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EXHIBIT 10.13
EXECUTION COPY
ENDORSEMENT AGREEMENT
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This Endorsement Agreement ("Agreement") is made this 13th day of
October, 1999 by and between SQUARE TWO GOLF INC., a New Jersey corporation (the
"Company"), and XXXXX XXXXXXXXX, an individual, with an address at 000 Xx Xxxxxx
Xxxxx, Xxxxx Xx, Xxx Xxxxxx, 00000 (the "Professional").
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WHEREAS, the Company manufactures and sells women's golf clubs and
other golf equipment;
WHEREAS, the Professional is a retired Ladies Professional Golf
Association ("LPGA") Tour Professional;
WHEREAS, the Company desires to utilize the services of the
Professional in connection with the promotion, marketing, and sale of a
signature line of women's golf clubs and the Company's other products and
services; and
WHEREAS, the Company and the Professional desire to enter into an
agreement pursuant to which the Professional will serve the Company as an
independent contractor, on the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the Company and the Professional hereby agree as follows:
1. TERM.
1.1 The term of this Agreement shall begin on January 1, 2000 and
continue for an initial period of five (5) years unless earlier terminated in
accordance with Section 7 hereof, and may be renewed under Section 8 hereof (the
initial period plus any renewal period, the "Term").
2. ENDORSEMENT SERVICES.
During the Term, the Professional will provide the services described
in this Section 2 (the "Services"):
2.1 The Professional hereby grants to the Company an exclusive license
to use her name, likeness, image and personal identification, singly or in any
combination, in connection with the production, use, marketing and sale of a
"Xxxxx Xxxxxxxxx" signature line of women's golf clubs (the "Products"), as
described more fully in Section 3 below.
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2.2 The Professional agrees to serve as a professional golf instructor
during up to ten (10) golf clinics hosted by the Company per calendar year at
locations within the United States to be determined by the Company. The golf
clinics shall be one or two day events.
2.3 The Professional agrees to serve as a spokesperson for the Company
at up to two (2) Professional Golf Association merchandise shows, including but
not limited to the PGA Merchandise Shows.
2.4 The Professional hereby grants to the Company the exclusive and
worldwide right to use her name, likeness, image and personal identification,
singly or in any combination, during the Term and for a period of six (6) months
after the Term as provided in Section 2.8, in the creation of two (2) print
advertisements per year and one (1) television advertisement per year (together,
the "Advertisements") for any golf equipment, along with all rights in any
images, videos, advertisement copy or other materials created by the
Professional or others. The Professional agrees that the Company shall own all
such materials and all intellectual property rights therein for use in
perpetuity in any media now known or hereafter devised or developed, including
but not limited to the internet. The Professional hereby grants to the Company
the worldwide right during the Term and for a period of six (6) months after the
Term as provided in Section 2.8 to use, reproduce, print, publish, distribute,
broadcast, modify, edit, condense, or expand any materials containing her name,
image, likeness or personal identification that are created hereunder.
2.5 The Professional hereby grants to the Company an exclusive license
to use her name, likeness, image and personal identification in the Company's
catalog of products.
2.6 The Professional agrees to participate in a minimum of five (5)
other events per calendar year to market and promote the Company's products,
including but not limited to market consultations, each of which shall include
meeting with the Company executives to assist in the design, development,
marketing and promotion of the Company's products.
2.7 The Professional agrees to use only the golf clubs and golf bags of
the Company in any golf event, whether professional or social, during the Term.
The Professional agrees (i) to use no golf bag bearing any identification of a
competitor of the Company and (ii) to wear no apparel bearing any identification
of a competitor of the Company, and will prohibit any caddy of hers from bearing
any such identification.
2.8 The Company shall cease use of the name, likeness, image or
personal identification of the Professional upon expiration or termination of
this Agreement. However, the Company will have the right to dispose of its
inventory of Products existing at the time of termination or expiration of this
Agreement and the right to use the name, likeness, image and personal
identification of the Professional in connection with the disposition of such
inventory. The right granted in this section shall expire six (6) months after
the termination or expiration of this Agreement. The Professional understands
and agrees that the Company shall have no obligation to take action against or
attempt to stop distributors, retailers and other third parties to this
Agreement who have purchased Products bearing the name, likeness, image or
personal
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identification of the Professional from any marketing, advertising, sale or
other disposition of such Products, regardless of any use they make of the name,
likeness, image or personal identification of the Professional.
