Document:

mgcn10qsb073105ex103

  
    MEMBERSHIP AND SERVICE AGREEMENT

    This Membership and Service Agreement ("Agreement") is entered into as of August 11, 2005, by and between the Citybuzz.tv   ("Participant"), located located at 1775 Broadway, Suite 401, New York, NY 10019 and the National Hotel Television Network  (NHN) ("Company") located at 530 North Federal Highway Ft. Lauderdale, Fl 33301.

    1.   Recitals.

     This Agreement is entered into with reference to the following:

    a.   Participant owns and operates a national advertising rep firm ("Citybuzz.tv").

    b.   Participant develops advertising, information and entertainment content ("Content") and broadcasts the Content on closed circuit television systems ("Local Network") to guests and other invitees of hotels, resorts and spas that accept national advertisements in the following locations: Atlanta, Baltimore, Boston, Charlotte, Chicago, D.C. Los Angeles, New York, Orange County CA Philadelphia, San Diego, San Francisco, Savannah, St. Louis and St. Charles ("Local Competitor"). 

    c. Participant desires to be represented to national advertisers by Company, and Company desires to sell national advertising on behalf of Participant on the terms and conditions set forth herein.

    d.   Company may enter into agreements similar to this Agreement with other participants ("Other Participants") who develop content for local networks in other locations in order to offer national advertisers a broader geographic market for distribution of advertising over local networks.  Collectively, the Company, Participants and the Other Participants are sometimes referred to as the "Consortium" in this Agreement.

    2.   Term.

     The term of this Agreement shall commence upon execution of this agreement and shall continue for a period of 18 months. This Agreement shall automatically renew for additional periods of 18 months unless either party sends the other party written notice of its intention not to renew, at least 60 days prior to the end of such 18-month period, or unless otherwise terminated pursuant to Section 10 hereof. 

    3.   Services.

      Participant hereby grants Company the right along with participant to sell national advertising on behalf of Participant for the Local Network.  In no event shall Company be responsible for securing any minimum amount of advertising for Participant or the Local Network, whether in terms of numbers of advertisers or value of advertising contracts.

    4.   Commission.

    a.  Basic Commission and Supplementary Commission.  Company shall pay Participant an amount equal to the gross revenue received (minus any applicable advertising agency commissions) from advertisements placed in the Local Network by Company minus a commission fee equal to 25% of such gross revenue,

    Participants Commission. Citybuzz.tv shall receive such net amount from all advertisements placed on Citybuzz.tv networks affiliates. Payment for Citybuzz.tv network affiliates shall be made payable only to Citybuzz.tv.

    b.  Referral Commission. If Participant refers a potential national advertiser to the Company ("Participant Referral"), and the Company enters into an advertising agreement with such advertiser for distribution to the Consortium, the Company shall pay to Participant a referral commission equal to 10% of the gross revenue received from such advertisements.

    5.  Intentionally omitted.

    6.   Participant Benefits.

     In addition to selling national advertising for Participant, the Company will provide benefits including, but not limited to the following, at no additional charge to Participant, except as otherwise provided in Section 4:

    a.   Prepare and purchase Company promotional material;

    b.   Produce and pay for Company media kits;

    c.   Purchase all printed Company materials, including stationery, business cards, and envelopes;

    d.   Coordinate distribution of advertisements;

    e.   Manage all advertising invoices and collections.

    7.   Exclusivity. The Company shall not sell national advertising for another network that broadcasts on closed circuit television systems to guests and other invitees of hotels, resorts and spas in the metropolitan areas of Atlanta, Baltimore, Boston, Chicago, D.C. Los Angeles, New York, Orange County, CA Philadelphia, San Diego, San Francisco, Savannah, St. Louis and St. Charles Charlotte, Alaska,  and Denver and Breckenridge Colorado. ("Local Competitor"). and any other non competitive market to NHN.

