REDACTED COPY
-------------
CONFIDENTIAL TREATMENT REQUESTED
--------------------------------
CONFIDENTIAL PORTIONS OF THIS
-----------------------------
DOCUMENT HAVE BEEN REDACTED
---------------------------
AND HAVE BEEN SEPARATELY
------------------------
FILED WITH THE COMMISSION
-------------------------
ENDORSEMENT AGREEMENT
---------------------
This Agreement is entered into on January 13, 2005 between
professional golfer, TOM WATSON, (hereinafter referred to as
"CONSULTANT") and ADAMS GOLF, LTD. (hereinafter referred to as
"ADAMS GOLF").
WITNESSETH
----------
WHEREAS, ADAMS GOLF desires to obtain the right to use the
name, likeness and ENDORSEMENT of CONSULTANT in connection with
the advertisement and promotion of ADAMS 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 5 years
and 4 months commencing the 1st day of September 2004 and
terminating the 31st day of December 2009.
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
the CONSULTANT'S name, fame, nickname, autograph, voice,
facsimile, signature, photograph, likeness, and image in
connection with the marketing, advertising, promotion and
sale of ADAMS 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 following ADAMS GOLF
PRODUCTS that CONSULTANT must exclusively play/use in all
Champions/Senior Professional Golf Association (SPGA) and
Professional Golf Association (PGA) events at all times:
-1-
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 to ADAMS GOLF the
exclusive right and license to use CONSULTANT'S ENDORSEMENT
in connection with the manufacture, sale, distribution,
advertising and promotion of PRODUCT in the CONTRACT
TERRITORY.
4. EXCLUSIVITY OF ENDORSEMENT
--------------------------
During the term of this Agreement, unless otherwise
authorized at the sole discretion of ADAMS GOLF in writing,
CONSULTANT shall not:
A. give the right to use or permit the use of CONSULTANT'S
name, facsimile signature, nickname, voice or likeness to
any other manufacturer or seller of PRODUCT;
B. sponsor or endorse PRODUCT made or sold by any other
manufacturer or seller; or
C. serve as a CONSULTANT or advisor of any other
manufacturer or seller of PRODUCT.
D. Notwithstanding paragraphs 4A, 4B and 4C above,
CONSULTANT shall be entitled to endorse and play the
[*****]. The parties expressly agree that CONSULTANT may
permit [*****] the use of CONSULTANT'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 of CONSULTANT varies from past practice of
utilizing similarly situated professionals, CONSULTANT
will take action to remedy the situation [*****]. If
CONSULTANT participates directly in any [*****] sponsored
photo shoots for advertising or PR, CONSULTANT shall wear
his ADAMS GOLF [*****]. The parties further expressly
agree that CONSULTANT'S endorsement of
- -----------------
[*****] Confidential Material redacted and filed separately
with the Commission.
-2-
the [*****] shall not include the right to place a
[*****] logo on his ADAMS GOLF [*****] or the ADAMS GOLF
[*****]. If CONSULTANT'S relationship with [*****]
terminates during this Agreement, CONSULTANT shall be
permitted to replace the [*****] endorsement with another
[*****] endorsement under the same terms and conditions
expressed herein.
E. Notwithstanding paragraphs 4A, 4B and 4C above,
CONSULTANT shall not be required to wear ADAMS GOLF
[*****] in [*****] ads.
5. EXCLUSIVE USE OF PRODUCT
------------------------
During the term of this Agreement, CONSULTANT shall
exclusively play/use the MANDATORY PRODUCT. (It is expressly
understood by the parties that CONSULTANT may play [*****] clubs
in the bag other than ADAMS GOLF clubs including, but not limited
to, a putter by a manufacturer other than ADAMS GOLF but may not
endorse those clubs and/or putter.)
6. CONSULTANT'S ENDORSEMENT OF NON-COMPETITIVE PRODUCT
---------------------------------------------------
If CONSULTANT endorses or promotes a non-competitive product
and in that endorsement or promotion CONSULTANT wears,
plays, uses, holds or is in any way associated with a
product that would constitute PRODUCT as defined under this
Agreement, CONSULTANT shall use objectively reasonable best
efforts to ensure that PRODUCT is an ADAMS GOLF PRODUCT and
it shall not be altered or changed in appearance in the
endorsement in any manner whatsoever without the express
written consent of ADAMS GOLF. When endorsing a non-
competitive product, under no circumstances shall CONSULTANT
wear, play, use, hold or in any way be associated with an
ADAMS GOLF competitor's Product.
