Exhibit 10.32
Joint Venture Agreement
This Joint Venture Agreement ("Agreement") is made this 31st day of
January, 1997 by and between Electric Media Co., Inc. ("EMC"), a Delaware
corporation having its principal place of business at 000 00xx Xxxxxx, XX, Xxxxx
000 Xxxxx, Xxxxxxxxxx, X.X. and Xxxxxxx "Xxxx" Xxxxxxx, residing at 0000 Xxx
Xxxxxxxxx Xxxxxx, X.X., #000, Xxxxxxxxxx, X.X., Xxxxxxx Worldwide Fusion
Technologies Corporation ("SWFT"), a Nevada corporation, having its principal
place of business at 0000 Xxx Xxx Xxxxx, Xxx Xxxxx, Xxxxxx; Texas Information
Development Commission, S.A. ("TIDC"), a Guatemalan S.A., having its principal
place of business at 0x Xxxxx 00-00 Xxxx 00, X.X.XX, Xxxxxxxxx Xxxx, Xxxxxxxxx,
C. A.. Xxxxxxx "Luke" Xxxxxxx, SWFT and TIDC shall be collectively referred to
as "Xxxxxxx," and Xxxxxxx and EMC shall be collectively referred to as "the
Parties."
WHEREAS, the Parties intend to jointly pursue the development and
exploitation of all technology developed by Xxxxxxx including but not limited to
advanced subcarrier modulation technology for the provision of video, voice,
and/or data communications over electric power lines and all other revenue
producing forms of distribution or exploitation of such technology (the
"Technology");
WHEREAS EMC desires to license the Technology from Xxxxxxx for all
commercial revenue producing purposes worldwide;
WHEREAS, EMC desires to provide certain financing and
management skills to the joint venture;
WHEREAS, Xxxxxxx desires to provide know-how, trade secrets, trademarks,
copyrights, patents, and other intellectual property related to the development
and exploitation of the Technology; and
WHEREAS, the Parties intend to conduct field tests of the Technology at the
El Rancho Hotel in Las Vegas, and to commercialize the Technology worldwide, and
in particular in Guatemala and with the World Bank.
Therefore, for the consideration of the mutual covenants and promises
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the
Parties agree as follows:
18. Purpose: EMC and Xxxxxxx hereby form a joint venture (the "Venture"),
the business of which shall be the development and the exploitation of the
Technology. The Technology shall include all related know-how, trade secrets,
trademarks, copyrights, patents, and other intellectual property, as recognized,
granted, or protected by the laws of any country, whether such Technology is
currently existing or developed during the course of the Venture.
2. Disclosure to EMC Experts: No later than February 15, 1997, Xxxxxxx
shall disclose the Technology to EMC's patent counsel and to experts as EMC may
designate. The qualifications of such experts shall be disclosed to Xxxxxxx and
such experts shall agree in advance to be bound by the terms of Section 11
regarding the nondisclosure of confidential information. If, as a result of such
disclosure, EMC believes that the Technology is not technically feasible or
commercially viable, EMC may terminate this Agreement by providing Xxxxxxx with
written notice within ten (10) days of the disclosure. Provided that there has
been no misrepresentation of any representation or warranty set forth herein by
Xxxxxxx, all funds advanced by EMC to Xxxxxxx as of the date of termination
shall be retained by Xxxxxxx as liquidated damages and EMC shall have no further
obligation to Xxxxxxx.
3. Scope: The Parties intend that the scope of the Venture
shall include the following activities:
(a) Field Test:
(i) A demonstration of the Technology shall be
conducted at the El Rancho Hotel, Las Vegas, Nevada, beginning no
later than March 15, 1997, pursuant to Attachment B (Field Test Agenda). Xxxxxxx
shall secure such equipment reasonably necessary for the conduct of the Field
Test, subject to a maximum expenditure of $1,500,000, the payment which shall be
in the form of a guarantee by LVEN, and shall ensure that such equipment shall
be returnable to the vendor for a full refund, less fees not to exceed ten
percent (10%), if the equipment does not work as expected by EMC. At all times
during such period of guarantee, LVEN shall maintain a minimum of One Million
Five Hundred Thousand Dollars ($1,500,000.00) in cash.
