Exhibit 10(w)
CERTAIN CONFIDENTIAL INFORMATION HAS BEEN OMITTED FROM THIS EXHIBIT 10(w)
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION IS INDICATED BY THE
SYMBOL "[**]" AT EACH PLACE IN THIS EXHIBIT 10(w) WHERE THE OMITTED INFORMATION
APPEARED IN THE ORIGINAL.
AMENDMENT TO LICENSE AGREEMENT
This Amendment to License Agreement effective as of the date of the
last signature (the "Amendment Effective Date"), modifies that certain License
Agreement between Callaway Golf Company ("Callaway Golf") and ▇▇▇▇▇▇▇▇, Inc.
("▇▇▇▇▇▇▇▇") dated May 14, 2001 (the "Agreement").
The parties now wish to modify the Agreement in certain respects as set
forth below.
The parties hereby agree as follows:
1. Sales Representatives.
(a) Section 2(d) of the Agreement is modified to require that, for
the remainder term of the Agreement, ▇▇▇▇▇▇▇▇ use commercially reasonable
efforts to maintain a Canada, Europe and United States sales force consisting of
between four (4) and six (6) in-house sales representatives, who are full-time
employees of ▇▇▇▇▇▇▇▇ and whose sole duties are those relating directly and
primarily to selling, marketing, promoting, advertising and distributing the
Licensed Products bearing the Trademarks pursuant to the Agreement, and
twenty-nine (29) independent sales representatives.
(b) Section 2(e) of the Agreement is replaced with the following:
On or before December 31, 2004 ▇▇▇▇▇▇▇▇ shall commence selling,
marketing, promoting, advertising and distributing the Licensed Products in New
Zealand, Australia and South Africa through distributors and/or sales
representatives.
(c) ▇▇▇▇▇▇▇▇ shall provide Tour Golf Group, Inc. with full and
unlimited access to all relevant independent apparel sales representatives of
the Licensed Products who are in good standing with ▇▇▇▇▇▇▇▇ to also promote and
sell Callaway Golf Footwear. Tour Golf Group's use of these independent sales
representatives shall be for footwear only.
(d) The Vice President of Sales of ▇▇▇▇▇▇▇▇ (▇▇▇▇▇▇▇▇ Golf Apparel
Sales) shall collaborate fully with the Vice President of Sales of Tour Golf
Group, Inc. to offer prospective independent sales representatives a total
Callaway Golf package, including apparel and footwear.
2. Closeouts.
(a) The following is added to the end of Section 2(f) of the
Agreement:
Exhibit 10(w)
CERTAIN CONFIDENTIAL INFORMATION HAS BEEN OMITTED FROM THIS EXHIBIT 10(w)
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION IS INDICATED BY THE
SYMBOL "[**]" AT EACH PLACE IN THIS EXHIBIT 10(w) WHERE THE OMITTED INFORMATION
APPEARED IN THE ORIGINAL.
The parties acknowledge that Other Third-Party Stores shall include:
Nordstrom Rack (no Last Call stores); Saks Off Fifth; ▇▇▇▇▇ Mart; and other
stores as approved on a case-by-case basis and in writing by Callaway Golf, in
its sole and absolute discretion. ▇▇▇▇▇▇▇▇ shall first present any closeout
Licensed Products to the ▇▇▇▇▇▇▇▇ Outlet Stores before presenting the closeout
Licensed Products to the Other Third-Party Stores.
(b) Further to the first sentence of Exhibit F-1, ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇ Golf agree that ▇▇▇▇▇▇▇▇ shall pay a reduced royalty rate on closeout
sales. For purposes of the Agreement, "Closeout" shall mean a markdown of at
least thirty percent (30%) off net wholesale. With respect to Closeout sales
▇▇▇▇▇▇▇▇ shall pay Callaway Golf royalties equal to [**] of Closeout Net Sales
for up to a maximum of [**] of the total Net Sales for each of: (1) the U.S. and
Canada combined; and (2) Europe. ▇▇▇▇▇▇▇▇ shall include in the reports that it
provides to Callaway Golf pursuant to Section 3(c) of the Agreement an
additional line item disclosing the total amount of Closeout Net Sales for the
U.S., Canada and Europe.
