782 Approve Mod. to Final Assessment RollCITY OF YELM
ORDINANCE NO. 782
AN ORDINANCE of the City of Yelm, Washington, approving a modification to the final
assessment roll for Local Improvement District No. 1.
WHEREAS, the final assessment roll for Local Improvement District No. 1 ("LID No. 1")
in the City of Yelm, Washington (the "City") was confirmed by Ordinance No. 674 on
September 24, 1999; and
WHEREAS, one or more property owners within LID No. 1 have applied for a transfer of
certain assessments within LID No. 1, as shown in the executed Agreement delivered to
the City, a copy of which is attached hereto as Exhibit I; and
WHEREAS, based on the representations and information set forth in said Agreement,
the City Council agrees that the proposed transfer of assessments should be approved;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF YELM, WASHINGTON,
DO ORDAIN AS FOLLOWS:
Section 1. The Agreement, attached hereto, as Exhibit I is hereby approved. The City
Council hereby finds that the value of each of the parcels as shown on
Exhibit B in the Agreement is at least equal to the assessment proposed to
be levied thereon. The transfer of the assessments as shown on Exhibit B
to the Agreement is hereby approved.
Section 2. This Ordinance shall be in full force and effect five days after its passage
and publication as provided by law.
PASSED by the Council of the City of Yelm, Washington at its regular meeting on the
9th day~of July, 2003.
CITY Y , W HINGTON
Ad Rivas, Mayor
Attest:
Agn P. Bennick, City Clerk
Approved as to Form:
Bond Counsel, Preston Gates & Ellis LLP
PASSED AND APPROVED: July 9, 2003
PUBLISHED: July 18, 2003
CITY OF YELM
ORDINANCE NO. 782
AN ORDINANCE of the City of Yelm, Washington, approving a modification to the final
assessment roll for Local Improvement District No. 1.
WHEREAS, the final assessment roll for Local Improvement District No. 1 ("LID No. 1")
in the City of Yelm, Washington (the "City") was confirmed by Ordinance No. 674 on
September 24, 1999; and
WHEREAS, one or more property owners within LID No. 1 have applied for a transfer of
certain assessments within LID No. 1, as shown in the executed Agreement delivered to
the City, a copy of which is attached hereto as Exhibit I; and
WHEREAS, based on the representations and information set forth in said Agreement,
the City Council agrees that the proposed transfer of assessments should be approved;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF YELM, WASHINGTON,
DO ORDAIN AS FOLLOWS:
Section 1. The Agreement, attached hereto, as Exhibit I is hereby approved. The City
Council hereby finds that the value of each of the parcels as shown on
Exhibit B in the Agreement is at least equal to the assessment proposed to
be levied thereon. The transfer of the assessments as shown on Exhibit B
to the Agreement is hereby approved.
Section 2. This Ordinance shall be in full force and effect five days after its passage
and publication as provided by law.
PASSED by t e Council of the City of Yelm, Washington at its regular meeting on the
9th day~f JuIJ~, 2003.
CITY ®Ff YE1~MI;"WA$HINGTON
AdarrJl' Rival, Mayor
Attest:
^/;
(~ C
Ag s P. Bennick, City Clerk
Approved as to Form:
Bond Counsel, Preston Gates & Ellis LLP
PASSED AND APPROVED:
PUBLISHED:
Exhibit I -Ordinance No. 782
City of Yelm
Local Improvement District No. 1
Agreement with Respect to Certain Assessments
1. The City of Yelm confirmed the final assessment roll for Local Improvement
District No. 1 "LID NO. 1" by Ordinance No. 674 on September 29, 1999.
2. Bev Malan, hereinafter referenced as the "Original Owner", represents and
warrants that they are the sole, lawful owner of the following-described property
located in Thurston County, Washington, hereinafter referred to as the "Original
Assessment Parcel":
The West 99.18 feet of the South Half of the Northeast Quarter of the
Southeast Quarter of the Southwest Quarter of Section 13, Township 17
North, Range 1 East, W.M.
At present, there is a principal amount of twenty thousand, four hundred nineteen
dollars and twenty seven cents ($20,419.27) remaining with respect to this
Original Assessment Parcel. Attached hereto as Exhibit A is a copy of a title
report confirming ownership of the Original Assessment Parcel in the Original
Owner as of April 1, 2003.
3. The undersigned, on behalf of the City Clerk-Treasurer, hereby confirms that the
current assessment roll for LID No. 1 identifies the Original Owner as the owner
of the Original Assessment Parcel as of April 1, 2003.
4. The Original Owner and Hollamer Investments LLC and MWSH Yelm LLC,
hereinafter referred to as the "New Owners", hereby agree that a portion of that
assessment referenced hereinabove shall be transferred and relevied on the
New Owners in the manner described in Exhibit B.
Page 1 of 4
5. Attached hereto as Exhibit C is a copy of a commitment for title insurance
showing ownership of the New Owners Parcel in the New Owner. Attached
hereto as Exhibit D is written evidence of the authority of Lawrence E. Tokarski to
sign as manager, for and on behalf of MWSH Yelm LLC and written evidence of
the authority of Mike Edwards to sign as manager, for and on behalf of Hollamer
Investments LCC.
6. The Community Development Director has reviewed this Agreement and its
Exhibits, and confirms that the parcels as described therein are not land-locked
nor do they contain any wetlands situated and states that he has reviewed the
appraisal information provided by the New Owners.
7. The City Clerk-Treasurer has reviewed this Agreement and its Exhibits, including
specifically the new allocation of the subject assessments, and confirms that the
values of the parcels encumbered are at least equal to the unpaid principal
balances of the assessments so allocated.
The Original Owner and the New Owners hereby agree that immediately upon
adoption of an Ordinance by the City Council of Yelm approving this Agreement,
the assessments for LID No. 1 shall be as shown on Exhibit B. Said parties
hereby warrant that all previously billed assessment installments levied upon the
Original Assessment Parcel have been satisfied and the account is paid current,
including principal, interest and penalties. This Agreement shall be effective and
binding upon each of the said parties upon their respective signing of this
Agreement.
//
Page 2 of 4
ORIGINAL OWNER:
Bev Malan Date
NEW OWNERS:
~G~i~UN'~ru'c. G.
Lawrence E. Tokarski Date
MWSH Yelm LLC
Mike Edwardsv Date
Hollamer Investments LLC
CITY CLERK-TREASURER:
i
. Bennick, City Clerk Date
CITY ADMINISTRATOR:
i
i ~~
Ily A. Ba ger, City A mi istrator Date
Page 3 of 4
STATE OF WASHINGTON
COUNTY OF
ss.
On this ,day of , 2003, before me
personally appeared Bev Malan, that executed the within and foregoing instrument, and
acknowledged the said instrument to be the free and voluntary act and deed of said
person/company, for the uses and purposes therein mentioned, and on oath stated that
he/she was authorized to execute said instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Official
Seal the day and year first above written.
Notary Public in and for the State of
Washington, residing at
STATE OF WASHINGTON
My commission expires
ss.
COUNTY OF~~uv`S~~-z ;~ )
~. _
On this ~~r ,day of ~ L ~~ , 2003, before me
personally appeared Mike Edwards, that ecuted the within and foregoing instrument,
and acknowledged the said instrument to be the free and voluntary act and deed of said
person/company, for the uses and purposes therein mentioned, and on oath stated that
he/she was authorized to execute said instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Official
Seal the day and year first above written.
,~
,,, r-
R..~AERR~ ~~~' Notary P lic in and for he State of Oregon,
.'~~.' ~,S~oNF-to•.,~~~t~ residing at ~ ~ '- " L C<~ My commission
~~r.,OTARY ~'m ; ~~ ~ ~ ., ~--
~ ,_,_ ~, i ,, expires f,~
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Page 4 of 4
STATE OF OREGON )
ss.
COUNTY OF -~~ )
On this 7 ay of , 2003, before me
personally appeared Lawrence E. a ki, that executed the within and foregoing
instrument, and acknowledged the said instrument to be the free and voluntary act and
deed of said person/company, for the uses and purposes therein mentioned, and on
oath stated that he/she was authorized to execute said instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Official
Seal the day and year first above written.
OFFICIAL SEAL Notary Public i and for the State of Oregon,
DAWN M HUTSON
NOTARY PUBLIC -OREGON residing a My commission
`~ COMMISSION NO. 366569
MY COMMISSION EXPIRES APR. 6, 2007 expires y
Page 5 of 1
EXHIBIT A
Title Report Relative to the Original Owner's Original Assessment Parcel.
i ~1~'~t °03 t i4k1~~
Thurston County 7lessueer
Real EstataExci~eTaxpn(~
Br ~ ~1 ~ 1~YM~
~r i
After recording return to:
Mike Malan and Bev Malan
14ao~ v„i...._u~„~,.,-,., cc }~a ~Qt77L ?N7
Yelm, WA 98597-9480
Legal Description (abbreviated): Parcel A of Boundary Line Adjustment BLA 0249
Additional Legal on page:
Assessor's Tax Parcel ID#: 21713340106 and
Reference:
QUIT CLAIM DEED
THE GRANTOR(S),Frederick L. Kolilis, II ,for and in consideration of to create separate property
conveys and quit claims to Bev Malan, a married woman, as her separate estate the following
described real estate, situated in the County of Thurston, State of Washington, together with all
after acquired title of the Grantor(s) therein:
Dated: March 25, 2003
See Exhibit A attached hereto.
r Lc ;~ '~-/ fvG~~
F ederick L. Kolilis, II
State of Washington
SS:
County of '/~ n 1t
On this Z~~ day of ~V 1 ~~I ~~/~ ~I/~~ ,before me personally
appeared Frederick L. Kolilis, II to me known to be the individual(s) described in and
who executed the within and foregoing instrument, and acknowledged that he signed
the same as his free and voluntary act and deed for the uses and purposes therein
mentioned.
under, my an ~aj~y~ official seal-tliie day and year last above written.
Notary Public in nd d[~the S td of . ~V1.~~° ~-~~
Residing at .
My Appointment x-ir s: .
~```~~,,~,.rRl ~ r~~I`1
s : ~; N07:iF1 ~f~~ : i
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Quit Claim Deed
WA.10.31.00
Trnnsnation Title Insurance Company
Las-iz (x/97)
I IIIIII VIII IIIIII VIII IIIIII III (IIIIII III VIII (III (III P ge722ot 2
EXHIBIT B
Legal Description of Properties subject to assessment and the Dollar Amount of
Assessments Allocable Thereto.
1. The Original Assessment Parcel owned by the Original Owner, being identified at
the time of the LID Assessment as tax parcel 21713340106 shall retain no
Equivalent Residential Units ("ERUs") and shall remain liable for and subject to
no principal amount ($0.00).
2. Fourteen (14) ERUs and the remaining principle balance of twenty thousand, four
hundred nineteen dollars and twenty seven cents ($20,419.27) of the base
assessment shall be transferred and relevied against following described New
Owner's real property (tax parcel number 21724120404) hereinafter referenced
as the "New Owner's Parcel":
Parcel B of Boundary Line Adjustment No BLA-008257 YL,
as recorded October 10, 2000, under recording No.
3317913,- records of Thurston County Auditor; Situate in the
City of Yelm, County of Thurston, State of Washington.
3. Attached hereto as "Exhibit B -Attachment One" is evidence that the New
Owner's Parcel has a market value of not less than the twenty thousand, four
hundred nineteen dollars and twenty seven cents ($20,419.27) assessment
principle balance being transferred thereto under this Agreement.
EXHIBIT B- ATTACHMENT ONE
Evidence of Appraisal of Value of the New Owner's Parcel.
