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EXHIBIT 10.10
JOINT VENTURE AGREEMENT
This JOINT VENTURE AGREEMENT is made and entered into by and between the
undersigned parties consisting of PERFORMANCE CAPITAL MANAGEMENT, a California
Corporation (hereinafter sometimes referred to as "PERFORMANCE" OR "PCM") and
PERFORMANCE ASSET MANAGEMENT FUND III, LTD., a California Limited Partnership,
(hereinafter sometimes referred to as "PAMF III").
WITNESSETH
WHEREAS, PAMF III is a limited partnership formed for the purpose of
generating income and cash flow from various retail contract assets acquired
from lenders and other creditors and desires to develop and maintain a dedicated
collections and servicing capacity to efficiently collect on such assets while
also limiting the legal ability for such collection services; and
WHEREAS, PERFORMANCE is a collections and servicing entity with the
expertise to perform such services;
THEREFORE THE PARTIES HEREBY AGREE AS FOLLOWS:
ARTICLE 1.1 FORMATION OF JOINT VENTURE
SECTION 1.1 FORMATION OF JOINT VENTURE. PERFORMANCE and PAMF III hereby
form a Joint Venture (the "Joint Venture" or "Venture") for the limited purposes
and scope hereinafter set forth. The parties are sometimes referred to herein as
the "Venturers," in the plural, and "Venturer," in the singular.
SECTION 1.2 NAME OF JOINT VENTURE. The affairs of the Joint Venture
shall be conducted solely under the name "PCM/PAMF III, J.V. Pool 21 " and such
name shall be used at all times in connection with the Joint Venture's affairs.
This Joint Venture shall be governed by and interpreted in accordance with the
laws of the State of California.
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SECTION 1.3 PURPOSE. The purpose of this Joint Venture shall be to
facilitate collections of charged off retail sales contracts and credit card
contracts assets ("Contract Assets") purchased from various lenders, or sell,
enforce, foreclose upon, and take any and all actions necessary, convenient or
expedient to maximize income and other benefits to be derived by the Joint
Venture in compliance with all applicable requirements of law. From time to time
the Joint Venture shall also purchase from lenders and other sources cash flow
generating Contract Assets in order to produce income for the Joint Venture. The
Joint Venture shall not engage in any other business or economic activity nor
acquire or own any type of property unrelated to the purposes set forth above
except with the prior written approval of all Venturers.
(b) 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 and, except as otherwise expressly provided in this Agreement,
neither Venturer shall be liable for the contracts or acts (of either omission
or commission) of the other Venturer. It is not the purpose or intention of this
Agreement to create, and this Agreement shall never be construed as creating, a
general business partnerships or any other relationship except for the specific
purpose set forth herein.
SECTION 1.4 PLACE OF BUSINESS The principal office and place of business
of the Joint Venture shall be: 00000 Xxx Xxxx, Xxxxx 000, Xxxxxx, XX 00000.
ARTICLE 2. MANAGEMENT OF THE VENTURE
SECTION 2.1 MANAGEMENT. Except as otherwise provided herein, all matters
relating to the policies and management of the Joint Venture and the conduct of
business operation and affairs of the Joint Venture shall be determined by
unanimous approval of the Venturers except to the extent, if any, that specific
authority may from time to time be granted in writing by the Venturers to any
employed personnel of the Joint Venture or any other party. Notwithstanding the
foregoing, PERFORMANCE shall be authorized and empowered to take such actions
and enter into such agreements on behalf of the Joint Venture as are more
particularly described in
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Section 2.2, below. All persons and entities dealing with the Joint Venture with
respect to such matters may rely on documents executed by PERFORMANCE alone in
connection with such matters.
SECTION 2.2 REPRESENTATIVES OF VENTURERS. In order to facilitate the
management and operation of the Joint Venture, each Venturer shall designate a
representative as the party authorized on behalf of such Venturer to make
decisions with respect to the Joint Venture. Each other Venturer 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 PERFORMANCE shall be Xxxxxxx X. Xxxxxxxx, and the designated
representative of PAMF III shall be Xxxxxxx Xxxxxxxx. Because of its specialized
expertise in the purchase and collections of Contract Assets, the
representatives of the Venturers designate PERFORMANCE:
(1) To collect revenues due or to become due to the Venture
and deposit such revenues in a bank clearing or trust
account or bank accounts (as selected by the Venturers);
(2) To exclusively assign accounts for collections to third
parties including but not limited to, outside collection
agencies and to hire attorneys from time to time to assist
in such efforts. Further, in connection with the authority
granted herein to PCM, PCM shall also have the right to
assign, transfer, or convey a portion of its ownership
interest in the Joint Venture to such third parties;
(3) To make such contracts, if any, relating to the conduct of
the business as they shall deem advisable;
(4) To negotiate and deal with regulatory authorities relative
to matters involving the business and affairs of the Joint
Venture;
(5) To prepare and deliver to each other Venturer periodic
reports, not less frequently than monthly, showing results
of operation of the Joint Venture for such period,
including cash receipts of the Joint Venture and
distribution of all funds of the Joint Venture; and
(6) To take such other action, to make all other routine
day-to-day decisions of the Joint Venture, and to perform
such other services as are necessary, customary or
appropriate for engaging in the economic
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activity constituting the purpose of the Joint Venture
referred to in Section 1.3 of this Agreement.
