Construction Joint Venture Agreement Form
CONSTRUCTION JOINT VENTURE AGREEMENT
THIS AGREEMENT is made this First day of __________, 2010, by and between XYZ
ENGINEERING, INC., a California Corporation ("XYZ"), whose principal business address
is___________, California, and QRT, INC., a California Corporation ("QRT"), whose principal
business address is ______________, California. XYZ and QRT are collectively, "the Joint
Venturers" and by this agreement mutually agree to engage in, undertake and carry on, as joint
venturers, certain public and/or private sector construction projects and any profits derive from and
any liability for losses arising out of the performance, be defined by an agreement in writing:
THEREFORE, it is agreed as follows:
1. FORMATION OF JOINT VENTURE
The joint venturers hereby constitute themselves as joint venturers for the purpose of
performing and completing the certain public and/or private sector construction projects,
("Construction Contract"), attached hereto as schedule "A" and for no other purpose. From time to
time upon written consent of all joint venturers, joint venturers may include new projects to their
2. NAME OF JOINT VENTURE
The Construction Contracts shall be entered into the names of the Joint Venturers, and shall
be known as JV. JV shall apply and obtain Contractor License under JV, prior to entering into any
construction agreement or perform any construction work.
3. JOINT AND SEVERAL OBLIGATIONS
The obligations under the Construction Contract shall be joint and several.
4. DURATION AND TERMINATION
This agreement shall remain in full force and effect until all the purposes for which this
venture has been undertaken have been accomplished and completed or until _____________, 2011,
whichever comes first.
5. PLACE OF BUSINESS
The principal place of business of the joint venture shall be at ________________ California,
or at such other place as may from time to time be agreed upon by the Joint Venturer.
6. FICTITIOUS BUSINESS NAME STATEMENT
The joint venture shall comply with applicable laws regarding the filing of notices with
respect to the use, continuation of use and discontinuation of use of its fictitious business name.
7. INTERESTS OF THE JOINT VENTURERS
The interest of the Joint Venturers in and to the Construction Contract, and in and to any and
all property and equipment acquired in connection with the perform ance thereof and in and to any
and all moneys which may be derived from the performance thereof and the obligations and
liabilities of each of the Joint Venturers hereto as among themselves in connection with the
Construction Contract and with respect to any and all liabilities and losses in
connection therewith shall be equal. Each Joint Venturer does hereby indem nify the other against
any loss or liability exceeding the proportions hereinabove stated by reason of any liability incurred
or loss sustained in and about the Construction Contract, or by reason of the execution of any surety
company bonds or indemnity agreements executed in connection therewith.
8. CONTRIBUTIONS AND DIVISION OF PROFITS
The interest of the parties in and to any profits and assets derived from the perform ance of
the Construction Contract, and in and to any property acquired by the joint venture in connection
with the work to be performed under this instrument, and in and to all contributions required, all
moneys received, and losses incurred in the performance of the Construction Contract shall be those
percentages set opposite their respective names as follows:
XYZ $500,000.00 50%
QRT $500,000.00 50%
9. INDEMNITY AGREEMENTS; SURETY BONDS
Each of the parties agrees to execute all applications and indemnity agreements required by
the sureties on any bond or bonds required in connection with the bid and Construction Contract.
All financial obligations assumed by the parties, or any of them, in connection with the performance
of the Construction Contract, all liabilities assumed by or charged to them, or any of them, as
contractors, guarantors, or indemnitors, in connection with any surety bond or other bonds which
may be given or executed in connection with the Construction Contract, and all other obligations and
liabilities of any kind or character which are assumed or undertaken by the parties, or any of them, in
connection with and for the benefit of the performance of the Construction Contract shall be shared
by the parties proportionately and in accordance with their respective interest as set forth in Article
10. CONTRIBUTION OF WORKING CAPITAL
All necessary working capital when and as required for the performance and prosecution of
the Construction Contract shall be furnished by the parties proportionately in accordance with their
respective interests as set forth in Article (8).
11. ADDITIONAL CAPITAL
Subject to the consent of the joint venturers, additional capital needed by the joint venture to
meet its operating needs from time to time during the term of the joint venture shall be obtained from
loans to the joint venture or, if such loans are not available, from additional capital contributions
from the joint ventures, which shall be made on a 50-50 basis.
12. WITHDRAWAL OF CAPITAL
Capital contributed to the joint venture by a joint venturer may not be withdrawn without the
consent of the joint venturers.
