HomeMy WebLinkAboutSDP 85-05; Mulvaney Financial LLC; 2000-0388943; Hold Harmless Agreement/ReleaseDOC ::’ 2000-0388943
RECORDING REQUESTED BY
WHEN RECORDED MAIL TO:
City Clerk
CITY OF CARLSBAD 1200 Carlsbad Village Dr. Carlsbad, CA 92008
JUI- 24. 2000 2:l.7 PM
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4439 th: ’ 13.00
11111111111111 2OWO388943
SPACE ABOVE THIS LINE FOR RECORDER’S USE
NO.: 216-420-21-00
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drainage system or other improvements”tdent#&“in the approved plans: or by the design,
construction or maintenance of the drainage system or other improvements identified in the
approved plans.
Approval of the plans by the City shall not constitute an assumption by the City of any
responsibility for such damage or taking. City shall not be an insurer or surety for the design or
1 -& '33 MasteniFarmslHolc HamlleJP 4, mainage Rev. 12/08198
4430
zonstruction of the improvements pursuant to the approved plans, nor shall any officer or
employee thereof be liable or responsible for any accident, loss or damage happening or
xcurring during the construction work or improvements as specified in this agreement.
It is further agreed that the above owner(s) will maintain all drainage systems to insure a
free flow to a satisfactory point of discharge unless said systems are accepted as public
facilities.
(Chairman, president or vice-prel~~~~~~t~~~~~~~~~~~~~~~~~t secretary, CFo or assistant
treasurer must sign for corporations. “~~~~~~~;‘:l:iR”:corporation must attach a reso,tition
certified by the secretary or assistant secretary under corporate seal empowering the offic&(s)
signing to bind the corporation.)
L\PPROVED AS TO FORM:
ilasten,Formsmoid Harmless AQ, mainage Rev. 12m49B
1
4491
State of California
County of San Diego 1
On 7 -‘7-06 before me, Omo/ A- Jfntct;,do %2%-t/
(Date) (Name’, Title of OffiLer)’
’ personally appeared J/mes K md /L/m& MD
(Name[s] of Signer[s]) Yzhd, u3 m . fljlu iI+3j24 I / personally known to me -OR -
(proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that k&he/they
executed the same in hMber/their authorized capacity(ies), and that by b&her/their
signature(s) on the instrument the person(s), or entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal
S?&ature of Notary
(This area for
official notary seal)
Title or Type of Document
Date of Document
Signer(s) other than named above
No. of Pages
cr3 99394d
cf.39 9394 3
MULVANEY FINANCIAL, LLC
a California Limited Liability Company
AMENDED AND RESTATED
OPERATING AGREEMENT
November 1,1999
TABLE OF CONTENTS
RECITALS ,.,..._t...................................................
ARTICLE 1: DEFINITIONS .....................
1.1. “Act” ................................
1.2. “Adjusted Capital Contribution” ...........
1.3. “Adjusted Capital Account Deficit” ........
1.4. “Affthate” ............................
1.5. “Articles of Organization” ...............
1.6. “Agreement” ..........................
1.7. “Assignee” ...........................
1.8. “Assigning Member” ...................
1.9. “Available Cash” .......................
1 .lO. “Book Depreciation” ...................
1.11. “Capital Account” .....................
1.12. “Capital Contribution” .................
1.13. “Capital Event” .......................
1.14. “Code” or “IRC” ......................
1.15. “Company” ..........................
1.16. “Company Minimum Gain” .............
1.17. “Confidential Information” ..............
1.18. “Corporations Code” or “Corp C” ........
1.19. “Economic Interest” ...................
1.20. “Encumber” ..........................
1.2 1. “Encumbrance” .......................
1.22. “Fair Market Value” ...................
1.23. “Initial Members” .....................
1.24. “Involuntary Transfer” .................
1.25. “Losses” ............................
1.26. “Majority of Members” .................
1.27. “Manager” or “Managers” ...............
1.28. “Member” ...........................
1.29. “Member Nonrecourse Debt” ............
1.30. “Member Nonrecourse Debt Minimum Gain’
1.3 1. “Member Nonrecourse Deductions” .......
1.32. “Membership Interest” ................. 1.33. “Nonrecourse Deductions” ..............
1.34. “Nonrecourse Liability” ................
1.35. “Notice” ............................
1.36. “Percent of the Members” ...............
1.37. “Percentage Interest” ...................
1.38. “Person“ ............................
1.39. “Profits” and “Losses” .................
1.40. “Property” ...........................
1.41. “Proxy” .............................
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1.42. “Regulations” or “Reg” .................
1.43. “Reserves” ...........................
1.44. “Successor in Interest” .................
1.45. “Tax Item” ...........................
1.46. “Tax Matters Member” .................
1.47. “Transfer” ...........................
1.48. “Triggering Event” ....................
1.49. “Units of Membership Interest” or “Unit”
1.50. “Vote” ..............................
1.5 1. “Voting Interest” ......................
ARTICLE 2: ARTICLES OF ORGANIZATION ......
2.1. Filing of Articles. . . . . . . . . . ......
2.2. Name ofthe Company. . . ......
2.3. Principle Executive Office. . . . . . . .
2.4. Initial Agent for Service of Process. . . . . . . . .
2.5. Purposes. . . . . . . . . . ......
2.6. Organizational Intent. . . . ......
2.7. Term............................ ......
2.8. Names and Addresses of Members. . . .
2.9. Name and Address of Manager. . . . . . . . .
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ARTICLE 3: CAPITAL AND CAPITAL CONTRIBUTIONS
3.1. Initial Capital Contributions. . . . . . . . . . .
3.1.1. Initial Member Capital Contributions. . . .
3.1.2. Sale of Additional Membership Interests. . .
3.2. Additional Capital Contributions. . . . . . . . .
3.3. Capital Accounts. . . . . . . . . . . . . . . .
3.4. No Withdrawals of Capital. . . . . . . . . .
3.5. No Interest Paid. . . . . . . . . . . . . . . . . .
3.6. No Liability of Members for Company Obligations. .
3.7. No priority Among Members. . . . . . . . . . . . . . . . . . .
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ARTICLE 4: ALLOCATIONS AND DISTRIBUTIONS .............................. .8
4.1. Allocation of Profits and Losses. ......................................... .8
4.2. DefinitionofProfitsandLosses. ......................................... .8
4.3. Financial and Tax Definitions. ........................................... .8
4.3.1. “Adjusted Capital Account Deficit” ................................... .8
4.3.2. “Book Depreciation” ............................................... .9
4.3.3. “CompanyMinimumGain” ......................................... .9
4.3.4. “Member Nonrecourse Debt” ........................................ .9
4.3.5. “MemberNonrecourseDebtMinimumGain” ........................... .9
4.3.6. “Member Nonrecourse Deductions” ................................... .9
4.3.7. “Nonrecourse Deductions” .......................................... .9
4.3.8. “Nonrecourse Liability” ............................................ .9
4.4. Special Allocations. .................................................... 9
4.4.1. CompanyMinimumGainChargeback. ................................ .9
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4.4.2. Member Nonrecourse Debt Minimum Gain Chargeback. ..
4.4.3. Qualified Income Offset. ............................
4.5. Allocation of Nonrecourse Deductions. ....................
4.6. Allocation of Capital Event Profits. .......................
4.7. Allocation of Capital Event Losses. .......................
4.8. Unrealized Appreciation or Depreciation of Distributed Property
4.9. Allocations re: Contributed Property. ......................
4.10. Allocations re: Transferred Interests. .....................
4.11. Adjustment of Fair Market Value. .......................
4.12. Members’ Intent re: Allocations. .........................
4.13. Distributions of Cash. ................................. 4.14. Distribution of Cash Resulting From Capital Event. .........
4.15. Valuation of Non-cash Distributions. .....................
4.16. Distributions in Liquidation. ............................
ARTICLE 5: MANAGEMENT .................. 5.1. Management by the Members. ...........
5.2. Company Officers. ....................
5.3. Limitation of Authority. ................
5.4. Other Business of Managers and Officers. ..
5.5. Compensation of Managers and Officers. ..
5.6. Title to Assets. .......................
5.7. Deposit Accounts. .....................
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ARTICLE 6: ACCOUNTS AND ACCOUNTING ... ......
6.1. BooksofAccount. .................... ......
6.2. Fiscal Matters. ........................ ......
6.3. Records. ............................ ......
6.4. Financial Statements. .................. ......
6.5. Tax Information. ...................... ......
6.6. Tax Matters Member. .................. ......
6.7. Tax Matters Member Authority. .......... ......
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ARTICLE 8: TRANSFERS OF MEMBERSHIP INTERESTS . . . . . . . . . . . . . . . . . . . . . . .20
8.1. Withdrawal of Members. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
ARTICLE 7: MEMBERSHIP MEETINGS, VOTING AND INDEMNITY
7.1. Membership Classes and Voting. ..........................
7.2. Record Date. ..........................................
7.3. Membership Certificates. ................................
7.4. Meetings of Members. ..................................
7.5. Adjoumment of Meetings. ...............................
7.6. Validity of Actions at Meetings. ...........................
7.7. Proxies ...............................................
7.8. Meeting Participation by Telephone. .......................
7.9. Actions Taken by Written Consent. ........................
7.10. No Authority of Members as Agents of Company. ...........
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8.2. Transfer of Membership Interests. ....................................... .20
8.3. Admission of Transferees as Members. ................................... .21
8.4. Rights and Obligations upon Substitution of Members. ....................... .22
8.5. Compliance with Securities Laws. ....................................... .22
8.6. Repurchase of Membership Interests, ..................................... ,22
ARTICLE 9: DISSOLUTION AND WINDING UP ................................ .23
9.1. Events Causing Dissolution. ............................................ .23
9.2. Dissolution and Winding Up. ........................................... .23
9.3. Rights and Liabilities of Members upon Dissolution. ......................... 24
ARTICLElO:CONFIDENTIALITY ........................................... ..2 4
10.1. Confidentiality Agreement. ............................................ 24
10.2. Definition of Confidential Information. .................................. .24
10.3. Equitable Relief Availability. .......................................... .24 10.4. ReformationofTerms. .............................................. ..2 4
ARTICLE 11: INDEMNIFICATION AND ARBITRATION ......................... .24
11.1. Indemnification. .................................................... .24
11.2. Arbitration..........................................................2 5
ARTICLE 12: [LEFT BLANK INTENTIONALLY] . . . . . . . . . . . . .25
ARTICLE 13: GENERAL PROVISIONS ...
