CC - Affidavit of Legal Interest and Articles of Incorporation 11/7/23,4:17 PM Rigby Watts and Company Mail-Affidavit
AFFIDAVIT OF LEGAL INTEREST
STATE OF IDAHO )
COUNTY OF ADA )
I,l.arr;e- eoc lN1P�LIYY 1)�S i-� JU9 S 14 ( ,g 01 'TCWT1.3�
(name) (address)
A, C , >� O' 14-n
(city) (state)
being first duly sworn upon,oath,depose and say:
1. That I am the record owner of the property described on the attached, and I grant my
permission to:
(name) (address)
to submit the accompanying application(s)pertaining to that property. (O
2. I agree to indemnify, defend and hold the City of Meridian and its employees harmless
from any claim or liability resulting from any dispute as to the statements contained
herein or as to the ownership of the property which is the subject of the application.
3. I hereby grant permission to City of Meridian staff to enter the subject property for the
purpose of site inspections related to processing said application(s).
Dated this_ day of 20
44-,a Cop
(Signature)
SUBSCRIBED AND SWORN to before me the day and year first above wr' n.
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(Rev 05/29/20)
https://mai I.google.com/mail/u/1/?i k=0744246fab&view=pt&search=all&permthid=thread-f:1781948993757550433%7Cmsg4:1781948993757550433... 2/2
w�TSEA� STATE OF IDAHO
y e Phil McGrane I Secretary of State
Business Office
450 North 4th Street
PO Box 83720
Boise, ID 83720
November 27, 2023
Request Type: Certificate of Existence/Filing Issuance Date: 11/27/2023
Request#: 0005487916 Copies Requested: 0
Receipt#: 000906796
Regarding: Reves LLC
Filing Type: Limited Liability Company(D) File# : 4219667
Formation/Qualification Date: 03/26/2021
Status: Active-Existing Formation Locale: IDAHO
Duration Term: Perpetual Inactive Date:
Certificate of Existence
I, Phil McGrane, Secretary of State of the State of Idaho, do hereby certify that effective as of the
issuance date noted above
Reves LLC
is a Limited Liability Company duly formed under the law of this State with a date of incorporation
and duration as given above.
Phil McGrane
Idaho Secretary of State
Processed By: Business Division Verification #: 026253126
Phone: 208-334-2301 * Email: business@sos.idaho.gov * Website: sosbiz.idaho.gov
OPERATING AGREEMENT
OF
REVES LLC
Dated Effective: May 13, 2021
TABLE OF CONTENTS
(The Table of Contents for this Operating Agreement is for convenience of reference only and is
not intended to define, limit or describe the scope or intent of any provisions of this Operating
Agreement.)
Paraaraoh Paae
ARTICLE1. FORMATION........................................................................................................1
1.1 Name...................................................................................................................1
1.2 Certificate of Organization; Effective Date of Agreement......................................1
1.3 Principal Office.....................................................................................................1
1.4 Designated Office and Registered Agent. ............................................................1
1.5 Authorized Business. ...........................................................................................1
1.6 Operating Agreement...........................................................................................1
ARTICLE 2. MEMBERS, CONTRIBUTIONS AND INTERESTS...............................................2
2.1 Initial Members, Contributions and Interests. .......................................................2
2.2 Limitation of Liability.............................................................................................2
2.3 No Member Authority...........................................................................................2
2.4 Fiduciary Duties...................................................................................................3
2.5 Additional Members. ............................................................................................3
2.6 Additional Contributions.......................................................................................3
2.7 Interest on Capital Contributions..........................................................................4
2.8 Loans; Guarantees. .............................................................................................4
2.9 Rights of Indemnification......................................................................................4
2.10 Voting Rights. ......................................................................................................4
2.11 Member Default. ..................................................................................................5
ARTICLE3. MEMBER MEETINGS..........................................................................................6
3.1 Meetings of Members. .........................................................................................6
3.2 Quorum................................................................................................................6
3.3 Notice of Meetings. ..............................................................................................6
3.4 Proxies.................................................................................................................6
ARTICLE4. MANAGEMENT....................................................................................................7
4.1 Number and Qualifications of Managers. .............................................................7
4.2 Term of Managers................................................................................................7
4.3 Authority of Member to Bind the Company...........................................................7
4.4 Action of Managers; Deadlock of Managers or Members.....................................9
4.5 Other Activities.....................................................................................................9
4.6 Resignation..........................................................................................................9
4.7 Removal of Managers by Members....................................................................10
4.8 Vacancy.............................................................................................................10
4.9 Managers' Compensation. .................................................................................10
4.10 Managers' Standard of Care..............................................................................10
TABLE OF CONTENTS •1
4.11 Self-Dealing. ......................................................................................................11
4.12 Employment of Affiliates.....................................................................................11
4.13 Management of Company and Property.............................................................11
4.14 Outside Services................................................................................................12
4.15 Tax Matters........................................................................................................12
ARTICLE 5. ACTIONS WITHOUT NOTICE,WITHOUT MEETING,OR BY TELEPHONE.....12
5.1 Meeting of all Members or Managers.................................................................12
5.2 Action Without Meeting. .....................................................................................12
5.3 Meetings by Telephone......................................................................................12
ARTICLE 6. ACCOUNTING AND RECORDS........................................................................13
6.1 Books of Account...............................................................................................13
6.2 Fiscal Year.........................................................................................................13
6.3 Accounting Reports............................................................................................13
6.4 Tax Returns.......................................................................................................13
6.5 Tax Matters Partner/Representative...................................................................13
ARTICLET. ALLOCATIONS..................................................................................................13
7.1 Allocations of Income and Gain..........................................................................13
7.2 Allocations of Loss.............................................................................................14
7.3 Capital Accounts................................................................................................14
7.4 Compliance with Section 704.............................................................................14
ARTICLES. DISTRIBUTIONS................................................................................................14
8.1 Distributions.......................................................................................................14
8.2 Cash Available For Distribution..........................................................................14
8.3 Distribution Schedule.........................................................................................15
8.4 Shared Priorities. ...............................................................................................15
ARTICLE 9. TRANSFERS OF MEMBERSHIP INTERESTS..................................................15
9.1 Restrictions on Disposition.................................................................................15
9.2 Permitted Transferees........................................................................................15
9.3 Right of First Refusal to Purchase Membership Interests Proposed to be
Transferredby Sale. ..........................................................................................16
9.4 Rights of Assignees. ..........................................................................................16
9.5 Admission of Assignees as Members.................................................................16
ARTICLE 10. WITHDRAWAL AND DISSOLUTION...............................................................17
10.1 Withdrawal.........................................................................................................17
10.2 Effect of Withdrawal or Other Event. ..................................................................17
10.3 Events of Dissolution. ........................................................................................17
10.4 Distribution Upon Dissolution. ............................................................................17
10.5 Distributions in Kind. ..........................................................................................18
TABLE OF CONTENTS -11
10.6 Statement of Dissolution. ...................................................................................18
ARTICLE 11. INDEMNIFICATION AND INSURANCE...........................................................18
11.1 Indemnification...................................................................................................18
11.2 Limitation of Liability...........................................................................................18
11.3 Insurance...........................................................................................................18
ARTICLE 12. AMENDMENTS................................................................................................18
12.1 By Members.......................................................................................................18
12.2 By Managers......................................................................................................19
ARTICLE 13. MISCELLANEOUS...........................................................................................19
13.1 Additional Documents........................................................................................19
13.2 Headings. ..........................................................................................................19
13.3 Severability. .......................................................................................................19
13.4 Third-Party Beneficiaries....................................................................................19
13.5 No Partnership Intended for Nontax Purposes...................................................19
13.6 Partnership Intended for Tax Purposes..............................................................19
13.7 Governing Law...................................................................................................20
13.8 Binding Effect.....................................................................................................20
13.9 Construction.......................................................................................................20
13.10 Time...................................................................................................................20
13.11 Waiver of Action for Partition; No Bill for Partnership Accounting.......................20
13.12 Counterpart Execution. ......................................................................................21
13.13 Specific Performance.........................................................................................21
13.14 Notice. ...............................................................................................................21
13.15 Rights and Remedies Cumulative......................................................................21
13.16 Waivers..............................................................................................................21
13.17 Attorney Fees. ...................................................................................................21
13.18 Merger Clause. ..................................................................................................22
ARTICLE 14. CERTAIN TAX PROVISIONS...........................................................................22
14.1 Definitions..........................................................................................................22
14.2 Special Allocations.............................................................................................23
14.3 Curative Allocations. ..........................................................................................24
14.4 Other Allocation Rules. ......................................................................................25
TABLE OF CONTENTS -!I!
List of Exhibits
Exhibit A—Property
Exhibit B — Members, Membership Interests, Sharing Ratios, Initial Capital Contributions
LIST OF ExHIBITB -1
EXHIBIT A
Property(Parcel "E")
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EXHIBIT A
EXHIBIT B
Members, Membership Interests, Sharing Ratios, Initial Contributions
Members Membership Sharing Ratios
Interests
Arthur P. Laos
E. Braemere Road 50% 50%
Boise, ID 83702
Carrie Lynn Thomas
909 S. Allante Place 50% 50%
Boise, ID 83709
Laos Initial Contributions to Company
Laos agrees to contribute one-half(1/2)of the earnest money deposit for the Property plus one-
half(112)of the additional amount required by the lender with respect to the Loan (estimated to
total approximately$230,000 in the aggregate), upon approval by the managers of the terms of
the Loan, to the Company, subject to and upon the Company's closing of the Purchase of the
Property.