(ii) Xxxxxxx shall be solely responsible for obtaining all
necessary government approvals and licenses (including any licenses required by
the Federal Communications Commission and the state of Nevada), obtaining all
necessary rights-of-way, and satisfying all interconnection requirements. In
connection with such approvals and licenses, EMC shall provide Xxxxxxx with any
reasonable and necessary information, as requested in writing, so that Xxxxxxx
may accomplish the above.
(iii) Prior to the commencement of the Field Test and in any event
no later than February 15, 1997, Xxxxxxx shall supply the Venture with an
opinion of qualified legal counsel that all such government approvals, licenses,
and rights-of-way have been obtained and all interconnection requirements
satisfied. The purpose of the Field Test is to verify the technical feasibility
of the Technology in a non-laboratory, real-world setting. Success of the Field
Test will be determined at EMC's sole discretion, with consideration of
compliance with mutually agreeable engineering standards. If the Technology
fails to perform, EMC shall have the option of terminating this Agreement by
providing Xxxxxxx with written notice within 10 days of the conclusion of the
Field Test. Provided that there has been no misrepresentation of any
representation or warranty set forth herein by Xxxxxxx, all funds advanced by
EMC to Xxxxxxx as of the date of termination shall be retained by Xxxxxxx as
liquidated damages and EMC shall have no further funding obligation to Xxxxxxx.
If there has been a misrepresentation of any representation or warranty set
forth herein by Xxxxxxx, EMC shall be entitled to terminate the Venture, to
receive reimbursement of all amounts expended in connection with the project,
including but not limited to all funds advanced to Xxxxxxx, as of the date of
termination, and to pursue all other claims which it may have available to it.
(b) Guatemalan Deployment: If the Field Test is successful or the
Venture is otherwise not terminated by EMC, the Parties shall use their best
efforts to jointly cooperate in the deployment of the Technology in Guatemala,
except that Xxxxxxx shall be solely responsible for (i) obtaining all necessary
government approvals, licenses and rights-of-way (including but not limited to
receiving full use of dedicated parts of the frequency spectrum and exclusive
use of the Guatemalan power grid); (ii) satisfying all interconnection
requirements (including but not limited to a telephone interconnection agreement
with Comsat); and (iii) securing insurance or reinsurance covering the Venture
from
"all risks and losses" (including but not limited to work stoppage due to any
cause without exception or force majeure, and for reimbursement of expenses and
lost profits). Prior to the commencement of providing service in Guatemala,
Xxxxxxx shall supply the Venture with an opinion of qualified legal counsel that
all such government approvals, licenses, rights-of-way and insurance have been
obtained and all interconnection requirements satisfied. In addition, Xxxxxxx
shall modify the equipment and software as necessary to permit the Technology to
operate in Guatemala. During the existence of the Venture, Xxxxxxx shall not
deploy or exploit the Technology in Guatemala without EMC.
(c) World Bank Deployment: If the Field Test is successful or the
Venture is otherwise not terminated by EMC, the Parties shall use their best
efforts to jointly cooperate in the deployment of the Technology at the World
Bank in Washington, D.C., or other locations as may be specified by the World
Bank, except that Xxxxxxx shall be solely responsible for obtaining all
necessary government approvals and licenses, obtaining all necessary
rights-of-way, satisfying all interconnection requirements and securing
insurance or reinsurance covering the Venture from "all risks and losses,"
including but not limited to work stoppage due to any cause without exception or
force majeure, and for reimbursement of expenses and lost profits. Prior to the
commencement of providing service to the World Bank, Xxxxxxx shall supply the
Venture with an opinion of qualified legal counsel that all such government
approvals, licenses, rights-of-way and insurance have been obtained and all
interconnection requirements satisfied. In addition, Xxxxxxx shall modify the
equipment and software as necessary to permit the Technology to operate as
required by the World Bank. During the existence of the Venture, Xxxxxxx shall
not deploy or exploit the Technology with the World Bank without EMC.
(d) Other Deployment: The Venture shall have the exclusive right to
develop and exploit the Technology in all other markets. Prior to the
commencement of providing service in any other location, Xxxxxxx shall supply
the Venture with an opinion of qualified legal counsel that all government
approvals, licenses, rights-of-way and insurance have been obtained, and all
interconnection requirements satisfied. During the existence of the Venture,
Xxxxxxx shall not deploy or exploit the Technology anywhere in the world without
EMC. Further, prior to the commencement of any other commercial activity, EMC
shall solicit Xxxxxxx'x input.
