FORBEARANCE AGREEMENT
This Forbearance Agreement (the "Agreement") is made and entered into on
March 18, 1998, by and between All-American Golf LLC, a California limited
liability company ("All-American"), Saint Xxxxxxx Golf Corporation, a Nevada
corporation ("Saint Xxxxxxx"), and Callaway Golf Company, a California
corporation ("Callaway Golf"), and is made with reference to the following
facts:
RECITALS
A. On or about June 13, 1997, All-American executed and delivered to
Callaway Golf a Secured Promissory Note in the original amount of Five Million
Two-Hundred Fifty Thousand Dollars ($5,250,000.00) (the "Note").
B. The Note is secured pursuant to a Continuing Security Agreement
dated June 13, 1997 by and between All-American and Callaway Golf (the
"Security Agreement"), a Membership Interest Security Agreement dated June 13,
1997, by and between Callaway Golf and Saint Xxxxxxx (the "Membership Interest
Security Agreement"), and a Deed of Trust dated June 13, 1997 executed by
All-American in favor of Callaway Golf securing the Indenture of Lease dated
June 13, 1997 by and between Urban Land of Nevada, a Nevada corporation, and
Callaway Golf (the "Deed of Trust") (the Note, Security Agreement, Membership
Interest Security Agreement and Deed of Trust are collectively referred to as
the "Loan Documents").
X. Xxxxxxxx Golf and Saint Xxxxxxx are also parties to that certain
Operating Agreement for All-American Golf LLC dated June 13, 1997 (the
"Operating Agreement").
D. Under the terms of the Note, All-American was obligated to
commence making payments of interest accrued on the principal outstanding
thereunder on December 21, 1997, and to make monthly installments of interest
accrued on the principal outstanding on the same day of each month thereafter
until the Maturity Date (as defined in the Note). All-American has failed to
make the monthly interest installments due on December 21, 1997, January 21,
1998 and February 21, 1998, and has advised Callaway Golf that it will be
unable to make the payments due on March 21 and April 21, 1998. There is past
due and owing on account of accrued and unpaid interest on the Note
$243,921.23 as of February 21, 1998, and including the payment due on March
21, 1998 of $43,750.00 and the payment due on April 21, 1998 of $43,750.00, as
of April 21, 1998 there will be due and owing under the Note at least
$331,421.23 (the "Arrears").
E. As a result of the failure by All-American to make the payments
referred to herein, the Note is presently in default. Callaway Golf has the
immediate and unconditional right to proceed against All-American under the
Note to collect amounts due under the Note and to exercise upon or enforce its
rights to its collateral as set forth in the Loan Documents.
F. All-American and Saint Xxxxxxx have requested Callaway Golf to
forbear from proceeding against All-American and Saint Xxxxxxx under the Note
and other Loan Documents and in connection therewith, have agreed to certain
terms and conditions to provide the inducement for such forbearance.
G. In addition, Saint Xxxxxxx has requested that Callaway Golf extend
certain financial accommodations to All-American SportPark, Inc.
("SportPark"), a wholly-owned subsidiary of Saint Xxxxxxx.
ACCORDINGLY, in consideration of Callaway Golf's forbearing from
immediately proceeding against All-American and Saint Xxxxxxx under the Note
and other Loan Documents, in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration,
receipt of which is hereby acknowledged, the parties hereby agree as follows:
1. Forbearance. Callaway Golf hereby agrees it will forbear from
proceeding against All-American and Saint Xxxxxxx under the Note and other
Loan Documents, subject to the terms and conditions hereinbelow contained:
1.1 Callaway Golf's agreement to forbear is expressly
conditioned upon the following:
(a) All-American shall timely make each payment due under
the Note, commencing with the payment due on May 21, 1998.
(b) In addition to the regularly scheduled Note payments,
simultaneously with the making of each regularly scheduled payment under the
Note, commencing with the payment due on May 21, 1998, All-American shall make
additional monthly payments under the Note of $36,824.81, or more, to cure the
Arrears, and shall continue to make such payments on the same day of each
month thereafter until January 21, 1999, at which time All-American shall make
a payment to Callaway Golf in an amount sufficient to pay in full the
remaining unpaid Arrears.
(c) In addition to the foregoing payments, on the tenth
(10th) day of each month, commencing on June 10, 1998, and on the same day of
each month thereafter until the Arrears shall be paid in full, All-American
shall make an additional payment (each an "Excess Payment") to be applied to
the Arrears in an amount equal to that amount that Cash from Operations (as
defined in the Operating Agreement) for the previous calendar month shall
exceed $300,000.00. The payment of any Excess Payment shall not release
All-American from thereafter tendering all regularly scheduled monthly
payments required as a condition to the forbearance hereunder.
(d) All-American's and Saint Xxxxxxx' continued compliance
with the terms of the Loan Documents, subject, however, to the provisions of
paragraphs 1.1(a), (b) and (c) above.
1.2 Callaway Golf's agreement of forbearance shall expire on
January 21, 1999 unless sooner terminated as provided herein or unless
extended by written agreement between the parties.
1.3 Notwithstanding Callaway Golf's agreement to forbear,
Callaway Golf may (but shall not be obligated to) at any time take any action
for the following purposes:
(a) To protect or preserve any of the security for the
Note;
(b) To appear in and defend any action affecting any of
such security;
(c) To take any action to effect the purposes and intent
of this Agreement.
2. Further Covenants. All-American and Saint Xxxxxxx further agree
as follows:
2.1 All-American and Saint Xxxxxxx shall execute any and all
documents and take any action reasonably requested by Callaway Golf to
effectuate the terms of this Agreement.
