8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 1/83
THIS AGREEMENT is made the day of ,
BETWEEN
(1) ABC, a company organised in ___________ under the laws of
____________and having its principal office, at ________________ (hereinafter
referred to as "ABC" which expression shall unless repugnant to the context ormeaning thereof include its successors and permitted assigns) of the One Part; and
(2) DEF, a company organised and existing under the laws of _______ and having
its registered office at ______________ (hereinafter referred to as "DEF" which
expression shall unless repugnant to the context or meaning thereof include its
successors and permitted assigns) of the Other Part;
(The expressions "ABC" and "DEF" are collectively referred to as the "Parties" and
any of them singly as "Party").
WHEREAS
A. ABC is, inter alia, engaged in the business of ______________________.
B. DEF is, inter alia, engaged in the business of _________________.
C. ABC and DEF propose entering into a joint venture to carry on the
business of ______________________ through the medium of a joint
venture company (“COMPANY”).
D. The Company shall be legally formed in a manner consistent with the
applicable provisions of the Indian Companies Act and shall be equally-owned by ABC and DEF.
E. Following the above, the Parties now wish to set out their definitive and
binding agreement for their participation in and to determine their
relationship with each other as Shareholders and certain aspects of the affairs
of and their dealings with the Company.
NOW IT IS HEREBY AGREED as follows:-
ARTICLE - I: DEFINITIONS AND INTERPRETATION
1.1 In this Agreement, unless the context otherwise requires, the following
expression shall have the meaning hereinafter assigned to them:-
"Act" means the Indian Companies Act, 1956 as amended from time to time
pursuant to which the Company will be incorporated and shall include any
statutory modifications or re-enactment of laws governing companies in
India.
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 2/83
"Agreement" means this Agreement and all Appendices hereto and
amendments thereto made specifically in writing and signed by theauthorised representatives of the Parties in accordance with the provisions
contained in this behalf hereunder.
"Agreed Proportions" means the proportions in which the percentages bear in
the Share Capital of the Company to be subscribed by the Parties in
accordance with Clause 4.2.
"Affiliate" means in relation to ABC, a person approved in writing by DEF,
and in relation to DEF, a person approved in writing by ABC.
"Annual Budget" means the annual budget for each fiscal year of the
Company to be prepared pursuant to and in accordance with Article II.
"Associates" means in respect of any Party, its Controlled Nominees or
holding company or subsidiaries.
"Auditors" means the independent statutory auditors of the Company for thetime being.
"Board" means Board of Directors of the Company as constituted from time
to time.
"Business" means the business of the Company referred to in Article III.
"Business Plan" means the rolling three year business plans of the Company
to be prepared pursuant to Article XI.
"CEO" means the Chief Executive Officer of the Company by whatevername called whether or not a member of the Board.
"CFO" means the Chief Financial Officer of the Company by whatever name
called whether or not a member of the Board.
"Controlled Nominee" means (1) in relation to ABC, any corporation inwhich it beneficially owns and controls directly or through any one or more
of its wholly owned subsidiaries more than half of the voting power of such
corporation or is in control of its management, and (2) in relation to DEF, a
corporation in which it, directly or indirectly through or together with its
Associates, nominees or subsidiaries jointly or severally holds or controls notless than half of the voting power of such corporation or is directly or
indirectly in control of the board of directors of such corporation or is incontrol of its management and shall include bodies corporate listed in
Appendix 'A' hereto.
“Confidential Information” means any data or information, oral or wr itten, in
any medium that relates to any Party‟s (or if any Party is bound to protect the
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 3/83
confidentiality of any third party‟s information, such third party‟s) past,
present, or future research, development, business activities, including anyunannounced product(s) and service(s), and including any information
relating to services, developments, inventions, processes, plans,
documentation, financial information, customer and distributor lists, forecastsand projections Confidential and Information shall also include the terms of
this Agreement.
"Debt' means all forms of long term borrowings (i.e. borrowings maturing
after one year) from and credit extended by sources other than the
Shareholders for a period exceeding one year.
"Directors" means the directors of the Company for the time being and shall
include their duly appointed alternates.
"Effective Date" means ____________
"Encumbrance" means and includes any interest or equity of any person
including without prejudice to the generality of the foregoing, any right toacquire, option or right of pre-emption or any mortgage, charge, pledge, lien
or assignment, or any other encumbrances, priority or security interest or
arrangement of whatsoever nature over or in the relevant property.
"Equity Capital" means the equity share capital of the Company to be issued
and paid up.
"Executive Committee" means the committee of the Board appointed
pursuant to Clause 6.11.
"Group" means in relation to a Party and to the Company, their respectiveAssociates.
“Lease Agreement” means the agreement between ABC or DEF and theCompany to provide the land, building, equipment and/or utilities to the
Company under a lease arrangement on payment of rentals.
"Memorandum and Articles of Association" means the Memorandum and
Articles of Association of the Company, and references to "Memorandum of Association" and "Articles of Association" shall mean the Memorandum of
Association and Articles of Association respectively of the Company.
"Plant" means the manufacturing facility of the Company whether owned by
itself or on lease.
"Product" means --------------------------------.
"Project" means the Business to be established pursuant hereto and to be
carried on by and through the Company.
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 4/83
“Proprietary Information” means all (a) copyrights, copyright registrations
and applications, trademark rights including registrations and applications,patent rights, trade names, mask work rights, trade secrets, know-how, trade
dress, moral rights, algorithms, rights, goodwill and other intellectual
property rights, and improvements, renewals, and extensions thereof,regardless of wherever such rights arise and (b) all derivatives of the
foregoing”.
"Rupees" and the sign "Rs." means the lawful currency of the Republic of
India.
"Secretary" means the person appointed by the Board holding the office of
the secretary of the Company for the time being.
"Shareholder" means persons who are registered holders of any Shares forthe time being of the Company and shall include the Parties for so long as
they hold Shares.
"Shareholders' Loans" means the loans for the time being extended by aShareholder to the Company on terms set out in a written loan agreement
between the Shareholder as lender and the Company as borrower, and suchother borrowings as may be agreed between the Parties from time to time
including by means of the issuance of debentures, bonds, notes, or otherwise
of the Company.
"Shares" means equity shares of par value of Rs.1O/- each in the issued,
subscribed and paid-up Equity Capital of the Company.
"Total Equity" means the total Equity Capital, agreed by the Parties to be
issued by the Company including convertible bonds, and convertibledebentures (whether fully or partially) for the time being of the Company.
"Transferee" means any person to whom or which Shares are transferred in a
manner as setout in this Agreement and who or which, as a condition to the
permitted transfer thereof, agrees in writing to be bound as a Shareholder.
1.2 References to Articles, Clauses, Recitals, Appendices and Schedules are to
articles, clauses, recitals, appendices and schedules of and to this Agreement.
1.3 Any reference to a statutory provision shall include such provision and any
regulations made in pursuance thereof as from time to time modified or re-enactedwhether before or after the date of this Agreement so far as such modification or re-enactment applied or is capable of applying to any transactions entered into prior to
this Agreement and (so far as liability thereunder may exist or can arise) shall
include also any past statutory provisions or regulations (as from time to timemodified or re-enacted) which such provisions or regulations have directly or
indirectly replaced.
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 5/83
1.4 Words importing the singular include the plural, words importing any gender
include every gender, and words importing persons include bodies corporate and
unincorporate and (in each case) vice versa.
1.5 Words and phrases the definitions of which are contained or referred to in the
Companies Act shall be construed as having the meaning thereby attributed to them
but excluding any statutory modification thereof not in force on the date of this
Agreement.
1.6 Words and phrases the definitions of which are contained or referred to in the
Articles of Association shall be construed as having the meaning thereby attributed
to them.
1.7 Unless otherwise prohibited by law, if the definition of any words or phrases
provided herein conflicts with the definition of said words or phrases contained inthe Companies Act or the Articles of Association, the definition provided herein
shall control.
1.8 Headings contained in this Agreement are for convenience of reference onlyand shall not govern the construction or interpretation of this Agreement including
any Article, Clause, Recital, Appendix or Schedule hereof.
ARTICLE - II: COLLABORATION AND CONDITIONS PRECEDENT
2.1 In consideration of the mutual agreements, covenants and undertakings hereinset out, the Parties have granted the rights and accepted the obligations hereinafter
appearing.
2.2 Parties agree to collaborate for carrying on the Business in the manner and
subject to and on the terms and conditions setout hereinafter.
2.3 ABC undertakes to fulfill all the requirements of the relevant Indian Authorities
for equity participation. DEF shall provide ABC with all such information as ABC
may require for satisfying the requirements of Indian Authorities.
ARTICLE - III: BUSINESS OF THE COMPANY AND ITS CONDUCT
3.1 The Company shall principally carry on the business of ______________.
3.2 The Parties shall at all times respectively endeavour to the best of their ability
to promote the Business of the Company.
3.3 The Business of the Company shall at all times be conducted independently
from the business of the Parties, but subject thereto, the Company may transact
business with any of the Parties, including the purchase of products and servicessupplied by any of the Parties, provided that such products or services are supplied
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 6/83
on terms mutually agreed between the Parties and are competitive, and only with
written consent of the other party per section 13.1.1 hereto.
3.4 Except as ABC and DEF may otherwise agree in writing or save as otherwiseprovided or contemplated in this Agreement or in the Annual Budget or Business
Plan, ABC and DEF shall exercise their powers in relation to the Company so as to
ensure that:
3.4.1 the Company carries on and conducts its Business and affairs in aproper and efficient manner and for its own benefit and in accordance with
the Business Plan;
3.4.2 save as may be provided in the agreements referred to in Clause 3.5, the
Company shall not enter into any agreement or arrangement restricting its
competitive freedom to provide and take goods and services by such means
and from and to such persons as it may think fit;
3.4.3 the Business of Company shall be carried on pursuant to policies laid
down from time to time by the Board;
3.4.4 the Company shall maintain adequate insurance against all risks usually
insured against by companies carrying on the same or similar business and(without prejudice to the generality of the foregoing) for the full replacement
or reinstatement value of all its assets of an insurable value;
3.4.5 the Company shall keep books of account and therein make true and
fair entries of all its dealings and transactions of and in relation to its business
so as to give true and fair view of the business and affairs of the Company;
3.4.6 the Company shall adopt such accounting policies consistent with theAct as may from time to time be generally acceptable in India;
3.4.7 the Company will provide ABC and DEF or to their respectivedesignated nominees within 4 weeks after the end of each month with
unaudited management accounts for such month, details of its order book and
forecast profit and loss to the end of the current half yearly accounting periodand such other data and information as may reasonably be required by ABC
or DEF;
3.4.8 the Company will provide each Party or a designated member of its
Group within 4 weeks of the date of receipt of request in this behalf fromsuch Party, such data and information regarding its business and operations
as such Party may reasonably request;
3.4.9 the Company shall prepare such accounts in respect of each accounting
reference period and fiscal year as are required by statute and procure that
such accounts are audited as soon as. practicable and in any event not later
than four months after the end of the relevant accounting reference period;
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 7/83
3.4.10 if the Company requires any approval, consent or license for the
carrying on of its business in the places and in the manner in which it is fromtime to time carried on or proposed to be carried on, the Company will use its
best endeavours to maintain the same in full force and effect.
3.4.11 the Company will promptly observe, perform and comply with its
obligations under each of the agreements referred to in Clause 3.5.
3.5 ABC and DEF agree to the following :
3.5.1 ABC shall lease to the Company its entire facilities located at_______comprising of land, building, utilities, off-site facilities and process
equipment . A detailed Lease Agreement evidencing said lease shall be
agreed to separately. The principal terms and conditions of the lease as
agreed to between ABC and DEF are set out in Annexure-A, which forms an
integral part of this Agreement.
3.5.2 ABC shall cause to transfer the employment of such personnel as are
willing to accept the transfer to the Company. The terms and conditions of employment in the Company in respect of these transferred personnel shall
remain unchanged from the terms and conditions of their employment atABC. DEF shall have the right to interview/select the personnel to be
employed in the Company within 30 days of the Effective Date. The details
of the personnel to be transferred is enclosed in Annexure-B .
3.5.3 DEF shall provide to the Company the necessary know-how andtechnology as may be required. The principal terms and conditions as agreed
to between ABC and DEF are set out in Annexure-C, which forms an integral
part of this agreement.
ARTICLE - IV: SHARE CAPITAL AND SHAREHOLDING PATTERN OF
THE COMPANY
4.1 The Company shall have only one class of Shares. The Parties hereto agree thatthe authorised share capital of the Company shall be __________ divided into
______ equity Shares of the face value of Rs.10/- each.
4.2(1) The issued and paid up Equity Capital of the Company shall be
____________ divided into __________ equity shares of the par value of Rs.10/-
(Rupees ten) each.
4.3 The shareholding pattern of the Equity Capital shall be as follows:
4.3.1 Fifty percent (50%) of the issued and paid up Equity Capital shall besubscribed for and be held by ABC and its Associates against cash inward
remittance in freely convertible foreign currency, save as expressly provided
in Clause 4.5.
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 8/83
4.3.2 50 percent (50%) of the issued and paid up Equity Capital shall be
subscribed for and be held by DEF and its Associates for cash at par save as
expressly provided in Clause 4.5.
4.3.3 ABC and DEF undertake to keep their equity holdings unchanged at
50% each during the life of the agreement.
4.4 Each Party shall bear its own costs and expenses (including travel andaccommodation expenses, salaries, allowances, out-of-pocket expenses and othercosts involved in the preparation, negotiation and execution of this Agreement) as
may be incurred before the Effective Date, except for the following, which the
Parties shall procure the Company (to the extent certified by the Auditors) to
reimburse to the Party incurring such expenses namely:-
4.4.1 the costs of incorporation of the Company including stamp duties andregistration charges payable in connection with the registration of the
Company; and
4.4.2 Costs and expenses of the Company including salary and wages of Company personnel pending induction of Shareholders Funds.
4.5 It is agreed that notwithstanding anything to the contrary contained in thisAgreement, at ABC's and DEF‟s option they shall be entitled to have issued tothem Shares in lieu of expenses incurred and falling within the scope and ambit of
Clause 4.4. However, no issuance of shares under this Clause 4.4 shall be permitted
if such issuance would directly or indirectly result in either Party holding more or
less than that Party‟s
4.6 The Parties shall hold their Shares subject to such conditions as may be
prescribed under applicable Indian regulations and/or the Articles of Association.
4.7 Unless otherwise agreed by all the Parties in writing, any further Shares to be
issued by the Company shall, subject to the par value of all issued Shares not
exceeding the Total Equity Capital, be offered and issued to the Shareholders in the
Agreed Proportions.
4.8 Notwithstanding anything to the contrary contained in Clause 4.7, if any of the
Parties (the "Rejecting Party") fails to subscribe and pay or cause to be subscribed
and paid for by their Associates any of the Shares offered to it in accordance with
this Agreement (the "Rejected Shares") within 30 days of such offer, such
Rejecting Party shall be deemed to be in breach of this Agreement. Withoutprejudice to the foregoing, the Rejected Shares shall be offered to the other Party
hereto according to the procedure set out below:-
4.8.1 Where the Rejecting Party is ABC the Board must offer the Rejected
Shares to DEF or its Associates nominated in this behalf by DEF;
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 9/83
4.8.2 Where the Rejecting Party is DEF the Board must offer the Rejected
Shares to ABC or its Associates nominated in this behalf by ABC;
4.8.3 Any Rejected Shares not accepted by the ABC or DEF or theirrespective Associates, those shares, may be offered by the Board to a third
party on terms no more favourable than those offered to ABC or DEF.
Provided, where Rejected Shares cannot be accepted by ABC or DEF or any
of their Associates as a result of any applicable Indian laws or regulations,ABC or DEF may, with prior written approval of DEF or ABC, as the case
may be, nominate an Affiliate who satisfies such laws and regulations to
subscribe for such Rejected Shares;
4.8.4 If DEF or ABC does not approve of such Affiliate, ABC or DEF shallsubscribe or cause any of its Associates to subscribe for such Rejected
Shares;
4.8.5 For the purpose of this Clause 4.8, any offer to subscribe Shares must
be made in writing by the Board. Any Party or its Associate wishing to
accept such offer from the Board must do so by giving notice in writing,which notice must be received by the Board no later than 60 days after the
day the offer was first made by the Board.
ARTICLE - V: SALE OF SHARES
5.1 Notwithstanding anything to the contrary contained herein, neither Party shall
sell, transfer, assign, hypothecate, mortgage, or otherwise encumber the whole orpart its Shareholding in the Company nor shall it permit its Associates and
Affiliates who are bound by the terms of this Agreement to do the same for a
period of 5 (five) years from the date of allotment of the Shares or for so long as
the Company owes any moneys to term lending financial institutions and banks,whichever is later ("Lockin Period"), without the prior written consent of the other
Party and after the said Lockin Period neither Party or its Associates and Affiliates
shall sell, transfer, assign, hypothecate, mortgage or otherwise encumber all or anypart of its/their Shares save and except with the prior consent in writing of the other
Party or as expressly provided in this Agreement.
5.2 In the event of either Party or its Associates or Affiliates desiring to sell or
dispose of its/their Shares, such Party shall, subject to Clause 5.3, give to the otherthe right of first refusal in the manner as provided hereinafter. If, on account of
laws or regulations in India, either Party is unable to acquire shares so offered to it,
it will be entitled to designate a person of its choice to whom the Shares in wholeor in part shall be transferred.
5.3 RIGHT OF FIRST REFUSAL.
5.3.1 Neither Party shall sell, give away, or otherwise dispose of or transfer
any of its Shares until (i) it has delivered to the Company an irrevocablewritten offer to sell ("Offer") all of its Shares or portion thereof ("Sale
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 10/83
Shares") and to the other Party (the "Remaining Party") at a price (the "Offer
Price") stated in the Offer and (ii) the Remaining Party shall have failed toaccept the Offer within 60 days after the receipt of the Offer. The Remaining
Party shall convey its acceptance, if any, to the Shareholder offering Sale
Shares pursuant hereto ("Selling Member") within 60 days of receipt of theOffer in respect thereof. If the Remaining Party accepts the Offer but does
not agree to the Offer Price, the price shall be determined by the Statutory
Auditors of the Company at the request of either Party and the price sodetermined shall be deemed to be the Offer Price for the purposes of this
Clause 5.3.
5.3.2 Within 60 days of the receipt of any requisite approvals for the
purchase of the Sale Shares by the Remaining Party, the Remaining Party
shall promptly pay or cause any person nominated by him to purchase theSale Shares and to pay the Offer Price for the Sale Shares in full in cash
against transfer of the Shares. If the approvals are at a price different from the
Offer Price, the Selling Member shall be entitled to withdraw its offer not
later than 15 days of the receipt of such approvals by it or to sell and transfer
the Sale Shares to the Remaining Party or its nominee at the price containedin such approvals. If the Offer is withdrawn, any subsequent sale shall always
be subject to the right of first refusal of the Remaining Party as contained in
this Article 5.3.
5.3.3 If the Remaining Party does not accept the Offer of Sale Shares, then atany time within 90 days after the expiration of the 60-day period referred to
in Sub-clause 5.3.1 above, the Selling Member may sell all, but not less than
all, of the Sale Shares to the Transferees selected by the Remaining Party andif the Remaining Party does not procure any buyer(s) for the Sale Shares of
the Selling Member at any time within 90 days after the expiration of the
above referred 90-day period, the Selling Member shall have the option toeither withdraw the Offer or to sell the Sale Shares through prospectus/publicoffer at Stock Exchange. For any sale subsequent to the withdrawal of the
Offer the procedure setout in this Clause 5.3 shall have to be complied again.