3. LICENSE AND ENDORSEMENT FOR PRODUCTS.
3.1 The Professional hereby grants an exclusive, worldwide license to
the Company to use the name, likeness, image and personal identification of the
Professional, during the Term and for a period of six (6) months after the Term
as provided in Section 2.8, in connection with the creation, manufacture,
marketing, sale and promotion of the Products. As a condition precedent to, and
a continuing precedent of, any obligations of the Company hereunder, the
Professional hereby agrees to use the Products upon their creation and to
provide an unqualified and unequivocal endorsement thereof during the Term at
the request of the Company at any time or times during the Term in verbal,
written or recorded forms. If the Professional is unable at any time during the
Term to provide such endorsement of the Products, the Company shall be released
from any of its obligations under Sections 4.1, 4.2, and 4.3 hereof to pay any
fees or royalties or to provide any stock options to the Professional and may
elect to terminate this Agreement without any further obligation to the
Professional.
4. COMPENSATION FOR ENDORSEMENT SERVICES.
4.1 The Company will pay the Professional a base fee of thirty-six
thousand dollars ($36,000) per year (the "Base Fee") for Services performed
during the Term. The Company shall pay the Base Fee in four (4) equal
installments of nine thousand dollars ($9,000) each on March 15, June 15,
September 15 and December 15 of each year during the Term commencing on January
15, 2000. The Professional acknowledges that the Company is under no obligation
to create or maintain the Products. The Professional agrees that payment of the
Base Fee shall satisfy all obligations of the Company hereunder if it elects not
to create or market and sell the Products.
4.2 If the Company elects to create and market the Products, the
Company will pay to the Professional a "Royalty Fee" on the sales of Products
during the Term, except as provided in the following sentence, of two percent
(2%) of the "Royalty Base," which Royalty Base shall be calculated as the
wholesale selling price of all Products for which the Company actually receives
the proceeds of such net of returns, allowances, discounts, shipping, taxes,
insurance and credits. During the Term, the Company shall pay the Royalty Fee,
earned for the preceding quarter, to the Professional quarterly, within thirty
(30) days of the end of the succeeding calendar year quarter. If the Company
decides not to renew this Agreement in accordance with the provisions of Section
8 below, the Company shall pay the Professional an amount equal to two percent
(2%) of the net book value of its unsold inventory of Products on December 31,
2004.
4.3 If the Company elects to create and market the Products, the
Company will grant to the Professional options to purchase shares of the
Company's capital stock ("Options"), as provided in this paragraph. On each
March 31, June 30, September 30, and December 31 during the Term that the
Company elects to continue the marketing and sale of the Products, the Company
will grant to the Professional a number of Options (the "Quarterly Grant
Number").
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The Quarterly Grant Number shall be the nearest whole number that results from
the division of the number of dollars represented by one half of one percent
(0.5%) of the Royalty Base by the closing price of the Company's stock on the
grant date. The exercise price of the Options shall be the closing price of the
Company stock on the grant date. The sum of the Quarterly Grant Numbers in each
calendar year of the Term shall not exceed fifteen thousand (15,000). The
options will expire five (5) years after each grant date. The Options shall not
be assigned, transferred or alienated by the Professional. Any attempt to
assign, transfer or alienate the Options without the prior written consent of
the Company shall be void.
4.4 The Company will reimburse the Professional for her reasonable and
necessary travel expenses in connection with her performance of the Services.
4.5 The Company shall be under no obligation to create, market, promote
or sell the Products. There shall be no minimum amounts due from the Company
hereunder except as specified in Section 4.1 above. The failure of the Company
to create, market, promote or sell the Products or to reach any specific sales
volume shall not result in any liability of the Company or create any right for
the Professional to make a claim against the Company. The Company may elect to
dispose of the Products at any price or for no consideration in its sole
discretion and shall not be obligated to the Professional for any sale or
transfer of the Products which does not produce compensation for the
Professional.
5. PROFESSIONAL'S CONDUCT.
5.1 The Professional shall at all times during the Term refrain
from:
5.1.1 dishonest, fraudulent, illegal or unethical acts or
omissions;
5.1.2 excessive use or abuse of alcohol;
5.1.3 use of controlled substances, except as prescribed by
a licensed medical professional in the treatment of illness or disease;
5.1.4 acts or omissions reasonably determined by the
Company to be prejudicial or injurious to the business or goodwill of
the Company, its officers, employees, shareholders or products, the
golf industry or professional golf; and
5.1.5 conduct which could reasonably be expected to degrade
the Professional, devalue the services of the Professional or to
bring the Professional into public hatred, contempt, scorn or
ridicule, or that could reasonably be expected to shock, insult or
offend the community or to offend public morals or decency.
