Exhibit 10.1

 

EXCLUSIVE DISTRIBUTION AGREEMENT

 

This exclusive distribution agreement (this “Agreement’”) is entered into as of
July 8, 2005, between, on the one hand, Jason Gore and Yamoto Motor Corporation,
(f/k/a Winspeed Industries, Inc) a corporation organized under the laws of the
State of California, having its principal place of business located at 900 San
Martin Place Fremont, California, 94539 (jointly “ Yamoto”), and, on the other
hand, Patriot Motorcycle Corporation, a corporation organized under the laws of
the State of Nevada, having its principal place of business located at 930 Calle
Negocio, Suite A, San Clemente, CA 92673 (“Patriot”). Pursuant to this
Agreement, Yamoto agrees to grant to Patriot the exclusive right to sell the
Products worldwide.

 

RECITALS

 

On December 10, 2003, and again with a revised agreement on June 25, 2005,
Yamoto entered into a exclusive distribution agreement with Chongqing Huansong
Industries (Group) Co. Ltd. (f/k/a Chongqing Wangguan Motorcycle Industry Ca.
Ltd.), a company incorporated and domiciled in China, (“Chongqing”) whereby
Chongqing granted to Yamoto the exclusive right to distribute in the United
States all off road motorcycles and all terrain vehicles (“ATVs”) manufactured
by Chongqing..

 

Patriot desires to acquire the exclusive right to be the sole distributor of all
off-road motorcycles and ATVs, as well as other products, and the parts
necessary to build and/or support them worldwide.

 

Yamoto and Patriot have expressly and mutually agreed to terminate and cancel
all prior agreements between them, whether written or oral, express or implied,
including but not limited to the distribution agreement entered into by the
parties on August 10, 2004.

 

Concurrently with the execution of this Agreement, Yamoto and Patriot have
executed a Trademark Assignment Agreement which is attached to this Agreement as
exhibit “A” and incorporated herein as if made a part hereof.

 

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NOW THEREFORE, in consideration of the foregoing promises and the mutual
covenants herein set forth and other good and valuable consideration, the
parties agree as follows:

 

ARTICLE SALE & DISTRIBUTION

 

1.1 Territory, Products and Yamoto by Patriot Marks, Subject to all terms and
conditions of this Agreement, Yamoto hereby grants to Patriot any and all rights
Yamoto possesses to distribute, sell, market, and promote the Products within
the Territory. The “Products” shall mean any and all motorcycles and ATV’s and
any other future products (e.g., generators) that are marketed and sold by
Yamoto presently or in the figure under the Yamoto by Patriot Marks including,
but not limited to, any and all parts and accessories associated with those
motorcycles and ATV’s and future products. The “Yamoto by Patriot Marks” shall
mean the various Yamoto and/or Yamoto by Patriot trademarks, service .marks,
names, logos, and designs which are owned by or licensed to Yamoto and/or
Patriot. The “Territory” shall mean the entire world.

 

1.2 Exclusive Distribution. Patriot shall be Yamoto’s sole distributor of
Products within the Territory. Yamoto, its officers, directors, predecessors,
affiliates, agents, employees, servants and any person or persons acting on its
behalf, shall not sell any Products to anyone within the Territory other than
Patriot, including but not limited to, consumers and third-party distributors.
Yamoto, its officers, directors, predecessors, affiliates, agents, employees,
servants and any person or persons acting on its behalf; farther agree that they
shall not distribute, or import; directly or indirectly, any Competing Products
to anyone other than Patriot, (The term “Competing Products” shall mean any and
all motorcycles, ATV’s, and any other products, parts, and accessories which are
of the same kind as, similar to or competitive with Products.).

 

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In consideration of the exclusive rights herein granted. (1) Yamoto shall in no
way: (i) sell or export Products to the Territory through any other channel than
Patriot or to any other distributor, person, consumer, or third-party; (ii)
directly or indirectly, sell, market, promote, or distribute in the Territory
any Competing Products; or (iii) make any purchase of Competing Products without
the prior written consent of Patriot during the effective period of this
Agreement, (2)No other competing products purchased through any other source by
Patriot can he named Yamoto or Yamoto by Patriot without mutual prior written
consent.

 

1.3 Assignment and Subdistribution. Patriot has the right to appoint
sub-distributors and dealers in the Territory so that the market share for the
Products can be expanded as much as possible. To support Patriot’s sales
promotion, Yamoto shall provide Patriot free of charge a reasonable quantity of
Advertising or sales promotion material such as advertising literature,
catalogs, brochures, and other material, which Patriot deems useful to Patriot
in its activities under this Agreement, Patriot may assign or delegate any of
its rights or obligations under this Agreement to its distribution network, in
whole or in part, whether by operation of law or otherwise, without Yamato’s
written consent. Patriot expressly reserves its right to purchase Products
directly from Chongqing on behalf of Yamoto or any other manufacturer or
supplier of the Products in the event that Yamoto is unable to supply the
Products to Patriot in a reasonable timely manner.

