Exhibit 10.2
Services Agreement
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AGREEMENT dated as of the 15th day of August, 2005 by and between XXXXXX
XXXXXXX PRODUCTIONS, INC. f/s/o Xxxxxx Xxxxxxx, [ADDRESS] ("Lender") and XXXXXX
XXXXXXX VENTURES LLC, 000 X. Xxxxxx-Xxxxx Xxxx, 0xx Xxxxx, Xxxxxx-Xxxxx,
Xxxxxxxxxxxx 00000 ("Company").
1. Services.
(a) Reference is hereby made to the Assignment Agreement between the
parties of even date herewith ("Assignment Agreement"). The terms "Xxxxxxx
Indicia," "Indicia Rights" and "Marks" as defined in the Assignment Agreement
shall have the same meanings when used herein.
(b) During the first five (5) years of the Term (as hereinafter
defined), Lender agrees to furnish the personal services of Xxxxxx Xxxxxxx
("GF"), and to cause GF to use GF's best efforts to assist Company in the
exploitation of the Indicia Rights and Marks and to promote the products and
services of Company and Company's licensees (each, a "Licensee"), subject to
Paragraph 6(b) below. Lender shall furnish the personal services of GF for
(i) at least three (3) days of services per year for each agreement entered
into by Company with a Licensee, and (ii) at least seven (7) days of services
per year for businesses operated by Company (each, a "Company Business")
(collectively, "Guaranteed Days"); provided, that Company shall in good faith
negotiate with each Licensee to attempt to minimize the number of days of
personal services to be required by GF for the benefit of such Licensee.
GF's services will be as and where designated by Company and the Licensees,
subject to the limitations set forth in this Agreement. GF's services may
include, without limitation, at Company's and the Licensees' election:
preparation of advertising, promotional, publicity and other materials;
participation on camera, voice over or other services for one or more
audiovisual recordings; audio recordings; still photographs; and/or
participation in media interviews, press events or personal appearances.
After the initial five (5) years of the Term, Lender agrees to use reasonable
good faith efforts to furnish the personal services of GF as provided in this
Paragraph 1(b).
(c) Guaranteed Days for services shall be on dates and at times and
places as designated by Company and the Licensees and shall be subject only to
GF's prior professional contractual commitments which as of the date of the
request make GF unavailable when and where required by Company or the
applicable Licensee; provided, however, that GF shall not be required to
perform services on any Saturday or Sunday, nor to perform services on any
Wednesday outside of Houston or that would conflict with his community and
religious obligations on such day. Lender shall use best efforts to cause GF
to be available when requested by Company and the Licensees.
(d) In addition to the services described in Paragraph 1(b) above,
during the first five (5) years of the Term (as hereinafter defined), Lender
agrees to furnish the personal services of GF to regularly attend Company
meetings and functions deemed significant by Company, subject to Lender's
reasonable approval, provided, however, meetings with Company shareholders,
potential investors, and investment bankers shall be deemed approved. After
the initial five (5) years of the Term, Lender agrees to use reasonable good
faith efforts to furnish the personal services of GF as provided in this
Paragraph 1(d).
2. Rights. All materials created or produced hereunder are
referred to herein as "Materials." As between Company, on the one hand, and
Lender and GF, on the other hand, Company shall be the owner of all right,
title or interest in such Materials including, without limitation, all
copyrights therein. Such Materials may be used and exploited in any and all
media now known or hereafter devised throughout the world in perpetuity, and
may include, without limitation, the following:
Company's and the Licensees' websites and on-line or other
Internet activities (including banner and other advertising
of Company's and the Licensees' products and services on
third party websites);
Point of purchase displays;
CD-Roms;
Print Ads (e.g., newspapers and magazines);
Television Advertisements and Infomercials (including
without limitation use of advertisements in broadcast,
cable and all other forms of television and specifically
including, without limitation, Internet use of such
advertisements);
Radio advertisements including, without limitation, any
audio use (e.g., Internet and/or analog or digital radio);
Outdoor advertising (e.g., billboards); and
Direct response marketing, including, without limitation,
catalogs and direct mail.
3. Travel/Accommodations. To the extent GF is required to
travel at Company's or a Licensee's request more than 50 miles outside of
Houston, Texas in connection with the performance of his services, GF will be
given a roundtrip first class ticket and, if used, a companion ticket (by
air, if appropriate, and between Houston, Texas and the destination),
exclusive ground transportation and first class hotel (suite, if available)
accommodations. Notwithstanding the foregoing, GF may elect to arrange for
alternate means of transportation in lieu of any air transportation otherwise
to be provided for by Company pursuant to the preceding sentence, for which
GF shall be entitled to be reimbursed, upon his submission of reasonable
receipts to Company, for his actual alternative transportation costs but in
no event to exceed the costs of the first class air transportation offered by
Company.
4. Term. The term of this Agreement (the "Term") shall be for the
remainder of the natural life of Xxxxxx Xxxxxxx, subject to suspension and/or
termination at Company's sole election in the event of breach and/or events
of force majeure as herein provided.
5. Compensation. In full consideration of Lender furnishing GF's
exclusive services hereunder and for all of the rights granted by Lender
herein, and provided that Lender has not
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materially breached any of its representations, warranties or agreements
hereunder, Company agrees to pay and award, as applicable, and Lender agrees
to accept the following:
(a) Beginning on the date of the execution and delivery of this
Agreement, and continuing yearly for the balance of the Term, Lender shall
receive an annual payment of One Hundred Twenty Thousand Dollars ($120,000)
(pro-rated for partial years) (the "Base Payment"), to be paid in equal
monthly installments.
