SUMMARY OF PRINCIPAL TERMS

Set forth below is a summary of certain significant provisions of the offering, the Limited Liability Company Agreement of the Fund (the “Limited Liability Company Agreement”) and other related agreements governing the Fund. The following summary does not purport to be complete and is subject to the detailed provisions of the Limited Liability Company Agreement and the Subscription Agreement. These documents should be read in their entirety by investors and are available upon request from the Manager, who is also available to respond to investors’ inquiries and requests for further information concerning the Fund.

The Fund AvenueWest Investment Fund I, LLC, a Delaware limited liability company (the “Fund”).

The Manager AvenueWest Management, LLC, a Colorado limited liability company, will serve as the manager of the Fund (“Manager”). The Manager is also the sole Class B Member of the Fund (the “Class B Member”).

Investment Strategy The Fund’s investment strategy is to acquire, and provide short-term rentals of, corporate housing properties (the “Investments”).

The Offering The Fund is seeking to raise not less than $1,000,000 and up to $10,000,000 in capital commitments (each a “Commitment”, and collectively, the “Commitments”) through the sale of Class A membership interests (“Class A Membership Interests”) to a limited number of eligible investors. Each eligible investor will become a Class A Member of the Fund (each a “Class A Member” and collectively the “Class A Members”) upon subscribing for the Class A Membership Interests. The Manager may increase or decrease the size of the offering in its sole discretion.

Minimum Class A Member

Commitment The minimum Commitment by a Class A Member will be $100,000, subject to reduction at the discretion of the Manager. The Manager also has discretion to reject the offer of a subscription for any reason.

Eligible Investors Commitments will only be accepted from investors who are “accredited investors” within the meaning of Rule 501(a) promulgated under Regulation D of the Securities Act of 1933, as amended (the “Securities Act”) pursuant to Regulation D, Rule 506(c) of the Securities Act. Section 201(a) of the Jumpstart our Business Startups Act (the “JOBS Act”) requires that issuers employing Rule 506(c) general solicitation must take “reasonable steps” to verify the accredited investor status of a prospective investor. This verification may be achieved by the engagement of a third party verification service or licensed attorney who in turn provides written confirmation that such service or person has taken reasonable steps to verify that the prospective investor is an accredited investor. The Fund has engaged Verify Investor (the “Verification Service”) to act on behalf of the Fund in making the objective determination as to whether the steps taken are “reasonable” in the context of the particular facts and circumstances of each prospective investor as it pertains to this offering.

Admission Period The “Admission Period” is the period commencing on the Initial Closing Date (as defined below) and ending on the earliest to occur of: (i) the first anniversary of the Initial Closing Date, or (ii) the date on which the Manager elects, in its discretion, to end the Admission Period, by providing written notice to the Class A Members. During the Admission Period, the Manager may admit Class A Members to the Fund in one or more closings.

Closings The Manager will hold the initial closing (“Initial Closing Date”) when the Fund receives Commitments from Class A Members equal to at least $1,000,000. The Manager may, in its discretion, admit additional Class A Members (each an “Additional Class A Member” and collectively the “Additional Class A Members”) to the Fund in subsequent closings (each date upon which an additional Class A Member is admitted to the Fund, a “Subsequent Closing Date”). Each Additional Class A Member will contribute an amount equal to such Additional Class A Member’s percentage interest in the Fund multiplied by the aggregate prior capital contributions. The Fund intends to conclude closings on the final Subsequent Closing Date, which will be no later than the date on which the Admission Period ends (“Final Closing Date”), after which no additional Class A Members will be admitted to the Fund. Proceeds from capital contributions made by Class A Members on closings subsequent to the Initial Closing Date will be distributed to or retained for the account of the Class A Members that participated in prior closings, pro rata based on their respective capital contributions prior to such Subsequent Closing Date. Such distributed amounts will be added to the Class A Members’ available commitments and may be required to be contributed to the Fund.

Capital Contributions From the time of the Initial Closing Date or Subsequent Closing Date, as applicable, until a period of 2 years after the Final Closing Date (the “Commitment Period”), each Class A Member will make capital contributions up to the amount of such Class A Member’s Commitment as and when called by the Manager upon a minimum of 15 days’ written notice (a “Contribution Notice”). The Contribution Notice will specify the date of the closing as well as appropriate payment instructions. After the expiration of the Commitment Period, the Class A Members may be required to make additional capital contributions for the limited purposes set out in Section 5.2(a) of the Limited Liability Company Agreement.

Term The Fund’s term will continue until the tenth anniversary of the Fund’s Final Closing Date, and may be extended for one 5-year period as approved by the Manager and Class A Members holding a majority in interest of the Class A Membership Interests (based on Commitments) in the Fund (excluding percentage interests held by any defaulting Class A Members) (the “Majority”).

