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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): January 28, 1997
GOLF-TECHNOLOGY HOLDING, INC.
(Name of Registrant as Specified in its Charter)
Idaho 0-26344 59-3303066
(State or other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
13000 Sawgrass Village Circle, Suite 30
Ponte Vedra Beach, Florida 32082
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (904) 273-8772
Page 1 of 5 Pages
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ITEM 5. OTHER EVENTS.
------------
On January 28, 1997 Golf-Technology Holding, Inc. (the "Registrant")
completed a Regulation D private placement offering to Clark Partners III, L.P.,
a New York limited partnership ("Clark"), pursuant to that certain Regulation D
Securities Subscription Agreement, dated as of January 27, 1997, between the
Registrant and Clark, of the following securities: (i) 2,625 shares of Series C
convertible preferred stock (the "Preferred Stock"), and (ii) warrants for the
purchase of 262,500 shares of the common stock of the Registrant, par value
$.001 per share (the "Common Stock"), with a strike price of $3.00 per share,
which expire on December 31, 2002, pursuant to the terms of that certain Warrant
for the Purchase of Shares of Common Stock, issued on January 27, 1997, by the
Registrant to Clark (the "Clark Warrant"). The purchase price for the Preferred
Stock and Clark Warrant paid by Clark to the Registrant was $1,750,000.
Clark's shares of Preferred Stock are convertible into a number of shares
of Common Stock in accordance with the following formula:
N x 1,000
---------
Conversion Price
----------------
where:
N = the number of shares of the Series C Preferred Stock for
which conversion is being elected:
and
Conversion
Price = the lesser of (i) $2.25 per share or (ii) the average
closing bid price on the NASDAQ SmallCap Market on the five
trading days immediately preceding the shareholder's
delivery of a notice of conversion to the Registrant.
As an inducement to Clark to purchase the Preferred Stock and Clark
Warrant, the Registrant agreed, among other things, to (i) not issue any debt or
equity securities for cash in public or private capital raising transaction,
with certain exceptions, for a period of six (6) months after January 28, 1997,
without prior written consent of Clark, (ii) grant Clark a right of first
refusal to purchase any new debt or equity securities of any type that the
Issuer may propose to sell and issue, (iii) as long as Clark owns a majority of
the 2,625 shares of Preferred Stock: (a) Clark shall have the discretion to name
the President of the Issuer, subject to the approval of such action by the Board
of Directors of the Issuer; (b) the Issuer agreed to provide Clark with a
monthly statement which shall outline actual financial performance versus
budgeted financial performance for the prior month and on a year to date basis;
(c) the Issuer agreed not to incur additional indebtedness in excess of
$250,000, without prior written consent of Clark; (d) the Issuer agreed not to
issue additional shares of convertible preferred stock or convertible debentures
without the prior written consent of Clark; (e) Clark shall have a qualified
right to designate one member to the Board of Directors of the Issuer; and (f)
the Registrant agreed not to pay any cash dividends on its Common Stock.
The shares of Common Stock issuable upon conversion of Clark's Preferred
Stock and upon exercise of the Clark Warrant are subject to the registration
rights set forth in that certain
Page 2 of 5 Pages
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Registration Rights Agreement, dated as of January 27, 1997 (the "Registration
Rights Agreement"), among the Registrant, Clark and RBB Bank Aktiengesellschaft
("RBB"). The shares of Preferred Stock issued to Clark are subject to the
rights, terms and provisions set forth in the Certificate of Designation, dated
January 23, 1997, in connection with the Series C Preferred Stock of the
Registrant (the " Certificate of Designation").
ITEM 7. EXHIBITS.
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(4) Certificate of Designation for Series C Preferred Stock.
(99a) Regulation D Securities Subscription Agreement, dated as of January 27,
1997, between the Registrant and Clark.
(99b) Regulation S Securities Subscription Agreement, dated as of January 27,
1997, between the Registrant and RBB.
(99c) Warrant for the Purchase of Shares of Common Stock, issued on January 27,
1997, by the Registrant to Clark, in connection with 262,500 shares of
Common Stock.
(99d) Warrant for the Purchase of Shares of Common Stock, issued on January 27,
1997, by the Registrant to RBB, in connection with 187,500 shares of
Common Stock.
(99e) Warrant for the Purchase of Shares of Common Stock, issued on January 27,
1997, by the Registrant to RBB, in connection with 51,724 shares of
Common Stock.
(99f) Registration Rights Agreement, dated as of January 27, 1997, among the
Registrant, Clark and RBB.
(99g) Certificate of Designation, dated January 23, 1997, in connection with
the Series C Preferred Stock of the Registrant.
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
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On January 28, 1997 the Registrant completed a Regulation S private
placement offering to RBB, a foreign institutional investor, pursuant to that
certain Regulation S Securities Subscription Agreement, dated as of January 27,
1997, between the Registrant and RBB, of the following securities: (i) 1,875
shares of Series C Preferred Stock, (ii) 51,724 shares of Common Stock (the "RBB
Shares"), (iii) warrants to purchase 187,500 shares of Common Stock with a
strike price of $3.00 per share, which expire December 31, 2002, pursuant to the
terms of that certain Warrant for the Purchase of Shares of Common Stock, issued
on January 27, 1997, by the Registrant to RBB (the "RBB Warrant"), and (iv)
warrants to purchase 51,724 shares of Common Stock with a strike price of $3.625
per share which expire on December 31, 2002, pursuant to the terms of that
certain Warrant for the Purchase of Shares of Common Stock, issued on January
27, 1997, by the Registrant to RBB (the "Additional RBB Warrant"). The purchase
price for the Preferred Stock, RBB Warrant and Additional RBB Warrant paid by
RBB to the Registrant was $1,250,000.
RBB's shares of Preferred Stock are convertible into shares of Common Stock
in accordance with the formula set forth in Item 5 above. The RBB Shares and the
shares of Common Stock issuable upon conversion of Clark's Preferred Stock and
upon exercise of the RBB Warrant and Additional RBB Warrant are subject to the
registration rights set forth in the
Page 3 of 5 Pages
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Registration Rights Agreement. The shares of Preferred Stock issued to RBB are
subject to the rights, terms and provisions set forth in the Certificate of
Designation.
Page 4 of 5 Pages
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SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, hereunto duly authorized on February 6, 1997.
GOLF-TECHNOLOGY HOLDING, INC.
By: /S/ HAROLD E. HUTCHINS
-------------------------
Name: Harold E. Hutchins
Title: Secretary, Vice President, Chief Financial
Officer, Chief Operating Officer
Page 5 of 5 Pages
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EXHIBIT INDEX
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(4) Certificate of Designation for Series C Preferred Stock, dated January
23, 1997.
(99a) Regulation D Securities Subscription Agreement, dated as of January 27,
1997, between the Registrant and Clark.
(99b) Regulation S Securities Subscription Agreement, dated as of January 27,
1997, between the Registrant and RBB.
(99c) Warrant for the Purchase of Shares of Common Stock, issued on January 27,
1997, by the Registrant to Clark, in connection with 262,500 shares of
Common Stock.
(99d) Warrant for the Purchase of Shares of Common Stock, issued on January 27,
1997, by the Registrant to RBB, in connection with 187,500 shares of
Common Stock.
(99e) Warrant for the Purchase of Shares of Common Stock, issued on January 27,
1997, by the Registrant to RBB, in connection with 51,724 shares of
Common Stock.
(99f) Registration Rights Agreement, dated as of January 27, 1997, among the
Registrant, Clark and RBB.
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EXHIBIT (4)
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CERTIFICATE OF DESIGNATION OF SERIES C PREFERRED STOCK
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CERTIFICATES OF DESIGNATION, NUMBER, POWER
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL, AND OTHER SPECIAL RIGHTS AND THE
QUALIFICATIONS, LIMITATIONS, RESTRICTIONS
AND OTHER DISTINGUISHING CHARACTERISTICS
SERIES C PREFERRED STOCK
OF
GOLF-TECHNOLOGY HOLDING, INC.
(THE "CERTIFICATE OF DESIGNATION")
It is hereby certified that:
1. The name of the company (hereinafter called the "Company") is GOLF-
TECHNOLOGY HOLDING, INC.
2. The Articles of Incorporation of the Company, as amended, authorizes
the issuance of 5,000,000 shares of Preferred Stock of a par value of $0.001 per
share and expressly vests in the Board of Directors of the Company the authority
provided therein to issue any or all of said shares in one or more series and by
resolution or resolutions to establish the designation, number, full or limited
voting powers, or the denial or voting powers, preferences and relative,
participating, optional, and other special rights and the qualifications,
limitations, restrictions, and other distinguishing characteristics of each
series to be issued.
3. On January 23, 1997, the Board of Directors of the Company, pursuant to
the authority expressly vested in it as aforesaid, adopted the following
resolutions creating a Series C issue of Preferred Stock:
RESOLVED, that Five Thousand (5,000) of the Five Million (5,000,000)
authorized shares of Preferred Stock of the Company shall be designated Series C
Preferred Stock (the "Series C Preferred Stock"). The Series C Preferred Stock
shall be pari passu with the Company's Series B Preferred Stock ("Series B
Preferred Stock") and shall possess the rights and privileges set forth below:
A. Dividends.
---------
(i) The holder of each issued and outstanding share of Series C
Preferred Stock shall be entitled to receive, when and as declared by the Board
of Directors of the Company, out of the assets at the time legally available for
such purpose, dividends at a rate of $33.30, payable annually in arrears. No
dividends shall be declared and paid on the Series C Preferred Stock (other than
a dividend payable solely in shares of Series C Preferred Stock) unless all
accrued but unpaid dividends on the Company's existing class of Series A
Preferred Stock have been declared and paid in cash. Such dividends shall not
be cumulative and no right
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to such dividends shall accrue to holders of Series C Preferred Stock unless
declared by the Company's Board of Directors; provided, however, that if all
shares of Series C Preferred Stock have not been converted into common stock by
December 31, 1997 such dividends shall begin to accumulate on all shares of
Series C Preferred Stock which remain outstanding at such time and shall be
payable, subject to clause (ii) below, on December 31, 1997 and each December 31
thereafter. At the Company's election, such dividends may be declared in cash,
or in additional shares of Series C Preferred Stock in an amount equal to the
number of shares of Series C Preferred Stock which on such date would be
convertible into that number of shares of common stock, par value $.001 per
share (the "Common Stock") which shall be determined as follows: the amount of
the dividend divided by the closing bid price of the Common Stock on December
31/st/ (or the first following business day if such date should fall on a
weekend or holiday). No dividends shall be declared or paid with respect to the
Company's Common Stock (other than a dividend payable solely in Common Stock of
the Company), or upon any other class of Preferred Stock of the Company with a
dividend preference subordinate to the dividend preference of the Series C
Preferred Stock, unless all accrued but unpaid dividends on the Series C
Preferred Stock has been declared and paid and a dividend of equal or greater
amount per share (on an as-if-converted to Common Stock basis) is first declared
and paid with respect to the Series C Preferred Stock and Series B Preferred
Stock on a pari passu basis.
(ii) No dividends shall be paid on the Series C Preferred Stock
at such time as:
(a) such payment would violate Idaho law; or
(b) such payment would impair the net capital or other
financial requirements applicable to the Company established by the National
Association of Securities Dealers, Inc., the Securities and Exchange Commission,
or any other state of federal securities authority or agency, any state or
federal commodities authority or agency, or any commodities or securities
exchange.
B. Liquidation Preference.
----------------------
(i) In the event of any liquidation, dissolution or winding-up of the
Company, either voluntary or involuntary (a "Liquidation"), the holders of
shares of the Series C Preferred Stock then issued and outstanding shall be
entitled to be paid out of the assets of the Company available for distribution
to its shareholders, whether from capital, surplus or earnings, before any
payment shall be made to the holders of shares of the Common Stock or upon any
other series of Preferred Stock of the Company with a liquidation preference
subordinate to the liquidation preference of the Series C Preferred Stock, an
amount equal to one thousand dollars ($1,000) per share. The liquidation
preference of the Series C Preferred Stock shall be junior in right of payment
to the liquidation preference of the Company's existing class of Series A
Preferred Stock and shall be on a pari passu basis with the right of payment to
the liquidation preference of the Company's existing class of Series B Preferred
Stock. If, upon any Liquidation of the Company, the assets of the Company
available for distribution to its shareholders shall be
2
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insufficient to pay the holders of shares of the Series C Preferred Stock,
holders of shares of the Series B Preferred Stock, and the holders of any other
series of Preferred Stock with a liquidation preference equal to the liquidation
preference of the Series C Preferred Stock the full amounts to which they shall
respectively be entitled, the holders of shares of the Series C Preferred Stock,
holders of shares of the Series B Preferred Stock, and the holders of any other
series of Preferred Stock with liquidation preference equal to the liquidation
preference of the Series C Preferred Stock and Series B Preferred Stock shall
receive all of the assets of the Company available for distribution and each
such holder of shares of the Series C Preferred Stock, holders of share of the
Series B Preferred Stock, and the holders of any other series of Preferred Stock
with a liquidation preference equal to the liquidation preference of the Series
C Preferred Stock shall share ratably in any distribution in accordance with the
amounts due such shareholders. After payment shall have been made to the holders
of shares of the Series C Preferred Stock of the full amount to which they shall
be entitled, as aforesaid, the holders of shares of the Series C Preferred Stock
shall be entitled to no further distributions thereon and the holders of shares
of the Common Stock and of shares of any other series of stock of the Company
shall be entitled to share, according to their respective rights and
preferences, in all remaining assets of the Company available for distribution
to its shareholders.
(ii) A merger or consolidation of the Company with or into any other
corporation, or a sale, lease, exchange, or transfer of all or any part of the
assets of the Company which shall not in fact result in the liquidation (in
whole or in part) of the Company and the distribution of its assets to its
shareholders shall not be deemed to be a voluntary or involuntary liquidation
(in whole or in part), dissolution, or winding-up of the Company.
C. Conversion of Series C Preferred Stock.
--------------------------------------
The holders of Series C Preferred Stock shall have the following
conversion rights:
(i) Right to Convert. Each share of Series C Preferred Stock shall be
----------------
convertible, on the Conversion Dates and at the Conversion Prices set forth
below, into fully paid and nonassessable shares of Common Stock.
(ii) Mechanics of Conversion. Each holder of Series C Preferred Stock
-----------------------
who desires to convert the same into shares of Common Stock shall provide notice
in the form of the Notice of Conversion or Exercise attached to the subscription
agreement pursuant to which the Series C Preferred Stock was issued (a
"Conversion Notice") via telecopy to the Company. The original Conversion
Notice and the certificate or certificates representing the Series C Preferred
Stock for which conversion is elected, shall be delivered to the Company by
international courier, duly endorsed. The date upon which a Conversion Notice
is properly received by the Company shall be a "Notice Date."
The Company shall use all reasonable efforts to issue and deliver within
three (3) business days after the Notice Date, to such holder of Series C
Preferred Stock at the address of
3
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the holder on the stock books of the Company, a certificate or certificates for
the number of shares of Common Stock to which the holder shall be entitled as
aforesaid; provided that the original shares of Series C Preferred Stock to be
converted are received by the transfer agent or the Company within three
business days after the Notice Date and the person or persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on such date. If the original shares of Series C Preferred Stock to
be converted are not received by the transfer agent or the Company within three
business days after the Notice Date, the Conversion Notice shall become null and
void.
(iii) Conversion Dates. The Series C Preferred Stock shall become
----------------
convertible into shares of Common Stock at any time commencing forty-five (45)
days after the last day on which there is an original issuance of the Series C
Preferred Stock (the "Conversion Date").
(iv) Conversion Price. Each share of Series C Preferred Stock shall
----------------
be convertible into the number of shares of Common Stock according to the
following formula:
N x 1,000
---------
Conversion Price
where:
N = the number of shares of the Series C Preferred Stock for
which conversion is being elected:
and
Conversion
Price = the lesser of (i) $2.25 per share or (ii) the average
closing bid price on the NASDAQ SmallCap Market on the five
trading days days immediately preceding the holder's
delivery of a Conversion Notice to the Company.
(v) Automatic Conversion. Each share of Series C Preferred Stock
--------------------
outstanding on June 30, 2002 automatically shall be converted into Common Stock
on such date at the Conversion Price then in effect, and June 30, 2002 shall be
deemed to be the Notice Date with respect to such conversion.
(vi) Fractional Shares. No fractional share shall be issued upon the
-----------------
conversion of any shares, share or fractional share of Series C Preferred Stock.
All shares of Common Stock (including fractions thereof) issuable upon
conversion of shares (or fractions thereof) of Series C Preferred Stock by a
holder thereof shall be aggregated for purposes of determining whether the
conversion would result in the issuance of any fractional share. If, after the
aforementioned aggregation, the conversion would result in the issuance of a
fraction of a
4
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share of Common Stock, the Company shall, in lieu of issuing any fractional
share, pay the holder otherwise entitled to such fraction a sum in cash equal to
the closing bid price of the Company's Common Stock on the Notice Date
multiplied by such fraction.
(vii) Reservation of Stock Issuable Upon Conversion. The Company
---------------------------------------------
shall at all times reserve and keep available out of its authorized but unissued
shares of Common stock, solely for the purpose of effecting the conversion of
the shares of the Series C Preferred Stock, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
then outstanding shares of the Series C Preferred Stock; and if at any time the
number of authorized but unissued shares of Common stock shall not be sufficient
to effect the conversion of all then outstanding shares of the Series C
Preferred Stock, the Company will take such corporate action as may be necessary
to increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.
(viii) Adjustment to Conversion Price.
------------------------------
(a) If, prior to the conversion of all shares of Series C Preferred
Stock, the number of outstanding shares or Common Stock is increased by a stock
split, stock dividend, or other similar event, the Conversion Price shall be
proportionately reduced, or if the number of outstanding shares of Common Stock
is decreased by a combination or reclassification of shares, or other similar
event, the Conversion Price shall be proportionately increased.
(b) If prior to the conversion of all shares of Series C Preferred
Stock, there shall be any merger, consolidation, exchange of shares,
recapitalization, reorganization, or other similar event, as a result of which
shares of Common Stock or the Company shall be changed into the same or a
different number of shares of the same or another class or classes of stock or
securities of the Company or another entity, then the holders of Series C
Preferred Stock shall thereafter have the right to purchase and receive upon
conversion of shares of Series C Preferred Stock, upon the basis and upon the
terms and conditions specified herein and in lieu of the shares of Common Stock
immediately theretofore issuable upon conversion, such share of stock and/or
securities as may be issued or payable with respect to or in exchange for the
number of shares of Common Stock immediately theretofore purchasable and
receivable upon the conversion of shares of Series C Preferred Stock held by
such holders had such merger, consolidation, exchange of shares,
recapitalization or reorganization not taken place, and in any such case
appropriate provisions shall be made with respect to the rights and interest of
the holders of the Series C Preferred Stock to the end that the provisions
hereof (including, without limitation, provisions for adjustment of the
Conversion Price and of the number of shares issuable upon conversion of the
Series C Preferred Stock) shall thereafter be applicable, as nearly as may be
practicable in relation to any shares of stock or securities thereafter
deliverable upon the exercise hereof. The Company shall not effect any
transaction described in this subsection unless the resulting successor or
acquiring entity (if not the Company) assumes by written instrument the
obligation to deliver to the holders of the Series C
5
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Preferred Stock such shares of stock and/or securities as, in accordance with
the foregoing provisions, the holders of the Series C Preferred Stock may be
entitled to purchase.
(c) If any adjustment under this subsection would create a fractional
share of Common Stock or a right to acquire a fractional share if Common Stock,
such fractional share shall be disregarded and the number of shares of Common
Stock issuable upon conversion shall be the next higher number of shares.
D. Voting. Except as otherwise provided by the Idaho Business
------
Corporation Act, the holders of the Series C Preferred Stock shall have no
voting power whatsoever, and no holder of Series C Preferred Stock shall vote or
otherwise participate in any proceeding in which actions shall be taken by the
Company or the shareholders thereof or be entitled to notification as to any
meeting of the Board of Directors or the shareholders.
E. Protective Provisions. So long as shares of Series C Preferred
---------------------
Stock are outstanding, the Company shall not without first obtaining the
approval (by vote or written consent, as provided by law) of the holders of at
least a majority of the then outstanding shares of Series C Preferred Stock:
(a) alter or change the rights, preferences or privileges of the
shares of Series C Preferred Stock so as to affect adversely the Series C
preferred Stock;
(b) create any new class or series of stock being on a parity with or
having a preference over the Series C preferred Stock with respect to dividends,
to payments upon Liquidation (as provided for in Section B of this Certificate
Designation) or to redemption; or
(c) do any act or thing not authorized or contemplated by this
Designation which would result in taxation of the holders of shares of the
Series C Preferred Stock under Section 305 of the Internal Revenue Code of 1986,
as amended (or any comparable provision of the Internal Revenue Code as
hereafter from time to time amended).
F. Status of converted Stock. In the event any shares of Series C
-------------------------
Preferred stock shall be converted as contemplated by this Certificate of
Designation, the shares so converted shall be canceled, shall return to the
status of authorized but unissued Preferred Stock of no designated class of
series, and shall not be issuable by the Company as Series C Preferred Stock.
FURTHER RESOLVED, that the statements contained in the foregoing
resolutions creating and designating the said Series C Preferred Stock and
fixing the number, powers, preferences and relative, optional, participating,
and other special rights and the qualifications, limitations, restrictions, and
other distinguishing characteristics thereof shall, upon the effective date of
said series, be deemed to be included in and be a part of the Articles of
Incorporation of
6
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the Company, as amended, pursuant to the provisions of Section 30-1-16 of the
Idaho Business Corporation Act.
Signed on January 23, 1997.
By: /S/ ERNEST R. VADERSEN
-------------------------------
Ernest R. Vadersen, President
Attest:
/S/ HAROLD E. HUTCHINS
- -------------------------------
Harold E. Hutchins, Secretary
7
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EXHIBIT (99a)
-------------
REGULATION D SECURITIES SUBSCRIPTION AGREEMENT
<PAGE>
REGULATION D SECURITIES SUBSCRIPTION AGREEMENT
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES COMMISSION OF ANY STATE UNDER ANY STATE SECURITIES LAW. THEY ARE
BEING OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER REGULATION D
("REGULATIONS") PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT").
THIS SUBSCRIPTION AGREEMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY OF THE SECURITIES OFFERED HEREBY BY OR TO
ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OF SOLICITATION WOULD BE
UNLAWFUL. INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. IN
MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND THE RISKS
INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED OR DETERMINED THE ACCURACY OR ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Regulation D Securities Subscription Agreement (the "Agreement" or the
"Subscription Agreement") is executed by the undersigned, Clark Partners III,
L.P. (the "Subscriber"), in connection with the offer by GOLF-TECHNOLOGY
HOLDING, INC., an Idaho corporation (the "Company") and subscription by the
Subscriber for (i) shares of convertible preferred stock Series C (the
"Preferred Stock") with an aggregate face amount of $2,625,000 (U.S.) (2,625
shares with a face amount of $1,000 (U.S.) per share), and (ii) warrants (the
"Warrants") to purchase 262,500 shares of the common stock of the Company (the
"Common Stock"), $.00l (U.S.) par value, at a purchase price of $3.00 (US) per
share, all at the aggregate purchase price of One Million, Seven Hundred Fifty
Thousand Dollars ($1,750,000) (U.S.) (the "Purchase Price"). The rights and
preferences of the Preferred Stock, including the terms on which the Preferred
Stock may be converted into Common Stock, are set forth in the Certificate of
Designation of Series C Preferred Stock attached hereto as Exhibit A (the
---------
"Certificate of Designation"). The Terms and provision of the Warrants,
including the terms on which the Warrants may be converted into Common Stock,
are set forth in the Warrant to Purchase Common Stock (the "Warrant Agreement")
attached hereto as Exhibit B. The (i) Preferred Stock and (ii) Warrants issued
---------
pursuant to this Agreement, and (iii) the shares of Common Stock issuable upon
conversion of the Preferred Stock and Warrants (the "Converted Shares") are
sometimes referred to herein as the "Securities." The solicitation of this
Subscription and, if accepted by the Company, the offer and sale of the
Securities, are being made in reliance upon the provisions of Regulation D
("Regulation D") promulgated under the United States Securities Act of 1933, as
amended (the "Act"). The Subscriber wishes to subscribe for the Securities in
accordance with the terms and conditions of the Certificate of Designation, the
Warrant Agreement and this Agreement. It is agreed as follows:
<PAGE>
1. Offer to Subscribe; Purchase Price
The Subscriber hereby offers to purchase and subscribe for the number of
Securities, and at the Purchase Price, set out in Sections 14 and 15 of this
Agreement. The closing (the "Closing") shall be deemed to occur when this
Agreement has been executed by both the Subscriber and the Company and payment
shall have been made by the Subscriber, by wire transfer, as directed in writing
by the Company on the day so directed, to an escrow agent, against the Company's
delivery of (i) certificates representing the Preferred Stock and (ii) the
Warrant Agreement. If the Closing does not occur, the funds of the Subscriber
shall be returned from escrow. The payment of the Adjusted Purchase Price (as
defined below) shall be made by delivering same day funds in United States
Dollars.
2. Representations; Access to Information; Independent Information;
Independent Investigation
The Subscriber represents and warrants to and covenants with the Company as
follows:
2.1 Organization. Good Standing and Qualification. The Subscriber is a
---------------------------------------------
limited partnership duly organized, validly existing and in good
standing under the laws of the State of New York and has all requisite
power and authority to carry on its business as now conducted and as
proposed to be conducted. The Subscriber is duly qualified to transact
business and is in good standing in each jurisdiction in which the
failure to so qualify would have a material adverse effect on the
business or properties of the Company and its subsidiaries taken as a
whole.
2.2 Independent Investigation. The Subscriber, in offering to subscribe
-------------------------
for the Securities hereunder, has relied upon an independent
investigation made by it and has, prior to the date hereof, been given
access to and the opportunity to examine all books and records of the
Company, and all material contracts and documents of the Company. The
Subscriber will keep confidential all non-public information regarding
the Company that the Subscriber receives from the Company. In making
its investment decision to purchase the Securities, the Subscriber is
not relying on any oral or written representations or assurances from
the Company or any other person or any representation of the Company
or any other person other than as set forth in this Agreement, public
filings of the Company or in a document executed by a duly authorized
representative of the Company making reference to this Agreement. The
Subscriber has such experience in business and financial matters that
it is capable of evaluating the risk of its investment and determining
the suitability of its investment. The Subscriber is a sophisticated
investor, as defined in Rule 506(b)(2)(ii) of Regulation D, and an
accredited investor as defined in Rule 501 of Regulation D, a copy of
which definition is attached hereto as Exhibit C.
---------
2
<PAGE>
2.3 Economic Risk. The Subscriber understands and acknowledges that an
-------------
investment in the Securities involves a high degree of risk, including
a possible total loss of investment. The Subscriber represents that
the Subscriber is able to bear the economic risk of an investment in
the Securities. In making this statement the Subscriber hereby
represents and warrants that the Subscriber has adequate means of
providing for the Subscriber's current needs and contingencies; the
Subscriber is able to afford to hold the Securities for an indefinite
period and the Subscriber further represents that the Subscriber has
such knowledge and experience in financial and business matters that
the Subscriber is capable of evaluating the merits and risks of the
investment in the Securities to be received by the Subscriber.
