Exhibit 10.14




	


CREDIT
AGREEMENT



        This
Credit Agreement (the “Agreement”) is entered into as of
February 13, 2004, by and among ADAMS GOLF, INC., a Delaware corporation;
ADAMS GOLF HOLDING CORP, a Delaware corporation; ADAMS GOLF GP
CORP, a Delaware corporation; ADAMS GOLF, LTD., a Texas limited
partnership; ADAMS GOLF IP, LP, a Delaware limited partnership; and
ADAMS GOLF MANAGEMENT CORP, a Delaware corporation (the
“Borrowers”), whose address is 2801 E. Plano Parkway, Plano,
Texas, 75074 and BANK OF TEXAS, N.A. (“Lender”) whose
address is 5956 Sherry Lane, Suite 1100, Dallas, Texas 75225. In consideration
of Lender’s making the following described loans, the mutual covenants
contained in this Agreement and other good and valuable consideration, the
receipt and sufficiency of which are acknowledged by each of the parties to this
Agreement, Borrowers and Lender agree as follows:



        ARTICLE
1. DEFINED TERMS.



        “Affiliate”
means, as to any Person, any other Person (a) that directly or indirectly,
through one or more intermediaries, controls or is controlled by, or is under
common control with, such Person; (b) that directly or indirectly beneficially
owns or holds five percent (5%) or more of any class of voting stock of such
Person; or (c) five percent (5%) or more of the voting stock of which is
directly or indirectly beneficially owned or held by the Person in question. The
term “control” means the possession, directly or indirectly, of the
power to direct or cause direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract, or otherwise;
provided, however, in no event shall the Lender be deemed an Affiliate of the
Borrowers or any of its Subsidiaries or Affiliates.



        “Applicable
Rate” means a variable rate of interest per annum at all times equal to
the Prime Rate minus one-half of one percent (1/2 of 1%), such Applicable Rate
to change when and as the Prime Rate changes.



        “Authorization
Documents” means, as to any Person which is not an individual, all
appropriate evidences of the authority of such Person to execute, deliver and
perform the Loan Documents to which it is a party, including, without
limitation, as to any such Person which is a corporation, resolutions of its
Board of Directors certified by its secretary or an assistant secretary, and a
Certificate of Incumbency certified by its secretary or an assistant secretary
certifying the names of the officers of such Person authorized to sign the Loan
Documents to which it is a party.



        “Authorized
Officer” means, (a) with respect to the Corporate Borrowers, the
President, Vice President, or Chief Financial Officer of each such respective
Corporate Borrower and (b) with respect to the Partnership Borrowers, the
President, Vice President, or Chief Financial Officer of the general partner of
the Partnership Borrowers, in each case as designated in writing to Lender.



        “Borrowing
Base” means, at the particular time in question, an amount equal to the
sum of (a) seventy-five percent (75%) of Eligible Accounts, as shown on the
latest Borrowing Base Report received by Lender and (b) for the determinations
using the subject month of December, January, and February of each calendar year
during the term of this Agreement, the lesser of (i) ten percent (10%) of
Eligible Inventory, as shown on the latest Borrowing Base Report received by
Lender, or (ii) $900,000.00.



        “Borrowing
Base Report” means a report in the form of report attached hereto as
“Exhibit A”, appropriately completed, together with the
following attachments: (i) detailed aged schedule of all Eligible Accounts, as
of the date specified in the report, listing face amount and date of invoices of
each Eligible Account and the name of each account debtor (and, upon request of
Lender, the address of each



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account debtor and copies of invoices, credit
reports, and any other matters and information relating to the Eligible
Accounts), and (ii) a schedule of Eligible Inventory detailed by product and
location.



“Business
Day” means a day (other than Saturday, Sunday or a legal holiday) on
which commercial banks are open for business in Dallas, Texas.



        “Capital
Lease Obligation” means the amount of Debt under a lease of Property by
a Person that would be shown as a liability on a balance sheet of such Person
prepared for financial reporting purposes in accordance with GAAP.



        “Charter
Documents” means, as to any Person which is not an individual, as
applicable, its articles/certificate of incorporation, bylaws, certificate of
partnership, partnership agreement, certificate of formation, limited liability
agreement, operating agreement and all shareholder agreements, voting trusts and
similar arrangements evidencing the existence, good standing, governance and
authority of such Person together with appropriate certificates of the
appropriate governmental officials of the state of incorporation or formation of
such Person as to the existence and good standing of such Person.



        “Closing
Date” means, the date upon which all of the conditions precedent set
forth in Article 7 hereof have been performed by Borrowers to Lender’s
satisfaction.



        “Closing
Documents” means a collective reference to (i) the Charter Documents
and Authorization Documents of Borrowers, certified as of a Current Date; (ii)
the Loan Documents, dated as of the Closing Date and executed and delivered by
the appropriate Person; (iii) the Initial Borrowing Base Report certified by the
Borrowers, as of a Current Date, and (iv) the Request for Loan executed by
Borrowers.



        “Collateral”
means all property of any kind which is subject to a Lien in favor of Lender or
which, under the terms of any Loan Documents, is or is purported to be
encumbered by any Lien in favor of Lender or subject to any Lien in favor of
Lender.



        “Commitment”
means the obligation of Lender to make the Loans to Borrowers pursuant to
Section 2.1 up to an aggregate principal amount at any time outstanding
of $2,000,000.00.



        “Corporate
Borrowers” means Adams Golf,  Inc.,  Adams Golf Holding Corp,  Adams Golf GP
Corp,  and Adams  Golf Management Corp.



        “Current
Date” means a date which is within five (5) calendar days prior to the
Closing Date.



        “Debt”
means as to any Person at any time (without duplication): (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, notes, debentures, or other similar instruments,
(c) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable of such Person arising in
the ordinary course of business that are not past due by more than ninety (90)
days, (d) all Capital Lease Obligations of such Person, (e) all Debt
or other obligations of others guaranteed by such Person, (f) all
obligations secured by a Lien existing on property owned by such Person, whether
or not the obligations secured thereby have been assumed by such Person or are
non-recourse to the credit of such Person, (g) any other obligation for
borrowed money or other financial accommodations which in accordance with GAAP
would be shown as a liability on the balance sheet of such Person, (h) any
repurchase obligation or liability of a Person with respect to accounts, chattel
paper or notes receivable sold by such Person, (i) any liability under a
sale and leaseback transaction that is not a Capital Lease Obligation,
(j) any obligation under any so-called “synthetic leases”,
(k) all reimbursement obligations of such Person (whether contingent or
otherwise) in



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respect of letters of credit, bankers’ acceptances, surety or
other bonds and similar instruments, and (m) all liabilities of such Person
in respect of unfunded vested benefits under any Plan.



        “Default”
means any of the events or conditions specified in Section 6.1, whether
or not any requirement for notice or lapse of time or any other condition has
been satisfied.



        “Default
Interest Rate” means a rate equal to the lesser of (a) the Applicable
Rate plus three percent (3%), with adjustments to be made on the same date of
any change in the Prime Rate or (b) the Maximum Rate.



        “Eligible
Accounts” means, as of the date of determination (without duplication)
the total of all accounts receivable of Borrowers created in the ordinary course
of business that are acceptable to Lender in its sole and absolute discretion
and that satisfy each of the following conditions:










	 	        (a)
The account complies with all applicable laws, rules and regulations, including,  without
limitation, usury laws, the Federal Truth in Lending Act and Regulation  Z of the Board
of Governors of the Federal Reserve System;






	 	        (b)
The account, if due 30 days from the original date of invoice, is not more than  60 days
past due;






	 	        (c)
The account, if due 60 days from the original date of invoice, is not more than  30 days
past due;






	 	        (d)
The account was created in connection with (i) the sale of inventory in the  ordinary
course of business and the sale has been fully consummated and the  inventory has been
shipped and delivered and received by the account debtor or  (ii) the performance of
services by a Borrower in the ordinary course of  business and the services have been
completed and accepted by the account  debtor;






	 	        (e)
The account represents a legal, valid and binding payment obligation of the  account
debtor enforceable in accordance with its terms and arises from an  enforceable contract,
the performance of which contract, insofar as it relates  to the account, has been
completed by a Borrower;






	 	        (f)
The account does not arise from the sale of any inventory on a bill-and-hold,  guaranteed
sale, sale-or-return, sale on approval, consignment or any other  conditional basis;






	 	        (g)
A Borrower has good and indefeasible title to the account and the account is  subject to
a valid, perfected, first priority security interest in favor of  Lender and is not
subject to any Liens except Liens in favor of Lender;






	 	        (h)
The account does not arise out of a contract or an order that, by its terms,  prohibits
or makes void or unenforceable the grant of a security interest to  Lender in and to the
account;






	 	        (i)
The amount of the account included in Eligible Accounts is not subject to any  setoff,
counterclaim, defense, dispute, recoupment or adjustment other than  normal discounts for
prompt payment;






	


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	 	        (j)
No Borrower has established a reserve for bad debt with respect to the account  or
considered collection of the account doubtful;






	 	        (k)
The account debtor is not insolvent or the subject of any bankruptcy, insolvency  or
similar proceeding and has not made an assignment for the benefit of  creditors,
suspended normal business operations, dissolved, liquidated,  terminated its existence,
ceased to pay its debts as they become due or suffered  a receiver or trustee to be
appointed for any of its assets or affairs;






	 	        (l)
The account is not evidenced by chattel paper or an instrument;






	 	        (m)
No  default exists under the account;






	 	        (n)
The account debtor has not returned or refused to retain, or otherwise notified  a
Borrower of any dispute concerning, or claimed nonconformity of, any of the  inventory or
services relating to the account;






	 	        (o)
The account is not owed by an Affiliate of any Borrower, a Subsidiary of any  Borrower,
or any stockholder, officer, director or employee of any Borrower or  any Subsidiary;






	 	        (p)
The account is payable by the account debtor in lawful money of the United  States of
America;






	 	        (q)
The account does not constitute progress billings, retainages, or deferred  payments
under a contract or order not fully performed;






	 	        (r)
The account debtor is not domiciled in any country other than the United States,  unless
the account is fully insured by the Export-Import Bank of the United  States, the Foreign
Credit Insurance Association or another insuring entity  acceptable to Lender or is fully
secured by a letter of credit issued or  confirmed by a bank acceptable to Lender
containing terms and conditions  reasonably acceptable to Lender;






	 	        (s)
The account is not owed by an account debtor as to which more than five percent  (5%) of
the aggregate balances then outstanding on accounts owed by the account  debtor and/or
its affiliates to Borrowers are more than 60 days past due from  the dates of their
original invoices;






	 	        (t)
The account debtor is not the United States or any department, bureau, agency or
instrumentality of the United States, unless, with respect to the security  interest in
the account in favor of Lender, the Federal Assignment of Claims Act  of 1940, as
amended, and any other applicable laws, shall have been complied  with; and






	 	        (u)
The account is not owed by an account debtor as to which the total of all  accounts owing
by the account debtor or an Affiliate of the account debtor  exceeds ten percent (10%) of
the total of all accounts at such date,  provided, that, an amount of
accounts owing by the account debtor  that do not exceed ten percent (10%) of the total
of all accounts at such date  shall not be excluded pursuant to this clause.






	


        The
amount of the Eligible Accounts owed by an account debtor shall be net of, and
shall be reduced by (if and to the extent not already so reduced by virtue of
the preceding clauses of this


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definition), the amount of all contra accounts,
reserves, credits, rebates and other indebtedness, liabilities and obligations
owed by Borrowers to the account debtor.



