Document:

<PAGE>   1
                                                                     EXHIBIT 4.2

                             STOCK OPTION AGREEMENT

        This agreement, dated as of the 12th day of July 2000 by and between MRV
Communications, Inc., a Delaware corporation (hereinafter called the "Company"),
party of the first part, and _____________________________________ (hereinafter
called "optionee"), a party of the second part;

                                   WITNESSETH

        Whereas, the Company has adopted the "the 2000 MRV Communications, Inc.
Stock Option Plan for Employees of AstroTerra Corporation." (the "Plan") to
permit options to be granted to certain employees of the Company and its
subsidiaries, including AstroTerra Corporation ("AstroTerra") to purchase common
shares of the Company; and

        Whereas, the optionee is employed by the employer corporation in a key
capacity, and the Company desires him or her to remain in such employ, to secure
or increase his or her stock ownership in the Company in order to increase his
or her incentive and personal interest in the welfare of the employer
corporation and to replace options such employee had or may have had with
AstroTerra prior to its acquisition by the Company;

        Now, therefore, in consideration of the premises and of the covenants
and agreements herein set forth, the parties hereby mutually covenant and agree
as follows:

        1. Subject to the terms and conditions set forth herein, the Company
grants to the optionee the option to purchase from the Company all or any part
of an aggregate amount of _________ common shares of the Company authorized and
unissued or, at the option of the Company, treasury stock if available
(hereinafter, the "optioned shares").

        2. The price per share (the "option price") to be paid for the optioned
shares shall be three United States dollars (US$3.00) per share. The Option
Price shall be paid in United States dollars.

        3. Subject to the provisions of paragraphs four (4) and six (6) hereof,
the options shall vest over a four year period commencing on July 12, 2000 with
25% of the options vesting on July 12, 2001 and 2.08333% of the remaining
options vesting at the end of each month commencing on August 12, 2001 and
ending as provided in paragraph 6 below. Optionee acknowledges that he or she
understands he or she has no right whatsoever to exercise the option granted
hereunder with respect to any optioned shares covered by any installment until
such installment accrues as provided above and that all unaccrued installments
shall cease to accrue on the date of termination of optionee's employment,
consulting or other arrangement with ASTROTERRA, the Company or its affiliated
companies (the "employer corporation").

        4. The option herein granted may be exercised only by written notice of
intent to exercise the option, served upon the secretary of the Company at its
offices at 20415 Nordhoff Street, Chatsworth, California 91311 specifying the
number of shares in respect of which the option is being exercised, accompanied
by payment for such shares in cash or by certified check or bank draft to the
order of the Company. Such shares, upon payment of the purchase price, shall be
fully paid and nonassessable.

        5. The option herein granted shall not be transferable by the optionee
otherwise than by will or the laws of descent and distribution, and may be
exercised during the life of the optionee only by the optionee.

        6. The option granted hereunder shall expire and become unexercisable on
or before the earliest of the following dates, whichever is applicable: (i) May
31, 2006; (ii) the date of the optionee's termination of employment from the
employer corporation for any reason other than death or disability; or (iii) the
date that is one year following the optionee's termination of employment from
the employer corporation by reason of his or her death, or by reason of his or
her disability, whichever is applicable.

        7. If any of the events specified in paragraph 14 of the Plan occur, the
adjustments in optioned shares and

<PAGE>   2

option price therein provided shall be made.

        8. As to all optioned shares (or any stock issued as a stock dividend
thereon or any securities issued in lieu thereof or in substitution therefor),
purchased by the optionee or his personal representative upon the exercise of
any portion of the option herein granted, the Board or Compensation Committee,
in its sole discretion, may require that the optionee or his or her personal
representative, as the case may be, agree to any of the following conditions:

            (a) That they sign an investment letter to the effect that they are
taking said shares for investment and not for resale.

            (b) That they will comply with such restrictions as may be necessary
to satisfy the requirements of the United States Securities Act of 1933.

        9. The optionee shall not be deemed for any purposes to be a shareholder
of the Company with respect to any of the optioned shares except to the extent
that the option herein granted shall have been exercised with respect thereto
and a stock certificate issued therefor. Optionee acknowledges and agrees that
this option supersedes and replaces any options optionee had or may have had
with AstroTerra or any of its affiliated corporations prior to AstroTerra's
acquisition by the Company.

        10. The existence of the option evidence hereby shall not affect in any
way the right or power of the Company or its shareholders to make or authorize
any or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business, or any merger or consolidation
of the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the common stock of the Company or the rights
thereof, or dissolution or liquidation of the Company, or any sale or transfer
of all or any part of its assets or business, or any other corporate act or
proceeding, whether of a similar character or otherwise.

        11. As a condition of the granting of the option herein granted, the
optionee agrees, for himself or herself and his or her personal representatives,
that any dispute or disagreement which may arise under or as a result of or
pursuant to this agreement shall be resolved by the Board of Directors of the
Company or the Compensation Committee thereof in its sole discretion, and that
any interpretation by the Board or committee of any term of this agreement shall
be final, binding and conclusive.

        12. If, at any time, the Board or Compensation Committee shall
determine, in its discretion, that the listing, registration or qualification of
the shares covered by the option upon any securities exchange or under any state
or federal law is necessary or desirable as a condition of or in connection with
the purchase of shares thereunder, the option may not be exercised, in whole or
in part, unless and until such listing, registration or qualification shall have
been effected free of any conditions not acceptable to the Board or Compensation
Committee.

        13. Nothing in this agreement shall be construed to confer upon the
optionee any right to continued employment with the employer corporation or to
restrict in any way the right of the employer corporation to terminate his or
her employment. Optionee acknowledges that in the absence of an express written
employment agreement to the contrary, the employer corporation may terminate
optionee's employment with the employer corporation at any time, with or without
cause. Optionee acknowledges that the option evidenced hereby is being granted
to encourage such optionee to secure or increase on reasonable terms his or her
stock ownership in the Company.

        14. This Agreement hereby incorporates by reference the Plan and all of
the terms and conditions of the Plan as heretofore amended and as the same may
be amended from time to time hereafter in accordance with the terms thereof, but
no such subsequent amendment shall adversely affect the Optionee's rights under
this Agreement and the Plan except as may be required by applicable law.

