FIRST COMMERCIAL FUNDING, LLC Two BRENTWOOD COMMONS, SUITE 150 BRENTWOOD, TENNESSEE 37027 OFFICE: 615-371-6174 FAx: 615-373-1582 JOINT VENTURE AGREEMENT
Exhibit
10.1
FIRST
COMMERCIAL FUNDING, LLC
Two
BRENTWOOD COMMONS, SUITE
150
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▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
OFFICE:
▇▇▇-▇▇▇-▇▇▇▇ FAx: ▇▇▇-▇▇▇-▇▇▇▇
This JOINT
VENTURE AGREEMENT (the
"Agreement") is made this 20 day
of October. 2009 (the
"Effective Date") by and between First
Commercial Funding, LLC, a
(insert name of state) Limited Liability Company, havine its principal place of
business at Two ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇. ▇▇ ▇▇▇▇▇ ("FCF") and ▇▇▇▇▇▇
International, Ltd„ a Delaware Corporation
having its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇▇. ▇▇ ▇▇▇▇▇ (the "Co-Venturer"). Each of the foregoing is a "Party"
and together' they are the "Parties.").
INFORMATIONAL
STATEMENT
WHEREAS.
FCF is in the business of providing financial advisory and other business
consulting services. Co-Venturer is in the business of manufacturing
high-efficiency low-emission engines and generators, as well as other specialty
engine systems, and
WHEREAS,
FCF and Co-Venturer desire to enter into a joint venture through which
they will pursue certain business opportunities together. and
WHEREAS, ▇▇▇▇▇ ▇▇▇▇, President
of FCF, is
the sole principal officer and key employee of FCF, and all of FCF's
experience, know-how, skills, networks and contacts required
to
successfully consummate the transaction contemplated by this Agreement exist and
are entirely dependent upon the continued performance of services and sufficient
availability and time commitment of ▇▇▇▇▇ ▇▇▇▇, and
NOW,
THEREFORE, for good and valuable consideration. the receipt and
sufficiency of which are hereby
acknowledged. the Parties agree as follows:
1. Purpose
and Control of Joint
Venture. The Parties hereby agree to form a joint venture that
shall own and operate a project known as ▇▇▇▇▇▇ International
Project
(the "Venture").
with dual locations in both New Jersey and Oklahoma. The Venture will seek to
raise approximately three hundred million USD ($300,000,000) ("Offering"). The
Venture will form a single
purpose entity in which both Parties will be owners (the "Joint Venture
Entity"). The Venture shall be controlled by a board of directors with
Co-Venturer appointing three directors as members and FCF appointing one
director as a member. In the event that a vacancy arises on the board, the party
that originally
appointed the vacated hoard seat shall appoint a replacement. The day to day
operations of the Joint Venture Entity shall be performed by officers appointed
by board of directors of Co-Venturer.
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2. Contributions of the Parties.
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a.
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FCF. FCF's contribution to
the Joint Venture Entity
shall be to provide expertise, an existinu, previously developed
network of likely potential investors, access to various experienced
industry contacts and knowledge on how
to organize and raise funds for the Co-Venture's Project through the use
of a private placement memorandum 144A offering (a "PPM") and in preparing
relevant documentation. The intent is to raise approximately $400$450
million through the sale of collateralized five-year zero coupon bonds.
The bonds shall be collateralized by a diversified portfolio of
contestable and non-contestable senior life insurance policies carefully
selected based on mutually agreed upon investment objectives (the
"Policies). The portfolio of specific Policies shall be reserved upon
remittance by the Venture of a nonrefundable down payment to the
seller(s) of the Policies of approximately 1.5% of the agreed upon
Policies purchase price. During
the intervening period thereafter, any policies paid out will be replaced
with other suitable policies until title to the Policies legally passes.
FCF shall furnish Co-Venturer with an example of the Risk Factors section
of a PPM from a prior similar, successful offering. FCF has represented
that its unique, proprietary transaction structure is designed to achieve
a value for the portfolio of Policies of approximately 50% of the
principal amount of the zero coupon bonds issued from the 144A private
offering. Although FCF will undertake its best efforts to select the
right
mix of policies, there can be no assurance that the actual value of the
portfolio of policies will achieve that value. FCF itself, will not be
involved in the offer. sale or purchase of' securities. and will not
receive any compensation as a result of the offer or sale of securities,
or in assisting the Joint Venture Entity to purchase securities if, in
fact, the Joint Venture Entity does so.
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b.
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Co-Venturer.