 

1.4 Pricing. Yamoto shall sell the Products to Patriot at the pre-determined
prices set forth in Exhibit B hereto. Yamoto shall be prohibited from increasing
the prices of the Products set forth in exhibit B attached hereto for a period
of two years from the date of this .Agreement; provided, however, that Yamoto
may increase the prices of the Products if Chongqing raises its selling prices
to Yamoto due to industry-wide increase of raw material or labor costs.
Thereafter, Yamoto may raise prices if it first negotiates these price increases
with Patriot and provides to Patriot justification for the increases, such as
product improvements, competitive market factors, etc. Price(s) for New
Product(s) not listed on Exhibit B will subject to mutually agreed upon pricing.

 

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1.5 Minimum Order. Minimum Order. Patriot shall use its best efforts to submit
purchase orders for twenty thousand (20,000) units of the Products annually
during the terns of this Agreement (the “Minimum Annual Unit Volume”). This
annual unit volume level shall be reduced by the number of units which are found
by Patriot to be subject to a manufacturing, engineering or other product
defect. In the event that Patriot fails to reacts the Minimum Annual Unit Volume
during any annual period, then Patriot may correct the unit shortfall during the
following annual period.

 

1.6 Payment. Upon execution of this agreement Patriot shall pay by wire transfer
of funds to Yamoto for all orders for Products being delivered within the United
States in United Stales dollars, (However both parties agree to discuss vase by
case the deposit for the order within Unites States if a single order from
Patriot exceed USD3000000.00) The wire transfer payment shall occur within
fifteen (15) days after the Products clear United States Customs and are
delivered to Patriot’s designated warehouse. Yamoto shall be entitled to file
and record UCC financing statement(s) with the Secretary of State of. Nevada or
any other state in the United States to encumbrance the unpaid-for Products.
Patriot shall pay for all orders for Products sold outside the United States in
United States Dollars and shall pay by electronic bank transfer, certified
cheek, or bank draft in favor of Yamoto. Thirty percent (30%) of the purchase
price of each order for Products delivered outside the United States is due when
Patriot receives Yamoto’s acceptance of the order. The remaining seventy percent
(70%) of the purchase price for each order for Products delivered outside the
United States is due when Patriot receives notice that the Products are ready
for shipment from China. If Patriot fails to submit to Yamoto the wire transfer
payment for ordered Products, within the applicable fifteen (15) day period,
then Patriot shall have thirty (30) days following receipt of written notice
from Yamoto in which to submit payment for the order. In the event that Patriot
fails to do so, then Yamoto may thereafter sell the products to any third-party
purchaser of the Products.

 

1.7 Initial Term and Renewal Periods. Subject to Article 5 of this Agreement,
the term of this Agreement shall be from the date of this Agreement until
December 11, 2040, at which time this Agreement shall expire. The parties
acknowledge and agree that if Yamoto’s current

 

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distribution agreement with Chongqing (the “Distribution Agreement”), expires,
or is otherwise terminated at any time prior to December 31, 2040, then Patriot
may in its sole discretion elect to: (1) purchase from Yamoto its ownership
interest in the Yamoto by Patriot Marks at fair market value, but in no event
less than Five Million dollars (US$5,OOO,OOO); and, (ii) thereafter purchase
Products directly from Chongqing or Chongqing Affiliates or any other
manufacturer or other source for producing Products under the Yamoto by Patriot
Marks. “Chongqing Affiliate(s)” means Chongqing’s officers, directors,
predecessors, affiliates, agents, employees, servants and any person or persons
acting on its behalf or any entity that is directly or indirectly owning or
controlling Chongqing, directly or indirectly owned or controlled by Chongqing,
or under common ownership or control with, Chongqing by more than fifty percent
(50%) of the voting power.

 

1.8 No Agency Relationship. No agency, partnership, or similar relationship is
created by thin Agreement. Neither party has any authority to assume or to
create any obligation or responsibility, express or implied, on behalf of or in
the name of the other party or to bind the other party in any manner and neither
party shall represent to any third party that such authority exists.

 

1.9 Change in Ownership or Control of Yamoto. If at any time, Yamoto desires to
effect a change in ownership, or a transfer of its business operations or its
principal, assets to any person or entity, then Yamoto must give Patriot six (6)
months’ prior written notice of any proposed change or transfer described in
this Paragraph 1.8. in such an event, Patriot will have a right of first refusal
to purchase Yamoto’s assets or stock on the same terms and conditions proposed
to be transferred to a bona fide buyer. If Patriot chooses to exercise this
right, Patriot must pay to Yamoto a refundable good faith deposit of one hundred
thousand dollars ($100,000), Patriot will have a reasonable opportunity to
inspect the assets, including real estate and corporate records, subject to a
non disclosure agreement to he executed by the parties, Following the submission
of the good-faith deposit, Patriot shall have ninety (90) days in which to
exercise its right of first refusal, and thereafter close the transaction.

 

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1.10 Pre-Product Run Samples. Yamoto agrees to deliver, with shipping costs
prepaid by Patriot, to Patriot three product run samples via Federal Express or
other overnight delivery service for full testing and evaluation prior to full
production runs and delivery to fulfillment destinations. Yamoto will deliver to
Patriot such pre-product run samples on all new or updated product models
involving changes to the drive train, transmission, electrical system, and
brakes.

 

1.11 Quality Warranty and After-Sole Service. Yamoto will provide spare parts
for after-sale service and Patriot shall arrange for after-sale service in the
Territory in accordance with the local situation. For each order of Products to
be shipped to United States, Yamoto will provide Patriot, free of charge, spare
parts worth up to 2% of the total order value, as chosen by Patriot.

