THE REGISTERED HOLDER OF THIS PURCHASE OPTION BY ITS ACCEPTANCE HEREOF, AGREES
THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS PURCHASE OPTION EXCEPT AS HEREIN
PROVIDED.
NOT EXERCISABLE PRIOR TO________________, 1997. VOID AFTER 5:00 P.M. EASTERN
TIME, _______________________, 2001.
PURCHASE OPTION
FOR THE PURCHASE OF
115,000 SHARES OF COMMON STOCK
AND/OR
115,000 COMMON STOCK PURCHASE WARRANTS
OF
TEARDROP GOLF COMPANY
(A DELAWARE CORPORATION)
1 PURCHASE OPTION.
THIS CERTIFIES THAT, in consideration of $100 duly paid by or on
behalf of GKN Securities Corp. ("Holder"), as registered owner of this Purchase
Option, to TearDrop Golf Company ("Company"), Holder is entitled, at any time or
from time to time at or after _______________,1997 ("Commencement Date"), and at
or before 5:00 p.m., Eastern Time, _______________, 2001 ("Expiration Date"),
but not thereafter, to subscribe for, purchase and receive, in whole or in part,
up to 115,000 shares of Common Stock of the Company, $.01 par value ("Common
Stock") and/or 115,000 Common Stock Purchase Warrants, each to purchase one
share of Common Stock ("Warrants") during the period commencing on
_______________, 1997 and expiring _______________, 2001, (five years from the
effective date of the registration statement on Form SB-2 No. 333-14647
("Registration Statement") pursuant to which the Company has registered shares
of Common Stock and warrants to purchase Common Stock ("Effective Date")). Each
Warrant is the same as the warrants that have been registered for sale to the
public pursuant to the Registration
Statement ("Public Warrants"). The shares of Common Stock and Warrants are
sometimes collectively referred to herein as the "Securities." The Holder can
purchase, upon exercise of the Purchase Option, either shares of Common Stock or
Warrants or both. If the Expiration Date is a day on which banking institutions
are authorized by law to close, then this Purchase Option may be exercised on
the next succeeding day which is not such a day in accordance with the terms
herein. During the period ending on the Expiration Date, the Company agrees not
to take any action that would terminate the Purchase Option. This Purchase
Option is initially exercisable at $____per share of Common Stock and $____per
Warrant purchased; provided, however, that upon the occurrence of any of the
events specified in Section 6 hereof, the rights granted by this Purchase
Option, including the exercise price and the number of shares of Common Stock
and Warrants to be received upon such exercise, shall be adjusted as therein
specified. The term "Exercise Price" shall mean the initial exercise price or
the adjusted exercise price, depending on the context of a share of Common Stock
or a Warrant.
2 EXERCISE.
2.1 EXERCISE FORM. In order to exercise this Purchase Option,
the exercise form attached hereto must be duly executed and completed
and delivered to the Company, together with this Purchase Option and
payment of the Exercise Price in cash or by certified check or
official bank check for the Securities being purchased. If the
subscription rights represented hereby shall not be exercised at or
before 5:00 p.m., Eastern time, on the Expiration Date this Purchase
Option shall become and be void without further force or effect, and
all rights represented hereby shall cease and expire.
2.2 LEGEND. Unless registered under the Securities Act of 1933,
as amended (the "Act"), each certificate for Securities purchased
under this Purchase Option shall bear a legend as follows unless such
Securities have been registered under the Act:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended
("Act") or applicable state law. The securities may not be
offered for sale, sold or otherwise transferred except
pursuant to an effective registration statement under the
Act, or pursuant to an exemption from registration under the
Act and applicable state law."
2.3 CASHLESS EXERCISE.
2.3.1 DETERMINATION OF AMOUNT. In lieu of the payment of the
Exercise Price in the manner required by Section 2.1, the
Holder shall have the right (but not the obligation) to pay
the Exercise Price for the Securities being purchased with
this Purchase Option by the surrender to the Company of any
exercisable but unexercised portion of this Purchase Option
having a "Stock Value" or "Warrant Value" (as defined below),
as the case may be, at the close of trading on the last
trading day immediately preceding the exercise of this
Purchase Option, equal to the Exercise Price multiplied by
the number of Securities being purchased upon exercise
("Cashless Exercise Right").
