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EXHIBIT 10.11
JOINT VENTURE AGREEMENT
This Joint Venture Agreement (the "Agreement") is made and entered into
as of November 30, 1994, between WALBRO AUTOMOTIVE CORPORATION, ("WALBRO") a
Delaware corporation located at Xxxxxx Xxxxx, Xxxxxxxx 00000 XXX, and DAEWOO
PRECISION INDUSTRIES, LTD. ("DPI"), a company incorporated under the laws of The
Republic of Korea ("Korea") located at X.X. Xxx 00 Xxx-Xxxxx, Xxxxx, Xxxxx. DPI
is an affiliate of Daewoo Motor Company Limited ("Daewoo"), a company
incorporated under the laws of Korea. Walbro and DPI 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. 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, modules,
level sensors, brackets, tubes, flanges, electric connectors and filters
(collectively "Sending Units" or "SU").
C. DPI has strong manufacturing capabilities in Korea.
D. In light of the foregoing the parties desire to utilize their
respective strengths by establishing a Joint Venture (the "JV"), to be jointly
owned by Walbro and DPI, to do applications engineering, manufacture and sell
integrated SU and their components.
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. As soon as possible after receipt of the
necessary governmental approvals, permits, licenses, consents and waivers
(collectively, the "Governmental Approvals"), the parties will cause the
incorporation and registration of the JV as a limited liability company
organized under the laws of Korea. The Articles of Incorporation 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 interests in the JV will initially be
owned 51% by DPI and 49% by Walbro ("Equity Interests"). Such ownership may
subsequently be transferred to direct or indirect wholly-owned subsidiaries or
Controlled Affiliates (as defined in Article VI) of either or both parties.
1.3 PURPOSE. The purpose of the JV will be to do applications
engineering, manufacture and sell SU and component elements thereof to Daewoo,
its Controlled Affiliates and unrelated customers in the JV Territory. An SU
includes a fuel pump, module, level sensor, brackets, tubes and flanges,
connectors and filters. By mutual written agreement of the parties, the scope of
the JV may be expanded to add additional fuel system products.
1.4 TERRITORY. The designated market for the JV (the "JV Territory")
will be such geographic areas as indicated on EXHIBIT 1.4.
1.5 NAME. The parties agree that the JV shall operate under the name
Korea Automotive Fuel Systems Ltd.
1.6 REGISTERED OFFICE. The registered office of the JV shall be
at such place of business as determined by the Board of Directors.
1.7 LIMITED LIABILITY COMPANY. The JV shall be a limited liability
company [Chusik Hoesa], and the creditors of the JV shall look solely to the
assets of the JV for relief. The parties shall not bear any direct or indirect
liability for the debts or obligations of the JV other than each party's
respective obligation to pay in full the amount of its share subscription.
ARTICLE II
CAPITALIZATION AND FUNDING OF THE JV
2.1 CAPITAL CONTRIBUTIONS. The initial capitalization of the JV
shall be 1,600 Million Won of equity which shall be contributed to the JV by
the parties in accordance with their Equity Interests. Additional contributions
shall be made as provided on page 28 of the Business Plan.
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 Equity Interests.
Such guarantees shall be several unless 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. Additional operating deficits or working capital needs
which cannot be funded with outside borrowings will be funded by the parties in
proportion to their respective Equity Interest. Unless otherwise agreed at the
time of funding, such deficits will be funded by loans from the parties.
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2.3 SUBSEQUENT CAPITAL CONTRIBUTIONS. If additional capital
requirements are contemplated by the Business Plan, they will be made by the
parties in proportion to their respective Equity Interests. No additional
capital contributions other than those contemplated by the Business Plan will be
required unless approved by both parties.
2.4 PROMOTERS. DPI, Walbro and five individual promoters
designated by DPI shall serve as the promoters of the JV and one invited
individual subscriber designated by DPI shall serve as a non-promoter
subscriber of the JV as required by the Korean Commercial Code ("KCC"). Each
individual promoter designated by DPI shall be deemed a nominee shareholder of
the JV on behalf of the DPI and subscribe for one share each in order that such
promoter can sign the Articles of Incorporation for the sole purpose of forming
the JV in accordance with applicable laws. DPI shall ensure that the individual
promoters shall immediately transfer said shares to DPI on incorporation of the
JV.
