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EXHIBIT 10.10
AGREEMENT
This Agreement dated February 7th, 1995 by and among:
1. Walbro Corporation, a Delaware corporation whose registered office is
located at Xxxx Xxxx, Xxxxxxxx 00000 XXX, represented by Xx. Xxxx X.
Xxxxxxx (Walbro).
2. Walbro Automotive Corporation (Automotive), a Delaware corporation
whose registered office is located at Xxxxxx Xxxxx, Xxxxxxxx 00000 XXX,
represented by Xx. Xxxx X. Xxxxxxx.
3. Magneti Marelli France S.A., a company incorporated under the laws of
France with share capital of FRF 424,494,000, whose registered office
is located at 00 xxx Xxxxxxxxx, 0000 Xxxxxxxx Xxxxxx and registered at
the Company and Commercial Registry of Nanterre number B652044827,
represented by Xx. Xxxxxxxx Xxxxxxxx (MM) which came to the rights of
Xxxxxx X.X. when it was absorbed by a merger into MM on July 1, 1994.
(collectively the "Parties")
R E C I T A L S
a. Walbro and Xxxxxx entered into a Joint Venture Agreement dated June
17, 1991 establishing a Joint Venture Company in France (JV France) for the
purpose of developing, manufacturing and marketing integrated TSS and their
component elements for sale to designated markets in Europe (hereinafter the
First Agreement).
b. In addition to the First Agreement Walbro and Xxxxxx entered into a
number of Ancillary Agreements, the list of which is contained in Appendix B to
this Agreement.
c. Automotive and Xxxxxx entered into a Joint Venture Agreement dated
as of January 1, 1993 establishing a JV in Brasil (JV Brasil) for the purpose of
developing, manufacturing and marketing integrated FDS and their component
elements for sale to designated markets in South America (hereinafter the Second
Agreement).
d. Together with the Second Agreement, Automotive and Xxxxxx entered
into a number of Ancillary Agreements the list of which is contained in Appendix
D to this Agreement.
e. The Parties believe that the automotive component market is a
worldwide market in which there are few car manufacturers which select their
suppliers based on the capability of such suppliers to deliver and service on a
worldwide basis. The Parties therefore decided to restructure their cooperation
with the purpose of eliminating any barrier among the existing Joint Ventures
and also with the view of setting up, in the near future, new companies in other
countries.
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f. The Parties also believe that it is necessary for them to strengthen
their cooperation by providing the JV France with the technical capability and
technology necessary to compete independently in the market and to approach on
its own customers around the world.
g. In furtherance of these objectives, the Parties hereby agree to
amend and modify the First Agreement with respect to the products, territory,
structure of JV Group and those other changes as detailed below. Unless
otherwise indicated, terms used in the Agreement shall have the same meanings as
in the First Agreement, and Second Agreement, where applicable.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
undertakings provided herein, the Parties agree as follows:
GENERAL PROVISIONS
1. The First Agreement is hereby confirmed and remains in effect to the
extent it is not amended or modified by this Agreement.
2. The cooperation among the Parties will take the form of a group of
companies controlled by JV France which shall hereinafter be identified as the
"JV Group".
3. Concurrent with this Agreement the Parties hereto shall cause the
transfer of all of the stock of Xxxxxx do Brasil ("JV Brasil") to JV France, and
shall cancel the Second Agreement effective as of the date of transfer. In
addition the product definition for the JV Brasil shall include fuel tanks.
4. The Parties hereby agree to cause JV France to form a Sociedad
Anonima de Capital Variable ("JV Mexico") as a member of JV Group which will be
owned 95% by JV France and 5% by Automotive. The initial paid up capital of JV
Mexico shall be equivalent to $4,000,000.
JV Mexico shall acquire from Magneti Marelli do Mexico fixed assets valued at
$2,600,000 (as depreciable assets); the capital stock of F.E.S.A. valued at
$150,000 and the stock of the level sensor business valued at market value.
JV Mexico shall not solicit any customer in the United States or Canada;
however, should JV Mexico be approached by any customer purchasing product for
resale in the United States or Canada, it shall immediately inform Automotive
which shall have full responsibility for dealing with such customers.
Furthermore the prices of the products to be sold by JV Mexico within Mexico to
Car Manufacturer controlled by any of Ford General Motors or Chrysler shall be
mutually agreed upon by the Parties.
5. Should Automotive complete the purchase of the plastic fuel tank
division of Dyno Industrier A.S. ("Tank Company") it will cause JV France and
the Tank Company to set up jointly (50/50) a fuel storage and delivery system
technical centre.
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The location, capitalization, management and other aspects with respect to such
Technical Centre shall be determined at the time of the formation of the
Technical Centre.
SPECIFIC AMENDMENTS TO THE FIRST AGREEMENT
The following amendments are effective as of February 7, 1995. Each section
number corresponds to the section of the First Agreement.
