Exhibit 10.50
JOINT VENTURE AGREEMENT
This Joint Venture Agreement is made as of this 1st day of July, 1999,
by and between XX XXXX'X INCORPORATED, a Pennsylvania business corporation
having offices at 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
("TBW") and THE ELECTRON CORP., a Colorado corporation having offices at 0000
Xxxxx Xxx Xxxxxx Xxxxxx, XX Xxx 000, Xxxxxxxxx, Xxxxxxxx 00000 ("Electron"). TBW
and Electron are referred to herein collectively as the "Venturers" and
separately as a "Venturer".
RECITALS:
A. TBW and Electron have agreed to form a joint venture for the purpose
of manufacturing and selling Belted Drive Components as defined herein.
B. It is the intention of the Venturers that Electron will become the
exclusive supplier of certain castings as identified in Schedule 1.1 (a) and,
together with TBW, the exclusive supplier of certain castings as identified on
Schedule 1.1 (b) for Belted Drive Components to the Venture pursuant to a
requirements contract with TBW, the payment obligations of which will be assumed
by the Venture and guaranteed by TBW.
C. The Venturers agree that TBW will become the exclusive provider to
the Venture of management, machining, sales, marketing, distribution and
engineering services; the exclusive supplier to the Venture of certain finished
components as described on Schedule 1.1 (c), and, together with Electron, the
exclusive supplier of finished components as described in Schedules 1.1 (a) and
1.1 (b) pursuant to (i) a marketing and administrative services agreement; and
(ii) a requirements contract with the Venture; and (iii) an assumption of the
payment obligations under the Electron requirements contract by the Venture,
which shall be guaranteed by TBW.
D. The Venturers agree that certain products manufactured by them shall
be sold in the Restricted Territory, as defined herein, only on behalf of and
through the Venture.
AGREEMENT:
NOW, THEREFORE, in consideration of the forgoing recitals, which are
made part of this Agreement, and the covenants, representations and warranties
set forth herein, and intending to be legally bound hereby, the Venturers agree
as follows:
1. Definitions. Capitalized terms used herein and not otherwise defined
shall have the following meanings:
1.1 "Belted Drive Components" shall mean power transmission
products of the types described on Schedule 1.1.
1.2 "Corrective Action Report(s)" shall mean written reports
issued by or on behalf of the Venture to the Venturers (i) stating, in
reasonable detail, the manner in which a casting produced by either
Venturer or machining performed by TBW is defective, substandard or not
otherwise in conformance with the product specifications adopted by or
on behalf of the Venture; and (ii) proposing a plan of correction and a
timetable within which the corrective action must be concluded.
1.3 "Cost of Goods Sold" shall mean the aggregate transfer
costs of the items sold by the Venture as stated on Schedule 1.1
1.4 "Effective Date" shall mean July 1, 1999.
1.5 "Fail(s) to Perform" or "Failure to Perform" shall mean
failure by either TBW or Electron to satisfy the criteria for
dimensional and cosmetic specifications for Belted Drive Components
established by the Venture or the failure to deliver Belted Drive
Components as and when required by the Venture pursuant to the
requirements contracts executed by each of TBW and Electron which
failure, in either event, when annualized as of the time of such
Failure to Perform, can reasonably be anticipated to result in a loss
of business to the Venture of more than $500,000 in Net Sales per
annum.
1.6 "G S and A Expenses" shall mean the general, sales and
administrative expenses charged to the Venture by TBW through the M &
AS Agreement as defined in Section 5.3 plus any uncollectible accounts
receivable (as determinated in accordance with Sections 8.6 and 8.7
hereinafter).
1.7 "General Partner" shall mean TBWE Belt Drive Systems LLC.
1.8 "Initial Inventory" shall mean all of the Belted Drive
Components held in the inventory of each of the Venturers as of the
Effective Date.
1.9 "Interest(s)" shall mean the equity interest in each of
the Venture and the General Partner held by each of the Venturers.
1.10 "Major Decisions" shall mean a decision of the Venture
requiring the unanimous consent of the Managers of the General Partner
pursuant to Section 15.6 of this Agreement.
1.11 "Manufacturing Rationalization" shall mean the
integration of the Belted Drive Components operations of the Venturers
and the Venture pursuant to the terms of Section 12 of this Agreement.
1.12 "M & AS Agreement" shall have the meaning ascribed to the
term in Section 5.3 hereinafter.
1.13 "Net Sales" shall mean to be invoiced sales minus
allowances, discounts, rebates and returns.
1.14 "Operating Income" shall mean Net Sales less (i) Cost of
Goods Sold and (ii) G S and A Expenses.
1.15 "Quality Audit Committee" shall mean a committee
organized by the Managers of the General Partner consisting of TBW's
Vice President and General Manager of its Mechanical Division, TBW's
Vice President of Quality and Electron's President and Chief Operating
Officer which shall have the authority and responsibility stated in
Section 11 of this Agreement.
1.16 "Restricted Territory" shall mean a territory comprising
the Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxx Xxxxxxx, Xxxxx Xxxxxxx and Canada.
1.17 "TBW Call Price" shall mean the purchase price for the
acquisition by TBW of the Interest of Electron determined in accordance
with Section 16.4.
1.18 "TBW Put Price" shall mean the purchase price for the
acquisition by TBW of the Interest of Electron determined in accordance
with Section 16.5.
1.19 "Trade Accounts Payable Balance" shall mean the unpaid
balance of the payment obligations of the Venture to Electron for
Initial Inventory and non-Initial Inventory for purposes of the
calculations in Section 16.
2. Formation of Joint Venture and General Partner. The parties will
form the Venture as a Pennsylvania limited partnership under the name TBWE Belt
Drive Components LP. The parties will also form a Pennsylvania limited liability
company under the name TBWE Belt Drive Systems LLC which shall serve as the
general partner of the Venture. The registered office of the Venture and the
General Partner shall be at 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx,
or at such other office location as the Venturers may agree from time to time.
3. Purpose. The sole purpose of the Venture shall be to manufacture,
machine, market, distribute and engineer Belted Drive Components and such other
products having similar uses which may be developed by either TBW or Electron in
the future and as may be approved, from time to time, by the Venturers acting in
their reasonable discretion in the Restricted Territory.
4. Effective Date. The Venture and the General Partner shall be formed
as of the Effective Date.
5. Exclusive Manufacture and Sales. All Belted Drive Components cast,
manufactured, machined, marketed, distributed or engineered by either TBW or
Electron in the Restricted Territory shall be marketed on behalf of and through
the Venture, and, except as otherwise expressly provided herein, none of the
Belted Drive Components shall be manufactured or sold independently of the
Venture or to any third party in the Restricted Territory. For purposes of this
Agreement, Belted Drive Components shall include the products identified on
Schedule 1.1 and future products of the same type as the products described on
Schedule 1.1 which may be developed by either TBW or Electron in the future.
5.1 Electron as Exclusive Supplier of Castings to TBW. From
and after the Effective Date, Electron shall become the exclusive
supplier of castings for Belted Drive Components to TBW, as set forth
on Schedules 1.1 (a) and 1.1 (b), pursuant to a requirements contract
entered into by and between Electron and TBW. The ultimate benefit and
payment obligations of the Electron requirements contract shall be
assigned by TBW to the Venture to enable TBW to satisfy its commitments
to the Venture as provided in Section 5.2 hereinafter, and TBW shall
guarantee the Venture's payment obligations after such assignment.
