Document:

LMI Aerospace, Inc. Exhibit 10.5 to Form 8-K

     

    EXHIBIT 10.5

     

    FOR
      INFORMATION PURPOSES ONLY - TO BE EXECUTED ON START DATE

    

    

    EMPLOYMENT
      AGREEMENT

    

    

    LMI
      AEROSPACE, INC.,
      a
      Missouri corporation (the “Corporation”), and DARREL
      E. KEESLING (“Employee”)
      hereby agree as follows:

    

    1. Employment.
      The
      Corporation hereby employs Employee, and Employee accepts employment from the
      Corporation, upon the terms and conditions hereinafter set forth in this
      Employment Agreement (“Agreement”). 

    

    2. Term
      of Employment. 

    

    (A) The
      initial term of Employee’s employment under this Agreement shall commence on the
      date of this Agreement (the “Commencement Date”) and shall terminate on December
      31, 2009; provided, however, that this Agreement shall automatically extend
      for
      successive one-year terms unless not later than October 31 of any year beginning
      in 2009, either party has given written notice to the other party of its or
      his
      intention not to extend the term of this Agreement (in which case, this
      Agreement shall terminate at the end of the then-current term); and provided,
      further, that the term of employment may be terminated upon the earlier
      occurrence of any of the following events:

    

    (1) Upon
      the
      termination of the business or corporate existence of the
      Corporation;

     

                                                  
      (2) At
      the
      Corporation’s option, in the event the Corporation determines that Employee is
      not performing the duties required of him hereunder to the satisfaction of
      the
      Corporation;

     

    (3) Upon
      the
      death of Employee;

    

    (4) At
      the
      Corporation’s option, if Employee shall suffer a permanent disability. For the
      purposes of this Agreement, “permanent disability” means any physical or mental
      impairment that renders Employee unable for a period of six (6) months or more
      to perform the essential job functions of his position, even with reasonable
      accommodation, as determined by a physician selected by the Corporation.
      Employee acknowledges and agrees that he shall voluntarily submit to a medical
      and/or psychological examination for the purpose of determining his continued
      fitness to perform the essential functions of his position whenever requested
      to
      do so by the Corporation. If the Corporation elects to terminate the employment
      relationship under this subparagraph (4), the Corporation shall notify Employee
      or his representative in writing, and the termination shall become effective
      on
      the date that such notification is given;

     

    (5) At
      the
      Corporation’s option, upon ten (10) calendar days’ written notice to Employee,
      in the event of any breach or default by Employee of any of the terms of this
      Agreement or of any of Employee’s duties or obligations hereunder. In lieu of
      providing ten (10) calendar days’ advance written notice, the Corporation, at
      its sole option, may terminate Employee’s services immediately and pay him an
      amount that is equivalent to ten (10) calendar days of his salary, less any
      deductions required by law;

     

    (6) At
      the
      Corporation’s option, without any advance notice, in the event that Employee
      engages in conduct that, in the opinion of the Corporation, (1) constitutes
      dishonesty of any kind (including, but not limited to, any misrepresentation
      of
      facts or falsification of records) in Employee’s relations, interactions or
      dealings with the Corporation or its customers; (2) constitutes a felony; (3)
      potentially may or will expose the Corporation to public disrepute or disgrace,
      or potentially may or will cause harm to the customer relations, operations
      or
      business prospects of the Corporation; (4) constitutes harassment or
      discrimination towards any person associated with the Corporation, whether
      an
      employee, agent or customer, based upon that person’s race, color, national
      origin, sex, age, disability, religion or other protected status; (5) reflects
      disruptive or disorderly conduct, including but not limited to, acts of
      violence, fighting, intimidation or threats of violence against any person
      associated with the Corporation, whether an employee, agent or customer, or
      possessing a weapon while on the Corporation’s premises or while acting on
      behalf of the Corporation; (6) is indicative of abusive or illegal drug use
      while on the Corporation’s premises or while acting on the Corporation’s behalf;
      or (7) constitutes a willful violation of any governmental rules or regulations;
      or

     

    (7) At
      Employee’s option, after providing the Corporation with at least thirty (30)
      calendar days advance written notice of his intention to terminate the
      employment relationship.

     

    If
      employment is terminated for any of the reasons set forth in subparagraphs
      (3)
      through (7) of this section 2(A), Employee shall be entitled to receive only
      the
      Base Salary (as that term is hereinafter defined) accrued but unpaid as of
      the
      date of the termination and shall be ineligible to receive any additional
      compensation or severance pay. If, on the other hand, employment is terminated
      by the Corporation during the term of this Agreement for any reason other than
      those set forth in paragraphs (3) through (7) of this section 2(A), subject
      to
      the conditions set forth in paragraphs 2(C) and (D) of this Agreement, the
      Corporation shall provide severance pay to Employee in an amount based upon
      his
      length of service with the Corporation. Specifically, the Corporation shall
      provide Employee with six (6) months of Base Salary if he has less than five
      (5)
      years of service with the Corporation as of the date of his termination and
      with
      twelve (12) months of Base Salary if he has five (5) or more years of service
      with the Corporation as of the date of his termination.

    

    (B) If
      Employee’s employment with the Corporation is terminated in conjunction with a
      change in the control of the Corporation or in conjunction with the sale of
      substantially all of the operating assets of the Corporation, the Corporation
      will provide Employee with severance pay under the circumstances specified
      in
      subparagraphs (1) and (2) of this section 2(B), and the conditions set forth
      in
      paragraphs 2(C) and (D) of this Agreement. For the purposes of this Agreement,
      a
“change in control” is defined as the sale of substantially all of the operating
      assets of the Corporation or the acquisition of more than fifty percent (50%)
      of
      the stock of the Corporation by a group of shareholders or an entity that
      acquires control of the Corporation (a “Purchaser”). 

    

    (1) If
      the
      change in control or the sale results in the involuntary termination of Employee
      or results in Employee electing to terminate his employment for a good reason
      as
      determined by the Corporation in its sole discretion (such as the Purchaser
      refusing to offer full time employment to Employee on terms comparable to those
      provided by the Corporation prior to the acquisition or the Purchaser requiring
      Employee to move to a new location), the Corporation shall provide Employee
      with
      severance pay in an amount that is equal to two times his annual Base Salary
      and
      shall pay Employee any reasonably anticipated Performance Bonus for the fiscal
      year in which he was terminated, on a prorated basis. 

    

    (2) If
      Employee voluntarily terminates his employment without a good reason (as
      determined by the Corporation in its sole discretion) within ninety (90) days
      after the change in control or the sale, the Corporation shall provide Employee
      with six (6) months of Base Salary if he has less than five (5) years of service
      with the Corporation as of the date of his termination and with twelve (12)
      months of Base Salary if he has five (5) or more years of service with the
      Corporation as of the date of his termination. 

    

    (C) The
      severance pay provided for in section 2(A) of this Agreement shall be paid
      in
      equal monthly installments, unless the Corporation, within its sole discretion,
      elects to pay the present value of the severance pay in a lump sum within thirty
      (30) calendar days of the termination. For purposes of calculating the present
      value of the severance pay, the discount rate shall be the prime rate quoted
      in
      the Wall Street Journal on the day the Corporation elects to pay the present
      value of the severance pay in a lump sum.

     

    

    (D) Notwithstanding
      anything to the contrary, (i) the amount of severance pay provided under this
      Agreement shall not under any circumstances exceed the limitations set forth
      in
§ 280G of the Code, and (ii) the Corporation’s obligation to pay the severance
      pay provided for in this section 2 shall be conditioned on Employee’s execution
      of a written release satisfactory to the Corporation.

     

    3. Compensation.

    

    (A) During
      the period from the Commencement Date to December 31, 2007, the Corporation
      shall compensate Employee for Employee’s services rendered hereunder by paying
      to Employee an annual salary (the “Base Salary”) of Two Hundred Forty Thousand
      Dollars ($240,000.00), prorated for the months employed in 2007. During the
      period from January 1, 2008 to December 31, 2008, Employee’s Base Salary shall
      be Two Hundred Fifty Thousand Dollars ($250,000.00). During the period from
      January 1, 2009 to December 31, 2009, Employee’s Base Salary shall be Two
      Hundred Sixty Thousand Dollars ($260,000.00). Thereafter, as long as this
      Agreement remains in effect, the annual Base Salary that the Corporation shall
      pay to Employee for his services rendered hereunder will be Two Hundred Sixty
      Thousand Dollars ($260,000.00). Payment of this salary will be made in
      accordance with the payroll policies of the Corporation in effect from time
      to
      time. Notwithstanding anything in this paragraph to the contrary, the
      Corporation reserves the right to deduct or withhold all amounts from Employee’s
      salary as may be required by law or otherwise mutually agreed to by the parties
      hereto.

    

    (B) With
      respect to each complete fiscal year of the Corporation during which (i)
      Employee is employed under the terms of this Agreement as of the last day of
      such fiscal year, and (ii) the Corporation’s “Annual Income from Operations” (as
      that term is hereinafter defined) is more than Ten Million Dollars
      ($10,000,000.00), the Corporation shall pay to Employee, in addition to the
      Base
      Salary, an annual “Performance Bonus.” 

