Letter of Intent for Joint Venture Template: Structure & Terms

Letter of Intent for Joint Venture Template

[Partner A Letterhead or Partner A Name and Address]

[Date]

[Partner B Name]
[Partner B Address Line 1]
[Partner B Address Line 2]
[City, State/Province, ZIP/Postal Code, Country]

Re: Letter of Intent Regarding Proposed Joint Venture Between [Partner A Name] and [Partner B Name]

Dear [Partner B Contact Name or “Sir/Madam”],

This Letter of Intent (“LOI”) sets out certain preliminary terms and conditions under which [Partner A Legal Name], a [Jurisdiction] [entity type] (“Partner A”), and [Partner B Legal Name], a [Jurisdiction] [entity type] (“Partner B,” and together with Partner A, the “Parties”) propose to form a joint venture (the “Joint Venture”) as described below.

Except as expressly stated in Section 11 (Binding and Non-Binding Provisions), this LOI is intended as a non-binding framework for further discussion and negotiation rather than a definitive agreement to form or continue the Joint Venture.

1. Parties and Joint Venture Purpose

1.1 Partner A Details
Legal Name: [Partner A Legal Name]
Entity Type: [Corporation / LLC / Partnership / Other]
Jurisdiction of Organization: [Jurisdiction]
Principal Address: [Partner A Address]

1.2 Partner B Details
Legal Name: [Partner B Legal Name]
Entity Type: [Corporation / LLC / Partnership / Other]
Jurisdiction of Organization: [Jurisdiction]
Principal Address: [Partner B Address]

1.3 Purpose of the Joint Venture
The overall purpose of the Joint Venture is to [short description of purpose, e.g., “develop, market, and sell [products/services]” / “build and operate [facility/project]” / “provide combined solutions in [industry/territory]”].

1.4 Scope of Activities
The Joint Venture is expected to carry out the following principal activities:

• [Activity 1 description]

• [Activity 2 description]

• [Activity 3 description]

Additional activities may be added by mutual written agreement of the Parties in the definitive joint venture agreement (the “Joint Venture Agreement”).

2. Form and Structure of the Joint Venture

2.1 Legal Form.
The Parties currently contemplate forming the Joint Venture as a:

• [Corporation / Limited Liability Company / Partnership / Other structure]
  organized under the laws of [Jurisdiction] (the “JV Entity”).

2.2 Ownership Interests.
The ownership interests of the JV Entity are expected to be allocated as follows:

• Partner A: [Percentage]%

• Partner B: [Percentage]%

Any future issuance of equity interests in the JV Entity will be subject to terms agreed in the Joint Venture Agreement.

2.3 Business Location.
The principal place of business of the JV Entity is expected to be located at:

• [City, State/Province, Country]

Additional offices or locations may be established as agreed by the Parties.

3. Contributions and Capitalization

3.1 Initial Contributions.
Subject to the Joint Venture Agreement, the Parties anticipate making the following initial contributions to the JV Entity:

• Partner A: [Cash amount], [description of assets, technology, or services contributed], and other resources as agreed.

• Partner B: [Cash amount], [description of assets, technology, or services contributed], and other resources as agreed.

3.2 Valuation of Non-Cash Contributions.
Non-cash contributions such as intellectual property, equipment, or services will be valued by mutual agreement of the Parties and documented in the Joint Venture Agreement or related schedules.

3.3 Additional Capital Contributions.
If the JV Entity requires additional funding, the Joint Venture Agreement will address:

• Circumstances under which capital calls may be made;

• Each Party’s obligation or option to contribute additional capital;

• Consequences if a Party fails to contribute (for example, dilution or adjustment of ownership interests).

4. Profit, Loss, and Distribution Terms (Indicative)

4.1 Profit and Loss Allocation.
Subject to applicable law and the Joint Venture Agreement, the Parties currently anticipate that:

• Profits and losses of the JV Entity will be allocated based on ownership percentages:

  • Partner A: [Percentage]%

  • Partner B: [Percentage]%

4.2 Distribution Policy.
Distributions of available cash (if any) will be subject to:

• Applicable law and creditor protections;

• Reasonable reserves for working capital and future projects;

• Distribution rules set forth in the Joint Venture Agreement.

The Parties may agree, for example, that distributions will be made [frequency, such as annually or quarterly] based on available profits.

5. Governance and Management

5.1 Governing Body.
The JV Entity is expected to be governed by a board of directors, managers, or equivalent governing body (the “JV Board”) composed of:

• [Number] representatives designated by Partner A;

• [Number] representatives designated by Partner B.

5.2 Decision-Making.
The Joint Venture Agreement will specify:

• Matters that require simple majority approval of the JV Board;

• Matters that require supermajority or unanimous approval (such as major transactions, changes in business scope, capital structure changes, or dissolution);

• Any reserved matters requiring consent of one or both Parties.

5.3 Management Team.
The day-to-day operations of the JV Entity will be managed by officers or managers appointed by the JV Board, which may include:

• Chief Executive Officer / Managing Director: [Role description]

• Chief Financial Officer / Finance Manager: [Role description]

• Other key management roles as agreed.

5.4 Reporting.
Management will provide regular financial and operational reports to the Parties, including:

• Periodic financial statements;

• Budget and forecasts;

• Key performance indicators and progress updates.

6. Intellectual Property and Technology

6.1 Pre-Existing IP.
Each Party will retain ownership of its pre-existing intellectual property, technology, and know-how.

6.2 Licensed IP to the Joint Venture.
The Parties expect to grant the JV Entity limited licenses to use certain intellectual property, as described in the Joint Venture Agreement, for the sole purpose of conducting the Joint Venture’s business.

