Document:

EX-10.1

 Exhibit 10.1 

Execution Version 
 BARCLAYS

 745 Seventh Avenue 
 New York,
New York 10019 
 CONFIDENTIAL 

August 2, 2016 
 Molina Healthcare, Inc. 

200 Oceangate, Suite 100 
 Long Beach, California 90802

 Attention: John Molina 
  

	 	Re:	Molina Healthcare, Inc. Commitment Letter 

	 	 	$400,000,000 Senior Bridge Facility 

 Ladies and Gentlemen: 

You have advised Barclays Bank PLC (“Barclays”, the “Commitment Party” or “we” or
“us”) that Molina Healthcare, Inc., a Delaware corporation (the “Borrower” or “you”), seeks financing to consummate the Transactions (such term and each other capitalized term used but not defined
herein having the meanings assigned to them in Annex A hereto and the Term Sheet referred to below). This letter, including the Term Sheet, the Transaction Description attached hereto as
Annex A and the Conditions Annex attached hereto as Annex C (the “Conditions Annex”), is hereinafter referred to as the “Commitment Letter”. 

1. Commitments. Upon the terms set forth in this Commitment Letter and subject solely to satisfaction or waiver of the conditions
expressly set forth in the Conditions Annex, Barclays (in such capacity, the “Initial Lender”) is pleased to advise you of its commitment to provide to the Borrower 100% of the aggregate principal amount of the Bridge Facility
(the “Commitment”). 
 2. Titles and Roles. Barclays, acting alone or through or with affiliates selected by
it, will act as bookrunner, lead arranger and syndication agent (in such capacities, collectively, the “Lead Arranger”) in arranging and syndicating the Bridge Facility. Barclays will act as the sole administrative agent (in
such capacity, the “Bridge Administrative Agent”) for the Bridge Facility. No additional agents, co-agents, arrangers or bookrunners will be appointed and no other titles will be awarded and no other compensation will be paid
(other than compensation expressly contemplated by this Commitment Letter and the fee letter dated the date hereof between the Commitment Party and you (the “Fee Letter”)) unless you and Barclays shall agree in writing;
provided that you shall have the right to appoint, within fifteen (15) business days after the date hereof, additional co-managers for the Bridge Facility (any such co-manager, an “Additional Agent”) for up to 50%
aggregate economics; it being understood that (i) no additional bookrunners may be appointed, (ii) the commitments of the Initial Lender in respect of the Bridge Facility will be reduced by the amount of the commitments of such Additional
Agents and the economics allocated to the Initial Lender in respect of the Bridge Facility will be reduced ratably by the amount of the economics allocated to such Additional Agents, in each case, upon the execution by such Additional Agents of
customary joinder documentation (it being understood that each such Additional Agent (or its affiliate) shall assume commitments in respect of the Bridge Facility on a pro rata basis that is equal to the proportion of the economics allocated to such
Additional Agent (or its affiliates)) and (iii) after giving effect to any such appointments, the Initial Lender shall be entitled to at least 50% of the economics in respect of the Bridge Facility. It is understood and agreed that
Barclays will have the “left” 

 
and “highest” placement in any and all marketing materials or other documentation used in connection with the Bridge Facility and shall hold the leading role and responsibilities
conventionally associated with such placement, including maintaining sole physical books for the Bridge Facility. 
 3. Conditions to
Commitment. The Commitment and undertakings of the Commitment Party hereunder are subject solely to the satisfaction or waiver of the conditions precedent set forth in the Conditions Annex. 

Notwithstanding anything in this Commitment Letter, the Fee Letter or the Financing Documentation (as defined in the Conditions Annex) or any
other letter agreement or other undertaking concerning the financing of the Transactions to the contrary, (a) the only representations and warranties the accuracy of which shall be a condition to the availability of the Bridge Facility on the
Closing Date, shall be (i) such of the representations made by the Seller with respect to the Acquired Assets or its businesses in the Acquisition Agreement as are material to the interests of the Lenders, but only to the extent that you or any
of your affiliates have the right (taking into account any applicable cure periods) to terminate your or such affiliate’s obligations under the Acquisition Agreement or otherwise decline to close the Acquisition (in each case, in accordance
with the terms of the Acquisition Agreement) as a result of a breach of any such representations and warranties in the Acquisition Agreement or any such representation or warranty not being accurate (the “Specified Acquisition Agreement
Representations”) and (ii) the Specified Representations (as defined below) and (b) the terms of the Financing Documentation shall be in a form such that they do not impair the availability of the Bridge Facility on the Closing
Date if the conditions set forth in Annex B are satisfied or waived by the Lenders. For purposes hereof, “Specified Representations” means the representations and warranties of the Loan Parties set
forth in the Bridge Loan Documentation relating to corporate existence and good standing in such Loan Party’s jurisdiction of organization; power and authority, due authorization, execution and delivery and enforceability, in each case,
relating to the Loan Parties’ entering into and performance of the Financing Documentation; enforceability of the Financing Documentation against the Loan Parties; no conflicts with or consents under the Loan Parties’ organizational
documents relating to entering into and performance of the Financing Documentation; solvency as of the Closing Date (after giving effect to the Transactions, with solvency being determined in a manner consistent with
Exhibit D to this Commitment Letter) of the Loan Parties on a consolidated basis; Federal Reserve margin regulations; the Investment Company Act; the PATRIOT Act, and not using proceeds in violation of OFAC or
FCPA. This paragraph, and the provisions herein, shall be referred to as the “Limited Conditionality Provision”. 
 4.
Syndication. 
 (a) The Lead Arranger intends and reserves the right, both prior to and after the Closing Date, to secure commitments
for the Bridge Facility from a syndicate of banks, financial institutions and other entities reasonably acceptable to you (such financial institutions and other entities committing to the Bridge Facility, including the Initial Lender, the
“Lenders”) upon the terms and subject to the conditions set forth in this Commitment Letter. Until the earlier of (i) the date that a Successful Syndication (as defined in the Fee Letter) is achieved and (ii) the date
that is 60 days following the Closing Date (the “Syndication Date”), you agree to, and will use commercially reasonable efforts to cause appropriate members of management of the Seller to (to the extent practical and not
in contravention of the Acquisition Agreement), assist the Lead Arranger actively in achieving a syndication of the Bridge Facility that is satisfactory to the Lead Arranger and you. To assist the Lead Arranger in its syndication efforts, you
agree that you will, and will cause your representatives and advisors to (to the extent practical and not in contravention of the Acquisition Agreement), and will use commercially reasonable efforts to cause, appropriate members of management of the
Seller and its representatives and advisors to, (i) provide promptly to the Commitment Party and the other Lenders upon request all information reasonably requested, and in the case of the Seller, to the extent previously prepared and

  
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available, by the Lead Arranger to assist the Lead Arranger to complete the syndication, (ii) make your senior management available to prospective Lenders on reasonable prior notice and at
reasonable times and places, (iii) host, with the Lead Arranger, one or more meetings or calls with prospective Lenders at mutually agreed times and locations, (iv) assist, and cause your affiliates and advisors to assist, the Lead
Arranger in the preparation of one or more customary confidential information memoranda and other customary marketing materials in form and substance reasonably satisfactory to the Lead Arranger to be used in connection with the syndication,
(v) use commercially reasonable efforts to ensure that the syndication efforts of the Lead Arranger benefit materially from the existing lending relationships of the Borrower, (vi) use commercially reasonable efforts to obtain, at the
Borrower’s expense, (A) a current public corporate credit rating from Standard & Poor’s Financial Services LLC, a subsidiary of The S&P Global Inc. (“S&P”), (B) a current public corporate family
rating from Moody’s Investors Service, Inc. (“Moody’s”) and (C) a current public rating with respect to the Bridge Facility and the Notes from each of S&P and Moody’s, in each case, prior to the
launch of general syndication of the Bridge Facility, and to participate actively in the process of securing such ratings, including having your senior management and, to the extent reasonable and practical, appropriate members of management of the
Seller meet with such rating agencies and (vii) your ensuring that prior to the later of the Closing Date and the Syndication Date there will be no competing issues, offerings, placements, arrangements or syndications of debt or equity
securities or commercial bank or other credit facilities by or on behalf of you or your subsidiaries being offered, placed or arranged (other than the Bridge Facility, the Notes, the Equity Issuance and the New Credit Agreement (as defined in Annex
A) without the written consent of Barclays, unless such issuance, offering, placement, arrangement or syndication could not reasonably be expected to materially impair the syndication of the Bridge Facility (it being understood that indebtedness
incurred in the ordinary course of business of the Borrower and its subsidiaries for capital expenditures and working capital purposes will not materially impair the syndication of the Bridge Facility). For the avoidance of doubt, you will not
be required to provide any information to the extent that the provision thereof would violate any attorney-client privilege, law, rule or regulation, or any obligation of confidentiality from a third party binding on you, the Seller (solely with
respect to the Acquired Assets) or any of your or its respective affiliates (so long as such confidentiality obligation was not entered into in contemplation of the Transactions); provided that you shall use commercially reasonable efforts to
obtain the relevant consents under such obligations of confidentiality to allow for the provision of such information to the extent reasonably requested by the Lead Arranger; provided, further, that you will inform the Lead Arranger,
in advance and to the extent legally permitted, that you are withholding any information pursuant to the foregoing. Your obligations under this Commitment Letter to use commercially reasonable efforts to cause the Seller or members of its
management to take (or to refrain from taking) any action shall be subject to any applicable limitation on your rights as set forth in the Acquisition Agreement. Notwithstanding the foregoing, neither the Seller nor any of its affiliates shall
be required (A) to prepare, create or provide (unless previously prepared and available prior to the date of the Acquisition Agreement) any financial information or financial statements in respect of Seller, any of its affiliates or the Acquired
Assets in connection with the foregoing. 
 (b) The Lead Arranger and/or one or more of its affiliates will exclusively manage all aspects
of the syndication of the Bridge Facility (in consultation with you), including decisions as to the selection and number of potential Lenders to be approached, when they will be approached, whose commitments will be accepted (with your consent not
to be unreasonably withheld or delayed), any titles offered to the Lenders and the final allocations of the commitments and any related fees among the Lenders, and the Lead Arranger will exclusively perform all functions and exercise all authority
as is customarily performed and exercised in such capacities. Notwithstanding the Lead Arranger’s rights to syndicate the Bridge Facility and receive commitments with respect thereto, unless otherwise agreed to by you, (i) the Initial
Lender shall not be relieved or released from its obligations hereunder (including its obligation to fund the Bridge Facility on the Closing Date) in connection with any syndication, assignment or participation in the Bridge Facility, including its
Commitment, until the initial funding 

  
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under the Bridge Facility has occurred on the Closing Date, (ii) no assignment by the Initial Lender shall become effective with respect to all or any portion of the Initial Lender’s
Commitment until the initial funding of the Bridge Facility (except to the extent that, only to the extent available on the Closing Date, (x) the Notes are issued and paid for and/or (y) the Equity Issuance occurs, in each case, in lieu of
the Bridge Facility or a portion thereof) and (iii) unless you and we agree in writing, the Initial Lender will retain exclusive control over all rights and obligations with respect to its Commitment in respect of the Bridge Facility, including
all rights with respect to consents, modifications, supplements, waivers and amendments, until the Closing Date has occurred. Without limiting your obligations to assist with the syndication efforts as set forth herein, it is understood that
the Commitment hereunder is not conditioned upon the commencement or completion of the syndication of, or receipt of commitments in respect of, the Bridge Facility and in no event shall either the successful completion of the syndication of the
Bridge Facility or compliance with the Commitment Letter constitute a condition to the availability of the Bridge Facility on the Closing Date. 

5. Information. 
 (a) You
represent, warrant and covenant that (to the best of your knowledge, insofar as it relates to the Seller and/or the Acquired Assets) (i) all written information and written data (other than the Projections, as defined below, other
forward-looking information and information of a general economic or general industry nature) concerning the Borrower, its subsidiaries, the Acquired Assets and any aspect of the Transactions that has been or will be made available to the Commitment
Party or the Lenders by you or any of your or their representatives, subsidiaries or affiliates (or on your or their behalf) (the “Information”), when taken as a whole, (x) is, and in the case of Information made available
after the date hereof, will be, complete and correct in all material respects and (y) does not, and in the case of Information made available after the date hereof, will not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading and (ii) all financial projections concerning the Borrower and its subsidiaries or the Acquired
Assets, taking into account the consummation of the Transactions, that have been or will be made available to any of the Commitment Party or the Lenders by you or any of your representatives, subsidiaries or affiliates (or on your or their behalf)
(the “Projections”) have been and will be prepared in good faith with a reasonable basis for the assumptions and the conclusions reached therein and on a basis consistent with the Borrower’s and the Seller’s historical
financial data (in the case of the Seller, solely as it relates to the Acquired Assets) (it being understood that (w) the Projections are as to future events and are not to be viewed as facts, (x) the Projections are subject to significant
uncertainties and contingencies, many of which are beyond your control, (y) no assurance can be given that any particular Projections will be realized and (z) actual results during the period or periods covered by any such Projections may
differ significantly from the projected results and such differences may be material). You agree that if, at any time prior to the later of the Closing Date and the Syndication Date, you become aware that any of the representations and
warranties contained in the preceding sentence would be incorrect in any material respect if the Information and Projections were being furnished, and such representations were being made, at such time, then you will promptly supplement (or use
commercially reasonable efforts to supplement, in the case of Information relating to the Seller and/or the Acquired Assets, if previously prepared and available) the Information and the Projections so that such representations are correct in all
respects under those circumstances. We will be entitled to use and rely upon, without responsibility to verify independently, the Information and the Projections. You acknowledge that we may share with any of our affiliates (it being
understood that such affiliates will be subject to the confidentiality agreements between you and us), and such affiliates may share with the Commitment Party, any information related to you, the Acquired Assets, or any of your subsidiaries or
affiliates (including, without limitation, in each case, information relating to creditworthiness) and the transactions contemplated hereby. 

  
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 (b) You acknowledge that (i) the Commitment Party will make available, on your behalf, the
Information, Projections and other marketing materials and presentations, including the confidential information memoranda (collectively, the “Informational Materials”), to the potential Lenders by posting the Informational
Materials on SyndTrak Online or by other similar electronic means (collectively, the “Electronic Means”) and (ii) certain prospective Lenders may be “public side” (i.e., lenders that have personnel that do not wish to
receive material non-public information (within the meaning of the United States federal securities laws, “MNPI”) with respect to the Borrower, the Seller or your or its subsidiaries or affiliates or any of your or their respective
securities, and who may be engaged in investment and other market-related activities with respect to such entities’ securities (such Lenders, “Public Lenders”). At the request of a Lead Arranger, (A) you will assist,
and cause your affiliates, advisors, and to the extent possible using commercially reasonable efforts, appropriate representatives of the Seller to assist (to the extent practical and not in contravention of the Acquisition Agreement), the Lead
Arranger in the preparation of Informational Materials to be used in connection with the syndication of the Bridge Facility to Public Lenders, which will not contain MNPI (the “Public Informational Materials”) and (B) at the
request of the Lead Arranger you will identify and conspicuously mark any Public Informational Materials “PUBLIC”. Notwithstanding the foregoing, you agree that the Commitment Party may distribute the following documents to all
prospective Lenders (including the Public Lenders) on your behalf, unless you advise the Commitment Party in writing (including by email) within a reasonable time prior to their intended distributions that such material should not be distributed to
Public Lenders: (w) administrative materials for prospective Lenders such as lender meeting invitations and funding and closing memoranda, (x) notifications of changes in the terms of the Bridge Facility, (y) historical financial
information regarding the Borrower and its subsidiaries (other than the Projections) and (z) drafts and final versions of the Term Sheet and the Financing Documentation. If you advise us in writing (including by email) that any of the
foregoing items (other than the Financing Documentation) should not be distributed to Public Lenders, then the Commitment Party will not distribute such materials to Public Lenders without further discussions with you. Before distribution of
any Informational Materials to prospective Lenders, you shall provide us with a customary letter authorizing the dissemination of the Informational Materials and confirming the accuracy and completeness in all material respects of the information
contained therein and, in the case of Public Informational Materials, confirming the absence of MNPI therefrom. In addition, the Information Materials shall (I) exculpate you with respect to any liability related to the misuse of the
contents of such Information Materials or any related offering and marketing materials by the recipients thereof and (II) exculpate us with respect to any liability related to the use or misuse of the contents of such Information Materials or
any related offering and marketing materials by the recipients thereof. 
 (c) Notwithstanding the foregoing, neither the Seller nor any of
its affiliates shall be required to prepare, create or provide (unless previously prepared and available prior to the date of the Acquisition Agreement) any financial information or financial statements in respect of Seller, any of its affiliates or
the Acquired Assets in connection with the foregoing. 
 6. Indemnification. You agree to indemnify and hold harmless the
Commitment Party and each of its affiliates and their respective directors, officers, employees, partners, representatives, advisors and agents and each of their respective heirs, successors and assigns (each, an “Indemnified
Party”) from and against any and all actions, suits, losses, claims, damages, penalties, liabilities and reasonable and documented out-of-pocket expenses of any kind or nature (including legal expenses), joint or several, to which such
Indemnified Party may become subject or that may be incurred or asserted or awarded against such Indemnified Party, in each case arising out of or in connection with or by reason of (including, without limitation, in connection with any
investigation, litigation or proceeding or preparation of a defense in connection therewith) (a) any matters contemplated by this Commitment Letter, the Transactions or any related transaction (including, without limitation, the execution and
delivery of this Commitment Letter, the Financing Documentation, the documentation for debt financing issued for the 

