Exhibit 10.1
CUSTOMER
AGREEMENT
Customer Agreement (this “
Agreement ”), effective as of the last
date on the signature page (the “ Effective
Date ”), by and
between CALLAWAY GOLF COMPANY (“
Callaway ”), a Delaware corporation, with offices at
2180 Rutherford Road, Carlsbad, California 92008, SAINT ANDREWS
GOLF SHOP, LTD. (“ Saint Andrews ”),
a Nevada limited liability company, with offices at 5325 South
Valley View Boulevard, Suite 4, Las Vegas, Nevada 89118, and
ALL -AMERICAN GOLF
CENTER, INC. (“ AAGC ”), a Nevada
corporation, with offices at 6730 South Las Vegas Boulevard, Las
Vegas, Nevada 89119. Callaway, Saint Andrews, and AAGC are
sometimes hereinafter referred to individually as a “
Party ”, and together, as the “ Parties ”.
R E C I T A L S
:
WHEREAS, on December 30, 1998 (the
“ Acquisition Date ”), All-American Golf, LLC
(the “ LLC ”) and AAGC, entered into an asset
purchase agreement in which the LLC sold to AAGC substantially all
of the assets of a golf facility on approximately 42 acres of land
on Las Vegas Boulevard in Las Vegas, Nevada, including a golf
course, driving range, performance center, training facility and
golf shop (the “ Center ”); and
WHEREAS, AAGC is the operator of the Center; and
WHEREAS, on the Acquisition Date,
Callaway and Saint Andrews Golf Corporation entered into: (i) a
trademark license agreement (the “ Trademark License
”) in which Callaway granted LLC the right to use certain
marks; and (ii) a software license agreement in which Callaway
granted the LLC the right to use certain software programs, all in
connection with its operation of the Center; and
WHEREAS, the software license
agreement was subsequently superseded by comparable provisions in a
Callaway Golf performance center agreement, which expired according
to its terms, but which the Parties have been operating under
notwithstanding its expiration (together, the “Software
License”); and
WHEREAS, AAGC is the
successor-in-interest with respect to the licenses granted by both
the Trademark License and the Software License; and
WHEREAS, Callaway, AAGC, and Saint
Andrews desire to set forth their understanding regarding certain
improvements to be made to the Center, and the purchase of Callaway
Golf® branded Golf Related Products (as defined in Section 2.2
below) to be sold at the Center.
NOW, THEREFORE, in consideration
of the foregoing recitals, the mutual benefits to be derived by the
Parties, and other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the Parties agree as
follows:
1. Callaway Contributions
. In consideration of the
agreements set forth herein, Callaway will make the contributions
(“ Contributions ”) set forth below at the times
and for the purposes indicated.
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1.1.
Advertising and Marketing . Callaway shall pay to Saint Andrews
an advertising and marketing contribution during each calendar year
in the amount of $250,000 (“ Advertising
Contribution ”) in the form of Golf Related Products
supplied by Callaway’s affiliate, Callaway Golf Sales Company
(“ CGSC ”), at no
charge, based on CGSC’s normal wholesale prices in effect
from time to time (“ No Charge Product
”). This Advertising Contribution will be pro-rated (i.e.,
reduced) during calendar year 2009 to take into consideration the
number of days that will elapse between the Effective Date and
December 31, 2009, and AAGC’s Marketing requirement in
Section 2.1 below during calendar year 2009 will likewise be
reduced by a commensurate amount.
1.2.
Retail Performance . If Saint Andrews’ purchases
of Golf Related Products for resale at, and only at, the Center
from CGSC exceeds $1,000,000 during any calendar year of the Term
(the “ Threshold Amount ”), including,
without limitation, the 2009 calendar year (regardless of the
Effective Date), then Saint Andrews will be entitled to receive
$250 of credit for each $1,000 of its purchases of Golf Related
Products from CGSC that exceed the Threshold Amount, up to a total
of $250,000 of credit, for the subject calendar year (“
Credit ”). Saint Andrews may, at its discretion, use
the Credit to offset against or pay any amounts due to CSGC on any
outstanding invoices.
1.3.
Equipment Supply .
Callaway shall provide AAGC, at no charge, with a sufficient supply
of: (a) range balls, which shall be at least 15,000 dozens per
calendar year; and (b) staff uniforms, consisting of pants, shirts,
wind-shirts, and shoes in the amounts and as set forth more fully
on Exhibit “A” . Furthermore, Callaway
shall provide AAGC for use at the Center with sixty (60) sets of
rental clubs (which will be on consignment to AAGC) in addition to
demonstration clubs consisting of two hundred (200) woods (for
which AAGC will be charged at 40% off CGSC’s normal wholesale
prices) and one hundred (100) six-irons (at no charge). The rental
clubs and demonstration clubs provided by Callaway shall be
reasonably replaced in order to account for wear and tear as well
as to ensure that the Center is provided with up to date
models.
