REDACTED COPY
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL PORTIONS OF THIS
DOCUMENT HAVE BEEN REDACTED
AND HAVE BEEN SEPARATELY
FILED WITH THE COMMISSION
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ENDORSEMENT AGREEMENT
This Agreement is entered into on January 13, 2005 between professional golfer,TOM WATSON, (hereinafter referred to as “CONSULTANT”) andADAMS GOLF,LTD. (hereinafter referred to as “ADAMS GOLF”).
WITNESSETH
WHEREAS,ADAMS GOLF desires to obtain the right to use the name, likeness andENDORSEMENT ofCONSULTANT in connection with the advertisement and promotion ofADAMS GOLF’S PRODUCT;
NOW THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
CONTRACT PERIOD
1. | TERM OF CONTRACT |
The Term of this Agreement shall be for a period of [* ****] years and [*****] months commencing the 1st day of September 2004 and terminating the [*****] day of [*****]. |
2. | DEFINITIONS |
As used in this Agreement, the following terms shall be defined as set forth below:
A. | CONSULTANT’S “ENDORSEMENT” means the right to use theCONSULTANT’S name, fame, nickname, autograph, voice, facsimile, signature, photograph, likeness, and image in connection with the marketing, advertising, promotion and sale ofADAMS GOLF’S PRODUCT. |
B. | “PRODUCT” shall mean all golf clubs including, but not limited to, metal woods, drivers, fairway woods, irons, iron-woods, utility clubs, wedges, and putters, bags, and headwear. |
C. | “MANDATORY PRODUCTS”shall mean the followingADAMS GOLF PRODUCTS thatCONSULTANT must exclusively play/use in all Champions/Senior Professional Golf Association (SPGA) and Professional Golf Association (PGA) events at all times: |
[***** ] Confidential Material redacted and filed separately with the Commission.
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1. | [*****] |
2. | Sufficient [*****] to maintain total minimum of [*****]ADAMS GOLF [*****] (includes [*****])[*****] at all times |
3. | [*****] |
4. | [*****] (CONSULTANT may continue to place the [*****] logo on the [*****] consistent with historical practice.) |
D. | “CONTRACT TERRITORY” shall mean the entire world. |
CONSULTANT’S OBLIGATIONS
3. | CONSULTANT’S ENDORSEMENT |
CONSULTANT hereby gives and grants toADAMS GOLF the exclusive right and license to useCONSULTANT’S ENDORSEMENT in connection with the manufacture, sale, distribution, advertising and promotion ofPRODUCTin theCONTRACT TERRITORY.
4. | EXCLUSIVITY OF ENDORSEMENT |
During the term of this Agreement, unless otherwise authorized at the sole discretion ofADAMS GOLFin writing,CONSULTANT shall not: |
A. | give the right to use or permit the use ofCONSULTANT’S name, facsimile signature, nickname, voice or likeness to any other manufacturer or seller ofPRODUCT; |
B. | sponsor or endorsePRODUCT made or sold by any other manufacturer or seller; or |
C. | serve as aCONSULTANT or advisor of any other manufacturer or seller ofPRODUCT. |
D. | Notwithstanding paragraphs 4A, 4B and 4C above,CONSULTANT shall be entitled to endorse and play the [*****]. The parties expressly agree thatCONSULTANTmay permit [*****] the use ofCONSULTANT’S name and/or likeness in [*****] print and/or television advertisement provided that this is executed in a manner consistent with [*****] past [*****] advertising practice using similarly situated professional golfers with competing golf club endorsement agreements that include [*****]. If [*****] use ofCONSULTANT varies from past practice of utilizing similarly situated professionals,CONSULTANT will take action to remedy the situation [*****]. IfCONSULTANT participates directly in any [*****] sponsored photo shoots for advertising or PR,CONSULTANT shall wear hisADAMS GOLF [*****]. The parties further expressly agree thatCONSULTANT’S endorsement of the [*****] shall not include the right to place a [*****] logo on hisADAMS GOLF [*****] or theADAMS GOLF [*****]. IfCONSULTANT’Srelationship with [*****] terminates during this Agreement,CONSULTANT shall be permitted to replace the [*****] endorsement with another [*****] endorsement under the same terms and conditions expressed herein. |
[***** ] Confidential Material redacted and filed separately with the Commission.
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E. | Notwithstanding paragraphs 4A, 4B and 4C above,CONSULTANT shall not be required to wearADAMS GOLF [*****] in [*****] ads. |
5. | EXCLUSIVE USE OF PRODUCT |
During the term of this Agreement,CONSULTANT shall exclusively play/use theMANDATORY PRODUCT. (It is expressly understood by the parties thatCONSULTANT may play [* ****] clubs in the bag other thanADAMS GOLF clubs including, but not limited to, a putter by a manufacturer other thanADAMS GOLF but may not endorse those clubs and/or putter.)
