<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
Information to be included in statements filed pursuant to 13d-1(a) and
amendments thereto filed pursuant to 13d-2(a)
TEARDROP GOLF COMPANY
(Name of Issuer)
Common Stock, par value $0.01 per share
(Title of Class of Securities)
878190
(CUSIP Number)
Douglas H. Walter, Esq.
Jones, Day, Reavis & Pogue
77 West Wacker
Chicago, IL 60601-1692
(312) 269-4109
--------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
January 8, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
(Continued on following pages)
Page 1 of 8
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- ----------------------- ---------------------
CUSIP NO. 878190 SCHEDULE 13D PAGE 2 OF 8 PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
JRH GOLF CORPORATION
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
00
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 237,357
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
0
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 237,357
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
0
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
237,357
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
6.4%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
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CUSIP NO. 878190 SCHEDULE 13D PAGE 3 OF 8 PAGES
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- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
James R. Hansberger
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
00
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
United States
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
237,357
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
237,357
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
237,357
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
6.4%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Item 1. Security and Issuer
This Statement relates to shares of common stock, $0.01 par value per share
(the "Shares"), of TearDrop Golf Company (the "Company"), a corporation
organized under the laws of the State of Delaware. The principal executive
offices of the Company are located at 1080 Lousons Road, Union, New Jersey,
07083.
Item 2. Identity and Background
JRH Golf Corporation (formerly known as RAM Golf Corporation) ("JRH") is a
corporation organized under the laws of the State of Delaware. JRH is engaged in
the manufacturing, distributing, promoting, marketing and selling of insert
putters. JRH's principal business address is, and its principal offices are
located at, 2020 Indian Boundry Drive, Melrose Park, Illinois, 60160.
James R. Hansberger ("Hansberger", and together with JRH, the "Reporting
Persons") is the principal stockholder, President and a member of the Board of
Directors of JRH. Hansberger is a United States citizen whose residence address
is 809 Red Stable Way, Oakbrook, Illinois, 60521.
The following sets forth a list of the names and present principal
occupations or employment of each director and executive officer (except
Hansberger (see immediately preceding paragraph)) of JRH:
NAME PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
- ---- ------------------------------------------
Robert Hansberger Director of JRH and Chairman of Futura Corporation, a
private holding company. Futura Corporation's business
address is 380 Park Center, Boise, Idaho, 83706.
Frank Heffley Secretary and Vice President of Manufacturing of JRH
Each of the executive officers and directors of JRH listed above (the
"Executives") are citizens of the United States. The business address of Robert
Hansberger is 380 Park Center, Boise, Idaho, 83706.. The business address of
Frank Heffley is 2020 Indian Boundry Drive, Melrose Park, IL, 60160.
During the last five years, none of the Reporting Persons or Executives has
been (a) convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (b) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, Federal or
State securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
On December 29, 1997 (the "Closing Date"), JRH and RAM Golf UK, LTD., a UK
corporation ("RAM UK", and together with JRH, "Sellers") sold a substantial
portion of their assets and properties on a going concern basis (the
"Acquisition") to TearDrop Ram Golf Company ("TearDrop RAM"), a wholly owned
subsidiary of the Company. JRH received the following consideration from
TearDrop RAM in connection with the Acquisition: (a) cash; (b) 83,007 Shares
held in escrow subject to an escrow agreement (see Item 6 (paragraph 2), the
response to which is hereby incorporated by reference, for additional
information concerning the terms of the escrow agreement); (c) 100,000 Shares
held in escrow subject to an escrow agreement (see Item 6 (paragraph 3), the
response to which is hereby incorporated by reference, for additional
information concerning the terms of the escrow agreement); (d) 4,350 Shares; (e)
a warrant (the "Warrant") to purchase 50,000 Shares within a specified period of
time at $6.625 per share (see Item 6 (paragraph 5), the response to which is
hereby incorporated by reference, for additional information concerning the
terms of the Warrant); and (f) an assumption by TearDrop RAM of certain ordinary
course liabilities of JRH incurred prior to the Closing Date.
The Shares and Warrant received by JRH in connection with the Acquisition
were not registered under the Securities Act of 1933, as amended (the "1933
Act") and are thus subject to various resale and other transfer restrictions.
Refer to Item 6 (fourth paragraph), the response to which is hereby incorporated
by reference, for additional information concerning the registration rights
granted by the Company to JRH with respect to the Shares and Warrant received in
connection with the Acquisition.
Page 4 of 8
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The 183,007 Shares issued to JRH in connection with the Acquisition and
held in escrow are subject to certain purchase price adjustments whereby the
number of Shares that will actually be received by JRH upon settlement of the
escrow may be higher or lower depending upon (a) the audited value of inventory
items acquired by TearDrop RAM and (b) required deliveries of inventory required
to meet the short term working capital needs of TearDrop Ram. See Item 6, the
response to which is hereby incorporated by reference, for additional
information concerning the purchase price adjustments and the escrow agreements.
Item 4. Purpose of Transaction
JRH acquired the Shares and the Warrant for investment purposes.
Of the Shares the Reporting Persons may be deemed to beneficially own (as
discussed in detail in Item 5), 50,000 relate to Shares the Reporting Persons
have a present right to acquire through the exercise of the Warrant. The Warrant
is more fully described in Item 6, the response to which is hereby incorporated
by reference.
See Items 3 and 6, the responses to which are hereby incorporated by
reference, for additional information concerning certain purchase price
adjustments whereby the number of shares that will actually be received by JRH
upon settlement of the escrow may be higher or lower and information concerning
the escrow agreements and the purchase price adjustments.
Except as set forth above, no Reporting Person or Executive has formulated
any plans or proposals which relate to or would result in (a) the acquisition by
any person of additional securities of the Company or the disposition of
securities of the Company, (b) an extraordinary corporate transaction involving
the Company or any of its subsidiaries, (c) a sale or transfer of a material
amount of the assets of the Company or any of its subsidiaries, (d) any change
in the present board of directors or management of the Company, (e) any material
change in the Company's present capitalization or dividend policy, (f) any other
material change in the Company's business or corporate structure, (g) any change
in the Company's charter or bylaws or other instrument corresponding thereto or
other action which may impede the acquisition of control of the Company by any
person, (h) causing a class of the Company's securities to be de-listed, (i) a
class of equity securities of the Company becoming eligible for termination of
registration pursuant to Section 12(4) of the Securities Exchange Act of 1934,
as amended or (j) any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer
JRH may be deemed the beneficial owner of 237,357 Shares, representing
approximately 6.4% of the Shares issued and outstanding at January 15, 1998
(based upon information obtained from the Company), with respect to 237,357
Shares of which JRH has sole voting and dispositive power and 0 Shares of which
JRH has shared voting and dispositive power.
