UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8 - K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report October 20, 1998
COMMISSION FILE NO. 0-24812
DIVOT GOLF CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 56-1781650
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(State or other jurisdiction (I.R.S. Employer Identification No.)
incorporation or organization)
One Tampa City Center, Suite 200, Tampa, FL 33602
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(Address of principal executive offices)
(813) 222-0611
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(Registrant's telephone number, including area code)
Check whether the registrant: (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes |X| No |_|
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DIVOT GOLF CORPORATION
FORM 8 - K
TABLE OF CONTENTS
Item 1. Changes in Control of Registrant - None
Item 2. Acquisition or Disposition of Assets - None
Item 3. Bankruptcy or Receivership - None
Item 4. Changes in Registrant's Certifying Accountant - None
Item 5. Other Events ....................................................Page 3
Item 6. Resignations of Registrant's Directors - None
Item 7. Financial Statements and Exhibits................................Page 3
Signatures................................................................Page 4
Page 2 of 4
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ITEM 5. Other Events
On October 6, 1998, the Company formed a joint venture with Raymond Floyd
("Joint Venture"). The Joint Venture is operated as a limited liability company,
80% of which will be owned by the Company and the remaining 20% by Eagle Golf
Enterprises, Inc. (a Raymond Floyd family-owned company).
The Joint Venture entered into a license agreement with Raymond Floyd
Enterprises, Inc., pursuant to which the Joint Venture received the exclusive
right to manufacture and distribute "Licensed Products" (which the parties
anticipate will include a signature line of Raymond Floyd golf related accessory
products). Manufacture and distribution of the Licensed Products will be the
sole business of the Joint Venture. The initial term of the license is ten
years, subject to 2 - 10 year renewal terms. The license will be subject to
termination or non-renewal if the Joint Venture, among other things, fails to
reach certain specified revenue goals. The Licensed Products will be
manufactured and distributed by Miller Golf, Inc., a wholly owned subsidiary of
the Company.
In consideration for the license, the Company has issued 354,463 shares of
common stock to Mr. and Mrs. Raymond Floyd, as tenants by the entirities,
through assignment from Raymond Floyd Enterprises, Inc. This represents 9.1% of
the issued and outstanding shares of the Company's common stock as of October
16, 1998. In this regard, the Company understands that Mr. and Mrs. Floyd have
filed, or are in the process of filing, a Form 13G. Mr. and Mrs. Floyd have the
obligation to return some or all of the shares upon the occurrence or
nonoccurrence of certain events.
ITEM 7. Financial Statements and Exhibits
Financial statements - None
The Exhibits listed below are being filed with this Form 8-K.
Exhibit/ Document/Description
Item
4.1 Registration Rights and Related Matters...................................5
10.1 Limited Liability Company Agreement of DIVOT - RFG JOINT VENTURE, L.L.C.
(the "Company") by and between EAGLE GOLF ENTERPRISES, INC., a Florida
corporation ("EAGLE"), and DIVOT GOLF CORPORATION, a Florida corporation
("DIVOT"), as members (collectively, the "Members")...........................12
10.2 Addendum to Limited Liability Company Agreement of Divot-RFG Joint Venture,
L.L.C.........................................................................45
10.3 LICENSE AGREEMENT by and between RAY FLOYD ENTERPRISES, INC. ("Licensor"),
RAYMOND FLOYD individually ("Floyd"), and DIVOT - RFG JOINT VENTURE, L.L.C., a
Florida limited liability company ("Company" or "Licensee")...................46
Page 3 of 4
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned herein duly authorized.
DIVOT GOLF CORPORATION
/s/Clifford F. Bagnall
-------------------------------------------
Clifford F. Bagnall, Chief Financial Officer
(Principal Financial and Accounting Officer)
Date: October 20, 1998
Page 4 of 4
EXHIBIT 4.1
DIVOT GOLF CORPORATION
201 N. FRANKLIN STREET, SUITE 200
TAMPA, FLORIDA 33602
September __, 1998
Ray Floyd Enterprises, Inc.
231 Royal Palm Way, Suite 100
Palm Beach, Florida 33480
Attn: George A. Lesnick, Managing Director
Re: Registration Rights and Related Matters
Ladies and Gentlemen:
Reference is hereby made to that certain License Agreement, dated as of
September __, 1998, (the "License Agreement") by and between RAY FLOYD
ENTERPRISES, INC., a Florida corporation ("Holder"), RAYMOND FLOYD, individually
("Floyd") and DIVOT - RFG JOINT VENTURE, L.L.C., a Florida limited liability
company (the "Licensee"), of which DIVOT GOLF CORPORATION, a Delaware
corporation ("Company"), and EAGLE GOLF ENTERPRISES, INC., a Florida
corporation, are the sole members.
Pursuant to the License Agreement, the Holder will receive and the Company
shall issue and deliver to the Holder an aggregate of 354,463 shares (the
"Shares") of the Company's common stock, $.001 par value per share (the "Common
Stock"), all of which Shares were issued and delivered upon execution of the
License Agreement, and of which 137,445 Shares (the "Conditional Shares") are
subject to future redemption by the Company as provided in the License
Agreement. In connection with the Shares, the parties to this letter agreement
("Agreement") do hereby agree as follows:
A. Representations by Company
The Company represents and warrants to Holder that:
1. Corporate Existence. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the state
of its incorporation.
2. Enforceability. This Agreement has been duly executed and delivered
by the Company, and this Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable in accordance with its terms.
3. Company's SEC Filings; Resale Registration Statement. The Company has
heretofore delivered to the Holder copies of (i) the Company's Registration
Statement on Form SB-2 (the "Resale Registration"), as filed with the Securities
and Exchange Commission (the "SEC") on July 2, 1998, relating to, among other
things, proposed registered sales of Company Common Stock by holders thereof,
(ii) the Company's Proxy Statement, dated May 6, 1998, as filed with the SEC,
and (iii) the Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1997, and the Company's Quarterly Reports on Form 10-QSB for the
three months ended March 31, 1998, and the six months ended June 30, 1998,
respectively. As of their respective dates, such documents (collectively, the
"SEC Filings") complied in all material respects with all applicable
requirements of the Securities Act of 1933, as amended (the "Securities Act")
and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements and unaudited
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consolidated interim financial statements of the Company included in such SEC
Filings were prepared in accordance with GAAP applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto
and, as to unaudited statements, except for the absence of notes thereto), and
present fairly in all material respects the financial position of the Company as
of the dates thereof and the results of the Company's operations for the periods
then ended (subject, in the case of unaudited interim financial statements, to
year-end adjustments, all of which adjustments will consist of normal recurring
accruals consistent with past practice).
4. Absence of Certain Changes. Since December 31, 1997, neither the
Company nor any of its subsidiaries has, except as disclosed otherwise in the
SEC Filings, (a) incurred any liability material to the Company and its
subsidiaries on a consolidated basis, except in the ordinary course of its
business consistent with past practices; (b) suffered a change or any event
involving a prospective change, in the business, assets, financial condition or
results of operation which has had, or is reasonably likely to have,
individually or in the aggregate, a material adverse effect on the Company's
consolidated business, assets, financial condition or results of operations.
5. The Shares. All the Shares are duly authorized and validly issued to
the Holder, fully paid and nonassessable, free and clear of all liens and
encumbrances, and are not subject to preemptive or similar rights; except for
the Company's right to redeem the Conditional Shares as expressly provided in
the License Agreement. The Shares are listed for trading on the Nasdaq Small Cap
Market. The Company agrees that if requested by Holder, the Company and its
securities counsel shall assist the Holder at the Company's expense in preparing
and filing any SEC filings required to be made by Holder from time to time in
respect of its ownership of the Shares (Form 13D, Forms 3 and 4, etc.).
B. Registration Rights
1. Registration Statement. The Company hereby agrees that it shall
prepare and file, as soon as practicable but in no event later than October 31,
1998, a registration statement (the "Registration Statement") on appropriate
form with the SEC under the Securities Act so as to permit the Holder (and each
of Holder's assignees of Shares that are affiliates of Holder (including
Permitted Assigns under Section C below); each also being a "Holder" for
purposes of this Section B) to sell in the Holder's discretion all or any
portion of the Shares from time to time in transactions registered under the
Securities Act; it being acknowledged that the Company has determined in its
discretion and hereby agrees to satisfy such registration requirements by
appropriately amending the Resale Registration in accordance with applicable law
to serve as the Registration Statement for such purpose and meet such
requirements, which amendment shall be filed as soon as practicable and no later
than October 31,1998 In the event that the Registration Statement is not
declared effective by the SEC on or before the 30th day after the filing of such
amendment (or on or before December 31, 1998 if prior to effectiveness the SEC
provides comments on the Resale Registration which require another amendment to
the Resale Registration and the Company maintains diligent efforts through such
date to cause the Resale Registration to become effective as soon as
practicable) (such date, as applicable, being the "Demand Date"), then the
Holder shall have the right to demand that the Company prepare and file as soon
as practicable, but in no event later than 30 days after such demand, another
Registration Statement on appropriate form with the SEC under the Securities Act
so as to permit the Holders to sell in their discretion all or any portion of
the Shares from time to time in transactions registered under the Securities
Act. The Company shall use its best efforts to cause any such Registration
Statement to be declared effective by the SEC as soon as practicable following
the filing thereof, and to remain effective until the earlier to occur of the
second annual anniversary of the date of this Agreement, or such time as the
Holders no longer hold any Shares (or such earlier time after the first
anniversary hereof when Rule 144 under the Securities Act is available for use
by Holders to sell all of the Shares then held by them without limitation under
the volume limits of Rule 144). The Company shall pay all expenses in connection
with any such registration, including, without limitation, the expenses of its
counsel and accountants, SEC and Nasdaq fees, financial printers, etc.; it being
agreed however that the Company shall not be liable for any discounts or
commissions of any underwriter or dealer or any counsel engaged by any Holder.
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If the Company determines to commence an underwritten public offering of
its capital stock at any time when the Registration Statement is required to be
effective as to any Shares under the foregoing paragraph, the Company shall (i)
promptly notify the Holder of such proposed offering and (ii) permit the Holders
to include any Shares held by them in such offering on the same pricing terms
(and shall include such Shares in any registration statement relating thereto);
provided, however, that if the managing underwriter advises the Company that the
inclusion of all Shares proposed to be included by the Holders in the
underwritten public offering (the "Holder Shares") together with all other
shares of Common Stock proposed to be included therein by holders (other than
the Holders) to which the Company has a legal obligation to include in such
offering (the "Other Shares") would, in the managing underwriter's reasonable
judgment, jeopardize the success of the Company's offering, then the Company
shall be required to include in the offering (in addition to the number of
shares to be sold by the Company) only that aggregate number of Shares and Other
Shares that the managing underwriter reasonably believes will not jeopardize the
success of the Company's offering, and the number of Shares and Other Shares to
be included in such underwritten public offering shall be allocated among the
holders thereof pro rata based upon the number of shares of Shares and Other
Shares requested by the holders thereof to be registered in such underwritten
public offering; it being agreed that no other selling shareholders shall
participate in such offering (except as permitted under this paragraph) unless
all requested Holder Shares are included therein.
2. Indemnification. In connection with the registration of any Shares
under the Securities Act pursuant to this Agreement, the Company shall indemnify
and hold harmless each Holder of such shares, each underwriter of such shares,
if any, each such broker or any other person, if any, who controls any of the
foregoing persons, within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which any of the foregoing
persons may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement of a material fact contained
in any registration statement under which such Shares were registered under the
Securities Act, any final prospectus contained therein, or any amendment or
supplement thereto, or any document prepared and/or furnished by the Company
incident to the registration or qualification of any Shares, or arise out of or
are based upon the omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading or,
with respect to any final prospectus, necessary to make the statements therein
in light of the circumstances under which they were made, not misleading, or any
violations by the Company of the Securities Act or state securities or "blue
sky" laws applicable to the Company relating to action or inaction required of
the Company in connection with such registration or qualification under such
state securities or blue sky laws; and shall reimburse each Holder, such
underwriter, broker or other person acting on behalf of such Holder and each
such controlling person for any legal or any other expenses reasonably incurred
by any of them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company shall
not be so obligated to indemnify and reimburse any Holder for any such loss,
claim, damage or liability that arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
said registration statement, said final prospectus or said amendment or
supplement or any document incident to the registration or qualification of any
Shares in reliance upon and in conformity with information furnished by such
Holder to the Company in writing specifically for use in preparation thereof.
The Holder agrees to indemnify and hold harmless (in the same manner and to the
same extent as set forth in this paragraph for the indemnification of Holder by
the Company) the Company, each director of the Company, each officer of the
Company who shall sign such registration statement and any person who controls
the Company within the meaning of the Securities Act, with respect to any untrue
statement or omission from such registration statement or final prospectus
contained therein or any amendment or supplement thereto, if and only if such
untrue statement or omission was made in reliance upon and in conformity with
information furnished to the Company by Holder in writing specifically for use
in the preparation of such registration statement, final prospectus or amendment
or supplement.
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3. Additional Registration Procedures.
a. The Registration Statement shall permit the Holders to sell
Shares directly or through agents, dealers, brokers or underwriters, in the
over-the-counter market, or otherwise, on terms and conditions determined by the
selling Holders at the time of sale by negotiation, or by market prices or
otherwise.
b. During the time that the Shares are required to be registered
hereunder, the Company shall promptly amend the Registration Statement (and its
Prospectus) as required from time to time such that it complies with all
applicable requirements of the Securities Act, including, without limitation, if
necessary to reflect the Additional Shares upon issuance thereof or to disclose
the selling Holders. Upon request of a Holder in connection with any proposed
registered sale of Shares under the Registration Statement, the Company shall
promptly furnish to Holders the opinion of the Company's legal counsel,
addressed to the selling Holders, to the effect that the Registration Statement
(and related prospectus) is legally sufficient at such time to effect a
registered sale of such Shares by such Holders at such time under the Securities
Act, which opinion shall be in form reasonably satisfactory to Holders and
include customary opinions given by issuer's counsel regarding registered sales
of securities.
c. In connection with the Company's obligations pursuant to this
Agreement, the Company will use its best efforts to effect such registrations to
permit the sale of the Shares in accordance with the intended method or methods
of disposition thereof, and pursuant thereto the Company will as expeditiously
as possible:
(1) prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement as may be necessary to
keep such registration statement effective for the applicable period; cause the
related prospectus to be supplemented by any required prospectus supplement, and
as so supplemented to be filed pursuant to Rule 424 under the Securities Act;
and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement during the
applicable period in accordance with the intended methods of disposition by the
participating Holders set forth in such registration statement or supplement to
such prospectus;
(2) notify the Holders whose Shares are to be covered by the
Registration Statement promptly: (i) when a prospectus or any prospectus
supplement or post-effective amendment has been filed, and, with respect to a
registration statement or any post-effective amendment, when the same has become
effective, (ii) of any request by the SEC for amendments or supplements to a
registration statement or related prospectus or for addition information, (iii)
of the issuance by the SEC of any stop order suspending the effectiveness of a
registration statement or the initiation of any proceedings for that purpose,
(iv) of the receipt by the Company of any notification with respect to the
suspension of the qualification of any of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose, (v) of the happening of any event which requires the making of any
changes in a registration statement or related prospectus so that such documents
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading and (vi) of the Company's reasonable determination that a
post-effective amendment to a registration statement would be appropriate; and,
in connection with any such notification, and from time to time upon request of
Holders, the Company shall clearly indicate to Holders the periods of time
during which the Registration Statement is or will not be available for use by
the Holders to effect registered sales of Shares thereunder in accordance with
law;
(3) make every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of a registration statement, or the
lifting of any suspension of the qualification of any of the Shares for sale
in any jurisdiction, at the earliest possible moment;
(4) furnish to the Holders whose Shares are covered by the
registration statement, without charge, at least one conformed copy of the
registration statement or statements and any post-effective amendment thereto,
including financial statements and schedules, all documents incorporated therein
by reference and all exhibits (including those incorporated by reference);
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(5) deliver to the Holders whose Shares are covered by the
registration statement, without charge, as many copies of the prospectus or
prospectuses (including each preliminary prospectus) and any amendment or
supplement thereto and such other documents as such persons may reasonably
request; and the Company consents to the use of such prospectus or any amendment
or supplement thereto by the Holders in connection with the offering and sale of
the Shares covered by such prospectus or any amendment or supplement thereto;
(6) prior to any registered sale of Shares, use its best
efforts to register or qualify such Shares for offer and sale under the
securities or blue sky laws of such state jurisdictions as the Holders
reasonably request in writing; keep each such registration or qualification
effective during the period such registration statement is required to be kept
effective and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Shares covered by the
applicable registration statement;
(7) cooperate with the Holders whose Shares are covered by
such registration statement to facilitate the timely preparation and delivery of
certificates representing Shares to be sold and not bearing any restrictive
legends unless required by applicable law; and enable such Shares to be in such
denominations and registered in such names as the Holders may request at least
two business days prior to any registered sale of Shares;
(8) upon the occurrence of any event or circumstance that
requires an amendment or supplement to the registration statement or prospectus
or any change in information incorporated therein, the Company shall notify the
Holders of such occurrence and shall prepare a supplement or post-effective
amendment to the applicable registration statement or related prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Shares being sold
thereunder, such prospectus will not contain any untrue statement of a material
fact or omit to state any material fact necessary to make the statements therein
not misleading;
(9) the Company shall deliver such documents and
certificates as may be reasonably required by the Holders to evidence
compliance with this Agreement;
(10) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC and make generally available to its
security holders earnings statements satisfying the provisions of Section 11(a)
of the Securities Act, as soon as reasonably practicable; and
(11) use its best efforts to cause all Shares covered by
each registration to be listed on each securities exchange and inter-dealer
quotation system on which a class of common equity securities of the Company is
then listed and to pay all fees and expenses in connection therewith.