03/19/03 12:11 F.j1X 380 493 2238
Thurston County Property Inquiry SPL
TRANSNATION TITLE
C~j 005
Page l of 1
Valu
Prapert
mx ue+
Use these buttons to display different information for this property
' New Search Basic Infio ~ Values Structures
Permits "Sales "Feedback "Map Into
Value Information
Tax Yeaw 2003 2002 2001 2000 1999 1,998
Assessment
Year 2002 2001 ,. 2000 1999 1995 1997
Market Value
6ulldings
Market Value Land $76,550 $76,550 $49,800 $74,100 $74,100 $74,100
Market Value Total $76,550 $76,550 $49,800 $74,100 $74,100 $74,100
Please Hate: Current year taxes are calculated on tha prior assessment year market value, less
adjustments for approved exemptions
Exemption Information
active exemptions: Nane
Office of the Assessor
Patricia Gostei~, Assessor
2000 Lakeridge Drive SW -Olympia, WA 98502
Customer Service (360)86-5410 -- Fax (360)i54-2958 -- TPD (360)754-2933
hops://fortress.wa.gov/tlaurstonco/propinfo/propsgl/value.asp?fe=PS&pn~21724120404 03/19/2003
EXHIBIT C
Title Report Relative to the New Owners Parcel.
o0i12/2003 20:51 FAY 360 459 3193 TRANSNATION TITLE 0]002
~ ~ru~'03 ~~~4~~
~~~0 39~iS
After recording, return to
(File No. 52530073)
Theresa M. Wade
P.O. Box 749
Salem OR 973b8-0749
~~~~~ ~~~a .s~
gr
~'1
STATUTORY WARRANTY DLED (Special)
Grantor(s): Hollamer Investments, L.L.C.,
a Washington limited liability company
Grantee(s): MWSH Yelm LLC,
a Washington limited liability company
Abbreviated Legal: Parcel B of boundary line adjustment No. BLA-008257YL
as recorded October 10, 2000, under Thurston County
Auditor's File Nv_ 3317913
Additional Legal(s) on page: Page 2
Assessor's Tax Parcel Number(s): 21724120404
THE GRANTORS, Hollamer Investments, L_L_C., a Washington limited liability
corrapany, for and izl consideration of the sum of $225,000.00, conveys and wants to
MWSH Yelm LLC, a Washington limited liability company, Grantor's undivided 47.8723%
interest in the following descn~bed real property, situated in the County of Thurston, State of
Washington:
That real property commonly knov-m as Tax Parcel No. 21724120404 consisting of
2.7 acres, more or less, as depicted in Exhibit I attached hereto, located in the City of Yelm,
County of Thurston, State of Washington, and legally described as follows:
Parcel B of boundary line adjustment No. BLA-008257YL as recorded
October 10, 2000, under Thurston County Auditor's k'ile No. 3317913.
SUBJECT TO:
All restrictions. covenants, liens and encumbrances of record.
Page 1-STATUTORY WARRANTY DEED (Special) n:\.vpdoc~\5253Q073\waR decd-hollamcr.dnc~ia~
3540010
IIIIIIIII 0fi 09'/Y~03 04?OBa
IIIIIIII III
IIIII 111111 IIII Iilll 111111 I
111111
TRANSNRTI~N TITLE INSUR 0 520.00 Thurston Co. Wa.
06/12/2003 20:52 FAX 360 459 3193 TRANSNATION TITLE
DATED this ~~ day of _„ , 2003.
IioDamer Investments, L.L.C., a Washington
limited liability company
By: ~
IVI_ D_ Edwards, Manager
STATE OF WASHINGTON ~ )
5S.
COUnty Of Thurston )
I certify that I know or have satisfactory evidence that M. D. Edwards is the person
acknowledged that he signed this instrument on oath stated that he was authorized to execute
the instr<unent and acknowledged it as the Manager of Hollamer Investments, L.L.C., a
Washington limited liability company, to be the free and voluntary act of such party for the
uses and purposes mentioned in the instalment.
ra®~-~,;a~ ~~uBLZc
State of tNr-~shington
JENP,*I~ER c. GFiRisrE~s~M
CommissJon Expires 7AAACH 10, 2005
Residing at
~i'rz Gt.
My appointment expires
3Ji o~oS
Paae 2 -STATUTORY WARRANTY DEED (Svecial) n:\wDdoCS~5Z530Q73~warr deed-hnllamer rlnNla~
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II III IIIII IIIIII IIII II~II IIIIIIIIIIII III IIII~ VIII (III 06 000003 04?Oea
I
TRANSNATION TITLE IN5UR D 520.00 Thurston Co. Wa
Title
EXHIBIT D
Evidence of Authority of Lawrence E. Tokarski to sign on behalf of MWSH Yelm LLC
and evidence of authority of Mike Edwards to sign on behalf of Hollamer Investments.
OPERATING- AGREEMENT
of
NIVVSH YELM LLC
Prepared by George M. Jennings
and Vada A. Salinas
Garrett, Hemann, Robertson,
Jennings, Comstock & Trethewy, P.C.
1011 Commercial Street N.E.
P.O. Box 749
Salem OR 97308
OPERATING AGREEMENT
OF
MWSH Yelm LLC,
a Washington limited liability company
The undersigned Members, desiring to form a limited liability company under Washington
Limited Liability Company Act, hereby agree as follows:
ARTICLE 1
FORMATION
1.1 Name. The name of the limited liability company (the "LLC") is MWSH YELM
LLC.
1.2 Certificate of Formation. A Certificate of Formation was filed with the Washington
Secretary of State on March 3, 2003.
1.3 Effective Date. The effective date of adoption of the Operating Agreement
("Agreement") of MWSH Yelm LLC is March 3, 2003.
1.4 Federal Employee Identification Number. The federal employee identification
number (EII~ assigned to the LLC is 86-1053016.
1.5 Duration. The LLC shall continue until terminated as provided in this Agreement or
under Washington law.
1.6 Principal Place of Business. The principal office of the LLC shall initially be
located at 245 Commercial Street S.E., Suite 200, Salem, Oregon 97301. The Members may
relocate the principal office or establish additional offices from time to time.
1.7 Registered Office and Registered A ent. The LLC's initial registered office shall be
at 1501 Eldridge Avenue, Bellingham, Washington 98225, and the name of its initial registered
agent at such address shall be David B. Anderson.
1.8 Management of LLC. The LLC shall be managed by a Manager or Managers.
1.9 Purnoses and Powers. The LLC intends to acouire real property for and develop and
construct an assisted living and congregate care facility located in Yelm, Washington, and further
described on the attached Exhibit 1.9. This general undertaking of the LLC will be referred to in
this Agreement as "the Project". This LLC shall be a single-asset entity; provided, however, that
the LLC may have more than one asset and may engage in any lawful business permitted under
Washington law or the laws of any jurisdiction in which the LLC may do business if to do so does
not constitute a breach of any contractual, trust deed, note, mortgage, or other obligation of the
LLC.
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1.10 Title to Property. All LLC property shall be owned by the LLC as an entity, and no
Member shall have any ownership interest in such property in the Member's individual name or
right, and any Member's interest in the LLC shall be personal property for all purposes. Except as
otherwise provided in this Agreement, the LLC shall hold all LLC property in the name of the LLC
and not in the name or names of any Member or Members. Except as otherwise provided in this
Agreement, the LLC shall hold all LLC property in the name of the LLC and not in the name or
names of any Member or Members.
ARTICLE 2
MEMBER CONTRIBUTIONS AND INTERESTS
2.1 Initial Contribution. Each of the Members agree to make the following
contributions, receive the following Ownership Units, and have the following initial capital
accounts:
Member Name Contribution Ownership % Capital
Units Account
.Lawrence E. Tokarski A bundle of contract
Revocable Living Trust rights, development 4,950 49.x% $4,950
dated June 11, 1996 concepts and reputation.
Kelley D. Hamilton A bundle of contract
and Janet Tovar- rights, development 4,950 49.5% $4,950
Hamilton Trust dated concepts and reputation.
November 29, 2002
Mountain West Senior A bundle of contract 100 1.0% $ 100
Housing LLC rights, development
("MWSH") concepts and reputation.
TOTAL 10,000 100% $10,000
2.2 Certificates of Ownership Units. Each Member shall receive a Certificate of
Ownership indicating the Ownership Units owned by each Member.
2.3 Other Business of Members. Any Member may engage independently or with
others in other business and investment ventures of every nature and description and shall have
no obligation to account to the LLC for such business or investments or for business or
investment opportunities.
2.4 Additional Contributions. In addition to the capital contributions listed above,
additional capital contributions shall be accepted from existing Members only if all the Members
unanimously approve and set the maximum total amount of the additional capital contributions.
If the Members do so, the Members shall make additional capital contributions on a pro-rata
basis in proportion to their Ownership Units.
2.~ No Interest on Capital Contributions. No interest shall be paid on capital
contributions; however, preferred members may receive preferred distributions.
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2.6 Capital Accounts. The LLC shall establish and maintain capital accounts with
respect to each Member in accordance with the rules found in Treas. Reg. Section 1.704-1(b).
ARTICLE 3
MEMBER MEETINGS
3.1 Annual Meetins?. An annual meeting of the Members may be held at a time, date
and place specified by the Manager(s) and communicated by notice to the Members. At such
annual meeting, the Members shall transact all business, which is properly brought before the
meeting.
3.2 Special Meetin;?s. A special meeting of Members shall be held if the Manager(s)
requests such meeting by providing notice of the time, date, place and purpose of the meeting to
the Members. A special meeting of Members shall be held if any member request such meeting
by signing, dating and delivering to the LLC's registered office a written demand for the
meeting, which describes the purpose or purposes for which such meeting is to be held. All
special meetings shall be held at a time, date and place designated by the Manager(s) specified in
the notice of this special meeting prepared by the Manager(s). In the event of a Member
requested special meeting, the Manager(s) shall set the date of such meeting not more than 30
days after receiving notice of the Member's request.
3.3 Notice of Meeting. Notice of the time, date and place of each Member meeting
shall be mailed to each Member not earlier than 60 days nor less than 10 days before the meeting
date. The notice must include a description of the time, date, place and purpose for which the
meeting is called.
3.4 Record Date. The persons entitled to notice of and to vote at a Member meeting
and their respective ownership interests shall be determined on the date on which the notice of
the meeting was first mailed or otherwise delivered to Members (the record date).
3.5 uorum. The presence, in person or by proxy, of Members holding at least 50%
of the Ownership Units shall constitute a quorum.
3.6 Proxies. A Member may be represented at a meeting by a person or entity
holding such Member's written proxy.
3.7 Votin . On each matter requiring action by the Members, each Member shall be
entitled to one vote for each Ownership Unit. Whenever the phrase "Majority of the Members"
or "Majority of the Ownership Units" is used in relation to voting, it means the decision voted on
requires the affirmative vote of more than ~0% of the Ownership Units. Unless otherwise
provided in this Agreement, all matters requiring action by the Members shall be approved by
vote of a Majority of the Ownership Units.
3.8 Meeting of all Members. Notwithstanding any other provision of this Operating
Agreement, if all of the Members hold a meeting at any time and place, such meeting shall be
valid without call or notice; and any lawful action taken at such meeting shall be the action of the
Members.
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3.9 Action Without Meeting. Any action required or permitted to be taken by the
Members at a meeting may be taken without a meeting if a consent in writing, describing the
action taken, is signed by all of the Members and is included in the minutes or filed with the
LLC's record of meetings.
3.10 Meetings by Telephone. Meetings of the Members may be held by telephone
conference or by any other means of communication by which all participants can communicate
with each other simultaneously during the meeting, and such participation- shall constitute
presence in person at the meeting.
3.11 Actions Requiring Unanimous Vote of Members. The following actions require
the unanimous approval of the Members:
3.11.1 Admitting an additional Member;
Agreement;
3.11.2 Issuing additional Ownership Units;
3.11.3 Amending or restating the Articles of Organization or this Operating
3.11.4 Electing a Manager who is not:
3.11.4.1 the trustor of a trust that is a Member of the LLC; nor
3.11.4.2 a Member of the LLC; nor
3.11.4.3 MWSH.
3.11.5 Merging the LLC with another entity;
3.11.6 Except as specifically provided in this Agreement, borrowing funds from
any person or entity which requires the personal guarantee of all of the Members;
3.11.7 Requiring additional capital contributions; or
Member.
