REGISTRATION AGREEMENT
AGREEMENT made as of October 31, 1997, between TEARDROP GOLF COMPANY (the
"Company") and XXXXX XXXXXX GOLF COMPANY ("Holder").
The Parties to this Agreement are Parties to an Asset Purchase Agreement of
even date herewith (the "Purchase Agreement"). In order to induce the Holder to
enter into the Purchase Agreement, the Company has executed this Agreement in
connection with the registration of securities issued by the Company under the
Purchase Agreement. The execution and delivery of this Agreement is a condition
to the Closing under the Purchase Agreement.
The parties have agreed as follows:
1. Registration Under Securities Act.
(a) Filing of Shelf Registration Statement. The Company shall cause to
be filed within 75 calendar days of the date hereof a shelf Registration
Statement registering the securities on a continuous basis on Form S-3 or
any successor thereto providing for the sale by the Holder of all of its
Registrable Securities and will use its best efforts to have such shelf
Registration Statement declared effective by the Commission within 120 days
from the date hereof, except that there shall be permitted an additional 30
days for the Company to have the Registration Statement declared effective
where the regulations of the Commission render the ability of the Company
to satisfy the 120 day requirement impracticable.
(b) Expenses. The Company shall pay all Registration Expenses in
connection with the registration pursuant to this Agreement.
2. Registration Procedures.
(a) If and whenever the Company is required to effect the registration
of the Registrable Securities under the Securities Act as provided in
Section 1, the Company shall, as expeditiously as possible:
(i) subject to Section 1, prepare and file with the Commission
the requisite registration statement to effect such registration
(including such audited financial statements as may be required by the
Securities Act or the rules and regulations promulgated thereunder)
and thereafter cause such registration statement to become and remain
effective, provided however, that before filing such registration
statement or any amendments thereto, the Company will furnish to the
Holder copies of all such documents proposed to be filed, which
documents will be subject to its review in accordance with Section
2(b);
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all securities
covered by such registration statement until such time as all of such
Registrable Securities have been disposed of in accordance with the
intended methods of disposition by the Holder set forth in such
registration statement;
(iii) furnish to the Holder (or underwriter, if any, of the
securities being sold by the Holder) such number of conformed copies
of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits), such number
of copies of the prospectus contained in such registration statement
(including each preliminary prospectus and any summary prospectus) and
any other prospectus filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, and such other
documents as, the Holder (and each such underwriter, if any) may
reasonably request in order to facilitate the public sale or other
disposition of the Registrable Securities;
(iv) use its best efforts to register or qualify all Registrable
Securities and other securities covered by such registration statement
under such other securities laws or blue sky laws of such
jurisdictions as the Holder (and any underwriter of the Registrable
Securities being sold) shall reasonably request, to keep such
registrations or qualifications in effect for so long as such
registration statement remains in effect, and take any other action
which may be necessary or advisable to enable the Holder (and
underwriter, if any) to consummate the disposition in such
jurisdictions of the Registrable Securities except that the Company
shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it would
not but for the requirements of this subdivision (iv) be obligated to
be so qualified or to consent to general service of process in any
such jurisdiction;
(v) use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the Holder to consummate the disposition of such
Registrable Securities;
(vi) furnish to the Holder a signed counterpart, addressed to the
Holder (and the underwriters, if any), of:
(A) an opinion of counsel for the Company, dated the
effective date of such registration statement (or, if such
registration includes an underwritten public offering, an opinion
dated the date of the closing under the underwriting agreement)
reasonably satisfactory in form and substance to the Holder, and
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(B) in the event of an underwritten offering, a "comfort"
letter, dated the effective date of such registration statement
(and if such registration includes an underwritten public
offering, a letter dated the date of the closing under the
underwriting agreement), signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement, covering substantially
the same matters with respect to such registration statement (and
the prospectus included therein) and, in the case of the
accountants' letter, with respect to events subsequent to the
date of such financial statements,
as are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered and in the case of the accountants' letter, such other
financial matters, and, in the case of the legal opinion, such other legal
matters, as the Holder may reasonably request;
(vii) notify the Holder (and the managing underwriter or
underwriters, if any) promptly and confirm such advice in writing
promptly thereafter:
(A) when the registration statement, the prospectus or any
prospectus supplement related thereto or post-effective amendment
to the registration statement has been filed, and, with respect
to the registration statement or any post-effective amendment
thereto, when the same has become effective:
