EXHIBIT 10.2
RECEIVABLES TRANSFER AGREEMENT
Dated as of February 10, 1999,
by and among
ODYSSEY GOLF, INC.
and
CALLAWAY GOLF SALES COMPANY
TABLE OF CONTENTS
ARTICLE I.
DEFINITIONS AND INTERPRETATION................................................... - 1 -
Section 1.01 Definitions........................................................ - 1 -
Section 1.02 Rules of Construction.............................................. - 1 -
ARTICLE II.
TRANSFERS OF RECEIVABLES......................................................... - 1 -
Section 2.01 Agreement to Transfer.............................................. - 1 -
(a) Receivables Transfers.............................................. - 1 -
(b) Payment of Purchase Price.......................................... - 2 -
(c) Ownership of Odyssey Sold Receivables.............................. - 2 -
(d) Reconstruction of Odyssey General Trial Balance.................... - 2 -
Section 2.02 Grant of Security Interest......................................... - 2 -
ARTICLE III.
CONDITIONS PRECEDENT............................................................. - 2 -
Section 3.01 Conditions to Transfer............................................. - 2 -
(a) Transfer Agreement; Other Documents................................ - 2 -
(b) Governmental Approvals............................................. - 2 -
(c) Compliance with Laws............................................... - 3 -
(d) Purchase Agreement Conditions...................................... - 3 -
ARTICLE IV.
REPRESENTATIONS, WARRANTIES AND COVENANTS........................................ - 3 -
Section 4.01 Representations and Warranties of Odyssey.......................... - 3 -
(a) Corporate Existence; Compliance with Law........................... - 3 -
(b) Executive Offices; Collateral Locations; Corporate or Other Names;
FEIN.............................................................. - 4 -
(c) Corporate Power, Authorization, Enforceable Obligations............ - 4 -
(d) No Litigation...................................................... - 4 -
(e) Solvency........................................................... - 5 -
(f) Material Adverse Effect............................................ - 5 -
(g) Ownership of Receivables........................................... - 5 -
(h) Ventures, Subsidiaries and Affiliates; Outstanding Stock........... - 5 -
(i) Taxes.............................................................. - 6 -
(j) Intellectual Property.............................................. - 6 -
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(k) Full Disclosure.................................................... - 6 -
(l) Notices to Obligors................................................ - 6 -
(m) ERISA.............................................................. - 6 -
(n) Brokers............................................................ - 7 -
(o) Margin Regulations................................................. - 7 -
(p) Nonapplicability of Bulk Sales Laws................................ - 8 -
(q) Securities Act and Investment Company Act Exemptions............... - 8 -
(r) Government Regulation.............................................. - 8 -
(s) Books and Records; Minutes......................................... - 8 -
(t) Deposit and Disbursement Accounts.................................. - 8 -
(u) Representations and Warranties in Other Related Documents.......... - 8 -
(v) Receivables........................................................ - 9 -
Section 4.02 Affirmative Covenants of Odyssey................................... - 9 -
(a) Offices and Records................................................ - 9 -
(b) Access............................................................. - 10 -
(c) Compliance With Credit and Collection Policies..................... - 10 -
(d) Assignment......................................................... - 10 -
(e) Deposit of Collections............................................. - 11 -
(g) Adjustments to Odyssey Sale Price.................................. - 11 -
Section 4.03 Negative Covenants of Odyssey...................................... - 11 -
(a) Liens.............................................................. - 11 -
(b) Modifications of Receivables or Contracts.......................... - 12 -
(c) Sale Characterization.............................................. - 12 -
(d) Actions Affecting Rights........................................... - 12 -
(e) Change to Credit and Collection Policies........................... - 12 -
(f) Adverse Tax Consequences........................................... - 12 -
(g) No Proceedings..................................................... - 12 -
Section 4.04 Breach of Representations, Warranties or Covenants................. - 12 -
ARTICLE V.
INDEMNIFICATION AND WAIVER...................................................... - 13 -
Section 5.01 Indemnification................................................... - 13 -
Section 5.02 Intentionally Omitted............................................. - 15 -
ARTICLE VI.
Intentionally Omitted........................................................... - 15 -
ARTICLE VII.
COLLATERAL SECURITY............................................................. - 15 -
Section 7.01 Security Interest................................................. - 15 -
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Section 7.02 Other Collateral; Rights in Receivables........................... - 16 -
ARTICLE VIII.
MISCELLANEOUS................................................................... - 16 -
Section 8.01 Notices........................................................... - 16 -
Section 8.02 No Waiver; Remedies............................................... - 17 -
Section 8.03 Successors and Assigns............................................ - 17 -
Section 8.04 Termination; Survival of Obligations.............................. - 18 -
Section 8.05 Complete Agreement; Modification of Agreement..................... - 18 -
Section 8.06 Amendments and Waivers............................................ - 18 -
Section 8.07 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF
JURY TRIAL........................................................ - 18 -
Section 8.08 Counterparts...................................................... - 20 -
Section 8.09 Severability...................................................... - 20 -
Section 8.10 Section Titles.................................................... - 20 -
Section 8.11 No Setoff......................................................... - 20 -
Section 8.12 Confidentiality................................................... - 20 -
Section 8.13 Further Assurances................................................ - 21 -
Section 8.14 Fees and Expenses................................................. - 21 -
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INDEX OF APPENDICES
Exhibit 2.01(a) Form of Receivables Assignment
Schedule 4.01(b) Executive Offices; Collateral Locations; Corporate Names
Schedule 4.01(d) Litigation
Schedule 4.01(f) Material Adverse Effect
Schedule 4.01(h) Ventures, Subsidiaries and Affiliates; Outstanding Stock
Schedule 4.01(i) Tax Matters
Schedule 4.01(m) ERISA Plans
Schedule 4.01(t) Deposit and Disbursement Accounts
Schedule 4.03(b) Existing Liens
Annex X Definitions
Annex Y Schedule of Documents
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THIS RECEIVABLES TRANSFER AGREEMENT ("Agreement") is entered into as
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of February 10, 1999, by and among CALLAWAY GOLF SALES COMPANY, a California
corporation, as purchaser of Receivables ("CGS") and ODYSSEY GOLF, INC., a
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California corporation, as seller of Receivables ("Odyssey").
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RECITALS
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A. Odyssey intends to sell, and CGS intends to purchase, all such
trade receivables.
AGREEMENT
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NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I.
DEFINITIONS AND INTERPRETATION
Section 1.01 Definitions. Capitalized terms used and not otherwise
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defined herein shall have the meanings ascribed to them in Annex X.
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Section 1.02 Rules of Construction. For purposes of this Agreement,
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the rules of construction set forth in Annex X shall govern. All Appendices
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hereto, or expressly identified to this Agreement, are incorporated herein by
reference and, taken together with this Agreement, shall constitute but a single
agreement.
ARTICLE II.
TRANSFERS OF RECEIVABLES
Section 2.01 Agreement to Transfer.
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(a) Receivables Transfers. Subject to the terms and conditions
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hereof, Odyssey agrees to sell (without recourse except to the extent
specifically provided herein) to CGS on the Business Day following the Closing
Date (the "Transfer Date") all Receivables owned by it on the Transfer Date
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(each such Receivable individually, a "Odyssey Sold Receivable," and
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collectively, the "Odyssey Sold Receivables"), and CGS agrees to purchase the
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Odyssey Sold Receivables on the Transfer Date. The Transfer shall be evidenced
by a certificate of assignment substantially in the form of Exhibit 2.01(a) (a
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"Receivables Assignment"), and Odyssey and CGS shall execute and deliver the
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Receivables Assignment on or before the Closing Date.