  
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purpose of refinancing all or a portion of the Bridge Facility (the “Permanent Financing”) and the closing of the Transactions) or (b) the use or the contemplated use of the
proceeds of the Bridge Facility, and will reimburse each Indemnified Party for all out-of-pocket expenses (but limited, in the case of legal fees and expenses, to the reasonable and documented out-of-pocket fees, disbursements and other charges of
one counsel to all Indemnified Parties (taken as a whole) and, if reasonably necessary, a single local counsel for all Indemnified Parties (taken as a whole) in each relevant jurisdiction and with respect to each relevant specialty, and in the case
of an actual or perceived conflict of interest, one additional counsel in each relevant jurisdiction to the affected Indemnified Parties similarly situated and taken as a whole) on written demand as they are incurred in connection with any of the
foregoing; provided that you will not have to indemnify any Indemnified Party against (A) any claim, loss, damage, liability or expense to the extent found by a final, non-appealable judgment of a court of competent jurisdiction to have
resulted from (i) the gross negligence or willful misconduct of such Indemnified Party, (ii) a material breach of obligations under the Commitment Letter or the Financing Documentation by such Indemnified Party or (iii) any dispute solely
among the Indemnified Parties (not arising as a result of any act or omission by the Borrower or any of its subsidiaries or affiliates) other than any claim, action, suit, inquiry, litigation, investigation or other proceeding brought by or against
any such Indemnified Party in its capacity as agent or arranger, or (B) any settlement entered into by such Indemnified Party without your written consent, but if settled with your written consent (such consent not to be unreasonably withheld,
conditioned or delayed) or if there is a judgment in any such action, suit, proceeding or claim, you agree to indemnify and hold harmless each Indemnified Party from and against any and all losses, claims, damages, liabilities or expenses by reason
of such settlement or judgment in accordance with the provisions of this paragraph. In the case of an investigation, litigation or proceeding to which the indemnity in this paragraph applies, such indemnity shall be effective whether or not
such investigation, litigation or proceeding is brought by you, your equity holders or creditors or an Indemnified Party, whether or not an Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are
consummated. No Indemnified Party will be liable to you, your affiliates or any other person for any damages arising from the use by others of Informational Materials or other materials obtained by Electronic Means, except to the extent that
your damages are found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such Indemnified Party. You shall not, without the prior written consent of each
Indemnified Party affected thereby (which consent shall not be unreasonably conditioned, withheld or delayed), settle any threatened or pending claim or action that would give rise to the right of any Indemnified Party to claim indemnification
hereunder unless such settlement (x) includes a full and unconditional release of all liabilities arising out of such claim or action against such Indemnified Party, (y) does not include any statement as to or an admission of fault,
culpability or failure to act by or on behalf of such Indemnified Party and (z) requires no action on the part of the Indemnified Party other than its consent (which consent shall not be unreasonably conditioned, withheld or delayed).

Neither you nor we nor any other Indemnified Party will be responsible or liable for any indirect, special, punitive or consequential damages
which may be alleged as a result of the Acquisition, this Commitment Letter, the Fee Letter, the Bridge Facility, the Permanent Financing, the Transactions or any related transaction contemplated hereby or thereby or any use or intended use of the
proceeds of any financing; provided that nothing contained in this sentence shall limit your indemnity or reimbursement obligations to the extent set forth above in this Section 6 in respect of any losses, disputes, claims, damages,
liabilities and expenses incurred or paid by an Indemnified Person to a third party that are otherwise required to be indemnified in accordance with this Section 6. You also agree that no Indemnified Party will have any liability (whether
direct or indirect, in contract or tort, or otherwise) to you or your affiliates or to your or their respective equity holders or creditors arising out of, related to or in connection with any aspect of the transactions contemplated hereby, except
to the extent such liability to you is determined in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from (i) the gross negligence or willful misconduct of such Indemnified Party or (ii) a material breach of
obligations under the Commitment Letter or the Financing Documentation by such Indemnified Party. 

  
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 7. Fees. As consideration for the commitments and agreements of the Commitment Party
hereunder, you agree to cause to be paid the nonrefundable fees described in the Fee Letter on the terms and subject to the conditions set forth therein. 

8. Confidentiality. 
 (a)
This Commitment Letter and the Fee Letter (collectively, the “Commitment Documents”) and the existence and contents hereof and thereof are confidential and may not be disclosed, directly or indirectly, by you in whole or in part to
any person without our prior written consent, except for disclosure (i) hereof or thereof on a confidential basis to your directors, officers, employees, accountants, attorneys and other professional advisors who have been advised of their
obligation to maintain the confidentiality of the Commitment Documents for the purpose of evaluating, negotiating or entering into the Transactions, (ii) as otherwise required by applicable law, rule or regulation or compulsory legal process or
pursuant to a subpoena (in which case, you agree, to the extent permitted by law, to inform us promptly in advance thereof), (iii) on a confidential basis to the board of directors, officers and advisors of the Seller in connection with their
consideration of the Acquisition (provided that any information relating to pricing (including in any “market flex” provisions that relate to pricing), fees and expenses has been redacted in a manner reasonably acceptable to us),
(iv) of this Commitment Letter, but not the Fee Letter, in any required filings with the Securities and Exchange Commission and other applicable regulatory authorities and stock exchanges or in any prospectus or other offering memorandum
relating to the Notes, (v) of the Term Sheet to any ratings agency in connection with the Transactions, (vi) of the aggregate fee amounts contained in the Fee Letter as part of projections, pro forma information or as part of a generic
disclosure of aggregate sources and uses related to fee amounts applicable to the Transactions to the extent customary or required in offering and marketing materials for the Bridge Facility and/or the Notes or in any public release or filing
relating to the Transactions. The Commitment Party shall be permitted to use information related to the syndication and arrangement of the Bridge Facility (including your name and company logo) in connection with obtaining a CUSIP number,
marketing, press releases or other transactional announcements or updates provided to investor or trade publications, subject to confidentiality obligations or disclosure restrictions reasonably requested by you. The confidentiality provisions
of this paragraph (a) with respect to the Borrower (other than with respect to the Fee Letter) shall automatically terminate on the date that is two (2) years from the date of this Commitment Letter. 

(b) We agree to use all non-public information provided to us by or on behalf of the Borrower hereunder solely for the purpose of providing
the services which are the subject of this Commitment Letter and to treat all such information confidentially; provided, that nothing herein shall prevent the Commitment Party from disclosing any such information (i) to any Lenders or
participants or prospective Lenders or participants or any direct or indirect contractual counterparties (or prospective counterparties) to any swap or derivative transaction relating to the Borrower and its obligations under the Bridge Facility,
(ii) as otherwise required by applicable law, rule or regulation or compulsory legal process or pursuant to a subpoena (in which case, we agree, to the extent permitted by law, to inform you promptly in advance thereof), (iii) upon the
request or demand of any regulatory authority having jurisdiction over the Commitment Party or its affiliates (in which case the Commitment Party shall, except with respect to any audit or examination conducted by bank accountants or any
governmental bank regulatory authority exercising examination or regulatory authority, promptly notify you, in advance, to the extent practicably and lawfully permitted to do so), (iv) to the employees, legal counsel, independent auditors,
professionals and other experts or agents of the Commitment Party who are informed of the confidential nature of such information and are or have been advised of their obligation to keep 

  
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information of this type confidential, (v) to any of its respective affiliates solely in connection with the Transactions, (vi) to the extent any such information becomes publicly
available other than by reason of disclosure by the Commitment Party or its affiliates in breach of this Commitment Letter, (vii) to the extent that such information is received by the Commitment Party from a third party that is not to the
Commitment Party’s knowledge subject to confidentiality obligations to you or the Borrower, (viii) to the extent that such information is independently developed by the Commitment Party, (ix) to ratings agencies in connection with the
Transactions and (x) for purposes of establishing a “due diligence” defense; provided, further that the disclosure of any such information to any Lenders or prospective Lenders or participants or prospective participants
referred to above shall be made subject to the acknowledgment and acceptance by such Lender or prospective Lender or participant or prospective participant that such information is being disseminated on a confidential basis (on substantially the
terms set forth in this paragraph or as is otherwise reasonably acceptable to you and the Commitment Party, including, without limitation, as agreed in any confidential information memorandum or other marketing materials) in accordance with the
standard syndication processes of the Commitment Party or customary market standards for dissemination of such type of information. The provisions of this paragraph (b) with respect to the Commitment Party shall automatically be superseded
by the confidentiality provisions to the extent covered in the Financing Documentation and shall in any event automatically terminate two (2) years following the date of this Commitment Letter. 

(c) The Commitment Party hereby notifies you that pursuant to the requirements of the USA PATRIOT Act, Title III of Pub. L. 107-56
(signed into law October 26, 2001) (the “PATRIOT Act”), it and each Lender may be required to obtain, verify and record information that identifies you, which information includes your name, address, tax identification number
and other information that will allow the Commitment Party and the other Lenders to identify you in accordance with the PATRIOT Act. This notice is given in accordance with the requirements of the PATRIOT Act and is effective for each of us and
the Lenders. 
 9. Other Services. 

(a) Nothing contained herein shall limit or preclude the Commitment Party or any of its affiliates from carrying on any business with,
providing banking or other financial services to, or from participating in any capacity, including as an equity investor, in any party whatsoever, including, without limitation, any competitor, supplier or customer of you, the Seller, or any of your
or its affiliates, or any other party that may have interests different than or adverse to such parties. 
 (b) You acknowledge that the
Lead Arranger and its affiliates (the term “Lead Arranger” as used in this section being understood to include such affiliates) (i) may be providing debt financing, equity capital or other services (including financial advisory
services) to other entities and persons with which you, the Seller, or your or its affiliates may have conflicting interests regarding the Transactions and otherwise, (ii) may act, without violation of its contractual obligations to you, as it
deems appropriate with respect to such other entities or persons, and (iii) have no obligation in connection with the Transactions to use, or to furnish to you, the Seller, or your affiliates or subsidiaries, confidential information obtained
from other entities or persons. In particular, you acknowledge that the Lead Arranger may possess information about the Acquired Assets, the Acquisition and other potential purchasers and their respective strategies and bids, but the Lead
Arranger has no obligation to furnish to you such information. 
 (c) In connection with all aspects of the Transactions, you acknowledge
and agree that: (i) the Bridge Facility and any related arranging or other services contemplated in this Commitment Letter constitute an arm’s-length commercial transaction between you and your affiliates, on the one hand, and the
Commitment Party, on the other hand, and you are capable of evaluating and understanding 

  
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and understand and accept the terms, risks and conditions of the Transactions, (ii) in connection with the process leading to the Transactions, the Commitment Party is and has been acting
solely as a principal and not as a financial advisor, agent or fiduciary, for you or any of your management, affiliates, equity holders, directors, officers, employees, creditors or any other party, (iii) except as described in
subsection (d) below, neither the Commitment Party nor any affiliate thereof has assumed or will assume an advisory, agency or fiduciary responsibility in your or your affiliates’ favor with respect to any of the Transactions or the
process leading thereto (irrespective of whether the Commitment Party or any of its affiliates has advised or is currently advising you or your affiliates on other matters) and the Commitment Party has no obligation to you or your affiliates with
respect to the Transactions except those obligations expressly set forth in the Commitment Documents, (iv) the Commitment Party and its affiliates may be engaged in a broad range of transactions that involve interests that differ from yours and
those of your affiliates and the Commitment Party shall have no obligation to disclose any of such interests, and (v) the Commitment Party has not provided any legal, accounting, regulatory or tax advice with respect to any of the Transactions
and you have consulted your own legal, accounting, regulatory and tax advisors to the extent you have deemed appropriate. You hereby waive and release, to the fullest extent permitted by law, any claims that you may have against the Commitment
Party or any of its affiliates with respect to any breach or alleged breach of agency or fiduciary duty. 
 (d) In addition, please note
that Barclays Capital Inc. has been retained by the Borrower as financial advisor (in such capacity, the “Financial Advisor”) in connection with the Acquisition. You agree to such retention, and further agree not to assert any
claim you might allege based on any actual or potential conflicts of interest that might be asserted to arise or result from, on the one hand, the engagement of the Financial Advisor, and on the other hand, our and our affiliates’ relationships
with you as described and referred to herein. 
 10. Acceptance/Expiration/Termination of Commitments. 

(a) This Commitment Letter and the Commitment of the Commitment Party and the undertakings of the Lead Arranger set forth herein shall
automatically terminate at 11:59 p.m. (Eastern Time) on August 15, 2016 (the “Acceptance Deadline”), without further action or notice unless signed counterparts of this Commitment Letter and the Fee Letter shall have been
delivered to counsel to the Lead Arranger by such time. 
 (b) In the event this Commitment Letter is accepted by you as provided above, the
Commitment and agreements of the Commitment Party and the undertakings of the Lead Arranger set forth herein will automatically terminate without further action or notice upon the earliest to occur of (i) consummation of the Acquisition (with
or without the use of the Bridge Facility), (ii) termination of the Acquisition Agreement in accordance with its terms, or your written notice of abandonment of the Acquisition and (iii) the End Date (as defined in the Acquisition Agreement),
as such date may be extended by either the Humana Seller or the Aetna Seller in accordance with the terms of the Humana Acquisition Agreement or the Aetna Acquisition Agreement, respectively, but in no event later than January 3, 2018, in each case,
unless the closing of the Bridge Facility has been consummated on or before such date on the terms and subject to the conditions set forth herein. 

(c) You may terminate this Commitment Letter, the Commitment and agreements of the Commitment Party and the undertakings of the Lead Arranger
set forth herein in full (but not in part) at any time in your sole and absolute discretion subject to the survival provisions set forth in Section 11 below. 

11. Survival. The sections of this Commitment Letter and the Fee Letter relating to any compensation (if and as applicable),
Indemnification, Expenses, Confidentiality, Other Services, Survival 

  
 9 

 
and Governing Law shall survive any termination or expiration of this Commitment Letter, the Commitment of the Commitment Party or the undertakings of the Lead Arranger set forth herein
(regardless of whether definitive Financing Documentation is executed and delivered), and the sections relating to Syndication and Information shall survive until the completion of the syndication of the Bridge Facility; provided that your
obligations under this Commitment Letter (other than your obligations with respect to the sections of this Commitment Letter relating to Syndication, Information, Confidentiality, Other Services, Survival and Governing Law) shall automatically
terminate and be superseded by the provisions of the Financing Documentation upon the initial funding thereunder, to the extent covered thereby, and you shall be released from all liability in connection therewith at such time.

12. Governing Law. THIS COMMITMENT LETTER AND THE FEE LETTER, AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED
THERETO (INCLUDING, WITHOUT LIMITATION, ANY CLAIMS SOUNDING IN CONTRACT LAW OR TORT LAW ARISING OUT OF THE SUBJECT MATTER HEREOF OR THEREOF), SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING
SECTION 5-1401 AND SECTION 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REFERENCE TO ANY OTHER CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF ; PROVIDED THAT,
NOTWITHSTANDING THE FOREGOING TO THE CONTRARY, IT IS UNDERSTOOD AND AGREED THAT ANY DETERMINATIONS AS TO (X) THE ACCURACY OF THE SPECIFIED ACQUISITION AGREEMENT REPRESENTATIONS AND WHETHER ANY SPECIFIED ACQUISITION AGREEMENT
REPRESENTATIONS HAVE BEEN BREACHED AND WHETHER YOU (OR YOUR AFFILIATES) HAVE THE RIGHT TO TERMINATE YOUR (OR THEIR) OBLIGATIONS UNDER THE ACQUISITION AGREEMENT OR TO DECLINE TO CONSUMMATE THE ACQUISITION AND (Y) WHETHER THE
ACQUISITION HAS BEEN CONSUMMATED IN ACCORDANCE WITH THE TERMS OF THE ACQUISITION AGREEMENT SHALL, IN EACH CASE BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE. THE PARTIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO
ANY CLAIM OR ACTION ARISING OUT OF THIS COMMITMENT LETTER OR THE FEE LETTER. With respect to any suit, action or proceeding arising in respect of this Commitment Letter or the Fee Letter or any of the matters contemplated hereby or thereby,
the parties hereto hereby irrevocably and unconditionally submit to the exclusive jurisdiction of any state or federal court located in the Borough of Manhattan, and irrevocably and unconditionally waive any objection to the laying of venue of such
suit, action or proceeding brought in such court and any claim that such suit, action or proceeding has been brought in an inconvenient forum. The parties hereto hereby agree that service of any process, summons, notice or document by
registered mail addressed to you or the Commitment Party will be effective service of process against such party for any action or proceeding relating to any such dispute. A final judgment in any such action or proceeding may be enforced in any
other courts with jurisdiction over you or the Commitment Party. 
 13. Miscellaneous. This Commitment Letter and the Fee Letter
embody the entire agreement among the Commitment Party and you and your affiliates with respect to the specific matters set forth above and supersede all prior agreements and understandings relating to the subject matter hereof. No person has
been authorized by the Commitment Party to make any oral or written statements inconsistent with this Commitment Letter or the Fee Letter. This Commitment Letter and the Fee Letter shall not be assignable by (x) you without the prior
written consent of the Commitment Party or (y) the Commitment Party (except as provided in Section 4(b)) without your prior written consent, and any purported assignment without such consent shall be void. This Commitment Letter and
the Fee Letter are not intended to benefit or create any rights in favor of any person other than the parties hereto and thereto, the Lenders and, with respect to indemnification, each Indemnified Party. This Commitment Letter and the

  
 10 

 
Fee Letter may be executed in separate counterparts and delivery of an executed signature page of this Commitment Letter and the Fee Letter by facsimile or electronic mail shall be effective as
delivery of manually executed counterpart hereof; provided that, upon the request of any party hereto or thereto, such facsimile transmission or electronic mail transmission shall be promptly followed by the original thereof. This
Commitment Letter and the Fee Letter may only be amended, modified or superseded by an agreement in writing signed by each of you and the Commitment Party. 

