EXHIBIT 10.12
ENDORSEMENT AGREEMENT
This Endorsement Agreement is made and entered into this first (1st)
day of January, 1996, by and between Teardrop Putter Corporation having its
principal office at 207 WatersEdge, Shelter Cove, Hilton Xxxx Xxxxxx, Xxxxx
Xxxxxxxx 00000 (hereinafter referred to as "TPC"), and Consolidated Artists
Inc., Xxxxxxxxxxx Xxxxx, Xxxxxxxx Xxxxxx, Xx. Xxxxxx, Xxxxxx XX0 0XX, Channel
Islands, British Isles (hereinafter referred to as "Consolidated Artists").
WITNESSETH:
WHEREAS, Xxxxx Xxxx (hereinafter referred to as "Xxxx") is recognized
and widely known throughout the world as an expert golfer; and
WHEREAS, Xxxx'x name, by virtue of his ability and extensive experience, has
acquired a secondary meaning in the mind of the purchasing public important to
the advertisement, promotion and sale of golf putters; and
WHEREAS, TPC is engaged in the manufacture, distribution and sale of golf
putters, and is desirous of acquiring the exclusive right to utilize Xxxx'x name
in connection with the advertisement, promotion and sale of the Teardrop Putter;
and
WHEREAS, Consolidated Artists holds all rights to and in Xxxx'x name and
endorsement for purposes of this Agreement; and
WHEREAS, Consolidated Artists being exclusively entitled to such rights
within the Contract Territory (as hereinafter defined)
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has agreed to authorize such use upon the terms and conditions hereinafter
contained;
NOW, THEREFORE, for and in consideration of the premises and mutual
covenants herein set forth and for other good and valuable consideration, it is
agreed as follows:
1. DEFINITIONS: As used herein, the terms set forth below shall be
defined as follows:
(a) "Xxxx Endorsement" shall mean the name, likeness, photograph, and
endorsement of Xxxx.
(b) "Endorsed Product" shall mean a putter manufactured, distributed,
promoted, advertised and sold by TPC bearing the "Teardrop
Putter" name and/or logo.
(c) "Contract Territory" shall mean the entire world.
(d) "Contract Period" shall mean that period of time commencing
January 1, 1996, and concluding December 31, 1998, unless sooner
terminated in accordance with the terms and conditions hereof.
(e) "Contract Year" shall mean that twelve (12)month period of time
commencing each first (1st) day of January throughout the
Contract Period.
(f) "Major Tournament" shall mean any of the following tournaments:
the Masters, the U.S. Open, the British Open and the PGA
Championship.
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(g) "PGA Tour Tournament" shall mean PGA Tour tournaments, excluding
the Major Tournaments.
(h) "International Tournament" shall mean European PGA Tour
tournaments (excluding the British Open),Japan PGA Tour
tournaments and Australian PGA Tour tournaments.
2. XXXX TO USE ENDORSED PRODUCT. Consolidated Artists agrees to cause
Xxxx to use the Endorsed Product during the Contract Period and throughout the
Contract Territory whenever he is playing competitive golf or otherwise
participating in golf clinics and outings.
3. GRANT OF ENDORSEMENT RIGHTS. Subject to the terms and conditions set
forth herein, Consolidated Artists grants to TPC the exclusive right and
license, within the Contract Territory and during the Contract Period, to use
the Xxxx Endorsement in connection with the manufacture, distribution,
advertisement, promotion and sale of the Endorsed Product.
4. CLOTHING IDENTIFICATION. Consolidated Artists agrees to cause Xxxx to
wear a patch and/or an embroidered non-patch bearing the Teardrop name and/or
logo on the right chest, left sleeve, and back of his golf shirt and/or sweater
(near the collar) and/or rain gear whenever he is playing competitive golf,
participating in golf clinics and outings or otherwise engaging in golf
promotional activities during the Contract Period and throughout the Contract
Territory. The expenses for the clothing and placement of the
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patch and/or embroidered non-patch shall be borne by TPC. TPC agrees to supply
Consolidated Artists or its designee with adequate quantities of said patch and
embroidered non-patch at no charge to Consolidated Artists.
