EXHIBIT 10.1
Vertical Computer Systems Inc. - Entertainment Marketing Group
Comprehensive Agreement for Marketing and Promotion Services and Business
Development
THIS AGREEMENT, effective as of October 16, 2000 between Vertical Computer
Systems, Inc., a corporation organized and existing under the laws of the State
of Delaware having its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("VCSY" or "Client") and Xatnu, Inc. dba
Entertainment Marketing Group, a marketing and promotion company having its
principal place of business at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("EMG" or "Agency").
WITNESSETH :
WHEREAS, the Agency is engaged in the business of providing marketing and
promotion and employs personnel with expertise in the rendering of such
services, and
WHEREAS, The Agency desires to provide trade and consumer marketing
services to Client, and
WHEREAS, Client desires to establish and promote the sale of Client
services and products (the "Products"), utilizing the marketing and creative
services of the Agency,
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein, the parties agree as follows:
I. Services. Client and the Agency have executed, of even date, three agreements
attached hereto as Exhibits A, B and C each of which is incorporated by
reference within. It is anticipated that Agency Services shall include the
services described in those Exhibits.
II. Compensation for Agency Services.
(a) The Agency agrees to accept as full compensation for its services and
expenses for the Client as described in Exhibit A for the national radio
promotional campaign and in Exhibit B for the national television promotional
campaign, commencing October 16, 2000, a total of (i) 379,688 shares of VCSY
common stock at $0.16 per share for executing both the described national radio
and the national television promotional campaigns, all of which shares are
deemed earned as the date of execution of this Agreement, (ii) $60,750 in
commencement fees for both the radio and television promotional campaigns
payable to Agency upon execution of this Agreement, (iii) $10,000 for producing,
editing and duplicating a high-end 0:30 television promotional spot, and (iv) up
to $22,000 in runner-up prizes for executing both the national radio and the
national television promotional campaigns, in the event EMG cannot secure such
prizing components for the respective campaigns at gratis or at a reduced price
as described in Exhibits A and B. All of the 379,688 shares shall be sold into
the market within six months, in equal amounts each month, after registration of
the shares on Form S-8. If, at the end of the abovesaid six month period, the
net proceeds of the sale of all 379,688 shares is less than $60,750, then Client
shall immediately pay Agency the difference between the net sales proceeds and
$60,750.
(b) The Agency agrees to accept as full compensation for its services and
expenses with regards to assisting the Client in its business development,
creating third party introductions, creating third party arrangements, and
forging strategic alliances for VCSY, commencing October 16, 2000, a grant of
five-year options to purchase 250,000 shares of VCSY common stock at $0.16 per
share, which grant is deemed earned as of the date of execution of this
Agreement. Client shall facilitate the cashless exercise of said options.
(c) The Agency agrees to accept as full compensation from the Client for its
sales services and expenses with regards to selling on behalf of the Client
advertising programs for ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and Client related web site
portals, sponsorships, and other sales, fees in the amount of twenty percent
(20%) of the gross revenue or market value equivalent to the Client, payable in
cash to the Agency as described in Exhibit C; and, additionally, a grant of
five-year options to purchase 250,000 shares of VCSY common stock at $0.16 per
share, which grant is deemed earned as of the date of execution of this
Agreement. Notwithstanding, these options may be exercised only in increments of
no less than 50,000 shares and in amounts equivalent to dollars of gross revenue
generated from sales on behalf of Client as described hereinabove in this
subparagraph (c). Client shall facilitate the cashless exercise of said options.
(d) Client agrees to register the above-described shares and the shares
underlying the warrants, described in this Section III, by whatever means
available (including on Form S-8) as soon as practical, but no later than
October __, 2000; and the Agency agrees and warrants that ▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇
▇▇▇▇▇▇▇▇▇ are the persons providing substantially all of the services hereunder
to Client and that all of the above said shares and shares underlying the
warrants are to be issued two-thirds to ▇▇▇▇▇▇▇ ▇▇▇▇ and one-third to ▇▇▇▇
▇▇▇▇▇▇▇▇▇.
III. Term.
(a) Term. The initial term of this Agreement shall commence on October 16, 2000,
and shall continue until at least one year until or October 16, 2001.
(b) Right Upon Termination. Upon termination of this Agreement, Client shall
have no obligations to the Agency, provided, however, any non-cancelable
contracts made on Client's behalf or uncompleted work, which cannot be assigned
by the Agency to Client shall, at the discretion of Client, be completed by the
Agency at Client's expense, and provided further that all indemnity obligations
of Client shall survive the termination of this Agreement. Upon termination of
this Agreement, the Agency shall deliver to Client all Client property and
materials in the Agency's possession and all information regarding Client's
advertising. The Agency shall cooperate in the transfer of all contracts and
agreements with other parties for marketing materials and all rights and claims
thereto. All unused marketing plans, ideas and materials prepared by the Agency
for Client, but not accepted by Client prior to the date of termination, shall
remain Client's property and shall be returned to Client.
