MERCHANDISING ADDENDUM
Merchandising Addendum dated as of the ____ day of August, 2026 by and between Red Head Inc., a California corporation, P.O. Box 5395, Novato, CA 94948 (hereinafter referred to as “Company”) and City of Fontana, a California municipal corporation located 8353 Sierra Avenue, Fontana, California 92335 (hereinafter referred to as “City”). The Company and City may be referred to herein individually as a “Party” and collectively as the “Parties.”
RECITALS
WHEREAS, Company has the sole and exclusive right to use and to license others to use the name and likeness of Sammy Hagar (hereinafter referred to as “Artist”) for the purposes of merchandising and marketing; and WHEREAS, Artist is a popular performer in the entertainment industry; and WHEREAS, City owns and operates a live performance venue entitled Stage Red, A Sammy Hagar Venue (“Venue”); and WHEREAS, Company and City are parties to a Naming Rights Agreement dated September 30, 2022; and WHEREAS, on August ___, 2026, Company and City entered into that First Amendment to the Naming Rights Agreement, pursuant to which, among other things, Company assigned, transferred and conveyed to City all of its right, title and interest in and to the trademark “STAGE RED” (the “Trademark”); and WHEREAS, Company and City desire to enter into this Merchandising Addendum to supplement the Naming Rights Agreement to introduce provisions related to merchandising rights, whereby the terms and conditions set forth hereinafter.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and undertakings herein contained, and for other good and valuable considerations, Company and City agree as follows:
DEFINITIONS: All capitalized terms used herein shall have the same meaning as in the Agreement, unless otherwise defined herein. “Term” shall mean the period commencing on August ___, 2026 and continuing on a co-terminus basis with the Naming Rights Agreement, unless earlier terminated pursuant to this agreement. “City’s Licensed Subject Matter” shall mean the intellectual property identified and described in Exhibit A-1 attached hereto, including, without limitation, any names, symbols, emblems, designs, depictions, characterizations, likenesses, visual representations, trademarks, logos, copyrights, and other materials specifically set forth in the exhibit. “Company’s Licensed Subject Matter” shall mean the intellectual property identified and described in Exhibit A-2 attached hereto, including, without limitation, any names, symbols, emblems, designs, depictions, characterizations, likenesses, visual representations, trademarks, logos, copyrights, and other materials specifically set forth in the exhibit. “Licensed Subject Matter” shall mean City’s Licensed Subject Matter and Company’s Licensed Subject Matter. “Products” shall mean merchandise items approved by Company and City embodying any of the Licensed Subject Matter. Products may include without limitation, T-shirts, jerseys, sweatshirts, hats, programs, posters, pictures, stickers, buttons and lights. “Actual Cost” of the Products shall mean all costs actually incurred by the respective party in its design (including artwork), manufacturing and shipping of the Products and registering of trademarks and/or copyrights therefor, all as evidenced by invoices and bills paid by the respective party. For purposes hereof, no overhead and/or interest shall be included in the calculation of the Actual Cost of the Products.
GRANT OF LICENSES.
Company’s Grant of License to City. Company hereby grants to City, and City hereby accepts from Company, subject to the terms hereof, the sole and exclusive right and license to use Company’s Licensed Subject Matter:
To manufacture Products or have Products manufactured during the Term; and To distribute and sell Products through (i) physical locations within a fifty (50) mile radius of the Venue, and (ii) through the related websites and social media accounts of City and Venue, provided that such distribution and sales comply with the terms of this Agreement.
City’s Grant of License to Company. City hereby grants to Company, and Company hereby accepts from City, subject to the terms hereof, the sole and exclusive right and license to use City’s Licensed Subject Matter:
To manufacture Products or have Products manufactured during the Term; and To distribute and sell Products through (i) physical locations outside a fifty (50) mile radius of the Venue, and (ii) any website or social media accounts of its choosing, provided that such distribution and sales comply with the terms of this Agreement.
MERCHANDISING STANDARDS.