Hansberger may be deemed the beneficial owner of 237,357 Shares,
representing approximately 6.4% of the Shares issued and outstanding at January
15, 1998 (based upon information obtained from the Company), with respect to 0
Shares of which Hansberger has sole voting and dispositive power and 237,357
Shares of which Hansberger has shared voting and dispositive power. Hansberger
may be deemed the indirect beneficial owner of the Shares due to his power to
direct the voting and disposition of the Shares through his position as the
controlling stockholder of JRH, the direct beneficial owner of the 237,357
Shares. Hansberger shares voting and dispositive power over these 237,357 Shares
with Robert Hansberger, the other member of Board of Directors of JRH identified
in Item 2.
Of the 237,357 Shares beneficially owned by each of the Reporting Persons,
50,000 relate to Shares the Reporting Persons have a present right to acquire
through the exercise of the Warrant, as more fully discussed in Item 6 (fifth
paragraph).
Other than in connection with the Acquisition, none of the Reporting
Persons or Executives has effected any other transactions in Shares during the
preceding sixty days.
TearDrop RAM may have the right to receive or the power to direct the
receipt of dividends with respect to 183,007 of the 237,357 Shares beneficially
owned by the Reporting Persons. The 183,007 Shares are held in escrow as
described in Item 6, the response to which is hereby incorporated by reference.
Page 5 of 8
<PAGE>
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
On December 19, 1997, the Company, TearDrop RAM, JRH, RAM UK and Hansberger
entered into an asset purchase agreement (the "Purchase Agreement") whereby the
Company agreed to acquire a substantial portion of the assets of Sellers in
exchange for cash, Shares and a warrant to purchase additional Shares at a
specified value. The Shares issued to JRH in connection with this Acquisition
were issued by the transfer agent pursuant to the terms of the Purchase
Agreement on January 8, 1998. See Item 3 for additional information, the
response to which is hereby incorporated by reference.
On December 29, 1997, JRH and TearDrop RAM entered into an Escrow Agreement
(the "Inventory Escrow Agreement", a copy of which is attached hereto as Exhibit
II and incorporated herein by reference) whereby 83,007 Shares used as
consideration (the "Inventory Escrow Shares") in the Acquisition were placed in
escrow. Pursuant to the Inventory Escrow Agreement, the escrow agent (the
"Inventory Agent") will release some or all of the Inventory Escrow Shares to
JRH upon the completion of an audit of the value of the inventory purchased by
TearDrop RAM from JRH. If the audited inventory value exceeds a specified
amount, the Inventory Agent will release all 83,007 Inventory Escrow Shares to
JRH and transfer additional Shares to JRH with a value equal to the excess, with
each share valued at $6.625 per share. If the inventory value does not exceed
the specified amount, the Inventory Agent will return a portion of the Inventory
Escrow Shares (the "Holdback Shares") to TearDrop RAM with a total value
equaling the deficiency, with each Inventory Escrow Share valued at $6.625. JRH
does not believe that any such Holdback Shares will have any meaningful impact
on the information disclosed in this statement.
On December 29, 1997, JRH and TearDrop RAM entered into an Escrow Agreement
(the "Delivery Escrow Agreement", a copy of which is attached hereto as Exhibit
III and incorporated herein by reference) whereby 100,000 Shares used as
consideration (the "Delivery Escrow Shares") in the Acquisition were placed in
escrow. Pursuant to the Delivery Escrow Agreement, the escrow agent (the
"Delivery Agent") will release all 100,000 Delivery Escrow Shares to JRH upon
the receipt of a notice indicating that TearDrop RAM has received, on or prior
to March 19, 1998, the dollar amount of the inventory with respect to JRH
products ordered from vendors located outside of the United States that is
necessary to satisfy 75% of its forecasted sales through April of 1998. If
TearDrop RAM does not receive such amount on or prior to March 19, 1998, the
Delivery Agent will transfer the 100,000 Delivery Escrow Shares to TearDrop RAM.
On December 29, 1997, the Company and JRH entered into a registration
rights agreement (the "Registration Agreement") whereby the Company granted JRH
registration rights under the 1933 Act for the registration with the Securities
and Exchange Commission (the "Commission") of the Warrant and the Shares
received by JRH (including Shares that may be issued to JRH upon exercise of the
Warrant) in connection with the Acquisition. Pursuant to the terms of the
Registration Agreement, the Company agreed to file a shelf Registration
Statement on Form S-3 with the Commission within 120 days of the Closing Date.
The Registration Agreement mandates that the Company use its best efforts to
have the shelf registration statement declared effective by the Commission
within 160 days of the Closing Date. The Company agreed to pay all expenses in
connection with a registration pursuant to the Registration Agreement.
On December 29, 1997, and in connection with the Acquisition, the Company
granted JRH the Warrant to purchase Shares of the Company. Pursuant to the terms
and conditions of the grant (the "Warrant to Purchase Common Stock", a copy of
which is attached hereto as Exhibit IV and incorporated herein by reference),
JRH is entitled to purchase from the Company fifty-thousand (50,000) fully paid,
validly issued and nonassessable Shares at a price of $6.625 per Share at any
time or from time to time during the period from December 29, 1997 to December
29, 2002. The Warrant has not been registered under the 1933 Act and neither the
Warrant nor any interest therein may be sold, transferred, pledged or otherwise
disposed of in the absence of such registration or an exemption therefrom under
the 1933 Act and the rules and regulations thereunder. As discussed in the
previous paragraph, the Registration Agreement covers the registration of this
Warrant. JRH has not exercised all or any part of the Warrant as of the date of
this filing of this Statement.