C. Other Agreements.
1. Permitted Assigns. The Company understands and agrees that the Holder
shall be permitted to assign and distribute all or any portion of the Shares to
the Holder's shareholders, consisting of Raymond and Maria Floyd, and that such
assignee-holders of the Shares shall also have all the rights and benefits of
the Holder under this Agreement with respect to their respective Shares
(however, only the Holder (Ray Floyd Enterprises, Inc.) shall have the option to
exercise its rights under the last sentence of the following paragraph C.2.).
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2. Registration Timing; Covenant to Redeem; Right of Termination. In the
event that the Company materially breaches, or makes a material
misrepresentation or otherwise materially fails to fulfill its obligations,
under this Agreement, or if a Registration Statement covering the Shares as
required hereunder is not declared effective by the SEC on or before the Demand
Date, or if the Registration Statement does not remain effective and usable for
registered sales by the Holders for an aggregate period of at least 180 days
during the first 12 months after the Registration Statement first becomes
effective; then, in any such event, at the option of any Holder in its sole
discretion, the Company shall redeem and purchase from such Holder all Shares
then held by him in accordance with the redemption terms set forth in Section
15.2(f) of the Licensee's Limited Liability Company Agreement. If such
redemption and full payment to Holders therefor does not occur within 15 days
after any Holder's request therefor, then at the option of Holder and effective
upon delivery of Holder's written notice to the Company, (i) the License
Agreement (and all rights of the Licensee thereunder) shall thereupon be
automatically cancelled and terminated and of no further force and effect, and
(ii) the Licensee shall be dissolved, and shall promptly windup and liquidate in
accordance with law and its Limited Liability Company Agreement; provided,
however, the parties agree that in the event that Holder exercises its option
under this sentence, the provisions of this sentence shall be the Holders' sole
remedy for the Company's failure to register or maintain the registration of the
Shares as required under this Agreement, except in the case of fraud or
intentional misconduct on the part of the Company.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as the
date first set forth above.
DIVOT GOLF CORPORATION
By:
Joseph R. Cellura
Chief Executive Officer
Acknowledged and Agreed:
RAY FLOYD ENTERPRISES, INC.
By:
Raymond Floyd
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The following parties hereby join and agree to the
provisions of Section C.2. (Termination Rights) above:
Divot - RFG Joint Venture, L.L.C.
By:
Name:
Title:
Eagle Golf Enterprises, Inc.
By:
Name:
Title:
11
EXHIBIT 10.1
LIMITED LIABILITY COMPANY AGREEMENT
OF
DIVOT - RFG JOINT VENTURE, L.L.C.
This Limited Liability Company Agreement of DIVOT - RFG JOINT VENTURE,
L.L.C. (the "Company") is made as of ______________, 1998 and is effective as of
_______________, 1998 (this "Agreement") by and between EAGLE GOLF ENTERPRISES,
INC., a Florida corporation ("EAGLE"), and DIVOT GOLF CORPORATION, a Florida
corporation ("DIVOT"), as members (collectively, the "Members").
WHEREAS, the Members desire to operate the Company as a limited
liability company under the Florida Act for the purposes set forth herein.
NOW THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Members hereby agree as
follows:
ARTICLE 1
DEFINED TERMS
Section 1.1 Definitions. Unless the context otherwise requires, the
terms defined in this Article I shall, for the purposes of this Agreement, have
the meanings herein specified.
"Affiliate" means with respect to a specified Person, any entity or other
Person that directly or indirectly controls, is controlled by, or is under
common control with, the specified Person. As used in this definition, the term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of an entity, whether
through ownership of voting securities, by contract or otherwise.
"Agreement" means this Limited Liability Company Agreement, as amended,
modified, supplemented or restated from time to time. References in the Florida
Act to "regulations" shall mean this Agreement.
"Articles" means the Articles of Organization of the Company and any and
all amendments thereto and restatements thereof filed on behalf of the Company
with the office of the Secretary of State of the State of Florida pursuant to
the Florida Act.
"Capital Account" means, with respect to any Member, the capital account
maintained for such Member in accordance with the provisions of Section 4.4
hereof.
"Capital Contribution" means, with respect to any Member, the aggregate
amount of money and the initial Gross Asset Value of any property (other than
money) contributed to the Company pursuant to Section 4.1 hereof with respect to
such Member's Interest.
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"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any corresponding federal tax statute enacted after the date of this
Agreement.
"Company Minimum Gain Chargeback Allocation" means the allocations
required by ss.1.704-2(f) of the Treasury Regulations.
"Covered Person" means a Member; any Affiliate of a Member; the Management
Committee or any member thereof; any officers, directors, shareholders,
partners, employees, representatives or agents of a Member, any Affiliate of a
Member, or the Management Committee; any employee or agent of the Company or its
Affiliates; any Tax Matters Member of the Company; or the President of the
Company.
"Depreciation" means, for each Fiscal Year or other period, an amount
equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such Fiscal Year or other period;
provided, however, that if the Gross Asset Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of such Fiscal
Year or other period, Depreciation shall be an amount that bears the same ratio
to such beginning Gross Asset Value as the federal income tax depreciation,
amortization or other cost recovery deduction with respect to such asset for
such Fiscal Year or other period bears to such beginning adjusted tax basis; and
provided further, that if the federal income tax depreciation, amortization or
other cost recovery deduction for such Fiscal Year or other period is zero,
Depreciation shall be determined with reference to such beginning Gross Asset
Value using any reasonable method selected by the Management Committee.
"Fiscal Year" means (i) the period commencing upon the formation of the
Company and ending on December 31, 1998, (ii) any subsequent twelve (12) month
period commencing on January 1 and ending on December 31.
"Florida Act" means Chapter 608, Florida Statutes, as amended from time to
time.
"Floyd Identification" means the name "Floyd," "Ray Floyd" or "Raymond
Floyd", the likeness, image and endorsement of Floyd, the facsimile signature of
Raymond Floyd and the Eagle Design mark, and also including without limitation
the "Floyd Collection Marks" and "Ray Floyd Collection," all as more
specifically defined or provided for in the License Agreement.
"Gross Asset Value" means, with respect to any asset, such asset's
adjusted basis for federal income tax purposes, except as follows:
(a) the initial Gross Asset Value of any asset contributed by a
Member to the Company shall be the gross fair market value of such asset, as
reasonably agreed to by the contributing Member and the Management Committee;
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(b) the Gross Asset Value of all Company assets shall be adjusted to
equal their respective gross fair market values, as reasonably determined by the
Management Committee and all Members, as of the following times: (a) the
acquisition of an additional interest in the Company by any new or existing
Member in exchange for more than a de minimis Capital Contribution; (b) the
distribution by the Company to a Member of more than a de minimis amount of
Company assets as consideration for an interest in the Company; and (c) the
liquidation of the Company within the meaning of Treasury Regulation
ss.1.704-1(b)(2)(ii)(g); provided, however, that adjustments pursuant to Clause
(a) and Clause (b) of this sentence shall be made only if the Management
Committee and all Members reasonably determine that such adjustments are
necessary or appropriate to reflect the relative economic interests of the
Members in the Company; and
(c) the Gross Asset Value of any Company asset distributed to any
Member shall be the gross fair market value of such asset on the date of
distribution, as reasonably determined by the Management Committee and such
Member.
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to Paragraph (a) or Paragraph (b) above, such Gross Asset Value shall
thereafter be adjusted by the Depreciation taken into account with respect to
such asset for purposes of computing Profits and Losses.
"Interest" means a Person's share of the allocations of the Company and a
Person's rights to receive distributions of the Company's assets in accordance
with the provisions of this Agreement and the Florida Act, whether as a Member
or an assignee of a Member's Interest.
"License Agreement" means that certain License Agreement between Ray
Floyd Enterprises, Inc., Raymond Floyd and the Company dated even date
herewith.
"Management Committee" has the meaning set forth in Section 6.1 hereof.
"Member" means any Person named as a member of the Company on Schedule A
hereto and includes any Person admitted as an Additional Member or a Substitute
Member pursuant to the provisions of this Agreement, in such Person's capacity
as a Member of the Company, and "Members" means two (2) or more of such Persons
when acting in their capacities as Members of the Company. For purposes of the
Florida Act, the Members shall constitute one (1) class or group of members.
"Member Minimum Gain Chargeback Allocations" mean the allocations required
by ss.1.704-2(i)(3) of the Treasury Regulations.
"Member Nonrecourse Deduction Allocations" mean the allocations required
by ss.1.704-2(i)(2) of the Treasury Regulations.
"Miller Products" means the products listed in the current Miller Golf
Catalog (titled "Miller Golf 1998 Retail Catalog", containing 49 pages) and
attached to this Agreement as Exhibit "I", and incorporated herein by reference.
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"Net Cash Flow" means, for each calendar month, Fiscal Year or other
period of the Company for which it must be determined, the gross cash receipts
of the Company from all sources other than Capital Contributions, less: (i) all
amounts actually paid by or for the account of the Company during the same
period pursuant to budgets, models, expense policies and business plans approved
by all the Members from time to time; (ii) reasonable reserves for reasonably
foreseeable expenses and other contingencies described in budgets and business
plans approved by all the Members; and (iii) payments of principal and interest
on any Company borrowings from Members or their Affiliates and expenses
reimbursed to Members or Affiliates, provided they are approved in advance by
all of the Members. Net Cash Flow shall not be reduced by depreciation,
amortization, cost recovery deductions, depletion, similar allowances or other
non-cash items, but shall be increased by any reduction of reserves previously
established.
"Nonrecourse Deduction Allocations" means the nonrecourse deductions as
defined in ss.1.704-2(c) of the Treasury Regulations.
"Percentage Interest" means a Member's Percentage Interest (from Schedule
A). The Percentage Interest of EAGLE shall not be diluted without its prior
written consent. Voting shall at all times be based upon the Members' Percentage
Interests (including times when the Capital Accounts of all Members is negative
or zero), except as provided in this Agreement.
"Person" includes any individual, corporation, association, partnership
(general or limited), joint venture, trust, estate, limited liability company,
or other legal entity or organization.
"Profits" or "Losses" means, for each Fiscal Year, an amount equal to the
Company's taxable income or loss for such Fiscal Year, determined in accordance
with ss.703(a) of the Code (but including in taxable income or loss, for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to ss.703(a)(1) of the Code), with the following
adjustments:
(a) any income of the Company exempt from federal income tax and not
otherwise taken into account in computing Profits or Losses pursuant to this
definition shall be added to such taxable income or loss;
(b) any expenditures of the Company described in ss.705(a)(2)(B) of
the Code (or treated as expenditures described in ss.705(a)(2)(B) of the Code
pursuant to Treasury Regulation ss.1.704-1 (b)(2)(iv)(i)) and not otherwise
taken into account in computing Profits or Losses pursuant to this definition
shall be subtracted from such taxable income or loss;
(c) in the event the Gross Asset Value of any Company asset is
adjusted in accordance with Paragraph (b) or Paragraph (c) of the definition of
"Gross Asset Value" above, the amount of such adjustment shall be taken into
account as gain or loss from the disposition of such asset for purposes of
computing Profits or Losses;
(d) gain or loss resulting from any disposition of any asset of the
Company with respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Gross Asset Value of the asset
disposed of, notwithstanding that the adjusted tax basis of such asset differs
from its Gross Asset Value;
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(e) in lieu of the depreciation, amortization and other cost recovery
deductions taken into account in computing such taxable income or loss, there
shall be taken into account Depreciation for such Fiscal Year or other period,
computed in accordance with the definition of "Depreciation" above; and
(f) notwithstanding any other provisions of this definition, any items
which are specially allocated pursuant to Section 8.2 hereof shall not be taken
into account in computing Profits or Losses.
"Substitute Member" means a Person who is admitted to the Company as a
Member pursuant to Section 14.1 hereof, and who is named as a Member on an
amended Schedule A to this Agreement.
"Tax Matters Member" has the meaning set forth in Section 11.1 hereof.
"Treasury Regulations" means the income tax regulations, including
temporary regulations, promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
ARTICLE 2
FORMATION AND TERM
Section 2.1 Formation.
(a) The Members hereby agree to form the Company as a limited
liability company pursuant to the provisions of the Florida Act, and agree that
the rights, duties and liabilities of the Members shall be as provided in the
Florida Act, except as otherwise provided herein.
(b) The name and mailing address of each Member and the amount
contributed to the capital of the Company shall be listed on Schedule A attached
hereto. The Management Committee shall be required to update Schedule A from
time to time as necessary to accurately reflect the information therein. Any
amendment or revision to Schedule A made in accordance with this Agreement shall
not be deemed an amendment to this Agreement. Any reference in this Agreement to
Schedule A shall be deemed to be a reference to Schedule A as amended and in
effect from time to time.
(c) The Members, or an authorized person on their behalf, shall
execute, deliver and file the Articles and any and all amendments thereto and
restatements thereof.
Section 2.2 Name. The name of the Company formed and continued is
DIVOT - RFG JOINT NEW VENTURE, L.L.C., or such other name as in available under
the Florida Act and agreed upon by all of the Members. The business of the
Company may be conducted upon compliance with all applicable laws under any
other name designated by the Management Committee, provided that any name
containing "Eagle" or "Floyd" or any part of the Floyd Identification shall
require prior written consent of EAGLE.
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Section 2.3 Term. The term of the Company shall commence on the date
the Articles are filed in the office of the Secretary of State of the State of
Florida and shall continue until December 31, 2058, unless the Company is
dissolved before such date in accordance with the provisions of this Agreement.
Section 2.4 Registered Agent and Office. The Company's registered
agent and office in Florida shall be One Tampa City Center, Suite 200, 201 North
Franklin Street, Tampa, Florida 33602. At any time, the Management Committee may
designate another registered agent and/or registered office.
Section 2.5 Principal Place of Business. The principal place of
business of the Company shall be One Tampa City Center, Suite 200, 201 North
Franklin Street, Tampa, Florida 33602. At any time, the Management Committee may
change the location of the Company's principal place of business.
Section 2.6 Qualification in Other Jurisdictions. Subject to Section
2.2, the Management Committee shall cause the Company to be qualified, formed or
registered under assumed or fictitious name statutes or similar laws in any
jurisdiction in which the Company transacts business. The President of the
Company shall execute, deliver and file any certificates (and any amendments
and/or restatements thereof) necessary for the Company to qualify to do business
in a jurisdiction in which the Company may wish to conduct business.
ARTICLE 3
PURPOSE AND POWERS OF THE COMPANY
Section 3.1 Purpose. The purpose of the Company shall be to distribute
and market on an exclusive basis various golf products manufactured by DIVOT (or
by its subsidiaries and other Affiliates, including without limitation, Miller
Golf, Inc., a Massachusetts corporation, or any successor business entity of
Miller Golf, Inc. (hereinafter "MILLER")), such products as are agreed upon in
writing by EAGLE and DIVOT from time to time, including the Licensed Products so
agreed upon and described in the License Agreement signed on even date herewith,
and such additional Licensed Products as may hereafter be agreed upon from time
to time pursuant to the terms and conditions of the License Agreement. DIVOT
(and its subsidiaries and other Affiliates, including without limitation,
MILLER) shall cause all business developments, enterprises, ventures, alliances
and other undertakings or opportunities relating to the manufacture,
distribution, marketing and sale of golf accessories and golf apparel (including
but not limited to clothing, shoes, socks and other footwear, gloves, belts,
hats and headwear, luggage and carry-alls or travel bags, golf bags and covers,
bag tags, golf-related gifts, divot tools eyewear/sunglasses, club head covers,
towels, umbrellas and golf jewelry and other golf collectibles) to be directed
to and undertaken by the Company for its exclusive profit and benefit,
irrespective of the fact that certain representatives, employees, agents and
other resources of DIVOT and such subsidiaries and other Affiliates may be
separately involved in developing such business undertakings and opportunities;
provided, however, that, notwithstanding anything in this Agreement to the
contrary, nothing herein shall prevent, limit, or restrict DIVOT or Miller or
any of their Affiliates) in its or their manufacture, distribution, or sale of
the Miller Products.
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The Company and its business shall be operated, developed and advanced in
a manner consistent with the reasonable business judgement and commercial
standards that an experienced and prudent manager would exercise and be governed
by when controlling and administering a comparable start-up venture. The
Company's purposes and business plan shall be implemented and advanced by DIVOT
and the Management Committee on a best efforts basis, with the primary goals of
successfully growing its business and maximizing the value of the Members'
Interests.
Section 3.2 Powers of the Company. The Company shall have the power
and authority to take any and all actions necessary, appropriate, proper,
advisable, incidental or convenient to or for the furtherance of the purpose set
forth in Section 3.1, including, but not limited to, the power:
(a) to conduct its business, carry on its operations and have and
exercise the powers granted to a limited liability company by the Florida Act in
any state, territory, district or possession of the United States, or in any
foreign country that may be necessary, convenient or incidental to the
accomplishment of the purpose of the Company;
(b) to acquire by purchase, lease, contribution of property or
otherwise, own, hold, operate, maintain, finance, improve, lease, sell, convey,
pledge, mortgage, transfer, demolish or dispose of any real or personal property
that may be necessary, convenient or incidental to the accomplishment of the
purpose of the Company;
(c) to enter into, perform and carry out contracts of any kind
(including contracts with any Member or Affiliate thereof, subject to Section
6.4) necessary to the accomplishment of the purpose of the Company;
(d) to sue and be sued, make claims and defend, and participate in
administrative or other proceedings, in its name;
(e) to appoint employees and agents of the Company, and define
their duties and fix their compensation;
(f) subject to the provisions of Article 12, to indemnify certain
Persons in accordance with the Florida Act and to obtain any and all types of
insurance;
(g) to borrow money and issue evidences of indebtedness (including
loans from any Member or Affiliate thereof, subject to Section 6.4) and to
secure any of the same by a mortgage, pledge or other lien on the assets of
the Company;
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(h) to pay, collect, compromise, litigate, arbitrate or otherwise
adjust or settle any and all other claims or demands of or against the
Company or to hold such proceeds against the payment of contingent
liabilities; and
(i) to make, execute, acknowledge and file any and all documents or
instruments necessary, convenient or incidental to the accomplishment of the
purpose of the Company.
