<PAGE>
As filed with the Securities and Exchange Commission on February 28, 2000
Registration Statement No. 333-93585
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------
DIGITAS INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 8742 04-3494311
(State or Other (Primary Standard (I.R.S. Employer
Jurisdiction Industrial Identification No.)
of Incorporation or Classification Code
Organization) Number)
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive office)
---------------
David W. Kenny
Chief Executive Officer
The Prudential Tower, 800 Boylston Street
Boston, MA 02199
(617) 867-1000
(617) 867-7308 (fax)
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------
Copies to:
Stuart M. Cable, P.C. Marschall I. Smith, Esq. Keith F. Higgins, Esq.
Jeffrey C. Hadden, P.C. General Counsel Ropes & Gray
Goodwin, Procter & Hoar Digitas Inc. One International Place
LLP The Prudential Tower Boston, Massachusetts
Exchange Place 800 Boylston Street 02110-2624
Boston, Massachusetts Boston, Massachusetts (617) 951-7000
02109-2881 02199 (617) 951-7050 (fax)
(617) 570-1000 (617) 867-1000
(617) 523-1231 (fax) (617) 369-8240 (fax)
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
---------------
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the SEC, acting pursuant to Section
8(a), may determine.
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<PAGE>
EXPLANATORY NOTE
Digitas has prepared this Amendment No. 3 to the Registration Statement on
Form S-1 (File No. 333-93585) for the purpose of re-filing with the Securities
and Exchange Commission certain exhibits to the Registration Statement which
are the subject of a Confidential Treatment Request. Amendment No. 3 does not
modify any provision of the Prospectus which forms a part of Amendment No. 2
to the Registration Statement and accordingly such Prospectus has not been
included herein.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 12. Other Expenses of Issuance and Distribution
The following table sets forth the estimated expenses payable by us in
connection with the offering and distribution, including fees and expenses
attributable to shares to be sold on behalf of the selling shareholders
(excluding underwriting discounts and commissions):
<TABLE>
<CAPTION>
Nature of Expense Amount
- ----------------- -------
<S> <C>
SEC Registration Fee................................................... $52,800
NASD Filing Fee........................................................ 21,890
Nasdaq National Market Listing Fee..................................... 1,000
Accounting Fees and Expenses........................................... *
Legal Fees and Expenses................................................ *
Printing Expenses...................................................... *
Blue Sky Qualification Fees and Expenses............................... 15,000
-------
Transfer Agent's Fee................................................... *
Miscellaneous.......................................................... *
-------
TOTAL................................................................
</TABLE>
The amounts set forth above, except for the Securities and Exchange
Commission, National Association of Securities Dealers, Inc. and Nasdaq
National Market fees, are in each case estimated.
* To be completed by amendment.
Item 14. Indemnification of Directors and Officers
In accordance with Section 145 of the Delaware General Corporation Law,
Article VII of our certificate of incorporation provides that no director of
Digitas be personally liable to Digitas or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (1)
for any breach of the director's duty of loyalty to Digitas or its
stockholders, (2) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (3) in respect of
unlawful dividend payments or stock redemptions or repurchases, or (4) for any
transaction from which the director derived an improper personal benefit. In
addition, our certificate of incorporation provides that if the Delaware
General Corporation Law is amended to authorize the further elimination or
limitation of the liability of directors, then the liability of a director of
the corporation shall be eliminated or limited to the fullest extent permitted
by the Delaware General Corporation Law, as so amended.
Article V of our by-laws provides for indemnification by Digitas of its
officers and particular non-officer employees under specific circumstances
against expenses, including attorneys fees, judgments, fines and amounts paid
in settlement, reasonably incurred in connection with the defense or
settlement of any threatened, pending or completed legal proceeding in which
any such person is involved by reason of the fact that such person is or was
an officer or employee of the registrant if such person acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of Digitas, and, with respect to criminal actions or
proceedings, if such person had no reasonable cause to believe his or her
conduct was unlawful.
Item 15. Recent Sales of Unregistered Securities
Since its formation on November 5, 1998, our predecessor entity, Bronner
Slosberg Humphrey Co., a Massachusetts business trust (the "Trust"), has
issued the following securities that were not registered under the Securities
Act of 1933, as amended (the "Securities Act"). The share numbers and per
share values give effect to the 30-for-1 stock split effected by the Trust in
the form of a stock dividend on December 2, 1999 and a two-for-one stock split
effected by the Trust on February 10, 2000.
II-1
<PAGE>
(i) In connection with the formation of the Trust, on November 5, 1998 the
Trust issued 60,000 shares of beneficial interest in the Trust (the "Shares")
to Michael E. Bronner under Section 4(2) of the Securities Act ("Section
4(2)") for sales by an issuer not involving a public offering.
(ii) On November 6, 1998, in connection with the merger of Bronner Slosberg
Humphrey, Inc. (the "Predecessor Corporation") with and into Bronner Slosberg
Humphrey, LLC ("BSH LLC"), the Trust:
(a) issued 48,930,022 Shares in the Trust to three investors in
exchange for the cancellation of the same number of shares, with
the same par value, held by such investors in the Predecessor
Corporation, all pursuant to Section 4(2) for sales by an issuer
not involving a public offering;
(b) assumed options to purchase 829,322 shares of the Predecessor
Corporation granted to two employees pursuant to employee stock
option agreements of the Predecessor Corporation as if such
options were granted by the Trust, without any changes being made
to either holder's rights under these employee stock option
agreements and in reliance on Section 3(b) of the Securities Act
("Section 3(b)") and Rule 701 promulgated thereunder ("Rule 701")
relative to sales pursuant to certain compensatory plans (to date,
no option holder has exercised these options); and
(c) assumed 13,530,000 units of stock appreciation rights ("SARS")
granted to seventeen investors under the Predecessor Corporation's
1997 stock appreciation rights plan as if such SARS were granted
by the Trust, without any changes being made to such holder's
rights thereunder, and pursuant to Rule 506 ("Rule 506") of
Regulation D promulgated under Section 4(2) ("Regulation D") for
sales by an issuer not involving a public offering. The investors
that participated in this Rule 506 offering each qualified as an
accredited investor pursuant to Rule 501 under Regulation D ("Rule
501").
(iii) On January 6, 1999, in connection with the recapitalization of the
Trust, the Trust:
(a) issued options to purchase 13,140,000 Shares in the Trust to
sixteen investors under the 1998 Option Plan (the "1998 Plan") in
exchange for the cancellation of 13,140,000 SARS, and the
redemption of 390,000 SARS held by seventeen investors and, all
granted in reliance on Section 3(a)(9) of the Securities Act
("Section 3(a)(9)") for exchanges by the issuer with certain
security holders and 330,000 of which were also granted to
fourteen of the investors pursuant to Rule 506 of Regulation D
promulgated under Section 4(2) for sales by an issuer not
involving a public offering; the investors that participated in
this Rule 506 offering each qualified as an accredited investor
pursuant to Rule 501 under Regulation D (to date, no option holder
has exercised these options);
(b) issued options to purchase 829,322 Shares in the Trust to two
employees under the 1998 Plan in exchange for the cancellation of
829,322 options granted pursuant such employees' stock option
agreements assumed in connection with the merger of the
Predecessor Corporation with and into BSH LLC and in reliance on
Section 3(a)(9) for exchanges by the issuer with certain security
holders (these options were repurchased by the Trust on July 6,
1999); and
(c) issued options to purchase 6,660,000 Shares in the Trust to
eighteen investors under the 1998 Plan pursuant to closing option
agreements, of which 402,000 were issued to three investors in
reliance on Rule 701 relative to sales pursuant to certain
compensatory plans and 6,258,000 were issued to fifteen investors
pursuant to Rule 506 of Regulation D promulgated under Section
4(2) for sales by an issuer not involving a public offering; the
investors that participated in this Rule 506 offering each
qualified as an accredited investor pursuant to Rule 501 under
Regulation D (to date, 1,050,000 of these options which were held
by three investors have expired);
II-2
<PAGE>
(d) issued a warrant for 900,000 Shares to one investor pursuant to
the terms of the warrant agreement, dated as of January 6, 1999,
and in reliance on Section 4(2) for sales by an issuer not
involving a public offering.
(iv) On January 7, 1999, in connection with the transfer of Strategic
Interactive Group Co.'s ("SIG CO") membership interest in SIG Holding LLC
("SIG Holding") to the Trust, the Trust:
(a) issued 11,261,435 Shares of the Trust to SIG Co. in exchange for
the transfer of its membership interest in SIG Holding and in
reliance on Section 4(2) for sales by an issuer not involving a
public offering; and
(b) issued options to purchase 3,326,645 Shares of the Trust to nine
investors pursuant to the Trust's 1998 Plan in exchange for the
transfer by SIG Co. of its membership interest in SIG Holding, of
which 40,064 were issued to two investors pursuant to Rule 701
relative to sales pursuant to certain compensatory plans and
3,286,581 were issued to seven investors pursuant to Rule 506 of
Regulation D promulgated under Section 4(2) for sales by an issuer
not involving a public offering. The investors that participated
in this Rule 506 offering each qualified as an accredited investor
pursuant to Rule 501 under Regulation D (118,448 Shares of the
Trust have been issued to a holder upon the exercise of his
options).
(v) From January 8, 1999 to December 31, 1999, the Trust has issued the
following:
(a) in August 1999, the Trust sold 99,272 of its Shares to Arthur Kern
as trustee of the Arthur Kern Revocable Trust for an aggregate
purchase price of $249,834.03 and pursuant to Rule 506 of
Regulation D promulgated under Section 4(2) for sales by an issuer
not involving a public offering; the investors that participated
in this Rule 506 offering each qualified as an accredited investor
pursuant to Rule 506 under Regulation D;
(b) in August 1999, the Trust sold 99,272 of its Shares to Alan Beck
for an aggregate purchase price of $249,834.03 and pursuant to
Rule 506 of Regulation D promulgated under Section 4(2) for sales
by an issuer not involving a public offering the investors that
participated in this Rule 506 offering each qualified as an
accredited investor pursuant to Rule 506 under Regulation D;
(c) in August 1999, the Trust sold 300,000 of its Shares to Orit
Gadiesh for an aggregate purchase price of $755,000.00 and
pursuant to Rule 506 of Regulation D promulgated under Section
4(2) for sales by an issuer not involving a public offering; the
investors that participated in this Rule 506 offering each
qualified as an accredited investor pursuant to Rule 506 under
Regulation D;
(d) pursuant to the Trust's 1998 Plan, the Trust has issued options to
purchase 4,752,000 Shares of the Trust to twenty-one investors, of
which 180,000 were issued to one such investor in reliance on Rule
701 relative to sales pursuant to certain compensatory plans and
4,572,000 were issued to twenty investors in reliance on Rule 506
of Regulation D promulgated under Section 4(2) for sales by an
issuer not involving a public offering; the investors that
participated in this Rule 506 offering each qualified as an
accredited investor pursuant to Rule 506 under Regulation D (to
date, no option holder has exercised these options); and
(e) pursuant to the Trust's 1999 Option Plan the Trust has issued a
total of 3,848,000 options to purchase Shares of the Trust, of
which 2,282,000 were issued to 1,201 investors in reliance on Rule
701 relative to sales pursuant to certain compensatory plans and
1,566,000 were issued to seven investors in reliance on Rule 506
of Regulation D promulgated under Section 4(2) for sales by an
issuer not involving a public offering. The investors that
participated in this Rule 506 offering each qualified as an
accredited investor pursuant to Rule 501 under Regulation D (to
date, no option holder has exercised these options).
II-3
<PAGE>
Item 16. Exhibits and Financial Statement Schedules
<TABLE>
<C> <S>
-1.1 Form of Underwriting Agreement.
-2.1 Agreement and Plan of Merger, dated as of November 6, 1998, by and
among Bronner Slosberg Humphrey, LLC; Bronner Slosberg Humphrey Inc.;
and Bronner Slosberg Humphrey Co.
-2.2 Agreement and Plan of Merger, dated as of November 6, 1998, by and
among Strategic Interactive Group, LLC; Strategic Interactive Group,
Inc.; and Strategic Interactive Group Co.
-2.3 Agreement and Plan of Merger, dated as of January 7, 1999, by and among
Bronner Slosberg Humphrey, LLC; Strategic Interactive Group, LLC; and
Bronner Slosberg Humphrey Co.
-2.4 Agreement and Plan of Merger, dated as of January 7, 1999, by and among
BSH Holding LLC; SIG Holding LLC; and Bronner Slosberg Humphrey Co.
-2.5 The Recapitalization Agreement, dated as of November 28, 1998, by and
among Hellman & Friedman Capital Partners III, L.P.; H & F Orchard
Partners III, L.P.; H & F International Partners III, L.P.; Positano
Partners Ltd.; Bronner Slosberg Humphrey Co.; Strategic Interactive
Group Co.; the Shareholders of BSH and SIG; the Option Holders of BSH
and SIG; the Share Appreciation Rights Holders of BSH and SIG; and the
Other Rights Holders of BSH (including the Amendment Agreement, dated
as of January 6, 1999).
-3.1 Amended and Restated Certificate of Incorporation of Digitas Inc.
-3.2 By-laws of Digitas Inc.
-4.1 Specimen certificate for shares of common stock, $.01 par value, of
Digitas Inc.
-5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of the
securities being offered.
-10.1 The Bronner Slosberg Humphrey Co., 1998 Option Plan.
-10.2 The Bronner Slosberg Humphrey Co., 1999 Option Plan.
+10.3 Form of 2000 Stock Option and Incentive Plan.
-10.4 Form of 2000 Employee Stock Purchase Plan.
-10.5 Lease Agreement, dated as of May 31, 1995, by and between The
Prudential Insurance Company of America and Bronner Slosberg Humphrey
Inc. (including amendment numbers 1-6, each dated as of May 31, 1995).
-10.6 Seventh Amendment to Lease, dated as of March 29, 1999, by and between
BP Prucenter Acquisition, LLC and Bronner Slosberg Humphrey, LLC.
-10.7 Eight Amendment to Lease, dated as of July 30, 1999, by and between BP
Prucenter Acquisition, LLC and Bronner Slosberg Humphrey, LLC.
-10.8 Sublease, dated as of December 22, 1997, by and between EMI
Entertainment World, Inc., and Bronner Slosberg Humphrey Inc.
-10.9 Sublease, dated as of March 22, 1999, by and between EMI Music, Inc.
and Bronner Slosberg Humphrey, LLC.
-10.10 Agreement of Sublease, dated as of April 29, 1999, by and between
Warner Music Group Inc. and Bronner Slosberg Humphrey, LLC.
-10.11 Agreement of Sublease, dated as of November 15, 1999, by and between
Bill Communications, Inc. and Bronnercom, LLC.
-10.12 Sub-Sublease Agreement, dated as of June 5, 1998, by and between
Strategic Interactive Group, Inc. and Allegiance Telecom, Inc.
(including the termination of the Sub-Sublease Agreement, dated as of
December 7, 1999).
</TABLE>
II-4
<PAGE>
<TABLE>
<C> <S>
-10.13 Sublease Agreement, dated as of August 21, 1997, by and among Tesseract
Corporation; Strategic Interactive Group, Inc.; and Bronner Slosberg
Humphrey Inc. (including the First Amendment, dated as of June 15,
1999).
-10.14 Lease Agreement, dated as of August 23, 1999, by and between M&S
Balanced Property Fund, L.P. and Bronnercom, LLC.
-10.15 Lease Agreement, dated as of May 20, 1999, by and between Forward
Publishing Limited and Bronner Slosberg Humphrey (UK) Inc.
