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HomeMy WebLinkAbout2001-12-11; City Council; 16460; Special District Financing & Administration Agmt4B# 1/0!4b0 WTG. 12/l l/O1 DEPT. FIN CITY OF CARLSBAD -AGENDA BILL TITLE- -’ APPROVAL OF MASTER AGREEMENT FOR PROFESSIONAL SERVICES WITH SPECIAL DISTRICT FINANCING AND ADMINISTRATION DEPT. HD. ’ &-- CITY All-Y. CITY MGR. m RECOMMENDED ACTION: Adopt Resolution No. aOoO\ -365 approving the master agreement with Special District Financing and Administration (SDFA) for special district consulting services. ITEM EXPLANATION: The Finance Department contracts with several firms in its administration of special districts, which include special assessment districts such as Ranch0 Carrillo and Community Facilities Districts such as the citywide Community Facilities District #I. In addition, the City is currently working on requests from several developers to form additional special districts. In addition to the standard contracts, the Finance department often needs to contract with a consulting firm to assist in special analysis regarding the City’s current districts as well as in the review and analysis of requests from developers to form new districts. To reduce the time required to award professional services contracts, staff is requesting approval of an as-needed agreement for consulting services relative to special district formations and administration. The as-needed agreement can be used to secure services for a number of relatively small projects and thereby shorten the time required to complete these projects. Typical task order services would include special tax or assessment estimates, lien to value calculations, total tax rate review and analysis, and policy research. Individual project task orders that identify a specific scope of services and “not to exceed” fee estimates will be established by the Finance Director and authorized when services are required. The agreement will be for approximately 2 years terminating on December 31, 2003. Staff is recommending that the City contract with SDFA to provide these services. SDFA currently administers the citywide Community Facilities District #I. The City previously selected this firm based on the consultant’s expertise and past experience working with the City on similar projects. Staff believes the experience gained by the consultant over the past years under the existing contract has enhanced their ability to provide the professional services required by the City. In addition, this firm originally worked on some of the tasks that need to be updated so they have unique knowledge of the districts and City policies that will assist them in completing the tasks on schedule. This continuity is important to the successful completion of the tasks. For these reasons, the Purchasing Officer has waived the requirement for multiple proposals. FISCAL IMPACT: Consultant fees will be paid from the specific financing district requiring the services or from funds previously appropriated in the Finance Department budget, as applicable. The maximum amount payable for all tasks within any one-year period will not exceed $50,000. EXHIBITS: 1. Resolution No. dco\ -3b5 approving a master agreement with Special District Financing and Administration for professional consulting services. II EXHIBIT 1 1 II RESOLUTION NO. 2001-365 2 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, APPROVING A MASTER 3 AGREEMENT WITH SPECIAL DISTRICT FINANCING AND ADMINISTRATION FOR PROFESSIONAL CONSULTING SERVICES 4 5 WHEREAS, the City Council of the City of Carlsbad, California, has reviewed and 6 determined the need for the utilization of special district consultant services on an ongoing, as- 7 needed basis in order to maintain service levels; and 8 WHEREAS, the City Council recognizes the need to maintain the continuity of work in 9 progress by utilizing Special ‘District Financing and Administration to provide professional 10 services in the area of special district financing; and 11 WHEREAS, Special District Financing and Administration has the necessary skills to fulfil1 12 the City’s need for special district consulting services; and 13 WHEREAS, the Purchasing Officer has waived the requirement for multiple proposals 14 due to Special District Financing and Administration unique qualifications to provide the 15 professional services due to their previous experience with the City. 16 NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, 17 California, as follows: 18 1. That the above recitations are true and correct. 19 2. That an agreement with Special District Financing and Administration, a copy of 20 which is attached as Exhibit A, and made a part hereof, is hereby approved. 22 23 24 25 26 27 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3. That the Mayor is hereby authorized to execute the Agreement with Special District Financing and Administration. PASSED, APPROVED AND ADOPTED at a regular meeting of the Carlsbad City Council held on the 11th day of DECEMBER , 2001 by the following vote, to wit: AYES: Council Members Lewis, Kulchin, J?innila, Nygaard, Hall ;;;;;,: "';lne (-f&4x&; . i/l/(/LG u I' w"bb CLAUDE A. LEWIS, Mayor . ATTEST: &~&&‘m~~L LORRAINE M. WOOD, City Clerk 3 EXHIBIT A MASTER AGREEMENT FOR CONSULTING SERVICES SPECIAL DISTRICT FlNANClNG AND ADMINISTRATION THIS AGREEMENT is made and entered into as of the /Lf 7&f day of DECEMW~ , 2001, by and between the CITY OF CARLSBAD, a municipal corporation, hereinafter referred to as “City”, and Special District Financing and Administration, a limited liability company, hereinafter referred to as “Contractor.” RECITALS City requires the services of a Contractor to provide the necessary consulting services for analysis and assistance on issues pertaining to the formation and administration of special financing districts on a non-exclusive, project by-project basis; and Contractor possesses the necessary skills and qualifications to provide the services required by the City; NOW, THEREFORE, in consideration of these recitals and the mutual covenants contained herein, City and Contractor agree as follows: 1. CONTRACTOR’S OBLIGATIONS The Contractor’s obligations with respect to any project granted to .Contractor under this agreement shall be as specified in the Task Description for the project (see paragraph 4 below). While performing any services under this agreement, Contractor will exercise the reasonable professional care and skill customarily exercised by reputable members of Contractor’s profession practicing in the Metropolitan Southern California area, and will use reasonable diligence and best judgment while exercising its professional skill and expertise. -l- . l/09/0 1 q 2. CITY OBLIGATIONS The City’s obligations with respect to any project granted to Contractor under this agreement shall be as specified in the Task Description for the project (see paragraph 4 below). 3. PROGRESS AND COMPLETION The work for any project granted to Contractor under this contract will begin within ten (10) days after receipt of notification to proceed by the Finance Director or Assistant Finance Director and be completed within the time specified in the Task Description for the project (see paragraph 4 below). Extensions of time may be granted if requested by the Contractor and agreed to in writing by the Finance Director or Assistant Finance Director. The Finance Director or Assistant Finance Director will give allowance for documented and substantiated unforeseeable and unavoidable delays not caused by a lack of foresight on the part of the Contractor or delays caused by City inaction or other agencies’ lack of timely action. 4. FEES TO BE PAID TO CONTRACTOR The total fee payable for the services to be performed shall be determined on a project-by-project basis and shall be based on the Contractor’s Schedule of Rates attached hereto as Exhibit “I”. Prior to initiation of any project work by the Contractor, the City shall prepare a Project Task Description and Fee Allotment (the “Task , Description”), which upon signature by the Contractor, and for City, by the City Manager or an authorized designee, shall be considered a part of this Agreement. The Task Description shall include a detailed scope of services for the particular project being considered and a statement of the Contractor’s fee to complete the project in -2- 1/09/01 5 accordance with the specified scope of services. The Task Description shall also include a description of the method of payment and shall be based upon an hourly rate, percentage of project complete, completion of specific project tasks or a combination thereof. The cumulative total for all projects allowed pursuant to this Agreement shall not exceed fifty thousand dollars ($50,000) per fiscal year. 5. DURATION OF CONTRACT This Agreement shall extend from the date first written above to December 31, 2003. The City Manager may amend the Agreement to extend it for three (3) additional one (1) year periods or parts thereof in an amount not-to-exceed fifty thousand dollars ($50,000) per fiscal year, subject to the appropriation of funds by the City ,Council. Extensions shall be based upon a satisfactory review of Contractor’s performance, City needs and appropriation of funds by the City Council. The parties shall prepare a . written amendment indicating the effective date and length of the extended Agreement. 