Fillable Printable Joint Ventures in Construction Form
Fillable Printable Joint Ventures in Construction Form
Joint Ventures in Construction Form
JOINT
VENTURES
IN CONSTRUCTION
Third Edition
by
RICHARD W. MILLER
Miller Law Firm
4310 Madison Avenue
Kansas City, Missouri 64111
(816) 531-0755
Published by:
National Association of Surety Bond Producers
1828 L Street, N.W., Suite 720, Washington, DC 20036-5104
Tel (202) 686 3700
TABLE
OF
CONTENTS
Chapter
1.
Introduction
1
2.
Checklist
of
Items
to
be
Included in a
Joint
Venture
Agreement..
2
3. Pre-Bidding
Joint
Venture Agreements 3
Form A. Declaration
of
Joint
Venture
Agreement
5
Form
B.
Short
Form Pre-Bidding
Agreement
6
Form
C.
Long Form Pre-Bidding Agreement.. 8
Form D. Pre-Bidding
Agreement
for
an
Item
Joint
Venture .12
Form
E.
Pre-Bid
Joint
Venture
Agreement
With
a DBE 14
4.
Joint
Venture in
Which
All
Venturers
Are
Named
in
the
Contract
and
the
Bond .15
Form
F.
Joint
Venture
Agreement
(All
Members
Are
Disclosed) 16
5.
Joint
Venture
With
a Disadvantaged Party
or
a Party
Who
is
not
Financially
Responsible But
Who
Has
an
Interest in Excess
of
Fifty
Percent
23
Form
G.
Joint
Venture
Agreement
With
a Disadvantaged Party 24
Form H. Financial
and
Management
Assistance
Agreement
31
6.
Section
8(a) Arrangements .33
Form
J.
Teaming
Agreement
35
7.
Silent
Joint
Venture : 44
Form
K.
Pre-Bid
Silent
Joint
Venture Agreement.. ..45
Form
L.
Silent
Joint
Venture
Agreement
.46
8.
Contribution
Bonds (Cross Indemnity Bonds) Between
Joint
Venturers ..49
Form M. Form
Guaranteeing
Obligation
of
Co-Venturer
Principal
to
Advance
His
Share
of
Contributions
50
Form
N.
Form
Guaranteeing
Obligation
of
Co-
Venturer Principal
to
Reimburse
Other
Venturers for Share
of
Ultimate
Loss
.51
9. A
Plan
for
Cooperation
Between Insurance Agents/Brokers
on
a
Joint
Venture
Project..
53
A
joint
venture has been
described in many ways
with
many
elements and purposes. For
the
pur-
pose
of
this discussion a
joint
venture
is
a
combination
of
two
or
more persons
to
carry
out
a single
business enterprise
or
a series
of
busi-
ness enterprises for profit, during
which
the
parties
combine
such
items
as
property, money, skill
and
knowledge to achieve such purpose.
The
amount
of
money,
equipment
and
property
is
normally
either
con-
tributed equally or in specific
percentages,
but
there
is
no
way
to
measure accurately
the
skill
and
knowledge
which
each
party brings
to
the
joint
venture.
Substantially
the
same rules
which
are applicable to members
of
a part-
nership apply
to
members
of
a
joint
venture.
One
venture
member
can
bind
his associates by a
contract
which
is
in furtherance
of
the
enter-
prise or
within
the
scope
of
activity
of
the
enterprise. Each
venturer
in a
true
joint
venture
is
liable for
the
performance
of
the
entire
contract
and
the
payment
of
all labor, materi-
al, equipment
and
other
obligations.
Chapter
1
Introduction
There
is
no
limitation
of
liability as
between
the
joint
venture
and
the
owner
and, if there
is
a default
by
any member
of
the
joint
venture,
the
remaining financially responsible
members
of
the
joint
venture are
required
to
complete
the
job.
Even
with
the
risk
that
one
mem-
ber
of
the
joint
venture
may have
to
satisfy a greater percentage
of
the
loss
than
originally contemplated,
there
are
certain
advantages
to
a
joint
venture
in construction:
1.
It spreads
the
risk among
the
members
in
proportion
to
each
member's interest
in
the
joint
venture
(although
one
member
may be liable in full
to
the
owner
if
another
member
of
the
joint
venture defaults).
2.
It combines specialized abilities.
3.