ARTICLE 4
CAPITAL CONTRIBUTIONS, MEMBER INTERESTS,
CAPITAL ACCOUNTS AND FUTURE CAPITAL REQUIREMENTS
Section 4.1 Capital Contributions.
(a) As set forth on Schedule A hereto, the Members shall make Capital
Contributions in cash or other property to the Company described therein, and
shall have original Capital Account balances equal to the amount of such Capital
Contributions.
(b) No Member shall be required to make additional Capital
Contributions without the prior written consent of such Member. The parties
acknowledge that EAGLE shall not be required to make any additional Capital
Contributions, or make any loans or advances to the Company, and that the Member
Interest of EAGLE shall not be diluted without its prior written consent.
Section 4.2 Additional Contributions, Advances and Efforts of
DIVOT.
(a) DIVOT shall also contribute to the Company the full sales,
distribution, marketing, communications, information systems, financial and
accounting services (including systems and controls), all production and
manufacturing, distributing and other resources of DIVOT (and its subsidiaries
and other Affiliates, including without limitation, MILLER), including the time
services and other benefits of management and administrative personnel of DIVOT
and its Affiliates. Such resources shall be provided to the Company on an
as-needed basis, but nevertheless at such times and in a manner consistent with
the reasonable business judgement and commercial standards that an experienced
and prudent manager would exercise and be governed by when controlling and
administering a comparable start-up venture, and with the primary goals of
successfully growing the Company's business and maximizing the value of the
Members' Interests.
(b) The direct incremental costs of providing such services and resources
to the Company shall be reimbursed by the Company to DIVOT (or MILLER or the
other Affiliate providing the same) the from time to time as sufficient revenue
is available to the Company. Notwithstanding the foregoing, DIVOT or MILLER
shall provide all executive and management services to the Company at no cost;
provided, however that after the Company's systems and operations have been
substantially developed and implemented, and the Management Committee believes
it to be in the Company's best interest to fully dedicate all of the services of
one or more persons to the management or administration of the Company, then the
direct costs of providing such dedicated services to Company shall be a
reimbursable expense (as hereinafter provided).
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(c) The determinations of the type and amount of such expenses that are
reimbursable (and the time for payment thereof by the Company to DIVOT, MILLER
or their Affiliates) shall be made according to a written reimbursement plan,
policy or model to be jointly developed and agreed upon by the Management
Committee and all Members, and which in any event shall permit reimbursement of
expenses related only to the incremental increase in the direct costs (rather
than indirect costs, such as employee benefits, rent, taxes, professional fees
not directly related to the Company's business), of providing such services and
other resources. If the parties cannot agree on such a plan, policy or model
within 45 days after the date of this Agreement, the Company will retain a
nationally recognized accounting firm (the fees and costs of which shall be
borne by the Company) mutually agreeable to the Members, and such accounting
firm shall develop it for them. The Management Committee and the Members shall
be bound by such accounting firm's determination.
(d) The Company shall also enter into such management, services and
manufacturing agreements with MILLER, and any other subsidiaries or Affiliates
of DIVOT that are to provide services or other resources to the Company
hereunder (and containing customary and normal terms reasonably acceptable to
both DIVOT and EAGLE) setting forth the terms of their relationship with the
Company, and also restricting usage of the Floyd Identification and any other
licensee rights under the License Agreement rights exclusively to the Company.
Section 4.3 Member's Interest. Each Member shall have the Percentage
Interest and Interest set forth in Schedule A. A Member's Interest shall for all
purposes be personal property. A Member has no interest in specific Company
property, unless and until distributed to such Member.
Section 4.4 Status of Capital Contributions.
(a) Except as otherwise provided in this Agreement, the amount of a
Member's Capital Contributions may be returned to it, in whole or in part, at
any time, but only with the unanimous consent of the Members.
(b) No Member or Affiliate thereof shall receive any interest, salary
or drawing with respect to its Capital Contributions or its Capital Account or
for services rendered or resources provided on behalf of the Company, except as
otherwise specifically provided in this Agreement.
(c) Except as otherwise provided in this Agreement, no Member shall be
required to lend any funds or make Capital Contributions to the Company or,
after a Member's Capital Contributions or advances of other resources have been
fully paid pursuant to Sections 4.1 and 4.2 hereof, to make any additional
Capital Contributions or advances to the Company. No Member shall have any
personal liability for the repayment of any Capital Contribution or advances of
any other Member.
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Section 4.5 Capital Accounts.
(a) A separate Capital Account shall be established and maintained for
each Member. The original Capital Account established for any Member who
acquires an Interest by virtue of an assignment in accordance with the terms of
this Agreement shall be in the same amount as, and shall replace, the Capital
Account of the assignor of such Interest, and, for purposes of this Agreement,
such Member shall be deemed to have made the Capital Contributions made by the
assignor of such Interest (or made by such assignor's predecessor in interest).
To the extent such Member acquires less than the entire Interest of the assignor
of the Interest so acquired by such Member, the original Capital Account of such
Member and its Capital Contributions shall be in proportion to the Interest it
acquires, and the Capital Account of the assignor who retains a partial
Interest, and the amount of its Capital Contributions, shall be reduced in
proportion to the Interest it retains.
(b) The Capital Account of each Member shall be maintained in
accordance with the following provisions:
(i) to such Member's Capital Account there shall be credited
such Member's Capital Contributions, such Member's distributive share of
Profits, special allocations of income and gain, and the amount of any
Company liabilities that are assumed by such Member or that are secured by
any Company assets distributed to such Member;
(ii) to such Member's Capital Account there shall be debited
the amount of cash and the Gross Asset Value of any Company assets
distributed to such Member pursuant to any provision of this Agreement, such
Member's distributive share of Losses, special allocations of loss and
deduction, and the amount of any liabilities of such Member that are assumed
by the Company or that are secured by any property contributed by such Member
to the Company; and
(iii) in determining the amount of any liability for
purposes of this Section (b), there shall be taken into account ss.752(c) of
the Code and any other applicable provisions of the Code and the Treasury
Regulations.
ARTICLE 5
MEMBERS
Section 5.1 Powers of Members. The Members shall have the power to
exercise any and all rights or powers granted to the Members pursuant to the
express terms of this Agreement.
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Section 5.2 Annual Budget and Business Plan. From time to time, but at
least annually, the Company's officers shall prepare or shall cause to be
prepared an updated business plan and operating, financing and capital budget
for the Company, commencing with the first partial Fiscal Year of the Company.
Each such business plan and budget shall be circulated to the Members for review
and comment, and upon approval by the Management Committee shall constitute the
business and budget of the Company for such Fiscal Year. In addition to such
other limitations as are contained therein, the Company's officers shall make no
disbursement and shall enter into no binding agreement, without the approval of
the Management Committee, if such disbursement or binding agreement would be
inconsistent with (or in light of all available facts and circumstances would
likely be inconsistent with) the then applicable business plan or budget.
Section 5.3 Resignation. Except as expressly provided in this Agreement,
a Member may not withdraw from the Company prior to the dissolution and winding
up of the Company. If a Member withdraws in violation of the foregoing
prohibition, such Member shall not be entitled to receive any distributions and
shall not otherwise be entitled to receive the fair market value of its Interest
except as otherwise expressly provided for in this Agreement.
ARTICLE 6
MANAGEMENT
Section 6.1 Management of the Company.
(a) The Management Committee shall consist of JEREMIAH M. DALY
("Daly") and four (4) other individuals, all four (4) of whom shall be appointed
by DIVOT after consultation with all Members. Such four (4) additional members
of the Management Committee may be removed and replaced at any time and from
time to time by DIVOT after consultation with all Members. Daly shall each serve
on the Management Committee until he dies, resigns, or is removed by the written
consent of all of the Members. If Daly dies, resigns or is removed by such
written consent of all Members, then his successor shall be mutually agreeable
to and appointed by written consent of all of the Members; and the same process
for written consent to removal/appointment shall continue to apply to all
successors of Daly serving as a member of the Management Committee. The
authority to vote on actions affecting the Company shall be shared equally among
the individuals serving on the Management Committee. The Management Committee
shall meet as often as may be reasonably necessary, as determined in the
reasonable discretion of the Management Committee members, or at any time upon
the written demand of a Member. The actions of the Management Committee shall
bind the Company except as provided herein.
(b) No decision of the Management Committee shall be made except upon
majority vote of all of its members at a meeting duly called with at least five
(5) days notice, specifying the agenda for the meeting (which notice may be
waived by any of its members, and will be deemed to have been waived if the
member participates in the meeting and has been provided with an agenda for the
meeting). Meetings may be held telephonically whereby each of the members
participating can hear each of the other members. Action by the Management
Committee may also be taken and represented by a unanimous written consent. The
Management Committee shall appoint a Secretary who shall be responsible for
taking minutes of the meetings and safekeeping them on behalf of the Company.
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(c) Daly shall serve as the initial Chief Executive Officer and
President of the Company ("CEO"), and the CEO shall at all times be responsible
for the execution of the management actions and decisions and the day-to-day
operations of the Company, until removed by the written consent of all of the
Members. If the CEO dies, resigns, or is removed by written consent of all
Members, then his successor (and all successors in such office succeeding him)
shall be mutually agreeable to and appointed by the written consent of all of
the Members. The Management Committee may appoint other individuals to serve as
officers of the Company, with such titles as it may select, including the titles
of Vice President, Treasurer and Secretary, to act on behalf of the Company with
such power and authority as the Management Committee may delegate in writing to
any such individual, subject to the restrictions and terms of this Agreement;
provided that no other officer so appointed shall have executive decision-making
or managerial authority senior to the CEO of the Company (including without
limitation, the Chairman, if one is appointed), without the written consent of
all Members.
(d) A member of the Management Committee may resign at any time by
giving at least thirty (30) days written notice to the other members of the
Management Committee (or such shorter time period acceptable to such members).
The resignation of any member of the Management Committee shall take effect upon
the expiration of said 30-day period or at such earlier time as determined by
the Management Committee. Unless otherwise specified in such notice, the
acceptance of such resignation shall not be necessary to make it effective. His
successor shall be appointed in the manner provided in Section 6.1(a).
Section 6.2 Powers of the Management Committee. Except as otherwise
specifically provided in this Agreement, the Management Committee shall have
full, exclusive and complete discretion, right, power, and authority to manage,
control and make all decisions affecting the business and affairs of the Company
and to do or cause to be done any and all acts, at the expense of the Company on
the terms provided herein, deemed by the Management Committee to be necessary or
appropriate to effectuate the business of the Company purposes and objectives of
the Company as set forth in this Agreement. Except as otherwise specifically
provided in this Agreement, and without limiting the generality of the
foregoing, the Management Committee shall have the power and authority to
execute all documents or instruments, perform all duties and powers and do all
things for and on behalf of the Company in all matters necessary, desirable,
convenient or incidental to the business of the Company.
The expression of any power or authority of the Management Committee in
this Agreement shall not in any way limit or exclude any other power or
authority which is not specifically or expressly set forth in this Agreement
provided the exercise of any such other power or authority is consistent with
this Agreement and the Florida Act.
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Section 6.3 No Management by Other Persons. No Person other than the
Management Committee members and the duly appointed officers of the Company and
its authorized agents shall take part in the management, or the operation or
control of the business and affairs of the Company. All such members, officers
and agents shall at all times comply with the terms and conditions of the
License Agreement. Except as expressly delegated by the Management Committee or
as required by the Florida Act, no Person other than the Management Committee
and the duly appointed officers or other authorized agents of the Company shall
be an agent of the Company or have any right, power or authority to transact any
business in the name of the Company or to act for or on behalf of or to bind the
Company.
Section 6.4 Restrictions on Authority of the Management Committee and
President. Notwithstanding anything to the contrary in this Article 6, neither
the Management Committee nor the President shall have any authority to take any
of the following actions without the unanimous written consent of all Members:
(i) To take any action that would cause a breach of or otherwise be
inconsistent with the License Agreement (or the stock registration rights
agreement relating to the DIVOT stock issued to Licensor or its Affiliates
thereunder);
(ii) To admit any additional Members at any time;
(iii) To cause the dissolution or liquidation of the Company, the
sale of substantially all of its business or assets, or the merger,
consolidation or other reorganization of the Company; or
(iv) To take any action requiring the consent or agreement of all
Members pursuant to this Agreement.
The President and the Management Committee shall also disclose in
writing to all Members any and all transactions between the Company and
Affiliates of any Member, Management Committee member, and officer or agent
of the Company before such transactions are implemented. The other Members,
the President and other officers, and the Management Committee shall take no
actions that would cause the Company to impair any of EAGLE's (or Raymond
Floyd's or his Affiliates') commercial alliances, agreements, endorsement
arrangements or other gainful commitments with other Persons, including
without limitation those commitments set forth in the list of "Eagle or Ray
Floyd Commitments" attached as Schedule B hereto, and any renewal of such
commitments.
Section 6.5 Reliance by Third Parties. Any Person dealing with the
Company or the Management Committee may rely upon a certificate signed by the
Management Committee as to:
(i) the identity of the Management Committee or any
member hereof;
(ii) the existence or non-existence of any fact or facts which
constitute a condition precedent to acts by the Management Committee or in
any other manner germane to the affairs of the Company;
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(iii) the Persons who are authorized to execute and
deliver any instrument or document of or on behalf of the Company; or
(iv) any act or failure to act by the Company or as to any
other matter whatsoever involving the Company or any Member.
ARTICLE 7
AMENDMENTS AND MEETINGS
Section 7.1 Amendments. Any amendment to this Agreement or the
Articles shall be adopted and be effective as an amendment thereto only if it
receives the affirmative vote of all of the Members, or such amendment is in
writing and executed by all of the Members.
Section 7.2 Meeting of the Members.
(a) Meetings of the Members may be called at any time by the
Management Committee or any Member. Each Member shall in writing authorize an
individual to represent and act for it by proxy on all matters in which a Member
is entitled to participate, including waiving notice of any meeting, voting or
otherwise participating at a meeting, and to provide such consents, approvals or
agreements of a Member as required in this Agreement. Every such proxy shall be
signed by the Member.
(b) Each meeting of Members shall be conducted by the President, and
such a meeting shall be called with at least five (5) days but not more than
thirty (30) days notice, specifying the agenda for the meeting. Such notice may
be waived by any of the Members at any time, and will be deemed to have been
waived if the Member participates in the meeting and has been provided with a
written agenda for the meeting. Meetings may also be held telephonically whereby
each of the Members can hear each of the other Members. The Management
Committee, in its sole discretion, shall establish all other provisions relating
to meetings of Members, including the time, place or purpose of any meeting at
which any matter is to be voted on by any Members, voting in person or by proxy
or any other matter with respect to the exercise of any such right to vote;
provided, however, any Member shall have the right to introduce agenda items for
each meeting. Except as expressly provided in this Agreement or the License
Agreement (concerning matters affecting the License Agreement), decisions of the
Members shall be made upon the vote of a majority in Interest of the Members.
Action by the Members may also be taken and represented by a unanimous written
consent. The Company's Secretary shall be responsible for taking minutes of the
Member meetings and safekeeping them on behalf of the Company.
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ARTICLE 8
ALLOCATIONS
Section 8.1 Profits and Losses.
(a) For each Fiscal Year of the Company, after giving effect to the
allocation rules of Section 8.2 hereof, net Profits for any Fiscal Year shall be
allocated as follows:
(i) First, between the Members in proportion to and in the inverse
order to which Losses were allocated to them pursuant to Section 8.1(b) below
until the cumulative Profits allocated pursuant to this Section 8.1(a)(i) equal
the cumulative Losses allocated pursuant to Section 8.1(b); and
(ii) Second, between the Members in proportion to their
Percentage Interests.
(b) For each Fiscal Year of the Company, after giving effect to the
allocations required by Section 8.2 hereof, net Losses for any Fiscal Year shall
be allocated as follows:
(i) First, between the Members in proportion to and to extent of
their positive Capital Account balances; and
(ii)Second, between the Members in proportion to their Percentage
Interests; provided that no Member shall be allocated Losses in excess of the
amount of the "economic risk of loss" it bears for the Company's indebtedness,
as determined under Treasury Regulation 1.752-2 (in which case, the excess Loss
shall be reallocated to the Member who bears such economic risk of loss for the
indebtedness, to the extent of the respective amounts of such economic risk of
loss it bears).
Section 8.2 Special Allocations.
(a) The Company shall make the qualified income offset allocation
required by the alternate test for economic effect under ss.1.704-1(b)(2)(ii)(d)
of the Treasury Regulations.
(b) In the event any Member has a deficit Capital Account at the end
of any Fiscal Year that is in excess of the sum of (i) the amount such Member is
obligated to restore to the Company pursuant to ss.1.704-1(b)(2)(ii)(c) of the
Treasury Regulations, (ii) the amount such Member is deemed to be obligated to
restore pursuant to the next to the last sentence of ss.1.704-2(g)(1) of the
Treasury Regulations and (iii) the amount such Member is deemed to be obligated
to restore pursuant to the next to the last sentence of ss.704-2(i)(5) of the
Treasury Regulations, such Member shall be specially allocated items of Company
income and gain in the amount of such excess as quickly as possible, provided
that an allocation pursuant to this Section 8.2(ii) shall be made if and only to
the extent that such Member would have a deficit Capital Account in excess of
such sum after all other allocations provided in this Article 8 have been
tentatively made as if Section 8.2(a) and this Section 8.2(b) were not in the
Agreement.
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(c) The Company shall make all (1) Member Nonrecourse Deduction
Allocations; (2) Member Minimum Gain Chargeback Allocations; and (3) Company
Minimum Gain Chargeback Allocations.
(d) The Company shall make all Nonrecourse Deduction Allocations to
the Members in proportion to their Percentage Interests.
