EXHIBIT 10.5
JOINT VENTURE AGREEMENT
AGREEMENT made as of the 9th day of February, 2007 by and between Ace
Marketing & Promotions, Inc., with its principal executive office located at ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Ace") and Atrium Enterprises Ltd.,
with its principal executive office located at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ ("Atrium").
W I T N E S S E T H :
WHEREAS, Ace is a full service advertising specialties and promotional
products distributor company, which distributes items manufactured by others to
its customers typically with its customers' logos on them (the "Ace Business");
and
WHEREAS, Atrium is a leader in the motivation and rewards industry having
a combination of over 30 years of experience, knowledge and long term
relationships in this industry and specifically to the incentive and rewards
business under the direction of ▇▇▇ ▇▇▇▇▇▇▇▇▇, it Chief Executive Officer and
President, it being understood that Atrium's mission is to fuse together a suite
of marketing and service solutions with a family of products and services that
develop, maintain, and enhance business relationships, and the value of related
transactions or actions (the "Atrium Business"); and
WHEREAS, Ace and Atrium mutually agree to enter into a Joint Venture
Agreement whereby each company retains the other company's services as an
independent sales representative for the other party; and
WHEREAS, it is intended that the parties will in the future explore joint
venture initiatives to deepen the relationship between the parties and to
increase the value of both organizations.
NOW, THEREFORE, it is agreed as follows:
ACE HIRES ATRIUM AS ITS SALES REPRESENTATIVE.
1. Atrium is hereby retained as a commissioned independent sales
representative of Ace. Atrium will provide its sales services to Ace on an
exclusive basis inasmuch as it will not provide similar services to other
promotional product companies. Atrium's services will consist of selling
promotional products, print sales and the like of Ace's Business to Atrium's
clients.
2. Atrium shall commit to secure one or more qualified individuals to
promote and sell promotional products, print sales and the like of Ace's
Business.
3. Ace shall pay Atrium the following compensation:
(a) A 50% commission on gross profit (as defined herein)
determined on a cash basis after collection of all sales orders receivables.
"Gross Profit" shall be defined as collected revenues from sales orders in which
Atrium are the salesman of record minus cost of goods, taxes, shipping and
handling. Commissions due under this paragraph 3(a) shall be paid monthly on or
about the last business day of each month.
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(b) Atrium will receive a draw of up to $7,500 per month against
its commissions, with the total outstanding draw amount never exceeding $30,000.
On or before February 15, 2007, Ace shall grant Atrium four year non-qualified
stock options to purchase 70,000 shares of its common stock at a purchase price
of $2.50 per share. The options shall vest in three equal annual installments
commencing February 15, 2008. These options, which shall be transferable to the
extent permitted by law and subject to the consent of Ace, which consent shall
not be unreasonably withheld, shall be granted outside of Ace's stock option
plan. In the event Ace determines that stockholder approval is required for the
grant of these options due to the listing requirements of any Exchange NASDAQ or
otherwise, Ace will undertake to obtain stockholder approval of same prior to
February 15, 2008.
(c) Ace will reimburse Atrium for its out-of-pocket expenses on a
monthly and non-accountable basis up to $400 per month. Any expense in excess of
$400 is subject to the written approval of Ace.
4. Atrium agrees that the projected Gross Profit on all sales orders
will be at least 25%, unless an officer of Ace consents to a lower Gross Profit.
In the event that the Gross Profit on an order is less than 25%, the commission
rate of 50% will be reduced by an agreed upon amount in writing.
5. Atrium and its employees who are assigned to work on Ace's account
shall not be employees of Ace and shall not be entitled to any employee
benefits, such as health, hospitalization and participation in a 401(k) plan or
otherwise.
ATRIUM HIRES ACE AS ITS SALES REPRESENTATIVE.
6. Ace is hereby retained as a commissioned independent sales
representative of Atrium. Ace will seek to introduce Atrium's Business products
and services to its clients, including its incentive platform programs and/or
Solata based target marketing/communication projects. These services will be
provided by Ace to its clients either through one more trained employees or
independent sales representatives of Ace or by referral of an Ace client to one
or more Atrium representatives assigned to the account. All Ace referrals shall
be documented in writing to Atrium.
7. Atrium shall pay Ace a 50% commission on gross profit (as defined
herein) determined on a cash basis after collection of all sales orders
receivables. "Gross Profit" shall be defined as collected revenues from sales
orders in which Ace is the salesman of record minus cost of goods, taxes,
shipping and handling. Commissions due under this paragraph 7 shall be paid
monthly on or about the last business day of each month.
8. Ace and its employees who are assigned to work on Atrium's account
shall not be employees of Atrium and shall not be entitled to any employee
benefits, such as health, hospitalization and participation in a 401(k) plan or
otherwise.
