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Partnerships, Joint Ventures & Strategic Alliances

Stephen I. Glover , Craig M. Wasserman, Contributing Experts

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“...Everything a practitioner needs to put together partnerships and joint ventures.”
Edmund C. Duffy of Skadden, Arps, Slate, Meagher & Flom LLP

There are few, if any, major corporations that do not engage in some level of partnership, joint venture and strategic alliance activity. Partnerships, Joint Ventures & Strategic Alliances book and CD will help you dissect any proposed transaction, spot the issues that need to be addressed and achieve a successful outcome. Discussions include: building a successful partnership, joint venture or strategic alliance; choice of entity considerations; fiduciary duties; tax and regulatory issues; exit mechanisms; and the role of lawyers. Leading experts offer their best strategies for negotiating joint ventures and alliances.

Written for anyone with hands-on involvement in negotiating and drafting joint ventures and strategic alliances, this complete reference provides extensive guidance on drafting limited partnership, limited liability company, and nonentity strategic alliance agreements. Detailed chapters examine special issues in: financial services and real estate joint ventures; minority strategic investments; integrating, retaining and providing benefits and incentives to joint venture employees; and intellectual property law considerations. Throughout, you will find timesaving checklists, clauses and forms (also provided on CD-ROM) that you can tailor to your own deals.

Book #00616; looseleaf, two volumes, 2,236 pages and one CD-ROM; published in 1992, revised edition published in 2003, updated as needed. ISBN: 978-1-58852-127-9

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  • Availability: Available
  • Brand: Law Journal Press
  • Product Type: Books
  • Edition: 0
  • Page Count: 2236
  • ISBN: 978-1-58852-127-9
  • Pub#/SKU#: 00616
  • Volume(s): 2
  • CDs: 1

Author Image
  • Stephen I. Glover
Stephen I. Glover is a partner in the corporate department of Gibson, Dunn & Crutcher LLP's Washington, D.C. office. He has written and lectured frequently on a variety of corporate and securities law topics. Mr. Glover is a member of the D.C. Bars Board of Governors and former co-chair of its Corporation, Securities and Finance Law Section. He has also served as a member of the New York Tribar Opinion Committee. He is a member of the advisory boards for Mergers & Acquisitions Law Report and The M&A Lawyer. Mr. Glover graduated from Harvard Law School in 1980, clerked for Judge J. Skelly Wright on the U.S. Court of Appeals for the District of Columbia Circuit during the 1980-1981 term and clerked for Justice Thurgood Marshall on the United States Supreme Court during the 1981-1982 term.

Also by Stephen I. Glover :
Business Separation Transactions: Spin-Offs, Subsidiary IPOs and Tracking Stock


Author Image
  • Craig M. Wasserman
Craig Wasserman (deceased) was a partner in the New York firm of Wachtell, Lipton, Rosen & Katz. He was a frequent speaker and author on corporate, banking, mergers and acquisitions and securities law topics. Mr. Wasserman received a B.A./M.A. in economics, summa cum laude, from Yale University in 1982. He graduated with a J.D. in 1986 from the Yale Law School, where he served as Editor of the Yale Law Journal, as well as Editor and Senior Articles Editor of the Yale Journal on Regulation. In 1986, he served as Law Clerk to Chief Judge Wilfred Feinberg of the United States Court of Appeals for the Second Circuit.


Author Image
Dora R. Arash
Gibson, Dunn & Crutcher LLP
Los Angeles, CA
Stephen G. Gellman
Wachtell Lipton Rosen & Katz
New York, NY
Jeannemarie O'Brien
Wachtell, Lipton, Rosen & Katz
New York, NY
Jim Bamford and David Ernst
McKinsey & Company
Washington, D.C.
Ellisa Opstbaum Habbart, Esq.
The Delaware Counsel Group, LLP
Wilmington, DE
William C. Pelster
Skadden, Arps, Slate, Meagher &
Flom LLP,
New York, NY
Elizabeth Bluestein Esq.
Los Angeles, CA
John Hess, Jr
Gibson, Dunn & Crutcher
London, United Kingdom
Sara Bloom Raskin
Baltimore, MD
Alec Y. Chang, Esq
Skadden, Arps, Slate, Meagher & Flom LLP
Palo Alto, CA
David Kennedy
Gibson, Dunn & Crutcher LLP
Palo Alto, CA
John H. Small
Prickett, Jones, Elliott, Kristol, & Schnee
Wilmington, DE
Denis A. Curran
Neustar
Sterling, VA
Richard K. Kim
Wachtell, Lipton, Rosen & Katz
New York, NY
Gavin D. Solotar
Wachtell Lipton Rosen & Katz
New York, NY
George W. Dent, Jr.
Case Western Reserve University Law School
Cleveland, OH
Eugene A. Ludwig
Promontory Financial Group
Washington, DC
Peter J. Walsh, Jr.
Potter Anderson & Corroon LLP
Wilmington, DE


