[EXHIBIT 10.12]
JOINT VENTURE AGREEMENT
This Agreement is made at Plzen, Czech Republic, this 4th day of April
1997 by and between TATRA a.s., (hereinafter referred to as TATRA), a
joint stock company incorporated in the Czech Republic and having its
principal office at Xxxxxxxxxxx 0000, 000 00 Xxxxxxxxxx, Xxxxx
Xxxxxxxx of the one part and VENUS UDYOG (INDIA) LIMITED, (hereinafter
referred to as VENUS), a limited company incorporated in India and
having its registered office at 000, Xxxxxxxxxx Xxxx, Xxxxxx Xxxxxxx,
Bombay 400 006, India, of the other part, individually referred to as
the "Party" and collectively referred to as the "Parties".
WHEREAS Tatra is inter alia engaged in the business of manufacture of
multi-purpose automotive vehicles in the Czech Republic and the export
of such vehicles world-wide,
AND WHEREAS Tatra is desirous of expanding its market in India and
surrounding territories stipulated in this understanding by
establishing manufacturing operations in India,
AND WHEREAS Venus sells various engineering products including
automobiles and automotive components in several countries through its
network of associates in the U.K., Czech Republic, Slovakia, C.I.S.,
Singapore and India and provides sales and marketing support to Tatra
in the exports of their vehicles to India and is desirous of
furthering the business of this Tatra in India by way of a joint
venture project to manufacture and sell, in India and in the
surrounding countries, vehicles based on the products and technology
developed by Tatra,
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Both the parties as proposed shareholders in a joint venture hereby
enter into an Agreement (hereinafter referred to as the "Agreement")
as under:
1. The parties agree to incorporate a Joint Venture (hereinafter
referred to as "JV") as per the applicable rules for
incorporation of limited liability companies in India under the
name of Tatra Udyog Limited. Both Tatra and Venus agree to the
use of their names, in part or full, either independently or in
any combination, by the joint venture, and as permissible by the
applicable laws. The JV will be authorised to the use of such
trademarks and tradenames in the territories defined in this
Joint Venture Agreement. Such authorisation will be
automatically granted to the JV by each of the parties for the
names and marks, partly or wholly, owned by each party, until
such time as the owning party ceases to be party to this JV.
2. The principal objective of the JV will be the manufacture and
sale of various types of trucks, spares and the service and
maintenance inter alia in the territories defined in this
agreement. In addition, the JV will undertake the design,
development, modification and type of approvals of products as
may be demanded by the markets in the territory. Any design or
development requiring substantial modification to engines,
gearbox, axles and other power train elements will require prior
approval of Tatra which will not be unreasonably withheld. The
parties will explore the possibilities to expand the activities
of the JV as may be mutually agreed.
3. The definition of territories in this Joint Venture Agreement
will be the countries of India, Sri Lanka, Bangladesh, Nepal and
any other country/countries that may be
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mutually agreed between Tatra and the JV in writing. On a case
to case basis, whenever possible, demand for vehicles from
right hand drive market outside the territory will be serviced
by the JV on mutually agreed terms.
4. Venus agrees to provide such facilities as may be required by the
JV for its incorporation in India. The registered office of the
JV will be located in a State in India as mutually agreed by the
parties. Venus will be reimbursed by JV adequate agreed
compensation for the use of its office premises and other
expenses incurred by it for the purpose of JV.
5. Tatra will hold 50% (fifty percent) and Venus will hold 50%
(fifty percent) of the share capital in the joint venture. Both
Tatra and Venus will contribute up to the equivalent of USD 2
million each towards the setting up of manufacturing facilities
of capacity 3000 vehicles per annum (on 3 shift working basis).
While contributions will be made only as demanded by the project
requirements, Venus will guarantee its share of total
contributions for the above initial capital requirements.
Subsequent increases to subscribed capital by each of the two
parties will be mutually agreed by them and will be such that
total share capital of each party will be in proportion to their
share capital holdings as above.