-10.16 Credit Agreement, dated as of January 6, 1999, by and among Bronner
Slosberg Humphrey, LLC and Strategic Interactive Group, LLC (as
borrower); the Lenders listed therein (as lenders); Bankers Trust
Company (as administrative agent); Fleet National Bank (as
documentation agent); and BankBoston, N.A. (as syndication agent).
-10.17 The First Amendment to Credit Agreement, dated as of November 5, 1999,
by and among Bronnercom, LLC (as borrower); the lenders listed on the
signature page thereof (as lenders); Bankers Trust Company (as
administrative agent); and Fleet Boston Corporation (as documentation
and syndication agent).
-10.18 Warrant Agreement, dated as of January 6, 1999, by and between Bronner
Slosberg Humphrey Co. and Positano Partners Ltd.
-10.19 Escrow Agreement, dated as of January 6, 1999, by and among Michael E.
Bronner; David W. Kenny; Bronner Slosberg Humphrey Co.; Strategic
Interactive Group Co.; Positano Partners Ltd.; and Boston Safe Deposit
and Trust Co.
-10.20 Shareholders Agreement, dated as of January 6, 1999, by and among
Positano Partners Ltd.; the Holders (as defined therein); Michael E.
Bronner; The Michael E. Bronner 1998 Annuity Trust; Bronner Slosberg
Humphrey Co.; Bronner Slosberg Humphrey, LLC; and BSH Holding.
-10.21 Governance Agreement, dated as of January 6, 1999, by and among
Positano Partners Ltd.; Vesuvio, Inc.; Michael E. Bronner; and David W.
Kenny.
-10.22 Registration Rights Agreement, dated as of January 6, 1999, by and
among Bronner Slosberg Humphrey Co.; Positano Partners Ltd.; Michael E.
Bronner; and the Persons listed on Schedule 1 thereto.
-10.23 Employment Agreement, dated as of January 6, 1999, by and between
Kathleen Biro and Bronner Slosberg Humphrey, LLC.
-10.24 Employment Agreement, dated as of January 6, 1999, by and between David
W. Kenny and Bronner Slosberg Humphrey, LLC.
-10.25 Employment Agreement, dated as of January 6, 1999, by and between
Michael Ward and Bronner Slosberg Humphrey, LLC.
-10.26 Employment Agreement, dated as of January 10, 2000, by and between
Michael Goss and Digitas Inc.
-10.27 Employment Agreement, dated as of January 10, 2000, by and between
Robert Galford and Digitas Inc.
-10.28 Employment Agreement, dated as of October 15, 1999, by and between
Marschall Smith and Bronnercom, LLC.
</TABLE>
II-5
<PAGE>
<TABLE>
<C> <S>
-10.29 Advertising Agreement, dated as of January 19, 1999, by and between
AT&T Corp. and Bronner Slosberg Humphrey.
-10.30 General Agreement, dated as of April 12, 1999, by and between AT&T
Corp. and Bronner Slosberg Humphrey.
-10.31 Advertising Agreement, dated as of April 12, 1999, by and between AT&T
Corp. and Bronner Slosberg Humphrey (including the Agreement
Amendment, dated as of May 12, 1999).
*10.32 Advertising/Marketing Agreement, dated as of October 11, 1995, by and
between AT&T Communications, Inc.-Business Communications Services and
Bronner Slosberg Humphrey Inc. (including the Agreement Amendment,
dated as of November 27, 1995).
*10.33 Direct Marketing Agreement, dated as of July 24, 1997, by and between
Cellular Telephone Company (d/b/a AT&T Wireless Services, Northeast
Region) and Bronner Slosberg Humphrey Inc.
-10.34 Letter of Engagement, dated as of July 1, 1999, by and among AT&T
Interactive Group, AT&T Corporation and Strategic Interactive Group.
-10.35 Marketing & Advertising Services Agreement, dated as of January 1,
2000, by and between Bronnercom, LLC and General Motors Corporation.
(Draft)
-10.36 Agreement 2000 Compensation, dated as of January 5, 2000, by and
between General Motors Corporation, Oldsmobile Division and
Bronnercom, LLC.
-10.37 Advertising/Marketing Promotion Agency Agreement, dated as of October
1, 1997, by and between American Express Travel Related Services
Company, Inc. and Bronner Slosberg Humphrey Inc.
-10.38 Form of Indemnification Agreement.
-16.1 Letter from PricewaterhouseCoopers LLP regarding change in accountant.
-21.1 Subsidiaries of Digitas Inc.
-23.1 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1 hereto).
-23.2 Consent of PricewaterhouseCoopers LLP.
-23.3 Consent of Arthur Andersen LLP.
-23.4 Report of Independent Public Accountants on Financial Statement
Schedule.
-24.1 Powers of Attorney (included on signature page).
-27.1 Financial Data Schedule.
-99.1 Form of 180 Day Lock-up Agreement.
-99.2 Form of 90/90 Day Lock-up Agreement.
</TABLE>
- --------
+ To be filed by amendment to the registration statement.
- Previously filed.
* Filed herewith; portions of this exhibit have been omitted pursuant to a
request for confidential treatment
(b) Financial Statement Schedules
Schedule II--Valuation and Qualifying Accounts
All other schedules have been omitted because they are not required or
because the required information is given in the Financial Statements or Notes
to those statements.
II-6
<PAGE>
Item 17. Undertakings
The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 3 to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Boston, Commonwealth of Massachusetts, on February 28, 2000.
DIGITAS INC.
By: /s/ David W. Kenny
-----------------------------------
Name: David W. Kenny
Title: Chief Executive Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 3 to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
Signature Title Date
- --------- ----- ----
/s/ David W. Kenny Chief Executive Officer and February 28, 2000
- ----------------------------- Chairman of the Board of
David W. Kenny Directors
(principal executive
officer)
/s/ Michael Goss Chief Financial Officer February 28, 2000
- ----------------------------- (principal financial officer
Michael Goss and principal accounting
officer)
/s/ * Director February 28, 2000
- -----------------------------
Michael E. Bronner
/s/ * Director February 28, 2000
- -----------------------------
John L. Bunce, Jr.
/s/ * Director February 28, 2000
- -----------------------------
Orit Gadiesh
</TABLE>
II-8
<PAGE>
<TABLE>
<S> <C> <C>
/s/ * Director February 28, 2000
- -----------------------------
Patrick J. Healy
/s/ * Director February 28, 2000
- -----------------------------
Arthur Kern
/s/ * Director February 28, 2000
- -----------------------------
Kathleen L. Biro
/s/ * Director February 28, 2000
- -----------------------------
Philip U. Hammarskjold
/s/ David W. Kenny February 28, 2000
- -----------------------------
David W. Kenny
Attorney in Fact
</TABLE>
II-9
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
Number Description No.
------- ----------- ----
<C> <S> <C>
-1.1 Form of Underwriting Agreement.
-2.1 Agreement and Plan of Merger, dated as of November 6, 1998, by
and among Bronner Slosberg Humphrey, LLC; Bronner Slosberg
Humphrey Inc.; and Bronner Slosberg Humphrey Co.
-2.2 Agreement and Plan of Merger, dated as of November 6, 1998, by
and among Strategic Interactive Group, LLC; Strategic
Interactive Group, Inc.; and Strategic Interactive Group Co.
-2.3 Agreement and Plan of Merger, dated as of January 7, 1999, by
and among Bronner Slosberg Humphrey, LLC; Strategic Interactive
Group, LLC; and Bronner Slosberg Humphrey Co.
-2.4 Agreement and Plan of Merger, dated as of January 7, 1999, by
and among BSH Holding LLC; SIG Holding LLC; and Bronner
Slosberg Humphrey Co.
-2.5 The Recapitalization Agreement, dated as of November 28, 1998,
by and among Hellman & Friedman Capital Partners III, L.P.; H &
F Orchard Partners III, L.P.; H & F International Partners III,
L.P.; Positano Partners Ltd.; Bronner Slosberg Humphrey Co.;
Strategic Interactive Group Co.; the Shareholders of BSH and
SIG; the Option Holders of BSH and SIG; the Share Appreciation
Rights Holders of BSH and SIG; and the Other Rights Holders of
BSH (including the Amendment Agreement, dated as of January 6,
1999).
-3.1 Amended and Restated Certificate of Incorporation of Digitas
Inc.
-3.2 By-laws of Digitas Inc.
-4.1 Specimen certificate for shares of common stock, $.01 par
value, of Digitas Inc.
-5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of
the securities being offered.
-10.1 The Bronner Slosberg Humphrey Co., 1998 Option Plan.
-10.2 The Bronner Slosberg Humphrey Co., 1999 Option Plan.
+10.3 Form of 2000 Stock Option and Incentive Plan.
-10.4 Form of 2000 Employee Stock Purchase Plan.
-10.5 Lease Agreement, dated as of May 31, 1995, by and between The
Prudential Insurance Company of America and Bronner Slosberg
Humphrey Inc. (including amendment numbers
1-6, each dated as of May 31, 1995).
-10.6 Seventh Amendment to Lease, dated as of March 29, 1999, by and
between BP Prucenter Acquisition, LLC and Bronner Slosberg
Humphrey, LLC.
-10.7 Eight Amendment to Lease, dated as of July 30, 1999, by and
between BP Prucenter Acquisition, LLC and Bronner Slosberg
Humphrey, LLC.
-10.8 Sublease, dated as of December 22, 1997, by and between EMI
Entertainment World, Inc., and Bronner Slosberg Humphrey Inc.
-10.9 Sublease, dated as of March 22, 1999, by and between EMI Music,
Inc. and Bronner Slosberg Humphrey, LLC.
-10.10 Agreement of Sublease, dated as of April 29, 1999, by and
between Warner Music Group Inc. and Bronner Slosberg Humphrey,
LLC.
-10.11 Agreement of Sublease, dated as of November 15, 1999, by and
between Bill Communications, Inc. and Bronnercom, LLC.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit Page
Number Description No.
------- ----------- ----
<C> <S> <C>
-10.12 Sub-Sublease Agreement, dated as of June 5, 1998, by and
between Strategic Interactive Group, Inc. and Allegiance
Telecom, Inc. (including the termination of the Sub-Sublease
Agreement, dated as of December 7, 1999).
-10.13 Sublease Agreement, dated as of August 21, 1997, by and among
Tesseract Corporation; Strategic Interactive Group, Inc.; and
Bronner Slosberg Humphrey Inc. (including the First Amendment,
dated as of June 15, 1999).
-10.14 Lease Agreement, dated as of August 23, 1999, by and between
M&S Balanced Property Fund, L.P. and Bronnercom, LLC.
-10.15 Lease Agreement, dated as of May 20, 1999, by and between
Forward Publishing Limited and Bronner Slosberg Humphrey (UK)
Inc.
-10.16 Credit Agreement, dated as of January 6, 1999, by and among
Bronner Slosberg Humphrey, LLC and Strategic Interactive Group,
LLC (as borrower); the Lenders listed therein (as lenders);
Bankers Trust Company (as administrative agent); Fleet National
Bank (as documentation agent); and BankBoston, N.A. (as
syndication agent).
-10.17 The First Amendment to Credit Agreement, dated as of November
5, 1999, by and among Bronnercom, LLC (as borrower); the
lenders listed on the signature page thereof (as lenders);
Bankers Trust Company (as administrative agent); and Fleet
Boston Corporation (as documentation and syndication agent).
-10.18 Warrant Agreement, dated as of January 6, 1999, by and between
Bronner Slosberg Humphrey Co. and Positano Partners Ltd.
-10.19 Escrow Agreement, dated as of January 6, 1999, by and among
Michael E. Bronner; David W. Kenny; Bronner Slosberg Humphrey
Co.; Strategic Interactive Group Co.; Positano Partners Ltd.;
and Boston Safe Deposit and Trust Co.
-10.20 Shareholders Agreement, dated as of January 6, 1999, by and
among Positano Partners Ltd.; the Holders (as defined therein);
Michael E. Bronner; The Michael E. Bronner 1998 Annuity Trust;
Bronner Slosberg Humphrey Co.; Bronner Slosberg Humphrey, LLC;
and BSH Holding.
-10.21 Governance Agreement, dated as of January 6, 1999, by and among
Positano Partners Ltd.; Vesuvio, Inc.; Michael E. Bronner; and
David W. Kenny.
-10.22 Registration Rights Agreement, dated as of January 6, 1999, by
and among Bronner Slosberg Humphrey Co.; Positano Partners
Ltd.; Michael E. Bronner; and the Persons listed on Schedule 1
thereto.
-10.23 Employment Agreement, dated as of January 6, 1999, by and
between Kathleen Biro and Bronner Slosberg Humphrey, LLC.
-10.24 Employment Agreement, dated as of January 6, 1999, by and
between David W. Kenny and Bronner Slosberg Humphrey, LLC.
-10.25 Employment Agreement, dated as of January 6, 1999, by and
between Michael Ward and Bronner Slosberg Humphrey, LLC.
-10.26 Employment Agreement, dated as of January 10, 2000, by and
between Michael Goss and Digitas Inc.
-10.27 Employment Agreement, dated as of January 10, 2000, by and
between Robert Galford and Digitas Inc.
-10.28 Employment Agreement, dated as of October 15, 1999, by and
between Marschall Smith and Bronnercom, LLC.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit Page
Number Description No.
------- ----------- ----
<C> <S> <C>
-10.29 Advertising Agreement, dated as of January 19, 1999, by and
between AT&T Corp. and Bronner Slosberg Humphrey.
-10.30 General Agreement, dated as of April 12, 1999, by and between
AT&T Corp. and Bronner Slosberg Humphrey.
-10.31 Advertising Agreement, dated as of April 12, 1999, by and
between AT&T Corp. and Bronner Slosberg Humphrey (including the
Agreement Amendment, dated as of May 12, 1999).
*10.32 Advertising/Marketing Agreement, dated as of October 11, 1995,
by and between AT&T Communications, Inc.-Business
Communications Services and Bronner Slosberg Humphrey Inc.
(including the Agreement Amendment, dated as of November 27,
1995).
*10.33 Direct Marketing Agreement, dated as of July 24, 1997, by and
between Cellular Telephone Company (d/b/a AT&T Wireless
Services, Northeast Region) and Bronner Slosberg Humphrey Inc.
-10.34 Letter of Engagement, dated as of July 1, 1999, by and among
AT&T Interactive Group, AT&T Corporation and Strategic
Interactive Group.
-10.35 Marketing & Advertising Services Agreement, dated as of January
1, 2000, by and between Bronnercom, LLC and General Motors
Corporation. (Draft)
-10.36 Agreement 2000 Compensation, dated as of January 5, 2000, by
and between General Motors Corporation, Oldsmobile Division and
Bronnercom, LLC.
-10.37 Advertising/Marketing Promotion Agency Agreement, dated as of
October 1, 1997, by and between American Express Travel Related
Services Company, Inc. and Bronner Slosberg Humphrey Inc.
-10.38 Form of Indemnification Agreement.
-16.1 Letter from PricewaterhouseCoopers LLP regarding change in
accountant.
-21.1 Subsidiaries of Digitas Inc.
-23.1 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1
hereto).
-23.2 Consent of PricewaterhouseCoopers LLP.
-23.3 Consent of Arthur Andersen LLP.
-23.4 Report of Independent Public Accountants on Financial Statement
Schedule.
-24.1 Powers of Attorney (included on signature page).
-27.1 Financial Data Schedule.
-99.1 Form of 180 Day Lock-up Agreement.
-99.2 Form of 90/90 Day Lock-up Agreement.
</TABLE>
- --------
+ To be filed by amendment to the registration statement.
- Previously filed.
* Filed herewith; portions of this exhibit have been omitted pursuant to a
request for confidential treatment
<PAGE>
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. THE LOCATIONS OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH
ASTERISKS.