Further, the Subscriber has no present need for liquidity in such
Securities; the Subscriber can afford a complete loss of such
investment in the Securities; and the Subscriber is willing to accept
such investment risks.
2.4 No Government Recommendation or Approval. The Subscriber understands
----------------------------------------
that no United States federal or state agency or similar agency of any
other country has passed upon or made any recommendation or
endorsement of the Company, this transaction or the subscription of
the Securities.
2.5 Reliance on Representation. This Agreement is made by the Company
--------------------------
with the Subscriber in reliance upon such Subscriber's representations
and covenants made in this Section 2, which by the Subscriber's
execution of this Agreement the Subscriber hereby confirms.
2.6 No Registration. Subscriber understands that the Securities have not
---------------
been registered under the Act and are being offered and sold pursuant
to an exemption from registration contained in the Act based in part
upon the representations of Subscriber contained herein. The Common
Stock issuable upon conversion of the Securities do, however, carry
certain registration rights as set forth in the Registration Rights
Agreement executed by the parties hereto (the "Registration Rights
Agreement").
2.7 No Public Solicitation. Subscriber knows of no public solicitation or
----------------------
advertisement of an offer in connection with the proposed issuance and
sale of the Securities.
2.8 Investment Intent. Subscriber is acquiring the Securities to be issued
-----------------
and sold hereunder (and the and Common Stock issuable upon conversion
of the Securities) for the Subscriber's own account. Subscriber is
acquiring such Securities pursuant to this Agreement for investment
and not with a view to the distribution thereof. Subscriber
understands that Subscriber must bear the economic risk of this
investment indefinitely unless the sale of such Securities is
registered pursuant to the Act, or an exemption from such registration
is available, and that except as set forth in the Registration Rights
Agreement, the Company has no present intention of registering any
such sale of the Securities. Subscriber
3
<PAGE>
represents and warrants to the Company that it has no present plan or
intention of selling any of the Securities, has made no predetermined
arrangements to sell any of the Securities other than as provided in
the Registration Rights Agreement and that the offering by the Company
of its securities to the Subscriber, as contemplated in this
Subscription Agreement (the "Offering"), together with any subsequent
resale of the Securities, is not part of a plan or scheme to evade the
registration provisions of the Act. Subscriber understands that public
resale of the Common Stock issuable upon conversion of the Preferred
Stock will not be permissible, absent registration, until the two year
holding period of Rule 144 has passed and then only in compliance with
Rule 144 and that the exercise of the Warrants will commence a two
year holding period with respect to Common Stock issuable upon
exercise of the Warrants unless "tacking" under Rule 144 is
permissible.
2.9 No Sale in Violation of the Act. Subscriber further covenants that
-------------------------------
Subscriber will not make any sale, transfer or other disposition of
any of the Securities or Common Stock issuable upon conversion of the
Securities in violation of the Act (including Regulation D), the
Securities Exchange Act of 1934, as amended (the "Exchange Act") or
the rules and regulations of the Securities and Exchange Commission
(the "Commission") promulgated thereunder.
2.10 Incorporation and Authority. Subscriber has the full power and
---------------------------
authority to execute, deliver and perform this Agreement and to
perform its obligations hereunder. This Agreement has been duly
approved by all necessary action of Subscriber, including any
necessary shareholder approval, has been executed by persons duly
authorized by Subscriber, and constitutes a valid and legally binding
obligation of Subscriber, enforceable in accordance with its terms.
2.11 No Reliance on Tax Advice. Subscriber has reviewed with Subscriber's
-------------------------
own tax advisors the foreign, federal, state and local tax
consequences of this investment, where applicable, and the
transactions contemplated by this Agreement. Subscriber is relying
solely on such advisors and not on any statements or representations
of the Company or any of its agents and understands that Subscriber
(and not the Company) shall be responsible for the Subscriber's own
tax liability that may arise as a result of this investment or the
transactions contemplated by this Agreement.
2.12 Independent Legal Advice. Subscriber acknowledges that Subscriber has
------------------------
had the opportunity to review this Agreement and the transactions
contemplated by this Agreement with his or her own legal counsel.
Subscriber is relying solely on such counsel and not on any statements
or representations of the Company or any of its agents for legal
advice with respect to this investment or the transactions
contemplated by this Agreement, except for the representations,
warranties and covenants set forth herein and in the opinion provided
for in Section 7.6 herein. Subscriber acknowledges that the law firm
of Pryor, Cashman, Sherman & Flynn,
4
<PAGE>
which is acting as escrow agent in connection with this transaction,
is the legal counsel to Subscriber and has not provided legal advice
to Subscriber.
2.13 Compliance with Applicable Law. The Subscriber understands and agrees
------------------------------
that Subscriber shall not sell, assign, transfer, pledge or otherwise
dispose of any of the Shares except in compliance with all conditions
on transfer imposed by the Certificate of Incorporation of the
Company, the Act and "Blue Sky" or securities laws of any state. If
Subscriber becomes subject to Section 13(d) of the Exchange Act,
Subscriber will duly file the required Schedule thereunder.
2.14 Not an Affiliate. Subscriber is not an officer, director or
----------------
"affiliate" (as that term is defined in Rule 405 of the Act) of the
Company, except that Kevin Moore, a Vice President of Ninth Floor
Corp., the general partner of the Subscriber, is a director of the
Company.
2.15 No Inquiries. Subscriber has not been the subject of a regulatory
------------
inquiry by the Commission.
3. Resales
Subscriber acknowledges and agrees that the Securities and Common Stock
issuable upon conversion of the Securities may and will only be resold (a) in
compliance with Regulation D (b) pursuant to a Registration Statement under the
Act; or (c) pursuant to an exemption from registration under the Act.
4. Legends; Subsequent Transfer of Securities
4.1 Legends. (a) The certificate(s) representing the Preferred Stock
-------
shall bear the legend set forth below and any other legend, if such
legend or legends are reasonably required by the Company to comply
with state, federal or foreign law. The certificates representing the
Common Stock issuable upon conversion of the Preferred Stock or issued
upon exercise of the Warrants shall bear the legend set forth in the
second paragraph below.
"A full statement of the designations, relative rights,
preferences and limitations of the shares of each class of stock
authorized to be issued by the Corporation, including Preferred
Stock issuable in classes and in one or more series within a
class (and the authority of Board of Directors to determine
variations for such classes and series of Preferred Stock), will
be furnished by the Corporation to any Shareholder upon request
and without charge.
These securities and the securities issuable upon exercise
thereof have not been registered under the Securities Act of
1933, as amended (the "Securities Act"), and may not be offered,
sold,
5
<PAGE>
pledged, hypothecated, assigned or transferred except (i)
pursuant to a registration statement under the Securities Act
which has become effective and is current with respect to these
securities, or (ii) pursuant to a specific exemption from
registration under the Securities Act but only upon a holder
hereof first having obtained the written opinion of counsel to
the Corporation, or other counsel acceptable to the Corporation,
that the proposed disposition is consistent with all applicable
provisions of the Securities Act as well as any applicable "Blue
Sky" or similar securities law."
(b) The Warrant Agreement shall bear the legend set forth below and any
other legend, if such legend or legends are reasonably required by the Company
to comply with state, federal or foreign law.
"THIS WARRANT AND THE SECURITES TO BE ISSUED UPON ITS EXERCISE
HAVE NOT BEEN REGISTERED UNDER THE SECURITES ACT OF 1933, AS
AMENDED (THE "ACT")."
4.2 Transfers. Subject to receipt of a legal opinion from legal counsel
---------
to the Company, the Company agrees, and shall instruct its agents,
that the Securities may be transferred to any person or entity who is
not an affiliate of the Company if such transfer occurs after the
applicable holding period as determined in accordance with the Act
(the "Applicable Holding Period"), without (a) any further restriction
on transfer (provided the transfer is made in compliance with the Act)
or (b) the entry of a "stop transfer" order against such Securities,
and the Securities delivered to the transferee shall not bear a
legend. The Company may place a stop transfer order on any Common
Stock issued upon conversion of Securities during the Applicable
Holding Period for the duration of the Applicable Holding Period. Upon
election by the Subscriber to convert the Preferred Stock into shares
of Common Stock or exercise the Warrants, the Subscriber shall deliver
to the Company a duly completed Notice of Conversion or Exercise (a
"Notice") in the form attached to this Agreement as Exhibit D.
---------
5. Company Covenants
5.1 Restrictions on Additional Issuances. The Company will not issue any
------------------------------------
debt or equity securities for cash in public or private capital
raising transactions for a period of six (6) months after the Closing,
without the prior written consent of the Subscriber; provided,
however, the requirement for Subscriber's prior written consent shall
not apply to: (i) the issuance of securities pursuant to the exercise
of options or warrants issued and outstanding on the date hereof; (ii)
any transaction involving the Company's arrangements, now or in the
future, with commercial banks or other lending institutions, subject
to the limitations set for in Section 5.3; (iii) issuances of
securities pursuant to the acquisition of another corporation by
6
<PAGE>
Company by merger, purchase of substantially all of the assets or the
other reorganization whereby the Company owns more than fifty percent
(50%) of the voting power of such corporation following such
transaction; (iv) any acquisition or disposition of a product or a
license by the Company on the condition that such issuance is approved
by the Board of Directors of the Company; (v) the issuance of
securities upon exercise or conversion of the Company's Series A,
Series B or Series C Preferred Stock outstanding on the date of the
Closing; or (vi) the concurrent issuance of Preferred Stock pursuant
to a Regulation S Subscription Agreement (collectively, the "Permitted
Issuances"). The Company additionally agrees not to issue, except as
dividends upon outstanding shares of Series A, Series B or Series C
Preferred Stock, any shares of Series A, Series B or Series C
Preferred Stock at any time subsequent to the Closing, and agrees that
issuances of Series A, Series B or Series C Preferred Stock subsequent
to the Closing shall not constitute Permitted Issuances.
5.2 Right of First Refusal. The Company hereby grants to the Subscriber
----------------------
the right of first refusal to purchase all (or any part) of New
Securities (as defined in this Section) that the Company may, from
time to time, propose to sell and issue. "New Securities" shall mean
any capital stock of the Company, whether now authorized or not, and
rights, options or warrants to purchase said capital stock, and debt
or equity securities of any type whatsoever that are, or may become,
convertible into said capital stock; provided, however, that the term
"New Securities" does not include Permitted Issuances. In the event
that the Company proposes to undertake an issuance of New Securities,
it shall give the Subscriber written notice of its intention,
describing the type of New Securities, the price and the general terms
upon which the Company proposes to issue the same. The Subscriber
shall have fifteen (15) days from the date of receipt of any such
notice to agree to purchase all or less than all of the New Securities
for the price and upon the general terms specified in the notice by
giving written notice to the Company and stating therein the quantity
of New Securities to be purchased. If the Subscriber fails to exercise
in full the right of first refusal within such fifteen (15) day
period, the Company shall have sixty (60) days thereafter to sell the
New Securities respecting which the Subscriber's rights were not
exercised at a price and upon general terms no more favorable to the
purchasers thereof than specified in the Company's notice. In the
event that the Company has not sold the New Securities within such
sixty (60) day period, the Company shall not thereafter issue or sell
any New Securities without first offering such securities to the
Subscriber in the manner provided above. The right of first refusal
granted under this Section shall terminate upon the earlier of: (i)
the date three (3) years from the date hereof; or (ii) the date upon
which the Subscriber ceases to own any securities: (a) purchased in
the Offering; (b) issued with respect to or upon conversion of
securities purchased in the Offering; or (c) purchased pursuant to the
right of first refusal granted under this Section.
7
<PAGE>
5.3 Additional Covenants. The Company hereby covenants to the Subscriber,
--------------------
so long as the Subscriber owns in excess of a majority of the
Preferred Stock (or Common Stock issuable upon conversion of the
Preferred Stock) which the Subscriber is purchasing pursuant to this
Agreement (or until such other time as specified below), that:
(i) the Subscriber shall have the discretion to name the
President of the Company, subject to approval of such action of the
Subscriber by the Board of Directors of the Company; provided,
however, the terms of this covenant shall terminate on the earlier of
the following to occur (a) the date which is two (2) years from the
date of this Agreement, or (b) in the event that the Subscriber ceases
to own a majority of the Preferred Stock (or Common Stock issuable
upon conversion of the Preferred Stock) which the Subscriber is
purchasing pursuant to this Agreement;
(ii) the Company shall provide the Subscriber with a monthly
statement which shall outline actual financial performance versus
budgeted financial performance for the prior month and on a year to
date basis;
(iii) the Company shall not incur additional indebtedness in
excess of $250,000, without the prior written consent of the
Subscriber;
(iv) the Company shall not issue additional shares of convertible
preferred stock or convertible debentures without the prior written
consent of the Subscriber;
(v) the Subscriber shall have the right to designate one member
to the Board of Directors of the Company, provided, however, the terms
of this covenant shall terminate on the earlier of the following to
occur (a) in the event that the Subscriber's ownership interest in the
Company on a fully diluted basis is below five percent (5%) of the
Common Stock of the Company, or (b) in the event that the Subscriber
ceases to own a majority of the Preferred Stock (or Common Stock
issuable upon conversion of the Preferred Stock) which the Subscriber
is purchasing pursuant to this Subscription Agreement; and
(vi) the Company shall not pay any cash dividends on its Common
Stock.
6. Representations, Warranties and Covenants of Company
The Company represents and warrants to and covenants with the Subscriber as
follows:
6.1 Organization. Good Standing and Qualification. The Company is a
---------------------------------------------
corporation duly organized, validly existing and in good standing
under the laws of the State of Idaho and has all requisite corporate
power and authority to carry on its
8
<PAGE>
business as now conducted and as proposed to be conducted. The Company
is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a material
adverse effect on the business or properties of the Company and its
subsidiaries taken as a whole. The Company to its knowledge is not the
subject of any pending or threatened investigation or administrative
or legal proceeding by the Internal Revenue Service, the taxing
authorities of any state or local jurisdiction, or the Securities and
Exchange Commission which have not been disclosed in the reports
referred to in Section 6.5 below.
6.2 Corporate Condition. None of the Company's filings made pursuant to
-------------------
the Exchange Act, including, but not limited to, those reports
referenced in Section 6.5 below, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to
make the statements made, in light of the circumstances under which
they were made, not misleading. There have been no material adverse
changes in the Company's financial condition or business since the
date of those reports which have not been disclosed to Subscriber in
writing.
6.3 Authorization. All corporate action on the part of the Company, its
-------------
officers, directors and shareholders necessary for the authorization,
execution and delivery of this Agreement, the performance of all
obligations of the Company hereunder and the authorization, issuance
(or reservation for issuance) and delivery of the Securities being
sold hereunder and the Common Stock issuable upon conversion of the
Securities have been taken, and this Agreement constitutes a valid and
legally binding obligation of the Company, enforceable in accordance
with its terms.
6.4 Valid Issuance of Securities and Securities. The Securities, when
-------------------------------------------
issued, sold and delivered in accordance with the terms hereof for the
consideration expressed herein, will be validly issued, fully paid and
nonassessable and, based in part upon the representations of the
Subscriber in this Agreement, will be issued in compliance with all
applicable U.S. federal and state securities laws. The Common Stock
issuable upon conversion of the Securities when issued in accordance
with the terms of the Certificate of Designation or Warrant Agreement
shall be duly and validly issued and outstanding, fully paid and
nonassessable, and based in part on the representations and warranties
of Subscriber and any transferee of the Securities or Common Stock
issuable upon conversion of the Securities, will be issued in
compliance with all applicable U.S federal and state securities laws.
6.5 Current Public Information. The Company represents and warrants to
--------------------------
the Subscriber that the Company has a class of securities registered
under Section 12(g) of the Exchange Act and has filed all the
materials required to be filed as reports pursuant to the Exchange Act
for a period of at least twelve months preceding the date hereof (or
for such shorter period as the Company was required
9
<PAGE>
by law to file such material). The Subscriber has obtained copies of
the Company's Form 10-KSB Annual Report for the year ended December
31, 1995 and Form 10-QSB for the fiscal quarter ended September 30,
1996. The Company undertakes to furnish the Subscriber with copies of
such other information as may be reasonably requested by the
Subscriber prior to consummation of this Offering.
6.6 Selling Efforts in Regard to this Transaction. The Company represents
---------------------------------------------
and warrants that the Offering is not part of a plan or scheme to
evade the registration provisions of the Act.
6.7 No Conflicts. The execution and delivery of this Agreement and the
------------
consummation of the issuance of the Securities and the transactions
contemplated by this Agreement do not and will not conflict with or
result in a breach by the Company of any of the terms or provisions
of, or constitute a default under, the Certificate of Incorporation or
bylaws of the Company, or any indenture, mortgage, deed of trust or
other material payment or instrument to which the Company is a party
or by which it or any of its properties or assets are bound, or any
existing applicable decree, judgment or order of any court, Federal or
State regulatory body, administrative agency or other governmental
body having jurisdiction over the Company or any of its properties or
assets.
6.8 Issuance of Securities. The Company will issue one or more
----------------------
certificates representing the shares of Preferred Stock in the name of
Subscriber in such denominations to be specified by the Company and
execute the Warrant Agreement prior to closing. Upon conversion of the
Securities in accordance with their terms, the Company will issue one
or more certificates representing shares of Common Stock in the name
of Subscriber and in such denominations to be specified by Subscriber
prior to conversion. Subject to the Company's transfer agent's receipt
of a legal opinion from legal counsel to the Company, the Converted
Shares to be issued upon conversion of the Securities shall not bear
any restrictive legends. The Company further warrants that no
instructions other than these instructions, and instructions for a
"stop transfer" until the end of the Applicable Holding Period, have
been given to the transfer agent and also warrants that the Converted
Shares shall otherwise be freely transferable by Subscriber on the
books and records of the Company subject to compliance with Federal
and State securities laws, the receipt of a legal opinion from legal
counsel to the Company and the terms of the applicable Securities. The
Company will notify the transfer agent of the date of completion of
the Offering. Nothing in this section shall affect in any way
Subscriber's obligations and agreement to comply with all applicable
securities laws upon resale of the Securities.
6.9 No Action. The Company has not taken and will not take any action that
---------
will affect in any way the running of the Applicable Holding Period or
the ability of
10
<PAGE>
Subscriber to resell freely the Securities in accordance with
applicable securities laws and the Agreement.
6.10 Compliance with Laws. As of the date hereof, the conduct of the
--------------------
business of the Company complies in all material respects with all
material statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees applicable thereto. The Company has not received
notice of any alleged violation of any statute, law, regulations,
ordinance, rule, judgment, order or decree from any governmental
authority. The Company shall comply with all applicable securities
laws with respect to the sale of the Securities, including but not
limited to the filing of all reports required to be filed in
connection therewith with the Securities and Exchange Commission or
any stock exchange or the NASDAQ Stock Market or any other regulatory
authority.
6.11 Litigation. Except as disclosed in the Company's Annual Report on Form
----------
10-KSB, there is no action, suit or proceeding before or by any court
or governmental agency or body, domestic or foreign, now pending or,
to the knowledge of the Company, threatened, against or affecting the
Company, or any of its properties, which could reasonably be expected
to result in any material adverse change in the business, financial
condition or results of operations of the Company, or which could
reasonably be expected to materially and adversely affect the
properties or assets of the Company.
6.12 Disclosures. There is no fact known to the Company (other than
-----------
general economic conditions known to the public generally) that has
not been disclosed in writing to the Subscriber that could reasonably
be expected to have a material adverse effect on the business,
financial condition or results of operations of the Company, or which
could reasonably be expected to materially and adversely affect the
properties or assets of the Company or could reasonably be expected to
materially and adversely affect the ability of the Company to perform
its obligations pursuant to this Subscription Agreement and the
issuance of the Securities hereunder.
6.13 Commissions. No person, firm or corporation is entitled to receive
-----------
any brokerage fee, commission or other similar payment from the
Company in connection with the consummation of the transactions
contemplated hereby and the Company shall not make any such payment to
any person, firm or corporation.
6.14 Capitalization. The Company, as of the date of the Closing (including
--------------
the Securities issued pursuant to this Subscription Agreement and the
Regulation D Securities Subscription Agreement, of even date herewith)
will have outstanding the number of shares of Common Stock, preferred
stock and warrants as set forth on Exhibit E.
---------
11
<PAGE>
7. Additional Covenants of Company
7.1 Accountants. The Company shall maintain as its independent auditors an
-----------
accounting firm that is authorized to practice before the SEC.
7.2 Corporate Existence and Taxes. The Company shall maintain its
-----------------------------
corporate existence in good standing, and shall pay all its taxes when
due except for taxes which the Company disputes.
7.3 Reserved Shares and Listings. For so long as any Securities held by
----------------------------
the Subscriber remain outstanding:
(a) the Company will reserve from its authorized but unissued shares
of Common Stock a sufficient number of shares to permit the
conversion in full of the outstanding Securities; and
(b) the Company will utilize its reasonable best efforts to maintain
its listing on the NASDAQ SmallCap Market.
7.4 Liquidated Damages for Late Conversion. As set forth in the
--------------------------------------
Certificate of Designation, the Company shall use all reasonable
efforts to issue and deliver, within three (3) business days after the
Subscriber has fulfilled all conditions and submitted all necessary
documents duly executed and in proper form required for conversion
(the "Deadline"), to the Subscriber or any party receiving Securities
by transfer from the Subscriber (together with the Subscriber, a
"Holder"), at the address of the Holder on the books of the Company, a
certificate or certificates for the number of shares of Common Stock
to which the Holder shall be entitled. The Company understands that a
delay in the issuance of the shares of Common Stock beyond the
Deadline could result in economic loss to the Holder. As compensation
to the Holder for such loss, the Company agrees to pay liquidated
damages to the Holder for late issuance of shares upon conversion of
the Securities in accordance with the following schedule (where "No.
Business Days Late" is defined as the number of business days beyond
three business days from the date of receipt by the Company of a
Notice and the transfer agent of all necessary documentation duly
executed and in proper form required for conversion, including the
original certificate or Warrant Agreement representing the Securities
to be converted, all in accordance with this Agreement, the Warrant
Agreement, the Certificate of Designation and the requirements of the
transfer agent):
12
<PAGE>
No. Business Days Late Liquidated Damages
---------------------- ------------------
1 $500
2 $1,000
3 $1,500
4 $2,000
5 $2,500
6 $3,000
7 $3,500
8 $4,000
9 $4,500
10 $5,000
> 10 $5,000 + $1,000 for each
Business Day Late beyond 10 days
The Company shall pay the Holder any liquidated damages incurred under
this Section by check upon the earlier to occur of (i) issuance of the
shares to the Holder or (ii) each monthly anniversary of the receipt
by the Company of such Holder's Notice. Nothing herein shall limit the
Subscriber's right to pursue actual damages for the Company's failure
to issue and deliver shares of Common Stock to the Subscriber in
accordance with the terms of the Certificate of Designation or the
Warrant Agreement.
7.5 Conversion Notice. The Company agrees that, in addition to any other
-----------------
remedies which may be available to the Subscriber, including, but not
limited to, remedies available under Section 7.4 of this Agreement, in
the event the Company fails for any reason to effect delivery to the
Subscriber of certificates representing shares of Common Stock upon
conversion of any Securities within three business days following
receipt by the Company of a Notice in connection with such Securities,
the Investor (as defined in the Notice) will be entitled to revoke the
Notice by delivering a notice to such effect to the Company whereupon
the Company and the Subscriber shall each be restored to their
respective positions immediately prior to delivery of such Notice.
7.6 Opinion of Counsel. Subscriber shall, upon purchase of the Securities,
------------------
receive an opinion letter from Pryor, Cashman, Sherman & Flynn,
counsel to the Company, to the effect that (i) the Company is duly
incorporated and validly existing; (ii) this Agreement, the issuance
of the Securities, and the issuance of the Common Stock upon
conversion of the Securities have been duly approved by all required
corporate action, and that all such Securities, upon due issuance,
shall be validly issued and outstanding, fully paid and nonassessable;
(iii) this Agreement, the Warrant Agreement and the Registration
Rights Agreement are valid and binding obligations of the Company,
enforceable in accordance with their terms, except as enforceability
of any indemnification provisions may be limited by principles of
public policy, and subject to laws of general application relating to
bankruptcy,
13
<PAGE>
insolvency and the relief of debtors and rules of laws governing
specific performance and other equitable remedies; and (iv) based upon
the representations and warranties of the Company and each Subscriber
in the Offering, the offer and sale of the Securities to the
Subscriber is exempt from the registration requirements of the Act;
except that with respect to the foregoing opinions counsel may add
such qualifications as are consistent with firm practice, including an
assumption that the transaction does not constitute a plan or scheme
to evade the registration provisions of the Act.
7.7 Consultation with Legal Counsel. The Company shall consult with its
-------------------------------
legal counsel regarding its Exchange Act filing requirements
including, but not limited to, the possible obligation of the Company
to file Form 8-K in connection with the Offering, and will timely make
any and all such filings deemed necessary by such counsel.
7.8 Registration Rights. The Company will grant the Subscriber the
-------------------
registration rights covering the Common Stock issuable on conversion
of the Securities on substantially the terms of the Registration
Rights Agreement attached hereto as Exhibit F on the date of the
---------
Closing.
8. Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, U.S.A., applicable to agreements made in and
wholly to be performed in that jurisdiction, except for matters arising under
the Act or the Exchange Act which matters shall be construed and interpreted in
accordance with such laws. Any action brought to enforce, or otherwise arising
out of, this Agreement shall be heard and determined in either a federal or
state court sitting in the State of New York, U.S.A.
9. Entire Agreement; Amendment
This Agreement, the Certificate of Designation, Warrant Agreement, the
Registration Rights Agreement and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof, and no party shall be liable or
bound to any other party in any manner by any warranties, representations or
covenants except as specifically set forth herein or therein. Except as
expressly provided herein, neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated other than by a written instrument
signed by the party against whom enforcement of any such amendment, waiver,
discharge or termination is sought.
10. Notices, Etc.
Any notice, demand or request required or permitted to be given by either
the Company or the Subscriber pursuant to the terms of this Agreement shall be
in writing and shall be deemed given when delivered personally or by facsimile,
with a hard copy to follow by two day courier
14
<PAGE>
addressed to the parties at the addresses of the parties set forth at the end of
this Agreement or such other address as a party may request by notifying the
other in writing.
11. Counterparts
This Agreement may be executed in any number of counterparts, each of which
shall be enforceable against the parties actually executing such counterparts,
and all of which together shall constitute one instrument.
12. Severability
In the event that any provision of this Agreement becomes or is declared by
a court of competent jurisdiction to be illegal, unenforceable or void, this
Agreement shall continue in full force and effect without said provision;
provided that no such severability shall be effective if it materially changes
the economic benefit of this Agreement to any party.
13. Titles and Subtitles
The titles and subtitles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.
