Fillable Printable Joint Venture Agreement

Joint Venture Agreement

JOINT VENTURE AGREEMENT

TABLE OF CONTENTS

1. Definitions ........................................................................2

2. Formation of JVC.............................................................3

3. Business of JVC ..............................................................4

4. Share Capital....................................................................4

5. Transfer of Shares to third Parties...................................5

6. Board of Directors and Management of the COMPANY.8

7. Board Meetings and Shareholder’s Meeting...................14

8. Strategic Plans and Budgets.............................................15

9. Dividends.........................................................................15

10. Financial Year Auditors and Audit..................................16

11. Accounts, Records, Reports and Inspection....................16

12. Confidentiality.................................................................17

13. Termination .....................................................................20

14. Deadlock..........................................................................21

15. Consequences of Termination ........................................23

16. Damages..........................................................................24

17. Force Majeure...............................................................25

18. Applicable law, Interpretation, Amendment &

Supplementation of the Agreement..............................26

19. Settlement of Disputes..................................................27

20. Communication.............................................................28

21. Miscellaneous...............................................................28

22. Assignment...................................................................28

23. Headings.......................................................................29

24. Modifications................................................................29

25. Waiver...........................................................................29

26. Independent Parties......................................................29

27. Representation and Authority......................................30

28. Counter Parts................................................................30

29. Additional Documents.................................................30

30. Entire Agreement.........................................................30

31. Conditions Precedent...................................................31

JOINT VENTURE AGREEMENT

This Joint Venture Agreement(hereinafter referred to as “Agreement’) made and

entered into at .......................this .............day of ...............200--.

BY AND AMONG

SEIL ENGINE INT’L LIMITED, a company registered in ----------------- under the -----

------------ Offshore Business Activities Act 1992 and having its registered office at P.O.

Box NO.----, -----------------(hereinafter referred to as “SEIL” which expression shall

mean and include its successors and permitted assigns.),

GLOBAL POWERS LIMITED a company registered in ----------------- under the --------

--------- Offshore Business Activities Act 1992 and having its registered office at P.O.

Box No.----, ----------------- (hereinafter referred to as “GPL” which expressions shall

mean and include its successors and permitted assigns)

AND

TRADE INT’L CORP., a company duly exiting and organized under the laws of Korea,

having its principal office at -----------------------------------------------------------------------

------------------------, Korea(hereinafter referred to as “TIC” which expressions shall

mean and include its successors and permitted assigns)

WITNESSETH :

WHEREAS, SEIL is a subsidiary company of Korea Engineering Co., Limited, a

leading Korean company having proven capabilities in the engineering, design and

construction on a turn-key basis of power plants, and possessing facilities for the

manufacture of equipment and machinery for power plants.

WHEREAS, GPL is an established ----------------- company having experience in diesel

power projects including overseeing operation, maintenance and repair of diesel power

plants, overall plant supervision, providing procurement and plant construction

assistance and financing structure assistance

WHEREAS, TIC is a company having experience in procurement and international

trade of equipment machinery and raw materials etc. foreign investment and project

financing.

SEIL,IPGL and TIC wish to form a Joint Venture Company (JVC) in ----------------- to

jointly promote, own, operate and manage diesel power projects in -----------------.

SEIL, GPL and TIC have had discussions to finalize the terms and conditions of the

participation of SEIL, GPL and TIC in the JVC, the manner in which the JVC will

conduct business and its day to day management and operations and wish to record in

writing the said terms and conditions mutually agreed upon by and among them and

matters incidental and ancillary thereto.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, SEIL,

GPL and TIC hereto agree as follows;

ARTICLE 1. DEFINITIONS

1. The terms stated below have the following respective meanings within this

Agreement, unless the context results in a different meaning.

(a) “ACT” means the ----------------- Offshore Business Activities Act, 1992, as

mended from time to time.

(b) “AFFILIATE” shall mean with respect to SEIL or IPGL or TIC, any entity

(other than the JVC) which controls or is controlled by or is under the common

control with SEIL or GPL or TIC respectively. An entity controls another when

its owns or controls, directly or indirectly, more than fifty percent (50%) of the

voting securities or voting interests of the said other entity or when it controls

the composition of the board of directors of the said other entity.

of the JVC.

(d) “MEMORANDUM AND ARTICLES OF ASSOCIATION” refers to the

document agreed among the Parties to this Agreement which stipulates the

objective, the organizational principles and the methods of internal

management and administration for the JVC in accordance with the principles

laid down in this Agreement

(e) “PERMITTTED NOMINEE” means any “AFFILATE” of a Party who has

been permitted by that Party to acquire share in the JVC.