IV. Ownership of Materials.
All products, ideas, concepts, themes and other intellectual property rights or
marketing materials created by the Agency on Client's behalf shall be and will
remain the property of Client.
V. Storage and Preservation.
The Agency shall properly store all tapes, files or other materials developed by
or transferred to the Agency by Client. The Agency shall ensure that all
materials be preserved by copying whenever necessary.
VI. Exclusivity.
Nothing in this Agreement shall be construed as requiring Client to assign all
or any specific portion of its marketing work exclusively to the Agency for the
terms of this Agreement.
XIV. Indemnification.
The Agency shall indemnify and hold harmless Client, its affiliates, agents and
employees from and against any and all claims, losses, actions, damages,
expenses and all other liabilities, including but not limited to reasonable
attorneys' fees, arising out of services performed by the Agency for Client.
Client shall give prompt notice to the Agency of any such claim, loss, action,
damage, expense or other liability, and shall fully cooperate in the defense of
any such action.
X. Legal Review.
The Agency shall provide, at its own expense, legal review and approval of all
work and services provided hereunder prior to publication of any marketing
material.
XI. Authorizations.
The Agency shall obtain releases, licenses, permits or other necessary
authorization to use photographs, copyrighted materials, artwork or any other
property or rights belonging to third parties obtained by the Agency for use in
performing Agency Services and shall hold Client harmless from all claims,
demands, expenses including reasonable attorneys' fees), liabilities, suits and
proceedings arising out of such use brought before any court, administrative
body, arbitration panel or other tribunal. Client shall obtain releases,
licenses, permits or other necessary authorization for any property or rights
obtained by Client which are used by the Agency in performing Agency Services,
and shall hold the Agency harmless from all claims, demands, expenses (including
reasonable attorneys' fees), liabilities, suits and proceedings arising out of
such use.
XII. Independent Contractor. All persons employed by the Agency in performance
of services hereunder shall be under the sole and exclusive direction and
control of the Agency, and shall not be considered the
employees of Client for any purpose whatsoever. The Agency shall remain at all
times an independent contractor.
XIII. Safeguarding Information.
The Agency shall not, during the period of this Agreement and extensions thereto
or at any time thereafter, reveal or otherwise make available to any other
person, or use for any purpose other than to benefit Client, any information or
trade secrets regarding Client's Products, services, business, customers, or
methods of operation learned by the Agency while providing services hereunder.
Any specifications, drawings, sketches, models, samples, tools, computer
programs, technical or business information or data, written, oral, in graphic
form or otherwise ("Information") furnished to the Agency hereunder or in
contemplation hereof shall remain the property of Client. The provisions of this
Section shall apply to all Agency subcontractors. The Agency shall be
responsible for informing subcontractors of any Information included in any work
subcontracted hereunder, and shall ensure that all subcontractors are in
compliance with this Section.
XIV. Use of Client Name.
The Agency shall not use Client's name, or the name of any affiliate of Client,
as a reference without prior written approval of Client or such affiliate,
provided, however, the Agency may list Client as one of its clients when
furnishing proposals to provide marketing services to prospective clients.
Approval will not be given in any case in which an endorsement might be
inferred. The provisions of this Section shall apply to Agency Affiliates and to
all subcontractors of the Agency.
XV. Assignment.
The Agency may not assign this Agreement or any part thereof to any Agency
Affiliate or any other entity without the prior written consent of Client.
XVI. Insolvency.
Either party may terminate this Agreement if the other party is insolvent or
makes an assignment for the benefit of creditors.
XVII. Notices.
All notices which may be given by either party to the other shall be deemed to
have been duly given when made in writing and delivered in person or deposited
in the United States mail, postage prepaid, and addressed to such party at such
party's address set forth at the beginning of this Agreement (or to such other
address as such party may designate by written notice delivered hereunder).
XVIII. Waiver.
Failure to enforce any provision hereof shall not constitute a waiver of that or
any other provision in any other circumstances.
XVIX. Entire Agreement.
This Agreement shall constitute the entire Agreement
between the parties with respect to the subject matter and supersedes all
previous agreements and understandings between Client and the Agency relating to
the subject matter hereof.
XX. Governing Law.
This Agreement shall be governed by the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
Vertical Computer Systems, Inc.
By:__________________________________________
▇▇▇▇▇▇▇ ▇▇▇▇, President
Xatnu, Inc. dba Entertainment Marketing Group
By:__________________________________________
▇▇▇▇▇▇▇ ▇▇▇▇, Chief Financial Officer