    

    The
      amount of the annual Performance Bonus (if any) shall be equal to:

    

    
      	 	
              (1)

            	
              5.00%
                of Employee’s Base Salary; plus

            

    

    

    
      	 	
              (2)

            	
              0.625%
                of the Corporation’s Annual Income from Operations that is above Ten
                Million Dollars ($10,000,000.00). In the event the Corporation does
                not
                meet its “Annual On-Time Delivery Metric” (as that term is defined in
                Appendix A), the bonus amount described in this Paragraph 3(B)(2),
                shall
                be reduced by up to Twenty-five Percent (25.0%), such amount to be
                determined by the Compensation Committee of the Board of Directors
                of the
                Corporation.

            

    

    

    The
      Compensation Committee of the Board of Directors of the Corporation retains
      the
      right to modify or adjust the manner in which the Performance Bonus is
      calculated in the event that the Corporation either acquires the assets of
      another entity, or any portion thereof, or sells its assets, or any portion
      thereof, to another entity.

    

    In
      the
      event the Corporation’s Annual Income from Operations for any given fiscal year
      is less than Ten Million Dollars ($10,000,000.00), Employee shall not be
      entitled to a Performance Bonus with respect to such fiscal year. 

    

    For
      purposes of the calculation of the Performance Bonus, the Corporation’s “Annual
      Income from Operations” means the consolidated Income from Operations of the
      Corporation and its subsidiaries, for a given fiscal year, as determined by
      the
      firm of independent certified public accountants providing auditing services
      to
      the Corporation, using generally accepted accounting principles consistently
      applied, and calculated without regard to (a) any bonus paid to the
      Corporation’s Chairman of the Board, (b) federal and state income tax, (c) any
      interest expense or other income and expense as they appear on the Corporation’s
      annual audited financial statements, (d) any expenses or income related to
      the
      disputed claim with the Lockheed Corporation ongoing at the time of execution
      of
      this Agreement, and (e) any income or loss attributable to any other corporation
      or entity (including the assets of a corporation or entity that constitute
      an
      operating business) acquired by or merged into the Corporation subsequent to
      the
      effective date of this Agreement. The Corporation shall pay to Employee any
      Performance Bonus due Employee hereunder not later than fifteen (15) days after
      the receipt by the Corporation of its annual audited financial statements,
      which
      the Corporation expects to receive within ninety (90) days after the end of
      each
      fiscal year of the Corporation.

    

    (C) In
      addition to the Base Salary and Performance Bonus (if any), Employee shall be
      entitled to receive such bonus compensation as the Compensation Committee of
      the
      Board of Directors of the Corporation may authorize from time to
      time.

    

    (D) As
      further inducement to Employee to enter into this Agreement, the Compensation
      Committee has approved the grant to Employee of __________ (_________) shares
      of
      restricted stock under the LMI Aerospace, Inc. 2005 Long-Term Incentive Plan
      (the “Plan”), subject to an accrued vesting of thirty-three percent (33%) of
      such grant upon each anniversary of the date of the grant, subject to the terms,
      conditions and limitations set forth in the Plan and documents evidencing the
      award of such grant.

    

    4. Duties
      of Employee.

    

    (A) Employee
      shall serve as Chief Operating Officer or in such other positions as may be
      determined by the Board of Directors of the Corporation, and Employee shall
      perform such duties on behalf of the Corporation and its subsidiaries by such
      means, at such locations, and in such manner as may be specified from time
      to
      time by the Chief Executive Officer or Board of Directors of the
      Corporation.

    

    (B) Employee
      agrees to abide by and conform to all rules established by the Corporation
      applicable to its employees.

    

    (C) Employee
      acknowledges that he is being employed as a full-time employee, and Employee
      agrees to devote so much of Employee’s entire time, attention and energies to
      the business of the Corporation as is necessary for the successful operation
      of
      the Corporation and shall endeavor at all times to improve the business of
      the
      Corporation. Employee shall not accept any business commitments other than
      with
      the Corporation without the advance written consent of the Corporation’s Chief
      Executive Officer.

    

    5. Expenses.
      During
      the period of Employee’s employment, except as otherwise specifically provided
      in this Agreement, the Corporation will pay directly, or reimburse Employee
      for,
      all items of reasonable and necessary business expenses approved in advance
      by
      the Corporation if such expenses are incurred by Employee in the interest of
      the
      business of the Corporation. The Corporation shall also reimburse Employee
      for
      automobile expenses incurred by Employee in the performance of Employee’s duties
      hereunder. The amount of such reimbursement shall be in accordance with the
      automobile expense reimbursement policy adopted (and as it may be modified
      from
      time to time) by the Corporation’s Board of Directors. All such expenses paid by
      Employee will be reimbursed by the Corporation upon presentation by Employee,
      from time to time (but not less than quarterly), of an itemized account of
      such
      expenditures in accordance with the Corporation’s policy for verifying such
      expenditures.

    

    6. Fringe
      Benefits.

    

    (A) Employee
      shall be entitled to participate in any health, accident and life insurance
      program and other benefits that have been or may be established by the
      Corporation for salaried employees of the Corporation.

    

    (B) Employee
      shall be entitled to an annual vacation without loss of compensation for such
      period as may be determined by the Board of Directors of the
      Corporation.

    

    (C) The
      Corporation shall furnish to Employee during the term of his employment an
      automobile selected by the Corporation to aid Employee in the performance of
      his
      duties. Upon agreement of the Corporation and Employee, the Corporation may,
      in
      lieu of the automobile, provide Employee with a Five Thousand Dollar ($5,000.00)
      annual automobile allowance.

    

    7. Covenants
      of Employee.

    

    (A) During
      the term of Employee’s employment with the Corporation and for all time
      thereafter, Employee covenants and agrees that Employee will not in any manner
      directly or indirectly, except as required in Employee’s duties to the
      Corporation, disclose or divulge to any person, entity, firm or company
      whatsoever, or use for Employee’s own benefit or the benefit of any other
      person, entity, firm or company, directly or indirectly, any knowledge, devices,
      information, techniques, customer lists, business plans or other data belonging
      to the Corporation or developed by Employee on behalf of the Corporation during
      his employment with the Corporation, without regard to whether all of the
      foregoing matters will be deemed confidential, material or important, the
      parties hereto stipulating, as between them, that the same are important,
      material, confidential and the property of the Corporation, that disclosure
      of
      the same to or use of the same by third parties would greatly affect the
      effective and successful conduct of the business of the Corporation and the
      goodwill of the Corporation, and that any breach of the terms of this
      subparagraph (A) shall be a material breach of this Agreement.

     

    (B) During
      the term of Employee’s employment with the Corporation and for a period of two
      (2) years or one (1) year with respect to subparagraph (4) below (the “Covenant
      Term”) after cessation for whatever reason of such employment (except as
      hereinafter provided in subparagraph (C) of this paragraph 7), Employee
      covenants and agrees that Employee will not in any manner directly or
      indirectly:

     

                     (1)    solicit,
      divert, take away or interfere with any of the customers (or their respective
      affiliates or successors) of the Corporation;

     

     (2)    engage
      directly or indirectly, either personally or as an employee, partner, associate
      partner, officer, manager, agent, advisor, consultant or otherwise, or by means
      of any corporate or other entity or device, in any business which is competitive
      with the business of the Corporation. For purposes of this covenant a business
      will be deemed competitive if it is conducted in whole or in part within any
      geographic area wherein the Corporation is engaged in marketing its products,
      and if it involves the manufacture of component parts for the aerospace industry
      or any other business which is in any manner competitive, as of the date of
      cessation of Employee’s employment, with any business then being conducted by
      the Corporation or as to which the Corporation has then formulated definitive
      plans to enter;

     

    (3)    induce
      any salesman, distributor, supplier, manufacturer, representative, agent, jobber
      or other person transacting business with the Corporation to terminate their
      relationship with the Corporation, or to represent, distribute or sell products
      in competition with products of the Corporation; or

     

    (4)    induce
      or
      cause any employee of the Corporation to leave the employ of the
      Corporation.

     

    

    (C) The
      parties agree that the Covenant Term provided for in the preceding subparagraph
      (B) shall be:

     

    

                    (1)reduced
      to six (6) months after cessation for whatever reason of Employee’s employment
      with the Corporation in the event all of the operating assets or all of the
      common stock of the Corporation is sold to any entity or individuals
      unaffiliated with the Corporation, its successors or assigns; or

     

    

                    (2)eliminated
      if the business currently operated by the Corporation is terminated, and the
      assets of the Corporation are liquidated.

     

    

    (D) All
      the
      covenants of Employee contained in this paragraph 7 shall be construed as
      agreements independent of any other provision of this Agreement, and the
      existence of any claim or cause of action against the Corporation, whether
      predicated on this Agreement or otherwise, shall not constitute a defense to
      the
      enforcement by the Corporation of these covenants.

     

    

    (E) It
      is the
      intention of the parties to restrict the activities of Employee under this
      paragraph 7 only to the extent necessary for the protection of legitimate
      business interests of the Corporation, and the parties specifically covenant
      and
      agree that should any of the provisions set forth therein, under any set of
      circumstances not now foreseen by the parties, be deemed too broad for such
      purpose, said provisions shall automatically be amended and modified to the
      minimum extent necessary in order for the provision(s) in question to be valid
      and enforceable.