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(b) Payment of Purchase Price. In consideration for the Sale of
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Odyssey Sold Receivables hereunder, CGS shall pay to Odyssey on the Transfer
Date an amount equal to (i) not less then ninety-five percent (95%) and not more
than ninety-eight percent (98%) of the fair market value of the Odyssey Sold
Receivables (the "Odyssey Sale Price"). The Odyssey Sale Price shall be
reflected upon a letter agreement executed by the parties hereto which shall
recite the fair market value of the Odyssey Sold Receivables, as reflected upon
the books and records, on and as of the Transfer Date, as well as the percentage
applied thereto to calculate the Odyssey Sale Price. All payments by CGS under
this Section 2.01(b) shall be effected by means of a wire transfer not later
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than 12:00 noon (New York time) on the Closing Date.
(c) Ownership of Odyssey Sold Receivables. On and after the Transfer
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Date and after giving effect to the Transfers to be made on such date, CGS shall
own the Odyssey Sold Receivables and Odyssey shall not take any action
inconsistent with such ownership nor shall Odyssey claim any ownership interest
in such Odyssey Sold Receivables.
(d) Reconstruction of Odyssey General Trial Balance. If at any time
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Odyssey fails to generate its Odyssey General Trial Balance, CGS shall have the
right to reconstruct such Odyssey General Trial Balance so that a determination
of the Odyssey Sold Receivables can be made pursuant to Section 2.01(a).
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Odyssey agrees to cooperate with such reconstruction, including by delivery to
CGS, upon CGS's request, of copies of all Contracts and Records.
Section 2.02 Grant of Security Interest. The parties hereto intend
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that the Transfer shall constitute a purchase and sale, and not a loan.
Notwithstanding anything to the contrary set forth in this Section 2.02, if a
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court of competent jurisdiction determines that any transaction provided for
herein constitutes a loan and not a purchase and sale, then the parties hereto
intend that this Agreement shall constitute a security agreement under
applicable law and that Odyssey shall be deemed to have granted, and Odyssey
does hereby grant, to CGS a first priority Lien in and to all of Odyssey's
right, title and interest in, to and under the Odyssey Sold Receivables.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.01 Conditions to Transfer. The Transfer hereunder shall
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be subject to satisfaction of each of the following conditions precedent (any
one or more of which may be waived in writing by each of CGS and the Operating
Agent):
(a) Transfer Agreement; Other Documents. This Agreement or
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counterparts hereof shall have been duly executed by, and delivered to, Odyssey
and CGS, and CGS shall have received such documents, instruments, agreements and
legal opinions as CGS shall request in
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connection with the transactions contemplated by this Agreement, including all
those identified in the Schedule of Documents, each in form and substance
satisfactory to CGS.
(b) Governmental Approvals. CGS shall have received (i) satisfactory
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evidence that Odyssey has obtained all required consents and approvals of all
Persons, including all requisite Governmental Authorities, to the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby and thereby or (ii) an Officer's Certificate
from Odyssey in form and substance satisfactory to CGS affirming that no such
consents or approvals are required.
(c) Compliance with Laws. Odyssey shall be in compliance in all
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material respects with all applicable foreign, federal, state and local laws and
regulations, including those specifically referenced in Section 4.02(f).
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(d) Purchase Agreement Conditions. Each of those conditions precedent
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set forth in Article III of the Purchase Agreement shall have been satisfied or
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waived in writing as provided therein.
(e) Representations and Warranties. The representations and
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warranties of Odyssey contained herein shall be true and correct as of the
Transfer Date, both before and after giving effect to such Transfer and to the
application of the Odyssey Sale Price therefor, except to the extent that any
such representation or warranty expressly relates to an earlier date and except
for changes therein expressly permitted by this Agreement.
The acceptance by Odyssey of the Odyssey Sale Price for the Odyssey Sold
Receivables on the Transfer Date shall be deemed to constitute, as of the
Transfer Date, a representation and warranty by Odyssey that the conditions in
this Section 3.01 have been satisfied. Upon any such acceptance, title to the
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Odyssey Sold Receivables sold on the Transfer Date shall be vested absolutely in
CGS, whether or not such conditions were in fact so satisfied.
ARTICLE IV.
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 4.01 Representations and Warranties of Odyssey. To induce
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CGS to purchase the Odyssey Sold Receivables, Odyssey makes the following
representations and warranties to CGS, each and all of which shall survive the
execution and delivery of this Agreement.
(a) Corporate Existence; Compliance with Law. Odyssey (i) is a
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corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation; (ii) is duly qualified to conduct business
and is in good standing in each other jurisdiction where its ownership or lease
of property or the conduct of its business requires such
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qualification, except where failure to be so qualified would not result in the
exposure of Odyssey to losses, damages or liabilities in excess of $100,000;
(iii) has the requisite corporate power and authority and the legal right to
own, pledge, mortgage or otherwise encumber and operate its properties, to lease
the property it operates under lease, and to conduct its business as now,
heretofore and proposed to be conducted; (iv) has all licenses, permits,
consents or approvals from or by, and has made all filings with, and has given
all notices to, all Governmental Authorities having jurisdiction, to the extent
required for such ownership, operation and conduct; (v) is in compliance with
its charter and bylaws; and (vi) subject to specific representations set forth
herein regarding ERISA, Environmental Laws, tax laws and other laws, is in
compliance with all applicable provisions of law, except where the failure to
comply, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.
(b) Executive Offices; Collateral Locations; Corporate or Other Names;
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FEIN. As of the Closing Date, the current location of Odyssey's chief executive
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office, principal place of business, other offices, and the locations of its
records concerning the Odyssey Sold Receivables are set forth in Schedule
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4.01(b) and none of such locations have changed within the past 12 months.
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During the prior five years, except as set forth in Schedule 4.01(b), Odyssey
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has not been known as or used any corporate, fictitious or trade name. In
addition, Schedule 4.01(b) lists the federal employer identification number of
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Odyssey.
(c) Corporate Power, Authorization, Enforceable Obligations. The
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execution, delivery and performance by Odyssey of this Agreement and the other
Related Documents to which it is a party and the creation of all Liens provided
for herein and therein and, solely with respect to clause (vii) below, the
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exercise by CGS, the Operating Agent or the Collateral Agent of any of its
rights and remedies under any Related Document to which it is a party: (i) are
within such Person's corporate power; (ii) have been duly authorized by all
necessary or proper corporate and shareholder action; (iii) do not contravene
any provision of such Person's charter or bylaws; (iv) do not violate any law or
regulation, or any order or decree of any court or Governmental Authority; (v)
do not conflict with or result in the breach or termination of, constitute a
default under or accelerate or permit the acceleration of any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which such Person is a party or by which such Person or any of its
property is bound; (vi) do not result in the creation or imposition of any
Adverse Claim upon any of the property of such Person; and (vii) do not require
the consent or approval of any Governmental Authority or any other Person,
except those referred to in Section 3.01(b), all of which will have been duly
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obtained, made or complied with prior to the Closing Date. On or prior to the
Closing Date, each of the Related Documents shall have been duly executed and
delivered by Odyssey that it is a party thereto and each such Related Document
shall then constitute a legal, valid and binding obligation of Odyssey,
enforceable against it in accordance with its terms.
(d) No Litigation. No Litigation is now pending or, to the knowledge
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of Odyssey, threatened against Odyssey that (i) challenges Odyssey's right or
power to enter into or perform any of its obligations under the Related
Documents to which it is a party, or the validity
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or enforceability of any Related Document or any action taken thereunder, (ii)
seeks to prevent the Transfer, Purchase or pledge of any Receivable or the
consummation of any of the transactions contemplated under this Agreement or the
other Related Documents or (iii) has a reasonable risk of being determined
adversely to Odyssey and that, if so determined, could have a Material Adverse
Effect. Except as set forth on Schedule 4.01(d), as of the Closing Date there
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is no Litigation pending or threatened that seeks damages in excess of
$1,000,000 or injunctive relief against, or alleges criminal misconduct by,
Odyssey.
