JOINT VENTURE AGREEMENT
This Joint Venture Agreement (hereinafter, "the Agreement") is entered into
this 8th day of September, 1998, between the following parties:-
The Xxxx-XX Corporation, a Delaware corporation with its
principal place of business at 000 Xxxxx Xxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxx 00000 (hereinafter, "Xxxx-XX")
AND
United Artists Theatre Circuit, Inc., a Maryland
corporation with its principal place of business at
0000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx,
Xxxxxxxx 00000 (hereinafter, "UATC").
RECITALS
Xxxx-XX and UATC have developed certain proprietary technology
(hereinafter, "the CDP Technology") in conjunction with Xxxxxxx Xxxxxx and Xxxx
Xxxxx, authors of certain patents more specifically defined in the schedule
entitled "Patents," attached as Exhibit A to this Agreement.
Xxxx-XX and UATC have decided to form a California limited liability
company, known as "CDP Limited Liability Company" (hereinafter, the "Company"),
whose members shall be Xxxx-XX and UATC each owning fifty percent (50%) of the
outstanding shares thereof.
1. PURPOSE
Xxxx-XX and UATC hereby declare and acknowledge that they have entered into
this Agreement for the purpose of acquiring, holding, developing, licensing and
exploiting the CDP Technology through the world on the terms and conditions
contained in this Agreement and Xxxx-XX and UATC hereby associate themselves for
such purpose as joint venturers.
2. DURATION
The Company shall come into existence immediately and shall continue in
existence until it is terminated by mutual agreement of the parties and after
the realization of assets, including final disposition of all property, and the
satisfaction of all obligations have been made in accordance with this
Agreement.
3. ASSIGNMENT OF PATENT RIGHTS
x. Xxxx-AO and UATC each assign to the Company all of its respective
rights, title and interest in and to the CDP Technology. Xxxx-XX, UATC,
Xxxxxxx Xxxxxx and Xxxx Xxxxx have effectuated assignments of all of their
rights, title and interest in and to the CDP Technology. Such right, title
and interest in and to the CDP Technology assigned by Xxxx-XX and UATC shall
include, without limitation, all domestic and foreign patents, detailed in
Exhibit A attached hereto, as well as the right to apply for additional
foreign patents derived from the domestic patents.
x. Xxxx-AO and UATC each grant to the Venture an exclusive,
royalty-free and perpetual license to any additional CDP Technology which
they may hereafter acquire or develop during the Company's existence.
c. Assignment of the patents have been attached hereto as Exhibit B.
4. MANAGEMENT
a. COMPOSITION. The Company shall be managed by an even number of
Managers (initially, four) appointed in equal numbers by UATC (initially,
Xxxx Xxxx and Xxxx Xxxxx) and Xxxx-XX (initially, Xxxxx Xxxxxxxxx and Xxxx
Xxxxx), (collectively, the "Management Committee"). All decisions of the
Management committee shall require a unanimous vote or written consent. It
is anticipated that day-to-day affairs of the Company will be managed by
Xxxx-XX under the control and supervision of the Management Committee. No
action may be taken nor sum expended (except for those expenses listed in the
schedule attached hereto as Exhibit C, which expenditures may be deemed
hereby to be pre-approved) on behalf of the Company or with respect to the
CDP Technology without
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the approval of the Management Committee first having been obtained. Xxxx-XX
or the Managers whom it so designates shall be authorized to make
disbursements only in accordance with budgets mutually approved by UATC and
Xxxx-XX, subject to a variance of not more than five percent (5%) in the
aggregate. Except as set forth in Paragraph 4.l. below, Xxxx-XX shall not
assign its obligations as daily manager or otherwise delegate any such
responsibilities without first having obtained the approval of the Management
Committee.
b. REPLACEMENT OF MANAGER. By notice in writing to the other party,
each party may remove or suspend any Manager appointed by it and appoint
another person in the vacant position and may appoint another representative
temporarily in the place of the Manager so removed or suspended or in the
place of a sick or absent Manager.
c. REGULAR MANAGEMENT MEETINGS. There shall be meetings of the
Management Committee on a regular basis to be determined by the parties but
not less than four times in each financial year, all to be held in
California. Attendance at any such meeting may be by means of telephonic
conference call or any substitute electronic means of communication.
d. ADDITIONAL MEETINGS. Additional meetings of the Management
Committee may be convened by any party giving written notice to the other
party no less than thirty (30) business days prior to such a meeting.
