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INFOMERCIAL PRODUCTION AND BRAND LICENSE AGREEMENT
AGREEMENT dated as of this 13 th day of October, 2010 (“Agreement”) by and among TV Goods, Inc., a Florida, corporation with its principal place of business at 14044 Icot Blvd, Clearwater FL 33760 (“ TVG ”), Sleek Audio, LLC , a Florida limited liability company with its principal place of business at 600 Eighth Avenue West, Third Floor, Palmetto, Florida 34221 (“ Sleek ”), and G-Unit Brands, Inc. , a New York corporation with a place of business c/o Greg Collins, Business Manager, 8 – 10 West 37 th Street, 4 th Floor, New York, New York 10018 (“ G-Unit ”). TVG, Sleek and G-Unit may also be referred to herein as the “Parties”.
WHEREAS, TVG has the capabilities to develop and produce direct response television programs of varying lengths (“ Shows ”), and to develop and manage other forms of marketing;
WHEREAS, Sleek and G-Unit entered into a Brand License Agreement on April 22, 2010 (the “ Brand License Agreement ”) whereby Sleek, among other things, was granted a world-wide license (the “ License ”) to use and apply Curtis Jackson’s (“ Jackson ”) approved professional monikers specified in Exhibit A ; Jackson’s approved likeness; and Jackson’s approved biography (collectively and individually, the “ Jackson Indicia ”) and the trademarks and trade symbols specified in Exhibit A (the “ G-Unit Marks ”), on and in relation to the manufacturing, marketing, distribution and sale of the Product (as defined in Paragraph 2.1 ) and on packaging, labels and hangtags for the Product;
WHEREAS, G-Unit and Sleek, subject to the further terms and conditions contained herein, have agreed to allow TVG to utilize Sleek’s approved biography, and the Sleek trademarks and trade symbols specified in Exhibit A (the “ Sleek Marks ”), the Jackson Indicia and G-Unit Marks in connection with the promotion and sale of the Product via direct response television and other forms of marketing as approved in writing by Sleek and G-Unit as set forth herein; and
WHEREAS, TVG has the capabilities to promote the sale of the Products via the Shows and via various other forms of marketing in all channels of distribution on a worldwide basis.
NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and in consideration of the Recitals, covenants and agreements contained herein, and intending to be legally bound, Sleek, G-Unit and TVG hereby agrees as follows:
The initial term of this Agreement shall commence as of the date hereof and shall continue through April 22, 2015 (the “ Initial Term ”), unless earlier terminated as provided herein. So long as the Minimum Royalty (as defined in Section 5.3) is met, and TVG is not in default under any provision of this Agreement, upon expiration of the Initial Term, TVG shall have the option to renew this Agreement for an additional five (5) year period (the “ Renewal Term ”) by providing written notice to Sleek and G-Unit at least thirty (30) days prior to expiration of the Initial Term. The Initial Term and Renewal Term, if any, are collectively referred to as the “ Term ” of this Agreement. For purposes of this Agreement, “ Contract Year ” shall mean each twelve (12) month period of the Term, commencing on the date hereof and ending on October 12 th of each succeeding calendar year; provided however this Agreement will automatically terminate upon termination of the Brand License Agreement. Notice of non-renewal of the Brand License Agreement shall serve as notice of non-renewal of this Agreement.
Subject to the further terms of this agreement and the timely performance of the Parties hereto and the availability of Product, not later than (90) days following execution of this Agreement, TVG will enter into a “Test Term” (“ Test Term ”) for a period not to exceed (90) days to begin upon the first airing of a Show as hereinafter defined. If the test results are satisfactory to TVG, TVG has the option at its sole discretion to rollout the Show and proceed with the Initial Term, subject to the further provisions of this Agreement. For the purposes of this agreement “ Rollout ” is defined as the point in time at which TVG either: 1) begins airing the
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Show subsequent to the expiration of the Test Term; or 2) the point in time at which TVG has expended $50,000 in media costs.
Subject to the further terms of this Agreement and the timely performance of the Parties as specified herein (including Product, prototype and Celebrity Talent availability) TVG agrees to use all reasonable efforts to begin airing a Show within ninety (90) days of the execution of this Agreement.