3.11.8 Allowing the LLC to loan LLC funds to a Member or entity owned by any
ARTICLE 4
IVIANAGEli~IE1~i T
4.1 Management b Manager(s). The LLC shall be managed by one (1) or more
Managers who shall be elected by the affirmative vote of a Majority of the Ownership Units.
The Manager(s) shall not be compensated for serving as Manager(s) unless otherwise agreed by
the holders of a Majority of the Ownership Units. However, the Manager(s) may be reasonably
compensated for services provided to the LLC which are not merely services incident to serving
as Manager.
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4.2 Initial Manager and Replacement of Managers. The initial Manager of the LLC
shall be MWSH. The initial Manager shall continue as Manager until replaced by the affirmative
vote of a Majority of the Ownership Units.
4.3 Removal of Manager by Members. By affirmative vote of Members owning a
Majority of the Ownership Units, the Members, in such Members' sole discretion, may remove
one or more Managers. In the event of the removal of one or more Managers, the remaining
Manager or Managers, if any, shall serve as Manager of the LLC. In the event of the removal of
a sole Manager or all of the Managers, a replacement Manager shall be elected by an affirmative
vote of a Majority of Ownership Units. However, in the event the Members fai_1 to elect a new
Manager by the affirmative vote of a Majority of the Ownership Units, the selection of Manager
shall be determined according to the dispute resolution provisions in this Agreement. In such
event, until a new Manager is selected, the Members of the LLC shall act as Managers.
4.4 Election of Managers. Once properly elected, a Manager(s) shall serve until such
time as the Manager's death, resignation, removal, or at such time as a new Manager(s) is
properly elected by the Members. Upon replacement or removal of the initial Manager, the
name of the newly-elected Manager(s) and the date upon which such Manager(s) is elected shall
be set out in the space provided below and initialed by Members owning a Majority of the
Ownership Units electing such Manager(s). Unless this original Operating Agreement so reflects
a managerial change, it is conclusively presumed that the initial Manager(s) continues as
Manager of this LLC.
Manager
Date of Election
Member's Initials
4.5 Manager Powers. All Managers shall have the right to participate in the
management of the LLC, and each Manager shall have authority to make all decisions relating in
any way to the LLC except decisions requiring unanimous approval of the Members of the LLC
as provided in this Agreement.
4.5.1 If more than one Manager is serving, a majority of the Managers shall
have authority to bind the LLC and make decisions regarding the LLC. In instances where the
Managers cannot approve or disapprove of a particular action because of a deadlock, the issue
shall be resolved according to the Dispute Resolution provisions of this Agreement.
4.6 Borrowing. The Manager(s) are authorized to borrow funds and pledge assets to
secure funds. The Manager(s) may borrow funds from all or any Member and in such case shall
pay interest at the Wall Street Journal Composite Prime Rate. No distribution shall be made
from the LLC until all loans from Members have been paid in full.
4.7 Other Activities. The Manager(s) may have other business interests and may
engage in other activities in addition to those relating to the LLC. This Section does not change
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each Manager's duty to act in a manner that the Manager reasonably believes to be in the best
interests of the LLC.
4.8 Meetings. If more than one Manager is elected, the Managers may hold meetings
at such place and time as is agreed upon by the Managers. No written notice of such meeting is
necessary.
4.9 Vacancy. If a vacancy occurs in the office of the Manager(s), the vacancy shall
be filled by the affirmative vote of Members owning a Majority of the Ownership Units.
ARTICLE 5
ACCOUNTING AND RECORDS
5.1 Books of Account. The LLC's books and records, a register showing the names,
addresses, and Ownership Units of the Members, and a copy of this Operating Agreement shall
be maintained at 'the principal office of the LLC; and each Member shall have access thereto at
all reasonable times. The Manager(s) shall keep books and records of the operation of the LLC
which are appropriate and adequate for the LLC's business and for .the carrying out of this
Agreement. Accounting records shall be kept in accordance with a comprehensive income tax
basis of accounting.
5.2 Fiscal Year. The fiscal year of the LLC shall be the calendar year.
5.3 Tax Returns. The Manager(s) shall cause all required federal and state income tax
returns for the LLC to be prepared and timely filed with the appropriate authorities. Witiun
90 days after the end of each fiscal year or such later date as the Members may agree by majority
vote, each Member shall be furnished a statement suitable for use in the preparation of the
Member's income tax return, showing the amounts of any distributions, contributions, gains,
losses, profits, or credits allocated to the Member during such fiscal year. No Member may
obtain damages of any kind or other relief against the LLC for failure to complete the accounting
and tax returns within 90 days but may demand records, hire an accountant, and be reimbursed
for actual expenses.
ARTICLE 6
ALLOCATIONS AND DISTRIBUTIONS
6.1 Allocations of Income and Loss for Tax Purposes. Subject to the Special
Allocations and Limitations set forth herein and in Appendices hereto, the profits and losses of
the LLC for each fiscal year will be allocated among the Members pro rata in proportion to their
Ownership Units. All items of income, gain, loss, deduction, and credit shall be allocated among
all Members in proportion to their Ownership Units.
6.2 Distributions.
6.2.1 Dish•ibutions. Distributions shall be made pro rata to all Members in
accordance with the Ownership Units at such times and in such total amounts as determined by
the Manager(s). Distributions in Liquidation shall be made as otherwise provided herein.
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6.2.2 Distributions in Liquidation. Distributions in liquidation of the LLC or a
Member's interest in the LLC, shall be made to the Members in the manner set forth in Articles 7
and 8 of this Agreement.
6.3 ~ecial Allocations and Limitations. The Members intend that all allocations
shall be pro rata, as described in Section 6.1. However, in order to comply with federal income
tax regulations regarding the substantial economic effect of company allocations in the special
circumstances described in such provisions, all allocations of company income, gain, loss, and
deductions are subject to the special allocations, definitions, and limitations found in
Appendix 6.3.
ARTICLE 7
TRANSFERS OF INTEREST
7.1 Permitted Transfers. Notwithstanding any other provision of this Operating
Agreement, the Members agree that the following transfers shall be permitted transfers and shall
not be deemed a transfer restricted under this Operating Agreement:
7.1.1 Any transfer from one existing Member of the LLC to another existing
Member of the LLC.
7.1.2 Any transfer from an individual Member to a trust of which the individual
Member is the trustor or from a trust which is a Member to the individual who is the trustor of
such trust; provided, however, that such Member shall provide the LLC with a Certification of
Trust which complies with the laws of the state in which the LLC is organized.
7.2 Security Interest in Member's Units as Collateral. A Member shall not be allowed
to grant a security interest in his Ownership Units as collateral for a loan unless such Member
has previously obtained the written consent to do so from Members owning a Majority of the
Ownership Units. Such security interest shall: (a) include only the Member's right to receive
distributions; (b) not act in any way to encumber any LLC property; and (c) only encumber the
Member's Ownership Units in the LLC. Such consent shall not be unreasonably withheld. In the
event that a Member requests such consent, such Member shall pay all of the LLC''s and
remaining Members' expenses incurred in determining whether consent should be granted,
including but not limited to the costs for attorney fees, accounting fees, title reports, UCC
reports, credit reports, review and verification of credit applications, document preparation,
recording fees, if any.
7.3 Restrictions on Sale. Except as otherwise specifically provided herein, this
Operating Agreement is personal to the named Members; and none of them, individually, jointly,
as trustor, trustee, or beneficiary of a trust shall in any manner or by operation of law transfer all
or any part of .any interest in this LI,C without obtaining the prior written consent of Members
owning a Majority of the Ownership Units of the LLC. Under this Agreement, the word
"transfer" means the voluntary or involuntary, direct or indirect, sale, gift, conveyance, license,
sublease, inter vivos conveyance, testamentary disposition, or other disposition of a Member's
Ownership Units, including but not limited to any change in ownership as a result of divorce,
insolvency, bankruptcy, operation of law or otherwise, and any change in ownership upon the
~.. ,. at_ t ., ~ A...~L,._ L_. '/l .1 .. ,.1 .. _.. a7_~ t.._ .7 ,__ L,. l'~a_,.a,.a '
ucaui ui a ivicuiuci vy wili, uc~iaLauwi, traI'i~lci ii'i tiuSi, Or iiiiucL tuc laws Oi Itiic~~a~e SuCCe55iuii
of any state. It is expressly agreed by each Member that no Member shall make or enter into any
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agreement or contract with a third party or make any will, trust agreement, deed, or gift which
would tend to amend, alter, abrogate the provisions, or act in contravention of the terms of this
Agreement. The provisions of this Operating Agreement shall be binding upon all persons
claiming the rights of any Member, including but not limited to the spouse, heirs, personal
representatives, administrators, trustees, trustors, creditors, and beneficiaries of any trust or
transferees of any Member.
7.4 Events Requiring Sale of Ownership Units of a Member. The following shall
govern voluntary and mandatory sales of LLC Ownership Units by Members:
7.4.1 Deadlock If any disagreement shall arise .among the Members creating a
deadlock in decision making relating to the operations of the LLC thus hindering the ability to
carry on the business of the LLC, the disagreement shall be resolved in accordance with the
Dispute Resolution provisions of this Agreement: If any Member of this LLC is unwilling to
abide by the decision obtained through the -dispute resolution process relating to a deadlock or
otherwise, then s~ich dissenting Member shall offer his Ownership Units in the LLC to the LLC
and the remaining Members for the fair market value of such dissenting Member's Ownership
Units without deduction for minority status or lack of marketability.
7.4.2 Desire to Sell/Death of a Member. If any Member desires to no longer be
a Member of the LLC or to sell such Member's Ownership Units, then. such Member shall offer
such Member's Ownership Units in the LLC to the LLC and the remaining Members for the .fair
market value of such Ownership Units, without deduction for minority status or lack of
marketability. Upon the death of any Member or the grantor of any trust that is a Member, the
Ownership Units owned by such Member shall be offered to the LLC and the remaining
Members for the fair market value of such Ownership Units, without deduction for minority
status or lack of marketability.
7.4.3 Other Events Requiring Sale. Upon the occurrence of any of the
following events relating to any Member, such Member shall offer to sell his Ownership Units in
the LLC to the LLC and the remaining Members for the fair market value of such Member's
Ownership Units, with deduction for minority ownership and lack of marketability: (i) the
Member makes an assignment for the benefit of creditors; (ii) the Member files a voluntary
petition for bankruptcy; (iii) the Member is adjudicated a bankrupt or insolvent; (iv} the Member
files a petition or answer seeking for the Member any reorganization, arrangement for the benefit
of creditors, composition of debts and assets, readjustment of debts and assets, liquidation of
assets, or dissolution of marriage or similar relief under any statute, law, or regulation, or (v) any
other event not described in 7.4.1 or 7.4.2 above.
7.5 Valuation of Ownership Units of a Member. In every instance involving the
voluntary or mandatory purchase or sale of Ownership Units in this LLC, if the parties cannot
agree on the fair market value, with or without discount for minority ownership and/or
marketability of the LLC Ownership Units, of any Member whose Ownership Units must be
voluntarily or mandatorily sold as described above, then the fair market value issue, with or
without discount for minority ownership or marketability, shall be resolved in accordance with
the Dispute Resolution provisions in this Agreement. The decision obtained through the Dispute
Resolution procedure shall be binding on the parties. Such fair market value, with or without
discount, as the case may be, is referred to herein as the `'Purchase Price".
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7.6 Options to Purchase Ownership Units of a Member. In every instance involving
the voluntary or mandatory purchase or sale of Ownership Units in this LLC and after the fair
market value, with or without discounts for minority ownership and/or marketability, has been
determined by agreement or through the Dispute Resolution procedure established in this
Agreement, then:
7.6.1 First Option to LLC. For a period not exceeding 60 days from the date a
Purchase Price for the Ownership Units has been determined, the LLC shall have the option to
purchase such Ownership Units, which option may be exercised by giving written notice of the
LLC's intent to purchase such Units at the Purchase Price which shall be paid pursuant to the
terms provided in this Agreement to the transferring Member or the transferring Member's estate
and shall be secured only by the Ownership Units so transferred.
