JOINT VENTURE AGREEMENT
THIS AGREEMENT (hereinafter referred to as “the Agreement”) is entered into by and between _________________________________ And _________________________________ (hereinafter referred to as “the Venturers”) for the following purposes:
WHEREAS the parties desire to form a Joint Venture (“the Venture”), by execution of this agreement for the purposes provided and fix and define their respective responsibilities interests and liabilities in connection with the performance of the before mentioned, and
NOW THEREFORE, in consideration of the mutual covenants and promises herein contained, the parties herein agree to constitute themselves as Joint Venturers, henceforth “Venturers”, for the purposes before mentioned, and intending to be legally bound hereby, the parties hereto, after first being duly sworn, do covenant, agree and declare as follows:
1. Definitions :
i. “Venturers” shall mean______________ and _________________ and any successor/s as may be designated or admitted to the Venture.
ii. “Net Profit” or “Net Losses” means the taxable income and the loss of the Venture except as follows :
iii. The Book Value of an asset shall be substituted for its adjusted tax basis if the two differ, but otherwise Net Profit or Net Losses shall be determined in accordance with the provisions of the Income Tax Act, 1961.
iv. “Project” shall mean __________________
v. “Percentage of Participation” shall refer to that figure set forth below.
2. Formation, Name and Principal Place of Business:
a. The Venturers do hereby form a joint venture in order for the venture to carry on the purposes for which provisions are contained hereinafter.
b. The Venturers shall execute all such documents or declaration as may be required under any law for the time being in force, in order for the Venture to operate and carry on its business and shall do all other acts and things requisite for the continuation of the Venture as a Joint Venture pursuant to applicable law for the time being in force.
ii. Name : The Name and style under which the Venture shall be conducted is: Principal Place of Business : The Venture shall maintain its principal place of business at ________________. The Venture may re-locate its office from time to time or may have additional offices as the Venturers may determine.
3. Purpose of the Joint Venture :
The purpose of the Joint Venture shall be the following :
4. Term : The term of the Joint Venture shall commence as of the date hereof and shall be terminated and dissolved upon the earliest to occur of:
a. Completion of the Project;
c. The unanimous agreement of the Venturers; or
d. A court order of competent jurisdiction.
5. Percentage of participation :
a. Except as otherwise provided in sections 6.0 and 9.0 hereof, the interest of the parties in any gross profits and their respective shares in any losses and/ or liabilities that may result from the Venture and their interests in all property and equipment acquired and all money received in connection with the performance of the Project shall be as follows:
(Name of Joint Venture Partner & Percentage) (Name of Joint Venture Partner & Percentage) ________________________________
b. The parties agree that in the event any losses arises out of results from the Performance of the Project, each venturer shall assume and pay, the share of the losses that is equal to the percentage of the participation.
c. If for any reason, a Venturer sustains any liabilities or is required to pay any Losses arising out of or directly concerned with the construction of the Project which are in excess of its Percentage of Participation in the Joint Venture, the other Venturer shall promptly reimburse such Venturer this excess, so that each and every member of the Joint Venture will then have paid its proportionate share of such losses to the full extent of its Percentage of Participation.
d. The Venturers agree to indemnify each other and to hold the others harmless from any and all losses of the Joint Venture that are in excess of such other Venturer’s Percentage of Participation: Provided that the provision of this sub-section shall be limited to the losses that are directly connected with or arise out of the performance of the Project and shall not relate, to or include any incidental, indirect or consequential losses that may be sustained or suffered by a party.
e. Initial Contribution of the Venture :
I. The Venturers shall contribute the property to the Venture and their Capital Account shall each be credited with the appropriate value of such contribution in accordance with their Venture interest.
II. Except as otherwise required by law or under this agreement, the Venturers shall not be required to make any further capital contribution to the Venture.
f. Venture Interests : Upon execution of this agreement the Venturers shall each own the following interests in the Venture:
Joint Venture Partner Percentage:
g. Return of Capital Contribution:
(a) No Venturer shall have the right to withdraw his capital contribution or demand or receive the return of his capital contributions or any part thereof except as otherwise provided under this agreement.
(b) The Venturers shall not be personally liable for the return of the capital Contribution or any part thereof, except as otherwise provided under this agreement. (c) The Venture shall not pay any interest on the capital contribution of any Venturer.
h. Allocation of Net Profits and Losses :
Subject to the provisions of this section, the Net Profits or Losses of this Venture (including any net Capital Gain of the Venture, resulting from any Capital Event), shall be allocated to the Venturers in the following priority:
A. Net Profits:
I. First, to those Venturers with negative Capital Accounts, between them in proportion to the ratio of their negative Capital Account balance, until no Venturer has a negative Capital Account.
II. Thereafter, to the Venturers, pro rata based on their respective Venture interests as set forth in Section 5.2 hereof.
B. Net Losses :
I. Subject to the provisions of this Section Net Losses of the Venture (including any net Capital Loss of the Venture resulting from a Capital Event) shall be allocated to the Venturers pro rata, based upon their respective Venture interests as set forth herein.
II. For purposes of this, Capital Account shall be adjusted Hypothetically. C. Distribution : Distributable cash of the venture shall be distributed to the Venturers pro rata, based on their respective Venture interests as set forth herein.
6. Management :
a. Except as otherwise provided herein the Management of the Joint Venture shall be conducted by all Venturers.
7. Delegation of Authority :
The Venturers agree to a split of the authority between themselves as follows:
a. _______________________________ shall _________________________
b. ______________________________ shall _______________________
8. Joint Venture Bank Account :
a. All Working Capital or other funds received by the Joint Venture in connection with the performance of the Project shall be deposited in a Current Bank Account to be opened with any Bank especially for the Joint Venture, and requiring the joint signatures of the parties for any withdrawals. Said Account shall be kept and operated upon separately and apart from any other account of the Venture.
b. Withdrawals of funds from the Joint Venture Bank Account may be made in such amount and by such persons as authorised by the Venturers.
9. Accounting and Auditing :
a. Separate Books of Accounts shall be kept by the Administrative Managing Partner of the transactions of the Joint Venture. Any Venturer may inspect such books of accounts upon reasonable notice and at any reasonable time.
b. Periodic audits may be made upon said Books of Accounts at such time as authorised by the Policy Committee by persons designated by same and copies of the Audited Accounts shall be furnished to all the Venturers.
c. Upon completion of the Project a final audit shall be made and copies of such final audited accounts shall he furnished to each of the parties.
d. It is understood and agreed that the method of accounting shall be Mercantile system of accounting and the accounting year shall be First day of April to Thirty-first day of March, in accordance with the provisions of the Income Tax Act, 1961.
e. The Administrative Managing Partner shall receive additional compensation over and above the salary agreed to be payable to each Venturer in compliance with the limitations and restrictions provided by the Income Tax Act, 1961.
10. Miscellaneous Provisions :
a. This Agreement constitute the entire Agreement between the Parties and may not be altered, unless the same is agreed upon in writing signed by the parties.
b. This Agreement is binding upon the heirs, representatives, assigns and successors of the parties.
c. This Agreement shall be governed by the laws of India.
Dated this _______________ day of __________ 20____
(Signatures of the Joint Venturers)