        “Eligible
Inventory” means, as of the date of determination, the value of all
inventory of raw materials and finished goods then owned by and in the
possession of a Borrower and held for sale or disposition in the ordinary course
of business, which Lender in its sole judgment deems Eligible Inventory, based
upon such considerations as Lender may from time to time determine to be
appropriate and in which Lender holds a valid, perfected, first priority
security interest, valued at the lower of (a) actual cost or (b) fair market
value. Without limiting the generality of the foregoing, Eligible Inventory
shall not include (i) inventory in which a Person (other than Lender) has a
Lien, (ii) inventory located outside of the continental United States, (iii)
inventory that consists of, work in process and materials or supplies used or to
be used, or consumed or to be consumed in the normal course of business; (iv)
inventory that has been shipped or delivered to a customer on a bill-and-hold,
guaranteed sale, sale-or-return, sale on approval, consignment or any other
repurchase or return basis, (v) inventory that is not in good condition or does
not comply with all applicable laws, rules and regulations with respect to its
manufacture, use, or sale, (vi) inventory with respect to which a claim exists
disputing the title of any Borrower to or right to possession of the inventory,
(vii) inventory that is not located at the locations specified in the Security
Instruments, (viii) inventory which is deemed defective, obsolete,
unmerchantable, or unsuitable by Lender in its reasonable judgment, and (ix)
inventory evidenced by a negotiable or non-negotiable document of title.



        “ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from time
to time, together with all rules and regulations promulgated with respect
thereto.



        “Event
of Default” means any of the events or conditions specified in
Section 6.1 provided that any requirement for notice or lapse of time or
any other condition has been satisfied.



        “GAAP”
means generally accepted accounting principles, applied on a consistent basis,
as set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and/or in
statements and pronouncements of the Financial Accounting Standards Board and/or
their successors which are applicable in the circumstances as of the date in
question; provided, however, for purposes of determining compliance with any
covenant set forth in Article 4 of this Agreement, such terms shall be
construed in accordance with GAAP as in effect on the date of this Agreement
applied on a basis consistent with the application used in the Initial Financial
Statements. Accounting principles are applied on a “consistent basis”
when the accounting principles applied in a current period are comparable in all
material respects to those accounting principles applied in a preceding period.



        “Inactive
Subsidiaries” has the meaning assigned that term in Section 3.22
hereof.



        “Indebtedness”
means the unpaid principal of and interest on (including, without limitation,
interest accruing after the maturity of the Loans and interest accruing after
the filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to Borrowers, whether or not a claim
for post-filing or post-petition interest is allowed in such proceeding) the
Loans and all other obligations and liabilities of Borrowers to Lender, whether
direct or indirect, absolute or contingent, due or to because due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with, this Agreement, any other Loan Document or any other document made,
delivered or given in connection herewith or therewith, whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses (including, without limitation, all fees, charges and disbursements of
counsel to Lender that are required to be paid by Borrowers pursuant hereto) or
otherwise.


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        “Law”
means any law, regulation, rule, order, decree, license or permit, domestic or
foreign.



        “Lien”
means any lien, mortgage, security interest, pledge, deposit, rights of vendor
under any title retention or conditional sale agreement or lease substantially
equivalent thereto, or any charge or encumbrance for security purposes, whether
arising by Law or agreement or otherwise.



        “Loan
Documents” means this Agreement, the Note, the Security Instruments,
and all other certificates, documents and agreements executed in connection with
this Agreement.



        “Loans”
means the loans made by Lender to Borrowers pursuant to Section 2.1.



        “Material
Adverse Effect” means any set of circumstances or events which (a) is
or could reasonably be expected to be material and adverse to the business,
condition (financial or otherwise), operations, Property, assets, operations,
prospects or profits of Borrowers, (b) has or could reasonably be expected to
have any material adverse effect whatsoever upon the validity or enforceability
of any of the Loan Documents or any of the transactions contemplated by the Loan
Documents, (c) materially impairs or could reasonably be expected to materially
impair the ability of Borrowers to pay the Indebtedness or to perform their
respective obligations under any of the Loan Documents, (d) impairs or could
reasonably be expected to impair the ability of Lender to enforce its legal
rights and remedies under any of the Loan Documents, or (e) impairs or could
reasonably be expected to impair the priority of the Liens under any Loan
Document or the value of the Collateral.



        “Maximum
Rate” means the maximum lawful rate of interest permitted by applicable
usury laws now or hereafter enacted which interest rate shall change when and as
said laws change, to the extent permitted by said laws, effective on the day
such change in said laws becomes effective, provided, however, that the term
“Maximum Rate” means a rate equal to five (5) percentage points above
the Prime Rate as it varies if there is no Maximum Rate.



        “Note”
has the meaning assigned that term in Section 2.1.



        “Partnership
Borrowers” means Adams Golf, Ltd. and Adams Golf IP, LP.



        “Permitted
Liens” means (a) Liens in favor of Lender, (b) Liens for taxes,
assessments and other governmental charges arising by law in the ordinary course
of business for sums which are not yet due and payable, (c) Liens of mechanics,
materialmen, warehousemen and other like Persons arising by law in the ordinary
course of business for sums which are not yet due and payable, (d) Liens, not
delinquent, created by statute in connection with worker’s compensation,
unemployment insurance and social security obligations, (e) encumbrances
consisting of minor easements, zoning restrictions or other restrictions on the
use of real property that do not (individually or in the aggregate) materially
affect the value of the assets encumbered or materially impair the ability of
any Borrower to use the assets in its business, and (f) liens held by Tom Watson
on the liquidated net assets including the inventory, accounts and account
receivables of Adams Golf, Inc., and Adams Golf, Ltd., which liens have been
subordinated to the liens held by Lender.



        “Person”
means an individual, corporation, partnership, association, joint stock company,
trust, estate, unincorporated organization or joint venture, or a court or
governmental unit or any agency or subdivision thereof, or any other legally
recognizable entity.



        “Plan”
means any employee benefit or other plan established or maintained by Borrowers
and which is covered by Title IV of ERISA.


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        “Prime
Rate” means the “prime rate” published in the “Money
Rates” table in The Wall Street Journal from time to time, and if
multiple rates are published, the highest such prime rate; provided,
however, that in the event The Wall Street Journal is no longer
published or no longer publishes the “Money Rates” table, Lender shall
choose a substitute rate that is based or comparable information. Such rate is
only one of the reference rates or indexes used by Lender from time to time.
Lender may lend to others at rates greater or less than such rate.



        “Property”
means any interest in any kind of property or assets, whether real, personal or
mixed, or tangible or intangible.



        “Security
Instruments” has the meaning assigned to that term in Section
7.1.



        “Stock”
means all shares, options, interests, participations or other equivalents
(howsoever designated) of or in a corporation, whether voting or non-voting,
including, without limitation, common stock, warrants, preferred stock,
convertible debentures, and all agreements, instruments, and documents
convertible, in whole or in part, into any one or more of all of the foregoing.



        “Subsidiary”
means any corporation of which more than fifty percent (50%) of the issued and
outstanding securities having ordinary voting power for the election of
directors is owned or controlled, directly or indirectly, by a Borrower and/or
one or more of its Subsidiaries.



        “Termination
Date” means February __, 2005, unless sooner terminated pursuant to
Section 6.2.



        “UCC”
means the Uniform Commercial Code, as enacted and in effect in the State of
Texas.



        ARTICLE
2. AMOUNT AND TERMS OF CREDIT.










	 	        2.1
The Commitment. Subject to, and upon the terms, conditions, covenants and
agreements contained in this Agreement, Lender agrees to make Loans to Borrowers  from
time to time for a period from and after the date of this Agreement up to  but not
including the Termination Date in such amounts as Borrowers may request  up to but not
exceeding an aggregate principal sum at any time outstanding equal  to the lesser of (a)
the Borrowing Base, as determined by Lender from time to  time pursuant to Section 2.5,
and (b) the Commitment. Within such limits  and during such period, Borrowers may borrow,
repay, and re-borrow under this  Agreement. To evidence the Loans, Borrowers will issue,
execute and deliver a  promissory note (such note together with any and all renewals,
extensions and/or  rearrangements thereof is called the “Note”) dated as
of the  date of this Agreement in the principal amount of the Commitment and payable to
the order of Lender on the Termination Date, and otherwise being in form and  substance
satisfactory to Lender. Unpaid principal of, and accrued interest on,  the Loans shall be
in accordance with the terms of the Note. Interest on the  Loans shall accrue at the
rates provided in Section 2.2.






	 	        2.2
Interest Rate. The unpaid principal of the Loans shall accrue interest  from the
date of advancement until the earlier of (a) an Event of Default or (b)  maturity at the
lower of (i) the Applicable Rate, with adjustments to the  Applicable Rate to be made on
the same date as any change in the Prime Rate or  (ii) the Maximum Rate. All past due
principal and interest, whether due as a  result of acceleration or otherwise, shall
accrue interest at the Default  Interest Rate from the date payment of the principal and
interest shall have  become due until the same shall have been fully discharged by
payment.






	 	        2.3
Request for Loans. Each Loan shall be made on the same Business Day as  written
notice in the form of the “Request for Loan” attached to this  Agreement as Exhibit
“B” duly






	


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completed and executed by an  Authorized Officer of each Borrower
is received by Lender if received by 12:00 p.m. (Dallas, Texas time) and on the next
Business Day if received by Lender after 12:00 p.m. (Dallas, Texas time). If all
conditions precedent to the Loan have been met, Lender will, on the date requested, make
the Loan available to  Borrowers by depositing the proceeds thereof into an account
maintained at  Lender as directed by Borrowers.






	 	        2.4
Initial Borrowing Base. During the period from the date of this Agreement  until
the first redetermination of the Borrowing Base by Lender, the Borrowing  Base shall be
$_________________ as provided by Borrowers in that certain  Borrowing Base Report of
even date with this Agreement.






	 	        2.5
Subsequent Determination of Borrowing Base. Promptly after receiving (a)  each
Borrowing Base Report, (b) the results of any audit or inspection performed  by or on
behalf of Lender with respect to Borrowers or the Collateral, or (c)  any other
information which Lender, in good faith, reasonably believes affects  the Borrowing Base
or any component thereof, Lender shall, based upon the  Borrowing Base Report, audit,
inspection or information, redetermine the  Borrowing Base to remain in effect until the
next redetermination. In the event  Lender has not received an appropriately completed
Borrowing Base Report (with  all attachments) within the time period specified in this
Agreement, Lender  shall have no obligation to redetermine the Borrowing Base or make any
additional Loans until such time as Lender shall have received the information.






	 	        2.6
Mandatory Prepayments. If the unpaid principal balance of the Loans  exceeds the
lesser of (a) the Borrowing Base or (b) the Commitment, Borrowers  shall immediately
prepay the principal of the Loans in an amount at least equal  to the excess. Each
prepayment of principal under this Section shall be  accompanied by all interest then
accrued and unpaid on the principal so prepaid.  Any principal or interest prepaid under
this Section shall be in addition to,  and not in lieu of, all payments otherwise
required to be paid under the Loan  Documents at the time of the payment.






	 	        2.7
Computation of Interest. All payments of interest shall be computed on  the per
annum basis of a year of 360 days, but to the extent such computations  of interest might
cause the rate of interest to exceed the Maximum Rate, the  interest shall be computed on
the basis of a year of 365 or 366 days, as  applicable.






	 	        2.8
Voluntary Prepayments. Borrowers may prepay the unpaid principal of the  Note at
any time in whole or from time to time in part, without premium or  penalty, but with
accrued interest to the date of prepayment on the amount so  prepaid. Each prepayment of
principal of the Note shall be applied to reduce the  outstanding principal balance of
the Note.