13. INTEREST ON CAPITAL
No interest shall be paid on any capital contributed to the Joint Venture by a Joint Venturer.
14. BORROWING MONEY; LOAN TO JOINT VENTURE
Neither Joint Venturer shall have the right to borrow money on behalf of the other Joint
Venturer or to use the credit of the other Joint Venturer for any purpose.
All loans to the Joint Venture shall be approved by the Joint Venturer. A loan by a Joint
Venturer (or an affiliate of a Joint Venturer) to the Joint Venture shall not be regarded as an increase
in such Joint Venturer's capital nor entitle such Joint Venturer to any increase of the profits or losses
of the Joint Venture.
15. AUTHORIZED REPRESENTATIVES
To facilitate the handling of all matters and questions in connection with the
performance of the Construction Contract, each of the Joint Venturers appoints the following
representatives to act for it in all such matters, with full and complete authority to act on its behalf in
relation to any matters or things in connection with , arising out of, or relative to the Joint Venture
and in relation to any matters or things involving the performance of the Construction Contract.
Authorized Representatives of XYZ:
Authorized Representative of QRT:
Either Joint Venturer may at any time and from time to time change its representative by
filing with the other a notice and duly executed appointment of a new representative or alternate, but
until the appointment and filing of such notice the actions of the representative or alternate hereby
appointed shall be conclusively binding on such Joint Venturer.
16. MANAGEMENT OF JOINT VENTURE
The representatives of the Joint Venturers shall meet from time to time as required to act on
necessary matter pertainings to the Construction contract. All decisions, commitments, agreements,
undertakings, understandings, or other matters pertaining to the performance of the Construction
Contract shall be mutually agreed upon by such representatives. No representative shall be liable to
the Joint Venturers by reason of his acts as such, except in the case of its gross negligence or actual
fraudulent or dishonest conduct. In the event the representatives cannot agree on a matter of Joint
Venture policy, the matter shall be submitted to informal, but binding, arbitration to a mutually
acceptable third party. If the Joint Venturers cannot agree on an arbitrator, then the matter shall be
resolved by binding commercial arbitration as provided in Article (42) below.
17. COST OF CONSTRUCTION
Cost of construction shall consist of the costs of all subcontracts, labor, material, plant, and
equipment purchased or rented, bonds, insurance, taxes on labor and material, imports, charges, legal
fees, liabilities not secured by insurance, and all other expenses and obligations incurred or suffered
in and about the performance of the Construction Contract of a nature which under sound accounting
practices would be properly charged as a cost of the performance of the Construction Contract. Such
costs shall not include any charges against the Joint Venture for any overhead expenses or charges of
the main or branch offices of the Joint Venturers or for the time which may be expended in
connection with the work by any of the Joint Venturers or their officers or employees, except as may
be approved by the Joint Venturers and except as provided for by this agreement. Equipment rented
either of the Joint Venturers shall be charged as a construction cost at a rate mutually agreed on by
the representatives of the parties.
(a) Separate books of account for the performance of the Construction Contract and all
matters pertaining thereto shall be kept and maintained at the main office of the Joint Venture. All
records of the Joint Venture shall be open for inspection of either Joint venturer at all reasonable
(b) A periodic audit of such books shall be made by an independent firm of accountants or by
such individuals as may be mutually agreed upon by the Joint Venturers, and a like audit shall be
made upon completion of the Construction Contract. With respect to the periodic audits there shall
be included, if requested by the Joint Venturers, a periodic comparison between the items of cost and
the items set up in the estimate of cost. The cost of any such audits shall be a part of the cost of
(c) Upon the completion of the Construction Contract a true and correct accounting shall be
had of all costs and expenses and all accounts, vouchers, and other data relating to the Construction
Contract and its performance.
(d) To the extent that the records of the Joint Venture must be kept subsequent to the
completion of the Construction Contract, pursuant to the provisions of law, the same shall be kept at
such place or places as the Joint Venturers may from time to time determine, and the cost thereof
shall be borne equally by the Joint Venturers.