The “ Products ” to be advertised and sold under this Agreement means (i) a high-end over-the-ear headphone product bearing the G-Unit Marks or Jackson Indicia developed by Sleek that is similar in quality to Sleek’s current SA6 Model, but with a louder and deeper bass output that will function both with cables and wirelessly (the “ Headphones ”) and (ii) wireless earbuds that are lower priced than the Headphones and bear the G-Unit or Jackson Indicia (“Sleek by 50 Earbuds”), together with adjustment modules, tips and other components, packaged under the trademarked name Sleek by 50 as set forth on Exhibit A (the “ Product ”). Each individual fully packaged set of the Product is sometimes referred to herein as the “ Product ” or “ Product Unit ”). The definition of Product shall include all future revisions, upgrades and enhancements. G-Unit and Jackson shall have no ownership interest whatsoever in the “Intellectual Property Rights”, as such term is defined below, pertaining to the Product, other than the Jackson Indicia and G-Unit Marks used thereon or in connection therewith or as otherwise specified herein or under any other agreement between Sleek and G-Unit and/or Jackson. TVG shall have no ownership interest whatsoever in the Products or in the “Intellectual Property Rights”, as such term is defined below pertaining to the Products. The Product shall be sold under the name Sleek by 50 which Sleek and G-Unit shall trademark. As used herein the term “Products” shall not include (i) ear bud wireless earphones custom fitted to a user’s ears (the “ Custom Ear Buds ”), (ii) over-the-ear headphones sold above the price point of the Headphones which do not bear the Jackson Indicia or G-Unit Marks, and (iii) headphone products, wireless ear buds, and other products sold, marketed or distributed by Sleek, including without limitation products licensed to TVG under this Agreement, which do not bear the Jackson Indicia or G-Unit Marks.
Nothing in this Section 2 or elsewhere in this Agreement shall restrict Sleek from developing, marketing, monitoring, selling, and/or licensing any of its existing or future products, including but not limited to products bearing the Sleek Marks.
Sleek hereby represents that it will use its best efforts so that a minimum of 2,500 headphone Product Units will be delivered to TVG on or about December 1, 2010 for sales made during the Test Term. Sleek will take all necessary steps to have the non-working prototype completed on or about October 5, 2010 and will have inventory manufactured and available for the test Term in accordance with the terms of this Agreement. As described further in paragraph 10.1 herein, Sleek will fund/finance the cost of the prototypes and inventory for the test Term. TVG shall fund/finance the Products for the Rollout. TVG shall also fund the purchase of the applicable tooling (which shall be owned by Sleek) up to a maximum amount of $250,000. To the extent the tooling is less than $250,000 TVG agrees to pay such difference between the actual amount paid for tooling (if less than $250,000) and the $250,000, to Sleek. TVG shall acquire the Product Units at COG (defined below).
Upon execution of this Agreement (and as a condition to TVG's execution thereon), Sleek shall provide TVG with copies of any patent, copyright, trademark, trade name and service mark registrations relating to the Product (all of which are listed on Exhibit A) and all such other documentation which shall in any way effect the legal and effective distribution, promotion and sale of the Product. TVG may not use the same without the written approval of the other parties and such use may only be in furtherance of this Agreement and only during the Term hereof. No product may become a Product hereunder without the express prior written consent of Sleek and no trademark utilizing the name, image, voice or likeness or 50 Cent may be used without the express prior written consent of G-Unit.
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(i) Sleek hereby represents that the lead time for supplying the headphone Product to TVG is presently ________ (_______) Units a day for orders up to _____ thousand (________) Product Units at current capacity. The estimated third party costs of manufacture and delivery of the Product and Packaging (the “COG” as defined below herein) per Product Unit is ______ ($_______), as set forth on Exhibit B hereto. Sleek hereby agrees to use its reasonable efforts to have delivered or to deliver the Product to TVG within such time-frame after receipt of said purchase orders. Sleek hereby represents that its manufacturer has the capability to increase monthly capacity to _______ Product Units per month, upon __________ (___) days notice. The Product shall be delivered in a UPS shippable container and housed in the US warehouse designated by TVG. Sleek and/or its manufacturer shall credit TVG , its sublicensees, and other purchasers of the Products, in full, for any defective Product Unit returned to Sleek and/or its manufacturer. A Product Unit shall be deemed defective if any component of the Product Unit is defective. The agreements/arrangements with the manufacturers, proof of the COG and other matters referred to in this paragraph, including but not limited to invoices, are listed in Exhibit B and are attached thereto .The Parties acknowledge that there are blanks in this paragraph upon execution and that the Parties agree to use their best efforts to complete and negotiate these terms within 15 days of the execution hereof.