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OTHER RELATED AGREEMENTS
9. Ace shall pay Atrium to cover its set-up costs of Atrium providing a
fully functional customized ACE REWARDS platform for use with Ace's customers
and/or employees. Atrium shall also provide enhanced Solata marketing and
communication modules to the platform at agreed upon customization costs plus
added functionality that would allow ACE to re-sell this ACE REWARDS platform to
other entities within the promotional products industry as described in
paragraph 11 below. All costs incurred by Atrium and to be paid by Ace shall be
approved in advance in writing by Ace.
10. Atrium shall create and introduce a sponsored "Experience The
Rewards" Mobile Banking Debit Card to ACE and their customers. The splitting of
profits and costs of this arrangement shall be mutually agreed upon in writing
at a later time.
11. Atrium agrees that Ace shall have exclusive sales/marketing rights
to the ACE REWARD platform and the Mobile Banking Debit Card referenced in
paragraph 10 above within the market defined as promotional products
distributors, related industry organizations such as ASI, PPAI and other
suppliers/manufacturers serving that industry. Upon Ace's request, Atrium shall
provide documentation from it and its technology partner, if any, indicating
their commitment to support Atrium as their sales entity servicing the ACE
REWARD platform and the Mobile Banking Debit Card market with Solata technology
and rewards initiatives.
12. Atrium will agree to participate in pre-determined Ace and/or Ace
customer trade shows and events to further promote this joint venture agreement.
13. The term of this agreement shall be for a period of one year and
shall be automatically extended for an additional year on each December 31
following the date hereof (the "Renewal Date"), unless a party to this agreement
terminates this agreement in writing to the other party on or before the Renewal
Date. In the event this agreement is terminated, the following provisions shall
apply:
o Paragraph 14 and the last sentence of paragraph 17 shall
survive the termination of this agreement in accordance with
its terms;
o For a period of two years after the termination of this
agreement, Atrium shall be obligated to maintain and support
at its cost, the Rewards Platform;
o For a period of two years after the termination of this
agreement, the provisions of paragraphs 10 and 11 shall
continue in full force and effect.; and
o For a period of two years after the termination of this
agreement, commissions shall be paid to the other party on all
orders and reorders that are placed to a party to this
agreement based on relationships that are established with
customers between the date hereof and the termination date of
this agreement. Accordingly, the termination of this
agreement, will not terminate the other party's right to
compensation for monies earned through the termination date of
this agreement and a period of two years thereafter.
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14. Each party agrees that during the term of this agreement and for a
period of five years thereafter, the following shall apply:
(i) Neither party shall make any derogatory or disparaging
remarks about the other party,
(ii) Neither party shall directly or indirectly cause or
induce any employees, consultants, customers, suppliers and others
from continuing its current or future business relationships with
the other party,
(iii) Each party agrees to keep confidential the names of
clients and customers of the other party and not to publicly or
otherwise release such information to any competitor or other person
or entity, except with the prior written approval of the other
party.
15. This Agreement sets forth the entire and only agreement or
understanding between Ace and Atrium relating to the subject matter hereof and
supersedes and cancels all previous agreements, negotiations, letters of intent,
correspondence, commitments and representations in respect thereof among them,
and no party shall be bound by any conditions, definitions, warranties or
representations with respect to the subject matter of this Agreement except as
provided in this Agreement. This Agreement may not be amended in any respect
except by an instrument in writing signed by the parties hereto.
16. Any and all notices, demands or requests required or permitted to be
given under this Agreement shall be given in writing and sent, by registered or
certified U.S. mail, return receipt requested, by hand, or by overnight courier,
addressed to the parties hereto at their addresses set forth above or such other
addresses as they may from time-to-time designate by written notice, given in
accordance with the terms of this paragraph.
17. The rights and obligations of each party under this Agreement shall
insure to the benefit of and shall be binding upon any successor of each party,
subject to the provisions hereof. Neither this Agreement nor any rights or
obligations of each party hereunder shall be transferable or assignable, without
the prior written consent of the other party. Nothing contained herein shall
create a partnership or other taxable entity between the parties, it being
understood that while this agreement is titled as a joint venture agreement, it
is really a comprehensive agreement involving many agreements and understandings
between the parties for the mutual benefit of each other.
18. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which when taken together shall
constitute one and the same instrument. If a party signs this Agreement and
transmits an electronic facsimile of the signature page to the other party, the
party who receives the transmission may rely upon the electronic facsimile as a
signed original of this Agreement.
19. This Agreement shall be governed by, construed and enforced in
accordance with the internal laws of the State of New York, without giving
reference to principles of conflict of laws. Each of the parties hereto
irrevocably consents to the venue and exclusive jurisdiction of the federal and
state courts located in the State of New York, County of Nassau.
ACE MARKETING & PROMOTIONS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
ATRIUM ENTERPRISES, LTD
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇ ▇▇▇▇▇▇▇▇▇, President and CEO
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