EXHIBIT "C"
CONTINUING SECURITY AGREEMENT
This Continuing Security Agreement ("Agreement") is made and entered into
as of June 13, 1997 by and between Callaway Golf Company, a California
corporation ("Callaway Golf") and All-American Golf LLC, a California limited
liability company (the "Company"), with respect to the following facts:
▇. ▇▇▇▇▇▇▇▇ Golf has agreed to make a loan to the Company pursuant to
the terms of the Secured Promissory Note dated June 13, 1997 in the original
principal amount of $5,250,000 by and between the Company, as maker, and
Callaway Golf, as holder (the "Note").
▇. ▇▇▇▇▇▇▇▇ Golf has required, as a condition to making the loans, that
the Company secure its obligations under the Note by granting a security
interest to Callaway Golf in certain of the Company's assets.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants contained herein, and for other good and valuable consideration the
receipt and adequacy of which are hereby acknowledged, the parties agree as
follows.
1. Property Subject To Security Interest. The Company hereby grants
and transfers to Callaway Golf, a security interest in the Company's right,
title and interest in, to and under the property described on Exhibit "A"
attached hereto and incorporated herein by this reference, now owned or
hereafter acquired by the Company (the "Collateral").
2. Obligations Secured. This Agreement and security interest hereunder
is granted to secure the payment of all indebtedness under and the performance
of all obligations of the Company under this Agreement and the Note, and all
extensions, modifications, substitutions, replacements and renewals thereof
(collectively, the "Secured Obligations").
3. The Company's Representations And Warranties. The Company hereby
represents and warrants as follows:
3.1 No Liens. The Company is the sole owner of the Collateral and
there are no liens or encumbrances or adverse claims whatsoever on or against
the Collateral, or any part thereof, created or incurred by the Company. The
Company will not transfer, pledge, sell or dispose of any interest or permit
any lien or encumbrance to be placed on the Collateral during the term of this
Agreement without the prior written consent of Callaway Golf.
3.2 Taxes. The Company will pay, prior to delinquency, all taxes,
liens and assessments of any kind whatsoever levied or assessed against the
Collateral or any part thereof and should the Company fail to do so, Callaway
Golf may pay the same, at its option, and any amount so paid shall bear
interest at the same rate as the Note and said amount of interest shall be
secured hereby and shall be immediately repayable by the Company to Callaway
Golf.
3.3 Maintenance and Insurance. The Company will at all times
maintain the Collateral essential to the conduct of its business in good
condition and repair, ordinary wear and tear excepted. The Company will keep
the Collateral insured against all loss by fire, theft and other risks,
liabilities and perils in form and amounts customary in the industry and with
companies of recognized standing. Any such insurance policies shall provide
for the loss proceeds to be payable to Callaway Golf as its interest may
appear, and shall provide for at least thirty (30) days written cancellation
notice to Callaway Golf. In the event the Company does not procure such
insurance required hereunder upon being requested to do so, Callaway Golf may
do so, at its option, and any sums expended for insurance premiums shall bear
interest at the same rate as the Note and said amount of interest shall be
secured hereby and shall be immediately repayable by the Company to Callaway
Golf.
3.4 Location of Collateral. The Company will keep the Collateral
separate and identifiable and will not sell, lease, transfer, hypothecate,
consign or permit or suffer any lien, attachment, judgment or other judicial
or involuntary lien against, or otherwise dispose of, the Collateral or any
part thereof outside the ordinary course of business without Callaway Golf's
prior written consent, which consent may be given or withheld in its sole and
absolute discretion. The Company will not grant any security interest to any
other party on any of the Collateral or any part thereof without Callaway
Golf's prior written consent, which consent may be given or withheld in its
sole and absolute discretion. The Company shall not remove any Collateral
from its existing location without the prior written consent of Callaway Golf.
3.5 Location and Inspection of Records. The address of the chief
executive office and chief place of business of the Company is its address set
forth in Section 7 hereof, and the Company has no other places of business
except as disclosed to Callaway Golf. All records pertaining to accounts and
contracts (including computer records) of the Company are kept at its chief
executive office, and the Company will notify Callaway Golf, no later than
thirty (30) days prior to any change in address of the chief executive office
or chief place of business of the Company or the change of the location of any
of the Collateral or records pertaining thereto. Callaway Golf may, upon
prior notice, during normal business hours and at reasonable intervals,
examine any of the Company's records, books, accounts, ledgers and assets of
any kind, and may take copies therefrom and may utilize any duplication
equipment located on the premises.
3.6 Compliance with Other Agreements. The Company will perform all
acts and comply with all terms of any agreement, the performance of and/or
compliance with which are secured by a lien that is, or appears to be,
superior, prior, subordinate, or subsequent to the security interest created
hereby.
3.7 Defense of Claims. The Company at its own cost and expense will
defend the Collateral against all claims, liens, security interests, demands
and other encumbrances of third parties which may affect Callaway Golf's
security interest in, or Callaway Golf's title to, any Collateral.
3.8 Notice. The Company will promptly notify Callaway Golf in the
event of any damage to or loss of any material portion of the Collateral or
any part thereof from any source whatsoever.
3.9 Further Assurances. The Company will execute any and all
further agreements, assignments, documents and financing statements that
Callaway Golf may reasonably request from time to time in order to perfect or
continue the security interest of Callaway Golf in the Collateral or otherwise
carry out the purposes and intent of this Agreement.
3.10 Operation of Business. The Company will at all times operate
the Company's business in a manner consistent with any and all rules,
regulations and statutes of governmental agencies having jurisdiction over the
Company's business applicable to the operation of such a business and will
comply with any and all requirements specified by companies insuring the
Collateral, or any part thereof, as conditions for such insurance.
3.11 No Additional Consent; Valid and Binding Obligation. No
consent, authorization, approval or other action by, and no notice to or
filing with, any governmental authority, regulatory body, or other person or
entity is required either (i) for the grant by the Company of the security
interest granted hereby or for the execution, delivery or performance of this
Agreement by the Company or (ii) for the perfection or exercise by Callaway
Golf of Callaway Golf's rights and remedies hereunder, other than the filings
of UCC-1 financing statements by Secured Party and any necessary continuations
thereof. This Agreement is the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, and other similar laws
affecting creditors' rights generally.
3.12 Maintenance of Business. Following the occurrence and during
the continuation of a "default," as defined in Section 4 below, or of an event
that, with the giving of notice or the lapse of time, or both, would
constitute such a default, Callaway Golf may take, and at Callaway Golf's
direction, the Company shall take, at the Company's expense, such action as
Callaway Golf may deem necessary or advisable to enforce collection of all
amounts due or to become due to the Company. If any default shall have
occurred and be continuing, Callaway Golf shall have the right, with respect
to agreements constituting Collateral, (i) to direct the obligor(s) under such
agreements to make payment of all amounts due or to become due thereunder
directly to Callaway Golf or to a post office lock box under Callaway Golf's
sole control, and/or (ii) to require that all amounts received by the Company
in respect of such agreements be received in trust for the benefit of Callaway
Golf and be segregated from other funds of the Company. Any amounts so
segregated shall, at Callaway Golf's request, be forthwith paid over to
Callaway Golf to be held as Collateral and either (A) released to the Company
after payment in full of all Secured Obligations, or (B) if any such default
shall have occurred and be continuing, applied as provided in Section 6.2, at
Callaway Golf's option. If Callaway Golf notifies the Company of Callaway
Golf's intention to direct such obligor(s) to make payments directly to
Callaway Golf and/or to a post office lock box and/or to require the Company
to segregate and hold such payments in trust, the Company shall enter into
written agreements satisfactory to Callaway Golf to implement such intention.
3.13 Attorney-in-Fact. To the extent allowed by law, the Company
hereby irrevocably appoints Callaway Golf, acting singly, as the Company's
attorney-in-fact, with full authority in the place and stead of the Company
and in the name of the Company, Callaway Golf, or otherwise, from time to time
in Callaway Golf's discretion, if a default shall have occurred and be
continuing, to take any action and to execute any instrument that Callaway
Golf may deem necessary or advisable to accomplish the purposes of this
Agreement (subject to the rights of the Company under Section 3.12), including
without limitation:
(a) to obtain and adjust insurance required to be maintained
pursuant to this Agreement in respect of any of the Collateral:
(b) to ask, demand, collect, ▇▇▇ for, recover, compound,
receive, and give acquittance and receipts for, money due and to become due
under or in respect of any of the Collateral;
(c) to receive, endorse, and collect any drafts or other
instruments and documents in connection with clauses (a) and (b) above; and
(d) to file claims or take any action or institute any
proceedings that the Callaway Golf may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
Callaway Golf with respect to any of the Collateral.
3.14 Callaway Golf May Perform. If the Company fails to perform
any agreement contained herein, or in the Note, then Callaway Golf may
perform, or cause the performance of, such agreement, and the expenses of
Callaway Golf incurred in connection therewith shall be payable by the Company
under Section 8.2 below.
3.15 Callaway Golf's Duties. The powers conferred on Callaway Golf
hereunder are solely to protect the interests of Callaway Golf in the
Collateral, and shall not impose any duty upon Callaway Golf to exercise any
such powers. Except for the safe custody of any Collateral in its possession
and the accounting for moneys actually received by it hereunder, Callaway Golf
shall have no duty as to any Collateral or as to the taking of any necessary
steps to preserve rights against prior parties or any other rights pertaining
to any Collateral.
4. Acts Constituting Default.
4.1 Events of Default. The happening of any of the following
events, at the option of Callaway Golf, shall constitute a default by the
Company under this Agreement:
(a) if any warranty or representation made by the Company
herein proves to have been false in any material respect when made;
(b) failure by the Company to keep or perform any of the terms,
covenants or conditions of this Agreement, and such monetary failure is not
cured within ten (10) days of written notice by Callaway Golf to the Company,
and such non-monetary failure is not cured within thirty (30) days written
notice by Callaway Golf to the Company;
(c) the levy of any attachment, execution or other process
against the Company or against the Collateral, or any part thereof, and the
failure of removal of such process within sixty (60) days;
(d) an Event of Default shall occur under the Note;
(e) a default or event of default shall occur under the Deed of
Trust dated June 13, 1997 executed by the Company 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 the Company, or a default or event of
default shall occur under the Membership Interest Security Agreement dated
June 13, 1997 by and between Saint ▇▇▇▇▇▇▇ Golf Corporation and Callaway Golf;
(f) the loss, theft, damage, destruction, or sale to or of the
Collateral or any part thereof which is not replaced with other property of a
value at least equal to that lost, which property shall become subject to this
Agreement; or
(g) if the Company shall make a general assignment for the
benefit of creditors, or shall admit in writing its inability to pay its debts
as they become due, or shall file or have filed against it a petition for
relief under any chapter or provision of the Bankruptcy laws of the United
States, as amended from time to time, or shall be adjudged a bankrupt or
insolvent, or shall file a petition, complaint, pleading, certificate, formal
request or matter of a similar nature seeking any reorganization, arrangement,
composition, liquidation, dissolution or financial relief of a similar nature
under any present or future statute, law or regulation, or shall file an
answer or response admitting or not contesting the material allegations of a
petition or other document filed against it in any proceeding commenced for
the purpose of affecting the Company's rights or creditors' remedies; and in
the case of any such proceeding commenced by any other person or entity
against the Company, or in the event that a receiver, trustee or other court
officer or administrative officer is appointed for the purpose of taking
possession of all or any part of the Collateral, or of the premises of the
Company, or the Company's successors or assigns, or any interest of the
Company or the Company's successors or assigns in the Collateral, and said
proceeding is not terminated or discharged within forty-five (45) days of its
commencement or said receiver, trustee, court officer or administrative
officer is not removed within forty-five (45) days of such appointment.
5. Callaway Golf's Remedies Upon Default. Upon a default by the
Company, as set forth above, Callaway Golf may do any one or more of the
following, in addition to all of its other rights and remedies, all of which
shall be cumulative:
(a) declare the entire indebtedness under the Note and this
Agreement immediately due and payable;
(b) exercise all rights and remedies of a secured party under
the California Uniform Commercial Code;
(c) require the Company to assemble the Collateral and make it
available to Callaway Golf;
(d) enter and/or remain upon the premises of the Company
without any obligation to pay rent to the Company, or any other place or
places where any of the Collateral is located and kept;
(e) enter upon the Company's premises where the Collateral is
kept and possess and remove the same without legal process if Callaway Golf
can do so without a breach of the peace or proceed by legal action to obtain
possession;
(f) proceed against the Company for any deficiency after
proceeding against the Collateral;
(g) incur expenses, including reasonable attorneys' fees and
costs including, but not by way of limitation, any fees and costs incurred in
any bankruptcy, liquidation, receivership or other debtor-relief proceeding by
the Company or relating to any of the Collateral, in the exercise of any right
or remedy hereunder.
6. Disposition of Collateral
6.1 Notice of Public Sale. Unless the Collateral is perishable or
threatens to decline speedily in value or is of the type customarily sold on a
recognized market, Callaway Golf will give the Company at least 5 days' prior
written notice of the time and place of any public sale thereof, or of the
time on or after which any private sale or other intended disposition thereof
is to be made.