5.3.4 Any period of time for the purchase of a Selling Member's Shares shall
be extended, if the transfer of the Sale Shares requires any consent orapproval from Indian authorities, to the earlier of (i) the date when the
requisite consents/approvals are obtained, or (ii) the end of the twelfth
calendar month immediately following the month in which the Selling
Member submitted an Offer in accordance with Clause 5.3.1 above. If, within
the twelve-month period described in the immediately preceding sentence,the Selling Member is unable to obtain any requisite consent for its transfer
of the Sale Shares, the Selling Member's Offer to sell the Sale Shares shall bedeemed to have expired and the Selling Member shall not be entitled to
transfer the Shares to any person except by again making an Offer under
Article 5.3.1 above.
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 11/83
5.3.5 If any Person purports to acquire any of the Shares, or any interest
therein, in a manner not specifically permitted by this Agreement (whether byoperation of law or by voluntary act or otherwise), the Remaining Party or
any person(s) nominated by the Remaining Party shall have the right, but not
the obligation, to purchase at book value any or all of the Shares purported tohave been thus acquired. But the failure of the Remaining Party to purchase
the Shares at book value shall not be deemed or construed to validate the
purported transfer of the Shares in violation of this Agreement, whichpurported transfer shall be null and void. As used in this Clause 5.3.5, "book value" shall mean the book value of the Shares in question determined in
accordance with the generally accepted accounting principles consistently
applied in the Company's financial statements. The determination of book value by a chartered public accountant or firm of chartered public
accountants then acting as the Company's regular Auditors shall be final,
conclusive and binding on the Company, the Parties, the person purporting to
have acquired the Shares in violation of this Agreement, and their successors
in interest.
5.3.6 In the event the Parties interest and control in the Controlled Nomineesgoes below 51% then the Shares held by such Controlled Nominee in the
Company shall be offered to the Other Party in accordance with the
provisions of Clause 5.3.1 above.
5.4 Clauses 5.2 and 5.3 shall not apply to any transfer inter-se between a Party andits Associates and Affiliates who have agreed to be bound by the terms of this
Agreement and the same shall not be subject to the right of pre-emption and first
refusal contained hereinabove and no such transfer shall be deemed to be, nor shall
it constitute, a breach of the provisions of Clauses 5.2 and 5.3 hereof.
ARTICLE - VI: BOARD OF DIRECTORS AND MANAGEMENT OF THECOMPANY
6.1 The Board of Directors shall be responsible for the overall policy and the
conduct of the business, affairs and operations of the Company except to the extent
that applicable laws, regulations, the Memorandum, Articles of Association or thisAgreement otherwise provide or allocate responsibility over any particular matter
to the Shareholders. The Board shall be entitled to delegate any of its power to such
of its members or officers of the Company as may be deemed appropriate by itsubject always to applicable laws, the Memorandum, the Articles of Association
and the provisions of this Agreement.
6.2 The Board shall, exclusive of alternate Directors, comprise and be not less than
4 and not more than 12 Directors of whom not more than one third shall be non-
retiring Directors.
6.3 The Board shall so long as DEF and/or its Associates and ABC and/or itsAssociates are Shareholders be comprised of 4 Directors. The representation of the
Parties on the Board shall be in equal proportion, provided that if there is
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 12/83
subsequently any change in the ratio of shareholdings of DEF and ABC in the
Company, the Parties shall procure that the representation of Parties on the Boardshall be in proportion to the respective shareholdings of the Parties in the
Company.
6.3.1 DEF and ABC shall be entitled to appoint non-retiring Directors in
proportion to their representation on the Board pursuant to sub-clause 6.3
above with the right to remove, replace or fill any vacancy with respect toany member they nominated or had authority to nominate, howsoever caused
therein by a communication in writing to the Company.
6.3.2 If the financial and other term lending institutions and banks require as
a condition of lending to the Company, appointment of nominee/otherDirector(s) for the period their loans are outstanding, the Parties hereby agree
for their such appointment. [In the event of such financial/term lending
Institutions and the banks requiring appointment of any independent
Directors, the same shall be selected by DEF and ABC by mutual agreement,or failing such mutual Agreement, they shall be selected by the Parties in
equal proportion.]
6.4 Upon a Party ceasing to hold at least 10% of the Shares, it will procure that the
Directors nominated by it will tender their resignation from their respective officesin the Company forthwith without any claim for compensation or loss of office or
otherwise except for salary (if any) and any other entitlements which may have
accrued up to the date of their resignation.
6.5 For the purposes of this Agreement, “Shareholding of a Party” shall mean the
aggregate of its shareholding and that of its Associates and Affiliates, in the
Company.
6.6. The Chairman of the Board shall be a nominee of DEF from amongst the
Directors nominated by DEF and the Parties shall procure his appointment as
Chairman of the Board. The Chairman of the Board shall be non-executive andshall not have a second or casting vote at meetings of the Board or the meetings of
Shareholders where the Chairman presides.
6.7 The Chairman shall be ex-officio Chairman of general meetings of the
Company in accordance with applicable provisions of the Act and the Articles of Association. At all Board meetings, if the Chairman is present, he shall preside, and
in his absence a Director designated by DEF shall be elected Chairman for that
meeting and shall preside.
6.8 The Board shall appoint Chief Executive Officer (the "CEO") and the Chief
Financial Officer (the "CFO") of the Company. The CEO shall be subject to the
supervision, direction and control of the Board and the Executive Committee. TheCEO shall be in charge of and responsible for the conduct of day to day business
and operations of the Company in accordance with the Board‟s instructions or
powers delegated to him/her without prejudice to the authority of the Board. The
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 13/83
CEO shall hold the office for such period and on such terms as the Board may
determine from time to time. The CFO shall report to the CEO and shall be the
controller of finance and accounts of the Company in accordance with the Board‟s
instructions or powers delegated to him/her by the Board
6.9 The CEO shall be nominated by DEF and ABC shall nominate the CFO. The
CEO and/or CFO may, at the option of the relevant Party, be on the Board, in
which case they shall be out of their respective nominee Directors
6.10 The Parties agree and acknowledge that appointment of nominees of the
Parties to the positions referred to in Clause 6.9 shall be in the short term only and
that it is the objective of the Parties that at the appropriate time, the CEO and CFO
and all other senior executives and employees of the Company shall be individualswho have commitment to and who look for their future career prospects only with
the Company and not with any Party hereto.
6.11 The Board shall select an executive management committee of the Board
("Executive Committee"), consisting of such number of Directors as the Board
may, while appointing the Executive Committee, decide, provided it shall have atleast one nominee Director each of DEF, ABC and the CEO. All decisions of the
Executive Committee shall be by majority. In the event there is a tie in respect of
any matter at the Executive Committee, the same shall be referred to the Board forits consideration and decision. Such other Directors or executives of the Company
may be invited to participate in the Executive Committee from time to time as the
Board, the Chairman of the Executive Committee or the Executive Committee maydeem appropriate. The Executive Committee shall, subject to the supervision and
control of the Board, be responsible for overseeing the day to day management of
the business and operations of the Company by the CEO and other officers and for
which purpose it shall have adequate authority and power with right to sub-
delegate. The Executive Committee‟s responsibilities shall include the following:
6.11.1 Developing long term and annual business plans for the approval of
the Board;
6.11.2 Establishing and modifying personnel policies, compensation,
retirement benefits etc., for all personnel excluding members of the Executive
Committee. The CEO shall determine these for other members of the
Executive Committee.
6.11.3 Management & deployment of surplus funds;
6.11.4 Developing & approval of marketing plans;
6.11.5 Day-to-day management of operations.
6.12 The Parties shall procure that the person nominated as aforesaid by them or
selected by the Executive Committee are appointed by the Company.
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 14/83
6.13 The Board shall determine the functions and duties of the CEO and CFO. The
Parties shall procure that the Board delegates appropriate powers to the CEO andCFO to discharge their respective functions and duties. The CEO shall report to
and function subject to the supervision, direction and control of the Executive
Committee and the Board. The CFO shall report to the CEO.
Senior managers selected by the Executive Committee shall be appointed by the
CEO and shall report to him. The CEO shall assign to the senior managers, subjectto directions if any of the Executive Committee, their duties, obligation and
functions.
6.14 The Auditors of the Company shall be selected jointly by the Parties.
6.15 The Company, if so statutorily required, shall have a Secretary as defined in
the Act. The Executive Committee shall select the Secretary and recommend himto the Board for appointment. The Board may appoint the person so recommended
as Secretary, if found suitable by it.
6.16 The responsibilities of the Secretary shall include statutory compliances andfilings in accordance with the Act and maintenance of statutory records as required
by the Act and such other duties as the Board/Executive Committee may assign to
him from time to time.
6.17 If any Party shall not be satisfied with the performance of the CEO or the
CFO, it shall be entitled to require his/their removal. On such requisition, the
Parties shall cause their respective nominees on the Board to vote and remove theCEO, or the CFO as the case may be. In the event of such removal, such person's
replacement shall be appointed in accordance with the procedure set out herein.
6.18 The right of nomination conferred on a Party hereunder shall include the rightof that Party to require the other Party to procure the Board to remove at any time
from office such person nominated by that Party as a Director and the right of thatParty at any time and from time to time to determine the period during which such
person shall hold the office of Director.
6.19 Whenever for any reason a person ceases to be a Director, the Party which had
nominated him or would be entitled to nominate him hereunder shall nominateforthwith another person for appointment as Director in substitution thereof, and
the Parties shall procure the appointment of such nominee as a Director.
6.20 Alternate Directors to be appointed for nominee Directors ("OriginalDirector") of each Party shall be persons proposed by such Party only and on such
nomination the Parties shall cause their respective nominee Directors to vote forand appoint him as such alternate Director. Such alternate Director shall be entitled
while holding office as such to receive notices of meetings of the Board or any
committee of the Board to which such Director has been appointed and to attend
and vote as a Director at any such meetings of the Board or any such committee atwhich the Original Director is not present and generally to exercise all the powers,
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 15/83
rights, duties and authorities and to perform all functions of the Original Director.
Further, such alternate Director shall be entitled to exercise the vote of the Original
Director at any meeting of the Board or any such committee.
6.21 The Company may pay such sitting fees to Directors, not exceeding the
maximum permissible under the Act, as may be determined by the Board from time
to time. In addition, a Director shall be entitled to receive such remuneration for
services performed for the Company as the Board may decide from time to time.
6.22 The Board shall meet at such time and at such place as it shall deem necessary
provided that at least one meeting of the Board shall be held in each quarter.
6.23 The Secretary shall, as and when directed by any Director, call a meeting of
the Board. Notice of every Board meeting whether first convened or adjourned
shall be sent to each Director and his alternate so as to be received not less than 14
days before the day such meeting is scheduled to take place.
6. 24 Except in emergent cases or unless the Parties or a majority of the Directors
agree otherwise (i) at least 14 days' written notice will be given to all Directors forconvening a Board meeting; and (ii) such notice shall be accompanied by an
agenda of the matters to be discussed. It is agreed that (unless in any particular casethe Parties shall otherwise agree) no resolution relating to any other business may
be proposed or passed at any Board meeting unless the nature of the business is
specified in the agenda for the meeting.
6. 25 The Chairman of the Board shall preside as Chairman of any meeting of theBoard or any committee of the Board if he is a member thereof, but if at any
meeting the Chairman be not present within 15 minutes after the time appointed for
holding the same, a substitute for that meeting shall be appointed from amongst the
nominee Directors of DEF on the Board.
6.26 No business shall be transacted at any Board meeting unless a quorum ispresent at the meeting. In the first instance the quorum for meetings of the Board
shall be at least one third of the Board including at least one Director nominated by
DEF and at least one Director nominated by ABC. A Director represented by hisalternate shall be deemed to be present for the purpose of determining whether a
quorum exists. If within half an hour from the time appointed for a meeting a
quorum as aforesaid is not present, the meeting shall stand adjourned to the sameday in the next week at the same time and place or to such other later day and at
such other time and place as the Directors may determine. If at such adjourned
meeting, a quorum is not present, the meeting shall stand adjourned for a furtherhalf hour and if the quorum as aforesaid is still not present but the Directors present
being at least one third of the Board, they shall constitute a quorum.
6.27 Subject to the provisions of the Act a resolution signed by a majority of theDirectors for the time being shall be as valid and effectual as if it has been a
resolution passed at a meeting of the Board of Directors duly convened and held.
Any such resolution may be contained in a single document or may consist of
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 16/83
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 17/83
d. issue of convertible debentures whereupon conversion thereof, the
issued share capital as agreed between the Parties is exceeded or wherethe respective proportions of the Shareholding of the Parties are altered;
and
7.5.5 amendment of the Memorandum and/or Articles of Association.
8. DEADLOCK
8.1 In the event that any of the following events occur, the provisions of this Clause
shall apply.
8.1.1 If the approval or modification of the Annual Budget or the Business Plan of
the Company for any year ("such Matter") has been consistently considered orraised at a Board meeting and has consistently resulted in an equality of votes. For
avoidance of doubt, any Such Matter shall be deemed to have been consistently
considered or raised at a Board meeting if Such Matter has been tabled for
discussion or discussed at more than 3 Board meetings in any 3 consecutive
months period;
8.1.2 any Such Matter having been consistently considered or raised at General
Meetings of the Company and on which there has been an equality of votes. Foravoidance of doubt, any Such Matter shall be deemed to have been consistentlyconsidered or raised at a General Meeting if Such Matter has been tabled for
discussion or discussed at more than 2 General Meetings in any 6 month period.
8.2 Upon the occurrence of an event under Clause 8.1 but in any event no later than
60 days after such occurrence, a Party shall be entitled to give a notice in writing
("Conciliation Notice") to the other Party.
8.3 Upon receipt of the Conciliation Notice, such matter stated in such ConciliationNotice shall be referred to the Chairmen of the Parties who shall confer with each
other in good faith and shall use their best efforts in order to resolve the same.
8.4 In the event Parties are unable resolve the Deadlock within 90 days of the
receipt of Conciliation Notice, either Party can serve on the other a notice inwriting requiring it to purchase its Shares ("Notice") The Party receiving the Notice
shall elect to purchase the shares if at all within 30 days of receipt of such notice. If
a Party so elects to purchase the Shares, the price payable therefor shall be as
determined by the Auditors of the Company and the provisions of Clause 8.5 shall
apply.
8.5 In the event that the sale of the Shares is prohibited or would otherwise result in
the purchasing Party being in contravention of any applicable laws or regulations
the purchasing Party shall be entitled:-
8.5.1 to have such Shares transferred to and registered in the name of a thirdparty who is qualified to hold such Shares, provided that such third party
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 18/83
shall first enter into an agreement with the other Party to the effect that it
shall adhere to the provisions of this Agreement in so far as such provisions
are applicable to the Parties at such time; or
8.5.2 to apply for the requisite Indian Government approvals for the sale of
the Shares or for the purchasing Party to purchase such shares provided that
where such approvals cannot be obtained within 120 days (or such other
number of days as may be agreed between the Parties based on the typicalresponse time of such authorities as the case may be) from the date the
purchasing Party has agreed to purchase such Shares, the purchasing Party
may within 30 days after the expiry of such period elect by giving written
notice to the selling Party to proceed under sub-clause (a) above.
8.6 Where a Party has purchased the Shares of the other Party, such purchasing
Party shall pay to such other Party the full amount of the purchase price by way of
a cashier's order against the delivery of the original share certificates and duly
executed instruments of transfer in respect of such Shares. This Agreement will beterminated with respect to a Party who sells all of its Shares under this Article 8,
effective as of the closing date of such sale of the Shares under this Article 8.
8.7 If, in any case, the other Party after having become bound to transfer its Shares
pursuant to the provisions of this Article 8 or otherwise, shall fail or refuse to doso, the Secretary or any other person appointed by the Board shall be deemed to
have been irrevocably authorized by the other Party with full power to execute,
complete and deliver, in the name and on behalf of the selling Party, transfers of the Shares to the purchasing Party thereof against payment of the purchase price
therefor to the Company, and the Board may then register the purchasing Party as
holder of the Shares and issue to the purchasing Party a certificate of the same and
thereupon the selling Party shall be bound to deliver up the certificates for the
Shares and upon such delivery shall be entitled to receive the purchase pricetherefor without interest.
8.8 If the Party receiving the Notice pursuant to Clause 8.4 elects not to purchase
the shares of the Party giving the Notice or does not respond to the Notice within
the period set out in Clause 8.4, the selling Party shall be entitled to sell its Sharesto the public through an offer letter/prospectus at same price as offered to the other
Party.
ARTICLE - IX: FUNDING
9.1 Each Party shall contribute to the funding requirements of the Company for theProject in the form of Equity Capital and/or Unsecured Loans, each such injection
being in the Agreed Proportions
9.2 It is agreed that the actual composition of the Shareholders' funds in terms of equity and Shareholders Loans and the timing thereof will be subject to further
discussion and mutual agreement of the Parties.
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 19/83
9.3 It is estimated that the Company would be able to start production of PV
modules within 18 months of the Effective Date. The expenses of the Companyduring this 18 months period are estimated at Rs. 4.3 million per month as per
details given in Annexure-D.
9.4 The Parties agree that various financial parameters such as but not limited to
the Equity Capital and maximum debt/equity ratio, will be subject to determination
as part of the rolling three-year Business Plan to be approved pursuant to ArticleXI. The Parties shall, acting reasonably and in good faith, and as and when
necessary, review and revise such financial parameters based on latest and best
projection of the funding requirements of the Project and prudent financingconsideration, so as to, at all times, ensure and enhance the business viability of the
Company and returns to the Shareholders.
9.5 The Parties agree that subject to mutual agreement, if any Shareholders
guarantees are required by any bank or financial institution lending monies to the
Company, the Parties shall provide the same in equal proportion.
ARTICLE - X: ACCOUNTS AND AUDIT
10.1 The Parties shall procure that:-
10.1.1 the Company at all times maintain accurate and complete accountingand other financial records in accordance with the requirements of all
applicable laws and generally accepted accounting standards and principles
applicable in India;
10.1.2 annual audited accounts of the Company containing the balance sheet
and profit and loss account and all such other information as may be required
under Indian law and prepared in accordance with generally acceptedaccounting standards and principles applicable in India consistently applied
shall be prepared and despatched to the Parties within six months of the end
of each financial year of the Company.
10.1.3 Each of the Parties or their authorized representatives shall, subject to
at least 7 days prior notice in writing to the Company be allowed access at all
reasonable times to examine the books and records of the Company.
ARTICLE - XI : ANNUAL BUDGET AND BUSINESS PLAN
11.1. The Parties shall procure that:
11.1.1 immediately after the Effective date, the Parties representatives shall
meet to prepare and finalize Annual Budget for the first year and a rollingthree-year Business Plan for the first three financial years of the Company.
