Document:

Exhibit 10.1

U.S. BANK® SBA PAYROLL PROTECTION LOAN

 U.S. Bank® SBA Payroll Protection Loan                         Borrower 

Note Date: 05/05/2020                                                           Electro-Sensors, Inc.

Tax ID Number: 41-0943459                                                 Minnetonka,MN 55343

Loan Amount: $645,180.00                                                   Type of Organization: C-Corp

         State of Registration: MN-Minnesota

1.     Loan ("Loan"). FOR VALUE RECEIVED, the undersigned borrower ("Borrower") promises to pay to the order of U.S. Bank National Association (the "Bank"), the principal sum of $645,180.00 (the "Loan Amount"), in accordance with the terms of this U.S. Bank® SBA Payroll Protection Loan (this "Agreement").

1.1  SBA Guaranty. In response to the Covid-19 pandemic the U.S. Congress has passed the CARES Act ("Act") which among other things, includes amending Section 7(a) of the Small Business Act (15 U.S.C. 636(a)) to provide for this short-term SBA lending program between February 15, 2020 to June 30, 2020 (the "Covered Period") for payroll protection of small businesses, nonprofit organizations, veterans organizations, or tribal business entities (the "Program"). The Loan evidenced by this Agreement is guaranteed by the U.S. Small Business Administration ("SBA"), information regarding which can be obtained from the SBA directly or at its website: www.sba.gov. Under this Program, if the proceeds of this Loan were used by the Borrower for eligible expenses as defined in Section 1102 of the Act to include payroll costs, continuation of heath care benefits, employee salaries, mortgage interest, rent, utilities, balances on SBA Economic Injury Disaster Loans ("EIDL") and interest on other outstanding debt incurred prior to February 15, 2020 ("Eligible Expenses"), then Borrower may apply for loan forgiveness of all Eligible Expenses excluding interest on outstanding non-mortgage debt, and existing EIDL balances not used for forgivable purposes ("Forgivable Expenses") from the SBA as outlined below. Upon Borrower certification of the amount of Loan proceeds used to pay Forgivable Expenses, such expenses will be forgiven as a principal payment on the Borrower's Loan. The remaining Loan balance, if any, will be re-amortized and paid by the Borrower as detailed further in this Agreement. It is a condition of making this Loan that the SBA accept the Loan. In no event shall the interest rate, fees or other charges under this Agreement exceed the maximum rate or amounts permitted for the SBA Loan Program or any other maximum rates of interest imposed by applicable law. This Loan is only available to Borrowers that have their principal place of business in the United States. To the extent feasible, Borrower agrees to purchase only American-made equipment and products with the proceeds of this Loan. The SBA Guaranty does not affect the liability of the Borrower under this Agreement. 

1.2  Forgiveness. Within 60 days from the Note Date, the Borrowers may request all or part of their Loan be forgiven by submitting an application for forgiveness and documentation verifying the number of fulltime equivalent employees on payroll and their pay rates during the eight weeks after this Note Date. Such documentation shall include payroll tax filings with the Internal Revenue Service, state income, state payroll, and state unemployment insurance filings, cancelled checks, payment receipts, transcripts of accounts, or other documents verifying payments for Forgivable Expenses ("Forgiveness Documentation"). Seventy-five percent of Eligible Expenses must be used for payroll related expenses and up to twenty-five percent may be used for other Eligible Expenses, to qualify for forgiveness. Borrower must also provide the Bank with a certification that the Forgiveness Documentation is true and correct, and the amount of requested forgiveness was used for Forgivable Expenses. After approval of the forgiveness amount and 6 month deferral, the Bank will provide the Borrower written notification of the remaining balance and re-amortization of the Loan, if any. Forgiveness cannot be provided without the Borrower’s submission to the Bank of all the documents required by this Section 1.2.

1.3  Interest. The unpaid principal balance will bear interest at an annual rate of 1.00%. 

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1.4  Payment Schedule. Principal and interest are payable in 18 installments of $36,051.07 each, beginning on 2020-12-05 and on the same date of each consecutive month thereafter (except that if a given month does not have such a date, the last day of such month), plus a final payment equal to all unpaid principal and accrued interest on 2022-05-05, the maturity date. Installment payment amounts will be re-amortized after the Deferral Period and partial loan forgiveness credit is applied, at such time an updated Payment Schedule will be provided to Borrower. There is no penalty for Borrowers who pay off their Loan early.

1.5  Automatic Payments. If this box is checked, then at all times that this Agreement is in effect, Borrower hereby authorizes the Bank to automatically deduct the amount of all payments required under this Agreement from:

 

Borrower's business deposit account number held with the Bank.

Borrower's business deposit account held at (Financial Institution) with Account Number and Routing Number.

This account is the "Payment Source Account." If there are insufficient funds in the Payment Source Account to pay the required payment, Borrower agrees to pay all fees on the Payment Source Account, which result from the automatic deductions, including any overdraft/NSF charges and any returned payment fee. If for any reason the Bank does not charge the Payment Source Account for payment, or if an automatic payment from the Payment Source Account is reversed, the payment is still due according to this Agreement. The number of withdrawals from the Payment Source Account may be limited, as set out in the customer agreement for that account. The Bank may cancel the automatic payment deduction from the Payment Source Account at any time in its discretion.

1.6  Calculation of Interest and Maximum Rate. Interest will be computed for the actual number of days principal is unpaid, using a daily factor obtained by dividing the stated interest rate by 360. In no event will the interest rate hereunder exceed that permitted by applicable law. If any interest or other charge is finally determined by a court of competent jurisdiction to exceed the maximum amount permitted by law, the interest or charge shall be reduced to the maximum permitted by law, and the Bank may credit any excess amount previously collected against the balance due or refund the amount to Borrower. 