Co-Venturer's contribution shall be the preparation and expertise
to setup and run the Venture. Venturer shall pay from the proceeds of the
$400,000 Engagement and Services fee to be paid by Co-Venturer as more
fully discussed in Section 3 below, all of the expenses of the Venture
including (without limitation) retaining legal counsel and accountants,
drafting
all of the documents for a
PPM, (ii) listing the offering on the NASDAQ PORTAL system and
(iii) posting the offering on either DTC, Euroclear or Clearstream. Other
expenses include, but are not limited to, securing the collateral of
senior life settlement policies (the "Policies"), registration fees and
maintenance fees of the Policies. A list of approximated, non-binding
expenses is attached hereto as Exhibit A. Marketing fees and broker/dealer
fees will be paid at such time as the Venture receives funding of at least
three hundred million USD ($300,000,000) (hereinafter, the
Closing").
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3. Fees. The Co-Venturer shall
pay FCF a fee of four hundred thousand dollars
USD (S400,000)
for covering
operational expenses and providing the resources necessary to accomplishing FCF's
contribution as set forth in paragraph
2.1 and 2.2 (the "Engagement and Services Fee"). The Co-Venturer shall remit an
initial payment of 550.000.00 within 48 hours after execution of this agreement.
Thereafter. Co-Venturer shall continue to remit additional monies to FCF as soon
as practicable with the objective of having remitted the entire Engagement Fee
within thirty (30) days after execution hereof..
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4. Ownership of Venture-Created
Entities. Co-Venturer or its assignees shall own
ninety percent (90%) of the ownership interests in the Joint Venture Entity and
FCF shall own ten percent JO%) of the ownership interests in the Joint Venture
Entity.
However, FCF shall not share in any of the profits, losses, gains and expenses
of the Venture. Any and all subsequent ventures undertaken by the Parties shall
adhere to the same ownership percentage structure set forth in this Section 4,
unless the Parties mutually agree in writing to different ownership
percentages.
5. Success Fee. In addition to
the Escrowed Expense Funds set forth in Section 3 above. Co-Venturer shall pay
FCF a fee, at Closing, of seven
and one half million USD ($7,500,000) and shares of restricted shares of
common stock of the Co-Venturer equal to one percent (1%) of
the total issued and outstanding common stock
of the Co-Venturer on the date of the Closing (the "Success Fee").
The Success Fee will be deducted simultaneously from the three hundred
million USD ($300,000.000) proceeds of the Offerine being disbursed at the
Closing of the Offering.
7. Use of Net Proceeds by Co-Venturer. A minimum of
$25,000,000 shall be disbursed to Co-Venturer at the closing of the Offering and
the balance of the net proceeds after disbursement or reserving funds for
payment of any unpaid expenses of the Offering and the balance of the purchase
price of the portfolio of Policies shall be disbursed to the Venture at the
closing of the Offering. The unused portion of the net proceeds from the
Offering shall be invested by the Venture in various highly rated. secure.
agree-upon securities with varying maturities to match the projected timetable
for the use of funds (the "Investment Portfolio"). The Venture agrees that it
will engage a professional "money manager" to invest such funds in accordance
with reasonable investment objectives of the Co-Venturer. Co-Venturer shall use
the net proceeds from the Offering to acquire manufacturing facilities,
establish and operate manthcturing operations and for general working capital
purposes directly related to the successful conduct of its business. From time
to time, and at any time. upon submission of a request for disbursement of
additional funds to the Co-Venturer for its planned expenditures over the
ensuing 3-6 month period, the parties shall have three business days to review
such request and disburse such addition funds, to the extent there are
sufficient remaining funds held by the Venture in its investment portfolio. New
and/or adjusted requests may be submitted as frequently as is necessary to
ensure the efficient and timely access to funds by Co-Venturer to carry out its
business objectives. Each such request shall be accompanied by a projected
schedule of production units by product type and shall provide reasonable detail
of the estimated timing and amount of each main category of expenditure.
Approval of the request for such disbursement of funds shall not be unreasonably
withheld by the Venture, provided all previously disbursed funds were utilized
by the Co-Venture in a manner consistent with the herein described intended us
of proceeds. The portfolio of Policies shall be registered in the name of the
Co-Venturer and upon obtaining possession and control. immediately transferred
to the Co-Venturer.
8. Representations
of FCF.
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a.
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FCF
represents that it has experience, skills and know-how in all aspects of
the structured transaction contemplated by this Joint Venture Agreement.
FCF acknowledges that it has been informed by Co-Venturer that it has
virtually no experience and only limited understanding of Collateralized
Zero Coupon Bonds, secured by portfolios of Policies and that it has no
experience and a very limited understanding of the market for buying and
selling portfolios of Policies. Therefore, FCF further acknowledges that
Co-Venturer is solely relying on FCF's experience, skills and know-how in
making its decision to enter into this
agreement.
