AGREEMENT
The undersigned Officers (each, an "Officer") from Planet Entertainment
Corp. ("Planet") and New Millenium Communications ("New Millenium") desire to
form a joint venture for the purpose of licensing and distributing all master
recordings heretofore recorded and/or acquired by Planet prior to the date
hereof (collectively, the "Prior Masters") and to License and distribute
Recordings recorded during the term hereof (the "Term Masters"); the "Prior
Masters" and the "Term Masters" are collectively hereinafter referred to as the
"Masters").
NOW, THEREFORE, the Officers agree as follows:
1. Name and Business. The Officers hereby form a joint venture for any
one or all of the following purposes, among others: to record, produce,
manufacture, lease, license, make and sell audio-only records and other devices
employing the use of audio-only or audiovisual recordings and to engage in such
other activities as are necessary or incidental thereto. The name of the new
company formed is: Planet Entertainment Europe Ltd. (the "Venture Name").
2. Term. The term of the Venture shall commence as of the date of this
Agreement and shall continue until it is dissolved by either of the following:
the sale or disposition of all Venture assets or upon judicial resolution. In
respect of the license term of the Masters, the Venture shall have the
non-exclusive right to exploit all subject Masters for a minimum period of
ninety-nine years (the "License Term") commencing on the date of full execution
of this Agreement.
3. Venture Contributions.
(a) It is agreed that Planet and New Millenium Communications shall
each receive a Fifty Percent (50%) interest in the Venture (the "Venture
Interest"). Each Officer may mutually agree from time to time to make voluntary
contributions to the capital of the Venture whether in the form of cash, labor
or other services or resources, as provided under the terms of this Agreement.
(b) The Venture's books and records shall be maintained in an account
maintained by New Millenium, unless otherwise agreed between the Parties.
Neither Officer shall be authorized to withdraw any funds from the Venture
without the prior written consent of the other. The Venture's profits and losses
shall be shared as follows: Fifty Percent (50%) Planet/Fifty Percent (50%) New
Millenium. The amount of Profits (as hereinafter defined) that shall be
available for distribution, and the amounts that shall remain undistributed
shall be made by unanimous decision of the Board (as hereinafter defined).
4. Allocations and Distributions.
(a) The Venture shall be initially taxed as a Company, unless otherwise
agreed. The fiscal year of the Venture shall, for bookkeeping purposes, be
divided into twelve (12) one month segments (each a "Monthly Segment"). Any
taxable income, gain, loss, deduction or other taxable items of the Venture with
respect to any such segment shall be allocated to each Officer as follows: 50%
to Planet/50% to New Millenium. The Venture's "net profits" or "net losses" for
each fiscal year shall be determined as soon as practicable after the close of
such fiscal year. This decision should be made by the Venture's accountant in
accordance with the generally accepted accounting principles.
(b) Net Cash Receipts ("Profits") of the Venture shall be distributed
to the Parties in accordance with its Percentage Interest, subject to the
Venture's reimbursing the Contributing Officer "off
the top" for its Contributions made to the Venture. It is agreed that New
Millenium shall hire additional staff and provide additional overhead to carry
out Venture business, subject to the Board's prior approval. All administrative
charges billed to the Venture by New Millenium to carry out its management
responsibilities must be similarly approved in advance by the Board. All costs
for the foregoing purposes(s) must be approved in advance by the Board in order
to be binding on the Venture. "Profits" shall refer to the total gross monies
actually received by the Venture, reduced by such working capital reserves and
other Venture expenses as may be established and maintained by Board decision.
Distributions, if any, shall be made no later than thirty (30) days after the
end of each Monthly Segment, subject to the payment of Venture expenses (as
defined in paragraph 5 below), the maintenance of reserves and withholding of
applicable income taxes in an amount that is reasonably consistent with the
Venture's anticipated tax liability.
(c) Each Officer represents and warrants on behalf of itself and on
behalf of its agents and/or employees the following: (i) Neither shall, without
the prior written consent of the other, endorse any note or act as an
accommodation officer or surety on behalf of the Venture; and (ii) Neither shall
assign, mortgage, encumber or grant a security interest in, nor sell any or all
of its shares in the Venture and/or its capital assets, or do any act that is
detrimental to the interests of the Venture.
5. Drawings. Each Officer shall be entitled to reimbursement by the
Venture for approved direct out-of-pocket expenses, e.g., office overhead,
operational expenses, taxes, expenses in connection with preparing reports,
costs of acquiring computer equipment, employee salaries, insurance costs,
accounting fees to maintain the Venture's books, pressing and manufacturing
costs, legal fees and all other expenses directly incurred on behalf of the
Venture. Any such approved expenses shall be calculated and paid "off the top"
prior to the division of profits. Neither Officer shall be entitled to draw
against Venture profits, which shall only be distributed as provided in this
Agreement.