1.7  Late Payment Fee. Subject to applicable law, if any payment is not made on or before its due date, the Bank may collect a delinquency charge of $15.00 or 5% of the delinquent amount, whichever is less; provided, however, that if any portion of the Loan evidenced by this Agreement has been guaranteed by the U.S. Small Business Administration, the late fee shall not exceed 5% of the delinquent amount. Collection of the late payment fee shall not be deemed to be a waiver of the Bank’s right to declare a default hereunder. 

1.8  Loan Purpose. Borrower represents that the proceeds of the Loan evidenced by this Agreement will be used for business purposes. Borrower specifically represents and warrants the following business purpose uses of the Loan proceeds; The funds will be used to retain workers and maintain payroll or make mortgage payments, lease payments, and utility payments. 

1.9  Deposits and Paying Procedure. The Bank is authorized and directed to credit any of Borrower's accounts with the Bank (or to the account Borrower designates in writing) for all Loans made hereunder, and the Bank is authorized to debit such account or any other account of Borrower with the Bank for the amount of any principal, interest or expenses due under this Agreement or other amount due hereunder on the due date with respect thereto. Payments due under this Agreement and other Loan Documents will be made in lawful money of the United States. All payments may be applied by the Bank to principal, interest and other amounts due under the Loan documents in any order, which the Bank elects. If, upon any request by Borrower to the Bank to issue a wire transfer, there is an inconsistency between the name of the recipient of the wire and its identification number as specified by Borrower, the Bank may, without liability, transmit the payment via wire based solely upon the identification number. 

1.10 Returned Payment Charge. For each payment made by Borrower to the Bank that is returned or rejected (such as a check that is returned unpaid, or an automated transfer that is rejected), Borrower shall pay the Bank a returned payment fee of $25.00.

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2.     Warranties/Covenants. Borrower continuously warrants and agrees as follows:

2.1  Borrower's Name, Location; Notice of Location Changes. Unless otherwise disclosed to the Bank in writing prior to the execution of this Agreement, Borrower's name and organizational structure has remained the same during the past five years. The Borrower will continue to use only the name set forth with Borrower’s signature unless Borrower gives the Bank prior written notice of any change. Furthermore, Borrower shall not do business under another name nor use any trade name without giving 10 days prior written notice to the Bank. The Borrower will not change its status or organizational structure without the prior written consent of the Bank. The address appearing at the top of this Agreement is Borrower's chief executive office (or residence if Borrower is a sole proprietor). 

2.2  Financial Information. The Borrower will (i) maintain accounting records in accordance with generally recognized and accepted principles of accounting consistently applied throughout the accounting periods involved; (ii) provide the Bank with such information concerning its business affairs and financial condition (including insurance coverage) as the Bank may reasonably request. 

2.3  Setoff. The Borrower grants to the Bank an express contractual right to set off against all depository account balances, cash and any other property of Borrower now or hereafter in the possession of the Bank and the right to refuse to allow withdrawals from any account (collectively "Setoff"). The Bank may, at any time upon the occurrence of a default hereunder (not withstanding any notice requirements or grace/cure periods under this or other agreements between Borrower and the Bank) Setoff against the Obligations whether or not the Obligations (including future installments) are then due or have been accelerated, all without any advance or contemporaneous notice or demand of any kind to Borrower, such notice and demand being expressly waived.

2.4  Borrower Compliance. The Borrower represents and warrants they will comply with all rules, laws, and obligations set forth under the SBA Paycheck Protection Program. 

2.5  Prohibition of Executive Officer Status. Borrower is not an Executive Officer of Bank as defined under 12 C.F.R. §215.2, if Borrower should become an Executive Officer of Bank, Borrower understands Bank reserves the right to require Borrower to repay on demand, any amount outstanding on the loan made under this Agreement.

3.     Default. Notwithstanding any cure periods described below, Borrower shall immediately notify the Bank in writing when Borrower obtains knowledge of the occurrence of any event of default specified below. Regardless of whether Borrower has given the required notice, the occurrence of one or more of the following shall constitute a default:

3.1  Nonpayment. The Borrower shall fail to pay (i) any interest due or any fees, charges, costs or expenses under this Agreement by five (5) days after the same becomes due; or (ii) any principal amount of this Agreement when due.

3.2  Nonperformance. The Borrower shall fail to perform or observe any agreement, term, provision, condition, or covenant (other than a default occurring under this paragraph 3) required to be performed or observed by Borrower hereunder or under any other agreement with or in favor of the Bank. 

3.3  Misrepresentation. Any financial information, statement, certificate, representation or warranty given to the Bank by Borrower (or any of their representatives) in connection with entering into this Loan and/or borrowing hereunder, or required  to be furnished under the terms hereof, shall prove untrue or misleading in any material respect (as determined by the Bank in the exercise of its judgment) as of the time when given. 

3.4  Default on Other Obligations. The Borrower is in default under the terms of any loan agreement, promissory note, lease, conditional sale contract or other agreements, document or instrument evidencing, governing or severing any indebtedness owing by Borrower to the Bank or any indebtedness in excess of $10,000 owing by Borrower to any third party, and the period of grace, if any, to cure said default shall have passed. 

3.5  Judgments. Any judgment shall be obtained against Borrower, which, together with all other outstanding unsatisfied judgments against Borrower, shall exceed the sum of $10,000 and shall remain unvacated, unbonded or unstayed for a period of thirty (30) days following the date of entry thereof.