                                       2
<PAGE>   3

        IN WITNESS WHEREOF, the Company has caused this instrument to be
exercised by its duly authorized officers, the optionee has hereunto affixed his
or her hand.

                                        MRV COMMUNICATIONS, INC.

                                        By:
                                           -------------------------------------

                                             -----------------------------------
                                        Its:
                                            ------------------------------------

                                        ------------------------
                                               Optionee

                                        3<PAGE>   1

                                                                   Exhibit 10.14

                               FOURTH AMENDMENT TO
                           LOAN AND SECURITY AGREEMENT

         THIS FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT, made as of the 31
day of July, 2000 (this "Amendment"), is by and between S2 GOLF INC., a New
Jersey corporation ("Borrower"), having its principal place of business at 18
Gloria Lane, Fairfield, New Jersey 07004, and PNC BANK, NATIONAL ASSOCIATION
(successor in interest to Midlantic Bank, National Association), a national
banking association, having offices at Two Tower Center Boulevard, 8th Floor,
East Brunswick, New Jersey 08816 ("Lender").

                              W I T N E S S E T H:
                              - - - - - - - - - -

         WHEREAS, Lender and Borrower are engaged in a commercial lending
relationship pursuant to a certain Loan and Security Agreement as of December
29, 1994, as amended by the First Amendment to Loan and Security Agreement dated
April 9, 1996, by the Second Amendment to Loan and Security Agreement dated as
of December 1, 1997, and by the Third Amendment to Loan and Security Agreement
dated as of September 23, 1998 (collectively referred to herein as the "Loan
Agreement"), pursuant to which Lender has advanced and may in the future advance
certain sums of money to Borrower and Borrower has agreed to repay same; and

         WHEREAS, Borrower has or is contemporaneously herewith entering into an
Asset Purchase Agreement (the "Lopez Acquisition Agreement") by and between
Borrower, as purchaser, and The Arnold Palmer Golf Company, a Tennessee
corporation, as seller, for the purchase of the operating division known as
NancyLopezGolf(TM) (the "Lopez Acquisition"); and

         WHEREAS, in connection with the Lopez Acquisition, Borrower has
requested that Lender increase the Revolving Loan Limit, make a term loan in the
amount of $900,000.00, and make certain other changes to the Loan Agreement; and

         WHEREAS, Lender, subject to the terms and conditions set forth in this
Amendment, is willing to increase the Revolving Loan Limit, make a term loan in
the amount of $900,000.00, and to make certain other changes in the terms and
conditions of the Loan Agreement;

         NOW, THEREFORE, in consideration of the premises and mutual promises
and covenants contained herein, the parties, each intending to be legally bound
hereby,. agree as follows:

                                    ARTICLE I

                                   DEFINITIONS
                                   -----------

         1.01 PREVIOUSLY DEFINED TERMS. All of the capitalized terms not
expressly defined in this Amendment shall have the meanings ascribed to such
terms in the Loan Agreement, as such terms may be amended in Section 1.02 of
this Amendment.

<PAGE>   2

         1.02 AMENDMENTS TO PREVIOUSLY DEFINED TERMS. The definitions of the
following terms are amended as follows:

                  (a) All references to "this Agreement" in the Loan Agreement
shall be deemed to mean the Loan Agreement as supplemented and amended by this
Amendment.

                  (b) All references to the Revolving Note in the Loan Agreement
shall be deemed to mean the Second Restated Note (as defined in Section 2.02
hereof).

                  (c) All references to "Relevant Documents" in the Loan
Agreement and this Amendment shall be deemed to include this Amendment and all
documents and instruments delivered to the Lender pursuant or incidental to this
Amendment or the Loan Agreement (i) by Borrower or any Related Entity, (ii) by
any pledgor or grantor of a lien, security interest or other right, or (iii) by
any other creditor of Borrower respecting the subordination of such creditor's
liens, security interests, and rights to payment to Lender's liens, security
interests and rights to payment.

         1.03 NEW TERMS. As used in this Amendment and in the Loan Agreement,
the following terms shall have the following meanings (references in this
Section 1.03 to "Section" shall be references to Sections of this Amendment):

                  "Capital Expenditures" shall mean all unfinanced expenditures
(including capitalized lease payments) for any fixed assets or improvements
which have a useful life of more than one (1) year, or for replacements thereof,
substitutions therefor or additions thereto.

                  "EBITDA" shall mean earnings (excluding Non-Recurring Income)
before interest expense, tax expense, depreciation and amortization, all
calculated in accordance with GAAP applied on a consistent basis on a Rolling
Twelve-Month Basis.

                  "Fixed Charge Coverage" shall mean the quotient of (a) the
difference between EBITDA and Capital Expenditures; divided by (b) scheduled
principal and interest payments due on all outstanding principal indebtedness
for money borrowed by Borrower, which quotient is calculated in accordance with
GAAP consistently applied from period to period on a Rolling Twelve-Month Basis
as of the end of each fiscal quarter.

                  "GAAP" shall mean generally accepted accounting principles in
effect from time to time in the United States of America.

                  "Non-Recurring Income" shall mean income received by Borrower
that is either infrequent or unusual, as defined under GAAP.

                  "Rolling Twelve-Month Basis" shall mean, for the purpose of
this Agreement, the calculation of any financial covenant or any component of a
financial covenant as of the end of each twelve-month period as of the date that
is the last day of such period.

                  "Second Restated Note" - as defined in Section 2.02.

                                      -2-
<PAGE>   3

                  "Term Loan" - as defined in Section 2D.

                  "Termination Date" - September 30, 2003.

                  "Undrawn Availability" -- at a particular date, shall mean an
amount equal to (a) the Revolving Loan Limit, MINUS (b) the sum of (i) the
outstanding principal amount of the Revolving Loans, PLUS (ii) all amounts due
and owing to Borrower's trade creditors that are outstanding sixty (60) days
beyond normal trade terms,' PLUS (iii) fees and expenses for which Borrower is
liable hereunder but which have not been paid or charged as a Revolving Loan."