Each the City and Company agree that all use of the other Party’s Licensed Subject Matter shall be solely on merchandise manufactured by or for the applicable Party in accordance with artistic standards approved by the other Party. Prior to the manufacture of any merchandise, the submitting Party shall deliver to the reviewing Party, via electronic mail, graphic representations of the proposed merchandise for review and approval. The reviewing Party shall have thirty (30) days from receipt thereof to approve or provide written comments. The reviewing Party’s failure to respond within such period shall constitute approval of the proposed merchandise.
The review of the proposed merchandise shall be limited to determining whether the merchandise meets reasonable artistic standards consistent with the nature of the merchandise. Approval shall not be unreasonably withheld, conditioned or delayed.
No merchandise displaying either Party’s Licensed Subject Matter shall be manufactured by the other Party without such prior approval.
In the event that the applicable artistic standards approved under this Agreement are not maintained throughout the period of manufacture, upon written notice specifying the affected merchandise item, including the product name, SKU, or production batch, and reasons why such standards are not met, the non-compliant Party shall immediately discontinue the manufacture and distribution of only the specific merchandise item identified in such notice. Such discontinuation shall not preclude such Party from manufacturing and distributing other merchandise items that meet the quality standards.
Each Party shall manufacture, or have manufactured on its behalf, only so many Products as such Party reasonably calculates are required for sale in connection with the license granted to it hereunder.
City shall provide Company, upon reasonable request and no more than quarterly, with an inventory summarizing the number and type of Products on hand with respect to the Venue. Company shall provide City, upon reasonable request and no more than quarterly, with an inventory summarizing the number and type of products on hand relating to any other City Licensed Subject Matter, other than STAGE RED.
Each Party shall pay its own costs and expenses in connection with the merchandising of the Products including production, manufacturing, packaging, shipping, distribution, sales personnel and concessionaires.
The Parties agree that all of its sublicensees shall be subject to the other Party’s prior written approval, such approval not to be unreasonably withheld.
City agrees to sell Company a reasonable number of Products for Company’s personal use at a price equal to City’s Actual Costs therefor plus five percent (5%) plus shipping. Said Products shall be delivered to Company at the address below upon receipt by City of payment in full. Said payment shall be deemed excluded from royalty bearing gross receipts as described herein.
Red Head Inc.
P.O. Box 5395
Novato, CA 94948
ARTWORK.
Prior to using any designs, packaging, advertising, or other advertising material, or other materials that include the other Party’s License Subject Matter in connection with Products (hereinafter collectively the “Artwork”), the submitting Party shall submit such Artwork to the reviewing Party for prior review and approval. The reviewing Party shall be deemed to have granted approval with respect thereto if it does not notify the submitting Party, in writing, to the contrary (stating specific objections) within thirty (30) days after receipt thereof.
Any Artwork submitted by a Party for use by the other Party shall remain the submitting Party’s Artwork and shall be deemed approved for use unless expressly stated otherwise in writing or unless such Artwork is materially altered in any way by the non-submitting Party. By submitting its Artwork for use by the other Party, the submitting Party grants the other Party the right to use such Artwork in the manufacture, distribution, marketing, and sale of Products. Each Party represents and warrants that it will either own the Artwork or otherwise has the right to grant the other Party the license to use the Artwork as provided herein.
Each Party shall be responsible for all costs associated with the creation of its respective Artwork and all right title and interest in and to the elements comprising same shall be owned by the Party that created such Artwork; provided, however, that each Party shall retain all right, title and interest in and to its respective Licensed Subject Matter. After the end of the Term, neither Party shall have any rights whatsoever to use or exploit any Artwork that contains or incorporates the other Party’s Licensed Subject Matter for any purpose.
Each Party agrees that, subject to the terms and conditions of this Agreement, the other Party’s Artwork may be used, copied, reproduced and/or exploited by the receiving Party in any manner in connection with the manufacture of the Products.
To the extent that the Products embody either Party’s Licensed Subject Matter, the Party owning such Licensed Subject Matter may provide reasonable instructions regarding the form, placement and other details of the Licensed Subject Matter on the Products, including, without limitation, placement of the required copyright, trademark and/or service mark notices on the Products. In connection therewith, the other Party shall, at its own cost, therefore, use its best efforts to comply with all legal requirements.
Each Party acknowledges the value of the publicity and good will associated with the other Party’s Licensed Subject Matter, and in such connection, acknowledges that such good will exclusively belongs to the Party owning such Licensed Subject Matter.