' 7.6.2 Second Option to Non-transferring Members. If the LLC does not
exercise its right to purchase Ownership ~ Units as provided above, the remaining Members,
jointly or severa113~, shall have the option to purchase all such Ownership Units at the Purchase
Price determined pursuant to the terms of this Agreement. The non-transferring Members shall
provide written notice of intent to exercise their option at any time within 60 days following the
last date by which the LLC may give notice of its intent to exercise such rights. If more than one
non-transferring Member desires to purchase all or any portion of such Ownership Units, such
Ownership Units shall be purchased by such non-transferring Members in proportions upon
which they agree or, in the absence of some other agreement among the non-transferring
Members, in proportion to the existing Ownership Units of each non-transferring Member.
7.7 Payment for Member's Ownership Units. The LLC or the remaining Members, as
the case maybe, in their sole discretion, shall choose one of the following methods for payment
of the Purchase Price for a Member's Ownership Units purchased pursuant to this Operating
Agreement:
7.7.1 In cash within 30 days of the exercise of the option to purchase; or
7.7.2 In monthly installments amortized over a period of 25 years, including
interest on the unpaid balance at the rate of 8% per annum, with no penalty for prepayment. If
such deferred payment is opted by either the LLC or the remaining Members, such Purchase
Price shall be memorialized by an installment note of the LLC or the non-transferring,
purchasing Members, payable to the transferring Member or the transferring Member's estate.
The installment note shall be secured only by the Ownership Units purchased by the LLC or the
remaining Members, as the case may be; and the entire balance due on such installment note
shall be due and payable in full upon the sale of all or substantially all of the LLC assets unless
the sale is part of a tax deferred exchange.
7.8 Substituted Parties. Except in the case of permitted transfers defined in Section
7.1, upon any transfer of Ownership Units, the transferee shall not become a fully substituted
Member with full membership rights unless and until: (a) the transferee is approved as a
substitute Member by remaining Members holding all of the remaining Ownership Units; (b) the
transferee delivers to the LLC any and all personal financial statements or other information
requested by the LLC; (c) the transferee pays for any credit reports requested by the LLC; (d) the
transferee pays for all legal documentation necessary to effectuate the transfer, including legal
CvSiS of ti12 LLC; and (e) the traiislcl'ce executes gild delivers to t'ne LLC ail documents
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necessary or appropriate in the opinion of counsel for the LLC to effect the transfer and to
confirm the agreement of the permitted assignee to be bound by the provisions of this
Agreement.
7.8.1 Upon any transfer of Ownership Units in which the transferee is not
admitted as a substitute Member, the Ownership Units held by such transferee shall not include.
any right to participate in management of the LLC, including any right to vote, consent to, or
approve any actions of the Manager and shall not include any right to information about the
LLC, its operations or its financial condition. In addition, if the transferee is not admitted as a
substitute Member, the transferee shall be allocated losses, profits, and distributions for tax
purposes, but the distribution of funds to such Member shall not be made. Such funds shall be
held in a suspense account by the LLC until such time as such transferee is admitted as a
substitute Member or upon dissolution of the LLC. Following any transfer to a transferee who is
not admitted as a substitute Member, the transferring Member's power and right to vote or
consent to any matters submitted to the Members to receive any distributions shall be terminated;
and any Ownership Units of the remaining Members for purposes only of such votes, consents,
and participation in management shall be proportionately increased until such time, if any, as
such transferee becomes admitted as a substitute Member.
7.9 Failure to Exercise Option. If neither the LLC nor the non-transferring Members
agree to purchase the Ownership Units of a Member who offers to or is required to offer to sell
such Member's Ownership Units to the LLC and/or the remaining Members as provided above,
the restrictions of this Agreement on transfer of such Ownership Units shall be removed; except
that: (i) such Ownership Units shall not be sold or transferred in any way to any third party for a
purchase price less than the Purchase Price determined under the paragraph entitled. Valuation of
Ownership Units of a Member, (ii) such Ownership Units shall not be sold on terms more
favorable to the purchaser than those provided in the paragraph entitled Payment for Member's
Ownership Units, and (iii) the rights of the transferee of such Ownership Units shall be
restricted as provided in the paragraph entitled Substituted Parties in this Agreement, and (iv) if
such Ownership Units are not sold by such Member within one (1) year of the determination of
the Purchase Price pursuant to the provisions of this Agreement, then the provisions and
restrictions of this Agreement relating to the transfer of Ownership Units shall apply, and the
options of the LLC and the remaining Members shall be reinstated.
ARTICLE 8
DISSOLUTION AND WINDING UP OF THE LLC
8.1 Dissolution. Except as otherwise provided in this Operating Agreement, the LLC
shall be dissolved: (a) at the time, if any, for dissolution specified in the Articles of Organization;
(b) within four (4) years of the sale, transfer, or other disposition of all of the assets of the LLC
unless otherwise agreed by the Members; (c) upon the agreement of Members owning more than
50% of the Ownership Units of this LLC. Provided, however, that, if such dissolution would
constitute an event of default of any contractual obligation of the LLC, then the LLC shall not be
dissolved.
8.2 Winding Up. Upon the dissolution of the LLC, the assets shall be liquidated as
promptly as is consistent with obtaining their fair market value, and the proceeds shall be applied
and distributed and allocated as promptly as is commercially reasonable in the following order:
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8.2.1 To the payment and discharge of the expenses of liquidation.
8.2.2 To the payment and discharge of all of the debts and liabilities of the LLC
to persons or organizations other than Members.
8.2.3 To the payment and discharge of any debts and liabilities to Members.
8.2.4 To preferred Members, if any, in the amount of the positive balances in
their respective capital accounts on the date of distribution. If the amount available for such
distribution to the preferred Members is insufficient to bring all of their positive capital account
balances to zero, then payment shall be made on a pro rata basis to all the preferred Members in
the same proportion that the positive balance in the capital account of each preferred Member
bears to the aggregate amount. of the positive balances in the capital accounts of all preferred
Members. .
8.2.5 To the Members in the amount of the positive balances in their respective
capital accounts on the date of distribution. If the amount available for such distribution to the
Members is insufficient to bring all their positive capital account balances to zero,. then payment
shall be made on a pro-rata basis to all the Members in the same proportion that the positive
balance in the capital account of each Member bears to the aggrega±e amount of the positive
balances in the capital accounts of all Members.
8.2.6 Any proceeds remaining shall be distributed to the Preferred Members,
Service Members, and Non-preferred Members, pro rata to all such Members in proportion to
their Ownership Units.
ARTICLE 9
INDEMNIFICATION
9.1 Indemnification. To the fullest extent permitted under the law of the state of
organization of the LLC, as such law exists or may hereafter be amended, the LLC shall defend,
indemnify, and hold harmless each Member and/or Manager of the LLC against any and all
clams and liabilities to which such Member and/or Manager has or shall become subject by
reason of serving or having served as such Member and/or Manager or by reason of any action
alleged to have been taken, omitted, or neglected by such Member and/or Manager. The LLC
may provide indemnification to employees and agents of the LLC. The indemnification
provided in this Section shall not be exclusive of any other rights to which any person may be
entitled under statute, agreement, resolution, contract, or otherwise.
4.2 Limitation of Liability. Members managing the LLC shall not be liable to the
LLC or its Members for monetary damages or otherwise for conduct as Member and/or Manager
except to the extent that the Limited Liability Company Act of the state in which this LLC was
organized, as it now exists or may hereafter be amended, prohibits elimination or limitation of
Manager or Member liability. No repeal or amendment of this Section of this Operating
Agreement or of the Limited Liability Company Act of the state in which this LLC was
organized shall adversely affect any right or protection of a Manager or Member for actions or
omissions prior to the repeal or amendment.
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ARTICLE 10
AMENDMENTS
10.1 By Members. The Members may amend or repeal the provisions of this
Operating Agreement by unanimous agreement of the Members set forth in writing or by
unanimous action taken at a meeting of Members called for that purpose. This Operating
Agreement may not be amended or repealed by oral agreement of the Members.
ARTICLE 11
MISCELLANEOUS
11.1 Additional Documents. Each Member shall execute such additional documents
and take such actions as are reasonably requested in order to complete or confirm the
transactions contemplated by this Operating Agreement.
11.2 Dispute Resolution. In the event there is any dispute or deadlock between or
among the parties to this Operating Agreement relating in any way to this Operating Agreement,
the LLC itself, the business or operations of the LLC, or the Articles of Organization of the LLC,
the parties must mediate any such dispute or deadlock before commencing any legal action. No
party to this Agreement can bring legal action or demand mandatory arbitration against another
party to this Agreement without first participating in mediation, unless one party refuses to
submit to mediation and legal action is brought to specifically enforce this mandatory mediation
provision of this Operating Agreement. If the parties cannot agree upon the person to act as the
mediator, then the U.S. Arbitration and Mediation Service in Portland, Oregon, shall select a
person to act as the mediator. The mediator's charges and expenses shall be split by the parties
on a 50/50 basis. Mediation fees and costs do not include each party's attorney fees and costs.
Each party shall be responsible for his own attorney fees and costs at mediation. Should the
dispute not be resolved by mediation, the parties agree to submit any dispute arising between the
parties relating in any way to this Agreement to binding arbitration with the U.S. Arbitration and
Mediation Service in Portland, Oregon, and shall utilize such Service's rules of procedure. If the
parties cannot agree upon an individual to act as the arbitrator, then the U.S. Arbitration and
Mediation Service in Portland, Oregon, shall select a person to act as the arbitrator. The standard
used by the arbitrator in resolving disputes will be reasonable business practices in similar
businesses, taking into account tax implications. If the dispute goes to arbitration, the prevailing
party shall be entitled to its attorney fees and costs incurred in the arbitration process. The
decision of an arbitrator shall be final and not subject to any appeal and shall be enforceable in a
court of competent jurisdiction.
11.2.1 Dispute Resolution in the Event of a Deadlock. In any instance in which
there are insufficient votes to approve or disapprove any actual or proposed action or inaction of
the LLC, the Members and Managers agree that such decision shall be referred to the dispute
resolution procedure described above; and the standard for decision making to be applied by the
arbitrator shall be the reasonable business practices in a similar business in the community,
taking into account tax implications. In such event, the LLC shall pay all costs of mediation and
arbitration. The decision of the arbitrator shall be final and not subject to any appeal and shall be
enforceable in a court of competent jurisdiction.
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11.3 Governing Law. This Operating Agreement shall be governed by the law of the
state in which this LLC was organized.
11.4 Headings. Headings in this Operating Agreement are for convenience only and
shall not affect its meaning.
11.5 Severability. The invalidity or unenforceability of any provision of this Operating
Agreement shall not affect the validity or enforceability of the remaining provisions.
11.6 Third-party Beneficiaries. The provisions of this Operating Agreement are
intended solely for the benefit of the Members and shall create no rights or obligations
enforceable by any third party, including creditors of the LLC, except as otherwise provided by
applicable lbw.
11.7 Representation of Counsel. This Operating Agreement was prepared by Garrett,
Hemann, Robertson, Jennings, Comstock 8~ Trethewy, P.C., which represents Rosemont
Retirement & Assisted Living Community LLC ("Rosemont") only in this matter. Although the
law firm has or may have represented the LLC or one or more of the Members of LLC, it is not
representing LLC or any such Members, individually or jointly, in the preparation of this
Operating Agreement. Each Member of LLC and LLC acknowledge that LLC and each Member
have been advised of these facts and have the right to and are encouraged to seek independent
legal counsel of LLC's and each Member's choice regarding LLC's and each Member's rights
and obligations, individually and as trustees, under this Operating Agreement. The LLC and
each Member acknowledge LLC's and each Member's right to negotiate the terms of this
Agreement and agree that although this Agreement was drafted by attorneys for Rosemont, it
shall not be interpreted or construed against any party.
