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HomeMy WebLinkAboutSDP 98-19; Manzanita Apartments; Site Development Plan (SDP)CT,Q>F CARLSBAD - ENGINEERING DEPAQiENT APPLICATION ENGINEERING PLAN CHECK Complete all appropriate information. Write N/A when not applicable. PROJECT NAME: MfrA/ ?/)*//?/? P/?£fM&Z3, DATE: ^// /03 1 PROJECT DESCRIPTION: PROJECT ADDRESS: LOTNO(S).: MAP NO.: /l/^, APN(S).: Z-/S*~~<9 Z&- IZ, /3 NUMBER OF LOTS: 2- NUMBER OF ACRES: *" ^ ' •*" "^ "^ ~ ^^ OWNER: Mailing Address: Phone Number: Fax Number E-Mail: I certify that I am the legal owner and that all the above information is true and correct to the best of my knowledge. Signature: Date: CML ENGINEER: B/Z/flA/ C, g&WA/ FIRM: \$HAM#0te- £M. ff6S/A«/£DAS, Mailing Address: /^// /^^^ < ?£?il/rvfd S fa , <h*f Ua/L&0$, Cd <*1 -&?(**} Phone Number: "7^ - <46o-(,Q(f *]__ Fax Number: 7^> " Vc^ -*?t/5f E-Mail: M XI 1 C <t> s H#M /Z0Ck-<OSi CA4* State Registration Number (L 3^3cy^3 APPLICANT: Mailing Address: Phone Number: Fax Number: E-Mail: Signature: Date: SOILS ENGINEER: FIRM: Mailing Address: Phone Number: Fax Number: E-Mail: State Registration Number: ADDITIONAL COMMENTS: IMPROVEMENT VALUATION l. What water district is the proposed project located in? (check one) QCarlsbad Municipal Water District Qofivenhain Qvaltetitos 2. If in the Carlsbad Munkapal Water District, what is the total cost estimate, including the 15% contingency fee, for water and reclaimed water improvements, sewer (for Carlsbad Municipal Water District only), street, public (median) landscape and irrigation, and drainage improvements (if applicable)? $ GRADING QUANTITIES exit cy fill cy remedial cy import cy export cyl From :P03 CITY OF CARLSBAD - ENGINEERING DEPARTMENT APPLICATION FOR ENGINEERING PLAN CHECK OR PROCESSING Complete ell appropriate Information. Wr|ty H/ft when. P°t applicable. DWG 389-9/f PROJECT DESCRIPTION: PROJECT ADDRESS: LOT NO(S),:MAP NO.: NO. OF DWELLING UNITS:LFMP ZONE PATE: ARN(S).: OTS:# ACRES: OWNER: X Moling Address:C ^ C Phono Nurrb«r: I certify thet I am In* legal owner and that all the above information is true and correct to.the best of my knowledge Signature Mailing Addrefes: I IS£> C Of Phone Number: ( §5?) Signature Date CIVIL ENGINEER: Firm:. * ' SOILS ENGINEER: firm; Mailing Addri Number: State Registration Number Phon* Number: State Ftegistielion Number: ADDITIONAL COMMENTS: 1 what w8ietJdifttrtc(^KthBjitopes«d-Bcaiecl located inidpal Water District IMPROVEMENT VALUATION [n? (circle one) Olivenhain Vallecitos 2. H In the Carlsbad Municipal Water District, what is contingency fee, for water «hd reclaimed 3 What Is the total cost estimate, Including the 15% Municipal Water District only), street, public (m drainage improvement* (if applicable)? 4 What is the total cost of landscape and irrigation improvements on prl' tfie total cost estimate, including th« 15% ivements (if applicable)? contingency fee, for sewer (for Carlsbad Bdlan) landscape jand irrigation, and '*,J?t> ate property (if applicable)? $ _ cy flu QUANTITIES remedial cy Import/export cy 5 D - / 7 From :-03 CITY OF CARLSBAD • ENGINEERING DEPARTMENT APPLICATION FOR ENGINEERING PLAN CHECK OR PROCESSING Complete ell appropriate Information. Wrltt N/A when nol applicable. 1. Whatwglei^district Isths^aroposedLotslgcl located (^r^badjginTdpal Water District 2. if in the Carlsbad Municipal Water District, what is contingency fee, for water and reclaimed water Improvements 3. What is the total cost estimate, Including the 15% contingency fee, for sewer {for Carlebad Municipal Water District only), street, public (median) landscape drainage Improvements (if applicable)? . 4. What is the total cost of landscape and irrigation improvements on private property (if applicable)? $ tfie total cost estimate, including the 15% (if applicable)? and Irrigation, and cy GRADINjG QUANTITIES remedial cy Import/export cy REV. 10MM APPLICATION FOR: (/ all that apply) Q Adjustment Plat Q Certificate of Compliance Q Dedication of Easement Type: Type: Q Encroachment Permit Q Engineering Standards Variance Q Final Map Q Grading Plancheck Q Grading i&'Tmprovement Plancheck Q Parcel Map Q Quitclaim of Easement Type: Type: Q Reversion to Acreage Q Street Vacation Q Tentative Parcel Map Q Certificate of Correction Q Covenant for Easement Q Substantial Conformance Exhibit FOR CITY USE ONLY Plancheck Number Type ADJP COC DOE ENCROACH ESV FM GRPC GRADING IPC PM QUITC RTA STV MS CCOR COVE SCE APPLICATION ACCEPTED BY: MASTER PROJECT ID: RECEIPT NUMBER: PRELIMINARY SIERRA SYSTEM INPUT INITIAL: SIERRA SYSTEM INPUT INITIAL: R-.BASE INPUT INITIAL: MASTER FILE NUMBER: F Q OTHER: Drawing Number 3*?- 7 Project I.D. 3D? WQ Deposit/Fees Paid "J*'Y"*\otppWbURb^'1-'" ' i^r*>* gSiGV^-^- •C,-/^11""" DATE STAMP APPLICATION RECEIVED DOCS/MISFORMS/APPLICATION ENG PLANCHECK OR PROCESSING '. 10/06/99 PROJECT REVIEW COMPLETION EASEMENT / COVENANT FOR EASEMENT The following project maps have been reviewed and are recommended for approval: Project Name: Project No.: Dwg. No.: Type of Easement.: MANZANITA APTS SDP98-19 PR 03-59 Utility DECLARATION OF RESPONSIBLE CHARGE I hereby declare that I have exercised responsible charge over the easement review of this project as defined in Section 8703 of the Business and Professions Code to determine that the easement documents are found to be in substantial compliance with applicable codes and standards. Plan review of these project easements does not relieve the Engineer of Work of the responsibilities with state and local ordinances. Signed. Helming Engineering Co., Inc. 1650 Linda Vista Drive, Suite 202 San Marcos, CA 92069 (760) 744-9801 Date Douglas L. HelmingVRCE 23874 Expiration Date 12/31/05 V.- PROJECT REVIEW COMPLETION EASEMENT / COVENANT FOR EASEMENT The following project maps have been reviewed and are recommended for approval: Project Name: Project No.: Dwg. No.: Type of Easement.: MANZANITA APTS SDP98-19 PR 03-58 Utility DECLARATION OF RESPONSIBLE CHARGE I hereby declare that I have exercised responsible charge over the easement review of this project as defined in Section 8703 of the Business and Professions Code to determine that the easement documents are found to be in substantial compliance with applicable codes and standards. Plan review of these project easements does not relieve the Engineer of Work of the responsibilities with state and local ordinances. Signed Helming Engineering Co., Inc. 1650 Linda Vista Drive, Suite 202 San Marcos, CA 92069 (760) 744-9801 Date Douglas L. Helmfng, RCE 23874 Expiration Date 12/31/05 PROJECT REVIEW COMPLETION EASEMENT / COVENANT FOR EASEMENT The following project maps have been reviewed and are recommended for approval: Project Name: Project No.: Dwg. No.: Type of Easement: MANZANITA APTS SDP98-19 PR 03-61 Public Street & Public Utility DECLARATION OF RESPONSIBLE CHARGE I hereby declare that I have exercised responsible charge over the easement review of this project as defined in Section 8703 of the Business and Professions Code to determine that the easement documents are found to be in substantial compliance with applicable codes and standards. Plan review of these project easements does not relieve the Engineer of Work of the responsibilities with state and local ordinances. Signed Helming Engineering Co., Inc. 1650 Linda Vista Drive, Suite 202 San Marcos, CA 92069 (760) 744-9801 Date Douglas L. Helming, RCE 23874 Expiration Date 12/31/05 Wo*/ PROJECT REVIEW COMPLETION EASEMENT / COVENANT FOR EASEMENT The following project maps have been reviewed and are recommended for approval: Project Name: Project No.: Dwg. No.: Type of Easement.: MANZANITA APTS SDP98-19 PR 03-60 Public Street & Public Utility DECLARATION OF RESPONSIBLE CHARGE I hereby declare that I have exercised responsible charge over the easement review of this project as defined in Section 8703 of the Business and Professions Code to determine that the easement documents are found to be in substantial compliance with applicable codes and standards. Plan review of these project easements does not relieve the Engineer of Work of the responsibilities with state and local ordinances. Signed Helming Engineering Co., Inc. 1650 Linda Vista Drive, Suite 202 San Marcos, CA 92069 (760) 744-9801 Date Douglas L. Helming, RCE 23874 Expiration Date 12/31/05 PROJECT REVIEW COMPLETION EASEMENT / COVENANT FOR EASEMENT The following project maps have been reviewed and are recommended for approval: Project Name: Project No.: Dwg. No.: Type of Easement.: MANZANITA APTS SDP 98-19 PR 03-64 DRAINAGE - ECR DECLARATION OF RESPONSIBLE CHARGE I hereby declare that I have exercised responsible charge over the easement review of this project as defined in Section 8703 of the Business and Professions Code to determine that the easement documents are found to be in substantial compliance with applicable codes and standards. Plan review of these project easements does not relieve the Engineer of Work of the responsibilities with state and local ordinances. Signed Helming Engineering Co., Inc. 1650 Linda Vista Drive, Suite 202 San Marcos, CA 92069 (760) 744-9801 Date_ Douglas L. Helming, RCE 23874 Expiration Date 12/31/05 PROJECT REVIEW COMPLETION EASEMENT / COVENANT FOR EASEMENT The following project maps have been reviewed and are recommended for approval: Project Name: Project No.: Dwg. No.: Type of Easement.: MANZANITA APTS SDP98-19 PR 03-62 PUBLIC STREET & PUBLIC UTILITY - ECR DECLARATION OF RESPONSIBLE CHARGE I hereby declare that I have exercised responsible charge over the easement review of this project as defined in Section 8703 of the Business and Professions Code to determine that the easement documents are found to be in substantial compliance with applicable codes and standards. Plan review of these project easements does not relieve the Engineer of Work of the responsibilities with state and local ordinances. Helming Engineering Co., Inc. 1650 Linda Vista Drive, Suite 202 San Marcos, CA 92069 (760) 744-9801 Signed Date Douglas L. Helming, RCE 23874 Expiration Date 12/31/05 PROJECT MAP REVIEW COMPLETION The following project maps have been reviewed and are recommended for approval: Project Name: MANZANITA APTS BOUNDARY ADJUSTMENT Project No.: SDP 98-19 Dwg. No.: ADJ 03-15 Parcel 1 & 2 DECLARATION OF RESPONSIBLE CHARGE I hereby declare that I have exercised responsible charge over the review of this project as defined in Section 8703 of the Business and Professions Code to determine that the documents are found to be in substantial compliance with applicable codes and standards. Plan review of these project easements does not relieve the Land Surveyor or Engineer of Work of the responsibilities with state and local ordinances. Signed Helming Engineering Co., Inc. 1650 Linda Vista Drive, Suite 202 San Marcos, CA 92069 (760) 744-9801 Date Douglas L Helming, RCE 23874 Expiration Date 12/31/05 PROJECT PLAN REVISION REVIEW COMPLETION The following project plan revisions have been reviewed and are recommended for approval: Project Name: Project No.: Dwg.. No.: Sheet No's.: MANZANITA APIS SDP98-19 389-9 1 & 13-15,Total Sheet = 4 DECLARATION OF RESPONSIBLE CHARGE I hereby declare that I have exercised responsible charge over the plan review of this project as defined in Section 6703 of the Business and Professions Code to determine that the plans are found to be in substantial compliance with applicable codes and standards. Plan review of these project drawings does not relieve the Engineer of Work of the responsibilities with state and local ordinances. Signed Helming Engineering Co., Inc. 1650 Linda Vista Drive, Suite 202 San Marcos, CA 92069 (760) 744-9801 Date Douglas L. Helming, RCE 23874 Expiration Date 12/31/05 PROJECT REVIEW COMPLETION EASEMENT / COVENANT FOR EASEMENT The following project maps have been reviewed and are recommended for approval: Project Name: Project No.: Dwg. No.: Sheets No.: MANZANITA APTS SDP98-19 PR 03-63 GRANT DEED OF EASEMENT DECLARATION OF RESPONSIBLE CHARGE I hereby declare that I have exercised responsible charge over the easement review of this project as defined in Section 8703 of the Business and Professions Code to determine that the easement documents are found to be in substantial compliance with applicable codes and standards. Plan review of these project easements does not relieve the Engineer of Work of the responsibilities with state and local ordinances. Signed Helming Engineering Co., Inc. 1650 Linda Vista Drive, Suite 202 San Marcos, CA 92069 (760) 744-9801 Date Douglas L. Helming, RCE 23874 Expiration Date 12/31/05 PROJECT PLAN REVIEW COMPLETION The following project plan have been reviewed and are recommended for approval- Project Name: MANZANITA APIS Project No.: SDP 98-19 Dwg.. No.: 389-9 Sheets No.: 1 through 51 DECLARATION OF RESPONSIBLE CHARGE I hereby declare that I have exercised responsible charge over the plan review of this project as defined in Section 6703 of the Business and Professions Code to determine that the plans are found to be in substantial compliance with applicable codes and standards. Plan review of these project drawings does not relieve the Engineer of Work of the responsibilities with state and local ordinances. Helming Engineering Co., Inc. 1650 Linda Vista Drive, Suite 202 San Marcos, CA 92069 (760) 744-9801 Signed O - ->^ Date Douglas L. Helming, RCE 23874 Expiration Date 12/31/05 PROJECT REVIEW COMPLETION EASEMENT / COVENANT FOR EASEMENT The following project maps have been reviewed and are recommended for approval: Project Name: MANZANITA APIS Project No.: SDP98-19 Dwg. No.: PR 00-48 Sheets No.: Grant Deed, Legal description & Plat DECLARATION OF RESPONSIBLE CHARGE I hereby declare that I have exercised responsible charge over the easement review of this project as defined in Section 8703 of the Business and Professions Code to determine that the easement documents are found to be in substantial compliance with applicable codes and standards. Plan review of these project easements does not relieve the Engineer of Work of the responsibilities with state and local ordinances. Signed Helming Engineering Co., Inc. 1650 Linda Vista Drive, Suite 202 San Marcos, CA 92069 (760) 744-9801 Date Douglas L. Helming, RCE 23874 Expiration Date 12/31/05 PROJECT PLAN REVIEW COMPLETION The following project plan have been reviewed and are recommended for approval: Project Name: MANZANITA APIS Project No.: SDP98-19 Dwg..No.: 389-9A Sheets No.: 1 through 20 DECLARATION OF RESPONSIBLE CHARGE I hereby declare that I have exercised responsible charge over the plan review of this project as defined in Section 6703 of the Business and Professions Code to determine that the plans are found to be in substantial compliance with applicable codes and standards. Plan review of these project drawings does not relieve the Engineer of Work of the responsibilities with state and local ordinances. Signed Helming Engineering Co., Inc. 1650 Linda Vista Drive, Suite 202 San Marcos, CA 92069 (760) 744-9801 Date Douglas L. Helming, RCE 23874 Expiration Date 12/31/05 " o? PSfTj^WJT o c MANZAHITA PARTNERS, UC 3990 RufFin Road • Suite 100 San Diego, CA 92123-1826 Telephone: (858) 614-7200 Facsimile: (858) 614-1650 August 21,2006 Ms. Donna Harvey City of Carlsbad/Engineering Department 1635 Faraday Ave. Carlsbad, CA 92008 Re: Manzanita Partners, LLC, SDP 98-19, DWG 389-9 - Improvement Agreement Deadline Extension Dear Ms. Harvey: Enclosed please find the following items as requested for the deadline extension of the improvement works at the Manzanita project, as referenced above: 1. Development Improvement Agreement Deadline Extension executed on behalf of Manzanita Partners, LLC, with notary acknowledgment; 2. Check in the amount of $ 350.00 payable to the City of Carlsbad for the extension fee Please send us a copy of the fully executed Development Improvement Agreement Deadline Extension for our record. Should you have any questions or require any additional information and/or documents, please do not hesitate to contact me at (858) 614-7268. Thank you. Priscilla Christianto Cc: Scott Dupree Ed Gorman Gene Roper 9 SHAMROCK Environmental Design & Development 1811 Rock Springs Road San Marcos CA 92069 Tel 760-480-6062 Fax 760-735-9459 e-mail mail ©shamrock.us.com web: www.shamrock.us.com January 28, 2004 Mr. Clyde Wickham City of Carlsbad Department of Public Works 1635 Faraday Carlsbad, CA. 92008 RE: Pad Certification SDP 98-19, DWG 389-9A To Whom It May Concern: I hereby certify that the grading for pads for the following buildings of the above mentioned project has been completed in conformance with the approved grading plan with only the exceptions noted. Bldg# BLDG#2101-a&b BLDG #3 103 BLDG#3102 Clubhouse Bldg#2104-a&b Bldg#2105-a&b Bldg#2106-a&b Bldg#2 107-a&b Bldg#2108-a&b Bldg#2 109-a&b Sincerely Plan Pad Elevation Elevation Elevation Elevation Elevation Elevation Elevation Elevation Elevation Elevation Elevation 316.7 319.2 322.4 322.4 323.1 320.8 321.8 316.1 309.8 310.3 Field Elevation Elevation 316.7 Elevation 319.2 Elevation 322.4 Elevation 319.62 Elevation 322.6 Elevation 320.8 Elevation 321.8 no data available Elevation 309.8 Elevation 310.3 Notes per plan per plan per plan *per plan as per const change #1 * per plan as per const change #1 per plan per plan per plan per plan gan P.E., P.L.S. President CC: Chip Escoffier Elaine Blackburn SHAMROCK Environmental Design & Development 1811 Rock Springs Road San Marcos CA 92069 Tel 760-480-6062 Fax 760-735-9459 e-mail mail @shamrock.us.com web: www.shamrock.us.com December 30, 2003 Mr. Clyde Wickham City of Carlsbad Department of Public Works 1635 Faraday Carlsbad, CA. 92008 RE: Pad Certification SDP 98-19, DWG 389-9A To Whom It May Concern: I hereby certify that the grading for pads for the following buildings of the above mentioned project has been completed in conformance with the approved grading plan with only the exceptions noted. Bldg# BLDG#2101-a&b BLDG#3103 BLDG#3102 Clubhouse Bldg#2104-a&b Plan Pad Elevation Elevation 316.7 Elevation 319.2 Elevation 322.4 Elevation 322.4 Elevation 323.1 Field Elevation Elevation 316.7 Elevation 319.2 Elevation 322.4 Elevation 319.62 Elevation 322.6 Notes per plan per plan per plan 'const change in process 'const change in process * these pad changes were necessary to meet new ADA access requirements, a construction change has been submitted for approval. Sincei P.LS. President CC: Chip Escoffier Elaine Blackburn DUDEK & ASSOCIATES, INC. CEngmfering, Planning, Corporate Office: Environmental Sciences and 605 Third Street 760.942.5147 for Complex Projects Management Services Encinitas, California 92024 Fax 760.632.0164 October 16, 2003 1835-01 The City of Carlsbad Clyde Wickham Engineering Department 1635 Faraday Avenue Carlsbad, CA 92008 RE: Manzanita Apartments Project, Carlsbad, California 2003 Status Report for Compliance with City of Carlsbad Mitigation Measures #4 and #5 Dear Mr. Wickham: Dudek & Associates, Inc. (DUDEK) is providing this 2003 status report to address compliance with City of Carlsbad Environmental Mitigation Monitoring Checklist Measures #4 and #5, for the Manzanita Apartments Project, Carlsbad, California. (File Numbers ZC 98-09/LCPA, 98-06/SDP, 98-06/HDP, 98-18/CDP, 98-73) The following summary provides verification regarding the current status of the Manzanita Partners project related to the two required mitigation measures associated with biological resources, vernal pool habitat, project grading and the requirement for California gnatcatcher surveys prior to the start of grading: MITIGATION MEASURE #4 (Biological Resources and Vernal Pools) Mitigation Measure #4 states the following: "Impacts to biological resources shall be mitigated pursuant to the recommendations made in the Biological Resources Study (prepared by Dudek & Associates, dated September 29, 1998, pages 29-32) unless different and/or additional mitigation is required by the U.S. Fish and Wildlife Service, the California Department of Fish and Game, and/or the Army Corps of Engineers. If any of those agencies require different and/or additional mitigation, then compliance with those different mitigation measures shall be required. " There have been no changes in the resource agency (Army Corps, USFWS & CDFG) mitigation program requirements per Army Corps, USFWS & CDFG, since original issuance of the environmental permits. The project is continuing under those original permits. C Q Mr. Clyde Wickham RE: 2003 Status Report for Compliance with City of Carlsbad Mitigation Measures #4 and #5 ^ As directed by the original Biological Resources Study (DUDEK, September 29,1998), direct impacts to a combined 3.39 acres of coastal sage scrub, disturbed coastal sage scrub and coyote brush scrub were to be mitigated through the onsite dedication of 5.09 acres of coastal sage scrub habitat within project open space, within the southwest portion of the site. Direct impacts to 1.78 acres of southern maritime chaparral habitat were to be mitigated through the onsite dedication of 3.56 acres of southern maritime chaparral habitat within project open space. The limits of the onsite dedicated open space areas have remained the same since the original project analysis and the areas to be preserved have been protected to date. Direct impacts to 0.02 acre of disturbed vernal pool and 0.08 acre of surrounding disturbed seasonal wetland, within the western portion of the project site (i.e. west of El Camino Real), were originally mitigated through restoration and enhancement of vernal pool habitat within the eastern open space parcel, east of El Camino Real. The Final Conceptual Mitigation Plan For Vernal Pool Restoration and Enhancement at the Manzanita Partners Property. DUDEK October 1999, outlined the required mitigation program. The mitigation program was initiated in early 2000 and was implemented as intended. All vernal pool enhancement and restoration activities within the eastern vernal pool preserve area were completed in February 2000. All work was conducted in compliance with the USFWS Biological Opinion and the Army Corps of Engineers Nationwide Permit Authorization. A total of 0.16 acre of vernal pool basin area was enhanced, 0.12 acre of vernal pool basin area was restored, and surrounding mima mound and upland habitat area surrounding the pools was enhanced and revegetated as part of the mitigation program. The five-year maintenance and monitoring period began on April 14,2000, upon completion of the installation and fulfillment of the initial 120-day plant establishment maintenance period requirements. Biological monitoring by DUDEK has been ongoing since that time. D & D Landscape has been implementing the maintenance program. A Year Two vernal pool status report was prepared by DUDEK on May 14, 2002, documenting the first and second years of the vernal pool monitoring program. The project is currently in the third year of the maintenance and monitoring program. The vernal pool restoration and enhancement program is progressing well and is on track to achieve the designated success criteria. DUDEK conducted additional biological monitoring surveys during the winter and spring of 2002/2003 to document site conditions during significant rainfall events and to evaluate water depth and holding capacity of the vernal pools. DUDEK also documented the resultant plant growth to determine vernal pool species presence. The Year Three data is being analyzed and the annual report will be completed in the near future. October 16, 2003 1835-01 '^t Manzanita Apartments Project, Carlsbad, California 2 Mr. Clyde Wickham RE: 2003 Status Report for Compliance with City of Carlsbad Mitigation Measures #4 and #5 MITIGATION MEASURE #5 (Project Grading and California Gnatcatcher Surveys) Mitigation Measure #5 states the following: "To mitigate potential disturbances to the California gnatcatcher, the grading operation within 100 feet of the proposed open space area will be restricted during the gnatcatcher breeding season, or from February 15 to August 30 each year, unless it can be shown through field reconnaissance by a certified biologist that no gnatcatchers are present on the property for mo months prior to the start of grading." Grading for the project was slated to begin prior to the end of the 2003 California gnatcatcher breeding period thus monitoring was initiated to confirm that no gnatcatchers were present for two months prior to start of the grading. To be in compliance with mitigation measure #5, the project developer, ConAm, retained DUDEK to conduct the necessary gnatcatcher surveys. The gnatcatcher survey work was conducted from January 2003 through August 2003 in anticipation of the start of site grading. The gnatcatcher surveys were extended due to several delays in the start of grading operations due to City permitting issues. Grading was subsequently delayed past the end of the gnatcatcher breeding season. The results of the 2003 gnatcatcher surveys are summarized in a separate letter report prepared by DUDEK dated September 15, 2003. All surveys were conducted per resource agency protocol survey procedures and in compliance with the project's mitigation measures. Gnatcatchers were detected onsite in two locations but were beyond the 100 foot restricted area. Please feel free to contact us if we can provide any further clarifications regarding these matters. Sincerely, DUDEK & ASSOCIATES, INC. jhn L. Minchin Landscape Architect iabitat Restoration Specialist October 16, 2003 1835-01 |& ASSOCIATES, INC. "•—"^^™"—^—^i^_^_J Manzanita Apartments Project, Carlsbad, California 3 Mr. Clyde Wickham RE: 2003 Status Report for Compliance with City of Carlsbad Mitigation Measures #4 and #5 cc: Elaine Blackburn, The City of Carlsbad - Planning Department Anita Hayworth, Dudek & Associates, Inc. Brian Regan, Shamrock Environmental Design & Development Phil Kidd & Dana Wohlford, Manzanita Partners Ron Perera & Brad Forrester, ConAm Jack Henthorn, Henthorn & Assoc., Inc. October 16,2003 1835-01 I'ro/Uiticittul '/cum.1 fur Complex Projt Manzanita Apartments Project, Carlsbad, California POUNTNEY Civil Engineers & Land Surveyors AUQUSt 26, 2003 1-797-011 Mr. Clyde Wickham ^6 2 A CITY OF CARLSBAD -Public Works, Engineering c 1635 Faraday Avenue Carlsbad, CA 92008 SUBJECT: MANZANITA APARTMETNS PROJECT; Project No. SDP 98-19 Dear Mr. Wickham: Per your request, we have reviewed the City of Carlsbad, Public Works Department - Standard Urban Storm Water Mitigation Plan (SUSWMP) and Storm Water Standards, dated April 2003. We found mat the Storm Water Pollution Prevention Plan (SWPPP) and Storm Water Management Plan (SWMP) / Water Quality Technical Report for the Manzanita Apartment Project issued in September 2002, conforms to your SUSWMP and Storm Water Standards except the four (4) items noted below. 1. The check list for "Priority Project Permanent Storm Water BMP Requirements and Standard Permanent Storm Water BMP Requirements" was not submitted since the document did not exist Therefore, we have attached a copy for inclusion in your copy of the SWPPP. 2. We have added a note to Sheet 20 of 20 to cross reference operating and maintenance procedures to be found in the SWMP document per your requirements. 3. Our Storm Water Management Plan (SWMP) is a Water Quality Technical Report per your latest procedures and was issued in September 2002. 4. We have added the "Priority" status of BMP requirements to Sheet 20 of 20. If you have any questions, please feel free to call me at 858-576-9200. Sincerely, ' CONSULTING GROUP, INC. __ K>r Project Manager WCY/ecg Attachment Pountney Consulting Group, Inc. 4455 Murphy Canyon Road, Suite 200, San Diego, CA 92123-4379 858-576-9200 • FAX 858-565-1738 • 800-540-9266 Storm Water Standards 4/03/03 V\. RESOURCES & REFERENCES APPENDIX A STORM WATER REQUIREMENTS APPLICABILITY CHECKLIST Complete Sections 1 and 2 of the following checklist to determine your project's permanent and construction storm water best management practices requirements. This form must be completed and submitted with your permit application. Section 1. Permanent Storm Water BMP Requirements: If any answers to Part A are answered "Yes," your project is subject to the "Priority Project Permanent Storm Water BMP Requirements," and "Standard Permanent Storm Water BMP Requirements" in Section III, "Permanent Storm Water BMP Selection Procedure" in the Storm Water Standards manual. If all answers to Part A are "No," and any answers to Part B are "Yes," your project is only subject to the "Standard Permanent Storm Water BMP Requirements". If every question in Part A and B is answered "No," your project is exempt from permanent storm water requirements. Part A: Determine Priority Project Permanent Storm Water BMP Requirements. Does the project meet the definition of one or more of the priority project categories?* 1 . Detached residential development of 10 or more units 2. Attached residential development of 10 or more units 3. Commercial development greater than 100,000 square feet 4, Automotive repair shop 5. Restaurant 6. Steep hillside development greater than 5,000 square feet 7. Project discharging to receiving waters within Environmentally Sensitive Areas 8. Parking lots greater than or equal to 5,000 ft* or with at least 15 parking spaces, and potentially exposed to urban runoff 9. Streets, roads, highways, and freeways which would create a new paved surface that is 5,000 square feet or greater Yes ^ i/ \s No * Refer to the definitions section in the Storm Water Standards for expanded definitions of the priority project categories. Limited Exclusion: Trenching and resurfacing work associated with utility projects are not considered priority projects. Parking lots, buildings and other structures associated with utility projects are priority projects if one or more of the criteria in Part A is met. If all answers to Part A are "No", continue to Part B. Storm Water Standards 4/03/03 Part B: Determine Standard Permanent Storm Water Requirements. Does the project propose: 1 . New impervious areas, such as rooftops, roads, parking lots, driveways, paths and sidewalks? 2. Newjjervious landscape areas and irrigation systems? 3. Permanent structures within 100 feet of any natural water body? 4. Trash storage areas? 5. Liquid or solid material loading and unloading areas? 6. Vehicle or equipment fueling, washing, or maintenance areas? 7. Require a General NPDES Permit for Storm Water Discharges Associated with Industrial Activities (Except construction)?* 8. Commercial or industrial waste handling or storage, excluding typical office or household waste? 9. Any grading oro/ound disturbance during construction? 10. Any new storm drains, or alteration to existing storm drains? Yes S\/ *s ^i/ No To find out if your project is required to obtain an individual General NPDES Permit for Storm Water Discharges Associated with Industrial Activities, visit the State Water Resources Control Board web site at, www.swrcb.ca.gov/stormwtr/industrial.html Section 2. Construction Storm Water BMP Requirements: If the answer to question 1 of Part C is answered "Yes," your project is subject to Section IV, "Construction Storm Water BMP Performance Standards," and must prepare a Storm Water Pollution Prevention Plan (SWPPP). If the answer to question 1 is "No," but the answer to any of the remaining questions is "Yes," your project is subject to Section IV, "Construction Storm Water BMP Performance Standards," and must prepare a Water Pollution Control Plan (WPCP). If every question in Part C is answered "No," your project is exempt from any construction storm water BMP requirements. If any of the answers to the questions in Part C are "Yes," complete the construction site prioritization in Part D, below. Part C: Determine Construction Phase Storm Water Requirements. Would the project meet any of these criteria during construction? 1 . Is the project subject to California's statewide General NPDES Permit for Storm Water Discharges Associated With Construction Activities? 2. Does the project propose grading or soil disturbance? 3. Would storm water or urban runoff have the potential to contact any portion of the construction area, including washing and staging areas? 4. Would the project use any construction materials that could negatively affect water quality if discharged from the site (such as, paints, solvents, concrete, and stucco)? Yes V/ \^ IX I/ No s s 31 Storm Water Standards 4/03/03 Part 0: Determine Construction Site Priority In accordance with the Municipal Permit, each construction site with construction storm water BMP requirements must be designated with a priority: high, medium or low. This prioritization must be completed with this form, noted on the plans, and included in the SWPPP or WPCP. Indicate the project's priority in one of the check boxes using the criteria below, and existing and surrounding conditions of the project, the type of activities necessary to complete the construction and any other extenuating circumstances that may pose a threat to water quality. The City reserves the right to adjust the priority of the projects both before and during construction. [Note: The construction priority does NOT change construction BMP requirements that apply to projects; ail construction BMP requirements must be identified on a case-by-case basis. The construction priority does affect the frequency of inspections that will be conducted by City staff. See Section IV. 1 for more details on construction BMP requirements.] Ql A) High Priority 1) Projects where the site is 50 acres or more and grading will occur during the rainy season 2) Projects 5 acres or more. 3) Projects 5 acres or more within or directly adjacent to or discharging directly to a coastal lagoon or other receiving water within an environmentally sensitive area Projects, active or inactive, adjacent or tributary to sensitive water bodies Q B) Medium Priority 1) Capital Improvement Projects where grading occurs, however a Storm Water Pollution Prevention Plan (SWPPP) is not required under the State General Construction Permit (i.e., water and sewer replacement projects, intersection and street re-alignments, widening, comfort stations, etc.) 2) Permit projects in the public right-of-way where grading occurs, such as installation of sidewalk, substantial retaining walls, curb and gutter for an entire street frontage, etc., however SWPPPs are not required. 3) Permit projects on private property where grading permits are required, however, Notice Of Intents (NOIs) and SWPPPs are not required. Q C) Low Priority 1) Capital Projects where minimal to no grading occurs, such as signal light and loop installations, street light installations, etc. 2) Permit projects in the public right-of-way where minimal to no grading occurs, such as pedestrian ramps, driveway additions, small retaining walls, etc. 3) Permit projects on private property where grading permits are not required, such as small retaining walls, single-family homes, small tenant improvements, etc. 32 p flf-fl Memorandum TO: Senior Planner, Elaine Blackburn FROM: Associate Engineer, Clyde Wickharn DATE 8/21/2003 RE: PRE03-46: MANZANITAAPARTMENTS We have completed our review of the preliminary design identified above. The proposal to change location of tot lot, the addition of chimneys for second floor units, replacement of wooden railings with composite material, the addition of utility meter cabinets, and the replacement of peaked roofs over carports are acceptable. From the package submitted we have no comments or concerns. If you have any questions or would like to discuss these comments, please give me a call at extension 2742. Henthorn & Associates 5365 Avenida Encinas, Suite A Carlsbad, California 92008 ._ . (760)438-4090 Fax (760) 438-0981 July 29, 2003 Elaine Blackburn City of Carlsbad 1635 Faraday Avenue Carlsbad, CA 92008 Subject: SDP 98-19: Substantial Conformance Dear Ms. Blackburn: In follow-up to our meeting on June 26, 2003, we have itemized for your substantial conformance review the site plan and architectural revisions proposed by ConAm for the Manzanita Apartments project (SDP 98-19). Each item below is accompanied by a statement of justification explaining why the change is requested. • Relocation of Tot Lot from pool area to southern area of site. The approved site development plan would result in the placement of the tot lot southerly adjacent to the apartment complex swimming pool and northerly adjacent to a parking area. For obvious safety and insurance reasons, the applicant proposes to relocate the tot lot to the existing open area in the center of the cluster of apartment buildings on the southern part of the site. The existing tot lot site would be landscaped to serve as an outdoor amenity for the apartment complex. • Addition of chimneys to the residential buildings. The applicant proposes to include fireplaces as a premium amenity for the second floor units in the two-story buildings and the third floor units in the three-story building. As the fireplaces requiring the chimneys will be located exclusively on the upper story, the footprint of the apartment buildings will not change. The addition of chimneys is in keeping with City Council's requirement for the complex to look "rustic," and contributes to the overall appearance of the complex as a quality residential development and not just another apartment complex. • Replacement of wooden railings with composite material (Trex, Timber-Tech) for railings and pickets. Industry standards now mandate a maximum of four inches between pickets on decks and porches; however, natural wood has a limit beyond which it cannot be cut down in width and yet maintain its strength and durability. The result is therefore a loss of the feeling of openness on the balconies and walkways that will have railings and pickets installed pursuant to these new standards. The alternative is the proposed composite material which has the appearance of natural wood, but maintains its strength and durability at smaller widths than natural wood. The composite material is ideal for railings because it does not splinter. Natural wood is still proposed for caps and fascia, but the composite material is preferred for the railings and spindles. -1- • Addition of utility cabinets to exterior of residential buildings. The approved architecture plans did not provide for the location of protected utility meters. The proposed utility cabinets are located in a recessed area of each residential building and therefore do not affect building spacing. • Replacement of flat carport roofs with peaked roofs. This is a purely aesthetic revision which is more in keeping with the overall design scheme of the project. We have submitted for your review materials samples, and in the instance of the tot lot relocation, a colored rendering df the proposed change. If you have any questions or need additional information regarding these proposed revisions, please contact us at your earliest convenience. Sincerely, :k Henthorn fack Henthorn &. Associates encl. CC: file Document 1 -2- A G«5 Sempra Energy' company May 19,2003 Manzanita Partners, L.L.C. c/o Mr. Brian Regan Shamrock Environmental Design & Consulting 1811 Rock Springs Road San Marcos, CA 92069 EXTENSION TO LETTER OF PERMISSION FOR GRADING AND CONSTRUCTION OF IMPROVEMENTS Dear Mr. Regan: San Diego Gas & Electric Company (SDG&E) is the owner of a 200' Electric Transmission Easement located in and around the following legal description: A PORTION OF THE SOUTH 10 ACRES OF THE NE % OF THE SOUTHWEST 1/4 OF SECTION 23, TOWNSHIP 12 SOUTH, RANGE 4 WEST, SAN BERNARDINO MERIDIAN, IN THE COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF, LYING WESTERLY OF THE WESTERLY LINE OF ROAD SURVEY NO. 1800-1 AS DESCRIBED IN DEED TO THE COUNTY OF SAN DIEGO, RECORDED DECEMBER 18, 1969 AS FILE PAGE NO. 230092 OF OFFICIAL RECORDS. ALSO, A PORTION OF THE SOUTHEAST % OF THE SOUTHWEST Y, OF SECTION 23, TOWNSHIP 12 SOUTH, RANGE 4 WEST, SAN BERNARDINO MERIDIAN, IN THE COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO OFFICIAL PLAT THEREOF. (A.P.N. 215-020-12 & 13, and 215-020-04) (SDG&E Right of Way No. 31558, Recorded April 16,1954 in Book 5207, Page 158 of Official Records). We have reviewed and approved the Grading Plans for Manzanita Partners, L.L.C., received August 6,2002, revised and accepted November 20,2002, which shows the proposed grading and improvements on the property subject to our easement These plans are attached to SDG&E's Permission to Grade Letter, dated November 22,2002, as Exhibit 'A' (14 sheets). Manzanita Apts Extn Ur.doc Permission is hereby granted to Manzanita Partners, L.L.C., to grade and construct improvements as shown on said plans, subject to the following conditions: 1. Expiration: This extension to the "Permission to Grade" shall expire if grading does not commence within 6 months from the date of this letter, or work is not diligently pursued to completion. 