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EXHIBIT 10.11
AMENDED AND RESTATED
JOINT VENTURE AGREEMENT
OF
PERFORMANCE ASSET MANAGEMENT FUND, LTD.
(a California Joint Venture)
This AMENDED AND RESTATED JOINT VENTURE AGREEMENT ("Agreement") is made
and entered into by and between PERFORMANCE CAPITAL MANAGEMENT, a California
corporation ("PCM") and PERFORMANCE ASSET MANAGEMENT FUND, LTD., a California
Limited Partnership ("PAMF") as of September 1, 1996. The Joint Venture created
hereby is sometimes referred to hereafter as the "Venture" and the parties are
sometimes referred to as "Venturers."
RECITALS
A. PAMF is a limited partnership formed for the purpose of generating
income and cash flow from various charged off retail sales contracts and credit
card contracts assets ("Contract Assets") acquired from lenders and other
creditors and desires to develop and maintain a dedicated collections and
servicing capacity to efficiently collect on the Contract Assets.
B. PCM is a collections and servicing entity with the expertise to perform
the collection and servicing of assets such as the Contract Assets.
C. The Venturers have entered into a series of joint ventures on
essentially identical terms with respect to a number of portfolios of Contract
Assets. The dates of prior joint venture agreements and portfolios of Contract
Assets are identified on Exhibit "A" hereto.
D. By this Agreement, the Venturers wish to amend and restate in a single
document the terms and conditions of their relationship which terms and
conditions will govern such relationship with respect to all Contract Assets
currently owned as well as all Contract Assets acquired in the future, if any.
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. FORMATION OF JOINT VENTURE. The Venturers have formed the Venture for
the limited purposes and scope set forth below and hereby amend, restate and
incorporate the terms of all prior agreements between them.
2. NAME OF THE JOINT VENTURE. The affairs of the Venture shall be
conducted under the name of "PAMF J.V." and such name shall be used at all times
in connection with the Venture's affairs. The Venture shall be governed by and
interpreted in accordance with the laws of the State of California. PCM is
hereby authorized to prepare and file such fictitious business name statements
and/or statements of partnership as PCM deems appropriate or required.
3. PURPOSE. The purpose of the Venture shall be to facilitate the
collection of Contract Assets purchased from various lenders and/or other
sources from time to time
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during the term of the Venture, and to sell, enforce, foreclose upon, and take
any and all actions necessary, convenient or expedient to maximize income and
other benefits to be derived by the Venture from the Contract Assets in
compliance with all applicable requirements of law. The Venture shall not engage
in any other business or economic activity nor acquire or own any type of
property unrelated to the purposes set forth above except with the prior written
approval of both Venturers.
4. GENERAL LIMITATIONS ON AUTHORITY OF Venturers. No Venturer shall have
any right or power to act for or assume any obligations or responsibility on
behalf of any other Venturer for any purpose whatsoever except as specifically
and expressly provided in this Agreement and neither Venturer shall be liable
for the contracts or acts (of either omission or commission) of the other
Venturer other than those taken on behalf of the Venture and specifically
authorized by the terms of this Agreement. It is not the purpose or intention of
this Agreement to create, and this Agreement shall never be construed as
creating, a general business partnership or any other relationship except for
the specific purposes set forth herein.
5. PLACE OF BUSINESS. The principal office and place of business of the
Venture shall be: 00000 Xxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000.
6. MANAGEMENT. Except as otherwise provided herein, all matters relating
to the policies and management of the Venture and the conduct of business
operation and affairs of the Venture shall be determined by unanimous approval
of the Venturers except to the extent, if any, that specific authority may from
time to time be granted in writing by the Venturers to any employed personnel of
the Venture or any other party. Notwithstanding the foregoing, PCM shall be
authorized and empowered to take such actions and enter into such agreements on
behalf of the Venture as are more particularly described in Section 7, below.
All persons and entities dealing with the Venture with respect to such matters
may rely on documents executed by PCM alone in connection with such matters.
