PZ - Esperanza Operating Agreement Executed OPERATING AGREEMENT
of
30352 ESPERANZA, LLC
This Operating Agreement(the"Agreement"),which shall be effective as of May 12, 2016, is
entered into by and between 30352 Esperanza, LLC, a California limited liability company("30352"
and/or the "Company") on the one hand, and Cesar Meyer and Brock Ward (collectively, the
"Members," or individually, a"Member")on the other hand, each of whom desires to enter into this
Agreement in accordance with the California Revised Uniform Limited Liability Company Act
(California Corporations Code §17701.01, et seq.) (the "Act"). The Members and the Company maybe
collectively referred to in this Agreement as the "Parties," or individually as a"Party."
NOW, THEREFORE, the Members agree as follows:
1. SELECTED DEFINITIONS
1.1. Selected Definitions. A variety of words and phrases will be capitalized in this
Agreement. Many will be defined in this "Selected Definitions" section,while others will be
defined elsewhere in this Agreement.
1.2. Adiusted Taxable Income. As used in this Agreement,"Adjusted Taxable Income"
means the federal taxable income allocated by 30352 to the Members with respect to their
Membership Interests for such whole or partial fiscal year. Such taxable income shall be
computed by: (i) subtracting excess taxable losses or credits of the Company for any prior period
allocable to each of the Members pursuant to their respective Membership Interests, and as long
as such losses/credits were not previously taken into account for purposes of determining such
Member's Adjusted Taxable Income in a prior fiscal year to the extent such loss or credit would
be available under the Code to offset income of the Member determined as if the income, loss,
and credits from the Company were the only income, loss, and credits of the Member in such or
any prior fiscal years; and (ii) taking into account any special basis adjustment with respect to
such Member resulting from an election by the Company under §754 of the Code.
1.3. Affected Member. As used in this Agreement, "Affected Member"means, as the
context will dictate, a Member whose conduct, actions, or circumstances caused a Dissolution
Event, caused a voluntary withdrawal which does not constitute a Dissolution Event, or who is
otherwise the subject of some action affecting the Company or the other Member.
1.4. Affiliate. As used in this Agreement, "Affiliate"means any Person who is in control of,
under the control of, or in common control with, a Member or Officer,whether such control is
direct or indirect. [In context of an Affiliate, "control" (including the terms "controlling, "
"controlled by"and "under common control with') means, with respect to a corporation or
limited liability company, the power to exercise more than fiftypercent (50%) of the voting rights
of that corporation or limited liability company, and with respect to an individual,partnership,
trust, or other entity or association, the power to direct or cause the direction of the management
and policies of a person, whether through the ownership of voting securities, by contract, or
otherwise.]
1.5. Affiliate Agreement. As used in this Agreement, "Affiliate Agreement"means any
agreement,whether written or oral,between 30352 and any Member or Officer of the Company
(including their respective Affiliates, if any). Such Affiliate Agreements might relate to any
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matter(e.g., employment, loans to or from 30352, business conducted between the Company and
an Affiliate, etc.).
1.6. Articles. As used in this Agreement, "Articles"means the Articles of Organization filed
with the California Secretary of State forming the Company, as initially filed and as they may be
amended from time to time.
1.7. Bankruptcy. As used in this Agreement, "Bankruptcy"means: (i)the filing of an
application by a Member for, or its/his consent to, the appointment of a trustee, receiver, or
custodian of the Member's assets; (ii)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; (iii) the making by a Member of a general assignment for the benefit of creditors; (iv)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(v)the failure by a Member generally to pay
the Member's debts as the debts become due within the meaning of§303(h)(1) of the United
States Bankruptcy Code, as determined by the Bankruptcy Court, or the admission in writing of
the Member of the Member's inability to pay its/his debts as they become due.
1.8. Capital Account. As used in this Agreement, "Capital Account" initially means the
value of a Member's capital investment in the Company,whether in the form of money, personal
or real property, and/or labor and services performed, and thus generally represents a Member's
equity in the Company. A Member's Capital Account may be adjusted from time to time to
reflect not only all the Member's Capital Contributions to the Company,but also the Company's
allocations of Net Profits,Net Losses, and/or Distributions to the Member.
1.9. Capital Contribution. As used in this Agreement, "Capital Contribution(s)"means any
Member's contribution to the capital of the Company in the form of cash,property, services
rendered, or a promissory note (or other binding obligation to contribute cash or property or to
render services). The amount of any non-cash contribution shall constitute the fair market value
of such contribution (net of liabilities secured by such contributed property that the Company is
considered to assume or take subject to Code §752). Capital Contributions shall not be deemed
loans.
1.10. Capital Event(s). As used in this Agreement, "Capital Event(s)"means the sale or other
disposition of any of 30352's capital assets, or alternatively the receipt of money paid by an
insurance company for the loss of Company property, or the receipt of proceeds arising out of a
refinancing of any of the Company's property.
1.11. Code. As used in this Agreement, and unless specifically stated otherwise, "Code'
means the Internal Revenue Code, as amended from time to time, or any corresponding provision
of any succeeding revenue law.
1.12. Company Minimum Gain. As used in this Agreement, "Company Minimum Gain"
shall have the same meaning as set forth for the term "Partnership Minimum Gain" in Treasury
Regulations §1.704-2 (26 C.F.R. §1.704-2).
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1.13. Confidential Information. As used in this Agreement, "Confidential Information" shall
mean all of the Company's proprietary or confidential information, in whatever form(oral,
visual, written, electronic, tangible, or intangible),whether labeled"confidential" or otherwise,
and including, without limitation, information related to the Company's: (i) clients or customers;
(ii) technical data; (iii)know-how; (iv) non-public information reasonably considered proprietary
or confidential; (v)profitable markets, lines of distribution, and/or marketing plans, strategies
and resources; (vi)pricing and pricing models; (vii)non-public software,programs, algorithms,
and/or source code; (viii) developments, inventions, processes, and formulas; (ix)proprietary
technology and designs; (x) financial data; (xi)business operations, including expansion
strategies and plans; (xii) inventory; and(xiii) any other information deemed"confidential"
within the meaning of California Civil Code §3426, et seq.
1.14. Corporations Code. As used in this Agreement, "Corporations Code"means the
California Corporations Code, as amended from time to time, and the provisions of any
succeeding law.
1.-15. Departing Member. As used in this Agreement, "Departing Member"means any
Member(or when applicable, a Member's trustees, executors,heirs,beneficiaries, or
representatives) whose conduct or circumstances results in a Dissolution Event, or who
otherwise withdraws, in whole or in part, from the Company in accordance with the terms set
forth below, where such withdrawal does not result in a Dissolution Event. When the context so
dictates, "Departing Member" shall also include the Departing Member's Estate Representatives
regardless of whether or not words to that effect are included in a specific provision set forth
below.
1.16. Dissolution Event. As used in this Agreement, "Dissolution Event"means,with respect
to a Member(i.e., an Affected Member), any of the following: death, serving notice of intent to
withdraw as a Member(unless related to the voluntary Transfer of a Member's Membership
Interest to a non-Member third-party), retirement, insanity, incapacity, or Bankruptcy. With
respect to a Member's insanity or incapacity, such events would only constitute Dissolution
Events if the condition(s) lasted for one hundred and twenty(120) days or more (in the
aggregate) during any consecutive twelve (12)month period.
1.17. Distribution(s). As used in this Agreement, "Distribution(s)"means the transfer of
money or property by the Company to the Members and/or Transferee(s), whichever the case
may be.
1.18. Economic Interest. As used in this Agreement, "Economic Interest"means the right, as
originally associated with a Member, to receive Distributions from the Company, as well as to
view the information available to those with a transferable interest within the meaning of
Corporations Code §17704.10. A mere Economic Interest does not convey any other rights to
any Person,including the right to vote or be deemed a Member of the Company. Persons
holding an Economic Interest in the Company shall not have the ability to Transfer that interest,
nor shall such Persons have any obligations to make Capital Contributions.
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1.19. Electronic Transmission. As used in this Agreement, "Electronic Transmission,"
whether by or to the Company, shall have the same meaning as is set forth in Corporations Code
§17701.02(i)(1)-(2).
1.20. Estate Representative(s). As used in this Agreement, "Estate Representative(s)"means
a deceased or Incapacitated Member's applicable heirs,beneficiaries, representatives,trustees,
executors, guardians, conservators, etc. Therefore, when the context so dictates, the terms
"Estate Representative(s)," "Departing Member" and"Affected Member" shall be
interchangeable.
1.21. Fiscal Year(s). As used in this Agreement, "Fiscal Year(s)"means the Company's fiscal
year,which shall be the calendar year. In the event that 30352 makes a tax election which
permits it to have a different Fiscal Year(upon a vote of both Members), or the Company is
otherwise required to alter its Fiscal Year, the Company's Fiscal Year shall be altered
accordingly.
1.22. Incapacity. As used in this Agreement, "Incapacity"means either a declaration by a
court of competent jurisdiction that the Affected Member is mentally incapacitated, or the
inability of a Member, as a result of physical illness or mental impairment, to reasonably and
intelligently participate in the day-to-day management and operation of 30352. Notwithstanding
the foregoing, a Member shall only be deemed Incapacitated under this Agreement(triggering a
Dissolution Event) if the condition lasts for one hundred and twenty(120) days or more (in the
aggregate) during any consecutive twelve (12)month period.
1.23. Member. As used in this Agreement, "Member"means each individual who: (i)has
been admitted into membership in the Company pursuant to the terms of this Agreement, and as
reflected in the attached Exhibit "A"; (ii) has signed this Agreement(and any subsequent
amendments to it); and(iii)has not engaged in conduct resulting in a Dissolution Event or whose
membership has not already been terminated for any other reason.
