MASTER JOINT VENTURE AGREEMENT OF [NAME OF STATE] JOINT VENTURE
The parties signing this Agreement agree to organize, participate in and carry out a Joint Venture on the terms, provisions and conditions set forth herein.
ARTICLE I
General
A. Parties.
The parties to this Agreement, herein collectively called “Ventures,” are [name of the Company] (sometimes called “the Company”) and [name of the Developer], a [name of state] [type of entity] (hereinafter sometimes called “Developer”).
B. Name.
The parties hereby form a joint venture to be known by the name of “[name of joint venture]” (hereinafter referred to as the “Joint Venture” or the “Venture”).
C. Purpose.
The sole purpose of the Joint Venture is to establish a format to acquire, develop, lease, manage and convey various tracts of land, herein called the “Property.” The parties hereto intend to attempt to develop numerous tracts of land into shopping centers each of which developments will be identified by a memorandum to be attached to this Agreement when each of said developments occur. The parties further agree that although the actual entities developing the various tracts of land will not be this Joint Venture (each such developing entity will be solely owned and controlled by [name of owner], individually), that this Joint Venture Agreement shall control the business terms and conditions of any such developments and the dealings between the parties hereto and each entity formed and owned by [name of owner] to hold title to the various tracts of land. The Joint Venture shall be a partnership only for the purpose specified herein, and this Agreement shall not be deemed to create a general partnership between the Venturers with respect to any activities whatsoever other than the activities within the business purposes herein specified. Neither of the Venturers shall have any power to bind the other Venturer, except as specifically provided in this Agreement.
D. Place.
The Joint Venture will conduct its business at [address of joint venture], or at such other place as may be designated by the Managing Venturer or the Company.
E. Effective Date and Term.
The effective date of this Joint Venture is [date of joint venture], and it shall continue thereafter for a term of three years thereafter unless sooner terminated as hereinafter provided or unless extended by the Venturers.
F. No Restrictions.
Nothing contained in this Agreement shall be construed so as to prohibit either Venturer or any firm or corporation controlled by or controlling such Venturer from owing, operating or investing in any property of any nature, real, personal or mixed, not owned or operated by the Venture. Each Venturer agrees that the other Venturer may engage in or possess an interest in another business venture or ventures of any nature and description, independently or with others, including, but not limited to, the ownership, financing, leasing, operation, management, syndication, brokerage and development of real property, and neither the Joint Venture nor the Venturers shall have any rights by virtue of this Agreement in and to said independent ventures or to the income or profits derived therefrom. During the terms of this Agreement and notwithstanding the foregoing Developer agrees that its officers, directors and shareholders, successors and assigns must offer to the Company the opportunity to participate in the same manner as identified elsewhere in this Agreement with Developer on all retail developments in which Developer its offices, directors or shareholders are involved. Developer shall provide all information to the Company pertaining to all such projects and developments and thereafter the Company shall have 30 days from receipt of all such information to decide whether it shall be involved in such development. If the Company does not respond in writing during such 30-day period it shall be assumed that the Company has rejected said proposal. Rejection of one or more of such developments shall not alter the obligation of Developer to offer all future development opportunities to the Company. If the Company accepts such proposal, the Company shall provide all deposits and equity funds required in such transaction to develop the project, including but not limited to earnest money, normal pre-development expenses, and professional fees for due diligence. The ownership of such development shall be only an entity solely owned and controlled by [name of owner] for the benefit of the Joint Venture, on the same basis as is set forth in this Joint Venture. Documentation for such future projects and developments shall be accomplished by memorandums to be attached to this Agreement.
ARTICLE II
Contributions and Capital Accounts
A. Initial Contributions.
The Company will contribute to the Joint Venture, as its initial contribution, all equity funds as required by the construction Lender for the intended project, Developer will contribute or cause to be contributed to the Venture, as its initial contribution, all of its right, title and interest in and to that certain commitment of any proposed tenant of the various properties as well as any interest it has in purchase agreements for the various properties to be developed. Legal Title to the Property shall remain in the name of an entity owned and controlled solely by [name of owner], which shall hold legal title to the Property for the benefit of the Joint Venture under the terms hereof. The interest rate payable to any Venturer on its invested capital shall be its cost of money but no less that the interest rate charged by the project construction Lender or permanent loan whichever is applicable. Upon any projects that the Company elects to proceed within the framework of the Joint Venture, the Joint Venture agrees to reimburse Developer and the Company, out of the construction loan for any reasonable and customary expenses of the parties related to the pre-development efforts of the proposed project. In no event shall Developer contractually bind the Company or Joint Venture to any expenses without the Company’s prior written consent.