(7) To borrow funds for the benefit of the Joint Venture and
to secure such borrowing by granting security interests,
assignments, pledges or to otherwise hypothecate the
Contract Assets as security for such loans;
(8) To sell, transfer, assign or otherwise liquidate all or
any portion of the Contract Assets on such terms as
PERFORMANCE, in its sole discretion, deems in the best
interest of the Joint Venture; and
(9) To admit additional joint ventures in exchange for
contributions of cash, equity or other value to and for
the benefit of the Joint Venture conditioned, however,
upon such new venturer executing a written agreement to be
bound by all of the terms hereof.
SECTION 2.3 UNAUTHORIZED ACTS. If any Venturer purports to do any act on
behalf of the Joint Venturer or to bind the Joint Venture 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 Joint Venture
from all claims, causes of action, costs, expenses, obligations and liabilities
thereby arising.
ARTICLE 3. ACCOUNTING AND DISTRIBUTIONS
SECTION 3.1 ACCOUNTING. The Joint Venture shall keep and maintain
adequate books of account and other financial records on the cash basis, in
accordance with generally accepted accounting principles to be consistently
applied. Such books of account and other records shall be open to inspection by
any Venturer at any time during reasonable business hours.
SECTION 3.2 DISTRIBUTIONS. All "Distributable Funds" (as hereinafter
defined) of the Joint 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 Joint
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Venturers in the following ratio: 55% to PAMF III and 45% to
PERFORMANCE.
(b) With respect to Distributable Funds generated from the sale or
other disposition of Contract Assets, such Distributable Funds
shall be distributed between the Joint Ventures in the following
ratio: 88% to PAMF III and 12% to PERFORMANCE.
The term "Distributable Funds," as used herein, means the amount (if
any) on any date, of cash collected on behalf of the Joint Venture less
reasonable reserves, current expenses and expenses incurred but not yet
disbursed.
SECTION 3.3 ALLOCATION OF INCOME, CREDITS, DEDUCTIONS, GAINS AND LOSSES.
For accounting and federal and state income tax purposes, all income,
deductions, credits, gains and losses of the Joint Venture shall be allocated to
the Venturers 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 Joint Venturers
in the following ratio: 55% to PAMF III and 45% to PERFORMANCE.
(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 Joint
Venturers in the following ratio: 88% to PAMF III and 12% to
PERFORMANCE.
SECTION 3.4 COMPENSATION TO ANY VENTURER.
(a) Except as set forth in 3.4(b) and except as may hereafter be
expressly authorized in writing by all of the Venturers, neither any Venturer,
shall be entitled to receive, directly or indirectly, any compensation,
commission or other payment from or on account of, or in connection with, the
performance of any service for the Joint Venture, or be entitled to
reimbursement for overhead costs or similar expenses relating to any service
performed for the Joint Venture by such party.
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(b) Subject to the provision of Article 2, PERFORMANCE hereby agrees to
utilize its best reasonable efforts to collect all amounts owned to the Joint
Venture by the obligers under the Contract Assets and to prepare monthly reports
(in a form similar to the report attached hereto as Exhibit "B", which is
attached hereto and made a part hereof for all purposes) detailing the cash
receipts of the Joint Venture and the distribution of all funds of the Joint
Venture. Notwithstanding anything to the contrary contained herein, PERFORMANCE
shall be entitled to payment for all actual collection services provided to the
Joint Venture (such as xxxxxxx letters, account loading, credit report inquiry,
computerized account, etc.) so long as PERFORMANCE uses its best reasonable
efforts to collect the amounts owing to the Joint Venture by the obligers under
the Contract Assets, including, without limitation, arranging for employees of
PERFORMANCE to collect such revenues. In addition, PERFORMANCE shall be entitled
to reimbursement for actual expenses incurred in connection with the sale of any
assets of the Joint Venture. On accounts referred for litigation or assigned to
a third party collection entity, PERFORMANCE shall be entitled to an additional
five (5%) percent of the total monthly revenues collected and received by the
Joint Venture on such accounts as reimbursement for the additional costs and
expenses incurred by PERFORMANCE 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 Joint Venture agrees to indemnify PERFORMANCE as
provided in Article 7, below from all claims or causes of action arising out of
PERFORMANCE's collection of or attempts to collect revenues on behalf of the
Joint Venture. The Venturers acknowledge and understand that the Contract Assets
consists 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.
