EXHIBIT 10.12
ENDORSEMENT AGREEMENT
THIS ENDORSEMENT AGREEMENT (this "Agreement"), made and entered into as
of May 31, 1999, by and between FAMOUS FIXINS, INC., 000 Xxxx 00xx Xxxxxx,
Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000 ("Company") and TURN 2, INC. ("Turn
2").
WITNESSETH
WHEREAS, Company desires to obtain the right to use the name, likeness
and endorsement of Xxxxx Xxxxx (hereinafter called "Xxxxx") in connection
with the advertisement, promotion and sale of Company's "Products"
(hereinafter defined); and
WHEREAS, Xxxxx has granted such rights to Turn 2 together with the
right to sublicense such rights.
NOW, THEREFORE, for and in consideration of the premises and of the
mutual promises and conditions herein contained, the parties do hereby agree
as follows:
1. Definitions. As used herein, the following terms shall be
defined as set forth below:
(a) "Contract Period" shall mean that period of time commencing as of
May 31, 1999 and concluding May 31, 2000.
(b) "Contract Territory" shall mean the United States of America and
Company's e-commerce site.
(c) "Contract Year Quarter" shall mean each 3 consecutive month
period occurring during any Contract Year ("Contract Year" meaning any twelve
month period herein commencing as of June 1) (so that, by way of example, the
first Contract Year Quarter of the first Contract Year commences as of June
1, 1999, the second commences on September 1, 1999, etc.).
(d) "Endorsed Products" shall mean all Products of Company which have
the Xxxxx Identification (defined below) highlighted as a part thereof (in
the Products' name or otherwise) or which are shipped in containers or
packages bearing the Xxxxx Identification.
(e) "Xxxxx Identification" shall mean any words or symbols or
photographic or graphic representations or combinations thereof which
identify Xxxxx such as, for example, the name and likeness of Xxxxx.
(f) "Premium Program" shall mean any traffic builder, third party
tie-in program or other program involving the use of a premium and shall
include any program primarily designed to attract the consumer to purchase a
product or service other than Endorsed Products themselves.
(g) "Products" shall mean cold breakfast cereals.
2. Grant of Endorsement Rights. (a) Turn 2 grants to Company the
exclusive right and license to use Xxxxx Identification within the Contract
Territory during the Contract Period in connection with the advertisement and
promotion by Company of Products in television, radio, print and point of
purchase. Turn 2 also grants to Company, subject to all of the terms and
conditions herein, the non-exclusive right to use the Xxxxx Identification in
connection with certain merchandise that may be featured on the back panel of
the Endorsed Products packaging, said merchandise to be subject to Turn 2's
sole and exclusive discretion and approval. Notwithstanding anything herein
to the contrary, it is specifically agreed that the Xxxxx Identification
cannot be used, in whole or in part, in connection with (i) Premium Programs
and/or (ii) any multi-media use except for Company's e-commerce site. Turn 2
expressly agrees that the right to use Xxxxx Identification will not be
granted to anyone other than Company for use within the Contract Territory
during the Contract Period in connection with the advertisement, promotion
and sale of Products. Anything herein to the contrary notwithstanding,
Company shall not have the right to distribute photographs of Xxxxx which are
larger than 5" x 7".
(b) Company agrees that during the Contract Period it will use its
best efforts actively and aggressively to (i) promote the sale of all
Endorsed Products in the Contract Territory, and (ii) prevent the sale of any
Endorsed Products outside the Contract Territory. Failure of Company to
comply with the provisions of this Section 2(b) shall entitle Turn 2 to
revoke this license immediately (notwithstanding any other provision in this
Agreement to the contrary).
(c) Turn 2 has the right to terminate this Agreement immediately if
Company's Endorsed Products are not being distributed nationally to a
significant number of stores by September 1, 1999.
3. Approvals. Company agrees that no use whatsoever of Xxxxx
Identification nor any item used in connection with Xxxxx Identification
(including, without limitation, advertising) will be made hereunder unless
and until the same has been approved by Turn 2. Turn 2 agrees that any
material, advertising or otherwise, submitted for approval as provided herein
may be deemed by Company to have been approved hereunder if the same is not
disapproved in writing within fourteen (14) days after receipt thereof.