Page 6 of 8
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Item 7. Material to Be Filed as Exhibits
Exhibit I: Joint Filing Agreement
Exhibit II: Escrow Agreement dated December 29, 1997 in connection with
83,007 Inventory Escrow Shares
Exhibit III: Escrow Agreement dated December 29, 1997 in connection with
100,000 Delivery Escrow Shares
Exhibit IV: Warrant to Purchase Common Stock of the Company
Page 7 of 8
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Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: January 20, 1998 /s/ James R. Hansberger
---------------------------
Name: James R. Hansberger
JRH GOLF CORPORATION
/s/ James R. Hansberger
------------------------------
BY: James R. Hansberger
ITS: President
Page 8 of 8
<PAGE>
EXHIBIT I
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f) under the Securities Exchange Act of 1934,
as amended, the persons named below agree to the joint filing on behalf of each
of them of a statement on Schedule 13D (including amendments thereto) with
respect to the common stock, $0.01 par value per share, of TearDrop Golf
Company, a corporation organized under the laws of Delaware, and further agree
that this Joint Filing Agreement be included as an Exhibit to such joint filing.
In evidence thereof, the undersigned hereby execute this Agreement this 20 th
day of January, 1998.
/s/ James R. Hansberger
--------------------------
Name: James R. Hansberger
JRH GOLF CORPORATION
/s/ James R. Hansberger
------------------------------
BY: James R. Hansberger
ITS: President
<PAGE>
Exhibit II
ESCROW AGREEMENT
----------------
THIS ESCROW AGREEMENT, dated as of December 29, 1997 by and among RAM GOLF
CORPORATION, a Delaware corporation, ("Seller"); TEARDROP RAM GOLF COMPANY, a
Delaware corporation, ("Buyer"); and Crummy, Del Deo, Dolan, Griffinger &
Vecchione, as escrow agent ("Escrow Agent").
W I T N E S S E T H:
WHEREAS, Buyer, Seller, TearDrop Golf Company, a Delaware corporation
("Parent"), and James R. Hansberger, a shareholder of Seller, are parties to
that certain Asset Purchase Agreement (the "Purchase Agreement"), dated December
23, 1997; and
WHEREAS, in connection with the closing of the transactions contemplated by
the Purchase Agreement (the "Closing"), Seller and Buyer desire to deposit
83,007 shares of common stock, par value $.01 per share, of Parent ("Common
Stock") into escrow with the Escrow Agent, to be held by Escrow Agent pursuant
to the terms and conditions of this Escrow Agreement pending the occurrence of
certain events set forth herein; and
WHEREAS, Escrow Agent is willing to serve in such capacity on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the aforesaid premises and the mutual
covenants and conditions hereinafter set forth, the parties hereby agree as
follows:
1. Definitions. Unless otherwise defined herein, each capitalized term
used in this Agreement shall have the meaning ascribed to such term in the
Purchase Agreement.
2. Appointment of Escrow Agent. Each of Buyer and Seller hereby appoints
and designates Escrow Agent as the Escrow Agent for the purposes and upon the
terms set forth herein, and Escrow Agent hereby accepts such appointment and
agrees to act as Escrow Agent hereunder for the purposes and upon the terms set
forth herein.
3. Deposit of Escrow Shares.
------------------------
(a) On or before the date hereof, Buyer has deposited with Escrow
Agent 83,007 shares of Common Stock, constituting a portion of the escrow
deposit required by Section 3.2(a)(ii) of the Purchase Agreement (such shares,
as increased by any dividends or other deposits thereon, the "Escrow Shares")
and executed stock powers. Seller and Buyer hereby agree that the Escrow Shares
will be held in escrow
<PAGE>
pending the disposition thereof pursuant to this Agreement and the Purchase
Agreement.
(b) Escrow Agent hereby accepts the Escrow Shares and shall hold the
Escrow Shares in accordance with the terms and conditions of this Agreement.
4. Delivery of the Escrow Shares. The release of the Escrow Shares at
any given time is subject to receipt by Escrow Agent of a written notice (a
"Notice") executed by an authorized officer of each of Buyer and Seller,
instructing Escrow Agent to disburse a specific number of the Escrow Shares to
each of Buyer and Seller as set forth below, and as indicated in such
instructions, based upon a determination of the Inventory on the Closing Date
Balance Sheet following the audit, review and other procedures referred to in
Section 3.3(a) of the Purchase Agreement; provided, however, that if items of
dispute must be referred to a nationally recognized firm of certified public
accountants, as provided in Section 3.3(a) of the Purchase Agreement, then a
Notice of such determination may be executed and delivered by an authorized
officer of either Buyer or Seller (with a copy to the other party) together with
a copy of the signed report of such firm indicating the amount of the Net Assets
on the Closing Date Balance Sheet. If such Notice indicates that the Inventory
equals or exceeds $2,727,452, Escrow Agent shall release the Escrow Shares in
full, to Seller. If such Notice indicates that the Net Assets are less than
$2,727,452, Escrow Agent shall submit for issuance to the Buyer, from the Escrow
Shares, the difference between the amount of the Inventory and $2,727,452, and
pay the balance of the Escrow Shares and the Escrow Cash Amount, if any, to
Seller. For purposes hereof, the Escrow Shares shall be valued at $6.625 per
share.
5. Escrow Agent Compensation. Escrow Agent shall be reimbursed for all
actual out-of-pocket expenses incurred in performing the services required
hereunder. The parties hereby agree that Buyer and Seller shall be liable
equally for all such amounts due to Escrow Agent. The fees of any replacement
Escrow Agent shall be split evenly by the Buyer and Seller.
6. Disputes. Notwithstanding the provisions of Section 4 of this
Agreement, in the event a dispute arises with regard to the escrow created by
this Agreement, the following provisions shall apply:
(a) If Escrow Agent shall receive a written notice from Buyer or
Seller stating that a disagreement or dispute has arisen between the parties or
any other persons resulting in adverse claims and demands being made from the
Escrow Shares (any such event being hereinafter referred to as a "Dispute"),
whether or not litigation has been instituted, then in any such event, Escrow
Agent shall continue to hold the Escrow Shares until Escrow Agent receives
either: (i) a written notice signed by Buyer and Seller, directing the delivery
of the Escrow Shares in accordance with this Agreement; or (ii) a final non-
appealable order of a court of competent jurisdiction, entered in an action,
suit or proceeding in which Buyer and Seller are parties, directing the delivery
of the Escrow Shares. In either of such events, Escrow Agent shall then deliver
the Escrow Property in accordance with such direction. Escrow Agent shall not be
or become liable in any way or to any person for its refusal to comply with any
such claims and demands in the event of a Dispute unless and until it has
received such direction. Upon compliance with such direction, Escrow Agent shall
be released of and from all liability hereunder.