	 	        2.9
Joint and Several Liability of Borrowers.






	 	        (a)
Each  of the Borrowers are accepting joint and several liability under this Agreement,
the Note, and the other Loan Documents in consideration of the financial  accommodations
to be provided by the Lender under this Agreement, for the mutual  benefit, directly and
indirectly, of each of the Borrowers and in consideration  of the undertakings of the
other Borrowers to accept joint and several liability  for the Indebtedness.






	 	        (b)
Each of the Borrowers, jointly and severally, hereby irrevocably and  unconditionally
accepts, not merely as a surety but also as a co-debtor, joint  and several liability
with the other Borrowers, with respect to the payment and  performance of all of the
Indebtedness (including, without limitation, any  Indebtedness arising under this 






	


Page 8












	 	Section 2.9), it being the intention of the  parties hereto that all the Indebtedness shall be
the joint and several  Indebtedness of each of the Borrowers without preferences or
distinction among  them.











	 	        (c)
If and to the extent that any of the Borrowers shall fail to make any payment  with
respect to any of the Indebtedness as and when due in accordance with the  terms thereof,
then in each such event the other Borrowers will make such  payment with respect to, such
Indebtedness.






	 	        (d)
The Indebtedness of each Borrower constitutes the absolute and unconditional,  full
recourse Indebtedness of such Borrower enforceable against each such  Borrower to the
full extent of its properties and assets, irrespective of the  validity, regularity or
enforceability of this Agreement or any other  circumstances whatsoever.






	 	        (e)
Each Borrower hereby waives notice of acceptance of its joint and several  liability,
notice of any Loans issued under or pursuant to this Agreement,  notice of the occurrence
of any Default, Event of Default, or of any demand for  any payment under this Agreement,
the Note, or any of the other Loan Documents  (except for notices required under this
Agreement and the other Loan Documents),  notice of any action at any time taken or
omitted by Lender under or in respect  of any of the Indebtedness, any requirement of
diligence or to mitigate damages  and, generally, to the extent permitted by applicable
law, all demands, notices  and other formalities of every kind in connection with this
Agreement, the Note,  and the other Loan Documents (except as otherwise provided in this
Agreement).  Each Borrower hereby assents to, and waives notice of, any extension or
postponement of the time for the payment of any of the Indebtedness, the  acceptance of
any payment of any of the Indebtedness, the acceptance of any  partial payment thereon,
any waiver, consent or other action or acquiescence by  Lender at any time or times in
respect of any default by any Borrower in the  performance or satisfaction of any term,
covenant, condition or provision of  this Agreement or any of the other Loan Documents,
any and all other indulgences  whatsoever by Lender in respect of any of the
Indebtedness, and the taking,  addition, substitution or release, in whole or in part, at
any time or times, of  any security for any of the Indebtedness or the addition,
substitution or  release, in whole or in part, of any Borrower. The Indebtedness of each
Borrower  shall not be diminished or rendered unenforceable by any winding up,
reorganization, arrangement, liquidation, reconstruction or similar proceeding  with
respect to any Borrower or Lender. The joint and several liability of the  Borrower
hereunder shall continue in full force and effect notwithstanding any  absorption,
merger, or any other change whatsoever in the name, constitution or  place of formation
of any of the Borrower or Lender.






	 	        (f)
Each Borrower hereby agrees that it will not enforce any of its rights of  contribution
or subrogation against the other Borrowers with respect to any  liability incurred by it
under this Agreement, the Note or any of the other Loan  Documents, any payments made by
it to the Lender with respect to any of the  Indebtedness or any collateral security
therefor until such time as all of the  Indebtedness has been paid in full in cash. Any
claim which any Borrower may  have against any other Borrower with respect to any
payments to Lender under  this Agreement, the Note or any other Loan Documents are hereby
expressly made  subordinate and junior in right of payment, without limitation as to any
increases in the Indebtedness arising hereunder or thereunder, to the prior  payment in
full in cash of the Indebtedness and, in the event of any insolvency,  bankruptcy,
receivership, liquidation, reorganization or other similar






	


Page 9












	 	
proceeding under the laws of
any jurisdiction relating to any Borrower, its  debts or its assets, whether voluntary or
involuntary, all Indebtedness shall be  paid in full in cash before any payment or
distribution of any character,  whether in cash, securities or other property, shall be
made to any other  Borrower therefor.






	 	        (g)
Each Borrower hereby agrees that, after the occurrence and during the  continuance of any
Default or Event of Default, the payment of any amounts due  with respect to the
indebtedness owing by any Borrower to any other Borrower is  hereby subordinated to the
prior payment in full in cash of the Indebtedness.  Each Borrower hereby agrees that
after the occurrence and during the continuance  of any Default or Event of Default, such
Borrower will not demand, sue for or  otherwise attempt to collect any indebtedness of
any other Borrower owing to  such Borrower until the Indebtedness shall have been paid in
full in cash. If,  notwithstanding the foregoing sentence, such Borrower shall collect,
enforce or  receive any amounts in respect of such indebtedness, such amounts shall be
collected, enforced and received by such Borrower as trustee for the Lender for
application to the Indebtedness.










	 	        (h)
In addition to all such rights of indemnity and subrogation as the Borrowers may  have
under applicable law (but subject to Section 2.9(f)), the Borrowers agree  that (i) in
the event a payment shall be made by any Borrower under this  Agreement, the Note or any
of the other Loan Documents, the remaining Borrowers  shall indemnify such Borrower for
the full amount of such payment and such  Borrower shall be subrogated to the rights of
the person to whom such payment  shall have been made to the extent of such payment and
(b) in the event any  assets of any Borrower shall be sold pursuant to any Loan Document
to satisfy in  whole or in part a claim of Lender, the remaining Borrowers shall
indemnify such  Borrower in an amount equal to the greater of the book value or the fair
market  value of the assets so sold.






	 	        (i)
Each Borrower (a “Contributing Borrower”) agrees (subject to Section  2.9(f))
that, in the event a payment shall be made by any other Borrower under  this Agreement,
the Note or any other of the other Loan Documents or assets of  any other Borrower shall
be sold pursuant to any Loan Document to satisfy a  claim, in whole or in part, of Lender
and such other Borrower (the  “Claiming Borrower”) shall have not been fully
indemnified by the  other Borrowers as provided in Section 2.9(h), the Contributing
Borrowers shall  indemnify the Claiming Borrower in an amount equal to the amount of such
payment  or the greater of the book value or the fair market value of such assets, as the
case may be, in each case multiplied by a fraction of which the numerator shall  be the
net worth of the Contributing Borrower on the date hereof and the  denominator shall be
the aggregate net worth of all the Borrowers on the date  hereof. Any Contributing
Borrower making any payment to a Claiming Borrower  pursuant to this Section 2.9(i) shall
be subrogated to the rights of such  Claiming Borrower under Section 2.9(h) to the extent
of such payment.






	 	        (j)
No failure on the part of a Borrower to make the payments required by Section  2.9(h) or
2.9(i) (or any other payments required under applicable law or  otherwise) shall in any
respect limit the Indebtedness and liabilities of any  Borrower with respect to its
Indebtedness under this Agreement, the Note and the  other Loan Documents, and each
Borrower shall remain liable for the full amount  of the Indebtedness.






	


Page 10















	 	        2.10
Clean-Up Period. Loans made by Lender under the Borrowing Base shall be  reduced
to zero during at least a thirty (30) consecutive day period between the  date hereof and
the Termination Date.







	 	        ARTICLE
3. REPRESENTATIONS AND WARRANTIES. In addition to any other  representations
or warranties made by Borrowers in any of the other Loan  Documents, in order to induce
Lender to enter into this Agreement and to make  the Loans, Borrowers represent and
warrant to Lender (which representations and  warranties will survive the delivery of the
Note and the making of the Loans)  that:






	 	        3.1
Organization.






	 	        (a)
Each  Corporate Borrower is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and is duly  qualified
to transact business in the State of Texas and in each other  jurisdiction wherein the
Property owned or the business transacted by it makes  such qualification necessary.






	 	        (b)
Each Partnership Borrower is a limited partnership duly formed and validly  existing
under the laws of the jurisdiction of its formation and is duly  qualified to transact
business in the State of Texas and in each other  jurisdiction wherein the Property owned
or the business transacted by it makes  such qualification necessary.






	 	        3.2
Power and Authority. Each Borrower has full power and authority to enter  into,
execute and deliver the Loan Documents to which it is a party, to  consummate the
transactions contemplated in the Loan Documents to which it is a  party, and to incur the
obligations provided for in the Loan Documents, all of  which have been duly authorized
by all necessary and proper action.






	 	        3.3
Consents. No consent or approval of any public authority or third party,  or of
any stockholders or partners of Borrowers, as applicable, is required as a  condition to
the validity of any of the Loan Documents which has not been  obtained.






	 	        3.4
Binding Obligations. The Loan Documents constitute legal, valid and  binding
obligations of each Borrower to the extent it is a party thereto,  enforceable in
accordance with their respective terms, except as enforcement may  be limited by
bankruptcy, insolvency or other laws of general application  relating to the enforcement
of creditors’ rights.






	 	        3.5
No Legal Bar, Etc. The execution and delivery of the Loan Documents, the
performance by each Borrower of its obligations under the Loan Documents to  which it is
a party, and the consummation of the transactions contemplated by  the Loan Documents, do
not and will not (a) conflict with any provision of any  Law, any Borrower’s Charter
Documents, any agreement, judgment, license,  order or permit applicable to or binding
upon any Borrower or any of its  Property, (b) result in the acceleration of any Debt
owed by any Borrower, or  (c) result in or require the creation of any Lien upon any
Property of Borrower.  No consent, approval, authorization, or order of, and no notice to
or filing  with, any court or governmental authority or third party is required in
connection with the execution, delivery or performance of any of the Loan  Documents or
to consummate any transaction contemplated by the Loan Documents.






	


Page 11















	 	        3.6
Trade Names, Place of Business. No Borrower has, during the preceding  five (5)
years, been known by or used any other name. The chief executive office  and principal
place of business of Borrowers are located at the address of  Borrowers set forth above.






	 	        3.7
Proceedings. Except as disclosed in public filings by Adams Golf, Inc.,  there are
no actions, suits or proceedings pending or, to the knowledge of  Borrowers, threatened
against or affecting any Borrower before any court or  administrative agency which on the
date of this Agreement has, or which if  adversely determined against such Borrower could
reasonably be expected to have,  a Material Adverse Effect on the Borrowers taken as a
whole.






	 	        3.8
Financial Statements. The financial statements of Borrowers which have  been
delivered to Lender prior to the date of this Agreement (the “Initial  Financial
Statements”) have been prepared in accordance with GAAP and  present fairly the
financial condition and results of the operation of Borrowers  as at the dates and for
the periods covered. Since September 30, 2003, no  adverse change has occurred in the
condition, financial or otherwise, of  Borrowers.






	 	        3.9
Investments and Guaranties. No Borrower has made investments in, advances  to, or
guaranties of the Debt of, any Person, except as disclosed in the Initial  Financial
Statements.






	 	        3.10
Debt. No Borrower has any Debt, except as disclosed in the Initial  Financial
Statements.






	 	        3.11
Taxes. All income taxes and other taxes due and payable by each Borrower  through
the date of this Agreement have been paid prior to becoming delinquent.






	 	        3.12
Title. Each Borrower has good and indefeasible title to all its Property,  free
and clear of any Liens and security interests, except for Permitted Liens.






	 	        3.13
No Defaults. No event or condition has occurred and is continuing which
constitutes, or with notice or lapse of time (or both) would constitute, an  Event of
Default under this Agreement or any of the other Loan Documents.






