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Exhibit 10.17
JOINT VENTURE AGREEMENT FOR
XXXXXXX MANUFACTURING, INC.,
AN OHIO JOINT VENTURE
THIS JOINT VENTURE AGREEMENT (herein after referred to as the "Agreement" ) is
entered into this 6th day of July, 1999, by and among Unitrend, Inc., a Nevada
corporation, and Xxx X. Xxxxxxx, an individual residing in the State of Ohio,
(herein after collectively referred to as the "Joint Venturers" or "Venturers")
for the purpose of: producing assemblies on an Original Equipment Manufacturer
("OEM") and tier one contractual basis for outside customers.
W I T N E S S E T H:
WHEREAS, the parties are desirous of forming a joint venture (the "Venture"),
under the laws of the State of Ohio by execution of this Agreement for the
purposes set forth herein and are desirous of fixing and defining between
themselves their respective responsibilities, interests, and liabilities in
connection with the performance of the before mentioned project; and
NOW, THEREFORE, in consideration of the mutual covenants and promises herein
contained, the Parties herein agree to constitute themselves as joint venturers
for the purposes before mentioned, and intending to be legally bound hereby, the
parties hereto, after first being duly sworn, do covenant, agree and certify as
follows:
ARTICLE I. DEFINITIONS
1.1. "Affiliate" shall refer to (i) any person directly or indirectly
controlling, controlled by or under common control with another person,
(ii) any person owning or controlling 10% or more of the outstanding
voting securities of such other person, (iii) any officer, director or
other partner of such person and (iv) if such other person is an officer,
director, joint venturer or partner, any business or entity for which
such person acts in any such capacity.
1.2. "Venturers" shall refer to Unitrend, Inc., and Xxx X. Xxxxxxx, and any
successor(s) as may be designated and admitted to the Venture.
1.3. "Internal Revenue Code", "Code" or "I.R.C." shall refer to the current
and applicable Internal Revenue Code.
1.4. "Net Profits and Net Losses" means the taxable income and loss of the
Venture, determined by the Venture's fiscal year.
1.5. The "book" value of an asset shall be substituted for its adjusted tax
basis if the two differ, but otherwise Net Profits and Net Losses shall
be determined in accordance with federal income tax principles.
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1.6. "Project" shall refer to those certain manufacturing and light assembly
operations wherein the Venture produces assemblies on an Original
Equipment Manufacturer (OEM) and tier one contractual basis for outside
customers.
1.7. "Treasury Regulations" shall refer to those regulations promulgated by
the Department of the Treasury with respect to certain provision of the
Internal Revenue Code.
1.8. "Percentage of Participation" shall refer to that figure set forth in
Article V at Section 5.1.
1.9. "Date of Production" shall refer to the date that the Venture enters into
the regular manufacture/assembly of finished product for Unitrend, Inc.,
as to be determined by the Venture's Board.
ARTICLE II. FORMATION, NAME, AND PRINCIPLE PLACE OF BUSINESS
2.1. FORMATION
(a) The Venturers do hereby form a joint venture pursuant to the laws
of the State of Ohio in order for the Venture to carry on the
purposes for which provision is made herein.
(b) The Venturers shall execute such certificates as may be required by
the laws of the State of Ohio or of any other state in order for
the Venture to operate its business and shall do all other acts and
things requisite for the continuation of the Venture as a joint
venture pursuant to applicable law.
2.2. NAME. The Name and style under which the Venture shall be conducted is:
"Xxxxxxx Manufacturing, Inc."
2.3. PRINCIPAL PLACE OF BUSINESS. The Venture shall maintain its principal
place of business at: 0000 XX 00, Xxxxxxx, Xxxx 00000. The Venture may
re-locate its office from time to time or have additional offices as the
Venturers may determine.
ARTICLE III. PURPOSE OF THE JOINT VENTURE
The business of the Venture shall be to produce assemblies on an Original
Equipment Manufacturer ("OEM") and tier one contractual basis for outside
customers, with a primary emphasis of the project to provide finished product
for Unitrend, Inc., in accordance with the contract documents for the Project
and all such other business incidental to the general purposes herein set forth.
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ARTICLE IV. TERM
4.1. TERMINATING EVENTS. The term of the Venture shall commence as of the date
hereof and shall be terminated and dissolved upon the earliest to occur
of: (i) completion of the Project and receipt of all sums due the Venture
by the entities for whom the Venture has performed services, and payment
of all laborers and materialmen employed by the Venture in connection
with the Project; (ii) the unanimous agreement of the Venturers; (iii)
the order of a court of competent jurisdiction; or (iv) the insolvency or
bankruptcy of any party(ies), as specified below.
