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THE CITY OF
FO BARSTOW
CROSSROADS OF OPPORTUNITY
Planning and Building Agency
Cannabis Division
CANNABIS LICENSE APPLICATION
ALL FEES ARE NON-REFUNDABLE - THIS APPLICATION IS A PUBLIC RECORD Application Number Date
To be filled out by City To be filled out by City
Applicant Name: _ Culture Barstow on the 15, LLC
Check each that applies:
Cannabis Application Fee
Initial $18,644.85
Quarterly Compliance Inspection • $550.00
Annual Renewal *** $14,107.85
Entity Transfer or Modification**
TOTAL FEES $19,194.85
Application Activities (mark all that apply):
Cannabis Cultivation • Cannabis Manufacturing*
Cannabis Distribution / Transportation Cannabis Testing Cannabis Dispensary • Non-store Front Delivery
*For Manufacturing, circle one: Volatile Non-Volatile
**For a transfer of one person or entity to another, original permit holder must submit a signed and dated letter on professional letterhead detailing his/her intention to be removed from the business and permit.
***Annual Regulatory Fee included. For an Annual Renewal Permit submit the following: Completed Application; Updated Live Scans; Proof that Business License taxes and Cannabis taxes have been paid and are up-to-date; One, 8.5" × 11" Site Plan and Floor Plan identifying the location of cannabis activities and showing the exact square footage of each cannabis activity. Include permit numbers.
An inspection by City Staff is required prior to issuance of the Annual Renewal. 005
220 E Mountain View St. Ste A • Barstow, CA 92311 • (760) 255-5161 • https://www.barstowca.org/home REV 1/5/2022 Cannabis License Application Page 2 of 68
Please print the following information and attach the conditions of approval for each permit you list:
Conditional Use Permit Application Number (required before operation):
Other related permits (previous cannabis applications, location development plan, etc.):
1. Application Information
Name of Business: Culture Cannabis Club
Applicant entity structure:
• Corporation
• Unincorporated Association
Z Other (described): A limited liability company
ll.
Applicant (Entity Name) Culture Barstow on the 15, LLC
Applicant Representative & Title: Devon Julian CEO
(this is the person who will be listed on the permit when it is issued, and whom the planning department will contact regarding this application)
Address: 1 Corporate Park Suite 112
City:_Irvine State: CA Zip:_ 92606
Telephone: (619) 277-2827 Email: [email protected] Cellphone: (619) 277-2827
Ill.
Location / Property Information
Facility address (issued by City of Barstow. If there are multiple addresses, list them all):
2824 Lenwood Rd, Barstow CA 92311
Assessor's Parcel Number (Issued by San Bernardino County Assessor): 421-313-046 Zip Code: 92311
Total square-Feet of each structure on site: 3,000 sf
Iv.
Property Owner information
Recorded Owner:_ Anil Mohan
Address: 13825 Pamlico Rd
City: Apple Valley State: 92307
Telephone: (760) 672-4128 Cellphone: (1p0) 672-4128
V.
Criminal Convictions
None
220 E Mountain View St. Ste A • Barstow, CA 92311 • (760) 255-5161 • https://www.barstowca.org/hom@0G REV 1/5/2022 Cannabis License Application Page 3 of 68
Please list any felony criminal convictions or misdemeanor convictions involving moral turpitude, or the illegal use, possession, transportation, distribution, or similar activities related to controlled substances. Please list offense, date of offense, date of conviction, and City in which conviction occurred:
1. None
4. VI.
Unfair Business Practices
For any Applicant or Managing Member, please list all unlawful, fraudulent, unfair, or deceptive business acts or practices:
1. None
Business Entity Information
Appropriate Entity: •Nonprofit • Not-for-profit 2 For-Profit Name of Corporation or LLC Culture Barstow on the 15, LLC Cal. Sec. of State Corp. ID No: 202128710878
Federal Tax ID No: 87-3768460
Date of Incorporation: 10/12/2021
Place of Incorporation: California
Location of Corporation Headquarters: Irvine, CA
Is this a Mutual Benefit Corporation? • YES NO
Are all members of the corporation Qualified Patients and Designated Primary Caregivers •YES Z NO of the Qualified Patient members?