1.24. Member Nonrecourse Debt. As used in this Agreement, "Member Nonrecourse Debt"
shall have the same meaning as set forth for the term "Partner Nonrecourse Debt" in Regulations
§1.704-2(b)(4). [26 C.F.R. §1.704-2(b)(4).]
1.25. Member Nonrecourse Deductions. As used in this Agreement, "Member Nonrecourse
Deductions"means items of Company loss, deduction, or Code §705(a)(2)(B) [26 U.S.C.A.
§705(a)(2)(B)] expenditures which are attributable to Member Nonrecourse Debt.
1.26. Membership Interest. As used in this Agreement, "Membership Interest,"which,when
expressed as a percentage of ownership in the Company, may also be referred to as a
"Percentage Interest,"means the totality of a Member's rights in the Company, including: (i) an
Economic Interest, as well as the right to share in the Company's losses and deductions; (ii) a
management interest(i.e., the right to vote and make decisions concerning the Company's
business affairs and day-to-day operations; and(iii) an informational interest(i.e., the right to
information and documents concerning the business and affairs of the Company). The
Membership Interest of each Member of 30352 is set forth in Exhibit "A." Should there come a
time when an individual is entitled to a certain percentage of the revenue of the Company,but
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does not otherwise have any other rights (i.e., has only an Economic Interest),Exhibit "A"shall
be amended to reflect this individual's rights.
1.27. Negative Capital Account/Positive Capital Account. As used in this Agreement, the
terms "Negative Capital Account" and"Positive Capital Account" shall mean a Capital account
with a balance of less than zero, and a Capital account with a balance greater than zero,
respectively.
1.28. Net Profits & Net Losses. As used in this Agreement, and pursuant to applicable law,
including without limitation, Code §§703 and 705, the terms "Net Profits" and"Net Losses"
mean 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.
1.29. Percentage Interest. As used in this Agreement, "Percentage Interest"means the
Membership Interest of each Member expressed as a percentage of ownership of the Company
out of a total of 100%. The Percentage Interest of each Member is set forth in Exhibit "A."
1.30. Person. As used in this Agreement, "Person"means an individual,partnership, limited
partnership, corporation, limited liability company, registered limited liability partnership, trust,
trustee of a trust, estate, association, or any other entity.
1.31. Regulations. As used in this Agreement, "Regulations"refers to the income tax
regulations of the United States Treasury Department promulgated under the Code, including
any temporary regulations, and any successor regulations which may be promulgated.
1.32. Remaining Member. As used in this Agreement, "Remaining Member"means,upon
the occurrence of a Dissolution Event, or a withdrawal from the Company of a Member where
such withdrawal does not constitute a Dissolution Event, the Member of the Company whose
conduct or circumstances did not cause the Dissolution Event or withdrawal. The term
"Remaining Member" shall, when context dictates, have the same meaning as "non-Affected
Member."
1.33. Securities Act. As used in this Agreement, "Securities Act"means the Securities Act of
1933, as amended, as well as any rules or regulations promulgated pursuant to the Securities Act.
"Securities Act" shall also mean any federal act passed as a successor to the Securities Act.
1.34. Tax Matters Member. As used in this Agreement, "Tax Matters Member" shall have
the same meaning as the term"Tax Matters Partner,"which is defined in §6231(a)(7) of the
Code.
1.35. Transfer(s). As used in this Agreement, "Transfer(s)" shall mean any voluntary or
involuntary, and direct or indirect, sale, Transfer, conveyance, assignment, pledge, or
encumbrance of any or all of a Member's Percentage Interest in 30352 to a non.-Member third-
party, regardless of whether such a Transfer occurred by operation of law (e.g.,bankruptcy, court
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order, foreclosure of a security interest, creditor's,execution on a judgment, appointment of a
receiver, assignment for the benefit of creditors, etc.), or otherwise.
1.36. Transferee(s). As used in this Agreement,"Transferee(s)" shall mean any individual
who receives a Transfer of all or part of a Member's Membership Interest in the Company,
regardless of whether or not the Transferee ultimately will become a Member and have the rights
granted to Members (e.g.,the right to vote), or who may otherwise acquire nothing but all or part
of a Member's Economic Interest in the Company. This definition shall apply whether such
acquisition was voluntary(i.e., assignment, sale, pledge, or encumbrance), or involuntary(i.e.,
bankruptcy, court order, foreclosure of security interest,judgment creditor, etc.).
2. FORMATION AND ORGANIZATION
2.1. Name & Articles. The name of the Company is 30352 Esperanza, LLC, and it was
formed upon the filing of its Articles of Organization with the California Secretary of State on
May 9, 2016. Subject to the provisions of this Agreement set forth below, no Person may
become a Member of 30352 Esperanza, LLC without agreeing to and becoming a signatory to
this, or an amended version of this, Agreement.
2.2. Operating Agreement. This Agreement has been entered into by the Members for the
express purpose of setting forth their rights, duties, and obligations to each other and to 30352.
To the extent that a provision in this Agreement alters one or more default provisions of the Act,
such alteration was intentional.
2.3. Term. 30352 shall continue in existence in perpetuity, unless dissolved earlier under a
specific provision set forth in the Articles, as required by the Act, or such earlier time as
determined in accordance with the provisions of this Agreement.
2.4. California Address. The Company's designated office in the State of California shall be
30352 Esperanza, Rancho Santa Margarita, CA 92688, or at any other address within the State of
California upon which both Members may agree. The Company shall maintain at this address, or
at the office of the Company's attorneys, all the records and documents which the Company is
required to keep pursuant to Corporations Code §17701.13.
2.5. Agent for Service of Process. 30352's agent for service of process shall be the agent
named in the Company's Articles of Organization. Subject to the requirements of the Act, and
upon the consent of both Members, the Company may select a new agent for service of process
at any time.
2.6. Names and Addresses of Members. The names and mailing addresses of the Members,
along with their respective Membership Interests in the Company, are set forth in the attached
Exhibit "A."
2.7. Authorization and Purpose. Pursuant to the Act, the Members have formed this
Company for the purpose of engaging in any lawful business activity in which limited liability
companies are permitted to engage under California law. The Members intend to govern the
Company in accordance with the Act, the Articles, and this Agreement, and consequently the
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Members shall have the power and authority granted to them under California law to carry out
the business of the Company. In the event of any conflict between the Act and this Agreement,
this Agreement shall control to the maximum extent permitted by applicable law. Likewise, in
the event of any conflict between the Articles and this Agreement, this Agreement shall control
as to current or prior Members or Transferees.
3. CAPITAL CONTRIBUTIONS AND ACCOUNTS
3.1. Initial Capital Contributions. The Members' initial Capital Contributions to 30352 are
set forth in Exhibit "A."
3.2. Additional Contributions. Neither Member shall be required to make any additional
contributions to the Company. However,upon the consent of both Members that additional
capital is desirable or necessary to cover reasonable business related expenses, the Members
shall make such additional contributions. Exhibit "A"shall be revised from time to time to
reflect such changes in each of the Members' Percentage Interests.
3.3. Capital Accounts. The Company shall create and maintain a Capital Account for each
Member of 30352 inconformity with Regulations §1.704-1(b)(2)(iv) [26 C.F.R. §1.704-
1(b)(2)(iv)]. Should any Member Transfer all or any part of his Membership Interest in
accordance with this Agreement, the Transferee shall receive that portion of the Member's
Capital Account attributable to the interest transferred. Subject to the Regulations,the Members
may choose to revise the manner in which the Company manages and/or computes the Members'
Capital Accounts.
3.3.1. Increases to a Member's Capital Account. A Member's Capital Account may
be adjusted upwards (i.e., increased) if a Member contributes additional cash or property
(real or personal) to 30352, if a Member assumes any of the Company's (or another
Member's) debt (whether secured or unsecured), or if a Member receives distributions of
Net Profits from the Company within the meaning of Internal Revenue Code
§705(a)(1)(B).
3.3.2. Decreases to a Member's Capital Account. Likewise, a Member's Capital
Account may be adjusted downwards (i.e., decreased) if a Member receives cash or
property(real or personal) from 30352, if the Company(or another Member) assumes
any of a Member's debt(whether secured or unsecured), or if a Member shares in the
Company's Net Losses within the meaning of Code §§705 and 752.
3.4. No Withdrawals From Capital Accounts/No Interest. No Member shall be entitled to
any withdrawal from their Capital Account or receive any Distributions from the Company
except as is otherwise stated in this Agreement. Likewise, no Member will receive interest in
connection with any Capital Contributions provided to the Company.
3.5. Right of Return of Contributions. Except as expressly set forth in this Agreement, and
excluding cash,upon the dissolution of the Company, the Members shall not be entitled to a
return of any Capital Contributions made to the Company. Likewise,unless expressly provided
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in this Agreement, no Member shall have priority over any other Member regarding the return of
their Capital Contribution.
4. MEMBERS
4.1. Membership Certificates. The Members shall issue membership certificates
representing their respective Membership Interests in the Company, and each such certificate
shall contain the following legend:
PLEASE TAKE NOTICE THAT THIS LLC MEMBERSHIP CERTIFICATE
REPRESENTS THIS MEMBER'S MEMBERSHIP INTEREST IN THE LLC
IDENTIFIED ON THE CERTIFICATE. THE TRANSFERABILITY OF THE
MEMBERSHIP INTEREST REPRESENTED BY THIS CERTIFICATE IS STRICTLY
CONDITIONED UPON THE REQUIREMENTS AND RESTRICTIONS CONTAINED
IN THE OPERATING AGREEMENT ENTERED INTO BY AND AMONG THE
LLC'S MEMBERS. NO TRANSFER, SALE, ASSIGNMENT, OR PLEDGE OF THE
MEMBERSHIP INTEREST REPRESENTED BY THIS CERTIFICATE SHALL BE
MADE UNLESS IT IS MADE IN COMPLIANCE WITH THE REQUIREMENTS AND
RESTRICTIONS CONTAINED IN THE OPERATING AGREEMENT.
