HomeMy WebLinkAboutClarity Real Estate Advisors LLC Agreement Consultant - 3-13-24
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AGREEMENT
CITY OF FRESNO, CALIFORNIA
CONSULTANT SERVICES
THIS AGREEMENT is made and entered into. effective on ______________________,
by and between the CITY OF FRESNO, a California municipal corporation (the City), and
Clarity Real Estate Advisors, LLC (the Consultant).
RECITALS
WHEREAS, the City desires to obtain professional Consultation services for a Housing
Market Segmentation Analysis (Project); and
WHEREAS, the Consultant is engaged in the business of furnishing services as a Real
Estate Advisors and hereby represents that it desires to and is professionally and legally
capable of performing the services called for by this Agreement; and
WHEREAS, the Consultant acknowledges that this Agreement is subject to the
requirements of Fresno Municipal Code Section 4-107 and Administrative Order No. 6-19;
and
WHEREAS, this Agreement will be administered for the City by its
Planning and Development Director (Administrator) or designee.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the covenants, conditions,
and premises hereinafter contained to be kept and performed by the respective parties,
it is mutually agreed as follows:
1. Scope of Services. The Consultant shall perform to the satisfaction of the City the
services described in Exhibit A, including all work incidental to, or necessary to
perform, such services even though not specifically described in Exhibit A.
2. Term of Agreement and Time for Performance . This Agreement shall be effective
from the date first set forth above (Effective Date) and shall continue in full force
and effect through March 31, 2025, subject to any earlier termination in accordance
with this Agreement. The services of the Consultant as described in Exhibit A are
to commence upon the Effective Date and shall be completed in a sequence
assuring expeditious completion, but in any event, all such services shall be
completed prior to expiration of this Agreement and in accordance with any
performance schedule set forth in Exhibit A.
3. Compensation.
(a) The Consultant’s compensation for satisfactory performance of all services
required or rendered pursuant to this Agreement shall be a total fee not to
exceed Thirty Four Thousand Eight Hundred Ninty Six Dollars ($34,896),
paid on the basis of the rates set forth in the schedule of fees and expenses
contained in Exhibit A.
(b) Detailed statements shall be rendered monthly for services performed in the
preceding month and will be payable in the normal course of the City
March 13, 2024
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business. The City shall not be obligated to reimburse any expense for
which it has not received a detailed invoice with applicable copies of
representative and identifiable receipts or records substantiating such
expense.
(c) The parties may modify this Agreement to increase or decrease the scope
of services or provide for the rendition of services not required by this
Agreement, which modification shall include an adjustment to the
Consultant’s compensation. Any change in the scope of services must be
made by written amendment to the Agreement signed by an authorized
representative for each party. The Consultant shall not be entitled to any
additional compensation if services are performed prior to a signed written
amendment.
4. Termination, Remedies and Force Majeure.
(a) This Agreement shall terminate without any liability of the City to the
Consultant upon the earlier of: (i) the Consultant’s filing for protection under
the federal bankruptcy laws, or any bankruptcy petition or petition for
receiver commenced by a third party against the Consultant; (ii) seven
calendar days prior written notice with or without cause by the City to the
Consultant; (iii) the City’s non-appropriation of funds sufficient to meet its
obligations hereunder during any City fiscal year of this Agreement, or
insufficient funding for the Project; or (iv) expiration of this Agreement.
(b) Immediately upon any termination or expiration of this Agreement, the
Consultant shall (i) immediately stop all work hereunder; (ii) immediately
cause any and all of its subcontractors to cease work; and (iii) return to the
City any and all unearned payments and all properties and materials in the
possession of the Consultant that are owned by the City. Subject to the
terms of this Agreement, the Consultant shall be paid compensation for
services satisfactorily performed prior to the effective date of termination.
The Consultant shall not be paid for any work or services performed or costs
incurred which reasonably could have been avoided.
(c) In the event of termination due to failure of the Consultant to satisfactorily
perform in accordance with the terms of this Agreement, the City may
withhold an amount that would otherwise be payable as an offset to, but not
in excess of, the City’s damages caused by such failure. In no event shall
any payment by the City pursuant to this Agreement constitute a waiver by
the City of any breach of this Agreement which may then exist on the part
of the Consultant, nor shall such payment impair or prejudice any remedy
available to the City with respect to the breach.
(d) Upon any breach of this Agreement by the Consultant, the City may
(i) exercise any right, remedy (in contract, law or equity), or privilege which
may be available to it under applicable laws of the State of California or any
other applicable law; (ii) proceed by appropriate court action to enforce the
terms of the Agreement; and/or (iii) recover all direct, indirect,
consequential, economic and incidental damages for the breach of the
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Agreement. If it is determined that the City improperly terminated this
Agreement for default, such termination shall be deemed a termination for
convenience.
(e) The Consultant shall provide the City with adequate written assurances of
future performance, upon Administrator’s request, in the event the
Consultant fails to comply with any terms or conditions of this Agreement.
(f) The Consultant shall be liable for default unless nonperformance is caused
by an occurrence beyond the reasonable control of the Consultant and
without its fault or negligence such as, acts of God or the public enemy, acts
of the City in its contractual capacity, fires, floods, epidemics, quarantine
restrictions, strikes, unusually severe weather, and delays of common
carriers. The Consultant shall notify Administrator in writing as soon as it is
reasonably possible after the commencement of any excusab le delay,
setting forth the full particulars in connection therewith, and shall remedy
such occurrence with all reasonable dispatch, and shall promptly give
written notice to Administrator of the cessation of such occurrence.
5. Confidential Information and Ownership of Documents.
(a) Any reports, information, or other data prepared or assembled by the
Consultant pursuant to this Agreement shall not be made available to any
individual or organization by the Consultant without the prior written
approval of the Administrator. During the term of this Agreement, and
thereafter, the Consultant shall not, without the prior written consent of the
City, disclose to anyone any Confidential Information. The term Confidential
Information for the purposes of this Agreement shall include all proprietary
and confidential information of the City, including but not limited to business
plans, marketing plans, financial information, materials, compilations,
documents, instruments, models, source or object codes and other
information disclosed or submitted, orally, in writing, or by any other medium
or media. All Confidential Information shall be and remain confidential and
proprietary in the City.
(b) Any and all writings and documents prepared or provided by the Consultant
pursuant to this Agreement are the property of the City at the time of
preparation and shall be turned over to the City upon expiration or
termination of the Agreement. The Consultant shall not permit the
reproduction or use thereof by any other person except as otherwise
expressly provided herein.
(c) If the Consultant should subcontract all or any portion of the services to be
performed under this Agreement, the Consultant shall cause each
subcontractor to also comply with the requirements of this Section 5.
(d) This Section 5 shall survive expiration or termination of this Agreement.
6. Professional Skill. It is further mutually understood and agreed by and between the
parties hereto that inasmuch as the Consultant represents to the City that the
Consultant and its subcontractors, if any, are skilled in the profession and shall
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perform in accordance with the standards of said profession necessary to perform
the services agreed to be done by it under this Agreement, the City relies upon the
skill of the Consultant and any subcontractors to do and perform such services in
a skillful manner and the Consultant agrees to thus perform the services and
require the same of any subcontractors. Therefore, any acceptance of such
services by the City shall not operate as a release of the Consultant or any
subcontractors from said professional standards.
7. Indemnification. To the furthest extent allowed by law, the Consultant shall
indemnify, hold harmless and defend the City and each of its officers, officials,
employees, agents, and volunteers from any and all loss, liability, fines, penalties,
forfeitures, costs and damages (whether in contract, tort or strict liability, including
but not limited to personal injury, death at any time and property damage), and
from any and all claims, demands and actions in law or equity (including
reasonable attorney's fees, litigation expenses and cost to enforce this agreement)
that arise out of, pertain to, or relate to the negligence, recklessness or willful
misconduct of the Consultant, its principals, officers, employees, agents, or
volunteers in the performance of this Agreement .
If the Consultant should subcontract all or any portion of the services to be
performed under this Agreement, the Consultant shall require each subcontractor
to indemnify, hold harmless and defend the City and each of its officers, officials,
employees, agents, and volunteers in accordance with the terms of the preceding
paragraph.
This section shall survive termination or expiration of this Agreement.
8. Insurance.
(a) Throughout the life of this Agreement, the Consultant shall pay for and
maintain in full force and effect all insurance as required in Exhibit B, which
is incorporated into and part of this Agreement, with an insurance
company(ies) either (i) admitted by the California Insurance Commissioner
to do business in the State of California and rated no less than “A-VII” in the
Best’s Insurance Rating Guide, or (ii) as may be authorized in writing by
the City’s Risk Manager or designee at any time and in his/her sole
discretion. The required policies of insurance as stated in Exhibit B shall
maintain limits of liability of not less than those amounts stated therein .
However, the insurance limits available to the City, its officers, officials,
employees, agents, and volunteers as additional insureds, shall be the
greater of the minimum limits specified therein or the full limit of any
insurance proceeds to the named insured.
(b) If at any time during the life of the Agreement or any extension, the
Consultant or any of its subcontractors\sub-consultants fail to maintain any
required insurance in full force and effect, all services and work under this
Agreement shall be discontinued immediately, and all payments due or that
become due to the Consultant shall be withheld until notice is received by
the City that the required insurance has been restored to full force and effect
and that the premiums therefore have been paid for a period satisfactory to
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the City. Any failure to maintain the required insurance shall be sufficient
cause for the City to terminate this Agreement. No action taken by the City
pursuant to this section shall in any way relieve the Consultant of its
responsibilities under this Agreement. The phrase “fail to maintain any
required insurance” shall include, without limitation, notification received by
the City that an insurer has commenced proceedings, or has had
proceedings commenced against it, indicating that the insurer is insolvent.
(c) The fact that insurance is obtained by the Consultant shall not be deemed
to release or diminish the liability of the Consultant, including, without
limitation, liability under the indemnity provisions of this Agreement. The
duty to indemnify the City shall apply to all claims and liability regardless of
whether any insurance policies are applicable . The policy limits do not act
as a limitation upon the amount of indemnification to be provided by the
Consultant. Approval or purchase of any insurance contracts or policies
shall in no way relieve from liability nor limit the liability of the Consultant,
its principals, officers, agents, employees, persons under the supervision of
the Consultant, vendors, suppliers, invitees, consultants, sub-consultants,
subcontractors, or anyone employed directly or indirectly by any of them.
(d) If the Consultant should subcontract all or any portion of the services to be
performed under this Agreement, the Consultant shall require each
subcontractor/sub-consultant to provide insurance protection, as an
additional insured, to the City and each of its officers, officials, employees,
agents, and volunteers in accordance with the terms of this section, except
that any required certificates and applicable endorsements shall be on file
with the Consultant and the City prior to the commencement of any services
by the subcontractor. The Consultant and any subcontractor/sub-consultant
shall establish additional insured status for the City, its officers, officials,
employees, agents, and volunteers by using Insurance Service Office (ISO)
Form CG 20 10 11 85 or both CG 20 10 10 01 and CG 20 37 10 01 or by
an executed manuscript company endorsement providing additional
insured status as broad as that contained in ISO Form CG 20 10 11 85.
9. Conflict of Interest and Non-Solicitation.
(a) Prior to the City’s execution of this Agreement, the Consultant shall
complete a City of Fresno conflict of interest disclosure statement in the
form as set forth in Exhibit C. During the term of this Agreement, the
Consultant shall have the obligation and duty to immediately notify the City
in writing of any change to the information provided by the Consultant in
such statement.
(b) The Consultant shall comply, and require its subcontractors to comply, with
all applicable (i) professional canons and requirements governing
avoidance of impermissible client conflicts; and (ii) federal, state, and local
conflict of interest laws and regulations including, without limitation,
California Government Code Section 1090 et. seq., the California Political
Reform Act (California Government Code Section 87100 et. seq.) and the
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regulations of the Fair Political Practices Commission concerning disclosure
and disqualification (2 California Code of Regulations Section 18700 et.
seq.). At any time, upon written request of the City, the Consultant shall
provide a written opinion of its legal counsel and that of any subcontractor
that, after a due diligent inquiry, the Consultant and the respective
subcontractor(s) are in full compliance with all laws and regulations. The
Consultant shall take, and require its subcontractors to take, reasonable
steps to avoid any appearance of a conflict of interest. Upon discovery of
any facts giving rise to the appearance of a conflict of interest, the
Consultant shall immediately notify the City of these facts in writing.
(c) In performing the work or services to be provided hereunder, the Consultant
shall not employ or retain the services of any person while such person
either is employed by the City or is a member of any City council,
commission, board, committee, or similar City body. This requirement may
be waived in writing by the City Manager, if no actual or potential conflict is
involved.
(d) The Consultant represents and warrants that it has not paid or agreed to
pay any compensation, contingent or otherwise, direct or indirect, to solicit ,
or procure this Agreement or any rights/benefits hereunder.
(e) Neither the Consultant, nor any of the Consultant’s subcontractors
performing any services on this Project, shall bid for, assist anyone in the
preparation of a bid for, or perform any services pursuant to, any other
contract in connection with this Project unless fully disclosed to and
approved by the City Manager, in advance and in writing . The Consultant
and any of its subcontractors shall have no interest, direct or indirect, in any
other contract with a third party in connection with this Project unless such
interest is in accordance with all applicable law and fully disclosed to and
approved by the City Manager, in advance and in writing . Notwithstanding
any approval given by the City Manager under this provision, the Consultant
shall remain responsible for complying with Section 9(b), above.
(f) If the Consultant should subcontract all or any portion of the work to be
performed or services to be provided under this Agreement, the Consultant
shall include the provisions of this Section 9 in each subcontract and require
its subcontractors to comply therewith.
(g) This Section 9 shall survive expiration or termination of this Agreement.
10. Recycling Program. In the event the Consultant maintains an office or operates a
facility(ies), or is required herein to maintain or operate same, within the
incorporated limits of the City of Fresno, the Consultant at its sole cost and
expense shall:
(a) Immediately establish and maintain a viable and ongoing recycling
program, approved by the City’s Solid Waste Management Division, for
each office and facility. Literature describing the City recycling programs is
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available from the City’s Solid Waste Management Division and by calling
City of Fresno Recycling Hotline at (559) 621-1111.
(b) Immediately contact the City’s Solid Waste Management Division at
(559) 621-1452 and schedule a free waste audit, and cooperate with such
Division in their conduct of the audit for each office and facility.
(c) Cooperate with and demonstrate to the satisfaction of the City’s Solid Waste
Management Division the establishment of the recycling program in
paragraph (i) above and the ongoing maintenance thereof.
11. General Terms.
(a) Except as otherwise provided by law, all notices expressly required of the
City within the body of this Agreement, and not otherwise specifically
provided for, shall be effective only if signed by the Administrator or
designee.
(b) Records of the Consultant’s expenses pertaining to the Project shall be kept
on a generally recognized accounting basis and shall be available to the
City or its authorized representatives upon request during regular business
hours throughout the life of this Agreement and for a period of three years
after final payment or, if longer, for any period required by law . In addition,
all books, documents, papers, and records of the Consultant pertaining to
the Project shall be available for the purpose of ma king audits,
examinations, excerpts, and transcriptions for the same period of time . If
any litigation, claim, negotiations, audit or other action is commenced before
the expiration of said time period, all records shall be retained and made
available to the City until such action is resolved, or until the end of said
time period whichever shall later occur. If the Consultant should subcontract
all or any portion of the services to be performed under this Agreement, the
Consultant shall cause each subcontractor to also comply with the
requirements of this paragraph. This Section 11(b) shall survive expiration
or termination of this Agreement.
(c) Prior to execution of this Agreement by the City, the Consultant shall have
provided evidence to the City that the Consultant is licensed to perform the
services called for by this Agreement (or that no license is required). If the
Consultant should subcontract all or any portion of the work or services to
be performed under this Agreement, the Consultant shall require each
subcontractor to provide evidence to the City that subcontractor is licensed
to perform the services called for by this Agreement (or that no license is
required) before beginning work.
12. Nondiscrimination. To the extent required by controlling federal, state and local
law, the Consultant shall not employ discriminatory practices in the provision of
services, employment of personnel, or in any other respect on the basis of race,
religious creed, color, national origin, ancestry, physical disability, mental disability,
medical condition, marital status, sex, age, sexual orientation, ethnicity, status as
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a disabled veteran or veteran of the Vietnam era. Subject to the foregoing and
during the performance of this Agreement, the Consultant agrees as follows:
(a) The Consultant will comply with all applicable laws and regulations
providing that no person shall, on the grounds of race, religious creed, color,
national origin, ancestry, physical disability, mental disability, medical
condition, marital status, sex, age, sexual orientation, ethnicity, status as a
disabled veteran or veteran of the Vietnam era be excluded from
participation in, be denied the benefits of, or be subject to discrimination
under any program or activity made possible by or resulting from this
Agreement.
(b) The Consultant will not discriminate against any employee or applicant for
employment because of race, religious creed, color, national origin,
ancestry, physical disability, mental disability, medical condition, marital
status, sex, age, sexual orientation, ethnicity, status as a disabled veteran
or veteran of the Vietnam era. The Consultant shall ensure that applicants
are employed, and the employees are treated during employment, without
regard to their race, religious creed, color, national origin, ancestry, physical
disability, mental disability, medical condition, marital status, sex, age,
sexual orientation, ethnicity, status as a disabled veteran or veteran of the
Vietnam era. Such requirement shall apply to the Consultant’s employment
practices including, but not be limited to, the following: employment,
upgrading, demotion or transfer; recruitment or recruitment advertising;
layoff or termination; rates of pay or other forms of compensation; and
selection for training, including apprenticeship. The Consultant agrees to
post in conspicuous places, available to employees and applicants for
employment, notices setting forth the provision of this nondiscrimination
clause.
