Marketing And Distribution Agreement

MARKETING AND DISTRIBUTION AGREEMENT


THIS AGREEMENT is made this 21st day of August, 1996, by and between THE ARNOLD PALMER GOLF COMPANY, a Tennessee corporation having its principal place of business at 6201 Mountain View Road, Ooltewah, Tennessee 37363 ("APGC"), and NEVADA BOB'S PRO SHOP, INC., a Delaware corporation having its principal place of business at 4043 S. Eastern, Las Vegas, Nevada 89119 ("Distributor"), under the following circumstances:


APGC is engaged in the manufacture, marketing and distribution of golf products, including Arnold Palmer golf equipment and Hot-Z golf bags and luggage. The Distributor is the owner and franchisor of Nevada Bob's retail golf shops ("Nevada Bob's"), in which the Distributor and its franchisees sell golf clubs, bags and related products. On the terms and conditions hereinafter set forth, APGC desires to appoint Distributor to market and sell the products described on Schedule 1 attached hereto (the "Products") (as such Schedule shall be amended from time to time by APGC and Distributor, it being acknowledged that APGC will offer to add to such Schedule such golf products as it makes generally available to its other distributors) and Distributor desires to be appointed a distributor for the marketing and sale of the Products.


NOW, THEREFORE, in consideration of the mutual covenants and obligations contained in this Agreement the parties hereto, intending to be legally bound, do hereby agree as follows:


ARTICLE I
GRANT AND ACCEPTANCE OF RIGHTS


1.1 Grant and Acceptance. On the terms and conditions provided in this Agreement, APGC grants to Distributor, and Distributor hereby accepts such grant, the right to sell the Products to customers at Nevada Bob's that are owned or franchised by Distributor and to conduct all activities reasonably related thereto including the advertising and promotion of the Products. APGC will grant the same rights to franchisees of Distributor who place orders with APGC for Products. APGC acknowledges that Distributor's rights include the right to sell Products through catalogs and mail solicitation on a worldwide basis. In addition and without limitation to the rights otherwise granted herein, Distributor shall have the non-exclusive right to create Web sites other types of sites now or hereafter known or developed for the purpose of promoting, advertising, merchandising, selling and offering for sale Products through on-line means or through other electronic means now or hereafter known or developed provided that Distributor shall furnish APGC draft copies of its Web site pages or material for other types of sites, or permit APGC to access such 2


Web site pages or material for other types of sites in beta format prior to making them available to the public, for approval in accordance with the provisions of Section 2.2 hereof.


1.2 Market. APGC's grant of the rights herein to Distributor to market and sell the Products is only for Nevada Bob's that are owned or franchised by Distributor and for no other market, and shall be for anywhere in the world that Distributor or its franchisees operate Nevada Bob's stores, except as expressly provided herein.


1.3 Non-Exclusivity. Nothing in this Agreement shall either preclude Distributor from marketing, distributing or selling products that are similar to the Products or APGC from marketing, distributing or selling the Products through distributors other than Distributor.


ARTICLE II
APGC'S OBLIGATIONS


2.1 Support and Information. APGC shall at its own expense provide sales and marketing support as reasonably requested by Distributor and so generally made available to its other distributors throughout the term of this Agreement, including:


(a) assistance and advice for the employees of Distributor in the demonstration and sales of the Products;


(b) marketing advice and assistance;


(c) prompt response to all inquiries and reasonable requests for assistance from Distributor; and


(d) making available for Distributor's use such advertising and publicity material and Product literature which may have been generated by APGC.


2.2 Advertising. APGC shall permit Distributor and its franchisees to advertise the Products utilizing the registered trademarks of APGC and offer sales promotions within guidelines and restrictions approved in advance by APGC.


2.3 Delivery of Products. Subject to availability (short stock situations to be reasonably allocated among all distributors), APGC shall accept orders and promptly supply the Products to the Distributor and its franchisees in accordance with orders received from the Distributor and the terms set forth in Article IV hereof.


