Trademark License Agreement

EXHIBIT 10.28


TRADEMARK LICENSE AGREEMENT


THIS TRADEMARK LICENSE AGREEMENT ("Agreement") is made and effective as of March 9, 1999 the "Effective Date"), by and between Callaway Golf Company, a California corporation ("Callaway Golf"), and Callaway Golf Media Ventures, LLC, a California limited liability company which concurrently herewith is changing its name to Callaway Editions Media Ventures, LLC ("CEMV"). Capitalized terms used herein and not otherwise defined herein have the meaning given to such terms in Section 1 below.


RECITALS


A. Callaway Golf is the owner of all right, title, and interest in and to the Licensed Mark and any and all trade dress, labels, and designs associated therewith, together with the goodwill of the business symbolized thereby;


B. Callaway Golf and Callaway Editions, Inc., a Delaware corporation ("Editions"), previously formed CEMV for the purpose of publishing a multi- volume series of illustrated, high-quality, golf-related books;


C. Callaway Golf and Editions are concurrently entering into a Membership Interest Purchase Agreement (the "Purchase Agreement") whereby Editions is purchasing Callaway Golf's membership interest in CEMV;


D. The Purchase Agreement contemplates Callaway Golf licensing the Licensed Mark to CEMV for the purpose of publishing high-quality, golf-related books; and


E. CEMV desires to obtain the right to use the Licensed Mark and Callaway Golf is willing to license such right to CEMV on the terms and conditions set forth in this Agreement.


NOW, THEREFORE, in consideration of the promises and mutual agreements contained herein and in the Purchase Agreement as well as for other good and valuable consideration, acknowledged by each of them to be satisfactory and adequate, the parties hereby agree as follows:


1. Definitions.
-----------


1.1 "Golf Book(s)" shall mean golf-related books, including corresponding video, CD, DVD and audio rights (and future equivalents of each) for each Golf Book.


1.2 "Licensed Mark" shall mean the two-word mark "Callaway Golf" in the design set forth in Exhibit "A", or in such design as may be amended and adopted by Callaway Golf in its sole discretion from time to time, and incorporated herein by reference.


1.3 "Net Sales" shall mean gross revenues of CEMV from the Golf Books, minus returns and refunds.


2. License.
-------


2.1 Grant. Subject to the terms and conditions hereof, Callaway Golf
----- hereby grants to CEMV, and CEMV accepts from Callaway Golf, for the term of this Agreement, a nontransferable, limited license to use the Licensed Mark in connection with Golf Books. The license granted herein shall not be sublicenseable except that CEMV shall have the right to sublicense third-parties the right to publish (including manufacturing and distributing rights) Golf Books created by CEMV.


2.2 Exclusivity. During the Initial Term and any Renewal Term of
----------- this Agreement (as defined in Sections 10.1.1 and 10.1.2 below), the license granted in this Agreement shall be mutually exclusive, such that neither party hereto may be involved with the publication of any Golf Books (other than the Golf Books using the Licensed Mark as provided in this Agreement) without the prior written consent of the other party, which consent shall be in the sole discretion of such other party. Moreover, during the term of this Agreement Callaway Golf shall not use or license any other party to use the name "Callaway Golf" in connection with the publication of any other books. Notwithstanding, nothing herein shall preclude Callaway Golf from producing and distributing products and materials that are ancillary to its business, including but not limited to catalogues, brochures, calendars, price lists, playing cards, hang tags and promotional materials.


2.3 Reservation of Rights. Nothing herein shall be construed to
--------------------- grant CEMV the right to use any Callaway Golf mark other than the Licensed Mark. Callaway Golf expressly reserves all rights with respect to all trademarks or service marks that may be owned by it or licensed to it which are not expressly licensed to CEMV under this Agreement.


2.4 Technical Access. Callaway Golf grants to CEMV the right to
---------------- reasonable access to Callaway Golf technical personnel without charge; provided, however, that such access shall not exceed thirty (30) hours of Callaway Golf personnel time in any one calendar month. All such access shall be coordinated through a single individual identified by Callaway Golf.


2.5 Termination of All Prior Licenses. The license to use the
--------------------------------- "Callaway Golf" mark which was a part of the Operating Agreement for CEMV dated January 26, 1998 as well as any other license from Callaway Golf to CEMV shall hereby be terminated.


3. Quality Standards.
-----------------


3.1 Maintenance of Quality. In the course of publishing the Golf
---------------------- Books, CEMV shall not allow the editorial and technical quality of any Golf Book to fall below the editorial and technical quality of the books published by Editions as of the Effective Date hereof, and all Golf Books shall be hard or flexicover, printed on high-quality paper, in color and sold by CEMV to


2


respected and traditional premium market channels (collectively, the "Standards and Specifications"). The Standards and Specifications are designed to ensure that the Golf Books are consistent with the reputation enjoyed by Callaway Golf and the Licensed Mark.


3.2 Rights of Inspection. To ensure that the Standards and
-------------------- Specifications are maintained, Callaway Golf and its authorized agents and representatives shall have the right, upon reasonable notice, to visit CEMV's place(s) of business at all reasonable times and to review the products, advertisements and marketing materials of CEMV.


