Supplemental Formation Agreement

EXHIBIT 10.34 December 7, 1992 SUPPLEMENTAL FORMATION AGREEMENT THIS AGREEMENT, made as of the 7th day of December 1992 betweenNISHIKAWA RUBBER CO., LTD., a corporation organized under the laws of Japan andhaving its principal office in Hiroshima, Japan (hereinafter called"Nishikawa"), and THE STANDARD PRODUCTS COMPANY, a corporation organized underthe laws of the State of Ohio, United States of America, and having itsprincipal office in Cleveland, Ohio (hereinafter called "Standard"), WITNESS AS FOLLOWS: WHEREAS, Nishikawa and Standard executed on October 9, 1986 a FormationAgreement relating to the organization and operation of an Indiana corporationto be known as Nishikawa Standard Company and owned 60% by Nishikawa and 40% byStandard (the "Formation Agreement"); and WHEREAS, Nishikawa and Standard subsequently agreed that NishikawaStandard Company should be reorganized as a general partnership and caused to beestablished on March 23, 1989 a Delaware general partnership as evidenced by aPartnership Agreement (the "Partnership Agreement"), which on March 31, 1989pursuant to the terms of an Asset Purchase Agreement acquired substantially allof the assets and assumed substantially all of the liabilities of the Indianacorporation known as Nishikawa Standard Company (the Delaware generalpartnership is hereinafter referred to as "NISCO"); and WHEREAS, Nishikawa of America, Inc., a Delaware corporation whollyowned by Nishikawa presently owns a 60% partnership capital interest in NISCOand NISCO Holding Company, a Delaware corporation wholly owned by Standard, ownsa 40% partnership capital interest in NISCO; and WHEREAS, the partnership capital of NISCO was originally established inthe Partnership Agreement at $25,000,000, which capital was increased by anamendment to the Partnership Agreement dated November 1, 1990 ("Amendment No.1") to $28,500,000; and WHEREAS, Amendment No. 1 granted to the Policy Committee authority tofurther increase NISCO's capitalization to $30,000,000, which increase wasapproved by the Policy Committee by action taken on March 20, 1991; and WHEREAS, the parties agreed on July 31, 1992 to increase the capital ofNISCO to $32,000,000 and have contributed to NISCO the cash required, although aformal amendment to the Partnership Agreement has not yet been executed; and WHEREAS, by this agreement the parties have agreed to further increasethe capital of NISCO to an aggregate of $38,400,000 and to authorize a furtherincrease in capital up to $41,400,000. WHEREAS, NISCO has been advised by Ford Motor Company, a substantialcustomer, that products now being produced by NISCO for Ford and additional Fordproducts scheduled for future production by NISCO over the next several yearswill be removed from NISCO and awarded to another supplier as long as NISCO iscontrolled by a Japan based manufacturer, i.e., Nishikawa; and WHEREAS, the parties have agreed that the partnership interest ofStandard held by NISCO Holding, Inc. should be increased to 50%, so that eachparty will have an equal equitable interest, and that, subject to certainlimitations, Standard will be in primary charge of overall management of NISCOfor at least five years, as hereinafter provided; and WHEREAS, as a result of such change in percentage of ownership and ofmanagement, as well as the parties' experience in operating NISCO and itspredecessor 3corporation for the past six years, the parties hereto have agreedthat certain matters relating to the management and operation of NISCO as setforth in the Formation Agreement should be revised or clarified, all ashereinafter provided. NOW, THEREFORE, in consideration of the mutual covenants containedherein and intending to be legally bound hereby, the parties hereto, who arehereinafter jointly called "the partners", hereby agree as follows: 1. Overall Philosophy. 1.1 During the period when it owned 60% of NISCO, Nishikawaassumed a responsibility and fully supported the growth of NISCO. To enhancecustomer relationships with United States automobile manufacturers, particularlyFord Motor Company, the parties are in agreement that equal ownership of NISCOis now essential. The advent of 50-50 ownership creates a different relationshipbetween the partners. 1.2 Standard recognizes that, as an equal partner, its obligationto assist and support NISCO has increased to a level equal to that of Nishikawa.With equal ownership it is also appropriate that neither partner be obliged tofinancially subsidize NISCO; instead there should be an effort at equalizationand normalization so that each of the partners is fairly reimbursed for anysignificant expenditure made by it on behalf of NISCO. Further, it remains thelong-term goal of NISCO to be a complete "stand alone" operation as stated inParagraph 6.4 of the Formation Agreement. 1.3 It is to the best interests of both Nishikawa and Standardthat NISCO emerge as a successful and profitable entity. The partners haveagreed that for the next five years Standard shall be primarily in charge ofoverall management of NISCO, subject to certain limitations as subsequentlyprovided. Nevertheless, the partners have also agreed that they will jointlycooperate and use their experience and expertise, in a spirit of friendship and 4unity, to make NISCO a solid and profitable company while simultaneously seekingto reduce the cost of parent company support. Such mutual cooperation relates toall aspects of NISCO's operations including technology, research anddevelopment, sales, production, purchasing, finance and administration. 1.4 The partners believe it is in the best interests of NISCO toserve both Japanese transplant and domestic automobile manufacturers and thatNISCO should strive to balance its sales evenly between these two types ofcustomers. 1.5 In order to achieve the goals set forth above, the partnershave agreed that continued growth of NISCO should be controlled as contemplatedby this Agreement. 2. Increase in Capital. 2.1 As noted above, the present partnership capital of NISCO is$32 million, of which Nishikawa through Nishikawa of America has contributed$19.2 million and Standard through NISCO Holding Company has contributed $12.8.To bring its partnership equity to 48.10%, Standard agrees promptly afterexecution of this agreement to contribute through NISCO Holding Company $6.4million to the partnership capital of NISCO, bringing NISCO's total capital to$38.4 million. 2.2 NISCO has been awarded by Ford Motor Company contracts forfuture production which will require establishment of a third plant. Inanticipation of the need for further capital, the partners have agreed toauthorize the Policy Committee to call from time to time for an increase in thecapital of NISCO to $41,400,000. The partners will subsequently determine howthe remainder of the cost of the third plant will be financed. 5 3. Purchase of 1.9% Partnership Interest. 3.1 Standard agrees promptly after the execution of this Agreementto cause NISCO Holding Company to purchase from Nishikawa of America a 1.90%equity interest in NISCO at a price of $1,500,000, and Nishikawa agrees to causeNishikawa of America to sell such 1.90% interest at such price. 3.2 Section 3.1 "Capital Contributions" of the PartnershipAgreement shall be amended to reflect the matters set forth in subparagraphs2.1, 2.2 and 3.1 above. In addition, all references in the Partnership Agreementto "60%" and "40%" shall be changed to "50%." 4. Change in Policy Committee. 4.1 In view of the fact that Nishikawa and Standard are to becomeequal partners in NISCO, it has been agreed that the Policy Committee should bereduced to six members and that both Nishikawa and Standard should ...