The Parties will submit such business plan to a meeting of the Board for
approval within thirty (30) days immediately following the Effective Date;
and
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 20/83
11.1.2 before the first full financial year of the Company, and, thereafter for
subsequent financial years, an Annual Budget and an updated rolling three-year Business Plan for the following three financial years will be finalised by
Executive Committee and thereafter approved by the Board. For this purpose
the CEO shall, with the assistance of CFO, prepare and submit an AnnualBudget and an updated rolling three-year Business Plan at least six weeks
before the beginning of every new financial year of the Company and submit
the same to the Board for its consideration and approval. The Annual Budgetand the updated rolling three-year Business Plan as approved by the Board
shall be the one to be implemented by the CEO.
ARTICLE - XII: DIVIDEND POLICY
12.1. The Parties shall procure that the Board in making any decision in relation to
the declaration of dividends and the appropriation of surplus shall consider the
following factors:-
12.1.1. the maintenance of prudent and proper reserves including allowance
for future working capital and provision for tax;
12.1.2 the due and prudent provision for all actual and carried forward losses
of the Company;
12.1.3. the due and prudent provision for the payment of all indebtedness,
borrowings and loans owed by the Company to the Parties or to banks and
financial institutions or to unsecured creditors; and
12.1.4. any other factors which the parties may agree to be taken into
account.
12.2 The Parties shall procure any dividend recommended by the Board to beapproved by the Shareholders and distributed by the Company within 42 days of
such approval by the Shareholders. The right to dividends will vest in the
Shareholders immediately upon the approval thereof by the Company in theGeneral Meeting whose names appear on the Register of Members of the Company
as on the record date. For purposes of this Clause, “record date” shall mean the date
on which the Register of Members is closed, which is before the issue of notice for
the General Meeting.
ARTICLE - XIII: CO-OPERATION AND GENERAL UNDERTAKING
13.1 Each of the Parties hereby agrees that each will exercise its voting rights forthe time being in the Company and each of the Parties hereto shall take all such
steps for the time being as shall lie within its power, to procure that:-
13.1.1 the Company will not contract with any of the Parties hereto without
the prior consent of the other.
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 21/83
13.1.2 the provisions of Clause 13.1.1 above shall apply mutatis mutandis to
the transactions between the Company and the Directors, employees and
Associates of each Party;
13.1.3. save with the written consent of the Parties and except in the ordinary
course of its business and on an arm's length basis the Company will not
enter into any contract or transaction with any third party whereby the third
party will receive more than a fair commercial price or where the Companywill receive less than a fair commercial price for any services rendered or
goods sold by it (less customary trade discounts and allowances); and
13.1.4 the Directors appointed by each of them shall observe, comply with
and implement the provisions of this Agreement.
13.2 The Parties shall at all times:-
13.2.1 co-operate in good faith and execute such documents and take such
action as may be reasonably required to give full effect to the provisions and
intent of this Agreement; and
13.2.2 promptly notify the other Party and the Company of all matters
coming to its notice which may affect the title to or enjoyment of theCompany's premises, assets or properties, and all significant, orders anddemands, and other communications received from any government or quasi
government authority in relation to the Company's licenses.
ARTICLE - XIV : FORCE MAJEURE AND CONDITIONAL EVENTS
14.1 In the event that any Party hereto shall be rendered unable to carry out the
whole or any part of its obligations under this Agreement for any reason beyondthe reasonable control of that Party, including but not limited to decrees or restrainsby governmental authorities, acts of God, force majeure, strikes, war, riot and any
other causes of such nature, then the performance of the obligations hereunder of
that Party or all the Parties hereto as the case may be and as they are affected bysuch cause shall be excused during the continuance of any inability caused, but
such inability shall as far as possible be remedied with all reasonable dispatch
provided the Party claiming force majeure has notified the other Parties withreasonable dispatch about the circumstances constituting force majeure and its
likely duration with such evidence in support thereof as may be reasonably
available with it.
ARTICLE - XV: DEFAULT
15.1. In the event that a Party ( the "Defaulting Shareholder"):-
15.1.1 commits any breach of any of its material obligations under this
Agreement and fails (where such breach is capable of remedy) or is unable(where such breach is not capable of remedy) to take appropriate steps to
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 22/83
cure such breach within 30 days after being given notice so to do by the Party
not in default;
15.1.2 goes into liquidation, whether compulsory or voluntary (except for thepurposes of a bona fide reconstruction or amalgamation with the consent of
the other Shareholders, such consent not to be unreasonably withheld);
15.1.3 has an administrator, receiver, receiver and manager, judicial manageror similar officer appointed over the whole or a substantial part of the assets
or undertaking of the Defaulting Shareholder;
15.1.4 becomes insolvent or is unable to pay its debts or admits in writing its
inability to pay its debts as they fall due or enters into any composition or
arrangement with its creditors or makes a general assignment for the benefit
of its creditors; or
15.1.5 ceases to carry on the whole or any substantial part of its business
other than in the course of reconstruction or amalgamation;
then the party not in default shall be entitled (but not after 90 days of the event in
question first coming to the attention of the non-defaulting party) to give a notice (a
"Default Notice") to the Defaulting Shareholder.
15.2 At any time within 90 days of the service of the Default Notice on the
Defaulting Shareholder, the Party not in default ("Other Party”) shall be entitled togive a written notice (a "Default Sale Notice") to the Defaulting shareholder with
copies given to the other Shareholders, and upon service of a Default Sale Notice,
the Defaulting Shareholder shall be deemed to have offered all its Shares for sale to
the Other Party on the date of receipt of the Default Sale Notice at the price equal
to the Fair Value as defined in clause 15.5 (the "Default Sale Price").
15.3 A sale of Shares pursuant to the provisions of this Article XV shall be
completed at the registered office of the Company at 12.00 noon on the day falling
60 days after the date of the Default Sale Notice given under Clause 15.2, or at
such time as any required approvals are obtained.
15.4 The rights of the Other Party under this Article XV shall be in addition and
without prejudice to any other rights of the Other Party against the Defaulting
Shareholder at law or in equity including, but not limited to, the right to damages.
15.5 For the purposes of this Agreement, the “Fair Value” of the Defaulting Shareholder's Shares shall be the value of such Shares as determined by theAuditors for the time being of the Company on the basis of book value. In so
certifying the Fair Value of such shares, the Auditors shall be acting as an expert
and not an arbitrator and the costs of such valuation and certification shall be borne
by the Defaulting Shareholder unless otherwise agreed by the parties.
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 23/83
15.6 Notwithstanding any other provision in this Article, Clauses 15.1 to and
including 15.5 shall be read subject to the following provisions:-
15.6.1 If the Defaulting Shareholder is ABC -
(a) the offer for sale of its Shares shall be deemed to be first made to
DEF.
(b) if the Shares are not accepted by DEF or any Associates/ person
designated in this behalf by DEF, they shall then be deemed to have
been offered to the public through prospectus or offer letter.
15.6.2 If the Defaulting Shareholder is DEF -
(a) the offer for sale of its Shares shall be deemed to be first made to
ABC
(b) if the Shares are not accepted by ABC or any Associate/person
designated in this behalf by ABC, they shall then be deemed to havebeen offered to the public through prospectus or offer letter.
15.7 It is hereby agreed that a Party agreeing to purchase the Shares of the Other
Party pursuant to and in accordance with this Agreement, including that of a
Defaulting Shareholder hereunder, shall be entitled to purchase the same itself or
nominate a buyer or buyers therefor.
15.8 In the event that the sale of the Shares is prohibited or would otherwise result
in a purchasing party being in contravention of any applicable laws or regulations
the provisions of Clause 4.8 shall apply mutatis mutandis.
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 24/83
ARTICLE - XVI: GENERAL
16.1 Each time the Company has an opportunity to exercise a right or privilege
granted by, pertaining to or otherwise involving DEF, or to take an action or file aclaim against, pertaining to or otherwise involving DEF, DEF shall vote its/their
Shares to cause the Company to exercise the right or privilege, or to take the action
or file the claim, in each case as ABC alone deems or determines appropriate.
Without limiting the generality of the immediately preceding sentence, with respectto any matter or transaction involving DEF (which matter or transaction is not
integral to DEF‟s rights and role as a Shareholder of the Company), ABC alone
shall determine the Company's course of action. The provisions of this Clause 16.1shall apply reciprocally to the Company's exercise of rights or privileges involving
ABC and to the Company's taking of actions or filing of claims against or
involving ABC. For the purposes of such reciprocal application, each reference inthe first two sentences of this Clause 16.1 to DEF shall be read as a reference to
ABC, as appropriate, and each reference in the first two sentences of this Section
Clause 16.1 to ABC shall be read as a reference to DEF.
16.2 COSTS
DEF and ABC shall pay their own costs and expenses incurred in relation to
the negotiation, preparation and execution of this Agreement.
16.3 NOTICES
All notices which are required to be given hereunder shall be in writing andshall be sent to the address of the recipient set out in this Agreement or in any
Deed of Adherence or such other address as the recipient may designate by
notice given in accordance with the provisions of this Clause. Any such
notice may be delivered personally, by prepaid certified letter electronic mail,or facsimile transmission and shall be deemed to have been served if by
personal delivery when delivered, if by certified prepaid post, 7 days after
posting, and if by electronic mail or facsimile transmission when dispatched.
16.4 SUCCESSORS BOUND
This Agreement shall be binding on and shall ensure for the benefit of the
successors and assign of each of the Parties hereto.
16.5 ASSIGNMENT
None of the Parties hereto may assign its rights or obligations in whole or inpart hereunder without the prior written consent of the other Parties hereto;
Provided that this Clause shall not prevent a transfer of Shares pursuant to
this Agreement.
16.6 CONTINUING AGREEMENT
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 25/83
All provisions of this Agreement shall so far as they are capable of being
performed and observed continue in full force and effect except in respect of
those matters then already performed.
16.7 GOOD FAITH
Each of the Parties hereto undertakes with each of the others to do all things
reasonably within its power which are necessary or desirable to give effect tothe spirit and intent of this Agreement and the Articles of Association.
16.8 FURTHER ASSURANCE
The Parties shall, use their respective reasonable endeavours to procure that
any necessary third parties shall, do, execute and perform all such furtherdeeds, documents, assurances, acts and things as any of the Parties hereto
may reasonably require by notice in writing to the others to carry the
provisions of this Agreement and the Articles of Association into full force
and effect.
16.9 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the Parties heretowith respect to the matters dealt with therein and supersedes any previous
agreement between the Parties hereto in relation to such matters. Each of the
Parties hereto hereby acknowledges that in entering into this Agreement ithas not relied on any representation or warranty save as expressly set out
herein or in any document referred to herein. No variation of this Agreement
shall be valid or effective unless made by one or more instruments in writing
signed by such of the Parties hereto which would be affected by such
variation.
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 26/83
16.10 LAW
This Agreement shall be governed by and construed in accordance with the
laws of India, without reference to the choice of laws provisions thereof.
16.11 NO PARTNERSHIP
Nothing in this Agreement shall constitute or be deemed to constitute apartnership between any of the Parties hereto and none of them shall have
any authority to bind the others in any way, except as provided herein..
16.12 DURATION
16.12.1 The terms of this Agreement shall remain in full force and effect for
so long as any of DEF and ABC or any of their respective Associates
continues to hold Shares, but in relation to a Shareholder which hastransferred all of its Shares as permitted by this Agreement and the Articles
of Association they shall thereupon cease to have further force and effect
except as provided in Clause 16.12.2.
16.12.2 This Agreement shall be deemed to be terminated by mutual consent
with effect from the date upon which either Party together with its Associatesceases to hold not less than 10 per cent of the issued and paidup Equity
Capital of the Company for the time being.
16.13 RIGHTS INCIDENT TO EQUITY CAPITAL OWNERSHIP
16.13.1 In the event of DEF ceasing voluntarily to hold 20% (twenty percent)
or more of the issued and outstanding Shares, its right to nominate non
retiring Directors shall cease and its rights to nominee Directors shall berestricted to have Directors in proportion to its such reduced shareholding.
16.13.2 In the event of ABC ceasing voluntarily to hold 20% (twenty
percent) or more of the issued and outstanding Shares, its right to nominate
non retiring Directors shall cease and its rights to nominee Directors shall be
restricted to have Directors in proportion to its such reduced shareholding.
16.13.3 In the event of a Party hereto ceasing voluntarily to hold 15% (fifteen
percent) or more of the issued and outstanding Shares, all rights of such Party
under this Agreement shall cease.
16.13.4 In the event of the Shareholding of a Party hereto falls voluntarily
below 10% (ten percent) of the issued and outstanding Shares, the other Partyshall, subject to Article V hereinabove, have the option exercisable at any
time thereafter to purchase the Shares remaining with such Party.
16.13.5 For the purpose of this Article 16.13.
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 27/83
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 28/83
16.16 EXERCISE OF POWERS
Where DEF or ABC is required under this Agreement to exercise its powers
in relation to the Company to procure a particular matter or-thing, suchobligation shall be deemed to include an obligation as a Shareholder
(including where an Associate is a Shareholder) and as a Director (where
applicable) of the Company and to ensure that any Directors appointed by it
or a member of its Group will procure such matter or thing.
16.17 This Agreement shall not be altered, changed, supplemented, or amended
except by written instruments signed by the parties hereto.
16.18 DISPUTE SETTLEMENT
16.18.1 The Parties will first use their best endeavors to resolve through
mutual consultation any dispute, difference or question arising between the
Parties or their respective representatives or assigns which may arise out of,
in connection with or in relation to this Agreement.
16.18.2 All disputes, differences or questions arising out of this Agreement
including the following:-
(a) the intention of the Parties or construction or interpretation of this
Agreement or any statute, legislation, regulation, governmental order or
directive affecting the Company;
(b) the transactions or consequences of or anything done, executed,
omitted or suffered as a result of this Agreement.
(c) any breach of this Agreement or any claim on account of suchbreaches; or
(d) any statute, legislation, governmental order or directive affecting
the Company or the affairs of the company;
which cannot be amicably resolved between the Parties shall be finally
settled by arbitration by a Board of three arbitrators, one each to be appointedby DEF and ABC and the third in accordance with the Rules of Arbitration of
the International Chamber of Commerce, Paris. Arbitration shall be in the
English language and shall be conducted in accordance with the Rules of
Arbitration of the said International Chamber of Commerce. Any arbitrationaward made shall be final and binding on the parties and is not subject to
appeal and shall be enforceable in any court of competent jurisdiction. The
venue of the arbitration shall be New Delhi.
16.18.3 Excepting the dispute, difference or question as may have beenreferred to arbitration, the Parties shall during the period of submission and
pending its adjudication, continue to perform the rest of their obligations
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 29/83
under this Agreement without prejudice to a final adjustment in accordance
with the said award as may be issued by such arbitration tribunal duly
constituted in accordance with this Clause.
16.19 All rights of DEF hereunder shall be exercised by Mr.
__________________, failing him through such representative as its Board of
Directors may appoint (with power to remove and replace) in this behalf.
16.20 All rights of ABC hereunder shall be exercised by the person authorised in
this behalf by the Board of ABC (with power to remove and replace).
16.21 CONFIDENTIALITY
16.21.1 Scope of Disclosure: Each Party, to the extent of its right to do so,shall disclose to the other Party only such Confidential and Proprietary
Information which the disclosing Party deems necessary to fulfill the
objectives of this Agreement.
16.21.2 Nondisclosure: The Party receiving Confidential or ProprietaryInformation (the “Receiving Party”) from the other Party (the “DisclosingParty”) hereby covenants that, for a period of 10 (ten) years after any
Confidential or Proprietary Information is received, to the following:
1. To protect and keep said Confidential and Proprietary Information in
strict confidence, using the same degree of care as it uses to protect itsown Confidential and Proprietary Information, but in no case should
the Receiving Party use any less than reasonable care:
2. To disclose the Confidential or Proprietary Information only on a
need to know basis and solely for the purpose specified in thisAgreement. Said Confidential or Proprietary Information shall be
disseminated by the Receiving Party only within the Receiving Party‟sorganization or to such third parties who agree to be bound by the
terms of this Agreement.
3. To not use the Confidential or Proprietary Information, in whole orin part, for any purpose other than the purpose of this Agreement
without the prior written consent of the Disclosing Party.
16.21.3 Property Rights: Any Confidential or Proprietary Information and
copies thereof disclosed by a Party to the other shall remain the property of the Disclosing Party and shall be returned by the Receiving Partyimmediately upon request. It is expressly understood and agreed by the
Parties that the disclosure and provision of Confidential or Proprietary
Information under this Agreement, by a Party to the other Party shall not beconstrued as granting to the Receiving Part, under the laws of any country,
any rights, whether express or implied by license or otherwise, on the
matters, inventions, discoveries, copyrights, trademarks, trade secrets, or
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 30/83
other intellectual property right to which such Confidential or Proprietary
Information pertains.
16.21.4 Limitation: Except as provided herein, the Receiving Party shall haveno obligation with respect to any Confidential or Proprietary Information
which:
1. Has come into the public domain prior to or after the disclosurethereof and in such case through no wrongful act of the Receiving
Party;
2. Is already known to the Receiving Party, as evidenced by written
documentation in the files of the Receiving Party or is independently
developed in good faith by an employee or employees of the Receiving
Party who did not have access to the Confidential or Proprietary
Information.
3. Is not properly designated or confirmed as Confidential or
Proprietary as required in Section 16.21.2 above.
4. Survival of Confidentiality Obligations: The rights and obligations
imposed by this Clause with respect to the use of Confidential orProprietary Information shall survive the termination of this
Agreement.
22. INTELLECTUAL PROPERTY RIGHTS
16.22.1 Rights Acquired Prior to Effective Date: Any intellectual property
rights in any protectable interest, including without limitation, inventions,
know-how, data, software, designs, customer lists, business plans, or anyother protectable interest, whether protected or entitled to protection underpatent, copyright, trademark, trade secret or any other category of intellectual
property protection, owned by either Party prior the Effective Date or
developed and/or acquired by said Party outside the scope of this Agreement
or shall be and remain the right of said Party.
16.22.2 Rights Resulting from Work Performed Pursuant this Agreement :
The ownership of or rights to any intellectual property resulting from
collective efforts of the Parties pursuant to the carrying out the Company
Business under this Agreement, shall be determined by the Parties in separate
agreement hereto.
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 31/83
16.23. SHAREHOLDERS' CONSENT
Where this Agreement provides that any particular transaction or matter
requires the consent, approval or agreement of any Shareholder, suchconsents approval or agreement shall be given subject to such terms that
Shareholder may impose and any breach of conditions by any person subject
thereto shall ipso facto be deemed to be a breach of the terms of this
Agreement.
16.24 PARTIES BOUND
16.24.1 The Company undertakes with each of the other Parties to be bound
by and comply with the terms and conditions of this Agreement insofar as the
same relate to the Company and to act in all respects as contemplated by this
Agreement.
16.24.2 Each of the parties undertakes with each of the others to exercise
their powers in relation to the Company so as to ensure that the Company
fully and promptly observes, performs and complies with its obligationsunder this Agreement.
16.24.3 Each of DEF and ABC undertakes with the other that whilst itremains a party to this Agreement it will not (except as expressly providedfor in this Agreement) agree to cast any voting rights exercisable in respect of
any of the shares held by it or a member of its Group, in accordance with the
directions, or subject to the consent of, any other person.
16.25 FURTHER ASSURANCE
ABC AND DEF further agrees not to deal with any third party directly orindirectly in any manner whatsoever in India relating to the Business and theProducts. ABC shall give DEF the right of first refusal in the event it desires
to source the Products from any third party.