Jeff Weiss, Danny Ertel and
Sara Keen
Vantage Partners, LLC,
Boston, MA

CHAPTER 1
Overview: Building a Successful Partnership, Joint Venture or Strategic Alliance

Craig M. Wasserman
§ 1.01 Introduction
§ 1.02 Defining the Landscape
§ 1.03 Ten Key Questions to Consider
[1] Is the Client’s Interest in the Venture/Alliance Primarily Strategic or Financial in Nature?
[2] What Consequences Would Stem from a Sale of the Client’s Interests in the Venture/Alliance?
[3] Why Does It Make Sense for the Client to Partner on this Project Rather than Go It Alone?
[4] What Opportunities Will the Client Forego by Entering into the Venture/Alliance?
[5] What Is the Scope of the Noncompetition and Exclusivity Provisions that Are Envisioned?
[6] What Are the Relative Strengths that Each Party Brings to the Table?
[7] What Are the Parties’ Relative Bargaining Powers, Both Up Front and Over Time?
[8] How Much Money Does the Client Wish to Invest in the Venture, Both Up Front and Over Time?
[9] What Are the Expected Exit Strategies, and Do All Parties Have a Shared View of the Likely Exit Scenarios?
[10] Has the Client Adequately Considered All the Things that Could Go Wrong with the Venture/Alliance, So that the Client’s Interests Can Be Adequately Protected in Such Various Downside Scenarios?
§ 1.04 Ten Key Strategies to Follow
[1] Assemble a Core Working Team for the Project
[2] Review Analogous Precedent Transactions and Collect Precedent Contracts to the Extent Available
[3] Separate the Proposed Transaction into Its Core Component Parts and Carefully Review the Key Accounting, Tax and Other Financial/Structural Consideration of the Proposed Transaction
[4] Stress Test All of the Key Strategic and Financial Premises
[5] Create a Term Sheet Early in the Process
[6] Create a Separate Issues List of All Key Open Legal, Financial and Structural Considerations that Will Need to Be Resolved
[7] Know What Will Work Best for Your Client Before Engaging the Other Side
[8] Take the Offensive in Putting Forth Proposals to the Other Side
[9] Avoid Ambiguities When It Comes to Drafting the Key Legal Obligations and Responsibilities of the Parties
[10] Consider What Works Best for Both Sides and Be Fair When Drafting Key Terms and Provisions
§ 1.05 A Roadmap to the Material that Follows
§ 1.06 Joint Ventures with a Distressed Partner
[1] Joint Venture Agreements as Executory Contracts
[2] Application of Section 365 to Joint Venture Agreements

CHAPTER 2
Getting Started: Process, Timing and Disclosure Concerns

Stephen I. Glover
§ 2.01 Introduction
§ 2.02 Forming the Deal Teams
§ 2.03 Preparing an Issues List and List of Tasks to Be Accomplished
§ 2.04 Timetable for the Transaction
§ 2.05 Public Announcements
§ 2.06 Due Diligence Checklist
§ 2.07  Due Diligence Checklist for Ventures That Will Operate in Foreign Countries

CHAPTER 3
Letters of Intent

Craig M. Wasserman and Gavin D. Solotar§ 3.01 Letters of Intent
[1] In General
[2] Advantages and Disadvantages
§ 3.02 Letter of Intent Terms
[1] Formation
[2] Governance
[3] Miscellaneous Provisions
§ 3.03 Binding vs. Nonbinding Letters of Intent
[1] The Legal Landscape
[2] Drafting Letters of Intent to Clearly Evidence Intent
§ 3.04 Disclosure Requirements
[1] Basic Disclosure Requirements under the Federal Securities Laws
[2] The Disclosure Paradigm
§ 3.05 Form of Letter of Intent for Joint Venture Transactions
§ 3.06 Sample Joint Venture Issues List
§ 3.07 List of Issues in Structuring and Operating an International Joint Venture

CHAPTER 4
Choice of Entity Considerations— A Comparison of Legal Entities

Stephen I. Glover and John Hess, Jr.
§ 4.01 Overview
§ 4.02 Factors to Consider When Deciding Whether to Form an Entity
§ 4.03 Factors Affecting the Choice of Entity
[1] Tax Issues
[2] Limited Liability
[3] Management Structure and Statutory Formalities
[4] Regulatory Filings and Approval
[5] Third-Party Consents
[6] Other Statutory Differences Between Types of Entities
[7] Exit Strategies

