laws during
any one calendar year shall not exceed $100,000.

            (iii) Any Options granted as Incentive Stock Options pursuant to
this Plan that for any reason fail or cease to qualify as such shall be treated
as Nonqualified Stock Options.

        6.2 PERFORMANCE AWARDS

        (a) GRANT OF PERFORMANCE AWARDS. The Administering Body shall determine
in its discretion the performance criteria (which need not be identical and may
be established on an individual or group basis) governing Performance Awards,
the terms thereof, and the form and time of payment of Performance Awards.

        (b) PAYMENT OF PERFORMANCE AWARDS. Upon satisfaction of the conditions
applicable to a Performance Award, payment will be made to the Recipient in
shares of Common Stock valued at Fair Market Value.

        6.3 RESTRICTED STOCK

        (a) AWARD OF RESTRICTED STOCK. The Administering Body shall determine
the Purchase Price (if any), the terms of payment of the Purchase Price, the
restrictions upon the Restricted Stock, and when such restrictions shall lapse.

        (b) REQUIREMENTS OF RESTRICTED STOCK. All shares of Restricted Stock
granted or sold pursuant to this Plan will be subject to the following
conditions:

            (i) NO TRANSFER. The shares may not be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of, alienated or encumbered until
the restrictions are removed or expire;

                                       12
<PAGE>

            (ii) CERTIFICATES. The Company may require that the certificates
representing Restricted Stock granted or sold to a Recipient pursuant to this
Plan remain in the physical custody of an escrow holder or the Company until all
restrictions are removed or expire;

            (iii) RESTRICTIVE LEGENDS. Each certificate representing Restricted
Stock granted or sold to a Recipient pursuant to this Plan will bear such legend
or legends making reference to the restrictions imposed upon such Restricted
Stock as the Company deems necessary or appropriate to enforce such
restrictions; and

            (iv) OTHER RESTRICTIONS. The Administering Body may impose such
other conditions on Restricted Stock as the Administering Body may deem
advisable, including, without limitation, restrictions under the Securities Act,
under the Exchange Act, under the requirements of any stock exchange or
interdealer quotation system upon which such Restricted Stock or shares of the
same class are then listed or traded and under any blue sky or other securities
laws applicable to such shares.

        (c) LAPSE OF RESTRICTIONS. The restrictions imposed upon Restricted
Stock will lapse in accordance with such terms or other conditions as are
determined by the Administering Body.

        (d) RIGHTS OF RECIPIENT. Subject to the provisions of Section 6.3(b) and
any restrictions imposed upon the Restricted Stock, the Recipient will have all
rights of a shareholder with respect to the Restricted Stock granted or sold to
such Recipient under this Plan, including, without limitation, the right to vote
the shares and receive all dividends and other distributions paid or made with
respect thereto.

        (e) TERMINATION OF EMPLOYMENT. Unless the Administering Body in its
discretion determines otherwise, if a Recipient's employment with the Company or
any Affiliated Entity terminates for any reason, all of the Recipient's
Restricted Stock remaining subject to restrictions on the date of such
termination of employment shall be repurchased by the Company at the Purchase
Price (if any) paid by the Recipient to the Company, without interest or
premium, and otherwise returned to the Company without consideration.

        6.4 STOCK APPRECIATION RIGHTS

        (a) GRANTING OF STOCK APPRECIATION RIGHTS. The Administering Body may at
any time and from time to time approve the grant to Eligible Persons of Stock
Appreciation Rights, related or unrelated to Stock Options.

        (b) STOCK APPRECIATION RIGHTS RELATED TO OPTIONS.

            (i) A Stock Appreciation Right granted in connection with a Stock
Option granted under this Plan will entitle the holder of the related Stock
Option, upon exercise of the Stock Appreciation Right, to surrender such Stock
Option, or any portion thereof to the extent previously vested but unexercised,
with respect to the number of shares as to which such Stock Appreciation Right
is exercised, and to receive payment of an amount computed pursuant to

                                       13
<PAGE>

Section 6.2(b)(iii). Such Stock Option will, to the extent surrendered, then
cease to be exercisable.

            (ii) A Stock Appreciation Right granted in connection with a Stock
Option hereunder will be exercisable only when, and only to the extent that, the
related Stock Option is exercisable, will not be transferable except to the
extent that such related Stock Option may be transferable, will not expire later
than the underlying Stock Option, and will be exercisable only when the Fair
Market Value of the Common Stock subject to the underlying Stock Option exceeds
the exercise price of such Stock Option.

            (iii) Upon the exercise of a Stock Appreciation Right related to a
Stock Option, the Recipient will be entitled to receive payment of an amount
determined by multiplying (A) the difference obtained by subtracting the
exercise price of a share of Common Stock specified in the related Stock Option
from the Fair Market Value of a share of Common Stock on the date of exercise of
such Stock Appreciation Right (or as of such other date or as of the occurrence
of such event as may have been specified in the instrument evidencing the grant
of the Stock Appreciation Right), by (B) the number of shares as to which such
Stock Appreciation Right is exercised.