(b) Beginning with the 2005 calendar year and continuing thereafter
(including following the expiration of the Term), Company shall pay to Lender
an amount (the "Bonus") to be determined as follows:
(i) with respect to any calendar year with respect to which Net
Active Business Income (as defined below) is equal to or greater than Two
Million Dollars ($2,000,000) but less than Four Million Dollars ($4,000,000),
the Bonus shall be equal to (A) Two Hundred Fifty Thousand Dollars ($250,000)
less (B) the Base Payment for the applicable year;
(ii) with respect to any calendar year with respect to which Net
Active Business Income is equal to or greater than Four Million Dollars
($4,000,000) but less than Six Million Dollars ($6,000,000), the Bonus shall
be equal to (A) Five Hundred Thousand Dollars ($500,000) less (B) the Base
Payment for the applicable year;
(iii) with respect to any calendar year with respect to which Net
Active Business Income is equal to or greater than Six Million Dollars
($6,000,000) but less than Eight Million Dollars ($8,000,000), the Bonus shall
be equal to (A) One Million Dollars ($1,000,000) less (B) the Base Payment for
the applicable year; and
(iv) with respect to any calendar year with respect to which Net
Active Business Income is equal to or greater than Eight Million Dollars
($8,000,000), the Bonus shall be equal to (A) One Million Five Hundred
Thousand Dollars ($1,500,000) less (B) the Base Payment for the applicable
year.
(c) The applicable Bonus, if any, shall be payable to Lender (less
the One Hundred Twenty Thousand Dollar ($120,000) Base Payment paid to Lender
with respect to such year, if applicable) within ninety (90) days of the end
of each calendar year. "Net Active Business Income" shall mean the net
income of the Company, MM Companies, Inc. and any and all Controlled Entities
(as defined in the limited liability company agreement of the Company) (as
determined in accordance with GAAP, provided, however, that the applicable
Bonus shall not be deducted as an expense in the calculation of Net Active
Business Income) derived from the exploitation of the Indicia Rights and
Marks other than in connection with Traditional Licenses. The Base Payment
and the Bonus shall be referred to collectively as the "Fee."
(d) All payments to be made hereunder shall be subject to such
withholding or other deduction as required by law.
6. Exclusivity. GF's services will be exclusive to Company during
the Term and throughout the world in connection with the exploitation,
promotion and other use of the Indicia
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Rights and Marks, including, without limitation, in all categories of products
and services and in premium promotions and commercial tie-ins; provided,
however, that (a) Company acknowledges that Lender and/or GF have entered into
those endorsement agreements described on Exhibit A attached hereto (the
"Existing Agreements") and that, accordingly, as of the date hereof, GF
services will not be exclusive to Company in connection with the products
described on Exhibit B attached hereto and (b) GF services will not be
exclusive to Company in connection with books, recordings, books on tape,
movies, TV (including reality TV and hosting), on camera appearances and
personal appearances, boxing and sport commentary, and boxing, provided that
none of the foregoing services may in any manner involve the licensing,
endorsement or promotion of the Marks in connection with any products and
services (except those products and services described on Exhibit B attached
hereto). As a material inducement to Company to enter into this Agreement,
Lender warrants and represents that (i) there are no existing agreements or
understandings in effect pertaining to GF's services and the Marks and Indicia
Rights other than the Existing Agreements, and (ii) the prior licenses and
endorsements under the Existing Agreements relate solely to the product and
service categories described in said Exhibit B and to no other.
7. Guilds and Unions. This Agreement and GF's services shall not be
subject to the terms and conditions of any union, guild or collective
bargaining agreement(s), provided, however, Company or the applicable
Licensee shall in each instance engage an advertising agency, production
company or payroll service (collectively "Union Signatory") to engage Lender
to furnish the services of GF to Company for any services hereunder, if any,
subject to the jurisdiction of AFTRA or SAG under the minimum terms required
by AFTRA or SAG, as applicable, provided, further that the compensation to
Lender hereunder shall not increase as a result thereof, nor shall it
increase Company's costs or expenses pursuant hereto except in respect of the
fee payable to such Union Signatory. Without limitation of the foregoing,
Company shall be entitled to credit the amounts paid to Lender by such Union
Signatory against sums payable hereunder or under the Assignment Agreement
including, without limitation, union minimum scale compensation and payments
for so-called "supplemental market" uses.
8. Approvals.
(a) Lender shall have the right to approve the still photographs of
GF used hereunder, which approval shall not be unreasonably withheld or
delayed. Any disapproval by Lender must be in writing and include the
specific reason(s) for such disapproval, and once Company has modified the
applicable material(s) in a manner that addresses the reason(s) for
disapproval, such material(s) shall be deemed approved. The parties
acknowledge and agree, however, that in no event will the Indicia Rights or
Marks be used in connection with any product containing, or in any other
context involving, alcohol, tobacco, firearms, political statements or sexual
content.
(b) Lender shall have the right to approve products proposed by
Company to be sold under the Marks, such approval not to be unreasonably
withheld or delayed (it being acknowledged that the withholding of approval
shall be conclusively deemed reasonable in respect of any product containing
alcohol, tobacco, firearm, political statements or sexual content). Any
proposed products submitted to Lender but not approved or disapproved within
thirteen (13) calendar days shall be deemed approved. Any disapproval by
Lender must be in
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writing and include the specific reason(s) for such disapproval, and once
Company has modified the applicable product in the manner that addresses the
reason(s) for disapproval, such product shall be deemed approved.
(c) Lender shall have the right of approval over the general format
of (e.g., appearance on a talk-show), principal people involved with (e.g.,
host of a talk-show) and other celebrities with whom GF is to appear (but
specifically excluding other celebrities appearing at different times at the
same event or on the same program) in connection with each personal
appearance required of GF pursuant to this Agreement, which approval shall
not be unreasonably withheld or delayed. Any description of event submitted
to Lender but not approved or disapproved within thirteen (13) calendar days
shall be deemed approved. Any disapproval by Lender must be in writing and
include the specific reason(s) for such disapproval, and once Company has
modified the applicable event in a manner that addresses the reason(s) for
disapproval, such event shall be deemed approved. The parties acknowledge
and agree that in no event will Company or the Licensees use the Name and
Likeness pursuant to this Agreement in connection with any product
containing, or in any other context involving, alcohol, tobacco, firearm,
political statements or sexual content.