CHAPTER 5
Fiduciary Duties and Legal Obligations of Joint Venture Partners

Peter J. Walsh, Jr.
§ 5.01 Overview
§ 5.02 Fiduciary Duties in General Partnerships
[1] The Duty of Loyalty
[2] The Duty of Care
[3] Good Faith and Fair Dealing
§ 5.03 Fiduciary Duties in Common Law Joint Ventures
[1] Joint Ventures Compared to Partnerships
[2] The Requisite Existence of a Joint Venture
[3] Nature and Extent of Joint Venture Fiduciary Duties
[4] Enterprise Specificity
[5] The Significance of Managerial Control
[6] Waiver of Objections to Breaches of Duty
§ 5.04 Fiduciary Duties in Limited Partnerships
[1] Fiduciary Duties of the General Partner
[2] Fiduciary Duties of Limited Partners
§ 5.05 Fiduciary Duties in Limited Liability Companies
§ 5.06 Contractual Modification of Fiduciary Duties
[1] General Partnerships
[2] Limited Partnerships
[3] Limited Liability Companies
[4] Joint Ventures

CHAPTER 6
Drafting the Joint Venture Agreement

Stephen I. Glover
§ 6.01 Introduction
§ 6.02 Choosing the Form of the Joint Venture
[1] Overview
[2] Factors Affecting the Choice of Form
§ 6.03 Defining the Venture’s Business and Powers
[1] Purposes of the Business
[2] The Venture’s Powers
§ 6.04 Identifying Assets to Be Conveyed to the Venture
§ 6.04A Representations Regarding Assets Conveyed to the Venture
§ 6.05 Managing the Venture
[1] Overview
[2] The Managing Board
[3] Officers
[4] The Venture’s Nonexecutive Employees
[5] Use of Advisory Committees
[6] Other Committees
§ 6.06 Capital Structure and Ownership Interests
[1] Ownership Interests
[2] Debt, Equity and Preferred Returns
[3] Voting Rights
§ 6.07 Capital Contributions
[1] Initial Capital Contribution
[2] Additional Capital Needs of the Venture
[3] Interest and Withdrawals of Capital
§ 6.08 Dividends and Distributions
[1] Basic Dividend Policy
[2] Foreign Currency Problems
[3] Sample Provisions
§ 6.09 Accounting Issues; Books and Records; Capital Accounts; Tax Matters
[1] Accounting Issues
[2] Books and Records
[3] Capital Accounts
[4] Tax Matters
[5] Sample Provisions
§ 6.10 Restrictions on Competition
[1] Competition Issues
[2] Sample Provisions
§ 6.10A Corporate Opportunity Doctrine Problems
[1] Opportunity Issues
[2] Sample Provisions
§ 6.10B Conflict of Interest and Other Fiduciary Duty Problems
§ 6.11 Transfer of Interests
[1] Overview
[2] Rights of First Refusal; Tag-Alongs and Drag-Alongs
[3] Regulatory Compliance
[4] Transfers Upon Default
[5] Admission to Partnership or Limited Liability Company
[6] Sample Provisions
§ 6.12 Confidentiality
[1] Discussion
[2] Sample Provisions
§ 6.13 Business Relationships Between the Venture and Venture Parties
[1] Discussion
[2] Sample Provisions
§ 6.14 Defaults and Remedies
[1] Overview
[2] Specifying the Events of Default
[3] Remedies for Default
[4] Sample Provisions
§ 6.15 Termination and Liquidation of the Venture
[1] Termination
[2] Liquidation of the Venture
[3] Sample Provisions
§ 6.16 Dispute Resolution Mechanisms
[1] Overview
[2] Mediation
[3] Arbitration
[4] Bouncing the Decision Upstairs
§ 6.17 Exit Mechanisms
[1] Overview
[2] Triggers
[3] Termination or Withdrawal
[4] Transfer Rights; Sale of the Venture
[5] Puts and Calls
[6] The Buy-Sell Device
[7] Forcing an IPO
[8] Negotiating Buy-Outs
§ 6.18 Indemnification Provisions
[1] Discussion
[2] Sample Provisions
§ 6.19 Governing Law; Forum Selection
[1] Discussion
[2] Sample Provisions
§ 6.20 Other Provisions
[1] Notices
[2] Other “Boilerplate”
[3] Sample Provisions
§ 6.21 Ancillary Agreements
[1] Overview
[2] Technology Licensing Agreements
[3] Marketing Agreements
[4] Administrative Service Agreement
[5] Real Estate Transfer and Asset Transfer Documents
[6] Trademark Agreement
§ 6.22 Sample Joint Venture Agreement: General Partnership Form
§ 6.23 Sample Joint Venture Agreement: Corporate Joint Venture Form
§ 6.24 Sample Joint Venture Agreement: Limited Liability Company Form
§ 6.25 Sample Joint Venture Agreement: Joint Venture Formation Agreement Form
§ 6.26 Exit Mechanism Issues List
[1] Types of Exit Mechanisms
[2] Exit Triggers
[3] Matching Exit Mechanisms to Exit Triggers
[4] Exit by Sale of the Venture
[5] Exit by Sale of Venture Interest
[6] Exit by Termination
[7] Designing Put Rights
[8] Designing Call Rights
[9] Designing Buy-Sell Provisions
§ 6.27  Form: Sample Strategic Alliance Memorandum of Understanding
§ 6.28  Form: Sample Joint Venture Contribution Agreement