Upon the completion of the Construction Contract, after providing for and paying (a) all
costs disbursed or incurred in the performance of the Construction Contract; (b) all other costs and
charges ordinarily and usually charged as costs in the performance of such a contract; (c) any and all
claims not secured by insurance; (d) proper reserves for any claims which shall have either been
brought against the Joint venturers or which the Joint Venturers m ay reasonably anticipate will be
brought against them; and (e) reserves for contingencies, if any, that shall be determined by the Joint
Venturers in their discretion to be necessary, and after repaying all sums advanced by the Joint
Venturers for working capital, any profits thereafter rem aining, resulting from the perform ance of
the Construction Contract, shall be distributed and divided equally between the Joint Venturers.
Any reserves, when no longer required, or so much thereof as shall remain, shall be similarly
If the performance of the Construction Contract results in a loss, the Joint Venturers shall be
obligated equally for any such loss. Such equal liability of the Joint Venturers for the bearing of
losses shall continue with respect to any claims which at any time, either before or after the
completion of the Construction Contract, shall be made against them or either of them by reason of
this Joint Venture or any matter or thing in connection therewith.
21. METHOD OF ACCOUNTING
The books of account of the Joint Venture shall be kept in accordance with generally
accepted accounting principles which shall be applied on a consistent basis.
22. ACCOUNTING YEAR
The accounting year of the Joint Venture shall end on the 31st day of December of each year.
23. ANNUAL REPORT/ACCOUNTING
Within 90 days after the end of each accounting year of the Joint Venture, a report and
accounting shall be made of the financial affairs of the Joint Venture as of the close of the said year.
Upon such accounting being made, the net profit or net loss sustained by the Joint Venture during
said year shall be ascertained and credited or debited, as the case may be, in the books of account of
the Joint Venture to the respective Joint Venturer in the proportions specified in Article (8) above.
24. DELIVERY OF TAX INFORMATION
Within 90 days after the end of each taxable year of the Joint Venture, the information
necessary for the Joint Venturers to complete their federal and state income tax or information
returns shall be made available to the Joint Venturers, and there shall be included with such
information a copy of the Joint Venture's federal and state income tax or information returns for the
25. TAX RETURNS
The Joint Venture shall prepare and file all required income tax returns for the Joint Venture
on a timely basis. QRT shall be the "tax matters Joint Venturer".
26. BANK ACCOUNTS
All funds of the Joint Venture shall be deposited in accounts in the name of the Joint Venture
at such bank or banks as may be selected by the Joint Venturers. All withdrawals therefrom or drafts
written thereon in excess of $5,000.00 shall be signed by a signatory/representative of each of the
Joint Venturers. The aggregate monthly withdrawals or drafts by anyone of Joint Venturers, shall not
27. TIME/EFFORTS DEVOTED TO JOINT VENTURE
In general, each Joint Venturer shall cooperate in whatever manner is reasonably necessary
to carry out the purposes of the Joint Venture, including, but not limited, to making joint
applications (with the other Joint Venturer) for and obtaining construction related bonds. Neither of
the Joint Venturers shall be required to spend any fixed amount of time in Joint Venture business,
and each of the Joint Venturers may engage in any other outside business or activity of any type,
including, but not limited to, the business regularly conducted by it apart from this Joint Venture;
provided, however, that each of the Joint Venturers shall spend a sufficient amount of time to
adequately perform such Joint Venturer's respective duties and obligations under this Agreement.
Neither of the Joint Venturers shall have the duty to disclose to the other Joint Venturer or the Joint
Venture any business opportunities of which it becomes aware, and either Joint Venturer may take
such opportunities for itself without being in breach of its duties or obligations hereunder.
Salaries shall be paid to the Joint Venture representatives as agreed between the Joint
Venturers from time to time.
29. PAYMENT OF JOINT VENTURE EXPENSES
The Joint Venture shall pay all reasonable and necessary expenses of the Joint Venture,
including, but not limited to, reasonable rent for tools, machinery, personnel, etc., provided by one
of the Joint Venturers to the Joint Venture, as agreed by the Joint Venturers in advance. In addition,
the Joint Venture shall reimburse each Joint Venturer for other reasonable and necessary expenses
incurred by it in the ordinary and proper conduct of the Joint Venture business and/or for the
preservation of the Joint Venture business or property.
Neither Joint Venturer shall be entitled to withdraw funds of the Joint Venture from time to
time for its own use, without the consent of the other Joint Venturer.
31. PROHIBITED ACTS
Neither Joint Venturer shall take any action in the name of the Joint Venture except in the
ordinary course of the Joint Venture business, without the consent of the other Joint Venturer.