EXHIBIT 10.32
MC941121LD
Page 1 of 19
ADVERTISING/MARKETING AGREEMENT
WITNESSETH:
That in consideration of the agreements expressed herein, AT&T
Communications, Inc. - Business Communications Services ("AT&T") having an
office at 55 Corporate Drive, Bridgewater, New Jersey 08807 and Bronner
Slosberg Humphrey Inc., a corporation of the Commonwealth of Massachusetts
("Agency"), having an office at 695 Atlantic Avenue, Boston, Massachusetts
02111, do hereby agree as follows:
ARTICLE 1 - AGENCY SERVICES
The Agency shall act as AT&T's advertising/marketing agency in the planning,
preparing, and placing of such advertising/marketing, as may be requested by
AT&T. The Agency shall perform other services as AT&T may request, as outlined
in Article 30, subject to mutual written agreement of the parties.
Agency shall devote its best efforts on behalf of AT&T to farther AT&T's
interests and shall reasonably endeavor in every proper way to make AT&T's
advertising/marketing and associated efforts, for which the Agency is herein
responsible, successful. To accomplish the foregoing, Agency specifically agrees
that its services shall include but not be limited to the following:
A. Assigning and maintaining, with AT&T's consent executive strategic
input and review, an account management group, creative, systems and
fulfillment, research and analysis, teleservices marketing, partnership
marketing, production, media and traffic teams necessary to service the
AT&T account;
B. Provide direct marketing services, including the creation, production
and placement, insertion or distribution of direct mail and direct
response advertising.
C. Attending meetings, as requested by AT&T, with AT&T's staff and
periodic meetings with AT&T's top management;
D. Familiarizing itself with the business of AT&T, its products and
services, and the industry in which AT&T operates; and analyzing the
present and potential advertising/marketing opportunities for such
products and services so as to provide AT&T with marketing and
advertising counsel, including specific advertising/marketing
objectives, strategies and plans for reaching AT&T's business
objectives;
E. Preparing layouts, copy, artwork, scripts and storyboards and furnishing
other elements and materials to be used in finished advertisements for
all media and promotions to be used by AT&T;
<PAGE>
MC941121LD
Page 2 of 19
F. Advising AT&T of the availability of all broadcast, publication and out-
of-home media which can appropriately be used to advertise AT&T products
and services; and developing media plans suitable for AT&T;
G. When publications media are to be used, arranging for insertions and
checking the advertisements in accordance with mutually acceptable
practices for date, appearance, position, size, quality and mechanical
reproduction;
H. When broadcast media are to be used, arranging for the programs,
commercials, time and talent, and plan; rendering all services necessary
for the proper and efficient use of the media; auditing the audience
share of broadcasts and verifying the broadcasts in accordance with
mutually acceptable practices for time, accuracy and other related
factors;
I. When outdoor posters, carcards, painted boards and other media are to
be used, arranging for displays and verifying in accordance with
mutually acceptable practices for date, appearance, position, site,
workmanship and mechanical reproduction;
J. Supervising the production of all finished advertising and marketing
material;
K. Negotiating, arranging and contracting for any special talent required,
with AT&T's approval, and for all photography, models, special effects,
layout, artwork and for all printing for use in the
advertising/promotions program; and making appropriate arrangements for
tax withholdings from talent;
L. Analyzing advertising, marketing and consumer research to aid AT&T in
developing advertising strategy and developing and evaluating AT&T's
advertising and media;
M. Conducting and analyzing competitive advertising tracking.
The above services shall be performed to the satisfaction of AT&T, shall be
performed in accordance with the highest professional standards and shall be in
accordance with such requirements or restrictions as may be lawfully imposed by
governmental authority. Services not completed to the reasonable satisfaction of
AT&T shall be reperformed at no cost to AT&T.
ARTICLE 2 - APPROVALS BEFORE COMMITMENT
No commitment of any kind shall be made by the Agency on behalf of AT&T unless
specifically authorized in writing by AT&T, except as provided in Article 3
(Estimates).
The Agency shall submit concepts, scripts, print copy and other materials as
early as possible to AT&T for internal review and required legal and technical
approval, and when appropriate to the networks' Broadcast
<PAGE>
MC941121LD
Page 3 of 19
Standards Departments, for specific approval prior to initial photographing,
broadcasting, telecasting, or print production of commercials or print
advertisements.
Agency shall contract with suppliers of media and such contracts shall provide
that Agency shall be solely liable for payment of media for time and/or space
costs incurred on behalf of AT&T from and after the time at which AT&T shall put
Agency in funds for payment thereof, and that all billing shall be sent to the
Agency.
ARTICLE 3 - ESTIMATES
The Agency shall furnish to AT&T, in writing and in advance, labor fee and a
cost estimate of all expenditures in connection with all services and projects
recommended by Agency or requested by AT&T. Prior to undertaking such projects
or committing AT&T's funds, Agency shall obtain written authorization from
AT&T. Agency shall furnish revisions of these estimates when changes in costs
are anticipated in excess of ten percent (10%), plus or minus. Each estimate as
approved by AT&T shall be executed by both parties. Approved estimates shall
constitute the only authorization for the Agency to take any action, make any
commitments or expend any money. In those situations where time or circumstances
will not permit specific prior written authorization, commitments not to exceed
$50,000 may be made with oral approval, provided such approval shall be
confirmed by an approved written estimate no later than ten (10) working days
thereafter.
ARTICLE 4 - DISCOUNTS
Agency shall obtain all prompt payment or other similar discounts available to
it from media and other suppliers from which it makes purchases in the
performance of the services hereunder. When Agency receives a cash discount,
rebate, frequency discount, volume discount, promotional consideration, or other
similar credit from such media or other suppliers, AT&T shall receive full
allowance for each such amount, provided Agency, after timely notification,
receives payment from AT&T within the applicable discount period.
ARTICLE 5 - ANNUAL REVIEW
An annual review shall take place during the first quarter (January - March) of
each calendar year for the review of the previous year's performance, to be
attended by appropriate AT&T management representatives and by Agency management
and senior members of the AT&T agency group. The purpose of this review is for
AT&T to present its evaluation of Agency performance to Agency and for Agency to
present its evaluation of AT&T management to AT&T, for AT&T and Agency to
mutually agree on any corrective action that may be needed and for AT&T and
Agency to set annual objectives.
<PAGE>
MC941121LD
Page 4 of 19
ARTICLE 6 - DEFINITIONS
A. "Gross Revenue" as used herein shall mean the total amount of compensation,
exclusive of pass-through costs, the Agency receives from AT&T for a
advertising/marketing services performed after reconciliation and any
rebates or supplementary fees are paid.
B. "Annual Salary" as used herein shall mean annual base salary, excluding
bonuses. It does not include employer paid FICA, insurance and medical
benefits its or payments into retirement plans.
C. "Direct Salaries" as used herein shall mean the [***] of [***] (including
[***]) in [***], [***] (including [***] and [***]), [***], [***] (including
[***]) and [***], [***] and [***], [***], [***] and [***] on the [***] which
are [***] to the [***].
1. [***] for an individual who works on the AT&T account is to be computed
as follows:
[***] multiplied by the [***] of [***] on the [***] divided by the
[***] of [***] on any [***].
[***] on Agency business means [***] on any [***] and on [***] and other
[***] It does not include [***], [***] or [***].
2. At AT&T's option, such option to be obtained by the Agency in writing
from AT&T, AT&T may elect to "buy-out" designated individuals. For those
individuals bought out by AT&T, AT&T shall be responsible for that
person's total annual base salary, excluding bonuses.
D. "Indirect Salaries" as used herein shall mean all [***] to the [***] other
than [***] as defined herein.
E. "All Other Expenses (ACE)" as used herein shall mean all other allowable
expenses allocable to AT&T and shall include:
1. Other salaries that can be directly allocable to the AT&T account that
are not included in direct salaries as defined in Section C above.
2. Payroll Related Expenses such as employer paid FICA, insurance and
medical benefits.
3. Employer payments into ERISA-approved retirement plans.
4. Indirect Costs which include indirect salaries, agency overhead costs
(e.g., space and facilities, professional fees and general corporate
expenses). Donations are not to be included in Indirect Costs.
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. THE LOCATIONS OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH
ASTERISKS.
<PAGE>
MC941121LD
Page 5 of 19
For purposes of compensation computation as set forth in Article 7, All
Other Expenses are equal to [***] X [***] as defined hereof.
F. "Direct Client Service Expenses" as used herein shall include out-of-pocket
expenses of Agency employees related to the AT&T account.
G. "Total Costs" as used herein shall equal [***] X [***].
H. "Profit Before Taxes" as used herein shall mean [***] minus [***], where
[***] equals ([***] + [***]) X [***].
ARTICLE 7 - AGENCY COMPENSATION
A. Agency compensation for the calendar year shall be computed as follows:
1. During the last quarter of the previous calendar year, AT&T and the
Agency shall meet to determine:
a. The account staffing (including all functions as defined in Article
6, Paragraph C) for the AT&T account for the next calendar year.
b. The aggregate Direct Salaries, as defined herein, of the agreed upon
account staff.
2. The fee for the calendar year is then ([***] + .[***]) X ([***] + [***])
X [***].
3. For 1994 the yearly fee is [***]. For each subsequent year, the
yearly fee shall be mutually agreed upon by the parties in writing and
attached as an amendment hereto.
B. [***] (expressed as a percent of [***]) as herein defined shall be based on
[***] of [***] for the [***]. The specific criteria for evaluation shall be
mutually agreed upon by the parties. However, the yearly Agency evaluation
as performed by AT&T shall be at the sole discretion of AT&T.
1. At the end of each calendar year, the Agency shall submit to AT&T actual
Direct Salaries as defined herein, and a computation of Profit Before
Taxes according to the formula:
Profit = Fee from [***] of this [***] - ([***] + [***]) X [***]
2. Based on the Agency evaluation as decided by AT&T, the Agency shall be
allowed:
a. [***]% profit (expressed as a percent of Total Costs) if Agency
evaluation is rated "unacceptable."
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. THE LOCATIONS OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH
ASTERISKS.
<PAGE>
MC941121LD
Page 6 of 19
b. [***]% profit (expressed as a percent of Total Costs) if Agency
evaluation is rated "fully meets."
c. [***]% profit (expressed as a percent of Total Costs) if
Agency evaluation is rated "exceeds."
d. [***]% profit (expressed as a percent of Total Costs) if Agency
evaluation is rated "far exceeds."
Agency shall use its best effort to provide actual Direct Salaries, actual
All Other Expenses and Profit calculations within sixty (60) days of the end
of the calendar year but in no event later than ninety (90) days after the
end of the calendar year, so that reconciliation can be made. Agency agrees
to keep accurate books of account and records, in accordance with generally
accepted accounting principles, concerning all transactions hereunder,
including documentation supporting all charges and including out-of-pocket
expenses. An independent certified public accounting firm of the Agency's
choice and at the Agency's expense shall annually review the Agency's
books of account and records and shall certify that the bills to AT&T and
actual Direct Salaries and Profit computations are accurate and in
accordance with the definitions set forth in this Agreement. Verification of
Direct Salaries shall be performed as outlined in Schedule I, attached
hereto and made a part hereof. This audit privilege shall include access by
the independent auditors to individual payroll and personnel records. Said
books of account and records (excluding individual payroll and personnel
records) shall be preserved and maintained by Agency and kept available for
inspection by AT&T for at least three (3) years from the end of each
accounting period.
C. AT&T shall pay the Agency on dates to be mutually agreed upon by the
parties.
D. If for any reason Agency anticipates exceptional increases in Direct
Salaries during any quarter of the year, a meeting between Agency and AT&T
shall be called by the Agency to discuss what action should be taken while
still providing AT&T with needed services.
E. If for any reason AT&T expects the advertising/marketing budget to decline
or increase significantly above or below the anticipated budget for the
year, AT&T will notify Agency of this change as soon as possible.
F. AT&T agrees to reimburse the Agency directly for reasonable Direct Client
Service Expenses, including travel and living expenses authorized by AT&T
and incurred in connection with this Agreement. Reimbursement for travel and
living expenses shall be in accordance with the following guidelines:
1. Transportation
a. Airline Tickets - Agency will be reimbursed for air fare that has been
purchased at coach fare for domestic travel (business class is allowed
for international flights over six (6) hours in
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. THE LOCATIONS OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH
ASTERISKS.
<PAGE>
MC941121LD
Page 7 of 19
duration). Agency employees may not request specific flights/carriers or
arrange/alter travel plans to obtain airline promotional benefits. Agency
employees traveling under first class status will be responsible for the
expense difference incurred. The ticket stub must be presented and relate
directly to the AT&T assignment. Reimbursement will not be made for the
purchase of travel insurance.
b. Reasonable taxi, bus, rail or car rental expenses will be reimbursed along
with associated receipts from tolls, tips, and parking fees will be
reimbursed by AT&T. Reimbursement for car rental expenses will be made upon
presentation of a car rental agreement/receipt. Car rentals must be
contracted at the lowest available rate and in the compact/subcompact
category where possible, unless special requirements dictate otherwise, in
which cases AT&T prior approval is required. For more than two people, a
mid-size rental is acceptable, however, names of the people must be
indicated on the car rental receipt.
AT&T will not reimburse car rental refueling charges.
Cab fares for "late nights" (after 8PM) are billable.
c. A mileage allowance, as approved yearly by the IRS, will be reimbursed to
Agency employees who use their own personal automobiles for services
provided on behalf of AT&T. Allowable mileage is determined by deducting the
normal commuting mileage.
When traveling, use public transportation as a first choice, personal car as
a second choice, and car rental as the last choice.
2. Lodging and Meals - Maximum of $150.00/day hotel allowance for domestic
travel, unless special requirements dictate otherwise, in which case AT&T
prior approval is required. Lower rates should be used if available. Agency
shall only invoice hotel expenses that are directly related to the work
performed under this Agreement. Expenses incurred at hotels for AT&T
business-related services (fax, typing, photocopying) are reimbursable.
AT&T will reimburse the Agency for meal expenses not exceeding $65.00 per
day, per person, which shall include room service and gratuities. Business
lunches are billable (only if an AT&T employee is present). Overtime meals
are not billable.
3. Business Calls - Business calls made on AT&T's behalf while staying
overnight are billable. Calls must list reason and person called and be on
the AT&T Network. Personal calls are not billable.
4. Personal Expenses - AT&T will not reimburse personal expenses of Agency
employees. If expenses of a personal nature (i.e., hotel/ship purchases,
alcoholic beverages, telephone and long
<PAGE>
MC941121LD
Page 8 of 19
distance charges, in-room movies, sundry items, etc.) are charged
against the room, the amount will be deducted from the invoice presented
to AT&T. For trips which extend beyond five (5) days, reasonable valet
and laundry charges will be reimbursed. AT&T will reimburse reasonable
gratuities.
5. Magazines/Newspapers/Books are not billable unless specifically
requested, in writing, by AT&T.
E. Services provided by Agency employees - For services requested by AT&T,
the Agency shall provide, as a maximum, the following number of people:
Maximum Number of People
a. Location Shoots 3
b. Press Runs 1
c. Strategy Meetings *
d. Review Meetings *
e. Research Meetings (Focus Groups) *
* Agency shall obtain prior approval from AT&T regarding the number of
people to attend.
The Agency shall submit copies of all hotel bills and other reimbursable
expenses along with the associated charge receipt(s). Expenses shall be
billed at cost and invoices for all reimbursable expenses shall list the
date(s), company, person(s) visited and business purpose for the expense.
