Agreement to Form Joint Venture and Joint Escrow Instructions

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Agreement to Form Joint Venture and Joint Escrow Instructions Powered By Docstoc
					     AGREEMENT TO ENTER
        JOINT VENTURE
AND JOINT ESCROW INSTRUCTIONS




  OWNER:

  DEVELOPER:
  PROJECT:

  DATED:       ________________, 20_
                       DEFINED TERMS


Effective Date:          ____________________, 200_

Owner:                                                       ,
                         a

Owner's Address:


                         Attention:
                         Phone No.: (___) ___-____
                         Fax No.: (___) ___-____
                         E-Mail:

Owner's Counsel:


                         Attention:
                         Phone No.: (___) ___-____
                         Fax No.: (___) ___-____
                         E-Mail:

Developer:

Developer's Address:

Developer's Counsel:

Property:                That certain unimproved land located at ___________
                         and _____________ in the City of ________, County of
                         ________, State of _______________, consisting of
                         approximately _______ net acres of land as described
                         on Exhibit A attached hereto, together with all of
                         Owner's right, title and interest in and to all rights,
                         privileges, easements, and appurtenances benefiting
                         such real property, including, but not limited to, all
                         mineral and water rights, all easements, rights-of-way,
                         and other appurtenances used or connected with the
                         beneficial use or enjoyment of such real property, and
                         together with all approvals, permits, plans, drawings,
                         reports, studies, and the like relating to such real
                         property.
Net Acreage:                         The gross surface area of the Property, less any portions
                                     required to be offered for dedication for streets,
                                     roadways or other easements or which are subject to set-
                                     back requirements in which landscaping or similar
                                     improvements may not be constructed.

Agreed Value:                        The sum of __________________________ Dollars
                                     ($______________.00); provided however if the Net
                                     Acreage of the Property is less than _______ (___)
                                     acres, the Agreed Value shall be reduced by _______
                                     Dollars per square foot of Net Acreage difference
                                     between ___________ (___) Net Acres and the actual
                                     Net Acreage of the Property.

Developer's Share of Agreed Value:   An amount equal to fifty percent (50%) of the Agreed
                                     Value.

Initial Deposit:                     __________________ Dollars ($__________.00)

Additional Deposit:                  __________________ Dollars ($__________.00)

Second Additional Deposit:           __________________ Dollars ($__________.00)

Third Additional Deposit:            __________________ Dollars ($__________.00)

Contingency Period:                  _________ (___) days from the Effective Date

Closing Date:                        No later than _________________, unless extended
                                     pursuant Section ________.

Title Company:


                                     Attention:
                                     Phone No.:
                                     Fax No.:

Escrow Holder:


                                     Attention:
                                     Phone No.:
                                     Fax No.:

Broker:




                                         -ii-
                         AGREEMENT TO ENTER JOINT VENTURE
                           AND JOINT ESCROW INSTRUCTIONS


       THIS AGREEMENT TO ENTER JOINT VENTURE AND JOINT ESCROW INSTRUCTIONS (this
"Agreement") is made and entered into as of the Effective Date by and between Developer and
Owner.

                                            RECITALS:

        A.     Owner and Developer desire to form a joint venture under the name
______________________, LLC, a _______________ limited liability company (the "Joint
Venture") for the purpose of developing and operating a ______________________(the "Project")
on the Property.

       In consideration of the mutual covenants and agreements contained herein, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
Developer and Owner agree as follows:

        1.      Formation of Joint Venture. Upon and subject to the terms and conditions set forth
in this Agreement, Developer and Owner agree to form the Joint Venture which will acquire the
Property for the purpose of developing and operating the Project. At the Closing (as defined below),
Owner agrees to contribute the Property to the Joint Venture through Escrow (as defined below). On
or before the Closing, Developer agrees contribute a sum equal to Developer's Share of the Agreed
Value to the Joint Venture through Escrow. At the Closing, Developer and Owner shall enter into an
operating agreement in form and substance mutually acceptable to Owner and Developer (the
"Operating Agreement").

        2.      Terms of the Operating Agreement and Management Agreement. In connection
with the formation of the Joint Venture, an affiliate of Developer and the Joint Venture shall enter
into a Management Agreement in form and substance mutually acceptable to Owner and Developer
(the "Management Agreement"). The Operating Agreement and Management Agreement, as
applicable, shall contain the following provisions:

                (a)     Managing Member. Developer shall be appointed as the managing member
of the Joint Venture.

                 (b)      Purpose of Joint Venture. The purpose of the Joint Venture shall be, among
others, to invest in, entitle, construct, lease, finance and operate the Project (the "Project").