6.2 Use of Proceeds. The proceeds of any disposition of Collateral
shall be applied in the following priority:
(a) to pay reasonable expenses of taking, holding, preparing
for sale, selling, leasing and the like, including reasonable attorneys' fees
and legal expenses incurred by Callaway Golf;
(b) to satisfy the indebtedness secured by this Agreement; and
(c) to satisfy any indebtedness secured by any subordinate
security interest in the Collateral, if written notification or demand
therefor is received before distribution of the proceeds is completed. In the
event the Collateral is sold or otherwise disposed of as aforesaid and a
sufficient sum is not realized to pay in full all indebtedness secured by this
Agreement after application of the proceeds as aforesaid, the Company promises
and agrees to pay to Callaway Golf any deficiency.
7. Notices. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telecopied or telex
communication) and mailed or telegraphed or telecopied or delivered to the
parties at their respective addresses as set forth below, or, as to each
party, at such other address as shall be designated by such party in a written
notice to the other parties complying as to delivery with the terms of this
Section 7. All such notices and communications, if mailed, shall be effective
upon deposit in the United States mail, first-class (or certified) postage
prepaid; if telegraphed or telecopied, shall be effective when transmitted, if
sent by telex, shall be effective when the telex is sent and the appropriate
answer back is received, and if delivered in another way, shall be effective
upon receipt.
(a) If to the Company, then to:
All-American Golf, LLC
c/o Saint ▇▇▇▇▇▇▇ Golf Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Callaway Golf, then to:
Callaway Golf Company
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇, President and
Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
8. Miscellaneous.
8.1 Indemnity. The Company agrees to indemnify, defend and hold
harmless, Callaway Golf and its officers, directors, employees, shareholders
and agents, from and against any and all claims, losses, and liabilities
growing out of, or resulting from, this Agreement (including, without
limitation, enforcement of this Agreement), except claims, losses or
liabilities resulting from Callaway Golf's gross negligence or willful
misconduct.
8.2 Expenses. The Company shall upon demand pay to Callaway Golf
the amount of any and all reasonable expenses, including the reasonable fees
and disbursements of counsel and/or any experts and agents, that Callaway Golf
may incur in connection with (i) the administration of this Agreement, (ii)
the inspection, custody, preservation, use, or operation of, the sale of, the
collection from, or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of Callaway Golf hereunder, or
under the Note, or under any judgment awarded to Callaway Golf in respect of
its rights hereunder, or under the Note (which obligation shall be severable
from the remainder of this Agreement and shall survive the entry of any such
judgment), or (iv) the failure of the Company to perform or observe any of the
provisions of this Agreement, or under the Note, or the failure of any
representation or warranty of the Company made in or pursuant to this
Agreement to be true and correct in all respects. The foregoing shall include
any and all expenses and fees incurred by Callaway Golf in connection with a
bankruptcy, reorganization, receivership, or similar debtor-relief proceeding
by or affecting the Company or any of the Collateral.
8.3 Survival. All covenants, agreements, representations, and
warranties made herein, and in documents delivered pursuant hereto, or in
connection herewith, shall be deemed to have been material and relied upon by
Callaway Golf and shall survive the execution and delivery to Callaway Golf.
8.4 Time. Time is of the essence of this Agreement.
8.5 No Waiver. No course of dealing between the Company and
Callaway Golf, or failure, neglect, or delay by Callaway Golf in exercising
any and all of Callaway Golf's rights hereunder shall operate as a waiver,
forfeiture or abandonment of any such right except only to the extent
expressly waived in writing.
8.6 Rights Cumulative. All rights and remedies provided in this
Agreement shall be cumulative and may be exercised and enforced without notice
or demand being first made to the Company.
8.7 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
California without giving any effect to principles of conflict of laws. Any
action or legal proceeding arising out of this Agreement may be brought in a
state or federal court of competent jurisdiction located in the County of San
Diego, State of California, and by executing this Agreement the parties
expressly consent and submit themselves to the jurisdiction of such courts.
8.8 No Assignment by the Company. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors
and assigns, provided that the Company may not assign, transfer, or delegate
its obligations hereunder without the prior written consent of Callaway Golf,
which consent may be given or withheld in Callaway Golf's sole discretion.
8.9 Entire Agreement. This Agreement, the Note and other documents
executed simultaneously herewith constitute the full and entire understanding
and agreement between the parties with regard to the subject matter hereof,
and supersede all prior agreements, understandings, inducements or conditions,
express or implied, oral or written, relating to the subject matter hereof.
The express terms hereof control and supersede any course of performance or
usage of trade inconsistent with any of the terms hereof.
8.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding
when one or more counterparts hereof, individually or taken together, shall
bear the signatures of all of the parties reflected hereon as the signatories.
8.11 Severability. In case any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable under any
particular circumstances or for any reason whatsoever, (i) the validity,
legality and enforceability of the remaining provisions of this Agreement, or
the validity, legality or enforceability under any other circumstances shall
not in any way be affected or impaired thereby and (ii) to the fullest extent
possible consistent with applicable law, the provisions of this Agreement
shall be deemed revised, and shall be construed so as to give effect to the
intent manifested by this Agreement.
8.12 Rights Cumulative; No Waiver. Callaway Golf's options,
powers, rights, privileges, and immunities specified herein or arising
hereunder are in addition to, and not exclusive of, those otherwise created or
existing now or at any time, whether by contract, by statute, or by rule of
law. Callaway Golf shall not, by any act, delay, omission, or otherwise, be
deemed to have modified, discharged, or waived any of Callaway Golf's options,
powers, or rights in respect of this Agreement, and no modification,
discharge, or waiver of any such option, power, or right shall be valid unless
set forth in writing signed by Callaway Golf or Callaway Golf's authorized
agent, and then only to the extent therein set forth. A waiver by Callaway
Golf of any right or remedy hereunder on any one occasion shall be effective
only in the specific instance and for the specific purpose for which given,
and shall not be construed as a bar to any right or remedy that Callaway Golf
would otherwise have on any other occasion.
8.13 Headings. The section heading used in this Agreement are
intended principally for convenience and shall not by themselves determine the
rights and obligations of the parties to this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
CALLAWAY GOLF COMPANY, a California
corporation
By:
▇▇▇▇▇▇ ▇. ▇▇▇, President and Chief
Executive Officer
ALL-AMERICAN GOLF LLC, a California
limited liability company
By: SAINT ▇▇▇▇▇▇▇ GOLF CORPORATION,
a Nevada corporation,
Managing Member
By:
▇▇▇ ▇▇▇▇▇▇, President
EXHIBIT "A"
DESCRIPTION OF COLLATERAL
The following property of the Company, presently owned or hereafter
arising or acquired, wherever located:
(a) All rights, title, and interest under that certain Service ▇▇▇▇
License Agreement dated June 13, 1997 by and between the Company and Callaway
Golf.
(b) All rights, title and interest under the Indenture of Lease dated
June 13, 1997 by and between Urban Land of Nevada, a Nevada corporation, and
the Company.
(c) All accounts, including, without limitation, all accounts
receivable, book debts, and other form of obligations (to the extent not
constituting obligations evidenced by chattel paper, documents or
instruments), now owned or hereafter received or acquired by or belonging or
owing to the Company, whether arising out of goods sold or services rendered
by the Company or from any other transaction, and all of the Company's rights
in, to, and under all purchase orders or receipts now owned or hereafter
acquired by the Company for goods or services, and all of the Company's rights
to any goods represented by any of the foregoing (including, without
limitation, unpaid seller's rights of rescission, replevin, reclamation, and
stoppage in transit and rights to returned, reclaimed or repossessed goods),
and all monies due or to become due to the Company under all purchase orders
and contracts for the sale of goods or the performance of services, or both,
by the Company (whether or not yet earned by performance on the part of the
Company or in connection with any other transaction), now in existence or
hereafter occurring including, without limitation, the right to receive the
proceeds of said purchase orders and contracts, and all collateral security
and guarantees of any kind given by any person or entity with respect to any
of the foregoing.
(d) All chattel paper now owned or hereafter acquired by the Company.
(e) All documents now owned or hereafter acquired by the Company.
(f) All equipment now or hereafter owned or acquired by the Company,
including, without limitation, all machinery, equipment, furnishings, vehicles
and computers and other electronic data processing and other office equipment,
and any and all addition to, substitution for, and replacements of any of the
foregoing, wherever located, together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto.
(g) All fixtures now or hereafter owned or acquired by the Company,
including, without limitation (regardless of where located), all of the
fixtures, systems, machinery, apparatus, equipment, and fittings of every kind
and nature whatsoever and all appurtenances and additions thereto and
substitutions therefor or replacements thereof, now or hereafter attached or
affixed to or constituting a part of, or located in or upon, real property,
together with all right, title, and interest of the Company in and to all
extensions, improvements, betterments, renewals, substitutes and replacements
of, and all additions and appurtenances to, any of the foregoing property and
all conversions of the security constituted thereby immediately upon any
acquisition or release thereof or any such conversion, as the case may be.
(h) All general intangibles now owned or hereafter acquired by the
Company, including, without limitation, all right, title, and interest that
the Company may now or hereafter have in or under any contract, all customer
lists, trademarks, service marks, patents, rights in intellectual property,
interests in partnerships, joint ventures, and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, databases,
data, skill, expertise, recipes, experience, processes, models, drawings,
materials and records, goodwill (including, without limitation, the goodwill
associated with any trademark, service ▇▇▇▇, trademark or service ▇▇▇▇
registration or trademark or service ▇▇▇▇ licensed under any trademark or
service ▇▇▇▇ license), claims in or under insurance policies (including,
without limitation, any unearned premiums), partnership interests, membership
interests, deposit accounts, rights to receive tax refunds and other payments
(whether payment in money or payment in kind), repayment rights, and security
interests (and other rights) of the Company relating to advances made,
expenses incurred, and services rendered by the Company to or for the benefit
of third parties (including, without limitation, all rights with respect to
any statutory or common law lien or trust), and rights of indemnification.
(i) All instruments now owned or hereafter acquired by the Company,
including, without limitation, all notes, certificated securities, and other
evidences of indebtedness, to the extent not constituting chattel paper.
(j) All inventory now owned or hereafter acquired by the Company,
including, without limitation, all inventory, merchandise, goods and other
personal property held by or on behalf of the Company for sale or lease or
furnished or to be furnished under a contract of service or that constitute
raw materials, work in process, or materials used or consumed or to be used or
consumed in the Company's business or the processing, packing, packaging,
labeling, promotion, delivery, or shipping of the same, and all finished
goods.
(k) All financial assets, investment property, securities accounts,
securities and security entitlements now owned or hereafter acquired by the
Company, and all interest, earnings, dividends and proceeds thereof.
(l) All other goods and personal property of the Company, whether
tangible or intangible and whether now or hereafter owned or existing, leased,
consigned by or to, or acquired by, the Company and wherever located,
including, without limitation (to the extent not described above), all farm
products, deposit accounts, cash, and any beneficial interest of the Company
under any trust.
(m) All or the foregoing, now owned or hereafter acquired or arising.
All of the property described above, together with the proceeds and
products thereof (and proceeds and products of proceeds and products), is
herein collectively called the "Collateral." Notwithstanding anything else
contained in this Exhibit, the "Collateral" shall exclude all hazardous or
toxic (i.e., deleterious to either the environment or to health) wastes.
EXHIBIT "D"
MEMBERSHIP INTEREST SECURITY AGREEMENT
This Membership Interest Security Agreement (the "Agreement") is made and
entered into as of June 13, 1997, by and between Saint ▇▇▇▇▇▇▇ Golf
Corporation, a Nevada corporation ("Saint ▇▇▇▇▇▇▇"), and Callaway Golf
Company, a California corporation ("Callaway Golf"), with respect to the
following facts:
A. All-American Golf LLC, a California limited liability company (the
"Company"), is indebted to Callaway Golf pursuant to that certain Secured
Promissory Note dated June 13, 1997 in the original principal amount of Five
Million Two Hundred Fifty Thousand Dollars ($5,250,000.00) (as amended,
renewed, modified or replaced, the "Note"), in favor of Callaway Golf.
Callaway Golf has requested and Saint ▇▇▇▇▇▇▇ has agreed to grant to Callaway
Golf a security interest in the "Collateral" defined herein to secure the
obligations of the Company to Callaway Golf in respect of the Note. But for
entering into this Agreement, Callaway Golf would not make the loan (the
"Loan") to the Company evidenced by the Note.
B. Pursuant to the terms of that Operating Agreement for All-American
Golf LLC dated June 13, 1997, as amended, restated, modified or supplemented
from time to time (the "Operating Agreement"), Saint ▇▇▇▇▇▇▇ is the owner of
eighty percent (80%) of the membership interests in the Company.