6.3 Jointly Developed IP.
The Parties will agree in the Joint Venture Agreement how intellectual property developed in the course of the Joint Venture will be owned and used, which may include:

• Joint ownership between the Parties;

• Ownership by the JV Entity with license rights for each Party; or

• Other mutually agreed structure.

7. Confidentiality and Information Sharing

7.1 Confidentiality Obligations.
The Parties acknowledge that they may exchange confidential information in connection with this LOI and the Joint Venture.

• If the Parties have already entered into a separate confidentiality or non-disclosure agreement (the “NDA”), that NDA will govern all confidential information exchanged.

• If no NDA is in place, the Parties agree to treat shared non-public information as confidential, use it only for evaluating and implementing the Joint Venture, and disclose it only to personnel and advisors with a need to know who are bound by similar obligations.

7.2 Information Rights.
The Joint Venture Agreement will describe the information and inspection rights of each Party, including access to the JV Entity’s books, records, and key personnel, subject to appropriate confidentiality and data protection rules.

8. Exclusivity / Non-Compete (If Applicable)

8.1 Exclusivity.
If the Parties agree to exclusivity regarding the Joint Venture’s activities, the LOI anticipates that:

• Each Party will agree not to enter into competing joint ventures or materially similar collaborations with third parties relating to [description of products/services/territory];

• The exclusivity will apply for a period of [Number] months or years, as set forth in the Joint Venture Agreement.

If no exclusivity is intended, the Parties may state that they remain free to conduct similar activities outside the Joint Venture, subject to agreed limitations.

8.2 Non-Compete / Non-Solicitation.
The Parties may agree in the Joint Venture Agreement to limited non-compete or non-solicitation provisions, such as:

• Restrictions on soliciting key employees of the JV Entity or the other Party;

• Restrictions on actively targeting certain customers exclusively served by the Joint Venture.

9. Due Diligence and Conditions

9.1 Due Diligence.
Each Party will conduct due diligence on the other Party and any assets or businesses to be contributed to the Joint Venture, including review of financial, legal, operational, and technical information.

9.2 Conditions to Formation.
The formation and launch of the Joint Venture will be subject to conditions to be set out in the Joint Venture Agreement, which may include:

• Completion of due diligence to each Party’s satisfaction;

• Negotiation and execution of the Joint Venture Agreement and related documents;

• Receipt of any required regulatory or third-party consents and approvals;

• Board or internal approvals of each Party;

• Absence of any law, order, or event that would make the Joint Venture impractical or unlawful.

10. Timeline and Process

10.1 Indicative Timeline.
Subject to further discussions, the Parties currently anticipate the following non-binding timeline:

• Execution of this LOI: on or about [Date];

• Completion of primary due diligence: by [Date];

• Drafting and negotiation of the Joint Venture Agreement: by [Date];

• Formation and launch of the Joint Venture: on or about [Date].

10.2 Good-Faith Negotiations.
The Parties intend to work in good faith and with commercially reasonable efforts to negotiate and finalize the Joint Venture Agreement and to complete any steps required to launch the Joint Venture, recognizing that either Party may ultimately decide not to proceed, subject to the Binding Provisions below.

11. Binding and Non-Binding Provisions

11.1 Non-Binding Business Terms.
The Parties acknowledge and agree that, except as expressly stated in Section 11.2, this LOI is non-binding and does not create any obligation to form or continue the Joint Venture, to invest capital, or to execute the Joint Venture Agreement. Either Party may discontinue discussions at any time, subject to the Binding Provisions.

11.2 Binding Provisions.
The following provisions of this LOI are intended to be legally binding upon the Parties when this LOI is signed and delivered:

• Section 7 (Confidentiality and Information Sharing) to the extent it imposes confidentiality obligations;

• Section 8 (Exclusivity / Non-Compete), if the Parties choose to apply binding exclusivity or non-solicitation terms;

• Section 10.2 (Good-Faith Negotiations), but only to the limited extent permitted or required by applicable law;

• Section 12 (Governing Law and Dispute Resolution);

• This Section 11.2 (Binding Provisions); and

• Any additional clauses expressly designated as binding here: [List any additional binding clauses].

All other provisions are intended solely as a basis for further discussions and negotiation and are not legally binding.

12. Governing Law and Dispute Resolution

12.1 Governing Law.
This LOI (including the Binding Provisions) shall be governed by and construed in accordance with the laws of [State/Province, Country], without regard to conflict-of-law rules.

12.2 Dispute Resolution.
Any disputes arising out of or relating to the Binding Provisions of this LOI shall be resolved by [specified court jurisdiction / arbitration body] located in [City, State/Province, Country], unless the Parties later agree otherwise in the Joint Venture Agreement.

13. Expiration and Counterparts

13.1 Expiration.
If this LOI is not signed by both Parties on or before [Expiration Date], it shall be of no further force or effect, unless the Parties agree in writing to extend this deadline.

13.2 Counterparts and Electronic Signatures.
This LOI may be executed in counterparts, including by electronic or facsimile signature. Each counterpart shall be deemed an original, and all counterparts together shall constitute one and the same instrument. Electronic delivery of a signed counterpart shall be as effective as delivery of a manually signed original.

14. Signatures

If the terms of this LOI are acceptable, please sign below to indicate your agreement to the Binding Provisions and your agreement in principle to the non-binding business terms described above.

[Partner A Legal Name]

By: _______________________________
Name: [Authorized Signatory Name]
Title: [Title]
Date: [Date]

[Partner B Legal Name]

By: _______________________________
Name: [Authorized Signatory Name]
Title: [Title]
Date: [Date]