Document:

THIRD AMENDMENT TO CREDIT AGREEMENT

 
Exhibit 10.3

 
THIRD AMENDMENT TO CREDIT AGREEMENT

 
THIS THIRD AMENDMENT TO CREDIT
AGREEMENT dated as of March 27, 2003 (the “Third Amendment”), is by and among HIGHWOODS REALTY LIMITED PARTNERSHIP, a North Carolina limited partnership (“Highwoods Realty”), HIGHWOODS PROPERTIES, INC., a Maryland
corporation (“Highwoods Properties”), HIGHWOODS FINANCE, LLC, a Delaware limited liability company (“Highwoods Finance”), HIGHWOODS SERVICES, INC., a North Carolina corporation (“Highwoods
Services”), and HIGHWOODS/TENNESSEE HOLDINGS, L.P., a Tennessee limited partnership (“Highwoods Tennessee”) (Highwoods Realty, Highwoods Properties, Highwoods Finance, Highwoods Services, and Highwoods Tennessee are
hereinafter referred to individually as a “Borrower” and collectively as the “Borrowers”), the subsidiaries of the Borrowers identified on the signature pages attached hereto (such Subsidiaries are hereinafter
referred to individually as a “Guarantor” and collectively as the “Guarantors”), the Lenders (as defined in the Credit Agreement referenced below), BANK OF AMERICA, N.A., as Administrative Agent for the Lenders (in
such capacity, the “Administrative Agent”), BANC OF AMERICA SECURITIES LLC, as Sole Lead Arranger (in such capacity, the “Sole Lead Arranger”) and Sole Book Manager (in such capacity, the “Sole Book
Manager”), WELLS FARGO BANK, NATIONAL ASSOCIATION, as Syndication Agent (in such capacity, the “Syndication Agent”), WACHOVIA BANK, N.A., as Documentation Agent (in such capacity, the “Documentation
Agent”), and is an amendment to that certain Credit Agreement dated as of December 13, 2000 by and among the Borrowers, Guarantors, Lenders, Administrative Agent, Sole Lead Arranger, Sole Book Manager, Syndication Agent and Documentation
Agent, as amended by that certain First Amendment to Credit Agreement dated as of June 29, 2001, and as amended by that certain Second Amendment to Credit Agreement dated as of December         , 2002
(as the same may have been further amended, restated, supplemented or otherwise modified, the “Credit Agreement”). 
 
W I T N E S S E T H 
 
WHEREAS, each of the Borrowers and the Guarantors have requested and the Lenders and Administrative Agent have agreed to amend the
Credit Agreement on the terms and conditions set forth herein; 
 
NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged by the parties hereto, the parties hereto agree as follows: 
 
1. Amendments to Credit Agreement. 
 
(a) Section 7.11(e) of the Credit Agreement is hereby deleted in its entirety and replaced
with the following: 
 
“(e)
Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio shall at all times be greater than 1.60 to 1.00.” 
 
(b) Section 7.11(k)(i) of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

 
“(i) Restricted Payments,
as determined on any date following the date of this Agreement and for the previous twelve (12) calendar month period (including, as applicable, periods occurring prior to the date of this Agreement) shall not exceed an amount equal to the sum of
(A) Cash Available for Distribution, plus (B) 25% of Net Assets Sales Proceeds derived from sales of Speculative Land, plus, (C) 70% of Net Assets Sales Proceeds derived from sales of other assets of the Consolidated Parties not considered to be
Speculative Land, plus (D) excess proceeds from the refinance of assets, in each case, over the same twelve (12) calendar month period.” 
 
2. Conditions Precedent. The effectiveness of this Third Amendment is subject to receipt by the Administrative Agent of each of the
following, each in form and substance satisfactory to the Administrative Agent: 
 
(a) A counterpart of this Third Amendment duly executed by the Borrowers, Guarantors, Lenders, Administrative Agent, Sole Lead Arranger, Sole Book Manager, Syndication Agent and Documentation

 

 
Agent; and

 
(b) Such other documents,
instruments and agreements as the Administrative Agent may reasonably request. 
 
