Exclusive
Marketing & Distribution Agreement
This Exclusive Marketing & Distribution
Agreement (“ Agreement ”) is entered into as of
this 25th day of September 2009 (the “ Effective Date
”), by and between hZo, Inc., a Delaware Corporation (“
Company ”) and ZAGG, Inc., a Delaware corporation,
(“ ZAGG ”).
Recitals
A. ZAGG
is in the business of, among other things, providing marketing,
promotional and distribution services in connection with the
application of protective coatings to consumer electronic and
hand-held devices (the “ Marketing Services
”).
B. ZAGG
identified the opportunity to market certain technology pertaining
to the development and application of a protective coating to
certain goods and products ( as the same may be modified or
updated from time to time, the “ Technology
”) and provided certain funding to facilitate the formation
of Company and enable Company to become the licensee or owner, as
applicable, of all right, title, and interest in and to the
Technology (the “ ZAGG Investment ,” as defined
in more detail in Section 2 below).
C. In
consideration of the ZAGG Investment, Company desires to engage
ZAGG to provide the Marketing Services to Company for branding,
promotion, sales and distribution and to develop business channels
for the Technology in the specific market segments set forth in
Exhibit A (the “ Market Segment ”), as such may
be amended by ZAGG and Company from time to time, upon the terms
and subject to the conditions contained in this
Agreement.
D. ZAGG
desires to provide the Marketing Services to Company with
respect to the Market Segment , subject to the terms and
conditions of this Agreement.
Agreement:
NOW THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1.
Appointment
. Subject to the terms
and conditions set forth in this Agreement and closing of the ZAGG
Investment (as defined below), as of the Effective Date, Company
hereby appoints ZAGG, on an exclusive basis to: (
a ) market and promote the Technology to potential customers
within the Market Segment (each a “ Customer ”);
and ( b ) refer such Customers to Company (collectively, the
“ Appointment ”).
2.
Condition
Precedent . The continued Appointment of ZAGG
is conditioned upon the ZAGG Investment, which shall consist of
the purchase by ZAGG of at least $3,150,000.00 in shares of
Series A Preferred Stock of the Company . In the
event that the ZAGG Investment is not received by Company by
February 25, 2010, either party may terminate this Agreement in all
respects by delivering written notice of termination to the other
party .
3.
First
Right of Refusal of Appointment . In the event that either Company or
ZAGG identifies any applications or opportunities to market or
promote the Technology outside the Market Segment (each a “
Proposed New Market Segment ”), then the party
identifying the Proposed New Market Segment shall inform the other
party of the existence of such Proposed New Market Segment and ZAGG
shall have thirty (30) days to provide to Company either: (a) a
written proposal including terms, conditions and pricing on which
ZAGG would be willing to pursue marketing and promotions in the
Proposed New Market Segment (“ ZAGG Proposal ”),
or (b) a written waiver by ZAGG of any right to pursue marketing
and promotions within the Proposed New Market
Segment. If Company accepts the ZAGG Proposal, the
Proposed New Market Segment shall be added to Exhibit A and shall
be part of the “Market Segment” for the purposes of
this Agreement. In the event that Company rejects the
ZAGG Proposal, which Company may only do if the ZAGG Proposal is
materially less favorable to Company than the terms, conditions or
pricing in place for the Market Segment, or if ZAGG fails to
provide a written waiver, then Company may market and promote the
Technology for any application in the Proposed New Market Segment
through its own direct sales organization or through third
parties. Notwithstanding the foregoing, other than the
Market Segment licensed to ZAGG as defined in Exhibit A, the
Company may respond to and fulfill unsolicited requests for the
Technology for applications or from potential customers
within the Market Segment provided that the Company first
immediately notifies ZAGG of any such request and obtains
ZAGG’s express prior written consent to accept and fulfilling
such request. ZAGG acknowledges that Company has
made no representations about the any revenue that ZAGG may
receive or any profit or income that ZAGG may realize
, if any, as an independent representative of Company and ZAGG
assumes all financial risks under this Agreement.
4.
Marketing
Budget . The
parties agree that in certain circumstances Company may desire to
engage ZAGG to perform additional services, either beyond the
Marketing Services or outside the Market Segment (“
Additional Services ”). In the event that Company
engages ZAGG to perform such Additional Services, then Company and
ZAGG shall mutually agree upon a marketing budget on a per project
or marketing campaign basis (“ Supplemental Budget
”) to be distributed to ZAGG in accordance with the terms of
such Supplemental Budget, including, if applicable, payments by
Company to ZAGG of royalties or other fees as may be mutually
agreed upon between the parties from time to time for the use by
Company of any ZAGG Mark (as defined below) in connection with
products or services not directly distributed by
ZAGG. For the avoidance of doubt, the Supplemental
Budget shall not apply in the ordinary course of the provision by
ZAGG of the Marketing Services in the Market Segment except as
agreed upon between the parties on a project by project
basis.