4.2. INSOLVENCY OR BANKRUPTCY OF PARTY. If, during the term of this agreement,
a party to the Venture should become insolvent or bankrupt, the remaining
party(ies) shall have the option to mutually agree to continue the
Venture, excluding the insolvent or bankrupt party, on payment to that
party or to a person or persons, as a court of competent jurisdiction
shall direct, the then-current fair market value of the shares held by
the insolvent or bankrupt holds in the Venture, together with the
contribution the insolvent or bankrupt has supplied to the capital assets
of the Venture, less accrued expenses and the further payment of any
accrued profits attributable to that contribution (if the parties cannot
agree upon such fair market value and/or contribution amount, either
party may elect to have such determination made pursuant to the dispute
resolution procedures set forth in Article X below). If the remaining
parties do not mutually agree to continue the Venture, it shall be
dissolved and wound up in accordance with the applicable provisions of
Ohio law.
ARTICLE V. PERCENTAGE OF PARTICIPATION
5.1. Except as otherwise provided in Articles VI and IX hereof, the interest
of the Parties in any gross profits and their respective shares in any
losses and/or liabilities that may result from the operations of the
Project, and their interests in all property and equipment acquired and
all money received in connection with the performance of the Project
shall vary according to the time periods designated below:
TIME PERIOD PARTY PERCENTAGE
------------------------------------------------------------------------
From formation throughout the first year Unitrend, Inc. 60
from Date of Production Xxx X. Xxxxxxx 40
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Throughout the second year from Date of Unitrend, Inc. 51
Production Xxx X. Xxxxxxx 49
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Throughout the remaining years of the Unitrend, Inc. 40
life of the Venture Xxx X. Xxxxxxx 60
5.2. The Parties agree that in the event any losses arises out of or result
from the performance of the Project, each Venturer shall assume and pay
the share of the losses that is equal to their then-effective Percentage
of Participation.
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5.3. If for any reason, a Venturer sustains any liabilities or is required to
pay any losses arising out of or directly connected with the operations
of the Project, or the execution of any surety bonds or indemnity
agreements in connection therewith, which are in excess of its Percentage
of Participation in the Venture, the other Venturer shall promptly
reimburse such Venturer this excess, so that each and every member of the
Venturer will then have paid its proportionate share of such losses to
the full extent of its Percentage of Participation.
5.4. The Venturers agree to indemnify each other and to hold the other
harmless from, any and all losses of the Venture that are in excess of
such other Venturer's Percentage of Participation. Provided that the
provisions of this subsection shall be limited to losses that are
directly connected with or arise out of the operations and performance of
the Project and/or the execution of any bonds or indemnity agreements in
connection therewith and shall not be relate to or include any
incidental, indirect or consequential losses that may be sustained or
suffered by a Party.
5.5. The Parties shall from time to time execute documents that may be
necessary in connection with the operations and performance of the
Project. Provided however, that the liability of each of the Parties
under any agreements to indemnify a surety company or surety companies
shall be limited to the percentage of the total liability assumed by all
the Parties under such indemnity agreements that is equal to the Party's
Percentage of Participation.
5.6. INITIAL CONTRIBUTION OF THE VENTURE.
(a) The Venturers shall contribute the Property to the Venture and
their Capital Account shall each be credited with the appropriate
value of such contribution in accordance with their Venture
interests.
(b) Except as otherwise required by law or this Agreement, the
Venturers shall not be required to make any further capital
contributions to the Venture.
5.7. VENTURE INTERESTS. Upon execution of this Agreement, the Venturers shall
each own a corresponding percentage in the Venture as designated by their
respective Percentage of Participation, described in Section 5.1, above.
5.8. RETURN OF CAPITAL CONTRIBUTIONS.
(a) No Venturer shall have the right to withdraw his capital
contributions or demand or receive the return of his capital
contributions or any part thereof, except as otherwise provided in
this Agreement.
(b) The Venturers shall not be personally liable for the return of
capital contributions or any part thereof, except as otherwise
provided in this Agreement.
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(c) The Venture shall not pay interest on capital contributions of any
Venturer.
