THOMAS & PERKINS
August 1, 1998
Mr. Frank Keery, CEO
Titan Motorcycle Company of America, Inc.
2222 West Peoria Avenue
Phoenix, AZ 85029
Dear Frank:
This letter will set forth the agreement reached between Titan Motorcycle
Company of America, Inc., (hereafter "Company") and Thomas & Perkins, Inc.
(hereafter "Agency") referring to advertising, public relations, and marketing
communications counsel to be provided by Agency to Company subject to the
following terms and conditions:
1. This agreement shall be effective beginning August 1, 1998. It may be
canceled by either party upon sixty (60) days advance written notice to the
other.
2. During the term of this Agreement and up to six months after its
cancellation, Agency agrees it will not perform services for any other
provider or manufacturer of motorcycles nor accept as a client any party
requesting services that would or could be in conflict with the interests
and objectives of the services to be provided to Company in the Company's
sole discretion without Company's prior written consent.
3. Company considers all data, knowledge and other information regarding
Company (collectively the "Information"), which is submitted or transferred
to the Agency, to be confidential, proprietary, and/or trade secret
information of the Company. Such Information and material shall be the sole
and exclusive property of the originating party. Agency agrees to take
every precaution to safeguard and treat the Information as confidential,
proprietary, and/or trade secret: and further agrees that it will not
disclose, publish or reveal (collectively, "Disclosure") any of the
Information received from the Company to any other party whatsoever, except
with the specific prior written consent of the Company. Notwithstanding the
foregoing, it shall not be a breach of this paragraph to provide any such
information or material upon lawful court order, provided the other party
has been given such prior notice as is reasonable and an opportunity to
object to disclosure. Agency agrees that it will not reproduce or make use
of, either directly or indirectly, any of the information which is received
or has been received by the Company, other than for the purpose for which
such Information has been disclosed, except with the specific prior written
consent of the Company. Agency agrees to return all such information to
Company upon request by the Company or termination of this Agreement.
4. The following advertising services shall he made available to the Company.
Company shall utilize said services at its sole discretion.
a. Development and effectuation of advertising and/or promotion
strategies and plans.
b. Development of advertising conceptual theme and concept.
c. Development of graphics including logo, ad design & layout, signage
and other items related to an advertising campaign which are approved
by Company and in accordance with Company's graphic standards.
d. Developing of media plans/strategies, researching respective budgets
and other related costs to the execution of those plans.
e. Development and effectuation of an advertising campaign or program.
f. Development of a brochure system, direct mail program and collateral
communications media to facilitate marketing Company and its products
or services.
g. Development of homepage communications to be placed on the Internet.
5. The following marketing communications/public relations services shall be
made available to the Company. Company shall utilize said services at its
sole discretion.
a. Development and effectuation of a public relations and marketing
communications program as agreed upon by the parties.
b. Development of a brochure system, direct mail program and collateral
communications media to help market Company.
c. Providing counsel to Company on other aspects of its public relations,
sales promotions and marketing communications program.
d. Researching budgets on collateral media and other aspects of the
public relations and marketing communications program.
e. Directing research-related activities for measurement of opinions,
attitudes and perceptions.
6. Unless otherwise agreed by the parties in writing, the following Agency
compensation and charges shall be applicable:
a. A monthly fee of $6,000 for account management services, traffic
services, media services, account planning, creative services which
include conceptual development, copyrighting, art direction, creative
direction, pre-press, print production management, and broadcast
producer services.