(d) Notwithstanding anything contained herein to the contrary, to the
extent that Company has licensed any of its rights hereunder to any
Licensees, Company's obligations pursuant to this Paragraph 8 shall be
satisfied by contractually requiring such Licensees to comply with the
provisions contained in this Paragraph 8. Once Lender has approved of any
item hereunder, including, without limitation, photographs, said approval
shall be deemed to apply to all future uses of such item and Company and the
Licensees shall not be required to obtain Lender's approval for any future
uses thereof. All rights of approval herein by Lender are personal to any
one (1) of GF, Xxxxxx Xxxxxxx, Xx. or Xxxxxx Xxxxxxx, III (collectively, the
"Designated Approval Parties"), and accordingly, in the event for any reason
(including, without limitation, in the event of the death of all three (3)
Designated Approval Parties) that all of the Designated Approval Parties are
unable to review materials and grant approvals, then the last of the
remaining Designated Approval Parties may designate two (2) additional
members of the Xxxxxxx family to exercise the approval rights herein after
the last of the Designated Approval Parties is unable to review materials and
grant approvals.
9. Assignment Agreement. Any material breach or default by Lender
under the Assignment Agreement shall constitute a material breach or default
by Lender under this Agreement and any event that would give Company the
right to suspend, extend, terminate or withhold any payments under the
Assignment Agreement shall similarly give Company the right to suspend,
extend, terminate or withhold any payments under this Agreement, as the case
may be.
10. Conditions Precedent. This Agreement and Company's obligations
are subject in all respects to the securing of any and all United States
employment verification as may be required by any United States governmental
authority or agency for the purpose of enabling GF to render services
hereunder. Upon Company's request, Lender and GF shall fully cooperate with
Lender in any effort to secure any and all required labor permits and visas
for any services
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to be rendered outside of the United States. Lender shall be solely
responsible for GF's passport as required.
11. Performance Standards. GF shall render all services hereunder as
reasonably required by Company. Furthermore, GF shall render all services
promptly in a diligent, conscientious, artistic and efficient manner to GF's
best abilities, either alone or in cooperation with others; provided,
however, that under no circumstances shall GF be required to participate in
any joint or other appearances that would be contrary to GF's consistently
articulated personal moral standards and beliefs. As between Lender and GF,
on the one hand, and Company, on the other hand, Company shall have sole
creative control (subject to the terms hereof) and sole business control with
respect to the development, production, distribution and exploitation of the
Materials and all rights granted under this Agreement.
12. Ownership. As between Lender and GF, on the one hand, and
Company, on the other hand, Company shall own all right, title and interest
in and to, and the results and proceeds of GF's services hereunder, and each
element(s) and part(s) thereof including without limitation the Materials and
GF's contribution thereto (collectively, "Work") in perpetuity in any and all
media now known or hereafter devised throughout the world. Without
limitation of the foregoing, Lender hereby acknowledges that the Work is
specially ordered or commissioned for use as a contribution to a motion
picture or other audio visual work or sound recording and that all such Work
shall be considered a work made for hire under the United States Copyright
Act. As between Lender and GF, on the one hand, and Company, on the other
hand, Company shall be considered the sole author thereof for all purposes
and shall own all of the rights comprised in and to the copyright and
renewals and extensions of copyright of such Work and that, as between Lender
and GF, on the one hand, and Company, on the other hand, only Company shall
have the right to copyright the same and to renew or extend the copyright to
the same in Company's name or the name of its nominee(s). To the extent that
the Work or any element thereof does not vest in Company, or if requested by
Company in writing, the applicable Licensee, as a work made for hire, Lender
hereby irrevocably assigns and transfers in whole to Company or such
Licensee, as applicable, all right, title and interest in and to such Work
and the results and proceeds thereof, including, without limitation, all
copyrights and renewals and extensions of copyright therein throughout the
universe, in all languages, in perpetuity, to the extent that Lender or GF
has, had or will have any interest therein. The assignment by Lender
hereunder also includes, without limitation, the assignment, on Lender's and
GF's own behalf and on behalf of their heirs, executors, administrators,
successors and assigns, in perpetuity, of all rental and lending rights under
national laws (whether implemented pursuant to the EC Rental and Lending
Rights Directive or otherwise) to which they may now be or hereafter become
entitled with respect to the Work and Lender acknowledges that the
consideration hereunder includes consideration for all such lending and
rental rights and is an adequate part of the revenue derived or to be derived
from said rights and constitutes equitable remuneration. Lender hereby
waives any and all claims that Lender or GF may now or hereafter have in any
jurisdiction to so called "moral rights" or rights of "droit moral" or
similar rights (including, without limitation, any right to assert a claim
for equitable remuneration) with respect to the Work. Without limitation of
the foregoing, Lender agrees, on Lender's and GF's own behalf and on behalf
of their heirs, executors, administrators, successors and assigns, not to
institute, support, maintain or permit directly or indirectly any litigation
or proceedings instituted or maintained on the ground that
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Company's or any Licensee's (or their designees') exercise of the rights
granted in the Work in any way constitutes an infringement or violation of any
rental or lending right. For the avoidance of doubt, neither Company nor the
Licensees are transferring to Lender or GF any right to or interest in any
copyright, trademark or service xxxx relating to any copyright, trademark,
service xxxx or other proprietary property (or to any elements of any of the
foregoing) owned or controlled by Company or any Licensees or any affiliate or
subsidiary of any of the foregoing. Lender further agrees that neither Lender
nor GF will seek (i) to challenge, through the courts, administrative
governmental bodies, private organizations, or in any other manner the rights
of Company or any Licensee to exploit the Work, or (ii) to thwart, hinder or
subvert the intent of the preceding grants and conveyances to Company and the
Licensees and/or the collection by Company and/or the Licensees of any
proceeds relating to the rights conveyed hereunder.