(c) The Consultant will, in all solicitations or advertisements for employees
placed by or on behalf of the Consultant in pursuit hereof, state that all
qualified applicants will receive consideration for employment without
regard to race, religious creed, color, national origin, ancestry, physical
disability, mental disability, medical condition, marital status, sex, age,
sexual orientation, ethnicity, status as a disabled veteran or veteran of the
Vietnam era.
(d) The Consultant will send to each labor union or representative of workers
with which it has a collective bargaining agreement or other contract or
understanding, a notice advising such labor union or workers'
representatives of the Consultant’s commitment under this section and shall
post copies of the notice in conspicuous places available to employees and
applicants for employment.
(e) If the Consultant should subcontract all or any portion of the services to be
performed under this Agreement, the Consultant shall cause each
subcontractor to also comply with the requirements of this Section 12.
13. Independent Contractor.
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(a) In the furnishing of the services provided for herein, the Consultant is acting
solely as an independent contractor. Neither the Consultant, nor any of its
officers, agents, or employees shall be deemed an officer, agent, employee,
joint venturer, partner, or associate of the City for any purpose. The City
shall have no right to control or supervise or direct the manner or method
by which the Consultant shall perform its work and functions. However, the
City shall retain the right to administer this Agreement so as to verify that
the Consultant is performing its obligations in accordance with the terms
and conditions thereof.
(b) This Agreement does not evidence a partnership or joint venture between
the Consultant and the City. The Consultant shall have no authority to bind
the City absent the City’s express written consent. Except to the extent
otherwise provided in this Agreement, the Consultant shall bear its own
costs and expenses in pursuit thereof.
(c) Because of its status as an independent contractor, the Consultant and its
officers, agents, and employees shall have absolutely no right to
employment rights and benefits available to City employees. The
Consultant shall be solely liable and responsible for all payroll and tax
withholding and for providing to, or on behalf of, its employees all employee
benefits including, without limitation, health, welfare and retirement benefits.
In addition, together with its other obligations under this Agreement, the
Consultant shall be solely responsible, indemnify, defend and save the City
harmless from all matters relating to employment and tax withholding for
and payment of the Consultant’s employees, including, without limitation, (i)
compliance with Social Security and unemployment insurance withholding,
payment of workers’ compensation benefits, and all other laws and
regulations governing matters of employee withholding, taxes and
payment; and (ii) any claim of right or interest in the City employment
benefits, entitlements, programs and/or funds offered employees of the City
whether arising by reason of any common law, de facto, leased, or co-
employee rights or other theory. It is acknowledged that during the term of
this Agreement, the Consultant may be providing services to others
unrelated to the City or to this Agreement.
14. Notices. Any notice required or intended to be given to either party under the terms
of this Agreement shall be in writing and shall be deemed to be duly given if
delivered personally, transmitted by facsimile followed by telephone confirmation
of receipt, or sent by United States registered or certified mail, with postage
prepaid, return receipt requested, addressed to the party to which notice is to be
given at the party's address set forth on the signature page of this Agreement or
at such other address as the parties may from time to time designate by written
notice. Notices served by United States mail in the manner above described shall
be deemed sufficiently served or given at the time of the mailing thereof.
15. Binding. Subject to Section 16, below, once this Agreement is signed by all parties,
it shall be binding upon, and shall inure to the benefit of, all parties, and each
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parties' respective heirs, successors, assigns, transferees, agents, servants,
employees, and representatives.
16. Assignment.
(a) This Agreement is personal to the Consultant and there shall be no
assignment by the Consultant of its rights or obligations under this
Agreement without the prior written approval of the City Manager or
designee. Any attempted assignment by the Consultant, its successors or
assigns, shall be null and void unless approved in writing by the City
Manager or designee.
(b) The Consultant hereby agrees not to assign the payment of any monies due
the Consultant from the City under the terms of this Agreement to any other
individual(s), corporation(s) or entity(ies). The City retains the right to pay
any and all monies due the Consultant directly to the Consultant.
17. Compliance With Law. In providing the services required under this Agreement,
the Consultant shall at all times comply with all applicable laws of the United
States, the State of California and the City, and with all applicable regulations
promulgated by federal, state, regional, or local administrative and regulatory
agencies, now in force and as they may be enacted, issued, or amended during
the term of this Agreement.
18. Waiver. The waiver by either party of a breach by the other of any provision of this
Agreement shall not constitute a continuing waiver or a waiver of any subsequent
breach of either the same or a different provision of this Agreement. No provisions
of this Agreement may be waived unless in writing and signed by all parties to this
Agreement. Waiver of any one provision herein shall not be deemed to be a waiver
of any other provision herein.
19. Governing Law and Venue. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of California, excluding,
however, any conflict of laws rule which would apply the law of another jurisdiction.
Venue for purposes of the filing of any action regarding the enforcement or
interpretation of this Agreement and any rights and duties hereunder shall be
Fresno County, California.
20. Headings. The section headings in this Agreement are for convenience and
reference only and shall not be construed or held in any way to explain, modify or
add to the interpretation or meaning of the provisions of this Agreement.
21. Severability. The provisions of this Agreement are severable. The invalidity or
unenforceability of any one provision in this Agreement shall not affect the other
provisions.
22. Interpretation. The parties acknowledge that this Agreement in its final form is the
result of the combined efforts of the parties and that, should any provision of this
Agreement be found to be ambiguous in any way, such ambiguity shall not be
resolved by construing this Agreement in favor of or against either party, but rather
by construing the terms in accordance with their generally accepted meaning.
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23. Attorney's Fees. If either party is required to commence any proceeding or legal
action to enforce or interpret any term, covenant or condition of this Agreement,
the prevailing party in such proceeding or action shall be entitled to recover from
the other party its reasonable attorney's fees and legal expenses.
24. Exhibits. Each exhibit and attachment referenced in this Agreement is, by the
reference, incorporated into and made a part of this Agreement.
25. Precedence of Documents. In the event of any conflict between the body of this
Agreement and any exhibit or attachment hereto, the terms and conditions of the
body of this Agreement shall control and take precedence over the terms and
conditions expressed within the exhibit or attachment. Furthermore, any terms or
conditions contained within any exhibit or attachment hereto which purport to
modify the allocation of risk between the parties, provided for within the body of
this Agreement, shall be null and void.
26. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
27. No Third Party Beneficiaries. The rights, interests, duties and obligations defined
within this Agreement are intended for the specific parties hereto as identified in
the preamble of this Agreement. Notwithstanding anything stated to the contrary
in this Agreement, it is not intended that any rights or interests in this Agreement
benefit or flow to the interest of any third parties.
28. Extent of Agreement. Each party acknowledges that they have read and fully
understand the contents of this Agreement. This Agreement represents the entire
and integrated agreement between the parties with respect to the subject matter
hereof and supersedes all prior negotiations, representations or agreements,
either written or oral. This Agreement may be modified only by written instrument
duly authorized and executed by both the City and the Consultant.
29. The City Manager, or designee, is hereby authorized and directed to execute and
implement this Agreement. The previous sentence is not intended to delegate any
authority to the City Manager to administer the Agreement, any delegation of
authority must be expressly included in the Agreement.
[SIGNATURES FOLLOW ON THE NEXT PAGE.]
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IN WITNESS WHEREOF, the parties have executed this Agreement at Fresno,
California, the day and year first above written.
CITY OF FRESNO,
a California municipal corporation
By:
Georgeanne A. White
City Manager
No signature of City Attorney required.
Standard Document ALL-S GCS Agt
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without modification, as certified by the
undersigned.
By:
Sophia Pagoulatos
Planning Manager
ATTEST:
TODD STERMER, CMC
City Clerk
By:
Deputy
Addresses:
CITY:
City of Fresno
Attention: Nadia Salinas,
Project Manager
2600 Fresno St, Room 3065
Fresno, CA 93721
Phone: (559) 621-8150
E-mail: Nadia.Salinas@fresno.gov
CLARITY REAL ESTATE ADVISORS,
LLC
By:
Name:
Title:
(If corporation or LLC., Board Chair,
Pres. or Vice Pres.)
By:
Name:
Title:
(If corporation or LLC., CFO, Treasurer,
Secretary or Assistant Secretary)
Any Applicable Professional License:
Number:
Name:
Date of Issuance:
CONSULTANT:
Clarity Real Estate Advisors
Attention: Pete Reeb,
President
100 Spectrum Center Drive, Suite 1400
Irvine, CA 92618
Phone: (858) 774-7126
E-mail: pete@ask-clarity.com
Attachments:
1. Exhibit A - Scope of Services
2. Exhibit B - Insurance Requirements
3. Exhibit C - Conflict of Interest Disclosure Form
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President, Manager
3/13/2024
Pete Reeb
3/15/2024
3/15/2024
3/18/2024
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EXHIBIT A
SCOPE OF SERVICES
Consultant Service Agreement between City of Fresno (the City)
and Clarity Real Estate Advisors (the Consultant)
Housing Market Segmentation Analysis
See attached.
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SCHEDULE OF FEES AND EXPENSES
See attached.
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Exhibit B
INSURANCE REQUIREMENTS
Consultant Service Agreement between City of Fresno (“CITY”)
and Clarity Real Estate Advisors (“CONSULTANT”)
Housing Market Segmentation Analysis
PROJECT TITLE
MINIMUM SCOPE OF INSURANCE
Coverage shall be at least as broad as:
1. The most current version of Insurance Services Office (ISO) Commercial
General Liability Coverage Form CG 00 01, providing liability coverage
arising out of your business operations. The Commercial General Liability
policy shall be written on an occurrence form and shall provide coverage for
“bodily injury,” “property damage” and “personal and advertising injury” with
coverage for premises and operations (including the use of owned and non-
owned equipment), products and completed operations, and contractual
liability (including, without limitation, indemnity obligations under the
Agreement) with limits of liability not less than those set forth under
“Minimum Limits of Insurance.”
2. The most current version of Commercial Auto Coverage Form CA 00 01,
providing liability coverage arising out of the ownership, maintenance or use
of automobiles in the course of your business operations. The Automobile
Policy shall be written on an occurrence form and shall provide coverage
for all owned, hired, and non-owned automobiles or other licensed vehicles
(Code 1- Any Auto).
3. Workers’ Compensation insurance as required by the State of California
and Employer’s Liability Insurance.
4. Professional Liability (Errors and Omissions) insurance appropriate to
CONSULTANT’S profession.
MINIMUM LIMITS OF INSURANCE
CONSULTANT, or any party the CONSULTANT subcontracts with, shall maintain limits of
liability of not less than those set forth below. However, insurance limits available to CITY,
its officers, officials, employees, agents and volunteers as additional insu reds, shall be the
greater of the minimum limits specified herein or the full limit of any insurance proceeds
available to the named insured:
1. COMMERCIAL GENERAL LIABILITY:
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(i) $1,000,000 per occurrence for bodily injury and property damage;
(ii) $1,000,000 per occurrence for personal and advertising injury;
(iii) $2,000,000 aggregate for products and completed operations; and,
(iv) $2,000,000 general aggregate applying separately to the work
performed under the Agreement.
2. COMMERCIAL AUTOMOBILE LIABILITY:
$1,000,000 per accident for bodily injury and property damage.
3. WORKERS’ COMPENSATION INSURANCE as required by the State of
California with statutory limits.
4. EMPLOYER’S LIABILITY:
(i) $1,000,000 each accident for bodily injury;
(ii) $1,000,000 disease each employee; and,
(iii) $1,000,000 disease policy limit.
5. PROFESSIONAL LIABILITY (Errors and Omissions):
(i) $1,000,000 per claim/occurrence; and,
(ii) $2,000,000 policy aggregate.
UMBRELLA OR EXCESS INSURANCE
In the event CONSULTANT purchases an Umbrella or Excess insurance policy(ies) to
meet the “Minimum Limits of Insurance,” this insurance policy(ies) shall “follow form” and
afford no less coverage than the primary insurance policy(ies). In addition, such Umbrella
or Excess insurance policy(ies) shall also apply on a primary and non -contributory basis
for the benefit of the CITY, its officers, officials, employees, agents and volunteers.
DEDUCTIBLES AND SELF-INSURED RETENTIONS
CONSULTANT shall be responsible for payment of any deductibles contained in any
insurance policy(ies) required herein and CONSULTANT shall also be responsible for
payment of any self-insured retentions. Any deductibles or self-insured retentions must
be declared to on the Certificate of Insurance, and approved by, the CITY’S Risk Manager
or his/her designee. At the option of the CITY’S Risk Manager or his/her designee, either:
(i) The insurer shall reduce or eliminate such deductibles or self-insured
retentions as respects CITY, its officers, officials, employees, agents
and volunteers; or
(ii) CONSULTANT shall provide a financial guarantee, satisfactory to
CITY’S Risk Manager or his/her designee, guaranteeing payment of
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losses and related investigations, claim administration and defense
expenses. At no time shall CITY be responsible for the payment of
any deductibles or self-insured retentions.
OTHER INSURANCE PROVISIONS/ENDORSEMENTS
The General Liability and Automobile Liability insurance policies are to contain, or be
endorsed to contain, the following provisions:
1. CITY, its officers, officials, employees, agents and volunteers are to be
covered as additional insureds. CONSULTANT shall establish additional
insured status for the City and for all operations by use of ISO Form
CG 20 10 11 85, CG 20 10 04 13, or CG 20 26 04 13 or by an executed
manuscript insurance company endorsement providing additional insured
status as broad as that contained in ISO Form CG 20 10 11 85.
2. The coverage shall contain no special limitations on the scope of protection
afforded to CITY, its officers, officials, employees, agents and volunteers.
Any available insurance proceeds in excess of the specified minimum limits
and coverage shall be available to the Additional Insured.
3. For any claims relating to this Agreement, CONSULTANT’S insurance
coverage shall be primary insurance with respect to the CITY, its officers,
officials, employees, agents and volunteers. Any insurance or self-
insurance maintained by the CITY, its officers, officials, employees, agents
and volunteers shall be excess of CONSULTANT’S insurance and shall not
contribute with it. CONSULTANT shall establish primary and non -
contributory status by using ISO Form CG 20 01 04 13 or by an executed
manuscript insurance company endorsement that provides primary and
non-contributory status as broad as that contained in ISO Form CG
20 01 04 13.
The Workers’ Compensation insurance policy is to contain, or be endorsed to contain, the
following provision: CONSULTANT and its insurer shall waive any right of subrogation
against CITY, its officers, officials, employees, agents and volunteers.
If the Professional Liability (Errors and Omissions) insurance policy is written on a claims-
made form:
1. The retroactive date must be shown and must be before the effective date
of the Agreement or the commencement of work by CONSULTANT.
2. Insurance must be maintained, and evidence of insurance must be provided
for at least five (5) years after completion of the Agreement work or
termination of the Agreement, whichever occurs first, or, in the alternative,
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the policy shall be endorsed to provide not less than a five (5) year discovery
period.
3. If coverage is canceled or non-renewed, and not replaced with another
claims-made policy form with a retroactive date prior to the effective date of
the Agreement or the commencement of work by CONSULTANT,
CONSULTANT must purchase “extended reporting” coverage for a
minimum of five (5) years completion of the Agreement work or termination
of the Agreement, whichever occurs first.
4. A copy of the claims reporting requirements must be submitted to CITY for
review.
5. These requirements shall survive expiration or termination of the
Agreement.
All policies of insurance required herein shall be endorsed to provide that the coverage
shall not be cancelled, non-renewed, reduced in coverage or in limits except after thirty
(30) calendar days written notice by certified mail, return receipt requested, has been
given to CITY. CONSULTANT is also responsible for providing written notice to the CITY
under the same terms and conditions. Upon issuance by the insurer, broker, or agent of
a notice of cancellation, non-renewal, or reduction in coverage or in limits, CONSULTANT
shall furnish CITY with a new certificate and applicable endorsements for such policy(ies).
In the event any policy is due to expire during the work to be performed for CITY,
CONSULTANT shall provide a new certificate, and applicable endorsements, evidencing
renewal of such policy not less than fifteen (15) calendar days prior to the expiration date
of the expiring policy.
Should any of the required policies provide that the defense costs are paid within the
Limits of Liability, thereby reducing the available limits by any defense costs, then the
requirement for the Limits of Liability of these polices will be twice the above stated limits.
The fact that insurance is obtained by CONSULTANT shall not be deemed to release or
diminish the liability of CONSULTANT, including, without limitation, liability under the
indemnity provisions of this Agreement. The policy limits do not act as a limitation upon
the amount of indemnification to be provided by CONSULTANT. Approval or purchase
of any insurance contracts or policies shall in no way relieve from liability nor limit the
liability of CONSULTANT, its principals, officers, agents, employees, persons under the
supervision of CONSULTANT, vendors, suppliers, invitees, consultants, sub-consultants,
subcontractors, or anyone employed directly or indirectly by any of them.
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VERIFICATION OF COVERAGE
CONSULTANT shall furnish CITY with all certificate(s) and applicable endorsements
effecting coverage required hereunder. All certificates and applicable endorsements
are to be received and approved by the CITY’S Risk Manager or his/her designee prior
to CITY’S execution of the Agreement and before work commences. All non -ISO
endorsements amending policy coverage shall be executed by a licensed and authorized
agent or broker. Upon request of CITY, CONSULTANT shall immediately furnish City
with a complete copy of any insurance policy required under this Agreement, including all
endorsements, with said copy certified by the underwriter to be a true and correct copy of
the original policy. This requirement shall survive expiration or termination of this
Agreement.
SUBCONTRACTORS - If CONSULTANT subcontracts any or all of the services to be
performed under this Agreement, CONSULTANT shall require, at the discretion of the
CITY Risk Manager or designee, subcontractor(s) to enter into a separate side agreement
with the City to provide required indemnification and insurance protection. Any required
side agreement(s) and associated insurance documents for the subcontractor must be
reviewed and preapproved by CITY Risk Manager or designee. If no side agreement is
required, CONSULTANT shall require and verify that subcontractors maintain insurance
meeting all the requirements stated herein and CONSULTANT shall ensure that CITY, its
officers, officials, employees, agents, and volunteers are additional insureds. The
subcontractors' certificates and endorsements shall be on file with CONSULTANT, and
CITY, prior to commencement of any work by the subcontractor.
