Model Joint Venture Agreement.docx

Model Joint Venture Agreement.docx

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ModelJointVentureAgreement

MODELJOINTVENTUREAGREEMENT

JOINTVENTUREAGREEMENT

BETWEEN

INNOVATIVETECHNOLOGIES,INC.OF

CHARLOTTESVILLE,VIRGINIA

UNITEDSTATESOFAMERICA

AND

THEUNITEDCOMPUTERANDSOFTWAREENTERPRISESOFMEXICO

JOINTVENTUREAGREEMENT

Enteredintothis______dayof______________________,1994,ByandBetweenUnitedComputerandSoftwareEnterprisesofMexicoontheonehand（hereinaftercalled"UNITED"）;andInnovativeTechnologies,Inc.,acorporationorganizedandexistingunderthelawsoftheStateofVirginia,UnitedStatesofAmerica,withitsprincipalofficeatCharlottesville,Virginia,U.S.A.,andInnovativeTechnologies,Ltd.（Europe）Ltd.,acorporationorganizedandexistingunderthelawsoftheUnitedKingdom（"IT（Europe）"）ontheotherhand（hereinaftercollectivelycalled"IT"）.

WITNESSETH

WHEREAS,UNITEDandIT（hereinaftercollectivelycalledthe"parties"）haveenteredintotwomemorandaofagreementdatedJune18,1994,fortheprocurementandtransferofcomputertechnology;and

WHEREAS,UNITEDandITdesiretocreatethebasisforacloseandlong-termrelationshipand,therefore,wishtoestablishanEquityJointVentureintheformofaLimitedLiabilityJointOwnershipCompanytobeknowasMexico-UnitedStatesComputerSystems（hereinaftercalledthe"JointVenture"orthe"Company"）inwhichbothpartieswillhaveownershipinterestsandrights;and

WHEREAS,thepurposeoftheJointVentureistoownandoperateafacilityinMexicofortheassemblyandmanufactureofcertainelectronicproductsashereinafterdefined;and

WHEREAS,itistheintentionofthepartiesthatfinancingfortheiragreeduponequitycontributionstotheJointVenturewillbeguaranteedforeachpartybytheForeignTradeBankofMexico;and

WHEREAS,UNITEDispreparedtoprovidelandandconstructabuildingorbuildingsappropriateforsuchafacility,aswellastoprovideotherassistanceandservicesnecessarytoaccomplishthepurposeoftheJointVenture;and

WHEREAS,inordertoaccomplishtheforegoingITispreparedtoequipandassistintheconstruction,installationanderectionofsuchafacilityandtoassistinthetrainingoftechnicians,machineoperators,supervisorsandothermanagementpersonnelfortheoperationandmanagementofsuchafacility;and

WHEREAS,ITispreparedtofurnishtotheJointVenturecertainlicenses,know-howandtechnicalassistance,aswellasmachinesandprocesses,tobeusedintheproductionofsuchproducts;and

WHEREAS,ITiswillingtogranttotheJointVenturetherighttoassembleandmanufacturesuchproductsunderITtrademarks,whicharethesoleandexclusivepropertyofIT;and

WHEREAS,itisthedesireofthepartiesthatIT（Europe）shallhavetheexclusiverightstomarketalloftheproductsproducedbytheJointVenture,bothintheMexicoandinoverseasmarkets,assetforthintheMarketingAgreementattachedheretoasAnnexA.

NOW,THEREFORE,inconsiderationofthemutualcovenantsandobligationshereinaftersetforth,thepartiesagreeasfollows:

ARTICLEI–DEFINITIONS

1.1.Definitions:

Thefollowingtermsshallhavethefollowingmeanings:

1.1.1.Agreement.ThisJointVentureAgreement,togetherwiththefollowingAnnexesheretoandanyamendmentsasmaylaterbeadoptedpursuanttoParagraph11.7hereof:

AnnexA–JointVentureMarketingAgreement

AnnexB–JointVentureArticlesofAssociation

AnnexC–JointVentureBy-laws

AnnexD–ListofTrademarks,tradenames,servicenames,devicesandregistrationparticularsofITProducts

1.1.2.Plant.ThefacilityfortheproductionoftheProductsasfurtherdescribedinParagraph1.1.3.hereof,togetherwithrelatedstorageareas,utilityareas,accessroutesandotherstructures,whichareusedbytheJointVentureCompanyintheactivitiescontemplatedhereunder.ThePlantshallconsistofatleastthreeseparateareasorbuildings:

oneareaorbuildingwheretheHAL69DeskTopComputerandVideoScrollerTerminalwillbeassembled,asecondareaorbuildingwherethemultilayerprintedcircuitboardprocessfacilitywillbelocated,andathirdareaorbuildingwherefloppydiskettesandCanterburydiskdriveswillbeassembledorfabricated.

1.1.3.Products.ThefinisheditemstobeassembledandmanufacturedbytheJointVentureconsistingof:

（a）TheHAL69DeskTopComputer

（b）TheVideoScrollerTerminal

（c）MultilayerPrintedCircuitBoards

（d）CanterburyDiskDrives

（e）FloppyDiskettes

1.1.4.Know-how.Thetechnicaldata,drawings,designs,instructions,specifications,tradesecretsandmanufacturinginformation（exceptTrademarks,ashereinafterdefined）ownedandusedbyIToritssubsidiariesinthemanufacture,productionandqualitycontroloftheProducts.Know-howshallalsomeanimprovementscoveringthemanufacture,productionandqualitycontroloftheProducts,includingadvancementsorextensionsoftheaforesaidwhicharedevelopedinthenormalcourseofbusinessandwhichdonotconstituteessentiallynewtechnologywhichwouldrequireasubstantialalterationinthepracticeofKnow-howasitisthenbeingfollowedbyIT.