     

    

    8. Documents.
      Upon
      cessation of Employee’s employment with the Corporation, for whatever reason,
      all documents, records (including without limitation, customer records),
      notebooks, invoices, statements or correspondence, including copies thereof,
      relating to the business of the Corporation then in Employee’s possession,
      whether prepared by Employee or others, will be delivered to and left with
      the
      Corporation, and Employee agrees not to retain copies of the foregoing documents
      without the written consent of the Corporation.

    

    9. Remedies.
      In the
      event of the breach by Employee of any of the terms of this Agreement,
      notwithstanding anything to the contrary contained in this Agreement, the
      Corporation may terminate the employment of Employee in accordance with the
      provisions of paragraph 2 of this Agreement. It is further agreed that any
      breach or evasion of any of the terms of this Agreement by Employee will result
      in immediate and irreparable injury to the Corporation and will authorize
      recourse to injunction and/or specific performance as well as to other legal
      or
      equitable remedies to which the Corporation may be entitled. In addition to
      any
      other remedies that it may have in law or equity, the Corporation also may
      require an accounting and repayment of all profits, compensation, remuneration
      or other benefits realized, directly or indirectly, as a result of such breaches
      by Employee or by a competitor’s business controlled, directly or indirectly, by
      Employee. No remedy conferred by any of the specific provisions of this
      Agreement is intended to be exclusive of any other remedy and each and every
      remedy given hereunder or now or hereafter existing at law or in equity by
      statute or otherwise. The election of any one or more remedies by the
      Corporation shall not constitute a waiver of the right to pursue other available
      remedies. Employee expressly agrees to pay all reasonable costs and attorneys’
fees incurred by the Corporation in order to enforce Employee’s obligations
      under this Agreement, regardless of whether litigation is commenced or
      prosecuted to a judgment.

    

    10. Severability.
      All
      agreements and covenants contained herein are severable, and in the event any
      of
      them shall be held to be invalid by any court of competent jurisdiction, this
      Agreement, subject to subparagraph 7(E) hereof, shall continue in full force
      and
      effect and shall be interpreted as if such invalid agreements or covenants
      were
      not contained herein.

    

    11. Waiver
      or Modification.
      No
      waiver or modification of this Agreement or of any covenant, condition or
      limitation herein shall be valid unless in writing and duly executed by the
      party to be charged therewith, and no evidence of any waiver or modification
      shall be offered or received in evidence in any proceeding, arbitration or
      litigation between the parties hereto arising out of or affecting this
      Agreement, or the rights or obligations of the parties hereunder, unless such
      waiver or modification is in writing, duly executed as aforesaid, and the
      parties further agree that the provisions of this paragraph 11 may not be waived
      except as herein set forth. Failure of the Corporation to exercise or otherwise
      act with respect to any of its rights hereunder in the event of a breach of
      any
      of the terms or conditions hereof by Employee shall not be construed as a waiver
      of such breach nor prevent the Corporation from thereafter enforcing strict
      compliance with any and all of the terms and conditions hereof.

    

    12. Assignability.
      This
      Agreement may be assigned by the Corporation to another entity that purchases
      substantially all of the assets of the Corporation or acquires a majority of
      the
      stock of the Corporation. The services to be performed by Employee hereunder
      are
      personal in nature, and, therefore, Employee shall not assign Employee’s rights
      or delegate Employee’s obligations under this Agreement, and any attempted or
      purported assignment or delegation not herein permitted shall be null and
      void.

    

    13. Successors.
      Subject
      to the provisions of paragraph 12, this Agreement shall be binding upon and
      shall inure to the benefit of the Corporation and Employee and their respective
      heirs, executors, administrators, legal administrators, successors and
      assigns.

    

    14. Notices.
      Any
      notice or other communication required or permitted hereunder shall be in
      writing and shall be deemed to have been given if delivered personally, by
      over-night courier, or by certified or registered mail, return receipt
      requested, if to the Corporation, to:

    

    

    Ronald
      S.
      Saks, President

    LMI
      AEROSPACE, INC.

    P.O.
      Box
      900

    St.
      Charles, MO 63302-0900

    

    and,
      if
      to Employee, to:

    

    Darrel
      E.
      Keesling

    1306
      Parkview Valley Drive

    Ballwin,
      MO 63011-4206

    

    or
      to
      such other address as may be specified by either of the parties in the manner
      provided under this paragraph 14.

    

    15. Construction.
      This
      Agreement shall be deemed for all purposes to have been made in the State of
      Missouri and shall be governed by and construed in accordance with the laws
      of
      the State of Missouri, notwithstanding either the place of execution hereof,
      nor
      the performance of any acts in connection herewith or hereunder in any other
      jurisdiction.

    

    16. Venue.
      The
      parties hereto agree that any suit filed arising out of or in connection with
      this Agreement shall be brought only in the United States District Court for
      the
      Eastern District of Missouri, unless that court lacks jurisdiction, in which
      case such action shall be brought only in the Circuit Court for St. Louis
      County, Missouri.

    

    17. Disclosure
      of Existence of Agreement.
      To
      preserve the Corporation’s rights under this Agreement, the Corporation may
      advise any third party of the existence of this Agreement and its terms, and
      Employee specifically releases and agrees to indemnify and hold the Corporation
      harmless from any liability for doing so.

    

    18. Agreement
      Drafted by the Corporation’s Counsel; Interpretation.
      Each
      party hereto acknowledges that the Corporation’s counsel, Gallop, Johnson &
Neuman, L.C., prepared this Agreement on behalf of and in the course of its
      representation of the Corporation and not Employee. Employee acknowledges and
      represents that: (a) he has been advised to seek the advice of independent
      counsel and (b) he has had the opportunity to seek the advice of independent
      counsel. Notwithstanding the foregoing, if a question of interpretation arises,
      this Agreement shall be construed as if drafted jointly by the parties, and
      no
      presumption or burden of proof shall arise favoring or disfavoring any party
      by
      virtue of the authorship of any provision of this Agreement.

    

    19. Review
      by and Approval of Compensation Committee.
      This
      Agreement, including each element of Employee’s compensation provided for in
      paragraph 3 has been reviewed and approved by the Compensation
      Committee.

    

    20. Entire
      Agreement.
      This
      Agreement constitutes the entire agreement between the parties with respect
      to
      the subject matter hereof and supersedes any and all prior employment,
      consulting and similar agreements, written and/or oral between the Corporation
      and Employee. Employee hereby waives and releases all rights and claims under
      any such employment, consulting or other similar agreements or with respect
      thereto.

    

    The
      parties have executed this Agreement on this _____________ day of February,
      2007.

    

    

     

                “CORPORATION”

    

                LMI
      AEROSPACE,
      INC.

     

    

                By:
      __________________________

                Ronald
      S. Saks,
      President

    

    

                “EMPLOYEE”

    

    

                _______________________________

                Darrel
      E.
      KeeslingEX-10.1 PBR Sponsorship Agreement

SPONSORSHIP AGREEMENT

 

STANDARD TERMS

 

 

THIS SPONSORSHIP AGREEMENT (“Agreement”), consisting of these Standard Terms (“Standard Terms”) and the Term Sheet attached hereto and incorporated by reference herein as Exhibit A (“Exhibit A”) is effective as of December 27, 2006 (the “Effective Date”), by and between ALPHATRADE.COM, a Nevada corporation, whose address is 1111 West Georgia Street, Vancouver, BC Canada V6E 4M3  ("Sponsor"), and PROFESSIONAL BULL RIDERS, INC., whose address is 6 South Tejon Street, Suite 700, Colorado Springs, CO 80903 ("PBR") (collectively the “Parties”).

 

Unless otherwise defined in these Standard Terms, all capitalized terms used in these Standard Terms shall have the meanings ascribed to such terms in Exhibit A.

 

PBR is the organizer and promoter of a number of top-level professional bull riding events, including the Built Ford Tough Series (“BFTS”), which includes a number of top level, professional bull riding events (“BFTS Events”), culminating in an annual championship event (“World Finals”).  Each competitive event of the BFTS leading to the World Finals, and the concluding four competitive performances during each World Finals will sometimes be referred to herein as an “Event” or “Events”; and 

 

AlphaTrade.com has a mission, "To organize the world's financial information and make it universally accessible and useful."   Sponsor has determined that its sponsorship support for PBR and the Events will result in favorable and valuable product exposure for Sponsor’s products and services, and PBR has determined that Sponsor’s sponsorship support will be beneficial to PBR, the BFTS Events and PBR members.

 

RIGHT OF FIRST REFUSAL to continue as the “Official Financial Information Sponsor of the PBR”: Sponsor shall have the RIGHT OF FIRST REFUSAL to purchase additional seasons to continue as the “Official Financial Information Sponsor of the PBR” for additional fees and on terms to be determined by mutual agreement of the Parties.  If another company shall propose to PBR to sponsor this category in contemplation of the expiration of this Agreement, or if PBR shall propose in writing to another potential sponsor for this category to be effective after the expiration of this Agreement, such terms, fees, and costs therefore (“Sponsorship Proposal”) shall be presented promptly to Sponsor after PBR receives such proposal from, or delivers such proposal to, another entity for the product category covered by this Agreement.   Sponsor shall have five (5) business days after receipt of the Sponsorship Proposal from PBR within which to accept it on the terms presented.  If Sponsor does not accept such proposal on such terms within such time, PBR shall be free to contract with any third party with respect to any such rights, or category (the “Refused Category”).  Notwithstanding the Right of First Refusal above, PBR will work with Sponsor in good faith to attempt to renew this Agreement for up to 3 years, subject to agreeing on terms and fees that would be mutually acceptable to both parties.

