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Exhibit 4.2(e)  

 
 

SECURITY AGREEMENT    
  

        2nd Swing, Inc., a Minnesota corporation ("Debtor"), whose address is 16305
36th Avenue North, Suite 550, Plymouth in the County of Hennepin, State of Minnesota 55446 (hereinafter called "Debtor" whether one or
more) does hereby grant unto David R. Pomije ("Secured Party") a security interest in the following (noted by a checkmark) described property
(hereinafter called "Collateral"): 

	ý	 	a.	 	All inventory of Debtor now owned or hereafter acquired which is held for sale or lease or is held as raw materials, work in process or materials used in connection with Debtor's business;
	

 	
 	

 	
 	

 
	ý	 	b.	 	All accounts of Debtor now existing or hereafter at any time acquired (and if specific accounts the same are listed on Schedule A hereto attached and made a part hereof);
	

 	
 	

 	
 	

 
	ý	 	c.	 	All contract rights and general intangibles of Debtor now existing or hereafter at any time arising;
	

 	
 	

 	
 	

 
	ý	 	d.	 	Other; Debtor's interest as a tenant in real estate leases, Debtor's interest as an equipment lessee in financed equipment leases, goods, instruments, documents of title, chattel paper, accounts receivable, investment
property, accounts, service marks, trademarks, trade names, general intangibles, payment intangibles, money, products, proceeds, and any and all other assets or property, whether tangible or intangible, now owned or hereafter acquired and wherever
located by the Debtor.
	

 	
 	

 	
 	

 
	ý	 	e.	 	All proceeds and products of the foregoing;

to
secure prompt payment to Secured Party at the address stated above of a note or notes dated April 2, 2000, executed by Debtor to Secured Party in the sum not to exceed Three Million Five
Hundred Thousand Dollars ($3,500,000), with interest as provided therein, and any and all extensions and renewals thereof, and any and all future advances made by Secured Party to Debtor at Secured
Party's option, together with all other liabilities of each Debtor to Secured Party (primarily, secondarily, direct, contingent, sole, joint or several) due or to become due or which may be hereafter
contracted or acquired and the performance by Debtor of all of the terms and conditions of this Security Agreement (hereinafter referred to as
"Obligations"). 

DEBTOR WARRANTS, REPRESENTS AND AGREES THAT (check each that applies):  

	ý	 	1.	 	Debtor is the owner of the Collateral, or will be the owner of the Collateral to be acquired after the date hereof, free of all liens, encumbrances and security interests, filed or not filed, except the security interest
hereby created, and has authority to execute this agreement.
	

ý	
 	

2.	
 	

The accounts are genuine and enforceable, and there are no offsets, counterclaims or defenses to any of them.
	

ý	
 	

3.	
 	

Debtor's inventory, books, records, contract rights and other property above specified relating to the Collateral are or will be kept at the above address and the address as shown in the following space: See Exhibit A for
addresses of stores and Debtor will not, without the prior written consent of Secured Party, remove or permit the same to be removed from the location or locations set forth above.
	

ý	
 	

4.	
 	

Debtor has full authority to use the collateral as collateral. Debtor will defend the Collateral against all other entities who, at any time, may claim an interest therein.
	
 	
 	

 	
 	

 

 

	

ý	
 	

5.	
 	

During the course of this Agreement, and as long as any obligation subject to this Agreement remains outstanding, Debtor will not grant a security interest in the Collateral, except as already granted, to any other person or entity without the prior
written consent of Secured Party and all other partners, shareholders or other entities whose consent may be required.
	

ý	
 	

6.	
 	

During the course of this Agreement, Debtor will keep the Collateral free from any and all liens, claims and encumbrances.
	

ý	
 	

7.	
 	

Debtor will not sell, offer for sale, transfer or dispose of all or any part of the Collateral, or any interest in the Collateral, without the prior written consent of Secured Party and all other partners, shareholders or other entities whose consent
is required, except in the ordinary course of business.
	

ý	
 	

8.	
 	