CHAPTER 7
Ancillary Agreements

Alisa Babitz and Denis A. Curran
§ 7.01 Introduction
[1] Types of Ancillary Agreements
[2] Reasons to Use Ancillary Agreements
[3] Coordination Between Joint Venture Agreement and Ancillary Agreements
§ 7.02 Contributing Assets to the Joint Venture
[1] Contribution Agreement
[2] License Agreement
[3] Asset Sharing Agreement
§ 7.03 Running the Joint Venture
[1] Services Agreement
[2] Employee Leasing Arrangements
[3] Branding/Marketing
§ 7.04 Ongoing Commercial Relationships
[1] General Terms and Conditions
[2] Exclusivity
[3] Term and Termination; Amendment
§ 7.05 Guaranties
§ 7.0A Research and Development Agreements
§ 7.06 Form of Contribution Agreement
§ 7.06A Forms of Instruments of Conveyance
§ 7.07 Form of Licensing Agreement
§ 7.07A Form of License Agreement with Royalties
§ 7.08 Form of Services and Employee Leasing Agreement
§ 7.08A Form of Transitional Services Agreement
§ 7.09 Form of Trademark License Agreement
§ 7.10 Form of Parent Guaranty
§ 7.11 Form of Parent Guaranty of Payment
§ 7.12 Form of Indemnification Agreement
§ 7.13 Form of Assignment of Rights and Confidentiality and Non-Disclosure Agreement

CHAPTER 8
The Role of Lawyers in Fostering Trust in Business Alliances

George W. Dent, Jr.
§ 8.01 Introduction
§ 8.02 Distinctive Features of Strategic Alliances
[1] The Growing Importance of Strategic Alliances
[2] Contractual Gaps in Strategic Alliances
[3] The Importance of Trust in Strategic Alliances
[4] The Definition of Trust
§ 8.03 The Problem of Lawyers in Strategic Alliances
[1] Current Ignorance
[2] The Behavior of Lawyers in Negotiations
[3] Law vs. Trust?
[4] The Awkward Role of Lawyers
[5] The Role of Law in Defining the Range of Alliances
§ 8.04 The Lawyer’s Role in Negotiations
[1] Attention to the Client’s Business Needs
[2] Negotiating to Enhance Trust and Cooperation
§ 8.05 Substantive Terms in Strategic Alliances
[1] Whether to Enter into an Alliance
[2] Choice of Entity: Introduction
[3] Incentive Structures
[4] Required Performances and the Scope of the Alliance
[5] Governance Mechanisms
[6] Dispute Resolution and Avoidance
[7] Termination
§ 8.06 Implications for Legal Training
[1] Contracts and Business Organizations
[2] Negotiation
[3] Diversity
§ 8.07 Conclusion

CHAPTER 9
Getting Alliances Right— The Management Perspective

James Bamford and David Ernst
§ 9.01 Introduction
§ 9.02 How Alliances Capture Value
§ 9.03 How to Execute Across the Alliance Lifecycle
[1] Have a Clear Strategy
[2] Choose Partners Carefully
[3] Choose the Right Structure
[4] Take a Broader View of Governance
[5]  Establish a Robust System to Measure and Monitor Performance
[6] Plan for Evolution and Proactively Restructure
§ 9.04 Conclusion
§ 9.05 Further References

CHAPTER 9A
Getting the Governance Right—Joint Venture Governance Guidelines

James Bamford and David Ernst
§ 9A.01 Introduction
§ 9A.02 The Joint Venture Governance Challenge
§ 9A.03 A Framework for Joint Venture Governance
§ 9A.04 Governance Outcomes
[1] Financial Performance
[2] Strategic Performance
[3] Operational Performance
[4] Governance and Relationship Performance
§ 9A.05 Joint Venture Governance Guidelines
§ 9A.06 Conclusion
§ 9A.07 Exhibits
[1] Exhibit 1: Added Challenges of JV Governance
[2] Exhibit 2: Key Elements of JV Governance
[3] Exhibit 3: Examples of JV Governance System Designs
[4] Exhibit 4: Outcome Measures of Good Governance
[5] Exhibit 5: JV Governance Diagnostic
[6] Exhibit 6: Sample Outcome of JV Governance Diagnostic
[7] Exhibit 7: Degree of JV Independence