6. PAYMENT OF FEES Payment of approved items on the invoice shall be mailed to the Contractor within 30 days of receipt of the invoice. 7. FINAL SUBMISSIONS The final submissions for each project performed by the Contractor shall be specified in the Task Description for the project (see paragraph 4 above). a. CHANGES IN WORK If, in the course of a project or the contract, changes seem merited by the Contractor or the City, and informal consultations with the other party indicate that a change in the conditions of a project or the contract is warranted, the Contractor or the City may request a change in the project or the contract. Such changes shall be -3- 1/09/01 processed by the City in the following manner: a letter outlining the required changes shall be forwarded to the City by Contractor to inform them of the proposed changes along with a statement of estimated changes in charges or time schedule. A Standard Amendment to Agreement shall be prepared by the City and approved by the City according to the procedures described in Carlsbad Municipal Code Section 3.28.172. Such Amendment to Agreement shall not render ineffective or invalidate unaffected portions of the agreement. 9. COVENANTS AGAINST CONTINGENT FEES The Contractor warrants that their firm has not employed or retained any company or person, other than a bona fide employee working for the Contractor, to solicit or secure this agreement and that Contractor has not paid or agreed to pay any company or person, other than a bona fide employee, any fee, commission, percentage, brokerage fee, gift or any other consideration contingent upon, or resulting from, the award or making of this agreement. For breach or violation of this warranty, the City shall have the right to annul this agreement without liability, or, in its discretion, to deduct from the agreement price or consideration, or otherwise recover, the full amount of such fee, commission, percentage, brokerage fees, gift or contingent fee. 10. ANTI-DISCRIMINATION AND ANTI-HARASSMENT CLAUSE The Contractor shall comply with all applicable state and federal laws and regulations prohibiting discrimination and harassment. 11. TERMINATION OF CONTRACT In the event of the Contractor’s failure to prosecute, deliver or perform the work as provided for in this contract, the City Manager may terminate this contract for nonperformance by notifying the Contractor by certified mail of the termination of the -4- 1/09/01 .3 Contractor. The Contractor, thereupon, has five (5) working days to deliver said documents owned by the City and all work in progress to the Finance Director or Assistant Finance Director. The Finance Director shall make a determination of fact based upon the documents delivered to City of the percentage of work which the Contractor has performed which is usable and of worth to the City in having the contract completed. Based upon that finding as reported to the City Manager, the City Manager shall determine the final payment of the contract. This agreement may be terminated by either party upon tendering thirty (30) days written notice to the other party. In the event of such suspension or termination, upon request of the City, the Contractor shall assemble the work product and put same in order for proper filing and closing and deliver said product to City. In the event of termination, the Contractor shall be paid for work performed to the termination date; however, the total shall not exceed the lump sum fee payable under paragraph 4. The City Manager shall make the final determination as to the portions of tasks completed and the compensation to be made. 12. CLAIMS AND LAWSUITS The Contractor agrees that any contract claim submitted to the City must be asserted as part of the contract process as set forth in this agreement and not in anticipation of litigation or in conjunction with litigation. The Contractor acknowledges that if a false claim is submitted to the City, it may be considered fraud and the Contractor may be subject to criminal prosecution. The Contractor acknowledges that California Government Code sections 12650 et seq., the False Claims Act, provides for civil penalties where a person knowingly submits a false claim to a public entity. These -5- l/09/01 provisions include false claims made with deliberate ignorance of the false information or in reckless disregard of the truth or falsity of information. If the City of Carlsbad seeks to recover penalties pursuant to the False Claims Act, it is entitled to recover its litigation costs, including attorney’s fees. The Contractor acknowledges that the filing of a false claim may subject the Contractor to an administrative debarment proceeding wherein the Contractor may be prevented to act as a Contractor on any public work or improvement for a period of up to five years. The Contractor acknowledges debarment by another jurisdiction is grounds for the City of Carlsbad to disqualify the Contractor from the selection The provisions of Carlsbad Municipal Code sections 3.32.025, 3.32.026, 3.32.027 and 3.32.028 pertaining to false claims are incorporated’herein by . 13. JURISDICTION The Contractor agrees and hereby stipulates that the proper venue and jurisdiction for resolution of any disputes between the parties arising out of this agreement is San Diego County, California. 14. STATUS OF THE CONTRACTOR The Contractor shall perform the services provided for herein in Contractor’s own way as an independent Contractor and in pursuit of Contractor’s independent calling, and not as an employee of the City. Contractor shall be under control of the City only as to the result to be accomplished, but shall consult with the City as provided for in the request for proposal. The persons used by the Contractor to provide services under this agreement shall not be considered employees of the City for any purposes whatsoever. -6- 1 /09/o 1 The Contractor is an independent Contractor of the City. The payment made to the Contractor pursuant to the contract shall be the full and complete compensation to which the Contractor is entitled. The City shall not make any federal or state tax withholdings on behalf of the Contractor or its employees or subcontractors. The City shall not be required to pay any workers’ compensation insurance or unemployment contributions on behalf of the Contractor or its employees or subcontractors. The Contractor agrees to indemnify the City within 30 days for any tax, retirement contribution, social security, overtime payment, unemployment payment or workers’ compensation payment which the City may be required to make on behalf of the Contractor or any employee or subcontractor of the Contractor for work done under this agreement or such indemnification amount may be deducted by the City from any balance owing to the Contractor. The Contractor shall be aware of the requirements of the Immigration Reform and Control Act of 1986 and shall comply with those requirements, including, but not limited to, verifying the eligibility for employment of all agents, employees, subcontractors, and Consultants that are included in this agreement. 15. CONFORMITY TO LEGAL REQUIREMENTS The Contractor shall cause all work performed under this Agreement to conform to all applicable requirements of law: federal, state and local. Contractor shall provide all necessary supporting documents to be filed with any agencies whose approval is necessary. The City will provide copies of the approved plans to any other agencies. 16. OWNERSHIP OF DOCUMENTS All work product produced by Contractor or its agents, employees and -7- 1/09/o 1 subcontractors pursuant to this Agreement is the property of City. In the event this Agreement is terminated, all work product produced by Contractor or its agents, employees and subcontractors pursuant to this Agreement will be delivered at once to City. Contractor will have the right to make one (1) copy of the work product for Contractor’s records. 17. REPRODUCTION RIGHTS The Contractor agrees that all copyrights which arise from creation of the work pursuant to this contract shall be vested in City and hereby agrees to relinquish all claims to such copyrights in favor of City. ia. HOLD HARMLESS AGREEMENT Contractor agrees to indemnify and hold harmless the City of Carlsbad and its officers, officials, employees, and volunteers from and against all claims, damages, losses, and expenses including attorneys fees arising out of the performance of the work described herein caused by any willful misconduct, or negligent act, or omission of the contractor, any subcontractor, anyone directly or indirectly employed by any of them, or anyone for whose acts any of them may be liable. 