Written notice convening a meeting under this section shall include an agenda
for the meeting. Attendance at any such meeting may be by means of telephonic
conference call or any substitute electronic means of communication.
e. QUORUM. A quorum for a properly constituted meeting of the
Management Committee shall be two of the four members designated above, one
from Xxxx-XX and one from UATC.
f. CHAIRMAN. Each Chairman shall hold office for a period of twelve
(12) months. The Managers shall elect one of their number as Chairman of the
Management Committee for the initial period of twelve (12) months from the
date of the first meeting of the Management Committee. If the parties fail
to agree upon a chairman, the first Chairman shall be
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appointed by Xxxxx Xxxxxxxxx. The Chairmanship for each subsequent year
shall rotate.
g. SECRETARY. The Managers shall elect one of their number as
Secretary of the Management Committee or, by mutual agreement, or a
non-Manager of the staff of either Xxxx-XX or United Artist Theatre Circuit,
for an initial period of twelve (12) months from the date of the first
meeting of the Management Committee. The Secretary for each subsequent year
shall hold office for twelve (12) months from the date of his election.
h. VOTES. Questions arising at the meeting of the Management
Committee shall be determined by unanimous vote of the Managers present and
voting.
i. MINUTES. The Secretary of the Management Committee shall cause
minutes of all resolutions and proceedings of all meetings of the Management
Committee to be duly entered in books provided for that purpose. Copies of
minutes of meetings shall be supplied to all parties within fourteen (14)
days of adjournment of such meetings.
j. BUSINESS. The Management Committee shall be authorized to receive
and consider any administrative and financial reports and to decide on any
proposal which relates to or concerns or deals with the Company and the CDP
Technology, including but not limited to any of the following matters:-
(1) approval of capital and operating expenditures, including payroll and
advertising, such expenditures to be the subject of budgets submitted
yearly by Xxxx-XX as manager of the Company's daily affairs and, if
necessary, modified quarterly and at such other times as required by
the Management Committee;
(2) the entry into or disposal, extension or termination of any lease, the
entry into any contract for purchase or disposal of land, or any other
asset of the Company;
(3) the entry into any other business venture;
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(4) any change in the structure of the Company or the participation of the
parties in the Company, including the creation of any new legal entity
in connection with the CDP Technology;
(5) disbursements which exceed approved budgets by more than five percent
(5%) in the aggregate;
(6) all loans, borrowings and other contractual commitments including,
without limitation, the securing of mortgages, charges, pledges,
guarantees, indemnities and letters of comfort to or by the Company;
(7) royalty or licensing agreements for the CDP Technology;
(8) sale of all or substantially all of the Company's assets; and
(9) dissolution of the Company.
k. DAY TO DAY MANAGEMENT. The parties hereto agree to entrust Xxxx-XX
with the day to day management, administration and operation of the Company.
Xxxx-XX shall supervise, manage and coordinate the operation of the Company
in accordance with the terms of this Agreement. UATC shall have the right to
appoint the Chief Financial Officer of the Company, subject to Paragraph 4.m.
below.
l. SUPERVISION. Xxxx-XX may designate, with the consent of UATC,
which consent shall not be unreasonably withheld, an outside person or entity
to whom or which its management functions may be delegated. Xxxx-XX is free,
however, to designate a member of its internal staff to supervise the
day-to-day operations of the Company without seeking the consent of UATC.
m. ACCOUNTING STAFF. The Chief Financial Officer, to be appointed by
UATC with the consent of Xxxx-XX, which consent shall not be unreasonably
withheld, shall oversee the preparation of the accounts and shall designate
and provide accounting staff for this purpose. The cost of such staff shall
be borne by the Company and such accounting staff shall prepare monthly
accounts, year-to-date and yearly accounts during the operation of the
Company or at such other times as Xxxx-XX and/or UATC shall direct and shall
provide the Management Committee with a copy of
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any balance sheet and profit and loss statement prepared in accordance with
this provision. To the extent feasible and practical, during the current
period of inactivity, the accounting staff should be internal to Xxxx-XX
and/or UATC in order to minimize costs and fees.
n. AUDITS. At the end of each financial year, the accounts of the
Company shall be audited by an accounting firm appointed by the Management
Committee and the correctness of the profit and loss account and the balance
sheet shall be ascertained by the Auditor of said accounting firm. If the
revenues of the Company are less than one million dollars ($1,000,000), the
accounts of the Company may be certified by the Chief Financial Officer.
