Joint Venture Agreement Between Borrower and Institutional Lender |
THIS AGREEMENT, made and entered into this ..... day
of ..............., 199..... by and between
............... a ............... (hereinafter referred to
as "Developer") and SAMPLE INSURANCE COMPANY, a New York
corporation, having its principal office at 1212 Main
Street, New York, New York 10001 (hereinafter referred to
as "Company");
W I T N E S S E T H:
In consideration of the mutual covenants set forth
herein, and for other good and valuable consideration each
party to the other in hand paid, receipt of which is
hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
The Venture
Section 1.01. Formation.
(a) Developer and Company hereby enter into and form
a general partnership (hereinafter referred to as the
"Venture") for the limited purposes and scope set forth
herein. The business and affairs of the Venture shall be
conducted solely under the name ............... and such
name shall be used at all times in connection with the
Venture's business and affairs. (Developer and Company
sometimes are referred to hereinafter collectively as
"Venturers" and individually as "Venturer").
(b) Except as expressly provided herein to the
contrary, the rights and obligations of the Venturers and
the administration and termination of the Venture shall be
governed by the Uniform General Partnership Act of the
................
Section 1.02. Purposes and Scope of the Venture.
(a) Contemporaneously with the execution of this
Agreement, Developer has conveyed to the Venture certain
land described in Exhibit ..... attached hereto and made a
party hereof (hereinafter referred to as the "Property")
together with all buildings and other improvements with
such items of personal property, fixtures and equipment as
are used in connection, with the use and operation of such
buildings and improvements, as more fully described in
Exhibit ..... attached hereto and made a part hereof,
excepting only such items of personal property as are
owned by a tenant under an executed lease and which do not
become the property of the landlord by law or under the
terms of the respective leases (such buildings,
improvements, personal property, fixtures and equipment
together with any other buildings, improvements, personal
property, fixtures and equipment from time to time
constructed or to be constructed shall be hereinafter
collectively referred to as the "Improvements").
(b) Subject to the provisions of this Agreement, the
Venture shall be limited strictly to the acquisition and
development of the Property and the leasing, sale,
financing, operation and management of the Property and
Improvements and any land and improvements acquired by the
Venture within the Area of Interest as defined in Section
7.15 of this Agreement, if any, for investment and the
production of income and profit and shall not be extended
by implication or otherwise unless Approved by the
Venturers. (The phrases "Approved by the Venturers" and
"Approval of the Venturers" and "Approval by the
Venturers" shall mean approved in writing by all
Venturers.)
(c) The Property and Improvements thereon are
presently encumbered by a first mortgage securing a
promissory note in the amount of $ .......... payable to
the order of Sample Insurance Company. The Venture has
acquired the Property and Improvements subject to such
mortgage.
(d) Except for the provisions of Section 7.15 hereof,
nothing in this Agreement shall be deemed to restrict in
any way the freedom of any Venturer to conduct any other
business or activity whatsoever (including the
acquisition, development, construction, leasing, sale,
financing, operation and management of real property)
without any accountability to the Venture or any other
Venturer, even if such business or activity competes with
the business of the Venture.
Section 1.03. Partnership Certificate.
The Venturers shall execute a partnership certificate
or certificates as required by ............... law to be
filed in connection with the formation of the Venture and
shall cause such certificate to be filed in the
appropriate records.
Section 1.04. Scope of Venturers' Authority.
Except as otherwise expressly and specifically
provided in this Agreement, no Venturer shall have any
authority to act for, or assume any obligations or
responsibility on behalf of, any other Venturer or the
Venture.
Section 1.05. Principal Place of Business.
The principal place of business of the Venture shall
be in ..............., ................
ARTICLE II
Management
Section 2.01. Management of the Venture.
(a) The overall management and control of the
business and affairs of the Venture shall be vested in the
Venturers collectively. Except where herein expressly
provided to the contrary, all decisions with respect to
the management and control of the Venture Approved by the
Venturers shall be binding on the Venture and all the
Venturers. The Venture shall have a managing partner
(hereinafter referred to as the "Managing Venturer")
designated pursuant to Section 2.02 hereof who shall be
responsible for the implementation of the decisions of the
Venturers and for conducting the ordinary and usual
business and affairs of the Venture as more fully set
forth in, and as limited by, this Agreement. The Managing
Venturer shall have under his supervision a managing agent
of the Property and Improvements (hereinafter referred to
as the "Managing Agent") designated or appointed pursuant
to Section 2.02(a) of this Agreement.
(b) No act shall be taken, sum expended, decision
made or obligation incurred by the Venture, Managing
Venturer, Managing Agent, or any Venturer with respect to
a matter within the scope of any of the major decisions
(hereinafter referred to as the "Major Decisions") as
enumerated below, unless such of the Major Decisions have
been Approved by the Venturers. The Major Decisions shall
include:
1. Acquisition of any land or interest therein;
2. Financing of the Venture, including but not
limited to interim and long-term financing or refinancing
of the Improvements and financing the operations of the
Venture;
3. Sale or other transfer, leasing (except for
certain space leases permitted to be made without approval
as specified in subsection (4) below), mortgaging or the
placing or suffering the placing of any lien or
encumbrance on the Property or the Improvements or any
parts thereof;
4. Entering into any lease or other arrangement
involving space in any part of the Improvements if any
such lease or other arrangement (i) covers more than .....
square feet of space, or (ii) provides for a term of more
than ............... (.....) years, including all options
to renew or otherwise extend the term, or (iii) provides
for an annual rental in excess of $.........., or (iv)
provides for an annual rental or other terms less
favorable to the Venture than the rental and other terms,
if any, set forth in guidelines Approved by the Venturers
or which otherwise varies in any material respect from any
model lease forms and lease guidelines previously
submitted by the Managing Venturer and Approved by the
Venturers;
5. Terminating or modifying any lease or other
arrangement involving all or any part of the Property or
space in any of the Improvements if such lease or other
arrangement was required to be Approved by the Venturers
pursuant hereto or if such modification would result in a
modified lease or other arrangement which, if it were a
new lease, would be required to be Approved by the
Venturers pursuant hereto;
6. Construction of any Improvements or the making
of any capital improvements, repairs, alterations or
changes not specifically provided for in the Budget (as
hereinafter defined). The decision as to whether an
improvement, repair, alteration or change is or is not
capital in nature shall be Approved by the Venturers;
7. Selecting or varying depreciation and accounting
methods, changing the fiscal year of the Venture and
making other decisions with respect to treatment of
various transactions for accounting, bookkeeping or tax
purposes, consistent with the other provisions of this
Agreement;
8. Approving each construction and architectural
contract and all architectural plans, specifications and
drawings prior to the construction of any buildings or
improvements contemplated thereby;
9. Varying or changing any portion of the insurance
program required by Article III of this Agreement;
10. Determining the fee, if any, to be paid to the
Managing Venturer and whether or not distributions should
be made to the Venturers, except as set forth in Section
4.02 and Section 4.07 of this Agreement;
11. Approving each Budget pursuant to Section 2.04
of this Agreement and approving each budget pursuant to
the Management Agreement referred to in Section 4.02 and
Section 4.07 of this Agreement;
12. Making any expenditure or incurring any
obligation by or of the Venture (i) involving a sum in
excess of $15,000.00 for any transaction or group of
similar transactions except for expenditures made and
obligations incurred pursuant to and specifically set
forth in a Budget previously Approved by the Venturers;
(ii) which when added to all other expenditures actually
made or to be made for the fiscal year of the Venture
exceeds the Budget by five percent (5%); or (iii) which
falls into any category of expenditures which in the
opinion of Company and its counsel is required by law to
have the prior approval of Company or its Board of
Directors;
13. Determination of the maximum and minimum working
capital requirements of the Venture;
14. Except as provided in Section 2.08 and Section
7.09 of this Agreement, the adjustment, settlement, or the
compromise of any claim, obligation, debt, demand, suit or
judgment against the Venture or against the Managing
Venturer in its capacity as Managing Venturer;
15. Replacing the Managing Agent or entering into
any management agreement by the Venture, except as
provided in Section 2.03(e) of this Agreement; and
16. Any other decision or action which by the
provisions of this Agreement is required to be Approved by
the Venturers or which materially affects the Venture or
the assets or operations thereof.
(c) All Major Decisions shall be made by each
Venturer in a timely manner with due regard for the
necessity of obtaining and evaluating the information
necessary for making the Major Decision as well as the
necessity for obtaining proper authorization from the
internal committees and boards of the Venturers.
(d) Anything contained in this Agreement to the
contrary notwithstanding, in the event Company shall
acquire any portion of Developer's interest in this
Venture, all Major Decisions shall thereafter require only
the approval of Company and the phrases "Approval of the
Venturers", "Approval by the Venturers" and "Approved by
the Venturers" shall be automatically amended to mean only
the approval of Company. Developer agrees that in the
event Company shall acquire any part of Developer's
interest as aforesaid, Company shall have no fiduciary,
trustee or other obligations to Developer unless the same
are expressly set forth in this Agreement, and to the
extent that any such fiduciary, trustee or other
obligations are implied by this Agreement, or arise by law
or in equity or otherwise, the same are hereby expressly
waived and relinquished by Developer.
Section 2.02. Appointment and Replacement of Managing
Venturer and Managing Agent.
(a) Company and Developer hereby approve
............... as Managing Venturer of the Venture.
............... hereby accepts its appointment by its
signature at the end of this Agreement and agrees to
discharge or cause the discharge of the duties of Managing
Venturer unless and until discharged pursuant to Section
2.02(b) of this Agreement. Company and Developer hereby
approve ............... as Managing Agent of the Property
and Improvements and ............... shall accept its
appointment as Managing Agent by signing the management
agreement annexed hereto as Exhibit ..... and made a part
hereof (which agreement and any renewals, extensions,
modifications and replacements thereof are hereinafter
referred to as the "Management Agreement").
(b) Company may at any time, at its option and
without any reason whatsoever, withdraw its approval of
(i) ............... as the Managing Venturer of the
Venture, (ii) any other Managing Venturer of the Venture
and (iii) any Managing Agent, subject to the provisions of
the Management Agreement.
Section 2.03 Duties of Managing Venturer.
