JOINT VENTURE AGREEMENT
"<insert name of joint venture>" THIS JOINT VENTURE AGREEMENT (herein after referred to as the "Agreement" ) is entered into by and among <**name of CDC - first party**> ("<**abbreviated name for 1st party**>") and <**name of builder - 2nd party**> ("<**abbreviated name for 2nd party**>"") both of whom are Florida corporations (herein after collectively referred to as the "Joint Venturers") for the purpose of developing single family home ownership units. W I T N E S S E T H: WHEREAS, the parties are desirous of forming a joint venture (the "Venture"), under the laws of the State of Florida by execution of this Agreement for the purposes set forth herein and are desirous of fixing and defining between themselves their respective responsibilities, interests, and liabilities in connection with the performance of the before mentioned construction projects; and NOW, THEREFORE, in consideration of the mutual covenants and promises herein contained, the Parties herein agree to constitute themselves as joint venturers, henceforth, "Venturers" for the purposes before mentioned, and intending to be legally bound hereby, the parties hereto, after first being duly sworn, do covenant, agree and certify as follows: ARTICLE I - FORMATION, NAME, AND PRINCIPAL PLACE OF BUSINESS 1.1 FORMATION (a) The Venturers do hereby form a joint venture pursuant to the laws of the State of Florida in order for the Venture to carry on the purposes for which provision is made herein. (b) The Ventures shall execute such certificates as may be required by the laws of the State of Florida or of any other state in order for the Venture to operate its business and shall do all other acts and things requisite for the continuation of the Venture as a joint venture pursuant to applicable law. 1.2 NAME. The Name and style under which the Venture shall be conducted is: "<**insert JV's name**>". 1.3 PRINCIPAL PLACE OF BUSINESS. The Venture shall maintain its principal place of business at the offices of <**1st party abrev**> or such other location as the Venturers may determine. ARTICLE II - DEFINITIONS 2.1 "Venturers" shall refer to <**1st party abrev**> and <**2nd party abrev**> and any successor(s) as may be designated and admitted to the Venture. 2.2 "Project" shall refer to the development of an individual parcel (or a grouping of parcels) of real estate upon which housing is to be constructed by this Joint Venture. This joint venture, as is outlined below, may undertake more than one Project. 2.3 "Development Plan" refers to the written memorandum that must be signed by both Venturers prior to the undertaking of any new Project. The Development Plan shall consist of two parts; a narrative and a pro forma development budget. 2.4 "Initial Project" refers to the planned development of two parcels of real estate located in the Coconut Grove community that are to be donated by the City of Miami. The Development Plan for the Initial Project is contained in a document labeled "Exhibit A" which is attached hereto and incorporated into this Agreement by this reference. 2.5 "Net Profits and Net Losses" shall be determined in accordance with federal income tax principles. 2.6 "Percentage of Participation" shall refer to that figure set forth in Article V. 2.7 "Capital Account": The term "Capital Account" when used in respect of any Venturer shall mean the sum of any capital contributions actually made by such Venturer to the capital of the Joint Venture, increased by the amount of all net profits credited (but not distributed) to the account of such Venturer pursuant this Agreement, and the amount of any additional capital contributions that any Venturer may make to the capital of the Joint Venture; and decreased by the amount of all net losses charged to the account of such Venturer pursuant to this Agreement, and all net profits actually paid or distributed to such Venturer. Land contributed by a Venturer may considered to be a capital contribution by that Venture to the extent mutually agreed upon by both Venturers in the Development Plan for a particular Project. 2.8 "Treasury Regulations" shall refer to those regulations promulgated by the Department of the Treasury with respect to certain provision of hate Internal Revenue Code. ARTICLE III - PURPOSE OF THE JOINT VENTURE 3.1 General Purpose: The business of the Venture shall be to acquire developable land and property, acquire financing, and develop or rehabilitate single family housing for sale to qualified buyers at a price and under terms and conditions that make the houses affordable to low and moderate income persons and all such other business incidental to the general purposes herein set forth. 