3.3 Pre-Production Product Approval. Prior to commercial production
------------------------------- of any Golf Book, CEMV shall provide to Callaway Golf sufficient samples or mock-ups to allow Callaway Golf to evaluate and approve the quality of such Golf Book and the manner of use of the Licensed Mark. CEMV shall not produce or distribute any Golf Book which has not been approved in writing by Callaway Golf as being in compliance with the requirements of Section 3.1, which approval shall not be unreasonably withheld.


3.4 Production Control. CEMV shall, from time to time during
------------------ production and distribution, upon the request of Callaway Golf, furnish without cost to Callaway Golf a reasonable number of samples of the Golf Books, which samples may be selected at random by Callaway Golf or pursuant to a reasonable sampling procedure specified by Callaway Golf. If Callaway Golf reasonably determines that such samples do not meet the quality standards required in this Agreement, Callaway Golf shall notify CEMV of the deficiencies in such samples and CEMV shall immediately discontinue all production and distribution of such deficient Golf Books until such time as additional samples are approved by Callaway Golf, which approval shall not be unreasonably withheld.


4. Ownership of Licensed Mark; Modifications.
-----------------------------------------


4.1 Callaway Golf's Ownership Rights. CEMV acknowledges Callaway
-------------------------------- Golf's exclusive right, title, and interest in and to the Licensed Mark and acknowledges that nothing herein shall be construed to accord to CEMV any rights in the Licensed Mark except as otherwise expressly so provided. CEMV acknowledges that its use of the Licensed Mark hereunder will not create in it any right, title or interest in the Licensed Mark and that all such use of the Licensed Mark and the goodwill generated thereby will inure to the benefit of Callaway Golf. CEMV warrants and represents with respect thereto as follows:


4.1.1 CEMV will not at any time challenge Callaway Golf's right, title, or interest in the Licensed Mark or the validity of the Licensed Mark or any registration thereof;


4.1.2 CEMV will not do or cause to be done or omit to do anything, the doing, causing, or omitting of which would contest or in any way infringe or dilute the rights of Callaway Golf in the Licensed Mark;


3


4.1.3 CEMV will not represent that it has any ownership in or rights with respect to the Licensed Mark other than rights conferred by this Agreement; and


4.1.4 CEMV will not, during the term of this Agreement, use any trademark, service mark, trade name, insignia or logo that infringes or dilutes the rights of Callaway Golf in the Licensed Mark.


4.2 Changes and Modifications to the Licensed Mark. CEMV may propose
---------------------------------------------- changes to the design portion of the Licensed Mark for adoption and approval by Callaway Golf in Callaway Golf's sole and absolute discretion. The Licensed Mark, as so modified or changed, shall for all purposes be deemed to be the Licensed Mark referred to in this Agreement. Any and all such modifications or changes in said Licensed Mark shall be the sole and absolute property of Callaway Golf, and Callaway Golf shall have the exclusive right to register such modified or changed marks as trademarks and/or service marks.


5. Undertakings of CEMV Respecting the Licensed Mark.
-------------------------------------------------


5.1 Marking; Compliance with Trademark Laws. CEMV shall (1) cause
--------------------------------------- the appropriate designation "TM," ''SM,'' or the registration symbol "(R)" to be placed adjacent to the Licensed Mark in connection with each use or display thereof and to indicate such additional information as Callaway Golf shall specify from time to time concerning the licensed rights under which CEMV uses the Licensed Mark, and (2) comply with all laws in force from time to time pertaining to CEMV's use of the Licensed Mark.


5.2 No Use Objectionable to Callaway Golf. CEMV shall not use the
------------------------------------- Licensed Mark on or in connection with any product, signage, display, packaging, or marketing material or in any manner to which Callaway Golf at any time reasonably objects. Except as approved by Callaway Golf in writing, in no event shall CEMV use the Licensed Mark on any book or in any manner which would degrade the reputation of Callaway Golf or its products in any material way.


6. Prosecution and Defense of Infringement Claims.
----------------------------------------------


6.1 Notice and Prosecution of Infringement of Marks. If CEMV becomes
----------------------------------------------- aware of any apparent infringement of the Licensed Mark, any petition to cancel any registration of the Licensed Mark, or any attempted use of or any application to register any mark confusingly similar to, or a colorable imitation of, the Licensed Mark, CEMV shall promptly notify Callaway Golf of such infringement, petition, use or application. Callaway Golf shall have the sole right, in its sole discretion, to:


6.1.1 Institute and prosecute any actions for such infringement of the Licensed Mark;
6.1.2 Defend any petition to cancel any registration of the Licensed Mark; and


4


6.1.3 Oppose any attempted use of or any application to register any mark confusingly similar to, or a colorable imitation of, the Licensed Mark.


6.1.4 Any damages and costs recovered through such proceedings shall belong exclusively to Callaway Golf, and Callaway Golf shall be solely responsible for all costs and expenses (including attorneys' fees) of prosecuting such actions. CEMV shall provide Callaway Golf with requested assistance in connection with such proceedings, and Callaway Golf shall reimburse CEMV's reasonable, pre-approved, out-of-pocket costs of providing such assistance.


6.2 Notice and Defense of Third-Party Infringement Claims. CEMV
---------------------- ...