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EXHIBIT C
DISCLOSURE OF CONFLICT OF INTEREST
Housing Market Segmentation Analysis
YES* NO
1 Are you currently in litigation with the City of Fresno or any of
its agents?
2 Do you represent any firm, organization, or person who is in
litigation with the City of Fresno?
3 Do you currently represent or perform work for any clients who
do business with the City of Fresno?
4 Are you or any of your principals, managers, or professionals,
owners or investors in a business which does business with
the City of Fresno, or in a business which is in litigation with
the City of Fresno?
5 Are you or any of your principals, managers, or professionals,
related by blood or marriage to any City of Fresno employee
who has any significant role in the subject matter of this
service?
6 Do you or any of your subcontractors have, or expect to have,
any interest, direct or indirect, in any other contract in
connection with this Project?
* If the answer to any question is yes, please explain in full below.
Explanation:
Signature
Date
(Name)
(Company)
(Address)
Additional page(s) attached.
(City, State Zip)
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X
X
X
President, Manager
3/13/2024
Irvine, CA 92618
X
n/a
Pete Reeb
X
100 Spectrum Center Dr, #1400
X
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EXHIBIT A
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February 23, 2024
Ms. Sophia Pagoulatos
Planning Manager
City of Fresno
2600 Fresno St
Fresno, CA 93721
Sent via email: sophia.pagoulatos@fresno.gov
RE: General Plan Market Segmentation Analysis, City of Fresno (Fresno County) California
Dear Ms. Pagoulatos:
Clarity Real Estate Advisors is pleased to present this proposal to provide comprehensive
market-driven housing market advisory services to the City of Fresno (Client). We are the
premier real estate market advisor in the western US; offering innovative, timely, and
comprehensive analyses to answer your real estate market questions. We provide you with
market-based conclusions designed to support your decision-making process with the best
information and advice possible. We see ourselves as an integral part of your evaluative team.
Background: Fresno is an incorporated city located in Fresno County
in California’s San Joaquin Valley. The current population of the city is
over 550K people. It is anticipated that future population and job
growth in Fresno itself, and the surrounding areas, will create a need
for additional housing within Fresno. With this in mind, the City has
requested that a Market Segmentation Analysis be prepared to
determine overall market conditions and the demand for housing,
addressing such issues such as the nature of housing demand,
sources of demand, demand by housing type, and unmet needs or
gaps for future housing by type, tenure and location.
Objective: The objective of this assignment is to compile and evaluate
pertinent demographic, economic, and housing market information
to provide conclusions and guidance relative to the future demand
for housing in Fresno. Our advice will be provided based on our evaluation of the characteristics
of the Fresno market, market trends, and our experience with housing supply and demand
considerations. The result of this assignment will be a PowerPoint style report presenting our
key conclusions and recommendations. This proposal has four sections:
I. Scope of Work
II. Qualifications
III. Timing & Fee Schedule (fee presented in separate document)
IV. Engagement Acceptance
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City of Fresno Clarity Real Estate Advisors
February 23, 2024 Page | 2
I. Scope of Work
1. Evaluation of Fresno
• Visit the City and surrounding areas
• Determine impressions regarding the current housing stock
• Determine an appropriate competitive market area (CMA)
• Compile information on the ratings of schools in the City
2. New Home Market Analysis
• Identify relevant active and recently sold-out new home comps in the CMA
• Survey sales agents at active new home comps
• Compile information on base prices, premiums, option revenues and incentives
• Compile information on community sales rates and buyer profiles
• Prepare profiles of representative selected new home comps
3. Local Resale Market Analysis
• Compile information on individual resales in the local market
• Information will include location, sale date, sale price, home size and lot size
• Prepare profiles of representative local resales
4. Multi-Family & Single Family Rental (SFR) Market Analysis
• Identify existing multi-family and SFR projects in the CMA
• Compile information on the projects such as location, year built, total number of units,
unit sizes and types, asking rents, occupancy rate and renter profile
• Provide information on macro-level multi-family market trends in Fresno County and
City (occupancy levels, average asking rents, new construction activity)
• Draw conclusions relative to the multi-family market in the City
5. Economic & Demographic Trends
• Compile available information on economic trends for Fresno County and City such as
current number of jobs, historical job growth top employers and income levels
• Compile information on demographic trends for Fresno County and City such as
population and household growth, household size and age distribution
• Provide “Tapestry” psychographic profile
insights regarding the makeup of households in
Fresno County and City (from data-provider
ESRI)
• Provide information on commute patterns for
both residents who currently live in Fresno
(where current residents work) and people
who work in Fresno (where they live)
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6. Housing Market Trends & Demand
• Compile and evaluate information as available on new home and resale trends in Fresno
County and the City (annual sales, average sales price, available inventory levels)
• Compile historical information on residential building permits issued in Fresno County
and the City (single family and multi-family) and provide information on employment to
permit ratios (E/P)
• Based on historical trends and possible future growth, provide projections for total
annual employment growth in Fresno County and the City for the next 10 years – data
will be bracketed with high/low scenarios
• Utilizing an employment-based approach, make projections relative to the future
demand for housing in Fresno including annual housing demand and demand by type
(for-sale vs rental multi-family)
7. Market Conclusions & Recommendations
• Based on the results of Steps 1 through 6, assess overall economic, demographic &
housing market trends as related to the demand for future housing in Fresno
• Provide a “simple snapshot” of housing market supply and demand conditions based on
socioeconomic and demographic characteristics
• Provide a data-driven assessment of the current housing supply matched to household
and population type compared to future demand
• Draw conclusions relative to current and future housing demand in Fresno, including
both total housing demand, demand by housing type, and location
8. Presentation of Findings & Report
• Discuss our findings and conclusions in a conference call and/or meeting
• Present our conclusions and recommendations in a PowerPoint style draft report,
followed by a subsequent final report pending review by Client (suitable for distribution
to third parties)
II. Qualifications
Firm & Team Information: Clarity Real Estate
Advisors works with many of the biggest names
in real estate, providing market-based decision-
making guidance and market feasibility studies
for real estate developments, both large and
small. The consultants of Clarity Real Estate
Advisors have worked on assignments from
coast to coast, including cities up and down the
central valley California such as Fresno, Clovis,
Hanley, Reedley, Merced, Bakersfield and
Visalia. Pete Reeb and Adam Artunian will
prepare this assignment.
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City of Fresno Clarity Real Estate Advisors
February 23, 2024 Page | 4
Pete Reeb, President – Pete is the leading market feasibility advisor in the
western US. Pete incorporates his decades of market experience and insights
into every assignment; benefitting clients with his keen analytical eye and
early-cycle trend-spotting capabilities, combined with the wisdom that comes
with having been through multiple market cycles. Pete originally founded Reeb
Development Consulting in 1996 to provide clients with insightful, timely, and
innovative real estate market advisory services and rebranded in 2020 as
Clarity Real Estate Advisors. Pete has been a part of three of the biggest names in the real
estate market consulting sector; starting his career with Robert Charles Lesser & Co (now
RCLCo); later serving as President of The Meyers Group (now Zonda); and then working as a
Principal at John Burns Consulting. Pete consults with public and private homebuilders,
landowners and developers, entitlement groups, investors, private equity firms, and the public
sector. Pete speaks frequently on housing market trends and has been quoted in the Wall St.
Journal. Pete has a B.A. in Economics and Public Policy from Pomona College. pete@ask-
clarity.com
Adam Artunian, Vice President – Adam is one of California’s most sought-after
and respected housing market consultants. With over 20 years of experience
as a real estate and financial analyst, Adam has established a solid reputation
for his ability to understand and analyze the market viability of complex and
pioneering real estate developments. Most recently, Adam was Vice President
at Reeb Development Consulting. Prior to that Adam evaluated hundreds of
real estate developments as Vice President of Consulting at John Burns Real
Estate Consulting. Adam started his career as a Senior Research & Financial Analyst for
Steadfast Companies, a full-service real estate investment and development firm. Clients
respect Adam’s thorough and analytical approach to evaluating real estate opportunities . Adam
has a B.S. in Finance from Santa Clara University. adam@ask-clarity.com
III. Timing & Fee Schedule
The time required to complete this assignment is approximately four to six weeks from our
receipt of your written authorization to proceed and all requested assignment-related
information. Delays in the provision of requested information from you, or changes to project
parameters or scope of work during the course of our work, may require additional time be
added to complete the assignment. We will keep
you apprised of our status as the study
progresses.
The total cost for this assignment, including our
professional fee and expenses, is $34,896. The
Recurring Expense Charge covers reimbursement
for data subscriptions and on-going expenses that
benefit all our clients while the Out-of-Pocket
Expense Charge is for travel expenses such
mileage or airfare to visit the city and housing
Fresno - Market Segmentation Analysis
Scope of Work Fee
1.Evaluation of Fresno $2,250
2.New Home Market Analysis $4,650
3.Local Resale Market Analysis $4,250
4.Multi-Family & SFR Market Analysis $4,750
5.Economic & Demographic Trends $2,750
6.Housing Market Trends & Demand $3,000
7.Market Conclusions & Recommendations $6,550
8.Presentation of Findings & Report $4,150
Total Professional Fee $32,350
Recurring Expense Charge (3%)$971
Out-of-Pocket Expense Charge $1,575
Total Charges $34,896
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comps, rental car, hotel and meals, as well as study-specific data purchases (such as ESRI) and
other incidentals.
Changes to the scope of work or project parameters that require additional time will be billed
on a time and expense basis at rates outlined under separate cover. Additional time and billings
will not be undertaken without email notification and acknowledgement from you. If you
decide to end this engagement prior to our completion of the scope of work, upon written
notification from you, we will stop work and will bill for work undertaken to date. Our standard
limiting conditions are included as Appendix A. The limiting conditions are intended to
discourage litigation of any sort. Additional meetings or calls will be charged at our standard
hourly rates upon your approval.
IV. Engagement Acceptance
We look forward to working with you and achieving the objectives of this engagement. Please
indicate your approval of this contract by signing in the space provided below. Thank you for
collaborating with Clarity Real Estate Advisors.
Sincerely,
Clarity Real Estate Advisors
Pete Reeb, President Adam Artunian, Vice President
pete@ask-clarity.com adam@ask-clarity.com
(858) 774-7126 (949) 861-1876
100 Spectrum Center Drive, Suite 1400 100 Spectrum Center Drive, Suite 1400
Irvine, CA 92618 Irvine, CA 92618
Contract Agreed & Accepted: City of Fresno
Signature: __________________________________
Print Name: __________________________________
Date: __________________________________
2.4 Proposal-2024 – Fresno –Market Segmentation Analysis (Clarity-Fresno- Market Segmentation Analysis-Proposal-2-23-2024)
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February 23, 2024 Page | 6
Appendix A: Limiting Conditions
1. Projections. The projections regarding the future included in Clarity Real Estate Advisors’ reports present the best
estimate of Clarity Real Estate Advisors as of the date they are prepared. There can be no assurance that the projections will
prove accurate and some of the assumptions used in the projections will inevitably turn out to be incorrect, resulting in material
differences between the projected and actual results. Also, unanticipated events and circumstances may occur and change the
actual results in material ways. Clarity Real Estate Advisors shall not be responsible with respect to the achievement of any
projections included in any communications and will have no liability with respect to the achievement of any projections in any
reports.
2. Third Party Use. The information furnished to Client by Clarity Real Estate Advisors is delivered solely for Client’s
benefit and may not be furnished to, quoted, relied upon or used by any other person or entity or filed with any governmental
agency for any purpose without Clarity Real Estate Advisors President’s prior written consent, except as may be required by
applicable laws or if required by any regulatory or supervisory authority that has jurisdiction over Client. Notwithstanding the
foregoing, so long as Client provides the complete report prepared for them by Clarity Real Estate Advisors, then Client shall be
permitted to furnish information to sophisticated third party investors pursuant to Client’s standard disclosure and confidentiality
practices, provided that Client provides such third party a copy of Clarity Real Estate Advisors’ limiting conditions and obtains
such third party’s agreement, in writing, that the delivery of such information is subject to all the provisions of these limiting
conditions. Client agrees to indemnify, defend (with counsel of Clarity Real Estate Advisors’ choice), and hold harmless Clarity
Real Estate Advisors and its officers, directors, shareholders, employees, advisors, consultants, and agents (“Indemnified Parties”)
from any and all claims, liabilities, damages, costs, injuries, lawsuits, actions or judgments of any kind or nature (including,
without limitation, attorneys’ fees, expert fees, and litigation costs and expenses) arising out of or related to the information or
reports prepared by Clarity Real Estate Advisors or its advisors or consultants, the use thereof by Client, or the delivery or use of
such information or reports by any third party to whom the Client delivers such information or report; provided, however, that
Client shall have no indemnification obligations with respect to the bad faith, gross negligence, willful misconduct or knowing
violation of applicable law by any Indemnified Party.
3. Errors and Omissions: While Clarity Real Estate Advisors will strive to adequately collect all the data and address all the issues,
Clarity Real Estate Advisors will rely on Client to identify material errors and omissions in the report. Client is responsible for
representations about its plans and expectations and for disclosure of significant information that might affect the assumpti ons
utilized by Clarity Real Estate Advisors or the ultimate realization of the projected results. In addition, Clarity Real Estate Advisors
is entitled to rely on any information or materials supplied by Client without confirming or assuming any liability for confi rming
such information provided. In addition, if Client requests that Clarity Real Estate Advisors estimates costs or other matters based
on general information or its experience rather than actually studying the specifics of a property, or otherwise requests that
Clarity Real Estate Advisors limits its review or studies in any respects, Clarity Real Estate Advisors is not responsible for any
inaccuracies that may result there from that might have been corrected by further study or review.
4. Bargained for and Maximum Liability. The provisions of this Agreement pertaining to liability limitation were
mutually negotiated and that, but for their inclusion, the fees charged by Clarity Real Estate Advisors to Client would have been
greater or Clarity Real Estate Advisors would not have entered into the Agreement. Notwithstanding anything to the contrary in
this agreement, Clarity Real Estate Advisors’ maximum aggregate liability to Client related to or in connection with this
agreement and the provision of information and reports by Clarity Real Estate Advisors and its consultants and advisors, whether
under theory of contract, tort (including negligence), professional errors or omissions, strict liability or otherwise; except any
liabilities, damages or injuries which are the result of Clarity Real Estate Advisors or its affiliated staff or employees’ bad faith,
gross negligence, willful misconduct or knowing violation of law, will be limited to the lesser of: (I) the total amount paid by
Client to Clarity Real Estate Advisors pursuant to this agreement to date, or (II) $2,000. In no event will Clarity Real Estate
Advisors be liable to Client, any representative, or any third party for any lost revenue, lost profits, incidental, speculative,
special, punitive, indirect or consequential damages, even if advised of the possibility of such damages, whether under theory of
contract, tort (including negligence), professional errors or omissions, strict liability or otherwise.
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5. Mediation and Arbitration. Mindful of the high cost of litigation, not only in dollars, but in time and energy as well,
the parties intend to and do hereby establish final and binding out of court dispute resolution procedures to be followed in the
event any controversy should arise out of or concerning this Agreement. Accordingly, the parties do hereby covenant and agree
to mediate, through the American Arbitration Association, any claim or controversy, dispute or claim of whatever nature arising
out of or relating to this Agreement, or the breach, interpretation or enforcement thereof (“Dispute”). In the event such Dispute
is not resolved through mediation, then such Dispute shall be decided by binding arbitration in accordance with the commercial
rules of arbitration of the American Arbitration Association. Client and Clarity Real Estate Advisors agree, unless otherwise
expressly agreed by the parties, that any mediation and arbitration pursuant to this agreement shall take place in San Diego
County, California.
6. Waiver of Jury Trial. Clarity Real Estate Advisors and Client each acknowledges that it is aware of and has had the
advice of counsel of its choice with respect to its rights to trial by jury, and each party does hereby expressly and knowingly waive
and release all such rights to trial by jury in connection with any Dispute, which will be resolved through the mediation and
arbitration processes set forth herein.
7. Disclaimer of Warranties. Clarity Real Estate Advisors grants no warranties, express or implied, by statute or
otherwise, to Client regarding services performed or information, reports or other materials supplied, nor their fitness for any
purpose, their quality, merchantability, or otherwise.
8. Commencement of Action. Any claim, demand, right, or defense by Client that arises out of or relates to this
Agreement or the negotiations that preceded this Agreement or the information or reports provided by Clarity Real Estate
Advisors and its advisors and consultants shall be barred unless Client commences an action thereon, or interposes a defense by
reason thereof within six (6) months after the date Client became aware of the inaccuracy, inaction, omission, event, or action
that gave rise to such claim, demand, right, or defense. Client acknowledges, understands, and agrees that the purpose and
effect of this paragraph is to shorten the period Client would otherwise have within which to raise such claims, demands, rights,
or defenses under applicable law.
9. Transfer or Assignment of Interest. In the event of any transfer of Clarity Real Estate Advisors’ interest in this
Agreement or in the subject matter of this Agreement, Clarity Real Estate Advisors shall be automatically relieved of all further
obligations or liability to Client. It is intended that the covenants and obligations contained in this agreement on the part of
Clarity Real Estate Advisors shall, subject to the foregoing, be binding on Clarity Real Estate Advisors, its successors and assigns,
only during and in respect to their respective successive periods of ownership.
10. Choice of Law. This Agreement shall be construed and enforced in accordance with the laws of the State of
California.
11. Sophistication of Client and Opportunity for Legal Review. Client is a sophisticated professional in real estate
transactions and contracts and is aware of the risks in real estate ownership, investment, finance and management. Client has
had the opportunity to consult with Client’s own legal counsel about the scope and effect of these limiting conditions.