(f) “PARTY” and “PARTIES” shall mean SEIL, GPL and TIC individually and

collectively as the context may require.

(g) “JOINT VENTURE AGREEMENT” or “THIS AGREEMENT” shall mean

this present Agreement and shall include any subsequent written modification

and amendments thereto.

(h) “JVC” means the Joint Venture Company to be jointly promoted by the

PARTIES hereto in accordance with and as indicated in this Agreement.

ARTICLE 2. FORMATION OF THE JVC

2.1 The JVC will be incorporated with the name of INTERNATIONAL POWER

PROJECT INVESTMENT LIMITED or such other name as may be mutually

agreed and approved by the regulatory authorities in -------------. The registered

office of the JVC will be situated at such place as shall be mutually agreed.

2.2 The JVC will be a private company with liability by share in accordance with the

laws of -------------. The liability of the shareholder in the JVC will be limited to

their respective investments on this issued and paid-up capital.

2.3 The MEMORANDUM and ARTICLES OF ASSOCIATION of the JVC shall

reflect the terms of this Agreement and be in such form as may be agreed among

the PARTIES. It is agreed that as among the PARTIES this Agreement shall

prevail and have an overriding effect, notwithstanding anything contained in the

MEMORANDUM and ARTICLES OF ASSOCIATION of the JVC. In the event

of any inconsistency between this Agreement and the MEMORANDUM and

ARTICLES OF ASSOCIATION of the JVC, the PARTIES agree and confirm that

this Agreement would prevail and that they would be bound by this Agreement

and that they would forthwith take steps to amend the MEMORANDUM and

ARTICLES OF ASSOCIATION of the JVC so as to remove such inconsistency.

ARTICLE 3. BUSINESS OF JVC

3.1 JVC shall:

(a) carry on the business of promoting ,owning, operating, and maintaining power

projects in India

(b) operate efficiently and economically

India;

(d) maximize profits and provide attractive return on investment to the Parties on

an ongoing basis.

ARTICLE 4. SHARE CAPITAL

4.1 JVC will initially have an authorised share capital of ----. million divided

into ...................million Equity Share of ----.10(ten) each, which authorised share

capital will be in stages increased to ----...........million or to such other amount as

may be agreed among the PARTIES.

4.2 The initial issued, subscribed and paid-up share capital of the JVC will be ----.

million divided into million Equity Share of ----.10 (ten) each. Such

issued, subscribed and paid-up capital shall be subscribed for cash at par and paid-

up and held by the PARTIES hereto as follows;-

(a) 60% of the issued and paid-up equity share capital of the JVC shall be

subscribed and held by SEIL/PERMITTED NOMINEES.

(b) ()% of the issued and paid-up equity share capital of the JVC shall be

subscribed and held by GPL / PERMITTED NOMINEES.

subscribed and held by TIC/PERMITTED NOMINEES.

4.3 The issued, subscribed and paid-up equity share capital may by mutual agreement

be increased. Such further issue of shares shall be made to the PARTIES in the

proportion referred to in Clause 4.2 unless otherwise agreed in writing by the

PARTIES. In the event a PARTY does not wish to subscribe to such further issue

of share of JVC offered to it and required to finance the ongoing operation of the

JVC’s business, then the remaining PARTY shall have the right to take up such of

the shares refused to be taken up by the first PARTY and the first PARTY shall

have its holding in the equity share capital of JVC diluted accordingly.

4.4In the event of PARTIES’ mutual agreement to change the pattern of holding of

the equity share capital of JVC to enable JVC to offer shares to public or any other

strategic investor, the respective shareholding of the PARTIES shall be changed in

such proportion as the PARTIES may decide so however that the holding of GPL

shall be not less than 29.55% and that of SEIL shall be not less than 29.55% of the

paid-up equity capital of JVC and that of TIC shall be not less than ( )% of the

paid-up equity capital of JVC. Such change in the shareholding pattern may be

effected only on the terms and conditions which may be mutually agreed in

writing among the PARTIES.

ARTICLE 5. TRANSFER OF SHARES TO THIRD PARTIES

5.1 Any PARTY or PARTIES/ PERMITTED NOMINEES (Selling Shareholder) shall

not be entitled to transfer /sell any of the shares held by it/them in JVC except in

accordance with the provisions of this clause;

(a) If any PARTY or its respective PERMITTED NOMINEES (hereinafter

referred to as “Offeror”) desire to transfer any or all of its / their shares in

JVC to any person or equity, it shall offer such shares in writing in the first

instance to the other PARTIES hereto (hereinafter referred to as “Offeree” ).