6. | CONSULTANT’S ENDORSEMENT OF NON-COMPETITIVE PRODUCT |
IfCONSULTANTendorses or promotes a non-competitive product and in that endorsement or promotionCONSULTANTwears, plays, uses, holds or is in any way associated with a product that would constitutePRODUCTas defined under this Agreement,CONSULTANT shall use objectively reasonable best efforts to ensure thatPRODUCT is anADAMS GOLF PRODUCT and it shall not be altered or changed in appearance in the endorsement in any manner whatsoever without the express written consent ofADAMS GOLF. When endorsing a non-competitive product, under no circumstances shallCONSULTANT wear, play, use, hold or in any way be associated with anADAMS GOLF competitor’s Product.
7. | CONSULTANT’S SATISFACTION OF MANDATORY PRODUCT |
It is particularly and expressly understood and agreed that ifCONSULTANT shall find in his sincere best reasonable judgment that theMANDATORY PRODUCT so supplied is not suitable for his use in tournament competition, then he shall promptly notifyADAMS GOLF in writing of such fact and the reasons therefor. Thereafter,ADAMS GOLF shall have a period of thirty (30) days to either, atADAMS GOLF’S sole discretion, supplyCONSULTANT withMANDATORY PRODUCT that is acceptable to him or terminate the agreement. It is agreed that if the contract is terminated pursuant to this paragraph, the compensation dueCONSULTANT shall be prorated from the date this Agreement is terminated. Proration of compensation shall be determined on the same repayment schedule as provide in paragraph 8A below.
[***** ] Confidential Material redacted and filed separately with the Commission.
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8. | MINIMUM NUMBER OF TOURNAMENTS AND POTENTIAL REPAYMENT OF BASE COMPENSATION |
A. | In each and every calendar year of this Agreement,CONSULTANT shall achieve a satisfactory record of play in a minimum of [* ****] professional golf association events on the SPGA and/or PGA tour (which shall include both the PGA and SPGA Tour Skins Games). If for any reason,CONSULTANT should achieve a satisfactory record of play in less than [*****] SPGA and/or PGA tour events in a calendar year, he shall repayADAMS GOLF an amount per event for each event under [*****] achieved in the given calendar year as follows: |
The agreed upon repayment amount per event per calendar year:
1. Year 1. $[*****]
2. Year 2 $[*****]
3. Year 3 $[*****]
4. Year 4 $[*****]
5. Year 5 $[*****]
B. | Payment shall be made toADAMS GOLF within one month following the end of the calendar year. For example, if in the calendar year 2005CONSULTANT achieves a satisfactory record of play in [*****] events, he shall repayADAMS GOLF[*****] dollars no later than January 31, 2006. |
C. | In the event thatCONSULTANT is prevented from competing for reasons outside his control, the parties agree to a good faith attempt to resolve the issues. If a resolution can not be reached,ADAMS GOLF may, at its sole discretion, demand prorated repayment pursuant to the repayment schedule in paragraph 8A above. |
9. | PRODUCT DESIGN |
During the term of this Agreement,CONSULTANT shall use best efforts to cooperate withADAMS GOLFin giving advice, suggestions and recommendations concerning the acceptability and playability of currentADAMS GOLF lines, the development of newADAMS GOLF lines, and information about significant golfPRODUCT and golf market trends, and meet as reasonably requested withADAMS GOLF’S Design/Testing Teams.
10. | PROMOTION OF PRODUCT |
During the term of this Agreement,CONSULTANT shall use best efforts to wear the headwear and displayADAMS GOLF’Sbrand name and to demonstrate, discuss and emphasize the newest features ofADAMS GOLF PRODUCT at every opportunity including but not limited to all Senior PGA tour events and promotional and advertising events in whichCONSULTANT takes part. |
[***** ] Confidential Material redacted and filed separately with the Commission.