NOW, THEREFORE, in consideration of the premises, and to induce and in
consideration of the Loan or other financial considerations, Saint ▇▇▇▇▇▇▇
hereby agrees for the benefit of Callaway Golf, its successors and assigns, as
follows:
1. Grant of Security Interest. As security for the full and prompt
performance and payment of all of the Secured Obligations described and
defined in Section 3 of this Agreement, Saint ▇▇▇▇▇▇▇ hereby assigns,
transfers and pledges to Callaway Golf, and grants a security interest to
Callaway Golf in, the following property, now owned or hereafter acquired or
arising (collectively the "Collateral"): (i) Saint ▇▇▇▇▇▇▇' entire interest
as a member in the Company, whether now owned or hereafter acquired, including
all right, title and interest of Saint ▇▇▇▇▇▇▇ as a member in the Company and
all rights and interests of any kind or nature under the Operating Agreement
as a member, including without limitation all voting, inspection, management
and rights in specific Company property; (ii) any and all obligations of the
Company to Saint ▇▇▇▇▇▇▇ as a member or on account of Saint ▇▇▇▇▇▇▇'
membership interest of any kind whatsoever, including without limitation, all
accounts, fees, general intangibles, chattel paper, documents, and promissory
notes and other instruments, including all rights with respect to any security
therefor or guaranties or other securities in respect thereof; and (iii) all
dividends, distributions and earnings arising out of any of the foregoing and
all additions, replacements and substitutions to any and all of the foregoing,
including, without limitation, any and all new or substituted or additional
cash, securities, instruments, chattel paper, general intangibles or other
property, tangible or intangible, distributed with respect to any of the
foregoing property or other property subject to this Agreement for any reason
whatsoever, and all proceeds of any and all of the foregoing (collectively,
the "Proceeds"). Saint ▇▇▇▇▇▇▇ also agrees to execute such other assignments
of Saint ▇▇▇▇▇▇▇' membership interests in such form and content as requested
by Callaway Golf.
2. Additional Collateral. Upon the acquisition by Saint ▇▇▇▇▇▇▇ of any
additional interest of any kind or nature in the Company, such interest shall
become part of the Collateral without any further action by any person. If at
any time after the date hereof all or any portion of the Collateral shall be
represented or evidenced by certificates, promissory notes or other
instruments, all such certificates, promissory notes or instruments
representing or evidencing the Collateral shall be delivered to and held by
Callaway Golf pursuant hereto and shall be (i) if certified, in suitable form
for transfer by delivery or accompanied by duly executed instruments of
transfer or assignment in blank, and (ii) if a promissory note or other
instrument, endorsed to Callaway Golf, all in form and substance satisfactory
to Callaway Golf.
3. Obligations Secured. The security interest granted pursuant to this
Agreement is made by Saint ▇▇▇▇▇▇▇ to secure the payment or performance as the
case may be, of each of the following described obligations to Callaway Golf
(the "Secured Obligations"):
(a) The payment and performance of all indebtedness, obligations,
liabilities, conditions and covenants of the Company to Callaway Golf now or
hereafter arising under the Note, the Continuing Security Agreement dated June
13, 1997 by and between the Company and Callaway Golf (the "Security
Agreement"), the Deed of Trust dated June 13, 1997 executed by the Company in
favor of Callaway Golf (the "Deed of Trust") securing the Indenture of Lease
dated June 13, 1997 by and between Urban Land of Nevada, a Nevada corporation,
and the Company, and/or this Agreement, and any and all extensions, amendments
or renewals or replacements of or for any of them (including, without
limitation, the payment of all principal, interest and other amounts arising
under or relating to the foregoing); and
(b) The payment and performance of all other obligations of the
Company to Callaway Golf now or hereafter existing, arising or owing and
stated to be secured hereby.
4. Rights With Respect to Distributions. So long as no Default (as
defined below) shall have occurred and be continuing, subject to any other
applicable provision of this Agreement, Saint ▇▇▇▇▇▇▇ shall be entitled to
receive payment in respect of obligations of the Company owed to Saint ▇▇▇▇▇▇▇
or to receive dividends, withdrawals, or other distributions in respect of the
Collateral. Upon the occurrence and during the continuation of any Default,
all rights of Saint ▇▇▇▇▇▇▇ to receive payments in respect of obligations of
the Company owed to Saint ▇▇▇▇▇▇▇ or to receive dividends, withdrawals or
other distributions in respect of the Collateral that Saint ▇▇▇▇▇▇▇ would
otherwise be entitled to receive hereunder shall cease (unless otherwise
agreed by Callaway Golf) and all such rights shall thereupon become
automatically vested in Callaway Golf, which shall have the sole right to
receive such cash or properties and apply them to payment of the Secured
Obligations or to hold them as Collateral, as it may elect. All cash or other
property received by Saint ▇▇▇▇▇▇▇ contrary to the provisions of this Section
4 shall be received in trust for the benefit of Callaway Golf, shall be
segregated from other property or funds of Saint ▇▇▇▇▇▇▇ and shall be
forthwith delivered to Callaway Golf as Collateral in the same form as so
received (with any necessary endorsement). Notwithstanding the foregoing
provisions of this Section 4, no distributions of any kind shall be made to
Saint ▇▇▇▇▇▇▇ unless made in accordance with the provisions of the Operating
Agreement.
5. Voting and Other Rights. So long as no Default (as defined below)
shall have occurred and be continuing, subject to any other applicable
provision of this Agreement, Saint ▇▇▇▇▇▇▇ shall be entitled to exercise any
and all voting and other consensual rights pertaining to the Collateral or any
part thereof for any purpose not prohibited by the terms of this Agreement.
Within three days after exercising any such right, Saint ▇▇▇▇▇▇▇ shall give
Callaway Golf written notice of the action taken or approved in connection
therewith. Upon the occurrence and during the continuance of any Default, all
rights of Saint ▇▇▇▇▇▇▇ to exercise the voting and other consensual rights
that Saint ▇▇▇▇▇▇▇ would otherwise be entitled to exercise hereunder shall
cease, and (unless otherwise agreed by Callaway Golf) all such rights (and any
other rights Saint ▇▇▇▇▇▇▇ may have under the Operating Agreement, as amended,
restated, modified or supplemented from time to time) shall thereupon become
vested in Callaway Golf, which shall thereupon have the sole right to exercise
such rights.
6. Financing Statement; Further Assurances. Saint ▇▇▇▇▇▇▇ agrees that
at any time and from time to time, at the expense of Saint ▇▇▇▇▇▇▇, Saint
▇▇▇▇▇▇▇ shall promptly execute and deliver all further instruments and
documents, and take all further action, that Callaway Golf may request in
order to perfect and protect the security interest granted or purported to be
granted hereby or to enable Callaway Golf to exercise and enforce its rights
and remedies hereunder with respect to any Collateral. Saint ▇▇▇▇▇▇▇ hereby
irrevocably makes, constitutes and appoints Callaway Golf (and all persons
designated by Callaway Golf for that purpose) as Saint ▇▇▇▇▇▇▇' true and
lawful attorney (and agent-in-fact) to sign the name of Saint ▇▇▇▇▇▇▇ on any
financing statements or other written matter, and to take any other act,
deemed necessary or requested by Callaway Golf to perfect and maintain a
perfected lien upon, and security interest in, any Collateral.
7. Representations and Warranties. Saint ▇▇▇▇▇▇▇ represents and
warrants to Callaway Golf as follows:
(a) Except for the Operating Agreement, there are no other
agreements or commitments between or among Saint ▇▇▇▇▇▇▇ and any other member
of the Company, including, without limitation, any agreements or commitments
relating to the management, operations or ownership of the Company or any of
its or its members' obligations with respect thereto;
(b) The Company is a duly organized and validly existing limited
liability company under the laws of the State of California and is duly
qualified to do business and in good standing in all jurisdictions in which
its activities make such qualification necessary;
(c) Neither the execution and delivery of this Agreement, the
consummation of the transactions herein contemplated, nor compliance with the
terms and provisions hereof will conflict with or result in a breach of any of
the terms, conditions or provisions of any indenture, agreement, lease or
instrument to which Saint ▇▇▇▇▇▇▇ is a party or by which Saint ▇▇▇▇▇▇▇ is
bound or to which Saint ▇▇▇▇▇▇▇ or any material part of Saint ▇▇▇▇▇▇▇'
property may be subject, including, without limitation, the Operating
Agreement (all consents for the transactions contemplated hereby required
under the terms of the Operating Agreement having been obtained), or
constitute a breach thereof or a default thereunder or permit the acceleration
of any obligation due thereunder or result in the creation or imposition of
any lien, charge or encumbrance of any nature whatsoever upon any of the
property of Saint ▇▇▇▇▇▇▇;
(d) This Agreement constitutes the valid and legally binding
obligation of Saint ▇▇▇▇▇▇▇ enforceable in accordance with its terms;
(e) No portion of the Collateral is evidenced by a certificate,
instrument or other writing except for such as have been delivered to Callaway
Golf;
(f) Saint ▇▇▇▇▇▇▇ is the sole owner of the Collateral, and there
are no liens, encumbrances or claims on or against the Collateral except the
security interest granted hereby; and
(g) Saint ▇▇▇▇▇▇▇ is a corporation in good standing under the laws
of the State of Nevada and has all corporate power and corporate authority
necessary to conduct its business and enter into the Operating Agreement.
(h) Saint ▇▇▇▇▇▇▇' chief executive office is located in Las Vegas,
Nevada.
8. Covenants of Saint ▇▇▇▇▇▇▇. So long as any Secured Obligation
remains outstanding, Saint ▇▇▇▇▇▇▇ covenants and agrees as follows:
(a) Saint ▇▇▇▇▇▇▇ shall indemnify, defend and hold harmless
Callaway Golf, its officers, directors, employees, shareholders and agents,
against all losses, claims, demands and liabilities of every kind caused by or
relating to the Collateral or other property subject hereto;
(b) Saint ▇▇▇▇▇▇▇ shall not sell, hypothecate, pledge or otherwise
dispose of any Collateral at any time, or become obligated to do any of the
foregoing, or permit the Collateral to become subject to any lien, judgment,
attachment or other adverse claim except in favor of Callaway Golf; provided,
however, if (i) the Loan is current in payment of principal and interest, (ii)
no Default then exists hereunder, and (iii) the total Appraised Unit Value of
Saint Andrew's Membership Interest in the Company, as determined pursuant to
Section 7 of the Operating Agreement (at the sole cost to Saint ▇▇▇▇▇▇▇) and
as agreed upon by Saint ▇▇▇▇▇▇▇ and Callaway Golf, exceeds 150% of the then
outstanding principal of the Loan, upon prior written notice to Callaway Golf,
Saint ▇▇▇▇▇▇▇ may pledge to a third party its membership interest in the
Company as security for obligations ("Third Party Obligations") not to exceed
that amount which is equal to the difference between such total Appraised Unit
Value of Saint ▇▇▇▇▇▇▇' membership interest and 150% of the outstanding
principal of the Loan. Any default under or with respect to the Third Party
Obligations shall also be a Default hereunder. Any such pledge by Saint
▇▇▇▇▇▇▇ shall be expressly subordinated to the security interests of Callaway
Golf. Saint ▇▇▇▇▇▇▇ and such third parties shall execute such documents and
agreements as Callaway Golf may request to effectuate and evidence the
foregoing, including, without limitation, subordination agreement(s) in a form
acceptable to Callaway Golf (which agreement shall include, but not be limited
to, provisions which limit such third parties' rights and remedies with
respect to Saint ▇▇▇▇▇▇▇' membership interest or other Collateral upon a
default to pursuit only after exercise of remedies by Callaway Golf). Saint
▇▇▇▇▇▇▇' ability to pledge its membership interest as security pursuant to
this Agreement shall be limited to one occasion during the term of this
Agreement and shall be limited to a single third party.
(c) Without the prior written consent of Callaway Golf (which
consent may be given or withheld in Callaway Golf's sole discretion), Saint
▇▇▇▇▇▇▇ shall not vote or give consent (i) to amend, modify, restate or alter
the Operating Agreement, (ii) to mortgage, encumber, pledge, sell, hypothecate
or otherwise transfer or dispose of all or any substantial portion of the
assets of Saint ▇▇▇▇▇▇▇ or of the Company, (iii) to terminate or dissolve
Saint ▇▇▇▇▇▇▇ or the Company or to withdraw or seek removal as a member in the
Company, (iv) to withdraw any capital from the Company, or (v) to make any
distribution of any kind to the members of the Company;
(d) Saint ▇▇▇▇▇▇▇ shall give Callaway Golf immediate notice of any
change in Saint ▇▇▇▇▇▇▇' chief executive office or chief place of business or
its name at least thirty (30) days prior to any change. Saint ▇▇▇▇▇▇▇ does
not operate under any trade or other names and has not utilized any trade
names or other names within the previous five years;
(e) All information at any time supplied to Callaway Golf by Saint
▇▇▇▇▇▇▇, including without limitation regarding the value of the Collateral
and financial statements, shall be at the time supplied to Callaway Golf,
correct and complete in all material respects;
(f) Saint ▇▇▇▇▇▇▇ will perform all acts and comply with all terms
of the Operating Agreement;
(g) Saint ▇▇▇▇▇▇▇ will execute any additional agreements, finance
statements, assignments or documents as may be requested by Callaway Golf to
effectuate the purpose of this Agreement or in order to perfect or continue
the security interest of Callaway Golf in the Collateral; and
(h) Saint ▇▇▇▇▇▇▇ at its own cost and expense will defend the
Collateral against all claims, liens, security interests, demands and other
encumbrances which may affect Callaway Golf's security interest in or Saint
▇▇▇▇▇▇▇' title to any Collateral.