Reinvestment Period The Fund will acquire Investments during the period commencing on the Initial Closing Date and ending on the close of the Reinvestment Period (as defined below), as the same may be extended. The Manager may retain and reinvest the proceeds of Investments without any obligation to make distributions to the Class A Members (other than tax distributions) for a period commencing on the Final Closing Date and ending on the fifth anniversary of the Final Closing Date (the “Reinvestment Period”). The Reinvestment Period can be extended for two one-year periods as approved by the Manager and the majority of Class A Members.

Investment Discretion The Manager may invest in, acquire or sell any Investment in its discretion.

Management Fees (a) From the Initial Closing Date until the end of the Commitment Period, the Fund will pay to the Manager, monthly in arrears, an annual investment management fee of 1% of the total Commitments; and         (b) From and after the expiration of the Commitment Period until liquidation of the Fund, the Fund will pay to the Manager, monthly in arrears, an annual investment management fee of 1% of the total capital contributions of the Members.

Class A Member Preferred Return…..Class A Members will receive distributions in an amount that will provide them with a non-compounded return of 6.5% per annum on their capital contributions (the “Preferred Return”). The Preferred Return will be paid out of, and to the extent of, the Fund’s cash available for distribution, as determined by the Manager in accordance with the terms of the Limited Liability Company Agreement.

Performance Fee After each Class A Member receives a return of its aggregate capital contributions and its Preferred Return, the Fund will pay to the Manager a performance fee equal to: (i) (A) 20% of the Preferred Return distributions, and (B) 20% of the amount distributed to the Class B Member pursuant to clause (A) hereof; (ii) 20% from all subsequent distributions of cash available for distribution until each Class A Member receives two times its aggregate capital contributions, and then (ii) 30% from all subsequent distributions of cash available for distribution.

Fund Expenses The Fund will pay (or reimburse the Manager) for all of the Fund’s operating expenses, including administrative costs related to the day to day operation of the Fund. Costs incurred by the Manager in connection with identifying, reviewing, acquiring, operating, monitoring and disposing of Investments will also be reimbursed by the Fund. See, Outline of Limited Liability Company Agreement, Fund Expenses and Organizational Expenses.

Class A Member Expenses Each Class A Member will be solely responsible for its own legal and tax counsel expenses and any out-of-pocket expenses incurred in connection with its admission to, or the maintenance of its investment in the Fund.

Manager Expenses The Manager will be responsible for all of its own normal and recurring routine operating expenses, such as compensation of its professional staff and the cost of office space, office equipment, communications, utilities and other such normal overhead expenses.

Incurrence of Indebtedness The Fund anticipates entering into borrowing arrangements (including arrangements with affiliates of the Manager) at the discretion of the Manager. Such borrowings shall not exceed twenty-five percent (50%) of the total Commitments. Such borrowings may also be to bridge timing differences between Fund investments and to pay operating expenses, investment expenses, organizational expenses, management fees and other Fund related expenses and fees subject to the receipt of capital contributions or proceeds from the operation or disposition of investments. Such indebtedness may result in an interest charge payable by the Fund. The Fund will attempt to obtain financing without leveraging any Investments.

Distributions The Fund intends to distribute available cash generated from Investments (including rental income) and from realizations and liquidations of Investments as soon as is reasonably practicable, taking into account the cash needs of the Fund. The Fund may, in the discretion of the Manager, after the divestiture or liquidation of an Investment, retain and reinvest such proceeds into additional Investments during the Reinvestment Period.

Other than tax distributions, all distributions will be made to the Members at the sole discretion of the Manager in the following order of priority:

  1. 100% to the Class A Members, pro rata, until each Class A Member has received distributions in an amount equal to its aggregate capital contributions;
  2. 100% to the Class A Members, pro rata, until each Class A Member has received its Preferred Return;
  3. To the Class B member until the Class B Member has received (A) 20% of the aggregate amounts previously distributed to the Class A Members as their Preferred Return; and (B) 20% of the amount distributed to the Class B Member pursuant to the preceding clause (A);
  4. 80% to the Class A Members and 20% to the Class B Member, until each Class A Member has received cumulative distributions in an amount equal to two times its aggregate capital contribution; and
  5. Thereafter, 70% to the Class A Members and 30% to the Class B Member.

Tax Distributions……………………..In addition, the Fund will, in the Manager’s discretion, make cash distributions to each Class A Member and to the Class B Member in an amount sufficient to pay all or a portion of federal, state and local income taxes attributable to such member’s ownership interest.

Allocation of Income, Expenses,

Gain and Loss Income, expenses, gains and losses of the Fund will be allocated to all Members in a manner consistent with the distribution of proceeds from Investments as described above, in a hypothetical liquidation scenario.