To pay all amounts required to be paid by Debtor pursuant to any articles of partnership, shareholder control agreement and/or any other instrument or agreement, as same may have been restated and/or amended, when said obligations are due and, should
Debtor fail to do so, Secured Party may, at Secured Party's sole option (and without any obligation to so do), pay or discharge the same. Any such payment by Secured Party shall become an obligation of Debtor and be secured by the Collateral subject
to this Agreement.
	

o	
 	

9.	
 	

At all times during the course of this Agreement, Debtor will honor and perform by the terms and conditions of any articles of partnership, shareholder control agreement and/or any other instrument or agreement and all restatements and amendments
thereto.
	

ý	
 	

10.	
 	

Debtor will use the inventory in a lawful manner consistent with this Agreement and with the terms and conditions of any policy of insurance thereon.
	

ý	
 	

11.	
 	

Debtor will keep the Collateral insured at all times against loss by fire and/or other hazards concerning which in the judgment of the Secured Party insurance protection is reasonably necessary in a company or companies satisfactory to the Secured
Party and in amounts sufficient to protect Secured Party against loss or damage to said Collateral and will pay the premiums therefor; that such policy or policies of insurance will be delivered to and held by the Secured Party, together with loss
payable clauses in favor of the Secured Party as its interest may appear, in form satisfactory to the Secured Party; and Secured Party may act as attorney for Debtor in obtaining, adjusting, settling and canceling such insurance and endorsing any
drafts.
	

ý	
 	

12.	
 	

Debtor will at any time or times hereafter execute such financing statements and other instruments and perform such acts as the Secured Party may request to establish and maintain a valid security interest in the Collateral, and will pay all costs of
filing and recording.
	

ý	
 	

13.	
 	

Until Secured Party shall notify Debtor of the revocation of such power and authority, Debtor will, at its own expense, endeavor to collect, as and when due, all of said accounts, including the taking of such action with respect to such collection or
the repossession of the goods as Debtor may deem advisable or as Secured Party may reasonably request. Debtor will forthwith deliver all proceeds of such collections and all repossessed or returned goods to Secured Party at its request; provided
Debtor will, on demand, pay to Secured Party the full unpaid contract price of repossessed goods or the invoice value of returned goods.
	

o	
 	

14.	
 	

Debtor will not compromise any of said accounts without the prior written consent of Secured Party.
	
 	
 	

 	
 	

 

2

 

	

ý	
 	

15.	
 	

Debtor will at all times keep accurate and complete records of the Collateral and permit Secured Party to inspect same and the Collateral at all reasonable times. Debtor will, upon request of Secured Party, furnish to Secured Party such reports and
statements as Secured Party may request with respect to the Collateral.
	

o	
 	

16.	
 	

Secured Party may notify account debtors of Secured Party's security interest, and that payment of all sums due or to become due shall be paid directly to Secured Party, and upon request of Secured Party, Debtor will notify account debtors of such
security interest. Secured Party shall have the power to demand, receive and sue for all moneys or other proceeds due from said accounts, to endorse the name of Debtor on all commercial paper given in payment or part payment thereof, and to settle,
adjust or compromise any claims or disputes as to said accounts.
	

ý	
 	

17.	
 	

Debtor will keep and maintain the Collateral in good condition and will not sell, lease or otherwise dispose of the Collateral other than in the ordinary course of its business at prices constituting the then fair market value thereof.
	

ý	
 	

18.	
 	

Debtor shall be in default under this Agreement upon the happening of any of the following events: (a) nonpayment, when due, of any amount payable on any of the Obligations or failure to observe or perform any term hereof; (b) if any covenant,
warranty or representation shall prove to be untrue in any material respect; (c) Debtor becomes insolvent or unable to pay debts as they mature or makes an assignment for the (d) entry of judgment against Debtor; (e) death of Debtor who is a natural
person or of any partner of any Debtor which is a partnership; (f) dissolution, merger or consolidation, or transfer of a substantial part of the property of any Debtor which is a corporation or a partnership; (g) if Secured Party deems itself
insecure for any reason; or (h) as Event of Default as defined in the Note above referenced.
	

ý	
 	

19.	
 	