 

ARTICLE 2: ORDER & DELIVERY

 

2.1 Orders. Patriot shall submit written purchase orders to Yamoto specifying
the number of Products required. Yamoto shall accept each order ‘within five (5)
business days of receiving the order, and must provide to Patriot within this
time period written notification stating that the order has been placed and
accepted by Yamoto. Patriot may cancel an order at any time within this live (5)
day period, with or without cause, and Patriot’s liability for such cancellation
shall be limited to Yamoto’s out-of-pocket costs and expenses incurred in
connection with the cancelled order which in no event shall exceed $150.00. The
parties agree that Yamoto will provide to Patriot a status update on all
unfilled Product orders within fifteen (15) days following Patriot’s placement
of each order with Yamoto.

 

2.2 Shipment. All Products ordered by Patriot shall be shipped within forty five
(45) days of the date that Yamoto notifies Patriot of its acceptance of each
order. In the event that Yamoto fair to ship the Products within the applicable
forty-five (45) day period, Yamoto must provide Patriot with immediate written
notice of its failure to do so, together with a detailed written explanation of
the facts and circumstances causing the delay in such

 

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event, Yamoto shall immediately identify in writing its revised shipping date,
Patriot, in its sole discretion, shall control the destination, method, and
route of shipment of Products by Yamoto, subject only to the manufacturer’s
previously established written guidelines for the method and conditions of
shipment. Unless otherwise specified in the purchase order, Yamoto may select
the carrier, which must be approved by Patriot, belay in approval by Patriot
shall release Yasnoto’s any and all liability for late shipment.

 

2.3 Delivery. Yamoto shall deliver the Products Free on Board (F.O.B.) to the
warehouse destination designated by Patriot. Title to the Products and the risk
of loss of the Products shall pass to Patriot only when the Products have been
delivered to Patriot’s designated warehouse, Except for the UCC filing
authorized in this Agreement, Yamoto shall deliver the Products to Patriot free
and clear of all liens, encumbrances and. security interests and shall not,
without the prior written consent of Patriot, encumber or otherwise assign any
rights to the Products to anyone other than Patriot.

 

2.4 Conformity of Shipments. If there is a shortage of Products in a shipment,
Patriot must give written notice to Yamoto within seven (7) days following the
date of delivery of such shipment of Products to Patriot at its designated
warehouse, together with a reasonable description and verification of the
shortage, Yamoto, at Patriot’s option, shall deliver to Patriot or Patriot’s
customer(s) at such location(s) as Patriot may designate, at Yamoto’s risk and
expense, the number of Products in shortage, or, alternatively, credit to
Patriot the purchase price and chipping costs incurred by Patriot in commotion
with such shortage. Yamoto may credit Patriot on subsequent orders for Products
or remit to Patriot funds in United States Dollars sufficient to compensate
Patriot for the shortage as set forth in the previous sentence.

 

2.5 Conformity of Products. If the Products in a shipment are iron-conforming
with Chongqing factory written specification or Patriot written order which are
accepted by Yamoto for any reason other than a shortage, then Patriot may reject
these Products by giving written notice to Yamoto within thirty (30) days
(“Acceptance Period”) after receipt of such shipment by Patriot’s designated
warehouse, together with a reasonable description

 

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and explanation of the basis for the rejection, such as manufacturing end/or
engineering defects. Patriot shall, at Yamoto’s option and at Yamoto’s risk and
expense, return to Yamoto any rejected Products, Yamoto shall, at: Patriots
option, deliver to Patriot’s designated warehouse, at Yamoto’s risk and expense,
replacements for the rejected Products, or, alternatively, credit to Patriot the
purchase price and shipping costs incurred by Patriot in connection with the
rejected Products. In the event that a dispute arises regarding the rejection of
a Product, the parties acknowledge and agree that a third party professional
inspector agreeable by both parties shall be hired to determine whether or riot
the Product(s) are non-conforming, All Products that are not rejected during the
said thirty (30) days Acceptance Period will be deemed finally accepted by
Patriot.

 

2.6 Manufacturer’s Warranty. Notwithstanding the foregoing, the manufacturer’s
warranty by Chongqing for defective parts for the Products shall be applicable
to all sales of the parts for the Products by Yamoto to Patriot. Yamoto agrees
to reimburse Patriot parts (not labor) expenses for all warranty claims . Yamoto
shall pay these amounts within thirty (30) days. of receiving from Patriot a
written statement of these expenses. The parties acknowledge and agree that it’s
Yamoto’s responsibility to facilitate the transmission of approved warranty
claims to Patriot, and warranty payments to Patriot on behalf of its dealers.
Patriot shall be solely responsible for the approval and payment of any and all
warranty claims and related expenses, Yamoto further agrees that it shall uses
its best efforts to mutually agree upon the timely reimbursement to Patriot for
1/3 of all parts and labor costs and expenses incurred by Patriot or its
distributor and dealer network in connection with any Product recalls.