(a) The original Managing Venturer, or any
replacement, on behalf of the Venture and at Venture
expense, unless otherwise expressly provided in this
Agreement (i) shall implement, or cause to be implemented,
all Major Decisions Approved by the Venturers and (ii)
shall conduct, or cause to be conducted, the ordinary and
usual business and affairs of the Venture in accordance
with and limited by this Agreement, including the
following:
1. At Venture expense, protect and preserve the
titles and interests of the Venture with respect to the
Property and Improvements and other assets owned by the
Venture;
2. At Venture expense, pay before delinquency and
prior to the addition thereto of interest or penalties,
all taxes, assessments, rents and other impositions
applicable to the Property and Improvements and other
assets owned by the Venture and undertake, when Approved
by the Venturers, any action or proceedings seeking to
reduce such taxes, assessments, rents or other
impositions;
3. At Venture expense, negotiate and, when Approved
by the Venturers, enter into and supervise the performance
of contracts covering the construction of any Improvements
or any repairs or alterations, and no such contract may be
modified, amended or terminated until Approved by the
Venturers if such contract when originally executed,
modified or amended, required the Approval of the
Venturers;
4. Lease space in the Improvements, provided,
however, that where required by this Agreement, such
leases shall have been Approved by the Venturers; and in
connection with the leasing of space, the Managing
Venturer shall observe and hereby agrees to the following:
(i) in no event shall the Managing Venturer permit the
Managing Agent to collect more than one month's rent in
advance unless Approved by the Venturers; (ii) immediately
following any vacancy, the Managing Venturer will cause
the Managing Agent, at its own expense, to prepare rental
listings for the vacant space and the Managing Venturer
shall use its best efforts to secure tenants for such
space through its own or through the Managing Agent's
organization; (iii) the Managing Venturer may, in its
discretion, distribute such listings to reputable and
active real estate brokers within a reasonably effective
area of the Property and, in such a reasonably effective
area of the Property and, in such event, the Managing
Venturer will cause the Managing Agent to supply such
cooperating brokers with information sufficient to enable
them to work on the rental of the space and will cause the
Managing Agent to cooperate with them on any matter that
will aid in the successful renting of the space; (iv) any
expenses incurred for advertising, unless otherwise
Approved by the Venturers, shall be paid by the Managing
Venturer or the Managing Agent for and from its own
account; (v) no agreement between the Managing Venturer or
the Managing Agent and any cooperating broker or brokers
shall, unless otherwise Approved by the Venturers, provide
for the payment of any commission for renewals or
extensions of existing leases; (vi) leasing commissions at
the rate set forth in Exhibit ..... attached hereto and
made a part hereof shall be payable to ............... on
any leases (excluding extensions or renewals of any
existing lease) made by ............... after the initial
leases for the occupancy of the space leased, Developer
being responsible for the payment of leasing commissions
on the initial leases for the occupancy of the space
leased; (vii) except for leases specifically Approved by
the Venturers, the Venture shall have no obligation to any
broker or brokers cooperating or dealing with the Managing
Venturer or the Managing Agent in the leasing of space in
the Property or any Improvements and the Managing Venturer
or the Managing Agent shall indemnify and hold the Venture
and the Venturers free, clear and harmless from and
against any and all claims for commissions or fees for
services rendered by such cooperating broker or brokers or
any other broker or brokers; (viii) should any claims,
demands, suits or legal proceedings be made or instituted
by or against the Venture or the Venturers, the Managing
Venturer and the Managing Agent shall give to each
Venturer all reasonable information for, and shall assist
in, the prosecution or defense thereof, without additional
payment therefor;
5. Keep all books of account and other records
required by the Venture, keep vouchers, statements,
receipted bills and invoices and all other records, in
such form as may be Approved by the Venturers, covering
all collections, disbursements and other data in
connection with the Property and any Improvements; permit
the Venturers, or any person designated by any Venturer,
at any reasonable time, to audit the books, records, and
accounts of the Managing Venturer relating to the Property
and any Improvements, and the Managing Venturer will
exhibit such books, records and accounts to any person
designated by any Venturer for that purpose, which
accounts and records relating to the Property and any
Improvements, including all correspondence and leases,
shall be the property of the Venture and, upon any
termination of the appointment of the Managing Venturer,
shall be surrendered to the Venture without charge
therefor;
6. Prepare and deliver to each of the Venturers
within thirty (30) days after the end of each quarter,
quarterly reports of the state of the business and affairs
of the Venture, and such other information concerning the
Venture as reasonably may be requested by the Venturers,
which reports shall include at least an operating
statement comparing current profit, loss and operating
expenses to the Budget, a balance sheet showing assets and
liabilities and a narrative report on leasing,
construction, employment and any other factors of
significance to the Venturers;
7. At Venture expense, have an annual audit of the
Venture's books made by a firm of certified public
accountants or nationally recognized standing, Approved by
the Venturers, and furnish each Venturer with a copy of
such annual audit, together with related financial
statements and tax returns as required in Article IV
hereof within ninety (90) days after the close of the
Venture's fiscal year, but in no event shall such date be
later than the date required by the Venture's lenders or
mortgagees;
8. Retain or employ at Venture expense, and
coordinate the services of, all employees, supervisors,
architects, engineers, accountants, attorneys and other
persons and entities necessary or appropriate to carry out
the business of the Venture; provided, however, the
Managing Venturer shall not enter into, modify, amend or
terminate any agreement with any such persons or entities
which would require the Venture to pay more than
$15,000.00 per year to any such person or entity unless
such action has been specifically Approved by the
Venturers or, if such payment is specifically itemized by
name and amount in the Budget, by prior approval of the
Budget; and further provided that the Managing Venturer
will not engage the services of any architects, engineers,
accountants, or attorneys unless and until Approved by the
Venturers. After any party has been engaged to perform
personal or professional services for the Venture, the
Managing Venturer shall give the Venturers notice thereof,
and at any time thereafter, the Managing Venturer shall
discharge and terminate the services or any of such
parties upon receipt of a request therefor from any
Venturer sent to the Managing Venturer and the other
Venturer, as soon as possible and in a manner which will
minimize the Venture's liability, if any, for damages or
claims. The Managing Venturer shall report in writing to
the Venturers, at least quarterly, all payments to any
person for services in connection with the Venture,
regardless of the amount of such compensation;
9. At Venture expense, pay all insurance premiums,
debts and other obligations of the Venture, including
amounts due under long-term financing of the Property and
Improvements and other loans to the Venture previously
Approved by the Venturers and costs of construction,
operation and maintenance of the Property and
Improvements;
10. Maintain all funds of the Venture (except funds
maintained in accounts of the Managing Agent as set forth
in the Management Agreement annexed hereto as Exhibit
(.....) in an account or accounts and in a bank or banks
approved by Company;
11. When Approved by the Venturers or as and when
provided in Section 4.07 of this Agreement, make
distributions from the funds of the Venture periodically
to the Venturers in accordance with the provisions of this
Agreement;
12. Subject to the provisions of this Agreement, at
Venture expense, operate, maintain, repair and otherwise
manage the Property and Improvements including the
performance of such functions as the collection of rent,
providing of utility, cleaning, repair and maintenance
services to be furnished to the Venture or by the Venture
as landlord, under the respective leases involved; keep
the Property and improvements in as good and marketable
condition as when they were completed (reasonable wear and
tear and damage due to casualty, insurance against which
is not required to be maintained under the terms of this
Agreement, excepted), and, on request, render advice
concerning sales and rental values and sales price; assure
that any contractor performing work on the Property or any
Improvements maintains insurance satisfactory to the
Venturers and any mortgagee of the Property and the
Improvements, including, but not limited to, Worker's
Compensation Insurance, Employers' Liability Insurance and
insurance against liability for injury to persons and
property arising out of all of such contractor's
operations, and the use of owned, non-owned, or hired
automotive equipment in the pursuit of all such
operations;
13. During the term of this Agreement, at Venture
expense, promptly comply, and cause the Managing Agent to
comply, with all present and future laws, ordinances,
orders, rules, regulations and requirements of all
federal, state and municipal governments, courts,
departments, commissions, boards and officers, any
national or local Board of Fire Underwriters, or any other
body exercising functions similar to those of any of the
foregoing, which may be applicable to the Property and
Improvements and the operation and management thereof
(including, without limitation, laws, ordinances, orders,
rules, regulations and requirements prohibiting restraints
on trade, or discrimination whether on the basis of race,
creed, color, national origin, age, sex, marital status,
or otherwise), Company hereby agreeing to cooperate with
the Managing Venturer in carrying out the foregoing, at no
cost or expense to Company and when and to the extent
Approved by the Venturers, the Managing Venturer is to
contest or assist the Venturers in contesting the validity
or application of any such law, ordinance, order, rule,
regulation or requirement;
14. Perform any other obligations provided elsewhere
in this Agreement to be performed by the Managing Venturer
either directly, or through employees of the Managing
Venturer, which employees shall be supervised, directed
and controlled by the Managing Venturer and the Managing
Venturer shall be responsible for the performance of such
employees;
15. Supervise all matters coming within the terms of
this Agreement, including direct observation, inspection
and supervision of all repairs, decorations and/or
alterations during the progress thereof and make final
inspection of the completed work and approve bills for
payment and, in that connection, the Managing Venturer
shall obtain the necessary receipts, releases, waivers,
discharges, bonds and assurances to keep the Property and
any Improvements free from mechanic's liens and other
claims;
16. Cause the Property and any Improvements to be
maintained, managed and operated in an efficient manner
and at all times maintain an organization sufficient to
enable it to carry out all of its duties, obligations and
functions as Managing Venturer under this Agreement; and
17. Keep all books, accounts and records required to
be kept on a current basis by Section 2.03(a)(5) hereof in
a safe place and in storage on the Property or at the
office of the Managing Venturer's principal place of
business or other secure storage for a period of not less
than ten (10) years and permit any Venturer, or any person
designated by any Venturer, at any reasonable time, to
inspect, review, copy and otherwise reproduce such books,
records and accounts.
(b) Any provision hereof to the contrary
notwithstanding, except for expenditures made and
obligations incurred and previously Approved by the
Venturers or directly pursuant to a Budget Approved by the
Venturers, or which otherwise are not required to be
Approved by the Venturers, neither the Managing Venturer
nor the Managing Agent shall have any authority to make
any expenditure or incur any obligation on behalf of the
Venture. The Managing Venturer shall not expend more than
the fair and reasonable market value at the time and place
of delivery or performance for any goods purchased or
services engaged on behalf of the Venture.
(c) The Managing Venturer shall pay, or cause the
Managing Agent to pay (without being entitled to
reimbursement from the Venture therefor as provided in
Section 2.03(e) hereof) all costs relating to bookkeeping
and billing for the Property and the Improvements, all
administrative costs relating to the collection of rents
and all other costs and expenses customarily borne by a
building management firm except as specifically set forth
herein. No part of the Managing Venturer's central office
overhead or the Managing Venturer's (as distinguished from
the Venture's) general or administrative expense shall be
deemed to be an expense of the Venture except as Approved
by the Venturers.
(d) Any provision hereof to the contrary
notwithstanding, all contracts, agreements, leases or
other arrangements for the furnishing to the Venture of
goods, services, or space shall be terminable by the
Venture on sixty (60) days notice unless a waiver of such
right to terminate on such notice is Approved by the
Venturers.
(e) It is understood and agreed that certain of the
duties and responsibilities of the Managing Venturer set
forth in Sections 2.03(a) and 2.04 of this Agreement have
been delegated to and assumed by ............... pursuant
to the terms and conditions of the Management Agreement,
under which Managing Agent has been retained to manage,
operate, promote and lease the Property and Improvements;
provided, however, the Managing Venturer shall be fully
responsible for supervising and assuring the performance
by Managing Agent of all duties and responsibilities of
Managing Agent under the Management Agreement. If Managing
Agent is ever removed or if the Management Agreement is
terminated, all of the duties and responsibilities set
forth in Sections 2.03(a) and 2.04 hereof shall again
become the sole responsibility of the Managing Venturer
hereunder until such time as a new management agreement
approved by Company as to form, scope and substance, shall
be entered into by and between the Venture and a new
managing agent, in which case certain of the duties and
responsibilities of the Managing Venturer hereunder may be
delegated to and assumed by such new managing agent
pursuant to the terms of the new management agreement;
provided however, that if ............... is ever removed
as Managing Agent, then ............... may resign as the
Managing Venturer, in which event it shall not thereafter
be obligated or entitled to perform the Managing
Venturer's duties hereunder. In the performance of its
duties and responsibilities under Sections 2.03(a) and
2.04 hereof (whether or not certain of such duties and
responsibilities shall have been assumed by a managing
agent under a management agreement approved by Company),
the Managing Venturer shall be and shall act solely as an
independent contractor and nothing in this Agreement shall
constitute or be construed to be or create a partnership
or joint venture between the Venture and the Managing
Venturer, or be construed to appoint or constitute the
Managing Venturer as an agent for the Venture for any
purpose, or be construed to create a lease by the Managing
Venturer of the Property or Improvements since it is
expressly covenanted that there is nothing more than an
agreement for the rendering of services by the Managing
Venturer. It is also understood and agreed that the
Managing Venturer shall receive no compensation for the
services it performs as the Managing Venturer.