 

THEREFORE, in consideration of the mutual covenants contained in this Agreement and other good and valuable consideration, the receipt and legal sufficiency of which are hereby expressly acknowledged, the Parties agree as follows:

 

I. Term of Agreement

 

1.1     Term. Unless otherwise specified in Exhibit A, the term of this Agreement will commence on the Effective Date and end upon conclusion of the 2007 World Finals, unless sooner terminated in accordance with the provisions of this Agreement (the “Term”).  If applicable, each PBR competition season (beginning with the first BFTS Event of that competition season and ending with completion of that competition season’s World Finals) throughout the Term of this Agreement will be referred to as a “Contract Year.”

 

1.2     First Right of Renewal.  Sponsor may, by written notice given to PBR on or before April 1, 2007 for the 2008 Contract Year, extend the Term for three (3) additional Contract Years, subject to mutual agreement regarding fees to be charged.  

II.      Rights and Obligations of the Parties

 

2.1      Grant of License. PBR grants to Sponsor a non-exclusive, non-transferable, limited license to use, throughout the Term but not thereafter, in the United States and its territories and possessions and subject to PBR’s pre-approval, PBR’s name and certain of its logos, trademarks and service marks, together with related artwork, composite works and derivative works (collectively, the “PBR Trademarks”), for the limited purpose of advertising and marketing Sponsor and Sponsor’s products and services in direct association with PBR, Sponsor’s sponsorship of PBR, the BFTS, and the Events. PBR agrees that, during the Term, Sponsor shall have the right within the United States and its territories and possessions, to refer to itself as an “Official Sponsor of The Professional Bull Riders,” or the “Official other (TBD) Company of the PBR,” using those words or words of comparable meaning.  PBR reserves the right to grant rights and/or licenses of any kind or nature whatsoever relating to the PBR Trademarks to any sponsor, advertiser or other third party.

 

During the Term, PBR will not enter into any sponsorship agreement with any person or entity, other than Sponsor, whereby such entity or person is granted the right to refer to itself or its products or services as the “Official “Financial Information Sponsor” of The Professional Bull Riders,” or the “Official Financial Information  Company of the PBR,” whether using those words or words of comparable meaning.

           

In return for the rights and benefits provided to Sponsor hereunder, Sponsor hereby grants to PBR and its affiliate, PBR-TV, Inc., the right and license, throughout the Term hereof, to use, display, publish, reproduce, copy, make derivatives of, distribute and exploit Sponsor's name and certain of its logos, trademarks and service marks, together with related artwork designated in Exhibit “B” (collectively, the “Sponsor Trademarks”) in the advertisement, marketing, or promotion of PBR, the BFTS Events, and the Events, and on PBR branded or produced merchandise, as well as a license to use, exploit, display, publish and distribute the Sponsor Trademarks in signs, banners, logo presentations, public announcements, promotional materials, posters, and other materials and communications produced, displayed or otherwise used at or in connection with PBR and the BFTS Events, and the Events. 

 

Sponsor acknowledges that the Sponsor Trademarks may be captured and/or incorporated (“Captured Sponsor Trademarks”) in audio/visual works and recordings created, captured and/or recorded at or in connection with the Events and associated activities (“Event Recordings”).  Sponsor grants to PBR and its affiliate, PBR-TV, Inc., a world-wide, perpetual license and right to use, exploit, copy, reproduce, display, publish, perform, transmit, televise and distribute any and all Event Recordings that include Captured Sponsor Trademarks in television and radio broadcasts, pictures, photographs, films, video recordings and/or any other audio/visual works. Sponsor further acknowledges and agrees that PBR is the exclusive owner of all right, title and interest in and to all Event Recordings, including all copyright and other intellectual property rights and goodwill therein.  Accordingly, PBR may exercise its exclusive copyright rights to use, publish, display, perform, reproduce, distribute, license, transmit, and create derivative works from, the Event Recordings in any form or through any medium.

 

2.4     Promotional Products and Materials.       Sponsor may use the PBR Trademarks only on Promotional Products and Promotional Materials, as defined below, and not on any products or materials offered or intended for sale by Sponsor, or on any Sponsor products, product packaging, hang tags, or other collateral materials directly associated with the sale of AlphaTrade.com products or services, without the express prior written approval of PBR.  

 

Before Sponsor uses, displays, publishes, reproduces, distributes or exploits, in any manner or medium, any products using, displaying, bearing, or incorporating the PBR Trademarks, or any portion thereof, for promotional purposes ("Promotional Products") and before Sponsor uses, displays, publishes, reproduces, distributes or exploits the PBR Trademarks, or any portion thereof, in or on any advertising, promotional, publicity or display materials (collectively, "Promotional Materials"), Sponsor will submit such Promotional Products or Promotional Materials to PBR for its approval, which shall not be unreasonably withheld.  For purposes of this Agreement, Promotional Products include only products distributed by Sponsor without charge to persons attending the Events, Sponsor employees, and Sponsor customers and do not include any products offered or intended for sale.  

 

For Promotional Products, Sponsor will submit to PBR for approval, for each item or product to be used, displayed, published, reproduced, distributed or otherwise exploited displaying, bearing or incorporating any PBR Trademarks, either:  (i) finished artwork or final proofs; (ii) pre-production samples or strike-offs; or (iii) a sample of each such item or product.  Sponsor will also advise PBR, in writing, how and to whom such Promotional Products will be used, displayed, published, reproduced distributed or exploited.  For Promotional Materials, Sponsor will submit to PBR for approval, as appropriate to the medium used, either:  (i) pre-production art or rough cuts; (ii) layout, storyboard and script; or (iii) finished materials or samples of advertisements.  Sponsor will also advise PBR, in writing, where such Promotional Materials will appear, i.e., in which publications, on the Internet, etc.  Within ten (10) business days after receiving a submittal and request for approval from Sponsor, PBR will provide Sponsor with written notice approving or disapproving the Promotional Product or Promotional Materials submitted.  If written approval from PBR is not received within ten (10) business days, the submittal will be deemed disapproved. 

 

In addition, if at any time during the Term hereof, Sponsor desires to use, display or distribute any products or materials at or in association with one or more of the Events, whether or not bearing or displaying the PBR Trademarks, Sponsor shall prior to any such use, display or distribution submit representative samples of the products or materials to be used, displayed or distributed to PBR for its approval, including, but not limited to, approval as to the use of all PBR Trademarks, the design and creative elements of the products and/or materials, and the quantity, method and location of use, display or distribution, which approval shall not be unreasonably withheld.

 

2.5      Acknowledgement.          Sponsor acknowledges and agrees that this Agreement does not limit or restrict PBR’s rights or the rights of any of PBR’s other sponsors, advertisers or business partners to grant licenses to third parties for the use of their own respective trademarks and logos. 

 

Sponsor further acknowledges that use, display, publication, reproduction, copying, distribution, alteration, creation of derivatives, licensing or other exploitation of the names, trademarks, trade names, service marks, logos or other intellectual property, including composite or derivative marks such as the BFTS Series and World Finals logos, of PBR’s other sponsors, advertisers, affiliates, agents, vendors and contractors including, but not limited to,  Ford Motor Company (“Ford”), V.F. Jeanswear (“Wrangler”), and Amp’d Mobile, Inc. (“Amp’d”) are not licensed or granted hereby and require the consent of the owner or holder of such intellectual property. Except to the limited extent as may be provided in Exhibit A during the Term, this Agreement also does not grant nor purport to grant to Sponsor the right to use, display, publish, reproduce, copy, distribute, alter, create derivatives of, license or otherwise exploit, in any way, the name, signature, image, likeness, photograph, persona, or other distinctive personal elements or publicity rights of any PBR member, bull rider, bullfighter, judge, official or Event participant or attendee.  If desired, Sponsor must obtain any such rights from the PBR member, participant or attendee him/herself. Upon request of Sponsor, PBR will devote commercially reasonable and diligent efforts to assist Sponsor in obtaining any such rights.

 

2.6     PBR’s Obligations.  Please see Exhibit A.

 

2.7     Additional Promotions and Exposure.  Please see Exhibit A.

 

2.8     Commercial Material.  All logo presentations and other Sponsor brand exposure to be provided as part of the Agreement will be of a design and content selected by Sponsor, subject to the reasonable approval of PBR, which approval will not be unreasonably withheld, conditioned or delayed.  Sponsor shall furnish, at its sole expense, each of Sponsor’s (i) logo presentations to be displayed as provided in the Agreement; and/or (ii) as applicable, commercial messages to be broadcast (“Commercial Material”) in accordance with the technical and delivery requirements of PBR and, in the case of commercial messages, PBR-TV, Inc. and the applicable broadcast network (“Network”), including, but not limited to, all commercial format, commercial message time, musical composition, commercial approval submission, and integration requirements applicable to the Commercial Material(s).  Sponsor shall be solely responsible for all content of any Sponsor logo presentations and/or commercial messages delivered to PBR or displayed and/or aired pursuant to this Agreement, as well as all applicable intellectual property rights used, and releases needed, in connection with such logo presentations and/or commercial messages including also, but not limited to any necessary musical clearance rights.  All salary, commissions, social security taxes, union fees, employer taxes, fees, licenses, permits, residuals, royalties, and all other obligations and liabilities (whether as to talent employed by Sponsor on Commercial Material furnished by Sponsor hereunder or otherwise) shall be borne and assumed by Sponsor.  Sponsor shall bear all costs and expenses incurred in connection with the design, production, use and delivery of the Commercial Material, including, but not limited to, all graphic materials expenses; recording, video tape, or film expenses; shipping and insurance expenses; customs and clearance charges.  If applicable, Sponsor is responsible for any integration charges or other technical charges charged by the Network for insertion or integration of Sponsor's Commercial Material.  Neither PBR nor PBR-TV, Inc. shall be liable for loss of, damage to, or other impairment of the value of any property or materials furnished or delivered by Sponsor.

