THIS MEMORANDUM OF UNDERSTANDING is entered into on 24 October 2020

Between

(1)            PARTY_1_NAME whose principal place of business is at PARTY_1_ADDRESS_SINGLE_LINE ("Party 1")

(2)            PARTY_2_NAME whose principal place of business is at PARTY_2_ADDRESS_SINGLE_LINE ("Party 2", together with Party 1, the "Parties")

[Insert names and Addresses of Additional Participants (if any)]

Whereas

The Parties wish to set out in this Memorandum the principles of a proposed joint venture in the field of FIELD.

Each party has various interests in the field. The parties wish to establish a PROPORTION joint venture to PURPOSE.

The parties believe that the joint venture will be in their mutual best interests. They recognise that the various arrangements will need careful review but each will endeavour in good faith to agree the detailed terms of the joint venture, on the basis of the principles set out in this Memorandum, and to take all necessary other actions in order successfully to establish the joint venture.

1. Joint Venture Company

1.1 The parties intend to establish a PROPORTION joint venture company to PURPOSE as described further in Annex 1 (the Business).

1.3 The parties' preferred intention is to create a new jointly-owned company. The parties will consider appropriate alternative structures if that becomes necessary or desirable because of tax and cost efficiency.

1.4 The name of the joint venture will be `JV_NAME' or such other name as the parties agree.

2. Activities of the Joint Venture

2.1 The business of the joint venture will be PURPOSE in the field of FIELD. The business may include other technologies and products as the parties agree.

2.2 The parties shall draw up and approve an initial business plan. The board of the joint venture company (the Board) will review the business plan at regular intervals and update it annually.

4. Valuation

4.1 Valuation negotiations will be finalised by the parties before signing the joint venture agreements. The Parties will use all reasonable efforts to agree an appropriate valuation process and methodology. 

4.2 Each party will make available to the other party all information (including financial information) regarding the interests to be vested in the joint venture as the other party may reasonably request in order to facilitate the valuation process.

4.3 If there is a material difference in the valuations of the respective contributions of the parties, the parties will use all reasonable efforts to agree an appropriate cash payment or alternative cost-efficient arrangement for bridging any difference in order to maintain the PROPORTION equity relationship within the joint venture.

4.4 The parties agree that the definitive legal agreements will set out appropriate warranties and indemnities (subject to limits and qualifications to be agreed) in relation to the interests each party contributes. There will be appropriate provisions for compensation or value adjustment arising from any material change in the information provided or representations made by each party for valuation purposes.

5. Capital and Funding

5.1 The parties will hold equity capital of the joint venture on a PROPORTION basis.

5.2 It is the intention of the parties that the joint venture should be self-financing and should obtain additional funds from third parties without recourse to its shareholders. Neither party shall be obliged to contribute further funds. Each party nevertheless acknowledges its intention to support the business of the joint venture in accordance with the current business plan, and will provide guarantees and undertakings as may reasonably be required to enable the joint venture to obtain funds. Unless otherwise agreed, any new equity capital shall be raised on a PROPORTION basis.

6. Board and Management

6.1 Overall management and supervision of the joint venture shall be the responsibility of the Board. Each party shall appoint an equal number of directors to the Board and have equal voting rights. The chairman of the Board shall not have a casting vote. A quorum shall require at least one director appointed by each party.

7. Shareholders Agreement

7.1 Certain key decisions affecting the joint venture shall be reserved for mutual agreement between the parties as shareholders. Final identification of these matters will be for the definitive agreement but they are likely to include:

(a) material change in scope or nature of the business;

(b) making (or terminating) any material joint venture, collaboration or technology licence;

(c) any material contract or transaction outside the ordinary course of business;

(d) major asset or business acquisitions/disposals;

(e) appointment/removal of the Chief Executive and other senior management;

(f) capital expenditure in excess of CURRENCYAMOUNT;

(g) borrowings exceeding an aggregate level of CURRENCYAMOUNT;

(h) approving the annual budget;

(i) changes in dividend policy;

(j) material dealings between the joint venture and the groups of the Parties;

(k) appointing/removing the auditors.

7.2 The Shareholders Agreement shall also include appropriate provisions on:

(a) dividend policy. The joint venture shall, subject to applicable laws and regulations, adopt a maximum distribution policy unless the parties otherwise agree. However, the parties intend that the joint venture should have regard to its internal operation, cash flow and funding requirements;

(b) the joint venture's auditors (who shall be ____________);

(c) the financial year of the joint venture (which shall be ____);

(d) monthly management accounts to be produced in respect of the operations of the joint venture and made available to the Board and the shareholders (together with such additional financial information as they may from time to time require);

(e) each party to have pre-emption rights if the other party wishes to transfer its shares in the joint venture (which, except for intra-group transfers, shall not be permitted for an initial period of 1 year);

(f) appropriate undertakings to be given by the parties not to compete with the business of the joint venture and clarifying the territorial scope of the joint venture business (including in relation to exports outside the territory of the joint venture);

(g) deadlock and dispute resolution.