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b.
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FCF
further represents that it has assembled a network of broker-dealers and
investments bankers that, based on recent feedback from firms in this
network, are enthusiastic about marketing
investment opportunities in similarly collateralized five-year coupon
bonds to its clients. To be clear, the Co-Venturer is relying on these
representations to gain
confidence that there is
a ready
market for the sale of such collateralized
securities.
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c.
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FCF
further represents that it has assembled a team of experts in the
field necessary to competently analyze the senior life insurance policy
portfolios and provide expert opinions on the extent to which such
portfolios are designed to meet
the agreed-upon investment
objectives.
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d.
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FCF
further represents that. as of the date, hereof, a ready, active market
for acquiring Policies that will meet our investment objective over the
five-year period of the collateralized zero coupon
bonds.
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e.
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FCF
further represents that there is, as of the date hereof, a ready, active
market for reselling Policies in accordance with the Venture's criteria
for appreciation in the value of the
Policies
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f.
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FCF
acknowledges that any breach of these representations could likely result
in substantial damages to Co-Venturer consisting of monetary losses and
opportunity costs caused by delays in its commencement of large scale
production of it proprietary technology. Co-Venturer is highly dependent
on receiving the net proceeds of at least $300 million from the sale of
the collateralized zero coupon bonds. These funds are intended to provide
critically needed start-up capital for production of various products
incorporating Co-Venturer's technology.
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g.
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FCF
represents that it has advised Co-Venturer. based on its experience
that it is likely
that the Offering will raise net proceeds of approximately $300
million and possibly be closed before the end of the calendar year
2009.
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9.Representations
of ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇ represents that:
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a.
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Except
for the two disclosed felony convictions in connection with prior
real estate transactions involving bankruptcy proceedings, there have
never been any felony or
misdemeanor convictions nor are there currently any pending or
threatened felony or misdemeanor charges. Furthermore, there are no
matters of any
nature relating to his background or arising
from any of his prior business dealings that could prevent or interfere
with the willingness or ability of broker-dealers and investment bankers
to market the zero coupon bonds to its customers or with the Venture's
ability to purchase and sell the portfolio of Senior
Policies.
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b.
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Except
for the matter disclosed to the Co-Venturer involving the cease and desist
order from the Alabama Securities Commission regarding sales of taxl ien
certificates, he never been, nor is he now, the actual or potential
subject of, or defendant in. any pending or threatened litigations.
claims, assessment, legal actions with any federal, state, local, SEC,
NASD or other authoritative investigations of any
nature.
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c.
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He
is not a party to any agreement. decree or the restrictive order of any
kind that could prevent him from freely entering
into this agreement and performing the services and fulfilling his
obligations contemplated by, and arising out oil this
Agreement.
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d.
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He
will not overcommit his personal time and resources and will throughout
the Project devote whatever time and resources are necessary and
appropriate to ensure the delivery of prompt, timely and competent
professional services in the interest of a successful outcome of the
Project.
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10. Title to Property; Waiver of
Partition Right. Legal
title to any property,
including the Policies, acquired as a result of the Venture shall be
taken in the name of the Venture, and shall be held for the benefit of both
Parties. Notwithstanding same, FCF acknowledges that any real property and
Policies purchased with the proceeds from the Offering shall be owned by the
Co-Venturer and not the Joint Venture Entity. Each Party waives and renounces
any right that such Party may have to institute or maintain any action for partition with
respect to any property owned by or held for the benefit of the
Venture.
11. Information. Co-Venturer shall provide
FCF with access to all current and historical data requested by FCF for the
purpose of preparing the PPM. Co-Venturer recognizes
and confirms that FCF may use and rely upon all data. material and other
information furnished to FCF by Co-Venturer without independent
verification.
12. Confidentiality.
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a. Each Party acknowledges that
it may receive confidential and proprietary nonpublic information related to the
other Party's business. The receiving Party shall keep confidential and shall
not use or disclose such Confidential Information (defined herein)
except in accordance with and in furtherance of this Agreement. "Confidential
Inibrmation" shall mean any and all information the disclosing Party
provides to the
receiving Party,
verbal or written,
which is identified as confidential or proprietary. Provided. however, the following shall be Confidential Information
regardless
of whether marked
as such:
the manner in which FCF structures
financial transactions and the identities of FCF's clients and
persons who provide funding (including their employees, agents and representatives) for financing
transactions. "Confidential Information"
shall not include
information which the receiving Party can prove: (i) was previously known to the
receiving. Party free of any obligation to keep it confidential; or (ii) is
or becomes publicly available by any means other than unauthorized
disclosure; or (iii) is developed by or on behalf of the receiving Party independent
of any information furnished under
this Agreement: or (iv) is received from a third party (which shall include those persons or entities that
directly or indirectly through one or more intermediaries control, are
controlled by, or are under common control of a Party) whose
disclosure does not violate any confidentiality agreement or
obligation.