B. Additional contributions.
Neither Venturer shall have the obligation, but shall have the option, to, make additional capital contributions whenever the Managing Venturer decides that additional capital is required by the Joint Venture to satisfy its indebtedness. Any contribution made by or for the benefit of the Company shall bear interest at [percentage amount of interest] per annum and shall be repaid to the Company prior to any other distributions being made hereunder.
C. Capital Account.
An individual capital account shall be maintained for each Venturer. It shall be credited with its contributions and its Distributive Share of the profits, as hereinafter defined, and debited with any distribution of capital and its share of losses of the Joint Venture. The “Capital Account” of a Venturer means the capital account of that Venture determined from the effective date of the Joint Venture strictly in accordance with the applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”) and the Treasury Regulations issued in connection therewith. The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulation Section 1.704-1(b), and shall be interpreted and applied in a manner consistent with such regulations. In the event that the Venturers shall determine that it is prudent to modify the manner which the Capital Accounts, or any debts or credits thereto, are computed in order to comply with such regulations, the Venturers may make such modification, provided that it is not likely to have any material effect on the amounts distributable to any Venturer pursuant to Paragraph C of Article VII hereof upon the dissolution of the Venture. The Venturers shall adjust the amounts debited or credited to Capital Accounts with respect to (i) any property contributed to the Venture or distributed by the Venturers, and (ii) any liabilities that are secured by such contributed or distributed property or that are assumed by the Venture or the Venturers, in the event that a Venturer shall determine such adjustments are necessary or appropriate pursuant to Treasury Regulation Section 1.704-1 (b)(2)(iv).
D. Qualified Income Offset.
Notwithstanding the provisions of Paragraph C above, no allocation of net losses for a taxable year of the Venture shall be made to a Venturer to the extent that such allocation would cause or increase the negative balance in such Venturer’s Capital Account (after taking into account any adjustments to such Venturer’s Capital Account for such taxable year resulting from an adjustment to the adjusted tax basis for Venture Property under Section 734(b) of the Code). For purposes of this Paragraph D and Paragraph F, each Venturer’s Capital Account shall be decreased for (i) allocations of net losses that, as of the end of such taxable year, reasonably are expected to be made to such Venturer pursuant to Sections 704(e)(2) and 706(d) of the Code and Treasury Regulation Section 1.751-1(b)(2)(ii), and (ii) distributions of Distributable Funds that, as of the end of such taxable year, reasonably are expected to be made to such Venturer, to the extent such distributions exceed offsetting increases, and shall be increased for (i) such Venturer’s allocable share of Minimum Gain, and (ii) the amount such Venturer unconditionally is obligated to contribute to the capital of the Venture pursuant to provisions of this Agreement or applicable state laws. If a Venturer unexpectedly receives an allocation or distribution of Distributable Funds that causes or increases a negative balance in such Venturer’s Capital Account (as adjusted above), except as provided in Paragraph H below, then items of Venture gross income and gain first will be allocated as quickly as possible to each such Venturer in proportion to, and to the extent of, the amount of the negative balance in each such Venturer’s Capital Account. This Section is intended to comply with the qualified income offset provisions set forth in Treasury Regulation 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
E. Minimum Gain.
“Minimum Gain” generally means the aggregate amount of gain that would be realized by the Venture if it disposed of (in a taxable transaction) any Venture Property subject to a non-recourse liability in full satisfaction thereof. The determination of the amount of Minimum Gain shall be made in accordance with the provisions of Treasury Regulation Section 1.704-1(b)(4)(iv)(c).
F. Minimum Gain Chargeback.
Notwithstanding any other provision in this Paragraph F to the contrary, if there is a net decrease in the amount of Venture Minimum Gain during a Venture taxable year, then to the extent of such decrease, items of Venture gross income and gain for such taxable year (and, if necessary, subsequent years) will be allocated as quickly as possible to each such Venturer in proportion to, and to the extent of, the negative balance standing in each such Venturer’s Capital Account (after making the adjustments described in Paragraph D above). This Paragraph F is intended to comply with the minimum gain chargeback requirements set forth in Treasury Regulation Section 1.704-1(b)(4)(iv)(e) and shall be interpreted consistently therewith.
