LSI 2010 Real Estate Joint Ventures conference materials.pdf

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David E. Myre, Jr. of Hillis Clark Martin & Peterson, P.S. Jane Rakay Nelson of Lane Powell PC § 18-1101. Construction and application of chapter and limited liability company agreement. Speaker 9a: 8 Speaker 10a: 8 (a) The rule that statutes in derogation of the common law are to be strictly construed shall have no application to this chapter. (b) It is the policy of this chapter to give the maximum effect to the principle of freedom of contract and to the enforceability of limited liability company agreements. (c) To the extent that, at law or in equity, a member or manager or other person has duties (including fiduciary duties) to a limited liability company or to another member or manager or to another person that is a party to or is otherwise bound by a limited liability company agreement, the member's or manager's or other person's duties may be expanded or restricted or eliminated by provisions in the limited liability company agreement; provided, that the limited liability company agreement may not eliminate the implied contractual covenant of good faith and fair dealing. (d) Unless otherwise provided in a limited liability company agreement, a member or manager or other person shall not be liable to a limited liability company or to another member or manager or to another person that is a party to or is otherwise bound by a limited liability company agreement for breach of fiduciary duty for the member's or manager's or other person's good faith reliance on the provisions of the limited liability company agreement. (e) A limited liability company agreement may provide for the limitation or elimination of any and all liabilities for breach of contract and breach of duties (including fiduciary duties) of a member, manager or other person to a limited liability company or to another member or manager or to another person that is a party to or is otherwise bound by a limited liability company agreement; provided, that a limited liability company agreement may not limit or eliminate liability for any act or omission that constitutes a bad faith violation of the implied contractual covenant of good faith and fair dealing. (f) Unless the context otherwise requires, as used herein, the singular shall include the plural and the plural may refer to only the singular. The use of any gender shall be applicable to all genders. The captions contained herein are for purposes of convenience only and shall not control or affect the construction of this chapter. (g) Sections 9-406 and 9-408 of this title do not apply to any interest in a limited liability company, including all rights, powers and interests arising under a limited liability company agreement or this chapter. This provision prevails over §§ 9-406 and 9-408 of this title. (68 Del. Laws, c. 434, § 1; 69 Del. Laws, c. 260, § 35; 72 Del. Laws, c. 389, § 26; 73 Del. Laws, c. 221, § 1; 74 Del. Laws, c. 275, §§ 13, 14.) DWT 12263743v1 0000099-071219 Exhibit A – Page 2 Law Seminars International | Real Estate Joint Ventures and Funds | 02/08/10 in Seattle, WA
David E. Myre, Jr. of Hillis Clark Martin & Peterson, P.S. Jane Rakay Nelson of Lane Powell PC Developer-Investor Remarks re Confidential Term Sheet For Magnificent Tower LLC _____________________________________________________________ Additional Capital Contributions Developer: No need for this provision. Project has been carefully planned with very conservative cost estimates. General reserves and ample construction period contingencies in proposed construction budget. I have secured best possible general contractor, and JV can expect favorable GMC-type construction contract. I have secured construction loan commitment from best possible local bank. With proposed initial capital contributions, this project will be fully funded. No risk of funding shortfall or cost overruns. Therefore no real risk of capital shortfall, once initial capital contributions are made and Construction Loan closed. Investor: Not comfortable. At least during Construction Phase, must have mandatory additional capital calls if Project gets into trouble. Many uncertainties during this phase a) construction contract not yet negotiated b) loan documents not yet negotiated, lender due diligence continuing c) City permits not yet issued d) risk of Architect and General Contractor malfeasance or negligence e) substantial lease-up risk Developer: If we experience construction cost overruns, I can persuade Construction Lender to release reserves or contingencies, or increase loan amount. No need for this provision. It only gives Construction Lender a reason to say “no” to my request. Investor: Still not comfortable. Construction Lenders are very tight. Developer: Okay, let’s provide that the members in the JV will meet, examine problem and possible solutions to an unexpected funding shortfall, and, if no other solution, we will agree at that point to make further capital contributions per our respective Percentage Interests. Speaker 9b: 1 Speaker 10b: 1 DWT 12265643v1 0000099-071219 1 Law Seminars International | Real Estate Joint Ventures and Funds | 02/08/10 in Seattle, WA
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L A W S E M I N A R S I N T E R N A
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Monday, February 08, 2010 Real Esta
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John W. Hanley, Jr., Ste
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Table of Contents Topic Speaker # L
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Faculty for Real Estate Joint Ventu
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John W. Hanley, Jr. of Davis Wright
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Steven L. Wood of Century Pacific,
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