In the event of a default: (a) Secured Party shall have the right, at its option and without demand or notice, to declare all or any part of the Obligations immediately due and payable; (b) Secured Party may exercise, in addition to the rights and
remedies granted hereby, all of the rights and remedies of a Secured Party under the Uniform Commercial Code or any other applicable law; (c) Secured Party may effect all necessary insurance, pay the premiums thereon, and may pay any taxes, liens and
encumbrances on the Collateral, and any such payments made by Secured Party with interest at the highest legal rate allowed by law shall be a part of the Obligations; (d) Debtor agrees to make the Collateral available to the Secured Party at a place
or places acceptable to the Secured Party; and (e) Debtor agrees to pay all costs and expenses of Secured Party, including reasonable attorneys' fees, in the collection of any of the Obligations or the enforcement of any of Secured Party's
rights.
	

ý	
 	

20.	
 	

If any notification of intended disposition of any of the Collateral is required by law, such notification shall be deemed reasonably and properly given if mailed at least ten (10) days before such disposition, postage prepaid, addressed to the
Debtor at the address shown herein.
	

ý	
 	

21.	
 	

Waiver of any default hereunder by Secured Party shall not be waiver of any other default or of a same default on a later occasion. No delay or failure by Secured Party to exercise any right or remedy shall be a waiver of such right or remedy and no
single or partial exercise by Secured Party of any right or remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy at any other time.
	
 	
 	

 	
 	

 

3

 

	

ý	
 	

22.	
 	

This Agreement and all rights and obligations hereunder, including matters of construction, validity and performance, shall be governed by the laws of Minnesota. If any part of this contract shall be adjudged invalid, the remainder shall not thereby
be invalidated.
	

o	
 	

23.	
 	

If more than one party of this contract shall sign this Security Agreement, the term "Debtor" shall mean all such parties and each of them and all such parties shall be jointly and severally obligated
hereunder. All rights of Secured Party shall inure to the benefit of the Secured Party's successors and assigns, and all obligations of Debtor shall bind Debtor's heirs, executors, administrators, successors and assigns.
	

ý	
 	

24.	
 	

Additional provisions of this Agreement: this security interest is subordinate to the prior secured interest of Marquette Capital Bank, N.A., a national banking association, as evidenced under its financing statement, dated December 22, 1997, filed
with the Minnesota Secretary of State as Doc. No. 1998085.

Dated
this 2nd day of April, 2000. 

	 	 	SECURED PARTY
	

 	
 	

 	
 	

 
	 	 	
 David R. Pomije
	

 	
 	

 	
 	

 
	 	 	DEBTOR
	

 	
 	

 	
 	

 
	 	 	2nd Swing, Inc., a Minnesota corporation
	

 	
 	

 	
 	

 
	 	 	By:	 	 
	 	 	 	 	
 P. Simon Kallal

Its President

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Exhibit 4.2(f)  

The securities represented by this certificate have not been registered, under either the Securities Act of 1933, as amended, or applicable state securities laws. They may not
be sold, offered for sale or transferred in the absence of an effective registration under the Securities Act of 1933, as amended, and the applicable state securities laws or an opinion of counsel
satisfactory in form and substance to counsel for the Company that such transaction will not result in a prohibited transaction under the Securities Act of 1933, as amended, or the applicable state
securities laws.

 
 

WARRANT    
    
    TO PURCHASE UP TO 350,000 SHARES OF COMMON STOCK
  OF
  2ND SWING, INC., A MINNESOTA CORPORATION    
  

        THIS CERTIFIES THAT, for good and valuable consideration David R.
Pomije, 801 Tonkawa Road, Long Lake, MN 55356 ("DRP") or assigns, is entitled to subscribe for and purchase from  2nd Swing,
Inc., a Minnesota corporation (the "Company"), at any time on or before ten
(10) years after the date hereof up to Three Hundred Fifty Thousand (350,000) fully paid and nonassessable shares of the Common Stock, $0.01 par value per share
("Warrant Shares"), of the Company at the Warrant Exercise Price (defined below), subject to the antidilution provisions of this Warrant. 

        DRP
is being granted the Warrant Shares in consideration for certain financial accommodations made by DRP for the benefit of the Company pursuant to a Mezzanine Letter Agreement dated
March 31, 2002 incorporated into this Warrant by reference as though fully set forth. 

