EXHIBIT 10.37
JOINT VENTURE AGREEMENT
This Joint Venture Agreement ("Agreement") is made this 6th day 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, D.C., Xxxx Xxxxxxxx ("Xxxxxxxx") an individual having his
principal place of business at 0000 Xxxxx Xxxxxx Xxxx, Xxx Xxxxx, Xxxxxx 00000,
Xxxxxx Xxxxxxx Xxxx Lima, an individual residing at 0X Xxxxx 00-00, Xxxx 00,
X.X.X., Xxxxxxxxx, Central America. "Arzu" and Xxxx Xxxxxx Xxxxxxxx
("Xxxxxxxx"), an individual residing at 00 Xxxxx 00-00, Xxxx 10. Guatemala,
Central America. EMC, Gerstein, Arzu and Xxxxxxxx shall be collectively referred
to as the "Parties".
WHEREAS the Parties form a joint venture, (the "Joint Venture or Venture"),
to pursue the further development of a communications network in Guatemala and
Central America suing fiber optic technology or any other technology or
technique that does not employ the use of the electrical grid in Guatemala for
the provision of telephone, video, voice, and or data communications ("the
Technology");
WHEREAS Gerstein , Arzu and Xxxxxxxx desire to provide the Technology to
the Joint Venture for all commercial revenue-producing purposes worldwide;
WHEREAS, EMC intends to provide certain financing and management skills to the
Joint;
WHEREAS, Gerstein, Arzu and Xxxxxxxx desire to provide certain management
skills, knowhow, trade secrets, trademarks, copyrights, patents and other
intellectual property related to the development and exploitation of the
Technology now owned or hereinafter acquired or development by then; and
WHEREAS, the Parties intend to develop a communications network beginning in
Guatemala based on the markets economic viability. Gerstein, Arzu and Xxxxxxxx
will establish offices and establish strategic banking relations for the
acceptance of telephone
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installation deposits. Upon determination of the economic feasibility of the
market in Guatemala (the "Market"), construction of the system will commence 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 and Arzu shall form EMC-SA, 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.
2. Market Evaluation Provided to EMC: Withing 30 days after the date on EMC SA
has legal standing in Guatemala (registered as "in Formation" status with
Guatemala's Commerce Registry), but in no event any later than July 30,
1997, Gerstein, Arzu and
Xxxxxxxx shall have funds in escrow in Guatemala, banks for 75,000 orders for
telephone service (at EMC's sole discretion this amount and time may be
modified); and shall provide a complete business plan demonstrating the economic
feasibility of each of the following:
(a) Providing service to 300,000 new telephone lines,
(ii) On going income from the initial 300,000 lines and the future expansion
plans for additional installation; and
(iii) Expansion of the tele communications network in other countries in
Central America. The Parties agree that the purpose of the business plan
described above and through marketing tests described in attachment B is to
verify the technical and commercial feasibility of the Technology in a
real-world setting. Success will be determined by EMC at its sole discretion. If
the market or Technology is not determined to be technically and commercially
acceptable, EMC shall have the option of terminating this agreement by providing
Gerstein, Arzu and Xxxxxxxx with written notice by August 31, 1997. Provided
that there has been no material misrepresentation or beach in the representation
or warranty set forth herein by Gerstein, Arzu and Xxxxxxxx, all funds advanced
by EMC to Gerstein, Arzu or Xxxxxxxx as of the date of termination shall be
retained by Gerstein, Arzu or Xxxxxxxx as liquidated damages and EMC shall have
no further funding or any other
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obligation to Gerstein, Arzu or Xxxxxxxx. If there has been material
misrepresentation of any representation or warranty set forth herein by
Gerstein, Arzu or Xxxxxxxx, 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,
Arzu or Xxxxxxxx, as of the date of termination and to pursue all other claims
which it may have available to it.
