Document:

Exhibit 10.32

 

JANUS HENDERSON GROUP PLC

LONG TERM INCENTIVE AWARD (“LTI”) ACCEPTANCE FORM

 

The Company grants to Andrew Formica (“you” or  “Grantee”), effective as of August 11, 2017 (the “Grant Date”), a Restricted Stock Unit Award (the “LTI Award”) as described below, subject to the terms and conditions set forth in this LTI Acceptance Form, the Company Plan and the attached Appendices.

 

Restricted Stock Unit Award — see Terms of Restricted Stock Unit Award attached as Appendix A

 

Number of Units Granted: 39,580

 

a.                                                              Except as otherwise provided herein, and/or in the Company Plan, the LTI Award will become vested on the vesting dates and in the amounts indicated below provided, that you have not experienced a Termination of Affiliation.  However, in the event that a vesting date occurs on a day when the New York Stock Exchange is closed, then such vesting date will occur on the next business day.  An additional holding period shall apply commencing on the relevant vesting date during which time you may not sell, pledge, charge, assign, dispose of or otherwise transfer ownership of the underlying shares pertaining to the award, other than to meet mandatory withholding liabilities. The first tranche will have an additional holding period of 2 years from the vesting date and the second tranche will have an additional holding period of 1 year from the vesting date.

 

	
Vesting Date
    	
 
    	
Amount Vesting
    	
 
    	
Release Date
    
	
August 10, 2020
    	
 
    	
26,387
    	
 
    	
August 10, 2022
    
	
August 10, 2021
    	
 
    	
13,193
    	
 
    	
August 10, 2022
    

 

b.                                                              Notwithstanding the provisions of (a) above, if you have a Termination of Affiliation with the Company due to death, Disability, or redundancy, a pro-rated portion of the LTI Award shall continue to vest in accordance with the schedule set forth in (a) above. The pro-rated portion of the LTI Award shall be calculated by multiplying the number of Shares subject to each tranche of the LTI Award by the fraction A/B (where A is the number of months between the Grant Date and the date of the Grantee’s Termination of Affiliation and B is the number of months in the relevant vesting period or such other number determined by the Janus Henderson Group Plc Compensation Committee (the “Committee”)). The additional holding periods referred to in (a) above will continue to apply to each pro-rated tranche of the LTI Award.

 

c.                                                               Except as provided in (b) above, in the event that you have a Termination of Affiliation, any portion of the LTI Award that is unvested, and any of your rights hereunder, shall be terminated, cancelled and forfeited effective immediately upon such Termination of Affiliation.

 

d.                                                              Notwithstanding anything to the contrary in the Company Plan, your LTI Award (a) shall vest and/or be released in accordance with the terms and conditions set forth in the attached Appendix B and (b) shall be subject to the forfeiture and claw-back provisions set forth in the attached Appendix C.

 

e.                                                               In accordance with the Company Plan, the Committee may, in its sole discretion, accelerate or continue the vesting of all or a portion of the LTI Award or waive any or all of the terms and conditions applicable to this LTI Acceptance Form or the attached Appendices. This LTI Acceptance Form and the attached Appendices do not supersede, or otherwise amend or affect any other LTI awards, agreements, rights or restrictions that may exist between the parties.

 

f.                                                                Capitalized terms used but not defined in this LTI Acceptance Form have the meaning specified in the Company Plan and/or in the attached Appendices.

 

 

By executing this LTI Acceptance Form, you indicate your acceptance of the LTI Award set forth above and agree to be bound by the terms, conditions and provisions set forth in the LTI Acceptance Form, the attached Appendices and the Company Plan, all of which are incorporated by reference herein and are an integral part of this LTI Acceptance Form. Please sign and return this LTI Acceptance Form to the Assistant Corporate Secretary’s Office in the envelope provided within sixty (60) days after the Company’s mailing of this LTI Acceptance Form to you. In the event you fail to return the executed original within sixty (60) days, the Company reserves the right to terminate and forfeit the LTI Award (including any rights provided for in this LTI Acceptance Form and the attached Appendices), or to suspend or forfeit all or any vesting event(s) arising from the LTI Award. This LTI Acceptance Form may be executed in counterparts, which together shall constitute one and the same original. This LTI Acceptance Form may be executed by the exchange of facsimile signature pages, provided that by doing so the Grantee agrees to provide an original signature as soon thereafter as possible.

 

ACCEPTED AND AGREED TO AS OF THE GRANT DATE:

 

	
 
    	
GRANTEE:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Andrew Formica
    

 

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APPENDIX A — TERMS OF RESTRICTED STOCK UNIT AWARD

 

1.                                      Grant of Restricted Stock Unit Award.

 

Subject to the provisions of this Appendix, the LTI Acceptance Form and the Company’s 2010 Long Term Incentive Stock Plan, as may be amended from time to time (the “Company Plan”), the Company hereby grants to the Grantee the number of restricted stock units (the “Stock Units”) identified under the Restricted Stock Unit Award section of the attached LTI Acceptance Form, representing the same number of shares of the Company’s common stock, par value $1.50 per share (“Common Stock”).

 

2.                                      No Right to Continued Employment.

 

Nothing in this Appendix or the Company Plan shall confer upon Grantee any right to continue providing services to, or be in the employ of, the Company or any Subsidiary or interfere in any way with the right of the Company any Subsidiary to terminate Grantee’s association or employment at any time.

 

3.                                      Unfair Interference.

 

The Grantee shall not without the prior written consent of the Company, during the Grantee’s employment with the Company and any Subsidiary and for a period of twelve months after the date on which the Grantee’s employment with the Company terminates (the “Termination Date”), directly or indirectly, either alone or jointly with or on behalf of any other person, firm or company:

 

(1)         solicit the services of or endeavor to entice away from the Company or any Subsidiary for which Grantee has worked in the period of 12 months prior to the Termination Date, any director, employee or consultant of the Company or any Subsidiary with whom the Grantee worked or had dealings during the course of Grantee’s employment with the Company or Subsidiary.