o. CAPITAL AND OPERATING EXPENDITURE. As manager of the Company's
daily affairs, Xxxx-XX may, in an emergency, exceed the budget approved by no
more than ten percent (10%) of the approved budget (in the aggregate for any
given year) but must obtain ratification by the Management Committee for such
expenditure at its next convened meeting.
p. CAPITAL CONTRIBUTIONS. Upon execution of this Agreement, Xxxx-XX
and UATC each shall make a capital contribution of $10,000 cash. Each party
shall make future capital contributions in proportion to its prescribed
equity at the time the contribution is to be made. The times by which
capital contributions are to be made shall be specified by the Chief
Financial Officer. Xxxx-XX and UATC shall make such additional cash capital
contributions as may be mutually required. In the event a party fails to
make an agreed capital contribution, the other party making the contribution
in lieu of the defaulting party shall be entitled to adjust the respective
percentage interests of the parties in equity, profits and cash distributions
to reflect the actual cash contributions of the parties, in addition to any
remedy at law or equity resulting from the default.
5. INDEMNITY OF MANAGER
There shall be no compensation paid by the Company to Xxxx-XX for acting
as manager of the company's daily affairs, unless approved by the Management
Committee. Xxxx-XX and UATC hereby agree to indemnify and shall hold
harmless the Manager appointed pursuant to Paragraph 4.m. above (if it is a
party to this Agreement or a related corporation) from
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any costs, liabilities or damage incurred or suffered by such manager arising
out of or in connection with such manager's activities as development manager
pursuant to this Agreement in the absence of negligence or any willful or
reckless wrongful acts or omissions of such manager. The parties'
indemnification shall be limited to their proportionate shares of prescribed
equities in the Company. The manager shall be required, as condition of his,
her or its employment as manager, to agree to indemnify and hold harmless the
Company, UATC and Xxxx-XX from and against all costs, liabilities or damage
incurred or suffered by all or any of them and arising out of such manager's
negligence or willful or reckless acts or omissions.
6. AGREEMENT WITH XXXXXXX XXXXXX
The parties have entered into an Agreement with Xxxxxxx Xxxxxx, attached
here to as Exhibit C and made a part hereof by reference. The parties and the
Company hereby agree to be bound by the conditions of said Agreement.
7. PROFITS, LOSSES AND DISTRIBUTIONS
Losses shall be allocated equally to Xxxx-XX and UATC (or if the parties
make unequal cash contributions, in proportion to their cash contributions).
Profits and cash distributions (and, in the event a sale of the Company's
business is structured as a sale of all or substantially all of the
membership interests in the Company, the proceeds therefrom) shall be
allocated as follows:
(i) First, in accordance with Paragraph 4 of the Xxxxxx Agreement
(Exhibit C), forty-five percent (45%) to UATC, forty-five percent (45%) to
Xxxx-XX and ten percent (10%) to Xxxxxxx Xxxxxx until Xxxxxx receives
$200,000, and thereafter, fifty percent (50%) to UATC and fifty percent (50%)
to Xxxx-XX until each has recouped its respective investments in the CDP
Technology since September 1, 1986;
(ii) Second, to UATC in the amount of $350,000, representing the amount
by which UATC's investment in the CDP Technology exceeded Xxxx-AO's
investment in the CDP Technology prior to September 1, 1986; and
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(iii) Third, further profits, cash distributions and proceeds from such
sale of all or substantially all membership interests shall be allocated
forty-five percent (45%) to UATC, forty-five percent (45%) to Xxxx-XX and ten
percent (10%) to Xxxxxxx Xxxxxx.
8. SEVERAL LIABILITY OF THE PARTIES
All contracts and agreements entered into on behalf of the Company
shall, wherever practicable, provide for the liabilities of the parties under
those contracts to be several to the extent of their respective interests in
the Company. Where the liabilities of the Company with respect to contracts,
leases, borrowings and items of a like nature cannot be several, the prior
approval of the Management Committee shall be required.