Each party reserves all rights pertaining to its own respective Licensed Subject Matter except as specifically granted hereunder.
ROYALTIES.
Company’s License to City (Company’s Licensed Subject Matter). In consideration of the rights and license herein granted in Section 2, City hereby agrees to pay to Company, a royalty equal to fifty percent (50%) of the Gross Profits derived from the sale of Products pursuant to the terms hereof.
For purposes of this Section, “Gross Profits” means the gross amounts actually received by City from such sales, less the direct cost of manufacturing or producing the Products (including materials and production costs), and less applicable sales taxes, value added taxes, and any equivalent taxes collected and remitted to the appropriate taxing authority, without deduction of any other kind.
City’s License to Company (City’s Licensed Subject Matter). No royalty shall be payable to City for Company’s use of the trademark “STAGE RED” pursuant to the license grant set forth in Section 2. However, with respect to Company’s use of any other City Licensed Subject Matter, Company shall pay to City a royalty equal to fifty percent (50%) of Gross Profits received by Company from the sale of Products incorporating such City Licensed Subject Matter.
For purposes of this Section, “Gross Profits” means the gross amounts actually received by Company from such sales, less the direct cost of manufacturing or producing the Products (including materials and production costs), and less applicable sales taxes, value added taxes, and any equivalent taxes collected and remitted to the appropriate taxing authority, without deduction of any other kind.
ACCOUNTING.
Within thirty (30) days after the end of each quarterly period during the Term, each Party shall provide a formal accounting of Gross Profits derived from the sale of Products from the prior quarterly period and shall pay or, if applicable, shall credit Company all royalties due, if any, in connection with the sale of Products for such quarterly period.
Such accounting shall include detailed concession reports, a statement of all Gross Profits derived from the sale of the Products indicating the number and description of each item of the Products sold and the gross sales prices of each such item less applicable taxes, and the calculation of any royalties payable to the other Party.
Each Party shall keep accurate books of account governing all transactions involving the Products. Company, or its duly authorized representative, shall have the right at any time, but in no event later than two (2) years after the date that each accounting is rendered to Company, at its sole expense, to audit the books and records of City with respect to the sale of the Products, upon reasonable notice to City; provided, however, that said audit is conducted at a time and place determined solely by City so as not to unreasonably interfere with City’s business. City shall have thirty (30) days following receipt of such report to review and dispute the findings in writing. The parties shall work in good faith to resolve any disputed items.
Likewise, City or its duly authorized representative, shall have the right at any time, but in no event later than five (5) years after the date that each accounting is rendered to City, at its sole expense, to audit the books and records of Company with respect to the sale of the Products, upon reasonable notice to Company; provided, however, that said audit is conducted at a time and place determined by Company so as not to unreasonably interfere with Company’s business. Company shall have thirty (30) days following receipt of such report to review and dispute the findings in writing. The parties shall work in good faith to resolve any disputed items.
If any audit determines that an underpayment has occurred, and such determination is not successfully disputed, interest on the amount of the underpayment shall accrue at a rate of ten percent (10%) per annum, commencing thirty (30) days following final resolution of the dispute (or, if undisputed, thirty (30) days following delivery of the audit report), and continuing until the date such underpaid amounts are paid in full.
No amounts shall be payable, and no interest shall accrue, with respect to any disputed amounts unless and until such dispute is resolved, except as expressly provided herein.
WARRANTIES AND REPRESENTATIONS.
Each Party hereby warrants and represents to other Party that it has the exclusive right and authority to grant to the other Party the rights granted herein.
Each Party hereto warrants and represents that it is under no disability, restriction or prohibition, whether contractual or otherwise, with respect to its rights to execute this Agreement, to grant the rights herein granted and to perform its obligations hereunder.
Each Party warrants and represents that none of the artwork furnished or to be furnished by such Party or its agents pursuant to the terms hereof, nor the exploitation or use thereof in accordance with the terms hereof, will violate or infringe upon any common law or statutory law or rights of any party, including without limitation contractual rights, trademarks, copyrights, and rights of publicity and privacy.