2. Terms and Conditions: All terms and conditions of the original document dated November 22,2002 shall benefit and bind Permittee its successors, assigns, agents or contractors. The permission letter and extension letter shall be posted on the job site at all times. Should you have any questions or require additional assistance, please call me at (858) 654-1201. EXTENSION APPROVED BY: San Diego Gas & Electric Company Michael J. Willi* Land Management Representative Manzanita Apts Extn Llr.doc '<.,,»*> 1811 Rock Springs Road San Marcos, CA 92069 Tel 760-460-6063 Fax-760-735-9459 e-mail mail@shamrack.us.com SHAMROCK Environmental Design & Development To: Clyde Wickham From: Brian Fax: (76Q) 602-1052 Pages: 2 Phone: (7«n 602-2742 Date: 07/31/2002 Re: SW Comer rtn at Cassia ECR CC: Ed G, Ron P, Cheui Y, File 1000 D Urgent O For Review D Please Comment D Please Reply D Please Recycle e Comments: Clyde: I can keep this existing traffic signal pole in place and the existing utilities uin place at the s/w return of Cassia & ECR if I can do a non-standard sidewalk around the pole and utilities as attached. As long as we meet ADA is it acceptable to the City to do this kind of sidewalk as attached. All other comments from team members appreciated. \\ ,,-N »/ !1 GSfrB GEL ue3aa '3 UBTJS ^12:20 20 IE or. 3-d -3 so Te j Clyde Wickham - R^^noth^Manza^jstion From: Sherri Howard To: Brian C. Regan; Clyde Wickham Date: 7/3/02 2:05PM Subject: Re: another Manzanita qustion The award for the construction of dual left turn lanes from El Camino Real to Camino Vida Roble, including widening El Camino Real 2.5', converting to video detection and upgrading the controller is scheduled for City Council July 9, 2002. The low bidder is HMS Construction. If any of those items were required by the condition, they are a part of the City project. >» "Brian C. Regan" <bregan@cox.net> 07/03/02 09:56AM >» Clyde last time I worked with Carrie on Camino Vida Roble, it appeared the big concern regarding Camino Vida Roble capacity for Manxzanita was a non-issue. What will you require to prove that condition re: Camino Vida Roble has been satisfied. CC:Ed Gorman; Jack Henthorn; Marshall Plantz; Ron Perera 08/14/00 ' 09:fr1 U 2,12'¥248 sn NAT ii TST aooi/nj ' - >'!v. > ' » ,- X - f San Diego Naairal Histoiy Museum Ifcillxxt Mark • ,S:m Diego Socitry of Natural 1-llsiory • Esi.ibli.shcd lt)74 'i^^v|| 8 August 2000 Mr. Brian C. Regan Regan Engineering 1811 Rnr.k Spring* Road San Marcos, California 92069 RE: Paleontological Resources, Manzanita Property (APN 215-020-12 and APN 212-; 020-13) Dear Mr. Regan: It is my understanding that the above referenced project has a paleontological.';', .'; resource condition attached to the development permit. However, after reviewing the project grading plans and in-house departmental records, it seems clear that development of the site will not result in any impacts to significant paleontological resources. Previous geologic mapping in the area indicates that the project site is underlain <$|g by Pleistocene-aged (approximately 700,000 years old) marine and non-marine terrace sandstones and Eocene-aged (approximately 45-48 million years old) estuarine and nearshore marine mudstones and sandstones. The Pleistocene sandstones can be assigne to the "Lindavista Formation," while the Eocene mudstones and sandstones can be. ^ assigned to either the Torrey Sandstone or Santiago Formation. The contact between the ''\ two rock units occurs at approximately elevation 315 feet. ; ;j? No fossil localities are known from the project site, although, several localities '| were discovered in the Santiago Formation during grading of the adjacent Poinsettia Hills v project site. Fossils collected from these localities included poorly preserved shell i remains of Eocene estuarine molluscs (clams and snails). The "Lindavista Formation" has yet to produce significant fossil remains in Carlsbad. The proposed improvements to the project site include only minimal grading, with maximum cut depths of only a few feet. The majority of these shallow cuts appear to be confined to deposits of the "Lindavista Formation." Such shallow and surficial cuts are not likely to encounter significant paleontological resources. In summary, the combined factors of limited earthwork by volume and depth of cut and the surficial location of the project, suggest that the potential for significant paleontological findings is unlikely. Therefore, I propose that the applicant not be ; required to implement a paleontological monitoring program. ! If you have any questions or concerns, please call at 232-3821, extension 232. . Sincerely, Thomas A. Demer^, Ph.D. Curator, Department of Paleontology CITY OF CARLSBAD Engineering Department CONFERENCE NOTES Page 1 of 2 DATE 06/19/2000 TIME 8:00 AM BY Carrie LOCATION Bob's Office PROJECT NUMBER(S) 38131 PROJECT TITLE 2000 Traffic Impact Fee Update SUBJECT ECR/CVR Intersection ATTENDEES Bob Johnson, Transportation Carrie Loya, Planning & Programs UNDERSTANDING The purpose of the meeting is to identify the improvements required at the intersection of El Camino Real and Camino Vida Roble as they relate to Traffic circulation and roadway geometry. Survey of the intersection and sketches of the proposed improvements were reviewed by Bob and John Kim. The following is a summary of the results of the meeting. 1. Bob identified two phases of improvements at this intersection: interim improvements and build out improvements. Bob felt that projected traffic volumes for the left turn movement from northbound ECR to CVR seem higher than what common sense warrants. He recommends interim improvements to mitigate high left turn traffic volumes prior to constructing build out improvements. The traffic volumes can then be further monitored to determine if build out improvements are necessary. 2. Interim improvements include increasing the existing left turn storage lane on ECR from approximately 300 feet to 500 feet. 3. Build out improvements include: • Adding an additional left turn lane on northbound ECR • Restriping ECR north and south of the ECR/CVR intersection. • Restriping CVR to eliminate bike lanes and add additional right only lane at d/w • Construct sidewalk on the north side of CVR to Yarrow Dr. • Obtain additional r/w on CVR for sidewalk additional lane and transitions. 4.Lane configuration on ECR at intersection (see attached sketch): Existing Southbound Northbound 8' 12' 12' 12' 8' 10' 12' 12' 8' = 94'r/w b/l thru thru thru med left thru thru b/l Proposed Build Out 5' 12' 12' 12' 4' 10' 10' 12' 12' b/l thru thru thru med left left thru thru 5' = 94'r/w b/l Form A H:\WORO\LoyaVJ813\ECR-CVR is\6-19 meeting notes.rtf .•I*"" W' CITY OF CARLSBAD Engineering Department CONFERENCE NOTES Page 2 of 2 DATE 06/19/2000 PROJECT NUMBER(S) 38131 PROJECT TITLE 2000 Traffic Impact Fee Update SUBJECT ECR/CVR intersection UNDERSTANDING (continued) 5. Lane configuration on CVR at intersection (see attached mark-up): Existing Westbound Eastbound 5' 5' 12' 12' 10' 12' 12' 5' 5' = 78'r/w pw b/l thru thru left thru thru b/l pw Proposed Build Out 5' 12' 11' 10' 12' 11' 12' 5.5' = 79'r/w (1'additional r/w) pw thru thru left thru thru right pw w/s/w 6. Transition on CVR from the proposed lane configuration in item 5 to the existing lane configuration, shall start at the driveway on the north side of the street and shall be 320 feet long. Additional right-of-way is most likely required to accommodate this transition. 7. The build out improvements of this intersection will be included in the 2000 TIP. 8. The Manzanita Apartments Developer may be required to design and construct the intermediate improvements as a mitigation. FOLLOW-UP REQUIRED 1. Carrie will meet with Skip and Clyde to determine if the Developer is required to design and construct the interim improvements and design the build out improvements. C: Skip Hammann, Development Services Clyde Wickam, Development Services Susan O'Rourke, O'Rourke Engineering Form A H:\WORD\Loya\3813\ECR-CVR is\6-19 meeting notes.rtf \ -f EK, CURS To CUSS yy/OTW */,^-' I \ /c* '^o ftI «2 Sj +% / +u / T 80-VK 'ufi M I-^TT! N wJJ8 t2 ^L J T^*« § * •JJS.4J °H §ti a,fra ,:,^ OP'*i i^^ J( +3'7.30 ^ N 3 .^ if ( +316.84 +318.79 ^^1.^HKio *^ Hj>.« +3H62 REGAN ENGINEERING 1811 Rock Springs Ro< San Marcos, Ca 92069 760-431-6863 LETTER OF TRANSMITTAL TO: City of Carlsbad Engineering Department DATE: 3/14/00 JOB NO. 1000 ATTENTION: Clyde Wickham RE: Camino Vida Robles WE ARE SENDING 0Attached Q]Shop Drawings |~"] Copy of letter dated COPIES DATE NO. 1 3/14/00 1 1 3/14/00 1 1 3/14/00 1 [~~| Under separate cover via MESSENGER the following items: Q Prints FJ3 Plans Q Samples Q Specifications [~~| Change order |~1 DESCRIPTION Plot of preliminary Lane layout & New curb Previous flimsy Copy of John Kim's comments ,..4 ^ ^trr-i rr-«T^RKCblvbU MAP i /| onnn1 Irtn 1 I LUUU ENGihiEERiNG DEPARTMENT THESE ARE TRANSMITTED as checked below: f~l For approval PH For checking fX| For your use QApproved as submitted 0As requested [^Approved as noted jResubmit copies rorapprovaf n Design only, not for construction r~| Return corrected prints •I For review and comment 1 Returned for corrections P^j For your action REMARKS: Clyde: Here is a preliminary copy of the Cam9ino Vida Robles improvements. I've respected John Kim's reqi I Have only used a five foot parkway from Face of curb to PL. I figured since the City is buying the RW they don't want £ than they absolutely have to. This matches the old RW. Additionally will the City require sidewalk the full length. It goes unless you extend to Yarrow as John Kim has suggested. If so the R/W would need to be widened at least 0.5 feet for th length of Camino Vida Robles, unless you only have a five foot sidewalk including top of curb width. Please comment or I am proposing. Any questions call 760-497-4589. Thanks, Brian ^ COPY TO file, Phil & Dana SIGNED: if enclosures are not as noted, kindly notify us at once. VEGA PUBLIC WORKS LAND DEVELOPMENT SECTION MEMORANDUM DRAFT March 27, 2000 TO: LLOYD HUBBS - CITY ENGINEER FROM: Senior Civil Engineer - Skip Hammann EL CAMINO REAL & CAMINO VIDA ROBLES INTERSECTION IMPROVEMENTS The Land Development Division received an exhibit from Regan Engineering on 3-14-00 illustrating the areas impacted on Camino Vida Roble (CVR) by the proposed improvements to this intersection to accommodate west bound dual left turn lanes on El Camino Real (ECR). The proposal meet the minimum City standards and will require additional right of way. The amount of right of way depends on the parkway width. The exhibit illustrates two alignments. The only difference between the two is, one has a 5 foot parkway and the other has a 10 foot parkway. The area north of the existing right of way is the only area affected. It is estimated that 2500 S.F. is need for a 5 foot parkway and 10,000 S.F. is needed for a 10 foot parkway. Staff recommends the alignment for a 10 foot parkway to allow for landscaping, utilities and sidewalks. A 5 foot parkway is feasible. However, if the City is going to acquire additional right of way staff is recommending obtaining enough right of way to accommodate a 10 foot parkway. Currently there is a need to provide the dual left turn lanes on ECR and modify CVR. The issue is the timing of the improvements. Originally, staff anticipated the improvements to be built by a land development project as part of off site improvements prior or concurrent to the need. It is not anticipated that these improvements will be constructed by a developer with in the next year or two at the earliest. This project has also been identified in the current CIP and if it was constructed by a developer, the developer would be eligible for reimbursement for the intersection improvements. If the project is constructed as a CIP project it could be started within the next 18 months depending on the time to acquire the right of way, prepare bid documents and select a contractor. Staff needs your direction. If the project needs to be constructed now, staff recommends that it be built as a CIP project. If it can wait 2 or more years then it could be built by a developer. SKIP HAMMANN Senior Civil Engineer- Land Development Attachment cc: Bob Wojcik, Deputy City Engineer - Land Development Clyde Wickham, Associate Engineer - Land Development MEMORANDUM September 10, 1999 TO: Associate Engineer, Clyde Wickham FROM: Associate Engineer, John Kim SDP 98-19 MANZANITA APARTMENTS (CAMINO VIDA ROBLE AND EL CAMINO REAL IMPROVEMENTS) I have the following comments to the proposed dual left turn from NB El Camino Real to WB Camino Vida Roble. 1) The lane drop transition on WB Camino Vida Roble should begin after (or west of ) the driveway on the north side of Camino Vida Roble, closest to El Camino Real. This will require additional right-of-way. 2) The minimum length of lane drop transition is 320 feet. The width of the lane dropped is 12 feet (not 9 feet) land speed used in the calculation should be 40 mprk- (not 30 mph). The Caltrans Traffic Manual does not make provisions for reduction of lateral offset if the exit lane happens to be wider than the entry lane. 3) In order to remove potential conflict between vehicles and pedestrians currently utilizing the bike lane, a sidewalk installed behind curb on the north side of Camino Vida Roble, from El Camino Real to Yarrow Drive should be incorporated as part of these improvements. If you have any questions regarding this matter, please give me a call at (760) 438- 1161, extension 4500. IN T. KIM, P.E. Associate Engineer Traffic Operations Section c: Public Works Director Deputy City Engineer, Transportation & ASSOCIATES, INC. Professional Teams for Complex Projects ring. Planning, Environmental Sciences and Management Services Corporate Office: 605 Third Street Encinitas, California 92024 760.942.5147 Fax 760.632.0164 May 2, 2000 1835-01 Ms. Julie Vanderwier U.S. Fish and Wildlife Service 2730 Loker Avenue West Carlsbad, CA 92008 Subject: Dear Ms. Vanderwier: Manzanita Partners Vernal Pool Restoration and Enhancement Project, Carlsbad Completion of Installation Report On 14 April 2000 Dudek & Associates, Inc. (DUDEK), D&D Landscape Construction, and Manzanita Partners, L.L.C. conducted a site visit at the Manzanita Partners Vernal Pool Restoration and Enhancement Project (Figure T) to verify the completion of the installation and to initiate the long-term maintenance and monitoring period. Currently, the project is performing well in terms of successful native plant establishment and minimal weed invasion. Native species are germinating in the enhanced and restored vernal pools and the upland coastal sage scrub transition areas. D&D Landscape Construction has been monitoring weed establishment within the mitigation site and has been weeding the site on a regular basis. The purpose of this letter is to document the status of the mitigation program and to chronologically summarize the installation events from initiation to completion. Figure 2 shows the current as-built conditions of the vernal pool enhancement and restoration areas. The installation events are summarized as follows: 24 November 1999: DUDEK flagged-off the westerly vernal pool and seasonal wetland area for salvaging of soils and inoculum. 26 November 1999: Clearing and grubbing was initiated within the perimeter of the western edge of the development west of the vernal pool and seasonal wetland area to be impacted. Coastal sage scrub areas were cut and mulched for use in the revegetation program. 3O November 1999: DUDEK met with D&D Landscape Construction to develop final implementation strategies, as summarized in the letter to the U.S. Fish and Wildlife Service (USFWS) dated 9 December 2000. USFWS later gave their concurrence on this proposed implementation protocol within minor revisions. 13 December 1999: Within the western portion of the site, DUDEK verified areas for vernal pool inoculum and soil salvaging. 10 - 17 January 2000: D&D Landscape Construction initiated the installation process including the following: 1) Salvaging of existing vernal pool inoculum and soils from the westerly vernal pool and seasonal wetland area; 2) Salvaging of existing Mohave yucca (Yucca schidigera) and coastal prickly pear (Opuntia littoralis); 3) Collection, transportion and spreading of 23 ten yard dump truck loads of crushed coastal sage scrub mulch (salvaged from west side). This included two inches of top soil for added soil bacteria, native seed, and humus for use within the mitigation site. 11 January 20OO: The existing pool and mima mound grades were documented prior to the final grading operations. Transit measurements of pool grades were taken by D&D Landscape Construction and DUDEK to determine grading modifications necessary to improve pool hydrology. On 11 January 2000, soils and mulch from the western, portion of the project site were transported to the east preserve and stockpiled. 13 January 2000: Within the mitigation site (eastern portion of the property), weed and exotic plant species were removed from the transitional areas surrounding the restored and enhanced vernal pools. The top 2-3 inches of weedy soil from the upland areas was also removed to decrease the weed/exotic seed bank within these transitional areas. A combination of mechanical work and hand labor were utilized. This weed duff was hauled to the western portion of the project site and spread over the impacted, previously salvaged, vernal pool and seasonal wetland area; this area is within the proposed development area. 17 January 2000 - 10 February 2000: The following items were completed during this time period: > Within the restored and enhanced vernal pools, the pools were re- contoured and the grades were documented. Within the restored pools, the salvaged topsoil was distributed. > The upland transitional areas throughout were roto-tilled to a depth of 3-6 inches. The mima mounds were re-contoured, and the salvaged coastal sage scrub topsoil and mulch was spread over all upland areas. May 2000 1835-01BU0EK |& ASSOCIATES, INC. | Manzanita Partners Vernal Pool Enhancement and Restoration Project Pr»/,«,to»i T«,m, fr, com|j« P»J«CB Completion of Installation Letter Page 2 The salvaged Mohave yucca and coastal prickly pear cactus were planted and watered in place within the upland areas. Silt fencing was installed around the perimeter of all vernal pools. 18 January 20OO: DUDEK conducted a site visit with USFWS representative Julie Vanderwier to review the status of the installation. 11 February 2000: The upland areas were imprinted with the specified seed mix, which contained 30 liters per acre of microrrhizal inoculum incorporated into the application. The imprinting was conducted by Hydroplant Inc. as a sub-contractor to D&D Landscape Construction. 11 - 14 February 2000: Following imprinting a final hydro-mulch layer was applied over all upland seeded coastal sage scrub areas for erosion control and to provide mulch seed protection. D&D Landscape Construction installed 1100 lineal feet of 5-foot T-post and three-strand barbed wire fencing. Every 200 feet a 24-inch sign, designating the area as a revegetation area, was installed along the east and west boundaries only. The 24-inch signs display the message "No Tresspassing - Penal Code 602 - Revegetation Project In Progress, Senstive Plant and Wildlife Preserve. Questions regarding this area may be directed to: Dudek & Associates, Inc. (760) 942-5147." 14 April2000: A site meeting with DUDEK, D&D Landscape Construction, and Manzanita Partners, L.L.C. was held to review the status of the site. It was determined at this site meeting that the 5-year maintenance and monitorrg period could begin formally. It was agreed that, the silt fencing around the restored and enhanced vernal pools will remain in place until the grading work starts along El Camino Real, which could be June or July of this year. Currently, the silt fencing is reducing wind blown seed and rodents/rabbits from getting into the pools. There does not appear to have been any problems with drainage runoff being precluded from entering the pools. Once grading work commences on the western side of the property, D&D Landscape Construction will remove the fencing from around the pools and will move it to the base of the barbed wire fence which runs parallel to El Camino Real along the western boundary of the mitigation site. This will help reduce wind blown seed and possible silt/dust from the construction work. Since completion of the installation phase in mid-February, D&D Landscape Construction has HMDEK & ASSOCIATES, INC. Pro/essionoj Teams /or Complex Projects May 2000 1835-01 Manzanita Partners Vernal Pool Enhancement and Restoration Project Completion of Installation Letter Page 3 been conducting weekly maintenance visits to address weed growth. A combination of herbicide applications and physical removals are being implemented. Silt fencing is being re- secured and re-staked where necessary due to wind damage. DUDEK will be periodically monitoring the maintenance work and coordinating with D&D Landscape Construction. DUDEK will be conducting a formal monitoring visit in late April and early May to document species germinating in the pools as well as within the upland transitional areas. A report will be prepared following the monitoring visit and will be forwarded to all involved parties. If you have any questions or require additional information, please do not hesitate to contact me at (760)942-5147. Very truly yours, DUDEK & ASSOCIATES, INC. Megan S. Eiwight Biologist/Habitat Restoration Specialist Attachments: Figures 1-1 cc: John Minchin, DUDEK PhilKidd, Manzanita Partners LL.C. Brian Regan, Regan Engineering Karon Marzec, U.S. Army Corps of Engineers Jim Whalen,J. Whalen Associates May 2000 1835-01 Manzanita Partners Vernal Pool Restoration and Enhancement Project Page 4 Professional Teams for Complex Projects ^glMfl^^l:^^^/-^^^^y^^MM^^Si^^^ io|f?5£S • -tv- ••&• -- - '•'-•' .i'-w'i^i."» v^"; 3 At; XT-"' T^ ~*v--' x'-;A?i-'.y£V'1V. ^ %,v, * BASE MAP SOURCE: USGS 7.5 Minute Series, Encinitas & San Luis Rey Quadrangles V '^ -' Manzanita Partners Properties - Vernal Pool Restoration Plan Vicinity Map rn on oa > II I' II II II II II Gregory Ryan - DWG 389-9 ' Pa; From: Gregory Ryan To: Wickham, Clyde Subject: DWG 389-9 090903 FIRE - Not sure if this can be accomplished at this time or not but FIRE would ask that a Fire Hydrant be added to 36+10.00 and 259+42.00 this F.H. is to front El Camino Real south of Cassia Rd. Plans do not indicate all the proposed location of the Backflow prevention devices for the automatic fire sprinkler systems to be installed, please confirm locations. Fire would also like to condition that all access drives, streets etc. within project boundary, are to be considered Fire Lanes and shall be subject to the requirements provided in Article 9, CA Fire Code 2001 Ed. )C C'tv of Carlsbad Public Works — Engineering Mr. Brian Reagan Manitou Engineering 350 West Ninth Street, Suite "B" Escondido, Ca. 92025 Octobers, 1999 MANZANITA PARTNERS - CAMINO VIDA ROBLE DESIGN ISSUES (SDP 98-19 / HDP 98-18 /SUP 98-06) Engineering Department staff has completed our review of the alignment that was submitted as an overlay sketch to show dual turn lanes from El Camino Real into a single lane on Camino Vida Roble. The proposed improvement is required as an offsite condition to the SDP mentioned above. I have attached a memo from John Kim that will summarize our position on this alignment. In general the improvement is located at a very crowded intersection. In addition to needing more Right of Way, the need to separate merging cars from the pedestrians proposes a challenge. I believe you can take these comments and start final design and alignment drawings. We need to resolve the right of way issue and the City will contact the property owner for acquisition or easement, we ask that as part of your design, plats and legal descriptions be prepared. A reimbursement agreement also needs to be processed. Plans and actual construction cost estimates will be necessary. When I locate a standard boiler plate agreement I will forward it to your office or if you rather to the developer, Phil Kidd. If you have any questions, please feel free to contact me at (760) 438-1161 extension 4353. CLYDE WICKHAM Associate Engineer - Land Use Review c: Deputy City Engineer, Land Use Review Division 2075 Las Palmas Dr. • Carlsbad, CA 92009-1576 • (76O) 438-1161 • FAX (76O) 431-5769 V,.- MEMORANDUM September 10, 1999 TO: Associate Engineer, Clyde Wickham FROM: Associate Engineer, John Kim SDP 98-19 MANZANITA APARTMENTS (CAMINO VIDA ROBLE AND EL CAMINO REAL IMPROVEMENTS) I have the following comments to the proposed dual left turn from NB El Camino Real to WB Camino Vida Roble. 1) The lane drop transition on WB Camino Vida Roble should begin after (or west of ) the driveway on the north side of Camino Vida Roble, closest to El Camino Real. This will require additional right-of-way. 2) The minimum length of lane drop transition is 320 feet. The width of the lane dropped is 12 feet (not 9 feet) and speed used in the calculation should be 40 mph (not 30 mph). The Caltrans Traffic Manual does not make provisions for reduction of lateral offset if the exit lane happens to be wider than the entry lane. 3) In order to remove potential conflict between vehicles and pedestrians currently utilizing the bike lane, a sidewalk installed behind curb on the north side of Camino Vida Roble, from El Camino Real to Yarrow Drive should be incorporated as part of these improvements. If you have any questions regarding this matter, please give me a call at (760) 438- 1161, extension 4500. IN T. KIM, P.E. Associate Engineer Traffic Operations Section c: Public Works Director Deputy City Engineer, Transportation LETTER OF TRANSMITTAL TO: IX/IAIMITOU ENGINEERING COIN/IRANY PUNNING • CIVIL ENGINEERING • SURVEYING DATE:JOB NO: ATTENTION: £ , y ~ c L) | X RF' —n x» / '^ll-tA^ MftW2.<^fOi T7\ /f P/^-^TT^l &A-O ^ d)FFS(T"£ / fM P(2~O v/ GJtf^v^A-/ / 5 • WE ARE SENDING 5 D Shop drawings D Copy of letter dated ^Attached f~l Under separate rnver via D Prints D Plans D Samples D Chanae order n the following items: D Specifications COPIES DATE NO.DESCRIPTION THESE ARE TRANSMITTED as checked below: D For approval D For checking D For your use D Approved as submitted D As requested D Approved as noted \2 For review and comment D Returned for corrections D For your action HFMARKS D Resubmit _copies for approval D Design only, not for construction D Return corrected prints D ou ~7 ~ f/xaf COPY TO SIGNED: If enclosures are not as noted, kindly notify us at once. 350 WEST NINTH AVENUE • SUITE B • ESCONDIDO, CALIFORNIA 92025 • (760) 741-9921 • FAX (760) 745-7487 Memorandum TO: Traffic Engineer, Bob Johnson FROM: Associate Engineer, Clyde Wickham DATE: September 9, 1999 SDP 98 - 19 : MANZANITA APARTMENTS CAMINO VIDA ROBLE & EL CAMINO REAL ISSUES We have received another draft of the El Camino Real / Camino Vida Roble dual left turn transition plan. We request a quick review if additional length is required. The project has been conditioned and the time to respond to this request is limited. Dave Mauser is working on a capital project to improve this intersection and has a better idea on a budgeted amount of funds. (There is a reimbursement agreement in process.) I am forwarding the specific request for lane utilization to your division for review & comment. The developer has met with Dave Mauser to discuss additional improvements to El Camino Real and reimbursement for proposed work beyond the incremental impacts of this project. John Kim has reviewed and commented on the project Traffic report and should be commended for his thorough attention. The specific question and request to your division is: • Can you (the traffic division) support the proposed Lane Configuration ? • Are there any comments or corrections to the package I am Transmitting? • If approved, are there proposed mitigation items or conditions that you would suggest be added to the approval documents? If possible, we will incorporate your comments in the staff report for this project. When I receive your comments I will forward them to Elaine Blackburn, the project Planner or if appropriate to Martin Lauber, the Engineer for correction or revision or for incorporation into the project's approval. C: Bob Wojcik, Principal Civil Engineer, Land Use Review Division ,001-28-2003 12:21 r. ta^^ too CONSENT OF THE SOLE DIRECTOR OF DJE FINANCIAL CORP. The undersigned, being the sole Director of DJE FINANCIAL CORP., a California corporation (the "Corporation"), hereby consent to the following action: BE IT RESOLVED, that any one of Daniel J. Epstein (President), J. Bradley Forrester, Robert J. Svatos, Ralph W. Tilley or E. Scott Dupree, (Vice Presidents) acting alone, in his respective capacity as President or Vice President of the Corporation ("Authorized Officer"), is hereby authorized and directed on behalf of the Corporation in the Corporation's capacity as a general partner in Continental American Properties, Ltd., a California limited partnership ("CAPL"), the general partner of ConAm Manzanita L.P., A California limited partnership, ("ConAm"), the Managing Member of Manzanita Partners, L.L.C., A California limited liability company ("Manzanita"), to execute and deliver any and all documents and take any other necessary action for the development and construction of the planned 157 unit multifamily residential project to be built on land owned by Manzanita located at Cassia and El Camino Real in the City of Carlsbad (the "Project"), including, but not limited to all necessary documents required by the City of Carlsbad and any utility companies servicing this Project such as the dedication of certain rights of way, easements, disclosures, letters of permission, site development plans or permits or open space designations (the "Development Documents"). BE IT FURTHER RESOLVED, that the Development Documents shall be in such form and shall contain such terms and conditions as may be approved by the Authorized Officer as completely as though the Development Documents were attached to this Consent and approved verbatim, it being the intention of the sole director to delegate to the Authorized officer full power and authority to negotiate the terms, conditions and provisions of each of the Development Documents in the Corporation's capacity as the general partner of the general partner of the managing member of Manzanita; and BE IT FURTHER RESOLVED, that the Authorized Officer, acting alone, is hereby authorized to subscribe the Corporation's name to any and all of the Development Documents, in the Corporation's capacity as the general partner of the general partner of the managing member of Manzanita, hereby vesting in the Authorized Officer the widest possible discretion with respect to the conduct of corporate business in connection with the Property. ,OCT-28-2003 12-22 BE IT FURTHER RESOLVED, that the Authorized Officer may execute ail of the Development Documents as set forth above, and any other documents required in connection with the Property, and that all such instruments executed shall be the binding acts and deeds of the Corporation, without the necessity of attestation by the secretary or any assistant secretary of the Corporation, and without the corporate seal being affixed thereto. BE IT FURTHER RESOLVED, that any prior acts of the Authorized Officers in connection with the Development Documents on behalf of Manzanfta are hereby ratified and approved and that the City of Carlsbad and any other party to the Development Documents shall be entitled to act in reliance upon the matters herein contained without further inquiry of any kind. IN WITNESS WHEREOF, the sole director of the Corporation has subscribed his name to this Consent as of the /3^day of August 2002. Daniel J. Epstein, Qfrectof TOTflL P.03 MANZANITA PARTNERS L.L.C BACKUP DOCUMENTS FOR SIGNATURE BLOCK MANZANITA PARTNERS, L.L.C. a California limited liability company By: ConAm Manzanita L.P., a California limited partnership its: Managing Member By: Continental American Properties, Ltd., a California limited partnership its: General Partner By: DJE Financial Corp., a California corporation its: General Partner By: Jts: Vice President Continental American Properties, Ltd. 1764 San Diego Avenue, San Diego, CA 92110 619-297-6771 619-297-3720 (fax.) Transmitted To: Finn: Brian Regan Shamrock Environmental 1811 Rock Springs Road San Marcos, CA 92069 From: Re: Date: Via: RonPerera Manzanita Apartments November 25, 2002 UPS Ground Enclosed: 1 Set of backup documents for Manzanita Partners, L.L.C. signature block Comments: For your use/forwarding to the City of Carlsbad. Please make additional copies if you will need these again in the future. SECRETARY OF STATE I, BILL JONES, Secretary of State of the State of California, hereby certify: That the attached transcript of f page(s) was prepared by and in this office from the record on file, of which it purports to be a copy, and that it is full, true and correct. IN WITNESS WHEREOF, I execute this certificate and affix the Great Seal of the State of California this day of JUl 3 1 2002. Secretary of State State of Californi Bill Jones Secretary of State LIMITED LIABILITY COMPANYARTICLES OF ORGANIZATION LLC-I IMPORTANT - Read the instructions before completing the fora. This document is presented for filing pursuant to Section 17050 of the California Corporations Code. I. Limited liability company name:<EW*.-.fc,«i*-VXC-«-L«M«<U**iyC viubkc IJmnmf l*t -CaafMnr' ».> Vr rfitu !••< »1M " tnt X« 1 Manzanita Partners, L.L.C. 2. Latest date (month/day/year) on which the limited liability company is to dissolve: 12/31/2097 3. 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 die Beveriy-Killea Limited Liability Company Act 4. Enter the name of initial agent for service of process and check the appropriate provision below: Philip C. Kidd : , which is [ X ] an individual residing in California. Proceed to Item 5. [ 1 a corporation which has filed a certificate pursuant to Section 1505 of the California Corporations Code. Skip Item 5 and proceed to Item 6. 5. If the initial agent for service of process is an individual, enter a business or residential street address in California: Street address: -| 000 Galloway City. Pacific Palisades State: CALIFORNIA Zip Code: 9 02 7 2 6. The limited liability company will be managed by: (check one) [ ] one manager [ ] more than one manager [ X ] limited liability company members 7. If other matters are to be included in the Articles of Organization attach one or more separate pages. Number of pages attached, if any: V 8. It is hereby declared that I am the person who executed this instrument, which execution is my act and deed. 'of organizer esse D. Palmer Type or print name of organizer Date: July 30 ..1911 LLC-I Ay*n«f4 kj Ike Stcnwy *t Swt I/M For Secretary of Stale Vtt ftte JUL 3 1 1997 ors* NIL JONES, tenter of** I State of California Bill Jones Secretary of State LIMITED U ABILITY COMPANY-STATEMENT OF INFORMATION Filing Fee $20.00-If Amendment, See Instructions IMPORTANT- Item! Instructions Before Completing This Form 1. LIMITED LIABILITY COMPANY NAME: (Do not alter if iwm« te preprinted.) Manzanita Partners, L.L.C. FILED OaaaO AUG - 8 2002 BU. JONES,of State This Space For Fifing Use Only 2. SECRETARY OF STATE FltE NUMBER 199721210015 3. STATE OR PLACE OF ORGANIZATION California PRINCIPAL EXECUTIVE OFFICE SIBEEIADDRESS 1764 San Diego Avenue CITY San Diego STATE CA ZFCOOE 92110 5. CALIFORNIA OFFICE WHERE RECORDS ARE MAINTAINED (FOR DOMESTIC ONLY) STOEETADDRESS 1764 San Diego Avenue OTY San Diego STATE CA ZPCOOE 92110 CHECK THE APPROPRIATE PROVISION BELOW AND NAME THE AGENT FOR SERVICE OF PROCESS [ ] ANMDMDUALRESHIMGINCAUFORMA, [X] A CORPORATION WHICH HAS FtED A CERTIFICATE PURSUANT TO CALFORNIA CORPORATIONS CODE SECTION 1505. AGENT'S NAME: CORPORATION SERVICE COMPANY which will do business in California as CSC LAWYERS INCORPORATING SERVICE 7. ADDRESS OF THE AGENT FOR SERVICE OF PROCESS IN CALIFORNIA, IF AN INDIVIDUAL ADDRESS CITY STATE CA ZPCOOE DESCRIBE TYPE OF BUSINESS OF THE UNITED LIABILITY COMPANY. Real Estate Ownership/ Development and Operations 9. UST THE NAME AND COMPLETE ADDRESS OF ANY MANAGER OR MANAGERS. OR IF NONE HAVE BEEN APPOINTED OR ELECTED. PROVIDE THE NAME AND ADDRESS OF EACH MEMBER. ATTACH ADDITIONAL PAGES, V NECESSARY. NAME Msmzanita ADDRESS 1155 Cuchara Drive COY Del Mar jftpartraents L.P. (Menter) STATE CA ZPCODE 92014 sfe.NAME ADDRESS CfTY Conflm Manzanita L.P. (Managing Maonber) 1764 San Diego Avenue San iprin STATE ZPCODE 92110 9C. NAME ADDRESS CITY STATE ZIP CODE 10. CHIEF EXECUTIVE OFFICER (CEO), IF ANY NAME n/a ADDRESS CTTY STATE ZPCODE 11. NUMBER OF PAGES ATTACHED. If ANY: 12. THIS STATEMENT IS TRUE, CORRECT, AND COMPLETE. Philip C. Kidd TYPE OR PRNT NAME OF C.|O/SST tfepjjer TUtE DUE DATE: AMENDMENT SEC/STATE FORM U.C-12 (REV. 10/2001)APPROVED BY SECRETARY OF STATE SECRETARY OF STATE I, BILL JONES, Secretary of State of the State of California, hereby certify: That the attached transcript of \ page(s) has been compared with the record on file in this office, of which it purports to be a copy, and that it is full, true and correct. IN WFTNESS WHEREOF, I execute this certificate and affix the Great Seal of the State of California this day of AU6 1 2 2002 Secretary of State State of California Bill Jones Secretary of State LIMITED LIABILITY COMPANY CERTIFICATE OF AMENDMENT A $30.00 filing fee must accompany this form IMPORTANT - Read instructions before completing this form. ENDORSED - FILEDto the office of the Secretary of Stateof the State of California AUG - 8 2002 BlU JONES, Secretary of State This Space For Filing Use Only 1. Secretary of State F3e Number 199721210015 2. Name of UmitedLiabiTrty Company: Manzanita Partners, L.L.C. 3. Complete only the sections where information is being changed. Additional pages may be attached ifnecessary. A. Limited Liability Company Name (end the name with the words limited Liability Company,' "Ltd. Liability Co.' or the abbreviafions "LLC" or T.LC.") B. The Lkruted Liabi% Company wffl be managed by (Check One): tXl one manager [ ] more than one manager [ J single member Kmited fiabaity company [ ] aU limited liability company members C. Amendrnent to text of the Artides of Organization: D. 