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HomeMy WebLinkAboutRP 06-02; Roosevelt Plaza; Redevelopment Permits (RP)4 ARLSBAD REDEVELOPMENT AGENUY PERMIT APPLICATION PLEASE CHECK ALL THAT APPLY: ADMINISTRATIVE PERMiT • • • • • • New construction of building(s) or addition(s) to the building footprint which have a building permit valuation which is equal to or less than $60,000. Interior or exterior improvements to existing stnjctures which result In an intensity of use. Provisional land uses, where a minor or major redevelopment permit is not required. Changes in permitted land uses which resutt in site changes, increased ADT, increased parking requirements, or resuit in compatibility issues/problems. Signs for existing businesses or facilities. Repair or maintenance activities which are not exempt from obtaining a permit. COASTAL DEVELOPMENT PERMIT MAJOR REDEVELOPMENT PERMIT ^ New construction of building(s) or addition(s) to the building footprint which have a building permit valuation which is greater than $150,000. Variances for projects within this category. • MINOR REDEVELOPMENT PERMIT • • New construction of buiiding(s) or addition(s) to the buiiding footprint which have a building permit valuation which is greater than $60,000 but less than $150,000. Variances for projects within this category. Variances for projects which would OthenA/ise be exempt or be eligible for an administrative pennit. MISCELLANEOUS REDEVELOPMENT PERMIT A-Frame Sign Sign Pennit Sign Program Sidewalk Tables/Chairs Outdoor Displays Other PROJECT TITLE: Briefdpcripgofproll _ ^ /VPrW^€r>iT5 ^:>^^^ a>^^M&(P Property Location: m\2cyi-cf?s-yyz e •Z(yi-o%'S--c>3 Street Address Owner's Name Address Telephone Number. Applicanfs Name. Address Telephone Number, n THE AREA BELOW IS TO BE COMPEETEDWQITY STAFF FEES FOR APPLICATION PROCESSING: (List type of fee and amount) RECEIPT OF APPLICATION Date Application Received Application Received by Permit Number Assigned RPD(P-OQ CITY OFCARLSBAD LAND USE REVIEW APPLICATION 1) APPLICATIONS APPLIED FOR: (CHECK BOXES) (FOR DEPARTMENT USE ONLY) (FOR DEPARTMENT USEONLY) • Administrative Permit - 2nd Dwelling Unit • Planned Industrial Permit • Administrative Variance • Planning Commission Determination • Coastal Development Permit • Precise Development Plan • Conditional Use Permit • Redevelopment Permit • Condominium Permit • Site Development Plan • Environmental impact Assessment • Speciai Use Permit • General Plan Amendment i • Specific Plan • Hillside Development Permit • Tontativo Parcel Map Obtain from Engineering Department • Local Coastal Plan Amendment • Tentative Tract Map • Master Plan • Variance • Non-Residential Planned Development • Zone Change • Planned Development Permit • List other applications not specified 2) ASSESSOR PARCEL NO(S).: 3) PROJECT NAME: 4) BRIEF DESCRIPTION OF PROJECT: MllSO OSS - fUl CC^A .^^ROCSS ^ FL^ 5) OWNER NAME (Print or Type) PATRICK K KIORKM 6) APPLICANT NAME (Print or Type) MAILING ADDRESS MAILING ADDRESS CITY AND STATE ZIP TELEPHONE CITY AND STATE ZIP TELEPHONE 1 CERTIFY THAT 1 AM THE LEGAL OWNER AND THAT ALL THE ABOVE INFORMATION IS TRUE AND CORRECT TO THE BEST OF MY KNOWLEDGE. 1 CERTIFY THAT 1 AM THE LEGAL REPRESENTATIVE OF THE OWNER AND THAT ALL THE ABOVE INFORMATION IS TRUE AND CORRECT TO THE BEST OF MY KNOWLEDGE. SIGNATURE DATE SIGNATURE DATE 7) BRIEF LEGAL DESCRIPTION /ATS 22^23^^ Z)F S^IC S2 . MA^^^ €ZS NOTE: A PROPOSED PROJECT REQUIRING l\/IULTIPLE APPUCATIONS BE FILED, MUST BE SUBMITTED PRIOR TO 3:30 P.M. A PROPOSED PROJECT REQUIRING ONLY ONE APPLICATION BE FILED, MUST BE SUBMITTEO PRIOR TO 4:00 P.M. Form 16 Rev. 05/03 PAGE 1 OF 2 8) LOCATION OF PROJECT: STREET ADDRESS ON THE BETWEEN (NORTH, SOUTH, EAST, WEST) SIDEOF I gOOSgySLT STK^BT' AND (NAME OF STREET) 9) LOCAL FACILITIES MANAGEMENT ZONE 10) PROPOSED NUMBER OF LOTS I 13) TYPE OF SUBDIVISION 16) PERCENTAGE OF PROPOSED PROJECT IN OPEN SPACE 19) GROSS SITE ACREAGE 22) EXISTING ZONING NIA 11) NUMBER OF EXISTING RESIDENTIAL UNITS 14) PROPOSED IND OFFICE/ SOUARE FOOTAGE 17) PROPOSED INCREASE IN ADT 20) EXISTING GENERAL PLAN 23) PROPOSED ZONING (TO (NAME OF STREET) OAK AVg (NAME OF STREET) 12) PROPOSED NUMBER OF RESIDENTIAL UNITS 15) PROPOSED COMM SQUARE FOOTAGE 18) PROPOSED SEWER USAGE IN EDU 21) PROPOSED GENERAL PLAN DESIGNATION 4 V 24) IN THE PROCESS OF REVIEWING THIS APPLICATION IT MAY BE NECESSARY FOR MEMBERS OF CITY STAFF, PLANNING COMMISSIONERS, DESIGN REVIEW BOARD MEMBERS OR CITY COUNCIL MEMBERS TO INSPECT AND ENTER THE PROPERTY THAT IS THE SUBJECT OF THIS APPLICATION. l/WE CONSENT TO ENTRY FOR THIS PURPOSE GNATURE FOR CITY USE ONLY FEE COMPUTATION APPLICATION TYPE TOTAL FEE REQUIRED FEE REQUIRED DATE STAMP APPLICATION RECEIVED RECEIVED BY: DATE FEE PAID RECEIPTNO. PAGE 2 OF 2 PROJECT DESCRIPTION/EXPLANATION PROJECT NAME: 1^0C^S>e.\/^=7Sr p^A^A APPLICANT NAME: I^ATRICK miCf/A^Z^ /VIGRMAAV Please describe fully the proposed project by application type. Include any details necessary to adequately explain the scope and/or operation of the proposed project. You may also Include any background information and supporting statements regarding the reasons for, or appropriateness of, the application. Use an a(ddendum sheet If necessary. Description/Explanation: A two story multi-use building with parking and three retail spaces ofthe first fioor plus four apartment on the second fioor. Existing buildings to be demolished. Project Description 10/96 Pagelofi Citv of Carlsbad Housing & Redevelopment Department DISCLOSURE STATEMENT Applicant's statement or disclosure of certain ownership interests on all applications which will require discretionary action on the part of the City Council or any appointed Board, Commission or Committee. The following information MUST be disclosed at the time of application submittal. Your project cannot be reviewed until this infomiation is completed. Please print. Note: Person is defined as "Any individual, firm, co-partnership, joint venture, association, social club, fratemai organization, corporation, estate, trust, receiver, syndicate, in this and any other county, city and county, city municipality, district or other political subdivision or any other group or combination acting as a unit*' Agents may sign this document: however, the legal name and entity of the applicant and property owner must be provided below. 1. APPLICANT (Not die applicant's agent) Provide the COMPLETE, LEGAL names and addresses of ALL persons having a financial interest in the application. If the applicant includes a corporation or partnership, include the names, title, addresses of all individuals owning more than 10% of the shares. IF NO INDIVIDUALS OWN MORE THAN 10% OF THE SHARES, PLEASE INDICATE NON- APPLICABLE (N/A) IN THE SPACE BELOW If a publiclv-owned corporation, include the names, titles, and addresses of the corporate officers. (A separate page may be attached if necessary.) Person PATRICK fA. N(^RrANKl Title hAAU K6I Klo KOVvBEK Address 2. OWNER (Not tiie owner's agent) Provide the COMPLETE. LEGAL names and addresses of ALL persons having any ownership interest in the property involved. Also, provide the nature of the legal ownership (i.e, partnership, tenants in common, non-profit, corporation, etc.). If the ownership includes a corporation or partnership, include the names, title, addresses of all individuals owning more than 10% of the shares. IF NO INDIVIDUALS OWN MORE THAN 10% OF THE SHARES, PLEASE INDICATE NON-APPLICABLE (N/A) IN THE SPACE BELOW. If a publiclv- owned corporation, include the names, titles, and addresses of the corporate officers. (A separate page may be attached if necessary.) Corp/Part_ Title Address Address Corp/Part_ Title Address 2965 Roosevelt St., Ste. B • Carlsbad, CA 92008-2389 • (760) 434-2810/2811 • FAX (760) 720-2037 ^ NON-PROFIT ORGANIZATION OR TRUST If any person identified pursuant to (1) or (2) above is a nonprofit organization or a trust, list the names and addresses of ANY person serving as an officer or director of the non-profit organization or as trustee pr beneficiary of the. Non Profit/Trust Titie Titie stee or beneficiary of the. / M/A Non Profit/Trust M //4 Address Address Have you had more than $250 worth of business transacted with any member of City staff. Boards, Commissions, Committees and/or Council within the past twelve (12) months? I I Yes ^ No If yes, please indicate person(s): NOTE: Attach additional sheets if necessary. I certify that all the above infonnation is true and correct to the best of my knowledge. Signature of owner/date Signature of applicant/date Print or type name of owner Print or type name of applicant Signature of owner/applicant's agent if applicable/date Print or type name of owner/applicant's agent H:ADMIN\COUNTER\DISCLOSURE STATEMENT 5/98 Page 2 Of 2 Woodland Group, Inc. 869 Grand Avenue Carlsbad, CA 92008 760-434-9818 Fax: 760-434-9827 2/1/2006 Roosevelt Ploza^ LLC 3135-3147 Roosevelt Street Carlsbad, CA 92008 Partner/Investment List as of January 2006 Partner Name Address Home Phone Business Phone Investment Amount financial Interset • Patrick M. Norman Deborah L. Norman 869 Grand Avenue,*Carlsbad, CA 92008 760-419-4001 7.60-434-9818 $100,000.00 28.57% Norma Lydia Morales 718 Church Ave., Chula Vista, CA 91910 619-425-2079 $25,000.00 7.14% Michael J. Clarke Debra P. Clarke ' 4807 Kdly Dr., Carlsbad, CA 92008 760.729.8837 $50,000.00 14.29% Michael A. McCarville Mia Y. McCarville 706 La Mirada Avenue, Encinitas, CA 92024 760-436-1785 • $50,000.00 14.29% Kirt D, Bacherio 7979 Caminito Dia #4, San Diego, CA 92122 858-625-8400 $50,000.00 14.29% Nanette S. Ure PO Box 425 Valley Center, Ca. 92082 ,$50,000.00 • 14.29% • Tony Bacherio 23213 Anza Avenue, Torrance, CA 90505 310-465-0553 . 310-465-0553 $25,000.00* 7.14% 350,000.00 100.00% Partner List address Page 1 OPERATING AGREEMENT For ROOSEVELT PLAZA, LLC THIS OPERATING AGREEMENT is entered into as of June 10, 2003 by and between Patrick M. Norman, a single man. Norma Lydia Morales, a single woman, Michael J. Clarke, a married man, Debra P. Clarke, a married woman, Michael A, McCarville, a married man, Mia Y. McCarville, a married woman, Kirt D. Bacherio, a single man and Nanette S. Ure, a single woman, (referred to individually as a Member and collectively as the Members). The Members have formed a limited liability company imder the Beverly-Killea Limited Liability Company Act. The Articles of Organization of the Company filed with the Califomia Secretary of State on June 05, 2003 re hereby adopted and approved by the Members. The Members enter into this Agreement to provide for the governance of the Company and the conduct of its business, and to specify their relative rights and obligations. NOW THEREFORE, tiie Members agree as follows: I. Definitions Capitalized terms used in this Agreement have the meanings specified in this Article or elsewhere in this Agreement and when not so defined shall have the meanings set forth in Califomia Corporations Code section 17001. (A) "Act" means the Beverly-Killea Limited Liability Company Act (Califomia Corporations Code sections 17000-17705), including amendments from time to time. (B) "Adjusted Capital Contribution" means, with respect to each Member, the excess of that Member's contribution to the capital of the Company over all prior distributions to the Member that have resulted from Capital Events. (C) "Adjusted Capital Account Deficit" means, with respect to any Member, the deficit balance, if any, in that Member's Capital Account as of the end of the relevant fiscal year of the Company, after the Member's Capital Account has been adjusted as follows: (1) The Member's Capital Account shall be increased by the amount of such Member's share of Company Minimum Gain and Member Non-recourse Debt Minimum Gain; and (2) The Member's Capital Account shall be decreased by the amount of the items described in Regulation section 1.704-l(b)(2)(ii)(d)(4)-(6). This definition of Adjusted Capital Account Deficit is intended to comply with the provisions of regulation section 1.704-1 (b)(2)(ii)(d) and shall be interpreted consistently with that regulation. (D) "Affiliate" of a Member means any Person directiy or indirectiy, through one or more intermediaries, controlling, controlled by, or under common control with the Member. The term "control" (including the terms "controlled by" and "under common control with) means the direct or indirect possession of the power to direct or cause the direction of the management and policies of a Person, whether through membership, ownership of voting securities, by contract, or otherwise. (E) "Agreement' means this operating agreement, as originally executed and amended fi'om time to time. (F) "Articles of Organization" is defined in Corporations Code section 17001(b) as applied to this Company. (G) "Assignee" means a person who has acquired a Member's Economic Interest in the Company, by way of a Transfer in accordance with the terms of this Agreement, but who has not become a Member. (H) "Assigning Member" means a Member who by means of a Transfer has transferred an Economic Interest in the Company to an Assignee. (I) "Available Cash" means all net revenues from the Company's operations, including net proceeds from all sales, refinancing, and other dispositions of Company property that the Manager, in the Manager's sole