 

Please see Exhibit A for additional details.

 

III.     Sponsorship/Investment Fees.

3.1     Sponsorship Fees.   Please see Exhibit A.

 

3.2     Additional Consideration.   Please see Exhibit A.

 

IV.              Trademarks

 

4.1     Sponsor Trademarks.        Notwithstanding the limited rights granted to PBR in Section 2.1 of this Agreement, the Sponsor Trademarks will remain the property of Sponsor. Any and all rights and interests in and to the Sponsor Trademarks under trademark or copyright law, as well as all other intellectual property rights and goodwill therein, will inure to the benefit of and be the exclusive property of Sponsor. 

 

4.2     PBR Trademarks.    Notwithstanding the limited rights granted to Sponsor in Sections 2.1 and 2.2 of this Agreement, the PBR Trademarks will remain the property of PBR. Any and all rights and interests in and to the PBR Trademarks under trademark or copyright law, as well as all other intellectual property rights and goodwill therein, will inure to the benefit of and be the exclusive property of PBR. Sponsor’s right to use the PBR Trademarks under this Agreement is non-assignable and nontransferable and will be only for the Term.

 

V.                 Indemnification

     

5.1     Sponsor Indemnification.   Sponsor hereby indemnifies, defends and holds harmless PBR, its parents, subsidiaries and affiliates, and their respective officers, directors, agents, employees and contractors, from and against any and all claims, actions, liabilities, damages, costs, expenses or losses of any kind whatsoever (including reasonable attorneys’ fees and disbursements) arising out of or resulting from: (i) any negligent acts or omissions or willful misconduct of Sponsor and/or its agents or employees; (ii) any material breach by Sponsor of any of its obligations, covenants, agreements, warranties or representations under this Agreement; (iii) any material, product or information provided by Sponsor or any advertising, marketing, promotional or informational materials, Commercial Materials, products or information created, produced, published, displayed or distributed by Sponsor hereunder; or (iv) any bodily injury, death or property damage proximately caused by Sponsor and/or its agents or employees. 

 

It is further agreed and understood that neither Sponsor nor any of its officers, directors, employees, contractors or agents will seek, receive or in any way be entitled to any of the benefits or insurances provided by PBR to its employees, (including, but not limited to  medical, workers compensation, unemployment, or other insurance coverage or benefits). Sponsor shall be solely responsible for obtaining, maintaining and complying with any such benefits and/or insurances as may be required or desired. Sponsor hereby waives, releases, indemnifies and holds harmless PBR, its parents, subsidiaries and affiliates, and their respective officers, directors, employees, agents, contractors, representatives and insurers, from and against any claim, suit, action, cost, damage, loss or liability arising out of or relating to any failure on behalf of Sponsor or any of its officers, directors, employees, contractors or agents to comply with the requirements of this paragraph.

 

5.2     PBR Indemnification.         PBR, hereby indemnifies, defends and holds harmless Sponsor, its parents, subsidiaries and affiliates, and their respective officers, directors, agents, employees and contractors, from and against any and all claims, actions, liabilities, damages, costs, expenses or losses of any kind whatsoever (including reasonable attorneys’ fee and disbursements) relating to or resulting from: (i) any negligent acts or omissions or willful misconduct of PBR and/or its agents or employees; (ii) any material breach by PBR of any of its obligations, covenants, agreements, warranties or representations under this Agreement; (iii) any material, product or information provided by PBR or any advertising, marketing, promotional or informational materials, products or information created, produced, published, displayed or distributed by PBR hereunder; or (iv) any bodily injury, death or property damage proximately caused by PBR and/or its agents or employees.

 

It is further agreed and understood that neither PBR nor any of its officers, directors, employees, contractors or agents will seek, receive or in any way be entitled to any of the benefits or insurances provided by Sponsor to its employees, (including, but not limited to  medical, workers compensation, unemployment, or other insurance coverage or benefits). PBR shall be solely responsible for obtaining, maintaining and complying with any such benefits and/or insurances as may be required or desired. PBR hereby waives, releases, indemnifies and holds harmless Sponsor, its parents, subsidiaries and affiliates, and their respective officers, directors, employees, agents, contractors, representatives and insurers, from and against any claim, suit, action, cost, damage, loss or liability arising out of or relating to any failure on behalf of PBR or any of its officers, directors, employees, contractors or agents to comply with the requirements of this paragraph.

 

5.3     Survival.       The obligations to indemnify, defend and hold harmless contained in this Section 5 will remain in full force and effect notwithstanding the termination or cancellation of this Agreement, whether by expiration of time, by operation of law, or otherwise.

 

VI.     Insurance.

 

6.1     PBR Insurance.       On an occurrence basis for the complete Events including set up and tear down, and throughout the Term, PBR will provide, at its own expense, the following types and amounts of insurance.  The insurance required shall include a “Separation of Insureds” clause, and the insurer will agree to waive all rights of subrogation against Sponsor, its officers, directors, employees, representatives, agents, volunteers and assigns for claims or losses arising from PBR’s actions, performance or obligations under this Agreement.  PBR’s insurance will contain an endorsement adding Sponsor and its affiliates, subsidiaries, officers, directors, employees and agents as Additional Insureds in all policies except Workers Compensation.

 

The insurance coverage required shall be as follows:

 

(i)                Workers Compensation: Statutory limits as required by state law for all of its employees, including Employer’s Liability with limits of not less than $500,000/$500,000/$500,000.

 

(ii)              Commercial General Liability Insurance: Coverage to be on an occurrence basis with limits of not less than $1,000,000/$1,000,000 Bodily Injury, Personal Injury and Property Damage including: Contractual Liability insuring the obligations assumed by PBR in this Agreement, Products/Completed Operations, Independent Contractors Protective Liability, and Broad Form Property Damage including Completed Operations.

 

(iii)            Excess Liability Insurance: Coverage with limits of not less than $3,000,000, excess of all of the above insurance.

 

All such required insurance shall be in a form reasonably acceptable to Sponsor and shall require the insurer to provide at least 30 days prior written notice of any major reduction, change, or cancellation in coverage.  PBR shall provide Sponsor with evidence of coverage upon reasonable request following execution of this Agreement. Failure to provide such certificate within a reasonable time or to maintain the insurance coverage specified herein will be deemed a material breach of this Agreement. In the event of any lapse in insurance coverage required hereby, Sponsor will have the right (but not the obligation, and not as an election of remedies) to obtain replacement insurance and to deduct the cost of the same from any amounts then owing by Sponsor hereunder. 

6.2     Sponsor Insurance. On an occurrence basis for the complete Events including set up and tear down, and throughout the Term, Sponsor will provide, at its own expense, the following types and amounts of insurance.  The insurance required shall include a “Separation of Insureds” clause, and the insurer will agree to waive all rights of subrogation against PBR, its officers, directors, employees, representatives, agents, volunteers and assigns for claims or losses arising from Sponsor’s actions, performance or obligations under this Agreement.  Sponsor’s insurance will contain an endorsement adding PBR and its affiliates, subsidiaries, officers, directors, employees and agents as Additional Insureds in all policies except Workers Compensation.

 

The insurance coverage required shall be as follows:

 

(i)                Workers Compensation: Statutory limits as required by state law for all of its employees, including Employer’s Liability with limits of not less than $500,000/$500,000/$500,000.

 

(ii)              Commercial General Liability Insurance: Coverage to be on an occurrence basis with limits of not less than $1,000,000/$1,000,000 Bodily Injury, Personal Injury and Property Damage including: Contractual Liability insuring the obligations assumed by Sponsor in this Agreement, Products/Completed Operations, Independent Contractors Protective Liability, and Broad Form Property Damage including Completed Operations.

 

(iii)            Excess Liability Insurance: Coverage with limits of not less than $3,000,000, excess of all of the above insurance.

 

All such required insurance shall be in a form reasonably acceptable to PBR and shall require the insurer to provide at least 30 days prior written notice of any major reduction, change, or cancellation in coverage.  Sponsor shall provide PBR with evidence of coverage upon reasonable request following execution of this Agreement. Failure to provide such certificate within a reasonable time or to maintain the insurance coverage specified herein will be deemed a material breach of this Agreement. In the event of any lapse in insurance coverage required hereby, PBR will have the right (but not the obligation, and not as an election of remedies) to obtain replacement insurance and to deduct the cost of the same from any amounts then owing by PBR hereunder. 

 

VII.    Representations and Warranties.

 

7.1     PBR Warranties.      PBR represents, warrants and covenants to Sponsor as follows:

 

(a)     It has the full right and legal authority to enter into and fully perform this Agreement in accordance with its terms.