32. LIMITATION OF JOINT VENTURE
It is specifically understood and agreed between the parties that this Joint Venture agreement
extends only to the performance of the Construction Contract, together with any changes or
additions to this agreement or extra work under it, and in no event shall this agreement extend to or
cover any different work.
The term "Construction Contract" as used in this agreement is intended to and shall include
the changes, additions, or extra work in this agreement mentioned.
33. LEASING OF MACHINERY AND EQUIPMENT
The parties shall lease to the joint venture, and the Joint Venture shall lease from the parties,
for the terms respectively commencing when the Joint Venture shall require them for use in
performing the Construction Contract without delay and continuing subsequently whenever and for
as long as the same shall be required in such performance, such machinery and equipment as the
parties may have available for use on the project, at and for the unit rental rates mutually agreed on
by the representatives of the parties.
Schedules of the mutually agreed rental rates shall be signed by each Venturer and attached
to this agreement. The sponsoring Joint Venturer will consult with the other Venturers before
committing the Joint Venture to a purchase agreement or lease with option agreement for the
acquisition or leasing of major equipment items, such as: truck cranes, side boom cats, trucks,
welding machines, compressors, tractors and loaders.
34. PURCHASE OF EQUIPMENT ON COMPLETION
On completion of the Construction Contract, the parties will secure a bona fide bid for each
item or group of items of equipment purchased by the Joint Venture, or held by it under a lease with
option agreement, from one or more reputable equipment dealers. Each of the parties shall have the
right to purchase any item or group of items, at the highest price bid for such item or items, by such
dealers, provided that no party shall be entitled to purchase a greater percentage of the equipment
than the percentage of its interest in the Joint Venture.
If more than one party shall desire to purchase the same items or items of equipment, at a
price or prices so determined, and mutually satisfactory adjustment is not effected by agreement
between or among them , then such item or items of equipment, in like manner as items not desired
by the parties, shall be disposed of by sale, for the best price obtainable, to outsiders.
All hand tools will be purchased for the Construction Contract from suppliers or from
members of the Joint Venture, provided their prices are considered equitable by the Joint Venture
participants. At the completion of the Construction Contract the tools shall be divided by value
according to each Joint Venturer's participation.
35. BANKRUPTCY OR DISSOLUTION OF PARTY
In the event of the bankruptcy or dissolution of any of the parties, this Joint Venture shall
immediately cease and terminate on its occurrence. Then, the successors, receivers, trustees, or
other legal representatives, in this agreement called "representatives" of any party so affected shall
cease to have any interest in the performance of the Construction Contract and shall cease to have
any interest in and to the Joint Venture or its assets. In any such case the remaining party shall have
the right to wind up the affairs of the joint venture and to carry out and complete the performance of
the Construction Contract. On such completion or sooner termination and receipt of payment of all
amounts due under the Construction Contract, the remaining Joint Venturer shall account to the
representatives of the party or parties so affected and such representative shall then be entitled to
receive from the remaining Joint Venturer an amount equal to the sums advanced by the party
represented, plus such party's proportionate share of the profits, or less such party's proportionate
share of the losses resulting from the performance of the Construction Contract to the date of the
termination of the Joint Venture. Provided, however, that the profit or loss computed as of the day
of the termination shall be in the same proportion to the whole profit or loss resulting from the
performance of the Construction Contract as the amount of work done under it at such time bears to
all of the work which is done under it.
In the event the share of the losses chargeable to the parties so represented exceeds the sum
advanced by such party, the representative shall promptly pay to the rem aining Joint Venturer any
such excess. The books of the Joint Venture shall be conclusive in establishing whether a profit has
been realized or a loss sustained, the amount, and the proportionate amount of work done as of any
given time or date.
36. ASSIGNMENTS AND TRANSFERS
Neither this agreement nor the interest of the parties or any of them in this agreement,
including its respective interest in any moneys belonging to or which may accrue to the Joint
Venture in connection with the Construction Contract, may be assigned, pledged, transferred or
hypothecated, except that in the event a party desires to obtain banking accommodations, such party
may assign, pledge, or hypothecate to the lending institution as security for such banking
accommodation, its interest in the moneys to be received by such party under this agreement when
distributed to it in accordance with its terms, if the other parties to this agreement give their written
consent to it in advance.
