Joint Venture Agreement

EXHIBIT 10.25


JOINT VENTURE AGREEMENT


This Joint Venture Agreement (the "Agreement") is made and entered into as of November 30, 1994, between WALBRO AUTOMOTIVE CORPORATION, ("WALBRO") a Delaware corporation located at Auburn Hills, Michigan 48326 USA, and DAEWOO PRECISION INDUSTRIES, LTD. ("DPI"), a company incorporated under the laws of The Republic of Korea ("Korea") located at P.O. Box 25 Kum-Jeong, Pusan, Korea. DPI is an affiliate of Daewoo Motor Company Limited ("Daewoo"), a company incorporated under the laws of Korea. Walbro and DPI are hereinafter collectively referred to as "the parties".


R E C I T A L S:


A. Walbro designs and manufactures fuel delivery subsystems as original equipment for application on automotive electronic fuel injection systems.


B. Walbro has advanced technology with respect to automotive electronic fuel injection system components, making particular technological advancements in the design and manufacture of electric fuel pumps, modules, level sensors, brackets, tubes, flanges, electric connectors and filters (collectively "Sending Units" or "SU").


C. DPI has strong manufacturing capabilities in Korea.


D. In light of the foregoing the parties desire to utilize their respective strengths by establishing a Joint Venture (the "JV"), to be jointly owned by Walbro and DPI, to do applications engineering, manufacture and sell integrated SU and their components.


NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and undertakings provided herein, the parties agree as follows:


ARTICLE I
FORMATION OF THE JV


1.1 INCORPORATION. As soon as possible after receipt of the necessary governmental approvals, permits, licenses, consents and waivers (collectively, the "Governmental Approvals"), the parties will cause the incorporation and registration of the JV as a limited liability company organized under the laws of Korea. The Articles of Incorporation of the JV ("Charter") shall be substantially in the form of EXHIBIT 1.1 attached hereto.


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1.2 OWNERSHIP. The equity interests in the JV will initially be owned 51% by DPI and 49% by Walbro ("Equity Interests"). Such ownership may subsequently be transferred to direct or indirect wholly-owned subsidiaries or Controlled Affiliates (as defined in Article VI) of either or both parties.


1.3 PURPOSE. The purpose of the JV will be to do applications engineering, manufacture and sell SU and component elements thereof to Daewoo, its Controlled Affiliates and unrelated customers in the JV Territory. An SU includes a fuel pump, module, level sensor, brackets, tubes and flanges, connectors and filters. By mutual written agreement of the parties, the scope of the JV may be expanded to add additional fuel system products.


1.4 TERRITORY. The designated market for the JV (the "JV
Territory") will be such geographic areas as indicated on EXHIBIT
1.4.


1.5 NAME. The parties agree that the JV shall operate under the
name Korea Automotive Fuel Systems Ltd.


1.6 REGISTERED OFFICE. The registered office of the JV shall be at such place of business as determined by the Board of Directors.


1.7 LIMITED LIABILITY COMPANY. The JV shall be a limited liability company [Chusik Hoesa], and the creditors of the JV shall look solely to the assets of the JV for relief. The parties shall not bear any direct or indirect liability for the debts or obligations of the JV other than each party's respective obligation to pay in full the amount of its share subscription.


ARTICLE II
CAPITALIZATION AND FUNDING OF THE JV


2.1 CAPITAL CONTRIBUTIONS. The initial capitalization of the JV shall be 1,600 Million Won of equity which shall be contributed to the JV by the parties in accordance with their Equity Interests. Additional contributions shall be made as provided on page 28 of the Business Plan.


2.2 OPERATING DEFICITS . Operating deficits of the JV beyond those provided for in the initial capitalization described above or needs for additional working capital will be funded by outside borrowings to the maximum extent available. If guarantees are required to secure outside borrowings, the parties shall render such guarantees in proportion to their Equity Interests. Such guarantees shall be several unless a bank requires the guarantees to be joint and several, in which event each party shall have a right of contribution from the other party. Additional operating deficits or working capital needs which cannot be funded with outside borrowings will be funded by the parties in proportion to their respective Equity Interest. Unless otherwise agreed at the time of funding, such deficits will be funded by loans from the parties.