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 a change in the latest date on which the limited liability company is to dissolve or any change in the events that wffl cause the dissolution. 4. Future Effective Date, if any:Month Day Year 5. Number of pages attached, if any: 6. Declaration: It is hereby declared that i am the person who executed this instalment, which execution is my act and deed. Philip C. Kidd, Member Date Type or Print Name and Title 7. RETURN TO: NAME I RRM ADDRESS CITY/STATE ZPCODE I E. Scott Dupree, Esq. ConAra Management Corporation 1764 San Diego Avenue San Diego, CA 92110 SEOSTATE (REV. 12799) ~l _J FORMLLC2 Approved by THIRD AMENDMENT TO AMENDED AND RESTATED OPERATING AGREEMENT FOR MANZANITA PARTNERS, LLC This Third Amendment to Amended and Restated Operating Agreement is made effective as of June 1, 2002 by and among ConAm Manzanita, L.P., a California limited partnership ("ConAm") and Manzanita Carlsbad Apartments L.P., a California limited partnership ("Initial Member"). ConAm and Initial Member (collectively, the "Members") agree as follows: 1. The Operating Agreement in effect for Manzanita Partners, LLC is hereby confirmed as being the Amended and Restated Operating Agreement for Manzanita Partners, LLC, effective as of September 1, 2000 [39 pgs.] ("the Operating Agreement"),, as amended by (1) the Amendment to Amended and Restated Operating Agreement for Manzanita Partners, LLC, effective as of August 29, 2001 ("the First Amendment"), (2) the Second Amendment to Amended and Restated Operating Agreement for Manzanita Partners, LLC, effective as of September 30, 2001 ("the Second Amendment"), and (3) this Third Amendment to Amended and Restated Operating Agreement for Manzanita Partners, LLC ("the Third Amendment"). Initial Member hereby ratifies the First Amendment and the Second Amendment. 2. Section 2.2 of the Operating Agreement is hereby amended to read in its entirety as follows: "2.2. Commission Approval. The Manager and Initial Member shall at all times use their best efforts to obtain Commission Approval as expeditiously as possible. In the event that Commission Approval is not obtained on or before October 31, 2002, any of the Members may by written notice terminate any further rights or obligations of ConAm under this Agreement. Upon the giving of such notice, ConAm shall resign as Manager and shall have no further rights (except for the right to return of Advances and interest thereon pursuant to Section 2.9 and/or Section 2.14) or duties in connection with the Company or this Agreement." 3. Section 2.8 of the Operating Agreement is hereby amended to read in its entirety as follows: "2.8 Commission Approval as Condition Precedent to ConAm's Capital Contributions. Notwithstanding anything to the contrary herein, the obligation of ConAm to make the Initial Contribution, the Second Contribution, and the Construction Advances is subject to the condition precedent that Commission Approval shall be obtained on or before October 31,2002." 1.nanni "«">-•"" inn i.ncrw no 4. Section 7.1 of the Operating Agreement is hereby amended to read in its entirety as follows: "7.1 Distributions from Available Cash. All Available Cash, other than from a Capital Transaction or the liquidation of the Company, shall be paid and distributed in the following order of priority: (i) To pay the Initial Member Development Fee during such time as the fee is payable under this Agreement. (ii) To pay a Preferred Return to Initial Member as follows: A. Commencing on the Effective Date and continuing for the duration of the period when the Company pays the Initial Member Developer Fee specified in Section 4.8,l(b), equal to six percent^6%) per annum, except as otherwise provided in Section 7.3, computed on the excess, if any, of the Capital Account of Initial Member over the Capital Account of ConAm ("Construction Period Preferred Return"). For the purposes of this Capital Account computation, it shall be always assumed that both the Initial Contribution referred to in Section 23 and the Second Contribution referred to in Section 2.4 have been made. B. During the period commencing on the date when the Company ceases to pay the Initial Member Developer Fee specified in Section 4.8.l(b) and ending on the date when the Initial Capital Distribution is distributed in full to Initial Member, equal to ten percent (10%) per annum, except as otherwise provided in Section 7.3, computed on the excess, if any, of the Capital Account of Initial Member over the Capital Account of ConAm ("Operating Period Preferred Return"). C. The Initial Member Development Fee specified in Section 7.1® ("7.1® Fee"), and the Preferred Return to Initial Member specified in Section 7.l(ii)(A) ("7.l(ii)(A) Return"), shall be distributed as follows: (1) 7.1® Fee and 7.1(ii)(A) Return due for the period from the Effective Date of the Operating Agreement up until and including August 31, 2001, shall be paid on the first day of each month in which it is due (receipt of said Fee and said Return for such period being hereby acknowledged by Initial Member); (2) 7.1(i) Fee and 7.1(ii)(A) Return due for the period from September 1, 2001 to the later of August 1,2002 or the date of Commission Approval ("Accrued Fee and Return") shall be accrued and shall be payable pursuant to, and with the priority granted under, Section 7.1(v) below (if Commission Approval is obtained prior to August 1, 2002, the Accrued Fee and Return shall aggregate $89,295); (3) 7.1(i) Fee and 7.1(ii)(A) Return due for periods on and after the later of August 1, 2002 or the date of Commission Approval shall be paid on the first day of each month in which it is due, and shall be prorated for any partial months. (iii) To repay Advances and Construction Advances, together with interest due on these items; (iv) To pay the ConAm Development Fee due under Section (v) To pay pro rata and pan passu (x) any unpaid Accrued Fee and Return owing to Initial Member and (y) an amount equal thereto to ConAm as a Pre-Approval Development Fee. (vi) To the Members no less often than quarterly, on a pro- rata basis according to their Percentage Interests." 5. Section 7.2(b) of the Operating Agreement is amended to read in its entirety as follows: (b) Priority of Distribution. Except as otherwise provided herein, if there is cash available for distribution from a Capital Transaction, then such cash shall be distributed in the following priority: (i) To the discharge, to the extent required by any lender or creditor (not including any Member that is a lender or creditor), of debts and obligations of the Company; (ii) To fund reasonable reserves for contingent or unforeseen liabilities of the Company; (iii) To pay any unpaid Development Fees other than as described in Section 7.1(v) above; (iv) To pay the undistributed amount of Preferred Return due and payable to Initial Member other than as described in Section 7.1(v) above; (v) To pay the undistributed amount of the Initial Capital Distribution due and payable to Initial Member; (vi) To repay the unpaid balance of the Advances and the Construction Advances, plus accrued interest, to the Manager; and to repay any other loans to the Company by the Members; writing setting forth all relevant terms and conditions of purchase from an offerer who is ready, willing, and able to consummate the purchase and who is not an Affiliate of the selling Member. For 30 days after the Notice is given, the other Members shall have the right to purchase the Membership Interest offered, on the terms stated in the Notice, for the price stated in the Notice (or the price plus the dollar value of noncash consideration, as the case may be). If the other 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 offerer named in the Notice. Unless the requirements of Section 9.3 are met, the offerer under this section shall receive solely an Economic Interest, and shall be entitled to receive only the share of Profits or other compensation by way of income and the return of Capital Contribution to which the assigning Member would have been-entitled. 8. Section 9.6 of the Operating Agreement is amended to read in its entirety as follows: "9.6 Stand Off Provision. After seven (7) years from the Effective Date, either the Manager, on the one hand, or the Initial Member, on the other hand, ("the Designer") may hand deliver to the other ("the Designee") a written notice ("the Designation") designating a price ("the Designated Price") pursuant to which the offering member agrees to purchase the entire Membership Interest of the Designee. The Designee shall have ninety (90) days from the date of the delivery of the Designation to decide whether to accept the Designer's offer or, in the Designee's sole discretion, to instead purchase the Designer's entire Membership Interest for the Designated Price. The decision shall be set forth in a writing hand-delivered or delivered by fax transmission to the Designee and, once notice of the decision is given, it shall be binding on the Designer and the Designee. The failure to give any timely notice shall constitute an irrevocable acceptance of the Designer's offer. If, in any transaction subject to this Section 9.6, the Manager is the purchaser of Initial Member's interest, the Designated Price shall be paid in cash. If the Initial Member is the purchaser, the Designated Price shall be paid hi cash, as to twenty percent (20%) of the payment and by a promissory note ("the Note") as to the balance. The Note shall bear interest at the rate of 10% per annum, shall be due and payable in full in one year, and shall contain other customary provisions. The Note shall be secured by Initial Member's Economic Interest in the Company. Unless the parties otherwise agree in writing, closing of a sale under this Section 9.6 shall occur within 120 days after delivery of the Designation." (vii) To pay pro rata and pan passu (x) any unpaid Accrued Fee and Return owing to Initial Member and (y) an amount equal thereto to ConAin as a Pre-Approval Development Fee. (viii) To the Members on a pro-rata basis according to their Percentage Interests. 6. Section 7.3 of the Operating Agreement is amended to read in its entirety as follows: "7.3 Initial Capital Distribution. Provided that the Company has Available Cash, upon the date when the Permanent Loan referred to in Article 13 is funded, Initial Member shall receive a cash distribution as a return of capital in the amount of $974,145 (the "Initial Capital Distribution"). The Initial Capital Distribution shall in no way diminish or affect the Initial Member's Membership Interest, Voting Interest, Percentage Interest or Economic Interest. In the event that sufficient Available Cash is not obtained from the Permanent Loan referred to in Article 13 to complete the Initial Capital Distribution in whole or in part at the time provided in this Section, then such Available Cash as is obtained shall be used to partially complete the Initial Capital Distribution, and the balance of the Initial Capital Distribution shall be completed from Available Cash obtained thereafter. Initial Member's Capital Account shall be reduced by the sum of any partial Initial Capital Distributions, with Operating Period Preferred Return continuing to be paid on the outstanding excess of Initial Member's Capital Account over ConAm's Capital Account as defined in Section 7.1(u)(B), until the Initial Capital Distribution is completed in full." 7. Section 9.1 of the Operating Agreement is amended to read in its entirety as follows: 9.1: Right of First Refusal. Commencing on the seventh anniversary of the Effective Date, Membership Interests in the Company may be transferred subject to the following right of first refusal. If a Member wishes to transfer any or all of the Member's Membership Interest in the Company to a person who is not (1) a Member, (2) an Affiliate of a Member, (3) a sibling of a Member pursuant to a Bona Fide Offer (as defined below), or (4) any other person who is the subject of a Permitted Transfer under Section 9.5, the Member shall give Notice to all other Members at least 60 days in advance of the proposed sale or Transfer, indicating the terms of the Bona Fide Offer and the identity of the offerer. The other Members shall have the option to purchase the Membership Interest proposed to be transferred at the price and on the terms specified in the Bona Fide Offer. If the price for the Membership Interest is other than cash, the fair value in dollars of the price shall be as established in good faith by the Manager. For purposes of this Agreement, "Bona Fide Offer" means an offer in This Amendment shall be effective as of June 1, 2002. In all other respects, the Operating Agreement, as amended by this amendment, shall remain in full force and effect. CONAM:ConAm Manzanita L.P., a California limited partnership By: Continental American Properties, Ltd., a California limited partnership, its general partner By: DJE Financial Corporation, a^alifornia corporation, its general By: Daniel J, President INITIAL MEMBER:Manzanita Carlsbad Apartments L.P., a California limited partnership By: Manzanita Properties, a California corporation, its general partner ByGl M.Wohlford President By:CJPhilip CKi Vice-President and Secretary AMENDMENT To AMENDED AND RESTATED OPERATING AGREEMENT FOR MANZANITA PARTNERS, LLC This Amendment to Amended and Restated Operating Agreement (this "Amendment") is made effective as of August 29, 2001, by and among ConAm Manzanita, L.P., a California limited partnership ("ConAm"), and Dana M. Wohlford ("Dana") and Philip C. Kidd ("Philip"), collectively, as a single Member. ConAm, Dana and Philip are collectively referred to as the "Members." RECITALS A. The Members entered into the Amended and Restated Operating Agreement for Manzanita Partners, LLC effective September 2,2000 (the "Operating Agreement"); B. The Members desire to amend the Operating Agreement to extend the date on which a certain condition precedent is required to occur, on the terms set forth in this Amendment. Capitalized terms not otherwise defined in this Amendment shall have the same meaning as prescribed in the Operating Agreement. TERMS 1. Commission Approval. Section 2.2 of the Operating Agreement is hereby amended and restated to read as follows: "2.2 Commission Approval. The Manager and the Initial Member shall at all times use their best efforts to obtain Commission Approval as expeditiously as possible. In the event that Commission Approval is not obtained on or before September 28, 2001, any of the Members may by written notice terminate any further rights or obligations of ConAm under this Agreement. Upon the giving of such notice, ConAm shall resign as Manager and shall have no further rights or duties in connection with the Company or this Agreement." 2. Condition Precedent to ConAm's Capital Contributions. Section 2.8 of the Operating Agreement is hereby amended and restated to read as follows: "2.8 Commission Approval as Condition Precedent to ConAm's Capital Contributions. Notwithstanding anything to the contrary herein, the obligation of ConAm to make the Initial Contribution, the Second Contribution, and the Construction Advances is subject to the condition precedent that Commission Approval shall be obtained on or before September 28, 2001.* 3. Development Fees. Notwithstanding anything in the Operating Agreement to the contrary, the Initial Member shall not be allocated or receive a Development Fee during the period September 1, 2001 through September 30, 2001. For purposes of Section 7.1.(ii)(B), the Company shall not be deemed to have ceased paying the Initial Member Developer Fee, and therefore Section 7.1.(ii)(B) shall not become effective, by virtue of this Paragraph 3 of this Amendment. 4. Preferred Return. Notwithstanding anything in the Operating Agreement to the contrary, the Initial Member shall not be allocated or receive any Preferred Return during the period September 1, 2001 through September 30,2001. 5. Full Force. The Operating Agreement remains in full force and, except as set forth in this Amendment, remains unmodified. CONAM MANZANTTA L.P., a California limited partnership By: Continental American Properties, Ltd., a California limited partnership, its general partner By: DJE Financial Corporation, a California . corporation, its general partner Dana M. WohJford Philip C. Kidd 08/30/2061 15:47 85B7555269 MflNZANITA PARTNERS PAGE 03t2sj~\ CON wi •' -j 6192942-451 p.es-«3 S«pwmb«r28.2001. Noc»idi«andim anything ta. tfa« Operating Aya«m*nt to contrary, cbe TfUTBtl IfniLu shall atot fa* «n<""*»'l or f««^j™f A Pp""l'j|i'FHM^'t Bee dkurinr tiu pcckxt Sqntnber 1. 2001 tkrMfjk $cf«utA«r 30, 2001. For puzpoK* of S«siofi 7.1.(iiXB). dw Conp«Df jbiO oot IK dmaed to btm cened poring the Initial Member Pevdoper Pee, «M) thae6m SKOOU 7.L@999 *&•& °« bceoiM «fiecd«e. by virtue of thi» of this A T^i^nrf 4. yi*farrtd Return. Notwiduttiuitnf tnytKinc in die Operatiag Agxcement to the contrary, the laitul Member shall not be allocated or receive any Preferred Return duriag the period September 1, 2001 through September JO, 2001. 5- ^ttPoM*- The Operating AtTMimot remains in fuU force and, except as set font in thjp Asotndsotoif t cnuim i CONAM MANZAMTA L P., a California limited partnership By: Cootineatcl Amaricui Propeitiai, Ltd, \ Califbnua Uxuced partnership. Us General partner ; DJE Finaatiol Coipor«rk>a, a California corporation,, its general partner Name Iti- DMaM.Wohlford ipC,; TOTTfa. F-83 OD/OJ./ZOOJ. 14. I/ O3O^333^O3 rtHrt&MW* I tt |-HI\. I ltCJV3 THOC OJ , . rtJG-39-2001 12=41 _ CON «1 .—. 619294S451 P.03'03 September 28, 2001." 3. Development Pfflf. Notwithstanding anything in the Operating Agreement to die contrary, the Initial Member shall not be allocated or receive a. Development Fee during the period September 1, 2001 through September 30, 2001. For purposes of Section 7.1.(u)(B), the Company shall not be deemed to have ceased paying the Initial Member Developer Fee, and therefore Section 7.1.(ii)(B) shall not become effective, by virtue of this Paragraph 3 of this Amendment. 4. Deferred Return. Notwithstanding anything in the Operating Agreement to the contrary, the Initial Member shall not be allocated or receive any Preferred Return during the period September 1, 2001 through September 30, 2001. 5. Futy Porpe. The Operating Agreement remains in full force and, except as set forth in this Amendment, remains unmodified. CONAM MANZANTTA L.P., a California limited partnership By: Continental American Properties, Ltd., a California limited partnership, its general partner By: DJE Financial Corporation, a California corporation, its general partner By; _ _ _ Name: Its: k. UJo DlnaM.Wohlford Philip CKidd P. 03 THE MEMBERSHIP AND OTHER OWNERSHIP INTERESTS CREATED UNDER THIS OPERATING AGREEMENT HAVE NOT SEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF CALIFORNIA OR ANY OTHER STATE. SUCH UNITS MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED UNDER THE RELEVANT PROVISIONS OF THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS OR IF AN EXEMPTION FROM SUCH REGISTRATION OR QUALIFICATION IS APPLICABLE. AMENDED AND RESTATED OPERATING AGREEMENT FOR MANZANITA PARTNERS, LLC This Amended and Restated Operating Agreement (this "Agreement") is made effective as of September 1, 2000 (the "Effective Date") by and among ConAm Manzanita, L.P., a California limited partnership ("ConAm") and Manzanita Carlsbad Apartments L.P., a California limited partnership (the "Initial Member"). ConAm and the Initial Member (collectively, the "Members") agree as follows: ARTICLE 1. FORMATION AND ORGANIZATION 1.1. Definitions. When used in this Agreement, the following terms have the meanings set forth below. "Act" shall mean the California Beverly-Killea Limited Liability Company Act, as amended, modified or supplemented from time to time. "Affiliate" of a Member means (i) any Person directly or indirectly, 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 possession, direct or indirect, 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. "Affiliates" of an Initial Member shall include such Initial Member's children, spouse, and issue. "Agreement" means this Amended and Restated Operating Agreement For MANZANITA PARTNERS, LLC, as amended, modified or supplemented from time to time. "Articles" shall have the meaning set forth in Section 1.2. P:Minziniu Op Agree Vcrs 15:08004.339 "Available Cash" means cash of the Company not required in connection with its operations, including (i) the net proceeds from operations (taking into account and deducting all proper expenditures, property management fees, disbursements of the Company, debt service payments, and increase in Reserves), (ii) net cash 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, and (Hi) any release from Reserves. "Capital Account" means the Capital Account maintained for each Member pursuant to Section 2.10. "Capital Contribution®" means the fair market value of all contributions made by a Member to the Company pursuant to Sections 2.1, 2.2, and 2.3 hereof. "Capital Contribution* includes the agreed fair market value (on the date of contribution) of any property (other than money) contributed to the Company as agreed to at arm's length by all the Members (net of liabilities secured by such contributed property that the Company is considered to assume or take "subject to" under IRC section 752) as stated in Exhibit A. A Capital Contribution shall not be deemed a loan. "Capital Transaction" shall have the meaning set forth in Section 7.2 . "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Commission Approval" shall be defined as occurring on the date when any land use approval from the California Coastal Commission ("Commission") which is required for the Project to be initially constructed has been granted by the Commission, is final and is no longer subject to rehearing or administrative appeal. "Commission Approval* shall occur notwithstanding conditions which may be attached to the California Coastal Commission's land use approval, so long as the Members unanimously agree that die conditions are acceptable and that the Project should go forward in compliance with such conditions. "Commission Approval" shall be deemed to occur notwithstanding any possibility of court litigation by any party to challenge such decision. "Company" means MANZANITA PARTNERS, LLC "Company Minimum Gain" has the meaning set forth in Regulation Section 1.704- 2(d), but substituting the term "Company" for the term "partnership" as the context requires. "Construction Loan" means the loans made or to be made to the Company to finance the initial construction and development of the Project. "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. Unless otherwise provided herein, a Member's Economic Interest shall be equal P:Manzanha Oo Aeree Yen 15:08004.339 2 to the Member's Percentage Interest. "Effective Date" has the meaning set forth in the initial paragraph of this Agreement. "Fair Market Value" means the cash price that would be paid by a willing buyer for an asset being sold by a willing seller in an open market transfer as to which time is not of the essence. "Fiscal Year" means the calendar year. "Gross Asset Value" means, with respect to any asset of the Company, the asset's adjusted basis for federal income tax purposes; provided, however, that (i) the Gross Asset Value of any asset contributed by a Member to the Company or distributed to a Member by the Company shall be the gross fair market value of such asset (without taking into account Section 7701(g) of the Code), as reasonably determined by the contributing or distributee Member, as the case may be, and the Company; (U) the Gross Asset Values of all Company assets shall be adjusted to equal their respective gross fair market values (without taking into account Section 7701 (g) of the Code), upon the termination of the Company for federal income tax purposes pursuant to Section 708(b)(l)(B) of the Code; and (Hi) the Gross Asset Values of all Company assets may be adjusted in the sole and absolute discretion of the Member to equal their respective gross fair market values (taking into account Section 770 l(g) of the Code), as reasonably determined by the Member, as of (A) the date of the acquisition of an additional interest in the Company by any new or existing Member in exchange for more than a de minimis contribution to the capital of the Company or (B) upon the distribution by the Company to a retiring or continuing Member of more than a de minjnni$ amount of Company property including money in reduction of such Member's interest in the Company. "Management Agreement" means an agreement substantially in the form of the attached Exhibit B between the Company and Con Am Management Corporation, a California corporation, which is affiliated with ConAm or any other company affiliated with ConAm (the "Property Manager"), under which the Property Manager will perform property management services in accordance therewith. "Member Nonrecourse Debt" has the meaning ascribed to the term "Partner Nonrecourse Debt" in Regulations Section 1.704-2(b)(4). "Member Nonrecourse Deductions" means items of Company loss, deduction, or Code Section 705(a)(2)(B) expenditures attributable to Member Nonrecourse Debt. "Membership Interest" means a Member's rights in the Company, collectively, including the Members' Economic Interest, any right to vote or participate in management, and any right to information concerning the business and affairs of the Company. P:M*»Mniu Oo Aeree Ven 15.-08004.339 "Nonrecourse Liability" has the meaning ascribed to such term in Regulations Section 1.752-1 (a)(2). "Operating Revenues" shall have the meaning set forth in Section 7.1(a)(l). "Percentage Interest" means the percentage set forth after the member's name on Exhibit A. The Percentage Interest of each member in the control and management of the Company may differ from a Member's Economic Interest (i.e., the percentage of Distributions and allocations of Profit and/or Loss to which the Member is entitled), and the Member's Capital Account. "Person" means any natural person, partnership, joint venture, association, corporation, limited liability company, trust or other entity. "Profits" and "Losses" mean, respectively, for each fiscal year or other period, an amount equal to the Company's taxable income or loss, as the case may be, for such year or period, determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss and deduction required to be stated separately pursuant to Section 703(a)(l) of the Code shall be included in taxable income or loss); provided, however, for purposes of computing such taxable income or loss: (i) any deductions for depreciation, cost recovery or amortization attributable to any assets of the Company shall be determined by reference to their Gross Asset Value, except that if the Gross Asset Value of an asset differs from its adjusted tax basis for federal income tax purposes at any time during such year or other period, the deductions for depreciation, cost recovery or amortization attributable to such asset from and after the date during such year or period in which such difference first occurs shall bear the same ratio to the Gross Asset Value as of such date as the federal income tax depreciation, amortization or other cost recovery deduction for such year or other period from and after such date bears to the adjusted tax basis as of such date; (ii) any gain or loss attributable to the taxable disposition of any property shall be determined by the Company as if the adjusted tax basis of such property as of such date of disposition was such Gross Asset Value reduced by all amortization, depredation and cost recovery deductions (determined hi accordance with clause (i) above) which are attributable to said property; (iii) the computation of all items of income, gain* loss and deduction shall be made without regard to any basis adjustment under Section 743 of the Code, which may be made by the Company; (iv) any receipts of the Company that are exempt from federal income tax and are not otherwise included in taxable income or loss shall be added to such taxable income or loss; and (v) any expenditures of the Company described in Section 705(a)(2)(B) of the Code pursuant to Regulations Section 1.704-l(b) shall be subtracted from such taxable income or loss. "Project" shall have the meaning set forth in Section 1.3. "Pro rata" means based upon relative Membership Interests, unless otherwise stated. "Redesign'' means any substantial change to the building layout, site plan, number of units, or revision to other aspects of the Project which is undertaken as a result of Commission Approval or other governmental requirements in order to comply with P:Mjnzaniu Op AereeVrn 15:08004 J39 4 conditions of approval, to obtain land use permits, to obtain building permits, or to secure other approvals which are reasonably necessary to proceed with the construction of the Project. "Regulations" means the regulations (including any proposed or temporary regulations) issued under the Code by the Department of the Treasury, as they may be amended from time to time, or any applicable successor regulations. Reference herein to any particular section of the Regulations shall be deemed to refer to the corresponding provision of any applicable successor regulations. "Reserves" means the reasonable reserves established and maintained from time to time by the Manager, in amounts reasonably deemed adequate and sufficient from time to time by the Manager to pay taxes, fees, insurance or other costs and expenses incident to the Company's business. "Tax Matters Partner" shall have the meaning set forth in Section 8.5. "Voting Interest" means, with respect to a Member, the right to Vote or participate in management and any right to information concerning the business and affairs of the Company provided under the Act, except as limited by the provisions of this Agreement. The Members' Voting Interests shall be as stated on Exhibit A and shall not necessarily be directly proportional to the Members' Percentage Interest or Economic Interest. Unless otherwise specified herein, a Member's Voting Interest shall be equal to its Membership Interest. 1.2. Formation and Name. By this Agreement the Members associate together as Members in order to do business as a California limited liability company named "MANZANITA PARTNERS, LLC" (the "Company") under the Act. All capitalized terms used in this Agreement but not specifically defined have the meanings ascribed to them under the Act. The internal affairs of the Company will be governed by this Agreement consistent with the Act and the Company's Articles of Organization filed in the Office of the California Secretary of State (the "Articles") on July 31, 1997 (the "Formation Date"), as they may be amended from time to time. At all times since the Formation Date, the Company was managed by the Initial Member, who has been the sole Member of the Company from the Formation Date until the Effective Date. 1.3. Term and Purpose. The purposes of the Company are to construct, develop and manage an approximately 157-unit apartment complex located at the corner of El Camino Real and Cassia Road in Carlsbad, California (the "Project"). The Project shall be constructed and operated substantially in conformity with the schematic design of the Project as previously approved by municipal and other governmental authorities. The Company shall have die authority to own, operate, maintain, manage, improve, repair, redevelop, sell, mortgage, refinance, pledge, convey, lease and in any manner deal with the Project and to do any and all other acts and things that may be necessary, incidental or convenient to carry out such purposes all in accordance with the provisions of this Agreement. No other business shall be conducted by the Company without the unanimous prior written consent of all of the PiManzanha Op Agree Vers 15:08004.339 5 Members, and no Member shall have the power to bind, to act for or to assume any obligation or responsibility on behalf of any other Member or the Company except as specifically provided in this Agreement. The term of the Company's existence (the "Term") commenced on the Formation Date and will continue until December 31, 2097, unless earlier terminated in accordance with the provisions of this Agreement or as provided by law. 1.4. Principal Office. The Company shall at. all times maintain a principal place of business and an agent for service of process in the State of California. The principal place of business of the Company will be located at 1764 San Diego Avenue, San Diego, California, 92110, unless and until changed by the Manager to another location. In addition, the Company may maintain such other offices at any other places, both within and outside of the State of California, as the Manager deems advisable. The Manager may also appoint agents for service of process in any other State, District, and/or jurisdiction in which the Company does business and make such filings, including filings for qualification to do business, as may be required or desirable under the laws of such other State, District, and/or jurisdiction. 1.5. Establishment of Bank Accounts. The Manager shall establish with a federally insured financial institution (or institutions) one or more accounts for the funds of the Company and designate one or more individuals authorized to draw against such accounts on behalf of the Company. 1.6. Title. Tide to any assets acquired by the Company will be held in the name of the Company. The Manager and, to the extent necessary, any of the Members, shall execute all documents which may be necessary to reflect the Company's ownership of its assets. ARTICLE 2. CAPITALIZATION 2.1. Original Capital Contribution; Membership Interest. The Initial Member has made the capital contributions to the Company as specified in the attached Eyhifot ^ (the "Original Capital Contributions"). In recognition of the Original Capital Contributions, the Initial Member shall receive a Membership Interest in the Company as specified in the attached Exhibit A. The fair market value of the Initial Member's Capital Account resulting from the Original Capital Contributions as of the date of this Agreement is agreed to be $3,800,145. 2.2. Commission Approval. The Manager and Initial Member shall at all times use its best efforts to obtain Commission Approval as expeditiously as possible. In the event that Commission Approval is not obtained on or before August 31,2001, any of the Members may by written notice terminate any further rights or obligations of ConAm under this Agreement. Upon the giving of such notice, ConAm shall resign as Manager and shall have no further rights or duties in connection with the Company or this Agreement. 2.3. ConAm's Initial Contribution; Membership Interest. Within not more than ten (10) days following Commission Approval, ConAm shall make an initial cash capital P:Manzauiu Op Agree Vets 15:08004.339 $ contribution to the Company in the amount of $974,145 (the "Initial Contribution"). In exchange for the Initial Contribution, ConAm shall receive a Membership Interest in the Company as specified in Exhibit A. 2.4. ConAm's Second Capital Contribution: Membership Interest. ConAm shall be obligated to make the following additional capital contribution. On the day the Construction Loan is funded, ConAm shall make a second cash capital contribution to the Company in the amount of $1.851.855 (the "Second Contribution"). In exchange for the Second Contribution, ConAm shall receive an increase to its Capital Account in the amount of such contribution and shall retain the Membership Interest in the Company as specified in Exhibit A. 2.5. Manager to Obtain Construction Loan. The Manager shall endeavor to obtain a Construction Loan promptly upon Commission Approval. From the proceeds of the Construction Loan, the Manager shall pay all indebtedness secured by real estate owned by the Company (currently, such indebtedness is estimated to be $1,851,855). 2.6. Return of Capital if Construction Loan Not Obtained. If a Construction Loan is not obtained within six months of the date of Commission Approval, any Member may by written notice terminate any further rights or obligations of ConAm under this Agreement. In the event of such termination, the Initial Contribution shall be returned to ConAm. Upon its receipt of such return of Initial Contribution, ConAm's Membership Interest shall be zero percent (0%) and the Initial Member's Membership Interest shall be one hundred percent (100%). ConAm shall resign as Manager and shall have no further rights or duties in connection with the Company or this Agreement. 2.7. Construction Advances. To the extent the undisbursed proceeds of the Construction Loan, the Initial Contribution and the Second Contribution, are insufficient to complete the construction of the Project, ConAm shall be obligated to make advances to the Company of the funds necessary to complete such construction (the "Construction Advances"). The Construction Advances shall be repaid in accordance with Section 7.2(b)(v), and shall accrue interest at 10% per annum. 2.8. Commission Approval as Condition Precedent to ConAm's Capital Contributions. Notwithstanding anything to the contrary herein, the obligation of ConAm to make the Initial Contribution, the Second Contribution, and the Construction Advances is subject to the condition precedent that Commission Approval shall be obtained on or before August 31,2001. 2.9. Advances by ConAm. Beginning on the Effective Date and continuing until the Construction Loan funding, if and to the extent that Company does not have Available Cash, ConAm shall advance to the Company all of the costs associated with the predevelopment of the Project, including, without limitation, legal fees relating to this Amendment to the Operating Agreement up to a maximum of $36,500 for Initial Member and $36,500 for ConAm, consulting fees, installment payments for the existing loan secured by the property on which the Project is situated, the Initial Member Development Fee P-M«vr«w» On Aetee Vm 15:08004.339 7 specified in Section 4.8.1 hereof, the Preferred Return specified in section 7.1(u) hereof, costs of any Redesign, environmental mitigation costs, city processing fees and other similar costs (the "Advances"). The Advances shall additionally include the sum of $190,000 to be paid to the Initial Member or, at the Initial Member's sole option, to an entity designated in writing by the Initial Member, upon Commission Approval, which is hereby agreed to represent a reimbursement of the predevelopment costs previously advanced to the Project by the Initial Member. If the Membership of ConAm is terminated pursuant to Section 2.2 or Section 2.6, the Advances shall be repaid to ConAm, together with interest accrued at the rate of 10% per annum simple interest, at such time as the Company (a) acquires sufficient funds to repay, in whole or in part, the Advances from a refinancing or sab of the Project to a third party, or (b) commences construction on the Project site. ConAm shall forfeit all other rights to such advances. If the Membership of ConAm is not so terminated, the Advances shall be repaid in accordance with Section 7.2(b)(v), and shall accrue interest at the rate of 10% annually. 