 

2.7 Factory Negotiations. The parties acknowledge and agree that Patriot has a
legitimate interest in the discussions between Yamoto and Chongqing and other
Product suppliers regarding the Products. Patriot may provide to Mr, Gore and/or
Yamoto its input regarding the Products, such as quality control, suggested
product improvements, production deadlines, or manufacturing costs, and Yamoto
agrees to convey all of Patriot’s concerns to Chongqing or other suppliers of
the Products as soon as possible, Yamoto shall provide to Patriot all
explanations and comments from Chongqing and ether suppliers

 

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in connection with Patriot’s concerns, Yamoto acknowledges and agrees that it is
responsible for obtaining a signed acknowledgement from Chongqing and other
suppliers of Products which states that it received Patriot’s suggested changes
and that Chongqing and other suppliers either: (i) have accepted the suggested
changes, along with implementation dates; or (ii) have rejected the suggested
changes and have explained to Yamoto their reasons for such rejection, Yamoto
shall provide to. Patriot nil explanations and comments from Chongqing, and
other suppliers in connection with Patriot’s concerns, The parties further agree
that Yamoto shall use its best efforts to permit direct contact and
communications between Chongqing or other suppliers and Patriot. Patriot will
hire an assistant who will act as Patriot’s contact person at Chongqing and
other suppliers which are producing or may produce Products to facilitate
communication with Patriot regarding product development, engineering changes,
technical matters, product updates, and other such matters.

 

2.8 Change in Supplier. In the event that Yamoto plans to change Its supplier(s)
of Products, Yamoto acknowledges and agrees that it must provide Patriot with
written notice of such proposed change within 90 days of the change, The notice
must provide the company name, address, and telephone numbers, the contact
person, the qualifications of the new supplier, and Yamoto’s underlying
rationale for the proposed change. Yamoto must allow Patriot to provide its
comments and input to Yamoto in connection with its proposed change of
supplier(s). The parties agree that thereafter and before changing any supplier,
including without limitation, Chongqing, Yamoto must take into consideration and
reasonably discuss with Patriot its comments and input before implementing any
change of supplier(s) of the Products.

 

2.9 Product Recalls. Yamoto acknowledges and agrees that in the event that the
Products may be subject to any manufacturing, engineering, or design defect
(“Product Defect”), then Patriot may: (i) provide Yamoto with written notice of
the Product Defeat (the “Notice”); (ii) develop and initiate a program to notify
end-users of the Products of the Precinct Defect; and (iii) implement a program
to correct or replace the Products subject to the Product Defect (the
“Program”). Yamoto shall use its best efforts to mutually agree

 

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upon the timely reimbursement of Patriot for one third (1/3) of all costs and
expenses incurred by Patriot, its sub-distributors, dealers and other third
parties in connection with the Notice and the Program, including but not limited
to, all administrative costs and all other expenses associated with the repair
or replacement of the Products and/or all parts and labor and related materials
and expenses in connection with any Product recall..

 

ARTICLE 3: MARKETING

 

3.1 Brand Features. Yamoto hereby grants Patriot a royalty-free, exclusive,
non-transferable license to use in the Territory the Yamoto Marks and other
distinctive brand features of Yamoto that are used in or relate to the Products
now or in the future during the term of this Agreement (the “Brand Features”)
for the sole purposes of selling, marketing and promoting the Products. Patriot
agrees that all of its usage of the Brand Features on tangible written materials
will; (i) include the proper marking for the trademark arid the appropriate
trademark attribution in reasonably close proximity to its first use of Brand
Features; (ii) not alter Brand Features in any way; and (Iii) use Brand Features
so that each of them creates a separate and distinct impression from any other
trademark, service marks, logos, trade dress and other distinctive brand
features that may be used by Patriot. Patriot agrees that it will jointly seek
trademark registration of “Yamoto by Patriot” for the Territory. Patriot agrees
that all uses of the Brand Features, including the goodwill and reputation
associated therewith, will inure to the benefit of Yamoto and Patriot. Patriot
acknowledges and agrees that it has the sole and exclusive right to defend and
protect the Brand Features, Yamoto agrees that 50% of all legal fees spent in
acquiring a and defending the “Yamoto by Patriot” mark(s) will be deducted from
its equity upon sale of its interest in the mark(s) only if all the legal
expense will be discussed between the parties and mutually agreed ahead,
Otherwise Patriot will be responsible for all the expense.

 

3.2 No Contest of Brand Features. During or after the term of this Agreement and
to the fullest extent permitted by applicable law, Patriot shall contest or
otherwise challenge (e.g., in any legal action or otherwise), or assist or
encourage any other entity or person to contest or challenge, the validity of
any of the Brand Features.

 

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3.3 Websites. Yamoto hereby grants Patriot complete access and all rights to,
modify the website www.yamoto-motor.com, and any other website address relating
to the Products that Yamoto may own or control, Yamoto has no right to modify
the Yamoto-motor.com website without prior written “mutually” approval content.
The parties agree to discuss all content of such website(s) that Yamoto
determines to be illegal, defamatory, infringing upon third party rights, or a
misrepresentation, and such content shall be immediately removed hi Patriot’s.
Patriot shall indemnify and hold Yamoto harmless from and against all loss,
liabilities, claims, expenses (including reasonable attorney’s fees) made by any
third party with respect to the aforementioned websites.

 

3.4 Potential Buyers. Yamoto shall notify Patriot of arry and all potential
purchasers of the Products located within the Territory and shall refer all
inquires regarding the Products to Patriot.