PLEASE TAKE FURTHER NOTICE THAT THE MEMBERSHIP INTEREST
REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER
APPLICABLE SECURITIES LAWS. CONSEQUENTLY, THE MEMBERSHIP
INTEREST MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, OR PLEDGED
UNLESS PURSUANT TO A REGISTRATION STATEMENT EFFECTIVE UNDER
APPLICABLE LAW, OR ANY APPLICABLE EXEMPTIONS.
4.2. Limitation of Liability. Unless otherwise set forth elsewhere in this Agreement and
subject to applicable law, no Member shall be personally liable for any of the Company's debts,
obligations, liabilities, or judgments solely because of the Member's membership in 30352.
4.3. Member Votes. Unless otherwise specifically stated below, both Members shall be
entitled to vote regarding issues related to the organization, operation, and dissolution of 30352
solely in proportion to their Membership Interests in the Company, and all votes shall be counted
pursuant to the Members' Membership Interests in the Company. It is the intention of the Parties
to this Agreement that unless otherwise specifically stated elsewhere in this Agreement, the
number of Members who vote on a particular issue shall be irrelevant. Rather, for purposes of
establishing a quorum or taking action requiring a vote of the Members, unless otherwise stated
in this Agreement, the Percentage Interests involved shall constitute the appropriate means of
determining the results of a vote.
4.4. Additional Members. Subject to the terms set forth below and to the Act, new Members
may be admitted to 30352: (i)upon the consent of both Members; or(ii) otherwise as a result of
an approved Transfer(in the manner set forth below in the Transfer and Termination section of
this Agreement) and subsequent decision by both Members to permit the Transferee to be a
Member. At the same time, the existing Members shall, upon their unanimous consent, .
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determine the extent, if any, of the new Member's right to participate in the day-to-day
management of the Company and/or vote on issues relevant to the Company. In no event shall a
Transferee become a Member of 30352, even if the other Members vote to make such an
individual a Member, until the Transferee fulfills the applicable requirements of this Agreement,
including without limitation, signing an amended and restated version of this Agreement, as well
as.any other documents upon which membership in 30352 is conditioned. Exhibit"A"shall be
amended to reflect the addition of a new Member.
4.4.1. Amended Articles of Organization. In the event that the Members determine
that the new Member shall not be a managing-Member of 30352, the Members will
prepare and file with the California Secretary of State the required documentation,
including without limitation, an Amended Articles of Organization converting 30352
from a member-managed limited liability company to a manager-managed limited
liability company.
4.5. Withdrawal from Membership. Subject to Corporations Code §§17706.01 and
17706.02, a Member may withdraw as a Member of 30352 at any time after giving written notice
to the Remaining Member at least ninety(90) days prior to the effective date of the withdrawal.
The Departing Member may revoke his notice to withdraw in writing at any time prior to the
expiration of the ninety(90) days by delivering such revocation to the Remaining Member.
Once the Departing Member provides his notice of intent to withdraw (and does not revoke such
notice prior to the required time period),the Departing Member shall, from that time forward, no
longer have any voting rights. Rather, the Departing Member shall only have the Economic
Interest of a Transferee. Once the ninety(90) days has passed, if the Departing Member did not
revoke his withdrawal,the Departing Member shall no longer be deemed a Member of 30352,
and he shall no longer have any rights in or to the Company. Subject to applicable law, the
Departing Member's Membership Interest shall be valued and paid out pursuant to the Purchase
Price provision contained in the Transfer and Termination section below. In addition to the
foregoing, a Member shall withdraw if required by the Act. To the fullest extent permitted by
the Act, a Member who withdraws from the Company shall remain liable both to the Company
and to the other Member for the Company's debts, obligations, and liabilities. Exhibit "A"shall
be revised to reflect a Member withdrawal from the Company. As is set forth elsewhere in this
Agreement, the withdrawal of a Member(other than a withdrawal involving an approved
Transfer to a non-Member third-party) shall constitute a Dissolution Event regardless of whether
the withdrawal was authorized or not.
4.5.1. Conforming(Authorized)Withdrawal. A conforming, or authorized,
withdrawal occurs when the Departing Member receives the requisite consent to
withdraw pursuant to the terms of this Agreement and when there is substantial
compliance with the conditions, restrictions, and limitations relating to withdrawals (and
where applicable, Transfers) contained in this Agreement. Subject to the exception
regarding Transfers to non-Member/non-Affiliate third-parties, in the event of a
conforming and authorized withdrawal, the Remaining Member will decide whether or
not to dissolve and wind up the Company's affairs. If the Remaining Member decide to
- continue operating 30352, the Departing Member will,unless otherwise prohibited by
applicable law, be paid for his Membership Interest pursuant to the Purchase Price
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provision contained in the Transfer and Termination section below. All other
withdrawals shall be deemed wrongful and non-conforming.
4.5.2. Non-Conforming Withdrawals (No Transfers). Any withdrawal required by
the Act, as well as any unauthorized withdrawal, shall constitute a non-conforming or
wrongful withdrawal and a material breach of this Agreement. In addition to being held
liable to both 30352 and to the Remaining Member, the Departing Member who
wrongfully withdraws from the Company shall no longer have all the rights of a Member,
and instead shall, from that time forward, only have the Economic Interest of a
Transferee. The Remaining Member shall then decide whether to continue operating the
Company or not pursuant to the terms set forth in the Transfer and Termination section
below. In the event that the Remaining Member elects to continue operating the
Company, the Affected Member shall continue to hold only the rights of a Transferee.
4.5.3. Wrongful Withdrawal Involving a Purported Transfer. See the Wrongful
Transfer section contained in the Transfer and Termination section below.
4.6. Competing Activities. To the fullest extent permitted under the Act, and subject to the
Members' obligations to protect the Company's Confidential Information,the Members
acknowledge and agree that each of them may freely participate and engage in investment
interests and business activities other than those related to the Company, including those which
directly compete with the business of 30352. This provision of the Agreement is specifically
intended to permit the Members to enter into and engage in business transactions which are
directly competitive with those of the Company, and neither the Company nor the other Member
shall have any right to make claim(s) against the other Member regarding such competing
activities merely as a result of his Membership Interest in 30352.
4.7. Compensation/Reimbursement of Members. Unless otherwise approved by both
Members, no Member or Affiliate shall be entitled to compensation for services rendered to the
Company unless such services relate to the formation or winding up/dissolution-of the Company.
Either or both Members shall, however, be entitled to reimbursement for any reasonable costs
they actually incur with respect to the formation, operation, growth, or dissolution of the
Company.
4.8. Transactions with Company. Subject to any limitations set forth in the Act or
elsewhere in this Agreement, the Members of 30352 may lend money to, or otherwise transact
business with, the Company. Unless both Members elect otherwise, a loan to the Company by a
Member shall not constitute a Capital Contribution.
4.9. Members Are Agents. The Members-each intend to actively participate in the
management of 30352. Consequently,unless otherwise set forth in this Agreement, each
Member is authorized to act as an agent for the Company if such actions are in compliance with
the wishes and decisions of both Members.
4.10. Dedication of Time. The Members shall individually devote whatever time they
reasonably believe is necessary to conduct the Company's business and affairs.
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4.11. Meetings. Although there shall be no required regular or annual meetings of the
Members, the Members nonetheless agree that Members' meetings which do occur shall be
conducted in accordance with Corporations Code §17704.07 and/or as follows:
4.11.1. Calling of Meetings. Member meetings may be called by either of the Members.
The Member who calls the meeting shall preside at that meeting, and shall select the
other Member to act as secretary for the meeting.
4.11.2. Location and Time of Meetings. Meetings shall take place any day of the week
between 8:00 am and 5:00 pm at the Company's principal office, or at any other location
that the individual calling the meeting selects, as long as telephonic or electronic
attendance by the other participants of the meeting is feasible. If both Members elect
otherwise, such meetings may take place either before 8:00 am or after 5:00 pm.
4.11.3. Notice. Written notice of any meeting shall be provided to the other Member.
Such notice shall be given by the individual who called the meeting, must specify the
purpose(s) of the meeting, and shall otherwise be given in accordance with the applicable
requirements of Corporations Code §1.7704.07. If a Member attends a meeting of the
Members,he shall be deemed to have waived his right to object to the notice of the
meeting unless he expresses such an objection at the commencement of the meeting.
4.11.4. Quorum. No action may be taken at any meeting unless both Members are
present (in person or via proxy). Once a quorum has been established at a duly held
meeting,business may be regularly transacted at that meeting.
4.11.5. Waiver of Notice or Consent. The actions taken at any meeting of Members
however called and noticed and wherever held,have the same validity as if taken at a
meeting duly held after regular call and notice, if a quorum is present either in person or
by proxy, and if either before or after the meeting, each of the Members entitled to vote
who was not present in person or by proxy, signs a written waiver of notice or consents to
the holding of the meeting or approves the minutes of the meeting. All such waivers,
consents or approvals shall be filed with the Company records or made a part of the
minutes of the meeting.
4.11.6. Telephonic or Electronic Participation. Members may participate in any
meeting of the Members via Electronic Transmission as long as both Members can hear
one another, and as long as the use of such equipment otherwise complies with
Corporations Code §17704.07(k) and (q). A Member so participating is deemed to be
present in person at the meeting.
4.11.7. Voidability of Actions Taken. Any actions taken or any agreements reached by
the Members which directly conflict with any of the provisions of this Agreement shall
be void and unenforceable.
4.11.8. Proxies. Both Members may vote in person or via the use of proxies as set forth
in Corporations Code §17704.07(o).
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4.11.9. Voting Rights. Unless otherwise specifically set forth in this Agreement or
mandated otherwise in the Act, all matters requiring the vote, approval, or consent of the
Members may be authorized upon the vote, approval, or consent of both Members.