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b.
All Confidential Information is and shall he the sole and exclusive
property of the disclosing Party. The receiving Party shall not disclose
any Confidential Information or take or cause any action which would be
inconsistent with or tend to diminish or impair the disclosing
Party's rights
in the Confidential Information.
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13. Non-Circumvention. For a
period of five years from the termination of this Agreement.
Co-Venturer shall not use FCF's Confidential Information for any reason for the
benefit of Co-Venturer or
any third party
(including any
persons or entities that directly or indirectly through one or more
intermediaries' control, are controlled by. or are under common control of
Co-Venturer). In the event Co-Venturer violates this Section 9. in each such
instance, Co-Venturer shall pay FCF an amount equal to Engagement Fee set forth in
Section 3 above. FCF shall be entitled to all available remedies in the event this Section 9 is violated
and such remedies are cumulative.
14. Term. This Agreement shall remain in effect
from the Effective Date
until the occurrence of
any of the following events: (a) adjudication of
bankruptcy, filing of a petition
pursuant to the United States Federal I3ankruptcy Act, or the withdrawal,
removal or insolvency of either of the Parties; (b) the sale or
other disposition of all, or substantially all, of the Venture assets; or (c) the mutual agreement of the
Parties.
15.
Dissolution of Joint Venture:
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a.
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Upon
maturity and
repayment of
the zero
coupon bonds issued in connection with the 144A Offering. the Venture
shall promptly undertake to wind up its affairs by satisfying all
remaining liabilities and obligations; and thereafter, disbursing and
remaining assets to
the Co-Venturer. Co-Venturer shall thereafter dissolve the
Venture.
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b.
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In
the event that Co-Venturer determines that, based on its assessment of the
facts and circumstances that it is highly
unlikely that the $300 million targeted amount of funds can be
successfully raised from
the Offering, then the Venture shall be promptly dissolved in accordance with the Section 1 I
a.
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Return of Material. Each
receiving Party shall return to the disclosing Party any and all documents
containing Confidential Information of the disclosing Party and materials of any kind
related to the business of the disclosing Party within three (3) days of the termination of this
Agreement unless the disclosing Party has agreed in writing that the receiving
Party may destroy all such documents and certify such destruction in
writing.
l6.
Indemnification.
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a.
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Co-Venturer.
Co-Venturer agrees
to indemnify FCF and its controlling persons. directors, officers,
managers, partners. members, shareholders, affiliates, agents,
representatives, successors
and assigns (collectively, the "Representatives") from and against any and
all losses, liabilities, deficiencies, costs, damages, expenses and
amounts paid in settlement of any claims sustained by Co-Venturer in
connection with the business of the Venture (including, without
limitation, reasonable attorneys' fees, charges and disbursements)
(collectively. the "Losses") incurred by the Co-Venturer as a result of
any claim, action, judgment or proceeding related to this
Agreement;
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b.
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FCF.
FCF agrees to
indemnify Co-Venturer and its Representatives from and against the Losses incurred by FCF
as a result
of any claim.
action. judgment or
proceeding related to this
Agreement.
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17. Other Business Interests. Each
Party may have interests in business other than the Venture described in this
Agreement. The Parties shall not have the right to
the income or proceeds derived from such other business interests, even if they
are competitive with the Venture or the other Party's business, so long as this Agreement has not been
terminated. Provided, however, any financing transaction sought by Co-Venturer
shall first be presented to FCF. who shall have the right. but not the obligation, to participate in
such transaction.
18. Fiscal Year and Accounting Method.
The fiscal year for the Joint Venture Entity shall be the calendar year
ending December 31. The Venture shall use the accrual method of accounting in
compliance with United
States .Generally Accepted
Accounting Principles.
19. Limitation of
Liability. The
Co-Venturer agrees that in
no event shall FCF's liability
under this Agreement exceed the Engagement Fee received by FCF under this
Agreement except to the
extent that damages
to the Co-Venturer
resulted from FCF's gross negligence, reckless or willful misconduct, or
violation of law. This
limitation of FCF's
liability to the
Co-Venturer shall not be
affected in any way by any determination that the indemnification
provisions in this Agreement are
not fully enforceable or otherwise not fully
available.
20. Disputes.
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a.