 

(2)         solicit, canvass, approach or accept any approach from any Customer of the Company or any Subsidiary with a view to obtain their custom or supply for a Competitor.

 

In this Section 3:

 

“Customer” means person, firm or company which at or within a period of two years prior to the Termination Date has done business with the Company or any Subsidiary as a customer, client or supplier, or which the Company or any Subsidiary is or was in the process of negotiating with a view to such person, firm or company becoming a customer, client or supplier, and with whom the Grantee worked or had dealings with the course of the Grantee’s employment and with whom or which Grantee first had contact or otherwise developed a relationship while employed by the Company; and

 

“Competitor” means an actual or prospective competitor of any business carried on by the Company or any Subsidiary in which the Grantee worked at any time during the period of one year prior to the Termination Date and with whom or which Grantee first had contact or otherwise developed a relationship while employed by the Company.

 

The Grantee acknowledges that:

 

(a)                       these restrictions form part of Grantee’s terms and conditions of employment;

 

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(b)                       the restrictions set out in this clause are reasonable and necessary for the protection of the legitimate interests of the Company (including but not limited to protecting confidential information, relationships with directors, employees, consultants and Customers, and the goodwill of the Company’s business) , and that, having regard to those interests such restrictions do not impose an unreasonable burden on Grantee; and

 

(c)                        damages are not an adequate remedy to protect the interests of the Company, and the Company is entitled to seek and obtain injunctive relief, or any other remedy, in any Court.

 

These restrictions shall supersede any other restriction to which Grantee may be subject in respect of non-solicitation of employees and of customers as set out in Grantee’s letter of employment.  All other restrictions to which Grantee may be subject which are not superseded by this clause shall continue with full effect in addition to the restrictions set out in this clause.

 

The consideration for the promises in these restrictions is given to the Grantee by the Company on its own behalf and on behalf of each other Subsidiary (including, for the avoidance of doubt, any subsidiary to which Grantee provides services from time to time).

 

The restrictions shall remain in full force and effect and survive the termination of Grantee’s employment for any reason whatsoever.

 

The restrictions in this Section 3 shall be governed by and construed in accordance with the laws of the jurisdiction in which Grantee is employed or primarily providing services according to his or her employment contract at the date of the termination of employment (“Territory”). Without prejudice to the foregoing sentence, if Grantee is employed the Company or Subsidiary in a state or territory in Australia, the restrictions in Section 3 shall be governed by and construed in accordance with New South Wales law, regardless of the Territory.

 

Any proceedings initiated by the Grantee in relation to the restrictions in Section 3 shall be initiated in the Territory. In the event that the Company or any Subsidiary (including, for the avoidance of doubt, any Subsidiary to which Grantee provides services from time to time) is the plaintiff in any proceedings in relation to the restrictions in Section 3, the Company may, at its option, elect to enforce the restrictions in any competent court of any jurisdiction which shall accept jurisdiction for this purpose.

 

4.                                      Change in Control.

 

In the event of a Change of Control of the Company, the Company may, in its sole discretion, cancel Grantee’s LTI Award in exchange for a payment in cash in an amount equal to (x) the consideration paid per Share in the Change of Control multiplied by (y) the number of Shares subject to Grantee’s LTI Award.

 

5.                                      Issuance of Shares.

 

Subject to Section 11 (pertaining to the withholding of taxes) and Section 19 (pertaining to Section 409A of the Code, if applicable), as soon as practicable after each vesting event under Subsections (a),  (b) or (d) of the LTI Acceptance Form, but in no case later than 60 days following the date on which an award becomes vested (provided there has been no prior forfeiture of the Stock Units pursuant to the terms of this Appendix or the Company Plan), the Company shall issue or otherwise transfer shares to the Grantee with respect to the Stock Units vesting (or shall take other appropriate

 

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steps to reflect the Grantee’s unrestricted ownership of all or a portion of the vested Stock Units that are subject to this Appendix).

 

6.                                      Nontransferability of the Stock Units.

 

No Stock Units shall be transferable by the Grantee by means of sale, assignment, exchange, encumbrance, pledge or otherwise.

 

7.                                      Rights as a Stockholder.

 

Except as otherwise specifically provided in this Appendix, the Grantee shall have no rights as a stockholder unless and until the Grantee has become the holder of record of shares of Common Stock following payment in Common Stock upon the vesting of Stock Units.  Notwithstanding the preceding, the Grantee shall have all the rights of a stockholder with respect to the right to be credited with Dividend Equivalents on his or her Stock Units to the extent dividends are paid on Company Common Stock, provided the record date for such dividend is on or after the date the Stock Units have been credited to the Grantee.

 

8.                                      Adjustment in the Event of Change in Stock.

 

In the event that the Committee determines that any dividend or other distribution (whether in the form of cash, Common Stock, other securities, or other property), recapitalization, stock split, reverse stock split, subdivision, consolidation or reduction of capital, reorganization, merger, scheme of arrangement, split-up, spin-off or combination involving the Company or repurchase or exchange of Common Stock or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transaction or event that affects the Common Stock such that an adjustment is determined by the Committee to be appropriate to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Company Plan, then the Committee shall, in such manner as it may deem equitable, adjust the number and type of shares or Stock Units, or, if deemed appropriate, make provision for a cash payment to the Grantee or the substitution of other property for Stock Units; provided, that the number of Stock Units shall always be a whole number.

 

9.                                      Payment of Transfer Taxes, Fees and Other Expenses.

 

The Company agrees to pay any and all original issue taxes and stock transfer taxes that may be imposed on the issuance of shares received by a Grantee in connection with the Stock Units, together with any and all other fees and expenses necessarily incurred by the Company in connection therewith.