12. Entire Agreement. This Agreement contains the entire agreement between the parties relating to the transaction
contemplated hereby and all prior or contemporaneous agreements, understandings, representations and statements, oral or
written, are merged herein.
13. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to
be an original, but all of which together shall constitute one instrument.
14. Severability of Provisions. Each provision of this Agreement shall be considered severable, and if for any reason any
provision which is not essential to affect the basic purposes of this Agreement is determined to be invalid and contrary to any
existing or future law, then such invalidity shall not impair the operation of or affect those provisions of this Agreement which are
valid
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OPERATING AGREEMENT
OF
CLARITY REAL ESTATE ADVISORS, LLC
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TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS ...................................................................................1
1.01 “Act” ..............................................................................................................1
1.02 “Adjusted Capital Account Deficit” ..............................................................1
1.03 “Affiliate” ......................................................................................................1
1.04 “Agreement” ..................................................................................................2
1.05 “Articles” .......................................................................................................2
1.06 “Available Cash” ...........................................................................................2
1.07 “Bankruptcy” ...............................................................................................2
1.08 “Book Depreciation” ......................................................................................2
1.09 “Capital Account” ..........................................................................................2
1.10 “Capital Contribution” ...................................................................................2
1.11 “Capital Event” ..............................................................................................2
1.12 “Code”............................................................................................................3
1.13 “Company” ....................................................................................................3
1.14 “Company Minimum Gain” ...........................................................................3
1.15 “Corporations Code” ......................................................................................3
1.16 “Distribution” .................................................................................................3
1.17 “Encumber”....................................................................................................3
1.18 “Encumbrance” ..............................................................................................3
1.19 “Fiscal Year” ..................................................................................................3
1.20 “Gross Asset Value” ......................................................................................3
1.21 “Involuntary Transfer” ...................................................................................3
1.22 “Majority Interest” .........................................................................................4
1.23 “Member” ......................................................................................................4
1.24 “Member Nonrecourse Debt” ........................................................................4
1.25 “Member Nonrecourse Debt Minimum Gain” ..............................................4
1.26 “Member Nonrecourse Deductions” ..............................................................4
1.27 “Membership Interest” ...................................................................................4
1.28 “Membership Unit” ........................................................................................4
1.29 “Negative Capital Account” ..........................................................................4
1.30 “Net Profit” and “Net Losses” .......................................................................5
1.31 “Nonrecourse Deductions” ............................................................................5
1.32 “Nonrecourse Liability” .................................................................................5
1.33 “Partnership Representative” .........................................................................5
1.34 “Percentage Interest” .....................................................................................5
1.35 “Person” .........................................................................................................5
1.36 “Positive Capital Account” ............................................................................5
1.37 “Regulations” .................................................................................................5
1.38 “Remaining Members” ..................................................................................5
1.39 “Secretary of State”........................................................................................5
1.40 “Transfer” ......................................................................................................5
1.41 “Transferable Interest” ...................................................................................6
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1.42 “Transferee” ...................................................................................................6
1.43 “Transferor Member”.....................................................................................6
1.44 “Vote” ............................................................................................................6
1.45 “Voting Interest” ............................................................................................6
ARTICLE 2 ARTICLES OF ORGANIZATION ...................................................6
2.01 Articles of Organization .................................................................................6
2.02 Name ..............................................................................................................6
2.03 Principal Place of Business and Company Mailing Address .........................6
2.04 Resident Agent ...............................................................................................6
2.05 Type of Business ............................................................................................7
2.06 Limited Liability Company............................................................................7
2.07 Term ...............................................................................................................7
2.08 Names and Addresses of Members ................................................................7
ARTICLE 3 CAPITAL AND CAPITAL CONTRIBUTIONS ..............................7
3.01 Initial Capital Contributions. .........................................................................7
3.02 Additional Contributions ...............................................................................7
3.03 Failure of Member to Make Additional Contribution ....................................8
3.04 Capital Accounts ............................................................................................8
3.05 No Withdrawal of Capital Contribution by Member .....................................9
3.06 No Interest ......................................................................................................9
3.07 No Personal Liability .....................................................................................9
3.08 No Priority of Return .....................................................................................9
ARTICLE 4 ALLOCATIONS AND DISTRIBUTIONS .......................................9
4.01 Allocation of Profits and Losses ....................................................................9
4.02 Profits and Losses. .........................................................................................9
4.03 Special Allocations ........................................................................................10
4.04 Member Nonrecourse Deductions .................................................................11
4.05 Allocation of Profits .......................................................................................12
4.06 Allocation of Losses ......................................................................................12
4.07 Unrealized Appreciation or Unrealized Depreciation ....................................12
4.08 Other Allocations ...........................................................................................12
4.09 Transfer of Interest .........................................................................................12
4.10 Gross Asset Value ..........................................................................................13
4.11 Compliance with Law and Regulations .........................................................13
4.12 Cash Distributions ..........................................................................................13
4.13 Cash Distributions Resulting from Capital Event ..........................................13
4.14 Determination of Value..................................................................................14
4.15 Distribution in Connection with Liquidation .................................................14
ARTICLE 5 MANAGEMENT AND CONTROL OF BUSINESS .......................14
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5.01 Management by Members..............................................................................14
5.02 General Duties and Obligations .....................................................................14
5.03 Insurance. .......................................................................................................14
5.04 Competition....................................................................................................14
5.05 Other Activities of Members Permitted. ........................................................14
5.06 Specific Powers of Members as Managers. ...................................................15
5.07 Limitations on Power of Members as Managers ...........................................16
5.08 Members as Agent of Company ....................................................................17
5.09 Acts of Member as Conclusive Evidence of Authority. ................................17
5.10 Warranted Reliance by Members on Others. .................................................17
5.11 Limitations of Liability of Members Acting as Managers.............................18
5.12 Deadlock. .......................................................................................................18
ARTICLE 6 ACCOUNTS AND ACCOUNTING .................................................18
6.01 Inspection of Books and Records. .................................................................18
6.02 Method of Accounting ...................................................................................18
6.03 Books and Records ........................................................................................19
6.04 Financial Statements ......................................................................................19
6.05 Income Tax Returns .......................................................................................20
6.06 Partnership Representative .............................................................................20
6.07 Authority of Partnership Representative ........................................................20
ARTICLE 7 MEMBERSHIP - MEETINGS, VOTING, INDEMNITY ................20
7.01 Class of Membership and Power of Members ...............................................20
7.02 Notice for Meetings .......................................................................................21
7.03 Membership Interest Certificates. ..................................................................21
7.04 Meetings of Members. ...................................................................................21
7.05 Adjournment of Meetings. .............................................................................22
7.06 Waiver of Notice. ...........................................................................................22
7.07 Proxies............................................................................................................22
7.08 Participation in Meetings by Electronic Means. ............................................22
7.09 Action by Members Without a Meeting. .......................................................22
7.10 No Agency Indemnification. ..........................................................................23
ARTICLE 8 TRANSFERS OF MEMBERSHIP INTERESTS ..............................23
8.01 Dissociation....................................................................................................23
8.02 Restrictions on Transfer. ................................................................................23
8.03 Right of First Refusal. ....................................................................................24
8.04 Triggering Events...........................................................................................24
8.05 Marital Dissolution or Death of a Spouse. .....................................................25
8.06 Option Periods. ..............................................................................................25
8.07 Nonparticipation of Interested Member. ........................................................26
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8.08 Option Purchase Price. ...................................................................................26
8.09 Substituted Member. ......................................................................................26
8.10 Duties of Substituted Member. ......................................................................27
8.11 Membership Interest Not Registered. ............................................................27
ARTICLE 9 DISSOLUTION, LIQUIDATION AND WINDING UP ..................27
9.01 Conditions Upon Which Dissolution Will Occur. .........................................27
9.02 Order of Payment and Distribution of Assets ................................................27
9.03 Return of Members’ Investment Not Guaranteed. .........................................28
9.04 Certificates to Be Filed. .................................................................................28
ARTICLE 10 CONFIDENTIALITY........................................................................28
10.01 Confidential Information ...............................................................................28
10.02 Equitable Relief .............................................................................................29
10.03 Reformation ...................................................................................................29
ARTICLE 11 INDEMNIFICATION........................................................................29
11.01 Indemnification of Agents by the Company ..................................................29
ARTICLE 12 ATTORNEY-IN-FACT AND AGENT .............................................30
12.01 Attorney-In-Fact and Agent ...........................................................................30
ARTICLE 13 MISCELLANEOUS PROVISIONS ..................................................30
13.01 Assurances .....................................................................................................30
13.02 Complete Agreement .....................................................................................30
13.03 Section Headings ...........................................................................................31
13.04 Binding Effect ................................................................................................31
13.05 Interpretation ..................................................................................................31
13.06 Company Counsel ..........................................................................................31
13.07 Applicable Law ..............................................................................................31
13.08 Jurisdiction and Venue ...................................................................................31
13.09 Ownership of Name, Logos and Trade Dress ................................................31
13.10 Remedies Cumulative ....................................................................................32
13.11 Notices ...........................................................................................................32
13.12 Amendments ..................................................................................................32
13.13 Severability ....................................................................................................32
13.14 Counterparts ...................................................................................................32
13.15 Spousal Consent .............................................................................................32
13.16 Attorneys’ Fees .............................................................................................32
13.17 Pre-Litigation Mediation ................................................................................32
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SIGNATURES .......................................................................................................................33
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TABLE OF EXHIBITS
EXHIBIT A MEMBERS OF CLARITY REAL ESTATE ADVISORS,
LLC, AS OF AUGUST 1, 2020 ........................................................34
EXHIBIT B SPOUSAL CONSENT ......................................................................35
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CLARITY REAL ESTATE ADVISORS, LLC
OPERATING AGREEMENT
Page 1 of 35
OPERATING AGREEMENT
OF
CLARITY REAL ESTATE ADVISORS, LLC
This Operating Agreement (the “Agreement”) is entered into August 1, 2020, by Park
Place Partners, Inc., a California corporation, and Peter Ross Reeb, an individual (the
“Members”).
The Members have formed Clarity Real Estate Advisors, LLC, a California limited
liability company (the “Company”) under the California Revised Uniform Limited Liability
Company Act. The Articles of Organization of the Company filed with the California Secretary
of State on June 15, 2020 are hereby adopted and approved by the Members.
The Members enter into this Agreement to provide for the governance of the Company
and the conduct of its business, and to specify their relative rights and obligations.
NOW, THEREFORE, the Members agree as follows:
ARTICLE 1
Definitions
When used in this Agreement, the capitalized terms will have the meanings specified in
this Article or elsewhere in this Agreement and when not so defined shall have the meanings set
forth in Corporations Code § 17701.02:
Section 1.01 “Act.” “Act” means the California Revised Uniform Limited Liability
Company Act (Corporations Code §§ 17701.01-17713.13), including amendments from time to
time.
Section 1.02 “Adjusted Capital Account Deficit.” “Adjusted Capital Account Deficit”
means, 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 of the Company, after such Member’s Capital
Account has been adjusted as follows: (1) the Member's Capital Account shall be increased by
the amount of such Member’s share of Company Minimum Gain and Member Nonrecourse Debt
Minimum Gain; and (2) the Member’s Capital Account shall be decreased by the amount of the
items described in the Regulations sections 1.704-1(b)(2)(ii)(d)(4), (5), and (6).
This definition of Adjusted Capital Account Deficit is intended to comply with the
provisions of the Regulations section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
with that Regulation.
Section 1.03 “Affiliate.” “Affiliate of a Member” means any Person under the control
of, in common control with, or in control of a Member, whether that control is direct or indirect.
The term “control,” as used herein, means, with respect to a corporation or limited liability
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OPERATING AGREEMENT
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company, the ability to exercise more than fifty percent (50%) of the voting rights of the
controlled entity, and with respect to an individual, partnership, trust, or other entity or
association, the ability, directly or indirectly, to direct the management or policies of the
controlled entity or individual.
Section 1.04 “Agreement.” “Agreement” means this Operating Agreement, in its
original form and as amended from time to time.
Section 1.05 “Articles.” “Articles” means the Articles of Organization filed with the
California Secretary of State forming this limited liability company, as initially filed and as they
may be amended from time to time.
Section 1.06 “Available Cash.” “Available Cash” means the gross cash proceeds of the
Company from all sources less all amounts used to pay or establish reserves for all Company
expenses, all as determined by the Members. Available Cash shall not be reduced by
depreciation, amortization, cost recovery deductions or similar allowances, but shall be increased
by any reductions of reserves previously established pursuant to the first sentence of this
definition.
Section 1.07 “Bankruptcy.” “Bankruptcy” means, with respect to any Person, being the
subject of an order for relief under Title 11 of the United States Code, or any successor statute or
other statute in any foreign jurisdiction having like import or effect.
Section 1.08 “Book Depreciation.” “Book Depreciation” means, with respect to any
item of Company property for a given Fiscal Year, a percentage of depreciation or other cost
recovery deduction allowable for federal income tax purposes for such items during that fiscal
year equal to the result (expressed as a percentage) obtained by dividing (1) the Fair market
value of that items at the beginning of the fiscal year (or the acquisition date during the Fiscal
Year), by (2) the federal adjusted tax basis of the item at the beginning of the Fiscal Year (or the
acquisition date during the Fiscal Year). If the adjusted tax basis of an item is zero, the Members
may determine Book Depreciation, provided that they do so in a reasonable and consistent
manner.
Section 1.09 “Capital Account.” “Capital Account” means the amount of the capital
interest of a Member in the Company, consisting of the amount of money and the fair market
value, net of liabilities, of any property initially contributed by the Member, as (1) increased by
any additional contributions and the Member’s share of the Company’s profits; and (2) decreased
by any Distribution to that Member as well as that Member’s share of Company losses.
Section 1.10 “Capital Contribution.” “Capital Contribution” means the total amount of
money and the fair market value, net of liabilities, of any property contributed by the Members to
the Company.
Section 1.11 “Capital Event.” “Capital Event” means a sale or disposition of any of the
Company’s assets, the receipt of insurance and other proceeds derived from the involuntary
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conversion of Company property, the receipt of proceeds from a refinancing of Company
property, or a similar event with respect to Company property or assets.
Section 1.12 “Code.” “Code” means the Internal Revenue Code of 1986, as amended
from time to time, or any corresponding provision of any succeeding revenue law.
Section 1.13 “Company.” “Company” means Clarity Real Estate Advisors, LLC, the
entity formed in accordance with this Agreement and the Articles.
Section 1.14 “Company Minimum Gain.” “Company Minimum Gain” has the same
meaning as set forth for the term “Partnership Minimum Gain” in the Regulations section 1.704-
2(d). [26 CFR § 1.704-2(d)]
Section 1.15 “Corporations Code.” “Corporations Code” means the California
Corporations Code, as amended from time to time and the provisions of any succeeding law.
Section 1.16 “Distribution.” “Distribution” means the transfer of money or property by
the Company to the Members without consideration.
Section 1.17 “Encumber.” “Encumber” means the act of creating or purporting to
create an Encumbrance, whether or not perfected under applicable law.
Section 1.18 “Encumbrance.” “Encumbrance” means, with respect to any Membership
Interest, or any element thereof, a mortgage, pledge, security interest, lien, proxy coupled with an
interest (other than as contemplated in this Agreement), option, or preferential right to purchase.
Section 1.19 “Fiscal Year.” “Fiscal Year” means the Company’s fiscal year, which will
be the calendar year, unless otherwise determined by the Members.
Section 1.20 “Gross Asset Value.” “Gross Asset Value” means, with respect to any
item of property of the Company, the item’s adjusted basis for federal income tax purposes,
except as follows:
(a) The initial Gross Asset Value of any item of property contributed by a
Member to the Company shall be the fair market value of such property, as mutually agreed by
the contributing Member and the Company;
(b) The Gross Asset Value of any item of Company property distributed to
any Member shall be the fair market value of such item of property on the date of Distribution;
and
(c) The Gross Asset Value of any item of Company property shall be subject
to the adjustments specified in Article 6.
Section 1.21 “Involuntary Transfer.” “Involuntary Transfer” means, with respect to
any Membership Interest, or any element thereof, any Transfer or Encumbrance, whether by
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OPERATING AGREEMENT
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operation of law, pursuant to court order, foreclosure of a security interest, execution of a
judgment or other legal process, or otherwise, including a purported transfer to or from a trustee
in bankruptcy, receiver, or assignee for the benefit of creditors.
Section 1.22 “Majority Interest.” “Majority Interest” means the Percentage Interests of
Members holding greater than Fifty percent (50%) of the total Percentage Interests held by all of
the Members.
Section 1.23 “Member.” “Member” means each Person who (1) has been admitted into
membership in the Company and (2) executes or causes to be executed this Agreement and any
subsequent amendments hereto, whose names and addresses are listed in Exhibit A hereto.
Section 1.24 “Member Nonrecourse Debt.” “Member Nonrecourse Debt” has the same
meaning as set forth for the term “Partnership Nonrecourse Debt” in the Regulations
section 1.704-2(b)(4). [26 CFR § 1.704-2(b)(4)].
Section 1.25 “Member Nonrecourse Debt Minimum Gain.” “Member Nonrecourse
Debt Minimum Gain” for a Fiscal Year of the Company means the net increase in minimum gain
attributable to Member Nonrecourse Debt, determined as set forth in the Regulations section
1.704-2(i)(2).