5. RETENTION OF ENDORSEMENT RIGHTS. Subject to the provisions of
Paragraphs 2, 3 and 4 above, TPC agrees that Consolidated Artists shall retain
all rights in and to the Xxxx Endorsement and shall not be prevented from using
or permitting or licensing others to use his name or endorsement in connection
with the promotion, advertisement, or sale of any product or service other than
a golf putter in the Contract Territory during the Contract Period. TPC further
agrees that upon the termination of this Endorsement Agreement for any cause
whatsoever, it will cease using the Xxxx Endorsement, the name "Xxxxx Xxxx," or
any facsimile thereof, for any promotional or advertising purposes; provided,
however, that TPC shall have the right to use the Xxxx Endorsement in
advertisements for ad space purchased by TPC prior to the termination of this
Agreement for a period of up to six (6) months following such termination. In
this connection, TPC shall provide Consolidated Artists with a list of such
previously purchased ad space within seven (7) days of the effective date of
termination and all such advertisements released after the effective date of
termination shall be subject to Consolidated Artists' prior approval pursuant to
the terms of Paragraph 7 below.
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6. PHOTOGRAPH SHOOTS; PERSONAL APPEARANCES. Consolidated Artists
agrees, if requested by TPC, to make Xxxx available for one (1) day on behalf
of TPC in each Contract Year during the Contract Period at times and places
mutually convenient to Xxxx and TPC for the purpose of taking still
photographs for the preparation and production of advertising and promotional
materials. TPC agrees that such photograph shoots shall not exceed five (5)
hours each in duration. Further, Consolidated Artists agrees, if requested by
TPC, to make Xxxx available for two (2) personal appearance days on behalf of
TPC in each Contract Year during the Contract Period at times and places
mutually convenient to Xxxx and TPC. Such personal appearances shall be
limited to one (1) day and shall not exceed five (5) hours each in duration.
In addition, TPC agrees to pay all reasonable and necessary expenses
(including first class travel, hotel accommodations and meal expenses)
incurred by Consolidated Artists in connection with such photograph shoots
and personal appearances.
7. PROMOTIONAL AND ADVERTISING MATERIALS. TPC agrees to provide
Consolidated Artists and its representative, Advantage International Management,
Inc. ("Advantage"), with a copy of all advertising and promotional materials
which will use or show the Xxxx Endorsement for their approval. Such promotional
or advertising materials shall be delivered to Advantage at least fourteen (14)
days prior to their release to the general public, and TPC agrees that the same
shall not be released without the
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prior written approval of Advantage. Advantage agrees that it will not
unreasonably disapprove or reject promotional or advertising materials
hereunder, and that Advantage's failure to disapprove such materials within
fourteen (14) days of receipt shall be deemed to be approval. In addition, TPC
agrees to provide Consolidated Artists with complimentary duplicates of all
promotional and/or advertising materials featuring Xxxx or the Xxxx Endorsement.
8. RETAINER FEE. In consideration of the rights and benefits granted to
TPC hereunder, TPC agrees to pay Consolidated Artists on behalf of Xxxx a
retainer fee in each Contract Year during the Contract Period ("Retainer Fee")
in accordance with the following schedule:
CONTRACT YEAR RETAINER FEE
First (1st) Contract Year Fifty-Five Thousand U.S.
(Jan. 1, 1996-Dec. 31, 1996) Dollars ($55,000)
Second (2nd) Contract Year Seventy Thousand U.S.
(Jan. 1, 1997-Dec. 31, 1997) Dollars (70,000)
Third (3rd) Contract Year Ninety Thousand U.S.
(Jan. 1, 1998-Dec. 31, 1998) Dollars ($90,000)
Said Retainer Fee shall be paid in four (4) equal installments on or before the
first (1st) day of February, May, August and November in each Contract Year.
9. TOURNAMENT BONUSES. In addition to the Retainer Fee set forth in
Paragraph 8 above, TPC agrees to pay Consolidated Artists on behalf of Xxxx the
following tournament bonuses for Xxxx'x
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tournament performances during the Contract Period (the "Tournament Bonus or
Bonuses"):
(a) Sixty Thousand U.S. Dollars ($60,000), each time Xxxx wins a Major
Tournament; and
(b) Twenty Thousand U.S. Dollars ($20,000), each time Xxxx wins a network
televised US PGA Tour Tournament; and
(c) Ten Thousand U.S. Dollars ($10,000) each time Xxxx wins a cable
televised US PGA Tour Tournament; and
(d) Seven Thousand Five Hundred U.S. Dollars ($7,500) each time Xxxx wins
a Golf Channel televised US PGA Tour Tournament or a Golf Channel
televised International Tournament; and
(e) Five Thousand U.S. Dollars ($5,000) each time Xxxx wins an
International Tournament not televised by Golf Channel or a
non-televised US PGA Tour Tournament.