It
increases
the
accuracy
of
bid
estimates
and
permits members
to compare estimates
with
the
other
members
of
the
joint
ven-
ture.
4. It permits using a
contractor
with
local knowledge.
5.
It
increases
the
ability
to
bid
more projects
and
thereby
spreads
bonding
capacity in pro-
portion
to
each
member's
interest in
the
joint
venture.
6.
It
enables bids
to
be submitted
on
major projects
which
other-
wise
one
contractor
could
not
do
alone.
7.
It enables a
pooling
of
talent,
resources,
equipment,
men
and
financing
with
the
other
mem-
bers
of
the
joint
venture.
8.
It
encourages future business
with
members
of
the
joint ven-
ture.
9. It keeps capital working.
10.
It
allows a
member
to increase
his area
of
operation
and exper-
tise.
The
following
sections
will discuss
some
of
the
ways
in
which
to
joint
venture,
the
risks
inherent
in
certain
methods, and possible ways
to
mini-
mize such risks
.•
1
Chapter
2
Checklist
of
Items
To
Be Included
In a Joint Venture Agreement
Although every
joint
venture
agreement should be specifically pre-
pared for each project,
the
following
are common provisions which should
be included or
at
least considered for
inclusion
in
such agreements:
1.
The
date
on
which
the
agree-
ment
is
established and executed.
2.
The
names, addresses and identi-
fication
of
the
type
of
business
form
of
each member
of
the
joint
venture.
3.
The
name
under which
the
joint
venture shall do business.
4. A full description of
the
project.
5. A statement
that
the
parties are
actually
joint
venturers for
the
project,
whether
or
not
the
con-
struction
contract
is
in
the
name
of
all members.
6.
The
establishment
of
a fund
by
the
parties
to
finance
the
work,
together with
the
amounts
to
be
contributed
by
each
party with
the
fund being deposited in a spe-
cial earmarked bank account,
under dual control,
and
with all
progress payments and
other
income being deposited in such
account.
7.
A clause providing that, if addi-
tional working capital
is
required,
the parties will proportionally
contribute additional funds,
as
needed,
and
spelling
out
the
effect
of
a failure
of
any member
to contribute.
8. A declaration
of
the
participa-
tion
of
the
parties and
the
percentages in which profits and
losses are shared should be set
forth. Usually these percentages
are the same percentages
as
the
contributions to
the
working
fund,
but
the
amount
of
contri-
bution
of
funds
by
parties
can
be
increased
or
decreased depending
on
the
contribution
of
equipment
to
the
project.
9. Payment
of
any fee to
the
con-
trolling
joint
venturer or sponsor
should be specified
whether
mea-
sured
as
a share
of
the
profits in
excess
of
that
contemplated
or
as
a flat dollar sum.
10. If equipment
is
involved, a spe-
cific clause should be inserted,
especially where
the
parties con-
tribute varying amounts
of
equipment.
11.
The
parties
to
the
joint
venture
should agree to sign all necessary
documents relating to
the
con-
tract,
bank
loans, indemnity
agreements and
the
like.
12. Designation
of
one
of
the
joint
venturers
as
the
general manager
of
the
project with authority to
bind
the
joint
venture, should be
included with a provision clearly
defining
not
only
the
managerial
duties, but all
other
duties
of
the
parties
and
procedures to be fol-
lowed in dealing with unusual
situations or problems
that
may
develop.
13. Items to be charged to
the
job
and
the
arrangements for a sepa-
rate set
of
books kept
by
an
outside Certified Public Accoun-
tant
should be specified.
14. A provision to
handle
the
ramifi-
cations
of
the
incapacity, death,
bankruptcy,
or
insolvency
of
a
member must
be
added to
the
joint venture agreement.
15.
The
acquisition
of
equipment
and
materials by
the
joint ven-
ture
and
the
disposal
of
such
equipment
and
material,
either
by sale with
the
proceeds treated
as
ordinary income, or
by
distrib-
uting
them
to
the
parties.
16.
The
acquisition
of
licenses
in
the
name
of
the
joint
venture or
each
venturer
as
required.
17.
The
joint
venture
agreement
should clearly define what liabili-
ties are to be insured against
by
each participant.
18. Items which are
to
be considered
as
costs
to
the
joint
venture for
the
purpose
of
determining profit
or loss, and those items which are
not
reimbursable
to
members
of
the
joint
venture
should be
detailed.