19. ASSIGNMENT OF CONTRACT The Contractor shall not assign this contract or any part thereof or any monies due thereunder without the prior written consent of the City. 20. SUBCONTRACTING If the Contractor shall subcontract any of the work to be performed under this contract by the Contractor, Contractor shall be fully responsible to the City for the acts and omissions of Contractor’s subcontractor and of the persons either directly or -8- 1/09/01 indirectly employed by the subcontractor, as Contractor is for the acts and omissions of persons directly employed by Contractor. Nothing contained in this contract shall create any contractual relationship between any subcontractor of Contractor and the City. The Contractor shall bind every subcontractor and every subcontractor of a subcontractor by the terms of this contract applicable to Contractor’s work unless specifically noted to the contrary in the subcontract in question approved in writing by the City. 21. PROHIBITED INTEREST No official of the City who is authorized in such capacity on behalf of the City to negotiate, make, accept, or approve, or take part in negotiating, making, accepting, or approving of this agreement, shall become directly or indirectly interested personally in this contract or in any part thereof. No officer or employee of the City who is authorized in such capacity and on behalf of the City to exercise any executive, supervisory, or similar functions in connection with the performance of this contract shall become directly or indirectly interested personally in this contract or any part thereof. 22. VERBAL AGREEMENT OR CONVERSATION No verbal agreement or conversation with any officer, agent, or employee of the City, either before, during or after the execution of this contract, shall affect or modify any of the terms or obligations herein contained nor entitle the Contractor to any additional payment whatsoever under the terms of this contract. 23. SUCCESSORS OR ASSIGNS Subject to the provisions of Paragraph 18, “Hold Harmless Agreement,” all terms, conditions and provisions hereof shall inure to and shall bind each of the parties -9- 1 /09/01 hereto, and each of their respective heirs, executors, administrators, successors, and assigns. 24. EFFECTIVE DATE This agreement shall be effective on and from the day and year first written above. 25. CONFLICT OF INTEREST The City has determined, using the guidelines of the Political Reform Act and the . City’s conflict of interest code, that the Contractor will not be required to file a conflict of interest statement as a requirement of this agreement. However, Contractor hereby acknowledges that Contractor has the legal responsibility for complying with the Political Reform Act and nothing in this agreement releases Contractor from this responsibility. 26. INSURANCE The Contractor shall obtain and maintain for the duration of the contract and any and all amendments insurance against claims for injuries to persons or damage to property which may arise out of or in connection with performance of the work hereunder by the Contractor, his agents, representatives, employees or subcontractors. Said insurance shall be obtained from an insurance carrier admitted and authorized to do business in the State of California. The insurance carrier is required to have a current Best’s Key Rating of not less than “A-V and shall meet the City’s policy for insurance as stated in Resolution No. 91-403. -lO- 1/09/o 1 A. Coveraqes and Limits. Contractor shall maintain the types of coverages and minimum limits indicated herein, unless a lower amount is approved by the City Attorney or City Manager: 1. Comprehensive General Liability Insurance. $1 ,OOO,OOO combined single-limit per occurrence for bodily injury, personal injury and property damage. If the submitted policies contain aggregate limits, general aggregate limits shall apply separately to the work under this contract or the general aggregate shall be twice the required per occurrence limit. 2. Automobile Liability (if the use of an automobile is involved for Contractor’s work for the City). $1 ,OOO,OOO combined single-limit per accident for bodily . injury and property damage. 3. Workers’ Compensation and Employer’s Liability. Workers’ Compensation limits as required by the Labor Code of the State of California and Employer’s Liability limits of $1 ,OOO,OOO per accident for bodily injury. 4. Professional Liability. Errors and omissions liability appropriate to the contractor’s profession with limits of not less than $1 ,OOO,OOO per claim. Coverage shall be maintained for a period of five years following the date of completion of the work. -ll- m l/09/01 Ii B. Additional Provisions. Contractor shall ensure that the policies of insurance required under this agreement contain, or are endorsed to contain, the following provisions: 1. The City shall be named as an additional insured on all policies excluding Workers’ Compensation and Professional Liability. 2. The Contractor shall furnish certificates of insurance to the City before commencement of work. 3. The Contractor shall obtain occurrence coverage, excluding Professional Liability which shall be written as claims-made coverage. 4. This insurance shall be in force during the life of the agreement and any extension thereof and shall not be canceled without 30 days prior written notice to the City sent by certified mail. 5. If the Contractor fails to maintain any of the insurance coverages required herein, then the City will have the option to declare the Contractor in breach, or may purchase replacement insurance or pay the premiums that are due on existing policies in order that the required coverages may be maintained. The Contractor is responsible for any payments made by the City to obtain or maintain such insurance and the City may collect the same from the Contractor or deduct the amount paid from any sums due the Contractor under this agreement. -12- 1 /09/01 27. NOTICES The name of the persons who are authorized to give written notices or to receive written notice on behalf of the City and on behalf of the Contractor in connection with the foregoing are as follows: For City: For Contractor: Title Name Address Finance Director Lisa Hildabrand 1635 Faraday Avenue Carlsbad, CA 92008 Title Name Address Managing Partner Barbara Hale-Carter 333 South Juniper, Suite 208 Escondido, CA 92025 28. BUSINESS LICENSE Contractor shall obtain and maintain a City of Carlsbad Business License for the duration of the contract. 29. ENTIRE AGREEMENT This agreement, together with any other written document referred to or contemplated herein, along with the purchase order for this contract and its provisions, embody the entire agreement and understanding between the parties relating to the subject matter hereof. In case of conflict, the terms of the agreement supersede the purchase order. Neither this agreement nor any provision hereof may be amended, -13- l/09/01 ld modified, waived or discharged except by an instrument in writing executed by the party against which enforcement of such amendment, waiver or discharge is sought. Executed by Contractor this 1 A- day of \\1 w--MbCT , 2001. CONTRACTOR: By: --- (print name/t’ ) -~~~~~~~~~~-~ .--- (Proper notarial acknowledgment of execution by Contractor must be attached. If a corporation, document must be signed by one from each column: Column A Chairman, president or vice-president Column B Secretary, assistant secretary, CFO or Assistant treasurer Otherwise, the corporation must attach a resolution certified by the secretary or assistant secretary under corporate seal empowering the officer(s) signing to bind the corporation.) CITY OF CARLSBAD, a municipal corporation of the State of California APPROVED AS TO FORM: RONALD R. BALL, City Attorney By: h /l. uww Deputy City Attorney -14 - l/09/01 Master Agreement For Consutting Services Between the City of Carlsbad and Special District Financing And Administration Contractor’s Schedule of Rates Principal $120.00 Programmer $95.00 Associate $75.00 Data Entry/Secretarial $40.00 Note: Hourly Rates are subject to annual increases in the Consumer Price Index. District will be notified in writing, in advance of work to be performed, of any increase that will be in effect for the ensuing fiscal year. -15- State of County af s+N~~1 qua On doJ* d?. %\ beforeme,nA.6cM@f%: Date Name and me of Otficer (e. ., ‘Jane Doa. N personally appeared EFf l+-x Name(s) of Signer(s) ersonally known to me to me on the basis of satisfactory evidence to be the person whose name($) is/ace subscribed to the within instrumen acknowledged to me that he&&hey executed the same in his/kerSCksir authorized capacity(iesJ, and that by his/he&t&r signature(s) on the instrument the person($), or the entity upon behalf of which the person(#) acted, executed the instrument. OPTIONAL Though the information below is not required by law, it may prove valuable IO persons relying on fhe document and could prevent ,. fraudulent removal and reaftachmenf of this form to another document. Description of Attached Document Title or Type of Document: so /+I flc!