AGREEMENT
BETWEEN
XXXXX GOLF, LTD.
AND
XXXXXXXX X. FALDO
This Agreement, dated April 22, 1998 (this "Agreement"), is between
Xxxxxxxx X. Faldo, a professional golfer (the "Professional"), and Xxxxx
Golf, Ltd., a Texas limited partnership ("Xxxxx Golf").
WHEREAS, the Professional is recognized and widely known as a highly
skilled professional golfer whose endorsement is of commercial value; and
WHEREAS, Xxxxx Golf and its affiliates are engaged in the design,
manufacture, distribution, advertisement, promotion and sale of golf clubs
and golf-related equipment, and desire to obtain the right to use the name,
likeness, endorsement and consultation services of the Professional in
connection with the advertisement, promotion and sale of the Endorsed
Products;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
ARTICLE I. SUMMARY OF TERMS AND DEFINITIONS
SECTION 1. CONTRACT PERIOD. The "Contract Period" shall commence
on May 1, 1998 and continue until the later to occur of (i) the death of the
Professional or (ii) May 1, 2030.
SECTION 2. CONTRACT TERRITORY. The "Contract Territory" is the
entire world.
SECTION 3. PROFESSIONAL'S ENDORSEMENT. The "Professional's
Endorsement" means all publicity rights belonging to the Professional, and
any words or symbols, photographic, graphic or video representations, or
combinations thereof, which identify the Professional such as, for example,
the Professional's name, initials, voice, likeness, biographical data,
character, image and signature (and all variations of the foregoing).
SECTION 4. ENDORSED PRODUCTS. The "Endorsed Products" means the
following products promoted by Xxxxx Golf or its affiliates using the
Professional's Endorsement: all golf clubs, head covers, golf bags, travel
covers, golf towels, and umbrellas designed, manufactured, promoted or sold
by or for Xxxxx Golf or any subsidiary or affiliate thereof.
SECTION 5. SPECIALLY ENDORSED PRODUCTS. The "Specially Endorsed
Products" means the Tight Lies-Registered Trademark- fairway xxxxx
distributed by Xxxxx Golf with such
AGREEMENT - PAGE 1
specifications that are acceptable to the Professional (to the extent
Professional determines to carry fairway xxxxx in his golf bag), an Xxxxx
Golf golf club bag, and Xxxxx Golf head covers which shall be placed on all
Xxxxx Golf golf clubs. It is understood that Xxxxx Golf will design with the
Professional a full line of additional golf clubs in the future (including
drivers, fairway woods, irons, wedges and putters) which, when acceptable to
Professional, will be carried by the Professional in his golf bag and shall
be "Specially Endorsed Products" for purposes hereof. Each of the
Professional and Xxxxx Golf will use their respective commercially reasonable
best efforts to cause such line of golf clubs to be acceptable to the
Professional.
SECTION 6. REQUIRED TOURNAMENTS. The "Required Tournaments" in
which the Professional shall compete during each calendar year during the
Contract Period, as required by ARTICLE III, SECTION 4a, means at least
eighteen (18) premium worldwide golf events, provided that if during the
Contract Period Professional should commence play on the Senior PGA Tour the
parties will mutually determine a lesser number of Required Tournaments as
appropriate. The Professional shall use his reasonable best efforts to
compete in at least the Required Tournaments. The Professional acknowledges
and agrees that the presumption that the Professional will receive exposure
proportionate to the number of designated tournaments is a material
inducement to Xxxxx Golf to enter into this Agreement. In the event
Professional does not compete in the anticipated number of tournaments other
than as a result of illness or injury, the royalty (including any minimum
royalty) payable to Professional pursuant to ARTICLE II, SECTION 5 shall be
reduced on a prorata basis. In order to facilitate monitoring the number of
Required Tournaments in which the Professional competes, the Professional
shall provide to Xxxxx Golf at the beginning of each tournament season a
tentative schedule of tournaments in which the Professional intends to
compete and shall review with Xxxxx Golf on a quarterly basis the number of
Required Tournaments in which the Professional competed during the previous
calendar quarter.
SECTION 7. PROMOTION ACTIVITIES. The items which the Professional
is required to wear and/or use, as required under ARTICLE III, SECTION 4b,
are visor/headgear with the Xxxxx Golf logo when the Professional wears a
visor or head gear and an Xxxxx Golf umbrella with the Xxxxx Golf logo.
Xxxxx Golf and its affiliates shall have the right to change their respective
trademark(s) or logo(s) from time to time.
SECTION 8. PERMITTED OTHER ENDORSEMENTS. The term "Permitted Other
Endorsements" means all products not competitive with the Endorsed Products.
Permitted Other Endorsements include the following endorsements in effect on
the date hereof: Polygram Video International Limited, Xxxxxxx Publishers,
Florsheim Group, Inc., Ford Motor Company, Marriott Ownership Resorts, Inc.
(subject to ARTICLE III, SECTION 12 hereof), Audemars Piguet, Xxxxxxx of
Scotland Limited and Bridgestone Sports Co., Limited.
AGREEMENT - PAGE 2
SECTION 9. PERSONAL APPEARANCES. The Professional shall make such
personal appearances each calendar year during the Contract Period as may be
mutually agreed upon by the Professional and Xxxxx Golf.