Each of the parties agrees that this Commitment Letter and the Fee Letter, if accepted by you as provided above, are binding and enforceable agreements with
respect to the subject matter contained herein and therein, including an agreement by the parties hereto to negotiate in good faith the Financing Documentation in a manner consistent with this Commitment Letter; provided, that nothing contained in
this Commitment Letter or the Fee Letter obligates you or any of your affiliates to consummate the Transactions or to draw upon all or any portion of the Bridge Facility. 

[Signature Pages Follow] 

  
 11 

 If you are in agreement with the foregoing, please indicate acceptance of the terms hereof by
signing the enclosed counterpart of this Commitment Letter and returning it to counsel to the Lead Arranger, together with an executed counterpart of the Fee Letter, by no later than the Acceptance Deadline. 

 

			
	Sincerely,
	
	BARCLAYS BANK PLC
		
	By:	 	 /s/ John Skrobe

	Name:	 	John Skrobe
	Title:	 	Managing Director

  
 [Commitment
Letter Signature Page] 

 Agreed to and accepted as of the date first 

above written: 
 MOLINA HEALTHCARE, INC. 

 

			
	By:	 	 /s/ John C. Molina

	Name:	 	John C. Molina
	Title:	 	Chief Financial Officer

  
 [Commitment
Letter Signature Page] 

 Annex A 

$400,000,000 SENIOR BRIDGE FACILITY 

TRANSACTION DESCRIPTION 

Capitalized terms not otherwise defined herein shall have the meanings assigned to them in the Commitment Letter to which this Transaction
Description is attached. 
 The Borrower, directly or through one or more wholly owned subsidiaries, intends to acquire certain assets
previously identified to us (collectively, the “Acquired Assets”) of Aetna Inc. (the “Aetna Acquisition”) and Humana Inc. (the “Humana Acquisition”, collectively with the Aetna Acquisition, the
“Acquisition”) (collectively, the “Seller”). 
 In connection with the foregoing, it is intended that:

 (a) The (i) Aetna Acquisition will be consummated pursuant to the terms and conditions of that certain Asset Purchase Agreement, dated as
of August 2, 2016 (including all schedules and exhibits thereto, by and between Aetna Inc. and Borrower (the “Aetna Acquisition Agreement”) and (ii) Humana Acquisition will be consummated pursuant to the terms and conditions of that
certain Asset Purchase Agreement, dated as of August 2, 2016 (including all schedules and exhibits thereto, by and between Humana Inc. and Borrower (the “Humana Acquisition Agreement”; the Humana Acquisition Agreement, together with
the Aetna Acquisition Agreement, the “Acquisition Agreement”). The date on which the Acquisition is closed (it being agreed that, pursuant to Section 6.01(d) of the Humana Acquisition Agreement, the Aetna Acquisition shall be
consummated substantially contemporaneously with the Humana Acquisition) is referred to as the “Closing Date”. Borrower shall also have the option to purchase, in addition to the Acquired Assets, Additional Contracts (as
defined in the Acquisition Agreement), subject to the terms of the Acquisition Agreement. 
 (b) The Borrower will issue and sell unsecured
senior notes (the “Notes”) in a public offering or in a Rule 144A or other private placement on or prior to the Closing Date yielding up to $400,000,000 in gross cash proceeds or, in the event the Notes are not or cannot be
issued on or prior to the Closing Date, or Notes generating less than $400,000,000 in gross cash proceeds are issued and sold on or prior to the Closing Date, the Borrower may borrow on the Closing Date under an unsecured senior bridge facility (the
“Bridge Facility”) up to (A) $400,000,000 less (B) the sum of (i) the aggregate principal amount of Notes, if any, issued on or prior to the Closing Date, as described in the Summary of Proposed Terms and Conditions
attached hereto as Annex B (the “Term Sheet”) and (ii) the gross proceeds from the public or private issuance and sale of shares of its common equity after the date hereof and on or prior to the
Closing Date (the “Equity Issuance”); provided, that, if Notes are issued, in no event shall the minimum aggregate principal amount of the Notes be less than $250,000,000. 

(c) It is understood that indebtedness under each of (i) the Borrower’s 5.375% Senior Notes due 2022 (as amended prior to
the date hereof, the “Existing Notes”), (ii) the Borrower’s (x) 1.125% cash convertible senior notes due January 15, 2020 and (y) convertible senior notes due August 14, 2044, (iii) the Credit Agreement
dated as of June 12, 2015 (as amended prior to the date hereof, the “Existing Credit Agreement”), among the Borrower, the lenders party thereto and SunTrust Bank, as administrative agent, and (iv) any revolving credit
facility entered into by the Borrower prior to the Closing Date solely for the purpose of replacing the Existing Credit Agreement) the Existing Credit Agreement (the “New Credit Agreement”) shall remain outstanding. 

  
 Annex A – Transaction
Description 
 1 

 (d) Fees, commissions and expenses in connection with the foregoing (the “Transaction
Costs”) will be paid. 
 The transactions described above are collectively referred to herein as the
“Transactions”. Except as the context otherwise requires, references to the “Borrower and its subsidiaries” will include any entity formed by the Borrower for purposes of acquiring the Acquired Assets and shall give
effect to the Transactions. 

  
 [Commitment
Letter Signature Page] 

 ANNEX B 

$400,000,000 
 SENIOR
BRIDGE FACILITY 
 SUMMARY OF PROPOSED TERMS AND CONDITIONS 

Capitalized terms not otherwise defined herein shall have the meanings assigned to them in the Commitment Letter to which this Summary of
Proposed Terms and Conditions is attached. 
  

			
	 Borrower:
	  	Molina Healthcare, Inc. (the “Borrower”).
		
	 Lead Arranger and Bookrunning

Manager:
	  	Barclays Bank PLC (“Barclays”), acting alone or through or with its affiliates, will act as bookrunning manager, lead arranger and syndication agent (in such capacities, the “Lead
Arranger”).
		
	 Lenders:
	  	Barclays (or one or more of its affiliates) and a syndicate of financial institutions and other entities arranged by the Lead Arranger in consultation with you and subject to your right to appoint co-managers as set forth in the
Commitment Letter (the “Bridge Lenders”).
		
	 Administrative Agent:
	  	Barclays (in such capacity, the “Administrative Agent”).
		
	 Bridge Loans:
	  	Unsecured senior bridge facility (the “Bridge Facility”) consisting of bridge loans (the “Bridge Loans”) in an aggregate principal amount of up to (A) $400,000,000 less (B) the sum of
(i) the aggregate gross proceeds of Notes available on the Closing Date and (ii) the aggregate gross proceeds of the Equity Issuance, in each case, if any, and issued after the date hereof and available on the Closing Date;
provided, that, if Notes are issued, in no event shall the minimum aggregate principal amount of the Notes be less than $250,000,000.
		
	 Use of Proceeds:
	  	$400,000,000 in proceeds of the Bridge Loans and, to the extent applicable, the proceeds of the Notes and the Equity Issuance (to the extent that Notes are issued and/or the Equity Issuance occurs and results in amounts available on
or prior to the Closing Date, in each case, in lieu of such portion of the Bridge Facility), will be used solely to (a) pay the acquisition consideration in connection with the Acquisition in the time periods contemplated by the Acquisition
Agreement on or after the Closing Date, (b) pay for any Additional Contracts pursuant to Section 5.20 of the Acquisition Agreement, (c) satisfy any regulatory or statutory capital requirements applicable to Borrower in connection with the
transactions contemplated by the Acquisition Agreement or the Acquired Assets, (d) pay the Transaction Costs (including funding regulatory or statutory capital) and (e) finance ongoing working capital requirements and other general
corporate purposes.

  
 Annex B – Bridge Facility Term
Sheet 
 1 

			
	 Availability:
	  	The Bridge Facility will be available only in a single draw of the full amount of the Bridge Facility on the Closing Date to be used by the Borrower on or after the Closing Date as described in “Use of Proceeds”
above. Amounts borrowed under the Bridge Facility that are repaid or prepaid may not be reborrowed.
		
	 Documentation:
	  	The documentation for the Bridge Loans (the “Bridge Loan Documentation”) will be based upon the Indenture (including the notes issued thereunder and as amended prior to the date hereof, the “Existing
Indenture”), dated as of November 10, 2015, among the Borrower, the guarantors party thereto and U.S. Bank National Association, as trustee, as modified in a manner to reflect (i) the terms of this Term Sheet and the Fee
Letter, (ii) the nature of the Bridge Facility as a credit agreement and (iii) changes in law or accounting standards and requirements of local law or to cure mistakes or defects (such provisions being referred to collectively as the
“Bridge Documentation Principles”).
		
	 Ranking:
	  	The Bridge Loans will be senior debt of the Borrower, pari passu with all other unsecured senior debt of the Borrower.
		
	 Guarantors:
	  	Certain domestic subsidiaries of the Borrower (together with the Borrower, the “Loan Parties”).
		
	 Security:
	  	None.
		
	 Interest:
	  	Interest rates and fees in connection with the Bridge Loans and the Exchange Notes (as defined below) will be as specified in the Fee Letter and on Schedule I attached hereto.
		
	 Maturity/Exchange:
	  	 The Bridge Loans will mature on the date (the “Initial Maturity Date”) that is twelve (12) months after the Closing
Date. If any Bridge Loan has not been repaid in full on or prior to the Initial Maturity Date, subject to payment of the Bridge Rollover Fee (as defined in the Fee Letter), the Bridge Loans will automatically be converted into term loans (each,
an “Extended Term Loan”) due on the date that is not less than eight (8) years after the Closing Date. The Extended Term Loans will be governed by the provisions of the Bridge Loan Documentation and will have the same
terms as the Bridge Loans except as expressly set forth on Schedule II hereto.
  

Lenders under the Extended Term Loans will have the option at any time or from time to time to receive Exchange Notes (the “Exchange Notes”)
in exchange for such Extended Term Loans having the terms set forth on Schedule III hereto; provided that the Borrower may defer the issuance of Exchange Notes until such time as the Borrower has
received requests to issue an aggregate principal amount of Exchange Notes equal to at least $100,000,000.

  
 Annex B – Bridge Facility Term
Sheet 
 2 

			
	Mandatory Prepayment:	  	The Borrower will be required to prepay the Bridge Loans on a pro rata basis, at par plus accrued and unpaid interest with:
		
		  	 (a)    100% of the net cash proceeds from the issuance of the Notes, any
Permanent Financing and/or any other indebtedness (other than the Existing Credit Agreement or New Credit Agreement) by the Borrower or any of its subsidiaries, subject to customary baskets and other exceptions to be mutually agreed upon;

 
 (b)    100% of the net cash
proceeds from any issuance of public or private equity securities of the Borrower (other than the Equity Issuance and issuances pursuant to employee stock plans), subject to customary exceptions to be mutually agreed upon; and

 
 (c)    100% of the net cash
proceeds of all non-ordinary course asset sales, insurance and condemnation recoveries and other asset dispositions by the Borrower or any of its subsidiaries, subject to customary reinvestment rights and exceptions to be mutually agreed upon.

 
 Each such prepayment will be made together with accrued and unpaid interest to the date of
prepayment, but without premium or penalty (except breakage costs related to prepayments not made on the last day of the relevant interest period).

		
	Change of Control:	  	Upon any change of control (to be defined in a manner consistent with the Bridge Loan Documentation Principles), the Borrower will be required to offer to prepay the entire principal amount of the Bridge Loans (plus any accrued and
unpaid interest) at par.
		
	Voluntary Prepayment:	  	The Bridge Loans may be prepaid at any time, in whole or in part, at the option of the Borrower, upon notice and in a minimum principal amount and in multiples to be agreed upon, at 100% of the principal amount of the Bridge
Loans prepaid, plus all accrued and unpaid interest and fees (including any breakage costs) to the date of the repayment.
		
	Conditions Precedent to Funding:	  	The funding of the Bridge Loans will be subject solely to satisfaction or waiver of the conditions precedent set forth in the Conditions Annex.
		
	Representations and Warranties:	  	The Bridge Loan Documentation will contain usual and customary representations and warranties for facilities of this type and consistent with Bridge Documentation Principles.
		
	Covenants:	  	The Bridge Loan Documentation will contain affirmative covenants comparable to those contained in the Existing Indenture (and also including a covenant to comply with the securities demand provisions in the Fee Letter, a customary
offering cooperation covenant, and a covenant to use all commercially reasonable efforts to refinance the Bridge Loans as soon as practicable) and incurrence-based negative covenants consistent with the Bridge Documentation
Principles.

  
 Annex B – Bridge Facility Term
Sheet 
 3 

			
		  	 The Bridge Loan Documentation will not include any financial maintenance covenants.

 
 Notwithstanding the foregoing, there shall be no restriction on the exercise of the
purchase option for Additional Contracts set forth in Section 5.20 of the Acquisition Agreement.

		
	Events of Default:	  	Consistent with the Bridge Documentation Principles.
		
	 Yield Protection and Increased
 Costs:
	  	Usual for facilities and transactions of this type (including mitigation provisions, tax gross up provisions and to include Dodd-Frank and Basel III as changes in law) and which will be, in any event, not less favorable to the
Borrower than the corresponding provisions of the Existing Indenture.
		
	Assignments and Participations:	  	 Subject to the prior approval of the Administrative Agent (such approval not to be unreasonably withheld, delayed or conditioned) and
compliance with applicable securities laws, the Bridge Lenders will have the right to assign Bridge Loans (other than to any natural person); provided, however, that prior to the Initial Maturity Date and so long as no Demand Failure
Event (as defined in the Fee Letter), payment or bankruptcy default or event of default is continuing, the consent of the Borrower (not to be unreasonably withheld, conditioned or delayed) shall be required with respect to any assignment if,
subsequent thereto, the Initial Lenders would hold, in the aggregate, less than 50.1% of the outstanding Bridge Loans. The Borrower shall be deemed to have consented to an assignment request if the Borrower has not objected thereto within
ten business days after written notice thereof.
  
 The Bridge Loan Documentation will
provide that, so long as no default or event of default is continuing, Bridge Loans may be purchased by and assigned to the Borrower or any of its subsidiaries through any offer to purchase or take by assignment open to all Bridge Lenders on a pro
rata basis in accordance with customary procedures to be agreed; provided that Bridge Loans owned or held by the Borrower or any of its subsidiaries will be cancelled for all purposes.

 
 The Bridge Lenders will have the right to participate their Bridge Loans (other than to
any natural person) without restriction, other than customary voting limitations. Participants will have the same benefits as the selling Bridge Lenders would have (and will be limited to the amount of such benefits) with regard to yield
protection and increased costs, subject to customary limitations and restrictions.

  
 Annex B – Bridge Facility Term
Sheet 
 4 

			
	Required Lenders:	  	On any date of determination, those Bridge Lenders who collectively hold more than 50% of the aggregate outstanding Bridge Loans (the “Required Lenders”).
		
	Amendments and Waivers:	  	 Amendments and waivers of the provisions of the Bridge Loan Documentation will require the approval of the Required Lenders, except that
(a) the consent of all Bridge Lenders directly adversely affected thereby will be required with respect to: (i) reductions of principal, interest, fees or other amounts, (ii) except as provided under “Maturity/Exchange”
above, extensions of scheduled maturities or times for payment (other than for purposes of administrative convenience), (iii) increases in the amount of any Bridge Lender’s commitment, (iv) additional restrictions on the right to
exchange Extended Term Loans for Exchange Notes or any amendment to the rate of such exchange, (v) changes in call dates or call prices (other than notice provisions) and (vi) changes in pro rata sharing provisions, and (b) the
consent of 100% of the Bridge Lenders (not to be unreasonably withheld, delayed or conditioned) will be required with respect to customary matters, including (i) to permit the Borrower to assign its rights under the Bridge Loan
Documentation and (ii) to modify any voting percentages, and (c) the consent of the Administrative Agent (not to be unreasonably withheld, delayed or conditioned) will be required to amend, modify or otherwise affect its rights and
duties.
  
 Notwithstanding the foregoing, no consent, waiver or approval of Lenders is
required, no shall any Lender’s commitment be reduced, for the exercise of the purchase option for Additional Contracts set forth in Section 5.20 of the Acquisition Agreement.

		
	Indemnification:	  	Substantially similar to the Existing Indenture.
		