LAWRENCE E. TOKARSKI REVOCABLE LIVING TRUST
dated June 11,1996, Member as to 4,950 Units
;, ..
Lawrence E. Tokarski, Trustee
~~
KELLEY D. HAMILTON and JANET TOVAR-HAMILTON
TRUST dated November 29, 2002, Member as to 4,950 Units
By: .~~~'i%'
D. Hamilton, Trustee
C1 ~~.1
(Date)
MOUNTAIN WEST SENIOR HOUSING LLC, an Oregon
limited liability company, Member as to 100 Units
By:
~~
Kepley D. Hamilton, Manager (Date)
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APPENDIX 6.3
6.3.1 Adjusted Capital Account Deficit. A deficit balance in any Member's Capital
Account at the end of any fiscal year,. after adjustment to reflect any Adjustment Items, to the
extent that the deficit exceeds the amount of a member's shares of Company Minimum Gain and
Member Non-recourse Debt minimum Gain (if any) that the Member is deemed to be obligated
to restore pursuant to Treasury Regulation §§1.704-2(g)(1) and 1.704-2(i)(5).
6.3.2 Adjustment Items. Adjustments, allocations, and distributions described in
Treasury Regulation §§1.704-1(b)(2)(ii)(d)(4), (5), and (6).
6.3.3 Capital Account. The account maintained for each Member pursuant to
Section 2.5.
6.3.4 Company Minimum Gain. As of any date, the amount of gain, if any, that would
be recognized by the Company for federal income tax purposes, as if it disposed of property in a
taxable transaction on that date in full satisfaction of any non-recourse liability secured by the
property, computed in accordance with Treasury Regulation §1.704-2(d)(1).
6.3.5 Member Non-recourse Debt has the same meaning as "partner non-recourse debt"
set forth in Treasury Regulation § 1.704-2(b)(4).
6.3.6 Member Non-recourse Debt Minimum Gain means an amount, with respect to
each Member non-recourse Debt, equal to the Company Minimum Gain that would result if such
Member Non-recourse Debt were treated as anon-recourse Liability, determined pursuant to
Treasury Regulation § 1.704-2(i)(2) and (3).
6.3.7 Member Non-recourse Deductions has the same meaning as "partner non-recourse
deductions" set froth in Treasury Regulation § 1.704-2(i)(2). The amount of Member non-
recourse Deductions with respect to a Member non-recourse Debt for a Company fiscal year
equals the excess, if any, of (A) the net increase, if any, in the amount of the Company
minimum Gain attributable to such Member Non-recourse Debt during the f seal year over (B)
the aggregate amount of any distribution during the fiscal year to the Member that bears the
economic risk of loss for such Member Non-recourse Debt to the extent the distributions are
from proceeds of the Member Non-recourse Debt and are allocable to an increase in Member
Non-recourse Debt Minimum Gain attributable to the Member Non-recourse Debt, determined
pursuant to Treasury Regulation § 1.704-2(i).
6.3.8 Non-recourse Deductions has the meaning set forth in Treasury Regulation
§ 1.704-2(c). The amount ofNon-recourse Deduction for a Company fiscal year equals excess, if
any, of the net increase, if any, in the amount of Company Minimum Gain during that fiscal year
over the .aggregate amount of any distributions during that fiscal year of proceeds of a non-
recourse Liability that are allocable to an increase in Company Minimum Gain, determined
pursuant to Treasury Regulation § 1.704-2(c).
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6.3.9 Non-recourse Liability has the meaning set forth in Treasury Regulation §1.704-
2(b)(3).
6.3.10 Limitations on Allocations of Loss. In no event will any Company loss or
deduction, or item thereof, be allocated to any Member to the extent that the member has, or
would have as a result of the allocation, an Adjusted Capital Account Deficit in the Member's
Capital Account as of the end of the Company taxable year to which the allocation relates. Any
loss or deduction, the allocation of which to a Member is disallowed by the foregoing restriction,
will be reallocated to those Members who do not have an Adjusted Capital Account Deficit as of
the end of such taxable year.
6.3.11 Company Minimum Gain Chargeback. If there is a net decrease in Company
Minimum Clain during any Company taxable year, each Member will be specially allocated,
before any other allocation of Company income; gain, loss, or deduction for the taxable year,
items of Company income and gain for the taxable year (and, if necessary, subsequent years) in
proportion to and to the extent of an amount equal to each Member's share of the net decrease in
Company Minimum Gain determine in accordance with Treasury Regulation § 1.704-2(g)(2).
This Paragraph is intended to comply with and will be interpreted consistently with the.
"minimum gain chargeback" provisions of Treasury Regulation § 1.704-2(f).
6.3.12 Member Non-recourse Debt Minimum Gain Chargeback. Notwithstanding any
other provision of Article 6 of the Agreement or this Appendix 6.3, except paragraph 6.3.11. of
this Appendix, if there is a net decrease in Member Non-recourse Debt minimum Gain
attributable to a Member Non-recourse Debt during any taxable year of the Company, each
Member who has a share of the Member non-recourse Debt Minimum Gain attributable to such
Member Non-recourse Debt, determined in accordance with Treasury Regulation § 1.704-2(i)(5),
will be specially allocated items of Company income and gain for such year (and, if necessary,
subsequent years) in an amount equal to such Member's share of the net decrease in Member
Non-recourse Debt, determined in accordance with Treasury Regulation § 1.704-2(i)(4).
Allocations pursuant to this Paragraph 6.3.12 ~ will be made in proportion to the respective
amounts required to be allocated to each Member pursuant thereto. The items to be so allocated
will be determined in accordance with Treasury Regulation §1.704-2(i)(4). This Paragraph
6.3.12 is intended to comply with, and will be interpreted consistently with, the partner non-
recourse debt minimum gain chargeback provisions of Treasury Regulations § 1.704-2(i)(4).
6.3.13 Qualified Income Offset. Notwithstanding any other provision of the Agreement
or this Appendix except Paragraphs 6.3.11 and 6.3.12 of this Appendix 6.3, in the event any
Member for any reason receives an Adjustment Item for any fiscal year that results in an
Adjusted Capital Account Deficit for that Member, the Member will be specially 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 the year) in an amount and manner sufficient to eliminate
the Adjusted Capital Account Deficit, if any, created by such Adjustment Item as quickly as
possible. This Paragraph 6.3.13 is intended to comply with the "qualified income offset"
requirements of Treasury Regulation ~ 1.704-1(b)(2)(ii)(d) and will be interpreted and .applied
consistently therewith.
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6.3.14 Offsetting Allocations. Any special allocations of items of income, gain, loss, or
deduction pursuant to Paragraphs 6.3.11, 6.3.12 or 6.3.13 of this Appendix 6.3 will be taken into
account in computing subsequent allocations of Company income, gain, loss or deduction
pursuant to Article 6 so that the net amount of any items so allocated and all other income, gain,
loss, deductions, and items thereof allocated to each Member pursuant to Article 6 will, to the
extent possible, be equal to the net amount that would have been allocated to each Member
pursuant to Article 6 if the special allocation had not occurred.
6.3.15 Allocations with respect to Contributed or Revalued Property. Notwithstanding
any other provision of Article 6 of this Agreement, in the event Internal Revenue Code ("IRC"}
§704(c) or IRC §704(c) principles applicable under Treasury Regulation §1.704-1(b)(2)(iv)
require allocations of Company income, gain, loss, or deductions for income tax purposes in a
manner different than otherwise provided in Article 6 of this Agreement, the provisions of IRC
§704(c) and the regulations thereunder will control such allocations among the Members for
income tax purposes. Any item of income, gain, loss, and deduction with respect to any property
(other than cash) that has been contributed to the Company by a Member or that has been
revalued for Capital Account purposes under this Agreement pursuant to Treasury Regulation
§ 1.704-1(b)(2)(iv) and which is required or permitted to be allocated to such Member for income
tax purposes under IRC §704(c} so as to take into account the variation between the tax basis of
such contributed or revalued property and its fair market value at the time of its contribution or
revaluation will be allocated solely for income tax purposes in the manner so required or
permitted under IRC §704(c) using the method described in Treasury Regulation §1.704-3 (or
any successor regulation) selected by the Manager.
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Exhibit 1.9
Description of Real Property
Parcel B of Boundary Line Adjustment No. BLA-008257YL as recorded
October 10, 2000, under Thurston County Auditor's File No. 3317913.
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6/4/03 1 6 2 5
SECOND RESTATED OPERATING
AGREEMENT
of
MOUNTAIN WEST SENIOR
HOUSING LLC
an Oregon limited liability company
Prepared by
George M. Jennings
Garrett, Hemann, Robertson,
Jennings, Comstock & Trethewy, P.C.
1011 Commercial Street NE
P.O. Box 749
Salem OR 97308
~. _ ~,; ,1
~--' ~
SECOND RESTATED OPERATING AGREEMENT ~"~.
..~ ~'~ II
OF
• ~.~
~:.:~, ,,
MOUNTAIN WEST SENIOR HOUSING LLC
an Oregon Limited Liability Company
The undersigned Members, desiring to form a limited liability company under the Oregon
Limited Liability Company Act, hereby agree as follows:
ARTICLE 1
FORMATION
1.1 Name. The name of the limited liability company (the "LLC") is Mountain West
Senior Housing LLC.
1.2 Articles of Organization. Articles of Organization were filed with the Oregon Secretary
of State on March 25, 2002.
1.3 Federal Employee Identification Number. The federal employee identification number
(EIN) assigned to the LLC is 75-3033311.
1.4 Restatement Effective Date. The original Operating Agreement of the LLC was adopted
on March 25, 2002. At the time of its original adoption, Kelley Hamilton and Mountain West
Investment Corporation, were the sole Members of the LLC. Effective January 1, 2003, Mountain West
Investment Corporation, transferred its interest in the LLC to Lawrence E. Tokarski, Trustee of the
Lawrence E. Tokarski Revocable Living Trust dated June 11, 1996. Also effective January 1, 2003,
Kelley Hamilton transferred his interest in the LLC to Kelley D. Hamilton, Trustee of the Kelley
Hamilton and Janet Tovar Hamilton Trust dated November 29, 2002 (the "Hamilton Trust"). Additional
Ownership Units were issues by the LLC to the Hamilton Trust effective January 1, 2003, in exchange
for its contribution of additional capital. Therefore, certain revisions to the Operating Agreement were
required to reflect the correct ownership interest in the LLC, and a Restated Operating Agreement was
adopted effective January 1, 2003. Effective January 1, 2003, the Members determined that the
Managers' powers should be expanded to enable the Managers to take action individually relating to all
financial decisions. This Second Restated Operating Agreement of the LLC is adopted to reflect the
change in Manager powers in the LLC effective January 1, 2003.
1.5 Term. The term of the LLC shall commehce on the date of the filing of the Articles of
Organization with the Oregon Secretary of State, and shall be perpetual, unless sooner dissolved, wound
up and terminated in accordance with the provisions of this Agreement and the Oregon Limited Liability
Company Act, as amended from time to time.
1.6 Principal Place of Business. The principal office of the LLC shall initially be located at
245 Commercial Street S.E., Suite 200, Salem, Oregon 97301. The Members may relocate the principal
office or establish additional offices from time to time.
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1.7 Registered Office and Registered Agent. The LLC's initial registered office shall be at
1011 Commercial Street N.E., Salem, Oregon, 97301, and the name of its initial registered agent. at such
address shall be Oregon Agent Corporation.
1.8 Management of LLC. The LLC shall be managed by a Manager or Managers.
1.9 Purposes and Powers. The LLC may engage in any lawful business permitted under
Oregon law, or the laws of any jurisdiction in which the LLC may do business
1.10 Title to Property. All LLC property shall be owned by the LLC as an entity, and no
Member shall have any ownership interest in such property in the Member's individual name or right,
and any Member's interest in the LLC shall be personal property for all purposes. Except as otherwise
provided in this Agreement, the LLC shall hold all LLC property in the name of the LLC and not in the
name or names of any Member or Members.