        (c) STOCK APPRECIATION RIGHTS UNRELATED TO OPTIONS

        The Administering Body may grant Stock Appreciation Rights unrelated to
Stock Options to Eligible Persons. Section 6.2(b)(iii) shall be used to
determine the amount payable at exercise under such Stock Appreciation Right,
except that in lieu of the exercise price specified in the related Stock Option,
the initial base amount specified in the Award shall be used.

        (d) LIMITS

        Notwithstanding the foregoing, the Administering Body, in its
discretion, may place a dollar limitation on the maximum amount that will be
payable upon the exercise of a Stock Appreciation Right under this Plan.

        (e) PAYMENTS

        Payment of the amount determined under the foregoing provisions may be
made solely in whole shares of Common Stock valued at their Fair Market Value on
the date of exercise of the Stock Appreciation Right or, alternatively, at the
sole discretion of the Administering Body, in cash or in a combination of cash
and shares of Common Stock as the Administering Body deems advisable. The
Administering Body has full discretion to determine the form in which payment of
a Stock Appreciation Right will be made and to consent to or disapprove the
election of a Recipient to receive cash in full or partial settlement of a Stock
Appreciation Right. If the Administering Body decides to make full payment in
shares of Common Stock, and the amount payable results in a fractional share,
payment for the fractional share will be made in cash.

        6.5 STOCK PAYMENTS.

        The Administering Body may approve Stock Payments of the Company's
Common Stock to any Eligible Person for all or any portion of the compensation
(other than base salary) or other payment that would otherwise become payable by
the Company to the Eligible Person in cash.

                                       14
<PAGE>

        6.6 DIVIDEND EQUIVALENTS

        The Administering Body may grant Dividend Equivalents to any Recipient
who has received a Stock Option, Stock Appreciation Right or other Award
denominated in shares of Common Stock. Dividend Equivalents may be paid in cash,
Common Stock or other Awards; the amount of Dividend Equivalents paid other than
in cash shall be determined by the Administering Body by application of such
formula as the Administering Body may deem appropriate to translate the cash
value of dividends paid to the alternative form of payment of the Dividend
Equivalent. Dividend Equivalents shall be computed as of each dividend record
date and shall be payable to recipients thereof at such time as the
Administering Body may determine. Notwithstanding the foregoing, the payment of
a Dividend Equivalent with respect to a Stock Option intended to constitute
Performance-Based Compensation shall not be contingent upon the exercise of such
Stock Option.

        6.7 STOCK BONUSES

        The Administering Body may issue shares of Common Stock to Eligible
Persons as bonuses for services rendered or for any other valid consideration on
such terms and conditions as the Administering Body may determine.

        6.8 STOCK SALES

        The Administering Body may sell to Eligible Persons shares of Common
Stock on such terms and conditions as the Administering Body may determine.

        6.9 PHANTOM

        The Administering Body may grant Awards of Phantom Stock. Phantom Stock
is a cash bonus granted under this Plan measured by the Fair Market Value of a
specified number of shares of Common Stock on a specified date, or measured by
the excess of such Fair Market Value over a specified minimum, which may but
need not include a Dividend Equivalent.

        6.10 OTHER STOCK-BASED BENEFITS

        The Administering Body is authorized to grant Other Stock-Based
Benefits. Other Stock-Based Benefits are any arrangements granted under this
Plan not otherwise described above that (a) by their terms might involve the
issuance or sale of Common Stock or (b) involve a benefit that is measured, as a
whole or in part, by the value, appreciation, dividend yield or other features
attributable to a specified number of shares of Common Stock.

        6.11 TERMINATION OF EMPLOYMENT

        Except as otherwise provided for in this Plan or determined by the
Administering Body in its discretion, all Awards granted to a Recipient, and all
of such Recipient's rights thereunder, shall terminate upon termination for any
reason of such Recipient's employment with the Company or any Affiliated Entity.

                                       15
<PAGE>

                                   ARTICLE VII
                                 REORGANIZATIONS

        7.1 CORPORATE TRANSACTIONS NOT INVOLVING A CHANGE IN CONTROL

        If the Company shall consummate any Reorganization not involving a
Change of Control in which holders of shares of Common Stock are entitled to
receive in respect of such shares any securities, cash or other consideration
(including without limitation a different number of shares of Common Stock),
each Award outstanding under this Plan shall thereafter be exercisable, in
accordance with this Plan, only for the kind and amount of securities, cash
and/or other consideration receivable upon such Reorganization by a holder of
the same number of shares of Common Stock as are subject to that Award
immediately prior to such Reorganization, and any adjustments will be made to
the terms of the Award in the sole discretion of the Administering Body as it
may deem appropriate to give effect to the Reorganization.