Thomas initial Contributions to Company
Thomas agrees to contribute one-half(1/2) of the earnest money deposit for the Property plus
one-half(1/2)of the additional amount required by the lender with respect to the Loan
(estimated to total approximately $230,000 in the aggregate), upon approval by the managers of
the terms of the Loan,to the Company, subject to and upon the Company's closing of the
Purchase of the Property.
EXHIBIT B
Draft v.1
FIRST AMENDMENT TO OPERATING AGREEMENT
This First Amendment to Operating Agreement ("Amendment"), dated effective as of
August 3 1 2021 (the `Effective Date"), is entered into by and between Arthur P. Laos ("Laos")
and Carrie Lynn Thomas("Thomas").
RECITALS
Laos and Thomas, as "members" are each parties to the Operating Agreement of Reves
LLC, an Idaho limited liability company, dated effective as of May 13, 2021 ("Operating
Agreement").
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Amendment to Exhibit B. Exhibit B to the Operating Agreement (Members,
Membership Interests, Sharing Ratios, Initial Contributions) is hereby amended and restated as
follows:
"EXHIBIT B
Members, Membership Interests, Sharing Ratios, Initial Contributions
Members Membership Interests Sharing Ratios
Arthur P. Laos 50% 50%
E. Braemere Road
Boise, ID 83702
Carrie Lynn Thomas 50%
909 S. Allante Place 50%
Boise, ID 83709
Laos Initial Contributions to Company
Laos agrees to contribute one-half (112) of the earnest money deposit for the Property plus one-
half (112) of the additional amount required by the lender with respect to the Loan (estimated to
total approximately $468,600 in the aggregate), i.e., approximately $234,300 by Laos, upon
approval by the managers of the terms of the Loan, to the Company, subject to and upon the
Company's closing of the Purchase of the Property.
Thomas Initial Contributions to Company
Thomas agrees to contribute one-half (112) of the earnest money deposit for the Property plus
one-half(1/2) of the additional amount required by the lender with respect to the Loan (estimated
to total approximately$468,600 in the aggregate), i.e.,approximately$234,300 by Thomas, upon
approval by the managers of the terms of the Loan, to the Company, subject to and upon the
Company's closing of the Purchase of the Property."
FIRST AMENDMENT TO OPERATING AGREEMENT- 1
Draft v.1
2. Effect of Amendment. Except as expressly provided in this Amendment, the
Operating Agreement shall remain unchanged and in full force and effect; provided, that to the
extent this Amendment conflicts with the Operating Agreement,the provisions of this Amendment
shall control.The recital to this Amendment is hereby incorporated herein by this reference. This
Amendment may be executed in multiple counterparts, each of which, whether an original or
delivered electronically(including by DocuSign or Adobe Sign), shall be deemed to be an original
and all of which, when taken together shall constitute one and the same instrument, as of the date
first written above.
[signature page follows]
FIRST AMENDMENT TO OPERATING AGREEMENT-2
Draft v.1
Adopted and agreed to as of August 3� 2021, by the undersigned, constituting all of the
members of the Company as of such date.
Members:
Arthur P. Laos, an individual
(.t/ P l�
Carrie ynn Thomas, an individual
e
CONSENT
Carol Lynn Laos, spouse of the member Arthur P.Laos, hereby consents and agrees as
follows:
1. I have read the Operating Agreement, as amended hereby, between the members
and the Company and accept its terms as to the disposition made herein of any interest I may
have in Arthur P. Laos's Membership Interest in the Company,whether through community
property or otherwise. I agree to the provisions relating to the restriction of the Transfer and the
purchase and sale of a Membership Interest in the Company and agree that the provisions shall
be binding on me,my successors, assigns, and estate while this Operating Agreement, as
amended hereby, may remain in effect.
2. I acknowledge that I have ascertained and weighed all of the facts, conditions, and
circumstances, and that all matters set forth herein have been fully and satisfactorily explained to
me, and that I am entering into this Operating Agreement, as amended hereby, freely and
voluntarily and have been advised to seek separate legal counsel with respect to this Operating
Agreement, as amended hereby.
DATED as ofthe,j-day of August, 2021.
��X 1yM
Carol Lynn Laos
FIRST AMENDMENT TO OPERATING AGREEMENT-1
OPERATING AGREEMENT
OF
REVES LLC
an Idaho Limited Liability Company
The undersigned members,Arthur P. Laos("Laos")and Came Lynn Thomas("Thomas"),
having formed a limited liability company under the Idaho Uniform Limited Liability Company Act
(the "Act"), hereby agree as follows:
ARTICLE 1. FORMATION
1.1 Name.
The name of the limited liability company is Raves LLC (the"Company").
1.2 Certificate of Organization: Effective Date of Agreement.
The Certificate of Organization was filed with the Idaho Secretary of State on March 26,
2021. This Operating Agreement is effective as of May 13, 2021.
1.3 Principal Office.
The principal office of the Company shall initially be located at 909 S.Allante Place, Boise,
Idaho 83709. The managers may relocate the principal office or establish additional offices from
time to time in such managers' discretion.
1.4 Designated Office and Registered Agent.
The Company's initial designated office shall be at 909 South Allante Place, Boise, Idaho
83709 and the name of its initial registered agent at such address shall be Carrie Lynn Thomas.
The managers may change the designated office and registered agent from time to time in such
managers' sole discretion.
1.5 Authorized Business.
The Company is organized solely (i) to purchase, own, develop, improve, and hold for
investment, including leasing and re-sale, "Parcel E" of that certain real property located in
Meridian, Idaho, as more particularly described on Exhibit A, attached hereto and incorporated
herein by this reference (the "Property") and (ii) to engage in any other lawful business as
approved by each of the managers to be necessary to operate the Property in a manner
customary to the operation of similar properties in the same geographic region ("Authorized
Business").
1.6 Operating Agreement.
The members executing the Operating Agreement hereby agree to the terms and
conditions of the Operating Agreement, as it may from time to time be amended according to its
OPERATING AGREEMENT-1
terms and agree that it governs all aspects of the Company, members, and managers allowable
by the Act. To the extent any provision of the Operating Agreement is prohibited or ineffective
under the Act, the Operating Agreement shall be considered amended to the smallest degree
possible in order to make the Operating Agreement effective under the Act. In the event the Act
is subsequently amended or interpreted in such a way to make valid any provision of the
Operating Agreement that was formerly invalid, such provision shall be considered to be valid
from the effective date of such interpretation or amendment. Further, it is the express intention
of the members that the Company be treated as a partnership for purposes of federal and state
taxation. The members agree to take such actions and make such elections as may be necessary
or convenient for the Company to be treated as a partnership for purposes of federal and state
taxation. If it is determined that the Company is not or will not be classified as a partnership under
the Internal Revenue Code of 1986, as amended (the "Code"), then the Operating Agreement
shall be considered amended to the smallest degree possible in whatever manner necessary to
ensure that the Company is or shall be treated as a partnership under the Code for purposes of
federal and state taxation.
ARTICLE 2. MEMBERS, CONTRIBUTIONS AND INTERESTS
2.1 Initial Members. Contributions and Interests.
The addresses of the members of the Company and their respective initial capital
contributions and Membership Interests (as defined below) and Sharing Ratios (defined below),
are as set forth on Exhibit B, attached hereto and made a part hereof. Each member shall make
the initial capital contribution described for that member on the terms set forth on Exhibit B. No
interest shall accrue on any capital contribution.
As used in this Operating Agreement, the term "Sharing Ratio" shalt include only the
economic interest of a member in the Company. The economic interest of a member shall mean
such member's share of one or more of the profits, losses and distributions pursuant to this
Operating Agreement and the Act but shall not include any management interest. The term
"Membership Interest" shall include both the economic interest and management interest of the
member in the Company. The management interest shall mean a member's right to participate
in the management or affairs of the Company, including the right to appoint one (1) manager and
to vote on, consent to or otherwise participate in any discussions of the managers or members
as further provided for below.
2.2 Limitation of Liability.
Each member's liability shall be limited as set forth in this Operating Agreement, and to
the fullest extent permitted under the Act and other applicable law. A member will not be
personally liable, merely as a member,for any debts or losses of the Company.The failure of the
Company to observe any formalities or requirements relating to the exercise of its powers or
management of its business or affairs shall not be grounds for imposing personal liability on the
members or managers for liabilities of the Company.
2.3 No Member Authority.
No member, in its capacity as a member, shall have any power or authority to bind the
Company unless the member, in its capacity as a member, has been given such authority herein
or by written authorization from the managers to act as an agent of the Company.
OPERATING AGREEMENT-2
2.4 Fiduciary Duties.
2.4.1 To the fullest extent permitted by the Act and applicable law, the members
shall not have any fiduciary duty to the Company or to any other member solely by reason of
being a member.
2.4.2 Any member may engage, independently or with others, in other business
and investment ventures and may engage in any other activities in addition to those relating to
the Company, including, without limitation, business interests and activities, which are directly or
indirectly in competition with those of the Company, such as owning any interest in adjacent real
property and shall have no obligation to account to the Company for such business or investments
or for business or investment opportunities.