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The Parties agree that in
the event of a violation of
Sections 8, 9 or 13
above, the non-breaching Party shall be entitled to seek an injunction to
prevent the breach or further breach and to seek injunctive relief or
specific performance without the posting
of a bond or other security. The non-breaching Party shall also be entitled to seek all other
available remedies.
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b.
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In the event of any
dispute arising out of this Agreement, the Parties shall meet and confer prior to
filing
a demand for arbitration to attempt to resolve the dispute without
incurring the costs of arbitration. Should the dispute not be resolved,
the Parties agree to
submit the dispute and all related issues to binding arbitration. The
dispute shall be heard by one arbitrator who shall be a licensed attorney with
at least ten (10)
years of experience. The decision
of the arbitrator
shall be binding and judgment
may be entered in any
court of competent jurisdiction. All Parties shall cooperate with
the arbitration and promptly pay all necessary lees. Until a final
decision on distribution of costs, all fees shall be paid equally by both
Parties. The arbitrator shall award reasonable attorney's fees to the
prevailing Party.
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21. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New Jersey applicable
to contracts executed and
to be wholly performed therein without giving effect to its conflicts of laws, principles or
rules.
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22. Amendments. This Agreement may
be modified or amended, or its provisions waived. only by a writing signed by
the Party against whom enforcement of the modifications, amendment or waiver is
sought.
23. Notices. All notices,
requests, demands and other communications hereunder shall be in writing and
shall be deemed to have been duly given (a) upon personal delivery; (b) upon
delivery by nationally recognized overnight delivery service, or (c) upon the
earlier of receipt or three (3) business days after being mailed by registered
or certified mail, postage prepaid. All notices pursuant to this Section 19
shall be addressed as follows or to such other address as a party.
a. If
to FCF:
First
Commercial Funding
Two
Brentwood Commons, Suite 150 ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
b. If
to Co-Venturer:
▇▇▇▇▇▇
International LTD
2100 I
Iwy. ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
24. Binding Agreement; No Assignment. This
Agreement shall be binding upon and shall inure to the benefit of each of the
Parties and their respective successors and permitted assigns. Neither Party may
assign its interest in this Agreement or the Venture without the prior written
consent of the other Party.
25. Not a Partnership. The Parties agree
that this Venture is not a partnership and shall not he governed by the
partnership laws of any country or state, and shall not be subject to taxation
under subchapter K of the U.S. Internal Revenue Code of 1986, as
amended.
26. Entire Agreement. This
Agreement constitutes the entire Agreement between the Parties hereto pertaining
to the subject matter hereof and supersedes all prior agreements and
understandings of the Parties, whether written or oral, and there are no
warranties, representations or other agreements between the Parties in
connection with the subject matter hereof except as specifically set forth
herein.
27. Severability. If any provision
or portion thereof of this Agreement
shall be held invalid or unenforceable, such provision shall be modified to the
extent necessary to make such provision enforceable to the fullest extent
permitted by law. To the extent modification will not remedy such invalidity or
unenforceability; such provision shall be stricken from this Agreement without
invalidating the remaining provisions of this Agreement.
28. Contract Construction. This Agreement is
the product of negotiations between the Parties, therefore. the rule of
construction which provides that ambiguities in a contract shall be construed
against the drafter shall not apply to this Agreement. and the Parties hereby
waive any such defense to the terms of this Agreement. 'the descriptive headings
of the paragraphs, subparagraphs
of this Agreement
are inserted for convenience only. and do not constitute a part of this
Agreement, and shall not affect in any way the meaning or interpretation of this
Agreement.
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29. No Waiver. No failure or delay
by either Party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege hereunder.
30. Survival. Sections 3, 4, 8, 9,
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1, 12, 13, 15 and such other sections as the context reasonably requires
shall survive the expiration or termination of this Agreement.
31.
Signatures. This Agreement may be executed in counterparts and all such
counterparts shall constitute but one and the same instrument. A facsimile
signature may substitute for and have the same legal effect as the original
signature. Each person signing on behalf of a Party hereto warrants that
such Party has perlbrmed all corporate or partnership actions necessary to make
this agreement a binding obligation,
enforceable in accordance with its terms.
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IN
WITNESS WHEREOF, the Parties have executed this Agreement on the date set
forth above.
| FCF: | ||||
| FIRST COMMERCIAL FUNDING | ||||
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/s/
▇▇▇▇▇ ▇▇▇▇
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Name:
▇▇▇▇▇ ▇▇▇▇
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Title:
President
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| CO-VENTURER: | ||||
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▇▇▇▇▇▇
INTERNATIONAL LTD
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/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title:
President and Chief Executive Officer
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