13. Termination.
(a) If for any reason, beyond Company's control, such as boycotts,
war, acts of God, labor troubles, strikes, restraints of public authority, or
any similar or dissimilar occurrence, Company is prevented from having GF
render services hereunder or from producing or using the Materials, or any of
them, for a period thirty (30) days, then Company shall have the right, at
its sole option, to terminate this Agreement by written notice to Lender to
that effect, and in that event, but without limitation of Company's rights or
remedies, any amount of the Fee which is unpaid shall be canceled. Lender's
rights in connection with an event of force majeure are governed by Paragraph
20(h) below.
(b) If Lender shall materially breach the terms of this Agreement, or
fail, neglect or refuse to perform its obligations hereunder, Company may at
its sole option, but without limitation of Company's rights or remedies,
discontinue paying Lender the Fee, and Company shall pay Lender such lesser
amount as a court of competent jurisdiction decides is fairly representative
of the value to the Company of the services and rights conveyed hereunder
subsequent to or as a result of such breach.
(c) If Lender or GF pleads guilty to or is convicted of a felony or
is convicted of, pleads guilty to, or commits any other crime or act of moral
turpitude or tending to shock, insult or offend the people of this nation or
any class or group thereof, then Company shall have the right to immediately
terminate this Agreement, and in that event, the Fee paid and/or owing to
Lender for the term during which such offense took place shall be returned to
Company and, with respect to any amount which is unpaid, the Fee shall be
canceled. Company's decision on all matters arising under this Paragraph
13(c) shall be conclusive.
(d) Nothing contained in this Paragraph 13 shall affect or limit any
other right or remedy, at law or in equity, which may otherwise be available
to Company.
(e) Upon any Termination Trigger, this Agreement shall be
automatically terminated without requirement of any action by Lender, subject
to any then existing licenses or other agreements made by Company with
unaffiliated third parties. Company shall execute any agreements or other
instruments reasonably requested by Lender for the purpose of giving effect
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to such termination. The consideration recited in Paragraph 5 of this
Agreement is and shall be deemed to constitute adequate consideration for the
covenants of Company in this Paragraph 13(e). The occurrence of any of the
following events shall constitute a "Termination Trigger" for purposes of
this Agreement:
(i) Company makes any written admission of insolvency;
(ii) Company files a voluntary petition in bankruptcy or a
voluntary petition seeking reorganization or to effect a plan or an
arrangement with or for the benefit of Company's creditors, or an involuntary
petition to such effect is filed and not dismissed within ninety (90) days;
(iii) Company applies for or consents to the appointment of a
receiver, trustee or conservator for any portion of Company's property, or
such appointment is made without Company's consent and not removed within
ninety (90) days;
(iv) Occurrence of any event of any of the foregoing types with
respect to MM Companies, Inc.
14. Representations, Warranties And Covenants. Lender hereby represents,
warrants and covenants that:
(a) Competitive Protection. Neither Lender nor GF has heretofore
rendered any services directly or indirectly, in commercials or
advertisements on behalf of any product or service except for those products
and services identified on Exhibit B attached hereto. Lender further
represents, warrants and covenants that neither Lender nor GF will, at any
time, whether prior to, during or after the Term: (i) discuss, negotiate
with, enter into any agreement or render any services of any kind, directly
or indirectly for any products and services, except for those products and
services described on Exhibit B attached hereto; (ii) permit the use of GF's
name, photograph, likeness, endorsement, voice or biographical material for
any products or services, except for those products and services described on
Exhibit B attached hereto; (iii) permit the use of GF's name, photograph,
likeness, endorsement, voice or biographical material in any manner in
advertising or publicizing any products or services, except for those
products and services described on Exhibit B attached hereto; or (iv) grant
any rights that would be inconsistent with or otherwise reduce the value of
the rights granted hereunder. Said exclusivity is subject to the exceptions
described in Paragraph 6 above.
(b) Existing Agreements. Lender hereby represents and warrants that
there are no existing agreements or understandings in effect pertaining to
the subject matter hereof other than the Existing Agreements. None of the
rights granted under the Existing Agreements will be enlarged.
(c) No Infringement. Lender hereby represents and warrants that any
and all incidents, dialogue, characters, actions, "gags," material, ideas,
inventions, ad lib, and other literary, dramatic and musical material
written, composed, submitted, added, improvised, interpolated and invented by
Lender and/or GF pursuant to this Agreement shall be wholly
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original and shall not infringe upon or violate any copyright of or the right
of privacy or any other rights of any person or entity and shall not
constitute a libel or slander of any person, firm or corporation.
(d) Compliance with Law. Lender and GF will comply with all
applicable laws, regulations, orders, and ordinances in rendering the
services provided for herein and all such services shall be promptly rendered
and shall be of first quality.
(e) Independent Contractor. Lender acknowledges that Lender and GF
are independent contractors.
(f) Right to Enter Agreement. Lender and GF have full power and
authority to enter into this Agreement and to perform all of the obligations
hereunder without violating the legal or equitable rights of any third
party. The performance by Lender and GF of services hereunder and/or the
exploitation of rights granted shall not violate or conflict with any
contract, agreement to which either such party is bound.
(g) Confidential Information. Neither Lender nor GF will disclose to
any party or utilize any confidential or proprietary information obtained
hereunder regarding Company the Licensees, or their respective customers,
products or services. Unless otherwise required by any applicable statute,
rule or regulation, Lender and GF will keep the terms and conditions of this
Agreement confidential. Notwithstanding the foregoing, nothing herein
contained shall be construed to prevent Lender and/or GF and/or their duly
authorized representatives from testifying in any court of competent
jurisdiction with respect to the aforementioned information and terms and
conditions in any action instituted to enforce the rights of Lender and/or GF
under the terms of this Agreement.
(h) No Commissions. Company shall not be under any obligation for
the payment of any commissions or fees to any agent or other representative
of Lender and/or GF on account of this Agreement.