5.2 TBW as Exclusive Supplier of Certain Finished Products to
the Venture. From and after the Effective Date, TBW will become the
exclusive provider of certain finished products comprising Belted Drive
Components to the Venture as set forth on Schedules 1.1 (b) and 1.1 (c)
pursuant to a requirements contract entered into by and between the
Venture and TBW.
5.3 TBW as Exclusive Provider of Marketing and Administrative
Services. From and after the Effective Date, TBW will become the
exclusive provider of administrative, internal accounting, routine
legal, sales, marketing, distribution and certain engineering services
to the Venture pursuant to a marketing and administrative services
agreement (the "M&AS Agreement") entered into by and between TBW and
the Venture. The M&AS Agreement shall provide for payment to TBW of a
fee in an amount equivalent to 18.9% of Net Sales made by the Venture,
provided that the dollar volume of Net Sales is no less than Forty-Four
Million Sixty-One Thousand and 00/100 Dollars ($44,061,000.00) and no
more than Fifty-Nine Million Six Hundred Eleven Thousand and 00/100
Dollars ($59,611,000.00). In the event that the Venture's Net Sales
either are less than Forty-Four Million Sixty-One Thousand and 00/100
Dollars ($44,061,000.00) or exceed Fifty-Nine Million Six Hundred
Eleven Thousand and 00/100 Dollars ($59,611,000.00), TBW's
administrative fee shall be determined by unanimous vote of the
Managers of the General Partner; provided, however, that the
administrative fee shall not be less than fifteen percent (15%) nor
more than twenty-three percent (23%) of Net Sales of the Venture. The
Venturers hereby agree and acknowledge that the administrative fee
being paid to TBW will be in lieu of any reimbursement of expenses
incurred by TBW in performing its obligations under the M&AS Agreement,
including expenses related to management supervision, internal
accounting, computing, internal engineering and routine legal costs and
expenses.
6. Transfer of Inventory to Venture. Electron agrees to sell finished
goods and casting inventory to TBW and TBW agrees to sell finished goods and
casting inventory to the Venture as follows:
6.1 Physical Audit and Verification of Inventory. On or before
the Effective Date, Electron shall cause to be performed a physical
audit of its Initial Inventory. TBW shall be entitled to monitor,
attend and receive the results from the audit. TBW shall not be
required to perform a physical inventory, but historically has made and
shall continue to make regular periodic adjustments to its inventory
based on daily reviews of its inventory. Electron shall be entitled to
verify TBW's Initial Inventory.
6.2 Sale of Initial Inventory. The Initial Inventory shall be
sold and transferred by TBW and Electron to the Venture for the
transfer costs stated on Schedules 1.1 (a), 1.1 (b) and 1.1 (c). TBW
and Electron shall be paid for their transfer of Initial Inventory as
provided in Subsections 8.1 and 8.4 7.5 hereinafter. All of Electron's
raw casting inventory items will be converted to finished goods and
shall be available for sale by the Venture as soon as practicable after
the Effective Date based on a schedule mutually acceptable to both
Venturers. TBW will include Electron's inventory in TBW's inventory
systems before sales of inventory are made by the Venture.
6.3 Location of Electron's Inventory. Upon written notice from
TBW, Electron shall transfer all of its inventory of Belted Drive
Components to its warehouse in Littleton, Colorado, and close its
remaining warehouses. Electron will maintain its existing warehouse in
Littleton, Colorado, for a period of one year after the Effective Date.
6.4 Return of Excess and Obsolete Initial Inventory. Any of
the Initial Inventory transferred by TBW and Electron to the Venture
that is (i) not sold by the Venture as of the first anniversary of the
Effective Date and (ii) is determined by the General Partner to be
excess or obsolete inventory (using TBW's customary methodology for
determining excess and obsolete inventory) shall be returned by the
Venture to TBW and, if appropriate based on which Venturer initially
transferred such Initial Inventory, by TBW to Electron for the transfer
costs stated on Schedules 1.1 (a), 1.1 (b) and 1.1 (c).
6.5 Reserve for Obsolete Inventory. The Venture shall
establish and maintain a reserve for obsolete inventory in the amount
of seventy-seven hundredths of one percent (0.77%) of the transfer cost
of Initial Inventory and one-half of one percent (0.5%) of Net Sales of
both Initial Inventory and non-Initial Inventory as stated on Schedules
1.1 (a), 1.1 (b) and 1.1 (c).
7. Purchase Price for Inventory. Except for the Initial Inventory, the
Venture shall pay TBW and Electron for Belted Drive Components sold to the
Venture as follows:
7.1 Price for Products Sold to TBW by Electron. The Venture
shall pay Electron for castings sold by it to TBW and sold by TBW to
the Venture at the transfer costs set forth on Schedules 1.1 (a) and
1.1 (b), plus a scrap and pig iron surcharge which will be reviewed
each calendar quarter based on the change in the Chicago Market for
plate and structural steel 2 feet and under.
7.2 Price for Products Sold to Venture by TBW. The Venture
shall pay TBW for finished products manufactured by TBW and sold to the
Venture and for the machining of all of the Venture's castings at the
transfer costs set forth on Schedules 1.1 (b) and 1.1 (c), plus a scrap
and pig iron surcharge which will be reviewed each calendar quarter
based on the change in the Chicago Market for plate and structural
steel 2 feet and under and the Chicago Market for pig iron.
7.3 Sale of Additional Products by TBW and/or Electron. Any
new products not included in the initial Belted Drive Component product
group shall be added only by the mutual agreement of both Venturers for
a price and method of costing determined jointly by both of the
Venturers.
7.4 Term of Cost Schedule. The transfer costs listed on
Schedules 1.1 (a), 1.1 (b) and 1.1 (c) shall remain fixed for a period
of three (3) years. After the third anniversary of the Effective Date
the Managers of the General Partner will convene to review the cost
schedule and make appropriate changes. In considering changes to the
cost schedule, the Managers of the General Partner shall consider
relevant indices published by the United States Department of Commerce
and by industry manufacturing groups. The transfer costs on the cost
schedule will not be changed or revised without a unanimous vote of all
Managers of the General Partner.
8. Payment of Venture's Accounts Payable to TBW and Electron. The
Venture shall pay TBW and Electron for the Initial Inventory and subsequent
sales of non-Initial Inventory as follows:
8.1 Allocation of Payments During First Three Months: For the
first three (3) months following the Effective Date, the Venture shall
pay TBW and Electron for Initial Inventory and subsequent non-Initial
Inventory sold by the Venture in the following percentages:
(i) to TBW 75%
(ii) to Electron 25%
8.2 Priority of Payments: Beginning on the first day of the
fourth month following the Effective Date, all payments by the Venture
to TBW and Electron for inventory sold to the Venture (or to TBW by
Electron) shall be allocated (i) first to non-Initial Inventory and
(ii) then to Initial Inventory.