        The
"Warrant Exercise Price" per share of Common Stock shall be Two and 75/100 Dollars ($2.75). The number of shares subject to this
Warrant and the Warrant Exercise Price shall be adjusted as provided in Section 5 hereof. 

        As
used herein, the term "Holder" means DRP, any party who acquires all or a part of this Warrant as a registered transferee of DRP, or
any record holder or holders of the Warrant Shares issued upon exercise, whether in whole or in part, of the Warrant. The term "Common Stock" means and includes the Company's presently authorized
common stock, par value $0.01 per share. 

        This
Warrant is subject to the following provisions, terms and conditions: 

        1.    Exercise; Transferability.    

	1.1
	Exercise. The rights represented by this Warrant may be exercised by the Holder hereof, in whole or in part (but not as to a fractional
share of Common Stock), by written notice of exercise (in the form attached hereto) delivered to the Company at the principal office of the Company prior to the expiration of this Warrant and
accompanied or preceded by the surrender of this Warrant along with a check in payment of the Warrant Exercise Price for such shares.

	1.2
	Conversion. In lieu of exercising this Warrant, the Holder may elect to receive shares of Common Stock equal to the value of this
Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company, together with notice of such election, in which event the Company shall issue to
the Holder a number of shares of the Company's Common Stock equal to the quotient obtained by dividing (i) the value of the portion of this Warrant being surrendered (determined by subtracting
the aggregate Warrant Exercise Price for such portion immediately prior to surrender from the aggregate Fair Market Value (as hereinafter defined) of the shares of Common Stock for which this Warrant
is being surrendered), by (ii) the Fair Market Value of one share of Common Stock immediately prior to surrender. 

For
purposes of this Section, the "Fair Market Value" of the Company's Common Stock shall mean the average of the closing bid and asked prices of the
Company's Common 

 

Stock quoted on the Nasdaq Stock Market or the closing price quoted on any exchange on which the Common Stock is listed, whichever is applicable, as published in The Wall
Street Journal, for the ten trading days immediately prior to the date of determination of Fair Market Value. If the Common Stock is not quoted on the Nasdaq Stock Market or on
an exchange, the Fair Market Value shall be the price per share which the Company could obtain from a willing buyer for shares sold by the Company from authorized but unissued shares, as such price
shall be agreed by the Company and the Holder, but in any event not less than Two and 75/100 Dollars ($2.75) per share. 

	1.3
	Transfer. This Warrant may be assigned, sold, transferred, or divided into two or more Warrants of smaller denominations to assignees
who are accredited investors as defined in the federal securities regulations. The Warrant and any Warrant Shares issued pursuant to exercise of this Warrant may be transferred only as provided in
Section 7 hereof, and the Warrant may not be hypothecated. 

        2.    Exchange and Replacement.    Subject to Sections 1 and 7 hereof, this Warrant is exchangeable upon the surrender
hereof by the Holder to the Company at its office for new Warrants of like tenor and date representing in the aggregate the right to purchase the number of Warrant Shares purchasable hereunder, each
of such new Warrants to represent the right to purchase such number of Warrant Shares (not to exceed the aggregate total number purchasable hereunder) as shall be designated by the Holder at the time
of such surrender. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction, or mutilation of this Warrant, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to it, and upon surrender and cancellation of this Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor, in lieu of this
Warrant. This Warrant shall be promptly canceled by the Company upon the surrender hereof in connection with any exchange or replacement. The Company shall pay customary expenses (but not stock
transfer taxes or any other taxes), payable in connection with the preparation, execution, and delivery of Warrants pursuant to this Section 2. 

        3.    Issuance of the Warrant Shares.    

	3.1
	Issuance. The Company agrees that the shares of Common Stock purchased hereby shall be and are deemed to be issued to the Holder as of
the close of business on the date on which this Warrant shall have been surrendered and the payment made for such Warrant Shares as aforesaid. Subject to the provisions of the next section,
certificates for the Warrant Shares so purchased shall be delivered to the Holder within a reasonable time, not exceeding fifteen (15) days after the rights represented by this Warrant shall
have been so exercised, and, unless this Warrant has expired, a new Warrant representing the right to purchase the number of Warrant Shares, if any, with respect to which this Warrant shall not then
have been exercised shall also be delivered to the Holder within such time. All Warrant Shares that may be issued upon the exercise of the rights represented by this Warrant will, upon exercise, be
fully paid and nonassessable and free from liens and charges with respect to the issue thereof.

