Joint Venture Agreement – Specimen
Clauses [CD1]
1. Information
of Joint venture Company
1.
Local and foreign (or else Local along) shall
take all necessary steps for the incorporation of a (type of corporation to be
formed) corporation under the laws of (jurisdiction of incorporation), which
said corporation shall be hereinafter referred to as the “Joint Company’
2.
Local and foreign (or else Local alone) shall
cause the Joint Company to be duly organized in accordance with the terms of
this Agreement, with (name for the documents of incorporation, under the law of
the jurisdiction of incorporation, such as “Statutes” “Letters Patent of
Incorporation”, “Memorandum and Articles of Association” etc.), which in the
English translation shall read in substantially the form schedule attached
hereto.
3.
The costs of incorporating the Joint Company
shall be borne equally (or accordingly to some other formula) by foreign and
Local.
4.
If any of the provisions contained in the
said Schedule should not be approved by the appropriate authority for inclusion
in the documents of incorporation of the Joint Company, then the parties agree
to make such amendments thereto as shall be acceptable to the said appropriate
authority without altering their purpose or intention, or failing such
amendment, to take all such other steps and do such other things, including the
execution of any other agreements as may be necessary, to achieve the interest
and purpose of such of the provisions as may not have been found acceptable by
the said appropriate authority.
2.
Payment for equity participation
In payment for the
shares of the Joint Company to be acquired by Foreign (Local ) at the time of
incorporation of the Joint Company (or, within-days after the incorporation of
the Joint Company), Foreign (Local) shall assign and transfer to the Joint
Company), Foreign (Local) shall assign and transfer to the Joint company.
1.
Cash : (amount ) in cash.
2.
Machinery and Equipment : All the machinery
and equipment set forth in Schedule-annexed hereto, which said machinery shall
become the sole property of the Joint company, free and clear of all liens,
charges and claims of any king whatsoever.
3.
Land : The absolute title, free and clear of
all liens, charges and claims of any kind whatsoever, to the real property and
all buildings and other structures thereon, including all fixtures, equipment
and machinery located therein situated at (municipal address) which said real
property, buildings structures, fixtures, equipment and machinery are more
specifically described in the schedule annexed hereto.
4.
Industrial Property :
a. Assignment
i
Patents : Foreign’s entire right, title and
interest in and to all unexpired patents and patent applications theretofore
issued or assigned to or filed by Foreign anywhere in the world to the Licensed
Products or to the production, manufacture or use thereof (a list of such
patents and patent applications heretofore issued or assigned to or filed by
Foreign being set out in the attached Schedule), together with all rights which
Foreign
then has to apply for
patents in the territory on inventions relating to the Licensed Products or to
their production, manufacture or use, and including all of Foreign’s rights
with respect to patents which may thereafter issue anywhere in the territory or
any such patent applications and with respect of divisions, patents of
addition, continuations, renewals, reissues and extensions of all such patents,
patent applications and patents which may issue on such patent applications ;
ii
Trade Mark and Trade Name : Foreign’s entire
right, title and interest in and to all rights in the territory which it then
has to all of the following trade marks and trade names, namely : (to all the
trade marks and trade names set out in the attached Schedule);
b.
Licenses
:
Foreign shall enter
into a Licence Agreement with the Joint company in the form as set out in
Schedule-hereto annexed, under which said Licence Agreement the Joint Company
shall become the exclusive licensee for the world for all unexpired patents and
patent applications of foreign for the Licensed Products or to the production,
manufacture or use thereof, together with all rights which Foreign then has to
apply for patents in the territory on inventions relating to the Licensed
Products or to their production, manufacture or use, and including all of
Foreign’s rights with respect to patents which may thereafter issue anywhere in
the territory or any such patent applications and with respect to divisions,
patents to addition, continuations, renewals, re-issue and extensions of all
such patents, patent applications and patents which may issue on such patent
applications ;
c.
Sub-licenses
: Foreign’s
entire right , title and interest in and to all rights in the territory which
it then has under patents owned by others relating to the Licensed products or
to their production manufacture or use , a list of Foreign’s present right
under such patents being set out in the attached Schedule.
5.