2.5 Additional Members.
Additional members shall only be admitted to the Company upon the unanimous approval
of the existing members and upon the condition that each additional member must execute this
Operating Agreement and agree to be bound by the terms hereof and execute any additional
amendment(s)to this Operating Agreement,and other documentation reasonably required by the
managers and existing members, or such additional member shall be treated as an Assignee(as
defined in Section 9.4). Unless otherwise agreed in writing by all the existing members, the
admission of additional members shall dilute the Membership Interests of the existing members
in the total amount of the Membership Interest to be issued to the additional member on a pro
rate basis according to the respective Membership Interests of the existing members. Upon
admission as an additional member, such additional member shall be required to make a capital
contribution to the Company in an amount determined by all of the managers and all of the existing
members.
2.6 Additional Contributions.
2.6.1 Additional Contributions. Except as set forth in this Section 2.6.1, no
member shall be permitted or required to make any additional capital contribution. Upon the
determination of the managers that additional funds are required by the Company for its business
or any of its obligations, expenses, costs, liabilities or expenditures, the managers may require
the members to make an additional capital contribution. The managers shall give notice in writing
at least forty-five (45) days prior to the date the additional contribution is due to all members and
Assignees setting forth the amount of the additional capital contribution approved by the
managers, the purpose for which such capital contribution is needed, and the date by which the
members and Assignees should contribute. Each member and Assignee shall contribute its share
of such additional contribution. Each member's share for purposes of the preceding sentence
shall be each member's or Assignee's Sharing Ratio.
2.6.2 Failure to Make Additional Contributions. In the event, after being notified
to contribute additional capital contributions, a member(s) fails to contribute additional funds as
required pursuant to Section 2.6.1 ("Non-Contributing Member(s)"), the other member(s)
("Contributing Member(s)") may, in addition to any other legal remedies available, contribute
additional funds to cover such amount that has not been contributed by the Non-Contributing
Member(s) (an "Over-Contribution"). The Contributing Member(s) may elect to treat the Over-
Contribution as follows:
OPERATING AGREEMENT-3
2.6.2.1 The Over-Contribution may be treated as a demand loan by the
Contributing Member(s) to the Non-Contributing Member(s), bearing interest at the prime rate of
the principal bank of the Company plus five percent (5%) per annum from the date the Over-
Contribution is made. To the extent of such Over-Contribution plus interest, any distributions
otherwise due to the Non-Contributing Member(s) shall instead be paid to the Contributing
Member(s) (pro rate with the amounts advanced by the Contributing Member(s)).
2.7 Interest on Capital Contributions.
Except as otherwise specifically provided in this Operating Agreement, no interest shall
be paid on capital contributions and no member shall have the right to withdraw any capital
contribution.
2.8 Loans: Guarantees.
2.8.1 Loans. Upon the approval of the managers, the Company may borrow
money from any member or third party upon such commercially reasonable terms and conditions
as may be approved by the managers. By execution hereof, the members hereby acknowledge
and consent to the Company obtaining a loan for the acquisition of the Property in the approximate
amount of One Million Four Hundred Thousand Dollars ($1,400,000.00)from a lender approved
by the managers(the"Loan")on such terms and conditions as may be approved by the managers.
2.8.2 Guarantees. The members agree that, except with respect to the Loan, no
member shall be required to guarantee any other loans, unless such member, in its discretion,
shall agree thereto in writing and such member receives the prior written consent of the managers.
With regard to any and all obligations arising from or related to any guaranty (a "Guarantee
Obligation") of any loan to the Company, including the Loan, the members hereby agree that if
any member/guarantor is obligated to satisfy any Guarantee Obligation, such member/guarantor
shall have a right of contribution against the members in proportion to each member's
Membership Interest relative to one another. The right of contribution provided herein is in
addition to any additional rights or remedies provided by law, or by any other agreement among
the members, and shall include all costs and expenses, including attorneys' fees and interest,
incurred by a member or guarantor in enforcing the terms hereof and/or with regard to any such
claim.
2.9 Rights of Indemnification.
The Company shall indemnify each member in accordance with Article 11.
2.10 Votino Riahts.
2.10.1 General. All members shall be entitled to vote only on matters submitted
to a vote of the members and not on any matter with respect to which the managers have authority
to act under Article 4, unless the vote of the members is specifically requested by the managers
or required under this Operating Agreement or the Act. Any person or entity holding an economic
interest, or any portion thereof, that has not been admitted as a member in accordance with this
Operating Agreement shall not be entitled to vote on any matters. Any member which is a
Defaulting Member(defined below)shall not be permitted to vote. On matters requiring action by
the members, each member shall be entitled to vote such member's Membership Interest in
OPERATING AGREEMENT-4
proportion to its relative Membership Interest to all outstanding Membership Interests. Each entity
constituting a member("Entity Member"), if any, shall appoint one of the principals thereof as the
designated representative ("Designated Representative") to attend meetings on behalf of such
Entity Member and to vote on or give consent on behalf of such Entity Member until notice of a
modification of the Designated Representative is provided to the managers and the members. In
the event of a dispute between the individual owners of an Entity Member regarding the identity
of its Designated Representative from time to time,then such member, as the case may be, shall
not be entitled to vote on the relevant matter.
2.10.2 Aooroval. Except as otherwise specifically provided in this Operating
Agreement, phrases such as"approval of the members"; "consent of the members"; "affirmative
vote of the members", or phrases of similar meaning, shall mean approval of an action by the
members holding in excess of fifty percent(50%)of the Membership Interests entitled to vote on
such matter.
2.10.3 Acts Requiring Unanimous Vote. Notwithstanding Sections 2.10.1 and
2.10.2 and anything to the contrary elsewhere in this Operating Agreement, the following matters
shall not be made or taken without the unanimous vote of the members:
2.10.3.1 Any amendment to this Operating Agreement;
2.10.3.2 Sale of all or substantially all of the assets of the Company;
2.10.3.3 Issue any additional Membership Interest to any member or any
other party;
2.10.3.4 Dissolution of the Company; and
2.10.3.5 Any other action set forth herein which expressly requires the
"unanimous approval of the members", "approval of all of the members", "consent of all of the
members"; "affirmative vote of all of the members", or phrases of similar meaning.
2.11 Member Default.
2.11.1 An "Event of Default" shall occur if a member ("Defaulting Member") fails
to perform any material obligation under this Operating Agreement(excluding the failure to make
any required additional cash capital contributions which shall be governed by Section 2.6 of this
Operating Agreement). Upon the occurrence of an Event of Default, the Company and the other
Member("Non-Defaulting Member")shall each have the right to deliver to the Defaulting Member
notice(a"Notice of Default")setting forth the nature of the obligations that the Defaulting Member
has failed to perform.
2.11.2 If the Defaulting Member fails to cure the Event of Default within the Cure
Period, the Non-Defaulting Member may take the actions set forth and agreed to in this Section
2.11. For purposes hereof,"Cure Period" means a period commencing on the date that the Notice
of Default is provided by the Non-Defaulting Member or the Company and ending (i)twenty (20)
days after Notice of Default is so provided, or (ii) in the case of any obligation (other than an
obligation to pay money)which cannot reasonably be cured within such twenty (20) day period,
such longer period not to exceed forty-five (45) days after the Notice of Default as is necessary
OPERATING AGREEMENT-5
to effect a cure of the Event of Default, so long as the Defaulting Member diligently attempts to
effect a cure throughout such period.
2.11.3 Upon the occurrence of an Event of Default and the expiration of the Cure
Period, and if any dispute remains with respect to the Event of Default, then the members shall
submit the dispute concerning the Event of Default to non-binding mediation in accordance with
Section 4.4.2 below.
2.11.4 Nothing in this Section 2.11 shall restrict a member's right to seek equitable
relief prior to mediation.
ARTICLE 3. MEMBER MEETINGS
3.1 Meetings of Members.
A meeting of the members shall be held if called by either of the managers or if any
member signs, dates and delivers to the managers a written request for a meeting which
describes the purpose or purposes for which said meeting is to be held. A member may waive
the requirement of notice of a meeting either by attending such meeting or executing a written
waiver before or after such meeting.Any such meeting shall be held during the Company's normal
business hours at its principal place of business unless the members unanimously consent in
writing or by their attendance at such meeting to its being held at another location or time.
3.2 Quorum.
The presence, in person or by proxy, of members holding at least fifty-one percent(51%)
of the Membership Interests, shall constitute a quorum.
3.3 Notice of Meetings.
Notice of meetings of the members shall be delivered, mailed, e-mailed or transmitted by
facsimile to all members and shall be given not less than ten (10) days nor more than thirty (30)
days prior to the time of said meeting and shall set forth the place, date and hour of the meeting,
and the nature of the business to be undertaken. The mailing of a notice, postage prepaid, in the
manner provided in this Section 3.3, shall be considered notice served, after said notice has been
deposited in a regular depository of the United States mail. Notices sent by facsimile or e-mail
shall be considered notice served upon confirmation of delivery.
3.4 Proxies.
A member may vote by proxy given to any other member. Any such proxy must be in
writing and must identify the specific meeting or matter to which the proxy applies or state that it
applies to all matters (subject to specified reservations, if any) coming before the Company for
approval under any provision of this Operating Agreement prior to a specified date (which shall
not be later than the first anniversary of the date on which such proxy is given). Any such proxy
shall be revocable at any time and shall not be effective at any meeting at which the member
giving such proxy is in attendance.