IN WITNESS WHEREOF the parties hereto have hereunto set their respective
hands the day and year first above written:
SIGNED BY
for and on behalf of DEF
in the presence of
SIGNED BY
for and on behalf of ABC
in the presence of
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 32/83
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 33/83
JOINT VENTURE AGREEMENT
This Agreement is made on this ___________________ day of ______________,
__________________
BETWEEN
1. ABC, a company organized and existing under the laws of the Republic of India and having its
Registered Office at ______________(hereinafter referred to as “ABC” which expression shallunless repugnant to the context or meaning thereof include its successors, administrators and
permitted assigns) of the One Part;
And
2. DEF a company organized and existing under the laws of the Republic of India and having its
Registered Office at ___________________ (hereinafter referred to as “DEF” which expression
shall unless repugnant to the context or meaning thereof include its successors, administrators and
permitted assigns) of the Other Part.
(Wherever the context so permits or requires the expressions “ABC” and “DEF” are collectively
referred to as the “Parties” and either of them singly as “Party”).
WHEREAS
A. ABC is, inter alia, engaged in the business of _________ and has its manufacturing
facility at _____________
In addition to the aforesaid, the ABC Undertaking also includes plant utilities, necessary
industrial, administrative and social infrastructure for supporting the activities and operations
of the ABC Undertaking and current assets, benefits of existing contracts, operating Licenses,
concessions, intellectual properties owned by ABC and used for the benefit of the
Undertaking and all other intangible property rights and privileges pertaining or belonging to
the Undertaking.
B. DEF is, inter alia, engaged in the business of _________________ and having its
manufacturing facilities _____________
In addition to the above, the DEF Undertaking also includes plant utilities, necessary
industrial, administrative and social infrastructure for supporting the activities and operations
of the DEF Undertaking and current assets, benefits of existing contracts, operating Licenses,
concessions, intellectual properties owned by DEF and used for the benefit of the
Undertaking and all other intangible property rights and privileges pertaining or belonging to
the Undertaking.
C. With a view to emerging as a globally competitive manufacturer through economies of
scale, increase in efficiency and rationalization of operations and to generally enhance
stakeholders value, ABC and DEF have agreed to consolidate their respective undertakingsinto a single entity in the manner as contemplated hereinafter.
D. In order to undertake the Business, ABC is in the process of promoting a public company
with limited liability under the provisions of the Companies Act, 1956 under the name and
style of XYZ (the “Company” or “XYZ”) and to acquire therein the Undertakings, of ABC
and DEF as briefly described herein above and for the participation of the Parties in XYZ in
the manner as envisaged in this Agreement.
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 34/83
E. It is deemed necessary and expedient to enter into this Agreement for giving effect to the
consolidation of the two Undertakings as contemplated here in above and define the
relationship between the Parties inter se and with XYZ including conduct of business of
XYZ, pending grant of requisite approvals including of the concerned Financial Institutions
and banks (collectively the “Lenders”) and the shareholders of ABC and DEF respectively
and such other approvals, consents and authorizations as may be necessary or required to
give effect to the transactions and the joint venture contemplated herein (collectively
“Approvals”).
NOW THEREFORE IN CONSIDERATION OF THE PREMISES SET FORTH HEREINABOVE
AND OF THE MUTUAL COVENANTS AND UNDERTAKINGS SET FORTH HEREINAFTER
THE PARTIES HERETO HEREBY AGREE AND THIS AGREEMENT WITNESSETH AS
FOLLOWS :
1. Definitions and Interpretation
1.1 Definitions
In this Agreement unless the context otherwise requires the following expressions
shall have the meaning hereinafter respectively assigned to them:
“Agreement” means this Agreement as amended from time to time in accordance withthe provisions contained in this behalf in this Agreement.
"Agreed Proportions" means the ratio which the the Share holdings of the Parties
(together with their respective Associates, Investor Affliates and Party Lenders with
whom they have firm buy back agreement to purchase their share holding within a
period not exceeding 3 (three) years) in the Equity Capital bear to each other e.g. if
the percentage of Shareholding of one party is 55% and the other Party is 45% then
the agreed proportion as between them shall, be 55:45.
“Approvals” shall have the meaning ascribed thereto in Recital above.
“Articles” means the proposed Memorandum and Articles of Association of XYZ as
set out in Schedule 1.
“Associate” means in relation to a Party, any holding company or subsidiary direct or
indirect, of that Party or any other subsidiary or subsidiaries of any such holding
company or subsidiary or any company under common control, or any person holding
not less than 10% (ten percent) of such Party‟s issued and paidup equity share capital
(the “investment associate”), or any holding company or any other subsidiary or
subsidiaries of any such holding company or subsidiary of such investment associate,
whether situate in India or elsewhere in the world.
“Audited Accounts” mean the Auditors Report and audited accounts of the Company
for any financial year of the Company.
“Auditor‟ means such firm of Chartered Accountants as are appointed statutory
auditors of the Company from time to time.
“Board” means the board of directors of the Company.
“Budget” means the annual operating budget of the Company as approved and/or
modified from time to time by the Board.
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 35/83
“Business” shall have the meaning ascribed thereto in Clause 3.2 hereinafter.
“Business Plan” means the business plan for the Company as approved and/or
modified from time to time by the Board.
“Chairman” means the Chairman of the Board for the time being.
“Company” or “XYZ” shall have the meaning ascribed thereto in Recital D
hereinabove.
“Company Lenders” means term lending financial institutions, and banks who lend
and advance or agree to continue loans, advances and other financial facilities to the
company including working capital loans, advances and facilities, and as security for
whole or part of which they hold a charge on the whole or part of the XYZ
Undertaking (other than assets taken on lease and forming part of the XYZ
Undertaking) including current assets, and leasing finance companies who have
provided on lease equipment and other assets forming part of the XYZ Undertaking at
the Effective Date or the Vesting Date or at any time thereafter.
“Companies Act” means the Companies Act, 1956 as amended from time to time and
shall include any statutory re-enactment thereof.
“Control” means in relation to a company, where a person (or persons acting in
concert) has or has agreed to obtain direct or indirect control (1) of the affairs of that
company, or (2) over more than 50 per cent of the voting rights of shareholders in that
company which are ordinarily exercisable in general meting or (3) of the composition
of the board of directors of that company. For these purposes “persons acting in
concert” are persons which actively co-operate, pursuant to an agreement or
understanding (whether formal or informal) with a view to obtaining or consolidating
Control of that Company.
“Deed of Adherence” means a deed in the form set out in Schedule “II”.
"Directors" means the directors of the Company for the time being and shall include
their duly appointed alternates.
“Effective Date” shall have the meaning ascribed thereto in Clause 2.1.3.
"Encumbrance" means any mortgage, charge, lien, hypothecation, pledge, or any other
security interest or encumbrance.
"Equity Capital" means the issued and paid up equity share capital of the Company.
"FIs" means term lending financial institutions, development and other banks, finance
companies, leasing companies and financial and investment corporations.
“Undertakings” means the DEF Undertaking and the ABC Undertaking collectively.
“Financial Year” means the period of twelve months ending on the [31st March] or
any other day in each year or such other period as may be determined by the Board
from time to time or any time.
“Intellectual Property” means the all r ights and benefits of use and exploitation, to the
extent such rights and benefits are vested in or available to the parties and subject to
such restrictions as are applicable thereto, of all intangible assets relating to and
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 36/83
forming part of the business of their respective Undertakings including but not limited
to goodwill, trade marks, patents, technical know-how, processes, quality control
know-how, and processes, confidential information, basic and detailed engineering
drawings, civil, structural, mechanical, electrical and instrumentation drawings and
specifications, operation and maintenance manuals and safety manuals relating to the
operation and maintenance of manufacturing facilities, utilities and services facilities
of and relating to manufacture, processing and handling of the Products and the
marketing and sale thereof.
“Lead Bank” means in case of DEF, the Canara Bank, and in the case of ABC,, the
State Bank of Patiala, who act as leaders of the respective consortiums of banks who
have lent and advanced moneys to DEF and ABC respectively for meeting the
working capital requirements of their respective Undertakings.
“Lead Institution” means in case of DEF, the ICICI Limited (“ICICI”) and in the case
of ABC, the Industrial Development Bank of India Limited („IDBI”), who act as
leaders of the respective consortiums of financial institutions who have lent and
advanced term loans to DEF and ABC respectively for their respective Undertakings.
“Managing Director” means the Managing Director from time to time of the
Company.
“Operating Licenses” means all licenses, permits, consents, approvals, and
registrations required or necessary under applicable laws and regulations for
undertaking and carrying on the Business including manufacture, processing,
handling, marketing and sale of the Products and all operations at XYZ Undertaking
and the maintenance thereof.
“Party Lenders” means term lending financial institutions and banks who have lent
and advanced loans and provided fiscal facilities including working capital loans and
advances and facilities to DEF and ABC respectively for their respective
Undertakings and as security, for the whole or part of which, they hold a charge on the
whole or part of the ABC Undertaking or DEF undertaking (other than assets taken on
lease and forming part of their respective Undertakings) including current assets, as
the case may be, and leasing finance companies who have provided on leaseequipment and other assets forming part of the respective Undertakings of ABC and
DEF respectively, at the Effective Date or the Vesting Date or at any time thereafter.
“Products” means ____________ -.
“Remaining Shareholder” means, for the purposes of Clause 6, where the transferor is
DEF and its Associates, ABC, and where the Transferor is ABC and its Associates,
DEF.
“Shareholders” mean all persons holding Shares for the time being in the issued and
subscribed Equity capital of the Company.
“Shares” mean the equity shares in the Equity Capital of the Company.
“Transferee” means for the purposes of Clause 6, a person to whom a Shareholder
wishes to transfer all or some of its Shares.
“Transferor” means, for the purposes of Clause 6, a shareholder wishing to transfer all
or some of its Shares.
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 37/83
“Transfer Agreements” shall have the meaning ascribed thereto in Clause 3.3
“Transfer Date” means the date (i) in relation to the DEF Undertaking, on which the
right and title to whole or substantially the whole of the DEF Undertaking is
transferred to and vested in the XYZ and (ii) in relation to the ABC Undertaking, on
which the right and title to whole or substantially the whole of the ABC Undertaking
is transferred to and vested in the XYZ
“XYZ Undertaking” means DEF Undertaking and ABC Undertaking collectively.
“Vesting Date” means the earlier of the date -
(i) on and from which the business of the ABC Undertaking and DEF
Undertaking is commenced to be carried on or is deemed to be carried on by
XYZ on its own account, or
(ii) on which ABC and DEF have received all of the following
approvals/consents:
(a) Party Lenders have accorded their consent to DEF and ABC
respectively for the transfer and vesting their respective Undertakings
into XYZ;
(b) Consent/approval of the respective Board of Directors and
shareholders of DEF and ABC to the transfer and vesting their
respective Undertakings into XYZ; and
(c) Consent/no objection by the Income tax authorities to DEF under
Chapter XX-A of the Income tax Act, 1961 to DEF for the transfer and
vesting of the immoveable property comprised in the DEF Undertaking
into XYZ.
1.2 Construction of certain references
1.2.1 Except as the context otherwise requires, references in this Agreement to:
(i) a document in “agreed terms” shall be to a document in writing in the terms
agreed between the Parties thereto and signed by them or on their behalf by
their duly authorised representatives;
(ii) information means books, records or other information in any form
including in writing on paper, electronically stored data, magnetic media.
(iii) “this Agreement” shall be to this Agreement as from time to time
amended, modified or superseded and shall include its Schedules.
(iv) a “Clause” or “Schedule” shall, unless otherwise stated, be to a Clause or
(as the case may be ) Schedule of this Agreement.
(iv) a time of day shall be to Indian time;
(vi) the words denoting singular shall include plural and vice versa, and words
denoting natural persons shall include firms, partnerships, companies and other
bodies corporate and entities whether or not having a separate legal activity);
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 38/83
(vii) any agreement, consent, approval, authorisation, notice, communication or
information required under or pursuant to this Agreement from or by any Party
to the other of them shall be valid and effectual only if it is in writing and
under the hands of duly authorised representative of such Party and not
otherwise; and
(viii) any reference to a statute or statutory provision shall include such statute
or provision as is from time to time modified or re-enacted or consolidated so
far as such modification or re-enactment or consolidation applies or is capable
of applying to any transaction entered into hereunder or pursuant hereto.
1.2.2 Headings are for convenience of reference only and shall be ignored in the
construction or interpretation of this Agreement.
2. Conditions Precedent
2.1 Effective Date
2.1.1 The conditions precedent to performance of obligations of the Parties under
Clause 4.2, 4.3, 4.4, 4.5 and 4.6 and Articles 6,7,8 and 10 of this Agreement are:
(i) receipt of all consents and approvals from Party Lenders for transfer of DEFUndertaking and ABC Undertaking to XYZ and assignment of debt pertaining
to DEF Undertaking and ABC Undertaking as on the vesting Date on terms
and to the extent as acceptable to DEF and ABC;
(ii) receipt by DEF and ABC respectively of all corporate consents and
approvals for transfer of DEF Undertaking and ABC Undertaking to XYZ on
terms acceptable to DEF and ABC; and
(iii) receipt by XYZ of all consents and approvals including from Company
Lenders for issue of Shares to DEF and ABC in consideration of the Transfer
of DEF Undertaking and ABC Undertaking to XYZ.
2.1.2 DEF and ABC may in their discretion waive all or any of the conditions setforth
in Clause 2.1.1 above.
2.1.3 The date on which all of the conditions setforth in Clause 2.1.1 are satisfied or
are waived by DEF and ABC pursuant to clause 2.1.2 above, is for the sake of brevity
hereinafter referred to as the “Effective Date”.
2.2 Responsibility of the Parties
2.2.1 Each of ABC and DEF shall make requisite applications to their respective
Lenders for grant of requisite approvals and consents for transfer and vesting of ABC
Undertaking and DEF Undertaking and assignment of associated debt respectively to
XYZ.
2.2.2 Each Party and/or XYZ shall make requisite applications to the concerned GOI
and other governmental and regulatory authorities, Central or State, for grant of
requisite approvals for transfer of all Operating Licenses to the Company and/or issue
of new Operating Licenses to XYZ.
2.2.3 Parties shall take necessary steps including applying for and making good faith
efforts to obtain requisite approvals and all procedural and statutory compliances for
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 39/83
the transfer and vesting of the Undertakings in XYZ in accordance with law and in a
tax efficient and mutually beneficial manner.
2.2.4 Each Party undertakes to use all reasonable endeavors to procure that the
condition precedent setforth in clause 2.1.1 is satisfied as soon as reasonably
practicable. All requests and enquires from Lenders shall be dealt with by the
receiving Party in consultation with the other of them. Parties shall co-operate with
each other and provide all necessary information and assistance to the other as may
reasonably required by Lenders.
2.3 Parties acknowledge that earliest occurrence of the Vesting Date is in their mutual
interest and they shall accordingly take all such steps and do all such acts deeds and things as
may reasonably be necessary and required for the said purpose.
2.4 Non satisfaction
If the Vesting Date has not occurred by _________ then this Agreement (other than the provisions
of Clause ___) may be terminated by either Party by a communication in writing to the other Party
without being liable for the same in any manner whatsoever.
3. Incorporation of Company
3.1 ABC shall promote and incorporate XYZ as a public company with limited liability under
the Companies Act, with its Registered Office in the State of Uttar Pradesh.
3.2 The main objects of XYZ shall, inter alia, be to engage in the business of production,
marketing, sale and distribution of the Products and to that end Parties would cause XYZ to
acquire the DEF Undertaking and ABC Undertaking.
3.3 Parties shall cause XYZ to enter into appropriate agreements with DEF and ABC for the
transfer of DEF Undertaking and ABC Undertaking respectively in form and content
including consideration as agreed between the Parties, the XYZ and the Party Lenders (the“Transfer Agreements”).
The transfer and vesting of Undertakings in XYZ shall be free from all encumbrances
charges and liens, save and except as is otherwise expressly setforth in the Transfer
Agreements.
3.4 Parties agree that on and from the Effective Date and till the Vesting Date:
3. 4.1 the business and affairs of the their respective Undertaking shall be conducted
in the ordinary course of business and there shall be no sale, transfer, assignment and
nor shall there be created any lien, charge or eEncumbrances on the whole or any part
of the their respective Undertakings including their assets and stocks other than in the
normal course of business and unless it is necessary in the interest of the relevant
uUndertakings; and
3. 4.2 Neither Party will prior to the Transfer Date, save and except with the previous
consent of the Other party or in the normal course of business :
(i) create, expend, grant or issue or agree to create, expend, grant of or issue
any Encumbrances on whole or any part of its Undertakings;
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 40/83
(ii) enter into any long term, material or abnormal capital commitments in
respect of its respective Undertakings other than in the ordinary course of the
business;
(iii) do or suffer anything whereby their financial position of Undertakings
shall be rendered less favorable than at the date hereof save and except in the
ordinary course of business;
(iv) cause to pass any resolution in its Board or any General Meeting creatingor granting any special rights or privileges in favor of any person other than
XYZ in respect of the whole or any part of its Undertakings;
(v) pay or, agree to pay all or any of the officers or workmen of its
Undertakings any additional or further remuneration, bonus or allowance other
than in the ordinary course of business;
(vi) dispose of any material part of the fixed assets or other assets of its
Undertakings other than in the ordinary course of business.
3.5 Each Party shall bear its own costs and expenses (including travel and accommodation
expenses, salaries, allowances and out-of-pocket expenses) involved in the preparation,
negotiation and execution of this Agreement. All expenses, costs, duties and levies forincorporation of XYZ and on and from the date of incorporation thereof shall be borne by the
Parties in equal proportion and the parties shall procure that the Company (to the extent
certified by the Auditors) to reimburse to the Party incurring such expenses, the same.
4. Share Capital OF THE COMPANY
4.1 Authorised Capital
The initial authorised share capital of XYZ shall be Rs.1,00,000 (Rupees one lakh)
divided into 10,0000 (ten thousand) equity shares of the par value of Rs.10.00
(Rupees ten) each. After the Effective Date the authorized share capital of XYZ shall
be increased to a level consistent with the capital requirements of XYZ having regard
to the consideration payable by XYZ for the Undertakings and the funding pattern
approved by the company Lenders. Such increase in authorised share Capital of XYZ
could be partly equity and partly unclassified or preference share capital as the Board
may deem appropriate and is permissible in law.
4.2 Issued and Paidup Share Capital
4.2.1 The issued and paid up Equity Capital of XYZ shall be determined on the basis
of consideration payable by XYZ for the Undertakings.
4.2.2 The initial issued and paidup Equity Capital shall be issued for consideration
other than cash and accordingly each Party shall be issued, subject to Clause 4.2.3
below, such number of Shares in the Equity Capital as is agreed between the Parties asconsideration payable by the Company to such Party for its Undertaking pursuant to
the relevant Transfer Agreement provided, however the ratio of Share holding of the
Parties in such initial issued and paidup Equity Capital shall be as follows :
4.2.3 Notwithstanding anything to the contrary contained in Clause 4.2.2 above, in the
event Party Lenders seek issue of Shares in the Equity Capital of the Company in
satisfaction of whole or part of the debt owed to them by a Party (the “Party Debt”)
the Shares to be issued to such Party Lenders on account of such conversion of Party
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 41/83
Debt (the “FI Shares”) shall be reduced from the number of Shares to be issued or
allotted to such Party pursuant to Clause 4.2.2 above and upon such issue and
allotment of Shares to party Lenders the Agreed Proportions shall be adjusted to
reflect the same.