	Expenses:	  	The Borrower shall pay (a) all reasonable and documented out-of-pocket expenses (including, without limitation, reasonable fees and expenses of one counsel to the Administrative Agent (and up to one local counsel in each
applicable jurisdiction and regulatory counsel)) of the Administrative Agent (promptly following written demand therefore) associated with the syndication of the Bridge Facility and the preparation, negotiation, execution, delivery and
administration of the Bridge Loan Documentation and any amendment or waiver with respect thereto and (b) all reasonable and documented out-of-pocket expenses (including, without limitation, reasonable fees and expenses of one counsel to the
Administrative Agent and the Bridge Lenders together (and up to one local counsel in each applicable jurisdiction and regulatory counsel)) of the Administrative Agent and each of the Bridge Lenders promptly following written demand therefore in
connection with the enforcement of the Bridge Loan Documentation or protection of rights.

  
 Annex B – Bridge Facility Term
Sheet 
 5 

			
	Governing Law and Forum:	  	Substantially similar to the Existing Indenture.
		
	Waiver of Jury Trial and Punitive and Consequential Damages:	  	Substantially similar to the Existing Indenture.
		
	Counsel for the Lead Arranger and the Administrative Agent:	  	Paul Hastings LLP.

  
 Annex B – Bridge Facility Term
Sheet 
 6 

 SCHEDULE I TO ANNEX B 

INTEREST RATES ON THE BRIDGE LOANS 
  

			
	 Interest Rate:
	  	 As set forth in Annex A to the Fee Letter.

		
	 Default Rate:
	  	 As set forth in Annex A to the Fee Letter.

  
 Schedule I to Annex B –Bridge
Facility Term Sheet 
 1 

 SCHEDULE II TO ANNEX B 

EXTENDED TERM LOANS 

SUMMARY OF PROPOSED TERMS AND CONDITIONS 

Capitalized terms used herein without definition will have the meanings given to them in the Summary of Proposed Terms and Conditions for
the Bridge Facility to which this Schedule II is attached. 
  

			
	Borrower:	  	The Borrower.
		
	Guarantors:	  	Same as the Guarantors of the Bridge Loans.
		
	Security:	  	None.
		
	Ranking:	  	Same as the Bridge Loans.
		
	Maturity:	  	Not less than eight (8) years from the Closing Date.
		
	Interest Rate:	  	The Extended Term Loans will bear interest at the Total Cap.
		
	Default Rate:	  	Same as the default rate for the Bridge Loans.
		
	Voluntary Prepayment:	  	The Extended Term Loans may be prepaid, in whole or in part, in minimum denominations to be agreed, at par, plus accrued and unpaid interest upon not less than one business day’s prior written notice, at the option of the
Borrower at any time.
		
	Change of Control:	  	Substantially similar to the Bridge Loans.
		
	 Covenants, Events of Default and
 Offers to
Repurchase:
	  	 The covenants, events of default and offers to repurchase (other than with respect to a change of control as described above) that would be
applicable to the Exchange Notes, if issued, will also be applicable to the Extended Term Loans in lieu of the corresponding provisions applicable to the Bridge Loans.
  

Notwithstanding the foregoing, there shall be no restriction on the exercise of the purchase option for Additional Contracts set forth in Section 5.20 of the
Acquisition Agreement.

		
	Governing Law and Forum:	  	Substantially similar to the Existing Indenture.

  
 Schedule II to Annex B –Bridge
Facility Term Sheet 
 1 

 SCHEDULE III TO ANNEX B 

EXCHANGE NOTES 
 SUMMARY
OF PROPOSED TERMS AND CONDITIONS 
 Capitalized terms used herein without definition will have the meanings given to them in the
Summary of Proposed Terms and Conditions for the Bridge Facility to which this Schedule III is attached. 
  

			
	Issuer:	 	The Borrower.
		
	Guarantors:	 	Same as the Guarantors of the Bridge Loans.
		
	Security:	 	None.
		
	Principal Amount:	 	The Exchange Notes will be available only in exchange for the Extended Term Loans. The principal amount of the Exchange Notes will equal 100% of the aggregate principal amount of the outstanding Extended Term Loans for
which they are exchanged and will have the same ranking as the Extended Term Loans for which they are exchanged. In the case of the initial exchange by the Bridge Lenders, the minimum aggregate principal amount of Extended Term Loans to be
exchanged for the Exchange Notes shall not be less than $100,000,000; provided that a Bridge Lender may not elect to exchange only a portion of its outstanding Extended Term Loans for Exchange Notes unless such portion is equal to or greater
than $100,000,000.
		
	Ranking:	 	Same as the Bridge Loans.
		
	Maturity:	 	Eight (8) years from the Closing Date.
		
	Interest Rate:	 	The Exchange Notes will bear interest at the Total Cap.
		
	Default Rate:	 	Same as the default rate for the Bridge Loans.
		
	Mandatory Redemption:	 	No mandatory redemption provisions other than 101% change of control put and customary asset sale offer to redeem provisions, subject to the Bridge Documentation Principles.
		
	Optional Redemption:	 	The Exchange Notes will be non-callable until the third anniversary of the Closing Date, subject to a customary T + 50 basis points “make-whole” redemption. Thereafter, each Exchange Note will be callable at par plus
accrued and unpaid interest plus a premium equal to 75% of the coupon on such Exchange Note, which premium shall decline ratably on each subsequent anniversary of the Closing Date thereafter to zero on the date that is two (2) years prior to
the maturity date of the Exchange Notes.

  
 Schedule III to Annex B –Bridge
Facility Term Sheet 
 1 

			
		 	 Prior to the third anniversary of the Closing Date, the Borrower may redeem up to 35% of such Exchange Notes with the proceeds from an equity
offering at a redemption price equal to par plus accrued interest plus a premium equal to 100% of the coupon in effect on such Exchange Notes.
  

Prior to a Demand Failure Event, any Exchange Notes held by the Initial Lender or its affiliates (other than (x) asset management affiliates purchasing
Exchange Notes in the ordinary course of their business as part of a regular distribution of the Exchange Notes and (y) Exchange Notes acquired pursuant to bona fide open market purchases from third parties or market making activities), shall
be prepayable and/or subject to redemption in whole or in part at par plus accrued interest on a non-ratable basis so long as such Exchange Notes are held by them.

		
	Registration Rights:	 	144A with registration rights.
		
	Right to Resell Notes:	 	Any Bridge Lender (and any subsequent holder) will have the absolute and unconditional right to resell the Exchange Notes to one or more third parties, whether by assignment or participation and subject to compliance with applicable
securities laws.
		
	Covenants; Events of Default:	 	 The Exchange Notes shall be subject to covenants and events of default that are consistent with the Bridge Documentation Principles and based
on those contained in the preliminary offering memorandum or prospectus, if any, used to market the Notes.
  

Notwithstanding the foregoing, there shall be no restriction on the exercise of the purchase option for Additional Contracts set forth in Section 5.20 of the
Acquisition Agreement.

		
	Defeasance; Satisfaction; and Discharge:	 	The Exchange Notes shall be subject to defeasance and satisfaction and discharge provisions that are consistent with the Bridge Documentation Principles and based on those contained in the preliminary offering memorandum or
prospectus, if any, used to market the Notes.
		
	Governing Law and Forum:	 	New York.
		
	Counsel to the Lead Arranger:	 	Paul Hastings LLP.

  
 Schedule III to Annex B –Bridge
Facility Term Sheet 
 2 

 ANNEX C 

$400,000,000 SENIOR BRIDGE FACILITY 

CONDITIONS ANNEX 

Capitalized terms not otherwise defined herein shall have the meanings assigned to them in the Commitment Letter to which this Annex is
attached, or Annex A or Annex B to the Commitment Letter 
 Subject in all respects to the Limited Conditionality Provision, the initial
availability and the making of the initial extensions of credit under the Facilities will be subject solely to the satisfaction or waiver of the following conditions precedent: 

1. The execution and delivery by the Borrower of the Bridge Loan Documentation (the “Financing Documentation”), which shall
be consistent, in each case, with the Commitment Documents and the Bridge Documentation Principles. 
 2. The Administrative Agent and the
Lead Arranger shall have received customary legal opinions, evidence of authorization, organizational documents, good standing certificates (with respect to the jurisdiction of incorporation of the Borrower), a customary closing certificate, and a
customary officer’s certificate. 
 3. The Acquisition shall be consummated prior to or substantially concurrently with the initial
funding of the Bridge Facility on the terms set forth in the Acquisition Agreement without giving effect to any modifications thereunder, or any waiver or consent thereunder by the Borrower or at the Borrower’s request, that is materially
adverse to the interests of the Lenders, it being understood that (a) any reduction in the purchase price set forth in the Acquisition Agreement shall not be deemed to be materially adverse to the interests of the Lenders so long as any such
reduction is applied to reduce the amount of commitments in respect of the Bridge Facility on a dollar-for-dollar basis, to a level not lower than $250,000,000, and in any event, any reduction in purchase price that is less than 10% of the total
acquisition consideration in the aggregate for both the Humana Acquisition and the Aetna Acquisition shall not be deemed to be materially adverse to Lenders, (b) any increase in the purchase price set forth in the Acquisition Agreement shall not be
deemed to be materially adverse to the interests of the Lenders so long as the purchase price increase is not funded with additional indebtedness (it being understood and agreed that no purchase price, working capital or similar adjustment
provisions set forth in the Acquisition Agreement shall constitute a reduction or increase in the purchase price), and (c) any change in any of the provisions relating to the Lead Arranger’s or the Lenders’ liability, consent rights
over certain amendments or waivers or status as a third party beneficiary under the Acquisition Agreement, shall be deemed to be materially adverse to the interests of the Lenders unless approved by the Lead Arranger (such consent not to be
unreasonably withheld, delayed or conditioned). Notwithstanding the foregoing, any amendments, waivers, modifications or consents pursuant to the Acquisition Agreement made pursuant to and in accordance with each of Section 2.12, Section 2.13, or
Section 5.20 thereof shall not be deemed to be materially adverse to the interests of Lenders or the Lead Arranger. 
 4. The Lead Arranger
shall have received: 
 (a) with respect to the Borrower and its subsidiaries, (i) audited consolidated balance sheets and
related consolidated statements of income, stockholders’ equity and cash flows (and the related audit reports) for the three most recently completed fiscal years ended at least 60 days prior to the Closing Date and (ii) unaudited consolidated
balance sheets and related consolidated statements of income and cash flows (and comparable periods for the prior fiscal 

  
 Annex C – Conditions Annex

 1 

 
year) for each interim fiscal quarter ended since the last audited financial statements and at least 40 days prior to the Closing Date (other than the fourth fiscal quarter). It is understood and
agreed that the Lead Arranger received the (i) audited consolidated balance sheets and related consolidated statements of income, stockholders’ equity and cash flows (and the related audit reports) for the fiscal years ended 2013, 2014
and 2015 and (ii) the unaudited consolidated balance sheets and related consolidated statements of income and cash flows (and comparable periods for the prior fiscal year) for the fiscal quarters ended March 31, 2015 and June 30, 2016; and 

(b) a solvency certificate from the chief financial officer of the Borrower in the form attached as Annex E hereto. 

5. The Lead Arranger shall have received, at least three (3) business days prior to the Closing Date, all documentation and other
information regarding the Borrower required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the PATRIOT Act, to the extent requested at least ten (10) business
days prior to the Closing Date. 
 6. To the extent invoiced with reasonable detail at least two (2) business days prior to the Closing
Date, all fees and expenses due to the Lead Arranger, the Administrative Agent and the Lenders required to be paid on the Closing Date (including the fees and expenses of counsel for the Lead Arranger and the Administrative Agent) will have been
paid. 
 7. With respect to the Bridge Facility, (i) (A) as of the date hereof, one or more investment banks satisfactory to the Lead
Arranger (collectively, the “Investment Bank”) shall have been engaged to publicly sell or privately place the Notes and the Investment Bank and (B) the Lead Arranger shall have received a preliminary offering memorandum or
preliminary private placement memorandum or, at the election of the Borrower, a preliminary prospectus (each, an “Offering Document”) suitable for use in a customary high-yield road show relating to the issuance of the Notes, which
contains all audited and unaudited historical and pro forma financial statements (including, in the case of audited financial statements, the auditor’s report thereon) and with respect to the Acquired Assets, an estimated range of revenues and
EBITDA (the “Acquired Assets Estimates”), in each case, for the most recently completed twelve-month period ended 40 days prior to the Closing Date, or as otherwise requested by the Investment Bank, together with a written
certification from the chief financial officer of the Borrower, in form and substance satisfactory to the Investment Bank, certifying as to reasonableness of such estimated ranges; provided that it is understood that the inclusion of the
Acquired Assets Estimates in the Offering Document shall satisfy any condition to provide financial information in respect of the Acquired Assets, and other data to be included therein (including without limitation financial data of the type and
form customarily included in offering memoranda, and all other data that the Securities and Exchange Commission would require in a registered offering of such Notes (other than, in the case of a private placement under Rule 144A, (x) as
would be required under Rules 3-09, 3-10 or 3-16 of Regulation S-X or Compensation Discussion and Analysis required by Regulation S-K Item 402(b) and (y) other information customarily excluded in private placements
pursuant to Rule 144A promulgated under the Securities Act)) or would be necessary for the Investment Bank to receive customary “comfort” (including “negative assurance” comfort) from independent accountants (the
“Required Notes Information”); provided that, such condition shall be deemed satisfied if such Offering Document excludes the “description of notes” and sections that would customarily be provided by the Investment
Bank or its counsel or advisors but is otherwise complete, and (ii) the Investment Bank shall have been afforded a period of at least 15 consecutive business days (the “Bond Marketing Period”) following receipt of an
Offering Document, including the information described in clause (i) above, to seek to place 

  
 Annex C – Conditions Annex

 2 

 
the Notes with qualified purchasers thereof (and at no time during such 15 consecutive business day period shall the financial information in the Offering Document have become stale);
provided that (w) if such period has not ended on or before August 19, 2016, it shall not commence before September 6, 2016, (x) such period shall not be required to be consecutive to the extent it would include any date
from November 24, 2016 through and including November 27, 2016 (which dates shall not count for purposes of the 15 consecutive business day period), (y) if such period has not ended on or before December 19, 2016, it shall
not commence before January 2, 2017 and (z) in the event the Bridge Commitment under this Commitment Letter is still outstanding after January 2, 2017, such period shall not include “blackout dates” customary in the market for high yield
note offerings or leveraged bridge financings. The comfort letters to be provided by the independent accountants of the Borrower shall be in usual and customary form (including satisfying the requirements of SAS 72), and the auditors
shall be prepared to deliver such letters at the pricing date, and shall cover the financial statements of the Borrower as well as financial data derived from the books and records of the Borrower included in such Offering Document.

8. The Specified Representations and the Specified Acquisition Agreement Representations will be true and correct in all material respects (or
if already qualified by materiality or “material adverse effect”, in all respects). 

  
 Annex C – Conditions Annex

 3 

 ANNEX D 

FORM OF SOLVENCY CERTIFICATE 

[DATE] 
 This Solvency Certificate is being
executed and delivered pursuant to Section [●] of that certain [●] (the “Credit Agreement”; the terms defined therein being used herein as therein defined). 

I, [●], the Chief Financial Officer of Borrower, in such capacity and not in an individual capacity, hereby certify as follows: 

 

	 	1.	I am generally familiar with the businesses and assets of Borrower and its Subsidiaries, taken as a whole, and am duly authorized to execute this Solvency Certificate on behalf of Borrower pursuant to the Credit
Agreement; and 

  

	 	2.	as of the date hereof and after giving effect to the Transactions and the incurrence of the indebtedness and obligations being incurred in connection with the Credit Agreement and the Transactions, that (i) the sum
of the debt and liabilities (subordinated, contingent or otherwise) of the Borrower and its Subsidiaries, taken as a whole, does not exceed the fair value of the assets (at a fair valuation) of the Borrower and its Subsidiaries, taken as a whole,
(ii) the present fair saleable value of the assets (at a fair valuation) of the Borrower and its Subsidiaries, taken as a whole, is greater than the amount that will be required to pay the probable liabilities of the Borrower and its
Subsidiaries, taken as a whole, on their debts and other liabilities subordinated, contingent or otherwise as they become absolute and matured; (iii) the capital of the Borrower and its Subsidiaries, taken as a whole, is not unreasonably small
in relation to the business of the Borrower and its Subsidiaries, taken as a whole, as conducted or contemplated as of the date hereof; and (iv) the Borrower and its Subsidiaries, taken as a whole, have not incurred and do not intend to incur,
or believe that they will incur, debts or other liabilities (including current obligations and contingent liabilities) beyond their ability to pay such debt or other liabilities as they become due (whether at maturity or otherwise). For the
purposes hereof, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual
or matured liability. 

 IN WITNESS WHEREOF, I have executed this Solvency Certificate on the date first written above. 

 

			
	By:	 	  

	Name:	 	
	Title:	 	Chief Financial Officer

  
 Annex D – Form of Solvency
Certificate 
 1Exhibit 10.18

 

EXECUTION COPY

 

 

JOINT VENTURE AGREEMENT

 

between

 

ACUSHNET CAYMAN LIMITED

 

and

 

MYRE OVERSEAS CORPORATION

 

Dated as of June 1, 1995

 

 

 

TABLE OF CONTENTS

 

	
Article
    	
 
    	
Page
    
	
1.
    	