4.12. Liability for Acts and Omissions. As long as the Members abide by their fiduciary
duties to the other Member(s) and the Company, no Member shall incur any personal liability to
any other Member or 30352 for any actions taken(or for a failure to act) on the Company's
behalf.
5. MANAGEMENT
5.1. Member-Managed. Unless otherwise expressly set forth in this Agreement, and subject
to the provisions of the Act, 30352 shall be managed and controlled by the two (2)Members,
each of whom shall have the authority to operate, control, act for, and bind the Company, as well
as exercise all the powers described in Corporations Code §17701.05. Such powers include,
without limitation,the right to: (i) endorse checks and other instruments made payable to the
Company; (ii) sign contracts (e.g., leases, employment, etc.) and incur obligations (e.g.,
mortgages, loans, lines of credit, etc.) on the Company's behalf, (iii)pay invoices and other
debts of the Company; (iv) sign checks, drafts, and other instruments obligating the Company to
any other Persons; (v)hire and fire consultants, attorneys, accountants, employees, and
independent contractors; (vi) initiate, defend, and settle lawsuits or administrative actions; (vii)
purchase and maintain various types of insurance; (viii) loan money to Members or employees;
(ix) invest profits; (x) indemnify Persons acting on the Company's behalf; (xi) establish
employee benefits; (xii)make charitable donations that further the Company's business and
affairs; (xiii) appoint officer(s); and (xiv) select the manner in which 30352 will be taxed(e.g., as
a corporation or partnership); and(xv)take any other actions they deem necessary to manage the
Company's affairs.
5.1.1. Appointment of Officers. From time to time,the Members may decide to
appoint either one (1) or more non-Members and/or one (1) or more of themselves, to act
as officer(s) of the Company(e.g., President, CFO, etc.) (the "Officer(s)"), each of whom
shall serve at the pleasure of both Members. One (1)individual may serve in more than
one(1) office. In the event a non-Member third-party is selected to act as an Officer of
the Company, his/her compensation shall be decided by both Members of 30352. With
respect to Member(s) serving as Officer(s) of the Company, such Member-Officer(s)
shall not earn additional compensation for acting as Officers unless upon the consent of
all the Members, which shall be reflected in a separate written agreement. A Member's
affiliation with a specific office shall not grant that Member any additional power or
authority over any other Member,but instead shall be viewed solely as a means of
dividing labor and/or communication with third-parties.
5.2. Assets of the Company/Bank Accounts. The Members shall ensure that all of the
Company's assets are at all times held in 30352's name and are never commingled with any
personal assets. Likewise,the Members shall ensure that all of the Company's funds are
deposited into and held in one (1) or more bank/financial accounts in the Company's name.
Such accounts shall be with one (1) or more recognized financial institutions, and subject to.the
limitations set forth elsewhere in this Agreement regarding the spending of the Company's
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funds, each Member shall be an authorized signer on all such accounts. Upon the consent of
both Members of 30352, non-Members may also be designated as signers on one (1) or more of
the Company's bank/financial accounts, at which time the Members shall also determine the
extent of such signers' rights.
5.3. Limitations on the Powers of the Members. As was stated above, and pursuant to
Corporations Code §17704.07(b)(3),while acting in compliance with the wishes and decisions of
both Members, each Member has the right,power, and authority to act on behalf of and bind
30352. However, with respect to the following issues, such rights,powers, and authority shall,
subject to applicable law, require the consent of both Members:
5.3.1.1. Amendment of this Agreement.
5.3.1.2. Amending the Articles.
5.3.1.3. Adding new Member(s), or otherwise determining the extent of such new
a new Member's rights, powers, and authority.
5.3.1.4. Loaning 30352's funds to any other Person, including either Member.
5.3.1.5. Merging with another company or deciding whether to reorganize and/or
convert 30352 to a different type of business entity. The Members acknowledge
and agree that in either case, each of them shall have all the rights of a dissenter
contained in Corporations Code §17711.01, et seq. The purchase of all, or
substantially all, of another company's assets(including stock or membership
units) or liabilities shall not fall within this provision's voting threshold if such
purchase was made within the ordinary course of business for 30352.
5.3.1.6. The sale,Transfer, or disposition of all, or substantially all, of the
Company's assets (unless doing so is in the ordinary course of 30352s business).
5.3.1.7. Incurring any debt outside the ordinary course of the Company's
business.
5.3.1.8. Entering into an Affiliate Agreement, or once the Company has entered
into such an Affiliate Agreement upon the consent of both Members, amending or
modifying such an agreement.
5.3.1.9. The settlement of any lawsuit or arbitration in which 30352 is a
defendant, cross-defendant, or respondent and: (i)which involves the payment of
money by the Company to any other party to the litigation; (ii)the Company's
agreeing to injunctive relief against it; and/or(iii) any agreement on the part of the
Company which would materially and/or negatively affect the manner in which
the Company conducts its business in the ordinary course.
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5.3.1.10. The incurring of any debt or obligation on the Company's behalf in
excess of$10,000. Any Company checks written to cover such approved debts or
obligations must be signed by both Members.
5.3.1.11. The filing of a petition for relief under the United States Bankruptcy
Code, or the negotiation of any assignment for the benefit of the Company's
creditors.
5.3.1.12. Taking any action which would actually or constructively prevent
30352 from carrying on its normal business operations.
6. ALLOCATION OF PROFIT AND LOSS AND DISTRIBUTION
6.1. Compliance with the Code and Regulations. The Company intends to comply with the
Code and all applicable Regulations, including without limitation the minimum gain chargeback
requirements, and intends that the provisions contained in this section(and sub-sections) of the
Agreement be interpreted consistently with that intent.
6.2. Allocation of Net Profits and Losses. The Members intend upon retaining the services
of a qualified tax professional to ensure that 30352 and the Members remain in compliance with
applicable provisions of the Code and the Regulations, including those found in §704. Each
Member shall be allocated a proportionate share of the Net Profits and Losses of the Company in
accordance with his respective Percentage Interest in 30352. Both Members, in consultation
with the Company's tax professional(s), shall determine such amounts in compliance with the
Code and the Regulations, taking into account any applicable exemptions, expenditures, and
depreciation schedules. Notwithstanding any contrary language elsewhere in this Agreement, in
the event that the Code or Regulations are amended, or the Company's tax professional(s) inform
the Members that any of the allocation requirements contained in this Agreement are unlikely to
be upheld, the Members shall have the authority to amend any applicable allocation provisions as
minimally as is possible to comport with applicable law.
6.3. Regulatory and Special Allocations. Any allocations made in accordance with this
section(and sub-sections) of the Agreement shall be taken into consideration in determining
subsequent allocations such that,to the extent possible, the total amount allocated in this and
subsequent allocations equals the amount which would have been allocated had there been no
regulatory or special allocations. To that end, the Members acknowledge and agree to the
following special allocations:
6.3.1. Allocation of Items of Gain. Pursuant to the Regulations (e.g., §1.704-2(g)), in
the event of a net decrease in Company Minimum Gain in any taxable Fiscal Year, 30352
shall specially allocate to each Member items of income and gain for that year(and, if
necessary, for subsequent years)prior to making any other allocations.
6.3.2. Member Nonrecourse Debt. In the event of a net decrease in Company
Minimum Gain based on a Member Nonrecourse Debt in any taxable Fiscal Year, the
Company shall first determine the extent of each Member's share of the Company
Minimum Gain attributable to Member Nonrecourse Debt(pursuant to the Regulations,
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§1.704-2(i)(5). The Company shall then specially allocate items of income and gain for
that year(and, if necessary,for subsequent years) in accordance with the Regulations
(e.g., §1.704-2(i)(4), (f)(6), or(j)(2))to each Member who has a share of the Company
Nonrecourse Debt Minimum Gain.
6.3.3. Member Nonrecourse Deductions. 30352 will allocate Nonrecourse Deductions
for any taxable Fiscal Year to each Member in proportion to his Percentage Interest.
Pursuant to §1.704-2(i) of the Regulations,the Company will also allocate any Member
Nonrecourse Deductions for any taxable Fiscal Year to the Member who bears the risk of
loss with respect to the attributable nonrecourse debt.
6.3.4. Negative Capital Account/Income Offset. If a Member unexpectedly receives
any Distribution, loss, or deduction allocation within the meaning of the §1.704-
l(b)(2)(ii)(d)(4), (5), or(6) of the Regulations which results in the Member's having a
Negative Capital Account balance at the end of the taxable Fiscal Year greater than the
Member's share of Company Minimum Gain, 30352 shall instruct its tax professional(s)
to specially allocate items of income and gain to that Member in a manner designed to
eliminate the excess Negative Capital Account balance as quickly as possible.
6.3.5. Adiusted Basis. Pursuant to §704(c) of the Code, and notwithstanding any other
provision in this Agreement, income, gain, loss, and deductions with respect to any.
property contributed by a Member to 30352 shall, for tax purposes,be allocated among
the Members. In making such allocations,the Members, in consultation with the
Company's tax professional(s), shall take into account: (i)variations between the
adjusted basis of the property contributed to 30352 for federal income tax purposes and
its fair market value on the date of contribution; and/or(ii) which of the three allocation
methods to rely upon(i.e., traditional, traditional with curative, or remedial). Allocations
made pursuant to this sub-section of the Agreement are made solely for federal, state, and
local taxes and shall not be taken into consideration in determining a Member's Capital.
Account, share of Net Profits or Net Losses, or any other items subject to Distribution
under this Agreement.
6.4. Allocation of Profits and Losses Arising Out of Capital Events. In any given taxable
Fiscal Year, the Members shall abide by the Code and Regulations in allocating profits and
losses arising out Capital Events.