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ARTICLE III
DISTRIBUTOR'S OBLIGATIONS


3.1 Commercially Reasonable Efforts. The Distributor shall at all times use commercially reasonable efforts to market, promote and sell the Products at Nevada Bob's that are owned by Distributor in order to stimulate and increase interest in the Products by appropriate means, including:


(a) development of a marketing program, which shall include but not be limited to advertisement of the Products in golf magazines, newspapers, other periodicals and media;


(b) maintaining an inventory of the Products reasonably anticipated to satisfy the demand therefor;


(c) prominently featuring the Products within each Nevada Bob's owned by Distributor; and


(d) employment and training of qualified sales personnel to ensure that the Products are aggressively promoted and sold by the Distributor.


3.2 Installation of Kiosks. The Distributor shall install in each Nevada Bob's owned by the Distributor no later than 90 days following the date of this Agreement and in each Nevada Bob's constructed by Distributor during the term of this Agreement a free standing kiosk (the Distributor's cost of which kiosk will be borne equally by the parties up to a maximum in the case of APGC of $900 (which can be adjusted at Nevada Bob's request on each anniversary of this Agreement based upon any increases in the Department of Labor's announced cost of living index, Atlanta area), each of which shall comply with the following requirements:


(a) the kiosk will include a minimum of 24 square feet and shall be of a shape agreed upon by the parties, which may vary with each Nevada Bob's store;


(b) the kiosk will be dedicated exclusively to display of the Products, including a prominent display of the Arnold Palmer name;


(c) the kiosks shall be fully stocked with a representative mix of the Products, which shall be displayed in an orderly and appealing manner;


(d) the kiosk will be located "left center" upon a customer's entry into a Nevada Bob's or, if in Distributor's reasonable discretion, "left center" is not available, a site reasonably determined by Distributor to be of equal prominence.


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(e) the kiosk will be free-standing and not built into or on a wall, and will be located within close proximity to the putting green in each Nevada Bob's store;


(f) the construction of the kiosk will be from materials approved in writing by APGC; and


(g) the kiosk will be in the form of the schematic attached hereto as Schedule 2.


3.3 Franchisees of Nevada Bob's. Distributor shall strongly recommend and encourage that its franchisees install kiosks in their Nevada Bob's in conformity with the requirements of Section 3.2 hereof and market and sell the Products, including, without limitation participation in all programs and campaigns for the promotion, marketing and sale of the Products. Orders for Products by such franchisees will be placed directly by such franchisees with APGC, and Distributor will have no responsibilities associated with same.


ARTICLE IV
TERMS AND CONDITIONS OF SALE


4.1 Standard Terms. All sales of Products to Distributor by APGC shall be subject to the terms and conditions of this Agreement in effect at the time of such sale. Any purchase orders issued by Distributor that contain provisions that are in addition to or inconsistent or conflict with any provisions of this Agreement or any of APGC's standard terms and conditions of sale as they may exist from time to time are hereby rejected by APGC and shall have no force or effect unless APGC specifically consents to such provision in writing.


4.2 Reports and Orders. Distributor shall submit orders for the Products to APGC for acceptance at mutually satisfactory periods. Such orders shall be subject to acceptance by APGC. Accepted orders for any Products not shipped during the month for which delivery was scheduled will remain in effect unless canceled in whole or in part by either party upon written notice to the other.


4.3 Prices.


(a) Distributor shall pay APGC for each shipment of the Products at the lowest distributor prices (including any applicable discounts and promotions) established by APGC and in effect at the time of the order. Distributor shall be responsible for the payment of all excise, sales, use, property and other taxes levied with respect to the Products sold to Distributor hereunder, other than taxes imposed or measured by APGC's income.


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(b) APGC has the right at any time to change its lowest distributor prices and specifications applicable to the Products and to issue new applicable price lists or bulletins. If APGC changes the prices or spe ...