Section 1.26 “Member Nonrecourse Deductions.” “Member Nonrecourse Deductions”
has the meaning set forth in the Regulations section 1.704-2(i)(2). For any Fiscal Year of the
Company, the amount of Member Nonrecourse Deductions with respect to a Member
Nonrecourse Debt equals the net increase during that fiscal year in Member Nonrecourse Debt
Minimum Gain attributable to such Member Nonrecourse Debt during that fiscal year, reduced
(but not below zero) by the amount of any Distributions during such year to the Member bearing
the economic risk of loss for such Member Nonrecourse Debt if such Distributions are both from
the proceeds of such Member Nonrecourse Debt and are allocable to an increase in Member
Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt, all as
determined according to the provisions of the Regulations section 1.704-2(i)(2). In determining
Member Nonrecourse Deductions, the ordering rules of the Regulations section 1.704-2(j) shall
be followed.
Section 1.27 “Membership Interest.” “Membership Interest” means a Member’s rights
in the Company, collectively, including the Member’s Economic Interest, right to vote and
participate in management, and right to information concerning the business and affairs of the
Company provided in this Agreement or under the Act.
Section 1.28 “Membership Unit.” “Membership Unit” means a fractional part of the
Membership Interests of all Members, which is designated as a Membership Unit, as set forth on
Exhibit A hereto, and having the rights and obligations specified with respect thereto in this
Agreement.
Section 1.29 “Negative Capital Account.” “Negative Capital Account” means a Capital
Account with a balance of less than zero.
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Section 1.30 “Net Profits” and “Net Losses.” “Net Profits” and “Net Losses” mean the
Company’s income, loss, and deductions computed at the close of each fiscal year in accordance
with the accounting methods used to prepare the Company’s information tax return filed for
federal income tax purposes.
Section 1.31 “Nonrecourse Deductions.” “Nonrecourse Deductions” has the meaning
set forth in the Regulations section 1.704-2(c). The amount of Nonrecourse Deductions for a
Company fiscal year equals the net increase in the amount of Company Minimum Gain during
that fiscal year, reduced (but not below zero) by the aggregate amount of any Distributions
during that fiscal year of proceeds of a Nonrecourse Liability that are allocable to an increase in
Company Minimum Gain.
Section 1.32 “Nonrecourse Liability.” “Nonrecourse Liability” has the meaning
provided in the Regulations section 1.752-1(a)(2). [26 CFR § 1.752-1(a)(2)].
Section 1.33 “Partnership Representative.” “Partnership Representative,” as defined in
the Code § 6223, is that Member designated by the Company in Section 6.06 to serve as the
Company’s representative in all examinations of the Company’s affairs by taxing authorities.
Section 1.34 “Percentage Interest.” “Percentage Interest” means the percentage
ownership of the Company of each Member as set forth in the column entitled “Members’
Percentage Interest” contained in Exhibit A attached hereto.
Section 1.35 “Person.” “Person” means an individual, partnership, limited partnership,
corporation, limited liability company, registered limited liability partnership, trust, association,
estate, or any other entity.
Section 1.36 “Positive Capital Account.” “Positive Capital Account” means a Capital
Account with a balance greater than zero.
Section 1.37 “Regulations.” “Regulations” (“Reg”), as used in this Agreement, refers
to the income tax regulations of the United States Treasury Department promulgated under the
Code, including any temporary regulations, and any successor regulations which may be
promulgated.
Section 1.38 “Remaining Members.” “Remaining Members” means, upon the
occurrence of a Triggering Event or Transfer, those Members of the Company whose conduct
did not cause its occurrence.
Section 1.39 “Secretary of State.” “Secretary of State” means the Secretary of State for
the State of California.
Section 1.40 “Transfer.” “Transfer” (or “Transferred”) means, with respect to a
Membership Interest or any element of a Membership Interest, any sale, assignment, gift,
Involuntary Transfer, Encumbrance, or other disposition of such a Membership Interest or any
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OPERATING AGREEMENT
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element of such Membership Interest, directly or indirectly, other than an Encumbrance that is
expressly permitted under this Agreement.
Section 1.41 “Transferable Interest.” “Transferable Interest” means a Person’s right to
share in the income, gains, losses, deductions, credit or similar items of, and to receive
Distributions from, the Company, but does not include any other rights of a Member, including
the right to vote or participate in management.
Section 1.42 “Transferee.” “Transferee” means a Person who has acquired a Member’s
Transferable Interest in the Company, by way of a Transfer in accordance with the terms of this
Agreement, but who has not become a Member.
Section 1.43 “Transferor Member.” “Transferor Member” means a Member who by
means of a Transfer has transferred a Transferable Interest in the Company to a Transferee.
Section 1.44 “Vote.” “Vote” means a written consent or approval, a ballot cast at a
meeting, or a voice vote.
Section 1.45 “Voting Interest.” “Voting Interest” means, with respect to a Member, the
right to vote or participate in management and any right to information concerning the business
and affairs of the Company provided under the Act, except as limited by the provisions of this
Agreement. A Member’s Voting Interest shall be directly proportional to that Member’s
Percentage Interest.
ARTICLE 2
Articles of Organization
Section 2.01 Articles of Organization. The Articles of Organization were filed with the
California Secretary of State on June 15, 2020, File Number 202016810677.
Section 2.02 Name. The name of the Company is Clarity Real Estate Advisors, LLC.
The business of the Company may be conducted under that name, or, in compliance with
applicable laws, any other name that the Members deem appropriate.
Section 2.03 Principal Place of Business and Company Mailing Address. The principal
executive office of the Company shall be at 100 Spectrum Center Drive, Suite 1400, Irvine,
California 92618, or any other place or places determined by the Members from time to time.
The mailing address of the Company is 100 Spectrum Center Drive, Suite 1400, Irvine,
California 92618.
Section 2.04 Resident Agent. The initial agent for service of process on the Company
shall be Alton G. Burkhalter, Esq., whose street address is 2020 Main Street, Suite 600, Irvine,
California 92614. The Members may from time to time change the Company’s agent for service
of process. If the agent ceases to act as such for any reason, the Members shall promptly
designate a replacement agent and notify the Secretary of State of the change.
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Section 2.05 Type of Business. The Company shall engage in the business of real
estate marketing, analytics and consulting, together with any other lawful business that the
Members may elect.
Section 2.06 Limited Liability Company. The Members intend the Company to be a
limited liability company under the Act, classified as a partnership for federal and, to the
maximum extent possible, state income taxes. The rights and liabilities of the Members shall be
determined under the Act and this Agreement. To the extent that the rights or obligations of any
Member are different because of any provision of this Agreement than those rights and
obligations would be in the absence of that provision, this Agreement shall control to the extent
permitted by the Act. The Members shall not take any action inconsistent with the express intent
of the parties to this Agreement.
Section 2.07 Term. The term of existence of the Company shall commence on the date
that the Articles of Organization are filed with the California Secretary of State, and shall
continue until terminated by the provisions of this Agreement or as provided by law.
Section 2.08 Names and Addresses of Members. The name, present mailing address,
taxpayer identification number, and percentage ownership of each Member is listed on Exhibit A
attached hereto.
ARTICLE 3
Capital and Capital Contributions
Section 3.01 Initial Capital Contributions. Each Member shall contribute capital to the
Company in the form of money, property or services as more particularly specified in Exhibit A,
which shall thereafter be deemed the Member’s initial Capital Contribution. The initial Fair
Market Value of each item of contributed property (net of liabilities secured by that property),
which the Company is considered to assume or to take “subject to” under the Code §752, is also
set forth in Exhibit A, together with the description and amount of these liabilities. If a Member
fails to make the initial Capital Contributions specified in this Section 3.01 within 30 days after
the effective date of this Agreement, that Member’s entire Membership Interest shall terminate,
and that Member shall indemnify and hold the Company and the other Members harmless from
any loss, cost, or expense, including reasonable attorney fees caused by the failure to make the
initial Capital Contribution.
Section 3.02 Additional Contributions. The Members may, by the Vote of Members
holding a Majority Interest, determine from time to time that further Capital Contributions in
addition to the Members’ initial Capital Contributions are needed to enable the Company to
conduct its business. On making such a determination, the Members shall have 90 days to make
the agreed additional Capital Contribution. Each Member shall be required to make an
additional Capital Contribution in an amount that bears the same proportion to the total
additional Capital Contribution that the Member’s Capital Account balance bears to the total
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Capital Account balances of all Members. No Member may voluntarily make any additional
Capital Contribution.
Section 3.03 Failure of Member to Make Additional Contribution. If a Member fails to
make an additional Capital Contribution required under Section 3.02 of this Agreement within 30
days after it is required to be made (a “Defaulting Member”), the other Members (each a
“Nondefaulting Member”) may make additional Capital Contributions up to the total aggregate
amount of the Defaulting Member Capital Contributions not made (the Additional Capital
Shortfall). Following the Nondefaulting Member’s making of any additional Capital
Contributions, each Member’s Percentage Interest shall be adjusted to reflect the ratio that the
Member’s Capital Account bears to the total Capital Accounts of all Members.
Section 3.04 Capital Accounts. An individual Capital Account for each Member shall
be maintained in accordance with the requirements of Treasury Regulation § 1.704-1(b)(2)(iv)
and adjusted in accordance with the following provisions:
(a) A Member’s Capital Account shall be increased by that Member’s Capital
Contributions, that Member’s share of Profits, and any items in the nature of income or gain that
are specially allocated to that Member under Article IV.
(b) A Member’s Capital Account shall be increased by the amount of any
Company liabilities assumed by that Member subject to and in accordance with the provisions of
Treasury Regulation § 1.704-1(b)(2)(iv)(c).
(c) A Member’s Capital Account shall be decreased by (a) the amount of cash
distributed to that Member; (b) the Fair Market Value of any property of the Company so
distributed, net of liabilities secured by the distributed property that the distributee Member is
considered to assume or to be subject to under the Code § 752; and (c) the amount of any items
in the nature of expenses or losses that are specially allocated to that Member under Article 4.
(d) A Member’s Capital Account shall be reduced by the Member’s share of
any expenditures of the Company described in the Code § 705(a)(2)(B) or that are treated as
section 705(a)(2)(B) expenditures under Treasury Regulation § 1.704-1(b)(2)(iv)(i) (including
syndication expenses and losses nondeductible under the Code § 267(a)(1) or § 707(b)).
(e) If any Transferable Interest (or portion thereof) is Transferred, the
Transferee of the Transferable Interest or portion shall succeed to the Transferor Member’s
Capital Account corresponding to the interest or portion.
(f) The principal amount of a promissory note that is not readily traded on an
established securities market and that is contributed to the Company by the maker of the note
shall not be included in the Capital Account of any Person until the Company makes a taxable
disposition of the note or until (and to the extent) principal payments are made on the note, all in
accordance with Treasury Regulation § 1.704-1(b)(2)(iv)(d)(2).
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(g) Each Member’s Capital Account shall be increased or decreased as
necessary to reflect a revaluation of the Company’s property assets in accordance with the
requirements of Treasury Regulations §§ 1.704-1(b)(2)(iv)(f) and 1.704-1(b)(2)(iv)(g), including
the special rules under Treasury Regulation § 1.701-1(b)(4), as applicable. The provisions of
this Agreement respecting the maintenance of Capital Accounts are intended to comply with
Treasury Regulation § 1.704-1(b) and shall be interpreted and applied in a manner consistent
with those Regulations.
Section 3.05 No Withdrawal of Capital Contribution by Member. A Member shall not
be entitled to withdraw any part of the Member’s Capital Contribution or to receive any
distributions, whether of money or property, from the Company except as provided in this
Agreement.
Section 3.06 No Interest. No interest shall be paid on Capital Contributions or on the
balance of a Member’s Capital Account.
Section 3.07 No Personal Liability. A Member shall not be bound by, or be personally
liable for, the expenses, liabilities, or obligations of the Company except as otherwise provided
in the Act or in this Agreement.
Section 3.08 No Priority of Return. Except as otherwise expressly provided in this
Agreement, no Members will have priority over any other Member with respect to the return of a
Capital Contribution or distributions or allocations of income, gain, losses, deductions, credits, or
items thereof.
ARTICLE 4
Allocations and Distributions
Section 4.01 Allocation of Profits and Losses. The Profits and Losses of the Company
and all items of Company income, gain, loss, deduction, or credit shall be allocated, for
Company book purposes and for tax purposes, to each Member in accordance with that
Member’s Percentage Interest.
Section 4.02 Profits and Losses. As used in this Agreement, “Profits and Losses”
means, for each fiscal year or other period specified in this Agreement, an amount equal to the
Company’s taxable income or loss for that year or period, determined in accordance with the
Code § 703(a), including all Tax Items required to be stated separately under the Code §
703(a)(1), with the following adjustments:
(a) Any income of the Company that is exempt from federal income tax and
not otherwise taken into account in computing Profits or Losses shall be added to taxable income
or loss;
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(b) Any expenditures of the Company described in the Code § 705(a)(2)(B) or
treated as the Code § 705(a)(2)(B) expenditures under Treasury Regulation § 1.704-1(b)(2)(iv)(i)
and not otherwise taken into account in computing Profits or Losses shall be subtracted from
taxable income or shall increase that loss;
(c) Gain or loss resulting from any disposition of Company property with
respect to which gain or loss is recognized for federal income tax purposes shall be computed by
reference to the Fair Market Value of the property disposed of, notwithstanding that the adjusted
tax basis of the property differs from its Fair Market Value;
(d) In lieu of depreciation, amortization, and other cost recovery deductions
taken into account in computing taxable income or loss, there shall be taken into account Book
Depreciation for that fiscal year or other period, computed in accordance with the definition of
“Book Depreciation” in Section 1.08; and
(e) Notwithstanding the foregoing provisions of this Section 4.02, any items
of income, gain, loss, or deduction that are specially allocated shall not be taken into account in
computing Profits or Losses under Section 4.01.
Section 4.03 Special Allocations. The following special allocations shall be made in
the following order:
(a) Company Minimum Gain Chargeback. If there is a net decrease in
Company Minimum Gain during a fiscal year, each Member shall be allocated, before any other
allocation under this Section, items of Company income and gain for the fiscal year equal to that
Member’s share of the net decrease in Company Minimum Gain as determined in accordance
with Treasury Regulation § 1.704-2(g)(2).
(b) Member Nonrecourse Debt Minimum Gain Chargeback. If there is a net
decrease in Member Nonrecourse Debt Minimum Gain during a fiscal year (as defined in the
Regulations), any Member with a share of the Member Nonrecourse Debt Minimum Gain
attributable to that Member’s Nonrecourse Debt as of the beginning of the fiscal year should be
allocated items of Company income and gain for that year (and, if necessary, subsequent years)
equal to that Member’s share of the net decrease in Member Nonrecourse Debt Minimum Gain.
A Member’s share of net decrease in Member Nonrecourse Debt Minimum Gain shall be
determined under Treasury Regulation § 1.704-2(g)(2). A Member shall not be subject to the
foregoing chargeback to the extent permitted under Treasury Regulation § 1.704-2(i)(4).
(c) Qualified Income Offset. If any Member unexpectedly receives an
adjustment, allocation, or distribution described in Treasury Regulation § 1.704-1(b)(2)(ii)(d)(4),
(d)(5), or (d)(6), that Member shall be allocated items of Company income and gain (consisting
of a pro rata portion of each item of Company income, including gross income and gain for that
fiscal year) in an amount and manner sufficient to eliminate, to the extent required by the
Regulations, the Adjusted Capital Account Deficit of that Member as quickly as possible;
provided that an allocation under this Section 4.03(c) shall be made only if and to the extent that
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the Member would have an Adjusted Capital Account Deficit after all other allocations provided
for in this Agreement have been made as if this Section 4.03(c) were not in the Agreement.
(d) Gross Income Allocation. In the event any Member has a deficit Capital
Account at the end of any Company fiscal year in excess of the sum of:
(1) The amount the Member is obligated to restore under any
provision of this Agreement, and
(2) The amount the Member is deemed to be obligated to restore under
Treasury Regulation § 1.704-2(g)(1), (i)(5), each such Member shall be specially allocated items
of Company income in the amount of the excess as quickly as possible; except that an allocation
under this Section 4.03(d) shall be made only if and to the extent that the Member would have a
deficit Capital Account in excess of that sum after all other allocations provided for in this
Article 4 have been made as if Section 4.03(c) and this Section 4.03(d) were not in the
Agreement.
(e) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions
for any Company 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 those Member Nonrecourse
Deductions are attributable in accordance with Treasury Regulation § 1.704-2(i)(1).
(f) Nonrecourse Deductions. Nonrecourse Deductions for any fiscal year
shall be specially allocated in proportion to their respective allocations of Profits for that fiscal
year.
(g) Section 754 Adjustments. To the extent an adjustment to the adjusted tax
basis of any Company asset under the Code § 734(b) or 743(b) is required under Treasury
Regulation § 1.704-1(b)(2)(iv)(m)(2) or § 1.704-1(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 interest in the Company, the amount of the 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 the basis), and the gain or loss shall be specially allocated to the Members
in accordance with their interests in the Company in the event that Treasury Regulation §1.704-
1(b)(2)(iv)(m)(2) applies, or to the Member to whom the distribution was made in the event that
Treasury Regulation § 1.704-1(b)(2)(iv)(m)(4) applies.
Section 4.04 Member Nonrecourse Deductions. Member Nonrecourse Deductions for
any fiscal year of the Company shall be allocated to the Members in the same proportion as
Profits are allocated under Section 4.01, provided that any Member Nonrecourse Deductions for
any fiscal year or other period shall be allocated to the Member who bears (or is deemed to bear)
the economic risk of loss with respect to the Member Nonrecourse Debt to which those Member
Nonrecourse Deductions are attributable in accordance with Treasury Regulation § 1.704-2(i)(2).
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Section 4.05 Allocation of Profits. In any fiscal year of the Company, Profits in excess
of Losses of the Company resulting from a Capital Event in that fiscal year shall be allocated to
the Members in the following order:
(a) To Members whose Adjusted Capital Contributions are in excess of their
Capital Accounts, in proportion to those excesses, until all of those excesses have been
eliminated. “Adjusted Capital Contributions” means, with respect to each Member, the excess of
that Member’s contribution to the capital of the Company over all prior distributions to the
Member that have resulted from Capital Events.