                                   ARTICLE II

                        AMENDMENTS TO THE LOAN AGREEMENT
                   RELATING TO AMOUNTS AND TERMS OF THE LOANS
                   ------------------------------------------

         2.01 REVOLVING LOANS. Sections 2A. 1(a) and 2A. 1(b) of the Loan
Agreement are hereby deleted in their entirety and replaced with the following:

                           "(a) Lender may at its discretion, upon the request
                  of Borrower, make loans hereunder to Borrower (a "Revolving
                  Loan" or the "Revolving Loans") from time to time on a
                  revolving loan basis in an aggregate principal amount not in
                  excess at any time outstanding of the Borrower's Revolving
                  Loan Limit; provided that, if the outstanding amount of the
                  Revolving Loans should exceed the Revolving Loan Limit at any
                  time, such excess (i) shall nevertheless be secured by the
                  Collateral and be subject to the terms of this Agreement, and
                  (ii) shall be payable immediately upon demand by Lender. The
                  Revolving Loans shall be payable (x) on the Termination Date,
                  or (y) at such other time as is provided in Section 9, Section
                  11 or elsewhere in this Agreement, whichever of (x) or (y)
                  shall first occur (the first to occur being referred to as the
                  "Maturity Date"). The Revolving Loans may, but need not, be
                  evidenced by one or more promissory notes (referred to
                  collectively as the "Revolving Note" in the form of EXHIBIT A
                  annexed to this Agreement); except as may be otherwise
                  provided in a Revolving Note, the Revolving Loans shall be
                  payable in accordance with the terms of this Agreement.

                           (b) DEFINITION OF REVOLVING LOAN LIMIT. Borrower's
                  Revolving Loan Limit shall be the lesser of (1) $8,000,000.00
                  less 50% of the aggregate face amount of all outstanding but
                  undrawn Letters of Credit, or (ii) the amount determined by
                  the following formula:

                                    (A) 80% of the face amount of Qualified
                           Accounts (less reserves determined by Lender for
                           advertising allowances, warranty claims and other
                           contingencies), which percentage Lender may increase
                           or decrease from time to time as Lender in its sole
                           and absolute discretion may determine; PLUS

                                      -3-
<PAGE>   4

                                    (B) the lesser of (i) 60% of the Net Value
                           of Qualified Inventory or (ii) Three Million, Five
                           Hundred Thousand Dollars ($3,500,000.00) which
                           percentage or amount Lender may increase or decrease
                           from time to time as Lender in its sole and absolute
                           discretion may determine; MINUS

                                    (C) 50% of the aggregate face amount of all
                           outstanding but undrawn Letters of Credit; MINUS

                                    (D) An amount, as may be determined by
                           Lender, up to the aggregate amount of all taxes,
                           assessments, charges, indebtedness and liabilities,
                           if any, the validity of which Borrower is contesting
                           as permitted under Section 5.2 of this Agreement.

                                    Lender shall have the right to increase or
                           decrease the Revolving Loan Limit from time to time.
                           The Revolving Loan Limit shall be subject to the
                           limitation stated in Section 11.3 in the event of
                           notice of termination of this Agreement. If Lender,
                           without prior notice to Borrower, decreases the
                           Revolving Loan Limit to an amount below the then
                           outstanding balance of the Revolving Loans, Borrower
                           will have until the earlier of (A) 15 days after such
                           reduction or (B) the Maturity Date, to repay the
                           amount outstanding in excess of the new Revolving
                           Loan Limit and, until repaid, Lender will have no
                           obligation to accept checks or otherwise advance any
                           additional Revolving Loans.

                                    It is further agreed that, during the period
                           from January through April in any calendar year while
                           this Agreement is in effect, the maximum amount
                           available to be borrowed with respect to subsection
                           2A. 1 (b)(ii) set forth above shall be increased by
                           up to $250,000.00 in excess of the funds that would
                           normally be available to be borrowed under subsection
                           2A.1(b)(ii) ("Seasonal Advance"). All Seasonal
                           Advances shall be secured by the Collateral and as of
                           May 1 of each calendar year, any outstanding Seasonal
                           Advance shall be immediately due and payable at such
                           time."

         2.02 SECOND RESTATED NOTE. Simultaneously with the execution and
delivery of this Amendment, the Restated Secured Revolving Loan Note dated
December 1, 1997, shall be restated in the form attached hereto as EXHIBIT A
(the "Second Restated Note"), providing for, among other things, the amendments
provided for by this Amendment, and upon the execution and delivery of the
Second Restated Note, the Restated Secured Revolving Loan Note shall be marked
"cancelled because restated" and returned to Borrower.

         2.03 REVOLVING LOANS. Section 2A.1(c)(ii)(E) of the Loan Agreement is
hereby deleted in its entirety and replaced with the following:

                                      -4-
<PAGE>   5

                           "(E) The Account is not due from an Account Debtor
                  which has more than fifty (50%) percent, in dollar value, of
                  its Accounts due to Borrower which does not qualify under
                  Subsection (D);"

         2.04 UNUSED LINE FEE. The following new Section 2A.8 of the Loan
Agreement is hereby inserted immediately after Section 2A.7 of the Loan
Agreement:

                  "2A.8 UNUSED LINE FEE. In addition to interest and all other
fees and expenses described in this Agreement, Borrower agrees to pay Lender, on
the first Banking Day of each calendar month, an amount equal to (A) one-quarter
of one percent (0.25%) multiplied by the difference between (a) $8,000,000.00
and (b) the sum of (i) the average principal balance of the Revolving Loans
outstanding in the preceding calendar month, calculated in accordance with
Section 2A. 5(a) hereof, and (ii) the average aggregate face amount of Letters
of Credit issued but undrawn during the preceding calendar month, divided by (B)
twelve."

