EXHIBIT 99.4
AMENDMENT NO. 3 TO ASSET PURCHASE AGREEMENT
This Amendment No. 3 (the "Amendment"), dated as of September
15, 2003, has been entered into between the signatories hereto for the purpose
of amending the Asset Purchase Agreement, dated as of June 30, 2003, between The
Top-Flite Golf Company (f/k/a Spalding Sports Worldwide, Inc.) and Callaway Golf
Company, as amended (the "Asset Purchase Agreement"). Initially capitalized
terms used but not otherwise defined herein shall have the meanings ascribed to
them in the Asset Purchase Agreement.
1. Amendments.
1.1 Of the amount payable under Section 1.5 of the Asset Purchase
Agreement:
1.1.1 $120,150,000 of the Closing Cash Payment shall be
paid to the Seller on the date hereof.
1.1.2 The Indemnity Deposit shall be paid to the Escrow
Agent on the date hereof.
1.1.3 Subject to Section 1.2 of this Amendment below, the
Assets of the Foreign Subsidiaries (the "Foreign Subsidiary Assets") shall be
conveyed to the Purchaser, or its permitted assign, and the balance of the
Purchase Price shall be paid to the Seller on September 30, 2003 (as adjusted
pursuant to Sections 1.6(a) and 1.7(a)(iv) of the Asset Purchase Agreement).
1.2 If the Assets of any of the Foreign Subsidiaries are not able
to be conveyed to the Purchaser on September 30, 2003, such Assets shall be
conveyed to the Purchaser on the date such Assets are able to be conveyed and
the provisions of Section 4.18 shall govern the amounts to be paid on September
30, 2003 and thereafter.
1.3 The Purchaser acknowledges that, pursuant to Article V of the
Asset Purchase Agreement, all of the conditions to closing the sale of the
Foreign Subsidiary Assets have been satisfied as of the date hereof; provided,
however that each Foreign Subsidiary shall execute a document of transfer
substantially in the form of the Bill of Sale (together with such other
documents as may be reasonably necessary or appropriate) to sell, transfer and
convey the Foreign Subsidiary Assets to the Purchaser, or its permitted assign,
in substantially the same condition as such Assets exist on the date hereof,
free and clear of all Encumbrances, other than Permitted Encumbrances, or
evidence such transfer on the public records.
1.4 Notwithstanding Section 4.17 of the Asset Purchase Agreement,
the Purchaser acknowledges and agrees that the Foreign Subsidiaries may continue
to operate the Business under the Top-Flite Name in the ordinary course,
including, but not limited to, selling Inventory of the Foreign Subsidiaries,
until the date upon which the Foreign Subsidiaries convey the Assets to the
Purchaser, or its permitted assign.
1.5 The term "Closing Date" in the Purchase Agreement shall refer,
as the context requires, to (i) the date of the Closing for the purchase and
sale of the Assets of the Seller and (ii) the date of the Closing for the
purchase and sale of the Assets of the Foreign Subsidiaries.
1.6 Section 1.7(a)(iv) of the Asset Purchase Agreement shall be
amended and restated as follows:
"(iv) (A) Prior to the Closing Date, the Seller shall in good
faith prepare, or cause to be prepared, and deliver to the Purchaser a
certificate signed by the Chief Financial Officer (or such other Person serving
in a similar capacity) of the Seller setting forth a reconciliation between the
Deemed Closing Date A/R Value of the Assigned Receivables and the Deemed Closing
Date A/R Value of the Assigned Receivables less the amount of "A&P" (which
pertains solely to co-op advertising and other similar promotional items that
are generally dilutive to such Assigned Receivables and which shall be
determined on the same basis as "A&P" is determined in the Financial Statements)
as of the Closing Date that are deductible from the Assigned Receivables (the
"A/R Reconciliation"). If the A/R Reconciliation, as determined by the Seller
and the Purchaser, (A) is equal to or greater than $3,540,000 and equal to or
less than $3,740,000, there shall be no adjustment to the Purchase Price; (B) is
greater than $3,740,000, the Purchaser shall reduce the Purchase Price (and
accordingly the Closing Cash Payment) by an amount equal to such excess; and (C)
is less than $3,540,000, the Purchaser shall increase the Purchase Price (and
accordingly the Closing Cash Payment) by the amount of such deficiency. The A/R
Reconciliation is agreed to be $6,411,000 for purposes of the Closing on the
date hereof and is subject to adjustment as set forth below.