(b) Among the Members in the proportion that the Capital Contribution of
each Member bears to the total Capital Contributions of all Members.
Section 4.06 Allocation of Losses. In any Company fiscal year, Losses in excess of
Profits of the Company, resulting from a Capital Event in that fiscal year, shall be allocated to
the Members with positive Capital Accounts, in proportion to their positive Capital Account
balances, until no Member has a positive Capital Account. For this purpose, Capital Accounts
shall be reduced by the adjustments set forth in Treasury Regulation § 1.704-1(b)(2)(ii)(d)(4)-(6).
Section 4.07 Unrealized Appreciation or Unrealized Depreciation. Any unrealized
appreciation or unrealized depreciation in the values of Company property distributed in kind to
all the Members shall be treated in accordance with applicable law.
Section 4.08 Other Allocations. Any item of income, gain, loss, or deduction with
respect to any property (other than cash) that has been contributed by a Member to the capital of
the Company, or that has been revalued under the provisions of Section 3.04(g), and that is
required or permitted to be allocated to the Member for income tax purposes under the Code §
704(c) so as to take into account the variation between the tax basis of the property and its Fair
Market Value at the time of its contribution, shall be allocated solely for income tax purposes in
the manner required or permitted under the Code § 704(c) using the “traditional” method
described in Treasury Regulation § 1.704-3(b), except that any other method allowable under
applicable Regulations may be used for any contribution of property with respect to which there
is agreement among the contributing Member and the any other Members who, together, hold a
Majority Interest.
Section 4.09 Transfer of Interest. In the case of a Transfer of a Transferable Interest
during any fiscal year of the Company, the Transferring Member and Transferee shall each be
allocated Profits or Losses based on the number of days each of them held the Transferable
Interest during that fiscal year. If the Transferring Member and Transferee agree to a different
proration and advise the Members of the agreed proration before the date of the Transfer, Profits
or Losses from a Capital Event during that fiscal year shall be allocated to the holder of the
Transferable Interest on the day the Capital Event occurred. If a Transferee makes a subsequent
Transfer, the Transferee shall be considered a “Transferring Member” with respect to the
subsequent Transferee for purposes of these allocations.
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Section 4.10 Gross Asset Value.
(a) The Gross Asset Value of all Company property shall be adjusted at the
following times: (1) on the acquisition of an interest or additional interest in the Company by any
new or existing Member in exchange for more than a de minimis Capital Contribution; (2) on the
distribution of money or other property (other than a de minimis amount) by the Company to a
Member as consideration for a Transferable Interest in the Company; and (3) on the liquidation
of the Company within the meaning of Treasury Regulation § 1.704-1(b)(2)(ii)(g), provided,
however, that adjustments under clauses (1) and (2) above shall be made only in the event of a
revaluation of Company property under Section 3.04(g) in accordance with Treasury Regulation
§ 1.704-1(b)(2)(iv)(f).
(b) The Gross Asset Value of Company property shall be increased or
decreased to reflect adjustments to the adjusted tax basis of the property under the Code § 732, §
733, or § 743, subject to the limitations imposed by the Code § 755 and Treasury Regulation §
1.704-1(b)(2)(iv)(m).
(c) If the Gross Asset Value of an item of property has been determined or
adjusted under Section 1.20, or subsection (a) or (b) of this Section 4.10, the Gross Asset Value
shall be adjusted by the Book Depreciation, if any, taken into account with respect to that
property for purposes of computing Profits and Losses.
Section 4.11 Compliance with Law and Regulations. It is the intent of the Members
that each Member’s allocated share of Company Tax Items be determined in accordance with
this Agreement to the fullest extent permitted by the Code § 704(b)-(c). Notwithstanding
anything to the contrary in this Agreement, if the Company is advised that, as a result of the
adoption of new or amended regulations under the Code § 704(b)-(c), or the issuance of
authorized interpretations, the allocations provided in this Agreement are unlikely to be
respected for federal income tax purposes, the Members are granted the power to amend the
allocation provisions of this Agreement, on advice of accountants and legal counsel, to the
minimum extent necessary for the allocation provisions to be respected for federal income tax
purposes.
Section 4.12 Cash Distributions. All Available Cash, other than revenues or proceeds
from a Capital Event or the dissolution of the Company, shall be distributed among the Members
in the same manner as Profits. The parties intend that Available Cash shall be distributed as soon
as practicable following the Members’ determination that cash is available for distribution. The
parties acknowledge that no assurances can be given about when or whether cash shall be
available for distributions to the Members.
Section 4.13 Cash Distributions Resulting from Capital Event. All Available Cash
resulting from a Capital Event (as distinguished from normal business operations or the
dissolution of the Company) shall be distributed to the Members in accordance with their
respective Percentage Interests as soon as practicable following the Members’ determination that
cash is available for distribution.
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Section 4.14 Determination of Value. If the proceeds from a sale or other disposition of
an item of Company property consist of property other than cash, the value of that property shall
be as determined by the Members. If noncash proceeds are subsequently reduced to cash, that
cash shall be taken into account by the Members in determining Available Cash and the
Members shall determine whether the cash has resulted from operations or from a Capital Event.
Section 4.15 Distribution in Connection with Liquidation. Notwithstanding any other
provisions of this Agreement to the contrary, when there is a distribution in connection with a
liquidation of the Company, or when any Member’s interest is liquidated, all items of income
and loss first shall be allocated to the Members’ Capital Accounts under this Article 4, and other
credits and deductions to the Members’ Capital Accounts shall be made before the final
distribution is made. The final distribution to the Members shall be made as provided in Section
9.02(d) of this Agreement. The provisions of this Section 4.15 and Section 9.02(d), shall be
construed in accordance with the requirements of Treasury Regulation § 1.704-1(b)(2)(ii)(b)(2).
ARTICLE 5
Management and Control of Business
Section 5.01 Management by Members. The Members as managers will manage the
Company. Except as otherwise provided in this Agreement, each Member acting alone has the
full and complete authority, power, and discretion to act for and bind the Company in the
ordinary course of the Company’s business and to execute any document on behalf of the
Company.
Section 5.02 General Duties and Obligations. Except as otherwise provided in this
Agreement, no Member will have any authority to hold himself/herself out as a general or special
agent of the Company in any business or other activity. The Members will take all actions that
may be necessary or appropriate (1) for the continuation of the Company’s valid existence as a
limited liability company under the Act, and (2) for the acquisition, development, maintenance,
preservation, and operation of the Company property in accordance with the provisions of this
Agreement and applicable laws and regulations.
Section 5.03 Insurance. The Members will cause the Company to procure and maintain
in force a reasonable amount of insurance covering the Company and Company property for all
types of liability and loss.
Section 5.04 Competition. During the term of the Company, each Member may engage
in any business activity for his or her own profit or advantage without the other Members’
consent; provided, however, no Member may engage in any activity that is in direct competition
with the Company’s business.
Section 5.05 Other Activities of Members Permitted. The Members may engage in
incidental other business activities that do not compete with the Company or interfere with the
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Member’s services to the Company, and may engage in personal investment activities in
enterprises that do not directly compete with the Company.
Section 5.06 Specific Powers of Members as Managers. Each Member as manager has
the following power and authority to act on the Company’s behalf, subject to the limitations of
the Act:
(a) To acquire property from any person as the Members may determine. The
fact that a Member is directly or indirectly affiliated or connected with any such person does not
prohibit a Member from dealing with that person or entity;
(b) To borrow money for the Company from banks, other lending institutions,
the Members, or Affiliates of the Members on the terms that the Member deems appropriate, and
in that connection, to hypothecate, encumber, and grant security interests in the assets of the
Company to secure repayment of the borrowed sums. Except as otherwise provided in the Act,
no debt will be contracted or liability incurred by or on behalf of the Company, except by the
Members;
(c) To purchase liability and other insurance to protect the property and
business of the Company;
(d) To hold and own any Company real and personal properties in the name of
the Company;
(e) To execute on behalf of the Company all instruments and documents,
including, without limitation, checks; drafts; notes and other negotiable instruments; mortgages
or deeds of trust; security agreements; financing statements; documents providing for the
acquisition, mortgage or disposition of property of the Company; assignments; bills of sale;
leases; partnership agreements; and any other instruments or documents reasonably believed to
be necessary in the opinion of the Members, to the business of the Company;
(f) To employ accountants, legal counsel, managing agents, and other experts
to perform services for the Company and to compensate them from the Company funds;
(g) To retain and compensate employees and agents generally, and to define
their duties;
(h) To enter into any and all other agreements on behalf of the Company, with
any other person or entity for any purpose necessary or appropriate to the conduct of the business
of the Company;
(i) To reimburse all expenses of the Company reasonably incurred and paid
by the Members on behalf of the Company;
(j) To do and perform all other acts as may be necessary or appropriate to the
conduct of the business of the Company.
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Except that items (a) through (d) must be approved in writing by the affirmative Vote of
Members holding a Majority Interest.
Section 5.07 Limitations on Power of Members as Managers. Notwithstanding the
provisions of Section 5.06, above, no act shall be taken, sum expended, decision made, or
obligation incurred by any Member regarding a matter within the scope of any of the major
decisions enumerated below (“Major Decisions”), unless and until the same has been approved
by the affirmative vote or written consent of Members holding a Majority Interest. Major
Decisions include the following:
(a) The transfer, exchange, or other disposition of all Company’s assets, any
significant portion thereof, or any significant interest in Company assets occurring as part of a
single transaction or plan;
(b) The merger of the Company with any other limited liability company,
limited partnership, or corporation;
(c) Contracting on behalf of the Company of any debt, obligation, or liability
on behalf of the Company of more than $2,500.00, except for trade debt incurred in the ordinary
course of the Company’s business and due within 12 months;
(d) Making any single expenditure in excess of $2,500.00, or annual
expenditures in excess of $50,000.00;
(e) Approving the Transfer of a Membership Interest and the admission of a
Transferee as a Member;
(f) Amending the Articles or this Agreement;
(g) Performing any act that would make it impossible to carry on the ordinary
business of the Company;
(h) Making, executing, or delivering on behalf of the Company any
assignment for the benefit of creditors or any guarantee, indemnity bond, or surety bond, or any
equivalent thereof;
(i) Lending funds belonging to the Company to any third party or extending
to any person, firm, or corporation, credit on behalf of the Company, except in the ordinary
course of business or as set forth in this Agreement;
(j) Changing the amount or character of Capital Contributions, or changing
the character of the business of the Company;
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(k) Investing any funds of the Company temporarily (by way of example and
not imitation) in time deposits, short-term governmental obligations, commercial paper, or other
investments.
Section 5.08 Members as Agent of Company. Every Member is an agent of the
Company for the purpose of its business, and for every other Member, for purposes of the
execution in the name of the Company of any instrument for apparently carrying on in the usual
way the business of the Company and binds the Company, unless that act is in contravention of
the Articles or this Agreement, or unless the Member so acting otherwise lacks the authority to
act for the Company and the person with whom the Member is dealing has actual knowledge of
the fact that the Member has no such authority.
Section 5.09 Acts of Member as Conclusive Evidence of Authority. Every contract,
deed, mortgage, lease and other instrument executed by at least one (1) Member is conclusive
evidence in favor of every person relying on or claiming under the instrument that at the time of
its delivery (1) the Company was in existence, (2) neither this Agreement nor the Articles had
been amended in any manner so as to restrict the delegation of authority among Members, and
(3) the execution and delivery of the instrument was duly authorized by Members. Any person
may always rely on a certificate addressed to him or her and signed by any single Member:
(a) As to who are the Members under this Agreement;
(b) As to the existence or non-existence of any fact that constitutes a condition
precedent to acts by the Members or in any other manner germane to the affairs of the Company;
(c) As to who is authorized to execute and deliver any instrument or
document of the Company;
(d) As to the authenticity of any copy of the Articles or this Agreement,
including amendments, and any other document relating to the conduct of the affairs of the
Company;
(e) As to any act or failure to act by the Company or as to any other matter
whatsoever involving the Company or any Member in Member’s capacity as a Member or
manager.
Section 5.10 Warranted Reliance by Members on Others. In performing their duties,
the Members as managers are entitled to rely on information, opinions, reports, or statements of
the following persons or groups unless they have knowledge concerning the matter in question
that would cause that reliance to be unwarranted:
(a) One or more employees or other agents of the Company whom the
Members reasonably believe to be reliable and competent in the matters presented;
(b) Any attorney, public accountant, or other person as to matters which the
Members reasonably believe to be within that person’s professional or expert competence;
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(c) A committee on which the Member does not serve, duly designated in
accordance with a provision of the Articles or this Agreement, as to matters within its designated
authority, provided that the Members reasonably believe the committee merits competence.
Section 5.11 Limitations on Liability of Members Acting as Managers. A Member
acting as a manager is not liable to the Company or the other Members for any loss or damage
resulting from any mistake of fact or judgment or any act or failure to act, to the extent permitted
by the Act, unless the mistake, act, or failure to act is the result of fraud, bad faith, gross
negligence, or willful misconduct.
Section 5.12 Deadlock. If the Members are deadlocked on any matter or any decision,
the Members must promptly select a mutually acceptable unrelated and independent individual
who will, after good faith discussions with the Members, resolve the deadlocked matter
(including, if necessary, by causing his or her vote in favor of a proposed resolution). If the
Members cannot agree on the selection of such an individual, any Member is entitled to request
that an official of the local office of JAMS appoint such an individual. That Member will
promptly give written notice to the other Members that such request has been made (whereupon
no other Member will be entitled to make a duplicative request to JAMS). In this event, the
official of JAMS will be instructed to use his or her best efforts to appoint an individual who (1)
is of good reputation and possesses a minimum of 5 years’ experience in the industry in which
the Company operates its business and (2) has no prior relationship with either the requesting
Member or the Company. The appointed individual will, after good faith discussions with the
Members, resolve the deadlocked matter (including, if necessary, by causing his or her vote in
favor of a proposed resolution in the event that no consensus can be reached on the conclusion of
these discussions). The Company will indemnify and hold harmless any individual selected or
appointed in accordance with the foregoing to the same extent that the person would be
indemnified if he or she were a Member of the Company. However, in no event will any such
individual be designated or construed to be a Member of the Company.
ARTICLE 6
Accounts and Accounting
Section 6.01 Inspection of Books and Records. Complete books of account of the
Company’s business, in which each Company transaction shall be fully and accurately entered,
shall be kept at the Company’s principal executive office and at other locations that the Members
shall determine from time to time, and shall be open to inspection and copying on reasonable
Notice by any Member or the Member’s authorized representatives during normal business
hours. The costs of inspection and copying shall be borne by that Member.
Section 6.02 Method of Accounting. Financial books and records of the Company shall
be kept in accordance with the method of accounting followed by the Company for federal
income tax purposes as selected by Members holding a Majority Interest. The financial
statements of the Company shall be appropriate and adequate for the Company’s business and
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for carrying out the provisions of this Agreement. The fiscal year of the Company shall be
January 1 through December 31.
Section 6.03 Books and Records. At all times during the term of existence of the
Company, and beyond that term if the Members deem it necessary, the Members shall keep or
cause to be kept the books of account referred to in Section 6.02, together with:
(a) A current list of the full name and last known business or residence
address of each Member, together with the Capital Contribution and the share in Profits and
Losses of each Member;
(b) A copy of the Articles of Organization, as amended;
(c) Copies of the Company’s federal, state, and local income tax or
information returns and reports, if any, for the six most recent taxable years;
(d) An original executed copy or counterparts of this Agreement, as amended;
(e) Any powers of attorney under which the Articles of Organization or any
amendments to said articles were executed;
(f) Financial statements of the Company for the six most recent fiscal years;
and
(g) The books and records of the Company as they relate to the Company’s
internal affairs for the current and past four fiscal years.
If the Members deem that any of the foregoing items shall be kept beyond the term of
existence of the Company, the repository of those items shall be as designated by the Members.
Section 6.04 Financial Statements. At the end of each fiscal year, the books of the
Company shall be closed and examined, statements reflecting the financial condition of the
Company and its Profits or Losses shall be prepared, and a report about those matters shall be
issued by the Company’s certified public accountants. Copies of the financial statements shall
be given to all Members. In addition, all Members shall receive, not less frequently than at the
end of each calendar quarter, copies of such financial statements regarding the previous calendar
quarter as may be prepared in the ordinary course of business by the Members or accountants
selected by the Members. The Members shall cause an annual report to be sent to each Member
within 120 days after the end of the fiscal year of the Company. The annual report may be sent
by electronic transmission by the Company and shall include:
(a) A balance sheet and income statement, and a statement of cash flows of
the Company as of the close of the fiscal year; and
(b) A statement showing the Capital Account of each Member as of the close
of the fiscal year and the distributions, if any, made to each Member during the fiscal year.
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Members representing at least 30 percent of the Members, by number, may request interim
balance sheets and income statements, and may, at their own discretion and expense, obtain an
audit of the Company books by certified public accountants selected by them; provided,
however, that not more than one such audit shall be made during any fiscal year of the Company.
Section 6.05 Income Tax Returns. Within 90 days after the end of each taxable year of
the Company, the Members must receive all information necessary for the Members to complete
their federal and state income tax or information returns and a copy of the Company’s federal,
state, and local income tax or information returns for that year.
Section 6.06 Partnership Representative. Peter Ross Reeb shall act as the Partnership
Representative of the Company under the Code § 6223(a).