In the event that on a consistent basis (i) Sleek is unable to supply adequate quantities of the Product as defined in 2.5 above to TVG on a timely basis or (ii) such Products do not meet the quality standards referred to herein, then Sleek shall use its best efforts to arrange for the manufacture or production of the Products (and any related packaging material or accompanying printed material) by another and/or different manufacturer to meet the required capacity. Sleek shall remain the sole arbiter on the quality of the Products and TVG shall remain responsible for the funding as set forth herein.
As stated above, TVG will acquire the Product from Sleek at COG and, if a source such as Jabil or another acceptable manufacturer is will/able to reduce the COG while maintaining quality, Sleek agrees that it will utilize that manufacturer; provided, however, the determination of “quality” shall be made in the sole discretion of Sleek, which determination shall be binding upon TVG;
Sleek agrees that it shall cooperate closely with TVG regarding the performance of duties and obligations of Sleek as described herein. TVG shall, after consultation with the Parties, determine when and how frequently to market the Product and, upon such determination, the Parties shall mutually agree upon the price at which the Products are to be sold by TVG.
TVG acknowledges that Sleek has certain existing business relationships with certain distributors and TVG shall use reasonable efforts to utilize these contacts, either directly or through its sub-licensees, such contacts in particular are Focal Point in Japan, Mobile International in China Hong Kong & Malaysia and IDCP in the European Union.
REVENUE SPLIT .
In full consideration of the Parties’ performance under this Agreement and for all of the rights granted by Sleek hereunder, TVG agrees to pay Sleek a percentage of the Net Profits, (the “ Royalty ”) as set forth in Section 6 below at the address provided in Section 13. Sleek and TVG acknowledge that the name, voice, image and likeness (including retail packaging rights) and Talent Fees due G-Unit shall be a deduction in determining the Net Profits as provided in Section 6 below (the “ G-Unit Royalty ”).
From and after the first airing of the Shows, TVG may withhold ten (10%) percent of all Royalties payable under this agreement, which would otherwise be due to Sleek and/or G-Unit over such period as to resolve for returns and charge backs. Such amount will be adjusted quarterly to reflect the actual amount subject to returns and chargeback experienced during the prior quarter.
Nothing contained herein shall be deemed to give Sleek or G-Unit the right to participate (through royalties, sharing fees, distribution fees or otherwise) in the proceeds of sales by TVG of any item other than the Product.
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During each year of the Term, TVG shall make a donation of $5,000 for each 100,000 Product Units sold during the previous calendar year (or partial calendar year, as the case may be), to the G-Unity Foundation or another charity(ies) designated by G-Unit; provided, however , that the initial donation on January 1, 2012 shall be based on sales of Product from the date hereof through December 31, 2011. For purposes of such contribution, sales of Products shall be deemed made as provided under Paragraph___ . This payment shall not be a deduction made prior to the determination of Net Profits.
TVG, with the full input and cooperation of Sleek and G-Unit, will script, create, shoot and produce a direct response spot or spots (the “Show”) promoting the sale of the Product including all retail point-of-purchase videos, and all product related marketing materials and promotional items and vehicles, including, but not limited to internet and viral videos . TVG will fund the production and the media test and Rollout of the Show. TVG will also fund and conduct the rollout of the Product into retail and all other channels of distribution. The parties will mutually agree and create the retail packaging prior to the production of the Show and begin placement activities at inception of the execution of this Agreement. G-Unit, subject to approval rights, grants the Parties the right to use the name, image, voice and likeness of 50 cent in retail and promotional packaging and promotional materials.
TVG shall be responsible to conduct all other operational services, and marketing in connection with the Shows produced by TVG, including, but not limited to, answering services, toll free or 800 phone numbers, P.O. boxes, all order processing and fulfillment functions, product storage and inventory, customer service and all other operational duties.
TVG shall provide Sleek and G-Unit with a Script outline to review for approval. Sleek’s and G-Unit’s suggested revisions and/or approval of the outline shall be submitted in writing to TVG, no later than forty-eight (48) hours after transmission of the Script outline to Sleek and G-Unit, and shall not in any way unreasonably delay production. If suggested revisions and/or approval are not received by TVG within forty-eight (48) hours after transmission to Sleek and G-Unit, TVG shall have the authority to deem the Script outline approved. Sleek’s approval of the Script outline shall constitute Sleek’s verification and representation to TVG of the truth and accuracy of the statements and claims concerning the Product made in the Script outline. If either Sleek or G-Unit does not approve an item, they shall specify in writing the specific reasons therefore and offer reasonably acceptable remedies. To the extent that such remedies are unacceptable to TVG, TVG and G-Unit shall have the final say on all aspects of the production and creation of the Show, subject to Sleek’s reasonable approval rights specified above.