5.9. ALLOCATIONS OF NET PROFITS AND LOSSES. Subject to the provisions of this
Article, the Net Profits and losses of the Venture (including any net
"book" gains of the Venture resulting from a Capital Event) shall be
allocated to the Venturers in the following priority:
(a) NET PROFITS:
(1) First, to those Venturers with negative Capital Accounts,
between them in proportion to the ratio of their negative
Capital Account balances, until no Venturer has a negative
Capital Account.
(2) Thereafter, to the Venturers, pro-rata, based on their
respective Venture interests as set forth in Section 5.2
hereof.
(b) NET LOSSES:
(1) Subject to the provisions of this Article VI, Net Losses of
the Venture (including any net "book" loss of the Venture
resulting from a Capital Event) shall be allocated to the
Venturers, pro rata, based upon their respective Venture
interests as set forth herein.
(2) For purposes of this, Capital Accounts shall be adjusted
hypothetically as provided for in Sections
1.704-1(b)(2)(ii)(d) and 1.704- 1(b)(4)(iv)(f) of the Treasury
Regulations. These adjustments shall include the qualified
income offset as set forth in this Agreement.
(c) DISTRIBUTIONS. Distributable Cash of the Venture shall be
distributed to the Venturers, pro rata, based on their respective
Venture interests as set forth herein.
ARTICLE VI. MANAGEMENT AND GOVERNANCE
6.1. The business of the Venture shall be conducted in accordance with the
policies, decisions, guidelines and budgets made or approved by the
Venture's Board of Directors ("Board"), subject to the terms of this
agreement.
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6.2. The Board shall be composed of five (5) Directors. Except as provided in
Articles VI and IX, each Party shall have a voice on the Board equal to
its Percentage of Participation. For such purpose each Party is assigned
the following number of votes during the time periods indicated below:
TIME PERIOD PARTY VOTES
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From formation throughout the first year Unitrend, Inc. 3
from Date of Production Xxx X. Xxxxxxx 2
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Throughout the second year from Date of Unitrend, Inc. 3
Production Xxx X. Xxxxxxx 2
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Throughout the remaining years of the Unitrend, Inc. 2
life of the Venture Xxx X. Xxxxxxx 3
6.3. Each Venturer shall provide a written list of representatives who shall
be entitled to vote on behalf of the Venturer at the Board meetings of
the Venture. Each Venturer may, at any time, remove or replace any of the
directors designated by the Venturer by giving written notice of the
replacement to the other Venturer. The Venturers shall each vote their
shares or otherwise cause the removal and replacement of a director
designated by the other Venturer as requested by the Venturer. Each
Venturer's Director or alternative representative on the Board is hereby
granted and shall hereafter possess authority to act for such Venturer on
all matters of interest to it with respect to its participation in the
Venture.
6.4. On each matter put to a vote of the Board, each Director present in
person or by proxy at the meeting shall be entitled to cast a vote. The
Board shall determine the policy for the management of the Venture by
majority vote and, as used in this Agreement, a "majority vote" is
defined to be any figure greater than one-half of the authorized votes.
Any matter put to a vote shall be deemed adopted by the Board upon
receiving the affirmative vote of three (3) Directors.
6.5. The Board shall have the following powers:
(a) To determine the time and place of holding its meetings and the
procedures for conducting Board affairs.
(b) To determine and act upon the various matters, expressly or
impliedly contained in other section of this Agreement, which
require decision by the Board.
(c) To determine and act upon any other matters of joint interest to,
or requiring prompt action by the Venture.
(d) To approve of the Venture's Annual Business Plan, Annual Budget,
Annual Revised Budget, and to review and approve of the contracts
the Venture has entered into or proposals to contract.
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(e) To determine insurance reserves and reserves for other potential
liabilities that may result from or arise out of the projects of
the Venture.
(f) To consider all claims and disputes of any kind between the Venture
and subcontractors and/or third Parties and to authorize
negotiation, arbitration, litigation, and/or any other process for
their resolution and to authorize the settlement thereof.
(g) To consider and approve and/or remove the President and all other
officers and key management of the Venture, provided however, that
the removal of the President of the Venture may only proceed upon
written documentation showing that the President's removal is
justified for cause.
(h) To review and establish on a quarterly basis current and projected
margins the Venture is receiving or expects to receive from the
transfer of assemblies or finished products to Unitrend, Inc.
and/or any outside customers pursuant to the activities of the
Venture as defined by Article III.