        7.2 CORPORATE TRANSACTIONS INVOLVING A CHANGE IN CONTROL

        As of the effective time and date of any Change in Control, this Plan
and any then outstanding Awards (whether or not vested) shall automatically
terminate unless (a) provision is made in writing in connection with such
transaction for the continuance of this Plan and for the assumption of such
Awards, or for the substitution for such Awards of new awards covering the
securities of a successor entity or an affiliate thereof, with appropriate
adjustments as to the number and kind of securities and exercise prices, in
which event this Plan and such outstanding Awards shall continue or be replaced,
as the case may be, in the manner and under the terms so provided; or (b) the
Board otherwise shall provide in writing for such adjustments as it deems
appropriate in the terms and conditions of the then-outstanding Awards (whether
or not vested), including without limitation (i) accelerating the vesting of
outstanding Awards and/or (ii) providing for the cancellation of Awards and
their automatic conversion into the right to receive the securities, cash or
other consideration that a holder of the shares underlying such Awards would
have been entitled to receive upon consummation of such Change in Control had
such shares been issued and outstanding immediately prior to the effective date
and time of the Change in Control (net of the appropriate option exercise
prices). If, pursuant to the foregoing provisions of this Section 7.2, this Plan
and the Awards shall terminate by reason of the occurrence of a Change in
Control without provision for any of the actions described in clause (a) or (b)
hereof, then any Recipient holding outstanding Awards shall have the right, at
such time immediately prior to the consummation of the Change in Control as the
Board shall designate, to exercise the Recipient's Awards to the full extent not
theretofore exercised, including any installments which have not yet become
vested.

                                  ARTICLE VIII
                                   DEFINITIONS

        Capitalized terms used in this Plan and not otherwise defined shall have
the meanings set forth below:

                                       16
<PAGE>

        "ADMINISTERING BODY" means the Board as long as no Committee has been
appointed and is in effect and shall mean the Committee as long as the Committee
is appointed and in effect.

        "AFFILIATED ENTITY" means any Parent Corporation or Subsidiary
Corporation.

        "APPLICABLE DIVIDEND PERIOD" means (i) the period between the date a
Dividend Equivalent is granted and the date the related Stock Option, Stock
Appreciation Right, or other Award is exercised, terminates, or is converted to
Common Stock, or (ii) such other time as the Administering Body may specify in
the written instrument evidencing the grant of the Dividend Equivalent.

        "AWARD" means any Stock Option, Performance Award, Restricted Stock,
Stock Appreciation Right, Stock Payment, Stock Bonus, Stock Sale, Phantom Stock,
Dividend Equivalent, or Other Stock-Based Benefit granted or sold to an Eligible
Person under this Plan.

        "AWARD DOCUMENT" means the agreement or confirming memorandum setting
forth the terms and conditions of an Award.

        "BOARD" means the Board of Directors of the Company.

        "CHANGE IN CONTROL" means the following and shall be deemed to occur if
any of the following events occur:

        (a) Any Person becomes the beneficial owner (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of thirty percent (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, twenty
percent (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 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

                                       17
<PAGE>

            (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 five
percent (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 fifty
percent (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 any order by a court
of competent jurisdiction of a plan of liquidation of the Company.

        "COMMISSION" means the Securities and Exchange Commission.

        "COMMON STOCK" means the common stock of the Company, as constituted on
the Effective Date of this Plan, and as thereafter adjusted as a result of any
one or more events requiring adjustment of outstanding Awards under Section 3.4
above.

        "COMPANY" means Callaway Golf Company, a Delaware corporation.

        "COMMITTEE" means the committee appointed by the Board to administer
this Plan pursuant to Section 4.1.

        "DIVIDEND EQUIVALENT" means a right granted by the Company under Section
6.6 to a holder of a Stock Option, Stock Appreciation Right or other Award
denominated in shares of Common Stock to receive from the Company during the
Applicable Dividend Period payments equivalent to the amount of dividends
payable to holders of the number of shares of Common Stock underlying such Stock
Option, Stock Appreciation Right, or other Award.

        "EFFECTIVE DATE" means February 18, 1998, which is the date this Plan
was adopted by the Board.

        "ELIGIBLE PERSON" shall include directors, officers, employees,
consultants and advisors of the Company or of any Affiliated Entity.

        "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

                                       18
<PAGE>

        "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

        "EXPIRATION DATE" means the 10th anniversary of the Effective Date.