(e) To the extent an adjustment to the adjusted tax basis of any
Company asset pursuant to Code ss.734(b) or Code ss.743(b) is required, pursuant
to ss.1.704-1(b)(2)(iv)(m) of the Treasury Regulations, to be taken into account
in determining Capital Accounts, the amount of such adjustment to the Capital
Accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis) and such
gain or loss shall be specially allocated to the Members in a manner consistent
with the manner in which their Capital Accounts are required to be adjusted
pursuant to such Section of the Treasury Regulations.
(f) The allocations set forth in this Section 8.2 (collectively the
"Regulatory Allocations") are intended to comply with certain requirements of
ss.1.704-1 and -2 of the Treasury Regulations. Notwithstanding any other
provisions of this Article 8 (other than the Regulatory Allocations), the
Management Committee shall, with the advice and assistance of the Company's tax
accountants, take the Regulatory Allocations into account in allocating other
Profits, Losses, and items of income, gain, loss, deduction and Code
ss.705(a)(2)(B) expenditures among the Members so that, to the extent possible,
the net amount of such allocations of other Profits, Losses, and other items and
the Regulatory Allocations to each Member shall be equal to the net amount that
would have been allocated to each such Member if the Regulatory Allocations had
not occurred.
Section 8.3 Allocation Rules.
(a) In the event Members are admitted to the Company pursuant to this
Agreement on different dates, the Profits (or Losses) allocated to the Members
for each Fiscal Year during which Members are so admitted shall be allocated
among the Members in proportion to their Percentage Interests during such Fiscal
Year in accordance with ss.706 of the Code, using any convention permitted by
law and selected by the Management Committee.
(b) For purposes of determining the Profits, Losses or any other items
allocable to any period, Profits, Losses and any such other items shall be
determined on a daily, monthly or other basis, as determined by the Management
Committee using any method that is permissible under ss.706 of the Code and the
Treasury Regulations thereunder.
(c) Except as otherwise provided in this Agreement, all items of
Company income, gain, loss, deduction and any other allocations not otherwise
provided for shall be divided among the Members in the same proportions as they
share Profits and Losses for the Fiscal Year in question.
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(d) The Members are aware of the income tax consequences of the
allocations made by this Article 8 and hereby agree to be bound by the
provisions of this Article 8 in reporting their shares of Company income and
loss for income tax purposes.
(e) Solely for purposes of determining a Member's proportionate share
of the "excess nonrecourse liabilities" of the Company within the meaning of
Treasury Regulations ss.1.752-3(a)(3), the Members' interests in Company Profits
shall be in accordance with their Percentage Interests.
(f) The Management Committee shall have reasonable discretion, with
respect to each Fiscal Year, to request from the Commissioner of the Internal
Revenue Service a waiver, pursuant to ss.1.704-2(f)(4) or 1.704-2(i)(4) of the
Treasury Regulations, of the minimum gain chargeback requirement of ss.
1.704-2(f) of the Regulations or the member minimum gain chargeback requirement
of ss.1.704-2(i)(4) of the Treasury Regulations, respectively, if the
application of such chargeback would cause a permanent distortion of the
economic arrangement of the Members.
Section 8.4 Other Tax Allocations: Section 704(c) of the Code.
(a) In accordance with ss.704(c) of the Code and the Treasury
Regulations thereunder, income, gain, loss and deduction with respect to any
property contributed to the capital of the Company shall, solely for income tax
purposes, be allocated among the Members so as to take account of any variation
between the adjusted basis of such property to the Company for federal income
tax purposes and its initial Gross Asset Value (computed in accordance with the
definition in Section 1.1 hereof).
(b) In the event the Gross Asset Value of any Company asset is
adjusted pursuant to Paragraph (ii) of the definition of "Gross Asset Value"
contained in Section 1.1 hereof, subsequent allocations of income, gain, loss
and deduction with respect to such asset shall take account of any variation
between the adjusted basis of such asset for federal income tax purposes and its
Gross Asset Value in the same manner as under ss.704(c) of the Code and the
Treasury Regulations thereunder.
(c) Any elections or other decisions relating to allocations under
this Section 8.4, including the selection of any allocation method permitted
under Treasury Regulation ss.1.704-3, shall be made by the Management Committee
in any manner that reasonably reflects the purpose and intention of this
Agreement. Allocations pursuant to this Section 8.4 are solely for purposes of
federal, state and local taxes and shall not affect, or in any way be taken into
account in computing, any Member's Capital Account or share of Profits, Losses,
other items or distributions pursuant to any provision of this Agreement.
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ARTICLE 9
DISTRIBUTIONS
Section 9.1 Net Cash Flow. Except as otherwise provided in Article 15
hereof (relating to the dissolution of the Company), any distribution of the Net
Cash Flow during any Fiscal Year shall be made to the Members in proportion to
their Percentage Interests.
Section 9.2 Distribution Rules.
(a) Net Cash Flow shall be distributed at such times as the Management
Committee decides in its reasonable discretion, giving consideration to the
investment expectations of the Members and customary rates of return for
participation in similar types of business ventures; provided, however, that at
a minimum, the Management Committee shall distribute Net Cash Flow on a
quarterly basis (and in a manner that will allow the Members to timely submit
estimated federal and state income tax payments utilizing such funds) to the
extent necessary to cover the federal and aggregate state income taxes
applicable to the taxable Profits of the Company for the quarter to which the
quarterly distribution of Net Cash Flow relates. For purposes of computing the
amount of these minimum distributions, the highest marginal individual tax
brackets for both federal and state income tax purposes shall be used (and
including each state where the Company's taxable Profits are subject to income
tax).
(b) All amounts withheld pursuant to the Code or any provision of any
foreign, state or local tax law or treaty with respect to any payment,
distribution or allocation to the Company or the Members shall be treated as
amounts distributed to the Members pursuant to this Article 9 for all purposes
of this Agreement, provided that such amounts are calculated in accordance with
Section 9.2(a). The Management Committee is authorized to withhold from
distributions to the Members and to pay over to any federal, foreign, state or
local government any amounts required to be so withheld pursuant to the Code or
any provision of any other federal, foreign, state or local law or treaty, and
shall allocate such amounts to those Members with respect to which such amounts
were withheld.
Section 9.3 Limitations on Distribution. Notwithstanding any provision
to the contrary contained in this Agreement, the Company shall not make a
distribution to any Member on account of its Interest in the Company if (a)
there has been no agreement by the Management Committee and the Members relating
to the plan, policy or model providing for reimbursement of certain expenses of
DIVOT or its Affiliates as contemplated in Section 4.2 of this Agreement, or (b)
such distribution would violate the solvency standards under Section 608.426 of
the Florida Act or other applicable insolvency or fraudulent conveyance laws.
ARTICLE 10
BOOKS AND RECORDS
Section 10.1 Inspection Rights Pursuant to Law. Without limiting any
right which the Members enjoy under the Florida Act, it is agreed that the
Company shall have obligations to the Members as set forth in Sections 10.2
through 10.3 respecting books, records and financial statements of the Company.
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Section 10.2 Books, Records and Financial Statements.
(a) At all times during the continuance of the Company, the Company
shall maintain, at its registered office and principal place of business all
records and materials referred to in Florida Act Section 608.4101, including
without limitation, separate books of account for the Company that shall show a
true and accurate record of all costs and expenses incurred, all charges made,
all credits made and received and all income derived in connection with the
operation of the Company business in accordance with generally accepted
accounting principles consistently applied ("GAAP"), and, to the extent
inconsistent therewith, in accordance with this Agreement. Such books of
account, together with a certified copy of this Agreement and of the
Certificate, shall at all times be maintained at the principal place of business
of the Company and shall be open to inspection, examination and audit at
reasonable times by each Member and its duly authorized representatives for any
purpose reasonably related to such Member's interest in the Company. This
provision shall be in addition to and not in substitution of any approval,
examination, verification, audit and other rights EAGLE or its Affiliates may
have under the License Agreement.
(b) The Management Committee shall prepare and maintain, or shall
cause to be prepared and maintained, the books of account of the Company. Not
later than thirty (30) days after the close of each month, the Management
Committee shall prepare (or shall cause to be prepared) in accordance with GAAP
financial statements (including balance sheets, income statements and statements
of cash flows) fairly presenting the financial position, results of operations
and changes in financial position of the Company as of the end of such calendar
month or, in the case of calendar months which end coincident with the end of a
calendar quarter or the end of a Fiscal Year, such calendar quarter or Fiscal
Year, as the case may be.
Section 10.3 Accounting Method. For both financial and tax reporting
purposes and for purposes of determining Profits and Losses, the books and
records of the Company shall be kept on the accrual method of accounting applied
in a consistent manner and shall reflect all Company transactions and be
appropriate and adequate for the Company's business.
ARTICLE 11
TAX MATTERS
Section 11.1 Tax Matters Member.
(a) DIVOT is hereby designated as "Tax Matters Member" of the Company
for purposes of ss.6231(a)(7) of the Code and shall have the power to manage and
control, on behalf of the Company, any administrative proceeding at the Company
level with the Internal Revenue Service relating to the determination of any
item of Company income, gain, loss, deduction or credit for federal income tax
purposes.
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(b) The Tax Matters Member shall, within five (5) business days of the
receipt of any notice from the Internal Revenue Service in any administrative
proceeding at the Company level relating to the determination of any Company
item of income, gain, loss, deduction or credit, mail a copy of such notice to
each Member.
Section 11.2 Right to Make Section 754 Election. The Tax Matters
Member may, upon receiving the written consent of each other Member, make or
revoke, on behalf of the Company, an election in accordance with ss.754 of the
Code, so as to adjust the basis of Company property in the case of a
distribution of property within the meaning of ss.734 of the Code, and in the
case of a transfer of a Company Interest within the meaning of ss.743 of the
Code. Each Member shall, upon request of the Tax Matters Member, supply the
information necessary to give effect to such an election.
Section 11.3 Taxation as Partnership. The Company shall be
treated as a partnership for U.S. federal income tax purposes.
ARTICLE 12
LIABILITY, EXCULPATION, INDEMNIFICATION
AND BUSINESS OPPORTUNITIES
Section 12.1 Liability.
(a) Except as otherwise provided by the Florida Act, the debts,
obligations and liabilities of the Company, whether arising in contract, tort or
otherwise, shall be solely the debts, obligations and liabilities of the
Company, and no Covered Person shall be obligated personally for any such debt,
obligation or liability of the Company solely by reason of being a Covered
Person.
(b) Except as otherwise expressly required by law, a Member, in its
capacity as Member, shall have no liability in excess of (a) the amount of its
Capital Contributions, (b) its share of any assets and undistributed profits of
the Company, (c) its obligation to make other payments expressly provided for in
this Agreement, and (d) the amount of any distributions wrongfully distributed
to it.
Section 12.2 Exculpation.
(a) No Covered Person shall be liable to the Company or any other
Covered Person for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Covered Person in good faith on behalf of
the Company and in a manner reasonably believed to be within the scope of
authority conferred on such Covered Person by this Agreement, except that a
Covered Person shall be liable for any such loss, damage or claim incurred by
reason of such Covered Person's gross negligence or willful misconduct.
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(b) A Covered Person shall be fully protected in relying in good faith
upon the records of the Company and upon such information, opinions, reports or
statements presented to the Company by any Person as to matters the Covered
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Company, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, Profits, Losses or Net Cash Flow or any
other facts pertinent to the existence and amount of assets from which
distributions to Members might properly be paid.
Section 12.3 Indemnification. To the fullest extent permitted by
applicable law, a Covered Person shall be entitled to indemnification from the
Company for any loss, damage or claim incurred by such Covered Person by reason
of any act or omission performed or omitted by such Covered Person provided
that: (i) any such action was undertaken in good faith on behalf of the Company
and in a manner reasonably believed to be in, or not opposed to, the best
interests of the Company, (ii) any such action was reasonably believed to be
within the scope of authority conferred on such Covered Person by this
Agreement, and (iii) with respect to any criminal action or proceeding, such
Covered Person had no reasonable cause to believe his action or omission was
unlawful, except that no Covered Person shall be entitled to be indemnified in
respect of any loss, damage or claim incurred by such Covered Person by reason
of gross negligence or willful misconduct with respect to such acts or
omissions; provided, , that any indemnity under this Section 12.3 shall be
provided out of and to the extent of Company assets only (including the proceeds
of any insurance policy obtained pursuant to Section 12.5 however hereof), and
no Covered Person shall have any personal liability on account thereof.
Section 12.4 Expenses. To the fullest extent permitted by applicable
law, expenses (including legal fees) incurred by a Covered Person in defending
any claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Company prior to the final disposition of such claim, demand,
action, suit or proceeding upon receipt by the Company of an undertaking by or
on behalf of the Covered Person to repay such amount if it shall be determined
that the Covered Person is not entitled to be indemnified as authorized in
Section 12.3 hereof.
Section 12.5 Insurance. The Company shall purchase and maintain
insurance, to the extent and in such amounts as the Management Committee shall,
in its sole discretion, deem reasonable, on behalf of Covered Persons and such
other Persons as the Management Committee shall determine, against any liability
that may be asserted against or expenses that may be incurred by any such Person
in connection with the activities of the Company or such indemnities, regardless
of whether the Company would have the power to indemnify such Person against
such liability under the provisions of this Agreement. The Management Committee
and the Company may enter into indemnity contracts with Covered Persons and such
other Persons as the Management Committee shall determine and adopt written
procedures pursuant to which arrangements are made for the advancement of
expenses and the funding of obligations under Section 12.4 hereof and containing
such other procedures regarding indemnification as are appropriate.
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Section 12.6 Ancillary Opportunities; Right of First Offer. In the event
DIVOT or any of its subsidiaries or other Affiliates, either alone or with
another Person or group (for this purpose, a "Venturer") desire to engage in any
business similar to that of the Company, the Company shall have the prior right
to consider such proposed business opportunity, and to instead undertake such
opportunity for the benefit of Company, either for itself or as a joint venturer
with a capital partner, joint venturer or other Person. Before such business
opportunity may be undertaken by any Venturer, the Members shall be provided
with a written plan for the proposed business opportunity, with sufficient
detail for them to make an informed decision as to whether the Company should
accept or reject the opportunity. The opportunity may be rejected only if all
Members agree in writing to reject it. It shall be accepted by the Company if
any Member votes to accept it. If the opportunity is so rejected, then the
Venturer shall be entitled to proceed with the plan and pursue the business
opportunity without further involvement by the Company or any liability
hereunder; provided, however, that, notwithstanding anything in this Agreement
to the contrary, nothing herein shall prevent, limit, or restrict DIVOT or
Miller (or any or their Affiliates) in its or their manufacture, distribution,
or sale of the Miller Products.
Section 12.7 Additional Golf Professional Endorsements. In the event the
Company or a Venturer, as defined in Section 12.6, desires to engage in any
business opportunity employing or utilizing in any manner the endorsement, name,
likeness, image or other persona of any other professional golfer (female or
male), the business opportunity shall be presented to the Management Committee
in the same manner as described in Section 12.6, and in any event prior to any
commitment being made to the professional golfer in question by the Company or a
Venturer. EAGLE shall have the right, in EAGLE's sole and absolute discretion,
to decide whether the Company should accept or reject such business opportunity,
and the other Members hereby agree to vote their Interests and to take such
other actions as may be appropriate or necessary to cause such acceptance or
rejection to occur, and to formalize such determination.
ARTICLE 13
ADDITIONAL MEMBERS
Section 13.1 Admission. By approval of all of the Members, the Company
is authorized to admit any Person as an additional member of the Company (each,
an "Additional Member" and collectively, the "Additional Members"). Each such
Person shall be admitted as an Additional Member at the time such Person (i)
executes this Agreement or a counterpart of this Agreement and (ii) is named as
a Member on an amended Schedule A hereto.
Section 13.2 Allocations. Additional Members shall not be entitled to
any retroactive allocation of the Company's income, gains, losses, deductions,
credits or other items; provided that, subject to the restrictions of ss.706(d)
of the Code, Additional Members shall be entitled to their respective share of
the Company's income, gains, losses, deductions, credits and other items arising
under contracts entered into before the effective date of the admission of any
Additional Members to the extent that such income, gains, losses, deductions,
credits and other items arise after such effective date. To the extent
consistent with ss.706(d) of the Code and Treasury Regulations promulgated
thereunder, the Company's books may be closed at the time Additional Members are
admitted (as though the Company's tax year had ended) or the Company may credit
to the Additional Members pro rata allocations of the Company's income, gains,
losses, deductions, credits and items for that portion of the Company's Fiscal
Year after the effective date of the admission of the Additional Members.
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ARTICLE 14
ASSIGNABILITY OR INTERESTS
Section 14.1 Assignability of Interests.
(a) Except as otherwise provided in this Article 14, no Member may
assign the whole or any part of its Interest without the prior written consent
of all other Members, which consent may be given or withheld in the sole and
absolute discretion of such other Members. If the prior written consent of the
other Members is obtained for any such assignment, such assignment shall,
nevertheless, not entitle the assignee to become a Substitute Member or to be
entitled to exercise or receive any of the rights, powers or benefits of a
Member other than the right to receive distributions to which the assigning
Member would be entitled, unless the assigning Member designates, in a written
instrument delivered to the other Members, its assignee to become a Substitute
Member and all of the other Members consent to the admission of such assignee as
a Member; and provided further, that such assignee shall not become a Substitute
Member without having first executed an instrument reasonably satisfactory to
the other Members accepting and agreeing to the terms and conditions of this
Agreement, including a counterpart of this Agreement, and without having paid to
the Company a fee sufficient to cover all reasonable expenses of the Company in
connection with such assignee's admission as a Substitute Member.
