Framework Contract: Definition & Sample

A framework contract is a document that outlines the terms and conditions for an ongoing business relationship between two or more parties. The purpose of a framework agreement is to establish rules, responsibilities, and expectations when working together.

The best way to think about a framework contract is as the foundation of a business relationship. It sets guidelines for how businesses worth with each other in the future without having to create entirely new agreements each time. As a result, a framework contract saves everyone involved time and money because they know what's expected from them ahead of time instead of going through negotiations every time something changes.

Common Sections in Framework Contracts

Below is a list of common sections included in Framework Contracts. These sections are linked to the below sample agreement for you to explore.

Framework Contract Sample

This Framework Agreement (this “Agreement” ) dated the 12th day of March, 2009 (the “Effective Date” ) is entered into by and among Grace THW Holding Limited, a company incorporated in the Cayman Islands ( “Grace Parent” ) and its wholly-owned subsidiary Grace Technology Investment Co., Ltd., a company incorporated in the British Virgin Islands ( “Grace” ), AGY Holding Corp., a company incorporated in Delaware, U.S.A. ( “AGY U.S.” ) and its wholly-owned subsidiary AGY (Cayman), a company incorporated in the Cayman Islands ( “AGY” ), Main Union Industrial Ltd., a company incorporated in Hong Kong, which promptly after the Completion Date will change its name to AGY Hong Kong Ltd. (the “Company” ) and Shanghai Grace Technology Co., Ltd., a company incorporated in the PRC, which promptly after the Completion Date will change its name to Shanghi AGY Technology Co. Ltd. (the “PRC Affiliate” ). Grace Parent, Grace, AGY U.S., AGY, the Company and the PRC Affiliate may each be referred to herein individually as a “Party” and collectively as the “Parties.”

In consideration of the mutual covenants and agreements set forth herein and in each of the Operative Agreements and for good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Parties hereby agree as follows:

1. Definitions . In addition to the terms defined elsewhere in this Agreement as used herein, and unless the context requires a different meaning, the following terms have the meanings set forth below:

1.1. “Affiliate” means, with respect to any person or entity, any other person or entity which controls, is controlled by, or is under common control with such person or entity. A person or entity shall be regarded as in control of another entity if it owns or controls more than fifty percent (50%) of the equity securities of the subject entity entitled to vote in the election of directors (or, in the case of an entity that is not a corporation, for the election of the corresponding managing authority).

1.2. “Asia” means the commercial and business territory defined by the primary yarn-consuming countries between the western coast of the Pacific Ocean and 100°E Longitude. Notwithstanding anything in the foregoing sentence to the contrary, (a) Asia includes, without limitation, PRC, Hong Kong, Japan, South Korea, Singapore, Malaysia, Indonesia, Macau, Brunei, Cambodia, Laos, Mongolia, Australia, New Zealand, the Philippines, Thailand, and Vietnam; and (b) Asia excludes, without limitation, North and South America, Europe, Africa, India, the Middle East, Russia, North Korea, Burma, and Taiwan; provided that Taiwan will be included in the definition of Asia at such time that the Company is permitted to sell to customers in Taiwan under all applicable laws and regulations.

1.3. “Completion Date” has the meaning given to it in the Share Sale Agreement.

1.4. “Confidential Information” means information or know-how that (a) if disclosed in writing, is marked with the words “Confidential,” “Proprietary” or words of similar import, and if disclosed orally or visually, is described in reasonable detail in a written notice sent by the Disclosing Party (defined below) to the Receiving Party (defined below) within thirty (30) days of the oral or visual disclosure requesting that such information be treated as Confidential Information hereunder or (b) is of a nature that would be reasonably expected to be understood as being confidential, whether or not marked as such, including all technical know-how and information and financial information. Notwithstanding the foregoing, “Confidential Information” does not include information that can be demonstrated by documentary evidence:

1.5. “Person” means and includes natural persons, corporations, limited partnerships, general partnerships, limited liability companies, limited liability partnerships, joint stock companies, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, and business trusts or other organizations, whether or not legal entities.

1.6. “PRC” means the People’s Republic of China, excluding for the purposes of this Agreement, Taiwan and the Special Administrative Regions of Hong Kong and Macau.

1.7. “Third Party” means any Person other than the Parties and their Affiliates.

2. Documentation . Without limiting any of the closing conditions set forth in the Share Sale Agreement, among other things, the following documentation is required for the Joint Venture:

2.1. Application documents in a form agreeable to the Parties, to be submitted to the appropriate authority in the PRC in order to increase the registered share capital and total investment of the PRC Affiliate. Prior to the Completion Date, Grace will procure that the Company will prepare and submit such application documents to the relevant PRC authorities. Such preparation and submission will be carried out in consultation with AGY, provided that AGY will have the right to consent to the form of such application documents prior to the submission thereof.

