JOINT VENTURE AGREEMENT
JOINT VENTURE AGREEMENT made this day of July, 1995, by and
between AMERICAN BROADWAY, INC., a Texas corporation, with offices at 000 Xxxx
Xxx, #000, Xxxxxxx, Xxxxx 00000 ("ABI"), and XXXXXX & ASSOCIATES, Inc., a
Maryland corporation, with offices at 00 Xx0xxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxx
00000 ("Xxxxxx").
W I T N E S S E T H :
WHEREAS, ABI and Xxxxxx have been formed to engage in the business
of presenting Non-Equity live stage Broadway-type productions of plays and
musicals (collectively, "Productions"); and
WHEREAS, the parties are desirous of forming a joint venture for
the purpose of financing, producing, managing and presenting Productions; and
WHEREAS, the parties are desirous of confirming their agreement in
writing,
NOW, THEREFORE, in consideration of the premises, the parties
hereto agree as follows:
1. Formation. The parties hereby form a joint venture (the "Joint
Venture") for the purpose of engaging in the
business of financing, producing, managing and presenting Productions in any
venue. The office of the Joint Venture shall be located at the offices of Xxxxxx
and the Joint Venture shall be known and conduct business as "Networks".
2. Term.
(a) The Joint Venture shall commence on the date of this
Agreement and shall continue to exist from such date until the date that is
three (3) years from the first day of the first month following the first
performance of the Joint Venture's first Production (the "Term"), unless sooner
terminated or dissolved as hereinafter provided. The Term shall be automatically
extended from year to year for an additional period of one year if the Net
Profit Threshold, hereinafter defined, shall have been attained.
(b) With respect to the initial three (3) years of the
Term, the "Net Profit Threshold" shall be attained if either (i) ABI shall have
earned ABI's share of Net Profits and ABI Fees, hereinafter defined, in the
amount of $350,000 during the third year of the Term or (ii) ABI shall have
earned $750,000 in ABI's share of Net Profits and ABI Fees cumulatively during
the initial three (3) years of the Term. Thereafter, the Net Profit Threshold
shall be attained if during the two (2) years immediately preceding the end of
the then current Term ABI shall
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have earned $750,000 in ABI's share of Net Profits and ABI Fees, cumulatively.
(c) For purposes of this Agreement, "Net Profits" shall
mean the gross income of the Joint Venture from any source, less all expenses of
the Joint Venture, including but not limited to recoupment of production
expenses for each Production, all running expenses for each Production,
including fees paid to each party pursuant to paragraph 5 hereof, and payment of
all outstanding overhead costs for the Joint Venture. By way of example, annexed
hereto as Exhibit A is a statement of the projected overhead costs for the Joint
Venture for the first year of operation, which has been mutually approved.
Actual overhead costs, and production and operating budgets for each Production
shall be determined by both parties.
3. Capital.
(a) Capital for the Joint Venture shall be contributed
by each of the parties in equal proportions only as, if and when required and
necessary for the business of the Joint Venture. The respective interests of the
each of the parties in the Joint Venture is as follows:
Name Percentage
---- ----------
ABI 50%
Xxxxxx 50%
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(b) In addition to the overhead and other normal
operating expenses of the Joint Venture described herein, the parties each agree
to use their best efforts to contribute or raise one-half of the capital
requirements to open and present the Productions. Any advances paid by ABI on
account of any ABI-presented dates shall not be considered part of ABI's capital
contribution.
(c) In the event Xxxxxx is unable to finance any portion
of its capital obligation, ABI shall lend to Xxxxxx such portion of Xxxxxx'x
obligation as it is unable to fulfill. In consideration of such financing,
Xxxxxx shall pay to ABI interest on any loans, made by ABI to Xxxxxx at the per
annum rate of (i) the NationsBank posted prime rate of interest as stated from
time to time, plus (ii) four (4%) percent, calculated on an average daily
balance per month. Interest shall be paid on interest earned at the same rate at
any time the amount of the loan outstanding from Xxxxxx to ABI exceeds $500,000.
