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EXHIBIT 10.7
JOINT VENTURE AGREEMENT
This Joint Venture Agreement (the "Agreement") is made and entered into
as of the day of January 1, 1993, between WALBRO AUTOMOTIVE CORPORATION, a
Delaware corporation whose registered office is located at Xxxxxx Xxxxx,
Xxxxxxxx 00000 XXX, ("Walbro"), and XXXXXX X.X., a company incorporated under
the laws of France with share capital of FRF 156,000,000, whose registered
office is located at 00 xxx Xxxxxxxxx, 0000 Xxxxxxxx Xxxxxx and registered at
the Company and Commercial Registry of Nanterre number B552150195, represented
by Xxxxxxxx Xxxxxxxx ("Xxxxxx"). Xxxxxx is an indirect, majority-controlled
subsidiary of Magneti Marelli S.p.A., a company incorporated under the laws of
Italy ("Marelli"). Walbro and Xxxxxx are hereinafter collectively referred to as
"the parties".
R E C I T A L S:
A. Walbro designs and manufactures fuel delivery subsystems as
original equipment for application on automotive electronic fuel injection
systems.
B. The parties believe, based on their extensive experience in
different aspects of fuel delivery systems, that the market for fuel delivery
systems will develop so as to offer important opportunities for suppliers that
have the ability to design and manufacture integrated fuel delivery systems,
which generally include a fuel pump, module, level sensor, bracket, tubes and
flanges, connectors and filter (collectively, an "FDS").
X. Xxxxxx designs and manufactures, inter alia, various fuel level
sensors, brackets and other ancillary components for applications in fuel
delivery subsystems.
D. Walbro has advanced technology with respect to automotive
electronic fuel injection system components, making particular technological
advancements in the design and manufacture of electric fuel pumps and other
delivery system-related technology.
E. In light of the foregoing and the parties' objective to compete
effectively in the South American markets, the parties desire to utilize their
respective strengths by establishing a Joint Venture (the "JV"), to be jointly
owned by Walbro and Xxxxxx, to develop, manufacture and market integrated FDS
and their component elements for sale to designated markets, as further
described below.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and undertakings provided herein, the parties agree as follows:
ARTICLE I
FORMATION OF THE JV
1.1 INCORPORATION. The parties will cause the incorporation and
registration of the JV as sociedade por quotas de responsabilidade limitada
("Limitada") organized under the laws of Brazil. The Contrato Social of the JV
("Charter") shall be substantially in the form of EXHIBIT 1.1 attached hereto.
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1.2 OWNERSHIP. The equity interest in the JV will be owned by the
parties based on their percentage share of capital contributions of 51% for
Xxxxxx and 49% for Walbro, as set forth in SECTION 2.1, as may be adjusted from
time to time ("Capital Percentages"). Such ownership may be through direct or
indirect wholly-owned subsidiaries or Controlled Affiliates (as defined in
Section 6.1) of either or both parties.
1.3 PURPOSE. The purpose of the JV will be to develop, manufacture and
market FDS and component elements thereof to the JV Territory as described in
SECTION 1.4 below. An FDS includes a fuel pump, module, level sensor, brackets,
tubes and flanges, connectors, filters and related components and subassemblies.
Except as expressly provided in SECTION 4.3, the JV will be the exclusive
vehicle through which each of the parties develops, manufactures and markets FDS
and component elements thereof in the JV Territory for both automotive original
equipment manufacturers and aftermarket customers.
1.4 TERRITORY. The designated market for the JV (the "JV Territory")
will be Colombia, Venezuela, Brazil, Guyana, Suriname, French Guiana, Ecuador,
Peru, Bolivia, Chile, Argentina, Paraguay and Uruguay and any new nation created
by the merger or separation of any of the above countries and all territories in
the South regions controlled by any of the above countries. The territory shall
not include Mexico.
1.5 NAME. The parties agree that the JV shall operate under the name
Xxxxxx do Brasil Ltda.
ARTICLE II
CAPITALIZATION AND FUNDING OF THE JV
2.1 CAPITAL CONTRIBUTIONS. The JV will be formed and capitalized as
follows:
(a) The initial capitalization of the JV shall be $3,000,000 of
equity. The above amounts shall be contributed to the JV by the parties in
proportion to their respective Capital Percentages.
(b) The equity contributions constituting the initial
capitalization shall be made at such times as requested by the Board.
2.2 OPERATING DEFICITS. Operating deficits of the JV beyond those
provided for in the initial capitalization described above or needs for
additional working capital will be funded by outside borrowings to the maximum
extent available. If guarantees are required to secure outside borrowings, the
parties shall render such guarantees in proportion to their Capital Percentages.
Such guarantees shall be several except if and to the extent a bank requires the
guarantees to be joint and several, in which event each party shall have a right
of contribution from the other party. Any additional operating deficits or
working capital needs will be funded by the parties in proportion to their
respective Capital Percentages. Unless otherwise agreed at the time of funding,
such deficits will be funded by loans from the parties.