         2.05 TERM LOAN. The following new Section 2D. of the Loan Agreement,
TERM LOAN, is hereby inserted in the Loan Agreement immediately after Section
2C. of the Loan Agreement as follows:

                  "2D.     TERM LOAN:

                  (a) Borrower has requested, and Lender has agreed to provide,
                  a term loan in the sum of Nine Hundred Thousand Dollars
                  ($900,000.00) (the "Term Loan") to finance, in part, the
                  acquisition by Borrower of assets of The Arnold Palmer Golf
                  Company, a Tennessee corporation (the "Palmer Company"),
                  including its operating division known as NancyLopezGolf(TM),
                  pursuant to an Asset Purchase Agreement by and between
                  Borrower, as purchaser, and the Palmer Company, as seller
                  (assets acquired by Borrower pursuant to such Asset Purchase
                  Agreement are hereinafter collectively known as the "Nancy
                  Lopez Assets"), which Term Loan shall be evidenced by that
                  certain Secured Term Loan Note in the form attached hereto as
                  Exhibit B (the "Term Loan Note") to be executed
                  contemporaneously herewith and which shall be repaid according
                  to the terms hereof and thereof

                  (b) Borrower shall pay principal and interest to Lender on the
                  first Banking Day of each calendar month based on a three-year
                  principal amortization schedule as shall be more fully set
                  forth in the Term Loan Note. Once repaid, the principal of the
                  Term Loan may not be reborrowed.

                  (c) Each payment of principal and interest with respect to the
                  Term Loan, howsoever designated by Borrower, shall be applied,
                  first, on account of accrued and unpaid interest, second, on
                  account of the then currently scheduled payment of principal,
                  and, third, to the outstanding principal balance of the Term
                  Loan in the inverse order of the maturity thereof

                  (d) Anything herein to the contrary notwithstanding, the
                  outstanding principal balance of the Term Loan shall be due
                  and payable, in full, together with all accrued

                                      -5-
<PAGE>   6

                  and unpaid interest, fees and charges, if any, immediately
                  upon the earlier of (i) August 1, 2003, or (ii) the
                  termination, for any reason and whether voluntarily or
                  involuntarily, of the Revolving Loan or this Agreement.

                  (e) The Term Loan shall bear interest at a fluctuating
                  interest rate per annum equal at all times to one and one-half
                  percent (1.5%) above Lender's Prime Rate in effect from time
                  to time, each change in such fluctuating rate to take effect
                  simultaneously with the corresponding change in the Prime
                  Rate, without notice to Borrower."

         2.06 TERM LOAN NOTE. The Loan Agreement is further hereby amended by
attaching thereto as Exhibit B a Secured Term Loan Note in the form attached
hereto as Exhibit B (the "Term Loan Note").

         2.07 OBLIGATIONS. Subsection 3 .2(a)(i) of the Loan Agreement is
deleted in its entirety and replaced with the following:

                  "(i) all principal of and interest on the Loans and all other
sums payable by Borrower or any Related Entity under the terms of this Agreement
or any of the Relevant Documents,".

         2.08 COLLATERAL. Clauses (ix) and (x) of Section 3.2(b) of the Loan
Agreement, DEFINITIONS OF "OBLIGATIONS," "COLLATERAL" AND "EQUIPMENT", are
hereby deleted in their entirety and replaced with the following:

         "(ix) all right, title and interest of Borrower in and to all domain
names and all web sites, including, but not limited to, the web site at
www.nancylopezgolf.com, (x) all rights and remedies which Borrower might
exercise with respect to any of the foregoing but for the execution of this
Agreement; and (xi) all accessions and additions to, replacements and
substitutions for, and proceeds and products of, the items described in the
preceding clauses (i) through (x)."

         2.09 AFFIRMATIVE COVENANTS. Section 5.6 of the Loan Agreement, ACCESS
TO RECORDS AND PROPERTY, is hereby amended by inserting the following sentence
at the end thereof:

          "Borrower shall pay Lender Seven Hundred Fifty Dollars ($750.00) for
each day of each person who conducts any of the aforesaid field inspections
and/or examinations, which fees shall be paid by Lender charging the Revolving
Loan on the first Banking Day of the subsequent calendar month; except that, at
such times as an Event of Default shall exist, Lender may charge the Revolving
Loan immediately after each day of field inspections and/or examinations is
conducted."

         2.10 NEW AFFIRMATIVE Covenants. The following new Sections 5.16 and
5.17 of the Loan Agreement, FIXED CHARGE COVERAGE AND MOVING ASSETS TO NEW
JERSEY, are hereby inserted in the Loan Agreement immediately after Section 5.15
of the Loan Agreement as follows:

                                      -6-
<PAGE>   7

                  "5.16. FIXED CHARGE COVERAGE. Maintain the Fixed Charge
                  Coverage as not less than 1.0 to 1.0 as at the end of each
                  fiscal quarter.

                  5.17. MOVING ASSETS TO NEW JERSEY. Within ten (10) days of the
                  date of the Fourth Amendment to Loan and Security Agreement by
                  and between Borrower and Lender, move and transport the Nancy
                  Lopez Assets to New Jersey and place all fixtures that are
                  part of the Nancy Lopez Assets at Borrower's office at 18
                  Gloria Lane, Fairfield, New Jersey."

         2.11 NEGATIVE COVENANT REGARDING TANGIBLE NET WORTH. Section 6.19 of
the Loan Agreement is deleted in its entirety and replaced with the following:

                  6.19 TANGIBLE NET WORTH. Cause or permit Tangible Net Worth to
                  be less than (i) $1,500,000.00 at any time during the fiscal
                  year ending December 31, 2000, or (ii) $2,200,000.00 at any
                  time from and after January 1, 2001; the term Tangible Net
                  Worth meaning, as of the time of any determination thereof,
                  the difference between (a) the sum of (i) the par value (or
                  value stated on the books of Borrower) of the capital stock of
                  all classes of Borrower, plus (or minus in the case of a
                  deficit) (ii) the amount of Borrower's surplus, whether
                  capital or earned, less (b) the sum of treasury stock,
                  unamortized debt discount and expense, good will, trademarks,
                  trade names, patents, deferred charges (exclusive of deferred
                  taxes), leasehold improvements and other intangible assets,
                  and any write-up of the value of any assets, all determined in
                  accordance with generally accepted accounting principles,
                  applied on a consistent basis.