It is the explicit understanding of TVG that Sleek shall in conjunction with 50 Cent/G-Unit create a contest or other incentive, which TVG will be able to utilize in the Show. The details of those incentive promotional plans are outlined in the SLEEK AUDIO ‘Marketing Plan Overview” attached hereto and incorporated herein by reference. These activities are to be funded by Sleek or G-Unit.
Sleek and G-Unit will have mutual approval with TVG over the use of other celebrity, non-celebrity, spokespersons, testimonials and other talent. ("Talent") with respect to the marketing and sale of the Product.
If TVG deems it necessary to have Product Testimonials in the Show, then TVG shall incorporate local Product testimonials of users of the Product(s) into the Show. If appropriate, Sleek agrees to supply TVG with contact information for users of Product, subject to applicable laws.
Sleek shall supply TVG with the necessary units of Product for the, Production of the Show at no cost to TVG. Uses for said Product include, but are not limited to, testimonials and production. The Product Samples shall become the sole property of TVG.
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TVG shall be responsible for final editing and post-production necessary to prepare the Show for television airing. The final version of the Show shall be subject to approval by Sleek for technical and legal accuracy. Under no circumstance shall the approval of the Show by Sleek be unreasonably withheld or cause unreasonable delay. Sleek shall be deemed to have approved the Program for technical and legal accuracy if Sleek does not object to the Show in writing, within five (5) days after transmission, Sleek’s approval of the final version of the Show shall constitute Sleek’s verification and representation to TVG of the truth and accuracy of the statements and claims concerning the Product made in the Show. Upon Rollout or the beginning of the Initial Term (both of which are defined above) if TVG, in its sole discretion decides to continue airing the Show or to continue marketing the Products, TVG shall assume the media expense and finance the inventory.
TVG and Sleek shall co-own the Show but neither may use the same except in furtherance of the provisions of this Agreement. Both Parties may use the Show and other promotional material for biographical and corporate promotional uses.
Upon reasonable notice and availability, representatives of Sleek shall use their best efforts to be available subject to prior business commitments, at no cost, except as provided for herein, to TVG to tape a Show (including revisions to the Show), promoting the sale of the Product.
The Show(s). In return for the G-Unit Royalty, G-Unit agrees that Curtis Jackson shall provide all the Services (as hereinafter defined) and shall be the Celebrity Talent/Host for the Show(s) and the retail and other promotional videos and vehicles to be utilized and jointly created with G-Unit and subject to its reasonable approval rights set forth elsewhere herein. The Appearances. G-Unit shall also provide Jackson’s guest appearance on home shopping channels a minimum of six (6) times each Contract Year and shall make a minimum of six (6) other Appearances at events approved by G-Unit, (collectively, the Shows and the Appearances are referred to as the “ Services ”).
The Celebrity Talent/Host agrees to perform all Services reasonably required by TVG which are in any manner related to his role as Celebrity Talent/Host/spokesperson and/or demonstrator of the Show and Appearances. Such services shall be rendered in a professional, competent and diligent manner and shall include, without limitation, and as applicable, (i) rehearsing, shooting and completing production the Show(s) (in consideration of the payments provided for in this Agreement), as TVG shall require in order to produce a "first class" Show, (ii) discussing and demonstrating the Product on camera (or in studio or via phone patch for radio), (iii) representing the Host's true beliefs as to the efficacy and quality of the Product, and (iv) interviewing endorsers of the Product, customers and potential customers of the Product and other persons that appear in the Show and other marketing/packaging/promotional videos and vehicles. The Celebrity Talent/Host shall cooperate with and participate in preproduction/rehearsal activities to the extent necessary in TVG's reasonable judgment, for the Celebrity Talent/Host to prepare adequately for his role in the Show. Such activities shall include, without limitation, meeting with and communicating by phone with the writers preparing the script for the Show (and other vehicles) and with other persons who will appear in the Show. Celebrity Talent/Host shall also be available subsequently as reasonably requested for voice overs, pick-ups or other related post-production needs, as may be mutually agreed.
If TVG requests Jackson’s attendance at any such Appearance event and Jackson is unable to attend, TVG shall have the right to request attendance at an alternate event(s), subject to the approval and scheduling provisio