2.3 SUBSEQUENT CAPITAL OR LOANS. Additional capital requirements
contemplated by the Business Plan will be made by the parties in proportion to
their respective Capital Percentages. No additional capital contributions or
loans other than those contemplated by the Business Plan will be
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required unless approved by both parties; if so approved, they will also be made
in proportion to their respective Capital Percentages.
ARTICLE III
GOVERNANCE OF THE JV
The parties agree that the JV will be governed substantially as set
forth below, and the parties agree and acknowledge that these governance
provisions have been agreed to for the direct benefit of the JV and its
business. The parties further agree: (a) that the JV will be structured to
reflect this governance to the fullest extent permitted under applicable law;
and (b) that, in the event of a conflict between the Charter and the following
provisions, the following provisions will prevail to the extent such a result is
not directly contrary to applicable public policy.
3.1 MANAGEMENT TEAM. The day-to-day operations of the JV will be
conducted by two managers and their staff appointed by Walbro and Xxxxxx.
3.2 CONSULTATIVE BOARD.
3.2.1 COMPOSITION. The JV will have a Consultative Board or
similar governing body (the "Board") comprised of four persons which shall
function at the shareholder level. Xxxxxx will designate two members (the
"Xxxxxx Members"), and Walbro will designate two members (the "Walbro Members").
The Board will elect the Chairman from among the members. The Chairman will be a
designee of Xxxxxx. The Board will also elect a Vice Chairman from among the
members, who will be a designee of Walbro. Members of the Board shall be
designated by Notice and will serve until replaced by the party so designating.
3.2.2 ROUTINE DECISIONS BY THE BOARD. For all matters other than
those set forth in SECTION 3.2.3:
(a) each member shall be given 7 days' written notice (with
acknowledgment of receipt) of any meeting, annual or special, of the Board;
(b) attendance in person at such a meeting, without written
objection to lack of sufficient notice, waives this notice requirement;
(c) three members shall constitute a quorum;
(d) the vote of a majority of all members present in person shall
be decisive;
(e) the vote of the Chairman will be decisive in a tie vote; and
(f) whenever necessary under Brazilian law, decisions of the Board
shall be confirmed by a general shareholder meeting.
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3.2.3 SPECIAL MATTERS. With respect to each of the following
situations, the Board will not have the power to act unless the requisite
majority voting in favor of a resolution includes at least one Walbro Member and
one Xxxxxx Member or in the alternative there is unanimous approval by one
Walbro Member and one Xxxxxx Member; and whenever necessary under Brazilian law,
decisions of the Board shall be confirmed by a general shareholder meeting.
(a) payment of a dividend other than from current year's earnings;
(b) approval, ratification or substantial change of the operating
budget of the JV, including without limitation, the capital expenditures,
additions or improvements for the year;
(c) approval, ratification or substantial change of the Business
Plan;
(d) sale of a substantial portion of the assets of the JV;
(e) authorization or approval of a merger, consolidation or change
in the capital structure of the JV;
(f) creation or incurrence of indebtedness for borrowed money if,
after giving effect to the creation of such indebtedness, the total amount of
the JV's indebtedness for borrowed money will exceed $2,000,000, except
unsecured current liabilities incurred in the ordinary course of business;
(g) creation or incurrence of any mortgage, pledge, lien, charge
or encumbrance upon any property or assets now owned or hereinafter acquired by
the JV except for (i) mortgages, pledges, liens, charges or encumbrances on, and
incurred at the time of and in connection with the acquisition of property
acquired in the ordinary course of business, (ii) minor liens and encumbrances,
and (iii) other liens and encumbrances for amounts not exceeding $2,000,000 in
the aggregate at any one time outstanding;
(h) making, ratifying or causing the JV to become a party to a
contract or commitment, or to renew, extend or modify any contract or commitment
between JV the and one of its equity holders or an "affiliate" of an equity
holder which requires payment of an aggregate amount in excess of $250,000. For
purposes of this subsection, an "affiliate" will mean:
i. a company, domestic or foreign, of which an equity holder in
the JV owns or controls, directly or indirectly, at least
25 % of the assets, voting stock or capital;
ii. a company, domestic or foreign, which owns or controls,
directly or indirectly, at least 25% of the assets, voting
stock or capital of an equity holder of the JV; or
iii. a company, domestic or foreign, under common control with an
equity holder through direct or indirect ownership of at
least 25 % of the assets, voting stock or capital of that
company.