4. Financing: EMC shall provide financing in accordance
with the terms set forth in Attachment A.
5. Compensation: Subject to the compensation due Xxxxxxx
pursuant to Attachment A hereto, after the Venture's expenses
(including but not limited to all business expenses, the cost of
manufacturing and deployment of equipment, taxes, and government
licensing fees), net profits shall be divided as follows:
(a) all capital contributions of EMC shall be repaid, at
an annual rate of interest of 6%; and
(b) after all capital contributions of EMC have been
repaid pursuant to Section 5(a) hereof, all further net profits
shall be divided as follows: 80% to EMC, 20% to Xxxxxxx.
6. Management of Venture: EMC shall provide the day-to-day management of
the Venture's business, which may be delegated or assigned to a professional
management company as EMC may deem fit. EMC shall use its best efforts to assist
Xxxxxxx in fulfilling its obligations of the Venture. EMC shall also have
control over the finances of the Venture, including but not limited to making
loan arrangements, and over strategic decisions affecting the Venture.
7. Licensing of Technology: The Technology shall hereby be
licensed by Xxxxxxx to the Venture on a royalty-free, exclusive,
worldwide basis. Upon termination of the Venture, EMC shall retain
a royalty-free, exclusive, worldwide license to exploit the
Technology.
8. Representations and Warranties:
(a) EMC: EMC represents and warrants that: 1) it is a corporation duly
organized, existing, and in good standing under the laws of Delaware; and 2) it
is authorized and empowered to perform each and all of its obligations as set
forth in this Agreement.
(b) Xxxxxxx: Xxxxxxx represents and warrants that: 1) all entities
which have any control or proprietary interest in the Technology are Parties to
this Agreement, and are duly organized, existing, and in good standing under all
applicable laws; 2) Xxxxxxx is authorized and empowered to perform each and all
of its obligations as set forth in this Agreement; 3) Xxxxxxx owns all right,
title and interest in and to the Technology for all purposes contemplated in
this Agreement, and such rights are not subject to any third party claims; 4)
the Technology as it currently exists does not and as it is developed will not
violate the intellectual property rights, including but not limited to patent,
copyright, trade secret and trademark rights, of any other person or entity; and
5) the Technology is not designed to and will not be designed to operate in
violation of any applicable law.
(c) Mutual Covenants: Each Party represents and warrants to the other
that: 1) it is not currently involved in, and has not been threatened with, any
litigation, government enforcement, or other action that would materially affect
its ability to perform its obligations under this Agreement; and 2) performance
of its obligations under this Agreement will not result in the violation of any
law or private agreement that would materially affect its ability to perform.
9. Indemnification: Each Party indemnifies the other and agrees to hold it
harmless from and against any claim, damage, loss, or liability (including
reasonable attorneys' fees) resulting from the breach of any of its obligations,
warranties, or representations under this Agreement.
10. Resolution of Disputes: The Parties agree to submit any
disputes arising under this Agreement to arbitration under the
rules of the American Arbitration Association in the State of
Nevada, City of Las Vegas.
11. Confidentiality: Xxxxxxx agrees to disclose the Technology to the
Venture, which the Venture shall maintain as a confidential and very valuable
business asset. Except as provided for in Section 2, the Technology shall not be
disclosed by either Party to third persons unless (i) the Parties agree that
such disclosure is necessary to effectuate the purposes of the Venture, (ii) the
information disclosed is already in the pubic domain, or (iii) such disclosure
is required by law. Any third persons to whom such disclosure is made shall be
required to execute an appropriate confidentiality agreement. The obligations of
confidentiality shall survive termination of this Agreement.
12. Term: The initial term of this Agreement shall be 25
years. The Agreement may be renewed for successive 25 year terms
at the election of EMC.
13. Termination: The Venture shall be dissolved upon the
first of the following to occur:
(a) the mutual agreement of the Parties;
(b) the Agreement is terminated pursuant to Section 2
hereof;
(c) the Agreement is terminated pursuant to Section 3(a)
hereof;
(d) the Agreement is terminated pursuant to Section 12
hereof; or
(e) a Party commits a material breach or default of its obligations
under this Agreement, such breach or default is not cured within 30 days of
written notice thereof by the other Party, and the other Party thereafter
provides written notice that the Venture will terminate in 30 days. Upon the
third such breach or default, the other Party may terminate the Agreement upon
30 days written notice, without providing for a cure period. If, at the time of
termination, there is any revenue from on-going business, such funds shall be
distributed according to the formula set forth herein and so shall survive such
termination.