Such loans shall be repaid by Xxxxxx to ABI as funds become available to Xxxxxx,
out of first profits of each Production or earlier, all payments being applied
first to accrued interest, and ABI shall have a claim against Xxxxxx'x interest
in the Joint Venture, until such time as the loans have been paid in full. The
parties agree to use their best efforts, including taking into account any
advances received from venues at which the Productions will be presented and
cash flow generated by the Productions, to cause
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the need for out-of-pocket disbursements by them to be minimized; provided,
however, that nothing herein contained shall cause the Joint Venture not to pay
its expenses in a timely manner or not to be operated in an efficient,
responsible manner.
4. Profits and Losses. There shall be established on the books
of the Joint Venture a capital account for each of the parties. The capital
account for each of the parties shall be credited with the capital contributions
of the parties as set forth in Paragraph 3 and with the amount of profits
allocable to each of the parties and shall be charged with the amount of all
distributions made to the parties and the amount of all losses allocable to the
parties. Upon dissolution and liquidation of the Joint Venture, both parties
shall be obligated to repay to the Joint Venture any deficit in their capital
accounts to the extent necessary to pay any liabilities of the Joint Venture.
5. Fees and Services. Xxxxxx shall cause its President, Xxxxxxx
Xxxxxx, to furnish his services to the Joint Venture as may be necessary in
order to effectuate the purposes of this Agreement, and he shall notify ABI
whenever he is working on a project unrelated to the activities of the Joint
Venture. Upon the formation of the Joint Venture, ABI shall designate a
representative and shall cause such representative to provide such services to
the Joint Venture as ABI in its reasonable business judgment determines are
necessary in order to effectuate
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the purposes of the Joint Venture, and ABI shall have the right at any time to
designate a substitute of comparable experience and authority. In consideration
of these services, Xxxxxx shall receive a weekly fee for each of the first two
(2) Productions the Joint Venture produces during any year of the Term in the
amount of $5,000 (the "Xxxxxx Fee") and ABI shall receive a weekly fee of $2,000
(the "ABI Fee"). Such fees shall be paid only for the first fifty (50)
performance weeks, cumulatively, for the two subject Productions within that
year of the Term, beginning with the first week of performances for each
production (i.e., a yearly maximum payment to Xxxxxx of $250,000 and to ABI of
$100,000); and for any Production presented by the Joint Venture in excess of
two (2) per year, any additional fees shall be subject to the mutual agreement
of the parties but shall always remain in the same relative proportion to each
other as the fees set forth above. In the event any Production shall suffer an
accounting loss in any week (including, for these purposes, scheduled weekly
repayment installments of Joint Venture startup expenses prior to July 1, 1996
[during the first year only], Joint Venture overhead [for each July 1 - June 30
period, commencing July 1, 1996], and production costs for such Production),
$2,000 of each party's fees set forth above shall be deferred on a pro-rata
basis until such time, if ever, as there shall be money available from first
weekly profits of such
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Production to cause the payment of the deferred fees. While this deferral of
fees and recovery of deferred fees may be cross-collateralized over the entire
length of each Production, the proceeds of one Production shall not be used to
pay the fees deferred in another Production.
6. Management. The parties agree that they will consult with one
another with respect to all business, financial, creative, personnel and
artistic matters of every nature and description involving the affairs of the
Joint Venture and its Productions, and all decisions shall require the mutual
agreement of the parties, each of them having one vote on such matters. However,
Xxxxxx shall have the authority to make day-to-day business, creative and other
decisions of the type customarily delegated to the general manager without the
consultation of ABI. Xxxxxxx Xxxxxx is hereby designated by Xxxxxx as its
representative for purposes of exercising managerial discretion and upon the
formation of the Joint Venture, ABI shall designate its representative. Any
documents or instruments necessary to effectuate the decisions of the Joint
Venture may be executed on behalf of the Joint Venture by either of the parties
hereto, provided such decisions have been mutually agreed.
7. Books and Records. Proper accounting records of all business
of the Joint Venture shall be maintained by ABI and kept open to the inspection
and copying of either of the parties
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or their designee or legal representatives at all reasonable business times.