 

3.5 Manuals. Yamoto acknowledges and agrees that it must provide to Patriot the
necessary owner manuals, warranty books, parts and service manuals, and other
resources and guides for the Patriot dealers and easterners that Patriot
receives from Chongqing, if Yamoto, in its sole discretion, decides to
relinquish this responsibility to Patriot, then Yamoto shall reimburse Patriot
fifty percent (50%) of Patriot’s costs and expenses in connection with the
compiling and printing of these materials.

 

ARTICLE 4; CONFIDENTIALITY AND NON-COMPETITION PROVISION

 

4.1 Confidential Information. Bach party acknowledges that it may have access to
the other party’s technical or business information, data, designs, concepts,
ideas, products, processes, methods, techniques, specifications, formulas,
compositions, samples, know-how, trade secrets, and improvements of a
confidential or proprietary nature, whether in tangible form or not, which
relate to the Products, or the development or commercialization thereof, and
which were disclosed by one party to the other party under this Agreement.
(“Confidential Information”). Notwithstanding the foregoing, neither party shall
have any obligation to disclose Confidential Information which is not related to
the products.

 

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4.2 Duty Not to Disclose, All Confidential Information shall remain the
exclusive property of the disclosing party. Each party agrees: (1.) to take all
reasonable measures necessary to protect the confidential nature of Confidential
Information disclosed to it, including but not limited to notifying any
individual or entity with which it works to complete the purposes of this
Agreement, of the confidential nature of such Confidential Information; (2)
except as provided in this Agreement, or by law or court order, not to disclose
to third parties or copy any Confidential Information or allow any third party
access to such Confidential Information without first obtaining the disclosing
party’s written consent; and (3) not to use, or permit others to use, any
Confidential Information disclosed to it except for the purposes set forth in
this Agreement. Each party is solely responsible for its employees complying
with the obligations set forth in this Section, If either party becomes aware of
the loss, theft or misappropriation of Confidential Information which is in its
possession or control, it shall notify the other party in writing within seven
(7) days of its discovery of such loss, theft or misappropriation.

 

4.3 Non-Confidential Information. Confidential Information shall not include
information that: (1)is, at the time of disclosure, legally available to the
general public; (2) becomes available to the genets public after disclosure but
through no fault of the receiving party; (3) was already in the lawful
possession of the receiving party without rerifi’ :lion prior to the date of
disclosure; or (4) is independently developed by the receiving party that may be
proven by written evidence.

 

4.4 Compelled Disclosure, If a party is required by law or court order to
disclose any Confidential information of the other party, that party shall: (1)
notify the other party in writing as soon as possible, but in no event less than
thirty (30) calendar days prior to any such disclosure; (2) cooperate with the
other party to preserve the confidentiality of such Confidential Information
consistent with applicable law; and (3) use its best efforts to limit any such
disclosure to the minimum disclosure necessary to Comply.

 

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4.5 Survival of Confidentiality. The rights and duties of this Article 4 shall
survive the expiration or termination of this Agreement

 

4.6 Non-Compete Provision. The parties acknowledge and agree that the services
rendered by Mr, Jason Gore to Patriot are unique, and that competitive use and
knowledge of any Confidential Information would substantially and irreparably
injure Patriot’s business, prospects and good will, Therefore, provided this
Agreement is not terminated by Yamoto for Cause or terminated by Patriot without
cause, Mr. Jason Gore agrees that during the term of this Agreement, and for a
period of one (1) year thereafter, Mr. Jason Gore shall not, directly or
indirectly, through any other person, firm, corporation or other entity (whether
as an officer, director, agent, associate, employee, partner, consultant, holder
of equity or debt investment, lender or in any other manner or capacity):

 

  (a) sell, market, offer to sell the Products and/or Competing Products;

 

  (b) solicit, induce, encourage or attempt to induce or encourage any dealer,
distributor, employee or consultant of Patriot to terminate his or her
employment or other relationship with Patriot, or to breach any other obligation
to Patriot; or

 

  (e) solicit, interfere with, disrupt, alter or attempt to disrupt or alter the
relationship, contractual or otherwise, between Patriot and any other person
including, without limitation, any consultant, contractor, customer, potential
customer, or supplier of Patriot.

 

ARTICLE 5: DEFAULTS,, REMEDIES, AND TERMINATION

 

5.1 Termination by Agreement. This Agreement may be terminated at any time by
mutual written agreement between Yamoto and Patriot.

 

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5.2 Primary Events of Default. Patriot and Yamoto hereby agree that the
occurrence of the events listed below shall constitute a Primary Event of
Default under this Agreement:

 

  a) Any violation of Paragraph 1.2 or 1.5 of this Agreement, such as the sale
of Products by Yamoto to any person or entity other than Patriot or the sale of
Competing Products by Yamoto; Or Failure by Patriot to fulfill the annually
minimum order.

 

  (b) Any violation of Paragraph 1.7 of this Agreement, such as if the
Distribution Agreement expires or is otherwise terminated at any time prior to
December 31, 2040.

 

  (c) Any violation of Article 6, Paragraphs 6.1 to 6.7, inclusive.