Each Party acknowledges that no rights in the other Party’s Licensed Subject Matter are granted under this Agreement except as otherwise expressly provided herein, and, except as so provided, each Party reserves all rights in and to it respective Licensed Subject Matter.
City will not enter into any agreement relating to the Company Licensed Subject Matter for commercial tie-ups or combination sales of any kind, nor will City give away Products as premiums or otherwise without Company’s prior written consent.
Company will not enter into any agreement relating to City’s Licensed Subject Matter, other than the “STAGE RED” trademark, for the commercial tie-ups, combination sales, or promotional giveaways of any kind without City’s prior written consent.
The Parties will not make or authorize any use, direct or indirect, of the Licensed Subject Matter in any manner not expressly permitted under this Agreement and it will not knowingly sell Products covered by this Agreement to persons who intend or are likely to re-sell them in any manner other than as set forth herein.
Company shall use City’s Licensed Subject Matter solely in accordance with the terms and scope of this Agreement. Any use of City’s Licensed Subject Matter outside the scope of this Agreement shall require City’s prior written consent.
Neither Party shall harm, misuse or bring into disrepute the other Party’s Licensed Subject Matter.
Neither Party shall create or incur any expenses chargeable to the other Party without the other Party’s prior written approval.
Neither Party shall use the other Party’s intellectual property in any manner that disparages, dilutes, or otherwise harm the other Party or the value of its intellectual property. Each Party shall promptly notify the other of any known unauthorized use, infringement, or misuse of the other Party’s intellectual property by any third party, and shall cooperate with the other Party in any legal or administrative action such Party elects to take to protect its intellectual property. Each Party shall have the right, but not the obligation, to pursue such enforcement action with respect to its own Trademark, in its sole discretion.
INDEMNIFICATION.
The Parties hereto shall indemnify, defend, protect, save and hold each other harmless from and against any and all actions, claims, suits, losses, judgments, penalties, liabilities, damages, costs and expenses (including without limitation reasonable attorney’s fees and court costs) of whatever kind and nature imposed on, incurred by or asserted, brought or made against either Party arising out of the other Party’s breach of any of its representations or warranties made pursuant to this Agreement or through the sole negligence or intentional acts of its officers, directors, employees, or representatives. The Parties hereto shall give each other prompt written notice of any such action, claim or suit and the Party so noticed shall have the opportunity, at its option, to participate in the defense thereof through counsel of its own choice at such Party’s sole cost and expense.
INSURANCE.
Prior to the sale of any Products, the Parties shall, at its own expense, obtain and maintain during the Term hereof a Products Liability Insurance Policy from a recognized insurance company qualified to do business in the State of California. Said policy shall name the receiving Party and as additional insureds against any claims, suits, losses, or damages arising out of the use of the Products and any alleged defects in the Products. Said policy shall be in an amount of not less than Five Million Dollars ($5,000,000). The receiving Party shall be provided with a certificate of insurance evidencing the existence of said policy and the coverage of receiving party. Said policy shall provide that receiving party shall be given notice by said insurance company at least ten (10) days prior to the cancellation or expiration of the policy.
INFRINGEMENT.
City and Company shall use its best efforts to protect each Party’s rights in and to the Licensed Subject Matter and the Products, including without limitation using their best efforts to discover, prevent and prohibit the illegal sale of Products and/or items of merchandise similar to Products by unlicensed third parties. Each Party hereto shall promptly notify the other of an infringement or other unauthorized exploitation of either Party’s Licensed Subject Matter or Products by any third party.
TERMINATION.
If either Party hereto breaches any of the material terms and conditions of this Agreement, the Party claiming such breach shall have the right, if it so elects, to serve upon the Party alleged to be in breach of the Agreement a written notice of its intention to terminate this Agreement and the Party alleged to be in breach shall thereupon have a period of thirty (30) business days within which to remedy said breach. If the Party alleged to be in breach fails to so remedy said breach, then upon the expiration of said thirty (30) business day period this Agreement shall automatically terminate.
Termination of this Agreement pursuant to the provisions of this clause shall be without prejudice to any other rights which either party may otherwise have against the other.
If either Party hereto becomes insolvent or files a petition in bankruptcy, or if a petition in bankruptcy is filed against either Party, or either Party makes an assignment for the benefit of creditors or makes any arrangement pursuant to any bankruptcy law or a receiver is appointed, this Agreement may be automatically terminated by the other Party at its election.