7. CONSULTANT'S SATISFACTION OF MANDATORY PRODUCT
----------------------------------------------
It is particularly and expressly understood and agreed that
if CONSULTANT shall find in his sincere best reasonable
judgment that the MANDATORY PRODUCT so supplied is not
suitable for his use in tournament competition, then he
shall promptly notify ADAMS GOLF in writing of such fact and
the reasons therefor. Thereafter, ADAMS GOLF shall have a
period of thirty (30) days to either, at ADAMS GOLF'S sole
discretion, supply CONSULTANT with MANDATORY 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 due CONSULTANT 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.
-3-
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 repay ADAMS 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 to ADAMS GOLF within one month
following the end of the calendar year. For example, if
in the calendar year 2005 CONSULTANT achieves a
satisfactory record of play in [*****] events, he shall
repay ADAMS GOLF [*****] dollars no later than January
31, 2006.
C. In the event that CONSULTANT 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 with ADAMS GOLF in giving advice,
suggestions and recommendations concerning the acceptability
and playability of current ADAMS GOLF lines, the development
of new ADAMS GOLF lines, and information about significant
golf PRODUCT and golf market trends, and meet as reasonably
requested with ADAMS 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 display ADAMS GOLF'S brand
name and to demonstrate, discuss and emphasize the newest
features of ADAMS GOLF PRODUCT at every opportunity
including but not limited to all Senior PGA tour events and
promotional and advertising events in which CONSULTANT takes
part.
- -----------------
[*****] Confidential Material redacted and filed separately
with the Commission.
-4-
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 for CONSULTANT by ADAMS
GOLF which are compatible with CONSULTANT'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 the ADAMS GOLF PRODUCT and wear [*****] and
display ADAMS 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 with CONSULTANT'S
own practice, play and personal time requirements. Said
activities shall be directly related to the promotion of
ADAMS GOLF PRODUCT. ADAMS GOLF shall reimburse
CONSULTANT for reasonable travel expenses for CONSULTANT
when making special appearances for ADAMS GOLF pursuant
to this paragraph but ADAMS GOLF shall not pay CONSULTANT
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 of CONSULTANT'S ENDORSEMENT is
materially reduced or impaired because CONSULTANT:
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, of ADAMS GOLF or any of its affiliates or any of
their respective PRODUCT 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 GOLF shall have the right, in addition to
its other legal and equitable remedies, to immediately
terminate this Agreement, by giving written notice to
CONSULTANT. ADAMS GOLF must 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.
-5-
13. FREEDOM TO CONTRACT
-------------------
CONSULTANT represents and warrants that CONSULTANT is free
of all prior undertakings and obligations which would
prevent or tend to impair either the full performance of
CONSULTANT'S obligations hereunder or ADAMS GOLF'S full
enjoyment of the rights and privileges granted to it by
CONSULTANT.
14. INDEMNITY
---------
CONSULTANT agrees to protect, indemnify and hold ADAMS GOLF
harmless 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 by CONSULTANT in this Agreement.
15. ABSENCE OF AGENCY
-----------------
CONSULTANT shall not and will not have the right or
authority to bind ADAMS GOLF by any representation or in any
other respect whatsoever or to incur any obligation or
liability in the name of or on behalf of ADAMS 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 over
CONSULTANT'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 over CONSULTANT'S
services hereunder. Any and all payments required to be
made to SAG or AFTRA or any other organization having
jurisdiction over CONSULTANT'S services hereunder, shall be
the sole responsibility of CONSULTANT.
ADAMS GOLF'S OBLIGATIONS
------------------------
17. SUPPLY OF PRODUCT
-----------------
A. During the term of this Agreement, ADAMS GOLF shall
provide CONSULTANT with sufficient quantities of such
MANDATORY PRODUCTS for CONSULTANT'S use as CONSULTANT may
reasonably need to fulfill his obligations under this
agreement. ADAMS GOLF shall pay all charges in
connection with the delivery of MANDATORY PRODUCTS to
CONSULTANT.