19.
When
and how
the
joint venture
is
terminated
and
how such items
as
guarantees, defects and insur-
ance will be
handled
after
termination.
20.
The
state
under
which
the
provi-
sions
of
the
joint
venture
agreement will be interpreted
should be designated.
It
is
essential
that
any
joint
ven-
ture agreement be tailored specif-
ically to
the
project involved,
the
needs and desires
of
each
member,
the
degree and type
of
participation
of
the
members thereof,
the
law
of
the
state governing
the
joint venture,
and
the
performance
of
the work
contemplated.
This
checklist
and
the
agreements
which follow have
been
prepared
with these factors
in
mind and should
be used merely
as
gUides
.•
2
Chapter 3
Pre-Bidding Joint Venture Agreements
The
following forms relate
to
pre-
bidding agreements
by
a
joint
venture. Form A
is
a Declaration
of
Joint
Venture
Agreement
where
the
bid
is
submitted solely
in
the
name
of
one
party and
which
has
as
its basic
purpose
the
assurance between
each
party
to
the
joint
venture
and
assur-
ance
to
the
surety
that
the
surety
knows all the parties
to
the
joint
venture
and
that,
if
the
bid
is
accept-
ed
and a
contract
awarded,
each
of
the
parties,
as
joint
venturers, will
perform
the
contract, will execute
the
application
of
the
surety for any
required bonds,
and
will indemnify
the
surety
as
though
each
was
named
as
a principal in
the
contract
and
any
bond.
Form B accomplishes
the
same
purpose
as
the Declaration
but
it also
goes far beyond
the
declaration by
setting forth
the
basic working rela-
tionship between
the
members
of
the
joint
venture
and
designating such
items
as
the
percentage
involvement
of
each member;
the
sponsor
or
man-
aging party;
the
method
of
handling
purchases, rentals, subcontracts and
equipment; and
the
termination
of
a
member's interest
on
the
happening
of
certain financial difficulties.
This
form contemplates
and
so states
in
Paragraph 14
that
a
joint
venture
agreement
more
specifically desig-
nating
the
respective interests
of
each
party will be
entered
into
if
the
parties so desire.
This
agreement
does have
the
distinct advantage
of
being short
and
confining itself
to
the
basic understandings,
which
the
parties should resolve prior
to
sub-
mitting
a bid,
but
at
the
same time
the
agreement does
not
overburden
the
parties
with
the
many
minute
details
of
a full scale
joint
venture
agreement. If
the
parties
cannot
agree
on
the
items in this agreement,
then
it
is
questionable
that
a
joint
venture
bid should be submitted.
For those who would
want
to
combine
a pre-bid agreement with
all
the
terms
of
a
joint
venture
agree-
ment
and
thus
avoid any after bid
negotiating, Form C
is
suggested
as
a
possible model.
It
also
contains
pro-
visions, such
as
in
paragraph
6,
which
some might consider result
in
a more "harsh"
treatment
of
a mem-
ber
of
the
joint
venture
who does
not
meet
his financial
and
other
obliga-
tions.
The
individual members
of
each
respective
joint
venture
must
determine
whether
they
would like
to
utilize
the
concepts
contained
in
this agreement or those
contained
in
the
joint
venture
agreement in
Chapter
4.
The
fourth Pre-Bidding
Agreement
(Form
D)
covers a short
form
of
an
item
joint
venture in
which
each member
of
the
joint
ven-
ture
is
solely responsible to perform
those bid items designated in
the
agreement
to
be performed
by
each
such member.
In
a typical item
joint
venture
none
of
the
work
is
done
by
the
joint
venture
as
such,
but instead
it
is
done
by
the
respective members
of
the
joint
venture.
The
profit mar-
gin
is
built
into
the
bid
items
themselves,
and
thus
the
joint
ven-
ture itself will
not
be
disbursing
profits
to
the
venturers. Each
ventur-
er
will profit
or
will sustain losses
based
on
how
successful each
is
with
the
item work
allocated
to
them.
Since
the
venturers are jointly liable
to
the
owner
and
third
parties for all
the
work,
each
venturer
in Paragraph
8
of
the
form
of
item
joint
venture
agrees
to
indemnify
the
other
from
any losses or claims
pertaining
to
the
work allocated
to
each.