Conflicts of Interest Various potential and actual conflicts of interest may arise from the fact that (i) the Manager may retain, on behalf of the Fund, the services of various affiliates of the Manager; (ii) the Manager or its affiliates may buy or sell properties on behalf of the Fund from or to the Manager or its affiliates; (iii) personnel who provide services to the Manager and affiliates of the Manager may choose to personally invest in the Fund; and (iv) the Manager and its affiliates may engage in transactions in the same type of assets sought by the Fund and therefore, may compete with the Fund for investment opportunities.

Non-Contributing Class A Members Any Class A Member who has agreed to make a capital contribution and fails to make such contribution within five days of the date specified in the Contribution Notice (“Defaulting Class A Member”) may be subject to certain consequences at the discretion of the Manager.

The Limited Liability Company Agreement describes the various remedies available in the event of a Defaulting Class A Member. The remedies include, but are not limited to: (i) accruing interest on the amount of such default and any costs of collection associated therewith commencing on the date such capital contribution was due at the lesser of (A) the rate of 20% per annum and (B) the maximum rate permitted by applicable law and requiring reimbursement for any other liability or obligation incurred by the Fund in connection with such default, (ii) causing distributions that would otherwise be made to the Defaulting Class A Member to be credited against the default amount, (iii) requiring the Defaulting Class A Member to withdraw its Class A Membership Interest in the Fund and receive a distribution equal to the Defaulting Class A Member’s remaining positive capital account balance. A Defaulting Class A Member will not be able to vote on matters on which the Defaulting Class A Member would otherwise be entitled to vote.

Withdrawal Voluntary withdrawal by Class A Members from the Fund will not be permitted. In certain circumstances, however, a Class A Member may be required to withdraw if its continued participation causes the Fund to be subject to ERISA or other laws or could otherwise be expected to have a material adverse effect on the Fund.

Transfer of Class A Member

Interest The Class A Membership Interests are not transferable except in certain limited circumstances and are subject to restrictions on transfer and resale designed to ensure that the Fund will not be required to register under the Investment Company Act, to ensure compliance with the laws regulating the sale of unregistered securities and to satisfy certain tax law considerations. Generally, all proposed transfers will be subject to the consent of the Manager.

Termination Upon termination, the Fund shall be dissolved and wound-up. The Manager shall proceed with the orderly sale or liquidation of the assets of the Fund and shall apply and distribute the proceeds of such sale or liquidation in the following order of priority, unless otherwise required by law:

  • First, to pay all outstanding debts and liabilities of the Fund (including expenses of liquidation);
  • Second, to the establishment of any reserve which the Manager may deem necessary (such reserve may be paid over to an escrow agent); and
  • Third, to all Members in accordance with the order of priority of distributions described above. See Distributions.

Indemnification The Fund will indemnify, to the maximum extent permitted by law, the Members, the Manager, the affiliates of the Manager, and their respective directors, managers, officers, members, employees and others against liabilities, claims and related expenses, relating to or arising out of the Investments or other activities of the Fund, activities undertaken in connection with the Fund, or otherwise relating to or arising out of the Limited Liability Company Agreement.

Income Tax Consequences A prospective investor should consider carefully all of the potential tax consequences of an investment in the Fund and should consult with its tax advisor before subscribing for Class A Membership Interests.

U.S. Investors This offering is limited to U.S. investors only.

Risk Factors An investment in the Fund involves significant risk and should be considered only by sophisticated investors able to meet drawdown obligations and assume the risks of loss and illiquidity inherent with an investment in the Fund. See “Risk Factors.”

Financial Reporting Within 90 days after the end of each fiscal year, the Manager will provide the Members with IRS Schedule K-1 to Form 1065 and such other information with respect to the Fund as may be necessary for the preparation of each Member’s federal, state and local income tax returns for such fiscal year. Within 150 days after the end of each fiscal year, the Manager will provide the Members annual reviewed financial statements of the Fund, prepared in accordance with the Fund’s method of accounting applied on a consistent basis. The fiscal year end of the Fund will be December 31.

Amendments and Side Letters Except as required by law and subject to certain limitations in the Limited Liability Company Agreement, the Manager may amend the Limited Liability Company Agreement in its sole discretion. The consent of the Class A Members holding a majority in interest of the Class A Membership Interests (based on Commitments) is required to amend the Limited Liability Company Agreement to the extent such amendment materially affects such Class A Members’ rights thereunder.

The Fund or the Manager, without the consent, approval or vote of the Class A Members, may enter into side letters or other agreements with individual Class A Members which have the effect of establishing rights under, or altering or supplementing the terms of the Limited Liability Company Agreement with respect to such Class A Member, notwithstanding any other provision of the Limited Liability Company Agreement.

Legal Moye White LLP serves as legal counsel to the Fund and the Manager in connection with the organization and operation of the Fund.

 

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