TPC shall pay any Tournament Bonuses due Consolidated Artists for a Major
Tournament win within sixty (60) days following TPC's receipt of an invoice from
Consolidated Artists or Advantage and any Tournament Bonuses due Consolidated
Artists for a network televised US PGA Tour Tournament win shall be paid within
forty-five (45) days following TPC's receipt of an invoice from Consolidated
Artists or Advantage. All other Tournament Bonuses due to Consolidated Artists
shall be paid by TPC within thirty (30) days following TPC's receipt of an
invoice from Consolidated Artists or Advantage.
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10. MONEY LIST BONUS(ES). In addition to the Retainer Fee and the
Tournament Bonuses set forth in Paragraphs 8 and 9 above, TPC agrees to pay
Consolidated Artists on behalf of Xxxx the following bonuses in each Contract
Year for Xxxx'x position on the Official Year-End PGA Tour Money List ("Money
List Bonus(es)"):
(a) Fifty Thousand U.S. Dollars ($50,000) each time Xxxx finishes in first
(1st) place on the Official Year-End PGA Tour Money List; and
(b) Twenty-Five Thousand U.S. Dollars ($25,000) each time Xxxx finishes
between second (2nd) and tenth (10th) place on the Official Year-End
PGA Tour Money List; and
(c) Fifteen Thousand U.S. Dollars ($15,000) each time Xxxx finishes
between eleventh (11th) and twentieth (20th) place on the Official
Year-End PGA Tour Money List; and
(d) Seven Thousand Five Hundred U.S. Dollars ($7,500) each time Xxxx
finishes between twenty-first (21st) and thirtieth (30th) place on the
Official Year-End PGA Tour Money List; and
(e) Five Thousand U.S. Dollars ($5,000) each time Xxxx finishes between
thirty-first (31st) and fortieth (40th) place on the Official Year-End
PGA Tour Money List.
TPC shall pay any Money List Bonuses due to Consolidated Artists within thirty
(30) days following TPC's receipt of an invoice from Consolidated Artists or
Advantage.
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11. ROYALTY COMPENSATION FOR ENDORSED PRODUCT. In addition to the Retainer
Fee, Tournament Bonuses and Money List Bonuses set forth in Paragraphs 8, 9 and
10 above, TPC agrees to pay Consolidated Artists on behalf of Xxxx royalty
compensation of ten percent (10%) of the net sales of all Endorsed Products
distributed or sold during the Contract Period in or to the Countries of
Australia and New Zealand ("Royalty Compensation"). "Net sales" shall mean the
gross invoice price billed to customers, less customary trade/quantity
discounts, rebates and returns actually credited, but with no deductions of any
kind. No costs incurred by TPC in the manufacture, advertisement, promotion or
exploitation of any Endorsed Product shall be deducted as a cost in calculating
the net sales. TPC agrees to guarantee to Consolidated Artists on behalf of Xxxx
a minimum Royalty Compensation of Twenty Thousand U.S. Dollars ($20,000) payable
in four (4) equal installments of Five Thousand U.S. Dollars ($5,000) and due
simultaneously with the Retainer Fee on or before the first (1st) day of
February, May, August and November in each Contract Year.
12. PAYMENT OF ROYALTY COMPENSATION. Within thirty (30) days of the
conclusion of each three (3) month period in each Contract Year during the
Contract Period, TPC agrees to deliver to Consolidated Artists and Advantage an
itemized statement setting forth the actual number of all Endorsed Products
distributed and sold during the preceding three (3) month period. Simultaneous
with the delivery of each statement setting forth such totals, TPC
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agrees to pay Consolidated Artists the appropriate Royalty Compensation in
excess of the $5,000 quarterly payment set forth in Paragraph 10 above, due on
the sales of the Endorsed Product for the period covered by such statement.
13. ACCOUNTING FOR ROYALTY COMPENSATION. TPC agrees that it shall keep
accurate and complete books and records showing all Endorsed Products
manufactured, distributed and sold. Consolidated Artists and Advantage, at
Consolidated Artists' expense, shall have the right during the Contract Period
and until two (2) years after the termination of this Agreement to inspect and
make copies of the books and records of TPC insofar as they relate to the
computation of royalty payments due and owing to Consolidated Artists hereunder.
14. PAYMENTS TO CONSOLIDATED ARTISTS. All payments to be made to
Consolidated Artists pursuant to the terms hereof shall be made by wire transfer
in U.S. Dollars to the following account:
Account Name: Advantage International Escrow Fund
Account #: 00000000-13
ABA #: 000000000
Bank Name: Franklin National Bank of Washington
Address: 0000 Xxx Xxxxxx
Xxxxxxxxxx, X.X. 00000
X.X.X.