Notwithstanding anything to the contrary set forth in
this Agreement, (i) neither the terms of Section 2.03
hereof nor any other provisions of this Agreement shall
enlarge or diminish the rights, duties or obligations of
Managing Agent under the Management Agreement and all such
rights, duties and obligations of Managing Agent shall be
determined solely by the Management Agreement without
regard to the provisions of this Agreement, and (ii)
Company may at any time at its option (without such act
being required to be Approved by the Venturers) and
without any reason whatsoever withdraw its approval of
Managing Agent and/or of any successor retained by the
Venture to manage, operate, promote and lease the Property
and Improvements and terminate the Management Agreement or
any subsequent management agreement by written notice to
Managing Agent or to any successor in like manner as
Company may terminate the Managing Venturer under Section
2.02(b) hereof unless the Management Agreement, as
approved by Company, shall specifically state otherwise.
Within ten (10) days from the date of Company's withdrawal
of its approval of the Managing Agent, Developer shall
deliver to Company a statement setting forth the names of
three (3) or more responsible parties experienced in the
management of similar real estate who would be acceptable
to Developer as Managing Agent. Within ten (10) days after
receipt of such statement Company shall give Developer a
written statement either (i) accepting one (1) of the
parties submitted by Developer, or (ii) rejecting all of
the parties submitted by Developer, and setting forth the
name of three (3) or more responsible parties experienced
in the management of similar real estate who would be
acceptable to Company as Managing Agent. If within ten
(10) days after Developer's receipt of such statement,
Developer does not accept any of the parties submitted by
Company, then either or both Company and Developer shall
request the ............... to select a responsible party
as Managing Agent for the Venture with experience in the
management of similar real estate. The selection by the
said ............... shall not be any of the parties named
by Company or Developer in their respective statements
exchanged between them. The Venture shall execute a one
(1) year standard form of management contract with the
Managing Agent selected by the said ................
Section 2.04. Budgets.
Not less often than one time each fiscal year and on
or before November 1st of such year, the Managing Venturer
shall prepare and submit to the Venturers for their
consideration a budget (hereinafter referred to as the
"Budget") setting forth the estimated receipts, reserves
and expenditures (capital, operating, and other) of the
Venture for the next fiscal year covered by the Budget.
When the Budget is approved by the Venturers, the Managing
Venturer shall implement the Budget and shall be
authorized subject to the requirements of Section
2.01(b)(12) hereof, without the need for further Approval
by the Venturers, to make the expenditures and incur the
obligations provided for in the Budget.
Section 2.05. Compensation of Venturers.
(a) Except as may be expressly provided for herein,
or as hereinafter Approved by the Venturers, no payment
will be made by the Venture to any Venturer for the
services of such Venturer or any member, stockholder,
director or employee of any Venturer.
(b) Except as may be expressly provided for herein,
or as hereinafter Approved by the Venturers, no Venturer
shall be entitled to any compensation or reimbursement
from the Venture or any other Venturer for expenses
incurred in connection with the formation, business or
affairs of the Venture.
Section 2.06. Contracts With Related Parties.
Neither the Managing Venturer, the Managing Agent nor
any Venturer shall enter into any agreement or arrangement
for the furnishing to or by the Venture of goods, services
or space with any person, corporation, partnership, joint
venture, association, joint stock company, trust, or other
entity (hereinafter referred to as an "Entity"), related
to or affiliated with the Managing Venturer, the Managing
Agent or any Venturer unless such agreement or arrangement
has been Approved by the Venturers. Each agreement with
the Entity related to or affiliated with the Managing
Venturer, the Managing Agent or a Venturer listed on
Exhibit ..... attached hereto and made a part hereof is
hereby Approved by the Venturers. By way of illustration
and not as a limitation on the scope of the phrase
"related to or affiliated with," and for the purposes of
this Agreement, the following Entities shall be deemed to
be "related or affiliated with" the Managing Venturer, the
Managing Agent or a Venturer:
1. Any owning Entity, which shall mean an Entity
owning directly or indirectly more than five percent (5%)
of the issued and outstanding stock of, or more than five
percent (5%) interest in, the Managing Venturer, the
Managing Agent or any Venturer;
2. Any Owned Entity, which shall mean an Entity
more than five percent (5%) of the issued and outstanding
stock of which, or more than a five percent (5%) interest
in which, is owned directly or indirectly by the Managing
Venturer, the Managing Agent or any Venturer;
3. Any Affiliated Entity, which shall mean either
(i) an Entity more than five percent (5%) of the issued
and outstanding stock of which, or more than a five
percent (5%) interest in which, is owned by an Owning
Entity or an Owned Entity or (ii) an Entity which owns
more than five percent (5%) of the stock of, or more than
a five percent (5%) interest in, an Owning Entity or an
Owned Entity; or
4. Any agent, officer, director, employee, partner
or shareholder (or any member of the family of any agent,
officer, director, employee, partner or shareholder) of
the Managing Venturer, the Managing Agent, any Venturer,
any Owning Entity, any Owned Entity, or any Affiliated
Entity.
Section 2.07. Rights Not Assignable, etc.
The rights of the Managing Venturer, as Managing
Venturer, or Developer shall not be assignable voluntarily
or by operation of law by the Managing Venturer or
Developer. The duties of the Managing Venturer or
Developer shall not be delegated voluntarily or otherwise
by Developer or the Managing Venturer, except as expressly
permitted by this Agreement in the case of the Managing
Agent.
Section 2.08. Indemnity of Venture and Venturers.
The Managing Venturer and the Managing Agent hereby
agree to indemnify and hold the Venture and the Venturers
harmless from any liability to any third person incurred
by reason of any acts of commission or omission or of any
negligence or tortious acts by the Managing Venturer or
the managing Agent under and by reason of this Agreement,
unless the same shall have been Approved by the Venturers
or the Venturers have participated therein. This indemnity
shall not be applicable with respect to the acts of
Developer or the Managing Venturer or the Managing Agent
duly performed in accordance with the terms and provisions
of this Agreement. Subject to thirty (30) days' prior
written notice to the Managing Venturer or the Managing
Agent, as the case may be, any Venturer shall have the
rights, in its sole discretion, but without being required
so to do, to adjust, settle or compromise any claim,
obligation, debt, demand, suit or judgment against the
Venturers, the Managing Venturer or the Managing Agent
arising out of or in connection with matters covered by
the foregoing indemnity (except the Managing Venturer or
the Managing Agent shall not have the right to participate
in, or to settle any dispute in which the Managing
Venturer or the Managing Agent, as the case may be, is
alleged to have committed acts of commission or omission
or negligent or tortious acts or any dispute by the
Venture with the Managing Venturer or the Managing Agent
so long as the Managing Venturer or the Managing Agent is
related to or affiliated with Developer) and, in such
event, the Managing Venturer and the Managing Agent shall
pay over, reimburse and make good to such Venturers all
sums of money that such Venturer shall pay, or cause to be
paid, or become liable to pay, under or by reason of this
Agreement, including any and all charges and expenses of
whatsoever kind and nature in connection therewith or in
connection with any litigation, investigation or other
matters in connection with such payment or payments.
ARTICLE III
Insurance
Section 3.01. Minimum Insurance Requirements.
(a) The Venture shall carry and maintain in force the
following insurance, to the extent the same is available,
the premiums for which shall be a cost and expense in
connection with the operation of the Venture:
(i) Worker's Compensation Insurance (including
Employers' Liability Insurance for an amount not less than
$..........) covering all employees of the Venture
employed in, on, or about the property of the Venture to
provide statutory benefits as required by the law of the
...............;
(ii) Comprehensive General Liability Insurance
(including protective liability coverage on operations of
independent contractors engaged in construction blanket
contractual liability insurance and with the exclusion for
explosion, collapse and underground property damage
removed) on an "occurrence" basis for the benefit of the
Venture and each of the Venturers as named insured against
claims for "personal injury" liability, including but not
limited to, bodily injury, death or property damage
liability with limits of not less than $100,000,000.00 in
the event of "personal injury" to any number of persons or
damage to property arising out of any one (1) occurrence;
such insurance, which may be furnished under a "primary"
policy and an "umbrella" policy or policies, shall also
include coverage against liability for bodily injuries,
death or property damage arising out of the use by or on
behalf of the Venture or the Venturers of any owned, non-
owned or hired automotive equipment for a limit not less
than that specified above;
(iii) All Risks Builders Risk Insurance on any
new construction, including coverage against collapse,
written on a completed value basis in an amount not less
than the total value of the Improvements under
construction (less the value of such of the Improvements
as are uninsurable under the policy, i.e. site
preparation, grading, paving, parking lots, excepting,
however, foundations and other under surface installations
subject to collapse or damage by other insured perils)
including, if applicable, the coverages available under
the so-called Installation Floater, all in form and amount
as may from time to time be required by any mortgagee of
any project under construction or as any Venturer may from
time to time reasonably require;
(iv) Fire, Extended Coverage and Vandalism and
Malicious Mischief and Earthquake Insurance on the
completed Improvements in an amount not less than the
original principal balance of any mortgage on the
Improvements or for such other amount (at no time,
however, less than the original principal balance of any
mortgage on the Improvements) as may be required to
prevent the Venture and the Venturers from becoming
coinsurers under the terms of the applicable policy and
against such additional perils and for such amounts as may
from time to time be required by any mortgagee of such
Improvements, but in any event, in an amount not less than
100% of the then actual replacement cost of the
Improvements (exclusive of excavation and foundation costs
and costs of underground tanks, conduits, pilings, and
other similar underground items) without deduction for
physical depreciation thereof; such insurance on the
completed Improvements shall contain the "Replacement Cost
Endorsement;"
(v) Crime insurance for an amount of not less than
two (2) times the monthly rent roll or $..........,
whichever is grater, for the benefit of Venturers against
loss caused by dishonest acts both on and off premises and
against infidelity of the Managing Venturer and officers,
agents, servants and employees of the Managing Venturer,
if any;
(vi) Boiler and Machinery Insurance in an amount not
less than $.......... or for such greater amount as any
Venturer may at any time reasonably require covering
physical damage to the Improvements, heat pumps, pressure
vessels, pressure piping, all major components of any
central air-conditioning or heating system and such
additional equipment as any Venturer may at any time
reasonably require;
(vii) If the Improvements are situated in an area
now or subsequently designated as having special flood
hazards as defined by the Flood Disaster Protection Act of
1973, as amended from time to time, flood insurance in an
amount equal to the replacement cost of the Improvements
or the maximum amount of flood insurance available,
whichever is the lesser;
(viii) When obtainable from the United States of
America or any agency or instrumentality thereof, War Risk
Insurance in an amount not less than the amount of fire
insurance, except that, in the event that it is not
possible to obtain war risk insurance in an amount at
least equal to such amount of fire insurance, then such
war risk insurance shall be procured in the maximum amount
obtainable;
(ix) ............... insurance against loss of income
by reason of any hazard covered under the insurance
required under Subsections (iii), (iv), (vi) and (vii) of
this Section 3.01(a) in an amount sufficient to avoid any
co-insurance penalty, but in any event for not less than
one year's gross receipts from all sources of income from
the Property and Improvements; and
(x) Such other insurance, as may reasonably be
requested by any Venturer or be required by any mortgagee
of the Property and Improvements.
(b) All such aforesaid policies of insurance or
duplicates thereof shall be delivered to Company
concurrently with the execution hereof and shall name the
Venture and each of the Venturers as named insureds, as
their respective interests may appear. All such insurance
shall be effected under policies issued by insurers and be
in forms and for amounts approved by Company.
(c) Within forty-five (45) days after the execution
of this Agreement, and at such other times during the term
of this Agreement as may be considered prudent and
necessary by any Venturer, Company and Developer shall
each select an insurance broker and such insurance brokers
shall independently and within forty-five (45) days of
their selection develop an insurance program and obtain a
premium quotation thereon. The brokers will alternate in
choosing the insurance companies with which they will
work, each broker first naming two companies, only one of
which may be an underwriting organization or a group of
affiliated companies, and then, after the other broker has
chosen its first two companies, naming not more than two
additional companies, the broker selected by Developer
shall have first choice. The Venturers agree that the
insurance broker who provides the more desirable insurance
program from a coverage, service, and cost standpoint will
be utilized to provide the insurance. In the event the
insurance proposals of the brokers are not considered to
differ substantially in coverage, service, or cost, then
the insurance broker selected by Developer shall be used.