CHAPTER 10
Managing the Alliance Relationship

Jeff Weiss, Danny Ertel and Sara Keen
§ 10.01 Meaning, and Importance, of Managing the Alliance Relationship
§ 10.02 Transitioning from Negotiation to Relationship Management
§ 10.03 Launching the Alliance Relationship
[1] The Relationship Launch Event
[2] Specific Purposes of the Relationship Launch Event
[3] Notes on Key Elements of the Relationship Launch Event
[4] Comment on Additional Launches
§ 10.04  Managing the Alliance Relationship
[1] Relationship Management Responsibilities
[2] Relationship Management Mechanisms
§ 10.05  Auditing and Adjusting the Alliance Relationship
[1] The Audit Questions
[2] The Audit Process
[3] The Adjustment Process
§ 10.06  Managing Changes that Affect the Alliance
§ 10.07  Managing the Alliance Relationship Through Termination
§ 10.08  Learning from Alliance Relationships
§ 10.09  Application to Joint Ventures
§ 10.10  Conclusion

CHAPTER 11
Negotiation Strategies for Joint Venture and Alliance Success

Danny Ertel and Jeff Weiss
§ 11.01 Overview: The What and the How of Negotiation
[1] Why Everyone Focuses on the Substance
[2] Why “Process” Matters
[3] The Two Parts of the Process
[4]  Negotiating Successful Joint Ventures and Alliances
§ 11.02 Getting Ready: Effective Preparation
[1] You Negotiate Like You Prepare
[2] Preparation (or Lack Thereof) that Destroys Value
[3] Preparing for Success
§ 11.03 Internal Alignment: Build It; Maintain It; or Else
[1]  Key Elements/Issues Requiring Alignment in Joint Ventures and Alliances
[2]  Processes for Building and Maintaining Alignment
§ 11.04 The Negotiator’s Mandate: How Far Can You Go?
[1] Management’s Dilemma: Broad vs. Narrow Authority
[2] A More Useful Construct
§ 11.05 Pre-Negotiation Negotiation
[1] The Negotiation Launch
[2] Ongoing Preparation and Process Management
§ 11.06 At the Negotiation Table
[1] What Is and Is Not Covered in this Section
[2] Who Should Be There
[3] Some Sroad Guidelines
§ 11.07 Decision Time
[1] An Iterative Process that Minimizes Surprises
[2] This Deal vs. What?

CHAPTER 12
Delaware Limited Partnership Law

Ellisa Opstbaum Habbart
§ 12.01 Introduction and Summary
§ 12.02 History of the Delaware Revised Uniform Limited Partnership Act
§ 12.03 Important Provisions of DRULPA
[1] Partnership Name
[2] Formation
[3] Amendment and Correction of the Certificate
[4] Admission of Limited Partners
[5] Classes of Partners
[6] Limited Partner Protection from Liability
[7] Certain Limited Partner Voting Rights
[8] Meetings of Limited Partners
[9] Information Rights of Limited Partners
[10] Rights and Obligations of General Partners
[11] Remedies for General Partner Breach of Partnership Agreement
[12] Rights and Obligations of Limited Partners
[13] Indemnification and Limitation of Fiduciary Liability
[14] Contributions
[15] Allocation of Profits and Losses
[16] Distributions
[17] Withdrawal of Partners
[18] Distributions and Liability for Their Return
[19] Assignment and Redemption of Limited Partnership Interests
[20] Dissolution and Winding Up of the Limited Partnership
[21] Limited Partnership Mergers
[22] Domestication, Transfer and Conversion of Limited Partnerships
[23] Series of Limited Partnerships
[24] Derivative and Class Actions
[25] Contested Matters and Votes
[26] Foreign Limited Partnerships
[27] Filing Fees and Annual Taxes
§ 12.04 References
[1] Statutory Citations
[2] Other Sources
§ 12.05 Forms—Delaware Secretary of State
[1] Reservations of Limited Partnership Name
[2] Consent to use of Name
[3] Certificate of Limited Partnership
[4] Certificate of Merger of Two Delaware Limited Partnerships
[5] Certificate of Merger and a Delaware Corporation and a Delaware Limited Partnership
[6] Certificate of Merger of a Delaware Limited Partnership and a Delaware General Partnership
[7] Certificate of Merger of a Foreign Limited Partnership into a Delaware Limited Partnership
[8] Certificate of Cancellation of Certificate of Limited Partnership
[9] State of Delaware Limited Partnership Tax Notice
[10] Certificate of Foreign Limited Partnership
[11] Registered Limited Liability Limited Partnership Application Form
§ 12.06 Annotated Form of Basic Delaware Limited Partnership Agreement