ARTICLE III
GOVERNANCE OF THE JV
The parties agree that the JV will be governed substantially as set
forth below, and acknowledge that these governance provisions are 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.
The parties shall cause the provisions of the Charter to be amended from time to
time as may be required to ensure that they at all times shall conform with the
terms and conditions of this Agreement and any amendments thereto.
3.1 REPRESENTATIVE DIRECTORS. The operations of the JV will be
conducted by two Representative Directors ("RD") elected from the Board of
Directors. Walbro and DPI shall each nominate one RD which election shall be
approved by the Board. The RDs shall operate under a Joint Representative
Directors system whereby the DPI RD will make the day-to-day routine operations
decisions. The Walbro RD will always be kept informed of the activities and
consulted with important decisions on corporate actions.
3.2 BOARD OF DIRECTORS.
3.2.1 COMPOSITION. The JV will have a Board of Directors (the
"Board") comprised of four persons which shall function in accordance with the
provisions of the KCC. DPI will designate in writing two members (the "DPI
Members"), and Walbro will, designate in writing two members (the "Walbro
Members"). The parties agree to exercise their voting rights as shareholders of
the JV so as to effect the election of the persons so nominated. The Board will
elect the Chairman from among the members. The Chairman will be a designee of
DPI. The Board will also elect a Vice Chairman from among the members, who will
be a designee of Walbro. Members of the Board will serve until replaced by the
party so designating. In the event of a vacancy in the position of any
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Director for any reason, the shareholders shall immediately elect a Director
nominated by the party which had the right to nominate the predecessor.
3.2.2 ROUTINE DECISIONS BY THE BOARD. Except as provided
in SECTION 3.2.3:
(a) each member shall be given 7 days' written notice
(with acknowledgement 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 except that in the case of a tie vote, the
vote of the Chairman will be decisive; and
(e) whenever necessary under Korean law, decisions of
the Board shall be confirmed by a general shareholder meeting.
3.2.3 SPECIAL MATTERS. The following matters may only be
decided at the Board level and 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 DPI Member:
(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 and the annual budget of the JV;
(d) making of political contributions;
(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 $250,000, except unsecured current liabilities incurred in the
ordinary course of business;
(g) giving a guarantee or 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
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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 $250,000 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, including, but not limited to pricing of product sales, between
the JV and one of its equity holders, or an "affiliate" of any of them
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 10% of the
assets, voting stock or capital;
(ii) a company, domestic or foreign, which owns or controls, directly or
indirectly, at least 10% 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 10% 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 DPI, Walbro or an affiliate (as that term is defined in
subsection (h) above) of DPI or Walbro, including the modification or
termination of any existing contract;
(j) agreement or commitment to purchase services, from Walbro,
DPI or their affiliates (as that term is defined in subsection (h) above);
and
(k) approval of the licensing or sublicensing of any SU
technology.
(l) any amendment to the Charter.
(m) increase or decrease in authorized and/or issued shares
of the JV;
(n) capital expenditures exceeding $250,000 which were not
previously approved in the current annual capital expenditure plan; and
(o) divestitures, including, without limitation, sale,
transfer, or other disposition by the JV of all or substantial part of its
assets, with a value exceeding $250,000.
In case of a deadlock over one or more of these issues, the provisions set forth
in SECTION 3.2.4 below will control.
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3.2.4 DEADLOCK. To facilitate the resolution of disputes, the
following sets forth the parties' agreement with respect to a deadlock
situation. In the event that:
(a) either of DPI 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 DPI Member or an approval of the
shareholders as provided in SECTION 9.3, 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 in favor of 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 DPI 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 DPI 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 DPI
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 DPI may agree in writing, the JV will automatically terminate as
prescribed in ARTICLE VII.
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 DPI
may agree in writing, the JV will automatically terminate as prescribed in
ARTICLE VII.
3.3 OFFICERS. DPI shall designate the President and Walbro shall designate
the Executive Vice President. The President shall appoint the balance of the
organizational staff after consulting with the Executive Vice President. The
organizational staff shall report to the President. The Executive Vice President
shall be kept informed of operational matters on a day-to-day basis by the
organizational staff.
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ARTICLE IV
CONDUCT OF THE JV
4.1 BUSINESS PLAN. The five-year business plan (the "Business Plan")
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
includes initial and subsequent funding requirements. The Business Plan will be
revised, updated and approved on an annual basis by the Board in accordance with
SECTION 3.2.3.