        "FAIR MARKET VALUE" of a share of the Company's capital stock as of a
particular date shall be (i) if the stock is listed on an established stock
exchange or exchanges (including for this purpose, the Nasdaq National Market),
the closing price of the stock quoted for such date as reported in the
Transactions Index of each such exchange, as published in The Wall Street
Journal and determined by the Administering Body, or, if no closing price was
quoted in any such Index for such date, then as of the next preceding date on
which such a closing price was quoted; or (ii) if the stock is not then listed
on an exchange or the Nasdaq National Market, the average of the closing bid and
asked prices per share for the stock in the over-the-counter market as quoted on
The Nasdaq Small Cap Market on such date (in the case of (i) or (ii), subject to
adjustment as and if necessary and appropriate to set an exercise price not less
than 100% of the fair market value of the stock on the date an option is
granted); or (iii) if the stock is not then listed on an exchange or quoted in
the over-the-counter market, an amount determined in good faith by the
Administering Body; provided, however, that (A) when appropriate, the
Administering Body, in determining Fair Market Value of capital stock of the
Company, may take into account such other factors as it may deem appropriate
under the circumstances and (B) if the stock is traded on the Nasdaq Small Cap
Market and both sales prices and bid and asked prices are quoted or available,
the Administering Body may elect to determine Fair Market Value under either
clause (i) or (ii) above. Notwithstanding the foregoing, the Fair Market Value
of capital stock for purposes of grants of Incentive Stock Options shall be
determined in compliance with applicable provisions of the IRC. The Fair Market
Value of rights or property other than capital stock of the Company means the
fair market value thereof as determined by the Committee on the basis of such
factors as it may deem appropriate.

        "INCENTIVE STOCK OPTION" means a Stock Option that qualifies as an
incentive stock option under Section 422 of the IRC, or any successor statute
thereto.

        "IRC" means the Internal Revenue Code of 1986, as amended.

        "NONQUALIFIED STOCK OPTION" means a Stock Option that is not an
Incentive Stock Option.

        "OTHER STOCK-BASED BENEFITS" means an Award granted under Section 6.9 of
this Plan.

        "PARENT CORPORATION" means any Parent Corporation as defined in Section
424(e) of the IRC.

        "PAYMENT EVENT" means the event or events giving rise to the right to
payment of a Performance Award.

                                       19
<PAGE>

        "PERFORMANCE AWARD" means an Award payable in Common Stock that vests
and becomes payable over a period of time upon attainment of performance
criteria established in connection with the grant of the Award.

        "PERFORMANCE-BASED COMPENSATION" means performance-based compensation as
described in Section 162(m) of the IRC. If the amount of compensation an
Eligible Person will receive under any Award is not based solely on an increase
in the value of Common Stock after the date of grant or award, the Committee, in
order to qualify an Award as performance-based compensation under Section 162(m)
of the IRC, can condition the grant, award, vesting, or exercisability of such
an Award on the attainment of a preestablished, objective performance goal. For
this purpose, a preestablished, objective performance goal may include one or
more of the following performance criteria: (a) cash flow, (b) earnings per
share (including earning before interest, taxes, depreciation and amortization),
(c) return on equity, (d) total Shareholder return, (e) return on capital, (f)
return on assets or net assets, (g) income or net income, (h) operating income
or net operating income, (i) operating margin, (j) return on operating revenue,
and (k) any other similar performance criteria.

        "PERSON" means any person, entity or group, within the meaning of
Section 13(d) or 14(d) of the Exchange Act, but excluding (i) the Company and
its subsidiaries, (ii) any employee stock ownership or other employee benefit
plan maintained by the Company that is qualified under ERISA and (iii) an
underwriter or underwriting syndicate that has acquired the Company's securities
solely in connection with a public offering thereof.

        "PHANTOM STOCK" means an Award granted under Section 6.9 of this Plan.

        "PLAN" means this 1998 Stock Incentive Plan of the Company.

        "PLAN TERM" means the period during which this Plan remains in effect
(commencing the Effective Date and ending on the Expiration Date).

        "PURCHASE PRICE" means the purchase price (if any) to be paid by a
Recipient for Restricted Stock as determined by the Committee (which price shall
be at least equal to the minimum price required under applicable laws and
regulations for the issuance of Common Stock which is nontransferable and
subject to a substantial risk of forfeiture until specific conditions are met).

        "RECIPIENT" means an Eligible Person who has received an Award under
this Plan.

        "REORGANIZATION" means any merger, consolidation or other
reorganization.

        "RESTRICTED STOCK" means Common Stock that is the subject of an Award
made under Section 6.3 and that is nontransferable and subject to a substantial
risk of forfeiture until specific conditions are met, as set forth in this Plan
and in any statement evidencing the grant of such Award.

                                       20
<PAGE>

        "RULE 16b-3" means Rule 16b-3 under the Exchange Act.

        "SECURITIES ACT" means the Securities Act of 1933, as amended.