3. Representations. Each of the Borrowers and each of the Guarantors collectively represent and warrant to the Administrative Agent and the Lenders that: 
 
(a) Authorization. Each of the
Borrowers and each of the Guarantors, respectively, has the right and power and has obtained all authorizations necessary to execute and deliver this Third Amendment and to perform its respective obligations hereunder and under the Credit Agreement,
as amended by this Third Amendment, in accordance with their respective terms. This Third Amendment has been duly executed and delivered by a duly authorized officers of each of the Borrowers and each Guarantor, respectively, and each of this Third
Amendment and the Credit Agreement, as amended by this Third Amendment, is a legal, valid and binding obligation of each of the Borrowers and each Guarantor (each as applicable), enforceable against each of the Borrowers and each Guarantor (each as
applicable) in accordance with its respective terms, except as the same may be limited by bankruptcy, insolvency, and other similar laws affecting the rights of creditors generally and by equitable principles generally. 
 
(b) Compliance with Laws, etc. The
execution and delivery by each of the Borrowers and each of the Guarantors of this Third Amendment and the performance by each of the Borrowers and/or the Guarantors of this Third Amendment and the Credit Agreement, as amended by this Third
Amendment, in accordance with their respective terms, does not and will not, by the passage of time, the giving of notice or otherwise: (i) require any approval (other than those already obtained) by any Governmental Authority or violate any law
(including any Environmental Law) which is applicable to a Borrower, any Guarantors, any Consolidated Party, the Credit Documents or the transactions contemplated herein or therein; (ii) conflict with, result in a breach of or constitute a default
under the organizational documents of any Borrower, any of the Guarantors or any other Consolidated Party, or any indenture, agreement/or other instrument to which any Borrower, any of the Guarantors or any other Consolidated Party is a party or by
which it or any of its respective properties may be bound; or (iii) result in or require the creation or imposition of any Lien upon or with respect to any property now owned or hereafter acquired by any Borrower, any Guarantor or any other
Consolidated Party other than in favor of the Administrative Agent for the benefit of the Lenders; and 
 
(c) No Default. No Default or Event of Default has occurred and is continuing as of the date hereof nor will exist
immediately after giving effect to this Third Amendment. 
 
4. Reaffirmation of Representations. Each of the Borrowers and each of the Guarantors hereby repeat and reaffirm all representations and warranties made by such party to the Administrative Agent and the Lenders in the Credit
Agreement and the other Credit Documents to which it is a party on and as of the date hereof (other than any representation or warranty expressly relating to an earlier date) with the same force and effect as if such representations and warranties
were set forth in this Third Amendment in full. 
 
5. Reaffirmation of Guaranty. Each of the Guarantors hereby reaffirms its continuing obligations to the Administrative Agent and the Lenders under the Credit Agreement and agrees that the transactions contemplated by this
Third Amendment shall not in any way affect the validity and enforceability of their respective guaranty obligations thereunder or reduce, impair or discharge the obligations of such Guarantors thereunder. 
 
6. Severability. If any provision of any of this
Third Amendment or of the Credit Agreement, as amended hereby, is determined to be illegal, invalid or unenforceable, such provision shall be fully severable and the remaining provisions shall remain in full force and effect and shall be construed
without giving effect to the illegal, invalid or unenforceable provisions. 
 
7. Certain References. Each reference to the Credit Agreement in any of the Credit Documents shall be deemed to be a reference to the Credit Agreement as amended by this Third Amendment and this
Third Amendment shall be deemed a Credit Document for purposes of the application of provisions of the Credit 
 

2 

 
Agreement generally applicable
thereto (including, without limitation, any arbitration provisions or waiver provisions). 
 