discretion, deems in excess of the amount reasonably necessary for the operating requirements of the Company, including debt reduction and Reserves. (J) "Book Depreciation" means, with respect to any item of Company property for a given fiscal year, a percentage of depreciation or other cost recovery deduction allowable for federal income tax purposes for this item during that fiscal year equal to the result (expressed as a percentage) obtained by dividing (1) the Gross Asset Value of that item at the beginning of the fiscal year (or the acquisition date during the fiscal year) by (2) the federal adjusted tax basis of the item at the begiiming of the fiscal year (or the acquisition date during the fiscal year). If the adjusted tax basis of an item is zero, the Manager may determine Book Depreciation if he or she does so in a reasonable and consistent manner. (K) "Capital Account" means, with respect to any Member, the account reflecting the capital interest of the Member in the Company, consisting of the Member's initial Capital Contributions maintained and adjusted in accordance with section 111(A) tiirough (F). (L) "Capital Contribution" means, with respect to any Member, tiie ainount of the money and the initial Gross Asset Value of any property (other than money) contributed to the Company (net of liabilities secured by such contributed property that the Company is considered to assume or take "subject to" under Intemal Revenue Code section 752) in consideration of a Percentage Interest held by that Member. A Capital Contribution shall not be deemed a loan. (M) "Capital Event" means a sale or disposition of any of the Company's capital assets, the receipt of insurance and other proceeds derived from tiie involuntary conversion of Company property, the receipt of proceeds from a refinancing of Company property, or a similar event with respect to Company property or assets. (N) "Code" or "IRC" means the Internal Revenue Code of 1986, as amended, and any successor provision. (O) "Company" means the company named in section II (B). (P) "Company Minimum Gain" has the meaning set forth in Regulation section 1.704-2(d)(l). (Q) "Confidential Information" is defined in section X. (R) "Corporations Code" means the Califomia Corporations Code. (S) "Economic Interest" means a Person's right to share in the income, gains, losses, deductions, credit, or similar items of, and to receive distributions from the Company, but does not include any other rights of a Member, including the right to vote or to participate in management. (T) "Encumber" means the act of creating or purporting to create an Encumbrance, whether or not perfected under appHcable law. (U) "Encumbrance" means, with respect to any Membership Interest or any element thereof, a mortgage, pledge, security interest, lien, proxy coupled witii an interest (other than as contemplated in this Agreement), option, or preferential right to pmchase. (V) "(jross Asset Value" means, with respect to any item of property of the Company, the item's adjusted basis for federal income tax purposes, except as follows: (1) The initial Gross Asset Value of any property contributed by a Member to the Company shall be the value of that property, as mutually agreed by the contributing Member and the Company; (2) The Gross Asset Value of all items of Company property shall be adjusted as of the following times: (a) the acquisition of an interest or additional interest in the Company by any new or existing Member in exchange for more than a de minimis Capital Contribution, (b) the distribution of money or other property (other than a de minimis amount) by the Company, and (c) the liquidation of the Company within the meaning of Regulation section 1.704-l(b)(2)(ii)(g); provided, however, that adjustments under clauses (a) and (b) above shall be made only if the Manager has determined that the Company shall revalue its assets in accordance with Regulation section 1 .704-1 (b)(2)(iv)(f); (3) The Gross Asset Value of any Company asset distributed to any Member shall be the value of such asset on the date of distribution, determined in accordance with section IV (A)(4), or if such distribution is not pursuant to that section, then in accordance with Regulation section 1 .737-l(b)(2); (4) The Gross Asset Value of Company assets shall be increased (or decreased) to reflea any adjustments to the adjusted tax basis of such assets under Intemal Revenue Code sections 732, '734, or 743, subject to the limitations imposed by Litemal Revenue Code section 755 and only to the extent that such adjustinents are taken into account in determining Capital Accounts under Regulation section 1.704-l(b)(2)(iv)(m); and (5) If the Gross Asset Value of an asset has been determined or adjusted under subparagraphs (1), (2), or (4) of this section, such Gross Asset Value shall thereafter be adjusted by the Book Depreciation, if any, taken into account with respect to such asset for purposes of computing Profits and Losses. (W) "Initial Members" means those Persons whose names are set forth in the first sentence of this Agreement. A reference to an Initial Member means any of the Initial Members. (X) "Involuntary Transfer" means, with respect to any Membership Interest or any element thereof, any Transfer or Encumbrance, whether by operation of law, under court order, foreclosure of a security interest, execution of a judgment or other legal process, or otherwise, including a purported transfer to or from a tmstee in bankmptcy, a receiver, or an assignee for the benefit of creditors. (Y) "Profits and Losses" are defined in section IV (A)(1). (Z) "Majority of Members" means a Member or Members whose Percentage Interests represent more than 50 percent of the Percentage Interests of all the Members. (AA) "Manager" or "Managers" means the Person(s) named as such in Article II (1), or the Persons who from time to lime succeed any Person as a Manager and who, in either case, are serving at the relevant time as a Manager. (BB) "Member" means an Initial Member or a Person who otherwise acquires a Membership Interest, as permitted under this Agreement, and who remains a Member. (CC) "Member Non-recourse Debt" is defined in Regulation section 1.704-2(b)(4). (DD) "Member Non-recourse Debt Minimum Gain" is an amount attributable to a Member Non- recourse Debt, equal to the Company Minimiun Gain that would result if such Member Non-recourse Debt were treated as a Non-recourse Liability, determined as set forth in Regulation section 1 .704- 2(i)(2)-(3). (EE) "Member Non-recourse Deductions" has the meaning set forth in Regulation section 1 .704-2(i)(2). For any fiscal year of the Company, the amount of Member Non-recourse Deductions with respect to a Member Non-recourse Debt equals the net increase during that fiscal year in Member Non- recourse Debt Minimum Gain attributable to such Member Non-recourse Debt during that fiscal year, reduced (but not below zero) by the amount of any distributions during such year to the Member bearing the economic risk of loss for such Member Non-recourse Debt if such distributions are both from the proceeds of such Member Non-recourse Debt and are allocable to an increase in Member Non-recourse Debt Minimum Gain attributable to such Member Non-recourse Debt, all as determined according to the provisions of Regulation section 1.704-2(i)(2). In determining Member Non-recourse Deductions, the ^0 ordering rules of Regulation section 1.704-2(j) shall be followed. (FF) "Membership Interest" means a Member's rights in the Company, collectively, including the Member's Economic Interest, any right to Vote or participate in management, and any right to information conceming the business and affairs of the Company. (GG) "Non-recourse Deductions" has the meaning set forth in Regulation section 1.704-2(c). The amount of Non-recourse Deductions for a Company fiscal year equals the net increase in the amoimt of Company Minimum Gain during that fiscal year, reduced (but not below zero) by the aggregate amount of any distributions during that fiscal year of proceeds of a Non-recourse Liability that are allocable to an increase in Company Minimum Gain. (HH) "Non-recourse Liability" is defined in Regulation section 1.752-1(a)(2). (II) "Notice" means a written notice required or permitted under this Agreement. A notice shall be deemed given or sent when deposited, as certified mail or for ovemight delivery, postage and fees prepaid, in the United States mails; when delivered to Federal E7q)ress, United Parcel Service, DHL World Wide Express, or Airbome Express, for ovemight delivery, charges prepaid or charged to the sender's account; when personally delivered to the recipient; when transmitted by electronic means, and such transmission is electronically confirmed as having been successfiilly transmitted; or when delivered to the home or office of a recipient in the care of a person whom the sender has reason to believe will promptiy communicate the notice to the recipient. (JJ) "Percent of Members" means the specified total of Percentage Interests of all the Members. (KK) "Percentage Interest" means a fraction, expressed as a percentage, the numerator of which is the total of a Member's Capital Account and the denominator of which is the total of all Capital Accounts of all Members. (LL) "Person" means an individual, partnership, limited partnership, tmst, estate, association, corporation, limited Uability company, or other entity, whether domestic or foreign. (MM) "Profits and Losses" are defined in section IV (A)(1). (NN) "Proxy" has the meaning set forth in the first paragraph of Corporations Code section 17001(ai). A Proxy may not be transmitted orally. (00) "Regulation" means the income tax regulations promulgated by the United States Department of the Treasury and published in the Federal Register for the purpose of interpreting and applying the provisions of the Code, as such regulations may be amended from time to time, including corresponding provisions of applicable successor regulations. (PP) "Reserves" means the aggregate of reserve accounts that the Manager, in the Manager's sole discretion, deems reasonably necessary to meet accmed or contingent liabilities of the Company, reasonably anticipated operating expenses, and working capital requirements. (QQ) "Successor in Interest" means an Assignee, a successor of a Person by merger or otherwise by operation of law, or a transferee of all or substantially all of the business or assets of a Person. (RR) "Tax Item" means each item of income, gain, loss, deduction, or credit of the Company. (SS) "Tax Matters Member" means such Person as may be designated in section VI (F)(1). (TT) "Transfer" means, with respect to a Membership Interest or any element of a Membership Interest, any sale, assignment, gift. Involuntary Transfer, Encumbrance, or other disposition of such a Membership Interest or any element of such Membership Interest, directly or indirectly, other than an Encumbrance that is expressly permitted under this Agreement. (UU) "Triggering Event" is defined in section VIII (D). (W) "Vote" means a written consent or approval, a ballot cast at a meeting, or a voice vote. (WW) "Voting Interest" means, with respect to a Member, the right to Vote or participate in management and any right to information conceming the business and affairs of the Company provided under the Beverly-Killea Limited Liability Company Act (Corporations Code sections 17000-17705), except as limited by the provisions of this Agreement. A Member's Voting Interest shall be directly proportional to that Member's Percentage Interest. n. Formation (A) Articles of Organization: The Articles of Organization were filed with the Califomia Secretary of State on June 05, 2003, File Number 200316210122. A copy ofthe Articles of Organization as filed is attached to this Agreement as Exhibit "A." (B) Name of Company: The name of tiie Company is ROOSEVELT PLAZA, LLC (C) Address of Company: The principal executive office of the Company shall be at 869 Grand Avenue, Carlsbad, Califomia 92008 or such other place or places as may be determined by the Manager from time to time. (D) Agent for Service of Process: The initial agent for service of process on the Company shall be Dennis E. Hicks, whose address is 2240 Gamet Ave, Suite B, San Diego, CA 92109. The Manager may from time to time change the Company's agent for service of process. (E) Business Purposes: The Company will be formed for the purposes of engaging in the business of real estate holding, development and reasonably related activities. 