OPERATING AGREEMENT-6
ARTICLE 4. MANAGEMENT
4.1 Number and Qualifications of Manaaers.
The Company shall be manager managed. A manager need not be a member. The
managers shall have all of the rights and powers that may be possessed by managers under the
Act and this Operating Agreement,including,without limitation,those rights and powers described
in this Article 4. There shall be two (2) managers, and one (1) manager shall be selected and
appointed by member Laos, and one (1) manager shall be selected and appointed by member
Thomas. The initial manager appointed by member Laos, shall be Laos, and the initial manager
appointed by member Thomas, shall be Thomas. In the event of the Transfer (as defined in
Section 9.1 below) of any or all of the Membership Interest of Laos to any other person(s) who
are admitted as member(s),then member Laos and/or the successor owner(s)of the Membership
Interest originally held by Laos who are admitted as members shall, as a group, and by majority
vote in proportion with their respective Membership Interests among each other, be entitled to
select and appoint one (1) manager and to remove that manager under Section 4.7 below and to
appoint a manager as provided in Section 4.8 below. In the event of the Transfer of any or all of
the Membership Interest of Thomas to any other person(s)who are admitted as member(s), then
member Thomas and/or the successor owner(s) of the Membership Interest originally held by
Thomas who are admitted as members shall, as a group, and by majority vote in proportion with
their respective Membership Interests among each other, be entitled to select and appoint one
(1) manager and to remove that manager under Section 4.7 below and to appoint a manager as
provided in Section 4.8 below.
4.2 Term of Managers.
The managers shall serve for a term ending on the earlier of the manager's death,
resignation or removal.
4.3 Authority of Member to Bind the Company. Subject to restrictions that may be
imposed from time to time by the members and this Operating Agreement,the managers shall be
agents of the Company with authority to bind the Company and the authority and right to manage
the Company and do all things necessary or convenient to carry out the Authorized Business of
the Company under this Operating Agreement and the Act. Except as set forth below, no one
manager shall have the authority to take any action as an agent for the Company, or to otherwise
bind the Company.
4.3.1 Day to Day Management.
4.3.1.1 Day-to-day management of the Company's business, in the
ordinary and usual course, shall be vested in each of the managers, subject to the limitations set
forth in Section 4.3.2 and Section 4.3.3 and elsewhere in this Operating Agreement.
4.3.2 Business Plan: Limitation on Specific Responsibilities and Authority of
Managers. All actions taken to implement and/or supervise the implementation of a manager's
specific responsibilities and authority shall be in accordance with an annual Property business
plan, Property budget and Property financial projections approved and adopted by both managers
on or before the 3111 day of December of each year ("Business Plan"). The initial Business Plan
for the period from March 26, 2021 through December 31, 2021 will be prepared on or before the
date of the Company's purchase of the Property.
OPERATING AGREEMENT-7
4.3.3 Joint Responsibility and Authority of the Manaaers The managers shall
be jointly responsible for and neither manager may, without the prior written consent of the other
manager, execute any documents or agreements concerning, expend any funds for, make any
decisions upon, or take any action towards, or otherwise cause the Company to act, regarding
any activity outside the ordinary and usual business affairs transacted by the Company (unless
expressly set forth in the Business Plan) including, without limitation:
4.3.3.1 adopt or authorize any Business Plan or cause the Company to
take any action or make any expenditure not in accordance with the Business Plan;
4.3.3.2 acquire additional property or properties (whether real property or
personal property) at a cost, individually or in any twelve (12) month period in the aggregate, in
excess of$10,000 (other than the Property);
4.3.3.3 enter into any contract, agreement or commitment, or series of
related contracts, agreements or commitments, obligating the Company to pay individually or in
any twelve(12) month period in the aggregate, in excess of$10,000;
4.3.3.4 Sell, convey, assign, or mortgage any real estate or any personal
or any other property (including the Property or any portion thereof);
4.3.3.5 Lease the Property or any portion thereof;
4.3.3.6 Make any employment offer(full, part-time or otherwise)to any
member or affiliate thereof;
4.3.3.7 Make any distribution to a member pursuant to Article 8 (except
for Income Tax Distributions (defined below));
4.3.3.8 Require any additional capital contributions by the members;
4.3.3.9 Reimburse any member, manager or any affiliate of any member
or manager for fees, costs or other amounts advanced or incurred by any member, manager or
any affiliate of any member or manager or by any member, manager or any affiliate of any
member or manager on behaff of the Company;
4.3.3.10 Cause the Company to engage in any business other than the
Authorized Business;
4.3.3.11 Cause any action on behalf of the Company that expressly
requires the approval, consent, authorization, or undertaking of"the managers", "approval of the
managers" or"each of the managers" or similar phrases used herein;
4.3.3.12 Cause any action on behalf of the Company that expressly
requires the approval, consent, authorization, or undertaking of the members or all of the
members; or
OPERATING AGREEMENT-8
4.3.3.13 Cause any action on behalf of the Company that is not
consistent with past custom and practice (including with respect to quantity and frequency) or is
not reasonably contemplated by the Business Plan.
4.4 Action of Managers: Deadlock of Managers or Members.
4.4.1 Except as agreed to in Section 4.3.1.1, all actions taken by the managers
shall require the unanimous consent of the managers. Each manager shall have one(1)vote. In
the event the managers cannot agree upon any matter or action to be taken, the matter or action
shall fail.
4.4.2 "Deadlock" shall occur with respect to any decision requiring the
unanimous approval of the managers (or by the members pursuant to Section 2 Jif such matter is
not approved (or otherwise resolved) on the matter submitted to the managers (or members, as
applicable) for vote at a meeting or in the form of a proposed written consent ("Tie Vote"), and
during the sixty(60)day period following the Tie Vote, the managers(or members, as applicable)
are unable or fail to break the Tie Vote(if the matter is presented in the form of a proposed written
consent, the sixty (60)day period shall commence on the date that the manager who was last to
receive the proposal received it). During this sixty (60) day period, the managers (or members,
as applicable) shall seek in good faith to hold at least three (3) additional meetings at which the
managers (or members, as applicable) shall make a good faith effort to break the Deadlock. To
the extent practicable,the managers(or members, as applicable)shall seek to resolve the matter
in a manner consistent with the Company's then-current Business Plan. The additional meetings
shall be held at the time and place agreed to by the managers. If a Deadlock occurs, and is not
resolved in accordance with this Section, then the managers (or members, as applicable) shall
submit the Deadlock to non-binding mediation. Either manager(or member, as applicable) may
initiate the non-binding mediation by providing to the other manager (or member, as applicable)
a written request for mediation, setting forth the subject of the Deadlock. Unless otherwise
agreed, the mediation will take place in Boise, Idaho. The managers (or members, as applicable)
will cooperate with one another in selecting a mediator, and in scheduling the mediation
proceedings. The managers (or members, as applicable) covenant that they will participate in
the mediation in good faith, and that the members will share equally in the costs of the mediator
and mediation (provided, each party shall be responsible for its own attorneys'fees and costs).
4.5 Other Activities.
Subject to the limitations agreed to below, the managers may have other business
interests and may engage in any other activities in addition to those relating to the Company,
including, without limitation, business interests and activities, which are directly or indirectly in
competition with those of the Company, such as owning any interest in adjacent real property for
the same purposes as set forth herein.
4.6 Resignation.
A manager may resign at any time by delivering written notice to the members. The
resignation is effective upon notice, unless the notice specifies a later effective date. Once
delivered, a notice of resignation is irrevocable unless revocation is permitted by the member that
appointed such manager. The resignation of a manager who is also a member shall not affect
the managers' rights as a member and shall not constitute a withdrawal of the member.
OPERATING AGREEMENT-9
4.7 Removal of Manaaers by Members.
Each member shall be entitled to remove the manager appointed by it with or without
cause and replace such manager as set forth in Section 4.8 below.
4.8 Vacancy.
If a vacancy occurs in the position of manager, the member represented by, and which
appointed such manager causing the vacancy shall fill the vacancy by selecting a new manager.
A vacancy that will occur at a specific later date may be filled before the vacancy occurs but the
new manager may not take office until the vacancy occurs unless specifically authorized by the
member choosing the new manager.
4.9 Managers' Compensation.
A manager shall not receive compensation for its services as manager unless set forth in
the Business Plan or approved by all of the members but shall be reimbursed by the Company
for reasonable out of pocket expenses directly associated with such manager's performance of
services to the Company in that capacity upon written approval of the other manager.
4.10 Managers' Standard of Care.
A manager owes to the Company and the members the fiduciary duties of loyalty and care
as set forth below.
4.10.1 Duty of Loyalty. A manager's duty of loyalty to the Company and the other
members is limited to the following:
(a) to account to the Company and hold as trustee for it any
property, profit or benefit derived by the managers in the conduct and winding up of the Company
business or derived from a use by the managers of Company property;
(b) to refrain from the appropriation of a Company opportunity
(this duty shall only be violated if the opportunity is within the Authorized Business of the Company
and relates directly to the Property); and
(c) to refrain from dealing with the Company in the conduct or
winding up of the Company business as or on behalf of a party having an interest adverse to the
Company.