(e) Solvency. Both before and after giving effect to (i) the
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transactions contemplated by this Agreement and the other Related Documents and
(ii) the payment and accrual of all transaction costs in connection with the
foregoing, Odyssey is and will be Solvent.
(f) Material Adverse Effect. Between December 31, 1997 and the
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Closing Date, (i) Odyssey has not incurred any obligations, contingent or non-
contingent liabilities, liabilities for Charges, long-term leases or unusual
forward or long-term commitments that, alone or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, other than, with
respect to a Material Adverse Effect as listed on Schedule 4.01(f), (ii) no
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contract, lease or other agreement or instrument has been entered into by
Odyssey or has become binding upon the such Person's assets and no law or
regulation applicable to Odyssey has been adopted that has had or could
reasonably be expected to have a Material Adverse Effect on such Person, and
(iii) Odyssey is not in default and to the knowledge of Odyssey after diligent
inquiry, no third party is in default under any material contract, lease or
other agreement or instrument to which Odyssey is a party that alone or in the
aggregate could reasonably be expected to have a Material Adverse Effect.
Between December 31, 1997 and the Closing Date no event has occurred that alone
or together with other events could reasonably be expected to have a Material
Adverse Effect, other than, with respect to a Material Adverse Effect as listed
on Schedule 4.01(f).
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(g) Ownership of Receivables. Odyssey owns each Receivable originated
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by it free and clear of any Adverse Claim (other than Permitted Encumbrances)
and, from and after the Transfer Date, CGS will acquire valid and properly
perfected title to and the sole record and beneficial ownership interest in each
Transferred Receivable purchased or otherwise acquired on such date, free and
clear of any Adverse Claim or restrictions on transferability. As of the
Closing Date, none of the properties and assets of Odyssey are subject to any
Liens other than Permitted Encumbrances and Credit Facility Liens, and there are
no facts, circumstances or conditions known to Odyssey that may result in any
Liens (including Liens arising under Environmental Laws) other than Permitted
Encumbrances and Credit Facility Liens. Odyssey has received all assignments,
bills of sale and other documents, and has duly effected all recordings, filings
and other actions necessary to establish, protect and perfect Odyssey's right,
title and interest in and to the Receivables originated by it and its other
properties and assets.
(h) Ventures, Subsidiaries and Affiliates; Outstanding Stock. Except
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as set forth in Schedule 4.01(h), Odyssey does not have any Subsidiaries, is not
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engaged in any joint venture or partnership with any other Person, nor is an
Affiliate of any other Person. All of the
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issued and outstanding Stock of Odyssey is owned by each of the Stockholders in
the amounts set forth on Schedule 4.01(h). Except as set forth on Schedule
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4.01(h), there are no outstanding rights to purchase, options, warrants or
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similar rights or agreements pursuant to which Odyssey may be required to issue,
sell, repurchase or redeem any of its Stock or other equity securities or any
Stock or other equity securities of its Subsidiaries.
(i) Taxes. All material tax returns, reports and statements,
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including information returns, required by any Governmental Authority to be
filed by Odyssey have been filed with the appropriate Governmental Authority.
All Charges have been paid prior to the date on which any fine, penalty,
interest or late charge may be added thereto for nonpayment thereof (or any such
fine, penalty, interest, late charge or loss has been paid), excluding Charges
or other amounts which are being contested in accordance with Section 4.02(l) or
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have been included as a liability on the most recent consolidated balance sheet
prepared by the Parent Guarantor which has been provided to CGS and delivered to
CGS, the Operating Agent and the Collateral Agent pursuant to the Purchase
Agreement. Proper and accurate amounts have been withheld by Odyssey from its
respective employees for all periods in full and complete compliance with all
applicable federal, state, local and foreign laws or have been included as a
liability on the most recent consolidated balance sheet prepared by the Parent
Guarantor which has been provided to CGS and delivered to CGS, the Operating
Agent and the Collateral Agent pursuant to the Purchase Agreement. All amounts
withheld have been timely paid to the respective Governmental Authorities.
Schedule 4.01(i) sets forth as of the Closing Date (i) those taxable years for
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which Odyssey's tax returns are currently being audited by the IRS or any other
applicable Governmental Authority and (ii) any assessments or threatened
assessments in connection with such audit or otherwise currently outstanding.
Except as described on Schedule 4.01(i), Odyssey has not executed or filed with
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the IRS or any other Governmental Authority any agreement or other document
extending, or having the effect of extending, the period for assessment or
collection of any Charges. Odyssey and its predecessors are not liable for any
Charges: (A) under any agreement (including any tax sharing agreements) or (B)
to the best of Odyssey's knowledge, as a transferee. As of the Closing Date,
Odyssey has not agreed or been requested to make any adjustment under IRC
Section 481(a), by reason of a change in accounting method or otherwise, that
would have a Material Adverse Effect.
(j) Intellectual Property. As of the Closing Date, Odyssey owns or
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has rights to use all intellectual property necessary to continue to conduct its
business as now or heretofore conducted by it or proposed to be conducted by it.
To the knowledge of Odyssey after diligent inquiry, such Person conducts its
business and affairs without infringement of or interference with any
intellectual property of any other Person.
(k) Full Disclosure. No information contained in this Agreement, any
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of the other Related Documents, or any written statement furnished by or on
behalf of Odyssey to CGS, the Operating Agent or the Collateral Agent pursuant
to the terms of this Agreement or any of the other Related Documents contains
any untrue statement of a material fact or omits or will omit to
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state a material fact necessary to make the statements contained herein or
therein not misleading in light of the circumstances under which they were made.
(l) Notices to Obligors. Odyssey has directed all Obligors of Odyssey
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Sold Receivables to remit all payments with respect to such Receivables to an
office of CGS.
(m) ERISA.
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(i) Schedule 4.01(m) lists all Title IV Plans, Multiemployer
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Plans, ESOPs and Retiree Welfare Plans. Copies of all such listed Plans,
together with a copy of the latest IRS/DOL 5500-series form for each such Plan,
have been delivered to CGS. Each Qualified Plan has been determined by the IRS
to qualify under Section 401 of the IRC, the trusts created thereunder have been
determined to be exempt from tax under the provisions of Section 501 of the IRC,
and nothing has occurred that would cause the loss of such qualification or tax-
exempt status. Each Plan is in compliance with the applicable provisions of
ERISA and the IRC, including the timely filing of all reports required under the
IRC or ERISA. Neither Odyssey nor an ERISA Affiliate has failed to make any
contribution or pay any amount due as required by either Section 412 of the IRC
or Section 302 of ERISA or the terms of any such Plan. Neither Odyssey nor any
ERISA Affiliate has engaged in a "prohibited transaction," as defined in Section
4975 of the IRC, in connection with any Plan that would subject Odyssey to a
material tax on prohibited transactions imposed by Section 4975 of the IRC.
(ii) Except as set forth in Schedule 4.01(m): (A) no Title IV
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Plan has any Unfunded Pension Liability; (B) no ERISA Event or event described
in Section 4062(e) of ERISA with respect to any Title IV Plan has occurred or is
reasonably expected to occur; (C) there are no pending or, to the knowledge of
Odyssey, threatened claims (other than claims for benefits in the normal
course), sanctions, actions or lawsuits, asserted or instituted against any Plan
or any Person as fiduciary or sponsor of any Plan; (D) neither Odyssey nor an
ERISA Affiliate has incurred or reasonably expects to incur any liability as a
result of a complete or partial withdrawal from a Multiemployer Plan; (E) within
the last five years no Title IV Plan with Unfunded Pension Liabilities has been
transferred outside of the "controlled group" (within the meaning of Section
4001(a)(14) of ERISA) of Odyssey or ERISA Affiliate; (F) no liability under any
Title IV Plan has been satisfied with the purchase of a contract from an
insurance company that is not rated AAA by S&P or an equivalent rating by
another nationally recognized rating agency.
