Finders keepers. (Wall Street West).

Mossimo Inc. was dealt another blow last week in its attempt to nullify a contract that requires it to pay Cherokee Inc. millions of dollars a year in finders fees when a Los Angeles Superior Court judge upheld the contract's terms.

The ruling confirms an earlier arbitration award that found the Santa Monica-based designer owed Van Nuys-based Cherokee a finder's fee for helping it broker a lucrative deal three years ago with nationwide discount retailer Target Corp.

Both Cherokee and Mossimo license their names to Target, which owns exclusive U.S. rights to manufacture and sell clothes and accessories under the brands.

Under its agreement with Target, which expires Jan. 31, 2006, Mossimo is paid a minimum of $9.6 million annually, according to regulatory filings. The Target agreement comprised 92 percent of the company's s revenue in 2002 and 2001, according to those filings.

Mossimo originally agreed to pay Cherokee 15 percent of its Target licensing revenue.

However, Mossimo signed an amended deal in April 2002 with Target under which company owner Mossimo Giannulli's design services make up 45 percent of the revenues. Under that new deal, Cherokee's 15 percent cut came out of the remaining 55 percent of revenues.

Cherokee objected, and so far courts have ruled Mossimo must include the total sum when calculating Cherokee's cut.

After it appealed the arbitration award, Mossimo posted a $3 million bond to cover the amount owed to Cherokee plus interest and legal fees, according to the company's SEC filings.

Mossimo officials, who didn't return calls for comment, can still appeal the court's decision upholding the arbitration award. A protracted court battle has Cherokee officials nervous about the state of funds.

"Since we are not clear when we will be receiving payment, we are exploring alternatives such as the selling or insuring of this asset which could provide us with greater liquidity," said Cherokee Chief Financial Officer Kyle Wescoat in a press release.