3. Advertising and Promotion.
(a) ▇▇▇▇▇▇▇▇ shall spend at least [**] wholesale (including
embroidery) each calendar year on free Licensed Products for use by Callaway
Golf Pro Tour staff players and Callaway Golf Tour representatives. This
[**] shall be part of the required expenditures listed in Exhibit E of the
Agreement. The Pro Tour Department of Callaway Golf shall select and manage the
inventory of Licensed Products for use by Callaway Golf Pro Tour staff players
and Callaway Golf Tour representatives.
(b) The following is added to the end of Section 2(j) of the
Agreement:
Notwithstanding the foregoing in this Section 2(j), the required
expenditures that are carried over from a previous calendar year into the first
150 days of the subsequent calendar year shall be spent only on the following:
(i) printed, television, radio, Internet and direct mail advertising; and (ii)
fixtures, point of purchase materials and freight for point of purchase
materials.
(c) Exhibit E of the Agreement is modified as follows:
Period Required Expenditures
---------------------------- ------------------------------------------
INITIAL TERM
01/01/2003-12/31/2003 [**] of Net Sales
2
Exhibit 10(w)
CERTAIN CONFIDENTIAL INFORMATION HAS BEEN OMITTED FROM THIS EXHIBIT 10(w)
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION IS INDICATED BY THE
SYMBOL "[**]" AT EACH PLACE IN THIS EXHIBIT 10(w) WHERE THE OMITTED INFORMATION
APPEARED IN THE ORIGINAL.
01/01/2004-12/31/2004 [**] of Net Sales
01/01/2005-12/31/2005 [**] of Net Sales
01/01/2006-12/31/2010 [**] of Net Sales each year for years 2006
through 2010
RENEWAL TERM
01/01/2011-12/31/2015 [**] of Net Sales each year for years 2011
through 2015
4. Personnel. Section 2(k) of the Agreement is modified to add the
following:
(a) ▇▇▇▇▇▇▇▇ shall maintain the new position for Callaway Golf,
▇▇▇▇▇▇▇▇, and other brands of Senior Vice President of Merchandising and Design.
In the event that ▇▇. ▇▇▇▇▇ ▇▇▇▇▇ should vacate this position, ▇▇▇▇▇▇▇▇ shall
provide Callaway Golf with the opportunity to interview and approve of his
replacement. Approval from Callaway Golf shall not be unreasonably withheld.
(b) ▇▇▇▇▇▇▇▇ shall use commercially reasonable efforts to employ a
person to fill the position of Senior Designer for Callaway Golf. The Senior
Designer for Callaway Golf shall report directly to the Senior Vice President of
Merchandising and Design and shall focus exclusively on the design of Callaway
Golf Licensed Products. ▇▇▇▇▇▇▇▇ shall fill the position of Senior Designer for
Callaway Golf no later than November 1, 2003. Callaway Golf shall have the
opportunity to interview candidates for this position, and no Senior Designer
for Callaway Golf shall be appointed without the approval of Callaway Golf,
which approval shall not be unreasonably withheld. ▇▇▇▇▇▇▇▇ shall use
commercially reasonable efforts to ensure that the position of Senior Designer
for Callaway Golf remains filled, during the term of this Agreement, by a person
suitably qualified for such position.
5. Prosecution and Maintenance of Licensed Trademarks.
(a) The first sentence of Section 8(c) of the Agreement is hereby
replaced with the following:
Callaway Golf is solely responsible for all Trademark prosecution and
maintenance decisions and efforts, including but not limited to conferring with
relevant domestic and foreign counsel, communicating with relevant domestic and
foreign
3
Exhibit 10(w)
CERTAIN CONFIDENTIAL INFORMATION HAS BEEN OMITTED FROM THIS EXHIBIT 10(w)
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION IS INDICATED BY THE
SYMBOL "[**]" AT EACH PLACE IN THIS EXHIBIT 10(w) WHERE THE OMITTED INFORMATION
APPEARED IN THE ORIGINAL.
trademark offices, filing new applications, affidavits, extensions and other
necessary or appropriate documents.