13.1. Entire Agreement and Amendment.
13.2. Counterparts. ..................
13.3. Governing Law. ...............
13.4. Binding Agreement. ............
13.5. Interpretation of Terms Used. .....
13.6. Additional Actions. .............
13.7. Other Activities of Members. .....
13.8. No Agency Created. ............
13.9. Capacities of Parties. ...........
13.10. Interpretation of Headings. ......
13.11. TimeisofEssence.. ........... 13.12. RightsofThirdParties.. ........
EXHIBITS:
Articles of Organization ..............
Certificate of Amendment ............
Schedule of Members ................
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.............................. Exhibit A
........................... ..ExhibitA 1
.............................. Exhibit B
iv
MULVANEY FINANCIAL, LLC
A California Limited Liability Company
AMENDED AND RESTATED
OPERATING AGREEMENT
RECITALS
THIS AMENDED and RESTATED OPERATING AGREEMENT (“Agreement”) is entered into
as ofNovember 1,1999, by James F. Mulvaney and David M. Mulvaney, which parties are variously
referred to herein individually as a Member or Jnitial Member and collectively as the Members or Initial
Members ), as well as any other persons who may hereafter be accepted as members (whose names shall
be added to the schedule ofMembers attached hereto as Exhibit 1), in accordance with the provisions
hereof on the terms and conditions hereinafter set forth.
WHEREAS, the Members have formed a limited liability company (the “Company”) under the Beverly-Killea Limited Liability Company Act. The Articles of Grganization of the Company, dated
January 19, 1998, and tiled with the California Secretary of State on January 20,1998, as File Number
101998020125, andthe Amendmentthereto representedby aCertificateofAmendmentdatedAprill4,
1999, and filed with the Secretary of State on October 4,1999, as File No. (the new Secretary of State
file number for the Company) 199802010125, are hereby ratified and approved by the Members; and,
WHEREAS, an Operating Agreement dated October 1, 1996 (sic) was made and entered into in
or about January 1998, by the then-existing Members (James F. Mulvaney, David M. Mulvaney, and
Brian A. Mulvaney), which Operating Agreement was subsequently amended by that First Amendment
to Operating Agreement dated April 14, 1999;
WHEREAS, Brian A. Mulvaney has transferred his interest in the Company to David M.
Mulvaney, and James F. Mulvaney and David M. Mulvaney are now the only Members of the
Company, and shall be deemed the Initial Members where referenced in this Agreement;
WHEREAS, the Members intend that this Agreement consolidate, amend, restate, and replace in
their entirety the original Operating Agreement and the First Amendment thereof.
WHEREAS, it is the intention of the parties hereto to admit additional members to the Company
for the purpose of acquiring additional capital for the Company; and,
WHEREAS, the Members enter into this Agreement to provide for the governance ofthe Company
and the conduct of its business, and to specify their relative rights and obligations;
NOW THEREFORE, the Members agree as follows:
ARTICLE 1: DEFINITIONS
Capitalized terms used in this Agreement have the meanings specified in this Article or elsewhere
in this Agreement and when not so defined shall have the meanings set forth in California Corporations
Code section 1700 1.
1.1. “Act” means the Beverly-Killea Limited Liability Company Act (California Corporations
Code § 5 !7000- !7705), including amendments from time to time.
1.2. “Adjusted Capital Contribution” is defined in Section 4.6.1
1.3. “Adjusted Capital Account Deficit” is defined in Section 4.3.1.
1.4. “Affiliate” of a Member means 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, owner ship of voting securities, by contract, or otherwise.
1.5. “Articles of Organization” is defined in Corporations Code section 1700!(b).
1.6. “Agreement” means this operating agreement, as originally executed and as amended from
time to time.
1.7. “Assignee” means a person who has acquiredahlember’s Economic Interest in the Company,
by way of a Transfer in accordance with the terms of this Agreement, but who has not become a
Member.
1.8. “Assigning Member” means a Member who by means of a Transfer has transferred an
Economic Interest in the Company to an Assignee.
1.9. “Available Cash” means all net revenues from the Company’s operations, including net
proceeds f?om all sales, refinancings, 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.
1.10. “Book Depreciation” is defined in Section 4.3.2.
1.11. “Capital Account” means, with respect to any Member, the account reflecting the capital interest of the Member in the Company, consisting of the Member’s initial Capital Contribution
maintained and adjusted in accordance with Section 3.3.
1.12. “Capital Contribution” means, with respect to any Member, the amount of the money and
the Fair Market Value bf any property (other than money) contributed to the Company (net ofliabilities
secured by such contributed property that the Company is considered to assume or take “subject to”
under IRC section 752) in consideration of a Percentage Interest held by such Member. A Capital
Contribution shall not be deemed a loan.
2
1.13. “Capital Event” means a sale or disposition of any of the Company’s capital assets, the receipt of insurance and other proceeds derived f?om the involuntary conversion of Company property,
the receipt of proceeds horn a refinancing of Company property, or a similar event with respect to
Company property or assets.
1.14. “Code” or “IRC” means the Internal Revenue Code of 1986, as amended, and any
successor provision.
1.15. “Company” means the company named in Section 2.2 of this Agreement.
1.16. “Company Minimum Gain” is defined in Section 4.3.3.
1.17. “Confidential Information” is defined in Section 10.2,
1.18. “Corporations Code” or “Corp C” means the California Corporations Code.
1.19. “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 of the
Company.
1.20. “Encumber” means the act of creating or purporting to create an Encumbrance, whether
or not perfected under applicable law.
1.21. “Encumbrance” means, with respect to any Membership Interest, or any element thereof,
a mortgage, pledge, security interest, lien, proxy coupled with an interest (other than aa contemplated
in this Agreement), option, or preferential right to purchase.
1.22. “Fair Market Value” means, with respect to any item of property of the Company, the
item’s adjusted basis for federal income tax purposes, except as follows:
1.22.1. The Fair Market Value of any property contributed by a Member to the Company shall
be the value of such property, as mutually agreed by the contributing Member and the Company;
1.22.2. The Fair Market Value of any item of Company property distributed to any Member
shall be the value of such item of property on the date of distribution as mutually agreed by the
distributee Member and the Company;
1.22.3. The Fair Market Value of Company property shall be subject to the adjustments
specified in Section 4.11; and
1.22.4. The Fair Market Value for purposes of Section 8.8 shall be as determined in that
section.
1.23. “Initial Members” means those Persons whose names are set forth in the first sentence of
this Agreement. A reference to an “Initial Member” means any of the Initial Members.
3
1.24. “Involuntary Transfer” means, with respect to any Membership Interest, or any element
thereof, any Transfer or Encumbrance, whether by operation of law, pursuant to court order, foreclosure
ofa security interest, execution of ajudgment or other legal process, or otherwise, including a purported
transfer to or from a trustee in bankruptcy, receiver, or assignee for the benefit of creditors.
1.25. “Losses” are defined in Section 4.2.
1.26. “Majority of Members” means a Member or Members whose Percentage Interests
represent more than 50 percent of the Percentage Interests of all the Members.
1.27. “Manager” or “Managers” means the Person(s) named as such in Article 2 or the Persons
who from time to time succeed any Person as a Manager and who, in either case, are serving at the
relevant time as a Manager.
1.28. “Member” means an Initial Member or a Person who otherwise acquires a Membership
Interest, as permitted under this Agreement, and who remains a Member.
1.29. “Member Nonrecourse Debt” is defined in Section 4.3.6.
1.30. “Member Nonrecourse Debt Minimum Gain” is detined in Section 4.3.5.
1.31. “Member Nonrecourse Deductions” is defined in Section 4.3.6.
1.32. “Membership Interest” means a Member’s rights in the Company, collectively, including
the Member’s Economic Interest, any right to Vote or participate in management, and any right to
information concerning the business and affairs of the Company.
1.33. “Nonrecourse Deductions” is defined in Section 4.3.7.
1.34. “Nonrecourse Liability” is defined in Section 4.3.8.
1.35. “Notice” means a written notice required or permitted under this Agreement. A notice shall
be deemed given or sent when deposited, as certified mail or for overnight delivery, post age and fees
prepaid, in the United States mails; when delivered to Federal Express, United Parcel Service, DHL
Worldwide Express, or Airborne Express, for overnight delivery, charges prepaid or charged to the
sender’s account; when personally delivered to the recipient; when transmitted by electronic means, and
such transmission is electronically confirmed as having been successfully transmitted; or when
delivered to the home or office of a recipient in the care of a person whom the sender has reason to
believe will promptly communicate the notice to the recipient.
1.36. “Percent of the Members” means the specified total of Percentage Interests of all the
Members.
1.37. “Percentage Interest” of a Member is that Member’s percentage share of the Profits and
Losses of the Company. The Percentage Interest of each Member shall be equal to a decimal fraction,
expressed as a percentage, equal to the number of Units of Membership Interest owned by that Member
divided by the total number of Units of Membership Interest owned by all Members. The Percentage
4
Interest of each Member shall be listed on Exhibit B, which shall be amended from time to time to
reflect changes in the ownership of Membership Interests.
1.38. “Person” means an individual, partnership, limited partnership, trust, estate, association,
corporation, limited liability company, or other entity, whether domestic or foreign.
1.39. “Profits” and “Losses” are defined in Section 4.2.
1.40. “Property” means that real property acquired by the Company pursuant to Section 2.5.
1.41. “Proxy” has the meaning set forth in the first paragraph of Cot-p C 4 17001 (ai). A Proxy may
not be transmitted orally.
1.42. “Regulations” or “Reg” means the income tax regulations promulgated by the United
States Department of the Treasury and published in the Federal Register for the purpose of interpreting
and applying the provisions of the Code, as such Regulations may be amended 6om time to time,
including corresponding provisions of applicable successor regulations.
1.43. “Reserves” means the aggregate of reserve accounts that the Manager, in the Manager’s sole
discretion, deems reasonably necessary to meet accrued or contingent liabilities of the Company,
reasonably anticipated operating expenses, and working capital requirements.
