EX-10.33 26 file017.htm FORMATION AGREEMENT


                                                                   EXHIBIT 10.33

                               FORMATION AGREEMENT




         THIS AGREEMENT, made as of the ___ day of October, 1986, BETWEEN:
NISHIKAWA RUBBER CO., LTD., a corporation organized under the laws of Japan and
having its principal office in Hiroshima, Japan (hereinafter called
"Nishikawa"), and THE STANDARD PRODUCTS COMPANY, a corporation organized under
the laws of the State of Ohio, United States of America, and having its
principal office in Cleveland, Ohio (hereinafter called "Standard"),

         WITNESS AS FOLLOWS:

         WHEREAS, Nishikawa is engaged in the manufacture and sale in Japan of
sponge and multi-durometer extruded and molded rubber products for use by
Japanese motor vehicle manufacturers;

         WHEREAS, Standard is experienced in the manufacture and sale in North
America of other rubber and plastic parts for use by North American motor
vehicle manufacturers; and

         WHEREAS, the parties desire jointly to establish in the United States a
facility to manufacture sponge and multi-durometer extruded and molded rubber
products ("the Products") to motor vehicle manufacturers located in the United
States, Canada and Mexico ("the Territory").

         NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:

         1. Formation of Company.

              1.1 Name. The name of the entity that operates the jointly owned
facility shall be Nishikawa Standard Company ("the Company").


              1.2 Purpose. The purpose of the Company shall be the manufacture
and sale of the Products and related products to motor vehicle manufacturers
located in the Territory. It is understood that the Company may elect to
manufacture windlace which would be attached to Products, and that windlace is a
"related product". The initial sales targets shall be Japanese owned, operated
or licensed motor vehicle manufacturers, particularly Honda, Mitsubishi
("Diamond Star") and Mazda. Secondary targets will be Toyota, Nissan and Nummi.
If practicable, the Company may eventually attempt to sell to North American
motor vehicle manufacturers such as General Motors, Ford and Chrysler.

              1.3 Plant. The parties have agreed that the Company shall purchase
a plant in Topeka, Indiana, presently owned by United Technologies, Inc.

              1.4 Formation. The parties have agreed to form a corporation under
the laws of the State of Indiana. The Articles of Incorporation and Bylaws shall
be in the form of Exhibits A and B attached hereto. The parties agree to take
such action and file such notices and other documents as may be legally
necessary to establish the Company.

         2. Financing.

              2.1 Capital. The initial share capital of the Company shall be
Three Hundred Thousand Dollars ($300,000) of which sixty percent (60%) shall be
contributed by Nishikawa and forty percent (40%) shall be contributed by
Standard. The initial capital shall be paid in cash promptly after the Company
is organized. Upon call of the Board of Directors, the share capital of the
Company may be increased from time to time to an aggregate of not to exceed Five
Million Dollars ($5,000,000), it being understood that all additional capital
contributions shall be made in the same 60/40 ratio.

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              2.2 Borrowings. It is anticipated that the Company will be
financed in part by borrowed funds. If feasible, some or all of such financing
will be raised through the issuance of industrial revenue bonds. Regardless of
the means by which the Company is financed, an effort will be made to avoid
guarantees of the Company's debt by Nishikawa and Standard. If the parties
subsequently determine that guarantees cannot be avoided, the guarantees will be
limited so that Nishikawa guarantees sixty percent (60%) of the debt and
Standard guarantees forty percent (40%) of the debt.

         3. Management.

              3.1 Overall Responsibility. Nishikawa will be responsible for
overall operation of the Company, including engineering, manufacturing, sales
and general administration of the Company, while Standard will be responsible
for personnel-labor matters and otherwise assist the Company in obtaining
qualified personnel and in doing business in North America.

              3.2 Board of Directors. Initially, there shall be seven members of
the Board of Directors. The initial members of the Board of Directors
representing Nishikawa shall be FUMYEA TAKEDA, TAKASHI ISE, YASUO NISHIKAWA and
JACK K. KURAMOTO. Standard's initial representatives shall be JAMES S. REID,
JR., ROBERT B. STEVENS and THOMAS E. JUDY. Either of Nishikawa or Standard may,
at any time, and from time to time, remove its representative(s) on the Board of
Directors and designate a successor. In the event the parties agree on a change
in the number of directors, the approximate 60/40 representation concept shall
be retained. During the term of this Agreement the parties agree to vote their
shares in the Company to preserve the 4/3 representation contemplated by this
section. The

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Board of Directors shall have such powers and duties as provided by law and as
set forth in Exhibit B.