-2-
<PAGE>
(b) Notwithstanding the foregoing, Escrow Agent shall have the
following rights in the circumstances described in Section 6(a) hereof:
(i) If Escrow Agent shall have received a notice signed by Buyer
or Seller advising that litigation between the parties over entitlement to the
Escrow Shares has been commenced by any person, Escrow Agent may, on notice to
the parties, deposit the Escrow Property with the clerk of the court in which
such litigation is pending; or
(ii) Escrow Agent may, on notice to Buyer and Seller, take such
affirmative steps as it may, at its option, elect in order to terminate its
duties as Escrow Agent, including, but not limited to, the deposit of the Escrow
Property with a court of competent jurisdiction and the commencement of an
appropriate action, the costs of which shall be borne by the parties hereto save
and except Escrow Agent. Upon the taking by Escrow Agent of the action described
in clause (i) or clause (ii) of this Section, Escrow Agent shall be released of
and from all liability hereunder except for gross negligence or willful
misconduct.
(c) Except for Escrow Agent's gross negligence or willful misconduct,
Escrow Agent shall not be responsible or liable in any manner whatsoever for the
sufficiency, correctness, genuineness or validity of any instrument deposited
with it, or any notice or demand given to it or for the form of execution of any
such instrument, notice or demand or for the identification, authority or rights
of any person executing, depositing or giving the same or for the terms and
conditions of any instrument, pursuant to which the parties may act.
(d) Escrow Agent shall not have any duties or responsibilities except
those expressly set forth in this Agreement and shall not incur any liability:
(i) in acting upon any signature, notice, demand, request, waiver, consent,
receipt or other paper or document believed by Escrow Agent to be genuine and
Escrow Agent may assume that any person purporting to give it any notice on
behalf of any party in accordance with the provisions hereof has been duly
authorized to do so; or (ii) in otherwise acting or failing to act under this
Agreement except in the case of Escrow Agent's gross negligence or willful
misconduct.
(e) The terms and provisions of this Agreement shall create no right
in any person, firm or corporation other than the parties and their respective
successors and assigns and no third party shall have the right to enforce or
benefit from the terms hereof.
(f) Escrow Agent shall not be bound by any modification, cancellation
or rescission of this Agreement unless the same is in writing and signed by the
other parties hereto and a copy thereof has been received by Escrow Agent.
(g) Escrow Agent has executed this Agreement for the sole purpose of
agreeing to act as such in accordance with the terms of this Agreement.
-3-
<PAGE>
(h) The parties hereto further agree to equally indemnify Escrow
Agent from and against any and all losses, claims, damages or liabilities and
expenses, including reasonable attorneys fees which may be asserted against it
or to which it may be exposed or may incur by reason of its performance
hereunder, except when such performance was grossly or willfully negligent.
7. Notices. All notices hereunder shall be given in accordance with
the notice provisions of the Purchase Agreement. In addition, notices to Escrow
Agent shall be addressed to it at:
Crummy, Del Deo, Dolan, Griffinger & Vecchione
One Riverfront Plaza
Newark, New Jersey 07102-5497
Attn: Jeffrey A. Baumel, Esq.
8. Termination. This Agreement shall terminate upon the earliest
occurrence of any of the following events: (i) the written agreement of all
parties who are bound by the terms hereof; or (ii) upon the delivery by Escrow
Agent of all of the Escrow Property in accordance with the terms of this
Agreement.
9. Incorporation. The preamble to this Agreement and all annexes,
schedules and exhibits annexed hereto are incorporated herein by this reference
as if set forth herein in their entirety.
10. Severability. In the event any provision of this Agreement shall
be held invalid or unenforceable by any Court, such holding shall not invalidate
or render unenforceable any other provision of this Agreement and each and every
other provision of this Agreement shall continue in full force and effect.
11. Binding Effect; Amendment. This Agreement contains the entire
agreement of the parties, and shall inure to the benefit of and be binding upon
the parties hereto and upon their successors in interest of any kind whatsoever,
including, but not limited to, their assignees, administrators, trustees,
attorneys-in-fact and legal representatives (except as herein otherwise
provided). It may not be waived, changed or discharged orally, but only by an
agreement in writing, signed by the parties hereto.
12. Waiver of Breach. The waiver by any party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
other or subsequent breach by any party.
13. Section Headings. Section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
-4-
<PAGE>
14. Construction.
------------
(a) This Agreement shall be construed pursuant to the laws of the State of
Illinois in effect at the time of such construction without giving effect to
conflicts of laws principles.
(b) Nothing in this Agreement shall be construed to limit or abridge the
rights and obligations of the Seller and Buyer under the Purchase Agreement.
15. Counterparts. This Agreement may be executed in one or more
counterparts in which event all of said counterparts shall be deemed to
constitute one original of this Agreement.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above-written.
ESCROW AGENT:
Crummy, Del Deo, Dolan, Griffinger
& Vecchione
By: /s/ Jeffrey A. Baumel
------------------------------
Name: Jeffrey A. Baumel, Esq.
Title: Director
SELLER:
RAM GOLF CORPORATION
By: /s/ James R. Hansberger
------------------------------
Name: James R. Hansberger
Title: President
BUYER:
TEARDROP RAM GOLF COMPANY
By: /s/ Rudy A. Slucker
------------------------------
Name: Rudy A. Slucker
Title: President
-6-
<PAGE>
Exhibit III
ESCROW AGREEMENT
----------------
THIS ESCROW AGREEMENT, dated as of December 29, 1997 by and among RAM GOLF
CORPORATION, a Delaware corporation, ("Seller"); TEARDROP RAM GOLF COMPANY, a
Delaware corporation, ("Buyer"); and Crummy, Del Deo, Dolan, Griffinger &
Vecchione, as escrow agent ("Escrow Agent").