Notwithstanding the foregoing, it shall not be a violation of the manager's duty of loyalty
merely because(i) such manager's conduct furthers such manager's own interest or the interest
of any particular member; or (ii) such manager engages in any transaction (including, without
limitation,the purchase, sale, lease or exchange of any property or the rendering of any service)
with the Company so long as the terms and conditions of such transaction, on an overall basis,
are believed at the time of approval to be fair and reasonable to the Company, and provided that
all of the members consent in writing to approve the transaction.
4.10.2 Duty of Care. A manager's duty of care in the discharge of such manager's
duties to the Company and its members is limited to refraining from engaging in grossly negligent
or reckless conduct, intentional misconduct, or a knowing violation of law. In discharging its
OPERATING AGREEMENT-10
duties, such manager shall be fully protected in relying in good faith upon the records required to
be maintained under the Act and upon such information, opinions, reports or statements by any
other members, or agents, or other persons as to matters such manager reasonably believes are
within such other person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Company, including, without limitation, information,
opinions, reports or statements as to the value and amount of the assets, liabilities, profits or
losses of the Company or any other facts pertinent to the existence and amount of assets from
which distributions to members might properly be paid.
4.11 Self-Dealing.
4.11.1 Permitted Actions. Subject to the approval of all of the members, the
members, managers, or their affiliates may deal with the Company, directly or indirectly, as
vendor, purchaser, employee, agent or otherwise. In the event of such unanimous member
approval, no contract or other act of the Company shall be voidable or affected in any manner
solely by the fact that a member, a manager or any of their respective affiliates is directly or
indirectly interested in such contract or other act and no member, manager or any of their affiliates
shall be accountable to the Company or the members in respect of any profits directly or indirectly
realized by it by reason of such authorized contract or other act. Such interested member or
manager shall be eligible to vote or take any other action as a member or manager in respect of
such contract or other act as it would be entitled were it or its affiliate not interested therein.
4.11.2 Api)roval of Self-Dealing Transactions. Notwithstanding Section 4.11.1 or
any other provision of this Operating Agreement to the contrary:
4.11.2.1 A manager and/or member shall disclose in advance to the
members the existence of a potential conflict and the material terms of any such proposed
transaction between the Company and the manager, member or any affiliate of a manager or
member;
4.11.2.2 Each such transaction shall be based on commercially
reasonable terms and industry standards; and
4.11.2.3 The form and material terms of each such transaction and/or
contract shall be approved by all of the members.
4.12 Employment of Affiliates.
The managers may employ,engage as independent contractors,or lease to the Company,
affiliates or employees of the managers or members, provided that such transaction be made on
terms and conditions which are no less favorable to the Company than if such transaction had
been entered into with an independent third party, and provided such transaction is disclosed to
the members and approved by all of the members.
4.13 Management of Company and Property.
It is understood that the managers hereunder are not required to be engaged in the full-time
management of the affairs of the Company or the management of the Property. The managers
may contract with third parties for tax, accounting and/or legal services required in managing the
day-to-day affairs of the Company and with an outside property management company for the
OPERATING AGREEMENT-11
customary property management and accounting functions. The fees and costs of such outside
third parties shall be on terms customary in Ada County, Idaho, and shall be considered an
operating expense of the Company or the Property, as shall out-of-pocket costs and expenses of
the managers in managing the Company or the Property. Reimbursement of all such fees and
costs and out-of-pocket expenses shall be subject to approval of each of the managers.
4.14 Outside Services.
The managers, affiliates of the managers, the members or affiliates of the members may also act
independently to provide non-management professional services to the Company, including,
without limitation, property management services; provided, however, that the provision of such
services by the managers, the members or affiliates of the managers or members is approved in
writing by all of the members. In the event the managers, the members or affiliates of the
managers or members provide such non-management services to the Company, the managers,
the members or affiliates of the managers or members shall be reimbursed at the normal and
customary charges for the provision of such services.
4.15 Tax Matters.
Except as otherwise specifically provided herein or prohibited by law, the members shall
select an individual from time to time to make any and all elections for federal and state income
tax purposes, including,without limitation, any election, if permitted by applicable law to: (i)adjust
the basis of Company property pursuant to Code §754, §734(b), and §743(b), or comparable
provisions of state or local law, in connection with Transfers (defined below) of Membership
Interests and Company distributions; (ii) extend the statute of limitations for assessment of tax
deficiencies against members with respect to adjustments to the Company's federal, state or local
tax returns; and (iii) represent the Company before taxing authorities or courts of competent
jurisdiction in tax matters affecting the Company.
ARTICLE S. ACTIONS WITHOUT NOTICE, WITHOUT MEETING, OR BY TELEPHONE
5.1 Meeting of all Members or Managers.
Notwithstanding any other provision of this Operating Agreement, if all the members or
managers hold a meeting at any time and place,such meeting shall be valid without call or notice
and any lawful action taken at such meeting shall be the action of the members or managers.
5.2 Action Without Meeting.
Any action required or permitted to be taken by the members or managers at a meeting
may be taken without a meeting if all the members or managers, as applicable, sign a written
consent describing the action taken. Such consent shall be included in the minutes or filed with
the Company's records.
5.3 Meetings by Telephone.
Meetings of the members or managers may be held by conference telephone or by any
other means of communication by which all participants can hear and speak to each other
simultaneously during the meeting, and such participation shall constitute presence in person at
the meeting.
OPERATING AGREEMENT-12
ARTICLE 6. ACCOUNTING AND RECORDS
6.1 Books of Account.
The Company's books and records, a register showing the names, addresses and
Membership Interests of the members and the Sharing Ratios of the Assignees (as defined in
Section 9.4) (if any), and this Operating Agreement shall be maintained by the managers at the
Company's principal place of business. Each member shall have access thereto at all reasonable
times. The managers shall keep books and records of the Company's operations that are
appropriate and adequate for the Company's business and for the carrying out of this Operating
Agreement and including all records required by the Act.
6.2 Fiscal Year.
The fiscal year of the Company shall be the calendar year.
6.3 Accounting Reports.
Within ninety(90)days after the close of each fiscal year, the managers shall cause each
member to receive an unaudited report of the activities of the Company for the preceding fiscal
year, including a copy of a balance sheet of the Company as of the end of such year and a
statement of income or loss for such year.
6.4 Tax Returns.
The managers shall cause all required federal and state income tax returns for the
Company to be prepared and timely filed with the appropriate authorities. Within ninety(90)days
after the end of each fiscal year, each member shall be furnished a statement suitable for use in
the preparation of the members income tax return, showing the amounts of any distributions,
contributions, gains, losses, profits, or credits allocated to the member during such fiscal year.
6.5 Tax Matters Partner/Representative.
The members hereby appoint member Arthur P. Laos as the"partnership representative"
(the "Partnership Representative") as provided in Code Section 6223(a) (as amended by the
BBA). In the event Arthur P. Laos ceases to be the Partnership Representative, then the
managers shall select and designate a replacement Partnership Representative. The Partnership
Representative is authorized and required to represent the Company (at the Company's
expense), in connection with all examinations of the Company's affairs by taxing authorities,
including resulting administrative and judicial proceedings, and to expend Company funds for
professional services and costs associated therewith. Each member agrees that such member
shall not treat any Company item inconsistently on such member's federal, state,foreign or other
income tax return with the treatment of the item on the Company's return.
ARTICLE 7. ALLOCATIONS
7.1 Allocations of Income and Gain.
All income and gain attributable to the ownership, operation or sale of the Property shall
be allocated to the members in accordance with their Sharing Ratios.
OPERATING AGREEMENT-13
7.2 Allocations of Loss.
All losses attributable to the operation of the Property shall be allocated to the members
in proportion to their Sharing Ratios.
7.3 Capital Accounts.
An individual capital account shall be maintained for each member and Assignee (as
defined in Section 9.4). Each such capital account shall be(i)credited with all capital contributions
by such member or Assignee and the member's or Assignee's distributive share of all income and
gain (including any income exempt from federal income tax); and (ii) charged with the amount of
all distributions to such member or Assignee and the member's or Assignee's distributive share
of losses and deductions. Capital accounts shall be maintained in accordance with federal
income tax accounting principles as set forth in Trees. Reg. 1.704-1(b)(2)(iv) or any successor
provision.
7.4 Compliance with Section 704.
The provisions of this Article 7 as they relate to the maintenance of capital accounts are
intended, and shall be construed, to cause the allocations of profits, losses, income, gain and
credit pursuant to this Article 7 to have substantial economic effect under the Regulations
promulgated under§704(b) and §704(c) of the Code, in light of the distributions made pursuant
to Articles 8 and 10 and the capital contributions made pursuant to Article 2.
ARTICLE 8. DISTRIBUTIONS
8.1 Distributions.
Except as otherwise provided in this Operating Agreement,distributions shall be paid upon
the approval of the managers, subject to the Company's cash available for distribution, provided
that, subject to the Company's cash available for distribution, the Company shall make quarterly
distributions in accordance with each members respective Sharing Ratio in an amount equal to
state and federal income tax due by the members for their respective shares of the Company's
income for each quarter(as adjusted for the estimated state and federal income tax for the then-
current tax year to date)("Income Tax Distributions").
