STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT dated as of October 21, 1996 between TEARDROP GOLF
COMPANY, a Delaware corporation (the "Company") and XXXX X. XXXXXXX (hereinafter
referred to as the "Optionee").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue stock options (the "Options") to
Optionee to purchase 250,000 shares (the "Shares") of Common Stock of the
Company, $.01 par value per share (the "Common Stock"); and
NOW, THEREFORE, in consideration of the agreements herein set forth and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Grant. The Optionee is hereby granted the right to purchase, at any
time from October 21, 1996 until October 20, 2001 at 5:00 p.m., New York time
(the "Option Exercise Term"), 250,000 Shares at an initial exercise price
(subject to adjustment as provided in Article 7 hereof) of $4.50 per Share.
2. Option Certificate. An option certificate (the "Option Certificate")
shall be delivered to Optionee pursuant to this Agreement in the form set forth
in Exhibit A attached hereto and made a part hereof, with such appropriate
insertions, omissions, substitutions and other variations as required or
permitted by this Agreement
3. Exercise of Options. The Options are exercisable at a price of $4.50
per share of Common Stock payable in cash or by certified check to the order of
the Company, subject to adjustment as provided in Article 7 hereof. Upon
surrender of the Option Certificate with the Form of Election, attached hereto
as Exhibit B, duly executed, together with payment of the Exercise Price (as
hereinafter defined) for the Shares at the Company's principal executive
offices, the registered holder of the Option Certificate ("Holder") shall be
entitled to receive a certificate or certificates for the Shares so purchased.
The purchase rights represented by each Option Certificate are exercisable at
the option of the Holder hereof, in whole or in part (but not as to fractional
Shares). In the case of the purchase of less than all the Shares, the Company
shall cancel said Option Certificate upon the surrender thereof and shall
execute and deliver a new Option Certificate of like tenor for the balance of
the Shares.
4. Issuance of Certificates. Upon the exercise of the Options, the
issuance of certificates for the Shares purchased shall be made forthwith (and
in any event within three business days thereafter) without charge to the Holder
thereof including, and such certificates shall (subject to the provisions of
Article 5 hereof) be issued in the name of, or in such names as may be directed
by, the Holder thereof; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the issuance
and delivery of any such certificates and the Company shall not be required to
issue or deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.
The Option Certificate and the certificates representing the Shares
shall be executed on behalf of the Company by the manual or facsimile signature
of the present or any future Chairman or Vice Chairman of the Board of Directors
or President or Vice President of the Company under its corporate seal
reproduced thereon, attested to by the manual or facsimile signature of the
present or any future Secretary or Assistant Secretary of the Company.
Upon exercise, in part or in whole, of the Options, certificates
representing the Shares purchased (collectively, the "Option Securities"), shall
bear a legend substantially similar to the following:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"),
and may not be offered or sold except (i) pursuant to an effective
registration statement under the Act, (ii) to the extent applicable,
pursuant to Rule 144 under the Act (or any similar rule under such
Act relating to the disposition of securities), or (iii) upon the
delivery by the holder to the Company of an opinion of counsel,
reasonably satisfactory to counsel to the Company, stating that an
exemption from registration under such Act is available."
5. Restriction on Transfer of Options. The Holder of the Option
Certificate, by its acceptance thereof, covenants and agrees that the Options
are being acquired as an investment and not with a view to the distribution
thereof.
6. Price.
6.1. Initial and Adjusted Exercise Price. The initial exercise price
of each Option shall be $4.50 per Share. The adjusted exercise price shall be
the price which shall result from time to time from any and all adjustments of
the initial exercise price in accordance with the provisions of Article 7
hereof.
6.2. Exercise Price. The term "Exercise Price" herein shall mean the
initial exercise price or the adjusted exercise price, depending upon the
context.
7. Adjustments of Exercise Price and Number of Securities. The following
adjustments apply to the Exercise Price of the Options with respect to the
Shares and the number of Shares purchasable upon exercise of the Options. In the
event the Exercise Price per Share and/or the number of Shares so purchasable is
adjusted, then the Exercise Price of the Options shall be adjusted in the same
proportion.
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7.1. Computation of Adjusted Price. In case the Company shall at any
time after the date hereof pay a dividend in shares of Common Stock or make a
distribution in shares of Common Stock, then upon such dividend or distribution
the Exercise Price in effect immediately prior to such dividend or distribution
shall forthwith be reduced to a price determined by dividing:
(a) an amount equal to the total number of shares of Common
Stock outstanding immediately prior to such dividend or distribution multiplied
by the Exercise Price in effect immediately prior to such dividend or
distribution, by
(b) the total number of shares of Common Stock outstanding
immediately after such issuance or sale.