9. Powers of Callaway Golf. Saint ▇▇▇▇▇▇▇ appoints Callaway Golf as
Saint ▇▇▇▇▇▇▇' true and lawful attorney-in-fact to perform any of the
following acts, which power is coupled with an interest, is irrevocable until
termination of this Agreement and may be exercised from time to time by
Callaway Golf and its officers and employees, or any of them, in their
discretion, to take any action and to execute any instrument which Callaway
Golf may deem reasonably necessary or desirable to accomplish the purposes of
this Agreement, including, without limitation, to receive, endorse and collect
all instruments made payable to Saint ▇▇▇▇▇▇▇ or representing any dividend,
interest payment or other distribution in respect of the Collateral or any
part thereof and to give full discharge for the same, when and to the extent
permitted by this Agreement, and (a) to perform or cause the performance of
any obligation of Saint ▇▇▇▇▇▇▇ hereunder in Saint ▇▇▇▇▇▇▇' name or otherwise;
(b) during the continuance of any Default, to liquidate any Collateral pledged
to Callaway Golf hereunder and to apply proceeds thereof to payment of the
Secured Obligations or to place such proceeds into a cash collateral account
pursuant to Section 10 hereof, all at Callaway Golf's sole discretion,
notwithstanding the fact that such liquidation may give rise to penalties; (c)
to notify any person obligated on any security, instrument or other document
or obligation subject to this Agreement of Callaway Golf's rights hereunder;
(d) during the continuance of any Default, to collect all cash or other
property now or hereafter payable upon or on account of the Collateral; (e) to
enter into any extension, reorganization, merger or consolidation agreement or
any other agreement relating to or affecting the Collateral and, in connection
therewith, to deposit or surrender control of the Collateral, to accept other
property in exchange for the Collateral, subject otherwise to this Agreement;
(f) to make any compromise or settlement Callaway Golf deems desirable or
proper in respect of the Collateral; (g) to perform any act which Callaway
Golf may deem necessary to preserve or protect the Collateral, or any part
thereof; (h) to execute on Saint ▇▇▇▇▇▇▇' behalf and in Saint ▇▇▇▇▇▇▇' name
any documents required in order to give Callaway Golf a continuing first lien
upon the Collateral or any part thereof; and (i) Saint ▇▇▇▇▇▇▇ hereby waives
any and all rights that Saint ▇▇▇▇▇▇▇ may now, or at any time have, to require
Callaway Golf to proceed against any other person or entity or to proceed
against any of the Collateral, or to pursue or enforce any other remedy
Callaway Golf may have at any time. Notwithstanding any other provision of
this Agreement, nothing herein shall limit, impair or modify any right of
Callaway Golf as a member in the Company.
10. Cash Collateral. Any money received by Callaway Golf in respect of
the Collateral may, at Callaway Golf's sole option, be retained, without
interest, as cash collateral and shall, for all purposes, be deemed Collateral
hereunder.
11. Indemnity. Saint ▇▇▇▇▇▇▇ agrees to indemnify, defend and hold
harmless, Callaway Golf and its officers, directors, employees, shareholders
and agents from and against any and all claims, losses and liabilities growing
out of, or resulting from, this Agreement (including, without limitation,
enforcement of this Agreement).
12. Default. The occurrence of any of the following shall constitute a
"Default" under this Agreement:
(a) any event that, under the Note, the Operating Agreement or any
related document, causes or permits the acceleration of any of the Secured
Obligations;
(b) any default or event of default under the Note, the Operating
Agreement, Security Agreement, Deed of Trust or any other document evidencing
or securing any Secured Obligation;
(c) Saint ▇▇▇▇▇▇▇' breach of, default under or failure to comply
with, perform or pay when due, whether on demand or otherwise, any term,
provision, covenant or condition, the Operating Agreement;
(d) any failure by Saint ▇▇▇▇▇▇▇ to keep or perform any of the
terms, covenants or conditions of this Agreement, and such monetary failure is
not cured within ten (10) days of written notice by Callaway Golf to Saint
▇▇▇▇▇▇▇, and such non-monetary failure is not cured within thirty (30) days of
written notice by Callaway Golf to Saint ▇▇▇▇▇▇▇;
(e) any failure of this Agreement, the Note, the Operating
Agreement, Security Agreement, Deed of Trust or any other agreement or
undertaking related to any Secured Obligation, to be the valid, binding and
enforceable obligation of the parties thereto (other than Callaway Golf);
(f) the levying of any attachment, execution or other process
against Saint ▇▇▇▇▇▇▇ or against the Collateral, or any portion thereof;
(g) if Saint ▇▇▇▇▇▇▇ (or any successor thereto) or the Company
shall make a general assignment for the benefit of Callaway Golf; or shall
file or have filed against it a petition for relief under the bankruptcy laws
of the United States; or in the event that a receiver, trustee or other court
officer is appointed for the purpose of taking possession of all or any part
of the Collateral;
(h) if Saint ▇▇▇▇▇▇▇ revokes or purports to revoke this Agreement
or its obligations hereunder; or
(i) a default shall occur under or with respect to the Third Party
Obligations.
13. Remedies. Upon the occurrence of a Default (but without limiting
any other rights or remedies of Callaway Golf, all of which are cumulative),
Callaway Golf shall thereupon and thereafter have any or all of the rights and
remedies to which a secured party is entitled after a default under the
provisions of the California Uniform Commercial Code. In addition to those
rights and remedies, Saint ▇▇▇▇▇▇▇ agrees that Callaway Golf may in its sole
discretion do or cause to be done any one or more of the following:
(a) declare the entire amount of the Secured Obligations
immediately due and payable;
(b) proceed to realize upon the Collateral or any portion thereof
in any manner or priority;
(c) if notice to Saint ▇▇▇▇▇▇▇ is required, give written notice to
Saint ▇▇▇▇▇▇▇ five (5) days prior to the date of public sale of the Collateral
or prior to the date after which private sale of the Collateral will be made;
(d) exercise all rights and remedies of a secured party under the
California Uniform Commercial Code; and
(e) proceed against Saint ▇▇▇▇▇▇▇ with or without proceeding
against the Collateral.
Saint ▇▇▇▇▇▇▇ acknowledges that all or part of foreclosure of the
Collateral may be restricted by state or federal securities laws and Callaway
Golf may be unable to effect a public sale of all or part of the Collateral
and that a public sale is or may be impractical and inappropriate for a
membership interest in the Company. Saint ▇▇▇▇▇▇▇ acknowledges and consents
that Callaway Golf may resort to one or more private or public sales to a
single purchaser or a restricted or limited group of purchasers. Saint
▇▇▇▇▇▇▇ agrees that private or public sales under these circumstances may be
at prices and other terms less favorable to Saint ▇▇▇▇▇▇▇ than if Collateral
were sold at a price negotiated by Saint ▇▇▇▇▇▇▇. Saint ▇▇▇▇▇▇▇ further
consents that Callaway Golf may take any steps it deems appropriate to avoid a
violation of securities laws which exist now or in the future. Saint ▇▇▇▇▇▇▇
further agrees that sales made under the foregoing circumstances shall be
deemed to have been made in a "commercially reasonable" manner.
The rights, privileges, powers and remedies of Callaway Golf shall be
cumulative, and no single or partial exercise of any of them shall preclude
the further or other exercise of any of them. Any waiver, permit, consent or
approval of any kind by Callaway Golf of any Default hereunder, or any such
waiver of any provisions or conditions hereof, must be in writing and shall be
effective only to the extent set forth in writing. Any proceeds of any
disposition of the Collateral, or any part thereof, may be applied by Callaway
Golf to the payment of expenses incurred by Callaway Golf in connection with
the foregoing, including reasonable attorneys' fees and expenses and expert
witnesses' fees and expenses, and the balance of such proceeds may be applied
by Callaway Golf toward the payment of the Secured Obligations and in such
order of application as Callaway Golf may from time to time elect.
In the event of a foreclosure of the Collateral or portions thereof by
Callaway Golf, and provided Callaway Golf or an affiliate or designee of
Callaway Golf shall become the owner thereof, then upon the written election
of Callaway Golf or such affiliate or designee, Callaway Golf, or such
affiliate or designee, as the case may be, shall become a member in the
Company in place of Saint ▇▇▇▇▇▇▇ and shall have all of the rights thereof.
Notwithstanding, nothing herein shall act to obligate Callaway Golf, or its
affiliate or designee, for Saint ▇▇▇▇▇▇▇' obligations as a member of the
Company.
14. Costs, Expenses and Attorneys' Fees. All payments, advances,
charges, costs and expenses, including reasonable attorneys' fees and expenses
and expert witnesses' fees and expenses, made or incurred by Callaway Golf in
exercising any right, power or remedy conferred by this Agreement or in the
enforcement thereof, whether before or after judgment (including, without
limitation, those arising in connection with the custody of, the sale of, or
other redemption upon, any of the Collateral or failure by Saint ▇▇▇▇▇▇▇ to
perform or observe any of the provisions hereof or in connection with the
enforcement of any judgment or other award) or in connection with a
bankruptcy, reorganization, receivership or similar debt-relief proceeding by
or effecting the Saint ▇▇▇▇▇▇▇ or any of the Collateral, shall be paid to
Callaway Golf by Saint ▇▇▇▇▇▇▇ immediately and without demand, together with
interest as a rate per annum equal to the rate applicable under the Note, or,
if less, the maximum rate permitted by law. Saint ▇▇▇▇▇▇▇' obligations under
this Section 14 are severable from the remainder of this Agreement and shall
survive the entry of judgment.
15. Governing Law; Successors, Assigns. This Agreement shall be
governed by and construed in accordance with the laws of the State of
California, and shall be binding on and inure to the benefit of the legal
representatives, successors and assigns of Saint ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Golf.
16. Severability. If any provision of this Agreement shall be held to
be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or any remaining provisions of
this Agreement.
17. Notice and Payments. All notices and other communications provided
for hereunder shall be in writing (including telegraphic, telecopied or telex
communication) and mailed or telegraphed or telecopied or delivered to the
parties at their respective addresses as set forth below, or, as to each
party, at such other address as shall be designated by such party in a written
notice to the other parties complying as to delivery with the terms of this
Section 17. All such notices and communications, if mailed, shall be
effective upon deposit in the United States mail, first-class (or certified)
postage prepaid; if telegraphed or telecopied, shall be effective when
transmitted, if sent by telex, shall be effective when the telex is sent and
the appropriate answer back is received, and if delivered in another way,
shall be effective upon receipt.
To Saint ▇▇▇▇▇▇▇ at its business office:
Saint ▇▇▇▇▇▇▇ Golf Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇, President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To Callaway Golf at its business office:
Callaway Golf Company
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇, President and Chief
Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
18. Additional Provision.
(a) Saint ▇▇▇▇▇▇▇ acknowledges, covenants and agrees that this
Agreement shall survive the payment in full of the Note and shall continue in
full force and effect with respect to any Secured Obligations not performed
upon and that survive payment of the Note.
(b) This Agreement gives rise to continuing obligations relating to
the Secured Obligations, including, without limitation, obligations and
liabilities arising under successive and future transactions that either
increase, decrease, or continue the Secured Obligations, or, from time to
time, renew Secured Obligations that have been satisfied, independent of and
in addition to any guaranty, endorsement, or collateral now or hereafter held
by Callaway Golf, whether or not furnished by Saint ▇▇▇▇▇▇▇. This Agreement
shall apply and be irrevocable with respect to any indebtedness created or
incurred even after actual receipt by Callaway Golf of any written notice of
revocation by Saint ▇▇▇▇▇▇▇ which indebtedness arises out of any extension,
renewal, advance, additional advance, refunding, replacement or modification
of any indebtedness originally created prior to the actual receipt of such
written notice regardless of whether such extension, renewal, advance,
additional advance, refunding replacement or modification occurs prior to such
revocation, and Saint ▇▇▇▇▇▇▇ waives any right to revoke this Agreement and
the benefits of California Civil Code Section 2815.