	3.2
	Delivery. Notwithstanding the foregoing, however, the Company shall not be required to deliver any certificate for Warrant Shares upon
exercise of this Warrant except in accordance with exemptions from the applicable securities registration requirements or registrations under applicable securities laws. Nothing herein, however, shall
obligate the Company to effect registrations under federal or state securities laws. If registrations are not in effect and if exemptions are not available when the Holder seeks to exercise the
Warrant, the Warrant exercise period will be extended, if need be, to prevent the Warrant from expiring, until such time as either registrations become effective or exemptions are available, and the
Warrant shall then remain exercisable for a period of at least 30 

2

 

calendar days from the date the Company delivers to the Holder written notice of the availability of such registrations or exemptions. The Holder agrees to execute such documents and make such
representations, warranties, and agreements as may be required solely to comply with the exemptions relied upon by the Company, or the registrations made, for the issuance of the Warrant Shares. 

        4.    Covenants of the Company.    The Company covenants and agrees that all Warrant Shares will, upon issuance, be
duly authorized and issued, fully paid, nonassessable, and free from all liens and charges with respect to the issue thereof. The Company further covenants and agrees that during the period within
which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved for the purpose of issue or transfer upon exercise of the subscription rights
evidenced by this Warrant a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant. 

        5.    Antidilution Adjustments.    The provisions of this Warrant are subject to adjustment as provided in this
Section 5. 

	5.1
	Price Adjustment. The Warrant Exercise Price shall be adjusted from time to time such that in case the Company shall hereafter:

	5.1.1
	pay
any dividends on the Common Stock of the Company payable in Common Stock or securities convertible into Common Stock;

	5.1.2
	subdivide
its then outstanding shares of Common Stock into a greater number of shares; or

	5.1.3
	combine
outstanding shares of Common Stock, by reclassification or otherwise; 

then,
in any such event, the Warrant Exercise Price in effect immediately prior to such event shall (until adjusted again pursuant hereto) be adjusted immediately after such event to a price
(calculated to the nearest full cent) determined by dividing (a) the number of shares of Common Stock outstanding immediately prior to such event, multiplied by the then existing Warrant
Exercise Price, by (b) the total number of shares of Common Stock outstanding immediately after such event (including the maximum number of shares of Common Stock issuable in respect of any
securities convertible into Common Stock), and the resulting quotient shall be the adjusted Warrant Exercise Price per share. An adjustment made pursuant to this Section 5.1 shall become
effective immediately after the effective date of the event causing the adjustment. If, as a result of an adjustment made pursuant to this Section 5.1, 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, the Board of Directors (whose determination shall be conclusive)
shall determine the allocation of the adjusted Warrant Exercise Price between or among shares of such classes of capital stock or shares of Common Stock and other capital stock. All calculations under
this Section 5.1 shall be made to the nearest cent or to the nearest 1/100 of
a share, as the case may be. In the event that at any time as a result of an adjustment made pursuant to this Section 5.1, the Holder of any Warrant thereafter surrendered for exercise shall
become entitled to receive any shares of the Company other than shares of Common Stock, thereafter the Warrant Exercise Price of such other shares so receivable upon exercise of any Warrant shall be
subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in this Section. 

	5.2
	Share Adjustment. Upon each adjustment of the Warrant Exercise Price pursuant to Section 5.1 above, the Holder of each Warrant
shall thereafter (until another such adjustment) be entitled to purchase at the adjusted Warrant Exercise Price the number of 

3

 

shares,
calculated to the nearest full share, obtained by multiplying the number of shares specified in such Warrant (as adjusted as a result of all adjustments in the Warrant Exercise Price in
effect prior to such adjustment) by the Warrant Exercise Price in effect prior to such adjustment and dividing the product so obtained by the adjusted Warrant Exercise Price. 