For the purposes of any computation to be made in accordance
with the provisions of this Section 7.1, the Common Stock issuable by way of
dividend or other distribution on any stock of the Company shall be deemed to
have been issued immediately after the opening of business on the date following
the date fixed for the determination of stockholders entitled to receive such
dividend or other distribution.
7.2. Subdivision and Combination. In case the Company shall at any
time subdivide or combine the outstanding shares of Common Stock, the Exercise
Price shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.
7.3. Adjustment in Number of Securities. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Article 7, the number of
Shares issuable upon the exercise of each Option shall be adjusted to the
nearest full number by multiplying a number equal to the Exercise Price in
effect immediately prior to such adjustment by the number of Shares issuable
upon exercise of the Options immediately prior to such adjustment and dividing
the product so obtained by the adjusted Exercise Price.
7.4. Reclassification, Consolidation, Merger, etc. In case of any
reclassification or change of the outstanding shares of Common Stock (other than
a change in par value to no par value, or from no par value to par value, or as
a result of a subdivision or combination), or in the case of any consolidation
of the Company with, or merger of the Company into, another corporation (other
than a consolidation or merger in which the Company is the surviving corporation
and which does not result in any reclassification or change of the outstanding
shares of Common Stock, except a change as a result of a subdivision or
combination of such shares or a change in par value, as aforesaid), or in the
case of a sale or conveyance to another corporation of the property of the
Company as an entirety, the Holder shall thereafter have the right to purchase
the kind and number of shares of stock and other securities and property
receivable upon such reclassification, change, consolidation, merger, sale or
conveyance as if the Holder were the owners of the Shares immediately prior to
any such events, at a price equal to the product of (x) the number of shares of
Common Stock issuable upon exercise of the Holder's Options and (y) the Exercise
Price in effect immediately prior to the record date for such reclassification,
change, consolidation, merger, sale or conveyance as if such Holder had
exercised the Options.
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7.5. Determination of Outstanding Shares of Common Stock. The number
of shares of Common Stock at any one time outstanding shall include the
aggregate number of shares issued or issuable upon the exercise of options,
rights and upon the conversion or exchange of convertible or exchangeable
securities.
8. Replacement of Option Certificates. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of any Option Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of the Option, if mutilated, the Company will
make and deliver a new Option Certificate of like tenor, in lieu thereof.
9. Elimination of Fractional Interests.
The Company shall not be required to issue certificates representing
fractions of Shares upon the exercise of the Option, nor shall it be required to
issue scrip or pay cash in lieu of fractional interests, it being the intent of
the parties that all fractional interests shall be eliminated by rounding any
fraction up to the nearest whole number of Shares.
10. Reservation of Securities.
The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon the
exercise of the Option, such number of shares of Common Stock as shall be
issuable upon the exercise thereof. The Company covenants and agrees that, upon
exercise of the Options and payment of the Exercise Price therefor, all Shares
issuable upon such exercise shall be duly and validly issued, fully paid,
non-assessable and not subject to the preemptive rights of any shareholder.
11. Rights of Option Holder.
Nothing contained in this Agreement shall be construed as conferring
upon the Holder the right to vote or to consent or to receive notice as a
shareholder in respect of any meetings of shareholders for the election of
directors or any other matter, or as having any rights whatsoever as a
shareholder of the Company.
12. Notices.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly made when delivered,
or mailed by registered or certified mail, return receipt requested:
(a) If to Optionee, to the address of the Optionee as shown on the
books of the Company; or
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(b) If to the Company, to the address of the Company's principal
executive officers or such address as the Company may designate.
13. Supplements and Amendments.
The Company and the Optionee may from time to time supplement or
amend this Option Agreement without the approval of any Holder of the Option
Certificate in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any
provisions herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company and the Optionee may deem
necessary or desirable and which the Company and the Optionee deem not to
adversely affect the interests of the Holder of the Option Certificate.
14. Successors.
All the covenants and provisions of this Agreement by or for the
benefit of the Company and the Optionee inure to the benefit of their respective
successors and assigns hereunder.
15. Governing Law.
This Agreement and each Option Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Delaware and for all
purposes shall be construed in accordance with the laws of said State.
16. Counterparts.
This Agreement may be executed in any number of counterparts and
each of such counterparts shall for all purposes be deemed to be an original,
and such counterparts shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
TEARDROP GOLF COMPANY
By: /s/ Xxxx Xxxxxxx
------------------------------
Name: Xxxx Xxxxxxx
Title:
OPTIONEE
/s/ Xxxx X. Xxxxxxx
-------------------
Xxxx X. Xxxxxxx
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EXHIBIT A
__________ Shares
THE SECURITIES ISSUABLE UPON EXERCISE OF STOCK OPTIONS ISSUED PURSUANT TO
THE STOCK OPTION AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT
APPLICABLE, PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH
ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY
THE HOLDER TO THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO
COUNSEL FOR THE COMPANY, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH
ACT IS AVAILABLE.