	 	        3.14
Use of Proceeds. The proceeds of the Loans will be used solely for  working
capital and other general corporate purposes.






	 	        3.15
Margin Securities. Under no circumstances will any part of the proceeds  of the
Loans be used directly or indirectly for the purpose, whether immediate,  incidental, or
ultimate, of purchasing, carrying or trading in any “margin  stock” or any
“margin securities” (as such terms are defined  respectively in Regulation T, U
or X promulgated by the Board of Governors of  the Federal Reserve System) or to extend
credit to others directly or indirectly  for the purpose of purchasing or carrying any
margin stock or margin securities.  Borrower is not engaged principally, or as one of its
important activities, in  the business of extending credit to others for the purpose of
purchasing or  carrying such margin stock or margin securities.






	 	        3.16
Compliance With Laws. Each Borrower is conducting its business in  material
compliance with all applicable federal, state, and local Laws,  including without
limitation those pertaining to environmental matters; none of  the operations of
Borrowers are the subject of any federal, state or local  investigation evaluating
whether any material remedial action is needed to  respond to a release of any hazardous
or toxic waste, substance or constituent  into the environment; Borrowers have not, and
(to the best knowledge of  Borrowers) no other Person has, filed any notice under any
federal, state or  local Law indicating that Borrowers are responsible for the release
into the  environment, or the improper storage, of any hazardous or toxic waste,
substance  or constituent or that such waste, substance or constituent has been released,
or is improperly stored, upon any Property of Borrowers; and Borrowers do not  have any
material contingent liability in connection with the release into the  environment, or
the improper storage, of any waste, substance or constituent.






	


Page 12















	 	        3.17
Good Consideration. The Loan Documents and the transactions contemplated  by the
Loan Documents have been or will be executed, delivered and performed in  good faith and
in exchange for reasonably equivalent value.






	 	        3.18
Solvency. Borrowers (a) are not insolvent on the date of this Agreement  and will
not become insolvent as a result of entering into the Loan Documents,  (b) do not intend
to incur Debt that will be beyond their ability to pay as such  Debt matures. Borrowers’ assets
do not constitute unreasonably small  capital to carry out their business as conducted
and as proposed to be  conducted.






	 	        3.19
ERISA. Borrowers have not (a) incurred an accumulated funding deficiency  under
any Plan in an amount sufficient to have a Material Adverse Effect, (b)  incurred
material liability to the Pension Benefit Guaranty Corporation in  connection with any
Plan, (withdrawn in whole or in part from participation in a  multi-employer pension plan
(as defined in ERISA), or (c) committed, permitted,  or suffered a “prohibited
transaction” or “reportable event” (as such terms are defined in ERISA).






	 	        3.20
Common Enterprise. The successful operation and condition of each of the
Borrowers is dependent on the continued successful performance of the functions  of the
group of Borrowers as a whole and the successful operation of each of the  Borrowers are
dependent on the successful performance and operation of each  other Borrower. Each
Borrower expects to derive benefit (and its board of  directors or other governing body
has determined that it may reasonably be  expected to derive benefit), directly and
indirectly, from successful operations  of each of the other Borrowers. Each Borrower
expects to derive benefit (and the  boards of directors or other governing body of each
Borrower has determined that  it may reasonably be expected to derive benefit), directly
and indirectly, from  the credit extended by the Lender to Borrowers hereunder, both in
their separate  capacities and as members of the group of companies. Each Borrower has
determined that execution, delivery, and performance of this Agreement and any  other
Loan Documents to be executed by such Borrower is within its purpose, will  be of direct
and indirect benefit to such Borrower, and is in its best interest.






	 	        3.21
Depository Relationship. To induce the Lender to establish the interest  rates
provided in the Note, Borrowers will use Lender as its principal  depository bank and the
Borrowers covenant and agree to maintain Lender as their  principal depository bank,
including for the maintenance of business, cash  management, and operating and
administrative deposit accounts.






	 	        3.22
Closed/Inactive Subsidiaries.






	 	        (a)
Adams Golf Foreign Sales Corp., Adams Golf Direct Responses, Ltd., and Adams  Golf RAC
Corp. have terminated their respective existences, and, as a result,  are no longer
direct or indirect Subsidiaries or Affiliates of Adams Golf, Inc.






	 	        (b)
Adams Golf UK, Ltd. and Adams Golf Japan, Inc. (the “Inactive  Subsidiaries”)
are inactive and do not conduct business, own any assets, or  have any Debt.






	


        ARTICLE
4. AFFIRMATIVE COVENANTS AND AGREEMENTS. So long as the Commitment is
available to Borrowers and until payment and performance in full of the Note and
all other Indebtedness, unless Borrowers receive prior written approval of a
deviation therefrom from Lender, Borrowers covenant and agree with Lender that:


Page 13















	 	        4.1
Business and Financial Information. Borrowers will promptly furnish to  Lender
from time to time such information regarding the business and affairs and  financial
condition of Borrowers as Lender may reasonably request, and will  furnish Lender:






	 	        (a)
Monthly Financial Statements — as soon as available and in any event  within
thirty (30) days after the end of each calendar month during the term of  this Agreement,
the consolidated balance sheet (including, without limitation, a  statement of contingent
liabilities) of Borrowers as of the close of such  calendar month and the consolidated
statement of operations, cash flows and  shareholders’ equity of Borrowers for such
calendar month, setting forth,  in each case in comparative form, the figures for the
corresponding periods in  the previous fiscal year as well as year-to-date figures, all
in such detail as  Lender may reasonably request and accompanied by a statement of an
Authorized  Officer certifying that the financial statements fairly present the financial
position of Borrowers at the close of such period and the results of their  operations
for such period;






	 	        (b)
Quarterly Financial Statements — as soon as available and in any  event
within forty-five (45) days after end of each of the first three (3)  fiscal quarters of
each fiscal year of Borrowers during the term of this  Agreement, the consolidated
balance sheet (including, without limitation, a  statement of contingent liabilities) of
Borrowers as of the close of such fiscal  quarter and the consolidated statement of
operations, cash flows and  shareholders’ equity of Borrowers for such fiscal
quarter, setting forth in  each case in comparative form the figures for the
corresponding periods in the  previous fiscal year as well as year-to-date figures, all
in such detail as  Lender may reasonably request and accompanied by a statement of an
Authorized  Officer certifying that the financial statements fairly present the financial
position of Borrowers and their operations for such period;






	 	        (c)
Annual Financial Statements — as soon as available and in any event  within
one hundred twenty (120) days after the close of each fiscal year of  Borrowers during
the term of this Agreement, the audited consolidated balance  sheet (including, without
limitation, a statement of contingent liabilities) of  Borrowers as at the end of such
fiscal year and the audited consolidated  statement of operations, cash flows and
shareholders’ equity of Borrowers  for such fiscal year, setting forth, in each case
in comparative form, the  figures for the previous fiscal year, all in reasonable detail
and audited by  independent certified public accountants of recognized national standing
acceptable to Lender and accompanied by an opinion of such accountants (which  shall not
be qualified in any material respect) to the effect that such  financial statements
fairly present the financial condition and results of  operations of Borrowers in
accordance with GAAP consistently applied;






	 	        (d)
Account Receivable Reports — as soon as available and in any event  within
ten (10) Business Days after the end of each calendar month during the  term of this
Agreement, a written report setting forth the amount of the billed  but uncollected
accounts receivable of Borrowers as at the end of such calendar  month or such other
applicable period, which, among other things, specifies the  names of the account debtors
and age of each account receivable in increments of  at least thirty-day intervals, such
report to be in reasonable detail and  prepared on a basis and in a format acceptable to
Lender and certified as  complete and correct by an Authorized Officer;






	


Page 14















	 	        (e)
Filing – as and when filed by Borrowers:






	 	        (i)
10-Q  quarterly reports and Form 10-K annual reports;






	 	        (ii)
any other filings made by any Borrower with the United States Securities and  Exchange
Commission and any successor thereto;






	 	        (iii)
copies of Borrowers’ federal income tax returns, and any amendments  thereto, filed
with the Internal Revenue Service; and






	 	        (iv)
any other information that is provided by Adams Golf, Inc. to its shareholders.






	 	        (f)
Inventory Reports — as soon as available and in any event within ten  (10)
Business Days after the end of each calendar month during the term of this  Agreement, a
written report with respect to such calendar month or other period,  setting forth
opening inventory, inventory acquired, inventory sold, inventory  returned, inventory
used or consumed in the business of Borrowers, closing  inventory, any other inventory
not within the preceding categories, and such  other information as Lender may request
from time to time, such report to be in  reasonable detail and prepared on a basis and in
a format acceptable to Lender  and certified as complete and correct by an Authorized
Officer;






	 	        (g)
Notice of Default — immediately upon becoming aware of the existence  of any
event or condition which constitutes, or with notice or lapse of time (or  both) would
constitute, an Event of Default under this Agreement or any of the  other Loan Documents,
a written notice specifying the nature and period of  existence of the default and what
action Borrowers are taking or propose to take  with respect thereto;






	 	        (h)
Notice of Claimed Default — immediately upon becoming aware that any  Person
has given notice or taken any other action with respect to a claimed  default under any
promissory note, contract, agreement or undertaking to which  any Borrower is a party or
by which any Property of any Borrower may be bound or  subject, a written notice
specifying the notice given or action taken by such  Person and the nature of the claimed
default and what action such Borrower is  taking or proposes to take with respect to the
claimed default;






	 	        (i)
Litigation — immediately upon becoming aware of any action, suit, or
proceeding pending or threatened against or affecting any Borrower in any court  or
before any governmental authority, which if adversely determined could have a  Material
Adverse Effect, a written notice specifying the nature of the action,  suit or proceeding
and what action such Borrower is taking or proposes to take  with respect to the action,
suit or proceeding; and






	 	        (j)
Material Adverse Effect — immediately upon becoming aware of any  event,
condition or circumstance that has, or could reasonably be expected to  have, a Material
Adverse Effect, a written notice specifying the nature of the  event, condition or
circumstance and what action Borrowers are taking or propose  to take with respect to the
event, condition or circumstance.






	


Page 15















	 	        4.2
Borrowing Base Reports. Borrowers will promptly furnish to Lender as soon  as
available and in any event within ten (10) Business Days after the end of  each calendar
month during the term of this Agreement, a Borrowing Base Report  as of the end of such
calendar month or such other applicable period  appropriately completed and with all
attachments, and certified as complete and  correct by an Authorized Officer.






	 	        4.3
Compliance Certificate. Borrowers will furnish to Lender concurrently  with the
furnishing of the quarterly and annual financial statements pursuant to  Section 4.1 of
this Agreement, a certificate in the form of certificate  attached to this Agreement as
Exhibit “C” signed by an  Authorized Officer stating:






	 	        (a)
that a review of the activities of Borrowers has been made under his supervision  with a
view to determining whether Borrowers have fulfilled all of their  obligations under the
Loan Documents; and






	 	        (b)
that Borrowers have fulfilled all of their obligations under the Loan Documents  and that
all representations made in the Loan Documents continue to be true and  correct (or
specifying the nature of any change) or if Borrowers shall be in  default, specifying any
default and the nature and status of the default and  showing in detail the computations
required by the provisions of Section  4.13 based on the figures which appeared on
the books of account of  Borrowers at the close of the respective period.






	 	        4.4
Taxes; Debts; Etc. Each Borrower will (a) timely file all required tax  returns,
(b) pay all taxes, assessments, and other governmental charges or  levies imposed upon it
or upon its income, profits or Property, (c) pay when  due, all trade debt owed by it on
ordinary trade terms to vendors, suppliers and  other Persons providing goods and
services used by it in the ordinary course of  its business, and (d) pay and discharge
when due, all other Debt now or  subsequently owed by it, unless the amount or
applicability thereof is being  contested in good faith by appropriate proceedings
diligently conducted,  provided adequate reserves for the payment thereof have been
established in  accordance with GAAP.






