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Exhibit 10.03
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ENDORSEMENT AGREEMENT
This Endorsement Agreement ("Agreement") is made and entered
into as of December 22, 1994, by and among the following parties, with respect
to the services of Xxxxx Xxxxxxx ("KI"):
(a) Xxxxx Xxxxxxx, Inc. ("KI Inc."), furnishing
the services of KI, Federal I.D. #953884612, c/o The Sterling/Xxxxxxx Co., 0000
Xxxxxx xx xxx Xxxxx, Xxxxx #00-00, Xxx Xxxxxxx, Xxxxxxxxxx 00000;
(b) The Sterling/Xxxxxxx Co. ("SW"), 0000
Xxxxxx xx xxx Xxxxx, Xxxxx #000, Xxx Xxxxxxx, Xxxxxxxxxx 00000;
(c) Xxxxxx Xxxxx, Inc. ("Xxxxxx"), 000 Xxxx 00xx
Xxxxxx, X.X. Xxx 000, Xxxxxx, Xxxxx Xxxxxxxx 00000; and
(d) Dynamic Classics, Ltd. ("Dynamic"),
00 Xxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxx Xxxxxx 00000.
1. Recitals. Dynamic desires to create a brand of exercise
equipment utilizing the name of KI, which is intended to replace its current
Shapeshop and Flexshop brandnames. The brandname for this new brand of exercise
equipment has yet to be determined but, for purposes of this Agreement, it shall
be referred to as the "KI Brand." Dynamic anticipates that sales of the KI Brand
exercise equipment will reach between $XXXXXX* to $XXXXXX* during the period
commencing 7/1/96 and ending 4/15/97, and $XXXXXX* to $XXXXXX* during the period
commencing 7/1/97 and ending 4/15/98. Dynamic's sales efforts in connection with
the KI Brand exercise equipment will be targeted toward major mass market
retailers, home shopping networks, and other widely-accepted channels of
distribution. KI, Inc. desires to provide the services of KI in connection with
the endorsement of the KI Brand exercise equipment. Therefore, Dynamic hereby
engages the services of KI, and KI Inc. hereby agrees to loan the services of
KI, on all of the terms and conditions set forth herein.
2. Term. The term of this Agreement shall commence
December 22, 1994 and expire on June 30, 1996 ("the Initial Term").
Dynamic is hereby granted the following options to renew the term
of this Agreement:
(a) One option for an additional two-year period
commencing July 1, 1996 and ending June 30, 1998 ("Option Period
#1"); and
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* A REQUEST FOR CONFIDENTIAL TREATMENT OF THIS INFORMATION HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
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(b) A second option for an additional two-year
period commencing July 1, 1998 and ending June 30, 2000 ("Option Period #2").
Each option must be exercised by written notice given not less than ninety (90)
days prior to the commencement date of the option period.
3. Endorsement. KI Inc. agrees that KI shall endorse
Dynamic's KI Brand of exercise equipment. KI Inc. shall have the absolute right
to approve the brandname for such line of exercise equipment. The brandname for
such line of equipment, once determined, shall be the joint property of Dynamic
and KI Inc., and Dynamic shall have no right to use such brandname beyond the
term of this Agreement, as lawfully extended pursuant to paragraph 2 hereof.
4. Personal Appearances.
(a) USA Appearance. KI will make one (1)
personal appearance on behalf of Dynamic within the United States, which shall
be at the Dynamic booth for The Super Show, held on February 5, 1995, at
Atlanta, Georgia. Such appearance shall be for the purpose of signing autographs
and shall last for a period of one (1) hour.
(b) Other Appearance. SW, on behalf of KI Inc.
and KI, will grant Dynamic two (2) additional one-half day appearance by KI on
behalf of Dynamic within the United States. It is contemplated that such
appearances will be on home shopping network programs, or other such channels of
distribution as shall be approved by SW on behalf of KI Inc. and KI. Such
appearances shall be (i) requested by Dynamic upon not less than two (2) weeks
prior notice, (ii) subject to KI's preexisting personal and professional
commitments, and (iii) subject to the approval of SW, on behalf of KI, Inc. and
KI.