9^ (F) Limited Liability Company: The Members intend the Company to be a limited Hability company under the Beverly-Killea Limited Liability Company Act (Corporations Code sections 17000- 17705), and be classified as a partnership for federal and, to the maximum extent possible, state income taxes. Neither the Manager nor any Member shall take any action inconsistent with the express intent of the parties to this Agreement. (G) Term of Company's Existence: The term of existence of the Company shall commence on the effective date of filing of Articles of Organization with the Califomia Secretary of State and shaU continue until terminated by the provisions of this Agreement or as provided by law. (H) Initial Members: The names and addresses of the Initial Members are as set forth in Exhibit "B." (I) Initial Managers: The name and business address of the Manager shall be: Patrick M. Norman 869 Grand Avenue Carlsbad, CA 92008 III. Capital and Capital Contributions (A) Initial Capital Contributions: Each Member shall contribute to the capital of the Company as the Member's initial Capital Contributions the money and property specified in Exhibit "C." The initial Gross Asset Value of each item of contributed property (net of liabilities secured by such property) that the Company is considered to assume or to take "subject to" under Intemal Revenue Code section 752, is also set forth in Exhibit "D," together with the description and amount of these liabilities. If a Member fails to make the initial Capital Contributions specified in this section within 30 days after the effective date of this Agreement, that Member's entire Membership Interest shall terminate and that Member shall indemnify and hold the Company and the other Members harmless from any loss, cost, or expense (including reasonable attomey fees) caused by the failure to make the initial Capital Contributions. (B) Additional Capital Contributions: The Manager may determine from time to time that Capital Contributions in addition to the Members' initial Capital Contributions are needed to enable the Company to conduct its business. On making such a determination, the Manager shall give notice to all Members in writing at least 90 days before the date on which such additional Capital Contribution is due. The Notice shall set forth the amount of additional Capital Contribution needed, the purpose for which it is needed, and the date by which the Members shall contribute. Each Member shall be required to make an additional Capital Contribution in an amount that bears the same proportion to the total additional Capital Contribution that such Member's Capital Account balance bears to the total Capital Account balances of all Members. No Member may voluntarily make any additional Capital Contribution. (C) Remedies When Member Fails to Make Additional Capital Contributions: The maximum amount of additional Capital Contributions that a Member may be required to make is ten (10) percent of the amount of the Member's initial Capital Contributions under section III (A). No Member may voluntarily make any additional Capital Contribution. (1) Dilution to Make up Shortfall: If a Member fails to make an additional Capital Contribution required under section III (B) within 30 days after it is required to be made (a Defaulting Member), the Manager shall within five days after said failure notify each other Member (a Non- defaulting Member) in writing of the total amount of Defaulting Member Capital Contributions not made (the Additional Capital Shortfall) and shall specify a number of days within which each Non-defaulting Member may make an additional Capital Contribution, which shall not be less than an amount bearing the same ratio to the amount of Additional Capital Shortfall as the Non-defaulting Member's Capital Account balance bears to the total Capital Accounts of all Non-defaulting Members. If the total amount of Additional Capital Shortfall is not so contributed, the Manager may use any reasonable method to provide Members the opportunity to make additional Capital Contributions, until the Additional Capital Shortfall is as fiilly contributed as possible. Following tiie Non-defaulting Members' making of such additional Capital Contributions, each Member's Percentage Interest shall be adjusted to reflect the ratio that the Member's Capital Account bears to the total Capital Accounts of all of the Members. (2) Enforcement; Penalizing Defaulting Member: If a Member fails for 30 days to make an additional Capital Contribution required under section III (B) (a Defaulting Member): (a) Failure to Make Additional Capital Contributions: The Defaulting Member shall indemnify and hold the Company and the other Members hannless from any loss, cost, or expense, including reasonable attomey fees caused by the failure to make the additional Capital Contribution. Such additional Capital Contributions that are not made by a Defaulting Member are referred to as Additional Capital Shortfall. A Member who makes the respective required additional Capital Contributions (Non-defaulting Member) shall have the right, but not the obligation, to advance an amount bearing the same ratio to the total amount of the Additional Capital Shortfall as a Non-defaulting Member's Capital Account bears to the total Capital Accounts of all Non-defaulting Members. A Member advancing an additional Capital Contribution for a Defaulting Member under this section shall (a) be paid interest by the Defaulting Member on the amount of such advance at an annual rate, from the date of the advance until paid, of ten percent (10%) and (b) receive all distributions that the Defaulting Member would otherwise be entitied to receive under the provisions of this Agreement as though the advances by the Non-defaulting Member were Capital Contributions made by such Non-defaulting Member, which distributions shall be applied first to attomeys' fees, costs, and expenses, if any; then to accmed and unpaid interest; and, finally, in reduction of the principal amount of such advance. The Defaulting Member grants any Non-defaulting Members who make advances to the Company in accordance with this subparagraph a security interest in the Defaulting Member's Membership Interest to secure the Defaulting Member's obligations under this subparagraph. The Defaulting Member shall, within five days of written notice, execute any documents or instmments reasonably necessary to enable Non-defaulting Members who make advances hereunder to perfect the foregoing security interests. Each Member irrevocably appoints each other Member, and any one of them acting alone, as his, her, or its attomey-in- fact for the limited purpose of executing, on behalf of such Member, if such Member becomes a defaulting Member, any of the foregoing documents or instmments. (b) Foreclosure on Defaulting Member: If the Defaulting Member fails to pay all sums due and owing to any Members who make advances under subparagraph (a), for a period of 180 days after such advance, each Member who has made advances under subparagraph (a) may foreclose on any security interest granted under this section by causing the principal amount of such advance to be transferred from the Defaulting Member's Capital Account and added to the Capital Account of the Member who has made such advances, with a corresponding adjustment in that Member's and the Defaulting Member's Percentage Interests. Accmed and unpaid interest and other amounts owed to Members who have made advances hereunder (the Non-capital Costs) shall also be paid out of the Defaulting Member's Capital Account, and if the Capital Account is not sufficient to fiilly pay Non- capital Costs, the available balance shall be shared pro rata in accordance with the amounts of the Non- defaulting Members respective advances. The Defaulting Member's Percentage Interest shall be further adjusted (but not below zero) following application to Non-capital Costs. All Members hereby agree that the foregoing constitutes and wiU constitute a disposition of collateral in a commercially reasonable manner within the meaning of Commercial Code section 9504. Reduction of a Defaulting Member's Capital Account to satisfy such member's repayment obligations under this subparagraph (b) shall be deemed a retum of capital to that Member to the extent of such reduction. (c) Suspension of Rights: On the occurrence of, and for the duration o^ a Default by any Member, the Defaulting Member shall not have any right to vote the Defaulting Member's Membership Interest or otherwise participate in the management or control of the business and affairs of the Company and any and all provisions of this Agreement with respect to management and control shall be detennined without including the Membership Interest of the Defaulting Member. The foregoing provisions shall be in addition to the Company's remedies under Corporations Code section 17201(a)(2). On satisfaction of a Defaulting Member's obligations (whether by enforcement of a remedy or otherwise) under subparagraph (b), that Member shaU be restored to fiill membership status to the extent of any remaining Percentage Interest. (d) Capital Accounts: An individual Capital Account for each Member shall be maintained in accordance with Regulation section 1.704-1 (b)(2)(iv) and adjusted in accordance with the following provisions: (1) Member Contributions: A Member's Capital Account shall be increased by that Member's Capital Contributions, that Member's share of Profits, and any items in the nature of income or gain that are specially allocated to that Member under sections IV (A)(3). (2) Liabilities Assumed: A Member's Capital Account shall be increased by the amount of any Company liabilities assumed by that Member subject to and in accordance with Regulation section 1.704-1 (b)(2)(iv)(c). (3) Member Capital Account Decreases: A Member's Capital Accoimt shall be decreased by (a) the amount of cash distributed to that Member, (b) the Gross Asset Value of any property of the Company so distributed, net of liabilities secured by such distributed property that the distributee Member is considered to assume or to be subject to under Intemal Revenue Code section 752, and (c) the amount of any items in the nature of expenses or losses tiiat are specially allocated to that Member under section rV(A)(3)(b) through IV(A)(3)(c). (4) Share of Expenditures: A Member's Capital Account shall be reduced by the Member's share of any expenditures of the Company described in Intemal Revenue Code section 705(a)(2)(B) or which are treated as Intemal Revenue Code section 705(a)(2)(B) expenditures under Regulation section 1 .704-1 (b)(2)(iv)(i) (including syndication expenses and losses nondeductible under hitemal Revenue Code sections 267(a)(1) or 707(b)). (5) Transfer of Economic Interest: If any Economic Interest (or portion thereof) is transferred, the transferee of such Economic Interest or portion shall succeed to the transferor's Capital Account attributable to such interest or portion. (6) Promissory Notes: The principal amount of a promissory note that is not readily traded on an established securities market and that is contributed to the Company by the maker of the note shall not be included in the Capital Account of any Person until the Company makes a taxable disposition of the note or until (and to the extent) principal payments are made on the note, all in accordance with Regulation section 1.704-1 (b)(2)(iv)(d)(2). (7) Revaluations: Each Member's Capital Account shall be increased or decreased as necessary to reflect a revaluation of the Company's property assets in accordance with the requirements of Regulation section 1.704-l(b)(2)(iv)(f)-(g), including the special rules under Regulation section 1.701-1 (b)(4), as appHcable. (E) Withdrawals: A Member shall not be entitied to withdraw any part of the Members Capital Contribution or to receive any distributions, whether of money or property, from the Company except as provided elsewhere in this Agreement and in subparagraph (1), below. (1) Withdrawals from Capital Accounts: Members may withdraw from their Capital Accounts provided: (1) all of the Members agree to likewise reduce their Capital Account by the same percentage interest; (2) the reduction in the Member's Capital Accounts does not render the LLC unable to pay its bills as they become due in the usual course of business; (3) the reduction in the Member's Capital Accounts does not make the LLC's total assets less than the sum of its total liabilities (Corp. Code Section 17254); and (4) the Members do not believe in good faith that following the reduction of the Member's Capital Accounts the LLC will need additional Capital Contributions within the next four months. The Members further agree that if the Manager issues a request for additional Capital Contributions pursuant to Article III (B) within less than four (4) montiis after a withdrawal from the Capital Accounts, then the ninety day period set forth in III (B) shall be reduced to thirty-five (35) days. (F) Interest: No interest shall be paid on Capital Contributions or on the balance of a Member's Capital Account. (G) Limited Liability: A Member shall not be bound by, or be personally liable for, the 10 expenses, Habilities, or obligations of the Company except as otherwise provided in the Beverly-Killea Limited Liability Company Act (Corporations Code sections 17000-17705) or in this Agreement. (H) No Priority of Return: No Member shall have priority over any other Member with respect to the retum of a Capital Contribution or distributions or allocations of income, gain, losses, deductions, credits, or items thereof. IV. Allocations and Distributions (A) Allocation of Profits and Losses (1) Definition of Profits and Losses: As used in this Agreement, "Profits and Losses" means, for each fiscal year or other period specified in this Agreement, an amount equal to the Company's taxable income or loss for such year or period, determined in accordance with Intemal Revenue Code section 703(a), including all Tax Items required to be stated separately under Intemal Revenue Code section 703(a)(1), with the following adjustments: (a) Exempt Income: Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses shall be added to such taxable income or loss. (b) Expenditures: Any expenditures of the Company described in Intemal Revenue Code section 705(a)(2)(B) or treated as Intemal Revenue Code section 705(a)(2)(B) expenditures under Regulation section 1.704-l(b)(2)(iv)(i) and not otherwise taken into account in computing Profits or Losses shall be subtracted from such taxable income or shall increase such loss; and (c) Other: Notwithstanding the foregoing provisions of this section, any items of income, gain, loss, or deduction that are specially allocated shall not be taken into account in computing Profits or Losses under section IV (A)(2). (2) Priority of Allocations: The Profits and Losses of the Company and all items of Company income, gain, loss, deduction, or credit shall be allocated, for Company book purposes and for tax purposes, to a Member in accordance with the Member's Percentage Interest. No items of taxable loss or deduction shall be allocated to a Member if and to the extent that the allocation would result in that Member having an Adjusted Capital Account Deficit. (3) Special Allocations: (a) Definitions Relating to Special Allocations: The following definitions shall apply with respect to this section: (i) "Adjusted Capital Account Deficit" is defined in section 1(C). (ii) "Book Depreciation" is defined in section I (J). 