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HomeMy WebLinkAbout20170731_Operating AgreementOPERATING AGREEMENT OF REKLAW,LLC THIS OPERATING AGREEMENT (this "Agreement") is made and entered into as of the 2nd day of January, 2017, by and between KIM ELIZABETH WALKER ("KEW") and MICHAEL CHARLES WALKER ("MCW"), as Members. ARTICLE I FORMATION 1.1 Formation. The parties to this Agreement hereby intend to form the Company pursuant to the Act in accordance with the terms and conditions of this Agreement effective upon the filing of Articles of Organization. Upon the request of the Members, as defined herein, or as required by law, the parties shall promptly execute all amendments of the Articles of Organization and all other documents that are needed to enable the Members to accomplish all filing, recording, publishing and other acts necessary or appropriate to comply with all requirements for the formation and operation of the Company under the Act. 1.2 Intent. It is the intent of the Members that the Company be operated in a manner consistent with its treatment as a "partnership" for federal and state income tax purposes. It is also the intent of the Members that the Company not be operated or treated as a "partnership" for purposes of Section 303 of the Federal Bankruptcy Code. No Member shall take any action inconsistent with the express intent of the parties hereto as set forth herein. 1.3 Definitions. Capitalized terms used in this Agreement are defmed in Article 8. ARTICLE II GENERAL PROVISIONS 2.1 Name. The name of the Company shall be "REKLAW, LLC," or such other name as the Members from time to time shall select. 2.2 Principal Office and Place of Business. The Principal Office and place of business of the Company shall be located at 418 Yz Orchid Avenue, Corona Del Mar, California, or such other place in Orange County, California as the Members from time to time shall determine. 2.3 Company Purposes. The Company is being formed to acquire, hold, encumber, develop, lease, market and sell residential real property. The Company shall have the power to do any and all acts and things necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of such purpose. 2.4 Term. The term of the Company shall commence on the filing of the Articles of Organization and shall continue until dissolved in accordance with Section 10.1 of this Agreement. PA2017-157 the Members in proportion to their negative Capital Account balances until such negative balances have been eliminated. 6.1 ARTICLE VI MANAGEMENT (a) General Management Terms. The Members agree that the management Member-Managed. 'D of the Company shall be vested in the Members. Except as otherwise specifically provided in this Agreement, the Members shall have the exclusive power and authority to undertake the purchase, development, leasing, management and operation of the Property provided that all such actions are consistent with an Approved Budget/Plan. The Members hereby delegate to the other Member the authority and responsibility to perform certain enumerated tasks as set forth in this Agreement, including the acquisitions, development, leasing, management and operation of the Property consistent with an Approved Budget/Plan. Notwithstanding the provisions of the immediately preceding sentence, in the event of a material and adverse change in the business operations or prospects of the Company or a material adverse change in the national economy or local economy, then even for actions that are consistent with the Approved Budget/Plan, the approval of the Members shall be required to continue the purchase, development, leasing, management and operation of the Property in compliance with the then Approved Budget/Plan. All votes, consents and actions which this Agreement required to be made by "the Members" shall require the approval of both Members. (b) Approved Budget/Plan. The Members shall establish and approve a budget and plan for each Property, as described in Section 3.l(c). Each Member, as applicable, may take any action set forth in Approved Budget/Plan then in effect, so long as consistent with the Approved Budget/Plan and not resulting in a material deviation therefrom, or as otherwise permitted by this Agreement. Within forty-five (45) days prior to the expiration of any Approved Budget/Plan or if any Member, or the Members collectively propose to take any action that materially deviates from the Approved Budget/Plan, the Member or Members will prepare and submit to the other Member and to any investor, lender for the applicable Property, and other persons as necessary, for review and approval a revised or new budget/plan. Any such budget/plan so proposed shall (i) be in the same general format as the existing Approved Budget/Plan and (ii) address, at a minimum, all material matters that are addressed in the existing Approved Budget/Plan. Within twenty (20) days after receiving such new or revised budget/plan, the non-proposing Member and any investor, lender for the applicable Property, and other persons as necessary, will by written notice to the Company or other proposing party either approve the new or revised budget/plan or state its reasons for disapproving the new or revised budget/plan. If any Member or other approving party disapproves any new or revised budget/plan, then the Members will meet within five (5) business days after such notice of disapproval and seek in good faith to agree upon acceptable revisions to the new or revised budget/plan. If the Members cannot agree on a revised budget/plan, each Member may only take actions set forth in the previously Approved Budget/Plan. If the Members cannot agree upon a new budget/plan and the existing Approved Budget/Plan has expired, the Company will continue to operate the Property and may honor previously approved obligations of the Company, but will 6 PA2017-157 pertaining to the purchase of Property, as permitted by this Agreement. "Tax Matters Member" means the "tax matters member" as defined in Section 623 l(a)(7) of the Code. "Transfer" means to sell, assign, transfer, give, donate, pledge, deposit, alienate, bequeath, devise or otherwise dispose of or encumber to any Person other than the Company. "Transferee" means a Person to whom a Transfer is made. "Treasury Regulations" shall mean pronouncements, as amended from time to time, or their successor pronouncements, which clarify, interpret and apply the provisions of the Code, and which are designated as "Treasury Regulations" by the United States Department of the Treasury. "Withdrawal Event" shall mean those event circumstances listed m applicable California regulations, not including the Bankruptcy of a Member. "Withdrawn Member" has the meaning set forth in Section 9.2 hereof. IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the day and year first above written. Each Member represents and warrants that its Interest has been acquired under this Agreement for its own account, for investment, and not with a view to, or for sale in connection with, any distribution thereof, nor with any intention of distributing or selling such Interest, and that it will not Transfer, or attempt to Transfer, its Interest in violation of the Securities Act of 1933 or any other applicable federal or state law. Each Member, by executing and delivering this Agreement, hereby represents and warrants to the Company that: ( a) it understands that this Agreement provides severe restrictions on its ability to dispose of or encumber its interest in the Company indefinitely and it may be unable to liquidate it in case of emergency; (b) it has read and understands the provisions of this Agreement; ( c) it is experienced in business and understands the risk inherent in business; ( d) it is able to financially comply with its obligations hereunder and is capable of suffering a total loss of its Capital Contributions hereunder; ( e) it understands that the Internal Revenue Service may disallow some or all of the deductions to be claimed by the Company, that the Company has no financial or operating history, that the Company involves a high degree of risk of loss, and that no governmental agency has made any finding or determination as to the fairness of the investment; ( f) it understands that it is purchasing an interest in the Company without having been furnished any offering literature or prospectus; and (g) it understands that all documents, records and books pertaining to its investments have been made available to him and its attorney and/or accountant. [Remainder of page intentionally left blank] 23 PA2017-157 KEW: By:·--~-------~ Name: Kim Elizabeth Walker Address: 418 Yz Orchid Avenue Corona Del Mar, California 92625 24 MCW: . ,IW--~ By: -----/-~------ Name: Michael Charles Walker Address: 418 Yz Orchid Avenue Corona Del Mar, California 92625 PA2017-157