 

10.                               Other Restrictions.

 

Notwithstanding any other provision of the Company Plan or this Appendix, the Company will not be required to issue, and the Grantee may not sell, assign, transfer or otherwise dispose of, any shares of Common Stock received as payment of the Stock Units, unless (a) there is in effect with respect to the shares of Common Stock received as payment for the Stock Units a registration statement under the Securities Act of 1933, as amended, and any applicable state or foreign securities laws or an exemption from such registration, and (b) there has been obtained any other consent, approval or permit from any other regulatory body which the Committee, in its sole discretion, deems necessary or advisable.  The Company may condition such issuance, sale or transfer upon the receipt of any representations or agreements from the parties involved, and the placement of any legends on 

 

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certificates representing  Common Stock received as payment of Stock Units, as may be deemed necessary or advisable by the Company in order to comply with such securities law or other restrictions.

 

11.                               Taxes and Withholding.

 

No later than the date as of which an amount first becomes includible in the gross income of the Grantee for tax withholding purposes with respect to any Stock Units or underlying shares of Common Stock, the Grantee shall pay all taxes that are required by applicable laws and regulations unless the provisions of Article 14 of the Company Plan apply and provided that the Share withholding or sale will not result in adverse accounting consequences to the Company.  The obligations of the Company under this Appendix shall be conditioned on compliance by the Grantee with this Section.  It is intended that the foregoing provisions of this Section shall normally govern the payment of withholding taxes (if required); however, if the required withholding is not accomplished under the preceding provisions of this Section, the Grantee agrees that the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the Grantee, including compensation or the delivery of the Stock Units or underlying shares of Common Stock that gives rise to the withholding requirement.\

 

12.                               Notices.

 

Any notice to be given to the Company shall be addressed to the Company at its principal office, in care of its Assistant Corporate Secretary.  Any notice to be given to the Grantee shall be addressed to Grantee at the address listed in the Company’s records.  By a notice given pursuant to this Section, either party may designate a different address for notices.  Any notice shall have been deemed given (i) when actually delivered to the Company, or (ii) if to the Grantee, when actually delivered; when deposited in the U.S. Mail, postage prepaid and properly addressed to the Grantee; or when delivered by overnight courier.

 

13.                               Binding Effect.

 

Except as otherwise provided hereunder, this Appendix shall be binding upon and shall inure to the benefit of the heirs, executors or successors of the parties to this Appendix.

 

14.                               Laws Applicable to Construction.

 

Subject to Section 3 above, the interpretation, performance and enforcement of this Appendix shall be governed by the laws of the State of Delaware without reference to principles of conflict of laws, as applied to contracts executed in and performed wholly within the State of Delaware.  In addition to the terms and conditions set forth in this Appendix, the Stock Units are subject to the terms and conditions of the Company Plan, which is hereby incorporated by reference.

 

15.                               Severability.

 

The invalidity or enforceability of any provision of this Appendix shall not affect the validity or enforceability of any other provision of this Appendix.

 

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16.                         Conflicts and Interpretation.

 

In the event of any conflict between this Appendix and the Company Plan, the Company Plan shall control.  In the event of any ambiguity in this Appendix, or any matters as to which this Appendix is silent, the Company Plan shall govern including, without limitation, the provisions thereof pursuant to which the Committee has the power, among others, to (i) interpret the Company Plan, (ii) prescribe, amend and rescind rules and regulations relating to the Company Plan, and (iii) make all other determinations deemed necessary or advisable for the administration of the Company Plan.

 

17.                         Amendment.

 

Except as otherwise provided for in this Appendix, this Appendix may not be modified, amended or waived except by an instrument in writing approved by both parties hereto or approved by the Committee.  The waiver by either party of compliance with any provision of this Appendix shall not operate or be construed as a waiver of any other provision of this Appendix, or of any subsequent breach by such party of a provision of this Appendix.  Notwithstanding anything to the contrary contained in the Company Plan or in this Appendix, to the extent that the Company determines that the Stock Units are subject to Section 409A of the Code and fail to comply with the requirements of Section 409A of the Code, the Company reserves the right to amend, restructure, terminate or replace the Stock Units in order to cause the Stock Units to either not be subject to Section 409A of the Code or to comply with the applicable provisions of such section.

 

18.                               Headings.

 

The headings of Sections herein are included solely for convenience of reference and shall not affect the meaning or interpretation of any of the provisions of this Appendix.

 

19.                               Section 409A; Six-Month Delay (if applicable).

 

The intent of the parties is that payments and benefits under this Appendix comply with Section 409A and, accordingly, to the maximum extent permitted this Appendix shall be interpreted and administered to be in compliance therewith.  Notwithstanding anything contained herein to the contrary, a Grantee shall not be considered to have terminated employment with the Company for purposes of this Appendix unless the Grantee would be considered to have incurred a “separation from service” from the Company within the meaning of 409A.  Each amount to be paid or benefit to be provided under this Appendix shall be construed as a separate identified payment for purposes of Section 409A, and any payments described in this Appendix that are due within the “short term deferral period” as defined in Section 409A shall not be treated as deferred compensation unless applicable law requires otherwise.  Without limiting the foregoing, and notwithstanding anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A of the Code, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to this Appendix during the six-month period immediately following Grantee’s separation from service shall instead be paid on the first business day after the date that is six months following the Grantee’s separation from service (or death, if earlier).

 

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APPENDIX B — ADDITIONAL TERMS OF RESTRICTED STOCK UNIT AWARD

 

Scheme of Arrangement

 

1.1                               If a court shall direct that a meeting of the holders of Shares be convened pursuant to Article 125 of the Companies (Jersey) Law 1991 for the purposes of considering a scheme of arrangement involving the reconstruction of the Company or its amalgamation with any other company or companies, the Stock Units shall be Released conditional on either the scheme of arrangement being approved by the shareholders’ meeting or sanctioned by the court (as determined by the Board in its absolute discretion) (the “Relevant Condition”).

 

1.2                               If the Relevant Condition is not satisfied, the Stock Units shall continue and remain outstanding.