(n) Brokers. No broker or finder acting on behalf of Odyssey was
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employed or utilized in connection with this Agreement or the other Related
Documents or the transactions contemplated hereby or thereby and Odyssey does
not have any obligation to any Person in respect of any finder's or brokerage
fees in connection therewith.
(o) Margin Regulations. Neither Odyssey nor any of its respective
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Subsidiaries is engaged, or will engage, principally or as one of its important
activities, in the business of
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extending credit for the purpose of "purchasing" or "carrying" any "margin
security" as such terms are defined in Regulation U of the Federal Reserve Board
as now and from time to time hereafter in effect (such securities being referred
to herein as "Margin Stock"). Odyssey does not own any Margin Stock and no
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portion of the Odyssey Sale Price will be used, directly or indirectly, for the
purpose of purchasing or carrying any Margin Stock, for the purpose of reducing
or retiring any Debt that was originally incurred to purchase or carry any
Margin Stock or for any other purpose that might cause any portion of such
proceeds to be considered a "purpose credit" within the meaning of Regulations
T, U or X of the Federal Reserve Board. The extensions of credit contemplated by
the Credit Facility as in effect on the date hereof do not violate, and neither
Odyssey nor any of its Subsidiaries will take or permit to be taken any action
that might cause any Related Document or the Credit Facility to violate any
regulation of the Federal Reserve Board.
(p) Nonapplicability of Bulk Sales Laws. No transaction contemplated
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by this Agreement or any of the other Related Documents requires compliance with
any bulk sales act or similar law.
(q) Securities Act and Investment Company Act Exemptions. The
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purchase of Odyssey Sold Receivables under this Agreement will constitute (i) a
"current transaction" within the meaning of Section 3(a)(3) of the Securities
Act and (ii) a purchase or other acquisition of notes, drafts, acceptances, open
accounts receivable or other obligations representing part or all of the sales
price of merchandise, insurance or services within the meaning of Section
3(c)(5) of the Investment Company Act.
(r) Government Regulation. Odyssey is not an "investment company" or
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an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act.
Odyssey is not subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, or any other federal or state statute that
restricts or limits its ability to incur Debt or to perform its obligations
hereunder. The purchase or acquisition of the Odyssey Sold Receivables by CGS
hereunder, the application of the Odyssey Sale Price therefor and the
consummation of the transactions contemplated by this Agreement and the other
Related Documents will not violate any provision of any such statute or any
rule, regulation or order issued by the Securities and Exchange Commission.
(s) Books and Records; Minutes. The bylaws or the certificate or
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articles of incorporation of Odyssey require it to maintain (i) books and
records of account and (ii) minutes of the meetings and other proceedings of its
Stockholders and board of directors.
(t) Deposit and Disbursement Accounts. Schedule 4.01(t) lists all
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banks and other financial institutions at which Odyssey maintains deposit or
other bank accounts as of the Closing Date, including the Lockbox Account or any
Blocked Accounts, and such schedule correctly identifies the name, address and
telephone number of each depository, the name in which
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the account is held, a description of the purpose of the account, and the
complete account number therefor.
(u) Representations and Warranties in Other Related Documents. Each
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of the representations and warranties of Odyssey contained in the Related
Documents (other than this Agreement) is true and correct in all material
respects and Odyssey hereby makes each such representation and warranty to, and
for the benefit of, CGS, GFC, the Operating Agent and the Collateral Agent as if
the same were set forth in full herein.
(v) Receivables. With respect to each Odyssey Sold Receivable
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designated as an Eligible Receivable in any Investment Base Certificate
delivered on or after the Transfer Date of such Odyssey Sold Receivable:
(i) such Receivable satisfies the criteria for an Eligible
Receivable;
(ii) prior to its Transfer to CGS such Receivable was owned by
Odyssey free and clear of any Adverse Claim (other than Permitted
Encumbrances), and Odyssey had the full right, power and authority to sell,
contribute, assign, transfer and pledge its interest therein as
contemplated under this Agreement and the other Related Documents and, upon
such Transfer, CGS will acquire valid and properly perfected title to and
the sole record and beneficial ownership interest in such Receivable, free
and clear of any Adverse Claim and, following such Transfer, such
Receivable will not be subject to any Adverse Claim as a result of any
action or inaction on the part of Odyssey;
(iii) the Transfer of each such Receivable pursuant to this
Agreement and the Receivables Assignment executed by Odyssey constitutes,
as applicable, a valid sale, contribution, transfer, assignment, setover
and conveyance to CGS of all right, title and interest of Odyssey in and to
such Receivable; and
(iv) Odyssey has no knowledge of any fact (including any
defaults by the Obligor thereunder on any other Receivable) that would
cause it or should have caused it to expect that any payments on such
Receivable will not be paid in full when due or to expect any other
Material Adverse Effect.
The representations and warranties described in this Section 4.01 shall survive
------------
the Transfer of the Odyssey Sold Receivables to CGS, any subsequent assignment
of the Odyssey Sold Receivables by CGS, and the termination of this Agreement
and the other Related Documents and shall continue until the indefeasible
payment in full of all Odyssey Sold Receivables.
Section 4.02 Affirmative Covenants of Odyssey. Odyssey covenants
--------------------------------
and agrees that, unless otherwise consented to by CGS and the Operating Agent,
from and after the Closing Date and until the Odyssey Collection Date:
-9-
(a) Offices and Records. Odyssey shall maintain its principal place
-------------------
of business and chief executive office and the office at which it keeps its
Records at the respective locations specified in Schedule 4.01(b) or, upon 30
----------------
days' prior written notice to CGS, at such other location in a jurisdiction
where all action requested by CGS, GFC, the Purchaser, the Operating Agent or
the Collateral Agent pursuant to Section 8.13 shall have been taken with respect
------------
to the Odyssey Sold Receivables. Odyssey shall also maintain each location
where Odyssey Collateral is located and each office at which it stores its
Records only at the respective locations specified in Schedule 4.01(b) or at
----------------
such other substituted or additional locations with respect to which Odyssey
shall, prior to establishing such location, (x) have notified CGS, GFC, the
Purchaser, the Operating Agent and the Collateral Agent thereof and (y) have
taken all actions necessary or otherwise requested by CGS, GFC, the Purchaser,
the Operating Agent or the Collateral Agent pursuant to Section 8.13 with
------------
respect to the Odyssey Sold Receivables and the Odyssey Collateral. Odyssey
shall at its own cost and expense, for not less than three years from the date
on which each Odyssey Sold Receivable was originated, or for such longer period
as may be required by law, maintain adequate Records with respect to such
Odyssey Sold Receivable, including records of all payments received, credits
granted and merchandise returned with respect thereto.