ARTICLE II. COMPENSATION TO PROFESSIONAL
SECTION 1. STOCK. In consideration for entering into the licensing
arrangement described herein, Xxxxx Golf shall cause Xxxxx Golf, Inc. to
issue to the Professional 450,000 shares of Xxxxx Golf, Inc. common stock,
par value $.001 per share ("Xxxxx Stock"). Xxxxx Golf represents and
warrants to Professional that, as of the date hereof, but immediately prior
to the issuance contemplated hereby, there are 9,120,422 shares of Xxxxx
Stock issued and outstanding.
SECTION 2. RESTRICTED SECURITIES; RISKS OF INVESTMENT. Professional
acknowledges and agrees that any investment in Xxxxx Golf, Inc. common stock
involves substantial risks and that Professional or his representative has
had the opportunity to review fully the books, records and financial
statements of Xxxxx Golf, Inc., Xxxxx Golf, and their respective affiliates,
and to ask questions of Xxxxx Golf's management and executive employees.
Professional further acknowledges and agrees that the shares of common stock
to be acquired hereunder are restricted securities which may not be sold,
transferred or hypothecated unless such transfer is pursuant to an effective
registration statement or an exemption from such registration as verified by
an opinion of counsel acceptable to Xxxxx Golf. Without limiting the
foregoing, Professional agrees that in no event shall he sell, transfer or
dispose of (except as set forth below) more than 50,000 shares of common
stock in any calendar year prior to 2002 without the prior written consent of
Xxxxx Golf other than transfers to the Professional's agent or manager in
payment of commissions, transfers to entities controlled by Professional or
gifts or transfers to immediate family members, provided that any such
transfers shall be subject to the provisions of this ARTICLE II, SECTION 2,
and, in connection therewith, the aggregate sales, transfers, dispositions or
hypothecations by such persons and Professional will not exceed 50,000 shares
in any calendar year without Xxxxx Golf's prior written consent. Xxxxx Golf
may request a written agreement from any transferee as a precondition to such
transfer regarding the restrictions set forth in this ARTICLE II, SECTION 2.
Professional may hypothecate any or all such shares to a third party lender
(which is not then or thereafter competitive to Xxxxx Golf or its affiliates
in any respect) in a bona fide loan transaction provided that such third
party lender agrees that in the event there is any foreclosure, sale or
similar action by such third party to realize upon the value thereof, Xxxxx
Golf or its affiliates shall have a right of first refusal to acquire such
shares from such lender at the price such shares are to be sold or the value
otherwise attributed to the same.
SECTION 3. TAXES ON STOCK GRANT. Xxxxx Golf agrees that it will use
commercially reasonable efforts to arrange financing for Professional for the
purpose of providing Professional with funds equivalent to the U.S. federal
income and U.K. income tax liability, if any, attributable to Professional by
virtue of the grant of stock hereunder.
AGREEMENT - PAGE 3
Professional acknowledges and agrees that in connection therewith he will
execute and deliver such loan documents as may be reasonably requested by
Xxxxx Golf, any of its affiliates or any third party lender and pledge such
number of the shares acquired by him hereunder as may be reasonably required
as collateral security for such loan. Such loan shall be for a reasonable
term to be negotiated between the parties and shall bear interest at a
variable rate equal to the lowest applicable federal rate (the "AFR") to
avoid imputed interest under the provisions of the Internal Revenue Code of
1986, as amended.
SECTION 4. PUBLIC OFFERING. Xxxxx Golf acknowledges that Xxxxx Golf
intends to use commercially reasonable efforts to effect an initial public
offering of Xxxxx Golf, Inc.'s common stock as soon as it is believed
commercially advisable and practical. In the event that on or prior to
December 31, 1998 Xxxxx Golf, Inc. has either (i) not effected such an
initial public offering or (ii) not entered into a definitive agreement to be
acquired (including, without limitation, an acquisition of substantially all
of its assets) for any combination of cash and registered securities,
Professional will have the right, exercisable on January 1, 1999 and for
ninety (90) days thereafter, to cause Xxxxx Golf effective March 31, 1999 to
repurchase all of the shares of common stock acquired by Professional
hereunder for $5,000,000. Such sum may, at the option of Xxxxx Golf, be paid
in equal quarterly installments over a period of three (3) years with
interest thereon at the AFR. In the event such "put right" is exercised by
Professional, Xxxxx Golf may, in its discretion, terminate this Agreement.
SECTION 5. ROYALTIES AND TRADEMARKS. The Professional hereby grants
to Xxxxx Golf, its affiliates and its duly authorized distributors and
representatives, subject to the terms and conditions of this Agreement, the
unlimited, sole and exclusive right, privilege and license, throughout the
Contract Territory, to use the Marks, for the endorsement of Xxxxx Golf and
its affiliates, and for the manufacture, endorsement, promotion, sale and
distribution of the Endorsed Products. Without limiting the generality of
the foregoing, Xxxxx Golf and its affiliates shall be permitted to use the
Marks in all advertising and promotional activities and media relating to
Xxxxx Golf or its affiliates, or the Endorsed Products, even if certain items
which are not Endorsed Products are shown or included in such advertising and
promotional activities and media. For purposes of this Agreement, "Marks"
shall mean "Xxxx Xxxxx," "Faldo," "N. Faldo," "Xxxx Xxxxx Line" and any
variations or derivations thereof, any related designs or logos, and all
copyrights, trade names, trademarks and service marks, and other proprietary
rights in or associated with any of the foregoing, anywhere in the world.