8.3 Payment after the Third Month for non-Initial Inventory:
Beginning on the first day of the fourth month following the Effective
Date, the Venture shall pay TBW and Electron on account of their
respective invoices (and in Electron's case for the invoices with
respect to castings sold by Electron to TBW) for non-Initial Inventory
in proportion to the accounts payable balances of the Venture owed to
each of them as compared to the Venture's total accounts payable each
month.
8.4 Payment after the third month for Initial Inventory:
Beginning on the first day of the fourth month following the Effective
Date, the Venture will pay TBW and Electron for Initial Inventory sold
by the Venture in the following percentages of Net Sales:
(i) to TBW 75.6%
(ii) to Electron 24.4%
8.5 Time of Payment to TBW and Electron: The Venture shall pay
TBW and Electron on account of their respective invoices on or before
the last day of each month commencing on the last day of the third
calendar month following the Effective Date for Belted Drive Components
sold by the Venture during the period beginning on the sixteenth day of
the second preceding month and ending on the 15th day of the
immediately preceding month. Payment for any sales made before
commencement of the first sixty day payment cycle shall be made on the
last day of the second calendar month following the Effective Date.
All payments to TBW and Electron pursuant to this Section 7 are subject to the
creation of reserves pursuant to Sections 6.5 and 8.6 hereof.
8.6 Reserves for Uncollectible Accounts. The Venture shall
establish a reserve for uncollectible accounts in the amount of two
tenths of one percent (0.2%) of Net Sales made by the Venture. Accounts
which are determined to be uncollectible in accordance with Section 8.7
shall be charged to the reserve, and, to the extent uncollectible
accounts exceed the amount of the reserve, shall then be charged back
to the Venturers.
8.7 Adjustments for Bad Debts. The Venture shall writeoff
accounts determined by TBW, in accordance with its customary practices,
not to be collectible in the normal course.
9. Product Characteristics. TBW shall determine the acceptable
dimensional and cosmetic characteristics of all castings included in the Belted
Drive Components and the physical specifications of the iron used in the
production of such castings. TBW, in its reasonable discretion, shall determine
whether castings included in the Belted Drive Components meet the dimensional
and cosmetic characteristics established by TBW. All castings of Belted Drive
Components produced by Electron shall conform to the physical specifications
established by TBW.
10. Quality Assurance. The Venture shall charge back scrap and
nonconforming, substandard or defective parts to each of TBW and Electron, as
the case may be, by the issuance of Corrective Action Reports. The amounts
charged back to either TBW or Electron, as the case may be, shall be determined
as follows:
10.1 Initial Inventory. If a casting included in the Initial
Inventory does not conform to the required specifications or if the
machining of an item of Initial Inventory is not performed in
accordance with specifications established by the Venture in accordance
with Section 9 hereof, the party casting or machining the component
shall be charged back an amount equivalent to the attributable transfer
cost set forth on Schedules 1.1 (a), 1.1 (b) and 1.1 (c).
10.2 Nonconforming Castings. A casting produced after the
Effective Date which does not conform to specifications established by
the Venture, shall be charged back to the Venturer which produced the
casting in an amount equivalent to the transfer cost established on
Schedules 1.1 (a), 1.1 (b) and 1.1 (c) .
10.3 Nonconforming Machining. A conforming casting which is
not machined in conformity with the Venture's specifications, shall be
charged back to TBW at the transfer cost established on Schedule 1.1
(a), 1.1 (b) and 1.1 (c). In the event that TBW performs machining on a
casting which does not conform to the Venture's specifications, the
party who produced the casting will be charged back for both machining
and casting at the transfer costs established on Schedules 1.1 (a), 1.1
(b) and 1.1 (c). TBW, in its reasonable discretion, may decline to
perform machining on any casting it believes not to conform to the
Venture's specifications.
10.4 Unattributed Nonconformity. If the Venture is unable to
determine to whom the nonconformity of a product is attributable, TBW
and Electron shall each be responsible for one-half of the cost of the
charge back as determined by this Section 10.
11. Quality Audit Committee. The Venture shall form a Quality Audit
Committee on the Effective Date which will review the manufacturing operations
of each Venturer annually and make recommendations to the Venture to insure
continuous improvement.
12. Manufacturing Rationalization. TBW and Electron shall use best
efforts to complete the "Manufacturing Rationalization" as defined hereinafter
on or before the first anniversary of the Effective Date. "Manufacturing
Rationalization" shall mean and include the following components:
12.1 Electron will become the exclusive source to TBW for the
castings to be produced by Electron as established in Schedules 1.1 (a)
and 1.1 (b).
12.2 TBW will become the exclusive source to the Venture for
the castings to be produced by TBW as established in Schedules 1.1 (b)
and 1.1 (c).
12.3 The Venture may elect to use TBW's patterns relating to
Belted Drive Components. The Venture shall reimburse the Venturers for
the costs incurred by either Venturer in transferring or altering TBW's
patterns in accordance with Schedule 12.3. Electron shall maintain
TBW's patterns in good working condition. All TBW patterns used by
Electron shall remain the property of TBW. Routine pattern maintenance
will be the responsibility of the Venturer actually using the pattern.
Pattern replacement costs will be billed to the Venture, subject to
approval of the General Partner of the Venture. Charges to the Venture
for pattern transfers and alterations shall be limited to those
patterns transferred by TBW to Electron and alterations specifically
required by the Venture because of casting design requirements.
12.4 Electron shall finish machining any castings that it is
contributing to the Initial Inventory based on a schedule mutually
agreeable to the Venturers.
12.5 In the event TBW elects to operate a machine shop in
Littleton, Colorado, Electron shall enter into a lease for its
Littleton machine shop at a fair market rental rate actually received
by lessors of comparable space in the metropolitan Denver, Colorado
area, and TBW shall have an option to purchase the machining equipment
owned by Electron at its then current fair market value.
12.6 The costs of Manufacturing Rationalization shall be borne
by the Venture. For purposes of this Agreement, costs of Manufacturing
Rationalization shall include the following:
(i) costs to prepare all drawings and remount
and gate any patterns transferred to
Electron by TBW and costs to alter patterns
where TBW specifications require
alterations;
(ii) incremental transportation costs to
transport castings from Blackwell, Oklahoma,
to Chambersburg, Pennsylvania, and from
Littleton, Colorado, to Xxxxxxxxx, Xxxxxxx,
Xxxxxx and Chambersburg, Pennsylvania;
(iii) tooling costs required due to changes in
castings from TBW standard castings design
to Electron castings design to manufacture
the Belted Drive Components;
(iv) costs associated with relocating equipment
(including disassembly, transportation,
reassembly and operator training, if
required); and
(v) one time expenses related to modifying or
adding hardware and software.
13. Title to Fixed Assets and Other Items. Title to all fixed assets,
plant, equipment and, except as provided in Section 17 hereinafter, intellectual
property rights, patterns and tooling of each of TBW and Electron shall remain
the property of TBW and Electron, respectively.
14. Insurance. TBW and Electron shall each name the other Venturer, the
General Partner and the Venture as additional insureds on their respective
product liability and public liability insurance policies which shall be in
amounts commercially reasonable for the types of manufacturing activities
conducted by the Venture. Initially, the limits of liability coverage shall not
be less than One Million Dollars ($1,000,000.00) for product liability insurance
and Three Million Dollars ($3,000,000.00) for public liability insurance per
occurrence.