1.44. “Successor in Interest” means an Assignee, a successor ofa Person by merger or otherwise
by operation of law, or a transferee of all or substantially all of the business or assets of a Person.
1.45. “Tax Item” means each item of income, gain, loss, deduction, or credit, or item thereof, of
the Company.
1.46. “Tax Matters Member” means such Person as may be designated under Section 6.6.
1.47. “Transfer” means, with respect to a Membership Interest or any element of a Membership
Interest, any sale, assignment, gift, Involuntary Transfer, Encumbrance, or other disposition of such a
Membership Interest or any element of such Membership Interest, directly or indirectly, other than an
Encumbrance that is expressly permitted under this Agreement.
1.48. “Triggering Event” is defined in Section 8.4.
1.49. “Units of Membership Interest” or “Unit” means the basic unit of measure of a
Membership Interest in the Company. All ownership of Membership Interests in the Company shall
be expressed as a number of Units.
1.50. “Vote” means a written consent or approval, a ballot cast at a meeting, or a voice vote.
1.51. “Voting Ikerest” 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. A Member’s Voting Interest shall
be directly proportional to that Member’s Percentage Interest.
5
ARTICLE 2: ARTICLES OF ORGANIZATION
2.1. Filing of Articles. The Articles of Organization were filed with the California Secretary of
State on January 20, 1998, File Number 101998020125. A copy of the Articles of Organization is
attached to this Agreement as Exhibit A. A Certificate of Amendment was tiled with the Secretary of
State on October 4,1999, and the Secretary of State assigned a new “tile number” to the Company (File
No. 199802010125); a copy of the Certificate is attached hereto as Exhibit Al.
2.2. Name of the Company. The name of the Company is “Mulvaney Financial, LLC.”
2.3. Principle Executive Office. The principal executive office ofthe Company shall be at 401
West A Street, Seventeenth Floor, San Diego, California 92101 or such other place or places as may
be determined by the Manager from time to time.
2.4. Initial Agent for Service of Process. The initial agent for service ofprocess on the Company
shall be James F. Mulvaney, 401 West A Street, Seventeenth Floor, San Diego, California 92101. The
Manager may from time to time change the Company’s agent for service of process.
2.5. Purposes. The Company has been formed for the purposes of acquiring real property (the
“Property”), developing such property, constructing and/or modifying improvements thereon, operating
and leasing the Property, holding the Property for long-term investment and capital appreciation, and
to do any other acts necessary or appropriate to effectuate the foregoing purposes.
2.6. Organlxatlonal Intent. The Members intend the Company to be a limited liability company
under the Act. Neither the Manager nor any Member shall take any action inconsistent with the express
intent of the parties to this Agreement.
2.7. Term. The term of existence of the Company shall commence on the effective date of filing
ofArticles of Organization with the California Secretary of State, and shall continue until December 3 1,
2050, unless sooner terminated by the provisions of this Agreement or as provided by law.
2.8. Names and Addresses of Members. The names and addresses of the Jnitial Members are
as set forth in Exhibit B. Such exhibit shall be amended from time to time to reflect changes in
membership.
2.9. Name and Address of Manager. The Company shall be managed by the Members. Each
Member is a Manager of the Company.
ARTICLE 3: CAPITAL AND CAPITAL CONTRIBUTIONS
3.1. Initial Capital Contributions.
3.1.1. Initial Member Capital Contributions. Each Initial Member shall contribute to the
capital of the Company as the Member’s initial Capital Contribution the money and other property
specified in Exhibit B. The names, addresses, capital contributions, number of Units of Membership
6
,. i
Interest and the Percentage Interest of each of the Members shall be set forth in Exhibit B. James F.
Mulvaney has made the capital contribution on behalf of David M. Mulvaney.
3.1.2. Sale of Additional Membership Interests. The Company has no present plans to sell
any additional Membership Interests, and may do so only upon the approval of a majority in Interests
of the Members.
3.2. Additional Capital Contributions. No additional capital contributions may be required or
made voluntarily except upon amendment of this Agreement to provide for same.
3.3. Capital Accounts. An individual Capital Account for each Member shall be maintained and
adjusted in accordance with the following provisions:
3.3.1. A Member’s Capital Account shall be increased by that Member’s Capital Contributions,
that Member’s share ofProfits, and any items in the nature of income or gain that are specially allocated
to that Member pursuant to Article 4.
3.3.2. AMember’s Capital Account shall be increasedby the amount ofany Company liabilities
assumed by that Member subject to and in accordance with the provisions ofReg 5 1.704- 1@)(2)(iv)(c).
3.3.3. A Member’s Capital Account shall be decreased by (1) the amount ofcash distributed to
that Member; (2) the Fair Market Value of any property ofthe Company so distributed, net of liabilities
secured by such distributed property that the distributee Member is considered to assume or to be
subject to under IRC section 752; and (3) the amount of any items in the nature of expenses or losses that are specially allocated to that Member pursuant to Article 4.
3.3.4. AMember’s Capital Account shall bereducedbytheMember’sshareofanyexpenditures
ofthe Company described in IX section 705(a)(2)(B) or which are treated as IRC section 705(a)(2)@)
expenditures pursuant to Reg section 1.704-1@)(2)(iv)(I) (including syndication expenses and losses
nondeductible under IRC sections 267(a)(l) or 707(b))
3.3.5. If any Economic Interest (or portion thereof) is transferred, the transferee of such
Economic Interest or portion shall succeed to the transferor’s Capital Account attributable to such
interest or portion.
3.3.6. The principal amount of a promissory note that is not readily traded on an established
securities market and that is contributed to the Company by the maker of the note shall not be included
in the Capital Account of any Person until the Company makes a taxable disposition of the note or until
(and to the extent) principal payments are made on the note, all in accordance with Reg section
1.704-l(b)(2)(iv)(d)(2)
3.3.7. Each Member’s Capital Account shall be increased or decreased as necessary to reflect
a revaluation of the Company’s property assets in accordance with the requirements of Reg sections
1.704-l(b)(2)(iv)(f) and 1.704-1@)(2)(iv)(g), including the special rules under Reg section
1.701-l(b)(4), as applicable. The provisions of this Agreement respecting the maintenance of Capital
Accounts are intended to comply with Reg section 1.704-l(b) and shall be interpreted and applied in
a manner consistent with those Regulations.
7
3.4. No Withdrawals of Capital. A Member shall not be entitled to withdraw any part of the
Member’s Capital Contribution or to receive any distributions, whether ofmoney or property, from the
Company except as provided in this Agreement.
3.5. No Interest Paid. No interest shall be paid on Capital Contributions or on the balance of a
Member’s Capital Account.
3.6. No Liability of Members for Company Obligations. A Member shall not be bound by, or
be personally liable for, the expenses, liabilities, or obligations of the Company except as otherwise provided in the Act or in this Agreement.
3.7. No Priority Among Members. Except as otherwise expressly provided in this Agreement,
no Member shall have priority over any other Member with respect to the return of a Capital
Contribution or distributions or allocations ofincome, gain, losses, deductions, credits, or items thereof.
ARTICLE 4: ALLOCATIONS AND DISTRIBUTIONS
4.1. Allocation of Profits and Losses. The Profits and Losses of the Company and all items of
Company income, gain, loss, deduction, or credit shall be allocated, for Company book purposes and
for tax purposes, to a Member in accordance with the Member’s Percentage Interest. The Percentage
Interests of the Members shall be as set forth in Exhibit B.
4.2. Definition of Profits and Losses. As used in this Agreement, “Profits and Losses” means,
for each fiscal year or other period specified in this Agreement, an amount equal to the Company’s
taxable income or loss for such year or period, determined in accordance with IRC section 703(a),
including all Tax Items required to be stated separately pursuant to IRC section 703(a)(l), with the
following adjustments:
4.2.1. Any income of the Company that is exempt from federal income tax and not otherwise
taken into account in computing Profits or Losses shall be added to such taxable income or loss;
4.2.2. Any expenditures of the Company described in IRC section 705(a)(2)(B) or treated as
IRC section 705(a)(2)(B) expenditures pursuant to Reg section 1.704-l(b)(2)(iv)(I) and not otherwise
taken into account in computing Profits or Losses shall be subtracted f?om such taxable income or shall
increase such loss; and,
4.2.3. Notwithstanding the foregoing provisions of this Section 4.2, any items of income, gain,
loss, or deduction that are specially allocated shall not be taken into account in computing Profits or
Losses under Section 4.1.
4.3. Financial aid Tax Defmitlons. The following definitions shall apply with respect to this Article 4.
4.3.1. “Adjusted Capital Account Deficit” means, with respect to any Member, the deficit
balance, if any, in such Member’s Capita1 Account as of the end of the relevant fiscal year of the
8
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Company, after such Member’s Capital Account has been adjusted as follows: (1) the Member’s Capital
Account shall be increased by the amount of such Member’s share of Company Minimum Gain and
Member Nonrecourse Debt Minimum Gain; and (2) the Member’s Capital Account shall be decreased
by the amount of the items described in Reg sections 1.704-l(b)(2)(ii)(d)(4), (5), and (6).
This definition of Adjusted Capital Account Deficit is intended to comply with the provisions of
Reg section 1.704-l(b)(2)(ii)(d) and shall be interpreted consistently with that Regulation.
4.3.2. “Book Depreciation” means, with respect to any item of Company property for a given
fiscal year, a percentage of depreciation or other cost recovery deduction allowable for federal income
tax purposes for such item during that fiscal year equal to the result (expressed as a percentage) obtained
by dividing (I) the Fair Market Value ofthat item at the beginning of the fiscal year (or the acquisition
date during the fiscal year), by (2) the adjusted tax basis of the item at the beginning of the fiscal year
(or the acquisition date during the fiscal year). If the adjusted tax basis of an item is zero, the Managers
may determine Book Depreciation, provided that they do so in a reasonable and consistent manner.