The Professional agrees, at his own expense, to promptly apply for and obtain
registration of such Marks as shall be mutually agreed, for use on and in
connection with the Endorsed Products, including at least the "Xxxx Xxxxx"
and "Faldo" Marks, in the United States of America and all such other
countries where Xxxxx Golf or its affiliates now or hereafter apply for or
obtain registration of any of Xxxxx Golf's or its affiliates' marks. The
Professional shall diligently and timely prosecute all such applications for
registration of the Marks, and shall upon request deliver or cause to be
delivered to Xxxxx Golf a report on the status of all such applications and
registrations of the Marks, together with copies thereof. The Professional
shall diligently and timely record Xxxxx Golf or its affiliates
AGREEMENT - PAGE 4
as licensees or registered users of the Marks where necessary or desirable
under applicable law. Further, the Professional agrees, at his own expense,
to take all such actions as may be necessary or desirable to record, enforce,
defend or otherwise preserve the validity of, or the Professional's title to,
any of the Marks, including without limitation, the timely filing,
prosecution or defense of oppositions or similar proceedings, prompt action
against infringers or third parties which may cause dilution of any of the
Marks, and timely defense of any claims that use any of the Marks by the
Professional, Xxxxx Golf or its affiliates infringes or dilutes the rights of
third parties. The Professional shall deliver or cause to be delivered to
Xxxxx Golf timely status reports on all such oppositions, proceedings,
actions or claims involving or relating to any of the Marks, including
without limitation, as much advance notice as shall be feasible prior to the
dismissal, cancellation, abandonment, withdrawal, refusal, or other adverse
judgment or decision involving or relating to any of the Marks, applications
therefor or registrations thereof. The Professional shall be responsible for
maintenance of all registrations of the Marks, including the timely filing of
declarations of continued use and incontestability, annuities, renewals,
continuations, and all related fees and expenses. In the event that Xxxxx
Golf shall determine that registrations would be desirable in more countries,
on more of the Marks, or for more goods or services than the Professional
obtains or is required to obtain hereunder, the Professional agrees to apply
for and obtain such additional registrations and Xxxxx Golf agrees to
reimburse the Professional for the reasonable direct costs thereof. Subject
to the provisions hereof, during the Contract Period, Professional shall be
entitled to receive a royalty equal to 5% of the Net Sales Price of all Xxxxx
Golf golf clubs (other than Specialty Items as defined below) sold by Xxxxx
Golf or its affiliates outside the United States of America, its territories
and possessions. For purposes hereof, the Net Sales Price shall mean the
sums actually received by Xxxxx Golf or its affiliates with respect to golf
clubs sold outside the United States of America, its territories and
possessions, less amounts for returns, price allowances, rebates, refunds,
shipping and taxes and shall exclude sales to or among affiliates of Xxxxx
Golf. The royalty shall be payable forty-five (45) days after the end of
each calendar quarter with respect to the prior quarter's net sales, provided
that in the event any such royalty payment, when taken together with all
other royalty payments (including, without limitation, any pro rata minimum
royalty payments as described below) made with respect to such year, is less
than the pro rata portion of the minimum royalty for such year (as set forth
below), Xxxxx Golf shall also remit the difference between the aggregate
amounts and the pro rata portion of the minimum royalty allocable to such
partial year. Any royalty payment may provide for such deductions that are
appropriate with respect to overpayment of royalties of any such prior
period. Any such deductions shall be allocated to such prior period and
minimum or maximum royalty amounts (as described herein) shall be
recalculated for such prior period. Further adjustments may be made to the
extent such allocation results in an overpayment for any period. Any such
adjustment shall also be allocated to the appropriate period for purposes of
determining minimum or maximum royalties Each royalty payment shall be
accompanied by such sales data that Professional may reasonably request.
With respect to sales made during 1999 and each of the following years during
the Contract Period, Professional shall receive a minimum royalty of the
following amount:
AGREEMENT - PAGE 5
YEAR MINIMUM ROYALTY
---- ---------------
1999 $1,500,000.00
2000 1,875,000.00
2001 2,343,750.00
2002 2,929,687.50
2003 3,662,109.38
2004 4,000,000.00
2005 4,000,000.00
2006 4,000,000.00
2007 4,000,000.00
2008 4,000,000.00
2009 - 2014 as set forth below
With respect to the years 2009 to 2014 the Professional shall receive a
minimum royalty, adjusted as of December 31 of each such year, to be as
follows:
$1,500,000 X CPI 1/CPI 2 = adjusted minimum royalty amount.
The terms CPI 1 and CPI 2 shall have the meanings set forth below.
In all events, minimum royalty amounts shall be adjusted to be the prorata
portion of the amount for any year which is less than a full year. Within
forty-five (45) days after the end of each such calendar year, Xxxxx Golf
shall pay to Professional the difference, if any, between the applicable
minimum royalty and the royalties received by Professional (including,
without limitation, pro rata minimum royalty payments) with respect to such
calendar year. After December 31, 2013 through the termination date or
expiration hereof, there shall be no minimum royalty. After December 31,
2008 and through the Termination date or Expiration hereof, the maximum
royalty payable to Professional with respect to sales in any of such years
shall not exceed $4,000,000, adjusted as set forth below (or the pro rata
portion of such amount for any year which is less than a full year). During
the Contract Period, such maximum amount shall be adjusted as of December 31
of every year commencing 2009 to be as follows:
$4,000,000 X CPI 1/CPI 2 = adjusted maximum royalty amount, where:
a. CPI means the monthly National Consumer Price Index for All
Urban Consumers, U.S. City Average (All Items; 1982-84 equals 100) issued
by the U.S. Department of Labor, Bureau of Labor Statistics, or its
successor agency, or if such index is no longer in effect, the successor
index thereto;
b. "CPI 1" shall mean the monthly CPI for the month of December of
such year (initially, December 2009); and
AGREEMENT - PAGE 6
c. "CPI 2" shall mean CPI for the month of December 2008.
