Foreign Collaboration Agreement (Financial)
This agreement made this 15th day of December 2000 between US Company Ltd., a company registered under the appropriate laws of the USA and carrying on business at San Francisco, USA hereinafter referred to as the foreign company (which term shall unless excluded by or repugnant to the context include its successors and assigns) of the one part and Ind Co. Ltd., a company registered under the Companies Act 1956 and having its Registered Office at …………………………Calcutta hereinafter referred to Registered Office at ……………Calcutta hereinafter referred to as the INDIAN COMPANY (which term shall unless excluded by or repugnant to the context include its successors and assigns) of the other part.
WHEREAS the parties herein have agreed subject to all necessary approvals, consents, validations, permissions and licences to procure the formation and incorporation in the State of West Bengal an INDIAN COMPANY with a Memorandum of Association as its principal objects, inter alia, of manufacturing and marketing and exporting Computers, setting up of infrastructures and to do acts incidental thereto.
AND WHEREAS the parties hereto have agreed to assist each other on certain matters to ensure the success of the operation of the INDIAN COMPANY.
Now therefore these presents witnesseth and the parties hereto hereby agree as follows:
1. The INDIAN COMPANY shall be the new Public Limited Company to be incorporated on terms of this Agreement in India with the name “New Company Ltd.” (hereinafter referred to as the new company).
2. “Shares” shall mean Equity Shares of the new company to be subscribed by the Foreign Company and INDIAN COMPANY upon the terms hereof:
(a) the company will be incorporated with the name New Company Limited;
(b) Memorandum of Association of the New Company Ltd. will have as its principal objects manufacturing and marketing of Computers and Softwares and rendering services in relation thereto both in India and abroad and to engage in infrastructure and associated activities;
(c) the authorised share capital of the new company will be Rs. 50 crores, divided into 50 lakhs equity shares of Rs. 100 each out of which issued subscribed and paid-up capital shall be Rs. 40 crores divided into 40 lakhs Equity shares of Rs. 100 each;
(d) The Memorandum and Articles of Association of the new company shall be approved by the Foreign Company and the INDIAN COMPANY.
3. The foreign company shall subscribe to and pay for the shares of new company in the manner as the Board of Directors of the new company may decide. The foreign company shall subscribe at any point of time 51% of total shares issued by the new company. The balance 49% of the issued shares of the new company shall be subscribed by the INDIAN COMPANY and its associates, promoters, their friends and relations.
4. The number of directors of the new company shall be minimum five and maximum eleven. The foreign company and the INDIAN COMPANY shall have equal number of directors in the Board but the Chairman of the Board of Directors as also at the General Meeting shall be one of the directors representing the INDIAN COMPANY. The foreign company and the INDIAN COMPANY shall exercise their rights as shareholders in accordance with the law and in terms of the present Agreement.
5. The new company shall not without the written consent of the INDIAN COMPANY increase or reorganise its capital, alter its Memorandum and Articles of Association, sell, release, transfer, mortgage or otherwise dispose of all or substantial portion of its business or assets or take any steps for merger or amalgamation of the new company with another company or for liquidation of the new company. Without the written consent of the INDIAN COMPANY the new company shall not create, acquire or control any subsidiary or make any substantial investment in any other company or venture or give loans or stand guarantee or extend credit to any person, firm or company except to its customers in the usual course of business.
6. The new company shall maintain proper books of accounts and records as required by law and the foreign company and the INDIAN COMPANY shall have the right to inspect the books of accounts and records and correspondence of the new company and take copies thereof at its own costs.
7. The foreign company and the INDIAN COMPANY shall give all requisite assistance to the new company to make the new company a success. The foreign company shall make available to the new company the know-how required to achieve its objectives, give access to the new company all processes of know-how, requisite financial assistance apart from shareholding, marketing assistance and facilities, advantage of services of the International Network of the foreign company and the use as Licencee or otherwise the Trade Marks, Patent Rights and goodwill of the foreign company for the purpose of production, sale and export of the products of the new company.
8. The INDIAN COMPANY shall furnish to the new company with its know-how, technology, technical assistance including the management in the production and marketing of the products of the new company, the business connections of the INDIAN COMPANY, access to Indian know-how, assistance in procurement of raw materials, financial assistance, assistance in the recruitment of personnel and running the administrative, fiscal and legal services. INDIAN COMPANY shall also promote the name and goodwill of the new company and its products.
9. The foreign company and the INDIAN COMPANY both shall from time to time make available to the new company their qualified employees for providing suitable services so that the new company can achieve its objectives.
10. The parties hereto agree that upon its incorporation the new company shall ratify, adopt, consent and agree to be bound by the terms of these presents. The foreign company and the INDIAN COMPANY shall in equal proportion pay preliminary expenses for forming the new company and all such expenses shall be reimbursed by the new company within a year from the time it goes into commercial production.
11. In case of breach of any of the terms of this Agreement by a party the other party may give two months notice to rectify the breach in default its intention to terminate the agreement. In the event the breach is not remedied then the other party shall give a second notice that it would terminate the agreement with effect from 30 days from receipt of the said notice.
12. In case of such notice for termination or there being a stalemate in the management of the affairs of the new company, either party may offer to the other to sell its shareholdings at a valuation to be made by the new company’s Auditor and by a second independent Auditor. If the valuation differs, then the value of shares will be taken as the average of the two valuations. If the offer is not accepted, then the shares shall be sold to outsiders. In the event the foreign company or INDIAN COMPANY goes into liquidation the other company may buy the shares of the new company at the book value of shares held by the company in liquidation.
13. The agreement shall be governed by the laws of India and the courts in India shall have jurisdiction to entertain any legal proceedings in relation to any dispute in relation to the agreement. In the event any of the clauses or part of the agreement be held to be invalid, that will not affect the other part or clauses which valid portion shall be enforceable.
14. All notices are to be served in the manner permissible under the law at the addresses recorded in the books and records of the new company.
15. The foreign company shall obtain all necessary permissions and consents of the Government of the foreign company for entering into this Agreement and carrying on business of the new company in India. The parties hereto shall obtain the necessary sanctions, permissions, authorisations etc. of the Reserve Bank of India, Government of India and other concerned authorities in respect of the present agreement as also for the new company for its incorporation and carrying on its business. In the event necessary approvals, licences, permissions and authorisations are not available, then this agreement shall become void.
16. All disputes and differences between the parties or any claims by any of the parties arising out of or in relation to this agreement including its construction, validity, compliance or breach which the parties have tried to but could not settle shall be referred to the Bengal Chamber of Commerce for settlement by arbitration proceedings in accordance with the law in India in force and the Award of the said Chamber of Commerce shall be final and binding on the parties to this agreement.
In witness whereof the parties hereto have executed these presents on the day, month and year first above-written.
Signed, sealed and delivered by
the said Mr. ……………………………
pursuant to the Board Resolution of the Foreign Company dated ……………… at Calcutta in the presence of: Signature
Signed, sealed and delivered by
pursuant to the Board Resolution
of the INDIAN COMPANY dated ………………… at Calcutta in the presence of: Signature