(B) of any request by the Commission for amendments or
supplements to the registration statement or the prospectus or
for additional information;
(C) of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or the
initiation of any proceedings by any Person for that purpose;
(D) if at any time the representations and warranties of the
Company cease to be true and correct;
(E) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any Registrable
Securities for sale under the securities or blue sky laws of any
jurisdiction or the initiation or threat of any proceeding for
such purpose;
(viii) notify the Holder, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, upon
discovery that, or upon the happening of any event as a result of
which, the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances
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then existing, and at the request of the Holder promptly prepare and
furnish to the Holder (and each underwriter, if any) a reasonable
number of copies of a supplement to or an amendment of such prospectus
as may be necessary so that, as thereafter delivered to the purchasers
of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing;
(ix) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the registration statement at
the earliest possible moment;
(x) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months, but not more
than eighteen months, beginning with the first day of the Company's
first full calendar month after the effective date of such
registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158
thereunder, and will furnish to the Holder at least five business days
prior to the filing thereof a copy of any amendment or supplement to
such registration statement or prospectus and shall not file any
thereof to which the Holder shall have reasonably objected on the
grounds that such amendment or supplement does not comply in all
material respects with the requirements of the Securities Act or of
the rules or regulations thereunder;
(xi) make available for inspection by the Holder, any underwriter
participating in any disposition pursuant to the registration
statement and any attorney or accountant retained by the Holder or
such underwriter (each, an "Inspector"), all financial and other
records, pertinent corporate documents and properties of the Company
(the "Records"), and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such
Inspector in connection with such registration in order to permit a
reasonable investigation within the meaning of Section 11 of the
Securities Act;
(xii) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of
such registration statement;
(xiii) enter into such agreements and take such other actions as
the Holder shall reasonably request in order to expedite or facilitate
the disposition of such Registrable Securities;
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(xiv) use its best efforts to list all Registrable Securities
covered by such registration statement on any securities exchange on
which any of the securities of the same class as the Registrable
Securities are then listed; and
(xv) use its best efforts to provide a CUSIP number for the
Registrable Securities, not later than the effective date of the
registration statement.
(b) The Company will not file any registration statement or amendment
hereto or any prospectus or any supplement thereto (including such
documents incorporated by reference and proposed to be filed after the
initial filing of the registration statement) to which the Holder (or the
underwriter or underwriters, if any) shall reasonably object. The Holder
agrees that, upon receipt of any notice from the Company of the occurrence
of any event of the kind described in subdivision (viii) of this Section,
the Holder will forthwith discontinue disposition of Registrable Securities
pursuant to the registration statement relating to such Registrable
Securities until the Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by subdivision (viii) of this Section.
3. Indemnification by the Company.
(a) General Rights.
(i) In the event of any registration of any securities of the
Company under the Securities Act, the Company will, and hereby does
agree to, indemnify and hold harmless in the case of any registration
statement of the Company, the Holder and any underwriter including the
respective directors, officers, agents and controlling persons (within
the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act), if any, of each of the Holder and such underwriters
against any losses, claims, damages, liabilities or expense, joint or
several, to which the Holder (or any underwriter) or any such
director, officer, agent or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or based
upon any untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which securities
were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, or any omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the
Company will reimburse the Holder (or any underwriter) and each such
director, officer, agent and controlling person for any legal or any
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability,
action or proceeding, provided that the Company shall not be liable in
such case to the extent that any such loss, claim, damage, liability
(or action or proceeding in respect thereof) or expense
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arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration
statement, any such preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement exclusively in reliance upon and
in conformity with information furnished to the Company through an
instrument duly executed by the Holder, specifically stating that it
is for use in the preparation thereof. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on
behalf of the Holder (or underwriter, if any) or any such director,
officer, agent or controlling person and shall survive the transfer of
such securities by the Holder.