4.3 Additional Capital
4.3.1 Subject to provisions of Clause 4.4, for business exigencies at a future date, the
Parties agree in principle to the following:
(i) dilution of their respective shareholding to less than the percentage
contemplated by Clauses 4.2.2 and 4.2.3 above, and
(ii) listing of the shares of the Company on the Stock Exchanges in India.
4.3.2 Subject to the provisions of Clause 4.3.1 above
(i) the ratio of the combined equity Share holding of each Party hereto together
with the equity share holding of its Associates and Investor Affiliates and any
of its Party Lenders, who had converted part of their debt into equity pursuant
to Clause 4.2.3 above and who have entered into with such Party a firm buy
back agreement for the sale of their Share holding by such Party not later thanfive years from the date of this Agreement shall be basis for determination of
Agreed Proportions;
(ii) the listing of the Shares of the Company on the Stock Exchanges in India
would be by mutual consent of the Parties or as agreed between the Parties and
Company Lenders or as envisaged in the Business Plan of Company as
approved by its Board or as otherwise provided in this Agreement; and
(iii) Neither Party shall without the prior consent of the Other Party acquire any
Shares out of the Shares issued by the Company for securing the listing of theCompany‟s Shares on Stock Exchange(s) in India or elsewhere or from the
Party Lenders of the Other Party or any third party save and except as
otherwise expressly permitted by this Agreement.
4.4 Rights Issue
4.4.1 In case of a Rights Issue of Shares (“Rights Issue”) in accordance with this
Agreement, the Company shall offer Shares in Rights Issue (the “Rights Shares”) to
the existing shareholders in proportion to their existing share holding in the Company
in accordance with the Companies Act. A Party shall be entitled to subscribe either
itself to its entitlement of such Rights shares or to renounce in favor of its Associates
or Investor Affiliates (who agree to be bound in writing by the terms of this
Agreement) or the other Party to subscribe to its entitlement of such Rights Shares.
4.4.2 If either Party desires to get its entitlement of Rights Shares (the “non -subscribing party”) funded, it may renounce in favor of any Banks, FIs mutual funds
and any other financier (the “Investor Affiliate”) to subscribe to its entitlement of
Rights Shares (the “Loan Shares”) provided (i) such Investor Affiliate and the Non -
Subscribing party shall have entered into a firm buy-back agreement whereby the
Investor Affiliate s) has agreed to sell and the Non-Subscribing Party has agreed to
buy back such Loan Shares within a period not exceeding 3 (three) years from the date
of allotment of the Loan Shares to such Investor Affiliate (s) by the Company and (ii)
the Investor Affiliate (s) shall not be entitled to transfer, assign, sell or otherwise
encumber or dispose off or transfer such Loan Shares in any manner whatsoever
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 42/83
during the said 3 (three) year period without giving to the other Party the right of first
refusal in accordance with Clause 6 below. During the said 3 (three) year period for so
long as the Investor Affiliate (s) holds the Loan Shares, for the purposes of
determining the rights of the Non-subscribing Party under this Agreement, the
aggregate of the Shareholding of such Non-Subscribing Party and Investor Affiliate
(s) shall be deemed to be the Share holding of such Non-Subscribing Party.
4.4.3 Should the Non-Subscribing Party fail to acquire the Loan Shares within the 5
(five) year period referred to in Clause 4.4.2 above, unless otherwise mutually agreed
between the Parties , the Investor(s) shall be entitled to retain such Loan Shares in its
own right but subject always to the provisions of Clause 6 below, and in such an event
the Agreed Proportion shall be adjusted by deduction of the Loan Shares so retained
or sold to a person other than the Non-Subscribing pParty and the rights of the parties
under this Agreement shall be adjusted accordingly.
4.5 Unless otherwise agreed by DEF and ABC in writing, any additional issue of Shares by
the Company in its Equity Capital (other than a Rights Issue) shall be offered and issued to
the Parties in the Agreed Proportions.
4.6 Notwithstanding anything to the contrary contained in Clause 4.4 above if the Parties
shall fail to subscribe and pay or cause their Associates or Investor Affiliates to subscribe and
pay for any of the Rights Shares offered to it in accordance with this Agreement (the"Rejected Shares") within such period not being less than 30 (thirty) days from the date of
offer of Rights Shares by the Company, as the Board may determine, the following shall
apply to the disposal of such Rejected Shares:
4.6.1 The Board shall offer the Rejected Shares to all the other Shareholders (the“Other Shareholders”) in proportion to their respective Shareholding in the Company
and such Shareholders shall be entitled to subscribe to such Rejected Shares
themselves, or if such Shareholder is a Party to this Agreement, to cause its
Associate(s), nominated in this behalf by it and who agree(s) in writing to be bound
by the terms of this Agreement, to subscribe to the same within the period prescribed
in this behalf by the Board.
4.6.2 Any Other Shareholder receiving an offer pursuant to Clause 4.6.1 above shallbe entitled to apply for issue and allotment of additional shares i.e. for more shares
than the number of Shares it is entitled in a Rights Issue on the basis of its existing
Share holding. In case of any Rejected Shares being available after issue and
allotment to the Other Shareholders in proportion to their respective Share holding in
the Company as on the date of offer of Rejected Shares to them (the “Surplus
Shares”), such Surplus Shares shall be issued and allotted to such of the Other
Shareholders who had applied for additional Shares in proportion to their existing
Share holding as on the date of offer pursuant to Clause 4.6.1.
4.6.3 Any Rejected Shares, not accepted by any Share holders and/or their respective
Associates and/or Investor Affiliates , may be offered by the Board to any third party
or parties on terms no more favorable than those offered to the other Shareholders or,
in the alternative, the Board may in its discretion decide to seek listing of Shares of the Company on one or more Stock exchanges in India. In such an event the
provisions of Clause 5 shall apply.
4.6.4 For the purposes of Clauses 4.5 and 4.6 any offer to the Shareholders to
subscribe to any Shares must be made in writing by the Board. Any Party or its
Associate(s) and/or Investor Affiliates , nominated in this behalf by such Party,
wishing to accept such offer from the Board must do so by giving notice in writing
and which notice must be received by the Board no later than 30 (thirty) days after the
date the offer was made by the Board.
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 43/83
4.7 The issue and allotment of shares by the Company to the Parties and/or to their
Associates/Investor Affiliates pursuant to Clause 4.2 above shall be only upon the transfer
and vesting of their respective Undertakings in the Company in accordance with Transfer
Agreements to be entered into between DEF and the Company and ABC and the Company
for their respective Undertakings.
4.8 The Parties and other person(s) subscribing to the Shares pursuant hereto shall hold their
Shares subject to the Memorandum and Articles of Association of the Company, this
Agreement, the applicable laws and approvals and such other conditions as may be
prescribed by the Company in general meeting or the Board.
4.9 Notwithstanding anything to the contrary contained in this Agreement DEF and ABC
shall hold directly and in their own respective names not less than 26% (twenty six percent)
each of the issued and paidup Share capital of the Company i.e. excluding the Share holding
of their respective Associates and Investor Affiliates .
5. Listing of Shares on Stock Exchanges
5.1 In the event of
5.1.1 the Parties agreeing; or
5.1.2 a Party requiring pursuant to Clause 6.4(a); or
5.1.3 the Board deciding in accordance with the provisions of Clause 4.6.3 to seek
listing of the shares on one or more Stock Exchanges in India, the provisions of
Clause 5.2 shall apply.
5.2 In the event:
5.2.1 the Parties mutually agreed to seek listing of Shares for any reason other than
those setforth in Clauses 5.1.2 and 5.1.3, the Parties shall cause the Company to issue
and offer such number of additional shares as may be necessary to list the Shares of
the Company on one or more Stock Exchanges in India or abroad in accordance withapplicable laws and regulations and to make public offer thereof for subscription.
5.2.2 In the event of the Shares being required to be listed for the reason setforth in
Clause 5.1.2 above, the Shares held by the Selling Member not being less than the
minimum number required for securing listing on a Stock Exchange shall be offered
by such Selling Member to public for sale.
5.2.3 In the event of the Shares being required by the Board to be listed for the reason
setforth in Clause 5.1.3, the Board shall offer the Shares available pursuant to Clause
4.6.3 for subscription to public provided the number of shares so available are
sufficient to meet the minimum number required under applicable laws and regulation
to secure listing of the Shares on one or more Stock Exchanges in India or abroad.
5.2.4 The Board shall determine the Stock Exchange or Exchanges on which the
Company shall seek listing of its shares and shall offer the shares, required to be
offered for securing such listing, to public through prospectus in accordance with the
procedure prescribed, and the applicable laws and regulations, for cash at par or such
premium as the Board may in its sole discretion determine save and except in case of
offer for the reason setforth in Clause 5.1.2 above, in which case subject to applicable
regulations the offer price shall be as determined by he Selling Party.
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 44/83
5.2.5 Costs of all public offer of Shares pursuant to this Clause 5.2 shall be met and be
borne by the Company
5.3 For the purposes of seeking listing of Shares of the Company on one or more Stock
Exchange(s) pursuant to this Agreement, the Parties agree to cause (subject to it being
feasible under applicable regulations) the Board and the Company to undertake the same
through book building process in accordance with the applicable regulations and to seek
listing of Shares through such book building process not later than 3 (three) months from the
date the Board determines or the parties agree or a Party requires listing, as the case may be.
5.4 The Parties agree and covenant that in the event of shares of the Company being required
to be listed in one or more Stock Exchanges pursuant to any provision of this Agreement, the
Parties shall cause the company to amend its Articles of Association to the extent necessary
and required to permit listing of the shares of the Company and to facilitate offer of Shares to
public for the said purpose. Parties agree to do all such acts, deeds and things as may be
necessary or required or incidental to secure listing of shares of the Company on one or more
Stock Exchanges in India or abroad including for offer of shares to public for the purpose.
6. TRANSFER AND SALE OF SHARES
6.1(a) Notwithstanding anything to the contrary contained herein, no Party shall, nor permit
its Associates and Investor Affiliates to sell, transfer or assign or create any Encumbrance on(except to the extent required by the Lenders) the whole or part of its share holding in the
Company save and except in accordance with and as expressly provided in this Agreement.
(b) A party and its Associates and Investor Affiliate may assign, or create any
Encumbrance on all or any of the Shares held by it/them in favor of any FIs or other
lenders (the "Encumbrance Holder") provided it is a term of such Encumbrance that the
Encumbrance Holder thereof shall be bound by the terms of this Agreement and in the
event of any sale of any of the Shares which are subject to any Encumbrance (the
"Encumbered Shares") by such encumbrance holder, the same shall always be subject to
the right of first refusal of the Other party under and in accordance with Clauses 6.3 and
6.4.
6.2 Parties covenant that they shall abide by the provisions of this Agreement and agree andundertake that they shall cause the Company to not register any transfer of Shares in
contravention of any provision of this Agreement.
6.3 subject to Clause 6.5 below, in the event of either DEF or ABC or their respective
Associate(s) or Investor Affiliates holding Shares in the Equity Capital desiring to sell or
dispose of its/their share holding in the Company, it shall give to the other of them the right
of first refusal in the manner as provided in Clause 6.4 hereinafter. If on account of
applicable laws or regulations either Party or its Associates are unable to acquire shares so
offered to it, such Party will be entitled to designate a person of its choice to whom the shares
in whole or in part shall be transferred.
6.4 Right of First Refusal.
(a) Subject to Clauses 6.1(b) and 6.5 neither DEF and/or its Associate and/or InvestorAffiliates nor ABC and/or its Associate and/or Investor Affiliates (the “Selling
Member”) shall sell, transfer, gift, or otherwise dispose of in any way or manner any
of its Shares until (i) it has delivered to the Company and to the other of them (the
"Remaining Party") an irrevocable written offer to sell all or part of its share holding
(the "offer") in the Company ("Sale Shares") at a price (the "Offer Price") stated in the
offer and (ii) the Remaining Party shall have failed to accept the offer for all of the
Sale Shares within 90 (ninety) days after the receipt of the offer. The Remaining Party
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 45/83
shall convey its acceptance, if any, to the Selling Member within 90 (ninety) days of
receipt of the offer by it. If the Remaining Party accepts the offer but does not agree to
the Offer Price and the Selling Member and the Remaining Member are unable to
mutually agree on the sale price within 60 (sixty) days of the date of acceptance of the
Offer by the Remaining Party, the Selling Member shall be obliged to sell all the Sale
shares to a third Party selected by the Remaining Party at the Offer Price and if the
Remaining Party shall fail to procure any third party to purchase the Sale Shares
within 30 (thirty) days of his failure to accept the Offer Price or to mutually agree on
the sale price with the Selling member, which ever is later, the Selling Member shall
be entitled to sell the Sale Shares to any third party at price and on terms not morefavorable than those setforth in the offer or, in its discretion, sell on a Stock Exchange
in India the Sale Shares together with such further Shares from its Shares holding in
the Company as is necessary or required to secure listing of the Company's Shares on
Stock Exchange(s) in India or such further Shares from its holding as the Selling
Member may deem appropriate. In the event of the Selling Member deciding to sell
the Sale Shares on the Stock Exchange as setforth in the immediately preceding
sentence, the parties shall cause the Company to do all such acts, deeds and things as
are necessary under applicable regulations including amendments to the articles to
enable such sale on the Stock Exchange(s) and the listing of the Shares thereon.
(b) In the event of Selling Member exercising pursuant to sub-clause (a) above the
option to sell the whole or any part of its Share holding on Stock Exchange and
provided the Shares proposed to be offered for sale to public by the Selling memberare sufficient in number to secure listing of the Company's Shares on Stock
Exchange(s), the provisions of clause 5 shall apply.
(c) Parties shall cause the Company to take all procedural steps necessary for making
such sale by public offer on Stock Exchange(s) pursuant to and in accordance with
Clause 6.4 (a) read with Clause 5 expeditiously.
(d) On acceptance of Offer, within 60 days thereof the sale and purchase of the SaleShares shall take place (the “Closing”). At the Closing the Remaining Party shall pay
or cause the person or persons nominated by it to purchase and pay the Offer Price for
the Sale Shares in full in cash against delivery of the Sale Shares together with such
number of duly executed share transfer deeds (with name of the Transferee left blank)
as the Remaining Member or its such nominee may require.
(e) if the transfer of the Sale Shares requires any consent or approval or notice, the
period prescribed for cClosing under sub-clause (d) above shall be extended to the
earlier of (i) the date when the requisite consents/approvals are obtained and/or expiry
of the notice period, or (ii) the end of the 3 (three) calendar months immediately
following the month in which the Remaining Member conveyed its irrevocable
written acceptance of the offer in accordance with sub-clause (a) above. If within the
said 3 (three) month period described in the immediately preceding sentence the
Selling Member or the Remaining Member, as the case may be, is unable to obtain
any requisite consent/approval for transfer or purchase of the Sale Shares and
provided notice period, if any, prescribed under any applicable regulations has
expired, the Selling Member's irrevocable written offer to sell the Sale Shares shall,
unless extended by mutual agreement of the Parties, be deemed to have expired andthe Selling Member shall not be entitled to transfer the Shares to any person except by
again making an irrevocable written offer under and in accordance with sub-clause (a)
above.
6.5 If any person purports to acquire any of the Shares, or any interest therein, in a manner
not specifically permitted by this Agreement (the "Default Shares"), whether by operation of
law or by voluntary act or otherwise, the Remaining Party or any person(s) nominated by the
Remaining Party shall have the right, but not the obligation, to purchase at lower of (i) the
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 46/83
Book Value minus 10% of Book Value or (ii) the apparent consideration paid therefor, any or
all of the Default Shares purported to have been thus acquired. However, the failure of the
Remaining Party to purchase the Default Shares at lower of the Book Value minus 10% of
Book Value or the apparent consideration paid therefor shall not be deemed or construed to
validate the purported transfer of the Default Shares in violation of this Agreement, which
purported transfer shall be null and void. As used in this Clause 6.5, "book value" shall mean
the book value of the Default Shares in question determined in accordance with the last
available audited balance sheet of the Company. The determination of book value by a
chartered public accountant or firm of chartered public accountants then acting as the
Company's regular independent statutory auditors shall be final, conclusive, and binding onthe Company, the Parties and the person(s) purporting to have acquired the Default Shares in
violation of this Agreement, and their respective successors in interest.
6.65 Provisions of Clauses 6.1, 6.2, 6.3 and 6.4 above shall not apply to any transfer of
Shares inter-se between a Party and its Associates and/or Investor Affiliates or inter se
between its Associates and/or between Investor Affiliates and Associates who have agreed to
be bound by the terms of this Agreement and the same shall not be subject to the right of
preemption and first refusal contained therein and no such transfer shall be deemed to be nor
shall it constitute a breach of this Agreement.
6.7 Notwithstanding anything to the contrary contained in this Agreement a party shall,
before transferring to any third party its Share holding or control in an Associate holding any
Shares, cause such Associate to transfer or otherwise assign its right, title and interest in the
shares to itself or to any other Associate who agrees in writing to be bound by the terms of
this Agreement. In the event of a Party transferring to any third party its Share holding or
control in such Associate in contravention of this clause 6 and such contravention is not
remedied within 30 days of the date of receipt of notice in this behalf from the other party,
such Associate and the defaulting Party shall be deemed to have offered the shares of the
Company held by such Associate for sale to the other Party irrevocably in the manner
provided in Clause 6.5.
7. REGULATION OF RIGHTS AND CONDUCT OF BUSINESS
7.1 The Parties acknowledge that their respective rights in the Company shall be regulated by
this Agreement and the Articles and agree and undertake to be bound by and comply with the
provisions of this Agreement and the Articles . The Parties shall procure that the Company
acts in accordance with this Agreement and the Articles and that the business of the
Company is confined to the Business in accordance with the Business Plans and Budgets .
7.2 The Parties shall at all times respectively endeavor to the best of their ability to promote
the Business of the Company.
7.3 The Business of the Company shall at all times be conducted independently from the
business of the Parties, but subject thereto the Company may in its discretion transact
business with any of the Parties, including the purchase of goods and/or provision of services
supplied by any of the Parties provided such goods or services are supplied on terms
mutually agreed between ABC and DEF and are competitive. Without prejudice to the
foregoing the Company may but shall not be obliged to purchase polyester chips from FlexChemicals Ltd., a Associate of DEF and may sell any of the Products to DEF on terms
mutually agreed between DEF, ABC and the Company.