2.10 Capital Accounts. The Company shall establish, calculate* and maintain a capital account ("Capital Account") for each Member in accordance with Section 1.704- l(b)(2)(iv) of the Regulations. If a Member transfers some or all of its Membership Interest in accordance with this Agreement, such Member's Capital Account attributable to the transferred Membership Interest will automatically be deemed transferred to the new owner of such Membership Interest pursuant to Regulations Section 1.704-l(b)(2)(iv)(l). 2.11 limitations on Withdrawals of Capital Contribution. No Member may withdraw its Capital Contributions or demand and receive property of the Company or any distribution in return for its Capital Contributions, except as may be specifically provided for in this Agreement or as required by law. No Member may receive the return of any portion of its Capital Contributions unless (i) all liabilities of the Company have been paid or there remains property of the Company sufficient to pay them; (u) the consent of all Members is obtained; (ui) the Articles are canceled or so amended as to allow the withdrawal or reduction, or (iv) such return is specifically provided for in this Agreement. 2.12 J imitpfl Liability of Members. Notwithstanding anything to the contrary contained herein, the liability of a Member for any of the debts, losses or obligations of the Company shall be limited to the sum of the Member's Capital Contributions which have been contributed to the Company or are contractually committed to be contributed to the Company. Accordingly no Member shall be obligated to provide additional capital to the Company or its creditors by way of contribution, loan or otherwise beyond the amount of Capital Contributions required under this Agreement. This Agreement is entered into with the understanding that Daniel J. Epstein, a general partner of Continental American Properties, Ltd., a California limited partnership (the general partner of ConAm), shall not be personally liable or responsible for any obligation arising under or related to this Agreement, except as to his interest as a general partner in the assets of Continental American Properties, Ltd., a California limited partnership. 2.13 Adjustment if Project Size Decreased by Commission Approval. If , as a result of Commission Approval or other governmental approval, the total number of units of the PAIanzanita Oo Aeree Ven 15:08004.339 ft Project is reduced to fewer than 157, then the Initial Capital Contributions of the Members shall be adjusted as follows. The Initial Capital Contribution of the Initial Member as set forth in Section 2.1 shall be reduced in value by $18,000 for each deleted unit (the "Capital Reduction Amount"). Hie ConAm Initial Contribution as set forth in Section 2.3 shall be reduced by the Capital Reduction Amount. The monthly Initial Member Development Fee as set forth in Section 4.8.1 shall be reduced by $600 for each deleted unit. The monthly Construction Period Preferred Return as set forth in Section 7.1(ii)(A) shall be reduced by $900 for each deleted unit. The Initial Capital Distribution as set forth in Section 7.3 shall be reduced by the Capital Reduction Amount. All other Economic Interests, Membership Interests, and Voting Interests shall be unaffected by the reduction in the number of units of the Project. 2.14 Additional Preferred Return on Advances If ConAm Funds Change in Character of Project Following Denial of Commission Approval. If, as a result of the inability to obtain Commission Approval, ConAm and Initial Member unanimously agree to convert the development of the Project to a character other than apartments with ConAm continuing to pay the Advances specified in Section 2.9 above pending the sale of the Project to a third party, then upon Initial Member's receipt of cash proceeds from such sale of the Project, or other Available Cash, the Advances shall be refunded to ConAm together with a preferred return on all Advances calculated at the rate of fifteen (15) percent per annum simple interest. ARTICLES. MEMBERS 3.1. Competing Activities. Each of the Members and their respective affiliates may engage or invest in, independently or with others, any business activity of any type or description, including without limitation those that might be the same as or similar to the Company's business and that might be in direct or indirect competition with the Company. Neither the Company nor any Member shall have any right in or to such other ventures or activities or to the income or proceeds derived from such ventures or activities. No Member is obligated to present any. investment opportunity or prospective economic advantage to the Company, even if the opportunity is of the character that, if presented to the Company, could be taken by the Company. The Members each have the right to hold any investment opportunity or prospective economic advantage for. their own account or to recommend such opportunity to persons other than the Company. Each Member acknowledges that the other Members and their Affiliates own or manage other businesses, including businesses that may compete with the Company. Each Member hereby waives any and all rights and claims which it may otherwise have against the other Members and Affiliates as a result of any of such activities. 3.2. Members Are Not Agents. No Member, acting solely in its capacity as a Member, is an agent of the Company nor can any Member in such capacity bind the Company nor execute any instrument on behalf of the Company. Nothing in the preceding sentence, PAIanzanitt Op Agree Vers 15:08004,339 however, in any way limits the rights or authority of the Manager or officers of the Company under this Agreement. 3.3. Good Faith and Cooperation. The Members shall use good faith and deal fairly with one another at all times. The Members shall cooperate fully with one another to give effect to the provisions and intent of this Agreement. The Manager shall be the fiduciary of the Members and shall at all times act in good faith in the performance of all obligations provided in this Agreement to be performed by the Manager and promote the best interests of the Company in dealing with the Members, the Members' Affiliates and with third parties; and use at least the same degree of diligence as used by first-class operators of projects comparable to the Project in managing and conducting their own affairs.. ARTICLE 4. MANAGEMENT AND CONTROL OF THE COMPANY 4.1. Management Generally. Except as otherwise provided in Section 4.2, the assets, business, and affairs of the Company will be managed by the Manager who is the sole manager of the Company and who will make all decisions and perform any and all acts or activities that the Manager deems necessary or appropriate to the management of the Company's assets, business, and affairs, subject to their rights under this Agreement to delegate certain rights and duties; provided, however, that the Manager shall comply with and adhere to the standards set forth in Sections 3.3. Without limiting the generality of the foregoing, the Members grant the Manager all powers which may be necessary or desirable to manage the assets, business, and affairs of the Company, including the power to exercise on behalf of and in the name of the Company all of the powers described in Section 17003 of the Act, and including the rights and authority to: 4.1.1. Enter into, execute, and carry out contracts of all kinds; 4.1.2. Bring and defend legal and administrative actions; 4.1.3. Purchase liability, casualty, and other insurance to protect the property, business, agents, employees, Managers, and Members of the Company; 4J..4. Execute on behalf of the Company all instruments and documents necessary or desirable, in the opinion of the Manager, to further the business of the Company, including checks, drafts, notes, negotiable instruments, deeds, mortgages, deeds of trust, security agreements, financing statements, guaranties, indemnity agreements, assignments, bills of sale, leases, partnership agreements, operating agreements, and any other instruments or documents; 4.1.5. Employ, retain, and compensate employees, agents, and consultants, independent contractors, accountants, legal counsel, and other professionals to perform services for the Company; PiManzaniu Op Agree Vers 15:08004.339 4.1.6. Pay all reasonable expenses of the Company and reimburse the Manager for all reasonable expenses paid by the Manager on behalf of the Company; and 4.1.7. Do and perform all other acts as may be necessary or appropriate to the conduct or furtherance of the business of the Company, as determined by the Manager. 4.2. Limitations on the Manager's Authority. Notwithstanding anything to the contrary contained in this Agreement, the Manager may not cause the Company to take any of the following actions without the written consent of the Members comprising more than fifty percent (50%) the Voting Interests: 4.2.1. Admit new Members; 4.2.2. Amend the Articles or this Agreement; 4.2.3. Merge the Company with any corporation, limited liability company, partnership, or other entity; 4.2.4. Buy, own, manage, sell, lease, mortgage (except as permitted in Section 4.2.10), pledge, or otherwise acquire or dispose of all or any portion of the Project; 4.2.5. Lend or borrow material sums of money to or from third parties, the Members, or affiliates of the Members, and to hypothecate, encumber, and grant security interests in the assets of the Company (except as permitted in Section 4.2.10); 4.2.6. Amend the Management Agreement in any material respect; 4.2 J. Dissolve the Company, except as otherwise provided in this Agreement. 4.2.8 Any act that would make it impossible to carry on the ordinary business of the Company; 4.2.9 Any confession of a judgment against the Company; 4.2.10 The incurring of any debt not in the ordinary course of business, provided that consent is not required for the Permanent Loan referred to in Section 13.1; 4.2.11 A change in the nature of the principal business of the Company; 4.2.12 The incurring of any contractual obligation or the making of any capital expenditure, after the Project has obtained a certificate of occupancy, having a total cost of more than $50,000.00; 4.2.13 The filing of a petition in bankruptcy or the entering into of an arrangement among creditors; f>.i**..,,,.«, n* A*n» Vrn lkQKXH.339 H 4.2.14 The entering into, on behalf of the Company, of any transaction constituting a "reorganization" within the meaning of Corp. C §17600; and 4.2.15 The entering into, on behalf of the Company, of agreements with Members and Affiliates of Members, except as provided in Sections 4.7,4.8.1,4.8.2, and 4.8.3. 4.2.16 Exception for Initial Member Successors. Notwithstanding the foregoing limitations, in the event both Dana M. Wohlford and Philip C. Kidd are deceased or otherwise have no further economic interest in Initial Member, then the Manager as a fiduciary shall have authority to take the kinds of actions described in Sections 4.2.1, 4.2.2, 4.2.4,4.2.5,4JL6,4.2.9, 4.2.10, or 4.2.12 without the consent of Initial Member. With the sole exceptions of the Construction Loan and the Permanent Loan referred to in Section 13.1, under no circumstances shall the Manager, without the consent of Initial Member, cause the Project to be encumbered at a debt coverage ratio of less than 1.25 (i.e., net income from the Project before debt service, depreciation and other non-operating expenses equal to 125% of the annual debt service). 4.3. Specific Duties of the Manager. 4.3.1 The Manager shall obtain sufficient financing for the construction of the Project (the "Construction Loan") from one or more lenders selected by Manager (the "Lender"), provided that: (a) The Construction Loan shall be qualified non-recourse to the Initial Member; (b) If required by the Lender, ConAm shall guarantee the obligations of the Company under the Construction Loan; and (c) If required by the Lender, ConAm shall guarantee the completion of the Project. 4.3.2 The Manager shall be responsible for the construction of the Project, including supervising, coordinating and expediting the work of general contractor, subcontractors, architects, engineers and other construction workers and professionals working on the Project. 4.3.3 ConAm shall obtain and execute as necessary any letters of credit or other guarantees in favor of third parties or governmental entities that are required for the Project to proceed. The Manager shall take such actions as are necessary to substitute ConAm for Initial Member with respect to such letters of credit. Any costs paid by ConAm associated with such letters of credit shall be Advances subject to Section 2.9. P;Manzaniu Op Agree Vers 15:08004.339 12 4.4. General Duties of the Manager. Without limiting the generality of Section 4.1, and, subject to the provisions and limitations of this Agreement, the Manager shall, in good faith, use reasonable efforts to perform and discharge the following duties (which may include delegating such duties to third parties including affiliates of the Manager) at the Company's sole expense, but only the extent Company funds are available: (i) Acquire, protect and preserve the title and interest of the Company with respect to the Project in accordance with the terms set forth herein and in any leases of all or part of the Project ("Lease"); enforce the terms and provisions of any Lease; keep full and complete records and accounts of the Project; administer any Lease (including without limitation (1) using reasonable effort to cause prompt compliance by the lessee with the applicable Lease and (2) causing full compliance by the Company, as Lessor, thereunder); collect payments due under any Lease; (ii) Cause to be paid all property taxes, assessments and other impositions applicable to the Project to the extent the same are obligations of the Company, provided that the Manager may contest any such taxes or assessments for so long as the failure to pay the same does not (1) subject the Project or any part thereof to loss through foreclosure or otherwise, (2) constitute a default or event which would constitute a default under any agreement to which the Company or the Project is subject or (3) results in penalties; (Hi) Execute in the name of the Company any management and operating agreement, including the Management Agreement, other service contracts and amendments thereto covering the Project, Leases and amendments thereto; and perform, or have performed, the obligations of the Company under all such agreements, contracts and leases provided that any Lease entered into shall meet the criteria established by the Members. (iv) See that all indebtedness owing by the Company or owing with respect to or secured by the Project, or any part thereof, is paid prior to delinquency and see that all other requirements thereunder are complied with; (v) Endeavor to enforce the obligations of any third parties to the Company; (vi) Keep all books of account and other records of the Company; (vii) Maintain all funds of the Company held or controlled by the Manager in a Company account or accounts at a bank or banks selected by the Manager; (viii) Carry or cause to be carried such insurance as the Manager may reasonably deem necessary or appropriate, but in all events maintain or cause to be maintained in force and effect throughout the term of this Agreement all insurance required to be maintained in force and effect by (1) the terms of any instrument securing any indebtedness of the Project; or which is secured by liens or security interests on the Project, or (2) the terms of any agreement, contract or lease binding on the Company; PrManzanita Op Agree Vets 15:08004.339 13 (xi) Execute in the name of the Company any and ail agreements with respect to the project (collectively, the "Project Agreements") and perform, or have performed, the obligations of the Company under the Project Agreements and any related agreements, instruments and other documents. Without limiting the generality of the foregoing, the Manager is hereby authorized, empowered and directed, on behalf of the Company, to close and consummate the transactions described in the Project Agreements according to the terms and conditions thereof, and to execute and deliver all instruments and documents required, necessary or desirable in connection therewith. 4.5. Indemnification. The Company shall indemnify any Person who was or is a party, or who is threatened to be made a party, to any Proceeding, other than a Proceeding instituted by a Member, by reason of the fact that such Person was or is a Member, Manager, employee, or other agent of the Company, or was or is serving at the request of the Company as an employee, or other Agent of another limited liability company, corporation, partnership, joint venture, trust, or other enterprise, against expenses, judgments, fines, settlements, and other amounts actually and reasonably incurred by such Person in connection with such proceeding, provided, however, that in no event shall the Company provide indemnification to any person who has not acted in the best interests of the Company or for any person who has been or is threatened to be made such party as a result of a breach of this Agreement or is guilty of fraud, willful neglect or other intentional torts. Under no circumstances shall Company funds be advanced to pay attorney fees or litigation expenses in any controversy or dispute between the Members, between the Manager and one or more Members or between the Company and one or more Members. Any allocation of attorneys' fees or litigation expenses incurred in such controversy or dispute shall be reserved until the time of settlement or final judgment of a court of competent jurisdiction. "Agent," as used in this Section 4.5, shall include a trustee or other fiduciary of a plan, trust, or other entity or arrangement described in Corporations Code section 207(f). "Proceeding," as used in this Section 4.5, 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 incurred 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 Manager. "Expenses," as used in this Section 4,5, includes, without limitation, attorney fees and expenses of establishing a right to indemnification, if any, under this Section 4.5. All of such Expenses shall immediately be repaid to the Company by such person, together with interest on such Expenses at 10% per annum, compounded annually, if a final judgment is issued determining that such Person committed an act for which it is not entitled to reimbursement under this Section 4,5. 4.6. Performance of Duties; Liability of the Members. No Member, including any Member in its capacity as Manager will be liable to the Company or to any Member for any PiManzaniw Op Agree Ven 15:08004.339 14 loss or damage sustained by the Company or any other Member, unless the loss or damage is the result of fraud, gross negligence, intentional misconduct, or an intentional violation of law by such Member. The Manager is not obligated to devote all of its time or business efforts to the affairs of the Company. The Manager shall, however, devote such time, effort, and skill as it deems appropriate for the operation of the Company and the management of its affairs. In performing its duties, the Manager may rely on information, opinions, reports, or statements of one or more officers, employees, or other agents of the Company whom the Manager reasonably believes to be reliable and competent, including any attorney, accountant, or other professional. 4.7. Transactions between the Company and the Manager. Notwithstanding that it may constitute a conflict of interest, the Manager may, and may cause its affiliates to, engage in any transactions (including the purchase, sale, management, lease, or exchange of any property or the rendering of any service) with the Company so long as such transaction is not expressly prohibited by this Agreement and so long as the terms and conditions of such transaction, on an overall basis, are fair and reasonable to the Company and are not materially less favorable to the Company than those that are generally available from persons capable of similarly performing them and in similar transactions between parties operating at arm's length. Initial Member acknowledges and agrees that an Affiliate of ConAm may be the general contractor for the construction of the Project. Such Affiliate shall perform such construction at cost, with ConAm receiving a Development Fee under this Agreement. The Construction Contract shall be in the form attached as Exhibit C to this Agreement. 4.8. Fees and Other Arrangements. 4.8.1. Pevelopment Fees. The following expenses shall be paid as operating expenses of the Company: (a) ConAm shall receive a Development Fee (the "ConAm Development Fee") for the construction of the Project including supervising, coordinating and expediting the work of the general contractor, subcontractors, architects, engineers and other construction workers and professionals working on the Project. Said Development Fee shall be equal to $1,500 per unit, and shall be deemed earned upon the filing of a notice of completion for the Project. (b) Initial Member shall receive a Development Fee (the "Initial Member Development Fee") for its predevelopment services, continuing development services, and continuing assistance in die coordination of the construction of the Project. The Initial Member Development Fee shall be equal to $3,247 per month and shall be paid solely during the period commencing on the Effective Date and ending on the date when the Permanent Loan specified in Article Xm is funded, or the date of the Initial Capital Distribution, whichever occurs first. P:Manzanitt Op Agree Yen 15:08004.339 15 4.8.2. Property Manager's Fee. Con Am Management Corporation or any other affiliate appointed by the Manager, shall enter into a Property Management Agreement with the Company in the form attached as Exhibit B to this Agreement. 4.8.3. Brokerage Fees. In connection with the sale of the Project to an entity other than a Member or an Affiliate of a Member while ConAm is serving as Manager, ConAm shall have the right to act, or designate an Affiliate to act, as listing broker for a brokerage fee equal to 2% of the sale price. 4.8.4. Other Fees. Except as provided in this subsection 4.8 of this Agreement, no other fees, salaries, or distributions shall be paid by the Company to the Manager or its Affiliates unless approved by all Members. 4.8.5. Use of Office. Initial Member or such other persons as may be designated by Initial Member shall be entitled to occupy and use as an office the manager's unit of the apartment complex in the Project, and subject to all of the rules, regulations and other standard rental terms, free of rent. Said right shall lapse and shall be of no further force or effect if Initial Member transfers its entire Economic Interest in the Company to a third party other than an Affiliate of Initial Member. 4.9. Limited Liability. No person who is the Manager or an officer of the Company (or both the Manager and an officer of the Company) will be personally liable under any judgment of a court, or in any other manner, for any debt, obligation, or liability of the Company, whether that liability or obligation arises in contract, tort, or otherwise, solely by reason of being the Manager or an officer (or both the Manager and an officer) of the Company except for any debt, obligation or liability arising from or out of fraud, gross negligence, intentional misconduct or an intentional violation of law by the Manager or an officer of the Company. 4.10. Officers. The Manager may appoint officers of the Company at any time. The officers of the Company, if deemed desirable by the Manager, may include a chief executive officer, a president, one or more vice-presidents, a secretary, and a chief financial officer. The officers shall serve at the pleasure of the Manager, subject to all rights, if any, of an officer under any contract of employment. Any individual may hold any number of offices and no officer need be a resident of the State of California or a citizen of the United States. The officers may exercise such powers and perform such duties as are determined from time to time by the Manager. Any contract, agreement, promissory note, deed, mortgage, lease, and other instrument or document executed or entered into between the Company and any other person, when signed by the chief executive officer or the president, and either the secretary or the chief financial officer, is not invalidated as to the Company by any lack of authority of the signing officers in the absence of actual knowledge on the part of the other person that the signing officers had no authority to execute the same. Every contract, agreement, promissory note, deed, mortgage, lease, and other instrument or document executed by the Manager (or the above-prescribed officers) on behalf of the Company is conclusive evidence in favor of every person relying thereon or claiming thereunder that at the time of the delivery thereof (i) PAfanzanita Op Agree Vers 15:08004.339 Ifc the Company was in existence, (ii) neither this Agreement nor the Articles had been amended in any manner so as to restrict the delegation of authority to the Manager (or the officers) provided for in this Agreement, and (iii) the execution and delivery of such instrument was duly authorized by all of the Members to the extent required. No officer shall receive salary or other compensation without the unanimous written approval of the Members. 4.11. Appointment of the Manager. ConAm is hereby appointed as Manager. ConAm shall continue to serve as Manager for the duration of this Operating Agreement unless it is removed by (1) a vote of the Members holding a majority of the Voting Interest; (2) for cause by order of a Court of competent jurisdiction based on its fraud, breach of fiduciary duty to the Members or other willful misconduct; (3) becoming insolvent or filing a petition for bankruptcy; or (4) providing written notice to all Members withdrawing from further service as Manager. In the event that ConAm ceases to be Manager, a new Manager shall be selected by Members holding a majority of the voting interest in the Company. In the event that no majority can agree on a new Manager, a Manager shall be appointed by order of a court of competent jurisdiction. ARTICLE 5. MEETINGS OF MEMBERS 5.1. Meetings. Any Member with a Voting Interest of at least 16.6% may call a meeting of the Members. Subject to Section 5.2 below (in the case of the Manager calling a meeting), such Member eligible to call a meeting may, but need not, call meetings of the Members for any purpose the Member deems appropriate in connection with the operation or business of the Company. If a Member elects to call a meeting of the Members, the Manager must cause a written notice of the meeting to be delivered to the Members not less than ten nor more than sixty days before the date of the meeting. The notice must specify the place, date, and time of the meeting and the general nature of the business to be transacted at the meeting. No business which is not referenced in the notice of the meeting may be transacted at the meeting unless consented to at the meeting by all of the Members. At any Members' meeting, the Manager may appoint a person to preside as Chairman at the meeting and a person to act as secretary of the meeting. At the Manager's direction, the secretary of the meeting shall prepare minutes of the meeting which must be maintained with the Company's books and records. Any meeting of the Members may be adjourned from time to time by the Member. When any meeting of Members is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place are announced at the meeting at which the adjournment takes place and the new date set for the recommencement of the adjourned meeting is less than 45 days from the date set for the original meeting. Any actions taken at a meeting of Members, however called and noticed, and wherever held, have the same validity as if taken at a meeting duly held after regular call and notice, if either before or after the meeting each of the Members entitled to vote, who was not present in person or by proxy, signs a written waiver of notice or consents to the holding of the meeting, or approves the minutes of the meeting. Attendance by a person at a meeting constitutes a waiver of notice as to that meeting. Neither the business to be transacted nor the purpose of any meeting of Members need be specified in any written waiver of notice. Members may participate in any PiManzaniu Op Agree Vers 15:08004.339 }7 meeting of the Members through the use of conference telephones or similar communications equipment as long as all Members participating in such meeting in person and by telephone or other communication equipment can hear one another. A Member participating in a meeting by telephone or similar communication equipment is deemed to be present in person at the meeting. 5.2. Action by Written Consent. Any action that may be taken or resolution that may be adopted at a meeting of Members may be taken or adopted without a meeting, if a consent in writing setting forth the action so taken or resolution so adopted, is signed and delivered to the Company within 60 days of the record date for that action by Members. All such written consents must be filed and maintained in the Company's books and records. ARTICLE 6. ALLOCATIONS OF PROFITS AND LOSSES 6.1. Allocations of Profits and Losses. 6.1.1. Profits. Profits shall be allocated to the Members, (a) First, (i) in an amount equal to the aggregate of the Preferred Return paid in the current and prior years, less (ii) Profits previously allocated under this Section 6.1.1 (a) in all prior years, and (b) Second, to the Members on a pro rata basis according to their Percentage Interests. 6.1.2. Losses. Losses shall be allocated to the Members on a pro rata basis according to their Percentage Interests. 6.1.3. Limitation on Allocations of Loss. Notwithstanding the provisions of Section 6.1.2, above, allocations of Losses to a Member may be made only to the extent that such allocations of Losses do not create a deficit Capital Account balance for that Member in excess of an amount, if any, equal to such Member's share of the Company's Minimum Gain that would be realized on a disposition of the Company's property. Any Losses not allocated to a Member because of the foregoing provision shall be allocated to the other Members (to the extent the other Members are not limited in respect of the allocation of Losses under this Section). Any Losses reallocated under this Section must be taken into account in computing subsequent allocations of Profits and Losses pursuant to this Article 6, so that the net amount of any item so allocated and the Profit and Losses allocated to each Member pursuant to this Article 6, to the extent possible, is equal to the net amount that would have been allocated to each such Member if no reallocation of Losses had occurred under this Section. PAIaazaniu Op Agree Vets 15.-080W.3J9 j g 6.2. Special Allocations. 6.2.1. Minimum Gain Chargeback. Notwithstanding the provisions of Section 6.1 above, and except as otherwise provided in Section 6.2.2 below, if there is a net decrease in the Company's Minimum Gain during any fiscal year, each Member must be specially allocated items of the Company's income and gain for such fiscal year (and, if necessary, in subsequent fiscal years) in an amount equal to the portion of such Member's share of the net decrease in the Company's Minimum Gain that is allocable to the disposition of the Company's property subject to a Nonrecourse liability, which share of such net decrease will be determined in accordance with Regulations Section 1.704-2(b)(2). Allocations pursuant to this Section must be made in proportion to the amounts required to be allocated to each Member under this Section. The items to be so allocated shall be determined in accordance with Regulations Section 1.7G4-2(i). This Section is intended to comply with the minimum gain chargeback requirement contained in Regulations Section 1.704-2(f) and must be interpreted consistent with such intention. 6.2.2. Chargeback of Minimum Gain Attributable to Member Nonrecourse Debt. Notwithstanding the provisions of Section 6.1 above, if there is a net decrease in the Company's Minimum Gain attributable to a Member Nonrecourse Debt, during any fiscal year, each Member who has a share of the Company Minimum Gain attributable to such Member Nonrecourse Debt (which share will be determined in accordance with Regulations Section 1.704-20(5)) will be specially allocated items of the Company's income and gain for such fiscal year (and, if necessary, in subsequent fiscal years) in an amount equal to that portion of such Member's share of the net decrease in the Company's Minimum Gain attributable to such Member Nonrecourse Debt that is allocable to the disposition of the Company's property subject to such Member Nonrecourse Debt (which share of such net decrease shall be determined in accordance with Regulations Section 1.704-20(5)). Allocations pursuant to this Section must be made in proportion to the amounts required to be allocated to each Member under this Section. The items to be so allocated must be determined in accordance with Regulations Section 1.704-20(4). This Section is intended to comply with the minimum gain chargeback requirement contained in Regulations Section 1.704-20(4) and will be interpreted consistent with such intention. 6.2.3. Nonrecourse Deductions. Notwithstanding Section 6.1 above, any nonrecourse deductions (as defined in Regulations Section 1704-2(b)(l)) for any fiscal year or other period shall be specially allocated to the Members in proportion to the ownership of their respective Membership Interests. 6.2.4. Member Nonrecourse Deductions. Notwithstanding Section 6.1 above, those items of the Company's loss, deduction, or Code Section 705(a)(2)(B) expenditures attributable to Member Nonrecourse Debt for any fiscal year or other period must be specially allocated to the Member who bears the economic risk of loss with respect to the Member Nonrecourse Debt to which such items are attributable in accordance with Regulations Section 1.704-20. P-M»i»n«a Oo Aewe Vers 15:08004.339 19 6.2.5. Qualified Income Offset. Notwithstanding Section 6.1 above, if a Member unexpectedly receives any adjustments, allocations, or distributions described in Regulations Section 1.704-l(b)(2)(ii)(d)(4), (5) or (6), or any other event creates a deficit balance in the Member's Capital Account in excess of the Member's share of the Company's Minimum Gain, then items of the Company's income and gain must be specially allocated to the Member in an amount and manner sufficient to eliminate the excess deficit balance as quickly as possible. Any special allocations made under this Section must be taken into account in computing subsequent allocations of income and gain under this Article 6 so that the net amount of any item so allocated and the Profits and Losses allocated to each Member under this Article 6 becomes, to the extent possible, equal to the net amount that would have been allocated to each Member under this Article 6 had the unexpected adjustments, allocations, or distributions not occurred. 6.2.6 Curative Allocations. The allocations provided for in this Section 6.2 (the "Regulatory Allocations") may not be consistent with the manner in which the Members intend to divide Profits, Losses, Company gross income and similar items. Accordingly, Profits, Losses, Company gross income and other items will be reallocated among the Members (In the same year, and to the extent necessary, in subsequent years) in a manner consistent with Regulations sections 1.704-1 (b) and 1.704-2 so as to prevent die Regulatory Allocations from distorting the manner in which Profits, Losses, Company gross income and other items are intended to be allocated among the Members pursuant to Section 6.1. 6.3. Code Section 704(c) Allocations. Notwithstanding any other provision in this Article 6, in accordance with Code Section 704(c) and the Regulations promulgated thereunder, income, gain, loss, and deduction with respect to any property contributed to the capital of the Company by one or more Members.must be allocated among the Members (solely for tax purposes) so as to take account of any variation between the adjusted basis of the property to the Company for federal income tax purposes and its fair market value on the date of contribution. Allocations under this Section are solely for purposes of federal, state and local taxes. As such, they do not affect, nor will they in any way be taken into account in computing a Member's Capital Account or share of Profits or Losses, or distributions under any provision of this Agreement. The Company shall use the traditional method described in Regulation 1.704-3. 6.4. Allocation of Profits and Losses and Distributions in Respect of a Transferred Interest. If during any fiscal year of the Company any Membership Interest is transferred (as permitted by this Agreement), or the percentage interest in the Company represented by a Member's Membership Interest is increased or decreased by reason of die admission of a new Member or otherwise, each item of income, gain, loss, deduction, or credit of the Company for such fiscal year must be assigned pro rata to each day in the particular period of such fiscal year to which such item is attributable (i.e., the day on or during which it is accrued or otherwise incurred) and the amount of each such item so assigned to any such day must be allocated to the Members based on the ownership of their respective Membership Interests at the close of such day. However, for the purpose of accounting convenience and simplicity, the Company may treat any such transfer, increase, or decrease affecting the Membership Interest PAlanzaniu Op AereeVers 1&Q8QD4 J39 20 of a Member which occurs at any time during a calendar month as having been consummated on the last day of the month, regardless of when during the month such transfer, increase, of decrease actually occurs. 6.5. Allocations Resulting From Dispositions. Notwithstanding any provision in the preceding Section to the contrary, gain or loss of the Company realized in connection with a sale or other disposition of any of the Company's assets must be allocated solely to die parties owning Membership Interests as of the date the sale or other disposition occurs. ARTICLE 7. DISTRIBUTIONS 7.1. Distributions from Available Cash. All Available Cash, other than from a Capital Transaction or the liquidation of the Company, shall be paid and distributed in the following order of priority: 0 To pay the Initial Member Development Fee during such time as the fee is payable under this Agreement. pi) To pay a Preferred Return to Initial Member as follows: A. Commencing on the Effective Date and continuing for the duration of the period when the Company pays the Initial Member Developer Fee specified in Section 4.8.1(b), equal to six percent (6%) per annum, except as otherwise provided in Section 7.3, computed on the excess, if any, of the Capital Account of Initial Member over the Capital Account of CpnAm ("Construction Period Preferred Return"). For the purposes of this Capital Account computation, it shall be always assumed that both the Initial Contribution referred to in Section 2.3 and the Second Contribution referred to in Section 2.4 have been made. B. During the period commencing on the date when the Company ceases to pay the Initial Member Developer Fee specified in Section 4.8.10)) and ending on the date when the Initial Capital Distribution is distributed in full to Initial Member, equal to ten percent (10%) per annum, except as otherwise provided in Section 7.3, computed on the excess, if any, of the Capital Account of Initial Member over the Capital Account of ConAm ("Operating Period Preferred Return"). All monthly Preferred Return shall be paid on the first day of each month, and shall be prorated for any partial months; (iii) To repay Advances and Construction Advances, together with interest due on these items; P:Manzaniu Op Agree Ven I5.