ARTICLE 8 - DURATION
The term of this Agreement shall begin on January 1, 1994 and shall continue
until terminated by either party for their convenience by giving ninety (90)
days written notice or as otherwise provided herein.
After expiration of the period of notice, no rights or liabilities shall arise
out of this relationship, regardless of any plans which may have been made for
future advertising promotions, except that: (1) if AT&T terminates, any non-
cancelable contracts made on AT&T's authorization (or any uncompleted work
previously approved by AT&T either specifically or as part of a plan, and still
existing at the expiration of the period of notice), which contracts were not or
could not be assigned by the Agency to AT&T or AT&T's assignee, shall be
carried to completion by the Agency and paid for by AT&T; and (2) if Agency
terminates, it shall be similarly responsible for any non-cancelable contracts
unless AT&T chooses to assume such contracts. Upon termination of this
Agreement, the Agency shall transfer, assign, and make available to AT&T, all
property and materials in the Agency's possession or control belonging to and
paid for by AT&T, and all information regarding AT&T's advertising. The Agency
also agrees to give all reasonable cooperation towards transferring, with the
approval of third parties in interest, all assignable reservations, contracts
and agreements with advertising media, or others, for advertising space,
<PAGE>
MC941121LD
Page 9 of 19
broadcast time or materials yet to be used and all rights and claims thereto and
therein, upon being duly released from the obligation thereof. Upon termination,
unused advertising/promotional plans and ideas prepared by the Agency for AT&T
prior to the date of termination shall remain AT&T's property.
Except as otherwise specifically set forth, all the rights and liabilities of
the parties arising out of this Agreement shall cease on the date of
termination.
ARTICLE 9 - BILLING AND PAYMENT
A. Agency's bills for space in publications, outdoor and carcard advertising,
and radio and TV time and talent shall be rendered to AT&T in sufficient
time to afford AT&T a reasonable opportunity to remit funds to enable Agency
to pay charges incurred for AT&T's account on their due dates, and AT&T
agrees to pay such bills within the time herein specified for payment.
Agency's bills for other items will be rendered to AT&T from time to time;
unless otherwise specified, such bills will be due and payable within
thirty (30) days from date thereof. Agency shall submit all media and other
invoices in time for AT&T to obtain customary cash discounts. All bills
submitted to AT&T by Agency shall be net of all commissions and/or markups.
All non-media billing charges shall be in accordance with Schedule II,
attached hereto and made a part hereof. In no event shall AT&T be liable for
media or non-media bills unless the Agency submits such bills to AT&T within
three (3) months from the date in which costs were incurred.
B. Receipt or acceptance by AT&T of any statement or invoice furnished pursuant
hereto or any sums paid by AT&T hereunder shall not preclude AT&T from
questioning the correctness thereof within two (2) years of the year in
question, and if any inconsistencies or mistakes are discovered in such
statements or payments, they shall be immediately rectified and prompt
adjustments and corresponding payments shall be made to compensate thereof.
C. AT&T agrees to pay any "short rates" with which AT&T is justly charged by
the media placed on AT&T's behalf by Agency for any premature termination
of a contract that is caused by AT&T. Agency shall pay any "short rates"
with which AT&T is charged by media for any premature termination of a
contract that is caused by Agency.
The Agency shall submit invoices for all work performed under this Agreement.
Invoices against this Agreement shall indicate the work performed for which
billing is rendered, shall be in accordance with approved estimates and shall be
submitted in duplicate.
<PAGE>
MC941121LD
Page 10 of 19
ARTICLE 10 - NOTICES
Any notice or demand which under the terms of this Agreement or under any
statute must or may be given or made by Agency or AT&T shall be in writing and
shall be given or made by telegram, telex, confirmed facsimile or by certified
or registered mail.
Such notice or demand shall be deemed to have been given or made when sent by
telegram, telex, or facsimile or when deposited, postage prepaid in the
U.S. mail.
ARTICLE 11 - TITLE
A. Except as set forth in Paragraph C below, all creative work and work
products, including, but not limited to, advertising and/or marketing plans,
media plans, ideas, and advertising materials developed by the Agency, or on
Agency's behalf, for AT&T in connection with this Agreement, and any and all
copyrights therein are hereby assigned and agreed to be assigned by Agency
to AT&T and shall be and will remain the exclusive property of AT&T, which
may use any of such as it deems appropriate. All such work and work products
shall be considered "works made for hire" to the extent allowed by law.
Agency shall acquire for AT&T from Agency subcontractors or others all such
assignments, rights and covenants, and will furnish AT&T with all such
documentation, as, any of them, are needed in AT&T's reasonable opinion to
assure vesting in it of title to, and unrestricted ownership rights in, such
work, work products and copyrights, and to perfect the enforceability of
such copyrights.
Should the Agency desire to use material developed for AT&T for another
client or for other business reasons it may request AT&T's permission to do
so. Granting of any such permission shall be at AT&T's sole discretion.
B. If Agency furnishes AT&T with materials previously copyrighted by Agency and
not originally prepared hereunder, Agency hereby grants and agrees to grant
to AT&T unrestricted, non-exclusive, royalty-free licenses for all purposes
under any and all copyrights in such materials, with the unrestricted right
to grant such sublicenses under those licenses as AT&T may see fit, to the
extent that such materials are used in conjunction with any of the work and
work products referred to in Paragraph A of this Article.
C. If AT&T has consented to the inclusion of materials owned or copyrighted by
others, or in which other rights may be claimed by others (and there shall
be no such inclusion without AT&T's prior consent), then the Agency shall
notify AT&T of the scope of the rights and permissions the Agency intends to
obtain with respect to such materials and shall modify the scope of same as
requested by AT&T. Copies of all rights and permissions clearly identifying
the included works to which they apply shall be supplied to AT&T prior to
program completion.
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D. Agency warrants the originality of the work prepared for AT&T hereunder
(except if such work is in the public domain) and its disclosure to AT&T
exclusively and that, except as provided in Paragraphs B and C above, no
portion of the material prepared for AT&T under this Agreement is derived
from copyrighted material.
E. Agency undertakes that no part of the creative work or work products
developed for AT&T in connection with this Agreement, whether or not
copyrightable, shall be disclosed to any persons or used by the Agency to
produce creative materials for any persons other than AT&T without the
express written permission of AT&T.
F. Agency shall retain all materials for two years or for such longer period as
is necessary for purposes of carrying out Agency's obligations hereunder
after which time they will be returned to AT&T, placed in public storage at
AT&T's expense, or destroyed as requested by AT&T. Agency shall safeguard
and be responsible for all materials entrusted to it by or on behalf of AT&T
and shall return such materials to AT&T upon request of AT&T, and, in any
event, as soon as practicable upon termination of this Agreement. Agency
shall provide copies of materials requested by AT&T to the extent necessary
for AT&T to litigate or negotiate claims or to handle proceedings before
regulatory agencies.
ARTICLE 12 - USE OF INFORMATION
Except under the conditions stated in the next sentence, any materials and/or
information furnished or disclosed by AT&T or developed by the Agency hereunder
is the property of and shall be deemed confidential to AT&T and shall be
surrendered to AT&T at the conclusion of this Agreement, or shall be destroyed
if AT&T shall so direct in writing. Unless such information or materials were
previously known to the Agency free of any obligation to keep it confidential,
or is subsequently made public by AT&T or by a third party having a legal right
to make such disclosure, it shall be held in confidence by the Agency, shall be
used only for the purposes hereunder, and may be used for other purposes only
upon such terms and conditions as may be mutually agreed upon in writing.
ARTICLE 13 - EXCLUSIVITY AND RESERVATION OF RIGHTS
A. For the duration of this Agreement, including the period of notice prior to
its effectiveness of termination, Agency and any of its constituent
companies anywhere in the world shall not undertake any work for any of the
following companies: Ameritech, Bell Atlantic, Bell South, British Telecom,
IBM, MCI, NYNEX, Pacific Telesis, Southwestern Bell, Sprint or US West.
B. Further, Agency and any of its constituent companies shall not work for
other companies that compete with any AT&T unit unless Agency receives
written approval from AT&T and the following three (3) conditions are met:
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MC941121LD
Page 12 of 19
1. The non-AT&T business is not competitive with the AT&T account handled
by the Agency.
2. A "virtual wall" is erected so that none of the people working
on AT&T's business share any information with people working on the
competitive account.
3. The Agency understand that if the competitive company shifts its focus
and strategy to become a strategic competitor, the Agency must then
choose to work only for AT&T or the competitor.
ARTICLE 14 - AGENCY'S INFORMATION
No specifications, drawings, sketches, models, samples, tools, computer or other
apparatus programs, technical or business information or data, written, oral or
otherwise, furnished by Agency to AT&T under this Agreement, or in contemplation
of this Agreement, shall be considered by Agency to be confidential or
proprietary unless subject matter so furnished is owned by AT&T as defined and
provided under the Article 11 (Title) or Article 12 (Use of Information),
contained herein.
ARTICLE 15 - INDEMNIFICATION/INFRINGEMENT
The Agency agrees to indemnify and save harmless AT&T, its subsidiaries,
affiliates and its customers and their officers, directors, employees successors
and assigns (collectively referred to as "AT&T") from and against the following
claims, losses, suits, demands, or liens:
A. Any tortious act, omission, or statement of the Agency or any person
employed by or under contract with the Agency that results in
injury (including death), loss or damage to any person or property,
including libel, slander, and defamation;
B. Injuries or death to persons or damage to property, including theft, in any
way arising out of or occasioned by, caused or alleged to have been caused
by or on account of the performance of the work or services performed by
Agency or persons furnished by Agency, except to the extent such injury or
damages are caused by AT&T's sole negligence or willful misconduct;
C. Any failure on the part of the Agency to satisfy all claims for labor,
equipment, materials and other obligations relating to the performance of
the work hereunder;
D. Piracy, unfair competition, plagiarism, idea misappropriation under implied
contract;
E. Assertions under Worker's Compensation or similar acts made by persons
furnished by Agency or by any subcontractor, or by reason of any injuries to
such persons for which AT&T would be responsible under Worker's
Compensation or similar acts if the persons were employed by AT&T;
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F. Any failure by the Agency to perform Agency's obligations under this clause
or, Article 16 (Insurance); and
G. Any act of infringement of any patent, trademark, or copyright; any title,
slogan, or other trademark; or any unauthorized use of trade secret or other
proprietary interest, except where such infringement or unauthorized use
arises solely from Agency's adherence to AT&T's written instructions which
are so specific as to directly cause said infringement or unauthorized use,
in which case AT&T shall so indemnify Agency; provided however, if such
instructions specify (1) commercial material which is available on the open
market or is the same as such material or (2) material of Agency's origin,
design or selection, and the adherence to such instructions results in the
infringement or unauthorized use, then Agency shall indemnify AT&T for any
such infringement or unauthorized use.
However, the indemnification in (A) shall not apply to claims for loss or damage
to property arising solely from Agency's reasonable reliance upon the accuracy,
completeness and propriety of information furnished by AT&T concerning its and
its competitors organization, products, industry and services in developing or
producing work or work products under this Agreement.
Each party shall defend or settle, at its own expense, any action or suit
against the other for which it is responsible hereunder and shall reimburse the
other for reasonable attorneys' fees, interest, costs of suit and all other
expenses incurred by the other in connection therewith. Each party shall notify
the other promptly of any claim for which the other is responsible hereunder and
shall cooperate with the other in every reasonable way to facilitate the defense
of any such claim.
ARTICLE 16 - INSURANCE
Agency shall maintain during the term of this Agreement (1) Worker's
Compensation insurance as prescribed by the law of the state or nation in which
the work is performed; (2) employer's liability insurance with limits of at
least $300,000 for each occurrence; (3) comprehensive automobile liability
insurance if the use of motor vehicles is required, with limits of at least
$1,000,000 combined single limit for bodily injury and property damage for each
occurrence; (4) Comprehensive General Liability ("CGL") insurance, including
Advertiser's Liability and Blanket Contractual Liability and Broad Form
Property damage, with limits of at least $5,000,000 combined single limit for
personal injury and property damage for each occurrence. All CGL insurance shall
designate AT&T as an additional insured for work Agency performs for AT&T.
Agency shall cause its subcontractors to maintain insurance similar in form and
account as AT&T shall approve, which approval shall not be reasonably withheld.
All such insurance must be primary and required to respond and pay prior to any
other available coverage.
Agency agrees that Agency, Agency's insurer(s) and anyone claiming by, through,
under or in Agency's behalf shall have no claim, right of action or right of
subrogation against AT&T and its customers based on any loss
<PAGE>
MC941121LD
Page 14 of 19
or liability insured against under the foregoing insurance. Agency shall furnish
prior to the start of work certificates or adequate proof of the foregoing
insurance. AT&T shall be notified in writing at least thirty (30) days prior to
cancellation of or any change in the policy.
ARTICLE 17 - RELATIONSHIP
The Agency shall exercise full control and direction over the employees of the
Agency performing the work covered by this Agreement. Any changes in personnel
performing services for AT&T that may be reasonably requested by AT&T through
its authorized representative shall be made promptly.
Neither the Agency nor its employees or agents shall be deemed to be AT&T's
employees or agents, it being fully understood that Agency employees are
entitled to no benefits or compensation from AT&T. It is understood that the
Agency is an independent contractor for all purposes and at all times. The
Agency is wholly responsible for withholding and payment of all applicable
federal, state and local income and other payroll taxes with respect to its
employees, including contributions from them as required by law. Agency agrees
to indemnify, defend and hold AT&T harmless from any claims made by Agency
employees or former Agency employees, their heirs or assigns, against AT&T for
direct compensation, including salaries and bonuses, or for any benefits such as
medical, dental, life insurance or pension benefits.
ARTICLE 18 - SUBCONTRACTS
The Agency shall be responsible for informing subcontractors of their
responsibility to protect any confidential and proprietary information included
in any work subcontracted hereunder, and Agency shall undertake all necessary
precautions to insure that each subcontractor is in compliance with this
Article. This Agreement is not intended to create any legal rights or interests
as to persons not directly a party hereto. In accordance with this
understanding, Agency shall remain fully, directly and solely responsible for
all expenses it incurs of any nature whatsoever and shall indemnify, defend and
hold AT&T harmless from any and all claims made against AT&T by persons not a
party to this Agreement for non-payment of such expenses (except those incurred
as an authorized and disclosed advertising agent for AT&T in connection with
approved work or services performed or purchases made hereunder).
If Agency elects to subcontract out any work, then the Agency shall request
competitive quotations from a minimum of three vendors when the subcontracted
work is estimated to exceed $20,000. The quotation process shall be
administered by the Agency and contracts awarded by the Agency, but only with
the prior concurrence of AT&T. Copies of the quotations shall be submitted to
AT&T for review and approval prior to the award of a contract. In the event a
selected vendor cannot perform, the Agency shall select another vendor upon
notification to and approval by AT&T. The Agency shall not fragment any
subcontracted work to avoid the obligation to obtain quotations.
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ARTICLE - 19 USE OF AT&T'S NAME, LOGO, AND MARKS
All use of AT&T's name, logo and marks shall be in strict conformance with any
written BCS, Corporate or other guidelines provided by AT&T and shall be
approved in advance by AT&T.
ARTICLE 20 - AUDIT
Agency shall maintain accurate and complete records including a physical
inventory, if applicable, of all costs incurred under this Agreement in
performing the services covered by this Agreement, including the costs of labor
(other than individual salaries and bonuses of agency employees), equipment,
materials, and other disbursements. These records shall be maintained in
accordance with recognized commercial accounting practices so they may be
readily audited and shall be held until costs have been finally determined under
this Agreement and payment or final adjustment of payment, as the case may be,
has been made. Agency shall permit AT&T or AT&T's representative to examine and
audit these records on reasonable notice. Audits shall be made not later than
two (2) calendar years after the end of the year in question.