 

1.3                               Stock Units shall not be Released without the consent of the Board under Section 1.1 if the purpose and effect of the scheme of arrangement is to create a new holding company for the Company, such company having substantially the same shareholders and proportionate shareholdings as those of the Company immediately prior to the scheme of arrangement.

 

Demerger

 

1.4                               If the Board becomes aware that the Company is or is expected to be affected by any demerger, dividend in specie, super-dividend or other transaction which, in the opinion of the Board, would affect the current or future value of the Stock Units, the Board, acting fairly, reasonably and objectively, may in their absolute discretion allow some or all of the Stock Units to be Released. The Board shall specify the Release Date and the permitted period of exercise.

 

Voluntary Winding-up

 

1.5                               If notice is duly given of a resolution for a voluntary winding-up of the Company then the Board, acting fairly, reasonably and objectively, may in their absolute discretion allow some or all of the Stock Units to be Released. The Board shall specify the Release Date and the permitted period of exercise.

 

Definitions

 

1.6                               For purposes of this Appendix, capitalized terms used but not defined in the LTI Acceptance Form, the Company Plan or this Appendix shall have the meanings set forth in the Henderson Group Plc Long Term Incentive Plan.

 

 

 

APPENDIX C — FORFEITURE AND CLAWBACK

 

The Stock Units shall be subject to the forfeiture and clawback provisions set forth in this Appendix.  Notwithstanding any provision of the Company Plan, the LTI Acceptance Form or this Appendix to the contrary, the Stock Units shall be subject to such additional forfeiture, clawback, deduction or recovery provisions as may be required pursuant to any applicable laws (including US securities laws), government regulations, stock exchange listing requirements or Company policies.

 

1.                                      FORFEITURE

 

1.1                               Any time prior to the applicable vesting date set forth in the LTI Acceptance Form, the Stock Units shall be forfeited to the extent determined by the Board (and for the avoidance of doubt the Board may determine that the Stock Units may be forfeited in whole or in part):

 

(a)                                 where the Board determines that:

 

(i)                                     the vesting of the Stock Units is not sustainable according to the financial situation of the Company; and/or

 

(ii)                                  the vesting of the Stock Units to the extent to which they would otherwise vest is not justified according to, and/or that there has been a material downturn in, the performance of: (i) the Company; (ii) any member of the Group or business unit for which the Grantee performs a role or has responsibility; (iii) any Fund to which the Grantee’s role relates or for which the Grantee has responsibility; and/or (iv) the Grantee.

 

1.2                               The effect of the forfeiture of the Stock Units (to the extent determined by the Board) shall be that the Grantee shall no longer be entitled to the issuance or transfer of Shares pursuant to the Stock Units.

 

2.                                      CLAW-BACK OF OVERPAYMENT OF AWARD

 

2.1                               A claw-back may be imposed by the Board (“Claw-Back”) at any time following the applicable Vesting Date until the [third] anniversary of the applicable Vesting Date:

 

(a)                                 where the Board determines that there has been a material misrepresentation in relation to the performance of the Company [or a member of the Group, business unit or Fund and/or the Grantee] on the basis of which the Board made its determination as to the extent to which the Stock Units vested, including (but not limited to): (i) a misstatement of the financial results and/or health of the Company [or a member of the Group, business unit or Fund] during a relevant Financial Year; (ii) an erroneous calculation in relation to the results of the Company [or a member of the Group, business unit or Fund] or other performance benchmark; (iii) errors in the financial statements of the Company or a member of the Group, business unit or Fund; or (iv) discrepancies in the financial accounts for a relevant Financial Year, whether or not arising from fraud or reckless behavior on the part of any director or employee of the Company or any member of the Group;

 

 

(b)                                 where the Grantee ceases to be an employee of any member of the Group by reason of dismissal for misconduct (for the avoidance of doubt, including but not limited to gross misconduct); or

 

(c)                                  where the Board determines that there has been a material failure of risk management for which the Grantee has direct or indirect responsibility in respect of: (i) the Company; (ii) any member of the Group or business unit for which the Participant performs a role or has responsibility; and/or (iii) any Fund to which the Grantee’s role relates or for which the Grantee has responsibility.

 

2.2                               The manner in which the Claw-Back shall be made by the Company’s Remuneration Committee is as follows:

 

(d)                                 the Company shall serve a notice in writing on each Grantee concerned setting out:

 

(1)                   the date of the Stock Units;

 

(2)                   the total number of Shares subject to the Stock Units which vested on the applicable Vesting Date;

 

(3)                   the number of Shares subject to the Stock Units which are subject to the Claw-Back calculated, if the Board so decides, after taking account of the tax and social security contributions paid by the Grantee (“Claw-Back Shares”);

 

(4)                   the Market Value of the Claw-Back Shares, as at the date the Claw-Back Shares were issued or transferred in satisfaction of the Stock Units (“Cash Equivalent”);

 

(e)                                  so far as the Board shall consider practicable, any Claw-Back shall be implemented by:

 

(1)                   a reduction in the number of Shares under the Company Plan or any other Discretionary Share Plan operated by the Company which would otherwise vest for [or be released to the Grantee on any future date, for the avoidance of doubt, including by the forfeiture of any Shares that are subject to [Rule 4A.3];

 

(2)                   a withholding of any cash amount otherwise due to the Participant under any bonus scheme[, phantom share scheme or other cash based incentive scheme] of the Company or any member of the Group (on a pre- or post-tax basis, as determined by the Board); or

 

(3)                   a deduction from any other sum owed to the Grantee (which may include unpaid salary and/or pension contributions) on a pre- or post-tax basis, as determined by the Board,

 

up to the number of Claw-Back Shares or their Cash Equivalent; and

 

(f)                                   if the Grantee ceases at any time to be a Participant in the Company Plan and/or any other Discretionary Share Plan operated by the Company, or the number of Shares which may be transferred on or following any future date under the Company Plan and/or any other Discretionary Share Plan operated by the Company is less than the number of Claw-Back Shares, or the Grantee ceases at any time to be a director or an employee of the Company or 

 

 

any member of the Group, then the Company may recover from the Grantee the Cash Equivalent of the  balance of the Shares remaining to be clawed-back and for these purposes the Cash Equivalent is a debt which is immediately due and payable by the Grantee to the Company.