2
2.3.1.1 COMMON STOCK. Upon exercise of the Conversion Right, the
Company shall deliver to the Holder (without payment by the
Holder of any of the Exercise Price in cash) that number of
shares of Common Stock equal to the quotient obtained by
dividing (x) the "Stock Value" (as defined below) of the
portion of the Purchase Option being converted at the time
the Conversion Right is exercised by (y) the Exercise Price.
The "Stock Value" of the portion of the Purchase Option being
converted shall equal the remainder derived from subtracting
(a) the Exercise Price multiplied by the number of shares of
Common Stock being converted from (b) the Market Price of the
Common Stock multiplied by the number of shares of Common
Stock being converted. As used herein, the term "Market
Price" at any date shall be deemed to be the last reported
sale price of the Common Stock on such date, or, in case no
such reported sale takes place on such day, the average of
the last reported sale prices for the immediately preceding
three trading days, in either case as officially reported by
the principal securities exchange on which the Common Stock
is listed or admitted to trading, or, if the Common Stock is
not listed or admitted to trading on any national securities
exchange or if any such exchange on which the Common Stock is
listed is not its principal trading market, the last reported
sale price as furnished by the NASD through the Nasdaq
National Market or SmallCap Market, or, if applicable, the
OTC Bulletin Board, or if the Common Stock is not listed or
admitted to trading on any of the foregoing markets, or
similar organization, as determined in good faith by
resolution of the Board of Directors of the Company, based on
the best information available to it.
2.3.1.2 WARRANTS. Upon exercise of the Conversion Right, the Company
shall deliver to the Holder (without payment by the Holder of
any of the Exercise Price in cash) that number of Warrants
equal to the quotient obtained by dividing (x) the "Warrant
Value" (as defined below) of the portion of the Purchase
Option being converted at the time the Conversion Right is
exercised by (y) the Exercise Price. The "Warrant Value" of
the portion of the Purchase Option being converted shall
equal the remainder derived from subtracting (a) the Exercise
Price multiplied by the number of Warrants being converted
from (b) the Market Price of the Warrants multiplied by the
number of Warrants being converted. As used herein, the term
"Market Price" at any date shall be deemed to be the last
reported sale price of the Warrants on such date, or, in case
no such reported sale takes place on such day, the average of
the last reported sale prices for the immediately preceding
three trading days, in either case as officially reported by
the principal securities exchange on which the Warrants are
listed or admitted to trading, or, if the
3
Warrants are not listed or admitted to trading on any
national securities exchange or if any such exchange on which
the Warrants are listed is not its principal trading market,
the last reported sale price as furnished by the NASD through
the Nasdaq National Market or SmallCap Market, or, if
applicable, the OTC Bulletin Board, or if the Warrants are
not listed or admitted to trading on any of the foregoing
markets, or similar organization, as determined in good faith
by resolution of the Board of Directors of the Company, based
on the best information available to it.
2.3.1.3 MECHANICS OF CASHLESS EXERCISE. The Cashless Exercise Right
may be exercised by the Holder on any business day on or
after the Commencement Date and not later than the Expiration
Date by delivering the Purchase Option with a duly executed
exercise form attached hereto with the cashless exercise
section completed to the Company, exercising the Cashless
Exercise Right and specifying the total number of Units will
purchase pursuant to such Cashless Exercise Right.
3 TRANSFER.
3.1 GENERAL RESTRICTIONS. The registered Holder of this Purchase
Option, by its acceptance hereof, agrees that it will not sell,
transfer or assign or hypothecate this Purchase Option prior to the
Commencement Date to anyone other than (i) an officer of GKN
Securities Corp. ("Underwriter") or an officer or partner of any
Selected Dealer in connection with the Company's public offering with
respect to which this Purchase Option has been issued, or (ii) any
Selected Dealer. On and after the Commencement Date, transfers to
others may be made subject to compliance with or exemptions from
applicable securities laws. In order to make any permitted
assignment, the Holder must deliver to the Company the assignment form
attached hereto duly executed and completed, together with the
Purchase Option and payment of all transfer taxes, if any, payable in
connection therewith. The Company shall immediately transfer this
Purchase Option on the books of the Company and shall execute and
deliver a new Purchase Option or Purchase Options of like tenor to the
appropriate assignee(s) expressly evidencing the right to purchase the
aggregate number of shares of Common Stock and Warrants purchasable
hereunder or such portion of such number as shall be contemplated by
any such assignment.