(B) As soon as practicable, but in no event later than
September 23, 2003, the Seller shall in good faith prepare or cause to be
prepared, and deliver to the Purchaser a certificate signed by the Chief
Financial Officer (or a Person acting in such capacity) of the Seller setting
forth its determination, based exclusively on the Books and Records and
consistent with past practice of the Seller, of the A/R Reconciliation
(expressed in United States dollars) as of the open of business on September 15,
2003, but without giving effect to the consummation of any of the transactions
contemplated hereby (the "Seller A/R Reconciliation"). During the course of the
Seller's determination of the A/R Reconciliation, the Purchaser shall make its
own conclusions regarding such A/R Reconciliation, based exclusively on the
Books and Records and consistent with past practice of the Seller . The
Purchaser shall in no event contact or engage in any discussions with any of the
customers of the Business with regard to A&P for the period prior to September
15, 2003. During the period between September 23, 2003 and September 30, 2003,
the Seller and the Purchaser shall cooperate and work closely to settle
discrepancies, if any, there may be between the Seller A/R Reconciliation and
the Purchaser's calculation of the A/R Reconciliation.
(C) In the event that the Seller and the Purchaser cannot
agree on the amount of the A/R Reconciliation, the parties agree to immediately
submit such discrepancies to the Independent Accountants, who shall determine,
exclusively on the
basis of the Books and Records and consistent with the past practice of the
Seller, the A/R Reconciliation value. The parties shall instruct the Independent
Accountants to deliver a written determination to the Purchaser and the Seller
no later than five (5) Business Days after submission of the discrepancies.
(D) On September 30, 2003 or as soon thereafter as possible if
the matter is submitted to the Independent Accountants, the Purchase Price shall
be adjusted as follows: (i) if the amount of the A/R Reconciliation, as finally
determined, is equal to $6,411,000 there shall be no adjustment to the Purchase
Price based on the amount of the A/R Reconciliation; (ii) if the amount of the
A/R Reconciliation, as finally determined, is greater than $6,411,000, the
Purchaser shall reduce the Purchase Price by the amount of such excess; and
(iii) if the amount of the A/R Reconciliation, as finally determined, is less
than $6,411,000, the Purchaser shall increase the Purchase Price by the amount
of such deficiency. The Purchaser acknowledges and agrees that the provisions of
this Section 1.7(a)(iv) are the sole provisions relating to the amount of A&P.".
1.7 The Deemed Closing Date A/R Value of the Accounts Receivable
transferred pursuant to this Agreement as of the date hereof is $31,650,000,
which shall be verified by the parties not later than September 30, 2003 based
upon the Books and Records and consistent with the past practices of the Seller.
The Purchase Price shall be adjusted as follows: (i) if the Deemed Closing Date
A/R Value of the Accounts Receivable, as finally determined, is equal to
$31,650,000 there shall be no adjustment to the Purchase Price based on the
amount of the Deemed Closing Date A/R Value; (ii) if the Deemed Closing Date A/R
Value of the Accounts Receivable, as finally determined, is greater than
$31,650,000, the Purchaser shall increase the Purchase Price by the amount of
such excess; and (iii) if the Deemed Closing Date A/R Value of the Accounts
Receivable, as finally determined, is less than $31,650,000, the Purchaser shall
decrease the Purchase Price by the amount of such deficiency. The Purchaser
acknowledges and agrees that the provisions of this Section 1.7 of the Amendment
are the sole provisions relating to the adjustment of the Purchase Price based
on the amount of the Deemed Closing Date A/R Value. The parties acknowledge that
this Section 1.7 of the Amendment does not modify or amend Section 1.7 of the
Agreement.
2. No Further Amendments. Except as amended herein, the Asset Purchase
Agreement will remain unchanged and in full force and effect.
3. Articles and Sections. The Article and Section headings in this
Amendment are for reference only and shall not affect the interpretation of this
Amendment.
4. Counterparts. This Amendment may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts together shall constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all, of the parties hereto.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties have executed this Amendment
as of the date first above written.
CALLAWAY GOLF COMPANY
By: /s/ Ronald A. Drapeau
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Name: Ronald A. Drapeau
Title: Chairman of the Board
President and Chief Executive
Officer
THE TOP-FLITE GOLF COMPANY
(f/k/a SPALDING SPORTS WORLDWIDE, INC.)
By: /s/ Peter A. Arturi
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Name: Peter A. Arturi
Title: Vice President, Secretary and
General Counsel
Amendment No.3 to Asset Purchase Agreement