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EXHIBIT 10.9
JOINT VENTURE AGREEMENT
This JOINT VENTURE AGREEMENT is made and entered into by and between the
undersigned parties consisting of PERFORMANCE CAPITAL MANAGEMENT, a California
Corporation (hereinafter sometimes referred to as "PERFORMANCE" OR "PCM") and
PERFORMANCE ASSET MANAGEMENT FUND II, LTD., a California Limited Partnership,
(hereinafter sometimes referred to as "PAMF II").
WITNESSETH
WHEREAS, PAMF is a limited partnership formed for the purpose of
generating income and cash flow from various retail contract assets acquired
from lenders and other creditors and desires to develop and maintain a dedicated
collections and servicing capacity to efficiently collect on such assets while
also limiting the legal ability for such collection services; and
WHEREAS, PERFORMANCE is a collections and servicing entity with the
expertise to perform such services;
THEREFORE THE PARTIES HEREBY AGREE AS FOLLOWS:
ARTICLE 1.1 FORMATION OF JOINT VENTURE SECTION 1.1
FORMATION OF JOINT VENTURE. PERFORMANCE and PAMF II hereby form
a Joint Venture (the "Joint Venture" or "Venture") for the limited purposes and
scope hereinafter set forth. The parties are sometimes referred to herein as the
"Venturers," in the plural, and "Venturer," in the singular.
SECTION 1.2 NAME OF JOINT VENTURE. The affairs of the Joint Venture
shall be conducted solely under the name "PCM/PAMF II, J.V. Pool 23" and such
name shall be used at all times in connection with the Joint Venture's affairs.
This Joint Venture shall be governed by and interpreted in accordance with the
laws of the State of California.
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SECTION 1.3 The purpose of this Joint Venture shall be to facilitate
collections of charged off retail sales contracts and credit card contracts
assets ("Contract Assets") purchased from various lenders, or sell, enforce,
foreclose upon, and take any and all actions necessary. Convenient or expedient
to maximize income and other benefits to be derived by the Joint Venture in
compliance with all applicable requirements of law. From time to time the Joint
Venture shall also purchase from lenders and other sources cash flow generating
Contract Assets in order to produce income for the Joint Venture. The Joint
Venture shall not engage in any other business or economic activity nor acquire
or own any type of property unrelated to the Joint Venture purpose except with
the prior written approval of all Venturers.
(b) Except as otherwise expressly and specifically provided in this
Agreement, as between the parties hereto, the obligations of the Venturers under
this Agreement shall be, in every case, several and shall not be, or be
construed to be, either joint or joint and several, and, except as otherwise
expressly provided in this Agreement, none of the Venturers shall have any
authority to act for, or to assume any obligations or responsibility on behalf
of, any other Venturer or the Joint Venture. It is not the purpose or intention
of this Agreement to create, and this Agreement shall never be construed as
creating, a general business partnership or any other relationship whereby,
except as otherwise expressly provided in this Agreement, any party hereto shall
be held liable for the contracts or acts, of either omission or commission, of
any other party hereto.
SECTION 1.4 PLACE OF BUSINESS The principal office and place of business
of the Joint Venture shall be: 00000 Xxx Xxxx, Xxxxx 000, Xxxxxx, XX 00000.
ARTICLE 2. MANAGEMENT OF THE VENTURE
SECTION 2.1 MANAGEMENT. All matters relating to the policies and
management of the Joint Venture and the conduct of business operation and
affairs of the Joint Venture shall be determined by unanimous approval of the
Venturers except to the extent, if any, that specific authority may from time to
time be granted in writing by the Venturers to any employed personnel of the
Joint Venture or any other party.