(d) The Managing Venturer shall furnish Company at
the conclusion of each fiscal year of the Venture a
certificate signed by the Managing Venturer containing a
detailed listing of the insurance policies then
outstanding and in full force as to the Property and
Improvements and stating that such insurance fully
complies with all requirements of this Agreement and of
any financing of the Property and Improvements. Such
listing will contain full premium detail.
ARTICLE IV
Accounting, Contributions, Distributions, and Allocations
Section 4.01. Interests of Venturers.
The Venturers agree that they have the following
undivided interests in the Venture (hereinafter referred
to as the "Distribution Percentage Interests") and except
as hereinafter provided in Section 4.0....., subject
however, to any adjustment of such Distribution Percentage
Interest effected pursuant to Section 4.03(c) of this
Agreement, shall share in the following proportions in the
profits or losses of the Venture and in all distributions
of assets of the Venture, whether distributions of Net
Cash Flow (as hereinafter defined in Section 4.07) or
capital or otherwise:
Company ............... .....%
Developer ............... .....%
Section 4.02. Initial Capital Contributions.
(a) This Agreement has been entered into by the
Venturers pursuant to the terms of an Agreement to Form
Partnership dated ..............., 199..... (hereinafter
referred to as the "Formation Agreement") pursuant to
which each Venturer agrees, subject to the conditions set
forth in the Formation Agreement, to make certain
contributions or payments to or on behalf of the Venture.
In accordance with Section ..... of the Formation
Agreement, Company shall make a cash contribution of
$.......... to the Venture (such contribution of Company
is hereinafter referred to as the "Company Initial Capital
Contribution"). Company shall be credited on the books and
records of the Venture with a capital contribution in the
amount actually paid by the Company.
(b) In accordance with Section ..... of the Formation
Agreement, Developer shall contribute to the Venture the
Property and Improvements (including, without limitation,
initial building standard tenant finish work, as described
in Exhibit ..... attached hereto and made a part hereof
and any other tenant work for any initial tenant, which
work shall include the costs of electricity and insurance
in connection with such work in place or to be completed)
and leasing commissions and all other property and sums
required to be contributed to the Venture pursuant to
Section ..... of the Formation Agreement. Developer shall
be credited on the books and records of the Venture with a
capital contribution in the agreed amount of $..........
(hereinafter referred to as the "Developer Initial Capital
Contribution").
Section 4.03. Additional Capital Contributions.
(a) In addition to the Company Initial Capital
Contribution and the Developer Initial Capital
Contribution, the Venturers shall contribute additional
capital to the Venture in proportion to their respective
Distribution Percentage Interests only if such
contributions are required to enable the Venture to
satisfy obligations after ..............., 199..... other
than obligations incurred in connection with initial
building standard tenant finish work (including
electricity and other utilities and insurance used or
maintained in connection with such tenant finish work) for
and are to be used exclusively to cover the costs of:
1. real estate taxes and assessments on the
Property or Improvements;
2. payments required to be made pursuant to any
mortgage on, or any ground lease of, the Property of
Improvements as well as the expense of curing any default
under any such mortgage or ground lease;
3. any alteration, repair or replacement required
by any present or future law, ordinance, order, rule,
regulation or requirement of any federal, state or
municipal government, department, commission, board or
officer, or any order, rule or regulation of the National
Board of Fire Underwriters or any other body exercising
similar functions;
4. any amount required to be paid pursuant to any
final order, judgment, or decree of any court or
governmental body having jurisdiction; and
5. any other item of expense if Approved by the
Venturers specifically or by inclusion in a Budget which
has been Approved by the Venturers.
(b) If additional capital contributions are required
to be made pursuant to the provisions of this Section
4.03, the Managing Venturer, or any Venturer, shall send a
notice thereof to each Venturer in the manner provided in
this Agreement. Such notice shall contain a statement
setting forth the specific purpose for which an additional
capital contribution is required and a report from the
accountants of the Venture (or, if Approved by the
Venturers, from the Managing Venturer) setting forth the
amounts of additional capital required as well as the
anticipated income and expenses for the quarter next
following the date of the notice to the Venturers with the
ascertainable reasons why the cash receipts of the Venture
are insufficient to meet the obligations for which the
additional capital has been requested. Each Venturer
shall, within twenty (20) days of the receipt of such
notice from the Managing Venturer or a Venturer, as the
case may be, deposit the additional capital contribution
required by such notice in escrow with the Managing
Venturer, and after all the additional capital
contributions have been made by the Venturers, such funds
shall be released from escrow to the Venture by the person
or entity holding the same, the capital accounts of the
Venturers shall be credited, and the obligations for which
the funds were required shall be satisfied. Any Venturer
may, by written notice to the other Venturers, require
that in lieu of depositing the additional capital
contribution with the Managing Venturer, that the
additional capital contribution be deposited in an escrow
account with a bank designated by the Venturers pursuant
to an escrow agreement Approved by the Venturers.
(c) In the event that any Venturer fails to make an
additional capital contribution within the time specified,
the Managing Venturer, or the Venturer sending the notice
under Section 4.03(b) hereof, shall send an additional
notice to all Venturers setting forth such fact and the
amount unpaid, and the Venturer not having deposited its
additional capital contribution as provided shall have a
further period of ten (10) days from the receipt of the
additional notice to make such additional capital
contribution. If at the end of such ten (10) day period
such Venturer shall still have failed to make such
additional capital contribution, such Venturer shall be a
Defaulting Venturer within the meaning of Article V
hereof, and the other Venturer shall have the right in
addition to any other right it may have under this
Agreement, at law or in equity, to:
(i) withdraw its additional capital contribution
from the escrow or escrow account provided therefor; or
(ii) advance for its own capital account (in addition
to the additional capital contribution required) the
additional capital contribution of the Defaulting Venturer
and thereafter all distributions which otherwise would be
payable to the Defaulting Venturer shall be paid to the
other Venturer until the other Venturer has received from
such distributions an amount equal to the additional
capital contribution required of the Defaulting Venturer
and paid by the other Venturer, and the amount of taxes
and other expenses incurred as a result of the failure to
make the additional capital contribution required of the
Defaulting Venturer, together with interest on the amount
thereof remaining from time to time unreturned, at the
rate of one percent (1%) above the prime rate of interest
of ............... as same may be changed from time to
time (as used herein "prime rate" shall mean the highest
current rate of interest which ............... charges
commercial borrowers of the highest credit standing for
short term unsecured loans) or the maximum rate permitted
by law, whichever is less; or
(iii) advance for its own capital account the
additional capital contribution required of it as well as
the additional capital contribution of the Defaulting
Venturer, and cause the Distribution Percentage Interest
of the Venturers to be recalculated as of the date the
additional capital contribution is made (the Distribution
Percentage Interest of each Venturer pursuant to such
recalculation shall be the percentage equal to the amount
of each Venturer's total contributed capital divided by
the aggregate amount of the total contributed capital of
all Venturers); or
(iv) loan to the Defaulting Venturer by paying the
same to the Venture, the amount of the additional capital
contribution required to be paid by the Defaulting
Venturer, which loan shall be repayable on demand by the
Defaulting Venturer with interest at the rate of one
percent (1%) above the prime rate of interest of
............... as same may be changed from time to time
(as used herein "prime rate" shall mean the highest
current rate of interest which ............... charges
commercial borrowers of the highest credit standing for
short term unsecured loans) or the maximum rate permitted
by law, whichever is less, and all distributions which
otherwise would be payable to the Defaulting Venturer
shall be applied to the repayment of said loan and the
interest thereon as long as such loan remains unpaid.
(d) It is understood that the Venture will not borrow
any funds required under this Section 4.03, and that no
Venturer shall have the right to pledge, mortgage,
hypothecate, or in any other way encumber any of the
Property or Improvements or any part of such Venturer's
interest in the Venture unless Approved by the Venturers.
Section 4.04. Capital Accounts, Valuation of Property and
Improvements.
Each Venturer shall have a capital account to which
its share of the profit or loss of the Venture shall from
time to time be credited or charged. Except as otherwise
provided in this Agreement, withdrawals from said account
and other distributions (whether or not of capital) to the
Venturers shall be made in proportion to their
Distribution Percentage Interests. No interest shall be
payable on the capital contributions or accounts of the
Venturers notwithstanding that the amounts thereof may not
be equal. It is agreed that for purposes of establishing
values on the books of the Venture, the Property owned by
the Venture on the date of this Agreement shall be deemed
to have a value of $ .......... and the Improvements on
the Property on the date hereof shall be deemed to have a
value of $ ........... The Venturers agree that
depreciation shall be taken by the Venture on a basis
Approved by the Venturers.
Section 4.05. Tax Status and Returns.
(a) Any provision hereof to the contrary
notwithstanding, solely for United States federal income
tax purposes, each of the Venturers hereby recognizes that
the Venture will be subject to all provisions of
Subchapter K of Chapter 1 of Subtitle A of the United
States Internal Revenue Code of 1954; provided, however,
the filing of U.S. Partnership Returns of Income shall not
be construed to extend the purposes of the Venture or
expand the obligations or liabilities of the Venturers. At
the request of any Venturer, the Venture shall file an
election under Section 754 of the United States Internal
Revenue Code of 1954.
(b) The Managing Venturer shall prepare or cause to
be prepared all tax returns and statements, if any, which
must be filed on behalf of the Venture regarding this
transaction with any taxing authority, and shall submit
such returns and statements to all the Venturers for their
approval prior to filing, and when Approved by the
Venturers, make timely filing thereof. In addition, the
Managing Venturer will furnish each Venturer with a report
setting forth in sufficient detail all such data and
information regarding the business of the Venture as shall
enable the Venture and each Venturer to prepare its
federal, state and local tax returns.
(c) The Managing Venturer shall be the "Tax Matters
Partner" for Internal Revenue Code Purposes and shall
notify the Venturers of any audit or other matter which it
is notified of, or becomes aware of, provided, however,
that the Tax Matters Partner shall not have the right to
extend the Statute of Limitations with respect to the
Venture, or either Venturer in any matter.
Section 4.06. Allocations for Tax Purposes.
Subject to the following provisions, for accounting
and federal, state and local income tax purposes, except
as herein otherwise specifically provided, all income,
deductions, credits, gains and losses of the Venture shall
be allocated to the Venturers in proportion to their
respective Distribution Percentage Interests.
Company's share of depreciation and amortization
allowable for income tax purposes with respect to the
Property and Improvements in existence and owned by the
Venture on the date hereof shall be sixty percent (60%) of
the amount of depreciation and amortization that would
have been allowable to the Venture if the adjusted basis
for the Property and Improvements in existence and owned
by the Venture on the date hereof were equal to the values
established for the Property and Improvements in existence
and owned by the Venture on the date hereof on the books
of the Venture in accordance with Section 4.04 of this
Agreement. The Developer's share shall be the amount of
depreciation and amortization allowable for income tax
purposes with respect to the Property and Improvements in
existence and owned by the Venture on the date hereof
shall be the difference between the total amount of
depreciation and amortization allowable to the Venture and
the amount of depreciation and amortization allowable to
Company under the preceding sentence.
Depreciation and amortization with respect to the
Property and Improvements acquired by the Venture after
the date of this Agreement and which has been paid for by
the Venture or all of the Venturers shall be allocated to
the Venturers in accordance with their respective
Distribution Percentage Interests.