1.3 This section is amended to read as follows:
"PURPOSE. The purpose of the JV will be to develop, manufacture
and market Fuel Delivery System (FDS) and components thereof to the JV's
Territories as described in SECTION 1.4 below. A FDS includes a fuel pump,
module, bracket and level sensor.
Except as especially provided in SECTION 4.3, the JV Group will be the exclusive
vehicle through which each of the Parties develop, manufacture, and market FDS
in the Exclusive Territory for both automotive original equipment manufacturers
and aftermarket customers."
Consistent with this new SECTION 1.3, FDS shall be substituted for TSS
throughout the First Agreement.
1.4 This Section is amended to read as follows:
"TERRITORY: The designated market of the JV (the JV
Territory) will be determined as follows:
a) Exclusive Territory: Europe (as defined in the First
Agreement), South America (as defined in the Second Agreement), and Mexico,
except that Walbro will be permitted to sell directly to aftermarket customers
in Mexico.
b) Excluded Territory: The United States, Canada and Korea.
c) Non-Exclusive Territory: All countries not included in the
Exclusive Territory and the Excluded Territory.
The JV Group will take no actions which would cause Walbro to violate its
agreement with Mitsuba-Walbro, Inc. or Mitsuba Electric Manufacturing Company.
ARTICLE III
GOVERNANCE OF THE JV
Except for Section 3.2.4 which is hereby deleted, Article 3 of the First
Agreement remains substantially unchanged. The governance principles laid down
in Article 3 will apply to the governance of the JV Group. More specifically the
Board of Directors and the P.D.G. of JV France shall be responsible for the
management of the JV Group. Subject to local laws, only
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routine decisions shall be delegated to local managers and all special matters,
and strategic issues shall be decided upon by the Board of Directors of JV
France.
3.1 The day-to-day operation of the JV will be conducted by the
Chairman of the Board ("President Directeur General") and its staff. Unless
otherwise agreed, key management personnel of the JV will be provided by the
parties as set forth on Exhibit 3.1 (in which Deputy CEO is cancelled). Walbro
shall have the right to approve the appointment of any new P.D.G. which approval
shall not be unreasonably withheld.
3.2 The last sentence beginning "The Board" and ending "designee of
Walbro" is cancelled.
3.2.3 SPECIAL MATTERS
k) Licensing or sub-licensing to a member of the JV Group shall
not be a special matter.
l) The addition of a new member of the JV Group shall be a special
matter.
m) Liquidation or dissolution of any member of the JV Group shall
be a special matter.
The last sentence of section 3.2.3 shall be deleted and the following
substituted: "Sections 3.2.3 and 3.2.5 shall be suspended and of no force or
effect for a period of three years from the date that any party (other than
current members of management) acquires stock which constitutes greater than 50%
of the total voting power of Walbro Corporation and the JV France by- laws shall
be modified accordingly. After such three year period, the above-mentioned
sections shall be reinstated and in full force and effect.
ARTICLE IV
CONDUCT OF THE JV
4.2 MANUFACTURING. The third sentence of this section which
begins "The parties acknowledge that certain products" shall be deleted. Walbro
and MM will cause JV France to expand its capabilities in design and development
and in customer application for FDS in order for JV France to achieve greater
autonomy.
JV France can sublicense the Walbro technology, the Xxxxxx technology
and its own technology to members of the JV Group as appropriate. As far as
Walbro technology is concerned, Walbro will receive from JV France the
stipulated royalties on worldwide sales by your members of the JV Group. JV
France will be responsible for providing to members of the JV Group support
engineering and application engineering services.
4.3 MARKETING. This section is modified to be consistent with the
modification to the definition of Territories.
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4.4 This section is deleted.
4.6 This section is deleted.
ARTICLE V
LICENSES TO/FROM THE JV
It is the intent of the Parties that the Walbro License shall be
modified and hereby amended to be consistent with the amendments and purposes of
this Agreement: for example, JV France shall be permitted to sublicense any
technology to any member of the JV Group without consent.
In addition the Parties agree that any technology developed by the JV
Group which is not subject to the grant-back provision of the Walbro License,
shall be offered for license to Walbro and MM as follows:
(1) Walbro shall have the right to an exclusive license in the
Excluded Territory for a royalty payment to be agreed upon by the Parties.
(2) Walbro and MM shall have the right to a nonexclusive license
in the Non-Exclusive Territory for a royalty payment to be agreed upon by the
Parties.
5.2 WALBRO TECHNOLOGY LICENSE. This section is modified to
provide that the Walbro License shall be exclusive in the Exclusive Territory
and nonexclusive in the Non-Exclusive Territory. The License shall only include
technology related to FDS.
5.3 FUTURE JV TECHNOLOGY. This section is modified to provide
that the JV will grant to Walbro and MM a nonexclusive license in the
Non-Exclusive Territory and to Walbro an exclusive license in the Excluded
Territory. The Licenses shall only include technology related to FDS.
5.4 SPECIAL EXTRA-TERRITORIAL LICENSE. This section is modified
to be consistent with the modification to the definition of Territory.
