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:
1.
TERM
1.1.
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.
1.2.
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.
1.3.
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.
2.
PRODUCTS/SHOW
2.1.
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.
2.2.
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.
2.3.
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
$250,000, to Sleek. TVG shall acquire the Product Units at
COG (defined below).
2.4.
Upon execution of this
Agreement (and as a condition to TVG's execution thereon), Sleek
shall provide TVG with copies of any patent, copyright, trademark,
trade name and service mark registrations relating to the Product
(all of which are listed on Exhibit A) and all such other
documentation which shall in any way effect the legal and effective
distribution, promotion and sale of the Product. TVG may not use
the same without the written approval of the other parties and such
use may only be in furtherance of this Agreement and only during
the Term hereof. No product may become a Product hereunder
without the express prior written consent of Sleek and no trademark
utilizing the name, image, voice or likeness or 50 Cent may be used
without the express prior written consent of G-Unit.
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2.5.
(i) Sleek hereby
represents that the lead time for supplying the headphone Product
to TVG is presently ________ (_______) Units a day for orders up to
_____ thousand (________) Product Units at current capacity. The
estimated third party costs of manufacture and delivery of the
Product and Packaging (the “COG” as defined below
herein) per Product Unit is ______ ($_______), 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.
(ii)
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.
(iii)
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;
2.6.
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.
2.7.
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.
3.
REVENUE
SPLIT .
3.1.
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 ”).
3.2.
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.
3.3.
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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3.4.
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.
4.
OPERATIONAL
DUTIES
4.1.
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.
4.2.
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.
4.3.
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.
4.3.1.
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.
4.4.
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.
4.5.
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.
4.6.
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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4.7.
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.
4.8.
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.
4.9.
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.
4.10.
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