ARTICLE 21 - ASSIGNMENT
The Agency shall not assign any right under this Agreement (excepting monies due
or to become due), subcontract any work or delegate any other obligations to be
performed or owed under this Agreement without the prior written consent of
AT&T. Any attempted assignment or delegation in contravention of the above
provisions shall be void and ineffective. Any assignment of monies shall be void
and ineffective to the extent that (1) Agency shall not have given AT&T at least
thirty (30) days prior written notice of such assignment or (2) such assignment
attempts to impose upon AT&T obligations to the assignee additional to the
payment of such monies, or to preclude AT&T from dealing solely and directly
with Agency in all matters pertaining to this Agreement including the
negotiation of amendments or settlements of charges due. All work performed by
Agency's subcontractor(s) at any time shall be deemed work performed by the
Agency.
ARTICLE 22 - TAXES
AT&T shall reimburse Agency only for the following tax payments with respect to
transactions under this Agreement unless an exemption applies: state and local
sales and use taxes, as applicable. Taxes payable by AT&T shall be billed as
separate items on Agency's invoices and shall not be included in Agency's
prices. AT&T shall have the right to have Agency contest any such taxes that
AT&T reasonably deems improperly levied, at AT&T's expense and subject to its
direction and control.
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MC941121LD
Page 16 of 19
ARTICLE 23 - COMPLIANCE WITH LAWS
Agency and all persons furnished by Agency shall comply at their own expense
with all applicable federal, state and local laws, ordinances, regulations and
codes, including identification and procurement of required permits,
certificates, licenses, insurance approvals and inspections, in performance
under this Agreement. Agency agrees to indemnify AT&T and its customers for any
loss or damage that may be sustained by reason of any failure to do so.
ARTICLE 24 - PUBLICITY, ADVERTISING
The Agency agrees not to advertise, promote, make use of any identification of
AT&T or publicize matters relating to the services performed under this
Agreement or to mention or imply any relationship or connection with AT&T in
such advertising, promotion or publicity without the prior written consent of
AT&T. The term "identification" includes any trade name, trademark, service
mark, insignia, symbol, or any simulation thereof, and any code, drawing,
specification, or evidence of AT&T's inspection. This article does not modify
Article 12 (Use of Information).
ARTICLE 25 - WAIVER
The failure of either party at any time to enforce any right or remedy available
to it under this Agreement with respect to any breach or failure by the other
party shall not be construed to be a waiver of such right or remedy with respect
to any other breach or failure by the other party.
ARTICLE 26 - SEVERABILITY
In the event that any one or more of the provisions contained herein shall for
any reason be held to be unenforceable in any respect under the laws of any
state, or of the United States of America, such unenforceability shall not
affect any other provision of this Agreement, but this Agreement shall then be
construed as if such unenforceable provision or provisions had never been
contained herein.
ARTICLE 27 - SURVIVAL OF OBLIGATION
The obligations of the parties under this Agreement that by their nature would
continue beyond the termination, cancellation or expiration of this Agreement,
including by way of illustration only and not limitation, those in the clauses
in Article 23 (Compliance With Laws), Article 16 (Insurance), Article 15
(Indemnification/Infringement), Article 12 (Use of Information), shall survive
termination, cancellation or expiration of this Agreement.
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MC941121LD
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ARTICLE 28 - CHOICE OF LAW
The construction, interpretation and performance of this Agreement shall be
governed by the laws of the State of New Jersey, excluding its choice of law
rules.
ARTICLE 29 - RELEASES VOID
Neither party shall require (1) waivers or releases of any personal rights or
(2) execution of documents, which conflict with the terms of this Agreement from
employees, representatives or customers of the other in connection with visits
to its premises and both parties agree that no such releases, waivers or
documents shall be pleaded by them or third persons in any action or proceeding.
ARTICLE 30 - SPECIAL SERVICES
At the request of AT&T, Agency may be asked to perform the following special
marketing communications services:
A. Create and produce sales promotion and collateral material.
B. Develop new product or service concepts and test marketing of new products
and services.
C. Conduct special advertising or market research.
D. Provide publicity and public relations services.
E. Provide specialized advertising services such as classified and recruitment
advertising.
F. Manage print media contracts and maintain total AT&T print data base.
G. Negotiate services for print media.
H. Negotiate services for media appearing outside the United States
(international).
I. Design services including packaging, trademarks and corporate identity
programs.
J. Stage and conduct sales, marketing positioning, sporting or other events and
meetings.
K. Design and prepare exhibits for trade shows or other venues.
L. Prepare visual presentation materials.
M. Produce television and/or radio programming other than commercials, or print
materials which are not advertising.
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Page 18 of 19
For any special services requested by AT&T and performed by Agency, compensation
shall be mutually agreed upon in writing prior to the start of work.
ARTICLE 31 - NONEXCLUSIVE RIGHTS
It is expressly understood and agreed that this Agreement does not grant to the
Agency an exclusive right or privilege to provide any and all of the services
described in this Agreement which AT&T may require. It is, therefore, understood
that AT&T may contract with other agencies for the procurement of the same or
comparable services.
ARTICLE 32 - CHANGES IN, TERMINATION, OR SUSPENSION OF PARTICULAR WORK
AT&T may, at any time, by written notice, advise the Agency of AT&T's intent to
make changes in, additions to, or deductions from, the work on any specific
program under an approved estimate. If such intended changes cause an increase
or decrease in the amount or character of the services to be rendered under this
Agreement, or in the time required for its performance, the Agency shall
promptly so advise AT&T, specifying the impact of such change on the approved
estimates. Thereafter, if AT&T elects to make such change, an equitable
adjustment to all appropriate terms and conditions, including the amount to be
paid to the Agency and the time for performance shall be made and this Agreement
shall be modified accordingly in writing. Notwithstanding anything contained in
this Article 32 to the contrary no change shall have the effect of reducing the
required ninety (90) days notice of termination.
ARTICLE 34 - ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the Agency and AT&T
relating to the subject matter hereof and shall not be modified or rescinded in
any manner except by a writing executed by both parties. Other than as expressly
provided herein, both the Agency and AT&T agree that no prior or contemporaneous
oral representations form a part of their agreement. Additional or different
terms inserted in this Agreement by Agency, or deletions thereto, whether by
alterations, addenda, or otherwise, shall be of no force and effect, unless
expressly consented to by AT&T in writing. The provisions of this Agreement
supersede all contemporaneous oral agreements and all prior oral and written
quotations, communications, agreements and understandings of the parties with
respect to the subject matter of this Agreement.
It is agreed and understood that Agreement Number AD911475LD executed on May 7,
1991 shall be deemed terminated, superseded and replaced by the terms and
conditions of this Agreement effective January 1, 1994.
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WITNESS WHEREOF, the Agency and AT&T have executed this Agreement in duplicate
on the day and year below written.
AT&T COMMUNICATIONS, INC.
BRONNER SLOSBERG HUMPHREY INC. BUSINESS COMMUNICATIONS SERVICES
By: /s/ Robert E. Stoloff By: /s/ David W. Robertson
------------------------------- ------------------------------------
(Signature) (Signature)
Robert E. Stoloff David W. Robertson
SVP & Chief Financial Officer - Director
------------------------------- ------------------------------------
(Name & Title Typed or Printed) (Name & Title Typed or Printed)
October 11, 1995 September 11, 1995
------------------------------- ------------------------------------
(Date) (Date)
<PAGE>
MC941121LD
Schedule I
Page 1 of 3
SCHEDULE I
[***] & ALL OTHER EXPENSES AUDIT INSTRUCTIONS
A. General
1. Obtain the current agency agreement between the Agency and AT&T.
2. Obtain the AT&T agency fee computation.
B. [***]
1. [***], for all [***] in the [***] as defined herein in [***], [***], [***]
on the [***], which [***] by [***] and [***], all [***]
during the [***].
a. [***], on a [***] or as [***] by [***], [***] ([***]%) of the [***] who
have [***] on the [***] during the [***] ([***] of [***]). This [***]
would include the [***] by [***], if applicable. Note that at least
[***] ([***]%) of the [***] must have [***] at least [***] ([***]%) of
their [***] on the [***]. (See [***] [***].[***].[***] below).
b. If more than [***]-[***][***] ([***]%) of [***] in [***]
[***].[***].[***]. above have [***] less than [***] ([***]%) of their
[***] on [***], on a [***], [***] who [***] less than [***] ([***]%) of
their [***] to [***] and [***] with a [***], until [***] ([***]%) of the
[***] ([***]%) or more of their [***] to the [***].
c. For [***] a [***] of [***] ([***]) [***] or [***] ([***]) [***] on a
[***], [***] ([***], [***] and [***]) to [***].
d. [***] does not include [***], [***] and [***].
e. [***] the [***] to each [***] by the [***] to [***] at a [***] by [***].
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. THE LOCATIONS OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH
ASTERISKS.
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MC941121LD
Schedule I
Page 2 of 3
2. [***] of [***] (including [***], but
excluding [***]) for the [***] in [***].[***].[***]. above.
a. [***] the [***] in the [***] to the [***]-[***][***], [***] and
[***]([***]) [***] on a [***].
b. If [***] in [***] were [***] during the [***], [***] the [***], the
[***] shall be [***] to be the [***] of the [***] during the [***].
In these [***], [***] the [***] of the [***].
c. [***] that no [***], [***], [***] or [***] are included in the [***]
of [***]. Note that [***] are not included as [***] of the [***].
3. [***] of [***] by [***].
a. [***] the [***] per [***].[***]. above and [***] per
[***].[***].[***]. above, [***] the [***] and [***] to the [***].
b. [***] the [***] of the [***].
4. [***] the [***] in [***].[***]. through [***].[***]. above, to the [***] in
[***]. below.
C. Overall Salary Testing
----------------------
Obtain report of annual base salary (including regular time, overtime but
excluding bonus payments) for all employees who charged time to the AT&T
account. Agree the information contained in this report to the year-end
payroll register.
D. Profit Calculation
------------------
Recalculate the agency fee computation, obtained in Step A.2 above, as
defined in Article 7 of the Agreement.
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. THE LOCATIONS OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH
ASTERISKS.
<PAGE>
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Schedule I
Page 3 of 3
E. Compliance Procedures
---------------------
1. If any errors were noted in Step B above, ensure the profit calculation is
corrected by the Agency prior to submission of the final fee calculation to
AT&T. If not corrected, include a summary of all errors as an Exhibit to the
report.
2. If the number of errors noted in Step B above exceeded ten (10), make another
selection as outlined in Step B.1 above, repeat Step B above and note in the
report to AT&T. If errors exceeded ten (10) in this secondary selection and
the effect of the errors equals or exceeds one percent (1%) of the fee to
AT&T, notify Agency and AT&T that audit can not be completed.
F. All Other Expenses
------------------
Use the definition of All Other Expenses (AOE) as defined in Article 6,
Paragraph E to determine and report the actual AOE for the year being
audited.
G. Representation Letter
---------------------
1. Obtain letter signed by the appropriate Agency representative which confirms
management's responsibility for the fair presentation and calculation of the
charges to AT&T, that management is not aware of any irregularities involving
management or employees who have significant roles in the system of internal
accounting control or any other irregularities involving other employees that
could have a material effect on the charges to AT&T or any violations or
possible violations of laws or regulations whose effects should be considered
for disclosure or for recording a loss contingency, that there have been no
communications from AT&T concerning noncompliance with or deficiencies in
financial reporting practices that could have a material effect on the
charges to AT&T and that no matters or occurrences have come to management's
attention up to the date of the letter which would materially affect the
charges to AT&T for the year the audit covers.
2. Clear draft of report with Agency prior to submission to AT&T, including
applicable items noted in Step D above.
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. THE LOCATIONS OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH
ASTERISKS.
<PAGE>
MC941121LD
Schedule II
Page 1 of 5
SCHEDULE II
NON-MEDIA BILLING SCHEDULE
Net out-of-pocket ("Net O-O-P") as used in this Schedule II shall mean the
amount of money the Agency pays to outside suppliers on behalf of AT&T based on
an authorized estimate.
A. Charges for Publication Advertising and Outdoor Advertising
1. Preparation of rough layouts and copy No Charge
2. Production of comprehensive layouts:
- purchased from outside suppliers Net O-O-P
- produced by Agency personnel Quoted in advance
3. Type composition, printing, engraving,
electrotypes, finished art, photographs,
photostats and other reproduction mats,
stereotypes, quantity proofs:
- purchased from outside suppliers Net O-O-P
- produced by Agency personnel Quoted in advance
4. Endorsement fees, testimonials, etc. Net O-O-P
5. Fashion Coordination performed by:
- studio and/or stylist Net O-O-P
- Agency personnel (Competitive Fee
Schedule) Net O-O-P
6. Travel expenses of Agency personnel to Net O-O-P
supervise production, obtain testimonials
and otherwise directly attributable to
specific publication and outdoor
advertising
7. Supervision and checking No Charge
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Schedule II
Page 2 of 5
8. Talent for use in test and/or finished Net O-O-P
advertising
9. Production of test advertisements Net O-O-P
10. Research and licensing costs for stock Net O-O-P
photography
11. Location scouting Net O-O-P
12. All other elements required to produce Net O-O-P
publications and outdoor advertising
not referred to above
B. Charges for Broadcast Advertising
1. Preparation of copy and rough storyboards No Charge
by Agency for the Agency's presentation
of creative executions
2. Regular storyboards and reproduction
copies of all regular storyboards and
animatics:
- purchased from outside suppliers Net O-O-P
- produced by Agency Quoted in advance
3. Talent for use in programs and Net O-O-P
commercials when separately contracted
for the Agency
4. Packaged shows and films Net O-O-P
5. Programs and scripts by outside Net O-O-P
speciality writers or producers
6. Music rights, jingles, prize money, Net O-O-P
dramatic literary or musical adaptions
or arrangements
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Schedule II
Page 3 of 5
7. Previewing, auditioning, selecting, No Charge
negotiating, contracting of programs
and talent
8. Producer's charges for filming, taping Net O-O-P
or recording commercials
9. Film production charges, studio and Net O-O-P
equipment rentals, scenery, props and
costumes and location scouting
10. Fashion Coordination/hair and makeup:
- by Agency personnel No Charge
- by studio and/or stylist Net O-O-P
11. Release prints and duplicate tapes for Net O-O-P
distribution
12. Distribution of release prints and Net O-O-P
duplicate tapes
13. Motion picture, slide and slidefilm Net O-O-P
processing
14. Checking, including air checks No Charge
15. Endorsement fees, testimonials, etc. Net O-O-P
16. Travel expenses of Agency personnel to Net O-O-P
supervise production or expenses otherwise
directly attributable to specific
commercial production
17. Music production associated with creative Net O-O-P
presentation, demos and test ads
18. Talent, including voice over, associated Net O-O-P
with creative presentations, demos and
test ads
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MC941121LD
Schedule II
Page 4 of 5
19. Closed captioning expenses Net O-O-P
20. All production costs for rough or test Net O-O-P
productions
21. All other elements required to televise or
broadcast television or radio commercials
and not referred to above:
- purchased from outside suppliers Net O-O-P
- produced by Agency No Charge
C. Postage, Express and Freight and Sales Taxes
1. Incidental to normal business routine No Charge
between Agency and client home office
2. Shipment of advertising materials to Net O-O-P
suppliers, media, etc.