1.1.5.Trademarks.Thosetradenames,servicemarks,trademarks,devicesandregistrationparticularslistedinAnnexDhereof,asitmaybeamendedfromtimetotime.

1.1.6.MajorDecisions.AMajorDecisionisanydecisionhavingorlikelytohaveamaterialimpactontheeconomicviabilityoftheCompanyoraffectingorlikelytoaffectthegeneralpolicyoftheCompany,including,withoutlimitation,amendmentoftheArticlesofAssociation;terminationanddissolutionoftheJointVenture;mergeroftheJointVenture;equityandcapitalexpansions;approvaloformodificationoftheCompany'sbudgetsorinitial[five（5）year]operationsandproductionplan;productionincreasesordecreases;increasesinwagesorachangeinprices;conclusionofthird-partycontracts;borrowings,loansandfinancings;establishmentofnewfactories;purchaseorsaleofmajormachineryorcapitalassets;acquisitionofindustrialpropertyrights;changesinmanagementstructureorpolicies;prosecution,defenseorsettlementofarbitration,litigationorconciliation;andanyotherdecisionsofsimilarimportance.

1.2PrecedenceClause

1.2.1.IntheeventthatthereisanydiscrepancyorambiguitybetweenthevariousdocumentswhichtogetherconstitutethisAgreement,asspecifiedinParagraph1.1.1.,thebasicdocumentstyledtheJointVentureAgreementshalltakeprecedenceoverallotherdocuments.AsamongsttheAnnexes,theorderinwhichtheyarelistedinParagraph1.1.1.shalldeterminetheorderofprecedence.ThusAnnexA,theJointVentureMarketingAgreement,shalltakeprecedenceoverAnnexB,theArticlesofAssociation,whichinturnshalltakeprecedenceoverAnnexC,theBy-Laws,andsoforth.

1.2.2.AmendmentstoanyofthedocumentscomprisingthisAgreementshallhavethesameorderofprecedenceasthedocumentbeingamended.

ARTICLEII–OBJECTANDSCOPE

2.1.TheobjectofthisAgreementistheestablishingofanEquityJointVentureintheformofaLimitedLiabilityJointOwnershipCompanytoequip,construct,manageandoperatethePlanttobeestablishedinMexicofortheassemblyandmanufactureofProducts.TheJointVentureintendstomarketallofitsProductssolelythroughIT（Europe）whichwillhaveexclusivemarketingrightsallovertheworldincludingMexicowithallprofitstobesharedequallybytheJointVentureandIT（Europe）assetforthintheMarketingAgreement.

ARTICLEIII–FORMATIONOFJOINTVENTURECOMPANY

3.1Capitalization.

3.1.1.TheinitialequitycapitaloftheJointVentureCompanyisFortyFiveMillionTwoHundredThousandUnitedStatesDollars（U.S.$45,200,000）,tobecommittedandcontributedintheproportionofseventyfivepercent（75%）forUNITEDandtwentyfivepercent（25%）forIT.IT'scontributiontotheequityoftheJointVentureconsistsofElevenMillionThreeHundredThousandUnitedStatesDollars（U.S.$11,300,000）.UNITED'ScontributiontotheequityoftheJointVentureconsistsofThirty-ThreeMillionNineHundredThousandDollars（U.S.$33,900,000）.

3.1.2.Theequitycapitalwillbepaidinbyeachpartywithinthirty（30）daysofanycallorcallsmadebytheBoardofDirectors.TheBoardmay,atitsdiscretion,requiretheequitycapitaltobepaidallatonceorininstallments.

3.1.3.ItisagreedthattheForeignTradeBankofMexicowillguaranteeeachparty'sfinancingofitsrespectiveequitycapital,andthatthisAgreementissubjecttoobtainingsuchguarantees.IftheguaranteeisexercisedagainstForeignTradeBankofMexicobyeitherparty'slendingentity,thenForeignTradeBankofMexicoshallhavetherighttothatparty'sshareofprofitsintheJointVenture,untilsuchtimeastheamountsowedtotheForeignTradeBankofMexicoarepaidoff.

3.2.Non-transferabilityofOwnershipInterests.

NeitherpartytothisJointVenturemayassignallorpartofitsequityinterestandownershiprightsexceptthatITmaytransferorassignallorpartofitsequityinterestandownershiprightsintheCompanytoIT（Europe）oranyothersubsidiaryoraffiliate（anyentityinwhichITownsatleastfortypercent（40%）equityorwhichownsatleastfortypercent（40%）oftheequityofIT）.

3.3.LimitedLiability.

3.3.1.NeitherITnorUNITEDshallbeindividuallyliableforthedebtsorobligationsoftheJointVenture,orforanyclaimforlossesordamagescausedbytheJointVenture,excepttotheextentoftheircontributionstoequityasspecifiedinParagraph3.1.above.

3.3.2.shallbeliabletotheotherexceptforacts,omissionstoactordecisionsconstitutinggrossnegligenceorbadfaith,