SECTION 2.2 REPRESENTATIVES OF VENTURERS. In order to facilitate the
management and operation of the Joint Venture, each Venturer shall designate a
representative as the party authorized on behalf of such Venturer to make
decisions with respect to the Joint Venture. Each other Venturer
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shall be entitled to rely upon the authority of such designated representative
until advised in writing by the other Venturer. The designated representative of
PERFORMANCE shall be Xxxxx Xxxxxx XX, and the designated representative of PAMF
II shall be Xxxxxxx Xxxxxxxx. Because of its specialized expertise in the
purchase and collections of Contract Assets, the representatives of the
Venturers designate PERFORMANCE:
(1) To collect revenues due or to become due to the Venture
and deposit such revenues in a bank clearing or trust
account or bank accounts (as selected by the Venturers);
(2) To exclusively assign accounts for collections to third
parties including but not limited to, outside collection
agencies and to hire attorneys from time to time to assist
in such efforts. Further, in connection with the authority
granted herein to PCM, PCM shall also have the right to
assign, transfer, or convey a portion of its ownership
interest in the Joint Venture to such third parties;
(3) To make such contracts, if any, relating to the conduct of
the business as they shall deem advisable;
(4) To negotiate and deal with regulatory authorities relative
to matters involving the business and affairs of the Joint
Venture;
(5) To prepare and deliver to each other Venturer periodic
reports, not less frequently than monthly, showing results
of operation of the Joint Venture for such period,
including cash receipts of the Joint Venture and
distribution of all funds of the Joint Venture; and
(6) To take such other action, to make all other routine
day-to-day decisions of the Joint Venture, and to perform
such other services as are necessary, customary or
appropriate for engaging in the economic activity
constituting the purpose of the Joint Venture referred to
in Section 1.3 of this Agreement.
In no event shall any Venturer have the right to incur any indebtedness on the
part of the Joint Venture without the prior written consent of the other
Venturers.
SECTION 2.3 UNAUTHORIZED ACTS. If any Venturer purports to do any act on
behalf of the Joint Venturer or to bind the Joint Venture and such action is
outside the authority of such Venturer as established under this Agreement, then
such Venturer shall be deemed to have breached this Agreement and, in addition
to all other liabilities of such Venturer thereby resulting, such Venturer
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shall, at such Venturer's own cost and expense, indemnify and hold harmless the
other Venturers and the Joint Venture from all claims, causes of action, costs,
expenses, obligations and liabilities thereby arising.
ARTICLE 3. ACCOUNTING AND DISTRIBUTIONS
SECTION 3.1 ACCOUNTING. The Joint Venture shall keep and maintain
adequate books of account and other financial records on the cash basis, in
accordance with generally accepted accounting principles, consistently applied.
Such books of account and other records shall be open to inspection by any
Venturer at any time during reasonable business hours.
SECTION 3.2 PROFITS AND LOSSES; DISTRIBUTIONS.
(a) All profits and losses of the Joint Venture shall respectively be
shared and borne by the Venturers in proportion to the respective Percentage
Interests (Exhibit "A" attached hereto) owned by each of the Venturers
determined as of the last day of the particular fiscal year of the Joint Venture
with respect to which such profits or losses were recognized.
(b) All "Distributable Funds" (as hereinafter defined) of the Joint
Venture from time to time on hand shall be distributed as follows:
(1) 55% to PAMF II and 45% to PERFORMANCE.
The term "Distributable Funds," as used herein, means the amount (if any), on
any date, of cash collected on behalf of the Joint Venture, less fees for
collections services deducted by PCM and any funds set aside for operations.
SECTION 3.3 ALLOCATION OF INCOME, CREDITS, DEDUCTIONS, GAINS AND LOSSES.
For accounting and federal and state income tax purposes, all income,
deductions, credits, gains and losses of the Joint Venture shall be allocated to
the Venturers in proportion to their respective Percentage Interest owned as of
the last day of the relevant fiscal year with respect to which such allocation
is to be made.
SECTION 3.4 COMPENSATION TO ANY VENTURER.
(a) Except as set forth in 3.4(b) and except as may hereafter be
expressly authorized in writing by all of the Venturers, neither any Venturer,
shall be entitled to receive, directly or indirectly, any compensation,
commission or other payment from or on account of, or in connection
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with, the performance of any service for the Joint Venture, or be entitled to
reimbursement for overhead costs or similar expenses relating to any service
performed for the Joint Venture by such party.
(b) Subject to the provision of Article 2, PCM hereby agrees to collect
all amounts owed to the Joint Venture by the obligers under the Contract Assets
and to prepare monthly reports (in a form similar to the report attached hereto
as Exhibit "C", which is attached hereto and made a part hereof for all
purposes) detailing the cash receipts of the Joint Venture and the distribution
of all funds of the Joint Venture. PCM shall be entitled to forty-five percent
(45%) of the monthly revenues collected and received by the Joint Venture
("Collection Fees") from the Contract Assets plus payment for collection
services (such as xxxxxxx letters, account loading, credit report inquiry,
computerized account, etc.) so long as PCM collects all amount owing to the
Joint Venture by the obligers under the Contracts Assets, including, without
limitation, arranging for employees of PCM, and not employees of the Joint
Venture, to collect such revenues. On accounts referred for litigation or
assigned to a third party collection entity, PCM shall be entitled to fifty-five
percent (55%) of the monthly revenues collected and received by the Joint
Venture on such accounts. PCM agrees to indemnify PAMF II from all claims or
causes of action arising out of PCM's collection of revenues on behalf of the
Joint Venture.