3. Sales Taxes Net O-O-P
D. Telephone, Teletype, Telegraph and Facsimile
1. Incidental to normal business routine No Charge
between Agency and client home office
2. Attributable to unusual service or to the Net O-O-P
production of specific advertising
projects
E. Research
1. All research conducted by Agency unless No Charge
authorized by client
2. All media research normally provided by No Charge
agencies
<PAGE>
MC941121LD
Schedule II
Page 5 of 5
3. Test materials Net O-O-P
4. Travel for Agency personnel to supervise, Net O-O-P
participate in and observe the research
F. Free-Lance Creative/Technical Talent Net O-O-P
<PAGE>
MC941121LD
Amendment No. 1
Page 1 of 1
ADVERTISING/MARKETING AGREEMENT AMENDMENT
AGREEMENT NUMBER: MC941121LD
AMENDMENT NUMBER: 1
AGENCY: BRONNER SLOSBERG HUMPHREY INC.
695 Atlantic Avenue
Boston, Massachusetts 02111
Advertising/Marketing Agreement MC941121LD dated October 11, 1995 between
AT&T Communications, Inc. - Business Communications Services and Bronner
Slosberg Humphrey Inc., is hereby amended as follows:
Effective January 1, 1995, Article 7, Section A.3. is deleted in its entirety
and replaced with the following:
Article 7.A.3
For 1995 the yearly fee is [***]. For each subsequent year, the yearly
fee shall be mutually agreed upon by the parties in writing and attached as
an amendment hereto.
ALL OTHER TERMS AND CONDITIONS TO REMAIN UNCHANGED
Accepted:
BRONNER SLOSBERG AT&T COMMUNICATIONS, INC.
HUMPHREY INC. BUSINESS COMMUNICATIONS SERVICES
By: /s/ Robert E. Stoloff By: /s/ David W. Robertson
------------------------------ ------------------------------
David W. Robertson - Director/Adv.
- --------------------------------- ----------------------------------
(Name & Title-Printed) (Name & Title-Printed)
11/27/95
- --------------------------------- ----------------------------------
(Date) (Date)
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. THE LOCATIONS OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH
ASTERISKS.
<PAGE>
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. THE LOCATIONS OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH
ASTERISKS.
EXHIBIT 10.33
Contract No. _______
Page 1 of 15
DIRECT MARKETING AGREEMENT
WITNESSETH:
That in consideration of the agreements expressed herein, Cellular Telephone
Company d/b/a AT&T Wireless Services, Northeast Region, ("AWS") having an office
at 15 East Midland Avenue, Paramus, New Jersey 07652 and Bronner Slosberg
Humphrey Inc., a corporation of the Commonwealth of Massachusetts ("Agency"),
having an office at 800 Boylston Street, The Prudential Tower, Boston,
Massachusetts 02199, do hereby agree as follows:
ARTICLE 1 - AGENCY SERVICES
The Agency shall act as AWS's direct marketing agency in the planning,
preparing, and placing of such direct communication programs (i.e. business to
business retention, consumer acquisition, marketing consulting, database
consulting and special projects) and marketing, as may be requested by AWS. The
Agency shall perform other services as AWS may request, as outlined in Article
30, subject to mutual written agreement of the parties.
Agency shall devote its best efforts, on behalf of AWS to further AWS's
interests and shall reasonably endeavor in every proper way to make AWS's direct
marketing and associated efforts, for which the Agency is herein responsible,
successful. To accomplish the foregoing, Agency specifically agrees that its
services shall include but not be limited to the following:
A. Assigning and maintaining, with AWS's consent executive strategic input
and review, an account management group, creative, systems and
fulfillment, research and analysis, teleservices marketing, partnership
marketing, production, media and traffic teams necessary to service the
AWS account;
B. Provide direct marketing services, including the creation, production
and placement, insertion or distribution of direct mail and other direct
communication programs;
C. Attending meetings, as requested by AWS, with AWS's staff and periodic
meetings with AWS's top management;
D. Familiarizing itself with the business of AWS, its products and
services, and the industry in which AWS operates; and analyzing the
present and potential direct marketing opportunities for such products
and services so as to provide AWS with direct marketing counsel,
including specific direct marketing objectives, strategies and plans for
reaching AWS's business objectives;
E. Preparing layouts, copy, artwork, scripts and storyboards and furnishing
other elements and materials to be used in finished advertisements for
all media and promotions to be used by AWS;
F. If requested, advising AWS of the availability of all broadcast,
publication and out-of-home media which can appropriately be used to
advertise AWS products and services; and developing media plans suitable
for AWS;
G. Supervising the production of all finished direct marketing material;
<PAGE>
Contract No.________
Page 2 of 15
H. Negotiating, arranging and contracting for any special talent required,
with AWS's approval, and for all photography, models, special effects,
layout, artwork and for all printing for use in the direct marketing
promotions program; and making appropriate arrangements for tax
withholdings from talent;
I. Analyzing direct marketing, marketing and consumer research to aid AWS
in developing advertising strategy and developing and evaluating AWS's
direct marketing and media;
J. Conducting and analyzing competitive direct marketing tracking.
The above services shall be performed to the satisfaction of AWS, shall be
performed in accordance with the highest professional standards and shall be in
accordance with such requirements or restrictions as may be lawfully imposed by
governmental authority. Services not completed to the reasonable satisfaction of
AWS shall be reperformed at no cost to AWS.
ARTICLE 2 - APPROVALS BEFORE COMMITMENT
No commitment of any kind shall be made by the Agency on behalf of AWS unless
specifically authorized in writing by AWS, except as provided in Article 3
(Estimates).
The Agency shall submit concepts, scripts, print copy and other materials as
early as possible to AWS for internal review and required legal and technical
approval.
ARTICLE 3 - ESTIMATES
The Agency shall furnish to AWS, in writing and in advance, labor fee and a cost
estimate of all expenditures in connection with all services and projects
recommended by Agency or requested by AWS. Prior to undertaking such projects or
committing AWS's funds, Agency shall obtain written authorization from AWS.
Agency shall furnish revisions of these estimates when changes in costs are
anticipated in excess of ten percent (10%), plus or minus. Each estimate as
approved by AWS shall be executed by both parties. Approved estimates shall
constitute the only authorization for the Agency to take any action, make any
commitments or expend any money. In those situations where time or circumstances
will not permit specific prior written authorization, commitments to exceed
$10,000.00 may be made with oral approval, provided such approval shall be
confirmed by an approved written estimate no later than ten (10) working days
thereafter.
ARTICLE 4 - DISCOUNTS
Agency shall obtain all prompt payment or other similar discounts available to
it from media and other suppliers from which it makes purchases in the
performance of the services hereunder. When Agency receives a cash discount,
rebate, frequency discount, volume discount, promotional consideration, or other
similar credit from such media or other suppliers, AWS shall receive full
allowance for each such amount, provided Agency, after timely notification,
receives payment from AWS within the applicable discount period.
ARTICLE 5 - ANNUAL REVIEW
An annual review shall take place during the first quarter (January - March) of
each calendar year for the review of the previous year's performance, to be
attended by appropriate AWS management representatives and by Agency management
and senior members of the AWS agency group. The purpose of this review will be
to determine the appropriate Agency bonus based on previous year's business
results. There will also be a mid-year review that addresses the quality of
Agency
<PAGE>
Contract No.________
Page 3 of 15
services and account management. AWS and the Agency will mutually agree on
any corrective actions needed.
ARTICLE 6. DEFINITIONS
A. "Gross Revenue" as used herein shall mean the total amount of
compensation, exclusive of pass-through costs, the Agency receives from
AWS for direct marketing services performed after reconciliation and any
rebates or supplementary fees are paid.
B. "Annual Salary" as used herein shall mean annual base salary, excluding
bonuses. It does not include employer paid FICA, insurance and medical
benefits or payments into retirement plans.
C. "Direct Salaries" as used herein shall mean the [***] of [***] (including
[***]) in [***], [***] (including [***] and [***]), [***], [***]
(including [***]) and [***], [***] and [***], [***], [***] and [***] on
the [***] which are [***] to the [***].
1. [***] for an individual who works on the AWS account is to be computed
as follows:
[***] multiplied by the [***] of [***] on the [***] divided by the
[***] of [***] on any [***].
[***] on Agency business means [***] on any [***] and on [***] and
other [***]. It does not include [***], [***] or [***].
2. At AWS's option, such option to be obtained by the Agency in writing
from AWS, AWS may elect to "buy-out" designated individuals. For those
individuals bought out by AWS, AWS shall be responsible for that
person's total annual base salary, excluding bonuses.
D. "Profit Before Taxes" as used herein shall mean [***] minus [***], where
[***] equals [***] X [***].
ARTICLE 7 - AGENCY COMPENSATION
A. Agency compensation for the calendar year shall be computed as follows:
1. During the last quarter of the previous calendar year, AWS and the
Agency shall meet to determine:
a. The account staffing (including all functions as defined in Article
6, Paragraph C) for the AWS account for the next calendar year.
b. The aggregate Direct Salaries, as defined herein, of the agreed
upon account staff.
2. The fee for the calendar year is then [***] X [***] X [***].
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. THE LOCATIONS OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH
ASTERISKS.
<PAGE>
Contract No.________
Page 4 of 15
3. For 1997 the yearly fee is estimated at [***]. Any increase or
decrease in the estimated fee will require AWS approval. For each
subsequent year, the yearly fee shall be mutually agreed upon by the
parties in writing and attached as an amendment hereto.
4. For 1997 the Agency's average rates range between [***] and [***]
per hour for marketing communications and planning. There will be
additional projects that will fall outside of this range that involve
operational enablement work beyond marketing communications (i.e.
database support, customer care assessments, etc.).
B. [***] (expressed as a [***] of [***]) as herein defined shall be based on
[***] of [***] for the [***] based on [***] in [***] to [***] its [***].
The specific criteria for evaluation shall be mutually agreed upon by the
parties.
Based on the Agency's performance in assisting AWS to meet its stated
goals, the Agency shall be allowed a bonus based on an agreed upon formula
attached hereto as Schedule I.
C. AWS shall pay the Agency on dates to be mutually agreed upon by the
parties.
D. If for any reason Agency anticipates exceptional increases in Direct
Salaries during any quarter of the year, a meeting between Agency and AWS
shall be called by the Agency to discuss what action should be taken while
still providing AWS with needed services.
E. If for any reason AWS expects the direct marketing budget to decline or
increase significantly above or below the anticipated budget for the year,
AWS will notify Agency of this change as soon as possible.
F. AWS agrees to reimburse the Agency directly for reasonable direct client
service expenses (i.e. out of pocket expenses of Agency related to the AWS
account), including travel and living expenses authorized by AWS and
incurred in connection with this Agreement. Reimbursement for travel and
living expenses shall be in accordance with the following guidelines:
1. Transportation
a. Airline Tickets - Agency will be reimbursed for air fare that has
been purchased at coach fare for domestic travel (business class is
allowed for international flights over six (6) hours in duration).
Agency employees may not request specific flights/carriers or
arrange/alter travel plans to obtain airline promotional benefits.
Agency employees traveling under first class status will be
responsible for the expense difference incurred. The ticket stub
must be presented and relate directly to the AWS assignment. Agency
employees must account for all business related tickets whether
used, partially used, or unused. Unused tickets should be promptly
returned to the licensing travel agency for credit. Reimbursement
will not be made for the purchase of travel insurance.
b. Reasonable taxi, bus, rail or car rental expenses will be
reimbursed along with associated receipts from tolls, tips, and
parking fees will be reimbursed by AWS. For groups traveling to the
same destination, special group fares should be utilized when
available. Reimbursement for car rental expenses will be made upon
presentation of a car rental agreement/receipt. Car rentals must be
contracted at the lowest available rate and in the
compact/subcompact category
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. THE LOCATIONS OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH
ASTERISKS.
<PAGE>
Contract No.________
Page 5 of 15
where possible, unless special requirements dictate otherwise, in which
cases AWS prior approval is required. For more than two people, a mid-
size rental is acceptable, however, names of the people must be indicated
on the car rental receipt. Taxis, shuttles and other available forms of
transportation should be used where it is more practical or less
expensive.
AWS will not reimburse car rental refueling charges.
Cab fares for "late nights" (after 8 PM) are billable.
c. A mileage allowance, as approved yearly by the IRS, will be reimbursed to
Agency employees who use their own personal automobiles for services
provided on behalf of AWS. Allowable mileage is determined by deducting
the normal commuting mileage.
When traveling, use public transportation as a first choice, personal car as
a second choice, and car rental as the last choice.
2. Lodging - Business class hotels should be utilized by Agency employees unless
another kind of hotel better meets the Agency employees needs at a lower
rate. Agency shall only invoice hotel expenses that are directly related to
the work performed under this Agreement. Expenses incurred at hotels for AWS
business related services (fax, typing, photocopying) are reimbursable. If
accommodations are not needed, it is the responsibility of the Agency
employee to ensure that the hotel is notified. "No show" bills will not be
reimbursed.
3. Meals and Entertainment - Reasonable expenses for business meals and/or
entertainment are reimbursable it the activities are directly related to AWS
related services. Business entertainment must be directly related and
conducive to the transaction of AWS related business and may precede or
follow the conducting of AWS business related activities or discussion. The
senior AWS representative must approve all such business entertainment in
writing and in advance.
Receipts for meal expenditures should be submitted for meal reimbursement.
However, per diem meal allowances may be charged for meals, with no
requirement for submitting receipts. The per diem meal allowances (including
gratuities) are as follows:
Breakfast $ 5.00
Lunch $ 7.00
Dinner $25.00
Daily Total $37.00
Normal reasonable and necessary gratuities up to 20% are reimbursable to the
Agency employee. This would include, but is not limited to, tips for Airport
Sky Caps, Hotel Bellboys, etc. Tips for meals should be listed individually
for reimbursement.
Overtime meals are not billable.
<PAGE>
Contract No.________
Page 6 of 15
4. Business Calls - Business calls and faxes made on AWS's behalf while
staying overnight are billable. Agency employees are encouraged to use a
calling card whenever possible. Calls must list reason and person called
and be on the AT&T Network. Personal calls are not billable.
5. Personal Expenses - AWS will not reimburse personal expenses of Agency
employees. If expenses of a personal nature (i.e., hotel/ship purchases,
alcoholic beverages, telephone and long-distance charges, in-room movies,
sundry items, etc.) are charged against the room, the amount will be
deducted from the invoice presented to AWS. Personal expenses for
laundry/valets, tips, etc. will be reimbursed where reasonable; up to a
maximum of $10.00 per day.
6. Magazines/Newspapers/Books are not billable unless specifically requested,
in writing, by AWS.
7. Services provided by Agency employees - For services requested by AWS, the
Agency shall provide, as a maximum, the following number of people:
Maximum Number of People
a. Location Shoots 3
b. Press Runs 1
c. Strategy Meetings *
d. Review Meetings *
e. Research Meetings (Focus Groups) *
* Agency shall obtain prior approval from AWS regarding the number of
people to attend.
The Agency shall submit copies of all hotel bills and other reimbursable
expenses along with the associated charge receipt(s). Expenses shall be billed
at cost and invoices for all reimbursable expenses shall list the date(s),
company, person(s) visited and business purpose for the expense.
ARTICLE 8 - DURATION
The term of this Agreement shall begin on January 1, 1997 and shall continue
until terminated by either party for their convenience by giving ninety (90)
days written notice or as otherwise provided herein.