W I T N E S S E T H:
WHEREAS, Buyer, Seller, TearDrop Golf Company, a Delaware corporation
("Parent"), and James R. Hansberger, a shareholder of Seller, are parties to
that certain Asset Purchase Agreement (the "Purchase Agreement"), dated December
23, 1997; and
WHEREAS, in connection with the closing of the transactions contemplated by
the Purchase Agreement (the "Closing"), Seller and Buyer desire to deposit
100,000 shares of common stock, par value $.01 per share, of Parent ("Common
Stock") into escrow with the Escrow Agent, to be held by Escrow Agent pursuant
to the terms and conditions of this Escrow Agreement pending the occurrence of
certain events set forth herein; and
WHEREAS, Escrow Agent is willing to serve in such capacity on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the aforesaid premises and the mutual
covenants and conditions hereinafter set forth, the parties hereby agree as
follows:
1. Definitions. Unless otherwise defined herein, each capitalized term
used in this Agreement shall have the meaning ascribed to such term in the
Purchase Agreement.
2. Appointment of Escrow Agent. Each of Buyer and Seller hereby appoints
and designates Escrow Agent as the Escrow Agent for the purposes and upon the
terms set forth herein, and Escrow Agent hereby accepts such appointment and
agrees to act as Escrow Agent hereunder for the purposes and upon the terms set
forth herein.
3. Deposit of Escrow Shares.
------------------------
(a) On or before the date hereof, Buyer has deposited with Escrow Agent
100,000 shares of Common Stock, constituting a portion of the escrow deposit
required by Section 3.2(a)(iii) of the Purchase Agreement (such shares, as
increased by any dividends or other deposits thereon, the "Escrow Shares") and
executed stock powers. Seller and Buyer hereby agree that the Escrow Shares will
be held in escrow
<PAGE>
pending the disposition thereof pursuant to this Agreement and the Purchase
Agreement.
(b) Escrow Agent hereby accepts the Escrow Shares and shall hold the
Escrow Shares in accordance with the terms and conditions of this Agreement.
4. Delivery of the Escrow Shares. The release of the Escrow Shares at any
given time is subject to receipt, on or after March 19, 1998, by Escrow Agent of
a written notice (a "Notice") executed by an authorized officer of each of Buyer
and Seller, instructing Escrow Agent to disburse the Escrow Shares to Buyer or
Seller as set forth below and as indicated in such instructions. If such Notice
indicates that Buyer has received, on or prior to March 19, 1998, the dollar
amount of the inventory with respect to Ram products ordered from vendors
located outside of the United States that is necessary to satisfy 75% of the
forecasted sales for April 1998, subject to the terms of Section 7.5(g) of the
Purchase Agreement, then Escrow Agent shall release the Escrow Shares to Seller.
If such Notice indicates that Buyer has not received such amount on or prior to
March 19, 1998, subject to the terms of Section 7.5(g) of the Purchase
Agreement, then Escrow Agent shall release the Escrow Shares to Buyer.
5. Escrow Agent Compensation. Escrow Agent shall be reimbursed for all
actual out-of-pocket expenses incurred in performing the services required
hereunder. The parties hereby agree that Buyer and Seller shall be liable
equally for all such amounts due to Escrow Agent. The fees of any replacement
Escrow Agent shall be split evenly by the Buyer and Seller.
6. Disputes. Notwithstanding the provisions of Section 4 of this
Agreement, in the event a dispute arises with regard to the escrow created by
this Agreement, the following provisions shall apply:
(a) If Escrow Agent shall receive a written notice from Buyer or
Seller stating that a disagreement or dispute has arisen between the parties or
any other persons resulting in adverse claims and demands being made from the
Escrow Shares (any such event being hereinafter referred to as a "Dispute"),
whether or not litigation has been instituted, then in any such event, Escrow
Agent shall continue to hold the Escrow Shares until Escrow Agent receives
either: (i) a written notice signed by Buyer and Seller, directing the delivery
of the Escrow Shares in accordance with this Agreement; or (ii) a final non-
appealable order of a court of competent jurisdiction, entered in an action,
suit or proceeding in which Buyer and Seller are parties, directing the delivery
of the Escrow Shares. In either of such events, Escrow Agent shall then
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<PAGE>
deliver the Escrow Property in accordance with such direction. Escrow Agent
shall not be or become liable in any way or to any person for its refusal to
comply with any such claims and demands in the event of a Dispute unless and
until it has received such direction. Upon compliance with such direction,
Escrow Agent shall be released of and from all liability hereunder.
(b) Notwithstanding the foregoing, Escrow Agent shall have the
following rights in the circumstances described in Section 6(a) hereof:
(i) If Escrow Agent shall have received a notice signed by Buyer
or Seller advising that litigation between the parties over entitlement to the
Escrow Shares has been commenced by any person, Escrow Agent may, on notice to
the parties, deposit the Escrow Property with the clerk of the court in which
such litigation is pending; or
(ii) Escrow Agent may, on notice to Buyer and Seller, take such
affirmative steps as it may, at its option, elect in order to terminate its
duties as Escrow Agent, including, but not limited to, the deposit of the Escrow
Property with a court of competent jurisdiction and the commencement of an
appropriate action, the costs of which shall be borne by the parties hereto save
and except Escrow Agent. Upon the taking by Escrow Agent of the action described
in clause (i) or clause (ii) of this Section, Escrow Agent shall be released of
and from all liability hereunder except for gross negligence or willful
misconduct.
(c) Except for Escrow Agent's gross negligence or willful misconduct,
Escrow Agent shall not be responsible or liable in any manner whatsoever for the
sufficiency, correctness, genuineness or validity of any instrument deposited
with it, or any notice or demand given to it or for the form of execution of any
such instrument, notice or demand or for the identification, authority or rights
of any person executing, depositing or giving the same or for the terms and
conditions of any instrument, pursuant to which the parties may act.
(d) Escrow Agent shall not have any duties or responsibilities except
those expressly set forth in this Agreement and shall not incur any liability:
(i) in acting upon any signature, notice, demand, request, waiver, consent,
receipt or other paper or document believed by Escrow Agent to be genuine and
Escrow Agent may assume that any person purporting to give it any notice on
behalf of any party in accordance with the provisions hereof has been duly
authorized to do so; or (ii) in otherwise acting or failing to act under this
Agreement except in the case of Escrow Agent's gross negligence or willful
misconduct.
(e) The terms and provisions of this Agreement shall create no right
in any person, firm or corporation other than the parties and their respective
successors and assigns and no third party shall have the right to enforce or
benefit from the terms hereof.
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<PAGE>
(f) Escrow Agent shall not be bound by any modification, cancellation
or rescission of this Agreement unless the same is in writing and signed by the
other parties hereto and a copy thereof has been received by Escrow Agent.