4.3.3. “Company Minimum Gain” has the meaning set forth in Reg section 1.704-2(d)(l)
4.3.4. “Member Nonrecourse Debt” is defined in Reg section 1.704-2(b)(4)
4.3.5. “Member Nonrecourse Debt Minimum Gain” for a fiscal year of the Company means
the net increase in Minimum Gain attributable to Member Nonrecourse Debt, determined as set forth
in Reg section 1.704-2(I)(2)
4.3.6. “Member Nonrecourse Deductions” has the meaning set forth in Reg section
1.704-2(I)(2). For any fiscalyearoftheCompany,theamount ofMemberNonrecourseDeductions with
respect to a Member Nonrecourse Debt equals the net increase during that fiscal year in Member
Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt during that fiscal
year, reduced (but not below zero) by the amount of any distributions during such year to the Member
bearing the economic risk of loss for such Member Nonrecourse Debt if such distributions are both from
the proceeds of such Member Nonrecourse Debt and are allocable to an increase in Member
Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt, all as determined
according to the provisions of Reg section 1.704-2(I)(2). In determining Member Nonrecourse
Deductions, the ordering rules of Reg section I .704-2(j) shall be followed.
4.3.7. “Nonrecourse Deductions” has the meaning set forth in Reg section 1.704-2(c). The
amount of Nonrecourse Deductions for a Company fiscal year equals the net increase in the amount of
Company Minimum Gain during that fiscal year, reduced (but not below zero) by the aggregate amount
of any distributions during that fiscal year of proceeds of a Nonrecourse Liability that are allocable to
an increase in Company Minimum Gain.
4.3.8. “Nonrecourse Liability” is defined in Reg section 1.752-1(a)(2)
4.4. Special Allocations. The following special allocations shall be made in the following order:
4.4.1. Company Minimum Gain Chargeback. If there is a net decrease in Company
Miium Gain during a fiscal year, each Member shall be allocated, before. any other allocation under
9
this Section, items of Company income and gain for such fiscal year equal to such Member’s share of
the net decrease in Company Minimum Gain as determined in accordance with Reg section
1.704-2(g)(2)
4.4.2. Member Nonrecourse Debt Minimum Gain Chargeback. If there is a net decrease in
Member Nonrecourse Debt Minimum Gain during a fiscal year, any Member with a share of the
Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt as of the
beginning of such fiscal year shall be allocated items of Company income and gain for such year (and,
if necessary, subsequent years) equal to that Member’s share of the net decrease in Member Nonrecourse Debt Minimum Gain. A Member’s share of net decrease in Member Nonrecourse Debt
Minimum Gain shall be determined pursuant to Reg section 1.704-2(g)(2). A Member shall not be
subject to the foregoing chargeback to the extent permitted under Reg section 1.704-2(I)(4).
4.4.3. Qualified Income Offset. If any Member unexpectedly receives an adjustment,
allocation, or distribution described in Reg sections 1.704-l(b)(2)(ii)(d)(4), (5), or (6), such Member
shall be allocated items of Company income and gain (consisting of a pro rata portion of each item of
Company income, including gross income and gain for such fiscal year) in an amount and manner
sufficient to eliminate the Adjusted Capital Account Deficit created by such adjustment, allocation, or distribution.
4.5. Allocation of Nonrecourse Deductions. MemberNonrecourse Deductions for any fiscal year
of the Company shall be allocated to the Members in the same proportion as Profits are allocated under
Section 4.1, provided that any Member Nonrecourse Deductions for any fiscal year or other period shall
be allocated to the Member who bears (or is deemed to bear) the economic risk of loss with respect to
the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in
accordance with Reg section 1.704-2(I)(2)
4.6. Allocation of Capital Event Profits. In any fiscal year ofthe Company, Profits in excess of
Losses of the Company resulting from a Capital Event in that Fiscal Year shall be allocated to the
Members in the following order:
4.6.1. To Members whose Adjusted Capital Contributions are in excess of their Capital
Accounts, in proportion to those excesses, until all of those excesses have been eliminated. “Adjusted
Capital Contributions” meana, with respect to each Member, the excess of such Member’s contribution
to the capital of the Company over all prior distributions to the Member that have resulted from Capital
Events.
4.6.2. Among the Members in proportion to their Allocation Percentages.
4.7. Allocation of Capital Event Losses. In any fiscal year of the Company, Losses in excess of
Profits of the Company, resulting from a Capital Event in that fiscal year, shall be allocated to the
Members with positive Capital Accounts, in proportion to their positive Capital Account balances, until
no Member has a positive Capital Account. For this purpose, Capital Accounts shall be reduced by the
adjustments set forth in Reg sections 1.704-1@)(2)(ii)(d)(4), (5), and (6).
4.8. Unrealized Appreciation or Depreciation of Distributed Property. Any unrealized
appreciation or unreal&d depreciation in the values of Company property distributed in kind to
10
Members shall be deemed to be Profits or Losses realized by the Company immediately prior to the
distribution of the property and such Profits or Losses shall be allocated to the Capital Accounts in the
same proportions as Profits are allocated under Section 4.1. Any property so distributed shall be treated
as a distribution to the Members to the extent of the Fair Market Value of the property, less the amount
of any liability secured by and related to the property. Nothing contained in this Agreement is intended
to treat or cause such distributions to be treated as sales for value. For the purposes of this Section 4.8,
“unrealized appreciation” or “unrealized depreciation” shall mean the difference between the Fair
Market Value of such property and the Company’s basis for such property.
4.9. Allocations re: Contributed Property. Any item of income, gain, loss, or deduction with
respect to any property (other than cash) that has been contributed by a Member to the capital of the
Company, or that has been revalued pursuant to the provisions of Section 3.3.7, and that is required or
permitted to be allocated to such Member for income tax purposes under IRC section 704(c) in order
to take into account the variation between the tax basis of such property and its Fair Market Value at
the time of its contribution, shall be allocated solely for income tax purposes in the manner required or
permitted under IRC section 704(c) using the “traditional” method described in Reg section 1.704-3(b), except that any other method allowable under applicable Regulations may be used for any contribution
of property with respect to which there is agreement among the contributing Member and a Majority
of Members (excluding the contributing Member).
4.10. Allocations re: Transferred Interests. hi the case of a Transfer of an Economic Interest
during any fiscal year of the Company, the Assigning Member and Assignee shall each be allocated
Profits or Losses based on the number of days each held the Economic Interest during that fiscal year.
If the Assigning Member and Assignee agree to a different proration and advise the Manager of the
agreed proration before the date ofthe Transfer, Profits or Losses from a Capital Event during that fiscal
year shall be allocated to the holder of the Interest on the day such Capital Event occurred. If an
Assignee makes a subsequent Assignment, said Assignee shall be considered an “Assigning Member”
with respect to the subsequent Assignee for purposes of the aforesaid allocations.
4.11. Adjustment of Fair Market Value.
4.11.1. The Fair Market Value of all Company property shall be adjusted as of the following
times: (1) the acquisition of an interest or additional interest in the Company by any new or existing
Member in exchange for more than a de minimis Capital Contribution; (2) the distribution of money
or other property (other than a de minimis amount) by the Company to a Member as consideration for
an Economic Interest in the Company, and (3) the liquidation of the Company within the meaning of Reg section 1.704-1@)(2)(ii)(g); provided, however, that adjustments under clauses (1) and (2) above
shall bemade only in the event ofarevaluationofCompanypropertyunderSection 3.3.8 inaccordance
with Reg section 1.704-l(b)(2)(iv)(f)
4.11.2. The Fair Market Value of Company property shall be in creased or decreased to reflect
adjustments to the adjpsted tax basis of such property pursuant to IRC section 732, lRC section 733,
or IRC section 743, subject to the limitations imposed by IRC section 755 and Reg section
1.704-l(b)(2)(iv)(m); and
4.11.3. If the Fair Market Value of an item of property has been determined or adjusted
pursuant to Section 1.22 or Subsections 4.11.1 or 4.11.2 of this Section 4.11, such Fair Market Value
11
shall be adjusted by the Book Depreciation, if any, taken into account with respect to such property for
purposes of computing Profits and Losses.
4.12. Members’ Intent re: Allocations. It is the intent of the Members that each Member’s
allocated share of Company Tax Items be determined in accordance with this Agreement to the fullest
extent permitted by IRC sections 704(b) and 704(c). Notwithstanding anything to the contrary contained
in this Agreement, if the Company is advised that, as a result of the adoption of new or amended
regulations pursuant to IRC sections 704(b) and 704(c), or the issuance of authorized interpretations,
the allocations provided in this Agreement are unlikely to be respected for federal income tax purposes,
the Manager is hereby granted the power to amend the allocation provisions of this Agreement, on
advice of accountants and legal counsel, to the minimum extent necessary to cause such allocation
provisions to be respected for federal income tax purposes.
4.13. Distributions of Cash. All Available Cash, other than revenues or proceeds from a Capital
Event or the dissolution ofthe Company, shall be distributed among the Members in proportion to their
respective Adjusted Capital Account Balances. The parties intend that Available Cash shall be
distributed as soon as practicable following the Managers’ determination that such cash is available for
distribution. The parties acknowledge that no assurances can be given with respect to when or whether
said cash will be available for distributions to the Members.
4.14. Distribution of Cash Resulting From Capital Event. All Available Cash resulting &om
a Capital Event (as distinguished from normal business operations or the dissolution of the Company)
shall be distributed to the Members in proportion to their respective Adjusted Capital Account Balances
as soon as practicable following the Managers’ determination that such cash is available for distribution.
4.15. Valuation of Non-cash Distributions. If the proceeds from a sale or other disposition of
an item of Company property consist of property other than cash, the value of that property shall be as
determined by the Managers. If such noncash proceeds are subsequently reduced to cash, such cash
shall be taken into account by the Managers in determining Available Cash and the Managers shall
determine whether such cash has resulted from operations or @om a Capital Event.
4.16. Distributions in Liquidation. Notwithstanding any other provisions of this Agreement to
the contrary, when there is a distribution in liquidation of the Company, or when any Member’s interest is liquidated, all items of income and loss first shall be allocated to the Members’ Capital Accounts
under this Article 4, and other credits and deductions to the Members’ Capital Accounts shall be made
before the final distribution is made. The final distribution to the Members shall be made as provided
in Section 9.2.4 of this Agreement. The provisions of this Section 4.16 and Section 9.2.4 shall be
construed in accordance with the requirements of Reg section 1.704-l(b)(2)(ii)(b)(2)
ARTICLE 5: MANAGEMENT
5.1. Managemedt by tbe Members. The business of the Company shall be managed by all the
Members, who shall serve as Managers. A Member shall be a Manager during, and only during, the
time the Member is a Member of the Company. A Manager may be removed only upon the execution
and filing of a Certificate of Amendment of the Articles of Organization of the Company in conformity
with Corp C section 17054 to provide that the Company is to be managed by managers, rather than by
12
all ofthe Members. All decisions concerning the management ofthe Company’s business shall be made
by the vote of a majority of the voting power of the Managers. Each Manager shall have the same
voting power as the Voting Interest of the Membership Interest which he or she owns or represents.