11 Zi (iii) "Company Minimum Gain" has the meaning set forth in Regulation section 1.704-2(d)(l). (iv) "Member Non-recourse Debt" has the meaning set forth in Regulation section 1.704-2(b)(4). (v) "Member Non-recourse Debt Minimum Gain" is defined in section 1 (DD). (vi) "Member Non-recourse Deductions" is defined in section I (EE). (vii) "Non-recourse Deductions" is defined in section I (GG). (viii) "Non-recourse Liability" is defined in Regulation section 1.752- 1(a)(2). (b) Certain Special Allocations: The following special allocations shall be made in the following order: (i) Company Minimum Gain Charge back: If there is a net decrease in Company Minimum Gain during a fiscal year, each Member shall be allocated, before any other allocation under this section, items of Company income and gain for such fiscal year equal to such Member's share of the net decrease in Company Minimum Gain as determined in accordance with Regulation section 1 .704-2(g)(2). (ii) Member Non-recourse Debt Minimum Gain Charge back: If there is a net decrease in Member Non-recourse Debt Minimum Gain during a fiscal year, any Member with a share of the Member Non-recourse Debt Minimum Gain attributable to such Member Non- recourse Debt as of the beginning of such fiscal year shall be allocated items of Company income and gain for such year (and, if necessary, subsequent years) equal to that Member's share of the net decrease in Member Non-recourse Debt Minimum Gain. A Member's share of net decrease in Member Non- recourse Debt Minimum Gain shall be determined under Regulation ion section 1.704-2(g)(2). A Member shall not be subject to the foregoing charge back to the extent permitted under Regulation section 1.704- 2(i)(4). (iii) Qualified Income Offset: If any Member unexpectedly receives an adjustment, allocation, or distribution described in Regulation section 1.704-l(b)(2)(ii)(d)(4), (5), or (6), such Member shall be allocated items of Company income and gain (consisting of a prorata portion of each item of Company income, including gross income and gain for such fiscal year) in an amount and manner sufficient to eliminate the Adjusted Capital Accoimt Deficit created by such adjustment, allocation, or distribution. (c) Other Special Allocations: (i) Allocation of Member Non-recourse Deductions: Member Non-recourse Deductions for any fiscal year of the Company shall be allocated to the Members in the same proportion as Profits are allocated under section IV (A)(2) provided that any Member Non-recourse 12 Deductions for any fiscal year or other period shall be allocated to the Member who bears (or is deemed to bear) the economic risk of loss witii respect to the Member Non-recourse Debt to which such Member Non-recourse Deductions are attributable in accordance with Regulation section 1.704-2(i)(2). (ii) Allocation of Profits From Capital Events: In any fiscal year of the Company, Profits in excess of Losses of the Company resulting from a Capital Event in that Fiscal Year shall be allocated to the Members in the following order: (A) Excess Adjusted Capital Contributions: To Members whose Adjusted Capital Contributions are in excess of their Capital Accounts, in proportion to those excesses, until all of those excesses have been eliminated. "Adjusted Capital Contributions" means, with respect to each Member, the excess of such Member's contribution to the capital of the Company over all prior distributions to the Member that have resulted from Capital Events. (B) Pro Rata: Among the Members in the proportion that the Capital Contribution of each Member bears to the total Capital Contributions of all Members. (iii) Allocation of Losses From Capital Events: In any fiscal year of the Company, Losses in excess of Profits of the Company, resulting from a Capital Event in that fiscal year, shall be allocated to the Members with positive Capital Accounts, in proportion to their positive Capital Account balances, until no Member has a positive Capital Account. For this purpose, Capital Accounts shall be reduced by the adjustments set forth in Regulation section 1.704-l(b)(2)(ii)(d)(4), (5), and (6). (iv) Allocations Respecting Asset Distributions: Any unrealized appreciation or unreaHzed depreciation in the values of Company property distributed in kind to Members shall be deemed to be Profits or Losses realized by the Company immediately prior to the distribution of the property and such Profits or Losses shall be allocated to the Capital Accounts in the same proportions as Profits are allocated under section FV (A)(2). Any property so distributed shall be treated as a distribution to the Members to the extent of the Gross Asset Value of the property, less the amount of any liability secured by and related to the property. Nothing contained in this Agreement is intended to treat or cause such distributions to be treated as sales for value. For the purposes of this section, "unrealized appreciation" or "unrealized depreciation" shall mean the difference between the Gross Asset Value of such property and the Company's federal adjusted tax basis for such property. (v) Allocations Respecting Contributed Property: Any item of income, gain, loss, or deduction with respect to any property (other than cash) that has been contributed by a Member to the capital of the Company, or that has been revalued under the provisions of section III (D)(7), and that is required or permitted to be aUocated to such Member for income tax purposes under Intemal Revenue Code section 704(c) in order to take into account the variation between the tax basis of such property and its Gross Asset Value at the time of its contribution, shall be allocated solely for income tax purposes in the manner required or permitted under Intemal Revenue Code section 704(c) using the "traditional" method described in Regulation section 1.704-3(b), except that any other method allowable under applicable Regulations may be used for any contribution of property with respect to 13 which there is agreement among the contributing Member and the Manager (and, if the Manager and the contributing Member are Affiliates, a Majority of Members who are not Affiliates of the Manager). (vi) Allocations Between Assignor and Assignee: In the case of a Transfer of an Economic Interest during any fiscal year of the Company, the Assigning Member and Assignee shall each be allocated Profits or Losses based on the number of days each held the Economic Interest during that fiscal year. If the Assigning Member and Assignee agree to a different proration and advise the Manager of the agreed proration before the date of the Transfer, Profits or Losses from a Capital Event during that fiscal year shall be allocated to the holder of the Interest on the day such Capital Event occurred. If an Assignee makes a subsequent Assignment, said Assignee shall be considered an "Assigning Member" with respect to the subsequent Assignee for purposes of the aforesaid allocations. (4) Revaluation of Company Assets: a) Adjustment of Gross Asset Value: The Gross Asset Value of all Company property shall be adjusted as of the following times: (i) Acquisition: The acquisition of an interest or additional interest in the Company by any new or existing Member in exchange for more than a de minims Capital contribution; (ii) Distribution: The distribution of money or other property (other than a de minimis amount) by the Company to a Member as consideration for an Economic Interest in the Company; and (iii) Liquidation: The Hquidation of the Company within the meaning of Regulation section 1.704-l(b)(2)(ii)(g). Adjustments under subparagraphs (i) and (ii) shall be made only in the event of a revaluation of Company property under section III (D)(7) in accordance with Regulation section 1.704-1 (b)(2)(iv)(f). (b) Tax Basis Adjustment: The Gross Asset Value of Company property shall be increased or decreased to reflect adjustments to the adjusted tax basis of such property under Intemal Revenue Code section 732, 733, or 743, subject to the limitations imposed by Intemal Revenue Code section 755 and Regulation section 1 .704-l(b)(2)(iv)(m). (c) Book Depreciation Adjustment: If the Gross Asset Value of an item of property has been determined or adjusted under subparagraphs (a) or (b) of this section, such Gross Asset Value shall be adjusted by the Book Depreciation, if any, taken into account with respect to such property for purposes of computing Profits and Losses. (5) Compliance With Law and Regulations: It is the intent of the Members that each Member's allocated share of Company Tax Items be detemiined in accordance with this Agreement to the fullest extent permitted by Intemal Revenue Code sections 704(b)-(c). Notwithstanding anything to the contrary contained in this Agreement, if the Company is advised that, as a result of the adoption of new or 14 ,00 amended regulations under Intemal Revenue Code sections 704(b)-(c), or the issuance of authorized interpretations, the allocations provided in this Agreement are unlikely to be respected for federal income tax purposes, the Manager is hereby granted the power to amend the allocation provisions of this Agreement, on advice of accountants and legal counsel, to the minimum extent necessary to cause such allocation provisions to be respected for federal income tax purposes. (B) Distributions: (1) Available Cash From Business Operations: All Available Cash, other than revenues or proceeds from a Capital Event or the dissolution of the Company, shall be distributed among the Members in the same manner as Profits. The parties intend tiiat Available Cash shall be distributed as soon as practicable following the Manager's determination that such cash is available for distribution. The parties acknowledge that no assurances can be given with respect to when or whether said cash will be available for distributions to the Members. (2) Available Cash From Capital Events: All Available Cash resulting from a Capital Event (as distinguished from normal business operations or tiie dissolution of the Company) shall be distributed to tiie Members in accordance with their respective Percentage Interests as soon as practicable following the Manager's determination that such cash is available for distribution. (3) Non-cash Proceeds: If the proceeds from a sale or other disposition of an item of Company property consist of property other than cash, the value of that property shall be detennined by the Manager. If such non-cash proceeds are subsequentiy reduced to cash, the Manager in determining Available Cash shall take such cash into account and the Manager shall determine whether such cash has resulted from operations or from a Capital Event. (4) Liquidating Proceeds: Notwithstanding any other provisions of this Agreement to the contrary, when there is a distribution in Hquidation of the Company or when any Member's interest is liquidated, all items of income and loss first shall be allocated to the Members' Capital Accounts under sections FV (A) through FV (B) and other credits and deductions to the Members Capital Accounts shall be made before the final distribution is made. The final distribution to the Members shall be made as provided in section IX (B)(4). The provisions of this section and section LX (B)(4) shall be constmed in accordance with Regulation section 1.704-l(b)(2)(ii)(b)(2). V. Management of the Companv (A) Number of Managers: The business of the Company shall be managed by the Manager named in section II (I) or a successor Manager selected in the manner provided in section V(C). Except as otherwise set forth in this Agreement, the Managers shall make all decisions conceming the management of the Company's business. (B) Term of Manager: The Manager shall serve until the earher of: 15 \0\ (1) Manager Action: The Manager's resignation, retirement, death, or