 

  (d) A Chapter 7 bankruptcy filing by Yamoto or Patriot

 

  (e) A failure by Yamoto to supply Products to Patriot. in accordance with this
Agreement. or failure by Patriot to pay for Products

 

  (f) Any violation of Article 7, Paragraphs 7.1 and 7.2

 

5.3 Remedies for Primary Events of Default.

 

  (a) Upon Primary Event of Default by Yamoto, Patriot shall have the right to
purchase Yamoto’s ownership interest in the Yamoto by Patriot Marks affair
market value (in no ease for less than $5,000,000); and, thereafter purchase
Products directly from Chongqing, or any other manufacturer or other source for
producing Products under YAMOTO by Patriot mark

 

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  (b) In addition to the remedies specified in Section 53(a), above, Patriot
shall be entitled to recover any actual damages that it has sustained due to
such Primary Events of Default.

 

  (o) Patriot shall have any and ail other remedies provided under the law.

 

5.4 Secondary Events of Default. Patriot and Yamoto hereby agree that the
occurrence of the events listed below shall constitute a Secondary Event of
Default Under this Agreement:

 

  (a) Failure to Pay Monies Due. If either party fails to pay the other overdo
amounts, unless the obligation to pay such amount is the subject of a bonafide
dispute between the parties.

 

  (b) Failure to comply with Other Obligations. If either party rails to comply
with any of its other obligations under this Agreement that are not specifically
identified as a Primary Event of Default.

 

5.5 Remedies for Secondary Events of Default. After receipt of notice of
default: as provided in Section 5.6 of this Agreement, the party in default
shall have forty-five (45) days to cure the Secondary Event of Default specified
in Section 5.4 (a) and (b) of this Agreement (the “Cure Period”), if the party
in default has not cured any such Secondary Event of Default by the end of the
Cure Period, then the non-defaulting party will be entitled to terminate the
Agreement and to recover any actual damages that it has sustained due to such
Secondary Event of Default. In addition, the party in default, together with its
successors, assigns, and affiliates, shall not, directly or indirectly, sell,
market, promote, or distribute in the Territory any Competing Products for a
period of one (I) year, following the termination of this Agreement.

 

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5.6 Notice. if any of the Secondary Events of Default specified in Section 5.4
of this Agreement Should occur, no such Secondary Event of Default shall give
vise to the remedies specified in Section 5.5 of this Agreement until written
notice has first been sent to and received by the defaulting party stating in
reasonable detail the facts constituting the Secondary Event of Default, and the
Cure Period has expired; provided, however that in no event shall such written
notice be required in the ease of a Primary Event of Default specified in
Section 5.2.

 

5.7 Transactions After Expiration or Termination.

 

  (a) Purchase Orders. Upon termination or expiration of this Agreement, Yamoto
will no longer be required to accept new purchase orders.

 

  (b) Payment Obligations and Warranty Claims. Termination of this Agreement for
any reason, or expiration of this Agreement, will not release Yamoto or Patriot
from the obligation to pay any amounts owed to the other that have accrued prior
to the effective date of termination or expiration.

 

  (c) Fulfillment of Patriot Purchase Orders. Upon the expiration or termination
of this Agreement, Yamoto will use its best efforts to fulfill all purchase
orders that it accepted prior to expiration or termination of this Agreement.

 

Continuance of Business Relations. Upon receipt of any notice of termination,
Yamoto and Patriot hereby agree to conduct themselves and their respective
operations until the effective date of termination in a manner that shall not
injure the reputation or goodwill of either party.

 

  (d) No Renewal or Waiver. In the event that, following the termination or
expiration of this Agreement, either party has business dealings with the other
with respect to the Products, such dealings shall not constitute either

 

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a renewal of this Agreement or a waiver of such termination or expiration.
However, all such dealings shall be governed by teens identical to this
Agreement for the duration of such dealings.

 

  (f) Surviving Provisions. Following the termination of this Agreement, the
following provisions of this Agreement shall remain in fall force and effect:
Article 4, 4.i through 4.6, inclusive; and Article 5, Paragraphs 5.3, 5.5 and
5.7.

 

ARTICLE 6: REPRESENTATIONS & WARRANTIES

 

6.1 Parties Duly Organized. Each party hereby represents that it is duly
organized, validly existing and in good standing under the laws of the State or
Commonwealth (as applicable) in which incorporated, and that it has full
corporate power and authority to carry on the business presently being conducted
by it and to enter into and to perform its obligations under this Agreement.

 

6.2 Right to Enter Agreement. Each party hereby represents (1) that it has taken
all action necessary to authorize the execution and delivery of this Agreement
and the performance of the obligations under this Agreement; (2) that the
officer executing this Agreement on behalf of the party has the legal right and
authority to bind the party to the terms and conditions of this Agreement; and
(3) that there are no actions, suits, proceedings, orders or investigations
pending or, to the knowledge of the company, threatened against the company, at
law or in equity, before any federal, state, or other governmental department,
commission, board, bureau, agency or internationally, domestic or foreign, which
are inconsistent with such party’s obligations under this Agreement.

 

6.3 Grant of Rights. Yamoto represents and warrants that it is authorized by
Chongqing to enter into this Agreement. Yamoto further represents and warrants
it has all of the rights that it is granting to Patriot, including, but not
limited to, the right to exclusively distribute the Products worldwide and the
right to the “Yamoto” trade name and trademark for the Products.