6.6. Notwithstanding any other provisions to the contrary herein, insurance
coverages and limits and warranty coverages, expenses and limits shall be
subject to approval of the Board. Unless specified otherwise by the Board
in writing, the Venture shall, at a minimum, insure against the loss or
damage of any inventory stored on the premises of the Venture. Losses,
damages and/or liabilities arising from assemblies or finished products
that have left the custody of the Venture shall be borne by that entity
which has requested the Venture to manufacture or produce such assemblies
or finished products.
6.7. The Board shall generally perform its duties at meetings held at least on
a quarterly basis, at which all designated representatives of the
Venturers are present, but where circumstances warrant, telephone
communication between all party representatives or their alternatives is
authorized; participation by such means shall constitute presence at such
meeting. Any Director may call a meeting of the Board by giving all other
Directors notice thereof at least ten (10) business days in advance of
the meeting or such shorter notice as agreed upon in writing by all
Directors. There shall be a quorum if at least one (1) director
designated by each Venturer is in attendance. Minutes shall be kept of
each Board meeting and provided to all Directors.
6.8. Except as otherwise provided in the Additional Provisions herein, the
salaries and expenses of each of the representatives on the Board shall
be borne by the Party whom the representative has been designated to
represent and shall not be an expense to the Venture.
6.9. Each Director shall hold office for a term expiring on his or her death,
resignation or removal from office or upon the expiration of such shorter
term as may be required under applicable laws.
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ARTICLE VII. ASSIGNMENT
Neither Venturer shall assign its interests or rights under this Agreement, by
operation of law or otherwise, without the prior written consent of the other
Venturer; provided, however, without relinquishment of its liability under this
Agreement, either Venturer may assign this Agreement to an affiliate who agrees
in writing to assume all of that Party's rights and obligations under this
Agreement. Subject to the foregoing restriction on assignment, this Agreement
shall be fully binding upon, inure to the benefit of and be enforceable by each
Party and its permitted successors and assigns.
ARTICLE VIII. JOINT VENTURE BANK ACCOUNTS
8.1. All Working Capital or other funds received by the Venture in connection
with the performance of the project shall be deposited in a Checking
Account, set up especially for the Venture. Said accounts shall be kept
separate and apart from any other accounts of the Venturers.
8.2. Withdrawal of funds from the Venture's Joint Checking Account may be made
in such amount and by such persons as authorized by the Board.
ARTICLE IX. ACCOUNTING AND AUDITING
9.1. Separate books of accounts shall be kept by the Administrative Managing
Partner of the transactions of the Venture. Any Venturer may inspect such
books upon reasonable notice and at any reasonable time.
9.2. Periodic audits may be made upon said books at such time as authorized by
the Board by persons designated by the same and copies of said audit
shall be furnished to all Venturers.
9.3. Upon completion of the Project, a final audit shall be made and copies of
such audit shall be furnished to each of the parties.
9.4. It is understood and agreed that the method of accounting used by the
Administrative Managing Partner and for state and federal income tax
purposes shall be the cash based method and that the accounting year
shall be the calendar year.
9.5. Services rendered on behalf of the Venture which are supplied by the
Venturers or their agents shall be back-charged to the Venture at cost.
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ARTICLE X. RESOLUTION OF DISPUTES
All disputes arising out of, or which are not specifically controlled by, the
terms of this Agreement, and which are not resolved by the good faith
negotiations between the Venturers, shall be settled by arbitration under the
rules of the American Arbitration Association. In so agreeing the parties
expressly waive their right, if any, to a trial by jury of these claims and
further agree that the award of the arbitrator shall be final and binding upon
them as though rendered by a court of law and enforceable in any court having
jurisdiction over the same.
ARTICLE XI. OTHER PROVISIONS
11.1. This agreement constitutes the entire agreement of the parties and may
not be altered, unless the same is agreed upon in writing signed and
acknowledged by the parties.
11.2. This agreement shall be governed by the laws of the state of Ohio.
11.3. Neither Venturer will represent or hold itself out as an employee, agent,
or franchisee of the other Venturer. Neither Venturer will be entitled to
and will not attempt to create or assume any obligation, express or
implied, on behalf of the other Venturer. This Agreement will not be
interpreted or construed as creating or evidencing any association or
partnership among the Venturers or as imposing any partnership or
franchiser obligation or liability on either Venturer.
So agreed and executed this 6th day of July, 1999.
UNITREND, INC., Joint Venturer
By: /s/ Xxxxxx X.X. Jelinger /s/ Xxx X. Xxxxxxx
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Title: President XXX X. XXXXXXX, Joint Venturer