Definitions
    	
1
    
	
2.
    	
Formation
    	
4
    
	
3.
    	
Transfer of Shares
    	
5
    
	
4.
    	
Examination
    	
5
    
	
5.
    	
Confidentiality
    	
6
    
	
6.
    	
Members’ Meetings
    	
6
    
	
7.
    	
Directors
    	
7
    
	
8.
    	
Management and   Operations
    	
8
    
	
9.
    	
Auditor
    	
10
    
	
10.
    	
Important Company   Action
    	
10
    
	
11.
    	
Profit and Dividend   Policy
    	
12
    
	
12.
    	
Trademark License
    	
13
    
	
13.
    	
Marketing
    	
13
    
	
14.
    	
Non-Competition
    	
13
    
	
15.
    	
Duration
    	
14
    
	
16.
    	
Termination
    	
14
    
	
17.
    	
Consequences of   Termination
    	
16
    
	
18.
    	
Governing Law
    	
17
    
	
19.
    	
Agreement to Perform
    	
17
    
	
20.
    	
Amendment
    	
18
    
	
21.
    	
Costs
    	
18
    
	
22.
    	
Relationship of Newco   to the Parties
    	
18
    
	
23.
    	
Language
    	
18
    
	
24.
    	
Bankers
    	
19
    
	
25.
    	
Assignments
    	
19
    
	
26.
    	
Notice
    	
19
    
	
27.
    	
Entire Agreement
    	
20
    
	
28.
    	
Force Majeure
    	
20
    
	
29.
    	
Resolution of Disputes
    	
20
    
	
30.
    	
Headings
    	
23
    

 

i

 

APPENDICES AND SCHEDULES

 

	
Appendix A
    	
Memorandum of   Association of Newco
    
	
 
    	
 
    
	
Appendix B
    	
Articles of Association   of Newco
    
	
 
    	
 
    
	
Schedule I
    	
Trademarks and Brand   Names
    

 

ii

 

JOINT VENTURE AGREEMENT

 

JOINT VENTURE AGREEMENT dated as of June 1, 1995, between ACUSHNET CAYMAN LIMITED, a limited company organized and existing under the laws of the Cayman Islands, British West Indies, having its registered offices at Maples and Calder, Attorneys-at-Law, Ugland House, South Church Street, P.O. Box 309, George Town, Grand Cayman, British West Indies (“ACL”), and MYRE OVERSEAS CORPORATION, a limited company organized and existing under the laws of the British Virgin Islands, having its registered offices at P.O. Box 362, Road Town, Tortola, British Virgin Islands (“MOC”),

 

W I T N E S S E T H :

 

WHEREAS, affiliates of ACL, particularly Acushnet Company (“Acushnet”), are engaged in the manufacture and sale of golf footwear products in the worldwide market;

 

WHEREAS, affiliates of MOC are manufacturers of footwear products with expertise in golf footwear production;

 

WHEREAS, ACL and MOC have agreed to jointly establish a company in the Cayman Islands, British West Indies (“Newco”), for the primary purpose of trading in and manufacturing, in the Peoples Republic of China (the “PRC”), golf footwear under the trademarks and brand names set forth on Schedule I (the “Trademarks”);

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants to be faithfully performed, the parties hereto agree as follows:

 

ARTICLE 1

Definitions

 

1.1                               In this Agreement, unless the context otherwise requires, the following terms shall have the following meaning:

 

(1)                                 “Acushnet Assignment” shall have the meaning set forth in Section 25.1.

 

 

(2)                                 “Articles” shall mean the Articles of Association of Newco in the form appended hereto as Appendix B, as the same may be amended from time to time.

 

(3)                                 “Assignment Date” shall mean the date that an Acushnet Assignment has taken place.

 

(4)                                 “Board” shall mean the Board of Directors of Newco.

 

(5)                                 “Change in Control” shall mean, with respect to any party, (i) a change in the ownership, whether directly or indirectly, of in excess of fifty percent (50%) of the outstanding shares or other ownership interests of such party, in the aggregate, after the date of this Agreement, or (ii) such a change in ownership of in excess of twenty-five percent (25%) of such outstanding shares or other ownership interests if a majority of the Directors in office immediately prior to such change in ownership shall cease to be Directors after such change in ownership.

 

(6)                                 “Class A Shares” shall mean the shares in the capital of Newco held by MOC in accordance with, and having the terms, rights and privileges set forth in, the Articles.

 

(7)                                 “Class B Shares” shall mean the shares in the capital of Newco held by ACL in accordance with, and having the terms, rights and privileges set forth in, the Articles.

 

(8)                                 “Companies Law” shall mean the Companies Law (Revised) of the Cayman Islands and any statutory modification thereof for the time being in force.

 

(9)                                 “Directors” shall mean the directors of Newco.

 

(10)                          “Dispute” shall have the meaning set forth in Section 29.1.

 

(11)                          “general meeting” shall mean a “general meeting” of the Members of Newco called in accordance with the Articles.

 

(12)                          “Initiating Party” shall have the meaning set forth in Section 29.2.

 

2

 

(13)                “Member” shall mean the person, body corporate or partnership registered as the holder of shares in Newco.

 

(14)                “Memorandum” shall mean the Memorandum of Association of Newco in the form appended hereto as Appendix A, as the same may be amended from time to time.

 

(15)                “Newco” shall mean Acushnet Lionscore, Ltd., a private limited company to be organized and registered in accordance with Article 2 of this Agreement and the Companies Law.

 

(16)                “Notice of Intent to Purchase” shall have the meaning set forth in Section 16.3.

 

(17)                “Notice of Intent to Sell” shall have the meaning set forth in Section 16.4.

 

(18)                “Pre-assignment Product” shall mean the amount of Product (i) purchased and distributed by Acushnet and (ii) the sale and distribution of which was arranged by Acushnet, during the twelve (12) month period preceding the Assignment Date.

 

(19)                “Procedure” shall have the meaning set forth in Section 29.1.

 

(20)                “Product” shall have the meaning set forth in Section 13.1.

 

(21)                “Shares” shall mean the ordinary shares of Newco, comprising the Class A Shares and the Class B Shares.

 

(22)                “Special Resolution” shall mean a resolution that is (i) passed by the holders of not less than seventy-five percent (75%) of the outstanding shares of Newco entitled to vote at a general meeting and (ii) in accordance with Section 59 of the Companies Law.

 

(23)                          “Subsidiary” shall mean Fuh Deh Lah Sports Ind. Co., Ltd., a wholly owned subsidiary of Newco to be established in the PRC as a wholly foreign owned enterprise.

 

1.2                               In this Agreement, unless there exists something in the subject or context inconsistent with such

 

3

 

construction, words importing the plural number shall be deemed to include the singular number.

 

1.3                               Expressions referring to writing shall, unless the contrary intention appears, be construed include printing, lithography, photography and other modes of representing words in a visible form.

 

ARTICLE 2 
  Formation

 

2.1                               The parties hereto undertake to cause Newco to be incorporated as soon as practicable in accordance with the Memorandum and Articles under the laws of the Cayman Islands.

 

2.2                               The name of Newco shall be “Acushnet Lionscore, Ltd.”.

 

2.3                               The location of the registered office of Newco shall be at the offices of Maples and Calder, Attorneys-at-Law, Ugland House, South Church Street, P.O. Box 309, George Town, Grand Cayman, British West Indies, or at such other place as the Members may from time to time decide.

 

2.4                               Initially, the authorized capital of Newco shall be Sixty Thousand U.S. Dollars (U.S.$60,000) comprising sixty thousand (60,000) shares, divided into the following two (2) classes: Class A Shares consisting of thirty-six thousand (36,000) shares, and Class B Shares consisting of twenty-four thousand (24,000) shares. Each Class A Share and each Class B Share shall be entitled to one vote. Each Share shall have a par value of One U.S. Dollar (U.S. $1.00), and the Class A Shares and Class B Shares shall be subscribed for, issued and held as follows:

 

	
Shareholder
    	
 
    	
Number of
   Class A Shares
    	
 
    	
Number of
   Class B Shares
    	
 
    
	
MOC
    	
 
    	
36,000
    	
 
    	
—
    	
 
    
	
ACL
    	
 
    	
—
    	
 
    	
24,000
    	
 
    
	
 
    	
 
    	
36,000
    	
 
    	
24,000
    	
 
    

 

2.5                               Not more than three (3) Class A Shares may be held, in one share each, by nominees of MOC, and not more than two (2) Class B Shares may be held, in one share each,

 

4

 

by nominees of ACL. All Shares held by nominees shall be construed to be the Shares of the principal and the principal shall be at liberty at any time to change nominees or to transfer to itself any Shares of Newco held by its nominees.

 

2.6                               All of the authorized capital of Newco shall be issued upon incorporation, and the parties hereto shall subscribe for such Shares at a purchase price of One Hundred U.S. Dollars (U.S. $100) per Share, payable in installments as follows:

 

	
Payment Date
    	
 
    	
Installment
    
	
 
    	
 
    	
 
    
	
Upon incorporation of Newco
    	
 
    	
50% of subscription price
    
	
 
    	
 
    	
 
    
	
On or prior to December 31, 1995
    	
 
    	
25% of subscription price
    
	
 
    	
 
    	
 
    
	
On or prior to June 30, 1996
    	
 
    	
25% of subscription price
    

 

Payments of the second and all subsequent installments of the subscription price shall be payable at such times and in such amounts as determined by the Board and within thirty (30) days after written notice to the parties.

 

ARTICLE 3

Transfer Of Shares

 

3.1                               The parties hereto shall not sell, transfer, pledge, encumber or otherwise dispose of all or any portion of their respective Shares in Newco except in accordance with the provisions of the Articles.

 

3.2                               No sale or transfer of Shares shall be registered or recognized unless (i) the purchaser or transferee shall first agree in writing to be bound by this Agreement and (ii) MOC and ACL shall have given written consent to the purchaser or transferee becoming a Member in Newco.

 

ARTICLE 4

Examination

 

4.1                               Each party shall independently have the right to call for and to inspect at any and all reasonable times,

 

5

 

the books, records and accounts of Newco and the Subsidiary, and may appoint or authorize senior financial or accounting personnel of such party to make such examination on their behalf at their cost.

 

ARTICLE 5

Confidentiality

 

5.1                               Unless specifically excepted or required by law, governmental authority or order of a court of competent jurisdiction, all information disclosed by either party (either to the other party or to Newco or the Subsidiary) under this Agreement, and the agreements attached as Appendices hereto, is and shall be treated as confidential. The parties and Newco will not disclose such information to third parties, and all parties and Newco shall take the same degree of caution as they exercise with respect to their own confidential information to prevent such information so received by them from being divulged to third persons, including officers and employees of either party or Newco not having a legitimate need therefor. This obligation of confidentiality will continue in perpetuity. The obligations of the parties and Newco under this paragraph shall not apply to information which hereafter becomes generally available to the public, except as a result of the fault of the party (or Newco or the Subsidiary) to which the information was disclosed.

 

ARTICLE 6

Members’ Meetings

 

6.1                               All Members’ meetings of Newco shall be convened and conducted in accordance with the provisions of the Articles. At every general meeting of Members, a quorum shall consist of the holders of the majority of the issued shares of Newco present in person or by proxy, provided that such holders must include the holders of a majority of Class B Shares. Any resolution of a general meeting, other than a Special Resolution, shall require passage by a simple majority of the votes cast. The chairman of any general meeting shall not have a second or casting vote in the event of an equality of votes.

 

6

 

ARTICLE 7 
  Directors

 

7.1                               Newco shall be managed by the Board, which shall be comprised of five (5) Directors. Three (3) Directors shall be appointed by, and may only be removed by, the holders of the Class A Shares and two (2) Directors shall be appointed by, and may only be removed by, the holders of the Class B Shares. Each such appointment or removal shall be made by notice in writing signed by or on behalf of such holders as the case may be. Except as may otherwise be herein provided, the powers of the Directors shall be determined by the Memorandum, the Articles and the Companies Law.

 

7.2                               In accordance with the provisions of the Articles, the Directors shall meet twice a year, inside or outside the Cayman Islands; provided that the Directors shall hold at least one such meeting in the Cayman Islands in each calendar year, in accordance with the Companies Law.

 

7.3                               The quorum for a Board Meeting shall be three (3) Directors; provided that at least one (1) Director appointed by the holders of the Class A Shares and one (1) Director appointed by the holders of the Class B Shares are present. Subject to the provisions of Article 10 below, a resolution of a Board Meeting shall be adopted by an affirmative vote of a majority of the Directors present or represented at the meeting. Any two (2) Directors may at any time summon a meeting of the Directors.

 

7.4                               A resolution in writing signed by all the Directors shall be as effective as a resolution passed at a meeting of the Directors duly convened and held.

 

7.5                               The Board shall cause minutes to be made in books designated for such purposes of (and may designate a secretary to administer the same):

 

(1)                            all appointments of officers made by the Directors;

 

(2)                            the names of the Directors present at each meeting of the Directors; and

 

(3)                            all resolutions and proceedings at all meetings of the Directors.

 

7

 

7.6                               A Director who is in any way, directly or indirectly, personally interested in any proposed contract or other transaction with Newco or the Subsidiary shall first declare the nature of his interest to the Directors before the Directors take any action with respect to such proposed contract or transaction and shall not vote thereon. A Director shall not be deemed to be interested in any contract or transaction simply because the other party to such contract or transaction is a party hereto, or an affiliate or subsidiary of a party hereto, or such contract or transaction involves a party hereto directly or indirectly.

 

7.7                               To the extent that any of the provisions of this Article conflict with or restrict any of the provisions of the Memorandum and Articles, the parties hereto agree to exercise their powers, rights and votes to give full effect to the provisions of this Article.

 

7.8                               No Director shall be permitted to directly or beneficially own the shares of Newco, except as a nominee of either MOC or ACL in accordance with Section 2.5.

 

ARTICLE 8

Management and Operations

 

8.1                               Newco shall establish the Subsidiary as promptly as possible for the purpose of manufacturing golf footwear in the PRC. Newco shall be responsible for all trading activities relating to the purchase and sale by the Subsidiary of semi-finished and finished goods.

 

8.2                               Each of Newco and the Subsidiary shall employ such individuals in the management of its business and grant to such individuals such authority as is determined from time to time by the Board; it being understood that Newco and the Subsidiary must at all times be managed and operated in such a manner that the Subsidiary always produces golf footwear (i) meeting quality standards and specifications established by ACL, (ii) in appropriate quantities to meet market demand as advised by ACL from time to time, and (iii) at a cost that is competitive when sold in Acushnet’s worldwide markets.

 

8.3                               In the operation of Newco and the Subsidiary, MOC shall, or shall cause Lionscore Industrial Co., Ltd. (“Lionscore”) to:

 

8

 

(1)                                 establish the Subsidiary;

 

(2)                                 provide plant layout for the Subsidiary;

 

(3)                                 identify all equipment needs and assist in procurement of equipment for Newco and the Subsidiary;

 

(4)                                 arrange for orientation and training of key management personnel for Newco and the Subsidiary;

 

(5)                                 assist in the recruitment and training of operational management, production labor and support personnel for Newco and the Subsidiary;

 

(6)                                 assist in raw materials sourcing, as required;

 

(7)                                 liaise with all relevant PRC government agencies during and after the establishment of the Subsidiary; and

 

(8)                                 provide support and guidance to Newco and the Subsidiary in the areas of infrastructure establishment and maintenance, real estate and building leasing, in-bound/out-bound customs clearance and administrative support.

 

8.4                               In the operation of Newco and the Subsidiary, ACL shall, or shall cause Acushnet to:

 

(1)                                 assist in the selection and training of management personnel and administrative support for Newco and the Subsidiary;

 

(2)                                 provide a worldwide market for the Subsidiary’s footwear products;

 

(3)                                 provide Newco and the Subsidiary with timely forecasts, specifications, orders, and procedures for all products to be exported;

 

(4)                                 assist in raw materials and component sourcing, as required; and

 

(5)                                 furnish such other services and assistance to Newco and the Subsidiary as may be required from time to time.

 

9

 

ARTICLE 9 

Auditor

 

9.1                               Unless and until otherwise decided by the Members, the auditor of Newco and the Subsidiary shall be Deloitte & Touche.

 

ARTICLE 10

Important Company Action

 

10.1                        Each party shall exercise its rights and perform its obligations under Article 8 recognizing that the success of Newco and the Subsidiary is to the mutual benefit of both parties and with the objective of providing Newco and the Subsidiary with security, growth and profit. Each party shall and shall cause its nominated directors and others nominated by it or under its control to act under Article 8 in good faith to give effect to the foregoing intention; provided, however, that the foregoing shall not be construed to require any party to take any action as long such party shall have acted in good faith.