 

3.                                      DEFINITIONS

 

3.1                               For purposes of this Section 1, capitalized terms used but not defined in the LTI Acceptance Form, the Company Plan or this Appendix shall have the meanings set forth in the Henderson Group Plc Long Term Incentive Plan.Exhibit

  Exhibit 10.19
	
		
	Callaway Golf Company
	Recipient:

	Performance Unit Grant
	Effective Grant Date:   

	 
	Number of Units:

	 
	Plan: Amended and Restated 2004 Incentive Plan

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

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

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

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

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

For purposes of this Agreement, “Continuous Service” means that Recipient’s service with the Company or its “parent” or “subsidiary” as such terms are defined in Rule 405 of the Securities Act (each an “Affiliate” and together “Affiliates”), whether as an employee, director or consultant, is not interrupted or terminated. The Committee shall have the authority to determine the time or times at which “parent” or “subsidiary” status is determined within the foregoing definition of Affiliate.  A change in the capacity in which Recipient renders service to the Company or an Affiliate as an employee, consultant or director or a change in the entity for which Recipient renders such service, provided that there is no interruption or termination of Recipient’s service with the Company or an 

Affiliate, shall not terminate a Recipient’s Continuous Service.  For example, a change in status from an employee of the Company to a consultant of a subsidiary or to a director shall not constitute an interruption of Continuous Service.  To the extent permitted by law, the Committee, in its sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absence approved by that party, including sick leave, military leave or any other personal leave.  Notwithstanding the foregoing, a leave of absence shall be treated as Continuous Service for purposes of vesting in the PSU only to such extent as may be provided in the Company’s leave of absence policy, in the written terms of any leave of absence agreement or policy applicable to Recipient, or as otherwise required by law.
		
	4.
	Lapse of Restrictions.  The restrictions imposed under paragraph 3 will lapse and expire, and the PSU will vest, in accordance with the following:

		
	(a)
	Vesting Schedule.  Subject to earlier cancellation, and subject to the vesting provisions, if any, set forth in any agreement between Recipient and the Company or its Affiliate, as the same may be amended, modified, extended or renewed from time to time, the restrictions imposed under paragraph 3 will lapse and be removed with respect to the number of PSUs, and in accordance with the vesting schedule, set forth in Exhibit B (the “Vesting Schedule”).

The Committee, however, may, in its discretion, accelerate the Vesting Schedule (in which case, the Committee may impose whatever conditions it considers appropriate on the accelerated portion).  
In addition, in the event of a Change in Control, the Committee shall provide that either:  (i) the PSUs subject to this Agreement will continue, or be assumed or replaced with an equivalent award by the successor or acquiring corporation (if any), which continuation, assumption or replacement will be binding on Recipient; or (ii) if the PSUs are not continued, assumed or replaced, then the restrictions imposed under paragraph 3 shall lapse and be removed and the PSUs shall be deemed to have vested immediately prior to the Change in Control at the target performance level.  In the event that the PSUs covered by this Agreement are continued, assumed or replaced pursuant to clause (i) of the preceding sentence in connection with a Change in Control, then (A) the PSUs shall continue under the same terms and conditions or shall continue under the same terms and conditions with respect to shares of a successor company that may be issued in exchange or settlement of such PSUs in connection with a Change in Control and (B) upon Recipient’s involuntary termination of Continuous Service with the Company and/or the successor or acquiring corporation (if any) without Substantial Cause, or upon Recipient’s resignation with Good Reason, in either case, within the one-year period immediately following such Change in Control, then the restrictions imposed under paragraph 3 shall lapse and be removed and the PSUs shall be deemed to have vested immediately upon such termination at the target performance level. For purposes hereof, “Substantial Cause”, “Good Reason” and “Change in Control” shall each have the meanings set forth in Exhibit A attached hereto.
		
	(b)
	Effect of Vesting.  The Company will deliver to Recipient a number of shares of Common Stock equal to the number of vested shares of Common Stock subject to the PSU within ten (10) days following the vesting date or dates provided herein.  Notwithstanding the foregoing, in the event that the Company (i) does not withhold shares otherwise issuable to Recipient to satisfy the Company’s tax withholding obligation and (ii) determines that Recipient’s sale of shares of Common Stock on the date the shares subject to the award 

2.

are scheduled to be delivered (the “Original Distribution Date”), would violate its policy regarding insider trading of Common Stock, as determined by the Company in accordance with such policy, then such shares shall not be delivered on such Original Distribution Date and shall instead be delivered as soon as practicable following the next date that Recipient could sell such shares pursuant to such policy; provided, however, that (A) if the Original Distribution Date occurs before a Change in Control then in no event shall the delivery of the shares be delayed pursuant to this provision beyond the later of: (1) December 31st of the same calendar year of the Original Distribution Date, or (2) the 15th day of the third calendar month following the Original Distribution Date, and (B) if the Original Distribution Date occurs on or after a Change in Control then in no event shall the delivery of the shares be delayed pursuant to this provision beyond the 15th day of the third calendar month following the Original Distribution Date.  
		