14. Notice: All notices under this Agreement shall be deemed
received on the day sent if delivered by facsimile, by the next
business day if delivered by overnight courier, and by five days
following the date of mailing if delivered by U.S. first class
mail. All notices are to be sent to the following, as the Parties
may from time to time modify by written notice:
If to EMC:
Xxxxxx X. Xxxxxxx, Esq.
Fish & Xxxxxxxxxx, P.C.
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Phone: 000-000-0000
Fax : 000-000-0000
If to Xxxxxxx:
Xxxxxxx Xxxx Xxxxxxx
0000 Xxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X.
Phone: _________________
Fax : _________________
15. Further Agreements: The Parties acknowledge that this Agreement
constitutes the initial understanding between them. They are all committed to
working diligently, with their respective counsel, towards the preparation and
execution of such further formal understandings to which they shall agree. Until
such time as these further understandings are formalized and executed, this
Agreement and the terms and conditions hereof shall be binding and in full force
and effect.
16. Miscellaneous:
(a) Severability: If any provision of this Agreement is adjudged by a
court or other governmental body of competent jurisdiction unenforceable or
invalid, the remainder of this Agreement shall continue in full force and effect
to the greatest extent permitted by law.
(b) Governing Law: This Agreement shall be governed by
the laws of the State of Nevada, without regard to conflicts of
laws principles.
(c) No Waiver: Failure by a Party to demand performance
of any obligation of the other Party shall not be deemed a waiver
of such non-performance.
(d) Force Majeure: Failure of a Party to perform any of the obligations
required of it under this Agreement shall not constitute a breach or default of
this Agreement if such failure was caused by an event not within the control of
the Party, including any acts of God, fire, earthquake, strike or other labor
dispute, riot, war, or terrorist act.
(e) Amendment: This Agreement may be amended only by
a writing executed by both Parties.
(f) Entire Agreement: This Agreement constitutes the
entire understanding of the Parties and any and all prior
agreements, understandings, or representations are hereby
terminated.
(g) Counterparts: This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date written above.
ELECTRIC MEDIA COMPANY, INC. XXXXXXX "LUKE" XXXXXXX
By: ____________________ By: ____________________
Title: _________________ Title: _________________
XXXXXXX WORLDWIDE FUSION
TECHNOLOGIES CORPORATION
By: ____________________
Title: _________________
TEXAS INFORMATION
DEVELOPMENT COMMISSION,
S.A.
By: ____________________
Title: _________________
67840.w11
ATTACHMENT A
FINANCING AND COMPENSATION DUE STEWART
I. FINANCING FOR THE FIELD TEST
The Parties hereby acknowledge that EMC has provided or will provide the
Venture or Parties hereto with $760,000, either partly or fully in cash or as a
line of credit, in order to complete the Field Test of the Technology, as
follows:
(a) December 1, 1996-January 28, 1997:
Travel : $140,000 cash advance to Xxxxxxx
Private Air : $80,000
Equipment : $15,000
Legal : $25,000
(b) January 28, 1997 : $150,000 for the Operating Budget
(set forth below and incorporated herein). The cost items set
forth in the Operating Budget are acceptable to EMC and approved by
it.
(c) February 15, 1997 : Up to $150,000. Prior to the disbursal of any
portion of these funds, Xxxxxxx shall provide EMC with invoices which to EMC's
satisfaction adequately evidence the expenditure of amounts for approved
budgetary items, not to exceed $100,000. If the documentation supports
expenditures less than $100,000, Xxxxxxx may carry the balance to $150,000
forward to the next payment period.
(d) March 6, 1997 : Up to $100,000. Prior to the disbursal of any portion
of these funds, Xxxxxxx shall provide EMC with invoices which to EMC's
satisfaction adequately evidence the expenditure of amounts for approved
budgetary items, not to exceed $100,000. If the documentation supports
expenditures less than $100,000, Xxxxxxx may carry the balance to $100,000
forward to the next payment period.
(e) March 15, 1997 : Up to $150,000. Prior to the disbursal of any portion
of these funds, Xxxxxxx shall provide EMC with invoices which to EMC's
satisfaction adequately evidence the expenditure of amounts for approved
budgetary items, not to exceed $150,000.