7. REPRESENTATIVES OF VENTURERS. In order to facilitate the management and
operation of the Venture, each Venturer shall designate a representative as the
party authorized on behalf of such Venturer to make decisions with respect to
the Venture. The other Venturer shall be entitled to rely upon the authority of
such designated representative until informed in writing to the contrary by the
other Venturer. The designated representative of PCM shall be Xxxxxxx X.
Xxxxxxxx, and the designated representative of PAMF shall be Xxxxxxx X.
Xxxxxxxx. Because of its specialized expertise in the purchase and collections
of Contract Assets, the representatives of the Venturers designate PCM:
A. To collect revenues due or to become due to the Venture and
deposit such revenues in a bank clearing or trust account or bank accounts (as
selected by the Venturers);
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B. To exclusively assign accounts for collections to third parties
including but not limited to, outside collection agencies and to hire attorneys
from time to time to assist in such efforts. Further, in connection with the
authority granted herein to PCM, PCM shall also have the right to assign,
transfer, or convey a portion of its ownership interest in the Venture to such
third parties;
C. To make such contracts, if any, relating to the conduct of the
business as they shall deem advisable;
D. To negotiate and deal with regulatory authorities relative to
matters involving the business and affairs of the Venture;
E. To prepare and deliver to each other Venturer periodic reports,
not less frequently than monthly, showing results of operation of the Venture
and distribution of all funds of the Venture;
F. To take such other action, to make all other routine day-to-day
decisions of the Venture, and to Perform such other services as are necessary,
customary or appropriate for engaging in the economic activity constituting the
purpose of the Venture referred to in Section 3 of this Agreement;
G. To borrow funds for the benefit of the Venture and to secure
such borrowing by granting security interests, assignments, pledges or to
otherwise hypothecate the Contract Assets as security for such loans;
H. To sell, transfer, assign or otherwise liquidate all or any
portion of the Contract Assets on such terms as PCM, in its sole discretion,
deems in the best interest of the Venture; and
I. To admit additional Venturers in exchange for contributions of
cash, equity or other value to and for the benefit of the Venture conditioned,
however, upon such new venturer executing a written agreement to be bound by all
of the terms hereof.
8. UNAUTHORIZED ACTS. If any Venturer purports to do any act on behalf of
the Venturer or to bind the Venture other than in strict compliance with the
terms of this Agreement, such Venturer shall be deemed to have breached this
Agreement and, in addition to all other liabilities of such Venturer thereby
resulting, such Venturer shall, at such Venturer's own cost and expense,
indemnify and hold harmless the other Venturers and the Venture from all claims,
causes of action, costs, expenses, obligations and liabilities thereby arising.
9. ACCOUNTING. The Venture shall keep and maintain adequate books of
account and other financial records on a cash basis, in accordance with
generally accepted accounting principles that consistently applied. Such books
of account and other records shall be open to inspection by any Venturer at any
time during reasonable business hours.
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10. DISTRIBUTIONS. All "Distributable Funds" (as hereinafter defined) of
the Venture from time to time on hand shall be distributed as follows:
A. With respect to Distributable Funds generated from payments
collected under the Contract Assets, such Distributable Funds shall be
distributed between the Venturers in the following ratio: 55% to PAMF and 45% to
PCM; or as noted on Exhibit A.
B. With respect to Distributable Funds generated from the sale or
other disposition of Contract Assets, such Distributable Funds shall be
distributed between the Venturers in the following ratio: 85% to PAMF and 15% to
PCM.
The term "Distributable Funds," as used herein, means the amount (if any),
on any date, of cash collected on behalf of the Venture either from the
collection, sale or other disposition of Contract Assets less reasonable
reserves, current expenses and expenses incurred but not yet disbursed.
11. ALLOCATION OF INCOME, CREDITS, DEDUCTIONS, GAINS AND LOSSES. For
accounting and federal and state income tax purposes, all income, deductions,
credits, gains and losses of the Venture shall be allocated to the Venturers as
of the last day of the relevant fiscal year with respect to which such
allocation is to be made as follows:
A. With respect to items of income, credits, deductions, gains and
losses generated from payments collected under the Contract Assets, such items
shall be allocated between the Venturers in the following ratio: 55% to PAMF and
45% to PCM; or as noted on Exhibit A.