3.Scope; The Parties intend that the scope of the Joint Venture shall
include the following activities:
(a) Marketability of Service
(i) The demonstration of the Technology and economic viability of the market
shall beginning in Guatemala as soon as practical. No Later than July 30, 1997,
Gerstein, Ar and Xxxxxxxx shall demonstrate that the market exist by completing
with Attachment B (Marketing Test), Section A.1, A.2. No later than September
30, 1997, Gerstein, Arzu and Xxxxxxxx shall secure such offices, equipment,
staff and marketing assistance reasonably necessary to support the project
viability. Should Gerstein, Arzu and Xxxxxxxx be able to prove the commercial
viability sooner, commencement of the infrastructure will begin sooner.
(ii) Gerstein, Arzu and Xxxxxxxx shall use their best efforts to obtain for the
Joint Venture all necessary government approvals and licenses (including any
licenses required by any Guatemala telecommunications or electric companies) to
obtain all necessary right-of-way and to satisfy all interconnection
requirements. If Gerstein, Arzu or Xxxxxxxx are unable to obtain any of the
above, they shall promptly notify the Joint Venture before the installation of
infrastructure begins and EMC shall have the right to cancel or reschedule the
start of installation of infrastructure in the even t approvals are not
obtained.
(iii) Prior to the commencement of the installation of infrastructure and in any
event no later than September 30, 1997, Gerstein, Arzu and Xxxxxxxx shall use
their best efforts to supply such information to the Joint Venture as maybe
required by its counsel to render an opinion that, to the bet knowledge of such
counsel, all such necessary government approvals, necessary patent, or other
licenses or rights-of-way have been obtain and all necessary interconnection
requirements satisfied.
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(b) Guatemalan Deployment:: If the Marketing 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, Arzu and Xxxxxxxx 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
(c) Other Deployment: The Joint Venture shall have the exclusive right 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, Arzu and Xxxxxxxx agree that:
(i) Gerstein, Arzu and Xxxxxxxx shall consult with EMC and Xxxxxx X. Xxxxxxx,
which consultation shall be exclusive during the term of the Joint Venture, in
connection with all telecommunications matters involving the Technology and
development and utilization of the Technology; and
(ii) Gerstein, Arzu and Xxxxxxxx shall cooperate with EMC to cause the
incorporation in
Guatemala of EMC, S.A., which shall be a wholly owned subsidiary of EMC.,
Gerstein, Xxxxxx Xxxx and Xxxx Xxxxxxxx, shall provide exclusive consulting
services to EMC, S.A. in connection with all telecommunication cations matters
involving the Technology and development and utilization of the Technology, and
any agreements related to such obligation shall be provided to the Joint
Venture;
(iii) the Parties agree that Gerstein's, Xxxxxxxx'x and Arzu's ownership
interest in 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 first right of
first refusal for any new business opportunities of Gerstein, Arzu or Xxxxxxxx,
or any other partners, regardless of whether such opportunities involve the
Technology.
4. Financing: EMC shall provide financing to the Joint Venture and
Gerstein, Martinez or Arzu 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.
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5. Compensation: Subject to the compensation due Gerstein, Arzu and Xxxxxxxx,
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 profit (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, Arzu and Xxxxxxxx. The 20% of the Joint Venture's profits paid to
Gerstein, Arzu and Xxxxxxxx shall be paid directly by Las Vegas Entertainment
Network, Inc. from its share of EMC 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, Arzu and Xxxxxxxx and subject to EMC's fiduciary
duty to Gerstein, Arzu and Xxxxxxxx .
7.Representation 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, Arzu and Xxxxxxxx: represent and warrant that: (1) they
are authorized and empowered to perform each and all of their respective
obligations as set forth in this Agreement; (2) whatever right, title and
interest in and to the Technology they own rights are not subject to any third
party claims, including but not limited to any claims of Xxxx Xxxxxxxx, Xxxxxxx
"Xxxx" Xxxxxxx, or any of their 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 secret and trademark rights of any other person or entity,
including but not limited to any claims of Xxxx Xxxxxxxx, Xxxxxxx "Xxxx"
Xxxxxxx, or any of their 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 (4) 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, Arzu and Xxxxxxxx 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.
