ACKNOWLEDGEMENT OF FURTHER AGREEMENTS
I (including any entity set forth below through which I market or conduct my Business, as defined below)
understand, acknowledge and agree that as a condition of being considered to participate in the reality-based
competition television program currently entitled “Shark Tank” (“Series”), I will be required to submit voluntarily to a
background check (and to execute all consents, authorizations and releases in connection therewith). I further
understand and acknowledge that I will be required to enter into further agreements with Mark Burnett Game Shows,
Inc. (“MBGS”), Mark Burnett Productions, Inc. (“MBP”), JMBP, Inc. (“JMBP”), One Three, Inc. (“OTI,” and
together with MBGS, MBP and JMBP, collectively, “Burnett”), American Broadcasting Companies, Inc.
(“Network”) and Sony Pictures Television Inc. (“SPT,” and together with Burnett and Network, the “Producers” and
each of individually a “Producer”; for sake of clarity, all of the entities comprising Burnett will be considered one
Producer) relating to my idea, product, invention, service or business (collectively, the “Business”). Among other
things, those agreements are currently anticipated to provide that as a condition of my participation on the Series and in
consideration for my introduction to the venture capitalist “sharks” and/or the publicity of appearing on the Series, as
well as other good and valuable consideration, Producers or their designee(s) will receive an irrevocable option (the
“Option”) to do either of the following, conditioned upon either of the Vesting Events described below occuring:
1.
Royalty Option: Receive a perpetual two percent (2%) royalty of 100% of the Net Revenues (as
defined below) derived from Business and/or any business entity(ies) through which my Business is marketed or
conducted (collectively, the “Business Enterprise”) that I present to the shark(s) (on terms and conditions to be set
forth in such agreements). “Net Revenues” means all revenues, from whatever source, generated by or derived from
the Business, whether received by or credited on a non-refundable basis to me, my team members, the Business
Enterprise, or my or the Business Enterprise’s designee, assignee or successor, less only actual, verifiable, out-ofpocket third-party costs and expenses for bona fide goods or services directly related to the Business (collectively
“Deductible Costs”). In no event will Deductible Costs exceed the applicable market rates or include any imputed
costs or charges.
2.
Warrant Option: Receive a perpetual warrant which gives Producers or their designee(s) a right to
receive, at the time of their choosing, an equity/ownership interest in the Business Enterprise. Such equity/ownership
interest (whether in the form of stock, membership interests, partnership interests, etc.) will be equal to seven and onehalf percent (7½%) of 100% of the number of equity/ownership interests of the Business Enterprise outstanding at the
latest of (i) the initial broadcast date of an episode of the Series in which my Business is presented; (ii) one year
following the completion of taping of such episode; and (iii) the date of completion of the Business Enterprise’s first
funding round following such taping date other than any funding provided by the shark(s) in connection with the initial
deal agreed to between the shark(s) and me, if any, (such latest date to be defined as the “Warrant Determination
Date”). When determining the total number of equity/ownership interests for purposes of the prior sentence, any
equity/ownership interests which may be issued in the future as a result of stock options or similar rights will be
counted in addition to any equity/ownership interests which are already issued. The warrant will also give Producers
or their designee(s) the following rights:
a.
The right to receive the most senior preferred class of equity/ownership interests in terms of
rights to receive dividends, rights to receive proceeds if the Business Enterprise is liquidated,
rights to receive proceeds if the Business Enterprise is sold, and voting/approval rights.
b.
The right to retroactively exercise the warrant as if it were exercised immediately prior to any
change in control or sale of the Business Enterprise, even if Producers or their designee(s) are
not made aware of the change in control or sale until after the fact.
c.
So-called “antidilution protection” whereby the number of equity/ownership interests that may
be issued upon exercise of the warrant will be adjusted if (i) the units of equity/ownership
interests of the Business Enterprise are split, divided or otherwise reclassified into a different
number or form of equity/ownership interests or (ii) the Business Enterprise, at any time after
the warrant is given, issues equity/ownership interests to any person at a per-interest price
which reflects a lower value of the Business Enterprise than the value of the Business
Enterprise at the Warrant Determination Date.