Taxable gain or loss on the sale or transfer of the
Property shall be allocated between the Venturers (i) as
if Company had a tax basis equal to .....% of the value
established for the Property and .....% of the value
established for the Improvements in existence on the date
hereof, both in accordance with Section 4.04 hereof, plus
.....% of the tax basis of any portion of the Property
acquired by purchase or otherwise by the Venture
subsequent to the date of this Agreement, plus .....% of
the tax basis of the Improvements acquired subsequent to
the date of this Agreement, all as set forth on the books
of the Venture for such Property and Improvements, less
the aggregate amount of depreciation and amortization with
respect thereto allowed to Company for tax purposes prior
to such sale or transfer, and (ii) as if Developer had a
tax basis equal to the balance of the Venture's tax basis
for the Property and Improvements. If the Property and
Improvements are sold or transferred in part, the tax
basis of the part sold or transferred will be allocated
between Company and Developer in proportion to the amounts
computed in accordance with the foregoing sentence. If, in
connection with any such sale or transfer, part of the
taxable gain is capital gain and part ordinary income, the
amount of capital gain and amount of ordinary income for
tax purposes shall be allocated between Company and
Developer in accordance with the amount of gain or loss
allocable to each, as aforesaid.
Any investment credit under the Internal Revenue Code
available to the Venture shall be allocated to the
Venturers in accordance with their respective Distribution
Percentage Interests. No investment credit under the
Internal Revenue Code shall have been taken on any
property contributed to the Venture at the time of its
contribution to the Venture.
Nothing in this Section 4.06 shall affect the amount
of cash or other assets to be distributed to any Venturer,
it being understood that the allocations required by this
Section 4.06 are for tax purposes only.
Section 4.07. Distribution to Venturers.
(a) Within thirty (30) days after the close of each
calendar quarter, the Managing Venturer shall distribute
the "Net Cash Flow" of the Venture for the preceding
calendar quarter in accordance with the provisions of
Section 4.01 hereof. Net Cash Flow shall be computed in
accordance with generally accepted sound cash basis
accounting principles consistently applied by deducting
the aggregate of (3) and (4) from the sum of (1) and (2)
below:
1. The gross income from the Venture computed in
accordance with sound cash basis accounting principles
consistently applied including all income earned and
received from all sources whatsoever as a direct or
indirect result of the ownership or operation of the
Venture such as, but without limitation, (i) the gross
amount of all cash payments received whether as rent,
additional rent, fees, charges or otherwise (excluding
security deposits unless the same are applied as a payment
of rent), (ii) sundry income, (iii) concession income,
(iv) interest on deposits provided that such interest is
not the property of tenants by local law, (v) the net
amount of any refund of impositions or taxes applicable to
any period of this Agreement, (vi) the proceeds from the
sale of any Venture property (including but not limited to
securities, notes or other obligations received in lieu of
or in addition to such cash payments), (vii) the proceeds
of any sale of personal property or fixtures now or
hereafter located on the Property and Improvements and
(viii) the amount of any other consideration, tangible or
intangible, received in relation to or in connection with
the Property and Improvements or any appurtenance thereto
(but not including (a) proceeds of insurance received and
used for restoration of the Property and Improvements in
the event of damage or destruction thereof, or (b)
proceeds of any sale, assignment, transfer, or mortgage as
permitted herein of the whole or any part of the interest
of a party hereto) received by the Venture, any of the
Venturers, the Managing Venturer, the Managing Agent, or
any other person on behalf of the Venture, or by any
associates, subsidiaries, agents, officers, directors or
employees of any of the Venturers, the managing Venturer
or the Managing Agent (but not including the compensation
paid to the Managing Agent pursuant to the Management
Agreement) or by any corporation, partnership,
organization or individual in which the Venturers, the
Managing Venturer or the Managing Agent, or their
associates, directors, officers, agents or employees have
any interest, direct or indirect, which is attributable to
the ownership, leasing, management, operation, use,
promotion, maintenance or servicing of the Property and
Improvements or other assets of the Venture.
2. The amount of (i) any unused portion of any
capital contributions of the Venturers, (ii) any proceeds
received from the mortgaging of the Property and
Improvements, the refinancing (to the extent that the net
proceeds exceed the amount of the mortgage or deed of
trust being refinanced) of any mortgage or deed of trust
on the Property and Improvements or the sale of the
Property and Improvements or any part thereof; and (iii)
any payments received by the Venture, any of the
Venturers, the Managing Venturer, the Managing Agent, or
any other person on behalf of the Venture, or by any
associates, subsidiaries, agents, officers, directors of
employees of any of the Venturers, the Managing Venturer
or the Managing Agent, or by any corporation, partnership
or individual in which the Venturers, the Managing
Venturer, or the Managing Agent, or their associates,
directors, officers, agents, or employees have any
interest, direct or indirect, as a result of any other
transactions involving the ownership, leasing, management,
operation, use, promotion, maintenance or servicing of the
Property and Improvements which do not come within (1)
above.
3. In accordance with sound cash basis accounting
principles consistently applied, insurance charges, real
estate taxes, assessments, reasonable legal expenses,
water, fuel electricity, repairs and maintenance,
supplies, decorating, normal fees paid to certified public
accountants, fees paid to the Managing Agent under the
Management Agreement and all expenses of the Venture and
all other items which for office buildings are normally
considered "operating expenses" (excluding, however, any
income or franchise tax imposed by Federal, State or local
governments on either of the Venturers in their individual
capacity), plus the aggregate amount of principal and
interest paid under mortgages or deeds of trust on the
Property and Improvements and under loans incurred in
connection with the Property and Improvements as well as
the cost of capital acquisitions, alterations,
construction or improvements, to the extent of payments
made or provided for during the fiscal year (except that
in the event and to the extent that capital acquisitions,
alterations, construction or improvements are paid for out
of borrowed funds, the amount paid or provided during the
fiscal year for interest and amortization on mortgages or
deeds of trust or loans made for such purpose shall be
deducted from Net Cash Flow in lieu of deducting the cost
of such capital alterations, construction and
improvements).
4. A reasonable reserve for budgeted tenant work
and for interest and amortization on mortgages or deeds of
trust and loans, real estate taxes, assessments, water
charges, sewer rents, insurance commissions, authorized
brokerage commissions, authorized leasing commissions,
construction costs and other expenses generally treated on
an accrual basis.
In computing the net Cash Flow, no deduction shall be
made for depreciation or amortization as such terms are
used for purposes of the Internal Revenue Code.
Section 4.08. Accounting.
(a) The fiscal year of the Venture shall be the
calendar year.
(b) The books of account of the Venture shall be kept
and maintained at all times at the place or places
Approved by the Venturers. The books of account shall be
maintained on an accrual basis in accordance with
generally accepted accounting principles, consistently
applied, and shall show all items of income and expense.
(c) The Managing Venturer shall cause to be prepared
and furnished to each of the Venturers promptly after the
close of each fiscal year a balance sheet of the Venture
dated as of the end of the fiscal year, a related
statement of income or loss for the Venture for such
fiscal year, and the same information for the fiscal year
as is required to be included in the quarterly reports
under Section 2.03(a)(6) of this Agreement, all of which
shall be certified in the customary manner by a firm of
independent certified public accountants Approved by the
Venturers. In addition, within seventy-five (75) days
after the end of each fiscal year the Managing Venturer
shall have such accountants prepare and deliver to each
Venturer a report setting forth in sufficient detail all
such information and data with respect to business
transactions affected by or involving the Venture during
such fiscal year as shall enable the Venture and each
Venturer to prepare its state, federal and local income
tax returns in accordance with the laws, rules and
regulations then prevailing. The Managing Venturer shall
have such accountants also prepare federal, state and
local tax returns required of the Venture and shall file
the same once Approved by the Venturers. The Managing
Venturer shall also furnish to each Venturer such other
reports on the Venture's operations and condition as may
be reasonably requested by each Venturer;
(d) Each Venturer shall have the right at all
reasonable times during usual business hours to audit,
examine, and make copies of or extracts from the books of
account of the Venture. Such right may be exercised
through any agent or employee of such Venturer designated
by it or him or by an independent certified public
accountant designated by such Venturer. Each Venturer
shall bear all expenses incurred in any examination made
for such Venturer's account.
Section 4.09. Bank Accounts.
Funds of the Venture shall be deposited in an account
or accounts of a type, in form and name and in a bank or
banks Approved by the Venturers. Withdrawals from bank
accounts shall be made by parties Approved by the
Venturers. All checks in excess of $25,000.00 shall
require an authorized signature of each Venturer.
ARTICLE V
Term and Termination
Section 5.01. Term.
The Venture shall commence on the date hereof and
shall continue until terminated in accordance with the
provisions of this Article V, which provisions shall not
be mutually exclusive, i.e., the exercise or use of one of
the provisions of this Article V shall not preclude the
exercise or use of any other provision of this Agreement.
No Venturer shall have the right and each Venturer hereby
agrees not to dissolve, terminate or liquidate, or to
petition a court for the dissolution, termination or
liquidation of the Venture except as provided in this
Agreement.
Section 5.02. Voluntary Termination.
(a) Company (at any time) and Developer (on or after
............... (.....) ............... from the date of
this Agreement) (Company or Developer, as the case may be,
being herein referred to as the "Offeror") shall have the
right to withdraw from the Venture by giving notice of
such intention to withdraw to the other Venturer
(hereinafter in and for the purposes of this Article V
referred to as the "Offeree") and in addition by
delivering to the other Venturer an offer in writing
delivering to the other Venturer an offer in writing
(hereinafter referred to as the "Offer") stating the cash
price at which the Offeror would be willing to purchase an
undivided one hundred percent (100%) interest in the
Property and Improvements. Such price shall be the amount
by which, in the opinion of Offeror, the value of the
Property and the Improvements is in excess of the then
aggregate unpaid principal balance plus accrued interest
and charges, if any, of the mortgages, deeds of trust, and
other liens and encumbrances affecting the Property and
Improvements as of the date of the Offer, subject to which
the Property and Improvements are to be conveyed. All such
mortgages, deeds of trust and other liens shall be listed
in the Offer.
If the Improvements have been damaged or if there is
a condemnation or other taking for a public purpose
pending, the Offer shall specify whether or not the price
specified is contingent upon the Improvements being fully
repaired and whether or not the condemnation or other
taking has been taken into account in the calculation of
the Offer. The Offer shall also specify as to whether the
Offer is contingent upon the Property and Improvements
being repaired and restored prior to the closing, or
whether the purchasing party is to agree to accept title
to the Property and Improvements in an unrepaired or
unrestored condition with an assignment of the insurance
or condemnation proceeds, settlements and awards. The
Managing Venturer shall furnish, or where appropriate,
make available to the Offeror and Offeree or use his best
efforts to obtain from third parties for the Offeror and
Offeree such certificates, documents and information as
the Offeror and Offeree may reasonably request in order to
enable the Offeror to prepare the Offer and Offeree to
make its decision.
(b) Upon receipt of the Offer given and delivered
pursuant to Section 5.02(a) hereof, the Offeree shall then
be obligated, in accordance with the provisions of Section
5.03 hereof, either to:
1. purchase the Offeror's interest in the Property
and Improvements in accordance with Section 5.03 of this
Agreement for cash at a purchase price equal to the one
hundred percent (100%) price referred to above multiplied
by the Distribution Percentage Interest of the Offeror, or
2. sell to the Offeror the interest of the Offeree
in the Property and Improvements in accordance with
Section 5.03 of this Agreement for cash at a purchase
price equal to the one hundred percent (100%) price
referred to above multiplied by the Distribution
Percentage Interest of the Offeree.
The Offeree shall give written notice of its election to
the Offeror within sixty (60) days after receipt of the
Offer. Failure of the Offeree to give the Offeror notice
that the Offeree has elected under subsection (1) above
shall be conclusively deemed to be an election under
subsection (2) above.
(c) If the Offeree elects to proceed under Section
5.02(b)(1) hereof, the Offeree shall purchase the Property
and Improvements as provided in this Article V.