1.11 Definitions. Certain terms used, in this Agreement are as defined in the attached
Appendix and such meaning shall control.
1.12 Rights of Creditors and Third Parties. This Agreement is entered into-among the LLC
and the Members for the exclusive benefit of the LLC, its Members and the Members' successors and
assigns. This Agreement is expressly not intended for the benefit of any creditor of the LLC, or any
other person except and only to the extent provided by applicable statutes. No such creditor or third
party shall have any right under this Agreement or any agreement between the. LLC and any Member
with respect to any capital contribution or otherwise.
ARTICLE 2
MEMBERS, CONTRIBUTIONS, AND INTERESTS
2.1 Members and Initial Contributions. The names of the Members of the LLC, the agreed
value of the Member's initial capital contribution, and the Member's initial units. of ownership ("units")
are as follows: .
Member Name Ownership Initial Capital
Units Contribution
Lawrence E. Tokarski, Trustee of the 750 $750.00
Lawrence E. Tokarski Revocable
Living Trust dated June 11, 1996
Kelley D. Hamilton, Trustee of the 750 $750.00
Kelley Hamilton and Janet Tovar
Hamilton Trust dated November 29,
2002
TOTAL 1,500 $1,500.00
2.2 Certificates of Ownership Units. The LLC may, but is not required to, issue each
Member a Certificate of Ownership Units indicating the Ownership Units owned by such Member.
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holders of a Majority of the Ownership Units. However, the Manager(s) may be reasonably
compensated for services provided to the LLC which are not merely services incident to serving as
Manager.
4.2 Initial Manager and Replacement of Manager. The initial Managers of the LLC shall
be Lawrence E. Tokarski and Kelley D. Hamilton. The initial. Managers shall continue as Managers
until replaced by the affirmative vote of a Majority of the Ownership Units.
4.3 Removal of Mana eg r by Members. By affirmative vote of Members owning a
Majority of the Ownership Units, the Members, in such Members' sole discretion, may remove one
or more Managers. In the event of the removal of one or more Managers, the remaining Manager or
Managers, if any, shall serve as Manager of the LLC. In the event of the removal of a sole Manager
or all of the Managers, a replacement Manager shall be elected by an affirmative vote of a Majority
of Ownership Units. However, in the event the. Members fail to elect a new Manager by the
affirmative vote of a Majority of the Ownership Units, the selection of Manager shall be determined
according to the dispute resolution provisions in this Agreement. In such event, until a new Manager
is selected, the Members of the LLC shall act as Managers.
4.4 Election of Managers. Once properly elected, a Manager(s) shall serve until such
time as the Manager's death, resignation, removal, or at such time as a new Manager(s) is properly
elected by the Members. Upon replacement or removal of the initial Manager(s), the name of the
newly-elected Manager(s) and the date upon which such Manager(s) is elected shall be set out in the
space provided below and initialed by Members owning a Majority of the Ownership Units electing
such Manager(s). Unless this original Agreement so reflects a managerial change, it is conclusively
presumed that the initial Manager(s) continues as Manager of this LLC.
Manager Date of Election Member's Initials
4.5 Manager Powers. All Managers shall have the right to participate in the management
of the LLC, and each Manager shall have authority to bind the LLC and make decisions individually
regarding the LLC, except those decisions requiring unanimous approval of the Members of the LLC
as provided in this Agreement. Notwithstanding the foregoing, any Manager holding less than 50%
of the managing authority for the LLC shall have authority to bind the LLC and make decisions
individually regarding the LLC.
4.6 Borrowing. The Manager is authorized to borrow funds and pledge assets to secure
funds upon written approval of a majority of the Members. The Manager may borrow funds from all
or any Member and in such case shall pay interest at the rate of four percent (4%) per annum above
Wells Fargo Bank's Prime Rate or such other rate as the parties may agree in writing. No
distribution shall be made from the LLC until all loans from Members have been paid in full.
4.7 Other Activities. The Manager may have other business interests and may engage in
other activities in addition to those relating to the LLC. This Section does not change each
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Manager's duty to act in a manner that the Manager reasonably believes to be in the best interests of
the LLC.
4.8 Meetings. If more than one Manager is elected, the Managers may hold meetings at
such place and time as is agreed upon by the Managers. No written notice of such meeting is
necessary.
4.9 Vacanc . If a vacancy occurs in the office of the Manager, the vacancy shall be filled
by the affirmative vote of Members owning a Majority of the Ownership Units.
ARTICLE 5
ACCOUNTING AND RECORDS
5.1 ~ Books of Account. The LLC's books and records, a register showing the names,
addresses, and Ownership Units of the Members, and a copy of this Agreement shall be maintained
at the principal off ce of the LLC; and each Member shall have access thereto at all reasonable times.
The Manager(s) shall keep books and records of the operation of the LLC which are appropriate and
adequate for the LLC's business and for the carrying out of this Agreement. Accounting records
shall be kept in accordance with a comprehensive income tax basis of accounting.
5.2 Fiscal Year. The fiscal year of the LLC shall be the calendar year.
5.3 Tax Returns. The Manager(s) shall cause all required federal and state income tax
returns for the LLC to be prepared and timely filed with the appropriate authorities. Within 90 days
after the end of each fiscal year or such later date as the Members may agree by majority vote, each
Member shall be furnished a statement suitable for use in the preparation of the Member's income tax
return, showing the amounts of any distributions, contributions, gains, losses, profits, or credits
allocated to the Member during such fiscal year. No Member may obtain damages of any kind or
other relief against the LLC for failure to complete the accounting and tax returns within 90 days but
may demand records, hire an accountant, and be reimbursed for actual expenses.
ARTICLE 6
ALLOCATIONS AND DISTRIBUTIONS
6.1 Allocations of Income and Loss for Tax Purposes. Subject to the Special Allocations
and Limitations set forth herein and in Appendices hereto, the profits and losses of the LLC for each
fiscal year will be allocated among the Members pro rata in proportion to their Ownership Units. All
items of income, gain, loss, deduction, and credit shall be allocated among all Members in proportion
to their Ownership Units.
6.2 Distributions.
6.2.1 Distributions. Distributions shall be made pro rata to all Members in
accordance with the Ownership Units at such times and in such total amounts as determined by the
Manager(s). Distributions in Liquidation shall be made as otherwise provided herein.
6.2.2 Distribztions in Liquidation. Distributions in liquidation of the LLC or a
Member's interest in the LLC, shall be made to the Members in the manner set forth in Articles 7 and
8 of this Agreement.
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6.3 Special Allocations and Limitations. The Members intend that all allocations shall be
pro rata, as described in Section 6.1. However, in order to comply with federal income tax
regulations regarding the substantial economic effect of company allocations in the special
circumstances described in such provisions, all allocations of company income, gain, loss, and
deductions are subject to the special allocations, definitions, and limitations found in Appendix 6.3.
ARTICLE 7
TRANSFERS OF INTEREST
7.1 Permitted Transfers. Notwithstanding any other provision of this Agreement, the
Members agree that the following transfers shall be permitted transfers and shall not be deemed a
transfer restricted under this Agreement:
7.1.1 Any transfer from one existing Member of the LLC to another existing
Member of the LLC. -
7.1.2 Any transfer from an individual Member to a trust of which the individual
Member is the trustor or from a trust which is a Member to the individual who is the trustor of such
trust; provided, however, that such Member shall provide the LLC with a Certification of Trust
which complies with the laws of the state in which the LLC is organized. "
7.2 Security Interest in Member's Units as Collateral. A Member shall not be allowed to
grant a security interest in his Ownership Units as collateral for a loan unless such Member has
previously obtained the written consent to do so from Members owning a Majority of the Ownership
Units. Such security interest shall: (a) include only the Member's right to receive distributions; (b)
not act in any way to encumber any LLC property; and (c) only encumber the Member's Ownership
Units in the LLC. Such consent shall not be unreasonably withheld. In the event that a Member
requests such consent, such Member shall pay all of the LLC's and remaining Members' expenses
incurred in determining whether consent should be granted, including but not limited to the costs for
attorney fees, accounting fees, title reports, UCC reports, credit reports, review and verification of
credit applications, document preparation, recording fees, if any.
7.3 Restriction on Sale. Except as otherwise specifically provided herein, this Agreement
is personal to the Members, jointly and severally, and none of them, individually, jointly, as trustor,
trustee, or beneficiary of a trust shall in any. manner or by operation of law sell, exchange, assign,
pledge, give, or otherwise transfer or encumber all or any part of any interest in this LLC without
obtaining the prior written consent of Members owning a Majority of the Ownership Units of the
LLC. Under this Agreement, the word "transfer" means the voluntary or involuntary, direct or
indirect, sale, transfer, license, sublease, inter vivos transfer, testamentary disposition, or other
disposition of a Member's Ownership Units, including but not limited to any change in ownership as
a result of divorce, insolvency, bankruptcy, operation of law or otherwise, and any change in
ownership upon the death of a Member by will, declaration, transfer in trust, or under the laws of
intestate succession of any state. It is expressly agreed by each Member that no Member shall make
or enter into any agreement or contract with a third party or make any will, trust agreement, deed, or
gift which would tend to amend, alter, abrogate the provisions, or act in contravention of the terms of
this Agreement. The provisions of this Agreement shall be binding upon all persons claiming the
rights of any Member, including but not limited to the spouse, heirs, personal representatives,
administrators, trustees, trustors, creditors, and beneficiaries of any trust of any Member.
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7.4 Events Requiring Sale of Ownership Units of a Member. The following shall govern.
voluntary and mandatory sales of LLC Ownership Units by Members:
7.4.1 Deadlock. If any disagreement shall arise among the Members creating a
deadlock in decision making relating to the operations of the LLC thus hindering the ability to carry
on the business of the LLC, the disagreement shall be resolved in accordance with the Dispute
Resolution Provisions of this Agreement. If any Member of this LLC is unwilling to abide by the'
decision obtained through the dispute resolution process relating to a deadlock or otherwise, then
such dissenting Member shall offer his Ownership Units in the LLC to the LLC and the remaining
Members for the fair market value of such dissenting Member's Ownership Units without deduction ;
for minority status or lack of marketability.
7.4.2 Desire to Sell/Death of a Member. If any Member desires to no longer be a
Member of the LLC or to sell such Member's Ownership Units, then such Member shall offer such
Member's Ownership Units in the LLC to the LLC and the remaining Members for the fair market
value of such Ownership Units, without deduction for minority status or lack of marketability. Upon
the death of any Member or the grantor of any trust that is a Member, the Ownership Units owned by
such Member shall be offered to the LLC and the remaining Members for the fair market value of
such Ownership Units, without deduction for minority status or lack of marketability, unless such
deceased Member has specifically provided for the distribution of such Member's ownership units to
a surviving child or children pursuant to the terms of a validly executed will or trust.
7.4.3 Other Events Requiring Sale. Upon. the occurrence of any of the following
events relating to any Member, such Member shall offer to sell his Ownership Units in the LLC to
the LLC and the remaining Members for the fair market value of such Member's Ownership Units,
with deduction for minority ownership and lack of marketability: (i) the Member makes an
assignment for the benefit of creditors; (ii) the Member files a voluntary petition for bankruptcy; (iii)
the Member is adjudicated a bankrupt or insolvent; (iv) the Member files a petition or answer seeking
for the Member any reorganization, arrangement for the benefit of creditors, composition of debts
and assets, readjustment of debts and assets, liquidation of assets, or dissolution of marriage or
similar relief under any statute, law,. or regulation,'or any other event not otherwise mentioned in this
Section 7.4.
7.5 Valuation of Ownership Units of a Member. In every instance involving the
voluntary or mandatory purchase or sale of Ownership Units in this LLC, if the parties cannot agree
on the fair market value with or without discount for minority ownership and/or marketability of the
LLC Ownership Units of any Member whose Ownership Units must be voluntarily or mandatorily
sold as described above, then the fair market value issue, with or without discount for minority
ownership or marketability, shall be resolved in accordance with the dispute resolution provisions in
this Agreement. The decision obtained through the dispute resolution procedure shall be binding on
the parties. Such fair market value with or without discount, as the case may be, is referred to herein
as the "Purchase Price".
