EXHIBIT 10.36
JOINT VENTURE AGREEMENT
This Joint Venture Agreement ("Agreement") is made this 6th of June,
1997, by and between Electric Media Company-Nevada, Inc. ("EMC"), A Nevada
corporation having its principal place of business at 000 00xx xxxxxx, XX, Xxxxx
000 Xxxxx, Xxxxxxxxxx, X.X., Xxxx Xxxxxxxx ("Xxxxxxxx"), an individual having
his principal place of business at 0000 Xxxxx Xxxxxx Xxxx, Xxx Xxxxx, Xxxxxx
00000. EMC, Gerstein shall be collectively referred to as the "Parties".
WHEREAS the Parties desire to form a joint venture, (the "Joint Venture
or Venture") to pursue the further development and exploitation of all forms of
technology developed or acquired by Gerstein, their affiliates or partners
relating to (i) any technique for the provision of video, voice, and/or date
communications over electric power lines, or (ii) other forms of transmission of
video, voice, and/or date communications including but not limited to cable,
telephone and microwave (the "Technology");
WHEREAS EMC desires to own the Technology developed or acquired by
Gerstein for all commercial revenue producing purposes worldwide;
WHEREAS, Gerstein desire to provide such know how, trade secrets,
trademarks, copyrights, patents, and other intellectual property related to the
development and exploitation of the Technology now owned or hereinafter acquired
by or developed by them 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, in particular in Guatemala.
Therefore, in consideration of the mutual covenants and promises
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. Purpose: EMC, Gerstein hereby form the Joint Venture, the business of which
shall be the development and 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.
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2. Disclosure to EMC Experts: No later than June 30, 1997, and as new
developments occur Gerstein shall disclose the Technology then in either of
their possession to the Joint Venture's patent counsel and to such other experts
as EMC may reasonably designate. The qualifications of such experts shall be
disclosed to Gerstein and such experts shall agree in advance to be bound by the
terms of Section 10 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 Gerstein with written notice within ten (10) days of the disclosure.
Provided that there has been no material misrepresentation or breach of any
representation or warranty set forth herein by Gerstein, all funds advanced by
EMC to Gerstein as of the date of termination shall be retained by Gerstein as
liquidated damages and EMC shall have no further obligation to Gerstein.
3. Scope. The Parties intend that the scope of the Joint 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 as soon as practical during
the development stage of the Technology. No later than July 30, 1997 Gerstein
shall demonstrate those items provided for in Attachment B (Field Tests Agenda),
Section A.1, A.2 and A.3. No later than August 30, 1997, Gerstein shall
demonstrate those items provided for in Attachment B, Section A in Guatemala.
Gerstein shall secure such equipment reasonably necessary for the conducting of
the Field Test, which Field Test shall end no later than October 15, 1997. EMC
shall provide Gerstein and their consultants, agents and affiliates with access
to the El Rancho Hotel in Las Vegas to conduct the Field Test and otherwise
perform its obligations as contemplated hereunder or pursuant to agreements
executed in connection herewith. Such right of access shall be evidenced by a
written agreement between EMC and/or the Joint Venture, on the one hand and the
owner of the El Rancho Hotel, on the other, which agreement shall also confirm
to the satisfaction of EMC and ITB that the contemplated occupancy and use of
such premises are permitted by such owner and nay applicable regulation or
regulatory authority. In connection with the field test Gerstein shall provide
EMC and ITB assurances that any and all tests to be conducted at the El Rancho
shall in no way distract or endanger the premises of electrical system and shall
not inhibit ITB's ability to continue construction on the premises.
(ii) Gerstein shall use their best efforts to obtain for the
Joint Venture all necessary government approvals and licenses (including any
licenses required by the Federal Communications Commission and the State of
Nevada), to obtain all necessary rights-of-way, and to satisfy all
interconnection requirements. If Gerstein are unable to obtain any of the above,
they shall promptly notify the Joint Venture before the Field Test begins and
EMC shall have the right to cancel or reschedule the Field Tests.
