10872290v.3
JOINT VENTURE CRITICAL ISSUES: FORMATION,
GOVERNANCE, COMPETITION AND EXITS
By
BYRON F. EGAN
Jackson Walker L.L.P.
901 Main Street, Suite 6000
Dallas, TX 75202-3797
began@jw.com
THE UNIVERSITY OF TEXAS SCHOOL OF LAW
10
TH
ANNUAL MERGERS AND ACQUISITIONS INSTITUTE
DALLAS, TX •
••
• OCTOBER 16, 2014
Copyright© 2014 by Byron F. Egan. All rights reserved.
9/16/2014
4650454v.1
Byron F. Egan
Biographical Information
Jackson Walker L.L.P. Phone: (214) 953-5727
901 Main Street, Suite 6000 Email: began@jw.com
Dallas, Texas 75202 www.jw.com
Practice: Byron F. Egan is a partner of Jackson Walker L.L.P. in Dallas. He is engaged in a corporate,
partnership, securities, mergers and acquisitions (“M&A”) and financing practice. Mr. Egan has extensive
experience in business entity formation and governance matters, M&A and financing transactions in a wide
variety of industries including ener gy, financial and technology. In addition to handling transactions, he advises
boards of directors and their audit, compensation and special committees with respect to fiduciary duty and
other corporate governance issues, the Sarbanes-Oxley Act, special investigation and other issues.
Involvement: Mr. Egan is Senior Vice Chair and Chair of Executive Council of the M&A Committee of the
American Bar Association and served as Co-Chair of its Asset Acquisition Agreement Task Force, which wrote
the Model Asset Purchase Agreement with Commentary. He is Chair of the Texas Business Law Foundation; is
a former Chair of the Business Law Section of the State Bar of Texas and former Chair of that section’s
Corporation Law Committee; and on behalf of these groups, has been instrumental in the drafting and enactment
of many Texas business entity and other statutes. He is also a member of the American Law Institute.
Publications: Mr. Egan writes and speaks about the areas in which his law practice is focused, and is a frequent
author and lecturer regarding M&A, governance of corporations, partnerships and limited liability companies,
securities laws, and financing techniques. Mr. Egan has written or co-authored the following law journal
articles: Corporate Governance: Fiduciary Duties of Corporate Directors and Officers in Texas, 43 Texas
Journal of Business Law 45 (Spring 2009); Responsibilities of Officers and Directors under Texas and
Delaware Law, XXVI Corporate Counsel Review 1 (May 2007); Entity Choice and Formation: Joint Venture
Formation, 44 Texas Journal of Business Law 129 (2012); Choice of Entity Decision Tree After Margin Tax and
Texas Business Organizations Code, 42 T exas Journal of Business Law 171 (Spring 2007); Choice of Entity
Alternatives, 39 Texas Journal of Business Law 379 (W inter 2004); Choice of State of Incorporation – Texas
Versus Delaware: Is it Now Time to Rethink Traditional Notions, 54 SMU Law Review 249 (Winter 2001); M
& A: Private Company Acquisitions: A Mock Negotiation, 116 Penn St. L. Rev. 743 (2012); Asset Acquisitions:
Assuming and Avoiding Liabilities, 116 Penn St. L. Rev. 913 (2012); Asset Acquisitions: A Colloquy, X U.
Miami Business Law Review 145 (Winter/Spring 2002); Securities Law: Major Themes of the Sarbanes-Oxley
Act, 42 Texas Journal of Business Law 339 (Winter 2008); Communicating with Auditors After the Sarbanes-
Oxley Act, 41 Texas Journal of Business Law 131 (Fall 2005); The Sarbanes-Oxley Act and Its Expanding
Reach, 40 Texas Journal of Business Law 305 (Winter 2005); Congress Takes Action: The Sarbanes-Oxley Act,
XXII Corporate Counsel Review 1 (M ay 2003); and Legislation: The Role of the Business Law Section and the
Texas Business Law Foundation in the Development of Texas Business Law, 41 Texas Journal of Business Law
41 (Spring 2005).
Education: Mr. Egan received his B.A. and J.D. de grees from the University of Texas. After law school, he
served as a law clerk for Judge Irving L. Goldberg on the United States Court of Appeals for the Fifth Circuit.
Honors: For over ten years, Mr. Egan has been listed in The Best Lawyers in America under Corporate, M&A
or Securities Law. He won the Burton Award for Legal Achievement in 2 005, 2006, 2008 and 2009. Mr. Egan
has been recognized as one of the top corporate and M&A lawyers in Texas by a number of publications,
including Corporate Counsel Magazine, Texas Lawyer, Texas Monthly, The M&A Journal (which profiled him
in 2005) and Who’s Who Legal. In 2009, his paper entitled “Director Duties: Process and Proof” was awarded
the Franklin J ones Outstanding CLE Article Award and an earlier version of that article was honored by the
State Bar Corporate Counsel Section’s Award for the Most Requested Article in the Last Five Years.
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10872290v.3
TABLE OF CONTENTS
Page
I. INTRODUCTION ...............................................................................................................1
II. CHOICE OF ENTITY .........................................................................................................2
A. Alternatives ..............................................................................................................2
B. LLC Entity of Choice for Joint Ventures .................................................................5
III. PRELIMINARY AGREEMENTS ....................................................................................21
A. Confidentiality Agreement.....................................................................................21
B. Exclusivity Agreement...........................................................................................22
C. Letter of Intent .......................................................................................................22
D. Conduct of Parties Can Result in Binding Agreement Before Definitive
Agreements Signed ................................................................................................23
IV. SCOPE AND PURPOSE ...................................................................................................27
V. FUNDING..........................................................................................................................30
VI. ALLOCATIONS AND DISTRIBUTIONS .......................................................................33
VII. GOVERNANCE AND MANAGEMENT ........................................................................35
VIII. DEFAULTS .......................................................................................................................38
IX. RESTRICTIONS ON TRANSFER OF JOINT VENTURE INTERESTS .......................42
X. DISPUTE RESOLUTION .................................................................................................43
XI. TERMINATION ................................................................................................................43
XII. ANTITRUST .....................................................................................................................45
A. HSR Filing Requirements ......................................................................................45
B. HSR Filing Fee Thresholds ....................................................................................46
C. General Antitrust Considerations ...........................................................................46
XIII. INTELLECTUAL PROPERTY ........................................................................................46
XIV. TRANSFERRING ASSETS TO A JOINT VENTURE ....................................................48
XV. LEGAL REPRESENTATION OF JOINT VENTURE .....................................................48