(ii) The Holder will, and hereby does agree to indemnify and hold
harmless the Company and the directors, officers, agents and
controlling persons, if any, of the Company against any losses,
claims, damages, liabilities or expense to which the Company and the
directors, officers, agents and controlling persons, if any, of the
Company may become subject under the Securities Act insofar as such
losses, claims, damages, liabilities or expense arise out of or are
based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which the
Registrable Securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent (and only to the extent) that
such loss, claim, damage, liability or expense occurs in exclusive
reliance upon and in conformity with written information furnished by
such Holder expressly for use in connection with such registration;
provided that the Holder shall be liable under this paragraph for only
that amount of losses, claims, damages, liabilities or expense as does
not exceed the proceeds to such Holder as a result of the sale of
Registrable Securities pursuant to such registration. Such indemnity
shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any such director, officer,
agent or controlling person.
(b) Notices of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding subdivisions of this Section, such
indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the
commencement of such action, provided that the failure of any indemnified
party to give notice as provided herein shall not relieve the indemnifying
party of its obligations under the preceding subdivisions of this Section,
except to the extent that the indemnifying party is actually prejudiced in
a material manner by such failure to give notice. In case any such action
is brought against an indemnified party, unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, the indemnifying
party shall be entitled to participate in and to assume the defense
thereof, jointly with any other
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indemnifying party similarly notified, to the extent that the indemnifying
party may wish, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party for any legal or other
expenses subsequently incurred by the latter in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying party
shall, without the consent of the indemnified party, consent to entry of
any judgment or enter into any settlement of any such action which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability, or a
covenant not to xxx, in respect to such claim or litigation. No indemnified
party shall consent to entry of any judgment or enter into any settlement
of any such action the defense of which has been assumed by an indemnifying
party without the consent of such indemnifying party.
(c) Other Indemnification. Indemnification similar to that specified
in the preceding subdivisions of this Section (with appropriate
modifications) shall be given by the Company and the Holder with respect to
any required registration or other qualification of securities under any
Federal or state law or regulation of any governmental authority, other
than the Securities Act.
(d) Indemnification Payments. The indemnification required by this
Section shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
(e) Contribution. If the indemnification provided for in the preceding
subdivisions of this Section is unavailable to an indemnified party in
respect of any loss, claim, damage, liability or expense referred to
therein, then each indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage, liability or
expense (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Holder or
underwriter, as the case may be, on the other from the distribution of the
Registrable Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the one hand and of
the Holder or underwriter, as the case may be, on the other in connection
with the statements or omissions which resulted in such loss, claim,
damage, liability or expense, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and of
the Holder or underwriter, as the case may be, on the other shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission to state a material
fact relates to information supplied by the Company, by the Holder or by
the underwriter and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission, provided that the foregoing contribution agreement shall not
inure to the benefit of any indemnified
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party if indemnification would be unavailable to such indemnified party by
reason of the provisions contained in the first sentence of subdivision (a)
of this Section and in no event shall the obligation of any indemnifying
party to contribute under this subdivision (e) exceed the amount that such
indemnifying party would have been obligated to pay by way of
indemnification if the indemnification provided for under subdivisions (a)
or (b) of this Section had been available under the circumstances.