(i) material agreement or commitment to any matter required of the
JV pursuant to a contract or agreement, including Ancillary Documents, with
Xxxxxx, Walbro or an affiliate (as that term is
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defined in subsection (h) above) of Xxxxxx or Walbro, including the modification
or termination of any existing contract;
(j) agreement or commitment to purchase services, from Walbro,
Xxxxxx or their affiliates (as that term is defined in subsection (h) above);
and
(k) approval of the licensing or sublicensing of any FDS
technology, fuel pump or other component embodying FDS technology, by the JV.
(1) any amendment to the Charter.
In case of a deadlock over one or more of these issues, the provisions set forth
in SECTION 3.2.4 below will control.
3.2.4 DEADLOCK. The following sets forth the parties' agreement
with respect to a deadlock situation. In the event that:
(a) either of Xxxxxx or Walbro (in this subsection called "the
First Party") gives written notice to the other party (in this subsection called
"the Second Party") specifying as subject to this subsection a resolution
requiring the affirmative vote of a majority of the Board, including at least
one Walbro Member and one Xxxxxx Member or the unanimous approval of the
shareholders, which resolution was previously put to and not passed by a general
or special meeting of the Board or shareholders, as applicable, because the
Second Party or its designee Members present did not vote in favor of the
resolution or voted against the resolution, or the Second Party or its designee
Members were not present for the vote; and
(b) such resolution is again put at another such meeting called
within 30 days of the original meeting and the First Party or its designee
Members present, as the case may be, votes for the resolution but the Second
Party or its designee Members, as the case may be, does not vote or votes
against the resolution, or the Second Party or its designee Members, as the case
may be, are not present for the vote, then a deadlock situation will be deemed
to have arisen. Within seven days of such event arising, Walbro and Xxxxxx will
prepare and circulate to the other a memorandum or other form of statement
setting out its position on the matter in dispute and its reasons for adopting
such position. Each such memorandum or statement will be considered by the Chief
Executive Officers of Xxxxxx and of Walbro who will respectively use their
reasonable efforts to resolve such dispute.
If the parties agree upon a resolution of the dispute, they will
jointly sign a statement setting forth the terms of such resolution and Walbro
and Xxxxxx will exercise all voting rights and other powers of control available
to them in relation to the JV to procure that such resolution is fully and
promptly carried into effect.
If a resolution of the dispute is not agreed upon within 30 days
after delivery of the memorandum or statements mentioned above or such longer
period as Walbro and Xxxxxx may agree in writing, the JV will automatically
terminate as prescribed in ARTICLE VII.
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If a resolution is agreed upon by the parties but is not
implemented by the JV within 60 days after such agreement, or such longer period
as Walbro and Xxxxxx may agree in writing, the JV will automatically terminate
as prescribed in ARTICLE VII.
ARTICLE IV
CONDUCT OF THE JV
4.1 BUSINESS PLAN. A five-year business plan (the "Business Plan") in
the form attached as EXHIBIT 4.1 will be approved by the Board in accordance
with SECTION 3.2.3 and will be implemented by the management of the JV. The
Business Plan will include initial and subsequent funding requirements. The
Business Plan will be revised and updated on an annual basis by the Board in
accordance with Section 3.2.3.
4.2 MANUFACTURING. Components to be incorporated into the FDS products
will be selected based on "best in class" for quality, performance and cost. The
JV will provide customer application engineering and manufacturing technology
with substantial support from Walbro under the Engineering Support Agreement.
The parties acknowledge that certain products will be manufactured by the JV
initially, that fuel pumps will be manufactured by Walbro and sold to the JV and
that certain level sensors will be manufactured by Xxxxxx and sold to the JV.
The JV may purchase fuel pumps and other components from Walbro and level
sensors and other components from Xxxxxx at prices to be agreed upon.
4.3 MARKETING. The JV will be responsible for the marketing of all FDS
products in the JV Territory. Distribution and marketing of FDS products to
aftermarket customers in the JV territory will be handled by the JV through the
Marelli or JV network as mutually agreed upon by the parties. Walbro shall not
sell FDS products in the JV Territory, except that Walbro may continue its
current practice of selling to U.S. aftermarket customers who export to the JV
Territory independent of the Marelli network.
4.4 ENGINEERING SUPPORT FROM WALBRO. The Business Plan provides for
certain engineering services to be provided to the JV by Walbro. Walbro will
provide such services to the JV on the basis provided under, and which services
will be governed by, the Walbro Engineering Support Agreement in substantially
the form attached as EXHIBIT 4.4. If and when necessary, simplified versions of
this agreement shall be prepared for filing with the INPI (Brazilian patent
office) or other governmental bodies. As between the parties, the terms of the
Engineering Support Agreement, as per Exhibit 4.4 shall prevail in any conflict
with the terms of the agreements filed with the INPI or any other governmental
body.
ARTICLE V
LICENSES
5.1 XXXXXX TECHNOLOGY LICENSE. Xxxxxx will provide all of its current
FDS component (other than fuel pump) technology to the JV via a fully paid-up
license (the "Xxxxxx License"), in the form of EXHIBIT 5.1, which is exclusive
in the JV Territory. The Xxxxxx License will provide Xxxxxx with all
modifications and improvements made by the JV to the level sensor technology
licensed thereby via a grant-back of such rights.