Re: Consolidated Artists
15. MINIMUM PLAY REQUIREMENT. TPC shall have the right to prorate the
Retainer Fee due Consolidated Artists upon fourteen (14) days written notice
to Consolidated Artists or Advantage in the event Xxxx fails to play a
minimum of seventeen (17) U.S. PGA
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Tour Events and the British Open in each Contract Year during the Contract
Period.
16. TIME OF THE ESSENCE. TPC acknowledges that time is of the essence in the
payment of all compensation due Consolidated Artists hereunder. For the purposes
of this Agreement, all payments not received within thirty (30) days of the date
due shall be deemed "past due". Such past due payments shall bear interest at a
rate of two percent (2%) per month OR the maximum rate permissible by law,
whichever is less. The imposition of interest provided for in this Paragraph
shall be in addition to any other remedies available to Consolidated Artists
under this Agreement or otherwise. Accordingly, Consolidated Artists shall not
be precluded from exercising any other remedies, whether at law or in equity, to
enforce the terms of this Agreement.
17. SPECIAL RIGHT OF NEGOTIATION AND TERMINATION. If at any time during the
Contract Period Xxxx determines that he no longer desires to use the Endorsed
Product Consolidated Artists shall so notify TPC in writing and the parties
shall meet and negotiate in good faith an amicable solution. Such discussion
shall take place within fourteen (14) days of Consolidated Artists' notice and
shall include such issues as Xxxx'x continued use of the Endorsed Product, the
continued use of the Xxxx Endorsement and the termination of this Agreement. If
no solution is reached within fourteen (14) days of such negotiation, the
parties agree that this Agreement shall automatically terminate and that TPC
will cease
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using the Xxxx Endorsement, the name "Xxxxx Xxxx," or any facsimile thereof, for
any promotional or advertising purposes in accordance with the terms set forth
in Paragraph 5 above. In addition, TPC agrees that Consolidated Artists shall be
entitled to the Retainer Fee prorated to the effective date of termination as
well any Tournament Bonuses, Money List Bonuses and any Royalty Compensation
earned by Consolidated Artists prior to the effective date of termination.
18. PRODUCTS FOR XXXX'X USE. During the Contract Period, TPC shall supply
Consolidated Artists, at no charge, with such quantities of the Endorsed Product
as Consolidated Artists may reasonably request for Xxxx'x use and the personal
use of Xxxx'x immediate family. In addition, TPC shall supply Consolidated
Artists at normal wholesale price with such quantities of the Endorsed Product
as Xxxx may reasonably request for gifts to others.
19. PROTECTING THE XXXX ENDORSEMENT. TPC and Consolidated Artists agree that
they will take all necessary steps during the Contract Period and thereafter to
protect the Xxxx Endorsement, the name "Xxxxx Xxxx" or any facsimile thereof in
connection with the advertisement, promotion, distribution and sale of the
Endorsed Product.
20. TERM OF AGREEMENT. The term of this Agreement shall commence January 1,
1996, and shall continue for a period of three (3) years, concluding December
31, 1998.
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21. SPECIAL RIGHT OF TERMINATION BY CONSOLIDATED ARTISTS. Consolidated
Artists shall have the right to terminate this Agreement upon thirty (30) days
prior written notice to TPC in the event of the occurrence of any of the
following contingencies:
(a) If TPC is adjudicated as insolvent, declares bankruptcy or fails to
continue its business of selling the Endorsed Product; or
(b) If TPC fails to make payment to Consolidated Artists of any sums due
pursuant to this Agreement within thirty (30) days following the date
such payment is due hereunder, provided that TPC is notified in
writing of such nonpayment by Consolidated Artists or Advantage and
such payment is not made within ten (10) days following such
notification.
TPC agrees that such termination shall not relieve it of its obligation to pay
Consolidated Artists all compensation contemplated hereunder. Accordingly,
Consolidated Artists shall not waive any of its rights at law or in equity.
22. SPECIAL RIGHT OF TERMINATION BY TPC. TPC shall have the right to
terminate this Agreement upon thirty (30) days prior written notice to
Consolidated Artists or Advantage in the event of the occurrence of any of the
following contingencies:
(a) In the event of 0gle's death during the Contract Period; or
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(b) In the event Xxxx is convicted of a felony involving moral turpitude.
In the event of such termination above, the parties agree that the Retainer Fee
due Consolidated Artists shall be prorated to the effective date of termination.