 

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6.4 Governmental Compliance. Each party represents and warrants that they have
filed and obtained any and all import, business, distributors, state and other
licenses and governmental approvals, including reseller agreements, that may be
necessary to permit the sale and distribution of the Products, Each party
further represents and warrants that they will maintain any and all import,
business, distributors, state and other licenses and governmental approvals,
including reseller agreements, that may be necessary to permit the sale and
distribution of the Products. Each party will provide to the other party true
and accurate copies of any and all import, business, distributors, state, and
other licenses and governmental approvals, including reseller agreements, within
thirty days of any such request from the other party. In addition to other
provisions of this Agreement that reclaim compliance by each party with various
laws, each shall at all times conduct its business in full compliance with all
international, national, federal, state and local laws, roles, and regulations,
including but not limited to, consumer fraud and deceptive trade practices laws,
customs laws, and all applicable building and safety codes.

 

6.3 Products. Yamoto represents and warrants that the Products sold to Patriot
for distribution worldwide are lawfully manufactured by Chongqing and sold to
Patriot, and do not infringe upon any other trademarks and/or intellectual
property.

 

6.6 Corporate Records. Each party represents and warrants that it has properly
maintained all required corporate records throughout its corporate existence.
Each party further represents and warrants that it will continue to properly
maintain all required corporate records at all times. Subject to its
confidentiality obligations to third parties, each party will provide to the
other party true and accurate copies of any and all required corporate records
within thirty days of any such request from the other party.

 

6.7 Disclosure of Documents. Yamoto will provide to Patriot true and accurate
copies of any other contract pertaining to this Exclusive Distribution Agreement
within thirty days of any such request from Patriot. In particular, Yamoto
agrees to provide to Patriot pursuant to this paragraph copies of any agreements
established between Yamoto and any manufacturer, as well as copies of any
existing distributor agreements.

 

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ARTICLE 7: INTELLECTUAL PROPERTY WARRANTIES & INDEMNIFICATION

 

7.1 Yamoto and Patriot hereby warrants that, to the best of its present
knowledge, the Yamoto by Patriot Marks can be used by Patriot free of
infringement of any trademark, service mark, trade dress, or other claim by any
third party. Yamoto and Patriot have no knowledge of any outstanding
infringement claims by any third party against the Yamoto by Patriot Marks.

 

7.2 In the event of any claims, causes of action or other demands,
controversies, losses or costs arising from any alleged infringement of any
trademark, copyright or other violation of intellectual property rights
allegedly caused by the use of the Yamoto by Patriot Marks, then Patriot and
Yamoto acknowledge and agree that (i) Patriot shall undertake the defense of
such action with counsel of Patriot’s choice on behalf of Patriot and/or Yamoto;
and (ii) the parties shall each bear equal financial responsibility for any
losses, damages, liabilities, judgments and expenses, plus the costs of
litigation, including attorneys’ fees, expert witness fees and court costs.

 

ARTICLE 8: LIABILITY & INSURANCE

 

8.1 Indemnification. Each party shall indemnify, defend and hold harmless the
other party from any and all claims, costs, liabilities, or damages (including
reasonable attorney’s fees) arising from its own: (1) material breach of this
Agreement; (2) breach of any representations and warranties provided in Article
6 and Article 7; or (3) negligent, grossly negligent, reckless or willful acts
or omissions.

 

8.2 Insurance Coverage. Yamoto and Patriot shall maintain continuously in
effect, at their own expense, insurance against all liability for the acts or
omissions of the parties or any of their employees, agents, servants, or
contractors in connection with the performance of this Agreement and for all
claims for damage to property, or for injury or death of any person.

 

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whether directly or indirectly, resulting from such acts or omissions. Such
insurance shall include commercial general liability insurance, and garage
liability insurance, and shall include coverage for products liability and
negligence, Each party shall obtain and shall maintain at its sole cost and
expense all necessary insurance, and no less than two million dollars
($2,000,000) in general products liability insurance and five million dollars
($5,000,000) after June 1, 2006, and annually thereafter with such increased
coverage and terms, as is commercially reasonable light of the business
conducted by the parties; provided, however, that such insurance coverage must
provide adequate protection against any claims, suits, demands, actions,
proceedings, costs, damages, expenses (including, without limitation, legal fees
and out-of-pocket expenses) and losses arising out of or relating to the party’s
activities and obligations under this Agreement. Notwithstanding the foregoing,
and in. addition, Yamoto and Patriot shall maintain insurance relating to the
types of claims described in Article 7, Paragraph 7.2 and Article 8, Paragraph
8.1, sufficient to be able to hold the other harmless against such claims.

 

Yamoto shall maintain continuously in effect, at its own expense, property
insurance which shall include coverage on all Products before title is passed to
Patriot, as to all perils included within the classifications of fire, extended
coverage, vandalism, malicious mischief and special extended periods.

 

Each party’s insurance policy shall name the other party as an additional named
insured and loss payee. Each party shall finish to the other party a certificate
of insurance with evidence that premiums therefore have been paid at least
annually, and each party shall require its insurance company to provide thirty
(30) days prior written notice to the other party in the event of cancellation
or any material change in any policy.

 

ARTICLE 9: GENERAL PROVISION’S

 

9.1 Waiver and Amendment. Except as otherwise expressly provided, this Agreement
may be amended and observance of any provision of this Agreement may be waived
(either generally or in any instance, retroactively or prospectively) only upon
written consent of the parties.