(c) Saint ▇▇▇▇▇▇▇ consents that Callaway Golf may, and authorizes
Callaway Golf at any time in its discretion without notice or demand and
without affecting the indebtedness and liabilities of Saint ▇▇▇▇▇▇▇ hereunder
to: (i) enter into agreements with the Company and renew, extend, amend,
waive, restructure, refinance, release, accelerate, or otherwise change the
time for payment of, or otherwise change the terms of, the indebtedness
evidenced thereby (including, without limitation, the Secured Obligations),
including, without limitation, (A) increase or decrease in the Secured
Obligations or the rate of interest on the Secured Obligations and (B) any
amendment of the Secured Obligations to permit Callaway Golf to extend further
or additional accommodations to the Company in any form, including credit by
way of loan, lease, sale or purchase of assets, guarantee, or otherwise, which
shall thereupon be Secured Obligations; (ii) accept new or additional
documents, instruments, or agreements relative to the Secured Obligations;
(iii) consent to the change, restructure or termination of the individual,
partnership, or corporate structure or existence of the Company, Saint ▇▇▇▇▇▇▇
or any affiliate of the Company or Saint ▇▇▇▇▇▇▇, and correspondingly
restructure the Secured Obligations; (iv) accept partial payments on the
Secured Obligations; (v) take and hold collateral or additional guaranties for
the Secured Obligations and amend, alter, exchange, substitute, transfer,
enforce, perfect or fail to perfect, waive, subordinate, terminate, or release
any such collateral or guaranties; (vi) apply any collateral, and direct the
order and manner of sale thereof as Callaway Golf in its sole discretion may
determine; (vii) settle, release on terms satisfactory to Callaway Golf or by
operation of law or otherwise, compound, compromise, collect, or otherwise
liquidate the Secured Obligations and/or the collateral or any guaranty
therefor in any manner, whether in liquidation, reorganization, receivership,
bankruptcy, or otherwise; (viii) release the Company or any other party for
all or any part of the Secured Obligations; or (ix) assign the Secured
Obligations or any rights related thereto in whole or in part.
(d) This Agreement is a guaranty of payment and not of collection.
Saint ▇▇▇▇▇▇▇' obligations under this Agreement are independent of those of
the Company and of the obligations of any other person or entity, and are not
conditioned or contingent upon the genuineness, validity, regularity, or
enforceability of the Note or other Secured Obligations or of the obligations
of any other person or entity. Callaway Golf may bring a separate action
against Saint ▇▇▇▇▇▇▇ without first proceeding against the Company, any other
guarantor, or any other person or entity, or any security held by Callaway
Golf, and without pursuing any other remedy. Callaway Golf's rights under
this Agreement in respect of the Secured Obligations shall not be exhausted by
any action of Callaway Golf until all of the Secured Obligations have been
fully and indefeasibly paid and performed.
(e) Saint ▇▇▇▇▇▇▇ waives and agrees not to assert or take advantage
of (i) any right to require Callaway Golf to proceed against the Company, any
other guarantor, or any other person or entity, or against any security now or
hereafter held by Callaway Golf, or to pursue any other remedy whatsoever,
including, without limitation, any such right or any other right set forth in
or arising out of any of Sections 2845, 2848, 2849, 2850, and 2855 of the
California Civil Code; (ii) any defense based upon any legal disability of the
Company or of any other guarantor, or person or entity, or any discharge or
limitation of the liability of the Company or of any other guarantor, or
person or entity, to Callaway Golf, or any restraint or stay applicable to
actions against the Company or against any other guarantor, person or entity,
whether such disability, discharge, limitation, restraint, or stay is
consensual, arises by order of a court or other governmental authority, or
arises by operation of law or any liquidation, reorganization, receivership,
bankruptcy, insolvency or debtor-relief proceeding, or from any other cause,
including, without limitation, any defense to the payment of interest,
attorneys' fees and costs, and other charges that otherwise would accrue or
become payable in respect of the Secured Obligations after the commencement of
any such proceeding, it being the intent of the parties that the Secured
Obligations shall be determined without regard to any rule of law or order
that may relieve the Company of any portion of such obligations; (iii)
setoffs, counterclaims, presentment, demand, protest, notice of protest,
notice of non-payment, or other notice of any kind; (iv) any defense based
upon the modification, renewal, extension, or other alteration of the Secured
Obligations; (v) any defense based upon the negligence of Callaway Golf,
including, without limitation, the failure to record an interest under a deed
of trust, the failure to perfect any security interest, or the failure to file
a claim in any bankruptcy of the Company or of any other guarantor; (vi) any
defense based upon a statute of limitations (to the fullest extent permitted
by law), and any defense based upon Callaway Golf's delay in enforcing this
guaranty or any other agreement; (vii) any defense based upon or arising out
of any defense that the Company may have to the performance of any part of the
Secured Obligations; (viii) any defense to recovery by Callaway Golf of a
deficiency after non-judicial sale of real or personal property; any defense
based upon the unavailability to Callaway Golf of recovery of a deficiency
judgment after non-judicial sale of real or personal property; and any defense
based upon or arising out of any of Sections 580a (which would otherwise limit
Saint ▇▇▇▇▇▇▇' liability after a nonjudicial foreclosure sale to the
difference between the obligations guarantied hereby and the fair market value
of the property or interest sold at such nonjudicial foreclosure sale), 580b
and 580d (which would otherwise limit Callaway Golf's right to recover a
deficiency judgment with respect to purchase money obligations and after a
nonjudicial foreclosure sale, respectively), or 726 (which, among other
things, would otherwise require Callaway Golf to exhaust all of its security
before a personal judgment may be obtained for a deficiency) of the California
Code of Civil Procedure (including but not limited to any fair value
limitations under Section 580a or 726 of such Code) or similar anti-deficiency
or one-action statute which may be applicable, if any, or based upon or
arising out of Division 5, 8, or 9 of the California Uniform Commercial Code
or similar provisions to the extent applicable under the California Uniform
Commercial Code as in effect; (ix) any defense based upon the death,
incapacity, lack of authority, or termination of existence of, or revocation
hereof by, any person or entity or persons or entities, or the substitution of
any party hereto; (x) any defense based upon or related to Saint ▇▇▇▇▇▇▇' lack
of knowledge as to the Company's financial condition; (xi) any defense based
upon Section 2809 of the California Civil Code; (xii) any defense based upon
the impairment of any subrogation or reimbursement rights that Saint ▇▇▇▇▇▇▇
might have, including any defense or right based upon the acceptance by
Callaway Golf or an affiliate of Callaway Golf of a deed in lieu of
foreclosure without extinguishing the Secured Obligations, even if such
acceptance destroys, alters, or otherwise impairs subrogation rights of Saint
▇▇▇▇▇▇▇, the right of Saint ▇▇▇▇▇▇▇ to proceed against the Company for
reimbursement, or both; (xiii) any right to designate the application of any
sums or property received by Callaway Golf; and (xiv) any other defense or
right available to Saint ▇▇▇▇▇▇▇ as a surety.
(f) Saint ▇▇▇▇▇▇▇ acknowledges that Saint ▇▇▇▇▇▇▇ is relying upon
Saint ▇▇▇▇▇▇▇' own knowledge and is fully informed with respect to the
Company's financial condition. Saint ▇▇▇▇▇▇▇ assumes full responsibility for
keeping fully informed of the financial condition of the Company and all other
circumstances affecting the Company's ability to perform its obligations to
Callaway Golf, and agrees that Callaway Golf will have no duty to report to
Saint ▇▇▇▇▇▇▇ any information that Callaway Golf receives about the Company's
financial condition or any circumstances bearing on the Company's ability to
perform all or any portion of the Secured Obligations, regardless of whether
Callaway Golf has reason to believe that any such facts materially increase
the risk beyond that which Saint ▇▇▇▇▇▇▇ intends to assume or has reason to
believe that such facts are unknown to Saint ▇▇▇▇▇▇▇ or has a reasonable
opportunity to communicate such facts to Saint ▇▇▇▇▇▇▇.
(g) Saint ▇▇▇▇▇▇▇ agrees that (i) Saint ▇▇▇▇▇▇▇ shall have no right
of subrogation, reimbursement or indemnity against the Company or against any
collateral provided for the Note unless and until all Secured Obligations have
been paid in full; (ii) Saint ▇▇▇▇▇▇▇ shall have no right of contribution
against any other guarantor unless and until all Secured Obligations have been
paid in full; and (iii) until Saint ▇▇▇▇▇▇▇ is permitted by the terms of this
paragraph to exercise any such right of subrogation, reimbursement, indemnity
or contribution, Saint ▇▇▇▇▇▇▇ hereby waives any right to enforce any remedy
that Saint ▇▇▇▇▇▇▇ might have against the Company or any other guarantor, or
to participate in any security held by Callaway Golf for the Secured
Obligations, by reason of any one or more payments by Saint ▇▇▇▇▇▇▇ or
collections under this Agreement, including, without limitation, any such
right or any other right set forth in Sections 2845, 2848 or 2849 of the
California Civil Code. Whether or not any or all of the foregoing waivers of
rights in respect of subrogation, reimbursement, indemnity and contribution
are held to be enforceable: (i) all existing and future indebtedness of the
Company to Saint ▇▇▇▇▇▇▇ (including, without limitation, any indebtedness
arising by reason of any payment by Saint ▇▇▇▇▇▇▇ hereunder) is hereby
subordinated to all Secured Obligations, and, without the prior written
consent of Callaway Golf, such indebtedness shall not be paid, in whole or in
part, nor will Saint ▇▇▇▇▇▇▇ accept any payment of or on account of any such
indebtedness except as expressly permitted by this Agreement; provided,
however, that, if Callaway Golf so requests, Saint ▇▇▇▇▇▇▇ shall enforce
and/or collect such indebtedness, subject to the following clause (ii); (ii)
each payment by the Company, whether received in violation of this Agreement
or pursuant to the request of Callaway Golf, shall be received by Saint
▇▇▇▇▇▇▇ in trust for Callaway Golf, and Saint ▇▇▇▇▇▇▇ shall cause the same to
be paid to Callaway Golf, immediately upon demand by Callaway Golf, on account
of the Secured Obligations; and (iii) no such payment shall reduce or affect
in any manner the liability of Saint ▇▇▇▇▇▇▇ under this Agreement. Saint
▇▇▇▇▇▇▇ shall execute such further documents, and take such further acts, as
Callaway Golf may request for the purpose of further perfecting, preserving or
protecting its rights hereunder.
(h) Upon the occurrence of any Default hereunder (but without
limiting Callaway Golf's right to resort to any other remedy it may have in
respect thereof), Callaway Golf may elect to foreclose non-judicially or
judicially against any real or personal property security it holds for the
Secured Obligations or any part thereof, or exercise any other remedy against
the Company or against any security. No such action by Callaway Golf shall
release or limit the liability of Saint ▇▇▇▇▇▇▇, even if the effect of that
action is to deprive Saint ▇▇▇▇▇▇▇, or any other guarantor, of the right or
ability to collect reimbursement from or to assert subrogation, indemnity, or
contribution rights against the Company or against any other guarantor for any
sums paid to Callaway Golf, or to obtain reimbursement by means of any
security held by Callaway Golf for the Secured Obligations. Saint ▇▇▇▇▇▇▇
waives all rights and defenses arising out of an election of remedies by
Callaway Golf, even though that election of remedies, such as nonjudicial
foreclosure with respect to security for the Secured Obligations, has
destroyed Saint ▇▇▇▇▇▇▇' rights of subrogation and/or reimbursement against
the Company by the operation of Section 580d of the California Code of Civil
Procedure or otherwise. Saint ▇▇▇▇▇▇▇ waives all rights and defenses arising
out of the operation of Section 580a of the California Code of Civil
Procedure, and further waives its right to a fair value hearing under such
Section 580a, or similar provisions of other applicable law, to determine the
size of a deficiency judgment following any foreclosure sale on encumbered
real property. Saint ▇▇▇▇▇▇▇ waives all rights and defenses that it may have
because the Secured Obligations, or parts thereof, are secured by real
property. This means, among other things: (i) Callaway Golf may collect from
Saint ▇▇▇▇▇▇▇ without first foreclosing on any real or personal property
collateral pledged by the Company or otherwise; (ii) if Callaway Golf
forecloses on any real property collateral (a) the amount of the Secured
Obligations may be reduced only by the price for which that collateral is sold
at the foreclosure sale, even if the collateral is worth more than the sale
price; and (b) Callaway Golf may collect from Saint ▇▇▇▇▇▇▇ even if Callaway
Golf, by foreclosing on the real property collateral, has destroyed any right
Saint ▇▇▇▇▇▇▇ may have to collect from the Company. This is an unconditional
and irrevocable waiver of any rights and defenses Saint ▇▇▇▇▇▇▇ may have
because the Secured Obligations or portions thereof are secured by real
property. These rights and defenses include, but are not limited to, any
rights or defenses based upon Sections 580a, 580b, 580d, or 726 of the
California Code of Civil Procedure.
(i) So long as any Secured Obligation shall be owing to Callaway
Golf, Saint ▇▇▇▇▇▇▇ shall not, without the prior written consent of Callaway
Golf, commence, or join with any other person or entity in commencing, any
bankruptcy, reorganization, or insolvency proceeding against the Company. The
obligations of Saint ▇▇▇▇▇▇▇ under this Agreement shall not be altered,
limited, or affected by any proceeding, voluntary or involuntary, involving
the bankruptcy, insolvency, receivership, reorganization, liquidation, or
arrangement of the Company, or by any defense the Company may have by reason
of any order, decree, or decision of any court or administrative body
resulting from any such proceeding. In furtherance of the foregoing, Saint
▇▇▇▇▇▇▇ agrees that if acceleration of the time for payment of any amount
payable by the Company under the Note or in respect of the other Secured
Obligations is stayed for any reason, all such amounts otherwise subject to
acceleration shall nonetheless be payable by Saint ▇▇▇▇▇▇▇ hereunder forthwith
upon demand.
