Golf Consultant Agreement - Watson - CTR Requested

REDACTED COPY


CONFIDENTIAL TREATMENT REQUESTED


CONFIDENTIAL PORTIONS OF THIS

DOCUMENT HAVE BEEN REDACTED

AND HAVE BEEN SEPARATELY

FILED WITH THE COMMISSION


[AMC LOGO]

Assured Management Company

GOLF CONSULTANT AGREEMENT


This Agreement is made on the 30th day of August, 1999, between THOMAS S.

WATSON ("CONSULTANT") and ADAMS GOLF, INC. ("ADAMS").

In consideration of the mutual covenants and agreement hereinafter expressed, the

parties hereto do covenant and agree with each other as follows:

1.

GRANT TO ADAMS .

CONSULTANT hereby gives and grants to ADAMS the exclusive worldwide right and license to use CONSULTANT'S name, facsimile signature, nickname, voice or likeness upon and in connection with the manufacture, sale, distribution, advertising and promotion of drivers and fairway woods ("EQUIPMENT"), manufactured or sold by ADAMS, its subsidiaries, affiliates or licensees as ADAMS in its sole discretion may determine. See also Sections 4.1 and 4.2 herein.

2.

COVENANTS BY CONSULTANT .

During the term of this Agreement, except as otherwise provided herein, CONSULTANT (a) will not give the right to use or permit the use of CONSULTANT's name, facsimile signature, nickname, voice or likeness to any other manufacturer or seller of golf clubs; (b) will not sponsor or endorse golf clubs made or sold by any other manufacturer or seller; and (c) will not serve as a consultant or advisor of any other manufacturer or seller of golf clubs. See also Sections 4.1 and 4.2 herein.

3.

DUTIES OF CONSULTANT .

During the term of this Agreement, CONSULTANT shall:

3.1

To the extent provided to CONSULTANT by ADAMS, play exclusively with ADAMS EQUIPMENT, carry an ADAMS umbrella, wear an ADAMS visor or cap and carry the ADAMS golf bag. However, CONSULTANT will not be required to wear ADAMS visor or cap in advertising for Polo Ralph Lauren.

3.2

Have the option to add golf ball and/or clothing product identification, logo or endorsement of third-party companies that do not manufacture clubs under the same brand to visor or cap and/or golf bag. No other product identification, logos or endorsements will be added to ADAMS visor or caps or golf bags without the express written consent of both parties, which consent shall not be unreasonably withheld. 1


3.3

Retain full option to (a) negotiate and enter into contract with any golf ball manufacturer that does not manufacture clubs under the same brand, as well as (b) decide which golf shoes and gloves to endorse.

3.4

Exert best efforts to achieve a satisfactory record of play in a minimum of [*****] ([*****]) events annually, including made-for-television events. In the event CONSULTANT should play less than [*****] ([*****]) events, then his annual retainer shall be reduced by a fraction of which the numerator is the number of events under [*****] ([*****]) he has played and the denominator of which is [*****] ([*****]). For example, if CONSULTANT plays [*****] ([*****]) events, his annual compensation shall be reduced by [*****]. Both parties agree that in the event illness or other reasons outside the control of CONSULTANT prevent CONSULTANT from playing [*****] ([*****]) events, the parties agree to negotiate to resolve the issue, and if accord cannot be reached, then to refer to Section 15 herein.

3.5

Use best efforts to make [*****] ([*****])appearances in Japan during the term of this Agreement, under his normal fees and conditions. If, in fact, there are no events that meet normal CONSULTANT conditions, ADAMS will assist in obtaining and/or producing same. CONSULTANT will not be required to play regular tour events to meet these conditions. If acceptable events are not available, the obligation is waived.

3.6

Advise and consult with ADAMS, at ADAMS' reasonable request, from time to time, relative to the design, testing and characteristics of EQUIPMENT.

3.7

Demonstrate, discuss and emphasize the newest features of ADAMS EQUIPMENT at every opportunity.