# Document Date: 1 Number of Pages: /s’ Signer(s) Other Than Named e Capacity(ies) Claimed by Signer(s) Signer’s Name: Signer’s Name: G Individual 0 Corporate Officer Title(s): w+ artner - G Limited meneral III Individual @ Corporate Officer Title(s): C; Partner - 3 Limited a General 0 Attorney-in-Fact 0 Trustee b Attorney-in-Fact 0 Trustee 0 Guardian or Conservator 0 Other: Signer is Representing: Top of thumb here i @ Guardian or Conservator 17 Other: Signer Is Representing: Top of thumb here 0 1996 Nabonal Notary Assocbatton * 6236 Remmet Ave.. P.O. Box 7164 * Canoga Park. CA91309-7164 Prod. No. 5907 Reorder: Call Toll-Free l-600-676-6627 19 State of &k, Fiie~; fi -;ja,,3-&c& County of 7 On .1\-2%- 01 before men. & oSti[ dctcl . I~~*w+I 6 b 1 ran/ Date personally appeared Name and Title cd Offd (e!g.. ‘Jane Doe. Nolar&blc’) c)-lc . CAf0-w Name(s) of Signer(s) oved to me on the basis of satisfactory evidence to be the person(g) whose name($ is/-subscribed to the within instrument and acknowledged to me that++e/she/tkey executed the same in l&/her/their authorized capacity@%), and that byJ?is/her/#Mr signature(b) on the instrument the person(g), or the entity upon behalf of which the person@) acted, executed the instrument. OPTIONAL Though the information below is not required by law, if may prove valuable lo persons relying on the document and could prevenf fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: Document Date: ,_ Number of Pages< / s’ Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer’s Name: Signer’s Name: CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT 2 “u individual Xd’ II f.1; 0 Corporate Officer M ri 2 $ General c: $ 0 Trustee- ti q Guardian or Conservator i Top of thumb here 6 0 Other: $ p g Signer Is Representing: E c: ?i ,v $ g Cl Individual 0 Corporate Officer Iitle(s): C Partner - 0 Limited El General Cl Attorney-in-Fact cl Trustee Cl Guardian or Consetvator @ Other: Signer Is Representing: m Top 01 thumb here 0 1996 Nalmal Notary Assoctatlon * 6236 Remmet Ave.. P.O. Box 7164 * Canoga Park, CA 91309-7164 Prod. No. 5907 Reorder: Call Toll-Free ?-600-676-6627 OPERATING AGREEMENT FOR SPECIAL DISTRICT FINANCING h ADMINISTRATION, LLC A LIMITED LIABILITY COMPANY This Operating Agreement is made effective as of this 1st day of January, 1997, by and among the parties listed on the signature pages hereof, with reference to the following facts: A. The parties have caused to be formed Special District Financing & Administration, LLC, (the "Company"), a limited liability company under the laws of the State of California. B. The parties desire to adopt and approve an operating agreement for the Company. NOW, THEREFORE, the parties (hereinafter sometimes collectively referred to as the "Members" or individually as the "Member") by this Agreement set forth the operating agreement for the Company under the laws of the State of California upon the terms and subject to the conditions of this Agreement. ARTICLE I DEFINITIONS When used in this Agreement, the following terms shall have the meanings set forth below (all terms used in this Agreement that are not defined in this Article I shall have the meanings set forth elsewhere in this Agreement): 1.1 "Act" shall mean the Beverly-Killea Limited Liability Company Act, codified in the California Corporations Code, Section 17100 et seq., as the same may be amended from time to time. 1.2 "Affiliate" shall mean any individual, partnership, corporation, trust or other entity or association, directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with the Member. 1.3 "Agreement" shall mean this Operating Agreement, as originally executed and as amended from time to time. 1.4 "Articles" shall mean the Articles of Organization for the Company originally filed with the California Secretary of State and as amended from time to time. 1.5 "Bankruptcy" shall mean: (a) the filing of an application by a Member for, or his or her consent to, the appointment of a trustee, receiver, or custodian of his or her other assets; (b) the entry of an order for relief with respect to a Member in proceedings under the United States Bankruptcy Code, as amended or superseded from time to time; (c) the making by a Member of a general assignment for the benefit of creditors; (d) the entry of an order, judgment, or decree by any court of competent jurisdiction appointing a trustee, receiver, or custodian of the assets of a Member unless the proceedings and the person appointed are dismissed within ninety (90) days: or (e) the failure by a Member generally to pay his or her debts as the debts become due within the meaning of Section 303(h) (1) of the United States Bankruptcy Code, as determined by the Bankruptcy Court, or the admission in writing of his or her inability to pay his or her debts as they become due. 1.6 "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, the provisions of succeeding law, and to the extent applicable, the Regulations. 1.7 VICompanyVl shall mean Special District Financing & Administration, LLC. 1.8 IlCorporations Code" shall mean the California Corporations Code, as amended from time to time, and the provisions of succeeding law. 1.9 "Dissolution Event" shall mean with respect to one or more of the following: death, insanity, withdrawal or bankruptcy unless the Members consent to continue the business of the Company pursuant to Section 8.1. 1.10 "DistributionI' shall refer to any money or other property transferred without consideration to Members with respect to their interests in the Company. 1.11 "Majority Interest" shall mean one or more Percentage Interests of Members which taken together exceed fifty percent (50%) of the aggregate of all Percentage Interests. 1.12 lVMemberVl shall mean each Person who (a) is an initial signatory to this Agreement, has been admitted to the Company as a Member in accordance with the Articles or this Agreement or an assignee who has become a Member in accordance with Article VII and (b) has not resigned, withdrawn, been expelled or, if other than an individual, dissolved. 1.13 "Membership Interest" shall mean a Member's entire interest in the Company. 1.14 "Percentage Interest" shall mean the percentage of a Member set forth opposite the name of such Member under the column "Member's Percentage Interest" in Exhibit A hereto, as such percentage may be adjusted from time to time pursuant to the terms of this Agreement. -2- 1.15 "Person" means an individual, partnership, trust, estatie, corporation or limited liability company. ARTICLE II ORGANIZATIONAL MATTERS 2.1 Formation. Pursuant to the Act, the Members have fonmed a California limited liability company under the laws of the State of California by causing the filing the Articles with #he California Secretary of State on January 3, 1997, File Number 101997003088. The rights and liabilities of the Members shall be determined pursuant to the Act and this Agreement. To the extant that the rights or obligations of any Member are different by reason of any provision of this Agreement then they would be in The absence of such provision, this Agreement shall, to the extent permitted by the Act, control. Neither the Managers nor any Membber shall take any action inconsistent with the express intent of Uhe parties to this Agreement. 2.2 Name. The name of the Company shall be "Special Distrsct Financing & Administration, LLC". The business of the Company rmay be conducted under that name or, upon compliance with applicable laws, any other name that the Managers deem appropriate or advisable. The Managers shall file any fictitious name certificates and similar filings, and any amendments thereto, that the Managers consider appropriate or advisable. 2.3 Term. The term of this Agreement shall be co-termirnus with the period of duration of the Company provided in Uhe Articles, unless extended or sooner terminated as hereinafuer provided. 2.4 Qffice and Agent. The Company shall continuously maintain an office and registered agent in the State of CaliforBnia as required by the Act. The principal office of the Company shall be as the Managers may determine. The Company also may have such offices, any where within and without the State of California, as the Manager from time to time may determine, or the business of Uzhe Company may require. The initial agent for service of process on the Company shall be Jeff Hamill, whose address is 16980 Via Tazon, Suite 190, San Diego, California 92127. The Manager may, from tiime to time, change the Company's agent for service of process. 