7.6 motions to Purchase Ownership Units of a Member. In every instance involving the
voluntary or mandatory purchase or sale of Ownership Units in this LLC and after the fair market
value with or without discounts for minority ownership and/or marketability has been determined by
agreement or through the dispute resolution procedure established in this Agreement, then:
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7.6.1 First Option to LLC. For a period not exceeding 60 days from the date a
Purchase Price for the Ownership Units has been determined, the LLC shall have the option to
purchase such Ownership Units, which option may be exercised by giving written: notice of the
LLC's intent to purchase such Units at the Purchase Price which shall be paid pursuant to the terms
provided in this Agreement to the transferring Member or the transferring Member's estate and shall
be secured by the Membership Units so transferred.
7.6.2 Second Option to Non-transferring Members. If the LLC does not exercise
its right to purchase Ownership Units as provided above, the remaining Members, jointly or
severally, shall have the option to purchase all such Ownership Units at the Purchase Price
determined pursuant to the terms of this Agreement. The non-transferring Members shall provide
written notice of intent to exercise their option at any time within 60 days following the last date by
which the L,LC may give notice of its intent to exercise such rights. If more than one non-
transferring Member desires to purchase all ox any: portion of such Ownership Units, such Ownership
Units shall be purchased by such non-transferring Members in proportions upon which they agree or,
in the absence of dome other agreement among the non-transferring Members, in proportion to the
existing Ownership Units of each non-transferring Member.
7.7 Payment~ for Member's Ownership Units. The LLC or the remaining Members, as the
case may be, in their sole discretion, shall choose one of the following methods for payment of the
Purchase Price for a Member's Ownership Units purchased pursuant to this Agreement:
7.7.1 In cash within 30 days of the exercise of the option to purchase; or
7.7.2 In monthly installments amortized over a period of 30 years, including
interest on the unpaid balance at the rate of 7% per annum, with no penalty for prepayment. If such
deferred payment is opted by either the LLC or the remaining Members, such Purchase Price shall be
memorialized by an installment note of the LLC or the non-transferring; purchasing Members,
payable to the transferring Member or the transferring Member's estate. The installment note shall be
secured by the Ownership Units purchased by the LLC or the remaining. Members, as the case may
be; and the entire balance due on such installment note shall be due and payable in full upon the sale
of all or substantially all of the LLC assets unless the sale is part of a tax deferred exchange.
7.8 Substituted Parties. Except in the case of permitted transfers defined in Section 7.1,
upon any transfer of Ownership Units, the transferee shall not become a fully substituted Member
with full membership rights unless and until: (a) the transferee is approved as a substitute Member
by remaining Members holding all of the remaining Ownership Units; (b) the transferee delivers to
the LLC any and all personal financial statements or other information requested by the LLC; (c) the
transferee pays for any credit reports requested by the LLC; (d) the transferee pays for all legal
documentation necessary to effectuate the transfer, including legal costs of the LLC; and (e) the
transferee executes and delivers to the LLC all documents necessary or appropriate in the opinion of
counsel for the LLC to effect the transfer and to confine the agreement of the permitted assignee to
be bound by the provisions of this Agreement.
7.8.1 Upon any transfer of Ownership Units in which the transferee is not admitted
as a substitute Member, the Ownership Units held by such transferee shall not include any right to
participate in management of the LLC, including any right to vote, consent to, or approve any actions
of the Manager and shall not include any right to information about the LLC, its operations or its
financial. condition. In addition, if the transferee is not admitted as a substitute Member, the
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transferee shall be allocated distributions for tax purposes, but the distribution of funds to such
Member shall not be made. Such funds shall be held in a suspense account by the LLC until such
time as such transferee is admitted as a substitute Member or upon dissolution of the LLC.
Following any transfer to a transferee who is not admitted as a substitute Member, the transferring
Member's power and right to vote or consent to any matters submitted to the Members to receive any
distributions shall be terminated; and any Ownership Units of the remaining Members for purposes
only of such votes, consents, and participation in management shall be proportionately increased
until such time, if any, as such transferee becomes admitted as a substitute Member.
7.9 Failure to Exercise Option. If neither the LLC nor the non-transferring Members
agree to purchase the Ownership Units of a Member who offers to or is required to offer to sell such
Member's Ownership Units to the LLC and/or the remaining Members as provided above, the
restrictions of this Agreement on transfer of such Ownership Units shall be removed; except that: (i)
such Ownership Units shall not be sold or transferred in any way to any third party for a purchase
price less than the Purchase Price determinedunder the paragraph entitled Valuation of Ownership
Units of a Member, (ii) such Ownership Units shall not be sold on terms more favorable to the
purchaser than those provided in the paragraph entitled Payment for Member's Ownership Units,
and (iii) the rights of the transferee of such Ownership Units shall be restricted as provided in the
paragraph entitled Substituted Parties.in this Agreement, and (iv) if such Ownership Units are not
sold by such Member within one (1) year of the determination of the Purchase Price pursuant to the
provisions of this Agreement, then the provisions and restrictions of this Agreement relating to the
transfer of Ownership Units shall apply, and the options of the LLC and the remaining Members
shall be reinstated.
ARTICLE 8
DISSOLUTION AND WINDING UP OF THE LLC
8.1 Dissolution. Except as otherwise provided in this Agreement, the LLC shall be
dissolved: (a) at the time, if any, for dissolution specified in the Articles of Organization; (b) within
four (4) years of the sale, transfer, or other disposition of all of the assets of the LLC unless otherwise
agreed by .the Members; (c) upon the agreement of Members owning more than 50% of the
Ownership Units of this LLC. Provided, however, that, if such dissolution would constitute an event
of default of any contractual obligation of the LLC, then the LLC shall not be dissolved.
8.2 Winding Up. Upon the dissolution of the LLC, the assets shall be liquidated as
promptly as is consistent with obtaining their fair market value, and the proceeds shall be applied and
distributed and allocated as promptly as is commercially reasonable in the following order:
8.2.1 To the payment and discharge of the expenses of liquidation.
8.2.2 To the payment and discharge of all of the debts and liabilities of the LLC to
persons or organizations other than Members.
8.2.3 To the payment and discharge of any debts and liabilities to Members.
8.2.4 To preferred Members, if any, in the amount of the positive balances in their
respective capital accounts on the date of distribution. If the amount available for such distribution to
the preferred Members is insufficient to bring all of their positive capital account balances to zero,
then payment shall be made on a pro rata basis to all the preferred Members in the same proportion
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that the positive balance in the capital account of each preferred Member bears to the aggregate
amount of the positive balances in the capital accounts of all preferred Members.
8.2.5 To the Members in the amount of the positive balances in their respective
capital accounts on the date of distribution. If the amount available for such distribution to the
Members is insufficient to bring all their positive capital account balances to zero, then payment shall
be made on a pro-rata basis to all the Members in the same proportion that the positive balance in the
capital account of each Member bears to the aggregate amount of the positive balances in the capital
accounts of all Members.
8.2.6 Any proceeds remaining shall be distributed to the Members, including
preferred Members on a pro rata basis to all such Members in the proportion to their ..Ownership
Units.
ARTICLE 9
INDEMNIFICATION
9.1 Indemnification. To the fullest extent permitted under the law of the state of
organization of the LLC, as such law exists or may hereafter be amended, the LLC shall defend,
indemnify, and hold harmless each Member and/or Manager of the LLC against any and all claims
and liabilities to which such Member and/or Manager has or shall become subject by reason of
serving or having served as such Member and/or Manager or by reason of any action. alleged to have
been taken, omitted, or neglected by such Member and/or Manager. The LLC may provide
indemnification to employees and agents of the LLC. The indemnification provided in this Section
shall not be exclusive of any other rights to which any person may be entitled under statute,
agreement, resolution, contract, or otherwise.
9.2 Limitation of Liability. Members managing the LLC shall not be liable to the LLC or
its Members for monetary damages or otherwise for conduct as Member and/or Manager except to
the extent that the Limited Liability Company Act of the state in which this LLC was organized, as it
now exists or may hereafter be amended, prohibits elimination or limitation of Manager or Member
liability. No repeal or amendment of this Section of this Agreement or of the Limited Liability
Company Act of the state in which this LLC was organized shall adversely affect any right or
protection of a Manager or Member for actions or omissions prior to the repeal or amendment.
ARTICLE 10
AMENDMENTS
10.1 By Members. The Members may amend or repeal the provisions of this Agreement
by unanimous agreement of the Members set forth in writing or by unanimous action taken at a
meeting of Members called for that purpose. This Agreement may not be amended or repealed by
oral agreement of the Members.
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ARTICLE 11
MISCELLANEOUS
11.1 Additional Documents. Each Member shall execute such additional documents and
take such actions as are reasonably requested in order to complete or confirm the transactions
contemplated by this Agreement.
11.2 Dispute Resolution. In the event there is any dispute or deadlock between or among the.
parties to this Agreement relating in any way to this Agreement, the LLC itself, the business or operation
of the LLC, or the Articles of Organization of the LLC, the parties must mediate such dispute or
deadlock before commencing any legal action. No party to this Agreement can bring legal action or
demand mandatory arbitration against another party to this Agreement without first participating in
mediation, unless one party refuses to submit to mediation and legal action is brought to specifically
enforce this mandatory mediation provision of this Agreement. The mediator's charges and expenses
shall be split by the parties on a 50/50 basis. Mediation fees and costs do not include each party's
attorney fees and costs. Each party shall be responsible for his own attorney fees and costs at mediation.
Should the dispute not be resolved by mediation, the parties agree to submit any dispute arising between
the parties relating in any way -to this Agreement to binding arbitration. The standard used by the
arbitrator in resolving disputes will be reasonable business practices in similar businesses, taking into
account tax implications. If the dispute .goes to arbitration, the prevailing party will be entitled to its
attorney fees and costs incurred in the arbitration process. The decision of an arbitrator will be final and
not subject to any appeal and will be enforceable in a court of competent jurisdiction.
11.2.1 Dispute Resolution in the Event of a Deadlock. In any instance in which there
are insufficient votes to approve or disapprove any actual or proposed action or inaction of the LLC,
the Members and Managers agree that such decision shall be referred to the dispute resolution
procedure described above; and the standard for decision making to be applied by the arbitrator shall
be the reasonable business practices in a similar business in the community, taking into account tax
implications. In such event, the LLC shall pay all costs of mediation and arbitration. The decision of
the arbitrator shall be final and not subject to any appeal and shall be enforceable in a court of
competent jurisdiction.
Oregon.
11.3 Governing. This Agreement shall be governed by the laws of the State of
11.4 Headings. Headings in this Agreement are for convenience only and shall not affect
its meaning.
11.5 Severability. The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of the remaining provisions.
11.6 Third-party Beneficiaries. The provisions of this Agreement are intended solely for
the benefit of the Members and shall create no rights or obligations enforceable by any third party,
including creditors of the LLC, except as otherwise provided by applicable law.
11.7 Representation of Counsel. This Agreement was prepared by Garrett, Hemann,
Robertson, Jennings, Comstock & Trethewy, P.C., which represents the LLC, only, in this matter.
Although the law firm has or may have represented one or more of the Members of the LLC, it is not
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representing any such Member, individually or jointly, in the preparation of this Agreement. Each
Member of this LLC acknowledges that such Member has been advised of these facts and has the
right to and is encouraged to seek independent legal counsel of such Member's choice regarding such
Member's rights and obligations, individually and as trustees, under this Agreement. Each Member
acknowledges each Member's right to negotiate the terms of this Agreement and agrees that,
although this Agreement was drafted by the attorneys for the LLC, it shall not be interpreted or
construed against any party.