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3.6  Inability to Perform; Bankruptcy/Insolvency. (i) The Borrower shall die or cease to exist, or (ii) any bankruptcy, insolvency or receivership proceedings, or an assignment for the benefit of creditors, shall be commenced under any federal or state law by or against Borrower; or (iii) Borrower shall become the subject of any out-of-court settlement with its creditors; or (v) Borrower is unable or admits in writing its inability to pay its debts as they mature. 

3.7  Adverse Change; Insecurity. (i) There is a material adverse change in the Borrower's business, properties, financial condition or affairs.

4.    Acceleration of Obligations. Upon the occurrence of any of the events identified in paragraph 3 and the passage of any applicable cure periods, the Bank may at any time thereafter, by written notice to Borrower, declare the unpaid principal balance of any Obligations, together with the interest accrued thereon and other amounts accrued hereunder, to be immediately due and payable; and the unpaid balance shall thereupon be due and payable, all without presentation, demand, protest or further notice of any kind, all of which are hereby waived, and notwithstanding anything to the contrary contained herein. Upon the occurrence of any event under paragraph 3.6, the unpaid principal balance of any Obligations, together with all interest accrued thereon and other amounts accrued hereunder, shall thereupon be immediately due and payable, all without presentation, demand, protest or notice of any kind, all of which are hereby waived, and notwithstanding anything to the contrary contained herein.

5.    Cumulative Remedies; Notice; Waiver. The Bank may enforce its rights and remedies under this Agreement upon default. In addition to the remedies for default set forth in this Agreement, the Bank upon default shall have all other rights and remedies for default provided by the Uniform Commercial Code, as well as any other applicable law and this Agreement. The rights and remedies specified herein are cumulative and are not exclusive of any rights or remedies, which the Bank would otherwise have. 

5.1  Waiver by the Bank. The Bank may permit Borrower to attempt to remedy any default without waiving its rights and remedies hereunder, and the Bank may waive any default without waiving any other subsequent or prior default by Borrower. Furthermore, delay on the part of the Bank in exercising any right, power or privilege hereunder or at law shall not operate as a waiver thereof: nor shall any single or partial exercise of such right, power or privilege preclude other exercise thereof or the exercise of any other right, power or privilege. No waiver or suspension shall be deemed to have occurred unless the Bank has expressly agreed in writing specifying such waiver or suspension.

6.    Waivers; Relationship to Other Documents. All Borrowers waive presentment, protest, demand, and notice of dishonor. The warranties, covenants and other obligations of Borrower (and the rights and remedies of the Bank) in this Agreement and all related documents are intended to be cumulative and to supplement each other.

7.    Expenses and Attorneys' Fees. The Borrower will reimburse the Bank and any participant in the Obligations ("Participant") for all attorneys' fees and all other costs, fees and out-of-pocket disbursements incurred by the Bank or any Participant in connection with the preparation, execution, delivery, administration, defense and enforcement of this Agreement, including fees and costs related to any waivers or amendments with respect thereto. The Borrower will also reimburse the Bank and any Participant for all costs of collection before and after judgment, and the costs of preservation and/or liquidation of any collateral.

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8.    Applicable Law; Interpretation; Joint Liability. This Agreement shall be governed by and interpreted in accordance with the internal laws of the state of Ohio, except to the extent superseded by Federal law. THE BORROWER HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITUATED IN THE COUNTY OR FEDERAL JURISDICTION OF THE BANK'S BRANCH WHERE THE LOAN WAS ORIGINATED, AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, WITH REGARD TO ANY ACTIONS, CLAIMS, DISPUTES OR PROCEEDINGS RELATING TO THIS NOTE, THE COLLATERAL, ANY OTHER LOAN DOCUMENT, OR ANY TRANSACTIONS ARISING THEREFROM, OR ENFORCEMENT AND/OR INTERPRETATION OF ANY OF THE FOREGOING. Invalidity of any provisions of this Agreement shall not affect any other provision. Nothing herein shall affect the Bank's rights to serve process in any manner permitted by law or limit the Bank’s right to bring proceedings against Borrower in the competent courts of any other jurisdiction or jurisdictions. This Agreement, and any amendment hereto (regardless of when executed) will be deemed effective and accepted only upon the Bank's receipt of the executed originals thereof. If there is more than one Borrower, the liability of Borrowers shall be joint and several, and the reference to "Borrower" shall be deemed to refer to all Borrowers. When SBA is the holder, this Note will be interpreted and enforced under Federal law, including SBA regulations. The Bank or SBA may use state or local procedures for filing papers, giving notice, and other purposes. By using such procedures, SBA does not waive any federal immunity from state or local control, penalty, tax, or liability. As to this Loan, Borrower may not claim or assert against SBA any local or state law to deny any obligation, defeat any claim of SBA, or preempt federal law.

9.    Participations/Successors. The Bank may, at its option, sell all or any interests in this Agreement to other financial institutions (the "Participant"), and in connection with such sales (and thereafter) disclose any financial information the Bank may have concerning Borrower to any such Participant or potential Participant. This provision does not obligate the Bank to supply any information or release Borrower from its obligation to provide such information, The rights, options, powers and remedies granted in this Agreement will extend to the Bank and to its successors and assigns, will be binding upon Borrower and its successors and assigns and will be applicable hereto and to all renewals and/or extensions hereof.