 

10.2                        None of the following actions by Newco shall have any force or effect unless approved by an affirmative vote of not less than a majority of the Directors appointed by the holders of the Class A Shares and a majority of the Directors appointed by the holders of the Class B Shares:

 

(1)                                 Any and all decisions regarding the basic or material policies of Newco or the Subsidiary (which shall not include day-to-day operation of Newco or the Subsidiary), relating to the scope, terms or conditions of its business;

 

(2)                                 The determination, adoption and/or modification of the annual business plan, operating budget and capital expenditure budget for Newco or the Subsidiary;

 

(3)                                 Any guarantee or indemnity with respect to the indebtedness or any other person, corporation, partnership or entity or any other arrangement pursuant to which Newco or the Subsidiary may become liable for the indebtedness of such other person, corporation, partnership or entity;

 

10

 

(4)                            Any contract relating to trademarks, tradenames or other trade secrets or industrial property rights;

 

(5)                            Employment or termination and the designation of key personnel (e.g., plant manager) of Newco or the Subsidiary;

 

(6)                            Any other contract or agreement under which a future commitment or the obligations of Newco or the Subsidiary may exceed Five Hundred Thousand U.S. Dollars (U.S. $500,000) or its equivalent in any other currency in any financial year of Newco;

 

(7)                            Payment of interim dividends or recommendation to the Members concerning payment of dividends or retention of profits; and

 

(8)                            Any acquisition of land or premises.

 

10.3                   In addition to any requirements of the Companies Law, none of the following actions by Newco shall have any force or effect unless such action has been approved by the Members pursuant to a Special Resolution:

 

(1)                            Any amendments, additions or deletions of the Memorandum and Articles;

 

(2)                            Any change of the authorized capital of Newco;

 

(3)                            Any sale, transfer or disposal of the business or undertaking (or a substantial part thereof) of Newco or the Subsidiary;

 

(4)                            Any alteration of the maximum number of Directors;

 

(5)                            Any charge, pledge or mortgage of the assets (or any one of them) of Newco or the Subsidiary;

 

(6)                            Any reorganization, amalgamation or voluntary liquidation of Newco except in accordance with the provisions hereunder;

 

(7)                            Any creation, formation or investment into a corporation, company, partnership or other business entity;

 

11

 

(8)                                 Any decision to change the domicile or residence of Newco or the Subsidiary;

 

(9)                                 Any joint venture or partnership contract or arrangement with any other person, firm or corporation and any withdrawal from such contract or arrangement; and

 

(10)                          Any matter relating to remuneration, benefit or welfare for Directors.

 

10.4                        Notwithstanding the voting provisions stated herein and in the Articles, any party proposing an important company action, as set forth herein and therein, shall be obligated to consult with the other party in good faith prior to submitting such action to a vote by Directors’ or Members’ resolution, whichever is applicable. In the event of a disagreement between the parties, such parties shall negotiate in good faith to reach a mutually satisfactory compromise; provided, however, that the foregoing shall not be construed to require any party to change its position if it shall have negotiated in good faith.

 

ARTICLE 11

Profit And Dividend Policy

 

11.1                        The parties agree that the primary objectives for Newco are (i) to provide golf footwear to Acushnet and its designated distributors at prices whereby Acushnet can maintain a competitive position in its worldwide market, and (ii) to provide a reasonable return to its Members.

 

11.2                        Subject to the primary objectives set forth in Section 11.1 above, the parties will endeavor to cause Newco and the Subsidiary to obtain a reasonable return on the investment of the parties. Attaining this level of reasonable return is predicated on the achievement of Acushnet’s targeted landed costs, which shall be agreed upon annually, with any excess cost over this target to be taken into account in establishing such return.

 

11.3                        Consistent with the foregoing Section 11.2, the parties shall endeavor to cause the Board to recommend to the Members the payment of dividends at the maximum prudent amount.

 

12

 

ARTICLE 12

Trademark License

 

12.1                        Forthwith following the registration of Newco and the establishment of the Subsidiary, ACL shall cause Newco or the Subsidiary to be granted a limited license to use the Trademarks in the PRC for the manufacture of golf footwear.

 

ARTICLE 13

Marketing

 

13.1                        Acushnet, and persons from time to time designated by Acushnet, shall have the sole and exclusive right to purchase and distribute and to arrange for the sale and distribution, everywhere in the world, of all goods and products manufactured or produced by Newco and the Subsidiary (the “Product”) on such arrangements and terms as shall from time to time be agreed upon between Newco and Acushnet or persons designated by Acushnet.

 

13.2                        In the event that (i) an Acushnet Assignment takes place and (ii) during any twelve (12) month period following such Acushnet Assignment (with such twelve (12) month periods commencing on the day following the Assignment Date and each anniversary thereof) such successor purchases and distributes, and arranges for the sale and distribution of, less than seventy percent (70%) of the Pre-assignment Product, Newco shall, as proposed by MOC and to the extent that the Subsidiary has available, uncommitted capacity to manufacture golf footwear products, have the right to manufacture for, and sell to, additional purchasers in order to minimize uncommitted capacity; provided that the Trademarks shall not be used in connection with any such sales to other purchasers.

 

ARTICLE 14

Non-Competition

 

14.1                        The parties hereby acknowledge that Acushnet currently manufactures and sells golf footwear and that both Acushnet and Lionscore have the following pre-existing commitments to competitors of Newco and the Subsidiary:

 

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(1)                                 P.T. Lezen, a vendor of Acushnet, currently produces plastic upper golf footwear in Indonesia, and

 

(2)                                 Lionscore manufactures leather upper golf footwear for the Mizuno brand.

 

14.2                        While recognizing the respective contractual commitments set forth above, the parties agree to cause their respective affiliates to limit competing relationships of their respective affiliates to those set forth in Section 14.1 above, and to endeavor to support Newco and the Subsidiary to the fullest extent possible.

 

14.3                        Except as set forth in Sections 14.1 and 14.2 above, so long as either party to this Agreement shall own an interest in Newco, directly or indirectly, such party shall not, and shall cause its affiliates not to, within the PRC in any way, either directly or indirectly or through a subsidiary or associated company or business or venture, in any manner compete with Newco or the Subsidiary in the PRC or engage in any contract, subcontract, or co-operate in any activity which is in competition with Newco or the Subsidiary in the PRC.

 

ARTICLE 15

Duration

 

15.1                        This Agreement shall be effective from the date hereof and shall continue in effect indefinitely until (i) terminated pursuant to Articles 16 or 28, or (ii) the dissolution of Newco in accordance with the Articles.

 

ARTICLE 16

Termination

 

16.1                        Upon default by any party in performance of any material obligation under this Agreement, the other party may give the defaulting party notice of the default. If such default is not cured within thirty (30) days from the date of such notice, the party giving such notice shall have the right to terminate this Agreement by notice in writing with immediate effect.

 

16.2                        If either party becomes insolvent or is adjudicated bankrupt, the other party shall have the right

 

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to terminate this Agreement immediately by giving notice in writing.

 

16.3                        If a Change in Control with respect to Acushnet or ACL shall occur, ACL shall promptly notify MOC that such Change in Control has occurred. MOC shall have the right to purchase all, but not less than all, of the Class B Shares; provided that (i) MOC shall notify ACL, within thirty (30) days after receipt of such notice that Change in Control has occurred or otherwise becoming aware of such Change in Control, of MOC’s intent to purchase all of the Class B Shares (“Notice of Intent to Purchase”) and (ii) such purchase shall be made within sixty (60) days after receipt by ACL of such Notice of Intent to Purchase. In the event that the conditions set forth in this Section 16.3 are met, ACL shall transfer absolute and unencumbered ownership of the Class B Shares to MOC or MOC’s designee; provided, however, that the following events shall not be deemed to give rise to a Change in Control and shall not give rise to a right to purchase the Class B Shares: (i) the sale or other disposition, whether by way of a public offering or otherwise, of less than fifty percent (50%) of the ownership interest in Acushnet or ACL not otherwise resulting in a Change in Control of Acushnet or ACL and (ii) a sale or other transfer of substantially all of the golf footwear business of Acushnet, including the ownership of ACL, to a successor in interest to Acushnet as contemplated by Article 25.

 

16.4                        If a Change in Control with respect to Lionscore or MOC shall occur, MOC shall promptly notify ACL that such Change in Control has occurred. ACL shall have the right to sell all, but not less than all, of the Class B Shares to MOC; provided that (i) ACL shall notify MOC, within thirty (30) days after receipt of such notice that Change in Control has occurred or otherwise becoming aware of such Change in Control, of ACL’s intent to sell all of the Class B Shares to MOC (“Notice of Intent to Sell”) and (ii) such sale shall be made within sixty (60) days after receipt by MOC of such Notice of Intent to Sell. In the event that the conditions set forth in this Section 16.4 are met, MOC shall buy such Shares upon transfer to MOC or its designee of absolute and unencumbered ownership of the Class B Shares.

 

16.5                        In the event of any sale of Shares in Newco pursuant to Sections 16.3 or 16.4, the sale and purchase price per Share shall be determined by mutual agreement of the parties. If the parties are unable to agree upon a

 

15

 

price within twenty (20) days after notice of the exercise of the purchase or sale rights described above, the parties shall refer the determination of such sale and purchase price to an appraiser, who shall be selected by mutual agreement of the parties and who shall determine the sale and purchase price per Share within thirty (30) days after such referral. Any such determination by the appraiser shall be final and binding upon the parties. In the event that the parties are unable to agree upon the selection of an appraiser for twenty (20) consecutive days, the parties shall attempt to resolve such dispute in accordance with Article 29.

 

16.6                        Either of MOC or ACL shall have the right to terminate this Agreement upon not less than eighteen (18) months prior written notice to the other parties, which notice shall specify the date (not less than eighteen (18) months after the date of such notice) such termination shall be effective; provided that in the event of a termination of this Agreement pursuant to this Section 16.6, the provisions of Section 17.2 shall apply.

 

16.7                        This Agreement shall be deemed to be terminated in the event of any party becoming a beneficial owner of all the shares issued by Newco.

 

ARTICLE 17

Consequences of Termination

 

17.1                        If this Agreement is terminated pursuant to Sections 16.1 or 16.2 or pursuant to Section 28.1, the party giving notice of termination in accordance with such Sections shall have the right, upon written notice to the other party, to require the winding up and dissolution of Newco and the Subsidiary. Upon receipt of any such notice, the parties shall take all necessary action to wind up and dissolve Newco and the Subsidiary.

 

17.2                        If this Agreement is terminated pursuant to Section 16.6, the parties shall cooperate, during the period from the date of notice of termination to the date such termination is to be effective, to (i) arrange for an orderly transition of the business of Newco and the Subsidiary and (ii) use all reasonable efforts to maintain the steady flow of golf footwear to Acushnet and its designated distributors. The party receiving any such notice of termination shall use all reasonable efforts to

 

16

 

minimize the cost of terminating this Agreement and arranging for the winding up or transition of the business of Newco and the Subsidiary, with the intention that the equity investments of all parties shall be preserved to the greatest extent possible and distributed or otherwise made available to the parties upon any such termination.

 

ARTICLE 18

Governing Law

 

18.1                        The validity, construction and performance of this Agreement shall be governed by the laws of the Cayman Islands, British West Indies.

 

ARTICLE 19

Agreement to Perform

 

19.1                        The parties hereto shall use their respective votes in Newco, and take all steps as may lie in their respective powers, to procure:

 

(1)                                 that this Agreement is duly performed; and

 

(2)                                 that the provisions of the Memorandum and Articles are not infringed; provided that in the event of any conflict between this Agreement and the Memorandum and Articles then, as between the parties, this Agreement shall prevail and the parties shall take all steps necessary to amend the Memorandum and Articles to remove any such conflict.

 

19.2                        Notwithstanding Section 19.1, nothing herein shall be construed so that a party shall be required to undertake any action which shall be in contravention of or shall be required to refrain from undertaking any action which shall be obligatory under the laws of the United States of America, Taiwan, the Cayman Islands or the PRC, whichever may be applicable. In the event that any provision of this Agreement shall be or becomes invalid, the parties hereto agree to substitute for such invalid provision a new provision which serves the purpose of the invalid provision to the best extent possible.

 

19.3                        The invalidity or unenforceability of any provision of this Agreement shall not affect the other

 

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provisions of this Agreement which shall remain in full force and effect.

 

ARTICLE 20

Amendment

 

20.1                             The terms of this Agreement may not be modified, waived or discharged except by an express declaration in writing signed on behalf of the parties hereto by their duly authorized officers which refers specifically to this Agreement.

 

ARTICLE 21

Costs

 

21.1                             The costs incidental to the incorporation of Newco shall be borne and paid by Newco. Each party shall bear its own costs incurred in connection with the preparation and execution of this Agreement.

 

ARTICLE 22

Relationship of Newco to the Parties

 

22.1                             This Agreement shall not make Newco or any party hereto the agent of any of the others nor shall it constitute a partnership between any of the parties or between any of the parties and Newco.

 

22.2                             Neither the parties hereto nor Newco shall have the power or right to pledge the credit of any of the others except with the prior express written consent of both parties hereto and of Newco.

 

ARTICLE 23

Language

 

23.1                             The official text of this Agreement shall be in English. The parties undertake to use the English language in respect of all documents and communications except where by law the relevant local language must be used.

 

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ARTICLE 24

Bankers

 

24.1                             The bankers for Newco shall be the International Commercial Bank of China in Taipei, Taiwan, and/or such other bank or banks as may be agreed to from time to time by the parties hereto.

 

ARTICLE 25

Assignments

 

25.1                             Save as herein provided or by mutual consent of the parties hereto, all or any part or portion of the rights, obligations and liabilities hereunder of the parties hereto, Acushnet or Lionscore shall not be assigned to third parties; provided, however, that Acushnet may assign its rights and obligations set forth in this Agreement to any successor to substantially all of the golf footwear business of Acushnet without the prior written consent of MOC (an “Acushnet Assignment”) .

 

ARTICLE 26

Notice

 

26.1                             Except as otherwise provided for elsewhere in this Agreement, any notice required to be given under this Agreement or any notice that might be appropriate to implement its purpose, shall be delivered by hand, sent by facsimile or sent by telex or by DHL or a comparable express courier service to the party to be served at the address first above written. The preceding address may be changed from time to time by notice sent in accordance with this Article. Any notice sent in accordance with this Article shall be deemed to have been made or given on the earlier of the date of receipt by addressee or the seventh day immediately following the date on which the telex was sent or the letter was dispatched by courier service.

 

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ARTICLE 27

Entire Agreement

 

27.1                        This Agreement embodies the entire understanding of the parties and there are no promises, terms, conditions or obligations, oral or written, express or implied, other than those contained herein save and except those mutually agreed to in writing by the parties after the execution of this Agreement.

 

ARTICLE 28 
  Force Majeure

 

28.1                        None of the parties shall be liable for failure to perform its part of this Agreement when such failure is due to fire, flood, earthquake, strikes, inevitable accidents, war (declared or undeclared), embargoes, blockades, legal restrictions, riots, insurrections, or any other causes beyond the control of the parties. If, as a result of legislation or governmental action, any of the parties are precluded from receiving any benefit to which such party is entitled hereunder, the parties shall review the terms hereof so as to endeavor to use their best efforts to restore such party to the same relative position as previously obtained hereunder. If an event of force majeure continues for more than six (6) months which denies any of the parties the substantial benefit of this Agreement, then such party may terminate this Agreement in accordance with Section 17.1.

 

ARTICLE 29

Resolution of Disputes

 

29.1                        The parties shall attempt to resolve any dispute amicably without the necessity of litigation. If any dispute arises between the parties relating to this Agreement (a “Dispute”), prior to the commencement of any legal action to interpret or enforce this Agreement, the parties shall first use the procedure specified in this Article 29 (the “Procedure”).

 

29.2                        The party seeking to initiate the Procedure (the “Initiating Party”) shall give written notice to the

 

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other party, describing in general terms the nature of the Dispute and the Initiating Party’s claim for relief.

 

29.3                        The parties shall be entitled to make such investigation of the Dispute as they deem appropriate, but agree to meet promptly, and in no event later than ten (10) business days from the date of the Initiating Party’s written notice, to discuss the resolution of the Dispute. The parties shall meet at such times and places and with such frequency as they may agree. If the Dispute has not been resolved within ten (10) business days from the date of their initial meeting, the parties shall cease direct negotiations and shall submit the Dispute to mediation in accordance with the following procedure.

 

29.4                        The parties shall have ten (10) business days from the date they cease direct negotiations to select a mediator. If no mediator has been selected within such period, the parties agree jointly to request the Singapore International Arbitration Centre to designate a mediator.

 

29.5                        In consultation with the mediator selected, the parties shall promptly designate a mutually convenient time and place for the mediation; provided that, in the event that the amount in dispute exceeds Five Hundred Thousand U.S. Dollars ($500,000), the place for the mediation shall be Singapore. Unless circumstances require otherwise, the time for the mediation shall not be later than fifteen (15) business days after selection of the mediator.

 

29.6                        The mediator shall determine the format for the meetings and is authorized to conduct both joint meetings and separate private caucuses with the parties. The mediation session shall be private. The mediator will keep confidential all information learned in private caucus with any party unless specifically authorized by such party to make disclosure of the information to the other party.

