EXHIBIT 10.20, and
EXHIBIT 10.23
MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding ("Memorandum") is entered into this 29th
day of July, 1996, by and between Hutch Sports USA, Inc., MacMark Corporation
and Equilink Licensing Corporation. The purpose of this Memorandum is to
express the parties' understanding and intentions relating to the assignment
(the "Assignments") to Hutch Sports USA of the licensee's rights and
obligations under (1) that certain License Agreement by and between MacMark
Corporation and MacGregor Sports Products, Inc., dated May 9, 1991, as amended
from time to time (the "MacMark License"); and (2) that certain License
Agreement by and between Equilink Licensing Corporation and MacGregor Sports
Products, Inc., dated May 9, 1991, as amended from time to time (the "Equilink
License") (the MacMark License and Equilink License being collectively
referred to herein as the "Licenses"), and with respect to certain
modifications the parties agree shall be made by amendments to the Licenses
promptly upon completion of the assignment of the Licenses to Hutch.
Capitalized terms used herein shall have the meanings attributed to them in
the License Agreements.
The parties hereto agree as follows:
1. In the categories of Licensed Products in which Equilink Licensing
Corporation has the license rights under the MacMark License, as a condition
to its consenting to the Assignments, Equilink Licensing Corporation and its
successors, assigns, trustees and receivers (collectively, "Equilink") will
receive a Proxy (as defined below) from the MacMark director(s) to be
appointed by Hutch Sports US, Inc. and its successors, assigns, trustees and
receivers (collectively, "Hutch") and from Hutch as MacMark stockholder
granting Equilink the right to vote with respect to each matter relating to
categories granted to Equilink, under the License Agreements, including
without limitation, the grant of new licenses, extensions of licenses,
assignments of licenses, sublicenses, and renewals and cancellations of
licenses. As used in this agreement, a Proxy shall be a perpetual, irrevocable
proxy complying with Delaware law, and Hutch Sports USA, Inc. hereby agrees
that it will require each MacMark director it appoints and each of its
assignees, successors, trustees and receivers and their director designees, to
be bound by such proxy, and Hutch (including such other persons) shall take
any and all actions required to renew such proxy in accordance with Delaware
law.
2. Equilink agrees that it will not unreasonably withhold its consent
to any assignment (through merger or otherwise) of the MacMark License by
Hutch or sublicense of any rights granted to Hutch under the MacMark License.
3. MacMark and Equilink are willing to, and hereby do, grant a waiver
of currently existing defaults under the Licenses, and a waiver of compliance
with respect to the Licensee's financial covenants thereunder for a period of
one year commencing on August 1, 1996. The parties agree to negotiate in good
faith an amendment to the MacMark License establishing reasonable Quick Ratio
tests and Minimum Sales Volume requirements; it being contemplated that the
minimum sales volume will increase and, upon such event, the required quick
ratio will be decreased. It is expressly acknowledged by Hutch that any
MacMark or Equilink waivers of or failures to call previous defaults does not
constitute a waiver of their right to call future defaults under the License.
4. The parties also agree to implement by amendment to the Licenses a
dispute resolution mechanism for terminating the Licenses in the event of a
default. An example of such dispute resolution provision is attached hereto as
Exhibit A. As a condition to Equilink's consent to the Assignments, Hutch will
also provide a Proxy from each Hutch director and as MacMark stockholder
providing that upon the expiration of applicable cure periods with respect to
objectively determined defaults (such as failure to supply requisite financial
statements, failure to make minimum sales volume, and disclosure F.O. non-
compliance with financial covenants in audited financials), and, in the case
of disputed defaults, upon the determination under the dispute resolution
mechanism that a default has occurred granting Equilink the right to vote as
to (a) termination F.O. the Licenses and (b) grant of new licenses to
unrelated third parties. Hutch would retain its equity interest in the MacMark
shares, and as such would be entitled to its share of any royalties received
from any such new license.
5. If Hutch is sued for its role if the transaction whereby Hutch
acquired the Licenses is attacked as a fraudulent conveyance, and MacMark or
Equilink are named as defendants or called as witnesses in any such suit, in
addition to the indemnity provided to Equilink from MacGregor Sports Products
and Equitex, at Equilink's option, Hutch will assume their defense as part of
Hutch's defense thereof with counsel reasonably acceptable to MacMark and
Equilink.
6. If Hutch seeks large numbers of foreign registrations of the
Trademarks in categories in which MacMark has not previously applied for
registrations in those territories, Hutch will bear the expense of obtaining,
maintaining and defending such registrations, provided, however, Hutch will
have no rights to apply for such registrations in its own name and such
registrations will be applied for by MacMark, and all rights in such
registrations will inure to MacMark.
7. If the Licensors seek outside counsel in preparing or reviewing this
Memorandum or the Amendment it contemplates, they will be reimbursed for their
legal fees up to $2,500.00
8. The obligations of Hutch to provide Proxies will survive the
termination of the MacMark License with respect to Hutch.
9. The parties agree that definitive documents contemplated herein must
be entered into reflecting the intent of this Memorandum on or before August
30, 1996 (unless the parties agree to extend), and that they will negotiate in
good faith to enter into such documents, provided, however, that Equilink's
and MacMarks' consent will automatically rescind if such final agreements and
other documents are not so entered into.
IN WITNESS WHEREOF, the parties have executed this Memorandum of
Understanding as of the date set forth above.
HUTCH SPORTS USA, INC. MACMARK CORPORATION
By: XXXXX SHAPER By: XXXXX XXXXX
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Its: VICE PRESIDENT AND GENERAL COUNSEL Its: CHAIRMAN
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EQUILINK LICENSING CORPORATION
By: XXXXX XXXXX
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Its: CHAIRMAN
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