10.  Copies; Entire Agreement; Modification. The Borrower hereby acknowledges the receipt of a copy of this Agreement. IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING AND EXPRESSING CONSIDERATION ARE ENFORCEABLE. NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED. THE TERMS OF THIS AGREEMENT MAY ONLY BE CHANGED BY ANOTHER WRITTEN AGREEMENT. THIS NOTICE SHALL ALSO BE EFFECTIVE WITH RESPECT TO ALL OTHER CREDIT AGREEMENTS NOW IN EFFECT BETWEEN BORROWER AND THE BANK. A MODIFICATION OF ANY OTHER CREDIT AGREEMENTS NOW IN EFFECT BETWEEN BORROWER AND THE BANK, WHICH OCCURS AFTER RECEIPT BY BORROWER OF THIS NOTICE, MAY BE MADE ONLY BY ANOTHER WRITTEN INSTRUMENT. ORAL OR IMPLIED MODIFICATIONS TO SUCH CREDIT AGREEMENTS ARE NOT ENFORCEABLE AND SHOULD NOT BE RELIED UPON.

11.  Waiver of Jury Trial. TO THE EXTENT PERMITTED BY LAW, BORROWER AND BANK HEREBY JOINTLY AND SEVERALLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS THEREUNDER, OR ANY TRANSACTION ARISING THEREFROM OR CONNECTED THERETO. BORROWER AND BANK EACH REPRESENTS TO THE OTHER THAT TIIIS WAIVER IS KNOWlNGLY, WILLINGLY, AND VOLUNTARILY GIVEN.

12.  Attachments. All documents attached hereto, including any appendices, schedules, riders, and exhibits to this Loan Note are hereby expressly incorporated by reference.

 

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SIGNATURES

By signing this Agreement, each person ("Signer"), individually and on behalf of Borrower, requests the Loan from the Bank. Each Signer is authorized to sign on behalf of Borrower and will provide business resolutions to the Bank upon request. Each Signer has read and agrees to all applicable provisions. Each Signer authorizes the Bank to (1) obtain credit records and other credit and employment information about the Signers personally and the Borrower (now and in the future), including from state and federal tax authorities, for deciding whether to approve the requested Loan and for later periodic account review and collection purposes, and (2) furnish information about the Borrower to credit bureaus, other Signers, and other persons who claim to be authorized by the Borrower to receive such information. The Borrower and each Signer guaranty that all information in this Agreement is correct and agree to notify the Bank if any information changes. All Loan proceeds shall be used only for business purposes generally, and for the specific purposes described in this Agreement.

 

By:          /s/ David L. Klenk

Name:      David L. Klenk

Title:        President

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Exhibit 10.2

FIRST AMENDMENT TO FOURTH AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
This FIRST AMENDMENT TO FOURTH AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Amendment”), dated as of August 28, 2019, is entered into by and among the Lenders (as defined below) signatory hereto, BANK OF AMERICA, N.A., as administrative agent and as security trustee for the Lenders (in such capacity, “Agent”), CALLAWAY GOLF COMPANY, a Delaware corporation (“Parent”), CALLAWAY GOLF SALES COMPANY, a California corporation (“Callaway Sales”), CALLAWAY GOLF BALL OPERATIONS, INC., a Delaware corporation (“Callaway Operations”), OGIO INTERNATIONAL, INC., a Utah corporation, (“Ogio”), TRAVISMATHEW, LLC, a California limited liability company (“travisMathew”, and together with Parent, Callaway Sales, Callaway Operations, and Ogio, collectively, “Existing U.S. Borrowers”), JACK WOLFSKIN NORTH AMERICA, INC., a Delaware corporation (“New Borrower” and together with the Existing U.S. Borrowers, collectively, “U.S. Borrowers”), CALLAWAY GOLF CANADA LTD., a Canada corporation (“Canadian Borrower”), JACK WOLFSKIN AUSRÜSTUNG FÜR DRAUSSEN GMBH & CO. KGAA, a partnership limited by shares (Kommanditgesellschaft auf Aktien) under the laws of the Federal Republic of Germany (“German Borrower”), CALLAWAY GOLF EUROPE LTD., a company organized under the laws of England (registered number 02756321) (“U.K. Borrower” and together with the Existing U.S. Borrowers, German Borrower, and Canadian Borrower, collectively, “Existing Borrowers”; and the New Borrower together with the Existing Borrowers, each individually a “Borrower” and individually and collectively, jointly and severally, the “Borrowers”), and the other Obligors party hereto.
RECITALS
A.    Existing Borrowers, the other Obligors party thereto, Agent, and the financial institutions signatory thereto from time to time (each a “Lender” and collectively the “Lenders”) have previously entered into that certain Fourth Amended and Restated Loan and Security Agreement dated as of May 17, 2019 (as amended, supplemented, restated and modified from time to time, the “Loan Agreement”), pursuant to which the Lenders have made certain loans and financial accommodations available to Existing Borrowers.  Terms used herein without definition shall have the meanings ascribed to them in the Loan Agreement.
B.    Pursuant to that certain Fee Letter, dated as of May 17, 2019 (as amended, restated, supplemented or otherwise modified from time to the, the “Fee Letter”), by and among Existing U.S. Borrowers and Agent, each Existing U.S. Borrower has agreed to pay certain fees to Agent on the terms set forth therein;
C.    Obligors have requested that Agent and the Supermajority Lenders amend the Loan Agreement, which Agent and the Supermajority Lenders are willing to do pursuant to the terms and conditions set forth herein.
D.    Obligors are entering into this Amendment with the understanding and agreement that, except as specifically provided herein, none of Agent’s or any Lender’s rights or remedies as set forth in the Loan Agreement or any of the other Loan Documents are being waived or modified by the terms of this Amendment.

AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
1.Amendments to Loan Agreement.
(a)    New Borrower is hereby added as a co-borrower under the Loan Agreement with the same force and effect as if New Borrower had duly executed and delivered the Loan Agreement as a Borrower thereunder in addition to the Existing Borrowers and agrees to all of the terms and provisions of the Loan Agreement applicable to it as a “Borrower” and “U.S. Borrower” thereunder.  Without limiting the foregoing:
(i)    The definition of “Borrowers” in the preamble of the Loan Agreement is hereby amended to include New Borrower in addition to the Existing Borrowers.
(ii)    The definition of “U.S. Borrowers” in the Loan Agreement is hereby amended to include New Borrower in addition to the existing U.S. Borrowers.
(iii)    New Borrower and each of the existing U.S. Borrowers shall be jointly and severally liable for all Obligations (and, for the avoidance of doubt, New Borrower shall be deemed a U.S. Facility Guarantor, a Canadian Facility Guarantor, a German Facility Guarantor, and a U.K. Facility Guarantor).
(iv)    Schedules 8.6.1 and 9.1.13 to the Loan Agreement are hereby amended and restated in their entirely with the corresponding schedules attached hereto as Exhibit A.
(v)    New Borrower hereby represents and warrants to Agent and the Lenders that the representations and warranties applicable to Borrowers in the Loan Agreement (after giving effect to the inclusions of New Borrower and the information set forth in as Exhibit A hereto) are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that are already qualified or modified by materiality in the text thereof) on and as of the date hereof (except to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties were true and correct in all material respects as of such earlier date).
(vi)    New Borrower hereby agrees to perform all of the covenants and agreements applicable to Borrowers and U.S. Borrowers in the Loan Agreement.
(vii)    Agent and the Lenders shall have all of the rights, remedies, interests and powers as against New Borrower as provided to Agent and the Lenders in relation to Borrowers and U.S. Borrowers in the Loan Agreement.
(viii)    To secure the prompt payment and performance of all Obligations (including, without limitation, all Obligations of the Guarantors), New Borrower hereby grants to Agent, for the benefit of the Secured Parties, a continuing security interest in and Lien upon all Property of New Borrower, in which New Borrower has rights, or the power to transfer rights, including all of the following Property of New Borrower, whether now or in the future, and wherever located: 

(1)    all Accounts;
(2)    all Goods, including Inventory, Equipment and fixtures;
(3)    all Deposit Accounts (including all cash, cash equivalents, financial assets, negotiable instruments and other evidence of payment, and other funds on deposit therein or credited thereto);
(4)    all securities accounts (including any and all Investment Property held therein or credited thereto);
(5)    all General Intangibles, including Intellectual Property (including the right to sue and recover for any and all past, present or future infringements of, violations of, dilution of or other damages or injuries to any Intellectual Property);
(6)    all monies, whether or not in the possession or under the control of Agent, a Lender, or a bailee or Affiliate of Agent or a Lender, and any Cash Collateral;
(7)    all Supporting Obligations;
(8)    all Instruments, Documents and Chattel Paper;
(9)    all Investment Property
(10)    all Letters of Credit (as defined in the UCC) and Letter-of-Credit Rights;
(11)    all Commercial Tort Claims, including those shown on Schedule 9.1.24 to the Loan Agreement;
(12)    all accessions to, substitutions for, and all replacements, products, and cash and non-cash proceeds of the foregoing, including proceeds of and unearned premiums with respect to insurance policies, and claims against any Person for loss, damage or destruction of any of the Property described in Section 7.1.1(a) to the Loan Agreement;  and
(13)    all books and records (including customer lists, files, correspondence, tapes, computer programs, print-outs and computer records) pertaining to any of the Property described in Section 7.1.1(a) to the Loan Agreement.
(b)    Clause (b) of the definition of “Excluded Property” in Section 1.1 of the Loan Agreement is hereby amended and restated in its entirety as follows: 
“(b)    assets owned by any U.S. Domiciled Obligor on the date hereof or hereafter acquired and any proceeds thereof that are subject to a Lien permitted by Section 10.2.1(j) or Section 10.2.1(p) of the Credit Agreement to the extent and for so long as the contract or other agreement in which such Lien is granted (or the documentation providing for the Capital Lease, Off-Balance Sheet Liability or purchase money obligation subject to such Lien) validly prohibits the creation of any other Lien on such assets and proceeds;”
(c)    Section 12.2.1 of the Loan Agreement is hereby amended and restated in its entirety as follows:

“Lien Releases; Care of Collateral.  Secured Parties authorize Agent to release any Lien with respect to any Collateral (a) upon Full Payment of the Obligations; (b) that is the subject of an Asset Disposition which Borrowers certify in writing to Agent is a disposition permitted hereunder or a Lien which Borrowers certify is a Permitted Lien entitled to priority over Agent’s Liens (and Agent may rely conclusively on any such certificate without further inquiry); (c) that does not have, when aggregated with all other released Collateral under this clause (c) in any calendar year, a book value greater than $5,000,000; or (d) with the written consent of all Lenders.  Secured Parties authorize Agent to release or subordinate its Liens to any Lien permitted under Section 10.2.1(j) or Section 10.2.1(p).  Agent shall have no obligation to assure that any Collateral exists or is owned by a Borrower, or is cared for, protected, insured or encumbered, nor to assure that Agent’s Liens have been properly created, perfected or enforced, or are entitled to any particular priority, nor to exercise any duty of care with respect to any Collateral.”
2.    Effectiveness of this Amendment.  The following shall have occurred before this Amendment is effective:
(a)    Amendment.  Agent shall have received this Amendment, executed by Agent, each Obligor and the Supermajority Lenders in a sufficient number of counterparts for distribution to all parties.
(b)    Acknowledgement to the Intercreditor Agreement.  Agent shall have received the Acknowledgement to the Intercreditor Agreement, executed by New Borrower, and acknowledged by Agent and the Term Loan Collateral Agent, in a sufficient number of counterparts for distribution to all parties.
(c)    Lien Searches.  Agent shall have received UCC, title and Lien searches and other evidence reasonably satisfactory to Agent that its Liens are the only Liens upon New Borrower’s Collateral, other than Permitted Liens.
(d)    Liens.  Agent shall have received satisfactory evidence that Agent shall have a valid and perfected first priority (except as otherwise permitted hereunder) Lien and security interest in New Borrower’s Collateral (including acknowledgments of all filings, registrations or recordations necessary to perfect its Liens in New Borrower’s Collateral).
(e)    Fees.  All filing and recording fees and taxes shall have been duly paid or arrangements satisfactory to Agent shall have been made for the payment thereof.
(f)    Officer’s Certificate.  Agent shall have received certificates, in form and substance satisfactory to it, from a knowledgeable Senior Officer of New Borrower certifying that, after giving effect to the transactions hereunder, (i) New Borrower is Solvent; (ii) no Default or Event of Default exists; (iii) the representations and warranties set forth in Section 9 of the Loan Agreement are true and correct; and (iv) New Borrower has complied with all agreements and conditions to be satisfied by it under the Loan Documents.
(g)    Secretary Certificate.  Agent shall have received a certificate of a duly authorized officer of New Borrower, certifying (i) that attached copies of New Borrower’s Organic Documents are true and complete, and in full force and effect, without amendment except as shown; (ii) that an attached copy of resolutions authorizing execution and delivery of the Loan Documents is true and complete, and that such resolutions are in full force and effect, were duly adopted, have not been amended, modified or revoked, and constitute all resolutions adopted with respect to this credit facility; and (iii) to the title, name and signature of each Person authorized to sign the Loan Documents. Agent may conclusively rely on this certificate until it is otherwise notified by New Borrower in writing.