2.5 Addresses of the Members and the Waaers. YIThe respective addresses of the Members and the Managers are set foltrth on Exhibit A. 2.6 Pumofanv, The purpose of the Company is to engage in any lawful activity for which a limited liability company -3- . may be organized under the Act. Notwithstanding the foregoing, the Company shall not engage in any business other than the following: (a) The business of providing financing and administrative consulting services to special districts and municipal agencies with such services directed towards facilitating the financing of certain public improvements and services. (b) Such other activities reasonably related to the foregoing purposes set forth in paragraph (a) above as may be necessary, advisable, or appropriate, in the reasonable opinion of the Manager to further the foregoing purposes. ARTICLE III CAPITAL CONTRIBUTIONB . . . 3.1 Initial Capital Contributions. Each Member shall have contributed all of their right, title and interest in and to the office equipment and furniture ("Personal Property") as described in Exhibit "B" attached hereto and all client accounts and account receivables relating to those clients listed on Exhibit "C" attached hereto. Notwithstanding anything herein to the contrary, should any or all of the Company's Members withdraw from the Company or upon dissolution of the Company, all assets donated to the Company by the Members, and any liabilities, payments or taxes associated with such assets, will become the personal property of such Member(s) interest. . . 3.2 Additional Capital Contributions, The Members shall contribute additional capital to the Company in such amounts and at such times as the Managers shall determine. The Members shall contribute such additional capital in proportion to their respective Percentage Interests, or in any other proportion as agreed upon by all Members. . . 3.3 Failure to Make Contributions. If a Member does not timely contribute capital when required, that Member shall be in default under this Agreement and the non-defaulting Members may elect to dissolve the Company under Article X. 3.4 . Enforcement Aag;Ulst Defaulting Member. A defaulting member shall indemnify and hold the Company and other Members harmless for any loss, cost, or expense, including reasonable attorneys' fees caused by the failure to make the additional Capital Contribution. 3.5 Member Iloans. If any Member, with the prior written consent of the Managers, makes any loan or loans to the Company or advances money on its behalf, the amount of any such loan shall not -4- entitle such lending Member to any increase in his or her share of the distributions of the .Company or subject him or her to any greater proportion of the losses which the Company may sustain. The amount of any such loan(s) or advance(s) shall be a debt due from the Company to such lending Member repayable upon such terms and conditions and bearing interest at such rates as shall be mutually agreed upon by the lending Member and the Manager and shall be in writing. If the Managers are the lender, any such loan shall bear such interest as shall be reasonable under the circumstances: but it is expressly understood that no Member shall be under any obligation whatsoever to make any such loan or advance to the Company. ARTICLE IV MEMBERS 4.1 -ited Liability. Except as required under the Act or as expressly set forth in this Agreement, no Member shall be personally liable for any debt, obligation, or liability of the Company, whether that liability or obligation arises in contract, tort, or otherwise, except as provided by Paragraph 3.1. 4.2 Members Are Not Agents. Pursuant to Section 5.1 and the Articles, the management of the Company is vested in the Manager. No Member, acting solely in the capacity of a Member, is an agent of the Company nor can any Member in such capacity bind nor execute any instrument on behalf of the Company. . . 4.3 Admission of AddItional Members. The Manager, with the written approval of all of the Members, may admit to the Company additional Members. Any additional Members shall obtain Membership Interests and will participate in the management, taxable income, taxable losses, and distributions of the Company on such terms as are determined by the Manager and approved by all the Members. . . 4.4 Transactions With The Comcanv. Subject to any limitations set forth in this Agreement and with the prior approval of the Manager after full disclosure of the Member's involvement, a Member may lend money to and transact other business with the Company. 4.5 Intentionallv Deleted, 4.6 Votina Riahts. Except as specifically provided herein, Members shall have no voting, approval or consent rights. 4.7 Meetings of Members, Date. . Time and Place of Meetinas of Members. . Meetings of Members may be held at such date, time -5 and place within or without the State of California as the Managers may fix from time to time. No annual or regular meetings of Members or the Managers are required. B. . Power to Call Meetlnas, Unless otherwise prescnibed by the Act or by the Articles, meetings of the Members may be called by the Managers, or upon written demand of any Member for the purpose of addressing any matters on which the Mennbers may vote. C. . alver of Notice or Consent. The actions taken at any meeting of Members however called and noticed,- and wherever held, have the same validity as if taken at a meeting duly held after regular call and notice, if a guomm is present either in person or by proxy, and if either beforre or after the meeting, each of the Members entitled to vote, who was not present in person or by proxy, signs a written waiver of notice or consents to the holding of the meetin-g or approves the minutes of the meeting. All such waiwers, consents or approvals shall be filed with the Company records or made a part of the meeting. Attendance of a person at a meeting shall constitute a waiver of notice of that meeting, except when the person objects, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened, and except that attendance at a meeting is mot a waiver of any right to object to the consideration of mathters not included in the notice of the meeting if that objectian is expressly made at the meeting. Neither the business to be transacted nor the purpose of any meeting of Members need be specified in any written waiver of notice. D. . . . Action Any action that may be taken at a meeting of Members may be Uaken without a meeting if a consent in writing setting forth the action so taken, is signed and delivered to the Company. All such consents shall be filed with the Manager or the secretary, if any, of the Company and shall be maintained in the Company records. Any Member giving a written consenU, or the Member's proxy holders may revoke the consent by a writing received by the Manager or secretary, if any, of the Company before written consents of the number of shares required to authorize the proposed action have been filed. E. . . . onic Particination bv Member at MeetnnqS, Members may participate in any Members' meeting through the use of any means of conference telephones or similar communications equipment as long as all Members participating can hear one another. A Member so participating is deemed to be present in person at the meeting. ARTICLE V MANAGEMENT AND CONTROL OF THE COMPANY 5.1 Manaaement of the Companv by Manager . A. . cluslve Management bv Manager. The business, property and affairs of the Company shall be managed exclusively by the Managers. Except for the situation in which the approval of the Members is expressly required by the Articles or this Agreement, the Managers shall have full, complete and exclusive authority, power, and discretion to manage and control the business, property and affairs of the Company, to make all decisions regarding those matters and to perform any and all other acts or activities customary or incident to the management of the Company's business, property and affairs. All decisions to be made by the Managers shall be made with the mutual joint consent of all Managers. B. The Manager is authorized to endorse checks, drafts, and other evidence of indebtedness made payable to the order of the Company, but only for the purpose of deposit into the Company's accounts, and may sign all checks, drafts, and other instruments obligating the Company to pay money, and may sign contracts and obligations on behalf of the company. 5.2. . Eli A. . . . er. Ter& and Ouallflcatlons. The business of the Company shall be managed by Barbara Hale-Carter and Jeff Hamill (collectively qRManagerll or "Managers"). Except as otherwise provided in this Agreement, all decisions concerning the management of the Company's business shall be made by the joint and mutual consent of both of the Managers. Each Manager shall serve until the Manager's resignation, retirement, death, or disability. A new Manager shall be appointed by all of the Members on the occurrence of any of such events. B. . slan.ation. Any Manager may resign at any time by giving written notice to the Members without prejudice to the rights, if any, of the Company under any contract to which the Manager is a party. 