        "SIGNIFICANT SHAREHOLDER" is an individual who, at the time a Stock
Option is granted to such individual under this Plan, owns more than ten percent
(10%) of the combined voting power of all classes of stock of the Company or of
any Parent Corporation or Subsidiary Corporation (after application of the
attribution rules set forth in Section 424(d) of the IRC).

        "STOCK APPRECIATION RIGHT" means a right granted under Section 6.4 to
receive a payment that is measured with reference to the amount by which the
Fair Market Value of a specified number of shares of Common Stock appreciates
from a specified date, such as the date of grant of the Stock Appreciation
Right, to the date of exercise.

        "STOCK BONUS" means an issuance or delivery of unrestricted or
restricted shares of Common Stock under Section 6.7 of this Plan as a bonus for
services rendered or for any other valid consideration under applicable law.

        "STOCK PAYMENT" means a payment in shares of the Company's Common Stock
to replace all or any portion of the compensation (other than base salary) that
would otherwise become payable to a Recipient.

        "STOCK OPTION" means a right to purchase stock of the Company granted
under Section 6.1 of this Plan.

        "STOCK SALE" means a sale of Common Stock to an Eligible Person under
Section 6.8 of this Plan.

        "SUBSIDIARY CORPORATION" means any Subsidiary Corporation as defined in
Section 424(f) of the IRC.

                                       21<PAGE>

                                                                   EXHIBIT 10.25

                              CALLAWAY GOLF COMPANY
                    NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN

                    (AS AMENDED AND RESTATED AUGUST 15, 2000)

                                    ARTICLE I
                                     GENERAL

               1. ADOPTION. This Callaway Golf Company Non-Employee Directors
Stock Option Plan (the "PLAN") is effective as of September 1, 1992, subject to
approval by the Board of Directors and shareholders of Callaway Golf Company
(the "COMPANY").

               2. PURPOSE. The Plan is designed to promote the interests of the
Company and its shareholders by using investment interests in the Company to
attract and retain highly qualified independent directors.

               3. ADMINISTRATION. The Plan shall be administered by the Company,
which shall have the power to construe the Plan, to determine all questions
arising under the Plan, to adopt and amend such rules and regulations for the
administration of the Plan as it may deem desirable, and otherwise to carry out
the terms of the Plan. The interpretation and construction by the administrator
of any provisions of the Plan or of any option granted under the Plan shall be
final. Notwithstanding the foregoing, the administrator shall have no authority
or discretion as to the selection of persons eligible to receive options granted
under the Plan, the number of shares covered by options granted under the Plan,
the timing of such grants, or the exercise price of options granted under the
Plan, which matters are specifically governed by the provisions of the Plan.

               4. ELIGIBLE DIRECTORS. A person shall be eligible to receive
grants of options under this Plan (an "ELIGIBLE DIRECTOR") if, at the time of
the option's grant, he or she is a duly elected or appointed member of the
Company's Board of Directors, but is not then otherwise an employee of the
Company or any of its subsidiaries or affiliates and has not been an employee of
the Company or any of its subsidiaries or affiliates since the beginning of the
Company's preceding fiscal year.

               5. SHARES OF COMMON STOCK SUBJECT TO THE PLAN AND GRANT LIMIT.
The shares that may be issued upon exercise of options granted under the Plan
shall be authorized and unissued shares of the Company's Common Stock. The
aggregate number of shares that may be issued upon exercise of options granted
under the Plan shall not exceed 840,000 shares of Common

                                         As Amended and Restated August 15, 2000

                                       1
<PAGE>

Stock, subject to adjustment in accordance with Article III, and no individual
may receive options under the Plan to purchase more than 120,000 shares of the
Company's Common Stock, subject to adjustment in accordance with Article III.

               6. AMENDMENT OF THE PLAN. The Company's Board of Directors may,
insofar as permitted by law, from time to time suspend or discontinue the Plan
or revise or amend it in any respect whatsoever, except that no such amendment
shall alter or impair or diminish any rights or obligations under any option
theretofore granted under the Plan without the consent of the person to whom
such option was granted. In addition, without further shareholder approval, the
Plan may not be amended so as to increase the number of shares subject to the
Plan (as adjusted under Article III), increase the number of shares for which an
option or options may be granted to any optionee (as adjusted under Article
III), change the class of persons eligible to receive options under the Plan,
provide for the grant of options having an exercise price per option share less
than the exercise price specified in the Plan, or extend the final date upon
which options may be granted under the Plan. Under no circumstances may the
provisions of the Plan that provide for the amounts, price, and timing of option
grants be amended more than once every six months, other than to comport with
changes in the Internal Revenue Code, ERISA, or the rules thereunder.

               7. TERM OF PLAN. Options may be granted under the Plan until
September 1, 2002, whereupon the Plan will terminate. Notwithstanding the
foregoing, each option granted under the Plan shall remain in effect until such
option has been exercised or terminated in accordance with its terms and the
terms of the Plan.