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ARTICLE 4. CAPITAL CONTRIBUTIONS; FORECLOSURE
SECTION 4.1 CAPITAL CONTRIBUTIONS. The Venturers have contributed to the
Joint Venture, as their respective original capital contributions, the credit
card contracts shown on Exhibit "A" attached hereto, and, accordingly, the
capital account of each respective Venturer has been credited with the amount of
such particular Venturer's capital contribution and the Percentage Interests in
the Venture thereby acquired by the various Venturers are as shown on Exhibit
"A" attached hereto.
ARTICLE 5. ASSIGNMENTS
SECTION 5.1 PROHIBITED ASSIGNMENTS. Except as otherwise provided,
without the consent of all other Venturers, no interest in this Joint Venture or
rights under this Agreement may be sold, assigned, transferred, mortgaged,
encumbered, hypothecated, or disposed of in any manner; and except as so
provided, any attempt to take any such action and any such purported sale,
assignment, transfer, mortgage encumbrance, hypothecation or other disposition
shall be void.
ARTICLE 6. TERM
SECTION 6.1 TERM. The Joint Venture and this Agreement shall remain in
full force and effect from the date hereof until termination of the Venture in
accordance with the provisions hereof. The Joint Venture shall terminate upon
the earlier to occur of any of the following:
(1) December 31, 2006; or
(2) The voluntary dissolution of the Joint Venture by the vote of the
holders of a majority of the Percentage Interests in the Venture;
or
(3) 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.
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ARTICLE 7. INDEMNIFICATIONS
SECTION 7.1 INDEMNIFICATION OF PERFORMANCE. The Joint Venture shall
indemnify and defend PERFORMANCE, its agents, employees, affiliated entities and
individuals, officers and directors (collectively referred to as PERFORMANCE 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 PERFORMANCE 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 PERFORMANCE acted
in good faith in a manner it reasonably believed to be in or not adverse to the
best interest of the Joint Venture.
ARTICLE 8. GENERAL
SECTION 8.1 NOTICES. Any and all notices permitted or required to be
given under the terms of this Agreement shall be in writing and may be served
by: (a) registered or certified mail, return receipt requested, postage prepaid,
and addressed to the party to be notified at the appropriate address specified
below; (b) delivering the same in person to such party, or by prepaid telegram,
addressed to the party to be notified at said address; (c) delivery by Federal
Express or other nationally recognized courier service, addressed to the party
to be notified at such address; or (d) telecopy (provided that such telecopy is
confirmed by mail or other delivery in the manner previously described). Notice
given by certified mail as aforesaid shall be deemed given and received three
(3) days after mailing , whether or not actually received. Any notice given in
any other above authorized manner shall be deemed received upon actual receipt;
but shall also be deemed received upon attempted delivery if such delivery is
not accepted. The addresses of the parties are as follows:
If to PERFORMANCE: Performance Capital Management
00000 Xxx Xxxx
Xxxxx 000
Xxxxxx, XX 00000
Telecopy: (000) 000-0000
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If to PAMF III: Performance Asset Management Fund III, Ltd.
0000 Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx
The addresses of any party may be changed by notice given in the manner
provided in this Section.
SECTION 8.2 ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties hereto relative to the formation, operation,
governance and other aspects of the Joint Venture hereby formed. No variation,
modification, or change of this Agreement shall be binding upon any party hereto
unless set forth in a document duly executed by such party (or duly authorized
agent of such party) and all other Venturers.
SECTION 8.3 SEVERABILITY. If any provision of this Agreement or
application thereof to any person of circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provision to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
SECTION 8.4 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.
SECTION 8.5 ATTORNEY'S 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 attorney's fees, costs and expenses incurred
in connection with the prosection or defense of such action (whether by
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arbitration or in court of law), and in connection with any action to collect
any judgment rendered thereunder.
Executed in multiple counterparts, each of which shall have the force
and effect of an original, this the 18th day of December, 1996 ("Effective
Date")
PERFORMANCE
By:
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Xxxxxxx X. Xxxxxxxx, President
Performance Capital Management
Address: 00000 Xxx Xxxx
Xxxxx 000
Xxxxxx, XX 00000
Telephone: (000)000-0000
PAMF III
By:
Xxxxxxx Xxxxxxxx, President
Performance Asset Management Fund III
Performance Development, Inc., General Partner
Address: 0000 Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
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EXHIBIT "A"
ORIGINAL
CAPITAL PERCENTAGE
NAME OF VENTURER CONTRIBUTION INTEREST
---------------- ------------ ----------
PAMF III [$700,292.50] [55%]
PCM [$ 0] [45%]
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EXHIBIT B
(FORM OF MONTHLY REPORT ON COLLECTIONS)
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SCHEDULE A
(SCHEDULE OF CONTRACT ASSETS)
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