(b) Access. The CGS Originator shall, at its own expense and during
------
normal business hours, from time to time upon one Business Day's prior notice
and as frequently as CGS, the Servicer, the Operating Agent or the Collateral
Agent determines to be appropriate: (i) provide CGS, the Operating Agent or the
Collateral Agent and any of their respective officers, employees and agents
access to its properties, facilities, advisors and employees (including
officers) of Odyssey and to the Odyssey Collateral, (ii) permit CGS, the
Operating Agent or the Collateral Agent and any of their respective officers,
employees and agents, to inspect, audit and make extracts from Odyssey's books
and records, including all Records maintained by Odyssey, (iii) permit CGS, the
Operating Agent or the Collateral Agent and their respective officers, employees
and agents, to inspect, review and evaluate the Odyssey Sold Receivables and
other Odyssey Collateral, and (iv) permit CGS, the Operating Agent or the
Collateral Agent and their respective officers, employees and agents to discuss
matters relating to the Odyssey Sold Receivables or Odyssey's performance under
this Agreement or the affairs, finances and accounts of Odyssey with any of its
officers, directors, employees, representatives or agents (in each case, with
those Persons having knowledge of such matters) and with its independent
certified public accountants. If an Incipient Termination Event or a
Termination Event shall have occurred and be continuing, or the Operating Agent,
in good faith, believes that an Incipient Termination Event or a Termination
Event is imminent or deems the Purchaser's rights or interests in the Odyssey
Sold Receivables or the Odyssey Collateral insecure, Odyssey shall, at its own
expense, provide such access at all times and without advance notice and provide
CGS, the Operating Agent or the Collateral Agent with access to its suppliers
and customers. Odyssey shall make available to CGS, the Operating Agent or the
Collateral Agent and their respective counsel, as quickly as is possible under
the circumstances, originals or copies of all books and records, including
Records maintained by Odyssey, that CGS, the Operating Agent or the Collateral
Agent may request. Odyssey shall deliver any document or instrument necessary
for CGS, the Operating Agent or the Collateral Agent, as they may from time to
time request, to obtain records from any service
-10-
bureau or other Person that maintains records for Odyssey, and shall maintain
duplicate records or supporting documentation on media, including computer tapes
and discs owned by Odyssey.
(c) Compliance With Credit and Collection Policies. Odyssey shall
----------------------------------------------
comply in all material respects with the Credit and Collection Policies
applicable to each Odyssey Sold Receivable and the Contracts therefor, and with
the terms of such Receivables and Contracts.
(d) Assignment. Odyssey agrees that, to the extent permitted under
----------
the Purchase Agreement, CGS may assign all of its right, title and interest in,
to and under the Odyssey Sold Receivables and this Agreement, including its
right to exercise the remedies set forth in Section 4.04. Odyssey agrees that,
------------
upon any such assignment, the assignee thereof may enforce directly, without
joinder of CGS, all of the obligations of Odyssey hereunder, including any
obligations of Odyssey set forth in Sections 4.02(d), 4.04, 5.01 and 8.14.
---------------- ---- ---- ----
(e) Deposit of Collections. Odyssey shall deposit and cause their
----------------------
respective Subsidiaries to deposit or cause to be deposited promptly into the
Lockbox Account or a Blocked Account, and in any event no later than the first
Business Day after receipt thereof, all Collections it or they may receive in
respect of Odyssey Sold Receivables.
(f) Notice of Material Event. Odyssey shall promptly inform CGS in
------------------------
writing of the occurrence of any of the following, in each case setting forth
the details thereof and what action, if any, Odyssey proposes to take with
respect thereto:
(i) the commencement of a case or proceeding by or against
Odyssey seeking a decree or order in respect of Odyssey (A) under the
Bankruptcy Code or any other applicable federal, state or foreign
bankruptcy or other similar law, (B) appointing a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar official) for the
Odyssey or for any substantial part of such Person's assets, or (C)
ordering the winding-up or liquidation of the affairs of Odyssey; or
(ii) (A) any Adverse Claim made or asserted against any of the
Odyssey Sold Receivables of which it becomes aware or (B) any determination
that a Odyssey Sold Receivable designated as an Eligible Receivable in an
Investment Base Certificate or otherwise was not an Eligible Receivable at
the time of such designation.
(g) Adjustments to Odyssey Sale Price. If on any day the Billed
---------------------------------
Amount of any Odyssey Sold Receivable is reduced as a result of any Dilution
Factors, and the amount of such reduction exceeds the amount, if any, of
Dilution Factors taken into account in the calculation of the Odyssey Sale Price
for such Odyssey Sold Receivable, Odyssey shall make a cash payment to CGS in
the amount of such excess by remitting such amount to the Collection Account in
accordance with the terms of the Purchase Agreement.
-11-
Section 4.03 Negative Covenants of Odyssey. Odyssey covenants and
-----------------------------
agrees that, without the prior written consent of CGS and the Operating Agent,
from and after the Closing Date and until the Odyssey Collection Date:
(a) Liens. Odyssey shall not create, incur, assume or permit to exist
-----
any Adverse Claim on or with respect to the Odyssey Sold Receivables or any of
its other properties or assets (whether now owned or hereafter acquired) except
for the Liens set forth in Schedule 4.03(b), other Permitted Encumbrances and
----------------
Credit Facility Liens.
(b) Modifications of Receivables or Contracts. Odyssey shall not
-----------------------------------------
extend, amend, forgive, discharge, compromise, cancel or otherwise modify the
terms of any Odyssey Sold Receivable, or amend, modify or waive any term or
condition of any Contract therefor.
(c) Sale Characterization. Odyssey shall not make statements or
---------------------
disclosures or prepare any financial statements for any purpose, including for
federal income tax, reporting or accounting purposes, that shall account for the
transactions contemplated by this Agreement in any manner other than with
respect to the Sale of each Odyssey Sold Receivable, as a true sale or absolute
assignment of its full right, title and ownership interest in such Odyssey Sold
Receivable to CGS.
(d) Actions Affecting Rights. Odyssey shall not: (i) take any
------------------------
action, or fail to take any action, if such action or failure to take action may
interfere with the enforcement of any rights hereunder or under the other
Related Documents, including rights with respect to the Odyssey Sold
Receivables; (ii) waive or alter any rights with respect to the Odyssey Sold
Receivables (or any agreement or instrument relating thereto); or (iii) fail to
pay any tax, assessment, charge, fee or other obligation of Odyssey with respect
to the Odyssey Sold Receivables, or fail to defend any action, if such failure
to pay or defend may adversely affect the priority or enforceability of the
perfected title of CGS to and the sole record and beneficial ownership interest
of CGS in the Odyssey Sold Receivables or, prior to their Transfer hereunder,
Odyssey's right, title or interest therein.
(e) Change to Credit and Collection Policies. Odyssey shall not fail
----------------------------------------
to comply with, and no change shall be made to, the Credit and Collection
Policies without the prior written consent of CGS and the Operating Agent.
(f) Adverse Tax Consequences. Odyssey shall not take or permit to be
------------------------
taken any action (other than with respect to actions taken or to be taken solely
by a Governmental Authority), or fail or neglect to perform, keep or observe any
of its obligations hereunder or under the other Related Documents, that would
have the effect directly or indirectly of subjecting any payment to CGS or
holders of the Commercial Paper who are residents of the United States of
America to withholding taxation.
(g) No Proceedings. From and after the Closing Date and until the
--------------
date one year plus one day following the date on which the Commercial Paper with
the latest maturity has
-12-
been indefeasibly paid in full in cash, Odyssey shall not, directly or
indirectly, institute or cause to be instituted against CGS any proceeding of
the type referred to in Sections 9.01(c) and 9.01(d) of the Purchase Agreement.
---------------- -------
Section 4.04 Breach of Representations, Warranties or Covenants.
--------------------------------------------------
Upon discovery by Odyssey or CGS that any representation or warranty in Sections
--------
4.01(g) and (v) (other than a representation, warranty or covenant relating to
---------------
the absence of Dilution Factors), was not true with respect to any Sold
Receivable as of the Transfer Date, the party discovering the same shall give
prompt written notice thereof to the other parties hereto. Odyssey may, at any
time on any Business Day, or shall, if requested by notice from CGS, on the
first Business Day following receipt of such notice, repurchase such Odyssey
Sold Receivable from CGS for cash, in an amount equal to the Billed Amount of
such Odyssey Sold Receivable minus the sum of (A) Collections received in
-----
respect thereof and (B) the amount of any Dilution Factors taken into account in
the calculation of the Odyssey Sale Price therefor. Notwithstanding the
foregoing, if any Receivable is not paid in full on account of any Dilution
Factors, Odyssey's repurchase obligation under this Section 4.04 with respect to
------------
such Receivable shall be reduced by the amount of any such Dilution Factors
taken into account in the calculation of the Odyssey Sale Price therefor. Upon
any such repurchase by Odyssey, CGS shall, without any further action, be deemed
to have reconveyed all of its right, title and interest in and to such Odyssey
Sold Receivable to Odyssey without recourse, representation or warranty. CGS
shall, at Odyssey's expense, take any action Odyssey may reasonably request to
further evidence such reconveyance.