8. Expenses. The Borrowers shall reimburse the Administrative Agent upon demand for all reasonable costs and expenses (including reasonable attorneys’ fees) incurred by the Administrative
Agent in connection with the preparation, negotiation and execution of this Third Amendment and the other agreements and documents executed and delivered in connection herewith. 
 
9. Benefits. This Third Amendment shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. 
 
10. Default. The failure of any of the Borrowers or any of the Guarantors to perform any of their respective obligations under this Third Amendment or the material falsity of any representation or warranty made herein shall,
at the option of the Administrative Agent and/or Lenders (as determined in accordance with the Credit Agreement) after expiration of any applicable cure period, constitute an Event of Default under the Credit Documents. 
 
11. No Novation. The parties hereto intend this Third
Amendment to evidence the amendments to the terms of the existing indebtedness of the Borrowers and Guarantors to the Lenders as specifically set forth herein and do not intend for such amendments to constitute a novation in any manner
whatsoever. 
 
12. GOVERNING LAW. THIS THIRD
AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE. 
 
13. No Implied Agreements. Except as expressly herein amended, the terms and conditions of the Credit
Agreement and the other Credit Documents remain in full force and effect. The amendments contained herein shall be deemed to have prospective application only, unless otherwise specifically stated herein. 
 
14. Counterparts. This Third Amendment may be executed
in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. It shall not be necessary in making proof of this Third Amendment to produce or account
for more than one such counterpart for each of the parties hereto. Delivery by facsimile by any of the parties hereto of an executed counterpart of this Third Amendment shall be as effective as an original executed counterpart hereof and shall be
deemed a representation that an original executed counterpart hereof will be delivered. Each counterpart hereof shall be deemed to be an original and shall be binding upon all parties, their successors and assigns. 
 
15. Binding Effect. This Third Amendment shall become
effective as of the date hereof at such time when all of the conditions set forth in Section 2 hereof have been satisfied or waived by the Lenders and it shall have been executed by the Borrowers, the Guarantors and the Administrative Agent, and the
Administrative Agent shall have received copies hereof (telefaxed or otherwise) which, when taken together, bear the signatures of each Lender, and thereafter this Credit Agreement shall be binding upon and inure to the benefit of the Borrowers, the
Guarantors, the Administrative Agent and each Lender and their respective successors and assigns. 
 
16. Definitions. All capitalized terms not otherwise defined herein are used herein with the respective definitions given them in
the Credit Agreement. The interpretive. provisions set forth in Sections 1.2 and 1.3 of the Credit Agreement shall apply to this Third Amendment as though set forth herein. 
 
[Signature Pages to Follow] 
 

3 

 
IN WITNESS
WHEREOF, each of the parties hereto has caused a counterpart of this Third Amendment to be duly executed and delivered as of the date written above. 
 

	 BORROWERS:
	 	 	 	 HIGHWOODS REALTY LIMITED PARTNERSHIP

	 	 	 	 	 	 	 By: HIGHWOODS PROPERTIES, INC.

	
	 	 	 	 	 	 	 HIGHWOODS PROPERTIES, INC.

	 	 	 	 	 	 	 HIGHWOODS SERVICES, INC

	 	 	 	 	 	 	 HIGHWOODS FINANCE, LLC

	 	 	 	 	 	 	 By: HIGHWOODS PROPERTIES, INC.

	
	 	 	 	 	 	 	 HIGHWOODS/TENNESSEE HOLDINGS, L.P.

	 	 	 	 	 	 	 By: HIGHWOODS/TENNESSEE PROPERTIES, INC.

	
	 	 	 	 	 	 	 By:
	 	 /s/ Ronald P. Gibson

	 	 	 	 	 	 	 	 	 Name: Ronald P. Gibson

	 	 	 	 	 	 	 	 	 Title: President and Chief Executive Officer

	
	 GUARANTORS:
	 	 	 	 HIGHWOODS/FLORIDA GP CORP.

	 	 	 	 	 	 	 HIGHWOODS/TENNESSEE PROPERTIES, INC.