6. TRANSFER PROVISIONS
6.1. Tatra and Venus shall not be entitled to transfer any of the
shares held by them in JV for a period of 5 years from the date
of the first sale by the JV of its products and thereafter only
except in accordance with the provisions of this Agreement.
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6.2. i) If at any time Tatra desires to transfer any or all of
shares held by them in JV, it shall offer such shares in
the first instance to Venus. Venus shall be entitled to
purchase all but not less than all the shares so offered or
to nominate any person or entity of its choice to accept
all but not less than all the shares so offered or to
nominate any person or entity of its choice to accept all
but not less than all the shares so offered. Venus shall
be entitled to accept or reject such offer within a period
of 90 days from the date of receipt from this offer. If
either Venus does not convey its acceptance to Tatra within
90 days as aforesaid, or if Reserve Bank of India or any
Indian Authority does not permit the sale of shares to
Venus, the offer shall be deemed to have been rejected by
Venus.
If however, the price asked by Tatra (the original price)
is not acceptable to Venus, Venus shall convey accordingly
to Tatra within a period of 90 days from the date of
receipt of offer. In that case, the valuation of shares
shall be referred to a firm of accountants acceptable to
both the parties, who shall act as valuers and not as
arbitrators. Such price so fixed by the valuers will
hereinafter be referred to as revised price. Venus shall
be entitled to accept or reject such a valuation within a
period of 90 days from the date of receipt of such report.
Only, if such offer is first rejected or deemed to have
been rejected by Venus, or if the Reserve Bank of India or
any Indian authority does not permit the sale of the shares
to Venus, Tatra shall be entitled to sell the shares to any
third party. However, the offer to third party shall not
be at a price lower than the lesser of the original price
at which the shares were offered to Venus in the first
instance or
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after the valuation done by a firm of accountants as
aforesaid. Offer to a third party shall not be made on
terms and conditions more favorable than those offered
to Venus. Venus shall have a first right of refusal as
aforesaid only if it agrees to purchase all the shares
offered by Tatra. Tatra shall have such a right of
offer to a third party within a period of six months from
the date of rejection of its offer by Venus. Thereafter,
the procedure stated hereinabove shall have to be gone
through.
ii) If at any time Venus desires to transfer any or all the
shares held by it in JV to any person or entity, it shall
offer such shares in the first instance to Tatra. Tatra
shall be entitled to purchase all but not less than all the
shares so offered or to nominate any person or other entity
of its choice to accept all but not less than all the
shares so offered. Tatra shall be entitled to accept or
reject such offer within a period of 90 days from the date
of receipt of the offer. If Tatra does not convey its
acceptance to Venus within a period of 90 days as
aforesaid, or if the Reserve Bank of India or any other
Indian authority does not permit the sale of the shares to
Tatra, the offer shall be deemed to have been rejected by
Tatra.
If however, the price asked by Venus (the original price)
is not acceptable to Tatra, it shall convey accordingly to
Venus within a period of 90 days from the date of offer.
In that case, the valuation of shares shall be referred to
a firm of accountants acceptable to both the parties who
shall act as valuers and not as arbitrators. Such price so
fixed by the valuers will hereinafter be referred to as
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revised price. Tatra shall be entitled to accept or reject
such a valuation within a period of 90 days from the date
of receipt of such report. Only if such offer is first
rejected, or deemed to be rejected by Tatra or if the
Reserve Bank or India or any Indian authority does not
permit the sale of shares to Tatra, Venus shall be entitled
to sell the shares to any third party. However the offer
to a third party shall not be at a price lower than the
lesser of the price at which the shares were offered to
Tatra in the first instance or after the valuation done by
a firm of accountants as aforesaid. Offer to a third party
shall not be made on terms and conditions more favorable
than those offered to Tatra. Tatra shall have a first
right of refusal as aforesaid only if it agrees to purchase
all the shares offered by Venus. Venus shall have such a
right of offering to a third party within a period of six
months from the date of rejection to its offer to Tatra.