 

(b)      This Agreement, when executed and delivered by PBR, will be its legal, valid and binding obligation enforceable against PBR in accordance with its terms, except to the extent that enforcement thereof may be limited by bankruptcy, insolvency or other similar laws affecting creditors’ rights generally.

 

(c)      The execution and delivery of this Agreement has been duly authorized by PBR, and such execution and delivery, and the performance by PBR of its obligations hereunder, do not and will not violate or cause a breach of any other agreements or obligations to which it is a party or by which it is bound, and no approval or other action by any governmental authority or agency is required in connection herewith.

 

(d)     This Agreement is entered into solely for the purchase of sponsorship and advertising rights as described herein and for no other purpose.

 

(e)     Each of the foregoing representations, warranties, and covenants shall be true at all times during the Term. PBR acknowledges that each of such representations, warranties and covenants are deemed to be material and have been relied upon by Sponsor, notwithstanding any investigation made by Sponsor.

 

7.2     Sponsor Warranties.          Sponsor represents, warrants and covenants to PBR as follows:

 

(a)     It has the full right and legal authority to enter into and fully perform this Agreement in accordance with its terms.

 

(b)     This Agreement, when executed and delivered by Sponsor, will be its legal, valid and binding obligation enforceable against Sponsor in accordance with its terms, except to the extent that enforcement thereof may be limited by bankruptcy, insolvency or other similar laws affecting creditors’ rights generally.

 

(c)      The execution and delivery of this Agreement has been duly authorized by Sponsor, and such execution and delivery and the performance by Sponsor of its obligations hereunder, do not and will not violate or cause a breach of any other agreements or obligations to which it is a party or by which it is bound, and no approval or other action by any governmental authority or agency is required in connection herewith.

 

(d)     This Agreement is entered into solely for the purchase of sponsorship and advertising rights as described herein and for no other purposes.

 

(e)     Each of the foregoing representations, warranties, and covenants shall be true at all times during the Term. Sponsor acknowledges that each of such representations, warranties and covenants are deemed to be material and have been relied upon by PBR, notwithstanding any investigation made by PBR.

 

VIII.     Default and Remedies

 

8.1     Default. A Party will be in default under this Agreement if it fails to perform any material obligation in a timely manner. If either Party is in default under this Agreement, the non-defaulting Party will deliver written notice specifying the default to the defaulting Party. The defaulting Party will have 30 days after receipt of such notice to cure the default. If a defaulting Party fails to cure a default within 30 days after receipt of a notice of default, the non-defaulting Party will have all rights and remedies available at law or in equity, including the right to terminate this Agreement. Termination of this Agreement will be accomplished by delivery of written notice of termination to the defaulting Party in accordance with Section 9.4.

 

8.3     Insolvency. If at any time during the Term of this Agreement, either Party is unable to pay its debts when due, or becomes insolvent, or there is filed by or against it in any court a petition for bankruptcy, insolvency, reorganization, or the appointment of a receiver or trustee for all or a portion of its property; or if either Party makes an assignment for the benefit of creditors, this Agreement may be canceled and terminated at the option of the non-acting Party upon written notice to the acting Party. Such cancellation will be effective immediately if the act giving rise to the cancellation is voluntary. Otherwise such cancellation will be effective upon adjudication of bankruptcy or insolvency or upon a court of competent jurisdiction taking and retaining jurisdiction over the acting Party and/or its assets for a period of 50 days or more.

 

8.4     Costs. In any action to enforce this Agreement, or to collect damages on account of any default under this Agreement, the prevailing Party shall also be entitled to collect all of its costs in such action, including costs of investigation, settlement, reasonable attorneys’ fees and all additional costs of collecting any judgment rendered in such action.

 

IX.      Miscellaneous

 

9.1     No Assignment.  Neither Party will assign this Agreement to any person, corporation or other entity without the prior written consent of the other Party.  This Agreement and all of the terms and provisions hereof are binding upon and will inure to the benefit of the Parties hereto and their respective successors and permitted assigns.

 

9.2      Force Majeure.  If total or partial performance of this Agreement is delayed or rendered impossible for any Party by virtue of any reason whatsoever beyond its reasonable control (including, without limitation, war, invasion, act of foreign enemy, hostilities (whether war be declared or not), civil war or strife, rebellion, strikes, lockouts or other industrial disputes or actions, fire, flood, epidemic, earthquake, explosion, decision of any court or other judicial body of competent jurisdiction, unavailability of materials, transportation, power or other commodity, satellite failure or non-availability, failure or non-availability of uplink and downlink satellite signals or terrestrial facilities, acts of God, acts of governments or other prevailing authorities, or defaults of third parties), then such non-performance will, to the extent and for the time prevented, be deemed not to constitute a breach of this Agreement.

 

9.3      Relationship of Parties. The Parties will be and act as independent contractors, and under no circumstances will this Agreement be construed as one of agency, partnership, joint venture, franchise or employment between the Parties. The Parties will each be solely responsible for the conduct of their respective employees, contractors and agents in connection with the performance of their obligations under this Agreement. Neither PBR nor Sponsor shall represent to any third party that it is the employee or agent of the other nor shall the Parties be empowered or authorized to bind each other or to hold themselves out to third parties contrary to the terms of this provision. 

 

It is further agreed and understood that neither Party nor any of their respective officers, directors, employees, contractors, representatives or agents will seek, receive, obtain or in any way be entitled to any benefits or insurances provided by the other Party to its employees, (including, but not limited to, medical, workers compensation, unemployment, or other insurance coverage or benefits). Each Party shall be solely responsible for obtaining, maintaining and complying with any such benefits and/or insurances as may be legally required or desired. Each Party hereby waives, releases, indemnifies and holds harmless the other, its parents, subsidiaries and affiliates, and their respective officers, directors, employees, agents, contractors, representatives and insurers, from and against any claim, suit, action, cost, damage, loss, penalty or liability arising out of or relating to any failure on behalf of the other Party, or any of its officers, directors, employees, contractors or agents, to comply with the requirements of this Section 9.3.

 

9.4      Notices. All notices or other deliveries required or permitted under this Agreement will be in writing and may be sent by United States mail, commercial courier service (which requires a signed receipt showing delivery) fax or personal delivery, and will be effective upon receipt by the Party for whom intended. Notices (and payments to PBR) will be delivered as follows:

 

If to Sponsor, to:

 

Penny Perfect, CEO 

ALPHATRADE.COM, 

1111 West Georgia Street

Suite 1820

Vancouver, BC Canada V6E 4M3

Tel. (604)-681-7503 

Fax (604)- 681-7710 

 

If to PBR, to:

                  

Randy W. Bernard, CEO

PROFESSIONAL BULL RIDERS, INC. 

6 South Tejon Street, Suite 700

Colorado Springs, CO 80903

Tel. (719) 471-3008

Fax (719) 955-3724

 

Either Party may, by notice properly delivered as provided above, change the address to which future notices and deliveries to that Party will be made.

 

9.5      Counterparts. This Agreement may be executed in any number or counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

 

9.6      Effect of Agreement.  All negotiations relative to the matters contemplated by this Agreement are merged herein and there are no other understandings or agreements relating to the matters set forth in this Agreement, except those expressly stated on this Agreement. This instrument sets forth the entire agreement between the Parties. No provision of this Agreement will be altered, amended, revoked or waived except by an instrument in writing signed by the Parties.

 

9.7      Severability. If any clause or provision of this Agreement is illegal, invalid or unenforceable under applicable present or future laws, then it is the intention of the Parties that the remainder of this Agreement shall not be affected, and that in lieu of any such clause or provision, there be added as a part hereof a substitute clause or provision as similar in terms and effect to such illegal, invalid or unenforceable clause or provision as may be possible.

 

9.8      Time. Time is of the essence of this Agreement.

 

9.9     Damages Limitation.  In no event shall PBR or Sponsor be liable for any indirect, special, punitive or consequential damages (including, but not limited to, loss of anticipated profits, interruption of business, or procurement of substitute goods or services) in connection with or arising out of this Agreement, whether arising out of contract, tort, or any other theory of liability.

 

9.10   Choice of Law.        This Agreement will be governed by and will be construed and enforced in accordance with the laws of the State of New York applicable to agreements entered into and performed within such State, without reference to the conflicts-of-law of such State. 

 

9.11   Venue.         The Parties agree that all suits, actions, claims and causes of action relating to the construction, validity, performance and enforcement of this Agreement shall be commenced in the State of New York

 

IN WITNESS WHEREOF, the Parties have executed this Agreement to be effective as of the Effective Date.

 

                                                          SPONSOR:

                                                          ALPHATRADE.COM, 

 

                                                          By:                                                               

                                                                   Penny Perfect

                                                                   Chief Executive Officer 

 

 

 

                                                          PBR:

                                                          PROFESSIONAL BULL RIDERS, INC.

 

 

                                                          By:                                                               

                                                                   Randy Bernard

                                                                   Chief Executive Officer

 

 

 

 

 

THROUGHOUT THIS AGREEMENT, WHERE INFORMATION HAS BEEN REPLACED BY AN ASTERISK (*), THAT INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
 

SPONSORSHIP AGREEMENT

 

EXHIBIT A

 

Exhibit A to Standard Terms of the SPONSORSHIP AGREEMENT between PROFESSIONAL BULL RIDERS, INC. and ALPHATRADE.COM.

 

covering SPONSORSHIP ELEMENTS

for 2007.