6.5. Distributions. Subject to Corporations Code §17704.05, 30352 shall make Distributions
to the Members, and if applicable, to any Transferees with an Economic Interest in the Company,
upon the consent of both Members. Distributions shall be made to the Members in accordance
with each of their respective Membership Interests in the Company, or with respect to
Transferees, in accordance with their respective Economic Interests in 30352. In addition to the
foregoing, 30352 shall issue tax advances on the Members' Distributions as follows:
6.5.1. Advances on Distributions. 30352 shall make quarterly cash Distributions to the
Members at least fifteen(15) days prior to the due date(s) for any federal estimated tax
payments. These estimated tax related Distributions are intended to constitute advances
on the Members' respective proportionate Distributions (i.e., they are not additional
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Distributions), and shall reduce, by the exact amount advanced, any Distributions due to
the Members based upon each Member's proportionate share of the Company's Net
Profits. Such Distributions shall be in at least the amount necessary for each Member to
make his estimated federal tax payment, which shall be calculated solely upon each
Member's proportionate share of the Company's estimated taxable income. The
Distribution of any sum less than the minimum Distribution required in this provision
shall require the consent of both Members. Any such decision must be applied uniformly
to all the Members. Notwithstanding the foregoing,in no event shall the Members ever
make any Distributions if in doing so, 30352 will be unable to pay its debts as they
become due, or if such a Distribution constitutes a violation of Corporations Code
§17704.05.
7. TRANSFER AND TERMINATION OF MEMBERSHIP INTERESTS
7.1. Restriction on Transferability of Membership Interests. Except as expressly
permitted in this Agreement, a Member may not Transfer(i.e., assign, encumber, sell, or
otherwise convey) all or part of his Membership Interest in 30352 without the consent of the
other Member. In entering into this Agreement, each of the Members acknowledges not only the
reasonableness and necessity of the restrictions set forth below regarding the Transfer or
termination of their respective Membership Interests,but also the fact that such restrictions are
intended to further the relationships between the Members. To the maximum extent permitted
by law, and pursuant to the terms of this Agreement, any purported Transfer not in compliance
with the provisions of this Agreement shall be null and void unless otherwise subsequently
consented to in writing by both Members.
-, 7.1.1. Exception to Transferability Restrictions. Notwithstanding any contrary
language contained in this Agreement, and subject to the following, a Member shall have
the absolute right to Transfer all or a portion of his Membership Interest to a revocable
trust created by or for his benefit(whether alone or in combination with the Member's
spouse, domestic partner, children, and/or heirs),provided that the Affected Member
retains for himself the sole right to vote on all issues related to 30352. Within ten(10)
calendar days of the non-Affected Member's written request to the Affected Member, the
Affected Member shall provide the non-Affected Member with a valid copy of the
relevant page(s) of the trust demonstrating the Affected Member's sole right to vote
regarding the Company's affairs on behalf of the applicable trust. Once the ten(10) day
period has passed, the Affected Member shall have no right to vote on any Company
affairs until he has furnished the requested copies.
7.1.2. Conditions Precedent on Transfers. Notwithstanding any contrary language
contained in this Agreement, a Transfer of all or any part of a Member's Membership
Interest in 30352 may only occur upon the consent of both Members, and such Transfer
shall only be deemed complete if the following requirements and conditions are first met:
7.1.2.1. A Transferee selected by the Members to become a new Member must
sign this Agreement, an amended and restated version of this Agreement, or any
other writing evidencing the Transferee's acknowledgment of and consent to be
bound by all the provisions of this Agreement.
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7.1.2.2. The Transferee must provide 30352 with a valid social security number
or an employment/taxpayer identification number. In addition,upon the request
of the Company's tax professional(s),the Transferee must also provide the
Company with the Transferee's initial tax basis in whatever transferable interest
the Transferee received from the Affected Member.
7.1.2.3. The Transfer is permitted under the Securities Act. And upon request by
any Member of 30352, the Transferee shall provide the Members with an opinion
letter signed by an attorney licensed to practice law in the State of California
indicating that the Transfer in question is in fact permitted under the Securities
Act.
7.1.2.4. The Transfer does not render 30352 subject to the Investment Company
Act of 1940, as amended, or any successor or equivalent statute, ordinance, and/or
regulation.
7.1.2.5. The Transfer does not cause the Company's termination pursuant to any
federal or state laws, ordinances,rules, or regulations.
7.1.2.6. The Transfer does not cause the loss of the Company's partnership status
for tax purposes, if applicable.
7.1.2.7. The Transferee reimburses 30352 for any reasonable expenses incurred
by the Company in connection with the Transfer, or when applicable, the
Transferee's admission to membership in 30352 (e.g., accountant, attorney, etc.).
7.1.2.8. Both the Departing Member(or when applicable, the Member whose
interest is subject to the Transfer) and the Transferee must strictly comply with all
the other provisions of this Agreement
7.2. Voluntary Transfer to a Non-Member Third-Party. The Members expressly intend to
treat a Transfer from a Member to a non-Member/non-Affiliate third-party differently from other
Transfers or withdrawals. Unlike other Transfers or withdrawals, which constitute Dissolution
Events and require some measure of consent from the other Member, a Transfer from a Member
to a non-Member/non-Affiliate third-party(whether conforming or not) shall not constitute a
Dissolution Event. Nor shall a Member require any consent to seek out and/or locate such a
third-party interested in purchasing all or part of the Affected Member's Membership Interest in
30352. Rather, as long as the Members strictly abide by the requirements and conditions set
forth above, as well as the following conditions and/or limitations, such Transfers to non-
Member/non-Affiliate third-parties shall be permitted:
7.2.1. Company's Right of First Refusal. A Member who wishes to Transfer all or
part of his interest in 30352 to a non-Member/non-Affiliate third-party shall immediately
provide the other Member(i.e., the Remaining Member)with written notice of his
intention(the "Notice"). The Notice shall fully describe the identity of the intended
Transferee, the Percentage Interest to be transferred, the price being offered, the terms of
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payment, and all other relevant terms of the offer. Upon request, the Departing Member
shall also provide the Remaining Member with any reasonable documentation evidencing
the bona fide nature of the offer described in the Notice (e.g., the third-party's ability to
pay the purchase price, etc.). Subject to the following conditions, the Remaining
Member shall then have the option to have 30352 purchase the Departing Member's
Percentage Interest at the price and terms stated in the Notice:
7.2.1.1. The Company's right of first refusal option shall remain open and
irrevocable for thirty(30) days from the date Notice is provided by the Departing
Member.
7.2.1.2. While the right of first refusal option period is open, the Remaining
Member may, on the Company's behalf, exercise 30352's right of first refusal at
any time upon the consent of the Remaining Member. The Membership Interest
of the Departing Member shall not be considered in the vote.
7.2.1.3. If the Remaining Member elect to exercise the Company's option to
purchase the Departing Member's Percentage Interest referenced in the Notice
(which may or may not constitute the entirety of the Departing Member's
Percentage Interest in 30352), the Remaining Member shall provide written notice
of that fact to the Departing Member within the right of first refusal option period ,
("ROFR Acceptance Notice"). The ROFR Acceptance Notice shall specify a
closing date for the purchase, which shall occur within thirty(30) days of the
expiration of that option period. On the closing date, 30352 shall tender to the
Departing Member the purchase price reflected in the Notice, and in return the
Departing Member shall deliver an instrument of title, unencumbered and
containing warranties of title, conveying to the Company the Departing Member's
Percentage Interest in the Company reflected in the Notice. The Remaining
Member shall then distribute the Percentage Interest purchased by 30352 among
the Remaining Member pursuant to each Remaining Member's proportionate
Membership Interest, or alternatively as the Remaining Member may, in his sole
discretion, decide.
7.2.2. Decision Not to Purchase Per Notice. If the Remaining Member decides not to
exercise the Company's right of first refusal option, or alternatively fails to send a timely
ROFR Acceptance Notice to the Departing Member, the Departing Member shall have
ninety(90) days to complete the Transfer to the Transferee named in the Notice on the
exact same terms specified in the Notice, and subject to the requirements set forth in this
Agreement. The Departing Member shall continue to exercise his full rights as a
Member until the closing of the Transfer. Once the Transfer has been consummated(i.e.,
once the closing occurs), the Departing Member shall provide written notice to the
Remaining Member of the closing date. In no event shall the Company be required to
recognize either the Transfer or the Transferee's rights until such notice has been
delivered to the Member(s) and the other applicable requirements set forth in this
Agreement have been satisfied.
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- 7.2.3. Partial Transfer. In the event that the Departing Member Transferred less than
his entire Membership Interest in 30352 to the Transferee, as set forth in the Notice, the
Departing Member shall still: (i)hold whichever portion of his Membership Interest he
did not Transfer; (ii) be deemed a Member; (iii)have voting rights proportionate to his
post-Transfer Percentage Interest; (iv)participate in the management of the Company;
and(v)receive his post-Transfer proportionate share of the Company's Distributions.
The Transferee, in turn, shall hold only an Economic Interest in 30352 and shall not be
deemed a Member until or unless the Remaining Member agrees to make the Transferee
a Member. And in the event that the Remaining Member does decide to make the
Transferee a Member, he shall, at that time, also determine whether or not the Transferee
will participate in the management of the Company. With respect to the latter, if the
Remaining Member decides to add the Transferee as a non-managing Member, the
Remaining Member shall amend the Articles to state that 30352 is a"manager-managed"
limited liability company.
7.2.4. Total Transfer. In the event that the Departing Member Transferred the entirety
of his Membership Interest in 30352 to the Transferee, as set forth in the Notice,upon the
closing date the Departing Member shall no longer be a Member of 30352. The
Transferee, in turn, shall hold only an Economic Interest in the Company and shall not be
deemed a Member until or unless the Remaining Member agrees to make the Transferee
a Member:. And in the event that the Remaining Member does decide to make the
Transferee a Member, he shall, at that time, also determine whether or not the Transferee
will participate in the management of the Company. With respect to the latter, if the
Remaining Member decides to add the Transferee as a non-managing Member,the
Remaining Member shall amend the Articles to state that 30352 is a"manager-managed"
limited liability company.
