The following comes directly from Dave Meltzer and F4WOnline.com

After a blow-up over the merchandise contract between UFC President Dana White and Duane Zinkin and Bob Cook of Zinkin Entertainment, which represents a slew of UFC fighters, mostly out of the American Kickboxing Association gym in San Jose, the UFC cut Jon Fitch and Christian Wellisch today.

Fitch, who headlined the 8/9 PPV show in Minneapolis against Georges St. Pierre in a welterweight title challenge, had been scheduled to face Akihiro Gono on the 1/31 show in Las Vegas. Fitch co-holds the UFC record for most consecutive wins, with eight, with Royce Gracie and Anderson Silva.

The argument stemmed from Zinkin and Cook advising their clients not to sign the UFC’s merchandising agreement, which gives the company lifetime merchandising rights to the fighters.

According to Cook, they gave the fighters the option of signing the agreement or not. UFC, in its current contract, had the rights to merchandise the fighters and put them in the videogame. However, UFC insisted on exclusive rights, which were not in the former contract.

The key is that the deal stipulates Zuffa would have lifetime exclusive rights to the fighters likeness, unlike the current deal which would be non-exclusive. If they were to leave the company and go with a new company, and that company gets a videogame, the fighter could not be part of the game. The agreement also doesn’t provide any listed compensation for appearance in the games.

Wellisch was agreeable to sign the deal, but apparently was cut anyway as he was caught in the crossfire.

While not cut yet, without a resolution, White will be cutting Cain Velasquez, the heavyweight who many considered the future of the division, as well as Josh Koscheck. Koscheck will not be cut right now because White felt that by Koscheck saving the company by taking the fight with Thiago Alves on 10/25 on less than two weeks notice, they owed him at least one more fight. Plus, it would be difficult to replace him since he is scheduled for the main event, against Yoshiyuki Yoshida, on 12/10 in Fort Bragg on the next Spike TV “Fight for the Troops” special.

Koscheck could be cut if he loses to Yoshida, but without a resolution, will not be signed to a new deal. Velasquez, currently out of action due to knee surgery, has two fights left on his contract. He would not be cut early unless he loses the first fight, as Zuffa contracts give the promotion the ability to cut someone under an existing contract with a loss, but not after a win.

The other major Zinkin Entertainment fighter, Mike Swick, signed the merchandise deal and is in no danger of being dropped.