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(c) Mutual Covenants: Each Party represents and warrants to the others
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. Indemnifications:
(a) Each Party indemnifies the others and agrees to hold them harmless from
and against any claim, damage, loss or liability (including reasonable
attorneys' fees) resulting from the breach of any of its obligations or
warranties or from any misrepresentations under this Agreement.
(b) Notwithstanding any other provision of this Agreement:
(i) Gerstein, Arzu and Xxxxxxxx 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
attorneys' fees) resulting from interference of 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, and other intellectual
property rights, as 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, Arzu or Xxxxxxxx for any
of their 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
attorneys' fees) resulting from interference of 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 against the Joint
Venture involving the business contemplated by this Agreement by Xxxx Xxxxxxxx,
Xxxxxxx "Xxxx" Xxxxxxx, or any of
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their partners or entities in which either of them exercises a controlling
interest, upon notice by EMC, or LVEN, Gerstein, Arzu and Xxxxxxxx shall assume
all responsibilities associated with responding to and defending such action or
claim. EMC and LVEN shall cooperate in good faith with Gerstein, Arzu and
Xxxxxxxx in any such response or defense, provided that EMC and LVEN shall be
reimbursed for its attorneys' 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 , Arzu and Xxxxxxxx agree to disclose the
Technology to the Joint Venture, and the Joint Venture and EMC each agree to
maintain its confidentiality. Except as provided for in Section 2, the
Technology shall not be disclosed by any 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 public domain, or
(iii) such disclosure is required by law. Any third person 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 Joint Venture shall be dissolved upon the first of the
following to occur:
(a) the mutual agreement of the Parties to effect such termination; (b) the
Agreement is terminated pursuant to Section 2, 3(a) or 11 hereof;
(b) a Party commits a material breach or defaults in its obligations under this
Agreement, such breach or default is not cured within 30 days of receipt of
written notice thereof by EMC in the case of a breach or default by Gerstein,
Arzu or Xxxxxxxx or written notice thereof by Gerstein, Arzu or Xxxxxxxx in the
case of a breach or default by EMC, and the notifying Party thereafter provides
written notice that the Joint Venture will terminate in 30 days. Upon the third
such breach or default, the notifying 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 profit 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 carrier, and by five days following the mailing if delivered by US
first class mail. All notices are to be sent to the following, as the Parties
may from time to time modify by written notice:
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If to EMC:
Xxxxxx X. Xxxxxxx, Esq.
Fish & Xxxxxxxxxx, P.C.
000 00xx Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000
Phone: 000-000-0000
Fax: 310-551- 1942
If to Gerstein:
Xxxxxxx Xxxxxxxx
0000 Xxxxx Xxxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
Phone: 702-648-8O64
If to Arzu:
Xxxxxx Xxxxxxx Xxxx Lima
0X. Xxxxx 00-00
Xxxx 00 X.X.X.
Xxxxxxxxx, Central America
Phone: 000-000-000-0000
If to Xxxxxxxx:
Xxxx Xxxxx Xxxxxxxx
00 Xxxxx 00-00
Xxxx 00
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Guatemala, Central America
Phone: 000-000-000-0000
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:
(a) Severability: If any provision of this Agreement is adjudged by a
court or other governmental body of competent jurisdiction to be 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, not, war or terrorist act.
(e) Amendment: This Agreement may be amended only by 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.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date written above.
ELECTRIC MEDIA COMPANY-NEVADA, INC.
