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HomeMy WebLinkAboutPZ - Operating Agreement (Franklin Mile Managers) - executed (1) DocuSign Envelope ID: BBE03710-2564-432C-B4C6-8DCED24D51D8 THE SECURITIES REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 NOR REGISTERED NOR QUALIFIED UNDER ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS QUALIFIED AND REGISTERED UNDER APPLICABLE STATE AND FEDERAL SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, SUCH QUALIFICATION AND REGISTRATION IS NOT REQUIRED. ANY TRANSFER OF THE SECURITIES REPRESENTED BY THIS AGREEMENT IS FURTHER SUBJECT TO OTHER RESTRICTIONS, TERMS AND CONDITIONS WHICH ARE SET FORTH HEREIN. THE SECURITIES REPRESENTED HEREBY HAVE BEEN ISSUED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND ARE NOT REGISTERED THEREUNDER. IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THESE SECURITIES, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, EXCEPT PURSUANT TO A REGISTRATION STATEMENT DULY FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION, UNLESS AN APPLICABLE EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. OPERATING AGREEMENT Franklin Mile Managers, LLC This OPERATING AGREEMENT ("Agreement") effective as of March 8th, 2021 , is by and among Sunny Cove, LLC, a California limited liability company ("Manager") and each of the signatories hereto (collectively, the "Members.") RECITALS A. On March 8th, 2021, Articles of Organization ("Articles") for Franklin Mile Managers, LLC (the "Company"), a limited liability company under the laws of the State of Idaho, were filed with the Idaho Secretary of State. B. The parties now desire to adopt and approve an operating agreement for the Company. AGREEMENT NOW, THEREFORE, by this Agreement, the Members set forth the operating agreement for the Company under the laws of the State of Idaho upon the terms and subject to the conditions of this Agreement. 1. DEFINITIONS. When used in this Agreement, the following terms shall have the meanings set forth below (all terms used in this Agreement that are not defined in this Section 1 shall have the meanings set forth elsewhere in this Agreement): 1 5474.001-2545915.1 DocuSign Envelope ID: BBE03710-2564-432C-B4C6-8DCED24D51D8 1.1 "Act" means the California Revised Uniform Limited Liability Company Act, Title 30, Chapter 25 et seq., as the same may be amended from time to time. 1.2 "Affiliate" means any individual, partnership, corporation, trust or other entity or association, directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with the Member. The term "control," as used in the immediately preceding sentence, means, with respect to a corporation or limited liability company the right to exercise, directly or indirectly, more than fifty percent (50%) of the voting rights attributable to the controlled corporation or limited liability company, and, with respect to any individual, partnership, trust, other entity or association, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the controlled entity. 1.3 "Agreement" means this Operating Agreement, as originally executed and as amended from time to time. 1.4 "Assignee" means a person who has acquired a Member's Economic Transferable Interest in the Company, by way of a Transfer in accordance with the terms of this Agreement, but who has not become a Member. 1.5 "Articles" means the Articles of Organization for the Company originally filed with the Idaho Secretary of State and as amended from time to time. 1.6 "Bankruptcy" means: (a) the filing of an application by a Member for, or such Member's consent to, the appointment of a trustee, receiver, or custodian of such Member's other assets; (b) the entry of an order for relief with respect to a Member in proceedings under the United States Bankruptcy Code, as amended or superseded from time to time; (c) the making by a Member of a general assignment for the benefit of creditors; (d) the entry of an order, judgment, or decree by any court of competent jurisdiction appointing a trustee, receiver, or custodian of the assets of a Member unless the proceedings and the person appointed are dismissed within ninety (90) days; or (e) the failure by a Member generally to pay such Member's debts as the debts become due within the meaning of Section 303(h)(1) of the United States Bankruptcy Code, as determined by the Bankruptcy Court, or the admission in writing of such Member's inability to pay such Member's debts as they become due. 1.7 "Capital Account" means with respect to any Member the capital account that the Company establishes and maintains for such Member pursuant to Section 3.5 below. 1.8 "Capital Contribution" means the total value of cash and fair market value of property (including promissory notes or other obligation to contribute cash or property) contributed and/or services rendered or to be rendered to the Company by Members. 1.9 "Code" means the Internal Revenue Code of 1986, as amended from time to time, the provisions of succeeding law, and to the extent applicable, the Regulations. 2 DocuSign Envelope ID: BBE03710-2564-432C-B4C6-8DCED24D51D8 1.10 "Company" means Franklin Mile Managers, LLC, a California limited liability company. 1.11 "Company Minimum Gain" shall have the meaning ascribed to the term "Partnership Minimum Gain" in the Regulations Section 1.704-2(d). 1.12 [Intentionally Omitted]. 1.13 "Dissolution Event" means the termination, Bankruptcy, dissolution or occurrence of any other event that terminates the continued membership of any Member unless the other Members consent to continue the business of the Company pursuant to Section 10.1 below. 1.14 "Distributable Cash" means the amount of cash that the Manager deems available for distribution to the Members, taking into account all Company debts, liabilities, and obligations of the Company then due and amounts which the Manager deems necessary to place into Reserves. 1.15 "Fiscal Year" means the Company's fiscal year, which shall be the calendar year. 1.16 "Financial Difficulty" means the institution of any proceeding under federal or state laws for relief of debtors, including filing of a voluntary or involuntary petition in bankruptcy or the adjudication as insolvent or bankrupt, the assignment of a Member's property for the benefit of creditors, the appointment of a receiver of a substantial portion of a Member's assets or the seizure by a sheriff or receiver of a substantial portion of a Member's assets, and the failure, in the case of any of these events, to obtain the dismissal of the proceeding or removal of the receiver within ninety (90) days of the event. If any or all of the Percentage Interest of any Member is disposed of under an encumbrance, lien or attachment, such an occurrence shall also be treated as an event of "Financial Difficulty." 1.17 "Invested Capital" means, with respect to any Member, the amount of Capital Contributions such Member has made to the Company, reduced by any distributions received by such Member to return such Capital Contributions. 1.18 "Majority Interest" means more than fifty percent (50%) of the Percentage Interests of Members. 1.19 "Manager" means Sunny Cove LLC, a California limited liability company ("Sunny Cove"), until it resigns or is replaced in accordance with Section 5.2 below. 1.20 "Member" means each Person who is an initial signatory to this Agreement, has been admitted to the Company as a Member in accordance with this Agreement or is an assignee who has become a Member in accordance with Section 7 of this Agreement. 3 DocuSign Envelope ID:BBE03710-2564-432C-B4C6-8DCED24D51D8 1.21 "Member & Manager Schedule" means the schedule attached hereto as Exhibit A, and incorporated herein by this reference, as such schedule may be amended from time to time pursuant to the terms of this Agreement. 1.22 "Member Nonrecourse Debt" shall have the meaning ascribed to the term "Partner Nonrecourse Debt" in Regulations Section 1.704-2(b)(4). 1.23 "Member Nonrecourse Deductions" means items of Company loss, deduction, or Code Section 705(a)(2)(b) expenditures which are attributable to Member Nonrecourse Debt. 1.24 "Membership Interest" means a Member's entire interest in the Company and all rights, benefits and privileges pertaining thereto. 1.25 "Net Profits" and "Net Losses" means the income, gain, loss, deductions, and credits of the Company in the aggregate or separately stated, as appropriate, determined in accordance with generally accepted accounting principles employed under the method of accounting at the close of each fiscal year on the Company's information tax return filed for federal income tax purposes. 1.26 "Nonrecourse Liability" shall have the meaning set forth in Regulations Section 1.752-1(a)(2). 1.27 "Percentage Interest" means the percentage interest of a Member set forth opposite the name of such Member in the Member & Manager Schedule, as such percentage may be adjusted from time to time pursuant to the terms of this Agreement. 1.28 "Person" means an individual, general partnership, limited partnership, limited liability company, corporation, trust, estate, real estate investment trust association or any other entity. 1.29 "Projects" means those certain projects on real property to be acquired by the Company for value add retail development opportunities in Idaho and any compatible adjacent uses. 1.30 Regulations" shall, unless the context clearly indicates otherwise, mean the regulations currently in force as final or temporary that have been issued by the U.S. Department of Treasury pursuant to its authority under the Code. 1.31 "Reserves" means the amount set aside at a particular time as a reasonable allowance for the Company's contingencies and anticipated obligations (including working capital reserves, tenant improvements, leasing costs, lender requirements and reasonable reserves for replacement of Company capital assets), as reasonably determined by the Manager from time to time. 1.32 "Transferable Interest" means the right, as originally associated with a Person's capacity as a Member, to receive distributions from the Company in 4 DocuSign Envelope ID: BBE03710-2564-432C-B4C6-8DCED24D51D8 accordance with this Agreement, whether or not the Person remains a Member or continues to own any part of the right. 1.33 "Transferee" means a Person who has acquired a Member's Transferable Interest in the Company, by way of a Transfer in accordance with the terms of this Agreement, but who has not become a Member. 1.34 "Transferring Member" means a Member who by means of a Transfer has transferred a Transferable Interest in the Company to a Transferee. 1.35 "Voting Interest" means, with respect to a Member, the right to Vote or participate in management and any right to information concerning the business and affairs of the Company provided under the Act, except as limited by the provisions of this Agreement. A Member's Voting Interest shall be directly proportional to that Member's Percentage Interest. 1.36 "Written" or "in writing" includes facsimile and other electronic communication authorized by the Act. 2. ORGANIZATIONAL MATTERS 2.1 Name. The name of the Company shall be Franklin Mile Managers, LLC. 2.2 Term. The term of the Company commenced on the date the Articles were filed, as listed in Recital A of this Agreement, and shall continue until terminated by the provisions of this Agreement or as provided by law. 2.3 Office and Agent. The Company shall continuously maintain an office and registered agent in the State of California as required by the Act. The principal office of the Company shall be located at 250 Bobwhite Court, Suite 240, Boise, Idaho 83706 or at such other location as the Manager may determine. The registered agent shall be as stated in the Articles or as otherwise determined by the Manager. 