5.3 Powers A. Powers of Manaaer. Without limiting the generality of Section 5.1 but subject to the Section 5.3B, the Managers shall have all necessary powers to manage and carry out the purposes, business, property, and affairs of the Company, including, without limitation, the power to exercise on behalf and in the name of the Company all of the powers described in -7- Corporations Code Section 17003. Without limiting the generality of the powers described in Corporations Code Section 17003, the Members acknowledge that such powers include, without limitation, the power to: (i) Acquire, purchase, renovate, improve, alter, rebuild, demolish, replace, and own real property and any other property or assets that both the Managers determine is necessary or appropriate or in the interest of the business of the Company, and to acquire options for the purchase of any such property: (ii) Sell, exchange, lease, or otherwise dispose of personal property and other property and/or real property and assets owned by the Company, or any part thereof or any interest therein; (iii) Borrow money from any party (including the Manager and their Affiliates), issue evidences of indebtedness in connection therewith, refinance, increase the amount of, modify, amend, or change the terms of or extend the time for the payment of any indebtedness or obligation of the Company, and secure such indebtedness by mortgage, deed of trust, pledge, security interest, or other lien on Company assets, so long as all Managers provide written consent; (iv) Guarantee the payment of money or the performance of any contract or obligation of any Person so long as both Managers provide written consent; (v) Sue on, defend, or compromise any and all claims or liabilities in favor of or against the Company; submit any or all such claims or liabilities to arbitration; and confess a judgment against the Company in connection with any litigation in which the Company is involved): and (vi) Retain legal counsel, auditors, and other professionals in connection with the Company business and to pay therefor such remuneration as the Manager may determine. (vii) Employing and terminating third party employees, consultants or property managers in connection with the day-to-day operation of the Company business including the operating entity for the Company. B. Limitations on Powers of Managers. The Managers shall not have authority hereunder to cause the Company to -8- engage in the following transactions without first obtaining the vote or written consent of all of the Members: (i) An alteration of the primary purpose of the Company as set forth in Section 2.3. (ii) Any act which would make it impossible to carry on the ordinary business of the Company. (iii) The confession of a judgment against the Company. (iv) Admission of a new member. (v) An amendment to the Articles or this Agreement. (vi) Do any act in contravention of this Agreement. (vii) Possess Company property or assign Company's rights in property for other than a Company purpose. (viii) Any other transaction described specifically in this Agreement as requiring the vote, consent, or approval of all of the Members. 5.4 Members Have No Managerial Authority, The Members shall have no power to participate in the management of the Company except as expressly authorized by this Agreement or the Articles and except as expressly required by the Act. Unless expressly and duly authorized in writing to do so by a Manager or Managers, no Member shall have any power or authority to bind or act on behalf of the Company in any way, to pledge its credit, or to render it liable for any purpose. 5.5 Performance of Duties: T&&ilitv of Manaaer. Each Manager shall perform his or her managerial duties in good faith, in a manner he or she reasonably believes to be in the best interests of the Company and its Members, and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances. A Manager who so performs the duties of Manager shall not have any liability by reason of being or having been a Manager of the Company. A Manager shall not be liable to the Company or to any Member for any loss or damage sustained by the Company or any Member, unless the loss or damage shall have been the result of fraud, deceit, gross negligence, reckless or intentional misconduct, or a knowing violation of law by the Manager. . 5.6 Devotion of Tjw The Managers are not obligated to devote all of their time or business efforts to the affairs of the -9- Company. The Managers shall devote whatever time, effort and skiill as each deems appropriate for the operation of the Company. 5.7 mentstoaer. No Manager or Affiliate of' a Manager is entitled to remuneration for services rendered or good provided to the Company. 5.8 Acts of Manager a s Con . . elusive Evidence of AUthprJtV. -Y note, mortgage, evidence of indebtedness, contract, certificate, statement, conveyance, or other instrument in writing, and any assignment or endorsement thereof, executed or entered into between the Company and any other person, when signed by the Manager is not invalidated as to the Company by any lack of authority of the signing Manager in the absence of actual knowledge on the part of the other person that the signing Manager had no authority to execute the same. 5.9 Officers. A. ent of Officers. The Manager may appoznt officers at any time. The officers of Company, if deemed necessary by the Manager, may include a chairperson, president, vice president, secretary, and chief financfial officer. The officers shall serve at the pleasure of the Manager, subject to all rights, if any, of an officer undoer any contract of employment. Any individual may hold aany number of offices. No officer need be a resident of the Statte of California or citizen of the United States. B. P . . gal. V a Qfficers. Subject to the rights, if any, of an officer undoer a contract of employment, any officer may be removed, either with or without cause, by the Manager at any time. Any officer may resign at any time by giving written notice to the Manager. Any resignation shall take effect at the date of the receipt of that notice or at any later tiime specified in that notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Company under any contract to which the officer is a party. 5.10 -ted Jli&iIity. No person who is a Manager or officer or both a Manager and officer of the Company shall be personally liable under any judgment of a court, or in any other manner, ear any debt, obligation, or liability of the Company, whether tkmat liability or obligation arises in contract, tort, or otherwise, solely by reason of being a Manager or officer or both a Manaqller and officer of the Company. -lO- ARTICLE VI ALLOCATIONS OF TAXABLE INCOME AND TAXABLE LOSS AND DISTRIBUTIONS 6.1 Allocations of Tuble Income and Taxable Loss. Taxab1.e income losses shall be allocated to the Members in the sarrue proportion expenses and cash are allocated pursuant to Sections 6. 2 and 6.3 below. . 6.2 Qperating Overhead and Expenses . Notwithstanding anythinlg herein to the contrary, operating, overhead and office expenses shall be allocated as follows: 1. The fixed office expense of monthly rent anld utilities shall be divided equally between Barbara Hale:- Carter and Jeff Hamill. 2. Telephone charges shall be allocated on a us:e basis unless the charge can be billed to a clienti, contract or to an specific member. Facsimile charges wr other published or unpublished telephone lines shall hoe billed to the responsible user. The monthly access charges for all telephone and fax lines shall tie allocated equally to each Member. Notwithstanding the above, Jeff Hamill shall be responsible for all chargers in connection with the use of the toll-free 800 number. 3. Employees expenses including, but not limited to hourly wages, salary, taxes, worker's compensation arvd other expenses, shall be allocated to the Members on the basis of billable work performed (i.e., work product tha& is billable to either a client or a Member). No+n billable employee expenses will be allocated to Member-s on a prorata basis. 4. Mileage reimbursement to employees shall bre allocated to Members based on billable work activities performed by the employee. 5. Non-billable employee work, mileage, sick pay, holiday pay, camp time shall be shared equally among the Members. The allocation of employee costs associated with retirement, medical and life insurance and other benefits shall be determined and agreed upon by all mf the Members prior to any approving or adopting of sucsh programs. Notwithstanding the above, other mandated benefits shall be allocated equally among all Members, unless otherwise agreed to by all Members. 