3.2 RESTRICTIONS IMPOSED BY THE ACT. This Purchase Option and
the Securities underlying this Purchase Option shall not be
transferred unless and until (i) the Company has received the opinion
of counsel for the Holder that this Purchase Option or the Securities,
as the case may be, may be transferred pursuant to an exemption from
registration under the Act and applicable state law, the availability
of which is established to the reasonable satisfaction of the Company
(the Company hereby agreeing that the opinion of Graubard Xxxxxx &
Xxxxxx shall be deemed satisfactory evidence of the availability of an
exemption), or (ii) a registration statement relating to such Purchase
Option or Securities, as the case may be, has
4
been filed by the Company and declared effective by the Securities and
Exchange Commission and compliance with applicable state law.
4 NEW PURCHASE OPTIONS TO BE ISSUED.
4.1 PARTIAL EXERCISE OR TRANSFER. Subject to the restrictions in
Section 3 hereof, this Purchase Option may be exercised or assigned in
whole or in part. In the event of the exercise or assignment hereof
in part only, upon surrender of this Purchase Option for cancellation,
together with the duly executed exercise or assignment form and funds
sufficient to pay any Exercise Price and/or transfer tax, the Company
shall cause to be delivered to the Holder without charge a new
Purchase Option of like tenor to this Purchase Option in the name of
the Holder evidencing the right of the Holder to purchase the
aggregate number of shares of Common Stock and Warrants purchasable
hereunder as to which this Purchase Option has not been exercised or
assigned.
4.2 LOST CERTIFICATE. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of
this Purchase Option and of reasonably satisfactory indemnification,
the Company shall execute and deliver a new Purchase Option of like
tenor and date. Any such new Purchase Option executed and delivered
as a result of such loss, theft, mutilation or destruction shall
constitute a substitute contractual obligation on the part of the
Company.
5 REGISTRATION RIGHTS.
5.1 DEMAND REGISTRATION.
5.1.1 GRANT OF RIGHT. The Company, upon written demand
("Initial Demand Notice") of the Holder(s) of at least 51% of
the Purchase Options and/or the underlying shares of Common
Stock and Warrants ("Majority Holders"), agrees to register
on one occasion, all or any portion of the Purchase Options
requested by the Majority Holders in the Initial Demand
Notice and all of the Securities underlying such Purchase
Options, including the Common Stock, the Warrants and the
Common Stock underlying the Warrants (collectively the
"Registrable Securities"). On such occasion, the Company
will file a Registration Statement covering the Registrable
Securities within sixty days after receipt of the Initial
Demand Notice and use its best efforts to have such
registration statement declared effective promptly
thereafter. If the Company fails to comply with the
provisions of this Section 5.1.1, the Company shall, in
addition to any other equitable or other relief available to
the Holder(s), be liable for any and all incidental, special
and consequential damages sustained by the Holder(s). The
demand for registration may be made at any time during a
period of five years beginning one year from the Effective
Date. The Company covenants and agrees to give written
notice of its receipt of any Initial Demand Notice by any
Holder(s) to all other registered Holders of the Purchase
Options and/or the Registrable Securities within ten days
from the date of the receipt of any such Initial Demand
Notice.
5
5.1.2 TERMS. The Company shall bear all fees and expenses
attendant to registering the Registrable Securities, but the
Holders shall pay any and all underwriting commissions and
the expenses of any legal counsel selected by the Holders to
represent them in connection with the sale of the Registrable
Securities. The Company agrees to use its best efforts to
cause the filing required herein to become effective promptly
and to qualify or register the Registrable Securities in such
States as are reasonably requested by the Holder(s);
provided, however, that in no event shall the Company be
required to register the Registrable Securities in a State in
which such registration would cause (i) the Company to be
obligated to register or license to do business in such
State, or (ii) the principal stockholders of the Company to
be obligated to escrow their shares of capital stock of the
Company. The Company shall cause any registration statement
filed pursuant to the demand rights granted under Section
5.1.1 to remain effective for a period of at least nine
consecutive months from the date that the Holders of the
Registrable Securities covered by such registration statement
are first given the opportunity to sell all of such
securities.
5.2 "PIGGY-BACK" REGISTRATION.