(h)    Legal Opinion.  Agent shall have received a written opinion of Gibson, Dunn & Crutcher LLP with respect to New Borrower, in form and substance satisfactory to Agent.
(i)    Charter Documents; Good Standing Certificates.  Agent shall have received copies of the charter documents of New Borrower, certified by the Secretary of State or other appropriate official of New Borrower’s jurisdiction of organization. Agent shall have received good standing certificates for New Borrower, issued by the Secretary of State or other appropriate official of New Borrower’s jurisdiction of organization and each jurisdiction where such New Borrower’s conduct of business or ownership of Property necessitates qualification.
(j)    Insurance.  Agent shall have received copies of policies or certificates of insurance for the insurance policies carried by New Borrower, all in compliance with the Loan Documents, together with endorsements naming Agent as lender loss payee (with respect to property policies only) or additional insured, as appropriate, each in form and substance satisfactory to Agent.
(k)    Diligence.  New Borrower shall have provided, in form and substance satisfactory to Agent, Issuing Banks and Lenders, all documentation and other information as Agent or any Lender deems appropriate in connection with applicable “know your customer” and anti‐money‐laundering rules and regulations, including the Patriot Act, Beneficial Ownership Regulation and the AML Legislation.  If New Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, it shall have provided a Beneficial Ownership Certification to Agent, Issuing Banks and Lenders.
(l)    Representations and Warranties.  The representations and warranties set forth herein must be true and correct.
(m)    No Default.  No event has occurred and is continuing that constitutes an Event of Default.
(n)    Other Required Documentation.  All other documents and legal matters in connection with the transactions contemplated by this Amendment shall have been delivered or executed or recorded and shall be in form and substance satisfactory to Agent.
3.    Joinder of New Borrower to the Fee Letter.  By its execution of this Agreement, New Borrower hereby (a) agrees that from and after the date of this Agreement, it shall be a “U.S. Borrower” party to the Fee Letter as if it were a signatory thereto and shall be bound by all of the provisions thereof, and (b) agrees that it shall comply with and be subject to all of the terms, conditions, covenants, agreements and obligations set forth in the Fee Letter applicable to U.S. Borrowers.  New Borrower hereby agrees that each reference to “U.S. Borrower” or “U.S. Borrowers” in the Fee Letter shall include New Borrower.  New Borrower acknowledges that it has received a copy of the Fee Letter and that it has read and understands the terms thereof.
4.    Representations and Warranties.  Each Obligor represents and warrants as follows:
(a)    Authority.  Each Obligor has the requisite corporate power and authority to execute and deliver this Amendment, and to perform its obligations hereunder and under the Loan Documents (as amended or modified hereby) to which it is a party.  The execution, delivery and performance by each Obligor of this Amendment have been duly approved by all necessary corporate action and no other corporate proceedings are necessary to consummate such transactions.
(b)    Enforceability.  This Amendment has been duly executed and delivered by each Obligor.  This Amendment and each Loan Document to which any Obligor is a party (as amended or modified 