-080tM.339 21 (iv) To pay the ConAm Development Fee due under Section 4.8.1 (a); (v) To the Members no less often than quarterly, on a pro-rata basis according to their Percentage Interests. 7.2. Distributions from Capital Transactions. (a) Definition of Capital Transaction. "Capital Transaction" shall include any: (i) Sale or other disposition of all or any part of the Project other than in dissolution and liquidation of the Company; (ii) Financing or refinancing of the Project; (iu) Condemnation of all or any part of the Project; - (iv) Payment from insurance on account of a casualty to the Project other than payments if any for insurance on account of business or rental interruption; (v) Payment from title insurance on account of a defect in title to the Project or with respect to any other claim under such title insurance; (vi) Capital Contributions; and (vii) Similar items or transactions the proceeds of which under generally accepted accounting principles are deemed attributable to capital. (b) Priority of Distribution. Except as otherwise provided herein, if there is cash available for distribution from a Capital Transaction, then such cash shall be distributed in the following priority: (i) To the discharge, to the extent required by any lender or creditor (not including any Member that is a lender or creditor), of debts and obligations of the Company; (ii) To fund reasonable reserves for contingent or unforeseen liabilities of the Company; (iii) To pay any unpaid Development Fees; (iv) To pay the undistributed amount of Preferred Return due and payable to Initial Member; (v) To pay the undistributed amount of the Initial Capital Distribution due and payable to Initial Member; ;,, n« A*nw V«x 15:0*004.339 22 (vi) To repay the unpaid balance of the Advances and the Construction Advances, plus accrued interest, to the Manager; and to repay any other loans to the Company by the Members. (vii) To the Members on a pro-rata basis according to their Percentage Interests. 7.3 Initial Capital Distribution. Provided that the Company has Available Cash, upon the later of (a) the date two years from Commission Approval or (b) the date when the Permanent Loan referred to in Article 13 is funded, Initial Member shall receive a cash distribution as a return of capital in the amount of $974,145 (the "Initial Capital Distribution"). Notwithstanding any other provision of this Agreement, if the Permanent Loan is obtained before the date two years following Commission Approval, the sum of $974,145 in Available Cash from the proceeds of such loan shall be retained at all times by the Manager in an interest-bearing account until the date when it may be distributed pursuant to this paragraph. Initial Member shall, commencing on the date when the proceeds of such loan are placed in said account, receive the interest from such account in lieu of the Preferred Return specified in Section 7.1(ii). The Initial Capital Distribution shall in no way diminish or affect the Initial Member's Membership Interest, Voting Interest, Percentage Interest or Economic Interest. In the event that sufficient Available Cash is not obtained from the Permanent Loan referred to in Article 13 to complete the Initial Capital Distribution in whole or in part at the time provided in this Section, then such Available Cash as is obtained shall be used to partially complete the Initial Capital Distribution, and the balance of the Initial Capital Distribution shall be completed from Available Cash obtained thereafter. Initial Member's Capital Account shall be reduced by the sum of any partial Initial Capital Distributions, with Operating Period Preferred Return continuing to be paid on the outstanding excess of Initial Member's Capital Account over ConAm's Capital Account as defined in Section 7.1(ii)(B), until the Initial Capital Distribution is completed in full. 7.4. Withdrawals. Except as provided in this Agreement, no Member shall be entitled to withdraw from die Company all or any part of his Capital Account. Without limiting the generality of immediately preceding sentence, no Member shall have the right to withdraw from the Company all or any part of his Capital Contribution (except as provided in this Agreement) until: (a) all liabilities of the Company, except liabilities to Members on account of their Capital Contributions, have been paid or there remains property of the Company sufficient to pay them; and (b) the unanimous consent of the Members is obtained. 7.5. Source of Distributions. Each Member shall look solely to the assets of the Company for all distributions with respect to the Company and the Member's Capital Contributions thereto and shall have no recourse therefor (upon dissolution or otherwise) P-Manzanka Op Agree Verj 15:08004.339 23 against the other Members. No Member shall have any right to demand or receive property other than cash upon dissolution and termination of the Company. ARTICLE 8. ACCOUNTING, RECORDS, REPORTING BY MEMBERS 8.1. Filing of Tax Returns. 8.1.1. The Manager shall engage a reputable firm of independent certified public accountants to prepare all federal and state partnership income tax returns for each tax year of the Company. A copy of each such income tax return shall be provided to all Members as soon as it is practicable but in no event later than ninety (90) days after the end of the Fiscal Year being reported upon. 8.1.2. Any provisions hereof to the contrary notwithstanding, solely for U.S. federal income tax purposes, each Member hereby recognizes that the Company will be subject to all provisions of Subchapter K of Chapter 1 of Subtitle A of the Code; provided, however, that the filing of U.S. Partnership Returns of Income shall not be construed to extend the purposes of the Company or expand the obligations or liabilities of the Members. 8.2. Accounting Decisions. All decisions as to accounting matters, except as otherwise specifically set forth herein, will be made by the Manager. The Manager may rely upon the advice of accountants as to whether such decisions are in accordance with accounting methods followed fox federal income tax purposes. 8.3. Books and Records. The books and records of the Company will be kept, and the financial position and the results of its operations recorded, in accordance with the accounting methods followed for federal income tax purposes. The books and records of the Company must be appropriate and adequate for the Company's business in the reasonable discretion of the Manager. In addition, the Company must maintain at its principal office in California all of the following: 8.3.1. A current list of the full name and last known business or residence address of the Members (and each non-substitute Member Transferee, as defined below) set forth in Alphabetical order, together with the Capital Contributions, Capital Account, and Membership Interests of each Member (and non-substitute Member Transferee); 8.3.2. A copy of the Articles and of this Agreement and all amendments to the Articles and this Agreement, together with executed copies of any powers of attorney pursuant to which any of them were executed; 8.3.3. Copies of the Company's federal, state, and local income tax or information returns and reports, if any, for the six most recent taxable years; PrManzaniu Op Agree Vers 15:08004.339 24 8.3.4. Copies of the financial statements of the Company, if any, for the six most recent fiscal years; and 8.3.5. The Company's books and records as they relate to the internal affairs of the Company for at least the current and past four fiscal years. 8.4. Delivery to Members and Inspection. Upon the written request of a Member (or a non-substitute Member Transferee) for purposes reasonably related to the interest of that person as a Member (or non-substitute Member Transferee), the Manager shall promptly deliver to the requesting Member (or non-substitute Member Transferee), at the Company's expense, a copy of the information required to be maintained under Sections 8.3.1 and 8.3.3. Each Member (and non-substitute Member Transferee) has the right upon reasonable request and for purposes reasonably related to the interest of the person as a Member (or non-substitute Member Transferee), to: 8.4.1. Inspect and copy (personally or through an agent) during normal business hours any of the Company's records described in Sections 8.3.1 through 8.3.5, above; and 8.4.2. Obtain from the Manager, promptly after their becoming available, a copy of the Company's income tax returns for each fiscal year. 8.5. Tax Matters Partner. With respect to all matters occurring or arising after the effective date of this Agreement, the Manager will be the "Tax Matters Partner" as defined in Section 6231 of the Code and may, from time to time, cause the Company to make such tax elections as it deems to be in the best interests of the Company and the Members and may represent the Company (at the Company's expense including all professionals' fees and costs) in connection with all examinations of the Company's affairs by tax authorities, including judicial and administrative proceedings. In the event the Company shall be the subject of an income tax audit by any federal, state or local authority, to the extent the Company is treated as an entity for purposes of such audit, including administrative settlement or judicial review, the Tax Matters Partner shall obtain the consents of the Members prior to extending the statute of limitations or choosing a forum or entering into any agreement or settlement with the Internal Revenue Service or otherwise binding the Company. If for any reason the Tax Matters Partner can no longer serve in that capacity or ceases to be the Manager, the Members may designate another individual to be Tax Matters Partner. With respect to all matters which have occurred prior to the effective date of this Agreement, the Initial Member shall be the "Tax Matters Partner." Initial Member and the Manager shall jointly address all Tax Matters which involve both matters occurring before and after the effective date of this Agreement. 8.6. Obligations of Members to Report Allocations. Each of the Members is aware of the income tax consequences of the allocations made under this Agreement and agree to be bound by the provisions of this Agreement in reporting its share of the Company's income, loss, and other tax attributes for income tax purposes. P:Manzaniu Op Agree Yen 15:08004.339 25 8.7. Fiscal Year. The fiscal year of the Company will end on December 31 of each year. 8.8. Financial Statements. The Manager will prepare, or cause to be prepared, and provide to the Members the following information: (a) as soon as practicable and in any event within thirty (30) days after the end of each quarterly fiscal period (excluding the last quarterly period) in each Fiscal Year of the Company, statements of income and cash flow and a reconciliation of Members' capital accounts statement for such quarterly period and, in the case of the second and third quarterly fiscal periods, for the period from the beginning of the then current Fiscal Year to the end of such quarterly period, and a balance sheet of the Company as of the end of such quarterly period, all in reasonable detail, subject to changes resulting from year-end adjustments; (b) as soon as practicable and in any event within ninety (90) days after the end of each Fiscal Year of the Company, statements of income and cash flow and a reconciliation of Members* capital accounts statement for such year, and a balance sheet of the Company as at the end of such year, in reasonable detail and accompanied by an opinion of the Company's independent certified public accountants selected by the Manager; (c) promptly upon receipt thereof, a copy of each other report submitted to the Manager by independent accountants in connection with any annual, interim or special audit made by them of the books of the Company (including, without limitation, management or comment letters delivered by such accountants); and (d) as soon as practicable and in any event within ninety (90) days after the end of each Fiscal Year of the Company, a Form K-l and such other information respecting the Company as is considered necessary by the Manager for the preparation by the Members of their respective income tax returns. All the foregoing financial statements shall be prepared in accordance with federal income tax accounting principles, consistently applied. 8.9. Fixed Asset Accounts. The Company shall maintain fixed asset accounts in such detail as any Member may require reflecting the cost to the Company of all fixed assets of the Company together with all documentation used to determine the values of die respective fixed assets. 8.10. Bank Accounts. All funds of every kind and nature received by the Company, including capital contributions, loan proceeds and operating receipts, shall be deposited in such bank accounts as shall be determined by the Manager. ARTICLE 9. TRANSFERS OF INTERESTS P:Manzmiu Oo Aeree Yen 15:08004.339 26 9.1. Right of First Refusal. Commencing on the fifth anniversary of the Effective Date, Membership Interests in the Company may be transferred subject to the following right of first refusal. If a Member wishes to transfer any or all of the Member's Membership Interest in the Company to a person who is not (1) a Member, (2) an Affiliate of a Member, (3) a sibling of a Member pursuant to a Bona Fide Offer (as defined below), or (4) any other person who is the subject of a Permitted Transfer under Section 9.5, the Member shall give Notice to all other Members at least 60 days in advance of the proposed sale or Transfer, indicating the terms of the Bona Fide Offer and the identity of the offerer. The other Members shall have the option to purchase the Membership Interest proposed to be transferred at the price and on the terms specified in the Bona Fide Offer. If the price for the Membership Interest is other than cash, the fair value in dollars of the price shall be as established in good faith by the Manager. For purposes of this Agreement, "Bona Fide Offer" means an offer in writing setting forth all relevant terms and conditions of purchase from an offerer who is ready, willing, and able to consummate the purchase and who is not an Affiliate of the selling Member. For 30 days after the Notice is given, the other Members shall have the right to purchase the Membership Interest offered, on the terms stated in the Notice, for the price stated in the Notice (or the price plus the dollar value of noncash consideration, as the case may be). If the other 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 offerer named in the Notice. Unless the requirements of Section 9.3 are met, the offerer under this section shall receive solely an Economic Interest, and shall be entitled to receive only the share of Profits or other compensation by way of income and the return of Capital Contribution to which the assigning Member would have been entitled. 9.2. Transfer and Assignment of Interests. Except as provided in Sections 9.1, 9.3, 9.4, 9.5, and 9.6, no Member may transfer, assign, convey, sell, encumber, or in any way alienate (each of the foregoing constituting a "Transfer") any of its Membership Interest without the prior written consent of a majority of the Membership Interests owned by the other Members, which consent may be withheld in each Member's sole and absolute discretion. Failure by a Member to respond within fifteen days after receipt of notice of a written request for consent from a Member desiring to Transfer some or all of its Membership Interest constitutes such Member's consent to the proposed Transfer. Transfers in violation of this Article are void and of no effect. After the consummation of any permitted Transfer, the Membership Interest so Transferred continue to be subject to the terms, provisions, and conditions of this Agreement and any further Transfers must comply with all of the terms, provisions, and conditions of this Agreement, including this Article. Upon the occurrence of any Transfer, the transferee (the "Transferee") may not become a substitute Member unless the requirements of Section 93 below, are met. Any Transferee who does not become a substitute Member may not vote or participate in the management and affairs of the Company or become or exercise any of the rights of a Member, other than to receive, to the extent transferred, the allocations of income, gain, losses, deductions, credits, or similar items, and P:Manzaniu Op Agree Vers 15:08004.339 27 the distributions of money or other property, to which the transferor Member would be entitled. 9.3. Substitution of Members. A Transferee of a Membership Interest may become a substitute Member only if (i) a majority of the Membership Interests owned by of the other Members consent in writing, which consent may be withheld in each Member's sole and absolute discretion, (u) all securities and tax requirements set forth in this Agreement, are met, (iii) the Transferee executes an instrument satisfactory to the Manager accepting, adopting, and agreeing to be bound by this Agreement, and (iv) the Transferee pays all reasonable expenses of the Company (including attorneys' fees) incurred in connection with the Transferee's admission as a substitute Member. The admission of a Transferee as a substitute Member does not release the transferring Member from any liability it may have to the Company or the other Members, 9.4. Rights of Legal Representatives. If a Member who is an individual dies or is adjudged by a court of competent jurisdiction to be incompetent to manage the Member's person or property, the Member's executor, administrator, guardian, conservator, or other legal representative may exercise all of the Member's rights for the purpose of settling the Member's estate or administering the Member's property, including any power the Member has under the Articles or this Agreement to give an assignee the right to become a Member. If a Member is a corporation, trust, or other entity and is dissolved or terminated, the powers of that Member may be exercised by its representative or successor. 9.5. Permitted Transfers. Despite any provision contained in this Agreement, a Member who is a natural person may transfer his or her Membership Interest, or a portion or interest therein, to any corporation, limited liability company, revocable or irrevocable, trust or any other entity in which the Member is either a shareholder, manager or trustee or in which the Member retains a beneficial interest, or to any Affiliate of such Member, or to any children, or issue of such Member; provided that, the transferee shall agree in writing to hold such Membership Interest subject to and be bound by the terms and conditions of this Agreement. 9.6 Stand Off Provision. After 5 years from the Effective Date, either the Manager, on the one hand, or the Initial Member, on the other hand, ("the Designer") may hand deliver to the other ("the Designee*) a written notice ("the Designation") designating a price ("the Designated Price") pursuant to which the offering member agrees to purchase the entire Membership Interest of the Designee. The Designee shall have ninety (90) days from the date of the delivery of the Designation to decide whether to accept the Designer's offer or, in the Designee's sole discretion, to instead purchase the Designer's entire Membership Interest for the Designated Price. The decision shall be set forth in a writing hand-delivered or delivered by fax transmission to the Designee and, once notice of the decision is given, it shall be binding on the Designer and the Designee. The failure to give any timely notice shall constitute an irrevocable acceptance of the Designer's offer. If, in any transaction subject to this Section 9.6, the Manager is the purchaser of Initial P-W,nTWj On A«w> V«* 1S.-080W.339 28 Member's interest, the Designated Price shall be paid in cash. If the Initial Member is the purchaser, the Designated Price shall be paid in cash, as to twenty percent (20%) of the payment and by a promissory note ("the Note") as to the balance. The Note shall bear interest at the rate of 10% per annum, shall be due and payable in full in one year, and shall contain other customary provisions. The Note shall be secured by Initial Member's Economic Interest in the Company. Unless the parties otherwise agree in writing, closing of a sale under this Section 9.6 shall occur within 120 days after delivery of the Designation. 9.7. General Provisions. Any transfer made pursuant to this Article 9 shall include the respective Member's Interest in and to the Company, the Project and all other assets of the Company. Each Member agrees to execute documents that may be required of the Company in connection with any such transfer. ARTICLE 10. DISSOLUTION AND WINDING UP 10.1. Dissolution Events. The Company will be dissolved, its assets disposed of, and its affairs wound up upon the first to occur of the following: 10.1.1. December 31,2097; 10.1.2. The election of the Members under Section 4.2; 10.1.3. Upon the death, retirement, withdrawal, resignation, expulsion, bankruptcy, or dissolution of a Member or occurrence of any other event which terminates the continued membership of a Member in the Company, unless thereafter the Company will have at least one remaining Member. 10.2. Certificate of Dissolution. As soon as possible following the occurrence of any of the events triggering dissolution specified in Section 10.1, the Manager shall execute a Certificate of Dissolution in the form prescribed by the California Secretary of State and file it in accordance with the Act. 10.3. Winding Up. Upon the occurrence of any event specified in Section 10.1 (and, in the case of Section 10.1.3, after the failure of the Members to timely elect to continue the existence of the Company), the Company will continue in existence solely for the purpose of disposing of its assets and winding up its affairs in an orderly manner, liquidating its assets, and satisfying the claims of its creditors. The Manager is responsible for overseeing the winding up of the Company's business. The Manager must give notice of the commencement of winding up activities by mail to all known creditors and claimants whose addresses appear on the records of the Company. The Manager is entitled to reasonable compensation for its services. PJtfanzaaka Op Agree Vcn 15:08004 J39 29 10.4. Distributions in Kind. Any non-cash asset distributed to one or more Members must first be valued at its fair market value to determine such Profit or Loss that would have resulted if the asset were sold for such value, the Profit or Loss must then be allocated pursuant to Article 7, and the Members' Capital Accounts must be adjusted to reflect such allocations. The amount distributed and charged to the Capital Account of each Member receiving an interest in the distributed asset is the fair market value of such interest (net of any liability secured by the asset that such Member assumes or takes subject to). The fair market value of the asset must be determined by the Manager or, if any Member objects to such valuation, then by an independent appraiser (any such appraiser must be recognized as an expert in valuing the type of asset involved) selected by the Manager and approved by the Members. 10.5. Order of Payment of Liabilities Upon Dissolution. 10.5.1. After (i) making all remaining distributions required under Sections 7.2 and 7.3 of this Agreement, if any, in the order provided for in those Sections; and (ii) determining that all known debts and liabilities of the Company, including debts and liabilities to Members who are creditors of the Company, have been paid or adequately provided for, the remaining assets will be distributed to the Members in accordance with their positive Capital Account balances, after taking into account income and loss allocations for the Company's taxable year during which liquidation occurs. The liquidating distributions must be made by the end of the Company's taxable year in which the Company is liquidated or, if later, within 90 days after the date of the liquidation. 10.5.2. The payment of a debt or liability, whether the whereabouts of the creditor is known or unknown, will be deemed to have been adequately provided for if the Company has complied with either of the following: 10.5.2.1. The payment of the debt or liability has been assumed or guaranteed in good faith by one or more financially responsible persons or entities, and the provision, including the financial responsibility of the person, was determined in good faith and with reasonable care by a liquidator to be adequate at the time of any distribution of the assets under this Article. 10.5.2.2. The amount of the debt or liability has been deposited by the Company into an account for that purpose in accordance with California Corporations Code Section 2008. 10.6. Compliance with Regulations. All payments to the Members upon the winding-up and dissolution of die Company must be made strictly in accordance with the positive capital account balance limitation and other requirements of Regulations Section 1.704-l(b)(2)(ji)(d). 10.7. Limitations on Payments Made in Dissolution. Except as otherwise specifically provided in this Agreement, each Member is entitled to look solely to the assets of the On An«e V«n 15.O8004.339 30 Company for the return of its positive Capital Account balance and will have no recourse for the return of its Capital Contribution or the receipt of its share of Profits (upon dissolution or otherwise) against the Manager or any other Member except as expressly provided in this Agreement. 10.8. Certificate of Cancellation. The Manager shall cause a Certificate of Cancellation of the Articles to be filed in the office of, and on a form prescribed by, the California Secretary of State, upon the completion of the winding-up of the affairs of the Company. 10.9. No Action for Dissolution. Except as expressly permitted in this Agreement, no Member may take any voluntary action that directly causes the dissolution of the Company. The Members acknowledge that irreparable damage would be done to the goodwill and reputation of the Company if any Member should bring an action in court to dissolve the Company under circumstances where dissolution is not required by this Article. This Agreement has been drafted to provide fair treatment of all parties and equitable payment in liquidation of the Membership Interests. Accordingly, except where the Manager has failed to liquidate the Company as required by this Article, each Member waives and renounces its right to initiate a legal action to seek the appointment of a receiver or trustee to liquidate the Company or to seek a decree of judicial dissolution of the Company on the grounds that Q it is not reasonably practicable to carry on the business of the Company in conformity with the Articles or this Agreement, or (ii) dissolution is reasonably necessary for the protection of the rights or interests of the complaining Member. ARTICLE 11. REPRESENTATIONS AND WARRANTIES 11.1. ConAm Representations. Warranties and Covenants. ConAm hereby represents, warrants and covenants to Initial Member and to the Company that: (a) Valid Execution. ConAm has validly executed this Agreement and the same constitutes the binding obligations of ConAm. ConAm has full power, authority and capacity to enter into this Agreement and to carry out ConAm's obligations as described in this Agreement. No consent, authorization or approval of any governmental authority or agency or other third party is required in connection with the execution, delivery and performance of this Agreement by ConAm. (b) Preserve Company Existence. ConAm, when acting in the capacity of Manager, will at all times preserve and keep in full force and effect the Company's status as a limited liability company under the Act. ConAm, when acting in the capacity of Manager, will take or cause the Company to take any and all reasonable steps deemed necessary by counsel to the Company to assure that the company will at all times be classified as a Company for federal income tax and not as an association taxable as a corporation. On A*nx V«s 15:08004.339 31 (c) No Material Adverse Change. No event, occurrence or proceeding is pending that would materially adversely affect the ability of ConAm to perform its obligations hereunder. (d) No Default. The execution and delivery of all instruments and the performance of all acts heretofore or hereafter made or taken or to be made or taken by ConAm concerning the Company have been or will be duly authorized by all necessary corporate or other action, and the consummation of any such transactions with or on behalf of the Company will not constitute a breach or violation of, or default under, the charter or by-laws of ConAm or any agreement by which ConAm or any of its respective properties are bound, or constitute a violation of law, administrative regulation or court decree. 11.2. Initial Member Representations. Warranties and Covenants. Initial Member hereby represents, warrants and covenants to ConAm that: (a) Valid Execution. Initial Member has validly executed this Agreement and the same constitutes the binding obligations of Initial Member. The Initial Member has full power, authority and capacity to enter into this Agreement and to carry out Initial Member's obligations as described in this Agreement. (b) No Material Adverse Change. Except as disclosed in writing to Initial Member's knowledge, no event, occurrence or proceeding is pending that would materially adversely affect the ability of Initial Member to perform its obligation hereunder. (c) No Default. The execution and delivery of all instruments and the performance of all acts heretofore or hereafter made or taken or to be made or taken by the Initial Member concerning the Members have been or will be duly authorized by all necessary corporate or other action, and Initial Member shall take reasonable steps to ensure that the consummation of any such transactions with or on behalf of the Company will not constitute a breach or violation of, or default under, the charter or by-laws of the Company or any agreement by which Initial Member or the Company or any of their respective properties are bound, or constitute a violation of law, administrative regulation or court decree. The Company has filed in a timely manner all tax returns required to be filed by it, the information on such returns is complete and accurate, and all taxes required to be paid have been paid. (d) Existing Liabilities and Obligations. There are as of the time of execution of this Agreement no known undisclosed material obligations or liabilities of the Company, other than those obligations, liabilities or encumbrances which could be ascertained from a diligent review of the public records and a diligent inspection of the site of the Project. No event of default or event which, with the giving of notice or the passage of time would become an event of default, has occurred under any Project construction contract, loan agreement, or other agreement of the Company. Initial Member has paid all obligations and liabilities which have been billed to the Company as of the Effective Date. Initial Member is not responsible for obligations and liabilities for services rendered to the Project mw9 On A»r«e Vent 15:08004.339 12 which may have accrued prior to the Effective Date, but which have not been billed to the Company as of the Effective Date. In the event that the Company is subjected to any fine or penalty by the California Coastal Commission or other governmental agency based on the disturbance (prior to September 1, 2000) of areas west of El Camino Real marked as "wet" or "wetlands" on the Dudek Biological Resources Report and Impact Assessment, dated December 21,1998, the Company shall pay such fine or penalty with funds derived from the Initial Contribution, the amount of such payment shall reduce the Initial Capital Distribution on a dollar-for-dollar basis, and the total of such payments, plus the adjusted Initial Capital Distribution, shall be debited against the Initial Member's capital account at the time of payment of the Initial Capital Distribution. Initial Member shall pay such fine or penalty, if any, to the extent that it exceeds the Initial Contribution. The following additional provisions shall apply to fines and penalties covered by this paragraph: (1) Initial Member must approve any settlement or other agreement that results in the imposition of any such fine or penalty; and (2) at Initial Member's request, the Manager will appeal any such fine or penalty using counsel of Initial Member's choice. The Company shall-assign to Initial Member all claims, rights, and causes of action that the Company may have against any party, other than the Members, relating to the subject matter of fines, penalties, environmental mitigations, redesign, reduction in units or other circumstances giving rise to either an Initial Capital Distribution reduction or a payment of fines or penalties by Initial Member. (e) Exclusive Business of the Company. The Company has not engaged in any other business other than the development of the Property. ARTICLE 12. MANDATORY MEDIATION OF DISPUTES 12.1. Dispute Resolution: All of the Members agree that prior to instituting any form of litigation regarding any claim, dispute, controversy, or other matter in question between any of the Members and/or the Manager, the Members shall participate in mediation of the matter for up to two full days using the services of a mutually agreeable retired judge in San Diego, California.. The Members each hereby agree to pay their proportionate share of any charges of the mediator relating to such mediation. .Any Member or Manager who fails to participate in such mediation promptly and in good faith shall under no circumstances receive any award of attorneys' fees, costs, or other litigation expenses in any form of litigation between the parties. ARTICLE 13. REFINANCING COMMITMENT 13.1. The Members agree that at the earliest reasonable time after completion of construction of the Project, the Manager shall use its best efforts to immediately cause the Construction Loan financing secured by the Property and the Project to be refinanced in the largest commercially reasonable amount. The proceeds of such refinancing are referred to as the "Permanent Loan." The Permanent Loan shall be a nonrecourse loan which meets the qualifications of Code Sections 465 and 752, so that losses with respect to nonrecourse deductions can be allocated to Initial Member. P^Manranita On Aeree Vm 15:08004.339 33 ARTICLE 14. MISCELLANEOUS 14.1. Not for Benefit of Creditors. The provisions of the Agreement are intended only for the regulation of relations among Members and the Company. The Agreement is not intended for the benefit of non-Member creditors and does not grant any rights to or confer any benefits on non-Member creditors or any other person who is not a Member, the Manager, or an officer. 14.2. Power of Attorney. Each Member acknowledges that, by executing this Agreement, they have constituted and appointed the Manager as their attoraey-in-fact, with full power and authority to act in its name and on his behalf in the execution, acknowledgment and filing of documents relating to the Company and its business, including the following: (a) any instrument that may be required to be filed by the-Company under appropriate state law or by any governmental agency or that the Manager deems advisable to file; or (b) any documents that may be required to be filed by the Company in connection with the admission of substitute or additional Members, or the dissolution and termination of the Company, provided the continuation or dissolution and termination are in accordance with this Agreement. Each Member further acknowledges that, by executing this Agreement, the power of attorney granted to the Manager under this Section: (i) survives the death of the Member, (U) may be exercised by the Manager either by signing separately as attorney-in-fact for each Member or, after listing all of the Members, executing any instrument by a single signature of the Manager acting as attorney-in-fact for all of the Members, and (Hi) survives the delivery of an assignment by a Member of all or any portion of its interest in the Company; except that where the Transferee of the whole of a Member's interest in the Company has been approved by the Manager for admission to the Company as a substitute Member, the power of attorney of the assignor survives the effective date of such substitution for the sole purpose of enabling the Manager to execute, acknowledge and file any instrument necessary to effect such substitution. Each Member agrees to execute a separate notarized Power of Attorney consistent with this paragraph promptly upon the Manager's request. 14.3. Reliance on Authority of Person Signing Agreement. If a Member is not a natural person, neither the Company nor any Member will (a) be required to determine the authority of the individual signing this Agreement to make any commitment or undertaking on behalf of such entity or to determine any fact or circumstance bearing on the existence of the authority of such individual or (b) be required to see to the application or distribution of proceeds paid or credited to individuals signing this Agreement on behalf of such entity. 14.4. No Interest in Company Property: Waiver of Action for Partition. No Member or Transferee has any interest in specific property of the Company. Without limiting the foregoing, each Member and Transferee irrevocably waives during the Term of the Company any right it may have to maintain an action for partition with respect to property of the Company. PAtanzauM Oo Aeree V«n 15:08004.339 34 14.5. Counsel to the Company. ConAm has been represented by the law firm of Solomon Ward Seidenwurm & Smith, TIP ("SWSS") and Initial Member has been represented by the firm of Katzoff & Riggs in connection with this Agreement. The parties anticipate that SWSS will act as legal counsel to the Company after the Effective Date. If any dispute arises between 'ConAm and Initial Member, or between either Member and the Company, SWSS shall not represent any party to the dispute, unless Initial Member consents thereto. ConAm and Initial Member have each obtained independent tax advice from advisors of their own choice. 14.6. Amendments. Any amendment to this Agreement required by law or necessary to reflect changes of a ministerial nature in this Agreement, provided such amendment does not materially and adversely affect the rights of the Members, may be made solely by the Manager. Any other amendment to this Agreement must be in writing and approved by the Members. Each Member covenants, on behalf of himself, his successors, assigns, heirs and personal representatives, to execute and deliver with acknowledgment or affidavit, if required, all documents and writings that may be necessary or appropriate to effectuate amendments pursuant to this Section. 