B. With respect to items of income, credits, deductions, gains and
losses generated from the sale or other disposition of Contract Assets, such
items shall be distributed between the Venturers in the following ratio: 85% to
PAMF and 15% to PCM.
12. COMPENSATION TO VENTURERS. Except as set forth herein and except as
may hereafter be expressly authorized in writing by all of the Venturers,
neither Venturer shall be entitled to receive, directly or indirectly, any
compensation, commission or other payment from or on account of, or in
connection with, the performance of any service for the Venture, or be entitled
to reimbursement for overhead costs or similar expenses relating to any service
performed for the Venture by such party.
13. BEST EFFORTS. PCM hereby agrees to utilize its best reasonable efforts
to collect all amounts owed to the Venture by the obligors under the Contract
Assets and to prepare monthly reports (in a form similar to the report attached
hereto as Exhibit "B", which is attached hereto and made a part hereof for all
purposes) detailing the cash receipts of the Venture and the distribution of all
funds of the Venture. Notwithstanding anything to the contrary contained herein,
PCM shall be entitled to payment for all actual collection services provided to
the Venture (such as xxxxxxx letters, account loading, credit report inquiry,
computerized account, etc.) so long as PCM uses its best reasonable
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efforts to collect the amounts owing to the Venture by the obligers under the
Contract Assets, including, without limitation, arranging for employees of PCM
to collect such revenues. In addition, PCM shall be entitled to reimbursement
for actual expenses incurred in connection with the sale of any assets of the
Venture. On accounts referred for litigation or assigned to a third party
collection entity, PCM shall be entitled to an additional five percent (5%) of
the total monthly revenues collected and received by the Venture on such
accounts as reimbursement for the additional costs and expenses incurred by PCM
in connection with such collection efforts and such amounts shall be in addition
to actual expenses paid to attorneys and third party collection entities. The
Venture agrees to indemnify PCM as provided below from all claims or causes of
action arising out of PCM's collection of or attempts to collect revenues on
behalf of the Venture. The Venturers acknowledge and understand that the
Contract Assets consist of accounts charged off as uncollectible or bad debts by
others and that it is expected that a large portion of the face amount of the
Contract Assets will not and cannot be collected and that the acquisition price
of the Contract Assets reflects the foregoing risk.
14. CAPITAL CONTRIBUTIONS. The Venturers have contributed to the
Venture, as their respective original capital contributions, the Contract
Assets, and, accordingly, the capital account of each respective Venturer has
been credited with the amount of such particular Venturer's capital contribution
and the Percentage Interests in the Venture thereby acquired by the various
Venturers.
15. PROHIBITED ASSIGNMENTS. Except as otherwise provided, without the
consent of all other Venturers, no interest in this Venture or rights under this
Agreement may be sold, assigned, transferred, mortgaged, encumbered,
hypothecated, or disposed of in any manner; and except as so provided, any
attempt to take any such action and such purported sale, assignment, transfer,
mortgage encumbrance, hypothecation or other disposition shall be void.
16. TERM. The Venture and this Agreement shall remain in full force and
effect from the date hereof until termination of the Venture in accordance with
the provisions hereof. The Venture shall terminate upon the earlier to occur of
any of the following:
A. December 31, 2005; or
B. The voluntary dissolution of the Venture by the vote of the
holders of a majority of the Percentage Interests in the Venture; or
C. The insolvency of any Venturer or the filing of a voluntary or
involuntary petition under any Chapter of the United States Bankruptcy Code or
any similar state statute naming an Venturer as debtor or any assignment for
benefit of creditors by any Venturer.
17. INDEMNIFICATION of PCM. The Venture shall indemnify and defend PCM,
its agents, employees, affiliated entities and individuals, officers and
directors (collectively
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referred to as PCM in this Section) in connection with any threatened, pending
or completed action, lawsuit or proceeding including arbitration or other means
of dispute resolution, against any and all costs, expenses (including attorneys
fees), costs of investigation, fines, judgments, amounts paid in settlement,
actually and reasonably incurred by PCM in connection with such action, lawsuit
or proceeding if in connection with the actions allegedly giving rise to the
claims upon which the action, lawsuit or proceeding is based PCM acted in good
faith in a manner it reasonably believed to be in or not adverse to the best
interest of the Venture.