3.2. Specific Development Plan a Prerequisite for Each New Project: This Joint Venture is envisioned to encompass the Initial Project and, if the Venturers subsequently agree, one or more additional Projects. Prior to undertaking a new housing development Project, the Venturers must both first agree upon a Development Plan for that Project. The Development Plan shall consist of two parts; a narrative and a pro forma development budget. 3.2.1 The narrative portion of the Development Plan shall consist of a written description of all relevant aspects of the proposed Project including * the location of the land, * the strategy for acquisition of title to the land (if applicable), * identification of who will hold title to the land (in most cases it will be preferable for the title to be held in the name of the Joint Venture rather than in the name of only one of the Venturers), * a statement as to the amount of capital contribution (if any) being made by either (or both) Venturer(s). If land is to be considered a capital contribution the statement will include the agreed upon value. * a general description of the house(s) to be built (including the estimated square footage, number of bedrooms & bathrooms and the amenities) * signature authority on the construction loan disbursement account * an estimate of the sale price, * an identification of the proposed source construction financing, * the strategy for obtaining construction financing, * the identify of the architect, * the identify of the key contractors (or a description of the process for choosing the contractors), * the duties of each Venturer, * the relevant time deadlines, and * a description of any other relevant aspect of the proposed Project. 3.2.2 The pro forma development budget for each Project shall include a listing of all of the estimated hard and soft costs (including any fees to be paid to the Venturers). The intent of the Development Plan is to force the Venturers to agree on all aspects of a proposed new Project before work on the Project is undertaken. 3.2.3 Initial Development Plan: the Development Plan for the Initial Project is attached hereto and incorporated herein by this reference and labeled "Exhibit A". ARTICLE IV - TERM The term of the Venture shall commence as of the date hereof and shall be terminated and dissolved upon the earliest to occur of: (i) the unanimous agreement of the Ventures; or (ii) the order of a court of competent jurisdiction. ARTICLE V - PERCENTAGE OF PARTICIPATION Upon execution of this Agreement, the Venturers shall each own the following interests in the Venturer's net profits, losses (and/or liabilities) and the Venture's equity ownership interest in property as follows: <**2nd party abrev**> 50% <**1st party abrev**> 50% ARTICLE VI - CAPITAL CONTRIBUTIONS 6.1 The Venturers shall make the capital contributions (if any) required by the Development Plan for the Initial Project and the Development Plans for all subsequent Projects and their Capital Account shall each be credited with the appropriate value of such contribution in accordance with their Venture interests. 6.2 Except as otherwise required by law or this Agreement, the Venturers shall not be required to make any further capital contributions to the Venture. 6.3 No Venturer shall have the right to withdraw his capital contributions or demand or receive the return of his capital contributions or any part thereof, except as otherwise provided in this Agreement. 6.4 The Venturers shall not be personally liable for the return of capital contributions or any part thereof, except as otherwise provided in this Agreement. 6.5 The Venture shall not pay interest on capital contributions of any Venturer. ARTICLE VII - ALLOCATIONS OF NET PROFITS AND LOSSES 7.1 Profits and losses shall be calculated on a Project by Project basis and shall not be aggregated. The Net Profits for each particular Project shall be calculated as follows: (1) determine the total amount of the gross proceeds derived from the sale of all of the houses of the particular Project as disbursed to the Joint Venture at the closing of those sales; (2) deduct the total amount of expenses and liabilities incurred by the Joint Venture for that Project. Subject to the provisions of this Article, the Net Profits and losses for a particular Project (including any net "book" gains of the Venture resulting from a Capital Event) shall be allocated to the Venturers in the following priority: 7.2 NET PROFITS: 7.2.1 Distributions: No Net Profits from a Project shall be distributed until after the Project has been completed and all of the houses have been sold and all of the Project Debts have been fully paid (at such time all Net Profits shall be distributed). 