	5.3
	Consolidation or Merger. In case of any consolidation or merger to which the Company is a party or in case of any sale or conveyance to
another corporation 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 corporation (including any
exchange effected in connection with a merger of a third corporation into the Company), there shall be no adjustment under Section 5.1 above but the Holder of each Warrant then outstanding
shall have the right thereafter to exercise such Warrant for the kind and amount of shares of stock and other securities and property such Holder would have owned or have been entitled to receive
immediately after such consolidation, merger, statutory exchange, sale or conveyance had such 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 5 with respect to the
rights and interests thereafter of any Holders of the Warrant, to the end that the provisions set forth in this Section 5 shall thereafter correspondingly be made applicable, as nearly as may
reasonably be, in relation to any shares of stock and other securities and property thereafter deliverable on the exercise of the Warrant. The provisions of this Section 5.3 shall similarly
apply to successive consolidations, mergers, statutory exchanges, sales or conveyances.

	5.4
	Warrant Exercise Price Adjustment. Upon any adjustment of the Warrant Exercise Price, then and in each such case, the Company shall
give written notice thereof, by first-class mail, postage prepaid, addressed to the Holder as shown on the books of the Company, which notice shall state the Warrant Exercise Price resulting from such
adjustment and the increase or decrease, if any, in the number of shares of Common Stock purchasable at such price upon the exercise of this Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based. 

        6.    No Voting Rights.    This Warrant shall not entitle the Holder to any voting rights or other rights as a
shareholder of the Company. 

        7.    Notice of Transfer of Warrant or Resale of the Warrant Shares.    

	7.1
	Notice of Intent to Transfer. Subject to the sale, assignment, hypothecation, or other transfer restrictions set forth in Sections 1.1
and 1.2, the Holder, by acceptance hereof, agrees to give written notice to the Company before transferring this Warrant or transferring any Warrant Shares of such Holder's intention to do so,
describing briefly the manner of any proposed transfer. Promptly upon receiving such written notice, the Company shall present copies thereof to the Company's counsel. If in the opinion of such
counsel the proposed transfer may be effected without registration or qualification (under any federal or state securities laws), the Company, as promptly as practicable, shall notify the Holder of
such opinion, whereupon the Holder shall be entitled to transfer this Warrant or to dispose of Warrant Shares received upon the previous exercise of this Warrant, all in accordance with the terms of
the notice delivered by the Holder to the Company; provided that an appropriate legend may be endorsed on this Warrant or the certificates for such Warrant Shares respecting restrictions upon transfer
thereof necessary or advisable in the opinion of counsel and satisfactory to the Company to prevent further transfers which would be in violation of Section 5 of the Securities Act of 1933, as 

4

 

amended
(the "1933 Act") and applicable state securities laws; and provided further that the prospective transferee or purchaser shall execute such
documents and make such representations, warranties, and agreements as may be required solely to comply with the exemptions relied upon by the Company for the transfer or disposition of the Warrant or
Warrant Shares. The Holder shall pay the reasonable attorneys' fees of such counsel incurred by the Company. 

	7.2
	Opinion of Counsel. If in the opinion of the counsel referred to in this Section 7, the proposed transfer or disposition of this
Warrant or such Warrant Shares described in the written notice given pursuant to this Section 7 may not be effected without registration or qualification of this Warrant or such Warrant Shares,
the Company shall promptly give written notice thereof to the Holder, and the Holder will limit its activities in respect to such as, in the opinion of such counsel, are permitted by law. 

        8.    Fractional Shares.    Fractional shares shall not be issued upon the exercise of this Warrant, but in any case
where the Holder would, except for the provisions of this Section 8, be entitled under the terms hereof to receive a fractional share, the Company shall, upon the exercise of this Warrant for
the largest number of whole shares then called for, pay a sum in cash equal to the sum of (a) the excess, if any, of the Market Price of such fractional share over the proportional part of the
Warrant Exercise Price represented by such fractional share, plus (b) the proportional part of the Warrant Exercise Price represented by such fractional share. For purposes of this
Section 8, the term "Market Price" with respect to shares of Common Stock of any class or series means: 

	8.1
	if
the Company's Common Stock is traded on an exchange or is quoted on the Nasdaq Stock Market, then the average closing or last sale prices, respectively, reported for the ten
(10) business days immediately preceding exercise of the Warrant,

	8.2
	if
the Company's Common Stock is not traded on an exchange or on the Nasdaq Stock Market but is traded on the over-the-counter market, then the average closing
bid and asked prices reported for the ten (10) business days immediately preceding the exercise of the Warrant, and

	8.3
	if
the Company's Common Stock is not traded on an exchange, the Nasdaq Stock Market, or the over-the-counter market, then the price established in good faith
by the Company's Board of Directors. 