(c) Travel. Travel expenses of KI in connection
with all scheduled personal appearances under this Agreement, as well the travel
expenses of KI's child's, the child's Nanny and an additional traveling
companion of KI's choosing (collectively referred to as KI's "entourage"), shall
be provided by Dynamic. KI and the members of her entourage shall travel via
first class air and portal to portal limousine ground transportation. In
addition, KI and the members of her entourage shall be lodged in first class
hotel accommodations and all of them shall be reimbursed for all meals and other
incidental expenses in connection with such appearances. All the above travel
expenses of KI and the members of her entourage shall be billed directly to
Dynamic. Notwithstanding the foregoing, if a personal appearance of KI is
conducted jointly by Dynamic and Xxxxxx, then all the above expenses shall be
shared by Dynamic and Xxxxxx on a 50/50 basis, although billed to Dynamic
directly.
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5. Photo Session. KI will participate in one (1) photo
session at a mutually acceptable time and place. Said photo session shall be
scheduled at KI's convenience upon not less than two (2) weeks prior notice, and
shall be subject to KI's convenience upon not less than two (2) week prior
notice, and shall be subject to KI's preexisting personal and professional
commitments. Such photo session shall be two (2) consecutive days in duration,
each day to consist of no more than eight (8) working hours; provided, however,
that if necessary, and at Dynamic's option, such photo session may be extended
to a third consecutive day to consist of no more than eight (8) working hours.
The above photo shoot shall be produced by SW and all images produced from the
photo shoot shall be the property of SW. The parties agree that all images from
such photo session must be retouched at the expense of Dynamic.
6. Videotapes. Dynamic shall have the right to
videotape KI's personal appearances on behalf of Dynamic under this Agreement
and to use the approved videotape or portions thereof only for non commercial,
trade consumer public relations purposes, and for no other purposes. Prior to
the use of such videotape, KI, Inc. shall have the absolute right to approve the
videotape.
7. Name, Photograph and Likeness. Dynamic shall have the
right to use KI's name, photograph, and likeness only in publicity releases,
trade and consumer advertising and packaging relating to the KI Brand exercise
equipment, subject to the terms of this Agreement, and for no other purpose. All
photos, illustrations or other materials involving the name or likeness of KI
which Dynamic desires to use (including all final retouched versions of photos
and the particular negatives which might be used) shall be submitted to SW, care
of Xxx Xxxxxxxx, at the address set forth above, for approval on behalf of KI
and KI, Inc., prior to any use of such materials. Any such materials submitted
in the foregoing manner shall be approved or rejected within ten (10) days of
its receipt by SW, and if no reply is received from SW within such ten (10) day
period, then Dynamic shall have the right to assume SW's approval and use the
materials submitted. SW agrees not to unreasonably withhold approval of such
materials. Following approval of such materials, Dynamic shall submit three (3)
units of each of such materials to SW upon their completion and printing. SW, on
behalf of KI and KI, Inc., shall have the further absolute right to approve the
content of the releases and advertising containing KI's photograph or likeness.
8. Compensation. KI, Inc. shall be compensated for the
services of KI in the manner set forth on Schedule A of this Agreement, attached
hereto and incorporated herein by this reference.
9. Product Approval. In order to ensure the quality of
the KI Brand of exercise equipment prior to any use of KI's name, photograph or
likeness in connection with any such equipment,
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Dynamic shall submit one (1) product sample of the proposed equipment to Xxxxxx,
care of Xxxx Xxxxxx, at the address set forth above, and one (1) sample of such
equipment to SW, care of Xxx Xxxxxxxx, at the approval or objection to the
sample equipment within a reasonable time following actual receipt of the sample
in question.
10. Account Executive Approval. KI, Inc. shall have the
right to approve the person or persons charged with managing her account with
Dynamic. An, notwithstanding any other provision of this Agreement to the
contrary, if Xxxxxx Xxxxxx of Dynamic should leave Dynamic, KI, Inc. shall have
the right to terminate this Agreement upon ten (10) days notice. If this
Agreement is terminated pursuant to the immediately preceding sentence, all
accrued benefits payable to KI, Inc. under this Agreement shall nevertheless be
paid to KI, Inc. and all royalties due under this Agreement shall be prorated to
the effective date of termination.
