Distributions Clause
(Preferred Return and Promote) (Joint Venture Agreement)

Summary

This distributions clause may be included in a limited liability company operating agreement (also referred to as a joint venture agreement). This clause includes practical guidance and drafting notes. For a full listing of key content covering real estate joint ventures (90/10 ownership split), see Real Estate Joint Venture Resource Kit (90/10 Real Estate Joint Venture). This clause should be used when one member has negotiated the right to receive a preferred return on a preferred capital contribution and the other member has negotiated the right to receive a promote once the preferred capital contribution is repaid (including the payment of the applicable preferred return) and the investor member has exceed a specified rate of return on all other capital contributions. The capitalized terms and section references used in this clause should be conformed to the relevant joint venture operating agreement. In this clause, the term “Managing Member” is what is commonly referred to as the operating member of the joint venture and the “Investor Member” is what is commonly referred to as the capital member of the joint venture. See Limited Liability Company Operating Agreement (Real Estate Joint Venture) for additional clauses and definitions to be contained in a joint venture agreement.