1.4.
Upgrade Range Area . Callaway shall provide a
contribution to AAGC of not more than $500,000 in the aggregate
(“ Range Contribution ”) to be used for
improvements to the driving range landing area, short game practice
area and putting green at the Center, provided Callaway Golf®
branding elements reasonably satisfactory to Callaway are utilized
in connection with all such improvements when practicable. The
Parties shall use their best efforts to complete the improvements
to the driving range landing area, short game practice area and
putting green at the Center during the Center’s offseason in
July and August of 2009, but in any event they shall be completed
during the calendar year of 2009. The design of such improvements
as well as the vendors used for such improvements shall be mutually
agreed upon by Callaway and AAGC prior to the commencement of any
work. The Parties agree that AAGC will take primary responsibility
for planning and implementing these improvements, including,
without limitation, obtaining bids and estimates and specifying
contractors or vendors of labor or materials. However, prior to
AAGC’s accepting any bids or estimates, or selecting
contractors or vendors, Callaway will be given an opportunity to
obtain competitive bids or estimates, or suggest competitive
contracts or vendors, provided that Callaway does not unreasonably
delay such improvements, and AAGC will cooperate with Callaway in
such efforts. Advances of the Range Contribution shall be made by
Callaway directly to the applicable contractors and vendors
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completing the work at the times and in
accordance with the schedules agreed to with such contractors and
vendors for the improvements contemplated in this Section 1.4
provided such improvements are completed to Callaway’s
reasonable satisfaction.
1.5.
Remodel Facility .
Callaway shall provide a contribution to AAGC of not more than
$750,000 in the aggregate (“ Improvement
Contribution ”) to be used for improvements to the
facilities at the Center, which improvements may include, without
limitation: improvements to the pro shop and retail area; upgraded
fitting bay technology and graphics; and enhanced exterior signage
and graphics; provided Callaway Golf® branding elements
reasonably satisfactory to Callaway are utilized in connection with
all such improvements. The Parties shall use their best efforts to
complete the improvements to facilities at the Center during the
Center’s offseason in July and August of 2009, but in any
event shall be completed during the calendar year of 2009. The
design of such improvements as well as the vendors used for such
improvements shall be mutually agreed upon by Callaway and AAGC
prior to the commencement of any work. The Parties agree that
Callaway will take primary responsibility for planning and
implementing these improvements, including, without limitation,
obtaining bids and estimates and specifying contractors or vendors
of labor or materials, and AAGC will cooperate with Callaway in a
commercially reasonable manner. Advances of the Improvement
Contribution shall be made by Callaway directly to the applicable
contractors and vendors completing the work at the times and in
accordance with the schedules agreed to with such contractors and
vendors for the improvements contemplated in this Section 1.5
provided such improvements are completed to Callaway’s
reasonable satisfaction.
1.6.
Business Operation Expenses . Within fifteen (15) calendar days
following the Effective Date, Callaway shall provide to AAGC a one
time cash contribution of $750,000 (“ Operation
Contribution ”) to be used for AAGC’s operating
expenses or business expenses, which expenses may include, without
limitation, rent, utilities, wages, loans, maintenance, or any
other costs, provided, however, that if any improvements are
constructed or modified, reasonable efforts shall be used, where
practicable, to include Callaway Golf® branding elements
reasonably satisfactory to Callaway. When making any payments to
third parties with the proceeds of the Operation Contribution, AAGC
will, within a reasonable time, provide Callaway with a breakdown
detailing the amount and purpose of the proposed payments and the
name of the proposed third party payees together with such
additional detail or other information as Callaway reasonably
requests.
2. AAGC’s and Saint Andrews’ Obligations
.
2.1.
During each calendar year, AAGC shall expend an amount equal to or
exceeding $250,000 for advertising, marketing and promotion for the
Center (“ Marketing ”) in a form that is
reasonably satisfactory to Callaway, and AAGC will provide Callaway
with such information, materials and reports in such form, with
such detail, and at such times as Callaway reasonably requests for
it to confirm that such expenditures have been made by AAGC for
such purposes. In exchange for AAGC’s Marketing, Callaway
shall pay the Advertising Contribution to Saint Andrews set forth
herein at Section 1.1.
2.2.
Purchases . AAGC and Saint Andrews h