	 	        4.5
Maintenance of Existence. Each Borrower will maintain its existence,  rights and
franchises.






	 	        4.6
Maintenance of Properties. Each Borrower will maintain its tangible  properties,
real and personal, in good order and repair at all times.






	 	        4.7
Maintenance of Licenses, Etc.. Each Borrower will maintain in full force  and
effect at all times, and apply in a timely manner for renewal of, all of its  licenses,
approvals, permits, franchises, patents, copyrights, trademarks,  service marks, and
trade names necessary for the continuation of the operation  of its business.






	 	        4.8
Compliance; Environmental Indemnity. Each Borrower will comply with, and  conduct
its business and affairs in compliance with, all federal, state, and  local Laws, rules
and governmental requirements, including, without limitation,  those pertaining to
pollution or other environmental matters and all ERISA  requirements and obtain all
permits, licenses, and other similar approvals  required by all such Laws pertaining to
the environment. Borrowers shall  indemnify Lender and hold Lender harmless from and
against any claim, loss or  damage to which Lender is subjected as a result of any past,
present or future  existence, use, handling, storage, transportation or disposal of any
hazardous  wastes or substance or toxic substance by Borrowers. This indemnification
shall  survive the termination of this Agreement and the payment of the Indebtedness.






	


Page 16















	 	        4.9
Insurance. Borrowers will maintain insurance with responsible insurance  companies
on such of their Properties, in such amounts and against such risks,  as is customarily
maintained by similar businesses operating in the same  vicinity, specifically to include
a policy of fire and extended coverage  insurance covering all Property, business
interruption insurance and liability  insurance, all to be with such companies and in
such amounts satisfactory to  Lender and to name Lender as loss payee, and evidence of
such insurance shall be  supplied to Lender.






	 	        4.10
Reimbursement of Expenses. If Borrowers fail to pay any taxes, insurance  premiums
or other amounts they are required to pay under this Agreement, or any  of the other Loan
Documents, and Lender pays the amounts, upon such payment and  demand, Borrowers will
immediately reimburse Lender therefor and each amount  paid by Lender shall constitute
Indebtedness owed under this Agreement, shall be  secured by the Loan Documents and shall
accrue interest at the Maximum Rate from  the date the amount is paid by Lender until the
date the amount is repaid to  Lender.






	 	        4.11
Financial Records; Inspection. Borrowers will maintain a system of  accounting
satisfactory to Lender and in accordance with GAAP, and permit  Lender’s officers or
authorized representatives to visit and inspect their  books of account and other reports
during normal business hours as often as  Lender may desire.






	 	        4.12
Location of Books and Records. Unless written notice of another location  is given
to Lender, each Borrower will maintain the location of its books and  records at the
address of Borrower set forth above.






	 	        4.13
Financial Covenants. Borrowers will maintain and comply with the  financial
covenants set forth on Schedule 4.13 attached to this  Agreement.






	


        ARTICLE
5. NEGATIVE COVENANTS. So long as the Commitment is available to
Borrowers and until payment and performance in full of the Note and all other
Indebtedness, unless Borrowers receive prior written approval of a deviation
therefrom from Lender (which approval will not be unreasonably withheld),
Borrowers hereby covenant and agree with Lender that:










	 	        5.1
Debt. Borrower will not create, incur, assume or permit to exist any Debt  other
than to Lender, except for (a) Debt existing on the date of this Agreement  which is
reflected in the Initial Financial Statements, (b) additional unsecured  Debt not
exceeding $500,000.00 at any one time outstanding, and (c) normal trade  debt incurred in
the ordinary course of business.






	 	        5.2
Liens. Borrowers will not grant, suffer or permit Liens on or security  interests
in any of their respective Properties, except Permitted Liens.






	 	        5.3
Loans, Advances. Borrower will not make any loans, advances or  investments to or
in any Person, except for (a) loans, advances and investments  existing on the date of
this Agreement which are reflected in the Initial  Financial Statements and (b) advances
and loans among the Borrowers.






	 	        5.4
Mergers, Etc. No Borrower will (a) amend its Charter Documents or  otherwise
change its name or structure, (b) reactivate any of the Inactive  Subsidiaries or permit
any of the Inactive Subsidiaries to conduct business, (c)  form a subsidiary company, (d)
consolidate with or merge into, or acquire any  Person, (e) permit any Person to
consolidate with or merge into, or acquire it,  (f) acquire the Stock of any corporation,
or (g) acquire all or substantially  all of the assets and business of any Person or any
division of any Person into  any merger or consolidation.






	


Page 17















	 	        5.5
Disposition of Assets. No Borrower will sell, lease, assign or otherwise  dispose
of or transfer any of its Property except (a) Equipment which is  worthless or obsolete
or which is replaced by Equipment of equal suitability and  value, provided the proceeds
of the sale or other disposition are delivered to  Lender for application to the
Indebtedness and (b) inventory which is sold in  the ordinary course of business on
ordinary trade terms.






	 	        5.6
Dividends. During the existence of a Default, no Borrower will declare or  pay any
dividends or distributions (other than dividends payable in capital  stock) on any shares
of any class of capital stock, any partnership interests or  other securities, or apply
any of its Property or assets to the purchase,  redemption or other retirement of any
shares of any class of capital stock, any  partnership interest or other security, or in
any way amend its capital  structure.






	 	        5.7
Nature of Business. No Borrower will change its name, address or the  general
character of business as conducted on the date of this Agreement, and no  Borrower will
engage in any type of business not reasonably related to its  business as presently and
normally conducted.






	 	        5.8
Redemption of Stock. No Borrower will, directly or indirectly, retire,  purchase
or otherwise acquire, directly or indirectly, any of its Stock or other  ownership
interest, as applicable.






	 	        5.9
Capital Expenditures. Borrowers will not enter into any commitment to  expend an
amount for the acquisition or lease of any Property or asset whether  tangible,
intangible, fixed or capital including repairs, replacements and/or  improvements, which
are capitalized under GAAP which exceeds $1,000,000.00 in  the aggregate during any
fiscal year of Borrowers during the term of this  Agreement.






	 	        5.10
ERISA Compliance. Borrowers will not adopt a Plan or amend an existing  Plan that
results in a material increase of benefits. Borrowers will not at any  time permit any
Plan maintained by them to:






	 	        (a)
engage in any “prohibited transaction” or “reportable  event”, as
such terms are defined in ERISA;






	 	        (b)
incur any accumulated funding deficiency; or






	 	        (c)
terminate  any Plan in a manner which could result in the imposition of Lien on any of
its  Property.






	


        ARTICLE
6. EVENTS OF DEFAULT AND REMEDIES.










	 	        6.1
Events. Any of the following events shall be considered an “Event of  Default” as
that term is used in this Agreement:






	 	        (a)
Borrowers default in the payment of any Indebtedness, whether principal or  interest or
any installment thereof, when due and payable;






	 	        (b)
any statement, representation or warranty of any Borrower in any of the Loan  Documents
proves to have been incorrect or incomplete in any material respect  when made;






	


Page 18















	 	        (c)
Any Borrower defaults in the due observance or performance of any of the  covenants or
agreements contained in Section 4.1, 4.2, 4.3, 4.4, 4.6, 4.7,  4.8, 4.9, 4.10, 4.11,
4.12, or 4.13 of this Agreement and such default  continues unremedied for a period
of thirty (30) days after notice of such  default is sent by Lender to Borrowers;






	 	        (d)
Any Borrower defaults in the due observance or performance of any of the  covenants or
agreements contained in Section 4.5 or in Article 5 of this Agreement or
any Borrower defaults in the due observance or performance  of any of its covenants or
agreements contained in any of the other Loan  Documents.






	 	        (e)
any default or event of default occurs under any Loan Document and the same is  not
remedied within the applicable period of grace (if any) provided in the Loan  Document;






	 	        (f)
Any Borrower dissolves or terminates its existence or discontinues its usual  business or
is enjoined, restrained or in any way prevented by court order or  order of any
governmental authority from conducting all or any material part of  its business and such
order is not lifted within thirty (30) days;






	 	        (g)
any involuntary case or other proceeding is commenced against any Borrower which  seeks
liquidation, reorganization or other relief with respect to it or its  debts and
liabilities under any bankruptcy, insolvency or similar law now or  hereafter in effect
or seeking the appointment of a trustee, receiver,  liquidator, custodian or other
similar official of it or any substantial part of  its property, or for the winding-up or
liquidation of its affairs;






	 	        (h)
Any Borrower commences a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to it or its debts and liabilities  under any
bankruptcy, insolvency or other similar law now or hereafter in effect  or seeking the
appointment of a trustee, receiver, liquidator, custodian or  other similar official of
it or any substantial part of its property or consents  to any such relief or to the
appointment of or taking possession by any such  official in an involuntary case or other
proceeding commenced against it, or  makes a general assignment for the benefit of
creditors, or fails generally to,  or admits in writing its inability to, pay its debts
generally as they become  due or takes any action to authorize or effect any of the
foregoing;






	 	        (i)
Any Borrower defaults in the payment of principal of or interest on any of its  Debt to
any Person, the non-payment of which could have a Material Adverse  Effect; or






	 	        (j)
any event, condition or circumstance occurs which has a Material Adverse Effect  and
Lender has provided Borrowers with written notice of the occurrence of such  event,
condition, or circumstance.






	 	        6.2
Remedies Upon Default.






	 	        (a)
Acceleration.






	 	        (i)
Upon  the occurrence of any Event of Default described in Section 6.1(f), (g), or  (h),
the Commitment and all other lending obligations, if any, of Lender  under this Agreement
shall immediately terminate, and the total unpaid principal  amount of the Note together
with interest then accrued and unpaid thereon and  all other Indebtedness shall become
immediately due and payable, all without  demand, presentment, notice of dishonor, notice
of acceleration, notice of  intent to accelerate, notice of intent to demand, protest, or
other notice of  default of any kind, all of which are expressly waived by Borrowers.






	


Page 19















	 	        (ii)
Upon the occurrence and at any time during the continuance of any other Event of  Default
specified in Section 6.1, Lender may, by written notice to  Borrowers, (aa)
declare the total unpaid principal amount of the Note together  with interest then
accrued and unpaid thereon and all other Indebtedness to be  immediately due and payable
without demand, presentment, notice of dishonor,  notice of acceleration, notice of
intent to accelerate, notice of intent to  demand, protest, or other notice of default of
any kind, all of which are  expressly waived by Borrowers, and/or (bb) terminate the
Commitment and other  lending obligations, if any, of Lender under this Agreement unless
and until  Lender shall reinstate the same in writing.






	 	        (b)
Other Rights. In addition, upon the occurrence of any Event of Default,  Lender
may, at its election, do any one or more of the following:






	 	        (i)
reduce any claim to judgment;






	 	        (ii)
exercise the rights of offset and/or banker’s lien and apply any and all  deposits
(general or special, time or demand, provisional or final) at any time  held and other
indebtedness at any time owing by Lender to or for the credit or  the account of each
Borrower against any and all of the Indebtedness,  irrespective of whether or not Lender
shall have made any demand under this  Agreement or the Note and although such
Indebtedness may be unmatured;






	 	        (iii)
foreclose any and all Liens in favor of Lender and/or otherwise realize upon any  and all
of the rights Lender may have in and to any Collateral, or any part  thereof; or






	 	        (iv)
exercise any and all other rights afforded by any applicable laws, or by the  Loan
Documents, at law or in equity, or otherwise, including but not limited to,  the rights
to bring suit or other proceedings before any court of competent  jurisdiction, either
for specific performance of any covenant or condition  contained in the Loan Documents or
in aid of the exercise of any right granted  to Lender in the Loan Documents, all as
Lender shall deem appropriate in its  sole discretion.