After expiration of the period of notice, no rights or liabilities shall arise
out of this relationship, regardless of any plans which may have been made for
future direct marketing promotions, except that: (1) if AWS terminates, any non-
cancelable contracts made on AWS's authorization (or any uncompleted work
previously approved by AWS either specifically or as part of a plan, and still
existing at the expiration of the period of notice), which contracts were not or
could not be assigned by the Agency to AWS or AWS's assignee, shall be carried
to completion by the Agency and paid for by AWS; and (2) if Agency terminates,
it shall be similarly responsible for any non-cancelable contracts unless AWS
chooses to assume such contracts. Upon termination of this Agreement, the Agency
shall transfer, assign, and make available to AWS, all property and materials in
the Agency's possession or control belonging to and paid for by AWS, and all
information regarding AWS's direct marketing. The Agency also agrees to give all
reasonable cooperation towards transferring, with the approval of third parties
in interest, all assignable reservations, contracts and agreements with direct
marketing media, or others, for advertising
<PAGE>
Contract No.________
Page 7 of 15
space, broadcast time or materials yet to be used and all rights and claims
thereto and therein, upon being duly released from the obligation thereof.
Upon termination, unused direct marketing/promotional plans and ideas
prepared by the Agency for AWS prior to the date of termination shall remain
AWS's property.
Except as otherwise specifically set forth, all the rights and liabilities of
the parties arising out of this Agreement shall cease on the date of
termination.
ARTICLE 9. BILLING AND PAYMENT
A. Agency's bills for space in publications, outdoor and carcard
advertising, and radio and TV time and talent shall be rendered to AWS in
sufficient time to afford AWS a reasonable opportunity to remit funds to
enable Agency to pay charges incurred for AWS's account on their due
dates, and AWS agrees to pay such bills within the time herein specified
for payment. Agency's bills for other items will be rendered to AWS from
time to time; unless otherwise specified, AWS shall pay Agency 100% of
all estimated Agency fee prior to the commencement of each project. AWS
shall pay 70% of all reimbursable expenses in advance of project work and
the remaining 30% of reimbursable expenses shall be invoiced upon
completion of the particular project. Such bills will be due and payable
within thirty (30) days from date thereof. Agency shall submit all media
and other invoices in time for AWS to obtain customary cash discounts.
All bills submitted to AWS by Agency shall be net of all commissions
and/or markups.
On a quarterly basis and again within ninety (90) days after the close of
each project, Agency will prepare for review by AWS a fee and pass-
through reconciliation for each project with appropriate credit/payment
adjustments made. Agency will provide AWS with credits in the amount of
any overpayment made by AWS for fee and reimbursable expenses.
(i) Fee reconciliations for direct marketing will reflect actual hours
worked at each billing rate, by position, by department;
(ii) Fee reconciliations for advertising materials and deliverables will
be supported by advertising and production summaries, including
number of advertisements placed and number of units actually
produced and shipped; and
(iii) Pass-through reconciliations will be supported by vendor invoices
(except summary compilations in the case of courier charges) and
travel expense summary reports.
All non-media billing charges shall be in accordance with Schedule II,
attached hereto and made a part hereof. In no event shall AWS be liable
for media or non-media bills unless the Agency submits such bills to AWS
within three (3) months from the date in which costs were incurred.
B. Receipt or acceptance by AWS of any statement or invoice furnished
pursuant hereto or any sums paid by AWS hereunder shall not preclude AWS
from questioning the correctness thereof within two (2) years of the year
in question, and if any inconsistencies or mistakes are discovered in
such statements or payments, they shall be immediately rectified and
prompt adjustments and corresponding payments shall be made to compensate
thereof.
C. AWS agrees to pay any "short rates" with which AWS is justly charged by
the media placed on AWS's behalf by Agency for any premature termination
of a contract that is caused by AWS. Agency shall pay any "short rates"
with which AWS is charged by media for any premature termination of a
contract that is caused by Agency.
<PAGE>
Contract No.________
Page 8 of 15
The Agency shall submit invoices for all work performed under this Agreement.
Invoices against this Agreement shall indicate the work performed for which
billing is rendered, shall be in accordance with approved estimates and shall
be submitted in duplicate.
ARTICLE 10 - NOTICES
Any notice or demand which under the terms of this Agreement or under any
statute must or may be given or made by Agency or AWS shall be in writing and
shall be given or made by telegram, telex, confirmed facsimile or by
certified or registered mail to the addresses noted in the first paragraph of
this Agreement.
Such notice or demand shall be deemed to have been given or made when sent by
telegram, telex, or facsimile or when deposited, postage prepaid in the U.S.
mail.
ARTICLE 11 - TITLE
A. Except as set forth in Paragraph C below, all creative work and work
products, including, but not limited to, direct marketing and/or
marketing plans, media plans, ideas, and direct marketing materials
developed by the Agency, or on Agency's behalf, for AWS in connection
with this Agreement, and any and all copyrights therein are hereby
assigned and agreed to be assigned by Agency to AWS and shall be and will
remain the exclusive property of AWS, which may use any of such as it
deems appropriate. All such work and work products shall be considered
"works made for hire" to the extent allowed by law. Agency shall acquire
for AWS from Agency subcontractors or others all such assignments, rights
and covenants, and will furnish AWS with all such documentation, as, any
of them, are needed in AWS's reasonable opinion to assure vesting in it
of title to, and unrestricted ownership rights in, such work, work
products and copyrights, and to perfect the enforceability of such
copyrights.
Should the Agency desire to use material developed for AWS for another
client or for other business reasons it may request AWS's permission to
do so. Granting of any such permission shall be at AWS's sole discretion.
B. If Agency furnishes AWS with materials previously copyrighted by Agency
and not originally prepared hereunder, Agency hereby grants and agrees to
grant to AWS unrestricted, non-exclusive, royalty-free licenses for all
purposes under any and all copyrights in such materials, with the
unrestricted right to grant such sublicenses under those licenses as AWS
may see fit, to the extent that such materials are used in conjunction
with any of the work and work products referred to in Paragraph A of this
Article.
C. If AWS has consented to the inclusion of materials owned or copyrighted
by others, or in which other rights may be claimed by others (and there
shall be no such inclusion without AWS's prior consent), then the Agency
shall notify AWS of the scope of the rights and permissions the Agency
intends to obtain with respect to such materials and shall modify the
scope of same as requested by AWS. Copies of all rights and permissions
clearly identifying the included works to which they apply shall be
supplied to AWS prior to program completion.
D. Agency warrants the originality of the work prepared for AWS hereunder
(except if such work is in the public domain) and its disclosure to AWS
exclusively and that, except as provided in Paragraphs B and C above, no
portion of the material prepared for AWS under this Agreement is derived
from copyrighted material.
<PAGE>
Contract No._______
Page 9 of 15
E. Agency undertakes that no part of the creative work or work products
developed for AWS in connection with this Agreement, whether or not
copyrightable, shall be disclosed to any persons or used by the Agency to
produce creative materials for any persons other than AWS without the
express written permission of AWS.
F. Agency shall retain all materials for two years or for such longer period
as is necessary for purposes of carrying out Agency's obligations
hereunder after which time they will be returned to AWS, placed in
public storage at AWS's expense, or destroyed as requested by AWS.
Agency shall safeguard and be responsible for all materials entrusted to
it by or on behalf of AWS and shall return such materials to AWS upon
request of AWS, and, in any event, as soon as practicable upon
termination of this Agreement. Agency shall provide copies of materials
requested by AWS to the extent necessary for AWS to litigate or negate
claims or to handle proceedings before regulatory agencies.
ARTICLE 12 - USE OF INFORMATION
Except under the conditions stated in the next sentence, any materials and/or
information furnished or disclosed by AWS or developed by the Agency
hereunder is the property of and shall be deemed proprietary and confidential
to AWS and shall be surrendered to AWS at the conclusion of this Agreement,
or shall be destroyed if AWS shall so direct in writing. Unless such
information or materials were previously known to the Agency free of any
obligation to keep it confidential as agreed to by both parties, or is
subsequently made public by AWS or by a third party having a legal right to
make such disclosure, it shall be held in confidence by the Agency for a
period of twenty (20) years, shall be used only for the purposes hereunder,
and may be used for other purposes only upon such terms and conditions as
may be mutually agreed upon in writing.
ARTICLE 13 - EXCLUSIVITY AND RESERVATION OF RIGHTS -
A. For the duration of this Agreement, including the period of notice prior
to its effectiveness of termination, Agency and any of its constituent
companies anywhere in the world shall not undertake any work for any of
the following companies or their wireless subsidiaries or partnerships:
Ameritech, Bell Atlantic, Bell South, British Telecom, IBM, MCI, NYNEX,
Pacific Telesis, Southwestern Bell, Sprint or US West.
B. Further, Agency and any of its constituent companies shall not work for
other companies that compete with any AWS unit unless at AWS sole
discretion the Agency receives written approval from AWS and the
following three (3) conditions are met:
1. The non-AWS business is not competitive with the AWS account handled
by the Agency.
2. A "virtual wall" is erected so that none of the people working on
AWS's business share any information with people working on the
competitive account.
3. The Agency understand that if the competitive company shifts its
focus and strategy to become a strategic competitor, the Agency must
then choose to work only for AWS or the competitor.
ARTICLE 14 - AGENCY'S INFORMATION
No specifications, drawings, sketches, models, samples, tools, computer or
other apparatus programs, technical or business information or data, written,
oral or otherwise, furnished by Agency to AWS under this Agreement, or in
contemplation of this Agreement, shall be considered
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Contract No.________
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by Agency to be confidential or proprietary unless subject matter so
furnished is owned by AWS as defined and provided under the Article 11
(Title) or Article 12 (Use of Information), contained herein.
ARTICLE 15 - INDEMNIFICATION/INFRINGEMENT
The Agency agrees to indemnify and save harmless AWS, its subsidiaries,
affiliates and its customers and their officers, directors, employees
successors and assigns (collectively referred to as "AWS") from and
against the following claims, losses, suits, demands, or liens:
A. Any tortious act, omission, or statement of the Agency or any person
employed by or under contract with the Agency that results in injury
(including death), loss or damage to any person or property, including
libel, slander, and defamation;
B. Injuries or death to persons or damage to property, including theft, in
any way arising out of or occasioned by, caused or alleged to have been
caused by or on account of the performance of the work or services
performed by Agency or persons furnished by Agency, except to the
extent such injury or damages are caused by AWS's sole negligence or
willful misconduct;
C. Any failure on the part of the Agency to satisfy all claims for labor,
equipment, materials and other obligations relating to the performance
of the work hereunder;
D. Piracy, unfair competition, plagiarism, idea misappropriation under
implied contract;
E. Assertions under Worker's Compensation or similar acts made by persons
furnished by Agency or by any subcontractor, or by reason of any
injuries to such persons for which AWS would be responsible under
Worker's Compensation or similar acts if the persons were employed by
AWS;
F. Any failure by the Agency to perform Agency's obligations under this
clause or, Article 16 (Insurance); and
G. Any act of infringement of any patent, trademark, or copyright; any
title, slogan, or other trademark; or any unauthorized use of trade
secret or other proprietary interest, except where such infringement or
unauthorized use arises solely from Agency's adherence to AWS's written
instructions which are so specific as to directly cause said
infringement or unauthorized use, in which case AWS shall so indemnify
Agency; provided however, if such instructions specify (1) commercial
material which is available on the open market or is the same as such
material or (2) material of Agency's origin, design or selection, and
the adherence to such instructions results in the infringement or
unauthorized use, then Agency shall indemnify AWS for any such
infringement or unauthorized use.
However, the indemnification in (A) shall not apply to claims for loss or
damage to property arising solely from Agency's reasonable reliance upon
the accuracy, completeness and propriety of information furnished by AWS
concerning its and its competitors organization, products, industry and
services in developing or producing work or work products under this
Agreement.
Each party shall defend or settle, at its own expense, any action or suit
against the other for which it is responsible hereunder and shall
reimburse the other for reasonable attorneys' fees, interest, costs of
suit and all other expenses incurred by the other in connection therewith.
Each party shall notify the other promptly of any claim for which the
other is responsible hereunder and shall cooperate with the other in every
reasonable way to facilitate the defense of any such claim.
<PAGE>
Contract No.________
Page 11 of 15
ARTICLE 16. INSURANCE
Agency shall maintain during the term of this Agreement (1) Worker's
Compensation insurance as prescribed by the law of the state or nation in
which the work is performed; (2) employer's liability insurance with limits
of at least $300,000 for each occurrence; (3) comprehensive automobile
liability insurance if the use of motor vehicles is required, with limits of
at least $1,000,000 combined single limit for bodily injury and property
damage for each occurrence; (4) Comprehensive General Liability ("CGL")
insurance, including Advertiser's Liability and Blanket Contractual Liability
and Broad Form Property damage, with limits of at least $5,000,000 combined
single limit for personal injury and property damage for each occurrence. All
CGL insurance shall designate AWS as an additional insured for work Agency
performs for AWS. Agency shall cause its subcontractors to maintain insurance
similar in form and amount as AWS shall approve, which approval shall not be
reasonably withheld. All such insurance must be primary and required to
respond and pay prior to any other available coverage.
Agency agrees that Agency, Agency's insurer(s) and anyone claiming by,
through, under or in Agency's behalf shall have no claim, right of action or
right of subrogation against AWS and its customers based on any loss or
liability insured against under the foregoing insurance. Agency shall furnish
prior to the start of work certificates or adequate proof of the foregoing
insurance. AWS shall be notified in writing at least thirty (30) days prior
to cancellation of or any change in the policy.
ARTICLE 17 - RELATIONSHIP
The Agency shall exercise full control and direction over the employees of
the Agency performing the work covered by this Agreement. Any changes in
personnel performing services for AWS that may be reasonably requested by AWS
through its authorized representative shall be made promptly.
Neither the Agency nor its employees or agents shall be deemed to be AWS's
employees or agents, it being fully understood that Agency employees are
entitled to no benefits or compensation from AWS. It is understood that the
Agency is an independent contractor for all purposes and at all times. The
Agency is wholly responsible for withholding and payment of all applicable
federal, state and local income and other payroll taxes with respect to its
employees, including contributions from them as required by law. Agency
agrees to indemnify, defend and hold AWS harmless from any claims made by
Agency employees or former Agency employees, their heirs or assigns, against
AWS for direct compensation, including salaries and bonuses, or for any
benefits such as medical, dental, life insurance or pension benefits.
ARTICLE 18 - SUBCONTRACTS
The Agency shall be responsible for informing subcontractors of their
responsibility to protect any confidential and proprietary information
included in any work subcontracted hereunder, and Agency shall undertake all
necessary precautions to insure that each subcontractor is in compliance with
this Article. This Agreement is not intended to create any legal rights or
interests as to persons not directly a party hereto. In accordance with this
understanding, Agency shall remain fully, directly and solely responsible for
all expenses it incurs of any nature whatsoever and shall indemnify, defend
and hold AWS harmless from any and all claims made against AWS by persons not
a party to this Agreement for non-payment of such expenses (except those
incurred as an authorized and disclosed direct marketing agent for AWS in
connection with approved work or services performed or purchases made
hereunder).
<PAGE>
Contract No.________
Page l2 of 15
If Agency elects to subcontract out any work, then the Agency shall request
competitive quotations from a minimum of three vendors when the subcontracted
work is estimated to exceed $20,000. The quotation process shall be administered
by the Agency and contracts awarded by the Agency, but only with the prior
concurrence of AWS. Copies of the quotations shall be submitted to AWS for
review and approval prior to the award of a contract. In the event a selected
vendor cannot perform, the Agency shall select another vendor upon notification
to and approval by AWS. The Agency shall not fragment any subcontracted work to
avoid the obligation to obtain quotations.
ARTICLE 19 - USE OF AWS'S NAME, LOGO, AND MARKS
All use of AWS's name, logo and marks shall be in strict conformance with any
written AWS, Corporate or other guidelines provided by AWS and shall be
approved in advance by AWS. AWS retains all rights to restrict or terminate any
use of its trademark and marks at anytime.