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i. Should the scope of the relationship change and require more or
less agency hours than currently planned and approved by Company
or Company's ability to allocate more resources to marketing,
then adjustments to the monthly fee structure will be mutually
agreed upon by both parties and incorporated.
ii. For the sake of establishing value, the Agency's average hourly
rate is discounted by twenty-five percent (25%) to a rate of $70
for Company. Company will receive well in excess of the few hours
accounted for under the above monthly fee.
iii. Agency compensation may be exchanged for shares of restricted
common stock of the Company. The Agency will bill the Company on
monthly basis. The per share price of the shares will be
determined by each calendar quarter average trading price
discounted by fifteen (15%) percent. To determine the number of
shares to be issued, the amount of fees billed for the quarter is
divided by the determined price er share. For example, if the
fees for the quarter were $20,000 and the average trading price
of the Company's share was $10.00 per share, the 15% discount is
then applied to the average price per share for the quarter and
would equal $8.50. The fee of $20,000 is divided by $8.50 to
determine the number of shares to be issued which would equal, in
this example, 2353 shares. Fractional shares will be rounded up
to the next whole share.
The Company reserves the right to pay due compensation in cash as
opposed to stock at its sole discretion.
b. Net expenses incurred by Agency on behalf of Company which include,
but are not limited to: communications (long distance telephone and
postage); transportation and other travel expenses, including mileage;
and messenger service.
c. All outside expenses incurred by Agency for Company will be billed at
actual cost, unless otherwise agreed upon by both parties.
d. All media placement charges are billed at NET. There is no media
mark-up.
e. All photocopies (black and white and color), special "comp" materials,
and computer access and storage (Syquest disks) charges.
7. All creative services work developed for the Company by the Agency must be
authorized by a signed cost estimate provided by the Agency. Should the
scope or direction of the project change, the Company will receive a
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revised cost estimate for its approval before the Agency proceeds with
work. The Company will also receive various weekly reports which shall be
hand-delivered or sent by electronic media detailing current activity in
which the Agency is engaged on behalf of the Company. The reports may note
action the Agency is taking on behalf of the Company. The Agency will not
proceed with the noted action until notified by the Company to do so.
8. All materials prepared by Agency for Company will be shown to and approved
by Company prior to Agency's release, printing, media insertions or
external release. Agency shall not be responsible for any errors in
materials approved by Company.
9. Company shall defend, indemnify and hold Agency harmless from and against
and all claims, demands, Suits and/or judgments including all reasonable
costs, expenses, and attorneys' fees based upon or arising out of Agency's
and/or Company's use of any information or material supplied to Agency by
company which ultimately is claimed or proven, and which was known by
Company, to be in violation of any federal, state, or local law, regulation
or order; or which violates the copyright or proprietary rights of a third
party; or which is claimed or proven to contain matter that is libelous or
scandalous; or invades any person's right to privacy, publicity, or other
personal right. Company also agrees to reimburse Agency for all attorneys'
and expert witness fees and expenses incurred in defending against or
investigating any such claim including any such fees or expenses on appeal,
but Company shall have no liability for such fees and expenses if it
accepts the defense of Agency within ten days of the lender. The Agency
agrees to indemnify the Company for all claims against the Company arising
out of the Agency's conduct related to this Agreement. Nothing herein shall
be construed to release Agency from responsibility for any loss, damage,
injury or liability arising from failure to perform services furnished
under this agreement according to ordinary advertising and public relations
business standards.
10. In the event of cancellation of this agreement by either party, all fees,
charges, and expenses billable, billed and incurred by Agency shall be paid
immediately by Company.
11. Company and Agency intend that all property rights to any and all
materials, text, documents, booklets, manuals, references, guides,
brochures, advertisements, music, sketches, drawings, photographs,
specifications, data, and any other recorded information created by Agency
and paid for by Company pursuant to this Agreement, in preliminary and
final forms and on any media whatsoever (collectively, the "Materials"),
shall belong to Company. To the extent permitted by the U.S. Copyright Act,
17 USC ss. 101 ET SEQ., the Materials are a work-made-for-hire, and all
ownership of copyright in the Materials shall vest in Company at the time
the Materials are created. To the extent that the Materials are not a
work-made-for-hire, Agency hereby sells, assigns and transfers all right,
title and interest in and to the Materials to Company, including the right
to secure copyright and other intellectual property rights throughout the
world and to have and to hold such copyright and other intellectual
property rights in perpetuity. As an exception, original artwork or
photographs, contracted outside the Agency, that have not been initially
negotiated (at the time of their creation) by Agency on behalf of Company
for full copyright privileges and ownership of the Company, shall remain
the exclusive property of their creators.