Furthermore, TPC agrees that any Tournament Bonuses, Money List Bonuses and any
Royalty Compensation earned by Xxxx prior to the effective date of termination
shall be paid in full within thirty (30) days of such effective date of
termination.
23. INDEMNITY. TPC agrees to protect, indemnify and hold harmless
Consolidated Artists and Xxxx from and against any and all expenses, damages,
claims, suits, actions, judgments and costs whatsoever, including attorneys'
fees, arising out of, or in any way connected with, any claim or action which
arises from the use of the Endorsed Product, the use of the Xxxx Endorsement, or
the performance of Consolidated Artists' and Xxxx'x obligations hereunder.
24. WAIVER. The failure of TPC or Consolidated Artists at any time or times
to demand strict performance by the other of any of the terms, covenants or
conditions set forth herein shall not be construed as a continuing waiver or
relinquishment thereof and either may at any time demand strict and complete
performance by the other of said terms, covenants and conditions.
25. ASSIGNMENT. Neither TPC nor Consolidated Artists shall have any right to
grant sublicenses hereunder or to otherwise
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assign, transfer, alienate, encumber or hypothecate any of its rights or
obligations hereunder without the express prior written consent of the other
party, except that Consolidated Artists shall have the right to assign the
financial benefits hereof and TPC hereby consents to such assignment.
26. NOTICES. All notices required hereunder shall be sent by telefax,
overnight mail or first class mail, return receipt requested, as appropriate, to
the parties at the following addresses:
TPC Xx. Xxxx X. Xxxxxxx
President
Teardrop Putter Corporation
207 WatersEdge, Shelter Cove
Xxxxxx Xxxx Xxxxxx, Xxxxx Xxxxxxxx 00000
Consolidated Consolidated Artists, Inc.
Artists Xxxxxxxxxxx Xxxxx
Xxxxxxxx Xxxxxx
Xx. Xxxxxx
Xxxxxx XX0 0XX
Channel Islands
British Isles
cc: Advantage International Management, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxx 0000
XxXxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxx Xxxxxxx
Advantage and TPC shall promptly notify each other in writing of any change of
address.
27. EMPLOYER/EMPLOYEE RELATIONSHIP. Nothing contained in this Agreement
shall be construed as establishing an employer/employee relationship between TPC
and Consolidated Artists. Accordingly, there shall be no withholding for tax
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purposes from any payments due hereunder to Consolidated Artists by TPC.
28. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia applicable to contracts
entered into and wholly to be performed within the Commonwealth of Virginia and,
in the event of any litigation arising out of this Agreement, venue shall be the
Commonwealth of Virginia. Should Consolidated Artists be required to institute
litigation due to TPC's breach of any terms of this Agreement, all costs of such
litigation, including reasonable attorneys' fees, shall be borne by TPC.
29. SIGNIFICANCE OF HEADINGS. Paragraph headings contained hereunder 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 paragraph headings had been
omitted.
30. ENTIRE AGREEMENT. This Agreement constitutes the entire understanding
between Consolidated Artists and TPC, and cannot be altered or modified except
by an agreement in writing signed by both parties. Upon its execution, this
Agreement shall supersede all prior negotiations, understandings and agreements,
whether oral or written, and such prior agreements shall thereupon be null and
void and without further legal effect.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
TEARDROP PUTTER CORPORATION
Date: 2-27-96 BY: /s/ Xxxxx X. Xxxxxxx
-------------------- --------------------------------
Xxxxx X. Xxxxxxx
President
CONSOLIDATED ARTISTS, INC.
Date: 10-4-96 By: /s/ X. X. Xxxxxx
-------------------- --------------------------------
Its: Ass Secretary
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GUARANTY
I, the undersigned, Xxxxx Xxxx, do hereby acknowledge that I have read the
foregoing Agreement between Teardrop Putter Corporation ("TPC") and Consolidated
Artists, Inc. ("Consolidated Artists") and am aware of the terms thereof. In
this connection, I agree that I will be bound by the terms and conditions of
such Agreement and that I will be entitled to the rights and benefits set forth
therein, as fully as if I have been a party to such Agreement. Furthermore, in
consideration of the mutual covenants and conditions and as a material
inducement to TPC to enter into said Agreement with Consolidated Artists, I do
hereby guarantee the performance of said Agreement by Consolidated Artists. This
guaranty shall only be effective upon the execution of the Agreement by
Consolidated Artists.
DATE: 3/28/96 /s/ Xxxxx Xxxx
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XXXXX XXXX