	 	        6.3
No Waiver or Exhaustion. No waiver by Lender of any of its rights or  remedies
under this Agreement or under any of the Loan Documents shall be  considered a waiver of
any other or subsequent right or remedy of Lender; no  delay or omission in the exercise
or enforcement by Lender of any rights or  remedies shall ever be construed as a waiver
of any right or remedy of Lender;  and no exercise or enforcement of any such rights or
remedies shall ever be held  to exhaust any right or remedy of Lender.






	


Page 20















	


        ARTICLE
7.  CONDITIONS PRECEDENT.










	 	        7.1
Documents and Other Items to be Delivered. Lender has no obligation to  make the
first Loan unless Lender shall have received all of the following at  Lender’s
office in Dallas, Texas, all in form, substance and date  satisfactory to Lender:






	 	        (a)
the Note executed by Borrowers;






	 	        (b)
the  following instruments (the “Security Instruments”):






	 	        (i)
one or more Security Agreements executed by Borrowers granting Lender a valid,  first
priority security interest in all assets, specified in such Security  Agreements whether
now owned or subsequently acquired and wherever located and  the proceeds and products
therefrom; and






	 	        (ii)
one or more UCC-1 Financing Statements reflecting Borrowers, as Debtor, and  Lender, as
Secured Party, covering the personal property described in the  Security Agreements.






	 	        (c)
Release of Liens and UCC-3 Termination Statements executed by such Persons as  Lender
deems necessary to insure Lender’s first priority security interest  in and to the
Collateral;






	 	        (d)
search certificates from the Secretaries of States of Delaware and Texas (and,  upon
request by Lender, such other governmental authorities as may be  repositories in any
state, county or parish where each Borrower conducts its  business or where any
Collateral may be located), setting forth all Uniform  Commercial Code filings, financing
statements, chattel mortgages, assignments  and other pledges of personal property and
any and all mechanics’ or  repairmens’ liens and federal, state and county tax
filings against each  Borrower, which certificates shall be in form, scope and content
satisfactory to  Lender and accompanied by copies of the filed financial statements,
chattel  mortgages and/or assignments and shall confirm that the Collateral is free and
clear of all pledges, assignments, security interest and liens other than those  in favor
of Lender;






	 	        (e)
each other Closing Document executed by the appropriate Persons;






	 	        (f)
Borrowers  shall have established Lender as its principal depository bank in accordance
with Section 3.21  in a manner acceptable to Lender; and






	 	        (g)
Lender shall have completed and approved the results of Lender’s collateral  audit
with respect to Borrowers.






	 	        7.2
Additional Conditions Precedent. Lender has no obligation to make any  Loan unless
the following additional conditions precedent have been satisfied:






	 	        (a)
all representations and warranties made by Borrowers in the Loan Documents are  true on
and as of the date of the Loan as if such representations and warranties  had been made
as of the date of the Loan;






	


Page 21















	 	        (b)
as of the date of the Loan no event or condition exists which constitutes, or  with
notice or lapse of time (or both) would constitute, an Event of Default  under this
Agreement;






	 	        (c)
there has been no event, condition or circumstance which has or could reasonably  be
expected to have a Material Adverse Effect; and






	 	        (d)
a duly executed Request for Loan has been provided to Lender.






	


        ARTICLE
8.  MISCELLANEOUS.










	 	        8.1
Enforceability.  If any provision of this Agreement is held to be unenforceable,
this Agreement  shall be considered divisible and inoperative as to the provision to the
extent  it is deemed to be unenforceable, and in all other respects this Agreement shall
remain in full force and effect; provided, however, that if the provision may be  made
enforceable by limitations thereof, then the provision shall be enforceable  to the
maximum extent permitted by law.






	 	        8.2
Performance; Notice. The Loan Documents are performable by Borrowers  entirely in
the county where Lender’s main office is located. Any notice  required to be
provided to Borrowers under this Agreement that is mailed postage  prepaid to Borrowers
c/o Adams Golf, Inc., 2801 E. Plano Parkway, Plano, Texas  75074 or at the most recent
changed address on file with Lender at least ten  (10) days before the time of the event
to which the notice relates shall be  deemed reasonable unless any longer period is
required by Law. 






	 	        8.3
Expenses. Borrowers hereby agree to pay on demand (a) all  costs and  expenses of
Lender in connection with the preparation, negotiation, execution  and delivery of the
Loan Documents and any and all amendment, modifications,  renewals,  extensions and
supplements to the Loan Documents including, without  limitation, the  reasonable fees
and the expenses of legal counsel for Lender,  (b) all costs and expenses  of Lender in
connection with the enforcement of any  of the Loan Documents, including,  without
limitation, the reasonable fees and  the expenses of legal counsel for Lender,  (c) all
transfer, stamp, documentary  or other similar taxes, assessments or charges  levied by
any governmental  authority in respect of any of the Loan Documents, (d) all  costs,
expenses,  assessments and other charges incurred in connection with any filing,
registration, recording or perfection of any security interest or Lien  contemplated by
any of the Loan Documents, and (e) all other costs and expenses  incurred by Lender in
connection with any Loan Document including, without  limitation, all costs, expenses and
other charges incurred in connection with  obtaining any audit or appraisal in respect of
the Collateral.






	 	        8.4
Successors and Assigns. The terms of this Agreement shall be binding upon  the
heirs, executors, administrators, personal representatives, successors and  assigns of
Borrowers and Lender. Lender reserves the right to assign the Loan  Documents in whole or
in part to any person or entity. In the event more than  one party executes this
Agreement, the obligations of the parties under this  Agreement shall be joint and
several. Section headings in this Agreement are  included solely for convenience, are not
intended to be full or accurate  descriptions of the content thereof and shall not be
construed to enlarge,  limit, or otherwise change the express provision thereof. Pronouns
in masculine,  feminine, or neuter genders shall be construed to include any other
gender, and  words in the singular form shall be construed to include the plural and vice
versa, unless the context otherwise requires. If the Loan Documents are given in  renewal
and extension of a prior obligation to Lender, all Liens and other  security interests
granted to secure such prior obligation, if any, are hereby  carried over and renewed to
secure the Indebtedness.






	


Page 22















	 	        8.5
Indemnification. BORROWERS SHALL INDEMNIFY LENDER AND ITS OFFICERS,  DIRECTORS,
EMPLOYEES, ATTORNEYS, AND AGENTS FROM, AND HOLD EACH OF THEM HARMLESS  AGAINST, ANY AND
ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS,  DISBURSEMENTS, COSTS AND
EXPENSES (INCLUDING ATTORNEYS’ FEES) TO WHICH ANY  OF THEM MAY BECOME SUBJECT WHICH
DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE TO  (A) THE NEGOTIATION, EXECUTION, DELIVERY,
PERFORMANCE, ADMINISTRATION OR  ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS, (B) ANY OF THE
TRANSACTIONS  CONTEMPLATED BY THE LOAN DOCUMENTS, OR (C) ANY REPRESENTATION, WARRANTY,
COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY OF THE LOAN DOCUMENTS, EXCEPT FOR  LOSSES,
LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS  AND EXPENSES
WHICH ARE CAUSED BY LENDER’S GROSS NEGLIGENCE OR WILLFUL  MISCONDUCT.






	 	        8.6
Applicable Law; Submission To Process. THE LOAN DOCUMENTS SHALL BE  GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS,  EXCEPT TO THE EXTENT
THE LOAN DOCUMENTS MAY BE GOVERNED BY THE LAWS OF THE  UNITED STATES. NOTWITHSTANDING ANY
PROVISION OF THIS AGREEMENT, THE NOTE, OR ANY  OF THE OTHER LOAN DOCUMENTS TO THE
CONTRARY, CHAPTER 346 OF THE TEXAS FINANCE  CODE AS AMENDED SHALL NOT BE APPLICABLE TO
THIS AGREEMENT, THE NOTE OR ANY OF  THE OTHER LOAN DOCUMENTS. BORROWERS HEREBY
IRREVOCABLY SUBMIT THEMSELVES TO THE  NONEXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL
COURTS SITTING IN THE STATE  OF TEXAS AND TO THE VENUE OF DALLAS COUNTY AND AGREE AND
CONSENT THAT SERVICE OF  PROCESS MAY BE MADE UPON THEM IN ANY LEGAL PROCEEDING RELATING
TO THIS AGREEMENT  BY ANY MEANS ALLOWED UNDER TEXAS OR FEDERAL LAW.






	 	        8.7
Limitation On Interest. It is expressly stipulated and agreed to be the  intent of
Borrowers and Lender at all times to comply with the applicable Texas  law governing the
maximum rate or amount of interest payable on the Note or the  Indebtedness (or
applicable United States Federal law to the extent that it  permits Lender to contract
for, charge, take, reserve or receive a greater  amount of interest than under Texas
law). If the applicable law is ever  judicially interpreted so as to render usurious any
amount called for under the  Note or under any of the other Loan Documents, or contracted
for, charged,  taken, reserved or received with respect to the Indebtedness, or Lender’s
exercise of the option to accelerate the maturity of the Note, or any prepayment  by
Borrowers results in Borrowers having paid or Lender having received any  interest in
excess of that permitted by applicable law, then it is  Borrowers’ and Lender’s
express intent that all excess amounts  theretofore collected by Lender be credited on
the principal balance of the Note  and all other Indebtedness (or, if the Note and all
other Indebtedness have been  or would thereby be paid in full, refunded to Borrowers),
and the provisions of  the Note and the other Loan Documents immediately be deemed
reformed and the  amounts thereafter collectible hereunder and thereunder reduced,
without the  necessity of the execution of any new document, so as to comply with the
applicable law, but so as to permit the recovery of the fullest amount otherwise  called
for hereunder and thereunder; provided, however, if the Note has been  paid in full
before the end of the stated term of the Note, then Borrowers and  Lender agree that
Lender shall, with reasonable promptness after Lender  discovers or is advised by
Borrowers that interest was received in an amount in  excess of the Maximum Rate either
refund such excess interest to Borrowers or  credit such excess interest against any
other Indebtedness then owing by  Borrowers to Lender. Borrowers hereby agree that as a
condition precedent to any  claim seeking usury penalties against Lender, that Borrowers
will provide  written notice to Lender, advising Lender in reasonable detail of the
nature and  amount of the violation, and Lender shall have sixty (60) days after receipt
of  such notice in which to correct such usury violation, if any, by either  refunding
such excess interest to Borrowers or crediting such excess interest  against any other
indebtedness then owing by Borrowers to Lender. All sums  contracted for, charged or
received by Lender for the use, forbearance or  detention of the Indebtedness shall, to
the extent permitted by applicable law,  be amortized or spread, using the actuarial
method, throughout the stated term  of the Indebtedness until payment in full so that the
rate or amount of interest  on account of the Indebtedness does not exceed the Maximum
Rate from time to  time in effect and applicable to the Indebtedness for so long as debt
is  outstanding. In no event shall the provisions of Chapter 346 of the Texas  Finance
Code (which regulates certain loan accounts and revolving triparty  accounts) apply to
the Indebtedness. Notwithstanding anything to the contrary  contained herein or in any of
the other Loan Documents, it is not the intention  of Lender to accelerate the maturity
of any interest that has not accrued at the  time of such acceleration or to collect
unearned interest at the time of such  acceleration. To the extent that Lender is relying
on Chapter 303 of the Texas  Finance Code, as amended, of the Revised Civil Statutes of
Texas to determine  the Maximum Rate payable on the Indebtedness, Lender will utilize the
weekly  ceiling from time to time in effect as provided in Chapter 303, as amended. To
the extent United States Federal law permits Lender to contract for, charge,  take,
receive or reserve a greater amount of interest than under Texas law,  Lender will rely
on United States Federal law instead of such Chapter 303, as  amended, for the purpose of
determining the Maximum Rate. Additionally, to the  extent permitted by applicable law
now or hereafter in effect, Lender may, at  its option and from time to time, implement
any other method of computing the  Maximum Rate under such Chapter 303 of the Finance
Code, as amended, or under  other applicable law by giving notice, if required, to
Borrowers as provided by  applicable law now or hereafter in effect. Borrowers and Lender
hereby agree  that any and all suits alleging the contracting for, charging or receiving
of  usurious interest shall lie in Dallas County, Texas, and each irrevocably waive  the
right to venue in any other county.