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11. | PROMOTIONAL APPEARANCES |
A. | During the term of this Agreement,CONSULTANT shall use best efforts to be available for such press interviews, radio or TV appearances arranged forCONSULTANT byADAMS GOLFwhich are compatible withCONSULTANT’S own practice, play and personal time requirements.CONSULTANT will be required to be available after a tournament for selected interviews, either the Sunday afternoon or Monday morning following the tournament. In all such interviews and appearances,CONSULTANT will use his best efforts to make reference to theADAMS GOLF PRODUCTand wear [*****] and displayADAMS GOLF’S brand name. |
B. | During the term of this Agreement,CONSULTANT shall make himself available on not more than [*****] days for television and radio commercials, photo shoots, modeling and promotional appearances compatible withCONSULTANT’S own practice, play and personal time requirements. Said activities shall be directly related to the promotion ofADAMS GOLF PRODUCT.ADAMS GOLFshall reimburseCONSULTANT for reasonable travel expenses forCONSULTANT when making special appearances forADAMS GOLF pursuant to this paragraph butADAMS GOLF shall not payCONSULTANT session fees, residual payments or the like for television appearances. Travel expenses shall include jet fuel or first-class round-trip airfare and lodging, meals and local transportation. |
12. | BEHAVIOR |
During the term of this Agreement,CONSULTANT will conduct himself at all times with due regard to public morals and conventions. If the value ofCONSULTANT’S ENDORSEMENT is materially reduced or impaired becauseCONSULTANT:
A. | committed or shall commit any public act that involves moral turpitude, |
B. | commits or violates any material foreign, U.S., federal, or other applicable state or local law, |
C. | commits any act which brings him into public disrepute, contempt, scandal or ridicule, or which insults or offends the community, |
D. | makes any statements in derogation, in any material respect, ofADAMS GOLFor any of its affiliates or any of their respectivePRODUCT 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,ADAMS GOLFshall have the right, in addition to its other legal and equitable remedies, to immediately terminate this Agreement, by giving written notice toCONSULTANT.ADAMS GOLFmust exercise its right of termination within ninety (90) days of its senior management becoming aware of the conduct giving rise to the right of termination.
[***** ] Confidential Material redacted and filed separately with the Commission.
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13. | FREEDOM TO CONTRACT |
CONSULTANT represents and warrants thatCONSULTANT is free of all prior undertakings and obligations which would prevent or tend to impair either the full performance ofCONSULTANT’S obligations hereunder orADAMS GOLF’S full enjoyment of the rights and privileges granted to it byCONSULTANT. |
14. | INDEMNITY |
CONSULTANT agrees to protect, indemnify and holdADAMS GOLFharmless from any and all liability, claims, causes of action, suits, damages and expenses (including reasonable attorneys’ fees and expenses) for which it becomes liable or is compelled to pay by reason of a breach of any covenant or representation byCONSULTANTin this Agreement. |
15. | ABSENCE OF AGENCY |
CONSULTANT shall not and will not have the right or authority to bindADAMS GOLFby any representation or in any other respect whatsoever or to incur any obligation or liability in the name of or on behalf ofADAMS GOLF.
16. | MEMBERSHIPS |
CONSULTANT warrants and represents that during the term of this Agreement he is a member in good standing of SAG, AFTRA or any other organization having jurisdiction overCONSULTANT’S services hereunder. This Agreement is subject to all of the terms and conditions of the collective bargaining agreements with SAG, AFTRA, or any other union agreements or codes having jurisdiction overCONSULTANT’S services hereunder. Any and all payments required to be made to SAG or AFTRA or any other organization having jurisdiction overCONSULTANT’S services hereunder, shall be the sole responsibility ofCONSULTANT.
ADAMS GOLF’S OBLIGATIONS
17. | SUPPLY OF PRODUCT |
A. | During the term of this Agreement,ADAMS GOLF shall provideCONSULTANT with sufficient quantities of suchMANDATORY PRODUCTS forCONSULTANT’S use asCONSULTANT may reasonably need to fulfill his obligations under this agreement.ADAMS GOLF shall pay all charges in connection with the delivery ofMANDATORY PRODUCTS toCONSULTANT. |
B. | In addition to paragraph 17A above, ADAMS GOLF shall provideCONSULTANT with [*****] sets of clubs forCONSULTANT’S family and friends each calendar year of this Agreement. |
[***** ] Confidential Material redacted and filed separately with the Commission.
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18. | BASE COMPENSATION |
For the entire term of this Agreement, from September 1, 2004 through [*****] ADAMS GOLF shall payCONSULTANT a base compensation of [*****] dollars. The base compensation shall be paid [*****].