7.2.5. Wrongful Transfer. If a Member purports to have transferred all or part of his
Membership Interest in the Company to a non-Member/non-Affiliate third-party without
abiding by the requirements contained in this Transfer and Termination section of the
Agreement, including honoring the Company's right of first refusal, then subject to
applicable law,the purported Transfer shall be void and the purported Transferee shall
have no rights whatsoever in the Company(i.e., neither the Remaining Member nor the
Company shall recognize the Transfer). In the event applicable law prohibits such a
result, or otherwise prevents the Remaining Member from enforcing or exercising his
right of first refusal, then the purported Transferee (and the Departing Member if the
purported Transfer was less than the Departing Member's entire Percentage Interest)
shall hold only an Economic Interest in the Company, with no right to vote on any
matters pertaining to 30352. In no event,however, shall either the Transferee or the
Departing Member be deemed Members of the Company in such a scenario.
7.3. Transfer of Member's Interest Upon Occurrence of Dissolution Event. Subject to
applicable law (e.g., Corporations Code §17707.03), upon discovering the occurrence of a
Dissolution Event, the Remaining Member shall dissolve and wind up the Company's affairs
unless he elects, within ninety(90) days after he learns of the Dissolution Event,to continue the
Company's normal business operations.
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7.3.1. Death or Incapacity of a Member. In the event of the death or Incapacity of a
Member, if the Remaining Member elects not to continue operations,he shall wind up
and dissolve 30352 and make all Distributions pursuant to applicable law. However, if
the Remaining Member does decide to continue operating the Company, the deceased
Member's Estate Representative(s) shall have only the rights of a Transferee (i.e., an
Economic Interest)until and unless, in the Remaining Member's sole discretion,the
Remaining Member tenders to the deceased Member's Estate Representative(s), an
amount sufficient to purchase the entirety of that Economic Interest. Consequently, for
purposes of this provision,the lack of"management rights" shall not prevent an Estate
Representative from reasonably disputing the below-discussed appraisal generated by the
Appraiser or the selection of the Appraiser. In addition to the foregoing, the Members
also agree that:
7.3.1.1. In the event of any dispute (including,but not necessarily, in the form of
legal action) on the part of one(l) or more of the Affected Member's Estate
Representatives regarding any of their respective rights, including those related to
the management of the Company or the right to receive Distributions (whether
upon dissolution or otherwise): (i)until the Estate Representatives resolve their
dispute in a satisfactory fashion (discussed below), no Estate Representative shall
be entitled to vote on any matters related to 30352; (ii) the Remaining Member
may deposit all Distributions intended for the Affected Member's Estate
Representatives into an isolated account until a satisfactory resolution of the
dispute is reached; and/or(iii)the Remaining Member may interplead all
Distributions with a court of competent jurisdiction pending a judicial resolution
of the dispute. Satisfactory resolution may come in the form of a judicial order or
approved stipulation by a court of competent jurisdiction, or if no legal action is
then pending, a fully executed settlement agreement/stipulation which the
Company's counsel is satisfied complies with applicable law. The Affected
Member's estate (or Estate Representatives, whichever the case may be) shall be
jointly and severally liable to the Remaining Member and/or the Company for all
attorneys' fees and costs incurred by the Remaining Member and/or the Company
in addressing such a dispute, and all such fees and costs may be deducted from
any Distributions set aside pursuant to this provision. Finally, the Members
acknowledge and agree that 30352 shall not be liable for any damages or claims
related to its good faith compliance with this provision, and instead, the Affected
Member's estate and his Estate Representatives shall indemnify and hold the
Company harmless from all such damages or claims.
7.3.1.2. Assuming that the Remaining Member did not opt to simply purchase the
Estate Representatives' Economic Interest,upon providing written notice to the
Remaining Member, the Affected Member's Estate Representatives may take
whatever actions they deem appropriate to exercise their rights, authority, and
powers in compliance with this Agreement, including dividing the Affected
Member's Membership Interest amongst themselves, resulting in multiple new
Members (each with a portion of the Percentage Interest previously held by the
Affected Member).
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7.3.1.3. In no event shall the decision of the Affected Member's Estate
Representatives to divide the Affected Member's Percentage Interest amongst
themselves constitute a Transfer on the part of the Affected Member or his estate,
nor require the consent of the Remaining Member.
7.3.2. Purchase Price. When a Dissolution Event occurs, if the Remaining Member
decides to purchase the above-referenced Economic Interest(s) of the Estate
Representative(s),the Remaining Member, in concert with the Departing Member(or the
Departing Member's Estate Representatives), shall first attempt to establish the fair
market value of the Company(the "Value") as of the date of the Dissolution Event. This
valuation shall occur on or before the fifteenth (15th) day following the later of: (i)the
date of the Dissolution Event; or(ii)the date the Remaining Member first acquired
knowledge of the Dissolution Event. In the event that the Remaining Member and the
Departing Member cannot agree on the Value,the Value shall be determined by an
appraisal conducted pursuant to the following:
7.3.2.1. The Remaining Member shall select a qualified and independent business
appraiser(the"Appraiser"), subject to the reasonable approval of the Departing
Member(or the Departing Member's Estate Representative(s)). The Appraiser
shall determine the Value of the Company using commonly accepted accounting
and valuation principles and shall complete that valuation on or before the sixtieth
(60th) day following the Remaining Member' receipt of notice of the event
triggering the sale. Upon written request by the Appraiser, 30352 shall be entitled
to an extra thirty (30) days to deliver a completed appraisal. The Company shall
pay for the costs associated with the Appraiser. If the Company fails to obtain an
appraisal from its Appraiser,the appraisal generated from the below-defined
Departing Member's Appraiser shall be deemed the final appraisal.
7.3.2.2. In the event a Departing Member(or the Departing Member's Estate
Representative(s))reasonably disputes the Value established by the Appraiser(at
which point the Departing Member shall have ten (10) calendar days to deliver to
the Remaining Member a written explanation describing the nature, extent, and
reasons for the dispute), the Departing Member shall have the right, at the
Departing Member's own expense, to have an independent appraisal performed
by an appraiser of the Departing Member's choosing (the "Departing Member's
Appraiser"). The Departing Member's Appraiser shall determine the Value of the
Company using commonly accepted accounting and valuation principles. The
Departing Member shall then have sixty(60) days from the date the Departing
Member delivers the above-referenced written explanation to deliver to the
Remaining Member the written appraisal prepared by the Departing Member's
Appraiser. If the lower value of the two (2) appraisals described above is at least
eighty five percent(85%) of the higher value,the Value shall be equal to the
average of the appraised value generated by the Appraiser and the appraised value
generated by the Departing Member's Appraiser. However, in the event that the
lower value is less than eighty five percent(85%) of the higher value, the average
of the values obtained by the Appraiser and Departing Member's Appraiser shall
be disregarded. Instead, the Remaining Member shall then select a third
Operating Agreement
30352 ESPERANZA,LLC
Page 21 of 29
appraiser, subject to the Departing Member's reasonable input, whose appraisal
shall be final (the"Final Appraiser"). The Final Appraiser shall be selected and
the appraisal completed and delivered to the Departing Member within forty-five
(45) days following the completion of the appraisal by the Departing Member's
Appraiser, subject to a reasonable extension requested by the Final Appraiser.
Upon the determination of the Value, the purchase price to be paid for the
Membership Interest of the Departing Member shall be equal to the Value
multiplied by the Departing Member's Percentage Interest in the Company(the
"Purchase Price").
7.3.3. Purchase by Remainint Member. Once the Purchase Price has been
determined, the Remaining Member may purchase the Departing Member's Membership
Interest. In making the election to purchase the Departing Member's interest, the Parties.
agree that the Remaining Member shall assign a closing date to occur within sixty(60)
days after the Purchase Price has been determined. The Remaining Member shall have
the option, in his reasonable discretion, to extend the closing date an additional sixty(60)
days. Upon the closing date, the Departing Member(or the Departing Member's Estate
Representatives) shall deliver to the Remaining Member any documents reasonably
necessary to effectuate an encumbrance free Transfer of the Departing Member's
Membership Interest in 30352 to the Remaining Member. In return, the Departing
Member shall be paid the Purchase Price.
7.4. Spousal Matters. The Members agree that each of their respective spouses shall sign the
Spousal Consent Form attached to this Agreement as Exhibit `B." Each Member shall
indemnify and hold the Company and the other Member harmless from any losses, claims, or
liabilities, including attorneys' fees and costs, resulting from the Member's failure to obtain his
spouse's signature on the Spousal Consent Form. In addition, the Members further agree to the
following:
7.4.1. Divorce. Upon a court ordered dissolution of the marriage of any married
Member, the Member's Membership Interest shall be allocated pursuant to the court's
dissolution order. However,with respect to such an allocation:
7.4.1.1. No spouse shall become a Member of 30352 as a result of an allocation,
distribution, or stipulation of or regarding the Affected Member's Membership
Interest.
7.4.1.2. In the event that a court order and/or stipulation allocates or distributes
all or portion of the Affected Member's Membership Interest.to the Affected
Member's spouse, that spouse shall hold only the rights of a Transferee.
7.4.1.3. The Member shall continue to exercise all voting rights in proportion to
the entire Percentage Interest held by both the Member and his spouse (as a
Transferee) notwithstanding the fact that the spouse may be entitled to a certain
percentage of the Distributions.
Operating Agreement
30352 ESPERANZA,LLC
Page 22 of 29
7.5. No Release of Liability. The Members acknowledge and agree that absent a separate
written agreement,upon payment of the Purchase Price to a Departing Member, the Departing
Member will not be released from any claim or liability to the Company or the Remaining
Member, or for any of the Company's actions or inactions,which occurred prior to the Departing
Member's departure from 30352.