 

This agreement details the specific sponsorship elements to be delivered under the Sponsorship Agreement. These elements are subject to the Standard Terms of Sponsorship which are incorporated and deemed included herein. If there are any inconsistencies with respect to the Standard Terms and these elements, these elements will govern.

 

2007 SPONSORSHIP ELEMENTS

 

In consideration of AlphaTrade.com’s sponsorship support of the PBR, throughout the Term and for each Contract Year, PBR will deliver the following sponsorship elements:

 

1.    TERM

Beginning on full execution of the Agreement (“Effective Date”) and terminating after the last performance of the 2007 PBR World Finals Events, unless extended to include up to three (3) additional Contract Years (at a mutually agreeable sponsorship fee for each additional year) and/or unless sooner terminated in accordance with the provisions of the Agreement (the “Term”) (excluding any renewals or extensions thereof).  

 

 

2.   OFFICIAL PBR SPONSORSHIP ELEMENTS

 

Official Status:  The “Official Financial Information Sponsor” of the Professional Bull Riders” or the “Official Financial information Company of the PBR (PBR shall be free to designate another company as the exclusive Stock Brokerage company of the PBR and such designation will not be considered to conflict with Financial Services Company).”  

 

a)       Trademark Usage:  PBR trademark use in all corporate advertising, marketing and promotional initiatives pursuant to the guidelines outlined in the Standard Terms of this Agreement.

 

b)       Official PBR Website General Elements: Logo placement in the sponsor section of PBR’s official website, including a hot link to the AlphaTrade.com website.

 

c)       Logo Inclusion in Media Guide and Collateral Material:  Sponsor’s corporate logo will be included in all PBR produced media guides and other marketing and corporate collateral materials produced by PBR after the effective date, regarding the Events for each Contract Year of this Agreement.

 

d)       Exclusive rights to text messaging promotions in the category with the PBR for the duration of this agreement including the option year: Sponsor will design and create ongoing SMS text messaging promotions for each event and for participation from TV viewers.  

 

A meeting will need to take place with Amp’d and Alphatrade.com in the very near future to decide if AlphaTrade.com and Amp’d can co-exist as it relates to official status and text messaging as described in section 1(d).

 

PBR and AlphaTrade.com will agree to agree that the text messaging sponsorship elements and contractual language will be spelled out in a separate addendum to this contact at both parties earliest convenience. 

 

3.   IN-ARENA ELEMENTS

 

a)       ARENA SIGNAGE 

 

                                      I.      TV Walk-Off Signage:  The AlphaTrade.com logo will be included in multiple locations on pre-produced signage located in prominent out-gate areas where television coverage occurs following select rides.  Sponsor’s logos in multiple locations will be placed in a step & repeat manner with other Sponsor logos and PBR brand placements.

 

                                     II.      Arena Fence: Display two (2) AlphaTrade.com branded arena banners, each measuring a minimum of three feet (3') by eight feet (8') and positioned on the inside of the arena fence, one on either side of the arena, at each competition performance at each BFTS Event and World Finals during the Term.

 

                                    III.      Chute Signage:  Sponsor will receive one (1) inside chute sticker measuring approximately 3” x 10” on the inside gate of each chute used in competition at each competition performance at each BFTS Event and World Finals during the term.

 

                                  IV.      Center Camera Well Signage (Shark Cage):  Sponsor will receive Two (2) signage positions on the Center Camera Well (Shark Cage) when utilized at BFTS performances.  Signage design and positions will be mutually agreed by the parties, with one signage placements on one (1) side of the centerline of the camera well facing the chutes and one (1) signage placement on either side of the centerline on the back side of the camera well.

 

Sponsor shall provide PBR with all approved logos and brand communication guidelines to be included in the signage for banners and all signage shall be produced by PBR and the reasonable costs of such shall be reimbursed by AlphaTrade.com.

 

4.   LIVE EVENT EXPOSURE

 

Sponsor shall receive the following live event exposure elements at each competition performance of the Events during the Term.

 

                                       I.      One (1) Jumbotron logo placements and verbal taglines as a section sponsor.

 

                                     II.      One (1) logo placement on the Daysheet as a section sponsor. 

 

                                    III.      Two (2) Jumbotron logo placements with verbal tagline airing in PBR’s pre & post show sponsor recognition.  

 

                                  IV.      Two (2) 30-second (00:00:30) commercial spots on the in-arena video replay board (where available) during the PBR’s pre and post show video loops. The commercial spots will be provided by Sponsor at Sponsors sole cost and expense.

 

5.      CONCOURSE DISPLAY. 

 

PBR shall provide one (1) promotional booth space at each BFTS Event (other than BFTS Events at event venues where booths are not available or are available only at a charge to PBR), located in the arena concourse or exhibition area and measuring no less than ten feet by ten feet (10' x 10"), for Sponsor’s distribution of free Promotional Products and Promotional Materials pre-approved by PBR. Sponsor may not sell or take purchase orders for any merchandise of any kind from the promotional booth space without first obtaining written approval from PBR. Sponsor will be responsible for all costs and expenses associated with design, construction, setup/take down and staffing of the booth at each BFTS Event.  PBR will provide transportation for one booth, provided such booth is contained in a PBR approved road case.

 

6.         IN ARENA PROMOTION - TEXT MESSAGING 

 

At a minimum of twenty-six (26) BFTS Events each Contract Year, (provided however, if the 2007 PBR Season has more than 26 events, PBR will include this promotion at each BFTS Event up to 28 Events, and if there are more than 28 BFTS Events, PBR intends and will attempt to include the promotion in all BFTS Events), PBR will, during intermission of one competition performance, provide an intermission promotion around Sponsor’s corporate objectives. The precise nature and content of the promotion shall be mutually developed and agreed between PBR and Sponsor.

 

PBR and AlphaTrade.com will agree to agree that the text messaging sponsorship elements and contractual language will be spelled out in a separate addendum to this contact at both parties earliest convenience. 

 

7.         BFTS EVENT ENTITLEMENT (Option for 2007 - $*)

 

Sponsor will be the title sponsor of One (1) BFTS Event at a mutually agreed upon BFTS Event in each Contract Year during the Term. Such event shall be mutually agreed upon by the parties subject to PBR’s available event entitlements.  Sponsor shall have the right to advertise and promote its AlphaTrade.com brand as the title sponsor of the selected Event. All public identification of and reference to the selected Event by AlphaTrade.com and PBR, as well as their respective employees, agents and representatives, will be made in the following manner: "The AlphaTrade.com Invitational" or otherwise as may be mutually agreed upon by the Parties. The Parties agree to create a mutually acceptable event logo incorporating both the AlphaTrade.com name and trademarks (or distinctive elements thereof) and the PBR name and trademarks (or distinctive elements thereof). 

 

At or in connection with the selected title sponsorship Event, each Contract Year PBR will: 

	Publicly reference the title of the Event as "The AlphaTrade.com Invitational" (or as titled by agreement of the Parties) and, where applicable, include the event logo, in all Event promotional materials and communications and in all arena public address announcements;

	Include the selected Event title (the "The AlphaTrade.com Invitational") and, where applicable, the Event logo, in all Event-related media (TV, print, radio, posters, flyers, press releases, etc) placed by or for PBR in national, local and surrounding Event markets;

	Include the selected Event title (the "The AlphaTrade.com Invitational") and the Event logo in promotion of the selected Event on the official PBR website (www.pbrnow.com);

	In addition to the sponsorship signage benefits to be provided pursuant to Section 2 above, PBR shall provide: 

                                                               i.      One (1) Event logo sign, positioned in the center of the overhead truss above the bucking chutes;

                                                             ii.      Two (2) AlphaTrade.com-branded banners, each positioned on the overhead truss above the bucking chutes, one on either side of the Event logo sign; and One (1) Event logo sign, positioned on the bridge over the center outgate, if available.

                                                            iii.      Twelve (12) additional VIP tickets, each with hospitality privileges, to each competition performance at the selected title sponsorship Event;

                                                            iv.      Up to two hundred (200) ticket vouchers to AlphaTrade.com to be redeemed for one mutually agreed upon performance at the selected title sponsorship Event. Vouchers will not be provided or redeemed at one-day Events. Vouchers may be redeemed for the lowest priced ticket. PBR will guarantee fulfillment of all AlphaTrade.com vouchers redeemed before a redemption deadline of four hours prior to show time. PBR will deliver to AlphaTrade.com, or to a place designated by Sponsor, the vouchers for the selected title sponsorship Event at least four (4) weeks prior to such Event. All expenses incurred in implementing the voucher program, including but not limited to designing and printing the vouchers and transportation, delivery and distribution of the vouchers, shall be the sole responsibility of AlphaTrade.com.