8.2 Cash Available For Distribution.
For purposes of this Article 8,the phrase"cash available for distribution" shall mean cash
of the Company which the managers reasonably determine may be distributed to the members
without impairing the ability of the Company to carry out its purposes, after taking into account
the actual and anticipated expenses of the Company and such reserves as the members
reasonably deem advisable to protect the Company from future cash shortfalls. Upon distribution
in accordance with this Article 8, the capital account for each member shall be charged for the
amount of the payment to that member.
OPERATING AGREEMENT-14
8.3 Distribution Schedule.
Distributions of the Company's cash available for distribution (other than quarterly
estimated Income Tax Distributions provided for under Section 8.1)shall be made in the following
order of priority:
8.3.1 Return of Cash. Any cash available for distribution shall be distributed first
to the members in proportion to their relative cash contributions to the Company made under
Sections 2.1 and 2.6 until the members have received cash distributions under this Section 8.3.1.
which are returns of capital for the full value of the members' cash contributions ("Priority
Distribution).
8.3.2 Remaining Cash. Any cash available for distribution remaining after
satisfaction of the Priority Distribution for the return of cash under Section 8.3.1 shall be distributed
to the members in proportion to their respective Sharing Ratios.
8.4 Shared Priorities. If there is more than one member who is entitled to the same
priority of distribution and there is not enough cash available for distribution to cover all
distributions in that priority category, the cash available for distribution shall be allocated and
distributed to the members entitled to distribution within that priority category in the relationship
which each of the member's respective claims in that priority category bear to the total claims of
all members in that priority category.
ARTICLE 9. TRANSFERS OF MEMBERSHIP INTERESTS
9.1 Restrictions on Disposition.
No member or Assignee (as defined in Section 9.4) shall, directly or indirectly, sell,
transfer, assign, contribute, gift, encumber, pledge, hypothecate, exchange or otherwise dispose
of,either voluntarily or involuntarily, by operation of law or otherwise,or to enter into any contract,
option or other arrangement or understanding with respect thereto (collectively, "Transfer" or
"Transferred" or"Transferring", as applicable), all or any portion of a Membership Interest without
the express, prior written approval of the other non-Transferring member(s), except as otherwise
provided in this Article 9. Each member hereby acknowledges the reasonableness of the
restrictions on Transfer imposed by this Operating Agreement in view of the Company's purposes
and the relationship of the members. Accordingly, the restrictions on Transfer contained herein
shall be specifically enforceable.
9.2 Permitted Transferees.
Subject to compliance with the provisions set forth below and upon prior written notice to
each other member of the Company, a member may Transfer all or part of his or her Membership
Interest to his or her spouse or lineal descendants or to a trust created for that member's estate
planning purposes or an entity controlled by a member("Permitted Transferee"). Any Permitted
Transferee shall be bound to the provisions of this Agreement and shall be obligated to execute
an addendum hereto in a form acceptable to the Company and each other member prior to such
Transfer. Subject to the foregoing, a Permitted Transferee shall automatically be admitted as a
member and shall not be an Assignee. For purposes of this Section 9.2, an entity is"controlled
by a member" If that member, directly or indirectly, possesses the power to direct or cause the
OPERATING AGREEMENT-15
direction of the management and policies of such entity, through the ownership of voting
securities, by contract or otherwise.
9.3 Riaht of First Refusal to Purchase Membership Interests Proposed to be
Transferred by Sale.
A member ("Selling Member") proposing to Transfer all or any portion of or interest in his or her
Membership Interest for value may do so only pursuant to a written bona fide offer of purchase
from a third party ("Offer"). If the Selling Member desires to Transfer his or her Membership
Interest pursuant to such Offer, such member shall give the other member notice which shall
contain a description of all of the material terms and conditions of the Offer and a copy of the
Offer. The other member shall have the right to purchase the Selling Members Membership
Interest subject to the Offer upon the terms and conditions contained in the Offer. If the other
member elects to purchase such Membership Interest, such member shall provide written notice
of such election to purchase all and not less than all of the Membership Interest subject to the
Offer within thirty (30) days of receipt of the Selling Member's notice of the Offer. The other
Member shall consummate the transaction as if he or she were the third party making the Offer,
but in no event shall the closing date be required to occur earlier than thirty (30) days following
the date of the other member's notification to the Selling Member of his or her (as applicable)
determination to purchase the Selling Member's Membership Interest subject to the Offer. If the
other member fails to give notice of the exercise of such other Member's right of first refusal within
such thirty (30) day period, or K the other Member does not elect to purchase all of the Selling
Member's Membership Interest, the Selling Member shall be free to Transfer his or her (as
applicable) Membership Interest subject to the Offer but only in accordance with the express
terms and conditions of the Offer. Unless admitted as member under Section 9.5 below the third
party purchasing the Selling Member's membership interest shall be an Assignee.
9.4 Rights of Assignees.
A person who acquires a Membership Interest but who is not admitted as a member(an
"Assignee") shall be entitled only to the economic rights with respect to such Transferred
Membership Interest, i.e., the Transferred Sharing Ratio, in accordance with this Operating
Agreement, and shall have no right to vote on any matters as a member, shall have no right to
any information or accounting of the affairs of the Company, shalt not be entitled to inspect the
books or records of the Company,and shall not have any of the rights of a member under the Act
or this Operating Agreement.
9.5 Admission of Assignees as Members.
Subject to the other provisions of this Operating Agreement, an Assignee of a Sharing
Ratio may be admitted to the Company as a member only upon the unanimous vote of the
members and the managers and the satisfaction of such other terms and conditions as all of the
members and managers shall require.
OPERATING AGREEMENT-16
ARTICLE 10. WITHDRAWAL AND DISSOLUTION
10.1 Withdrawal.
Each member agrees not to withdraw from the Company without the approval of the other
member(s). Notwithstanding the foregoing, a member may voluntarily withdraw and such
withdrawal shall be effective ninety (90) days after written notice is delivered to the managers.
Any and all member withdrawals, however, shall be conclusively deemed an Event of Default and
the Withdrawing Member shall be liable to the Company and the remaining member(s) for any
and all costs, expenses and damages arising from such breach. The Company may offset any
damages against any amounts otherwise distributable to the Withdrawing Member, in addition to
pursuing any remedies otherwise available herein or under applicable law.
10.2 Effect of Withdrawal or Other Event.
Upon the withdrawal, bankruptcy or dissolution of a member, such member shall cease to
be a member in the Company and shall hold its Membership Interest in the Company as an
Assignee and shall therefore not be entitled to appoint or continue the appointment of a manager
or possess any other management interest of a member.
10.3 Events of Dissolution.
Unless otherwise provided in this Operating Agreement,the Company shall dissolve upon
the approval of dissolution by a unanimous vote of the members. Upon the approval of dissolution,
the managers shall cause a statement of dissolution to be filed.
10.4 Distribution Upon Dissolution.
Upon dissolution of the Company as provided in this Article 10, the managers shall
immediately proceed to wind up the affairs of the Company. The managers shall sell or otherwise
liquidate all of the property of the Company as promptly as practicable (except to the extent the
members determine to distribute any assets to the members in kind as provided in Section 10.5)
and the proceeds therefrom shall be applied and distributed in the following order:
10.4.1 First, to pay secured debts to third parties and members (excluding debts
to be assumed pursuant to any sale, if any); then
10.4.2 Second, in the case of the sale of substantially all of the Company's assets,
to pay the costs of such sale; then
10.4.3 Third, to pay unsecured debts of the Company owed to creditors other than
members; then
10A.4 Fourth,to pay unsecured debts of the Company owed to members;then
10.4.5 Fifth, to the members any amounts which are returns of capital for the full
amount of such members Priority Distribution and for any other unretumed cash contributions;
then
10.4.6 The balance, if any, to members and/or Assignees in proportion to their
respective Sharing Ratios.
OPERATING AGREEMENT-17
10.5 Distributions in Kind.
Upon the approval of all of the members, the managers may distribute to the members
assets in kind. Each such non-cash asset shall be valued at its fair market value at the time of
distribution as reasonably determined by the managers.
10.6 Statement of Dissolution.
When all debts, liabilities and obligations have been paid and discharged or adequate
provisions have been made therefore and all of the remaining property and assets have been
distributed to the members, the managers shall file a statement of dissolution in accordance with
the Act. Upon filing the statement of dissolution, the existence of the Company shall cease,
except as otherwise provided in the Act.
ARTICLE 11. INDEMNIFICATION AND INSURANCE
11.1 Indemnification.
The Company shall indemnify its members and the managers to the fullest extent
permissible under Idaho law, as the same exists or may hereafter be amended, against all liability,
loss and costs (including,without limitation, attorney fees through all levels of action) incurred or
suffered by a person by reason of or arising from the fact that such person is or was a member
or manager of the Company. The Company may, by vote of all of the members, provide
indemnification to employees and agents of the Company who are not members or managers.
The indemnification provided in this Section 11.1 shall not be exclusive of any other rights to which
any person may be entitled under the Act or other statute.
11.2 Limitation of Liability.
The managers shall not be liable to the Company or its members for monetary damages
for conduct as a manager except to the extent that the Act, as it now exists or may hereafter be
amended, prohibits elimination or limitation of liability, and/or except arising from the managers'
material breach of this Operating Agreement, fraud, bad faith, willful misconduct or gross
negligence. No repeal or amendment of this Section 11.2 or of the Act shall adversely affect any
right or protection of a member or a manager for actions or omissions prior to the repeal or
amendment.