8. BOOKS, RECORDS,AND REPORTING
8.1. Books and Records of the Company. The Members shall maintain and keep at the
Company's principal place of business, and/or at any other location that both Members may
decide, the following books and records: (i) an alphabetical list of names and addresses of the
Members, together with each Member's Capital Contribution, Capital Account, and
Membership/Percentage Interest; (ii) a copy of the Articles and any amendments, and if
applicable, any powers of attorney under which the Articles were signed; (iii) copies of the
Company's federal, state, and local income tax or information returns and reports, if any, for the
six (6)most recent taxable years; (iv) a copy of this Agreement and any amendments, and if
applicable, any powers of attorney under which the Agreement was signed; (v) copies of the
Company's financial statements, if any, for the six (6)most recent Fiscal Years; (vi) other books
and records related to the Company's internal affairs for the current and previous four(4) years;
and(vii) minutes of all meetings, along with related notices, waivers, and consents, if any.
8.2. Inspection Rights. For purposes reasonably related to a Member's or Transferee's
interest in 30352, and upon reasonable written request, all Members and Transferees shall have
the right to inspect and copy, during normal business hours: (i) at the Company's expense,the
books and records of the Company required to be maintained pursuant to Corporations Code
§17701.13(d)(1), (2), and(4); and(ii) at the Member's/Transferee's expense, the books and
records of the Company required to be maintained under the remaining sub-sections of
Corporations Code §17701.13(d).
8.3. Accounting Method. Both Members shall select the method of accounting best suited
for the Company for tax purposes, and the books and records of the Company shall be
maintained in accordance with that accounting method. Likewise, while the Members are free to
prepare and maintain the Company's financial records in a manner best suited to its needs,upon
an affirmative vote of both Members of 30352, the Company shall be required to prepare and
maintain its financial records in accordance with generally accepted accounting principles.
8.4. Financial Statements/Reports to Members. The Members shall timely prepare,
maintain, furnish to each Member or Transferee, and/or file with the appropriate governmental
agencies, all reports and documents required by applicable law. The Members may then submit
such documents to their tax advisor(s) to determine their respective Adjusted Taxable Income.
To that end,the Members agree as follows:
8.4.1. Fiscal Year. The Company's Fiscal Year shall be January 1 to December 31.
8.4.2. Documents Necessary for Member Tax Returns. On at least an annual basis,
but no more than ninety(90) days following the end of the Fiscal Year, the Tax Matters
Member shall ensure the preparation and delivery to all the Members and Transferees of
Operating Agreement
30352 ESPERANZA,LLC
Page 23 of 29
I
all documents and information necessary for the Members/Transferees to prepare their
federal and state tax returns.
8.4.3. Tax Matters Member. Subject to applicable tax laws and regulations, the
Members designate Cesar Meyer as the Tax Matters Member(within the meaning of
§6231(a)(7) of the Code) to not only make any income tax election he deems advisable
following consultation with the Company's financial advisors,but also to represent
30352 in all examinations of the Company's tax related affairs and/or inquiries by taxing
authorities. The other Member is free to file a statement with an applicable taxing
authority indicating that the Tax Matters Member is not authorized to speak for him,but
absent such a statement, the Tax Matters Member shall be authorized to negotiate, settle,
and compromise with any applicable taxing authorities on behalf of 30352. The
Company shall reimburse the Tax Matters Member for all expenses incurred, and the
Company authorizes the Tax Matters Member to use Company funds to obtain necessary
professional services in connection with such examinations by taxing authorities. In
addition to the foregoing, the Members acknowledge and agree that:
8.4.3.1. No Member will treat, on his own tax returns, any item related to 30352
inconsistently with how the Company treated that item.
8.4.3.2. In the event the Company pays a Member's deficiency assessed by a
taxing authority, that Member shall reimburse 30352 for the payment, and such
amount shall be recoverable by the Company from the Affected Member, either
as an offset to future Distributions or otherwise.
8.4.3.3. The Tax Matters Member may resign at any time and in his sole
discretion. Upon such a resignation,both Members must select another Member
to become the new Tax Matters Member.
9. DISSOLUTION,LIQUIDATION,AND WINDING UP
9.1. Conditions Under Which Dissolution Shall Occur. The Members shall dissolve 30352
and wind up its affairs upon the earliest occurrence of any of the following events: (i) at the time
or occurrence of an event specified in the Articles, if any; (ii)upon the occurrence of a
Dissolution Event, and the failure by the Remaining Member to elect to continue operating the
business (in accordance with the provisions set forth above); (iii)upon the election of the
Members to dissolve; (iv)upon the entry of a decree of judicial dissolution pursuant to California
Corporations Code §17707.03; or(v)upon the sale or Transfer of all, or substantially all, of the
Company's assets, unless such sale or Transfer is part of the ordinary course of the Company's
business.
9.2. Winding Up and Dissolution. Upon the dissolution of 30352,the Members shall wind
up the Company's affairs by, among other things, selling all of the Company's assets and
providing written notice to all creditors, if any, regarding the dissolution. In liquidating the
Company's assets, the Members shall use commercially reasonable efforts to maximize the sale
prices. Members shall be entitled to reasonable compensation for providing their services to
wind up the Company's affairs. During this time period, the Company shall continue solely for
Operating Agreement
30352 ESPERANZA,LLC
Page 24 of 29
the purpose of winding up its affairs in an orderly manner, liquidating its assets, and satisfying
the claims of its creditors, if any.
9.3. Order of Payment. After determining that all known debts and liabilities of 30352 been
paid or provided for, including, without limitation, the costs of liquidation and the debts and
liabilities owed to Members who are creditors of the Company, and after determining that no
contingent reserve is necessary, the Company's remaining assets shall be distributed, in cash,
property other than cash, or both, first to each of the Members pursuant to each Member's
Membership Interest in the Company, and then to any Transferees pursuant to each Transferee's
Economic Interest. Unless required by applicable law, Members shall not be required to restore
Negative Capital Account Balances.
9.4. No Right to Cure Deficits. Except as otherwise provided in this Agreement or by the
Act, the Members may look solely to the Company for payment of their Capital Account
balances. In no event shall a Member be entitled to recover a Positive Capital Account balance
or proportionate share of the Net Profits from any other Member.
9.5. Fi1in2 of Certificates. Upon the dissolution of 30352, the Members shall file a
Certificate of Dissolution with the Secretary of State. After completion of the winding up of the
Company's affairs,the Members shall file a Certificate of Cancellation of the Articles with the
Secretary of State.
9.6. Intellectual Property. Upon the dissolution of 30352, the Company's intellectual
property(e.g., patents, copyrights, trademarks) shall revert to the Member(s)who contributed
such intellectual property, either as part of their Capital Contribution, or at any later time as long
as the Member created the intellectual property prior to becoming a Member. The Members
shall sign any documentation necessary to effectuate the intent of this provision.
10. CONFIDENTIAL INFORMATION
10.1. Keeping Confidential Information Confidential. The Members acknowledge and
agree that in their capacities as managing Members of 30352, they will have unfettered access to
the Company's Confidential Information. The Members further acknowledge and agree that the
Confidential Information represents (and will continue to represent) a special,unique, and
valuable asset to the Company which the Members have already invested(and will continue to
invest) substantial time, money, knowledge, and energy developing. Based upon the foregoing,
and based upon the likely loss of the Company's competitive advantage in the face of a wrongful
disclosure of its Confidential Information to a non-Member, no Member shall, while still a
Member or at any time afterwards, directly or indirectly, wrongfully use or profit from, or
otherwise disclose the Company's Confidential Information to any non-Member unless that
Person requires access to the Confidential Information to: (i)perform approved services or job
duties on behalf of 30352; (ii)review or analyze the status of his investment in the Company;
(iii)prepare, file, or pay his (or a Member's/Transferee's)taxes; (iv) conduct due diligence as
part of a potential purchase or Transfer of a Member's Membership Interest; or(v)upon the
consent of both Members. In addition,the Members further agree as follows:
Operating Agreement
30352 ESPERANZA,LLC
Page 25 of 29
10.1.1. Reasonable Steps to Safeguard. Each Member shall take all reasonable steps
to safeguard the Company's Confidential Information and to prevent its unapproved or
inadvertent disclosure, or its misuse,theft, or loss. Such steps shall include, without
limitation,ensuring that recipients of the Confidential Information are entitled to have
access to the Confidential Information, are aware of its confidential nature, and bound by
a written confidentiality or non-disclosure agreement at least as protective as are those
contained in this provision.
10.1.2. Exceptions to Confidentiality. Confidential Information shall not include any
information which: (i) is already in the public domain or which becomes so through a
conscious decision by both Members of 30352; (ii)pursuant to documentary proof, a
Member independently developed without the use of the Company's resources or
Confidential Information; or(iii)pursuant to documentary proof, a Member receives in
good faith from an independent third-party who is not otherwise not bound by a
confidentiality agreement or duty of confidentiality.
10.1.3. Operation of Law. Notwithstanding the foregoing, no Member shall be
prohibited from disclosing Confidential Information sought by operation of law(e.g., as a
result of a valid subpoena, court order, deposition, etc.)provided that prior to any
disclosure of the Confidential Information, the Affected Member must take all reasonable
steps to provide the other Members with prompt notice sufficient to permit the Company
to contest such disclosure.
10.1.4. Irreparable Harm. In the event of a breach of any of the confidentiality
provisions of this Agreement, the Company will likely suffer irreparable injury and
damage for which money damages may not be adequate or may be difficult to ascertain.
Consequently in the event of such a breach, or a reasonably anticipated breach, in
addition to the Company's other legal and equitable remedies, 30352 shall be entitled to
seek injunctive relief without the necessity of posting a bond.