(g) Escrow Agent has executed this Agreement for the sole purpose of
agreeing to act as such in accordance with the terms of this Agreement.
(h) The parties hereto further agree to equally indemnify Escrow
Agent from and against any and all losses, claims, damages or liabilities and
expenses, including reasonable attorneys fees which may be asserted against it
or to which it may be exposed or may incur by reason of its performance
hereunder, except when such performance was grossly or willfully negligent.
7. Notices. All notices hereunder shall be given in accordance with the
notice provisions of the Purchase Agreement. In addition, notices to Escrow
Agent shall be addressed to it at:
Crummy, Del Deo, Dolan, Griffinger & Vecchione
One Riverfront Plaza
Newark, New Jersey 07102-5497
Attn: Jeffrey A. Baumel, Esq.
8. Termination. This Agreement shall terminate upon the earliest
occurrence of any of the following events: (i) the written agreement of all
parties who are bound by the terms hereof; or (ii) upon the delivery by Escrow
Agent of all of the Escrow Property in accordance with the terms of this
Agreement.
9. Incorporation. The preamble to this Agreement and all annexes,
schedules and exhibits annexed hereto are incorporated herein by this reference
as if set forth herein in their entirety.
10. Severability. In the event any provision of this Agreement shall be
held invalid or unenforceable by any Court, such holding shall not invalidate or
render unenforceable any other provision of this Agreement and each and every
other provision of this Agreement shall continue in full force and effect.
11. Binding Effect; Amendment. This Agreement contains the entire
agreement of the parties, and shall inure to the benefit of and be binding upon
the parties hereto and upon their successors in interest of any kind whatsoever,
including, but not limited to, their assignees, administrators, trustees,
attorneys-in-fact and legal representatives (except as herein otherwise
provided). It may not be waived, changed or discharged orally, but only by an
agreement in writing, signed by the parties hereto.
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<PAGE>
12. Waiver of Breach. The waiver by any party of a breach of any provision
of this Agreement shall not operate or be construed as a waiver of any other or
subsequent breach by any party.
13. Section Headings. Section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14. Construction.
(a) This Agreement shall be construed pursuant to the laws of the State of
Illinois in effect at the time of such construction without giving effect to
conflicts of laws principles.
(b) Nothing in this Agreement shall be construed to limit or abridge the
rights and obligations of the Seller and Buyer under the Purchase Agreement.
15. Counterparts. This Agreement may be executed in one or more
counterparts in which event all of said counterparts shall be deemed to
constitute one original of this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above-written.
ESCROW AGENT:
Crummy, Del Deo, Dolan, Griffinger
& Vecchione
By: /s/ Jeffrey A. Baumel
--------------------------------
Name: Jeffrey A. Baumel, Esq.
Title: Director
SELLER:
RAM GOLF CORPORATION
By: /s/ James R. Hansberger
--------------------------------
Name: James R. Hansberger
Title: President
BUYER:
TEARDROP RAM GOLF COMPANY
By: /s/ Rudy A. Slucker
--------------------------------
Name: Rudy A. Slucker
Title: President
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<PAGE>
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND NEITHER THIS WARRANT NOR ANY INTEREST HEREIN MAY BE SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND THE RULES AND
REGULATIONS THEREUNDER. BY ITS ACCEPTANCE HEREOF, THE HOLDER OF THIS CERTIFICATE
REPRESENTS THAT IT IS ACQUIRING THE WARRANT FOR INVESTMENT AND AGREES TO COMPLY
IN ALL RESPECTS WITH PARAGRAPH (D) OF THIS WARRANT.
Void after 5:00 p.m. New York Time on December 29, 2002
Warrant to Purchase 50,000 Shares of Common Stock
WARRANT TO PURCHASE COMMON STOCK
OF
TEARDROP GOLF COMPANY
This is to Certify that, FOR VALUE RECEIVED, RAM GOLF CORPORATION, or its
registered assigns ("Holder"), is entitled to purchase, subject to the
provisions of this Warrant, from TearDrop Golf Company, a Delaware corporation
(the "Company"), fifty thousand (50,000) fully paid, validly issued and
nonassessable shares of Common Stock, par value $.01 per share, of the Company
("Common Stock") at a price of $6.625 per share at any time or from time to time
during the period from December 29, 1997 to December 29, 2002, but not later
than 5:00 p.m. New York City Time, on December 29, 2002. The number of shares of
Common Stock to be received upon the exercise of this Warrant and the price to
be paid for each share of Common Stock may be adjusted from time to time as
hereinafter set forth. The shares of Common Stock deliverable upon such
exercise, and as adjusted from time to time, are hereinafter sometimes referred
to as "Warrant Shares" and the exercise price of a share of Common Stock in
effect at any time and as adjusted from time to time is hereinafter sometimes
referred to as the "Exercise Price."
(a) EXERCISE OF WARRANT. This Warrant may be exercised in whole or in part
at any time or from time to time on or after December 29, 1997 and until
December 29, 2002 (the "Exercise Period"), provided, however, that (i) if either
such day is a day on which banking institutions in the State of New York are
authorized by law to close, then on the next succeeding day which shall not be
such a day, and (ii) in the event of any merger, consolidation or sale of
substantially all the assets of the Company as an entirety, resulting in any
distribution to the Company's stockholders, prior to December 29, 2002, the
Holder shall have the right to exercise this Warrant commencing at such time
through December 29, 2002 into the kind and amount of shares of stock and other
securities and property (including cash) receivable by a holder of the number of
shares of Common Stock into which this Warrant might have been exercisable
immediately prior thereto. This Warrant may be exercised by presentation and
surrender hereof to the Company at its principal office, or at the office of its
stock transfer agent, if any, with the Purchase Form annexed hereto duly
executed and accompanied by payment of the Exercise Price for the number of
Warrant Shares specified in such form. As soon as practicable after each such
<PAGE>
exercise of the warrants, but not later than seven (7) days from the date of
such exercise, the Company shall issue and deliver to the Holder a certificate
or certificate for the Warrant Shares issuable upon such exercise, registered in
the name of the Holder or its designee. If this Warrant should be exercised in
part only, the Company shall, upon surrender of this Warrant for cancellation,
execute and deliver a new Warrant evidencing the rights of the Holder thereof to
purchase the balance of the Warrant Shares purchasable thereunder. Upon receipt
by the Company of this Warrant at its office, or by the stock transfer agent of
the Company at its office, in proper form for exercise, the Holder shall be
deemed to be the holder of record of the shares of Common Stock issuable upon
such exercise, notwithstanding that the stock transfer books of the Company
shall then be closed or that certificates representing such shares of Common
Stock shall not then be physically delivered to the Holder.