	 	 	 	 	 	 	 HIGHWOODS/FLORIDA HOLDINGS, L.P.

	 	 	 	 	 	 	 By: HIGHWOODS FLORIDA GP CORP.

	
	 	 	 	 	 	 	 PINELLAS NORTHSIDE PARTNERS, LTD.

	 	 	 	 	 	 	 By: HIGHWOODS/FLORIDA HOLDINGS, L.P.

	 	 	 	 	 	 	  By: HIGHWOODS/FLORIDA GP CORP.

	
	 	 	 	 	 	 	 PINELLAS BAY VISTA PARTNERS, LTD.

	 	 	 	 	 	 	 By: HIGHWOODS/FLORIDA HOLDINGS, L.P.

	 	 	 	 	 	 	  By: HIGHWOODS/FLORIDA GP CORP.

 
(Signatures continued on next page) 
 

 

	 DOWNTOWN CLEARWATER TOWER, LTD.
 By: HIGHWOODS /FLORIDA HOLDINGS, L.P.
 By: HIGHWOODS /FLORIDA GP CORP.

	
	 SISBROS, LTD
 By: HIGHWOODS /FLORIDA HOLDINGS, L.P.
 By: HIGHWOODS /FLORIDA GP CORP.

	
	 SHOCKOE PLAZA INVESTORS, L.C.
 By: HIGHWOODS REALTY LIMITED PARTNERSHIP
 By: HIGHWOODS PROPERTIES, INC.

	
	 RC ONE LLC
 By: HIGHWOODS SERVICES, INC.

	
	 HPI TITLE AGENCY, LLC
 By: HIGHWOODS REALTY LIMITED PARTNERSHIP
 By: HIGHWOODS PROPERTIES, INC.

	
	 ALAMEDA TOWERS DEVELOPMENT COMPANY

	 CHALLENGER, INC.

	 GUARDIAN MANAGEMENT, INC.

	 HIGHWOODS/CYPRESS COMMONS LLC
 By: AP SOUTHEAST PORTFOLIO PARTNERS, L.P.
 By: AP-GP SOUTHEST PORTFOLIO PARTNERS, L.P .
 By: HIGHWOODS REALTY GP CORP.

	
	 HIGHWOODS/INTERLACHEN HOLDINGS, L.P.
 By: HIGHWOODS /FLORIDA HOLDINGS, L.P.
 By: HIGHWOODS /FLORIDA GP CORP.

	
	 HIGHWOODS CONSTRUCTION SERVICES, LLC
 By: HIGHWOOD SERVICES, INC.

 
(Signatures continued on next page) 
 

 

	 HIGHWOODS DLF, LLC
         By: HIGHWOODS REALTY LIMITED PARTNERSHIP
                By: HIGHWOODS PROPERTIES,
INC.

	
	 HIGHWOODS DLF II, LLC
         By: HIGHWOODS REALTY LIMITED PARTNERSHIP
                By: HIGHWOODS PROPERTIES,
INC.

	
	 PAPEC RICHMOND II, LLC
         By: HIGHWOODS REALTY LIMITED PARTNERSHIP
                By: HIGHWOODS PROPERTIES,
INC.

	
	 PAPEC WESTON I, LLC
         By: HIGHWOODS REALTY LIMITED PARTNERSHIP
                By: HIGHWOODS PROPERTIES,
INC.

	
	 PAPEC WESTON II, LLC
         By: HIGHWOODS REALTY LIMITED PARTNERSHIP
                By: HIGHWOODS PROPERTIES,
INC.

	
	 PAPEC WESTON III, LLC
         By: HIGHWOODS REALTY LIMITED PARTNERSHIP
                By: HIGHWOODS PROPERTIES,
INC.

	
	 SPI SHADOW CREEK II, LLC
         By: HIGHWOODS REALTY LIMITED PARTNERSHIP
                By: HIGHWOODS PROPERTIES,
INC.

