SETTLEMENT AGREEMENT
This Agreement is being entered into on March 31, 1998 by and among TA
Liquidation Corp., a Delaware corporation formerly known as ▇▇▇▇▇ ▇▇▇▇▇▇ Golf
Company, ▇▇▇▇▇ ▇▇▇▇▇▇ Golf (Scotland) Ltd., a company incorporated with limited
liability under the laws of Scotland, and USI Canada Inc., an Ontario
corporation ("Sellers"); USI American Holdings, Inc., a Delaware corporation
("Shareholder"); and ▇▇▇▇▇ ▇▇▇▇▇▇ Golf Company, a Delaware corporation formerly
known as TearDrop Acquisition Corp. and TearDrop Golf Company, a Delaware
corporation ("Parent").
The parties recited above are the parties to an Asset Purchase Agreement
dated October 31, 1997 (the "Purchase Agreement"). All capitalized terms not
defined herein shall have the meanings assigned to them in the Purchase
Agreement.
The Closing was consummated on November 10, 1997. Sellers and Buyer have
had disagreements regarding the Final Net Worth and related adjustment of the
Purchase Price pursuant to Section 2.2 of the Purchase Agreement, and the
parties to the Purchase Agreement now desire to resolve said disagreements, to
determine the final Purchase Price adjustment and to provide for certain other
matters as set forth herein.
Therefore, the parties, intending to be legally bound, and in
consideration of the mutual agreements set forth herein, hereby agree as
follows:
1. Amendment of Purchase Price. The parties hereby agree that, in lieu
of the provisions of Section 2.2 of the Purchase Agreement
(Adjustment of Purchase Price) and the related provisions of Section
2.3 of the Purchase Agreement (Payment of Purchase Price), the
Purchase Price as set forth in Section 2.1 of the Purchase Agreement
is hereby amended as follows:
a. The Cash Purchase Price shall be increased from Ten Million
Dollars ($10,000,000) to Eleven Million, Six Hundred Thousand
Dollars ($11,600,000).
b. The amount of Common Stock shall be decreased from One Million
(1,000,000) shares to One Hundred, Seventy-Five Thousand
(175,000) shares.
c. The amount of Preferred Stock shall remain unchanged.
2. Final Purchase Price Determination. The parties agree that the
determination of the Purchase Price set forth in Section 1 of this
Agreement shall be final and binding on the parties, with the same
effect as if an Acceptance Notice had been delivered pursuant to
Section 2.2(d) and payment had been made in accordance with Sections
2.2 and 2.3 of the Purchase Agreement. The procedures set forth in
Section 2.2 of the Purchase Agreement shall be of no further force
or effect. Buyer and Parent hereby absolutely, unconditionally and
irrevocably release Sellers, Shareholder and the affiliates thereof
from and against any and all liabilities or claims of any kind in
connection with or related to the Final Balance Sheet, whether
asserted or unasserted prior hereto, whether known or unknown, or
whether arising prior to or subsequent to this Settlement Agreement.
For the avoidance of doubt, the release set forth herein shall be
understood to include (without limitation) the obligations of
Sellers under the purported agreements with ▇▇. ▇▇▇▇ ▇▇▇▇▇ and Mr.
▇▇▇ ▇▇▇▇▇ and any other agreements of the Business for which an
accrual could or should have been made on the Final Balance Sheet,
which obligations shall be borne by Buyer. The preceding sentence
shall not prejudice the rights of Buyer under any provisions of the
Purchase Agreement other than Sections 1.5, 2.2 and 2.3 thereof.
3. Common Stock. The decrease in the amount of Common Stock pursuant to
Section 1 shall be accomplished as set forth in this Section. Upon
receipt of the payment specified in Section 4 below, Seller shall
transmit its share certificate number TG0053, evidencing ownership
of 1 million shares of the Parent's common stock, together with an
appropriate instrument of assignment to the Parent in respect of the
825,000 shares surrendered hereby, to Continental Stock Transfer &
Trust Co., ▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as transfer agent.
Parent shall cause said transfer agent to issue a replacement
certificate in respect of the balance of 175,000 shares of common
stock forthwith and deliver said certificate to Seller c/o ▇▇▇▇▇▇ ▇.