(d) If the Offeree elects to proceed under Section
5.02(b)(2) hereof, the Offeror shall purchase the Property
and Improvements as provided in this Article V.
(e) If, following an election by the Offeree to
purchase under Section 5.02(b)(1) hereof, the Offeree is
not ready and willing to consummate the purchase in
accordance with Section 5.03 hereof, the Offeree shall be
deemed to be a Defaulting Venturer (as that term is used
in Section 5.07 hereof). The Offeror, in addition to all
other rights and remedies available at law or in equity
against the Defaulting Venturer, shall have the right to
purchase the interest of the Defaulting Venturer in the
Property and Improvements as if the Defaulting Venturer
had made an election under Section 5.02(b)(2) hereof.
Section 5.03. Closing.
(a) The closing (hereinafter referred to as the
"Closing") of any sale of the Property and Improvements
pursuant to this Article V shall be held at a mutually
acceptable place, on a mutually acceptable date not more
than forty-five (45) days after receipt by the Offeror of
the written notice of election, or the expiration of the
time of the Offeree to so elect, as provided in Section
5.02(b) hereof. However, within ten (10) days after such
receipt or expiration, there shall be a preliminary
closing at which the Venture shall execute and deliver to
the Venturers a good and sufficient deed or deeds or other
instrument of conveyance in recordable form conveying the
Property and Improvements to the Venturers as tenants-in-
common in proportion to the Distribution Percentage
Interest of each Venturer and the selling party shall
deliver to the purchasing party an option agreement in
recordable form granting to the purchasing party an
exclusive right to acquire the interest of the selling
party pursuant to this Agreement. The deed or deeds or
other instrument of conveyance to the Venturers as
tenants-in-common and the option shall be filed for record
and recorded. At the option of the purchasing party, the
conveyance of the Property and Improvements to the
Venturers as tenants-in-common may be eliminated and the
purchasing party may elect to receive from the Venture an
option agreement in recordable form granting the
purchasing party an exclusive right to acquire the
Property and Improvements directly from the Venture.
(b) At the Closing, a deed (with anti-merger
provisions if requested by the purchasing party and with
covenants against grantor's acts) or other instrument of
conveyance from the selling party to the purchasing party
of the undivided interest of the selling party as a
tenant-in-common of the Property and improvements,
together with such other instruments and documents as may
be necessary or desirable to effectuate the sale and
transfer of the undivided interest of the selling party in
and to the Property and Improvements to the purchasing
party and the purchase price to be paid by the purchasing
party for said undivided interest in the Property and
Improvements, shall be deposited in escrow under an escrow
agreement and with an escrow agent Approved by the
Venturers. The instruments and documents to be deposited
in escrow at the Closing shall be legally sufficient to
convey to the purchasing party the undivided interest of
the selling party in and to the Property and Improvements
free and clear of all mortgages, deeds of trust, liens and
encumbrances, except the mortgages, deeds of trust, liens
and encumbrances listed in the Offer upon completion of
dissolution pursuant to Section 5.05 hereof. The purchase
price shall be paid by a cashier's or certified check from
a bank acceptable to the selling party. At the Closing,
any real estate closing adjustments which are usual and
customary in the locality of the Property shall be made
between the purchasing party and the selling party as of
the date of the Closing. If the purchasing party elects to
eliminate the conveyance of the Property and Improvements
to the Venturers as tenants-in-common, then the deed or
other instrument of conveyance shall be from the Venture
and shall convey all of the Property and Improvements to
the purchasing party upon payment of the purchaser price
referred to above. The purchase price shall be paid over
the selling party by the Venture at the consummation of
the Closing.
(c) In the event that there are any transfer taxes
payable as an incident to the conveyances at the
preliminary closing or the Closing, such taxes shall be
expenses of the Venture. In the event that any title
insurance company insuring the title of the Venture to the
Property and Improvements shall refuse to include the
interests of the Venturers as tenants-in-common as
"Insureds", as that term is used in the standard ALTA
owner's policy, the deeds or other instrument of
conveyance from the Venture to the Venturers as tenants-
in-common, or to the purchasing party, as the case may be,
shall be General Warranty Deeds as to matters as of the
date of the Venture's title policy and as to matters found
in deeds with covenants against grantor's acts as to
matters subsequent to the date of the Venture's title
policy.
Section 5.04. Assumption of Liabilities.
(a) At the Closing held pursuant to this Article V,
the purchasing party shall, by a legally enforceable
agreement, assume the payment of any indebtedness under
any lien on the Property and Improvements set forth in the
Offer to the extent that the Venturers have personal
liability.
(b) If, at the time of the purchase of the Property
and Improvements, such Property and Improvements or the
selling party's interest in the Venture are subject to a
mortgage, deed of trust, lien or encumbrance, other than
as listed in the Offer, the purchasing party shall either
discharge or take subject to such mortgage, deed of trust,
lien or encumbrance and (i) in the case of such a
mortgage, deed of trust, lien or encumbrance upon the
Property and Improvements, reduce the amount of the Offer
by the amount of money as would be required to discharge
same with an appropriate reduction in the purchase price
under Section 5.02(b) hereof or (ii) in the case of such a
mortgage, deed of trust, lien or encumbrance upon the
selling party's interest in the Venture, reduce the
purchase price by the amount required to discharge the
same. If, at the time of the purchase of the Property and
Improvements the purchase price as appropriately reduced
as provided in this Section 5.04(b) is more than the value
of the Property and Improvements less the amount of all
the encumbrances, whether listed in the Offer or not, the
purchasing party may, at its sole option, cancel the
purchase. In the event the purchase is cancelled by the
purchasing party, the terms of this Agreement shall remain
in effect and continue to be binding on the parties as
tenants-in-common with appropriate modifications of the
Agreement, and the purchasing party shall release the
option granted pursuant to Section 5.03 hereof. In
addition, if such an encumbrance shall have been placed in
contravention of the terms and provisions of this
Agreement, then the purchasing party shall also have all
of the rights provided in this Article V with respect to a
default by any Venturer in addition to all rights at law
or in equity against the selling party.
(c) If the Improvements are damaged by fire or other
casualty, or if any party possessing the right of eminent
domain shall give notice of an intention to take or
acquire a substantial part of the Property or
Improvements, and such damage occurs, or such notice is
given between the date of the Offer and the completion of
the liquidation procedures pursuant to Section 5.05
hereof, the following shall apply:
1. If the Property and Improvements are damaged by
an insured casualty (or an uninsured casualty) not
resulting in substantial damage, or if the taking or
acquisition shall not involve a substantial portion of the
Property and Improvements, resulting in an other than
substantial reduction in income, then the purchasing party
shall be required to complete the transaction and accept
an assignment of the insurance or condemnation proceeds,
settlements and awards, if any.
2. If the Property and Improvements are damaged by
an insured casualty (or an uninsured casualty) resulting
in substantial damage, or if the taking or acquisition
shall result in a substantial reduction in the income
producing capacity of the Property and Improvements, then
the purchasing party shall have the option to either (i)
accept the Property and Improvements in an "as is"
condition together with any insurance or condemnation
proceeds, settlements and awards, if any, or (ii) cancel
the purchase.
In the event that the taking or acquisition shall
result in a substantial reduction in the income producing
capacity of the Property and Improvements, notwithstanding
the election of the purchasing party pursuant to the
immediately preceding paragraph, the selling party shall
also have the right to cancel the purchase.
In the event that the purchase is cancelled by the
purchasing party or the selling party pursuant to this
Agreement, after any conveyance to the Venturers as
tenants-in-common, the terms of this Agreement shall
remain in effect and continue to be binding on the parties
as tenants-in-common with appropriate modifications of
this Agreement, and the purchasing party shall release the
option granted pursuant to Section 5.03 hereof.
Section 5.05. Liquidation and Distribution Procedure.
(a) Effective upon the deposit in escrow of the
documents of transfer and the purchase price pursuant to
Section 5.03 hereof, the Venture shall be deemed dissolved
and if the funds of the Venture are insufficient to wind
up the business and affairs of the Venture, the Venturers
shall also deposit in escrow their pro-rata share of such
funds as are necessary to wind up the business and affairs
of the Venture, pay all just debts and obligations of the
Venture and distribute the assets (other than the Property
and Improvements) in accordance with the Distribution
Percentage Interests of the Venturers. The expenses of the
escrow administration shall be expenses of the Venture.
(b) In the event of a liquidation and distribution as
a result of the occurrence of an Event of Dissolution
pursuant to Section 5.06 hereof or a default pursuant to
Section 5.07 hereof, the Withdrawing Venturer (as
hereinafter defined) or the Defaulting Venturer (as
hereinafter defined), as the case may be, shall have no
power or authority to bind the Venture or the Venturers
but shall assist the remaining Venturer in the dissolution
and winding up of the Venture and the distribution of the
assets thereof. Upon such distribution and winding up, the
parties hereto shall be relieved of all obligations
hereunder except for obligations, duties or rights which
have not been determined or ascertained as of the date of
such termination and except for rights or remedies which a
Non-Defaulting Venturer may have against a Defaulting
Venturer at law or in equity. The winding up of the
Venture and the termination of the business and affairs of
the Venture shall be conducted by the Venturers jointly
only if dissolution occurs pursuant to Section 5.02
hereof. During the period of such winding up, the business
and affairs of the Venture shall be conducted so as to
maintain and preserve the assets of the Venture in a
manner consistent with the winding up of the affairs
thereof.
Section 5.06. Event of Dissolution.
(a) The Venture shall not be wound-up and terminated
by the occurrence of an Event of Dissolution unless the
Venturers, other than the Withdrawing Venturer (as
hereinafter defined), shall so decide.
(b) The term "Event of Dissolution" as used hereunder
shall mean any one or more of the following:
(i) the death of any person who is now or who shall
hereafter become a Venturer or the death of any person or
persons having a fifty percent (50%) or more collective
interest in any partnership or corporation which shall be
a Venturer;
(ii) the dissolution or termination of any
partnership or corporation which is now or which shall
hereafter become a Venturer;
(iii) the appointment of a committee for, or
declaration as an incompetent or mentally ill person in a
judicial proceeding of, any person who now or who shall
hereafter become a Venturer or who has a fifty percent
(50%) or more interest in any partnership or corporation
which shall be a Venturer, or a showing that such person
is of unsound mind in any judicial proceedings;
(iv) the showing by competent medical evidence that
any person who is now or who shall hereafter become a
Venturer or any person who has a fifty percent (50%) or
more interest in any partnership or corporation which
shall be a Venturer is mentally or medically unable to
perform the duties required of him by the Venture;
(v) the disappearance of, or the lack of ability to
contact any Venturer or any person who has a fifty percent
(50%) or more interest in any partnership or corporation
which shall be a Venturer for a period of ninety (90) days
or more;
(vi) the occurrence of any one of the following
events:
1. if any Venturer, or any parent or
subsidiary of any Venturer, or any member or members or
stockholder or stockholders having fifty percent (50%) or
more singular or collective interest in any partnership or
corporation, respectively, which shall be a Venturer,
without being replaced as a partner or stockholder in such
Venturer within thirty (30) days, (any such party or
parties which are not so replaced are hereinafter
collectively and individually referred to as the "Bankrupt
Party") shall file a voluntary petition or application for
relief in bankruptcy or shall be adjudicated a bankrupt or
insolvent, or shall file any petition, application for
relief or answer seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or
similar relief for itself under the present or any future
federal bankruptcy code or act or any other present or
future applicable federal, state or other statute or law
relative to bankruptcy, insolvency, or other relief for
debtors, or shall seek or consent to or acquiesce in the
appointment of any trustee, receiver, custodian,
conservator or liquidator of the Bankrupt Party or of all
or any substantial part of said Bankrupt Party's
properties or said Bankrupt Party's interest in the
Venture (the term "acquiesce" as used in this Article V
includes, but is not limited to, the failure to file a
petition or motion to vacate or discharge any order,
judgment or decree within fifteen (15) days after the date
of such order, judgment or decree); or
2. if a court of competent jurisdiction shall
enter an order, judgment or decree approving a petition
filed against the Bankrupt Party seeking any
reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under the
present or any future federal bankruptcy code or act or
any other present or future applicable federal, state or
other statute or law relating to bankruptcy, insolvency,
or other relief for debtors, and such Bankrupt Party shall
acquiesce in the entry of such order, judgment or decree,
or such order, judgment or decree shall remain unvacated
and unstayed for an aggregate of thirty (30) days (whether
or not consecutive) from the date of entry thereof, or any
trustee, receiver, custodian, conservator or liquidator of
such Bankrupt Party or of all or any substantial part of
such Bankrupt Party's properties or interest in the
Venture shall be appointed without the consent or
acquiescence of such party and such appointment shall
remain unvacated and unstayed for an aggregate of thirty
(30) days (whether or not consecutive); or
3. if any Bankrupt Party shall admit in
writing its inability to pay its debts as they become due
or mature or shall not pay its debts as they become due;
or
4. if any Bankrupt Party shall give notice to
any governmental body of insolvency or pending insolvency,
or suspension of operations; or
5. if any Bankrupt Party shall make an
assignment for the benefit of creditors or take any other
similar action for the protection or benefit of creditors.