14. Amount
The undersigned Subscriber hereby subscribes for (i) 2,625 shares of
Preferred Stock with a face value of Two Million, Six Hundred Twenty-Five
Thousand Dollars ($2,625,000) (U.S.), and (ii) Warrants to purchase 262,500 and
pays herewith funds in the amount of One Million, Seven Hundred Fifty Thousand
Dollars ($1,750,000) (U.S.). The Applicable Holding Period in connection with
the Preferred Stock shall begin on the date the Company receives payment of the
Purchase Price and the Applicable Holding Period in connection with the
Converted Shares to be issued in connection with conversion of the Preferred
Sock or exercise of the Warrants shall be dependent upon the date of conversion
or exercise and any payments due in connection therewith and the provisions of
the Act, as contemplated by the Company and its outside securities counsel.
15. Prior Agreement
The Subscriber and Company have previously entered into that certain Letter
Agreement, dated January 23, 1997 (the "Letter Agreement"). Pursuant to the
Letter Agreement, the Subscriber wired $250,000 as an advance on the Purchase
Price in contemplation of the Closing of the transactions described in this
Agreement. Accordingly, the net amount due to the Company by the Subscriber
pursuant to this Agreement is One Million, Five Hundred Thousand Dollars
($1,500,000 = $1,750,000 - $250,000) (the "Adjusted Purchase Price").
[Signature page follows, remainder of page intentionally blank]
15
<PAGE>
The undersigned Subscriber acknowledges that this subscription shall not be
effective unless accepted by the Company as indicated below.
SUBSCRIBER:
CLARK PARTNERS III, L.P.
By: Ninth Floor Corp.
its general partner
By: /S/ KEVIN MOORE
---------------
Name: Kevin Moore
Title: Vice President
Address: 30 Wall Street, 9th Floor
New York, New York 10005
Date of execution by Subscriber: January 27, 1997
THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY AND THIS AGREEMENT IS DATED AS
OF THE 27/TH/ DAY OF JANUARY, 1997.
COMPANY:
GOLF-TECHNOLOGY HOLDING, INC.
By: /S/ HAROLD E. HUTCHINS
-------------------------
Name: Harold E. Hutchins
Title: Vice President, Chief Financial Officer,
Chief Operating Officer, and Secretary
<PAGE>
EXHIBIT A
---------
Certificate of Designation for Series C
Preferred Stock, dated January 23, 1997.
See Exhibit (4)
<PAGE>
EXHIBIT B
---------
Warrant for the purchase of Shares of Common Stock, issued on January 27, 1997,
by the Registrant to Clark, in connection with 262,500 Shares of Common Stock.
See Exhibit (99c)
<PAGE>
EXHIBIT C
----------
DEFINITION OF "ACCREDITED INVESTOR"
Pursuant to Rule 501(a) of Regulation D, the term "Accredited Investor" is
defined as follows:
1. Any bank as defined in section 3(a)(2) of the Securities Act of 1933 (the
"Act"), or any savings and loan association or other institution as defined
in section 3(a)(5)(A) of the Act whether acting in its individual or
fiduciary capacity; any broker or dealer registered pursuant to section 15
of the Securities Exchange Act of 1934; any insurance company as defined in
section 2(13) of the Act; any investment company registered under the
Investment Company Act of 1940 or a business development company as defined
in section 2(a)(48) of that Act; Small Business Investment Company licensed
by the U.S. Small Business Administration under section 301(c) or (d) of
the Small Business Investment Act of 1958; any plan established and
maintained by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions for the benefit of
its employees, if such plan has total assets in excess of $5,000,000;
employee benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974, if the investment decision is made by a plan
fiduciary, as defined in section 3(21) of such Act, which is either a bank,
savings and loan association, insurance company, or registered investment
adviser, or if the employee benefit plan has total assets in excess of
$5,000,000 or, if the self-directed plan, with investment decisions made
solely by persons that are accredited investors.
2. Any private business development company as defined in section 202(a)(22)
of the Investment Advisers Act of 1940.
3. Any organization described in section 501 (c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or partnership,
not formed for the specific purpose of acquiring the securities offered,
with total assets in excess of $5,000,000.
4. Any director, executive officer, or general partner of the issuer of the
securities being offered or sold, or any director, executive officer, or
general partner of a general partner of that issuer.
5. Any natural person whose individual net worth, or joint net worth with that
person's spouse, at the time of his purchase exceeds $1,000,000.
6. Any natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with that person's spouse
in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current year.
<PAGE>
7. Any trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in section (b)(2)(ii) of
Rule 506.
8. Any entity in which all of the equity owners are accredited investors.
<PAGE>
EXHIBIT D
---------
NOTICE OF CONVERSION OR EXERCISE
(To be executed by the registered holder in order to convert the share(s) of
Series C Preferred Stock or exercise Warrants)
In accordance with that certain Regulation D Securities Subscription
Agreement (the "Subscription Agreement"), by and between Clark Partners III,
L.P. and Golf-Technology Holding, Inc. (the "Company"), dated as of January 27,
1997, the undersigned hereby irrevocably elects to convert any of the Securities
represented by the attached certificate or agreement into shares of common stock
("Common Stock") of the Company according to the conditions of the Certificate
of Designation of Series C Preferred Stock or Warrant Agreement, as applicable,
as of the date written below. Capitalized terms used and not defined herein
shall have the meanings ascribed to them in the Subscription Agreement. If
shares are to be issued in the name of a person other than undersigned, the
undersigned will pay all transfer taxes payable with respect thereto and is
delivering herewith such certificates. No fee will be charged to the undersigned
for any conversion, except for transfer taxes, if any.
The undersigned represents that it: (i) is familiar with and understands
the terms, conditions and requirements contained in Regulation D and Rule 144
promulgated under the Securities Act of 1933, as amended (the "Act"); (ii) will
comply with the transfer restrictions contained in Section 4(1) of the Act and
Rule 144 promulgated thereunder to the extent they are applicable; (iii) has no
prior understanding with respect to the sale of the Common Stock to any third
party; (iv) purchased the Securities with investment intent, is purchasing the
Common Stock with investment intent; and (v) will make any sale, transfer or
other disposition of the Common Stock in full compliance with the Act, the
Exchange Act, as amended, and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder.
The undersigned acknowledges and agrees that:
(I) in connection with the conversion of Preferred Stock into shares of
Common Stock :
(a) no shares of Common Stock will be issued until the original
Preferred Stock Certificate(s) to be converted and the Notice are
received by the Company's attorney or transfer agent,
(b) the original Preferred Stock Certificate(s) to be converted and the
Notice must be received by the Company's attorney or transfer agent
by the third business day following the date of conversion indicated
below, or such Notice shall become null and void at the sole
discretion of the Company; and
(c) the certificates representing the Common Stock issuable upon
conversion of the Preferred Stock shall bear the legend set forth in
the second paragraph of the legend set forth in Section 4.1 of the
Subscription Agreement, and
(II) in connection with the conversion of Warrants into shares of Common
Stock:
(a) no shares of Common Stock will be issued until the Warrant holder
surrenders the original Warrant Agreement (with the subscription
form at the end thereof duly executed);
(b) the original Warrant Agreement (with the subscription form at the
end thereof duly executed) and the Notice must be received by the
Company's attorney or
<PAGE>
transfer agent by the third business day following the date of
conversion indicated below, or such Notice and subscription form
shall become null and void at the sole discretion of the Company,
and
(c) the certificates representing the Common Stock issuable upon
exercise of the Warrants shall bear the legend set forth in the
second paragraph of the legend set forth in Section 4.1 of the
Subscription Agreement.
Conversion Formula: Date of Conversion:
--------------------------
Applicable Conversion Price:
------------------
Subscriber's Name:
----------------------------
Signature:
-----------------------------------
Name:
Title:
Address:
--------------------------------------
----------------------------------------------
2
<PAGE>
EXHIBIT E
---------
OUTSTANDING COMMON STOCK, PREFERRED STOCK
AND WARRANTS
GOLF-TECHNOLOGY HOLDING, INC.
AS OF JANUARY 27, 1997
(excluding the Securities issued pursuant to
this Subscription Agreement and the
Regulation S Securities Subscription
Agreement, of even date herewith)
Shares of Common Stock: 4,049,408
Shares of Preferred Stock: Series A - 389,600
Series B - 9,231
-------
398,831
Options to purchase the
following number of
shares of Common
Stock: 441,500
Warrants to purchase
the following number of
shares of Common
Stock: 637,334
<PAGE>
EXHIBIT F
---------
Registration Rights Agreement, dated as of January 27, 1997, among the
Registrant, Clark and RBB.
See Exhibit (99f)
<PAGE>
EXHIBIT (99b)
-------------
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT
<PAGE>
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES COMMISSION OF ANY STATE UNDER ANY STATE SECURITIES LAW. THEY ARE
BEING OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER REGULATION S
("REGULATIONS") PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"). THE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
UNITED STATES OR TO U.S PERSONS (AS SUCH TERM IS DEFINED IN REGULATION S) UNLESS
THE SECURITIES ARE REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS, OR SUCH OFFERS, SALES AND TRANSFERS ARE MADE PURSUANT TO AVAILABLE
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
THIS SUBSCRIPTION AGREEMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY OF THE SECURITIES OFFERED HEREBY BY OR TO
ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OF SOLICITATION WOULD BE
UNLAWFUL. INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. IN
MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND THE RISKS
INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED OR DETERMINED THE ACCURACY OR ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Regulation S Securities Subscription Agreement (the "Agreement" or the
"Subscription Agreement") is executed by the undersigned, RBB Bank
Aktiengesellschaft (the "Subscriber"), in connection with the offer by GOLF-
TECHNOLOGY HOLDING, INC., an Idaho corporation (the "Company") and subscription
by the Subscriber for (i) shares of convertible preferred stock Series C (the
"Preferred Stock") with an aggregate face amount of $1,875,000 (U.S.) (1,875
shares with a face amount of $1,000 (U.S.) per share), (ii) warrants (the
"Warrants") to purchase 187,500 shares of the common stock of the Company (the
"Common Stock"), $.00l (U.S.) par value, at a purchase price of $3.00 (US) per
share, (iii) additional warrants (the "Additional Warrants") to purchase 51,724
shares of the Common Stock, $.00l (U.S.) par value, of the Company, at a
purchase price of $3.625 (US) per share, and (iv) the issuance of 51,724 shares
(the "Additional Shares") of Common Stock, all at the aggregate purchase price
of One Million, Two Hundred Fifty Thousand Dollars ($1,250,000) (U.S.) (the
"Purchase Price"). The rights and preferences of the Preferred Stock, including
the terms on which the Preferred Stock may be converted into Common Stock, are
set forth in the Certificate of Designation of Series C Preferred Stock attached
hereto as Exhibit A (the "Certificate of Designation"). The Terms and provision
---------
of the Warrants, including the terms on which the
<PAGE>
Warrants may be converted into Common Stock, are set forth in the Warrant to
Purchase Common Stock (the "Warrant Agreement") attached hereto as Exhibit B.
---------
The Terms and provision of the Additional Warrants, including the terms on which
the Additional Warrants may be converted into Common Stock, are set forth in the
Additional Warrant to Purchase Common Stock (the "Additional Warrant Agreement")
attached hereto as Exhibit C. The (i) Preferred Stock, (ii) Warrants, (iii)
---------
Additional Warrants, (iv) Additional Shares issued pursuant to this Agreement,
and (v) the shares of Common Stock issuable upon conversion of the Preferred
Stock, Warrants, and/or Additional Warrants (the "Converted Shares") are
sometimes referred to herein as the "Securities." The Preferred Stock, Warrants,
and Additional Warrants are sometimes referred to herein as the "Convertible
Securities." The solicitation of this Subscription and, if accepted by the
Company, the offer and sale of the Securities, are being made in reliance upon
the provisions of Regulation S ("Regulation S") promulgated under the United
States Securities Act of 1933, as amended (the "Act"). The Subscriber wishes to
subscribe for the Securities in accordance with the terms and conditions of the
Certificate of Designation, the Warrant Agreement, the Additional Warrant
Agreement and this Agreement. It is agreed as follows:
1. Offer to Subscribe; Purchase Price
The Subscriber hereby offers to purchase and subscribe for the number of
Securities, and at the Purchase Price, set out in Sections 14 and 15 of this
Agreement. The closing (the "Closing") shall be deemed to occur when this
Agreement has been executed by both the Subscriber and the Company and payment
shall have been made by the Subscriber, by wire transfer, as directed in writing
by the Company on the day so directed, to an escrow agent, against the Company's
delivery of (i) certificates representing the Preferred Stock and Common Stock
and (ii) the Warrant Agreement and Additional Warrant Agreement. If the Closing
does not occur, the funds of the Subscriber shall be returned from escrow. The
payment of the Adjusted Purchase Price (as defined below) shall be made by
delivering same day funds in United States Dollars.
2. Representations; Access to Information; Independent Information;
Independent Investigation
The Subscriber represents and warrants to and covenants with the Company,
on its own behalf and on behalf of each person or entity for which the
Subscriber is acting as a fiduciary, as follows:
2.1 Offshore Transaction. The Subscriber represents and warrants to the
---------------------
Company that (i) neither the Subscriber nor any of the investors on
whose behalf the Subscriber may purchase and hold Securities (the
"Investors") is a "U.S. person" as that term is defined in Rule 902(o)
of Regulation S (a copy of which definition is attached as Exhibit D),
---------
and neither the Subscriber nor any Investor is an entity organized or
incorporated under the laws of any foreign jurisdiction by any "U.S
person" principally for the purpose of investing in securities not
registered under the Act, unless the Subscriber is or was organized or
incorporated by "U.S.
2
<PAGE>
persons" who are accredited investors (as defined in Rule 501(a) under
the Act) and who are not natural persons, estates or trusts
("Institutional Investors"), and all owners of interests in such
entity who are "U.S. persons" are Institutional Investors, and not
natural persons, estates or trusts; (ii) the Securities were not
offered to the Subscriber or to any Investor in the United States and
at the time of execution of this Subscription Agreement and of any
offer to the Subscriber or to the Investors to purchase the Securities
hereunder, the Subscriber and each such Investor was physically
outside the United States; (iii) the Subscriber is purchasing the
Securities for its own account and not on behalf of or for the benefit
of any U.S. person and the sale and resale of the Securities have not
been prearranged with any buyer in the United States; (iv) the
Subscriber and to the best knowledge of the Subscriber each
distributor, if any, participating in the offering of the Securities,
has agreed and the Subscriber hereby agrees that all offers and sales
of the Securities prior to the expiration of a period commencing on
the closing of the Securities offered and ending forty-five (45) days
thereafter (the "Restricted Period") shall not be made to U.S. persons
or for the account or benefit of U.S. persons and shall otherwise be
made in compliance with the provisions of Regulation S. Subscriber has
not been engaged or acted as or on behalf of a distributor or dealer
(and is not an affiliate of a distributor or dealer) with respect to
this transaction.
2.2 Independent Investigation. The Subscriber, in offering to subscribe
-------------------------
for the Securities hereunder, has relied upon an independent
investigation made by it and has, prior to the date hereof, been given
access to and the opportunity to examine all books and records of the
Company, and all material contracts and documents of the Company. The
Subscriber will keep confidential all non-public information regarding
the Company that the Subscriber receives from the Company. In making
its investment decision to purchase the Securities, the Subscriber is
not relying on any oral or written representations or assurances from
the Company or any other person or any representation of the Company
or any other person other than as set forth in this Agreement, public
filings of the Company or in a document executed by a duly authorized
representative of the Company making reference to this Agreement. The
Subscriber has such experience in business and financial matters that
it is capable of evaluating the risk of its investment and determining
the suitability of its investment. The Subscriber is a sophisticated
investor, as defined in Rule 506(b)(2)(ii) of Regulation D, and an
accredited investor as defined in Rule 501 of Regulation D, a copy of
which definition is attached hereto as Exhibit E.
---------
2.3 Economic Risk. The Subscriber understands and acknowledges that an
-------------
investment in the Securities involves a high degree of risk, including
a possible total loss of investment. The Subscriber represents that
the Subscriber is able to bear the economic risk of an investment in
the Securities. In making this statement the Subscriber hereby
represents and warrants that the Subscriber has adequate means of
providing for the Subscriber's current needs and contingencies;
3
<PAGE>
the Subscriber is able to afford to hold the Securities for an
indefinite period and the Subscriber further represents that the
Subscriber has such knowledge and experience in financial and business
matters that the Subscriber is capable of evaluating the merits and
risks of the investment in the Securities to be received by the
Subscriber. Further, the Subscriber has no present need for liquidity
in such Securities; the Subscriber can afford a complete loss of such
investment in the Securities; and the Subscriber is willing to accept
such investment risks.
2.4 No Government Recommendation or Approval. The Subscriber understands
----------------------------------------
that no United States federal or state agency or similar agency of any
other country has passed upon or made any recommendation or
endorsement of the Company, this transaction or the subscription of
the Securities.
2.5 No Directed Selling Efforts in Regard to this Transaction. The
---------------------------------------------------------
Subscriber has not, and to the best of the Subscriber's knowledge,
neither the Company nor any distributor, if any, participating in the
offering of the Securities nor any person acting for the Company or
any such distributor has conducted any "directed selling efforts" as
that term is defined in Rule 902 of Regulation S. Such activity
includes, without limitation, the mailing of printed material to
investors residing in the United States, the holding of promotional
seminars in the United States, the placement of advertisements with
radio or television stations broadcasting in the United States or in
publications with a general circulation in the United States, which
discuss the offering of Securities.
2.6 Reliance on Representation. This Agreement is made by the Company
--------------------------
with the Subscriber in reliance upon such Subscriber's representations
and covenants made in this Section 2, which by the Subscriber's
execution of this Agreement the Subscriber hereby confirms. If the
Subscriber includes or consists of more than one person or entity, the
obligations of the Subscriber shall be joint and several and the
representations and warranties herein contained shall be deemed to be
made by and be binding upon each such person or entity and their
respective heirs, executors, administrators, successors and assigns.
2.7 No Registration. Subscriber understands that the Securities have not
---------------
been registered under the Act and are being offered and sold pursuant
to an exemption from registration contained in the Act based in part
upon the representations of Subscriber contained herein. The
Additional Shares and Common Stock issuable upon conversion of the
Convertible Securities do, however, carry certain registration rights
as set forth in the Registration Rights Agreement executed by the
parties hereto (the "Registration Rights Agreement").
2.8 No Public Solicitation. Subscriber knows of no public solicitation or
----------------------
advertisement of an offer in connection with the proposed issuance and
sale of the Securities.
4
<PAGE>
2.9 Investment Intent. Subscriber is acquiring the Securities to be issued
-----------------
and sold hereunder (and the and Common Stock issuable upon conversion
of the Convertible Securities) for the Subscriber's own account (or
for beneficiaries' accounts over which the Subscriber has investment
discretion but no discretionary voting or dispositive authority).
Subscriber and each other party acquiring any Securities pursuant to
this Agreement are acquiring such Securities for investment and not
with a view to the distribution thereof. Subscriber understands that
Subscriber must bear the economic risk of this investment indefinitely
unless the sale of such Securities is registered pursuant to the Act,
or an exemption from such registration is available, and that except
as set forth in the Registration Rights Agreement, the Company has no
present intention of registering any such sale of the Securities.
Subscriber represents and warrants to the Company that it has no
present plan or intention of selling any of the Securities in the
United States, has made no predetermined arrangements to sell any of
the Securities other than as provided in the Registration Rights
Agreement and that the offering by the Company of its securities to
the Subscriber, as contemplated in this Subscription Agreement (the
"Offering"), together with any subsequent resale of the Securities, is
not part of a plan or scheme to evade the registration provisions of
the Act. Subscriber currently has no short position in any of the
Securities, including any short call position or any long put position
or any contract or arrangement that has the effect of eliminating or
substantially diminishing the risk of ownership of the Securities, nor
has engaged in any hedging transaction with respect to the Securities.
Subscriber covenants that neither Subscriber nor its affiliates nor
any person acting on its or their behalf has the intention of
entering, or will enter during the Restricted Period, into any put
option, short position or any hedging transaction or other similar
instrument or position with respect to the applicable Securities or
securities of the same class as the Securities and neither Subscriber
nor any of its affiliates nor any person acting on its or their behalf
will use at any time Securities acquired pursuant to this Agreement to
settle any put option, short position or other similar instrument or
position that may have been entered into prior to the execution of
this Agreement. Subscriber covenants that it shall not (i) convert any
of the Preferred Stock, or (ii) exercise any of the Warrants or
Additional Warrants, into shares of Common Stock during the Restricted
Period. In connection with the Warrants and the Additional Warrants,
the Subscriber covenants, that Subscriber shall not sell, transfer or
assign such Securities to a US Person, and that when notifying the
Company of Subscriber's intent to exercise its warrants the
Subscriber shall exercise its Warrants or Additional Warrants outside
of the United States by completing and executing a Notice of
Conversion or Exercise (a "Notice ") in the form attached to this
Agreement as Exhibit F ,outside of the United States.
---------
2.10 No Sale in Violation of the Act. Subscriber further covenants that
-------------------------------
Subscriber will not make any sale, transfer or other disposition of
any of the Securities or Common Stock issuable upon conversion of the
Convertible Securities in violation of the Act (including Regulation
S), the Securities Exchange Act of
5
<PAGE>
1934, as amended (the "Exchange Act") or the rules and regulations of
the Securities and Exchange Commission (the "Commission") promulgated
thereunder.
2.11 Incorporation and Authority. Subscriber has the full power and
---------------------------
authority to execute, deliver and perform this Agreement and to
perform its obligations hereunder. This Agreement has been duly
approved by all necessary action of Subscriber, including any
necessary shareholder approval, has been executed by persons duly
authorized by Subscriber, and constitutes a valid and legally binding
obligation of Subscriber, enforceable in accordance with its terms.
2.12 No Reliance on Tax Advice. Subscriber has reviewed with Subscriber's
-------------------------
own tax advisors the foreign, federal, state and local tax
consequences of this investment, where applicable, and the
transactions contemplated by this Agreement. Subscriber is relying
solely on such advisors and not on any statements or representations
of the Company or any of its agents and understands that Subscriber
(and not the Company) shall be responsible for the Subscriber's own
tax liability that may arise as a result of this investment or the
transactions contemplated by this Agreement.
2.13 Independent Legal Advice. Subscriber acknowledges that Subscriber has
------------------------
had the opportunity to review this Agreement and the transactions
contemplated by this Agreement with his or her own legal counsel.
Subscriber is relying solely on such counsel and not on any
statements or representations of the Company or any of its agents for
legal advice with respect to this investment or the transactions
contemplated by this Agreement, except for the representations,
warranties and covenants set forth herein and in the opinion provided
for in Section 7.6 herein. Subscriber acknowledges that the law firm
of Pryor, Cashman, Sherman & Flynn, which is acting as escrow agent
in connection with this transaction, is the legal counsel to
Subscriber and has not provided legal advice to Subscriber.
2.14 Compliance. If Subscriber becomes subject to Section 13(d) of the
----------
Exchange Act, Subscriber will duly file the required Schedule
thereunder.
2.15 Not an Affiliate. Subscriber is not an officer, director or
----------------
"affiliate" (as that term is defined in Rule 405 of the Act) of the
Company.
2.16 No Pledges. Subscriber has not pledged the Securities, and will not
----------
pledge the Securities during the Restricted Period, as collateral in
a margin account or otherwise with a U.S. person.
2.17 No Inquiries. Subscriber has not been the subject of a regulatory
------------
inquiry by the Commission.
6
<PAGE>
2.18 Warranties of Other Parties. If Subscriber is purchasing any of the
---------------------------
Securities or Common Stock issuable upon conversion of the
Convertible Securities for the accounts of parties other than
Subscriber (as contemplated by Section 2.9 above), Subscriber has
full power and authority to make the representations, warranties and
agreements made pursuant to this Agreement on behalf of the owners of
such accounts, and agrees that each representation, warranty and
agreement made by Subscriber herein is also made by and on behalf of
each owner of each such account.
3. Resales
Subscriber acknowledges and agrees that the Securities and Common Stock
issuable upon conversion of the Convertible Securities may and will only be
resold (a) in compliance with Regulation S; (b) pursuant to a Registration
Statement under the Act; or (c) pursuant to an exemption from registration under
the Act.
4. Legends; Subsequent Transfer of Securities
4.1 Legends. (a) The certificate(s) representing the Preferred Stock and
-------
Additional Shares shall bear the legend set forth below and any other
legend, if such legend or legends are reasonably required by the
Company to comply with state, federal or foreign law. Assuming that
there are no changes in the material facts set forth in Section 2 of
this Agreement or applicable law from the date hereof until the date
of conversion, and subject to the Company's transfer agent's receipt
of a legal opinion from legal counsel to the Company, the certificate
representing the Common Stock into which the Convertible Securities
are convertible after the Restricted Period shall not bear a legend.
"The shares of preferred[/common] stock of Golf-Technology
Holding, Inc. (the "Issuer") represented by this certificate have
been issued pursuant to Regulation S, promulgated under the
Securities Act of 1933, as amended (the "Act"), and have not been
registered under the Act or any applicable state securities laws.
These shares may not be offered or sold within the United States
or to or for the account of a "U.S. Person" (as that term is
defined in Regulation S) during the period commencing on the sale
of these securities and ending on the forty-fifth (45/th/) day
following completion of the Regulation S offering of the Issuer
pursuant to which these shares have been issued, which day
is March 13, 1997 (the "Restricted Period"). The shares of
preferred stock represented by this certificate may first be
converted into common stock of the issuer on March 13, 1997. The
Issuer will notify the transfer agent of the date of the
expiration of such Restricted Period. Following expiration of the
Restricted Period, these shares
7
<PAGE>
may not be offered or sold unless such offer or sale is
registered or exempt from registration under the Act.
A full statement of the designations, relative rights,
preferences and limitations of the shares of each class of stock
authorized to be issued by the Corporation, including Preferred
Stock issuable in classes and in one or more series within a
class (and the authority of Board of Directors to determine
variations for such classes and series of Preferred Stock), will
be furnished by the Corporation to any Shareholder upon request
and without charge.
These securities and the securities issuable upon exercise
thereof have not been registered under the Securities Act of
1933, as amended (the "Securities Act"), and may not be offered,
sold, pledged, hypothecated, assigned or transferred except (i)
pursuant to a registration statement under the Securities Act
which has become effective and is current with respect to these
securities, or (ii) pursuant to a specific exemption from
registration under the Securities Act but only upon a holder
hereof first having obtained the written opinion of counsel to
the Corporation, or other counsel acceptable to the Corporation,
that the proposed disposition is consistent with all applicable
provisions of the Securities Act as well as any applicable "Blue
Sky" or similar securities law."
(b) The Warrant Agreement and Additional Warrant Agreement shall bear the
legend set forth below and any other legend, if such legend or legends are
reasonably required by the Company to comply with state, federal or foreign law.
"THIS WARRANT AND THE SECURITES TO BE ISSUED UPON ITS EXERCISE
HAVE NOT BEEN REGISTERED UNDER THE SECURITES ACT OF 1933, AS
AMENDED (THE "ACT") AND THIS WARRANT MAY NOT BE EXERCISED BY OR
ON BEHALF OF ANY U.S. PERSON UNLESS REGISTERED UNDER THE ACT OR
AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE."