5.2.1 GRANT OF RIGHT. In addition to the demand right of
registration, the Holders of the Purchase Options shall have
the right for a period of seven years commencing one year
from the Effective Date, to include the Registrable
Securities as part of any other registration of securities
filed by the Company (other than in connection with a
transaction contemplated by Rule 145(a) promulgated under the
Act or pursuant to Form S-8 or any equivalent form) provided,
however, that if, in the written opinion of the Company's
managing underwriter or underwriters, if any, for such
offering, the inclusion of the Registrable Securities, when
added to the securities being registered by the Company or
the selling stockholder(s), will exceed the maximum amount
of the Company's securities which can be marketed (i) at a
price reasonably related to their then current market value,
or (ii) without materially and adversely affecting the entire
offering, the Company shall nevertheless register all or any
portion of the Registrable Securities required to be so
registered but such Registrable Securities shall not be sold
by the Holders until 180 days after the registration
statement for such offering has become effective and provided
further that, if any securities are registered for sale on
behalf of other stockholders in such offering and such
stockholders have not agreed to defer such sale until the
expiration of such 180 day period, the number of securities
to be sold by all stockholders in such public offering during
such 180 day period shall be apportioned PRO RATA among all
such selling stockholders, including all holders of the
Registrable Securities, according to the total amount of
securities of the Company owned by said selling stockholders,
including all holders of the Registrable Securities.
5.2.2 TERMS. The Company shall bear all fees and expenses
attendant to registering the Registrable Securities, but
the Holders shall pay any and all underwriting commissions
and the expenses of any legal counsel selected by the Holders
to represent them in connection with the sale of the
Registrable Securities. In the event of such a proposed
registration, the Company shall furnish the then
6
Holders of outstanding Registrable Securities with not less
than thirty days written notice prior to the proposed date of
filing of such registration statement. Such notice to the
Holders shall continue to be given for each registration
statement filed by the Company until such time as all of the
Registrable Securities have been sold by the Holder. The
holders of the Registrable Securities shall exercise the
"piggy-back" rights provided for herein by giving written
notice, within twenty days of the receipt of the Company's
notice of its intention to file a registration statement.
The Company shall cause any registration statement filed
pursuant to the above "piggyback" rights to remain effective
for at least nine months from the date that the Holders of
the Registrable Securities are first given the opportunity to
sell all of such securities.
5.3 GENERAL TERMS.
5.3.1 INDEMNIFICATION. The Company shall indemnify the
Holder(s) of the Registrable Securities to be sold pursuant
to any registration statement hereunder and each person, if
any, who controls such Holders within the meaning of Section
15 of the Act or Section 20(a) of the Securities Exchange Act
of 1934, as amended ("Exchange Act"), against all loss,
claim, damage, expense or liability (including all reasonable
attorneys' fees and other expenses reasonably incurred in
investigating, preparing or defending against any claim
whatsoever) to which any of them may become subject under the
Act, the Exchange Act or otherwise, arising from such
registration statement but only to the same extent and with
the same effect as the provisions pursuant to which the
Company has agreed to indemnify the Underwriter contained in
Section 5 of the Underwriting Agreement between the
Underwriter and the Company, dated the Effective Date. The
Holder(s) of the Registrable Securities to be sold pursuant
to such registration statement, and their successors and
assigns, shall severally, and not jointly, indemnify the
Company, against all loss, claim, damage, expense or
liability (including all reasonable attorneys' fees and other
expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which they may
become subject under the Act, the Exchange Act or otherwise,
arising from information furnished by or on behalf of such
Holders, or their successors or assigns, in writing, for
specific inclusion in such registration statement to the same
extent and with the same effect as the provisions contained
in Section 5 of the Underwriting Agreement pursuant to which
the Underwriter has agreed to indemnify the Company.
5.3.2 EXERCISE OF WARRANTS. Nothing contained in this
Purchase Option shall be construed as requiring the Holder(s)
to exercise their Purchase Options or Warrants prior to or
after the initial filing of any registration statement or the
effectiveness thereof.
5.3.3 EXCLUSIVITY. The Company shall not permit the
inclusion of any securities other than the Registrable
Securities to be included in any registration statement filed
pursuant to Section 5.1 hereof without the prior written
consent of the Majority Holders of the Registrable
Securities.