 

29.7                        The parties agree to participate in the mediation procedure to its conclusion. The mediation shall be terminated by (i) the execution of a settlement agreement by the parties, (ii) a declaration of the mediator that the mediation is terminated, or (iii) a written declaration of a party to the effect that the mediation process is terminated, but not before the conclusion of one full day’s mediation session. Even if the mediation is terminated without a resolution of the Dispute, the parties agree not to terminate negotiations and not to commence any legal

 

21

 

action or seek other remedies prior to the expiration of five (5) days following termination of the mediation. Notwithstanding the foregoing, any party may commence litigation within such five (5) day period if litigation could be barred by an applicable statute of limitations or in order to request an injunction to prevent irreparable harm.

 

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ARTICLE 30

Headings

 

30.1                        The headings and titles listed in this Agreement are for convenience only and shall be ignored in construing the terms of this Agreement.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers or representatives on the day and year first above written.

 

	
 
    	
MYRE   OVERSEAS CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/ Umemura Kenji
    
	
 
    	
 
    	
Name:
    	
Umemura   Kenji
    
	
 
    	
 
    	
Title:
    	
Director
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
ACUSHNET   CAYMAN LIIMITED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ James M. Connor
    
	
 
    	
 
    	
Name:
    	
James   M. Connor
    
	
 
    	
 
    	
Title:
    	
Senior   Vice President Golf Footwear,
   Gloves and Accessories
    

 

	
Acknowledged   and Agreed for purposes of Articles 8, 14 and 16 above:
    	
 
    
	
 
    	
 
    
	
LIONSCORE   INDUSTRIAL CO., LTD.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Ching Lu Su
    	
 
    
	
Name:
    	
Ching   Lu Su
    	
 
    
	
Title:
    	
President
    	
 
    
	
 
    	
 
    	
 
    
	
Acknowledged   and Agreed for purposes of Articles 8, 12, 13, 14 and 16 above:
    	
 
    
	
 
    	
 
    
	
ACUSHNET   COMPANY
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Dale M. Shenk
    	
 
    
	
Name:
    	
Dale   M. Shenk
    	
 
    
	
Title:
    	
Vice   President Finance and Controller
    	
 
    

 

23

 

Appendix A

 

THE COMPANIES LAW

 

(REVISED)

 

MEMORANDUM OF ASSOCIATION

 

OF

 

ACUSHNET LIONSCORE, LTD.

 

1.                                      The name of the Company is Acushnet Lionscore, Ltd.

 

2.                                      The Registered Office of the Company shall be at the offices of Maples and Calder, Attorneys-at-Law, Ugland House, South Church Street, P.O. Box 309, George Town, Grand Cayman, Cayman Islands, British West Indies, or at such other place as the Members may from time to time decide.

 

3.                                      The business objects of the Company are as follows:

 

(a)                                 To manufacture and sell or otherwise trade in golf footwear, including parts and supplies therefor; and

 

(b)                                 To establish and maintain subsidiaries in the Peoples Republic of China (“PRC”) and in any other part of the world for all, or any, of the purposes stated herein.

 

4.                                      Except as prohibited or limited by the Companies Law (Revised), the Company shall have full power and authority to carry out any object and shall have and be capable of from time to time and at all times exercising any and all of the powers at any time or from time or time exercisable by a natural person or body corporate in doing in any part of the world whether as principal, agent, contractor or otherwise whatever may be considered by it necessary for the attainment of its objects and whatever else may be considered by it as incidental or conducive thereto or consequential thereon, including, but without in any way restricting the generality of the foregoing, the power to make any alterations or amendments to this Memorandum of Association and the Articles of Association of the Company considered necessary or convenient in the manner

 

 

set out in the Articles of Association of the Company, and the power to do any of the following acts or things: to pay all expenses of and incidental to the promotion, formation and incorporation of the Company; to register the Company to do business in any other jurisdiction; to sell, lease or dispose of any property of the Company; to draw, make, accept, endorse, discount, execute and issue promissory notes, debentures, bills of exchange, bills of lading, warrants and other negotiable or transferable instruments; to lend money or other assets and to act as guarantors; to borrow or raise money on the security of the undertaking or on all or any of the assets of the Company including uncalled capital or without security; to invest monies of the Company in such manner as the Board determines; to sell the products of the Company for cash or any other consideration; to distribute assets in specie to Members of the Company; to make charitable or benevolent donations; to pay pensions or gratuities or provide other benefits in cash or kind to directors, officers, employees, past or present and their families; to purchase officers liability insurance; to carry on any trade or business incidental to, and generally to do all acts and things which, in the opinion of the Company or the directors, may be conveniently or profitably or usefully acquired and dealt with, carried on, executed or done by the Company in connection with, the business aforesaid; PROVIDED THAT the Company shall only carry on the businesses for which a license is required under the laws of the Cayman Islands when so licensed under the terms of such laws.

 

5.                        The Company shall be established as a limited liability company and the liability of each Member shall be limited to the amount from time to time unpaid on such Member’s shares.

 

6.                        The share capital of the Company is Sixty Thousand U.S. Dollars (U.S. $60,000) divided into sixty thousand (60,000) ordinary shares of a nominal or par value of One U.S. Dollar (U.S. $1.00) per share. The sixty thousand (60,000) ordinary shares shall be divided into the following two (2) classes: Class A Shares consisting of thirty-six thousand (36,000) ordinary shares and Class B Shares consisting of twenty-four thousand (24,000) ordinary shares. The Company shall have the power, insofar as it is permitted by law, to redeem or purchase and to increase or reduce the said capital subject to the provisions of the Companies Law (Revised) and the Articles of Association. The Company shall also have the power to issue any part of its capital, whether original, redeemed or increased, with

 

2

 

or without any preference, priority or special privilege or subject to any postponement of rights or to any conditions or restrictions and such that unless the conditions of issue shall otherwise expressly declare, every issue of shares, whether declared to be preference or otherwise, shall be subject to the powers hereinbefore contained.

 

7.                        The Company is registered as exempted and its operations will be carried on subject to the provisions of Section 192 of the Companies Law (Revised) and, subject to the provisions of the Companies Law (Revised) and the Articles of Association, it shall have the power to register by way of continuation as a body corporate limited by shares under the laws of any jurisdiction outside the Cayman Islands and to be deregistered in the Cayman Islands.

 

8.                        The Company shall be placed into winding up and dissolution in the event of the dissolution, liquidation, bankruptcy or insolvency or any Member in accordance with Article Ten of the Articles of Association of the Company.

 

I, the individual whose name and address is subscribed, am desirous of being formed into a company in pursuance of this Memorandum of Association and I respectively agree to take the number of shares in the capital of the Company set opposite my name.

 

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DATED   the          day of June, 1995
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
SIGNATURE   and ADDRESS OF SUBSCRIBER
    	
 
    	
NUMBER   OF SHARES TAKEN
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
One   Ordinary Share for a Subscription Price of U.S.$100.00
    
	
P.O. Box   309
    	
 
    	
 
    
	
Grand   Cayman, B.W.I.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Witness   to the above signature
    	
 
    	
 
    

 

 

I,                         , Registrar of Companies in and for the Cayman Islands HEREBY CERTIFY that this is a true and correct copy of the Memorandum of Association of this Company duly incorporated on the        day of June, 1995

 

	
 
    	
 
    	
 
    
	
 
    	
REGISTRAR OF COMPANIES
    	
 
    

 

4

 

Appendix B

 

THE COMPANIES LAW (REVISED)

 

ARTICLES OF ASSOCIATION

 

OF

 

Acushnet Lionscore, Ltd.

 

 

Article One

 

Interpretation

 

Section 1. In these Articles the following words and expressions shall, where not inconsistent with the context, have the following meanings respectively and Table A of the Law shall be excluded:

 

“Articles” means these Articles of Association as they may be altered in accordance with Section 9.2 from time to time;

 

“Auditor” means the person, including any individual or partnership, for the time being performing the duties of auditor of the Company;

 

“Board” means the Board of Directors of the Company, elected an accordance with Article Six of these Articles;

 

“the Company” means Acushnet Lionscore, Ltd.;

 

“the Law” means the Companies Law (Revised) and any statutory modification thereof for the time being in force;

 

“Member” means the person, body corporate or partnership registered in the Register of Members as the holder of shares in the Company, and when two or more persons are so registered as joint holders of shares, means the person whose name stands first in the Register of Members as one of such joint holders;

 

 

“Memorandum” means the Memorandum of Association of the Company.

 

“Notice” means written notice unless otherwise specifically stated;

 

“Register of Members” means the Register of Members kept in accordance with Section 5.1 of these Articles;

 

“Secretary” means the person appointed to perform the duties of Secretary of the Company and includes any Assistant or Acting Secretary;

 

“share” shall where the context so admits, include a fractional share; and

 

“Special Resolution” means a resolution which is (i) passed by the holders of not less than seventy-five percent (75%) of the outstanding voting shares of Newco entitled to vote at a general meeting and (ii) in accordance with Section 59 of the Law.

 

Section 1.2.                                 In these Articles, unless there exists something in the subject or context inconsistent with such construction, words importing the plural number shall be deemed to include the singular number.

 

Section 1.3.                                 Expressions referring to writing shall, unless the contrary intention appears, be construed to include printing, lithography, photography and other modes of representing words in a visible form.

 

Section 1.4.                                 Unless the context otherwise requires, words or expressions contained in these Articles shall bear the same meaning as in the Companies Law (Revised) or any statutory modification thereof in force for the time being.

 

Article Two

 

Shares

 

Section 2.1.                                 Subject to the provisions of these Articles, the unissued shares of the Company (whether forming part of the original or any increased authorized capital) shall be at the disposal of the Directors who may offer, allot, grant options over or otherwise dispose of

 

2

 

them to such persons at such times and for such consideration and upon such terms and conditions as they may determine consistent with these Articles.

 

Section 2.2.                                 No share shall be issued except as fully paid up.

 

Section 2.3.                                 The name and address of every person being the holder of registered shares, their class or series and the date when they became or ceased to become a Member shall be entered in the Register of Members.

 

Section 2.4.                                 Every person whose name is entered as a Member in the Register of Members as being the holder of registered shares, may request, and the Company shall issue thereto, a certificate specifying the share or shares held and the par value thereof, provided that in respect of a registered nominative share, or shares, held jointly by several persons the Company shall not be bound to issue more than one certificate, and delivery of a certificate for a share to one of several joint holders shall be sufficient delivery to all.

 

Section 2.5.                                 Any Member receiving a share certificate shall indemnify and hold the Company harmless from any loss or liability which it may incur by reason of wrongful or fraudulent use or representation made by any person by virtue of the possession of such certificate. If a certificate is worn out or lost it may be renewed on production of the worn-out certificate, or on satisfactory proof of its loss together with such indemnity as the Members may require.

 

Section 2.6.                                 Subject to the provisions of the Law, shares may be issued on terms that they are liable to be redeemed on such terms and in the manner as Members by Special Resolution before the issue of the shares may determine.

 

Article Three

 

Variation of Rights; Class A Shares and Class B Shares

 

Section 3.1.                                 The shares of the Company shall be divided into two classes: Class A Shares and Class B Shares. Class A Shares shall consist of thirty-six thousand (36,000) shares. Class B Shares shall consist of twenty-four thousand (24,000) shares.

 

3

 

Section 3.2.                                 The rights attached to the Class A Shares and Class B Shares may, whether or not the Company is being wound up, only be varied or abrogated with the consent in writing of the holders of a majority of the issued shares of that class, or with the sanction of a Special Resolution passed at a general meeting of the holders of the shares of that class. The provisions of these Articles relating to general meetings shall apply to every such general meeting of the holders of one class of shares.

 

Section 3.3.                                 The rights conferred upon the holders of the shares of any class or series issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class or series, be deemed to be varied by the creation or issue of further shares of the class or series.

 

Section 3.4.                                 The holders of the shares of any class or series shall not have any preemptive right to purchase or subscribe for any shares of the Company unless expressly provided by the terms of the issue of the shares of that class.

 

Article Four

 

Transfer of Shares

 

Section 4.1.                                 Shares may be transferred or pledged only with the approval of the Board, which shall be bound to follow the terms of any agreement to which the Member proposing to transfer or pledge shares is a party and which imposes restrictions on such transfer or pledge. For purposes of this Article Four, the Board shall only approve such transfer or pledge upon the unanimous consent of all Directors elected by the Members holding the class of shares not being proposed to be transferred or pledged, which consent may be withheld in the sole discretion of such Directors. The instrument of transfer of any share shall be in writing and shall be executed by or on behalf of the transferor, and the transferor shall be deemed to remain the holder of a share until the name of the transferee is entered in the Register in respect thereof.

 

Section 4.2.                                 No Class A Member or Class B Member shall transfer, sell, mortgage, assign, pledge or create or permit any lien, charge or encumbrance over, or grant any option or other rights in or over, or otherwise dispose of any or all of the shares held by such Member from time to time, or any interest therein, without the consent of the

 

4

 

Members holding a majority of the outstanding shares of the other class, which consent may be withheld in the sole discretion of such Members. The Board shall not recognize any instrument purporting to effect any transfer or other disposition of shares in violation of this Article Four, and any such purported transfer or other disposition shall be null and void.

 

Section 4.3.                                 If either all Class A Members or all Class B Members dispose of all of their shares in the Company, then at the request of such Members, the Members shall procure prior to such sale that the Company changes its name to one which does not include the word “Lionscore” or a word similar thereto, if the Class A Members are such requesting Members, or “Acushnet” or a word similar thereto, if the Class B Members are such requesting Members.

 

Section 4.4.                                 The Directors shall cause the share certificates representing shares of the Company, if any, to bear a legend making reference to the restrictions on transfer set forth in this Article Four.

 

Article Five 

 Members

 

Section 5.1.                                 The Company shall keep in one or more books a Register of its Members and shall enter therein the following particulars, that is to say:

 

(a)                            the name and address of each Member, the number of shares held by him and the amount paid or agreed to be considered to be paid on such shares;

 

(b)                            the date on which each person was entered in the Register of Members; and

 

(c)                             the date on which any person ceased to be a Member.

 

Section 5.2.                                 The Company shall, within six (6) months of its formation and in each year of its existence thereafter, hold a general meeting as its annual general meeting and shall specify the meeting as such in the Notices calling it. The Company shall hold annual general meetings, which shall be held at such time, day and place as may be fixed by the Board and such meetings shall transact the following business:

 

5

 

(a)                                 Receiving the report of the Board and considering the statement of accounts and balance sheet of the Company for the fiscal year ended on the preceding thirtieth day of November, with the auditor’s report thereon.

 

(b)                                 Declaration of dividend.

 

(c)                                  Approving the auditor’s fee.

 

(d)                                 Electing Directors.

 

(e)                                  Appointing an auditor for the current fiscal year and fixing his or her remuneration.

 

(f)                                   Any other business which may be properly brought before an annual general meeting.

 

Section 5.3.                                 At least twenty-one (21) days prior to the date fixed for an annual general meeting or any other general meeting, written Notice of the summoning of such meeting specifying the place, the day and hour of the meeting and nature of business to be transacted shall be sent by mail to every Member whose name appears in the Register of Members as of the date of issuing said Notice, which Notice shall be sent by registered airmail to each Member whose address in the Register of Members is outside the country in which the Notice to said Member is posted.

 

Section 5.4.                                 Any Member may convene a general meeting for the purpose of:

 

(a)                                 considering and if thought fit passing of a Special Resolution to alter or amend the Memorandum or Articles or to require the Company to be dissolved; or

 

(b)                                 to consider any matter in connection with the management of the Company’s affairs;

 

Section 5.5.                                 All general meetings shall be convened and conducted at such locations as the Board shall determine in accordance with the provisions of the Law and these Articles.

 

Section 5.6.                                 The accidental omission to give Notice of a general meeting to or the non-receipt of Notice of a general meeting by any person entitled to receive Notice shall not invalidate the proceedings at that meeting.

 

6

 

Section 5.7.                                 A general meeting shall, notwithstanding that it is called by shorter Notice than that specified in these Articles, be deemed to have been properly called if it is so agreed by all the Members entitled to attend and vote thereat.

 

Section 5.8.                                 (a) At any general meeting, the Members present in person or by proxy shall elect a Chairman of the meeting.

 

(b)                                 At any general meeting, one or more Members entitled to vote present in person or representing in person or by proxy in excess of 50% of the outstanding voting shares of the share capital of the Company entitled to vote at such meeting shall form a quorum for the transaction of business, provided always that such quorum must include more than 50% of the Class B-Shares-being-represented at the meeting, either in person or by proxy. If within half an hour from the time appointed for the meeting a quorum is not present, the meeting shall stand adjourned to the following day at the same time as the Chairman may determine.

 

(c)                                  The Chairman may, with the consent of any meeting at which a quorum is present (and shall if so directed by the meeting), adjourn the meeting from time to time and from place to place, and only the business left unfinished at the meeting from which the Members present in person or represented by proxy have adjourned shall be dealt with. It shall not be necessary to give any Notice of the adjourned meeting or of the business to be transacted at the adjourned meeting; save and except for a meeting adjourned sine die, when Notice of the adjourned meeting shall be given as in the case of an original meeting.

 

Section 5.9.                                 (a) Subject to any rights or restrictions lawfully attached to any class or series of shares, at any general meeting, each Member shall be entitled to one vote for each share held by him and such vote may be given in person or by proxy.