▇▇▇▇▇, Associate General Counsel, U.S. Industries, Inc., ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇. Seller acknowledges that the
certificate issued to it will bear the same restrictive legend as is
set forth on certificate number TG0053.
4. Payment . Payment of the One Million, Six Hundred Thousand Dollars
($1,600,000) due to Buyer pursuant to Section 1 of this Agreement
shall be made to Sellers on the date hereof by wire transfer of
immediately available funds as follows:
Chase Manhattan Bank
New York, New York
ABA #▇▇▇▇▇▇▇▇▇
USI American Holdings, Inc.
A/C #323-073670
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5. Board Seat. Clause (a) of Section 6.18 of the Purchase Agreement is
hereby amended to read as follows:
shares of Preferred Stock having a redemption value of the
aggregate amount of $5 million or more, Parent will cause a
nominee of Sellers ("Nominee") to be elected to the Parent's
Board, and
6. Certificate of Designation - Mandatory Redemption. This paragraph
shall apply in the event that, pursuant to the last sentence of
Article VI(B) of the Certificate of Designation with respect to the
Preferred Stock, 60% of certain net cash proceeds are to be applied
to the redemption of Preferred Stock. In each such event, Parent
shall purchase from Sellers, and Sellers shall sell to Parent,
additional shares of Preferred Stock having an aggregate Redemption
Price (as defined in the Certificate of Designation) equal to 10% of
the applicable net cash proceeds (but in no event more than the
remaining shares of Preferred Stock then owned by Sellers), so as to
have as nearly as possible the same economic effect as if the two
references to "60%" in Article VI(B) were replaced with references
to "70%."
7. Registration Statement. The registration statement contemplated by
the Registration Agreement shall be filed with the Securities and
Exchange Commission on or before April 20, 1998.
8. Publicity. The parties shall consult, as contemplated by Section 6.8
of the Purchase Agreement, before issuing any press release or
making other disclosure of the terms of this Agreement.
9. Representations and Warranties. Each of Sellers, USI, Buyer and
Parent represents and warrants to the other that:
a. The execution and delivery of this Agreement and the other
documents to be delivered by such party pursuant hereto, and
the consummation of the transactions contemplated hereby and
thereby, are within the corporate power of such party and have
been duly authorized by all necessary corporate proceedings on
the part of such party.
b. Such party is a corporation duly organized and in good
standing under the laws of the jurisdiction of its
incorporation identified in the first paragraph hereof.
c. This Agreement and the other documents to be executed by such
party pursuant hereto have been duly executed and delivered by
such party and
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constitute its valid and binding obligations and acts,
enforceable against such party in accordance with such terms.
d. The execution and delivery of this Agreement and the other
documents to be executed by such party pursuant hereto, and
the consummation of the transactions contemplated hereby and
thereby, do not (and will not, with the giving of notice or
the passage of time or both) contravene any of the terms of,
constitute an event of default under, or permit the exercise
or imposition of any lien pursuant to, such parties
constitutive documents or any agreement, security document,
license, franchise or other right or undertaking to which such
party is a party or by which it is bound.
10. Miscellaneous.
a. This Settlement Agreement shall be binding upon and inure to
the benefit of each party hereto and its successors and
assigns. This Settlement Agreement is intended to be a
complete statement of all the terms of the arrangement between
the parties with respect to the matters provided for herein,
supercedes any discussions and other communications between
the parties with respect to those matters and cannot be
changed or terminated orally. Except as amended or modified by
this Settlement Agreement, the terms of the Purchase Agreement
shall remain in full force and effect.
b. The Section headings contained herein are for purposes of
convenience only and are not intended to define or limit the
contents of said paragraphs.
c. This Agreement may be executed in counterparts, each of which
shall be an original, but which together shall constitute one
and the same Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first set forth above.
TA LIQUIDATION CORP.
/s/
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Name:
Title:
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▇▇▇▇▇ ▇▇▇▇▇▇ GOLF (SCOTLAND) LTD.
/s/
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Name:
Title:
USI CANADA INC.
/s/
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Name:
Title:
USI AMERICAN HOLDINGS, INC.
/s/
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Name:
Title:
▇▇▇▇▇ ▇▇▇▇▇▇ GOLF COMPANY
/s/
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Name:
Title:
TEARDROP GOLF COMPANY
/s/
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Name:
Title:
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