Thereafter the procedure stated hereinabove shall have to
be gone through.
7. Nothing contained in clauses 6(i) and 6 (ii) shall apply to
transfer of shares by either party to:
(a) the Company wherein the party to this agreement holds ore
than 50 percent of its equity, or
(b) the proposed transferee company holds more than 50 percent
of equity of the party to this agreement, or
(c) more than 50 percent of directors of the proposed
transferee company or nominees of the party to this
agreement, or
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(d) more than 50 percent of directors of the party to this
agreement are nominees of the proposed transferee company,
or
(e) any other mutually agreed party.
8. The right to transfer the shares of JV to a third party as
envisaged by clauses 6(i), 6(ii) and 7 shall be subject to the
condition precedent that such third party (transferee) shall
agree in writing to be bound by the terms of this Agreement.
9. i) Tatra will enter into a separate technical know-how agreement
with the JV for the manufacture of vehicles to Tatra design by
the JV from components/aggregates in either semi-knocked down or
completely knocked down conditions according to assortment for
modification and assembly of a range of vehicles. The model
range initially will consist of:
* Dumper
* Chassis (with and without platform and other
superstructures)
* Tractor
ii) The above vehicles will be based on the latest models
developed by Tatra suitably modified to meet the Indian market
requirements. Subsequently, any other model/product or
combinations will be offered as agreed with the JV.
iii) The transfer of technical know-how for the models/products
referred to in 9(ii) hereinabove, providing technical assistance
to te JV and for using the trade name/trade marks of Tatra and
Skoda, the JV shall pay an agreed royalty on the ex-factory price
(net
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of taxes, excise and other duties) of vehicles manufactured
and sold by the JV in the territories and such royalty payments
will be as provided in the guidelines issued by Government of
India and shall be subject to withholding tax in India. The
aggregate amount of the royalty, referred hereto, payable shall
not exceed USD 3 million. Upon the aggregate amount of royalty
paid to Tatra by the JV reaching USD 3 million, the JV will be
entitled to use free of cost the technical know-how and trade
marks/trade names thereafter.
10. i) The Board of Directors of the JV will consist of maximum 6
(six) members. 3 (three) directors will be nominees of Tatra and
3 (three) directors will be nominees of Venus. The maximum
number of Directors may be increased by mutual agreement of the
two parties and in any event, the number of nominees of each must
be in proportion to their respective holdings in the share of
capital of the JV. If either Tatra or Venus desires to change
its nominee(s) on the Board, it shall intimate accordingly to
other party. Both the parties shall carry out the change as
required by the concerned party in the Board of the JV.
ii) Casual vacancy arising in the Board of Directors shall be
filled up by appointing the nominee of the party whose nominee
has vacated the office, so that both the parties continue to have
an equal representation on the Board of the JV.
iii) The Board shall be entitled to appoint an alternate
director to act for any director (hereinafter referred to as
Original Director) during his absence for a period of not less
than three months from the state in which meetings of the Board
are ordinarily held. The
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alternate director has to be resident of any state within the
Republic of India. In such a case the alternate director shall be
a person nominated by the party which nominated the Original
Director. The party nominating the alternate director shall have
a right to withdraw its nominated alternate director and appoint
another in his place.
iv) The first directors of the JV shall be the following
persons: Nominees of Tatra: Xx. Xxxxxxx Xxxx Xx., Xx. Xxxxxx
Xxxxxxx and Xx. Xxxxx Xxxxx, Nominees of Venus: Mr. R.K. Rishi,
Xx. X. Xxxxxxxxx and Xx. X. X. Xxxx.
11. Two directors on Board will be permanent directors nominated by
the parties, one nominated by Venus and one nominated by Tatra.
As required under (Indian) Companies Act, one third of Directors
(representing equal number from each side) shall retire every
year, who shall be eligible for reappointment. If however, one
third of the total strength of the directors does not result in
an even number, the number of directors retiring every year shall
be an even number immediately higher than one third of the
strength of the Board, representing equal number from each side.