14.7. Governing Law. This Agreement is governed by and will be construed in accordance with the laws of the State of California, irrespective of California's choice-of-law principles. 14.8. Further Assurances. Each party to this Agreement shall execute and deliver all instruments and documents and take all actions as may be reasonably required or appropriate to carry out the purposes of this Agreement. 14.9. Venue and Jurisdiction. All actions and proceedings arising in connection with this Agreement must be tried and litigated exclusively in the State and Federal courts located in the County of San Diego, State of California, which courts have personal jurisdiction and venue over each of the parties to this Agreement for the purpose of adjudicating all matters arising out of or related to this Agreement. Each party authorizes and accepts service of process sufficient for personal jurisdiction in any action against it as contemplated by this Section by registered or certified mail, return receipt requested, postage prepaid, to its address for the giving of notices set forth in this Agreement. 14.10. Counterparts and Exhibits. This Agreement may be executed in counterparts, each of which is deemed an original and all of which together constitute one document. All exhibits attached to and referenced in this Agreement are incorporated into this Agreement. 14.11. Time of Essence. Time and strict and punctual performance are of the essence with respect to each provision of this Agreement. 14.12. Attorney's Fees. Subject to Article 12 above, the prevailing party(ies) in any litigation, arbitration, mediation, bankruptcy, insolvency or other proceeding ("Proceeding") relating to the enforcement or interpretation of this Agreement may recover from die P.M,n,,n«, Hn A«r~ Vm 15:08004.339 35 unsuccessful party(ies) all reasonable costs, expenses, and attorney's fees (including expert • witness and other consultants' fees and costs) relating to or arising out of (a) the Proceeding (whether or not the Proceeding proceeds to judgment), and (b) any post-judgment or post-award proceeding including one to enforce or collect any judgment or award resulting from the Proceeding. All such judgments and awards shall contain a specific provision for the recovery of all such subsequently incurred costs, expenses, and actual attorney's fees. 14.13. Prior Understandings. This Agreement and all documents specifically referred to and executed in connection with this Agreement: (a) contain the entire and final agreement of the parties to this Agreement with respect to the subject matter of this Agreement, and (b) supersede all negotiations, stipulations, understandings, agreements, representations and warranties, if any, with respect to such subject matter, which precede or accompany the execution of this Agreement. M.14.' Conflicts. To the extent of any conflict between the provisions of this Agreement then the provisions of the Company's Articles, the provisions of the Company's Articles would be deemed controlling. To the extent of any conflict between the provisions of this Agreement and/or the Company's Articles and those provisions of the Act, which by virtue of the express provisions of the Act may not be modified by agreement, such provisions of the Act would be deemed controlling. 14.15. Interpretation. Each provision of this Agreement is valid and enforceable to the ***" fullest extent permitted by law. If any provision of this Agreement (or the application of such provision to any person or circumstance) is or becomes invalid or unenforceable, the remainder of this Agreement, and the application of such provision to persons or circumstances other than those as to which it is held invalid or unenforceable, are not affected by such invalidity or unenforceability. 14.16. Successors-in-Interest and Assigns. Subject to the restrictions on transferability contained in this Agreement, this Agreement is binding upon and inures to the benefit of the successors-in-interest and assigns of each party to this Agreement. 14.17. Notices. Each notice and other communication required or permitted to be given under this Agreement ("Notice") must be in writing. Notice is duly given to another party upon: (a) hand delivery to the other party, (b) receipt by the other party when sent by facsimile to the address and number for such party set forth below (provided, however, that the Notice is not effective unless a duplicate copy of the facsimile Notice is promptly given by one of the other methods permitted under this Section), (c) three business days after the Notice has been deposited with the United States postal service as first class certified mail, return receipt requested, postage prepaid, and addressed to the party as set forth below, or (d) the next business day after the Notice has been deposited with a reputable overnight delivery service, postage prepaid, addressed to the party as set forth below with next-business-day delivery guaranteed, provided that the sending party receives a confirmation of delivery from "" the delivery-service-provider. Each party shall make a reasonable, good faith effort to ensure that it will accept or receive Notices to it that are given in accordance with this Section. A P-Man»n«a Oo A«*e Vets 15:08004.339 36 party may change its address for purposes of this Section by giving the other party written notice of a new address in the manner set forth above. 14.18. Waiver. Any waiver of a default or provision under this Agreement must be in writing. No such waiver constitutes a waiver of any other default or provision concerning the same or any other provision of this Agreement. No delay or omission by a party in the exercise of any of its rights or remedies constitutes a waiver of (or otherwise impairs) such right or remedy. A consent to or approval of an act does not waive or render unnecessary the consent to or approval of any other or subsequent act. 14.19. Drafting Ambiguities. Each party to this Agreement and its legal counsel have reviewed and revised this Agreement. The rule of construction that ambiguities are to be resolved against the drafting party or in favor of the party receiving a particular benefit under an agreement may not be employed in the interpretation of this Agreement or any amendment to this Agreement. P:Manzanitt Oo Aeree Vers 15:08004.339 37 14.20 Designation by Initial Member. Initial Member hereby designates Philip C. Kidd as the sole person who is authorized to exercise any power, right, notice, or other action which Initial Member is empowered to have or exercise under this Agreement ("Initial Member Designate"). Payments to Initial Member shall be made to the Initial Member Designate or to such other person(s) or antitypes) as the Initial Member Designate may in writing specify. The Initial Member Designate may be changed by a notice provided in accordance with Section 14.17. CONAM: ConAm Manzanita L.P., a California limited partnership By: Continental American Properties, Ltd., a California limited partnership, its general partner By: DJE Financial Corporation, a California corporation, its general partner ~~~ INITIAL MEMBER: Manzanita Carlsbad Apartments L.P., a California limited partnership By: Manzanita Properties, a California corporation, its general partner DanaM. Wohlford President By: Philip CKiddl Vice-President and Secretary P:Manranitt Oo Aeree VeK 15:08004.339 38 BYLAWS OF DJS FINANCIAL CORP. ARTICLE I OFFICES Section 1. PRINCIPAL OFFICE. The location of the principal executive office of the corporation is 1764 San Diego Avenue, San Diego, California. The board of directors may change the principal office from one location to another at any time. Any change in location shall be noted by the secretary on these bylaws opposite this section, or this section may be amended to state the new location. Section 2. OTHER OFFICES. Branch or subordinate Q,f- fices may at any time be established by the board of directdrs wherever the-corporation is qualified to do business. ARTICLE II DIRECTORS Section 1. NUMBER OF DIRECTORS. The authorized number of directors of the corporation shall be 1. The number of directors 3i=y be changes only by an amendment of this section of the bylaws approved by the holders of a majority of the out- standing voting shares. Section 2. ELECTION OF DIRECTORS. At each annual meeting of shareholders, directors shall be elected to hold office until the next annual meeting. Each director, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until a suc- cessor has been elected and qualified. Directors need not be residents of the State of California or shareholders of the cor- poration. Section 3. RESIGNATION AND REMOVAL OF DIRECTORS. Any director may resign effective upon giving written notice to the chairman of the board, the president, the secretary or the board of directors of the corporation, unless the notice specifies a later time for the effectiveness of such resignation. If the resignation is effective at a future time, a successor may be elected to take office when the resignation becomes effective. The board of directors may declare vacant the office of a director who has been declare'd of unsound mind by an order of ., court or convicted of a felony. .-. Any or all of the directors may be removed, with or with- "'•' out cause, if such removal is approved by a majority of the outstanding voting shares, except that no director may be re- moved without cause (unless the entire board of directors is removed) when the votes cast against removal, or not consent- ing in writing to such removal, would be sufficient to elect such director if voted cumulatively at an election at which the same total number of votes were cast (or, if such action is taken by written consent, all shares entitled to vote were voted) and the entire number of directors authorized at the time of the director's most recent election were then being elected. Any reduction of the authorized number of directors does not remove any director prior to the expiration of such di- rector's term of office. Section 4. FILLING DIRECTOR VACANCIES. Except for a vacancy created by the removal of a director, vacancies on the board of directors may be filled by a majority of the directors then in office, whether or not less than a quorum, or by a sole remaining director. A vacancy on the board of di- rectors created by the removal of a director may be filled only by the shareholders, except that a vacancy created by«the board of directors declaring the office of a director vacant pursuant to ARTICLE II, Section 3, of these bylaws may be filled by the board of directors. The shareholders xsy elect a director at any time to fill any vacancy not filled by the directors. Section 5. MEETINGS 0? TEE BOARD O? DIRECTORS. Meetings of the board of directors shall be held at the prin- cipal executive office of the corporation unless another place is stated in the notice of the meeting. Regular meetings of the board of directors shall be held annually immediately following the annual meeting of the shareholders provided in ARTICLE V, Section 1. Additional regular meetings of the board of directors shall be held, if so provided in a resolution adopted by the board of directors, at the time and place specified in such resolution. A special meeting of the board of directors may be called by the president, any vice president, the secretary or any two directors. Notice of all regular and special meetings of the board of directors shall be given. A notice need not include the purpose or agenda for the meeting. The notice may be in writing and mailed at least four days before the meeting. The notice may also be delivered personally or by telephone cr telegraph at least 48 hours before the meeting. Notice of a meeting need not be given any director who signs a waiver of notice, whether before or after the meeting, or who attends the meeting without protesting, prior thereto, or at its commencement, the. lack of notice to such director. Members of the board of directors may participate in a meeting through use of conference telephone or similar commun- ications equipment, so long as all members participating in such meeting can hear one another. Participation in a meeting by this means constitutes presence in person at such meeting. A majority of the authorized number of directors consti- tutes a quorum of the board of directors for the transaction of business. A majority of the directors present, whether or not a quorum is present, may adjourn any meeting to another time and place. If the meeting is adjourned for more than 24 hours, notice of any adjournment to another time or place shall be given, prior to the time of the adjourned meeting, to the di- rectors who were not present at the time of the adjournment. Section 6. REQUIRED VOTE OF DIRECTORS. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present is the act of the board of directors. A meeting at which a quorum is ini- tially present may continue to transact business notwith- standing the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for such meeting. * Section 7. _ WRITTEN CONSENT OF DIRECTORS. Any actiron required or permitted to be taken by the board of directors :say be raken without a meeting, if all members of the board shall individually or collectively consent in writing to sucr. action. Such written consent or consents shall be filed with the minutes of the proceedings of the board. Such action by written consent shall have the same force and effect as a unanimous vote of such directors. Section 8. COMMITTEES. Committees are of two kinds, those with legal authority to act for the corporation and ad- visory committees. The former are provided for in paragraph (a) below and the latter in paragraph (b) below. (a) The board of directors may, by resolution adopted by a majority of the authorized number of directors, designate one or more committees with legal authority to act for the corporation to the extent specified in the resolution creating such committee, each such committee consisting of two or more directors, to serve at the pleasure of the board. The board may designate one or more directors as alternate members of any committee, who may replace any absent member at any meeting of the committee. Section 5, 6 and 7 of these bylaws, with appropriate adaptations to the circumstances, apply to the procedures of these committees. Any such committee, to the extent provided in the resolution of the board, shall have all the authority of the board, except with respect to: (1) The approval of any action which also requires shareholder approval. (2) The filling of vacancies on the board or on any committee. (3) The fixing of compensation of the directors for serving on the board or on any committee. (4) The amendment or repeal of bylaws or the adop- tion of new bylaws. (5) The amendment or repeal of any resolution of the board which by its express terms is not so amendable or re- pealable. (6) The declaration of a dividend or other distribu- tion to shareholders, except at a rate or in a periodic amount or within a price range determined by the board. (7) The appointment of other committees of the board or the members thereof. (b) Advisory committees may be appointed to consist of one or more members. Advisory committee membership may con- sist of directors only, or both directors and nondirectors or nondirectors onlyr and also may include nonvoting members and alternate members. Advisory committees have no legal author- ity to act for the corporation, but shall report their findings and recommendations to the board of directors. Section 9. FEES AND COMPENSATION. Directors and members of committees shall receive neither compensation for their services nor reimbursement for their expenses unless ap- proved by a resolution of the board. £ Section 10. " INSPECTION RIGHTS OF DIRECTORS. Every director shall have the absolute right at any reasonable time to inspect and copy all books, records and documents of every kind and to inspect the physical properties of the corporation and of its subsidiary corporations, domestic and foreign. Such inspection by a director may be made in person or by agent or attorney and the right of inspection includes the right to copy and make extracts. ARTICLE III OFFICERS Section 1. OFFICERS AND DUTIES. The officers of the corporation are the President, the Secretary and the Treasurer. The board of directors may by resolution establish additional offices and prescribe the duties thereof. (a) The president is the chief executive officer and gen- eral manager of the corporation. The President shall, subject to the control of the board of directors, have general super- vision, direction and control of the business and affairs of the corporation and of its officers, employees and agents, in- cluding the right to employ, discharge and prescribe the duties and compensation of all officers, employees and agents of the corporation, except where such matters are prescribed in the bylaws or by the board of directors. The president shall preside at all meetings of the shareholders and of the board of directors. The president is authorized to sign all contracts, notes, conveyance, and other papers, documents and instruments in writing in the name of the corporation. (b) The board of directors may by resolution authorize the appointment of one or more vice presidents to perform, under the direction of the president, duties and responsi- bilities in the management of the corporation or in particular areas of its management. In the event of the disability of the president, the duties of the president shall be exercised by the person designated by the board of directors, or in the absence of such designation, by the senior vice president, if there be one. (c) The secretary shall keep or cause to be kept the min- ute book of the corporation. The secretary shall keep or cause to be kept the share register of the corporation or, if the corporation has a transfer agent, shall be responsible that the transfer agent keeps the share register. The sec- retary shall sign in the name of the corporation, either alone or with one or more other officers, all documents authorized or required to be signed by the secretary. If the corporation has a corporate seal, the secretary shall keep the seal and shall affix the seal to stock certificates and to other doc- uments as appropriate or desired. The board of directors may by resolution authorize one or more assistant secretaries to perform, under the direction of the secretary, some or all of the duties of the secretary. (d) The treasurer is the chief financial officer of thei corporation, "and where appropriate may be designated by the alternate title "chief financial officer". The treasurer is responsible for the receipt, maintaining and disbursement of all funds of the corporation. The treasurer shall keep or cause to be kept books and records of account and records of all properties of the corporation. The treasurer shall pre- pare or cause to be prepared annually, or more often if so di- rected by the board of directors or president, financial statements of the corporation. The board of directors may by resolution, authorize one or more assistant treasurers to per- form, under the direction of the treasurer, some or all of the duties of the treasurer. (e) The board of directors may in its discretion elect a chairman of the board, who shall preside at all meetings of the board of directors at which he is present and shall have any other powers and perform any other duties that are pre- scribed by the board of directors. Section 2. APPOINTMENT AND REMOVAL OF OFFICERS. (a) The president and secretary and treasurer shall be appointed by the board of directors. Other officers shall be appointed as prescribed in the resolution of the board of di- rectors establishing the office. (b) Any officer appointed by the board of directors may be removed from office at any time by the board of directors, with or without cause or prior notice. Any officer not ap- pointed by the board of directors may be removed from office at any time by the officer by whom appointed or by the board of directors, with or without cause or prior notice. (c) When authorized by the board of directors, any of- ficer may be appointed for a specified term under a contract of employment. Notwithstanding that such officer is appointed for a specified term or under a contract of employment, any such officer may be removed from office at any time pursuant to paragraph (b) and shall have no claim against the corpora- ^ tion on account of such removal other than for such monetary compensation as such officer may be entitled to under the terms of the contract of employment. (d) Any officer may resign at any time upon written notice to the corporation without prejudice to the rights, if any, of the corporation under any contract to which the of- ficer is a party. Such resignation is effective upon receipt of the written notice by the corporation unless the notice prescribes a later effective date or unless the notice pre- scribes a condition to the effectiveness of the resignation. Section 2. EXECUTION OF INSTRUMENTS. Except as pro- vided in ARTICLE VI of the bylaws with respect to share certi- ficates, any and all instruments executed in the name of the corporation, including, but not limited to, contracts, agree- ments, purchase orders, notes, deeds, deeds of trust, mort- gages, leases, security agreements, checks and drafts issued, endorsements of checks and drafts received, certificates, ap- plications and reports, shall be executed by any one or mor^e officers, employees or agents of the corporation as authorized from time to time by the board of directors. Such authori- zation may be general or confined to specific instances. The respective offices and duties thereof as established and de- fined in these bylaws and by resolution of the board of di- rectors include, except as otherwise provided, the authority to execute instruments in the name of the corporation when the "***' execution of the instrument is incident to carrying out the duties of the office. ARTICLE IV INDEMNIFICATION Section 1. INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES. The corporation may indemnify a director, of- ficer or employee under the provisions of Section 317 of the California Corporations Code, or pursuant to any contract entered into with any employee who is not an officer or di- rector. Expenses incurred in defending any proceeding may be ad- vanced by the corporation as authorized in Section 317 of the California Corporations Code prior to the final disposition of such proceeding, upon receipt of an undertaking by or on be- half of the director, officer or employee to repay such amount unless it shall be determined ultimately that the director, officer or employee is entitled to be indemnified. The corporation may purchase and maintain insurance on behalf of any director, officer or employee of the corporation against any liability asserted against or incurred by the di- rector, officer or employee in such capacity or arising out of the director's, officer's or employee's status as such, whether or not the corporation would have the power to indem- nify the director, officer or employee against such liability under the provisions of Section 317 of the California Corpora- tions Code. ARTICLE V SHAREHOLDERS Section 1. ANNUAL MEETING OF SHAREHOLDERS. An annual meeting of shareholders shall be held between the 31st day of March and the 30th day of June in each year. The exact date and time cf s^ch annual meeting shall be fixed by reso- lution of the board of directors. The annual meeting shall be held at the principal executive office of the corporation unless the board of directors by resolution prescribes a different place. At the annual meeting of shareholders the total author- ized number of directors shall be elected. Any other proper business may be transacted at the annual meeting of share- holders except as limited by the notice requirements of sub- divisions (a) and (f) of Section 601 of the California Cor-^' porations Code. Section 2. SPECIAL MErTINGS OF SHAREHOLDERS. Special meetings of the shareholders may be called by the board of directors, the president or holders of shares en- titled to cast not less than 10 percent of the votes at the meeting. Section 3. NOTICE OF MEETING OF SHAREHOLDERS. Writ- ten notice of all annual and special meetings of shareholders shall be given not less than 10 nor more than 60 days before the date of the meeting to each shareholder entitled to vote thereat. Such notice shall state the place, date and hour of the meeting and (1) in the case of a special meeting, the gen- eral nature of the business to be transacted, and no other business may be transacted, or (2) in the case of the annual meeting, those matters which the board of directors, at the time of the mailing of the notice, intends to present for action by the shareholders. The notice of any meeting at which the directors are to be elected shall include the names of nominees intended at the time of the notice to be presented by management for election. Notice of a shareholders' meeting or any report shall be given either personally or by mail or other means of written communication, addressed to the shareholder at the address of such shareholder appearing on the books of the corporation or given by the shareholder to the corporation for the purpose of notice; or if no such address appears or is given, at the place where the principal executive office of the corporation is located or by publication at least once in a newspaper of general circulation in the county in which the principal ex- ecutive office is located. The notice or report shall be deemed to have been given at the time when delivered person- • 7 ally or deposited in the mail or at the time when delivered personally or deposited in the pail or sent by other means of written communication. An affidavit of mailing of any notice or report in accordance with the provisions of this bylaw, ex- ecuted by the secretary, assistant secretary or any transfer agent, shall be prima facie evidence of the giving of the not- ice or report. Except as otherwise prescribed by the board of directors in particular instances and except as otherwise provided by subdivision (c) of Section 601 of the California Corporations Code, the secretary shall prepare and give, or cause to be prepared and given, the notice of meetings of shareholders. Section 4. RECORD DATE. (a) In order that the cor- poration may determine the shareholders entitled to notice of any meeting or to vote or entitled to receive payment of any dividend or other distribution or allotment of any rights or entitled to exercise any rights in respect of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than 60 nor less than 10 days' prior to the _date of such meeting nor more than 60 days prior to any other action. (b)If no record date is fixed: (1) The record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the business day next preceding the day on which notice is given or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held. (2) The record date for determining shareholders entitled to give consent to corporate action in writing without a meeting, when no prior action by the board has been taken, shall be the day on which the first written consent is given. (3) The record date for determining shareholders for any other purpose shall be at the close of business on the day on which the board adopts the resolution relating thereto, or the 60th day prior to the date of such other action, whichever is later. (c) A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting unless the board fixes a new record date for the adjourned meeting/ but the board shall fix a new record date if the meeting is adjourned for more than 45 days from the date set for the original meeting. (d) Shareholders at the close of business on the record date are entitled to notice and to vote or to receive the dividend, distribution or allotment of rights or to exercise the rights, as the case may be, notwithstanding any transfer of any shares on the books of the corporation after the record date. Section 5. SHAREHOLDER'S PROXIES. Every person en- titled to vote shares may authorize another person or persons to act by written proxy with respect to such shares. No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. Every proxy continues in full force and effect until revoked by the person executing it prior to the vote pursuant thereto. Such revocation may be effected by a writing delivered to the corporation stating that the proxy is revoked or by a subse- quent written proxy executed by, or by attendance at the meeting and voting in person by, the person executing the proxy. The dates contained on the forms of proxy presump- tively determine the order of execution, regardless of the postmark dates on the envelopes in which they are mailed. A proxy is not revoked by the death or incapacity of the maker, unless, before the vote is counted, written notice of such death or incapacity is received by the corporation. A proxy may be made irrevocable under the circumstances set forth in subdivision (e) of Section 705 of the California Corporations Code. Section 6. QUORUM FOR MEETING C? SHAREHOLDERS. A ma- jority of the shares entitled to vote, represented in pers9*n or by proxy, -shall constitute a quorum at a meeting of share- holders. If a quorum is present, the affirmative vote of the majority of the shares represented at the meetinc and entitled to vote -.-. ir.y r.a:;er shall be the ac~ cf the shareholders, unless the vote of a majority or higher percentage of all out- standing shares is required by law or by the articles of in- corporation and except as provided in paragraph (a) and (b). (a) The shareholders present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment notwithstanding the withdrawal of enough shareholders to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a ma- jority of the shares required to constitute a quorum. (b) In the absence of a quorum, any meeting of share- holders may be adjourned from time to time by a vote of a ma- jority of the shares represented either in person or by proxy, but no other business may be transacted, except as provided in paragraph (a), Section 7. ADJOURNED MEETING OF SHAREHOLDERS. When a shareholders' meeting is adjourned to another time or place, except as otherwise provided in this bylaw, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 45 days or if after the adjournment a new record date is fixed for the ad- journed meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting. Section 8. VALIDATING MEETING OF SHAREHOLDERS. The transactions of any meeting of shareholders, however called and noticed and wherever held, are as valid as though had at a meeting duly held after regular call and notice, if a quorum is present either in person or by proxy, and if, either before or after the meeting, each of the persons entitled to vote, not present in person or by proxy, signs a written waiver of notice or a consent to the holding of the meeting or an ap- proval of the minutes thereof. All such waivers, consents and approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Attendance in person at a meeting shall constitute a waiver of notice of and presence at such meeting, except when a person objects, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened and except that at- tendance at a meeting is not a waiver of any right to object to the consideration of matters required by law to be included in the notice but not so included, if such objection is expressly made at the meeting. Neither the business to be transacted at nor the purpose of any regular or special meeting of share- holders need be specified in any written waiver of notice, ex- cept as required by subdivision (f) of Section 601 of the California Cprporations Code. Section 9. CUMULATIVE VOTING FOR DIRECTORS. Every shareholder complying with paragraph (a) and entitled to -:--t* at any election cf directors may cumulate such shareholder's votes and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which the shareholder's shares are entitled, or dis- tribute the shareholder's votes on the same principal among as many candidates as the shareholder thinks fit. (a) No shareholder shall be entitled to cumuiata votes (i.e., cast for any one or more candidates a number of .votes greater than the number of the shareholder's shares) unless such candidate or candidates' names have been placed in nomi- nation prior to the voting and the shareholder has given no- tice at the meeting prior to the voting of the shareholder's intention to cumulate the shareholder's votes. If any one shareholder has given such notice, all shareholders may cumu- late their votes for candidates in nomination. In any election of directors, the candidates receiving the highest number of votes of the share entitled to be voted for them up to the number of directors to be elected by such shares are elected. Section 10. VOTING BY BALLOT. Elections for di- rectors need not be by ballot unless a shareholder demands election by ballot at the meeting and before the voting be- gins. Section 11. INSPECTORS OF ELECTION. In advance of any meeting of shareholders the board of directors may appoint in- spectors of election to act at the meeting and any adjournment thereof, if inspectors of election are not so appointed, or if any persons so appointed fail to appear or refuse to act, the chairman of any meeting of shareholders may, and on the request of any shareholder or a shareholder's proxy shall, ap- point inspectors of election (or persons to replace those who so fail or refuse) at the meeting. The number of inspectors shall be either one or three. If appointed at a meeting on the request of one or more shareholders or proxies, the majority of shares represented in person or by proxy shall determine whether one or three inspectors are to be appointed. The inspectors of election shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum and the authenticity, validity and effect of proxies, receive votes, ballots or consents, hear and determine all challenges and questions in any way arising in connection with the right to vote, count and tabulate all votes or consents, determine when the polls shall close, determine the result and do such acts as may be proper to conduct the election or vote with fairness to all shareholders. The inspectors of election shall perform their duties im- partially, in good faith, to the best of their ability and as expeditiously as practical. If there are three inspectors <$t election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all. Any report cr certificate made by the inspectors of election is prima facie evidence of the facts stated herein. Section 12. WRITTEN CONSENT OF SHAREHOLDERS. Any action which may be taken at any annual or special meeting of shareholders may be taken without a meeting and without prior notice, if a co'nsent in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares having not less than the -.inizaum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled" to vcte thereon were present and voted, subject to paragraph (a) of this section. (a) The election of" a director by the shareholders by written consent to fill a vacancy (other than one created by removal) not filled by the board of directors requires the written consent of a majority of the outstanding shares en- titled to vote. Any other election of directors by written consent requires the unanimous written consent of all shares entitled to vote for the election of directors. Any shareholder giving a written consent, or the share- holder's proxyholders, or a transferee of the shares or a per- sonal representative of the shareholder or their respective proxyholders, may revoke the consent by a writing received by the corporation prior to the time that written consents of the number of shares required to authorize the proposed action have been filed with the secretary of the corporation, but may not do so thereafter. Such, revocation is effective upon its receipt by the secretary of the corporation. Unless the consents of all shareholders entitled to vote have been solicited in writing, notice of any shareholder ap- proval without a meeting by less than unanimous written con- sent shall be given as provided in subdivision (b) of Section 603 of the California Corporations Code. Section 13. INSPECTION RIGHTS OF SHAREHOLDERS. (a) A shareholder or shareholders holding at least 5 percent in the aggregate of the outstanding voting shares of the corporation or who hold at least 1 percent of such voting shares and have filed a Schedule 14B with the United States Securities and Exchange Commissicr. relzririg to the election cf directors of the corporation shall have an absolute right to do either or both of the following: (1) inspect and copy the record of shareholders' names and addresses and shareholdings during usual business hours upon five business days' prior written demand upon the corporation, or (2) obtain from the transfer agent for the corporation, upon written demand and upon the tender of its usual charges for such a list (the amount of which charges shall be stated to the shareholder by the transfer agent upon request), a list of the shareholders' names and addresses, who are entitled to vote for the election of directors, and their shareholdings, as of the most recent' record date for which it has been compiled or as of a date spe=- cified by th'e shareholder subsequent to the date of demand. The list shall be roade available on or before the latter of fiva business days after the demand is received or after the date specified therein as the date of which the list is to be compiled, (b) The record of shareholders shall also be open to in- spection and copying by any shareholder or holder of a voting trust certificate at any time during usual business hours upon written demand on the corporation, for a purpose reasonably related to such holder's interest as a shareholder or holder of a voting trust certificate. (c) The corporation shall have the responsibility to cause its transfer agent to comply with the requirements of paragraphs (a) and (b) . If che corporation has no transfer agent, the corporation shall comply with the requirements of paragraphs (a) and (b), including the preparation of the list upon payment of a reasonable charge. (d) The accounting books and records and minutes of pro- ceedings of the shareholders and board of directors and com- mittees of the board of directors shall be open to inspection upon the written demand on the corporation of any shareholder or holder of a voting trust certificate at any reasonable time during usual business hours, for a purpose reasonably related to such holder's interests as a shareholder or as the holder of such voting trust certificate. (e) Inspection pursuant to this section of the bylaws by a shareholder or holder of a voting trust certificate may be made in person or by agent or attorney, and the right of in- spection includes the right to copy and make extracts. (f) If any record subject to inspection pursuant to this section of the bylaws is not maintained in written form, the corporation shall at its expense make such record available in written form. ARTICLE VI SHAKES Section 1. SHARE CERTIFICATES; SIGNATURES. The share certificates of the corporation shall be in a form ap- proved by the board of directors. The share certificates shall be signed in the name of the corporation by the president and secretary. As an alternative to the sicr.stur- cf the president, a share certificate may be signed by the chairman of the bc-crc cf directors, the vice chairman of the board of directors or a vice president. As an alternative to the signature of the secretary, a share cer- tificate may be signed by the chief financial officer, an assistant secretary or an assistant treasurer. Any or all of the signatures on the certificate may be facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, . it may be issued by the corporation with the same effect as if * such person were an officer, transfer agent or registrar at the date of issue. Section 2. FRACTIONAL SHARES. If upon original issuance, there would be a fraction of a share issued, the fraction shall be issued unless the board of directors by res- olution provides an alternative to the issuance of a frac- tional share as authorized in paragraph (a). (a) In lieu of original issuance of a fractional share, the corporation may (i) arrange for the disposition of frac- tional interests by those entitled thereto, (ii) pay in cash the fair value of fractions of a share as of the time when those entitled to receive such fractions are determined or (iii) issue scrip or warrants in registered or bearer form which shall entitle the holder to receive a certificate for a full share upon the surrender of such scrip, or warrants ag- gregating a full share. Upon transfer, no share certificate shall be issued for a fraction of a share, unless the prior share certificate in- cluded a fraction of a share. ARTICLE VII RECORDS Section 1. MINUTE BOOK. The corporation shall keep or cause to be kept a minute book which shall contain: (a) The record of all meetings of the board of directors including date, place, those -attending and the proceedings thereof, a copy of the notice of meeting and when and how given, written waivers of notice of meeting, written consents to holding meeting, written approvals of minutes of meeting, and unanimous written consents to action of the board of di- rectors without a meeting, and similarly as to meetings of ^ committees of the board of directors established pursuant to paragraph (b) of ARTICLE II, Section 8 of the bylaws. (b) The record of all meetings of the shareholders in- cluding date, place, shareholders and nuitbers of shares present in person or by proxy, proxies used, and the pro- ceedings thereof, a copy of the notice of meeting and when and how given, any affidavit as to the mailing or giving of no- tice, written waivers of notice of meeting, written consents to the holding of the meeting, written approvals of the minutes of the meeting, and a copy of the notice to share- holders of corporation action approved by shareholders without a meeting by less than unanimous written consent. (c) A copy cf the articles of incorporation and all amendments thereto and a copy of all certificates filed with the Secretary of State. (d) A copy of the bylaws as amended, duly certified by the secretary. (e) A copy of each Notice of Issuance filed with the Com- missioner of Corporations together with the receipt issued by the Commissioner of Corporations and any affidavit or declara- tion of mailing of the Notice, and each permit of or qualifi- cation by the Commissioner of Corporations to issue shares or consent to transfer shares. Section 2. SHARE REGISTER. The corporation shall keep or cause to be kept a share register, which shall contain *"""' a record of each share certificate issued, including the certificate number, the date, the number of shares, the name and address of the shareholder, and any shareholder changes of address. The share register shall also record each transfer of a share certificate issued upon the transfer and the numbers of shares for each such certificate, and shall retain the share certificate cancelled upon the transfer. If the corporation has a transfer agent, the share register shall be maintained by the transfer agent and the corporation shall cause the transfer agent to furnish the corporation at least annually a list of shareholders with names, addresses, share certificate numbers and numbers of shares held. Section 3. ANNUAL REPORT. The sending of an annual report to the shareholders of the corporation is waived. Section 4. FINANCIAL STATEMENTS TO SHAREHOLDERS. If the corporation prepares annual, semiannual or quarterly financial statements, a copy thereof shall be mailed on re- quest to any shareholder. If the corporation has not otherwise prepared quarterly financial statements, upon written request received from one or more shareholders holding' in the aggregate at least 5 per- cent of the outstanding shares of any class of the corpora- ' ( 't tion, the corporation shall prepare and mail or deliver to the H^--'' requesting shareholder or shareholders within 30 days after 4— receipt of the request an income statement of the corporation for the three-month, six-month or nine-month period of the current fiscal year ended more than 30 days prior to the date of the request and a balance sheet of the corporation as of the end of such period. The quarterly income statements and balance sheets referred to in this paragraph shall be accompanied by the report thereon, if any, of any independent accountants engaged by the corporation or by certificate of an authorized officer of the corporation that such financial statements were prepared without audit from the books and records of the corporation. ARTICLE VIII AMENDMENT OF BYLAWS Section 1. AMENDMENT. Except as provided in ARTICLE II, Section 1 of these bylaws, these bylaws may be amended or repealed either by approval of the board of directors or by approval of the holders of a majority of the outstanding shares. CERTIFICATE OF SECRETARY I certify that: •*.