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d.
The right to transfer the warrant or the equity/ownership interests issuable on exercise of the
warrant freely to any person at any time.
e.
Any other rights granted to the sharks, myself, my family, any so-called “founders” or any
other equity owner on at least as favorable terms, including but not limited to the right to have
such equity/ownership rights registered for public offering, the right to participate in future
equity/ownership interest offerings, audit rights, the right to receive financial information, socalled “matching rights” and so-called “drag-along/tag-along rights”.
Producers or their designee(s) will receive such rights described above without any return obligation to fund the
Business Enterprise.
Either of the following shall constitute a “Vesting Event” and thereby vest Producers’ Option: (i) I enter into a
binding agreement regarding the Business Enterprise with a shark within two (2) years of the date of my introduction
to the shark or (ii) the initial exhibition of an episode of the Series that includes my presentation (or a portion thereof)
to the sharks sufficient to allow a reasonable person to identify the Business’s name and the nature of the Business.
At any time during the three-year period following (a) completion of taping of an episode of the Series in
which my Business is presented, or (b) if no such taping occurs, the date of my introduction by Producers to the
shark(s), Producers or their designee(s) will have the right to request documentation regarding the Business Enterprise
to determine whether and in what manner to exercise the Option (e.g., financial statements, business plan, list of
owners/investors, charter, form of warrant, stockholders agreements, rights agreements) (“Documentation Right”).
Conditioned on a Vesting Event having occurred, the Option may be exercised by Producers or their designee(s) until
the later to occur of (i) the end of such three-year period and (ii) six months following the date that satisfactory
documentation is provided to Producers or their designee(s) following a request for documentation (the “Option
Exercise Period”).
The procedure for exercise of the Option will be as follows: at any time before the end of the Option Exercise
Period, any of the Producers (i.e., one, two, or three) may each exercise the Option for one-third of the total
consideration due for exercise of the selected Option,1 and (iii) if at the end of the Option Exercise Period at least one
but not all three Producers have exercised the Option, then the remaining balance of the consideration for exercise of
the selected Option will be given to the Producer(s) that had exercised the Option.2
In addition, in the event that a shark and I, the Business Enterprise or any entity affiliated with me enter into a
binding agreement within two (2) years of the date of my introduction to such shark in connection with an idea,
product, invention, service or business other than the Business (“Alternative Business”), then the Option will also
apply to the Alternative Business (including any business entity(ies) through which the Alternative Business is
marketed or conducted). Producers shall be entitled to exercise their Documentation Right as set forth above with
respect to the Alternative Business, and the Option Exercise Period for an Alternative Business shall run from the date
I enter into such binding agreement with respect to the Alternative Business (and subject to the terms above). The
Warrant Determination Date with respect to any Alternative Business shall be the later of (i) one year following my
entering into such binding agreement and (ii) the date of completion of the first funding round following the date I
enter into such binding agreement).
If the Option is exercised, Producers’ royalty or right to receive equity (as applicable) will be an obligation in
addition to any obligations contained in any agreement between me and any shark. In addition to any other remedies
1
For example, if two Producers exercise the Warrant Option, then each would receive a warrant for the right to
receive 2.5% (or a total for both of 5%) of the number of equity/ownership interests in the Business Enterprise
outstanding at the Warrant Determination Date.
2
For example, following the prior example, if two Producers exercised the Warrant Option but not the third,
the two exercising Producers would each receive an additional warrant for the right to receive 1.25% of the number of
equity/ownership interests in the Business Enterprise outstanding at the Warrant Determination Date.
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(at law, in equity, or otherwise) available to Producers, my failure to execute such agreements in the form presented
may result in my immediate disqualification from the Series.
Dated:
Participant Name:
Entity Name (if any):
Signature:
Signature:
Title:
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