In no event shall any delay in paying a royalty due to computation of the
formula set forth above result in a default hereunder.
For all purposes, sales of specialty golf clubs and limited edition golf
clubs, including, without limitation, "Audemars Piguet"-TM- and Jaguar (all of
the foregoing specialty and limited edition golf clubs being referred to
herein when designated as such by Xxxxx Golf as "Specialty Items"), will not
be included in determining the above minimum royalty amounts. From the date
this Agreement is executed through the termination date of this Agreement.
Professional shall be entitled to receive a royalty equal to ten percent
(10%) of the Net Sales Price of all Xxxxx Golf Specialty Item golf clubs sold
outside of the United States of America, its territories and possessions.
Within thirty (30) days after the last royalty payment for any calendar year,
Professional may request that he inspect the books and records of Xxxxx Golf
relating to the computation of royalties payable hereunder. Upon execution
of a confidentiality agreement containing standard terms and conditions,
Xxxxx Golf shall permit Professional or his representative to conduct such
inspection at such times to be agreed to by the parties. Professional
acknowledges and agrees that the royalty payments to be made herein are in
consideration of all provisions of this Agreement.
SECTION 6. FALDO JUNIOR SERIES. Xxxxx Golf agrees that through the
year 2008 it will support the "Faldo Junior Series" in the United Kingdom by
making an annual contribution to the sponsoring organization of not less than
$45,000 for each year the tournament is played under such name. In return
for such support, Professional will ensure that Xxxxx Golf is accorded
sponsorship recognition of the highest category with respect to the "Faldo
Junior Series" and shall receive all other benefits accorded to the greatest
sponsors thereof (including, without limitation, advertising and tickets to
events).
SECTION 7. ACTOR'S GUILD. Payments made to the Professional as
gross wages for work pursuant to a contract governed by agreements with the
Screen Actor's Guild ("SAG") in connection with the Professional's appearance
in television commercials or other promotional activities under this
Agreement shall be deducted from the compensation (including royalties)
payable to the Professional pursuant to this Agreement.
ARTICLE III. DUTIES, GRANTS, SERVICES, COVENANTS
AND AGREEMENTS
SECTION 1. CONTRACT TERMS. The parties hereby confirm that the
recitals of this Agreement and the provisions of ARTICLE I are integral parts
of this Agreement.
SECTION 2. GRANT OF ENDORSEMENT RIGHTS. The Professional hereby
grants to Xxxxx Golf and its affiliates and its duly authorized distributors
and representatives,
AGREEMENT - PAGE 7
subject to all terms and conditions of this Agreement, the unlimited, sole
and exclusive right, privilege and license, within the Contract Territory and
during the Contract Period, to use the Professional's Endorsement to endorse
Xxxxx Golf and its affiliates, and on and in connection with the
advertisement, promotion, endorsement and sale of the Endorsed Products in
any manner or media whatsoever, whether now existing or hereafter created,
anywhere in the world. The Professional agrees that he will not grant, nor
cause any affiliated entity to grant, to anyone other than Xxxxx Golf or its
affiliates the right to use the Marks or the Professional's Endorsement,
except in the case of the Permitted Other Endorsements identified in ARTICLE
I, SECTION 8. Neither Xxxxx Golf nor any of its affiliates shall have any
obligation hereunder to use the Professional's Endorsement or the Marks in
connection with the advertisement, endorsement, promotion or sale of any of
the Endorsed Products.
The Professional represents and warrants that he is the owner, free and
clear, of each of the rights granted, assigned or licensed to Xxxxx Golf and
its affiliates in this Agreement and he has the legal capacity, power and
authority to grant the rights and licenses contained in this Agreement. In
addition, the Professional expressly represents and warrants that he has
neither assigned nor previously granted any license or any endorsement right
in conflict with the rights and licenses granted to Xxxxx Golf and its
affiliates hereunder. Xxxxx Golf recognizes the validity of the
Professional's property interest in the Professional's Endorsement and agrees
not to challenge the validity of said interest during the Contract Period.
SECTION 3. USE OF SPECIALLY ENDORSED PRODUCTS. During the Contract
Period, the Professional shall use exclusively the Specially Endorsed
Products, defined in ARTICLE I, SECTION 5, within the Contract Territory
while playing golf and during all professional tournaments, golf events,
personal appearances, exhibitions, advertisements, fund raisers, corporate
outings and similar promotional events in which he takes part.
SECTION 4. ADDITIONAL OBLIGATIONS.
a. REQUIRED TOURNAMENT PLAY. The Professional agrees to use his
best efforts to compete in at least the Required Tournaments, as defined
in ARTICLE I, SECTION 6.
b. PROMOTION. The Professional agrees that during the Contract
Period and within the Contract Territory, while playing golf and during
all professional tournaments, golf events, personal appearances,
exhibitions, advertisements, fund raisers, corporate outings and similar
promotional events in which he takes part, he will wear and/or use the
items described in ARTICLE I, SECTION 7, unless prohibited by the rules of
the event.