007
220 E Mountain View St. Ste A • Barstow, CA 92311 • (760) 255-5161 • https://www.barstowca.org/home REV 1/5/2022 Cannabis License Application Page 4 of 68
Corporate Officers:
Please provide the following information for each cannabis permit applicant Corporate Officer. Attach additional pages to the application if necessary. Those listed will be authorized to discuss matters of this application with the Planning Department. Corporate Officers and Delivery Drivers must be recorded by the California Secretary of State.
All corporațe officers and non-store front delivery drivers shall submit a live scan, failure to do so may result in delayed processing of this application.
Name (First, MI, Last) Title Phone
Devon Julian CEO (714) 657-9628
Julie Le Director of Administration (619) 277-2827
Anil Mohan Owner (760) 672-4128
008
220 E Mountain View St. Ste A • Barstow, CA 92311 • (760) 255-5161 • https://www.barstowca.org/home Property Owner
Authorization
035
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BARSTOW PROPERTY OWNER / LANDLORD USE DISCLOSURE & AUTHORIZATION FOR
A CANNABIS FACILITY
If the applicant is the owner of the property on which this activity is located, the applicant shall provide a copy of the title or deed to the property. If the applicant is not the owner of the property, this form shall be filled out and a copy of the contractual agreement between applicant and owner included.
Anil Mohan _ am the legal Owner / Landlord / Lessor or real (Nome of Property owner/ n2824 Lenwood Rd (Circle Appropriate Term) Property located at in Barstow, California.
I hereby authorize the Cannabis Apricanentled
Culture Barstow on the 15, LLC , to use this property as a Name of Corporation, individual, or Business)
annabis facility, as that term is defined in state law and by the City of Barstow Municipal Code, for the specifi use of a cannabis facility.
Anil Mohan - Owner
ted Name & Title)
(Signature of Legal Owner / Landlord / Lessor)
(760) 672-4128 13825 Pamlico Rd, Apple Valley CA 92307
(Phone Number) (Address)
2/3/22
(Copy and attach additional pages of this form if necessary to include multiple Owners) All Signatures must be original, no electronic signatures, or copies will be accepted. 1, Culture Barstow on the 15, LLC _ declare under penalty of perjury that the foregoing (Applicant)
Information is true and correct. Executed this day of Feb _ 20_22 036
220 E Mountain View St. Ste A • Barstow, CA 92311 • (760) 255-5161 • https://www.barstowca.org/home Operating Standards
Acknowledgement
055
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ACKNOWLEDGEMENT OF CANNABIS OPERATING STANDARDS AS SET FORTH IN
BARSTOW'S MOST RECENT CANNABIS ORDINANCE
The undersigned Management Members, on behalf of the herein Cannabis Operation 1, permit applicant, Culture Barstow on the 15, LLC _ declare under penalty of perjury that I have read and understand the provisions of Barstow's most recent cannabis ordinance, and shall, collectively and individually, ensure that the Cannabis Applicant, its Members, and Management Members shall not engage in activity that violates the Operational Requirements set forth in Barstow's most recent cannabis ordinance, which states in relevant part that the Cannabis Applicant shall:
(A) Only Operate on a property located within the zoning districts specified by Barstow Municipal Code sections 19.16.030 and 19.18.030, as applicable.
(B) Not be located within a 1,000-foot radius of any public or private school providing instruction in kindergarten or any grades one through twelve, public park, public day care center or youth center, or church or other religious land use that in in existence at the time the Cannabis Business applies for its initial Permit.
(C) Not be located within 1,000-foot radius of any residentially zoned district of the City (Districts ER, LDP, SFR, MDR or any other newly created residential zoning district) that is so zoned at the time the Cannabis Business applies for its initial Permit.