2.2. Amended and Restated Memorandum and Articles of Association of the Company in a form agreeable to the Parties. Prior to the Completion Date, Grace will cause the Company to file such Amended and Restated Memorandum and Articles of Association with the appropriate Hong Kong authorities.

2.3. Amended and Restated Memorandum and Articles of Association of the PRC Affiliate in a form agreeable to the Parties. Either before, on, or promptly after the Completion Date, as the Parties may agree, such Amended and Restated Memorandum and Articles of Association will be registered with the Shanghai Foreign Investment Administration Committee and Shanghai Administration for Industry and Commerce.

3. Operative Agreements . In addition to this Agreement, the following agreements must be entered into as part of the Joint Venture:

3.1. Simultaneously with the execution of this Agreement, Grace Parent, Grace, and AGY are entering into the Share Sale Agreement in the form attached hereto as Exhibit A .

3.2. On the Completion Date, the applicable Parties and their Affiliates will enter into the following agreements:

4. Mutual Representations and Warranties . Without limiting the representations and warranties made by the Parties in the Share Sale Agreement or any other Operative Agreement, each Party represents and warrants to the other Parties as of the Effective Date that:

4.1. It is a corporation or company duly organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation or formation and has the full corporate or other power and authority to execute, deliver, and perform this Agreement, and to consummate the transactions contemplated by this Agreement and the Operative Agreements;

4.2. The execution, delivery, and performance of this Agreement and the Operative Agreements and the consummation of the transactions contemplated by this Agreement and the Operative Agreements have been duly authorized by all necessary corporate action on its part;

4.3. This Agreement and the Operative Agreements to which it is a party, when duly executed and delivered by an authorized officer, will be legal, valid, and binding obligations enforceable against it in accordance with the terms of this Agreement and the applicable Operative Agreements, respectively, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or other laws relating to or affecting creditors’ rights generally and by general equity principles, including judicial principles affecting the availability of injunction and specific performance;

4.4. The execution, delivery, and performance of this Agreement and the Operative Agreements to which it is a party and the consummation of the transactions contemplated by this Agreement and the Operative Agreements does not (a) violate (i) any provision of any law or any governmental rule or regulation applicable to it in any material respect, (ii) any of its organizational documents, including, without limitation, its certificate of incorporation or articles of organization, as applicable, and its by-laws or operating agreement, as applicable, (iii) any material order, judgment or decree of any court, law or regulation of any governmental body or administrative or other agency having jurisdiction over it; or (b) conflict with, result in a breach of or constitute a default under any contract or agreement to which it is a party or by which it is bound; and

4.5. No consent, approval, or authorization of or from any stockholders or members or any governmental entity or any Person, whether prescribed by law, regulation, contract or agreement, is required for the execution or delivery of this Agreement or, if required, has been obtained on or prior to the Effective Date.

5.1. Confidential Information . All Confidential Information disclosed by a Party (together with its Affiliates, the “Disclosing Party” ) to another Party (together with its Affiliates, the “Receiving Party” ) prior to the Effective Date or during the term of this Agreement or any Operative Agreement (a) will be used by the Receiving Party solely in connection with the activities contemplated by this Agreement and the Operative Agreements, provided that each Party agrees that it will provide Confidential Information received from the Disclosing Party only to the Receiving Party’s employees, consultants and advisors who have a need to know and are bound by confidentiality obligations at least as strict as this Section 5, and provided further that AGY, as a Receiving Party, may disclose Confidential Information received from a Disclosing Party to AGY’s Affiliates and to the employees, consultants and advisors of such Affiliates who have a need to know and are bound by confidentiality obligations at least as strict as this Section 5, (b) shall be maintained in confidence by the Receiving Party and (c) shall

not otherwise be disclosed by the Receiving Party to any other person, firm, or agency, governmental or private (other than a Party’s Affiliates), without the prior written consent of the Disclosing Party. For purposes of this Agreement, all information in Grace Parent’s or Grace’s possession regarding the Company or the PRC Affiliate as of the Effective Date will be deemed the Confidential Information of the Company or the PRC Affiliate, as applicable.