If at any time during the Term hereof by reason of any act of God, fire, earthquake, flood, explosion, strike, labor disturbance, civil commotion, act of government, its agencies or officers, any order, regulation, ruling or action of any labor union or association of artists, musicians, composers or employees affecting Company, Artist or City, its subsidiaries or affiliates or the industry in which it is or they are engaged or any shortage of or failure or delays in the delivery of materials, supplies, labor or equipment or any other cause or causes beyond the control of Artist, Company, and/or City, the performance of Company’s or City’s obligations hereunder is delayed, hampered, interrupted or interfered with or otherwise becomes impossible or impracticable, and if such condition exists for ninety (90) consecutive days or for a total of ninety (90) days in any six (6) month period during the Term, then either Party may upon notice to the other terminate this agreement.
ASSIGNMENT.
Neither Company nor City shall assign this Agreement without the prior written consent of the other Party, except that Company shall have the right to assign this Agreement to any subsidiary, or to any person, firm or corporation owning or acquiring a substantial portion, fifty one percent (51%), of Company’s stock or assets.
NOTICES.
All notices and statements provided for herein shall be in writing and, together with all payments provided for herein, shall be sent by United States mail, postage prepaid, or sent by email to the address set forth above or such other address as may be designated in writing from time-to-time. A copy of all notices to City shall be sent to Best Best & Krieger, c/o City of Fontana City Attorney, 2855 E, Guasti Road, Suite 400, Ontario, CA 91761. A copy of all notices to Company shall be sent to Berman Entertainment and Technology Law, 600 California Street, 11th Floor, San Francisco, CA 94108. Properly addressed notices delivered or sent as provided herein shall be deemed given when post-marked if delivered by mail, or on the date thereof if sent by email.
MISCELLANEOUS.
This Agreement sets forth the entire understanding of the Parties hereto relating to the subject matter hereof. No modification, amendment, waiver, termination or discharge of this Agreement or any of the terms or provisions hereof shall be binding upon either of the Parties unless confirmed by a written instrument signed by the Parties. No waiver by either Party of any term or provision of this Agreement or of any default hereunder shall affect such Party’s rights thereafter to enforce such term or provision or to exercise any right or remedy in the event of any other default, whether or not similar.
If any provision of this Agreement shall be held void, voidable, invalid or inoperative, no other provision of this Agreement shall be affected as a result thereof, and, accordingly, the remaining provisions of this Agreement shall remain in full force and effect as though such void, voidable, invalid or inoperative provision had not been contained herein. Notwithstanding the foregoing, in the event any provision held void, voidable, invalid or inoperative shall impair either Party’s right to receive royalties here in under or impair either party’s right to manufacture, distribute and sell Products in accordance with the Terms hereof, then this agreement shall be deemed to terminate.
Nothing herein contained shall constitute a partnership or a joint venture between the Parties. Neither Party hereto shall have the right to obligate or bind the other in any manner whatsoever nor hold itself out contrary to the terms of this paragraph, and neither Party shall become liable for any representation, act or omission of the other contrary to the provisions hereof.
In the event of any action, suit or proceeding arising from or based upon this Agreement brought by either Party hereto against the other, each Party shall bear its own attorneys’ fees and other costs incurred in connection with such action, suit, or proceeding, and no party shall be entitled to recover such fees or costs from the other.
Except as otherwise provided in this Agreement all rights and remedies herein or otherwise shall be cumulative and none of them shall be in limitation of any other right or remedy.
This Agreement has been entered into in the State of California, and its validity, construction, interpretation and legal effect shall be governed by the laws of the State of California applicable to contracts entered into and performed entirely within the State of California. The parties hereto agree that any lawsuit or proceeding initiated by one party against the other in connection with this Agreement shall be brought in San Bernardino California.
IN WITNESS THEREOF, the parties hereto have signed this agreement on the date first set forth above.
CITY OF FONTANA
By:
Matthew Ballantyne, City Manager
RED HEAD INC.
By:
Name:
Title:
ATTEST:
By:
APPROVED AS TO FORM:
By:
Ruben Duran
Assistant City Attorney
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