CHAPTER 13
Nonentity Strategic Alliances

Craig M. Wasserman§ 13.01 Overview
§ 13.02 Illustrative Alliances
§ 13.03 Key Issues in Creating a Strategic Alliance Without a Jointly Owned Entity
[1] Avoiding a Fiduciary Relationship
[2] Specifying the Parties’ Property Ownership Rights
[3] Protecting Against Potential Legal Liabilities Associated with the Alliance
§ 13.04 Governance Mechanisms for Nonentity Strategic Alliances
[1] The Use of Marketing or Business Plans
[2] The Alliance Committee
§ 13.05 Dispute Resolution
[1] Resolving Governance Disputes
[2] Resolving Legal Disputes
[3] Resolving Disputes Over Financial Computations
§ 13.06 Revenue Shares and Other Economic Sharing Arrangements
§ 13.07 Exclusivity, Noncompetes and Defining the Scope of the Alliance
§ 13.08 Termination and Unwind Provisions
§ 13.09 Drafting Contractual Alliances: Structure and Outline of an Illustrative Credit Card Co-Branding Agreement
[1] Article I: Definitions, General Provisions, Rules of Construction
[2] Article II: Establishment of a Joint Marketing and Co-Branded Program
[3] Article III: Marketing Plan
[4] Article IV: Account Creation and Administration
[5] Article V: Intellectual Property
[6] Article VI: Compensation
[7] Article VII: Additional Covenants of Purchaser
[8] Article VIII: Confidentiality
[9] Article IX: Representations and Warranties
[10] Article X: Indemnification
[11] Article XI: Term and Termination
[12] Article XII: General

CHAPTER 14
Special Issues in Financial Services Joint Ventures and Alliances

Richard K. Kim
§ 14.01 Overview
§ 14.02 Joint Ventures and Alliances to Engage in Banking Activities
[1] Regulatory Implications
[2] Illustrative Transactions to Engage in Banking
§ 14.03 Joint Ventures and Alliances to Engage in Securities Brokerage
[1] Securities Brokerage Regulatory Framework
[2] Illustrative Transactions to Engage in Securities Brokerage
§ 14.04 Joint Venture and Alliances to Engage in Asset Management
[1] Asset Management Regulatory Framework
[2] Illustrative Transactions to Engage in Asset Management
§ 14.05 Joint Ventures and Alliances to Engage in Insurance Activities
[1] Insurance Regulatory Framework
[2] Illustrative Transactions
§ 14.06 Conclusion

CHAPTER 14A
Challenges in Designing Effective Compliance and Risk Management Structures for Financial Services Joint Ventures

Eugene A. Ludwig and Sarah Bloom Raskin
§ 14A.01 Introduction
§ 14A.02 Compliance and Risk Management for Financial Institutions
[1] Examples of Financial Services Joint Ventures
[2] The Increased Importance of Compliance and Risk Management
[3] Regulatory Expectations Regarding Compliance and Risk Management Systems
§ 14A.03  Issues of Compliance and Risk Management Within Financial Services Joint Ventures
[1] Compliance and Risk Management: Assessing the Risks of a Joint Venture
[2] Compliance and Risk Management Within the Joint Venture
[3] Compliance and Risk Management Systems in the Joint Venture: How Much Oversight by Each Parent?
[4] Compliance and Risk Management Systems Within the Joint Venture: Outsourcing
[5] Resolving Differences Between Parent Firms Regarding Risk Taking and Compliance
§ 14A.04 Practical Advice

CHAPTER 15
Special Issues in Real Estate Joint Ventures

Stephen G. Gellman
§ 15.01 Overview
§ 15.02 Capital Contributions
[1] Initial Capital Contributions
[2] Additional Capital Contributions
[3] Failure to Make Capital Contributions
§ 15.03 Fees and Other Compensation to the Venturers
§ 15.04 Distributions
§ 15.05 Management of the Venture
[1] Overview
[2] Major Decisions
[3] Standards and Procedures for Major Decisions
[4] Authority of Managing Venturer
[5] Transactions with Affiliates
[6] Competitive Projects
[7] Indemnities
§ 15.06 Transfers of Venture Interests
[1] Overview
[2] Permitted Transfers
[3] Transfers to Third Parties
[4] Closing Procedures for Transfers
[5] Pledges of Partnership Interests
§ 15.07 Events of Default
§ 15.08 Buy-Sell Procedures; Dispute Resolution