         2.12 NEGATIVE COVENANT REGARDING CAPITAL EXPENDITURES. Section 6.20 of
the Loan Agreement, CAPITAL EXPENDITURES, is deleted in its entirety and
replaced with the following:

          "6.20 CAPITAL EXPENDITURES. Enter into any agreement to purchase or
pay for, or become obligated to pay for, Capital Expenditures, long term leases,
capital leases or sale lease-backs, in an amount aggregating in excess of
$100,000.00 during any fiscal year except the fiscal year 2000, for which the
aforementioned limit shall be $150,000.00."

         2.13 JUDGMENTS. Section 8.12 of the Loan Agreement, JUDGMENTS, is
deleted in its entirety and replaced with the following:

          "8.12 JUDGMENTS. One or more judgments or orders for the payment of
money exceeding $100,000.00 in the aggregate are rendered against Borrower, and
any such judgment or order continues unsatisfied and not effectively stayed for
a period of thirty (30) consecutive days, unless the same shall be contested in
good faith and for which Borrower shall establish a reserve that is satisfactory
to Lender in its sole and absolute discretion;"

         2.14 TERMINATION. Section 11.2 of the Loan Agreement is deleted in its
entirety and replaced with the following:

                                      -7-
<PAGE>   8

                  "11.2    TERMINATION BY BORROWER.

                           Borrower may terminate this Agreement only upon:

                                    (i) giving ninety (90) days' prior written
                           notice to Lender of the intended termination day;

                                    (ii) paying to Lender in full the principal
                           and interest of the Loans, and all other Obligations
                           under this Agreement and the Relevant Documents; and

                                    (iii) paying to Lender, as liquidated
                           damages, if the termination date is on or before
                           September 29, 2003, a sum equal to one percent of the
                           average of the daily outstanding principal amounts of
                           the Loans during the twelve months preceding the date
                           on which Lender receives notice of Borrower's intent
                           to terminate this Agreement, calculated in accordance
                           with Section 2A.5(a) hereof"

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES
                         ------------------------------

          Borrower represents and warrants to Lender, knowing and intending that
Lender will rely thereon in entering into this Amendment, that the following
statements are true and accurate:

         3.01 AFFIRMATION OF REPRESENTATIONS. All of the representations and
warranties contained in Section 4 of the Loan Agreement, as. such Section may be
amended by this Amendment, are, immediately after the execution and delivery of
this Amendment, true and accurate as of the date hereof with the same force and
effect as though such representations and warranties had been more fully set
forth herein and made on the date hereof.

         3.02 DUE AUTHORIZATION: NO DEFAULT.

(a) The execution, delivery and performance by Borrower of this Amendment and
the Relevant Documents are within Borrower's powers, have been duly authorized
by all necessary action on the part of Borrower and (i) do not and will not (A)
require any consent or approval of the stockholders of Borrower, or (B)
constitute or result in a breach of, or default under (with due notice or
passage of time or both) any agreement, undertaking, or instrument to which
Borrower is a party or by which it may be affected, or (C) result in the
creation or imposition of any lien or restriction on any assets of the Borrower,
other than liens in favor of Lender, and (ii) are not and will not be prevented
or limited by, or violate, conflict with or breach Borrower's Certificate of
Incorporation or By-laws, or any applicable law or regulations, or any judgment,
order, award or decree of any judicial body or other governmental authority or
arbitrator applicable to Borrower or any of Borrower's assets.

                                      -8-
<PAGE>   9

                  (b) This Amendment and the Relevant Documents upon their
execution and delivery will have been duly executed and delivered by the
Borrower and each such document and the Loan Agreement, as amended by this
Amendment, will be legal, valid and binding obligations of Borrower, enforceable
against Borrower in accordance with their respective terms and provisions except
as may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws from time to time in effect that affect
creditors' rights generally.

         3.03 NO GOVERNMENTAL CONSENT NECESSARY. No authorization, approval or
other action by, and no notice to or filing with, any Person or governmental
authority or regulatory body is required for the due execution, delivery and
performance by Borrower of this Amendment or any of the Relevant Documents.

         3.04 LIST OF PROCEEDINGS. Except as described on SCHEDULE 1 to this
Amendment, there is no claim, action, suit, proceeding, inquiry, hearing or
investigation pending or (to the knowledge of Borrower) threatened against
Borrower or any of its assets, in any court of law or equity, or before or by
any federal, state or local governmental authority or before any arbitrator.
Except as described on SCHEDULE 1 to this Amendment, there are no unsatisfied
judgments or awards against Borrower or any of its assets.

         3.05 BROKERAGE COMMISSIONS. No Person is entitled to receive from
Borrower any brokerage commission, finder's fee or similar fee or payment in
connection with the consummation of the transactions contemplated by this
Amendment. No brokerage or other fee, commission or compensation is to be paid
by Lender by reason of any act, alleged act or omission of Borrower with respect
to the transactions contemplated hereby.

         3.06 NO DEFENSES TO PAYMENT. Borrower has no defenses to the repayment
of the Obligations and has no claims or rights of set-off against Lender in
connection with the Obligations.

                                   ARTICLE IV

                                  MISCELLANEOUS
                                  -------------

         4.01 ENTIRE AGREEMENT: AMENDMENTS: LENDER'S CONSENT. This Amendment
(including the Schedules hereto) and the Relevant Documents amend and supplement
the Loan Agreement and the Relevant Documents delivered prior to the date
hereof, and otherwise supersede, with respect to their subject matter, all prior
and contemporaneous agreements, understandings, inducements or conditions
between the respective parties, whether express or implied, oral or written. No
amendment or waiver of any provision of this Amendment or any of the Relevant
Documents, nor consent to any departure by Borrower therefrom, shall in any
event be effective unless the same shall be in writing and signed by Lender, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.

                                      -9-
<PAGE>   10

         4.02 GENDER. Throughout this Amendment, the masculine shall include the
feminine and vice versa and the singular shall include the plural and vice
versa, unless the context of this Amendment indicates otherwise.