6. INDEPENDENT CONTRACTOR.
6.1 With respect to all Services described in this Agreement, the
Professional's status will be that of an independent contractor and not a
partner, employee or agent of the Company. The Professional has no power or
authority whatsoever to make binding commitments or
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contracts on behalf of the Company. The Professional agrees that she will pay
and hold the Company harmless from any and all costs, expenses, fees, dues,
pension contributions, benefit contributions and fines associated with her
present or future required membership in any trade association, union or
professional organization, including but not limited to LPGA, PGA, USGA, SAG or
AFTRA, that may be associated with her performance of this Agreement. The
Professional represents that no agent or representative fees, charges, rights or
claims exist in connection with her execution or performance of this Agreement,
and the Professional shall hold harmless the Company from any such liability.
Any costs incurred by the Company to comply with any rule, contract, order or
other requirement of SAG, AFTRA or other union or professional organization
having control or jurisdiction over the Professional or her performance of the
services required by this Agreement shall be deducted from the sums due from the
Company to the Professional. The Professional agrees that the compensation
provided to her under Section 4 of this Agreement shall be deemed compensation
for purposes of meeting any minimum pay requirements of any SAG or AFTRA
agreement. If any of the above terms are deemed to violate any SAG or AFTRA
agreement, the Company shall have the option to terminate this Agreement without
liability.
6.2 The Professional shall have no authority to incur expenses on
behalf of the Company without the Company's prior written approval. The
Professional shall submit to the Company for written approval a description of
anticipated expenses, other than those for reasonable and necessary travel,
prior to incurring such expenses. All statements submitted by the Professional
for expenses that were not pre-approved by the Company will be subject to
review, approval or rejection by the Company in its sole discretion.
6.3 The Professional will be solely responsible for withholding and
paying any and all federal, state and local taxes, including but not limited to
payroll, unemployment, social security and income taxes, and any other payments
which may be due as a result of or in connection with payments made by the
Company for services rendered under this Agreement. The Professional
acknowledges that she is not qualified for and will not receive any Company
employee benefits or other incidents of employment.
6.4 The Professional agrees to maintain at all times during the Term
such insurance, including without limitation, health insurance, workers'
compensation, automobile and general comprehensive liability coverage, as will
protect and hold harmless the Company from any claims, losses, damages, costs,
expenses or liability arising out of the Services performed under this
Agreement. The Company may require the Professional to provide insurance
certificates evidencing the same.
6.5 The Professional represents and warrants that:
6.5.1 The Professional has the right to enter into this
Agreement;
6.5.2 By agreeing to perform or performing this Agreement,
the Professional will not breach any existing agreement; and
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6.5.3 Neither the Professional's grant of rights to the
Company under this Agreement nor the Company's exercise of such rights
will cause the infringement of any rights of third parties.
6.6 The Professional agrees not to enter into any other agreement the
performance of which would or could cause an infringement of the rights that the
Professional grants to the Company under this Agreement.
7. TERMINATION.
7.1 This Agreement shall terminate automatically if the Professional
dies or becomes disabled, or suffers illness, mental or physical disability to
the extent that she is unable to perform the obligations of the Professional
under the terms of this Agreement.
7.2 Either the Company or the Professional may terminate this Agreement
in the event of a non-curable breach of this Agreement by the other party.
7.3 In case of a breach of the Agreement that is capable of being
cured, the non-breaching party shall, before terminating the Agreement, give the
breaching party written notice of such breach, and a thirty (30) day period in
which to cure such breach.
7.4 The Professional's obligations under (i) Section 9 hereof and (ii)
Exhibit A shall survive a termination of this Agreement for the applicable
periods set forth therein. The Company's obligation to compensate the
Professional pursuant to Section 4 of this Agreement shall cease on the
effective date of termination except as to amounts earned by the Professional
and due from the Company accruing prior to such date.
7.5 The right to terminate outlined in this section shall be in
addition to, and not in lieu of, all other remedies which may be available to
the non-breaching party, whether at law or in equity, for a breach of this
Agreement.
8. RENEWAL.
8.1 The Company may renew this Agreement on the same terms and
conditions for one (1) additional five year period that shall begin on January
1, 2005 and end on December 31, 2009, by providing a written notice of its
intent to effect such renewal to the Professional by November 30, 2004.
9. NON-COMPETITION.
9.1 The Professional acknowledges that any use of her name, likeness,
image or personal identification by any third party in connection with the
making, use, sale, marketing, promotion or advertising of golf equipment,
including but not limited to golf clubs and golf bags, would cause a likelihood
of confusion with the Products of the Company, during the Term and thereafter
during the time the Company disposes of inventory on hand at the expiration of
this Agreement. The Professional acknowledges that she will have a right,
pursuant to and under the
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conditions described in Section 4.2 above, to receive a specified royalty for
inventory on hand at the expiration of the initial term, and accordingly hereby
grants to the Company the right to fill any orders for, assemble components of,
market, advertise, promote and sell any inventory of Products in its inventory
existing at the expiration or termination of this Agreement, for a period not to
exceed two (2) years after such expiration or termination of the original term.