In
some item
joint
ventures
the
work
is
subcontracted
to
the respec-
tive venturers,
but
this
is
a
matter
of
choice among
the
venturers them-
selves keeping
in
mind
certain
contractual
requirements
which may
require a
certain
percentage
to be
done
by
the
joint
venture
itself.
Form E
is
a pre-bidding agreement
with
a disadvantaged party.
This
form recognizes
the
need
for a full-
length
joint
venture
agreement
because
of
the
uniqueness
of
the
arrangement
.•
3
-------------
--------------
FORMA
Declaration
of
Joint Venture Agreement
This
Declaration made and entered
into
this _
day of , 199
by
and
between _
(hereinafter called
"Contractor") and _
(hereinafter called
"Venturer") who hereby agree
as
follows:
1.
A bid has been submitted or
is
to be submitted in
the
name
of
Contractor
to _
(hereinafter called "Owner")
for
construction
of
Such bid
is
for
and
on
behalf of said
Contractor
and
Venturer who hereby declare
that
they are
joint
ven-
turers in
the
submission
of
said bid, notwithstanding
the fact
that
the
proposal
is
being made
in
the
name
of
Contractor
alone.
2.
If the bid of
Contractor
is
accepted
and
a
contract
awarded,
the
parties hereto
as
joint
venturers will
perform said
contract
and will share
in
the
profit
or
loss
which may result therefrom in
the
proportions
that
their several interests bear
to
the
whole.
3. If a bid bond or a performance bond or labor and
material (payment) bond, or both, are required to be
furnished
in
connection
with said contract,
then
the
parties hereto
as
joint venturers,
and
each
of them,
will execute
the
customary application
and
indemni-
fication agreement of
the
surety providing such
bond(s}, obligating themselves thereby severally
and
jointly to perform, abide
by,
and be subject to, all
the
agreements in said application
contained
and
in
addition to indemnify
and
save harmless said surety
in
the
same
manner
and
to
the
same
extent
as
if
they,
and
each of them, were
named
as principals
in
said
contract
and
in said bond(s}.
4.
An
original executed copy
of
this Declaration shall
be furnished
to
said surety
by
the
joint
venturers,
who agree
that
its terms
and
obligations constitute
one
of the inducements
to
said surety to provide said
bond(s}.
5. This Declaration shall, in all its terms
and
obliga-
tions,
in
addition to being for
the
benefit
of
said
surety, be also for
the
benefit
of
any
other
surety or
sureties joining with said surety
in
executing said
bond(s}
as
well
as
any surety
or
sureties assuming
reinsurance thereupon.
In
Witness Whereof,
the
parties have executed this
Declaration this
__
day
of
_
19_
Signed
5
FORM B
Short Form Pre-Bidding Agreement
This
Pre-bidding Agreement entered
into
as
of this
__
day of , 199
__
by and
between
the
following parties: _
and
WITNESSETH:
Whereas the parties hereto desire to submit a
joint
bid to _
(hereinafter referred
to
as
the
"Owner"), for
the
con-
struction
of
_
(herein called
the
"Work").
Whereas, the parties
each
hereby certify
and
repre-
sent to each
other
their
ability to provide
their
respective share of bonding capacity, finances, person-
nel, equipment and supervision
to
complete the work in
the
event they are
the
successful bidder and to sustain
and pay for any losses
that
may be incurred;
NOW
THEREFORE, it
is
hereby agreed between
the
parties hereto
as
follows:
1.
They will jointly prepare a bid to be submitted
to
the
Owner
for a contract for the Work.
2.
The
bid shall be submitted in
the
names
of
the
undersigned
as
joint venturers and should a con-
tract for said Work be obtained
as
a result
of
such
bid, such contract shall be taken in
the
names of
the undersigned,
as
joint
venturers, or in such
other
name
as
may be agreed upon
by
the undersigned
with the consent and approval of
the
Owner.
3. Each and every obligation created by any such bid
or contract shall be
the
joint
and several obligation
of the undersigned.
4.
The
interest of
the
undersigned
in
any such con-
tract, if obtained, and in
the
Work shall be
as
follows:
---
%
--_%
--_%
---
%
5.