Technical
Date :
Foreign’s entire
right, title and interest in and to the sue in the territory of all Technical
Date which Foreign is then entitled to use anywhere in the world ; and
thereafter during the term of this Agreement, Foreign shall assign and transfer
promptly to the Joint company any and all rights in the territory with respect
to Technical Date relating to the Licensed Products and all other products
being manufactured by the Joint Company, which Foreign shall acquire during
such term incidental or relating to such products; foreign shall take all such
action and shall execute all such documents as the Joint Company referred to
above, including, without limitation, the full and complete disclosure to the
Joint Company of Foreign’s Technical Data, and lists of Foreign’s distributors
and customers for all of the Licensed products and other products produced or
sold by foreign which may be similar to the products manufactured or sold from
time to time by the Joint Company.
In the above Section,
the term “Technical Data” shall mean formula, inventions, whether or not
patentable, secret processes and technical information relating to the products
and to the production, manufacturing, engineering and test data,
specifications, application, instructions, information, regarding uses, raw
materials and methods for controlling and analysing quality and sample copies
of advertising and publicity materials, except that information received in
confidence from others or information forbidden to be disclosed by virtue of
any law or governmental regulation restricting the dissemination of such
information shall not be included.
Note:
Indian government does not normally allow adjustment of share Capital against
equipment or know-how fee transferred by the foreign party to Indian Joint
Venture Company.
3.
Decision by Board of Directors
A.
Simple majority : All decisions of the Board of Directors
shall require an affirmative vote of at least (number-it should be half of the
total number of directorship plus one ) directors.
OR
B.
Special majority : All decisions of the Board of Directors
shall require an affirmative vote of at least (number it should be half of the
total number of nominees of the partner with the largest number of nominees on
the Board, plus one for each of the other partners) directors.
AND/OR
C.
No casting vote : The chairman shall not have a casing or
second vote in the event of a deadlock.
4. Distribution
of profits
A. The parties hereto recognize
that their own and the best interest of the joint Company will be best served
by taking all reasonable steps to ensure the expansion of the production
facilities of the Joint Company as rapidly as market conditions permit, and to
this end, agree to retain sufficient earnings in the Joint Company before
distributing profits to the shareholders, as shall be reasonably required in
the circumstances to provide for such expansion and for the other requirements
of conducting the affairs of the Joint Company according to sound business
practices.
OR
B. Before any profits of the
Joint Company shall be distributed as dividends to the shareholders
thereof…………per cent of each year’s net profits after tax shall be set aside to
meet the capital and other requirements of the Joint Company.
5. Grant
of Licence
1.
The licensor shall make available to the
Licensee without charge and as required by the Licensee all such technical data
and information as shall be necessary for the Licensee to manufacture, sell and
service the licensed products and all products related thereto.
2.
If the Licensee shall desire technical
assistance in connection with the manufacture, sale, application or servicing
of the licensed products and all products related thereto, the Licensor shall
make available to the Licensee the services of trained personnel for and during
such period as the Licensee shall reasonable require.
3.
Representative of the Licensor and the
Licensee shall from time to time consult with each other regarding research,
production, sales, servicing, advertising and promotion pertaining to the
manufacture of the licensed products, and including all developments and
improvements in respect thereof, and the Licensor shall do all such things as
shall be necessary to supply all the technical data and information and
technical assistance in respect thereof as the Licensee shall request in
accordance with the terms of the two preceding paragraphs.
6. Grant
of sub-licence
a. The Joint Company shall have
the right to assign the benefits to this Agreement, and to sub-licence the
rights to the trade names and trade marks, to such other parties and upon such
terms and conditions as it shall in its absolute discretion determine,
provided, however, that it remains responsible to Foreign for its obligations
hereunder and provided that such assignment or sub-licence shall apply only to
the designated territory.
7. Trade
mark
d.
Foreign hereby grants to the Joint Company
the right during the continuance and subject to the provisions of this
Agreement to use each and every of the trade arks and trade names upon or in
connection with the authorised products manufactured and/or assembled by or on
behalf of the Joint Company within the territory and which comply with the
relative standards, and the Joint Company agrees that it will use the trade
marks and trade names upon or in connection with al authorised products so
manufactured and/or assembled.
e.
The right of the Joint Company to use the
trademarks and trade names as aforesaid is an exclusive right for the whole of
the territory.
8. Grant
of Technical Assistance
1.
Foreign shall furnish to the Joint Company
detailed plans, specifications, blueprints and other date and information
sufficient to enable a qualified contractor or contractors to construct
production facilities at (address of site in host country) capable of producing
(quantity) per year of ( list products), which said production facilities shall
be capable to being altered, added to or expended in an economical fashion so
as to increase the production of the above said products or to adopt the
facilities for the production of other related or similar products as the
business exigencies of the Joint Company may from time to time require, and
shall be of the latest, most modern and most economical design, and shall be
capable of producing the said products in the most efficient and economical fashion.