7
5.3.4 DOCUMENTS DELIVERED TO HOLDERS. The Company shall
furnish to each Holder participating in any of the foregoing
offerings and to each underwriter of any such offering, if
any, a signed counterpart, addressed to such Holder or
underwriter, of (i) an opinion of counsel to the Company,
dated the effective date of such registration statement (and,
if such registration includes an underwritten public
offering, an opinion dated the date of the closing under any
underwriting agreement related thereto), and (ii) a "cold
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 issued a report on the Company's
financial statements included in such registration statement,
in each case covering substantially the same matters with
respect to such registration statement (and the prospectus
included therein) and, in the case of such 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 to
underwriters in underwritten public offerings of securities.
The Company shall also deliver promptly to each Holder
participating in the offering requesting the correspondence
and memoranda described below and to the managing underwriter
copies of all correspondence between the Commission and the
Company, its counsel or auditors and all memoranda relating
to discussions with the Commission or its staff with respect
to the registration statement and permit each Holder and
underwriter to do such investigation, upon reasonable advance
notice, with respect to information contained in or omitted
from the registration statement as it deems reasonably
necessary to comply with applicable securities laws or rules
of the National Association of Securities Dealers, Inc.
("NASD"). Such investigation shall include access to books,
records and properties and opportunities to discuss the
business of the Company with its officers and independent
auditors, all to such reasonable extent and at such
reasonable times and as often as any such Holder shall
reasonably request.
5.3.5 UNDERWRITING AGREEMENT. The Company shall enter into
an underwriting agreement with the managing underwriter(s)
selected by any Holders whose Registrable Securities are
being registered pursuant to this Section 5. Such agreement
shall be reasonably satisfactory in form and substance to the
Company, each Holder and such managing underwriters, and
shall contain such representations, warranties and covenants
by the Company and such other terms as are customarily
contained in agreements of that type used by the managing
underwriter. The Holders shall be parties to any
underwriting agreement relating to an underwritten sale of
their Registrable Securities and may, at their option,
require that any or all the representations, warranties and
covenants of the Company to or for the benefit of such
underwriters shall also be made to and for the benefit of
such Holders. Such Holders shall not be required to make any
representations or warranties to or agreements with the
Company or the underwriters except as they may relate to such
Holders, their shares and their intended methods of
distribution.
8
5.3.6 DOCUMENTS TO BE DELIVERED BY XXXXXX(S). Each of the
Holder(s) participating in any of the foregoing offerings
shall furnish to the Company a completed and executed
questionnaire provided by the Company requesting information
customarily sought of selling security holders.
6 ADJUSTMENTS.
6.1 ADJUSTMENTS TO EXERCISE PRICE AND NUMBER OF SECURITIES. The
Exercise Price and the number of shares of Common Stock underlying the
Purchase Option (and underlying the Warrants underlying the Purchase
Option) shall be subject to adjustment from time to time as
hereinafter set forth:
6.1.1 STOCK DIVIDENDS - RECAPITALIZATION, RECLASSIFICATION,
SPLIT-UPS. If after the date hereof, and subject to the
provisions of Section 6.3 below, the number of outstanding
shares of Common Stock is increased by a stock dividend
payable in shares of Common Stock or by a split-up,
recapitalization or reclassification of shares of Common
Stock or other similar event, then, on the effective date
thereof, the number of shares of Common Stock issuable on
exercise of the Purchase Option and the Warrants underlying
the Purchase Option shall be increased in proportion to such
increase in outstanding shares.
6.1.2 AGGREGATION OF SHARES. If after the date hereof, and
subject to the provisions of Section 6.3, the number of
outstanding shares of Common Stock is decreased by a
consolidation, combination or reclassification of shares of
Common Stock or other similar event, then, upon the effective
date thereof, the number of shares of Common Stock issuable
on exercise of the Purchase Option and the Warrants
underlying the Purchase Option shall be decreased in
proportion to such decrease in outstanding shares.
