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Exhibit 10.11
RESTATEMENT OF FMG ROYALTY
AGREEMENT OF 7 AUGUST, 1992
This RESTATEMENT OF THE FMG (Forcelledo Marketing Group, Inc.)
AGREEMENT of August 7, 1992 is entered into as of this 20th day of March, 1995
by and between Xxxx and Xxxx Xxxxxxxxxx, two individuals (sometimes hereinafter
collectively referred to as "FORCELLEDO"), on the one hand, and ROLLERBALL
INTERNATIONAL INC., a corporation organized under the laws of the State of
Delaware ("ROLLERBALL"), on the other hand.
RECITALS
A. Rollerball is engaged in the business of developing, manufacturing
and distributing In-line skates and accessories principally, but not
exclusively, in the United states.
X. Xxxxxxxxxx is the founder of FMG and Rollerball International Inc.,
and also owner and holder of all rights to the Rollerball skate concept (an
In-line skate distinguished by two or more spherical balls as wheels, also known
as Roll Ball technology) and the Rollerball brand name (Schedule A).
C. This Agreement memorializes a modification of the terms and
conditions agreed to in the August 6, 1996 Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises, and on the
basis of the representations, warranties, covenants and agreements set forth
below Forcelledo and Rollerball agree as follows:
1. TRANSFER OF RIGHTS
1.1 Forcelledo hereby transfers and assigns to Rollerball all rights,
title and interest in and to all patents, trademarks, copyrights and other
intellectual property rights, ideas and know-how associated with the Rollerball
two or more spherical balls tandem skate ("Rights").
1.2 With the transfer of the Rights, Rollerball hereby obtains sole and
exclusive authority and discretion to determine the method of marketing products
developed from the Rollerball two or more spherical balls tandem skate
technology. This may involve, without limitation, the establishment of a new
company to market such products, third-party licensing agreements for the
Rights, distribution agreements with retailers or direct response marketing.
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2. COMPENSATION TO FORCELLEDO
2.1 As total compensation to Forcelledo as consideration for the
transfer of the Rights, Rollerball shall pay to Forcelledo a royalty (the
"Royalty") which is equal to three percent (3%) of worldwide Net Sales, with the
exception of letter of credit sales, of all Rollerball Skate products which are
listed on Schedule B to this Agreement (the "Rollerball Skate Products"). For
purposes of this Agreement, "Net Sales" shall mean gross sales minus all
returns, trade discounts and allowances. On Net Sales generated by letter of
credit sales, Forcelledo shall be paid a Royalty of 1.8% of worldwide Net Sales
of the Rollerball Skate Products. The Royalty shall be paid in perpetuity,
unless adjusted pursuant to Section 2.3 below.
2.2 Forcelledo shall not be paid a royalty in connection with any
products, other than the Rollerball Skate Products as listed in Schedule B,
developed, manufactured, distributed and marketed by Rollerball.
2.3 In the event that Rollerball shall file a Registration Statement
with the Securities and Exchange Commission for purposes of registering the
common stock of Rollerball under the Securities Act of 1933, all royalties due
to Forcelledo in connection with the manufacturer and distribution of the
Rollerball Skate Products shall be reduced proportionately with all other
Rollerball royalty recipients if deemed necessary, in the good faith
determination of Rollerball and its advisors, to facilitate an initial public
offering of Rollerball's common stock, and such reductions, if any, will be
negotiated by the parties in good faith.
2.4 The Royalty shall be paid in U.S. currency once every six (6)
months, not later than forty (40) days following the last day of Rollerball's
second and fourth fiscal quarters. The royalty payments are retroactive to the
first shipments by Rollerball in 1994.
2.5 Forcelledo shall be responsible for payment of any and all state
and federal taxes owed on a Royalty payment from Rollerball. The parties
acknowledge and agree that any compensation paid by Rollerball to Forcelledo
shall be reported to the Internal Revenue Service and appropriate state taxing
authorities by Rollerball in accordance with U.S. tax laws and regulations.
3. REPRESENTATIONS AND WARRANTIES
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Rollerball hereby represents and warrants to Forcelledo that:
3.1 Rollerball is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has full corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder.
3.2 Rollerball has taken all requisite corporate action to authorize
and approve the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby, and this Agreement constitutes a legal,
valid and binding agreements of Rollerball, except as such enforcement may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally or the scope of equitable remedies which may be available.
3.3 The execution an delivery of this Agreement and the consummation of
the transactions contemplated hereby will not violate the Articles of
Incorporation or the bylaws of Rollerball or any agreement, contract or other
instrument to which Rollerball is a party, or any statue, rule, regulation,
order, judgment, award or decree.
3.4 There is no litigation, proceeding or investigation pending or, to
the knowledge of Rollerball, threatened against Rollerball affecting any of its
assets or properties that could result, either in any case or in the aggregate,
in any material adverse change in the assets, properties or business of
Rollerball, or than could impair the validity of this Agreement or any action to
be taken pursuant to this Agreement.
4. AUDIT RIGHTS
4.1 Upon ten (10) days written notice by Forcelledo to Rollerball,
Forcelledo shall be given the right to audit Rollerball's accounting books and
financial records as they pertain to payment of the Royalty, together with
appropriate backup documentation related to the production and manufacturer of
the Rollerball Skate Products.
4.2 In the event that Forcelledo's audit as provided for by Section 4.1
above demonstrates, in the good faith judgment of Rollerball and its advisors,
that Forcelledo is owed an additional Royalty payment, upon written notice of
the deficiency by Forcelledo to Rollerball, Rollerball shall have forty-five
(45) days to pay the balance owing to Forcelledo without penalty.