To avoid any possibility of confusion of the public, trademark infringement or
interference with the rights of the Company, the Professional agrees not to
endorse, license or otherwise authorize the use of her name, likeness or image
in connection with another company's golf clubs or golf-related clothing or
equipment during the Term and for a period of two (2) years thereafter.
9.2 The Professional agrees to divest herself of any management or
control interest that she currently has in any entity that is a competitor of
the Company, and not to acquire any such interest during the Term.
10. RIGHT OF INJUNCTIVE RELIEF.
10.1 The Professional acknowledges and agrees that a breach of the
covenants contained in Section 9 of this Agreement would actually or potentially
deprive the Company of a substantial amount of sales and business value and that
the amount of injury would be impossible or difficult to ascertain fully. The
Company shall, therefore, be entitled to obtain an injunction against the
Professional restraining any violation, further violation, or threatened
violation of Section 9 above, in addition to any other remedies to which the
Company may be entitled by law.
11. MISCELLANEOUS.
11.1. ENFORCEABILITY. The unenforceability or invalidity of any
provision of this Agreement shall not affect the enforceability or validity of
the balance of the Agreement. In the event that any such provision should be or
becomes invalid for any reason, such provision shall remain effective to the
maximum extent permissible, and the parties shall consult and agree on a legally
acceptable modification giving effect to the commercial objectives of the
unenforceable or invalid provision, and every other provision of this Agreement
shall remain in full force and effect.
11.2. ASSIGNABILITY. This Agreement is not assignable by the
Professional but is assignable by the Company to any affiliate or successor
entity. Any attempted assignment by the Professional without the prior written
consent of the Company shall be void. As used in this Agreement, the term
"Company" shall include any entity to which this Agreement shall have been
assigned by the Company, in accordance with the preceding.
11.3. AMENDMENT/WAIVER.
11.3.1 This Agreement supersedes all prior and contemporaneous
agreements and understandings between the parties with respect to the
subject matter hereof and may not be changed or amended orally.
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11.3.2 No change, termination or attempted waiver of any of
the provisions of this Agreement shall be of any effect unless the same
is set forth in writing and duly executed by the party against which it
is sought to be enforced.
11.3.3 The failure of any party at any time or from time to
time to require performance of the other party's obligations under this
Agreement shall in no manner affect such party's right to enforce any
provisions of this Agreement at a subsequent time. The waiver by any
party of any right arising out of any breach by the other party shall
not be construed as a waiver of any right arising out of a subsequent
breach.
11.4. GOVERNING LAW. The validity, interpretation,
construction and performance of this Agreement shall be governed in
accordance with the laws of the State of New Jersey without giving
effect to the principles of conflicts of laws of such state.
11.5. NOTICES. Any communication (including any notice, consent,
approval or instructions) provided for under this Agreement may be given to the
person to whom it is addressed by delivering the same to or for such person at
the address or facsimile number of such person as set out hereinafter or at such
other address or number as such person shall have notified to the other party
hereto, provided that a copy of any communication sent by fax shall be
immediately deposited in the mail. Any communication so addressed and delivered
as aforesaid shall be deemed to have been sufficiently given or made on the date
on which it was delivered.
If to the Company: S2 GOLF INC.
00 Xxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxxxxx
Facsimile number: (000) 000-0000
With a copy to: Xxxx Xxx Xxxxxxxxx, Esq.
Squire, Xxxxxxx & Xxxxxxx L.L.P.
0000 Xxx Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Facsimile number: (000) 000-0000
If to the Professional: Xxxxx Xxxxxxxxx
0000 Xxxxxxxxx
Xxxxxx Xxxxx, Xxxxx 00000
Facsimile number: (000) 000-0000
With a copy to: Xxxx Xxxxxxx
00000 Xxxx Xxxxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Facsimile number: (000) 000-0000
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11.6. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.7. INTELLECTUAL PROPERTY RIGHTS, CONFIDENTIALITY AND NON-USE. The
Professional acknowledges her obligations under the provisions of the
Intellectual Property Rights Confidentiality and Non-Use Obligations Agreement
attached hereto as "Exhibit A" and made a part hereof by this reference. The
rights and obligations of the parties set forth in Exhibit A shall survive the
termination or expiration of this endorsement agreement, regardless of cause or
circumstances of the termination or expiration.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SQUARE TWO GOLF, INC.