15. Salient Terms of Venture's Limited Partnership Agreement. The terms
and conditions governing the Venture, including, without limitation, management,
allocation of income and losses, distribution of profits, limitations on
ownership and disposition of equity interests, financial reporting, meetings and
term of existence will be addressed in the Venture's Limited Partnership
Agreement which shall be executed by TBW and Electron on or before July 1, 1999.
The Limited Partnership Agreement shall contain the following terms and
conditions:
15.1 Ownership. The Interests in the Venture shall be held as
follows:
General Partner .50% Interest as general partner
TBW 75.35% Interest as limited partner
Electron 24.15% Interest as limited partner
TBW shall hold a 75.6% Interest in the General Partner and Electron
shall hold a 24.4% Interest in the General Partner.
15.2 Capital Accounts. TBW and Electron will each have capital
accounts in both the General Partner and the Venture which will be
established and maintained in accordance with the requirements of the
Internal Revenue Code and the Regulations of the Internal Revenue
Service. The initial capital account balance on the Effective Date in
the General Partner will be Zero Dollars ($0.00) and in the Venture
will be One Hundred Dollars ($100.00).
15.3 Allocation of Taxable Income and Tax Losses and Profits.
The taxable income and tax losses of the Venture for each fiscal year
shall be allocated, and all distributions of profits shall be made, as
follows:
(i) taxable income and tax losses of the Venture
shall be allocated to each of the General
Partner, TBW and Electron in proportion to
their Interests; and
(ii) all distributions of profits shall be made
to each of the General Partner, TBW and
Electron in proportion to their respective
Interests and shall be made at the end of
each calendar month or as soon as
practicable thereafter. The cash account
balance of the Venture, after provision for
bad debt and obsolete inventory reserves,
shall be brought to zero at the end of each
calendar month.
15.4 General Partner. The general partner of the Venture shall
be TBWE Belt Drive Systems LLC, whose managers shall be the following
individuals and their successors:
(i) President and Chief Operating Officer of
Electron;
(ii) Vice President/General Manager of TBW's
Mechanical Division; and
(iii) a senior executive of TBW selected, in its
sole discretion, by TBW.
15.5 Meetings of Managers of the General Partner. During the
first year following the Effective Date, the managers of the General
Partner shall meet quarterly in person. After the first anniversary of
the Effective Date, the managers of the General Partner shall meet no
fewer than two (2) times per year. The managers shall hold an annual
meeting which the Chairman and Chief Executive Officer of Electron and
the President of TBW shall be invited. The Chairman and Chief Executive
Officer of Electron and the President of TBW shall be given at least
two (2) weeks notice of the annual meeting. In the event that either
the Chairman and Chief Executive Officer of Electron or the President
of TBW are unable to attend the annual meeting of the Managers of the
General Partner, reasonable efforts shall be made to reschedule the
meeting to accommodate the attendance of such persons.
15.6 Major Decisions. All "Major Decisions", as defined
hereinafter, shall only be made by unanimous vote of all managers of
the General Partner. TBW shall manage the daily affairs of the Venture
pursuant to the M&AS Agreement in form and substance acceptable to both
TBW and Electron. "Major Decisions" which shall be made only by
unanimous agreement of all managers of the General Partner, and shall
be limited to the following:
(i) mortgaging, pledging or subjecting to a
security interest on any portion of the
Venture's assets, except for customary liens
contained in or arising under any purchase
money security interests or similar
agreements binding the Venture's assets;
(ii) admission of an additional or substitute
joint venture member (except an assignee of
a Venturer as permitted on Section 25
hereinafter);
(iii) any transaction with an affiliate of either
TBW or Electron, unless expressly permitted
in this Joint Venture Agreement;
(iv) merger or combination of the Venture with
any other person;
(v) binding the Venture to any contract or
agreement regarding any matter beyond the
scope of the Venture;
(vi) any action regarding the assets or business
of the Venture which benefits either
Venturer or its respective affiliates to the
detriment of the other Venturer or the
Venture, including, without limitation,
appropriation or use of proprietary
information, business opportunities, funds
or other assets;
(vii) changing the transfer costs of Belted Drive
Components to an amount different from the
transfer costs set forth on Schedules 1.1
(a), 1.1 (b) and 1.1 (c); and
(viii) borrowing any funds on behalf of the Venture
on an unsecured basis, except trade debt
incurred in the ordinary course of business
and funds borrowed from either Venturer for
working capital purposes.
15.7 Inability to Achieve Unanimous Agreement on Major
Decisions. In the event that the managers of the General Partner are
unable to achieve unanimous agreement on a Major Decision within thirty
(30) days after the date of the meeting at which the issue requiring
the Major Decision was presented for vote, the President of TBW and the
Chairman and Chief Executive Officer of Electron shall have a period of
sixty (60) days to deliberate and reach consensus. If the President of
TBW and the Chairman and Chief Executive Officer of Electron are not
able to reach consensus within ninety (90) days after the issue
requiring a Major Decision was presented for vote, then either of the
Venturers shall have the option of submitting the issue to binding
arbitration, subject to the following limitations:
(i) in the event the President of TBW and the
Chairman and Chief Executive Officer of
Electron agree to terminate the Venture
rather than to proceed to arbitration, TBW
shall have the option to acquire Electron's
Interest in the Venture and in the General
Partner for an aggregate purchase price
equal to the average of the Call Price and
the Put Price as determined in accordance
with Sections 16.4 and 16.5 hereinafter;
(ii) in the event Electron elects to submit the
issue to arbitration and TBW declines to
participate in the arbitration proceeding,
TBW shall purchase Electron's Interest in
the Venture and in the General Partner for
an aggregate purchase price equal to the
Call Price as determined in accordance with
Section 16.4 hereinafter; and
(iii) in the event TBW elects to submit the issue
to arbitration and Electron declines to
participate in the arbitration proceeding,
TBW shall be entitled to acquire Electron's
Interest in the Venture and in the General
Partner for an aggregate purchase price
equal to the Put Price as determined in
accordance with Section 16.5 hereinafter.
15.8 Termination of Venture. The Venture and the General
Partner shall terminate upon the occurrence of the earliest of the
following events: (i) the Venturers agree to a termination of the
Venture; (ii) all of the Venturers' interests in the Venture and in the
General Partner are held by one of the Venturers; or (iii) the Venture
is terminated unilaterally pursuant to Section 16 below. The Venture
may be terminated at the election of either Venturer if the other
Venturer Fails to Perform (as defined herein) and the defaulting
Venturer has not implemented an acceptable corrective action plan
within ten (10) days after issuance of a Corrective Action Report by or
on behalf of the Venture.
15.9 Books and Records. The Venture shall maintain complete
and accurate books of all transactions, expenses and income which shall
be available to each of the Venturers at any time upon reasonable
notice for review and copying. Either Venturer shall have the right to
audit the books and records of the Venture at any reasonable time upon
ten (10) days prior written notice to the Venture and the other
Venturer. Any such audit requested by one of the Venturers shall be at
the expense of the Venturer requesting the audit. Notwithstanding the
foregoing sentence and as provided in Section 22 below, the Venture
shall cause an annual audit to be performed by the Venture's
independent accounting firm at the cost of the Venture.