(b) Notwithstanding the foregoing, EAGLE (and any assignee or
Substitute Member that is a "Permitted Assignee" as defined below, and which
hereafter acquires its Interest from EAGLE or another Permitted Assignee) shall
be permitted to assign, at any time and from time to time, all or any part of
its Interest to a Permitted Assignee. For this purpose "Permitted Assignee"
means a Person that is (i) an Affiliate of Raymond or Maria Floyd, (ii) a
natural or adoptive lineal ancestor or descendant of either of Raymond or Maria
Floyd, (iii) a trust, estate, guardianship or custodianship, including those
established under any the Uniform Gifts to Minors Act of any state, for an
individual described in the preceding clause (ii), and (iv) entities under the
control of Raymond or Maria Floyd and one or more other Permitted Assignees;
provided, however, that no transfer shall be made under this section if such
transfer or transfers would result in EAGLE. Raymond or Maria Floyd, and any
Affiliate of EAGLE and Raymond or Maria Floyd to own a Percentage Interest or
Percentage Interests, in the aggregate, of less than 2%. EAGLE shall have the
right to designate that any Permitted Assignee shall be admitted as a Substitute
Member.
(c) Notwithstanding the foregoing, DIVOT shall have the right to
assign, at any time and from time to time, all or part of its Interest to any
corporation or other entity in which DIVOT is a majority owner, determined by
both its voting rights or voting power, and its economic rights aggregating all
ownership interests, whether common or preferred, DIVOT shall have the right to
designate that any such assignee shall be admitted as a Substitute Member.
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(d) If a Member assigns all or part of its Interest in the Company
and the assignee is entitled to become a Substitute Member, such assignee shall
be admitted to the Company effective immediately prior to the effective date of
the assignment (as defined in Section 14.3 hereof), and, immediately following
such admission, the assigning Member shall cease to be a Member of the Company
to the extent of the portion of the Interest assigned hereunder. In such event,
the Company shall not dissolve if the business of the Company is continued
without dissolution in accordance with Section 15.2(g) hereof. For purposes of
this Article 14, "assignment" shall include any sale, transfer, conveyance,
pledge or grant of a security interest in an Interest, and any "involuntary
transfer" such as a sale of an Interest in connection with any bankruptcy or
similar insolvency proceedings, or a divorce or other marital settlement
involving any Member, or any other disposition or encumbrance of an Member
Interest.
Section 14.2 Recognition of Assignment by Company or Other Members. No
assignment, or any part thereof, that is in violation of this Article 14 shall
be valid or effective, and neither the Company nor the Management Committee or
any Member shall recognize the same for any purpose of this Agreement, including
the purpose of making distributions of Net Cash Flow pursuant to Section 9.1
hereof with respect to such Interest or part thereof. Neither the Company nor
the Management Committee shall incur any liability as a result of refusing to
make any such distributions to the assignee of any such invalid assignment.
Section 14.3 Effective Date of Assignment. Any valid assignment of a
Member's Interest, or part thereof, pursuant to the provisions of this Article
14 shall be effective as of the close of business on the day preceding the
closing of the transaction evidencing the assignment, unless all consents have
not been obtained, in which case the effective date shall be on such date all of
the written consents to such assignment have been obtained, or such other date
as the assigning Member and all Members agree upon. The Company shall, from the
effective date of such assignment, thereafter pay all further distributions on
account of the Interest (or part thereof), so assigned, to the assignee of such
Interest, or part thereof. As between any Member and its assignee, Profits and
Losses for the Fiscal Year of the Company in which such assignment occurs shall
be apportioned for federal income tax purposes in accordance with any convention
permitted under ss.706(d) of the Code and selected by the Management Committee.
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Section 14.4 Right of First Refusal.
(a) Except in the case of a transfer involving a Permitted Assignee or
an assignee approved by all of the Members, in the event of any proposed
assignment of all or any part of an Interest, the Member proposing to make such
assignment, or the third party foreclosing upon the Interest succeeding thereto
as a result of an "involuntary transfer," shall give to the Members a written
notice ("assignment notice") stating the terms of the proposed assignment and
the name, address and a resume for the Person(s) to whom the proposed assignment
would be made; the assignment notice shall be accompanied by sufficiently
detailed information relating to the fair market valuation of the Interest, and
such other information reasonably requested by the Members. Upon receiving the
assignment notice, the other Members shall have the option, for a period of 60
days from the date that it receives the assignment notice, to vote that the
Company acquire all of that portion of the Interest subject to the assignment
notice, for the same consideration and other terms and conditions contained in
the assignment notice. If this right of first refusal is exercised by the other
Members (and the Company), the closing shall occur within 30 days of the
exercise of such option.
(b) If the other Members (and the Company) fail to exercise their
right of first refusal within the 60 day period, the Interest covered by the
assignment notice may then be assigned to the Person(s) described in the
assignment notice, for exactly the same consideration and other terms and
conditions provided therein; provided however, that such Person acquiring the
Interest in question shall not become a Substitute Member unless the assignee
has been approved in such capacity under Section 14.1. In the event that the
other Members (and the Company) do not exercise this right of first refusal, the
proposed assignment shall be closed within 60 days following the 60-day period
described in subsection (a) above. If such closing does not occur within that
time period, then the Interest in question shall once again become subject to
the restrictions of this Article 14 and this Agreement.
Section 14.5 "Tag-along" Rights of EAGLE.
(a) Sale of Company Interest. In the event DIVOT or its Affiliates, acting
either alone or with any other Members or assignees that previously acquired an
Interest from DIVOT, proposes to assign more than 51% in aggregate of the total
membership Interests owned by them in a transaction other than one contemplated
in Section 14.1(c) (a "Block Sale"), such Block Sale transfer shall not be
effectuated unless, and until, EAGLE has been provided with the opportunity to
sell all or any part of its Interest at the same time and for the same
consideration and same terms and conditions that apply to the Block Sale. The
obligations of the Block Sale participants under this Section 14.5 to afford
EAGLE the ability to exercise its "tag-along" rights shall be discharged if (i)
EAGLE is provided with written notice to participate in the Block Sale
transaction, together with a detailed description of the terms and conditions
thereof, including the computation and proposed letter of understanding or
definitive agreement describing the purchase price and all of the other terms
and conditions of the transaction, and such other due diligence materials EAGLE
may reasonably request; and (ii) EAGLE thereafter fails to exercise its rights
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to participate in the proposed transaction within 30 days after receiving such
written notice. For purposes of computing the purchase price or other
consideration in any such Block Sale transaction, any securities or other
property to be received by the assigning Members of their Affiliates shall be
valued at their fair market value, and any compensation to be paid to any
officers, directors, owners or other principals or Affiliates of such Members,
shall also be taken into account in computing the amount of consideration to be
received by the assigning Members, and the corresponding amount that EAGLE shall
be entitled to receive if it elects to exercise his "tag-along" rights and
participate in the Block Sale transaction.
(b) Sale of MILLER. In the event that (i) DIVOT proposes to sell,
transfer, exchange, assign or otherwise dispose of stock or other securities of
MILLER, whether by separate sale or by merger, consolidation, share exchange,
recapitalization or other reorganization involving MILLER, or (ii) MILLER, DIVOT
and/or any other shareholders or security holders of MILLER, issue, enter into
or participate in any agreements, options, warrants, debentures, convertible
securities or similar instruments the effect of which is to provide for
contingent or future ownership of stock or other securities of MILLER
(collectively "Investment Instruments"); and the effect of such transaction
would cause DIVOT to own stock or other securities of MILLER that entitles DIVOT
to own less than 51% of both the voting rights and economic participation in
MILLER's outstanding stock and other securities (when assuming maximum issuance
of shares and exercise of rights under all Investment Instruments); then a
"Miller Sale" will be deemed have occurred for purposes of this Agreement. DIVOT
agrees that if EAGLE shall elect, DIVOT shall not permit a Miller Sale to be
effectuated unless, and until, DIVOT's Interest in the Company are sold to the
same Persons that would own and control MILLER as the result of the Miller Sale.
The fair price of DIVOT's Interest and the other customary terms and conditions
of the transfer of DIVOT's Interest to such Persons acquiring ownership of
MILLER shall be as DIVOT and such Persons reasonably agree upon. The obligations
of DIVOT to afford EAGLE the ability to exercise its election rights hereunder
shall be discharged if (i) EAGLE is provided with written notice of the Miller
Sale transaction, together with a detailed description of the terms and
conditions thereof, including the computation and proposed letter of
understanding or definitive agreement describing the purchase price and all of
the other terms and conditions of the transaction, and such other due diligence
materials EAGLE may reasonably request; and (ii) EAGLE thereafter fails to
exercise its election to have DIVOT sell its Interest to participate in the
proposed transaction within 30 days after receiving such written notice.
Section 14.6 Put Option of EAGLE. In the event that a "Eagle Withdrawal
Event" occurs, as defined below, EAGLE shall have the right to cause the Company
to purchase the entire Interest of EAGLE, together with the Interest of any
Permitted Assignee ("Eagle Interest"), upon giving written notice of such event
to the Management Committee, and providing the Company with a reasonable
opportunity to cure the circumstances giving rise to the Eagle Withdrawal Event
within a reasonable cure period agreed upon by both the Company and EAGLE, but
in no event shall the cure period continue for more than thirty (30) days
without the consent of EAGLE. In the event that EAGLE exercises this put option,
the Company shall be required to purchase the entire Eagle Interest, for cash,
within thirty (30) days of receiving the put option notice (or if applicable,
within fifteen (15) days after the cure period elapses). The Eagle Interest
shall be valued at its aggregate book value as of the month end immediately
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preceding the events giving rise to EAGLE's rights to exercise the put option.
The purchase price shall be allocated among the holders of the Eagle Interest in
proportion to the relative Interests held by each holder of a Eagle Interest.
For purposes of this Agreement, a Eagle Withdrawal Event shall mean any of the
following: (i) breach of this Agreement by another Member; (ii) intentional
misconduct or gross negligence by representatives of DIVOT or other members of
the Company's management causing a material and adverse effect on the Company
business (except acts involving EAGLE or its Shareholders, directors or
officers); (iii) the commission of a morally reprehensible crime or other
socially unacceptable conduct causing ill repute to the Company by any Person
having significant involvement in the management of the Company; or (iv) the
Company has not achieved gross revenues of $1,000,000 or more for the twelve
(12) month period ending on the second anniversary of the date hereof and for
each Fiscal Year commencing thereafter, except in this case the 30-day period
set forth above shall be increased to sixty (60) days, during which 60-day
period EAGLE agrees to meet with DIVOT in good faith to discuss the Company and
its business opportunities, this Agreement, and the propriety of EAGLE'S taking
action under this Section 14.6(iv).
ARTICLE 15
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 15.1 No Dissolution. The Company shall not be dissolved by the
admission of Additional Members or Substitute Members in accordance with the
terms of this Agreement.
Section 15.2 Events Causing Dissolution. The Company shall be
dissolved and its affairs shall be wound up upon the occurrence of any of the
following events:
(a) the expiration of the term of the Company, as provided in
Section 2.3 hereof;
(b) the written consent of all Members;
(c) at such time as there are no Members;
(d) the entry of a decree of judicial dissolution under of the
Florida Act.
(e) the termination of the License Agreement;
(f) the breach of that certain stock registration rights agreement to be
entered into by DIVOT and an Affiliate of EAGLE pursuant to the License
Agreement, or the failure of DIVOT to register and maintain the registration of
the DIVOT stock issued pursuant thereto within the time and for the period set
forth in section C.2. of such registration rights agreement, unless DIVOT cures
such breach by entering into an agreement with the holders of such DIVOT stock
to purchase such stock for a price in cash equal to its then fair market value
(which shall not be less than the public market price per share thereof), as
determined by an appraiser mutually agreed upon by DIVOT and such holders (the
cost of which appraiser shall be borne by DIVOT and the Company);
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(g) upon the bankruptcy or dissolution of a Member, unless all remaining
Members agree in writing within 30 days after such event to continue the
business of the Company; provided, however, that the Company shall nonetheless
be dissolved if the License Agreement is terminated upon the happening of or in
connection with either of such events; or
(h) EAGLE's election to dissolve in the event the Company has not achieved
gross revenue of $1,000,000 or more for the twelve (12) month period ending on
the second anniversary of the date hereof and for each Fiscal Year commencing
thereafter, if it has not elected to exercise its put option pursuant to Section
14.6; provided, however, that EAGLE agrees that it shall not elect to dissolve
the Company hereunder, without first giving DIVOT sixty (60) days prior written
notice, during which 60-day period EAGLE agrees to met with DIVOT in good faith
to discuss the Company, its business opportunities, this Agreement, and the
propriety of EAGLE'S taking action under this section.
Section 15.3 Notice of Dissolution. Upon the dissolution of the
Company the Management Committee shall promptly notify the Members of such
dissolution.
Section 15.4 Liquidation. Upon dissolution of the Company, the
Management Committee (in such capacity, the "Liquidating Trustee") shall carry
out the winding up of the Company and shall immediately commence to wind up the
Company's affairs; provided, however, that a reasonable time shall be allowed
for the orderly liquidation of the assets of the Company and the satisfaction of
liabilities to creditors so as to enable the Members to minimize the normal
losses attendant upon a liquidation. The Members shall continue to share Profits
and Losses and other items during liquidation in the same manner, as specified
in Article 8 hereof, as before liquidation. The proceeds of liquidation shall be
distributed in the following order and priority:
(a) to creditors of the Company, including Members who are creditors,
to the extent otherwise permitted by law, and consistent with the subordination
or other terms and conditions therein pertaining to priority of satisfaction of
such indebtedness, in full satisfaction of the liabilities of the Company
(whether by payment or the making of reasonable provision for payment thereof);
and
(b) to the Members in accordance with their Percentage Interests.
Section 15.5 Termination. The Company shall terminate when all of the
assets of the Company, after payment of or due provision for all debts,
liabilities and obligations of the Company, shall have been distributed to the
Members in the manner provided for in this Article 15 and the Certificate shall
have been canceled in the manner required by the Florida Act.
Section 15.6 Claims of the Members. The Members and former Members
shall look solely to the Company's assets for the return of their Capital
Contributions, and if the assets of the Company remaining after payment of or
due provision for all debts, liabilities and obligations of the Company are
insufficient to return such Capital Contributions, the Members and former
Members shall have no recourse against the Company or any other Member;
provided, however, that nothing contained herein shall be deemed to limit the
rights of a Member under applicable law.
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ARTICLE 16
MISCELLANEOUS
Section 16.1 Notices. All notices provided for in this Agreement shall
be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by registered or certified mail or by recognized
overnight delivery service, as follows:
(a) if given to the Company, in care of the Management Committee at
the principal place of business of the Company set forth in Section 2.5
hereof.
(b) if given to any Member, at the address set forth under its name on
Schedule A attached hereto, or at such other address as such Member may
hereafter designate by written notice to the Company.
Section 16.2 Failure to Pursue Remedies. The failure of any party to
seek redress for violation of, or to insist upon the strict performance of, any
provision of this Agreement shall not prevent a subsequent act, which would have
originally constituted a violation, from having the effect of an original
violation.
Section 16.3 Cumulative Remedies. The rights and remedies provided by
this Agreement are cumulative and the use of any one right or remedy by any
party shall not preclude or waive its right to use any or all other remedies.
Said rights and remedies are given in addition to any other rights the parties
may have by law, statute, ordinance or otherwise.
Section 16.4 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of all of the parties and, to the extent permitted by this
Agreement, their successors, legal representatives and assigns.
Section 16.5 Interpretation. Throughout this Agreement, nouns,
pronouns and verbs shall be construed as masculine, feminine, neuter, singular
or plural, whichever shall be applicable. All references herein to "Articles,"
"Sections" and "Paragraphs" shall refer to corresponding provisions of this
Agreement.
Section 16.6 Severability. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision were omitted.
Section 16.7 Counterparts. This Agreement may be executed in any
number of counterparts with the same effect as if all parties hereto had signed
the same document. All counterparts shall be construed together and shall
constitute one instrument.
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Section 16.8 Integration. This Agreement constitutes the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements and understandings pertaining thereto.
Section 16.9 Governing Law. This Agreement and the rights of the
parties hereunder shall be interpreted in accordance with the laws of the State
of Florida, and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
MEMBERS:
DIVOT GOLF CORPORATION
By:
------------------------------------------
Name:
Title:
EAGLE GOLF ENTERPRISES, INC.:
By:
------------------------------------------
Name:
Title :
41
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SCHEDULE A
MEMBERS
Member's
Capital Percentage
Name Contribution Interest
- ---------------------- -------------- -------------
DIVOT GOLF CORPORATION $80 CASH 80%
201 N. Franklin Street
Suite 200
Tampa, FL 33602
EAGLE GOLF
ENTERPRISES, INC., $20 CASH 20%
231 Royal Palm Way
Suite 100
Palm Beach, Florida 33480
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SCHEDULE B
EAGLE OR RAYMOND FLOYD COMMITMENTS
American Home Products and any renewals thereof
Black Ice Golf - Equipment and club coating. Non-exclusive, RFG holds equity
position with royalties.
Blockbuster Entertainment - Instructional video, Cuttin' Strokes (1996).
Non-exclusive, RFG has right to source and distribute.
Bridgestone Sports USA and any renewals thereof - Golf ball (Precept brand) and
glove. Exclusive to category. License and endorsement fee, with performance
bonuses.
Capital Mercury - Apparel and any renewals thereof. Exclusive to shirt,
windshirt, vest and short category, guaranteed minimum, plus royalties.
Corporate Express, Inc. - Joint ventures, alliances and other endorsement
arrangements with a NYSE company to target Fortune 1000 corporate market with
corporate merchandise catalogs for employees, customers and award programs.
Cyber Ad - Web site and real time catalog. Exclusive to category, percentage of
proceeds.
Dotson Art - Gold theme greeting cards.
Electronic Arts - Video golf game featuring stars of the Senior PGA Tour.
Golf Clubs - with any party - Exclusive.
Golf Day - Day planner with golf theme featuring Raymond. Exclusive to category.
Guarantee and royalty and distribution rights to corporate markets.
Gustbuster Umbrella - High end, patented golf and fashion umbrellas. Exclusive
to category.
Hyatt Hotel and Resorts and any renewals thereof
Inpro - Shotmaster hand held computer teaching device. Non-exclusive to
category.
Lexus and any renewals thereof
Neckwear - High end ties featuring the Floyd eagle logo. Non-exclusive.