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(iii) Prior to the commencement of the Field Test and in any
event no later than June 15, 1997, Gerstein shall use their best efforts to
supply such information to Joint Venture as may be required by its counsel to
render an opinion that, to the best knowledge of such counsel, that all such
necessary government approvals, necessary patents, and other licenses, and
rights-of-way have been obtained and all necessary interconnection requirements
satisfied. The Parties agree that the purpose of the Field Test is to verify the
technical and commercial feasibility of the Technology in a non- laboratory,
real-world setting. Success of the Field Test will be determined by EMC at its
sole discretion. If the Technology is not determined to be technically and
commercially acceptable, EMC shall have the option of terminating this Agreement
by providing Gerstein with written notice within 10 days of the conclusion of
the Field Test. Provided that there has been no material misrepresentation or
beach of any representation or warranty set forth herein by Gerstein, all funds
advanced by EMC to Gerstein as of the date of termination shall be retained by
Gerstein as liquidated damages and EMC shall have no further funding or any
other obligation to Gerstein. If there has been a material misrepresentation of
any representation or warranty set forth herein by Gerstein, EMC shall be
entitled to terminate the Joint Venture, to receive reimbursement of all amounts
expended in connection with the Joint Venture, including but not limited to all
funds advanced to Gerstein, 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 Joint
Venture is otherwise not terminated by EMC, the Parties shall use their best
efforts to cooperate with each other in the deployment of the Technology in
Guatemala, except that Gerstein shall be solely responsible (i) to use their
best efforts to obtain for the Joint Venture all necessary government approvals,
licenses and rights-of-way; (ii) to satisfy all interconnection requirements and
(iii) to secure reasonable and customary insurance or reinsurance to protect the
business of the Joint Venture (including but not limited to business
interruption insurance). Prior to the commencement of providing services in
Guatemala utilizing the Technology, Gerstein shall use their best efforts to
supply the Joint Venture with such information as may be required by its counsel
to render its opinion that, to the best knowledge of such counsel, all such
government approvals, licenses, rights-of-way and insurance necessary for the
conduct of the business of the Joint Venture have been obtained and all
interconnection requirements necessary therefore have been satisfied. In
addition, Gerstein shall use their best efforts to modify or cause to modify
such equipment and software as may be necessary to permit the Technology to
operate in Guatemala. During the term of the Joint Venture, neither Gerstein
shall not deploy or exploit the Technology in Guatemala other than on behalf of
or for the benefit of the Joint Venture.
(c) Other Deployment: The Joint Venture shall have the exclusive right to
further develop and exploit the Technology in all markets other than
Guatemala..
(d) Exclusive Services; As an essential part of the consideration for the
formation of the Venture, Gerstein agrees that:
(i) Stockholders and affiliates and their partners, of Gerstein shall consult
with EMC and Xxxxxx X. Xxxxxxx, which consultation shall be exclusive
during the term of the Joint
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Venture, in connection with all telecommunications matters involving the
Technology and development and utilization of the Technology;
(ii) Gerstein shall cooperate with EMC to cause the
incorporation in Guatemala of EMC, S.A., which shall be a wholly owned
subsidiary of EMC, Xxxxxx Xxxx and Xxxx Xxxxxxxx, shall provide exclusive
consulting services to EMC, S.A. in connection with all telecommunications
matters involving the Technology and development utilization of the Technology,
and any agreements related to such obligations shall be provided to the Joint
Venture;
(iii) the Parties agree that Gerstein's ownership of the
Technology as it currently exists and as it may be developed during the term of
the Joint Venture shall be assigned or otherwise transferred to EMC on a
royalty-free (except for those royalties described in Section II of Attachment
A), exclusive, worldwide basis. The Parties shall execute all necessary
agreements and cooperate in all respects in order to effectuate such assignment
or transfer of ownership; and
(iv) during the term of this Agreement, EMC shall be granted a
right of first refusal for any new business opportunities of Gerstein, or any of
their stockholders, affiliates, or partners, regardless of whether such
opportunities involve the Technology.
4. Financing: EMC shall provide financing to the Joint Venture and Gerstein at
such times and in such amounts as shall reasonably be required for the
operation of the business of the Joint Venture in accordance with the terms
set forth in Attachment A.
5. Compensation: Subject to the compensation due Gerstein pursuant to
Attachment A hereto, after the Joint Venture's expenses (including but not
limited to all business expenses, the cost of manufacturing and deployment of
equipment, taxes, and government licensing fees) have been paid, or satisfactory
provision for such payment has been made, net operating profits (i.e.income from
continuing operations) shall be divided as follows: first to EMC in an amount
equal to its capital contributions plus a return thereon at an annual rate of
6%; and thereafter 80% to EMC and 20% to Gerstein. The 20% of the Joint
Venture's profits paid to Gerstein shall be paid directly by Las Vegas
Entertainment Network, Inc. from its share of EMC's profits.