         4.03 BINDING EFFECT: GOVERNING LAW. This Amendment shall be binding
upon and inure to the benefit of Borrower and Lender and their respective
successors and assigns, except that Borrower shall not have the right to assign
its rights hereunder or any interest herein without the prior written consent of
Lender. This Amendment, the Relevant Documents and the other documents delivered
in connection with this Amendment shall be governed by, and construed in
accordance with, the laws (both substantive and procedural, and without
reference to conflicts of laws) of the State of New Jersey.

         4.04 SEVERABILITY OF PROVISIONS. Any provision of this Amendment or any
of the Relevant Documents that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions of this Amendment, or such Relevant Documents or affecting the
validity or enforceability of such provision in any other jurisdiction.

         4.05 HEADINGS. The headings preceding the text of this Amendment are
inserted solely for convenience of reference and shall not constitute a part of
this Amendment nor affect its meaning, construction or effect.

         4.06 EXHIBITS AND SCHEDULES. All of the Exhibits and Schedules to this
Amendment are hereby incorporated by reference herein and made a part hereof.

         4.07 LOAN AGREEMENT: FULL FORCE AND EFFECT. Except, and solely to the
extent, that the same has been specifically modified, amended or supplemented
herein, all of the terms and conditions of the Loan Agreement shall remain in
full force and effect.

         4.08 NO WAIVER OF DEFAULT. Borrower hereby acknowledges and agrees that
the execution, delivery and performance of this Amendment and the Relevant
Documents by Lender is not intended, and shall not be deemed, to be a waiver or
release of any Event of Default as defined under the Loan Agreement, and that
Lender reserves all of its rights and remedies to which it may be entitled,
whether an Event of Default occurred at, before or after the date of this
Amendment.

         4.09 WAIVER OF TRIAL BY JURY. TO THE FULL EXTENT PERMITTED BY LAW,
BORROWER AND LENDER HEREBY WAIVE THEIR RIGHT TO TRIAL BY JURY IN ANY LITIGATION
RELATING TO THE LOAN AGREEMENT OR THE RELEVANT DOCUMENTS.

         4.10 CONFLICTS WITH LOAN AGREEMENT. If any term, condition or provision
of this Amendment is inconsistent or conflicts with any term, condition or
provision of the Loan Agreement, the term, condition or provision of this
Amendment shall govern to the extent of such inconsistency or conflict.

                                      -10-
<PAGE>   11

         4.11 ANNUAL REVIEW. The execution of this Amendment shall serve as the
annual review for Borrower's Revolving Loan.

         4.12 CONDITIONS PRECEDENT. The effectiveness and enforceability of this
Amendment are conditioned on the consummation of the following conditions
precedent:

         (i) The consummation of the Lopez Acquisition;

         (ii) The execution by Borrower, and delivery to Lender, of this
Amendment, the Second Restated Secured Revolving Note, the Term Loan Note, the
Patent Security Agreement, the Trademark Security Agreement, UCC-1 Financing
Statements, Assignment of Leases and such other documents as Lender shall deem
to be required, necessary or desirable in its reasonable judgment (collectively,
the "Amendment Documents");

         (iii) Receipt by Lender of results of searches for UCC financing
statements, judgments, tax liens and the like that are reasonably acceptable to
Lender;

         (iv) Receipt by Lender of perfected, first-priority security interests
in the Collateral;

         (v) Lender's satisfaction, in its sole and absolute discretion, with
the Lopez Acquisition Agreement;

         (vi) The payment of an amendment fee in the amount of Forty Thousand
Dollars ($40,000.00) by Borrower to Lender;

         (vii) Receipt by Lender of an opinion of Borrower's legal counsel that
the Lopez Acquisition is effective, that Borrower has duly executed and
delivered to Lender the Amendment Documents, and that such other issues as
Lender may require to be addressed are satisfactory;

         (viii) Receipt by Lender of duly-executed, original UCC-3 Termination
or Release Financing Statements for such UCC filings as may be required by
Lender in its sole and absolute determination;

         (ix) Confirmation by Lender that, after giving effect to the Lopez
Acquisition and after advancing the Revolving Loans that will be made in
connection therewith, the Undrawn Availability shall equal or exceed Five
Hundred Thousand Dollars ($500,000.00); and

         (x) Receipt by Lender of such other documents, reports and evidence as
Lender shall require in its sole and absolute discretion.

                            [Signature Page Follows]

                                      -11-
<PAGE>   12

         IN WITNESS WHEREOF, the undersigned have set their hands and seals or
caused these presents to be executed by duly authorized corporate officers and
sealed with their seal the day and year first above written.

S2 GOLF INC.

By:  /s/ Douglas A. Buffington
    ----------------------------------
Name:     DOUGLAS A. BUFFINGTON
Title:    President

PNC BANK, NATIONAL ASSOCIATION

By:  /s/ Kenneth S. Kaestner
    ----------------------------------
Name:    Kenneth S. Kaestner
Title:   Assistant Vice President

                                      -12-
<PAGE>   13

                                   EXHIBIT "A"
                                   -----------

                   SECOND RESTATED SECURED REVOLVING LOAN NOTE
                   -------------------------------------------

<PAGE>   14

                                 SECOND RESTATED
                           SECURED REVOLVING LOAN NOTE
                           ---------------------------

$8,000,000.00                                              As of July 31, 2000

          FOR VALUE RECEIVED, the undersigned, S2 GOLF INC., a corporation
organized under the laws of New Jersey, ("Borrower"), hereby unconditionally
promises to pay to the order of PNC BANK, NATIONAL ASSOCIATION, its successors
or assigns ("Lender") upon the Maturity Date, as defined in the Agreement (as
hereinafter defined), the principal sum of EIGHT MILLION DOLLARS ($8,000,000.00)
or, if different, the aggregate unpaid principal amount of all Revolving Loans
made by Lender to Borrower pursuant to the Loan and Security Agreement, dated
December 29, 1994, as amended by the First Amendment to Loan and Security
Agreement dated April 9, 1996, the Second Amendment to Loan and Security
Agreement dated as of December 1, 1997, and as amended by the Third Amendment to
Loan and Security Agreement, dated the date hereof, and any amendments,
extensions or renewals thereof (the "Agreement"), and to pay interest as
hereinafter provided on all principal of Revolving Loans remaining unpaid from
time to time, from the date of each such Loan until its payment in full. Both
principal and interest hereunder shall be payable in lawful money of the United
States of America, and in immediately available funds, at the office of Lender
located at Two Tower Center Boulevard, East Brunswick, New Jersey 08816, or at
such other place as the holder hereof may from time to time designate in
writing.