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5.2 WALBRO TECHNOLOGY LICENSE. Walbro will provide all of its FDS
technology to the JV via a license (the "Walbro License"), substantially in the
form of EXHIBIT 5.2, which will be exclusive in the JV Territory (except for the
Ford Motor Company and General Motor Corporation licenses to produce for their
own use, as such licenses may be renewed or extended from time to time). The
Walbro License shall provide that the sale of "Future Licensed Products" will be
on a royalty-bearing basis. The Walbro License will provide Walbro with all
modifications and improvements to the fuel pump technology licensed thereby via
a grant-back of such rights.
5.3 BRAZILIAN LICENSES FOR FILING. If and when necessary, simplified
versions of the licenses in Sections 5.1 and 5.2 shall be prepared for filing
with the INPI (Brazilian patent office). These simplified licenses shall comply
with the requirements of the INPI and will be constructed to protect the
parties' property rights in their patents, trademarks, logos, know-how and the
like. As between the parties, the terms of the licenses under Sections 5.1 and
5.2 shall prevail in any conflict with the terms in the licenses filed with the
INPI.
5.4 FUTURE JV TECHNOLOGY. The JV may develop future FDS technology for
use in its operations and will be the owner of any such technology except as
provided by grant-back in Sections 5.1 and 5.2. The JV will grant to Walbro a
non-exclusive license to use all new FDS technology owned by the JV in areas
other than the JV Territory via a royalty-bearing license to be agreed upon by
the parties, unless said technology is in any significant manner a modification
or improvement of the technology licensed pursuant to the Walbro License which
was not the subject of a "grant-back", in which case the license will be
royalty-free. The parties further agree that, in negotiating the royalty to be
paid under such license agreement, they will take into account the relative
contributions of technology supplied by Walbro, supplied by Xxxxxx, and
developed by the JV itself to the products covered by such license.
5.5 CONSEQUENCES OF JV TERMINATION ON WALBRO LICENSE.
5.5.1 TERMINATION GENERALLY. If the JV terminates under ARTICLE
VII for any reason other than those described in SECTIONS 5.5.2 and 5.5.3 below,
Walbro agrees to enter into a new license agreement with the JV or Xxxxxx, as
the case may be, provided that the Walbro License has not been terminated by
Walbro due to a material breach by the JV thereof. The terms of the new license
shall be substantially identical to the terms of the Walbro License, except
that: (a) the royalty rate to be paid with respect to Licensed Products (as
defined in the Walbro License) shall be revised to a reasonable royalty rate
which is agreed upon by the parties hereto or is determined by an appropriate
expert appointed by the parties (or, if the parties cannot agree on such
appointment, the expert shall be appointed through the arbitration process set
forth in SECTION 9.6); and (b) certain of the other terms of the Walbro License
shall be changed as set forth in EXHIBIT 5.5.1. Walbro's obligation hereunder
shall be void and no license shall be granted unless all of the terms of the
above license are approved by the appropriate Brazilian governmental
authorities.
5.5.2 CERTAIN WALBRO BREACHES. If the JV terminates under SECTION
7.1.6, then the Walbro License shall continue in full force and effect
regardless of termination of the JV, and the Walbro License may be assignable to
Xxxxxx at that time.
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5.5.3 CERTAIN XXXXXX BREACHES. If the JV terminates under Section
7.1.5, then Walbro shall have no further obligation to enter into a new license
with either the JV or Xxxxxx.
ARTICLE VI
RESTRICTIONS ON TRANSFER OF INTERESTS IN THE JV
6.1 NO TRANSFER WITHOUT APPROVAL. Neither Walbro nor Xxxxxx may
transfer any of its equity interests in the JV to any third party (other than
direct or indirect Controlled Affiliates) without the prior written approval of
the other party. It is the intention of the parties that there be only two
owners of the JV; consequently, any attempted transfer of equity interests in
the JV must encompass the entire equity interest of the transferring party.
For purposes of this Agreement, a "Controlled Affiliate" of a party
means any person which controls, is controlled by or is under common control
with, such party; "control" means the ownership of a majority of both the voting
power of, and the equity interests in, a person.
6.2 RIGHT OF FIRST REFUSAL. If for any reason a transfer of equity
interest in the JV cannot be restricted as provided in SECTION 6.1, then a
transfer by either party of any of its shares of capital stock of the JV to any
third party (other than to a direct or indirect Controlled Affiliate), shall be
subject to a right of first refusal by the other party to acquire such interests
as set forth below.