4.2 MANUFACTURING. Components to be incorporated into the SU products
will be selected based on "best in class" for quality, performance and cost.
Walbro will start the JV with customer application engineering and
manufacturing technology with substantial support from Walbro under the
Engineering Support Agreement attached as EXHIBIT 4.2. The parties acknowledge
that initially, fuel pumps will be manufactured by Walbro and sold to the JV at
full absorption cost ("FAC") plus 5%. FAC includes materials, labor, overhead
plus allocations of selling, administrative, general and research and
development overhead. The parties further agree that the sales price for any
components sold by Walbro to the JV shall be acquisition cost if purchased from
a third party or FAC if manufactured by Walbro plus tooling amortization,
procurement expenses (generally 8-13% of cost), plus 9%. Walbro also encourages
the JV to purchase components directly from Walbro's recommended suppliers at
Walbro's acquisition cost plus tooling, if necessary. Common tooling will be
paid for by Walbro and the JV will reimburse Walbro for tooling cost based on
the JV's pro rata tool use plus 10%. Walbro will be kept informed of the JV's
purchasing activity to insure proper volume allocation. The parties agree to
utilize the Recommended Localization Plan (attached as EXHIBIT 4.2A) for this
purpose. As soon as feasible, such manufacturing shall be done by the JV.
Walbro further agrees to use its best efforts to perform all acts necessary for
the acquisition by the JV of the necessary imported machinery, equipment,
components and raw materials at arm's length fair market value and on the most
favorable terms and conditions acceptable to the JV until such time that these
machinery, equipment, components and raw materials are available from domestic
sources.
4.3 MARKETING. The JV will be responsible for the sale of all SU
products to its customers in the JV Territory. The JV will begin sales to
customers in 1995. Prior to such time the parties may sell SU to customers in
the JV Territory. With respect to the JV Territory, the JV will have the
exclusive right to sell SU in Korea. With respect to all other countries in the
JV Territory, such rights shall be non-exclusive.
4.4 ENGINEERING SUPPORT FROM WALBRO. Walbro will provide engineering
services to the JV as provided in the Engineering Support Agreement.
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ARTICLE V
LICENSES
5.1 MASTER TECHNOLOGY LICENSE AGREEMENT. Walbro will provide its SU
technology to the JV via a license (the "Walbro License") granted under the
Master Technology Agreement attached as EXHIBIT 5.1.
5.2 CONSEQUENCES OF JV TERMINATION ON WALBRO LICENSE. If the JV
terminates for any reason, the Walbro License shall simultaneously terminate.
5.3 COOPERATION. The parties hereto will use their best efforts, in all
relevant capacities, to cause the JV to perform all its obligations under the
Walbro License.
ARTICLE VI
RESTRICTIONS ON TRANSFER OF INTERESTS IN THE JV
Neither Walbro nor DPI may transfer any of its Equity Interests in the JV to
any third party (other than Controlled Affiliates) without the prior written
approval of the other party. It is the intention of the parties that there be
only two equity holders in the JV; consequently, any attempted transfer of
Equity Interests in the JV must encompass the entire Equity Interest of the
transferring party. A designated transferee (whether or not a Controlled
Affiliate) shall issue a written undertaking to the non-transferring party
hereto and the JV agreeing to be bound by all provisions of this Agreement as if
it had executed this Agreement in lieu of the transferring party and assume all
of the transferring party's duties, obligations and liabilities under this
Agreement, the Articles of Incorporation and the Ancillary Documents as defined
in Section 13.1. Any transfer shall be subject to the approval of the Korean
Government, if necessary, and shall not become effective until such approval has
been obtained.
For purposes of this Agreement, a "Controlled Affiliate" of a party means
any person which directly or indirectly 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.
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, including a
non-permitted transfer in violation of Article VI, 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
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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 pursuant to
Section 9.02 of the Master Technology License Agreement;
7.1.6 VIOLATION OF CERTAIN PROVISIONS. Upon the failure or refusal
of a party or its designees to comply with the governance provisions set forth
in SECTION 3.2.3 or to comply with the capitalization obligations under ARTICLE
II, the non-offending party may terminate this Agreement, at its option and
without prejudice to any of its other legal and equitable rights and remedies,
by giving not less than 60 days' prior written notice. This clause shall
survive any judicial determination that the restrictions set forth in SECTION
3.2.3 or the requirements set forth in ARTICLE II are unenforceable or void.