B. In addition to paragraph 17A above, ADAMS GOLF shall
provide CONSULTANT with [*****] sets of clubs for
CONSULTANT'S family and friends each calendar year of
this Agreement.
- -----------------
[*****] Confidential Material redacted and filed separately
with the Commission.
-6-
18. BASE COMPENSATION
-----------------
For the entire term of this Agreement, from September 1,
2004 through [*****], ADAMS GOLF shall pay CONSULTANT 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. If CONSULTANT 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. If CONSULTANT 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. If CONSULTANT 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.
-7-
C. In the event of ADAMS GOLF'S insolvency or bankruptcy, it
is expressly agreed to by the parties that CONSULTANT
shall not be obligated to repay any money so long as
CONSULTANT continues to fully perform his obligations
under this Agreement.
20. APPROVAL OF ADVERTISING
-----------------------
Prior to publishing or placing any advertising or
promotional material which uses CONSULTANT'S name, facsimile
signature, nickname, voice or likeness, ADAMS GOLF shall
submit the same to CONSULTANT, or CONSULTANT'S designee, for
approval, which approval shall not be unreasonably withheld
or delayed. If CONSULTANT disapproves, the reasons
therefore shall be given to ADAMS GOLF in writing within
three (3) business days or shall be deemed approved. ADAMS
GOLF agrees to protect, indemnify and hold CONSULTANT
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 GOLF agrees to defend, indemnify and hold harmless
CONSULTANT 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 in ADAMS GOLF'S PRODUCT, provided that ADAMS
GOLF is promptly given notice in writing and is given
complete authority and information required for the defense,
and ADAMS GOLF shall pay all damages or costs awarded
therein against CONSULTANT and any other cost incurred by
CONSULTANT in defense of any suit, but shall not be
responsible for any cost, expense or compromise incurred or
made by CONSULTANT without ADAMS GOLF'S prior written
consent.
TERMINATION
-----------
22. FAILURE TO PLAY
---------------
Notwithstanding any other paragraph of this Agreement, in
the event that CONSULTANT 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'S estate shall be required to
repay ADAMS GOLF for that period of the Agreement not
performed by CONSULTANT. The repayment amount shall be
calculated in the same way as repayment is calculated under
paragraph 8A.
- -----------------
[*****] Confidential Material redacted and filed separately
with the Commission.
-8-
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, CONSULTANT shall be required to repay
ADAMS GOLF for that period of the Agreement not performed by
CONSULTANT. 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 of CONSULTANT
in advertising within [*****] days.
B. In the event of termination of this Agreement, ADAMS GOLF
shall cease using the name and/or likeness of CONSULTANT
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.
- -----------------
[*****] Confidential Material redacted and filed separately
with the Commission.
-9-
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.
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 of CONSULTANT or ADAMS GOLF unless and until it has
been signed by CONSULTANT, or a duly authorized
representative, and by duly authorized representatives of
ADAMS GOLF and 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 between ADAMS GOLF and
CONSULTANT. 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
--------------------------------
Neither ADAMS GOLF nor CONSULTANT 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 to CONSULTANT'S
business, legal and financial advisors, and with respect to
all such advisors, CONSULTANT shall take all reasonable
steps to ensure such confidentiality to ADAMS GOLF.
Furthermore, CONSULTANT recognizes that during the course of
performing his duties hereunder he may become aware of
proprietary, confidential information concerning ADAMS GOLF,
its PRODUCT, methods, processes, billing practices,
financial condition, etc., or information ADAMS GOLF
designates as confidential (collectively "Confidential
Information"). CONSULTANT agrees that he
-10-
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 of ADAMS
GOLF or for any purpose not contemplated by the Agreement.
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
upon CONSULTANT, 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 to ADAMS
GOLF by CONSULTANT.
Every written notice which may be served upon ADAMS 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 by ADAMS
GOLF to CONSULTANT.
-11-
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first set forth above.
APPROVED FOR CONSULTANT
By: /s/ Tom Watson Date: January 13, 2005
--------------------- -----------------
Tom Watson
APPROVED FOR ADAMS GOLF, LTD.
By: /s/ Oliver G. "Chip" Brewer III Date: January 13, 2005
------------------------------- -----------------
Oliver G. ("Chip") Brewer III
CEO, ADAMS GOLF
-12-