6.2.1 FIRST OFFER. If either of Walbro or Xxxxxx receives from a
third party (the "Outsider") a bona fide written offer (a "Bona Fide Offer") to
purchase all of its shares of capital stock of the JV (the "Equity Interest"),
such party (the "Selling Party") agrees that prior to effecting any sale
pursuant to such Bona Fide Offer, it will first make a written offer (the
"Offer") upon the terms and conditions provided herein to sell its Equity
Interest to the other party (the "Offeree Party").
6.2.2 NOTICE OF OFFER. The Offer will set forth the following:
(a) the Selling Party's intention to sell its Equity Interest;
(b) a photostatic copy of the Bona Fide Offer of the Outsider, and
all written communications relating to the proposed sale and purchase of the
Equity Interest;
(c) a written offer to sell to the Offeree Party the Equity
Interest of the Selling Party upon the same terms and conditions and for the
same price as the Bona Fide Offer; and
(d) the U.S. dollar equivalent of the price.
6.2.3 OFFEREE PARTY ACCEPTANCE. The Offeree Party may accept such
Offer for all, but not less than all, of the offered Equity Interest by giving
written notice within 30 days after receipt of the Offer to the Selling Party.
If the sale to the Offeree Party is not consummated within 45 days after the
expiration of this 30-day notice period (which 45-day period will be tolled by
any waiting period or suspension of the transaction imposed or required by
applicable law or any unnecessary delay caused by the Selling Party) or
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as provided in the Bona Fide Offer, the Selling Party will have the right to
sell its interest to the Outsider as provided in SECTION 6.2.5 below.
6.2.4 PURCHASE BY THE OFFEREE PARTY. Any purchase by the Offeree
Party pursuant to this ARTICLE VI will be consummated upon the same terms and
conditions and for the U.S. dollar equivalent price as the Bona Fide Offer for
the Equity Interest. Any terms and conditions not specified in the Bona Fide
Offer will be mutually agreed upon by the Offeree Party and the Selling Party.
6.2.5 PURCHASE BY OUTSIDER. If the Offeree Party fails to accept
the Offer pursuant to SECTION 6.2.3, the Selling Party will then have the right
to sell its Equity Interest to such Outsider on the same terms and conditions as
contained in the notice described in SECTION 6.2.2; provided that (i) the sale
to the Outsider is consummated within 45 days after the expiration of the 30-day
option period described in SECTION 6.2.3 (which 45-day period will be tolled by
any waiting period or suspension of the transaction imposed or required by
applicable law) or as provided in the Bona Fide Offer, and (ii) the Outsider
becomes a party to this Agreement contemporaneous with his purchase of the
Equity Interest. If the Selling Party and the Outsider do not consummate the
sale of the Equity Interest within the time period described in (i) above or
intend to consummate such sale on materially different terms than the Bona Fide
Offer, the Equity Interest may only be sold to said Outsider after again
complying with the terms of this ARTICLE VI.
ARTICLE VII
TERMINATION OF THE JV
7.1 TERM AND TERMINATION OF THE JV. Unless otherwise terminated as
provided below, the JV will be of perpetual duration. The JV will be terminated:
7.1.1 BY MUTUAL CONSENT. At any time by the mutual consent of the
parties;
7.1.2 FOR BREACH. Upon the material breach, which is not cured
within 90 days after notice thereof, by a party of its obligations to the JV or
otherwise under this Agreement, at the option of the non-breaching party
exercised within 10 days after the expiration of the 90-day cure period;
7.1.3 BANKRUPTCY. Automatically upon the filing of a voluntary
petition or answer admitting jurisdiction of the court and the material
allegations, or the consent to, an involuntary petition pursuant to or
purporting to be pursuant to any reorganization or insolvency law of any
jurisdiction, or an assignment for the benefit of creditors, or an application
for or consent to the appointment of a receiver or trustee of a substantial part
of the property of a party hereto;
7.1.4 DEADLOCK. Upon an unresolved deadlock as described in
SECTION 3.2.4;
7.1.5 TERMINATION OF WALBRO LICENSE BY WALBRO. At the option of
Walbro, immediately upon the termination of the Walbro license agreement
pursuant to Section 9.02(F) thereof;
7.1.6 VIOLATION OF CERTAIN PROVISIONS. At the option of Xxxxxx,
upon the failure or refusal of Walbro or its designees to comply with the
governance provisions set forth in SECTION 3.2.3; or
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7.1.7 FORCE MAJEURE. At the option of the non-offending party,
upon the failure of a party to begin fully performing its obligations under this
Agreement within six months after such party declares an inability to perform
due to force majeure as provided in SECTION 9.5.
7.1.8 EXPROPRIATION. Upon the expropriation of a substantial
portion of the JV's property.