(D) Comply with all City laws and all other applicable laws. (E) Comply with all applicable provisions of Business & Professions Code Section 26000, et seq. and all applicable rules and regulations promulgated by the State Licensing Agencies. (F) Designate one of its Owners or full-time employee as its Community Relations Liaison and who shall be responsible for receiving and responding to all concerns and complaints made to the City regarding the Cannabis Business and for making a good faith attempt to promptly address all concerns and resolve all complaints. The Community Relations Liaison's name, phone number, and email address shall be posted prominently on the exterior of the Cannabis Business's Business Premises. (G) Individuals under 21 years of age shall not be allowed on the Business Premises of any Cannabis Business, except as pertaining to the sale of cannabis for medicinal use by a Storefront Retail Cannabis Business to a medical patient or primary caregiver who is at least 18 years of age. (H) A Retail Storefront Cannabis Business shall only be open to the public between the hours of 6 a.m. and 10 p.m. A Delivery Cannabis Business shall only deliver Cannabis or Cannabis Products between the hours of 6 a.m. and 10 p.m. The City Manager may adjust these default hours by regulation. 056
220 E Mountain View St. Ste A • Barstow, CA 92311 • (760) 255-5161 • https://www.barstowca.org/home REV 1/5/2022 Cannabis License Application Page 7 of 68
(I) Implement sufficient security measures to deter and prevent the unauthorized entrance into areas containing Cannabis or Cannabis Products, and to deter and prevent the theft of Cannabis or Cannabis Products. These security measures shall include, but may not be limited to the following:
1) Alarm system (perimeter, fire, and panic buttons)
2) Remote monitoring of alarm systems by licensed security professionals 3) Perimeter lighting systems (including motion sensors) for after-hours security 4) Perimeter security and lighting
5) Establishing limited access areas accessible only to authorized Cannabis Business personnel 6) All Cannabis and Cannabis Products shall be stored and secured in accordance with the requirements specified by the State of California. All Cannabis and Cannabis Products, including live plants that are being cultivated, shall be kept in a manner as to prevent diversion, theft, and loss.
7) 24-hour security surveillance cameras to monitor all entrances and exits to and from the Business Premises, all interior spaces within the Cannabis Business which are open and accessible to the public, all interior spaces where Cannabis, cash or currency, is being stored for any period of time on a regular basis and all interior spaces where diversion of Cannabis could reasonably occur. Live feed and video recording shall be maintained for a minimum of 90 days. (J) Take reasonable steps to discourage persons on or around its Business Premises, including any parking areas under its control from engaging in illegal, criminal, or nuisance activities, including, but not limited to, disturbances of the peace, public intoxication, drinking alcoholic beverages, smoking or ingesting Cannabis Products, illegal drug activity, vandalism, obstruction of the operation of another business, harassment of passersby, gambling, prostitution, loitering, public urination, lewd conduct, drug trafficking, excessive loud noise, or any other behavior that adversely affects or detracts from the quality of life for adjoining residents, property owners, or businesses. (K) Provide immediate access to its Business Premises and all areas therein to employees or agents of the City performing their official duties.
(L) The City Manager or its designee may develop other operational requirements or regulations as are determined to be necessary to protect the public health, safety, and welfare. (M) Cannabis growing, manufacturing, and testing shall be in appealing and discreet facilities that do not openly advertise the presence of any cannabis products or operations on site and subject to City's Design Guidelines.
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220 E Mountain View St. Ste A • Barstow, CA 92311 • (760) 255-5161 • https://www.barstowca.org/home REV 1/5/2022 Cannabis License Application Page 8 of 68
We, Anil Mohan and Julie Le
(Printed Name of Property Owner) (Printed Name of Operator) Collectively acknowledge that we have been provided a copy of the cannabis facility operating standards listed on the City of Barstow's most recent cannabis ordinance. We further acknowledge that we have read, understand, and shall ensure compliance with the aforementioned operation standards and all applicable provisions of the City of Barstow's most recent cannabis ordinance at the time cannabis facility entitled Culture Cannabis Club
(Name of facility listed on the application)
We certify under penalty of perjury that the foregoing information is true and correct.
Executed this / day of Feb
20_22 in Barstow, California.