2.
Foreign hereby warrants and guarantees that
the said production facilities shall satisfy all the above requirements.
9.
Installation of Plant & Machinery
Foreign shall furnish
to the Joint Company all the necessary technical assistance to assemble and
install the equipment and machinery in the plant so that it will function in
the matter required in the specifications.
10. Maintenance
Facilities
Foreign shall furnish
to the Joint Company all the technical data, information and assistance
necessary to ensure the effective operation and maintenance of the machinery
and equipment, including :
a.
A list of recommended plant spares;
b.
Lubrication and maintenance manuals’;
c.
Detailed operating instructions ;
d.
Detailed manuals indicating the construction
and assembly of each model and typed of machinery and equipment ;
11. Operation
of Facilities
Foreign shall furnish
to the joint Company technical assistance and advice on all aspects of plant
operation including, but without limiting, the generality of the foregoing :
a.
Scheduling, material specifications and
ordering, and production techniques relating to the manufacture of the
products.
b.
Quality control and production planning;
c.
Methods, studies and other industrials
engineering activities in connection with the organizing, planning , training
or personnel, and development of operating practices and procedures to obtain
the most efficient use of the production facilities;
d.
Recommended safety procedures.
12. Testing
Facilities
1.
The Joint Company shall not be required to
accept the plant or production facilities until, such time as it shall be
wholly satisfied that the said production facilities are capable of producing
the required products in the required quantities.
2.
Accordingly, before such acceptance,
representative samples of each type of product to be produced by the Joint
Company shall be sent to (name of independent testing agency or firm
; or to Foreign’s
main production plant) for testing to ensure their compliance with the required
standards and specifications and that they have been constructed in a good and
workmanlike manner, and the Joint Company shall have been furnished with a
guarantee and warranty of the satisfaction of such conditions.
13. Research
and Development
Foreign shall during
the term of this Agreement, provide to the Joint Company all technical
information and assistance as shall be necessary to keep the Joint Company
aware of, current with, and able effectively to use, the latest developments in
technology applicable or relating to the manufacture, sale or use of the
products to be produced by the Joint Company.
14. Training
Foreign hereby
undertakes to provide training and technical assistance to the Joint Company
upon the following terms and conditions :
1.
a.
Prior to the start-up of production, Foreign
agrees to accept for training up to (maximum number) operating employees of the
Joint Company as its plant located (site of Foreign’s plant) for periods of at
least-months each.
b.
It is understood that the maximum number of
such employees to be trained by Foreign at any one time shall be and that they
shall be made familiar with all operational and technical aspects of production
as relate to or are similar to the production operation to be undertaken by the
Joint Company.
c.
The Joint Company shall have no obligation to
pay for the costs of such training, other than to pay for their travelling
expenses to and from (Foreign’s Country) and their salaries, if any.
d.
Foreign will use its best efforts to assist
in arranging for immigration visas for such trainees and in finding suitable
living accommodation at reasonable prices for such trainees while they shall be
in (Foreign’s Country).
2.
For a period prior to the start-up of
production and during the initial operating period, which initial operating
period shall not last longer than-days, Foreign agrees to provide to the Joint
Company :
a.
One qualified production supervisor, and
–assistants, all of whom shall be graduate engineers, who, besides their
responsibilities in respect of readying the plant and operating facilities for
the start-up of production and the initial operating period, shall assume
responsibility for training all the operating employees of the Joint Company in
their operating functions.
b.
One qualified individual who will assist in
the recruitment and hiring of the necessary employees and in the development of
personnel and labour relations skills in the Joint Company.
c.
The Joint Company agrees to reimburse to
Foreign all expenses in respect of such individuals, including their salaries,
travel expenses and living expenses while in (host country), provided that such
expenses inclusive of all taxes but exclusive or travel to and from (host
country), shall not exceed-per man per month.
d.
Local agrees to use its best efforts to
arrange for their immigration visas into (host county) and suitable
accommodation while they should be in (host country).
3.
.
a.
The Joint Company shall be entitled, from
time to time and as it shall consider necessary, to require Foreign to send to
(host country) such personnel or individuals as it shall consider necessary to
assist the Joint Company in finding solutions to any of its problems and in
training employees of the joint Company to cope with such problems.
b.