OCC Sports - Instructional video, 60 Yards In.
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Pro Tour Memorabilia - Signed framed photographs, club heads and balls.
Non-exclusive. Signing session fee and royalties on sales.
Raymond Floyd Belts - Signature belt collection. Exclusive, guaranteed minimum
and royalty. Price points to be two-tiered for green grass and lower retail.
Thirty or so SKU's to start. Three years with automatic renewal.
SBC Catalog - Employee catalog distributed to 200,000 employees with merchandise
bearing logo's; RFG has 2 pages with various products. Non-exclusive to
category. Makes margin on sale to catalog entry.
Sikorsky - alliance or other endorsement arrangements
Simon & Schuster - Instructional Book, The Elements of Scoring, to be released
September '98.
Sirgany - Golf shop retailer in specialty niches such as airports. Exclusive to
category. Equity and guaranteed royalties.
Softspikes - Alternative golf spike. Exclusive to category. Equity.
Southwestern Bell and any renewals thereof
Statue Masters - High end statues and busts of RLF. Exclusive to category.
Royalty percentage and distribution rights.
Stromgren - Lycra support and magnetic therapy for athletes. Exclusive to
category. Equity, royalties.
Sunglasses - endorsement contract to wear and endorse signature line of
sunglasses --- non-exclusive to category
West Sports Marketing - Master's collectable card.
44
EXHIBIT 10.2
Addendum to Limited Liability Company Agreement of
Divot-RFG Joint Venture, L.L.C.
The undersigned are entering into that certain Limited Liability Company
Agreement ("Agreement") of Divot-RFG Joint Venture, L.L.C., dated as of October
2, 1998, and desire to supplement the provisions of such Agreement as follows:
1. Miller Golf, Inc., a Massachusetts corporation ("Miller"), shall be
utilized by the Company for the marketing, sales and distribution of the
Company's products, unless otherwise agreed upon in writing by all of the
Members of the Company.
2. The same management personnel involved in the senior management of
Miller shall also be involved in the Company's senior management, and there
shall be at least one member in common to the Board of Directors of Miller and
the Management Committee of the Company, unless otherwise agreed upon in writing
by all Members of the Company.
This Addendum is incorporated by reference into the Agreement effective as
of October 2, 1998 as if originally set forth therein.
MEMBERS:
DIVOT GOLF CORPORATION
By:
Name:
Title:
EAGLE GOLF ENTERPRISES, INC.:
By: ______________________________________
Name:
Title :
45
EXHIBIT 10.3
LICENSE AGREEMENT
AGREEMENT by and between RAY FLOYD ENTERPRISES, INC. ("Licensor"), RAYMOND
FLOYD individually ("Floyd"), and DIVOT - RFG JOINT VENTURE, L.L.C., a Florida
limited liability company ("Company" or "Licensee").
W I T N E S S E T H :
WHEREAS, Floyd has assigned to Licensor the worldwide rights to use the
name, likeness, image and endorsement of Floyd, the facsimile signature of
Floyd, and the Eagle Design mark;
WHEREAS, Licensee, directly or indirectly desires to manufacture and
distribute a signature line of Floyd-endorsed golf-related consumer products and
to obtain the right to use the name, likeness, endorsement, and personal
services of Floyd in connection with the merchandising, distribution, and sale
of such products; and
WHEREAS, Licensor has the right and license to grant such rights to
Licensee and is willing to do so and Floyd is willing to provide personal
services in accordance with the following terms in exchange for the
consideration stated hereinbelow and in the Limited Liability Company Agreement
of the Licensee ("L.L.C. Agreement").
NOW, THEREFORE, for and in consideration of the premises and of the
mutual promises and covenants herein contained, and in the L.L.C. Agreement,
the parties do hereby agree as follows:
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ARTICLE 1 : Definitions.
As used herein, the following terms shall be defined as set forth below.
1.1 "Calendar Year" means each twelve-month period commencing
on January 1 and ending on December 31 during the Initial Term and any
subsequent terms of this Agreement, except that, with respect to the year 1998,
"Calendar Year" shall mean the period commencing on the Effective Date and
ending on December 31, 1998.
1.2 "Contract Period" shall mean that period of time commencing on
the Effective Date, expiring or terminating in accordance with the provisions of
the L.L.C. Agreement, and/or terminating pursuant to the provisions of Article 4
herein.
1.3 "Contract Territory" shall mean all countries including the
territories and possessions thereof of the world.
1.4 "Divot Golf" and/or "Divot" mean Divot Golf Corporation, a
Delaware corporation.
1.5 "Effective Date" shall mean the date on which the last party to
sign executes this Agreement.
1.6 "Floyd Identification" shall mean the name "Floyd", "Ray Floyd"
or "Raymond Floyd", the likeness, image, and endorsement of Floyd, the facsimile
signature of Floyd and the Eagle Design mark, which is currently registered in
the United States, and Canada.
1.7 "Licensed Products" shall mean the products approved upon the
date of this Agreement, if any, and from time to time hereafter by Licensor for
manufacture and sale by Licensee under and in connection with Floyd
Identification pursuant to this License Agreement. Schedule A attached hereto
contains a list of the product items the parties have agreed to designate as
"Licensed Products" at the time this Agreement was signed, if any. Additional
items shall be deemed "Licensed Products" after the Licensor has delivered to
Licensee a memorandum or other written statement containing a reasonably
detailed description of the additional item and the signature of Raymond Floyd,
or his designee, if any (as such designee may be identified in writing to
Licensee from time to time). The parties may develop a mutually acceptable
procedure for submitting such additional "Licensed Product" item requests to the
Licensor and requesting the written consent of Raymond Floyd, or his designee
thereto.
1.8 "Initial Term" shall mean the period of time commencing on the
Effective Date and ending in accordance with the provisions of the L.L.C.
Agreement, Article 4 hereof, or upon the expiration of fifty (50) years after
the Effective Date, whichever first occurs.
1.9 "Licensee" or "Company" means Divot - RFG Joint Venture, L.L.C.,
a Florida limited liability company established pursuant to and governed by the
terms and conditions of the L.L.C. Agreement.
1.10 "Licensor" means Ray Floyd Enterprises, Inc., a Florida
corporation, owning world-wide rights to Floyd Identification.
1.11 "L.L.C. Agreement" means the Limited Liability Company
Agreement of the Licensee executed simultaneously herewith between Divot Golf
Corporation, a Delaware corporation ("Divot"), and Eagle Golf Enterprises, Inc.,
a Florida corporation ("Eagle"), which Agreement governs the aforesaid parties'
respective rights and obligations in and with respect to, among other issues,
Licensee's governance and management.
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ARTICLE 2 : Grant.
2.1 Grant of Rights.
2.1.1 Grant of Trademark Rights. Subject to all of the terms
and provisions herein and to the terms and provisions of
the L.L.C. Agreement, executed as of the same date,
Licensor hereby grants to Licensee the exclusive,
non-transferable royalty-free right and license to
manufacture, advertise, distribute and sell Licensed
Products under and in connection with Floyd
Identification as same may be approved by Licensor in
Licensor's sole and absolute discretion and subject to
Licensor's prior grants of rights to third-parties as
set forth on Schedule B to the L.L.C. Agreement. If a
product is approved by Licensor to be a Licensed
Product, the parties shall sign a written addendum to
this Agreement identifying the product and stating the
date of its approval as a Licensed Product by Licensor.
Licensee shall be obligated to launch any such Licensed
Product within eighteen (18) months after the date of
approval thereof set forth in the Addendum.
2.1.2 Personal Appearances. During the Contract Term, but only
so long as (i) Floyd is not physically impaired; (ii)
Floyd owns and controls Licensor; (iii) Eagle or Raymond
Floyd (and his spouse or other affiliates) owns an
ownership interest in Licensee, and Licensee is in
compliance with all the terms and conditions hereof,
Licensee may request that Floyd make personal
appearances from time to time for the benefit of and on
behalf of Licensee and Licensed Products, for example,
to attend trade shows and/or to participate in
photography sessions for print or television advertising
of Licensed Products. Subject to the reasonableness of
such requests on Licensee's part and taking into
consideration Floyd's schedule and commitments, as a
professional golfer, Floyd shall endeavor to accommodate
such requests. Licensee agrees that, for each personal
appearance made pursuant to this paragraph 2.1.2,
Licensee shall reimburse Floyd for the expenses incurred
by Floyd and one travelling companion of Floyd for
meals, first-class accommodations, and Floyd's private
aircraft including jet fuel costs allocable to Floyd's
travel to and from West Palm Beach, Florida to a
personal appearance destination requested by Licensee
hereunder.
2.2 Reservation of Rights. All rights not herein specifically
granted to Licensee shall remain the property of Licensor to be used in any
manner Licensor deems appropriate. Licensee acknowledges that Licensor has
heretofore exclusively authorized third-parties to use, and expressly reserves
the right to use and authorize others to use, Floyd Identification within the
Contract Territory and during the Contract Period in connection with certain
defined products and services as set forth on Schedule B to the L.L.C. Agreement
and the renewal terms thereof. Specifically, Licensee acknowledges, by way of
example and not limitation, that Licensor has previously granted others the
exclusive right to use Floyd Identification on and in connection with certain
articles of clothing, clothing accessories, golf equipment, and certain golf
accessories; for golf pro shops which are operated as a part of, and ancillary
to, golf courses, golf driving ranges, recreational centers, hotel and
conference center complexes having golf courses, and golf learning centers; in
connection with golf-related apparel, golf-related products, golf-related
events, and with golf-related theme restaurants and retail store services
ancillary thereto.
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2.2.1 No Trade Name Rights Granted. Licensee expressly
acknowledges that Licensor is not granting to Licensee
hereby the right to use, and that Licensee may not use,
the name "Floyd" or Floyd Identification or Eagle Design
as or as part of any trade name, corporate title,
business style or fictitious name to identify Licensee's
business under the terms hereof at any time in any
country during or after the termination or expiration of
this License Agreement.
2.3 Acknowledgment of Ownership Rights. Licensee acknowledges that
Licensor owns all right, title and interest worldwide in and to Floyd
Identification, Floyd's endorsement and services rights, and that Licensor is
Floyd's related company as that term is defined in Section 45 of the Lanham
Trademark Act. Licensee further acknowledges and agrees that it will not at any
time challenge or contest the validity of said rights or Licensor's ownership
thereof or rights therein in the Contract Territory. Licensee agrees that it
will not apply to register or register any Floyd Identification or the Floyd
Collection Mark or any word, phrase, symbol or name confusingly similar thereto
or suggestive thereof as a trademark or service mark, trade name, fictitious
name or corporate title anywhere in the world and that, upon Licensor's request,
Licensee shall execute any and all documents which Licensor reasonably believes
to be necessary or desirable for registration or protection of such Floyd
Identification for Licensed Products or otherwise.
2.4 Quality of Services. Licensee acknowledges and agrees that
Licensor has a right and an obligation to maintain and protect the image and
reputation of Floyd Identification, and that, in order to accomplish this
purpose, Licensor must in all cases be assured that Floyd Identification will be
used only on or in connection with the manufacture, distribution, and
merchandising services for the Licensed Products and for Licensed Products which
are of a high quality and conform to a uniform and prestigious image acceptable
to Licensor.
2.5 Quality Controls. With respect to Licensed Products, Licensor
shall have the right to approve or disapprove all samples and prototypes of
Licensed Products and their packaging, labeling and materials prior to their
manufacture and sale by Licensee and Licensee agrees that the terms and
provisions governing Licensor's rights and Licensee's obligations with respect
to advertising uses of Floyd Identification set forth in paragraph 2.7 shall
apply to all Licensed Products.
2.6 Quality Controls: Distribution. In order to ensure that
Licensor's standards of quality with respect to selection, presentation,
assortment, manufacture, advertisement, distribution and sale of Licensed
Products are maintained, Licensee agrees as follows:
2.6.1 Licensed Products Marketed and Sold Individually or
as a Collection. Licensor shall have the right to:
(i) participate with Licensee in determining which
Licensed Products shall be merchandised
individually or together as a collection; and (ii)
participate in the determination of which channels
of distribution are acceptable for the sale of
Licensed Products as commercially appropriate to
the image of Floyd and Floyd Identification.
2.6.2 No Unauthorized Products or Trade Channels. Licensee
agrees that it shall not at any time during or after the
Term of this Agreement:
(i) manufacture, advertise, distribute, or sell
any altered, non-conforming, non-genuine,
counterfeit, unapproved or unauthorized products
using Floyd Identification; or (ii) distribute,
offer for sale or sell Licensed Products bearing
Floyd Identification to or through any channel of
distribution or retail trade which has not been
approved by Licensor.
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2.7 Signage, Promotion, Public Relations and Advertising
Approvals. Licensee agrees that, at all times during the Initial Term or any
subsequent terms of this Agreement, before using, publishing, releasing or
distributing any signage, advertising, public relations, announcements,
business, packaging, labeling or promotional or communications material in any
format or medium using or referencing Floyd or Floyd Identification or Licensed
Products bearing Floyd Identification, whether intended for the public, the
trade or for use for advertisement, offering for sale or sale by direct mail or
electronic or broadcast transmission or by retailers for in-store promotions,
Licensee shall first submit to Licensor for its examination, approval or
disapproval, a prototype or representative sample of each such item. Licensor
agrees that it will promptly examine and either approve or disapprove such
samples and that Licensor will promptly notify Licensee of its approval or
disapproval. Licensor agrees that Licensor will not unreasonably disapprove any
item so long as it conforms to Licensor's standards of quality, appearance,
taste, and content and, if any is disapproved, that Licensee will be advised of
the specific reasons in each case within ten business days of Licensor's receipt
of such item. Licensor agrees that any item submitted for approval hereunder
will be deemed approved hereunder if the same is not disapproved in writing
within ten (10) business days after receipt thereof. Licensee agrees not to use,
print, publish, advertise, or disseminate or sell any item disapproved by
Licensor. Licensee further agrees to bring all disapproved items into full
compliance with Licensor's directives before use or publication or dissemination
or sale thereof. Licensor acknowledges that Licensee is not required to resubmit
for Licensor's approval, products, signage, advertising, public relations or
promotional items previously approved by Licensor under this Section 2.7 if such
items conform to materials and articles previously approved by Licensor.
2.8 Undertakings Binding on Licensee's Subcontractors,
Affiliates, Agents. Licensee acknowledges and agrees that its undertakings set
forth in this Article 2 respecting Licensor's rights and Licensee's obligations
concerning quality controls shall be made binding by Licensee by contract upon
its agents, affiliates, subcontractors and representatives who shall be engaged
in any manner whatever in the selection, design, manufacture, distribution,
promotion, advertising, dissemination, packaging, transportation or sale of
Licensed Products pursuant to this License Agreement.
ARTICLE 3 3 3: Royalty.
3.1 Licensee's Royalty Obligation. Subject to the registration and
other obligations of Divot, Floyd acknowledges that he has received
simultaneously with the execution of this Agreement on his own behalf and on
behalf of his wife, Maria, as tenants by the entireties, the consideration set
forth on Exhibit 1 annexed hereto and made a part hereof as pre-paid royalties
for Licensor's and Floyd's grant of rights herein to Licensee, as to which grant
of rights Divot is a third-party beneficiary as a joint venturer in Licensee.
Except as set forth on Exhibit 1, Licensor's grant of rights herein to Licensee
under Section 2.1 shall be royalty-free.
ARTICLE 4 4 4: Term and Termination.
4.1 Renewal Option. Subject to the terms and conditions of this
Agreement, upon expiration of the Initial Term hereof, this Agreement shall be
automatically renewed upon all of the terms and conditions herein for
consecutive five (5) year terms, unless either party gives notice in writing of
its intention not to renew this Agreement at least three (3) months prior to the
expiration of the Initial Term or any subsequent five-year term. In the event
either party fails to deliver notice of its intention not to renew and extend
this Agreement for said additional five-year terms at least three months prior
to the expiration of the Initial Term and any subsequent five-year term, this
Agreement will automatically be extended for the next succeeding five-year term.
In the event either party delivers timely notice of its intent not to renew this
Agreement for any additional five-year term pursuant to the terms of this
Section 4.1, this Agreement shall expire automatically upon the expiration of
the then-current five-year term.