11.3 Insurance.
The Company may purchase and maintain insurance on behalf of any manager, member
or agent of the Company against any liability asserted against or incurred by the managers,
members or agent acting in such capacity or arising out of the managers', members' or agent's
status as such, whether or not the Company would have the power to indemnify the managers,
members or agent against such liability under this Article 11 or the Act.
ARTICLE 12. AMENDMENTS
12.1 By Members.
The members may amend or repeal the provisions of this Operating Agreement but only
upon satisfying the following two conditions: (1)the amendment must be in writing and signed by
OPERATING AGREEMENT-18
all members in one or any number of identical counterparts; and (2)the amendment must clearly
state it is an amendment to the Operating Agreement of Raves LLC. Under no condition will this
Operating Agreement be amended or repealed by oral or implied agreement or course of conduct
of the members.
12.2 By Managers.
The managers may not amend or repeal the provisions of this Operating Agreement.
ARTICLE 13. MISCELLANEOUS
13.1 Additional Documents.
Each member shall execute such additional documents and take such actions as are
reasonably requested by the managers in order to complete or confirm the transactions
contemplated by this Operating Agreement.
13.2 Headings.
Headings in this Operating Agreement are for convenience only and shall not affect its
meaning.
13.3 Severability.
The invalidity or unenforceability of any provision of this Operating Agreement shall not
affect the validity or enforceability of the remaining provisions.
13.4 Third-Party Beneficiaries.
The provisions of this Operating Agreement are intended solely for the benefit of the
members and managers and shall create no rights or obligations enforceable by any third party,
including creditors of the Company, except as otherwise provided by the Act.
13.5 No Partnership Intended for Nontax Purooses.
The members have formed the Company under the Act, and expressly do not intend
hereby to form a partnership under either the Idaho Uniform Partnership Act or the Idaho Uniform
Limited Partnership Act. The members do not intend to be partners to one another, or partners
as to any third party. To the extent any member, by word or action, represents to another person
that any other member is a partner or that the Company is a partnership, the member making
such wrongful representation shall be liable to any other member who incurs personal liability by
reason of such wrongful representation.
13.6 Partnership Intended for Tax Purposes.
The members have formed the Company under the Act, and expressly do intend hereby
to have the Company classified and treated for purposes of federal and state income taxation as
a partnership. The members agree to take such actions and make such elections as may be
necessary or convenient for the Company to be treated as a partnership for purposes of federal
and state taxation.
OPERATING AGREEMENT-19
13.7 Governing Law. The laws of the State of Idaho shall govern the validity of this
Operating Agreement, the construction of its terms, and the interpretation of the rights and duties
of the members.
13.8 Binding Effect.
Except as otherwise provided in this Operating Agreement, every covenant, term, and
provision of this Operating Agreement shall be binding upon and inure to the benefit of the
members and their respective heirs, legatees, legal representatives, successors,transferees, and
assigns.
13.9 Construction.
Every covenant, term, and provision of this Operating Agreement shall be construed
simply according to its fair meaning and not strictly for or against any member. The terms of this
Operating Agreement are intended to embody the economic relationship between the members
and shall not be subject to modification by, or be conformed with, any actions by the Internal
Revenue Service except as this Operating Agreement may be explicitly so amended and except
as may relate specifically to the filing of tax returns. For purposes of this Operating Agreement:
(a) the words "include," "includes" and "including" shall be deemed to be followed by the words
"without limitation"; (b)the word"or"is not exclusive;and(c)the words"herein,""hereof,""hereby,"
"hereto" and "hereunder" refer to this Operating Agreement as a whole. The definitions given for
any defined terms in this Operating Agreement shall apply equally to both the singular and plural
forms of the terms defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. Unless the context otherwise requires,
references herein: (x) to Articles, Sections, and Exhibits mean the Articles and Sections of, and
Exhibits attached to, this Operating Agreement; (y) to an agreement, instrument or other
document mean such agreement, instrument or other document as amended,supplemented and
modified from time to time to the extent permitted by the provisions thereof; and (z) to a statute
mean such statute as amended from time to time and include any successor legislation thereto
and any regulations promulgated thereunder. This Operating Agreement shall be construed
without regard to any presumption or rule requiring construction or interpretation against the party
drafting an instrument or causing any instrument to be drafted. The Exhibits and Schedules
referred to herein shall be construed with, and as an integral part of, this Operating Agreement to
the same extent as if they were set forth verbatim herein.
13.10 Time.
Time is of the essence with respect to this Operating Agreement.
13.11 Waiver of Action for Partition; No Bill for Partnership Accounting.
Each of the members irrevocably waives any right that such member may have to maintain
any action for partition with respect to any of the Company property. To the fullest extent
permitted by law, each member covenants (except with the approval of the members) not to file
a bill for a limited liability company accounting.
OPERATING AGREEMENT-20
13.12 Counterpart Execution.
This Operating Agreement may be executed in any number of counterparts with the same
effect as if all of the members had signed the same document. All counterparts shall be construed
together and shall constitute one agreement. Facsimile or electronic (PDF) images of signatures
will be accepted as original signatures.
13.13 Specific Performance.
Each member agrees with the other member that the members would be irreparably
damaged if any of the provisions of this Operating Agreement are not performed in accordance
with their specific terms and that monetary damages would not provide an adequate remedy in
such event. Accordingly, it is agreed that, in addition to any other remedy to which the non-
breaching members may be entitled, at law or in equity, the non-breaching members shall be
entitled to injunctive relief to prevent breaches of the provisions of this Operating Agreement and
specifically to enforce the terms and provisions hereof.
13.14 Notice.
Unless otherwise provided herein, all notices, demands, requests and other
communications required or permitted hereunder shall be in writing and shall be deemed
delivered on the earlier of(i)three(3)days after the date of posting of registered or certified mail,
addressed to the addressee at the address of its registered agent on file with the Idaho Secretary
of State or at such other address as such party may have specified theretofore by notice delivered
in accordance with this Section 13.14, (ii) attempted delivery or refusal to accept delivery if sent
by courier or other personal delivery service, or(iii)actual receipt by the addressee regardless of
the method of giving notice. The addresses in this Operating Agreement, as amended from time
to time, shall be used for purposes of giving notice to members.
13.15 Rights and Remedies Cumulative.
The rights and remedies provided by this Operating Agreement are cumulative and the
use of any one right or remedy by any party shall not preclude or waive the right to use any or all
other remedies. Said rights and remedies are given in addition to any other rights the parties may
have by law, statute, ordinance or otherwise.
13.16 Waivers.
The failure of any party to seek redress for violation of or to insist upon the strict
performance of any covenant or condition of this Operating Agreement shall not prevent a
subsequent act, which would have originally constituted a violation, from having the effect of an
original violation.
13.17 Attorney Fees.
Each member and manager, or the Company shall be entitled to reasonable attorney's
fees incurred in enforcing the terms hereof,and additionally,in the event of any controversy, claim
or action being filed or instituted between the parties to this Operating Agreement to enforce the
terms and conditions of this Operating Agreement or arising from the breach of any provision
hereof. The prevailing party will be entitled to receive from the other party or parties all costs,
OPERATING AGREEMENT-21
damages, and expenses, including reasonable attorney's fees incurred by the prevailing party,
whether or not such controversy or claim is litigated or prosecuted to judgment. The prevailing
party will be that party who was awarded judgment as a result of trial or arbitration or who receives
a payment of money from the other party in settlement of claims asserted.
13.18 Merger Clause.
This Operating Agreement and the Exhibits hereto encompass the entire agreement of
the members and supersede all previous understandings and agreements between the members,
whether oral, in a record, implied, course of conduct, or any combination thereof. This Operating
Agreement is fully integrated and any contemporaneous understandings or agreements that are
not embodied in the Operating Agreement shall be disregarded.
Further, this Operating Agreement shall continue to be fully integrated, unless amended
or repealed in accordance with Article 12. No future understandings or agreements whether
written, oral, implied, or course of conduct shall amend, add to, subtract from, change, or modify
this Operating Agreement, except for amendments in accordance with Article 12. Accordingly, all
members waive their right to and are estopped from claiming anything to the contrary.
ARTICLE 14. CERTAIN TAX PROVISIONS
14.1 Definitions.
The following terms used in this Operating Agreement shall have the following meanings
(unless otherwise expressly provided herein);
14.1.1 "Adjusted Deficit" shall mean, with respect to any member, the deficit
balance, if any, in such member's capital account as of the end of the relevant fiscal year, after
giving effect to the following adjustments:
(a) The capital account shall be increased by any amounts
which such member is obligated to restore pursuant to any provision of this Operating Agreement
or is deemed to be obligated to restore pursuant to the next to the last sentences of Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5);
(b) The capital account shall be decreased by the items
described in Sections 1.704-I(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6) of the
Regulations; and
(c) The foregoing definition of Adjusted Deficit is intended to
comply with the provisions of Section 1.704-I(b)(2)(ii)(d) of the Regulations and shall be
interpreted consistently therewith.
14.1.2 "Company Minimum Gain" shall mean the same as "partnership minimum
gain" as set forth in Sections 1.704-2(b)(2)and 1.704-2(d)of the Regulations.
14.1.3 "Member Nonrecourse Debt" shall have the meaning set forth in Section
1.704-2(b)(4)of the Regulations for"partner nonrecourse debt."