	
	 HARBORVIEW PLAZA, LLC
         By: HIGHWOODS/FLORIDA HOLDINGS, L.P.
                By: HIGHWOODS/FLORIDA GP
CORP.

	
	 SPI BROOKFIELD I, LLC
         By: HIGHWOODS REALTY LIMITED PARTNERSHIP
                By: HIGHWOODS PROPERTIES,
INC.

	
	 SPI BROOKFIELD II, LLC
         By: HIGHWOODS REALTY LIMITED PARTNERSHIP
                By: HIGHWOODS PROPERTIES,
INC.

	 SPI BUSINESS HOLDINGS, LLC
         By: HIGHWOODS REALTY LIMITED PARTNERSHIP
                By: HIGHWOODS PROPERTIES,
INC.

	
	 SPI CENTURY PLAZA III, LLC
         By: HIGHWOODS REALTY LIMITED PARTNERSHIP
                By: HIGHWOODS PROPERTIES,
INC.

	
	 SPI JEFFERSON VILLAGE, LLC
         By: HIGHWOODS REALTY LIMITED PARTNERSHIP
                By: HIGHWOODS PROPERTIES,
INC.

 

	 SPI SEVEN SPRINGS I, LLC
         By: HIGHWOODS REALTY LIMITED PARTNERSHIP
                By: HIGHWOODS PROPERTIES,
INC.

	
	 SPI TRADEPORT OFFICE III, LLC
         By: HIGHWOODS REALTY LIMITED PARTNERSHIP
                By: HIGHWOODS PROPERTIES,
INC.

	
	 SPI RALEIGH CORPORATE CENTER, LLC
         By: HIGHWOODS REALTY LIMITED PARTNERSHIP
                By: HIGHWOODS PROPERTIES,
INC.

	
	 HIGHWOODS COLONNADE, LLC
         By: HIGHWOODS REALTY LIMITED PARTNERSHIP
                By: HIGHWOODS PROPERTIES,
INC.

	
	 SPI TRADEPORT PLACE V, LLC
         By: HIGHWOODS REALTY LIMITED PARTNERSHIP
                 By: HIGHWOODS PROPERTIES,
INC.

	
	 HIWTP, LLC
         By: HIGHWOODS SERVICES, INC.

	
	 HIGHWOODS INDUSTRIAL VIRGINIA, LLC
         By: HIGHWOODS SERVICES, INC.

	
	 HIGHWOODS INDUSTRIAL NORTH CAROLINA, LLC
         By: HIGHWOODS SERVICES, INC.

	
	 GROVE PARK SQUARE, LLC
         By: HIGHWOODS SERVICES, INC.

	
	 HIGHWOODS WELLNESS CENTER, LLC
         By: HIGHWOODS SERVICES, INC.

	
	 HIGHWOODS 3322, LLC
         By  HIGHWOODS/FLORIDA HOLDINGS, L.P.
                By: HIGHWOODS/FLORIDA GP
CORP.

	
	 NICHOLS PLAZA WEST, INC.

	 OZARK MOUNTAIN VILLAGE, INC.

	 SHADOW CREEK I, LLC
         By: HIGHWOODS REALTY LIMITED PARTNERSHIP
                By: HIGHWOODS PROPERTIES,
INC.

	
	 4551 COX ROAD LLC
         By: HIGHWOODS REALTY LIMITED PARTNERSHIP
                By: HIGHWOODS PROPERTIES,
INC.

 
(Signatures continued on next page) 

 

	 4600 COX ROAD LLC
     By: HIGHWOODS/FLORIDA HOLDINGS, L.P.
            By: HIGHWOODS/FLORIDA GP CORP.

	
	 581 HIGHWOODS, L.P.
     By: HIGHWOODS/FLORIDA HOLDINGS, L.P.
            By: HIGHWOODS/FLORIDA GP CORP.

 

	
	 By:
	 	 /s/ Ronald P. Gibson

	 	 	 Name: Ronald P. Gibson
 Title: President and Chief Executive Officer

 