16. Unilateral Termination of Joint Venture. Except as provided in
Section 16.1 hereinafter, either Venturer may elect unilaterally to terminate
the Venture. In the event that either Venturer should elect to terminate the
Venture, the Interest of Electron in the Venture and in the General Partner
shall be purchased by TBW as follows:
16.1 Unilateral Termination by TBW before First Anniversary of
Effective Date. If TBW elects to terminate the Venture before the first
anniversary of the Effective Date, TBW shall acquire Electron's
Interest in the Venture and in the General Partner for a purchase price
equivalent to the sum of Seven Million Twelve Thousand and 00/100
Dollars ($7,012,000.00) plus any Trade Accounts Payable Balance owed by
the Venture to Electron. Electron shall not be entitled to terminate
the Venture unilaterally during the first year after the Effective
Date, except as provided in Section 16.2.1 below.
16.2 Termination by Either Venturer for Failure of Other
Venturer to Perform before First Anniversary of Effective Date. If
either Venturer shall elect to terminate the Venture because of the
Failure to Perform of the other Venturer commencing before the First
Anniversary of the Effective Date, TBW shall purchase Electron's
Interest in the Venture and in the General Partner for the following
purchase prices:
16.2.1 Failure of TBW to Perform: The Trade Accounts
Payable Balance owed by the Venture to Electron plus
ninety-seven and six-tenths percent (97.6%) of the operating
income of the Venture from the Effective Date to the
commencement date of TBW's Failure to Perform plus the product
of Seven Million Twelve Thousand and 00/100 Dollars
($7,012,000.00) multiplied by a fraction having as a numerator
the difference between the number 365 less the days elapsed
between the Effective Date and the commencement date of TBW's
Failure to Perform divided by the number 365.
16.2.2 Failure of Electron to Perform: The Trade
Accounts Payable Balance owed by the Venture to Electron plus
seventy-three and two-tenths percent (73.2%) of the Operating
Income of the Venture from the Effective Date to the
commencement date of Electron's Failure to Perform plus the
product of Five Million Two Hundred Fifty-Nine Thousand and
00/100 Dollars ($5,259,000.00) multiplied by a fraction having
as a numerator the difference between the number 365 less the
days elapsed between the Effective Date and the commencement
date of Electron's Failure to Perform divided by the number
365.
16.3 Unilateral Termination by TBW after the First Anniversary
of the Effective Date but Before the Third Anniversary of the Effective
Date. If TBW elects to terminate the Venture after the first
anniversary of the Effective Date but before the third anniversary of
the Effective Date, TBW shall acquire Electron's interest in the
Venture and in the General Partner for a purchase price equivalent to
the Trade Accounts Payable Balance owed by the Venture to Electron plus
the greater of (i) Seven Million Twelve Thousand and 00/100 Dollars
($7,012,000.00) or (ii) ninety-seven and six-tenths percent (97.6%) of
the Venture's Operating Income for the most recent period of twelve
(12) consecutive calendar months.
16.4 Unilateral Termination by TBW after the Third Anniversary
of the Effective Date. If TBW elects to terminate the Venture after the
third anniversary of the Effective Date, TBW shall acquire Electron's
Interest in the Venture and in the General Partner for a purchase price
equivalent to ninety-seven and six-tenths percent (97.6%) of the
Venture's Operating Income for the prior twelve (12) calendar months
plus any Trade Accounts Payable Balance owed by the Venture to Electron
(collectively the "Call Price").
16.5 Unilateral Termination by Electron after the First
Anniversary of the Effective Date. If Electron elects to terminate the
Venture, TBW shall acquire Electron's interest in the Venture and in
the General Partner for the sum of seventy-three and two-tenths percent
(73.2%) of the Venture's Operating Income for the prior twelve (12)
calendar months plus any Trade Accounts Payable Balance owed by the
Venture to Electron (collectively the "Put Price").
For purposes of the purchase price calculations of this Section 16, the Trade
Accounts Payable Balance allocable to Electron's Initial Inventory shall not
exceed a sum equivalent to the dollar volume of Net Sales in calendar year 1998
of each such item of Initial Inventory multiplied by two (2).
17. Disposition of Assets Upon Termination of Venture. In the event the
Venture is terminated by agreement of the Venturers, unilateral termination by
either Venturer as provided for in Section 15.8 and 16 of this Agreement or
otherwise ceases to exist , all assets of the Venture, including, but not
limited to, intellectual property rights (if any), patterns, tooling (if any),
inventory and accounts receivable, and all intellectual property rights,
patterns and tooling of Electron required for or utilized in the manufacture of
Belted Drive Components will become the exclusive property of TBW.
18. Electron's Agreement Not to Compete.
18.1 Agreement Not To Compete. Except as otherwise
specifically provided in Subsection 18.2 hereinafter, Electron agrees
that,
18.1.1 with respect to castings for Belted Drive
Components, for a period of three (3) years after termination
of the Venture (provided that termination is the result of
unilateral termination by Electron, termination by mutual
agreement or termination because of Electron's Failure to
Perform); and
18.1.2 with respect to finished goods comprising
Belted Drive Components, for a period of ten (10) years after
termination of the Venture (provided that termination is the
result of unilateral termination by Electron, termination by
mutual agreement or termination because of Electron's Failure
to Perform),
Electron will not compete with either TBW or the Venture, either directly or
indirectly, in the production, manufacture and sale of Belted Drive Components
in the Restricted Territory.
18.2 Agreement Upon Unilateral Termination by TBW. Electron
agrees that, in the event TBW terminates the Venture pursuant to
Sections 16.1, 16.2.1, 16.3 or 16.4 above, Electron will not compete
with either TBW or the Venture, either directly or indirectly, in the
production, manufacture and sale of Belted Drive Components in the
Restricted Territory with respect to finished goods comprising Belted
Drive Components, for a period of ten (10) years after termination of
the Venture. TBW acknowledges that should TBW terminate the Venture
pursuant to Section 16.1, 16.2.1, 16.3 or 16.4 above, Electron shall be
allowed to compete with TBW or the Venture, either directly or
indirectly, in the production, manufacture and sale of castings for
Belt Drive Components in the Restricted Territory provided that such
sales by Electron are solely to customers who are not related persons,
affiliates or under common control with Electron.
19. Ownership of Interest in Competing Business. TBW and Electron
covenant, represent and warrant that, with the exception of Groupo Blaju, TBW's
Mexican subsidiary, neither TBW nor Electron, nor any of their respective
affiliates, currently own or will acquire, either directly or indirectly, an
interest in any entity, division or person which shall manufacture and sell
products substantially similar to the Belted Drive Components. In the event that
either TBW or Electron in the future seeks to acquire a business or entity
(other than Groupo Blaju) which manufactures and sells products substantially
similar to the Belted Drive Components, either Venturer may acquire such
operation, business or entity provided that the other Venturer is offered an
equity interest proportionate to its share of the Venture. Except as expressly
provided in Section 20.2 hereinafter, Groupo Blaju, and the manufacture and sale
by it of any products competitive with the Venture, shall not be deemed part of
the Venture, nor will sales by Groupo Blaju into the Restricted Territory be
considered part of the Venture or subject to the limitations on competing
businesses contained in this section.