	


Page 23















	 	        8.8
No Oral Agreements. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS  CONSTITUTE A
WRITTEN AGREEMENT WHICH REPRESENTS THE FINAL AGREEMENT BETWEEN THE  PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR  ORAL AGREEMENTS OF THE PARTIES.






	 	        8.9
Construction. Borrowers and Lender acknowledge that each of them has had  the
benefit of legal counsel of its own choice and has been afforded an  opportunity to
review this Agreement and the other Loan Documents with its legal  counsel and that this
Agreement and the other Loan Documents shall be construed  as if jointly drafted by
Borrowers and Lender.






	 	        8.10
Waiver Of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
BORROWERS AND LENDER HEREBY IRREVOCABLY AND EXPRESSLY WAIVE ALL RIGHT TO A TRIAL  BY JURY
IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT,  TORT, OR
OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS OR  THE TRANSACTIONS
CONTEMPLATED THEREBY OR THE ACTIONS OF LENDER IN THE  NEGOTIATION, ADMINISTRATION, OR
ENFORCEMENT THEREOF.






	 	        8.11
Participation. Borrowers hereby acknowledge and agree that Lender has and  shall
have the right at any time without the consent of or notice to Borrower to  grant
participations in all or part of the Indebtedness now or hereafter  outstanding under
this Agreement, the Note, or any of the other Loan Documents  and any security interest
and/or Liens on the Property of Borrowers now or  hereafter granted by Borrowers to
Lender as security for the payment and  performance of such obligations. Borrowers hereby
authorize Lender and each  participant of Lender in the case of an Event of Default or
demand for payment  under this Agreement, to proceed directly by right of setoff, banker’s
lien  or otherwise against any assets of Borrowers, which may at the time of such  Event
of Default or demand for payment be in the hands of Lender or any such  participant to
the full extent of its interest in such obligations.






	


Page 24















	 	        8.12
No Duty Or Special Relationship. Borrowers acknowledge that Lender has no  duty to
Borrowers with respect to the loan transactions set forth in the Loan  Documents except
as expressly provided for in this Agreement and the other Loan  Documents, and
acknowledge that no fiduciary, trust, or other special  relationship exists between
Lender and Borrowers.






	 	        8.13
Other Remedies Not Required. Borrower may be required to pay the Note in  full
without the assistance of any other party, or any collateral or security  for the Note.
Lender shall not be required to mitigate damages, file suit, or  take any action to
foreclose, proceed against or exhaust any collateral or  security in order to enforce
payment of the Note.






	 	        8.14
Inconsistencies And Conflicts. To the extent any irreconcilable conflicts  or
inconsistencies exist between the terms of this Agreement and any of the  other Loan
Documents, the terms of this Agreement shall govern and control.






	 	        8.15
Future Advances. No advance under the Note shall constitute a waiver of  any of
the conditions of Lender’s obligation to make further advances nor,  in the event
Borrowers are unable to satisfy any such condition, shall any such  waiver have the
effect of precluding Lender from thereafter declaring such  inability to be a Default.






	 	        8.16
Lender’s Discretion. All matters hereunder that require  Lender’s
discretion, (including, without limitation, whether Borrowers have  satisfied any
condition precedent), Lender shall use its sole and reasonable  discretion, except as
otherwise provided for herein. Further, Lender may in its  sole discretion waive any of
its rights with respect to a particular Event of  Default.






	 	        8.17
Business Loans. Borrowers warrant and represent to Lender, and to all  other
holders of any debt evidenced by the Note, that the loan evidenced by the  Note is and
shall be for business, commercial, investment or other similar  purpose and not primarily
for personal, family, household or agricultural use.






	 	        8.18
Representations and Warranties. All representations and warranties of  Borrowers
herein, and all covenants and agreements made by Borrowers herein made  before the
effective date of this Agreement, shall survive such date.






	 	        8.19
Binding Effect. All covenants and agreements of Borrowers under this  Agreement
shall bind the respective successors and assigns of Borrowers and  shall inure to the
benefit of Lender and its successors and assigns. The rights  of Borrowers under this
Agreement are not assignable.






	 	        8.20
No Waiver. No course of dealing on the part of Lender, or its officers or
employees, nor any failure or delay by Lender with respect to exercising any of  its
rights, remedies, powers or privileges hereunder shall operate as a waiver  thereof. No
indulgence by Lender, or waiver of compliance with any of the terms,  covenants, or
provisions of this Agreement or the other Loan Documents, shall be  construed as a waiver
of Lender’s right to subsequently require strict  performance by the Borrowers. The
rights and remedies of the Lender under this  Agreement and the other Loan Documents
shall be cumulative and the exercise or  partial exercise of any such rights or remedies
shall not preclude the exercise  of any other rights or remedies.






	 	        8.21
Amendment. Neither this Agreement nor any provision hereof may be  changed,
waived, discharged or terminated orally, but only by an instrument in  writing signed by
the party against whom enforcement of the change, waiver,  discharge or termination is
sought.






	


Page 25















	 	        8.22
Severability. In the event any provision contained in any of the Loan  Documents
shall, for any reason, be held invalid, illegal or unenforceable in  any respect, such
provision shall be severed from the applicable Loan Document,  and such invalidity,
illegality or unenforceability shall not affect any other  provision of the applicable
Loan Document.






	 	        8.23
Counterparts. This Agreement may be executed in two or more counterparts,  and it
shall not be necessary that any one counterparts be executed by all of  the parties
hereto. Each fully or partially executed counterpart shall be deemed  an original, but
all such counterparts taken together shall constitute but one  and the same instrument.






	 	        8.24
Further Assurances. Borrowers will execute and deliver such further  instruments
as may be deemed necessary or desirable by Lender to carry out the  provisions and
purposes of this Agreement and the other Loan Documents and to  preserve and perfect the
Liens of the Lender in the Collateral.






	 	        8.25
Right of Termination. Borrowers shall have the right to terminate this  Agreement
at any time, provided, that there is no Indebtedness owing at the time  of such
termination.






	


        WITNESS
THE EXECUTION HEREOF, as of the ___ day of February, 2004.


Page 26















			LENDER:


BANK OF TEXAS, N.A., a national banking association



By: /S/ ERIC L. KRAFT

——————————————

Name: Eric L. Kraft

Title: Vice President




BORROWERS:


ADAMS GOLF, INC., a Delaware corporation



By: /S/ ERIC LOGAN

——————————————

Name: Eric Logan

Title: Chief Financial Officer




ADAMS GOLF HOLDING CORP., a Delaware corporation



By: /S/ ERIC LOGAN

——————————————

Name: Eric Logan

Title: Vice President




ADAMS GOLF GP CORP., a Delaware corporation



By: /S/ ERIC LOGAN

——————————————

Name: Eric Logan

Title: President




ADAMS GOLF, LTD., a Texas limited partnership


By: Adams Golf GP Corp, a Delaware corporation,

its sole General Partner



By: /S/ ERIC LOGAN

——————————————

Name: Eric Logan

Title: President






	


Page 27














			ADAMS GOLF IP LP, a Delaware corporation


By: Adams Golf GP Corp, a Delaware corporation,

its sole General Partner



By: /S/ ERIC LOGAN

——————————————

Name: Eric Logan

Title: President




ADAMS GOLF MANAGEMENT CORP., a Delaware corporation



By: /S/ ERIC LOGAN

——————————————

Name: Eric Logan

Title: Vice President




	


Page 28















	


Schedule
4.13



Financial
Covenants










	 	        (a)
Ratio of Total Liabilities to Tangible Net Worth. Borrowers will not  permit the
ratio of Total Liabilities to Tangible Net Worth to be more than 0.60  to 1.0 during the
term of this Agreement.






	 	        (b)
Interest Coverage Ratio. Borrowers will maintain, as of the last day of  each
fiscal quarter of Borrowers during the term of this Agreement, a ratio of  (i) Net Income
plus Interest Expense plus Tax Expense divided by (ii) Interest  Expense, each determined
for the preceding twelve (12) month period ending on  such day, of not less than 1.5 to
1.0.






	


As  used herein, the following
terms shall have the following meanings:



        “Capital
Lease Obligations” means, as of the date of calculation, any and all
lease obligations of Borrower that, in accordance with GAAP, have been or are
required to be capitalized on the books of Borrower.



        “Interest
Expense” means, for any period, the interest charges paid or accrued
during such period (including imputed interest on Capital Lease Obligations but
excluding amortization of debt discount and expense and excluding capitalized
interest) on Debt of Borrowers.



        “Net
Income” means, for any period, the net income (or loss) of Borrowers
for such period, as determined in conformity with GAAP.



        “Tangible
Net Worth” means, as of the date of calculation, all amounts which, in
conformity with GAAP, would be included as shareholder equity on a consolidated
balance sheet of the Borrowers; provided, however, there is excluded therefrom:
(a) any note receivable or account receivable from any Borrower or from any
director, officer, employee or shareholder of any Borrowers, (b) any amount
attributable to treasury shares, (c) goodwill, including any amounts however
designated, that represent the excess of the purchase price paid for assets or
stock over the value assigned thereto, (d) patents, trademarks, trade names and
copyrights, and (e) all other assets which are properly classified as intangible
assets.



        “Tax
Expense” means, for any period, charges for taxes accrued during such
period by Borrowers, determined in conformity with GAAP.



        “Total
Liabilities” means, as of the date of calculation, all amounts which in
conformity with GAAP, would be included as liabilities on a balance sheet of
Borrowers.



Page 29















	


EXHIBIT A



BORROWING
BASE REPORT



FOR MONTH ENDED
___________________ (THE “SUBJECT MONTH”)



LENDER:  Bank of Texas, N.A.



BORROWERS:  Adams Golf, Inc.,
Adams Golf Holding Corp., Adams Golf GP Corp., Adams Golf, Ltd., Adams Golf  IP, LP, and
Adams Golf Management Corp.



        This
certificate is delivered under the Credit Agreement (the
“Agreement”) dated as of February __, 2004, among Borrowers and
Lender. Capitalized terms used in this certificate shall, unless otherwise
indicated, have the meanings set forth in the Agreement. On behalf of Borrowers,
the undersigned certifies to Lender on the date hereof that (a) no Default
or Event of Default has occurred and is continuing, (b) a review of the
activities of Borrowers during the Subject Month has been made under my
supervision with a view to determining the amount of the current Borrowing Base,
(c) the accounts receivable and inventory included in the Borrowing Base
below meet all conditions to qualify for inclusion therein as set forth in the
Agreement, and all representations and warranties set forth in the Agreement
with respect thereto are true and correct in all material respects, and
(d) the information set forth below hereto is true and correct as of the
last day of the Subject Month.