G. Allocable Share of Minimum Gain.
“Allocable Share of Minimum Gain” means, with respect to a Venturer as of any relevant determination date, the aggregate non-recourse deductions [as defined in Treasury Regulation Section 1.704-1(b)(4)(iv)(f)] allocated to such Venturer (and such Venturer’s predecessor[s] in interest up to that time), less aggregate share of such Venturer (and such Venturer’s predecessor[s] in interest) of the net decreases in Minimum Gain as of that date, The determination of the amount of each Venturer’s Allocable Share of Minimum Gain shall be made in accordance with Treasury Regulation Section 1.704-1(b)(4)(iv)(f).
H. Distribution of Assets.
In the event that assets of the Venture other than cash are distributed to a Venturer in kind, Capital Accounts shall be adjusted for the hypothetical “book” net profit or net loss that would have been realized by the Venture if the distributed assets had been sold for their fair market values in a cash sale (in order to reflect unrealized gain or loss). In the event of the liquidation of a Venturer’s interest in the Venture or of the Venture, Capital Accounts shall be adjusted for the hypothetical “book” net profit or net loss that would have been realized by the Venture if all Venture assets had been sold for their fair market values in a cash sale (in order to reflect unrealized gain or loss).
I. Venture Termination.
Capital Accounts also shall be adjusted upon the constructive termination of the Venture as provided under Section 708 of the Code in accordance with the method set forth in the immediately preceding paragraph (as required by Section 1.704-1(b)(2)(iv)(1) of the Treasury Regulations).
J. Reports.
Tax reports and Financial reports shall be prepared by the Managing Venturer and distributed to Venturer’s within 75 days after the end of the tax year.
ARTICLE III
Accounting and Distributions
A. Ownership of the Joint Venture.
The Joint Venture shall be owned by the Venturers in the percentage interests (herein sometimes referred to as the “Distributive Shares”) set forth opposite each of their names below, to-wit:
Company [percentage amount of interest]
Developer [percentage amount of interest]
Total 100%
However, if the Company requires Allen Goins to guaranty personally and construction financing which Allen Goins hereby agrees to so guaranty upon the request of the Company, the ownership for any such development shall be:
Company [percentage amount of interest]
Developer [percentage amount of interest]
Total 100%
B. Allocations and Reports.
- The parties agree to elect out of Subchapter K of Chapter 1 of Subtitle A of the Code. If the Venture is a corporation, it shall be a Sub S Corporation.
- Except as hereinafter expressly provided, all Joint Venture income, expenses, gains, profits, losses and deductions, will be maintained on an accrual basis in accordance with generally accepted accounting principles for reporting purposes, and shall be allocated to and shared at all times by the Venturers in accordance with their respective Distributive Shares. Notwithstanding the foregoing, to the extent (if any) that the agreed value of any property contributed to the Joint Venture by any Venturer exceeds the adjusted basis of such property in the hands of the contributing Venturer immediately prior to such contribution, it is expressly understood and agreed that the gain (if any) resulting from the sale, exchange or other disposition of the assets of the Joint Venture shall be allocated to such contributing Venturer until the gain so allocated pursuant to this provision equals the aggregate amount of such excess value.
C. Distribution to Venturers.
From time to time, the Managing Venturer shall distribute the Distributable Funds (as hereinafter defined) of the Joint Venture on a pro rate basis in accordance with their respective Distributive Shares in the Joint Venture. For purposes hereof, the term “Distributable Funds” shall mean the amount by which the total cash owned by the Joint Venture from time to time (including, without limitation, cash proceeds from the sale of Joint Venture assets) exceeds the reasonable working capital requirements of the Joint Venture as determined by the Managing Venturer. Any Venturer may initiate a distribution of funds when the “Distributable Funds” exceed $[amount of funds in dollars] by a minimum amount of $[amount of funds in dollars] to be distributed or to fund the income tax liabilities of the Venturer derived from the Joint Venture business.