20. Transactions With or Involving Groupo Blaju.
20.1 Sales to Groupo Blaju. The Venture shall sell Belted
Drive Components to, and as required by, Groupo Blaju at a price of One
hundred Twenty Percent (120%) of the cost of such Belted Drive
Components to the Venture.
20.2 United States Designed Products Sold in Restricted
Territory (Excluding Mexico) by Groupo Blaju. All Belted Drive
Components designed in the United States, manufactured by Groupo Blaju
and sold directly or indirectly in the Restricted Territory (with the
exception of Mexico) shall be deemed to be Belted Drive Components
manufactured by TBW for purposes of this Agreement.
20.3 Belted Drive Components Designed Elsewhere and Sold by
Groupo Blaju. Except as provided in Section 20.2 above, all Belted
Drive Components designed, manufactured and sold by Groupo Blaju
(including, without limitation, IBSA and TIBSA brands) shall not be
subject to the terms of this Agreement and may be sold by Groupo Blaju
without restriction.
21. Corrective Action Plan. Either Venturer who is alleged to have
Failed to Perform shall submit a corrective action of plan to the Venture within
ten (10) days after issuance of a Corrective Action Report by the other Venturer
on behalf of the Venture which shall state in reasonable detail the proposed
corrective action.
22. Alternate Sources of Supply of Product. TBW, under its obligations
under the M&AS Agreement and on behalf of the Venture, shall have the right to
purchase castings from an alternate source or to manufacture castings comprising
Belted Drive Components in the event that Electron Fails to Perform. Upon the
occurrence of a Failure to Perform by Electron, and if either TBW (on behalf of
the Venture) or the Venture purchases castings comprising Belted Drive
Components from an alternate source, the Venture shall be reimbursed by Electron
in an amount equivalent to (i) the difference between the cost to the Venture of
acquiring substitute castings and the price listed on Schedules 1.1 (a) and 1.1
(b); plus (ii) a management fee in the amount of ten percent (10%) of the price
listed on Schedules 1.1 (a) and 1.1 (b). In the event that Electron Fails to
Perform and TBW manufactures replacement castings to be sold to the Venture,
Electron shall reimburse TBW for the actual costs to TBW of producing the
castings plus a management fee in the amount of ten percent (10%) of such costs.
In the event TBW Fails to Perform, the Venture shall have the right to have
castings machined by an alternate source, and TBW shall reimburse the Venture in
an amount equivalent to (i) the difference between the actual costs to the
Venture of machining and the price listed on Schedules 1.1 (b) and 1.1 (c); plus
(ii) a management fee in the amount of ten percent (10%) of the costs of such
machining.
23. TBW Marketing and Administrative Services Agreement. TBW shall
enter into the M&AS Agreement with the Venture providing, among other things,
for the following reporting services:
(i) within thirty (30) days after the end of each
calendar month, a product sales analysis for Belted
Drive Components reporting, in reasonable detail, the
Venture's sales for such month and any forecast of
sales activity for the current month;
(ii) within thirty (30) days after the end of each
calendar month, a monthly profit and loss statement,
balance sheet, statement of cash flows and accounts
receivable aging for the Venture;
(iii) (a) within thirty (30) days after the end of each
calendar quarter unaudited financial statements as of
the end of the such period, including a balance sheet
and statement of income and interest holder's equity,
prepared in accordance with generally accepted
accounting principles and a schedule reflecting, for
such period, the Venture's capital expenditures and a
schedule showing the capital account balance of each
partner of the Venture; and (b) within seventy-five
(75) days after the end of each calendar year,
audited financial statements as of the end of the
such period, including a balance sheet and statement
of income and Interest holder's equity, prepared in
accordance with generally accepted accounting
principles and accompanied by a report of the
Venture's independent certified public accounting
firm, a schedule reflecting, for such period, the
Venture's capital expenditures and a schedule showing
the capital account balance of each partner of the
Venture;
(iv) not less than fifteen (15) days before the date on
which the Venture files its federal income tax return
or any state or local income tax returns, a copy of
the income tax returns proposed to be filed for the
Venture; and
(v) a monthly 12-month rolling sales forecast for the
Venture.
The Venture's independent certified public accounting firm shall be a nationally
recognized accounting firm approved jointly by TBW and Electron.
24. Indemnification of Venturers. The Venture and the General Partner
shall defend, indemnify and hold harmless TBW, Electron and their respective
affiliates, officers, directors, partners, stockholders, employees or other
agents from and against all claims, demands and liabilities (including attorneys
fees) arising in connection with the Venture and the General Partner; provided,
however, that the Venture and the General Partner shall not be obligated to
defend, indemnify and hold harmless the Venturers with respect to any claim,
demand or liability arising out of the Venturer's gross negligence, willful
misconduct or intentional violation of applicable law or breach of this
Agreement or breach of any requirements, management services or administrative
services agreement between the Venturer and both the Venture and the General
Partner. The agreement of indemnity is between each Venturer and the Venture,
and neither Venturer shall be liable to indemnify the other Venturer except (i)
for the material breach of any covenant, representation or warranty contained in
this Agreement; or (ii) a material breach of any other term or condition of this
Agreement.
25. Limitations on Assignability. The Venturers shall be entitled to
assign their Interests in the Venture and the General Partner, provided that the
proposed assignee has the financial strength, ability and industry experience
necessary to perform competently and efficiently the obligations of the
assigning Venturer under this Agreement. Except as expressly provided in the
foregoing sentence, neither Venturer shall have the right to mortgage, pledge,
assign, transfer or sell its Interest in the Venture and the General Partner
without the consent of the other Venturer or delegate its duties in connection
with the operation of the Venture without the consent of the other Venturer, and
any attempted assignment, or any attempt to assign, convey or otherwise transfer
or sell any interest in the Venture or the General Partner not in accordance
with this Agreement, shall be null and void.
26. Termination of Venture. The Venture shall continue until
terminated. In the event the Venture is terminated, TBW shall purchase the
Interest of Electron in the Venture and in the General Partner for a purchase
price determined in accordance with the formula stated in Section 15.7 (i)
hereof. Upon termination, the Venture shall be dissolved and immediately
commence to wind up its business and affairs, liquidate all assets and pay all
debts and liabilities first owing to other than the Venturers, then those owing
to the Venturers, and finally distribute equally to the Venturers any net
proceeds, assets or funds remaining in the Venture. The Venturers agree to
proceed with due diligence to complete dissolution, liquidation and distribution
in a prompt manner. Notwithstanding anything to the contrary contained herein,
this Agreement may be terminated immediately by either Venturer by written
notice upon the occurrence of any of the following events:
(i) the other Venturer seeks protection under the bankruptcy
or insolvency laws of the United States of America or any other
jurisdiction,
(ii) a petition for bankruptcy or the appointment of a
receiver or similar action is filed against the other Venturer and is
not dismissed within ninety (90) days thereafter, or
(iii) the other Venturer makes any assignment for the benefit
of its creditors.
Additionally, if either party hereto shall be dissolved an its business
terminated, this Agreement shall automatically terminate upon the effectiveness
of such dissolution.