5.
Personnel
. Personnel employed by
ZAGG to perform the Marketing Services are not employees of Company
and ZAGG assumes full responsibility for their acts, daily
interaction, and management control. Without limiting
the generality of the foregoing, ZAGG shall not be treated
as an employee of Company for state or federal income tax purposes,
nor will ZAGG be an employee of Company for purposes of the
Federal Unemployment Tax Act, Federal Insurance Contributions Act,
the Social Security Act or any other federal, state or local
unemployment or employment security act. ZAGG
shall inform its personnel that they are not entitled to the
provisions of any Company employee benefits. Company
will not be responsible for worker’s compensation, health or
disability benefits, retirement or pension benefits, unemployment
insurance or withholding income taxes and Social Security for said
personnel. ZAGG shall identify itself as an
authorized referral representative of Company only with respect to
the Marketing Services covered by this Agreement and shall
otherwise identify itself as an independent business.
6.
Conflict
of Interest . ZAGG warrants to Company that ZAGG
does not currently distribute, sell, or promote any products,
services or technologies that directly compete with the Technology
(“Competing Technology ”) within the Market
Segment. ZAGG warrants that prior to distributing,
selling, or promoting any Competing Technology to the Technology
within the Market Segment , ZAGG will provide Company with
written notice thereof.
7.
Changes
in the Technology . ZAGG shall have the right to
market, distribute, sell or offer for sale and promote updated
changes or modifications to the Technology, update or discontinue
any of the Technology from time to time and Company shall notify
ZAGG in writing of any such modifications, updates or
discontinuations of the Technology that may affect the marketing
efforts of ZAGG .
8.1. General
. ZAGG will use its best efforts to refer, market and
promote the Technology to Customers for applications within the
Market Segment and to refer such Customers to Company in
accordance with the terms and conditions of this Agreement (the
“ Promotion Obligations ”). Without
limiting the generality of the foregoing, the Promotion Obligations
shall, at a minimum, require ZAGG to execute and complete the
following promotional activities and to develop all advertising,
promotional, sales and collateral literature related thereto and
necessary therefore:
8.1.1.
E-Mail . Subject to Section 4 , ZAGG shall, at
its sole expense, develop, design, print and fulfill an email
campaign, the purpose of which shall be to introduce the Technology
to the Market Segment.
8.1.2.
Collateral Materials
. Subject to Section 4 ,
ZAGG, at its sole expense, unless otherwise agreed upon
in writing between the parties, shall develop, design, print and
fulfill marketing collateral materials relating to the Technology,
and provide sufficient quantities to each of its independent sales
representatives or contractors.
8.1.3.
Tradeshow Marketing
. ZAGG, at its sole cost and
expense unless otherwise agreed upon in writing between the
parties, shall prominently display and diligently
promote the Technology at any applicable tradeshows
that ZAGG attends during the Term (as defined below)
.
8.1.4.
Customer Relations
. ZAGG shall be governed
in all dealings with members of the public by the highest standards
of honesty, integrity and fair dealing, and shall do nothing which
would tend to discredit, dishonor, reflect adversely upon or in any
manner injure the reputation of Company or any of its
officers, partners, directors, managers, stockholders, members,
affiliates or representatives (the “Related
Parties”) or the Technology. Without limiting
the generality of the foregoing, ZAGG will: (a) refrain from and
avoid any deceptive, misleading, disparaging or unethical practices
that are or might be detrimental to Company or its Related
Parties, the Technology, or the public; (b) make no false or
misleading representations with regard to Company or the
Technology; (c) not publish or employ, or cooperate in the
publication or employment of, any misleading or deceptive
advertising material with regard to Company or the
Technology; and (d) make no representations, warranties or
guarantees to Customers or to the trade with respect to the
specifications, features or capabilities of the Technology that are
inconsistent with any literature or specifications distributed by
Company . ZAGG will maintain records of its
marketing activities hereunder and will permit Company to
review such records upon reasonable prior written notice to
determine ZAGG’s compliance with the terms and conditions of
this Agreement.
8.1.5.
Compliance with Laws, Procedures
and Good Busi

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