 

(b)                                 Subject to Section 9.2 of these Articles, at any general meeting other than in respect of a matter requiring a Special Resolution, any question proposed for the consideration of the Members shall be decided on a simple majority of the votes of Members entitled to vote and such majority shall be ascertained in accordance with the provisions of these Articles; provided that the affirmative votes of the holders of a majority of the Class B Shares must always be included. The Chairman of any general

 

7

 

meeting shall not have a second or casting vote in the event of an equality of votes.

 

(c)                                  At any general meeting, a declaration by the Chairman that a question proposed for consideration has, on a show of hands, been carried, or carried unanimously or by a particular majority or lost and an entry to that effect in a book containing the minutes of the proceedings of the Company shall be conclusive evidence of that fact without proof of the number or proportion of the votes recorded in favor of or against such question.

 

Section 5.10.                          When a vote is taken by ballot, each Member entitled to vote shall be furnished with a ballot paper on which he shall record his vote in such manner as shall be determined at the meeting having regard to the nature of the questions on which the vote is taken; and each ballot paper shall be signed, initialed or otherwise marked so as to identify the voter. At the conclusion of the ballot, the ballot paper shall be examined by the Chairman with assistance of a Member appointed for the purpose, and the result of the ballot shall be declared by the Chairman.

 

Section 5.11.                          An instrument appointing a proxy shall be in writing under the hand of a Member or his attorney duly authorized in writing or, if the Member is a corporation, either under seal or under the hand of an officer or attorney of the corporation duly authorized, and shall be such other form as the Members may from time to time approve.

 

Section 5.12.                          Any corporation which is a Member of the Company may by resolution of its directors authorize such persons as it thinks fit to act as its representative at any meeting of the Members of the Company and the person so authorized shall be entitled to exercise the same powers on behalf of the corporation which he represents as that corporation could exercise if it were an individual Member of the Company.

 

Section 5.13.                          (a) A resolution in writing (whether on one or more separate papers) duly signed by Members holding a simple majority of the shares entitled to vote on the matter shall be deemed a valid resolution of a general meeting or class meeting, as the case may be; provided that such Members include the affirmative votes of the holders of a majority of the Class B Shares.

 

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(b)                                 A resolution in writing (whether on one or more separate papers) duly signed by Members holding a seventy-five percent (75%) majority of the shares entitled to vote on the matter shall be deemed a valid Special Resolution of the general meeting or class meeting, as the case may be.

 

Article Six

 

Board of Directors

 

Section 6.1.                                 The business and affairs of the Company shall be managed by or under the direction of the Board.

 

Section 6.2.                                 The number of directors that shall constitute the whole Board shall be five (5). Three (3) Directors shall be elected by the holders of not less than fifty-one percent (51%) of the Class A Shares. Two (2) Directors shall be elected by the holders of not less than fifty-one percent (51%) of the Class B Shares. Subject to Sections 6.3 and 6.4, Directors shall be elected at the annual general meeting to hold office until the next annual general meeting and until their respective successors are elected and qualified.

 

Section 6.3.                                 Any Director may resign at any time by giving written Notice of such resignation to the Board or the Secretary of the Company. Any such resignation shall take effect at the time specified therein or, if no time is specified, upon receipt thereof by the Board or the Secretary, as the case may be. Unless specified therein, the acceptance of such resignation shall not be necessary to make it effective.

 

Section 6.4.                                 A Director elected by the holders of the Class A Shares may only be removed by the holders of a majority of the Class A Shares. A Director elected by the holders of the Class B Shares may only be removed by the holders of a majority of the Class B Shares. In either case, such removal may be with or without cause.

 

Section 6.5.                                 Regular meetings of the Board shall be held at such time and at such place as the Board may from time to time prescribe; provided that if the Company is an exempted company in accordance with Section 182 of the Law, the Board shall hold at least one meeting in the Cayman Islands in each calendar year, in accordance with Section 193 of the Law. No Notice need be given of any regular

 

9

 

meeting, and a Notice, if given, need not specify the purposes thereof. A meeting of the Board may be held without Notice immediately after an annual general meeting of Members, at the same place as that at which such meeting was held.

 

Section 6.6.                                 A special meeting of the Board may be called at any time by the Board, the Chairman of the Board, the Executive Committee, if any, or the President and shall be called by any one of them or by the Secretary upon receipt of a written request to do so specifying the matter or matters, appropriate for action at such a meeting, proposed to be presented at the meeting and signed by at least two Directors. Any such meeting shall be held at such time and at such place as shall be determined by the body or person calling such meeting. Notice of such meeting stating the time and place thereof shall be given (i) by deposit of the Notice in the mail, first class, postage prepaid, at least ten days before the day fixed for the meeting, addressed to each Director at his address as it appears on the Company’s records or at such other address as the Director may have furnished the Company for that purpose, or (ii) by delivery of the Notice similarly addressed for dispatch by telex or telecopy, or by delivery of the Notice by telephone or in person, in each case at least 24 hours before the time fixed for the meeting.

 

Section 6.7.                                 Each meeting of the Board shall be presided over by the Chairman of the Board, or in his absence by the President, if a director, or if neither is present, by such member of the Board as shall be chosen by a majority of the directors present. The Secretary shall act as secretary of the meeting, or if no such officer is present, a secretary of the meeting shall be designated by the person presiding over the meeting.

 

Section 6.8.                                 The quorum for meetings of the Board shall be three (3) Directors; provided that at least one (1) Director appointed by the holders of the Class A Shares and one (1) Director appointed by the holders of the Class B Shares are present. Subject to Section 9.1, a resolution of a meeting of the Board shall be adopted by an affirmative vote of a majority of the Directors present or represented at the meeting.

 

Section 6.9.                                 Directors may participate in meetings of the Board or of such committees by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can

 

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hear each other, and such participation shall constitute presence in person at such meeting.

 

Section 6.10.                          Any action required or permitted to be taken at any meeting of the Board may be taken without a meeting if all members of the Board consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the Board.

 

Section 6.11.                          A Director shall receive such compensation, if any, for his services as a director as may from time to time be fixed by the Board, which compensation may be based, in whole or in part, upon his attendance at meetings of the Board. He may also be reimbursed for his expenses in attending any meeting.

 

Section 6.12.                          A Director may hold other office or place of profit with the Company and may be paid such extra remuneration therefor whether by way of salary commission participation of profits or otherwise.

 

Section 6.13.                          Each Director for the time being shall be indemnified out of the assets of the Company from and against all actions, proceedings, costs, charges, losses, damages and expenses which he or any of them shall or may incur or sustain by reason of any act done or omitted in or about the execution of his or their duties, except such (if any) as he or any of them shall incur or sustain by or through his or their own fraud, negligence or willful default.

 

Section 6.14.                          A Director may be party to or otherwise interested in any transaction or arrangement with the Company or in which the Company is otherwise interested and shall not be accountable to the Company for any benefit which he derives from any such office or from any such transaction or arrangement and no such transaction or arrangement shall be avoidable on the grounds of such interest or benefit provided the Director shall first disclose his interest in the same to all other Directors in writing.

 

Section 6.15.                          The Board shall cause minutes to be made in books provided for the purpose:

 

(a)                                 of all appointments of officers made by the Board;

 

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(b)                                 of the names of the Members (including those represented thereat by an alternate or by proxy) present at each meeting of the Board and of any committee of the Board; and

 

(c)                                  of all resolutions and proceedings at all meetings of the Board.

 

Section 6.16.                          The Board may appoint a custodian or trustee for the safe keeping of all moneys, assets and securities of the Company with such powers and duties in respect thereof as may be specified in such appointment.

 

Section. 6.17.                       The Board may appoint a Secretary to perform administrative functions on behalf of the Company.

 

Article Seven

 

Dividends

 

Section 7.1.                                 Payment of dividends, whether interim or annual, by the Company is subject to approval of the Board; provided that the annual dividend shall be subject to the approval of the Members in general meeting.

 

Section 7.2.                                 Subject to the Law, the Board from time to time declare dividends and distributions on shares of the Company outstanding and authorize payment of the same out of the funds of the Company lawfully available therefor.

 

Section 7.3.                                 The Board may, before declaring any dividends or distributions, set aside such sums as they think proper as a reserve or reserves which shall at the discretion of the Board be applicable for any purpose of the Company and pending such application may, at the like discretion, be employed in the business of the Company.

 

Section 7.4.                                 No dividend or distribution shall be payable except out of the profits of the Company, realized or unrealized, or out of the share premium account or as otherwise permitted by the Law.

 

Section 7.5.                                 The Board may declare that any dividend or distribution be paid wholly or partly by the distribution of specific assets and in particular of paid up shares, debentures, or debenture stock of any other company or in any one or more of such ways and where any difficulty arises in regard to such distribution, the Board may settle

 

12

 

the same as they think expedient and in particular may issue fractional certificates and fix the value for distribution of such specific assets or any part thereof and may determine that cash payments shall be made to any Member upon the footing of the value so fixed in order to adjust the rights of all Members and may vest any such specific assets in trustees as may seem expedient to the Board.

 

Section 7.6.                                 Any dividend, distribution, interest or other monies payable in cash in respect of shares may be paid by cheque or warrant sent through the post directed to the registered address of the holder or, in the case of joint holders, to the holder who is first named on the Register of Members or to such person and to such address as such holder or joint holders may in writing direct. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent. Any one of two or more joint holders may give effectual receipts for any dividends, bonuses, or other monies payable in respect of the share held by them as joint holders.

 

Article Eight

 

Accounts and Financial Statements

 

Section 8.1.                                 The Board shall cause accounts to be kept of all transactions of the Company in such manner as to show a true and fair position of the assets and liabilities of the Company for the time being.

 

Section 8.2.                                 The financial year end of the Company shall be determined by the Board and failing such determination the financial year end shall be the 31st of December.

 

Section 8.3.                                 Each Member may demand and shall receive true and full information regarding the state of the business and financial condition of the Company.

 

Section 8.4.                                 One Auditor shall be appointed by the Board. An Auditor shall not be a Director or Officer of the Company. The Board shall have power to appoint and dismiss the Auditor from time to time.

 

Section 8.5.                                 The duties and remuneration of the Auditor shall be fixed by the Board or in such manner as the Board may determine.

 

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Section 8.6.                                 The Company will adopt a convention for U.S. federal income tax purposes under which all of the income accrued by the Company in any calendar month will be allocated to Members of record on the last day of the month.

 

Article Nine

 

Important Company Action

 

Section 9.1.                                 None of the following actions by the Company shall have any force or effect unless approved by an affirmative vote of not less than a majority of the Directors appointed by the holders of the Class A Shares and a majority of the Directors appointed by the holders of the Class B  Shares:

 

(a)                       Any and all decisions regarding the basic or material policy of the Company (which does not include day-to-day operation of the Company) relating to the scope, terms or conditions of its business;

 

(b)                       The determination, adoption and/or modification of the annual business plan, operating budget and capital expenditure budget;

 

(c)                        Any guarantee or indemnity with respect to the indebtedness or any other person, corporation, partnership or entity or any other arrangement pursuant to which the Company may become liable for the indebtedness of such other person, corporation, partnership or entity;

 

(d)                       Any contract relating to trademarks, tradenames or other trade secrets or industrial property rights;

 

(e)                        Employment or termination and the designation of key personnel (e.g., plant manager)

 

(f)                         Any other contract or agreement under which a future commitment or the obligations of the Company may exceed Five Hundred Thousand U.S. Dollars (U.S. $500,000) or its equivalent in any other currency in any financial year of the Company;

 

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(g)                             A payment of interim dividend or recommendation to the Members concerning payment of dividend or retention of profits; and

 

(h)                            Any acquisition of land or premises.

 

Section 9.2.                                 In addition to any requirements of the Law, none of the following actions by the Company shall have any force or effect unless such action has been approved by the Members pursuant to a Special Resolution:

 

(a)                            Any amendments, additions or deletions of the Memorandum or Articles;

 

(b)                            Any change of the authorized capital of the Company;

 

(c)                             Any sales, transfer or disposal of the business or undertaking (or a substantial part thereof) of the Company;

 

(d)                            Any alteration of the maximum number of Directors;

 

(e)                             Any charge, pledge or mortgage of the Company’s assets (or any one of them);

 

(f)                              Any reconstruction, amalgamation or voluntary liquidation of the Company except in accordance with the provisions hereunder;

 

(g)                             Any creation, formation or investment into a corporation, company, partnership or other business entity;

 

(h)                            Any decision to change the domicile or residence of the Company;

 

(i)                                Any joint venture or partnership contract or arrangement with any other person, firm or corporation and any withdrawal from such contract or arrangement; and

 

(j)                               Any matter relating to remuneration, benefit or welfare for Directors.

 

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Article Ten

 

Winding Up And Dissolution

 

Section 10.1.                          Any of the following events occurring to a Member shall cause the winding up and dissolution of the Company:

 

(a)                       the bankruptcy, winding up or dissolution of such Member;

 

(b)                       if such Member makes any assignment for the benefit of his creditors or files a petition voluntarily for bankruptcy under the laws of any country or files a petition seeking for himself any arrangement, re-organization, amalgamation, composition, re-adjustment, liquidation, dissolution or similar relief under any law or regulation;

 

(c)                        if such Member files an answer or other pleading admitting or failing to contest the material allegation of a petition filed against him in any proceedings of a nature described in the immediately preceding paragraph of this Section;

 

(d)                       if such Member seeks consents to or acquiesces in the appointment of a trustee, receiver or liquidator of himself or all or a substantial part of his properties; or

 

(e)                        any proceedings of a nature mentioned in the foregoing paragraphs of this Article occurs without the consent of such Member and is not dismissed or vacated within 120 days.

 

Section 10.2.                          The Company shall be considered to have commenced voluntary winding up and dissolution automatically and without the requirement of any other act:

 

(a)                       if the Members of the Company pass a Special Resolution requiring the Company to be wound up and dissolved; or

 

(b)                       upon the happening of any event in relation to a Member as defined in Section 10.1.

 

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Section 10.3.                          On winding up and dissolution of the Company the balance of the assets available for distribution and subject to any special rights or restrictions attaching to any class or series of shares shall be applied in paying to the Members the amounts paid up on the shares held by them and the surplus shall belong to such Members according to the respective number of shares held by them.

 

Section 10.4.                          When the Company is in winding up and dissolution if no other liquidator is appointed the Members shall act as liquidator or joint liquidators in the event that there shall be more than one.

 

Article Eleven

 

Tax Matters Partner

 

Section 11.1.                          The Company will be treated as a partnership for U.S. federal income tax purposes, and the Members holding Class B Shares shall select a Member to serve as the “Tax Matters Partner” as that term is defined in the U.S. Internal Revenue Code.

 

Article Twelve

 

Notices

 

Section 12.1.                          Unless otherwise herein or by law expressly provided, a Notice may be served by the Company on any Member either personally or by telex or facsimile to his registered address or by sending it using air mail (if appropriate) through the post prepaid in an envelope addressed to such Member at his address as registered in the Register of Members.

 

Section 12.2.                          Any Notice required to be given to the Members shall, with respect to any shares held jointly by two or more persons, be given to all such persons.

 

Section 12.3.                          Any Notice shall be deemed to have been served at the time when the same would be delivered in the ordinary course of transmission, and in proving such service it shall be sufficient to prove that the Notice was properly addressed and prepaid, if posted, and the time when it was posted or transmitted by telex or facsimile as the case may be.

 

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Article Thirteen

 

Seal

 

Section 13.1.                          The Seal of the Company shall not be affixed to any instrument except over the signature of at least one Member and the Secretary or by some person appointed by the Members, provided that the Secretary may affix the Seal of the Company over his signature only to any authenticated copies of these Articles, the Memorandum, the minutes of any meetings or any other document required to be authenticated by him and to any instrument which the Members have specifically approved beforehand.

 

Article Fourteen

 

Alteration of Articles

 

Section 14.1.                          No Article shall be rescinded, altered or amended, and no new Article shall be made until the same has been proposed and passed as a Special Resolution.

 

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DATED   the         day of June, 1995
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
SIGNATURE   and ADDRESS
    	
 
    
	
OF   SUBSCRIBER
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
[                                              ]
    	
 
    
	
P.O. Box   309
    	
 
    
	
Grand   Cayman, British West Indies
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Witness   to the above signature
    	
 
    

 

 

I,                        , Registrar of Companies in and for the Cayman Islands HEREBY CERTIFY that this is a true and correct copy of the Articles of Association of this Company duly incorporated on the         day of June, 1995

 

	
 
    	
 
    	
 
    
	
 
    	
REGISTRAR OF COMPANIES
    	
 
    

 

19

 

Schedule I

 

Trademarks and Brand Names

 

	
1.
    	
 
    	
Aqua-Lites
    
	
2.
    	
 
    	
Contemporary-Lites
    
	
3.
    	
 
    	
DryJoys
    
	
4.
    	
 
    	
DryJoys GX
    
	
5.
    	
 
    	
FJ
    
	
6.
    	
 
    	
Foot-Joy
    
	
7.
    	
 
    	
Green-Joys
    
	
8.
    	
 
    	
JoyWalkers
    
	
9.
    	
 
    	
LPX
    
	
10.
    	
 
    	
Soft-Joys
    
	
11.
    	
 
    	
Soft-Joys Sierra
    
	
12.
    	
 
    	
TCX
    
	
13.
    	
 
    	
Ultra-Joys
    
	
14.
    	
 
    	
Pinnacle

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