The Model Joint Venture Agreement - …

1 Joint Venture Agreement Between Large Member and Small Member Dated effective as of , 200 The Member Interests and/or Units of [Company] (the Member Interests ) are subject to the restrictions on transfer and other terms and conditions set forth in this Agreement . The Member Interests have been acquired for investment only and have not been registered under (a) the Federal Securities Act of 1933, as amended or (b) any other state securities law. The Member Interests may not be offered for sale, pledged, hypothecated, sold, assigned, or transferred, except in compliance with (i) such laws and (ii) the terms and conditions of this Agreement . Comment: This legend is included for the reasons explained in the Commentary to Model Joint Venture Agreement and Contents Article 1: Definitions and Rules of Construction .. 36 Certain Defined Terms .. 36 Rules of Construction.

2 36 Article 2: Establishment of the Company .. 38 Establishment of the Company .. 38 Name .. 41 Term .. 41 Representations and Warranties .. 41 Covenants Pending Closing .. 49 Closing Conditions and Termination .. 50 Place and Time of Closing .. 51 Closing Deliveries .. 51 Initial Member Interests .. 55 Treatment of Member Interests as Securities under UCC Article 8 .. 56 Company Obligations & Rights .. 58 Article 3: Capital Contributions .. 59 Initial Capital Contributions .. 59 Additional Capital Contributions and Member Loans .. 59 Failure of a Member to Make a Required Additional Capital Contribution or Make a Required Member Loan .. 61 No Withdrawal of or Payment of Interest on Capital .. 63 Article 4: Allocation of profits and Losses; Distributions .. 64 Shares of Profits and Losses .. 64 Definitions .. 65 Distributions .. 66 Payment of Distributions if Shortfall Loans Outstanding.

3 68 No Priority .. 68 Other Distribution Rules .. 68 Liquidating Distribution Provisions .. 69 Distribution Policy .. 69 Limitation upon Distributions .. 69 Article 5: Management .. 69 Management Committee .. 71 Management Committee Meetings .. 74 Voting of Managers; Quorum .. 76 Actions Requiring Management Committee Approval Major .. 78 Actions Requiring Management Committee Approval Other .. 82 Chief Executive Officer .. 83 Other Officers and Employees .. 84 Business Plan .. 86 Dispute Resolution Procedures .. 89 Standard of Conduct .. 91 Managers and Officers Exculpation .. 94 Managers and Officers Indemnification .. 95 Article 6: Transfer Restrictions on Member Interests .. 97 Restrictions on Transfer of Member Interests .. 98 Assignment to Controlled Persons .. 103 Effect of Non-compliance .. 105 Article 7: Dissolution or Buy-Sell In the Absence of 106 Applicability.

4 107 Triggering Events Absence of Default .. 107 Remedies Absence of Default .. 110 Voluntary Buy-Sell .. 110 Article 8: Dissolution and Other Rights upon Default .. 111 Applicability ..112 Definitions Defaulting Member and Non-Defaulting Member and Default Event .. 112 Remedies Upon Default by One Member .. 118 Remedies if Both Members are Defaulting Members .. 125 Article 9: Dissolution Procedures .. 126 Generally .. 126 Method of Sale .. 127 Application of Proceeds of Liquidation .. 128 Certified Liquidation Statement .. 129 Article 10: Buy-Sell in the Absence of Default .. 129 Offer to Buy or Sell .. 130 Terms of the Offer .. 131 Offeree s Response to Offer .. 132 Closing and Date of the Closing .. 133 Deliveries at the Closing .. 133 Default by Purchasing Member .. 134 Article 11: Buy-Sell upon Default .. 142 Generally .. 142 Price if Non-Defaulting Member s Member Interest is Being Purchased and Sold.

5 143 Price if Defaulting Member s Member Interest is Being Purchased and Sold .. 143 Resolution of Disagreement as to Amount .. 144 Default Buy-Sell Closing Generally .. 147 Default Buy-Sell Closing Selling Member Deliveries .. 148 Default Buy-Sell Closing Purchasing Member Deliveries .. 149 Default Buy-Sell Closing Claims against Purchased Member Interest .. 151 Default Buy-Sell Closing Default by Selling Member .. 151 Article 12: Reporting and Accounting provisions .. 152 Books and Records .. 153 Other Accounting and Tax Provisions .. 153 Distribution of Financial Statements and Other Reports .. 154 Right of Inspection and Examination .. 155 Auditors .. 155 Article 13: Dispute Resolution .. 155 Generally .. 156 Dispute Resolution Procedures .. 157 Article 14: Indemnification .. 160 Survival; Effect of Knowledge; Other .. 161 Indemnification by Large Member.