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4.3 In the event that an audit conducted by Forcelledo pursuant to
Section 4.1 above results in a good faith dispute between Rollerball and
Forcelledo as to whether Forcelledo is owed an additional Royalty payment, the
parties hereto agree to abide by the results of a second audit to be conducted
by an independent auditor to be mutually agreed upon by Rollerball and
Forcelledo (the "Independent Audit"). Prior to the commencement of an
Independent Audit, Forcelledo will provide a written notice (the "Audit Notice")
to Rollerball which will request that the Independent Audit be conducted and
will state the amount of additional Royalty payment which is alleged by
Forcelledo to be owed by Rollerball. In the event that the Independent Audit
demonstrated that Forcelledo is not owed an additional Royalty payment,
Forcelledo will pay the costs and professional fees associated with the
Independent Audit. In the event that the Independent Audit demonstrates that
Forcelledo is owed an additional Royalty payment, in addition to Forcelledo's
other remedies provided by California Law and by this agreement, Rollerball
shall pay Forcelledo the additional Royalty payment and interest at the rate of
ten percent (10%) per annum on the principal balance due and owing from the date
for payment of the Royalty set forth in Section 2.4 to the date that the Royalty
is paid in full. In the event that the Independent Audit demonstrates that
Forcelledo is owed an additional Royalty payment, the costs of the Independent
Audit shall be borne by the parties in proportion to the amount determined by
the Independent Audit to be owed by Rollerball as compared to the amount of
additional Royalty payment demanded by Forcelledo in the Audit Notice. For
example only, if the Audit Notice states that an additional Royalty payment of
$50,000 is owed by Rollerball and the Independent Audit determines that, in
fact, Forcelledo is owed $25,000, and the Independent Audit costs $20,000 to
conduct, the parties will each pay $10,000 of Independent Audit expense. If the
parties are required by the firm conducting the Independent Audit to pay an
advance retainer or fee, the parties will share that obligation equally, and an
adjustment and/or reimbursement will be made at the conclusion of the
Independent Audit to reflect the proportional obligation of the parties as
determined above.
4.4 Any audit of Rollerball's accounting books and financial records
conducted in connection with the payment of the Royalty shall occur at
Rollerball's corporate headquarters in Los Angeles, California.
4.5 Except as otherwise provided by this Agreement, Forcelledo shall be
solely responsible for paying the cost of any audit conducted by Forcelledo
pursuant to Section 4.1, except that Rollerball shall produce relevant
accounting records as its own costs.
5. ARBITRATION
5.1 In the event of a default in terms and provisions of this
Agreement, the parties hereto agree that they shall submit their dispute to
arbitration pursuant to the
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rules of the American Arbitration Association. Furthermore, during the
arbitration process, Forcelledo shall have the right to conduct discovery,
including but not limited to obtaining copies of all pertinent accounting
documents and deposing any and all witnesses regarding relevant accounting
issues.
6. ATTORNEY'S FEES
In the event any party takes legal action to enforce any of the terms
of this Agreement, the unsuccessful party to such action shall pay the
successful party's expenses, including attorneys' fees, incurred in such action.
7. MISCELLANEOUS PROVISIONS
7.1 Successors and Assigns. All of the terms, provisions and
obligations of this Agreement shall inure to the benefit of and shall be binding
upon the parties hereto and their respective heirs, representatives, successors
and assigns. Notwithstanding the foregoing, neither this Agreement nor any
rights hereunder shall be assigned, pledged, hypothecated or otherwise
transferred by Forcelledo without the prior written consent of Rollerball in
each instance.
7.2 Governing Law. The validity, construction and interpretation of
this Agreement shall be governed in all respects by the laws of the State of
California.
7.3 Headings. Sections and subsections headings are not to be
considered part of this Agreement and are include solely for convenience and
reference and in no way define, limit or describe the scope of this Agreement or
the intent of any provision hereof.
7.4 Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto pertaining to the subject matter hereof, and
supersedes all prior agreements, understanding, negotiations and discussions,
whether oral or written, relating to the subject matter of this Agreement. No
supplement, modification, waiver or termination of this Agreement shall be valid
unless executed by the party to be bound thereby. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provisions hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
7.5 Notice. Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been given (i) if
personally delivered, when so delivered, (ii) if mailed, one (1) week after
having been placed in the United ~ate~ mail, registered or certified, postage
prepaid, addressed to the party to whom it is directed at the address set forth
below or (iii) if given by telex or
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telecopier, when such notice or other communication is transmitted to the telex
or telecopier number specified below and the appropriate answer back or
telephonic confirmation is received:
If to Rollerball:
Rollerball International Inc.
0000 Xxxxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxxxxx, President & CEO
Telecopier Number: 000-000-0000
If to Xxxxxxxxxx
Xxxx and Xxxx Xxxxxxxxxx
0000 Xxxxxx Xxxx Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Either party may change the address to which such notices are to be addressed by
giving the other party notice in the manner herein set forth.
7.6 Third Parties. Nothing in this Agreement, expressed or implied, is
intended to confer upon any person other than Rollerball or Forcelledo any
rights or remedies under or by reason of this Agreement.
7.7 Execution and Delivery of Restatement of Assignment of Rights and
Royalty Agreement. This Agreement shall become binding upon and enforceable by
the parties hereto only upon the full execution and delivery (by all named
parties hereto) of the Restatement of FMG Royalty Agreement dated August 7,
1992, dated as of the date of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date and year set forth above;
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ROLLERBALL INTERNATIONAL INC.
Xxxx Xxxxxxxxxx, President & CEO