 

8.         WORLD FINALS & FAN ZONE ELEMENTS

 

 

a)       Fan Zones:  

 

Sponsor shall have the right at no additional Sponsorship Fee to participate in PBR’s official “Fan Zone” promotions held at selected BFTS Events.    The precise nature, extent and other details of Sponsor’s participation will be mutually agreed between Sponsor and PBR from time to time.  Display space at the PBR Fan Zones shall be provided to Sponsor free of charge, however, Sponsor shall be responsible for all utilities, telephone, waste disposal, staffing and other costs associated with the set-up, operation, tear-down and transportation of any promotion conducted by Sponsor; 

 

b)       World Finals Fan Zone:  

 

Sponsor shall have the right at no additional Sponsorship Fee to participate in PBR’s official “Fan Zone” in connection with the World Finals Fan Zone. Sponsor will receive one (1) display space (size and configuration) will be mutually agreed upon by the parties, subject to venues space restrictions and other logistical considerations.  The precise nature, extent and other details of Sponsor’s participation will be mutually agreed between Sponsor and PBR.  Display space at the World Finals Fan Zone shall be provided to Sponsor free of charge, however, Sponsor shall be responsible for all utilities, telephone, waste disposal, staffing and other costs associated with the set-up, operation, tear-down and transportation of any promotion conducted by Sponsor; 

 

c)       Thomas & Mack Fan Zone:  

 

Sponsor shall have the right at no additional Sponsorship Fee to one (1) display space at Thomas & Mack during the second weekend of World Finals.  The precise nature, extent and other details of Sponsor’s participation will be mutually agreed between Sponsor and PBR. Display space at the Thomas & Mack Fan Zones shall be provided to Sponsor free of charge, however, Sponsor shall be responsible for all utilities, telephone, waste disposal, staffing and other costs associated with the set-up, operation, tear-down and transportation of any promotion conducted by Sponsor. 

 

9.    NETWORK TELEVISION ADVERTISING

 

a)       Network Television Commercial Units:  

 

Sponsor shall receive from PBR, through PBR’s affiliate, PBR-TV, Inc., certain network television advertising time during the Term for broadcast on standard television.  In particular, Sponsor shall receive two (2) thirty second (00:00:30) standard network television advertising commercial “spots” in the premier national broadcast of each of eight (8) Events on PBR’s then current standard broadcast partner network or networks, for a total of sixteen (16) commercial advertising spots each Contract Year.  

 

If in any Contract Year, PBR’s then current standard broadcast partners broadcast a minimum of seven (7) Events but fewer than nine (9) Events, PBR and sponsor shall mutually agree on the scheduling of the commercial advertising spots across the number of Events actually broadcast by PBR’s then current standard broadcast partners.

 

If, in any one Contract Year, PBR’s then current standard broadcast partner televises more than nine (9) premier national broadcasts of PBR Events, Sponsor shall have the option, if inventory is available to purchase additional standard network television advertising commercial spots to be broadcast in each such additional show, exercisable by providing written notice to PBR.  If inventory is available, Sponsor may purchase such additional commercial spots at a per spot cost of thirty thousand dollars ($30,000) for each additional thirty second (00:00:30) standard network television advertising spot actually telecast on FOX and twenty five thousand dollars ($25,000)  for each additional thirty second (00:00:30) standard network television advertising spot actually telecast on NBC.  In the event Sponsor, in keeping with the foregoing, promptly opts to purchase additional standard network advertising spots, PBR shall, promptly following its receipt of the applicable standard network telecast certificate for each show in which the additional advertising spots are telecast, deliver to Sponsor a written invoice (including copies of the standard network telecast certificate) reflecting the additional advertising spot consideration due, Sponsor agrees to pay such additional advertising spot consideration within fifteen (15) days from its receipt of such written invoice.  

 

10.    PRINT ADVERTISING

 

a)       PRINT ADVERTISING (Alphatrade.com may purchase additional ad space from Grandview Media at their published rates for 2007).

vi.      Sponsor shall receive one (1) full-page, full color advertisement in one (1) edition of PBR’s official 8-Seconds Event Program OR Sponsor shall receive one (1) full-page, full color advertisement in one (1) edition of Pro Bull Rider magazine’s for each Contract Year. 

vii.    Sponsor shall receive one (1) full-page, full color advertisement in the World Finals programs for each Contract Year. 

viii.  Sponsor will receive a minimum of one (1) sponsor spotlight in Pro Bull Rider magazine.

ix.      Sponsor shall be included in a minimum of one (1) editorial feature in PBR’s Pro Bull Rider Magazine, PBR’s Official 8 Seconds program OR PBR’s World Finals Program.  

 

The foregoing advertisement copy to be provided shall be supplied by Sponsor, at its sole cost and expense, and shall, prior to printing, be submitted to and approved by PBR.  Any additional program or other advertisements that Sponsor may desire to have included in PBR publications shall be purchased by Sponsor separately, at Sponsor’s sole expense.

 

 

11.   WEBSITE EXPOSURE

 

a)       Sponsor will receive prominent logo placement on the home page of PBR’s official web site, www.pbrnow.com  during the term.  The foregoing logo placement will be approximately one hundred (100) pixels high by one hundred sixty (160) pixels wide, and such logo may be displayed on an alternating or rotating basis with other sponsors;

 

b)       PBR and Sponsor will work together, in good faith, to develop and implement a promotion that incorporates direct consumer contact and development of a consumer database that provides research information.  The precise nature, content and other details of the foregoing promotion and database will be mutually agreed between Sponsor and PBR;

 

c)       If applicable, Sponsor will receive announcements supporting the Web Promotion during the national broadcast(s) of BFTS Event(s) on the NBC and FOX Networks during each Contract Year.

 

Sponsor agrees that it will be solely responsible for any costs and expenses associated with the Web Promotion and that any such costs and/or expenses will be considered separate from, and in addition to, the “Sponsorship Fees” described in Section 12 below.  The precise nature, content and other details of the Web Promotion including, but not limited to, the possible elements described above will be mutually agreed between Sponsor and PBR from time to time.

 

11.               TICKETS & HOSPITALITY PASSES

 

a)       TICKETS & HOSPITALITY PASSES 

 

a.       Tickets & Pre-Party Passes:  Sponsor will receive twenty-four (24) VIP tickets and twenty-four (24) VIP Pre-party passes for six (6) select performances and twelve (12) VIP tickets and twelve (12) VIP Pre-party passes for all remaining performances and  the PBR World Finals;

 

b.       Pre- & Post-Event Parties:  Sponsor shall be allowed to participate in PBR’s official pre and post Event parties before and after each of the Events in a manner to be mutually determined and agreed.

 

c.       Purchase of Additional Tickets & Pre-Party Passes:  Sponsor shall be allowed the opportunity to purchase additional Event tickets, World Finals tickets and VIP pre-party passes at PBR’s then-current discounted sponsor rate (current discount is 20%);  

 

13.     SPONSOR’S CO-MARKETING INITIATIVES

 

            a)   Sponsor will create and host a series of applications designed specifically for the PBR – ie. An application to monitor the rankings of the animal athletes and the professional bull riders, other applications as requested and agreed to by both parties.  

 

            b)    Sponsor will be solely responsible for the cost of creating the product and will host it on their websites for the duration of this agreement. 

 

            c)    Sponsor will pay PBR twenty-five percent (25%) of the Sponsor’s net proceeds for  all text messaging promotions done in conjunction with the PBR and the Sponsor for the term of this agreement. 

    

PBR and AlphaTrade.com will agree to agree that the text messaging sponsorship elements and contractual language will be spelled out in a separate addendum to this contact at both parties earliest convenience. 

 

14.  SPONSORSHIP FEES & TEXT MESSAGING ADVANCE INVESTMENT SUMMARY

 

In return for the sponsorship rights and considerations to be provided to Sponsor pursuant to this Agreement, Sponsor shall pay PBR the following amounts (“Sponsorship Fees”):

 

Total 2007 Sponsorship Fees totaling $ * (US Dollars), payable as follows: 

 

 

·                     $  * on Execution of this Agreement; 

·                     $  * on January 15th, 2007 

·                     $  * on January 31st, 2007

·                     $  * on or before April 30th, 2007; 

·                     $  * on or before July 31st, 2007; 

·                     $  * on or before October 31st, 2007;

 

 

The foregoing Sponsorship Fees shall be paid to PBR in U.S. Dollars at the location set forth in Section 9.4 of the Standard Terms and Conditions. 

 

Text messaging net revenue due to PBR will be paid semi-annually June 30 and December 31 of each year.  The net revenue disbursement will be calculated on the basis of revenue actually received by the Sponsor for that period.  

 

The foregoing Sponsorship Fees are based on a minimum of twenty six (26) BFTS Events (one (1) or more performances each) plus World Finals (a minimum of 26 performances) during each Contract Year of BFTS Events and World Finals.  

 

15.  NOTICES – CONTACT INFORMATION

 

If to Sponsor, to:

 

Penny Perfect

CEO, AlphaTrade.com

1111 West Georgia Street

Suite #1820

Vancouver, BC Canada V6E 4M3

Tel:  604/681-7503

Fax 604/681-7710

 

With a copy to:

 

Darrin M. Ocasio

Sichenzia Ross Friedman Ference LLP

1065 Avenue of the Americas, 21st Floor

New York, NY 10018

 

If to PBR, to:

                  

Randy W. Bernard

CEO, Professional Bull Riders, Inc.

6 South Tejon Street, Suite 700

Colorado Springs, CO 80903

Tel. (719) 471-3008

Fax (719) 955-3724

 

 

IN WITNESS WHEREOF, the Parties have executed these Sponsorship Elements to be effective as of the Effective Date

 

 

ALPHATRADE.COM                                                      PROFESSIONAL BULL RIDERS, INC.

 

Per:_______________________________                        Per:____________________________

Penny Perfect, CEO                                                       Randy Bernard, CEO

                        

 

Date:______________________________                        Date:____________________________

 

I have the authority to bind Sponsor                                 I have the authority to bind PBR

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