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This Memorandum of Understanding template provides all the key terms and helps guide you to complete the typical key factors agreed to in an MOU by the undersigned parties. All is subject to due diligence and other conditions set out in the template and which you can tweak and adjust. This MOU will form the basis of finalized negotiated definitive agreements.
MEMORANDUM OF UNDERSTANDING Between [ENTER PARTY A] (“Abbreviated Name if Applicable”) and [ENTER PARTY B] (“Abbreviated Name if Applicable”) Month XX, 20XX This Memorandum of Understanding (the “Memorandum of Understanding”) describes the key terms which we (the undersigned) have agreed, subject to due diligence and other conditions set out below, should form the basis of negotiated definitive agreements. Except as explicitly described below, and which provisions are binding and for which each party acknowledges the receipt and sufficiency of good and valuable consideration, neither party intends that this Memorandum of Understanding represents the final agreement as to the transactions described herein. The understandings expressed in this Memorandum of Understanding are subject to, and conditional upon, the negotiation and execution of the definitive and final transaction documents (the “Transaction Documents”). Either party is free to withdraw from the negotiation of the transaction described herein for any reason prior to the execution of such definitive and final Transaction Documents without liability or obligation to the other party. Each party will be responsible for its own expenses in the negotiation of the definitive and final Transaction Documents, and any actions taken by other parties in reliance on the preliminary agreements expressed herein will be at the party's own risk. Subject to the above, the undersigned agree: 1. FORMATION OF NEWCO 1.1 [Company A] and [Company B] will form a new entity (“New Venture Name”) in a jurisdiction acceptable to both parties. [New Venture Name] shall be named at the discretion of [Company B]. [Company B] will be issued treasury shares such that it holds 80% of the share capital of the new entity, in consideration for USD $XX million cash . The balance of 20% of the capital of the new entity will be owned by [Company A]. 1.2 The objective of [New Venture Name] is to create and build the leading video-centric portal for residents of the South Asian region, through the initial step of the exploitation of the content provided to it by [Company A], and then to expand the business including through the acquisition of further content from the South Asian region and worldwide. 1.3 [Company A] will cause [New Venture Name], to hold, by way of assignment or license on an exclusive basis, or otherwise, the benefit of all of its South Asian channel and content license and distribution agreements, as further described in Appendix A and Appendix B hereto as of the closing date, as well as all of its subscribers to such channels in exchange for the obligation by [New Venture Name] to perform the obligations under those license and distribution agreements. 1.4 Immediately following the signing of the Transaction Documents for the establishment of [New Venture Name], planned on or before MONTH XX, 20XX, [New Venture Name] will complete a business plan, including commercial and distribution plans and organizational structure, to be approved by representatives of both [Company A] and [Company B]. This plan is to include details of transfer pricing of [Company A] services, technical transition plan and timeline, licensing agreement for additional [Company A] content, [Company B]’s detailed commercial obligations, etc. 1.5 [Company A] and [Company B] will enter into a Shareholders Agreement acceptable to both parties by no later than MONTH XX, 20XX (the “Closing Date”). The Shareholders Agreement will include rights and obligations customary to agreements of this type. In addition, the Shareholders Agreement will provide that: (a) The Board of Directors of [New Venture Name] will consist of five (5) members, consisting of three (3) nominees of [Company B], and two (2) nominees of [Company A]. One of the nominees of [Company A] shall be [ENTER NAME]; and [ENTER NAME] (b) [Company A] will not oppose an application to list the shares of [New Venture Name] on the [ENTER NAME] Stock Exchange or an alternative stock exchange in India , provided that such actions are consistent with decisions of the Board of Directors and any other requirements of applicable law. 1.6 [ENTER NAME] shall be retained by [New Venture Name] in consulting capacity on a transitional basis, and shall, immediately upon closing, assist the [New Venture Name] board of directors in soliciting an appropriate Chief Executive Officer for [New Venture Name], who is expected to be based in [ENTER CITY]. 2. OBLIGATIONS OF [COMPANY B] 2.1 [Company B] will, for a period of at least three (3) years, provide the following services to [New Venture Name], as agreed between the parties: . (a) license [Company B]’ library to [New Venture Name] and any and all future additions thereto, and any and all content acquired or produced by [Company B], according to the same or similar terms and conditions of the License Agreement attached as Appendix C hereto; (b) to support [New Venture Name] through [Company B]’s marketing and advertising activities in respect of [Company B]’s products, based upon a joint marketing plan as agreed between [Company B] and [New Venture Name], including the following, at no cost to [New Venture Name]: (i) International Marketing. Advertise [New Venture Name] on DVDs and videotapes sold and rented in North America and Western Europe and other key immigrant destinations, as
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