4.2 Transfers. Subject to receipt of a legal opinion from legal counsel
---------
to the Company, the Company agrees, and shall instruct its agents,
that the Securities may be transferred to any person or entity who is
not an affiliate of the Company if such transfer occurs after the
Restricted Period, without (a) any further restriction on transfer
(provided the transfer is made in compliance with the Act) or (b) the
entry of a "stop transfer" order against such Securities, and the
Securities delivered to the transferee shall not bear a legend;
provided, however in connection with the Warrants and Additional
Warrants, that such Warrants and Additional Warrants may not be
transferred to a U.S. Person, and in connection
8
<PAGE>
with the exercise of any of the Warrants or Additional Warrants the
Notice must be executed outside of the United States and the Converted
Securities will only be delivered to an address outside of the United
States. The Company may place a stop transfer order on any Common
Stock issued upon conversion of Convertible Securities during the
Restricted Period for the duration of the Restricted Period. Upon
election by the Subscriber to convert the Preferred Stock into shares
of Common Stock or exercise the Warrants or Additional Warrants, the
Subscriber shall deliver to the Company a duly completed Notice, which
Notice was executed outside of the United States.
5. Issuance of Further Securities.
5.1 Restrictions on Additional Issuances. The Company will not issue any
------------------------------------
debt or equity securities for cash in public or private capital
raising transactions for a period of six (6) months after the Closing,
without the prior written consent of the Subscriber; provided,
however, the requirement for Subscriber's prior written consent shall
not apply to: (i) the issuance of securities pursuant to the exercise
of options or warrants issued and outstanding on the date hereof; (ii)
any transaction involving the Company's arrangements, now or in the
future, with commercial banks or other lending institutions; (iii)
issuances of securities pursuant to the acquisition of another
corporation by the Company by merger, purchase of substantially all of
the assets or other reorganization whereby the Company owns more than
fifty percent (50%) of the voting power of such corporation following
such transaction; (iv) any acquisition or disposition of a product or
a license by the Company on the condition that such issuance is
approved by the Board of Directors of the Company; (v) the issuance of
securities upon exercise or conversion of the Company's Series A,
Series B or Series C Preferred Stock outstanding on the date of the
Closing; or (vi) the concurrent issuance of Preferred Stock pursuant
to a Regulation D Subscription Agreement (collectively, the "Permitted
Issuances"). The Company additionally agrees not to issue, except as
dividends upon outstanding shares of Series A, Series B or Series C
Preferred Stock, any shares of Series A, Series B or Series C
Preferred Stock at any time subsequent to the Closing, and agrees that
issuances of Series A, Series B or Series C Preferred Stock subsequent
to the Closing shall not constitute Permitted Issuances.
5.2 Right of First Refusal. The Company hereby acknowledges the continuing
----------------------
applicability of the right of first refusal granted to the Subscriber
pursuant to Section 5.2 of that certain Regulation S Securities
Subscription Agreement (the "Prior Subscription Agreement"), by and
between Company and Subscriber, dated May 21, 1996. The Company
hereby agrees to postpone the termination date of such right of first
refusal to the earlier of: (i) three (3) years from the date hereof;
or (ii) the date upon which the Subscriber ceases to own any
securities purchased in the Offering (as defined in the Prior
Subscription Agreement, such offering the "Prior Offering") or in the
Offering pursuant to this Agreement: (a) purchased in
9
<PAGE>
the Prior Offering or in the Offering pursuant to this Agreement; (b)
issued with respect to or upon conversion of securities purchased in
the Prior Offering or in the Offering pursuant to this Agreement; or
(c) purchased pursuant to the right of first refusal granted under
this Section.
6. Representations, Warranties and Covenants of Company
The Company represents and warrants to and covenants with the Subscriber as
follows:
6.1 Organization. Good Standing and Qualification. The Company is a
---------------------------------------------
corporation duly organized, validly existing and in good standing
under the laws of the State of Idaho and has all requisite corporate
power and authority to carry on its business as now conducted and as
proposed to be conducted. The Company is duly qualified to transact
business and is in good standing in each jurisdiction in which the
failure to so qualify would have a material adverse effect on the
business or properties of the Company and its subsidiaries taken as a
whole. The Company to its knowledge is not the subject of any pending
or threatened investigation or administrative or legal proceeding by
the Internal Revenue Service, the taxing authorities of any state or
local jurisdiction, or the Securities and Exchange Commission which
have not been disclosed in the reports referred to in Section 6.5
below.
6.2 Corporate Condition. None of the Company's filings made pursuant to
-------------------
the Exchange Act, including, but not limited to, those reports
referenced in Section 6.5 below, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to
make the statements made, in light of the circumstances under which
they were made, not misleading. There have been no material adverse
changes in the Company's financial condition or business since the
date of those reports which have not been disclosed to Subscriber in
writing.
6.3 Authorization. All corporate action on the part of the Company, its
-------------
officers, directors and shareholders necessary for the authorization,
execution and delivery of this Agreement, the performance of all
obligations of the Company hereunder and the authorization, issuance
(or reservation for issuance) and delivery of the Securities being
sold hereunder and the Common Stock issuable upon conversion of the
Convertible Securities have been taken, and this Agreement constitutes
a valid and legally binding obligation of the Company, enforceable in
accordance with its terms.
6.4 Valid Issuance of Securities and Convertible Securities. The
-------------------------------------------------------
Securities, when issued, sold and delivered in accordance with the
terms hereof for the consideration expressed herein, will be validly
issued, fully paid and nonassessable and, based in part upon the
representations of the Subscriber in this Agreement, will be issued in
compliance with all applicable U.S. federal and state securities laws.
The Common Stock issuable upon conversion of the Convertible
10
<PAGE>
Securities when issued in accordance with the terms of the Certificate
of Designation, Warrant Agreement or Additional Warrant Agreement
shall be duly and validly issued and outstanding, fully paid and
nonassessable, and based in part on the representations and warranties
of Subscriber and any transferee of the Securities or Common Stock
issuable upon conversion of the Convertible Securities, will be issued
in compliance with all applicable U.S federal and state securities
laws.
6.5 Current Public Information. The Company represents and warrants to
--------------------------
the Subscriber that the Company is a "reporting issuer" as defined in
Rule 902(1) of Regulation S and it has a class of securities
registered under Section 12(g) of the Exchange Act and has filed all
the materials required to be filed as reports pursuant to the Exchange
Act for a period of at least twelve months preceding the date hereof
(or for such shorter period as the Company was required by law to file
such material). The Subscriber has obtained copies of the Company's
Form 10-KSB Annual Report for the year ended December 31, 1995 and
Form 10-QSB for the fiscal quarter ended September 30, 1996. The
Company undertakes to furnish the Subscriber with copies of such other
information as may be reasonably requested by the Subscriber prior to
consummation of this Offering.
6.6 No Directed Selling Efforts in Regard to this Transaction. The Company
---------------------------------------------------------
has not, and to the best of the Company's knowledge neither the
Subscriber nor any distributor, if any, participating in the offering
of the Securities nor any person acting for the Company or any such
distributor has conducted any "directed selling efforts" as that term
is defined in Rule 902 of Regulation S. Such activity includes,
without limitation, the mailing of printed material to investors
residing in the United States, the holding of promotional seminars in
the United States, the placement of advertisements with radio or
television stations broadcasting in the United States or in
publications with a general circulation in the United States, which
discuss the offering of any of the Securities. The Company represents
and warrants that the Offering is not part of a plan or scheme to
evade the registration provisions of the Act.
6.7 No Conflicts. The execution and delivery of this Agreement and the
------------
consummation of the issuance of the Securities and the transactions
contemplated by this Agreement do not and will not conflict with or
result in a breach by the Company of any of the terms or provisions
of, or constitute a default under, the Certificate of Incorporation or
bylaws of the Company, or any indenture, mortgage, deed of trust or
other material payment or instrument to which the Company is a party
or by which it or any of its properties or assets are bound, or any
existing applicable decree, judgment or order of any court, Federal or
State regulatory body, administrative agency or other governmental
body having jurisdiction over the Company or any of its properties or
assets.
11
<PAGE>
6.8 Issuance of Securities. The Company will issue one or more
----------------------
certificates representing the shares of Preferred Stock and Additional
Shares in the name of Subscriber in such denominations to be specified
by the Company and execute the Warrant Agreement, and Additional
Warrant Agreement, prior to closing. Upon conversion of the
Convertible Securities in accordance with their terms, the Company
will issue one or more certificates representing shares of Common
Stock in the name of Subscriber and in such denominations to be
specified by Subscriber prior to conversion. Subject to the Company's
transfer agent's receipt of a legal opinion from legal counsel to the
Company, the Converted Shares to be issued upon conversion of the
Convertible Securities shall not bear any restrictive legends. The
Company further warrants that no instructions other than these
instructions, and instructions for a "stop transfer" until the end of
the Restricted Period, have been given to the transfer agent and also
warrants that the Converted Shares shall otherwise be freely
transferable by Subscriber on the books and records of the Company
subject to compliance with Federal and State securities laws, the
receipt of a legal opinion from legal counsel to the Company and the
terms of the applicable Securities. The Company will notify the
transfer agent of the date of completion of the Offering and of the
date of expiration of the Restricted Period. Nothing in this section
shall affect in any way Subscriber's obligations and agreement to
comply with all applicable securities laws upon resale of the
Securities.
6.9 No Action. The Company has not taken and will not take any action that
---------
will affect in any way the running of the Restricted Periods or the
ability of Subscriber to resell freely the Securities in accordance
with applicable securities laws and the Agreement.
6.10 Compliance with Laws. As of the date hereof, the conduct of the
--------------------
business of the Company complies in all material respects with all
material statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees applicable thereto. The Company has not received
notice of any alleged violation of any statute, law, regulations,
ordinance, rule, judgment, order or decree from any governmental
authority. The Company shall comply with all applicable securities
laws with respect to the sale of the Securities, including but not
limited to the filing of all reports required to be filed in
connection therewith with the Securities and Exchange Commission or
any stock exchange or the NASDAQ Stock Market or any other regulatory
authority.
6.11 Litigation. Except as disclosed in the Company's Annual Report on Form
----------
10-KSB, there is no action, suit or proceeding before or by any court
or governmental agency or body, domestic or foreign, now pending or,
to the knowledge of the Company, threatened, against or affecting the
Company, or any of its properties, which could reasonably be expected
to result in any material adverse change in the business, financial
condition or results of operations of the Company, or
12
<PAGE>
which could reasonably be expected to materially and adversely affect
the properties or assets of the Company.
6.12 No U.S. Offering. The Company represents that it has not offered the
----------------
Securities to the Subscriber or any Investor in the U.S. or to any
person in the United States or any U.S. person, except pursuant to
that certain Regulation D Securities Subscription Agreement, of even
date hereof.
6.13 Disclosures. There is no fact known to the Company (other than
-----------
general economic conditions known to the public generally) that has
not been disclosed in writing to the Subscriber that could reasonably
be expected to have a material adverse effect on the business,
financial condition or results of operations of the Company, or which
could reasonably be expected to materially and adversely affect the
properties or assets of the Company or could reasonably be expected to
materially and adversely affect the ability of the Company to perform
its obligations pursuant to this Subscription Agreement and the
issuance of the Securities hereunder.
6.14 Commissions. No person, firm or corporation is entitled to receive
-----------
any brokerage fee, commission or other similar payment from the
Company in connection with the consummation of the transactions
contemplated hereby and the Company shall not make any such payment to
any person, firm or corporation.
6.15 Capitalization. The Company, as of the date of the Closing (including
--------------
the Securities issued pursuant to this Subscription Agreement and the
Regulation D Securities Subscription Agreement, of even date herewith)
will have outstanding the number of shares of Common Stock, preferred
stock and warrants as set forth on Exhibit G.
---------
7. Additional Covenants of Company
7.1 Accountants. The Company shall maintain as its independent auditors an
-----------
accounting firm that is authorized to practice before the SEC.
7.2 Corporate Existence and Taxes. The Company shall maintain its
-----------------------------
corporate existence in good standing, and shall pay all its taxes when
due except for taxes which the Company disputes.
7.3 Reserved Shares and Listings. For so long as any Securities held by
----------------------------
the Subscriber remain outstanding:
(a) the Company will reserve from its authorized but unissued shares
of Common Stock a sufficient number of shares to permit the
conversion in full of the outstanding Convertible Securities; and
13
<PAGE>
(b) the Company will utilize its reasonable best efforts to maintain
its listing on the NASDAQ SmallCap Market.
7.4 Liquidated Damages for Late Conversion. As set forth in the
--------------------------------------
Certificate of Designation, the Company shall use all reasonable
efforts to issue and deliver, within three (3) business days after the
Subscriber has fulfilled all conditions and submitted all necessary
documents duly executed and in proper form required for conversion
(the "Deadline"), to the Subscriber or any party receiving Convertible
Securities by transfer from the Subscriber (together with the
Subscriber, a "Holder"), at the address of the Holder on the books of
the Company, a certificate or certificates for the number of shares of
Common Stock to which the Holder shall be entitled. The Company
understands that a delay in the issuance of the shares of Common Stock
beyond the Deadline could result in economic loss to the Holder. As
compensation to the Holder for such loss, the Company agrees to pay
liquidated damages to the Holder for late issuance of shares upon
conversion of the Convertible Securities in accordance with the
following schedule (where "No. Business Days Late" is defined as the
number of business days beyond three business days from the date of
receipt by the Company of a Notice and the transfer agent of all
necessary documentation duly executed and in proper form required for
conversion, including the original certificate, Warrant Agreement or
Additional Warrant Agreement representing the Convertible Securities
to be converted, all in accordance with this Agreement, the Warrant
Agreement, the Additional Warrant Agreement, the Certificate of
Designation and the requirements of the transfer agent):
No. Business Days Late Liquidated Damages
---------------------- ------------------
1 $500
2 $1,000
3 $1,500
4 $2,000
5 $2,500
6 $3,000
7 $3,500
8 $4,000
9 $4,500
10 $5,000
> 10 $5,000 + $1,000 for each
Business Day Late beyond 10 days
The Company shall pay the Holder any liquidated damages incurred under
this Section by check upon the earlier to occur of (i) issuance of the
shares to the Holder or (ii) each monthly anniversary of the receipt
by the Company of such Holder's Notice. Nothing herein shall limit the
Subscriber's right to pursue actual damages for the Company's failure
to issue and deliver shares of Common Stock
14
<PAGE>
to the Subscriber in accordance with the terms of the Certificate of
Designation, the Warrant Agreement or the Additional Warrant
Agreement.
7.5 Conversion Notice. The Company agrees that, in addition to any other
-----------------
remedies which may be available to the Subscriber, including, but not
limited to, remedies available under Section 7.4 of this Agreement, in
the event the Company fails for any reason to effect delivery to the
Subscriber of certificates representing shares of Common Stock upon
conversion of any Convertible Securities within three business days
following receipt by the Company of a Notice in connection with such
Securities, the Investor will be entitled to revoke the Notice by
delivering a notice to such effect to the Company whereupon the
Company and the Subscriber shall each be restored to their respective
positions immediately prior to delivery of such Notice.
7.6 Opinion of Counsel. Subscriber shall, upon purchase of the Securities,
------------------
receive an opinion letter from Pryor, Cashman, Sherman & Flynn,
counsel to the Company, to the effect that (i) the Company is duly
incorporated and validly existing; (ii) this Agreement, the issuance
of the Securities, and the issuance of the Common Stock upon
conversion of the Convertible Securities have been duly approved by
all required corporate action, and that all such Securities, upon due
issuance, shall be validly issued and outstanding, fully paid and
nonassessable; (iii) this Agreement, the Warrant Agreement, the
Additional Warrant Agreement and the Registration Rights Agreement are
valid and binding obligations of the Company, enforceable in
accordance with their terms, except as enforceability of any
indemnification provisions may be limited by principles of public
policy, and subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of laws
governing specific performance and other equitable remedies; and (iv)
based upon the representations and warranties of the Company and each
Subscriber in the Offering, the offer and sale of the Securities to
the Subscriber is exempt from the registration requirements of the
Act; except that with respect to the foregoing opinions counsel may
add such qualifications as are consistent with firm practice,
including an assumption that the transaction does not constitute a
plan or scheme to evade the registration provisions of the Act.
7.7 Consultation with Legal Counsel. The Company shall consult with its
-------------------------------
legal counsel regarding its Exchange Act filing requirements
including, but not limited to, the possible obligation of the Company
to file Form 8-K in connection with the Offering, and will timely make
any and all such filings deemed necessary by such counsel.
7.8 Registration Rights. The Company will grant the Subscriber the
-------------------
registration rights covering the Common Stock issuable on conversion
of the Convertible Securities on substantially the terms of the
Registration Rights Agreement attached hereto as Exhibit H on the date
---------
of the Closing.
15
<PAGE>
8. Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, U.S.A., applicable to agreements made in and
wholly to be performed in that jurisdiction, except for matters arising under
the Act or the Exchange Act which matters shall be construed and interpreted in
accordance with such laws. Any action brought to enforce, or otherwise arising
out of, this Agreement shall be heard and determined in either a federal or
state court sitting in the State of New York, U.S.A.
9. Entire Agreement; Amendment
This Agreement, the Certificate of Designation, Warrant Agreement, the
Additional Warrant Agreement, the Registration Rights Agreement and the other
documents delivered pursuant hereto constitute the full and entire understanding
and agreement between the parties with regard to the subjects hereof and
thereof, and no party shall be liable or bound to any other party in any manner
by any warranties, representations or covenants except as specifically set forth
herein or therein. Except as expressly provided herein, neither this Agreement
nor any term hereof may be amended, waived, discharged or terminated other than
by a written instrument signed by the party against whom enforcement of any such
amendment, waiver, discharge or termination is sought.
10. Notices, Etc.
Any notice, demand or request required or permitted to be given by either
the Company or the Subscriber pursuant to the terms of this Agreement shall be
in writing and shall be deemed given when delivered personally or by facsimile,
with a hard copy to follow by two day courier addressed to the parties at the
addresses of the parties set forth at the end of this Agreement or such other
address as a party may request by notifying the other in writing.
11. Counterparts
This Agreement may be executed in any number of counterparts, each of which
shall be enforceable against the parties actually executing such counterparts,
and all of which together shall constitute one instrument.
12. Severability
In the event that any provision of this Agreement becomes or is declared by
a court of competent jurisdiction to be illegal, unenforceable or void, this
Agreement shall continue in full force and effect without said provision;
provided that no such severability shall be effective if it materially changes
the economic benefit of this Agreement to any party.
16
<PAGE>
13. Titles and Subtitles
The titles and subtitles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.
14. Amount
The undersigned Subscriber hereby subscribes for (i) 1,875 shares of
Preferred Stock with a face value of One Million, Eight Hundred Seventy-Five
Thousand Dollars ($1,875,000) (U.S.), and (ii) Warrants to purchase 187,500
shares of Common Stock and pays herewith funds in the amount of One Million,
Two Hundred Fifty Thousand Dollars ($1,250,000) (U.S.). The Restricted Period
in connection with the Preferred Stock shall begin on the date the Company
receives payment of the Adjusted Purchase Price and the Restricted Period in
connection with the Converted Shares to be issued in connection with conversion
of the Preferred Sock or exercise of the Warrants or Additional Warrants shall
be dependent upon the date of conversion or exercise and any payments due in
connection therewith and the provisions of the Act, as contemplated by the
Company and its outside securities counsel.
.
15. Prior Agreement
The Subscriber and Company have previously entered into that certain Letter
Agreement, dated October 31, 1996 (the "Letter Agreement"). Pursuant to the
Letter Agreement, the Company was required to issue to the Subscriber (i) a
$650,000 convertible bond (the "Debt"), (ii) warrants to purchase 51,724 shares
of Common Stock, and (iii) 51,724 shares of Common Stock. In conjunction with
the closing of the privately placed sale of the Preferred Stock and Warrants to
the Subscriber, the Company will (i) repay the $650,000 Debt, together with
interest, in the amount of $16,250 which amount shall be deducted from the
Purchase Price which the Subscriber shall pay to the Company, (ii) issue the
Additional Warrants, and (iii) issue the Additional Shares. The parties hereto
acknowledge and agree that (i) by retiring the Debt and issuing the Additional
Warrants and Additional Shares, the Company shall satisfy all of its obligations
under the Letter Agreement, and (ii) this Subscription Agreement shall function
as the subscription agreement for the securities sold to the Subscriber pursuant
to the Letter Agreement. Accordingly, the net amount due to the Company by the
Subscriber pursuant to this Agreement is Five Hundred Eighty-Three Thousand,
Seven Hundred Fifty Dollars ($583,750 = $1,250,000 - ($650,000 + $16,250))
(U.S.) (the "Adjusted Purchase Price").
[Signature page follows, remainder of page intentionally blank]
17
<PAGE>
The undersigned Subscriber acknowledges that this subscription shall not be
effective unless accepted by the Company as indicated below.
SUBSCRIBER:
RBB BANK AKTIENGESELLSCHAFT
By: /S/ HERBERT STRAUSS
-----------------------------
Name: Herbert Strauss
Title: Head Trader
Address: Burgring 16
8010 Graz, Austria
Date of execution by Subscriber: January 22, 1997
Place of execution: Austria
THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY AND THIS AGREEMENT IS DATED AS
OF THE 27 DAY OF JANUARY, 1997.
COMPANY:
GOLF-TECHNOLOGY HOLDING, INC.
By: /S/ HAROLD E. HUTCHINS
-------------------------
Name: Harold E. Hutchins
Title: Secretary, Vice President, Chief
Operating Officer and Chief Financial
Officer
<PAGE>
EXHIBIT A
---------
Certificate of Designation for Series C
Preferred Stock, dated January 23, 1997.
See Exhibit (4)
<PAGE>
EXHIBIT B
---------
Warrant for the purchase of Shares of Common Stock, issued January 27, 1997, by
the Registrant to RBB, in connection with 187,500 Shares of Common Stock.
See Exhibit (99d)
<PAGE>
EXHIBIT C
---------
Warrant for the purchase of Shares of Common Stock, issued January 27, 1997, by
the Registrant to RBB, in connection with 51,724 Shares of Common Stock.
See Exhibit (99e)
<PAGE>
EXHIBIT D
---------
DEFINITION OF "U.S. PERSON"
Pursuant to Rule 902 (c), (o) and (p) of Regulation S, the terms "U.S. person"
and "United States" are defined as follows:
(o) U.S. Person.
(1) "U.S. person" means:
(i) Any natural person resident in the United States;
(ii) Any partnership or corporation organized or incorporated under
the laws of the United States;
(iii) Any estate of which any executor or administrator is a U.S.
person;
(iv) Any trust of which any trustee is a U.S. person;
(v) Any agency or branch of a foreign entity located in the United
States;
(vi) Any non-discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary for the
benefit or account of a U.S. person;
(vii) Any discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary organized,
incorporated, or (if an individual) resident in the United
States; and
(viii) Any partnership or corporation if: (A) organized or
incorporated under the laws of any foreign jurisdiction; and (B)
formed by a U.S. person principally for the purpose of investing
in securities not registered under the Securities Act of 1933, as
amended (the "Act") unless it is organized or incorporated, and
owned, by accredited investors (as defined in Rule 501(a) of the
Act) who are not natural persons, estates or trusts.
(2) Notwithstanding paragraph (o)(1) of this rule, any discretionary
account or similar account (other than an estate or trust) held for the benefit
or account of a non-U.S. person by a dealer or other professional fiduciary
organized, incorporated, or (if an individual) resident in the United States
shall not be deemed a "U.S. person".
<PAGE>
(3) Notwithstanding paragraph (o)(1) of this rule, any estate of which any
professional fiduciary acting as executor or administrator is a U.S. person
shall not be deemed a U.S. person if:
(i) An executor or administrator of the estate who is not a U.S.
person has sole or shared investment discretion with respect to
the assets of the estate; and
(ii) The estate is governed by foreign law.
(4) Notwithstanding paragraph (o)(1) of this rule, any trust of which any
professional fiduciary acting as trustee is a U.S. person shall not be deemed a
U.S. person if a trustee who is not a U.S. person has sole or shared investment
discretion with respect to the trust assets, and no beneficiary of the trust
(and no settlor if the trust is revocable) is a U.S. person.
(5) Notwithstanding paragraph (o)(l) of this rule, an employee benefit plan
established and administered in accordance with the law of a country other than
the United States and customary practices and documentation of such country
shall not be deemed a U.S. person.
(6) Notwithstanding paragraph (o)(l) of this rule, any agency or branch of
a U.S. person located outside the United States shall not be deemed a "U.S.
person" if:
(i) The agency or branch operates for valid business reasons; and
(ii) The agency or branch is engaged in the business of insurance or
banking and is subject to substantive insurance or banking
regulation, respectively, in the jurisdiction where located.
(7) The International Monetary Fund, the International Bank for
Reconstruction and Development, the Inter-American Development Bank, the Asian
Development Bank, the African Development Bank, the United Nations, and their
agencies, affiliates and pension plans, and any other similar international
organizations, their agencies, affiliates and pension plans shall not be deemed
"U.S. persons."
(p) United States. "United States" means the United States of America, its
territories and possessions, any State of the United States, and the
District of Columbia.
2
<PAGE>
EXHIBIT E
---------
DEFINITION OF "ACCREDITED INVESTOR"
Pursuant to Rule 501(a) of Regulation D, the term "Accredited Investor" is
defined as follows:
1. Any bank as defined in section 3(a)(2) of the Securities Act of 1933 (the
"Act"), or any savings and loan association or other institution as defined
in section 3(a)(5)(A) of the Act whether acting in its individual or
fiduciary capacity; any broker or dealer registered pursuant to section 15
of the Securities Exchange Act of 1934; any insurance company as defined in
section 2(13) of the Act; any investment company registered under the
Investment Company Act of 1940 or a business development company as defined
in section 2(a)(48) of that Act; Small Business Investment Company licensed
by the U.S. Small Business Administration under section 301(c) or (d) of
the Small Business Investment Act of 1958; any plan established and
maintained by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions for the benefit of
its employees, if such plan has total assets in excess of $5,000,000;
employee benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974, if the investment decision is made by a plan
fiduciary, as defined in section 3(21) of such Act, which is either a bank,
savings and loan association, insurance company, or registered investment
adviser, or if the employee benefit plan has total assets in excess of
$5,000,000 or, if the self-directed plan, with investment decisions made
solely by persons that are accredited investors.
2. Any private business development company as defined in section 202(a)(22)
of the Investment Advisers Act of 1940.
3. Any organization described in section 501 (c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or partnership,
not formed for the specific purpose of acquiring the securities offered,
with total assets in excess of $5,000,000.
4. Any director, executive officer, or general partner of the issuer of the
securities being offered or sold, or any director, executive officer, or
general partner of a general partner of that issuer.
5. Any natural person whose individual net worth, or joint net worth with that
person's spouse, at the time of his purchase exceeds $1,000,000.
6. Any natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with that person's spouse
in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current year.
<PAGE>
7. Any trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in section (b)(2)(ii) of
Rule 506.