    8.   Advertisers.

    a.  Company Advertisers.  Company will contract directly with national advertisers ("Advertisers") for the placement of advertisements in the Consortium, including those advertisers that are Participant Referrals.

    b.  Participant agrees to air all advertising sold by Company for the Local Network in accordance with the terms and conditions agreed upon between the Advertisers and Company and Participant. All payments for advertising, in accordance with the provisions of paragraph 9G below, placed in the Local Network by Company shall be made to Company. Company will forward any payments due to Participant pursuant to Section 4 above for advertisements placed in the Local Network or for Participant Referrals to Participant within fourteen (14) days of its receipt of the payments. If any Advertiser does not pay Company for an advertisement placed in the Local Network or the Consortium by Company, and Company exhausts commercially reasonable efforts to collect payment from such Advertiser, Company shall not be liable to Participant. Company's collection efforts shall be limited to writing letters, re-invoicing, follow-up telephone calls and hiring a collection agency (which decision shall be made in Company's sole discretion and all costs therefore shall be offset against payments by Company to Participant). Company shall not be required to pursue any manner of litigation in connection with its collection efforts. Participant agrees not to pursue any collections against Advertisers without the written authorization from the Company.

    c.  Participant Referrals.  If Participant has contacts with a national advertiser, and believes such advertiser might be interested in advertising with the Consortium, then Participant will notify the Company in writing of such national advertiser.  If Company does not already have a relationship or contact with such potential advertiser, and Company desires to approach such potential advertiser, then Participant and Company shall work together to approach such potential advertiser.  If such advertiser and Company and the relevant Other Participants are able to negotiate mutually agreeable terms and conditions, then the Company shall contract directly with such national advertiser for the placement of advertisements in the Consortium.  

    9.   Participant Obligations.

    a.   Company shall send a copy of the advertiser spot to participant for integration into Citybuzz.tv network affiliates.

    b.   Participant shall not become a member of any other network, and shall not allow any other company to sell national advertising on its behalf for the Local Network.

    c.   Participant shall not establish another Local Network in a market in which one of the Other Participants operates under Agreement with the Company related to the Consortium.

    d.   Participant shall maintain the Local Network as a first-class Local Network with the same or better quality, exposure and distribution as the Local Network has of the Effective Date.

    e.   Participant shall maintain at least the same distribution throughout the contract period. Participant shall notify Company of new distribution numbers every four months beginning on the effective date of this Agreement.

    f.    Upon written request to Participant by Company, Participant shall supply copies to the Company of signed affidavits or the pertinent sections of signed contracts for each claimed distribution outlet in its Local Networks. Affidavits or contract copies will contain (a) a hotel room count, and (b) a signature of a hotel official.

    g.   Participant shall use its best efforts to fulfill all outstanding advertising agreements that have been placed by or through the Company as approved by the Participant in accordance with a procedure and schedule established with the Company.

    h. Participant, for any reason, at its sole discretion, is hereby granted the right to accept or reject any advertising, in whole or in part, by Company for airing in Participant's network. 

    10. Termination.

    Company may terminate this Agreement for any reason upon sixty (60) days prior written notice to Participant.  Participant shall be entitled to terminate this Agreement only for material breach of this Agreement by Company, and only if the Company shall fail to cure such material breach within 30 days after written notice thereof is received by Company.  At the time of the expiration or termination of Participant's agreement with the Company, Participant shall fulfill all outstanding advertising agreements that have been placed for Participant by or through Company, and the Company shall fulfill its obligations to Participant regarding such outstanding advertising agreements, including, but not limited to, the obligation to make payments to the Participant for such advertising in a timely manner as described in paragraph 8 above.  Sections 10, 11, 13b and 13f shall survive any expiration or termination of this Agreement.

    11. Waiver and Indemnity.

    Company shall not be responsible for, and Participant hereby waives all claims against Company for the placement, quality or distribution of advertisements sold by or through Company for the Local Network. Participant shall indemnify, defend and hold harmless Company, and its respective officers, directors, shareholders, members, agents and representatives from and against all claims, actions, damages and liabilities arising out of the placement, quality or distribution of advertisements sold by or through Company for the Local Network or any breach of this Agreement by Participant, its employees, or directors. The Company shall indemnify, defend and hold harmless Participant, and its respective officers, directors, shareholders, members, agents and representatives from and against all claims, actions, damages and liabilities arising out of any breach of this Agreement by the Company, its employees, or directors.

    12. Assignment.

     Participant or Company shall not be entitled to assign this Agreement without the written approval of the other party, which will not be unreasonably withheld.