The Offeree shall be entitled to purchase the shares so offered or nominate

any person or entity of its choice to accept the shares offered. Such Nominee

shall be approved by the other PARTIES hereto, provided that such approval

shall not be unreasonably withheld. Sale and purchase of such shares shall

be at a Fair Price as defined hereinafter.

The Offeree shall be entitled to accept or reject such offer within a period of

90(ninety) days from the date of receipt of the offer or within a period of 30

(thirty) days from the date of fixation of Fair Price, whichever is later. If the

Offeree or its nominees do not convey its / their acceptance in writing to the

Offeror within such period, the offer shall be deemed to have been rejected

by the Offeree.

Only if such offer is first rejected or is deemed to have been rejected by the

Offeree, the Offeror shall be entitled to sell the shares to any third party or

equity at the Fair Price or at a price higher than the Fair Price(hereinafter

referred to as the “Opportunity Price”), provided, however, that once the

Offeror identifies such third party the Offeror shall forthwith disclose to the

other party the name of the third party and the Opportunity Price at which

the shares are proposed to be transferred.

Upon such notification by the Offeror, the Offeree once again shall have the

option to either purchase the said shares from the Offeror at the Opportunity

Price or allow the Offeror to sell the said shares to the said third party at the

Opportunity Price; such option shall be exercised by the Offeree within 10

(ten) days of such notification.

Such right of the Offeror to sell the shares to any third party shall be

exercised within a period of 60(sixty) days from the date when such offer is

deemed to have been rejected.

The Offeree / its nominees shall have a right of first refusal as aforesaid only

if it and / or its nominees agree to purchase all the shares offered by the

Offeror.

(b) Notwithstanding anything herein contained where a PARTY exercises its

right to sell the shares to any third party consequent to the other PARTIES

rejecting the second offer or such second offer being deemed to have been

rejected as outlined in Clause (a) above, the exercise of such right will be

subject to;

(i) the third party being acceptable to the other PARTIES

(ii) such third party agreeing in writing as a condition precedent to the

transfer of share to it to be bound by the terms and conditions of this

Agreement as though it was a signatory to this Agreement

PERMITTED NOMINEES accept the offer to purchase of the other

PARTIES/its PERMITTED NOMINEE shares but be prevented from

acquiring such shares by virtue of any Government restrictions or refusal of

approval, the first PARTY/its PERMITTED NOMINEES shall have a right

to nominate any party who is free to acquire such shares, and agree to abide

by this Agreement, provided however that the other PARTIES to this

Agreement has been consulted in this regard.

(d) Notwithstanding any transfer, acquisitions of shares as contemplated in

clauses (a) above, the PARTIES shall at all times be responsible and liable to

discharge all their obligations to JVC and to each other so long as they are

the shareholders in JVC.

(e) Nothing contained in clause (a) above shall apply to transfer of shares by the

PARTIES(hereinafter referred to as “”Transferor”) to its PEMITTED

NOMINEES (hereinafter referred to as ”Transferee”), provided that such

nominee agrees in writing as a condition precedent to the transfer to be

bound by the terms and conditions of this Agreement as though it was a

signatory to this Agreement and undertakes to re-transfer the shares to the

Transferor in the event that the Transferee ceases to be the PERMITTED

NOMINEE of the Transferor. Each of the PERMITTED NOMINEES

holding shares of JVC pursuant to this clause shall be deemed to be a

PARTY to this Agreement as if originally named herein.

5.3 “Fair Price” means the price to be determined by mutual agreement of the

PARTIES within a period of 15(fifteen) days from the date of the offer being

communicated to the other PARTIES. In the event of an agreement not being

reached, the PARTIES shall within a maximum period of 5 (five) days appoint

their auditors/chartered accountants (of their choice) to value the shares

independently and require such valuation to be made within a maximum period

of 30 (thirty) days form the date of appointment. In the event of there being a

difference in the two valuations of less than 10 (ten)% of the higher value than

the Fair Price shall be the average of both the valuations. If the difference in

both valuation is more than 10 (ten) % of the higher value than in that event the

aforesaid auditors/chartered accountants of the PARTIES shall within a period of

10 (ten) days of the later valuation mutually appoint in independent

internationally reputed firm of chartered accountants to be the final valuers of the

shares. Such valuers shall determine the Fair Price as an independent valuers

within a period of 30 (thirty)days of the appointment and such valuation shall

be final and binding upon the PARTIES. The auditors/chartered accountants

shall act as valuers and not as arbitrators. The valuation shall be made on the

basis of JVC being a going concern and taking into account the historic results of

a representative period and reasonable projections of the future.