7.2 CONSEQUENCES OF TERMINATION.
7.2.1 PURCHASE OPTION. Upon termination of the JV pursuant to
SECTION 7.1 above, either party will have the option, in lieu of proceeding with
the dissolution of the JV, to purchase the other party's Equity Interest by
giving notice within 30 days after the termination of the JV to the other party
that it desires to purchase for cash all of the Equity Interest of the other
party at a stated price. Any offers made under this provision will be submitted
simultaneously on the last day of the 30-day period.
If within the 30-day period only one party gives notice that it
wishes to purchase the other party's Equity Interest, then the other party may
either accept such offer, or give notice within 20 days of the offer that the
price will be equal to the fair market value of the Equity Interest as
determined by an investment banker with recognized standing in the international
finance community and mutually acceptable to the parties. In the event the
parties cannot agree on an investment banker, each party will select one banker
and the two bankers will select a third banker, which third banker will
conclusively determine fair market value. For purposes of this section, "fair
market value" of an Equity Interest will be the value of the JV as if it were
being sold as a whole business and a going concern to one purchaser, multiplied
by the selling party's Capital Percentage at the time of the valuation.
If within the 30-day period both parties give notice that they
wish to purchase the other party's Equity Interest, then the party whose notice
contains the highest stated per share price will purchase the other party's
Equity Interest at that price for cash, or as otherwise mutually agreed to by
the parties.
Notwithstanding anything to the contrary, this purchase option
will not be available to a party whose breach, bankruptcy, insolvency, or
liquidation has given rise to the termination of the JV pursuant to SECTION
7.1.2, SECTION 7.1.3, SECTION 7.1.5 or SECTION 7.1.6.
7.2.2 DISSOLUTION. If the above purchase option is not exercised
by either party, the parties will use their best efforts to dissolve the JV and
wind up its affairs in a manner designed to preserve the interests of both
parties in the JV products and JV Territory, including the granting of
cross-licenses by each party for the use on a non-exclusive basis of all
technology developed and owned by the JV at the time of its dissolution. Nothing
herein shall prejudice the rights of Xxxxxx to enter into the license agreement
provided by SECTION 5.4.1.
7.2.3 DAMAGES. Nothing herein shall prejudice the rights of a
party, in addition to the exercise of any other remedy hereunder, to recover
money damages for any breach by a party of this Agreement or any Ancillary
Document (as defined).
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ARTICLE VIII
REGULATORY MATTERS AND INVALIDITY
8.1 COOPERATION IN MAKING REGISTRATIONS. The parties shall cooperate
fully in making, whenever required or necessary, registrations under National
Institute of Individual Property (INPI) Resolution N-022 with respect to
agreements for the transfer of technology and rendering of technical assistance.
8.2 CONSEQUENCES OF INVALIDITY. If for any reason whatever at any time,
any provision of this Agreement or any of the Ancillary Documents is or becomes
invalid, illegal or unenforceable, or is declared by any court of competent
jurisdiction or any other competent authority to be invalid, illegal or
unenforceable or if such competent authority:
(i) refuses, or formally indicates an intention to refuse
authorization of, or exemption to, any of the provisions of or
arrangements contained in this Agreement or in any of the
Ancillary Documents (in the case of a refusal either by way of
outright refusal or by way of requiring an amendment or deletion
of any provision of this Agreement or of any of the Ancillary
Documents and/or the inclusion of any new provision in this
Agreement or in the Ancillary Documents and/or the giving of
undertakings as to future conduct before such authorization or
exemption can be granted); or
(ii) formally indicates that to continue to operate any provision of
this Agreement or of any of the Ancillary Documents may expose the
parties to sanctions under any order, enactment or regulation, or
requests any party to give undertakings as to future conduct in
order that such party may not be subject to such sanctions; and in
all cases, whether initially or at the end of any earlier period
or periods of exemption (each of which circumstances being
referred to in this ARTICLE VIII as "a Relevant Invalidity"), then
in any such case, at the request of either party by notice or a
series of notices to that effect to the other ("Negotiation
Notice"), the parties will meet to negotiate in good faith to
agree upon valid, binding and enforceable substitute provisions
while at the same time reconsidering the other terms of this
Agreement and of any of the Ancillary Documents not so affected so
as to reestablish an appropriate balance of the commercial
interests of the parties ("Substitute Provisions").
8.3 FAILURE TO AGREE ON SUBSTITUTE PROVISIONS. If and to the extent
that Substitute Provisions are formally agreed in writing within one month of
the service of a Negotiation Notice, or such other period as may be formally
agreed in writing between the parties, then in that respect the matter shall be
deemed to be settled and such substitute provisions shall be deemed part of this
Agreement or of any of the Ancillary Documents. If, however, in respect of any
Relevant Invalidity no Substitute Provisions can be agreed within such period,
then if any party considers on reasonable grounds that its commercial interests
with regard to this Agreement and/or any of the Ancillary Documents is
materially and adversely affected as a consequence of the Relevant Invalidity it
may submit such matter to arbitration pursuant to SECTION 9.8.