6. Management of Venture: EMC shall provide the day-to-day management
of the Joint Venture's business, which may be delegated or assigned to a
professional management company selected by EMC. Decisions with regard to the
financing of the business of the Joint Venture shall be made by EMC in
consultation with Gerstein and subject to EMC's fiduciary duty to Gerstein.
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7. 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 Nevada; and 2)
it is authorized and empowered to perform each and all of its obligations
as set forth in this Agreement.
(b) Gerstein: Gerstein represents and warrants that: 1) They
are authorized and empowered to perform each and all of its obligations as set
forth in this Agreement; 2) They own 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, including but not limited to any claims
of Xxxx Xxxxxxxx, Xxxxxxx "Xxxx" Xxxxxxx, or any other partners or entities in
which either of them exercises a controlling interest, and the Technology will
operate as contemplated in this agreement with being subject to any such claims;
3) 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 secrets and trademark rights, of any other person or
entity but not limited to any claims of Xxxx Xxxxxxxx, Xxxxxxx "Xxxx" Xxxxxxx,
or any other partners or entities in which either of them exercises a
controlling interest, and the Technology will operate as contemplated in this
agreement with being subject to any such claims; and 5) the Technology is not
designed to and will not be designed to operate in violation of any applicable
law. During the term of the Joint Venture, Gerstein shall secure whatever
patents and licenses at their sole cost as necessary and as determined by the
Joint Venture and its counsel for the Joint Venture to exploit the Technology
worldwide.
(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.
8. Indemnification: (a) 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. (b)
Notwithstanding any other provision to this agreement;
(i) Gerstein each agree to individually indemnify, defend, and
hold harmless, EMC, LVEN and any of their officers, directors, partners,
employees, or affiliates from and against any and all liabilities and losses,
including but not limited to direct or indirect losses, loss of profits, loss of
business, special, exemplary, consequential, or punitive damages or any other
losses of any kind whatsoever (including attorney fees) resulting from
interference from any nature whatsoever with the business contemplated by this
Agreement caused by Xxxx Xxxxxxxx, Xxxxxxx "Xxxx" Xxxxxxx or any of their
partners or entities in which either of them exercises a controlling interest,
including but not limited to any claims involving know-how, trade secrets,
trademarks, copyrights, patents, or other
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intellectual property rights recognized, granted or protected by the laws of any
country related to the Technology.
(ii) Neither EMC, LVEN nor any of its officers, directors,
partners, employees, or affiliates shall be liable to Gerstein for any of their
liabilities or losses, including by not limited to direct or indirect losses,
loss of profits, loss of business, special, exemplary, consequential, or
punitive damages, or any other losses of any kind whatsoever (including attorney
fees), resulting from interference from any nature whatsoever with the business
contemplated by this Agreement caused by Xxxx Xxxxxxxx, Xxxxxxx "Xxxx" Xxxxxxx
or any of their partners or entities in which either of them exercises a
controlling interest.
(iii) In the event that any claim should be brought to the
Joint Venture involving any business contemplated by this Agreement by Xxxx
Xxxxxxxx, Xxxxxxx "Xxxx" Xxxxxxx or any of their partners or entities in which
either of them exercises a controlling interest, upon notice by EMC, or LVEN,
Gerstein shall assume all responsibilities associated with responding to and
defending such action or claim. EMC and LVEN shall cooperate in good faith with
Gerstein in any such response or defense, provided that EMC and LVEN shall be
reimbursed for the attorney fees as provided for in subsection (a) above.
9. 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.
10. Confidentiality: Gerstein agrees to disclose the Technology to the
Joint Venture, which the Joint 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.
11. 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.
12. Termination: The Venture shall be dissolved upon the first of the following
to occur:
(a) the mutual agreement of the Parties to effect such termination;
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(b) the Agreement is terminated pursuant to Section 2, 3 (a) or 11 hereof;
(c) 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 Joint 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, net
operating profits shall be distributed according to the formula set forth
herein.
13. 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 Gerstein:
0000 Xxxxx Xxxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
Phone: 000-000-0000
14. 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.