8. Any entity in which all of the equity owners are accredited investors.
2
<PAGE>
EXHIBIT F
---------
NOTICE OF CONVERSION OR EXERCISE
(To be executed by the registered holder in order to convert the share(s)
of Series C Preferred Stock or exercise Warrants, or Additional Warrants)
In accordance with that certain Regulation S Securities Subscription
Agreement (the "Subscription Agreement"), by and between RBB Bank
Aktiengesellshaft and Golf-Technology Holding, Inc. (the "Company"), dated as of
January 27, 1997, the undersigned hereby irrevocably elects to convert any of
the Convertible Securities represented by the attached certificate or agreement
into shares of common stock ("Common Stock") of the Company according to the
conditions of the Certificate of Designation of Series C Preferred Stock,
Warrant Agreement or Additional Warrant Agreement, as applicable, as of the date
written below. Capitalized terms used and not defined herein shall have the
meanings ascribed to them in the Subscription Agreement. If shares are to be
issued in the name of a person other than undersigned, the undersigned will pay
all transfer taxes payable with respect thereto and is delivering herewith such
certificates. No fee will be charged to the undersigned for any conversion,
except for transfer taxes, if any.
The undersigned represents that it and each person or entity on whose
behalf it holds Convertible Securities to be converted into Common Stock (each
an "Investor"): (i) is familiar with and understands the terms, conditions and
requirements contained in Regulation S ("Regulation S") and Rule 144 promulgated
under the Securities Act of 1933, as amended (the "Act"); (ii) is not a "U.S.
Person" or "distributor" as defined in Regulation S; (iii) purchased the
Convertible Securities for which conversion is being elected, and is purchasing
the Common Stock referenced herein, for its own account and for the account of
each Investor and not for the account or benefit of any U.S. Person; (iv) will
comply with the transfer restrictions contained in Section 4(1) of the Act and
Rule 144 promulgated thereunder to the extent they are applicable; (v) has not
had a "short" position in the Company's securities at any time since the
purchase of the Securities (including any short call position or any long put
position or any contract or arrangement that had the effect of eliminating or
substantially diminishing the risk of ownership of the Securities) nor has it
engaged in any hedging transaction with respect to the Securities or the Common
Stock; (vi) has no prior understanding with respect to the sale of the Common
Stock to any third party; (vii) has not engaged in any "directed selling
efforts" (as such term is defined in Regulation S) with respect to the
Securities or the Common Stock issuable upon conversion of the Convertible
Securities; (viii) purchased the Securities with investment intent, is
purchasing the Common Stock with investment intent and presently has no intent
to sell, dispose of or otherwise transfer the Common Stock; (ix) will make any
sale, transfer or other disposition of the Common Stock in full compliance with
the Act, the Exchange Act, as amended, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder; and (x) received the
offer to purchase the Securities outside the United States and, at the time the
Subscription Agreement pursuant to which the Securities was executed was, and
upon execution of this Notice is, outside the United States. The undersigned has
obtained representations from each Investor with respect to compliance with
paragraphs (i) - (x) of this Notice.
<PAGE>
The undersigned acknowledges and agrees that:
(I) in connection with the conversion of Preferred Stock into shares of
Common Stock :
(a) no shares of Common Stock will be issued until the original
Preferred Stock Certificate(s) to be converted and the Notice are
received by the Company's attorney or transfer agent, and
(b) the original Preferred Stock Certificate(s) to be converted and the
Notice must be received by the Company's attorney or transfer agent
by the third business day following the Date of Conversion
indicated below, or such Notice shall become null and void at the
sole discretion of the Company; and
(II) in connection with the conversion of Warrants or Additional Warrants
into shares of Common Stock:
(a) no shares of Common Stock will be issued until the Warrants or
Additional Warrants holder surrenders the original Warrant
Agreement or Additional Warrant Agreement (with the subscription
form at the end thereof duly executed);
(b) the original Warrant Agreement or Additional Warrant Agreement
(with the subscription form at the end thereof duly executed) and
the Notice must be received by the Company's attorney or transfer
agent by the third business day following the Date of Conversion
indicated below, or such Notice and subscription form shall become
null and void at the sole discretion of the Company; and
(c) the Warrant or Additional Warrant was exercised outside of the
United States and the Converted Securities will be delivered to an
address outside of the United States, as indicated below.
Conversion Formula: Date of Conversion or exercise:
-------------
Place of execution of this notice:
----------
Applicable Conversion Price:
----------
Subscriber's Name:
--------------------------
Signature:
----------------------------------
Name:
------------------------------
Title:
------------------------------
Address:
------------------------------------
--------------------------------------------
Address (which must be outside of the United
States) for delivery of the certificates
reflecting the Converted Securities:
--------
--------------------------------------------
--------------------------------------------
2
<PAGE>
EXHIBIT G
---------
OUTSTANDING COMMON STOCK, PREFERRED STOCK
AND WARRANTS
GOLF-TECHNOLOGY HOLDING, INC.
AS OF JANUARY 27, 1997
(excluding the Securities issued pursuant to
this Subscription Agreement and the
Regulation D Securities Subscription
Agreement, of even date herewith)
Shares of Common Stock: 4,049,408
Shares of Preferred Stock: Series A - 389,600
Series B - 9,231
-------
398,831
Options to purchase the
following number of
shares of Common
Stock: 441,500
Warrants to purchase
the following number of
shares of Common
Stock: 637,334
<PAGE>
EXHIBIT H
---------
Registration Rights Agreement, dated as of January 27, 1997, among the
Registrant, Clark and RBB.
See Exhibit (99f)
<PAGE>
EXHIBIT (99c)
-------------
CLARK WARRANT
<PAGE>
THIS WARRANT AND THE SECURITES TO BE ISSUED UPON ITS EXERCISE HAVE NOT BEEN
REGISTERED UNDER THE SECURITES ACT OF 1933, AS AMENDED (THE "ACT").
WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK
--------------------------------------------------
262,500 Shares Warrant
Issued January 27, 1997
FOR VALUE RECEIVED, GOLF-TECHNOLOGY HOLDING, INC. (the "Company"), an
Idaho corporation, hereby certifies that Clark Partners III, L.P. ("Clark"), or
its permitted assigns are entitled to purchase from the Company, at any time or
from time to time commencing January 27, 1997 (the "Commencement Date"), and
prior to 5:00 p.m., New York, New York time then current, on December 31, 2002
(the "Expiration Date"), 262,500 fully paid and non-assessable shares of the
common stock, $.00l par value, of the Company, at a purchase price of $3.00 per
share. Hereinafter, (i) said common stock, together with any other equity
securities which may be issued by the Company with respect thereto or in
substitution therefor, is referred to as the "Common Stock," (ii) the shares of
the Common Stock purchasable hereunder are referred to as the "Warrant Shares,"
(iii) the aggregate purchase price payable hereunder for the Warrant Shares is
referred to as the "Aggregate Warrant Price," (iv) the price payable hereunder
for each of the shares of the Warrant Shares is referred to as the "Per Share
Warrant Price" and (v) this warrant and all warrants hereafter issued in
exchange or substitution for this warrant are referred to as the "Warrants." The
Aggregate Warrant Price is not subject to adjustment. The Per Share Warrant
Price is subject to adjustment as hereinafter provided; in the event of any such
adjustment, the number of Warrant Shares shall be adjusted by dividing the
Aggregate Warrant Price by the Per Share Warrant Price in effect immediately
after such adjustment.
1. Exercise of Warrant.
(a) This Warrant may be exercised, in whole at any time or in part from
time to time, commencing on the Commencement Date, and prior to 5:00 p.m., New
York, New York time then current, on the Expiration Date, by the holder of this
Warrant (the "Holder") by the surrender of this Warrant (with the Subscription
attached hereto in the form of Exhibit A and the Notice of Conversion or
---------
Exercise (the "Notice of Exercise"), attached to that certain Regulation D
Securities Subscription Agreement, by and between the Company and Clark, dated
as of January 27, 1997 and attached hereto as Exhibit B, duly executed) at the
---------
address set forth in Subsection 8(a) hereof, together with proper payment of the
Aggregate Warrant Price, or the proportionate part thereof if this Warrant is
exercised in part. Payment for the Warrant Shares shall be made by wire
transfer, certified or official bank check, payable to the order of the Company.
If this Warrant is exercised in part, this Warrant must be exercised for a
number of whole shares of the Common Stock, and the Holder is entitled to
receive a new Warrant covering
<PAGE>
the number of Warrant Shares in respect of which this Warrant has not been
exercised and setting forth the proportionate part of the Aggregate Warrant
Price applicable to such Warrant Shares. Upon such exercise and surrender of
this Warrant, the Company will (i) issue a certificate or certificates in the
name of the Holder for the number of whole shares of the Common Stock to which
the Holder shall be entitled and, if this Warrant is exercised in whole, in lieu
of any fractional share of the Common Stock to which the Holder shall be
entitled, pay cash equal to the fair value of such fractional share (determined
in such reasonable manner as the Board of Directors of the Company shall
determine), and (ii) deliver the other securities and properties receivable upon
the exercise of this Warrant, or the proportionate part hereof if this Warrant
is exercised in part, pursuant to the provisions of this Warrant.
(b) In lieu of exercising this Warrant in the manner set forth in paragraph
1(a) above, this Warrant may be exercised between the Commencement Date and the
Expiration Date by surrender of the Warrant without payment of any other
consideration, commission or remuneration, together with the Notice of Exercise
and cashless exercise subscription in the form attached hereto as Exhibit C,
---------
duly executed. The number of shares to be issued in exchange for the Warrant
shall be the product of (x) the excess of the market price of the Common Stock
on the date of surrender of the Warrant and the exercise subscription form over
the Per Share Warrant Price and (y) the number of shares subject to issuance
upon exercise of the Warrant, divided by the market price of the Common Stock on
such date. Upon such exercise and surrender of this Warrant, the Company will
(i) issue a certificate or certificates in the name of the Holder for the number
of whole shares of the Common Stock to which the Holder shall be entitled and,
in lieu of any fractional share of the Common Stock to which the Holder shall be
entitled, pay cash equal to the fair value of such fractional share (determined
in such reasonable manner as the Board of Directors of the Company shall
determine), and (ii) deliver the other securities and properties receivable upon
the exercise of this Warrant, pursuant to the provisions of this Warrant.
2. Reservation of Warrant Shares.
The Company agrees that, prior to the expiration of this Warrant, the
Company will at all times have authorized and in reserve, and will keep
available, solely for the issuance or delivery upon the exercise of this
Warrant, such number of shares of the Common Stock and such amount of other
securities and properties as from time to time shall be deliverable to the
Holder upon the exercise of this Warrant, free and clear of all restrictions on
sale or transfer (except such as may be imposed under applicable federal and
state securities laws) and free and clear of all preemptive rights and all other
rights to purchase securities of the Company.
3. Protection Against Dilution.
(a) If, at any time or from time to time after the date of this Warrant,
the Company shall distribute to the holders of its outstanding Common Stock, (i)
securities, other than shares of Common Stock, or (ii) property, other than cash
dividends paid in conformity with past practice, without payment therefor, with
respect to Common Stock, then, and in each such case, the Holder, upon the
exercise of this
2
<PAGE>
Warrant, shall be entitled to receive the securities and property which the
Holder would have held on the date of such exercise if, on the date of this
Warrant, the Holder had been the holder of record of the number of shares of the
Common Stock subscribed for upon such exercise and, during the period from the
date of this Warrant to and including the date of such exercise, had retained
such shares and the securities and properties receivable by the Holder during
such period. Notice of each such distribution shall be forthwith mailed to the
Holder.
(b) If, at any time or from time to time after the date of this Warrant,
the Company shall (i) pay a dividend or make a distribution on its capital stock
in shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock
into a greater number of shares, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares or (iv) issue by reclassification of its
Common Stock any shares of capital stock of the Company, the Per Share Warrant
Price in effect immediately prior to such action shall be adjusted so that the
Holder of any Warrant thereafter exercised shall be entitled to receive the
number of shares of Common Stock or other capital stock of the Company which he
would have owned or been entitled to receive immediately following the happening
of any of the events described above had such Warrant been exercised immediately
prior thereto. An adjustment made pursuant to this shall become effective
immediately prior thereto. An adjustment made pursuant to this subsection (b)
shall become effective immediately after the record date in the case of a
dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or reclassification.
If, as a result of an adjustment made pursuant to this subsection (b), the
holder of any Warrant thereafter surrendered for exercise shall become entitled
to receive shares of two or more classes of capital stock or shares of Common
Stock and other capital stock of the Company, the Board of Directors (whose
determination shall be conclusive and shall be described in a written notice to
the Holder of any Warrant promptly after such adjustment) shall determine the
allocation of the adjusted Per Share Warrant Price between or among shares of
such classes or capital stock or shares of Common Stock and other capital stock.
(c) Except as provided in 3(e), in case the Company shall hereafter issue
or sell any shares of Common Stock for a consideration per share less than fair
market value of a share of Common Stock at such time as determined by the
reasonable judgment of the Company's Board of Directors, the Per Share Warrant
Price shall be adjusted as of the date of such issuance or sale so that the same
shall equal the price determined by dividing (i) the sum of (A) the number of
shares of Common Stock outstanding immediately prior to such issuance or sale
multiplied by the Per Share Warrant Price plus (B) the consideration received by
the Company upon such issuance or sale by (ii) the total number of shares of
Common Stock outstanding after such issuance or sale.
(d) Except as provided in 3(e), in case the Company shall hereafter issue
or sell any rights, options, warrants or securities convertible into Common
Stock entitling the holders thereof to purchase the Common Stock or to convert
such securities into Common Stock at a price per share (determined by dividing
(i) the total amount, if any, received or receivable by the Company in
consideration of the issuance or sale of such rights, options, warrants or
convertible securities plus the total consideration, if any, payable to the
Company upon exercise or conversion thereof (the "Total Consideration") by (ii)
the number of additional shares of Common Stock issuable upon exercise or
conversion of such securities) less than the then Per Share Warrant Price in
effect on the date of such issuance or sale, the Per Share Warrant Price
3
<PAGE>
shall be adjusted as of the date of such issuance or sale so that the same shall
equal the price determined by dividing (i) the sum of (A) the number of shares
of Common Stock outstanding on the date of such issuance or sale multiplied by
the Per Share Warrant Price plus (B) Total Consideration by (ii) the number of
shares of Common Stock outstanding on the date of such issuance or sale plus the
maximum number of additional shares of Common Stock issuable upon exercise or
conversion of such securities.
(e) No adjustment in the Per Share Warrant Price shall be required in the
case of (i) the issuance of shares of Common Stock upon the exercise of options
which may be granted under the Company's Stock Option Plan as in effect on the
date hereof, or (ii) the issuance of shares pursuant to the exercise of this
Warrant or any other warrants that are being issued as of the date hereof or are
outstanding as of the date hereof.
(f) In case of any consolidation or merger to which the Company is a party
other than a merger or consolidation in which the Company is the continuing
corporation, or in case of any sale or conveyance to another entity of the
property of the Company as an entirety or substantially as an entirety, or in
the case of any statutory exchange of securities with another entity (including
any exchange effectuated in connection with a merger of any other corporation
with the Company), the Holder of this Warrant shall have the right thereafter to
convert such Warrant into the kind and amount of securities, cash or other
property which he would have owned or have been entitled to receive immediately
after such consolidation, merger, statutory exchange, sale or conveyance had
this Warrant been exercised immediately prior to the effective date of such
consolidation, merger, statutory exchange, sale or conveyance and in any such
case, if necessary, appropriate adjustment shall be made in the application of
the provisions set forth in this Section 3 with respect to the rights and
interests thereafter of the Holder of this Warrant to the end that the
provisions set forth in this Section 3 shall thereafter correspondingly be made
applicable, as nearly as may reasonably be, in relation to any shares of stock
or other securities or property thereafter deliverable on the exercise of this
Warrant. The above provisions of this 3(f) shall similarly apply to successive
consolidations, mergers, statutory exchanges, sales or conveyances. Notice of
any such consolidation, merger, statutory exchange, sale or conveyance, and of
said provisions so proposed to be made, shall be mailed to the Holder not less
than 20 days prior to such event. A sale of all or substantially all of the
assets of the Company for a consideration consisting primarily of securities
shall be deemed a consolidation or merger for the foregoing purposes.
(g) No adjustment in the Per Share Warrant Price shall be required unless
such adjustment would require an increase or decrease of at least $0.05 per
share of Common Stock; provided, however, that any adjustments which by reason
of this (g) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment; and provided further, however, that
adjustments shall be required and made in accordance with the provisions of this
Section 3 (other than this (g)) later than such time as may be required in order
to preserve the tax-free nature of a distribution to the Holder of this Warrant
or Common Stock. All calculations under this Section 3 shall be made to the
nearest cent or to the nearest 1/100th of a share, as the case may be. Anything
in this Section 3 to the contrary notwithstanding, the Company shall be entitled
to make such reductions in the Per Share Warrant Price, in addition to those
required by this Section 3, as it in its discretion shall deem to be advisable
in order that any
4
<PAGE>
stock dividend, subdivision of shares or distribution of rights to purchase
stock or securities convertible or exchangeable for stock hereafter made by the
Company to its shareholders shall not be taxable.
(h) Whenever the Per Share Warrant Price is adjusted as provided in this
Section 3 and upon any modification of the rights of the Holder of this Warrant
in accordance with this Section 3, the Company shall, at its own expense, within
ten (10) days of such adjustment or modification, deliver to the holder of this
Warrant a certificate of the principal financial officer of the Company setting
forth the Per Share Warrant Price and the number of Warrant Shares after such
adjustment or modification and the manner of computing the same. In addition,
within thirty (30) days of the end of the Company's fiscal year next following
any such adjustment or modification, the Company shall, at its own expense,
deliver to the Holder of this Warrant a certificate of a firm of independent
public accountants of recognized standing selected by the Board of Directors
(who may be the regular auditors of the Company) setting forth the same
information as required by such principal financial officer certificate.
(i) If the Board of Directors of the Company shall declare any dividend or
other distribution in cash with respect to the Common Stock, other than out of
earned surplus, the Company shall mail notice thereof to the Holder not less
than 10 days prior to the record date fixed for determining shareholders
entitled to participate in such dividend or other distribution.
4. Fully Paid Stock; Taxes.
The Company agrees that the shares of the Common Stock represented by each
and every certificate for Warrant Shares delivered on the exercise of this
Warrant in accordance with the terms hereof shall, at the time of such delivery,
be validly issued and outstanding, fully paid and non-assessable and not subject
to preemptive rights or other contractual rights to purchase securities of the
Company, and the Company will take all such actions as may be necessary to
assure that the par value or stated value, if any, per share of the Common Stock
is at all times equal to or less than the then Per Share Warrant Price. The
Company further covenants and agrees that it will pay, when due and payable, any
and all federal and state stamp, original issue or similar taxes which may be
payable in respect of the issue of any Warrant Share or certificate therefor.
5. Limited Transferability.
(a) This Warrant shall be transferable or assignable by the Holder, in
whole or in part, only (i) to any successor firm or corporation of Clark (ii) to
any of the employees, attorneys, consultants, partners, agents or subsidiaries
of Clark or of any such successor entity or (iii) in the case of an individual,
pursuant to such individual's last will and testament or the laws of descent and
distribution and is so transferable only upon the books of the Company which it
shall cause to be maintained for the purpose, provided, however the transferor
shall complete an Assignment in either of the forms attached hereto as Exhibit D
---------
or Exhibit E. The Company may treat the registered holder of this Warrant as he
---------
or it appears on the Company's books at any time as the Holder for all purposes.
The Company shall permit any holder of a Warrant or his duly authorized
attorney, upon written request during ordinary business hours, to inspect and
copy or
5
<PAGE>
make extracts from its books showing the registered holders of Warrants. All
Warrants will be dated the same date as this Warrant.
(b) By acceptance hereof, the Holder represents and warrants that this
Warrant is being acquired, and all Warrant Shares to be purchased upon the
exercise of this Warrant will be acquired, by the Holder solely for the account
of such Holder and not with a view to the fractionalization and distribution
thereof and will not be sold or transferred except in accordance with the
applicable provisions of the Act and the rules and regulations of the Securities
and Exchange Commission promulgated thereunder, and the Holder agrees that
neither this Warrant nor any of the Warrant Shares may be sold or transferred
except under cover of a Registration Statement under the Act which is effective
and current with respect to such Warrant Shares or pursuant to an opinion, in
form and substance reasonably acceptable to the Company's counsel, that
registration under the Act is not required in connection with such sale or
transfer. Any Warrant Shares issued upon exercise of this Warrant shall bear the
following legend:
"The Securities represented by this certificate have not been
registered under the Securities Act of 1933 and are restricted securities within
the meaning thereof. Such securities may not be sold or transferred except
pursuant to a Registration Statement under such Act which is effective and
current with respect to such securities or pursuant to an opinion of counsel
reasonably satisfactory to the issuer of such securities that such sale or
transfer is exempt from the registration requirements of such Act."
6. Loss, etc., of Warrant.
Upon receipt of evidence satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant, and of indemnity reasonably
satisfactory to the Company, if lost, stolen or destroyed, and upon surrender
and cancellation of this Warrant, if mutilated, and upon reimbursement of the
Company's reasonable incidental expenses, the Company shall execute and deliver
to the Holder a new Warrant of like date, tenor and denomination.
7. Warrant Holder Not Shareholders.
Except as otherwise provided herein, this Warrant does not confer upon the
Holder any right to vote or to consent to or receive notice as a shareholder of
the Company, as such, in respect of any matters whatsoever, or any other rights
or liabilities as a shareholder, prior to the exercise hereof.
8. Communication.
No notice or other communication under this Warrant shall be effective
unless, but any notice or other communication shall be effective and shall be
deemed to have been given if, the same is in writing and is mailed by first-
class mail, postage prepaid, addressed to:
(a) the Company at 13000 Sawgrass Village Circle, Suite 30, Ponte
Vedra Beach, Florida 32082 or such other address as the Company has designated
in writing to the
6
<PAGE>
Holder; or
b) the Holder at 30 Wall Street, 9/th/ Floor, New York, New York
10005, or such other address as the Holder has designated in writing to the
Company.
9. Headings.
The headings of this Warrant have been inserted as a matter of convenience
and shall not affect the construction hereof.
10. Applicable Law.
This Warrant shall be governed by and construed in accordance with the laws
of the State of New York without giving effect to the principles of conflict of
law thereof.
[Signature page follows, remainder of page intentionally blank]
7
<PAGE>
IN WITNESS WHEREOF, the Company, has caused this Warrant to be signed by
its President and its corporate seal to be hereunto affixed and attested by its
Secretary this 27/th/ day of January, 1997.
(SEAL) GOLF-TECHNOLOGY HOLDING, INC.
ATTEST:
/S/ HAROLD E. HUTCHINS By: /S/ ERNEST R. VADERSEN
- ------------------------- ----------------------
Secretary Name: Ernest R. Vadersen
Title: President
<PAGE>
EXHIBIT A
---------
SUBSCRIPTION
The undersigned holder, _________________________________ pursuant to the
provisions of the within and foregoing Warrant, hereby agrees to subscribe for
and purchase _______ shares of the Common Stock of Golf-Technology Holding, Inc.
covered by said Warrant, and makes payment therefor in full at the price per
share provided by said Warrant.
Dated:_____________________ ___________________________________
Signature
Address:
____________________________________
____________________________________
____________________________________
<PAGE>
EXHIBIT B
---------
NOTICE OF CONVERSION OR EXERCISE
--------------------------------
(To be executed by the registered holder in order to convert the
share(s) of Series C Preferred Stock or exercise Warrants)
In accordance with that certain Regulation D Securities Subscription
Agreement (the "Subscription Agreement"), by and between Clark Partners III,
L.P. and Golf-Technology Holding, Inc. (the "Company"), dated as of January 27,
1997, the undersigned hereby irrevocably elects to convert any of the Securities
represented by the attached certificate or agreement into shares of common stock
("Common Stock") of the Company according to the conditions of the Certificate
of Designation of Series C Preferred Stock or Warrant Agreement, as applicable,
as of the date written below. Capitalized terms used and not defined herein
shall have the meanings ascribed to them in the Subscription Agreement. If
shares are to be issued in the name of a person other than undersigned, the
undersigned will pay all transfer taxes payable with respect thereto and is
delivering herewith such certificates. No fee will be charged to the undersigned
for any conversion, except for transfer taxes, if any.
The undersigned represents that it: (i) is familiar with and understands
the terms, conditions and requirements contained in Regulation D and Rule 144
promulgated under the Securities Act of 1933, as amended (the "Act"); (ii) will
comply with the transfer restrictions contained in Section 4(1) of the Act and
Rule 144 promulgated thereunder to the extent they are applicable; (iii) has no
prior understanding with respect to the sale of the Common Stock to any third
party; (iv) purchased the Securities with investment intent, is purchasing the
Common Stock with investment intent; and (v) will make any sale, transfer or
other disposition of the Common Stock in full compliance with the Act, the
Exchange Act, as amended, and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder.
The undersigned acknowledges and agrees that:
(I) in connection with the conversion of Preferred Stock into shares of
Common Stock :
(a) no shares of Common Stock will be issued until the original
Preferred Stock Certificate(s) to be converted and the Notice are
received by the Company's attorney or transfer agent,
(b) the original Preferred Stock Certificate(s) to be converted and the
Notice must be received by the Company's attorney or transfer agent
by the third business day following the date of conversion indicated
below, or such Notice shall become null and void at the sole
discretion of the Company; and
(c) the certificates representing the Common Stock issuable upon
conversion of the Preferred Stock shall bear the legend set forth in
the second paragraph of the legend set forth in Section 4.1 of the
Subscription Agreement, and
(II) in connection with the conversion of Warrants into shares of Common
Stock:
(a) no shares of Common Stock will be issued until the Warrant holder
surrenders the original Warrant Agreement (with the subscription
form at the end thereof duly executed);
(b) the original Warrant Agreement (with the subscription form at the
end thereof duly executed) and the Notice must be received by the
Company's attorney
<PAGE>
or transfer agent by the third business day following the date of
conversion indicated below, or such Notice and subscription form
shall become null and void at the sole discretion of the Company,
and
(c) the certificates representing the Common Stock issuable upon
exercise of the Warrants shall bear the legend set forth in the
second paragraph of the legend set forth in Section 4.1 of the
Subscription Agreement.
Conversion Formula: Date of Conversion:
--------------------------
Applicable Conversion Price:
-----------------
Subscriber's Name:
---------------------------
Signature:
-----------------------------------
Name:
-----------------------------
Title:
-----------------------------
Address:
-------------------------------------
-------------------------------------
2
<PAGE>
EXHIBIT C
---------
SUBSCRIPTION FOR CASHLESS WARRANT SUBSCRIPTION
The undersigned, _________________________________________________pursuant
to the provisions of the within and foregoing Warrant, hereby agrees to
subscribe to that number of shares of the Common Stock of Golf-Technology
Holding, Inc. as are issuable in accordance with the formula set forth in
paragraph 1(b) of said Warrant, and makes payment therefor in full by surrender
and delivery of said Warrant.
Dated:________________________ ______________________________
Signature
Address:
______________________________
______________________________
______________________________
<PAGE>
EXHIBIT D
---------
ASSIGNMENT
FOR VALUE RECEIVED, _______________________________hereby sells, assigns
and transfers unto the within and foregoing Warrant and all rights evidenced
thereby, and does irrevocably constitute and appoint
_________________________attorney, to transfer said Warrant on the books of
Golf-Technology Holding, Inc.