7.2.2. Any Net Profits distributed shall first be used to repay any amount of any capital contributions that might have been made by the Venturers (in accordance with the mutually agreed upon Development Plan for the particular Project) If both Venturers have made capital contributions for a particular Project) and there is not a sufficient amount of Net Profit to repay both, then the Net Profits shall be split between them in proportion to the ratio that their respective Capital Account balances bear to each other. 7.2.3 All remaining Net Profits shall be distributed to the Venturers, pro-rata, based on their respective Percentage of Participation. 7.3 LOSSES: 7.3.1 Losses of the Venture (including any net "book" loss of the Venture resulting from a Capital Event) shall be allocated to the Venturers, pro rata, based upon their respective Venture interests as set forth herein. 7.3.2 For purposes of this, Capital Accounts shall be adjusted hypothetically as provided for in Sections 1.704-1(b)(2)(ii)(d) and 1.704- 1(b)(4)(iv)(f) of the Treasury Regulations. These adjustments shall include the qualified income offset as set forth in this Agreement. 7.4 The Parties agree that in the event any losses arises out of or results from the performance of the Project, each Venturer shall assume and pay the share of the losses that is equal to the percentage of participation. 7.5 If for any reason, a Venturer sustains any liabilities or is required to pay any losses arising out of or directly connected with the construction of the Project, or the execution of any surety bonds or indemnity agreements in connection therewith, which are in excess of its Percentage of Participation, in the Joint Venture, the other Venturer shall promptly reimburse such Venturer this excess, so that each and every member of the Joint Venturer will then have paid its proportionate share of such losses to the full extent of its Percentage of Participation. 7.6 The Venturers agree to indemnify each other and to hold the other harmless from, any and all losses of the Joint Venture that are in excess of such other Venturer's Percentage of Participation. Provided that the provisions of this subsection shall be limited to losses that are directly connected with or arise out of the performance of the Project and/or the execution of any bonds or indemnity agreements in connection therewith and shall not be relate to or include any incidental, indirect or consequential losses that may be sustained or suffered by a Party. 7.7. The Parties shall from time to time execute such bonds and indemnity agreements, including applications there and other documents that may be necessary in connection with the performance of the Project. Provided however, that the liability of each of the Parties under any agreements to indemnify a surety company or surety companies shall be limited to the percentage of the total liability assumed by all the Parties under such indemnity agreements that is equal to the Party's Percentage of Participation. ARTICLE VIII - DELEGATION OF AUTHORITY 8.1 The Venturers agree to a split of authority between themselves as follows: 8.1.1 Except as provided for in a Project Development Plan or a decision of the Policy Committee, <**1st party abrev**> shall be charged with the primary responsible for the retail sales of the houses that produced in a Project and for customer relations. 8.1.2 <**2nd party abrev**> shall be the Project Managing Partner in charge of the Project construction work. The Project Managing Partner shall appoint a General Manager through whom it shall direct charge and supervision of all matters necessary and connected with the performance of the construction contracts, with the exception of that performed by the Administrative Managing Partner. 8.2 Authority to act for and bind the Venturers in connection with any and all of the performance of a Project may be delegated in writing by unanimous vote of the Policy Committee to any designated individual(s) or entity(ies). ARTICLE IX - POLICY COMMITTEE 9.1 The management of the Joint Venture shall be conducted pursuant to policy established by the Parties acting through a "Policy Committee" which is hereby established. 9.2 Each Party shall have an equal voice in the Policy Committee. For such purpose each Party is assigned the following number of votes and hereby designates the following representatives to exercise such votes. Party votes representatives <**1st party abrev**> <**name of representative**> <**2nd party abrev**> <**name of representative**> 9.3 Each Venturer may, at any time, substitute an alternative in place of any of its above-named representatives by serving written notice to all the other Parties. Each Venturer's representative or alternative representative on the Policy Committee is hereby granted and shall hereafter possess authority to act for such Venturer on all matters of interest to it with respect to its participation in the joint venture. 