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12. It is agreed the Company will pay the Agency for services rendered within
thirty (30) days of receiving Agency's invoice. The Agency will bill the
Company for its media placement in the month that it is placed, which
traditionally occurs prior to the Agency receiving actual invoices from the
various media vendors with whom it placed media with on behalf of the
Company. This practice is done to facilitate timely payment to media
vendors to ensure the Agency's ability to appropriately leverage effective
placement and rates in serving the Company's objectives. It is also
acknowledged that the Agency will not pay vendors it has contracted for
work in behalf of the Company until the Company has paid the Agency (per
section 13). A finance charge equal in amount to 12% annually will be
charged each month by Agency on any unpaid balance due on invoices
submitted by Agency to Company which exceed forty-five (45) days from the
date of invoice. As security for any sum due on programs, projects or plans
undertaken by the Agency for the Company, Agency shall have the right to
retain possession of all advertising/marketing communications-related
materials of Company currently within the possession of the Agency until
the dispute is mutually resolved by both parties. Should a dispute occur,
the Company will, in writing, inform the Agency of its concern. The Company
will not be obligated to pay related invoices until the parties have
mutually resolved the dispute.
13. SEQUENTIAL LIABILITY: Company acknowledges that, in placing its advertising
with various media, the Agency will contract with such media on the basis
of "sequential liability" pursuant to which the Agency shall be solely
liable for payment to the extent that proceeds have cleared to the Agency
from the Company as advertiser for advertising published or broadcast in
accordance with the media contract. As advertiser, the Company will remain
solely liable for sums owing but not cleared to the Agency in respect of
such advertising. Accordingly, the Company hereby authorizes and agrees
that the Agency may contract with media on its behalf on the basis of
sequential liability, and that it will be solely liable to media and
respect to payments for such space or time to the extent such payments have
not cleared the Agency. To the foregoing extent, the Agency will act as
agent for the Company as disclosed principal in entering into contracts
with media, and a copy of this paragraph may be presented to media and/or
other third parties as evidence of the Agency's authority to act in such
capacity for such purposes.
14. If it becomes necessary for either party to commence any action or
proceeding against the other party in order to enforce the provisions
hereof, or to recover damages as a result of a breach of any of the
provisions hereof the prevailing party shall be entitled to recover all
reasonable costs incurred in connection therewith including reasonable
attorney's fees.
15. This agreement shall be interpreted and construed in accordance with the
laws of the State of Arizona.
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16. Any notice, demand or communication under or in connection with this
agreement which either party desires or is required to give to the other,
shall be deemed delivered when deposited in the United States mail first
class postage prepaid, or when personally served upon the other party.
17. This agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successor and assigns. Neither party
shall have a right to assign its rights or obligations under this agreement
without the prior written consent of the other. This agreement contains the
entire understanding of the parties with respect to the subject matter
herein contained. The parties may, from time to time during this agreement,
modify, vary, or alter any of the provisions of this agreement by a writing
executed by both parties.
18. Agency agrees to maintain accurate and satisfactory records and books in
accordance with sound accounting principles. Said books and records shall
present fairly all costs and expenses utilized either directly or
indirectly in computing any charges to the Company under this agreement.
Upon thirty (30) days' written notice. Agency shall allow the Company's
auditors access to the records and books to determine whether the Agency is
in compliance with the provisions of this agreement. The records and books
will be made available during the term of the agreement, and for a period
of twenty four (24) months thereafter.
19. Agency warrants and agrees that it will do the following throughout the
term of this Agreement:
a. Comply with all applicable laws, rules and regulations, whether
federal, state or local, including without limitation, the federal and
any state Occupational Safety and Health Act and worker's compensation
acts.
b. Pay all business, payroll, property, income and other taxes due upon
or in connection with the operation of its independent business.
c. Provide any and all insurance coverage necessary to protect its
independent business and Company from all applicable risks, including
but not limited to (i) workers' compensation coverage, (ii)
unemployment insurance coverage, (iii) automobile insurance and (iv)
comprehensive general liability insurance.
d. Refrain from doing anything which would tend to discredit, dishonor,
reflect adversely upon or in any way injure the good name or business
of Company.