(Day) (Month) (Year)
Anil Mohan, Owner
Signature of Property Owner Printed Name & Title
x Sulule Julie Le, Director of Administration
Signature of Operator Printed Name & Title
058
220E Mountain View St. Ste A • Barstow, CA 92311 • (760) 255-5161 • https://www.barstowca.org/home Information Release
Form
059
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INFORMATION AND RELEASE FORM
The undersigned, on behalf of Culture Barstow on the 15, LLC, hereby authorize the City of Barstow, by and (Name of Corporation)
Through its appropriate Officers, Agents, and Employees to verify and confirm the information contained in this application, and to conduct such other investigations as may be reasonably required by the City of Barstow, its Officers, Agents, and Employees for the purpose of determining the capability, fitness, and capacity of the above named Corporation to obtain the Cannabis Permit.
The Applicant by signing this Information Release Form consents to service of any notice required or provided for by the laws, rules, regulations, or ordinances of the City of Barstow upon the person(s) at the address listed for Applicant, will constitute sufficient and legal notice, unless said Applicant listed an Attorney of Record and/or Agent for service of process, with sufficient contact information.
The Applicant consents and agrees that full compliance will be made with all applicable State laws and City ordinances governing the conduct of the particular type of activity for which the Cannabis Permit re requested.
The Applicant by signing this Information Release Form understand that any complete or false information may constitute grounds for denial.
This form MUST be signed by each Applicant Management Member.
Devon Julian, CEO 2/2/22
Signature of Management Member Printed Name & Title Date bule Julie Le, Director of Administration 211/22
Signature of Management Member Printed Name & Title Date Anil Mohan, Owner 2/3/22
Signature of Management Member Printed Name & Title Date This release may be executed in two or more counterparts, each of which shall be deemed an original, and all of which taken together shall constitute one and the same instrument. All Signatures must be originals; no electronic signatures or copies will be accepted.
I declare under penalty of perjury that I have read the forgoing application and all information, statements, verifications, declarations, and authorizations made, attached to and contained herein, and that I have personal knowledge of the information contained in the application, and that the information contained and the application is true and correct, and that the application was completed under supervision of the Management Members.
Executed this day of peb 20 22 in Barstow, California.
(Day) (Month) (Year)
060
220 E Mountain View St. Ste A • Barstow, CA 92311 • (760) 255-5161 • https://www.barstowca.org/home On-site member contact
Statement
061
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BARSTOW CANNABIS FACILITY
ON-SITE MEMBER CONTACT STATEMENT
The undersigned, on behalf of Culture Barstow on the 15, LLC (Name of Corporation)
hereby designates Devon Julian as the on-site
(Name of On-Site Manager)
Community Relation's Representative to whom the Public or City can provide notice to fi there are operating problems or issues relating to the Barstow Cannabis Facility. The Cannabis Facility shall make every good faith effort to encourage residents to call this person to try to solve operating problems, if any, before any calls or complaints are made to the Police or Planning Departments.
Devon Julian, CEO
Signature of On-Site Manager Printed Name & Title
1 Corporate Park Suite 112, Irvine CA 92606 (619) 277-2827 Address Phone Number
None [email protected]
Fax Number Email
I declare under penalty of perjury that 1 have read the forgoing application and all information, statements, verifications, declarations, and authorizations made, attached to and contained herein, and that I have personal knowledge of the information contained in the application, and that the information contained and the application is true and correct, and that the application was completed under supervision of the Management Members.
Executed this day of Jinuan 202- - in Barstow, Calitornia. (Day) (Month)
062
220 E Mountain View St. Ste A • Barstow, CA 92311 • (760) 255-5161 • https://www.barstowca.org/home Operating Agreement
600
DocuSign Envelope ID: 4E37539E-1538-4BBA-95C4-76963FFF82D1
ACTIONS TAKEN BY
UNANIMOUS WRITTEN CONSENT
IN LIEU OF ORGANIZATIONAL MEETING
OF THE MEMBERS
of
Culture Barstow on the 15, LLC
a California limited liability company
Dated as of: October 7, 2021
The following actions are hereby taken by unanimous written consent of the Members of Culture Barstow on the 15, LLC (the "Company"), a California limited liability company, pursuant to the laws of the State of California.