c. PROFESSIONAL CONDUCT. During the term of this Agreement, the
Professional will conduct himself at all times with due regard to public
morals and conventions. Notwithstanding anything to the contrary set forth
in the prior
AGREEMENT - PAGE 8
sentence or the immediately succeeding sentence, in no event shall a
matter which is public knowledge as of the date hereof be deemed a
violation by Professional of this ARTICLE III, SECTION 4. If, in Xxxxx
Golf's reasonable opinion, the Professional shall have committed or shall
commit any act or do anything that is or shall be offensive or involve
moral turpitude under violations of U.S., federal, State of Texas or other
applicable or local laws, or which brings him into public disrepute,
contempt, scandal or ridicule, or which insults or offends the community,
which injures or may tend to injure the success of Xxxxx Golf or its
affiliates or any of their respective products, distributors, services or
customers; or if, in Xxxxx Golf's reasonable opinion, the Professional
shall make any statements in derogation in any material respect of Xxxxx
Golf or any of its affiliates or any of their respective products or
services and such statement is made to the general public or becomes a
matter of public knowledge; then at any time after the occurrence of such
act, thing or statement, Xxxxx Golf shall have the right, in addition to
its other legal and equitable remedies, to immediately terminate this
Agreement, by giving written notice to the Professional. In the event the
Professional receives written notice from Xxxxx Golf terminating this
Agreement for cause as set forth in this Section, the Professional shall
have twenty (20) days from the date of delivery of the notice to request,
by written notice to Xxxxx Golf, that the matter be submitted to
arbitration. If the Professional requests arbitration, Xxxxx Golf and the
Professional agree that such matter shall be settled by arbitration in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association. Unless required otherwise by state law, the
parties hereto agree to arbitrate their differences in Dallas, Texas.
The parties agree further that (i) an arbitrator may render an interim
ruling, including injunctive relief, and (ii) all claims of any type
alleged in connection with such matter (but only such matter) by either
party, including defenses, are included in the jurisdiction of the
arbitrator.
In connection with such dispute, either party may send written notice to
the other party and the Regional Office of American Arbitration
Association invoking the binding arbitration provisions of this Section.
Each party has ten (10) days from the date of mailing by the American
Arbitration Association of a written list of proposed arbitrators within
which to return the written list of proposed arbitrators with their
choices of arbitrators, to the American Arbitration Association. The
arbitrator selected by the Professional and the arbitrator selected by
Xxxxx Golf shall both select a third arbitrator. The parties further
consent to the jurisdiction of any appropriate court to enforce the
provisions of this Section and/or to confirm any award rendered by the
panel of arbitrators.
Any costs or other expenses, including attorney fees and costs
incurred by the successful party, arising out of or occurring because of
the arbitration proceedings, shall be assessed against the unsuccessful
party.
AGREEMENT - PAGE 9
SECTION 5. PRODUCTS FOR PROFESSIONAL'S USE. During the Contract
Period, Xxxxx Golf will provide the Professional, at no cost or expense to the
Professional, with such quantities of Endorsed Products and clothing bearing
Xxxxx Golf's authorized logos as he may reasonably request in connection with
performing his obligations under this Agreement.
SECTION 6. OTHER ENDORSEMENTS. During the Contract Period, the
Professional agrees not to endorse, wear or exhibit the logo, trademark or
sticker of, or otherwise advertise or promote, any other company, firm,
organization or person, or their products or services, except as permitted in
ARTICLE I, SECTION 8, without the express written consent of Xxxxx Golf, which
consent Xxxxx Golf may withhold in its sole discretion.
SECTION 7. SERVICES OF THE PROFESSIONAL.
a. The Professional and Xxxxx Golf shall mutually agree on the
personal appearances to be made by Professional. The personal
appearances which may be made by the Professional under this Agreement
may be for any one or more of the following purposes: attendance at
sales "demo" days; in-store appearances, autograph sessions, customer or
distributor outings or dinners and other promotional appearances on
behalf of Xxxxx Golf or its affiliates; modeling in connection with
photographs, drawings or other advertising relating to the Endorsed
Products, which shall be subject to Professional's approval, which such
approval shall not be unreasonably withheld; production of television and
radio commercials or promotional videos and/or other multi-media
advertising (including materials for use on the Internet), which shall be
subject to Professional's approval, which such approval shall not be
unreasonably withheld; and developing, testing, evaluating and consulting
regarding prototypes and new products, including but not limited to golf
clubs. The Professional agrees to keep confidential the nature of this
Agreement, the terms hereof and all non-public information which may be
disclosed or made available to him by or on behalf of Xxxxx Golf or its
affiliates in the course of rendering such services, including, without
limitation, the existence of any prototypes or new products and all
design aspects and any financial information or data which are not
available to the public. With respect to the services of the
Professional in developing, testing and evaluating prototypes and new
products, including the "Xxxx Xxxxx Line" described in ARTICLE III,
SECTION 9, the Professional agrees, if requested, to execute an agreement
in form and substance reasonably satisfactory to Xxxxx Golf, whereby the
Professional agrees to maintain the confidentiality of Xxxxx Golf's or
its affiliates' proprietary business and technical information and data,
and assigns to Xxxxx Golf or its affiliates all rights in and to any
inventions, designs, trade secrets, know how, patents, patent
applications, copyrights, and similar rights, applications therefor and
registrations thereof, throughout the world (collectively, the
"Intellectual Property Rights").