(c) In the event of the occurrence of an Event of
Dissolution:
(i) the Venturer as to whom the Event of Dissolution
has occurred (such Venturer being referred to as the
"Withdrawing Venturer") shall immediately cease to be a
Venturer and shall have no right to participate in the
management and control of the Venture and the remaining
Venturer or Venturers, as the case may be, may send such
notices of the dissolution to such persons and entities as
the remaining Venturer or Venturers, as the case may be,
may deem appropriate and necessary under the circumstances
and shall either wind up the business and affairs of the
Venture or continue the business and affairs of the
Venture as the remaining Venturer or Venturers deem
appropriate and necessary under the circumstances;
(ii) the remaining Venturer or Venturers, and the
case may be, shall settle the business of the Venture as
expeditiously as its nature will permit and account for
the interests of the Venturers. Such settlement procedure
may include, "but shall not be limited to, a purchase by
the remaining Venturer of the Distribution Percentage
Interest of the Withdrawing Venturer at a price determined
in accordance with an appraisal or appraisals of the
interest of the Withdrawing Venturer made by three
generally recognized competent real estate appraisers in
the area, one selected by each Venturer and the third"
selected by the appraisers selected by the Venturers,
except in the case of an event specified in Section
5.06(b)(iii), (iv) and (v) hereof, in which case the
appraisal shall be made by a generally recognized
competent real estate appraiser in the area selected by
the remaining Venturer, a public sale of all or any part
of the assets of the Venture, a winding up of the Venture,
or, after causing the Venture to convey the Property and
Improvements to the Venturers (including the Withdrawing
Venturer) as tenants-in-common in accordance with the
respective Distribution Percentage Interests, a petition
to a court of appropriate jurisdiction requesting that
such court supervise and approve a partitioning of the
Property and Improvements;
(iii) the good will of the Venture (including the
name, records and files) shall belong to and remain solely
vested in the Venture. Any insurance owned by the Venture
or by the remaining Venturer or Venturers on the life of
any Venturer shall be valued at a sum equal to the cash
surrender proceeds thereof; and
(iv) the prior written consent of the remaining
Venturer or Venturers, as the case may be, shall be
required prior to any consent to any administration of the
Property and Improvements by any referee, trustee or court
of bankruptcy.
The remaining Venturers shall have the right at all times
to continue the business and affairs of the Venture.
(d) Except as otherwise provided in Sections 5.06(a)
and 5.06(c)(i) or (ii) and except in the case of a
transfer of the entire interest of one Venturer to the
other Venturer, neither the sale, assignment, conveyance
nor transfer of all or any part of the interest of any
Venturer shall result in a dissolution of the Venture as a
general partnership under the ............... Act of the
............... even though such sale, assignment,
conveyance or transfer may result in the withdrawal of a
Venturer as a general partner of the Venture and/or the
admission of a new general partner to the Venture.
(e) Whenever a Venturer is permitted or required by
this Agreement to select an appraiser, such Venturer shall
select such appraiser within a reasonable time, but in no
event in excess of sixty (60) days from the date when such
Venturer is permitted or required to select such
appraiser. In the event that a Venturer fails to elect an
appraiser within the required time period, the other
Venturer may select the appraiser and shall give the other
party notice of its selection.
Section 5.07. Default.
If any Venturer fails to perform any of its
obligations hereunder, or violates the terms of this
Agreement, or if such Venturer shall also be the Managing
Venturer or if the Managing Venturer and the Managing
Agent shall be related to or affiliated with each other or
any Venturer related to or affiliated with either (as
illustrated in Section 2.06 hereof) and the Managing
Venturer or the Managing Agent shall have violated the
provisions of this Agreement or the terms of its
employment (such Venturer being referred to as the
"Defaulting Venturer"), the other Venturer shall have the
right to give the Defaulting Venturer a Notice of Default
specifically setting forth the nature of the default and
stating that the Defaulting Venturer shall have a period
of fifteen (15) days to pay any sums of money specified
therein as due and owing to the Venture or to the other
Venturer and to cure any other default specified. If the
monies specified are not paid or the Defaulting Venturer
does not cure all other defaults within such fifteen (15)
day period, or, if such other defaults are not capable of
being cured within such period, and the Defaulting
Venturer has not commenced in good faith the curing of
such other defaults within such fifteen (15) day period
and does not thereafter prosecute to completion with
diligence and continuity the curing thereof, the other
Venturer shall have the right to:
1. bring proceeding in the nature of specific
performance, injunction or other equitable remedy, it
being acknowledged by each of the Venturers that damages
at law may be an inadequate remedy for a default or
threatened breach of this Agreement;
2. bring any action at law by or on behalf of the
Venture or the other Venturers as may be permitted in
order to recover damages;
3. institute such proceedings (including but not
limited to the right to purchase the interest of the
Defaulting Venturer in the Property and Improvements or in
the Venture at a price determined by an appraisal or
appraisals made by generally recognized as competent real
estate appraisers in the area selected by the other
Venturer) as may be appropriate to secure an accounting
and to dissolve, wind up and terminate the Venture; or
4. institute the procedure set forth in Section
5.02 hereof by giving a notice to such effect to the
Defaulting Venturer.
ARTICLE VI
Sale, Assignment, Transfer, or Other Disposition
Section 6.01. Prohibited Transfers.
(a) Except as provided in Articles V and VI of this
Agreement, no Venturer may sell, transfer, assign or
otherwise dispose of, or mortgage, hypothecate, or
otherwise encumber or permit or suffer any encumbrance of
all or any part of its or his interest in the Venture
unless Approved by the Venturers and any attempt to so
transfer or encumber any such interest shall be void.
(b) Except as provided in Section 6.02(b) hereof,
Developer, or any partners or members thereof, shall not
sell, assign, transfer or otherwise dispose of Developer's
interest in the Venture or any partnership interest in
Developer or Developer's rights in this Agreement. The
partnership interests in Developer shall, in a legally
effective manner, be made subject to this restriction. The
sole general partners of Developer shall at all times
(except in the case of death) be ............... shall be
the sole limited partners. ............... shall at all
times (except in the case of his death) have not less than
a ............... (.....%) percent general partnership
interest in Developer and effective legal control of the
management and operation of Developer and ...............
shall have not less than a ............... (.....%)
percent partnership interest in Developer. ...............
shall at all times (except in the case of death) be the
managing partner of Developer. For purposes of this
Article VI the term "immediate family" shall mean a son,
daughter, or descendant of either; a stepson or
stepdaughter; or descendant of either; or a spouse.
(c) Developer shall not consolidate with or merge
into or become a partner or member of any other
partnership or other entity or convey or transfer a
substantial part of its properties or assets.
(d) Developer shall promptly notify Company of any
and all changes whatsoever in the ownership or
hypothecation of any interest in Developer or a partner
thereof or of any other act or transaction involving or
resulting in any change in either ownership, interest or
identity of the parties in control of Developer or the
degree thereof, of which it or any of its partners or
members have been notified or otherwise have knowledge or
information.
(e) Developer shall, at such time or times as Company
may reasonably request, furnish Company with a complete
statement, subscribed and sworn to by a partner or member
of Developer duly authorized, setting forth all of the
partners or members of Developer (including the
composition of any ............... which is a
............... of Developer) and the extent of their
respective holdings, and in the event any other parties
have a beneficial interest in such stock, their names and
the extent of such interests, all as determined or
indicated by the records of Developer, by specific inquiry
made by said partner or member of all parties who on the
basis of such records own five percent (5%) or more of the
interests in Developer, and by such other knowledge or
information as said partner or member shall have.
Section 6.02. Permitted Transfers.
(a) Company shall have the right, upon thirty (30)
days prior written notice to all other Venturers, but
without the consent of any other Venturer, to transfer all
or any part of its interest in the Venture to an
Affiliated Corporation, as hereinafter defined, provided
such transfer does not cause a termination of the Venture
within the meaning of the Internal Revenue Code of 1954,
as amended. For the purposes of this Section 6.02, an
Affiliated Corporation shall be (i) any corporation which
owns directly or indirectly all or substantially all the
stock of Company, or (ii) any corporation, the stock of
which is all or substantially all owned directly or
indirectly by Company.
(b) On or at any time after ..............., but not
before, Developer or any partner thereof may sell, assign,
transfer or otherwise dispose of any partnership interest
in Developer or all of Developer's rights under this
Agreement (any such sale, assignment, transfer or other
disposition by Developer or any partner thereof is
hereinafter referred to as a "Developer Transfer") subject
to the following conditions:
(i) No Developer Transfer shall be made without the
prior written consent of Company;
(ii) Developer shall provide all Venturers with sixty
(60) days' prior written notice of any Developer Transfer;
(iii) No Developer Transfer shall be made that
will cause a dissolution of the Venture within the meaning
of the Internal Revenue Code of 1954, as amended; and
(iv) Each Developer Transfer shall be made in
accordance with Paragraph ..... of that certain
partnership agreement, dated ............... ("Developer's
Partnership Agreement"), executed by all of the partners
of Developer, the provisions of which Paragraph or any
other provisions of the Developer's Partnership Agreement
relating thereto shall not be amended or otherwise changed
in any manner whatsoever without the prior written consent
of Company, except for such amendments or changes that by
their express terms will not be applicable to any
Developer Transfer permitted by this Section 6.02(b).
(c) In the event a Developer Transfer of an ownership
interest in Developer permitted by Section 6.02(b) hereof
shall be made by a testamentary bequest to a member of the
immediate family of a deceased partner or member of
Developer, neither the ............... (.....)
............... waiting period of Section 6.02(b) hereof
nor the conditions of Section 6.02(b)(i), (ii) and (iii)
hereof shall be applicable to such Developer Transfer.
(d) Any permitted transferee of a part of an interest
in the Venture shall become a Venturer unless the terms of
the transfer expressly provide to the contrary; provided,
however, no such transferee shall have any right to
participate in the management and control of the Venture
independently of the Venturer making such transfer unless
such participation is Approved by the Venturers. Unless
the terms of the transfer expressly provide to the
contrary, any permitted transferee of the whole interest
of any Venturer shall become a Venturer and any such
transferee shall have the right to participate in the
management and control of the Venture and the Venturer who
transferred the whole of his interest shall cease to be a
Venturer and shall have no right to participate in the
management and control of the Venture.
Section 6.03. Right of Sale and First Refusal.