               8. GRANTS BEFORE SHAREHOLDER APPROVAL. Option grants made before
this Plan has been approved by the Company's shareholders shall be made subject
to and effective only upon such approval.

               9. RESTRICTIONS. All options granted under the Plan shall be
subject to the requirement that, if at any time the Company shall determine, in
its discretion, that the listing, registration or qualification of the shares
subject to options granted under the Plan upon any securities exchange or under
any state or federal law, or the consent or approval of any government
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of such an option or the issuance, if any, or purchase of
shares in connection therewith, such option may not be exercised 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.

                                         As Amended and Restated August 15, 2000

                                       2

<PAGE>

               10. NONASSIGNABILITY. No option granted under the Plan shall be
assignable or transferable by the grantee except by will or by the laws of
descent and distribution or pursuant to a qualified domestic relations order (as
defined by the Internal Revenue Code of 1986, as amended). During the lifetime
of the optionee, the option shall be exercisable only by the optionee, and no
other person shall acquire any rights therein.

               11. WITHHOLDING TAXES. Whenever shares of Common Stock are to be
issued upon exercise of an option granted under the Plan, the administrator
shall have the right to require the optionee to remit to the Company an amount
sufficient to satisfy any federal, state and local withholding tax requirements
prior to the delivery of any certificate or certificates for such shares. The
administrator may, in the exercise of its discretion, allow satisfaction of tax
withholding requirements by accepting delivery of stock of the Company or by
withholding a portion of the Common Stock otherwise issuable upon exercise of an
option.

               12. DEFINITION OF "FAIR MARKET VALUE." For purposes of the Plan,
the term "FAIR MARKET VALUE," when used in reference to the value of a share of
the Company's Common Stock on the date an option is granted under the Plan,
shall be: (a) if the Common Stock is listed on an established stock exchange or
exchanges, the mean between the highest and lowest sale prices of the Common
Stock quoted in the Transactions Index of each such exchange as averaged with
such mean price as reported on any and all other exchanges, as published in "The
Wall Street Journal" and determined by the Company, or, if no sale price was
quoted in any such Index for such date, then as of the next preceding date on
which such a sale price was quoted, provided that the mean on such preceding
date is not less than 100% of the fair market value of the Common Stock on the
date the option is granted; or, (b) if the Common Stock is not then listed on an
exchange, the average of the closing bid and asked prices per share for the
Common Stock in the over-the-counter market as quoted on NASDAQ on such date;
or, (c) if the Common Stock is not then listed on an exchange or quoted on
NASDAQ, an amount determined in good faith by the Company.

               13. RIGHTS AS A SHAREHOLDER. An optionee or a transferee of an
option shall have no rights as a shareholder with respect to any shares issuable
or issued upon exercise of the option until the date of the receipt by the
Company of all amounts payable in connection with exercise of the option,
including the exercise price and any amounts required by the Company pursuant to
Section 11 of Article I.

               14. PURCHASE FOR INVESTMENT. Unless the shares of Common Stock to
be issued upon exercise of an option granted under the Plan have been

                                         As Amended and Restated August 15, 2000

                                       3
<PAGE>

effectively registered under the Securities Act of 1933 as now in force or
hereafter amended, the Company shall be under no obligation to issue any shares
of Common Stock covered by any option unless the person who exercises such
option, in whole or in part, shall give a written representation and undertaking
to the Company which is satisfactory in form and scope to counsel to the Company
and upon which, in the opinion of such counsel, the Company may reasonably rely,
that he or she is acquiring the shares of Common Stock issued to him or her
pursuant to such exercise of the option for his or her own account as an
investment and not with a view to, or for sale in connection with, the
distribution of any such shares of Common Stock, and that he or she will make no
transfer of the same except in compliance with any rules and regulations in
force at the time of such transfer under the Securities Act of 1933, or any
other applicable law, and that if shares of Common Stock are issued without such
registration, a legend to this effect may be endorsed upon the securities so
issued.

               15. GOVERNING LAW. This Plan and any stock options granted
hereunder shall be governed by and construed in accordance with the internal
laws of the State of Delaware and applicable federal law.

                                   ARTICLE II
                                  STOCK OPTIONS

               1. GRANTS OF INITIAL OPTIONS.

                      (a) Each Eligible Director who becomes an Eligible
Director in 1992 shall, upon first becoming an Eligible Director, receive a
one-time grant of an option to purchase up to 80,000 shares of the Company's
Common Stock at an exercise price of $2.50 per share, subject to (i) vesting as
set forth in Section 4 of Article II, and (ii) adjustment as set forth in
Article III.