Dated:________________________ ______________________________
Signature
Address
______________________________
______________________________
______________________________
<PAGE>
EXHIBIT E
---------
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED,_________________________________ hereby assigns and
transfers unto _________________________________________________the right to
purchase __________ shares of the Common Stock of Golf-Technology Holding, Inc.
the right to purchase _________ shares of the Common Stock of Golf-Technology
Holding, Inc. by the foregoing Warrant, and a proportionate part of said Warrant
and the rights evidenced hereby, and does irrevocably constitute and appoint
___________________________________________ attorney, to transfer that part of
said Warrant on the books of Golf-Technology Holding, Inc.
Dated:________________________ ______________________________
Signature
Address
______________________________
______________________________
______________________________
<PAGE>
EXHIBIT (99d)
-------------
RBB WARRANT
<PAGE>
THIS WARRANT AND THE SECURITES TO BE ISSUED UPON ITS EXERCISE HAVE NOT BEEN
REGISTERED UNDER THE SECURITES ACT OF 1933, AS AMENDED (THE "ACT") AND THIS
WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON UNLESS
REGISTERED UNDER THE ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK
187,500 Shares Warrant
Issued January 27, 1997
FOR VALUE RECEIVED, GOLF-TECHNOLOGY HOLDING, INC. (the "Company"), an
Idaho corporation, hereby certifies that RBB Bank Aktiengesellschaft ("RBB"),
or its permitted assigns are entitled to purchase from the Company, at any time
or from time to time commencing March 13, 1997 (the "Commencement Date"), and
prior to 5:00 p.m., New York, New York time then current, on December 31, 2002
(the "Expiration Date"), 187,500 fully paid and non-assessable shares of the
common stock, $.00l par value, of the Company, at a purchase price of $3.00 per
share. Hereinafter, (i) said common stock, together with any other equity
securities which may be issued by the Company with respect thereto or in
substitution therefor, is referred to as the "Common Stock," (ii) the shares of
the Common Stock purchasable hereunder are referred to as the "Warrant Shares,"
(iii) the aggregate purchase price payable hereunder for the Warrant Shares is
referred to as the "Aggregate Warrant Price," (iv) the price payable hereunder
for each of the shares of the Warrant Shares is referred to as the "Per Share
Warrant Price" and (v) this warrant and all warrants hereafter issued in
exchange or substitution for this warrant are referred to as the "Warrants." The
Aggregate Warrant Price is not subject to adjustment. The Per Share Warrant
Price is subject to adjustment as hereinafter provided; in the event of any such
adjustment, the number of Warrant Shares shall be adjusted by dividing the
Aggregate Warrant Price by the Per Share Warrant Price in effect immediately
after such adjustment.
1. Exercise of Warrant.
(a) This Warrant may be exercised, in whole at any time or in part from
time to time, commencing on the Commencement Date, and prior to 5:00 p.m., New
York, New York time then current, on the Expiration Date, by the holder of this
Warrant (the "Holder") by the surrender of this Warrant (with the Subscription
attached hereto in the form of Exhibit A and the Notice of Conversion or
---------
Exercise (the "Notice of Exercise"), attached to that certain Regulation S
Securities Subscription Agreement, by and between the Company and RBB, dated as
of January 27, 1997 and attached hereto as Exhibit B, duly executed) at the
---------
address set forth in Subsection 10(a) hereof, provided, however, (i) the Holder
of this Warrant must certify in the Note of Exercise that Holder is not a "US
Person" as that term is defined in Rule 902(e) of Regulation D pursuant to the
Securities Act of 1933, as amended (a copy of which is attached
<PAGE>
hereto as Exhibit C) (ii) such Notice of Exercise must be executed outside of
---------
the United States, and (iii) the address where the Holder instructs the Company
to forward the certificate for the shares issued upon exercise of this Warrant
is outside of the United States, together with proper payment of the Aggregate
Warrant Price, or the proportionate part thereof if this Warrant is exercised in
part. Payment for the Warrant Shares shall be made by wire transfer, certified
or official bank check, payable to the order of the Company. If this Warrant is
exercised in part, this Warrant must be exercised for a number of whole shares
of the Common Stock, and the Holder is entitled to receive a new Warrant
covering the number of Warrant Shares in respect of which this Warrant has not
been exercised and setting forth the proportionate part of the Aggregate Warrant
Price applicable to such Warrant Shares. Upon such exercise and surrender of
this Warrant, the Company will (i) issue a certificate or certificates in the
name of the Holder for the number of whole shares of the Common Stock to which
the Holder shall be entitled and, if this Warrant is exercised in whole, in lieu
of any fractional share of the Common Stock to which the Holder shall be
entitled, pay cash equal to the fair value of such fractional share (determined
in such reasonable manner as the Board of Directors of the Company shall
determine), and (ii) deliver the other securities and properties receivable upon
the exercise of this Warrant, or the proportionate part hereof if this Warrant
is exercised in part, pursuant to the provisions of this Warrant.
(b) In lieu of exercising this Warrant in the manner set forth in paragraph
1(a) above, this Warrant may be exercised between the Commencement Date and the
Expiration Date by surrender of the Warrant without payment of any other
consideration, commission or remuneration, together with the Notice of Exercise
and cashless exercise subscription, in the form attached hereto as Exhibit D,
---------
duly executed. The number of shares to be issued in exchange for the Warrant
shall be the product of (x) the excess of the market price of the Common Stock
on the date of surrender of the Warrant and the exercise subscription form over
the Per Share Warrant Price and (y) the number of shares subject to issuance
upon exercise of the Warrant, divided by the market price of the Common Stock on
such date. Upon such exercise and surrender of this Warrant, the Company will
(i) issue a certificate or certificates in the name of the Holder for the number
of whole shares of the Common Stock to which the Holder shall be entitled and,
in lieu of any fractional share of the Common Stock to which the Holder shall be
entitled, pay cash equal to the fair value of such fractional share (determined
in such reasonable manner as the Board of Directors of the Company shall
determine), and (ii) deliver the other securities and properties receivable upon
the exercise of this Warrant, pursuant to the provisions of this Warrant.
2. Reservation of Warrant Shares.
The Company agrees that, prior to the expiration of this Warrant, the
Company will at all times have authorized and in reserve, and will keep
available, solely for the issuance or delivery upon the exercise of this
Warrant, such number of shares of the Common Stock and such amount of other
securities and properties as from time to time shall be deliverable to the
Holder upon the exercise of this Warrant, free and clear of all restrictions on
sale or transfer (except such as may be imposed under applicable federal and
state securities laws) and free and clear of all preemptive rights and all other
rights to purchase securities of the Company.
2
<PAGE>
3. Protection Against Dilution.
(a) If, at any time or from time to time after the date of this Warrant,
the Company shall distribute to the holders of its outstanding Common Stock, (i)
securities, other than shares of Common Stock, or (ii) property, other than cash
dividends paid in conformity with past practice, without payment therefor, with
respect to Common Stock, then, and in each such case, the Holder, upon the
exercise of this Warrant, shall be entitled to receive the securities and
property which the Holder would have held on the date of such exercise if, on
the date of this Warrant, the Holder had been the holder of record of the number
of shares of the Common Stock subscribed for upon such exercise and, during the
period from the date of this Warrant to and including the date of such exercise,
had retained such shares and the securities and properties receivable by the
Holder during such period. Notice of each such distribution shall be forthwith
mailed to the Holder.
(b) If, at any time or from time to time after the date of this Warrant,
the Company shall (i) pay a dividend or make a distribution on its capital stock
in shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock
into a greater number of shares, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares or (iv) issue by reclassification of its
Common Stock any shares of capital stock of the Company, the Per Share Warrant
Price in effect immediately prior to such action shall be adjusted so that the
Holder of any Warrant thereafter exercised shall be entitled to receive the
number of shares of Common Stock or other capital stock of the Company which he
would have owned or been entitled to receive immediately following the happening
of any of the events described above had such Warrant been exercised immediately
prior thereto. An adjustment made pursuant to this shall become effective
immediately prior thereto. An adjustment made pursuant to this subsection (b)
shall become effective immediately after the record date in the case of a
dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or reclassification.
If, as a result of an adjustment made pursuant to this subsection (b), the
holder of any Warrant thereafter surrendered for exercise shall become entitled
to receive shares of two or more classes of capital stock or shares of Common
Stock and other capital stock of the Company, the Board of Directors (whose
determination shall be conclusive and shall be described in a written notice to
the Holder of any Warrant promptly after such adjustment) shall determine the
allocation of the adjusted Per Share Warrant Price between or among shares of
such classes or capital stock or shares of Common Stock and other capital stock.
(c) Except as provided in 3(e), in case the Company shall hereafter issue
or sell any shares of Common Stock for a consideration per share less than the
fair market value of a share of Common Stock at such time as determined by the
reasonable judgment of the Company's Board of Directors, the Per Share Warrant
Price shall be adjusted as of the date of such issuance or sale so that the same
shall equal the price determined by dividing (i) the sum of (A) the number of
shares of Common Stock outstanding immediately prior to such issuance or sale
multiplied by the Per Share Warrant Price plus (B) the consideration received by
the Company upon such issuance or sale by (ii) the total number of shares of
Common Stock outstanding after such issuance or sale.
3
<PAGE>
(d) Except as provided in 3(e), in case the Company shall hereafter issue
or sell any rights, options, warrants or securities convertible into Common
Stock entitling the holders thereof to purchase the Common Stock or to convert
such securities into Common Stock at a price per share (determined by dividing
(i) the total amount, if any, received or receivable by the Company in
consideration of the issuance or sale of such rights, options, warrants or
convertible securities plus the total consideration, if any, payable to the
Company upon exercise or conversion thereof (the "Total Consideration") by (ii)
the number of additional shares of Common Stock issuable upon exercise or
conversion of such securities) less than the then Per Share Warrant Price in
effect on the date of such issuance or sale, the Per Share Warrant Price shall
be adjusted as of the date of such issuance or sale so that the same shall equal
the price determined by dividing (i) the sum of (A) the number of shares of
Common Stock outstanding on the date of such issuance or sale multiplied by the
Per Share Warrant Price plus (B) Total Consideration by (ii) the number of
shares of Common Stock outstanding on the date of such issuance or sale plus the
maximum number of additional shares of Common Stock issuable upon exercise or
conversion of such securities.
(e) No adjustment in the Per Share Warrant Price shall be required in the
case of (i) the issuance of shares of Common Stock upon the exercise of options
which may be granted under the Company's Stock Option Plan as in effect on the
date hereof, or (ii) the issuance of shares pursuant to the exercise of this
Warrant or any other warrants that are being issued as of the date hereof or are
outstanding as of the date hereof.
(f) In case of any consolidation or merger to which the Company is a party
other than a merger or consolidation in which the Company is the continuing
corporation, or in case of any sale or conveyance to another entity of the
property of the Company as an entirety or substantially as an entirety, or in
the case of any statutory exchange of securities with another entity (including
any exchange effectuated in connection with a merger of any other corporation
with the Company), the Holder of this Warrant shall have the right thereafter to
convert such Warrant into the kind and amount of securities, cash or other
property which he would have owned or have been entitled to receive immediately
after such consolidation, merger, statutory exchange, sale or conveyance had
this Warrant been exercised immediately prior to the effective date of such
consolidation, merger, statutory exchange, sale or conveyance and in any such
case, if necessary, appropriate adjustment shall be made in the application of
the provisions set forth in this Section 3 with respect to the rights and
interests thereafter of the Holder of this Warrant to the end that the
provisions set forth in this Section 3 shall thereafter correspondingly be made
applicable, as nearly as may reasonably be, in relation to any shares of stock
or other securities or property thereafter deliverable on the exercise of this
Warrant. The above provisions of this 3(f) shall similarly apply to successive
consolidations, mergers, statutory exchanges, sales or conveyances. Notice of
any such consolidation, merger, statutory exchange, sale or conveyance, and of
said provisions so proposed to be made, shall be mailed to the Holder not less
than 20 days prior to such event. A sale of all or substantially all of the
assets of the Company for a consideration consisting primarily of securities
shall be deemed a consolidation or merger for the foregoing purposes.
(g) No adjustment in the Per Share Warrant Price shall be required unless
such adjustment would require an increase or decrease of at least $0.05 per
share of Common Stock;
4
<PAGE>
provided, however, that any adjustments which by reason of this (g) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment; and provided further, however, that adjustments shall be
required and made in accordance with the provisions of this Section 3 (other
than this (g)) later than such time as may be required in order to preserve the
tax-free nature of a distribution to the Holder of this Warrant or Common Stock.
All calculations under this Section 3 shall be made to the nearest cent or to
the nearest 1/100th of a share, as the case may be. Anything in this Section 3
to the contrary notwithstanding, the Company shall be entitled to make such
reductions in the Per Share Warrant Price, in addition to those required by this
Section 3, as it in its discretion shall deem to be advisable in order that any
stock dividend, subdivision of shares or distribution of rights to purchase
stock or securities convertible or exchangeable for stock hereafter made by the
Company to its shareholders shall not be taxable.
(h) Whenever the Per Share Warrant Price is adjusted as provided in this
Section 3 and upon any modification of the rights of the Holder of this Warrant
in accordance with this Section 3, the Company shall, at its own expense, within
ten (10) days of such adjustment or modification, deliver to the holder of this
Warrant a certificate of the principal financial officer of the Company setting
forth the Per Share Warrant Price and the number of Warrant Shares after such
adjustment or modification and the manner of computing the same. In addition,
within thirty (30) days of the end of the Company's fiscal year next following
any such adjustment or modification, the Company shall, at its own expense,
deliver to the Holder of this Warrant a certificate of a firm of independent
public accountants of recognized standing selected by the Board of Directors
(who may be the regular auditors of the Company) setting forth the same
information as required by such principal financial officer certificate.
(i) If the Board of Directors of the Company shall declare any dividend or
other distribution in cash with respect to the Common Stock, other than out of
earned surplus, the Company shall mail notice thereof to the Holder not less
than 10 days prior to the record date fixed for determining shareholders
entitled to participate in such dividend or other distribution.
4. Fully Paid Stock; Taxes.
The Company agrees that the shares of the Common Stock represented by each
and every certificate for Warrant Shares delivered on the exercise of this
Warrant in accordance with the terms hereof shall, at the time of such delivery,
be validly issued and outstanding, fully paid and non-assessable and not subject
to preemptive rights or other contractual rights to purchase securities of the
Company, and the Company will take all such actions as may be necessary to
assure that the par value or stated value, if any, per share of the Common Stock
is at all times equal to or less than the then Per Share Warrant Price. The
Company further covenants and agrees that it will pay, when due and payable, any
and all federal and state stamp, original issue or similar taxes which may be
payable in respect of the issue of any Warrant Share or certificate therefor.
5
<PAGE>
5. Limited Transferability.
(a) This Warrant shall be transferable or assignable by the Holder, in
whole or in part, only (i) to any successor firm or corporation of RBB (ii) to
any of the directors, officers, employees, attorneys, consultants, partners,
agents or subsidiaries of RBB or of any such successor entity or (iii) in the
case of an individual, pursuant to such individual's last will and testament or
the laws of descent and distribution and is so transferable only upon the books
of the Company which it shall cause to be maintained for such purpose, provided,
however the transferor shall complete an Assignment in either of the forms
attached hereto as Exhibit E or Exhibit F. The Company may treat the registered
--------- ---------
holder of this Warrant as he or it appears on the Company's books at any time as
the Holder for all purposes. The Company shall permit any holder of a Warrant or
his duly authorized attorney, upon written request during ordinary business
hours, to inspect and copy or make extracts from its books showing the
registered holders of Warrants. All Warrants will be dated the same date as this
Warrant.
(b) By acceptance hereof, (A) the Holder represents and warrants that (i)
this Warrant is being acquired, and all Warrant Shares to be purchased upon the
exercise of this Warrant will be acquired, by the Holder solely for the account
of such Holder (or for beneficiaries' accounts over which the Holder has
investment discretion but no discretionary voting or dispositive authority) and
not with a view to the fractionalization and distribution thereof, (ii) this
Warrant will not be sold or transferred except in accordance with the applicable
provisions of the Act and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder, and (iii) and if Holder is acquiring
this Warrant or any of the Securities or Common Stock issuable upon conversion
of the Convertible Securities for the accounts of parties other than Holder (as
contemplated above in this paragraph), Holder has full power and authority to
make the representations, warranties and agreements made pursuant to this
Warrant on behalf of the owners of such accounts, and agrees that each
representation, warranty and agreement made by Subscriber herein is also made by
and on behalf of each owner of each such account, and (B) the Holder agrees that
(i) this Warrant may not be sold to a US Person and (ii) neither this Warrant
nor any of the Warrant Shares may be sold or transferred except under cover of a
Registration Statement under the Act which is effective and current with respect
to such Warrant Shares or pursuant to an opinion, in form and substance
reasonably acceptable to the Company's counsel, that registration under the Act
is not required in connection with such sale or transfer. Any Warrant Shares
issued upon exercise of this Warrant shall bear the following legend:
"The Securities represented by this certificate have not been
registered under the Securities Act of 1933 and are restricted securities
within the meaning thereof. Such securities may not be sold or transferred
except pursuant to a Registration Statement under such Act which is
effective and current with respect to such securities or pursuant to an
opinion of counsel reasonably satisfactory to the issuer of such securities
that such sale or transfer is exempt from the registration requirements of
such Act."
6
<PAGE>
6. Loss, etc., of Warrant.
Upon receipt of evidence satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant, and of indemnity reasonably
satisfactory to the Company, if lost, stolen or destroyed, and upon surrender
and cancellation of this Warrant, if mutilated, and upon reimbursement of the
Company's reasonable incidental expenses, the Company shall execute and deliver
to the Holder a new Warrant of like date, tenor and denomination.
7. Warrant Holder Not Shareholders.
Except as otherwise provided herein, this Warrant does not confer upon the
Holder any right to vote or to consent to or receive notice as a shareholder of
the Company, as such, in respect of any matters whatsoever, or any other rights
or liabilities as a shareholder, prior to the exercise hereof.
8. Communication.
No notice or other communication under this Warrant shall be effective
unless, but any notice or other communication shall be effective and shall be
deemed to have been given if, the same is in writing and is mailed by first-
class mail, postage prepaid, addressed to:
(a) the Company at 13000 Sawgrass Village Circle, Suite 30, Ponte
Vedra Beach, Florida 32082 or such other address as the Company has designated
in writing to the Holder; or
b) the Holder at Burgring 16, 8010 Graz, Austria, or such other
address as the Holder has designated in writing to the Company.
9. Headings.
The headings of this Warrant have been inserted as a matter of convenience
and shall not affect the construction hereof.
10. Applicable Law.
This Warrant shall be governed by and construed in accordance with the laws
of the State of New York without giving effect to the principles of conflict of
law thereof.
[Signature page follows, remainder of page intentionally blank]
7
<PAGE>
IN WITNESS WHEREOF, the Company, has caused this Warrant to be signed
by its President and its corporate seal to be hereunto affixed and attested by
its Secretary this 27/th/ day of January, 1997.
(SEAL) GOLF-TECHNOLOGY HOLDING, INC.
ATTEST:
/S/ HAROLD E. HUTCHINS By: /S/ ERNEST R. VADERSEN
- ------------------------- ---------------------------
Secretary Name: Ernest R. Vadersen
Title: President
<PAGE>
EXHIBIT A
---------
SUBSCRIPTION
The undersigned holder, _________________________________ pursuant to the
provisions of the within and foregoing Warrant, hereby agrees to subscribe for
and purchase _______ shares of the Common Stock of Golf-Technology Holding, Inc.
covered by said Warrant, and makes payment therefor in full at the price per
share provided by said Warrant.
Dated:_____________________ ___________________________________
Signature
Address:
____________________________________
____________________________________
____________________________________
<PAGE>
EXHIBIT B
---------
NOTICE OF CONVERSION OR EXERCISE
--------------------------------
(To be executed by the registered holder in order to convert the share(s)
of Series C Preferred Stock or exercise Warrants, or Additional Warrants)
In accordance with that certain Regulation S Securities Subscription
Agreement (the "Subscription Agreement"), by and between RBB Bank
Aktiengesellshaft and Golf-Technology Holding, Inc. (the "Company"), dated as of
January 27, 1997, the undersigned hereby irrevocably elects to convert any of
the Convertible Securities represented by the attached certificate or agreement
into shares of common stock ("Common Stock") of the Company according to the
conditions of the Certificate of Designation of Series C Preferred Stock,
Warrant Agreement or Additional Warrant Agreement, as applicable, as of the date
written below. Capitalized terms used and not defined herein shall have the
meanings ascribed to them in the Subscription Agreement. If shares are to be
issued in the name of a person other than undersigned, the undersigned will pay
all transfer taxes payable with respect thereto and is delivering herewith such
certificates. No fee will be charged to the undersigned for any conversion,
except for transfer taxes, if any.
The undersigned represents that it and each person or entity on whose
behalf it holds Convertible Securities to be converted into Common Stock (each
an "Investor"): (i) is familiar with and understands the terms, conditions and
requirements contained in Regulation S ("Regulation S") and Rule 144 promulgated
under the Securities Act of 1933, as amended (the "Act"); (ii) is not a "U.S.
Person" or "distributor" as defined in Regulation S; (iii) purchased the
Convertible Securities for which conversion is being elected, and is purchasing
the Common Stock referenced herein, for its own account and for the account of
each Investor and not for the account or benefit of any U.S. Person; (iv) will
comply with the transfer restrictions contained in Section 4(1) of the Act and
Rule 144 promulgated thereunder to the extent they are applicable; (v) has not
had a "short" position in the Company's securities at any time since the
purchase of the Securities (including any short call position or any long put
position or any contract or arrangement that had the effect of eliminating or
substantially diminishing the risk of ownership of the Securities) nor has it
engaged in any hedging transaction with respect to the Securities or the Common
Stock; (vi) has no prior understanding with respect to the sale of the Common
Stock to any third party; (vii) has not engaged in any "directed selling
efforts" (as such term is defined in Regulation S) with respect to the
Securities or the Common Stock issuable upon conversion of the Convertible
Securities; (viii) purchased the Securities with investment intent, is
purchasing the Common Stock with investment intent and presently has no intent
to sell, dispose of or otherwise transfer the Common Stock; (ix) will make any
sale, transfer or other disposition of the Common Stock in full compliance with
the Act, the Exchange Act, as amended, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder; and (x) received the
offer to purchase the Securities outside the United States and, at the time the
Subscription Agreement pursuant to which the Securities was executed was, and
upon execution of this Notice is, outside the United States. The undersigned has
obtained representations from each Investor with respect to compliance with
paragraphs (i) - (x) of this Notice.
<PAGE>
The undersigned acknowledges and agrees that:
(I) in connection with the conversion of Preferred Stock into shares of
Common Stock :
(a) no shares of Common Stock will be issued until the original
Preferred Stock Certificate(s) to be converted and the Notice are
received by the Company's attorney or transfer agent, and
(b) the original Preferred Stock Certificate(s) to be converted and the
Notice must be received by the Company's attorney or transfer agent
by the third business day following the Date of Conversion
indicated below, or such Notice shall become null and void at the
sole discretion of the Company; and
(II) in connection with the conversion of Warrants or Additional Warrants
into shares of Common Stock:
(a) no shares of Common Stock will be issued until the Warrants or
Additional Warrants holder surrenders the original Warrant
Agreement or Additional Warrant Agreement (with the subscription
form at the end thereof duly executed);
(b) the original Warrant Agreement or Additional Warrant Agreement
(with the subscription form at the end thereof duly executed) and
the Notice must be received by the Company's attorney or transfer
agent by the third business day following the Date of Conversion
indicated below, or such Notice and subscription form shall become
null and void at the sole discretion of the Company; and
(c) the Warrant or Additional Warrant was exercised outside of the
United States and the Converted Securities will be delivered to an
address outside of the United States, as indicated below.
Conversion Formula: Date of Conversion or exercise:
Place of execution of this notice:
-------------
Applicable Conversion Price:
-------------------
Subscriber's Name:
-----------------------------
Signature:
-------------------------------------
Name:
Title:
Address:
---------------------------------------
---------------------------------------
Address (which must be outside of the United States)
for delivery of the certificates reflecting the
Converted Securities:
--------------------------
-----------------------------------------------
-----------------------------------------------
2
<PAGE>
EXHIBIT C
---------
DEFINITION OF "U.S. PERSON"
---------------------------
Pursuant to Rule 902 (c), (o) and (p) of Regulation S, the terms "U.S. person"
and "United States" are defined as follows:
(o) U.S. Person.
(1) "U.S. person" means:
(i) Any natural person resident in the United States;
(ii) Any partnership or corporation organized or incorporated under
the laws of the United States;
(iii) Any estate of which any executor or administrator is a U.S.
person;
(iv) Any trust of which any trustee is a U.S. person;
(v) Any agency or branch of a foreign entity located in the United
States;
(vi) Any non-discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary for the
benefit or account of a U.S. person;
(vii) Any discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary organized,
incorporated, or (if an individual) resident in the United
States; and
(viii) Any partnership or corporation if: (A) organized or
incorporated under the laws of any foreign jurisdiction; and (B)
formed by a U.S. person principally for the purpose of investing
in securities not registered under the Securities Act of 1933, as
amended (the "Act") unless it is organized or incorporated, and
owned, by accredited investors (as defined in Rule 501(a) of the
Act) who are not natural persons, estates or trusts.
(2) Notwithstanding paragraph (o)(1) of this rule, any discretionary
account or similar account (other than an estate or trust) held for the benefit
or account of a non-U.S. person by a dealer or other professional fiduciary
organized, incorporated, or (if an individual) resident in the United States
shall not be deemed a "U.S. person".
<PAGE>
(3) Notwithstanding paragraph (o)(1) of this rule, any estate of which any
professional fiduciary acting as executor or administrator is a U.S. person
shall not be deemed a U.S. person if:
(i) An executor or administrator of the estate who is not a U.S.
person has sole or shared investment discretion with respect to
the assets of the estate; and
(ii) The estate is governed by foreign law.
(4) Notwithstanding paragraph (o)(1) of this rule, any trust of which any
professional fiduciary acting as trustee is a U.S. person shall not be deemed a
U.S. person if a trustee who is not a U.S. person has sole or shared investment
discretion with respect to the trust assets, and no beneficiary of the trust
(and no settlor if the trust is revocable) is a U.S. person.
(5) Notwithstanding paragraph (o)(l) of this rule, an employee benefit plan
established and administered in accordance with the law of a country other than
the United States and customary practices and documentation of such country
shall not be deemed a U.S. person.
(6) Notwithstanding paragraph (o)(l) of this rule, any agency or branch of
a U.S. person located outside the United States shall not be deemed a "U.S.
person" if:
(i) The agency or branch operates for valid business reasons; and
(ii) The agency or branch is engaged in the business of insurance or
banking and is subject to substantive insurance or banking
regulation, respectively, in the jurisdiction where located.
(7) The International Monetary Fund, the International Bank for
Reconstruction and Development, the Inter-American Development Bank, the Asian
Development Bank, the African Development Bank, the United Nations, and their
agencies, affiliates and pension plans, and any other similar international
organizations, their agencies, affiliates and pension plans shall not be deemed
"U.S. persons."
(p) United States. "United States" means the United States of America, its
territories and possessions, any State of the United States, and the
District of Columbia.