18. GENERAL MATTERS.
18.1 NOTICES. Any and all notices permitted or required to be given
under the terms of this Agreement shall be in writing and may be served by: (a)
registered or certified mail, return receipt requested, postage prepaid, and
addressed to the party to be notified at the appropriate address specified
below; (b) delivering the same in person to such party, or by prepaid telegram,
addressed to the party to be notified at said address; (c) delivery by Federal
Express or other nationally recognized courier service, addressed to the party
to be notified at such address; or (d) telecopy (provided that such telecopy is
confirmed by mail or other delivery in the manner previously described). Notice
given by certified mail as a fore said shall be deemed given and received three
(3) days after mailing, whether or not actually received. Any notice given in
any other above authorized manner shall be deemed received upon actual receipt;
but shall also be deemed received upon attempted delivery if such delivery is
not accepted. The addresses of the parties are as follows:
IF TO PCM: Performance Capital Management
Attn: Xxxxxxx X. Xxxxxxxx
00000 Xxx Xxxx
Xxxxx 000
Xxxxxx, XX. 00000
Telecopy: (000) 000-0000
IF TO PAMF: Performance Asset Management Fund, Ltd.
Performance Development, Inc.,
General Partner
0000 Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx Xxxxx, XX. 00000
Attention: Xxxxxxx Xxxxxxxx
Telecopy: (000) 000-0000
The addresses of any party may be changed by notice given in the manner
provided in this Section.
18.2 ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties hereto relative to the formation, operation, governance and
other aspects of the Venture hereby formed. No variation, modification, or
change of this
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Agreement shall be binding upon any party hereto unless set forth in a document
duly executed by such party (or duly authorized agent of such party) and all
other Venturers.
18.3 SEVERABILITY. If any provision of this Agreement or
application thereof to any person of circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provision to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
18.4 BINDING AGREEMENT. This Agreement shall inure to the benefit
of and be binding upon the undersigned parties and their respective successors
and assigns. Whenever, in this instrument, a reference to any party is made,
such reference shall be deemed to include a reference to the successors and
assigns of such party, however, neither this Section nor any other portion of
this Agreement shall be interpreted to constitute a consent to any assignments
or transfer other than pursuant to and in accordance with the other provisions
of this Agreement.
18.5 ATTORNEYS' FEES. If any party hereto commences an action,
including arbitration or other form of dispute resolution, against any other
party hereto to enforce any of the terms hereof or because of the breach by any
party hereto of any of the terms hereof, the losing or defaulting party shall
pay the prevailing party reasonable attorneys' fees, costs and expenses incurred
in connection with the prosecution or defense of such action (whether by
arbitration or in court of law), and in connection with any action to collect
any judgment rendered thereunder.
This Agreement may be executed in multiple counterparts, each of which
shall have the force and effect of an original, as of the date first set forth
above ("Effective Date").
PERFORMANCE CAPITAL MANAGEMENT,
A CALIFORNIA CORPORATION
By: /s/ XXXXXXX X. XXXXXXXX
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Xxxxxxx X. Xxxxxxxx, President
PERFORMANCE ASSET MANAGEMENT
FUND, LTD., A CALIFORNIA LIMITED
PARTNERSHIP
By: /s/ XXXXXXX X. XXXXXXXX
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Xxxxxxx X. Xxxxxxxx, President
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EXHIBIT "A"
DATE PARTNERSHIP CODE CORPORATION COMMENTS
08/29/91 XXX I PCM Far Western Bank
10/22/91 XXX I PCM Far Western Bank
12/05/91 XXX I PCM Landmark
01/15/92 XXX I PCM Personal Finance
06/22/93 XXX I PC063/2063 PCM Centennial Thrift
06/11/96 XXX I P1P2BF PCM Berkley Fed. Bank
08/30/96 XXX I PICM16 PCM Chase Manhattan
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EXHIBIT "B"
(form of Monthly Report on Collections)