6. Banking. The capital account of the Venture shall be maintained in a
separate interest bearing account established in the Venture name. All checks
written against Venture funds, regardless of the value, shall require the
signature of a duly authorized Officer of Planet and a duly authorized Officer
of New Millenium.
7. Books. The Venture's books shall be maintained at the offices of New
Millenium, unless otherwise agreed. Any Officer of Planet, shall have access
thereto at all times to examine the books and records of the Venture. The books
shall be kept on a fiscal year basis (which may or may not be a calendar year)
and shall be closed and balanced as follows: at the end of each month and upon
the end of fiscal year. The Venture accountant shall cause an unaudited monthly
report to be sent to all Officers within thirty (30) days after the close of
each Monthly Segment. All statements and reports shall be prepared according to
generally accepted accounting principles.
8. Termination. The Venture shall terminate upon the following
event(s): (i) the sale or dissolution of all of its assets; or (ii) upon
judicial resolution. In the event of such termination, both Officers shall
proceed with reasonable promptness to liquidate the business of the Venture. The
assets of the Venture shall be used and distributed in the following order: (a)
to pay or provide for the payment of all Venture liabilities to liquidate
expenses and other financial obligations; (b) to discharge the balance of the
capital accounts of the Venture; (c) sell of any existing inventory and (d)
distribute all remaining funds in accordance with each Officer's interests.
9. Restrictions on Transfer of Venture Interest.
(a) Each Officer agrees on behalf of itself, and any of its officers,
agents and/or employees that it shall not sell, transfer, pledge, give, assign
or enter into any agreement, a result of which any third person (the "Recipient
Officer") shall acquire any interest in the Venture, unless such Officer (the
"Transferring Officer") shall have obtained prior written consent of the
other(s). If such consent is
given, it shall not be effective unless: the Recipient Officer agrees in writing
to be bound by all of the terms and conditions of this Agreement.
(b) If either Officer (the "Selling Officer") receive(s) a bona fide
offer from a third party to purchase any stake (the "Selling Shares") in the
Venture (the "Third Party Offer"), it shall first give written notice of the
amount and the terms of the offer, the identity of the proposed buyer and its
willingness to accept the offer to the other Officer (the "Non-Selling
Officer"). The Non-Selling Officer shall have the option, within ten (10) days
after receipt of such notice to purchase the Selling Shares in the Venture from
the Selling officer under the same terms as are contained in the Third Party
Offer. In the event the Non-Selling Officer declines to purchase the Selling
Shares, then such Selling Officer shall have the right to sell its Interest to a
third party pursuant to the terms contained in the Third Party Offer. In the
event the Third Party Offer concerns the acquisition of one hundred percent
(100%) of the Venture Interest by another company (the "Acquiring Company"),
then, subject to the approval of the Parties of all substantive terms of such
acquisition, then the Venture shall become a subsidiary of such Third Party
Company.
(c) Ownership of all Masters subject to the terms hereto shall be
retained at all times by Planet.
10. Management Responsibilities.
Planet and New Millenium shall jointly share in all decisions relating
to the operation of the Venture (e.g., how many records to release each year,
artwork, the timing and hiring of personnel, the packaging of each Album
released hereunder, the determination of working capital reserves, the tax
election of the Venture, selection of an insurance carrier, if any, etc.) and
shall implement each decision by establishing a Management Board comprised of a
total of four Officers; two (2) Officers shall be elected by Planet and two
Officers shall be elected by New Millenium.
11. Miscellaneous
(a) This Agreement shall be governed by and construed in accordance
with the laws of United Kingdom.
(b) This Agreement shall be binding upon and inure to the benefits of
the parties hereto and their respective legal representatives, successors and
permitted assigns, subject to the terms, conditions and covenants set forth
herein.
(c) This Agreement may be executed in counterpart, each of which shall
be deemed on original, but all of which together shall constitute one and the
same instrument.
(d) This Agreement may be amended or modified by a written instrument
executed by an Officer of Planet and an Officer of New Millenium.
(e) It is understood that the Officers may engage in outside activities
("Outside Activities") so long as such Outside Activities do not directly
compete with the activities of the Venture.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
29 day of May, 1998.
PLANET ENTERTAINMENT CORP.
By: /s/ Xxxxxx Xxxxxxx, President
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Duly Authorized Signature
NEW MILLENIUM COMMUNICATIONS
By: /s/ Xxxxx Xxxxxxx
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Duly Authorized Signature