The
undersigned jointly shall execute (with each
of
the
undersigned designating its
own
broker for its
portion of
the
bond) any
and
all indemnity agree-
ments required by the surety or sureties
on
any
bonds furnished
in
connection
with
the
award
or
performance
of
any such
contract
and
each shall
assume and bear its proportionate share (as desig-
nated in paragraph 4 above) of any loss which may
result therefrom, and each of the undersigned shall
contribute,
when
and
as
required, its ratable portion
of all amounts needed for working capital, tools,
equipment and
other
items required for the perfor-
mance of the Work.
6. All expenses incurred by the parties hereto, or any
of them,
in
estimating and preparing
the
contem-
plated bid shall be borne separately by each of
the
parties and shall
in
no
manner
be considered
as
a
part of
the
construction cost of the Project in
the
event
the
Work
is
awarded to
the
joint
venture.
7.
In
the
event
that
no
agreement
is
reached
by
the
parties
hereto
as
to
the
amount
of
the
bid to be sub-
mitted or if such agreement
is
reached
and a bid
is
submitted but
no
contract
is
offered
or
awarded to
the joint venture,
then
this
Agreement
shall be
of
no further force and effect and any
joint
venture
relationship or joint venture
between
the
parties for
said Project shall automatically terminate.
8.
shall be
the
Managing Party of
the
joint
venture,
subject, however, to
the
superior authority and con-
trol of
the
joint venturers.
The
Managing Party
6
shall
have
direct charge over
and
supervision
of
all
matters necessary to,
and
connected
with,
the
per-
formance
of
said
contract.
The
undersigned shall, if
necessary or advisable, execute
and
deliver
to
the
Managing Party
or
a project manager designated
by
the
Managing Party from time
to
time a power
of
attorney sufficiently broad
to
enable said Managing
Party,
or
the
project manager or both, to perform
properly and promptly such duties and responsibili-
ties.
9.
Any
profits
or
gains arising from
the
performance
of
the
contract
shall be apportioned
to
all
the
parties
in
the
same proportions
as
set forth in paragraph
4.
In
the
event
of
any losses arising from
the
perfor-
mance
of
the
contract,
each
party shall assume
and
pay its full proportionate share
as
such proportions
are fixed by paragraph
4.
10.
Incident
to
the
performance
of
the
contract,
the
Managing Party, directly
or
through
the
project
manager acting for it
at
the
time, may deliver, in
the
name and
on
behalf
of
the
joint
venture, such
purchase orders, rental agreements, subcontracts
and
other
agreements for
the
acquisition
of
materi-
als, labor, equipment, facilities
and
work
as
the
Managing Party may
deem
necessary
or
advisable.
11.
Incident
to
the
performance
of
the
contract, equip-
ment
may be
rented
from any member
of
the
joint
venture, including
the
Managing Party,
at
fair
and
reasonable rates.
Upon
completion
of
the
project,
the
Managing Party will secure a
bona
fide bid for
each
item or group
of
items
of
equipment
purchased
by,
or
for,
the
joint
venture, from
one
or
more rep-
utable
equipment
dealers, and
each
of
the
parties
shall
have
the right
to
purchase any item
or
group
of items,
at
the highest prices bid therefor
by
such
dealers,
but
no
party
without
the prior written
con-
sent
of
all
other
parties shall be
entitled
to purchase
any greater
percentum
of
such
equipment
than
the
percentage
of
its interest in
the
joint
venture. All
equipment
not
so disposed
of
shall be sold
by
the
Managing Party for
the
best price obtainable
to
such dealers or
other
outsiders.
12.
In
the
event
that
during performance
of
the
contract
any party shall become insolvent
or
bankrupt
or
take
advantage
of
any bankruptcy
arrangement
or
debtor
statute
in
force
at
the
time, said
party
shall cease
to
have
any voice in
the
joint
venture
from
and
after
that
date,
but
the
liability
and
responsibility
of
that
party
to
the
others
shall
continue
in
full force
and
effect.
13.
This
Pre-bidding
Agreement
is
limited
and relates
solely to
the
Work
and
to
any
additions
thereto
or
modifications
thereof
and
to
no
other,
and
upon
the
completion
of
the
Work
and
its
acceptance
by
the
Owner
and
the
performance
of
all obligations
of
the
undersigned under such
contract,
a final
accounting
and
settlement
shall be made
by
and
among
the
undersigned
and
thereupon
this
agreement
shall ter-
minate
and
come
to
an
end.
14.