ARTICLE V.
INDEMNIFICATION AND WAIVER
Section 5.01 Indemnification. Without limiting any other rights
---------------
that CGS or any of its Stockholders, officers, directors, employees, attorneys,
agents or representatives (each, an "CGS Indemnified Person") may have hereunder
----------------------
or under applicable law, Odyssey hereby agrees to indemnify and hold harmless
each CGS Indemnified Person from and against any and all Indemnified Amounts
that may be claimed or asserted against or incurred by any such CGS Indemnified
Person in connection with or arising out of the transactions contemplated under
this Agreement or under any other Related Document, any actions or failures to
act in connection therewith, including any and all legal costs and expenses
arising out of or incurred in connection with disputes between or among any
parties to any of the Related Documents, or in respect of any Odyssey Sold
Receivable or any Contract therefor or the use by Odyssey of the Odyssey Sale
Price therefor; provided, that Odyssey shall not be liable for any
--------
indemnification to a CGS Indemnified Person to the extent that any such
Indemnified Amounts result solely from (a) such CGS Indemnified Person's gross
negligence or willful misconduct, as finally determined by a court of competent
jurisdiction, (b) recourse for uncollectible or uncollected Odyssey Sold
Receivables, or (c) any income tax or franchise tax incurred by any CGS
Indemnified Person, except to the extent that the incurrence of any such tax
results from a breach of or default under this Agreement
-13-
or any other Related Document. Without limiting the generality of the foregoing,
Odyssey shall pay on demand to each CGS Indemnified Person any and all
Indemnified Amounts relating to or resulting from:
(i) reliance on any representation or warranty made or deemed
made by Odyssey (or any of its officers) under or in connection with this
Agreement or any other Related Document or on any other information
delivered by Odyssey pursuant hereto or thereto that shall have been
incorrect in any material respect when made or deemed made or delivered;
(ii) the failure by Odyssey to comply with any term, provision
or covenant contained in this Agreement, any other Related Document or any
agreement executed in connection herewith or therewith, any applicable law,
rule or regulation with respect to any Odyssey Sold Receivable or Contract
therefor, or the nonconformity of any Odyssey Sold Receivable or the
Contract therefor with any such applicable law, rule or regulation;
(iii) the failure to vest and maintain vested in or to Transfer
to CGS, or any action taken or omitted by Odyssey which impairs the vesting
in or Transfer to CGS of, valid and properly perfected title to and sole
record and beneficial ownership of the Receivables that constitute Odyssey
Sold Receivables, together with all Collections in respect thereof, free
and clear of any Adverse Claim;
(iv) any dispute, claim, offset or defense of any Obligor
(other than its discharge in bankruptcy or a dispute, claim, offset or
defense which is finally determined by a court of competent jurisdiction to
be non-meritorious) to the payment of any Receivable that is the subject of
the Transfer hereunder (including a defense based on such Receivable or the
Contract therefor not being a legal, valid and binding obligation of such
Obligor enforceable against it in accordance with its terms but excluding
discounts to, or other Dilution Factors that reduce, the Billed Amount
thereof), except to the extent that such dispute, claim, offset or defense
results solely from any action or inaction on the part of CGS;
(v) any products liability claim or other claim arising out of
or in connection with merchandise, insurance or services that is the
subject of any Contract;
(vi) any failure by Odyssey to cause the filing of, or any
delay in filing, financing statements or other similar instruments or
documents under the UCC of any applicable jurisdiction or any other
applicable laws with respect to any Receivable that is the subject of the
Transfer hereunder, whether at the time of the Transfer or at any
subsequent time;
-14-
(vii) any failure by Odyssey to perform, keep or observe any of
its duties or obligations hereunder, under any other Related Document or
under any Contract related to a Odyssey Sold Receivable, including the
commingling of Collections with respect to Odyssey Sold Receivables by
Odyssey at any time with the funds of any other Person;
(viii) any investigation, Litigation or proceeding related to
this Agreement or the use of the Odyssey Sale Price obtained in connection
with any Sale or the ownership of Receivables or Collections with respect
thereto or in respect of any Receivable or Contract, except to the extent
any such investigation, Litigation or proceeding relates to a matter
involving a CGS Indemnified Person for which neither Odyssey nor its
Affiliates (other than CGS) is at fault, as finally determined by a court
of competent jurisdiction; or
(ix) any claim brought by any Person other than a CGS
Indemnified Person arising from any activity by Odyssey or any of its
Affiliates in servicing, administering or collecting any Odyssey Sold
Receivables.
NO CGS INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO
THIS AGREEMENT OR ANY OTHER RELATED DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD
PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS
DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES THAT MAY BE ALLEGED AS A RESULT OF ANY TRANSACTION
CONTEMPLATED HEREUNDER OR THEREUNDER.
Section 5.02 Intentionally Omitted.
---------------------
ARTICLE VI.
Intentionally Omitted.
---------------------
ARTICLE VII
COLLATERAL SECURITY
Section 7.01 Security Interest. To secure the prompt and complete
-----------------
payment, performance and observance of any and all recourse and indemnity
obligations of the Odyssey to CGS, including those set forth in Sections
--------
4.02(g), 4.04, 5.01 and 8.14, and to induce CGS to enter into this Agreement in
------- ---- ---- ----
accordance with the terms and conditions hereof, Odyssey hereby grants, assigns,
conveys, pledges, hypothecates and transfers to CGS a Lien upon all of Odyssey's
-15-
right, title and interest in, to and under the following property, whether now
owned by or owing to, or hereafter acquired by or arising in favor of, Odyssey
(including under any trade names, styles or derivations of Odyssey), and whether
owned by or consigned by or to, or leased from or to, Odyssey, and regardless of
where located (all of which being hereinafter collectively referred to as the
"Odyssey Collateral"):
------------------
(a) all accounts, inventory, general intangibles, investment property,
chattel paper, documents, and instruments, whether or not specifically assigned
to CGS;
(b) all books and records (including customer lists, credit files,
computer programs, tapes, disks, data processing software and other related
property and rights) pertaining to the foregoing;
(c) all monies, securities and other property now or hereafter in the
possession or custody of, or in transit to, CGS, for any purpose (including
safekeeping, collection or pledge), from or for Odyssey, or as to which Odyssey
may have any right or power, and all of CGS's credits and balances with Odyssey
existing at any time; and
(d) to the extent not otherwise included, all proceeds and products of
the foregoing and all accessions to, and substitutions and replacements for,
each of the foregoing; provided, that the Odyssey Collateral shall not include
any general intangibles and instruments in which a Lien is not granted as a
result of the terms of the Subsidiaries Security Agreement delivered pursuant to
(and defined in) the Credit Agreement.
Section 7.02 Other Collateral; Rights in Receivables. Nothing
---------------------------------------
contained in this Article VII shall limit the rights of CGS in and to any other
-----------
collateral that may have been or may hereafter be granted to CGS by Odyssey or
any third party pursuant to any other agreement or the rights of Odyssey under
any of the Odyssey Sold Receivables.