9. NO ASSIGNMENT OF INTEREST
Except as set forth in Section 15 below, neither Xxxx-XX nor UATC shall
lease, sell, assign or in any other way part with possession of its interest
in the Company or the CDP Technology or any part thereof, transfer, mortgage,
charge, create any lien over nor in any way encumber, declare itself a
trustee or otherwise deal with its interest in the Company or the CDP
Technology or any part thereof, without obtaining the prior written consent
of the other party hereto which consent can be withheld at the absolute
discretion of either party whose consent is required. Nothing in this
provision shall preclude UATC or Xxxx-XX from assigning its respective
interest in the Company and/or the CDP Technology to any of its wholly-owned
subsidiaries, provided that the parent corporation agrees to remain party to
and liable under the terms of this Agreement.
10. PARTITION
Without the consent of the other party, a party shall not apply for the
partition or an order for sale of its interest in the Company including its
interest in any lease or freehold property held pursuant to this Agreement.
11. RELATIONSHIP OF PARTIES
Notwithstanding anything to the contrary contained herein, neither this
Agreement nor any agreement referred to herein nor the acts or omissions of the
parties or of any of them shall result nor are they intended
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to result in the creation of a partnership or other relationship whereby a
party shall be held responsible or liable for any act or omission of the
other party, either jointly or otherwise, or shall authorize any party to
pledge the credit of the other party or shall impair the independent status
of any party or shall create any trust.
No party shall act as or purport to act as the agent or make any promise
or representation on behalf of any other party without first obtaining its
express written approval.
12. TERMINATION UPON DEFAULT
A party shall have committed an event of default if:
(a) it breaches a material provision of this Agreement where such
failure shall continue for a period of ten (10) days after written notice by
the non-defaulting party to the defaulting party; provided, however, that if
the nature of noncompliance is such that more than ten (10) days is
reasonably required to cure the default, the defaulting party may be deemed
to have cured the default if it has commenced the cure within such ten (10)
day period and thereafter diligently pursues such cure to completion;
(b) it fails to reimburse a loss suffered by the non-defaulting party
within ten (10) days after receipt of written notice from the non-defaulting
party which notice shall quantify and detail the nature of the loss suffered;
(c) it fails to make a cash call, as detailed in Paragraph 4.p. above;
(d) it presents a petition for winding up the Company, and it cannot
within ten (10) days reasonably satisfy the other party hereto that the
petition is frivolous or vexatious or an order is made, or an effective
resolution is passed, for its winding up except where the winding up is for
the purpose of reconstruction or amalgamation and has been approved by the
other party, such approval not to be unreasonably withheld; or
(e) it causes a provisional liquidator or a receiver or receiver and
manager of its assets, or any part thereof or any part of the income thereof,
to be appointed or if it calls a meeting of its creditors pursuant to the
California Code or other relevant company legislation.
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13. DISSOLUTION UPON BANKRUPTCY
In the event of the bankruptcy of either Xxxx-XX or UATC, the Company
shall dissolve unless the remaining party consents within ninety (90) days of
the bankruptcy or dissolution to the continuation of the business of the
Company. If the remaining party so consents, the remaining party shall
purchase the interest of the bankrupt or dissolving party at a cash price
equal to the bankrupt or dissolving party's capital account balance. If the
remaining party does not so consent, or at any time with the agreement of
both parties, the Company shall be dissolved. This provision shall not apply
to the filing of a Chapter 11 (reorganization) petition in bankruptcy court.
Upon dissolution, the Company's assets shall be sold or otherwise
commercialized and the proceeds distributed in the following priority:
(i) First, to the expenses of dissolution (including reasonable
compensation for the persons involved therein);
(ii) Next, to the payment of all debts and liabilities to third parties;
(iii) Next, equally to UATC and Xxxx-XX until each has recouped their
respective investments in the CDP Technology since September 1, 1986;
(iv) Next, to UATC to the extent that the $350,000 preference referred to
in Section 7(ii) has not been otherwise recouped; and
(v) Thereafter, to the parties in accordance with their positive capital
account balances and in accordance with all of the other requirements of
Treasury Regulations Section 1.704-1(b)(2)(ii), including the parties'
obligation to restore the amount of any deficit capital account balance
following the distribution.
14. BUY-SELL PROVISIONS
Xxxx-XX and UATC shall negotiate in good faith for a period of at least
thirty (30) days to negotiate a resolution to any controversy or dispute
arising between the parties. Thereafter, either party (the "Initiating
Party")
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may elect to deliver a written notice (the "Valuation Notice"), setting forth
a purchase price and terms of payment for either party's interest.