(i) Testimonial Affidavits. If and to the extent Company or any
Licensees shall require, for the purpose of complying with legal or
broadcaster or industry requirements concerning the use of testimonials and
endorsements in advertising or promotion for certain products or services,
Lender will furnish appropriate affidavits attesting to GF's use of and
preference for such products or services.
(j) Insurability. GF is insurable and will cooperate with Company in
procuring disability and/or life insurance pursuant to Paragraph 16 below.
15. Indemnity.
(a) Lender agrees to indemnify and hold Company harmless against any
and all loss, damage and expense, including attorneys' fees and costs,
arising out of any claims, demands, actions, suits or prosecutions that may
be instituted against Company by reason of (i) any material breach by Lender
of any of Lender's warranties, representations or agreements set forth in
this Agreement and/or in the Assignment Agreement or (ii) any representation,
information or
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material supplied by Lender and/or GF to Company or any Licensee in connection
herewith and/or in connection with the Assignment Agreement (collectively,
"Indemnifiable Losses"). Pending the determination of any claim, Company may
withhold sums due to Lender hereunder or pursuant to the Assignment Agreement
in reasonable proportion to the potential liability of Company with respect to
such claim. Company shall have the absolute right to control the defense of
any such claim. Company agrees that Lender's aggregate liability to Company
under this Agreement and the Assignment Agreement for all Indemnifiable Losses
will not exceed the lesser of (x) the total maximum value of the Fee and the
Assignor Royalty (as defined in the Assignment Agreement) payable pursuant to
the Assignment Agreement, in each case solely to the extent such amounts are
to be payable to Lender and/or GF following the earlier of (A) the date that a
third party provides Company and/or Lender and/or GF with a claim or demand
for which Lender's indemnity hereunder applies, (B) the filing of a suit
against Company and/or Lender and/or GF with a claim or demand for which
Lender's indemnity hereunder applies, and (C) the date Company makes a written
claim or demand against Lender and/or GF for which Lender's indemnity
hereunder applies, and (y) Six Million Dollars ($6,000,000) (the lesser of (x)
and (y), the "Cap"). For purposes of clarification and by way of example only,
if a claim or demand is made on January 1, 2007 for which Lender's indemnity
hereunder applies, then Lender's total liability in connection therewith,
together with Lender's liability for any other Indemnifiable Losses, will not
exceed the total maximum value of and shall be recovered solely by offset
against, payments of the Assignor Royalty (as defined in the Assignment
Agreement) and the Fee, in each case to the extent to be paid following
January 1, 2007, but in all events limited by the maximum $6 million amount
set forth in clause (y) of the definition of the Cap. Company hereby
acknowledges that Lender does not make any representations or warranties
relating to Lender's intellectual property rights except as specifically
provided for under this Agreement or the Assignment Agreement. Except for the
remedies specified in Paragraph 9 of the Assignment Agreement, the
indemnification provided for in this Paragraph 15(a) shall be the sole and
exclusive remedy of Company for any Indemnifiable Loss. In the event of any
conflict between this Paragraph 15(a) and any provision of any other agreement
or instrument entered into or delivered in connection with the transactions
contemplated by this Agreement, this Paragraph 15(a) shall govern.
(b) Company agrees to indemnify and hold Lender and GF harmless as to
all damages and costs, including attorneys' fees and costs resulting from all
claims by a third party as a result of any claims or representations made by
Company or any Licensees in any Materials produced by Company or Licensees
hereunder or the use thereof or as a result of the material breach by Company
of Company's warranties, representations or agreements hereunder.
(c) Company shall have the absolute right to take over in any
proceeding brought against Lender and/or GF relating to the Marks pursuant to
this paragraph and no settlement will be entered into by Lender and/or GF
relating to the Marks without prior written approval of Company.
16. Insurance.
(a) Company shall have the right to protect its interests hereunder
by taking out an insurance policy on the life of GF and/or any occurrence of
GF's becoming disabled and unable
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to render services hereunder. Lender agrees to make GF available for any
reasonable physical examinations that may be necessary to obtain said policy
at a mutually agreeable place and time. If Lender so desires, GF shall have
the right to have a doctor of his choice present at any such examination at
Lender's sole cost.
(b) Company shall obtain and maintain at its own expense, commencing
at least thirty (30) days prior to the date of commencement of distribution
of products pursuant to this Agreement or the Assignment Agreement, umbrella
liability insurance with coverage of no less than $10,000,000, and product
liability insurance, naming Lender as an additional insured, from a qualified
insurance carrier and, with respect to the product liability insurance, in a
reasonable amount in light of the category of products involved; provided,
however, that to the extent that the rights to any products are licensed by
Company to a third party pursuant to the Assignment Agreement, Company's
obligations pursuant to this paragraph shall be satisfied by contractually
requiring such licensee to obtain such insurance with Company and Lender to
be named as additional insureds. These policies shall specify that they may
not be canceled by the insurer except after thirty (30) days' prior written
notice by the insurer to Lender.
17. Comparative Advertising.
(a) Lender acknowledges that GF's currently existing positive image
was the major factor in Company's entering into this Agreement, and that the
continuation of said positive image and its positive reflection on Company's
and the Licensees' products and services is of the essence of this
Agreement. Accordingly, neither Lender nor GF will engage in any act
concerning Company or the Licensees, or their respective products, services
or personnel, or make any statement concerning same which, if either became
publicly known, would or might impair Company or any of the Licensees, or the
public's image of Company's or any of the Licensees' products or services or
personnel or which would in any way frustrate the purposes of this Agreement.
(b) Lender recognizes that GF is rendering valuable services to
Company and the Licensees, in the creation of goodwill for Company and the
Licensees and their respective products and services. Accordingly, Lender
agrees that, at no time, whether prior to, during or after the Term, will
Lender or GF render services or permit the use of any aspect of GF's Name and
Likeness in advertising or publicity for any other party where such
advertising or publicity damages said goodwill by demeaning or denigrating
Company or any of the Licensees, or any their respective products, services
or personnel.