2.4 Addresses of the Members and the Manager. The respective addresses of the Members and the Manager are set forth in the Member & Manager Schedule. The Manager is hereby authorized and empowered to amend the Member & Manager Schedule from time to time as necessary or appropriate to reflect any change in the addresses of the Members and/or the Manager as provided in this Agreement. 2.5 Purpose of Company. The purpose of the Company is to engage in any lawful activity for which a limited liability company may be organized under the Act. Notwithstanding the foregoing, the Company shall not engage in any business other than the following without the consent of all Members: (a) to act as a Manager for entities in the business of acquiring, owning, managing, developing, leasing, and holding for investment ownership interests, whether directly or indirectly, in Projects; 5 DocuSign Envelope ID:BBE03710-2564-432C-B4C6-8DCED24D51D8 (b) such other activities directly related to the foregoing business as may be necessary, advisable, or appropriate, in the reasonable opinion of the Manager to further the foregoing business. 3. CAPITAL CONTRIBUTIONS 3.1 Initial Capital Contributions. Upon the full execution of this Agreement, each of the Members shall make the capital contribution(s) to the Company as specified in the Member & Manager Schedule. 3.2 Additional Capital Contributions. (a) All Members acknowledge and agree that the Manager may determine from time to time that additional capital contributions or loans are required to enable the Company to conduct its business, including without limitation, to fund any costs that are not funded by the Members' initial Capital Contributions and/or any third- party bank or institutional financing ("Additional Capital Contributions"). (b) The Manager's right to exercise its discretion and authority under this Section 3.2 is personal to the Manager. Nothing in this Section 3.2 (whether express or implied), shall be construed to entitle any third party (including, without limitation, a creditor of the Company) to substitute its own judgment for the judgment of the Manager in determining if and when the Company requires additional capital or borrowed funds. (c) Upon making such a determination, the Manager may deliver a notice to the Members (hereinafter referred to as a "Call Notice"), specifying in reasonable detail the debts, obligations, and expenses then due and the amount of Additional Capital Contributions requested to be contributed. Each Member shall have the option, not the obligation, to contribute its pro rata share of the Additional Capital Contributions based on its Percentage Interest. (d) Each Member may make its Additional Capital Contribution within fifteen (15) business days after delivery of each Call Notice. For such Additional Capital Contributions, the Members shall each receive a credit to its Capital Account in the amount of its contribution. (e) If a Member chooses not to contribute any capital contribution after the Call Notice, then such party acknowledges and agrees that its Percentage Interest will be diluted by the contributions that are made by all other contributing members, based on the Fair Market Value of the Property and Project at the time (as determined in Section 7.8(b)(ii)(B)). 3.3 Loans by a Member. (a) Loans by an Affiliate. If at any time, or from time to time, the Manager determines, in its commercially reasonable discretion, that the Company requires additional funds to conduct its business, the Manager may obtain an unsecured 6 DocuSign Envelope ID:BBE03710-2564-432C-B4C6-8DCED24D51D8 loan from any of Mark Engstrom, James Engstrom or Kent Calfee (or an entity controlled by one of such individuals). Any such loan shall bear interest at 8% per annum and otherwise be based on commercially reasonable and market terms. (b) Loans by a Member. If at any time, or from time to time, the Manager determines, in its commercially reasonable discretion, that the Company requires additional funds to conduct its business and the Manager elects not to obtain a loan pursuant to Section 3.3(a) above, the Manager may permit the Members to make one or more unsecured loans to the Company (collectively "Member Loans" and separately, a "Member Loan") in accordance with the following provisions: (i) Each Member shall have the right, but not the obligation, to loan to the Company that portion of the required additional funds that is in the same proportion as the Percentage Interest of such Member is to the aggregate Percentage Interests of all Members; (ii) The Manager shall give written notice to each Member of (i) the total amount of required additional funds, and (ii) such Member's proportionate share thereof. Each Member shall have ten (10) business days from the date such notice is given to loan its proportionate share of the required additional funds to the Company; (iii) If any Member loans less than its proportionate share of the required additional funds, then the other Member may loan the resulting deficiency. If at that time there are then more than two Members, then the other Members may loan the resulting deficiency in such proportion as they may agree. If the other Members are unable to so agree, then each such other Member shall have the right, but not the obligation, to contribute that portion of the resulting deficiency which is in the same proportion as the Percentage Interest of such other Member is to the aggregate Percentage Interest of all Members who desire to contribute such deficiency; (iv) Each Member Loan shall be evidenced by the Company's unsecured promissory note. The principal balance of a Member Loan, outstanding from time to time, shall bear interest at the rate of eight percent (8%) per annum, compounded annually; (v) The Company shall repay the entire principal balance of each Member Loan, together with interest thereon, prior to making distributions to Members under Section 6.5. If there are two or more Member Loans, then such loans shall be repaid to the extent of available of Company funds, pro rata, in accordance with their respective outstanding balances; and (vi) All payments which the Company makes on a Member Loan shall be treated as payments made to a partner not acting in its capacity such under Code Section 707(a). 3.4 Return of Contributions. Except as provided in this Agreement, no Member or Interest Holder shall have the right to receive any distribution or the return of 7 DocuSign Envelope ID:BBE03710-2564-432C-B4C6-8DCED24D51D8 any Contribution upon any withdrawal from the Company, except upon dissolution of the Company where the existence of the Company is not continued as provided herein. No Member or Interest Holder shall have the right to receive any Distribution in any form other than money. Except as specifically set forth in this Agreement, and/or except as specifically provided in any written agreements between the Members that are approved in writing by the Company, no Member shall have priority over any other Member with respect to the return of a Capital Contribution or distributions or allocations of income, gain, losses, deductions, credits, or items thereof. 3.5 Capital Accounts. The Company shall establish an individual Capital Account for each Member, which shall be credited with the amount or agreed value of the initial Capital Contribution for such Member set forth in the Member & Manager Schedule. Thereafter, the Company shall determine and maintain each Capital Account in accordance with Regulations Section 1.704-1(b)(2)(iv). If a Member transfers all or a part of such Member's Membership Interest in accordance with this Agreement, such Member's Capital Account attributable to the transferred Membership Interest shall carry over to the new owner of such Membership Interest pursuant to Regulations Section 1.704-1(b)(2)(iv)(1). 3.6 No Interest. Except as otherwise provided in this Agreement, no Member shall be entitled to receive any interest on such Member's Capital Contributions. 3.7 Warranties. The Members acknowledge that the Manager or its Affiliates may be requested to guaranty debt for an entity under management, and agree that such decision is within the sole discretion of the Manager and its Affiliates. If such guaranties are requested and given, each Member agrees that it will join with the Manager (whether joint and several or several only). 4. MEMBERS 4.1 Limited Liability. Except as required under the Act or as expressly set forth in this Agreement, no Member (including without limitation, the Manager) shall be personally liable for any debt, obligation or liability of the Company, whether that liability or obligation arises in contract, tort or otherwise. 4.2 Transactions with the Company. Subject to any limitations set forth in this Agreement and with the prior approval of the Manager after full disclosure of the Member's involvement, a Member or an Affiliate may lend money to and transact other business with the Company. Subject to other applicable law, such Member has the same rights and obligations with respect thereto as a Person who is not a Member. 4.3 Remuneration To Managers or Members. Except as set forth in this Section 4.3, or except as otherwise authorized in or pursuant to this Agreement, no Manager, Member or an Affiliate is entitled to remuneration for acting in the Company business, subject to (i) the entitlement of the Manager and Members to reimbursement of reasonable expenses incurred on behalf of the Company, and (ii) the entitlement of 8 DocuSign Envelope ID: BBE03710-2564-432C-B4C6-8DCED24D51D8 Manager or Members winding up the affairs of the Company to reasonable compensation pursuant to Section 10.3. 4.4 Members Cannot Bind the Company; Consent Rights. Pursuant to Section 5.1 and the Articles, the management and direction of the Company is vested in the Manager. The Members shall have no power to participate in or direct the management of the Company except as expressly authorized by this Agreement or the Articles and except as expressly required by the Act. Unless expressly and duly authorized in writing to do so by the Manager, no Member shall have any power or authority to bind or act on behalf of the Company in any way, to pledge its credit, or to render it liable for any purpose. Except as expressly provided in this Agreement, Members shall have no voting, approval or consent rights. 5. MANAGEMENT AND CONTROL OF THE COMPANY 5.1 Management of the Company bV Manager. Subject to any provisions of the Articles and this Agreement relating to actions required to be approved by the Members, if any, the business, property and affairs of the Company shall be managed and all powers of the Company shall be exercised by or under the direction of the Manager. 5.2 Election of Manager. (a) Number, Term, Elections and Qualifications. The Company shall have one (1) Manager, and the initial Manager of the Company shall be Sunny Cove. The Manager shall hold such office until such Manager resigns, or a Majority Interest of the Members elects to remove such Manager which election can only be made if the Manager commits fraud, gross negligence, reckless or intentional misconduct, or a knowing violation of law in connection with carrying out its duties as the Manager of the Company. (b) Resignation. A Manager may resign at any time by giving written notice to the Members. The resignation of a Manager shall take effect thirty (30) days after the receipt of that notice or at such later time as shall be specified in the notice; and, unless otherwise specified in the notice, the acceptance of the resignation shall not be necessary to make it effective. If a Manager is also a Member of the Company, the resignation of such Manager shall not affect the Manager's rights as a Member and shall not constitute a withdrawal of the Manager as a Member. In such event, a replacement Manager may be elected by the affirmative vote or written consent of Members holding a Majority Interest. 