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 13.5;
7.1.8 EXPROPRIATION. Upon the expropriation of a substantial
portion of the JV's property; or
7.1.9 NO GOVERNMENT APPROVALS. At the option of either party, upon
the failure to obtain any required governmental approvals within six months
from the execution of this Agreement.
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.
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
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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
equity 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 and maximize the economic
interests of both parties.
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. Upon
termination of this Agreement, neither party shall be discharged from any
antecedent obligations or liabilities to the other party or the JV hereunder
unless agreed otherwise in writing.
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 Korean law
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 (each of which circumstances being referred to in this ARTICLE
VIII as "a Relevant Invalidity") 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
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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, 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 13.8.
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 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
GENERAL MEETING OF SHAREHOLDERS
9.1 GENERAL. The JV shall hold an ordinary General Meeting of
Shareholders within three months after the end of each fiscal year, and may
convene at any time an extraordinary General Meeting of Shareholders in
compliance with the resolutions of the Board of Directors and Korean laws;
provided that the first ordinary General Meeting of
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Shareholders shall be held without delay after the shares to be issued at the
time of establishment of the JV are fully paid and subscribed for hereunder.
9.2 TIME, PLACE, QUORUM. The date, time, place and agenda for a General
Meeting of Shareholders shall be determined by the Board of Directors. Notices
for a General Meeting of Shareholders shall be sent to the shareholders and
other persons entitled to receive notice by the chairman of Board of Directors
not later than 30 days before the relevant General Meeting.
A quorum at all General Meetings of Shareholders shall be the
presence of shareholders representing at least 52% of the total number of
issued and outstanding shares entitled to vote thereon. A shareholder shall be
entitled one vote for each share of the JV he owns. All resolutions shall be
passed by the affirmative vote of at least 52% of the total issued and
outstanding shares entitled to vote are present or represented by proxy, except
where a greater majority is required by subsection 9.3 below, by the Articles
of Incorporation or by law.
9.3 MATTERS. The following matters shall be determined by the affirmative
vote of shareholders representing not less than two thirds of the total issued
and outstanding shares entitled to vote are present or represented by proxy:
(i) Amendment of Articles of Incorporation
(ii) Increase or decrease in authorized and/or paid in capital
of the JV;
(iii) Dissolution, reorganization or merger of the JV; (iv) Sale
or transfer of all or substantial portion of assets and
property of the JV; and
(v) Dismissal of a Director or the Auditor of the JV.
9.4 RECORDING. The substance of the proceedings at a General Meeting of
Shareholders and the results thereof shall be recorded in English.
ARTICLE X
AUDITOR
The JV shall have two statutory auditors one of whom shall be nominated
by DPI and one of whom shall be nominated by Walbro. They shall be elected at
the General Meeting of the Shareholders.
ARTICLE XI
ACCOUNTING
The fiscal year of the JV shall be the calendar year.
The JV shall keep true and accurate accounting records of all operations
in Korean currency units in accordance with generally accepted accounting
principles, and such
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records shall be open to inspection by the parties hereto or by their duly
authorized representatives at all reasonable times.
The JV's financial books shall be audited annually at the expense of the
JV by an internationally recognized firm or association of certified public
accountants. The financial statements for the JV shall be prepared promptly
following each fiscal year of the JV and copies of all such financial statements
shall be provided promptly to each shareholder and Director of the JV.
ARTICLE XII
REPRESENTATIONS AND WARRANTIES
Each party hereby warrants and represents to the other party and to the
JV that the following warranties and representations are true as of the date
hereof (except for matters disclosed in writing prior to such date) and will be
true (without exception) on the date the parties first subscribe for the shares
of the JV:
(i) It is a corporation duly organized and validly existing under the
laws of the jurisdiction of incorporation, and it has all requisite
legal and corporate power and authority to own and operate its
properties and to carry on its business;
(ii) Its execution, delivery and performance of this Agreement has been
duly authorized by all requisite corporate action, and this
Agreement constitutes the valid, legal and binding obligation of
such party, enforceable in accordance with the terms hereof; and
(iii) It does not have any outstanding commitments or obligations,
contractual or otherwise, which would in any way conflict with or
impede its ability and right to enter into this Agreement and
fulfill its duties and obligations hereunder;
Each party shall indemnify and hold harmless the other party and the JV
from and against any and all liabilities (direct or indirect), losses, costs,
damages, claims, commissions and expenses (including attorneys' fees and other
legal fees) which the other party or the JV may sustain by reason of a material
breach of, or material inaccuracy with respect to, any representation or
warranty made by such party herein or pursuant hereto.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1 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 the Master Technology License Agreement,
Charter, Engineering Support Agreement 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.