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4.2 Termination upon Material Breach. In the event of a material
breach of this Agreement by Licensee (including any breach hereof by Divot),
Floyd and Licensor may terminate the license and rights granted to Licensee
under this Agreement by giving written notice to Licensee of termination and the
basis for such termination. The license and rights granted under this Agreement
shall terminate 45 days after delivery of such written notice unless such breach
is substantially cured, within such 45-day period. In the event that, after the
expiration of said 45-day cure period, Licensee has failed to substantially cure
such breach or to tender substantial efforts to so cure to Licensor's reasonable
satisfaction, AND PROVIDED THAT Licensee delivers written notice to Licensor
that it disputes that its accused conduct constitutes a "material breach", the
parties agree to submit their dispute to arbitration as provided hereafter and
this License Agreement and the L.L.C. Agreement shall continue in full force and
effect during the pendency of such arbitration. By way of example only and not
limitation, the following could be deemed to be material breaches:
4.2.1 Divot fails to comply with its obligations set forth on
Exhibit 1 hereof;
4.2.2 Licensee uses or authorizes another to use the Floyd
Identification for products which are non-Licensed
Products contrary to the provisions hereof;
4.2.3 Licensee fails to observe quality controls implemented
by Licensor and/or fails to require its subcontractors,
independent contractors, representatives and affiliates
to observe such controls and/or fails to reasonably cure
quality control deficiencies relating to Licensed
Products properly noticed by Licensor as required under
Section 2.6.1 of this License Agreement;
4.2.4 Licensee refuses or neglects to submit to Licensor
sample signage, public relations and trade
announcements, marketing materials, advertising copy,
promotional items, in-store displays, etc. or other
materials for which Licensor's approval is required
under Section 2.7 hereinabove of this Agreement;
4.2.5 Licensee assigns or purports to assign or pledges or
sublicenses any of the rights granted herein to any
third-party in violation of the terms of this Agreement;
4.2.6 Licensee engages in a business other than the
manufacture, merchandising and sale of Licensed
Products bearing Floyd Identification without first
obtaining the prior written consent of Floyd and
Licensor as required by the L.L.C. Agreement;
4.2.7 Licensee knowingly sells or offers for sale products
purportedly Floyd-endorsed or Floyd-branded products,
which are not genuine or authorized, or which have not
been pre-approved by Licensor; or
4.2.8 Divot undergoes a change of control.
4.3 Licensor's Unconditional Right of Termination. Licensor
shall have the unconditional right to terminate this Agreement immediately upon
notice to Licensee upon the happening of any one of the following events:
4.3.1 If all or substantially all of Licensee's business or
assets are nationalized or appropriated by any national
government or governmental authority provided, that this
Agreement will only terminate with respect to the
merchandising and sale of Licensed Products in countries
affected by such nationalization and/or appropriation;
4.3.2 If Licensee or Divot makes an assignment of all or
substantially all of its assets for the benefit of a
creditor or creditors, or becomes insolvent, or files a
petition in bankruptcy or is involuntarily forced into
bankruptcy, or a receiver or trustee of its assets is
appointed;
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4.3.3 If either Licensee or Divot ceases operations with a
view to dissolving and winding up its affairs;
4.3.4 If Licensee pledges, hypothecates, assigns or
sublicenses any of its rights and obligations under this
License Agreement or any modification or amendment
thereto to any third-party without the express prior
written consent of Licensor;
4.3.5 If the applicable laws and regulations of any country or
any third-party claim or any court order prohibit or
prevent or otherwise impair Licensee's use of Floyd
Identification under this License Agreement for any
Licensed Products, then this Agreement shall terminate
with respect to such country and/or for such product but
only for the period of time such use is prohibited,
prevented or impaired and Licensor shall have no
liability to Licensee or to Divot as a result thereof;
or
4.3.6 If Eagle has exercised its election to dissolve the
L.L.C. or its right to cause the L.L.C. to acquire its
entire interest in the L.L.C. (including all interests
held by Floyd or Eagle Affiliates that acquire their
interests from Eagle after the inception of the L.L.C.).
4.4 Licensee's Rights of Termination. Licensee shall have the right
upon 60 days' written notice to Licensor to terminate this Agreement during the
Initial Term and any subsequent term upon the occurrence of any one or more of
the following events:
4.4.1 The commercial value of Floyd Identification is
substantially impaired as a result of the commission by
Floyd of any act which shocks, insults or offends the
community or ridicules public morals and decency which
termination shall become effective within 60 days
following Licensee's delivery of notice to Licensor of
such termination provided that, Floyd's death or
disability shall not constitute grounds for Licensee's
termination of this License Agreement.
4.4.2 Licensee is dissolved and discontinued in accordance
with the L.L.C. Agreement.
4.4.3 If Licensor makes an assignment of all or substantially
all of its assets for the benefit of a creditor or
creditors, or becomes insolvent, or files a petition in
bankruptcy or is involuntarily forced into bankruptcy,
or a receiver or trustee of its assets is appointed.
ARTICLE 5: Registration of Floyd Identification: Trademark Notations and
Legends.
5.1 Registration of Floyd Identification. At Licensee's
request, Licensor shall apply to register, maintain and renew the registration
of the Floyd Identification for the Licensed Products in the United States,
Canada and in any other country in which Licensee offers or proposes to offer
Licensed Products to the extent permitted by applicable laws and regulations
governing the registration of trademarks. Licensor will direct and control such
registration process through counsel of its choice and Licensee agrees that it
will reimburse Licensor for all reasonable attorneys' fees, costs and
disbursements incurred by Licensor in connection with the registration process
world-wide including defending opposition and cancellation proceedings brought
by third parties, upon delivery of invoices or other reasonable evidence of the
fees, costs and disbursements to be reimbursed to Licensor.
5.2 Licensee Cooperation. Licensee agrees to cooperate with
Licensor and/or Licensor's counsel in achieving registration of Floyd
Identification and to execute any and all documents required, provide use
evidence and testimony and documentation that may be required in any ex parte or
inter partes administrative proceedings involving Floyd Identification use
and/or registration, at Licensor's sole expense.
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5.3 Licensee's Use of Floyd Identification. Licensee agrees to
make proper use of Trademark notations ("sm", "(TM)" or "(R)") in conjunction
with all advertising uses and displays of the Floyd Identification and, when
practicable, in promotional or advertising messages in any media referencing the
Floyd Identification, Licensee shall cause the following legend to appear in
legible form:
("Floyd Identification") [`sm' or `(TM)' or `(R)'] is a
[registered] trademark of Ray Floyd Enterprises, Inc.
and is used herein under license."
5.4 No Registration by Licensee: Ownership of Goodwill. Licensee
shall not, in its own name and on its own behalf, directly or indirectly, apply
to register or register any Floyd Identification or any name, words, symbols,
slogans or images confusingly similar thereto or suggestive thereof, in any
country whether as a trademark or service mark, trade name, fictitious name or
corporate title. Licensee acknowledges that Licensee's use of Floyd
Identification hereunder for Licensed Products inures solely to Licensor's
benefit and any goodwill resulting from such use shall belong solely to
Licensor.
ARTICLE 6: Litigation
6.1 Prosecutions. Licensor and Licensee shall use their good
faith best efforts to cooperate in protecting and enforcing rights in the Floyd
Identification for Licensed Products, to bring jointly as co-plaintiffs all
actions and proceedings involving the Licensed Products and to agree upon the
terms of any settlement with respect to any third-party infringements, or acts
of unfair competition involving Floyd Identification, its use and registration
and Licensor and Licensee shall share equally the costs of all legal fees,
expenses and liabilities including amounts paid in settlement and any amounts
recovered as damages and costs or by way of settlement.
6.2 Undertaking to Defend. Licensor shall defend and hold
Licensee harmless from and against any suit, action or proceeding for trademark
infringement alleging that Licensee's use of Floyd Identification for Licensed
Products infringes the proprietary ownership rights of third-parties PROVIDED
THAT Licensee's breach of this Agreement or its negligence did not precipitate
such suit, action or proceeding; and Licensor shall pay all costs, expenses,
attorneys' fees and damages or amounts paid in settlement resulting from such
suit, action or proceeding, and shall have control over the defense of such
suit, action or proceeding including without limitation control over the
settlement of same including the right to withdraw any application, annul any
registration or require Licensee and Licensee's agents, subcontractors,
representatives, and distributors to cease the use of Floyd Identification and
sale of any Licensed Products bearing Floyd Identification in any location or
country or for any product without liability on the part of Licensor or Floyd.
ARTICLE 7: Representations and Warranties and Covenants
7.1 Licensor Representations. Licensor represents and
warrants:
7.1.1 Licensor has the full right and legal authority to enter
into and fully perform this Agreement in accordance with
its terms and, without violating the rights of any other
person or entity;
7.1.2 Licensor will comply with all applicable laws,
regulations and ordinances in the performance of its
duties under this Agreement;
7.1.3 Licensor has no obligations and has not granted any
rights to any third-party that prohibit it from entering
into or fully complying with the terms and provisions of
this License Agreement, subject to Licensor's
Reservation of Rights under Section 2.2.
7.1.4 There is no material action, suit, proceeding, claim,
arbitration or investigation pending (or to the best of
Licensor's knowledge, currently threatened) against
Licensor, its constituent members, or their affiliates,
or any of them, or their respective personal or business
activities, properties or assets or, to the best of
Licensor's knowledge, that of any officer, director or
employee of Licensor or of its members which would or
could impair Licensor's or its constituent members'
ability to fully perform its obligations hereunder and
exploit its rights hereunder. Licensor is not a party to
or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or
government agency or instrumentality and there is no
material legal action by Licensor currently pending or
which Licensor intends to initiate.
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7.2 Licensee's Representations, Warranties and Covenants. Licensee
represents and warrants as follows:
7.2.1 Licensee is a limited liability company duly organized,
validly existing and in good standing under the laws of
the State of Delaware. Licensee has all requisite power
and authority to enter into and perform this Agreement
in accordance with its terms and provisions without
violating the rights of any other person or entity.
7.2.2 Licensee will comply with all applicable laws,
regulations and ordinances in the performance of its
rights and obligations under this Agreement.
7.2.3 Absent Floyd's prior informed written consent, Licensee
will not, during the Contract Period, own, control or
operate, or participate directly or indirectly in the
ownership, control or operation of, any business or
enterprise except the manufacture, merchandising and
sale of authorized Licensed Products in accordance with
this License Agreement; PROVIDED THAT nothing herein
shall limit the business activity of Divot, or any
affiliate of Divot (other than the Licensee), except to
the extent set forth in the L.L.C. Agreement.
7.2.4 Licensee's marketing, promotion, advertising and sale of
Licensed Products does not and will not constitute
libel, defamation, false advertising or other commercial
tort or violate any federal, state or local laws,
ordinances, rules or regulations.
7.2.5 There is no material action, suit, proceeding, claim,
arbitration or investigation pending (or to the best of
Licensee's knowledge, currently threatened) against
Licensee, its constituent members, or their affiliates
or any of them or their respective personal or business
activities, properties or assets or, to the best of
Licensee's knowledge, that of any officer, director or
employee of Licensee or of its members which would or
could impair Licensee's or its constituent members'
ability to fully perform its obligations hereunder and
exploit its rights hereunder. Licensee is not a party to
or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or
government agency or instrumentality and there is no
material legal action by Licensee currently pending or
which Licensee intends to initiate.
ARTICLE 8: Indemnification.
8.1 Indemnification of Licensee. Licensor agrees to indemnify
and hold Licensee harmless both during the Contract Period of this Agreement and
following the expiration or termination hereof for any reason from, against and
in respect of any and all demands, claims, actions or causes of action,
liabilities, losses and expenses including reasonable attorneys' fees and
expenses arising out of or relating to any breach by Licensor of any
representation or warranty made by Licensor in any provision of Article 7
hereinabove. Such right to indemnification shall be in addition to any and all
other rights of Licensee under this Agreement.
8.2 Indemnification of Licensor. Divot and Licensee agree to
indemnify and hold Licensor and Floyd harmless, both during the Contract Period
of this Agreement and following the expiration or termination hereof for any
reason, from, against and in respect of any and all demands, claims, actions or
causes of action, liabilities, losses, and expenses including reasonable
attorneys' fees and expenses arising out of or relating to any breach by
Licensee of any representation or warranty made by Licensee in any provision of
Article 7 of this Agreement. Licensee's indemnification of Licensor shall also
extend to any and all third-party claims for deceptive, false or misleading
advertising, advertising injury, or product liability, personal injury or death
arising out of Licensee's business conducted with respect to the Licensed
Products. Such right to indemnification shall be in addition to any and all
other rights of Licensor or Floyd, or their successors or assigns under this
Agreement.
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8.3 Insurance. Licensee agrees to purchase and maintain in
effect at its own expense liability insurance covering claims arising under the
circumstances described in Section 8.2 above, which insurance shall be in the
amount of at least U.S. $1 million per occurrence or combined single limit.
Within 30 days following the Effective Date of this Agreement, Licensee shall
submit to Licensor a certificate of insurance naming Licensor as an additional
insured party and requiring that the insurer shall not terminate or modify such
policy without written notice given to Licensor at least 60 days in advance
thereof.
ARTICLE 9: Arbitration Procedure.
The parties agree that they shall resolve all disputes between them,
except as otherwise specifically set forth herein to the contrary, through the
arbitration provisions contained in Exhibit 2 annexed hereto and made a part
hereof provided, however, that the parties acknowledge that, in the event the
integrity of and goodwill symbolized by Floyd Identification may be damaged by
reason of the acts or omissions of Licensee or of Divot or of subcontractors or
agents or affiliates of any of the foregoing, Licensor may suffer irreparable
harm and, accordingly, it is expressly acknowledged and agreed that Licensor
shall have recourse to the federal and/or state courts in the event equitable
remedies are sought or desired by Floyd and/or Licensor to protect against
irreparable injury to Floyd, to Licensor and to Floyd Identification.
ARTICLE 10: Assignments: Sub-licenses.
10.1 No Assignment. Licensee may not assign, pledge or
sub-license its rights and obligations (in whole or in part) under this License
Agreement without the express written consent of Licensor or Floyd provided,
however, that Licensee shall have the right to subcontract the manufacture,
distribution, advertisement, transportation and sale of Licensed Products to
Miller Golf, Inc., Divot's wholly-owned subsidiary so long as said subcontractor
is wholly or majority-owned by Divot.
10.2 No Collateral Assignment. Licensee may not make a
collateral assignment, pledge, hypothecation or contingent transfer of its
rights and obligations (in whole or in part) under this License Agreement.
ARTICLE 11: Notices.
11.1 Delivery of Notice. Any notice required to be given
pursuant to this License Agreement shall be made in writing and shall be deemed
delivered as follows:
11.1.1When transmitted by telecopier, on the date of the
transmission provided the transmitting party receives
confirmation that the facsimile transmission was
delivered;
11.1.2When delivered by express overnight courier, registered
or certified mail, on the date stated on the
confirmation of receipt to the addressee;
11.2 Notice to Licensor. Notice to Licensor should be addressed as
follows:
Ray Floyd Enterprises, Inc.
Attn.: Raymond Floyd, President
231 Royal Palm Way
Suite 100
Palm Beach Florida 33480
Facsimile: (561) 833-1722
Telephone: (561) 833-2622
With copy to:
Greenberg, Traurig, Hoffman, Lipoff,
Rosen & Quentel, P.A.
1222 Brickell Avenue
Miami, Florida 33131
Attn.: Norman J. Benford, Esq.
Facsimile: (305) 579-0717
Telephone: (305) 579-0660
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11.3 Notice to Licensee. Notice to Licensee shall be addressed as
follows:
Divot - RFG Joint Venture, L.L.C.
One Tampa City Center, Suite 200
201 North Franklin Street
Tampa, Florida 33602
Attn: Jeremiah Daly
Facsimile: (813) 222-3434
Telephone: (813) 222-0611
With copies to:
Annis, Mitchell, Cockey, Edwards & Roehn, P.A.
One Tampa City Center, Suite 2100
201 North Franklin Street
Tampa, Florida 33602
Attn: Fred S. Ridley, Esq.
Facsimile: (813) 223-9067
Telephone: (813) 229-3321
11.4 Change of Address for Notice. Upon at least 15 days written
notice, either party may, during the Contract Period, change its address to any
other address for purposes of delivery of notice pursuant to this Article 11.
ARTICLE 12: Miscellaneous Provisions.
12.1 Governing Law. This License Agreement and any dispute,
controversy or claim arising out of or relating to this Agreement or the
interpretation, performance, validity or enforceability thereof shall be
construed in accordance with federal laws applicable to trademarks and otherwise
with the internal laws of the State of Florida without regard to its principles
of conflicts of laws and this Agreement shall be deemed to have been drafted
jointly by the parties.
12.2 Entire Understanding. This License Agreement and the
L.L.C. Agreement constitute the entire understanding of the parties with respect
to the subject matter hereof and supersede all previous agreements and
understandings between them, and there are no prior understandings, agreements,
conditions or representations, oral or written, express or implied, with
reference to the subject matter hereof that are not merged herein, expressly
referenced herein or superseded hereby or which are expressly contemplated for
future consummation.
12.3 No Agency. Nothing contained in this License Agreement
shall be construed as creating any agency, partnership, joint venture or other
form of joint enterprise between the Licensor and or Floyd, on the one hand, and
either Licensee, and/or Divot, on the other hand.
12.4 No Modification Unless in Writing. This License Agreement
may only be amended or modified and/or expanded as to additional products and
services in a writing signed by the parties.
12.5 Severability. The provisions of this License Agreement
are independent of each other and the invalidity of any provision or a portion
hereof shall not affect the validity or enforceability of any other provision.
12.6 Waiver. Any delay or failure on the part of either party
to enforce its rights hereunder to which it may be entitled shall not be
construed as a waiver of the right and privilege to do so at any subsequent time
and no acceptance of full or partial payment due under this Agreement during the
continuance of any default shall constitute a waiver of the breach of the term
or condition.
12.7 Binding Agreement. The provisions of this Agreement will
be binding upon and inure to the benefit of the parties and their respective
heirs, agents, executors, administrators, and Licensee's permitted successors
and permitted assigns.
12.8 Governing Agreement. In the event of a conflict between
any term or provision of this License Agreement and any term or provision of the
L.L.C. Agreement, the terms and provisions of this Agreement will prevail with
respect to the subject matter hereof.
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12.9 Force Majeure. Neither party shall incur liability to the
other for any failure or delay in fulfilling its obligations under this License
Agreement due to force majeure. "Force Majeure" shall mean acts of nature, acts
of government, wars, riots, civil insurrection, strikes or other labor
disturbances.
WHEREFORE, the parties have caused this License Agreement to be
executed by their duly authorized representatives, intending thereby to be
legally bound.
For and on Behalf of Licensee: For and on Behalf of:
DIVOT - RFG JOINT
VENTURE, L.L.C. RAY FLOYD ENTERPRISES, INC.