ARTICLE 6. BOARD OF DIRECTORS AND MANAGMENT OF THE JVC

6.1

(a) The PARTIES shall be jointly responsible for the management of JVC

(b) The Board of Directors of JVC(hereinafter referred to as “Board”) shall

consist of ( ) directors of whom GPL shall be entitled to nominee/designate

( ) directors and SEIL shall be entitled to nominate/designate ( )directors

(including the managing director) and TIC shall be entitled to

nominate/designate ( ) directors. Any increase in the strength of the

Board shall be in the same proportion.

Such rights of representation on the Board shall be enjoyed by a PARTY as

long as it holds equity shares in the capital of JVC. All directors except

the managing director shall be liable for retirement by rotation.

6.2 For the purpose of implementing this Agreement, the PARTIES hereto agree and

undertake that they shall, at all times, exercise their respective voting rights as

shareholders in the JVC in such manner and shall ensure that their respective

representatives on the Board of the JVC shall so vote at the Board and shall so act

so as to ensure the proper implementation and observance of the terms and

provisions contained in and in the spirit of this Agreement.

6.3 GPL or, as the case may, SEIL or TIC shall be entitled to recommend the

appointment of alternate directors in the event that directors appointed or

nominated or designated by GPL or, as the case may be, SEIL or TIC are unable

to attend the meetings of the Board. The Board shall accept such

recommendations and forthwith appoint these alternate directors in accordance

with the Act.

The Board shall, if so required by a non-resident director, appoint a person who is

already a director or an alternate director of the JVC to be appointed as an

alternate director for another director(s), in which event, the alternate director(s)

so appointed shall have additional vote(s).

6.4 A vacancy on the Board shall be filled in as follows;

(a) In the case of a director who was nominated/designated for appointment by

GPL vacating his office as a director, the person to be appointed to fill the

vacancy shall be one nominated /designated by GPL.

(b) In the case of a director who was nominated/designated for appointment by

SEIL vacating his office as a director, the person to be appointed to fill the

vacancy shall be one nominated /designated by SEIL.

TIC vacating his office as a director, the person to be appointed to fill the

vacancy shall be one nominated /designated by TIC.

6.5 In the event of appointment of additional directors any PARTY shall have the

right to nominate such directors, subject to the provisions of Clause 6.1.

6.6 The cost of travel, lodging and boarding of the directors and other out of pocket

expense incurred by them for attending the meetings of the Board shall be borne

by the JVC.

6.7 Each director shall be paid such sitting fees for attending any meeting of the

Board as may be decided by the Board within the limits in this respect prescribed

by the Act.

6.8 Any director shall also be entitled to receive such remuneration for service

performed by him for JVC as the Board may decide and be approved by the

shareholders of the JVC.

6.9(a) Subject to clause (b) below, as long as SEIL holds shares in the equity share

capital of JVC, it shall have the right to appoint /nominate the chairman of the

Board of JVC after due deliberations and extensive consultations with the GPL

and TIC.

(b) It is agreed and understood among the PARTIES that notwithstanding what is

stated in Clause (a) above , the first chairman of the JVC shall be

Mr. ........................, who shall be entitled to continue to act as the chairman of

the JVC, so long as SEIL or its PERMITTED NOMINEE is shareholder in the

JVC.

6.10 SEIL shall have the right to appoint and nominate a managing director of JVC.

The managing director shall be in charge of the day to day operations and

management of JVC. The managing director shall be vested with substantial

powers of management which he shall exercise subject to the overall

superintendence, control and direction by the Board.

The managing director shall have the full responsibility and authority to manage

the affairs of JVC within the framework of the business plan, and subject to the

power required to be exercised by the Board or the shareholders under this

Agreement or the provisions of the Act.

6.11 The representation of the PARTIES on any committee or sub- committee of the

Board shall be in the same proportion and be computed in the same manner as

their representation on the Board,

6.12 All matters shall be decided by the Board of JVC by a simple majority of votes.

Provided that, the Board or any committee thereof (whether at its meeting or by

circular resolution) or any executive/employee of the JVC or any

person/committee under the power delegated by the Board shall not take any

decision/action on the following matters involving the JVC except with the

majority of directors which majority shall comprise of at least one affirmative vote

of a director nominated /designated by GPL and one affirmative vote of a director

nominated /designated by SEIL and one affirmative vote of a director nominated /

designated by TIC.