Turn 2 agrees that any material submitted
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hereunder will not be unreasonably disapproved and, if it is disapproved,
that Company will be advised of the specific grounds therefor. Company
agrees to protect, indemnify and save harmless Turn 2 and Xxxxx, or either
of them, from and against any and all expenses, damages, claims, suits,
actions, judgments and costs whatsoever, arising out of, or in any way
connected with, any advertising material furnished by, or on behalf of,
Company.
4. Remuneration. (a) Within thirty (30) days following the
conclusion of each Contract Year Quarter, Company shall deliver to Turn 2 an
itemized statement setting forth the total shipments of Endorsed Products
during said Contract Year Quarter and, at the same time, shall pay to Turn 2
a royalty with respect to such shipments as hereinafter provided. Such
royalties shall be based upon the actual invoice price of such shipments,
exclusive only of shipping charges and sales taxes, and shall be at the rate
of 11.5% of the total of said invoice prices with a minimum invoice price
of $2.50 per box.
(b) In addition to the royalty payments set forth above, Company
agrees to grant Turn 2 an option to purchase an aggregate of 50,000 shares of
Company's publicly traded and registered stock (the "Shares") at an exercise
price of $0.15 per share (the "Option"), which Option shall vest and become
unrestricted when the SEC declares Company's registration statement effective
(anticipated to be no later than November 30, 1999) and shall be exercisable
until June 30, 2004. As further inducement to Turn 2 to enter into this
Agreement, Company and Turn 2 will enter into that certain Option Agreement
dated as of the date of this Agreement, which shall govern all aspects of the
Option.
(c) Further, Turn 2 will be entitled to fifty percent (50%)
of all gross profits (i.e., gross revenues less only Company's actual out-of-
pocket costs of obtaining the raw merchandise) generated from merchandise
related to the Endorsed Products and/or the Xxxxx Identification, said
merchandise to be advertised exclusively on the back panel of each box of
Endorsed Products. Except for the advertising of merchandise related to the
Endorsed Products and/or the Xxxxx Identification, no other use of the back
panel of each box of Endorsed Products is permitted without Turn 2's prior
written consent. It is agreed that all such merchandise must be mutually
approved in all respects by the parties hereto, including, without
limitation, the style, design and cost thereof.
(d) In addition to and separate from any other remuneration
hereunder, if Company uses any performance or service of Xxxxx hereunder in
any way that is subject to the jurisdiction of any applicable artists' union,
guild or other organization (including, without limitation, SAG and AFTRA),
either during or after the Contract Period, Company shall pay directly to
such organization all minimum payments or fees (for benefit plans or
otherwise) required to be made with respect to Xxxxx'x performance or
services.
(e) If, at any time during the Contract Period, Company shall enter
into any agreement (the terms of what are significantly the same as the terms
hereof) in connection with
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the production and sale of Company's products using the name, likeness,
photographic representation or signature of any other Major League Baseball
player (active or retired)(except Xxxxx Xxxx or Xxxx XxXxxxx), which
agreement provides for the payment to such individual of remuneration in
excess of that set forth herein, then Company agrees it will immediately so
notify Turn 2 and, at the same time, shall, retroactive to the effective date
of such other agreement, increase the rate of remuneration paid to Turn 2
hereunder up to the highest then current rate paid by Company to any such
Major League Baseball player (active or retired)(except Xxxxx Xxxx or Xxxx
XxXxxxx).
5. Notices and Submissions. Turn 2 hereby designates International
Merchandising Corporation, IMG Center, Suite 100, 0000 Xxxx 0xx Xxxxxx,
Xxxxxxxxx, Xxxx 00000, Attn.: Xxxxx Xxxxx, as Turn 2's authorized agent for
all purposes hereunder. All notices, submissions and/or requests for
approval to be made, obtained or delivered by Company to Turn 2 pursuant to
this Agreement shall be delivered to said address free of all charges such
as, for example, shipping charges and customs charges. In the event that any
such charges are paid by Turn 2 or by Turn 2's authorized agent, Company
agrees to make prompt reimbursement.
