Joint
Venture Agreement – Specimen Clauses
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 brone 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.
1.
2.
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);
a.
a.
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 ;
a.
b.
a.
b.
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.
1.
2.
3.
4.
1.
ine-height:115%;font-family:
"Arial","sans-serif";display:none'>
2.
ine-height:115%;font-family:
"Arial","sans-serif";display:none'>
3.
ine-height:115%;font-family:
"Arial","sans-serif";display:none'>
4.
ine-height:115%;font-family:
"Arial","sans-serif";display:none'>
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.
1.
2.
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.
1.
2.
3.
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
A.
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.
1.
2.
3.
4.
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.
1.
2.
3.
4.
5.
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.
1.
2.
3.
4.
5.
6.
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.
1.
2.
3.
4.
5.
6.
7.
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.
1.
2.
3.
4.
5.
6.
7.
8.
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.
1.
2.
3.
4.
5.
6.
7.
8.
9.
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 ;
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
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.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
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.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
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.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Training
Foreign hereby undertakes to provide
training and technical assistance to the Joint Company upon the following terms
and conditions :
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).
1.
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).
1.
2.
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.
1.
2.
3.
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.
1.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
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.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
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.