Reference no: EM13952365
There is a new development in the Argentina joint venture project on which we have been working. USCO and ARGCO have tentatively agreed that Banco BigBank ("BigBank"), a Brasil bank, will lend US$40 million to the JV Corporation, under the terms and conditions summarized below. (Defined terms in this memorandum have the meanings assigned to them in the draft Joint Venture Agreement ("JVA"))
1. BigBank's loan will be the subject of a Loan Agreement, which will be a new Exhibit to the JVA, and which will address such matters as the term of the loan, the interest rate, and other terms and conditions of the loan.
2. The entire loan proceeds will be advanced in one lump sum, at the time the Required Capital Contributions are made.
3. In consideration of its agreement to make the loan, BigBank will receive a 35% ownership interest in the JV Corporation, with the ownership interests of USCO and ARGCO to be correspondingly reduced.
4. BigBank will be entitled to designate two members of the board of directors of the JV Corporation.
5. BigBank agrees that USCO and ARGCO should prepare the Application, but BigBank requires the right to approve the Application before it is submitted to the Regulator.
6. BigBank requires that it be granted a Tag Along Right if another shareholder of the JV Corporation sells only 10% of its Shares.
7. USCO requires that it have the right veto any proposed decisions that would supermajority approval of Shares under the original JVA.
You represent USCO, and your assignment is to prepare a revised draft of reflect (i) the addition of BigBank as another party to it, (ii) the basic terms and loan referred to above, and (iii) the other matters specified above.
As mentioned above, the detailed terms and conditions of the BigBank loan will be set forth in a Loan Agreement which will be a new Exhibit to the JVA. It is therefore not necessary to prepare a draft of the Loan Agreement at this time. However, your revised draft of the JVA should include a summary of the basic terms of the loan which are referred to above, in a suitable location in the JVA.
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