Should ABI elect to engage an outside certified public accounting firm for the
Joint Venture, Xxxxxx shall have the right to approve the choice of outside
firms, such approval not to be unreasonably withheld or delayed. Accounting for
the individual Productions shall be provided by Xxxxxx on a weekly basis. ABI
shall have the right to designate an outside certified public accounting firm
for each Production, subject to the approval of Xxxxxx, not to be unreasonably
withheld or delayed. The Joint Venture shall maintain its accounting records and
shall report for income tax purposes on the accrual basis of accounting with a
fiscal year ending June 30 or another mutually agreed upon date. ABI shall
provide Xxxxxx with monthly financial status reports on the Joint Venture, and
at the end of each fiscal year, a complete account of the affairs of the Joint
Venture shall be furnished by ABI to each of the parties, together with such
appropriate information as may be required by each party for the purpose of
preparing its income tax return for that year.
8. Bank Accounts. The Joint Venture shell maintain its accounts
in the name of the Joint Venture at NationsBank, where all income and monies of
the Joint Venture shall be deposited. Any check or series of checks for any one
transaction in excess of $20,000 disbursed by the Joint Venture shall contain
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the signature of one designee of each member of the Joint Venture.
9. Other Activities.
(a) Subject to the provisions of paragraph 5, each party shall
devote such efforts and such time as may be necessary or advisable for the
furtherance of the activities of the Joint Venture. Each party shall have the
right to engage in other business activities during the Term, including, without
limitation the production of other plays or shows alone or in conjunction with
other persons and any other activities which may be deemed competitive with the
activities of the Joint Venture.
(b) Notwithstanding the foregoing, the parties shall offer to
the Joint Venture exclusively any Productions in any venue; provided, however,
that should the Joint Venture use its best efforts to present a particular
Production under this Agreement and be unsuccessful, then either party may make
a minimal passive investment in such project if produced by a third party,
without the active involvement of the other party hereto, provided that such
investment shall not exceed twenty-five (25%) percent of the capitalization of
such project and the investing party shall first have notified the other party
hereto of its intention to make such investment. Neither party shall assist in
acquiring the non-Equity rights in any project for any person or entity other
than the Joint Venture or have any other involvement
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in a non-Equity production not produced by the Joint Venture except for such
minimal passive investment. Xxxxxx and Xxxxxxx Xxxxxx, individually, and ABI and
its affiliates further agree not to provide their services for any other person
or entity with regard to a non-Equity production.
(c) ABI and its affiliates shall have the right to present
non-Equity productions locally, whether produced by the Joint Venture or other
entities, as part of their ongoing business of presenting productions, and any
profits from such activities shall remain solely the property of ABI or its
affiliates, as the case may be. With regard to ABI's presentation of
Productions, ABI shall negotiate the presenting deal with the Joint Venture in
good faith. In the event a third party producer becomes involved in a
Production, the provisions of this Agreement shall continue to apply as between
ABI and Xxxxxx independent of any arrangement they may make with such third
party producer.
20. Termination.
(a) The Term and the business of the Joint Venture shall
terminate upon the occurrence of any of the following:
(i) upon written notice (the "Termination Notice")
from one member of the Joint Venture to the other within
thirty (30) days after the end of
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the then current Term if the Net Profit Threshold has not been
attained or, if a determination of net profits for the current
year has not yet been made, within thirty (30) days after such
date as a determination has been made by the accountants for
the Joint Venture that the Net Profit Threshold has not been
attained, which notice shall set forth a date (the
"Termination Date") that is not less than thirty (30) nor more
than sixty (60) days after the date of the Termination Notice;
(ii) the bankruptcy, dissolution or liquidation of
either member of the Joint Venture or its withdrawal pursuant
to paragraph 2 hereof;
(iii) the death, illness, disability, incapacity or
otherwise of Xxxxxxx Xxxxxx such that he is unable to perform
his duties hereunder in the manner contemplated for sixty (60)
consecutive days or an aggregate of one hundred eighty (180)
days in any twelve-month period; or
(iv) any other event causing the termination of the
Joint Venture under the laws of the State of Texas.
(b) With respect to subparagraph 10(a)(i), termination of the
Joint Venture shall be effective as of the last day of the then current Term
(the "Effective Date"), with an
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appropriate adjustment between the parties giving effect to any profit or loss
of the Joint Venture between the Effective Date and the Termination Date, and
with respect to subparagraphs 1O(a)(ii), (iii) and (iv), termination of the
Joint Venture shall be effective on the day on which the event occurs giving
rise to such termination.