(b) The following is added to the end of Section 8(c) of the
Agreement:
Unless otherwise determined by Callaway Golf on a case by case basis,
▇▇▇▇▇▇▇▇ shall be responsible for direct payment of all application fees,
extension fees, renewal fees, attorneys' fees and other disbursements necessary
in order to file and prosecute applications for the registration of the
Trademarks in International Classes 16, 18, 20, 24 and 25 (or the equivalent
country specific classes) in all countries in the Territory where the Licensed
Products shall or may be sold ("Trademark Fees"); provided, however, that the
failure to obtain such registration shall not affect the validity of the
Agreement. ▇▇▇▇▇▇▇▇ may apply any Trademark Fee to the requisite advertising and
promotion expenditures for the year in which the Trademark Fee is incurred.
Callaway Golf shall be entitled to receive, for recordkeeping purposes, copies
of all invoices, billing statements, etc. with respect to all Trademark Fees for
which ▇▇▇▇▇▇▇▇ is responsible under this Section 8(c). In the event ▇▇▇▇▇▇▇▇
fails to timely pay any Trademark Fees, Callaway Golf may, in its discretion pay
the given Trademark Fees to the applicable agency and/or provider of services
and ▇▇▇▇▇▇▇▇ shall promptly reimburse Callaway Golf for such expenditures
(including any penalties and/or late charges assessed against the given matter
which are paid for by Callaway Golf). Callaway Golf reserves the right, in its
sole discretion, to add a late charge (as described in Section 3(d) of the
Agreement) to any reimbursements which ▇▇▇▇▇▇▇▇ fails to pay to Callaway Golf
within thirty (30) days of the date of Callaway Golf's invoice.
6. European Business. On or before December 31, 2003 and periodically
thereafter ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Golf shall meet to review ▇▇▇▇▇▇▇▇'▇ business
model for Europe. A review of the European plan performance will be scheduled
for on or after March 31, 2004, at which time Callaway Golf will evaluate the
progress and set forth a timeline for any necessary adjustments.
7. Trademarks. Exhibit A of the Agreement is modified to add the following
trademarks:
Callaway Golf Boston
Callaway Golf Drysport
Callaway Golf Italy
Black and Blue Tag (without Callaway Golf Logo)
▇▇▇▇ and Taupe Sport Tag (without Callaway Golf Logo)
8. Territory. Exhibit B of the Agreement is modified to add the following
territories:
4
Exhibit 10(w)
CERTAIN CONFIDENTIAL INFORMATION HAS BEEN OMITTED FROM THIS EXHIBIT 10(w)
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. THE OMITTED INFORMATION IS INDICATED BY THE
SYMBOL "[**]" AT EACH PLACE IN THIS EXHIBIT 10(w) WHERE THE OMITTED INFORMATION
APPEARED IN THE ORIGINAL.
Dubai
Guam
Puerto Rico
Saipan
9. Non-Exclusive Licensed Products. Exhibit C-2 of the Agreement is
modified to delete the following products:
Briefcases
Desk Supplies
Leather & Non-Leather Handbags
Office Accessories
Portfolios
Sports/Duffel Bags
▇▇▇▇▇▇▇▇ shall complete all sales and delivery of the above-deleted
non-exclusive products by December 31, 2003.
10. All other terms and conditions in the Agreement that have not been
changed or otherwise modified by this Amendment shall remain unchanged and shall
continue in full force and effect. All capitalized terms used in this Amendment,
which are not otherwise defined herein, shall have the same meanings ascribed to
them in the Agreement.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed as of
the Amendment Effective Date.
▇▇▇▇▇▇▇▇, INC. CALLAWAY GOLF COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------- --------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman & CEO Title: Chairman & CEO
Date Signed: 12/2/03 Date Signed: 12/16/03
5