(b) RESERVATION OF SHARES. The Company shall at all times reserve for
issuance and/or delivery upon exercise of this Warrant such number of shares of
its Common Stock as shall be required for issuance and delivery upon exercise of
the Warrants.
(c) FRACTIONAL SHARES. No fractional shares or script representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Holder an amount in cash equal to such fraction
multiplied by the current market value of a share, determined as follows:
(1) If the Common Stock is listed on a national securities
exchange or admitted to unlisted trading privileges on such exchange
or listed for trading on the Nasdaq National Market, the current
market value shall be the last reported sale price of the Common Stock
on such exchange or market on the last business day prior to the date
of exercise of this Warrant or if no such sale is made on such day,
the average closing bid and asked prices for such day on such exchange
or market; or
(2) If the Common Stock is not so listed or admitted to unlisted
trading privileges, but is traded on the Nasdaq SmallCap Market, the
current Market Value shall be the average of the closing bid and asked
prices for such day on such market and if the Common Stock is not so
traded, the current market value shall be the mean of the last
reported bid and asked prices reported by the National Quotation
Bureau, Inc. on the last business day prior to the date of the
exercise of this Warrant; or
(3) If the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and asked prices are not so reported, the
current market value shall be an amount not less than book value
thereof as at the end of the most recent fiscal year of the Company
ending prior to the date of the exercise of the Warrant, determined in
such reasonable manner as may be prescribed by the Board of Directors
of the Company.
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<PAGE>
(d) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT.
(1) Restrictions on Transfer. Neither this Warrant, the Warrant
Shares issuable upon the exercise hereof nor any interest herein or
therein shall be transferable except upon the conditions specified in
this paragraph (d), which conditions are intended to ensure compliance
with the provisions of the Securities Act of 1933, as amended (the
"Act"), in respect of any such transfer. The holder hereof will cause
any transferee of this Warrant, the Warrant Shares or any interest
herein or therein held by him to agree to take and hold the Warrant,
the Warrant Shares or an interest herein or therein subject to the
provisions and upon the conditions specified in this paragraph (d).
2. Restrictive Legend. This Warrant and each Warrant Share shall
(unless otherwise permitted by the provisions of subparagraph (d)(3))
include a legend in substantially the following form:
Warrant Legend:
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND NEITHER THIS WARRANT NOR ANY INTEREST
HEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM
UNDER SAID ACT AND THE RULES AND REGULATIONS THEREUNDER. BY ITS
ACCEPTANCE HEREOF, THE HOLDER OF THIS CERTIFICATE REPRESENTS THAT
IT IS ACQUIRING THIS WARRANT FOR INVESTMENT AND AGREES TO COMPLY
IN ALL RESPECTS WITH PARAGRAPH (D) OF THIS WARRANT.
Warrant Share Legend:
THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND NEITHER THESE SHARES NOR ANY INTEREST
HEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM
UNDER SAID ACT AND THE RULES AND REGULATIONS THEREUNDER. BY ITS
ACCEPTANCE HEREOF, THE HOLDER OF THIS CERTIFICATE REPRESENTS THAT
IT IS ACQUIRING THESE SHARES FOR INVESTMENT AND
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<PAGE>
AGREES TO COMPLY IN ALL RESPECT WITH
PARAGRAPH (D) OF THE WARRANT DATED AS OF
DECEMBER 29, 1997 PURSUANT TO WHICH THESE
SHARES WERE ISSUED.
(3) Notice of Proposed Transfers. The holder of this
Warrant or any Warrant Shares by acceptance hereof or thereof agrees
to comply in all respect with the provisions of this paragraph (d).
Prior to any proposed transfer of this Warrant or any Warrant Shares
which transfer is not made pursuant to an effective registration
statement, the holder hereof or thereof shall give written notice to
the Company of such holder's intention to effect such transfer. Each
such notice shall describe the manner and circumstance of the proposed
transfer in reasonable detail, and shall be accompanied by (a) a
written opinion of counsel reasonably satisfactory to the Company,
addressed to the Company, to the effect that the proposed transfer may
be effected without registration under the Act or (b) written
assurance from the staff of the Securities and Exchange Commission
(the "Commission") that it will not recommend that any action be taken
by the Commission in the event such transfer is effected without
registration under the Act. Such proposed transfer may be effected
only if the Company shall have received such notice and such opinion
of counsel or written assurance, whereupon the holder of this Warrant
or the Warrant Shares shall be entitled to transfer this Warrant or
the Warrant Shares in accordance with the terms of the notice
delivered by the holder to the Company. Each certificate evidencing
this Warrant or the Warrant Shares transferred as above provided shall
bear the appropriate legend set forth in subparagraph (d)(2), except
that such certificate shall not bear such legend if the option of
counsel or written assurance referred to above is to the further
effect that neither such legend nor the restriction on transfer in
this Article are required to ensure compliance with the Act.
(4) Termination of Conditions and Obligations. The
conditions precedent imposed by this paragraph (d) upon the
transferability of the Warrant Shares shall terminate as to any
particular Warrant Shares when such Warrant Shares shall have been
effectively registered under the Act and sold or otherwise disposed of
in accordance with the intended method of disposition by the seller or
sellers thereof set forth in the registration statement covering such
Warrant Shares or at such time as an opinion of counsel as specified
in subparagraph (3) shall have been rendered to the effect set forth
in the last sentence of subparagraph (3).
(5) Upon receipt by the Company of evidence satisfactory to
it of the loss, theft, destruction or mutilation of this Warrant, and
(in the
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case of loss, theft or destruction) of reasonably satisfactory
indemnification, and upon surrender and cancellation of this Warrant,
if mutilated, the Company will execute and deliver a new Warrant of
like tenor and date. Any such new Warrant executed and delivered shall
constitute an additional contractual obligation on the part of the
Company, whether or not this Warrant so lost, stolen, destroyed or
mutilated shall be at any time enforceable by anyone.
(e) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in the Warrant and
are not enforceable against the Company except to the extent set forth herein.