              3.3 Officers. Fumyea Takeda shall act as President of the Company
and, initially, J. Richard Hamilton shall act as Secretary of the Company. The
remaining officers of the Company shall be selected by its Board of Directors.

              3.4 Auditors. A nationally recognized accounting firm acceptable
to both parties shall be engaged as auditors of the Company. Fully audited
financial statements of the Company shall be prepared annually in accordance
with generally accepted accounting principles.

              3.5 Books of Account - Financial Information. To the extent
feasible under United States law and practice, the books of the Company shall be
maintained in accordance with Nishikawa's practices and recommendations. Monthly
financial reports shall be prepared by the Company and furnished to Nishikawa
and Standard. Nishikawa and Standard shall have full access to the books of
account and financial records at all reasonable times.

         4. Technical Information.

              4.1 Information Furnished. Each party shall furnish to the Company
such technical information and know-how regarding the design, manufacture and
sale of the Products as may be required to make the Company commercially viable.
Except for any patented technology owned by third parties, all information and
know-how to be utilized in manufacturing the Company's initial group of Products
consists of existing technology, product designs, know-how patents and related
technical information owned by Nishikawa and/or Standard which shall be
furnished without charge to the Company. For new technology, designs for new
products and other related technical information, know-how and/or patents which
the

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Company wishes to acquire from Nishikawa and/or Standard, the parties from time
to time may agree upon a fee or royalty to be paid to the supplying party to
reimburse it for an appropriate share of the cost of the research and
development or otherwise compensate for its efforts.

              4.2 Reimbursable Expenses. Because of its experience, it is
anticipated that Nishikawa will furnish to the Company the bulk of the technical
information required to design and manufacture the Products. If in this
connection it is necessary to send from Japan technical employees of Nishikawa,
Nishikawa shall be reimbursed by the Company for the wages, travel and living
expenses of such employees.

              4.3 Information Kept Confidential. Technical information and
know-how furnished to the Company shall be kept confidential. It is expressly
understood that non-public information relating to the Company's prices, costs,
sales, production plans and forecasts, designs and similar matters will not be
exchanged with or disclosed to, directly or indirectly, individuals responsible
for making decisions on such matters at Standard's Canadian subsidiary.

         5. Purchases from Nishikawa and Standard.

              5.1 General. The Company shall be under no obligation to purchase
equipment, raw materials or other goods from either Nishikawa or Standard.

              5.2 Equipment. No item of equipment shall be purchased at a price
in excess of $50,000 from Standard without the prior approval of Nishikawa or
from Nishikawa without the prior approval of Standard. In addition, Nishikawa
will give written notice to Standard as to any equipment purchased at a price in
excess of $5,000 from Nishikawa.

              5.3 Materials from Standard. Standard agrees to make available to
the Company raw materials such as rubber and finished or semi-finished products
such as windlace (for incorporation into a completed OEM part) on the same
pricing basis as it uses in interplant

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transactions, normally not more than 11.11% over Standard's cost (determined on
the same basis as "cost" is determined for Standard's interplant transactions).

         6. Start-up Matters.

              6.1 Preformation Expenses. Each party will bear its own expenses
relating to the planning and formation of the Company, except that expenditures
solely for the benefit of the Company incurred by either party prior to its
formation shall be reimbursed by it upon its formation. Examples of such
expenditures are:

         (a) Cost of an option for a plant or plant site;

         (b) Deposit against or cost of a plant or plant site;

         (c) Deposits made on equipment for the plant;

         (d) Salaries of employees of Nishikawa and Standard assigned full-time
    to this project.

         (e) Cost of engineering and construction of the plant incurred before
    formation.

              6.2 Plant Equipment. Nishikawa, after consultation with Standard,
shall determine the number of production lines, the general type of equipment to
be initially installed in the plant, and the estimated aggregate cost of such
equipment. Thereafter the acquisition and installation of such equipment shall
be the responsibility of the President under the overall direction of the Board
of Directors.

              6.3 Office Assistance. Standard agrees to make available without
charge at its Westborn, Michigan offices one fully equipped office, plus
secretarial assistance, for use by Nishikawa employees until offices are
available at the Company's plant.