ARTICLE VII
MISCELLANEOUS
Section 8.01 Notices. Except as otherwise provided herein, whenever
-------
it is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any
of the parties by any other parties, or whenever any of the parties desires to
give or serve upon any other parties any communication with respect to this
Agreement, each such notice, demand, request, consent, approval, declaration or
other communication shall be in writing and shall be deemed to have been validly
served, given or delivered (a) upon the earlier of actual receipt and three
Business Days after deposit in the United States Mail, registered or certified
mail, return receipt requested, with proper postage prepaid, (b) upon
transmission, when sent by telecopy or other similar facsimile transmission
(with
-16-
such telecopy or facsimile promptly confirmed by delivery of a copy by personal
delivery or United States Mail as otherwise provided in this Section 8.01), (c)
------------
one Business Day after deposit with a reputable overnight courier with all
charges prepaid or (d) when delivered, if hand-delivered by messenger, all of
which shall be addressed to the party to be notified and sent to the address or
facsimile number set forth under its name on the signature page hereof or to
such other address (or facsimile number) as may be substituted by notice given
as herein provided; provided, that each such declaration or other communication
--------
shall be deemed to have been validly delivered to the Collateral Agent under
this Agreement upon delivery to the Operating Agent in accordance with the terms
of this Section 8.01. The giving of any notice required hereunder may be waived
------------
in writing by the party entitled to receive such notice. Failure or delay in
delivering copies of any notice, demand, request, consent, approval, declaration
or other communication to any Person (other than CGS) designated in any written
communication provided hereunder to receive copies shall in no way adversely
affect the effectiveness of such notice, demand, request, consent, approval,
declaration or other communication. Notwithstanding the foregoing, whenever it
is provided herein that a notice is to be given to any other party hereto by a
specific time, such notice shall only be effective if actually received by such
party prior to such time, and if such notice is received after such time or on a
day other than a Business Day, such notice shall only be effective on the
immediately succeeding Business Day.
Section 8.02 No Waiver; Remedies. CGS's failure, at any time or
-------------------
times, to require strict performance by Odyssey of any provision of this
Agreement or the Receivables Assignment shall not waive, affect or diminish any
right of CGS thereafter to demand strict compliance and performance herewith or
therewith. Any suspension or waiver of any breach or default hereunder shall
not suspend, waive or affect any other breach or default whether the same is
prior or subsequent thereto and whether the same or of a different type. None
of the undertakings, agreements, warranties, covenants and representations of
Odyssey contained in this Agreement or any Receivables Assignment, and no breach
or default by Odyssey hereunder or thereunder, shall be deemed to have been
suspended or waived by CGS unless such waiver or suspension is by an instrument
in writing signed by an officer of or other duly authorized signatory of CGS and
directed to Odyssey, specifying such suspension or waiver. CGS's rights and
remedies under this Agreement shall be cumulative and nonexclusive of any other
rights and remedies that CGS may have under any other agreement, including the
other Related Documents, by operation of law or otherwise. Recourse to the
Odyssey Collateral shall not be required.
Section 8.03 Successors and Assigns. This Agreement shall be
----------------------
binding upon and shall inure to the benefit of Odyssey (including a debtor-in-
possession on its behalf) and CGS and their respective successors, transferees,
endorsees and permitted assigns, except as otherwise provided herein. Odyssey
may not assign, transfer, hypothecate or otherwise convey its rights, benefits,
obligations or duties hereunder without the prior express written consent of
CGS, GFC, the Operating Agent and the Collateral Agent. Any such purported
assignment, transfer, hypothecation or other conveyance by Odyssey without the
prior express written consent of CGS, GFC, the Operating Agent and the
Collateral Agent shall be void. Odyssey acknowledges that, to the extent
permitted under the Purchase Agreement, CGS may assign its rights granted
hereunder,
-17-
including the benefit of any indemnities under Article V, and upon such
---------
assignment, such assignee shall have, to the extent of such assignment, all
rights of CGS hereunder and, to the extent permitted under the Purchase
Agreement, may in turn assign such rights. Odyssey agrees that, upon any such
assignment, such assignee may enforce directly, without joinder of CGS, the
rights set forth in this Agreement. All such assignees, including parties to the
Purchase Agreement in the case of any assignment to such parties, shall be third
party beneficiaries of, and shall be entitled to enforce CGS's rights and
remedies under, this Agreement to the same extent as if they were parties
hereto. The terms and provisions of this Agreement are for the purpose of
defining the relative rights and obligations of Odyssey and CGS with respect to
the transactions contemplated hereby and, except for CGS, GFC, the Operating
Agent and the Collateral Agent, no Person shall be a third party beneficiary of
any of the terms and provisions of this Agreement. The rights of CGS, the
Operating Agent and the Collateral Agent hereunder with respect to the "Lenders"
and the "Agent" party to the Credit Facility are subject to the Intercreditor
Agreement to the extent provided therein.
Section 8.04 Termination; Survival of Obligations.
------------------------------------
(a) This Agreement shall create and constitute the continuing
obligations of the parties hereto in accordance with its terms, and shall remain
in full force and effect until the Termination Date.
(b) Except as otherwise expressly provided herein or in any other
Related Document, no termination or cancellation (regardless of cause or
procedure) of any commitment made by CGS under this Agreement shall in any way
affect or impair the obligations, duties and liabilities of Odyssey or the
rights of CGS relating to any unpaid portion of any and all recourse and
indemnity obligations of Odyssey to CGS, including those set forth in Sections
--------
4.04, 5.01 and 8.14, due or not due, liquidated, contingent or unliquidated or
---- ---- ----
any transaction or event occurring prior to such termination, or any transaction
or event, the performance of which is required after the Facility Termination
Date. Except as otherwise expressly provided herein or in any other Related
Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon Odyssey, and all rights of CGS hereunder, all
as contained in the Related Documents, shall not terminate or expire, but rather
shall survive any such termination or cancellation and shall continue in full
force and effect until the Termination Date; provided, that the rights and
--------
remedies pursuant to Section 4.04, the indemnification and payment provisions of
------------
Article V, and the provisions of Sections 4.03(f), 8.03, 8.12 and 8.14 shall be
--------- ---------------- ---- ---- ----
continuing and shall survive any termination of this Agreement.
Section 8.05 Complete Agreement; Modification of Agreement. This
---------------------------------------------
Agreement and the other Related Documents constitute the complete agreement
between the parties with respect to the subject matter hereof and thereof,
supersede all prior agreements and understandings relating to the subject matter
hereof and thereof, and may not be modified, altered or amended except as set
forth in Section 8.06.
------------
-18-
Section 8.06 Amendments and Waivers. No amendment, modification,
----------------------
termination or waiver of any provision of this Agreement or any of the other
Related Documents, or any consent to any departure by Odyssey therefrom, shall
in any event be effective unless the same shall be in writing and signed by each
of the parties hereto and CGS, the Operating Agent and the Collateral Agent. No
consent or demand in any case shall, in itself, entitle any party to any other
consent or further notice or demand in similar or other circumstances.
SECTION 8.07 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
--------------------------------------- --------------
TRIAL.
-----
(A) THIS AGREEMENT AND EACH RELATED DOCUMENT (EXCEPT TO THE EXTENT
THAT ANY RELATED DOCUMENT EXPRESSLY PROVIDES TO THE CONTRARY) AND THE
OBLIGATIONS ARISING HEREUNDER AND THEREUNDER SHALL IN ALL RESPECTS, INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK (WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS THEREOF) AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
(B) EACH PARTY HERETO HEREBY CONSENTS AND AGREES THAT THE STATE OR
FEDERAL COURTS LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THEM
PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY RELATED DOCUMENT; PROVIDED, THAT EACH PARTY HERETO ACKNOWLEDGES
--------
THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE OF THE BOROUGH OF MANHATTAN IN NEW YORK CITY; PROVIDED FURTHER, THAT
-------- -------
NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE CGS FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO ENFORCE
A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF CGS. EACH PARTY HERETO SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY
SUCH COURT, AND EACH PARTY HERETO HEREBY WAIVES ANY OBJECTION THAT SUCH PARTY
MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
----- ---
CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF
----------
AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH PARTY HERETO HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PARTY AT
THE
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ADDRESS SET FORTH BENEATH ITS NAME ON THE SIGNATURE PAGES HEREOF AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH PARTY'S
ACTUAL RECEIPT THEREOF OR THREE DAYS AFTER DEPOSIT IN THE UNITED STATES MAIL,
PROPER POSTAGE PREPAID. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF ANY
PARTY HERETO TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
(C) BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY
(RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY
RELATED DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
Section 8.08 Counterparts. This Agreement may be executed in any
------------
number of separate counterparts, each of which shall collectively and separately
constitute one agreement.