By: /s/XXXXXXX X. XXXXXXXXXX
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Xxxxxxx X. Xxxxxxxxxx
President
PROFESSIONAL
/s/ XXXXX XXXXXXXXX
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Xxxxx Xxxxxxxxx
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EXHIBIT A
Intellectual Property Rights
Confidentiality and Non-Use Obligations Agreement
This Agreement by and between SQUARE TWO GOLF INC., a New Jersey
corporation (the "Company") and XXXXX XXXXXXXXX, an individual residing at 000
Xx Xxxxxx Xxxxx, Xxxxx Xx, Xxx Xxxxxx 00000 (the "Recipient"), is part of the
Endorsement Agreement of the parties. In consideration of and as an inducement
for the Company entering into said Endorsement Agreement with Recipient:
(a) Recipient acknowledges and agrees that communications for the
purpose of proposing to work for or working for the Company have in the past or
will entail the disclosure, observation and display to Recipient of information
and materials of the Company that are proprietary, confidential and trade
secret, which include, but are not limited to, golf equipment marketing plans,
research, development and designs, computer software, screens, user interfaces,
systems designs and documentation, processes, methods, fees, charges, know-how
and any result from the work performed by Recipient or the Company, new
discoveries, Intellectual Property (as defined below) and improvements to the
Company's products made for or on behalf of the Company (all of which, singly
and collectively, "Information").
With regard to such Information, whether or not labeled or specified as
confidential, proprietary or trade secret, Recipient agrees:
(i) to use the Information solely for the purpose of making
proposals to or working under contracts with the Company; and
(ii) not to disclose or transfer the Information to others
without the Company's written permission.
(b) Recipient will not be prevented from using or disclosing
Information:
(i) which Recipient can demonstrate, by written records, was
known to it before the disclosure or display of the Information by the
Company to Recipient; or
(ii) which is now, or becomes in the future, public knowledge
other than by breach of this Agreement or the endorsement agreement by
Recipient, its employees or agents; or
(iii) that is lawfully obtained by Recipient from a source
independent of the Company, which source was lawfully in possession of
the Information and which source had the unrestricted right to disclose
or display the Information to the Recipient; or
(iv) that is required by legal process to be disclosed,
provided that Recipient will timely inform the Company of the
requirement for disclosure, will permit the Company to attempt, by
appropriate legal means, to limit such disclosure and will itself
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use appropriate efforts to limit the disclosure and maintain
confidentiality to the extent possible.
(c) The confidentiality and non-use obligations of Recipient will
remain in effect after all work for the Company has been completed.
(d) All Information, including any copies thereof, in any media, in the
possession or control of Recipient and Information embodied or included in any
software or data files loaded or stored on computers in the possession or
control of Recipient, its agents or employees, shall be removed and returned to
the Company upon demand, but no later than the completion of work for the
Company.
(e) Recipient agrees that she will not copy the Information in whole or
in part or use all or any part of the Information to reverse engineer, duplicate
the function, sequence or organization of the Information for any purpose
without the prior written permission of the Company.
(f) Recipient further acknowledges and agrees that all new discoveries,
inventions, improvements, processes, formulae, designs, drawings, training
materials, original works of authorship, photos, video tapes, electronic images,
documentation, trademarks and copyrights (the "Intellectual Property"), that may
be developed, conceived, or made by Recipient, alone or jointly with others
during her work for the Company, shall be the exclusive property of the Company
and shall be deemed a work for hire. Recipient hereby assigns and agrees to
assign all Recipient's rights in any Intellectual Property to the Company.
Recipient hereby grants to the Company power of attorney for the purpose of
assigning all Recipient's rights in Intellectual Property to the Company for the
purposes of filings, registrations and other formalities deemed necessary by the
Company to prosecute, protect, perfect or exploit its ownership and interests in
Intellectual Property. Recipient further agrees to execute, acknowledge and
deliver any documentation, instruments, specifications or disclosures necessary
to assign, prosecute, protect, perfect or exploit the Company ownership of
Intellectual Property.
(g) Recipient acknowledges and agrees that the Company possesses
valuable know-how, proprietary, confidential and trade secret Information that
has been procured or developed by the Company at great expense and that its
unauthorized disclosure would result in substantial damages to the Company that
may not be adequately compensated by monetary relief. Accordingly, Recipient
hereby consents to the jurisdiction of the Federal and County Courts in Essex
County, New Jersey and agrees that the Company may seek temporary restraining
orders against it or other extraordinary relief necessary to protect the
Information.
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