	(c)
	Payment of Taxes.  If applicable, upon vesting and/or issuance of Common Stock in accordance with the foregoing, Recipient must pay in the form of a check or cash or other cash equivalents to the Company such amount as the Company determines it is required to withhold under applicable laws as a result of such vesting and/or issuance.  In this regard, the Company may  withhold from the shares of Common Stock otherwise issuable to Recipient upon the vesting of the PSU that number of shares having an aggregate Fair Market Value (as defined in the Plan), determined as of the date the withholding tax obligation arises, equal to the amount of the total withholding tax obligation; provided, however, that in no event shall the aggregate Fair Market Value of the shares of Common Stock so withheld exceed the maximum individual statutory tax rate in the applicable jurisdiction at the time of such withholding (or such other rate as may be required to avoid the liability classification of the applicable award under generally accepted accounting principles in the United States of America); provided, further, that the number of shares withheld by the Company to satisfy the tax withholding with respect to the PSUs shall be rounded up to the nearest whole share to the extent rounding up to the nearest whole share does not result in the liability classification of the PSUs under generally accepted accounting principles in the United States of America. Alternatively, a Recipient who is subject to Section 16 of the Exchange Act at the time the tax withholding obligation arises may request to satisfy his or her tax withholding obligation directly through an immediate payment to the Company equal to the amount of the tax withholding obligation.  If such a Recipient does not satisfy the tax withholding obligation pursuant to the preceding sentence, Recipient authorizes and directs the Company to withhold from the shares of Common Stock otherwise issuable to Recipient upon vesting of the SUs that number of shares having an aggregate Fair Market Value (as defined in the Plan), determined as of the date the withholding tax obligation arises, equal to the amount of the total withholding tax obligation. Recipient acknowledges that the ultimate liability for all tax-related items legally due by Recipient is and remains Recipient’s responsibility and that Company and/or its Affiliates (1) make no representations or undertakings regarding the treatment of any tax-related items in connection with any aspect of the PSU grant, including the grant or vesting of the PSU, the subsequent sale of shares of Common Stock and the receipt of any dividends; and (2) do not commit to structure the terms of the grant or any aspect of the PSU to reduce or eliminate Recipient’s liability for tax-related items.

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

3.

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

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

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

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

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

		
	(d)
	Recipient is voluntarily participating in the Plan; 

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

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

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

		
	8.
	Electronic Delivery.  The Company may, in its sole discretion, decide to deliver any documents related to the PSU and participation in the Plan or future PSUs that may be granted under the Plan by electronic means or to request Recipient consent to participate in the Plan by electronic means.  Recipient hereby consents to receive such documents by electronic delivery and, if requested, to agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

		
	9.
	Taxable Event.  Recipient acknowledges that the issuance/vesting/settlement of the PSUs will have significant tax consequences to Recipient and Recipient is hereby advised to consult with Recipient’s own tax advisors concerning such tax consequences.  A general description of the U.S. federal income tax consequences related to the PSUs is set forth in the Plan prospectus. 

4.

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

		
	11.
	Miscellaneous. 

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

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

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

		
	(d)
	To the extent applicable, this Agreement and the PSUs shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder.  The PSUs are not intended to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code and the Department of Treasury regulations and other interpretive guidance issued thereunder.  For purposes of Section 409A of the Code (including, without limitation, for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)), each payment that Recipient may be eligible to receive under this Agreement shall be treated as a separate and distinct payment.  Notwithstanding anything to the contrary in the Plan, if the PSUs constitute “deferred compensation” under Section 409A of the Code and Recipient is a “specified employee” for purposes of Section 409A of the Code, no distribution or payment of any amount that is due because of Recipient’s “separation from service” (as defined in Section 409A of the Code without regard to alternative definitions thereunder) will be issued or paid (a) unless Recipient’s termination of Continuous Service is a “separation from service” and (b) before the date this six (6) months following the date of Recipient’s “separation from service” or, if earlier, the date of the Participant’s death, unless such distribution or payment can be made in a manner that complies with Section 409A of the Code, and any amounts so deferred will be paid in a lump sum on the day after such six (6) month period elapses.

		
	12.
	Severability.  The provisions of this Agreement shall be deemed to be severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.  If any provision of this Agreement, or the application thereof to any person or any circumstance, is held to be invalid or unenforceable under present or future laws effective 

5.

during the term of this Agreement, such provision shall be fully severed, and in lieu thereof there shall automatically be added as part of this Agreement a suitable and equitable provision in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision.
		
	13.
	Governing Law.  This Agreement will be governed by and construed in accordance with the laws of the State of Delaware and applicable federal law.

		
	14.
	Irrevocable Arbitration of Disputes.

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

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

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

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

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

		
	(f)
	It is expressly understood that the parties irrevocably agree to arbitrate any dispute identified above and have chosen arbitration to avoid the burdens, costs and publicity of a court proceeding, and the arbitrator is expected to handle all aspects of the matter, including discovery and any hearings, in such a way as to minimize the expense, time, burden and publicity of the process, while assuring a fair and just result.  In particular, the parties expect that the arbitrator will limit discovery 

6.

by controlling the amount of discovery that may be taken (e.g., the number of depositions or interrogatories) and by restricting the scope of discovery only to those matters clearly relevant to the dispute.  However, at a minimum, each party will be entitled to at least one (1) deposition and shall have access to essential documents and witnesses as determined by the arbitrator. 
		
	(g)
	The provisions of this paragraph shall survive the expiration or termination of the Agreement, and shall be binding upon the parties.

		
	15.
	Data Privacy.  Recipient hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of his or her personal data as described in this document by and among, as applicable, the Company and its Affiliates for the exclusive purpose of implementing, administering and managing Recipient’s participation in the Plan.

Recipient understands that the Company and its Affiliates may hold certain personal information about Recipient, including, but not limited to, Recipient’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all PSUs or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in Recipient’s favor, for the purpose of implementing, administering and managing the Plan (“Data”).  Recipient understands that Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these Data recipients may be located in Recipient’s country or elsewhere, and that the Data recipients’ country may have different data privacy laws and protections than Recipient’s country.  Recipient understands that he or she may request a list with the names and addresses of any potential recipients of the Data by contacting the local human resources representative.  Recipient authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing Recipient’s participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom Recipient may elect to deposit any PSUs or shares of Common Stock.  Recipient understands that Data will be held only as long as is necessary to implement, administer and manage Recipient’s participation in the Plan.  Recipient understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, without cost, by contacting in writing the local human resources representative.  Recipient understands, however, that refusing or withdrawing consent may affect Recipient’s ability to participate in the Plan.  For more information on the consequences of refusal to consent or withdrawal of consent, Recipient understands that he or she may contact the local human resources representative.
		