(j) The liability of Saint ▇▇▇▇▇▇▇ hereunder shall be reinstated
and continued, and the rights of Callaway Golf shall continue, with respect to
any amount at any time paid on account of the Secured Obligations that
Callaway Golf shall thereafter be required to restore or return in connection
with the bankruptcy, insolvency, or reorganization of the Company or Saint
▇▇▇▇▇▇▇, or otherwise, all as though such amount had not been paid. The
determination as to whether any such payment must be restored or returned
shall be made by Callaway Golf in its sole discretion; provided, however, that
if Callaway Golf chooses to contest any such matter, Saint ▇▇▇▇▇▇▇ agrees to
indemnify and hold harmless Callaway Golf from all costs and expenses
(including, without limitation, reasonable legal fees and disbursements) of
such litigation. Callaway Golf shall be under no obligation to return or
deliver this Agreement to Saint ▇▇▇▇▇▇▇, notwithstanding the payment of the
Secured Obligations. If this Agreement is nevertheless returned to Saint
▇▇▇▇▇▇▇ or is otherwise released, then the provisions of this Section 18(j)
shall survive such return or release, and the liability of Saint ▇▇▇▇▇▇▇ under
this Agreement shall be reinstated and continued under the circumstances
provided in this Section 18(j) notwithstanding such return or release.
19. Miscellaneous. No provision of this Agreement or Callaway Golf's
rights hereunder can be waived or modified nor can Saint ▇▇▇▇▇▇▇ be released
from its obligations hereunder except by a writing executed by Callaway Golf.
No such waiver shall be applicable except in the specific instance for which
given.
20. Counterparts. This Agreement may be executed in counterparts, each
of which shall be considered an original and all of which together shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, Saint ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Golf have executed this
Membership Interest Security Agreement as of the day and year first written
above.
SAINT ▇▇▇▇▇▇▇ GOLF CORPORATION, a Nevada
corporation
By:
▇▇▇ ▇▇▇▇▇▇, President
CALLAWAY GOLF COMPANY, a California
corporation
By:
▇▇▇▇▇▇ ▇. ▇▇▇, President and Chief
Executive Officer
CONSENT AND ACKNOWLEDGMENT BY COMPANY AND MEMBERS
All-American Golf LLC, a California limited liability company (the
"Company") and each of the undersigned (constituting 100% of the members of
the Company), hereby consent to and acknowledge that they are aware of
Callaway Golf's security interest in and to Saint ▇▇▇▇▇▇▇' membership interest
in the Company and any and all related obligations of the Company to Saint
▇▇▇▇▇▇▇ pursuant to the foregoing Membership Interest Security Agreement
("Agreement)", and further acknowledges, consents and agrees as follows:
1. To the granting by Saint ▇▇▇▇▇▇▇ of all of its membership rights,
title and interests in and to the Company and the Operating Agreement in
accordance with the Agreement.
2. To pay all amounts required under the Agreement to be paid to
Callaway Golf and to perform according to the terms therein;
3. Upon a Default, that Callaway Golf may exercise any and all rights
of Saint ▇▇▇▇▇▇▇ under the Operating Agreement, including, without limitation,
all voting, management, and inspection rights.
4. That it shall not cause an amendment, modification or alteration of
the Operating Agreement or any rights thereunder without the prior written
consent of Callaway Golf.
5. That until all of the Secured Obligations are paid and satisfied in
full, it will not mortgage, sell, pledge or hypothecate any assets of the
Company without the consent of Callaway Golf, which can be given or withheld
in Callaway Golf's sole judgment.
6. That it shall provide to Callaway Golf at all times any and all
information reasonably requested by Callaway Golf with respect to the Company
and to allow it to inspect the books and records of the Company at times
requested.
7. In the event of a foreclosure of the Collateral or portions thereof
by Callaway Golf, provided Callaway Golf or an affiliate or designee of
Callaway Golf shall become the owner thereof, then, upon the written election
of Callaway Golf or such affiliate or designee, Callaway Golf or such
affiliate or designee, as the case may be, shall become automatically admitted
as a member in the Company in place of Saint ▇▇▇▇▇▇▇ and shall be entitled to
exercise any and all rights relating thereto.
8. That notwithstanding any provision of the Agreement or this Consent,
Callaway Golf is not assuming any of the obligations of Saint ▇▇▇▇▇▇▇.
9. That this Consent shall be irrevocable and shall remain in full
force and effect until such time as it shall receive written notice from
Callaway Golf that all of the Secured Obligations shall have been satisfied in
full.
10. That the undersigned have duly registered and recorded in the books
and records of the Company the security interest of Callaway Golf granted by
Saint ▇▇▇▇▇▇▇ to ▇▇▇▇▇▇▇▇ Golf and that Callaway Golf is deemed a registered
pledgee of such interest.
All capitalized terms not defined hereinabove shall be as defined in the
Agreement. The obligations hereunder shall be joint and several.
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WHEREFORE, this Consent and Acknowledgment by Company and Members is
executed on June 13, 1997.
ALL-AMERICAN GOLF LLC, a California SAINT ▇▇▇▇▇▇▇ GOLF CORPORATION,
limited liability company a Nevada Corporation
By: SAINT ▇▇▇▇▇▇▇ GOLF CORPORATION, By:
a Nevada corporation, ▇▇▇ ▇▇▇▇▇▇, President
Managing Member
By:
▇▇▇ ▇▇▇▇▇▇, President
By: CALLAWAY GOLF COMPANY, a CALLAWAY GOLF COMPANY, a
California corporation, Member California corporation
By: By:
▇▇▇▇▇▇ ▇. ▇▇▇, President ▇▇▇▇▇▇ ▇. ▇▇▇, President and
and Chief Executive Officer Chief Executive Officer
IRREVOCABLE INSTRUCTION
The undersigned hereby irrevocably instructs All-American Golf LLC, a
California limited liability company, and all of its members, to carry out and
perform the terms of the foregoing Consent and Acknowledgment by Company and
Members and the Agreement as defined therein. This Instruction shall be
irrevocable by the undersigned.
SAINT ▇▇▇▇▇▇▇ GOLF CORPORATION,
a Nevada corporation
By:
▇▇▇ ▇▇▇▇▇▇, President
SERVICE ▇▇▇▇ LICENSE AGREEMENT
THIS SERVICE ▇▇▇▇ LICENSE AGREEMENT ("Agreement") is made and effective as
of June 13, 1997, by and between Callaway Golf Company, a California
corporation ("Callaway Golf") and All-American Golf LLC, a California limited
liability company ("LICENSEE") and is made with reference to the following
facts:
▇. ▇▇▇▇▇▇▇▇ Golf is the owner of all right, title, and interest in and
to the registered and unregistered trademarks and any and all trade dress,
labels, and designs associated therewith, which are set forth on Exhibit A
attached hereto, together with the goodwill of the business symbolized
thereby; and
▇. ▇▇▇▇▇▇▇▇ Golf and LICENSEE mutually desire to enter into this
Agreement in accordance with the provisions hereof.
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein contained and for other good and valuable consideration, acknowledged
by each of them to be satisfactory and adequate, the parties do hereby agree
as follows:
1. Definitions.
1.1 "Licensed ▇▇▇▇" shall mean the ▇▇▇▇ "Callaway Golf Center."
1.2 "Center" shall mean the golf facility, including a golf course,
driving range, performance center, training facility and golf shop, to be
located on the premises of the All-American Sport Park in Las Vegas, Nevada.
1.3 "Operating Agreement" shall mean the Operating Agreement for
All-American Golf LLC dated June 13, 1997.
2. License.
2.1 Grant. Subject to the terms and conditions hereof, Callaway
Golf hereby grants to LICENSEE, and LICENSEE accepts from Callaway Golf, for
the term of this Agreement, a nontransferable, limited exclusive (except as
set forth herein) license, to use the Licensed ▇▇▇▇ (i) as the name of the
Center and (ii) in advertisements for the Center. The list of marks set forth
on Exhibit A is solely for purposes of defining Callaway Golf's trademark
rights. Nothing herein shall be construed to grant LICENSEE the right to use
any Callaway Golf ▇▇▇▇ other than the Licensed ▇▇▇▇ "Callaway Golf Center."
2.2 Reservation of Rights. Callaway Golf expressly reserves all
rights with respect to all trademarks or service marks that may be owned by it
or licensed to it which are not expressly licensed to LICENSEE under this
Agreement.
3. Quality Standards.
3.1 Maintenance of Quality. In the course of operating and
marketing the Center in connection with the Licensed ▇▇▇▇, LICENSEE shall
maintain and adhere to standards of quality and technical specifications that
may be in effect and/or adopted and approved by Callaway Golf, in its sole and
absolute discretion, from time to time during the term of this Agreement
including, but not limited to, the approval and review rights of Callaway Golf
with respect to the operation of the Center as set forth in the Operating
Agreement of LICENSEE ("Standards and Specifications"). The Standards and
Specifications are designed to ensure that the operation and marketing of the
Center are consistent with the reputation enjoyed by Callaway Golf and the
Licensed ▇▇▇▇.
3.2 Advertising. Callaway Golf shall have the right to approve all
advertising and marketing materials relating to the Center and which include
the Licensed ▇▇▇▇ ▇▇▇▇▇ to the initial use by LICENSEE of same.
3.3 Rights of Inspection. To ensure that the Standards and
Specifications are maintained, Callaway Golf and its authorized agents and
representatives shall have the right to enter the Center at all reasonable
times, with prior notice to LICENSEE to inspect the operation of the Center
and to inspect the books, records, advertisements and marketing materials of
LICENSEE.
4. Ownership of the Licensed ▇▇▇▇; Modifications.
4.1 Callaway Golf's Ownership Rights. LICENSEE acknowledges
Callaway Golf's exclusive right, title, and interest in and to the Licensed
▇▇▇▇ and acknowledges that nothing herein shall be construed to accord to
LICENSEE any rights in the Licensed ▇▇▇▇ except as otherwise expressly so
provided. LICENSEE acknowledges that its use of the Licensed ▇▇▇▇ hereunder
will not create in it any right, title or interest in the Licensed ▇▇▇▇ and
that all such use of the Licensed ▇▇▇▇ and the goodwill generated thereby will
inure to the benefit of Callaway Golf. LICENSEE warrants and represents with
respect thereto as follows:
4.1.1 LICENSEE will not at any time challenge Callaway Golf's
right, title, or interest in the Licensed ▇▇▇▇ or the validity of the Licensed
▇▇▇▇ or any registration thereof;
4.1.2 LICENSEE will not do or cause to be done or omit to do
anything, the doing, causing, or omitting of which would contest or in any way
impair or tend to impair the rights of Callaway Golf in the Licensed ▇▇▇▇;
4.1.3 LICENSEE will not represent that it has any ownership in
or rights with respect to the Licensed ▇▇▇▇ other than rights conferred by
this Agreement; and
4.1.4 LICENSEE will not, either during or subsequent to the
term of this Agreement, use any trademark, service ▇▇▇▇, trade name, insignia
or logo that is confusingly similar to or a colorable imitation of the
Licensed ▇▇▇▇.
4.2 Changes and Modifications to the Licensed ▇▇▇▇. ▇▇▇▇▇▇▇▇ Golf
expressly reserves the right from time to time to modify and change the
Licensed ▇▇▇▇. The Licensed ▇▇▇▇, as so modified or changed, shall for all
purposes be deemed to be the Licensed ▇▇▇▇ referred to in this Agreement. Any
and all such modifications or changes in said Licensed ▇▇▇▇ developed or
adopted by Callaway Golf shall be the sole and absolute property of Callaway
Golf, and Callaway Golf may incorporate the same in the Licensed ▇▇▇▇ and
shall have the exclusive right to register such modified or changed marks as
trademarks and/or service marks. LICENSEE may propose changes to the Licensed
▇▇▇▇ for adoption and approval by Callaway Golf.
5. Undertakings of Licensee Respecting the Licensed ▇▇▇▇.
5.1 Marking; Compliance with Trademark Laws. LICENSEE shall, (1)
cause the appropriate designation "TM," ''SM,'' or the registration symbol " "
to be placed adjacent to the Licensed ▇▇▇▇ in connection with each use or
display thereof and to indicate such additional information as Callaway Golf
shall specify from time to time concerning the license rights under which
LICENSEE uses the Licensed ▇▇▇▇; and (2) comply with all laws pertaining to
trademarks and service marks in force from time to time.
5.2 Display of the Marks. LICENSEE shall display, in a manner
consistent with Callaway Golf's standards, the Licensed ▇▇▇▇ at the Center and
in marketing activities respecting the Center.