CHAPTER 16
Minority Strategic Investments

Stephen I. Glover
§ 16.01 Basic Structural Issues
§ 16.02 Due Diligence Issues
§ 16.03 Impact of Purpose on Structure
§ 16.04 Equity Vs. Debt
§ 16.05 Common Stock Vs. Preferred Stock
§ 16.05 A Shareholder Approval Requirements Under Stock Exchange Rules
§ 16.06 Pricing and Size of Equity Investment
§ 16.07 Minority Vs. Majority Equity Investments
§ 16.08 Performance-Based Adjustments in the Investor’s Equity Stake
§ 16.09 Investments in Public Companies vs. Investments in Private Companies
§ 16.10 Terms of Preferred Stock
§ 16.11 Governance Issues
§ 16.12 The Right to Board Representation
§ 16.13 Class Voting Rights for Preferred Stock
§ 16.14Approval and Blocking Rights
§ 16.15 Operating and Financial Covenants
§ 16.16 Information Rights
§ 16.17 Standstill Agreement
§ 16.18 Investor Puts and Target Calls
§ 16.19 Preemptive Rights
§ 16.20 Investor’s Right of First Refusal
§ 16.21 Drag-Along, Tag-Along Rights, and Co-Sale Rights
§ 16.22 Options to Acquire Additional Target Equity
§ 16.23 Cross-Investments by the Target and the Investor
§ 16.24 Staged Acquisitions
§ 16.25 Restrictions on Transfer and Lock-Up Agreements
§ 16.26 Registration Rights
§ 16.27 Terms of Debt Investment
§ 16.28 Corporate Law Issues in Strategic Investments
§ 16.29 Securities Law Issues in Strategic Investments
§ 16.30 Tax Issues
§ 16.31 Accounting Issues
§ 16.32 Antitrust Issues
§ 16.33 Forms of Business Relationships
[1] Joint Ventures
[2] Technology Licensing Agreement
[3] Marketing Agreement
[4] Supply Agreement
[5] Employee Sharing Agreement
§ 16.34 Documentation
§ 16.34A Terms of Select Strategic Investments
§ 16.35 Form: Term Sheet for Series C Preferred Stock
§ 16.36 Form: Stock Purchase Agreement for Strategic Investment Made at Time of the Initial Public Offering
§ 16.37 Form: Stock Purchase Agreement Providing for Strategic Investment in a Public Company
§ 16.38 Form: Warrant to Acquire Common Stock
§ 16.39 Form: Registration Rights Agreement

CHAPTER 17
Antitrust Considerations

William C. Pelster and Alec Y. Chang
§ 17.01 Introduction
§ 17.02 The Statutory Framework
[1] The Sherman Act
[2] The Clayton Act
[3] The Federal Trade Commission Act
[4] The National Cooperative Research and Production Act
[5] The Hart-Scott-Rodino Antitrust Improvements Act
[6] Other Antitrust Laws
§ 17.03 Analytical Framework for Competitor Collaborations
[1] Per Se Illegality
[2] Rule of Reason and Efficiencies
[3] Merger Analysis
[4] Spillover Effects
§ 17.04 Analysis of Joint Venture Transactions
[1] Naked Agreement to Restrain Trade
[2] Merger Analysis
[3] Spillover Effects
[4] Ancillary Restraints
[5] Access to Joint Ventures
[6] Joint Venture Guidelines
§ 17.05 Licensing of Intellectual Property

CHAPTER 18
Tax Issues

Dora R. Arash and Elizabeth S. Bluestein
§ 18.01 Overview
§ 18.02 Making Sure that the Partnership Is Taxed as a Partnership
[1] Partnership Classification
[2] The Anti-Abuse Regulations
[3] Judicial Anti-Abuse Doctrines
§ 18.03 Loss Limitation Rules
[1] Overview
[2] IRC Section 704(d) Basis Limitations
[3] At-Risk Limitations
[4] Passive Loss Limitations
§ 18.04 Allocations of Income and Loss and Distributions of Cash
[1] Overview
[2] Definitions of Capital Accounts and Other Tax-Related Terms
[3] Loss Sharing Schemes
[4] Cash Distribution and Income Allocation Schemes
[5] Special Allocations to Achieve Specific Objectives
[6] Deficit Capital Accounts
[7] Minimum Gain Chargeback
[8] Miscellaneous Important Provisions
§ 18.05 Taxation of Partnership Interests Received for Services
[1] Introduction
[2] Distinction Between Capital Interest and Profits Interest
[3] Receipt of Capital Interest for Services
[4] Receipt of Profits Interest for Services
§ 18.06 Contributions of Property
[1] Overview
[2] Depreciation and Gain or Loss When the Agreed Value of Property Differs from Its Basis
[ 3] Valuing Contributed Property at Zero
[4] Issuance of Noncompensatory Options
§ 18.07 Distribution of Property
[1] Distribution of Marketable Securities
[2] Recognition of Pre-Contribution Gain upon Certain Distributions of Property
§ 18.08 Withholding on Partnership Distributions
§ 18.09 IRC Section 754 Election
§ 18.10 Appointment of Tax Matters Partner
§ 18.11 Tax Shelter Registration and Other Regulations
[1] Overview
[2] Tax Shelter Registration
[3] Exceptions
[4] Notification of Tax Shelter Registration Number
[5] Disclosure
[6] Investor List
[7] Penalties
[8] Planning Considerations