Upon
being awarded a
contract
for
the
Work,
the
undersigned, if requested
to
do
so by
the
Managing
Party, will
enter
into a
Joint
Venture
Agreement
more specifically defining their respective interest
in,
and
obligations under, such
contract
as
among
themselves,
and
providing a practical
method
for
their
collaboration
and
cooperation
in
performing
the
Work.
Such
agreement shall incorporate all
of
the
provisions
contained
in this Pre-bidding
Agreement,
as
well
as
others
deemed
proper
and
advisable.
Until
and
unless a
Joint
Venture
Agreement
is
so executed,
the
provisions hereof
shall
constitute
the
sole
and
only
agreement
of
the
parties
concerning
said Project.
In
Witness Whereof,
the
parties
have
executed
this Pre-Bidding
Agreement
this day
of
19
By
~
_
By
_
7
---------------
FORMe
Long Form Pre-Bidding Agreement
This Agreement, executed this day
of
,
19__
,
by
and
between
____________________
, and
is
made
with
reference
to
the
following:
Whereas, _
(hereinafter called
"Owner")
has invited bids for
the
construction
of
_
__________
(hereinafter called "Project")
and
has
had
prepared Plans, Specifications and
Addenda thereto, if any
(herein
called
the
"Contract");
and
Whereas,
the
parties
hereto
intend
by
this agreement
(i)
to
constitute themselves a
joint
venture
to submit a
bid for
the
performance
of
the
Contract,
and
if
the
Contract
is
awarded
to
the
joint
venture, to perform
the
Contract,
and (ii)
to
specify their respective rights and
obligations between themselves
with
respect to
the
sub-
mission
of
the
bid,
the
performance
of
the
Contract,
the
manner
in
which
the
profits or losses therefrom shall be
shared
or
borne
and
all
other
matters
pertaining
to
the
joint
venture.
NOW
THEREFORE,
the
parties agree
as
follows:
1.
The
parties hereby
constitute
themselves a
joint
venture
(the
"Joint Venture") for
the
sole and
exclusive purpose
of
submitting a bid for
the
perfor-
mance
of
the
Contract
and, if
the
Contract
is
awarded to
the
Joint
Venture,
of
performing
the
Contract.
The
Joint
Venture
and
this agreement
shall terminate (a) if
the
parties do
not
agree
on
the
terms
of
the
bid, (b) if
the
Contract
is
not
awarded
to
the
Joint
Venture, (c)
or
when
the
performance
of
the
Contract
has
been
completed
as
the
case may
be, and
when
the
accounts are settled between
the
parties in accordance
with
the
terms hereof.
This
agreement shall
not
limit
either
party from engag-
ing in
other
business for its
own
respective account.
2.
The
parties will prepare, execute
and
submit a bid
for
the
performance
of
the
Contract
in an
amount
or
amounts and
on
terms mutually agreed upon
between
the
parties prior to its submission, and will
execute
and
submit all bid bonds required in con-
nection
therewith.
The
bid shall be made in
the
names
of
the
parties
or
under
a mutually agreed
upon
fictitious name.
3. Unless otherwise mutually agreed
in
writing, all
costs and expenses incurred
in
connection
with
the
preparation
of
the
bid,
the
submission
of
the
bid
and
all
other
matters up
to
the
date
of
the
award
of
the
Contract
shall be
borne
by
the
party which
incurred
the
same.
4.
The
parties hereby jointly
and
severally appoint
and
constitute
and
and
each
of
them,
as
their
true and lawful attorneys-in-fact,
with
full power
and
authority
to
act, severally for,
and
on
behalf
of,
the
Joint
Venture,
and
each
of
the
parties hereby ratifies
and
confirms
the
signature
of
either
of
said attorneys-in-fact
on
any
said docu-
ments
as
the
act
and
deed
of
the
Joint
Venture
and
each
of
the
parties.
5.