hereby) is a legal, valid and binding obligation of such Obligor, enforceable against such Obligor in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability, and is in full force and effect.
(c)    Representations and Warranties.  The representations and warranties contained in each Loan Document to which any Obligor is a party (other than any such representations or warranties that, by their terms, are specifically made as of a date other than the date hereof) are correct on and as of the date hereof as though made on and as of the date hereof.
(d)    Due Execution.  The execution, delivery and performance of this Amendment are within the power of each Obligor, have been duly authorized by all necessary corporate action, have received all necessary governmental approval, if any, and do not contravene any law or any contractual restrictions binding on any Obligor.
(e)    No Default.  No event has occurred and is continuing that constitutes an Event of Default.
5.    Deposit Accounts.  Within 90 days of the date hereof (or such longer period as agreed to by Agent in its sole discretion), the New Borrower shall take all actions necessary to establish Agent’s control of all Deposit Accounts (including Dominion Accounts) and securities accounts maintained by the New Borrower; provided, however, that such control shall not be required for Excluded Deposit Accounts.
6.    Choice of Law.  The validity of this Amendment, its construction, interpretation and enforcement, the rights of the parties hereunder, shall be determined under, governed by, and construed in accordance with the internal laws of the State of New York, without giving effect to any conflict of law principles (but giving effect to Section 5-1401 of the New York General Obligation Law and Federal laws relating to national banks).  The consent to forum and judicial reference provisions set forth in Section 14.15 of the Loan Agreement are hereby incorporated in this Amendment by reference.
7.    Counterparts.  This Amendment may be executed in any number of counterparts and by different parties and separate counterparts, each of which when so executed and delivered, shall be deemed an original, and all of which, when taken together, shall constitute one and the same instrument.  Delivery of an executed counterpart of a signature page to this Amendment by telefacsimile or a substantially similar electronic transmission shall have the same force and effect as the delivery of an original executed counterpart of this Amendment.  Any party delivering an executed counterpart of this Amendment by telefacsimile or a substantially similar electronic transmission shall also deliver an original executed counterpart, but the failure to do so shall not affect the validity, enforceability or binding effect of such agreement.
8.    Reference to and Effect on the Loan Documents.
(a)    Upon and after the effectiveness of this Amendment, each reference in the Loan Agreement, the Fee Letter, or any other Loan Document to this “Agreement”, “hereunder”, “herein”, “hereof”, “thereunder”, “therein”, “thereof”, or words of like import referring to the Loan Agreement, the Fee Letter,  or any other Loan Document shall mean and refer to such agreement as supplemented by this Amendment.
(b)    Except as specifically amended above, the Loan Agreement, the Fee Letter and all other Loan Documents are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed and shall constitute the legal, valid, binding and enforceable obligations of Obligors to Agent and the Lenders.

(c)    The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of Agent or any Lender under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents.
(d)    To the extent that any terms and conditions in any of the Loan Documents shall contradict or be in conflict with any terms or conditions of the Loan Agreement, after giving effect to this Amendment, such terms and conditions are hereby deemed modified or amended accordingly to reflect the terms and conditions of the Loan Agreement as modified or amended hereby.
9.    Ratification.  Each Obligor hereby restates, ratifies and reaffirms each and every term and condition set forth in the Loan Agreement, as amended hereby, and the Loan Documents effective as of the date hereof.  Subject to and without limiting the foregoing, all security interests, pledges, assignments and other Liens and Guarantees previously granted by any Obligor pursuant to the Loan Documents are hereby reaffirmed, ratified, renewed and continued, and all such security interests, pledges, assignments and other Liens and Guarantees shall remain in full force and effect as security for the Obligations on and after the date hereof.
10.    Estoppel.  To induce Lenders to enter into this Amendment and to continue to make advances to Borrowers under the Loan Agreement, each Obligor hereby acknowledges and agrees that, as of the date hereof, there exists no right of offset, defense, counterclaim or objection in favor of any Obligor as against Agent or any Lender with respect to the Obligations.
11.    Integration.  This Amendment, together with the other Loan Documents, incorporates all negotiations of the parties hereto with respect to the subject matter hereof and is the final expression and agreement of the parties hereto with respect to the subject matter hereof.
12.    Severability.  In case any provision in this Amendment shall be invalid, illegal or unenforceable, such provision shall be severable from the remainder of this Amendment and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
[Remainder of Page Left Intentionally Blank]

IN WITNESS WHEREOF, the parties have entered into this Amendment as of the date first above written.

	
	
	OBLIGORS:

CALLAWAY GOLF COMPANY, 
a Delaware corporation
By: /s/Brian P. Lynch 
Name: Brian P. Lynch
Title: Executive Vice President and Chief Financial Officer

	Address for Borrower Agent:

Callaway Golf Company
2180 Rutherford Road
Carlsbad, CA 92008
Attention: Brian P. Lynch
Telephone: (760) 804-4056 
Email: Brian.Lynch@callawaygolf.com

With a copy to:

Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, NY 10166-0193
Attention: Aaron F. Adams
Facsimile: (212) 351-2494
Email: AFAdams@gibsondunn.com

	CALLAWAY GOLF SALES COMPANY, 
a California corporation
By: /s/Jennifer L. Thomas
Name: Jennifer L. Thomas
Title: Chief Financial Officer and Treasurer

	CALLAWAY GOLF BALL OPERATIONS, INC., 
a Delaware corporation
By: /s/Jennifer L. Thomas
Name: Jennifer L. Thomas
Title: Treasurer

	OGIO INTERNATIONAL, INC., 
a Utah corporation
By: /s/Patrick S. Burke 
Name: Patrick S. Burke
Title: Vice President and Treasurer

	
	
	TRAVISMATHEW, LLC, 
a California limited liability company
By: /s/Patrick S. Burke 
Name: Patrick S. Burke 
Title: Treasurer

	JACK WOLFSKIN NORTH AMERICA, INC., 
a Delaware corporation
By: /s/Brian P. Lynch 
Name: Brian P. Lynch
Title: President and Chief Executive Officer

	CALLAWAY GOLF INTERACTIVE, INC. 
a Texas corporation
By: /s/Jennifer L. Thomas 
Name: Jennifer L. Thomas
 Title: Chief Financial Officer

	CALLAWAY GOLF INTERNATIONAL SALES COMPANY, 
a California corporation
By: /s/Patrick S. Burke 
Name: Patrick S. Burke
Title: President

	CALLAWAY GOLF CANADA LTD.,
a Canada corporation
By: /s/Patrick S. Burke 
Name: Patrick S. Burke
Title: Director

	CALLAWAY GOLF EUROPE LTD.,
a company organized under the laws of England and Wales
By: /s/Patrick S. Burke 
Name: Patrick S. Burke
Title: Director 