5.3 Control and Management. Subject to the Members' rights to approve "Major Decisions" under Section 5.5, (i) the Manager shall have the exclusive authority to control, manage and direct the Company's business, (ii) all Company matters shall be decided by the Manager, and (iii) the Manager shall be responsible for the day-to-day management of the Company's business. Without limiting the generality of the foregoing, and subject to those limitations set forth elsewhere in this Agreement, the 9 DocuSign Envelope ID:BBE03710-2564-432C-B4C6-8DCED24D51D8 Manager shall have the right, without the consent of any Member, to cause the Company to do any of the following upon such terms and conditions as the Manager deems, in its sole and absolute discretion, to be in the Company's best interests: (a) Negotiate and execute all purchase and sale agreements, loan agreements, contracts, leases, option agreements, promissory notes, deeds of trust, grant deeds, agreements for sale, escrow instructions, releases, easements, maps, construction contracts, security agreements, fixture filings, financing statements, indemnities, management agreements, guarantees, partnership agreements, operating agreements, limited liability company agreements, resolutions, certificates and other documents and instruments, including, without limitation, the purchase agreement and all documents related to the acquisition of a Project, and all documentation relating to the acquisition financing and/or construction financing for a Project, including any amendments and/or modifications thereto; (b) Acquire assets, including, without limitation, a Project; (c) Amend, modify or terminate the purchase agreement that provides for the acquisition of a Project; (d) Enter into, amend, modify or terminate any tenancy in common agreement to which the Company is a party; (e) Lease all or any part of a Project; (f) Sell, exchange, or otherwise dispose of all or any part of any Company assets, including, without limitation, a Project; (g) Borrow money (including extending guarantees of same by the Manager or its members), finance, refinance, mortgage, prepay, in whole or in part, increase, modify or extend any obligation, including, without limitation, the Company's acquisition financing for a Project; (h) Expend the funds of the Company in furtherance of the Company's business in accordance with the provisions of this Agreement; (i) Engage, at the expense of the Company, such professional services as may be required, including legal and accounting services; 0) Acquire and enter into any contract of liability and other insurance which the Manager deems reasonably necessary and proper for the protection of the Members and the Company for the conservation of its assets or for any purpose convenient or beneficial to the Company; (k) Settle any insurance claims in favor of or against the Company as the Manager may deem advisable; 10 DocuSign Envelope ID:BBE03710-2564-432C-B4C6-8DCED24D51D8 (1) Hire and fire employees of the Company and to set compensation and benefits for such employees; (m) Enter into and execute agreements or contracts on behalf of the Company; (n) Cause the Company's accountant to determine the Net Profits and Net Losses of the Company as well as the Members pursuant to the terms of this Agreement and in accordance with tax accounting principles as applied to the Company; (o) Open accounts and deposit and maintain funds, in the name of the Company, in banks, savings and loan associations, or other financial institutions; (p) Compromise, resolve disputes or otherwise adjust claims in favor of, or against, the Company and to commence or defend litigation with respect to the Company or any assets of the Company, as the Manager may deem advisable, all or any of the above matters being at the expense of the Company; (q) Make elections under the tax laws of the United States or any State as to the treatment of Company income, gains, losses, deductions and credits and as to all other relevant matters; and (r) Perform any and all other acts or activities customary or incidental to the Company purposes and the foregoing powers; and to execute any and all instruments to effectuate the Company purposes and foregoing powers, so long as such act or activities may be lawfully carried on or performed by a limited liability company under the laws of the State of California. 5.4 Management Duties and Obligations of the Manager. Subject to the Members' rights to approve "Major Decisions" under Section 5.5 or elsewhere in this Agreement, the Manager shall be responsible for the day-to-day management of the Company and the daily operation of the subject business. The Manager shall, in addition to fulfilling any other obligations imposed by this Agreement, perform the following duties: (a) All purchase orders, deeds, notes, leases, contracts, and other documents shall be signed on behalf of the Company only by the Manager or its duly authorized agents. (b) The Manager shall open and thereafter maintain one or more separate bank accounts in the name of the Company in which there shall be deposited all of the funds of the Company. The funds in said account shall be used solely for the business of the Company and all withdrawals therefrom are to be made upon checks signed by the Manager or such other person or persons as the Manager may designate. (c) Except as otherwise provided in this Agreement, the Manager shall have all rights and powers subject to all restrictions and liabilities of a member in a 11 DocuSign Envelope ID:BBE03710-2564-432C-B4C6-8DCED24D51D8 limited liability company without other members and shall have all rights and powers subject to all restrictions imposed on managers by the Act. Thus, the Manager shall not have authority to do any act in contravention of this Agreement, or do any act that would make it impossible to carry on the ordinary business of the Company. 5.5 Voting Rights of Members. Notwithstanding any other provision of this Agreement, the following actions constitute "Major Decisions" and the Manager is not authorized to cause the Company to do any of the following without the written consent of a Majority Interest of the Members: (i) A merger or conversion of the Company; (ii) Other than as disclosed and agreed in Section 4.4, enter into agreements or contracts on behalf of the Company with Affiliates of the Manager and/or with the Manager; (iii) Payment of any compensation to the Manager, except as expressly set forth in this Agreement; (iv) Any amendment to this Agreement or the Articles; (v) The admission of a Manager or the election to continue the business of the Company after the immediately preceding manager has ceased to be the Manager pursuant to the Act, where there is no remaining or surviving Manager; (vi) The dissolution of the Company; (vii) A change in the nature of the Company's business, or undertaking any action outside the ordinary course of the Company's business. (viii) Admission of a new member via direct capital contribution to the Company; or (ix) The release of a Member's obligations to make Additional Capital Contributions. Each Member shall respond to a request for its written consent under this Section 5.5 in a reasonably timely manner in light of the circumstances of the request. 5.6 Performance of Duties; Liability of Manager. The Manager shall not be liable to the Company or to any Member for any loss or damage sustained by the Company or any Member, unless the loss or damage shall have been the result of fraud, gross negligence, reckless or intentional misconduct, or a knowing violation of law by such Manager in connection with carrying out its duties as the Manager of the Company. 5.7 Devotion of Time. The Manager is not obligated to devote all of such Manager's time or business efforts to the affairs of the Company, but the Manager shall 12 DocuSign Envelope ID: BBE03710-2564-432C-B4C6-8DCED24D51D8 devote all time and efforts necessary and work diligently to cause the Projects to be completed, and will spend a reasonable amount of time, effort, and skill as reasonably necessary for the operation of the Company. 5.8 Limitations on Liability and Duties of Officers and Members. (a) Each Member and Officer must discharge his duties in accordance with good faith business judgment in what he believes is in the best interests of the Company. Each Member and Officer is entitled to rely on information, opinions, reports and statements or other data prepared or presented by any Person to the Member or Officer that the Member or Officer reasonably believes in good faith to be reliable and competent in the matters presented. Reliance on such information, opinions, reports or statements shall be conclusive evidence that the Member or Officer acted reasonably and in good faith in the exercise of his business judgment. (b) THE MEMBERS ACKNOWLEDGE AND REPRESENT THAT EACH OF THEM HAS HAD THE OPPORTUNITY TO REVIEW SECTION 30-25-304 OF THE ACT AND CONSULT WITH INDEPENDENT COUNSEL AND/OR OTHER ADVISORS AND FULLY UNDERSTAND THE SCOPE OF RESPONSIBILITIES AND DUTIES OWED UNDER SECTION 30-25-304 THE ACT. (c) Pursuant to Sections 17701.10 and 17704.09 of the Act, the Members hereby agree as follows: (i) Business Opportunities. The Members and Officers recognize that each of them and their Affiliates, and the shareholders, members, Officers, directors, employees, agents, and representatives of each of them have or may have other business interests, activities and investments, some of which may be in conflict or competition with the business of the Company. Except as provided herein, it is the Members' express intent and desire that: (1) Each Member and Officer and his Affiliates: (i) are and shall continue to be entitled to carry on such other business interests, activities and investments; (ii) may engage in or possess an interest in any other business or venture of any kind, independently or with others; and (iii) may engage in such activities, whether or not competitive with the Company, without any obligation to offer any interest in such activities to the Company or the other Members; (2) Neither the Company nor any Member or Officer shall have any right, by virtue of this Agreement, in and to such activities, or the income or profits derived therefrom; and (3) The pursuit of such activities, even if competitive with the business of the Company, shall not be deemed wrongful or improper. (ii) Notwithstanding this Section, the Company and the Members hereby agree that the Members shall not compete in any of the following 13 DocuSign Envelope ID: BBE03710-2564-432C-B4C6-8DCED24D51D8 activities: as set forth in the governing documents for any entity and Project managed by the Company. (d) Limitation on Liability. Pursuant to Section 30-25-304, no Member or Officer shall be liable to the Company or to any Member for any monetary damages sustained by the Company or any Member, unless the loss or damage shall have been the result of: (i) a breach of the duty of loyalty as modified herein; (i i) a financial benefit received by the Member or Officer to which the Member or Officer is not entitled; (iii) an intentional infliction of harm on the Company or another Member; or (iv) an intentional violation of criminal law. 5.9 Business with Related Entities. Subject to Section 30-25-304, no Company funds, assets, credits or other resources of any kind or description shall be paid to, or used for, the benefit of any Member or Officer or any Affiliate of any Member or Officer except as specifically provided in this Agreement or as approved by all the Members and so long as the amounts paid to any Member or Officer or any Affiliate is equal to the amount which would be paid to an independent third (3rd) party. Without limiting the foregoing, if the Members by Majority Vote approve of any transactions after full disclosure to all Members, such transaction shall not be a violation of Section 17704.09 of the Act. 5.10 Right to Repurchase Membership Interests. In the event that (i) the employment of Jason Jaques is terminated for any reason by Engstrom Properties, Inc., (ii) James Teare is unable or unwilling to provide brokerage services consistent with those historically provided to Engstrom Properties, Inc. (and its affiliates), or (iii) John Monley is unable or unwilling to provide development services consistent with those historically provided to Engstrom Properties, Inc. (and its affiliates), then the Company shall have the right to repurchase the applicable Member's Membership Interest at Fair Market Value pursuant to Section 7.8 of this Agreement. 