Except
as
is
otherwise provided in Paragraphs
3,6
and
13
hereof,
the
parties shall share
the
profits
or
bear
the
losses
of
the
Joint
Venture
and
shall
own
all
of
the
property and funds acquired
by
the
Joint
Venture in
the
following
proportion
(their
"Proportionate Share",
as
the
same may be
changed
from time
to
time
with
respect to
the
sharing
of
profits
and
ownership
of
property
and
funds, pur-
suant
to
Paragraphs 6
or
13,
but
not
as
to
the
bearing
of
losses or
as
to
the
obligation
to
con-
tribute to working capital):
8
---
%
--_%
Each party agrees to indemnify
the
other
against
any loss
or
liability
in
excess
of
the
proportion set
forth above by reason
of
any liability incurred or
loss
sustained in
connection
with,
or
arising
out
of,
(i)
the performance
of
the
Contract,
(ii) any bonds
to which
the
Joint Venture
is
a party, (iii) any
indemnity agreements executed in
connection
with
any such bonds, (iv) any financing arrangements to
perform
the
Contract,
and (v) the
Joint
Venture,
generally.
6.
The
parties from time to time shall determine
the
amount
of
working capital required to perform the
Contract. If
the
parties are unable to
so
agree, the
largest
amount
which
either
party in good faith
specifies shall be deemed to be
the
amount
of
work-
ing capital determined to be required to perform
the
Contract. Each party shall contribute to
the
Joint
Venture its Proportionate Share
of
the
amount
so
determined
within
ten
(0)
days after
each
determi-
nation
is
made. If
either
party shall fail
to
contribute all
of
its Proportionate Share
when
due
and if such default shall
continue
for
ten
(0)
days
after written notice from the non-defaulting party,
the
non-defaulting party shall
contribute
the defi-
ciency in
the
proportionate share
of
the
defaulting
party. In such
event,
and regardless
of
any later
offer by
the
defaulting party to remedy its default or
the later remedy
by
a defaulting party
of
its default,
the
Proportionate Share
of
each
party
in
the
profits
of
the
Joint Venture and
in
the
ownership
of
all
property and funds thereafter acquired by the Joint
Venture automatically shall change to
the
respec-
tive proportions
that
the
total
amount
contributed
to working capital by each party bears to the total
amount
contributed to working capital
by
both
par-
ties (exclusive
of
any
amount
later contributed by a
defaulting party),
but
the Proportionate Share
of
each party in any losses
of
the
Joint
Venture shall
remain
as
specified
in
Paragraph
5.
In addition to
the foregoing,
the
non-defaulting party shall
have
the
right to assert against
the
defaulting party any
and all causes
of
action
arising
out
of
such default
and
any
and
all remedies therefor proVided by
law.
7.
When
the
Joint
Venture has funds in excess
of
its
working capital requirements,
as
determined
from
time to time by the parties,
th~
Proportionate
Share
of
each
party in such excess shall be paid to
the
par-
ties. Either party may withdraw funds from
the
Joint
Venture
with
the
consent
of
the
other
party.
Any
such withdrawal shall
not
of
itself, unless otherwise
agreed, change
the
Proportionate
Share
of
either
party.
8.
All
funds received
by
the
Joint
Venture
from any
source shall be deposited
in
an
account
or
accounts
in
the
name
of
the
Joint Venture in such
bank
or
banks, mutually agreed
upon
by
both
parties
and
shall be subject to withdrawal by
such
person
or
persons
as
the
parties shall
determine
from time
to
time.
9. Each party shall own its
Proportionate
Share
of
all
equipment, machines, tools, materials, supplies
and
other
property
which
are purchased by the Joint
Venture
or
charged
to
the
account
of
the
Joint
Venture.
At
the
completion
of
the
Contract,
or
sooner if such property
no
longer
is
required for
the
performance
of
the
Contract,
such property shall be
divided between
the
parties
in
a
manner
agreed
upon
by
the
parties. If
the
parties are unable to
agree
on
the
division
of
some
or
all
of
such property,
the
property
as
to
which
the
parties are unable to
agree shall be sold and
each
party shall be paid its
Proportionate Share
of
the
sale proceeds. All funds
and property acquired
by
the
Joint
Venture shall be
held in
the
name
of
the
Joint
Venture.
10. Separate books
of
account
of
the
transactions
of
the
Joint Venture shall be kept
and
maintained
by
the
Managing Party
at
its principal office or at the job
site,
and
the
same shall be available for inspection
by
either
party at any reasonable time.
The
books
of
the Joint Venture shall be
maintained
on
a per-
centage
of
completion
basis
and
the
tax returns
of
the Joint Venture shall be prepared
on
a completed
9
contract
basis
or
on
such
other
basis as
the
parties
determine.