9.4 The Policy Committee shall determine the policy for the management of the joint venture by majority vote and, as used in this Agreement, a "majority vote" is defined to be any figure greater than one-half of the authorized votes. 9.5 The Policy Committee shall have the following powers: (a) To determine the time and place of holding its meetings and the procedures for conducting Committee Affairs. (b) To determine and act upon the various matters, expressly or impliedly contained in other section of this Agreement, which require decision by the Policy Committee. (c) To make all management decisions of the Joint Venture (except that <**2nd party abrev**> shall be exclusively in charge of the management of construction related of each Project). (d) By unanimous vote the Policy Committee can authorize an entity or person to act for and bind the Joint Venturer in connection with any and all of the performance of the Venture. Any such delegation of authority shall be writing. (e) To determine and act upon any other matters of joint interest to, or requiring prompt action by the Joint Venture. (f) To determine insurance reserves and reserves for other potential liabilities that may result from or arise out of the Project work. (g) To consider all claims and disputes of any kind between the Joint Venture and other parties and to authorize negotiation, arbitration, litigation, and/or any other process for their resolution and to authorize the settlement thereof. 9.6 Notwithstanding any other provisions to the contrary herein, insurance coverages and limits shall be subject to approval of all the parties. This approval shall not be unreasonably withheld. 9.7 The Policy Committee shall generally perform its duties at a meeting at which all designated representatives of the Parties are present, but where circumstances warrant, telephone communication between all party representatives or their alternatives is authorized. 9.8 The salaries and expenses of each of the representatives on the Policy Committee shall be borne by the Venturer whom the representative has been designated to represent and shall not be an expense to the Joint Venture. ARTICLE X - JOINT VENTURE BANK ACCOUNTS 10.1 All proceeds derived from the sale of the houses developed by the Joint Venture which are disbursed to the Joint Venture at the closings from those sales shall be deposited in a specially created bank accounts requiring the joint signatures of both Venturers for any withdrawals. There shall be a separate bank account for each Project. Said accounts shall be kept separate and apart from any other accounts of the Venturers. 10.2 Separate and apart from the type of bank accounts specified in the previous paragraph, the Venture, from time to time, shall set up special bank accounts to be used for the receipt of construction loan disbursements and the payment of those loan funds to satisfy Project debts associated with the development of Project real estate. Only the signature of <**2nd party abrev**> will be required for the withdrawal of funds from these types of accounts (unless other signature are required by the mutual agreement of the Venturers in the Development Plan for a Project or otherwise). ARTICLE XI - ACCOUNTING AND AUDITING 11.1 Separate books of accounts shall be kept for transactions of the Joint Venture. Such books shall be kept by on behalf of the Joint Venture by one of the Venturers as designated by the Policy Committee. Any Venturer may inspect such books upon reasonable notice and at any reasonable time. 11.2 Periodic audits may be made upon said books at such time as authorized by the Policy Committee by persons designated by the same and copies of said audit shall be furnished to all Venturers. ARTICLE XII - OTHER PROVISIONS 12.1 This agreement constitutes the entire agreement of the parties and may not be altered, unless the same is agreed upon in writing signed and acknowledged by the parties. 12.2 This agreement is binding upon the heirs, court appointed representatives, assigns, and successors of the parties. 12.3 This agreement shall be governed by the laws of the state of Florida. IN WITNESS WHEREOF, the Venturers have caused this Agreement to be executed in their respective names by themselves or by their duly authorized corporate agents as of the day and year indicated by their signatures below. This Agreement shall become effective upon the signature of the last of the three Ventures. <**name of builder - 2nd party**> By: _____________________________ Date:______________ <**name of CDC - first party**> By: _____________________________ Date:______________ **************** page break *************** Exhibit A: Development Plan for "Initial Project" |