11. Insurance. During the term of this Agreement, Dynamic
shall maintain in effect, at its sole cost and expense, a comprehensive general
liability and product liability insurance policy, as well as an errors and
omissions policy covering all advertising, with minimum limits of $1,000,000 for
each occurrence and $2,000,000, in the aggregate, naming KI, Inc. and KI as
additional insureds. The carrier providing such coverage shall at all times
maintain at least a B+ rating according to the A.M. Best rating service. Such
insurance policy shall provide that it cannot be canceled or modified without
the insured first giving KI, Inc. and KI at least thirty (30) days written
notice. At the request of KI, Inc., Dynamic shall provide KI, Inc. with a copy
of the applicable policy and a certificate confirming the existence of said
insurance coverage.
12. Representations of Dynamic and Xxxxxx. Dynamic and
Xxxxxx hereby represent to KI, Inc., that they have been and are in compliance
with all licenses, permits and other governmental authorizations required for
the conduct of their business as now being conducted or proposed to be conducted
for the performance of this Agreement.
13. Additional Endorsers. During the term of this
Agreement, Dynamic shall not utilize the services of any person to endorse,
sell, market, or promote the KI Brand exercise equipment without prior written
approval of SW, on behalf of KI, Inc. and KI.
14. Injunctive Relief. In the event of a breach of this
Agreement, each of the parties shall be entitled to all remedies available to
them at law or equity, including, without limitation, injunctive relief.
15. Accounting.
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(a) For as long as Dynamic is obligated to pay
royalties to KI, Inc., and for a period of one year thereafter, Dynamic shall
keep separate true and accurate books and records in accordance with generally
accepted accounting principles consistently applied in which there shall be
reflected all sales of the products carrying the name and/or likeness of KI (the
"Products(s)"), the gross, wholesale and retail selling price of each Product,
and the amount of the royalty payable to KI, Inc. pursuant to this Agreement.
Such books and records shall contain enough detail so as to enable KI, Inc. to
ascertain the amount of all such royalties.
(b) Dynamic agrees to furnish to KI, Inc.,
within twenty-five (25) days after the end of each month during which royalties
are payable to KI, Inc., a statement, verified by a duly authorized
representative of Dynamic, showing the computation of the royalty payable to KI,
Inc. pursuant to this Agreement.
(c) For the sole purpose of verifying the
figures reported in any statement or report furnished by Dynamic to KI, Inc.
under this Agreement, a representative or representatives of KI, Inc. may,
during the period for which royalties are payable to KI, Inc. and for a period
of one (1) year thereafter, upon three (3) business days advance notice to
Dynamic and not more than twice in any year, examine any or all of the books and
records which Dynamic is required to maintain pursuant to subparagraph (a) of
this paragraph and all other records, documents, and material in the possession
of or under the control of Dynamic relevant to calculating royalties with
respect to the subject matter of this Agreement. Such books of account, records
and inventory records shall be made available to KI, Inc.'s representatives for
examination at the premises of Dynamic during normal business hours.
16. Miscellaneous Provisions.
(a) Merger. This Agreement supersedes any and
all prior written or oral agreements between the parties.
(b) Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of California
without regard to conflict of law principles.
(c) Attorney's Fees. The prevailing party in
any proceeding brought to enforce any provision of this Agreement shall be
entitled to recover the reasonable fees and costs of its counsel, plus all other
costs of such proceeding.
(d) Notices. All notices required to be given
and all materials required to be submitted pursuant to this Agreement shall be
made via certified or registered mail, postage prepaid, return receipt
requested, at the addresses set forth in the recitals to this Agreement.
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IN WITNESS WHEREOF, this Agreement has been executed as of the
date first set forth above.
XXXXX XXXXXXX, INC.
By
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XXXXX XXXXXXX, President
DYNAMIC CLASSICS, LTD.
By
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XXXXXX XXXXXX
XXXXXX XXXXX, INC.
By
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XXXX XXXXXX
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SCHEDULE A
COMPENSATION*
* A REQUEST FOR CONFIDENTIAL TREATMENT OF THIS INFORMATION HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
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