*„ 1. I am the presently elected and acting secretary of DJE1 FINANCIAL CORP., a California corporation; and 2. The foregoing bylaws consisting of 15 pages, are the by- laws of that corporation as adooted by the board of directors effective 6t*<,u*f 29. ;?V3 . I have subscribed ray name and affixed the^seal of tjxe corpora- tion effective tfj..,,*? 2# Robert D. Rosenthal, Secretar 15 SECRETARY OF STATE I, BILL JONES, Secretary of State of the State of California, hereby certify. That the attached transcript of page(s) was prepared by and in this office from the record on file, of which it purports to be a copy, and that it is full, true and correct. IN WITNESS WHEREOF, I execute this certificate and affix the Great Seal of the State of California this JAN 14 Secretary of State '-1 1 V- 'tvi 1149362 FILED In lli« office of itw StciwttHy of Stof* ol «h. Stal. of AUG131983MARCH WIW IK, tamtin *( tM*ARTICLES OF INCORPORATION OF DJE FINANCIAL CORP. The undersigned incorporator for the purposes of forming a corporation under the General Corporation Law of the State of California hereby certifies: ONE: The name of the corporation is DJE FINANCIAL CORP. TWO: The purpose of the corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of California other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California Cor- porations Code. THREE: The name and complete business address in the state of che corporation's initial agent for service of process is Robert D. Rosenthal, 1764 San Diego Avenue, San Diego, California 92110. FOUR: The corporation is authorized to issue 100,000 shares of Common Stock of one class. IN WITNESS WHEREOF, the undersigned has executed these Articles of Incorporation this 16th day of Augi&t, 1983.y Robert D. Rosenthal I declare that I am the person who executed the foregoing Articles of Incorporation and this instrument is my act and deed. Executed August 16, 1983, at San V ifornia. Robert D. Rosenthal AGREEMENT OF LIMITED PARTNERSHIP OF - . CON AM MANZANITA L.P. "•«.« A ™ \M««.»»««!*« T D D CON AM MANZANITA L.P. AGREEMENT OF LIMITED PARTNERSHIP THIS AGREEMENT OF LIMITED PARTNERSHIP (the "Agreement") of CON AM MANZANITA L.P., a California limited partnership (the "Partnership"), is entered into as of September 29, 2000, by and among Continental American Properties, Ltd., a California limited partnership, as general partner (the "General Partner"), and ConAm Asset Management Corporation, a California corporation ("ConAm"). as limited partner, pursuant to the provisions of, California Revised Uniform Limited Partnership Act, being Chapter 3, Title 2, of the California Corporations Code (as the same may be amended from time to time, the "Act"). RECITALS WHEREAS, it is the intention of the General Partner and the Limited Partner to enter into this Agreement to provide for, among other things, the operation of the Partnership and the allocation of profits and losses, cash flow and other proceeds of the Partnership among the Partners and certain other matters. f NOW, THEREFORE, in consideration of the mutual benefits, covenants and conditions herein set forth, the undersigned do hereby agree to the following: 1.. DEFINITIONS. (a) "Affiliate" means, when used with reference to a. specified Person (i) any Person that, directly or indirectly, controls or is controlled by, or is under common control with, the specified Person, (ii)any Person that is an officer of, director of, partner in, or trustee of, or serves in a similar capacity with respect to, the specified Person or with respect to which the . specified Person serves in a similar capacity, (iii) any Person that, directly or indirectly, is the beneficial owner of 10% or more of any class of equity securities of, or otherwise has a substantial beneficial interest in, the specified Person or of which the specified Person is directly or indirectly the owner of 10% or more of any class of equity securities or in which the specified Person has a substantial beneficial interest, (iv) any Person who is an officer, director, partner, trustee, or holder of 10% or more of the voting securities or beneficial interests of any of the foregoing, and (v) any relative or spouse of the specified Person. (b) "Capital Account" of a Partner means the aggregate amount of cash contributed by such Partner to the Partnership, increased by (i) the fair market value of property contributed by such Partner to the Partnership (other than a promissory note by such Partner who is the maker of such note), net of liabilities secured by such property that the Partnership assumes or takes the property subject to, (ii) the amount of any Partnership liabilities assumed by such Partner other than liabilities secured by property distributed to such Partner, (iii) such Partner's distributive share of Income of the Partnership and (iv) any items in the nature of income and gain which are excluded from the definitions of Income and Loss and allocated to such Partner, and reduced by (i) such Partner's distributive share of Loss, (ii) the amount of any distributions of cash to such Partner, (iii) the amount of liabilities of such Partner assumed by the Partnership, other than liabilities secured by property contributed by such Partner, (iv) the fair market value of property (net of liabilities assumed by such Partner and liabilities to which such distributed property is subject) distributed to such Partner, and (v) any items in the nature of deductions or losses which are excluded from the definitions of Income and Loss and allocated to such Partner. Upon a distribution of property, other than one described in Section 10(b)(ix), the Capital Accounts of each Partner shall be adjusted as provided in Regulations Section 1.704- l(b)(2)(iv)(e). In the event the Gross Asset Values of Partnership assets are adjusted pursuant to Section 10(b)(ix), the Capital Accounts of all Partners shall be adjusted simultaneously to reflect the aggregate net adjustment as if the Partnership recognized gain or loss equal to the amount of such aggregate net adjustment. The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations Sections 1.704-l(b) and 1.704-2 and shall be interpreted'arid applied in a manner consistent with such Regulations and the General Partner shall make appropriate modifications if unanticipated events occur which might otherwise cause this Agreement not4o comply with Regulations Sections 1.704-l(b) and 1.704-2. For purposes hereof, the term Partner shall include any predecessor in interest of such Partner. (c) "Capital Contribution" means the aggregate amount of cash and the agreed upon fair market value of property (other than cash) contributed by a Partner to the Partnership. (d) "Certificate" means a Certificate of Limited Partnership on Form LP-1 filed with the California Secretary of State, and all amendments thereto. (e) "Code" means the Internal Revenue Code of 1986, as amended. (f) "Depreciation" means, for each fiscal year or other period, an amount equal to the depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such year or other period, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, Depreciation shall be ah amount which bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis. (g) "Distributable Cash" means the amount of cash which the General Partner in its reasonable discretion determines is available for distribution to the Partners, taking into account all debts, liabilities and obligations of the Partnership then due or payable in the future and amounts which the General Partner has set aside as reasonable reserves. (h) "General Partner" means Continental American Properties, Ltd., a California limited partnership and any other Person admitted to the Partnership as a general partner in accordance with the terms of this Agreement and the Act. (i) Intentionally left blank -2- (j) "General Partner's Loan Rate" means a floating rate equal to one percentage point in excess of the prime rate of Bank of America, NT & SA, from time to time (but in no event to exceed the maximum legal rate). (k) "Gross Asset Value" means, with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows: (i) the initial Gross Asset Value of any asset contributed by a Partner to the Partnership shall be the gross fair market value of such asset, as determined by the contributing Partner and the Partnership; and (ii) the Gross Asset Value of all assets whose Gross Asset Value has been adjusted pursuant to Section 10(b)(ix) shall be adjusted pursuant to the last sentence of Section 10(b)(ix). (1) "Income" and "Loss" means the taxable income or loss for federal income tax purposes of the Partnership for each fiscal year (or short fiscal year), plus income and gain exempt from federal income tax for such fiscal year (or short fiscal year), and minus Section 705(a)(2)(B) Expenditures for such fiscal year (or short fiscal year). Any item of income, gain, loss, deduction or Section 705(a)(2)(B) Expenditure that is allocated in any fiscal year pursuant to Section 10(b)(iv), (v), (vi) or (vii) shall be excluded from the computation of Income or Loss to be allocated for such fiscal year pursuant to Section 10(b)(i) or (ii). Income or Loss resulting from any disposition of Partnership property shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value. In lieu of the depreciation, amortization or other cost recovery deductions taken into account hi computing income for federal income tax purposes, there shall be taken into account Depreciation for such fiscaTyear (of short fiscal year). (m) Intentionally left blank (n) "Interests" shall refer to those interests in the Partnership owned by the Partners. (o) "Limited Partners" means the Persons designated as such on Exhibit A hereto and in the Partner List. Reference to a "Limited Partner" shall be to any one of the Limited Partners. (p) "Liquidation" means (i) when used with reference to the Partnership, the earlier of (A) the date upon which the Partnership is terminated under Section 708(b)(l) of the Code, or any similar provision enacted in lieu thereof, or (B) the date upon which the Partnership ceases to be a going concern, and (ii) when used with reference to any Partner, the earlier of (A) the date upon which there is a Liquidation of the Partnership or (B) the date upon which such Partner's entire interest in the Partnership is terminated by means of a distribution or series of distributions by the Partnership to the Partner. (q) "Loss" shall have the meaning ascribed to it in Section 1(1) hereof. (r) "Manzanita Partners" is Manzanita Partners L.L.C., a California limited liability company, the owner and developer of a planned 157 unit multifamily apartment project located in Carlsbad, California. -3- (s) "Minimum Gain" means the sum of the separately computed amount of gain, if any, that would be realized by the Partnership if, with respect to each non-recourse liability of the Partnership, the Partnership disposed of the property subject to such nonrecourse liability for no other consideration than full satisfaction of such liability in accordance with Regulations Section 1.704-2(d). For this purpose, the term "nonrecourse liability" shall have the meaning set forth in Regulations Section 1.752-l(a)(2). (t) 'Tartner List" means the list of the full name and last known business or residence address of each Partner set forth hi alphabetical order together with the Capital Contribution and the share in profits and losses of each Partner, as required to be maintained by the Partnership pursuant to Section 15615(a) of the Act. (u) ''Partner Nonrecourse Debt" means any Partnership liability to the extent the liability is nonrecourse for purposes of Regulations Section 1.1001-2, and a Partner (or a related person within the meaning of Regulations Section 1.752-4(b)) bears the economic risk of loss (within the meaning of Regulations Section 1.752-2). (v) "Partner Nonrecourse Debt Minimum Gain" means Minimum Gam attributable to Partner Nonrecourse Debt. (w) "Partners" means collectively the General Partner and the Limited Partners. Reference to a "Partner" shall be to any one of the Partners. (x) "Partnership" means the limited partnership created by the filing of the Certificate and governed by this Agreement and, unless the context otherwise requires, the limited li ability company that was converted into the Partnership. (y) "Partnership Interest" means the interest hi the Partnership of a Partner. (z) "Percentage Interest" of a Partner means the percentage determined by dividing such Partner's Capital Contribution by the aggregate Capital Contributions of all Partners. The current Percentage Interests of the Partners are set forth on Exhibit A hereto. (aa) "Person" means any individual, partnership, corporation, limited liability company, trust or other entity. (bb) "Regulations" means the Income Tax Regulations promulgated under the Code, as such regulations may be amended from time to time. (cc) "Section 705(a)(2)(B) Expenditure" means any expenditure of the Partnership described in Section 705(a)(2)(B) of the Code or treated as such pursuant to Regulations Section 1.704-l(b)(2)(iv)(i). (dd) "Securities Act" means the Securities Act of 1933, as amended. A£«fHtv«n*f<B I P Pwtrwcltfn 2. NAME OF PARTNERSHIP. The name of the Partnership shall be ConAm Manzanita L.P.. The business of the Partnership, however, may be conducted under any other name selected by the General Partner. 3. PLACE OF BUSINESS AND AGENT FOR SERVICE OF PROCESS. The principal place of business for the Partnership shall be 1764 San Diego Avenue, San Diego, California 92110, unless changed by designation of the General Partner to another location in the State of California. In addition, the Partnership may maintain such other offices at any other place or places as the General Partner may deem advisable. The name and address of the agent for service of process on the Partnership in California shall be as set forth in the records of the California Secretary of State from time to time. 4. PURPOSES. The Partnership has been formed to become a member of Manzanita Partners. 5. TERM. The term of the Partnership commenced on September 29, 2000, with the filing of the Certificate of Limited Partnership form LP-1 with the Secretary of State of the State of California, and shall continue until December 31, 2097, unless sooner terminated in accordance with the provisions of Section 20 of this Agreement or as otherwise provided by law. 6. CAPITAL CONTRIBUTIONS. (a) Initial Capital - . (i) General Partner - The Capital Contribution of the General Partner is set forth on Exhibit A hereto and in the Partner List The General Partner, in its capacity as such, shall not otherwise be required to make any contribution to the capital of the Partnership and shall have no obligation to contribute capital to the Partnership in order to continue operations of the Partnership in the event that the Partnership has insufficient funds to pay its operating expenses or other obligations. (ii) Limited Partners - The Capital Contribution of each Limited Partner is set forth on Exhibit A hereto and in the Partner List (b) Additional Capital - No Partner shall be obligated to make any additional Capital Contributions to the Partnership. -5- 7. FILING OF CERTIFICATE OF LIMITED PARTNERSHIP. The General Partner has caused the Certificate to be filed with the California Secretary of State and shall cause a duplicate original or certified copy thereof to be filed or recorded wherever such filing is required by law or is deemed appropriate by the General Partner. The Certificate shall be amended as required by the Act and may be amended at any time in any other respect that the General Partner may determine. 8. RIGHTS, DUTIES AND LIABILITY OF THE GENERAL PARTNER. (a) Management of Partnership Business - The General Partner shall be solely responsible for the management of the Partnership's business and shall have all rights and powers generally conferred by law or necessary, advisable or consistent in connection therewith. The General Partner shall perform such reasonable acts as may be consistent with good business practices in its performance as the General Partner. No third party dealing with the Partnership shall be required to investigate the authority of the General Partner or to secure the approval or confirmation by the Partners of any act of the General Partner in connection with the conduct of Partnership business. The General Partner shall have full authority to execute on behalf of the Partnership any and all agreements, contracts, documents and instruments, and the execution thereof by the General Partner shall be the only execution necessary to bind the Partnership thereto. Nothing contained in this Section 8(a) shall be deemed to limit or modify the provisions of Section 8(c) or 1 l(c) hereof. (b) Specific Rights and Powers - In addition to any other rights and powers which the General Partner may possess, but subject to the limitations of Section 8(c), the General Partner, on behalf of the Partnership, shall have all specific rights and powers required for or appropriate to its management of the Partnership's business which, by way of illustration but not by way of limitation, shall include the following rights and powers: (i) To enter into and execute agreements and related documents, including without limitation the operating agreement of Manzanita Partners, in connection with the acquisition by the Partnership of an interest in Manzanita Partners. (ii) To exercise all rights and perform all duties, if any, of the Partnership member or managing member of Manzanita Partners. asa (iii) To execute loan documents, promissory notes and security documents relating thereto, and to otherwise borrow money, and, if security is required therefor, to subject to any security device any Partnership asset, and to prepay, in whole or in part, refinance, increase, modify, consolidate, extend or assume any such obligation, upon such terms and in such amounts as the General Partner deems, in its reasonable discretion, to be in the best interests of the Partnership. (iv) To acquire and enter into any contract of insurance which the General Partner reasonably deems necessary and proper for the protection of the Partnership. (v) To employ attorneys and accountants on behalf of the Partnership. (vi) To pay, collect, compromise, arbitrate, resort to legal action for or otherwise adjust claims or demands of or against the Partnership. (vii) To establish, from income derived from the Partnership's operations, such reserves as the General Partner, in its sole discretion, shall deem reasonable to help meet anticipated Partnership expenses. (viii) To lend, and/or request one or more other Partners to lend, such money to the Partnership as the General Partner, in its sole discretion, deems necessary for the payment of any Partnership obligations and expenses, which loans, if any, shall be repaid with interest at the General Partner Loan Rate, from the first available funds and prior to any distributions to the Partners; provided, however, that (A) except as expressly provided in this Agreement, no Partner shall be required to make any loans and (B) the General Partner shall be under no obligation to give the other Partners the opportunity to lend money to the Partnership. (ix) To deposit, withdraw, invest, pay, retain and distribute the Partnership's funds in any mariner consistent with the provisions of this Agreement. (x) To enter into and execute such additional agreements or other documents and to do such other acts as the General Partner, in its sole discretion, deems necessary or desirable to effectuate the foregoing or the purposes of the Partnership. . • • . . '' (c) Limitations on General Partner's Authority - The General Partner, on behalf of the Partnership, shall have no authority to do any act prohibited by law, nor shall the General Partner have any authority to: . . (i) Enter into agreements with itself or any of its Affiliates for services, except as otherwise provided herein, or on a basis comparable to that which could be arranged with unaffiliated third parties for comparable services. (ii) Permit the Partnership to be charged with any overhead or salaries of the General Partner or any Affiliate of the General Partner, except as otherwise provided in Section 9. (iii) Permit or cause the Partnership to make any loans to the General Partner or any Affiliate of the General Partner. (iv) Permit or cause the funds of the Partnership to be commingled with any funds of the General Partner or any Affiliate of the General Partner. (v) Permit or cause the Partnership to make gjve-ups or rebates to the General Partner or any Affiliate of the General Partner or participate in any reciprocal business arrangements with the General Partner or any Affiliate of the General Partner. -7- ftmAm Mammantu I. P Parttwrchtn Agreement (vi) Permit any sale or assignment of Interests to a "benefit plan investor" (within the meaning of Department of Labor Regulation Section 2510.3-101(f)(2)) if, immediately after such sale or assignment, 25% or more of the Interests would be owned by benefit plan investors (determined in accordance with Department of Labor Regulation Section 2510.3-101 (f)), unless the General Partner has obtained an opinion of counsel that such sale or assignment would not cause assets of the Partnership to be "plan assets" (within the meaning of Department of Labor Regulation Section 2510.3-101) with respect to any Partner subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended. (d) Other Business Ventures - Any Partner, including the General Partner, and any shareholder, officer, director, employee, partner, member, Affiliate or other Person holding a legal or beneficial interest in any entity which is a Partner, may engage in or possess an interest in other business ventures of every nature and description, independently or with others, whether such ventures are competitive with the Partnership or otherwise, and neither the Partnership nor the Partners shall have any right by virtue of this Agreement in or to such independent ventures or to the income or profits derived therefrom. 9. COMPENSATION OF THE GENERAL PARTNER; REIMBURSEMENTS. (a) Reimbursements to the General Partner and its Affiliates - The General Partner and its Affiliates shall be reimbursed by the Partnership for: (i) all organization and offering expenses incurred by the General Partner or its Affiliates in connection with the formation of the Partner-ship and the sale of the Interests, including but not limited to a pro rata portion of the salaries of employees performing services in connection therewith; (ii) the actual cost of goods, materials and services (including construction supervision, management and contract administration) provided to the Partnership by unaffiliated parties; (iii) a pro rata portion of the salaries of employees of the General Partner or any of its Affiliates who perform services for the Partnership for which neither the General Partner nor any Affiliate of the General Partner is entitled to receive a separate fee hereunder; provided, however, that the amount of such salary reimbursement shall not exceed the amount the Partnership would be required to pay independent parties for comparable services; and (iv) costs of travel incurred by the General Partner or its Affiliates in connection with Partnership business. (b) Administration Fee - The General Partner shall be entitled to receive from the Partnership an Administration Fee in the amount of $2,500 per annum commencing in 2001 for its services in maintaining the books and records of the Partnership and providing operational reports to the Partners. In the event that the General Partner determines that the Partnership does not have sufficient cash to pay the Administration Fee when due, any unpaid Administration Fee shall accrue, with interest at the General Partner Loan Rate, and be paid from available cash as promptly as possible and before any distributions to the Partners. The Administration Fee shall be due and payable on January 1 of each year, unless waived by the General Partner. -8- P Pftr*fM»rcitm A« 10. DISTRIBUTIONS AND ALLOCATIONS. (a) Distributions - Except as otherwise provided in Section 20(b), distributions of Distributable Cash shall be made to the Partners, pro rata in accordance with their respective Percentage Interests. (b) Allocations - Income, Loss, and other items for federal income tax purposes shall be allocated as follows: (i) Loss for each fiscal year shall be allocated in the following order of priority: (A) First, to each Partner, an amount equal to (or in proportion to if less than) the excess, if any, of the cumulative amount of Income allocated to such Partner pursuant to Section 10(b)(ii)(C) over the cumulative amount of Loss allocated to such Partner pursuant to this Section 10(b)(i)(A); (B) Second, to each Partner, an amount equal to (or in proportion to if less than) the excess, if any, of such Partner's Capital Account (after allocation of any Loss pursuant to Sections 10(b)(i)(A)) over zero; and (C) Third, the balance, to the Partners, pro rata in accordance with their Percentage Interests. (ii) Income for each fiscal year shall be allocated in the following order of priority: (A) First, to each Partner, an amount equal to (or in proportion to'if less than) the excess, if any, of the cumulative amount of Loss allocated to such Partner pursuant to Section 10(b)(i)(C) over the cumulative amount of Income allocated to such Partner pursuant to this Section 10(b)(ii)(A); (B) Second, to each Partner, an amount equal to (or in proportion to if less than) the excess, if any, of the cumulative amount of Loss allocated to such Partner pursuant to Section 10(b)(i)(B) over the cumulative amount of Income allocated to such Partner pursuant to this Section 10(b)(ii)(B); and (C) Third, the balance, if any, to the Partners, pro rata in accordance with their Percentage Interests. (iii) To the extent that Income includes any income or gain which for federal income tax purposes is treated as ordinary income from recapture of depreciation, such Income treated as ordinary income shall be apportioned among the Partners, to the extent of Income allocated to the Partners, pro rata in accordance with the prior allocation of depreciation to which such recapture is attributable. -9- OwAm Manazanita L.P.PartnershiD Aereement (iv) Notwithstanding the provisions of Section 10(bXi), in no event shall any allocation of Loss (or any other loss, deduction or Section 705(aX2)(B) Expenditure) to any Partner cause such Partner to have or increase a deficit balance in its Capital Account. (v) If a Partner receives an adjustment, allocation or distribution described in Regulations Section 1.704-l(b)(2)(ii)(d)(4), (5) or (6) which creates or increases a deficit balance (taking into account distributions, other than distributions hi liquidation of the Partnership, reasonably expected to be made) in the Partner's Capital Account (as provided in Regulations Section 1.704-l(b)(2)(ii)(d)(4), (5) or (6)), the General Partner shall allocate items of income or gain (as those terms are used in Regulations Section 1.704-l(b)(2)(ii)(d)) to such Partner in an amount and manner to eliminate the Partner's Capital Account deficit attributable to such adjustment, allocation or distribution as quickly as possible. (vi) If there is a net decrease in the Partnership's Minimum Gain during any fiscal year, each Partner shall be allocated items of income and gain for such fiscal year equal to such Partner's share of the net decrease in Minimum Gain during such fiscal year in accordance with Regulations Sections 1.704-2(f) and (g). (vii) Any item of Partnership loss, deduction or Section 705(a)(2)(B) Expenditure that is attributable to Partner Nonrecourse Debt shall be allocated to the Partner or Partners that bear the economic risk of loss with respect to such Partner Nonrecourse Debt in accordance with Regulations Section 1.704r2(i). If there is a net decrease during any fiscal year in the minimum gain attributable to a Partner Nonrecourse Debt (within the meaning of Regulations Section 1.704-2(i)(3)), then any Partner with a share of the minimum gain attributable to such Partner Nonrecourse Debt at the beginning of such fiscal year shall be allocated items of Partnership income and gain for such fiscal year (and, if necessary, for subsequent fiscal years) equal to such Partner's share of the net decrease in Partner Nonrecourse Debt Minimum Gain as provided hi Regulations Section 1.704-2(i)(4). (viii) In accordance with Section 704(c) of the Code and Regulations Section 1.704-l(b)(2)(iv)(d), income, gam, loss and deduction with respect to any property contributed to the capital of the Partnership shall, solely for tax purposes, be allocated among the Partners so as to take account of any variation between adjusted basis of such property to the Partnership and its initial Gross Asset Value. In the event the Gross Asset Value of any Partnership property is adjusted (other than for Depreciation) subsequent allocations of income, gain, loss and deduction with respect to such property shall take account of any variation between the adjusted basis of such property and its Gross Asset Value in the same manner as under Section 704(c) and the Regulations thereunder. Any elections or other decisions relating to such allocation shall be made by the Partner in a manner that reasonably reflects the purpose and intention of this Agreement. (ix) The Gross Asset Values of all Partnership assets may be adjusted by the General Partner in accordance with Regulations Section 1.704-l(b)(2Xiv) to equal then* respective gross fair market values as reasonably determined by the General Partner as of the following tunes: (A) the acquisition of an additional interest in the Partnership by any new or -10- ConAm Manazanita L-P-Partnership Agreement existing Partner in exchange for more than a de minimis capital contribution; (B) the distribution by the Partnership to a retiring or continuing Partner as consideration for an interest in the Partnership of more than a de minimis amount of money or other Partnership property; and (C) the Liquidation of the Partnership. In such event, if the Gross Asset Value of an asset does not equal its adjusted basis for federal income tax purposes, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Income and Loss. (x) For purposes of Sections 10(b)(iv), (v), (vi) and (vii), there shall be excluded from any deficit in a Partner's Capital Account any amount such Partner is obligated to restore to its Capital Account under Regulations Section 1.704- l(bX2)(ii)(c), as well as any addition thereto pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(l) and 1.704-2(i)(5) after taking into account thereunder any changes during such fiscal year in Minimum Gain and Partner Nonrecourse Debt Minimum Gain. (xi) For purposes of Sections 10(b)(iv), (vi) and (vii), each Partner's Capital Account shall be reduced by the items described in Regulations Section 1.704-l(b)(2)(ii)(d)(4), (5) and (6). (xii) If there is any conflict in the application of the following Sections, they shall be applied in the following order, of priority: (A) Section 10(b)(vi), (B) Section 10(b)(vii), (C) Section 10(b)(v), (D) Section 10(b)(iv), (E) Section 10(bXii) and (F) Section 10(b)(i). (xiii) Without limiting this Section 10, if there is a Liquidation of the Partnership, the General Partner shall make adjustments to the Capital Accounts of the Partners to reflect the actual or anticipated Income or Loss allocable among the. Partners in accordance with, or as if there had been, an actual disposition of the Partnership's property at its fair market value. (xiv) The provisions of this Section 10 (and the related provisions of this Agreement) are intended to comply with Regulations Sections 1.704-1 (b) and 1.704-2 and shall be interpreted and applied in a manner consistent therewith. (c) Initial Allocations and Distributions - Notwithstanding the provisions of Sections 10(a) and (b), (i) prior to the initial Investor Closing all allocations of Income and Loss and all distributions of Distributable Cash shall be allocated or distributed, as the case may be, between the Partners pro rata in accordance with then- respective Capital Contributions. 11. RIGHTS OF LIMITED PARTNERS, (a) No Control of Business or Right to Act for Partnership - A Limited Partner shall not take part in or interfere in any manner with the conduct or control of the business of the Partnership or have any right or authority to act for or bind the Partnership. The exercise by a Limited Partner of the rights and powers granted in this Agreement or by the Act, including without limitation, the right to vote and to give consents or approvals as herein provided, shall be -11- deemed to relate to the basic structure of the Partnership and not to participation in the control of the business of the Partnership. (b) Withdrawal of Limited Partner; Return of Contribution - A Limited Partner shall not have the right to (i) withdraw from the Partnership prior to the expiration of the term of the Partnership; (ii) withdraw or reduce its capital contribution or to receive interest thereon; (iii) demand or receive property other than cash upon any distribution by the Partnership or to bring an action for partition against the Partnership; or (iv) have any priority over any other Partner as to return of its capital contribution or as to compensation as a Partner by way of income, except as otherwise provided in Section 10. (c) Voting Rights - (i) The following actions may be taken only upon the affirmative vote or the written consent of Partners holding more than 50% of the Percentage Interests: (A) the amendment of this Agreement other than amendments made pursuant to Section 15(a); (B) the admission of a General Partner, provided, however, that if there is no General Partner, a new general partner may be admitted upon the affirmative vote or the written consent of Limited Partners holding more than 50% of the Percentage Interests; (C) the election to dissolve the Partnership pursuant to Section 19(a); (D) the sale of all or substantially all of the assets of the Partnership; and (E) the election of a trustee to liquidate and distribute the Partnership's assets pursuant to Section 20(b). (ii) The removal of the General Partner pursuant to Section 19(b) hereof may be taken upon the affirmative vote or the written consent of Limited Partners holding at least 75% of the Percentage Interests held by Limited Partners. (iii) Except as otherwise specifically provided hi this Agreement, the voting rights provided in this Section ll(c) are the only voting rights which the Limited Partners shall be allowed to exercise. Notwithstanding the foregoing, the General Partner may, at its option, submit to the vote of the Limited Partners any other matter enumerated in Section 15632(b)(5) of the Act and any matter so submitted must be approved by Partners holding more than 50% of the Percentage Interests. 