    13. General Provisions.

    a.   Notices. All notices given under this Agreement shall be in writing and may be personally served or delivered by facsimile or certified or express mail, addressed as provided above. Any notice served personally or by facsimile shall be deemed received when served or confirmed. Any notice delivered by certified or express mail shall be deemed received two (2) days after its deposit in the mail.

    b.   Applicable Law.  This Agreement shall be governed solely by the laws of the State of Florida. The parties agree that the proper venue for all actions brought pursuant to this Agreement shall be Broward County, Florida.

    c.   Parties' Relationship. Nothing in this Agreement shall be construed to create a partnership, joint venture, or agency relationship between the parties.

    d.   Amendment. This Agreement may be amended only by a written agreement signed by both parties hereto.

    e.   Final Agreement. This Agreement memorializes and constitutes the final expression and the complete and exclusive agreement between the parties with regard to the subject matter hereof, and it supercedes and replaces all prior negotiations, proposed agreements, and agreements, whether written or unwritten.

    f.    Confidentiality. This agreement and any other communications, agreements, negotiations, whether written or unwritten and including the affidavits referred in paragraph 9f above, between Company and Participants are confidential and cannot be shared with any parties outside of the Participant or the Company except as reasonably necessary to satisfy customary and usual conditions of advertisers. The Company's inclusion of information regarding the Local Network on its website or marketing materials, including [hotel names, hotel room counts, etc...], shall not be considered a breach of this provision. Confidential information does not include information that (i) is in or enters the public domain without breach of this Agreement, (ii) the receiving party lawfully receives from a third party without restriction on disclosure and without breach of a nondisclosure obligation or (iii) the receiving party can demonstrate that it knew without restriction prior to receiving such information from the disclosing party, or that it developed independently without reference to such information. The terms and conditions of this Agreement will be deemed Confidential Information and will not be disclosed to any third party unless expressly provided for in this Agreement. Violation of this clause may result in the immediate termination of this Agreement by Company. In addition to any other remedies available to it at law or in equity, each party will be entitled to injunctive relief (without the requirement of posting a bond or other form of security) to enforce this section.

    Company:

    By:       _____/s/Gordon Scott Venters________________________

    Name:  _______Gordon Scott Venters______________________

    Title:     ________Pres/CEO_____________________

    Date:    _______8/24/05______________________

    Participant:

    CITYBUZZ.TV

    By:       ______/s/C. Ferer_______________________

    Name:  ________C. Ferer_____________________

    Title:     _________Pres, Chrm Vidicom____________________

    Date:    ________8/29/05_____________________SUPPLY AGREEMENT

Exhibit 10.1

SUPPLY AGREEMENT

This Supply Agreement (Agreement) is between Nutri System, Inc. (NS), a corporation with offices at 200 Welsh Road, Horsham, PA 10944, and Oregon Freeze Dry, Inc. (Supplier), a corporation with offices at 525 25th Avenue SW, Albany, OR 97321.

OFD will sell, and NS will buy packaged products that meet NS's specifications, subject to the terms and conditions of this Agreement.

 

	DEFINITIONS

	"Authorized Purchases" shall mean ingredients and packaging material purchased by Supplier to meet NS orders, QVC forecasts and maintain Buffer/Replenishment requirements.
	 "Laws" means all applicable statutes, ordinances, judicial and administrative decisions, and the rules and regulations of governmental agencies, of the United States or any state, territory, county, city, municipality or other political subdivision in which the Product(s) are manufactured, marketed, distributed, sold or used including, without limitation, those relating to environmental and transportation matters and those requiring a notice or warning.
	"Product(s)" meaning product line that has been approved by NS and are being produced by Supplier.
	"Specifications" means finished product description provides product description, ingredients, nutrition information, microbiological requirements, as well as other product parameters.  

 

	TERM

The term of this Agreement shall commence on August 15, 2005 (Effective Date) and shall expire on December 31, 2010 unless terminated earlier according to its terms.  This agreement may be renewed as is, or as modified, based on agreement of both parties.  Agreement may be terminated by either party, upon written notice within 90 days after date of notice.   If NS terminates agreement, NS shall be liable to Supplier for the actual costs for all Authorized Purchases, minus any value Supplier or NS can obtain, using commercially reasonable efforts, for the unused portion of the Authorized Purchase.  If Supplier discontinues agreement, Supplier will make reasonable efforts to assist NS locate a replacement supplier and assist with formula development and production assistance.