11. Liquidation.
(a) Upon the termination of the Joint Venture, the assets of
the Joint Venture shall be liquidated as promptly as possible, and the cash
proceeds shall be applied in the following order of priority:
(i) To the payment of debts, taxes, obligations and
liabilities of the Joint Venture and the necessary expenses of
liquidation. Where there is a contingent debt, obligation or
liability, a reserve shall be set up to meet it, and if and
when such contingency shall cease to exist, the monies, if
any, in such reserve shall be distributed as provided for in
this paragraph 11;
(ii) To the repayment of any remaining loans and
accrued interest due to ABI from Xxxxxx pursuant to paragraph
3(b), which amounts, if any, shall reduce any amount
distributable to Xxxxxx
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pursuant to subparaqraphs (iii) and/or (iv) following;
(iii) To the repayment of the capital accounts of the
parties, such parties sharing such repayment proportionately
to their respective capital accounts;
(iv) The surplus, if any, of such assets then
remaining shall be divided among the parties in proportion to
their percentage interests in the Joint Venture.
(b) Notwithstanding the termination and liquidation of the
Joint Venture, the parties shall continue to remain obligated to each other with
respect to any Productions in development or running on the date of termination.
A Production shall be considered to be in development when either the non-Equity
rights have been acquired by the Joint Venture or a written proposal mutually
agreed to by the parties to acquire such rights is in negotiation with the
holder of such rights. Any net profits derived from such Productions shall be
divided by the parties in accordance with the terms of this Agreement.
12. Arbitration. Any dispute related to any asserted breach of his
Agreement shall be determined and settled by arbitration before a single
arbitrator in the City of New York in accordance with the rules of the American
Arbitration Association
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then obtaining. There shall be no right to arbitrate management decisions that
are not asserted to be a breach of this Agreement. Any award rendered shall be
final and conclusive upon the parties, and judgment thereunder may be entered in
any court having jurisdiction thereof.
13. Notices. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given or made: if by hand,
immediately upon delivery; if by telex, telecopier, or similar electronic
device, upon the close of business, provided it is sent on a business day
between 9:00 a.m. and 4:00 p.m., but if not, then immediately upon the beginning
of the first business day after being sent; if by Federal Express, Express Mail
or any other overnight delivery service, on the first business day after
dispatch; and if mailed by certified mail, return receipt requested, two (2)
business days after delivery or the return of the notice to the sender marked
"unclaimed". All notices, requests and demands are to be given or made to the
parties at the following addresses (or to such other addresses as any party may
designate by notice in accordance with the provisions of this paragraph):
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If to ABI: American Broadway, Inc.
000 Xxxx Xxx #000
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
With a copy to: Xxxxxxxx Xxxx Xxxxxxxx Xxxxx
Xxxxxxxx & Xxxxx P.C.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
If to Xxxxxx: Xxxxxx & Associates, Inc.
00 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
With a copy to: Frankfurt Xxxxxx Xxxxx & Selz
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
14. Waivers and Amendments.
(a) This Agreement may be amended, modified or supplemented
only by a written instrument executed by the parties. The provisions of this
Agreement may be waived only by an instrument in writing executed by the party
granting the waiver. The waiver by any party hereto of a breach of any provision
of this Agreement shall not operate or be construed as a further or continuing
waiver of such breach or as a waiver of any other or subsequent breach.
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(b) No failure on the part of any party to exercise, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of such right, power or
remedy by such party preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law.
15. Additional Documents. Each of the parties shall from time to
time, at the request of the other, execute, acknowledge and deliver to the other
party any and all further instruments that may be reasonably required to give
full force and effect to the provisions of this Agreement.
16. Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties and their respective heirs,
executors, administrators, successors and assigns, but is not otherwise
assignable without the prior written consent of the non-assigning party. Any
attempted assignment in violation of this paragraph shall be void and of no
force or effect. Notwithstanding the foregoing, ABI and its permitted assignees
shall have the right to assign this Agreement to any corporation in which the
majority of the voting stock is owned by PACE Entertainment Corporation or one
of its affiliates, or by a partnership in which PACE Entertainment Corporation
or
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one of its affiliates is a general partner, and Xxxxxx shall have the right to
sign this Agreement to any corporation in which the majority of the voting stock
is owned by Xxxxxx and Associates, Inc. or Xxxxxxx Xxxxxx or a partnership in
which either of the foregoing parties is a general partner.
17. Partial Validity. If any provision of this Agreement or the
application thereof to any person or circumstance is held to be invalid or
unenforceable, all of the remaining provisions shall not be affected thereby and
shall nevertheless continue in full force and effect.
18. Entire Agreement. This Agreement contains the full and
complete understanding of the parties hereto, and supersedes all prior oral and
written agreements.
19. Governing Law. This Agreement shall be interpreted, construed
and governed in all respects under the laws of the State of Texas applicable to
contracts entered into and wholly performed therein.
20. Section and Other Headings. The headings set forth at the
beginning of each paragraph are for the convenience of reference and do not
convey any independent meaning.
21. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an
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original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have set their hand as of the year
and date first above written.
AMERICAN BROADWAY, INC.
By: /s/ Xxxx Xxxxxx
-----------------------------
Xxxx Xxxxxx, President
XXXXXX & ASSOCIATES
By: /s/ Xxxxxxx Xxxxxx
-----------------------------
Xxxxxxx Xxxxxx, President
AS TO PARAGRAPHS 5 and
9(b) ONLY:
/s/ Xxxxxxx Xxxxxx
-----------------------------
XXXXXXX XXXXXX
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EXHIBIT A
JANUARY 1996 - JUNE 1997
NETWORKS OVERHEAD BUDGET
TOTAL TOTAL TOTAL 1 11
Jan 1-Jun 30 Jul 1-Jun 30 Jul 1-Jun 30 Mo. Budget Mo. Budget
1995 1995/96 1996/97 Jul 96 Aug 96-Jun 97
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STAFF PAYROLL:
General Mgr. Assistance 4,000 28,200 29,850 2,350 2,500
Production Assistant 0 21,600 21,600 1,800 1,800
Admin. Assistants 0 0 16,720 1,520
Health Insurance 0 6,600 6,600 550 550
Payroll Tax 0 6,225 6,600 519 728
Subtotal Payroll Cost 4,000 62,625 83,291 5,219 7,098
OFFICE EXPENSE:
Office Space Rental 0 15,000 15,550 1,250 1,300
Copier/Office Supplies 1,800 3,900 4,175 325 350
Postage Machine Rental 0 600 600 50 50
Phone System Rental 0 1,200 1,750 100 150
Postage & Delivery 1,200 2,700 2,000 000 000
Telephone Service & LD 2,100 4,800 5,350 400 450
Subtotal Office Expense 5,100 28,200 30,400 2,350 2,550
DEVELOPMENT:
Research Travel 1,800 3,600 3,600 300 300
P.R. & Entertainment 1,800 3,600 3,600 300 300
Subtotal Development 3,600 7,200 7,200 600 600
GENERAL & ADMINISTRATIVE:
Housing 3,000 6,000 6,000 500 500
Travel Allowance 1,500 3,600 3,000 250 250
Health Insurance 3,060 6,135 6,149 511 512
Misc. Expenses 840 1,680 1,680 140 140
Subtotal G & A Expense 8,400 16,815 16,829 1,401 1,402
OVERHEAD EXPENSE:
* Liability Insurance 0 6,000 6,000 500 500
** Accounting Services 1,750 12,000 20,250 1,000 1,750
Legal 1,500 3,000 3,000 250 250
Subtotal Overhead 3,250 21,000 29,250 1,750 2,500
------------ -----------
TOTAL OVERHEAD EXPENSE $24,350 $135,840 $166,970 $11,320 $14,150
OFFICE START-UP COST $25,000
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TTL. OVERHEAD PAID OUT OF 1ST PROFITS $352,160
*Assume coverage by Pace Policy - Incremental cost estimated
**Assume serviced by Pace in-house - Incremental cost estimated
REVISED 7/6/95