AGREEMENT - PAGE 10
x. Xxxxx Golf agrees that it will reimburse the Professional for
reasonable travel, lodging and meal expenses (including first class air
travel) incurred by him and his traveling associate in connection with
rendering the services set forth in this Article III, Section 7.
c. The Professional acknowledges that Xxxxx Golf and its
affiliates may use the Professional's Endorsement and the Marks in its
promotional activities, including television commercials, print and/or
Internet advertisements, and he agrees to cooperate with Xxxxx Golf's and
its affiliates promotional efforts in that regard. The Professional
shall use his best efforts to demonstrate and promote the characteristics
and quality of the Endorsed Products. The Professional shall participate
in the production of television and radio commercials and in such press
interviews, radio and television appearances and other appearances as may
be arranged for him by Xxxxx Golf. It is understood and agreed by the
Professional that Xxxxx Golf and its affiliates shall have the right to
exhibit commercials and otherwise make use of all such promotional
materials on a worldwide basis and that Xxxxx Golf and its affiliates
shall be the sole owner of all commercials, promotional materials and
other items produced or created hereunder and all related rights
worldwide, including, without limitation, copyright, trademark and
intellectual property rights. The Professional agrees to enter into a
SAG contract with Xxxxx Golf and/or its advertising agency if reasonably
necessary to accomplish the purposes of this Section. If required under
a SAG contract, the Professional shall be paid as gross wages for the
making, use, reuse, broadcast, publication or other display of any
television commercials produced under this Agreement utilizing the
Professional's Endorsement at the minimum fee as provided in the then
current applicable SAG union code agreement, which sum(s) shall be
deducted from the compensation payable to the Professional under this
Agreement, as set forth in ARTICLE II, SECTION 7. All other costs and
expenses associated with work performed by the Professional under a SAG
contract shall be paid by Xxxxx Golf. It is further understood and agreed
by the Professional that Xxxxx Golf and its affiliates shall have the
right to translate and "dub" the Professional's voice in television
commercials produced for Xxxxx Golf or its affiliates in order to
facilitate foreign exhibition of the commercials.
SECTION 8. APPROVAL OF ADVERTISING. Xxxxx Golf agrees that no use of
the Professional's Endorsement nor advertising materials will be made hereunder
unless and until the same has been approved by the Professional. The
Professional agrees that any material, advertising or otherwise, submitted for
approval as provided herein may be deemed by Xxxxx Golf to have been approved
hereunder if the same is not disapproved by the Professional in writing within
fourteen (14) days after the Professional's receipt thereof. The Professional
agrees that any material submitted hereunder will not be unreasonably
disapproved and, if it is disapproved, that Xxxxx Golf will be advised in
writing of the specific grounds therefor at the time of disapproval. Xxxxx
Golf agrees to protect, indemnify and save harmless the Professional from and
against any and all expenses, damages, claims, suits, actions, judgments and
costs whatsoever, arising out of,
AGREEMENT - PAGE 11
or in any way connected with, any advertising material furnished by, or
prepared on behalf of, Xxxxx Golf or its affiliates.
SECTION 9. XXXX XXXXX LINE. Xxxxx Golf and Professional agree that
Xxxxx Golf will develop a "Xxxx Xxxxx Line" of Xxxxx Golf golf clubs. Xxxxx
Golf and Professional agree that Professional will be actively involved in the
research, development, testing and advertising of such new line of clubs.
Professional acknowledges and agrees that all of his rights in any inventions,
designs, patents, copyrights and other intellectual property or rights created
in connection with such new line of clubs shall be the sole property of Xxxxx
Golf and/or its affiliates. Professional further acknowledges and agrees that
any such intellectual property and rights shall have been made for the sole and
exclusive benefit of and owned by Xxxxx Golf and/or its affiliates.
SECTION 10. BOARD OF XXXXX GOLF. Xxxxx Golf covenants that until the
date that royalties are no longer to be paid to Professional under ARTICLE II,
SECTION 5 HEREOF, it will use its commercially reasonable efforts to cause a
designee of Professional to be nominated and elected to the Board of Directors
of Xxxxx Golf, Inc.
SECTION 11. EXCLUSIVE DISTRIBUTOR AGREEMENT. The parties acknowledge
that it is the intent of Xxxxx Golf to execute an exclusive distributorship
agreement containing standard terms and conditions for the sale and
distribution of Xxxxx Golf products in the United Kingdom with Dimensions in
Sports on terms to be negotiated.
SECTION 12. MARRIOTT AGREEMENT. If a suitable agreement can be reached
between Xxxxx Golf or its affiliates and Marriott Corporation or its affiliates
("Marriott") for the operation of golf learning, research and custom fitting
centers at various Marriott facilities, the Professional agrees, for no
additional compensation, to enter into and perform under an agreement relating
thereto with Xxxxx Golf or its affiliates and Marriott. The existing "Xxxx
Xxxxx Learning Centers" or "Xxxx Xxxxx Golf Institutes" at various Marriott
facilities and any future such facilities will be named "Xxxx Xxxxx Learning
and Xxxxx Golf Custom Fitting and Research Centers" or such other name as may
be mutually agreed.
ARTICLE IV. MISCELLANEOUS
SECTION 1. INTELLECTUAL PROPERTY RIGHTS. Xxxxx Golf and its
affiliates shall have the right anywhere in the world, during the Contract
Period or thereafter, at its own expense, to apply for, file, renew, assign,
obtain registrations or patents, or record its ownership, as the case may be,
of any of the Intellectual Property Rights or other rights granted or licensed
to Xxxxx Golf or its affiliates hereunder. The Professional agrees, without
additional compensation, to render such reasonable assistance, including the
taking of such actions and execution of such documents, as may be necessary or
desirable to enable Xxxxx Golf or its affiliates to accomplish these items, and
to enforce, defend or
AGREEMENT - PAGE 12
otherwise preserve the validity of the Intellectual Property Rights or other
rights granted or licensed to Xxxxx Golf or its affiliates hereunder. The
Professional agrees not to directly or indirectly challenge the validity,
registration, enforceability of Xxxxx Golf's or its affiliates' ownership of
such Intellectual Property Rights or other rights, and shall not, directly or
indirectly, apply for, file or obtain any patents or registrations on any of
the Intellectual Property Rights or any variations or derivations thereof.