Action without Meeting. These actions are taken in lieu of the organizational meeting of the Members of the Company. The undersigned comprising and constituting the Members and holders of all membership interest of Company, do hereby consent to taking the following actions without an organizational meeting, in accordance with the laws of the State of California.
2. Waiver of Notice. The undersigned, comprising and constituting the Members and holders of all membership interest of Company, do hereby waive notice of the time, place, and purpose of the organizational meeting of Members.
Articles of Organization. The Members reviewed the Articles of Organization attached hereto as Exhibit A. Based upon this review and consideration by the Members, the following resolution was adopted.
RESOLVED, that the Articles of Organization attached hereto as Exhibit A which has been filed with the California Secretary of State on October 12, 2021, is hereby approved, adopted and ratified by the Members.
RESOLVED FURTHER, that the Members of this Company are authorized and directed to take any action necessary to effectuate the foregoing resolution, including, but not limited to, causing Company to file the Articles of Organization with the California Secretary of State, placing a certified copy in the minute book of the Company, and to keep a copy at the principal executive office of the Company, and any other action required by law.
Operating Agreement. The Members reviewed and considered the proposed Operating Agreement attached hereto as Exhibit B. Based upon this review and consideration by the Members, the following resolution was adopted.
RESOLVED, that the Operating Agreement attached hereto as Exhibit B, which was presented to the Members for consideration, is hereby approved, adopted and ratified by the Members.
RESOLVED FURTHER, that the Members of this Company are authorized and directed to take any action necessary to effectuate the foregoing resolution, including, but not limited to, placing a certified copy in the minute book of the Company, and to keep a copy at the principal executive office of the Company, and 010
DocuSign Envelope ID: 4E37539E-1538-4BBA-95C4-76963FFF82D1 any other action required by law.
Employer Identification Number. The Company desires to obtain an Employer Identification Number ("EIN") from the Internal Revenue Service ('IRS").
RESOLVED, that the Company shall obtain an EIN from the IRS.
RESOLVED FURTHER, that the Members of this Company shall attach the IRS' confirmation of assignment of EIN as Exhibit C, attached hereto.
RESOLVED FURTHER, that the Members of this Company are authorized and directed to take any action necessary to effectuate the foregoing resolution, including, but not limited to, placing a certified copy in the minute book of the Company, and to keep a copy at the principal executive office of the Company, and any other action required by law.
6. Appointment of Managers. The Members of the Company considered whom to nominate and elect as Managers of the Company. In connection, therewith, the following resolution is hereby adopted:
RESOLVED: that the following was unanimously nominated and appointed as Managers:
Manager: Devon Julian
Manager: Julie Le
Omnibus Resolution.
RESOLVED, that the Members of Company be, and hereby are, authorized, empowered, and directed to take all steps, and to execute and deliver any and all instruments in connection with carrying the foregoing resolutions into effect.
IN WITNESS WHEREOF, the undersigned comprising and constituting the Members and holders of all membership interest of Company has executed this unanimous written consent as of the date first set forth above.
MEMBERS:
DocuSigned by:
juliele
Devon Julial
-Docu Signed by:
ANIL MOHAN
Anil. k..20352911B4..
011
DocuSign Envelope ID: 4E37539E-1538-4BBA-95C4-76963FFF82D1
OPERATING AGREEMENT
of
CULTURE BARSTOW ON THE 15, LLC
a California Limited Liability Company
This operating agreement (the "Agreement") of Culture Barstow on the 15, LLC, a California limited liability company (the "Company"), is executed on October 13, 2021 ("Effective Date") by and among the Company and the Members. Unless otherwise noted, capitalized terms used in this Agreement have the meanings ascribed herein, as more fully set forth in ARTICLE XI.
NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein, the parties hereto agree to and do associate themselves for the purposes and upon the terms and conditions set forth herein.
ARTICLE I
ORGANIZATIONAL MATTERS
Section 1.01 Name. The name of the Company is Culture Barstow on the 15, LLC.