5.5.1 TERMINATION GENERALLY. This section is amended to provide that
the License herein granted shall be a nonexclusive license throughout the world,
except there is no license in the Excluded Territory.
The first sentence of 5.5.1 shall be modified to read as follows: If
the JV Agreement terminates for any reason, Walbro agrees to enter into a new
license agreement with MM provided the Walbro License has not been terminated by
Walbro due to a material breach by the JV thereof.
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ARTICLE VII
TERMINATION OF THE JV
7.1.1 BY MUTUAL CONSENT. Add to the end of the sentence "and subject
to such conditions as agreed between them".
7.1.2 FOR BREACH. The nonbreaching party shall also has the right
to be treated as Noninitiating party under section 7.1.4.
7.1.3 BANKRUPTCY. This section is deleted.
7.1.4 DEADLOCK. This section is deleted and the following is
substituted: 7.1.4 UNILATERAL TERMINATION. At the election of any party
pursuant to the procedures and conditions of section 7.2.
7.1.5 TERMINATION OF THE WALBRO LICENSE BY WALBRO. This section is
deleted.
7.1.6 VIOLATION OF CERTAIN PROVISIONS. This section is deleted.
7.1.7 FORCE MAJEURE. This section is deleted.
7.2 CONSEQUENCES OF TERMINATION. This section is deleted and
replaced by the following section:
7.2 PROCEDURES AND GUIDELINES FOR A UNILATERAL TERMINATION
7.2.1 PROCEDURES. For any reason, one party may give written notice
(the Initiating Party) to the other party (the Non- Initiating Party) that it
elects to cause the termination of the JV Agreement.
Within thirty days of receipt of such notice the Chief Executive
Officers of the Parties hereto will meet and use their reasonable efforts to
determine if such dissolution is in the best interest of the Parties.
If the Parties are unable to agree upon a continuation of the JV
Agreement, then they shall jointly sign a statement to such effect and the
termination of the JV Agreement and the division of the assets and liabilities
of the JV Group ("Business") shall proceed as follows.
7.2.2 GUIDELINES TO THE TERMINATION. The Business shall be divided
among the Parties in any manner and subject to any terms and conditions that
they may agree upon.
If the Parties cannot agree upon terms and conditions for a termination
within three months from the initial receipt of notice from the Initiating
Party, then the following procedures shall apply.
The Parties shall appoint an independent consultant (Consultant) which
shall be a Merchant or Investment Banker with international expertise and
knowledge in the automotive
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industry, to analyze and determine the method for division of the Business under
the guidelines prescribed below.
If the Parties are unable to agree upon the appointment of a
Consultant, each Party shall appoint its own consultant which consultant will
appoint the Consultant for purposes of this termination.
There shall be a professional appraisal of the Business utilizing
standard appraisal procedures for a transaction such as this, and the division
of the Business shall be done in a manner to as closely divide the Business in
equal value shares as possible. In the event that the two parts of the Business
are not equal in value, one Party shall pay the other the difference in cash.
The Business shall also be divided based upon customer relations, and
to the extent possible each Party should get an equal value of potential
customers. Business attributable to any one customer shall not be divided
between the Parties. In addition, the Consultant shall give due consideration to
the likelihood that any Party is more likely to retain any specific customer.
For a period of 12 months after the division, neither Party will sell
FDS to the other Party's customers at a loss.
With respect to the transfer of physical assets of the Business, the
Parties will cooperate with each other for a transition period, in producing
product for the customers. The transition period will last for the shorter of
(i) the time needed for one Party to construct a plant and production lines and
have customer approval of the manufacturing process or (ii) two years. During
the transition period, the Party owning the plant shall manufacture product on a
timely bases with reasonable cost sharing allocations for the other Party.
In addition to the foregoing division of the Business, the Initiating
Party shall pay to the Non-Initiating Party an amount equal to 25% of the total
appraised value of the entire Business.
The Non-Initiating Party shall have the right to require, by written
notice to be delivered not later than thirty days after the receipt of the
Consultant's plan of division, that in lieu of proceeding in such divisions, the
Initiating Party must buy out its interest in the JV Group's Business for 150%
of its appraised value.
Any technology owned by the JV Group which is transferred to one Party
in the division of the Business shall be licensed, on a nonexclusive and royalty
free basis to the other Party. All parties shall have the right of sublicense.
8. The ancillary agreements listed in Appendix B and in Appendix D are
hereby modified to be consistent with the modifications and amendments herein
contained or cancelled if not in use on the date hereof.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement the
day and the year first above written.
MAGNETI MARELLI FRANCE S.A. WALBRO CORPORATION
/s/ Xxxxxxxx Xxxxxxxx /s/ Xxxx X. Xxxxxxx
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By: Xxxxxxxx Xxxxxxxx By: Xxxx X. Xxxxxxx
Its: President Its: Vice President
WALBRO AUTOMOTIVE CORPORATION
/s/ Xxxx X. Xxxxxxx
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By: Xxxx X. Xxxxxxx
Its: President and COO
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