6.1.3 ADJUSTMENTS IN EXERCISE PRICE. Whenever the number of
shares of Common Stock purchasable upon the exercise of this
Purchase Option is adjusted, as provided in this Section 6.1,
the Exercise Price shall be adjusted (to the nearest cent) by
multiplying such Exercise Price immediately prior to such
adjustment by a fraction (x) the numerator of which shall be
the number of shares of Common Stock purchasable upon the
exercise of this Purchase Option immediately prior to such
adjustment, and (y) the denominator of which shall be the
number of shares of Common Stock so purchasable immediately
thereafter. If it is determined that such Exercise Price and
number of shares of Common Stock must be adjusted, then the
Exercise Price of the Purchase Option with respect to the
underlying Warrants and the number of Warrants purchasable
hereunder shall also be adjusted pro rata. For example, if
the Exercise Price of this Purchase Option for a share of
Common Stock decreases to $[5.00] then the Exercise Price of
this Purchase Option for a Warrant will decrease to $[0.10].
6.1.4 REPLACEMENT OF SECURITIES UPON REORGANIZATION, ETC. In
case of any reclassification or reorganization of the
outstanding shares of Common Stock other than a change
covered by Section 6.1.1 hereof or which solely
9
affects the par value of such shares of Common Stock, or in
the case of any merger or consolidation of the Company with
or into another corporation (other than a consolidation or
merger in which the Company is the continuing corporation and
which does not result in any reclassification or
reorganization of the outstanding shares of Common Stock), or
in the case of any sale or conveyance to another corporation
or entity of the property of the Company as an entirety or
substantially as an entirety in connection with which the
Company is dissolved, the Holder of this Purchase Option
shall have the right thereafter (until the expiration of the
right of exercise of this Purchase Option) to receive upon
the exercise hereof, for the same aggregate Exercise Price
payable hereunder immediately prior to such event, the kind
and amount of shares of stock or other securities or property
(including cash) receivable upon such reclassification,
reorganization, merger or consolidation, or upon a
dissolution following any such sale or other transfer, by a
Holder of the number of shares of Common Stock of the Company
obtainable upon exercise of this Purchase Option immediately
prior to such event; and if any reclassification also results
in a change in shares of Common Stock covered by
Section 6.1.1, then such adjustment shall be made pursuant to
Sections 6.1.1, 6.1.3 and this Section 6.1.4. The provisions
of this Section 6.1.4 shall similarly apply to successive
reclassifications, reorganizations, mergers or
consolidations, sales or other transfers.
6.1.5 CHANGES IN FORM OF PURCHASE OPTION. This form of
Purchase Option need not be changed because of any change
pursuant to this Section, and Purchase Options issued after
such change may state the same Exercise Price and the same
number of shares of Common Stock and Warrants as are stated
in the Purchase Options initially issued pursuant to this
Agreement. The acceptance by any Holder of the issuance of
new Purchase Options reflecting a required or permissive
change shall not be deemed to waive any rights to a prior
adjustment or the computation thereof.
6.2 [Intentionally Omitted]
6.3 ELIMINATION OF FRACTIONAL INTERESTS. The Company shall not
be required to issue certificates representing fractions of shares of
Common Stock or Warrants upon the exercise or transfer of the Purchase
Option, nor shall it be required to issue scrip or pay cash in lieu of
any fractional interests, it being the intent of the parties that all
fractional interests shall be eliminated by rounding any fraction up
or down to the nearest whole number of Warrants, shares of Common
Stock or other securities, properties or rights.
7 RESERVATION AND LISTING. The Company shall at all times reserve and
keep available out of its authorized shares of Common Stock, solely for the
purpose of issuance upon exercise of the Purchase Options or the Warrants,
such number of shares of Common Stock or other securities, properties or
rights as shall be issuable upon the exercise thereof. The Company
covenants and agrees that, upon exercise of the Purchase Options and
payment of the Exercise Price therefor, all shares of Common Stock and
other securities issuable upon such exercise shall be duly and validly
issued, fully paid and non-assessable and not subject to preemptive rights
of any stockholder. The Company further covenants
10
and agrees that upon exercise of the Warrants underlying the Purchase
Options and payment of the respective Warrant exercise price therefor, all
shares of Common Stock and other securities issuable upon such exercises
shall be duly and validly issued, fully paid and non-assessable and not
subject to preemptive rights of any stockholder. As long as the Purchase
Options shall be outstanding, the Company shall use its best efforts to
cause all (i) shares of Common Stock issuable upon exercise of the Purchase
Options and the Warrants, and (ii) the Warrants underlying the Purchase
Options to be listed (subject to official notice of issuance) on all
securities exchanges (or, if applicable on Nasdaq) on which the Common
Stock or the Public Warrants issued to the public in connection herewith
are then listed and/or quoted.