19. | PERFORMANCE BONUSES AND TOTAL COMPENSATION LIMITATION |
A. | In addition to his base compensation,CONSULTANT shall also be entitled to bonuses based on performance in particular PGA and SPGA events and year-end standing as follows: |
1. | IfCONSULTANT wins a PGA Tour Major (consisting of the Masters, US Open, PGA and British Open) or the Champion’s Tour (SPGA) US Open,CONSULTANT shall receive a bonus of $ [*****]. |
2. | IfCONSULTANT wins a Champions/Seniors Tour (SPGA) major other than the US Open (which shall for the purposes of this agreement consist of the Senior PGA, Senior British, the Tradition and the Ford Seniors)CONSULTANT shall receive a bonus of $ [*****]. |
3. | IfCONSULTANT finishes in the top [*****] on the official year end money list of the Champion’s Tour (SPGA),CONSULTANT shall also be entitled to a year end performance bonus according to the following schedule: |
a. | 2005$ [*****] |
b. | 2006$ [*****] |
c. | 2007$ [*****] |
d. | 2008$ [*****] |
e. | 2009$ [*****] |
B. | Notwithstanding paragraph A and its subparts above, the maximum total annual bonuses shall in no case exceed the following schedule: |
1. | 2005$ [*****] |
2. | 2006$ [*****] |
3. | 2007$ [*****] |
4. | 2008$ [*****] |
5. | 2009$ [*****] |
(For example, if in the calendar year [*****]CONSULTANT wins every PGA tour major and finishes in the top [*****] on the official year end money list of the Champion’s Tour (SPGA),CONSULTANT’S total bonuses shall be [*****] dollars.
[***** ] Confidential Material redacted and filed separately with the Commission.
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C. | In the event ofADAMS GOLF’S insolvency or bankruptcy, it is expressly agreed to by the parties thatCONSULTANT shall not be obligated to repay any money so long asCONSULTANT continues to fully perform his obligations under this Agreement. |
20. | APPROVAL OF ADVERTISING |
Prior to publishing or placing any advertising or promotional material which usesCONSULTANT’S name, facsimile signature, nickname, voice or likeness,ADAMS GOLFshall submit the same toCONSULTANT, orCONSULTANT’S designee, for approval, which approval shall not be unreasonably withheld or delayed. IfCONSULTANT disapproves, the reasons therefore shall be given toADAMS GOLF in writing within three (3) business days or shall be deemed approved.ADAMS GOLF agrees to protect, indemnify and holdCONSULTANT harmless from and against any and all expenses, damages, claims, suits, actions, judgments and costs whatsoever, arising out of, or in any way connected with, any advertising material furnished by, or on behalf of, the company. |
21. | INDEMNITY |
ADAMS GOLFagrees to defend, indemnify and hold harmlessCONSULTANT from any and all liability, claims, causes of action, suits, damages and expenses (including reasonable attorneys’ fees and expenses) for which he becomes liable or is compelled to pay by reason of or arising out of any claim or action for personal injury, death or otherwise involving alleged defects inADAMS GOLF’S PRODUCT, provided thatADAMS GOLFis promptly given notice in writing and is given complete authority and information required for the defense, andADAMS GOLFshall pay all damages or costs awarded therein againstCONSULTANT and any other cost incurred byCONSULTANT in defense of any suit, but shall not be responsible for any cost, expense or compromise incurred or made byCONSULTANT without ADAMS GOLF’S prior written consent. |
TERMINATION
22. | FAILURE TO PLAY |
Notwithstanding any other paragraph of this Agreement, in the event thatCONSULTANT dies or is unable to play tour golf at all,ADAMS GOLF may terminate this Agreement on thirty (30) days’ written notice. Upon such termination,CONSULTANT and/or CONSULTANT’Sestate shall be required to repayADAMS GOLF for that period of the Agreement not performed byCONSULTANT. The repayment amount shall be calculated in the same way as repayment is calculated under paragraph 8A.
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23. | TERMINATION FOR CAUSE |
Notwithstanding any other paragraph of this Agreement, if either party commits any material breach of this Agreement, the other party may terminate for cause upon giving fifteen (15) days written notice of such cause and provided the breach is not rectified within such fifteen (15) day period. Upon such termination,CONSULTANTshall be required to repayADAMS GOLF for that period of the Agreement not performed byCONSULTANT. The repayment amount shall be calculated in the same way as repayment is calculated under paragraph 8A.
24. | ADAMS GOLF’S RIGHTS UPON TERMINATION |
A. | In the event of termination of this Agreement,ADAMS GOLF shall cease using the name and/or likeness ofCONSULTANT in advertising within [*****] days. |
B. | In the event of termination of this Agreement,ADAMS GOLF shall cease using the name and/or likeness ofCONSULTANT on Product within[*****] months after termination of this Agreement. |
MISCELLANEOUS PROVISIONS
24. | 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.
25. | APPLICABLE LAW |
This Agreement shall be governed and construed according to the laws of the State of Kansas.