6. ALLOCATIONS OF NET PROFITS AND NET LOSSES AND DISTRIBUTIONS 6.1 Allocations of Net Profit and Net Loss. (a) Net Loss. Net Loss shall be allocated to the Members in proportion to their Percentage Interests. Notwithstanding the previous sentence, loss allocations to a Member shall be made only to the extent that such loss allocations will not create a deficit Capital Account balance for that Member in excess of an amount, if any, equal to such Member's share of Company Minimum Gain that would be realized on a foreclosure of the Company's property. Any loss not allocated to a Member because of the foregoing provision shall be allocated to the other Members (to the extent the other 14 DocuSign Envelope ID:BBE03710-2564-432C-B4C6-8DCED24D51D8 Members are not limited in respect of the allocation of losses under this Section 6.1(a)). Any loss reallocated under this Section 6.1(a) shall be taken into account in computing subsequent allocations of income and losses pursuant to this Section 6, so that the net amount of any item so allocated and the income and losses allocated to each Member pursuant to this Section 6, to the extent possible, shall be equal to the net amount that would have been allocated to each such Member pursuant to this Section 6 if no reallocation of losses had occurred under this Section 6.1(a). (b) Net Profit. Except as otherwise provided in this Agreement, Net Profit shall first be allocated to the Members in proportion to their Percentage Interests. 6.2 Special Allocations. (a) Minimum Gain Chargeback. Notwithstanding Section 6.1, if there is a net decrease in Company Minimum Gain during any Fiscal Year, each Member shall be specially allocated items of Company income and gain for such Fiscal Year (and, if necessary, in subsequent fiscal years) in an amount equal to the portion of such Member's share of the net decrease in Company Minimum Gain that is allocable to the disposition of Company property subject to a Nonrecourse Liability, which share of such net decrease shall be determined in accordance with Regulations Section 1.704-2(g)(2). Allocations pursuant to this Section 6.2(a) shall be made in proportion to the amounts required to be allocated to each Member under this Section 6.2(a). The items to be so allocated shall be determined in accordance with Regulations Section 1.704-2(f). This Section 6.2(a) is intended to comply with the minimum gain chargeback requirement contained in Regulations Section 1.704-2(f) and shall be interpreted consistently therewith. (b) Chargeback of Minimum Gain Attributable to Member Nonrecourse Debt. Notwithstanding Section 6.1 of this Agreement, if there is a net decrease in Company Minimum Gain attributable to a Member Nonrecourse Debt during any Fiscal Year, each member who has a share of the Company Minimum Gain attributable to such Member Nonrecourse Debt (which share shall be determined in accordance with Regulations Section 1.704-2(i)(5)) shall be specially allocated items of Company income and gain for such Fiscal Year (and, if necessary, in subsequent Fiscal Years) in an amount equal to that portion of such Member's share of the net decrease in Company Minimum Gain attributable to such Member Nonrecourse Debt that is allocable to the disposition of Company property subject to such Member Nonrecourse Debt (which share of such net decrease shall be determined in accordance with Regulations Section 1.704-2(i)(5)). Allocations pursuant to this Section 6.2(b) shall be made in proportion to the amounts required to be allocated to each Member under this Section 6.2(b). The items to be so allocated shall be determined in accordance with Regulations Section 1.704-2(i)(4). This Section 6.2(b) is intended to comply with the minimum gain chargeback requirement contained in Regulations Section 1.704-2(i)(4) and shall be interpreted consistently therewith. (c) Nonrecourse Deductions. Notwithstanding Section 6.1, any nonrecourse deductions (as defined in Regulations Section 1.704-2(b)(1)) for any Fiscal 15 DocuSign Envelope ID:BBE03710-2564-432C-B4C6-8DCED24D51D8 Year or other period shall be specially allocated to the Members in proportion to their Percentage Interests. (d) Member Nonrecourse Deductions. Notwithstanding Section 6.1, those items of Company loss, deduction, or Code Section 705(a)(2)(b) expenditures which are attributable to Member Nonrecourse Debt for any Fiscal Year or other period shall be specially allocated to the Member who bears the economic risk of loss with respect to the Member Nonrecourse Debt to which such items are attributable in accordance with Regulations Section 1.704-2(i). (e) Qualified Income Offset. Notwithstanding Section 6.1, if a Member unexpectedly receives any adjustments, allocations, or distributions described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), or any other event creates a deficit balance in such Member's Capital Account in excess of such Member's share of Company Minimum Gain, items of Company income and gain shall be specially allocated to such Member in an amount and manner sufficient to eliminate such excess deficit balance as quickly as possible. Any special allocations of items of income and gain pursuant to this Section 6.2(e) shall be taken into account in computing subsequent allocations of income and gain pursuant to this Section 6 so that the net amount of any item so allocated and the income, gain, and losses allocated to each Member pursuant to this Section 6 to the extent possible, shall be equal to the net amount that would have been allocated to each such Member pursuant to the provisions of this Section 6.2(e) if such unexpected adjustments, allocations, or distributions had not occurred. 6.3 Section 704(c) Allocations. Notwithstanding any other provision in this Section 6, in accordance with Code Section 704(c) and the Regulations promulgated thereunder, income, gain, loss, and deduction with respect to any property contributed to the capital of the Company shall, solely for tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the Company for federal income tax purposes and its fair market value on the date of contribution. Allocations pursuant to this Section 6.3 are solely for purposes of federal, state and local taxes. As such, they shall not affect or in any way be taken into account in computing a Member's Capital Account or share of profits, losses, or other items of distributions pursuant to any provision of this Agreement. 6.4 Allocations. If any Membership Interest is transferred, or is increased or decreased by reason of the admission of a new Member or otherwise, during any Fiscal Year of the Company, each item of income, gain, loss, deduction, or credit of the Company for such Fiscal Year shall be assigned pro rata to each day in the particular period of such Fiscal Year to which such item is attributable (i.e., the day on or during which it is accrued or otherwise incurred) and the amount of each such item so assigned to any such day shall be allocated to the Member based upon such Member's respective Membership Interest at the close of such day. Notwithstanding any provision above to the contrary, gain or loss of the Company realized in connection with a sale or other disposition of any of the assets of the Company shall be allocated solely to the 16 DocuSign Envelope ID: BBE03710-2564-432C-B4C6-8DCED24D51D8 parties owning Membership Interests as of the date such sale or other disposition occurs. 6.5 Distributions. Subject to applicable law and any limitations contained elsewhere in this Agreement, the Manager in proportion to their Percentage Interests. 6.6 Obligations of Members to Report Allocations. The Members are aware of the income tax consequences of the allocations made by this Section 6 and hereby agree to be bound by the provisions of this Section 6 in reporting their shares of Company income and loss for income tax purposes. 7. TRANSFER AND ASSIGNMENT OF INTERESTS 7.1 Transfer and Assignment of Interests. No Member shall be entitled to withdraw, transfer, assign, convey, sell, encumber or in any way alienate all or any part of such Member's Membership Interest except with the prior written consent of a Majority Interest of the Members, which consent may be given or withheld, conditioned or delayed (as allowed by this Agreement or the Act), as the other Members may determine in their sole discretion. Any sale or transfer of membership interests in the Manager which causes Mark Engstrom or his Affiliate(s) to no longer have ownership in the Manager shall not constitute a transfer under this Section 7. After the consummation of any transfer of any part of a Membership Interest, the Membership Interest so transferred shall continue to be subject to the terms and provisions of this Agreement and any further transfers shall be required to comply with all the terms and provisions of this Agreement. 7.2 Further Restrictions on Transfer of Interests. In addition to other restrictions found in this Agreement, no Member shall transfer, assign, convey, sell, encumber or in any way alienate all or any part of such Member's Membership Interest: (a) without compliance with all applicable federal and state securities laws; or (b) if the Membership Interest to be transferred, assigned, sold or exchanged, when added to the total of all other Membership Interests sold or exchanged in the preceding twelve (12) consecutive months prior thereto, would cause the termination of the Company under the Code, as reasonably determined by the Manager. 7.3 Substitution of Members. A transferee of a Membership Interest shall have the right to become a substitute Member only if (a) the requirements of Sections 7.1 and 7.2 relating to consent of Members, securities and tax requirements hereof are met, (b) such Person executes an instrument satisfactory to the Manager accepting and adopting the terms and provisions of this Agreement, and (c) such person pays any reasonable expenses in connection with such Member's admission as a new Member. The admission of a substitute Member shall not result in the release of the Member who assigned the Membership Interest from any liability that such Member may have to the Company. 7.4 Permitted Transfers. The Membership Interest of any Member may be transferred under the following circumstances without the prior written consent of other 17 DocuSign Envelope ID:BBE03710-2564-432C-B4C6-8DCED24D51D8 Members as required by Section 7.1 and without following the requirements of Section 7.8, but only with the prior approval of the Manager, which shall not be unreasonably withheld, and subject to compliance with Section 7.2 and 7.3 above: (a) Any transfer of the membership interests may be made only by inter-vivos gift or by testamentary transfer to any spouse, parent, sibling, in-law, child or grandchild, or other lineal descendant of such Member, or to a trust for the benefit of such Member or such spouse, parent, sibling, in-law, child, grandchild, or other lineal descendant of the Member; or (b) To any Affiliate of the Member. The Manager is hereby authorized and empowered to amend the Member & Manager Schedule from time to time as necessary or appropriate to reflect such transfers. 7.5 Effective Date of Permitted Transfers. Any permitted transfer of all or any portion of a Membership Interest shall be effective as of the date upon which the requirements of Sections 7.1, 7.2, and 7.3 have been met. The Manager shall provide the Members with written notice of such transfer as promptly as possible after the requirements of Sections 7.1, 7.2, and 7.3 have been met. Any transferee of a Membership Interest shall take subject to the restrictions on transfer imposed by this Agreement. 