12. The Chairman of the Board of Directors will have a tenure of two
years and will alternate between a nominee of Tatra and a nominee
of Venus. The initial Chairman will be a nominee of Tatra. The
Chairman of the Board of Directors will not have a casting vote
in the event of a tie.
13. The Chief Executive Officer (CEO)/Managing Director (MD) shall be
nominated by Venus and this nomination shall have the approval of
Tatra who shall not unreasonably withhold such approval. The
Deputy Chief Executive Officer (Dy. CEO)/Deputy
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Managing Director (Dy. MD) will be nominated by Tatra and this
nomination shall have the approval of Venus who shall not
unreasonably withhold such approval. The responsibilities and
powers of the CEO/MD and Xx.XXX/Dy.MD are given in Annexure to
this Agreement.
14. i) Resolutions and policy decisions at a Board Meeting or a
general Body Meeting can be made by a simple majority at these
meetings unless it is otherwise required by the provisions of
(Indian) Companies Act. In such an event provisions of (Indian)
Companies Act shall be followed. A period of notice of 30 days
for calling a Board Meeting will be given. The powers of the
shareholders, Board of Directors and the Management of the JV
with respect to major policy decisions are as specified in the
Annexure to this Agreement. Major policy decisions as listed in
this Annexure shall not be passed unless there is a positive vote
from both the sides.
ii) It is agreed between the parties that the JV shall have a
minimum of four meetings of the Board of Directors every year (a
minimum of 1 Board meeting per quarter) and one Annual General
Meeting every year.
iii) The Board of Directors may pass Circular Resolutions as may
be permitted under the (Indian) Companies Act.
iv) The quorum at the Board Meetings shall be a minimum of two
directors consisting of one nominee of each party.
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15. Both the parties will attempt to settle any dispute arising out
of this agreement in an amicable manner. In the event there is
no unanimity of opinion, on any item and the representatives of
parties do not agree, resulting in deadlock, the matter shall be
resolved by:
i) In the first instance by referring the same to one
representative of the respective parties.
ii) If they are not able to decide the issue the same should be
referred to a Retired Judge of a High Court in India or any
other qualified person mutually agreed.
iii) If the decision obtained from the Retired Judge or any
other qualified person mutually agreed is not acceptable to
any of the parties, the same shall be referred for
arbitration which will be governed by the Rules of
Arbitration of the International Chamber of Commerce. The
venue of such arbitration which will be London, U.K. The
cost of arbitration shall be borne by the losing party. In
the event there is no winning or losing party, the cost of
arbitration will be shared equally between the two parties.
The award shall be binding on both the parties and it shall
not be disputed in any manner. The award may be enforced
by any court of competent jurisdiction.
16. The Memorandum of Association and Articles of Association will
include as required by the (Indian) Companies Act the stated
objectives of the JV as expounded in this Agreement and will also
include other terms and conditions which will permit the JV to
pursue any activities as may be necessary to operate in any
present or future situation.
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The Memorandum of Association and Articles of Association of the
JV will be drafted in such a way as may be agreed to between the
parties hereto and which will incorporate as far as practicable all
the clauses of this Agreement. The Memorandum of Association and
Articles of Association of the JV shall not be altered without the
consent of both the parties.
17. The JV will maintain its Books of Account and Records at its
registered office and such books and records will be available to
either of the parties for inspection provided, the party so
requiring an inspection gives notice to the management of the JV
sufficiently in advance.
18. All approvals as required from the Governments or any other
regulatory authority for the establishment of the JV are to be
obtained by each of the two parties in their respective countries
and each party will extend to the other necessary assistance in
obtaining such approvals. The JV will be responsible for
obtaining type approvals in India of the vehicles proposed to be
manufactured in India and Tatra will provide the JV vehicles for
such approval. The JV will also be responsible for obtaining the
approvals as may be required in any of the other territories
assigned to the JV.