5.3 No Use Objectionable to Callaway Golf. LICENSEE shall not use
the Licensed ▇▇▇▇ on or in connection with any display, packaging, or
marketing material to which Callaway Golf at any time objects.
6. License Fee.
6.1 Commitment to Pay Royalties. LICENSEE shall pay to Callaway
Golf or its successors-in-interest a royalty (the "Royalty") in U.S. Dollars
to accounts designated by Callaway Golf in accordance with the provisions set
forth in this Section 6.
6.2 Royalty Rate; Payment Requirements; Report. LICENSEE shall pay
Callaway Golf, within ninety (90) days following the end of each fiscal year
of LICENSEE, a "Royalty Payment" equal to three percent (3%) of Licensee's
gross revenues from the Center for such fiscal year, along with a report of
the aggregate gross revenues and Royalty Payments of the Center for such
fiscal year, certified by an independent public accountant (hired and paid for
by LICENSEE and acceptable to Callaway Golf in its sole discretion) as
presenting such information fairly in all material respects. The Royalty
Payment for any one fiscal year shall not exceed Fifty Thousand Dollars
($50,000) ("Maximum Royalty Payment").
6.3 Interest on Late Royalty Payments. Time is of the essence with
respect to all payments by LICENSEE and interest at the rate of interest
announced publicly by ▇▇▇▇▇ Fargo Bank, from time to time, as its base rate
(referred to herein as the "Base Rate"), on the date payment is due, shall
accrue on any amount due Callaway Golf, from and after the date upon which
payment is due until the date of actual payment. The interest so charged
shall be calculated monthly and payable on demand, and shall accrue at the
aforesaid rate until the payment is received by Callaway Golf. The payment of
interest in accordance with the terms hereof is in addition to all other
remedies available to Callaway Golf in the event of default or termination.
6.4 Best Efforts Commitment. LICENSEE acknowledges that the
expectancy of Callaway Golf of receipt of Royalty Payments pursuant to this
Agreement constitutes a material inducement to Callaway Golf to enter into
this Agreement. Accordingly, LICENSEE undertakes to employ its best efforts
during the term of this Agreement to operate and market the Center under the
Licensed ▇▇▇▇ in order to generate such Royalty Payments.
7. Prosecution and Defense of Infringement Claims.
7.1 Notice and Prosecution of Infringement of Marks. LICENSEE
shall provide Callaway Golf with prompt notice of any apparent infringement
of the Licensed ▇▇▇▇, any petition to cancel any registration of the Licensed
▇▇▇▇, or any attempted use of or any application to register any ▇▇▇▇
confusingly similar to, or a colorable imitation of, the Licensed ▇▇▇▇ of
which it becomes aware. Callaway Golf, in its sole discretion, shall have
sole right to:
7.1.1 Institute and prosecute any actions for such infringement
of the Licensed ▇▇▇▇;
7.1.2 Defend any petition to cancel any registration of the
Licensed ▇▇▇▇; and
7.1.3 Oppose any attempted use of or any application to
register any ▇▇▇▇ confusingly similar to, or a colorable imitation of, the
Licensed ▇▇▇▇.
7.1.4 Any damages and costs recovered through such proceedings
shall belong exclusively to Callaway Golf, and Callaway Golf shall be solely
responsible for all costs and expenses (including attorney's fees) of
prosecuting such actions. LICENSEE shall provide Callaway Golf with
reasonably requested assistance in connection with such proceedings, and
Callaway Golf shall reimburse LICENSEE's reasonable out-of-pocket costs of
providing such assistance.
7.2 Notice and Defense of Third-Party Infringement Claims.
LICENSEE shall have primary responsibility for defending against any and all
claims charging service ▇▇▇▇ or trademark infringement involving the use by
LICENSEE of the Licensed ▇▇▇▇. Callaway Golf shall provide LICENSEE with
reasonably requested assistance in connection with such proceedings, and
LICENSEE shall reimburse Callaway Golf's reasonable out-of-pocket costs of
providing such assistance. LICENSEE shall keep Callaway Golf informed of the
status of such proceeding and supply Callaway Golf with any reasonably
requested documents regarding such proceedings. Any expenses, losses,
damages, or judgments (including attorney's fees) in connection with claims
alleging service ▇▇▇▇ or trademark infringement involving the use by LICENSEE
of the Licensed ▇▇▇▇ shall be the responsibility of LICENSEE without any claim
over against Callaway Golf for any portion thereof. LICENSEE shall obtain
Callaway Golf's approval before entering into any compromise, settlement in
stipulation regarding such proceeding, which approval Callaway Golf shall not
unreasonably withhold.
7.3 Callaway Golf's Rights to Defend Infringement Claims. In the
event LICENSEE does not within a reasonable period (having due regard for the
protection of the Licensed ▇▇▇▇) defend against a claim alleging service ▇▇▇▇
or trademark infringement involving the use by LICENSEE of the Licensed ▇▇▇▇,
▇▇▇▇▇▇▇▇ Golf shall have the right, but shall not be obligated, to defend such
claim. Any expenses, losses, damages, or judgments (including attorney's
fees) in connection with such claims defended by Callaway Golf shall be the
sole responsibility of LICENSEE.
8. Licensee Defense and Indemnification of Licensor. LICENSEE shall
defend, indemnify and save harmless Callaway Golf, its subsidiaries and
affiliates, and their respective successors and assigns from all losses,
costs, liabilities, damages, claims, and expenses of every kind and
description, including reasonable attorney's fees, arising out of or resulting
from any act or omission of LICENSEE relating to the operation and marketing
of the Center in connection with which the Licensed ▇▇▇▇ is used, including,
but not limited to (1) unfair or fraudulent advertising claims, warranty
claims, and product defect or liability claims pertaining to the Center; and
(2) claims for unauthorized use or misuse of any patent, trademark, copyright,
or other proprietary right owned, used or controlled by any third party
pertaining to the operation and marketing of the Center.
9. Compliance with Laws by Licensee. In addition to compliance with laws
governing service ▇▇▇▇ and trademark usage as provided in Section 5 hereof,
LICENSEE agrees to comply with all laws governing operation and marketing of
the Center.
10. Term and Termination.
10.1 Term. The term of this Agreement shall continue until
terminated in accordance with the terms set forth herein.
10.2 Events of Termination. If any of the following events shall
occur with respect to LICENSEE, each such occurrence shall be deemed an "Event
of Termination."
10.2.1 Bankruptcy of LICENSEE. The occurrence of a
"Bankruptcy" with respect to LICENSEE. For this purpose, "Bankruptcy" means a
"Voluntary Bankruptcy" or an "Involuntary Bankruptcy." A "Voluntary
Bankruptcy" means the inability of LICENSEE generally to pay its debts as such
debts become due, or an admission in writing by LICENSEE of its inability to
pay its debts generally or a general assignment by LICENSEE for the benefit of
creditors; the filing of any petition or answer by LICENSEE seeking to
adjudicate it a bankrupt or insolvent, or seeking for itself any liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of LICENSEE or its debts under any law relating to bankruptcy,
insolvency, or reorganization or relief of debtors, or seeking, consenting to,
or acquiescing in the entry of an order for relief or the appointment of a
receiver, trustee, custodian, or other similar official for LICENSEE or for
any substantial part of its property; or corporate action taken by LICENSEE to
authorize any of the actions set forth above. An "Involuntary Bankruptcy"
means without the consent or acquiescence of LICENSEE, the entering of an
order for relief or approving a petition for relief or reorganization or any
other petition seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or other similar relief under any
present or future bankruptcy, insolvency or similar statute, law or
regulation, or the filing of any such petition against LICENSEE, which
petition shall not be dismissed within ninety (90) days, or, without the
consent or acquiescence of LICENSEE, the entering of an order appointing a
trustee, custodian, receiver, or liquidator of LICENSEE or of all or any
substantial part of the property of LICENSEE which order shall not be
dismissed within sixty (60) days.
10.2.2 Royalty Payment Default. LICENSEE defaults in the
payment of any amount owed to Callaway Golf for Royalties pursuant to Section
6 when same becomes due and payable.
10.2.3 Breach of Agreements. LICENSEE fails to perform in
accordance with any of the material terms and conditions contained (i) in this
Agreement (except to the extent that such failure to perform constitutes a
royalty payment default subject to Section 10.2.2 above); (ii) the Operating
Agreement for All-American Golf LLC dated June 13, 1997; (iii) the Right of
First Opportunity Agreement by and between LICENSEE and Callaway Golf dated
June 13, 1997; (iv) the Secured Promissory Note dated June 13, 1997 by and
between LICENSEE and Callaway Golf; or (v) the Continuing Security Agreement
dated June 13, 1997 by and between LICENSEE and Callaway Golf.
10.2.4 Dissolution of Licensee. LICENSEE ceases operations for
any reason for more than forty-five (45) consecutive days or sixty (60) days
in any twelve (12) month period.
10.2.5 Performance Criteria. LICENSEE fails to meet the
performance criteria set forth on Exhibit B attached hereto.
10.2.6 Sale of Callaway Golf's Membership Interest in LICENSEE.
Callaway Golf sells all of its membership interest in LICENSEE pursuant to
Section 7.1 of the Operating Agreement.
10.3 Callaway Golf's Right to Terminate Upon Event of Termination.
Callaway Golf may, at its option, without prejudice to any other remedies it
may have, terminate this Agreement upon occurrence of an Event of Termination
by giving written notice of such termination to LICENSEE as follows:
10.3.1 Immediately, upon the occurrence of any Event of
Termination pursuant to Section 10.2.1, 10.2.4, 10.2.5 or 10.2.6, or the
effective date of termination pursuant to Section 10.4;
10.3.2 After the expiration of two (2) business days following
the occurrence of an Event of Termination pursuant to Section 10.2.2 and
delivery of written notice of such payment default to LICENSEE, if such
payment default is then still uncured; or
10.3.3 After the expiration of fifteen (15) days from
LICENSEE's receipt of notice from Callaway Golf of the occurrence of any Event
of Termination pursuant to Section 10.2.3, if such Event of Termination is
then still uncured.
10.4 Callaway Golf's Rights To Terminate For Any Reason Or No
Reason. Callaway Golf shall have the right to terminate this Agreement at
any time for any or no reason upon giving ninety (90) days prior written
notice of such termination and with payment to LICENSEE in the amount of Five
Hundred Thousand Dollars ($500,000). Callaway Golf shall pay such amount on
the effective date of termination pursuant to this Section. Callaway Golf
shall have the right to offset against such termination payment any Royalty
Payment then due to Callaway Golf.
10.5 Availability of Injunctive Relief. LICENSEE agrees that the
remedy at law of Callaway Golf for any act or event that constitutes an Event
of Termination under this Agreement, other than the failure of LICENSEE to pay
any monies when due, will be inadequate and that Callaway Golf shall be
entitled to injunctive relief, specific performance or other such equitable
relief, and that LICENSEE shall not urge in any such proceeding that an
adequate remedy exists at law.
10.6 Post-Termination Obligations of LICENSEE. Upon the
termination of this Agreement for any reason, all rights of LICENSEE to use
the Licensed ▇▇▇▇ shall immediately thereafter cease. LICENSEE shall not
thereafter operate or conduct business under any name or in any manner that
might tend to give the general public the impression that this Agreement is
still in force, or that LICENSEE has any right to use the Licensed ▇▇▇▇.
11. Miscellaneous.
11.1 Entire Agreement; Modifications. This Agreement, together
with exhibits and schedules attached hereto, contains the entire agreement
between the parties hereto with respect to the transactions contemplated
hereby, and contains all of the terms and conditions thereof and supersedes
all prior agreements and understandings relating to the subject matter hereof.
No changes or modifications of or additions to this Agreement shall be valid
unless the same shall be in writing and signed by each party hereto.
11.2 Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any one or more of
the provisions hereof shall not affect the validity and enforceability of the
other provisions hereof.
11.3 Assignment. No party to this Agreement may, voluntarily or by
operation of law, assign or otherwise transfer any of his, her or its rights
or obligations under this Agreement, without obtaining the prior written
consent of all other parties hereto. Any attempted assignment in violation of
this Agreement shall be void and of no effect.
11.4 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties, their successors and assigns.
11.5 Waivers. No waiver of any of the provisions of this Agreement
shall be deemed to be or shall constitute a waiver of any other provision of
this Agreement, whether or not similar, nor shall any waiver constitute a
continuing waiver. No waiver of any provision of this Agreement shall be
binding on the parties hereto unless it is executed in writing by the party
making the waiver.
11.6 Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of delivery if delivered personally to the
party to whom notice is to be given, or on the third (3rd) day after mailing
if mailed to the party to whom notice is given, by first class mail,
registered or certified, postage prepaid, and properly addressed as follows:
If to Callaway Golf:
Callaway Golf Company
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇, President and Chief
Executive Officer
With a copy to:
G. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇, Forward, ▇▇▇▇▇▇▇▇ & Scripps LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to LICENSEE:
Saint ▇▇▇▇▇▇▇ Golf Corporation
Manager of LICENSEE
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇, President of Manager
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ & Del ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Either party may change the address to which notices to such party are to
be addressed by giving the other party hereto written notice of such change in
the manner herein set forth.