18. Accountings and Reports.
(a) Company agrees to keep full and accurate books of account
respecting the Net Active Business Income. Lender shall have the right at
Lender's own expense, and not more often than once in any calendar year, to
examine said books and records on prior written notice to Company of at least
thirty (30) days, insofar as said books and records concern the Net Active
Business Income, for the sole purpose of verifying the accounting statements
sent by Company to Lender during the two (2) years prior to the commencement
of such audit. Lender may make
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such examination for a particular statement only once, and only within two (2)
years after the date when Company sends Lender such statement. In the event
that Lender shall examine such records, such examination shall be conducted by
an independent auditor selected by Lender and reasonably approved by Company,
such examination being conducted in such manner as to not unduly interfere
with the business of Company. Lender's representatives shall not disclose to
any other person, firm or corporation any information acquired as a result of
any such examination; provided, however, that nothing herein contained shall
be construed to prevent Lender and/or its duly authorized representatives from
testifying in any court of competent jurisdiction with respect to the
information obtained as a result of such examination, in any action instituted
to enforce the rights of Lender under the terms of this Agreement.
(b) Statements of Net Active Business Income shall be furnished to
Lender within ninety (90) days after the close of Company's fiscal year. All
statements rendered by Company to Lender shall be binding upon Lender and not
subject to any objection by Lender for any reason unless specific objection in
writing, stating the basis thereof, is given to Company within two (2) years
from the date rendered. Failure to make specific objection within said time
period shall be deemed approval of such statement. Lender will not have the
right to bring an action against Company in connection with any statement or
payment hereunder unless Lender commences the suit within six (6) months from
the date such written objection, if any, is so given.
19. Lender Endorsement Proposals. If Lender requests in writing that
Company grant to a third party the right to utilize GF's services in
connection with a particular product or service in an arrangement described
by Lender in reasonable detail (including, without limitation, as to proposed
grantees, financial terms and products/services), and Company fails to make a
good faith effort to (x) utilize GF's services in connection with such
product or service itself or (y) grant such rights in connection such product
or service to a third party within eighteen (18) months following Company's
receipt of Lender's written request therefor, then upon Lender's written
request following such eighteen (18) month period, Company will waive the
exclusivity provisions hereunder for the sole purpose of enabling Lender to
grant such rights to a third party and if the parties are unable to agree
upon such terms, the parties shall submit the matter on an expedited basis
for arbitration in accordance with the procedures described in Paragraph
19(b) below; provided, however, that with respect to a requested grant to
utilize GF's services in connection with the operation of restaurants, the
foregoing period shall be nine (9) months in lieu of eighteen (18) months,
Paragraph 19(b) below will not apply and in no event will any Marks be used
in connection with the sale of alcohol. The terms and conditions of any such
grant of rights by Lender, other than the advance, royalty amount, and
guarantee, if any, shall be consistent with customary industry terms, and
subject to Company's prior written approval, not to be unreasonably withheld
or delayed and Lender shall be required to disclose to Company all of the
terms and conditions of any such proposed agreement (including, without
limitation, the amounts of the advance, royalty and guarantee, if any).
Notwithstanding the foregoing, Company shall not be required to comply with
the foregoing procedures and/or waive any exclusivity provisions hereunder if:
(a) the requested grant of rights would conflict with an existing or
contemplated grant of rights at or about the time the request is made by
Lender;
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(b) Company determines that the requested grant of rights (i) would
diminish the good will attaching to one or more of the Marks and/or Xxxxxxx
Indicia, in whole or in part, (ii) is contrary to the best interests of
Company and/or (iii) is inconsistent with Company's business plan for the
exploitation of the Indicia Rights and/or the Marks; provided, however, that
if Lender disagrees with Company's determination pursuant the foregoing (i),
(ii) or (iii), the parties shall submit the matter on an expedited basis to
the American Arbitration Association in New York, New York in accordance with
the rules promulgated by said association before a single arbitrator that is
an expert in trademark licensing, and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction over this
Agreement, in which event, the prevailing party shall be entitled to recover
any and all reasonable attorney's fees and other costs incurred in connection
with the arbitration; or
(c) if Company is willing to itself enter into the agreement with the
requested third party under the proposed terms.
20. General Provisions.
(a) Inspection of Materials. Lender and GF waive any right to
inspect or approve the Materials (except as otherwise set forth herein) and
Company shall have no liability for any visualization or audio distortion
which may occur to the Materials, including, but not limited to blurring,
distortion, alteration or optical illusion.
(b) Successors and Assigns; Assignment. The terms and conditions of
this Agreement will inure to the benefit of and be binding upon the
respective successors and permitted assigns of the parties. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by either party hereto without the prior written consent of the
other party; provided, however, that (i) Company may assign this Agreement
(A) in connection with a merger or sale of all or a substantial portion of
Company's stock or assets, (B) to any entity (x) of which Xxxxxx Xxxxxxx
Ventures LLC or MM Companies, Inc. is the managing member, sole general
partner or sole director, or (y) which provides Lender and GF with the same
management rights provided to Lender and GF pursuant to Section 3 of the
limited liability company agreement of Company, or (C) with the prior written
consent of Lender or GF or their successors in interest; and (ii) Company may
license any of its rights hereunder and Company and its licensees may
subcontract any portion of the creation and production of the Work hereunder
without restriction. Any purported assignment by either party contrary to
the terms of this paragraph shall be null and void.
(c) Governing Law. This Agreement will be governed by and construed
and enforced under the internal laws of the State of New York, without
reference to principles of conflict of laws or choice of laws. Subject to
the limited instances in which the expedited arbitration provision of
Paragraph 19 hereof shall apply, any controversy or claim arising under, out
of, or in relation to this Agreement or any breach or alleged breach hereof,
shall be determined and settled by arbitration, pursuant to the rules then
obtaining of the American Arbitration Association ("AAA"), and the procedures
set forth herein. In the event of an inconsistency between the rules of the
AAA and the procedures set forth herein, the procedures set forth herein
shall control. The location of the arbitration shall be in New York, New
York.