12. TRANSFER OF INTERESTS, (a) Requirements for Assignment - Subject to any restrictions on transferability required by federal or state law or contained elsewhere in this Agreement, a Partner, including -12- f D P«i+tuM*K»«» the General Partner (subject'to the provisions of the last paragraph of Section 19(a) hereof), shall have the right to assign all or any portion of its Partnership Interest by a written assignment to any Person, provided that such assignment (i) is not in contravention of any of the provisions of this Agreement (with particular reference to the representations contained in Section 23(b) hereof); and (ii) has been duly executed and acknowledged by the assignor and assignee, with the approval of the General Partner, which approval may be granted or withheld in its sole discretion. (b) Assignee's Rights - An assignee of any Partnership Interest shall be entitled to receive distributions of cash or other property from the Partnership and to receive allocations of the gains, profits and losses of the Partnership attributable to such: Interest under the provisions of this Section after the effective date of the assignment but shall have no rights of a Partner unless and until such assignee becomes a substitute Partner pursuant to Sections 12(f) through (i). (c) Allocation of Income, Loss and Distributions Subsequent to Assignment - The Income or Loss of the Partnership attributable to any Partnership Interest acquired by reason of any assignment shall be allocated between the assignor and assignee by taking into account then* varying interest during the period in accordance with Section 706(d) of the Code, using any conventions permitted by law and selected by the General Partner. All distributions on or before the date such assignment is recognized by the Partnership in accordance with Section 12(d) shall be made to the assignor, and all distributions thereafter shall be made to the assignee. Neither the Partnership nor the General Partner shall incur any liability for making allocations and distributions in accordance with the provisions of this Section 12(c), whether'or not the Partnership or the General Partner has knowledge of any transfer or ownership of any Interest. (d) Satisfactory Written Assignment Required - Anything herein to the contrary notwithstanding, both the Partnership and the General Partner shall be entitled to treat the assignor of a Partnership Interest as the absolute owner thereof in all respects, and shall incur no liability for distributions of cash made in good faith to it, until such time as a written assignment that conforms to all requirements of this Section 12 has been received by and recorded on the books of the Partnership. (e) Limitation on Sale or Exchange - No Partnership Interest may be sold or exchanged if such transaction, in light of the total of all other Partnership Interests sold or exchanged within the period of 12 consecutive months prior thereto, might, in the opinion of counsel for the Partnership, (i) result in the termination of the Partnership under Section 708 of the Code, (ii) jeopardize the status of the Partnership as a partnership for federal income tax purposes, or (iii) cause the Partnership to be treated as a "publicly traded partnership" within the meaning of Section 7704(b) or 469(k)(2) of the Code. (f) Requirements for Substitution - No assignee of any Partnership Interest shall have the right to become a substitute Limited Partner in place of its assignor unless all of the following conditions are satisfied: -13- (i) The written consent of the General Partner to such substitution is obtained, which consent may be granted or withheld in its sole and absolute discretion; (ii) A duly executed and acknowledged written instrument of assignment, being either a certificate evidencing the Interest owned by the assignor prior to such assignment or some other instrument approved by the General Partner, is filled with the Partnership setting form the intention of the assignor that the assignee become a substitute Limited Partner in its place; (iii) The assignee executes an irrevocable Power of Attorney, satisfactory to the General Partner, appointing the General Partner as the assignee's lawful attorney-in-fact for certain specified purposes; (iv) The assignor and assignee execute and acknowledge such other instruments as the General Partner may deem necessary or desirable to effect such substitution; (v) A transfer fee is paid to the Partnership sufficient to cover all reasonable expenses connected with such assignment and substitution; (vi) If required by any lender to the Partnership, the consent of such lender to such substitution; (vii) If requested by the General Partner, an opinion of assignor's counsel, which opinion shall be satisfactory to counsel for the Partnership, that the Interests) may be legally sold or distributed without registration under the Securities Act is provided to the Partnership; and (viii) The Partner List is amended to add the assignee and, if appropriate, to delete the assignor or to reduce the Partnership Interest of the assignor. Except as provided herein, no persons may be admitted to the Partnership as additional Limited Partners. (g) Evidence of Intent to Substitute - A Partner who assigns any Partnership Interest must evidence its intention that its assignee be admitted as a substitute Limited Partner in its place and execute any instruments required by the General Partner in connection therewith. (h) Substitution Required for Vote - Unless or until an assignee of a Partnership Interest becomes a substitute Limited Partner, such assignee shall not be entitled to exercise any vote with respect to such Partnership Interest or exercise any other rights of a Limited Partner. (i) Effective Date - The effective date of a substitution shall be the first day of the calendar quarter next following the date upon which the General Partner has given its written consent to such substitution and has amended the Partner List. 0') Continuing Liability of Assignor - Any assignment pursuant to Section 13 hereof will not relieve the assigning Limited Partner of its duties and obligations hereunder unless the -14- ConAm Manazaniu LJ* .Partnership Agreement General Partner agrees in writing to release such Limited Partner; provided, however, that no release shall be effective to release the assignor from liability to the Partnership under subdivision (d) of Section 15622 and Sections 15652 and 15666 of the Act, whether or not the assignee becomes a substitute Limited Partner. (k) Assignment Void - Any purported assignment of an Interest which is not in compliance with this Section 12 shall be null and void and of no force and effect. 13. BOOKS, RECORDS, ACCOUNTING, REPORTS AND TAX MATTERS. (a) Records - The Partnership shall keep and maintain at the office specified in Section 3 hereof complete and proper records and books of account of the Partnership, including, but not limited to: (i) the Partner List; (ii) a copy of the Certificate, including all amendments thereto, together with any powers of attorney pursuant to which the Certificate or any amendments thereto were executed; (iii) copies of the Partnership's federal, state and local income tax or information returns and reports, if any, for the six most recent taxable years; (iv) copies of this Agreement, including all amendments hereto, together with any powers of attorney pursuant to which this Agreement or any amendments hereto were executed; . (v) copies of the financial statements of the Partnership, if any, for the six most recent fiscal years; and (vi) the books and records as they relate to the internal affairs of the Partnership for at least the current and past three fiscal years. (b) Limited Partners* Rights to Records - Upon the request of a Limited Partner, the General Partner shall promptly deliver to such Limited Partner, at the expense of the Partnership, a copy of the information required to be maintained pursuant to clauses (i), (ii) and (iv) of Section 13(a) hereof. In addition, each Limited Partner shall have the right upon reasonable request to inspect and copy during normal business hours any of the Partnership records required to be maintained pursuant to Section 13(a) hereof and to obtain from the General Partner, promptly after becoming available, a copy of the Partnership's federal, state and local income tax or information returns for each year. (c) Operational Reports - The General Partner shall furnish to each Limited Partner a copy of all annual or other reports prepared with respect to Manzanita Partners for the members of Manzanita Partners. -15- i I P Pftrtn^rchm Ao (d) Income Tax Information - The General Partner shall cause income tax returns for the Partnership to be prepared by the Partnership's accountant and filed with the appropriate authorities, and shall furnish to each Partner (and each assignee of an Interest), as soon as practicable following receipt of tax information with respect to Manzanita Partners, all tax information with respect to the Partnership as may be required by the Partner for the preparation of its federal and state tax returns. (e) Taxable Year and Accounting Method - Except as otherwise required by the Code or the Regulations, the Partnership's taxable year shall be the calendar year. The General Partner shall elect the Partnership's method of accounting for federal income tax purposes. (f) Tax Elections - The General Partner shall have the authority to make any election or other determination on behalf of the Partnership provided for under the Code or any provision of state or local tax law. (g) Tax Matters Partner - The Tax Matters Partner (within the meaning of Section 6231(a)(7) of the Code) of the Partnership shall be the General Partner. (h) Capital Accounts - The General Partner shall cause the Capital Accounts of the Partners to be determined and maintained throughout the full term of the Partnership in accordance with Section 704(b) of the Code and Regulations promulgated thereunder. 14. BANK ACCOUNTS. All funds of the Partnership are to be deposited in the Partnership's name in such bank account or accounts as may be designated by the General Partner, and shall be withdrawn on the signature of the General Partner, or such other Persons as the General Partner may authorize. 15. AMENDMENTS. (a) Amendments Not Requiring Agreement of Limited Partners - This Agreement shall be amended without the consent of any Limited Partner whenever required by the Act or otherwise by law. This Agreement may be amended without the consent of any Limited Partner to (i) effect changes of a ministerial nature which do not materially and adversely affect the rights of the Limited Partners; (ii) conform the provisions of this Agreement to the requirements of Regulations issued under Section 704 of the Code regarding the allocation of partnership items (including non-taxable receipts or non-deductible expenditures or credits) for federal income tax purposes; and (iii) delete or add any provision of this Agreement required to be so deleted or added by a state securities commission or similar agency, which addition or deletion is deemed by such commission or agency and by the General Partner to be for the benefit or protection of the Limited Partners. (b) Amendments Requiring Agreement of Limited Partners - Except as provided in Section 15(a), an amendment to this Agreement must be approved by Partners holding more than 50% of the Percentage Interests. -16- (c) Obligations of Limited Partners - Each Limited Partner covenants, on behalf of itself, its successors, assigns, heirs and personal representatives, to execute and deliver with acknowledgment or affidavit, if required, all documents and writings that may be necessary or appropriate to effectuate amendments pursuant to the provisions of Sections 15(a) and (b). (d) Copies of Amendments - The General Partner shall promptly furnish to each Limited Partner a copy of any amendment to this Agreement executed by the General Partner pursuant to a power of attorney from such Limited Partner. 16. POWER OF ATTORNEY. Each Limited Partner hereby acknowledges and reaffirms that the General Partner, has been constituted and appointed, with full power of substitution, as the attorney-in-fact for such Limited Partner for the purposes set forth below. Each additional Limited Partner shall constitute and appoint the General Partner as the attorney-in-fact for such Limited Partner with power and authority to act in its name, place and stead and on its behalf in the execution, acknowledgment and filing of documents relating to the Partnership and its business including, but not limited to, the following: (a) This Agreement or any amendments thereto, subject to the provisions of Section 15; (b) All other certificates or instruments including any amendments thereto required to be filed by the Partnership under the Act, or the provisions of this Agreement; (c) All certificates and other instruments necessary to permit the Partnership to do business in any jurisdiction other than California or to promote the limitation of liability .of the Partnership therein; (d) All conveyances and other instruments necessary to effect the dissolution and liquidation of the Partnership; and (e) All other certificates, instruments and documents which the General Partner determines, in its sole discretion, are necessary or desirable to effectuate the provisions of this Agreement and the purposes of the Partnership. Each Limited Partner further acknowledges and reaffirms by its execution hereof, that the Power of Attorney granted to the General Partner: (a) Is a Special Power of Attorney coupled with an interest and is irrevocable; (b) May be exercised by the General Partner either by signing separately as attomey- in-fact for each Limited Partner or by listing all of the Partners executing any instrument with a single signature of the General Partner, as attorney-in-fact for all of them; and (c) Shall survive the death, incapacity or dissolution of the Limited Partner or the assignment by the Limited Partner of the whole or any portion of its Interest; except that where -17- P Partn*rchin Aorrrnvnt the assignee of the whole of a Limited Partner's Interest has been approved by the General Partner for admission to the Partnership as a substitute Limited Partner, the Power of Attorney of the assignor shall survive the delivery of such assignment for the sole purpose of enabling the General Partner to execute, acknowledge and file any instrument necessary to effect such substitution. 17. MEETINGS. It is not contemplated that there will be regular meetings of the Partnership. However, meetings of the Partnership may be called by the General Partner or by Limited Partners holding more than 10% of Interests for any matters on which the Partners may vote. Limited Partners holding .more than 10% of the Interests may propose amendments to this Agreement. Meetings, if any, shall be conducted in accordance with Section 15637 of the Act. Any action that may be taken at any meeting of the Partners may be taken by written consent without a meeting. 18. DEATH, INCOMPETENCE, BANKRUPTCY OR DISSOLUTION OF A LIMITED PARTNER. (a) Individual Limited Partner - Upon the death, legal incompetence or bankruptcy of an individual Limited Partner, such Limited Partner's executor, administrator, guardian, conservator or other legal representative shall have all of the rights of a Limited Partner for the purpose of settling such Limited Partner's estate or administering such Limited Partner's property, but shall not become a substitute Limited Partner without obtaining Hie consent of the General Partner. (b) Other Limited Partners - Upon the bankruptcy, insolvency, dissolution or other cessation to exist as a legal entity of a Limited Partner, the legal representative or successor of such Limited Partner shall have all of the rights of a Limited Partner for the purpose of effecting the orderly disposition of that Limited Partner's affairs or business, but shall not become a substitute Limited Partner without obtaining the consent of the General Partner. 19. WITHDRAWAL, REMOVAL AND TERMINATION OF GENERAL PARTNER. (a) Withdrawal of General Partner, Assignment of Partnership Interest - The General Partner may withdraw from the Partnership as General Partner at any time by giving written notice to all other Partners not less than 30 days prior to the proposed effective date of such withdrawal. Notwithstanding the foregoing, the withdrawal shall not be effective (i) if such withdrawal causes a default under or results in the acceleration of the repayment of any Partnership indebtedness (other than a loan made by the General Partner or an Affiliate of the General Partner), or (ii) if such withdrawal would constitute a breach or default under any other agreement to which the General Partner or the Company is a party. In the event of a withdrawal by the General Partner which constitutes a breach of this Agreement, the Partnership may recover from the withdrawing General Partner damages for breach of this Agreement and, in addition to any remedies available under this Agreement or applicable law, shall have the right to offset such -18- damages against any amounts otherwise distributable or payable to the General Partner by the Partnership. The General Partner may sell, assign or otherwise transfer all or any portion of its Partnership Interest to any Person; provided, however, that without the consent of Limited Partners owning more than 50% of the Percentage Interests such assignee may not become a general partner of the Partnership but may be admitted as a limited partner at the election of the General Partner and the assignee, (b) Removal of General Partner - Upon the vote or written consent of Limited Partners owning at least 75% of the Percentage Interests, the General Partner may be removed as a general partner of the Partnership if the General Partner has been finally determined by a court of competent jurisdiction to have committed fraud, gross negligence or willful misconduct in the management of the Partnership business. Written notice of the removal of the General Partner shall be served upon it either by certified or by registered mail, return receipt requested, or by personal service. Such notice shall set forth the reasons for the removal and the date upon which the removal is to become effective, which date shall not be earlier than the later of (i) 60 days after the service of such notice upon the General Partner or (ii) the final determination of the court referred to above. Notwithstanding the foregoing, in no event shall the removal of a General Partner be effective until all loans made by the General Partner or its Affiliates are repaid. Such notice shall be sighed and acknowledged by Limited Partners owning at least 75% of the Percentage Interests, whose signatures shall have been made thereon not more than 30 days prior to the date of presentation to the General Partner. (c) Termination of General Partner - The General Partner shall cease to be General Partner upon the happening of any of the following events ("Event of Termination'*): (i) the withdrawal from the Partnership of the General Partner as General Partner; (ii) the removal of the General Partner and, as provided in Section 20(b) and the repayment of all loans made to the Partnership by the General Partner or its Affiliates; (iii) the bankruptcy of the General Partner; (iv) if the General Partner is a corporation, limited liability company or partnership, the dissolution of the General Partner; or (v) if the General Partner is an individual, the death of the General Partner or the entry by a court of competent jurisdiction of an order adjudicating the General Partner incompetent to manage his person or estate. Upon the termination of the General Partner, such terminated General Partner shall cease to be a General Partner of the Partnership but shall continue to have all rights and interests of a Limited Partner with respect to its Interest 20. DISSOLUTION, (a) Events Causing Dissolution - The Partnership shall be dissolved upon the occurrence of any of the following events: (i) the expiration of the term of the Partnership as specified in Section 5 hereof; -19- OonAiti Manazanita L.P.Ptrtnershin Agreement (ii) the election of the General Partner and of Limited Partners holding more than 50% of the Percentage Interests to wind up and dissolve the Partnership; (iii) the sale or other disposition of all or substantially all of the assets of the Partnership as permitted by this Agreement; (iv) the General Partner ceases to be General Partner, unless, in the event of any such cessation, (i) at the time there is at least one other remaining or substitute General Partner and all such remaining or substitute General Partners elect within 90 days to continue the business of the Partnership, or (ii) if there are no remaining or substitute General Partners, Limited Partners holding more than 50% of the Percentage Interests elect within 90 days to continue the business of the Partnership and designate one or more successor General Partners); or (v) entry of a decree of judicial dissolution pursuant to Section 15682 of the Act. (b) Disposition of Assets and Distribution of Proceeds of Sale - Upon the dissolution of the Partnership, the General Partner, or a trustee (the 'Trustee") elected by Limited Partners holding more than 50% of the Interests if there is no General Partner, shall sell the assets owned by the Partnership as promptly as is consistent with obtaining the fair value thereof. Partnership assets shall be. applied or distributed in the following order: ' (i) to the payment of debts and Ii abilities of the Partnership, other than those to Partners, in the order provided by applicable law, and the expenses of liquidation; (ii) to the payment to the General Partner of any loans or unpaid fees or reimbursements pursuant to Section 9 hereof; (iii) to the payment of other debts and liabilities of the Partnership to the Partners; and . (iv) any balance of assets to the Partners, pro rata in accordance with each Partner's positive Capital Account balance, to the extent thereof, after allocation of all Income, Loss and other appropriate Capital Account adjustments. (c) Distribution in Kind - In lieu of disposing of Partnership's assets, the General Partner or, in its stead, the Trustee, may elect, in its sole discretion, to distribute all or a portion of such assets in kind. In such event, the fair market value of such assets shall be determined by an appraiser selected by the General Partner or the Trustee. Each Partner will receive, in satisfaction of its Partnership Interest, an undivided interest in the Partnership's assets equal to the portion of the proceeds to which it would have been entitled under the provisions of Section 20(b) if the Partnership's assets had been sold at their respective fair market values, subject to their respective liabilities. -20- I P Purtnmhin Avtvwnwnt (d) Certificates of Dissolution and Cancellation - Upon the dissolution of the Partnership, the General Partner, the Trustee or the Limited Partners, as the case may be, shall file in the office of the Secretary of State of the State of California a Certificate of Dissolution and, upon the completion of the winding up of the affairs of the Partnership, a Certificate of Cancellation, and shall file and record certified copies thereof wherever the Certificate was filed or recorded. (e) Death, Etc, of a Limited Partner - The death, legal incapacity, bankruptcy, dissolution or insolvency of a Limited Partner shall not dissolve the Partnership. 21. LITIGATION. The General Partner shall prosecute and defend such actions at law or in equity as it may deem necessary to enforce or protect the interests of the Partnership. The Partnership and the General Partner shall respond to any unappealed final decree, judgment or decision of any Court, board or authority having jurisdiction in the premises. The General Partner shall"satisfy any such judgment, decree or decision first out of any insurance proceeds available therefore, next out of assets of the Partnership and, finally, out of the assets of the General Partner. 22. LIMITATION ON LIABILITY OF GENERAL PARTNER TO OTHER PARTNERS AND PARTNERSHIP; PARTNERSHIP INDEMNIFICATION OF GENERAL PARTNER. (a) Defects as to Formalities - No failure to observe any formalities or requirements of this Agreement, the Certificate or the Act shall be grounds for imposing liability on the Partners for liabilities of the Partnership. (b) Liability of Partners to Third Parties - Except as otherwise provided in the Act or in this Agreement, no Partner shall be personally liable for any debt, obligation or liability of the Partnership, whether arising in contract or otherwise, solely by reason of being a Partner of the Partnership. (c) Limitations on Liability of General Partner to Other Partners and Partnership; Indemnification - The General Partner shall not be liable for the return of the Capital Contributions of the Limited Partners, who shall look solely to the assets of the Partnership for any return of capital. The General Partner is specifically permitted to satisfy any Partnership obligations as to which the General Partner is personally liable, if any, before satisfying Partnership obligations as to which the General Partner has no such personal liability. The General Partner shall not be required to devote all of its time or business efforts to the affairs of the Partnership, but shall devote so much of its time and attention to the Partnership as is necessary and advisable to successfully manage the affairs of the Partnership. The doing of any act or the failure to do any act by the General Partner, which shall not constitute fraud, gross negligence or willful misconduct, in pursuance of the authority granted, to promote the interests of the Partnership, the effect of which may cause or result in loss or damage -21- to the Partnership, if done in good faith, shall not subject the General Partner, its Affiliates, partners, officers, directors, employees or their successors and assigns (each an "Indemnified Party") to any liability and, in such event, the Partnership will indemnify and hold harmless each Indemnified Party from any claim, loss, expense, liability, action or damage resulting from or relating to any such act or omission, including, without limitation, reasonable fees and expenses of attorneys engaged by an Indemnified Party in defense of such act or omission and other reasonable costs and expenses of litigation and appeal. All costs and expenses incurred in defending any proceeding or action or otherwise shall be advanced by the Partnership. Moreover, the General Partner shall not be liable to the Partnership or the Limited Partners because any taxing authorities disallow or adjust any deductions or credits in the Partnership income tax returns. This Agreement is entered into with the understanding that Daniel J. Epstein, a general partner of Continental American Properties, Ltd., a California limited partnership, shall not be personally liable or responsible for any obligation arising under this Agreement^ except as to his interest as a general partner in the assets of Continental American Properties, Ltd. 23. REPRESENTATIONS OF LIMITED PARTNERS. Each Limited Partner by becoming obligated hereunder, hereby represents and warrants to the General Partner and to the Partnership as follows: (a) Investment Intent - Its acquisition of a Partnership Interest is made as a principal for its sole account for investment purposes only and not with a view toward the distribution of all or any portion thereof and that under no circumstances will it sell, transfer or assign all or any portion of its Partnership Interest except in compliance with the provisions of this Agreement. (b) Knowledge and Experience - It is relying on its own business and financial knowledge and experience, or that of its advisors, in making a decision to enter into and execute this Agreement. It, alone or with its purchaser representative, has such knowledge and experience in business and financial matters as enables it to utilize the information made available to it in connection with the investment, to evaluate the merits and risks of the prospective investment and to make an informed investment decision. (c) Restrictions on Transfer - It is aware of the restrictions on transfer of its Partnership Interest hereunder and that the same will at no time be freely transferable or be assignable otherwise than to a person or entity accepting similar restrictions on transferability. (d) Personal Circumstances - It has no reason to anticipate any change in personal circumstances, financial or otherwise, which should cause it to sell or distribute or necessitate or require any sale or distribution of its Interest. (e) Investment Risks - It is familiar with the nature of and risks attending investments in real estate and securities, and is capable of bearing the economic risks of this investment. -22- (f) Restrictions on Sale or Other Disposition - It is fully aware of the restrictions on resale of its Partnership Interest under the Securities Act, and applicable state securities laws; in particular, it is aware that the Interest will not be registered under the Securities Act at any time, may not at any time be freely salable and that any sale thereof may have significant adverse tax consequences. (g) Reliance on Exemptions - It is fully aware that the Interests are being issued by the Partnership in reliance upon the exemption provided by Section 4(2) of the Securities Act, and the Rules promulgated thereunder, on the grounds that no public offering is involved, and upon the representations, warranties and agreements set forth in this Section 23(b) and in the Limited Partners' Subscription Agreements. 24. MISCELLANEOUS. (a) Notices - The reports, statements and returns referred to in Section 13 hereof may be mailed to the Partners via any appropriate class of U.S. mail. Any other notice, request, demand, instruction, consent, approval or other communication required or permitted to be given to the Partners hereunder shall be in writing and shall be personally delivered, or sent by registered or certified mail, postage and fees prepaid, return receipt requested or by messenger or courier service. All such communications shall be addressed as follows: If to the General Partner, at the principal place of business of the Partnership; and, if to any other Partner, to the address specified on the books and records maintained by the Partnership. Notice shall be deemed to have been given upon personal delivery, three business days after mailing in the manner provided above or, if delivered by messenger or courier, upon signature by any person at the address to which the notice has been properly sent. The addresses for purposes of this Section 24 may be changed by any Partner by the Partner giving written notice thereof in the manner provided herein. Unless and until such written notice is given, the last address given, or the address provided herein if no notice of change has been given, shall control. (b) Severability - The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision. (c) Titles and Captions - Section and paragraph titles or captions contained in this Agreement are inserted only as a matter of convenience and for reference and hi no way define, limit, extend or describe the scope of this Agreement or the intent of any provision hereof. (d) Person and Gender - Whenever the singular number is used in this Agreement and when required by the context, the same shall include the plural, and the masculine gender shall include the feminine and neuter genders and the word "person" shall include a corporation, firm, partnership or other form of association. (e) Applicable Law - The terms and provisions of this Agreement and any dispute arising hereunder shall be governed by the internal laws of the State of California, without giving effect to the choice of law rules or laws of such jurisdiction. -23- (f) Litigation - Each Partner agrees that any litigation, claim or lawsuit directly or indirectly arising out of or related to this Agreement, any of the terms thereof or the relationship created thereby shall be instituted exclusively in the courts, whether federal or state, located in the County of San Diego, California, and nowhere else. Each Partner further agrees that, notwithstanding the foregoing, any such litigation, claim or lawsuit as to which there is federal jurisdiction, by reason of diversity, federal question or otherwise, shall be instituted exclusively in the federal district court for the southern district of California. In any actions between the parties to enforce any of the terms of this Agreement or of any other contract relating to the Partnership or any action in any other way pertaining to Partnership affairs or this Agreement, the prevailing party shall be entitled to recover expenses, including reasonable attorneys' fees, including expenses and fees of any appeals. (g) Entire Agreement - This Agreement is the final integration of the agreement of the parties with respect to the matters covered by it and supersedes any prior understanding or agreement, oral or written, with respect thereto. (h) No Third Party Beneficiaries - This Agreement is entered into among the Partners for the exclusive benefit of the Partnership and its Partners and their successors and assigns. Except to the extent provided by applicable statute, and then only to that extent, no creditor or third party shall have any rights under this Agreement or under any other agreement between the Partnership and any Partner, either with respect to any contribution to the Partnership or otherwise. GENERAL PARTNER: LIMITED PARTNERS: Continental American Properties, Ltd., a ConAm Asset Management Corporation, a California limited partnership California corporation By: DJE Financial Cojp<ar€aKfimiia By: - corporation, f >. Namefxpoa^eT- Its: General Parta/r. ) Title: Vice President By: Title: Vice President THE INTERESTS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. TRANSFER OR OTHER DISPOSITION OF THE INTERESTS IS RESTRICTED AND MAY NOT BE MADE WITHOUT AN APPROPRIATE OPINION OF COUNSEL. -24- EXHIBIT A List of Partners, Capital Contributions and Percentage Interests Capital Percentage Partner Name Contribution Interest General Partner: Continental American Properties, Ltd. $990 99% Limited Partners: ConAm Asset Management Corporation $10 1% Totals $1000 100% ConAm Maiuzanita L.P.Partnership Agreement CON AM MANZANITA L.P. AGREEMENT OF LIMITED PARTNERSHIP TABLE OF CONTENTS 1. DEFINITIONS .. 1 2. NAME OF PARTNERSHIP 5 3. PLACE OF BUSINESS AND AGENT FOR SERVICE OF PROCESS 5 4. PURPOSES..,. ...... _ 5 5. TERM 5 6. CAPITAL CONTRIBUTIONS 5 7. FILING OF CERTIFICATE OF LIMITED PARTNERSHIP 6 8. RIGHTS, DUTIES AND LIABILITY OF THE GENERAL PARTNER 6 9. COMPENSATION OF THE GENERAL PARTNER; REIMBURSEMENTS 8 10. DISTRIBUTIONS AND ALLOCATIONS 9 11. RIGHTS OF LIMITED PARTNERS 11 12. TRANSFER OF INTERESTS 12 13. BOOKS, RECORDS, ACCOUNTING, REPORTS AND TAX MATTERS 15 14. BANK ACCOUNTS 16 15. AMENDMENTS „„.,....,.,..„„.„„.,.,„„ 16 16. POWER OF ATTORNEY....«,...,....,.,........ 17 17. MEETINGS ,...,.,.„.,.,.,„.„„,.„„„.,.„„„„,„., 18 18. DEATH, INCOMPETENCE, BANKRUPTCY OR DISSOLUTION OF A LIMITED PARTNER 18 19. WITHDRAWAL, REMOVAL AND TERMINATION OF GENERAL PARTNER 18 M«n«9«nitfi ? P PartnwcKin Aoiwnvmt 20. DISSOLUTION 19 21. LITIGATION. 21 22. LIMITATION ON LIABILITY OF GENERAL PARTNER TO OTHER PARTNERS AND PARTNERSHIP; PARTNERSHIP INDEMNIFICATION OF GENERAL PARTNER....21 23. REPRESENTATIONS OF LIMITED PARTNERS. 22 24. MISCELLANEOUS 23 -11- SECRETARY OF STATE I, BILL JONES, Secretary of State of the State of California, hereby certify: VThat the attached transcript of page(s) was prepared by and in this office from the record on file, of which it purports to be a copy, and that it is full, true and correct. IN WITNESS WHEREOF, I execute this certificate and affix the Great Seal of the State of California this day of OCT - 4 2000 Secretary of State ^^^ i§>tate of California ^>ecre tarp of J&tate1 y\ •* _ j^^^^^BLZf M ^^ ''*~* NV^ $tU forte* CERTIFICATE OF LIMITED PARTNERSHIP A $70.00 fOing fee must accompany this form. IMPORTANT- Read Instructions before completing this form SEP 2 9 2000 ^^ JONES. Setttery of Sfcsfr This Space For FiRna Use Onlv 1. NAME OF THE UMfTEDPARTNERSHP <END THE NAME WITH THE VOIDS 'UMITED PARTNERSHIP' OR THE ABBREVIATION 'LP.') ConAm Hanzanita L.P. 2. STREET ADDRESS OF PRNOPAL EXECUTIVE OFFICE CITY AND STATE 1764 San Diego Avenue, San Diego, CA 92110 1764 San Diego Avenue, San Diego,CA 92110 ZPOODE ZIP CODE 4. CCMPLETEFUMnH>PARTraiSHPWASFORMEDPRIORTOJULYl. 1984 AND B WEMSTENCE ON THE DATE 1MB CERTfiCATE IS EXECUTED. THE ORlGWALUMnEDPAIWJERSMP CERTIFICATE WAS RECORDED ON 19 WITH THE RECORDER OF COUNTY. FUz OR RECORDATION NUMBER **"*NAME THE AGENT FOR SERVICE OF PROCESS AND CHECK THE APPROFWATEPROVHON BELOW: ^^I^ORKriCN SERVICE CCM'ANY which will do business in California a CSO — TAWYRRS T^jrjrffSJTKft'PTJ^fl SEPVTrTC s WHICH IS ( ) ANMDMDUALRESONGMCAUFORNW. PROCEED TO HEM 6. (X) AODRPC>RATK><WHK^HASHU3)ACERTflCATEPURSUAWTO 6. f AN MDMDUALCAUFORMA ADDRESS OF THE AGENT FOR SERVICE OF PROCESS: ADDRESS: CITY: STATE: CA 7PCOOE: 7. NAMES AND ADDRESSES OF ALL GENERAL PARTNERS: (AHACH ADDITIONAL PAGES. IF NECESSARY) A. NAME Continental American Properties, Ltd. ADDRESS: 1764 San Diego Avenue err* San Diego m CA B. NAME: ADDRESS: CITY: STATE: DtSSOIJUnOKOONTfl4UA]IC44ANDCANOaLAaON. Q^ ,j\ BPCODE- 92110 ZIP CODE: TATEMENT. MERGER. 9. OTHER MATTERS TO BE NCUJDED M THB CERWCATE MAY BE SET FORTH ON SEPARATE ATTACHED PAGES AND ARE MADE A PART OF THIS CERTFICATE. OTHER MAnE!BMAYNajUDETHEPlJRP06EC*BU»€SSOFTHEU^^ GAMBUNG ENTERPRISE. 10. NUMBER OF PAGES ATTACHED. F ANY: i. 11. ICERTKyTHATTHESTATEMB4TSCXX<rAffCDMTHSDOCUMEWAR^ 1 DECLARE THATI AM THE PERSON WHO IS EXECUTMG THB WSTRUMENT. WHCH EXECWTWN 6 MY ACT AND DE«D. SEE ATTACHED SIGNATURE PACE 09/28/00 SIGNATURE POSITION OR TITLE PRINT NAME SIGNATURE POSITION OR TITLE PRMTNAME DATE DATE Signature Page LP-1 ConAm Manzanita L.P. CONTINENTAL AMERICAN PROPERTIES, LTD., a California Limited Partnership By: DJE Financial Corp., a California corporatioi its: General By: its: Vice President