11.7 Attorneys' Fees. If either party hereto commences an action
against the other party to enforce any of the terms hereof or because of the
breach by such other party of any of the terms hereof, the prevailing party
shall be entitled, in addition to any other relief granted, to all actual
out-of-pocket costs and expenses incurred by such prevailing party in
connection with such action, including, without limitation, all reasonable
attorneys' fees, and a right to such costs and expenses shall be deemed to
have accrued upon the commencement of such action and shall be enforceable
whether or not such action is prosecuted to judgment.
11.8 No Third-Party Benefits. None of the provisions of this
Agreement shall be for the benefit of, or enforceable by, any third-party
beneficiary.
11.9 Headings. The Section and Subsection headings used herein are
for convenience or reference only, are not a part of this Agreement and are
not to affect the construction of, or be taken into consideration in
interpreting, any provision of this Agreement.
11.10 Counterparts. This Agreement may be executed in several
counterparts all of which together shall constitute one and the same
instrument with the same force and effect as though each of the parties had
executed the same document.
11.11 Governing Law. This Agreement is made and shall be governed
by, and construed and enforced in accordance with, the internal laws of the
State of California, without regard to the conflict of laws principles
thereof, as the same apply to agreements executed solely by residents of
California and wholly to be performed within California.
11.12 Construction. In the interpretation and construction of this
Agreement, the parties acknowledge that the terms hereof reflect extensive
negotiations between the parties and that this Agreement shall not be deemed,
for the purpose of construction and interpretation, that either party drafted
this Agreement.
11.13 No Public Announcement. Except as otherwise required by law,
neither party to this Agreement shall make or cause to be made any public
announcement or press release with respect to the terms of this Agreement or
the transactions contemplated hereby without the prior written approval of the
other party hereto, which consent shall not be unreasonably withheld or
delayed.
11.14 Venue; Submission to Jurisdiction. Each of the parties
submits to the exclusive jurisdiction of any state or federal court sitting in
San Diego County, California, in any action or proceeding arising out of or
relating to this Agreement. Each Member further agrees that personal
jurisdiction over such Member may be effected by service of process, and that
when so made shall be as if served upon such Member personally within the
State of California. Each of the parties waives any defense of inconvenient
forum to the maintenance of any action or proceeding so brought and waives any
bond, surety, or other security that might be required of any other party with
respect thereto.
11.15 Authority. Each of the persons executing this Agreement
represents and warrants that it is authorized to execute this Agreement and
the entity on whose behalf they are signing is bound by the terms hereof.
11.16 Expenses. Except as otherwise provided for herein, each
party hereto shall be responsible for its own expenses accrued in connection
with the negotiation, execution and consummation of the transactions
contemplated by this Agreement, including fees of his or its respective
attorneys, accountants or consultants.
11.17 Good Faith. All parties hereto agree to carry out the terms
of this Agreement and to act in good faith with respect to the terms and
conditions contained herein before and after the execution hereof.
11.18 Time is of the Essence. Time is of the essence in this
Agreement, and all of the terms, covenants and conditions hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
CALLAWAY GOLF COMPANY, LICENSEE:
a California corporation
ALL-AMERICAN GOLF LLC, a
By: California limited liability company
▇▇▇▇▇▇ ▇. ▇▇▇, President and
Chief Executive Officer By: Saint ▇▇▇▇▇▇▇ Golf Corporation,
a Nevada corporation
By:
▇▇▇ ▇▇▇▇▇▇, President
EXHIBIT A
REGISTRATION
TRADEMARK NUMBER CLASSES
▇▇▇▇▇ 1239514 28
Bouncer 1302835 28
The Purist 1310230 28
Callaway Hickory Stick 1313608 28
Little Poison 1326177 28
▇▇▇▇ ▇▇▇▇▇▇▇▇ & Design 1374905 28
▇▇▇▇ ▇▇▇▇▇▇▇▇ & Design 1376015 25, 28
T and Design 1377379 25, 28
Billet Series 1431312 28
▇▇▇▇▇ II & Design 1431331 28
S2H2 & Design 1506114 28
S2H2 & Design 1524605 25
The Swing Tube 1627344 28
T and Design 1643727 28
Ladies Gems & Design 1649160 28
Big ▇▇▇▇▇▇ 1649164 28
Tru-bore 1656904 28
Callaway & Design 1662574 28
▇▇▇▇▇ Steamer 1669906 28
You Can't Argue with Physics 1681308 28
White Gold & Design 1684160 28
▇▇▇▇▇▇ Figure Pointing & Device 1691746 28
S2H2 1713921 28
Big ▇▇▇▇▇▇ & Design 1720466 28
You Can't Hit It With Your Eyes Closed 1743983 28
Hole in the Head 1746483 28
Callaway & Design 1762932 25
World's Friendliest Fairway ▇▇▇▇▇ 1766823 28
Callaway & Design 1768763 28
RCH 60 1779049 28
World's Friendliest Driver ▇▇▇▇▇▇▇ 28
Big ▇▇▇▇▇▇ 1800144 25
▇▇▇▇ ▇▇▇▇▇▇ 1807716 28
RCH 90 1816436 28
RCH 90 & Design 1819065 28
▇▇▇▇▇▇ Figure Swinging Club & Device 1821440 25
Torus & Device 1821477 28
Heavenwood 1826476 28
Ladies' Gems & Design 1831447 28
The Most Solid Feel in Golf 1833403 28
▇▇▇▇▇▇ Figure Swinging Club & Device 1833419 28
World's Friendliest Metal ▇▇▇▇▇ 1851149 28
War Bird 1867722 28
The ▇▇▇▇▇▇ 1877710 28
Divine Nine 1879270 28
▇▇▇▇▇▇ Figure Sitting & Device 1887983 28
Big ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Irons USA
Medallion & Design 1912653 28
Chevron & Device 1918107 28
Big ▇▇▇▇▇▇ Bottom Design 1918108 28
S2H2 Wood Bottom Design 1922181 28
Big In All The Right Places, For
All The Right Reasons 1932270 28
Kick Butt 1932282 28
S2H2 & Design 1933211 28
Brass Billet 1943259 28
War Bird Bottom Design 1947849 28
Callaway & Design 1959504 25
Great Big ▇▇▇▇▇▇ 1982951 28
World's Friendliest Iron 1987183 28
Medallion Outline 1991571 28
G.B.B.UL & Design 1996083 28
Titanic 2007032 28
G.B.B. & Design 2012458 28
World's Friendliest 2022405 28
▇▇▇ Would 2039478 28
Medallion Internal Geometries 2045306 28
RCH Series 96 2056210 28
How Golf Should Feel 2056345 28
Medallion Outline 2059675 25
Deuce 2065148 28
▇▇▇▇▇ 899593 28
BBB Men's Head Cover 28
BBB Scoreline Design 28
BBB Women's Head Cover 28
Biggest Big ▇▇▇▇▇▇ 25
BJ-1 28
Callaway 37
Callaway 16
Callaway 9, 42
Callaway 36
Callaway 8
Callaway 3, 9
Callaway & Design 37
Callaway & Design 9, 42
Callaway & Design 16
Callaway & Design 36
Callaway & Design 3, 9
Callaway & Design 21
Callaway & Design 8
Callaway & Design 6
Callaway Golf 28
Callaway Golf 9, 42
Callaway Golf 16
Callaway Golf 25
Callaway Golf & Design 28
Callaway Golf & Design 9, 42
Callaway Golf & Design 16
Callaway Golf & Design 25
Callaway Golf Center 41
Callaway Golf Experience 42
Callaway Golf Performance Center 42
Callaway Kids 16
Chevron & Device 28
Deuce 25
Divine Nine 25
▇▇▇ Would 25
GBB Iron Medallion (broad) & Design 28
GBB Iron Medallion (medium) & Design 28
GBB Iron Medallion (narrow) & Design 28
GBB Scoreline Design 28
Gems Lite 28
Gems UL 28
Gems Ultra Lite 28
Great Big ▇▇▇▇▇▇ 25
Heavenwood 25
Memphis "10" Special 28
S2H2 & Design 25
▇▇▇ ▇▇▇▇▇ Performance System 9
Tartan & Design 25
Tungsten Titanium & Design 28
War Bird 25
Callaway 18
Callaway & Design 9
Callaway & Design 18
Callaway Golf 18
Callaway Golf 9
Callaway Golf & Design 18
Callaway Golf & Design 9
Memphis "10" 28
EXHIBIT B
PERFORMANCE CRITERIA
FISCAL YEAR PERFORMANCE CRITERIA
1997 The Company shall not realize a net loss in excess of
$500,000 from the date of the opening of the Center
to the general public through December 31, 1997.
1998 The Company shall not realize a net loss in excess of
$400,000 for the year nor a cumulative, undiscounted
net loss in excess of $1,000,000 as of the end of the
year.
1999 The Company shall not realize a net loss in excess of
$300,000 for the year nor a cumulative, undiscounted
net loss in excess of $1,000,000 as of the end of the
year.
2000 The Company shall not realize a net loss in excess of
$200,000 for the year nor a cumulative, undiscounted
net loss in excess of $1,000,000 as of the end of the
year.
2001 The Company shall attain inception-to-date, undis-
counted net profit of at least $1.
2002+ During each fiscal year that the Callaway Golf Loan
remains outstanding, the Allocation of Net Income
and Net Loss to Callaway Golf as calculated pursuant
to Article VI of this Agreement will represent at
least a 5% annual return on the equity investment
of Callaway Golf.
During each fiscal year following the year in which
the Callaway Golf Loan is repaid, the Allocation
of Net Income and Net Loss to Callaway Golf as cal-
culated pursuant to Article VI of this Agreement will
represent at least a 10% annual return on the equity
investment* of Callaway Golf.
Performance Criteria shall be subject to applicable governmental laws,
orders, ordinances, rules, regulations and restrictions, acts of God, fires,
strikes and other labor difficulties, accidents, war and any risks in any way
pertaining thereto and all other events and circumstances beyond the control
of Company. Failure to achieve Performance Criteria shall not be deemed to
have occurred if such failure is caused by any of the events set forth in the
preceding sentence.
--------------
* As to any fiscal year, the equity investment of Callaway Golf is defined as:
- the initial capital contribution of $750,000
plus
- any additional capital contribution made by (or conversion of debt to
equity effected by) Callaway Golf pursuant to this Agreement. Contributions
made during the subject year will be appropriately weighted to reflect the
portion of the year benefitted by the contribution
plus
- cumulative prior year net income allocations pursuant to Article VI of
this Agreement, except that if cumulative prior year allocations represent a
net loss, such cumulative prior year allocations will be disregarded
minus
- any distributions made to Callaway Golf pursuant to Article VI of this
Agreement.
Distributions made during the subject year will be appropriately weighted to
reflect the portion of the year affected by the distribution.
STATE OF CALIFORNIA
▇▇▇▇ ▇▇▇▇▇, SECRETARY OF STATE
SACRAMENTO
I, ▇▇▇▇ ▇▇▇▇▇, Secretary of State of California, hereby certify:
That the annexed transcript of 1 page(s) was prepared by and in this
office from the record on file, of which it purports to be a copy, and that it
is full, true and correct.
THE GREAT SEAL
OF THE STATE OF
CALIFORNIA IN WITNESS WHEREOF, I execute this
certificate and affix the Great
Seal of the State of California
May 29, 1997
/s/ ▇▇▇▇ ▇▇▇▇▇
Secretary of State
STATE OF CALIFORNIA
▇▇▇▇ ▇▇▇▇▇, SECRETARY OF STATE
SACRAMENTO
LIMITED LIABILITY COMPANY
ARTICLES OF ORGANIZATION
1. Limited liability company name: All-American Golf LLC
2. Latest date (month/day/year) on which the limited liability company is to
dissolve: December 31, 2097
3. The purpose of the limited liability company is to engage in any lawful
act or activity for which a limited liability company may be organized under
the ▇▇▇▇▇▇▇-▇▇▇▇▇▇ Limited Company Act.
4. Enter the name of initial agent for service of process and check the
appropriate provision below:
▇▇▇▇▇ ▇▇▇▇, which is
[X] an individual residing in California. Proceed to Item 5.
[ ] a corporation which has filed a certificate pursuant to Section 1505
of the California Corporations Code. Skip Item 5 and proceed to Item 6.
5. If the initial registered agent for service of process is an individual,
enter a business or residential street address in California:
Street address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
City: Carlsbad State: California Zip Code: 92008-8815
6. The limited liability company will be managed by: (Check one)
[X] one manager [ ] more than one manager [ ] limited liability
company members
7. If other matters are to be included in the Articles of Organization attach
one or more separate pages.
Number of pages attached, if any: 0
8. It is hereby declared that I am the For Secretary of State Use
person who executed this instrument,
which execution is may act and deed.
101997148021
/s/ G. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Signature of organizer FILED in the office of the
Secretary of State of the
G. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq. State of California
Type or print name of organizer
May 28, 1997
Date: May 27, 1997
/s/ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, Secretary of
State