Section 1.02 Principal Office. The principal office of the Company is located at 3 Corporate Park, Suite 200, Irvine CA 92606, or such other location as the Members may determine from time to time.
Office and Agent for Service of Process. The office for service of process on the Company and the agent for service of process on the Company in the State of California shall be the office of the initial agent and the initial agent, respectively, named in the Articles of Organization or such other office (which need not be a place of business of the Company) or such other Person or Persons as the Members may designate from time to time in the manner provided by RULLCA and Applicable Law.
Section 1.04 Purpose; Powers; Operating Agreement. The purpose of the Company is to engage in any lawful act or activity for which limited liability companies may be formed under RULLCA and to engage in any and all activities necessary or incidental thereto.
Section 1.05 Term. The term of the Company commenced on the date the Articles of Organization were filed with the Secretary of State of the State of California and shall continue in existence until the Company is dissolved in accordance with the provisions of this Agreement or as provided by law.
ARTICLE II
MEMBERS
The name, business, residence, or mailing address, email address, and facsimile number, if any, Capital Contributions, and respective Member Units of each Member are set out in the Members Schedule in Schedule I. The Members shall maintain and update the Members Schedule, upon the issuance or Transfer of any Member Units to any new or existing Member in accordance with this Agreement.
Section 2.02 Classes of Member Units. The Company shall have two (2) classes of Member Units:
Class A Units and Class B Units. The Class A Units and Class B Units shall have rights and privileges as follows:
(a) Class A Units. The Class A Units: (a) shall be entitled to vote on any matters subject to Operating Agreement of
Culture Barstow on the 15, LLC Page 1 of 19
012
DocuSign Envelope ID: 4E37539E-1538-4BBA-95C4-76963FFF82D1 the vote of the Members; (b) shall have the general right to receive distributions in accordance with Article V of this Agreement; and (c) shall have the right to receive distributions upon dissolution or liquidation of Company in accordance with Article IX of this Agreement.
Class B Units. The Class B Units: (a) shall not be entitled to vote on any matters subject to the vote of the Members, except as required by the Act; (b) shall have the right to receive distributions in accordance with Article V of this Agreement; and (c) shall have the right to receive distributions upon dissolution or liquidation of Company in accordance with Article IX of this Agreement.
Section 2.03 Capital Contributions; Additional Capital Contributions; Capital Accounts; No Withdrawals; Loans.
(a) The Members have contributed to the Company the amounts, in the form of cash, property, services, or other obligations (as such amounts may be amended herein from time to time, the "Capital Contributions") set out in the Members Schedule.
After fully funding the Capital Contributions no Member shall be required to make any additional Capital Contributions. The Managers may determine from time to time by majority vote, that Capital Contributions in addition to the Members' initial Capital Contributions are needed to enable the Company to conduct its business. If such a determination is made by the Managers, the Managers shall give written notice to all Members in writing at least 30 days before the date on which such additional Capital Contribution may be made. The written notice shall set forth the amount of additional Capital Contribution needed from each Member, the purpose for which it is needed, and the date by which the Members may, if they, in their sole discretion, contribute the same. Each Member will be given the opportunity to make, but shall have no obligation to make, any additional Capital Contributions in accordance with the Members' Percentage Interests. If additional Capital Contributions are not made in accordance with each Member's Percentage Interest at the time, the Members acknowledge that their Percentage Interests may be altered. Immediately following such Capital Contributions, the Percentage Interests shall be adjusted by the Managers to reflect the new relative proportions of the Member Units of the Members, as set forth in the resolution approving the additional contributions.