6. All other expenses shall be allocated in accordance with Percentage Interest. -ll- 6.3 Cash from Onerations. Cash from all operations of the Company after making payments for all expenses provided for in Section 6.2, shall be distributed to the Members at such time as determined, in the discretion of the Managers, in the following order of priority: A. First, to repay any Member loans made pursuant to Section 3.4, in proportion to the outstanding principal balances of such loans; B. Cash from work performed prior to the date of this Agreement from clients existing before the date of this Agreement shall be allocated 100% to either Jeff Hamill or Barbara Hale-Carter in accordance with the existing client list attached hereto as Exhibit tVC1l; C. Cash from new or recurring projects beginning after the date of this Agreement for clients existing before the date of this Agreement may be negotiated between Barbara Hale- Carter and Jeff Hamill as they may decide in their own discretion and taking into consideration their respective workloads, work knowledge or any other factors; D. Cash from clients obtained after the date of this Agreement shall be assigned on a percentage basis to the Company's Members as negotiated between the firm's Managers prior to signing a contract with the new client. E. The balance, if any, shall be distributed to the Members in proportion to their Percentage Interests. . . 6.4 Form of Distribution, A Member, regardless of the nature of the Member's Capital Contribution, has no right to demand and receive any distribution from the Company in any form other than money. No Member may be compelled to accept from tae Company a distribution of any asset in kind in lieu of a proportionate distribution of money being made to other Members. Except upon a dissolution and the winding up of the Company, no M-ember may be compelled to accept a distribution of any asset in kind. . . . 6.5 Return of Distributions . Except for distributions made in violation of the Act or this Agreement, no Member shall be obligated to return any distribution to the Company or pay the amount of any distribution for the account of the Company or to any creditor of the Company. -12- . ARTICLE VII TRANSFER AND ASSIGNMFNl' OF INTERESTS 7.1 mansfer and Assiament of Interests . No Member maay sell or transfer his Percentage Interest or any portion thereof without the written consent of all Members. 7.2 Further Restrictions on Transfer of Uerests-. In addition to other restrictions found in this Agreement, no Member shall transfer, assign, convey, sell, encumber or in azny way alienate all or any part of his or her Membership Interest: U-1 without registration under applicable federal and state securities laws, or if requested by the Manager, unless the Member deliwers an opinion of counsel satisfactory to the Manager that registration under such laws is not required; and (ii) if the Membership Interest to be transferred, assigned, sold or exchanged, when added to the total of all other Membership Interests old or exchanged in the preceding twelve (12) consecutive months prior thereto, would cause the termination of the Company under the Code, as determined by the Manager. . 7.3 l?conomic Interest, No transferee of any Percentage Interest shall be entitled to become a Member herein without the prior written consent of all Members. As a further condit=ion to the validity of any sale or transfer of any Percentage Interest to any person who is not already a Member herein, prior to the time of such transfer, such transferee must tender to the Company the full amount of all surcharges with respect to the interest he is acquiring and subscribe in writing to this Agreement, agreeing thereby to be bound by all of the terms and provisions heraof, an executed copy of which subscription must be delivered -to all Members. 7.4 Effectiveitted Transfers, Any permitted transfer of all or any portion of a Membership Interest sfnall be effective on the First day of the month following the da-e upon which the requirements of Sections 7.1, 7.2 and 7.3 have been met. The Managers shall provide the Members with written notice of such transfer as promptly as possible after the requirements of Sections 7.1, 7.2 and 7.3 have been met. Any transferee of a Membership Interest shall take subject to the restrictions on transfer iimposed by this Agreement. . 7.5 Bights of Legal Renresentatives. If a Member wha is an individual dies or is adjudged by a court of competent jurisdfliction to be incompetent to manage the Member's person or proper-y, the Member's executor, administrator, guardian, conservator, or- other legal representative may exercise all of the Member's rights for the purpose of settling the Member's estate or administering the Members' property, including any power the Member has und.er the Articles or this Agreement to give an assignee the right to become -13- state and local income tax or information returns for each Fiscal Year. C. The Manager shall cause an annual report to be sent to each of the Members not later than 120 days after the close of the Fiscal Year. That report shall contain a balance sheet as of the end of the Fiscal Year and an income statement and statement of changes in financial position for the Fiscal Year. Such financial statements shall be accompanied by the report thereon, if any, of the independent accountants engaged by the Company or, if there is no report, the certificate of a Manager that the financial statements were prepared without audit from the book and records of the Company. D. The Manager shall cause to be prepared at least annually, at Company expense, information necessary for the preparation of the Members' federal and state income tax returns. The Manager shall send or cause to be sent to each Member within 90 days after the end of each taxable year such information as is necessary to complete federal and sate income tax or information returns, and, if the Company has 35 or fewer Members, a copy of the company's federal, state, and local income tax or information returns for that year. E. The Manager shall cause to be filed at lest annually with the California Secretary of State the statement required under California Corporations Code 517060. 9.3 Tax Matters for the ComgaUlv Hued bv Manaaer . The Manager shall from time to time cause the Company to make such tax elections as they deem to be in the best interests of the Company and the Members. The Manager shall be designated as "Tax Matters Member" (as defined in Code Section 6231), to represent the Company (at the Company's expense) in connection with all examination of the Company's affairs by tax authorities, to expend the Company funds for professional services and costs associated therewith. . . . 9.4 Accountina Decis&on . s and Reliance on Others . All decisions as to accounting matters, except as otherwise specifically set forth herein, shall be made by the Manager. The Manager may rely upon the advice of its accountants as to whether such decisions are in accordance with accounting methods followed for federal income tax purposes. ARTICLE X DISSOLUTION AND WINDING UP . 10.1 Pissolution . The Company shall be dissolved, its assets shall be disposed of, occur of the following: and its affairs wound up on the first to -15- (a) Upon the happening of Dissolution Event specified in the Articles; (b) Upon the entry of a decree of judicial dissolution pursuant to Section 17351 of the Corporations Code: (c) Upon the vote of all Members: (d) The sale of all or substantially all of the assets of Company. 10.2 Certificate of Dissolution. As soon as possible following the occurrence of any of the events specified in Section 10.1, the Manager who have not wrongfully dissolved the Company or, if none, the Members, shall execute a Certificate of Dissolution in such form as shall be prescribed by the California Secretary of State and file the Certificate as required by the Act. 10.3 Wina Up. Upon the occurrence of any event specified in Section 10.2, the Company shall continue solely for the purpose of winding up its affairs in an orderly manner, liquidating its assets, and satisfying the claims of its creditors. The Manager who has not wrongfully dissolved the Company or, if none, the Members, shall be responsible for overseeing the winding up and liquidation of Company, shall take full account of the liabilities of Company and assets, shall either cause its assets to be sold or distributed, and if sold shall cause the proceeds therefrom, to the extent sufficient therefor, to be applied and distributed as provided in Section 10.4. The Persons winding up the affairs of the Company shall give written notice of the commencement of winding up by mail to all known creditors and claimants whose addresses appear on the records of the Company. The Manager or Members winding up the affairs of the Company shall be entitled to reasonable compensation for such services. . *.* . 