LSI 2010 Real Estate Joint Ventures conference materials.pdf

David E. Myre, Jr. of Hillis Clark Martin & Peterson, P.S.
Jane Rakay Nelson of Lane Powell PC
Construction Loan, in form and substance reasonably satisfactory to the Construction Lender;
and
(ii) an environmental indemnity agreement for the benefit of the Construction
Lender, to which the Company will also be liable with respect to the ongoing environmental
condition of the Site and the Project, in form and substance reasonably satisfactory to the
Construction Lender.
6. Equity Closing Funding Conditions. Each Member’s obligation to complete its
initial capital contribution shall be subject to fulfillment (or waiver by Investor in its sole
discretion) of the following conditions precedent:
….
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Speaker 9a: 3
Speaker 10a: 3
9. Additional Capital Contributions: Construction Phase. During the Construction
Phase, if Investor reasonably determines that the proceeds of the initial capital contributions and
the Construction Loan will not be sufficient to complete development, design and construction of
the Project and achieve Project Stabilization, Investor may issue a mandatory capital call notice
for additional capital contributions that, in the aggregate, will eliminate such deficit. Such
notice, when issued, shall require each Member to complete an additional contribution of cash to
the Company, in proportion to its percentage interest, not later than thirty (30) days after such
notice. Such additional capital contribution proceeds shall be delivered to the Construction
Lender (if required by the Construction Loan documents) for disbursement or otherwise applied
by the Company as described in the capital call notice. If either Member fails to complete an
additional capital contribution when due, the other Member shall have the right to advance the
shortfall as a loan or substituted or additional capital contribution, with applicable interest rate or
preferred return, according to Investor’s customary operating agreement provisions.
Developer’s failure to make an additional capital contribution when due shall also be a
grounds for removal as Manager of the Company (as hereinafter described) and also constitute a
“Default” (as hereinafter defined). If Developer commits a breach of its duties as Manager of
the Company and such actions are the cause of a capital deficit during the Construction Phase,
Investor may (but is not obligated to) issue a mandatory capital call notice without waiving the
Company’s, or Investor’s, claims against Developer for such breach.
10. Additional Capital Contributions – Operating Phase. After Project Stabilization,
if each Member reasonably determines that, for the current year, revenues from operation of the
Project, plus any remaining proceeds from capital contributions and the Construction Loan or the
Term Loan (as hereinafter described), will be insufficient to meet all of the Company’s operating
expenses and debt service obligations and maintain a reasonable level of working capital in such
year, such Member may issue a capital call notice for voluntary additional capital contributions
in the aggregate amount of the projected capital deficit. If either Member chooses not to make
the requested additional capital contribution, the other Member may make a loan to the Company
(if then permitted by the terms of the Construction Loan or Term Loan), in the amount of the
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Law Seminars International | Real Estate Joint Ventures and Funds | 02/08/10 in Seattle, WA