8. Third Party Approvals

8.1 The parties will use all reasonable efforts to identify as soon as possible any third party consents or approvals which may be required, including:

(a) consents of other partners;

(b) consents of relevant regulatory authorities;

(c) any tax clearances reasonably required by either party in relation to the proposed joint venture structure.

8.2 Material third party consents or approvals will be a pre-condition of completing the joint venture. Each party will endeavour to obtain them as speedily as possible and each will co-operate with the other for this purpose.

9. Confidentiality and Announcements

9.1 Each of the parties shall keep confidential and not disclose to any other person, nor use for any purpose except the purposes of the joint venture, any information obtained from the other party as a result of negotiating, entering into or implementing the joint venture. This does not apply to information which:

(a) is required to be disclosed by operation of law or any stock exchange regulations or any binding judgment or order, or any requirement of a competent authority;

(b) is reasonably required to be disclosed in confidence to a party's professional advisers for use in connection with the joint venture and/or matters contemplated in this Memorandum of Understanding;

(c) is or becomes within the public domain (otherwise than through the recipient party's default).

9.2 No public announcement or press release in connection with the subject matter of this Memorandum of Understanding shall be made or issued by or on behalf of either party without the prior written approval of the other. This does not apply if the announcement or press release is required by law, by any stock exchange or by any governmental authority.

10. Dispute Resolutions

This document is governed by and are to be construed in accordance with English Law.

All disputes controversy, difference or claim arising out of or in connection with this document, including any question regarding its existence, validity or termination, or any dispute regarding non-contractual obligations shall be finally settled under the arbitration rules of the London Court of International Arbitration by one or more arbitrators appointed in accordance with the said rules. The seat of Arbitration shall be London and proceedings shall be conducted in English.

11. Notices and service

11.1 Any notice to be given by one party to the other under, or in connection with, this Agreement shall be in writing and signed by or on behalf of the party giving it.  It shall be served by sending it by email to the address set out in clause 11.2 , or delivering it by hand, or sending it by preā€‘paid recorded delivery, special delivery or registered post, to the address set out in clause 11.3 and in each case marked for the attention of the relevant party (or as otherwise notified from time to time in accordance with the provisions of this clause 11).  Any notice so served by hand, e-mail, fax or post shall be deemed to have been duly given:

  1. in the case of delivery by hand, when delivered;
  2. in the case of fax or electronic mail on a Business Day prior to 5.00 pm, at the time of receipt;
  3. in the case of prepaid recorded delivery, special delivery or registered post, at 10am on the second Business Day following the date of posting

provided that in each case where delivery by hand or by fax occurs after 5pm on a Business Day or on a day which is not a Business Day, service shall be deemed to occur at 9am on the next following Business Day. References to time in this clause are to local time in the country of the addressee.

11.2        The addresses of the parties for the purpose of clause 11.1 are as follows:

Party 1

PARTY_1_NAME

Address: PARTY_1_ADDRESS_MULTI_LINE

 E-mail: PARTY_1_EMAIL

For the attention of: PARTY_1_CONTACT

Party 2

PARTY_2_NAME

Address: PARTY_2_ADDRESS_MULTI_LINE

 E-mail: PARTY_2_EMAIL

For the attention of: PARTY_2_CONTACT

11.3        A party may notify the other party to this Agreement/ of a change to its name, relevant addressee, address or fax number for the purposes of this clause 11, provided that, such notice shall only be effective on:

(a)            the date specified in the notice as the date on which the change is to take place;  or

(b)           if no date is specified or the date specified is less than five Business Days after the date on which notice is given, the date following five Business Days after notice of any change has been given.

11.4        All notices under or in connection with this Agreement shall be in the English language or, if in any other language, accompanied by a translation into English.  In the event of any conflict between the English text and the text in any other language, the English text shall prevail.

11.5        Service of any legal proceedings concerning or arising out of this Agreement shall be effected by causing the same to be delivered to the party to be served at its principal place of business as specified in this Agreement, or to such other address as may from time to time be notified in writing by the party concerned.

12. No Rights of Third Parties

A person who is not a party to this Document shall have no right to enforce any of its terms.

13. Legal Obligations

This Memorandum of Understanding represents the good faith intentions of the parties to proceed with the proposed joint venture but is not legally binding and creates no legal obligations on either party (save for clauses 9, 10, 11 and 12). Its sole purpose is to set out the principles on which the parties intend in good faith to negotiate legally definitive agreements.

As witness this Agreement has been signed by the duly authorised representatives of the parties the day and year above written.

Yours faithfully
 
__________________

Yours faithfully
 
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ANNEX 1 
DESCRIPTION OF THE BUSINESS

PRODUCT