disability; (2) Member Action: The Manager's removal by tiie Members; and (3) Term Expiration: The expiration of the Manager's term as Manager, if a term has been designated by a Majority of Members. A new Manager shall be appointed by a Majority of Members on the occurrence of any of the foregoing events. (C) Appointment and Removal of Managers: Each Manager shall be appointed by a Majority of Members for (1) a term expiring with the appointment of a successor or (2) a term expiring at a definite time specified by a Majority of Members in connection with such an appointment. A Manager who is not also a Member may be removed with or without cause at any time by action of a Majority of Members. A Manager who is a Member may be removed only on the Vote of all other Members and the execution and filing of a Certificate of Amendment of the Articles of Organization of the Company in confonnity with Corporations Code section 17054, if necessary, to provide that the Company is to be managed by members. (D) Duties of Manager: The Manager, who shall be the President of the Company, shall have the powers and duties described in section V (H) and such other powers and duties as may be prescribed in this Agreement or by the Members. Notwithstanding the foregoing, the Manager shall not take any of the following actions on behalf of the Company unless a Majority of Members has consented to the taking of such action. (1) Ordinary Course: Any act that would make it impossible to carry on the ordinary business of the Company; (2) Confession of Judgment: Any confession of a judgment against the Company; (3) Dissolution: The dissolution of the Company; (4) Asset Disposition: The disposition of all or a substantial part of the Company's assets not in the ordinary course of business; (5) Debt: The incurring of any debt not in the ordinary course of business; (6) Nature of Business: A change in the nature of the principal business of the Company; (7) Capital Expenditures: The incurring of any contractual obligation or the making of any capital expenditure with a total cost of more than twenty thousand dollars ($20,000.00); 16 (8) Bankruptcy: The filing of a petition in bankmptcy or the entering into of an arrangement among creditors; and (9) Reorganization: The entering into, on behalf of the Company, of any transaction constituting a "reorganization" withinthe meaning of Corporations Code section 17600. (E) Procedure for Action by Manager: Actions of the Manager shall be taken at meetings or as otherwise provided in this section by a majority. No regular meetings of the Manager needs be held. The President or any Member may call a meeting provided said President and/or Member complies with Article VII (D). The Notice needs to specify the purpose of the meeting. The President and/or Manager shall keep or cause to be kept with the books and records of the Company fiill and accurate minutes of all meetings, notices and waivers of notices of meetings, and all written consents to actions of the Managers. (F) Time Devoted to Company: It is acknowledged that the Manager has other business interests to which the Manager devotes part of the Manager's time. The Manager shall devote such time to the conduct of the business of the Company, as the Manager, in the Manager's own good faith and discretion, deems necessary. (G) Compensation: The Manager shall be entitied to compensation for the Manager's services as determined by the Members, and to reimbursement for all expenses reasonably incuned by the Manager in the performance of the Manager's duties. (H) Officers of Company: The Company shall have a President, who shall be a Manager. The President shall be the chief executive officer of the Company and shall have general supervision of the business and affairs of the Company, shall preside at all meetings of Members and of Managers, and shall have such other powers and duties usually vested in a chief executive officer. A Majority of the Members may provide for additional officers of the Company, may alter the powers and duties ofthe President, and shall estabhsh the powers and duties of all other officers and the compensation of all Company officers. (I) Title to Assets: The Manager shall cause all assets of the Company, whether real or personal, to be held in tiie name of the Company. (J) Banking: All fimds of the Company shall be deposited in one or more accounts with one or more recognized financial institutions in the name of the Company, at such locations as shall be determined by the Manager. Withdrawal from such accounts shall require only the signature of the Manager or such other person or persons as the Manager may designate. 17 to? VI. Financial Records; Tax Matters Member (Partner) (A) Accounts: Complete books of account of the Company's business, in which each Company transaction shall be fiilly and accurately entered, shall be kept at the Company's principal executive office and at such otiier locations as the Manager shaU determine from time to time and shall be open to inspection and copying on reasonable Notice by any Member or the Member's authorized representatives during normal business hours. The costs of such inspection and copying shall be bome by the Member. (B) Accounting: Financial books and records of the Company shall be kept on the cash method of accounting, which shall be the method of accoimting followed by the Company for federal income tax purposes. The financial statements of the Company shall be prepared in accordance with generally accepted accounting principles and shall be appropriate and adequate for the Company's business and for carrying out the provisions of this Agreement. The fiscal year of the Company shall be January 1 through December 31. (C) Records: At all times during the term of existence of the Company, and beyond that term if the Manager deems it necessary, the Manager shall keep or cause to be kept the books of account refened to in section VI (B), together with: (1) Members: A cunent list of the full name and last-known business or residence address of each Member, togetiier with the Capital Contribution and the share in Profits and Losses of each Member; (2) Manager: A cunent Hst of the fiill name and business or residence address of each Manager; (3) Articles of Organization: A copy of the Articles of Organization, as amended; (4) Tax Information: Copies of the Company's federal, state, and local income tax or information retums and reports, if any, for the six most recent taxable years; (5) Original Operating Agreement: An original executed copy or counterparts of this Agreement, as amended; (6) Power of Attorney/Amendment: Any powers of attomey under which the Articles of Organization or any amendments to said articles were executed; (7) Financial Statements: Financial statements of the Company for the six most recent fiscal years; and (8) Internal Affairs: The books and Records of the Company as they relate to the Company's intemal affairs for the cunent and past four fiscal years. 18 If the Manager deems that any of the foregoing items shall be kept beyond the term of existence of the Company, the repository of said items shall be as designated by the Manager. (D) Company Financial Statements: At the end of each fiscal year the books of the Company shall be closed and examined and statements reflecting the financial condition of the Company and its Profits or Losses shall be prepared, and a report thereon shall be issued by the Company's accountants. Copies of the financial statements shall be given to all Members. In addition, all Members shall receive not less frequently than at tiie end of each calendar quarter (if requested), copies of such financial statements regarding the previous calendar quarter, as may be prepared in the ordinary course of business, by the Manager or accountants selected by the Manager. The Manager shall deliver to each Member, within 120 days after the end of the fiscal year of the Company, a financial statement that shall include: (1) Company Accounting: A balance sheet and income statement, and a statement of changes in the financial position of the Company as of the close of the fiscal year; and (2) Member Accounting: A statement showing the Capital Account of each Member as of the close of tiie fiscal year and the distributions, if any, made to each Member during the fiscal year. Members representing at least twenty-five percent (25%) of voting interests of Members, or three or more Members, may request interim balance sheets and income statements and may, at their own discretion and expense, obtain an audit of the Company books by certified public accountants selected by them; provided, however, that not more than one such audit shall be made during any fiscal year of the Company. (E) Income Tax Returns: Within 90 days after the end of each taxable year of the Company, the Manager shall make available to each of the Members all information necessary for the Members to complete their federal and state income tax or information retums and a copy of the Company's federal, state, and local income tax or information retums for such year. (F) Tax Matters Member (Partner) (1) Manager as Tax Matters Member: The Manager shall act as Tax Matters Member (Partner) of the Company under Intemal Revenue Code section 6231 (a)(7). (2) Authority to be Exercised by Tax Matters Member (Partner): The Tax Matters Member (Partner) is hereby authorized to do the following: (a) Proceedings: Keep the Members informed of administrative and judicial proceedings for the adjustment of Company items (as defined in Intemal Revenue Code section 6231 (a)(3)) at the Company level, as required under Intemal Revenue Code section 6223(g) and the implementing Regulations; (b) Settlement Agreements: Enter into settlement agreements under Intemal Revenue Code section 6224(c)(3) and appHcable Regulations with the Intemal Revenue Service or the 19 OS Secretary of the Treasury (the Secretary) with respect to any tax audit or judicial review, in which agreement the Tax Matters Member may expressly state that such agreement shall bind the other Members, except that such settiement agreement shall not bind any Member who (within the time prescribed under the Code and Regulations) files a statement with the Secretary providing that the Tax Matters Member shall not have the authority to enter into a settiement agreement on behalf of such Member; (c) Petitions: On receipt of a notice of a final Company administrative adjustment, file a petition for readjustment of the Company items with the Tax Court, the District Court of the United States for the district in which the Company s principal place of business is located, or the United States Court of Federal Claims, all as contemplated under Intemal Revenue Code section 6226(a) and applicable Regulations; (d) Adjustments: File requests for administrative adjustment of Company items on Company tax retums under Intemal Revenue Code section 6227(b) and applicable Regulations; and, to tiie extent such requests are not allowed in fiill, file a petition for adjustment with the Tax Court, the District Court of the United States for the district in which the Company's principal place of business is located, or the United States Court of Federal Claims, all as contemplated under Intemal Revenue Code section 6228(a); and (e) Other Action: Take any other action on behalf of the Members or the Company in connection willi any administrative or judicial tax proceeding to the extent pennitted by law or regulations, including retaining tax advisers (at the expense of the Company) to whom the Tax Matters Member may delegate such rights and duties as deemed necessary and appropriate. VII. Membership (A) Members and Voting Rights: There shall be only one class of membership and no Member shall have any rights or preferences in addition to or different from those possessed by any other Member except as specifically provided for in sections FV. Members shall have the right and power to appoint, remove, and replace Managers and officers of the Company and the right to Vote on all other matters with respect to which this Agreement or the Beverly-Killea Limited Liability Company Act (Corporations Code sections 17000-17705) requires or permits such Member action. Each Member shall Vote in proportion to the Member's Percentage Interest as of the goveming record date, determined in accordance with section VII (B). If a Member has assigned all or part of the Member's Economic Interest to a person who has not been admitted as a Member, the Assigning Member shall Vote in proportion to the Percentage Interest that the Assigning Member would have had, if the assignment had not been made. Without limiting the foregoing, all of the following acts shall require the unanimous Vote of the Members: (1) Transfer: The Transfer of a Membership Interest and the admission of the Assignee as a Member of the Company; 20 (2) Amendment: Any amendment of the articles of organization or this Agreement; and (3) Compromise: A compromise of the obligation of a Member to make a Capital Contribution as specified in sections III (A) through III (C). (B) Record Dates: The record date for detemiining the Members entitied to receive Notice of any meeting, to Vote, to receive any distribution, or to exercise any right in respect of any other