7.6 Rights of Legal Representatives. If a Member who is an individual, or an individual who acts on behalf of a Member, dies or is adjudged by a court of competent jurisdiction to be incompetent to manage the Member's person or property, such party's executor, administrator, guardian, conservator, or other legal representative may exercise all of the Member's rights for the purpose of settling the Member's estate or administering the Member's property, including any power the Member has under the Articles or this Agreement to give an assignee the right to become a Member. If a Member is a corporation, trust, or other entity and is dissolved or terminated, the powers of that Member may be exercised by such Member's legal representative or successor. 7.7 No Effect to Transfers in Violation of Agreement. Any transfer in violation of this Section 7 shall be null and void, and the transferee shall have no right to vote or participate in the management of the business, property and affairs of the Company, to exercise any rights of a Member, or to receive the share of the Company's Net Profits, Net Losses and distributions to which the transferor would otherwise be entitled. 7.8 Right of First Refusal. (a) Right of First Refusal. Except for a transfer of a Membership Interest permitted under Section 7.4 above, each time that a Member (the "Transferring Member") proposes to transfer such Member's Membership Interest, or upon receipt by the Transferring Member of a bona fide offer to purchase such Transferring Member's Membership Interest, in writing from any third party that has the financial ability to 18 DocuSign Envelope ID: BBE03710-2564-432C-B4C6-8DCED24D51D8 complete the purchase, that the Transferring Partner wishes to accept (a "Third Party Offer"), the Transferring Member shall first offer to sell its Membership Interest to the other Members in accordance with the provisions of this Section 7.8. (i) The Transferring Member shall promptly offer in writing (an "Offer") to sell its Membership Interest to the other Member(s) upon the terms and conditions contained in the Third Party Offer. When the Transferring Member submits the Offer to the other Member(s), the Transferring Member shall attach a copy of the Third Party Offer to the notice, together with documentation that reasonably demonstrates the third party's financial ability to complete the purchase. (ii) The Offer may be accepted by any Member by delivering written notice of its acceptance to the Transferring Member within thirty (30) days following the accepting Member's receipt of the Offer. The failure of any Member to submit a written acceptance notice to the Transferring Member within the thirty (30) day period shall constitute an election on the part of that Member to not purchase the Transferring Member's Membership Interest. If there are more than two Members in the Company, and more than two Members accept the Offer, then the accepting Members shall be entitled to purchase a portion of the Transferring Member's Membership Interest in the same proportion that each of such Member's Membership Interest bears to the aggregate of the Membership Interests of all the Members electing to purchase such interest. (iii) The aggregate purchase price to be paid for the Membership Interest being offered by the Transferring Member shall be, at the sole option of the purchaser(s), the price determined in Section 7.8(b)(ii) or equal to the sum of the following amounts: (i) the purchase price set forth in the Third Party Offer, less (ii) the amount of any commission, finder's fee or other brokerage or agent's compensation that would be payable as part of the Third Party Offer. If the Third Party Offer provides for the payment of non-cash consideration, then the purchasing Members each may elect to pay the consideration in cash equal to the good faith estimate of the present fair market value of the non-cash consideration offered as reasonably agreed upon by the Transferring Member and the Member(s) electing to purchase the Membership Interest being transferred. The purchase price for the Membership Interest of the Transferring Member shall be payable by the accepting Member(s) within ninety (90) days after the Offer is accepted. At the closing of the sale, the Transferring Member shall deliver an assignment of its Membership Interest to the accepting Member. The accepting Member shall be entitled to take title to the Transferring Member's Membership Interest in such entity or structure that it deems desirable or appropriate. (iv) If no Members accept the Offer within the thirty (30) day period, then the Transferring Member shall be free to accept the Third Party Offer, and if it is accepted, to sell the Membership Interest substantially in accordance with the terms of the Third Party Offer, provided that: (i) such transfer is completed no more than sixty (60) days after the closing date specified in the Offer, (ii) is made on terms no less favorable to the Transferring Member than as designated in the Offer notice, (iii) the requirements of Sections 7.1, 7.2 and 7.3 relating to consent by the other Members, 19 DocuSign Envelope ID: BBE03710-2564-432C-B4C6-8DCED24D51D8 securities and tax requirements hereof are met, and (iv) unless the non-transferring Member(s) approve of the transferee as a Member of the Company, then the transferee shall obtain the Transferring Member's Economic Interest and shall be a Non-Voting Member. If such Membership Interest is not so transferred, the Transferring Member must give notice in accordance with this Section prior to any other or subsequent transfer of such Membership Interest. (v) Except as otherwise provided in this Agreement, no Member shall transfer less than all of its Membership Interest without the written consent of all Members. (b) Option to Purchase. This Section 7.8(b) shall not apply to any transfer of a Membership Interest permitted under Section 7.4 above. From time to time, if a Transferring Member desires to sell its Membership Interest but has not received a Third Party Offer that it desires to accept, then, prior to listing the Membership Interest on the open market, or hiring a broker to find a buyer for the Membership Interest, the Transferring Member shall deliver notice to the other Members of the Transferring Member's desire to sell its Membership Interest, and such notice shall include the purchase price for the Membership Interest that the Transferring Member would accept (an "Option Notice"). (i) Option Exercise and Terms. On the receipt of an Option Notice, the receiving Member(s) shall have the option to exercise its right to purchase the Transferring Member's Membership Interest described in the Option Notice, at the price determined as set forth in Section 7.8(b)(ii) below, by delivering written notice of such exercise to the Transferring Member not later than thirty (30) days after the receiving Member's receipt of the Option Notice. Any Member that timely exercises its option shall be referred to as a "Purchasing Member." Once a Purchasing Member has exercised its option under this Section, then the Transferring Member shall not have any right to sell its Membership Interest pursuant to a Third Party Offer under Section 7.8(a). The failure of any Member to submit a written exercise notice to the Transferring Member within the thirty (30) day period shall constitute an election on the part of that Member to not exercise its option to purchase the Transferring Member's Membership Interest. If there are more than two Members in the Company, and more than two Members exercise their rights to exercise their options to purchase the Membership Interest described in the Option Notice, then the Purchasing Members shall be entitled to purchase a portion of the Transferring Member's Membership Interest in the same proportion that each of such Purchasing Member's Membership Interest bears to the aggregate of the Membership Interests of all the Members exercising their rights to purchase such interest, and such parties together shall be collectively referred to herein as the "Purchasing Member." The purchase of the Membership Interest described in the Offer Notice shall close not more than ninety (90) days after the purchase price is established for the Membership Interest in accordance with Section 7.8(b)(ii) below. The purchase price for the Membership Interest of the Transferring Member shall be payable ten percent (10%) down, in immediately available funds, at the closing of the sale, and the balance pursuant to an unsecured promissory note at four percent (4%) annual interest, fully amortized over one hundred twenty (120) monthly payments. The 20 DocuSign Envelope ID: BBE03710-2564-432C-B4C6-8DCED24D51D8 note shall contain customary provisions, including prepayment without penalty and ten (10) day grace period. At the closing of the sale, the Transferring Member shall execute and deliver to the Purchasing Member all duly executed conveyances, assignments and other instruments which shall include standard and customary representations and warranties, as necessary to transfer the Transferring Member's Membership Interest to the Purchasing Member. The Purchasing Member shall be entitled to take title to the Transferring Member's Membership Interest in such entity or structure that the Purchasing Member determines. (ii) Purchase Price. The purchase price of the Membership Interest (the "Purchase Price") shall be equal to the fair market value of the Membership Interest as determined under this Section 7.8(b)(ii) ("Fair Market Value"). (A) The Transferring Member and the Purchasing Member shall confer and use their commercially reasonable efforts to agree in writing on the Fair Market Value within ten (10) business days after the Purchasing Member delivers its exercise notice to the Transferring Member (the "Trigger Date"). (B) If such Members are unable to agree on the Fair Market Value in writing on or before the Trigger Date, then the Fair Market Value shall be determined by the procedure set forth in this Section 7.8(b)(ii)(B). Within ten (10) business days after the Trigger Date, each of the Transferring Member and the Purchasing Member, at its cost and by giving written notice to the other, shall appoint an appraiser with at least five (5) years' full-time appraisal experience, to appraise the fair market value in accordance with this Section. Each selected appraiser shall, within sixty (60) days after the Trigger Date (the "Appraisal Date"), alone determine the fair market value of the Membership Interest in writing and prepare and submit its complete self-contained narrative appraisal report reasonably setting forth the fair market value to the Transferring Member and the Purchasing Member. The selected appraiser shall take into account minority, lack of marketability, or any other discounts as deemed appropriate in his or her professional judgment. If a party does not appoint an appraiser as provided in the preceding sentence, then the appraiser appointed by the other party shall be the sole appraiser and shall prepare a written appraisal report reasonably setting forth the fair market value of the Membership Interest. (C) The Transferring Member's and the Purchasing Member's appraisers shall each provide a copy of its appraisal simultaneously to each other, the Transferring Member and the Purchasing Member, not later than the Appraisal Date. If either of the two appraisers fails to so deliver copies of its appraisal on or before the Appraisal Date, then the fair market value of the Membership Interest as described in the appraisal of the other appraiser shall be the Fair Market Value. (D) If both appraisers so submit their appraisals by the Appraisal Date, and the higher appraisal is not more than one hundred five percent (105%) of the lower appraisal, the Fair Market Value of the Membership Interest shall be established as the average of the two appraisals. If not, then the two (2) appraisers shall confer and agree upon a third appraiser who also meets the requirements 21 DocuSign Envelope ID: BBE03710-2564-432C-B4C6-8DCED24D51D8 described in Section 7.8(b)(ii)(B) above, within five (5) business days after the Appraisal Date. If the two (2) appraisers are unable to agree on a third appraiser as provided in the preceding sentence, then either the Transferring Member or the Purchasing Member may, in accordance with Section 12.5 below, seek to have an arbitrator appoint a third appraiser. If a third appraiser is agreed upon and/or appointed in accordance with this Section 7.8(b)(ii)(D), such appraiser must be a person who has not previously acted in any capacity for either the Transferring Member or the Purchasing Member, and has no interest, whether financial or otherwise, in this Agreement or the transactions contemplated hereby. The third appraiser shall, within five (5) business days after receipt of the Transferring Member's and the Purchasing Member's appraisal reports, ONLY select one of the two appraisal reports that it determines best describes the fair market value of the Membership Interest, and the fair market value as set forth in such report shall be the Fair Market Value. (E) The Transferring Member and the Purchasing Member shall each bear the cost of its respective appraiser, and the cost of the third appraiser (if any) shall be shared equally by the Transferring Member and the Purchasing Member. 