8 CERTAIN NOTICE REQUIREMENTS.
8.1 HOLDER'S RIGHT TO RECEIVE NOTICE. Nothing herein shall be
construed as conferring upon the Holders the right to vote or consent
or to receive notice as a stockholder for the election of directors or
any other matter, or as having any rights whatsoever as a stockholder
of the Company. If, however, at any time prior to the expiration of
the Purchase Options and their exercise, any of the events described
in Section 8.2 shall occur, then, in one or more of said events, the
Company shall give written notice of such event at least fifteen days
prior to the date fixed as a record date or the date of closing the
transfer books for the determination of the stockholders entitled to
such dividend, distribution, conversion or exchange of securities or
subscription rights, or entitled to vote on such proposed dissolution,
liquidation, winding up or sale. Such notice shall specify such
record date or the date of the closing of the transfer books, as the
case may be.
8.2 EVENTS REQUIRING NOTICE. The Company shall be required to
give the notice described in this Section 8 upon one or more of the
following events: (i) if the Company shall take a record of the
holders of its shares of Common Stock for the purpose of entitling
them to receive a dividend or distribution payable otherwise than in
cash, or a cash dividend or distribution payable otherwise than out of
retained earnings, as indicated by the accounting treatment of such
dividend or distribution on the books of the Company, or (ii) the
Company shall offer to all the holders of its Common Stock any
additional shares of capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of the
Company, or any option, right or warrant to subscribe therefor, or
(iii) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business shall be
proposed.
8.3 NOTICE OF CHANGE IN EXERCISE PRICE. The Company shall,
promptly after an event requiring a change in the Exercise Price
pursuant to Section 6 hereof, send notice to the Holders of such event
and change ("Price Notice"). The Price Notice shall describe the
event causing the change and the method of calculating same and shall
be certified as being true and accurate by the Company's President and
Chief Financial Officer.
8.4 TRANSMITTAL OF NOTICES. All notices, requests, consents and
other communications under this Purchase Option shall be in writing
and shall be deemed to have been duly made on the date of delivery if
delivered personally or sent by overnight
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courier, with acknowledgment of receipt to the party to which notice
is given, or on the fifth day after mailing if mailed to the party to
whom notice is to be given, by registered or certified mail, return
receipt requested, postage prepaid and properly addressed as follows:
(i) if to the registered Holder of the Purchase Option, to the address
of such Holder as shown on the books of the Company, or (ii) if to the
Company, to its principal executive office.
9 MISCELLANEOUS.
9.1 AMENDMENTS. The Company and the Underwriter may from time to
time supplement or amend this Purchase Option without the approval of
any of the Holders in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, or to make any other
provisions in regard to matters or questions arising hereunder which
the Company and the Underwriter may deem necessary or desirable and
which the Company and the Underwriter deem shall not adversely affect
the interest of the Holders. All other modifications or amendments
shall require the written consent of the party against whom
enforcement of the modification or amendment is sought.
9.2 HEADINGS. The headings contained herein are for the sole
purpose of convenience of reference, and shall not in any way limit or
affect the meaning or interpretation of any of the terms or provisions
of this Purchase Option.
9.3 ENTIRE AGREEMENT. This Purchase Option (together with the
other agreements and documents being delivered pursuant to or in
connection with this Purchase Option) constitutes the entire agreement
of the parties hereto with respect to the subject matter hereof, and
supersedes all prior agreements and understandings of the parties,
oral and written, with respect to the subject matter hereof.
9.4 BINDING EFFECT. This Purchase Option shall inure solely to
the benefit of and shall be binding upon, the Holder and the Company
and their respective successors, legal representatives and assigns,
and no other person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of or by virtue
of this Purchase Option or any provisions herein contained.
9.5 GOVERNING LAW; SUBMISSION TO JURISDICTION. This Purchase
Option shall be governed by and construed and enforced in accordance
with the laws of the State of New York, without giving effect to
conflict of laws. The Company hereby agrees that any action,
proceeding or claim against it arising out of, or relating in any way
to this Purchase Option shall be brought and enforced in the courts of
the State of New York or of the United States of America for the
Southern District of New York, and irrevocably submits to such
jurisdiction, which jurisdiction shall be exclusive. The Company
hereby waives any objection to such exclusive jurisdiction and that
such courts represent an inconvenient forum. Any process or summons
to be served upon the Company may be served by transmitting a copy
thereof by registered or certified mail, return receipt requested,
postage prepaid, addressed to it at the address set forth in Section 8
hereof. Such mailing shall be deemed personal service and shall be
legal and binding upon the Company in any action, proceeding or claim.