27. Representations and Warranties of TBW. TBW represents and warrants
to Electron as follows:
27.1 Corporate Authority and Approvals.
27.1.1 Organization and Standing of TBW. TBW is a
corporation duly organized, validly existing under the laws of
the Commonwealth of Pennsylvania, and has full corporate power
to own its properties and to carry on its business as now
being conducted. TBW is duly qualified, licensed, or
domesticated and in good standing as a foreign corporation and
authorized to do business in each jurisdiction in which the
character of its properties or the nature of its business
requires such license, qualification or authorization, and a
list of those states where TBW is so licensed, qualified, or
domesticated is set forth in Schedule 27.1.1.
27.1.2 Corporate Approvals. TBW has obtained all
corporate authorizations and approvals required for the
execution and delivery of this Agreement as well as the
execution and delivery of all other documents, agreements,
certificates or instruments which are to be executed by TBW in
connection with this transaction (the "Other TBW Instruments")
and the consummation of the transactions contemplated by this
Agreement. This Agreement and the Other TBW Instruments have
been duly executed and delivered by TBW are the valid and
binding obligations of TBW, enforceable against TBW in
accordance with their respective terms, except to the extent
that enforceability may be limited or affected by bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium or
other laws relating to or affecting generally the enforcement
of debtor's or contracting parties' rights, and to the extent
that the availability of the remedy of specific performance or
of injunctive relief or other equitable relief with respect to
the enforceability of such obligations is subject to the
discretion of the court before which any proceeding therefor
may be brought.
27.1.3 No Violation of Other TBW Instruments. Neither
the execution and delivery of this Agreement or the Other TBW
Instruments by TBW nor the consummation of the transactions
contemplated hereby will conflict with, result in a breach of
or constitute a default under the corporate charter or by-laws
of TBW or any contract, instrument, agreement or understanding
to which TBW is a party or by which it or any of its
properties is bound, nor will it result in acceleration in the
time for performance of any obligation under any contract or
instrument, nor will it result in the creation or imposition
of any lien, charge or encumbrance upon any asset transferred
under this Agreement, nor give rise to any right of
determination, nor will it result in the violation of any law,
statute, ordinance, rule or regulation applicable to TBW.
27.2 Description and Condition of Inventory. TBW's inventories
of Belted Drive Components are (i) usable and saleable in the ordinary
course of business at prevailing market prices without discount; and
(ii) owned free and clear of all liens, claims, charges and
encumbrances of any kind or nature.
27.3 Litigation. There is no action, proceeding, governmental
investigation or other legal or administrative proceeding pending or,
to the knowledge of TBW, threatened, against or relating to TBW, or its
officers or employees, or its properties, assets or business or the
transactions contemplated by this Agreement or that would interfere
with the performance by TBW of this Agreement.
27.4 Taxes. TBW has no tax deficiency or claim outstanding,
proposed or, to its knowledge, assessed against it with respect to any
taxes, including, without limitation, income, property, sales, use,
franchise, added value, employee's income withholding and social
security taxes, imposed by the United States or by any foreign country
or by any state, municipality, subdivision or instrumentality of the
United States or of any foreign country, or by any other taxing
authority, and TBW has made timely filings of all tax returns due to
all such taxing authorities.
27.5 Permits; Governmental Approvals. TBW possesses all
material franchises, licenses, permits and other authority as are
necessary for the conduct of TBW's business and is not in default in
any material respect under any of such franchises, permits, licenses or
other authority. No approval, consent, authorization or other order of,
and no consent, designation, filing, registration, qualification or
recordation with, any governmental authority is required in connection
with the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby.
27.6 Operations in Conformity With Law. TBW's operations, as
presently conducted, are not in material violation of any law or
regulation, including, without limitation, any applicable building
code, zoning ordinance, law relating to the employment of labor
(including provisions thereof relating to wages, hours, equal
opportunity, collective bargaining, age, pregnancy, disability and sex
discrimination and the payment of social security and other taxes),
regulation of the Federal Occupational Safety and Health
Administration, or any law regarding protection of the environment or
the use, storage or disposal of hazardous wastes.
Neither the warranties and representations made by TBW in this Agreement and the
Other TBW Instruments, nor the financial statements furnished by TBW, nor any
certificate or memorandum furnished or to be furnished by TBW, or on its behalf,
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements herein or
therein not misleading. All representations and warranties of TBW shall be true
on and as of the Closing Date with substantially the same effect as if made on
and as of such date.
28. Covenants of TBW. TBW shall hold in strict confidence all
confidential data and information obtained from Electron, or any officer, agent
or representative of Electron:
28.1 Expenses of Acquisition Transaction. TBW shall pay all of
its expenses in connection with the transactions contemplated by this
Agreement, including, without limitation, the fees and expenses of its
legal counsel and accountants.
28.2 Notice of Breach of Representation or Warranty. Promptly
upon TBW becoming aware of the occurrence of, or the impending or
threatened occurrence of, any event which would cause or constitute a
breach, or would have caused or constituted a breach had such event
occurred prior to the date hereof, of any of the representations and
warranties of TBW contained in or referred to in this Agreement, TBW
shall give detailed written notice thereof to Electron.
29. Representations and Warranties of Electron. Electron represents and
warrants that:
29.1 Corporate Authority and Approvals.
29.1.1 Organization and Standing of Electron.
Electron is a corporation duly organized, validly existing
under the laws of the State of Colorado, and has full
corporate power to own its properties and to carry on its
business as now being conducted. Electron is duly qualified,
licensed, or domesticated and in good standing as a foreign
corporation and authorized to do business in each jurisdiction
in which the character of its properties or the nature of its
business requires such license, qualification or
authorization, and a list of those states where Electron is so
licensed, qualified, or domesticated is set forth in Schedule
29.1.1.
29.1.2 Corporate Approvals. Electron has obtained all
corporate authorizations and approvals required for the
execution and delivery of this Agreement as well as the
execution and delivery of all other documents, agreements,
certificates or instruments which are to be executed by
Electron in connection with this transaction (the "Other
Electron Instruments") and the consummation of the
transactions contemplated by this Agreement. This Agreement
and the Other Electron Instruments have been duly executed and
delivered by Electron and are the valid and binding
obligations of Electron enforceable against Electron in
accordance with their respective terms, except to the extent
that enforceability may be limited or affected by bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium or
other laws relating to or affecting generally the enforcement
of debtor's or contracting parties' rights, and to the extent
that the availability of the remedy of specific performance or
of injunctive relief or other equitable relief with respect to
the enforceability of such obligations is subject to the
discretion of the court before which any proceeding therefor
may be brought.
29.1.3 No Violation of Other Electron Instruments.
Neither the execution and delivery of this Agreement or the
Other Electron Instruments by Electron nor the consummation of
the transactions contemplated hereby will conflict with,
result in a breach of or constitute a default under the
corporate charter or by-laws of Electron or any contract,
instrument, agreement or understanding to which Electron is a
party or by which it or any of its properties is bound, nor
will it result in acceleration in the time for performance of
any obligation under any contract or instrument, nor will it
result in the creation or imposition of any lien, charge or
encumbrance upon any asset transferred under this Agreement,
nor give rise to any right of determination, nor will it
result in the violation of any law, statute, ordinance, rule
or regulation applicable to Electron.
29.2 Description and Condition of Inventory. Electron's
inventories of Belted Drive Components are (i) usable and saleable in
the ordinary course of business at prevailing market prices without
discount; and (ii) owned free and clear of all liens, claims, charges
and encumbrances of any kind or nature.