7.9 Financial Difficulty. Upon the Financial Difficulty of a Member, the Company shall have the option, for a period ending fifteen (15) calendar days following the determination of the purchase price as provided in Section 7.8(b), and the other Members, pro rata in accordance with their Percentage Interest in the Company, shall then have the option, for a period of fifteen (15) days thereafter, to purchase the Percentage Interest in the Company not purchased by the Company, on the same terms and conditions as apply to the Company. If neither the Company nor all other Members elect to purchase the entire Interest, then the Members electing to purchase shall have the right, pro rata in accordance with their Percentage Interest in the Company, to purchase the additional Percentage Interest in the Company available for purchase. The transferee of the Percentage Interest in the Company that is not purchased shall hold such Interest in the Company subject to all of the provisions of this Agreement. 8. ACCOUNTING, RECORDS, REPORTING BY MEMBERS 8.1 Books and Records. The books and records of the Company shall be kept, and the financial position and the results of its operations recorded, in accordance with the accounting methods followed for federal income tax purposes. The books and records of the Company shall reflect all the Company transactions and shall be appropriate and adequate for the Company's business. The Company shall maintain at its principal office in California all of the following: (a) A current list of the full name and last known business or residence address of each Member set forth in alphabetical order, together with the Capital Contributions, Capital Account and Percentage Interest of each Member; 22 DocuSign Envelope ID: BBE03710-2564-432C-B4C6-8DCED24D51D8 (b) A current list of the full name and business or residence address of the Manager; (c) A copy of the Articles and any and all amendments thereto together with executed copies of any powers of attorney pursuant to which the Articles or any amendments thereto have been executed; (d) 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; (e) A copy of this Agreement and any and all amendments thereto together with executed copies of any powers of attorney pursuant to which this Agreement or any amendments thereto have been executed; (f) Copies of the financial statements of the Company, if any, for the six most recent Fiscal Years; and (g) The Company's books and records as they relate to the internal affairs of the Company for at least the current and past four Fiscal Years. 8.2 Annual Reports. The Manager shall cause to be prepared at least annually, at Company expense, information necessary for the preparation of the Members' federal and state income tax returns. The Manager shall send or cause to be sent to each Member within ninety (90) days after the end of each taxable year such information as is necessary to complete federal and state income tax or information returns. 8.3 Bank Accounts. The Manager shall maintain the funds of the Company in one or more separate bank accounts in the name of the Company, and shall not permit the funds of the Company to be commingled in any fashion with the funds of any other Person. 8.4 Tax Matters for the Company. The Manager shall act as Partnership Representative of the Company under Internal Revenue Code Section 6223(a) and is authorized to do the following: (a) For purposes of this Section 8.4, all references to sections of the Internal Revenue Code are to the Internal Revenue Code provisions enacted by the Bipartisan Budget Act of 2015 (Pub L 114-74, 129 Stat 584), as such provisions may subsequently be amended. (b) The obligations of each Member or former Member under this Section 8.4 shall survive the transfer or redemption by a Member of its Membership Interest and the termination of this Agreement or the dissolution of the Company. (c) If any adjustment in the amount of any item of income, gain, loss, deduction, or credit of a partnership, or any partner's distributive share thereof, is determined with respect to the Company, the Partnership Representative shall promptly 23 DocuSign Envelope ID:BBE03710-2564-432C-B4C6-8DCED24D51D8 notify the Members on receipt of the notice of final adjustment and shall take all actions directed by a majority of the Members in writing within 10 business days after receipt of such notice, including, without limitation, filing a petition in Tax Court, or, if applicable, causing the Company either to pay the amount of such adjustment under Internal Revenue Code Section 6225 or to make the election under Internal Revenue Code Section 6226(a). (d) No later than 10 business days after the Partnership Representative has knowledge of any audit or proceeding concerning the Company, the Partnership Representative shall notify the Members of the existence of such audit or proceeding. Each Member shall have the right to have a tax advisor of its own choosing participate in, but not direct, the prosecution or defense of such audit or proceeding at such Member's sole expense. The Partnership Representative shall make commercially reasonable efforts to facilitate such tax advisor's participation. (e) If any adjustment in the amount of any item of income, gain, loss, deduction, or credit of a partnership, or any partner's distributive share thereof, is finally determined with respect to the Company, and the Partnership Representative has not yet caused the Company to make the election under Internal Revenue Code Section 6226(a): (i) the Members shall take all actions requested by the Partnership Representative, including, without limitation, filing amended tax returns and paying any tax or adjustment due; (ii) if applicable, the Partnership Representative shall use commercially reasonable efforts to make any modifications available under Internal Revenue Code Section 6225(c)(3), (4), and (5); and (iii) any imputed underpayment (as determined in accordance with Internal Revenue Code Section 6225) or adjustment that does not give rise to an imputed underpayment shall be apportioned among the Members, for the taxable year in which the adjustment is finalized, in such manner as may be necessary (as determined by the Partnership Representative in good faith) so that, to the maximum extent possible, the tax and economic consequences of the partnership adjustment and any associated interest and penalties are borne by the Members based on their interests in the Company for the reviewed year. (f) Expense items attributable to the audit and final determination of any imputed adjustment amount of the Company shall be specially allocated to each Member in proportion to which each Member bears the cost of such imputed adjustment amount. (g) To the extent that a portion of the tax liabilities imposed under Internal Revenue Code Section 6225 relates to a former Member, the Company may require that former Member to indemnify the Company for its allocable portion of such tax. Each Member acknowledges and agrees that, notwithstanding the transfer or redemption of all or any portion of its interest in the Company, it will remain liable for all tax liabilities with respect to its allocable share of income and gain of the Company for the Company's taxable years (or portions thereof) prior to such transfer or redemption. The obligations of each Member or former Member under this Section 8.4 shall survive the transfer or redemption by such Member of its Membership Interest and the termination of this Agreement or the dissolution of the Company. 24 DocuSign Envelope ID:BBE03710-2564-432C-B4C6-8DCED24D51D8 9. INDEMNIFICATION. 9.1 Indemnification of Agents. (a) An "Agent" is any Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding by reason of the fact that such Person is or was a Member, Manager, officer, employee or other agent of the Company on Company business, or such Person is or was a manager, member, director, officer, employee or other agent of the Manager or a Member of the Company and acting in connection with or on behalf of the Company on Company business. (b) To the fullest extent permitted by applicable law in effect on the date hereof and to such greater extent as applicable law may hereafter from time to time permit, and to the extent of its assets, the Company shall indemnify, defend and hold harmless each Agent, and each from and against any and all liabilities of every kind (including, without limitation, attorneys' fees), arising in any manner out of or in connection with the operation of the Company's business, except as to those matters arising by reason of such Agent's fraud, gross negligence, reckless or intentional misconduct, or a knowing violation of law. The Manager shall be authorized, on behalf of the Company, to enter into indemnity agreements from time to time with any Agent entitled to be indemnified by the Company hereunder, upon such terms and conditions as the Manager deems appropriate in its business judgment. If any action, suit or proceeding is instituted against the Company and/or the Manager and/or an Agent with respect to the Company's business, assets, liabilities or activities, the Manager may obtain legal counsel to defend or assist in defending such action, suit or proceeding. The Company shall (i) advance to the Manager funds necessary to pay for all expenses and costs reasonably incurred in connection therewith, and (ii) reimburse the Manager for, and indemnify, defend and hold harmless the Manager from and against, any and all liabilities, costs and expenses which were not advanced by the Company but which were incurred in connection with the defense of any such action, suit or proceeding, including, without limitation, liabilities, costs and expenses paid in settlement or compromise of the action, suit or proceeding. If, following the Company's advance of funds to the Manager pursuant to this subsection (b), a court of competent jurisdiction determines that the Manager is not entitled to indemnification under this Agreement, then the Manager shall return all advanced funds to the Company without interest. (c) The Manager shall not be liable to the Company for any loss suffered by it in connection with its activities, provided that if such loss or liability arises out of any action or inaction of the Manager, the Manager must have determined in good faith that such course of conduct was in the best interest of the Company, and such course of conduct must not have constituted fraud, gross negligence, reckless or intentional misconduct, or a knowing violation of law by such Manager in connection with carrying out its duties as the Manager of the Company. 