14.1.4 "Member Nonrecourse Debt Minimum Gain" shall mean an amount, with
respect to each Member Nonrecourse Debt, equal to the Company Minimum Gain that would
OPERATING AGREEMENT-22
result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in
accordance with Section 1.704-2(i)(3) of the Regulations.
14.1.5 "Member Nonrecourse Deductions" shall have the meaning set forth in
Sections 1.704-2(i)(1)and 1.704-2(i)(2)of the Regulations for"partner nonrecourse deductions."
14.1.6 "Nonrecourse Deductions" shall have the meaning set forth in Section
1.704-2(b)(1)of the Regulations.
14.1.7 "Nonrecourse Liability" shall have the meaning set forth in Section 1.704-
2(b)(3) of the Regulations.
14.1.8 "Regulations" shall mean proposed, temporary and final regulations
promulgated under the Code in effect as of the date of filing the Articles and the corresponding
sections of any regulations subsequently issued that amend or supersede such regulations.
14.2 Soecial Allocations.
The following special allocations shall be made in the following order:
14.2.1 Minimum Gain Chargeback. Except as otherwise provided in
Section 1.704-2(f) of the Regulations promulgated under the Code in effect as of the date of
signing this Operating Agreement and the corresponding sections of any regulations
subsequently issued that amend or supersede such Regulations, notwithstanding any other
provision of this Article 14, if there is a net decrease in Company Minimum Gain during any fiscal
year,each member shall be specially allocated items of Company income and gain for such fiscal
year (and, if necessary, subsequent fiscal years)in an amount equal to such member's share of
the net decrease in Company Minimum Gain,determined in accordance with Regulations Section
1.704-2(g). Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each member pursuant thereto. The items to be
so allocated shall be determined in accordance with Sections 1.704-2(f)(6) and 1.704-20)(2) of
the Regulations. This Section 14.2.1 is intended to comply with the minimum gain chargeback
requirement in Section 1.704-2(f) of the Regulations and shall be interpreted consistently
therewith.
14.2.2 Member Minimum Gain Chargeback. Except as otherwise provided in
Section 1.704-2(i)(4) of the Regulations, notwithstanding any other provision of this Article 14 if
there is a net decrease in Member Nonrecourse Debt Minimum Gain attributable to a Member
Nonrecourse Debt during any fiscal year, each member who has a share of the Member
Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt, determined in
accordance with Section 1.704-2(i)(5) of the Regulations, shall be specially allocated items of
Company income and gain for such fiscal year(and, if necessary, subsequent fiscal years) in an
amount equal to such member's share of the net decrease in Member Nonrecourse Debt
Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with
Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made
in proportion to the respective amounts required to be allocated to each member pursuant thereto.
The items to be so allocated shall be determined in accordance with Sections 1.704 2(i)(4) and
1.704-20)(2)of the Regulations. This Section 14.2.2 is intended to comply with the minimum gain
chargeback requirement in Section 1.704-2(i)(4) of the Regulations and shall be interpreted
consistently therewith.
OPERATING AGREEMENT-23
14.2.3 Qualified Income Offset. In the event any member unexpectedly receives
any adjustments, allocations, or distributions described in Section 1.704-1(b)(2)(ii)(d)(4),
Section 1.704-1(b)(2)(ii)(d)(5) or Section 1.704-1(b)(2)(ii)(d)(6) of the Regulations, items of
Company income and gain shall be specially allocated to each such member in an amount and
manner sufficient to eliminate, to the extent required by the Regulations, the Adjusted Deficit of
such member as quickly as possible, provided that an allocation pursuant to this Section 14.2.3
shall be made only if and to the extent that such member would have an Adjusted Deficit after all
other allocations provided for in this Article 14 have been tentatively made as if this Section 14.2.3
were not in this Operating Agreement.
14.2.4 Gross Income Allocation. In the event any member has a deficit Capital
Account at the end of any fiscal year which is in excess of the sum of:
(a) the amount such member is obligated to restore pursuant to
any provision of this Operating Agreement, and
(b) the amount such member is deemed to be obligated to
restore pursuant to the next to the last sentences of Regulations Sections 1.704-2(g)(1) and
1.704 2(i)(5), each such member shall be specially allocated items of Company income and gain
in the amount of such excess as quickly as possible, provided that an allocation pursuant to this
Section 14.2.4 shall be made only if and to the extent that such member would have a deficit
capital account in excess of such sum after all other allocations provided for in this Article 14 have
been made as if Section 14.2.3 hereof and this Section 14.2.4 were not in this Operating
Agreement.
14.2.5 Nonrecourse Deductions. Nonrecourse Deductions for any fiscal year shall
be specially allocated to the members in proportion to their Sharing Ratios.
14.2.6 Member Nonrecourse Deductions. Any Member Nonrecourse Deductions
for any fiscal year shall be specially allocated to the member who bears the economic risk of loss
with respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions
are attributable in accordance with Regulations Section 1.704-2(i)(1).
14.2.7 Section 754 Adjustments. To the extent an adjustment to the adjusted tax
basis of any Company asset pursuant to Code Section 734(b)or Code Section 743(b)is required,
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) or Regulations Section
1.704 I(b)(2)(iv)(m)(4), to be taken into account in determining capital accounts as the result of a
distribution to a member in complete liquidation of the member's Sharing Ratio in the Company,
the amount of such adjustment to capital accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset)or loss(if the adjustment decreases such basis)and
such gain or loss shall be specially allocated to the member in accordance with its Sharing Ratios
in the Company in the event that Regulations Section 1.704 I(b)(2)(iv)(m)(2) applies, or to the
member to whom such distribution was made in the event that Regulations Section 1.704-1
(b)(2)(iv)(m)(4) applies.
14.3 Curative Allocations.
The allocations set forth in Sections 14.2.1 through 14.2.7 hereof (the "Regulatory
Allocations") are intended to comply with certain requirements of the Regulations. It is the intent
of the members that, to the extent possible, all Regulatory Allocations shall be offset either with
OPERATING AGREEMENT-24
other Regulatory Allocations or with special allocations of other items of company income, gain,
loss or deduction pursuant to this Section 14.3. Therefore, notwithstanding any other provision
of this Article 14 (other than the Regulatory Allocations),the managers shall make such offsetting
special allocations of Company income, gain, loss or deduction in whatever manner it determines
appropriate so that, after such offsetting allocations are made, each member's capital account is,
to the extent possible,equal to the capital account such member would have had if the Regulatory
Allocations were not part of this Operating Agreement and all Company items were allocated
pursuant to Article 7. In exercising discretion under this Section 14.3,the members shall take into
account future Regulatory Allocations under Section 14.2.1 and Section 14.2.2 that, although not
yet made, are likely to offset other Regulatory Allocations previously made under Section 14.2.5
and Section 14.2.6.
14.4 Other Allocation Rules.
For purposes of determining the profits, losses, or any other items allocable to any period,
profits, losses, and any such other items shall be determined on a daily, monthly, or other basis,
as determined by the members using any permissible method under Code Section 706 and the
Regulations thereunder.
14.4.1 The members are aware of the income tax consequences of the allocations
made by Article 7 and this Article 14 and hereby agree to be bound by the provisions of Article 7
and of this Article 14 in reporting their shares of Company income and loss for income tax
purposes.
14.4.2 Solely for purposes of determining a member's proportionate share of the
"excess nonrecourse liabilities" of the Company within the meaning of Regulations
Section 1.752-3(a)(3), the members interests in Company profits shall be in proportion to their
Sharing Ratios.
14.4.3 To the extent permitted by Section 1.704-2(h)(3) of the Regulations, the
members shall endeavor to treat distributions of net cash from operations or net cash from sales
or net cash from refinancings as having been made from the proceeds of a Nonrecourse Liability
or a Member Nonrecourse Debt only to the extent that such distributions would cause or increase
an Adjusted Deficit for any member.
[end of text]
OPERATING AGREEMENT-25
ADOPTED effective as of the date first set forth above, by the undersigned, constituting
all the members of the Company.
Laos:
4th �LAoJ
Art111,1 P Laos NMI A,202116.11 MDT)
Arthur P. Laos
Thomas:
it".A �„
Caine. om!!IML,11202108'26 M P,T,
Carrie Lynn Thomas
OPERATING AGREEMENT-26
CONSENT
Carol Lynn Laos, spouse of the member Arthur P. Laos, hereby consents and agrees as
follows:
1. 1 have read the Operating Agreement between the members and the Company
and accept its terms as to the disposition made herein of any interest I may have in Arthur P.
Laos's Membership Interest in the Company, whether through community property or otherwise.
I agree to the provisions relating to the restriction of the Transfer and the purchase and sale of a
Membership Interest in the Company and agree that the provisions shall be binding on me, my
successors, assigns, and estate while this Operating Agreement may remain in effect.
2. 1 acknowledge that I have ascertained and weighed all of the facts, conditions,
and circumstances, and that all matters set forth herein have been fully and satisfactorily
explained to me, and that I am entering into this Operating Agreement freely and voluntarily and
have been advised to seek separate legal counsel with respect to this Operating Agreement.
DATED as of the 131" day of May, 2021.
CaroG I�n�[aoy
of LJnn Laoc'.„xY t3.�0�1 I6);'MLi;
Carol Lynn Laos
OPERATING AGREEMENT-27