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              6.4 Additional Assistance. It is anticipated that the Company will
eventually function as a completely separate entity with full-time staff in all
positions. If, prior to the availability of offices at the Company's plant
and/or the availability of a full staff of employees, the Company requires
special administrative, sales, engineering, accounting, purchasing or similar
services, the parties shall from time to time agree upon a fee or commission to
be paid Standard fairly to reimburse it for such services, but no element of
profit shall be included in such reimbursement.

         7. Miscellaneous.

              7.1 Applicable Law. This Agreement and the Exhibits hereto shall
be construed in accordance with the law of Indiana, United States of America.

              7.2 Entire Agreement. This Agreement and the Exhibits hereto set
forth the entire agreement and understanding between the parties pertaining to
the subject matter thereof. The provisions of this Agreement shall supersede any
prior written or oral agreement or understanding which is inconsistent with this
Agreement or the Exhibits hereto.

              7.3 Amendment. This Agreement may be amended only in writing
signed by both parties hereto. Any approvals, notices or consents required
hereunder must be signed by the party giving such approval, notice or consent.

              7.4 Notices. Any notice, acceptance or other communication
provided for herein shall be deemed duly given when mailed by registered
postpaid airmail to the other party. Until otherwise notified in writing, the
addresses of the parties hereto for all such notices shall be:

                 Nishikawa Rubber Co., Ltd.
                 2-2-8 Misasamachi
                 Hiroshima, Japan
                 Attention:

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                 The Standard Products Company
                 2130 West 110th Street
                 Cleveland, Ohio 44102
                 Attention: President

              7.5 Assignment. This Agreement and the rights and obligations
hereunder and the shares of the Company shall not be assignable by either party
without the prior written consent of the other, provided that no such consent
shall be required (1) in the event of a merger, consolidation or sale of
substantially all of the assets of either party, or (2) for an assignment to a
wholly owned subsidiary of, or to a corporation which owns all of the voting
stock of, either party, or (3) in connection with a transfer of shares in
accordance with Section 7.6 below.

              7.6 Right of First Refusal. Except for transfers permitted by
Section 7.5, neither Nishikawa nor Standard shall transfer shares of the Company
owned by them except as follows:

         (a) If either party (the "Offeror") desires to transfer all or any part
    of its shares in the Company to a third party, the Offeror shall first offer
    in writing to sell such shares to the other party (the "Offeree") on the
    same terms and conditions as offered to the third party. The Offeree shall
    have 60 days to purchase all of the shares so offered. The election to
    exercise the option shall be made in writing and mailed by certified mail,
    return receipt requested, to Offeror. If all the shares so offered are not
    purchased by the Offeree, the Offeror shall be free to sell all the shares
    to the third party, provided the sale is (1) on the same terms offered to
    the Offeree and (2) closed within 60 days after the Offeree's option to
    purchase has expired.

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         (b) Any transfer under this Section 7.6 shall be invalid until the
    party transferring its shares shall obtain the transferee's express written
    agreement to become subject to all the terms of this Agreement.

         (c) The certificates for shares of the Company shall bear an
    appropriate reference to the restrictions on transfer set forth in this
    Section 7.6.

         7.7 Waiver. The waiver of either party of any right hereunder or breach
    by the other party of any right hereunder shall not be deemed a waiver of
    any other right hereunder, or of any subsequent right arising from a breach
    of this Agreement of the same or similar nature.

         7.8 Inconsistencies. In the event of any inconsistency between the
    provisions of this Agreement and the provisions of the Exhibits attached
    hereto, the provisions of the Exhibits shall control.

         7.9 Illegal Provisions. In the event any one or more of the provisions
    of this Agreement or the Exhibits hereto shall be determined to be invalid,
    illegal or unenforceable in any respect, the validity, legality and
    enforceability of the remaining provisions shall not in any way be affected
    or impaired thereby.

         7.10 Term of Agreement. The obligations of the parties hereto shall
    survive the formation of the Company and shall remain binding on each party
    so long as it or an assignee permitted by Section 7.5 is a shareholder of
    the Company. This Agreement is intended to be a "voting agreement" as
    authorized by Section 23-1-31-1 of the Indiana Business Corporation Law.

         7.11 This Agreement is subject to approval by appropriate Japanese
    authorities, which approval shall be promptly requested by Nishikawa.

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