8.4 DEFERRAL OF DETERMINATION OF ADVERSE EFFECT. If any party
considers that it is unable to assess the consequence of any Relevant Invalidity
in the light of facts subsisting at the time, that party may
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defer commencement of an arbitration in respect of the provision or provisions
affected by such Relevant Invalidity until such time as it considers on
reasonable grounds that its commercial interests with regard to this Agreement
and/or any of the Ancillary Documents are materially and adversely affected in
the light of events occurring subsequent to communication of the finding of
invalidity to the parties. Notwithstanding the foregoing, a party must commence
arbitration pursuant to SECTION 8.3 within 60 days of receipt of the Negotiation
Notice.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 ANCILLARY DOCUMENTS; INTERPRETATION. The parties acknowledge and
agree that, in the event of an inconsistency or disagreement between this
Agreement, on the one hand, and any other agreement or document referred to
herein to be entered into in connection with the JV (each an ("Ancillary
Document" and, collectively, the "Ancillary Documents"), this Agreement shall
prevail.
9.2 PUBLIC ANNOUNCEMENTS AND CONFIDENTIALITY. The parties agree that
all data and information relating to the JV, including but not limited to any
information relating to or provided under any Ancillary Document, the JV's trade
secrets, know-how, inventions, discoveries, improvements, technologies, business
practices and methods, whether or not patented, lists of suppliers, and
information relating to the JV's financial statements, customer identities and
utilization patterns, needs and participation levels, potential customers,
suppliers, products, servicing methods, equipment, programs, analyses, profit
margins and cost data, shall be kept confidential by both parties and shall not,
whether prior to or after the date hereof, be disclosed to any person, firm, or
corporation, except to the extent that such data or information is generally
known to the trade or in the public domain. The parties, however, may provide
the information to third parties (i) for the purpose of assisting in the
evaluation of the JV, its performance, or its operations, (ii) for the purpose
of determining the value of said party's equity interest in the JV, and (iii)
for any other purpose consistent with the activities contemplated by this
Agreement and the Ancillary Documents; provided that in each case the disclosing
party takes reasonable precautions to maintain the confidential nature of the
information. The parties may also make any disclosures necessary to comply with
applicable securities and other disclosure laws. The parties recognize and
acknowledge that any breach by them of the foregoing provisions of this section
may cause irreparable harm to the other party and the JV and, in the event of
any such breach, such other party or the JV shall, in addition to all other
remedies available to it, at law or in equity, be entitled, if it so elects, to
institute and prosecute proceedings in any court of competent jurisdiction to
enjoin such breaching party from doing any act in violation of such provisions,
and that such other party or the JV shall not be required to show actual
monetary damages as a prerequisite to such relief. The above provisions shall
survive any termination of this Agreement and any dissolution of the JV for a
period of two years after such termination or dissolution.
Each party agrees not to make any public disclosure regarding the
existence or the substance of the transactions contemplated hereby without the
prior approval of the other party, except to the extent that either party
reasonably determines that such disclosure is required by applicable law or
regulation.
9.3 ACCOUNTING. The JV's accounting methods will be in accordance with
Brazilian law and Brazilian generally accepted accounting principles and all
accounts shall be maintained in Brazilian
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currency units. Indexing or currency conversions shall be the responsibilities
of, and at the expense of the parties.
9.4 INSURANCE. Insurance protection provided for the JV under this
Agreement must apply both to each individual installation of the JV and to all
installations as a whole. The JV's insurance must also provide insurance
coverage for all types of risk related to the construction and operation of the
aforementioned installations, including material and other property losses
caused to fixed assets belonging to the JV, rented by it, or acquired on credit
by it, as well as its civil liability for property or physical damage which may
be caused to third parties in connection with the JV's activity, either by
defects in the goods its produces or by JV workers and employees in connection
with their performance of their job responsibilities.
9.5 FORCE MAJEURE. Where either party is unable, wholly or in part, by
reason of force majeure to carry out its obligations under this Agreement, such
obligations are suspended so far as they are affected by the force majeure
during the continuance thereof; provided that an obligation to pay money is
never excused by force majeure.
The party affected by the force majeure will give notice to the other
party of the particulars of the situation and the probable extent to which it
will be unable to, or delayed in, performing its obligations under this
Agreement, within 10 days after the occurrence of the force majeure.
For purposes of this section, "force majeure" means an act of God,
strike, lockout or other interference with work, war declared or undeclared,
blockade, disturbance, lightning, fire, earthquake, storm, flood or explosion;
governmental or quasi-governmental restraint action, expropriation, prohibition,
intervention, direction or embargo; unavailability or delay in availability of
equipment or transport; inability or delay in obtaining governmental or
quasi-governmental approvals, consents, permits, licenses, authorities or
allocations; and any other cause whether of the kind specifically enumerated
above, or otherwise which is not reasonably within the control of the party
affected.