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The arbitration shall be conducted by a panel of three (3) neutral arbitrators
who are independent and disinterested with respect to the parties, the
Agreement, and the outcome of the arbitration. The parties shall first attempt
to select mutually the three (3) arbitrators. If no agreement can be reached
by the parties within thirty (30) days of the filing of the demand for
arbitration, then each party shall select one (1) arbitrator and the two (2)
arbitrators thus selected shall then select the third arbitrator. If any
vacancy occurs in the board of arbitrators appointed hereunder by reason of
death, resignation, refusal to act, physical incapacity or otherwise, a new
arbitrator shall be appointed in the same manner and by the same party or
arbitrators, as applicable, by whom the previous incumbent was appointed. The
arbitrators shall be instructed and directed to assume case management
initiative and control over the arbitration process (including, without
limitation, scheduling of events, prehearing discovery and activities, and the
conduct of the hearing), in order to complete the arbitration as expeditiously
as is reasonably practical for obtaining a just resolution of the dispute.
Each party shall bear its own expenses in connection with the arbitration, and
shall share equally in the payment of the arbitrators' fees as and when billed
by the arbitrators, unless the arbitrators rule otherwise. Such determination
by the two (2) of the three (3) arbitrators shall be final, binding and
conclusive upon the parties hereto and shall be rendered in such form that it
may be judicially confirmed under the laws of the State of New York. The
parties hereto expressly consent to the exclusive jurisdiction of the courts
in New York County to enforce any award of the arbitrators.
(d) Survival. The representations, warranties and indemnifications
of Lender and Company contained in this Agreement shall survive.
(e) Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument. Signed facsimile
copies of this Agreement will legally bind the parties to the same extent as
original documents.
(f) Headings. The headings and captions used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement. All references in this Agreement to sections,
paragraphs, exhibits and schedules will, unless otherwise provided, refer to
sections and paragraphs hereof and exhibits and schedules attached hereto,
all of which exhibits and schedules are incorporated herein by reference.
(g) Notices. Any notices and other communications required or
permitted under this Agreement shall be in writing and shall be delivered (a)
personally by hand or by courier, (b) mailed by United States first-class
mail, postage prepaid or (c) sent by facsimile directed (i) if to Lender, at
Lender's address or facsimile number set forth below, or at such address or
facsimile number as Lender may designate by giving at least ten (10) days'
advance written notice to Company or (ii) if to Company, to its address or
facsimile number set forth below, or at such other address or facsimile
number as Company may designate by giving at least ten (10) days' advance
written notice to Lender. All such notices and other communications shall be
deemed given upon (x) receipt or refusal of receipt, if delivered personally,
(y) three (3) days after being placed in the mail, if mailed, or (z)
confirmation of facsimile transfer, if faxed.
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The address of Lender for the purpose of this Paragraph
20(g) is as follows:
Xxxxxx Xxxxxxx Productions, Inc.
[**ADDRESS**]
[**FAX**]
with a copy to:
Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx LLP
0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxx Xxxxxxx Xxxxx, Esq.
Facsimile: (000) 000-0000
The address of Company for the purpose of this Paragraph
20(g) is as follows:
Xxxxxx Xxxxxxx Ventures LLC
000 X. Xxxxxx-Xxxxx Xxxx, 0xx Xxxxx
Xxxxxx-Xxxxx, Xxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
with copies to:
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
and
Franklin, Xxxxxxx, Xxxxxx & Xxxxxxxx, P.C.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
(h) Force Majeure. It is understood and agreed that in the event an
act of government, war, fire, flood, an Act of God or labor trouble, or any
other similar or dissimilar reasons beyond the control of a party to this
Agreement prevents the performance by such party of the provisions of this
Agreement, then such nonperformance shall not be considered a breach
15
of this Agreement and such nonperformance shall be excused while the
conditions described herein prevail.
(i) Amendments and Waivers. This Agreement may be amended and the
observance of any term of this Agreement may be waived only with the written
consent of Lender and Company. Any amendment effected in accordance with
this Paragraph 20(i) will be binding upon Lender, Company and their
respective successors and assigns.
(j) Severability. If any provision of this Agreement is held to be
unenforceable under applicable law, such provision will be excluded from this
Agreement and the balance of the Agreement will be interpreted as if such
provision were so excluded and will be enforceable in accordance with its
terms.
(k) Entire Agreement. This Agreement, together with the Subscription
Agreement and the Assignment Agreement, and all exhibits and schedules hereto
and thereto, constitutes the entire agreement and understanding of the
parties with respect to the subject matter hereof and supersedes any and all
prior negotiations, correspondence, agreements, understandings, duties or
obligations between the parties with respect to the subject matter hereof.
(l) Further Assurances. Lender further agrees, upon Company's
request, to do all acts necessary to carry out the terms of this Agreement
and to execute, and, where necessary, to cause GF and his family members to
execute, any and all documents in connection therewith. In the event that
Lender or GF fails to execute any document or instrument within fifteen (15)
days of Company's request therefor, Lender hereby irrevocably appoints
Company as Lender's and GF's attorney in fact with the right, but not the
obligation, to execute such documents or instruments in the names of and on
behalf of such parties, but for Company's benefit, which appointment shall be
coupled with an interest and irrevocable.
(m) Meaning of Include and Including. Whenever in this Agreement the
word "include" or "including" is used, it shall be deemed to mean "include,
without limitation" or "including, without limitation," as the case may be,
and the language following "include" or "including" shall not be deemed to
set forth an exhaustive list.
(n) Fees, Costs and Expenses. Except as otherwise provided for in
this Agreement, all fees, costs and expenses (including attorneys' fees and
expenses) incurred by any party hereto in connection with the preparation,
negotiation and execution of this Agreement and the exhibits and schedules
hereto and the consummation of the transactions contemplated hereby and
thereby (including the costs associated with any filings with, or compliance
with any of the requirements of any governmental authorities), shall be the
sole and exclusive responsibility of such party.