6. Payments; Books and Records. (a) Turn 2 may elect to have
payments made by check, wire transfer or bank transfer. Unless such election
has been made in writing, all payments shall be made by check drawn to the
order of "Turn 2, Inc." and delivered to IMG, Xxxxx 000, 0000 Xxxx 0xx
Xxxxxx, Xxxxxxxxx, Xxxx 00000, Attn.: Xxxxx Xxxxx. Payments shall be made
together with such Value Added Tax or equivalent as may be chargeable thereon.
Past due payments hereunder shall bear interest at the rate of (i)
one and one-half percent (1-1/2%) per month, or (ii) the maximum interest
rate permissible under law, whichever is less.
(b) Company agrees that it will keep accurate and complete records
and books of account showing all Endorsed Products shipped by it and the
price thereof. Turn 2, or its representatives, shall, upon two weeks'
written notice, have the right at all reasonable times (prior to the
expiration of two (2) years after the termination of the Contract Period) to
inspect and make copies of the books and records of Company insofar as they
shall relate to the computation of royalties to be paid to Turn 2 hereunder
and the shipment of Endorsed Products pursuant to this Agreement. In the
event that any such inspections show an underreporting and underpayment in
excess of five percent (5%) for any twelve (12) month period, then Company
shall pay the cost of such examination.
7. Labels/Packaging. (a) It is understood that each of the Endorsed
Products shipped by Company or its container or the packaging therefor shall
have affixed thereto a label or other permanent identification which includes
Xxxxx Identification.
(b) It is hereby agreed that the back panel of the Endorsed Products'
packaging will feature ad copy or offers as determined by Turn 2 and its
agent, subject to Company's right to reasonably reject such materials only if
such materials are clearly offensive to a majority of the
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populace. Any and all revenues generated by such ad copy or offers shall be
disbursed in accordance with Section 4(c) above. Further, the side panel of
the Endorsed Products packaging shall feature a charity or other entity of
Xxxxx'x sole choice. All packaging costs shall be Company's sole
responsibility.
8. Trademarks. Should Company, at any time or times during the
Contract Period, desire to register a trademark or trademarks which include
Xxxxx Identification, or which relate in any manner to Xxxxx, and/or to
register Company as a user thereof, Turn 2 shall execute any and all
documents which the parties reasonably believe to be necessary or desirable
for registration or protection of such trademark or trademarks in the name of
Xxxxx. All costs related to any such trademarks shall be borne by Company,
and ownership of any such trademarks shall rest solely in the name of Turn 2
or its designee. Upon registration of any such trademark, Turn 2 shall grant
to Company a license for the use of such registered trademark on or in
connection with the advertisement, promotion and sale of Endorsed Products,
which license shall be coextensive and coterminous with the rights granted
thereunder with respect to Xxxxx Identification and shall require no increase
in the payments set forth but shall contain such additional provisions as
Turn 2 reasonably believes are necessary for the protection of such trademark
registered in the name of Xxxxx or Turn 2. Company agrees that it will not
file, during the Contract Period or thereafter, any application for trademark
registration or otherwise obtain or attempt to obtain ownership of any
trademark or trade name within the Contract Territory or in any other country
of the world which consists of Xxxxx Identification or any xxxx, design or
logo intended to make reference to Xxxxx or to identify products endorsed by
Xxxxx. In the event that, prior to the Contract Period, Company has filed
one or more applications for registration of any such trademark, or otherwise
has obtained any rights to such trademark, Company agrees to cause such
applications and/or trademarks to be assigned and transferred to Turn 2
forthwith.
9. Products for the Use of Turn 2. During the Contract Period,
Company shall supply Turn 2 and/or its agent with such amounts of Endorsed
Products as Turn 2 and/or its agent may reasonably request. Company agrees
to pay all charges in connection with the delivery of Endorsed Products to
Turn 2 and/or Turn 2's agent, including shipping charges, air freight charges
and customs charges. Company agrees to reimburse Turn 2's authorized agent
for all such expenses incurred by it in connection with the transfer of
Endorsed Products to Turn 2 and/or Turn 2's agent.