Notwithstanding the provisions of this subdivision (e), neither the Holder
nor the underwriter shall be required to contribute any amount in excess of
the amount by which (i) in the case of the Holder, the net proceeds
received by the Holder from the sale of Registrable Securities or (ii) in
the case of an underwriter, the total price at which the Registrable
Securities purchased by it and distributed to the public were offered by
the public exceeds, in either such case, the amount of any damages that the
Holder or underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11 the
Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
4. Definitions.
(a) The term "Registrable Securities" means (i) the Common Stock
issued to Sellers pursuant to the Purchase Agreement, (ii) the common stock
issued or issuable upon conversion of the Preferred Stock originally issued
to Sellers pursuant to the Purchase Agreement and (iii) the Preferred Stock
and any securities issued or issuable with respect to the securities
referred to in clause (i), (ii) or (iii) or with respect to securities
which previously became Registrable Securities pursuant to this clause by
way of a stock dividend or stock split or in connection with a combination
of shares, recapitalization, merger, consolidation or other reorganization.
As to any particular Registrable Securities, once issued such securities
shall cease to be Registrable Securities when (a) a registration statement
with respect to the sale of such securities shall have become effective
under the Securities Act and such securities shall have been disposed of in
accordance with such registration statement, (b) such securities shall have
been distributed to the public pursuant to Rule 144 (or any successor
provision) under the Securities Act, (c) such securities shall have been
otherwise transferred, new certificates for such securities not bearing a
legend restricting further transfer shall have been delivered by the
Company and subsequent disposition of such securities shall not require
registration or qualification of such securities under the Securities Act
or any similar state law then in force, or (d) such securities shall have
ceased to be outstanding.
(b) The term "Registration Expenses" means all expenses incident to
the Company's performance of or compliance with this Agreement, including,
without limitation, all registration, filing and NASD fees, all stock
exchange listing fees, all fees and expenses of complying with securities
or blue sky laws, all word processing, duplicating and printing expenses,
messenger and delivery expenses, the fees and disbursements of counsel for
the Company and of its independent public accountants, including the
expenses of any special audits or "cold comfort" letters required by or
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incident to such performance and compliance, premiums and other costs of
policies of insurance against liabilities arising out of the public
offering of the Registrable Securities being registered and any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities, but excluding underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of the Holder's
Registrable Securities pursuant to the shelf Registration Statement,
provided that, in any case where Registration Expenses are not to be borne
by the Company, such expenses shall not include salaries of the Company's
personnel or general overhead expenses of the Company, premiums or other
expenses relating to liability insurance required by underwriters of the
Company or other expenses for the preparation of financial statements or
other data normally prepared by the Company in the ordinary course of its
business or which the Company would have incurred in any event.
(c) For purposes of this Agreement, a Person will be deemed to be a
holder of Registrable Securities whenever such Person has the right to
acquire such Registrable Securities (by conversion or otherwise, but
disregarding any legal or other restrictions upon the exercise of such
right), whether or not such acquisition has actually been effected.
(d) Unless otherwise stated, other capitalized terms contained herein
have the meanings set forth in the Purchase Agreement.
5. Certain Rights of the Holder.
The Company will not file any registration statement under the Securities
Act, unless it shall first have given to the Holder, at least 30 days prior
written notice thereof. If any such registration statement refers to the Holder
by name or otherwise as the holder of any securities of the Company, then the
Holder shall have the right within such 30 day period to require (a) the
insertion therein of language, in form and substance satisfactory to the Holder
to the effect that the holding by the Holder of such securities does not
necessarily make the Holder a "controlling person" of the Company within the
meaning of the Securities Act and is not to be construed as a recommendation by
the Holder of the investment quality of the Company's debt or equity securities
covered thereby and that the Holder will assist in meeting any future financial
requirements of the Company or (b) in the event that such reference to the
Holder by name or otherwise is not required by the Securities Act or any rules
and regulations promulgated thereunder, the deletion of the reference to the
Holder. If the Holder does not respond within such 30 day period, the Company
may proceed with the filing.
6. Miscellaneous.
(a) No Inconsistent Agreements. The Company will not hereafter enter
into any agreement with respect to its securities which is inconsistent
with the rights granted to the holders of Registrable Securities in this
Agreement.