By: /S/ Xxxxxx X. Xxxxxxx /S/ Xxxx Xxxxx Xxxxxxxx
/S/Xxxxxxx Xxxxxxxx /S/Xxxxxx Xxxxxxx Xxxx L:ima
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ATTACHMENT A
FINANCING AND COMPENSATION DUE GERSTEIN, ARZU AND XXXXXXXX
1. FINANCING FOR THE MARKETING TESTS
The Parties hereby acknowledge that EMC has provided or will provide the
Venture or Parties hereto with financing in order to complete the Marketing Test
of the Technology, as follows:
(a) Upon signing this Agreement and providing EMC with copies of all
contracts for the acquisition of office space, etc. up to $500,000 for general
start-up costs, including renting office space, equipment, and other initial
120-day start-up expenses as such costs and expenses are agreed to by the
Parties.
(b) Upon acceptance of the Marketing Test described in Attachment B
or within 30 days hereafter, the Joint Venture shall commence construction of
the infrastructure according to a mutual agreed upon budget.
(c) All payments made according to the above schedule shall he made
only after EMC receives invoice payment requests in the form of Attachment C.
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FINANCING AND COMPENSATION DUE AFTER SUCCESSFUL
COMPLETION OF THE MARKETING TEST
Upon EMC's acknowledgment of the successful completion of the
Marketing Test items listed in Section Bof Attachment B:
(a) Gerstein, Arzu and Xxxxxxxx shall jointly receive from EMC 500,000 shares
of restricted common stock in Las Vegas Network ("LVEN") as a success fee;:
and
(b) Upon the successful completion and written acceptance by EMC of
all Marketing Test, Xxxxxxxx Xxxx and Xxxxxxxx shall jointly receive $15,000 per
month as an advance against their 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 Marketing Test. EMC shall not be obligated to make
any monthly payment until it has acknowledged satisfactory completion of all of
the Marketing Test. All advances to Gerstein, Arzu and Xxxxxxxx, 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) hereof. The amount of net profits due Gerstein, Arzu and
Xxxxxxxx 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,
Martinez and Arzu's accounts are in equilibrium (that is, advances equal earned
net profits plus interest), LVEN shall distribute to Gerstein, Arzu and
Xxxxxxxx, 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,
Arzu and Xxxxxxxx shall jointly receive 500,000 shares of restricted common
stock in LVEN for each 150,000 telephones verified as installed in Guatemala up
to a total of two million five hundred thousand (2,500,000) shares. All LVEN
shares issued to Gerstein, Arzu and Xxxxxxxx shall be subject to and reduced by
any reverse split or other reclassification of LVEN stock.
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ATTACHMENT B
MARKETING TEST
The Marketing Test shall include, but not exclusive, purpose, the
creastion of live, real-time, tests to demonstrate of the capability and
tgehnology.
A. By no later than July 30, 1997, the commercial marketability shall be
proven in accordance with the following:
A.1. Providing 75,000 orders for new telephone lines with deposits in local
Guatemala banks to cover same;
A.2. Poviding a complete business plan, demonstrating the
eocnomic feasility of the Technology, including anticipated revenues,
expenses, profits, and the details of installation operaitons ("the
Market Feasibility Study"); and
A.3. Five telephone calls initiated from five separate residences to any other
telephone worldwide;
All billing and collection procedures are also to be demonstrated. Wtihint 30
days of acceptence of the Marketing Test decribed in Attachement B,
Gerstein, Arzu and Xxxxxxxx shall cause the title to the switch, which is
currently located in Guatemala, to be transferred to EMC. The Pacific
serial number and describtion of the switche shall be provided by Gerstin,
Arzu and Xxxxxxxx to EMC , at least 10 days proir thereto.
This Agenda constitutes an initial draft statement of
the purposes of the Marketing Test and may be modified or added to by
EMC, with Gerstein's, Arzu's and Xxxxxxxx'x reasonable acceptance, by
sending written notice to Gerstein, Arzu and Xxxxxxxx at any time
hereafter, but in no event not priot to July 15, 1997.
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