lawful action, shall be the date set by the Manager or by a Majority of Members; provided that such record date shall not be more than 60, or less than ten calendar days prior to the date of the meeting and not more than 60 calendar days prior to any other action. In the absence of any action setting a record date, the record date shall be determined in accordance with Corporations Code section 17104(k). (C) Membership Certificates: The Company may, but shall not be required, to issue certificates evidencing Membership Interests (Membership Interest Certificates) to Members of the Company. Once Membership Interest Certificates have been issued, they shall continue to be issued as necessary to reflect cunent Membership Interests held by Members. Membership Interest Certificates shall be in such form as may be approved by the Manager, shall be manually signed by the Manager, and shall bear conspicuous legends evidencing the restrictions on transfer and the purchase rights of the Company and Members set forth in sections VIII (B) through VIII (K). AU issuances, re-issuances, exchanges, and other transactions in Membership Interests involving Members shall be recorded in a permanent ledger as part of the books and Records of the Company. (D) Meetings: Call, Notice and Quorum: Meetings of the Members may be called at any time by the Manager, or by Members representing more than ten percent (10%) of the Interests of the Members for the purpose of addressing any matters on which the Members may Vote. If the Members call a meeting of the Members, Notice of the call shall be delivered to the Manager. Meetings may be held at the principal executive office of the Company or at such other location as may be designated by the Manager. Following the call of a meeting, the Manager shall give Notice of the meeting not less than ten, or more than 60 calendar days prior to the date of the meeting to all Members entitled to Vote at the meeting. The Notice shall state the place, date, and hour of the meeting and the general nature of business to be transacted. No other business may be transacted at the meeting. A quomm at any meeting of Members shall consist of a Majority of Members, represented in person or by Proxy. The Members present at a duly called or held meeting at which a quomm is present may continue to transact business until adjournment, notwithstanding the withdrawal of a sufficient number of Members to leave less than a quomm, if the action taken, other than adjoumment, is approved by the requisite Percentage of Members as specified in this Agreement or the Act. No regular meeting of Members need be held. (E) Adjournment of Meeting: A meeting of Members at which a quorum is present may be adjoumed to another time or place and any business, which might have been transacted at the original meeting, may be transacted at the adjoumed meeting. If a quorum is not present at an original meeting, that meeting may be adjoumed by the Vote of a Majority of Voting Interests represented either in person or by Proxy. Notice of the adjoumed meeting need not be given to Members entitled to Notice ifthe time and place of the adjoumed meeting are announced at the meeting at which the adjournment is taken, unless (1) the adjoumment is for more than 45 days, or (2) after the adjoumment, a new record date is 21 ,0? fixed for tiie adjoumed meeting. In the situations described in (l)-(2). Notice of the adjoumed meeting shall be given to each Member of record entitled to Vote at the adjoumed meeting. (F) Waiver of Notice: The transactions of any meeting of Members, however called and noticed, and wherever held, shall be as valid as though consummated at a meeting duly held after regular call and Notice, if (1) a quorum is present at that meeting, either in person or by Proxy and (2) either before or after tiie meeting each of the persons entitied to Vote, not present in person or by Proxy, signs either a written waiver of notice, a consent to the holding of the meeting, or an approval of the minutes of the meeting. Attendance of a Member at a meeting shall constitute waiver of notice, imless that Member objects, at the beginning of the meeting, to the ttansaction of any business on the ground that the meeting was not lawfully called or convened. Attendance at a meeting is not a waiver of any right to object to the consideration of matters required to be described in tiie notice of the meeting and not so included, if the objection is expressly made at the meeting. (G) Proxies: At aU meetings of Members, a Member may Vote in person or by Proxy. Such Proxy shall be filed with the Manager before or at the time of the meeting, and may be filed by facsimile transmission to the Manager at the principal executive office of the Company or the Manager may give such other address as to the Members for such purposes. (H) Participation in Meetings by Conference Telephone: Members may participate in a meeting through use of conference telephone or similar communications equipment, provided that all Members participating in such meeting can hear one another. Such participation shall be deemed attendance at the meeting. (I) Action by Members Without Meeting: Any action that may be taken at any meeting of the Members may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by Members having not less than the minimum number of Votes that would be necessary to authorize or take that action at a meeting at which all Members entitled to Vote thereon were present and voted. If the Members are requested to consent to a matter without a meeting, each Member shall be given notice of the matter to be voted on in the manner described in section VII (D). Any action taken without a meeting shall be effective when the required minimum number of Votes have been received. Prompt Notice of the action taken shall be given to all Members who have not consented to the action. (J) No Agency; Indemnification: No Member acting solely in the capacity of a Member is an agent of the Company, nor can any Member acting solely in the capacity of a Member bind the Company or execute any instrument on behalf of the Company. Accordingly, each Member shall indemnify, defend, and save hannless each other Member and the Company from and against any and all loss, cost, e^ense, liability, or damage arising from or out of any claim based on any action by such Member in contravention of the first sentence of this section. VIII. Transfers of Membership Interests (A) Withdrawal of Members: A Member may withdraw from the Company at any time by giving Notice of withdrawal to all other Members and the Manager at least 180 calendar days before the 22 0^ effective date of withdrawal. Withdrawal shall not release a Member from any obligations and liabilities under this Agreement accmed or incuned before the effective date of withdrawal. A withdrawing Member shall divest the Member's entire Membership Interest before the effective date of withdrawal in accordance with and subject to the provisions of sections VIII (B) through VIII (K). A member may not withdraw from the Company without the written consent of all remaining Members. Withdrawal shall not release a Member from any obligations and liabilities under this Agreement accmed or incuned before the effective date of withdrawal. A withdrawing Member shall have only the rights of a holder of an Economic Interest in the Company in respect of the Member's Membership Interest in the Company and shall have no other rights. Unless aU remaining Members consent to such withdrawal, the withdrawing Member shall not be entitied to a distribution of his, her, or its Economic Interest until the dissolution and liquidation of the Company. For purposes of this Section, the term "Economic Interest" shall not mean or include any right to share in the income, gains, losses, deductions, credits, or similar items of the Company attributable to any period following withdrawal, or any right to information conceming the business and affairs of the Company, except as provided in Corporations Code section 17106. (B) Restrictions on Transfer: Except as expressly provided in this Agreement, a Member shall not transfer any part of the Member's Membership Interest in the Company, whether now owned or later acquired, unless (1) the other Members unanimously approve the transferee's admission to the Company as a Member on such Transfer and (2) the Membership Interest to be transferred, when added to the total of all other Membership Interests transfened in the preceding 12 months, will not cause the tennination of the Company under the Code. No Member may Encumber or pemiit or suffer any Encumbrance of all or any part of the Member's Membership Interest in the Company unless such Encumbrance has been approved in writing by the Manager. Such approval may be granted or withheld in the Manager's sole discretion. Any Transfer or Encumbrance of a Membership Interest without such approval shall be void. Notwithstanding any other provision of this Agreement to the contrary, a Member who is a natural person may transfer all or any portion of his or her Membership Interest to any revocable tmst created for the benefit of the Member, or any combination between or among the Member, the Member's spouse, and the Member's issue; provided that the Member retains a beneficial interest in the tmst and all of the Voting Interest included in such Membership Interest. A Transfer of a Member's beneficial interest in such tmst, or failure to retain such Voting Interest, shall be deemed a Transfer of a Membership Interest. (C) Right of First Refusal: If a Member wishes to transfer any or all of the Member's Membership Interest in the Company under a Bona Fide Offer (as defined below), the Member shall give Notice to the Manager and all other Members at least 30 days in advance of the proposed sale or Transfer, indicating the terms of the Bona Fide Offer and the identity of the offeror. The Company and the other Members shall have the option to purchase the Membership Interest proposed to be transfened at the price and on the terms provided in this Agreement. If the price for the Membership Interest is other than cash, the fair value in doUars of the price shall be as estabhshed in good faith by the Company. For purposes of tiiis Agreement, "Bona Fide Offer" means an offer in writing setting forth all relevant terms and conditions of purchase from an offeror who is ready, willing, and able to consummate the purchase and who is not an AffiUate of the seUing Member. For 30 days after the Notice is given, the Company 23 shall have the right to purchase the Membership Interest offered, on the terms stated in the Notice, for the lesser of (1) the price stated in the Notice (or the price plus the dollar value of non-cash consideration, as the case may be) and (2) the price determined under the appraisal procedures set forth in section VII (H). If the Company does not exercise the right to purchase all of the Membership Interest, then, with respect to the portion of the Membership Interest that the Company does not elect to purchase, that right shall be given to the other Members for an additional 30-day period, beginning on the day that the Company's right to purchase expires. Each of the other Members shall have the right to purchase, on the same terms, a part of the interest of the offering Member in the proportion that the Member's Percentage Interest bears to the total Percentage Interests of all of the Members who choose to participate in the purchase; provided, however, that the Company and the participating Members may not, in the aggregate, purchase less than iHe entire interest to be sold by the offering Member. If the Company and the oilier Members do not exercise their rights to purchase all of the Membership Interest, the offering Member may, within 90 days from the date the Notice is given and on the terms and conditions stated in the Notice, sell or exchange that Membership Interest to the offeror named in the Notice. Unless the requirements of section VIII (B) are met, this section shall become an Assignee and shall be entitled to receive only the share of Profits or other compensation by way of income and the retum of Capital Contribution to which the assigning Member would have been entitled. (D) Triggering Events: On the happening of any of the following events (Triggering Events) with respect to a Member, the Company and the other Members shall have the option to purchase the Membership Interest in the Company of such Member (Selling Member) at the price and on the terms provided in section VIII (H): (1) Event One: The death, mental or physical disability, bankmptcy, or withdrawal of a Member, or the winding up and dissolution of a corporate Member, or merger or other corporate reorganization of a corporate Member as a result of which the corporate Member does not survive as an entity; provided that the remaining Members have elected to continue the business of the Company as provided in section FX (A). (2) Event Two: The failure of a Member to make the Member's Capital Contribution under the provisions of sections III (A) tiu^ough III (H). (3) Event Three: The occurrence of any other event that is, or that would cause, a Transfer in contravention of this Agreement. Each Member agrees to promptly give Notice of a Triggering Event to