29.3 Litigation. There is no action, proceeding, governmental
investigation or other legal or administrative proceeding pending or,
to the knowledge of Electron, threatened, against or relating to
Electron, or its officers or employees, or its properties, assets or
business or the transactions contemplated by this Agreement or that
would materially interfere with the performance by Electron of this
Agreement.
29.4 Taxes. Electron has no tax deficiency or claim
outstanding, proposed or, to its knowledge, assessed against it with
respect to any taxes, including, without limitation, income, property,
sales, use, franchise, added value, employee's income withholding and
social security taxes, imposed by the United States or by any foreign
country or by any state, municipality, subdivision or instrumentality
of the United States or of any foreign country, or by any other taxing
authority, and Electron has made timely filings of all tax returns due
to all such taxing authorities.
29.5 Permits; Governmental Approvals. Electron possesses all
material franchises, licenses, permits and other authority as are
necessary for the conduct of Electron's business and is not in default
in any material respect under any of such franchises, permits, licenses
or other authority. No approval, consent, authorization or other order
of, and no consent, designation, filing, registration, qualification or
recordation with, any governmental authority is required in connection
with the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby.
29.6 Operations in Conformity With Law. Electron's operations,
as presently conducted, are not in material violation of any law or
regulation, including, without limitation, any applicable building
code, zoning ordinance, law relating to the employment of labor
(including provisions thereof relating to wages, hours, equal
opportunity, collective bargaining, age, pregnancy, disability and sex
discrimination and the payment of social security and other taxes),
regulation of the Federal Occupational Safety and Health
Administration, or any law regarding protection of the environment or
the use, storage or disposal of hazardous wastes.
Neither the warranties and representations made by Electron in this Agreement
and the Other Electron Instruments, nor the financial statements furnished by
Electron , nor any certificate or memorandum furnished or to be furnished by
Electron, or on its behalf, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
the statements herein or therein not misleading. All representations and
warranties of the Electron shall be true on and as of the Closing Date with
substantially the same effect as if made on and as of such date.
30. Covenants of Electron. Electron shall hold in strict confidence all
confidential data and information obtained from TBW, or any officer, agent or
representative of TBW.
30.1 Expenses of Acquisition Transaction. Electron shall pay
all of its expenses in connection with the transactions contemplated by
this Agreement, including, without limitation, the fees and expenses of
its legal counsel and accountants.
30.2 Notice of Breach of Representation or Warranty. Promptly
upon Electron becoming aware of the occurrence of, or the impending or
threatened occurrence of, any event which would cause or constitute a
breach, or would have caused or constituted a breach had such event
occurred prior to the date hereof, of any of the representations and
warranties of Electron contained in or referred to in this Agreement,
Electron shall give detailed written notice thereof to TBW.
31. Notices. All notices or other communications required or to be
given hereunder shall be in writing and shall be deemed duly given when received
or presented for delivery to the person entitled thereto at the addresses set
forth above, or at such other address as the Venturer may notify the other
Venturer from time to time by written notice.
32. Modification. This agreement may not be amended, modified or
rescinded, or any term or provision hereof waived, except by written agreement
signed by all of the Venturers, or, in the case of a waiver, signed by the
Venturer sought to be charged therewith.
33. Binding Effect. This agreement shall be binding upon and shall
inure to the benefit of and be enforceable by the Venturers and their respective
representatives, heirs, successors and permitted assigns, if any.
34. Governing Laws. This agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Pennsylvania.
35. Integration. This agreement and the Schedules and Exhibits hereto
set forth the entire agreement and understanding among the Venturers relating to
the subject matter hereof and all prior agreements, understandings and
discussions relating to same are hereby made null and void.
36. Partial Invalidity. If any term or provision of this agreement is
held by a court of competent jurisdiction to be invalid or unenforceable, in
whole or in part, the rest and remainder of this agreement and the application
of such provision to other circumstances and/or persons, shall remain valid and
enforceable to the fullest extent permitted by law.
37. Arbitration of Disputes. Any action, dispute, claim, or
controversy, whether sounding in contract, tort, or otherwise arising with
respect to this Agreement or relating to the other agreements contemplated by
this Agreement (the "Dispute" or "Disputes"), may, but is not required to, be
resolved by arbitration as set forth below. If taken to arbitration, such
disputes shall be resolved by binding arbitration in accordance with Title 9 of
the United States Code and the Commercial Arbitration Rules of the American
Arbitration Association ("AAA"). In the event of any inconsistency between such
Rules and these arbitration provisions, these provisions shall supersede such
Rules. All statutes of limitation which would otherwise be applicable shall
apply to any arbitration proceeding. In any arbitration proceeding subject to
these provisions, the arbitrator is specifically empowered to decide pre-hearing
motions which are substantially similar to pre-hearing motions to dismiss and
motions for summary adjudication. Judgment upon the award rendered may be
entered in any court having jurisdiction. A judgment entered on an arbitrator's
award shall not be appealable by either of The Venturers or the Venture.
Whenever an arbitration is elected, the parties shall select an arbitrator in
the manner provided in subsection 37.1.
37.1 Whenever an arbitration is elected under Section 37 of
this Agreement, the arbitrator shall be selected in accordance with the
Commercial Arbitration Rules of the AAA. Any arbitrator selected under
this subsection shall be knowledgeable in the subject matter of this
Dispute.
37.2 In the event of any Dispute governed by this section, the
party who does not prevail with respect to such Dispute shall pay all
of its own expenses, the arbitrator's fees and all costs and fees
(including attorneys' fees, administrative fees, arbitrator's fees, and
court costs) of and to the prevailing party.
38. Consent to Jurisdiction and Venue. With regard to any matters not
subject to arbitration as provided in Section 37 above, TBW and Electron hereby
consent to the exclusive jurisdiction of the courts designated in this Section
38 hereinafter in any and all actions or proceedings arising hereunder or
pursuant hereto, and irrevocably agree to service of process by personal service
upon them or by certified or registered mail, return receipt requested, directed
to the Venturers at their respective last know addresses.
38.1 Actions or Proceedings Commenced by TBW: TBW and Electron
consent to the exclusive jurisdiction of the federal and state courts
sitting in Colorado in any and all actions or proceedings commenced by
TBW against Electron and arising hereunder or pursuant hereto.
38.2 Actions or Proceedings Commenced by Electron: TBW and
Electron consent to the exclusive jurisdiction of the federal and state
courts sitting in Pennsylvania in any and all actions or proceedings
commenced by Electron against TBW and arising hereunder or pursuant
hereto.
39. Headings. The headings and subheadings contained in the titling of
this Agreement are intended to be used for convenience only and do not
constitute part of this Agreement or a basis for the interpretation hereof.
40. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Venturers have executed this Joint Venture
Agreement on the day and year first above written intending to be legally bound
hereby.
ATTEST: XX XXXX'X INCORPORATED
_______________________________ By:________________________________
Xxxx X. Xxxxx, Corporate Secretary Xxxx X. Xxxxxxxxxxx, Vice President
and General Manager,
Mechanical Division
ATTEST: THE ELECTRON CORP.
_______________________________ By:_________________________________
, Secretary Xxxxxxx Xxxxxxx, President and
Chief Operating Officer