Section 6.07 Authority of Partnership Representative. Each Member hereby consents
to such designation and agrees that, upon the request of the Members, it will execute, certify,
acknowledge, deliver, swear to, file and record at the appropriate public offices such documents
as may be necessary or appropriate to evidence such consent. The Partnership Representative
shall be promptly reimbursed for all reasonable expenses (including reasonable outside attorneys
and other reasonable outside professional fees, and allocated overhead and internal costs)
incurred by it in connection with service as Partnership Representative (as applicable) to the
extent such reimbursement is not prohibited by applicable law. Nothing herein shall be
construed to restrict the Members from causing the Company to engage an accounting firm or
legal counsel to assist the Partnership Representative in discharging its duties hereunder. The
Partnership Representative will represent the Company in any audits, disputes, controversies or
proceedings under the Partnership Tax Audit Rules; provided, however, that the Partnership
Representative shall keep the Members informed as to all material developments with respect to
such audits, disputes or controversies and shall not have any right to settle or compromise any
such audits, disputes, controversies or proceedings without approval of the Members. The
Company and the Partnership Representative shall keep the Members informed of any inquiries,
audits, other proceedings or tax deficiencies assessed or proposed to be assessed (of which the
Company or Partnership Representative is actually aware) by any taxing authority against the
Company or the Members.
ARTICLE 7
Membership - Meetings, Voting, Indemnity
Section 7.01 Class of Membership and Power of Members. There shall be only one
class of membership and no Member shall have any rights or preferences in addition to or
different from those possessed by any other Member, except as specifically provided in Article 4.
Members shall have the right and power to appoint, remove, and replace officers of the Company
and the right to vote on all other matters with respect to which this Agreement or the Act requires
or permits Member action. Each Member shall vote in proportion to the Member’s Percentage
Interest as of the governing record date, determined in accordance with Section 7.02. If a
Member has transferred all or part of the Member’s Transferable Interest to a person who has not
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been admitted as a Member, the Transferring Member shall vote in proportion to the Percentage
Interest that the Transferring Member would have had if the transfer had not been made.
Without limiting the foregoing, all of the following acts shall require the unanimous Vote
of the Members:
(a) The Transfer of a Membership Interest and the admission of the
Transferee as a Member of the Company;
(b) Any amendment of the Articles of Organization or this Agreement; and
(c) A compromise of the obligation of a Member to make a Capital
Contribution under Article 3.
Section 7.02 Notice for Meetings. The record date for determining the Members
entitled to receive Notice of any meeting, to vote, to receive any distribution, or to exercise any
right in respect of any other lawful action shall be the date set by the affirmative Vote of
Members holding a Majority Interest; provided that the record date shall not be more than 60, or
less than 10, calendar days before the date of the meeting and not more than 60 calendar days
before any other action. In the absence of any action setting a record date, the record date shall
be determined in accordance with Corporations Code § 17704.07(p).
Section 7.03 Membership Interest Certificates. The Company may, but is not required
to, issue certificates evidencing Membership Interests (Membership Interest Certificates) to
Members of the Company. Once Membership Interest Certificates have been issued, they shall
continue to be issued as necessary to reflect current Membership Interests held by Members.
Membership Interest Certificates shall be in a form approved by the Members, shall be manually
signed by the Members and shall bear conspicuous legends evidencing the restrictions on
Transfer and the purchase rights of the Company and Members set forth in Article 8. All
issuances, reissuances, exchanges, and other transactions in Membership Interests involving
Members shall be recorded in a permanent ledger as part of the books and records of the
Company.
Section 7.04 Meetings of Members. Meetings of the Members may be called at any
time by Members representing more than 10 percent of the Interests of the Members, for the
purpose of addressing any matters on which the Members may vote. Meetings may be held at
the principal executive office of the Company or at any other location designated by the
Members. Following the call of a meeting, the Members shall give Notice of the meeting not
less than 10, nor more than 60, calendar days before the meeting date to all Members entitled to
vote at the meeting. The Notice shall state the place, date, and hour of the meeting, the means of
electronic transmission by and to the Company or electronic video communication, if any, and
the general nature of business to be transacted. No other business may be transacted at the
meeting. A quorum at any meeting of Members shall consist of Members holding a Majority
Interest, represented in person or by Proxy. The Members present at a duly called or held
meeting at which a quorum is present may continue to transact business until adjournment,
notwithstanding the withdrawal of a sufficient number of Members to leave less than a quorum,
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if the action taken, other than adjournment, is approved by the requisite Percentage of Members
as specified in this Agreement or the Act.
Section 7.05 Adjournment of Meetings. A meeting of Members at which a quorum is
present may be adjourned to another time or place and any business that might have been
transacted at the original meeting may be transacted at the adjourned meeting. If a quorum is not
present at an original meeting, that meeting may be adjourned by the Vote of a majority of
Voting Interests represented either in person or by Proxy. Notice of the adjourned meeting need
not be given to Members entitled to Notice if the time and place of the adjourned meeting are
announced at the meeting at which the adjournment is taken, unless (a) the adjournment is for
more than 45 days, or (b) after the adjournment, a new record date is fixed for the adjourned
meeting. In the situations described in clauses (a) and (b), Notice of the adjourned meeting shall
be given to each Member of record entitled to vote at the adjourned meeting.
Section 7.06 Waiver of Notice. The transactions of any meeting of Members, however
called and noticed, and wherever held, shall be as valid as though consummated at a meeting
duly held after regular call and notice, if (a) a quorum is present at that meeting, either in person
or by Proxy, and (b) either before or after the meeting, each of the persons entitled to vote, not
present in person or by Proxy, signs either a written waiver of notice, a consent to the holding of
the meeting, or an approval of the minutes of the meeting. Attendance of a Member at a meeting
shall constitute waiver of notice, unless that Member objects, at the beginning of the meeting, to
the transaction of any business on the ground that the meeting was not lawfully called or
convened. Attendance at a meeting is not a waiver of any right to object to the consideration of
matters required to be described in the notice of the meeting and not so included, if the objection
is expressly made at the meeting.
Section 7.07 Proxies. At all meetings of Members, a Member may vote in person or by
Proxy. The Proxy shall be filed with the Members before or at the time of the meeting, and may
be filed by facsimile transmission to the Members at the principal executive office of the
Company or any other address given to the Members for those purposes.
Section 7.08 Participation in Meetings by Electronic Means. A meeting of the
Members may be conducted, in whole or in part, by electronic transmission by and to the
Company or by electronic video communication if (1) the Company implements reasonable
measures to provide Members (in person or by Proxy) a reasonable opportunity to participate in
the meeting and to vote on matters submitted to the Members, including an opportunity to read
or hear the proceedings of the meeting substantially concurrently with those proceedings, and if
(2) any Member votes or takes other action at the meeting by means of electronic transmission to
the Company or electronic video communication, a record of that vote or action is maintained by
the Company.
Section 7.09 Action by Members Without a Meeting. Any action that may be taken at
any meeting of the Members may be taken without a meeting if a consent in writing, setting forth
the action so taken, is signed by Members having not less than the minimum number of votes
that would be necessary to authorize or take that action at a meeting at which all Members
entitled to vote were present and voted. If the Members are requested to consent to a matter
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without a meeting, each Member shall be given notice of the matter to be voted on in the manner
described in Section 7.04. Any action taken without a meeting shall be effective when the
required minimum number of votes have been received. Prompt Notice of the action taken shall
be given to all Members who have not consented to the action.
Section 7.10 No Agency Indemnification. No Member acting solely in the capacity of
a Member is an agent of the Company, nor can any Member acting solely in the capacity of a
Member bind the Company or execute any instrument on behalf of the Company. Accordingly,
each Member shall indemnify, defend, and hold harmless each other Member and the Company
from and against any and all loss, cost, expense, liability, or damage arising from or out of any
claim based on any action by the Member in contravention of the first sentence of this Section
7.10.
ARTICLE 8
Transfers of Membership Interests
Section 8.01 Dissociation. Member may not dissociate from the Company without the
written consents of all remaining Members. Dissociation shall not release a Member from any
obligations and liabilities under this Agreement accrued or incurred before the effective date of
dissociation. A dissociating Member shall have only the rights of a holder of a Transferable
Interest in the Company in respect of the Member’s Membership Interest in the Company.
Unless all remaining Members consent to the dissociation, the dissociating Member shall not be
entitled to a distribution of its Transferable Interest until the dissolution and liquidation of the
Company. For purposes of this Section 8.01, the term “Transferable Interest” shall not mean or
include any right to share in the income, gains, losses, deductions, credits, or similar items of the
Company attributable to any period following dissociation, or any right to information
concerning the business and affairs of the Company, except as provided in Corporations Code §
17704.10.
Section 8.02 Restrictions on Transfer. Except as expressly provided in this Agreement,
a Member shall not Transfer any part of the Member’s Membership Interest in the Company,
whether now owned or later acquired, unless (a) the other Members unanimously approve the
transferee’s admission to the Company as a Member on that Transfer and (b) the Membership
Interest to be Transferred, when added to the total of all other Membership Interests Transferred
in the preceding 12 months, shall not cause the termination of the Company under the Code. No
Member may Encumber or permit or suffer any Encumbrance of all or any part of the Member’s
Membership Interest in the Company unless the Encumbrance has been approved in writing by
all other Members. Approval may be granted or withheld in the other Members’ sole discretion.
Any Transfer or Encumbrance of a Membership Interest without that approval shall be void.
Notwithstanding any other provision of this Agreement to the contrary, a Member who is a
natural person may Transfer all or any portion of his or her Membership Interest to any revocable
trust created for the benefit of the Member, or any combination between or among the Member,
the Member’s spouse or domestic partner, and the Member’s issue, provided that the Member
retains a beneficial interest in the trust and all of the Voting Interest included in the Membership
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Interest. A Transfer of a Member’s beneficial interest in the trust, or failure to retain the Voting
Interest, shall be deemed a Transfer of a Membership Interest.
Section 8.03 Right of First Refusal. If a Member wishes to Transfer any or all of the
Member’s Membership Interest in the Company under a Bona Fide Offer (as defined below), the
Member shall give Notice to all other Members at least 30 days in advance of the proposed sale
or Transfer, indicating the terms of the Bona Fide Offer and the identity of the offeror. The
Company and the other Members shall have the option to purchase the Membership Interest
proposed to be transferred at the price and on the terms provided in this Agreement. If the price
for the Membership Interest is other than cash, the fair value in dollars of the price shall be as
established in good faith by the Company. For purposes of this Agreement, “Bona Fide Offer”
means an offer in writing setting forth all relevant terms and conditions of purchase from an
offeror who is ready, willing, and able to consummate the purchase and who is not an Affiliate of
the selling Member. For 30 days after the Notice is given, the Company shall have the right to
purchase the Membership Interest offered, on the terms stated in the Notice, for the lesser of (a)
the price stated in the Notice (or the price plus the dollar value of noncash consideration, as the
case may be) and (b) the price determined under the appraisal procedures set forth in Section
8.08.
If the Company does not exercise the right to purchase all of the Membership Interest,
then, with respect to the portion of the Membership Interest that the Company does not elect to
purchase, that right shall be given to the other Members for an additional 30-day period,
beginning on the day that the Company’s right to purchase expires. Each of the other Members
shall have the right to purchase, on the same terms, a part of the interest of the offering Member
in the proportion that the Member’s Percentage Interest bears to the total Percentage Interests of
all of the Members who choose to participate in the purchase; provided, however, that the
Company and the participating Members may not, in the aggregate, purchase less than the entire
interest to be sold by the offering Member.
If the Company and the other Members do not exercise their rights to purchase all of the
Membership Interest, the offering Member may, within 90 days from the date the Notice is given
and on the terms and conditions stated in the Notice, sell or exchange that Membership Interest
to the offeror named in the Notice. Unless the requirements of Section 8.02 are met, the offeror
under this Section 8.03 shall become a Transferee, and shall be entitled to receive only the share
of Profits or other compensation and the return of Capital Contribution to which the transferring
Member would have been entitled.
Section 8.04 Triggering Events. On the happening of any of the following events
(“Triggering Events”), the Company and the other Members shall have the option to purchase
the Membership Interest of a Member (the “Selling Member”) at the price and on the terms
provided in Section 8.08 of this Agreement:
(a) The death, incapacity, bankruptcy, or dissociation of a Member, or the
winding up and dissolution of a corporate Member, or the merger or other corporate
reorganization of a corporate Member as a result of which the corporate Member does not
survive as an entity;
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(b) As it relates to Peter Ross Reeb or any other employee of the Company
who becomes a member, the termination of employment for any reason;
(c) The failure of a Member to make the Member’s Capital Contribution under
the provisions of Article 3 of this Agreement.
(d) The occurrence of any other event that is, or that would cause, a Transfer
in contravention of this Agreement.
Each Member agrees to promptly give Notice of a Triggering Event to all other
Members.
Section 8.05 Marital Dissolution or Death of a Spouse. Notwithstanding any other
provisions of this Agreement:
(a) If, in connection with the divorce or dissolution of the marriage of a
Member, any court issues a decree or order that transfers, confirms, or awards a Membership
Interest, or any portion of it, to that Member’s spouse (an “Award”), then, notwithstanding that
the transfer would constitute an unpermitted Transfer under this Agreement, that Member shall
have the right to purchase from his or her former spouse the Membership Interest, or portion of
it, that was so transferred, and the former spouse shall sell the Membership Interest or portion of
it to that Member at the price set forth below in Section 8.08 of this Agreement. If the Member
has failed to consummate the purchase within 180 days after the court Award (the “Expiration
Date”), the Company and the other Members shall have the option to purchase from the former
spouse the Membership Interest or portion of it under Section 8.06 of this Agreement, provided
that the option period shall commence on the later of (1) the day following the Expiration Date,
or (2) the date of actual notice of the Award.
(b) If, by reason of the death of a spouse of a Member, any portion of a
Membership Interest is transferred to a Transferee other than (1) that Member or (2) a trust
created for the benefit of that Member (or for the benefit of that Member and any combination
between or among the Member and the Member’s issue) in which the Member is the sole Trustee
and the Member, as Trustee or individually possesses all of the Voting Interest included in that
Membership Interest, then the Member shall have the right to purchase the Membership Interest
or portion of it from the estate or other successor of his or her deceased spouse or Transferee of
the deceased spouse, and the estate, successor, or Transferee shall sell the Membership Interest
or portion of it at the price set forth in Section 8.08 of this Agreement. If the Member has failed
to consummate the purchase within 180 days after the date of death (the “Expiration Date”), the
Company and the other Members shall have the option to purchase from the estate or other
successor of the deceased spouse the Membership Interest or portion of it under Section 8.06 of
this Agreement, provided that the option period shall commence on the later of (1) the day
following the Expiration Date, or (2) the date of actual notice of the death.
Section 8.06 Option Periods. On the receipt of Notice by the other Members as
contemplated by Sections 8.01, 8.03, and 8.05, and on receipt of actual notice of any Triggering
Event as determined in good faith by the Members (the date of the receipt is hereinafter referred
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to as the “Option Date”), the Company shall have the option, for a period ending 30 calendar
days following the determination of the purchase price as provided in Section 8.08, to purchase
the Membership Interest in the Company to which the option relates, at the price and on the
terms set forth in Section 8.08 of this Agreement, and the other Members, pro rata in accordance
with their prior Membership Interests in the Company, shall then have the option, for a period of
30 days thereafter, to purchase the Membership Interest in the Company not purchased by the
Company, on the same terms and conditions as apply to the Company. If all other Members do
not elect to purchase the entire remaining Membership Interest in the Company, then the
Members electing to purchase shall have the right, pro rata in accordance with their prior
Membership Interests in the Company, to purchase the additional Membership Interest in the
Company available for purchase. The transferee of the Membership Interest in the Company that
is not purchased shall hold the Membership Interest in the Company subject to all of the
provisions of this Agreement.
Section 8.07 Nonparticipation of Interested Member. Neither the Member whose
interest is subject to purchase under this Article, nor that Member’s Affiliate, shall participate in
any vote or discussion of any matter pertaining to the disposition of the Member’s Membership
Interest in the Company under this Agreement.
Section 8.08 Option Purchase Price. The purchase price of the Membership Interest
that is the subject of an option under Section 8.06 shall be the Fair Option Price of the interest as
determined under this Section 8.08. The term “Fair Option Price” means the cash price that a
willing buyer would pay to a willing seller when neither is acting under compulsion and when
both have reasonable knowledge of the relevant facts on the Option Date. Each of the selling
and purchasing parties shall use his, her, or its best efforts to mutually agree on the Fair Option
Price. If the parties are unable to so agree within 30 days of the Option Date, the selling party
shall appoint, within 40 days of the Option Date, one appraiser, and the purchasing party shall
appoint within 40 days of the Option Date, one appraiser. The two appraisers shall within a
period of 5 additional days, agree on and appoint an additional appraiser. The three appraisers
shall, within 60 days after the appointment of the third appraiser, determine the Fair Option Price
of the Membership Interest in writing and submit their report to all the parties.
The Fair Option Price shall be determined by disregarding the appraiser’s valuation that
diverges the most from each of the other two appraisers’ valuations, and the arithmetic mean of
the remaining two appraisers’ valuations shall be the Fair Option Price. Each purchasing party
shall pay for the services of the appraiser selected by it, plus one-half of the fee charged by the
third appraiser, and one-half of all other costs relating to the determination of Fair Option Price.
The Fair Option Price as so determined shall be payable in cash.
Section 8.09 Substituted Member. Except as expressly permitted under Section 8.02, a
prospective transferee (other than an existing Member) of a Membership Interest may be
admitted as a Member with respect to the Membership Interest (Substituted Member) only (a) on
the unanimous Vote of the other Members in favor of the prospective transferee’s admission as a
Member, and (b) on the prospective transferee’s executing a counterpart of this Agreement as a
party to it. Any prospective transferee of a Membership Interest shall be deemed a Transferee,
and, therefore, the owner of only a Transferable Interest until the prospective transferee has been
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admitted as a Substituted Member. Except as otherwise permitted in the Act, any such
Transferee shall be entitled only to receive allocations and distributions under this Agreement
with respect to the Membership Interest and shall have no right to vote or exercise any rights of a
Member until the Transferee has been admitted as a Substituted Member. Until the Transferee
becomes a Substituted Member, the Transferring Member shall continue to be a Member and
have the power to exercise any rights and powers of a Member under this Agreement, including
the right to vote in proportion to the Percentage Interest that the Transferring Member would
have had if the transfer had not been made.