	 LENDERS:
	 	 	 	 BANK OF AMERICA, N.A.,
 individually in its capacity as a Lender
 and in its capacity as Administrative Agent

	
	 	 	 	 	 	 	 By:
	 	 /s/ Gretchen P. Burad

	 	 	 	 	 	 	 Name:
	 	 Gretchen P. Burad

	 	 	 	 	 	 	 Title:
	 	 Managing Director

 

	 	 	 	 	 WELLS FARGO BANK, NATIONAL ASSOCIATION

individually in its capacity as a Lender
 and in its capacity as Syndication Agent

	
	 	 	 	 	 	 	 By:
	 	 /s/ John S. Misiura

	 	 	 	 	 	 	 Name:
	 	 John S. Misiura

	 	 	 	 	 	 	 Title:
	 	 Vice President

 

	 	 	 	 	 WACHOVIA BANK, N.A.
 individually in its capacity as a Lender
 and in its capacity as Documentation Agent

	
	 	 	 	 	 	 	 By:
	 	

	 	 	 	 	 	 	 Name:
	 	

	 	 	 	 	 	 	 Title:
	 	

 

	 	 	 	 	 COMMERZBANK AG,
 NEW YORK AND GRAND CAYMAN BRANCHES
 individually in its capacity as a Lender
 and as Managing Agent

	
	 	 	 	 	 	 	 By:
	 	

	 	 	 	 	 	 	 Name:
	 	

	 	 	 	 	 	 	 Title:
	 	

 

	
	 	 	 	 	 	 	 By:
	 	

	 	 	 	 	 	 	 Name:
	 	

	 	 	 	 	 	 	 Title:
	 	

 

	 	 	 	 	 PNC BANK, NATIONAL ASSOCIATION
 individually in its capacity as a Lender
 and as a Co-Agent

	
	 	 	 	 	 	 	 By:
	 	 /s/ Timothy P. Gleeson

	 	 	 	 	 	 	 Name:
	 	 Timothy P. Gleeson

	 	 	 	 	 	 	 Title:
	 	 Assistant Vice President

 
(Signatures continued on next page) 

 

	 	 	 	 	 AMSOUTH BANK
 individually in its capacity as a Lender
 and as a Co-Agent

	
	 	 	 	 	 	 	 By:
	 	 /s/ Robert Blair

	 	 	 	 	 	 	 Name:
	 	 Robert Blair

	 	 	 	 	 	 	 Title:
	 	 Vice President Commercial Real Estate

 

	 	 	 	 	 SOUTHTRUST BANK
 individually in its capacity as a Lender
 and as a Co-Agent

	
	 	 	 	 	 	 	 By:
	 	 /s/ Ann Peck

	 	 	 	 	 	 	 Name:
	 	 Ann Peck

	 	 	 	 	 	 	 Title:
	 	 Assistant Vice President

 

	 	 	 	 	 RBC CENTURA BANK
 individually in its capacity as a Lender
 and as a Co-Agent

	
	 	 	 	 	 	 	 By:
	 	 /s/ Robert E. Hammersley, Jr.

	 	 	 	 	 	 	 Name:
	 	 Robert E. Hammersley, Jr.

	 	 	 	 	 	 	 Title:
	 	 Bank Officer

 

	 	 	 	 	 BRANCH BANKING AND TRUST COMPANY
 individually in its capacity as a Lender
 and as a Co-Agent

	
	 	 	 	 	 	 	 By:
	 	 /s/ Holger Ebert

	 	 	 	 	 	 	 Name:
	 	 Holger B. Ebert

	 	 	 	 	 	 	 Title:
	 	 SVP

 

	 	 	 	 	 ERSTE BANK, NEW YORK BRANCH
 individually in its capacity as a Lender

	
	 	 	 	 	 	 	 By:
	 	 /s/ Gregory T. Aptman

	 	 	 	 	 	 	 Name:
	 	 Gregory T. Aptman

	 	 	 	 	 	 	 Title:
	 	 Vice President

 

