REGISTRATION AGREEMENT
AGREEMENT made as of December 29, 1997, between TEARDROP GOLF COMPANY, a
Delaware corporation (the "Company), and RAM GOLF CORPORATION, a Delaware
corporation ("Holder").
The Parties to this Agreement are Parties to an Asset Purchase Agreement
dated December 23, 1997 (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 120 calendar days of the date hereof a shelf
Registration Statement under the Securities Act of 1933, as amended (the
"Act") providing for the registration of the sale of the Registrable
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 160 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 Securities and Exchange Commission (the
"Commission") render the ability of the Company to satisfy the 160 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) When 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 (and in all events
subject to Section 1):
(i) 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 the sooner
of (i) 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 or (ii) two
years from the date of the Closing as defined in the Purchase
Agreement;
(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) notify the Holder (and the managing underwriter or
underwriters, if any) promptly and confirm such advice in writing
promptly thereafter:
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(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;
(vii) 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 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;
(viii) make every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of the registration
statement at the earliest possible moment;
(ix) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission 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
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supplement does not comply in all material respects with the
requirements of the Securities Act or of the rules or regulations
thereunder;
(x) 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;
(xi) 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;
(xii) 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;
(xiii) 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
(xiv) 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
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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
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
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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 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,
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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 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 Holder pursuant to the Purchase Agreement, (ii) the common
stock issued or issuable upon the exercise of Warrants issued to the
Holder in accordance with the Purchase Agreement 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
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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 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 and the expenses
of any separate fees for counsel for the Holder, 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
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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.
(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. This Agreement may be assigned by the
Holder to any of the stockholders of the Holder who become transferees of
the Registrable Securities and for purposes hereof they will be treated as
a Holder. 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
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Agreement and the transactions contemplated hereunder in any federal or
state court within the State of Illinois . This Agreement shall be
governed by and construed in accordance with the law of the State of
Illinois 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 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) Underwriter Holdback. The Holder agrees that if the Company
proposes to offer securities pursuant to a Registration Statement under
the Securities Act pursuant to a firm commitment underwritten public
offering, then the Holder will, if requested by the Underwriter of such
proposed public offering, enter into such agreement that may be
requested, agreeing not to sell, pledge, hypothecate or otherwise dispose
of any Registrable Securities for the same period of time that is
requested of officers, directors and principal stockholders of the
Company.
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(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 other 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
TEARDROP GOLF COMPANY
By: /s/ XXXX X. XXXXXXX
-----------------------
Title: President
RAM GOLF CORPORATION
By: /s/ XXXXX X. XXXXXXXXXX
-----------------------
Title: President
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