Section 8.09 Severability. Wherever possible, each provision of
------------
this Agreement shall be interpreted in such a manner as to be effective and
valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
Section 8.10 Section Titles. The section titles and table of
--------------
contents contained in this Agreement are provided for ease of reference only and
shall be without substantive meaning or content of any kind whatsoever and are
not a part of the agreement between the parties hereto.
Section 8.11 No Setoff. Odyssey's obligations under this Agreement
---------
shall not be affected by any right of setoff, counterclaim, recoupment, defense
or other right Odyssey might have against CGS, the Operating Agent or the
Collateral Agent, all of which rights are hereby expressly waived by Odyssey.
Section 8.12 Confidentiality.
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(a) Except to the extent otherwise required by applicable law, as
required to be filed publicly with the Securities and Exchange Commission, or
unless each Affected Party shall otherwise consent in writing, Odyssey and CGS
agree to maintain the confidentiality of this Agreement (and all drafts hereof
and documents ancillary hereto) in its communications with third parties other
than any Affected Party or any CGS Indemnified Person and otherwise and not to
disclose, deliver or otherwise make available to any third party (other than its
directors, officers, employees, accountants or counsel) the original or any copy
of all or any part of this Agreement (or any draft hereof and documents
ancillary hereto) except to an Affected Party or a CGS Indemnified Person.
(b) Odyssey agrees that it shall not (and shall not permit any of its
Subsidiaries to) issue any news release or make any public announcement
pertaining to the transactions contemplated by this Agreement and the Related
Documents without the prior written consent of CGS and each Affected Party
(which consent shall not be unreasonably withheld) unless such news release or
public announcement is required by law, in which case Odyssey shall consult with
CGS and each Affected Party prior to the issuance of such news release or public
announcement. Odyssey may, however, disclose the general terms of the
transactions contemplated by this Agreement and the Related Documents to trade
creditors, suppliers and other similarly-situated Persons so long as such
disclosure is not in the form of a news release or public announcement.
Section 8.13 Further Assurances.
------------------
(a) Odyssey shall, at its sole cost and expense, upon request of CGS,
the Operating Agent or the Collateral Agent, promptly and duly execute and
deliver any and all further instruments and documents and take such further
actions that may be necessary or desirable or that CGS, the Operating Agent or
the Collateral Agent may request to carry out more effectively the provisions
and purposes of this Agreement or any other Related Document or to obtain the
full benefits of this Agreement and of the rights and powers herein granted,
including (i) using its best efforts to secure all consents and approvals
necessary or appropriate for the assignment to or for the benefit of CGS of any
Odyssey Sold Receivable, and (ii) filing any financing or continuation
statements under the UCC with respect to the ownership interests granted
hereunder or under any other Related Document. Odyssey hereby authorizes CGS,
CGS, the Operating Agent or the Collateral Agent to file any such financing or
continuation statements without the signature of Odyssey to the extent permitted
by applicable law. A carbon, photographic or other reproduction of this
Agreement or of any notice or financing statement covering the Odyssey Sold
Receivables shall be sufficient as a notice or financing statement where
permitted by law.
(b) If Odyssey fails to perform any agreement or obligation under this
Section 8.13, CGS, GFC, the Operating Agent or the Collateral Agent may (but
------------
shall not be required to) itself perform, or cause performance of, such
agreement or obligation, and the reasonable expenses of CGS, GFC, the Operating
Agent or the Collateral Agent incurred in connection
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therewith shall be payable by Odyssey upon demand of CGS, GFC, the Operating
Agent or the Collateral Agent.
Section 8.14 Fees and Expenses. In addition to its indemnification
-----------------
obligations pursuant to Article V, Odyssey agrees to pay on demand all costs and
---------
expenses incurred by CGS in connection with the negotiation, preparation,
execution and delivery of this Agreement and the other Related Documents,
including the fees and out-of-pocket expenses of CGS's counsel, advisors,
consultants and auditors retained in connection with the transactions
contemplated thereby and advice in connection therewith, and Odyssey agrees to
pay all costs and expenses, if any (including attorneys' fees and expenses but
excluding any costs of enforcement or collection of the Odyssey Sold
Receivables), in connection with the enforcement of this Agreement and the other
Related Documents.
* * *
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IN WITNESS WHEREOF, the parties have caused this Receivables Transfer
Agreement to be executed by their respective duly authorized representatives, as
of the date first above written.
CALLAWAY GOLF SALES COMPANY
By: /s/ Xxxxx X. Xxxx
------------------------------
Name:
Title:
0000 Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxx 00000-0000
Facsimile No.: (000) 000-0000
ODYSSEY GOLF, INC.
By: /s/ Xxxxx X. Xxxx
------------------------------
Name:
Title:
0000 Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxx 00000-0000
Facsimile No.: (000) 000-0000
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EXHIBIT 2.01(a)
---------------
RECEIVABLES ASSIGNMENT
----------------------
THIS RECEIVABLES ASSIGNMENT (the "Receivables Assignment") is entered
----------------------
into as of February 10, 1999, by and between Odyssey Golf, Inc. ("Odyssey") and
-------
Callaway Golf Sales Company ("CGS").
---
1. We refer to that certain Receivables Transfer Agreement (the
"Odyssey Transfer Agreement") of even date herewith among Odyssey and CGS. All
--------------------------
of the terms, covenants and conditions of the Odyssey Transfer Agreement are
hereby made a part of this Receivables Assignment and are deemed incorporated
herein in full. Unless otherwise defined herein, capitalized terms or matters
of construction defined or established in Odyssey Transfer Agreement shall be
applied herein as defined or established therein.
2. For good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Odyssey hereby sells to CGS, without recourse,
except as provided in Section 4.04 of the Odyssey Transfer Agreement, all of
------------
Odyssey's right, title and interest in, to and under all Odyssey Sold
Receivables transferred by Odyssey to CGS under the Odyssey Transfer Agreement.
3. Subject to the terms and conditions of the Odyssey Transfer
Agreement, Odyssey hereby covenants and agrees to sign, sell, execute and
deliver, or cause to be signed, sold, executed and delivered, and to do or make,
or cause to be done or made, upon request of CGS and at Odyssey's expense, any
and all agreements, instruments, papers, deeds, acts or things, supplemental,
confirmatory or otherwise, as may be reasonably required by CGS for the purpose
of or in connection with acquiring or more effectively vesting in CGS or
evidencing the vesting in CGS of the property, rights, title and interests of
Odyssey sold hereunder or intended to be sold hereunder.
4. Wherever possible, each provision of this Receivables Assignment
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Receivables Assignment shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of this
Receivables Assignment.
5. THIS RECEIVABLES ASSIGNMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS, AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
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IN WITNESS WHEREOF, the parties have caused this Receivables
Assignment to be executed by their respective officers thereunto duly
authorized, as of the day and year first above written.
CALLAWAY GOLF SALES COMPANY ODYSSEY GOLF, INC.
By:________________________ By:________________________
Name: Name:
Title: Title:
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