	
	 	 	 	 	 	 	 By:
	 	 /s/ Bryan Lynch

	 	 	 	 	 	 	 Name:
	 	 Bryan J. Lynch

	 	 	 	 	 	 	 Title:
	 	 First Vice President<PAGE>

                                                                   Exhibit 10.48

                               FIRST AMENDMENT TO
              SECOND AMENDED EXECUTIVE OFFICER EMPLOYMENT AGREEMENT

      This First Amendment to Second Amended Executive Officer Employment
Agreement ("First Amendment") is made effective as of March 1, 2003 by and
between CALLAWAY GOLF COMPANY, a Delaware corporation (the "Company") and RONALD
A. DRAPEAU ("Employee").

      A.    The Company and Employee are parties to that certain Second Amended
Executive Officer Employment Agreement entered into as of June 1, 2002 (the
"Second Amended Agreement").

      B.    The Company and Employee desire to amend the Second Amended
Agreement pursuant to Section 15 of the Second Amended Agreement, in the manner
set forth herein.

      NOW, THEREFORE, in consideration of the foregoing and other consideration,
the value and sufficiency of which are hereby acknowledged, the Company and
Employee hereby agree as follows:

      1.    Expenses and Benefits. Section 5(c)(ii) of the Second Amended
Agreement is amended to read as follows:

            "(ii) receive, if Employee is insurable under usual underwriting
standards, term life insurance coverage on Employee's life, payable to whomever
Employee directs, in an amount equal to three (3) times Employee's base salary,
not to exceed a maximum of $1,500,000.00 in coverage, provided that Employee
completes the required health statement and application and that Employee's
physical condition does not prevent Employee from qualifying for such insurance
coverage under reasonable terms and conditions;"

      2.    Termination. Sections 8(a) and 8(c) of the Second Amended Agreement
are amended as set forth below. Section 8(e), "Termination Due to Death," is
deleted, and Sections 8(f) and 8(g) are re-numbered to 8(e) and 8(f).

            "(a)  Termination at the Company's Convenience. Employee's
employment under this Second Amended Agreement may be terminated by the Company
at its convenience at any time. In the event of a termination by the Company for
its convenience, Employee shall be entitled to receive (i) any compensation
accrued and unpaid as of the date of termination; and (ii) the immediate vesting
of all unvested stock options held by Employee as of the date of such
termination. In addition to the foregoing and subject to the provisions thereof,
Employee shall be entitled to Special Severance as described in Section 19 and
Incentive Payments as described in Section 20."

            "(c)  Termination by Employee for Substantial Cause. Employee's
employment under this Second Amended Agreement may be terminated immediately by
Employee for substantial cause at any time. In the event of a termination by
Employee for substantial cause, Employee shall be entitled to receive (i) any
compensation accrued and unpaid as of the date of termination; and (ii) the
immediate vesting of all unvested stock options held by Employee as of the date
of such termination. In addition to the foregoing, and subject to the provisions
thereof, Employee shall be entitled to Special Severance as described in Section
19 and Incentive Payments as described in Section 20. "Substantial cause" shall
mean
<PAGE>
for purposes of this subsection a material breach of this Second Amended
Agreement by the Company."

            3.    But for the amendments contained herein, and any other written
amendments properly executed by the parties, the Second Amended Agreement shall
otherwise remain unchanged.

      IN WITNESS WHEREOF, the parties have executed this First Amendment on the
dates set forth below, to be effective as of the date first written above.

EMPLOYEE                                        COMPANY

                                                Callaway Golf Company,
                                                a Delaware corporation

/s/ RONALD A. DRAPEAU                       By: /s/ STEVEN C. MCCRACKEN
------------------------------------            --------------------------------
Ronald A. Drapeau                               Steven C. McCracken
                                                Senior Executive Vice President,
                                                Chief Legal Officer

Dated:                                          Dated:
        ------------------------                        -----------------------

                                       2                       Ronald A. Drapeau

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