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2.3 SUBSEQUENT CAPITAL CONTRIBUTIONS. If additional capital requirements are contemplated by the Business Plan, they will be made by the parties in proportion to their respective Equity Interests. No additional capital contributions other than those contemplated by the Business Plan will be required unless approved by both parties.


2.4 PROMOTERS. DPI, Walbro and five individual promoters designated by DPI shall serve as the promoters of the JV and one invited individual subscriber designated by DPI shall serve as a non-promoter subscriber of the JV as required by the Korean Commercial Code ("KCC"). Each individual promoter designated by DPI shall be deemed a nominee shareholder of the JV on behalf of the DPI and subscribe for one share each in order that such promoter can sign the Articles of Incorporation for the sole purpose of forming the JV in accordance with applicable laws. DPI shall ensure that the individual promoters shall immediately transfer said shares to DPI on incorporation of the JV.


ARTICLE III
GOVERNANCE OF THE JV


The parties agree that the JV will be governed substantially as set forth below, and acknowledge that these governance provisions are for the direct benefit of the JV and its business. The parties further agree: (a) that the JV will be structured to reflect this governance to the fullest extent permitted under applicable law; and (b) that, in the event of a conflict between the Charter and the following provisions, the following provisions will prevail to the extent such a result is not directly contrary to applicable public policy. The parties shall cause the provisions of the Charter to be amended from time to time as may be required to ensure that they at all times shall conform with the terms and conditions of this Agreement and any amendments thereto.


3.1 REPRESENTATIVE DIRECTORS. The operations of the JV will be conducted by two Representative Directors ("RD") elected from the Board of Directors. Walbro and DPI shall each nominate one RD which election shall be approved by the Board. The RDs shall operate under a Joint Representative Directors system whereby the DPI RD will make the day-to-day routine operations decisions. The Walbro RD will always be kept informed of the activities and consulted with important decisions on corporate actions.


3.2 BOARD OF DIRECTORS.


3.2.1 COMPOSITION. The JV will have a Board of Directors (the "Board") comprised of four persons which shall function in accordance with the provisions of the KCC. DPI will designate in writing two members (the "DPI Members"), and Walbro will, designate in writing two members (the "Walbro Members"). The parties agree to exercise their voting rights as shareholders of the JV so as to effect the election of the persons so nominated. The Board will elect the Chairman from among the members. The Chairman will be a designee of DPI. The Board will also elect a Vice Chairman from among the members, who will be a designee of Walbro. Members of the Board will serve until replaced by the party so designating. In the event of a vacancy in the position of any


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Director for any reason, the shareholders shall immediately elect a Director nominated by the party which had the right to nominate the predecessor.


3.2.2 ROUTINE DECISIONS BY THE BOARD. Except as provided in SECTION 3.2.3:


(a) each member shall be given 7 days' written notice
(with acknowledgement of receipt) of any meeting, annual or special,
of the Board;


(b) attendance in person at such a meeting, without
written objection to lack of sufficient notice, waives this notice
requirement;


(c) three members shall constitute a quorum;


(d) the vote of a majority of all members present in
person shall be decisive except that in the case of a tie vote, the
vote of the Chairman will be decisive; and


(e) whenever necessary under Korean law, decisions of the
Board shall be confirmed by a general shareholder meeting.


3.2.3 SPECIAL MATTERS. The following matters may only be decided at the Board level and with respect to each of the following situations, the Board will not have the power to act unless the requisite majority voting in favor of a resolution includes at least one Walbro Member and one DPI Member:


(a) payment of a dividend other than from current year's
earnings;


(b) approval, ratification or substantial change of the
operating budget of the JV, including without limitation, the capital
expenditures, additions or improvements for the year;


(c) approval, ratification or substantial change of the
Business Plan and the annual budget of the JV;


(d) making of political contributions;


(e) authorization or approval of a merger, consolidation
or change in the capital structure of the JV;


(f) creation or incurrence of indebtedness for borrowed
money if, after giving effect to the creation of such indebtedness,
the total amount of the JV's indebtedness for borrowed money will
exceed $250,000, except unsecured current liabilities incurred in the
ordinary course of business;


(g) giving a guarantee or creation or incurrence of any
mortgage, pledge, lien, charge or encumbrance upon any property or
assets now owned or hereinafter acquired by the JV except for (i)
mortgages, pledges, liens, charges or