ARTICLE 4. CAPITAL CONTRIBUTIONS; FORECLOSURE
SECTION 4.1 CAPITAL CONTRIBUTIONS. The Venturers have contributed to the
Joint Venture, as their respective original capital contributions, the credit
card contracts shown on Exhibit "A" attached hereto, and, accordingly, the
capital account of each respective Venturer has been credited with the amount of
such particular Venturer's capital contribution and the Percentage Interests in
the Venture thereby acquired by the various Venturers are as shown on Exhibit
"A" attached hereto. ARTICLE 5. ASSIGNMENTS
SECTION 5.1 PROHIBITED ASSIGNMENTS. Without the consent of all other
Venturers, no interest in this Joint Venture or rights under this Agreement may
be sold, assigned, transferred, mortgaged, encumbered, hypothecated, or disposed
of in any manner; and except as so provided, any attempt
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to take any such action and any such purported sale, assignment, transfer,
mortgage encumbrance, hypothecation or other disposition shall be void.
ARTICLE 6. TERM
SECTION 6.1 TERM. The Joint Venture and this Agreement shall remain in
full force and effect from the date hereof until termination of the Venture in
accordance with the provisions hereof. The Joint Venture shall terminate upon
the earlier to occur of any of the following:
(1) December 31, 2002; or
(2) The voluntary dissolution of the Joint Venture by the vote of the
holders of a majority of the Percentage Interests in the Venture.
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ARTICLE 7. GENERAL
SECTION 7.1 NOTICES. Any and all notices permitted or required to be
given under the terms of this Agreement shall be in writing and may be served
by: (a) registered or certified mail, return receipt requested, postage prepaid,
and addressed to the party to be notified at the appropriate address specified
below; (b) delivering the same in person to such party, or by prepaid telegram,
addressed to the party to be notified at said address; (c) delivery by Federal
Express or other nationally recognized courier service, addressed to the party
to be notified at such address; or (d) telecopy (provided that such telecopy is
confirmed by mail or other delivery in the manner previously described). Notice
given by certified mail as aforesaid shall be deemed given and received three
(3) days after mailing , whether or not actually received. Any notice given in
any other above authorized manner shall be deemed received upon actual receipt;
but shall also be deemed received upon attempted delivery if such delivery is
not accepted. The addresses of the parties are as follows:
If to PERFORMANCE: Performance Capital Management
00000 Xxx Xxxx
Xxxxx 000
Xxxxxx, XX 00000
Telecopy: (000) 000-0000
If to PAMF II: Performance Asset Management Fund II, Ltd.
0000 Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx
The addresses of any party may be changed by notice given in the manner
provided in this Section.
SECTION 7.2 ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties hereto relative to the formation, operation,
governance and other aspects of the Joint Venture hereby formed. No variation,
modification, or change of this Agreement shall be binding upon any party hereto
unless set forth in a document duly executed by such party (or duly authorized
agent of such party) and all other Venturers.
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SECTION 7.3 SEVERABILITY. If any provision of this Agreement or
application thereof to any person of circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provision to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
SECTION 7.4 BINDING AGREEMENT. This Agreement shall inure to the benefit
of and be binding upon the undersigned parties and their respective successors
and assigns. Whenever, in this instrument, a reference to any party is made,
such reference shall be deemed to include a reference to the successors and
assigns of such party, however, neither this Section nor any other portion of
this Agreement shall be interpreted to constitute a consent to any assignments
or transfer other than pursuant to and in accordance with the other provisions
of this Agreement.
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Executed in multiple counterparts, each of which shall have the force
and effect of an original, this the 20th day of March, 1997 ("Effective Date")
PERFORMANCE
By:
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Xxxxxxx X. Xxxxxxxx, President
Performance Capital Management
Address: 00000 Xxx Xxxx
Xxxxx 000
Xxxxxx, XX 00000
Telephone: (000)000-0000
PAMF II
By:
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Xxxxxxx Xxxxxxxx, President
Performance Asset Management Fund II
Performance Development, Inc., General Partner
Address: 0000 Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
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EXHIBIT "A"
ORIGINAL
CAPITAL PERCENTAGE
NAME OF VENTURER CONTRIBUTION INTEREST
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PAMF II [$175,309.44] [55%]
PCM [$ 0] [45%]
collection services
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