(o) Confidentiality. Lender agrees that Lender will not authorize or
release advertising or publicity materials relating to the subject matter of
this Agreement, nor will Lender give interviews which make reference to the
details of this Agreement without Company's prior written approval, although
GF may, during interviews, respond, discuss and comment in a favorable and
positive manner that Lender is associated with Company and the licensees
hereunder and endorses and uses their products and services. Without
limitation of the
16
foregoing, Lender agrees to treat the financial terms of the Agreement as
confidential and not to divulge the business terms and conditions of the
Agreement without the prior written consent of Company.
(p) Remedies. It is expressly understood and agreed that the
services to be performed by Lender and GF and the rights and privileges
granted to Company hereunder are special, unique, extraordinary and
impossible of replacement, which gives them a peculiar value, the loss of
which could not be reasonably or adequately compensated in damages in an
action of law, and that Lender's and/or GF's failure or refusal to perform
any obligations hereunder or Lender's and/or GF's failure to comply with the
provisions hereof might cause Company to suffer irreparable loss and damage.
Accordingly, Lender agrees that should Lender and/or GF fail or refuse to
perform such obligations or comply with such restrictions, Company shall be
entitled as a matter of right to ex-parte injunctive or other equitable
relief against Lender and GF to prevent the continuance of such failure or
refusal or to prevent Lender and GF from performing services for, or granting
rights to others, or taking actions described in violation of this Agreement.
Neither the right to resort to injunctive or other equitable relief, nor the
exercise of such right, shall constitute a waiver of any other or additional
rights or remedies or pursuant to the terms of this Agreement which Company
may have against Lender and/or GF as a result of such failure or refusal.
All rights, licenses, privileges and property herein conveyed to Company are
irrevocable and not subject to rescission, restraint or injunction under any
and all circumstances, except if Company violates the provisions in
Paragraphs 8(a) and/or 8(c) of this Agreement which provide that the Indicia
Rights, Marks and Name and Likeness shall not be used in connection with any
product containing, or in any other context involving, alcohol, tobacco,
firearms, political statements or sexual content. Except as specifically
provided to the contrary in the preceding sentence, Lender's rights and
remedies shall be limited to the right, if any, to obtain damages at law.
Company may exploit, or forbear from exploiting, the rights granted herein in
whole or in part, in Company's reasonable commercial judgment, subject in all
cases to the terms and conditions hereof and of the Assignment Agreement. If
Company shall at any time breach any of its material obligations hereunder
including by failing to make any payment or render any statement required
under this Agreement when due, Lender shall not commence any action or
proceeding until Company has failed to remedy such default within thirty (30)
days after notice thereof by Lender.
(q) Drafting History. In resolving any dispute or construing any
provision in this Agreement, there shall be no presumption made or inference
drawn (i) because the attorneys for one of the parties drafted this
Agreement, (ii) because of the drafting history of this Agreement, or (iii)
because of the inclusion of a provision not contained in a prior draft or the
deletion of a provision contained in a prior draft.
(r) No Joint Venture. Nothing herein shall create or be deemed to
create any agency, partnership or joint venture relation between the parties
and neither party has the power to obligate or bind the other in any manner
whatsoever.
(s) FCC Obligations. Lender acknowledges that Lender and GF are
familiar with the applicable provisions of the Federal Communications Act, as
amended, respecting disclosure of payments to individuals connected with
broadcasts, and the rules and regulations of the Federal
17
Communications Commission, and Lender agrees that Lender and GF will comply
with same. Lender's and GF's compliance with the foregoing shall be of the
essence of this Agreement.
(t) Time Of the Essence. Time is of the essence with regard to
Lender's and GF's performance of the services described herein, as is GF's
appearance at all scheduled production dates.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
XXXXXX XXXXXXX PRODUCTIONS, INC.
By:_______________________
Name:
Title:
XXXXXX XXXXXXX VENTURES LLC
By:_______________________
Name:
Title:
18
PERSONAL INDUCEMENT LETTER
--------------------------
In order to induce Xxxxxx Xxxxxxx Ventures LLC ("Company") to enter
into the services agreement (the "Agreement") dated as of August 15, 2005,
with Xxxxxx Xxxxxxx Productions, Inc. ("Lender") f/s/o Xxxxxx Xxxxxxx, and in
consideration of the execution and delivery thereof by Company, I hereby
represent and warrant as follows:
1. I am familiar with each term and condition of the Agreement. I
hereby consent and agree to the execution and delivery of the Agreement by
Lender and hereby agree to render all of the services provided therein to be
rendered by me. I agree to be bound by and duly perform and observe each and
all of the terms and conditions of the Agreement requiring performance or
compliance on my part.
2. I hereby join in all warranties, representations, agreements and
indemnities made by Lender in the Agreement.
3. I agree that if Lender should be dissolved or should otherwise
cease to exist or, for any reason whatsoever, should fail, be unable, neglect
or refuse to duly perform and observe each and all of the terms and
conditions of the Agreement requiring performance or compliance on Lender's
part, at Company's election, I shall be deemed to be substituted for Lender
as a direct party to the Agreement.
4. I irrevocably and primarily guarantee all of the obligations of
Lender in the Agreement. I agree that, in the event of a breach or
threatened breach of the Agreement by Lender or by me, Company shall be
entitled to seek legal and equitable relief by way of injunction or otherwise
against Lender or against me, or against both Lender and me, at Company's
discretion, without the necessity of first exhausting any rights or remedies
which Company may have against Lender.
5. I hereby waive any claim against Company for wages, salary or
other compensation of any kind under the Agreement, and I agree that I will
look solely to Lender for any and all compensation that I may become entitled
to receive for services rendered in connection with the Agreement.
________________________
Xxxxxx Xxxxxxx
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