6 166 Indemnification as to Environmental Matters by Large Member .. 170 Indemnification by Small Member .. 172 Deduction from Indemnification Amount .. 172 Time Limitations .. 174 Procedure for Indemnification Third Party Claims .. 176 Procedure for Indemnification Other Claims .. 179 Satisfaction of Indemnification Obligations .. 179 Exclusiveness of Remedies .. 181 Article 15: Competition .. 182 Competition .. 182 Distribution .. 186 Independent Agreements .. 186 Scope of Restrictions .. 186 Article 16: Confidentiality .. 187 Confidentiality This Agreement .. 187 Confidentiality Company Information .. 188 Definitions Company Information and Other .. 189 Certain Exceptions .. 190 Permitted Disclosure to Representatives .. 192 Disclosure to Non-Representatives .. 193 Continuing Protection of Trade Secrets .. 193 Remedies.

7 193 Attorney-Client Privilege .. 194 Continuing Obligations .. 195 No Limitation on Other Agreements .. 195 Pre- Joint Venture Confidentiality Agreement .. 196 Article 17: Miscellaneous .. 196 Further Assurances .. 196 Notices .. 197 Jurisdiction; Service of Process .. 199 Waiver .. 201 Entire Agreement and Modification .. 202 Assignments, Successors .. 203 No Third Party Rights .. 204 Severability .. 205 Time is of the Essence; Computation of Time .. 206 Expenses .. 206 Governing Law .. 206 Counterparts .. 208 Attachments .. 211 Definitions and Certain Rules of Construction .. 211 Representations and Warranties of Large 223 Representations and Warranties of Small 269 Covenants of Large Member and Small Member Prior to Closing Date .. 287 Conditions Precedent to Large Member s Obligations to Close and Right to Terminate Prior to Closing.

8 295 Conditions Precedent to Small Member s Obligations to Close and Right to Terminate Prior to Closing .. 313 (a)(iii) Form of Opinion of Large Member s Lawyers Note: Not included, but see forms of opinions and commentary in the Model Stock Purchase Agreement with Commentary and in the Model Asset Purchase Agreement with Commentary. (a)(v)-A Large Member Contributed Assets Note: Not included, but needs to list the assets that are being contributed to the Company by Large Member. (a)(v)-B Large Member Bill of Sale and Assignment .. 319 (a)(v)-B Large Member Assignment and Assumption Agreement .. 323 (b)(iii) Form of Opinion of Small Member s Lawyers Note: Not included, but see forms of opinions and commentary in the Model Stock Purchase Agreement with Commentary and in the Model Asset Purchase Agreement with Commentary. (b)(v)-A Small Member Contributed Assets Note: Not included, but needs to list the assets that are being contributed to the Company by Small Member.

9 (b)(v)-B Small Member Bill of Sale and Assignment Note: See Attachment (a)(v)-B. (b)(v)-B Small Member Assignment and Assumption Agreement Note: See Attachment (a)(v)-B. (c) Authority of Officers Note: Not included, but should be bylaw-type provisions that set forth the authority of the Company s officers. 12 Accounting and Tax Matters .. 325 Exhibits One Business Plan [ Model JV Agreement (a)] Note: To be supplied by business people, but need to determine whether have Critical Targets that need to be addressed as a termination event (See Model JV Agreement ). Joint Venture Agreement This is a Joint Venture Agreement (together with all Attachments and Exhibits and amendments to it, this Agreement ) between , a corporation ( Large Member ), and , a corporation ( Small Member ), and dated [as of] , 200.

10 RECITALS A. Large Member, through its High Tech Division, and Small Member are each currently engaged in the research, development, manufacturing and distribution of products ( Initial Products ), that each will manufacture on a toll basis for the Joint Venture and that will be distributed by the Joint Venture . B. Large Member, through its High Tech Division, currently distributes its Initial Products in the United States and elsewhere in the world, and Small Member currently distributes its Initial Products in the United States. C. Large Member and Small Member desire to form a Joint Venture as a Delaware limited liability company (the Company ) for the distribution of Initial Products and for the research, development, manufacture and distribution of products that are not Initial Products ( New Products; and with such activities as to the Initial Products and the New Products being the Business ).