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encumbrances on, and incurred at the time of and in connection with
the acquisition of property acquired in the ordinary course of
business, (ii) minor liens and encumbrances, and (iii) other liens and
encumbrances for amounts not exceeding $250,000 in the aggregate at
any one time outstanding;


(h) making, ratifying or causing the JV to become a party
to a contract or commitment, or to renew, extend or modify any
contract or commitment, including, but not limited to pricing of
product sales, between the JV and one of its equity holders, or an
"affiliate" of any of them which requires payment of an aggregate
amount in excess of $250,000. For purposes of this subsection, an
"affiliate" will mean:


(i) a company, domestic or foreign, of which an equity holder in the
JV owns or controls, directly or indirectly, at least 10% of the
assets, voting stock or capital;


(ii) a company, domestic or foreign, which owns or controls, directly
or indirectly, at least 10% of the assets, voting stock or capital
of an equity holder of the JV; or


(iii) a company, domestic or foreign, under common control with an
equity holder through direct or indirect ownership of at least 10%
of the assets, voting stock or capital of that company.


(i) material agreement or commitment to any matter required of the JV
pursuant to a contract or agreement, including Ancillary Documents, with
DPI, Walbro or an affiliate (as that term is defined in subsection (h)
above) of DPI or Walbro, including the modification or termination of any
existing contract;


(j) agreement or commitment to purchase services, from Walbro, DPI or
their affiliates (as that term is defined in subsection (h) above); and


(k) approval of the licensing or sublicensing of any SU technology.


(l) any amendment to the Charter.


(m) increase or decrease in authorized and/or issued shares of the JV;


(n) capital expenditures exceeding $250,000 which were not previously
approved in the current annual capital expenditure plan; and


(o) divestitures, including, without limitation, sale, transfer, or
other disposition by the JV of all or substantial part of its assets, with
a value exceeding $250,000.


In case of a deadlock over one or more of these issues, the provisions set forth in SECTION 3.2.4 below will control.


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3.2.4 DEADLOCK. To facilitate the resolution of disputes, the following sets forth the parties' agreement with respect to a deadlock situation. In the event that:


(a) either of DPI or Walbro (in this subsection called "the First
Party") gives written notice to the other party (in this subsection called
"the Second Party") specifying as subject to this subsection a resolution
requiring the affirmative vote of a majority of the Board, including at
least one Walbro Member and one DPI Member or an approval of the
shareholders as provided in SECTION 9.3, which resolution was previously
put to and not passed by a general or special meeting of the Board or
shareholders, as applicable, because the Second Party or its designee
Members present did not vote in favor of the resolution or voted against
the resolution, or the Second Party or its designee Members were not
present for the vote; and


(b) such resolution is again put at another such meeting called within
30 days of the original meeting and the First Party or its designee Members
present, as the case may be, votes for the resolution but the Second Party
or its designee Members, as the case may be, does not vote in favor of or
votes against the resolution, or the Second Party or its designee Members,
as the case may be, are not present for the vote, then a deadlock situation
will be deemed to have arisen. Within seven days of such event arising,
Walbro and DPI will prepare and circulate to the other a memorandum or
other form of statement setting out its position on the matter in dispute
and its reasons for adopting such position. Each such memorandum or
statement will be considered by the Chief Executive Officers of DPI and of
Walbro who will respectively use their reasonable efforts to resolve such
dispute.


If the parties agree upon a resolution of the dispute, they will jointly sign a statement setting forth the terms of such resolution and Walbro and DPI will exercise all voting rights and other powers of control available to them in relation to the JV to procure that such resolution is fully and promptly carried into effect.


If a resolution of the dispute is not agreed upon within 30 days after delivery of the memorandum or statements mentioned above or such longer period as Walbro and DPI may agree in writing, the JV will automatically terminate as prescribed in ARTICLE VII.


If a resolution is agreed upon by the parties but is not implemented by the JV within 60 days after such agreement, or such longer period as Walbro and DPI may agree in writing, the JV will automatically terminate as prescribed in ARTICLE VII.


3.3 OFFICERS. DPI shall designate the President and Walbro shall designate the Executive Vice President. The President shall appoint the balance of the orga ...