Section 8.10 Duties of Substituted Member. Any person admitted to the Company as a
Substituted Member shall be subject to all the provisions of this Agreement that apply to the
Member from whom the Membership Interest was transferred, except that the transferring
Member shall not be released from liabilities as a Member solely as a result of the transfer, both
with respect to obligations to the Company and to third parties incurred before the transfer.
Section 8.11 Membership Interest Not Registered. The initial sale of Membership
Interests in the Company to the Initial Members has not been qualified or registered under the
securities laws of any state, including California, or registered under the Securities Act of 1933,
in reliance on exemptions from the registration provisions of those laws. Notwithstanding any
other provision of this Agreement, Membership Interests may not be Transferred unless
registered or qualified under applicable state and federal securities laws unless, in the opinion of
legal counsel satisfactory to the Company, qualification or registration is not required. A
Member who desires to transfer a Membership Interest shall be responsible for all legal fees
incurred in connection with that opinion.
ARTICLE 9
Dissolution, Liquidation And Winding Up
Section 9.01 Conditions Upon Which Dissolution Will Occur. The Company shall be
dissolved on the first to occur of the following events:
(a) The written agreement of Members holding a Majority Interest to dissolve
the Company.
(b) The sale or other disposition of substantially all of the Company’s assets.
(c) Entry of a decree of judicial dissolution under Corporations Code §
17707.03.
Section 9.02 Order of Payment and Distribution of Assets. On the dissolution of the
Company, the Company shall engage in no further business other than that necessary to wind up
the business and affairs of the Company. The Members shall wind up the affairs of the
Company. The Members winding up the affairs of the Company shall give Notice of the
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commencement of winding up by mail to all known creditors and claimants against the Company
whose addresses appear in the records of the Company. After paying or adequately providing for
the payment of all known debts of the Company (except debts owing to Members), the remaining
assets of the Company shall be distributed or applied in the following order:
(a) To pay the expenses of liquidation;
(b) To the establishment of reasonable reserves for contingent liabilities or
obligations of the Company. On the determination that reserves are no longer necessary, they
shall be distributed as provided in this Section 9.02;
(c) To repay outstanding loans to Members. If there are insufficient funds to
pay those loans in full, each Member shall be repaid in the ratio that the Member’s loan, together
with accrued and unpaid interest, bears to the total of all loans from Members, including all
accrued and unpaid interest. Repayment shall first be credited to unpaid principal and the
remainder shall be credited to accrued and unpaid interest; and
(d) Among the Members with Positive Capital Account Balances as provided
in Section 4.15.
Section 9.03 Return of Members’ Investment Not Guaranteed. Each Member shall
look solely to the assets of the Company for the return of the Member’s investment, and if
Company property remaining after the payment or discharge of the Company’s debts and
liabilities is insufficient to return the investment of each Member, the Member shall have no
recourse against any other Members for indemnification, contribution, or reimbursement, except
as specifically provided in this Agreement.
Section 9.04 Certificates To Be Filed. Upon the dissolution of the Company, the
Members will file a Certificate of Dissolution with the Secretary of State. After the winding up
of the Company’s affairs has been completed, the Members will file a Certificate of Cancellation
of the Articles of Organization with the Secretary of State.
ARTICLE 10
Confidentiality
Section 10.01 Confidential Information. “Confidential Information” means all trade
secrets, “know-how,” customer lists, pricing policies, operational methods, programs, and other
business information of the Company created, developed, produced, or otherwise arising before
the date of the Transfer. The foregoing notwithstanding, the term “Confidential Information”
shall not include materials that were created by Peter Reeb prior to formation of the Company.
Each Member covenants with the Company and each other Member that on the Transfer of the
Member’s Membership Interest, whether voluntary, involuntary, by operation of law, or by
reason of any provision of this Agreement, the Member shall not use or disclose in any manner
any Confidential Information.
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Section 10.02 Equitable Relief. Each Member stipulates that a breach of the provisions
of this Article 10 shall result in irreparable damage and injury to the Company for which no
money damages could adequately compensate it. If the Member breaches the provisions of this
Agreement, in addition to all other remedies to which the Company may be entitled, and
notwithstanding the provisions of Article 11, the Company shall be entitled to an injunction to
enforce the provisions of this Agreement, to be issued by any court of competent jurisdiction, to
enjoin and restrain the Member and each and every Person concerned or acting in concert with
the Member from the continuance of that breach. Each Member expressly waives any claim or
defense that an adequate remedy at law might exist for any such breach.
Section 10.03 Reformation. If any provision in this Article 10 is deemed to exceed the
time or geographic limits or any other limitation imposed by applicable law in any jurisdiction,
that provision shall be deemed reformed in that jurisdiction to the maximum extent permitted by
applicable law.
ARTICLE 11
Indemnification
Section 11.01 Indemnification of Agents by the Company. The Company shall have the
power to indemnify any Person who was or is a party, or who is threatened to be made a party, to
any Proceeding by reason of the fact that the Person was or is a Member, officer, employee, or
other agent of the Company, or was or is serving at the request of the Company as a director,
officer, employee, or other Agent of another limited liability company, corporation, partnership,
joint venture, trust, or other enterprise, against expenses, judgments, fines, settlements, and other
amounts actually and reasonably incurred by that Person in connection with the proceeding, if
that Person acted in good faith and in a manner that the Person reasonably believed to be in the
best interests of the Company, and, in the case of a criminal proceeding, the Person had no
reasonable cause to believe that the Person’s conduct was unlawful. The termination of any
proceeding by judgment, order, settlement, conviction, or on a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the Person did not act in good faith and
in a manner that the Person reasonably believed to be in the best interests of the Company, or
that the Person had reasonable cause to believe that the Person’s conduct was unlawful.
To the extent that an agent of the Company has been successful on the merits in defense
of any Proceeding, or in defense of any claim, issue, or matter in any Proceeding, the agent shall
be indemnified against expenses actually and reasonably incurred in connection with the
Proceeding. In all other cases, indemnification shall be provided by the Company only if
authorized in the specific case by the affirmative Vote of Members holding a Majority Interest.
“Agent”, as used in this Section 11.01, shall include a trustee or other fiduciary of a plan,
trust, or other entity or arrangement described in Corporations Code § 207(f).
“Proceeding”, as used in this Section 11.01, means any threatened, pending, or completed
action or proceeding, whether civil, criminal, administrative, or investigative.
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Expenses of each Person indemnified under this Agreement actually and reasonably
incurred in connection with the defense or settlement of a proceeding may be paid by the
Company in advance of the final disposition of the proceeding, as authorized by the Members
who are not seeking indemnification or, if there are none, by the affirmative Vote of Members
holding a Majority Interest, on receipt of an undertaking by that Person to repay that amount
unless it shall ultimately be determined that the Person is entitled to be indemnified by the
Company. “Expenses,” as used in this Section 11.01, includes, without limitation, attorney fees
and expenses of establishing a right to indemnification, if any, under this Section 11.01.
ARTICLE 12
Attorney-In-Fact and Agent
Section 12.01 Attorney-In-Fact and Agent. Each Member, by execution of this
Agreement, irrevocably constitutes and appoints each other Member and any of them acting
alone as the Member’s true and lawful attorney-in-fact and agent, with full power and authority
in the Member’s name, place, and stead to execute, acknowledge, and deliver, and to file or
record in any appropriate public office: (a) any certificate or other instrument that may be
necessary, desirable, or appropriate to qualify the Company as a limited liability company or to
transact business as one in any jurisdiction in which the Company conducts business; (b) any
certificate or amendment to the Company’s articles of organization or to any certificate or other
instrument that may be necessary, desirable, or appropriate to reflect an amendment approved by
the Members in accordance with the provisions of this Agreement; (c) any certificates or
instruments that may be necessary, desirable, or appropriate to reflect the dissolution and
winding up of the Company; and (d) any certificates necessary to comply with the provisions of
this Agreement. This power of attorney shall be deemed to be coupled with an interest and shall
survive the Transfer of the Member’s Transferable Interest. Notwithstanding the existence of
this power of attorney, each Member agrees to join in the execution, acknowledgment, and
delivery of the instruments referred to above if requested to do so by a manager. This power of
attorney is a limited power of attorney and does not authorize any manager to act on behalf of a
Member except as described in this Article 12.
ARTICLE 13
Miscellaneous Provisions
Section 13.01 Assurances. Each Member will execute all documents and certificates and
perform all acts deemed appropriate by the Members and the Company or required by this
Agreement or the Act in connection with the formation and operation of the Company and the
acquisition, holding, or operation of any property by the Company.
Section 13.02 Complete Agreement. This Agreement and the Articles constitute the
complete and exclusive statement of the agreement among the Members with respect to the
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matters discussed herein and therein and they supersede all prior written or oral statements
among the Members, including any prior statement, warranty, or representation.
Section 13.03 Section Headings. The section headings which appear throughout this
Agreement are provided for convenience only and are not intended to define or limit the scope of
this Agreement or the intent or subject matter of its provisions.
Section 13.04 Binding Effect. Subject to the provisions of this Agreement relating to the
transferability of Membership Interests, this Agreement is binding upon and will inure to the
benefit of the parties hereto and their respective heirs, administrators, executors, successors, and
assigns.
Section 13.05 Interpretation. All pronouns and common nouns will be deemed to refer
to the masculine, feminine, neuter, singular, and plural, as the context may require. In the event
that any claim is made by any Member relating to the drafting and interpretation of this
Agreement, no presumption, inference, or burden of proof or persuasion will be created or
implied solely by virtue of the fact that this Agreement was drafted by or at the behest of a
particular Member or his or her counsel.
Section 13.06 Company Counsel. Company counsel may also be counsel to any
Member, or Affiliate of a Member, if a majority of the Members who are not individually
represented by such counsel agree. The Members may execute on behalf of the Members and
the Company any written consents to such representation as may be required by the California
Rules of Professional Conduct or the rules governing professional conduct in other jurisdictions.
Burkhalter Kessler Clement & George LLP (“BKCG”) has been initially selected to serve as
Company counsel. The Members acknowledge and agree that BKCG owes them no direct duties
and that Company counsel’s duties will be owed to the Company and to any Member or Affiliate
of a Member which BKCG represents individually.
Section 13.07 Applicable Law. Each Member agrees that all disputes arising under or in
connection with this Agreement and any transactions contemplated by this Agreement will be
governed by the internal law, and not the law of conflicts, of the State of California.
Section 13.08 Jurisdiction and Venue. Each Member agrees to submit to the exclusive
jurisdiction of the federal and state courts located in the County of Orange, State of California in
any action arising out of a dispute under or in connection with this Agreement or any transaction
contemplated by this Agreement. Each Member further agrees that personal jurisdiction may be
effected upon him or her by service of process by registered or certified mail addressed as
provided in Exhibit A attached hereto, and that when service is so made, it will be as if personal
service was effected within the State of California.
Section 13.09 Ownership of Name, Logos and Trade Dress. The Company and its
Members acknowledge and agree that Park Place Partners, Inc. (“PPP”) is the creator of the
name “Clarity Real Estate Advisors” along with all related logos and trade dress (Collectively,
the “Clarity Brand”) which PPP has licensed on a royalty free basis to the Company for its
exclusive use. Said License is not transferrable and it may not be sublicensed. In any event of a
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sale of the Company or substantially all of its assets, the license granted to Company shall
terminate and all rights of use and ownership of the Clarity Brand shall revert back to PPP.
Section 13.10 Remedies Cumulative. The remedies described in this Agreement are
cumulative and will not eliminate any other remedy to which a Person may be lawfully entitled.
Section 13.11 Notices. Any notice or other writing to be served upon the Company or
any Member thereof in connection with this Agreement must be in writing and will be deemed
completed when delivered to the address specified in Exhibit A, if to a Member, and to the
resident agent, if to the Company. Any Member will have the right to change the address at
which notices will be served upon Ten (10) days’ written notice to the Company and the other
Members.
Section 13.12 Amendments. Any amendments, modifications, or alterations to this
Agreement or the Articles must be in writing and signed by all of the Members.
Section 13.13 Severability. Each provision of this Agreement is severable from the other
provisions. If, for any reason, any provision of this Agreement is declared invalid or contrary to
existing law, the inoperability of that provision will have no effect on the remaining provisions
of the Agreement which will continue in full force and effect.
Section 13.14 Counterparts. This Agreement may be executed in counterparts, each of
which will be deemed an original and all of which will, when taken together, constitute a single
document.
Section 13.15 Spousal Consent. Within Ten (10) days of becoming a Member of the
Company or Ten (10) days after an individual marries, such Member must have his or her spouse
execute a consent in the same or similar form as the one attached to this Agreement as Exhibit B.
Section 13.16 Attorneys’ Fees. In the event that any dispute between the Company and
the Members or the Managers, or among the Members, should result in litigation or arbitration,
the prevailing party in such dispute shall be entitled to recover from the other party all reasonable
fees, costs and expenses of enforcing any right of the prevailing party, including without
limitation, reasonable attorneys' fees and expenses, all of which shall be deemed to have accrued
upon the commencement of such action and shall be paid whether or not such action is
prosecuted to judgment. Any judgment or order entered in such action shall contain a specific
provision providing for the recovery of attorney fees and costs incurred in enforcing such
judgment and an award of prejudgment interest from the date of the breach at the maximum rate
allowed by law. For the purposes of this Section: (a) attorney fees shall include, without
limitation, fees incurred in the following: (1) postjudgment motions; (2) contempt proceedings;
(3) garnishment, levy, and debtor and third party examinations; (4) discovery; and (5)
bankruptcy litigation and (b) “prevailing party” shall mean the party who is determined in the
proceeding to have prevailed or who prevails by dismissal, default or otherwise.
Section 13.17 Pre-Litigation Mediation. In the event of any dispute, claim or
controversy arising out of or relating to this Agreement, before filing a lawsuit, the Members
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agree to first submit the dispute to non-binding mediation with JAMS at its Orange County,
California office before a mutually acceptable mediator (or a mediator picked at random from
JAMS’ list of qualified mediators if the Members cannot agree on a mediator), with each
Member bearing a share of the mediator’s fees corresponding to that Member’s Percentage
Interest. Any Member may commence mediation by providing to JAMS and the other Members
a written request for mediation, setting forth the subject of the dispute and the relief requested. If
a Member submits a written request to mediate a dispute to the other Members and the other
Members fails to respond in good faith and to take reasonable steps to initiate mediation within
thirty (30) days of receipt of such notice, the Member requesting the mediation will then be free
to file a lawsuit and there will be no waiver of any entitlement to attorneys’ fees under the
preceding sentence. All offers, promises, conduct and statements, whether oral or written, made
in the course of the mediation by any of the Members, their agents, employees, experts and
attorneys, and by the mediator or any JAMS employees, are confidential, privileged and
inadmissible for any purpose, including impeachment, in any arbitration or other legal
proceeding involving the Members, provided that evidence that is otherwise admissible or
discoverable shall not be rendered inadmissible or non-discoverable as a result of its use in the
mediation.
Except as expressly set forth below, if any Member files a lawsuit without complying
with the foregoing requirement, that Member will waive its right to any attorneys’ fees to which
such Member may be entitled to in such lawsuit under this Agreement. Notwithstanding the
foregoing, the Members will be entitled to file a lawsuit at any time to obtain equitable relief,
such as by temporary restraining order or injunction, in state or Federal court to prevent any
violation of any of the applicable covenants, conditions or provisions contained in this
Agreement.
IN WITNESS WHEREOF, the Members have executed or caused to be executed this
Agreement, effective as of the date set forth at the commencement of the document.
MEMBERS:
Park Place Partners, Inc., a California
corporation
By: ____________________________
Jeffrey Spindler
Its: Chief Executive Officer
Peter Ross Reeb, an individual
_____________________________
Peter Ross Reeb
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EXHIBIT A
MEMBERS OF CLARITY REAL ESTATE ADVISORS, LLC,
AS OF AUGUST 1, 2020
Name: Park Place Partners, Inc., a California
corporation
Address: 100 Spectrum Center Drive, Suite 1400
Irvine, California 92618
Taxpayer ID: ON FILE
Capital Contribution: $7,500.00
Percentage Interest: 50%
Membership Units Held 500
Name: Peter Ross Reeb
Address: 10457 Harvest View Way
San Diego, California 92128
Taxpayer ID: ON FILE
Capital Contribution: $7,500.00
Percentage Interest: 50%
Membership Units Held 500
.
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EXHIBIT B
SPOUSAL CONSENT
I, Alexa Allerton Reeb, the spouse of Peter Ross Reeb, acknowledge that I have
read the foregoing Operating Agreement dated as of August 1, 2020 (hereinafter referred to as
the “Agreement”), by and among the Members of Clarity Real Estate Advisors, LLC, a
California limited liability company (hereinafter referred to as the “Company”), and that I know
its contents. I am aware that by the provisions of the Agreement, the Company and the Members
may buy all of the Membership Interests (as defined in the Agreement) which my spouse owns,
including any interest I might have in the Membership Interests, and I am aware that certain
other restrictions are imposed on the sale or other disposition of the Membership Interests.
I hereby agree to be bound by the Agreement and acknowledge and agree that my
interest, if any, in the Membership Interests is subject to the Agreement and will be irrevocably
bound by the Agreement, and I further understand and agree that any community property
interest I may have in the Membership Interests will be similarly bound by the Agreement.
I am aware that the legal, financial and related matters contained in the
Agreement are complex, and that I am free to seek independent guidance or counsel with respect
to this Spousal Consent. I have either sought such guidance or counsel or determined after
reviewing the Agreement carefully that I waive such right.
Dated: August 1, 2020 ____________________________________
Alexa Allerton Reeb
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