In the event that a membership is owned by more than one person or by a person not a natural person,
then such owners(s) shall designate a natural person to serve a the Manager representing them or it.
Actions of the Managers shall be taken at meetings or as otherwise provided herein. Managers may
participate in the meeting through the use of a conference telephone or similar communications
equipment, provided that all Managers participating in the meeting can hear one another. No regular
meetings of the Managers need be held. The President or any two Managers may call a meeting of the
Managers by giving Notice of the time and place of the meeting at least 48 hours prior to the time of
the holding of the meeting. The Notice need not specify the purpose of the meeting, nor the location
if the meeting is to be held at the principal executive office of the Company. A majority of voting
power of Managers shall constitute a quorum for the transaction of business at any meeting of the
Managers. The transactions of the Managers at any meeting, however called or noticed, or wherever
held, shall be as valid as though transacted at a meeting duly held after call and notice if a quorum is
present and if, either before or after the meeting, each Manager not present signs a written waiver of
notice or a consent to the holding of such meeting or an approval of the minutes of such meeting. Any
action required or permitted to be taken by the Managers under this Agreement may be taken without
a meeting if a majority of the Managers individually or collectively consent in writing to such action.
Each Member, by execution of this Amendment, irrevocably constitutes and appoints the Managers
or any Manager acting alone (the Manager[s] existing at the time any of the acts below are taken), as
such Member’s true and lawful attorney-in-fact and agent, with full power and authority in such
Member’s name, place, and stead, to execute, acknowledge, and deliver, and to file and record in any
appropriate public office: 5.1 .O. 1. Any certificate or other instrument that may be necessary, desirable,
or appropriate to qualify a Company as a limited liability company or to transact business as such in
any jurisdiction in which the Company conducts business; 5.1.0.2. any certificate or amendment to the
Company’s Articles of Organization, or to any certificate or other instrument that may be necessary,
desirable, or appropriate to reflect an amendment approved by the Members in accordance with the
provisions of this Agreement; 5.1.0.3. any certificates or instruments that may be necessary, desirable,
or appropriate to reflect dissolution in winding up of the Company; and 5.1.0.4. any certificates
necessary to comply with the provisions of this Agreement. This power of attorney will be deemed to
be coupled with an interest and will survive the Transfer of the Member’s Economic Interest. Notwithstanding the existence of this power of attorney, each Member agrees to join in the execution,
acknowledgment and delivery of the instruments referred to above if requested to do so by the
Managers. This power of attorney is a limited power of attorney and does not authorize any Manager
to act on behalf of a Member except as described herein.
Each Manager, acting alone, is authorized to perform any and all such acts, including execution
and delivery of any and all documents and certificates necessary to carry out the purposes of the Company regarding the acquisition, holding, and disposition of real property, including but not liited
to, agreements to purchase, sell, improve, or encumber real property for the benefit of Company, and
all documents necessky to accomplish the same. This includes, but is not limited to, deeds of
conveyance and deeds of trust.
5.2. Company OUken. The principal officers of the Company shall be a president, a secretary
and a treasurer/chief financial officer. The Company may also have, at the discretion of the Managers,
13
one or more vice presidents, one or more assistant secretaries, one or more assistant treasurers, and such
other officers as may be appointed by the Managers. Any number of offices may be held by the same
person. The officers of the Company shall be chosen by the Managers and each shall serve at the
pleasure of the Managers, subject to the rights, if any, of an officer under any contract of employment.
The Managers may appoint, and may empower the president to appoint, such other officers as the
business of the Company may require, each of whom shall hold office for such period, have any such
authority and perform such duties as may be provided herein or as the board of directors may from time
to time determine. Subject to the rights, if any, of an officer under any contract of employment, any
officer may be removed, either with or without cause, by the Managers, at any regular or special
meeting of the Managers or by any offrcer upon whom such power of removal may be conferred by the
Managers. Any officer may resign at any time by giving written notice to the Company. Any
resignation shall take effect at the date of the receipt of that notice or at any later time specified in that
notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the
Company under any contract to which the officer is a party. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed for
regular appointments to that office. The initial officers of the Company shall be as follows:
President James F. Mulvaney
Vice President David M. Mulvaney
Treasurer/CFO David M. Mulvaney
Secretary David M. Mulvaney
5.2.1. Duties of President. The President shall be the chief executive officer of the Company
and shall, subject to the control of the Managers, have general supervision, direction, and control of the
business and the officers ofthe Company. He or she shall preside at all meetings of the Managers and
meetings of the Members. He or she shall have such powers and duties as may be prescribed by the
Managers or by this Agreement.
5.2.2. Duties of Vice President. In the absence or disability of the president, the vice
presidents, if any, in order of their rank as fixed by the Managers or, if not ranked, a vice president
designated by the Managers, shall perform all the duties of the chief executive officer, and when so
acting shall have all the powers of, and be subject to all the restrictions upon, the chief executive officer.
The vice presidents shall have such other powers and perform such other duties as from time to time
may be prescribed for them by the Managers or the president.
5.2.3. Duties of Secretary. The secretary shall keep or cause to be kept, at the principal
executive office or such other place as the Managers may direct, a book of minutes of all meetings and
actions of Members, Managers, and committees of Managers, with the time and place of holding,
whether regular or special, and if special, how authorized, the notice given, the names of those present
at meetings, the Member interests present or represented at meetings. The secretary shall keep, or cause to be kept, at the principal executive office, as determined by resolution of the Members, a member
register showing the names of all Members and their addresses. The secretary shall give, or cause to
be given, notice of all meetings of the Members and the Managers required to be given, and shall have
such other powers and perform such other duties as may be prescribed by the Managers.
14
5.2.4. Duties ofTreasurer/Chief Financial Ofticer. The treasure.r/chieffinanciaI officer shall
keen and maintain, or cause to be kept and maintained, adequate and correct books and records of
accounts of the properties and business transactions of the Company, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, retained earnings and shares. The books of
account shall at all reasonable times be open to inspection by any Member or Manager. The chief
financial officer shall deposit all monies and other valuables in the name and to the credit of the
Company with such depositories as may be designated by the board of directors. He or she shall
disburse the funds of the Company as may be ordered by the Managers, shall render to the president
and Managers, whenever they request it, an account of all of his transactions as chief financial officer
and of the financial condition of the Company, and shall have other powers and perform such other
duties as may be prescribed by the Managers.
5.3. Limitation of Authority. Notwithstanding the foregoing, the officers shall not take any of
the following actions on behalf of the Company unless a Majority of Members has consented to the
taking of such action:
(a) Any act that would make it impossible to carry on the ordinary business of the Company;
(b) Any confession of a judgment against the Company;
(c) The dissolution of the Company;
(d) The disposition of all or a substantial part of the Company’s assets not in the ordinary course
of business;
(e) The incurring of any debt not in the ordinary course of business;
(r) A change in the nature of the principal business of the Company;
(g) The filing of a petition in bankruptcy or the entering into of an arrangement among creditors;
and,
(h) The entering into, on behalf of the Company, ofany transaction constituting a “reorganization”
within the meaning of Corp C $17600.
5.4. Other Business of Managers and Offkers. It is acknowledged that the officers of the
Company have other business interests to which they devote part of their time. The Manager and
officers shall devote such time to the conduct of the business of the Company as necessary to the
effective management of the business of the Company.
5.5. Compensation of Managers and Officers. The Managers and officers shaI1 be entitled to
compensation for their services as determined by the Managers, and to reimbursement for all expenses
reasonably incurred in the performance of their duties.
5.6. Title to Assets. The hesident shall cause all assets of the Company, whether real or personal,
to be held in the name of the Company unless specifically directed by the Managers to do otherwise.
15
5.7. Deposit Accounts. All funds ofthe Company shall be deposited in one or more accounts with
one or more recognized financial institutions in the name of the Company, at such locations as shall be
determined by the Managers. Withdrawal from such accounts shall require the signature of the such
person or persons as the Managers may designate.
ARTICLE 6: ACCOUNTS AND ACCOUNTING
6.1. Books of Account. Complete books of account of the Company’s business, in which each
Company transaction shall be fully and accurately entered, shall be kept at the Company’s principal
executive office and at such other locations as the Managers shall determine horn time to time and shall
be open to inspection and copying on reasonable Notice by any Member or the Member’s authorized
representatives during normal business hours. The costs of such inspection and copying shall be borne
by the Member.
6.2. Fiscal Matters. Financial books and records of the Company shall be kept on the cash
method of accounting, which shall be the method of accounting followed by the Company for federal
income tax purposes. The financial statements of the Company shall be appropriate and adequate for
the Company’s business and for carrying out the provisions of this Agreement. The fiscal year of the
Company shall be January 1 through December 31.
6.3. Records. At all times during the term of existence of the Company, and beyond that term if
the Manager deems it necessary, the Managers shall keep or cause to be kept the books of account
referred to in Section 6.2, together with:
6.3.1. A current list of the fi.dl name and last known business or residence address of each
Member, together with the Capital Contribution and the share in Profits and Losses of each Member;
6.3.2. A current list of the full name and business or residence address of each Manager;
6.3.3. A copy of the Articles of Organization, as amended;
6.3.4. 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;
6.3.5. An original executed copy or counterparts of this Agreement, as amended;
6.3.6. Any powers of attorney under which the Articles of Organization or any amendments to
said articles are executed;
6.3.7. Financial statements of the Company for the six most recent fiscal years; and
6.3.8. The books and Records of the Company as they relate to the Company’s internal affairs
for the current and past four fiscal years.
If the Manager deems that any of the foregoing items shall be kept beyond the term of existence
of the Company, the repository of said items shall be as designated by the Managers.