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(b) Adjustments Affecting Registrable Securities. The Company will not
take any action, or permit any change to occur, with respect to its
securities which would adversely affect the ability of the Holders to
include Registrable Securities in a registration statement undertaken
pursuant to this Agreement or which would adversely affect the ability of
the Holder to sell such Registrable Securities in any such registration
(including, without limitation, effecting a stock split or a combination of
shares).
(c) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, if and only if the Company has obtained the written
consent of the Holder or, if such securities are held by more than one
holder and where such amendment would not adversely affect the rights of
any holder by written consent of a majority in interest of the Preferred
Stock.
(d) Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto will bind and inure
to the benefit of the respective successors and assigns of the parties
hereto whether so expressed or not. In addition, whether or not any express
assignment has been made, the provisions of this Agreement which are for
the benefit of purchasers or holders of Registrable Securities are also for
the benefit of, and enforceable by, any subsequent holder of Registrable
Securities.
(e) Jurisdiction and Governing Law. The Company and the Holder each
hereby consent to personal jurisdiction in any action brought with respect
to this Agreement and the transactions contemplated hereunder in any
federal or state court within the State of Delaware. This Agreement shall
be governed by and construed in accordance with the law of the State of
Delaware without giving effect to conflicts of law principles thereof.
(f) Construction. Section headings of this Agreement are for reference
purposes only and are to be given no effect in the construction or
interpretation of this Agreement.
(g) Severability. In the event that any provision hereof would, under
applicable law, be invalid or enforceable in any respect, such provision
shall be construed by modifying or limiting it so as to be valid and
enforceable to the maximum extent compatible with, and permissible under,
applicable law. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement which shall remain in full force and effect.
(h) Joint Agreement. The provisions of this Agreement and each
document delivered pursuant hereto shall be deemed to be the joint effort
of each of the parties
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hereto and shall not be construed more severely or strictly against any one
or more parties.
(i) Notices. Except as otherwise provided in this Agreement, all
notices, requests and other communications shall be in writing and shall be
given to the Holder addressed to it in the manner set forth in the Stock
Purchase Agreement or at such other address as the Holder shall have
furnished to the Company in writing, and to the Company, to the attention
of its President, or at such other address, or to the attention of such
other officer, as the Company shall have furnished to the Holder. Each such
notice, request or other communication shall be effective (i) if given by
mail, 72 hours after such communication is deposited in the mails with
first class postage prepaid, addressed as aforesaid or (ii) if given by any
other means (including, without limitation, by air courier), when delivered
at the address specified above, provided that any such notice, request or
communication shall not be effective until received.
(j) Counterparts. This Agreement may be executed simultaneously in
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
(k) No Inconsistent Agreements. The Company has not entered into nor
will the Company on or after the date of this Agreement enter into any
agreement which is inconsistent with the rights granted to the Holder in
this Agreement or which otherwise conflicts with the provisions hereof. The
rights granted to the Holder hereunder do not in any way conflict with and
are not inconsistent with the rights granted to the holders of the
Company's other issued and outstanding securities under any agreements. The
Company will not grant any registration rights under the Securities Act or
any state securities laws without the prior written consent of the Holder.
(l) Specific Performance. The parties hereto acknowledge that there
would be no adequate remedy at law if any party fails to perform any of its
obligations hereunder, and accordingly agree that each party, in addition
to any other remedy to which it may be entitled at law or in equity, shall
be entitled to compel specific performance of the obligations of any other
party under this Agreement in accordance with the terms and conditions of
this Agreement in any court of the United States or any State thereof
having jurisdiction. Any remedy hereunder is subject to certain equitable
defenses and to the discretion of the court before which any proceedings
therefor may be brought.
(m) Entire Agreement. This Agreement embodies the entire agreement
between the parties and understanding between the Company and the Holder
relating to the subject matter hereof and supersedes all prior agreements
and understandings relating to such subject matter.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
TEARDROP GOLF COMPANY
By:________________________________
Title:_____________________________
XXXXX XXXXXX GOLF COMPANY
By:________________________________
Title:_____________________________
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