ARTICLE 20 - AUDIT
Agency shall maintain accurate and complete records including a physical
inventory, if applicable, of all costs incurred under this Agreement in
performing the services covered by this Agreement, including the costs of labor
(other than individual salaries and bonuses of agency employees), equipment,
materials, and other disbursements for purposes of certifying that the bills to
AWS and actual Direct Salaries and Profit computations are accurate and in
accordance with the definitions set forth in this Agreement. Discrepancies in
the bills shall be remedied by Agency within a reasonable period of time after
they are discovered, by either crediting or debiting AWS or by issuing a check
to AWS. These records shall be maintained in accordance with recognized
commercial accounting practices so they may be readily audited and shall be held
until costs have been finally determined under this Agreement and payment or
final adjustment of payment, as the case may be, has been made. Agency shall
permit AWS or AWS's representative to examine and audit these records on
reasonable notice. Audits shall be made not later than two (2) calendar years
after the end of the year in question.
ARTICLE 21 - ASSIGNMENT
The Agency shall not assign any right under this Agreement (excepting monies due
or to become due), subcontract any work or delegate any other obligations to be
performed or owed under this Agreement without the prior written consent of
AWS. Any attempted assignment or delegation in contravention of the above
provisions shall be void and ineffective. Any assignment of monies shall be void
and ineffective to the extent that (1) Agency shall not have given AWS at least
thirty (30) days prior written notice of such assignment or (2) such assignment
attempts to impose upon AWS obligations to the assignee additional to the
payment of such monies, or to preclude AWS from dealing solely and directly with
Agency in all matters pertaining to this Agreement including the negotiation of
amendments or settlements of charges due. All work performed by Agency's
subcontractor(s) at any time shall be deemed work performed by the Agency.
ARTICLE 22 - TAXES
AWS shall reimburse Agency only for the following tax payments with respect to
transactions under this Agreement unless an exemption applies: state and local
sales and use taxes, as applicable. Taxes payable by AWS shall be billed as
separate items on Agency's invoices and shall not be included in Agency's
prices. AWS shall have the right to have Agency contest any such taxes that AWS
reasonably deems improperly levied, at AWS's expense and subject to its
direction and control.
<PAGE>
Contract No.________
Page 13 of 15
ARTICLE 23 - COMPLIANCE WITH LAWS
Agency and all persons furnished by Agency shall comply at their own expense
with all applicable federal, state and local laws, ordinances, regulations and
codes, including identification and procurement of required permits,
certificates, licenses, insurance approvals and inspections, in performance
under this Agreement. Agency agrees to indemnify AWS and its customers for any
loss or damage that may be sustained by reason of any failure to do so.
ARTICLE 24 - PUBLICITY, ADVERTISING
The Agency agrees not to advertise, promote, make use of any identification of
AWS or publicity matters relating to the services performed under this Agreement
or to mention or imply any relationship or connection with AWS in such direct
marketing, promotion or publicity without the prior written consent of AWS. The
term "identification" includes any trade name, trademark, service mark,
insignia, symbol, or any simulation thereof, and any code, drawing,
specification, or evidence of AWS's inspection. This article does not modify
Article 12 (Use of Information).
ARTICLE 25 - WAIVER
The failure of either party at any time to enforce any right or remedy available
to it under this Agreement with respect to any breach or failure by the other
party shall not be construed to be a waiver of such right or remedy with respect
to any other breach or failure by the other party.
ARTICLE 26 - SEVERABILITY
In the event that any one or more of the provisions contained herein shall for
any reason be held to be unenforceable in any respect under the laws of any
state, or of the United States of America, such unenforceability shall not
affect any other provision of this Agreement, but this Agreement shall then be
construed as if such unenforceable provision or provisions had never been
contained herein.
ARTICLE 27 - SURVIVAL OF OBLIGATION
The obligations of the parties under this Agreement that by their nature would
continue beyond the termination, cancellation or expiration of this Agreement,
including by way of illustration only and not limitation, those in the clauses
in Article 23 (Compliance With Laws), Article 16 (Insurance), Article 15
(Indemnification/Infringement), Article 12 (Use of Information), shall survive
termination, cancellation or expiration of this Agreement.
ARTICLE 28 - CHOICE OF LAW AND VENUE
The construction, interpretation and performance of this Agreement shall be
governed by the laws of the State of New Jersey, excluding its choice of law
rules, and any action on this Agreement will be in the state or federal courts
of the state of New Jersey.
ARTICLE 29 - RELEASES VOID
Neither party shall require (1) waivers or releases of any personal rights or
(2) execution of documents, which conflict with the terms of this Agreement from
employees, representatives or customers of the other in connection with visits
to its premises and both parties agree that no such releases, waivers or
documents shall be pleaded by them or third persons in any action or proceeding.
<PAGE>
Contract No.________
Page l4 of 15
ARTICLE 30 - SPECIAL SERVICES
At the request of AWS, Agency may be asked to perform the following special
marketing communications services:
A. Create and produce sales promotion and collateral material.
B. Develop new product or service concepts and test marketing of new products
and services.
C. Conduct market research.
D. Design services including packaging, trademarks and corporate identity
programs.
E. Stage and conduct sales, marketing positioning, sporting or other events
and meetings.
F. Design and prepare exhibits for trade shows or other venues.
G. Prepare visual presentation materials.
H. Other services outside of the scope of direct marketing.
For any special services requested by AWS and performed by Agency, compensation
shall be mutually agreed upon in writing prior to the start of work.
ARTICLE 31 - NON-EXCLUSIVE RIGHTS
It is expressly understood and agreed that this Agreement does not grant to
the Agency an exclusive right or privilege to provide any and all of the
services described in this Agreement which AWS may require. It is, therefore,
understood that AWS may contract with other agencies for the procurement of the
same or comparable services.
ARTICLE 32 - CHANGES IN, TERMINATION, OR SUSPENSION OF PARTICULAR WORK
AWS may, at any time, by written notice, advise the Agency of AWS's intent to
make changes in, additions to, or deductions from, the work on any specific
program under an approved estimate. If such intended changes cause an increase
or decrease in the amount or character of the services to be rendered under
this Agreement, or in the time required for its performance, the Agency shall
promptly so advise AWS, specifying the impact of such change on the approved
estimates. Thereafter, if AWS elects to make such change, an equitable
adjustment to all appropriate terms and conditions, including the amount to be
paid to the Agency and the time for performance shall be made and this
Agreement shall be modified accordingly in writing. Notwithstanding anything
contained in this Article 32 to the contrary no change shall have the effect of
reducing the required ninety (90) days notice of termination.
ARTICLE 33 - ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the Agency and AWS
relating to the subject matter hereof and shall not be modified or rescinded in
any manner except by a writing
<PAGE>
Contract No.________
Page 15 of 15
executed by both parties. Other than as expressly provided herein, both the
Agency and AWS agree that no prior or contemporaneous oral representations form
a part of their agreement. Additional or different terms inserted in this
Agreement by Agency, or deletions thereto, whether by alterations, addenda, or
otherwise, shall be of no force and effect, unless expressly consented to by AWS
in writing. The provisions of this Agreement supersede all contemporaneous oral
agreements and all prior oral and written quotations, communications, agreements
and understandings of the parties with respect to the subject matter of this
Agreement.
WITNESS WHEREOF, the Agency and AWS have executed this Agreement in duplicate on
the day and year below written.
CELLULAR TELEPHONE COMPANY
BRONNER SLOSBERG HUMPHREY, INC. d/b/a AT&T Wireless Services
- ------------------------------- ----------------------------
By: Robert E. Stoloff By: Kathryn A. Russell
____________________________ ________________________
(Signature) (Signature)
Robert E. Stoloff Kathryn Russell
SVP & Chief Financial Officer Vice President
_______________________________ __________________________________
(Name & Title Typed or Printed) (Name & Title Typed or Printed)
7/24/97 7/16/97
_______________________________ __________________________________
(Date) (Date)
<PAGE>
SCHEDULE I
1997 BSH Agency Bonus Structure -
AWS NY/NJ
7/97
OBJECTIVE: Reward BSH with bonus when company-wide annual business goals are met
or exceeded across three program areas: [***], [***], and [***]. Bonus based on
% of total year fees by program (all bonus fees to be paid in 1998). Note:
research and data fees are not included in 1997.
[***]
[***]
Business Goal
Low to Medium to High
--- ------ ----
Response Rate Range* [***] to [***] to [***]
Bonus % [***] to [***] to [***]
* Response rate / associated bonus to be determined after each [***] for
[***] (Data not included).
[***]
Low to Medium to High
--- ------ ----
Response Rate * [***] to [***] to [***]
Bonus % [***] to [***] to [***]
* Response rate / associated bonus to be
determined after each [***].
[***]
<TABLE>
<CAPTION>
Above Churn Target to Target to Below Target
------------------ ------ ------------
<S> <C> <C> <C> <C> <C>
End of Year Total [***] to [***] to [***]
Voluntary Churn [***] of target* to [***] of target * to [***] of target
Bonus % [***]
[***] = x [***] = x [***]
</TABLE>
* For every % point below target of voluntary churn BSH will receive [***] of
the bonus pool with a maximum of [***] bonus (below target bonus based (x) =
target [***] dollars).
Note: To receive any payout, churn must reach a minimum of [***] of the target.
After [***] payout is incremental based on delivery (e g. if [***] of target
churn is achieved,
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. THE LOCATIONS OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH
ASTERISKS.
<PAGE>
Bronner Bonus Fees Opportunity
7/97
[***]
Business Goal
Response Rate [***]
<TABLE>
<CAPTION>
Low Medium High
--- ------ ----
<S> <C> <C> <C> <C> <C>
[***] to [***] to [***]
Bonus % [***] [***] [***]
</TABLE>
CALCULATION
Bonus % [***] [***] [***]
X X X
Est. Fee Total [***] [***] [***]
= = =
Bonus $ Opportunity [***] to [***] [***]
Range
[***] Fees *
[***] $[***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
------
[***]
* Note: Actual fees will be calculated after program completion.
(2)
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. THE LOCATIONS OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH
ASTERISKS.
<PAGE>
[***]
7/97
Business Goal
Response Rate [***]
Low Medium High
--- ------ ----
Response Rate [***] to [***] to [***]
Bonus % [***] [***] [***]
CALCULATION
Bonus % [***] to [***] to [***]
X X X
Est. Fee Total [***] [***] [***]
= = =
Bonus $ Opportunity [***] [***] [***]
Range
Estimated Fees (Fees to be actualized at year-end)
[***] [***]
[***] [***]
[***] [***]
[***] 2B Control [***]
[***] 2B [***]
[***] III [***]
-----
[***]
Brainstorming [***]
[***] [***]
-----
[***]
(3)
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. THE LOCATIONS OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH
ASTERISKS.
<PAGE>
[***]
7/97
<TABLE>
<CAPTION>
Above Churn Target Target Below Target
<S> <C> <C> <C> <C> <C>
End of Year Total [***] [***] [***]
Voluntary Churn
Bonus % of Total [***] of target to [***] of target to [***] of target
Retention Fees [***] [***] = x plus up to [***]
increase of x
</TABLE>
<TABLE>
<CAPTION>
CALCULATION
<S> <C> <C> <C>
Est. Bonus % [***] of [***] [***] of [***] [***] of [***]
X X X
Est. Fee Total [***] [***] [***]
= = =
Bonus $ Opportunity Range [***] to [***] to [***]
</TABLE>
Estimated Retention Fees *
<TABLE>
<CAPTION>
[***] $ [***] $
----- - --- -
<S> <C> <C> <C>
Jan. Rate [***] [***] Auto [***] [***]
Feb. Rate [***] [***] Ed. Mailing [***]
[***] [***] Life Cycle [***]
Bond [***] [***] Predictive Churn [***]
Bond 15/24 [***] [***] [***]
March Rate [***] [***] Lifecycle [***]
April Rate [***] [***] [***] [***]
May Rate [***] [***] Creative Platform [***]
June Rate [***] [***] [***] [***]
July Rate [***] [***] [***] [***]
Bond [***] [***] -----
June Remail [***] [***]
August Rate [***] [***]
Rate [***] Sept.-Dec [***]
[***] 1Q [***]
[***] [***]
Rate [***] [***]
Consumer 1997 DPCS [***] [***]
Deact Research March [***]
Rate Elimination [***]
[***] [***]
DPCS [***] [***]
[***] 2Q [***]
KAR Meeting 4/16 [***]
2Q [***] [***] * Actual as of 5/23.
-----
[***]
</TABLE>
(4)
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. THE LOCATIONS OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH
ASTERISKS.
<PAGE>
1997 Total BSH Bonus
Opportunity Range
7/97
Low High
--- ----
$ $
- -
[***] [***] [***]
[***] [***] [***]
[***] [***] [***]
------ ------
Total [***] [***]
NOTE: The fees listed for each of the projects herein are rough figures. The
bonus calculation will be done based on actual fees for each program.
In addition, as a point of clarification, the "Below Target" portion of the
bonus calculation for [***] should be interpreted to be [***]. This calculation
should not be interpreted to mean that BSH gets [***]
(5)
CONFIDENTIAL INFORMATION HAS BEEN OMITTED PURSUANT TO RULE 406 UNDER THE
SECURITIES ACT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. THE LOCATIONS OF THE OMITTED INFORMATION HAVE BEEN INDICATED WITH
ASTERISKS.
<PAGE>
Contract No._______
Schedule II
Page l of 2
SCHEDULE II
NON-MEDIA BILLING SCHEDULE
Net out-of-pocket ("Net O-O-P") as used in this Schedule II shall mean the
amount of money the Agency pays to outside suppliers on behalf of AWS based on
an authorized estimate.
A. Charges for Publication Advertising and Outdoor Advertising
1. Preparation of rough layouts and copy No Charge
2. Production of comprehensive layouts:
- purchased from outside suppliers Net O-O-P
- produced by Agency personnel Quoted in advance
3. Type composition, printing, engraving;
electrotypes, finished art, photographs,
photostats and other reproduction mats,
stereotypes, quantity proofs:
- purchased from outside suppliers Net O-O-P
- produced by Agency personnel Quoted in advance
4. Endorsement fees, testimonials, etc. Net O-O-P
5. Fashion Coordination performed by:
- studio and/or stylist Net O-O-P
- Agency personnel (Competitive Fee Schedule) Net O-O-P
6. Travel expenses of Agency personnel to
supervise production, obtain testimonials
and otherwise directly attributable to
specific publication and outdoor advertising Net O-O-P
7. Supervision and checking No Charge
<PAGE>
Contract No.________
Schedule II
Page 2 of 2
8. Talent for use in test and/or finished Net O-O-P
advertising
9. Production of test advertisements Net O-O-P
10. Research and licensing costs for stock Net O-O-P
photography
11. Location scouting Net O-O-P
12. All other elements required to produce Net O-O-P
publications and outdoor advertising
not referred to above
B. Postage, Express and Freight, and Sales Taxes
1. Incidental to normal business routine No Charge
between Agency and client home office
2. Shipment of advertising materials to Net O-O-P
suppliers, media, etc.
3. Sales Taxes Net O-O-P
D. Telephone, Teletype, Telegraph and Facsimile
1. Incidental to normal business routine No Charge
between Agency and client home office
2. Attributable to unusual service or to the Net O-O-P
production of specific advertising
projects
E. Research
1. All research conducted by Agency unless No Charge
authorized by client
2. All media research normally provided by No Charge
agencies
3. Test materials Net O-O-P
4. Travel for Agency personnel to supervise, Net O-O-P
participate in and observe the research
F. Free-Lance Creative/Technical Talent Net O-O-P