25 DocuSign Envelope ID: BBE03710-2564-432C-B4C6-8DCED24D51D8 10. DISSOCIATION 10.1 No Right to Dissociate. No Member has the right to dissociate from the Company without receiving the consent of all other Members. 10.2 Events Causing Wrongful Dissociation. A Person shall be wrongfully dissociated as a Member from the Company when any of the following occur: (a) The Company receives notice of the Member's express will to withdraw as a Member; (b) The Member expelled as a Member by the unanimous consent of the other Members because any of the following applies: (i) It is unlawful to carry on the Company's activities with the Person as a Member. (ii) There has been a Transfer of all of the Member's Transferable Interest in the Company, other than the following: (1) A Transfer for security purposes. (2) A Permitted Transfer under Section 7.4. (iii) The Member is a corporation and, within ninety (90) days after the Company notifies the Member that it will be expelled as a Member because the Member has filed a certificate of dissolution or the equivalent, its charter has been revoked, or its right to conduct business has been suspended by the jurisdiction of its incorporation and the certificate of dissolution has not been revoked or its charter or right to conduct business has not been reinstated. (iv) The Member is a limited liability company or partnership that has been dissolved and whose business is being wound up. (c) In the case of a member that is a trust, the trust's entire Transferable Interest in the Company is distributed other than as allowed under Section 7.4. (d) In the case of a Member that is an estate, the estate's entire Transferable Interest in the Company is transferred other than as allowed under Section 7.4. 10.3 Death. The death of an individual Member shall not cause the Member to be dissociated unless the recipient of the Membership Interest is other than by a Permitted Transfer. 26 DocuSign Envelope ID: BBE03710-2564-432C-B4C6-8DCED24D51D8 10.4 Effect of Disassociation. (a) When a Person is dissociated as a Member of the Company, all of the following apply: (i) The person's right to participate as a Member in the management and conduct of the Company's activities terminates. (ii) Subject to Section 30-25-304 of the Act, any Transferable Interest owned by the Person immediately before dissociation in the person's capacity as a Member is owned by the Person solely as a Transferee. (b) Dissociation as a Member does not discharge the former Member from any debt, obligation, or other liability to the Company or the other Members that was incurred while the Person was a Member nor does it release the former Member from any obligation to contribute Additional Capital. (c) If a Person is wrongfully dissociated from the Company, that Person shall be liable for all damages and injuries caused by the wrongful dissociation. 10.5 [Intentionally Omittedl. 10.6 Savings Clause. Notwithstanding anything in this Article IX to the contrary, if a dissociation arising from a Permitted Transfer, this Article IX shall not apply. 11. DISSOLUTION AND WINDING UP 11.1 Dissolution. The Company shall be dissolved, its assets shall be disposed of, and its affairs wound up on the first to occur of the following: (a) Upon the entry of a decree of judicial dissolution pursuant to the Act; (b) Upon the affirmative vote or written consent of a Majority Interest of the Members; (c) The occurrence of a Dissolution Event unless within ninety (90) days after the occurrence of such event Members holding a Majority Interest consent to continue the business of the Company; or (d) The sale of all or substantially all of the assets of Company. 11.2 Certificate of Dissolution. As soon as possible following the occurrence of any of the events specified in Section 10.1, the Manager or, if none, the Members, shall execute a Certificate of Dissolution and/or Certificate of Cancellation, as applicable, in such form as shall be prescribed by the Idaho Secretary of State and file the Certificate(s) as required by the Act. 27 DocuSign Envelope ID: BBE03710-2564-432C-B4C6-8DCED24D51D8 11.3 Winding Up. Upon the occurrence of any event specified in Section 10.1 , the Company shall continue solely for the purpose of winding up its affairs in an orderly manner, liquidating its assets, and satisfying the claims of its creditors. The Manager or, if none, the Members, shall be responsible for overseeing the winding up and liquidation of Company, shall take full account of the liabilities of Company and assets, shall either cause its assets to be sold as promptly as is consistent with obtaining the fair market value thereof and shall cause the proceeds therefrom, to the extent sufficient therefor, to be applied and distributed as provided in Section 10.5. The Persons winding up the affairs of the Company shall give written notice of the commencement of winding up by mail to all known creditors and claimants whose addresses appear on the records of the Company. The Manager or Members winding up the affairs of the Company shall be entitled to reasonable compensation for such services. 11.4 Distributions in Kind. Any non-cash asset distributed to one or more Members shall first be valued at its fair market value to determine the Net Profit or Net Loss that would have resulted if such asset were sold for such value, such Net Profit or Net Loss shall then be allocated pursuant to Section 6, and the Members' Capital Accounts shall be adjusted to reflect such allocations. The amount distributed and charged to the Capital Account of each Member receiving an interest in such distributed asset shall be the fair market value of such interest (net of any liability secured by such asset that such Member assumes or takes subject to). The fair market value of such asset shall be determined by the Manager or by the Members or if any Member objects by an independent appraiser (any such appraiser must be recognized as an expert in valuing the type of asset involved) selected by the Manager (or liquidating trustee), and approved by the Members. 11.5 Order of Payment of Liabilities Upon Dissolution. After determining that all known debts and liabilities of the Company in the process of winding-up, including, without limitation, debts and liabilities to Members who are creditors of the Company, have been paid or adequately provided for, the remaining assets shall be distributed to the Members in accordance with Section 6.5. 11.6 Limitations on Payments Made in Dissolution. Except as otherwise specifically provided in this Agreement, each Member shall only be entitled to look solely to the assets of the Company for the return of such Member's positive Capital Account balance and shall have no recourse for such Member's Capital Contribution and/or share of Net Profits (upon dissolution or otherwise) against the Manager or any other Member. 11.7 No Deficit Restoration. Upon the liquidation of the Company within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Regulations, each Member's Capital Account shall be adjusted for all contributions, distributions and allocations for all taxable years including the year during which such liquidation occurs. If a Member has a deficit in its Capital Account, such Member shall not be obligated to contribute any amount to the Company. The allocation provisions of this Agreement are intended to produce final Capital Account balances which reflect the aggregate cumulative distribution priorities described in Section 6.5. 28 DocuSign Envelope ID: BBE03710-2564-432C-B4C6-8DCED24D51D8 12. INVESTMENT REPRESENTATIONS Each Member hereby represents and warrants to, and agrees with, the Manager, the other Members, and the Company as follows: 12.1 Preexisting Relationship or Experience. (a) Such Member has a preexisting personal or business relationship with the Manager and one or more of the Company's officers, or control persons or (b) by reason of such Member's business or financial experience, or by reason of the business or financial experience of such Member's financial advisor who is unaffiliated with and who is not compensated, directly or indirectly, by the Company or any affiliate or selling agent of the Company, such Member is capable of evaluating the risks and merits of an investment in the Membership Interest and of protecting such Member's own interests in connection with this investment. 12.2 No Advertising. Such Member has not seen, received, been presented with, or been solicited by any leaflet, public promotional meeting, newspaper or magazine article or advertisement, radio or television advertisement, or any other form of advertising or general solicitation with respect to the sale of the Membership Interest. 12.3 Investment Intent. Such Member is acquiring the Membership Interest for investment purposes for such Member's own account only and not with a view to or for sale in connection with any distribution of all or any part of the Membership Interest. No other person will have any direct or indirect beneficial interest in or right to the Membership Interest. 13. MISCELLANEOUS 13.1 Counsel to the Company. This Agreement has been prepared by legal counsel to the Company ("Company Counsel"), which may also be counsel to the Manager or any Affiliate of a Manager or any Member or any Affiliate of a Member. The Manager may execute on behalf of the Company and the Members any consent to the representation of the Company that Company Counsel may request pursuant to the Idaho Rules of Professional Conduct or similar rules in any other jurisdiction ("Rules"). Each Member acknowledges that Company Counsel does not represent any Member in the absence of a clear and explicit agreement to such effect between the Member and Company Counsel, including without limitation in the preparation and negotiation of this Agreement, and that in the absence of any such agreement Company Counsel shall owe no duties directly to a Member. In the event any dispute or controversy arises between any Members and the Company, or between any Members or the Company, on the one hand, and a Manager (or Affiliate of a Manager) that Company Counsel represents, on the other hand, then Company Counsel may not represent either the Company or any such Member or Manager (or such Member's or Manager's Affiliate) in connection with such dispute or controversy unless then agreed to in writing by all Members, provided that Company Counsel may continue to represent any of the Members (or their Affiliates) and/or the Manager (or its Affiliates) in matters unrelated to 29 DocuSign Envelope ID: BBE03710-2564-432C-B4C6-8DCED24D51D8 the Company and the Property, and each Member hereby consents to such representation. 13.2 Complete Agreement. This Agreement and the Articles constitute the complete and exclusive statement of agreement among the Members and Manager with respect to the subject matter herein and therein and replace and supersede all prior written and oral agreements or statements by and among the Members and Manager or any of them. No representation, statement, condition or warranty not contained in this Agreement or the Articles will be binding on the Members or Manager or have any force or effect whatsoever. To the extent that any provision of the Articles conflict with any provision of this Agreement, the Articles shall control. 13.3 Binding Effect. Subject to the provisions of this Agreement relating to transferability, this Agreement will be binding upon and inure to the benefit of the Members, and their respective successors and assigns. 