<PAGE>
EXHIBIT D
---------
SUBSCRIPTION FOR CASHLESS WARRANT SUBSCRIPTION
The undersigned, _________________________________________________pursuant
to the provisions of the within and foregoing Warrant, hereby agrees to
subscribe to that number of shares of the Common Stock of Golf-Technology
Holding, Inc. as are issuable in accordance with the formula set forth in
paragraph 1(b) of said Warrant, and makes payment therefor in full by surrender
and delivery of said Warrant.
Dated:________________________ ______________________________
Signature
Address:
______________________________
______________________________
______________________________
<PAGE>
EXHIBIT E
---------
ASSIGNMENT
FOR VALUE RECEIVED, _______________________________hereby sells, assigns
and transfers unto the within and foregoing Warrant and all rights evidenced
thereby, and does irrevocably constitute and appoint
_________________________attorney, to transfer said Warrant on the books of
Golf-Technology Holding, Inc.
Dated:________________________ ______________________________
Signature
Address
______________________________
______________________________
______________________________
<PAGE>
EXHIBIT F
---------
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED,_________________________________ hereby assigns and
transfers unto _________________________________________________the right to
purchase __________ shares of the Common Stock of Golf-Technology Holding, Inc.
the right to purchase _________ shares of the Common Stock of Golf-Technology
Holding, Inc. by the foregoing Warrant, and a proportionate part of said Warrant
and the rights evidenced hereby, and does irrevocably constitute and appoint
___________________________________________ attorney, to transfer that part of
said Warrant on the books of Golf-Technology Holding, Inc.
Dated:________________________ ______________________________
Signature
Address
______________________________
______________________________
______________________________
<PAGE>
EXHIBIT (99e)
-------------
ADDITIONAL RBB WARRANT
<PAGE>
THIS WARRANT AND THE SECURITES TO BE ISSUED UPON ITS EXERCISE HAVE NOT BEEN
REGISTERED UNDER THE SECURITES ACT OF 1933, AS AMENDED (THE "ACT") AND THIS
WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON UNLESS
REGISTERED UNDER THE ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK
51,724 Shares Warrant
Issued January 27, 1997
FOR VALUE RECEIVED, GOLF-TECHNOLOGY HOLDING, INC. (the "Company"), an
Idaho corporation, hereby certifies that RBB Bank Aktiengesellschaft ("RBB"),
or its permitted assigns are entitled to purchase from the Company, at any time
or from time to time commencing March 13, 1997 (the "Commencement Date"), and
prior to 5:00 p.m., New York, New York time then current, on December 31, 2002
(the "Expiration Date"), 51,724 fully paid and non-assessable shares of the
common stock, $.00l par value, of the Company, at a purchase price of $3.625 per
share. Hereinafter, (i) said common stock, together with any other equity
securities which may be issued by the Company with respect thereto or in
substitution therefor, is referred to as the "Common Stock," (ii) the shares of
the Common Stock purchasable hereunder are referred to as the "Warrant Shares,"
(iii) the aggregate purchase price payable hereunder for the Warrant Shares is
referred to as the "Aggregate Warrant Price," (iv) the price payable hereunder
for each of the shares of the Warrant Shares is referred to as the "Per Share
Warrant Price" and (v) this warrant and all warrants hereafter issued in
exchange or substitution for this warrant are referred to as the "Warrants." The
Aggregate Warrant Price is not subject to adjustment. The Per Share Warrant
Price is subject to adjustment as hereinafter provided; in the event of any such
adjustment, the number of Warrant Shares shall be adjusted by dividing the
Aggregate Warrant Price by the Per Share Warrant Price in effect immediately
after such adjustment.
1. Exercise of Warrant.
(a) This Warrant may be exercised, in whole at any time or in part from
time to time, commencing on the Commencement Date, and prior to 5:00 p.m., New
York, New York time then current, on the Expiration Date, by the holder of this
Warrant (the "Holder") by the surrender of this Warrant (with the Subscription
attached hereto in the form of Exhibit A and the Notice of Conversion or
---------
Exercise (the "Notice of Exercise"), attached to that certain Regulation S
Securities Subscription Agreement, by and between the Company and RBB, dated as
of January 27, 1997 and attached hereto as Exhibit B, duly executed) at the
---------
address set forth in Subsection 10(a) hereof, provided, however, (i) the Holder
of this Warrant must certify in the Note of Exercise that Holder is not a "US
Person" as that term is defined in Rule 902(e) of Regulation D pursuant to the
Securities Act of 1933, as amended (a copy of which is attached
<PAGE>
hereto as Exhibit C) (ii) such Notice of Exercise must be executed outside of
---------
the United States, and (iii) the address where the Holder instructs the Company
to forward the certificate for the shares issued upon exercise of this Warrant
is outside of the United States, together with proper payment of the Aggregate
Warrant Price, or the proportionate part thereof if this Warrant is exercised in
part. Payment for the Warrant Shares shall be made by wire transfer, certified
or official bank check, payable to the order of the Company. If this Warrant is
exercised in part, this Warrant must be exercised for a number of whole shares
of the Common Stock, and the Holder is entitled to receive a new Warrant
covering the number of Warrant Shares in respect of which this Warrant has not
been exercised and setting forth the proportionate part of the Aggregate Warrant
Price applicable to such Warrant Shares. Upon such exercise and surrender of
this Warrant, the Company will (i) issue a certificate or certificates in the
name of the Holder for the number of whole shares of the Common Stock to which
the Holder shall be entitled and, if this Warrant is exercised in whole, in lieu
of any fractional share of the Common Stock to which the Holder shall be
entitled, pay cash equal to the fair value of such fractional share (determined
in such reasonable manner as the Board of Directors of the Company shall
determine), and (ii) deliver the other securities and properties receivable upon
the exercise of this Warrant, or the proportionate part hereof if this Warrant
is exercised in part, pursuant to the provisions of this Warrant.
(b) In lieu of exercising this Warrant in the manner set forth in paragraph
1(a) above, this Warrant may be exercised between the Commencement Date and the
Expiration Date by surrender of the Warrant without payment of any other
consideration, commission or remuneration, together with the Notice of Exercise
and cashless exercise subscription, in the form attached hereto as Exhibit D,
---------
duly executed. The number of shares to be issued in exchange for the Warrant
shall be the product of (x) the excess of the market price of the Common Stock
on the date of surrender of the Warrant and the exercise subscription form over
the Per Share Warrant Price and (y) the number of shares subject to issuance
upon exercise of the Warrant, divided by the market price of the Common Stock on
such date. Upon such exercise and surrender of this Warrant, the Company will
(i) issue a certificate or certificates in the name of the Holder for the number
of whole shares of the Common Stock to which the Holder shall be entitled and,
in lieu of any fractional share of the Common Stock to which the Holder shall be
entitled, pay cash equal to the fair value of such fractional share (determined
in such reasonable manner as the Board of Directors of the Company shall
determine), and (ii) deliver the other securities and properties receivable upon
the exercise of this Warrant, pursuant to the provisions of this Warrant.
2. Reservation of Warrant Shares.
The Company agrees that, prior to the expiration of this Warrant, the
Company will at all times have authorized and in reserve, and will keep
available, solely for the issuance or delivery upon the exercise of this
Warrant, such number of shares of the Common Stock and such amount of other
securities and properties as from time to time shall be deliverable to the
Holder upon the exercise of this Warrant, free and clear of all restrictions on
sale or transfer (except such as may be imposed under applicable federal and
state securities laws) and free and clear of all preemptive rights and all other
rights to purchase securities of the Company.
2
<PAGE>
3. Protection Against Dilution.
(a) If, at any time or from time to time after the date of this Warrant,
the Company shall distribute to the holders of its outstanding Common Stock, (i)
securities, other than shares of Common Stock, or (ii) property, other than cash
dividends paid in conformity with past practice, without payment therefor, with
respect to Common Stock, then, and in each such case, the Holder, upon the
exercise of this Warrant, shall be entitled to receive the securities and
property which the Holder would have held on the date of such exercise if, on
the date of this Warrant, the Holder had been the holder of record of the number
of shares of the Common Stock subscribed for upon such exercise and, during the
period from the date of this Warrant to and including the date of such exercise,
had retained such shares and the securities and properties receivable by the
Holder during such period. Notice of each such distribution shall be forthwith
mailed to the Holder.
(b) If, at any time or from time to time after the date of this Warrant,
the Company shall (i) pay a dividend or make a distribution on its capital stock
in shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock
into a greater number of shares, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares or (iv) issue by reclassification of its
Common Stock any shares of capital stock of the Company, the Per Share Warrant
Price in effect immediately prior to such action shall be adjusted so that the
Holder of any Warrant thereafter exercised shall be entitled to receive the
number of shares of Common Stock or other capital stock of the Company which he
would have owned or been entitled to receive immediately following the happening
of any of the events described above had such Warrant been exercised immediately
prior thereto. An adjustment made pursuant to this shall become effective
immediately prior thereto. An adjustment made pursuant to this subsection (b)
shall become effective immediately after the record date in the case of a
dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or reclassification.
If, as a result of an adjustment made pursuant to this subsection (b), the
holder of any Warrant thereafter surrendered for exercise shall become entitled
to receive shares of two or more classes of capital stock or shares of Common
Stock and other capital stock of the Company, the Board of Directors (whose
determination shall be conclusive and shall be described in a written notice to
the Holder of any Warrant promptly after such adjustment) shall determine the
allocation of the adjusted Per Share Warrant Price between or among shares of
such classes or capital stock or shares of Common Stock and other capital stock.
(c) Except as provided in 3(e), in case the Company shall hereafter issue
or sell any shares of Common Stock for a consideration per share less than the
fair market value of a share of Common Stock at such time as determined by the
reasonable judgment of the Company's Board of Directors, the Per Share Warrant
Price shall be adjusted as of the date of such issuance or sale so that the same
shall equal the price determined by dividing (i) the sum of (A) the number of
shares of Common Stock outstanding immediately prior to such issuance or sale
multiplied by the Per Share Warrant Price plus (B) the consideration received by
the Company upon such issuance or sale by (ii) the total number of shares of
Common Stock outstanding after such issuance or sale.
3
<PAGE>
(d) Except as provided in 3(e), in case the Company shall hereafter issue
or sell any rights, options, warrants or securities convertible into Common
Stock entitling the holders thereof to purchase the Common Stock or to convert
such securities into Common Stock at a price per share (determined by dividing
(i) the total amount, if any, received or receivable by the Company in
consideration of the issuance or sale of such rights, options, warrants or
convertible securities plus the total consideration, if any, payable to the
Company upon exercise or conversion thereof (the "Total Consideration") by (ii)
the number of additional shares of Common Stock issuable upon exercise or
conversion of such securities) less than the then Per Share Warrant Price in
effect on the date of such issuance or sale, the Per Share Warrant Price shall
be adjusted as of the date of such issuance or sale so that the same shall equal
the price determined by dividing (i) the sum of (A) the number of shares of
Common Stock outstanding on the date of such issuance or sale multiplied by the
Per Share Warrant Price plus (B) Total Consideration by (ii) the number of
shares of Common Stock outstanding on the date of such issuance or sale plus the
maximum number of additional shares of Common Stock issuable upon exercise or
conversion of such securities.
(e) No adjustment in the Per Share Warrant Price shall be required in the
case of (i) the issuance of shares of Common Stock upon the exercise of options
which may be granted under the Company's Stock Option Plan as in effect on the
date hereof, or (ii) the issuance of shares pursuant to the exercise of this
Warrant or any other warrants that are being issued as of the date hereof or are
outstanding as of the date hereof.
(f) In case of any consolidation or merger to which the Company is a party
other than a merger or consolidation in which the Company is the continuing
corporation, or in case of any sale or conveyance to another entity of the
property of the Company as an entirety or substantially as an entirety, or in
the case of any statutory exchange of securities with another entity (including
any exchange effectuated in connection with a merger of any other corporation
with the Company), the Holder of this Warrant shall have the right thereafter to
convert such Warrant into the kind and amount of securities, cash or other
property which he would have owned or have been entitled to receive immediately
after such consolidation, merger, statutory exchange, sale or conveyance had
this Warrant been exercised immediately prior to the effective date of such
consolidation, merger, statutory exchange, sale or conveyance and in any such
case, if necessary, appropriate adjustment shall be made in the application of
the provisions set forth in this Section 3 with respect to the rights and
interests thereafter of the Holder of this Warrant to the end that the
provisions set forth in this Section 3 shall thereafter correspondingly be made
applicable, as nearly as may reasonably be, in relation to any shares of stock
or other securities or property thereafter deliverable on the exercise of this
Warrant. The above provisions of this 3(f) shall similarly apply to successive
consolidations, mergers, statutory exchanges, sales or conveyances. Notice of
any such consolidation, merger, statutory exchange, sale or conveyance, and of
said provisions so proposed to be made, shall be mailed to the Holder not less
than 20 days prior to such event. A sale of all or substantially all of the
assets of the Company for a consideration consisting primarily of securities
shall be deemed a consolidation or merger for the foregoing purposes.
(g) No adjustment in the Per Share Warrant Price shall be required unless
such adjustment would require an increase or decrease of at least $0.05 per
share of Common Stock;
4
<PAGE>
provided, however, that any adjustments which by reason of this (g) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment; and provided further, however, that adjustments shall be
required and made in accordance with the provisions of this Section 3 (other
than this (g)) later than such time as may be required in order to preserve the
tax-free nature of a distribution to the Holder of this Warrant or Common Stock.
All calculations under this Section 3 shall be made to the nearest cent or to
the nearest 1/100th of a share, as the case may be. Anything in this Section 3
to the contrary notwithstanding, the Company shall be entitled to make such
reductions in the Per Share Warrant Price, in addition to those required by this
Section 3, as it in its discretion shall deem to be advisable in order that any
stock dividend, subdivision of shares or distribution of rights to purchase
stock or securities convertible or exchangeable for stock hereafter made by the
Company to its shareholders shall not be taxable.
(h) Whenever the Per Share Warrant Price is adjusted as provided in this
Section 3 and upon any modification of the rights of the Holder of this Warrant
in accordance with this Section 3, the Company shall, at its own expense, within
ten (10) days of such adjustment or modification, deliver to the holder of this
Warrant a certificate of the principal financial officer of the Company setting
forth the Per Share Warrant Price and the number of Warrant Shares after such
adjustment or modification and the manner of computing the same. In addition,
within thirty (30) days of the end of the Company's fiscal year next following
any such adjustment or modification, the Company shall, at its own expense,
deliver to the Holder of this Warrant a certificate of a firm of independent
public accountants of recognized standing selected by the Board of Directors
(who may be the regular auditors of the Company) setting forth the same
information as required by such principal financial officer certificate.
(i) If the Board of Directors of the Company shall declare any dividend or
other distribution in cash with respect to the Common Stock, other than out of
earned surplus, the Company shall mail notice thereof to the Holder not less
than 10 days prior to the record date fixed for determining shareholders
entitled to participate in such dividend or other distribution.
4. Fully Paid Stock; Taxes.
The Company agrees that the shares of the Common Stock represented by each
and every certificate for Warrant Shares delivered on the exercise of this
Warrant in accordance with the terms hereof shall, at the time of such delivery,
be validly issued and outstanding, fully paid and non-assessable and not subject
to preemptive rights or other contractual rights to purchase securities of the
Company, and the Company will take all such actions as may be necessary to
assure that the par value or stated value, if any, per share of the Common Stock
is at all times equal to or less than the then Per Share Warrant Price. The
Company further covenants and agrees that it will pay, when due and payable, any
and all federal and state stamp, original issue or similar taxes which may be
payable in respect of the issue of any Warrant Share or certificate therefor.
5
<PAGE>
5. Limited Transferability.
(a) This Warrant shall be transferable or assignable by the Holder, in
whole or in part, only (i) to any successor firm or corporation of RBB (ii) to
any of the directors, officers, employees, attorneys, consultants, partners,
agents or subsidiaries of RBB or of any such successor entity or (iii) in the
case of an individual, pursuant to such individual's last will and testament or
the laws of descent and distribution and is so transferable only upon the books
of the Company which it shall cause to be maintained for such purpose, provided,
however the transferor shall complete an Assignment in either of the forms
attached hereto as Exhibit E or Exhibit F. The Company may treat the registered
--------- ---------
holder of this Warrant as he or it appears on the Company's books at any time as
the Holder for all purposes. The Company shall permit any holder of a Warrant or
his duly authorized attorney, upon written request during ordinary business
hours, to inspect and copy or make extracts from its books showing the
registered holders of Warrants. All Warrants will be dated the same date as this
Warrant.
(b) By acceptance hereof, (A) the Holder represents and warrants that (i)
this Warrant is being acquired, and all Warrant Shares to be purchased upon the
exercise of this Warrant will be acquired, by the Holder solely for the account
of such Holder (or for beneficiaries' accounts over which the Holder has
investment discretion but no discretionary voting or dispositive authority) and
not with a view to the fractionalization and distribution thereof, (ii) this
Warrant will not be sold or transferred except in accordance with the applicable
provisions of the Act and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder, and (iii) and if Holder is acquiring
this Warrant or any of the Securities or Common Stock issuable upon conversion
of the Convertible Securities for the accounts of parties other than Holder (as
contemplated above in this paragraph), Holder has full power and authority to
make the representations, warranties and agreements made pursuant to this
Warrant on behalf of the owners of such accounts, and agrees that each
representation, warranty and agreement made by Subscriber herein is also made by
and on behalf of each owner of each such account, and (B) the Holder agrees that
(i) this Warrant may not be sold to a US Person and (ii) neither this Warrant
nor any of the Warrant Shares may be sold or transferred except under cover of a
Registration Statement under the Act which is effective and current with respect
to such Warrant Shares or pursuant to an opinion, in form and substance
reasonably acceptable to the Company's counsel, that registration under the Act
is not required in connection with such sale or transfer. Any Warrant Shares
issued upon exercise of this Warrant shall bear the following legend:
"The Securities represented by this certificate have not been
registered under the Securities Act of 1933 and are restricted securities
within the meaning thereof. Such securities may not be sold or transferred
except pursuant to a Registration Statement under such Act which is
effective and current with respect to such securities or pursuant to an
opinion of counsel reasonably satisfactory to the issuer of such securities
that such sale or transfer is exempt from the registration requirements of
such Act."
6
<PAGE>
6. Loss, etc., of Warrant.
Upon receipt of evidence satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant, and of indemnity reasonably
satisfactory to the Company, if lost, stolen or destroyed, and upon surrender
and cancellation of this Warrant, if mutilated, and upon reimbursement of the
Company's reasonable incidental expenses, the Company shall execute and deliver
to the Holder a new Warrant of like date, tenor and denomination.
7. Warrant Holder Not Shareholders.
Except as otherwise provided herein, this Warrant does not confer upon the
Holder any right to vote or to consent to or receive notice as a shareholder of
the Company, as such, in respect of any matters whatsoever, or any other rights
or liabilities as a shareholder, prior to the exercise hereof.
8. Communication.
No notice or other communication under this Warrant shall be effective
unless, but any notice or other communication shall be effective and shall be
deemed to have been given if, the same is in writing and is mailed by first-
class mail, postage prepaid, addressed to:
(a) the Company at 13000 Sawgrass Village Circle, Suite 30, Ponte
Vedra Beach, Florida 32082 or such other address as the Company has designated
in writing to the Holder; or
b) the Holder at Burgring 16, 8010 Graz, Austria, or such other
address as the Holder has designated in writing to the Company.
9. Headings.
The headings of this Warrant have been inserted as a matter of convenience
and shall not affect the construction hereof.
10. Applicable Law.
This Warrant shall be governed by and construed in accordance with the laws
of the State of New York without giving effect to the principles of conflict of
law thereof.
[Signature page follows, remainder of page intentionally blank]
7
<PAGE>
IN WITNESS WHEREOF, the Company, has caused this Warrant to be signed by
its President and its corporate seal to be hereunto affixed and attested by its
Secretary this 27/th/ day of January, 1997.
(SEAL) GOLF-TECHNOLOGY HOLDING, INC.
ATTEST:
/S/ HAROLD E. HUTCHINS By: /S/ ERNEST R. VADERSEN
- ------------------------- --------------------------
Secretary Name: Ernest R. Vadersen
Title: President
<PAGE>
EXHIBIT A
---------
SUBSCRIPTION
The undersigned holder, _________________________________ pursuant to the
provisions of the within and foregoing Warrant, hereby agrees to subscribe for
and purchase _______ shares of the Common Stock of Golf-Technology Holding, Inc.
covered by said Warrant, and makes payment therefor in full at the price per
share provided by said Warrant.
Dated:_____________________ ___________________________________
Signature
Address:
____________________________________
____________________________________
____________________________________
<PAGE>
EXHIBIT B
---------
NOTICE OF CONVERSION OR EXERCISE
(To be executed by the registered holder in order to convert the share(s)
of Series C Preferred Stock or exercise Warrants, or Additional Warrants)
In accordance with that certain Regulation S Securities Subscription
Agreement (the "Subscription Agreement"), by and between RBB Bank
Aktiengesellshaft and Golf-Technology Holding, Inc. (the "Company"), dated as of
January 27, 1997, the undersigned hereby irrevocably elects to convert any of
the Convertible Securities represented by the attached certificate or agreement
into shares of common stock ("Common Stock") of the Company according to the
conditions of the Certificate of Designation of Series C Preferred Stock,
Warrant Agreement or Additional Warrant Agreement, as applicable, as of the date
written below. Capitalized terms used and not defined herein shall have the
meanings ascribed to them in the Subscription Agreement. If shares are to be
issued in the name of a person other than undersigned, the undersigned will pay
all transfer taxes payable with respect thereto and is delivering herewith such
certificates. No fee will be charged to the undersigned for any conversion,
except for transfer taxes, if any.
The undersigned represents that it and each person or entity on whose
behalf it holds Convertible Securities to be converted into Common Stock (each
an "Investor"): (i) is familiar with and understands the terms, conditions and
requirements contained in Regulation S ("Regulation S") and Rule 144 promulgated
under the Securities Act of 1933, as amended (the "Act"); (ii) is not a "U.S.
Person" or "distributor" as defined in Regulation S; (iii) purchased the
Convertible Securities for which conversion is being elected, and is purchasing
the Common Stock referenced herein, for its own account and for the account of
each Investor and not for the account or benefit of any U.S. Person; (iv) will
comply with the transfer restrictions contained in Section 4(1) of the Act and
Rule 144 promulgated thereunder to the extent they are applicable; (v) has not
had a "short" position in the Company's securities at any time since the
purchase of the Securities (including any short call position or any long put
position or any contract or arrangement that had the effect of eliminating or
substantially diminishing the risk of ownership of the Securities) nor has it
engaged in any hedging transaction with respect to the Securities or the Common
Stock; (vi) has no prior understanding with respect to the sale of the Common
Stock to any third party; (vii) has not engaged in any "directed selling
efforts" (as such term is defined in Regulation S) with respect to the
Securities or the Common Stock issuable upon conversion of the Convertible
Securities; (viii) purchased the Securities with investment intent, is
purchasing the Common Stock with investment intent and presently has no intent
to sell, dispose of or otherwise transfer the Common Stock; (ix) will make any
sale, transfer or other disposition of the Common Stock in full compliance with
the Act, the Exchange Act, as amended, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder; and (x) received the
offer to purchase the Securities outside the United States and, at the time the
Subscription Agreement pursuant to which the Securities was executed was, and
upon execution of this Notice is, outside the United States. The undersigned has
obtained representations from each Investor with respect to compliance with
paragraphs (i) - (x) of this Notice.
<PAGE>
The undersigned acknowledges and agrees that:
(I) in connection with the conversion of Preferred Stock into shares of
Common Stock :
(a) no shares of Common Stock will be issued until the original
Preferred Stock Certificate(s) to be converted and the Notice are
received by the Company's attorney or transfer agent, and
(b) the original Preferred Stock Certificate(s) to be converted and the
Notice must be received by the Company's attorney or transfer agent
by the third business day following the Date of Conversion
indicated below, or such Notice shall become null and void at the
sole discretion of the Company; and
(II) in connection with the conversion of Warrants or Additional Warrants
into shares of Common Stock:
(a) no shares of Common Stock will be issued until the Warrants or
Additional Warrants holder surrenders the original Warrant
Agreement or Additional Warrant Agreement (with the subscription
form at the end thereof duly executed);
(b) the original Warrant Agreement or Additional Warrant Agreement
(with the subscription form at the end thereof duly executed) and
the Notice must be received by the Company's attorney or transfer
agent by the third business day following the Date of Conversion
indicated below, or such Notice and subscription form shall become
null and void at the sole discretion of the Company; and
(c) the Warrant or Additional Warrant was exercised outside of the
United States and the Converted Securities will be delivered to an
address outside of the United States, as indicated below.
Conversion Formula: Date of Conversion or exercise:
-----------
Place of execution of this notice:
-----------
Applicable Conversion Price:
-----------------
Subscriber's Name:
---------------------------
Signature:
-----------------------------------
Name:
-----------------------------
Title:
-----------------------------
Address:
-------------------------------------
---------------------------------------------
---------------------------------------------
Address (which must be outside of the United States)
for delivery of the certificates reflecting the
Converted Securities:
------------------------
---------------------------------------------
---------------------------------------------
2
<PAGE>
EXHIBIT C
---------
DEFINITION OF "U.S. PERSON"
---------------------------
Pursuant to Rule 902 (c), (o) and (p) of Regulation S, the terms "U.S. person"
and "United States" are defined as follows:
(o) U.S. Person.
(1) "U.S. person" means:
(i) Any natural person resident in the United States;
(ii) Any partnership or corporation organized or incorporated under
the laws of the United States;
(iii) Any estate of which any executor or administrator is a U.S.
person;
(iv) Any trust of which any trustee is a U.S. person;
(v) Any agency or branch of a foreign entity located in the United
States;
(vi) Any non-discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary for the
benefit or account of a U.S. person;
(vii) Any discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary organized,
incorporated, or (if an individual) resident in the United
States; and
(viii) Any partnership or corporation if: (A) organized or
incorporated under the laws of any foreign jurisdiction; and (B)
formed by a U.S. person principally for the purpose of investing
in securities not registered under the Securities Act of 1933, as
amended (the "Act") unless it is organized or incorporated, and
owned, by accredited investors (as defined in Rule 501(a) of the
Act) who are not natural persons, estates or trusts.
(2) Notwithstanding paragraph (o)(1) of this rule, any discretionary
account or similar account (other than an estate or trust) held for the benefit
or account of a non-U.S. person by a dealer or other professional fiduciary
organized, incorporated, or (if an individual) resident in the United States
shall not be deemed a "U.S. person".
<PAGE>
(3) Notwithstanding paragraph (o)(1) of this rule, any estate of which any
professional fiduciary acting as executor or administrator is a U.S. person
shall not be deemed a U.S. person if:
(i) An executor or administrator of the estate who is not a U.S.
person has sole or shared investment discretion with respect to
the assets of the estate; and
(ii) The estate is governed by foreign law.
(4) Notwithstanding paragraph (o)(1) of this rule, any trust of which any
professional fiduciary acting as trustee is a U.S. person shall not be deemed a
U.S. person if a trustee who is not a U.S. person has sole or shared investment
discretion with respect to the trust assets, and no beneficiary of the trust
(and no settlor if the trust is revocable) is a U.S. person.