7.4 Except as ABC and DEF may otherwise agree in writing or save as otherwise provided or
contemplated in this Agreement or in the Business Plan and/or Budget, ABC and DEF shall
exercise their rights and powers in relation to the Company so as to ensure and procure that:
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 47/83
(a) the Company carries on and conducts its Business and affairs in a proper and
efficient manner and for its own benefit and in accordance with the Business Plan and
Budget;
(b) save as may be agreed between ABC and DEF, the Company shall not enter into
any agreement or arrangement with either Party or its Associates restricting its
competitive freedom to take goods and services by such means and from such persons
and on such terms as it may think fit;
(c) the Business of the Company shall be carried on pursuant to policies laid down
from time to time by the Board;
(d) Company shall maintain adequate insurance against all risks usually insured
against by companies carrying on the same or similar business and (without prejudice
to the generality of the foregoing) for the full replacement or reinstatement value of all
its assets of an insurable value;
(e) the Company shall keep books of account and therein make true and fair entries of
all its dealings and transactions of and in relation to its business so as to give true and
fair view of the business and affairs of the Company;
(f) Company shall adopt such accounting policies consistent with the Companies Actas may from time to time be generally acceptable in India;
(g) Company will provide ABC and DEF or to their respective designated nominees
on the Board within 4 weeks after the end of each month with unaudited management
accounts for such month, and such other data and information regarding its business
and operations as may reasonably be requested by ABC and DEF;
(h) the Company shall prepare such accounts in respect of each accounting reference
period and Financial year as are required by statute and applicable regulations and
procure that such accounts are audited as soon as practicable and in any event not later
than the period permitted under the relevant statute; and
(i) the Company will use its best endeavors to maintain the approvals, consents or
licenses required for carrying on its business in full force and effect.
8. BOARD OF DIRECTORS AND MANAGEMENT OF THE COMPANY
8.1 The Company shall have a Board of Directors (the “Board”) which shall be responsible
for the overall policy and the conduct of the business, affairs and operations of the Company
except to the extent that applicable law, the Articles and this Agreement allocate
responsibility over any particular matter to any of its members or officers or otherwise. The
Board shall be entitled to delegate any of its powers and functions to such of its committees
or directors or to such officers of the Company as may be deemed appropriate by the Board
but subject always to applicable laws and regulations, the Articles and this Agreement.
8.2 The Board shall, exclusive of alternate Directors, comprise and be not less than 9 (nine)
and nor more than 15 Directors of whom not more than one third shall be non-retiring
Directors.
8.3(a) Unless otherwise mutually agreed by the Parties and subject to the provisions of
Clause 10.2 so long as ABC and DEF are Shareholders, ABC and DEF shall be entitled to
appoint one non-retiring Director each with right to remove and replace or DEFl any vacancy
howsoever caused in their office by a communication in writing to the Company.
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 48/83
(b) In the event
(i) the aggregate share holding of DEF and its Associates and Investor AfDEFiates
including for the purposes of this Clause 8.3(b) share holding of any Party Lenders
allotted Shares pursuant to Clause 4.2.3 (the “Lender Shares”) is not less than 45% of
the issued and paidup Equity Capital,
(ii) DEF and/or its Associate(s) have a firm and subsisting buy back arrangement with
the Party Lenders referred to in Clause 8.3(b)(i) above whereunder such Lender sharesheld by such Party Lenders is required to be acquired by DEF and/or its Associate(s)
not late than 3 (three) years from the date of this Agreement and
(iii) the aggregate Share holding of ABC and its Associates and Investor Affiliates is
not less than 55% of the issued and paidup Equity Capital.
(iv) none of Party Lenders have appointed any nominee director on the Board by
virtue of their share holding, the representation of the Parties on the Board shall be in
equal proportion. In the event any of the conditions setforth in the preceding sentence
of this Clause 8.3(b) is not satisfied, the representation of the Parties on the Board
shall, subject to provisions of Clause 8.4 be in proportion to their respective share
holding in the issued and paidup Equity Capital.
The Chairman
8.4. Unless otherwise mutually agreed between the Parties, so long as DEF is a shareholder,
_________ shall be the Chairman of the Board subject, however, to Clause 10 below. The
Chairman of the Board shall be non-executive and shall not have a second or casting vote at
meetings of the Board or any Committee thereof or the meetings of Shareholders where the
Chairman presides.
8.5 The Chairman shall be ex-officio Chairman of general meetings of the Company in
accordance with applicable provisions of the Act and the Articles of Association. At all
Board meetings if the Chairman is present he shall preside, and in his absence the Managing
Director shall be elected as Chairman for that meeting and shall preside and in the absence of
the Managing Director, the Board may elect one of them to be the Chairman for that meeting.
Managing Director and Senior Managers
8.6 The Company shall have a Managing Director (the “MD”) who shall be responsible for
the conduct of the day to day management, business and affairs of the Company. Subject to
the provisions of Clause 10 the MD shall be __________ and if for any reason the said
_________ ceases to be MD, a nominee of ABC approved by the Board shall be appointed as
MD. The Parties shall procure that the said _________ or the person selected as aforesaid, as
the case may be, is appointed by the Board as MD. Senior Managers and other direct reports
of the MD in the Company ("Senior Managers") shall be selected by the MD.
8.7 The MD shall be delegated by the Board adequate power and authority to undertake,conduct and carry on the day to day management, business and affairs of Company. The
Parties shall procure that the Board delegates appropriate powers to the MD to discharge his
functions and duties. MD shall report to and function subject to the supervision, direction and
control of the Board.
8.8 Senior Managers shall be appointed by the MD and shall report to him. MD shall assignto the Senior Managers their duties and functions.
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 49/83
The Secretary
8.9 The Company shall have a Secretary as defined in the Companies Act. The Executive
Committee shall select the Secretary and recommend him to the Board for appointment. The
Board may appoint the person so recommended as Secretary, if found suitable by it.
8.10 The responsibilities of the Secretary shall include compliances in accordance with the
Companies Act and maintenance of statutory records as required by the Companies Act.
8.11 If any Party is not satisfied with the performance of the Secretary, it shall be entitled to
require his removal. On such requisition the Parties shall cause their respective nominees on
the Board to vote and remove the Secretary from his office. In the event of such removal,
such person's replacement shall be appointed in accordance with the procedure set out herein.
Nominee Director
8.12 The right of nomination conferred on a Party hereunder shall include the right to require
the other Party to procure that the Board and the Company shall remove at any time and from
time to time from office such person nominated by that Party as a Director and the right of
that Party at any time and from time to time to determine the period during which such
person shall hold the office of Director.
8.13 Whenever a person ceases to be a Director or any vacancy shall occur in his office for
any reason whatsoever, the Party who had nominated him shall be entitled to nominate
forthwith another person for appointment as Director in the vacancy so caused. The Parties
shall procure the appointment of such nominee as a Director.
Alternate Director
8.14 Alternate Directors to be appointed for any nominee Director (the "Original Director")
of each Party shall be persons proposed by such Party only and on such nomination the
Parties shall cause their respective nominee Directors to vote for and cause the Board to
appoint him as alternate Director for such Original Director. Such alternate Director shall be
entitled while holding office as such to receive notices of meetings of the Board or any
committee of the Board to which such Director has been appointed and to attend and vote as
a Director at any such meetings of the Board or subject to provisions of Clause 8.22 at any
such committee at which the Original Director is not present and generally to exercise all the
powers, rights, duties and authorities and to perform all functions of the Original Director. .
8.15 The Company may pay such sitting fees to Directors, not exceeding the maximum
permissible under the Companies Act, as may be determined by the Board. In addition to or
in substitution of the sitting fee Directors may be paid commission not exceeding the
maximum permissible under the Companies Act. A Director shall in addition be entitled to
receive such remuneration for services performed for the Company not exceeding the
maximum permissible under the Companies Act.
Board Meetings and Resolutions
8.16 The Board shall meet at such time or times and at such place or places as it may deem
appropriate provided at least one meeting of the Board shall be held in each quarter.
8.17 The Secretary shall as and when directed by the Chairman and/or the MD call a meeting
of the Board. Further any Director may request the Chairman to call a meeting of the Board.
Notice of every Board meeting whether first convened or adjourned shall be sent to each
Director and his alternate so as to be received not less than 7 (seven) days before the day
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 50/83
such meeting is scheduled to take place unless such notice is waived by at least one nominee
Director each of DEF and ABC.
8.18 Except in emergent cases, unless the Parties or a majority of the Directors agree
otherwise (i) at least 7 (seven) days' written notice shall be given to all Directors for
convening a Board meeting; and (ii) such notice shall be accompanied by an agenda of the
matters to be discussed. In the event the Chairman, the MD or any Director (acting
reasonably and in good faith) deems that circumstances exist which require a meeting to be
convened at shorter notice, the Chairman on his own or at the request of such director direct
the Secretary to call a meeting of the Board as aforesaid by giving less than 7 (seven) days'
notice of such meeting. It is further agreed that (unless in any particular case the Parties shall
otherwise agree) no resolution relating to any business may be proposed or passed at any
Board meeting unless the nature of the business is specified in the agenda for the meeting.
8.19 No business shall be transacted at any Board meeting unless a quorum is present at the
meeting. In the first instance the quorum for meetings of the Board shall be at least one third
of the Board including at least one Director each nominated by the Parties hereto. A Director
represented by his alternate shall be deemed to be present for the purpose of determining
quorum. If within half an hour from the time appointed for a meeting a quorum as aforesaid
is not present, the meeting shall stand adjourned to the same day in the next week at the same
time and place or to such other later day and at such other time and place as the Directors
may determine. If at such adjourned meeting also, a quorum is not present, the meeting shall
stand adjourned for further half an hour and if the quorum as aforesaid is still not present but
the Directors present are at least one third of the Board, they shall constitute a quorum
Provided however, no matter referred to in Clause 9.2 shall be considered at such adjourned
meeting and the business at such adjourned meeting shall be confined only to the remaining
items as specified in the agenda for such meeting and no matter not forming part of the
agenda circulated for the meeting shall be considered at such adjourned Board meeting.
8.20 Subject to the provisions of the Companies Act and Clause 9.2, a resolution signed by a
majority of the Directors for the time being shall be valid and effectual as if it is a resolution
passed at a meeting of the Board of Directors duly convened and held. Any such resolution
may be contained in a single document or may consist of several documents, all in like form.
For the purposes of this Clause "in writing" and "signed" shall include approval by facsimile.
Executive Committee
8.21 The Board shall constitute a 2 (two) member Executive Committee of the Board
comprising of one nominee Director each of the Parties. It is agreed that normally no
alternate Director shall be permitted to participate in Executive Committee Meetings.
However in unavoidable circumstances alternate Directors may be allowed to participate in
place of original Directors with the consent of the Parties.
8.22 The Chairman of the Executive Committee will be on annual rotation basis i.e. for first
year DEF nominee shall be the Chairman of the Executive Committee and for following year
ABC nominee shall be its Chairman and so on. Any member of the Executive Committee can
request the Chairman of the Executive Committee to convene a meeting of Executive
Committee and the Chairman of the Executive Committee shall promptly convene a meetingbut not later than 7 (seven) business days of receipt of such request.
8.23 The Executive Committee shall be generally responsible for, finalisation of business
plans and annual budgets, review of operations, review of performance of personnel and
HRD matters, approval of general meeting notices etc. It shall also be responsible for
approval of appointment of the Secretary, Head (Operations), Head (Marketing) and Head
(Finance) by whatever name called.
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 51/83
All matters to be put up to the Board and specified in Clauses 9.1 and 9.2 shall in the first
instance be put up for consideration of the Executive Committee. The Executive Committee
shall also act as a forum for inter-action and resolving all matters inter se between the Parties.
8.24 (a) All decisions of the Executive Committee shall be by unanimous vote. In the absence
of unanimity in respect of any matter, the same shall be referred to the Board for its decision.
(b) The Chairman of the Executive Committee shall be entitled to invite such of the
Senior Managers of the Company as he may determine provided if the chairman be anDEF nominee, such invitation to attend the meetings of the Executive Committee shall
be in consultation with MD . Such invitees however will have no vote.
8.25 Annual Budgets and Business Plans During each Financial Year, the Company shall
adopt an annual Budget for the next Financial Year and a Business Plan for the succeeding
two (2) Financial Years. Each such annual Budget and Business Plan shall be prepared under
the direction and supervision of the MD and submitted to the Executive Committee for its
consideration. upon the approval thereof by the Executive Committee or in the event of there
being no unanimity at the Executive Committee in respect thereof, the same shall be
submitted to the Board for its approval at least one (1) month prior to the end of each
Financial Year .
8.26 The Auditors
The Auditors of the Company shall be selected by the Board.
9. MATTERS TO BE DECIDED BY THE BOARD
9.1 Except as otherwise required by this Agreement, the Articles, or the Companies Act, all
resolutions and decisions of Directors shall be by vote of a majority of the Directors present
at a duly convened meeting of the Board. Except as otherwise required by this Agreement,
the Articles or the Companies Act, any action which can be taken by a Board at a duly
convened meeting may also be taken by a resolution by circulation signed by all or a majority
of the Directors. Subject to the provisions of Clause 9.4 Policy Matters setforth in Clause 9.2
below can be approved only by the Board with the affirmative vote of at least one nominee
Director each of DEF and ABC. No Director shall have a casting vote.
9.2 All matters to be decided by the Board shall be determined by simple majority, except
that no action or decision shall be taken nor any resolution passed in respect of any of the
following matters (the “Policy Matters”) by the Board or any Committee thereof shall be
valid and effective unless approved by majority and such majority comprises of affirmative
vote of at least one nominee Director each of ABC and DEF:
(i) Any change or modification in the rights of the Shareholders;
(ii) Any amendment to the Memorandum and/or Articles of Association of the
Company;
(iii) Any increase in authorized or issued share capital, other than on rights basis if
provided in Business Plan;
(iv) Any consolidation of or reduction in the Share capital of the Company or creation
of new classes of shares, whether voting or non-voting;
(v) Any issue of debentures, bonds or other instrument convertible into equity Shares;
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 52/83
(vi) Any proposal for placing of the Company in voluntary dissolution or winding up;
(vii) Any proposal for amalgamation or merger of the Company with any other
company;
(viii) Any sale, lease or transfer of the whole or substantial part of the undertaking or
assets of the Company;
(ix) creation of any mortgage, charge, lien or encumbrance on the assets of theCompany other than for working capital advances or as contemplated in the annual
Budget or Business Plan;
(x) Any loan or other borrowing carrying right or option to convert whole or any part
thereof or accrued interest thereon into shares of the Company or conversion of any
debt or obligation of the Company into shares of the Company; and
(xi) Any diversification or establishment of any subsidiary other than as contemplated
in the annual Budget or Business Plan.
9.3 no action or decision in respect of any of the following matters ("Special Matters") shall
be valid and effective unless part of or contemplated by an annual Budget or Business Plan or
approved by a resolution passed by the Board or any Committee thereof by majority:
(i) entering into of any material contract (over a value of Rs. 5 crore) outside the
ordinary course of its business;
(ii) the entering into, termination or variation of any contract or arrangement (whether
legally binding or not) by the Company with a Party or any company which is a
Associate of any Party;
(iii) the incurring of any material expenditure or liability of a capital nature exceeding
in aggregate Rs.5 (five) crore outside the Aannual Budget (including for this purpose
the acquisition of any asset under lease or hire purchase);
(iv) Borrowings and creation of charge on the assets of the Company other than as set
forth in the annual budgets or business plans or for working capital advances;
(v) Any proposal to confess any judgment of a value in excess of Rs.1 Crore against
Company,
(vi) Agreements or material transactions between the Company and any Director or
shareholder of the Company or an Associate of such shareholder or any service
contracts with any Party or its Associate(s) for provision of any service or
management support or consultancy to Company;
(vii) the recommendation for payment of any dividend or other distribution and
appropriation of profits.
(viii) the giving of any guarantee, indemnity or security in respect of the obligations of
any third party;
(ix) the entering into of any profit sharing, share option or similar other scheme for the
benefit of the officers or employees of the Company or any material variation of any
such scheme;
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 53/83
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 54/83
Agreement including nomination of a member to the Executive Committee or affirmative
vote right under Clause 9.2 above.
10.3 In case the voting share holding of DEF or ABC, as the case may be, falls below 10% of
the voting share capital of the Company, then this Agreement shall terminate provided
however the obligation under Clause 6.4 shall survive such termination. Further in such an
event such Party will procure its nominee Directors to tender their resignations from their
respective offices as Directors of the Company forthwith without any claim for compensation
for loss of office or otherwise except for salary (if any) and any other entitlements which may
have accrued upto the date of their resignation.
10.4 Notwithstanding anything to the contrary contained in this Agreement for the purposes
of this Article 10(i) Share holding of DEF shall mean the Share held by DEF in its own name
and excluding the Shares held by its Associates and Investor AfDEFiates, and (ii) Share
holding of ABC shall mean the Shares held by ABC in its own and excluding the Shares.
10.5 Subject to the provision of Clause 10.3 and other provisions of this Agreement, this
Agreement shall also terminate on the earlier of:
10.5.1 the DEF and ABC agreeing in writing to terminate this Agreement, or
10.5.2 an effective resolution is passed or a binding order is made for the winding-upof the Company.
11. Pull-Along Rights
11.1 Subject to the provisions of Clauses 6.3 and 6.4, if at any time during the subsistence of
this Agreement a Party holding not less than 30% (thirty percent) of the voting Shares (the
“Qualified party”) shall enter into an agreement (including an agreement in princip le) to
dispose off its entire Share holding in the issued and paidup Share capital of the Company to
any person or entity, the Qualified Party may require the other Party sell its Shares to such
person or entity at the same price and on the same terms and conditions as those on which the
Qualifying Party has agreed to sell such Shares.
12. RIGHT TO BUY OR SELL SHARES
12.1 If -
12.1.1 a Party (the “Defaulting Party”) is in breach of any of its obligations under this
Agreement in any respect, and such breach continues for sixty (60) days after the
other Party has given notice in writing, specifying the breach and demanding cure
thereof, to Defaulting Party; or
12.1.2 a court of competent jurisdiction shall enter a decree or order appointing a
trustee or receiver of the Defaulting Party or in respect of substantial part of its assets
or undertaking or shall approve a petition for or effecting an arrangement in
bankruptcy, a reorganization pursuant to a bankruptcy act, or other judicialmodification, or alteration of the rights of creditors of Defaulting Party, other than
amalgamation or merger, and the operation thereof is not stayed within sixty (60) days
from the date of entry thereof, or the Defaulting Party shall DEFe a petition for an
assignment for the benefit of its creditors, or any court of competent jurisdiction shall
enter a decree or order adjudicating Defaulting Party as bankrupt or insolvent;
then upon the occurrence of such an event the other Party shall have the right to require the
sale of shares by such defaulting Party to it in Company in accordance with Clause 6.5 6.4.
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 55/83
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 56/83
(ii) promptly notify the other Party and the Company of all matters coming to its
notice which may affect the title to or enjoyment of the XYZ Undertaking including
premises, assets or properties of the Company, and all significant, orders and
demands, and other communications received from GOI, GOUP or any government or
quasi government authority in relation to the Operating licenses.
(c) In the event that a Party hereto shall be rendered unable to carry out the whole or any
part of its obligations under this Agreement for any reason beyond the reasonable control
of that Party, including but not limited to decrees or restraints of governmental
authorities, orders of any court of competent jurisdiction, acts of God, strikes, war, riot
and any other cause of similar nature, then the performance of the obligations hereunder
of that Party, to the extent affected by such cause shall be excused during the
continuance of such disability, but such disability shall as far as possible be remedied
with all reasonable dispatch provided the Party claiming force majeure has notified the
other Party with reasonable dispatch about the circumstances constituting force majeure
and its likely duration with such evidence in support thereof as may reasonably be
available with it.