10.1.5. Survival. The Members' obligations under the confidentiality provisions of this
Agreement shall survive the Members' withdrawal or dissociation from 30352, and to the
extent that such Confidential Information reverts back to other Members, it shall also
survive the Company's termination, dissolution, or winding up.
11. INDEMNIFICATION OF AGENTS
11.1. 30352 Shall Indemnify Agents. To the fullest extent permitted by the Act, 30352 shall
indemnify any Member, and may indemnify any Person, from and against any liabilities,losses,
damages, claims,judgments, settlements,penalties, fines, fees, or costs of any kind(including
attorneys' fees and costs) incurred as a result of that Member's or Person's actions or inactions
performed(or not performed) in his capacity as a Member, manager, officer, employee, or agent
of the Company, as long as the Member or Person did not commit any acts of fraud, deceit, or
breach of fiduciary duty.
Operating Agreement
30352 ESPERANZA,LLC
Page 26 of 29
12. ACKNOWLEDGMENT OF INVESTMENT
12.1. One Class. 30352 shall have only one (1) class of Membership Interest.
12.2. Preexisting Relationship. The Members have preexisting personal and/or business
relationships with each other. The Members are also fully capable of evaluating the risks and
merits of their investment in 30352 and of protecting their own interests.
12.3. No Advertising. The Members have not seen,received,been presented with, or been
solicited by any leaflet,public promotional meeting, or advertisement related to an investment in
30352.
12.4. Economic Risk. The Members are all financially able to bear the economic risk of an
investment in 30352, including a total loss of that investment. The Members further
acknowledge that.their investment in the Company comes with an inherent risk of loss—even as
to their entire Capital Contributions—and that each of them fully understands the risks,
recognizing that 30352 is a newly organized entity with no operating history.
12.5. Non-Registration. Neither the Membership Interests nor Certificates, if any,have been
registered under the Securities Act of 1933, as amended(the "Securities Act"), or qualified under
the California Corporate Securities Law of 1968, as amended.
12.6. Tax Consequences. The Members acknowledge that the tax consequences to each of
theirs of investing in the Company will depend on their particular circumstances, and in no event
shall 3 03 52,the other Members, or their respective attorneys, accountants, agents,
representatives, or Affiliates shall bear any responsibility or liability for such tax consequences.
13. GENERAL PROVISIONS
13.1. Notices. Subject to any other specified means of communication set forth elsewhere in
this Agreement, all notices required under this Agreement shall be in writing and shall be
deemed delivered if delivered to each of the Members or the Company's principal business
address, and: (i)when delivered by hand with written confirmation of receipt; (ii) when delivered
by a reputable delivery service (e.g., Federal Express, United Parcel Service)requiring a
signature upon receipt; and/or(iii)when delivered (or delivery is attempted)by the United States
Postal Service if sent via certified mail, return receipt requested. Notwithstanding the foregoing,
upon the consent of both Members in 30352, service of notices required under this provision
shall be deemed delivered on the date of receipt if sent via fax or email. In the event the
Members make such an election, the fax number(s) and email address(es) of each Member shall
be recorded in the books and records of the Company and available to Members and Transferees
for the purpose of providing notices required under this Agreement. Likewise,upon the consent
of both Members of 30352,notices required under this Agreement shall also be sent to
designated third-parties, such as the Company's attorneys. In the event the Members make such
an election, the address(es), fax number(s), and/or email address(es) of such individuals shall be
delivered to the Members and Transferees and recorded in the books and records of the
Company.
Operating Agreement
30352 ESPERANZA,LLC
Page 27 of 29
13.2. Headings. The section headings which appear throughout this Agreement have been
provided solely for the convenience of the Members, and do not define or limit the scope of any
provision. Consequently, the headings shall not be considered when interpreting this Agreement.
13.3. Execution of Documents and Other Acts. In connection with the formation, operation,
and maintenance of 30352, each Member shall sign any documents and certificates, and
otherwise perform any acts required under this Agreement,required by the Act, or which are
deemed reasonably appropriate by both Members.
13.4. No Waiver. No breach of any provision(s) of this Agreement shall be deemed waived
unless done so in a writing signed by the Members. Waiver of any one (1)provision of this
Agreement shall not be deemed to be a waiver of any other provision, nor shall a waiver of a
specific provision on one (1) or more occasions be deemed a permanent waiver of that provision.
13.5. Interpretation. All pronouns and common nouns shall be deemed to refer to the
masculine, feminine, neuter, singular, or plural, as the context may require. Use of the word
"Agreement" shall mean and refer not only to this Agreement,but also to any specified exhibits
or subsequent amendments, regardless of whether or not such exhibits were incorporated into
this Agreement by reference. In addition, any use of the terms "include,""includes,"or
"including"in this Agreement, each shall be understood to also include the phrase"without
limitation."
13.6. Arm's Length. The Members acknowledge and agree that each of them entered into this
Agreement knowingly and voluntarily, at arm's length, and with a full understanding of the legal
significance and ramifications for doing so. Each of the Members has had the advice and
counsel of an attorney of his own choosing, or had an opportunity to seek such advice and
counsel and elected not to do so. Each of the Members therefore agrees that any rule of law or
legal decision which would require interpretation of this Agreement against the Party that drafted
it, including Civil Code §1654, shall not be applicable, and in fact is irrevocably and
unconditionally waived.
13.7. Severability. In the event that all or part of any provision in this Agreement becomes or
is declared by a court of competent jurisdiction to be illegal,unenforceable, or void, this
Agreement shall continue in full force and effect without such language. However, if the
absence of such language materially alters the rights, limitations, and/or obligations of the
Members, the above-referenced court shall determine the rights, limitations, and/or obligations of
the Members pursuant to the intent of this Agreement as a whole.
13.8. Successors and Assigns. Subject to the provisions of this Agreement relating to the
transferability of Membership interests, this Agreement shall be binding upon and shall inure to
the benefit of the Members, as well as their respective successors, assigns, and Estate
Representatives.
13.9. No Third-Party Beneficiaries. Except as specifically stated above (e.g.,regarding
Transferees), nothing in this Agreement is intended or should be construed to give any Person,
other than the Members (and their permitted successors and assigns), any legal or equitable right,
remedy, or claim under this Agreement.
Operating Agreement
30352 ESPERANZA,LLC
Page 28 of 29
13.10. Entire Agreement. This Agreement constitutes the entire understanding and agreement
between the Members relating to their respective Membership Interests in 30352. This
Agreement therefore supersedes all previous understandings or agreements, whether written or
oral,between the Members relating to such membership. Any amendments or modifications to
this Agreement shall be effective only if in writing and signed by all of the Members.
13.11. Applicable Law,Jurisdiction, and Venue. This Agreement shall be governed by the
laws of the State of California. Each Member agrees to submit to the exclusive jurisdiction of
the federal and state courts of the State of California in any action arising out of a dispute or
interpretation of this Agreement,with venue in the County of Orange.
13.12. Attorneys' Fees. If any legal action is brought to enforce and/or interpret this
Agreement, the prevailing Party shall be entitled to recover their reasonable attorneys' fees and
costs incurred in that action or proceeding, in addition to any other relief to which they may be
entitled.
13.13. Counterparts. This Agreement may be executed in counterparts, each of which shall be
deemed an original and all of which shall, when taken together, constitute a single document.
IN WITNESS WHEREOF, both of the Members of 30352 Esperanza, LLC, a California
limited liability company, have signed this Agreement, effective as of the dates set forth below.
MANAGING MEMBER MANAGING MEMBER
Date: Date:
By:
By: //"7
7sar eye Broc Ward
Operating Agreement
30352 ESPERANZA,LLC
Page 29 of 29
EXHIBIT A
TO
OPERATING AGREEMENT
OF
30352 ESPERANZA, LLC
MEMBERS & CAPITAL CONTRIBUTIONS
EXHIBIT "A"
Members & Capital Contributions
Member Name Address Capital Contribution Percentage
Interest
5 Lennox Cesar Meyer contributed: (i)
Cesar Meyer Ladera Ranch, CA 92694 $10,000; (ii) loan commitment, 50%
including, if necessary,a personal
guaranty; and(iii)sweat equity
Brock Ward contributed: (i)
Brock Ward 20 Indian Pipe $10,000; (ii) loan commitment, 50%
Trabuco Canyon,CA 92679 including, if necessary, a personal
guaranty; and(iii)sweat equity
Exhibit"A"to Operating Agreement
30352 ESPERANZA,LLC
Page 1 of 1
EXHIBIT B
To
OPERATING AGREEMENT
OF
30352 ESPERANZA, LLC
SPOUSAL CONSENT FORM
GG 9�
Spousal Cousent Form
L the undersigned,am the spouse of c tom. G•r. a:� =,, e xC
30353 Fstserats a,LI. {`"3{135Z")and a.party tr;ttze Agreeme'a rto v�'hych this l lztbat;s t tckie
mom.
i have read the Agreementj i understand its coutcnts and i expressly aokzaov?rtec gc that thu
Agreetaent evatains pr=,ov�s orgy which.my spoutie grafts;3�}3�2 a d 7rt +atltez n VlLtlhe
riS Eti�xo pttcz hsse my,spouse s Membersh interest w r Gom sa anc ltt xh mr c.rarsr trni
p y� s
c firth rsl,il`atiy.
T accept,and agree to the forega hg:provikion and ci�nsent to sixth,a sale,shattt it o ci r TAgr .
that-any.interest"l may h zv°e in 303$2(inclu ing my spouse's�lletnk etsiZt T t�z t)is sabject ta..
the l rovislons a.11lis Agreement inclzitli»g,vxrithditt tsmzii�t on,the r eemei is Transfer
limitations; I therefore agree to take rto actionn to'hindex:or;clelay the operatic n o tS1e:Gozrzpar?y
r�itl;:.rcgazcl tct my spouses Mezxtlsership;interest(or,f'or.th'at matter; aay iriWrest-1 ttaAy Savo iu
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