SECTION 2. ASSIGNMENT. This Agreement shall bind and inure to the
benefit of the Professional, and the heirs and permitted assigns of the
Professional. The Professional may not transfer or assign any of his rights
hereunder without the prior written consent of Xxxxx Golf. The rights granted
Xxxxx Golf hereunder shall run and inure to the benefit of Xxxxx Golf and each
of its subsidiaries and affiliates and their respective successors, including
successors by merger or consolidation. Except as provided herein, Xxxxx Golf
shall not, without the prior written consent of the Professional, transfer or
assign the rights under this Agreement to any other person or entity; provided,
however, that Xxxxx Golf may assign this Agreement and its rights hereunder
without Professional's consent to a third party which acquires substantially
all of the assets of Xxxxx Golf or which relate to the Endorsed Products.
SECTION 3. DEFAULT. If either party at any time during the Contract
Period shall (a) fail to timely make any payment of any sum of money herein
specified to be made, or (b) fail to timely observe or perform any of the
covenants, agreements, or obligations hereunder (other than the payment of
money), the non-defaulting party may terminate this Agreement as follows: as
to (a), above, if such payment is not made within thirty (30) days after the
aggrieved party shall have delivered to the other party written notice of such
failure to make payment; or as to (b), above, if such default is not cured
completely as soon as reasonably possible and in no event later than sixty (60)
days after the aggrieved party shall have delivered to the other party written
notice specifying such default; provided, however, that failure to terminate
this Agreement pursuant to this Section shall not effect or constitute a waiver
of any rights or remedies the non-defaulting party would have been entitled to
demand in the absence of this Section, whether by way of damages, termination
or otherwise.
SECTION 4. TERMINATION. Except as set forth herein, including,
without limitation, termination for uncorrected default as set forth in ARTICLE
IV, SECTION 3, hereof, this Agreement shall terminate upon the expiration of
the Contract Period. In addition, and without limiting the foregoing, Xxxxx
Golf shall have the right to terminate this Agreement upon any of the following
events:
a. The inability of the Professional, by reason of any ailment or
illness, physical or mental, to perform the duties required hereunder for
a consecutive period of twelve (12) months, unless Xxxxx Golf has
provided, and the Professional has elected to participate in, group
disability insurance coverage through a third party insurer, in which
case this Agreement will continue in effect, but the compensation payable
hereunder to the Professional shall then be reduced
AGREEMENT - PAGE 13
and limited to the amounts payable by the insurer under the group
disability insurance policy; or
b. The Professional shall retire or become officially ineligible
to compete on the Official PGA Tour and/or the Senior PGA Tour (or
similar premium successor tours, should one or more be formed) at any
time during the Contract Period; or
c. The Professional has engaged in illegal or immoral conduct
resulting in a felony conviction, or has otherwise conducted himself in a
manner not in keeping with the standards of professional conduct as
required under ARTICLE III, SECTION 4c; or
d. The Professional shall have exercised the put right provided
for in ARTICLE II, SECTION 4, provided that such termination shall have
no effect on the Professional's right to exercise such put right; or
e. The death of the Professional.
Xxxxx Golf and Professional shall each have the right, on January 1, 2008
and for a period of 90 days thereafter, to terminate this Agreement in the
event that (a) Xxxxx Golf is in default of its obligation to make royalty
payments hereunder or the Xxxx Xxxxx Line (or similar line) of golf clubs is
not being actively marketed by Xxxxx Golf or its affiliates (other than as a
result of action or inaction by Professional) and (b) B.H. (Barney) Xxxxx is
not then affiliated with Xxxxx Golf, Inc. in a senior executive capacity and
(c) Xxxxx Golf, Inc. did not effect an initial public offering of its common
stock or become a reporting company under the Securities Exchange Act of 1934,
as amended, or any successor statute thereto, and there has been a sale or
other disposition by Xxxxx Golf, Inc. of all or substantially all of its assets
or a reorganization, stock sale, exchange, merger or consolidation of Xxxxx
Golf, Inc. which at such time results in a change of 50% or more of the then
beneficial ownership of the then outstanding common stock of Xxxxx Golf, Inc.
or any successor entity.
In the event of the death of the Professional prior to May 1, 2030, Xxxxx
Golf's exclusive rights to the use of the Professional's Endorsement shall
continue, at the option of Xxxxx Golf, for any periods until May 1, 2030, and
the Professional's heirs or estate shall be entitled to any royalties due under
ARTICLE III, SECTION 4 hereof during the periods therein provided. The
Professional's heirs or estate shall cooperate with Xxxxx Golf and its
affiliates in the recording or registration of Xxxxx Golf's rights in this
regard under applicable law.
Upon termination or expiration of this Agreement for any reason other than
the default of Xxxxx Golf, Xxxxx Golf shall have the right for one (1) year to
market and sell all remaining inventory of Endorsed Products (including
Specially Endorsed Products and the Specialty Items) and other items bearing
the Professional's Endorsement and the Professional shall be entitled to the
royalty contemplated by ARTICLE II, SECTION 5 hereof
AGREEMENT - PAGE 14
with respect to such sale, provided that the minimum royalty will no longer be
applicable. Termination of this Agreement shall be in addition to, and not in
lieu of, any other rights and remedies of Xxxxx Golf.
