MASTER JOINT VENTURE AGREEMENT
THIS MASTER JOINT VENTURE AGREEMENT ("Agreement"), made and entered into as
of this 15th day of August, 2000, by and between V&R RECORD COMPANY d/b/a
HOMEGROWNBUZZ DISTRIBUTION NETWORK of Lenexa, Kansas ("HGB") and Captains
Management Corporation, Inc., a Nevada corporation, with offices in
Collierville, Tennessee ("SMI"). The name of the resulting joint venture shall
be "the Home Grown Buzz Program") ("HGB Program") or other name that the two
parties deem mutually acceptable.
ARTICLE I GENERAL PROVISIONS
1.1 Business Purposes. The business of the Joint Venture shall be as follows:
HGB and KSMI shall jointly market and distribute: (a) revenue-sharing virtual
inventory systems designed and/or manufactured by KSMI or its affiliates, and/
or (b) revenue-sharing vertical market software applications designed and/or
manufactured by KSMI or its affiliates; the specific industries for the
aforementioned marketing and distribution shall be entertainment and related
enterprises in theatre environments. Specifically, HGB shall provide "foot
print" space in the HGB retain locations for KSMI for KSMI virtual inventory
systems, dynamic displays, internet-access terminals and other equipment
necessary for creation of the revenue-sharing systems and assist in the
development of revenue-sharing systems and technology. HGB shall also provide
marketing representation or introduction of KSMI products and services to
music and retail chains. KSMI and/or its affiliates in turn will provide all
equipment, virtual inventory features and functions, content management,
accountancy and maintenance of systems.
1.02 Term of Agreement. This Joint Venture shall commence on the date first
above written and shall continue in existence until terminated by consent of
the parties, liquidated, or dissolved by law or as hereinafter provided.
ARTICLE II GENERAL DEFINITIONS
The following comprise the general definitions of terms utilized in this
Agreement.
2.01 Affiliate. An affiliate of an entity is a person that, directly or
indirectly through one or more intermediaries, controls, is controlled by or
is under common control of such entity.
2.02 Capital Contribution(s). The capital contribution to the Joint Venture
actually made by the parties, including property, cash and any additional
capital contributions made.
2.03 Profits and Losses. Any income or loss of the Joint Venture for federal
income tax purposes determined by the Joint Venture's fiscal year, including,
without limitation, each item of Joint Venture income, gain, loss or deduction.
HBG and KSMI are jointly responsible for all operations and decisions of the
Joint Venture and the compensation for providing various services shall be
determined jointly by the parties. No reimbursements for expenses or other
form of overhead shall be permitted or charged to the Joint Venture without
the prior expressed and written agreement between HGB and KSMI.
HGB hereby warrants and represents that the Customer Account Statements, from
February, 1999 through June, 2000, rendered by Franklin Capital Corporation
for V&R Records, the retain distribution affiliate of HGB are true and
accurate, reflect the historical sales and accounts that are services by V&R
and HGB, and are indicative of the sales and accounts that will be serviced by
the HGB Program.
HGB, by itself, through V&R Records, Inc., shall acquire digital download and
"fixing" rights to audio and video recordings, and assign these rights to the
HGB Program. KSMI shall provide "digital rights" software (permitting
accountancy and royalty payments), digital downloading technology for internet
and kioske distribution, network operations for Internet hosting and kioske
distribution management, promotion and sponsorship for kioske distributions.
KSMI shall provide a credit facility to the HGB Program in an amount $100,000
no later than 10 days after the execution of the Agreement for working capital
to be used in the HGB Program.
ARTICLE IV ALLOCATIONS
4.1 Profits and Losses. Commencing on the date hereof and ending on the
terminations of the business of the Joint Venture, all profits, losses and
other allocations to the Joint Venture shall be allocated according to the
specific projects, equipment and vertical market software applications that
were delivered or implemented through the Joint Venture. For the purposes of
the audio and video digital download rights that were acquired by the HGB, or
its affiliate V&R Records, Inc., HGB and KSMI shall receive 50% of the net
proceeds derived after payment of expenses related to equipment, maintenance,
software and royalties; for the purposes of the audio digital download rights
that are acquired by KSMI, HGB shall receive 10% of the net proceeds derived
after payment of expenses related to equipment, maintenance, software, and
royalties. With respect to the presentation of any equipment or vertical
market software applications for installation in other market locations
suggested by HGB, HGB and KSMI shall execute a specific memorandum which sets
for the relevant shares of profits and losses per project or implementation of
equipment or vertical market application.