The Company agrees that the prevailing party(ies) in any such
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action shall be entitled to recover from the other party(ies) all of
its reasonable attorneys' fees and expenses relating to such action
or proceeding and/or incurred in connection with the preparation
therefor.
9.6 WAIVER, ETC. The failure of the Company or the Holder to at
any time enforce any of the provisions of this Purchase Option shall
not be deemed or construed to be a waiver of any such provision, nor
to in any way affect the validity of this Purchase Option or any
provision hereof or the right of the Company or any Holder to
thereafter enforce each and every provision of this Purchase Option.
No waiver of any breach, non-compliance or non-fulfillment of any of
the provisions of this Purchase Option shall be effective unless set
forth in a written instrument executed by the party or parties against
whom or which enforcement of such waiver is sought; and no waiver of
any such breach, non-compliance or non-fulfillment shall be construed
or deemed to be a waiver of any other or subsequent breach, non-
compliance or non-fulfillment.
9.7 EXECUTION IN COUNTERPARTS. This Purchase Option may be
executed in one or more counterparts, and by the different parties
hereto in separate counterparts, each of which shall be deemed to be
an original, but all of which taken together shall constitute one and
the same agreement, and shall become effective when one or more
counterparts has been signed by each of the parties hereto and
delivered to each of the other parties hereto.
IN WITNESS WHEREOF, the Company has caused this Purchase Option to be
signed by its duly authorized officer as of the ____ day of ______________,
1996.
TEARDROP GOLF COMPANY
By:__________________________
Name: Xxxx X. Xxxxxxx
Title: Chief Executive Officer and
President
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Form to be used to exercise Purchase Option:
TEARDROP GOLF COMPANY
00 Xxx Xxxxxx, Xxxxxxxx #0
Xxxxxx Xxxx Xxxxxx, Xxxxx Xxxxxxxx 00000
Date:_________________, 19__
The undersigned hereby elects irrevocably to exercise the within
Purchase Option and to purchase ____ shares of Common Stock and Warrants to
purchase _____shares of Common Stock of TearDrop Golf Company and hereby makes
payment of $____________ (at the rate of $________per share of Common Stock and
$________per Warrant) in payment of the Exercise Price pursuant thereto. Please
issue the Common Stock and Warrants as to which this Purchase Option is
exercised in accordance with the instructions given below.
OR
The undersigned hereby elects irrevocably to exercise the within
Purchase Option and to purchase __________Securities of TearDrop Golf Company by
surrender of the unexercised portion of the within Purchase Option (with a
"Value" of $___________ based on a "Market Price" of $_________). Please issue
the Common Stock and Warrants comprising the Securities in accordance with the
instructions given below.
______________________________
Signature
______________________________
Signature Guaranteed
NOTICE: THE SIGNATURE TO THIS FORM MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE WITHIN PURCHASE OPTION IN EVERY PARTICULAR WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A
BANK, OTHER THAN A SAVINGS BANK, OR BY A TRUST COMPANY OR BY A FIRM HAVING
MEMBERSHIP ON A REGISTERED NATIONAL SECURITIES EXCHANGE.
INSTRUCTIONS FOR REGISTRATION OF SECURITIES
Name ________________________________________________________
(Print in Block Letters)
Address ________________________________________________________
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Form to be used to assign Purchase Option:
ASSIGNMENT
(To be executed by the registered Holder to effect a transfer of the
within Purchase Option):
FOR VALUE RECEIVED,____________________________________
does hereby sell, assign and transfer unto_______________________
the right to purchase _______________________ shares of Common Stock and/or
Warrants to purchase ________ shares of Common Stock of TearDrop Golf Company
("Company") evidenced by the within Purchase Option and does hereby authorize
the Company to transfer such right on the books of the Company.
Dated:___________________, 199_
______________________________
Signature
NOTICE: THE SIGNATURE TO THIS FORM MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE WITHIN PURCHASE OPTION IN EVERY PARTICULAR WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER.
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