(f) ANTI-DILUTION PROVISIONS. The Exercise Price in effect at any time and
the number and kind of securities purchasable upon the exercise of the Warrants
shall be subject to adjustment from time to time upon the happening of certain
events as follows:
(1) In case the Company shall (i) declare a dividend or make a
distribution on its outstanding shares of Common Stock in shares of Common
Stock, (ii) subdivide or reclassify its outstanding shares of Common Stock
into a greater number of shares, or (iii) combine or reclassify its
outstanding shares of Common Stock into a smaller number of shares, the
Exercise Price in effect at the time of the record date for such dividend
or distribution or of the effective date of such subdivision, combination
or reclassification shall be adjusted so that it shall equal the price
determined by multiplying the Exercise Price by a fraction, the denominator
of which shall be the number of shares of Common Stock outstanding after
giving effect to such action, and the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to such
action. Such adjustment shall be made successively whenever any event
listed above shall occur.
(2) Whenever the Exercise Price payable upon exercise of each Warrant
is adjusted pursuant to Subsection (1) above, the number of Shares
purchasable upon exercise of this Warrant shall simultaneously be adjusted
by multiplying the number of Shares initially issuable upon exercise of
this Warrant by the Exercise Price in effect on the date hereof and
dividing the product so obtained by the Exercise Price, as adjusted.
(3) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least five cents
($0.05) in such price; provided, however, that any adjustments which by
reason of this Subsection (3) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment required to be
made hereunder. All calculations under this Section (f) shall be made to
the nearest cent or to the nearest one-hundredth of a share, as the case
may be. Anything in this Section (f) to the contrary notwithstanding, the
Company shall be
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<PAGE>
entitled, but shall not be required, to make such changes in the Exercise
Price, in addition to those required by this Section (f), as it shall
determine, in its sole discretion, to be advisable in order than any
dividend or distribution in shares of Common Stock or any subdivision,
reclassification or combination of Common Stock, hereafter made by the
Company shall not result in any Federal income tax liability to the holders
of Common Stock or securities convertible into Common Stock (including
Warrants).
(4) Whenever the Exercise Price is adjusted, as herein provided, the
Company shall promptly but no later than 10 days after any request for such
an adjustment by the Holder, cause a notice setting forth the adjusted
Exercise Price and adjusted number of Shares issuable upon exercise of each
Warrant, and, if requested, information describing the transactions giving
rise to such adjustments, to be mailed to the Holders at their last
addresses appearing in the Warrant Register, and shall cause a certified
copy thereof to be mailed to its transfer agent, if any.
(5) In the event that at any time, as a result of an adjustment made
pursuant to Subsection (1) above, the Holder of this Warrant thereafter
shall become entitled to receive any shares of the Company, other than
Common Stock, thereafter the number of such shares so receivable upon
exercise of this Warrant shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in this Section (f)
above.
(6) Irrespective of any adjustments in the Exercise Price or the
number or kind of shares purchasable upon exercise of this Warrant,
Warrants theretofore or thereafter issued may continue to express the same
price and number and kind of shares as are stated in the similar Warrants
initially issuable pursuant to this Agreement.
(g) OFFICER'S CERTIFICATE. Whenever the Exercise Price shall be adjusted
as required by the provisions of the foregoing Section, the Company shall
forthwith file in the custody of its Secretary or an Assistant Secretary at its
principal office and with its stock transfer agent, if any, an officer's
certificate showing the adjusted Exercise Price determined as herein provided,
setting forth in reasonable detail the facts requiring such adjustment,
including a statement of the number of additional shares of Common Stock, if
any, and such other facts as shall be necessary to show the reason for and the
manner of computing such adjustment. Each such officer's certificate shall be
made available at all reasonable times for inspection by the holder or any
holder of a Warrant executed and delivered pursuant to Section (a) and the
Company shall, forthwith after each such adjustment, mail a copy by certified
mail of such certificate to the Holder or any such holder.
(h) RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the Company, or in the case of any consolidation or merger of
the Company with or into another corporation (other than a merger with a
subsidiary in which merger the Company is the continuing corporation and which
does not result in any reclassification, capital reorganization or other change
of outstanding shares of Common Stock of the class issuable upon exercise of
this
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<PAGE>
Warrant) or in the case of any sale, lease or conveyance to another corporation
of the property of the Company as an entirety, the Company shall, as a condition
precedent to such transaction, cause effective provisions to be made so that the
Holder shall have the right thereafter by exercising this Warrant at any time
prior to the expiration of the Warrant, to purchase the kind and amount of
shares of stock and other securities and property receivable upon such
reclassification, capital reorganization and other change, consolidation,
merger, sale or conveyance by a holder of the number of shares of Common Stock
which might have been purchased upon exercise of this Warrant immediately prior
to such reclassification, change, consolidation, merger, sale or conveyance. Any
such provision shall include provision for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Warrant. The foregoing provisions of this Section (h) shall similarly apply to
successive reclassifications, capital reorganizations and changes of shares of
Common Stock and to successive consolidations, mergers, sales or conveyances.
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<PAGE>
IN WITNESS WHEREOF, this Warrant is executed this 29th day of December,
1997.
TEARDROP GOLF COMPANY
By: /s/ Rudy A. Slucker
-------------------------
Name: Rudy A. Slucker
Title: President
[SEAL]
Dated As Of: December 29, 1997
Attest:
/s/ Joseph Cioni
- --------------------------------
Assistant Secretary
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<PAGE>
PURCHASE FORM
-------------
Dated __________, 19___
The undersigned hereby irrevocably elects to exercise the within Warrant to
the extent of purchasing ____ shares of Common Stock and hereby makes payment of
______ in payment of the actual price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
--------------------------------------
Name
--------------------------------------
(Please typewrite or print in block letters)
Address:
----------------------------------
Signature
---------------------------------
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<PAGE>
ASSIGNMENT FORM
---------------
FOR VALUE RECEIVED, ______________ hereby sells, assigns and transfers unto
Name ______________________________
(Please typewrite or print in block letters)
Address ___________________________
the right to purchase Common Stock represented by this Warrant to the extent of
_____ shares as to which such right is exercisable and does hereby irrevocably
constitute and appoint ________ as attorney, to transfer the same on the books
of the Company with full power of substitution in the premises.
Date __________, 19___
Signature ____________
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