13.7 No party shall make any media or other announcements, releases, disclosures or
statements relating to this Agreement and the transactions which are the subject of this
Agreement without the prior consent of the other party unless such announcement or release
is required to be made by law or by a stock exchange or is to its employees, legal advisers
and other consultants and may not be disclosed to any other person except:
(a) to the shareholders or the Parties or their Associates;
(b) for the purpose of this Agreement;
(c) for securing or maintaining Operating Licenses or complying with the conditions
thereof or of any other approval consent or authorisation from any government or
statutory authority, agency or instrumentality;
(d) in connection with legal proceedings relating to this Agreement; or
(e) is otherwise not confidential.
13.8 All information received by the Parties from the Company or each other is either
marked "Confidential" or is by its nature intended to be exclusively for the knowledge of the
recipient alone shall be deemed confidential and exclusively for the knowledge of the Parties
alone and shall not be disclosed or used to the detriment of the Company or the Parties until
or unless the recipient can demonstrate (i) that it is or part of it, in the public domain,
whereupon to the extent that it is public, this obligation shall cease, or (ii) disclosure is
required by law or by the rules and regulations of any stock exchange or any other regulatory
authority.
13.9 All rights of ABC under this Agreement shall be exercised by ________ and failing him
by a Director of ABC authorised in this behalf by the Board of Directors of ABC and all
rights of DEF under this Agreement shall be exercised by _________ and failing him by a
Director of DEF authorised in this behalf by the Board of Directors of DEF
13.10(i) The Parties agree that during the subsistence of this Agreement neither party will
enter into any negotiations or agreements, directly or indirectly, with any third Pparty with
regard to the sale of its Undertaking including provision of technical Know-how, assistance
and/or services in any manner whatsoever relating to production and marketing of the
Products.
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 57/83
(ii) Neither Party shall for a period of 3 (three) years after it ceases hold 10% or more of
voting share capital of the Company engage, directly or indirectly, in the business of
manufacture marketing and/or dealing in Products including provision of technical
know-how, assistance and/or services in any manner whatsoever relating to production
and marketing of the Products in India or abroad. For the purposes of this clause the
expression party shall include their promoters .
13.11 Subject to and excluding Article 10, for the purposes of other previsions of this
Agreement Share holding of DEF shall mean the aggregate of its Share holding and that of its
Associates and Investor Affiliates, and of ABC shall mean the aggregate of its Share holding
and that of its Associates and Investor Affiliates , in the Company.
13.12 Notices
All notices which are required to be given hereunder shall be in writing and shall be
sent to the address of the recipient set out in this Agreement or such other address as
the recipient may designate by notice given in accordance with the provisions of this
Clause 13.11. Any such notice shall in case of DEF be marked “Attention:
_________” and in case of ABC be marked “Attention: ___________. Any such
notice may be delivered personally or by prepaid post letter with copy by electronic
mail or facsimile transmission and shall be deemed to have been served if by personal
delivery when delivered and if by prepaid post 15 days after posting.
13.13 Successors Bound
This Agreement shall be binding on and shall enure for the benefit of the successors of
the Parties.
13.14 Assignment
No party may assign its rights or obligations in whole or in part hereunder without the
prior consent of the other party Provided that this Clause 13.143 shall not prevent a
transfer of shares pursuant to Clause 6.
13.15 Continuing Agreement
All provisions of this Agreement shall so far as they are capable of being performed
and observed continue in full force and effect except in respect of those matters then
already performed.
13.16 Good Faith
Each Party covenants with the other Party to do all things reasonably within its power
which are necessary or desirable to give effect to the spirit and intent of this
Agreement and the Articles.
13.17 Further Assurance
The Parties shall, and shall use their respective reasonable endeavors to procure that
any necessary third parties shall, do, execute and perform all such further deeds,
documents assurances, acts and things as any of the parties hereto may reasonably
require by notice in writing to the others to carry the provisions of this Agreement and
the Articles into full force and effect.
13.18 Entire Agreement
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 58/83
This Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matters of this Agreement and supersedes any previous
agreement, understandings and writings including the MOU dated ___________ between the Parties other than the agreement titled “Basis of Acquiring Business and
Valuation thereof” of even data in respect thereof. No variation of or amendment to
this Agreement shall be valid or effective unless made in accordance with Clause
13.24
13.19 No Partnership
Nothing in this Agreement shall constitute or be deemed to constitute a partnership
between any of the parties hereto and none of them shall have any authority to bind
the others in any way.
13.20 Accrued rights
The termination of this Agreement however caused and the ceasing by any
Shareholder to hold any Shares shall be without prejudice to any obligations or rights
of either Party which have accrued prior to such termination or ceasure and shall not
affect any provision of this Agreement which is expressly or by implication provided
to come into effect on or continue in effect after such termination or ceasure.
13.21 Waiver
No failure to exercise and no delay in exercising on the part of a Party of any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise of any right, power or privilege preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and remedies
provided in this Agreement are cumulative and not exclusive of any rights or,
remedies otherwise provided by law.
13.22 Severability
Notwithstanding that any provision of this Agreement may prove to be illegal or
unenforceable, the remaining provisions of this Agreement shall continue in full force
and effect. Parties shall in good faith negotiate and agree upon a replacement
provision which shall be as close as permissible in law to such illegal or
unenforceable provision.
13.23 Exercise of powers
Where DEF or ABC is required under this Agreement to exercise its powers in
relation to the Company to procure a particular matter or thing, such obligation shall
be deemed to include an obligation as a Shareholder (including where a Associate is a
Shareholder) and as a Director (where applicable) of the Company and to ensure that
any Directors appointed by it or an Associate will procure such matter or thing.
13.24 Amendment
This Agreement shall not be altered, changed, supplemented, or amended except by a
written instrument signed by the Parties and expressly stated to be an amendment to
this Agreement.
13.25 No Consequential Loss or Damage
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 59/83
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 60/83
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 61/83
JOINT VENTURE AGREEMENT
AGREEMENT
dated
Between:
(1) [ABC] a company incorporated in [country of incorporation] ("ABC");
(2) [DBF] a company incorporated in [country of incorporation] ("DEF");
(3) [Newco Limited], a company incorporated in [ ] ("the Company");
1. RECITALS
1.1 ABC carries on [in ] the business of [ ].
1.2 DEF carries on [in ] the business of [ ].
1.3 The parties wish to participate in and operate the Company as a joint
venture company to carry on the Business on the terms and conditions of
this Agreement.
1.4 The Company, details of which are set out in Schedule 1, has not
traded and has no assets or liabilities.
2. INTERPRETATION
2.1 In this Agreement, unless the context otherwise requires--
(a)."A Director" means a director of the Company appointed inaccordance with the Articles by the holders of a majority in
nominal value of the A Shares;
(b) "B Director" means a director of the Company appointed in
accordance with the Articles by the holders of a majority in
nominal value of the B Shares;
(c)."the Ancillary Agreements" means the agreements referred to
in clause 5.5;
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 62/83
(d) "the Annual Business Plan" means the annual business plan
referred to in clause 8.5(c);
(e) "the Articles" means the new articles of association of the
Company adopted pursuant to in clause 5.3(a)(iii), as the same may
be amended from time to time;
(f) "A Share" means an A share of Rs. ____in the capital of the
Company;
(g) "the Auditors" means the auditors for the time being of the
Company;
(h) "Bankers Draft" means a draft drawn by a clearing bank on a
branch of that bank in ______ and available for immediate credit
through the town clearing system;
(i)" Share"means a B share of Rs. ______ in the capital of the
Company;
(j) "the Board" means the board of directors (as constituted from
time to time) of the Company;
(k) "the Business" means the business and activities referred to in
clause 3.2, as carried on by the Company from time to time;
(l) "Business Day" means a day on which banks are open for
business ;
(m) "Completion" means performance by the parties of their
respective obligations under clauses 5.3, 5.4 and 5.5;
(n) "Force Majeure" has the meaning given to that expression by
clause 16.1;
(o) "Group" means, in relation to any company, that company and
any other company which, at the relevant time, is its HoldingCompany or Subsidiary, or a Subsidiary of any such Holding
Company; and "Member" of a Group shall be construed
accordingly;
(p) "the Memorandum" means the memorandum of association of
the Company as amended pursuant to clause 5.3(a)(ii), and as thesame may be further amended from time to time;
(q) "Reserved Matter" means any matter referred to in clause 9.1;
(r) "Restricted Information" has the meaning given to that
expression by clause 13.1;
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 63/83
(s) "the Shareholders" means each of the registered holders of
Shares at the relevant time;
(t) "Shares" means A Shares, B Shares and other shares in the
capital of the Company issued from time to time, and includes the
beneficial interest therein;
(u) "the Share Transfer Provisions" mean the provisions of theArticles relating to the transfer of Shares and expressions defined
in those provisions have the same meaning in this Agreement; and
(v) "the Territory" means .
2.2 In this Agreement, unless the context otherwise requires, any reference to--
(a) "writing", or any cognate expression, includes a reference toany communication effected by telex, facsimile transmission or
similar means;
(b) a statute or a provision of a statute is a reference to that statuteor provision as amended, re-enacted or extended at the relevant
time, [and includes any corresponding provision in a statute
replacing that statute or provision];
(c) a document "in the agreed terms" is a reference to the form of the draft initialled for the purposes of identification on behalf of
the parties;
(d) "this Agreement" is a reference to this Agreement and each of
the Schedules, as amended or supplemented at the relevant time;
(e) a Schedule is a reference to a schedule to this Agreement; and
(f) a clause or a paragraph is a reference to a clause of thisAgreement (other than the Schedules) or a paragraph of the
relevant Schedule.
2.3 In this Agreement--
(a) any reference to the parties includes a reference to their
respective [personal representatives, heirs,] successors in title and
permitted assignees;
(b) any reference to a person includes any body corporate,
unincorporated association, partnership or other legal entity;
(c) the singular includes the plural and vice versa; and
(d) words importing any gender include any other gender.
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 64/83
2.4 The headings in this Agreement are for convenience only and shall not affect its
interpretation.
3. THE JOINT VENTURE
3.1 ABC and DEF shall promote the Company as a joint venture between
them on and subject to the terms of this Agreement.
3.2 The business of the Company shall be [ ], or such variation, extension
or limitation of those activities as may be made from time to time in
accordance with this Agreement.
4. CONDITIONS
4.1 The provisions of this Agreement (other than this clause 4 and clause 24) are
conditional on--
(a) the terms of this Agreement being approved by an ordinary
resolution of each of ABC and-DEF in general meeting; and
(b) the obtaining of any consent required for Completion, the
promotion of the Company or the carrying on of the Business by
the Company.
4.2 ABC and DEF shall use all reasonable commercial endeavours to
procure that the conditions specified in clause 4.1 are duly fulfilled.
4.3 Subject as provided in clause 4.2, if any of the conditions specified inclause 4.1 is not duly fulfilled on or before [ ] , this Agreement shallautomatically terminate and no party shall have any claim against any
other.
5. COMPLETION
D-06
5.1 [Within [] Business Days after the fulfilment [or waiver] of the
conditions set out in clause 4.1] [Forthwith upon the execution of this
Agreement], the parties shall comply with their obligations under clause5.3, 5.4 and 5.5.
5.2 Completion shall take place at the offices of [ ] at _______, or at
such other place or time as the parties may agree.
5.3 ABC and DEF shall procure that an extraordinary general meeting of
the Company is duly convened and held at which there are proposed and
passed--
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 65/83
(a) special resolutions of the Company to--
(i) change the name of the Company to"[ ] Limited";
(ii) change the main objects of the Company to those
contained in the form of the memorandum of association
set out in Schedule 2;
(iii)adopt, subject to the passing of the other resolutionsreferred to in this clause 5.3, new articles of association in
the form set out in Schedule 3;
iv. convert each of the two issued Ordinary Shares into an A Share [and a B Share];
v. (v) redesignate the authorised but unissued Ordinary Shares as [ ] A Share
[and [ ] B Shares]; and
(b) ordinary resolutions of the Company to--
(i) increase the authorised share capital of the Company to[ ]; and
(ii) authorise the Board to allot and issue the Shares
referred to in clause 5.4(b) and(c) on the terms referred to
therein.
5.4 Forthwith upon the provisions of clause 5.3 being complied with--
(a) the issued A Share shall be transferred to ABC [and the issued
B Share shall be transferred to DEF, in either case] for nil
consideration;
(b) ABC shall subscribe for [ ] A Shares [for cash at par];
(c) DEF shall subscribe for [ ] B Shares [for cash at par];
(d) ABC and DEF shall each appoint their nominees as A Directors
or B Directors as the case may be;
(e) the Board shall approve the execution and exchange of the
Ancillary Agreements; and
(f) the Board shall pass such other resolutions and do such other
things as are necessary in order to comply with the provisions of
clause 8.
5.5 Upon the provisions of clause 5.4 being complied with the following
agreements shall be entered into and, to the extent provided for therein,
duly completed by the parties thereto —
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 66/83
(a) [an agreement in the agreed terms for the sale by ABC and the
purchase by the Company of certain premises and other business
assets;]
(b) [[an exclusive] licence agreement in the agreed terms to begranted by DEF to the Company in respect of certain technology
owned by DEF;]
(c) [[an exclusive] distribution agreement in the agreed terms to be
entered into between the Company and ABC in respect of the
distribution by ABC of the Company" s products.]
5.6 Each of ABC and DEF undertakes with the other of them, and the Company
undertakes with each of ABC and DEF, that--
(a) it will hold its Shares subject to and comply in all respects with
the provisions of this Agreement and the Share TransferProvisions, and will duly perform and observe the obligations
undertaken by it under any of the Ancillary Agreements; and
(b) any warranty or representation given or made by it under any of
the Ancillary Agreements is and shall at Completion remain true
and accurate.
6 FINANCIAL PROVISIONS
6.1 If and to the extent that the Company requires finance in accordance
with its Annual Business Plan in addition to that obtained under clause
5.4--
(a) the Board shall seek to obtain the same by way of bank
overdraft facility or other commercial borrowing from third
parties; or
(b) the [Shareholders] [Parents] shall loan, or procure that aMember of their respective Groups loans, the same to the
Company pro rata to the number of Shares held by any Member of
their respective Groups at the relevant time, on terms that each
such loan shall carry interest at [ ] per cent above the base
rate from time to time or
(c) the Shareholders shall provide the same by subscribing in cashfor further Shares or Loan Stock issued by the Company pro rata to
the number of Shares held by each of them at the relevant time.
6.2 Where the Board seeks to obtain loans from third parties, each of the
[Shareholders] [Parents] shall use it's best efforts to procure the provision
of the same on normal commercial terms--
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 67/83
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 68/83
7.3 Office administration and company secretarial services shall, subject
to either [ ] or the Company giving the other not less than [ ]months' notice in writing, be provided by [ ], which shall be entitled to
charge the Company on such basis as may from time to time be agreed
with the Company for all reasonable expenses incurred in providing those
services.
7.4 Where any Shareholder or any Member of its Group makes personnelavailable to the Company, the terms of such availability, including any
question as to whether such personnel are to be seconded to or employed
by the Company, shall be determined by and subject to agreement. Wheresuch personnel are seconded, the Company shall pay to the party
supplying such personnel all employment costs (including, without
limitation, salary, pension, national insurance and the cost of any fringe
benefits) of such personnel during the period of such secondment.
8. MANAGEMENT OF THE COMPANY
D-09
8.1 The following persons shall be appointed as directors of the Company pursuant to the
Articles--
A
Directors
B Directors
8.2 [ ] shall be appointed as the first Chairman of the Board pursuant to the
Articles.
8.3 The Board shall appoint for the purposes specified in clause 8.4 and 8.5--
(a) a chief executive (who [shall] [need] [not] be a director) on
such terms as it may think fit, the first chief executive being
[ ]; and
(b) a management committee comprising [the chief executive], one
A Director and one B Director.
8.4 The chief executive shall--
(a) be responsible for the day to day management of the businessof the Company within the terms of the Annual Business Plan
approved by the Board;
(b) report to the Board with such frequency and in such manner as
may be required by the Board;
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 69/83
(c) [be entitled to attend meetings of the Board but [, if not a
Director,] shall not vote or be counted in a quorum;] and
(d) comply with all decisions and directions of the Board.
8.5 The Management Committee shall, unless otherwise required by the Board--
(a) perform such duties as may be delegated to it by the Board;
(b)have the power to co-opt such persons (including A Directorsand B Directors) as it thinks appropriate to assist it in the
management of the Company;
(c)cause to be prepared for approval by the Board an annual
business plan outlining the proposed objectives of the business of
the Company; and
(d)comply with all decisions and directions of the Board.
8.6 The Board shall, not later than _______ before the beginning of eachfinancial period of the Company, consider and seek to approve the Annual
Business Plan.
8.7 Subject to clause 14, each Director shall be entitled to make full
disclosure to the Shareholder appointing him of any information relatingto the Company which that Director may acquire in the course of his
appointment.
8.8 Meetings of the Board shall take place at such time or times as may be
required or as requested by [the chief executive] [either Shareholder] but
not in any event at intervals of more than three months calculated from the
date of Completion. Unless otherwise agreed in writing by all theDirectors, at least [seven] clear Business Days' notice in writing shall be
given of each meeting of the Board, which notice shall specify in as great
a detail as is practicable the business to be considered at the meeting, [andunless all the Directors (or their duly appointed alternates) agree otherwise
no matters shall be resolved at any meeting of the Board except those
specified in the notice of the meeting].
8.9 [The quorum necessary to constitute a meeting of the Board shall be at
least one A Director (or his alternate) and one B Director (or his alternate),
but if within 15 minutes of the time fixed for a Board meeting a quorum is
not present, then unless otherwise agreed between at least one A Directorand one B Director the meeting shall stand adjourned to the same time and
place on the seventh [day] [Business Day] following the original date of the meeting, [and at the adjourned meeting any two Directors (or their
alternates), whether A Directors or B Directors, shall constitute a quorum,
and if no such quorum is present the adjourned meeting shall be
dissolved].]
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 70/83
8.10 [Any question arising at any meeting of the Directors shall be
decided by a majority of votes-of the Directors (or their alternates)present. [The Directors (or their alternates) appointed by a Shareholder
and present at any Board meeting shall between them carry a total number
of votes equal to that total number of Directors which that Shareholder is
entitled to appoint.]]