19. Tatra and Venus shall endeavor to promote the interests of the JV
to the maximum extent possible. If however, any of the parties
wishes to pursue any business in a similar or competing line in
the territories assigned in this agreement, then the matter would
be mutually discussed and decided between the parties keeping in
view the overall interests of the JV.
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20. This Joint Venture Agreement is made in and will be governed by
and construed in accordance with the laws of India.
21. This Agreement is, and all documents, notices, orders and other
communications delivered hereunder, will be in the English
language, which will be the official text of this Agreement.
22. Notices to be given as per this Joint Venture Agreement will be
sent to the addresses indicated below by fax, confirmation
received, with a confirmation copy being dispatched
contemporaneously by registered air mail:
Tatra: Tatra a.s.
Xxxxxxxxxxx 0000
000 00 Xxxxxxxxxx, Xxxxx Xxxxxxxx
Fax No.: 00+42+656+89 4481
For the attention of: Xx. Xxxxxx Xxxxxxx
Venus: Venus Udyog (India) Limited
Xxxxxx Xxxxxxx
000, Xxxxxxxxxx Xxxx
Xxxxxx 000 000, Xxxxx
Fax No.: 00+91+22+000 0000
For the attention of: Xx. X. X. Xxxx
Notice given by fax as herein provided will be deemed to have
been received by the party being notified on the first business
day, in the city of destination, following the date of dispatch
of the notice and notice given by registered air mail will be
deemed to have been received by the party being notified 15 days
following the date of dispatch. Either party may change its
address by notice given to the other party in the manner given
above.
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23. Neither party may assign to any other party any rights and
obligations arising out of this Joint Venture Agreement in whole
or in part, without the express prior written consent of the
other party.
24. Force Majeure
Neither party will be liable for damages or be deemed to be in
default by reason of any delay or failure in performing any of
its obligations under this Joint Venture Agreement when such
failure is due to fires, floods, earthquakes, strikes or other
labor interruptions, war (whether or not declared), military
action, riot, Acts of God, Acts of Government, terrorist acts,
explosion, sabotage, insurrection or civil disturbance (each such
event, an "Event of Force Majeure"). Provided, however, that the
affected party must:
(a) promptly notify the other party of the occurrence of the
Event of Force Majeure
(b) advise the other party of the circumstances and effects of
the Event of Force Majeure
(c) consult with the other party concerning suitable interim
arrangements, and
(d) continue performance as soon as reasonably possible after
such cause of failure or delay is removed.
The occurrence of the Event of Force Majeure will not relieve
either party from performing its obligations under this Joint
Venture Agreement at such times and to the extent as may be
possible after the intervention of the Event of Force Majeure.
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25. This Agreement constitutes the entire agreement between the
parties and supersede and cancel all prior agreements, expressed
or implied, written or oral, with respect to the subject matter
hereof. No modification, deletion, amendment will be binding
unless in writing signed by the authorized representatives of
both parties or in the case of a waiver, by the party granting
the waiver.
26. Termination
i) Without prejudice to any other right or remedy and
notwithstanding anything contained in this Agreement:
(a) either party shall have the right to terminate this
Agreement by giving 60 days written notice to the other
party if other party voluntarily or otherwise commits a
breach of any one of the substantial term or conditions of
this Agreement, provided that if the breach is remediable,
the right as aforesaid shall be exercised only if the
breach is not remedied within the period of the notice
referred to above.
(b) either party shall be entitled to terminate this Agreement
forthwith by giving a written notice to the other party in
the event that the other party is declared insolvent or has
entered into a compromise or arrangement with its creditors
or if a distress execution or other process shall be levied
upon or if an encumbrance shall take possession of or if a
receiver shall be appointed of a substantial part of the
assets or property of the other party.