26. | ENTIRE AGREEMENT |
The provisions of this Agreement are intended by the parties as a complete, conclusive and final expression of their agreement concerning the subject matter hereof, which Agreement supersedes all prior agreements concerning the subject matter, and no other statement, representation, agreement or understanding, oral or written, made prior to or at the execution hereof, shall vary or modify the written terms hereof. No amendments, modifications or releases from any provision hereof shall be effective unless in writing and signed by both parties.
27. | WAIVER |
Unless otherwise mutually agreed in writing, no departure from, waiver of, or omission to require compliance with any of the terms hereof by either party shall be deemed to authorize any prior or subsequent departure or waiver, or obligate either party to continue any departure or waiver.
[***** ] Confidential Material redacted and filed separately with the Commission.
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28. | EXECUTION AND DELIVERY REQUIRED |
This instrument shall not be considered to be an agreement or contract nor shall it create any obligation whatsoever on the part ofCONSULTANT orADAMS GOLFunless and until it has been signed byCONSULTANT, or a duly authorized representative, and by duly authorized representatives ofADAMS GOLFand delivery has been made of a fully signed original to both parties.
29. | SEVERABILITY |
Any provision or part of this Agreement prohibited by applicable law shall be ineffective to the extent of such prohibition without invalidating the remaining provisions or parts hereof.
30. | RELATIONSHIP |
Both parties agree that this Agreement does not constitute and shall not be construed as a constituting of a partnership or joint venture betweenADAMS GOLFandCONSULTANT. Neither party shall have any right to obligate or bind the other party in any manner whatsoever, and nothing herein contained shall give or is intended to give any rights of any kind to any third person.
31. | ASSIGNMENT AND CHANGE OF CONTROL |
NeitherADAMS GOLFnorCONSULTANT shall have the right to grant sublicenses hereunder or to assign, alienate or otherwise transfer any of its rights or obligations hereunder.
32. | CONFIDENTIALITY |
Both parties understand that the contents of this Agreement, including, but not limited to, all amounts paid or to be paid and any additional consideration, are extremely confidential, and that disclosure of same to any third party could be detrimental to the interests of one or both parties. Therefore, both parties agree not to disclose the terms of this Agreement, without the permission of the other party, to any third party other than toCONSULTANT’S business, legal and financial advisors, and with respect to all such advisors,CONSULTANT shall take all reasonable steps to ensure such confidentiality toADAMS GOLF. Furthermore,CONSULTANT recognizes that during the course of performing his duties hereunder he may become aware of proprietary, confidential information concerningADAMS GOLF, itsPRODUCT, methods, processes, billing practices, financial condition, etc., or informationADAMS GOLFdesignates as confidential (collectively “Confidential Information”).CONSULTANT agrees that he will maintain in confidence and not disclose to any third party at any time any such Confidential Information and shall not use any such information to the detriment ofADAMS GOLFor for any purpose not contemplated by the Agreement.
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33. | ARBITRATION |
In the event a dispute arises under this Agreement which cannot be resolved, such dispute shall be submitted to arbitration and resolved by a panel of three arbitrators (who shall be lawyers), in a decision required by a majority of the arbitrators. If the parties cannot agree upon the panel of three arbitrators, then each party may pick an arbitrator and the two chosen arbitrators shall choose upon the three-arbitrator panel. The arbitration shall be conducted in accordance with the Arbitration Rules of the American Arbitration Association. Venue shall be Kansas. The award or decision rendered by the arbitration panel shall be final, binding and conclusive and judgment may be entered upon such award by any court of competent jurisdiction. |
34. | NOTICE |
Every written notice or written report which may be served uponCONSULTANT, according to the terms of this Agreement, may be served by enclosing it in a postpaid envelope addressed to:
Mr. Tom Watson
C/O Assured Management Company
1901 W. 47th Place, Suite 200
Westwood, Kansas 66205
or at such other address as is given in writing toADAMS GOLFbyCONSULTANT.
Every written notice which may be served uponADAMS GOLF, according to the terms of this Agreement, shall be served by enclosing it in a postpaid envelope addressed to:
Attention Legal Department
ADAMS GOLF, LTD.
2801 East Plano Parkway
Plano, Texas 75074
or at such other address as is given in writing byADAMS GOLFtoCONSULTANT.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first set forth above.
APPROVED FORCONSULTANT | |||
By: /s/ Tom Watson | Date: January 13, 2005 | ||
Tom Watson | |||
APPROVED FORADAMS GOLF, LTD. | |||
By: /s/ Oliver G. “Chip” Brewer III | Date: January 13, 2005 | ||
Oliver G. (“Chip”) Brewer III | |||
CEO,ADAMS GOLF |
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