                (c)    Development Fee. Developer shall receive the sum equal to _________
percent (__ %) of all development costs (hard and soft) incurred in connection with the entitlement
and construction of the Project (the "Development Fee") for its services in connection with the
development of the Project. The Development Fee shall be paid and disbursed from the proceeds of
a construction loan obtained by the Joint Venture (the "Loan") as described in the Operating
Agreement in monthly installments commencing with the construction of the Project or on such other
basis as may be provided by the construction lender. If a permanent loan is funded prior to payment
of the entire Development Fee, the unpaid balance will be paid at the closing of the permanent loan.
                (d)     Management Agreement. Pursuant to the terms of the Management
Agreement, the Joint Venture agrees to retain an affiliate of Developer to manage the Project upon its
completion. The monthly management fee shall be ________ percent (__ %) of gross monthly
collections of base rent (excluding reimbursement of common area maintenance expenses, taxes and
insurance).

                 (e)     Leasing/Sales Fee. Developer or an affiliate of Developer shall be entitled
to: (i) a leasing fee of ________ Dollars ($__.00) per square foot of floor area of each space in the
Project leased by the Joint Venture to tenants; (ii) a sales fee of ___% of the sales price of any
portion of the Project sold by the Joint Venture to users; and (iii) a leasing fee of ___% of the value
of any portion of the Project ground leased to a tenant by the Joint Venture. Developer, or the
affiliate of Developer who is paid such fee, shall then be responsible for any fees payable to outside
real estate brokers for such transactions by the Joint Venture.

               (f)    Capital Contributions to the Joint Venture. On or before the Closing,
Owner shall contribute the Property and Developer shall contribute an amount equal to Developer's
Share of the Agreed Value to the capital of the Joint Venture.

                (g)    Distribution. Concurrently with the Closing, the Joint Venture shall
distribute to Owner an amount equal to Developer's Share of the Agreed Value.

                  (h)     Profits and Losses. The members of the Joint Venture shall participate
equally in the profits and losses from the operation of the Project. The operating profits shall mean
the net cash flow from the operations of the Project after deducting operating expenses, debt service
and maintenance of reasonable operating reserves. No party shall be entitled to any preferred return
on their initial contributed capital.

                (i)     Transfers of Interest. Transfers of interests under the Operating Agreement
will be generally prohibited, except to related entities.

                 (j)   Financing. The Operating Agreements shall provide that only the Property
may be used as collateral for any construction or permanent financing in connection with the Project
and that neither Owner nor Developer shall be required to obtain separate financing using other
assets of either Owner or Developer as collateral. Further, in no event shall Owner or its members be
required to guaranty any obligations of the Joint Venture.

       3.      Escrow and Closing.

                (a)    Opening of Escrow. For the purposes of this Agreement, an escrow
("Escrow") shall be deemed opened ("Opening of Escrow") on the date that Escrow Holder receives
(i) a copy of this Agreement fully executed by Developer and Owner, and (ii) the Initial Deposit.
Developer and Owner shall use their best efforts to cause the Opening of Escrow to occur on or
before two (2) business days after the Effective Date. Escrow Holder shall promptly notify
Developer and Owner in writing of the date of the Opening of Escrow. This Agreement shall
constitute joint escrow instructions to Escrow Holder. Developer and Owner agree to execute,
deliver and be bound by any reasonable or customary supplemental escrow instructions or other
instruments reasonably required by Escrow Holder to consummate the transaction contemplated by
this Agreement; provided, however, that no such instruments shall be inconsistent or in conflict with,
amend or supersede any portion of this Agreement. If there is any conflict or inconsistency between


                                                  -2-
the terms of such instruments and the terms of this Agreement, then the terms of this Agreement shall
control.

                (b)     Deposit. Within five (5) business days after the Effective Date, Developer
shall deposit or cause to be deposited with Escrow Holder the Initial Deposit. Upon the expiration of
the Contingency Period, Developer shall deposit or cause to be deposited with Escrow Holder the
Additional Deposit. The Term "Deposit" shall mean and include the Initial Deposit and the
Additional Deposit, along with all interest accrued thereon. Escrow Holder shall immediately invest
the Deposit in a federally-insured, interest-bearing account, and all interest accruing thereon shall be
credited to the party entitled to the Deposit. Developer shall be entitled to withdraw funds from the
Deposit in order to reimburse Developer for costs incurred in connection with the pursuit of the
Entitlements as described in Section 13. In the event Developer withdraws all of the funds from the
Deposit, Developer shall then cause the Second Additional Deposit to be deposited with Escrow
Holder, or, alternatively, may elect to terminate this Agreement. The Second Additional Deposit
once made, shall thereafter be considered part of the Deposit. Once the Developer has withdrawn all
of the funds constituting the Second Deposit pursuant to Section 13, Developer shall cause the Third
Additional Deposit to be deposited with Escrow Holder, or alternatively, elect to terminate this
Agreement. The Third Additional Deposit, once made, shall thereafter be considered part of the
Deposit. If this Agreement is terminated, then the Escrow Holder shall disburse the Deposit to the
appropriate party as required under this Agreement.