By: /s/ Neil Howie  
Name: Neil Howie
Title: Director

	
	
	CALLAWAY GOLF EUROPEAN HOLDING COMPANY LIMITED,
a company limited by shares incorporated under the laws of England and Wales
By: /s/ Neil Howie 
Name: Neil Howie
Title: Director

By: /s/ Steven Gluyas 
Name: Steven Gluyas
Title: Director

	CALLAWAY GERMANY HOLDCO GMBH, 
a limited liability company (Gesellschaft mit beschränkter Haftung) under the laws of the Federal Republic of Germany
By: /s/Patrick S. Burke 
Name: Patrick S. Burke
Title: Managing Director

By: /s/ Melody Harris‐Jensbach
Name: Melody Harris‐Jensbach
Title: Managing Director

	
	
	JW STARGAZER HOLDING GMBH, 
a limited liability company (Gesellschaft mit beschränkter Haftung) under the laws of the Federal Republic of Germany
By: /s/ Melody Harris‐Jensbach
Name: Melody Harris‐Jensbach
Title: Managing Director

By: /s/ Ante Franicevic
Name: Ante Franicevic
Title: Managing Director

	
	
	SKYRAGER GMBH, 
a limited liability company (Gesellschaft mit beschränkter Haftung) under the laws of the Federal Republic of Germany
By: /s/ Melody Harris‐Jensbach
Name: Melody Harris‐Jensbach
Title: Managing Director

By: /s/ Ante Franicevic
Name: Ante Franicevic
Title: Managing Director

	JACK WOLFSKIN AUSRÜSTUNG FÜR DRAUSSEN GMBH & CO. KGAA, 
a partnership limited by shares (Kommanditgesellschaft auf Aktien) under the laws of the Federal Republic of Germany, acting through its managing partner, SKYRAGER GMBH
By: /s/ Melody Harris Jensbach_
Name: Melody Harris Jensbach
Title: Managing Director

By: /s/ Ante Franicevic
Name: Ante Franicevic
Title: Managing Director

	JACK WOLFSKIN RETAIL GMBH, 
a limited liability company (Gesellschaft mit beschränkter Haftung) under the laws of the Federal Republic of Germany
By: /s/ Melody Harris Jensbach
Name: Melody Harris Jensbach
Title: Managing Director

By: /s/ Ante Franicevic
Name: Ante Franicevic
Title: Managing Director

	
	
	AGENT AND LENDERS

	BANK OF AMERICA, N.A., as Agent and as a U.S. Lender
By: /s/ James Fallahay
Name: James Fallahay
Title: Senior Vice President

Address:

Bank of America, N.A.
520 Newport Center Drive, Ste. 900
Newport Beach, CA 92660
Attn: James Fallahay
E-Mail: james.fallahay@baml.com
Telecopy: (415) 228-5278

With a copy to:

Morgan, Lewis & Bockius LLP 
300 South Grand Avenue, 22nd Floor 
Los Angeles, California 90071-3132 
Attn:  Marshall Stoddard, Jr., Esq.
E-Mail: mstoddard@morganlewis.com 
Telecopy: (213) 612-2501

	BANK OF AMERICA, N.A.
(acting through its London branch), as a U.K. Lender and a German Lender
By: /s/ James Fallahay
Name: James Fallahay
Title: Senior Vice President

Address: On File with Agent

	
	
	BANK OF AMERICA, N.A.
(acting through its Canada branch), as a Canadian Lender
By: /s/ Sylwia Durkiewicz
Name: Sylwia Durkiewicz
Title: Vice President

Address: 

Bank of America, N.A.
181 Bay Street, Suite 400
Toronto, ON M5J 2V8
Attn: Sylwia Durkiewicz
E-Mail: sylwia.durkiewicz@baml.com
Telecopy: (312) 453-4041

	
	
	SUNTRUST BANK, 
as a U.S. Lender, a Canadian Lender, 
a U.K. Lender, and a German Lender

By: /s/ Dan Clubb
Name: Dan Clubb
Title: Director

Address: On File with Agent

	
	
	MUFG UNION BANK, N.A., 
as a U.S. Lender, a Canadian Lender, 
a U.K. Lender, and a German Lender

By: /s/ Peter Ehlinger
Name: Peter Ehlinger
Title: Vice President

Address: On File with Agent

	
	
	JPMORGAN CHASE BANK, N.A., 
as a U.S. Lender

By: /s/ Daniel Stampfel
Name: Daniel Stampfel
Title: Authorized Officer

Address:

2200 Ross Avenue, 9th FL
Dallas, TX 75201
Attn: Daniel Stampfel
E-Mail: daniel.j.stampfel@jpmorgan.com
Telecopy: 214-965-2594

	
	
	JPMORGAN CHASE BANK, N.A. 
LONDON BRANCH, 
as a U.K. Lender and a German Lender

By: /s/ Kennedy A. Capin
Name: Kennedy A. Capin
Title: Executive Director

Address:

JPMorgan Chase Bank, N.A., 
25 Bank Street, Canary Wharf
London, E14 5JP
Attn: Kennedy Capin
E-Mail: kennedy.a.capin@jpmorgan.com
Telecopy: +44 (0)20 3493 1365

	
	
	JPMORGAN CHASE BANK, N.A., 
TORONTO BRANCH, 
as a Canadian Lender

By: /s/ Auggie Marchetti
Name: Auggie Marchetti
Title: Authorized Officer

Address:

JPMorgan Chase Bank, N.A.,
66 Wellington Street West, 45th Floor
Toronto, ON M5K 1E7
Attn: Auggie Marchetti
E-Mail: agostino.a.marchetti@jpmorgan.com

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