 

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9.2 Entire Agreement. This Agreement constitutes the entire agreement between
the parties and may not be modified except by a writing duly signed by both
parties. This Agreement is intended by the parties as a complete and exclusive
statement of the terms of their agreement. All prior and contemporaneous
discussions and negotiations have been merged and integrated into and superseded
by this Agreement. The parties also confirm that any prior agreements between
the parties have been cancelled and revoked, including but not limited to the
distribution agreement dated August 10, 2004.

 

9.3 Receipt of Agreement. Each party hereby acknowledges receipt of a signed
copy of this Agreement.

 

9.4 Notices. All notices, requests, demands and other communications hereunder
shall be given in writing and shall be: (1) Personally delivered; (2) sent by
telecopy, facsimile transmission or other electronic means of transmitting
written documents with conformation of receipts, or (3) sent to the parties at
their respective addressees indicated herein by registered or certified mail,
return receipt requested and postage prepaid, or by private overnight mail
vender services with conformation of receipt. The respective address to be used
for all such notices, demands, or requests shall be as set forth on page 1 of
this Agreement or to such other person or address as either party shall furnish
to the other in writing from time to time. If personally delivered, such
communication shall be deemed delivered upon actual receipt by the “attention”
addressee or a person authorized to accept for such addressee’ if electronically
transmitted pursuant to this paragraph, such communication shall be deemed
delivered the next business day after transmission (end sender shall bear the
burden of proof of delivery)’ if sent by overnight courier pursuant to this
paragraph, such communications shall be deemed delivered upon receipt by the
“attention” addressee or person authorized to accept for such address’ and if
sent by mail pursuant tot this paragraph, such communication shall be deemed
delivered as of the date of delivery indicated on the receipt issued by the
relevant postal service, or, if the addressee rails or refuses to accept
delivery, as of the date of such failure or refusal.

 

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9.5 Force Majeure. Neither party shall be liable fin its inability to perform
any obligation under this Agreement (other than the obligation to make payments
due) where such inability is caused by either war (whether or not declared),
civil war, riot, revolution, act of piracy, sabotage, storm, earthquake, flood,
lightning, explosion, fire, labor disputes or strikes (whether or not the
settlement of such dispute or strike is within the power of the affected party)
or acts of governmental or nongovernmental authority or by any other event
(whether or not listed in this clause) not within the control of the party
claiming to be affected, The party affected by such an event shall immediately
give written notice of the nature and likely duration (if it can be assessed).
Performance of this Agreement shall be suspended for the duration of such, an
event.

 

9.6 Binding Effect and Benefit. This Agreement inures to the benefit of and is
binding upon the parties hereto and their successors and permitted assigns. This
Agreement is not intended, nor shall it be construed, to confer upon any person
except the parties hereto and its successors and permitted assigns any rights or
remedies under or by reason of this Agreement, except as contemplated herein.

 

9.7 Applicable Law and Jurisdiction. This Agreement and all matters arising
under or growing out of or in connection with or in respect of this Agreement
shall be governed by and construed in accordance with the laws of the State of
California.

 

9.8 Section Headings. The headings in this Agreement are inserted for
convenience only and shall not constitute a. part hereof,

 

9.9 Severability of Provisions. Each provision contained in this Agreement is
declared to constitute a separate and distinct covenant and provision and to be
severable from all other separate, distinct covenants and provisions. If any
provision of this Agreement is or becomes invalid, illegal, or unenforceable in
any jurisdiction, such provision shall be deemed amended without materially
altering the intention of the parties, it shall be stricken and the remainder of
this Agreement shall remain in full force and effect.

 

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9.10 Waiver of Breach. No waiver of a breath of any provision of this Agreement
shall be deemed to be, or shall constitute, a waiver of a breach of any other
provision of this Agreement, whether or not similar, nor shall such waiver
constitute a continuing waiver of such breach unless otherwise expressly
provided in such waiver.

 

9.11 Sales Tax. All prices quoted in this Agreement are exclusive of all
applicable sales, use or other excise taxes (including sales tax and goods and
services tax), Patriot is responsible for all taxes and similar charges
customary for a buyer of products and services as herein contemplated.

 

9.12 Execution. This Agreement may be executed in one or more counterparts, each
of which when taken together shall constitute one and the same instrument, This
Agreement may be delivered by personal delivery or Facsimile transmission.

 

9.13 Independent Contractors. Nothing contained in this Agreement shall be
deemed or construed to create any partnership or joint venture between Yamoto
and. Patriot. Each party’s activities pursuant to this Agreement shall be
carried on by such party as an independent company and not as an agent for or
employee of the other party. Unless stated elsewhere in this Agreement, neither
party shall have no authority to act on behalf of the other party or to bind the
other party directly or indirectly. Under no circumstances shall any party’s
employee be deemed or construed to be an employee of the other party, nor shall
Yamoto and Patriot be deemed to be co-employers of any employee.

 

WHEREFORE, the parties have executed this Agreement as of the date first written
above.

 

YAMOTO MOTOR CORPORATION    

/s/ Jason Gore

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By:   Jason Gore Title:   President    

/s/ Jason Gore

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By:   Jason Gore

 

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PATRIOT MOTORCYCLES CORPORATION    

/s/ Michel Attlas

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By:   Michel Attlas Title:   CEO PATRIOT MOTORCYCLES CORPORATION    

/s/ Daniel Cwleka

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By:   Daniel Cwleka Title:   President

 

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