9.6 EXPENSES. Walbro and Xxxxxx, and not the JV, will each pay their
own costs and expenses incurred in negotiating and drafting this Agreement and
the Ancillary Documents.
9.7 FURTHER ASSURANCES. Walbro and Xxxxxx agree to execute and deliver
such other instruments, agreements or documents and take such other action as
may reasonably be necessary or desirable to consummate the transactions
contemplated by this Agreement.
9.8 RESOLUTION OF DISPUTES. Any dispute, controversy or claim arising
out of or relating to this Agreement or any Ancillary Agreement, including,
without limitation, the breach, termination or invalidity thereof, shall be
settled pursuant to and shall be subject to that certain Arbitration Agreement
dated June 17, 1991, attached as Exhibit 9.8, except that for purposes of any
such arbitration, the arbitrators shall apply the substantive law specified in
this Agreement or any Ancillary Documents.
9.9 SUCCESSORS AND ASSIGNS. This Agreement will be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns, but will not be assignable or delegable by any party without
the prior written consent of the other party, except that either party may
assign, in whole or
14
in part, its rights hereunder, subject to all obligations hereunder, to a
Controlled Affiliate in connection with any transfer of Equity Interests in the
JV permitted pursuant to ARTICLE VI; provided, however, that such assignment
will not relieve that party of any of its obligations or liabilities hereunder.
9.10 AMENDMENTS, SUPPLEMENTS, ETC. This Agreement may be amended or
supplemented at any time by additional written agreements signed by both
parties, as may mutually be determined by the parties to be necessary, desirable
or expedient to further the purposes of this Agreement or to clarify the
intention of the parties.
9.11 NOTICES. All notices and other communications required or
permitted hereunder will be in writing and, unless otherwise provided in this
Agreement, will be deemed to have been duly given when delivered in person or
one business day after having been dispatched by telegram or electronic
facsimile transfer (confirmed in writing by mail simultaneously dispatched with
a copy of the sender's machine printed facsimile confirmation) or three business
days after having been dispatched by an internationally recognized overnight
courier service to the appropriate party at the address specified below.
(a) If to Walbro, to:
Walbro Automotive Corporation
0000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxx 00000
Facsimile Number: (000) 000-0000
Attention: Chief Financial Officer
With a copy to:
Xxxxxx Xxxxxx & Xxxxx
000 X. Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Facsimile Number: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxx
(b) If to Xxxxxx, to:
Xxxxxx X.X.
00 xxx Xxxxxxxxx
0000 Xxxxxxxx Xxxxxx
Attention: Directeur-Generale
With a copy to:
Magneti Marelli S.p.A.
Xxxxx Xxxx Xxxxxxxx
00000 Xxxxxxxx Xxxxx, Xxxxx
15
Facsimile Number: (39) (0) 00000000
Attention: General Counsel
9.12 WAIVER. Waiver by either party of a breach by the other party of
any obligation or requirement contained in, or arising from, this Agreement does
not operate as a waiver of another or continuing breach by the other party of
the same, or any other, obligation or requirement hereunder. Any waiver by
either party must be in writing, signed by the waiving party.
9.13 ENTIRE AGREEMENT. This Agreement and the Ancillary Documents
represent the understanding of the parties with respect to the subject matter
hereof and thereof and supersede any other agreement, whether written or oral,
that may have been made or entered into by Walbro or Xxxxxx or their affiliates
relating to the matters contemplated hereby.
9.14 NO STRICT CONSTRUCTION. The language used in this Agreement will
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against either
party.
9.15 SEVERABILITY. Subject to the provisions of ARTICLE VIII, if any
provision of this Agreement or the application of any such provision to any
person or circumstance is held invalid, illegal or unenforceable in any respect
by a court of competent jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision hereof.
9.16 GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of New York, without giving effect to the
principles of conflict of laws thereof.
9.17 THIRD PARTIES. Nothing in this Agreement express or implied is
intended to confer any right or remedy under or by reason of this Agreement on
any person other than the parties, their respective heirs, representatives,
successors and permitted assigns, affect or discharge the obligation or
liability of any third persons to any party to this Agreement, or give any third
party any right or subrogation or action over against any party to this
Agreement.
9.18 TITLES AND HEADINGS. Titles and headings to sections herein are
inserted for convenience of reference only, and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
9.19 EXECUTION IN COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same agreement.
9.20 SURVIVAL. The covenants and agreements made in SECTIONS 5.4, 7.2,
9.2, 9.4, 9.6 and 9.14 will survive any termination of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
WALBRO AUTOMOTIVE CORPORATION
By: /s/ Xxxx Xxxxxxx
--------------------------------
Its: Treasurer
--------------------------------
XXXXXX X.X.
By: /s/ Xxxxxxxx Xxxxxxxx
--------------------------------
Its: Director General
--------------------------------