3.8

Be available for such press interviews, radio or TV appearances arranged for CONSULTANT by ADAMS which are compatible with CONSULTANT's own practice, play and personal time requirements. CONSULTANT will be required to be available after a tournament win for selected interviews, either the Sunday afternoon or Monday morning following the win. In all such interviews and appearances, CONSULTANT will use his best efforts to make reference to the ADAMS brand.

3.9

Cooperate with ADAMS in giving advice, suggestions and recommendations concerning the acceptability and playability of current ADAMS golf lines, the development of new ADAMS golf lines, and information about significant golf product and golf market trends, and meet as reasonably requested with ADAMS' Design/Testing Teams.

3.10

Make himself available on not more than two (2) days per Contract Year (as defined in Section 10 herein) for television and radio commercials and photo shoots, compatible with CONSULTANT's own practice, play and personal time 2

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requirements, at no cost to ADAMS, except for expenses for himself and one associate as provided in Section 7.5 hereunder. Said activities shall be directly related to the promotion of ADAMS golf products.

3.11

Cooperate to the maximum extent possible, compatible with CONSULTANT's practice and play requirements on Tour and personal time requirements, in assisting ADAMS' promotional and public relations activities by making himself available for up to [*****] ([*****]) days per Contract Year (as defined in Section 10 herein), on no more than [*****] ([*****]) separate occasions, for personal appearances at no cost to ADAMS, except for expenses for himself and one associate as provided in Section 7.5 hereunder. Said activities shall be directly related to the promotion of ADAMS golf products and shall not conflict with scheduled tournament play. Each day shall be not more than [*****] ([*****]) hours in length, excluding travel time. Days must be used during each Contract Year; days do not carryover to subsequent Contract Years.

3.12

In the event ADAMS desires additional personal appearance or production days from CONSULTANT, other than days provided in Sections 3.10 and 3.11 herein, CONSULTANT will make himself available as may be mutually agreed by the parties at his then-current daily rate (which, as of January 1, 1999, is [*****] dollars ($[*****])), plus expenses. This shall be in addition to any other fees payable as provided in Section 7 hereunder.

4.

DEVELOPMENT OF IRONS AND OTHER CLUBS .

4.1

ADAMS will use best efforts, along with CONSULTANT, to develop irons and other clubs for CONSULTANT's use. Until such clubs are developed to CONSULTANT's satisfaction, CONSULTANT retains right to use irons, putter and wedge of his choice, made by any manufacturer.

4.2

ADAMS, along with CONSULTANT, is making best efforts to develop a graphite tip shaft technology to interact with the new iron heads being developed. CONSULTANT's input and endorsement through his usage on the Tour are a critical element in developing new clubs.

If CONSULTANT plays the iron developed by ADAMS, then he shall be entitled to a royalty of [*****] percent ([*****]%) of sales at ADAMS' wholesale price on sales in excess of [*****] dollars ($[*****]). Wholesale price shall be defined as used in ADAMS' public accounting practices which are in accordance with GAAP. By way of example, wholesale price shall be the ADAMS' sales price (less rejects, returns, cancellations, declines, credit card charge-backs, shipping and handling, bad debt, sales discounts, demo clubs, sales specials, sales promotions, net downs and sales taxes) on all sales. This royalty shall be in addition to compensation provided in Section 7 herein. If CONSULTANT is playing only the new iron head without the graphite tip, he shall receive a [*****] percent ([*****]%) royalty as set out herein but only on the sales of the steel shafted clubs sold worldwide. 3

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4.3

Should ADAMS develop irons subsequently to the new irons contemplated in Section 4.2 above, CONSULTANT's royalty rights in Section 4.2 shall apply even if CONSULTANT chooses to keep playing the new irons contemplated in Section 4.2 above. For example, if ADAMS develops a second generation of irons to the new irons contemplated in Section 4.2 above and sells the second generation of irons both with and without the graphite tip, and CONSULTANT chooses to continu ...