SECTION 5. INDEMNITY.
x. Xxxxx Golf agrees to protect, indemnify and save harmless the
Professional and the Professional's authorized agent, or either of them,
from and against any and all expenses, damages, claims, suits, actions,
liabilities, judgments and costs whatsoever, including reasonable
attorneys' fees, in each case arising out of, or in any way connected
with, actions or omissions of Xxxxx Golf or any claim or action for
personal injury, death or other cause of action involving alleged defects
in Xxxxx Golf's products, provided that Xxxxx Golf shall be given prompt
notice of any such action or claim and the Professional and the
Professional's agent shall render all reasonable assistance to Xxxxx Golf
and its counsel in the investigation, defense, settlement or resolution of
such action or claim. During the Contract Period, Xxxxx Golf agrees to
provide and maintain, at its own expense, product liability insurance with
limits of not less than $2,000,000.
b. Professional agrees to protect, indemnify and save harmless
Xxxxx Golf and each of its subsidiaries and affiliates from and against
any and all expenses, damages, claims, suits, actions, liabilities,
judgments and costs, whatsoever, including reasonable attorneys' fees,
arising out of, or in any way connected with, (i) federal, state, local
and other taxes or contributions imposed or required under unemployment
insurance, social security and income tax laws worldwide, with respect to
the Professional's performance of this Agreement or his receipt of
compensation hereunder, or (ii) use of any of the Marks in accordance
with ARTICLE III, SECTION 5 hereof.
SECTION 6. NOTICE. Any notice, request, demand or other communication
required or permitted hereunder shall be in writing and shall be deemed
properly given when actually received or within fourteen (14) days of mailing
by certified or registered mail, return receipt requested, postage prepaid,
whichever first occurs, to the Professional at:
Xxxxxxxx Faldo
XXX XXXX
XXX XX XXX
XXX XXXXXX
XXXXX, XXXX, XXXX
England
AGREEMENT - PAGE 15
with a copy to: Xxxx Xxxxx Esq.
Wachtel, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000-0000
and to Xxxxx Golf at: 0000 Xxxxx Xxxxxxx
Xxxxx, Xxxxx 00000
Attn: B. H. (Barney) Xxxxx
with a copy to: Xxxxxx X. Xxxxxxx, Esq.
Xxxxx & Xxxxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Either party may change its address for the purpose of this Agreement by giving
notice to the other party in accordance herewith.
SECTION 7. WAIVER. The failure of any party hereto at any time or
times to demand strict performance by the other of any of the terms, covenants
or conditions set forth herein shall not be construed as a continuing waiver or
relinquishment thereof and each may at any time demand strict and complete
performance by the other of said terms, covenants and conditions.
SECTION 8. SIGNIFICANCE OF HEADINGS. Section headings contained
herein are solely for the purpose of aiding in speedy location of subject
matter and are not in any sense to be given weight in the construction of this
Agreement. Accordingly, in case of any question with respect to the
construction of this Agreement, it is to be construed as though such Section
headings had been omitted.
SECTION 9. ENTIRE AGREEMENT; AMENDMENTS. This writing constitutes the
entire agreement between the parties hereto and may not be changed or modified
except by a writing signed by the party or parties to be charged thereby.
SECTION 10. GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the internal laws of the State of Texas, without
reference to its choice of law principles. Any legal action to interpret or
enforce this Agreement, or any provision hereof, shall be brought exclusively
in the courts in the State of Texas, and the parties hereby consent to the
jurisdiction of said courts and waive any objection to venue in this state or
proceeding in such state on the basis of FORUM NON CONVENIENS.
SECTION 11. RESERVATION OF RIGHTS. All rights not herein specifically
granted to Xxxxx Golf shall remain the property of the Professional to be used
in any manner the Professional deems appropriate.
AGREEMENT - PAGE 16
SECTION 12. U.S. DOLLARS. For purposes of this Agreement, the term
"dollars" or "$" means U.S. dollars. All amounts recited herein shall be in U.
S. dollars.
SECTION 13. INDEPENDENT CONTRACTOR. The services performed by the
Professional under this Agreement are in the capacity as an independent
contractor. This Agreement does not constitute and shall not be construed as
establishing an employee-employer relationship, or constituting a partnership
or joint venture, between the Professional and Xxxxx Golf. Except as set forth
herein, no party hereto shall have any right to obligate or bind another party
in any manner, and nothing herein contained shall give, or is intended to give,
any rights of any kind to any third person.
SECTION 14. SEVERABILITY. In the event that any one or more provisions
of this Agreement shall be deemed unenforceable or invalid by a court of
competent jurisdiction, such determination shall in no way affect the validity
or enforceability of any other provision herein.
SECTION 15. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, and each of such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute but
one Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the dates set forth below.
XXXXX GOLF, LTD.
By: XXXXX GOLF GP, INC.
Date: April 22, 1998 By: /s/ X.X. Xxxxx
-------------- ------------------------------
Name: B. H. (Barney) Xxxxx
Title: President
PROFESSIONAL
Date: April 22, 1998 /s/ Xxxxxxxx X. Faldo
-------------- ---------------------------------
Xxxxxxxx X. Faldo
AGREEMENT - PAGE 17
Accepted and Agreed to this
22nd day of April, 1998
XXXXX GOLF, INC.
By: /s/ X.X. Xxxxx
------------------------------
Name: B. H. (Barney) Xxxxx
Title: President
AGREEMENT - PAGE 18