10. Services of Xxxxx. If Company desires to utilize the services of
Xxxxx as a model in connection with photographs or drawings for advertising
or for personal appearances, Turn 2 agrees, at the reasonable request of
Company and upon adequate notice, to provide the services of Xxxxx at a time
and place reasonably convenient to the schedule of Xxxxx. Company agrees
that it will reimburse Turn 2 for reasonable travel (including first class
air fare), lodging, ground transportation and meal expenses incurred by Xxxxx
and one traveling companion designated by Xxxxx. Company further agrees it
will reimburse Turn 2's authorized agent for reasonable travel (including air
fare), lodging and meal expenses incurred in providing one representative to
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accompany Xxxxx. Company understands that if services are requested
hereunder, such services may be coordinated with similar services for others
entitled to the use of Xxxxx Identification in other connections. Company
further understands that such services may be required not more than once
during the Contract Period for up to one (1) hour, In the event that Company
elects to use the services of Xxxxx in connection with television
advertising, Company shall make all required union scale and union pension
and welfare payments. Company further understands that failure to utilize
services of Xxxxx pursuant to this section shall not result in any reduction
in payments to Turn 2 hereunder, nor may the obligation to provide services
be carried past the Contract Period. The obligations of Turn 2 to provide
the services of Xxxxx hereunder are subject to the condition that payments to
Turn 2 are current and up to date.
11. Force Majeure. If, at any time during this Agreement, Turn 2 or
Xxxxx is prevented from or hampered or interrupted or interfered with in any
manner whatever in fully performing its/his duties hereunder, by reason of
any present or future statute, law, ordinance, regulation, order, judgment or
decree, whether legislative, executive or judicial (whether or not valid),
act of God, earthquake, fire, flood, epidemic, accident, explosion, casualty,
lockout, boycott, strike, labor controversy (including but not limited to
threat of lockout, boycott or strike), riot, civil disturbance, war or armed
conflict (whether or not there has been an official declaration of war or
official statement as to the existence of a state of war), invasion,
occupation, intervention of military forces, act of public enemy, embargo,
delay of a common carrier, inability without default on Company's part to
obtain sufficient material, labor, transportation, power or other essential
commodity required in the conduct of its business; or by reason of any cause
beyond his reasonable control; or by reason of any other cause of any similar
nature (all of the foregoing being herein referred to as an "event of force
majeure"), then Turn 2's/Xxxxx'x obligations hereunder shall be suspended as
often as any such event of force majeure occurs and during such periods of
time as such events of force majeure exist and such non-performance shall not
be deemed to be a breach of this Agreement.
12. Default. (a) If either party at any time during the Contract
Period shall (i) fail to make any payment of any sum of money herein
specified to be made, or (ii) fail to observe or perform any of the
covenants, agreements or obligations hereunder (other than the payment of
money), the non-defaulting party may terminate this Agreement as follows: as
to subparagraph (i) if such payment is not made within ten (10) days after
the defaulting party shall have received written notice of such failure to
make payment, or as to subparagraph (ii) if such default is not cured within
thirty (30) days after the defaulting party shall have received written
notice specifying in reasonable detail the nature of such default. In order
to be a sufficient notice hereunder, any such written notice shall specify in
detail each item of default and shall specify the provision of this Agreement
which applies to each item of default, and shall specify in detail the action
the defaulting party must take in order to cure each such item of default.
The termination rights set forth in this section shall not constitute the
exclusive remedy of the nondefaulting party hereunder, however, and if
default is made by either party hereunder, the other may resort to such other
remedies as said party would have been entitled to if this section had
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been omitted from this Agreement. Termination under the provisions of this
section shall be without prejudice to any rights or claims which the
terminating party may otherwise have against the defaulting party.