D. Accounting.
- The fiscal year of the Joint Venture shall begin on the first day of January and end on the last day of December of each year.
- The books of account of the Joint Venture shall be kept and maintained at all times at the Managing Venturer’s principal place of business and shall be open at all reasonable times during usual business hours to examination and inspection by the Venturers.
- Reports such as the annual tax filing and financial reports shall be prepared by the Managing Venturer.
- Upon request by any Venturer, complete copies of the Venture Books, Records and all periodic financial reports as well as work sheets prepared for the IRS Tax Reports, shall be provided within seven days of the request by the Venturer.
E. Bank Accounts.
Funds of the Joint Venture shall be deposited in a Joint Venture account or accounts in the bank or banks designated by the Managing Venturer. Withdrawal from Venture bank accounts shall be made by the Managing Venturer or other parties approved by the Venturers. All withdrawals shall be upon the signature of both Venturers.
ARTICLE IV
Management and Control and Managing Venturer
A. Appointment of Managing Venturer.
The Company is hereby designated by the Venturers as the initial Managing Venturer of the Joint Venture. Development fees for the project the Venture is to develop shall be divided [portion of fees] to Developer and [portion of fees] to the Company other than for the Ocala Shopping Center the Joint Venture anticipates developing. The Development fee for said Ocala Shopping Center shall be divided [percentage amount of fee] to the Company and [percentage amount of fee] to Developer. Subject to lender approval the Venturers agree that the minimum project budget for development fees shall be [percentage amount of project cost] of the project cost.
B. Management and Control.
Except as herein otherwise expressly provided, the Managing Venturer shall have the exclusive right to manage, control and operate, or cause to be managed, controlled and operated, all of the business and affairs of the Joint Venture subject to the business plans, proforma and budget approved by its Ventures. All checks of the Joint Venture shall be two party signatures. Involving both ventures the Managing Venturer is hereby vested with the power and authority to receive and disburse all capital contributions, to meet all obligatory payments, costs and expenses of the Joint Venture, to execute, acknowledge and deliver for an on behalf of the Joint Venture all documents, instruments, agreements, papers and checks and to do all things necessary in the discretion of the Managing Venturer to lease, develop, construct improvements on, finance, sell or otherwise convey the Property, and carry out all of the purposes of this Joint Venture subject to the business plans, proforma and budget approved by its Ventures. Developer shall be the initial management company of the project at a fee of [percentage amount of payments] of collected gross rental payments. The initial term of said management agreement shall be for one year commencing upon the occupancy date of the Anchor Tenant but cancellable without penalty upon sale of the project or for cause. The Joint Venture may at its discretion appoint a different management company at any time. Developer shall be the initial exclusive leasing agent for the Joint Venture. The fee paid to Developer shall be $[amount of fee in dollars] per square foot of leased and rental paying apace for any [name of tenant] or any other Anchor Tenant lease generated by Developer. Developer shall not be entitled to a fee or commission for any [name of tenant] lease or other major tenant lease generated by a third party unless same shall be pre-approved in writing by the Company. For leased space other than for an Anchored Tenant the commission shall be $[amount of commission in dollars] per square foot of leased space actually leased by Developer and $[amount of commission in dollars] per square foot for tenants that Developer shares with third party brokers. Developer shall be solely responsible for payment of commissions to third party brokers. For purposes of this Agreement Anchor Tenant shall be defined as a tenant who leases more than [area of lease] square feet of space.
Payment for commissions are as follows:
- [percentage amount of payment] upon lease execution and construction loan closing.
- [percentage amount of payment] upon tenant opening for business.
Outparcel sales commission shall be [percentage amount of contract price] of the contract price paid at closing if the sale is the sole responsibility of Developer and [percentage amount of contract price] if the sale is a co-broker deal between Developer and a third party. Developer is granted the exclusive right to sell any outparcels pursuant to prices agreed to by the Managing Venturer.
Ground lease commissions shall be [percentage amount of lease rates] of the first annual lease rate paid upon the commencement of lease payments and [percentage amount of lease rates] of the first annual lease rate if the lease is a co-brokered lease with a third party broker.
In addition to the foregoing (but not in limitation of the generality of the immediately preceding paragraph), the Venturers specifically grant to the Managing Venturer alone, and in the exercise of the Managing Venturer’s sole discretion, the exclusive right to do any or all of the following on behalf of the Venture, subject to the approval of the Venturers which shall not be unreasonably withheld.