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13.2 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, (iii) with
the written consent of the other party to the JV and (iv) 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 five 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.
13.3 EFFECTIVENESS. The effective date of this Agreement shall be the
date on which the later of the following events occurs: (i) the execution of
this Agreement by the parties hereto, (ii) November 30, 1994 or (iii) the
issuance of the necessary Governmental Approvals in form satisfactory to both
parties hereto.
13.4 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.
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13.5 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,
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.
13.6 EXPENSES. Walbro and DPI will each pay its own costs and expenses
incurred in the negotiation and drafting of this Agreement and the Ancillary
Documents.
13.7 FURTHER ASSURANCES. Walbro and DPI 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.
13.8 RESOLUTION OF DISPUTES - ARBITRATION. Any dispute, controversy or
claim ("Dispute") arising out of or relating to this Agreement or any Ancillary
Document, including, without limitation, the breach, termination or invalidity
thereof, shall be settled pursuant to this section.
(a) Any Dispute shall before commencement of any arbitration procedure, be
put before the Chairman of Walbro and the President of DPI for an
amicable solution. If such a solution cannot be achieved within 15 days
of written notice of such Dispute by either party to the other party
then arbitration shall commence pursuant to this section.
(b) The arbitration shall be conducted in Paris, France in accordance with
the Rules of Arbitration and Conciliation of the International Chamber
of Commerce then in effect.
(c) Each party shall appoint one arbitrator within 15 days after receipt of
a demand for arbitration. The two arbitrators thus appointed shall,
within 30 days after both shall have been appointed, appoint a third
arbitrator, who shall not be a national of Korea nor of the U.S.A. and
who shall preside over the arbitration proceedings. If any appointment
required herein shall not be made within the
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prescribed time, then such appointment may be made by the President of
the International Chamber of Commerce.
(d) The proceedings shall be conducted in English, and all arbitrators shall
be conversant in and have a thorough command of the English language.
(e) Both parties shall be bound by the award rendered by the arbitrators and
judgment thereon may be entered in any court of competent jurisdiction.
(f) Notwithstanding any other provision of this Agreement, either party
shall be entitled to seek preliminary injunctive relief from any court
of competent jurisdiction pending the final decision or award of the
arbitrators.
13.9 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 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.
13.10 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.
13.11 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 Xxxxxx Xxxx
X.X. Xxx 000000
Xxxxxx Xxxxx, XX 00000
Facsimile Number: (000) 000-0000
Attention: President; Director of International Operations
With a copy to:
Xxxxxx Xxxxxx & Xxxxx
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000 X. Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Facsimile Number: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx
(b) If to DPI, to:
Daewoo Precision Industries, Ltd.
X.X. Xxx 00 Xxx-Xxxxx
Xxxxx, Xxxxx
Facsimile Number: 00-00-000-0000
With a copy to:
President
13.12 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.
13.13 DISCLAIMER OF AGENCY. This Agreement does not constitute either
party as the legal representative or agent of the other party for any purpose
whatsoever. Neither party shall have any right or authority to assume, create
or incur any liability or obligation of any kind, express or implied, against,
in the name of or on behalf of the other party except in accordance with this
Agreement or as may otherwise be agreed in writing by the parties.
13.14 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.
13.15 GOVERNING LAW. This Agreement will be governed by and construed
in accordance with the laws of Korea.
13.16 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, nor to 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.
13.17 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.
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13.18 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.
13.19 SURVIVAL. The covenants and agreements made in SECTIONS 7.2, 13.2,
13.4, 13.6 and 13.13 will survive any termination of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first above written.
WALBRO AUTOMOTIVE CORPORATION
By: XXXXXXX X. XXXXXXXX
Xxxxxx X. Reyerk Its: CHAIRMAN
XXXXXX X. REYERK
Notary Public, Oakland County, MI
My Commission Expires Jan. 21, 1997
DAEWOO PRECISION INDUSTRIES, LTD.
By: OH-XXXX XXXX
Its: PRESIDENT
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