16
6.4. Financial Statements. At the end of each fiscal year the books of the Company shall be
closed and examined and statements reflecting the financial condition of the Company and its Profits
or Losses shall be prepared, and a compilation report thereon shall be issued by the Company’s certified
public accountants. Copies of the financial statements shall be given to all Members. In addition, all
Members shall receive not less frequently than at the end of each calendar quarter, copies of such
financial statements regarding the previous calendar quarter, as may be prepared in the ordinary course
of business, by the Managers or accountants selected by the Managers. The Managers shall deliver .to
each Member, within 120 days after the end of the fiscal year of the Company, a financia1 statement that
shall include:
6.4.1. A balance sheet and income statement, and a statement of cash flow of the Company as
of the close of the fiscal year;
6.4.2. A statement showing the Capital Account of each Member as of the close of the fiscal
year and the distributions, if any, made to each Member during the fiscal year. Members representing
at least 30 percent of the Members, by number, may request interim balance sheets and income
statements, and may, at their own discretion and expense, obtain an audit of the Company books, by
certified public accountants selected by them; provided, however, that not more than one such audit
shall be made during any fiscal year of the Company.
6.5. Tax Information. Within 90 days after the end of each taxable year of the Company the
Managers shall send to each of the Members all information necessary for the Members to complete
their federal and state income tax or information returns and a copy of the Company’s federal, state, and
local income tax or information returns for such year.
6.6. Tax Matters Member. James F. Mulvaney shall act as Tax Matters Member (“Partner”) of
the Company pursuant to IRC section 623 l(a)(7).
6.7. Tax Matters Member Authority. The Tax Matters Member (“Partner”) is hereby authorized
to do the following:
6.7.1. Keep the Members informed of administrative and judicial proceedings for the
adjustment of Company items (as defined in IRC section 623 l(a)(3)) at the Company level, aa required
under IRC section 6223(g) and the implementing Regulations;
6.7.2. Enter into settlement agreements under IRC section 6224(c)(3) and applicable
Regulations with the Internal Revenue Service or the Secretary of the Treasury (the Secretary) with
respect to any tax audit or judicial review, in which agreement the Tax Matters Member may expressly
state that such agreement shall bind the other Members, except that such settlement agreement shall not
bind any Member who (within the time prescribed under the Code and Regulations) files a statement
with the Secretary providing that the Tax Matters Member shall not have the authority to enter into a settlement agreement on behalf of such Member;
6.7.3. On receipt of a notice of a final Company administrative adjustment, to file a petition for readjustment of the Company items with the Tax Court, the District Court of the United States for the
17
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district in which the Company’s principal place of business is located, or the United States Court of
Federal Claims, all as contemplated under IRC section 6226(a) and applicable Regulations;
6.7.4. File requests for administrative adjustment of Company items on Company tax returns
under IRC section 6227(b) and applicable Regulations; and, to the extent such requests are not allowed
in full, tile a petition for adjustment with the Tax Court, the District Court of the United States for the
district in which the Company’s principal place of business is located, or the United States Court of
Federal Claims, all as contemplated under lRC section 6228(a); and
6.7.5. To take any other action on behalf of the Members or the Company in connection with
any administrative or judicial tax proceeding to the extent permitted by law or regulations, including
retaining tax advisers (at the expense of the Company) to whom the Tax Matters Member may delegate
such rights and duties as deemed necessary and appropriate.
ARTICLE 7: MEMBERSHIP MEETINGS, VOTING AND INDEMNITY
7.1. Membership Classes and Voting. There shall be only one class of membership and no
Member shall have any rights or preferences in addition to or different from those possessed by any
other Member except as specifically provided for in Article 4. Members shall have the right and power
to appoint, remove, and replace Managers and officers of the Company and the right to Voteon all other
matters with respect to which this Agreement or the Act requires or permits such Member action. Each
Member shall Vote in proportion to the Member’s Percentage Interest as of the goveming record date,
determined in accordance with Section 7.2. If a Member has assigned all or part of the Member’s
Economic Interest to a person who has not been admitted as a Member, the Assigning Member shall
Vote in proportion to the Percentage Interest that the Assigning Member would have had, if the
assignment had not been made.
Without limiting the foregoing, all of the following acts shall require the unanimous Vote of the
Members:
7.1.1. decision to continue the business of the Company after any event mentioned in Section
9.1:
7.1.2. The Transfer of a Membership Interest and the admission of the Assignee as a Member
of the Company;
3.
7.1.3. Any amendment of the articles of organization or this Agreement; and
7.1.4. compromise of the obligation of a Member to make a Capital Contribution under Article
7.2. Record Date. The record date for determining the Members entitled to receive Notice of any
meeting, to Vote, to receive any distribution, or to exercise any right in respect of any other lawful
action, shall be the date set by the Managers or by a Majority of Members; provided that such record
date shall not be more than 60, or less than ten calendar days prior to the date of the meeting and not
18
more than 60 calendar days prior to any other action. In the absence of any action setting a record date,
the record date shall be determined in accordance with Corp C section 17104(k).
7.3. Membership Certificates. The Company may, but shall not be required, to issue certificates
evidencing Membership Interests (Membership Interest Certificates) to Members ofthe Company, Once
Membership Interest Certificates have been issued, they shall continue to be issued as necessary to
reflect current Membership Interests held by Members. Membership Interest Certificates shall be in
such form as may be approved by the Managers, shall be manually signed by the Managers, and shall
bear conspicuous legends evidencing the restrictions on Transfer and the purchase rights of the
Company and Members set forth in Article 8. All issuances, reissuances, exchanges, and other
transactions in Membership Interests involving Members shall be recorded in a permanent ledger as part
of the books and records of the Company.
7.4. Meetings of Members. Meetings of the Members may be called at any time by the Managers,
or by Members representing more than 10 percent of the Interests of the Members for the purpose of
addressing any matters on which the Members may Vote. If a meeting of the Members is called by the
Members, Notice of the call shall be delivered to the Managers. Meetings may be held at the principal
executive office of the Company or at such other location as may be designated by the Managers.
Following the call of a meeting, the Managers shall give Notice of the meeting not less than ten, or
more than 60 calendar days prior to the date of the meeting to all Members entitled to Vote at the
meeting. The Notice shall state the place, date, and hour of the meeting and the general nature of
business to be transacted. No other business may be transacted at the meeting. A quorum at any meeting
of Members shall consist of a Majority of Members, represented in person or by Proxy. The Members
present at a duly called or held meeting at which a quorum is present may continue to transact business
until adjournment, nohvithstanding the withdrawal of a sufficient number ofMembers to leave less than
a quorum, if the action taken, other than adjournment, is approved by the requisite Percentage of
Members as specified in this Agreement or the Act. In the case of Membership Interests held jointly
by more than one person, one of the co-owners shall represent the joint owners for purposes of voting,
and such person shall be designated to the Company by a written designation signed by all of the joint
owners of the Membership Interest. Such designation shall remain effective until and unless it is
replaced by another designation signed by all of the joint owners of the Membership Interest. The
jointly held interest may not be voted until and unless such a designation is delivered to the Company.
7.5. Adjournment of Meetings. A meeting of Members at which a quorum is present may be
adjourned to another time or place and any business which might have been transacted at the original
meeting may be transacted at the adjourned meeting. If a quorum is not present at an original meeting,
that meeting may be adjourned by the Vote of a majority ofVoting Interests represented either in person
or by Proxy. Notice of the adjourned meeting need not be given to Members entitled to Notice if the
time and place of the adjourned meeting are announced at the meeting at which the adjournment is
taken, unless (1) the adjournment is for more than 45 days, or (2) after the adjournment, a new record
date is fixed for the adjourned meeting. In the situations described in clauses (1) and (2), Notice of the
adjourned meeting shall be given to each Member of record entitled to Vote at the adjourned meeting.
7.6. Validity of Actions at Meetings. The transactions of any meeting of Members, however called and noticed, and wherever held, shall be as valid as though consummated at a meeting duly held
a&r regular call and notice, if (1) a quorum is present at that meeting, either in person or by Proxy, and
(2) either before or after the meeting, each of the persons entitled to Vote, not present in person or by
19
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Proxy, signs either a written waiver of notice, a consent to the holding of the meeting, or an approval
of the minutes of the meeting. Attendance of a Member at a meeting shall constitute waiver of notice,
unless that Member objects, at the beginning of the meeting, to the transaction of any business on the
ground that the meeting was not lawfully called or convened. Attendance at a meeting is not a waiver
of any right to object to the consideration of matters required to be described in the notice of the meeting and not so included, if the objection is expressly made at the meeting.
7.7. Proxies. At all meetings ofMembers, a Member may Vote in person or by Proxy. Such Proxy
shall be tiled with the Managers before or at the time of the meeting, and may be tiled by facsimile
transmission to the Manager at the principal executive office of the Company or such other address as
may be given by the Manager to the Members for such purposes.
7.8. Meeting Participation by Telephone. Members may participate in a meeting through use
ofconference telephone or similar communications equipment, provided that all Members participating
in such meeting can hear one another. Such participation shall be deemed attendance at the meeting.
7.9. Actions Taken by Written Consent. Any action that may be taken at any meeting of the
Members may be taken without a meeting if a consent in writing, setting forth the action so taken, is
signed by Members having not less than the minimum number of Votes that would be necessary to
authorize or take that action at a meeting at which all Members entitled to Vote thereon were present
and voted. If the Members are requested to consent to a matter without a meeting, each Member shall be given notice of the matter to be voted upon in the manner described in Section 7.4. Any action taken
without a meeting shall be effective when the required minimum number of Votes have been received.
Prompt Notice of the action taken shall be given to all Members who have not consented to the action.
7.10. No Authority of Members as Agents of Company. No Member acting solely in the
capacity of a Member is an agent of the Company, nor can any Member acting solely in the capacity
of a Member bind the Company or execute any instrument on behalf of the Company. Accordingly,
each Member shall indemnify, defend, and save harmless each other Member and the Company from and against any and all loss, cost, expense, liability or damage arising from or out of any claim based
upon any action by such Member in contravention of the first sentence of this Section 7.10.