               (c)     Closing. For purposes of this Agreement, the "Closing" shall be the date that
the Joint Venture is formed and the Property is contributed to the Joint Venture by Owner as
provided herein. Unless changed in writing by Developer and Owner, the Closing shall occur on the
Closing Date, except as otherwise provided in this Agreement.

       4.      Remedies.

                 (a)     Remedies Upon Owner's Default. If, prior to the Closing, Owner defaults
in any of its obligations under this Agreement, or breaches any of its representations or warranties set
forth in this Agreement, then Developer shall have the right to seek any and all remedies available to
Developer at law, in equity or under this Agreement. Without limiting the generality of the
foregoing, Developer shall have the right, at its election, to (i) terminate this Agreement by delivery
of written notice to Owner and Escrow Holder and receive a return of the Deposit then remaining and
pursue recovery of all actual damages suffered by Developer attributable to Owner's breach (or if
necessary, seek specific performance of this Agreement), and/or (ii) waive such Owner default and
consummate the transaction contemplated hereby in accordance with the terms hereof.

          (b)   Liquidated Damages Upon Developer's Default. DEVELOPER AND
OWNER AGREE THAT IT WOULD BE EXTREMELY DIFFICULT OR IMPOSSIBLE TO
DETERMINE THE DAMAGES THAT OWNER WOULD SUFFER IF DEVELOPER DEFAULTS
HEREUNDER AND FAILS TO CONSUMMATE THE TRANSACTION CONTEMPLATED BY
THIS AGREEMENT.     DEVELOPER AND OWNER THEREFORE AGREE THAT A
REASONABLE PRESENT ESTIMATE OF THE DAMAGES THAT OWNER WOULD SUFFER
IF DEVELOPER SO DEFAULTS HEREUNDER AND FAILS TO CONSUMMATE THE
TRANSACTION CONTEMPLATED BY THIS AGREEMENT IS AN AMOUNT OF MONEY
EQUAL TO THE DEPOSIT THEN HELD BY ESCROW HOLDER. THEREFORE, IF
DEVELOPER DEFAULTS HEREUNDER AND FAILS TO CONSUMMATE THE
TRANSACTION CONTEMPLATED BY THIS AGREEMENT, THEN OWNER SHALL


                                                  -3-
RECEIVE THE DEPOSIT THEN HELD BY ESCROW HOLDER. OWNER AGREES THAT
PAYMENT OF THE LIQUIDATED DAMAGES IS OWNER'S SOLE AND EXCLUSIVE
REMEDY FOR DEVELOPER'S DEFAULT HEREUNDER AND OWNER WAIVES ANY RIGHT
TO SPECIFIC PERFORMANCE.

       INITIALS:                   _______________                    _______________
                                   Owner                              Developer

        5.      Owner's Delivery of Property Documents. Within five (5) days after the Effective
Date, Owner shall deliver to Developer all documents and/or materials in Owner's possession or
control relating to the Property (collectively, the "Property Documents"). At any time during the
Contingency Period, Owner shall reasonably cooperate with Developer to provide to Developer such
other documents or other materials in Owner's possession or control relating to the Property that
Developer may reasonably request.

       6.      Developer's Conditions Precedent and Termination Right.

               (a)     Conditions Precedent.        The Closing and Developer's obligation to
consummate the transaction contemplated by this Agreement are subject to the timely satisfaction or
written waiver (except as hereinafter provided) of the following conditions precedent within the
applicable time period set forth below (collectively, "Developer's Contingencies"), which are for
Developer's benefit only.

                         (i)    Title Review. Within five (5) after the Effective Date, Owner will
furnish or cause to be furnished to Developer a preliminary title report prepared by the Title
Company (the "Report") describing the title to the Property, together with legible copies of the
exceptions (the "Exceptions") set forth in the Report and a color-coded plot of all easements
referenced as Exceptions in the Report (the ("Easement Plot"). On or before the expiration of the
Contingency Period, Developer shall have approved, or conditionally approved, in writing, in
Developer's sole and absolute discretion, any matters of title disclosed by the following (collectively,
the "Title Documents"): (A) the Report; (B) the Exceptions; (C) the Easement Plot; and (D) the
legal description of the Property. The Joint Venture shall be responsible, at its sole cost and expense,
for obtaining an ALTA survey, if Developer so elects. On or before the Closing, Developer may
submit a specific list to Owner of any additional endorsements that Developer may reasonably
request (the "Joint Venture’s Title Endorsements"). Developer shall have ten (10) business days
from receipt of written notice from Owner to approve, disapprove or conditionally approve any
Exceptions to title to the Property that (1) are not created by Developer, and (2) exist as of the
issuance of the Report but are not disclosed in the Title Documents, or that come into existence after
issuance of the Report, but prior to the Property Closing.

                        (ii)    Joint Venture's Title Policy. On or before the Closing, the Title
Company shall, upon payment of
				
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Description: Agreement to Form Joint Venture and Joint Escrow Instructions between owner and developer to develop commercial property
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