	16.
	Language.  If you have received this Agreement or any other document related to the Plan translated into a language other than English and if the translated version is different than the English version, the English version will control. 

IN WITNESS WHEREOF, the Company and Recipient have executed this Agreement effective as of the Effective Grant Date.
CALLAWAY GOLF COMPANY                RECIPIENT
By:                                                     
 

7.

EXHIBIT A
A “Change in Control” means the following and shall be deemed to occur if any of the following events occurs:
(a)    Any person, entity or group, within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) but excluding the Company and its subsidiaries and any employee benefit or stock ownership plan of the Company or its subsidiaries and also excluding an underwriter or underwriting syndicate that has acquired the Company’s securities solely in connection with a public offering thereof (such person, entity or group being referred to herein as a “Person”) becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either the then outstanding shares of Common Stock or the combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of directors; or
(b)    Individuals who, as of the effective date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board, provided that any individual who becomes a director after the effective date hereof whose election, or nomination for election by the Company’s shareholders, is approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered to be a member of the Incumbent Board unless that individual was nominated or elected by any Person having the power to exercise, through beneficial ownership, voting agreement and/or proxy, 20% or more of either the outstanding shares of Common Stock or the combined voting power of the Company’s then outstanding voting securities entitled to vote generally in the election of directors, in which case that individual shall not be considered to be a member of the Incumbent Board unless such individual’s election or nomination for election by the Company’s shareholders is approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board; or
(c)    Consummation by the Company of the sale, lease, exchange or other disposition (in one transaction or a series of related transactions) by the Company of all or substantially all of the Company’s assets or a reorganization or merger or consolidation of the Company with any other person, entity or corporation, other than
		
	(i)
	a reorganization or merger or consolidation that would result in the voting securities of the Company outstanding immediately prior thereto (or, in the case of a reorganization or merger or consolidation that is preceded or accomplished by an acquisition or series of related acquisitions by any Person, by tender or exchange offer or otherwise, of voting securities representing 5% or more of the combined voting power of all securities of the Company, immediately prior to such acquisition or the first acquisition in such series of acquisitions) continuing to represent, either by remaining outstanding or by being converted into voting securities of another entity, more than 50% of the combined voting power of the voting securities of the Company or such other entity outstanding immediately after such reorganization or merger or consolidation (or series of related transactions involving such a reorganization or merger or consolidation), or

		
	(ii)
	a reorganization or merger or consolidation effected to implement a recapitalization or reincorporation of the Company (or similar transaction) that does not result in a material change in beneficial ownership of the voting securities of the Company or its successor; or

(d)    The liquidation or dissolution of the Company.

8.

If required for purposes of compliance with Section 409A of the Code, in no event will a Change in Control be deemed to have occurred if such transaction is not also a “change in the ownership or effective control of” the Company or “a change in the ownership of a substantial portion of the assets of” the Company as determined under Treasury Regulation Section 1.409A-3(i)(5) (without regard to any alternative definition thereunder).  The Board may, in its sole discretion and without a Participant’s consent, amend the definition of “Change in Control” to conform to the definition of “Change in Control” under Section 409A and the regulations thereunder.
The term “Substantial Cause” shall have the meaning ascribed such term in Recipient’s employment agreement with the Company and, if Recipient does not have an employment agreement with the Company defining such term, then “Cause” shall mean Recipient’s (1) failure to substantially perform his or her duties; (2) misconduct, including but not limited to, use or possession of illegal drugs during work and/or any other action that is damaging or detrimental in a significant manner to the Company; (3) conviction of, or plea of guilty or nolo contendere to, a felony; or (4) failure to cooperate with, or any attempt to obstruct or improperly influence, any investigation authorized by the Board or any governmental or regulatory agency.
The term “Good Reason” shall have the meaning ascribed such term in Recipient’s employment agreement with the Company and, if Recipient does not have an employment agreement with the Company defining such term, then “Good Reason” shall mean (1) the Company’s material breach of any employment agreement between the Company and Recipient; (2) any material diminishment in the title, position, duties, responsibilities or status that Recipient had with the Company, as a publicly traded entity, immediately prior to the Change in Control; (3) any material reduction of Recipient’s base salary provided to Recipient immediately prior to the Change in Control; or (4) any requirement that Recipient relocate or any assignment to Recipient of duties that would make it unreasonably difficult for Recipient to maintain the principal residence Recipient had immediately prior to the Change in Control.  Within ninety (90) days of the date Recipient knows, or should have known, that Recipient has Good Reason to resign his or her employment, Recipient shall notify the Company in writing of the Good Reason and Recipient’s intent to terminate his or her employment for Good Reason no earlier than thirty (30) days later.  The Company shall then have thirty (30) days to cure the condition underlying Recipient’s notice or inform Recipient, in writing, of its intent not to do so.  If the Company fails to cure the condition, or states that it does not intend to attempt to cure the condition underlying Recipient’s notice, then Recipient shall have the right to terminate for Good Reason no later than ninety (90) days following the expiration of the cure period or the written statement of intent not to cure. 

9.