          All of the provisions of the Agreement are incorporated herein by
reference and, in the event of ambiguity or inconsistency between any provisions
of the Agreement and this Second Restated Secured Revolving Loan Note (this
"Note"), the provisions of the Agreement shall prevail. Any term in initial
capitals in this Note and not otherwise defined herein shall have the meaning
ascribed thereto in the Agreement.

          Interest on principal amounts hereunder shall be payable monthly in
arrears on the first Banking Day in each calendar month, commencing the date
hereof, and on the Maturity Date, at a fluctuating interest rate per annum equal
at all times to one-quarter percent (`/4%) above the Prime Rate of Lender in
effect from time to time; provided that any amount of principal (or, to the
extent permitted ~ payable hereunder which is not paid when due (whether after
demand, by acceleration or otherwise) and whether before or after judgment shall
bear interest payable on demand, from the day when said amount becomes due as
aforesaid until it is paid in full, at a fluctuating interest rate per annum
equal at all times to the Default Rate (as defined in the Agreement). Each
change in the fluctuating interest rate hereunder shall take effect
simultaneously with the corresponding change in the prime rate. The prune rate
applicable to this Note shall be the rate of interest announced from time to
tune by Lender as its "prime rate" or "prime lending rate". This rate of
interest is determined from time to time by Lender as a means of pricing some
loans to its customers and it is neither tied to any external rate of interest
or index nor does it necessarily reflect the lowest rate of interest actually
charged by Lender to any particular class or category of customers. Lender shall
present a monthly invoice to Borrower reflecting the interest payment due, but
any failure or delay by Lender in submitting invoices for interest payments
shall not discharge or relieve Borrower of the obligation to make such interest
payments.

<PAGE>   15

          The Borrower authorizes the Lender to debit any loan or deposit
account maintained by it with the Lender for accrued interest, as and when due.
Such authorization shall not affect the Borrower's obligation to pay when due
all amounts payable hereunder whether or not there are sufficient funds in any
such accounts. The foregoing shall be in addition to and not in limitation of
any rights of set-off which Lender may have.

          This Note has been issued under the Agreement and is secured thereby
and entitled to the benefits thereof. Reference is made to the Agreement for a
description of the property to be subject thereto from time to time. The
Agreement contains, among other terms, provisions for acceleration of the
indebtedness hereunder upon the happening of certain stated events.

         Notwithstanding any other provision of this Note or the Agreement, the
maturity hereof shall be accelerated as provided in the Agreement upon
termination of the Agreement by Borrower.

         If this Note is mutilated, lost, stolen or destroyed, then upon
surrender thereof (if mutilated) or receipt of evidence and indemnity (if lost,
stolen or destroyed) Borrower shall execute and deliver a new promissory note of
like tenor.

         This Note shall be subject to prepayment on such terms and conditions
and upon payment of such prepayment penalty or liquidated damages, if any, as is
provided in the Agreement.

         Borrower and any endorser, surety or guarantor of this Note hereby each
(a) waive presentment for payment, demand, notice of dishonor, protest, notice
or protest and all other demands and notices in connection with the delivery,
performance and enforcement of this Note, except as may be specifically
otherwise provided in the Agreement, (b) consent that, without notice to or
release of the liability of any such party, the obligations of any party may
from time to time, in whole or part, be renewed, extended, modified,
accelerated, compromised, settled or released by Lender, and (c) waive all
defenses based on suretyship or impairment of collateral.

         TO THE FULL EXTENT PERMITTED BY LAW BORROWER AND LENDER HEREBY WAIVE
THEIR RIGHT TO TRIAL BY JURY IN ANY LITIGATION RELATING TO THIS OBLIGATION AND
AS PROVIDED IN THE AGREEMENT.

         THE OBLIGATIONS OF BORROWER HEREUNDER ARE JOINT AND SEVERAL.

         This Note evidences indebtedness created under the Agreement which
indebtedness is continued in full force and effect on a continuous basis,
unimpaired and undischarged, under this Note. This Note is issued in
substitution for, but not as payment or satisfaction of, the Restated Secured
Revolving Loan Note issued under the Agreement

                            [Signature Page Follows]

                                      -2-
<PAGE>   16

         IN WITNESS WHEREOF, and intending to be legally bound hereby, Borrower
has executed this Note as of the date first above written.

WITNESS:                                        S2 GOLF INC.

By: /s/ Lynn C. Buffington                      By: /s/ Douglas A. Buffington
   -----------------------------                   -----------------------------
Print Name:  Lynn C. Buffington                 Name:  DOUGLAS A. BUFFINGTON
                                                Title: President

                                      -3-
<PAGE>   17

                                   EXHIBIT "B"
                                   -----------
                             SECURED TERM LOAN NOTE
                             ----------------------

<PAGE>   18

                             SECURED TERM LOAN NOTE
                             ----------------------

$900,000.00                                                       July 31, 2000

             FOR VALUE RECEIVED, the undersigned, S2 GOLF INC., a corporation
organized under the laws of New Jersey, ("Borrower"), hereby unconditionally
promises to pay to the order of PNC BANK, NATIONAL ASSOCIATION ("Lender") the
principal sum of NINE HUNDRED THOUSAND DOLLARS ($900,000.00) (the "Term Loan")
as hereinafter provided, and to pay interest as hereinafter provided on the
unpaid principal balance of this Secured Term Loan Note (this "Note") from time
to time, from the date hereof until the principal hereof is paid in full. Both
principal and interest hereunder shall be payable in lawful money of the United
States of America, and in immediately available funds, at the office of PNC
Bank, National Association, as Agent for the Lender, located at Two Tower Center
Boulevard, 8th Floor, East Brunswick, New Jersey 08816, or at such other place
as the holder hereof may from time to time designate in writing.