                      (b) Each Eligible Director who becomes an Eligible
Director from January 1, 1993 through April 17, 1996 shall, upon first becoming
an Eligible Director, receive a one-time grant of an option to purchase up to
80,000 shares of the Company's Common Stock at an exercise price per share equal
to 75% of the fair market value of the Company's Common Stock on the date of his
or her election to the Board, subject to (i) vesting as set forth in Section 4
of Article II, and (ii) adjustment as set forth in Article III.

                      (c) Each Eligible Director who becomes an Eligible
Director from April 18, 1996 through August 17, 1999 shall, upon first becoming
an Eligible Director, receive a one-time grant of an option to purchase up to
80,000 shares of the Company's Common Stock at an exercise price per share equal
to the fair market value of the Company's Common Stock on the date of his or her

                                         As Amended and Restated August 15, 2000

                                       4
<PAGE>

election to the Board, subject to (i) vesting as set forth in Section 4 of
Article II, and (ii) adjustment as set forth in Article III.

                      (d) Each Eligible Director who becomes an Eligible
Director after August 17, 1999 shall, upon first becoming an Eligible Director,
receive a one-time grant of an option to purchase up to 20,000 shares of the
Company's Common Stock at an exercise price per share equal to the fair market
value of the Company's Common Stock on the date of his or her election to the
Board, subject to (i) vesting as set forth in Section 4 of Article II, and (ii)
adjustment as set forth in Article III.

                      (e) Options granted under Sections 1(a) through 1(d) of
this Article II are "INITIAL OPTIONS" for purposes hereof.

               2. GRANTS OF ADDITIONAL AND SPECIAL OPTIONS.

                      (a) Prior to January 1, 2000, on each even-numbered (i.e.
2nd, 4th, 6th, 8th, 10th) anniversary of an Eligible Director's election to the
Board, if the Eligible Director has served as a director since his or her
election and is continuing as a director for at least another year, such
Eligible Director shall automatically be granted an "ADDITIONAL OPTION" to
purchase up to 8,000 shares of the Company's Common Stock at an exercise price
equal to the fair market value of the Company's Common Stock on the date of
grant, subject to (i) vesting as set forth in Section 4 of Article II, and (ii)
adjustment as set forth in Article III.

                      (b) Beginning January 1, 2000, on each anniversary of an
Eligible Director's election to the Board, if the Eligible Director has served
as a director since his or her election and is continuing as a director for at
least another year, such Eligible Director shall automatically be granted an
"ADDITIONAL OPTION" to purchase up to 4,000 shares of the Company's Common Stock
at an exercise price equal to the fair market value of the Company's Common
Stock on the date of grant, subject to (i) vesting as set forth in Section 4 of
Article II and (ii) adjustment as set forth in Article III.

                      (c) Each Eligible Director who has an odd-numbered (i.e.
1st, 3rd, 5th, 7th) anniversary in 1999 shall receive a "SPECIAL OPTION" on
August 17, 1999 to purchase up to 4,000 shares of the Company's Common Stock at
an exercise price equal to the fair market value of the Company's Common Stock
on the date of grant, subject to (i) vesting as set forth in Section 4 of
Article II, and (ii) adjustment as set forth in Article III.

                                         As Amended and Restated August 15, 2000

                                       5
<PAGE>

                      (d) No individual may receive aggregate Additional Options
and Special Options to purchase more than 40,000 shares of the Company's Common
Stock pursuant to this Section.

               3. EXERCISE PRICE. The option exercise price shall be payable
upon the exercise of an option in legal tender of the United States or such
other consideration as the administrator may deem acceptable, including without
limitation stock of the Company (delivered by or on behalf of the person
exercising the option or retained by the Company from the Common Stock otherwise
issuable upon exercise), provided, however, that the administrator may, in the
exercise of its discretion, (i) allow exercise of an option in a broker-assisted
or similar transaction in which the exercise price is not received by the
Company until immediately after exercise, and/or (ii) allow the Company to loan
the exercise price to the person entitled to exercise the option, if the
exercise will be followed by an immediate sale of some or all of the underlying
shares and a portion of the sales proceeds is dedicated to full payment of the
exercise price. Upon proper exercise, the Company shall deliver to the person
entitled to exercise the option or his or her designee a certificate or
certificates for the shares of Common Stock to which the option pertains.

               4. VESTING AND EXERCISE.

                      (a) Initial Options shall vest and become exercisable 50%
upon the first anniversary of the grant date, if the optionee has remained an
Eligible Director for the entire period from the date of grant to the first
anniversary thereof, and 50% upon the second anniversary of the grant date, if
the optionee has remained an Eligible Director for the entire period from the
date of grant to the second anniversary thereof.