	PURCHASE OF RAW MATERIAL & PACKAGING MATERIAL

	NS authorizes Supplier to purchase raw material and packaging material as required to meet NS consumption level estimates and forecasts, and maintain Replenishment/Buffer System. 
	Supplier will use NS's Consumption level and QVC forecast to determine purchase quantities of raw and packaging materials.  Supplier has authorization to purchase a maximum of three months of raw and packaging materials.     
	If NS decides to discontinue a Product, they will provide Supplier with as much notice as possible.  NS will be responsible for all ingredients and packaging materials specific to the discontinued product, and Supplier will bill NS for these remaining materials. 
	If NS decides to reformulate a product, NS will be responsible for all ingredients and packaging materials that are no longer usable due to reformulation, and Supplier will bill NS for these materials.  
	Upon termination or expiration of this Agreement for any reason other than Supplier's material breach of a material term, NS shall be liable to Supplier for the actual costs to Supplier for all Authorized Purchases, minus any value Supplier or NS can obtain, using commercially reasonable efforts, for the unused portion of the Authorized Purchase.  

 

4.PRICE: PAYMENT

	Freight Terms are F.O.B. Albany, OR.  
	OFD will invoice NS on the date of shipment.  NS shall pay invoices within thirty (30) days of invoice date. 
	Pricing is based on costs of raw material, packaging materials and Supplier's processing costs.  Pricing will be reviewed bi-annually, and if pricing adjustments are necessary, these adjustments will be made July 1 and January 1 of each year.
	NS may require product reformulations which may cause pricing to change.  In this case, Supplier will inform NS of new pricing, and Supplier and NS will agree on transition timing for the new product formulation.

 

5.REBATE

OFD has agreed to a Rebate Program for 2005 based on the following sales levels:

	1% rebate for sales between $6,200,000-$7,749,000
	2% rebate for sales between $7,750,000-$9,299,000
	3% rebate for sales above $9,300,000 
	The rebate amount will be based on the total dollar value of OFD products shipped to NS from January 1-December 31, 2005.  
	The 2005 Rebate will be paid to NS by January 31, 2006.
	Supplier will offer rebate program to NS on future year's sales.  Future programs will use the previous year's total sales +25% as the starting level for the next year's rebate.  For example, if 2005 sales are $9,000,000, the 2006 rebate will begin at $11,250,000.  

 

6.FORECASTING/REPLENISHMENT SYSTEM

	NS will provide Supplier with estimated Weekly Consumption Levels and this information will determine buffer levels held at Supplier.  NS will update Weekly Consumption Levels as necessary based on their sales levels changes and trends. 
	NS will provide Supplier with NS inventory report from each warehouse at least once per week.  NS is making efforts to increase frequency of inventory data and will ideally be able to provide it daily in the near future.   If data is provided to Supplier more frequently, Supplier will have better information to make decisions on production quantities and priorities, and this will decrease our response time.   If possible, NS will provide Supplier with direct access to NS inventory of Supplier's items.   
	When NS expects significant increases, they will provide Supplier with a forecast three months in advance of increased shipments.

 

7.WARRANTY; REMEDY LIMITS 

Supplier warrants that the Products, at the time of Delivery, shall conform to the Specifications.  Supplier disclaims all other warranties, express or implied, including warranties of merchantability and fitness for a particular purpose.  In the event that Products do not conform to the Limited Warranty, NS's exclusive remedy shall either be replacement or a refund of the purchase price, whichever Supplier elects in its sole discretion.  In no event will Supplier be liable for special, consequential, and incidental damages, even if forewarned of their likelihood.  Supplier's maximum liability arising under and relating to this Agreement shall not exceed the total amount paid Supplier by NS, irrespective of the facts and legal theories (including torts) underlying the claims.

 

8.TITLE/RISK OF LOSS

Title to and risk of loss or damage to the Product(s) shall pass from Supplier to NS when the Product leaves Supplier's Dock.

 

9.CONFIDENTIALITY

All processes, documents, data, plans, material, policies or information, including, without limitation, the Specifications, pertaining to either party's business which is obtained by the other party ("receiving party") or furnished to the receiving party in connection with the receiving party's services or Product(s) hereunder ("Information") shall be maintained by the receiving party in strict confidence and shall not be disclosed to any person or entity for any reason or used by the receiving party except as necessary for it to perform its obligations hereunder. The terms of this confidentiality provision shall survive the expiration, termination or cancellation of this Agreement, for a period of five (5) years. The limitations contained in this provision shall not apply to:

	Information which is in the public domain at the time of disclosure; or
	Information which becomes part of the public domain after disclosure through no fault of the receiving party; or 
	Information which the receiving party can prove was known by the receiving party at the time of disclosure;
	Information which the receiving party can prove was supplied to the receiving party by a third (3rd) party or was independently developed by the receiving party.