The
Managing Party shall furnish
the
other
party
or
parties from time to
time
with
such
statements
and
reports relating
to
the
progress
of
the performance
of
the
Contract
and
to
the
finan-
cial
condition
of
the
Joint Venture as
the
other
party reasonably may request.
At
the
completion
of
the
Contract
and
at
such intervals as
the
parties
may agree upon,
each
party shall be furnished
with
a complete
account
of
the
receipts
and
disburse-
ments
of
the
Joint
Venture.
On
December 31
of
each year during
the
existence
of
the
Joint
Venture
and
at
the
completion
of
the
Contract,
if requested
by
either
party,
the
accounts
of
the
Joint
Venture
shall be a audited
by
a mutually acceptable firm
of
independent
certified public accountants. Each
such audit shall be performed
in
a
manner
which
will permit
the
accountants
to
express
an
unquali-
fied accountant's
opinion
with
respect
to
the
financial
statements
of
the
Joint
Venture if
the
existing facts
warrant
such
an
unqualified opinion.
The
cost
of
each
audit shall be
borne
by
the
Joint
Venture.
11.
When
the
Contract
has
been
fully completed and
accepted and after
the
Joint
Venture has paid or
provided for
(i)
all costs incurred in
connection
with
the
performance
of
the
Contract
and
by
the
Joint Venture, Oi) all claims
not
fully covered by
insurance, (iii) reserves for all claims made or
threatened
against
the
Joint
Venture
and
(iv)
reserves for contingencies, if any,
that
the
parties
shall
determine
to be advisable, and after repaying
to
each
party
the
amount
advanced
by
it to
the
Joint Venture as working capital,
the
Proportionate
Share
of
each
party in
the
profits
then
remaining
shall be distributed
to
each
party.
The
amount
of
each reserve, or
the
remaining balance thereof,
shall be similarly distributed
when
the
same
no
longer
is
required.
12. Each party shall
have
an
equal voice in
the
manage-
ment
of
the
joint
Venture and
the
parties shall
agree from time
to
time
on
the
methods
and
man-
ner
of
performance
of
the
Contract
and
on
the
management
powers
and
duties
to
be
delegated
to
the
Managing Party,
to
persons specified in
Paragraph 4,
and
to
any
other
person
or
persons.
Subject
to
the
foregoing,
the
Managing
Party shall
be _
The
Managing Party shall be responsible for
the
direct
management
and
supervision
of
the
perfor-
mance
of
the
Contract.
At
the
completion
of
the
Contract
and
when
the
receipts
and
disbursements
of
the
joint
Venture
have
been
finally determined,
if
the
joint
Venture made a profit,
the
Joint
Venture
shall pay
the
Managing Party a
management
fee
in
an
amount
equal
to
ten
percent
(10%)
of
such prof-
it.
The
management
fee shall be
charged
to
the
Joint
Venture as a
direct
cost. If
the
Joint
Venture
does
not
make a profit,
the
Managing
Party shall
not
be
entitled
to
a
management
fee.
The
parties -
shall furnish from
their
respective organizations,
to
the
extent
available, all
of
the
personnel,
skill,
experience
and
knowledge
which
is
required
to
per-
form
the
Contract
efficiently
and
expeditiously.
13. If
either
party shall be adjudged
to
be bankrupt,
or
make
an
assignment for the benefit
of
its creditors,
or
if a receiver
is
appointed
to
take
over
all
or
sub-
stantially all
of
its assets,
then
(i)
the
Joint
Venture
automatically shall terminate, (ii)
such
party shall
have
no
further voice in
the
performance
of
the
Contract,
(iii) such party's
Proportionate
Share
of
the
Joint
Venture's profit
(determined
after
the
per-
formance of
the
Contract
has
been
completed
and
accepted) shall be limited
to
such party's
Proportionate
Share
of
the
proportion
of
such profit
which
the
joint
Venture's direct
and
overhead costs
paid or accrued to
the
end
of
the
month
during
which
the
joint
Venture
terminates
pursuant to this
Paragraph
13
bears to
the
Joint
Venture's direct
and
overhead
costs paid or occurred
to
the
completion
and
acceptance
of
the
Contract,
but
such party's
Proportionate
Share
of
any losses
of
the
Joint
Venture shall remain
as
specified
in
Paragraph 5
(the
books
of
account
maintained
by
the
Joint
Venture
shall be conclusive for all purposes
hereun-
der),
and
(iv)
the
other
party shall do all things
10