37. ADJUSTMENT OF ACCOUNTS
On completion of the performance of the Construction Contract, the parties shall render a
true and correct account, each to the others, of all expenses incurred on account of and all moneys
received as result of, such performance. The parties mutually agree, on completion of the
performance of the Construction Contract, to settle and adjust all accounts in connection with the
performance of the Construction Contract, and to pay, each to the others, such sums as well result in
reach of the parties receiving that portion of all profits arising from the performance of the
Construction Contract, or bearing that proportion of all losses arising from it in accordance with
Articles (8), and (35).
38. TRUST FUNDS
All moneys contributed by the Joint Venturers to this Joint Venture and all moneys received
as payments under the Construction Contract or otherwise received shall be treated and regarded as,
and are hereby declared to be, trust funds for the performance of the Construction Contract and for
no other purpose until the Construction Contract shall have been fu lly com pleted and accepted by
owner and until all obligations of the Joint Venturers hereto shall have been paid, otherwise
discharged, or provided for adequate reserves. such reserves shall likewise be treated as trust funds
until they shall have served the purposes for which they were created. Proper fidelity bond coverage
shall be maintained on all persons who are directly connected with performance of the Construction
Contract, and the cost of such fidelity bond premiums shall be part of the construction cost.
39. DISSOLUTION OF JOINT VENTURE
Upon dissolution of the Joint Venture, except as otherwise provided herein, the operation of
the Joint Venture's business shall be confined to those activities necessary to wind up the Joint
Venture's affairs, discharge its obligations, and preserve and distribute its assets. Any gains or losses
of the Joint Venture arising out of the liquidation of the Joint Venture's assets shall be allocated, and
the cash and other property of the Joint Venture remaining after satisfaction of Joint Venture
obligations shall be distributed, to the Joint Venturers in accordance with the provisions of Article
(8) above. Promptly on dissolution, a Notice of Dissolution of Joint Venture shall be published
pursuant to Section 15035.5 of the California Corporations Code or any equivalent successor statute
40. BINDING EFFECT
Except as otherwise provided in this agreement, this agreement shall inure to the benefit of,
and be binding on the parties, their successors, trustees, assigns, receivers and legal representatives,
but shall not inure to the benefit of any other person, firm, or corporation.
41. GOVERNING LAW
All questions relative to the execution, validity, interpretation, and performance of this
agreement shall be governed by the laws of the State of California.
42. DISPUTE RESOLUTION
If a dispute arises that cannot be resolved through direct discussions, Joint Venturers shall
participate in mediation before recourse to any other form of binding dispute resolution. The location
of the mediation shall be Los Angeles County, Ca lifornia. Joint Venturers hereby appoint RAFIK
AYVAZI as the sole mediator. Joint Venturers acknowledge that RAFIK AYVAZI is the attorney of
Joint Venturer and consent to RAFIK AYVAZI being the sole mediator and waive to any disclaimer
required of a mediator, if any, as to potential conflict of interest or bias. If for any reason RAFIK
AYVAZI refuses to act as the mediator, or disqualified, the joint venturers shall participate in
mediation under the Construction Industry Mediation Rules of the American Arbitration
Association. Once one party provides written notice of mediation to the American Arbitration
Association, the parties agree to commence such mediation within sixty (60) days of the notice of
the request. Engaging in mediation is a condition precedent to any other form of binding dispute
resolution. Agreements reached in mediation shall be binding and enforceable as any other
settlement agreement. If the Joint Venturers are not able to resolve the dispute in Mediation, then
such disputes shall be resolved through binding arbitration carried out in accordance with the rules
and regulations of the American Arbitration Association. Each of the Joint Venturers shall be
entitled to conduct full discovery under the applicable provisions of the California Code of Civil
Procedure in any such proceeding. The decision of the arbitrator in any such proceeding shall be
fully enforceable in any court of competent jurisdiction.
43. ATTORNEY'S FEES
Should any litigation or arbitration be commenced between the parties concerning any
provision of this Agreement, the party prevailing in such litigation shall be granted, to recover their
costs and reasonable attorney's fees incurred in such litigation.
44. ENTIRE AGREEMENT
This agreement contains the sole and only agreement of the parties hereto relating to the Joint
Venture. Any prior agreement, promises, negotiations or representations not expressly set forth in
this Agreement are of no force and effect.
IN WITNESS WHEREOF, the undersigned have executed this Joint Venture Agreement as
of the day and year set forth above.
XYZ ENGINEERING, INC. QRT, INC.