15. Miscellaneous:
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(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 all
--------- Parties.
(f) Entire Agreement: This Agreement and any future amendments constitute 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.
By: /S/ Xxxxxx X. Xxxxxxx
Title: President
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Xxxxxx Xxxxxxxx
By: /S/ Xxxxxx Xxxxxxxx
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ATTACHMENT A
FINANCING AND COMPENSATION DUE GERSTEIN
I. FINANCING FOR THE FIELD TEST
The Parties hereby acknowledge that EMC has provided or will provide
the Venture or Parties hereto with financing in order to complete the Field Test
of the Technology, as follows: (a) upon signing this agreement and providing EMC
with all copies of contracts $150,000.
(b) upon the successful completion and written acceptance by EMC of Field Test,
A.1, A.2, A.3, $100,000.
(c) upon the successful completion and written acceptance by EMC of the
Guatemala Field Test A, $50,000 (plus additional compensation as described in
section II (a) of this attachment A).
(d) all payments made according made according to the above schedule
shall be made only after EMC receives invoice payment request in the form of
attachment C.
II. FINANCING AND COMPENSATION DUE GERSTEIN AFTER SUCCESSFUL
COMPLETION OF THE FIELD TEST
Upon EMC's acknowledgment of the successful completion of the Field
Test, items listed in section a, on attachment A:
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(a) Gerstein shall receive from EMC 500,000 shares of restricted common stock
in Las Vegas Entertainment Network, Inc. ("LVEN"); and
(b) Upon the successful completion and written acceptance by EMC of all
Field Tests, including Guatemala, Gerstein shall receive $25,000 per month as an
advance against Gerstein's 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 all the Field
Tests. All advances to Gerstein, together with interest on such advances
compounded at the rate of six percent (6%) per annum, shall be recouped by EMC
out of their respective share of Venture net profits under section 5 (b)
thereof. The amount of net profits due Gerstein shall be deposited directly by
the Venture to EMC's account, until all such advances, plus accrued interest
shall have been repaid. Once Gerstein's account are in equilibrium (that is,
advances equal earned net profits, plus interest), EMC shall distribute to
Gerstein on a quarterly basis a draw based on their share of net profits.
(c) In addition to the shares of LVEN set forth in (a) above, Gerstein
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
Gerstein's total of restricted common stock of LVEN generated by net revenues
shall not exceed Two Million Five Hundred Thousand (2,500,000) shares. All LVEN
shares issued to Gerstein 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.
(d) In addition to the shares of LVEN, as a bonus, Gerstein shall
jointly receive $6.50 per installed device, which is operating and revenue
producing to EMC. LVEN shall receive $25 per installed device, which is
operating and revenue producing to EMC, plus 75% of the net profits.
(e) Gerstein shall jointly 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 Gerstein.
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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 demonstrated and commercially deployed in
Guatemala.
A. By no later than August 1, 1997, the Technology shall be demonstrated at
the "El Rancho" Hotel and shall deliver:
A.1. A minimum of twelve (12) distinct Devices, (similar to
the attached), receiving and retransmitting video signals on twelve (12)
distinct video channels at 3 DTV (video signals to be supplied by EMC VHS tape,
which shall be transferred by Gerstein);
A.2. All channels delivered by the local satellite system on a
subdivided thirteenth (13th) channel; for purposes of this Agenda, the number of
cable channels is estimated to be twenty-five (25);
A.3. A telephony demonstration, whereby the Devices can place
telephone calls to each other including two-way full-motion video and to any
other telephone number worldwide, and;
A.4 The devices will have ARS 232 connector, a portable
keyboard and access to the Internet. The devices will be able to operate at
approximately 90-105 Mbs;
A.5 Inter Room Gaming as mutually agreed. Exclusive rights to Nevada, New
Jersey and worldwide given to EMC. .
The only connections required by the Devices for any of the testing
described above, shall be to any A/C outlet within the El Rancho Hotel. Within 6
months of the El Rancho test, the surrounding 10 hotels will also be
demonstrated a similar test..
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This Agenda constitutes an initial draft statement of the purposes of
the Field Test and may be modified or added to by EMC, with Gerstein's
reasonable acceptance, by sending written notice to Gerstein at any time
hereafter, but in no event less than twenty (20) days prior to the start of the
Xx Xxxxxx Xxxxx Xxxx.
00000.x00
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