At the conclusion of this Agreement, the receiving party shall destroy or return the Information to the disclosing party, whichever the disclosing party directs.

 

10.ASSIGNMENT AND CHANGE OF CONTROL

Neither party shall assign nor otherwise transfer, in any manner, either by contract, operation of law or change in control, this Agreement or any of the rights and obligations hereunder without the other party's prior written consent.

 

11.ENTIRE AGREEMENT

This Agreement, including its attached exhibits and schedules specified herein, supersedes all prior or contemporaneous written or oral agreements and understandings relating to the subject matter thereof. Neither party is entitled to rely on any representation of any officer, employee or agent of the other party which is not expressly set forth in this Agreement. Notwithstanding the foregoing, any confidentiality or non-disclosure agreements executed by the parties prior to the date of this Agreement shall survive the execution of this Agreement. In the event of conflict between the terms of any such confidentiality or non-disclosure agreement and the terms of this Agreement, the terms of this Agreement shall prevail. This Agreement shall not be amended, altered, or changed unless in writing signed by the parties hereto.

 

12.FORCE MAJEURE

In the event that either party hereto shall be delayed, hindered in or prevented from the performance of any act required hereunder by reason of failure of power, riots, insurrection, war or other reasons of a like nature not the fault of, or under the reasonable control of, the party delayed in performing work or doing acts required hereunder, then performance of such acts shall be excused for the period of the delay and the period for the performance of any such acts shall be extended for a period equal to the period of such delay, provided such delayed party gives prompt written notice to the other party of the occurrence giving rise to the delay; and, provided further, Supplier shall commence performance promptly upon the cessation of the Force Majeure event.

 

 

 

13.GOVERNING LAW; JURISDICTION

	Governing Law.  This Agreement shall be governed and construed in accordance with the laws of the State of Oregon, including all matters of construction, validity, enforcement and performance, without regard to its conflict of law provisions.

	Jurisdiction. The parties hereby consent to the jurisdiction of the Oregon State and Federal courts for all purposes.

 

14.MEDIATION

The parties will attempt in good faith to promptly resolve any dispute arising out of this Agreement by negotiations between representatives who have authority to settle the controversy. If unsuccessful, the parties shall engage in non-binding third-party mediation, with fees and expenses of such mediation apportioned equally to each side. Any dispute not resolved by negotiation or mediation may then be submitted to a court of competent jurisdiction in accordance with the terms of this Agreement.

 

15.NOTICE

All notices, requests and other communications to any party hereunder shall be in writing and shall be given:

If to Supplier -Oregon Freeze Dry, Inc.

Attn: Pam Bentley, Market Manager, Retail & Private Label

PO Box 1048

Albany, OR  97321

If to NS - Nutri System

Attn: David Vone, 

Senior Director of Procurement, Supply Chain

200 Welsh Road

Horsham, PA 19044

 

16.SUCCESSORS AND ASSIGNS

Except as limited by the Assignment provisions hereof, this Agreement, including its terms and provisions shall be binding upon and inure to the benefit of the parties hereto and their respective partners, legal representatives, successors and assigns.

 

17.SEVERABILITY

Each provision of this Agreement is severable and if any provision shall be finally determined to be invalid, illegal or unenforceable ("invalid") in any jurisdiction, the remaining provisions shall not be affected thereby, nor shall said provision be invalid in any other jurisdiction.

 

18.AUTHORIZATION; VALIDITY

In witness whereof, the parties hereto have duly executed this Agreement as of the day and year first above written:

Oregon Freeze Dry, Inc.                                  Nutri System, Inc.

By: _/s/ James Merryman___________          By: _/s/ Bruce Blair________________                               

Print Name: James Merryman                         Print Name: Bruce Blair

Title: Senior Vice President, Food Division     Title: CIO/Senior Vice President,   

                                                                        Operations

Date: ________9/16/05_____________         Date:__________9/16/05___________

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