(a) Each Venturer hereby grants to the other Venturer
effective from and after the date of execution of this
Agreement, but only so long as each Venturer remains a
Venturer, the right of first refusal on any sale,
transfer, assignment or any other disposition of all or
any part of its interest in the Venture and in the
Property and Improvements, excepting those dispositions
permitted in Sections 6.02(a) and 6.02(c) hereof. Any
Venturer entitled to the right of first refusal set forth
herein is for the purposes of this Section 6.03 referred
to as "Offeree".
(b) If Company (at anytime) or if Developer (after
the expiration of ............... (.....) years from the
date of this Agreement) (Company and Developer, as the
case may be, being hereinafter referred to as the "Selling
Party") shall desire to dispose of (any type of
disposition is hereinafter referred to as a "sale") its
interest in the Venture to a transferee not permitted by
Section 6.02(a) and (c) hereof, and if the Selling Party
receives a bona fide offer therefor which the Selling
Party desires to accept or otherwise agrees on terms with
a proposed purchaser, then the Selling Party shall deliver
to the Offeree an executed contract or commitment for the
sale of its interest in the Venture to the purchaser which
shall set forth (i) that the proposed sale is subject to
the rights of the Offeree, (ii) all of the provisions,
terms and conditions of the proposed sale, and (iii) the
name of the proposed purchaser and address to which
notices may be sent; and which contract or commitment
shall be accompanied by the written offer of the Selling
Party (which contract or commitment and written offer are
collectively referred to as the "Offering Notice") to sell
the interest in the Venture to the Offeree instead of to
the proposed purchaser, subject, nevertheless, to the
provisions of this Section 6.03.
(c) If the Selling Party has agreed to pay any
commission or fee to any agent or broker by reason of the
sale or proposed sale of an interest in the Venture which
is subject to the rights of the Offeree, the Selling Party
shall cause said agent or broker entitled to receive any
commission resulting from the proposed transaction with
the Selling Party to deliver to Offeree a certification by
the agent or broker as to the identity of all parties, if
any, other than broker or agent who will share such
commission and the respective amounts to be shared. A true
and correct copy of the certification shall accompany the
Offering Notice to the Offeree. To the extent that the
certification discloses that the broker or agent will
share any part of the commission or fee with the proposed
purchaser, then the broker shall be required to share to
the same extent the commission with such Offeree as shall
acquire an interest in the Venture pursuant to the
Offering Notice.
(d) The Offeree shall have the right to purchase the
interest in the Venture referred to in the Offering Notice
for cash or upon the terms and conditions set forth in the
Offering Notice (except that the Offeree may substitute
cash for any non-dollar portion of the purchase price, as
well as a portion which is an obligation to pay dollars in
the future) by giving written notice thereof (hereinafter
referred to as the "Reply Notice") duly executed by the
Offeree, to the Selling Party and the proposed purchaser.
The Reply Notice to be given to the proposed purchaser
shall be delivered to the address of said proposed
purchaser as set forth in the Offering Notice. Said Reply
Notice must be received by the Selling Party and the
proposed purchaser within thirty (30) days after receipt
by the Offeree of the Offering Notice.
(e) In the event a Reply Notice is not received by
the Selling Party within the time aforesaid then the
Selling Party shall have the right to transfer the
interest in the Venture referred to in the Offering Notice
to the proposed purchaser upon the terms and conditions
set forth in the Offering Notice. In the event of any
change in the identity of the proposed purchaser, or the
terms or conditions specified in the Offering Notice,
notice thereof and an opportunity to purchase the interest
in the Venture shall first be given to the Offeree in
accordance with the provisions of this Agreement.
(f) No transfer of any interest in the Venture
subject to the right of first refusal of any Offeree shall
be effective if in violation of the rights of the Offeree.
(g) A Venturer shall not be responsible or liable for
any breach of the provisions of this Section 6.03 by
reason of violation or breach of the terms thereof by any
other Venturer.
(h) In the event the Offeree fails to exercise the
right of first refusal granted to it and the proposed sale
is completed, the right of first refusal granted to
Offeree as set forth in this Section 6.03 shall continue
and be binding upon the purchaser and the remaining
Venturer.
(i) In the event request is made of an Offeree for
written confirmation that any proposed transaction is not
subject to the right of first refusal granted to such
Offeree pursuant to the provisions of this Section 6.03,
then within ten (10) days after notice of the proposed
transaction and requested confirmation, the Offeree shall
execute and deliver to the Venturer requesting said
confirmation, a written statement confirming that said
Offeree does not have the right of first refusal with
respect to said proposed transaction, if the facts so
warrant and if Offeree has knowledge of such facts.
Section 6.04. Restrictions on Control of Developer.
(a) Developer hereby represents to Company that all
of the partners of Developer have entered into and duly
executed that certain agreement of even date herewith,
(hereinafter referred to as the "Developer's Agreement")
attached hereto as Exhibit and agreed therein to the
following:
1. ............... shall be the managing partner of
............... for all matters and decisions of and
concerning the Venture and the operations of the same;
2. Company may, without further or independent
inquiry, assume and rely at all times that ...............
has full power and authority to approve all of the Major
Decisions on behalf of Developer and bind all of the
partners of ............... by his acts and deeds;
3. ............... has at least a ...............
(.....%) percent general partnership interest in, and he
and ............... have at least a ...............
(.....%) percent partnership interest in ...............;
4. the Developer's Agreement cannot be revoked,
rescinded, modified, or terminated or in any other manner
changed without the prior written consent of Company; and
5. In the event of the death of ...............
Developer shall designate ............... either as
managing partner of ............... with the same powers
as ............... had before his death.
(b) In the event that the Developer's Agreement shall
be changed in any manner whatsoever (if such change shall
be legally effective), without the prior written consent
of Company, then at the option of Company, (i) any such
change shall constitute an Event of Dissolution and
Company may proceed to settle the business of the Venture
in accordance with Section 5.06(c) of this Agreement, or
(ii) any such change shall constitute a default under this
Agreement, Developer shall be a Defaulting Venturer, and
Company may proceed to institute any of the procedures set
forth in Section 5.07 of this Agreement that may be
instituted by a Venturer against a Defaulting Venturer.
(c) Developer hereby represents that all the
partnership interests in Developer are and shall continue
to be, in a legally effective manner, subject to the
terms, provisions, conditions and restrictions of the
Developer's Agreement.
ARTICLE VII
General
Section 7.01. Notices.
(a) All notices, demands or requests provided for or
permitted to be given pursuant to this Agreement must be
in writing. All notices, demands and requests to be sent
to Developer or any assignee of the interest of Developer
hereunder pursuant hereto shall be deemed to have been
properly given or served by depositing the same in the
United States mail, addressed to Developer, postpaid and
registered or certified, return receipt requested, at the
following address:
Sample Insurance Company
123 State Street
New York, New York 10001
Attention:
with a copy to:
(b) All notices, demands or requests to be sent to
Company or any assignee of the interest of Company
hereunder pursuant hereto shall be deemed to have been
properly given or served by depositing the same in the
United States mail, addressed to Company, postpaid and
registered or certified, return receipt requested, at the
following address:
Sample Insurance Company
123 State Street
New York, New York 10001
Attention:
with a copy to:
(c) All notices, demands and requests shall be
effective upon being deposited in the United States mail.
However, the time period in which a response of any such
notice, demand or request must be given shall commence to
run from the date of receipt on the return receipt of the
notice, demand or request by the addressee thereof.
Rejection or other refusal to accept or the inability to
deliver because of changed address of which no notice was
given shall be deemed to be receipt of the notice, demand
or request sent.
In the event that registered or certified mail is not
being accepted for prompt delivery, notices may then be
served by personal service upon any officer or director or
partner (if such Venture is a partnership) of any Venturer
or upon any individual who is a Venturer.
(d) By giving to the other Venturer at least thirty
(30) days' written notice thereof, each Venturer shall
have the right from time to time and at any time during
the term of this Agreement to change their respective
addresses and each shall have the right to specify as its
address any other address within the United States of
America.
(e) No transferee of any part interest by any
Venturer shall be entitled to receive a notice independent
of the notice sent to the Venturer making such transfer. A
notice sent or made to a Venturer shall be deemed to have
been sent and made to all transferees, if any, of such
Venturer.
Section 7.02. Governing Laws.
This Agreement and the obligations of the Venturers
hereunder shall be interpreted, construed and enforced in
accordance with the laws of the ................
Section 7.03. Fees and Commissions.
It is understood and agreed that Company shall be
under no obligation for the payment of any brokerage
commission or fees of any kind with respect to this
Agreement or the transactions contemplated hereunder.
Developer hereby agrees to indemnify and hold Company
harmless from any claims for brokerage commissions or fees
of any kind including, without limitation, any fees to
..............., the broker in the transaction
contemplated by this Agreement. Developer hereby
acknowledges that it is aware that ............... has
been involved in other transactions with Company, and
Developer enters into this Agreement with full disclosure
of the foregoing. Developer hereby agrees that it shall
have no rights against Company, or defenses to its
obligations under this Agreement, arising out of any
relationship between ..............., and Developer hereby
waives any such rights that it may have in law or in
equity.
Section 7.04. Entire Agreement.
This Agreement contains the entire agreement between
the parties hereto relative to the formation of a Venture
to develop the Property and Improvements. No variations,
modifications, or changes herein or hereof shall be
binding upon any Venturer unless set forth in a document
duly executed by or on behalf of such Venturer.
Section 7.05. Waiver.
No consent or waiver, express or implied, by any
Venturer to or of any breach or default by the other
Venturer in the performance by the other of its
obligations hereunder shall be deemed or construed to be a
consent or waiver to or of any other breach or default in
the performance by such other Venturer of the same or any
other obligations of such Venturer hereunder. Failure on
the part of any Venturer to complain of any act or failure
to act of the other Venturer or to declare the other
Venturer in default, irrespective of how long such failure
continues, shall not constitute a waiver of such Venturer
of its rights hereunder.
Section 7.06. Severability.
If any provision of this Agreement or the application
thereof to any person or circumstances shall be invalid or
unenforceable to any extent, the remainder of this
Agreement and the application of such provisions to other
persons or circumstances shall not be affected thereby and
shall be enforced to the greatest extent permitted by law.
Section 7.07. Status Reports.
Recognizing that each Venturer may find it necessary
from time to time to establish to third parties such as
accountants, banks, mortgagees or the like, the then
current status of performance hereunder, each Venturer
agrees, upon the written request of any other venturer
made from time to time, to furnish promptly a written
statement (in recordable form, if requested) on the status
of any matter pertaining to this Agreement to the best of
the knowledge and belief of the individual making such
statement.
Section 7.08. Terminology.
All personal pronouns used in this Agreement, whether
used in the masculine, feminine, or neuter gender, shall
include all other genders; the singular shall include the
plural, and vice versa and shall refer solely to the
parties signatory hereto except where otherwise
specifically provided. Titles of Articles and Sections are
for convenience only, and neither limit nor amplify the
provisions of this Agreement, and all references herein to
Articles, Sections or subdivisions thereof shall refer to
the corresponding Article, Section or subdivision thereof
of this Agreement unless specific reference is made to
such Articles, Sections or subdivisions of another
document or instrument.
Section 7.09. Indemnity of Company.
Developer agrees to indemnify and hold Company
harmless from any liability to any third person incurred
by reason of the failure of Developer (or the Managing
Venturer or the Managing Agent if Developer or a party
related to or affiliated with Developer shall be the
Managing Venturer or the Managing Agent) or any officer or
employee thereof to perform its duties and obligations
under this Agreement in accordance with the terms thereof
or by reason of any negligent or tortious acts of
Developer (or by the Managing Venturer or the Managing
Agent if Developer or a party related to or affiliated
with Developer shall be the Managing Venturer or the
Managing Agent) or any officer or employee thereof under
and by reason of this Agreement, unless Company shall have
approved the same in writing or partici |
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