TEARDROP GOLF COMPANY
Stock Option Certificate
TearDrop Golf Company (the "Company"), a Delaware Corporation, hereby
grants to the person named below an option to purchase shares of Common Stock,
par value $.01 per share, of the Company (the "Option") under and subject to the
Stock Option Agreement between the Company and ______________ (the "Agreement")
exercisable on the following terms and conditions and those set forth in
connection with this certificate:
Name of Optionee:
---------------------------------------------------------
Address:
---------------------------------------------------------
---------------------------------------------------------
Social Security No.:
---------------------------------------------------------
Number of Shares:
---------------------------------------------------------
Option Price:
---------------------------------------------------------
Date of Grant:
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Exercisability Schedule
-----------------------
Exercise Period
---------------
Number of Shares Subject to Option Commencement Expiration Date
---------------------------------- ------------ ---------------
Date
----
The Option shall not be treated as an Incentive Stock Option under section
422 of the Internal Revenue Code of 1986, as amended. By acceptance of this
Option, the Optionee agrees to the terms and conditions hereof.
TEARDROP GOLF COMPANY
Stock Option Terms And Conditions
1. Agreement Incorporated by Reference. This Option is issued pursuant to
the terms of the Stock Option Agreement (the "Agreemenet) between TearDrop Golf
Company, a Delaware corporation (the "Company) and Xxxx X. Xxxxxxx. Capitalized
terms used and not otherwise defined in this certificate have the meanings given
to them in the Agreement. This certificate does not set forth all of the terms
and conditions of the Agreement, which are incorporated herein by reference.
2. Option Price. The price to be paid for each share of Common Stock
issued upon exercise of the whole or any part of this Option is the Option Price
set forth on the face of this certificate.
3. Exercisability Schedule. This Option may be exercised at any time and
from time to time for the number of shares and in accordance with the Agreement.
This Option may not be exercised as to any shares after the Expiration Date.
4. Method of Exercise. To exercise this Option, the Optionholder shall
deliver written notice of exercise to the President of the Company specifying
the number of shares with respect to which the Option is being exercised
accompanied by payment of the Option Price for such shares in cash or by
certified check. Promptly following such notice, the Company will deliver to the
Optionee a certificate representing the number of shares with respect to which
the Option is being exercised.
5. Rights as a Stockholder. The Optionee shall not have any rights as a
stockholder of the Company in respect of shares as to which the Option shall not
have been exercised and payment made as provided above.
6. Recapitalization, Mergers, Etc. As provided in the Agreement, in the
event of certain corporate transactions affecting the Company's outstanding
Common Stock, the number and kind of shares subject to this Option and the
exercise price hereunder Committee shall be adjusted.
7. Compliance with Securities Laws. It shall be a condition to the
Optionee's right to purchase shares of Common Stock hereunder that the Company
may, in its discretion, require (a) in the opinion of counsel for the Company,
the proposed purchase shall be exempt from registration under that Act and the
Optionee shall have made such undertakings and agreements with the Company as
the Company may reasonably require, and (b) that such other steps, if any, as
counsel for the Company shall consider necessary to comply with any law
applicable to the issue of such shares by the Company shall have been taken by
the Company or the Optionee, or both. The certificates representing the shares
purchased under this Option may contain such legends as counsel for the Company
shall consider necessary to comply with any applicable law.
8. Payment of Taxes. The Optionee shall pay to the Company, or make
provision satisfactory to the Company for payment of, any taxes required by law
with respect to the exercise of this Option.
TEARDROP GOLF COMPANY
By: /s/ Xxxx Xxxxxxx
------------------------
ACCEPTED:
/s/ Xxxx X. Xxxxxxx
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EXHIBIT B
FORM OF ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise the right,
represented by this Option Certificate, to purchase _________ Shares of Common
Stock and herewith tenders in payment for such securities, cash or a certified
or official bank check payable to the order of TearDrop Golf Company in the
amount of $_____________, all in accordance with the terms of that Stock Option
Agreement dated as of ____________. The undersigned requests that a certificate
for such securities be registered in the name of _________________________,
whose address is _________________________________.
Date: Signature:
-------------------------------*
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(Insert Social Security or Other
Identifying Number of Holder)
* Signature must conform in all respects to
name of holder as specified on the face of
the Option Certificate.