the Manager and all other Members. (E) Marital Dissolution or Death of Spouse: Notwithstanding any other provisions of this Agreement: 24 ^0 (1) Divorce: If in connection with the divorce or dissolution of the marriage of a Member, any court issues a decree or order that transfers, confirms, or awards a Membership hiterest, or any portion thereof, to that Member's spouse (an Award), then, notwithstanding that such transfer would constitute an un-permitted Transfer under this Agreement, that Member shall have the right to purchase from his or her former spouse tiie Membership Interest, or portion thereof, that was so transfened, and such former spouse shall sell the Membership Interest or portion thereof to that Member at the price set forth below in section VIII(H). If the Member has failed to consummate the purchase within 180 days after the court award (the Expiration Date), the Company and the other Members shall have the option to purchase from the former spouse the Membership Interest or portion thereof under section VIII (F); provided that the option period shall commence on the later of (a) the day following the Expiration Date or (b) the date of actual notice of the Award. (2) Death: If, by reason of the death of a spouse of a Member, any portion of a Membership Interest is transfened to a Transferee other than (a) that Member or (b) a tmst created for tiie benefit of that Member (or for the benefit of that Member and any combination between or among the Member and the Member's issue) in which the Member is the sole Tmstee and tiie Member, as Tmstee or individually, possesses all of the Voting Interest included in that Membership Interest, then the Member shall have the right to purchase the Membership Interest or portion thereof from the estate or other successor of his or her deceased spouse or Transferee of such deceased spouse, and the estate, successor, or Transferee shall seU the Membership Interest or portion thereof at the price set forth in section VIII(H). If the Member has failed to consummate the purchase within 180 days after the date of death (the Expiration Date), the Company and the other Members shall have the option to purchase from the estate or other successor of the deceased spouse the Membership Interest or portion thereof under section VIII (F); provided that the option period shall commence on the later of (a) the day following the Expiration Date or (b) the date of actual notice of the death. (F) Purchase Option Following Triggering Event: On the later of the date of the Notice or the receipt of Notice by the Manager and the other Members as contemplated by sections VIII (A), VIII(C) and VIII (E), and on receipt of actual notice of any Triggering Event as determined in good faith by the Manager (the date of such receipt is hereinafter refened to as the Option Date), the Manager shall promptiy cause a Notice of this occunence of the Triggering Event to be sent to all Members and the Company shall have the option, for a period ending 30 calendar days following the determination of the purchase price as provided in section VIII(H), to purchase the Membership Interest in the Company to which the option relates, at the price and on the terms set forth in section VIII(H), and the other Members, pro rata in accordance with their prior Membership Interests in the Company, shall then have the option, for a period of 30 days thereafter, to purchase the Membership Interest in the Company not purchased by the Company, on the same terms and conditions as apply to the Company. If all other Members do not elect to purchase the entire remaining Membership Interest in the Company, then the Members electing to purchase shall have the right, pro rata in accordance with their prior Membership Interest in the Company, to purchase the additional Membership Interest in the Company available for purchase. The transferee of the Membership Interest in the Company that is not purchased shall hold such Membership Interest in the Company subject to all of the provisions of this Agreement. (G) Nonparticipation of Interested Member: Neither the Member whose interest is subject to purchase under sections VIII (A) through VIII (K) nor such Member's Affiliate shaU participate in any 25 Vote or discussion of any matter pertaining to the disposition of the Member's Membership Interest in the Company under this Agreement. (H) Option Purchase Price: The purchase price of the Membership Interest that is the subject of an option under section VIII (F) shall be the "Fair Option Price" of the interest as determined under this section. "Fair Option Price" means the cash price that a willing buyer would pay to a willing seller when neither is acting under compulsion and when both have reasonable knowledge of the relevant facts on the Option Date. Each of the selling and purchasing parties shall use his, her, or its best efforts to mutually agree on the Fair Option Price. If the parties are unable to so agree within 30 days of the Option Date, the selling party shall appoint, within 40 days of the Option Date, one appraiser, and the purchasing party shall appoint within 40 days of the Option Date, one appraiser. The two appraisers shall within a period of five additional days, agree on and appoint an additional appraiser. The tiiree appraisers shall, within 60 days after the appointment of the third appraiser, determine the Fair Option Price of the Membership Interest in writing and submit their report to all the parties. The Fair Option Price shall be determined by disregarding the appraiser's valuation that diverges the greatest from each of the other two appraisers' valuations, and the arithmetic mean of the remaining two appraisers' valuations shall be the Fair Option Price, Each purchasing party shall pay for the services of the appraiser selected by it, plus one half of the fee charged by the third appraiser, and one half of aU other costs relating to the determination of Fair Option Price. The option purchase price as so determined shall be payable in cash. (I) Substituted Member: Except as expressly permitted under section VIII (B), a prospective transferee (other than an existing Member) of a Membership Interest may be admitted as a Member with respect to such Membership Interest (Substituted Member) only (1) on the Vote of a majority in interest of the other Members in favor of the prospective transferee's admission as a Member and (2) on such prospective transferee executing a counterpart of this Agreement as a party hereto. Any prospective transferee of a Membership Interest shall be deemed an Assignee and, therefore, the owner of only an Economic Interest until such prospective transferee has been admitted as a Substituted Member. Except as otherwise pennitted in the Act, any such Assignee shall be entitled only to receive allocations and disttibutions under this Agreement with respect to such Membership Interest and shall have no right to Vote or exercise any rights of a Member until such Assignee has been admitted as a Substituted Member. Until the Assignee becomes a Substituted Member, the Assigning Member will continue to be a Member and to have the power to exercise any rights and powers of a Member under this Agreement, including the right to Vote in proportion to the Percentage Interest that the Assigning Member would have had in the event that the assignment had not been made. (J) Duties of Substituted Member: Any person admitted to the Company as a Substituted Member shall be subject to all the provisions of this Agreement that apply to the Member from whom the Membership Interest was assigned, provided, however, that the assigning Member shall not be released from liabilities as a Member solely as a result of the assignment, both with respect to obligations to the Company and to third parties, incurred prior to the assignment. (K) Securities Laws: The initial sale of Membership Interests in the Company to the initial Members has not been qualified or registered under the securities laws of any state, including Califomia, or registered under the Securities Act of 1933, in reliance on exemptions from the registration provisions 26 of those laws. Notwithstanding any other provision of this Agreement, Membership Interests may not be transfened unless registered or qualified under applicable state and federal securities law unless, in the opinion of legal counsel satisfactory to the Company, such qualification or registration is not required. The Member who desires to transfer a Membership Interest shall be responsible for all legal fees incuned in connection with said opinion. IX. Dissolution and Winding Up (A) Events of Dissolution: The Company shall be dissolved on the first to occur of the following events: (1) Written Agreement: The written agreement of a Majority of Members to dissolve the Company; (2) Sale: The sale or other disposition of substantially all of the Company's assets; or (3) Judicial Decree: Entry of a decree of judicial dissolution under Corporations Code section 17351. (B) Winding Up: On the dissolution of the Company, the Company shall engage in no further business other than that necessary to wind up the business and affairs of the Company. The Managers who have not wrongfully dissolved the Company or, if there is no such Manager, the Members, shall wind up the affairs of the Company. The Delegates voiding up the affairs of the Company shall give Notice of the commencement of winding up by mail to all known creditors and claimants against the Company whose addresses appear in the records of the Company. After paying or adequately providing for the payment of all known debts of the Company (except debts owing to Members), the remaining assets of the Company shall be distributed or applied in the following order: (1) Expenses: To pay the expenses of liquidation. (2) Reserves: To the establishment of reasonable reserves by the Delegate for contingent liabilities or obligations of the Company. On the Delegate's determination that such reserves are no longer necessary, said reserves shall be distributed as provided in this section. (3) Loans to Members: To repay outstanding loans to Members. If there are insufficient fimds to pay such loans in full, each Member shall be repaid in the ratio that the Member's loan, together with interest accmed and unpaid thereon, bears to the total of all such loans from Members, including all interest accmed and unpaid thereon. Such repayment shall first be credited to unpaid principal and the remainder shall be credited to accmed and unpaid interest. (4) Positive Capital Account Balances: Among the Members with Positive Capital Account Balances as provided in section FV (B) (1). (C) Deficits: Each Member shaU look solely to the assets of the Company for the retum of the Member's investment, and if the Company property remaining after the payment or discharge ofthe debts and liabilities of the Company is insufficient to retum the investment of each Member, such Member shall have no recourse against any other Members for indemnification, contribution, or reimbursement, except 27 as specifically provided in this Agreement. X. Non-competition and Confidentiality Each Member hereby covenants with the Company and each other Member that on the Transfer of the Member's Membership Interest, whether voluntary, involuntary, by operation of law, or by reason of any provision of this Agreement, the Member wiU not, directiy or indirectiy through an Affiliate or otherwise, in the County of San Diego, State of Califomia, for a period of one (1) year following the date ofthe Transfer, (1) engage in any business in any way similar to or competitive with the business of the Company, (2) enter into any agreement or understanding, written or oral, relating to the services of any employee of the Company, (3) solicit the business of, enter into any agreement, written or oral, or otherwise deal with any customers of the Company, who were such at the time of tiie Transfer, or (4) use or disclose in any manner any Confidential Information. "Confidential Information" means all trade secrets, "know-how," customer Usts, pricing policies, operational methods, programs, and other business information of the Company created, developed, produced, or otherwise arising before the date of the Transfer. Each Member hereby stipulates that a breach of the provisions of this section will result in ineparable damage and injury to the Company for which no money damages could adequately compensate it. If the Member breaches the provisions of this Agreement, in addition to all other remedies to which the Company may be entitied, and notwithstanding the arbitration provisions of section IX (B), the Company shall be entitied to an injunction to enforce the provisions of this Agreement, to be issued by any court of competent jurisdiction, to enjoin and restrain the Member and each and every Person concemed or acting in concert with the Member from the continuance of such breach. Each Member expressly waives any claim or defense that an adequate remedy at law might exist for any such breach. If the provisions contained herein shall be deemed to exceed the time or geographic limits or any other lunitation imposed by applicable law in any jurisdiction, then such provision shall be deemed reformed in such jurisdiction to the maximum extent pennitted by applicable law. XL Indemnification and Arbitration (A) Indemnification: The Company shall have the power to indemnify any Person who was or is a party, or who is threatened to be made a party, to any Proceeding by reason of the fact that such Person was or is a Member, Manager, officer, employee, or other agent of the Company, or was or is serving at the request of the Company as a director, officer, employee, or other agent of another limited liability company, corporation, partnership, joint venture, tmst, or other enterprise, against expenses, judgments, fines, settiements, and other amounts actually and reasonably incuned by such Person in connection with such proceeding, if such Person acted in good faith and in a manner that such Person reasonably believed to be in the best interests of the Company, and, in the case of a criminal proceeding. 