ARTICLE 8: TRANSFERS OF MEMBERSHIP INTERESTS
8.1. Withdrawal of Members. A Member may not withdraw l?om the Company except upon the
written consent of all other Members. Withdrawal shall not release a Member Tom any obligations and
liabilities under this Agreement accrued or incurred before the effective date of withdrawal. A
withdrawing Member shall divest the Member’s entire Membership Interest before the effective date
of withdrawal in accordance and subject to the provisions of this Article 8.
8.2. Transfer of Membership Interests. Except for transfer by bequest or under the laws of
intestacy, Members sliall not be entitled to sell, subject to a security interest, assign, transfer or convey
all or any part of their Membership Interests except as provided in this Section, and any act in
contravention of this Section shall be null and void ab initio. Upon obtaining the prior written consent
of the appropriate state securities department, if necessary, and an opinion of counsel that the transfer
will not (i) violate any federal or state securities laws, or (ii) jeopardize the status of the original sale
20
of the Membership Interest with respect to any federal or state law, or (iii) adversely affect the tax status
ofthe Company, or (iv) result in the terminationofthe Company pursuant to the Internal Revenue Code
($708(B)(l) or otherwise), a Member may assign or sell his Membership Interests subject to the
following:
8.2.1. Such Member and the respective purchaser, transferee, or assignee, execute,
acknowledge and deliver to the Manager such instruments of transfer and assignment with respect to
such transactions as are satisfactory in form and substance to a Majority of Interest of the other
Members.
8.2.2. Partial assignment generally will not be allowed.
8.2.3. The selling or assigning Member shall pay all costs involved in the transfer,
including, without limitation, state blue sky fees and attorney’s fees.
Notwithstanding any other provision of this Agreement to the contrary, a Member who is a natural
person may transfer all or any portion of his or her Membership Interest to any revocable trust created
for the benefit of the Member, or any combination between or among the Member, the Member’s spouse, and the Member’s issue; provided that the Member retains a beneficial interest in the trust and
all of the Voting Interest included in such Membership Interest. A Transfer of a Member’s beneficial
interest in such trust, or failure to retain such Voting Interest, shall be deemed a Transfer of a
Membership Interest.
8.3. Admission of Transferees as Members. Subject to each ofthe provisions of Section 8.2 of
this Agreement being met to the satisfaction of a Majority of Interest of the other Members, an assignee
of a Membership Interest shall be admitted as a Member with respect to such Membership Interest
(Substituted Member) only upon the satisfactory completion of the following:
8.3.1. The duly executed and acknowledged written instrument or assignment which sets
forth the intention of the assignor that the assignee become a Substituted Member in his place has been
filed with the Company;
8.3.2. The assignor and assignee execute and acknowledge such other instruments as the
Manager may deem necessary to effect such admissions, including the written acceptance and adoption
by the assignee of the provisions of this Agreement and the power of attorney;
8.3.3. A reasonable transfer fee as has been charged shall have been paid to the Company;
8.3.4. A Majority in Interest of the other Members shall have consented in writing to the
substitution of such assignee, which consent may be given or withheld at the sole and absolute
discretion of such Members;
8.3.5. If the assignee is a corporation, the assignee shall have provided the Managers with
evidence satisfactory to counsel to the Company of its authority to become a Member under the terms and provisions of this Agreement; and
21
8.3.6. Counsel for the Company, or aqualified counsel for the assignee, whichcounsel shall
have been approved of by the Managers, shall have rendered an opinion to the Managers that the
admission of the assignee as a Substituted Member is in conformity with the Act and that none ofthe
actions in connection with the admission will cause the termination or dissolution ofthe Company, or
will adversely affect its classification as a partnership for federal income tax purposes.
Any prospective transferee of a Membership Interest shall be deemed an Assignee, and, therefore,
the owner of only an Economic Interest until such prospective transferee has been admitted as a
Substituted Member. Except as otherwise permitted in the Act, any such Assignee shall be entitled only
to receive allocations and distributions under this Agreement with respect to such Membership Interest
and shall have no right to Vote or exercise any rights of a Member until such Assignee has been
admitted as a Substituted Member. Until the Assignee becomes a Substituted Member, the Assigning
Member will continue to be a Member and to have the power to exercise any rights and powers of a
Member under this Agreement, including the right to Vote in proportion to the Percentage Interest that
the Assigning Member would have had in the event that the assignment had not been made. The
Managers may elect to treat an Assignee who has not become a Substituted Member as a Substituted
Member in the place of his assignor should he deem, in his sole and absolute discretion, that such
treatment is in the best interests of the Company for any of its purposes or for any of the purposes of
this Agreement.
8.4. Rights and Obligations upon Substitution of Members. Any person admined to the
Company as a Substituted Member shall be subject to all the provisions of this Agreement that apply
to the Member from whom the Membership Interest was assigned, provided, however, that the
assigning Member shall not be released from liabilities as a Member solely as a result of the
assignment, both with respect to obligations to the Company and to third parties, incurred prior to the
assignment.
8.5. Compliance with Securities Laws. The sale of Membership Interests in the Company has
not been qualified or registered under the securities laws of any state, including California, or registered
under the Securities Act of 1933, in reliance upon exemptions from the registration provisions of those
laws. Notwithstanding any other provision of this Agreement, Membership Interests may not be
Transferred unless registered or qualified under applicable state and federal securities law unless, in the
opinion of legal counsel satisfactory to the Company, such qualification or registration is not required.
The Member who desires to transfer a Membership Interest shall be responsible for all legal fees
incurred in connection with said opinion.
8.6. Repurchase of Membership Interests. Commencing five years after the date of completion
of the Offering described in Section 3.1.2, the Company shall be authorized to repurchase Membership
Interests of Members wishing to sell same, provided that such repurchases will not (I) violate any
federal or state laws, or (ii) jeopardize the status of the original sale of the Membership Interest with
respect to any federal or state law, or (iii) adversely affect the tax status of the Company, or (iv) result
in the termination of the Company pursuant to the Internal Revenue Code. The availability and terms of any such repurchase shall be in the sole discretion of the Manager.
22
ARTICLE 9: DISSOLUTION AND WINDING UP
9.1. Events Causing Dissolution. The Company shall be dissolved upon the first to occur of the
following events:
9.1.1. The death, incapacity, bankruptcy, withdrawal, or dissolution of a Member, provided, however, that the remaining Members may by the Vote of a Majority of Members within 90 days of the
happening of that event Vote to continue the business of the Company, in which case, the Company
shall not dissolve. If the remaining Members fail to so Vote, the remaining Members shall wind up the
Company. For purposes of this Subsection 9.1.1, in determining a Majority ofMembers, the Percentage
Interest of the Member who has died, become incapacitated, with drawn, or who has become bankrupt
or dissolved shall be taken into account.
9.12. The expiration of the term of existence of the Company.
9.1.3. The written agreement of all Members to dissolve the Company.
9.1.4. The sale or other disposition of substantially all of the Company’s assets.
9.15. Entry of a decree ofjudicial dissolution under Corp C section 17351.
9.2. Dissolution and Winding Up. On the dissolution of the Company, the Company shall
engage in no further business other than that necessary to wind up the business and affairs of the
Company. The Managers who have not wrongfully dissolved the Company or, if there is no such
Manager, the Members, shall wind up the affairs of the Company. The Persons winding up the affairs
of the Company shall give Notice of the commencement of winding up by mail to all known creditors
and claimants against the Company whose addresses appear in the records of the Company. After
paying or adequately providing for the payment of all known debts of the Company (except debts owing
to Members), the remaining assets of the Company shall be distributed or applied in the following
order:
9.2.1. To pay the expenses of liquidation.
9.2.2. To the establishment of reasonable reserves by the Managers for contingent liabilities or
obligations of the Company. Upon the Managers’ determination that such reserves are no longer
necessary, said reserves shall be distributed as provided in this Section 9.2.
9.2.3. To repay outstanding loans to Members. Ifthere are insufficient funds to pay such loans
in titll, each Member shall be repaid in the ratio that the Member’s loan, together with interest accrued
and unpaid thereon, bears to the total of all such loans from Members, including all interest accrued and
unpaid thereon. Such repayment shall first be credited to accrued and unpaid interest due and the
remainder shall be cre.dited to principal.
9.2.4. Among the Members with Positive Capital Account Balances as provided in Section
4.13.
23
_’ .’
9.3. Rights and Liabilities of Members upon Dissolution. Each Member shall look solely to
the assets of the Company for the return of the Member’s investment, and if the Company property
remaining after the payment or discharge of the debts and liabilities of the Company is insufficient to
return the investment of each Member, such Member shall have no recourse against any other Members
for indemnification, contribution, or reimbursement, except as specifically provided in this Agreement.
ARTICLE 10: CONFIDENTIALITY
10.1. Confidentiality Agreement. Each Member hereby covenants with the Company and each
other Member that use or disclose in any manner any Confidential Information except for the benefit
of the Company.
10.2. Definition of Confidential Information. “Confidential Information” means all trade secrets, “know-how,” customer lists, pricing policies, operational methods, programs, and other
business informationofthe Company created, developed, produced, or otherwise arising before the date
of the Transfer.
10.3. Equitable Relief Availability. Each Member hereby stipulates that a breach of the
provisions of this Article 10 will result in irreparable damage and injury to the Company for which no
money damages could adequately compensate it. If the Member breaches the provisions of this
Agreement, in addition to all other remedies to which the Company may be entitled, and
notwithstanding the provisions of Section 11.2, the Company shall be entitled to an injunction to
enforce the provisions of this Agreement, to be issued by any court of competent jurisdiction, to enjoin
and restrain the Member and each and every Person concerned or acting in concert with the Member
from the continuance of such breach. Each Member expressly waives any claim or defense that an
adequate remedy at law might exist for any such breach.
10.4. Reformation of Terms. If the provisions contained herein shall be deemed to exceed the
time or geographic limits or any other limitation imposed by applicable law in any jurisdiction, then
such provision shall be deemed reformed in such jurisdiction to the maximum extent permitted by
applicable law.