13.4 Interpretation. In the event any claim is made by any Member relating to any conflict, omission or ambiguity in this Agreement, no presumption or burden of proof or persuasion shall be implied by virtue of the fact that this Agreement was prepared by or at the request of a particular Member or such Member's counsel. 13.5 Arbitration and Mediation. (a) Mediation of Disputes. If Members cannot resolve a dispute or controversy regarding this Operating Agreement or the operation of the Company, they shall submit their dispute or controversy to mediation. The parties to the dispute or controversy shall arrange the procedure and terms of the mediation. (b) Arbitration of Disputes. If, following mediation, the parties to a dispute or controversy cannot resolve their dispute or controversy, they shall submit their dispute or controversy to arbitration in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association. Any award rendered by arbitrators shall be final, binding, and conclusive on the parties to the arbitration, and judgment on the award may be entered in any court having jurisdiction. Any party may commence arbitration by sending the other parties to the dispute a written request for arbitration. The prevailing party or parties may be awarded attorney fees, costs, and other expenses of the arbitration. 13.6 Severability. If any provision of this Agreement or the application of such provision to any person or circumstance shall be held invalid, the remainder of this Agreement or the application of such provision to persons or circumstances other than those to which it is held invalid shall not be affected thereby. 13.7 Notices. Any notice, demand, approval, consent, or other communication required or desired to be given under this Agreement shall be given in writing in the manner set forth below, addressed to the Member or Manager at the address specified 30 DocuSign Envelope ID:BBE03710-2564-432C-B4C6-8DCED24D51D8 in the Member & Manager Schedule, or at such other address for which that party may have given not less than five (5) business days' prior written notice to the other parties notice under the provisions of this Section. Any notice, demand, approval, consent, or other communication given by (a) mail shall be deemed to have been given on the second (2nd) business day immediately following the date it was deposited in the United States mail, first class and postage prepaid; (b) overnight common carrier courier service shall be deemed to be given on the business day (not including Saturday) immediately following the date it was deposited with such common carrier; (c) delivery in person or by messenger shall be deemed to have been given upon delivery in person or by messenger; or (d) electronic transmission shall be deemed to have been given on the date of transmission of the entire communication, provided that (i) such transmission occurs prior to 5:00 p.m. Pacific Time, on a business day, otherwise on the succeeding business day, and (ii) the sending party deposits a hard copy of the original transmitted document(s) in the United States mail, addressed to the receiving party, first class postage prepaid, not later than the first (1 st) business day following such transmission. 13.8 Reliance on Authority of Person Signing Agreement. If a Member is not a natural person, neither the Company nor any Member will (a) be required to determine the authority of the individual signing this Agreement to make any commitment or undertaking on behalf of such entity or to determine any fact or circumstance bearing upon the existence of the authority of such individual or (b) be responsible for the application or distribution of proceeds paid or credited to individuals signing this Agreement on behalf of such entity. 13.9 No Interest in Company Property; Waiver of Action for Partition. No Member has any interest in specific property of the Company. Without limiting the foregoing, each Member irrevocably waives during the term of the Company any right that such Member may have to maintain any action for partition with respect to the property of the Company. 13.10 Legal Costs. If any party to this Agreement shall take any action to enforce this Agreement or bring any action or commence any proceeding for any relief against any other party, declaratory or otherwise, arising out of this Agreement, the losing party shall pay to the prevailing party a reasonable sum for attorneys' fees incurred in bringing such suit or proceeding and/or enforcing any judgment granted therein, all of which shall be deemed to have accrued upon the commencement of such action or proceeding and shall be paid whether or not such action or proceeding is prosecuted to judgment. Any judgment or order entered in such action or proceeding shall contain a specific provision providing for the recovery of attorneys' fees and costs incurred in enforcing such judgment. For purposes of this section, attorneys' fees shall include, without limitation, fees incurred in the following: (a) post-judgment motions; (b) contempt proceedings; (c) garnishment, levy, and debtor and third party examinations; (d) discovery; (e) bankruptcy litigation; and (f) appeals. 13.11 Remedies Cumulative. The remedies under this Agreement are cumulative and shall not exclude any other remedies to which any person may be lawfully entitled. 31 DocuSign Envelope ID:BBE03710-2564-432C-B4C6-8DCED24D51D8 13.12 Governing Law; Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of Idaho, without regard to principles of conflict of laws. 13.13 Time of the Essence; Dates. Time is of the essence of this Agreement. A "business day" as used in this Agreement shall mean any day other than a Saturday, Sunday, a day on which the Federal Reserve System is closed, or a day on which commercial banks in Idaho are authorized to close. In the event that any date specified in this Agreement falls on a date other than a business day, it shall be deemed to fall on the succeeding business day. 13.14 Attorney-In-Fact and Agent. Each Member, by execution of this Agreement, irrevocably constitutes and appoints the Manager as the Member's true and lawful attorney-in-fact and agent, with full power and authority in the Member's name, place, and stead to execute, acknowledge, and deliver, and to file or record in any appropriate public office: (a) any certificate or other instrument that may be necessary, desirable, or appropriate to qualify the Company as a limited liability company or to transact business as one in any jurisdiction in which the Company conducts business; (b) 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; (c) any certificates or instruments that may be necessary, desirable, or appropriate to reflect the dissolution and winding up of the Company; (d) a statement from any Idaho non-resident member stating that the Member consents to file a Idaho tax return, to make timely payment of all taxes imposed on the Member with respect to the income of the Company, and to be subject to personal jurisdiction in Idaho for purposes of the collection related to the Company's income; and (e) 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 Manager. 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 in this Section. 13.15 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original (including copies sent to a party by electronic transmission) as against the party signing such counterpart, but which together shall constitute one and the same instrument. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 32 DocuSign Envelope ID:BBE03710-2564-432C-B4C6-8DCED24D51D8 IN WITNESS WHEREOF, the undersigned have executed this Agreement as set forth below. Manager: Members: Sunny Cove, LLC, Wildwood Family LTD, a California limited a California limited liability company partnership DocuSigned by: E 91�oµ Sunny Cove, LLC, By: a California limited liability company, Mark Engstrom, its Manager its, general partner DocuSigned by: Y Mark Engstrom, its Manager 5DocuSigned by: aS ul ' �GIo m-s Jason Jaques, individually DocuSigned by: ,�aw�t,S fit,avt, James Teare, individually FDocuSigned by: jb(at w%bKL" 9o-3s14.()F ^ John Monley, individually 33 5474.001-2545915.1 DocuSign Envelope ID:BBE03710-2564-432C-B4C6-8DCED24D51D8 ACKNOWLEDGMENT AND ACCEPTANCE BY MANAGER The undersigned hereby accepts appointment as a Manager of the Company as provided in Section 5.2 above, and agrees to serve as a Manager of the Company in accordance with Article 5 of this Agreement. Sunny Cove, LLC, a Californba�Umij9d liability company Y Mark Engstrom, its Manager EXHIBIT: A - Member & Manager Schedule B — Spousal Consent 34 5474.001-2545915.1 DocuSign Envelope ID:BBE03710-2564-432C-B4C6-8DCED24D51D8 Exhibit A to Operating Agreement for Franklin Mile Managers, LLC MEMBER & MANAGER SCHEDULE MEMBERS Name and Address of Members Capital Contribution Percentage Interest Wildwood Family LTD, a California $5,500.00 55% limited partnership 837 Jefferson Boulevard West Sacramento, CA 95691 Phone: (916) 617-4244 Email: mark.engstrom@cushwake.com James Teare $1,500.00 15% Jason Jaques $1,500.00 15% 2217 Shenandoah Place Davis, CA 95616 Phone: (916) 617-4277 Email: mason.jagues cushwake.com John Monley $1,500 15% 265 Mercedes Court Davis, CA 95616 Phone: (916) 754-7400 Email: johnmlepropinc.com Total: $10,000.00 100% A-1 5474.001-2545915.1 DocuSign Envelope ID:BBE03710-2564-432C-B4C6-8DCED24D51D8 MANAGER Name and Address of Manager Sunny Cove, LLC, a California limited liability company Attn: Mark Engstrom 837 Jefferson Boulevard West Sacramento, CA 95691 Phone: (916) 617-4244 Email: mark.engstrom@cushwake.com 2 5474.001-2545915.1 DocuSign Envelope ID:BBE03710-2564-432C-B4C6-8DCED24D51D8 Exhibit B to Operating Agreement for Franklin Mile Managers, LLC COMMUNITY PROPERTY SPOUSAL CONSENT OPERATING AGREEMENT OF Franklin Mile Managers, LLC I, certify and declare that: 1. 1 am the spouse or registered domestic partner of ("Spouse"), one of the persons who has executed or otherwise agreed to be bound by all of the terms and conditions set forth in the foregoing Operating Agreement of Franklin Mile Managers, LLC, dated 2020, as such agreement may be amended from time to time ("Agreement"). 2. My Spouse has acquired an ownership interest in Franklin Mile Managers, LLC, an Idaho limited liability company ("LLC"). 3. 1 agree to be bound by and accept my rights under the provisions of the Agreement in lieu of all community property or other interests I may have in property subject to the terms of the Agreement; 4. 1 grant my Spouse an irrevocable special power of attorney, which is coupled with the interest of my spouse and myself under the Agreement, to deal with the subject matter of the Agreement and to modify, amend, and add to the Agreement without further signature, acknowledgment, agreement, or consent on my part. 5. 1 agree not to take any action at any time which might interfere with or hinder the operation of the Agreement and any interest or rights now or later acquired by me or my Spouse arising from or related to the Agreement, and any modifications, amendments, or additions to the Agreement. 6. 1 have been afforded the opportunity to seek independent legal and tax counsel of my own choosing to (i) help me in evaluating the character of my interest in the LLC as community property or separate property, and (ii) advise me regarding my position with respect to the Agreement, this Community Property Spousal Consent, the LLC, and the interests of myself and my Spouse from a legal, economic and tax standpoint. 7. My Spouse and I have fully discussed the character of our respective interests in the LLC (e.g., as community property or separate property) between ourselves and have had the opportunity to seek independent legal counsel with respect to the characterization of our respective interests in the LLC as community property or separate property. 8. 1 have read, understand, and agree to have my legal rights determined by the Agreement. Dated: DocuSign Envelope ID:BBE03710-2564-432C-B4C6-8DCED24D51D8