2.2 That although Callaway Golf by this document agrees on
certain conditions to forbear from exercising remedies under the Note and
other Loan Documents, Callaway Golf has not waived any default or defaults or
claims or rights that may exist now or may occur in the future except as
otherwise provided herein; Callaway Golf does not waive or acquiesce, and this
Agreement shall not be construed as a waiver or acquiesce in, any default or
event of default under any agreement entered into between Callaway Golf and
All-American or Saint Xxxxxxx; no failure to exercise and no delay in
exercising, on the part of Callaway Golf, any right, remedy, power or
privilege hereunder or under any other Loan Documents shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder or thereunder preclude any other right, remedy,
power or privilege or constitute an election of remedy; and the rights,
remedies, powers and privileges hereunder and therein are cumulative and not
exclusive of any rights, remedies, powers or privileges provided by law.
2.3 During the time period in which the forbearance under
paragraph 1 above shall remain in effect, All-American and Saint Xxxxxxx agree
that any applicable statute of limitations to any cause or causes of action
which Callaway Golf may have or hereafter acquire against All-American or
Saint Xxxxxxx under or in connection with the Note or other Loan Documents
shall be tolled.
2.4 That each of the terms of the Note and other Loan Documents
are hereby ratified and reaffirmed unconditionally, and shall remain in full
force and effect.
3. Miscellaneous.
3.1 This Agreement is entered into without any party having
relied on any statement or representation of any adverse party. Each party
represents and warrants that that party has been represented by legal counsel
of that party's own free choice and that counsel has explained to that party
the full legal effect of this Agreement and the arrangements referred to
herein.
3.2 The parties hereto confirm the accuracy of the Recitals set
forth above, each of which are incorporated herein by reference.
3.3 All representations, warranties, agreements and covenants
made in this Agreement shall survive the closing and termination of this
Agreement notwithstanding any investigation at the time made by or on behalf
of either party.
3.4 This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof. Except as otherwise
specifically provided herein, no change, modification, addition or termination
of this Agreement or any part hereof shall be valid unless it is in writing
and signed by or on behalf of the party to be charged therewith.
3.5 No waiver of any provision of this Agreement shall be
effective unless in writing and signed by the parties to be charged with such
waiver, and no waiver shall be deemed a continuing waiver or a waiver in
respect to any subsequent breach or default either of a similar or of a
different nature, unless expressly stated in writing.
3.6 This Agreement shall be binding upon and shall inure to the
benefit of the respective administrators, representatives, partners,
partnerships, subsidiary organizations, successors, assignees of each of the
parties hereto, and all other persons, firms, corporations, associations,
partnerships or other entities wherever the context requires or admits.
3.7 The parties hereto acknowledge that simultaneously herewith
the Membership Interest Security Agreement is being modified to include as an
additional "Secured Obligation" as defined thereunder Saint Xxxxxxx'
obligations under a Guaranty dated March 18, 1998, pursuant to which Saint
Xxxxxxx is guarantying all obligations of SportPark to Callaway Golf under a
Promissory Note dated March 18, 1998 in the original stated principal amount
of Three Million Dollars ($3,000,000.00) executed by SportPark in favor of
Callaway Golf. The parties hereto consent to the modification of the
Membership Interest Security Agreement and acknowledge and agree that (a)
references to the Membership Interest Security Agreement in the Loan Documents
shall include such agreement as it may be modified or amended from time to
time, (b) an event of default under the Guaranty is a default under the
Membership Interest Security Agreement (as amended) and that an event of
default under the Membership Interest Security Agreement is a default under
all of the Loan Documents, and (c) Callaway Golf may apply all recoveries
under the Membership Interest Security Agreement to the Secured Obligations
(as defined thereunder) in such order and in such amounts as Callaway Golf may
determine in its sole and absolute discretion.
3.8 This Agreement shall not be construed nor is it intended as
an amendment or modification of the Note or other Loan Documents, but rather
it simply memorializes the terms and conditions under which Callaway Golf is
willing to temporarily forbear from exercising certain of its rights and
remedies under the Note and other Loan Documents.
3.9 Callaway Golf's agreement to forbear shall terminate
immediately on the earlier to occur of (a) January 21, 1999, or (b)
All-American's or Saint Xxxxxxx' default in the performance of or failure to
comply with any of the terms or conditions hereof, or (c) the filing of a
petition for relief under Title 11 of the United States Code or any successor
provision by or against All-American or Saint Xxxxxxx. Upon such termination,
and at all times thereafter, Callaway Golf may proceed to enforce any and all
of its rights and remedies provided by the Note, this Agreement and the other
Loan Documents or as otherwise provided by law.
3.10 The obligations of each of the parties hereto are joint and
several.
3.11 In the event any litigation or contested proceeding arises
between or among any party or parties to this Agreement relating to this
Agreement, the prevailing party shall be entitled to recover, in addition to
the cost provided by law, all actual costs, expenses and attorney's fees
incurred, including any costs or attorney's fees incurred in connection with
any bankruptcy, liquidation, reorganization or other debtor-relief proceeding
of any party hereto.
3.12 This Agreement shall be construed and enforced in accordance
with California law.
3.13 This Agreement may be executed by one or more of the parties
in any number of separate counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. This
Agreement shall not be effective until executed by all parties hereto.
Executed at San Diego, California on the date first above written.
ALL-AMERICAN GOLF LLC,
a California limited liability company
By: SAINT XXXXXXX GOLF CORPORATION,
a Nevada corporation, Managing Member
By:______________________________________
Xxx Xxxxxx, President
SAINT XXXXXXX GOLF CORPORATION,
a Nevada corporation
By:_______________________________
Xxx Xxxxxx, President
CALLAWAY GOLF COMPANY,
a California corporation
By:_______________________________
Xxxxxx X. Xxx, President and
Chief Executive Officer