CHAPTER 19
Securities Law Issues

Stephen I. Glover, R. McMillan Price, and David P. Patch
§ 19.01 Introduction
§ 19.02 Venture Interests as Securities
§ 19.03 Applicability of Section 5 of the Securities Act to the Offer and Sale of Venture Interests
§ 19.04 Private Placement Exemption Under Section 4(2)
§ 19.05 Regulation D Safe Harbors
[1] Rule 504 Exemption
[2] Rule 505 Exemption
[3] Rule 506 Exemption
[4] General Solicitation
[5] Calculating the Number of Purchasers
[6] Accredited Investor Definition
[7] Required Disclosure
[8] Limitations on Resale
[9] Notice of Sales
[10] Insignificant Deviations from Requirement of Regulation D
[11] Integration
[12] Placement Procedures
§ 19.06 Section 4(6) Exemption
§ 19.07 Regulation S Exemption for Offshore Offers and Sales
§ 19.08 Intrastate Offering Exemption
§ 19.09 Offerings Under Rule 144A
§ 19.10 Regulation A Exemption and Small Business Offerings
§ 19.11 Rule 701 Exemption for Offerings to Employees
§ 19.12 Fraud Liability and Disclosure Documents
§ 19.13 Integration Issues
§ 19.14 State Blue Sky Laws
§ 19.15 Post-Formation Capital Raising Activities by Joint Ventures
§ 19.16 Initial Public Offerings by Joint Ventures
[1] Reasons for Engaging in an Initial Public Offering
[2] Structuring the IPO: Primary vs. Secondary Offering
[3] Creating an IPO Ready Venture
[4] Securities Act Registration Basics
[5] Gun-Jumping and Other Disclosure Issues Before Filing
[6] Communications During the Waiting Period
[7] Special Disclosure Issues
[8] Registration Under the Exchange Act
[9] Listing on Exchanges or the NASDAQ
[10] The Role of the Underwriters and the Underwriting Agreement
[11] Investment Company Act Issues in Venture IPOs
[12] Schedule 13G Filings by Venture Partners Following a Venture IPO
[13] Application of Section 16 to Venture Partners in Venture IPOs
[14] Application of Regulation M to Venture Partners in Venture IPOs
§ 19.17 Application of Securities Laws to Transfers of Joint Venture Interests
[1] Rule 4(1 1/2) Exemption
[2] Rule 144 Transfers
[3] Resales Pursuant to Rule 144A
[4] Regulation S Resales
[5] Registered Transfers
[6] Registration Rights
§ 19.18 Disclosure Issues for Venture Partners
[1] Disclosure of Preliminary Joint Venture Negotiations
[2] Application of Regulation FD to Disclosures About Joint Ventures
[3] A Venture Partner’s Obligation to Report Material Joint Venture Agreements, the Formation of a Joint Venture or the Transfer of a Venture Interest on Form 8-K
[4] Disclosure of Joint Venture Activities in Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q
§ 19.19 Liability Under the Securities Laws
[1] Liability Under Section 11 in Connection with Public Offerings
[2] Liability Under Section 12(a)(2) of the Securities Act in Connection with Public Offerings
[3] Controlling Person Liability Under Section 15 of the Securities Act in Connection with Public Offerings
[4] Liability Under Section 17(a) of the Securities Act in Connection with Public Offerings
[5] Liability Under Rule 10b-5 in Connection with Public and Private Offerings
[6] Other Rule 10b-5 Liability
[7] Other Liabilities

CHAPTER 20
Intellectual Property Issues Arising Out of the Formation and Operation of Joint Ventures

David Kennedy
§ 20.01 Introduction
§ 20.02 Overview of Intellectual Property Rights
[1] Patents
[2] Copyrights
[3] Trademarks
[4] Trade Secrets
[5] Summary
§ 20.03 Preliminary Considerations
[1] Due Diligence
[2] Representations and Warranties
[3] Risk Allocation Issues
§ 20.04 Allocation of Intellectual Property Rights
[1] Nature of Ownership and Exclusive License Rights
[2] Nature of Nonexclusive License Rights
[3] Nature of Joint Ownership
§ 20.05 Allocation of Venture Intellectual Property Rights upon Venture Dissolution or Exit of Venturer
§ 20.06 Other Selected Issues
[1] Ancillary Agreements Relating to the Joint Venture
[2] Bankruptcy Issues
[3] Protecting the Venture’s Intellectual Property Rights

CHAPTER 21
Integrating, Retaining and Providing Benefits and Incentives to Employees of a Joint Venture

Jeannemarie O’Brien
§ 21.01 Introduction
§ 21.02 Key Considerations in Structuring Compensation for the Joint Venture Management Team
§ 21.03 Retaining and Providing Incentives to Joint Venture Employees
[1] Equity Compensation Awards Based on Equity in the Joint Venture
[2] Cash Bonus Based on Joint Venture Performance
§ 21.04 Qualified Retirement and Welfare Benefit Plan Key Considerations
[1] Level of Benefits
[2] How Benefits Will Be Provided
[3] Specific Issues with the Alternative Approaches to Providing Pension Benefits
[4] Other Big Picture Issues
[5] Sample Employee Benefits Covenant
§ 21.05 Leased Employees
§ 21.06 Restrictions on Soliciting and/or Hiring Employees
§ 21.07 Disclosure of Compensation for Publicly Registered Joint Ventures

APPENDICES
INDEX