ARTICLE 11: INDEMNIFICATION AND ARBITRATION
11.1. Indemnlflcatlon. The Company shall have the power to indemnify any Person who was or
is a party, or who is threatened to be made a party, to any Proceeding by reason of the fact that such
Person was or is a Member, Manager, officer, employee, or other agent of the Company, or was or is
serving at the request of the Company as a director, officer, employee, or other Agent of another limited
liability company, corporation, partnership, joint venture, trust, or other enterprise, against expenses,
judgments, fines, settlements, and other amounts actually and reasonably incurred by such Person in connection with such proceeding, if such Person acted in good faith and in a manner that such Person
reasonably believed to be in the best interests ofthe Company, and, in the case of a criminal proceeding,
such Person had no reasonable cause to believe that the Person’s conduct was unlawful. The termination
of any proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the Person did not act in good faith and in a
24
manner that such Person reasonably believed to be in the best interests of the Company, or that the Person had reasonable cause to believe that the Person’s conduct was unlawful.
To the extent that an agent of the Company has been successful on the merits in defense of any
Proceeding, or in defense of any claim, issue, or matter in any such Proceeding, the agent shall be
indemnified against expenses actually and reasonably incurred in connection with the Proceeding. In
all other cases, indemnification shall be provided by the Company only if authorized in the specific case
by a Majority of Members.
“Agent,” as used in this Section Il. 1, shall include a trustee or other fiduciary of a plan, trust, or
other entity or arrangement described in Corp C section 207(f).
“Proceeding,” as used in this Section 11.1, 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 Managers who are not seeking
indemnification or, if there are none, by a Majority of the Members, upon receipt of an undertaking by
such Person to repay such amount unless it shall ultimately be determined that such Person is entitled
to be indemnified by the Company. “Expenses,” as used in this Section 11.1, includes, without
limitation, attorney fees and expenses of establishing a right to indemnification, if any, under this
Section 11.1.
11.2. Arbitration. Any action to enforce or interpret this Agreement, or to resolve disputes with
respect to this Agreement as between the Company and a Member, or between or among the Members,
shall be settled by arbitration in accordance with the rules of the American Arbitration Association.
Arbitration shall be the exclusive dispute resolution process in the State of California, but arbitration
shall be a nonexclusive process elsewhere. Any party may commence arbitration by sending a written
demand for arbitration to the other parties. Such demand shall set forth the nature of the matter to be
resolved by arbitration. The Manager shall select the place of arbitration. The substantive law of the
State of California shall be applied by the arbitrator to the resolution of the dispute. The parties shall
share equally all initial costs of arbitration. The prevailing party shall be entitled to reimbursement of
attorney fees, costs, and expenses incurred in connection with the arbitration. All decisions of the
arbitrator shall be final, binding, and conclusive on all parties. Judgment may be entered upon any such
decision in accordance with applicable law in any court having jurisdiction thereof. The arbitrator (if
permitted under applicable law) or such court may issue a writ of execution to enforce the arbitrator’s
decision.
ARTICLE 12: [LEFT BLANK INTENTIONALLY]
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ARTICLE 13: GENERAL PROVISIONS
13.1. Entire Agreement and Amendment. This Agreement constitutes the whole and entire
agreement of the parties with respect to the subject matter of this Agreement, and it shall not be
modified, amended in any respect, or terminated except by a written instrument executed by all the
parties. This Agreement replaces and supersedes all prior written and oral agreements by and among
the Members and Managers or any of them.
13.2. Counterparts. This Agreement may be executed in one or more counter parts, each of
which shall be deemed an original, but all of which together shall constitute one and the same instrument.
13.3. Governing Law. This Agreement shall be construed and enforced in accordance with
the internal laws of the State of California. If any provision of this Agreement is determined by any
court ofcompetent jurisdiction or arbitrator to be invalid, illegal, or unenforceable to any extent, that
provision shall, if possible, be construed as though more narrowly drawn, if a narrower construction
would avoid such invalidity, illegality, or unenforceability or, if that is not possible, such provision
shall, to the extent of such invalidity, illegality, or unenforceability, be severed, and the remaining
provisions of this Agreement shall remain in effect.
13.4. Binding Agreement. This Agreement shall be binding on and inum to the benefit of the parties and their heirs, personal representatives, and permitted successors and assigns.
13.5. Interpretation of Terms Used. Whenever used in this Agreement, the singular shall
include the plural and the plural shall include the singular, and the neuter gender shall include the
male and female as well as a trust, firm, company, or corporation, all as the context and meaning of
this Agreement may require.
13.6. Additional Actions. The parties to this Agreement shall promptly execute and deliver
any and all additional documents, instruments, notices, and other assurances, and shall do any and
all other acts and things, reasonably necessary in connection with the performance oftheirrespective
obligations under this Agreement and to carry out the intent of the parties.
13.7. Other Activities of Members. Except as provided in this Agreement, no provision of
this Agreement shall be construed to limit in any manner the Members in carrying on their respective
businesses or activities.
13.8. No Agency Created. Except as provided in this Agreement, no provision of this
Agreement shall be construed to constitute a Member, in the Member’s capacity as such, the agent
of any other Member.
13.9. Capacities of Parties. Each Member represents and warrants to the other Members that
the Member has the Capacity and authority to enter into this Agreement.
13.10. Interpretation of Headings. The article, section, and paragraph titles and headings
contained in this Agreement are inserted as matter of convenience and for ease of reference only and
26
,, 1
shall be disregarded for all other purposes, including the construction or enforcement of this
Agreement or any of its provisions.
13.11. Time is of Essence. Time is of the essence of every provision of this Agreement that
specifies a time for performance.
13.12. Rights of Third Parties. This Agreement is made solely for the benefit ofthe parties
to this Agreement and their respective permitted successors and assigns, and no other person or
entity shall have or acquire any right by virtue of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written
above.
27
ARTICLES OF ORGANIZATION
EXHIBIT A
RECORDING REGUESTED BY AND ‘, WHEN RECORDED MAIL To: i 1
SPACE ABOVE THIS LINE FOR RECORDER’S USE
SACRAMENTO
Z, BILL JONES, Secretary of State of California, hereby certify:
That the annexed transcript of / page(s) was prepared by
and in this officefrom the record onfile, of which itpurports to be a copy,
and that it is full, true and cbrrect.
IN WITNESS WHEREOF, I execute
this certaifiate and affi the Great
Seal of the Skate of California
JAN 2 2 f998
’ State of California ’
Bill Jones
Secretary of State
LlMlTED LIABILlm COMPANY ARTICLES OF ORCANIZATION
LLC-1
IMpoRTANlJ - Reed the iostrnctioos before compkting tbc form.
Tbir docomeot is o-led for fdioe Donneot to Section 17050 of the California Coroorrtioos Code
1. tilted liabil$ company name: m*rr -rOM-.~CiLLmrr-i-.I--~---~.“~,
Mulvanev Financial, LLC
2. Laprt date (monWday&ear) on which tie limited lkbili~y compsay is IO dissolve: 12/31/2050 --, -~I
3. Tbe o-se of the lbnii liity company is to engage in my lawful act or a&icy for which a liiited lkbiii compaoy
mey’bc &ganiwd uoder tbc Se&y-K%Limii Lkbilii Compaay Act
4. Entermearmcofinitirlmtforserviccofp-aadchcdcthc~provirionklow:
James F. Mulvaney .wbicbk
[X] mbxlividualraidin~inCaiifonkPruceedtoItan5.
[ ] ~c~oawhichbacfilcd~cenifiestepun~tco-SenioalS05 oftbewifomiaCorpotatiwrCode. SkipI~emS
aodproceedtoItem6.
5. If the bdrial agent for savice of pmces is an individual. ema a bosioess or raidatkl s&a address in Califomix
Sutetaddfesx 401 West "A" Street, 17th Floor
Cl San Diego SQIe: cAuFomu
6. TbelimitedlkbiiitycompaoywiUbemeoegedby: (cbeckooe)
zlpcodc: 92101-7994
[x 1 -m-w [ ] mofothanoaemweger [ 1 limited lkbility coooeoy membax
7. ~otham~Petok~cludedin~~Amclaof~~PtlChOMOTmOrC~~
1. Itkbaebydeckredtbat1emtbepasoawbo
exewIedIbIsblsmml~‘lwh*hexewdalb
myumddwd.
Donald G. Johnson, Jr.
rypeorpIioIoameofor@za
fllsD m,eainadum~d~ dlllehtSWld-
JIM 20 1998
CERTIFICATE OF AMENLMMENT
EXHIBIT Al
Si%tate of cLCaliforttia
$W panes
Secretarp of State
LIMITED LIABILITY COMPANY
CERTIFICATE OF AMENDMENT
A $30.00 filing fee must accompany this form
IMPORTANT - Read lnstructlons before completing this form
I. Limited Liability Company fjame:
l”,2!kE:O,Shk 01 UN State ct Calltcfn!a
OCT 0 4 k9
SILL JONES, S&Wry of Slate
This Space For Fding Use only
Mulvaney Financial ', LLC
2. Secretary of State File number: 101998020125 - 149qdao/o/a5
3. Enter only the information in the Articles of Organization (LLC-1) amended by filing this Certificate of Amendment (LLC-2). Provide the text of the amendment adopted using the space provided and/or attaching one or more
separate pages.
A. Amendment to text of the Articles of Organization:
8. Limited Liability Company Name: .__
C. Latest date on which the limited liability company is to dissolve: (MonthKlayNear)
0. The Limited Liability Company wilt be managed by (Check One):
[ ] One Manager [ ] More Than One Manager [ x] Limited Liability Company Members
E. Any change in the events that will cause dissolution of the Limited Liability Company.
4. Number of pages attached, if any. -o-
5. It is hereby declared that I am the person who executed this instrument, which execution is my act and deed.
Date:
James F. Mulvanev, Manaqer Type or print name and title of authonzed person
6. RETURN TO:
NAME r Robe& A. &inn. ESU.
FIRH c/o Mulvaney, kahai & Barry
ADDRESS 401 We&t "A" Street, 17th Floor
CITY/STATS San Diego, CA 92101-7994
ZtPcoDe I
SEOSTATE (REV. l&‘Wj FORh4 UC-2 . FILIND FEE:
MULVANEY FINANCIAL, LLC A California Limited Liability Company
SCHEDULE OF MEMBERS
Name and Address
James F. Mulvaney
40 1 West A Street, Seventeenth Floor
San Diego, California 92101
Capital Percentage
Contribution Units Interest
$9,800 98 98%
David M. Mulvaney
4806 Aragon Dr.
SanDiego,CA92115
$200 2 2%
EXHIBIT B