	LINE
	 	AT END OF
SUBJECT MONTH

	 
	1.	 	Total accounts
receivable (less discounts)	 	 	 	$__________
	 
	2.	 	Ineligible Accounts	 	$__________	 	 
	 
	 	 	(a)	 	Accounts which not due either 30 or 60 days from the original date of invoice	 	$__________	 	 
	 
	 	 	(b)	 	With respect to Accounts
which are not deemed ineligible by (a) above:	 	$__________	 	 
	 
	 	 	(i)	 	Accounts not in compliance
with applicable laws, rules, and regulations	 	$__________	 	 
	 
	 	 	(ii)	 	Accounts, if due 30 days
from the original date of invoice, are more than 60 days past due	 	$__________	 	 
	 
	 	 	(iii)	 	Accounts, if due 60 days
from the original date of invoice, are not more than 30 days past due	 	$__________	 	 
	 
	 	 	(iv)	 	Accounts for consignments
and non-final sales	 	$__________	 	 






	


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	 	 	(v)	 	Accounts evidenced by chattel
paper or an instrument	 	$__________	 	 
	 
	 	 	(vi)	 	Foreign accounts	 	$__________	 	 
	 
	 	 	(vii)	 	Accounts due from the U.S.
Government or subdivision thereof (with respect to which the Federal Assignment
of Claims Act of 1940 has not been complied with)	 	$__________	 	 
	 
	 	 	(viii)	 	Accounts subject to specific
assignment restrictions	 	$__________	 	 
	 
	 	 	(ix)	 	Accounts owed by account
debtor with more than 5% of Accounts of such account debtor 60 days past due	 	$__________	 	 
	 
	 	 	(x)	 	Amounts excluded due to
% concentration restriction on any single account debtor (10% concentration limit)	 	$__________	 	 
	 
	 	 	(xi)	 	Accounts representing commissions
or not created in the ordinary course of business or not arising from an enforceable
contract, the performance of which has been completed by the Borrower	 	$__________	 	 
	 
	 	 	(xii)	 	Accounts to which the Borrower
does not have good and indefeasible title or which are subject to any Lien except
Liens in favor of the Lender	 	$__________	 	 
	 
	 	 	(xiii)	 	Accounts subject to setoff,
counterclaim, defense, dispute, recoupment, or adjustment other than normal discounts
for prompt payment	 	$__________	 	 
	 
	 	 	(xiv)	 	Accounts with respect to
which the account debtor is insolvent or the subject of any bankruptcy or insolvency
proceeding or has made an assignment for the benefit of creditors, suspended normal
business operations, dissolved, liquidated, terminated its existence, ceased to
pay its debts as they become due, or suffered a receiver or trustee to be appointed
for any of its assets or affairs	 	$__________	 	 
	 
	 	 	(xv)	 	Accounts with respect to
which any default exists	 	$__________	 	 






	


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	 	 	(xvi)	 	Accounts with respect to
which the account debtor has returned or refused to retain, or otherwise notified
the Borrower of any dispute concerning, or claimed nonconformity of, any of the
goods from the sale of which the account arose	 	$__________	 	 
	 
	 	 	(xvii)	 	Accounts owed by a Borrower or an Affiliate, employee, officer, director or shareholder of any Borrower	 	$__________	 	 
	 
	 	 	(xviii)	 	Accounts not payable in
Dollars	 	$__________	 	 
	 
	 	 	(xix)	 	The amount of all “contra
accounts” and other obligations owed by the Borrower to account debtors	 	$__________	 	 
	 
	 	 	(xx)	 	Other Ineligible Accounts
disallowed by Lender in its sole discretion	 	$__________	 	 
	 
	3.	 	Total Ineligible
Accounts
add Lines 2(a) and 2(b)(i) through (xx)	 	 	 	$__________
	 
	4.	 	Total Eligible
Accounts
Line 1 minus Line 3	 	 	 	$__________
	 
	5.	 	Multiplied by:
Borrowing Base factor	 	 	 	75%
	 
	6.	 	Total Accounts
Component of Borrowing Base
Line 4 x Line 5	 	 	 	$__________
	 
	7.	 	Inventory	 	 	 	 
	 
	 	 	(a) 	 	Raw Materials	 	 	 	$__________
	 
	 	 	(b) 	 	Finished Goods	 	 	 	$__________
	 
	 	 	(c)	 	 Total Inventory	 	 	 	$__________
	 
	8.	 	Ineligible Inventory	 	 	 	$__________






	


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	 	 	(a)	 	Inventory not in the possession
or under the control of a Borrower	 	$__________	 	 
	 
	 	 	(b)	 	Inventory not subject to a perfected, first priority security interest in favor of the Lender	 	$__________	 	 
	 
	 	 	(c)	 	Inventory that has been
shipped or delivered to a customer on consignment, a sale-or-return basis, or on
the basis of any similar understanding	 	$__________	 	 
	 
	 	 	(d)	 	Inventory with respect to
which a claim exists disputing the Borrower’s title to or right to possession of
such inventory	 	$__________	 	 
	 
	 	 	(e)	 	Inventory that is not in
good condition or does not comply with any applicable law, rule, or regulation
or any standard imposed by any Governmental Authority with respect to its manufacture,
use, or sale	 	$__________	 	 
	 
	 	 	(f)	 	Other Ineligible Inventory
disallowed by Lender in its sole discretion	 	$__________	 	 
	 
	9.	 	Total Ineligible
Inventory
add Lines 8(a) through 8(f)	 	 	 	$__________
	 
	10.	 	Total Eligible
Inventory
Line 7 minus Line 9 	 	 	 	$__________
	 
	11.	 	Multiplied by:
Borrowing Base factor m(as applicable for subject month)	 	 	 	10% (December, January &
February 0% (other months) 
	 
	12.	 	Total Inventory
Component of Borrowing Base
Line 10 times Line 11	 	 	 	$__________
	 
	13.	 	Borrowing Base
Line 6 plus the lesser of (a) Line 12 or (b)
$900,000.00	 	 	 	$__________
	 
	14.	 	Amount of Commitment	 	 	 	$2,000,000.00 
	 
	15.	 	Principal balance
of Loans
(not to exceed $2,000.000.00)	 	 	 	$__________
	 
	16.	 	Lesser of
Line 13 or Line 14	 	 	 	$__________






	


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	17.	 	Amount available for Loans, if positive, or amount to be repaid, if negative
Line 16 minus Line 15	 	 	 	$__________






			By:

——————————————
Name:
Title:







	


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EXHIBIT
“B”



REQUEST FOR
LOAN



        Reference
is made to that  certain  Credit  Agreement  dated as of February __, 2004 (as from time
to time  amended,  the  “Agreement”),  by and among Adams Golf, Inc., Adams
Golf Holding Corp.,  Adams Golf GP Corp.,  Adams  Golf, Ltd., Adams Golf IP, LP, and
Adams Golf Management Corp.  (“Borrowers”) and Bank of Texas,  N.A.  (“Lender”).
Terms which are defined in the Agreement are used herein with the meanings  given them in
the  Agreement.  Pursuant  to the terms of the  Agreement,  Borrowers  hereby  request
Lender to make a Loan in the amount set forth below in  Item (4) under the heading
"Borrowing Information".



        To
induce Lender to make the requested Loan, Borrowers hereby represent, warrant,
acknowledge, and agree to and with Lender that:










	 	        (a)
The officer of Borrowers signing this instrument is the duly elected, qualified  and
acting officer of Borrowers as indicated below such officer’s signature  hereto
having all necessary authority to act for Borrowers in making the request  herein
contained.






	 	        (b)
All representations and warranties contained in the Agreement and in each of the  other
Loan Documents are true and correct in all respects on and as of the date  hereof with
the same force and effect as if made on and as of such date.






	 	        (c)
All covenants and agreements contained in the Agreement and in each of the other  Loan
Documents to have been complied with and performed on or prior to the  making of the
requested Loan have been fully complied with and performed.






	 	        (d)
No Default or Event of Default has occurred and is continuing or would result  from the
requested Loan.






	 	        (e)
All conditions precedent to the advance of the requested Loan set forth in  Article 7 of
the Agreement have been satisfied.






	 	        (f)
Since the date of the latest Compliance Certificate delivered to Lender, there  has been
no material adverse change in the Collateral or in the business,  assets, operations,
prospects or condition, financial or otherwise, of  Borrowers.






	 	        (g)
The amount of the requested Loan, when added to the aggregate principal amount  of all
outstanding Loans will not exceed an amount equal to the lesser of (i)  the Borrowing
Base or (ii) the Commitment.






	 	        (h)
All information supplied below is true, correct and complete as of the date  hereof.






	


Page 35















	


Borrowing
Information









	 	(1) 	Amount of the Commitment
(lesser of Borrowing Base or Commitment)  		$________	
	 
	 	(2) 	Outstanding principal amount of Loans prior to requested Loan		$________	
	 
	 	(3) 	Net availability of credit: line (1) minus line (2)		$________	
	 
	 	(4) 	Amount of requested Loan		$________	
	 
	 	(5) 	Date of Loan		____________	






	


        IN
WITNESS WHEREOF, this instrument is executed as of _____________.










			[BORROWER]


By:

——————————————

Printed Name:

——————————————

Title:

——————————————






	


Page 36















	


EXHIBIT
“C”



COMPLIANCE
CERTIFICATE



        Reference
is made to the Credit  Agreement (the  “Agreement”)  dated as of February __,
2004,  made by and  between ADAMS GOLF, INC., ADAMS GOLF HOLDING CORP.,  ADAMS GOLF GP
CORP.,  ADAMS GOLF, LTD., ADAMS GOLF IP, LP, and  ADAMS GOLF  MANAGEMENT  CORP.  (“Borrowers”)
and BANK OF TEXAS,  N.A.  (“Lender”).  Terms which are defined in the
Agreement are used herein with the meanings  given them in the Agreement.  The
undersigned  hereby  certifies that  he is a duly elected, qualified, and acting officer
of Borrower, and that:










	 	        1.
a review of the  activities of Borrowers has been made under his  supervision  with a
view to  determining  whether Borrowers have fulfilled all of their obligations under the
Agreement and the other Loan Documents;






	 	        2.
Borrowers have fulfilled all of their obligations under the Agreement and the  other Loan
Documents and all representations and warranties made in the  Agreement and the other
Loan Documents are true and correct in all material  respects on and as of the date
hereof with the same force and effect as though  made on and as of the date hereof;






	 	        3.
no Default or Event of Default has occurred and is continuing as of the date hereof;






	 	        4.
Borrowers are in compliance with the terms and conditions of all leases  covering
property upon which the  Collateral is located and all such leases are in full force and
effect; and






	 	        5.
attached  hereto as Schedule A is a report  prepared by the  undersigned  setting  forth
information  and  calculations  that demonstrate  compliance (or  noncompliance)  with
the covenants set forth in Section 4.13 of the  Agreement.






	


        IN
WITNESS WHEREOF, this certificate is executed as of _________________.










			By:

——————————————

Printed Name:

——————————————

Title:

——————————————






	


Page 37















	


SCHEDULE
A



        Borrower
has complied with the covenants contained in Section 4.13 of the
Agreement as detailed below:









	 	(a) Actual Ratio of Total Liabilities to Tangible Net Worth	_____ to 1.00 
	 
	 	Required Ratio of Total Liabilities to Tangible Net Worth	0.60 to 1.00 
	 
	 	(b) Actual Interest Coverage Ratio	_____ to 1.00 
	 
	 	Required Interest Coverage Ratio	1.50 to 1.00 






	


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