By:_____________________________ By:_________________________________
Typed Name:_____________________ Typed Name:_________________________
Title:____________________________ Date of Signature:_____________________
Date of Signature:__________________
Name:_______________________________
Raymond Floyd
Date of Signature:______________________
Accepted and Agreed As To All Terms:
DIVOT GOLF CORPORATION
By:____________________________
Name:
Title:
Date of Signature: ______________, 1998
Accepted and Agreed As To Paragraph 7 of Exhibit 1:
By: _____________________________
Name:
Title:
Date of Signature: ______________, 1998
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EXHIBIT 1
Divot's Royalty Obligations
1. Upon the execution of this License Agreement by all parties, Divot Golf
Corporation, a Delaware corporation ("Divot"), a third-party beneficiary of this
License Agreement, shall deliver, or cause to be delivered, to Licensor, or its
assigns (which shall include Raymond and Maria Floyd, as tenants by the
entireties), 354,463 shares of Common Stock of par value $0.001 of Divot, duly
issued to and registered in the name of Licensor (or such assignee) (the
"Shares"), subject to Divot's option in Paragraph 2 below. 2. Upon the happening
of the "Triggering Event" (as defined below), Divot shall have the option to
cause Licensor (or its assignee, as the case may be) to sell to Divot, or its
designee, 137,445 of the Shares for the total sum of $1.00. The option shall be
exercised by delivery of a written notice to the Licensor (and with a copy
thereof to the assignee of the Shares, if known to Divot), stating Divot's
intent to acquire such shares, accompanied by a check in the total amount of
$1.00 payable to the Licensor (or assignee, if known). 3. The Shares shall
initially not be registered under the Securities act of 1933 and shall bear a
legend substantially similar to the following:
THE SHARES OF STOCK ("SHARES") REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, OR ANY STATE STATUTES.
THE SHARES MAY NOT BE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
WITHOUT AN OPINION OF COUNSEL FOR THE HOLDER, WHICH OPINION AND COUNSEL
SHALL BE REASONABLY SATISFACTORY TO DIVOT GOLF CORPORATION, THAT SUCH
REGISTRATION IS NOT REQUIRED. THE HOLDER OF THE SHARES IS ALSO ENTITLED TO
CERTAIN REGISTRATION RIGHTS AS SET FORTH IN THAT CERTAIN REGISTRATION
RIGHTS AND RELATED MATTERS AGREEMENT DATED _________, 1998 BETWEEN DIVOT
GOLF CORPORATION AND RAY FLOYD ENTERPRISES, INC., AND ARE FURTHER SUBJECT
TO THE OPTION OF DIVOT GOLF CORPORATION TO ACQUIRE 137,445 OF THE SHARES
UPON THE OCCURRENCE OF CERTAIN CONDITIONS SET FORTH IN THE LICENSE
AGREEMENT AMONG DIVOT, RAY FLOYD ENTERPRISES, INC., AND DIVOT-RFG JOINT
VENTURE, L.L.C. DATED ____________, 1998.
4. Licensor (or its assigns, as the case may be) shall execute such other
documentation as reasonably requested by Licensee or Divot in order to meet, or
demonstrate compliance with, any exemptions available under state or federal
securities laws in connection with the delivery of the Shares to Licensor. 5.
The "Triggering Event" shall be the first anniversary of this License Agreement,
unless prior to such date a definitive agreement is executed between Licensor
and Corporate Express, Inc. and/or its affiliate, as Licensee, containing a
provision substantially as follows:
"Section ___. Divot-Eagle. Without creating any legally binding
obligations upon the Licensee [Corporate Express], the Licensee will
consult with DIVOT-RFG JOINT VENTURE, L.L.C. ("Venture") from time to
time with regard to the Venture's desire and capability of providing
its manufacturing and distribution resources, as well as various
golf-related products and accessories, to Licensee for distribution or
resale to Licensee's customers."
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6. The Shares shall in the aggregate constitute 4.9 percent of Divot's total
outstanding shares of Common Stock as of the date hereof on a fully diluted
basis, after giving effect to the issuance of the Shares and assuming exercise,
conversion and/or exchange of all of Divot's currently outstanding derivative or
convertible securities for shares of Divot's Common Stock in accordance with
their respective terms (including, without limitation, all of Divot's
outstanding stock options, warrants, preferred stock, and convertible notes).
All the Shares shall be duly authorized and validly issued to such person, fully
paid and nonassessable, and free and clear of all liens and encumbrances
(subject to Paragraph 2 above), and shall not be subject to preemptive or
similar rights; and all of the Shares shall also entitled to registrations
rights as set forth in that certain Registration Rights and Related Matters
agreement between Divot and Licensor dated as of even date herewith. 7. In the
event that Eagle Golf Enterprises, Inc. ("Eagle") elects to dissolve the
Licensee for its failure to achieve the gross revenue threshold for the
twelve-month period ending upon the second anniversary of the Limited Liability
Company Agreement of the Licensee dated _____________, 1998, in accordance with
the terms in Article 14 thereof, Divot shall have the option to require Licensor
to pay Divot an amount equal to the value of the Shares declared as taxable
income by Licensor (or its assigns, as the case may be) for the federal income
tax purposes for the tax year during which the Shares were received from Divot,
less the amount of all additional federal, state and local taxes the recipient
of the Shares was required to pay for receiving them. If the persons required to
make such payment to Divot under this paragraph hold any of the Shares at the
time Divot requests payment of the amount hereunder, then such persons may apply
all or part of such Shares to the payment liability, using the greater of (a)
the same value declared for the Shares for federal income tax purposes when
received, or (b) the then fair market value of the Shares based on the average
closing trading price of Divot's common stock during the 30-day period
commencing 15 days prior to the date that Divot's written request for payment is
made hereunder. The payment to Divot (and/or delivery to it of some or all of
the Shares) required under this paragraph shall be made within 30 days after
Divot's written request for payment is made.
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EXHIBIT 2
Arbitration Provisions
1. Dispute Resolution Mechanism. All disputes between the parties not resolved
by private negotiating, shall be settled by the following procedures, which
shall only apply to disputes which are susceptible to binding resolution
through alternative dispute resolution under applicable Florida law.
The "Disputes" covered by these provisions specifically include, but are not
limited to, the following:
(a) any and all claims, disputes, or issues that in any way
relate to or arise out of the terms, conditions, rights, obligations,
representations, warranties and performance of this Agreement and the
relationship between the parties;
(b) any and all claims, disputes, or issues that in any way
relate to or, arise out of or under this Agreement;
(c) any and all claims, disputes, or issues that in any way
relate to or arise out of regarding the validity of this Agreement or any
provision of this Agreement;:
(d) any and all claims, disputes, or issues that in any way
relate to or arise out of the performance or breach of this Agreement;
(e) any claims, disputes or issues regarding punitive damages,
or injunctions, or any other equitable claims;
(f) any and all questions regarding the arbitrability of any
claims, disputes or issues under this Agreement;; and
(g) any claims, disputes or issues for attorneys' fees and
costs in connection with any dispute and any mediation and/or arbitration
under this Agreement..
In regard to any Dispute subject to the terms of these Regulations, the party
claiming to be aggrieved (a "Claimant") must comply with the following Dispute
resolution procedure or it shall be deemed to have waived its Dispute.
2. Step One: Notice of Dispute and Negotiation.
(a) The Claimant shall attempt to give detailed written notice to
the other parties of the Claimant's specific complaint including the nature and
facts of the Dispute, the amount of actual damages and expenses, including
attorneys' fees, claimed or incurred by the Claimant within thirty (30) days of
the date Claimant knew about, or should have known about, incurred acts,
occurrences and/or omissions giving rise to the Dispute. The Claimant shall
include copies of all documents that support its claims. The purpose of this
notice is to advise the other party of the Dispute and to provide the Parties an
opportunity to resolve the claim, dispute or issue before filing for mediation.
In no event shall a failure by Claimant to give notice hereunder limit or in any
way restrict Claimant's ability to prosecute its claims.
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(b) Within thirty (30) days after receipt of the notice, the
Parties receiving the notice shall tender to the other parties a written
response, including an offer of settlement, if appropriate. Any offer of
settlement not accepted within thirty (30) days of receipt by the Claimant shall
be deemed to have been rejected.
(c) The tender of an offer of settlement is not an admission of
engaging in an unlawful act or practice or of liability.
(d) In the event the parties are unable to settle their disputes
after following the procedures set forth above, within thirty (30) days
thereafter, the parties shall submit their disputes to mediation. However, if
requested by either party, the parties agree to meet to discuss the Dispute
within such thirty (30) day period.
3. Error! Bookmark not defined.Step Two: Mandatory Mediation. If the parties do
not resolve the Dispute under Step One, then Claimant, if wishing to pursue
the Dispute, must submit the dispute to mandatory mediation. Any Dispute
between the Claimant and any other party shall be submitted to mandatory
mediation prior to the Claimant seeking recourse through arbitration.
Claimant, in order to submit a Dispute to mediation, must submit a written
request for mediation to the other party and to the mediator. The Claimant
shall use reasonable efforts to make a written request for mediation within
(60) days of the initial notice of the Dispute by the Claimant to the other
parties. The written request for mediation shall include the written notice
of the Dispute and supporting documents set forth above and a summary of the
negotiations.
(a) All parties shall share equally in the naming of the mediator.
The mediator shall act as an advocate for resolution and shall use his or her
best efforts to assist the parties in reaching a mutually acceptable settlement.
The parties shall name the mediator within seven (7) days after a party has
submitted a written request for mediation. In the event that the parties cannot
agree on the naming of the mediator, the parties shall each select a mediator
and those mediators shall select an Independent mediator. The mediation shall be
conducted in Tampa, Florida, unless otherwise agreed to by both parties. In the
event a party fails to attend a mediation without good cause or the mediator
determines that a party has not acted in good faith to settle the dispute, then
the Party failing to attend the mediation or to act in good faith during the
mediation shall be responsible for the reasonable attorneys' fees and costs of
the other Party as determined by the mediator.
(b) The mediator shall not serve as a mediator in any dispute in
which he or she has any financial or personal interest in the result of the
mediation. Prior to accepting an appointment, the mediator shall disclose any
circumstance likely to create a presumption of bias or prevent a prompt meeting
with the parties. In the event that the Parties disagree as to whether the
mediator shall serve, the mediator shall not serve.
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(c) Except as set forth herein, the mediator does not have the
authority to decide any issue for the parties, but will attempt to facilitate
the voluntary resolution of the dispute by the parties. The mediator is
authorized to conduct joint and separate meetings with the parties and to offer
suggestions to assist the parties in achieving settlement. If necessary, the
mediator may also obtain expert advice concerning technical aspects of the
dispute, provided that the parties agree and assume the expenses of obtaining
such advice. Arrangements for obtaining such advice shall be made by the
mediator or the parties, as the mediator shall determine. Likewise, the mediator
may request the limited production of documents from both parties in defense of
their respective claims. The mediator shall not disclose the parties in defense
of their respective claims. The mediator shall not disclose the actual documents
without the consent of the offering party. However, in his or her discussions
with the respective parties, the mediator will be permitted to share summary
oral information from any such documents.
(d) Mediation proceedings shall not extend beyond two (2) days,
without the consent of the parties.
(e) The parties shall be governed by Sections 44.102 and 768.79,
Florida Statutes, although no civil action is pending. An offer of settlement or
an offer or demand for judgment may be made at any time after an impasse has
been declared by the mediator. An offer is deemed rejected if it is not accepted
in writing before the commencement of arbitration. The parties agree that in the
event they are unable to resolve their dispute through mediation, then the
Claimant, if it wishes to pursue the dispute further, must submit the dispute to
mandatory final and binding arbitration as set forth hereinbelow.
(f) The Parties further agree that at any time following the
mediation process but prior to the initiation of binding arbitration, the
president or highest ranking senior level executive of the respective companies
shall meet or confer telephonically in one last effort to resolve the dispute.
During each phase of the alternative dispute evaluation process, the Parties
agree to act in good faith to settle the dispute, if possible. 1 1Step 3:
Mandatory Final and Binding Arbitration
4. Step 3: Mandatory, Final and Binding Arbitration:
(a) Except as otherwise provided herein, all claims, disputes,
controversies and other matters in question arising out of or relating to this
Agreement or to the alleged breach thereof shall subject to negotiation between
the Parties as described herein or by mediation between the parties. If such
negotiation and mediation are unsuccessful, the parties agree to submit to
binding arbitration. The parties agree the arbitration shall be administered by
the American Arbitration Association ("AAA") and conducted in accordance with
its Commercial Arbitration Rules, except as otherwise provided herein or as the
parties may otherwise agree. The arbitration specified herein is intended to
provide an arbitral forum instead of a judicial forum for the resolution of
disputes, as authorized by Florida Statutes Section 682.02.
(b) In order to invoke arbitration, Claimant shall submit a notice
of demand for binding arbitration in writing to the other party pursuant to the
Regulations within ninety (90) days of the completion of mediation. The written
notice of demand for binding arbitration shall include the written notice of
claim and supporting documents as set forth above.
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(c) Upon filing of a notice of demand for binding arbitration
by either party, arbitration shall be commenced and conducted as follows:
(i) All claims, disputes, controversies, and other matters
(collectively "matters") in question shall be referred to and decided and
settled by a three person arbitration panel that has been found acceptable by
all parties. Selection of the arbitrator panel shall be made within ten (10)
business days after the date of filing of a demand for arbitration. In the event
the parties cannot agree on the selection of the arbitrator panel within ten
(10) business days of demand of the written notice invoking arbitration, the
arbitrator panel shall be selected pursuant to the AAA Commercial Arbitration
Rules. The arbitrator panel shall act by the affirmative vote of a majority of
such panel.
(ii) The cost of arbitration proceedings, including without
limitation the arbitrator's compensation and expenses, hearing room charges,
court reporter transcript charges, etc., shall be borne by the Parties equally
or otherwise as the arbitrator panel may determine. The arbitrator panel may
award the prevailing Party its reasonable attorneys' fees and costs incurred in
connection with the arbitration. The arbitrator panel is specifically instructed
to award attorneys' fees for instances of abuse in the discovery process.
(iii) The arbitration proceedings shall be held in Tampa,
Florida, unless the parties agree otherwise.
(iv) The parties shall have the right to conduct and
enforce pro-hearing discovery in accordance with the then current Federal Rules
of Civil Procedure, subject to these limitations.
(v) Each party may serve no more than one set of
interrogators limited to fifty items.
(vi) Each party may depose the other parties expert
witnesses who will be called to testify at the hearing, plus two fact witnesses
without regard to whether they will be called to testify (each party will be
entitled to a total of not more than 24 hours of depositions of the other
parties' witnesses); provided however, that the arbitrator panel may provide for
additional depositions upon showing of good cause; and
(vii) Document discovery and other discovery shall be under
the control of and enforceable by the arbitrator panel.
(d) All discovery disputes shall be decided by the arbitrator
panel. The arbitrator panel is empowered:
(i) to issue subpoenas to compel pre-hearing
document or deposition discovery;
(ii) to enforce the discovery rights and obligations
of the Parties; and
(iii) to otherwise control the scheduling and conduct
of the proceedings.
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Notwithstanding any contrary foregoing provisions, the arbitrator panel
shall have the power and authority to, and to the fullest extent practicable
shall, abbreviate arbitration discovery in a manner which is fair to all parties
in order to expedite the conclusion of each alternative dispute resolution
proceeding.
(e) Within fifteen (15) days after selection of the arbitrator
panel or as soon thereafter as is mutually convenient to the arbitrator panel,
the arbitrator panel shall hold a pre-hearing conference to establish schedules
for completion of discovery, for exchange of exhibit and witness lists, for
arbitration briefs, for the hearing, and to decide procedural matters and all
other questions that may be presented.
(f) The hearing shall be conducted to preserve its privacy and to
allow reasonable procedural due process. Rules of evidence need not be strictly
followed, and the hearing shall be streamlined as follows:
(i) Documents shall be self-authenticating, subject
to valid objection by the opposing party;
(ii) Expert reports, witness biographies,
depositions, and affidavits may be utilized, subject to the opponent's right
of a live cross-examination of the witness in person;
(iii) Charts, graphs, and summaries shall be utilized to
present voluminous data, provided (i) that the underlying data was made
available to the opposing Party thirty (30) days prior to the hearing, and (ii)
that the preparer of each chart, graph, or summary is available for explanation
and live cross-examination in person;
(iv) The hearing should be on consecutive Business
Days without interruption to the maximum extent practicable; and
(v) The arbitrator panel shall establish all other
procedural rules for the conduct of the arbitration in accordance with the
AAA Commercial Arbitration Rules.
(g) No arbitration shall include, by consolidation, joinder, or in
any other manner, any additional person not a party to the Regulations, except
by written consent of the Parties in dispute containing a specific reference to
these Regulations.
(h) The arbitrator panel is empowered to render an award of
general compensatory damages and equitable relief (including, without
limitations, injunctive relief, but is not empowered to award exemplary, special
or punitive damages. The award rendered by the arbitrator panel (1) shall be
final; (2) shall not constitute a basis for collateral estoppel as to any issue;
and (3) shall not be subject to vacation or modification.
(i) All persons subject to this Agreement expressly agree to WAIVE
ANY RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES of any kind, whether this
right or claim could accrue now or in the future under applicable law. However,
in the event a court determines that the express waiver set forth herein is
unenforceable, then the arbitrator panel, and not a court, shall determine if
punitive or exemplary damages should be awarded and, if awarded, the amount
thereof.
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(j) The parties hereto will maintain the substance of any
proceedings hereunder in confidence and the arbitrator panel, prior to any
proceedings hereunder, will sign an agreement whereby the arbitrator panel
agrees to keep the substance of any proceedings hereunder in confidence.
(k) In the event any court or other tribunal concludes any portion
of these procedures to be void or otherwise unenforceable for any reason, the
remainder of these procedures shall survive and is deemed severable, such that
the parties' express purpose to arbitrate any unresolved controversy shall be
recognized and given effect.
(l) THE PARTIES HAVE CAREFULLY READ THIS AGREEMENT AND UNDERSTAND
THAT BY SIGNING THIS AGREEMENT, THEY ARE AGREEING TO SUBMIT ALL DISPUTES TO
MEDIATION AND ARBITRATION IN LIEU OF FILING A LAW SUIT. THE PARTIES KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY AGREE TO WAIVE ANY RIGHT TO A JURY TRIAL AND
AGREE THAT PRIVATE ADJUDICATION THROUGH MEDIATION AND ARBITRATION IS THE
EXCLUSIVE MEANS FOR RESOLVING ANY AND ALL DISPUTES COVERED BY THIS AGREEMENT
AMONG ANY TWO OR MORE OF THE SIGNATORIES HERETO.
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