II. FINANCING AND COMPENSATION DUE XXXXXXX AFTER SUCCESSFUL
COMPLETION OF THE FIELD TEST
Upon EMC's acknowledgement of the successful completion of the Field Test
under the terms of Section 3(a) above:
(a) EMC shall arrange for financing to purchase up to
$1,500,000 for equipment for the El Rancho Demonstration. All
equipment shall be financed on an actual cost basis without any
markup;
(b) Xxxxxxx shall receive from EMC 500,000 shares of restricted common
stock in Las Vegas Entertainment Network ("LVEN"); and
(c) Xxxxxxx shall receive $300,000 per month as an advance against
Xxxxxxx'x share of future Venture net profits, such advance to be payable on the
fifteenth day of each month and used for accountable developmental expenses as
invoiced in a form acceptable to EMC for or by third party vendors, beginning
with the first full month upon the successful completion of the Field Test. EMC
shall not be obligated to make any monthly payment until it has acknowledged
satisfactory completion of the Field Test. All advances to Xxxxxxx, together
with interest on such advances compounded at the rate of six percent (6%) per
annum, shall be recouped by EMC out of Xxxxxxx'x share of Venture net profits
under Section 5(b) hereof. The amount of net profits due Xxxxxxx shall be
deposited directly by the Venture to EMC's account, until all such advances,
plus accrued interest shall have been repaid. Once Xxxxxxx'x account is in
equilibrium (that is, advances equal earned net profits, plus interest), EMC
shall distribute to Xxxxxxx on a quarterly basis a draw based on its share of
net profits.
(d) In addition to the shares of EMC set forth in II (b), Xxxxxxx shall
receive 500,000 shares of restricted common stock in LVEN for each $10,000,000
of LVEN net revenue (after expenses and taxes) generated by LVEN's manufacture
and sale of equipment utilizing the Technology (the "Device") and by LVEN's
distributed share of equity of EMC's net profits as defined by generally
accepted principles of accounting consistently applied; provided, however, that
Xxxxxxx'x total of restricted common stock of LVEN generated by net revenues
shall not exceed Five Million Five Hundred Thousand (5,500,000) shares. All LVEN
shares issued to Xxxxxxx shall be subject to and reduced by any reverse split or
other reclassification of LVEN stock and shall be registered in any public
offering as agreed to by the parties and by the participating underwriters.
(e) In addition to the shares of LVEN, as a bonus, Xxxxxxx shall receive
$6.50 per installed device, which is operating and revenue producing to EMC.
(f) Xxxxxxx shall also be entitled to receive a bonus of one percent (1%)
of such revenue which EMC actually receives as a result of new commercial
revenue producing contracts provided by Xxxxxxx.
OPERATING BUDGET
Scientific/Engineer Group, includes
special housing costs, fees, local
transportation, etc. $90,000
Security, vehicles, project administration and
development for above $55,000
Logistics and support, including lobby and
geographic support and attendant administration $35,000
Consultant fees for above $20,000
G & A, temporary and permanent clerical and support staffing, project overnight,
purchasing, management, information system (MIS) and information services
$100,000
ATTACHMENT B
FIELD TEST AGENDA
The "El Rancho" Field Test Agenda shall include as its primary, but not
exclusive, purpose, the creation of a live, real-time test using the same
equipment and methods, which will be used in Guatemala to demonstrate the
capability of the El Rancho's and the surrounding ten hotels' power grids to
deliver by means of such power grids the following:
1. A minimum of twelve (12) distinct Devices, receiving and
retransmitting video signals on twelve (12) distinct video channels (video
signals to be supplied by EMC VHS tape);
2. All channels delivered by the local Las Vegas cable system on a
subdivided thirteenth (13th) channel; for purposes of this Agenda, the number of
cable channels is estimated to be fifty-two (52);
3. A telephony demonstration, whereby the Devices can place telephone
calls to each other and to any other telephone number worldwide.
The only connections required by the Devices shall be to any A/C outlet
within the El Rancho Hotel or surrounding ten hotels.
This Agenda constitutes an initial draft statement of the purposes of the
Field Test and may be modified or added to by EMC, with Xxxxxxx'x reasonable
acceptance, by sending written notice to Xxxxxxx at any time hereafter, but in
no event less than five (5) days prior to the start of the Xx Xxxxxx Xxxxx Xxxx.
00000.x00