28 such Person had no reasonable cause to believe that the Person's conduct was unlawfiil. The temiination of any proceeding by judgment, order, settlement, conviction, or on a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the Person did not act in good faith and in a manner that such Person reasonably believed to be in the best interests of the Company, or that the Person had reasonable cause to believe that the Person's conduct was unlawful. To the extent that an agent of the Company has been successfiil on the merits in defense of any Proceeding, or in defense of any claim, issue, or matter in any such Proceeding, the agent shall be indemnified against excuses actually and reasonably incuned in connection with the Proceeding. In all other cases, the Company only if authorized in a specific case by a Majority of Members shall provide indemnification. "Agent," as used in this section, shall include a tmstee or other fiduciary of a plan, tmst, or other entity or anangement described in Corporations Code section 207(f). "Proceeding," as used in this section, means any threatened, pending, or completed action or proceeding, whether civil, criminal, administrative, or investigative. Expenses of each Person indemnified under this Agreement actually and reasonably incuned in connection with the defense or settlement of a proceeding may be paid by the Company in advance of the final disposition of such proceeding, as authorized by the Managers who are not seeking indemnification or, if there are none, by a Majority of the Members, on receipt of an undertaking by such Person to repay such amount imless it shall ultimately be detennined that such Person is entitied to be indemnified by the Company. "Expenses," as used in this section, includes, without limitation, attomey fees and expenses of estabUshing a right to indemnification, if any, under this section. (B) Arbitration: Any action to enforce or interpret this Agreement, or to resolve disputes with respect to this Agreement as between the Company and a Member, or between or among the Members, shall be settled by arbitration in accordance with the rules of the American Arbitration Association. Arbitration shall be the exclusive dispute resolution process in the State of Califomia, but arbitration shall be a nonexclusive process elsewhere. Any party may commence arbitration by sending a written demand for arbitration to the other parties. Such demand shall set forth the nature of the matter to be resolved by arbitration. The Manager shall select the place of arbitration. The arbitrator to the resolution of the dispute shall apply the substantive law of the State of Califomia. The parties shall share equally all initial costs of arbitration. The prevailing party shall be entitled to reimbursement of attomey fees, costs, and expenses incurred in connection with the arbitration. All decisions of the arbitrator shall be final, binding, and conclusive on all parties. Judgment may be entered on any such decision in accordance with applicable law in any court having jurisdiction thereof The arbitrator (if permitted under applicable law) or such court may issue a writ of execution to enforce the arbitrator's decision. XII. Power of Attornev Each Member, by execution of this Agreement, inevocably constitutes and appoints each Manager and any of them acting alone as such Member's tme and lawful attomey-in-fact and agent, with fiill power and authority in such Member's name, place, and stead to execute, acknowledge, and deliver, and to file or record in any appropriate public office: 29 (A) Transact Business: Any certificate or other instmment that may be necessary, desirable, or appropriate to qualify the Company as a limited liability company or to transact business as such in any jurisdiction in which the Company conducts business; (B) Amendments: Any certificate or amendment to the Company's Articles of Organization or to any certificate or other instniment that may be necessary, desirable, or appropriate to reflect an amendment approved by the Members in accordance with the provisions of this Agreement; (C) Dissolution: Any certificates or instmments that may be necessary, desirable, or appropriate to reflect the dissolution and winding up of the Company; and (D) Compliance: Any certificates necessary to comply with the provisions of this Agreement. This power of attomey wiU be deemed to be coupled with an interest and wiU survive the Transfer of the Member's Economic Interest. Notwithstanding the existence of this power of attomey, each Member agrees to join in the execution, acknowledgment, and delivery of the instmments refened to above if requested to do so by a Manager. This power of attomey is a limited power of attomey and does not authorize any Manager to act on behalf of a Member except as described in this section. XIIL General Provisions (A) Entire Agreement; Amendment: This Agreement constitutes the whole and entire agreement of the parties with respect to the subject matter of this Agreement, and it shall not be modified or amended in any respect except by a written instmment executed by all the parties. This Agreement replaces and supersedes all prior written and oral agreements by and among the Members and Managers or any of them. (B) Counterpart Executions: This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instmment. (C) Governing Law; Severability: This Agreement shall be constmed and enforced in accordance with the intemal laws of the State of CaHfomia. If any provision of this Agreement is determined by any court of competent jurisdiction or arbitrator to be invalid, illegal, or unenforceable to any extent, that provision shall, if possible, be constmed as though more nanowly drawn, if a nanower constmction would avoid such invalidity, illegality, or unenforceability or, if that is not possible, such provision shall, to the extent of such invalidity, illegality, or unenforceability, be severed, and the remaining provisions of this Agreement shall remain in effect. (D) Benefit: This Agreement shall be binding on and inure to the benefit of the parties and their heirs, personal representatives, and permitted successors and assigns. 30 (E) Number and Gender: Whenever used in this Agreement, the singular shall include the plural and the plural shall include the singular, and the neuter gender shall include the male and female as well as a tmst, firm, company, or corporation, all as tiie context and meaning of this Agreement may require. (F) Further Assurances: The parties to this Agreement shall promptly execute and deliver any and all additional documents, mstruments, notices, and other assurances, and shall do any and all other acts and things, reasonably necessary in connection with the performance of their respective obligations under this Agreement and to carry out the intent of the parties. (G) Member's Other Business: Except as provided in this Agreement, no provision of this Agreement shall be constmed to limit in any manner the Members in the carrying on of their own respective businesses or activities. (H) Agent: Except as provided in this Agreement, no provision of this Agreement shall be constmed to constitute a Member, in the Member's capacity as such, the agent of any other Member. (I) Authority To Contract: Each Member represents and wanants to the other Members that the Member has the capacity and authority to enter into this Agreement. (J) Titles and Headings: The article, section, paragraph and subparagraph tities and headings contained in this Agreement are inserted as matter of convenience and for ease of reference only and shall be disregarded for all other purposes, including the constraction or enforcement of this Agreement or any of its provisions. (K) Amendment: This Agreement may be altered, amended, or repealed only by a writing signed by all of the Members. (L) Time of the Essence: Time is of the essence of every provision of this Agreement that specifies a time for performance. (M) No Third Party Beneficiary Intended: This Agreement is made solely for the benefit of the parties to this Agreement and their respective pemiitted successors and assigns, and no other person or entity shall have or acquire any right by virtue of this Agreement. 31 r > IN WITNESS WHEREOF, the parties have executed or caused to be executed this Agreement on the day and year first above written. Dated: June 10, 2003 Dated: June 10, 2003 Dated: June 10,2003 Dated: June 10, 2003 Dated: June 10, 2003 Dated: June 10, 2003 Dated: June 10, 2003 Dated: June 10, 2003 c Patrick M. Norman Norma Lydia Morales Michael A. McCarville Mia Y. McCarville <irt D. Bacherio Nanette S. Ure 32 SECRETARY OF STATE I, Kevin Shelley, Secretary of State of the State of California, hereby certify: That the attached transcript of page(s) has been comparecd with the recor(j on file in this office, of which it purports to be a copy, an(d that it is full, true an(J correct. IN WITNESS WHEREOF, I execute this certificate and affix the Great Seal of the State of California this day of n Secretary of State W Sec/Siale Form CE-107 (rev. t/03) GSP 03 7469V State of California Kevin Shelley Secretary of State LIMITED UABILITY COMPANY ARTICLES OF ORGANIZATION A $70.00 filing fee must accompany this form. IMPORTANT - Read instructions before completing this form. 03162101252 ENDORSED - FILED m the office of the Secretary of State ofthe State of California JUN 0 5 2003 KEVIN SHELLEY Secretary of Stat© This Space For Filing Use Only 1. Name of the limited liability company (end the name with the worcls "Limitecl Liability Company," "Ltd. Liability Co.," or the abbreviations "LLC" or "LLC") ROOSEVELT PLAZA, LLC 2. The purpose of the limited liability company is to engage in any lawful act or activity for which a limited liability company may be organized under the Beverly-Killea limited liability company act. 3. Name the agent for service of process and check the appropriate provision below: DENNIS E HICKS [X] an individual residing in California. Proceed to item 4. [ ] a corporation which has filed a certificate pursuant to section 1505. Proceed to item 5. which is 4. If an Individual, California address of the agent for service of process: Address: 2240 GARNET AVE SUITE B Citv: SAN DIEGO State: CA ZipCode: 92109 5. The limited liability company will be managed by: (check one) (X^^one manager j more than one manager [ ] single member limited liability company all limited liability company members 6. Other matters to be included in this certificate may be set forth on separate attached pages and are made a part of this certificate. Other matters may include the latest date on which the limited liability company is to dissolve. 7. Number of pages attached, if any: 8. Type of business of the limited liability company. (For informational purposes only) REAL ESTATE HOLDING/DEVELOPMENT CO 9. DECLARATION: It is hereby declared that I am the person who executed this instrument, which execution is my act and deed. PATRICK M NORMAN MANAGING MEMBER Signature of Organizer Type or Print Name of Organizer. Date 10. RETURN TO: NAME FIRM ADDRESS CITY/STATE ZIP CODE [PATRICK M NORMAN ROOSEVELT PLAZA, LLC 2240 GARNET AVE SUITE B SAN DIEGO, CA Li2109 J SEC/STATE (REV. 01/03) FORM LLC-1 - FILING FEE $70.00 CFS INITIAL MEMBERS 1) Patrick M. Norman 3635 Harding Street Carlsbad, CA 92008 5) Michael A. McCarville 706 LA Mirada Ave Encinitas, CA 92024 2) Norma L. Morales 718 Church Avenue Chula Vista, CA 91910 6) Mia Y. McCarville 706 La Mirada Ave. Encinitas, CA 92024 3) Michael J. Clarke 7) 4807 Kelly Drive Carlsbad, CA 92008 4) Debra P. Clarke 8) 4807 Kelly Drive Carlsbad, CA 92008 Kirt D. Bacherio 7979 Caminito Dia #4 SanDiego, CA 92122 Nannette S. Ure 30041 Wilhite Lane Valley Center, CA 92082 EXHIBIT "B" INITIAL CAPITAL CONTRIBUTIONS Member Name: Member's Capital Contribution Member's Percentage Interest Patrick M. Norman 3635 Harding Street Carlsbad, CA 92008 $50,000 16.67% Norma L. Morales 718 Church Avenue Chula Vista, CA 91910 $50,000 16.67% Michael J. Clarke Debra P. Clarke 4807 Kelly Drive Carlsbad, CA 92008 $50,000 16.67% Michael A. McCarville Mia Y McCarville 706 La Mirada Avenue Encinitas, CA 92024 $50,000 16.67% Kirt D. Bacherio $50,000 7979 Caminito Dia #4 San Diego, CA 92122 Nanette S. Ure $50,000 30041 Wilhite Lane Valley Center, CA 92082 16.67% 16.67% EXHIBIT "C" « A INITIAL CAPITAL ASSET VALUE The members are contributing cash in the amount of $300,000 to the LLC. EXHIBIT "D"