(5) Notwithstanding paragraph (o)(l) of this rule, an employee benefit plan
established and administered in accordance with the law of a country other than
the United States and customary practices and documentation of such country
shall not be deemed a U.S. person.
(6) Notwithstanding paragraph (o)(l) of this rule, any agency or branch of
a U.S. person located outside the United States shall not be deemed a "U.S.
person" if:
(i) The agency or branch operates for valid business reasons; and
(ii) The agency or branch is engaged in the business of insurance or
banking and is subject to substantive insurance or banking
regulation, respectively, in the jurisdiction where located.
(7) The International Monetary Fund, the International Bank for
Reconstruction and Development, the Inter-American Development Bank, the Asian
Development Bank, the African Development Bank, the United Nations, and their
agencies, affiliates and pension plans, and any other similar international
organizations, their agencies, affiliates and pension plans shall not be deemed
"U.S. persons."
(p) United States. "United States" means the United States of America, its
territories and possessions, any State of the United States, and the
District of Columbia.
<PAGE>
EXHIBIT D
---------
SUBSCRIPTION FOR CASHLESS WARRANT SUBSCRIPTION
The undersigned, _________________________________________________pursuant
to the provisions of the within and foregoing Warrant, hereby agrees to
subscribe to that number of shares of the Common Stock of Golf-Technology
Holding, Inc. as are issuable in accordance with the formula set forth in
paragraph 1(b) of said Warrant, and makes payment therefor in full by surrender
and delivery of said Warrant.
Dated:________________________ ______________________________
Signature
Address:
______________________________
______________________________
______________________________
<PAGE>
EXHIBIT E
---------
ASSIGNMENT
FOR VALUE RECEIVED, _______________________________hereby sells, assigns
and transfers unto the within and foregoing Warrant and all rights evidenced
thereby, and does irrevocably constitute and appoint
_________________________attorney, to transfer said Warrant on the books of
Golf-Technology Holding, Inc.
Dated:________________________ ______________________________
Signature
Address
______________________________
______________________________
______________________________
<PAGE>
EXHIBIT F
---------
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED,_________________________________ hereby assigns and
transfers unto _________________________________________________the right to
purchase __________ shares of the Common Stock of Golf-Technology Holding, Inc.
the right to purchase _________ shares of the Common Stock of Golf-Technology
Holding, Inc. by the foregoing Warrant, and a proportionate part of said Warrant
and the rights evidenced hereby, and does irrevocably constitute and appoint
___________________________________________ attorney, to transfer that part of
said Warrant on the books of Golf-Technology Holding, Inc.
Dated:________________________ ______________________________
Signature
Address
______________________________
______________________________
______________________________
<PAGE>
EXHIBIT (99f)
-------------
REGISTRATION RIGHTS AGREEMENT
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the " Registration Rights Agreement" or
"Agreement") is entered into as of January 27, 1997, by and among GOLF-
TECHNOLOGY HOLDING, INC., an Idaho corporation (the "Company"), and Clark
Partners III, L.P. ("Clark") and RBB Bank Aktiengesellschaft ("RBB," together
with Clark, collectively, the "Investors" and each an "Investor").
Recitals
WHEREAS, the Company is offering to sell (A) shares of Series C Preferred
Stock (the "Preferred Stock") of the Company in the amount of (i) 1,875
Preferred Shares to RBB (the "RBB Preferred Shares"), and (ii) 2,625 Preferred
Shares of the Company to Clark (the "Clark Preferred Shares"), (B) warrants (the
"Warrants") for the purchase of shares of common stock par value $.001 (the
"Common Stock") of the Company in the amount of (i) 187,500 shares of Common
Stock pursuant to the terms of the Warrant for the Purchase of Shares of Common
Stock (the "RBB Warrant"), issued on January 27, 1997, by the Company to RBB,
(ii) 51,724 shares of Common Stock pursuant to the terms of the Warrant for the
Purchase of Shares of Common Stock (the "Additional RBB Warrant"), issued on
January 27, 1997, by the Company to RBB, and (iii) 262,500 shares of Common
Stock pursuant to the terms of the Warrant for the Purchase of Shares of Common
Stock (the "Clark Warrant"), issued on January 27, 1997, by the Company to Clark
and (C) 51,724 shares of Common Stock to RBB (the "RBB Common Shares"), for an
aggregate purchase price to be paid by RBB of One Million, Two Hundred Fifty
Thousand Dollars ($1,250,000) (U.S.) pursuant to the terms of the Regulation S
Securities Subscription Agreement (the "Regulation S Agreement"), dated January
27, 1997, between the Company and RBB, and for an aggregate purchase price to be
paid by Clark of One Million Seven Hundred Fifty Thousand Dollars ($1,750,000)
(U.S.), pursuant to the terms of the Regulation D Securities Subscription
Agreement (the "Regulation D Agreement" and collectively with the Regulation S
Agreement, "the Subscription Agreements"), dated January 27, 1997, between the
Company and Clark; and
WHEREAS, pursuant to the terms of, and in partial consideration for, the
Investors' agreement to enter into the Subscription Agreements, the Company has
agreed to provide the Investors with certain registration rights with respect to
the Offered Securities;
NOW THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in the Subscription Agreements
and this Agreement, the Company and the Investors agree as follows:
1. Certain Definitions. As used in this Registration Rights Agreement,
-------------------
the following terms shall have the following respective meanings:
"Clark Securities" shall mean the Clark Preferred Shares and Clark
Warrants.
<PAGE>
"Commission" shall mean the United States Securities and Exchange
Commission or any other United States agency at the time administering the
Securities Act.
"Converted Stock" shall mean the shares of Common Stock issuable upon
conversion of the Clark Preferred Shares, Clark Warrants, RBB Preferred Shares,
RBB Warrant and Additional RBB Warrant.
"Offered Securities" shall mean the Clark Securities and the RBB
Securities.
"Other Registrable Securities" shall mean those shares of Common Stock
heretofore or hereafter issued pursuant to one or more agreements granting the
purchasers of such securities the right to have the Company register such
securities or include such securities in any other registration of the Company's
equity securities.
"RBB Securities" means the RBB Preferred Shares, RBB Warrants, RBB
Additional Warrants, and RBB Common Shares.
"RBB Shares" means the RBB Preferred Shares, RBB Common Shares, and the
shares of Common Stock issuable upon conversion of the RBB Preferred Shares or
exercise of the RBB Warrants or RBB Additional Warrants.
"Registrable Shares" shall mean (i) any Common Stock of the Company issued
or issuable in respect of the Warrants or Preferred Stock issued to RBB or
Clark, or their permitted transferees, and (ii) the RBB Common Shares or upon
any stock split, stock dividend, recapitalization or similar event; provided,
however, that Registrable Shares or other securities shall no longer be treated
as Registrable Shares if (A) they have been sold to or through a broker or
dealer or underwriter in a public distribution or a public securities
transaction, (B) they have been sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act so that
all transfer restrictions and restrictive legends with respect thereto are
removed upon consummation of such sale or (C) all such Registrable Shares are
available for sale under the Securities Act (including Rule 144(k)), in the
opinion of counsel to the Company, without compliance with the registration and
prospectus delivery requirements of the Securities Act and without compliance
with the volume and manner of sale restrictions of Rule 144, so that all
transfer restrictions and restrictive legends with respect thereto may be
removed upon the consummation of such sale.
The terms "register", "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"Registration Expenses" shall mean all expense incurred by the Company in
compliance with Section 2 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, blue sky fees and expenses, reasonable fees and
disbursements (not to exceed $20,000) of one counsel for all the selling
2
<PAGE>
holders of Registrable Shares for a limited "due diligence" examination of the
Company, and the reasonable expenses of any special audits incident to or
required by any such registration (but excluding the compensation of regular
employees of the Company, which shall be paid in any event by the Company, and
excluding all underwriting discounts and selling commissions applicable to the
sale of the Registrable Shares).
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Shares and all fees and
disbursements of one counsel for the selling holders of Registrable Shares
(other than the fees disbursements of such counsel included in Registration
Expenses).
2. Requested Registration.
----------------------
The following registration rights will apply (I) in connection with RBB,
if, and only if, at any time prior to the termination of this Agreement,
Regulation S promulgated under the Securities Act is rescinded or modified so as
to preclude RBB from reselling in United States public securities markets any of
the RBB Securities received from the Company pursuant to the Regulation S
Agreement following expiration of the Restricted Period (as defined in the
Regulation S Agreement), or if, for any other reason, the Company refuses to
issue RBB Shares bearing no restrictive legend to RBB after expiration of the
Restricted Period; or (II) in connection with Clark, at any time after January
27, 1998; provided, however, that an Investor shall not be entitled to request
registration pursuant to this Agreement (and shall not be considered an Investor
pursuant to this Agreement, and the securities held by an Investor shall not be
considered Registrable Shares pursuant to this Agreement) if a representation or
warranty of such Investor in the applicable Subscription Agreement is inaccurate
or was inaccurate when made, or such Investor has failed to comply with the
covenants and agreements set forth in the applicable Subscription Agreement:
(a) Request for Registration. If the Company shall receive from any
------------------------
Investor, at any time after twelve (12) and prior to forty-eight (48) months
following the final closing of the sale of Offered Securities pursuant to the
Subscription Agreements, a written request that the Company effect a
registration with respect to all, but not less than all, of the Registrable
Shares held by such Investor (which notice shall specify the intended method of
disposition), the Company shall:
(i) promptly give written notice of the proposed registration to all
other holders of Registrable Shares; and
(ii) as soon as practicable use its best efforts to effect such
registration (including, without limitation, the execution of an undertaking to
file post-effective amendments, appropriate qualification under applicable blue
sky or other state securities laws and appropriate
3
<PAGE>
compliance with applicable regulations issued under the Securities Act) as may
be so requested and as would permit or facilitate the sale and distribution of
all or such portion of such Registrable Shares as are specified in such request,
together with all or such portion of the Registrable Shares of any holder or
holders of Registrable Shares joining in such request as are specified in a
written request given within fifteen (15) days after receipt of such written
notice from the Company; provided that the Company shall not be obligated to
effect, or to take any action to effect, any such registration pursuant to this
Section 2:
(A) after the Company has effected one or more such registrations
pursuant to this Section 2(a) and such registrations have been declared or
ordered effective by the Commission and the sale of all the Registrable Shares
shall have closed; or
(B) within the period starting with the date sixty (60) days prior to
the Company's good faith estimated date of filing of, and ending one hundred
eighty (180) days following the effective date of, any registered offering of
the Company's securities to the general public.
Subject to the foregoing limitations in clauses (A) and (B) above, the
Company shall file a registration statement covering the Registrable Shares so
requested to be registered as soon as practicable after receipt of the request
or requests of the Investors, but no later than forty-five (45) days following
receipt of such request or requests, except in the event audited financial
statements not previously prepared are required to be prepared prior to the
filing of such registration statement, in which case such registration statement
must be filed as soon as practicable, but in any event within ninety (90) days
following receipt of such request or requests.
The registration statement filed pursuant to the request of an
Investor may, subject to the provision of Section 2(b) below, include Other
Registrable Securities, other securities of the Company which are held by
officers or directors of the Company or which are held by other holders of
registration rights, and may include securities of the Company being sold for
the account of the Company.
(b) Underwriting. If an Investor intends to distribute the
------------
Registrable Shares covered by their request by means of an underwriting, they
shall so advise the Company as a part of their request made pursuant to Section
2 and the Company shall include such information in the written notice referred
to in Section 2(a)(i) above. The right of any holder of Registrable Shares to
registration pursuant to Section 2 shall be conditioned upon such holder's
participation in such underwriting and the inclusion of such holder's
Registrable Shares in such underwriting (unless otherwise mutually agreed by a
majority in interest of the Investors and such holder with respect to such
participation and inclusion) to the extent provided herein. A holder of
Registrable Shares may elect to include in such underwriting all or a part of
the Registrable Shares it holds.
(i) If the Company shall request inclusion in any registration
pursuant to Section 2 of securities being sold for its own account, or if
officers or directors of the Company holding other securities of the Company or
other holders of registration rights, shall request
4
<PAGE>
inclusion in any registration pursuant to Section 2, the Investors shall, on
behalf of all holders of Registrable Shares, offer to include Other Registrable
Securities and the securities of the Company, such officers and directors and
such other holders of registration rights in the underwriting and may condition
such offer on their acceptance of the further applicable provisions of this
Agreement. The Company shall (together with all holders of Registrable Shares,
officers and directors, other holders of registration rights and holders of
Other Registrable Securities proposing to distribute their securities through
such underwriting) enter into an underwriting agreement in customary form with
the underwriter or representative of the underwriters selected for such
underwriting by the Company, which underwriter(s) shall be reasonably acceptable
to a majority in interest of the Investors.
(ii) Notwithstanding any other provision of this Section 2, if the
representative of the underwriters advises the Company in writing that marketing
factors require a limitation on the number of shares to be underwritten, the
Company shall so advise all holders of Registrable Shares and other shareholders
whose securities would otherwise be underwritten pursuant hereto, and the number
of Registrable Shares and other securities that may be included in the
registration and underwriting shall be allocated in the following manner: the
securities of the Company held by officers and directors of the Company (other
than Registrable Shares) shall be excluded from such registration and
underwriting to the extent required by such limitation, and, if a limitation on
the number of shares is still required, the Other Registrable Securities shall
be excluded pro rata with Registrable Shares, unless another method of
determining such exclusion is specified in the agreements governing the Other
Registrable Securities, according to the relative number of Other Registrable
Securities requested to be included in such registration and underwriting, from
such registration and underwriting to the extent required by such limitation,
and, if a limitation on the number of shares is still required, the number of
Registrable Shares that may be included in the registration and underwriting
shall be allocated among all holders of Registrable Shares in proportion, as
nearly as practicable, to the respective amounts of Registrable Shares which
they had requested to be included in such registration at the time of filing the
registration statement. No Registrable Shares or any other securities excluded
from the underwriting by reason of the underwriter's marketing limitation shall
also be included in such registration. In connection with the registration
rights granted to Clark pursuant to this Agreement, the parties hereto
acknowledge and agree that (i) pursuant to the terms of the Regulation D
Agreement, Clark has a qualified right to designate one member of the Board of
Directors of the Company, and (ii) that in no way shall the satisfaction of such
right limit or adversely affect the registration rights granted to Clark
pursuant to this Agreement.
(iii) If the Company or any officer, director or holder of
Registrable Shares or Other Registrable Securities who has requested inclusion
in such registration and underwriting as provided above disapproves of the terms
of the underwriting, such person may elect to withdraw therefrom by written
notice to the Company, the underwriter and the Investors. The securities so
withdrawn shall also be withdrawn from registration.
(c) Number of Requests for Registration. Each of Clark and RBB, or
-----------------------------------
their permitted transferees, shall have one (1) requested registration right
under this Section 2.
5
<PAGE>
3. Incidental Registration Under Securities Act of 1933.
----------------------------------------------------
(a) The Company agrees that if, at any time and, from time to time
(during the period commencing on the Commencement Date and ending on the
Expiration Date), the Board of Directors of the Company shall authorize the
filing of a registration statement other than a registration statement on Form
S-4 or S-8 (any such registration statement being sometimes hereinafter called a
"Company Initiated Registration Statement") under the Act (otherwise than
pursuant to Section 2 hereof) in connection with the proposed offer of any of
its securities by it or any of its shareholders, the Company will (i) promptly
notify the Investors and all of their permitted transferees, if any, that such
Company Initiated Registration Statement will be filed and that the Registrable
Shares which are then held, and/or which may be acquired upon the exercise of
the Warrants or conversion of the Preferred Stock, by the Investors, or their
permitted transferees, and such Investors, or their permitted transferees, will
be included in such Company Initiated Registration Statement at the Investors',
or their permitted transferees' request, (ii) cause such Company Initiated
Registration Statement to cover all Registrable Shares which it has been so
requested to include, (iii) cause such Company Initiated Registration Statement
to become effective as soon as practicable and to remain effective and current
for a minimum period of one hundred eighty (180) days (unless terminated earlier
as contemplated by Section 2(a)(ii)(A) or (B), and (iv) take all other action
necessary under any federal or state law or regulation of any governmental
authority to permit all Registrable Shares which it has been so requested to
include in such Company Initiated Registration Statement to be sold or otherwise
disposed of and will maintain such compliance with each such federal and state
law and regulation of any governmental authority for the period such
registration statement remains effective (such period being a minimum of one
hundred eighty (180) days, unless the effectiveness of the registration
statement is terminated earlier as contemplated by Section 2(a)(ii)(A) or (B)).
If the registration of which the Company gives notice is a firmly underwritten
registered public offering, the Company shall so advise the Investors, and their
permitted transferees, as part of the written notice given pursuant to this
Section 3(a). In such event, notwithstanding any other provision of this Section
3(a), if the underwriter of such public offering determines in its reasonable
discretion that marketing factors require the limitation of the number of shares
to be underwritten, the underwriter may (subject to the allocation priority set
forth below) exclude some or all of the Registrable Shares from such
registration and underwriting. The Company shall so advise all Investors, and
their permitted transferees, shall allocate the securities to be included in
such offering in the following manner. The Company may exclude shares of all
Investors, and their permitted transferees, of registration rights without any
exclusion of shares offered by the Company, provided that no securities other
than securities offered by the Company are included in such registration. In the
event of any exclusion of shares held by holders of registration rights, the
securities of the Company (other than the Registrable Shares) issued subsequent
the date hereof (whether or not such securities are entitled to registration
rights) shall be excluded first to the extent required by such limitation and,
if a limitation of the number of shares is still required, the number of shares
that may be included in the registration and underwriting shall be allocated
among all Investors, and their permitted transferees, and all holders of shares
of Common Stock (or securities that are convertible into or exchangeable for
shares of Common Stock) that were issued and outstanding prior to the date
hereof and which shares of Common Stock (including shares of Common Stock
issuable upon conversion or exchange of such convertible securities) the Company
is contractually obligated or otherwise desires, at the request of such holders,
to
6
<PAGE>
include in such registration ("Prior Shares") in proportion, as nearly as
practicable, to the respective number of Registrable Shares held or purchasable
by such Investors, and their permitted transferees, and the respective number of
Prior Shares, each determined at the time of the notice referred to in this
Section 3(a).
(b) Whenever the Company is required pursuant to the provisions of this
Section 3 to include Registrable Shares in a registration statement, the Company
shall (i) furnish each Investors of any such Registrable Shares and each
underwriter of such Registrable Shares with such copies of the prospectus,
including the preliminary prospects, conforming to the Act (and such other
documents as each such Investors or each such underwriter may reasonably
request) in order to facilitate the sale or distribution of the Registrable
Shares, (ii) use its best efforts to register or qualify such Registrable Shares
under the blue sky laws (to the extent applicable) of such jurisdiction or
jurisdictions as the Investors, or their permitted transferees, of any such
Registrable Shares and each underwriter of Registrable Shares being sold by
Investors, or their permitted transferees, shall reasonably request, and (iii)
take such other actions as may be reasonably necessary or advisable to enable
such Investors, or their permitted transferees, and such underwriters to
consummate the sale or distribution in such jurisdiction or jurisdictions in
which such Investors, or their permitted transferees, shall have reasonably
requested that the Registrable Shares be sold.
(c) The parties hereto, hereby acknowledge and agree that the registration
rights granted to the Investors pursuant to Section 3 of this Agreement are
subordinate to the "piggyback" registration rights of Third World Investments,
Ltd. ("Third World") granted by the Company to Third World pursuant to that
certain Warrant for the Purchase of Shares of Common Stock, issued on May 21,
1996, for 500,000 shares, by the Company to Third World.
4. Expenses of Registration. The Company shall bear all Registration
------------------------
Expenses incurred in connection with any registration, qualification or
compliance of the Registrable Shares pursuant to this Agreement. All Selling
Expenses shall be borne by the holders of the securities so registered pro rata
on the basis of the number of their shares so registered.
5. Registration Procedures. Pursuant to this Agreement, the Company will
-----------------------
keep each holder of Registrable Shares advised in writing as to the initiation
of a registration under this Agreement and as to the completion thereof. At its
expense, the Company will:
(a) Use reasonable efforts to keep such registration effective for a
period of one hundred eighty (180) days or until the holder or holders of
Registrable Shares have completed the distribution described in the registration
statement relating thereto or until the securities registered cease to be
Registrable Shares, whichever first occurs;
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of securities
covered by such registration statement; and
7
<PAGE>
(c) Furnish such number of prospectuses and other documents incidental
thereto, including any amendment of or supplement to the prospectus, as a holder
of Registrable Shares from time to time may reasonably request.
6. Indemnification.
---------------
(a) The Company will indemnify each holder of Registrable Shares, each
of its officers, directors and each person controlling such holder of
Registrable Shares, with respect to which registration has been effected
pursuant to this Agreement, and each underwriter, if any, and each person who
controls any underwriter, and their respective counsel against all claims,
losses, damages and liabilities (or actions, proceedings or settlements in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus, or other
document incident to any such registration, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by the
Company of the Securities Act or any rule or regulation thereunder applicable to
the Company in connection with any such registration and will reimburse each
such holder of Registrable Shares, each of its officers, directors and partners,
and each person controlling such holder of Registrable Shares, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses as they are reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or action,
provided, however, that the indemnity contained in this Section 6(a) shall not
apply to amounts paid in settlement of any such claim, loss, damage, liability
or action if such settlement is effected without the consent of the Company; and
provided further that the Company shall not be liable in any such case to the
extent that any such claim, loss, damage, liability or expense arises out of or
is based on any untrue statement or omission based upon written information
furnished to the Company by such holder of Registrable Shares or underwriter and
stated to be specifically for use therein. The foregoing indemnity agreement is
further subject to the condition that insofar as it relates to any untrue
statement, alleged untrue statement, omission or alleged omission made in a
preliminary prospectus, such indemnity agreement shall not inure to the benefit
of the foregoing indemnified parties if copies of a final prospectus correcting
the misstatement, or alleged misstatement, omission or alleged omission upon
which such loss, liability, claim or damage is based is timely delivered to such
indemnified party and a copy thereof was not furnished to the person asserting
the loss, liability, claim or damage.
(b) Each holder of Registrable Shares, severally and not jointly,
will, if Registrable Shares held by it are included in the securities as to
which such registration is being effected, indemnify the Company, each of its
directors and officers and each underwriter, if any, of the Company's securities
covered by such a registration statement, each person who controls the Company
or such underwriter within the meaning of the Securities Act and the rules and
regulations thereunder, each other such holder of Registrable Shares and each of
its officers, directors and partners, and each person controlling such holder of
Registrable Shares, and their respective counsel against all claims, losses,
damages and liabilities (or actions, proceedings or settlements in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact relating to such holder contained in any such
registration statement, prospectus, offering circular or other document, or any
omission (or alleged omission) to state therein a material fact required to be
stated therein relating to such holder or necessary to make the statements
therein relating to such holder not misleading or any violation by such holder
of any rule or regulation promulgated under the Securities Act applicable to
such holder and relating to action or inaction required of such holder in
connection with any such registration; and will reimburse the Company, such
holders of Registrable Shares, directors, officers, partners, persons,
underwriters or control persons for any legal or any other expense reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) relating to such holder is made in such registration statement,
8
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prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by such holder of
Registrable Shares and stated to be specifically for use therein; provided,
however, that such indemnification obligations shall not apply if the Company
modifies or changes to a material extent written information furnished by such
holder; provided, further, that the obligation of any holder of Registrable
Shares to indemnify the Company under the provisions of this Section 6(b) shall
be limited to the product of the number of Registrable Shares being sold by the
selling holder and the market price of the Common Stock on the date of the sale
to the public of these Registrable Shares.
(c) Each party entitled to indemnification under this Section 6 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld or delayed), and the Indemnified Party may participate
in such defense at such Indemnified Party's expense. No Indemnifying Party, in
the defense of any such claim or litigation, shall except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation. Each Indemnified Party shall
furnish such information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall be reasonably
required in connection with defense of such claim and litigation resulting
therefrom.
7. Information By Holder of Registrable Shares. Each holder of
-------------------------------------------
Registrable Shares shall furnish to the Company such information regarding such
holder of Registrable Shares and the distribution proposed by such holder of
Registrable Shares as the Company may reasonably request in writing and as shall
be reasonably required in connection with any registration referred to in this
Agreement.
9
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8. Miscellaneous.
-------------
8.1 Governing Law. This agreement shall be governed by and construed
-------------
in accordance with the laws of the State of New York without giving effect to
conflict of laws.
8.2 Successors and Assigns. Except as otherwise provided herein, the
----------------------
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
8.3 Entire Agreement. This Agreement constitutes the full and entire
----------------
understanding and agreement between the parties with regard to the subject
matter hereof.
8.4 Notices. etc. All notices and other communications required or
------------
permitted hereunder shall be in writing and shall be mailed by first-class mail,
postage prepaid, or delivered by hand or by messenger or courier delivery
service, addressed (a) if to Clark, at 30 Wall Street, 9/th/ Floor, New York,
New York 10005, Attention: Kevin Moore, or at such other address as such
Investor shall have furnished to the Company in writing, (b) if to RBB, at
Burgring 16, 8010 Graz, Austria, Attention: Herbert Strauss, or at such other
address as such Investor shall have furnished to the Company in writing, or (c)
if to the Company, at 13000 Sawgrass Village Circle, Suite 30, Ponte Vedra
Beach, Florida 32082, Attention: President, or at such other address as the
Company shall have furnished to each Investor and each such other holder in
writing.
8.5 Delays or Omissions. No delay or omission to exercise any right,
-------------------
power or remedy accruing to any holder of any Registrable Shares, upon any
breach or default of the Company under this Agreement, shall impair any such
right, power or remedy of such holder nor shall it be construed to be a waiver
of any such breach or default, or an acquiescence therein, or of or in any
similar breach or default thereunder occurring, nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any holder of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions of
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement, a by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
8.6 Counterparts. This agreement may be executed in any number of
------------
counterparts, each of which may be executed by less than all of the parties
hereto, each of which shall be enforceable against the parties actually
executing such counterparts and all of which together shall constitute one
instrument.
8.7 Severability. In the case any provision of this Agreement shall
------------
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
8.8 Amendments. The provisions of this Agreement may be amended at
----------
any time and from time to time, and particular provisions of this Agreement may
be waived, with and
10
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only with an agreement or consent in writing signed by the Company and by the
Investors currently holding fifty percent (50%) of the Registrable Shares as of
the date of such amendment or waiver.
[Signature page follows, remainder of page intentionally blank]
11
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IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be executed as of the date first above written.
COMPANY: GOLF-TECHNOLOGY HOLDING, INC.
By: /S/ HAROLD E. HUTCHINS
----------------------
Name: Harold E. Hutchins
Title: Vice President, Chief Financial Officer,
Chief Operating Officer, and Secretary
INVESTORS: CLARK PARTNERS III, L.P.
By: Ninth Floor Corp.
its general partner
By: /S/ KEVIN MOORE
-------------------------
Name: Kevin Moore
Title: Vice President
RBB BANK AKTIENGESELLSCHAFT
By: /S/ HERBERT STRAUSS
----------------------
Name: Herbert Strauss
Title: Head Trader