(b) Notwithstanding anything herein to the contrary, the cure periods
set forth in subparagraphs (a)(i) and (a)(ii) above only apply to Company's
first default under this Agreement. Accordingly, Turn 2 may, after Company's
first default has occurred under either subparagraph (a)(i) or subparagraph
(a)(ii) above and has been cured, thereafter immediately terminate this
Agreement upon any further defaults by Company hereunder without providing
Company an opportunity to cure any additional defaults.
13. Termination. From and after the termination of the Contract
Period all of the rights of Company to the use of Xxxxx Identification shall
cease absolutely and Company shall not thereafter use or refer to Xxxxx
Identification in advertising or promotion in any manner whatsoever, it being
understood by Company that Xxxxx Identification may be used at any time by
others in connection with the advertisement and promotion of Products the
shipment of which is completed after the termination of the Contract Period.
It is further agreed that following termination of the Contract Period,
Company shall not advertise, promote, distribute or sell any item whatsoever
in connection with the use of any name, figure, design, logo, trademark or
trade name similar to or suggestive of Xxxxx Identification.
14. Inventory of Endorsed Products on Termination/Expiration. Any
Endorsed Products that may have been manufactured by or for Company prior to
the termination or expiration of the Contract Period may be sold by Company
during the ninety (90) day period next following the date of termination or
expiration; provided, however, that Company shall have no such rights unless
(a) Company is not in default of any of its obligations hereunder on the date
of termination or expiration, (b) within fifteen (15) days after the date of
termination or expiration, Company shall furnish to Turn 2 a written
statement of the number and description of Endorsed Products actually in
stock on the date of termination or expiration, (c) the quantity of Endorsed
Products in stock on the date of termination or expiration is not in excess
of a reasonable inventory based upon Company's selling requirements of
Endorsed Products during the Contract Period, (d) Company shall continue to
pay to Turn 2 with respect to such sales a royalty at the rates specified
herein, and (e) royalties payable pursuant to this section shall be paid
within thirty (30) days following the end of each calendar month with respect
to shipments made during such month.
15. Major League Baseball Trademarks. Nothing contained herein shall be
construed to convey to Company any rights to use the trademarks, logos or
uniform of the New York Yankees, Major League Baseball or any other
professional or amateur baseball association (including any member clubs or
teams of such association) in conjunction with the rights granted hereunder.
All rights to the use of such trademarks, logos or team identification must be
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acquired from the New York Yankees, Major League Baseball, or any other
appropriate rights holder.
16. Indemnity. Company agrees to protect, indemnify and save
harmless Turn 2, Turn 2's agent and Xxxxx, or any of them, from and against
any and all expenses, damages, claims, suits, actions, judgments and costs
whatsoever, including reasonable attorneys' fees, arising out of, or in any
way connected with, this Agreement, Company's default hereunder, the
negligence, actions, errors or omissions of Company or any claim or action
for personal injury, death or otherwise involving alleged defects in
Company's Products, provided that Company shall be given notice of any such
action or claim. Company agrees to provide and maintain, at its own expense,
general liability insurance and product liability insurance with limits no
less than $3,000,000 and within thirty (30) days from the date hereof,
Company will submit to Turn 2 a fully paid policy or certificate of insurance
naming Turn 2, Turn 2's agent and Xxxxx as additional insured parties,
requiring that the insurer shall not terminate or materially modify such
without written notice to Turn 2 at least twenty (20) days in advance
thereof.
17. Waiver. The failure of either party at any time or times to
demand strict performance by the other of any of the terms, covenants or
conditions set forth herein shall not be construed as a continuing waiver or
relinquishment thereof and each may at any time demand strict and complete
performance by the other of said terms, covenants and conditions.
18. Bankruptcy. If Company shall become bankrupt or insolvent, or if
Company's business shall be placed in the hands of a Receiver, Assignee or
Trustee, whether by voluntary act of Company or otherwise, the Contract
Period shall, at the option of Turn 2, immediately terminate.