The Joint Company shall reimburse to Foreign
the expenses of such employees for the period during which they shall be absent
from their regular business duties with Foreign, including their travel to and
from the (host country) by economy fare air passage, their salaries and their
living expenses, provided that the total of such expenses including all taxes
but excluding the said air passage, shall not exceed-per man per month.
4.
During such time as said personnel supplied
by Foreign shall be rendering technical assistance and training to the Joint
Company, they shall not be regarded as employees of the Joint Company, for any
purposes nor shall Foreign make any claim on behalf as such personnel arising
from accident or any other cause.
15. Restriction
on sale of shares
Foreign and Local
agree that neither will sell, transfer, assign, mortgage, pledge or otherwise
encumber or deal with any or all shares of the capital stock of the Joint
Company without the prior written consent of the other except as is hereinafter
provided and provided that this provision shall not apply to transfer of
directors’ qualification share so long as the beneficial ownership of such
shares is retained by Foreign or Local as the case may be.
16. Buy-sell
arrangement A. Complex agreement
1.
Either Foreign or Local (hereinafter in this
clause called the “offer-or”) shall have the right at any time-after years from
the execution of this Agreement by notice in written (hereinafter called the
“original notice”) to the other to offer to sell to the other (hereinafter in
this clause called the “offeree”) all but not less than all of the outstanding
shares of the Joint Company then owned by the offeror at a price and terms to
be specified in the original notice, provided, however, that the price shall be
payable on the “closing date”, as hereinafter defined, and the balance shall be
payable in not more than (number) annual installments and provided further that
the original notice shall provide that the offeree shall have the right to
elect to sell to the offeror all of the shares of the Joint Company then owned
by the offeree at the price and then on the terms set forth in the original
notice.
2.
Within 90 days after receipt of the original
notice the offeree shall advice the offeror by “notice in writing (hereinafter
called the “notice of election”) whether the offeree accepts the offer of the
offeror to sell all but not less than all of the outstanding shares of the
Joint Company owned by the offeror or elects to sell to the offeror all of the
outstanding shares of the Joint Company owned by the offeree.
3.
If the offeree does not advice the offeror by
notice in writing within the said period of 90 days as hereinbefore provided
then the offeree shall be deemed to have accepted the offer of the offeror to
sell all but not less than all of the shares of the Joint Company owned by the
offeror in accordance with the terms of the original notice.
4.
The purchase and sale of the shares of the
Joint Company any resulting from acceptance or deemed acceptance by the offeree
of the offer of the offeror to sell contained in the original notice as
aforesaid or the election by the offeree to sell to the offeror all but not
less than all of the shares of the Joint Company owned by the offeree or the
offeror, as the case may be as aforesaid, shall be completed on a date
(hereinafter called the
“closing date”) not
later than ………days after receipt by the offeror of the notice of election, or
if the offeree does not deliver a notice of election as aforesaid …………..days
after receipt of the original notice by the offeree, at which time the nominees
of the party whose shares are to be sold (hereinafter called the “vendor”)
shall resign as directors, officers and employees of the Company and the other
party who is purchasing the vendor’s shares (hereinafter called the
“purchaser”) shall and will pay to the vendor the price or the portion thereof
set forth in the original notice by cash or certified cheque.
If, on the closing
date, the vendor shall fail or refuse to complete the transaction, the
purchaser shall have the right on payment of the purchase price (or the portion
thereof then due) to credit of the vendor in any chartered bank in the city of
(name of city) and on giving notice thereof to the vendor to execute and
deliver all such transfers, resignations and other documents and instruments
which may be necessary or advisable in order to complete the transaction and
the purchaser is hereby irrevocably appointed attorney of the vendor for and in
the name of and on behalf of the vendor to execute and do any deeds, transfers,
conveyances, assignments, assurances and things which the vendor ought to
execute and do under the covenants herein contained.
If, on the closing date,
the purchaser shall fail or refuse to complete the transaction, the vendor
shall have the right to purchase the purchaser’s shares and on payment to the
purchaser of an amount equal to 75 per cent of the purchase price, to execute
and deliver all such transfers, resignations and other documents and
instruments which may be necessary or advisable in order to complete the
transaction and the vendor is hereby irrevocably appointed the attorney of the
purchaser for and in the name of and on behalf of the purchaser to execute and
do any deeds, transfers, conveyances, assignments, assurances and things which
the purchaser ought to execute and do under the covenants herein contained.
It is understood and
agreed that neither party hereto shall make or assist in making any application
to wind up the Joint Company after an original notice shall have been delivered
pursuant to the provisions of this section.
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