                      (b) Prior to January 1, 2000, Additional Options shall
vest and become exercisable 50% upon the first anniversary of the grant date, if
the optionee has remained an Eligible Director for the entire period from the
date of grant to the first anniversary thereof, and 50% upon the second
anniversary of the grant date, if the optionee has remained an Eligible Director
for the entire period from the date of grant to the second anniversary thereof.
Beginning January 1, 2000, Additional Options shall vest and become exercisable
100% two years from the grant date if the optionee has remained an Eligible
Director for the entire period from the date of grant to the vesting date.

                      (c) Each Special Option shall vest and become exercisable
100% on the second anniversary date of the Eligible Director's election to the
Board that occurs following the grant date if the optionee has remained an
Eligible Director for the entire period from the date of grant to the vesting
date.

                                         As Amended and Restated August 15, 2000

                                       6
<PAGE>

               5. OPTION AGREEMENTS. Each option granted under the Plan shall be
evidenced by an option agreement duly executed on behalf of the Company and by
the Eligible Director to whom such option is granted and stating the number of
shares of Common Stock issuable upon exercise of the option, the exercise price,
the time during which the option is exercisable, and the times at which the
options vest and become exercisable. Such option agreements may but need not be
identical and shall comply with and be subject to the terms and conditions of
the Plan, a copy of which shall be provided to each option recipient and
incorporated by reference into each option agreement. Each option agreement may
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the administrator.

               6. TERM OF OPTIONS AND EFFECT OF TERMINATION. Notwithstanding any
other provision of the Plan, no Initial Options, Additional Options or Special
Options shall be exercisable after the expiration of ten years from the
effective date of their grant. In the event that any outstanding option under
the Plan expires by reason of lapse of time or is otherwise terminated without
exercise for any reason, then the shares of Common Stock subject to any such
option which have not been issued pursuant to the exercise of the option shall
again become available in the pool of shares of Common Stock for which options
may be granted under the Plan. In the event that the holder of any option
granted under this Plan shall cease to be a director of the Company for any
reason, all options granted under this Plan to such holder shall be exercisable,
to the extent already exercisable at the date such holder ceases to be a
director, for a period of one year after that date (or, if sooner, until the
expiration of the option according to its terms), and shall then terminate. In
the event of the death of an optionee while such optionee is a director of the
Company or within the period after termination of such status during which he or
she is permitted to exercise an option, such option may be exercised by any
person or persons designated by the optionee on a Beneficiary Designation Form
adopted by the administrator for such purpose or, if there is no effective
Beneficiary Designation Form on file with the Company, by the executors or
administrators of the optionee's estate or by any person or persons who shall
have acquired the option directly from the optionee by his or her will or the
applicable laws of descent and distribution.

                                         As Amended and Restated August 15, 2000

                                       7
<PAGE>

                                   ARTICLE III
                      RECAPITALIZATIONS AND REORGANIZATIONS

               1. ANTI-DILUTION ADJUSTMENTS. The number of shares of Common
Stock available for issuance upon exercise of options granted under the Plan,
the maximum number of shares for which options granted under the Plan may be
exercised by any individual, the number of shares for which each option (issued
and unissued) can be exercised, and the exercise price per share of options
(issued and unissued) shall be proportionately adjusted for any increase or
decrease in the number of issued and outstanding shares of Common Stock
resulting from a subdivision or consolidation of shares or the payment of a
stock dividend or any other increase or decrease in the number of issued and
outstanding shares of Common Stock effected without receipt of consideration by
the Company. All share amounts and exercise prices set forth in this amended
plan document have been restated to take into account, and give full effect to,
any and all stock splits implemented since the adoption and approval of the Plan
by shareholders on April 29, 1993 and before April 17, 1996.

               2. CORPORATE TRANSACTIONS. If the Company shall be the surviving
corporation in any merger or consolidation, each outstanding option shall
pertain to and apply to the securities to which a holder of the same number of
shares of Common Stock that are subject to that option would have been entitled.
A dissolution or liquidation or change in control of the Company, or a merger or
consolidation in which the Company is not the surviving corporation, shall cause
each outstanding option to terminate, unless the agreement of merger or
consolidation shall otherwise provide; provided that, in the event such
dissolution, liquidation, change in control, merger or consolidation will cause
outstanding options to terminate, each optionee shall have the right immediately
prior to such dissolution, liquidation, merger or consolidation or upon such
change in control to exercise his or her option or options in whole or in part
without regard to any vesting requirements. For purposes hereof, a "change in
control" shall be the acquisition by any person or entity of beneficial
ownership of 50% or more of the Company's outstanding voting securities.

               3. DETERMINATION BY THE COMPANY. To the extent that the foregoing
adjustments relate to stock or securities of the Company, such adjustments shall
be made by the administrator, whose determination in that respect shall be
final, binding and conclusive. The grant of an option pursuant to the Plan shall
not affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or to consolidate or to dissolve, liquidate or sell, or
transfer all of any part of its business or assets.

                                         As Amended and Restated August 15, 2000

                                       8

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