19. Assignment. This Agreement shall bind and inure to the benefit of
Turn 2 and the successors and assigns of Turn 2. Nothing herein shall
prevent Turn 2 from assigning the monetary benefits of this Agreement as it
may so desire. Further, inasmuch as it is recognized that Turn 2 is the
representative of Xxxxx, Turn 2 may at any time assign this Agreement to
Xxxxx and, in such event, Turn 2 shall have no further obligation or
liability in connection herewith and Turn 2's position vis-a-vis Company in
connection herewith shall be in all respects the same as if Turn 2 had signed
this Agreement as agent rather than as principal from the beginning. The
rights granted Company hereunder shall be used only by it and shall not,
without the prior written consent of Turn 2, be transferred or assigned to
any other. In the event of the merger or consolidation of Company with any
other entity, Turn 2 shall have the right to terminate the Contract Period by
so notifying Company in writing on or before sixty (60) days after Turn 2 has
received notice of such merger or consolidation.
20. Arbitration. In the event a dispute arises under this agreement
which cannot be resolved, such dispute shall be submitted to arbitration and
resolved by a single arbitrator (who shall be a lawyer) in accordance with
the Commercial Arbitration Rules of the American
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Arbitration Association then in effect. All such arbitration shall take
place at the office of the American Arbitration Association located in New
York, New York. Each party is entitled to depose one (1) fact witness and
any expert witness designated by the other party, and to conduct such other
discovery as the arbitrator deems appropriate. The award or decision
rendered by the arbitrator shall be final, binding and conclusive and
judgment may be entered upon such award by any court.
21. Significance of Headings. Section headings contained herein are
solely for the purpose of aiding in speedy location of subject matter and are
not in any sense to be given weight in the construction of this Agreement.
Accordingly, in case of any question with respect to the construction of this
Agreement, it is to be construed as though such section headings had been
omitted.
22. Entire Agreement. This writing constitutes the entire agreement
between the parties hereto and may not be changed or modified except by a
writing signed by the party or parties to be charged thereby.
23. Governing Law. This Agreement shall be governed and construed
according to the law of New York.
24. Reservation of Rights. All rights not herein specifically
granted to Company shall remain the property of Turn 2 to be used in any
manner Turn 2 deems appropriate. Company understands that Turn 2 has
reserved to itself the right to authorize others to use Turn 2 Identification
within the Contract Territory and during the Contract Period in connection
with all tangible and intangible items and services other than Products
themselves.
25. No Joint Venture. This Agreement does not constitute and shall
not be construed as constituting a partnership or joint venture between Turn
2 and Company. Neither party shall have any right to obligate or bind the
other party in any manner whatsoever, and nothing herein contained shall
give, or is intended to give, any rights of any kind to any third person.
26. Authorization. The execution, delivery and performance of this
Agreement by Company and by Turn 2 has been duly authorized and approved by
the Board of Directors of Company and by the Board of Directors of Turn 2 and
constitutes a valid and binding obligation of Company and of Turn 2
enforceable in accordance with its terms.
27. Execution and Delivery . This instrument shall not be considered
to be an agreement or contract nor shall it create any obligation whatsoever
on the part of Turn 2 and Company, or either of them, unless and until it has
been personally signed by a representative of Turn 2 and by a representative
of Company and delivery has been made of a fully signed original. Acceptance
of the offer made herein is expressly limited to the terms of the offer.
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28. Liability. In no event (including, but not limited to, Xxxxx'x
or Turn 2's default hereunder) shall Xxxxx or Turn 2 be liable to Company (or
any entity claiming through Company) for any amount in excess of the amounts
of royalties actually received by Turn 2 hereunder, excluding the
reimbursement of expenses. Under no circumstances will Xxxxx or Turn 2, on
the one hand, or Company, on the other hand, be liable to the other or any
other entity for any special, consequential, indirect, exemplary and/or
punitive damages, or for loss of good will or business profits.
IN WITNESS WHEREOF, the par-ties hereto have caused this Agreement to
be executed as of the date first above written.
FAMOUS FIXINS, INC. TURN 2, INC.
By: /s/ Xxxxx Xxxxx By: /s/ Xxxxx Xxxxx
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Xxxxx Xxxxx Xxxxx Xxxxx
President President
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