        9.    Restriction on Transfer.    Any Warrant Shares issued to DRP shall bear the following legend: 

THE
SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, OFFERED, PLEDGED, OR OTHERWISE
DISTRIBUTED FOR VALUE UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR LAWS COVERING SUCH SECURITY OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THE SECURITY
(CONCURRED TO BY COUNSEL FOR THE COMPANY) STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT, PLEDGE, OR DISTRIBUTION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES
ACT OF 1933 AND ALL APPLICABLE STATE SECURITIES LAWS. 

5

 

        IN WITNESS WHEREOF, 2nd Swing, Inc. has caused this Warrant to be signed by its duly authorized officer and this
Warrant to be dated March 31, 2002. 

	 	 	 	 	2ND SWING, INC.,

A MINNESOTA CORPORATION
	

 	
 	

 	
 	

By:	
 	

/s/  STANLEY A. BODINE      
 Stanley A. Bodine
 Its Chief Executive Officer

5810 Baker Road

Minnetonka, Minnesota 55345l
	Accepted this 31st day of March, 2002.	 	 	 	 
	

By:	
 	

/s/  DAVID R. POMIJE      
 David R. Pomije	
 	

 	
 	

 
	

801 Tonkawa Road

Long Lake, MN 55356	
 	

 	
 	

 

6

 

        To:        2nd
Swing, Inc., a Minnesota corporation 

 
 

NOTICE OF EXERCISE OF WARRANT
  To Be Executed by the Registered Holder in Order to Exercise the Warrant    

        The
undersigned hereby irrevocably elects to exercise the attached Warrant to purchase for cash,                        of the shares
issuable upon the exercise of such Warrant, and requests
that certificates for such shares (together with a new Warrant to purchase the number of shares, if any, with respect to which this Warrant is not exercised) shall be issued in the name of: 

David
R. Pomije* 

Please
insert social security or other identifying number of registered Holder of certificate 

	 	 	
	 	 
	

 	
 	

Address:	
 	

 
	

 	
 	

	
 	

 
	

 	
 	

	
 	

 

Date:
                         

	 	 	By:	 	 
	 	 	 	 	
 David R. Pomije

*The
signature on the Notice of Exercise of Warrant must correspond to the name as written upon the face of the Warrant in every particular without alteration or enlargement or any change whatsoever
or must be accompanied by assignment documents When signing on behalf of a corporation, partnership, trust or other entity, PLEASE indicate your position(s) and title(s) with such entity and reference
the entity above your signature with your position or title noted below your signature. It would also be helpful if you would print (either next to your signature or below your signature} your name as
signed. 

7

 
ASSIGNMENT FORM  

        To be signed upon transfer of Warrants. 

        FOR
VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto                        the right to purchase shares of
Common Stock of 2nd Swing, Inc. to
which the Warrant relates and appoints                        , attorney, to transfer said right on the books of 2nd
Swing, Inc. with full power of substitution in the premises. 

	Date:                         	 	
 Signature*
	

 	
 	

Address:
	

 	
 	

	

 	
 	

	

 	
 	

*The
signature on the Assignment Form must correspond to the name as written upon the face of the Warrant in every particular without alteration or enlargement or any change whatsoever. When signing
on behalf of a corporation, partnership, trust or other entity, PLEASE indicate your position(s) and title(s) with such entity and reference the entity above your signature with your position or title
noted below your signature. It would also be helpful if you would print (either next to your signature or below your signature) your name as signed. 

8

QuickLinks

WARRANT TO PURCHASE UP TO 350,000 SHARES OF COMMON STOCK OF 2ND SWING, INC., A MINNESOTA CORPORATION

NOTICE OF EXERCISE OF WARRANT To Be Executed by the Registered Holder in Order to Exercise the Warrant

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