Exhibit B
Plan Overview
The 2018-20 LTIP is a performance share unit (PSU) plan tied to measurement of currency neutral adjusted Earnings Per Share (EPS) achievement over a one-, two-, and three-year period, with the earlier years weighted more heavily through the mechanics of the plan. A portion of the total award may be “banked” at the end of each year based on cumulative achievement, with final vesting not occurring until the end of the three-year performance period. Banked awards cannot be decreased based on performance in subsequent years. In addition, banked awards during year 1 are capped at 50% of the three-year target award, and cumulative banked awards after year 2 are capped at 80% of the three-year target award level.  As such, target or above target awards can only be achieved if performance is at or above the three-year target performance goal.
Performance Shares
Performance share units are a contingent right to receive one share of Common Stock of the Company upon vesting of the award. The target number of performance share units is determined at the time of grant (after converting the target grant value to share units), and the performance share units are scheduled to vest on the third anniversary of the Effective Grant Date. The actual number of units that vest at the end of the three years can vary from 0% to 200% of target, based on achievement of company-wide performance objectives over the three-year period, as detailed below.
Performance Measures and Goals
Achievement will be determined using currency neutral adjusted Earnings Per Share (EPS) over one-, two- and three-year performance periods beginning January 1, 2018, with performance measured at the end of each time period. Adjusted EPS shall mean calculated EPS after taking into account extraordinary items including (a) extraordinary, unusual and/or non-recurring items of gain or loss, (b) gains or losses on the disposition of a business, (c) changes in tax or accounting regulations or laws, or (d) non-recurring transaction and transition costs related to a merger, acquisition, divestiture, joint venture, or other strategic transaction, or financing transaction (e) asset write-downs, (f) litigation or claims judgments or settlements, (g) any accruals for reorganization and restructuring programs, and (h) any extraordinary non-recurring items as described in Accounting Principles Board Opinion No. 30, all of which must be identified in the audited financial  statements, including footnotes, or in the Management’s Discussion and Analysis section of the Company’s annual report. Currency neutral shall mean the Company’s adjusted EPS in local currency translated at the Company’s budgeted foreign currency exchange rates as set forth below: 

	
						
	Budgeted Currencies

	Type
	1 Local = USD
	1 US = Local
	Type
	1 Local = USD
	1 US = Local

	AUD
	 
	 
	KRW
	 
	 

	CAD
	 
	 
	MXN
	 
	 

	CNY
	 
	 
	MYR
	 
	 

	EUR
	 
	 
	SEK
	 
	 

	GBP
	 
	 
	THB
	 
	 

	JPY
	 
	 
	 
	 
	 

The annual and cumulative currency neutral adjusted EPS targets and related award levels for each of the performance periods are summarized below. For years 1 and 2, goals above the target EPS level are not applicable since payout levels above 100% can only be achieved if the three-year cumulative EPS performance exceeds target. Further, the maximum award that can be achieved based solely on 

10.

the first year’s performance is 50% of target and the maximum award that can be achieved based on the combined performance in years 1 and 2 is 80% of target.

	
								
	Currency Neutral Adjusted EPS Metrics

	 
	 
	 
	 
	 
	 
	 

	Year
	Annual Currency Neutral Adjusted EPS Target
	Cumulative Currency Neutral Adjusted EPS Goals and Award Levels(1)
	Maximum Cumulative Award

	Threshold 
(50% Award)
	Target 
(100% Award)
	Maximum(2) 
(200% Award)

	1 – 2018
	 
	 
	 
	n/a
	50%

	2 – 2019
	 
	 
	 
	n/a
	80%

	3 – 2020
	 
	 
	 
	 
	200%

                                       1 Award levels are interpolated between the specified goals on an a straight line basis
                                       2 Award levels above 100% are not available until the completion of the full three-year performance period

If the vesting of the PSUs is accelerated in connection with a Change in Control prior to the completion of the performance period for the performance metric pursuant to Section 4(a) of the Agreement, the value of the PSUs will vest upon closure and be paid out at the target performance level. 
Cumulative Award Value Calculation Process
Year 1:        
		
	•
	If actual currency neutral adjusted EPS performance does not reach the threshold currency neutral adjusted EPS level for year 1, no performance award is earned for year 1

		
	•
	Actual currency neutral adjusted EPS Performance at or above the threshold level will determine the performance award level for year 1, with performance above target not rewarded in year 1

		
	•
	The interpolated year 1 performance achievement level will be multiplied by cumulative payout cap for year 1 of 50% and then by the target number of units

Year 2:        
		
	•
	If actual cumulative currency neutral adjusted EPS performance through year 2 does not exceed the threshold cumulative currency neutral adjusted EPS level for year 2, no incremental performance award is earned for year 2

		
	•
	Actual cumulative currency neutral adjusted EPS Performance through year 2 at or above threshold cumulative currency neutral adjusted EPS level will determine the cumulative performance award level through year 2, with performance above target not rewarded in year 2

		
	•
	The interpolated year 2 cumulative performance level will be multiplied by the cumulative award cap for year 2 of 80% and then by the target number of shares, to determine the cumulative performance award through year 2.

		
	•
	If cumulative performance award through year 2 is less than or equal to the performance award earned in year 1, no additional incremental performance award is earned in year 2

		
	•
	If cumulative performance award through year 2 exceeds the performance award earned in year 1, the performance award earned in year 1 will be subtracted from the calculated cumulative award through year 2 to determine the incremental performance award earned in year 2

		
	•
	The cumulative performance award earned through year 2 cannot exceed 80% of the three-year target award

11.

Year 3:        
		
	•
	If actual cumulative currency neutral adjusted EPS performance through year 3 does not exceed the threshold cumulative currency neutral adjusted EPS level for year 3, no incremental performance award is earned for year 3, and the cumulative performance award earned through year 2 is the final number of shares earned under the plan

		
	•
	Actual cumulative currency neutral adjusted EPS Performance through year 3 at or above threshold cumulative currency neutral adjusted EPS level will determine the cumulative award payout level through year 3, up to a maximum of 200%

		
	•
	The interpolated year 3 cumulative performance payout level will be multiplied by the target number of shares to determine the cumulative performance award through year 3

		
	•
	If cumulative performance award through year 3 is less than or equal to the cumulative performance award earned through year 2, no additional incremental performance award is earned in year 3, and the cumulative performance award earned through year 2 is the final number of shares earned under the plan

		
	•
	If cumulative performance award through year 3 exceeds the cumulative performance award earned through year 2, the cumulative performance award earned through year 2 will be subtracted from the calculated cumulative award through year 3 to determine the incremental performance award earned in year 3

		
	•
	Cumulative performance award earned through year 3 cannot exceed 200% of the three-year target number of shares

12.

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