20. In the event of any one or more of the following events, Company shall be
deemed to be in default under this agreement and Company shall be obligated
to pay Agency any and all fees, damages, expenses, and losses actually
incurred by Agency as a result of such default:
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a. Company's failure to pay bills submitted to it by Agency after sixty
(60) days from the date said bills are received by Company;
b. Upon Company's breach of any of the other terms and conditions of this
agreement; or
c. Upon the bankruptcy or insolvency of Company.
21. The individuals who sign this agreement on behalf of the respective parties
hereby represent and warrant that they have the right, power, legal
capacity and appropriate corporate authority to enter this agreement on
behalf of the corporation for which they sign below, if any.
If the foregoing accurately sets forth your understanding of our agreement,
kindly indicate your approval by signing and dating the duplicate original of
this letter and return it to me. This letter is for your files.
Sincerely,
THOMAS & PERKINS, INC.
Approved and accepted:
/s/ [illegible] By /s/ Francis S. Keery
------------------------------- -------------------------------
Title: President Title: CEO
Date: 8/7/98 Date: August 31, 1998
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Addendum to Contract
Original Agreement - August 1, 1998
Titan Motorcycle Company of America, Inc.
Web site development or electronic media development services include
development, launch and maintenance of electronic media, including but not
limited to Internet web sites, marketing CD-ROMs, kiosks, intranets, extranets,
custom software, floppy presentation mailers, virtual reality tours, simulated
product, demonstrations, data base design and building, three dimensional
renderings and animation.
In connection with the Agency's web site development for the Company, all
non-compiled program code, scripts, and run-time code developed by the Agency,
including but not limited to javascript, Pen code, Python ".py" code, databases
(but not database engines), and HTML code that reside in the Company's root web
Site directory (the "Root Directory Code"), to the extent owned by the Agency,
shall remain the Agency's property. Upon final payment of all development fees
and the reimbursement of all costs associated therewith, the Root Directory Code
shall become jointly owned by the Agency and the Company. Each owner shall have
the right to use, reuse and modify the Root Directory Code at their own
discretion, provided, however, the Company may not transfer or assign its rights
in and to the Root Directory Code, or any part thereof, without the prior,
written consent of the Agency, which consent may be withheld in the Agency's
discretion. The Agency may reuse the formatting and design elements inherent in
the Root Directory Code and any other code developed for the Company at its
discretion, but may not use any of the Company's copyrighted or proprietary
material which may be contained within the Root Directory Code, without the
prior, written consent of the Company, which consent may be withheld in the
Company's discretion. Notwithstanding anything to the contrary set forth herein
or elsewhere, all software used in web site development residing outside of the
Company's root web site directory, including but not limited to database
engines, server software and third party software, to the extent owned by the
Agency, shall remain the sole property of the Agency and nothing herein shall be
construed to convey or create any rights therein to the Company.
As another exception, in connection with the Agency's development of software
for the Company other than in connection with web site development for the
Company, all source code for compiled programs, including but not limited to
Macromedia Shockwave, Macromedia Flash, Macromedia Director, Python ".pyc" flies
and Java shall remain the property of the Agency. Upon final payment of all
development fees and the reimbursement of all costs associated therewith, Agency
hereby grants to the Company an irrevocable license to use, reuse and modify all
compiled flies created by the Agency for the Company, at the Company's
discretion. This license shall be strictly construed so as not to transfer any
other rights other than those specifically described herein, and shall not be
transferable without the prior, written consent of the Agency, which consent may
be withheld in the Agency's discretion.
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Thomas & Perkins, Inc., Approved and accepted by:
By______________________________ By______________________________
Title:__________________________ Title:__________________________
Date:___________________________ Date:___________________________
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