Lawrence E. Tokarski Revocable Living Trust
dated June 11,1996, as to 750 Unites
1awrence E. Tokarski, Trustee (Date)
Kelley Hamilton and Janet Tovar Hamilton Trust
dated November 29, 2002, as to 750 Units
gy; ~ ~? 2~/G~
Ke ey D. amilton, Trustee (Date)
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APPENDIX 6.3
6.3.1 Adjusted Capital Account Deficit means a deficit balance in any Member's Capital
Account at the end of any fiscal year, after adjustment to reflect any Adjustment Items, to the extent
that the deficit exceeds the amount of a member's shares of Company Minimum Gain and Member
Non-recourse Debt minimum Gain (if any) that the Member is deemed to be obligated to restore
pursuant to Treasury Regulation §§1.704-2(g)(1) and 1.704-2(i)(5).
6.3.2 Adjustment Items means adjustments, allocations, and distributions described in
Treasury Regulation §§1.704-1(b)(2)(ii)(d)(4}, (5), and (6).
6.3.3 Capital Account means the account maintained for each Member pursuant to
Section 2.5.
6.3.4 Company Minimum Gain means as of any date, the amount of gain, if any, that would
be recognized by the Company for federal income tax purposes, as if it disposed of property in a
taxable transaction on that date in full satisfaction of any non-recourse, liability ,secured by the
property, computed in accordance with Treasury Regulation §1.704-2(d)(1).
6.3.5 Member Non-recourse Debt has the same meaning as "partner non-recourse debt" set
forth in Treasury Regulation § 1.704-2(b)(4).
6.3.6 Member Non-recourse Debt Minimum Gain means an amount, with respect to each
Member non-recourse Debt, equal to the Company Minimum Gain that would result if such Member
Non-recourse Debt were treated as anon-recourse Liability, determined pursuant to Treasury
Regulation § 1.704-2(i)(2) and (3).
6.3.7 Member Non-recourse Deductions has the same meaning as "partner non-recourse
deductions" set froth in Treasury Regulation § 1.7.04-2(i)(2). The amount of Member non-recourse
Deductions with respect to a Member non-recourse Debt for a Company fiscal year equals the
excess, if any, of (A) the net increase, if any, in the amount of the Company minimum Gain
attributable to such Member Non-recourse Debt during the fiscal year over (B) the aggregate amount
of any distribution during the fiscal year to the Member that bears the economic risk of loss for such
Member Non-recourse Debt to the extent the distributions are from proceeds of the Member Non-
recourse Debt and are allocable to an increase in Member Non-recourse Debt Minimum Gain
attributable to the Member Non-recourse Debt, determined pursuant to Treasury Regulation §1.704-
2(1).
6.3.8 Non-recourse Deductions has the meaning set forth in Treasury Regulation § 1.704-
2(c). The amount ofNon-recourse Deduction for a Company fiscal year equals excess, if any, of the
net increase, if any, in the amount of Company Minimum Gain during that fiscal year over the
aggregate amount of any distributions during that fiscal year of proceeds of anon-recourse Liability
that are allocable to an increase in Company Minimum Gain, determined pursuant to Treasury
Regulation § 1.704-2(c).
6.3'.9 Non-recozrse Liability has the meaning set forth in Treasury Regulation § 1.704-
2(b)(3).
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6.3.10 Limitations on Allocations of Loss. In no event will any Company loss or deduction,
or item thereof, be allocated to any Member to the extent that the member has, or would have as a
result of the allocation, an Adjusted Capital Account Deficit in the Member's Capital Account as of
the end of the Company taxable year to which the allocation relates. Any loss or deduction, the
allocation of which to a Member is disallowed by the foregoing restriction; will be reallocated to
those Members who do not have an Adjusted Capital Account Deficit as of the end of such taxable
year.
6.3.11 Company Minimum Gain Chargeback. If there is a net decrease in Company
Minimum Gain during any Company taxable year, each Member will be specially allocated, before
any other allocation of Company income, gain, loss, or deduction for the taxable year, items of
Company income and gain for the taxable year (and, if necessary, subsequent years) in proportion to
and to the extent of an amount equal to each Member's share of the net decrease in Company
Minimum Gain determine in accordance with Treasury Regulation § 1.704-2(g)(2). This Paragraph is
intended to comply with and will be interpreted" consistently with the "minimum gain chargeback"
provisions of Treasury Regulation §1.704-2(f).
6.3.12 Member Non-recourse Debt Minimum Gain Chargeback. Notwithstanding any other
provision of Article 6 of the Agreement or this Appendix 6.3, except paragraph 6.3.11. of this
Appendix, if there is a net decrease in Member Non-recourse Debt minimum Gain attributable to a
Member Non-recourse Debt during any taxable year of the Company, each Member who has a share
of the Member non-recourse Debt Minimum Gain attributable to such Member Non-recourse Debt,
determined in accordance with Treasury Regulation § 1.704-2(i)(5), will be specially allocated items
of Company income and gain for such year (and, if necessary, subsequent years) in an. amount equal
to such Member's share of the net decrease in Member Non-recourse Debt, determined in accordance
with Treasury Regulation § 1.704-2(i)(4). Allocations pursuant to this Paragraph 6.3.12 will be made
in proportion to the respective amounts required to be allocated to each Member pursuant thereto.
The items to be so allocated will be determined in accordance with Treasury Regulation §1.704-
2(1)(4). This Paragraph 6.3.12 is intended to comply with, and will be interpreted consistently with,
the partner non-recourse debt minimum gain chargeback provisions of Treasury Regulations §1.704-
2(1)(4)
6.3.13 Qualified Income Offset. Notwithstanding any other provision of the Agreement or
this Appendix except Paragraphs 6.3.11 and 6.3.12 of this Appendix 6.3, in the event any Member
for any reason receives an Adjustment Item for any fiscal year that results in an Adjusted Capital
Account Deficit for that Member, the Member will be specially 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 the year) in an amount and manner sufficient to eliminate the Adjusted Capital Account
Deficit, if any, created by such Adjustment Item as quickly as possible. This Paragraph 6.3.13 is
intended to comply with the "qualified income offset" requirements of .Treasury Regulation § 1.704-
1(b)(2)(ii)(d) and will be interpreted and applied consistently therewith.
6.3.14 Offsetting Allocations. Any special allocations of items of income, gain, loss, or
deduction pursuant to Paragraphs 6.3.11, 6.3.12 or 6.3.13 of this Appendix 6.3 will be taken into
account in computing subsequent allocations of Company income, gain, loss or deduction pursuant to
Article 6 so that the net amount of any items so allocated and all other income, gain, loss, deductions,
and items thereof allocated to each Member pursuant to Article 6 will, to the extent possible, be equal
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to the net amount that would have been allocated to each Member pursuant to Article 6 if the special
allocation had not occurred.
6.3.15 Allocations with respect to Contributed or Revalued Property. Notwithstanding any
other provision of Article 6 of this Agreement, in the event Internal Revenue Code ("IRC") §704(c)
or IRC §704(c) principles applicable under Treasury Regulation § 1.704-1(b)(2)(iv) require
allocations of Company income, gain, ~ loss, or deductions for income tax purposes in a manner
different than otherwise provided in Article 6 of this Agreement, the provisions of IRC §704(c) and
the regulations thereunder will control such allocations among the Members for income tax purposes.
Any item of income, gain, loss, and deduction with respect to .any property (other than cash) that has
been contributed to the Company by a Member or that has been revalued for Capital Account
purposes under this Agreement pursuant to Treasury Regulation § 1.704-1(b)(2)(iv) and which is
required or permitted to be allocated to such Member for income tax purposes under IRC §704(c) so
as to take into account the variation between the `fax basis of such contributed or revalued property
and its .fair market value at the time of its contribution or revaluation will be allocated solely for
income tax purposes in the manner so required ~ or permitted under IRC §704(c) using the method
described in Treasury Regulation § 1.704-3 (or any successor regulation) selected by the Manager.
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2.3 Other Business of Members. Any Member may engage independently or with others
in other business and investment ventures of every nature and description and shall have no
obligation to account to the LLC for such business or investments or for business or investment
opportunities.
2.4 Additional Contributions. In addition to the capital contributions listed above,
additional capital contributions shall be accepted from existing Members only if all the Members
unanimously approve and set the maximum total amount of the additional capital contributions. If
the Members do so, the Members shall make additional capital contributions on a pro-rata basis in
proportion to their Ownership Units.
2.5 No Interest on Capital Contributions. No interest shall be paid on capital
contribution.
2.6 Capital Accounts. The LLC shall establish and maintain capital accounts with
respect to each Member in accordance with the rules found in Treas. Reg. Section 1.704-1(b).
ARTICLE 3
MEMBER MEETINGS
3.1 Annual Meeting. An annual meeting of the Members may be held at a time, date and
place specified by the Manager(s) and communicated by notice to the Members. At such annual
meeting, the Members shall transact all business, which is properly brought before the meeting.
3.2 ~ecial Meetings. A special meeting of Members shall be held if the Manager(s)
requests such meeting by providing notice of the time, date, place and purpose of the meeting to the
Members. A special meeting of Members shall be held if any member requests such meeting by
signing, dating and delivering to the LLC's registered office a written demand for the meeting, which
describes the purpose or purposes for which such meeting is to be held. All special meetings shall be
held at a time, date and place designated by the Manager(s) specified in the notice of this special
meeting prepared by the Manager(s). In the event of a Member requested special meeting, the
Manager(s) shall set the date of such meeting not more than 30 days after receiving notice of the
Member's request.
3.3 Notice of Meeting. Notice of the time, date and place of each Member meeting- shall
be mailed to each Member not earlier than 60 days nor less than 10 days before the meeting date.
The notice must include a description of the time, date, place and purpose for which the meeting is
called.
3.4 Record Date. The persons entitled to notice of and to vote at a Member meeting and
their respective ownership interests shall be determined on the date on which the notice of the
meeting was first mailed or otherwise delivered to Members (the record date).
3.5 uorum. The presence, in person or by proxy, of Members holding at least 75% of
the Ownership Units shall constitute a quorum.
3.6 Proxies. A Member may be represented at a meeting by a person or entity holding
such Member's written proxy.
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3.7 Vo int. On each matter requiring action by the Members, each Member shall be
entitled to one vote for each Ownership Unit. Whenever the phrase "Majority of the Members" or
"Majority of the Ownership Units" is used in relation to voting, it means the decision voted on
requires the affirmative vote of more than 60% of the Ownership Units. Unless otherwise provided
in this Agreement, all matters requiring action by the Members shall be approved by vote of a
Majority of the Ownership Units.
3.8 Meeting of all Members. Notwithstanding any other provision of this Agreement, if
all of the Members hold a meeting at any time and place, such meeting shall be valid without call or
notice; and any lawful action taken at such meeting shall be the action of the Members.
3.9 Action Without Meeting. Any action required or permitted to be taken by the
Members at a meeting may be taken without a meeting if a consent in writing, describing the action
taken, is signed by all of the Members and is included in the minutes or filed with the LLC's record
of meetings.
3.10 Meetings by Telephone. Meetings of the Members may be held by telephone
conference or by any other means of communication by which all participants can communicate with
each other simultaneously during the meeting, and such participation shall constitute presence in
person at the meeting.
3.11 Actions Requirin Unanimous Vote of Members. The following actions require the
unanimous approval of the Members: .
3.11.1 Admitting an additional Member;
3.11.2 Amending or restating the Articles of Organization or this Agreement;
3.11.3 Electing a Manager who is neither:
3.11.3.1 the trustor of a trust that is a Member of the LLC; nor
3.11.3.2 a Member of the LLC.
3.11.4 Merging the LLC with another entity;
3.11.5 Except as specifically provided in this Agreement, borrowing funds from any
person or entity which requires the personal guarantee of all of the Members;
3.11.6 Requiring additional capital contributions; or
3.11.7 Allowing the LLC to loan LLC funds to a Member or entity owned by any
Member.
ARTICLE 4
MANAGEMENT
4.1 Management by Mana eg_r(s). The LLC shall be managed by one (1) or more
Managers who shall be elected by the affirmative vote of a Majority of the Ownership Units. The
Manager(s) shall not be compensated for serving as Manager(s) unless otherwise agreed by the
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