9. RESERVED MATTERS
D-10
9.1 Except in respect of any matter expressly provided for herein, for the
purposes of this Agreement the following matters are Reserved Matters--
(a) the creation or issue of any share or loan capital or any
obligation convertible into share capital or loan capital of the
Company;
(b) the grant of any option or right to subscribe for any share or
loan capital of the Company;
(c) the consolidation, sub-division or alteration of any rights
attached to any share capital of the Company, the purchase by theCompany of its own shares, the reduction of its share capital, the
capitalisation of any amount standing to the credit of any reserve
of the Company or the reorganisation of any of the share capital of
the Company;
(d) the incorporation or acquisition of any subsidiary or thesubscription for or the acquisition of any shares or other securities
or interest in any company;
(e) the giving of any guarantee or indemnity not in the ordinary
course of business;
(f) the declaration and/or payment of any dividend otherwise than
in accordance with clause 11;
(g) the appointment or dismissal of the chief executive or (if there
is one) any managing director;
(h) the grant to any person of a right to appoint any director of the
Company, the entering into of any agreement for the managementof the Company or the incurring of any management charges;
(i) the entering into of any partnership, joint venture or profit-
sharing arrangement with any other person;
(j) the appointment or removal of the Auditors (other than the re-
appointment of the first auditors of the Company);
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 71/83
(k)the incurring of any expenditure or the entering into of any
commitment by the Company--
(i)which would [reasonably be expected to cause overhead
costs for the year in total to] exceed [by more than 10 percent] the total provided for in the current Annual Business
Plan; or
(ii) for any item of capital expenditure exceeding [ ] even if
so provided for; (I) the changing of any of the accounting
principles or conventions of the Company, otherwise thanas required by law or in order to comply with any
applicable statement of standard accounting practice or
Financial Reporting Standard;
(m). the alteration of any provision of the Memorandum or Articles
or the passing of any resolution inconsistent with any such
provision;
(n) the provision of any credit or making of a loan or advance forany person other than in the normal course of the Business;
(o) any [material] variation, extension or limitation of the nature orscope of the Business; (p) the commencement or defence of any
legal proceedings or arbitration, other than routine debt collection;
(q) the purchase, lease or acquisition of any site or building for use
in the Business and/or any immovable property which is
substantial in relation to the Company or the acquisition of any
other business;
(r) the sale, lease, transfer, mortgage, charge, pledge or otherdisposition of the whole or a substantial part of the Company's
undertaking or any material asset of the Company or any
agreement to effect any of the foregoing;
(s) any transaction between the Company and any Shareholder (or
any Member of its Group) otherwise than on arm's length terms;
(t) the presentation of any petition or passing of any resolution for
the Company to be put into administration or to be wound up; and
(u) the borrowing of any money or giving of any guarantee,
indemnity or security.
9.2 No Reserved Matter shall be undertaken or effected by the Company-(a) which under the Articles requires a resolution of the Board, unless a
majority of the Directors vote (whether in person or by proxy) in favour of
the resolution; or (b) which under the Articles requires a resolution of theShareholders, unless both the holder of the A Shares and the holder of the
B Shares vote in favour of the resolution.
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 72/83
9.3 If at any time [after the [ ] anniversary of this Agreement], a
resolution of the Board or the Shareholders on a Reserved Matter is duly
proposed but is not passed, either Shareholder may--
(a) give notice in writing to the other Shareholder within 30 daysafter the date of the proposal of the resolution, in which event the
Shareholders shall seek to resolve the issue by negotiation within a
further period of 30 days after the date of service of that notice;and
(b) if within that further period the proposed resolution on thatReserved Matter, with such amendments as the Shareholders may
agree, has not been passed or has been withdrawn, or the notice
given pursuant to (a) above has not been withdrawn, the otherShareholder shall at the end of that further period be deemed to
have given a sale notice pursuant to the Share Transfer Provisions
on the date of service of that notice.
9.4 If the offer of Shares in a sale notice deemed to be given pursuant to
clause 9.3 is not accepted within the offer period, the Shareholder whichgave the notice pursuant to clause 9.3(a) shall be deemed to have given asale notice pursuant to the Share Transfer Provisions on the date of expiry
of that offer period.
9.5 If the offer of Shares in a sale notice deemed to be given pursuant to
clause 9.4 is not accepted within the offer period, the parties shall, unless
otherwise agreed, forthwith take all steps necessary to wind up the
Company.
10. ADMINISTRATION
Unless otherwise agreed by the Board--
(a) the secretary of the Company shall be [ ];
(b) the registered office of the Company shall be at [ ];
(c) the first auditors of the Company shall be [ ];
(d) the accounting reference date of the Company shall be [ ];
and
(e) the Company's bankers shall be [ ].
11. DIVIDENDS
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 73/83
11.1 Subject to the provisions of Part VIII of the Companies Act 1985,
there shall be distributed by way of dividend [all] [not less than per cent]
of the distributable profits of the Company for each accounting period.
12. TRANSFER OF SHARES
12.1 No Shareholder shall sell, transfer, mortgage, charge, encumber or
otherwise dispose of any Share or any interest therein except in
accordance with the provisions of this clause 12.
12.2 A Shareholder may transfer its Shares to any other person provided
that--
(a) the transfer is made in accordance with the Share Transfer
Provisions;
(b) except in the case of a transfer from one Shareholder toanother, the proposed transferee has agreed in writing with the
other parties to this Agreement to assume all future obligations of
the transferor and any other Member of the transferor's Group
under this Agreement and the Ancillary Agreements, andotherwise to be bound by all the applicable provisions thereof, as if
it were a party thereto;
(c) where the transferee is not the ultimate Holding Company of its
Group, that Holding Company (or another Member of its Group
reasonably acceptable to the other Shareholder) has agreed inwriting with the other parties to this Agreement to be bound by all
the provisions of this Agreement [and the Ancillary Agreements]
applicable to the Parent of which the transferor is a Subsidiary; and
(d) any necessary consent has been obtained for the transfer.
12.3 The Shareholders shall procure that the Directors approve for
registration any transfer of Shares which complies with the provisions of
this clause 12, and decline to approve for registration any other transfer of
Shares.
12.4 Upon any Shareholder ceasing to hold any Shares, subject tocompliance with the provisions of clause 12.2--
(a) all future obligations of that Shareholder and, except where theShares are transferred to another Member of its Group, its Parent
shall cease; and
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 74/83
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 75/83
times during the continuance of this Agreement and within [ ]
years after its termination--
(a) use its best endeavours to keep confidential all Restricted
Information;
(b) not disclose any Restricted Information to any other person;
(c) not use any Restricted Information for any purpose otherwisethan as contemplated by and subject to the terms of this
Agreement;
(d) not make any copies of, record in any way or part with
possession of any Restricted Information; and
(e) ensure that none of its directors, officers, employees, agents oradvisers does any act which, if done by that party, would be a
breach of the provisions of (a), (b), (c) or (d) above.
13.3 The Recipient may--
(a) disclose any Restricted Information to--
(i) any sub-contractor, supplier or licensee of the Recipient;
(ii) any bona fide transferee of the Recipient's Shares;
(iii) any governmental or other authority or regulatory
body; or
(iv) any employees of that party or any of the
aforementioned persons; to such extent only as is necessaryfor the purposes contemplated by this Agreement, or asrequired by law, and in each case (except where the
disclosure is to any such body as is mentioned in (iii) above
or any employees of any such body) subject to the
Recipient first obtaining a written undertaking in favour of the Informant from the person in question, as nearly as
practicable in the terms of this clause, to keep the
Restricted Information confidential and to use it only forthe purposes for which the disclosure is made, and
submitting the same to the Informant; or
(b) use any Restricted Information for any purpose, or disclose it to any
other person, to the extent only that--
(i) [the Recipient can demonstrate from its written records
that] it was known to the Recipient at the time when it was
disclosed by the Informant;
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 76/83
(ii)[after being disclosed by the Informant it is disclosed to
the Recipient by any other person otherwise than in breachof any obligation of confidentiality owed to the Informant;
or]
(iii) it is at the date of this Agreement, or at any time after
that date becomes, public knowledge through no fault of
the Recipient, provided that in doing so the Recipient doesnot disclose any part of that Restricted Information which
is not public knowledge.
14.4 The provisions of this clause 14 shall continue in force in accordance
with their terms, notwithstanding the termination of this Agreement for
any reason.
14. COMPETITION
14.1 [ ] undertakes with the Company and [ ] that it willnot, and will procure that no Member of its Group will, for so long as it or
any Member of its Group holds any Shares, directly or indirectly carry on
or be interested in any business--
(a) in the Territory that competes with the Business; or
(b) which competes with the business of [ ] or a Member of its
Group.
14.2 [ ] undertakes with the Company and [ ] that it will not, and
will procure that no Member of its Group will, for so long as it or any
Member of its Group holds any Shares, directly or indirectly carry on or
be interested in any business--
(a) in the Territory that competes with the Business; or
(b) which competes with the business of [ ] or a Member of its
Group.
14.3 [The Company undertakes--
(a) with [ ] that it will not and will procure that no Member
of its Group will, for so long - as.it or any Member of its Groupholds any Shares carry on any business which competes with any
business carried on [ ] or any Member of its Group; and
(b) with [ ] that it will not and will procure that no Member
of its Group will for so long as it or any Member of its Group
holds any Shares or at any time thereafter compete with any
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 77/83
business carried on outside the Territory by [ ] or any
Member of its Group.]
14.4 Nothing in this clause 14 shall prohibit any Shareholder or any Member of its Group
from--
(a) being or becoming the owner for investment purposes of not
more than 20 per cent of the shares or other securities of any
company listed on a recognised stock exchange; or
(b) acquiring any shares or other securities or having any other interest in
any business or company if a minor part of that business or the business of
that company consists of the Business, provided that the acquisition of that
part of the business in question is not the principal reason for theacquisition and the Shareholder in question or the relevant Member of its
Group forthwith offers to dispose of that part of the business in question to
the Company on an arms-length basis and keeps such offer open for
acceptance within 90 days.
14.5 Each Shareholder undertakes with the other Shareholder and theCompany that it shall not, for so long as it owns any Shares and for a
period of twelve months after it ceases to own any Shares--
(a) solicit or entice away or attempt to solicit or entice away from
that other Shareholder or the Company the custom of any person
who is or has at any time within one year prior to the date inquestion been a customer, client, agent or correspondent of, or in
the habit of dealing with, that other Shareholder or the Company;
or
(b) solicit or entice away or attempt to solicit or entice away fromthat other Shareholder or the Company any employee of that other
Shareholder or the Company, whether or not that employee would
commit a breach of contract by leaving his employment.
15. GUARANTEE CLAUSE
Each of the Parents ("the Parent")--
(a) undertakes that it will procure the due and punctual
performance by any Shareholder which is a Member of its Groupof the obligations of that Shareholder under this Agreement; and
(b) as primary obligor and not merely as a surety undertakes to
indemnify each of the Company, the other Parent and anyShareholder which is a Member of the other Parent's Group ("the
Other Parties") against any loss, damage, costs or expense arising
out of any default by any Shareholder which is a Member of the
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 78/83
Parent's Group the due and punctual performance by the
Shareholder of all of the obligations of the Shareholder under this
Agreement.
16. FORCE MAJEURE
D-18
16.1 For the purposes of this Agreement "Force Majeure" means anycircumstances beyond the reasonable control of either party (including,
without limitation, any strike, lock-out or other form of industrial action).
16.2 If any party is unable to comply with any of its obligations under thisAgreement [or any of the Ancillary Agreements] because of Force
Majeure it shall forthwith notify the other parties of the nature and extent
of the Force Majeure.
16.3 No party shall be deemed to be in breach of this Agreement, or
otherwise be liable to any other party, by reason of any delay in
performance, or the non-performance, of any of its obligations hereunder,to the extent that the delay or non-performance is due to any Force
Majeure of which it has notified the other parties, and the time for
performance of that obligation shall be extended accordingly.
16.4 If the performance by any party of any of its obligations under this
Agreement is affected by Force Majeure for a continuous period in excessof 6 months, [the parties shall enter into bona fide discussions with a view
to alleviating its effects, or to agreeing upon such alternative arrangements
as may be fair and reasonable] [any of the other parties shall be entitled to
terminate this Agreement by giving written notice to the other parties].
17. DURATION AND TERMINATION
17.1 Subject as provided in the following provisions of this clause, this
Agreement shall continue in force for a period of [ ] years from
its date, and shall terminate at the end of that period unless at any timebefore the expiry of that period the parties agree that it shall continue in
force.
17.2 If at any time before the termination of this Agreement pursuant to
clause 17.1 one of the Shareholders notifies the other in writing that itwishes it to continue in force, but the other does not wish it to do so, thatShareholder may, at any time before the termination of this Agreement
and provided that there is no agreement between the parties that this
Agreement shall continue in force has been reached, give a further notice
in writing to the other Shareholder, whereupon the other Shareholder shallbe deemed to have given a sale notice pursuant to the Share Transfer
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 79/83
Provisions, and the provisions of clause 9.4 and 9.5 shall apply, the
necessary changes being made.
17.3 If--
(a) an encumbrancer takes possession, or a receiver is appointed, of
any of the property or assets of either Shareholder or of any
company of which it is a Subsidiary;
(b) either Shareholder or any company of which it is a Subsidiarybecomes subject to an administration order or makes any voluntary
arrangement with its creditors ;
(c) either Shareholder or any company of which it is a Subsidiary
goes into liquidation (except for the purposes of amalgamation or
re-construction and in such a manner that the company resulting
therefrom effectively agrees to be bound by or assume the
obligations of that company);
(d) either Shareholder or any company of which it is a Subsidiaryceases, or threatens to cease, to carry on business; or
(e) control of either Shareholder or of any company of which it is aSubsidiary is acquired by any person not having control on the date
of this Agreement,
that Shareholder shall forthwith give written notice of the
occurrence of that event to the other Shareholder or, if it does not
do so, shall be deemed to have done so upon the other Shareholder
becoming aware of the relevant event.
17.4 The events specified in clause 17.3 shall be deemed to include, inrelation to any company which is subject to the law of any foreign
jurisdiction, any event which under the law of that jurisdiction is
equivalent to any of the events so specified.
17.5 If either Shareholder--
(a) commits any [serious or continuing] breach of any of the
provisions of this Agreement or of any of the Ancillary
Agreements and, if the breach is capable of remedy, fails to
remedy it within 30 days after being given a written notice
containing full particulars of the breach and requiring it to beremedied; or
(b) gives or is deemed to give a notice to the other Shareholder
pursuant to clause 17.3, the other Shareholder shall be entitled, at
any time within 30 days after the expiration of the 30-day periodreferred to in (a) above or receipt of the notice referred to in clause
17.3 (or after it has become aware of any event in respect of which
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 80/83
such a notice should have been so given, if earlier), to give written
notice to the first-mentioned Shareholder--
(i) requiring it to sell its Shares, in which event that
Shareholder shall be deemed to have given a sale noticepursuant to the Share Transfer Provisions on the date of
service of that written notice; or
(ii) requiring the Company to be wound up, in which event
the parties shall forthwith take all steps necessary to do so.
17.6 If for any reason the Company is at any time wound up, this Agreement shall
thereupon terminate.
17.7 For the purposes of clause 17.5(a), a breach shall be considered
capable of remedy if the party in breach can comply with the provision in
question in all respects other than as to the time of performance (provided
that time of performance is not of the essence).
17.8 The rights given by this clause 17 shall not prejudice any other rightor remedy of either Shareholder in respect of the breach concerned (if any)
or any other breach, whether of this Agreement or of any of the Ancillary
Agreements.
18. EFFECTS OF TERMINATION
18.1 If at any time any Member of the [ ] Group or any Member of
the [ ] Group, as the case may be, ceases to be a Shareholder so
that none of the Shares are held by any of the Members of that Group, then
within 28 days of that event occurring the other Shareholder shall procure
that the name of the Company be changed so that it does not include--
(a) where a Member of the [ ] Group has ceased to be a
Shareholder, the word " " or anything confusingly or deceptively
similar thereto; and
(b) where a Member of the [ ] Group has ceased to be a
Shareholder, the word " " or anything confusingly or deceptively
similar thereto, and all appropriate stationery and other materialincorporating such name or initials shall thereupon cease to be
used.
18.2 Upon the termination of this Agreement for any reason--
(a) [each of the Ancillary Agreements shall [, except to the extentotherwise specified therein,] terminate automatically in accordance
with their respective terms;]
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 81/83
(b) any provision of this Agreement which is expressed to continue
in force after termination shall continue in full force and effect;
and
(c) subject as provided in this clause 18, and except in respect of any accrued rights, the parties shall not be under any further
obligation to each other.
19. NATURE OF AGREEMENT
D-21
19.1 This Agreement is personal to the parties and none-of them mayassign, mortgage, charge (otherwise than by floating charge) or sub-
licence any of its rights hereunder, or sub-contract or otherwise delegate
any of its obligations hereunder, except with the written consent of the
other parties.
19.2 Nothing in this Agreement shall create, or be deemed to create, a
partnership, or the relationship of principal and agent, between the partiesor any of them.
19.3 This Agreement contains the entire agreement between the partieswith respect to its subject matter and may not be modified except by an
instrument in writing signed by the duly authorised representatives of the
parties.
19.4 Each party acknowledges that, in entering into this Agreement, it
does not do so in consideration of or in reliance on any representation,warranty or other provision except as expressly provided in this
Agreement, and all conditions, warranties or other terms implied by statuteor common law are excluded to the fullest extent permitted by law.
19.5 If any provision of this Agreement is held by any court or other
competent authority to be invalid or unenforceable in whole or in part, thisAgreement shall continue to be valid as to its other provisions and the
remainder of the affected provision.
19.6 No failure or delay by any party in exercising any of its rights under
this Agreement shall be deemed to be a waiver thereof and no waiver of a
breach of any provision of this Agreement shall be deemed to be a waiver
of any subsequent breach of the same or any other provision.
19.7 Where any provision of this Agreement applies expressly or by
implication to the Company, the Shareholders shall procure that the
Company complies with that provision.
20. ARBITRATION
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 82/83
20.1 Subject as provided in clause 20.2, any dispute or difference between
the parties relating to the rights or obligations of the parties under thisAgreement (other than a failure to agree upon a Reserved Matter) shall be
referred to a single arbitrator appointed by agreement between the parties
or, failing agreement between the parties within 30 days after a request fora reference is made by any party, nominated on the application of any
party by the _________.
20.2 Clause 20.1 shall not preclude the making of an application to the
Court for injunctive relief.
21. NOTICES AND SERVICE
21.1 Any notice or other information required or authorised by this Agreement to be
given shall be, given by--
(a) delivering it by hand;
(b) sending it by pre-paid registered first class post ; or
(c) sending it by telex, cable, facsimile transmission, electronic
mail or comparable means of communication;
to the relevant parties at the addresses given in clause 21.4.
21.2 Any notice or information given by post in the manner provided by
clause 21.1 (b) which is not returned to the sender as undelivered shall be
deemed to have been given on the seventh day after the envelope
containing it was so posted; and proof that the envelope containing any
such notice or information was properly addressed, pre-paid, registeredand posted, and that it has not been so returned to the sender, shall be
sufficient evidence that the notice or information has been duly given.
21.3 Any notice or information sent by telex, cable, facsimile transmission
or comparable means of communication shall be deemed to have beenduly sent on the date of transmission, provided that a confirming copy of it
is sent as provided in clause 21.1 (b) to the relevant .parties at the
addresses given in clause 21.4 within 24 hours after transmission.
21.4 Service of any document for the purposes of any legal proceedings
concerning or arising out of this Agreement shall be effected by any partyby causing it to be delivered to the relevant party at its registered orprincipal office, or to such other address as may be notified to it by that
party in writing from time to time.
22. MISCELLANEOUS
8/3/2019 Joint Venture Agreements
http://slidepdf.com/reader/full/joint-venture-agreements 83/83
22.1 Each party shall from time to time (both during the continuance of this Agreement
and after its termination) do all such acts and execute all such documents as may be
reasonably necessary in order to give effect to the provisions of this Agreement.
22.2 The parties shall bear their own costs of and incidental to the preparation, execution
and implementation of this Agreement.
23. PROPER LAW
23.1 Subject as provided in clause 23.2, ________--only shall apply to the
whole of this Agreement .
23.2 Any question arising out of this Agreement as to the construction or
effect of any Intellectual Property shall be decided in accordance with thelaws of the country in which the Intellectual Property in question has been
granted or filed or exists.
23.3 [The parties hereby submit to the exclusive jurisdiction of the High
Court of [ ] .