10.4 Order of Paym~tiilities Uoon Dissolution . A. After determining that all the known debts and liabilities of the Company in the process of winding up, including, without limitation, debts and liabilities to Members who are creditors of the Company, have been paid or adequately provided for in accordance with Section 6.2, the remaining assets shall be distributed to the Members in the following order of priority. (i) All cash and accounts receivables shall be allocated and distributed in accordance with Section 6.3. -16- (ii) All assets listed on Exhibit "B" shall be allocated and distributed to the Member listed in Exhibit "B" who have contributed such asset. (iii) All assets acquired by Company after the date of this Agreement shall be distributed in proportion to their value at such time in accordance with their Percentage Interest unless a particular Member has acquired such asset solely for their benefit and in such event such Member shall receive such asset. B. The payment of a debt or liability, whether the whereabouts of the creditor is known or unknown, has been adequately provided for if the payment has been provided for by either of the following means: (i) Payment thereof has been assumed or guaranteed in good faith by one or more financially responsible persons or by the United States government or any agency thereof, and the provision, including the financial responsibility of the Person, was determined in good faith and with reasonable care by the Members or Manager to be adequate at the time of any distribution of the assets pursuant to this Section. (ii) The amount of the debt or liability has been deposited as provided in Section 2008 of the California Corporations Code. This Section 10.4(B) shall not prescribe exclusive means of making adequate provision for debts liabilities. 10.5 Certificate . of CancellatiQn . The Manager or Members filed the Certificate of Dissolution shall cause to be filed in the and who the office of, and on a form prescribed by, the California Secretary of State, a certificate of cancellation of the Articles upon the completion of the winding up of the affairs of the Company. . . 10.6 rJo Action for Dissolution Except as expressly permitted in this Agreement, a Member shall'not take any voluntary action that directly causes a Dissolution Event. The Members acknowledge that irreparable damage would be done to the good will and reputation of the Company if any Member should bring an action in court to dissolve the Company under circumstances where dissolution is not required by Section IO.1. -17- ARTICLE XI MISCELLANEOUS 11.1 Comolete Aureement. This Agreement and the Articles constitute the complete and exclusive statement of agreement armong the Members and Manager with respect to the subject matter herrein and therein and replace and supersede all prior written and oral agreements or statements by and among the Members and Manager: or any of them. No representation, statement, condition or warranty not contained in this Agreement or the Articles will be binding on the Members or Manager or have any force or effect whatsoever. To the extent that any provision of the Articles conflict with any provision of this Agreement, the Articles shall control. 11.2 Successors And Assiunees. This Agreement shall be binding upon and inure to the benefit of the parties hereto and of all officers, directors, agents, successors, assigns, heiirs, beneficiaries, executors, or administrators of either party. 11.3 Parties in Interest . Except as expressly provided in the Act, nothing in this Agreement shall confer any rights or remedies under or by reason of this Agreement on any Persons other than the Members and Manager and their respective successors and assigns nor shall anything in this Agreement relieve or discharge the obligation or liability of any third person to any party to this Agreement, nor shall any provision give any third person any rgght of subrogation or action over or against any party to this Agreement. . 11.4 Prows, Statutorv ReferenceS . All pronouns and all variations thereof shall be deemed to refer to the masculiine, feminine, or neuter, singular or plural, as the context in which they are used may require. Any reference to the Code, the Regulations, the Act, Corporations code or other statutes or thaws will include all amendments, modifications, or replacements of the specific sections and provisions concerned. 11.5 miouities. The parties agree that, should any provision of this Agreement be found to be ambiguous in any way, such ambiguity shall not be resolved by construing this Agreement. in favor of or against any party herein but rather by construing the terms of this Agreement fairly and reasonably in accordance with their generally accepted meaning. 11.6 References to this Aureement Numbered or lettered articles, sections and subsections herein contained refer to articles, sections and subsections of this agreement unless otherwise expressly stated. 11.7 Wits. All Exhibits attached to this Agreement are incorporated and shall be treated as if set forth herein. -1% . . . 11.8 Sever&.llity . If any provision of this Agreement or the application of such provision to any person or circumstance shall be held invalid, the remainder of this Agreement or the application of such provision to persons or circumstances other than those to which it is held invalid shall not be affected thereby. 11.9 Additional Documents and Acts. Each Member agrees to execute and deliver such additional documents and instruments and to perform such additional acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions, and conditions of this Agreement and the transactions contemplated hereby. 11.10 ndments. All amendments to this Agreement will be in writing and signed by all of the Members. . . 11.11 Reliance on Authoritv of Person SiunlnaAareement . If a Member is not a natural person, neither the Company nor any Member will (a) be required to determine the authority of the individual signing this Agreement to make any commitment or undertaking on behalf of such entity or to determine any fact or circumstance bearing upon the existence of the authority of such individual or W be responsible for the application or distribution of proceeds paid or credited to individuals signing this Agreement on behalf of such entity. 11.12 Fultiple Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. Il.13 Attorney Fees. In the event that any dispute between the Company and the Members or among the Members should result in litigation, arbitration or an out-of-court settlement, the prevailing party in such dispute shall be entitled to recover from the other party all reasonable fees, costs and expenses of enforcing any right of the prevailing party, including without limitation, reasonable attorneys' fees and expenses. 11.14 Time . All dates and times in this Agreement are of the essence. . 11.15 Remedies Cumulative The remedies under this Agreement are cumulative and shall not 'exclude any other remedies to which any person may be lawfully entitled. 11.16 Notices. Any notice to be given or other documents to be delivered by any party to the other or others hereunder may be delivered in person to an officer of any party, or may be deposited in the United States mail duly certified or registered, return receipt requested, with postage prepaid, or by Federal Express or -19- other similar overnight delivery service and addressed to the party for whom intended, to the address provided in Exhibit "A". Any party hereto may from time to time, by written notice to the other, designate a different address which shall be substituted for the one above specified. Unless otherwise specifically provided for herein, all notices, payments, demands or other communications given hereunder shall be in writing and shall be deemed to have been duly given and received (i) upon personal delivery or (ii) as of the third Business Day after mailing by United States registered or certified mail, return receipt requested, postage prepaid, addressed as set forth above, or (iii) the immediately succeeding Business Day after deposit with Federal Express or other equivalent overnight delivery system. 11.17 . itration. Should any action or out-of-court settlement proceedings be instituted between the parties of this Agreement or their representatives concerning any provision of this Agreement on the rights and duties of any person, the party or parties prevailing in such action or proceeding, whether by out-of- court settlement or in whose favor final judgment shall be entered, as the case may be, shall be entitled, in addition to such other relief as may be granted, to a reasonable sum for attorneys' fees in such action or proceeding. IN WITNESS WHEREOF, all of the Members of Special District Financing & Administration, LLC, a California limited liability company, have executed this Agreement, effective as of the date written above. Jeff'#%nill MEMBER Barb&&Hale-Ckkez MEMBER G:\WP\5013\001\OPERATE.NEW -2o- EXHIBIT A QF MENBERS C MANAGERS Barbara Hale-Carter, Member & Manager 16980 Via Tazon, Suite 190 San Diego, CA 92127 Jeff Hamill, Member t Manager 16980 Via Tazon, Suite 190 San Diego, CA 92127 Angela F. Hamill, Member 16980 Via Tazon, Suite 190 San Diego, CA 92127 50% 45% 5%