             The principal hereof shall be repaid as follows (i) on the first
Banking Day of each calendar month in the amount of Twenty-Five Thousand Dollars
($25,000.00) commencing on September 1, 2000, and continuing each month
thereafter to and including July 1, 2003; and (ii) a final installment on August
1, 2003, when the entire unpaid balance of principal of, and any accrued
interest upon, the Term Loan shall be due and payable in full without setoff,
deduction or counterclaim.

         Interest on principal amounts hereunder shall be payable monthly in
arrears on the first Banking Day in each calendar month, commencing on September
1, 2000, and on the final day when said principal amounts become due, at a
fluctuating interest rate per annum equal at all times to one and one-half
percent (1.5%) above the Prime Rate of Lender in effect from time to time;
provided that any amount of principal (or, to the extent permitted by law, of
interest) payable hereunder which is not paid when due (whether after demand, by
acceleration or otherwise) and whether before or after judgment shall bear
interest payable on demand, from the day when said amount becomes due as
aforesaid until it is paid in full, at a fluctuating interest rate per annum
equal at all times to the Default Rate (as defined in the Agreement (as
hereinafter defined)). Each change in the fluctuating interest rate hereunder
shall take effect simultaneously with the corresponding change in the Prime
Rate. The Prime Rate applicable to this Note shall be the rate of interest
announced from time to time by Lender as its "prime rate" or "prime lending
rate". This rate of interest is determined from time to time by Lender as a
means of pricing some loans to its customers and it is neither tied to any
external rate of interest or index nor does it necessarily reflect the lowest
rate of interest actually charged by Lender to any particular class or category
of customers. Lender shall present a monthly invoice to Borrower reflecting the
interest payment due, but any failure or delay by Lender in submitting invoices
for interest payments shall not discharge or relieve Borrower of the obligation
to make such interest payments.

This Note has been issued under, and is secured by, the Loan and Security
Agreement, dated December 29, 1994, as amended by the First Amendment to Loan
and Security Agreement dated April 9, 1996, the Second Amendment to Loan and
Security Agreement dated as of December 1,

<PAGE>   19

1997, the Third Amendment to Loan and Security Agreement dated as of September
23, 1998, and as amended by the Fourth Amendment to Loan and Security Agreement
dated the date hereof, and any amendments, extensions or renewals thereof (the
"Agreement") between Borrower and Lender, and is entitled to the benefits
thereof Reference is made to the Agreement for a description of the property to
be subject thereto from time to time. The Agreement contains, among other terms,
provisions for acceleration of the maturity hereof upon the happening of certain
stated events.

         All of the provisions of the Agreement are incorporated herein by
reference and, in the event of ambiguity or inconsistency between any provisions
of the Agreement and this Note, the provisions of the Agreement shall prevail.
Any term in initial capitals in this Note and not otherwise defined herein shall
have the meaning ascribed thereto in the Agreement.

             NOTWITHSTANDING THE FOREGOING, UPON THE TERMINATION OF THE
REVOLVING LOAN, WHETHER VOLUNTARILY OR INVOLUNTARILY, AND WHETHER UPON
ACCELERATION OR AT THE TERMINATION DATE OR OTHERWISE, THE ENTIRE UNPAID BALANCE
OF PRINCIPAL OF, AND ANY ACCRUED INTEREST UPON, THE TERM LOAN SHALL IMMEDIATELY
BE DUE AND PAYABLE IN FULL WITHOUT SETOFF, DEDUCTION OR COUNTERCLAIM.

             Borrower authorizes the Lender to debit any loan or deposit account
maintained by it with the Lender for accrued principal and interest, as and when
due. Such authorization shall not affect the Borrower's obligation to pay when
due all amounts payable hereunder whether or not there are sufficient funds in
any such accounts. The foregoing shall be in addition to and not in limitation
of any rights of set-off which the Lender may have.

             Notwithstanding any other provision of this Note or the Agreement,
the maturity hereof shall be accelerated as provided in the Agreement upon
termination of the Agreement by Borrower.

             If this Note is mutilated, lost, stolen or destroyed, then upon
surrender thereof (if mutilated) or receipt of evidence and indemnity (if lost,
stolen or destroyed) Borrower shall execute and deliver a new promissory note of
like tenor.

             This Note shall be subject to prepayment on such terms and
conditions and upon payment of such prepayment penalty or liquidated damages, if
any, as is provided in the Agreement.

          Borrower and any endorser, surety or guarantor of this Note hereby
each (a) waive presentment for payment, demand, notice of dishonor, protest,
notice or protest and all other demands and notices in connection with the
delivery, performance and enforcement of this Note, except as may be
specifically otherwise provided in the Agreement, (b) consent that, without
notice to or release of the liability of any such party, the obligations of any
party may from time to time, in whole or part, be renewed, extended, modified,
accelerated, compromised, settled or released by Lender, and (c) waive all
defenses based on suretyship or impairment of collateral.

                                      -2-
<PAGE>   20

             THE PARTIES HERETO HEREBY WAIVE THEIR RIGHT TO A TRIAL BY JURY IN
ANY LITIGATION RELATING TO THE OBLIGATION EVIDENCED HEREBY.

             THE OBLIGATIONS OF BORROWER HEREUNDER ARE JOINT AND SEVERAL.

                            [Signature Page Follows]

                                      -3-
<PAGE>   21

             IN WITNESS WHEREOF, and intending to be legally bound hereby,
Borrower has caused this Note to be executed as of the date first above written.

WITNESS:                                       S2 GOLF INC.

By:  /s/ Lynn C. Buffington                    By:  /s/ Douglas A. Buffington
     ---------------------------------              ----------------------------
Print Name:  Lynn C. Buffington                Name:  DOUGLAS A. BUFFINGTON
                                               Title:   President

                                      -4-
<PAGE>   22

                                   SCHEDULE I
                                   ----------

                                   Proceedings
                                   -----------

                  On July 21, 1999, a former Vice President of the Company filed
a complaint against the Company in the Essex County Superior Court of New Jersey
in connection with the termination of his employment. He claims damages of
approximately $50,000.00.

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