Within thirty (30) days after receipt of the Valuation Notice, the other
party (the "Electing Party") shall elect in writing (the "Election Notice")
to either purchase the entire interest of the Initiating Member or to sell
the Electing Party's entire interest to the Initiating Party, in each case at
the price and on the terms set forth in the Valuation Notice. If an Election
Notice is not timely given, the Electing Party shall be deemed to have
elected to sell its interest to the Initiating Party.
The consummation of the transaction shall occur within thirty (30) days
after receipt of the Election Notice, but no later than sixty (60) days after
delivery of the Valuation Notice.
15. SALE OF INTEREST IN COMPANY
No party may transfer any of its interest in the Company other than in
accordance with the following provision:
a. TRANSFER WITH CONSENT. Any party may sell all but not part of its
interest in the Company to any person approved in writing by all the other
parties, provided that it shall be a condition precedent to such sale that
the vendor procures that the purchaser enters into an agreement with the
parties, thereby agreeing to be bound by all terms and conditions to this
Agreement as if it were a party to it.
A party wishing to transfer all but not part of its interest in the Company
shall give notice in writing (the "Transfer Notice") to the Board of Directors.
16. FORCE MAJEURE
No failure or omission to carry out or observe any of the conditions of
this Agreement shall give rise to any claim by one of the parties hereto
against any other party or result in a breach of this Agreement if such
failure or omission arises by reason of delay or inability to perform caused
by war, whether declared or not, insurrections, strikes, inability to obtain
materials, fire, storm or other severe action of the elements, accidents,
government or statutory restrictions or from other causes, whether like or
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unlike the foregoing, which are unavoidable or beyond the reasonable control
of any or all of the parties.
17. ENTIRE UNDERSTANDING
This Agreement sets forth the entire agreement and understanding between
the parties as to the subject matter of this Agreement and merges all prior
discussions between them. Neither of the parties shall be bound by any
conditions, definitions, warranties or representations with respect to the
subject matter of this agreement other than expressly provided in this
Agreement as duly set forth, and each party acknowledges to the other party
that, except as set out in this Agreement, it has not relied on any
representation made by or on behalf of any other party.
18. VARIATIONS TO AGREEMENT
This Agreement may only be varied, modified, amended or added to in writing
executed by the parties hereto.
19. NOTICE
In addition to any method prescribed by the laws of the State of
California, from time to time notice may be given by one party to another
party at the address of the relevant party set out below, or to such other
address as is notified by the relevant party to the other party from time to
time by way of first class mail, postage prepaid, sent to:
Xxxx-XX: Xxxxx X. Xxxxxxxxx, President and CEO
The Xxxx-XX Corporation
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
and a copy to: Xxxx X. Xxxxx, General Counsel
The Xxxx-XX Corporation
000 Xxx xx xx Xxxxx, Xxxxx 000X
Xxxxxx Xxxxx, XX 00000
Fax: 000-000-0000
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UATC: Xxxx Xxxx, President and CEO
United Artists Theatre Circuit, Inc.
0000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
and a copy to: Xxxx Xxxxx, General Counsel
United Artists Theatre Circuit, Inc.
0000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Fax: 000-000-0000
20. GOVERNING LAW AND SUBMISSION TO JURISDICTION
This Agreement is made and shall be construed in accordance with the laws
of the State of California. Further, the parties agree that any action or
proceeding instituted to enforce, interpret or apply any provision of this
Agreement shall be filed within a court of competent jurisdiction in Los Angeles
County, California. The party prevailing in any such action or proceeding shall
be entitled to reimbursement by the losing party of all costs and expenses
including, but not limited to, its attorneys' fees and costs.
21. SEVERABILITY
If any provision of this Agreement is deemed to be illegal, invalid or
unenforceable, the legality, validity and enforceability of the remaining parts
shall not be affected.
22. ENTIRE AGREEMENT
This Agreement is the entire Agreement of the parties relating to the
Company and the CDP Technology and supercedes all prior agreements. Subject
to the restrictions relating to transferability, this Agreement will be
binding upon and inure to the benefit of the parties, and their respective
successors and assigns. All amendments hereto must be in writing and signed
by the party to be charged.
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Please confirm your acceptance by signing and returning a copy of this
Agreement.
THE XXXX-XX CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxx
-------------------------------
Xxxxx X. Xxxxxxxxx
Its President and CEO
UNITED ARTIST THEATRE CIRCUIT, INC.
By: /s/ Xxxx X. Xxxx
-------------------------------
Xxxx X. Xxxx
Its President and CEO
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