ARTICLE V RIGHTS AND DUTIES OF THE JOINT VENTURERS
5.1 Business of Joint Venture. HGB and KSMI shall each have joint authority
and discretion in the management and control of the business of the Joint
Venture for the purposes herein stated and shall make all decisions affecting
the business and serve to bind the Joint Venture. HGB and KSMI shall manage
and control the affairs of the Joint Venture to the best of their ability and
shall use its best efforts to carry out the business of the Joint Venture.
ARTICLE VI AGREEMENTS WITH THIRD PARTIES AND WITH
AFFILIATES OF THE JOINT VENTURERS
6.01 Validity of Transaction. Affiliates of the parties to this Agreement may
be engaged to perform services for the Joint Venture. The validity of any
transaction agreement or payment involving the Joint Venture and any
Affiliates of the parties to this Agreement otherwise permitted by the terms
of this Agreement shall not be affected by reason of the relationship between
them and such Affiliates or the approval of said transactions, agreement or
payment.
6.02 Other Business of the Parties to this Agreement. The parties to this
Agreement and their respected Affiliates may have interests in business other
than the Joint Venture business. The Joint Venture shall not have the right
to the income or proceeds derived from such other business interests and, even
if they are competitive with the Partnership business, such business interests
shall not be deemed wrongful or improper.
ARTICLE VII PAYMENT EXPENSES
All expenses of the Joint Venture shall be paid by the terms and conditions of
the agreements described in Article III above and shall be reimbursed by the
Joint Venture.
ARTICLE VIII INDEMNIFICATION OF THE JOINT VENTURERS
The parties to this Agreement shall have no liability to the other for any
loss suffered which arises out of any action or inaction if, in good faith,
it is determined that such course of conduct was in the best interest of the
Joint Venture and such course of conduct did not constitute negligence or
misconduct. The parties to this Agreement shall each be indemnified by the
other against losses, judgments, liabilities, expenses and amounts paid in
settlement of any claims sustained by it in connection with the Joint Venture.
ARTICLE IX DISSOLUTION
9.1 Events of the Joint Venturers. The Joint Venture shall be dissolved upon
the happening of the following events:
(a) The adjudication of bankruptcy, filing of a petition pursuant to a Chapter
of the Federal Bankruptcy Act, withdrawal, removal or insolvency of either
of the parties.
(b) The sale or other disposition, not including an exchange of all, or
substantially all, of the Joint Ventures.
(c) Mutual agreement of the parties.
ARTICLE X MISCELLANEOUS PROVISIONS
10.01 Books and Records. The Joint Venture shall keep adequate books and
records at its place of business, setting forth a true and accurate account of
all business transactions arising out of and in connection with the conduct of
the Joint Venture.
10.02 Validity. In the event that any provision of this Agreement shall be
held to be invalid, the same shall not affect in any respect whatsoever the
validity of the remainder of this Agreement.
10.03 Integrated Agreement. This Agreement constitutes the entire
understanding and agreement among the parties hereto with respect to the
subject matter hereof,and there are no agreements, understandings restrictions
or warranties among the parties other than those set forth herein provided for.
10.04 Headings. The headings, titles and subtitles used in this Agreement
are for ease or reference only and shall not control or affect the meaning or
construction of any provision thereof.
10.05 Notices. Except as may be otherwise specifically provided in this
Agreement, all notices required or permitted hereunder shall be in writing and
shall be deemed to be delivered when deposited in the United States mail,
postage prepaid, certified or registered mail, return receipt requested,
addressed to the parties at their respective addresses set forth in this
Agreement or at such other addresses as may be subsequently specified by
written notice.
10.06 Applicable Law and Venue. This Agreement shall be construed and
enforced under the laws of the State of Tennessee.
10.07 Other Instruments. The parties hereto covenant and agree that they will
execute such other and further instruments and documents as are or may become
reasonably necessary or convenient to effectuate and carry out the purposes of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
Signed, sealed and delivered in the presence of:
/s/_______________________________ /s/____________________________
HGB KSMI
