Contribution Agreement
(Joint Venture)

Summary

This contribution agreement may be used in connection with a party's contribution of assets in return for an equity interest in a joint venture. This template includes practical guidance, drafting notes, and optional clauses. A simple contribution of noncash assets can be addressed in a limited liability agreement or other joint venture agreement. However, a contribution agreement should be used if the conveyance involves added complexities and, as a result, separate representations, warranties, or covenants are appropriate for the contributed assets. Four examples of when practitioners should consider using a separate contribution agreement are described below. First, if the joint venture's transferred assets are subject to liens, encumbrances, third party consents to transfer, regulatory oversight, or other impediments to their ownership or use, a separate contribution agreement should be used that contains representations, warranties, and covenants addressing those issues in detail. Second, contribution agreements should be used if joint venture partners will be contributing different kinds and amounts of assets to the joint venture, or if the contributions will be made at different points in time. In such a circumstance, a contribution agreement will specify these differences in greater detail to capture the parties' understanding. Third, contribution agreements are necessary if the parties want indemnification rights unique to the contribution. Practitioners should carefully review the indemnification rights in the primary joint venture agreement and consider whether those rights are sufficient and, if not, whether a separate contribution agreement can better address those concerns. Finally, a contribution agreement can clarify the specific obligations and mechanics associated with any post-transfer rights of the contributing partner. Such rights expressed in a contribution agreement may include the right to buy back or receive the contributed assets upon the termination of the joint venture, for instance. This contribution agreement is between one accredited investor (the Participant) and the joint venture entity (the JV Company). In this template, the joint venture participant contributes assets (the Contributed Assets) in exchange for membership units in the JV Company (the Units). Each party makes separate representations and warranties, and contemplates that the contributing party has entered into a separate limited liability agreement for the joint venture. This template does not contain indemnification rights for breaches of the representations, warranties, or covenants. For further information, see Joint Venture Resource Kit, Due Diligence in the Establishment of Joint Ventures, Conveying Assets to the Joint Venture, Joint Venture Assignment and Assumption Agreement, and Joint Venture Bill of Sale.