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ii) No waiver of antecedent breach and no grant of time and
indulgence shall prejudice any subsequent right to
terminate this Agreement.
iii) The termination shall not prejudice the right of either
party against the other which may have accrued prior to the
date of the termination.
iv) On the termination of this Agreement, the parties hereto
shall refrain from any acts, indications, publicity or
advertisements which may mislead any third party into the
belief that the parties hereto still maintain business
relationships with each other with reference to the JV and
neither party hereto shall commit any act detrimental to
the business or reputation of the other.
27. Invalidity of any clause or part thereof of this Agreement shall
not affect the other parts of the Agreement. Any headings in
this Agreement are only illustrative and do not govern the
contents of the Agreement.
IN WITNESS WHEREOF the parties have caused this Agreement to be duly
executed by their authorized representatives on the date first written
above.
TATRA a.s. VENUS UDYOG (INDIA) LIMITED
/s/ /s/
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Annexure
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MAJOR POLICY DECISIONS
A. Major Policy decisions to be taken by Shareholders
i. Changes in capital structure of the XX
xx. Issue of any shares or debentures or bonds
iii. Any decisions for winding up or sale or amalgamation or merger of
XX
xx. Alteration in the memorandum of the XX
x. Alteration in the articles of the JV
vi. Alteration in the name of the JV
vii. Loans and advances to Directors
viii. Investments decisions beyond the limits laid down u/s,370 & 372
of the Companies Act
ix. Appointment of Managing Director/Chief Executive Officer
x. Declaration of dividend
xi. Adoption of accounts
xii. Appointment or removal of auditors
B. Major policy decisions to be taken by the Board of the XX
x. Establishment, expansion or disposal of manufacturing facilities
or addition of a new project.
ii. Medium or long term management plan
iii. Financing plan
iv. Fiscal budget and settlement of accounts
v. Acquisition, sale, licensing, sub-licensing or abolition of any
patent rights, know-how or trademark
vi. Commencement of litigation to defend against infringement of
patents owned or licensed
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vii. Appointment or removal of key personnel in the management of the
JV
viii. Appointment or removal of outside accountants, valuers, legal
advisers
ix. Change of JV's registered office from one state to another
x. Obtaining long term loans exceeding INR 1 million other than
working capital limits from Banks
xi. Make any loan transactions or advances of IV funds involving more
than INR 0.1 million
xii. Loans and advances to Directors
xiii. Creation of any mortgae or charge in respect of JV's interest and
assets for loans exceeding INR 0.5 million
xiv. Any transaction involving sale or exchange or surrender or
disposal or purchase of any properties or assets of the JV of
values exceeding INR 0.5 million
xv. Recommendation of dividend
xvi. Appointment of selling agents/purchasing agents, if any, for the
JV's products
xvii. Investments within the limits laid down u/s. 370 & 372 of the
Companies Act
xviii. Declaration of dividends
xix. Any other item considered important by a party to this Agreement
C. Responsibilities and powers of the Chief Executive
Officer/Managing Director and the Deputy Chief Executive
Officer/Deputy Managing Director
Both CEO/MD and Dy.eputy Chief Executive Officer/Deputy Managing
Director will have responsibilities for all the activities and
functions of the Joint Venture. However,
The Chief Executive Officer/Managing Director shall be mainly
responsible for the following functions:
General Administration and Personnel
Commercial and Marketing
Finance
External Relations, and
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The Deputy Chief Executive Officer/Deputy Managing Director shall
be mainly responsible for the following functions:
Manufacturing
Product Development
Product Service and quality control
The Chief Executive Officer (CEO)/Managing Director (MD) anda The
Deputy Chief Executive Officer (Dy. CEO)/Deputy Managing Director
(Dy.MD) may delegate their functional responsibilities and powers
as considered appropriate by them for the day to day functioning
of the JV within the overall responsibilities vested in them by
the Board of Directors.
Any financial decision involving amounts greater than Rs.1
million (or equivalent of USD 30000) will be taken jointly by the
CEO/MD and the Xx.XXX/Dy.MD.
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