- The negotiation and execution of a lease for the Property and the improvements thereon;
- The negotiation and execution of any construction or development contracts relating to the Property;
- The negotiation and execution of any notes, mortgages, assignments of leases and rents, guaranties, pledges, security agreements, loan agreements, statements, affidavits and day other documents and agreements relating to the financing or mortgaging of the Property and/or the improvements thereon;
- The negotiation and execution of any earnest money contracts/purchase and sale agreements relating to the Property or any portion thereof; and
- The transfer, sale, exchange or other conveyance of all or any portion of the Property, or any interest therein; and
- In the event Allen Goins does guarantee the construction loan for the Project, he shall have right to approve any ease or contract for the Project but not otherwise.
Venturers hereby grant to the Company the exclusive right to sell all of the Venturer’s shopping centers and receive a normal and customary commission for any such sale upon the closing of any such sale or sales.
ARTICLE V
Death, Dissolution, Bankruptcy and Disability of a Venturer
Upon the death, dissolution, bankruptcy or permanent mental disability, as determined by a competent psychiatrist, of a Venturer, the interest of the Venturer so affected shall become vested in the heirs, administrator, executor or legal representative of the Venturer so affected, subject to all rights, covenants, duties and obligations imposed by this Agreement upon such Venturer, except that any such interest shall no longer be entitled to be voted hereunder, but all such voting rights shall become vested in the remaining Venturer. The death, dissolution, bankruptcy or disability of a Venturer shall not cause the Joint Venture to terminate, but it shall continue in effect, subject to the terms of this Agreement.
ARTICLE VI
Sale of a Venturer’s Interest
No Venturer shall sell, transfer, pledge, assign, hypothecate, encumber or otherwise dispose of its interest in the Joint Venture without the prior written consent of the other Venturer.
ARTICLE VII
Liquidation Upon Termination
A. Termination.
The Joint Venture shall terminate upon the sale, transfer or other disposition of all or substantially all of the Joint Venture’s assets, the expiration of the term set forth in Paragraph E of Article I, or upon the written agreement of the Venturers, whichever occurs first.
B. Liquidation Upon Termination.
Upon the termination of the Joint Venture the Managing Venturer shall promptly wind up the affairs of the Joint Venture and pay and distribute the assets of the Joint Venture in the following order of priority:
- In the payment of debts of the Joint Venture to creditors other than Venturers;
- In payment of loans to the Joint Venture by Venturers; and
- To the Venturers proportionately in accordance with their respective Distributive Shares of the Joint Venture.
ARTICLE VIII
Notices
All written notices, acceptances, rejections, elections, exercises and waivers provided for or permitted to be given pursuant to this Agreement must be in writing and must be given or served by depositing the same in the United States Mail, addressed to the party to be notified, postage prepaid, registered or certified mail, return receipt requested, or by delivering such notice in person to such party. Notices given or served pursuant hereto shall be effective upon receipt by the party to be notified. All notices must be addressed to the Venturers at the address set forth opposite their names below. By giving at least 10 days prior written notice to the other parties, the parties hereto and their respective successors and assigns shall have the right, from time to time, to change their respective addresses.
ARTICLE IX
Governing Law
Any matter which may arise hereunder which is not herein specifically provided for shall be determined in accordance with and governed by the [applicable local law].
ARTICLE X
Indemnity
The Venturers, by this execution of this Agreement, hereby agrees to indemnify and hold each other harmless from and against any liability which it may incur by reason of its acting as Managing Venturer for the Joint Venture or fulfilling the responsibilities as a venturer, except any liability resulting from its gross negligence or malfeasance. The indemnity given by The Venturer’s shall be on a pro rata basis according to its Distributive Share. This indemnity shall survive the termination of this agreement.
ARTICLE XI
Amendment
This Agreement may be modified or amended at any time by a written instrument signed by both of the Venturers.
ARTICLE XII
Binding Effect
This Agreement shall be binding upon the Venturers and their respective successors and permitted assigns.
IN WITNESS WHEREOF, the undersigned parties have signed and delivered this Agreement effective as of the date mentioned above.
[name of developer]
By: «signature»
[name of the company]
By: «signature»
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