5.2. Authorized Disclosure and Use . Notwithstanding the provisions of Section 5.1, nothing herein shall preclude the Receiving Party from disclosing Confidential Information to the extent such Confidential Information is required to be disclosed by the Receiving Party to comply with applicable laws, to defend or prosecute litigation or to comply with governmental regulations, provided that the Receiving Party provides prior written notice of such disclosure to the Disclosing Party and takes reasonable and lawful actions to avoid and/or minimize the degree of such disclosure. In addition, each Party may not disclose the terms of this Agreement or any Operative Agreement (to the extent such terms are confidential) to any Third Party except to actual or prospective investors, acquirers or strategic partners or to a Party’s accountants, attorneys and other professional advisors; provided that such disclosures shall be subject to continued confidentiality obligations at least as strict as this Section 5.

5.3. Public Announcements and Use of Names . No disclosure of the existence of, or the terms of, this Agreement or the Operative Agreements may be made by any Party, and no Party shall use the name, trademark, trade name or logo of any other Party in any publicity, news release or disclosure relating to this Agreement or its subject matter or the Operative Agreements without the prior express written permission of the other Party, except as may be required by law or expressly permitted by the terms of this Agreement or the Operative Agreements. If a public disclosure is required by any applicable law, including in a filing with the U.S. Securities and Exchange Commission, the disclosing Party shall provide copies of the disclosure reasonably in advance of such filing or other disclosure, but not later than five (5) business days prior to the filing, for the non-disclosing Party’s prior review and comment and to allow the other Party a reasonable time to object to any such disclosure or to request confidential treatment thereof. No Party shall originate any publicity, news release or public announcements, written or oral, whether to the public or press, stockholders or otherwise, relating to the execution of this Agreement or the Operative Agreements, the subject matter of this Agreement or the Operative Agreements, any of the terms of this Agreement or the Operative Agreements, or any amendment to this Agreement or the Operative Agreements without the prior written consent of the other parties to such agreements; provided , however , that each Party may disclose such information to existing and prospective investors, lenders and advisors owing a duty or contractual obligation of confidentiality to the Party with respect to such disclosure.

6. Dispute Resolution .

6.1. Escalation In the event any dispute, controversy or claim arises between or among the Parties under, out of, in connection with or in any way relating to the Joint Venture, this Agreement or the Operative Agreements, or the breach, termination, validity or enforceability of any provision in this Agreement or any Operative Agreement (a “Dispute” ), the applicable Parties will discuss and negotiate in good faith a solution acceptable to the Parties. If, after negotiating in good faith, the Parties fail to reach agreement within sixty (60) days, then the Dispute may be referred, as applicable, to the Douglas Mattscheck of AGY and Mr. Kunzhou

Xie of Grace, (each, an “Executive” ) for resolution at the request of any Party. Any resolution, if any, by the Executives shall be final and binding on the Parties. If the Executives fail, after good faith discussions, to reach an amicable agreement on the Dispute within ten (10) business days of submission to the Executives, then the Dispute shall be submitted to binding arbitration in accordance with Section 6.2. Notwithstanding the foregoing, if a Dispute arises with respect to an Operative Agreement and such Operative Agreement contains separate dispute resolution procedures applicable to the Dispute, then the applicable Parties will follow such dispute resolution procedures contained in such Operative Agreement.

6.2. Arbitration . If the Parties fail to resolve any Dispute informally through negotiation between the Parties or the Executives, then the Dispute will be submitted to binding arbitration as follows:

The Party requesting arbitration shall promptly serve upon the other Arbitrating Party or Parties a written notice and demand for arbitration stating the substance of the controversy, dispute, or claim, and the contention of the Party requesting arbitration. Within sixty (60) days after service of the demand, the Arbitrating Parties shall select three (3) mutually acceptable arbitrators who will hear the Dispute as a panel and render an award upon the determination of the majority of the panel. The arbitrators are to act as neutral arbitrators and shall have no past, present, or anticipated future affiliation with the Parties or any relationship with the Parties which would unduly influence the independence of an arbitrator. If the Arbitrating Parties are unable to agree upon three (3) mutually acceptable arbitrators within such sixty (60) day period, then each Arbitrating Party will select an arbitrator satisfying the criteria described in the immediately preceding sentence within five (5) business days, the two (2) designated arbitrators will select a mutually agreeable third arbitrator satisfying the criteria described in the immediately preceding sentence within five (5) business days and all three (3) arbitrators will hear the Dispute as a panel and render an award upon the determination of the majority of the panel. In the event of failure by an Arbitrating Party to nominate an arbitrator in accordance with this provision and otherwise within the time and in the manner provided in the Arbitration Rules,

then such arbitrator shall be appointed by the Hong Kong International Arbitration Centre.