The Company shall establish and maintain for each Member a separate capital account (each, a "Capital Account") on its books and records in accordance with the provisions of Section 704(b) of the Code and Treasury Regulations Section 1.704-1(b)(2)(iv). Each Capital Account shall be (i) credited by such Member's Capital Contributions to the Company and any profits allocated to such Member in accordance this Agreement and (i) debited by any distributions to such Member and any losses allocated to such Member. For purposes of maintaining the Members' Capital Accounts, profits and losses shall be determined in accordance with Treasury Regulations Section 1.704-1(b). The Capital Accounts shall be adjusted by the Managers upon the occurrence of an event described in Treasury Regulations Section 1.704- 1(b)(2)(iv)(f)(5) in the manner described in Treasury Regulations Section 1.704-1(b)(2)(iv)(f)(5) and (g) if the Managers determine that such adjustments are necessary or appropriate to reflect the relative economic interests of the Members. In the event of a Transfer of any Member Units in accordance with the terms of this Agreement, the Transferee shall succeed to the Capital Account of the Transferor to the extent it relates to the transferred Member Units.
(d) No Member shall be entitled to withdraw any part of his, her or its Capital Account or to receive any distribution from the Company, except as otherwise provided in this Agreement. (e) If any Member shall have a deficit balance in his, her or its Capital Account, such Member shall have no obligation, during the term of the Company or upon dissolution or liquidation thereof, to Operating Agreement of
Culture Barstow on the 15, LLC Page 2 of 19
013
DocuSign Envelope ID: 4E37539E-1538-4BBA-95C4-76963FFF82D1 restore such negative balance or make any Capital Contributions to the Company by reason thereof, except as may be required by Applicable Law or in respect of any negative balance resulting from a withdrawal of capital or dissolution in contravention of this Agreement. (f) Loans made by Members to the Company shall not be considered Capital Contributions.
If any Member shall loan funds to the Company, then the making of such loan shall not result in any increase in the Capital Account balance of such Member (nor increase in any Units to such Member). The amount of such loan shall be the debt of the Company to such Member and shall be payable or collectable in accordance with the terms and conditions upon which such loans are made. The Company shall not enter into a loan with a Member except with majority approval of the Managers. (g) Expenses. Following the full funding of the Build-Out Costs and completion of such build- out, all expenses incurred by the Company relating to operating costs, capital expenditures, inventory and product purchases, and all other expenses necessary to operate a commercial cannabis business (the such Operational Expenses (being the "Member Paid Operational Expenses"). Such Member Paid Operational Expenses shall: (i) not be considered Capital Contributions and shall not result in any increase in the Capital Account balance of such Member (nor increase in any Units to such Member), (ii) be considered a debt of the Company to such Member and shall be payable to such Member. So long as there are any Member Paid Operational Expenses due and payable to any Member, the Company shall not make any distributions of Available Cash. Such Member Paid Operational Expenses shall be paid first in-line (subject to any terms and conditions of any other debt facility agreements or other liabilities) before any distributions are made.
Section 2.04 Admission of Additional Members.
(a) Additional Members may be admitted from time to time, in accordance with the provisions of Section 2.01 and this Section 2.04 and in connection with (i) the issuance of Member Units by the Company, with majority approval of the Managers; or (ii) a Transfer of Member Units, subject to compliance with the provisions of ARTICLE VI.
(b) In order for any Person not already a Member of the Company to be admitted as a Member, whether pursuant to an issuance or a Transfer (including a Permitted Transfer) of Member Units or otherwise, such Person shall have delivered to the Company an executed written undertaking substantially in the form of the Joinder Agreement attached hereto as Exhibit A (a "Joinder Agreement"). Upon the amendment of the Members Schedule and the satisfaction of any other applicable conditions, including, if a condition, the receipt by the Company of payment for the issuance of the applicable Member Units, such Person shall be admitted as a Member, shall be a party hereto, shall be deemed listed as such on the books and records of the Company, and, in the case of an issuance, thereupon shall be issued his, her or its Member Units. Additionally, (i) the Capital Accounts shall be adjusted as necessary in accordance with Section 2.03 and (ii) the Member Units of the Members shall be adjusted so that the total percentage of all Member Units equals 100%.
Section 2.05 Dissociation; Death.
A Member may dissociate at any time by providing written notice of dissociation to the Company and all other Members 180 calendar days before the effective date of dissociation stated in the notice. The dissociation will be effective when the Company receives the notice, or if such Member specifies a later date, then on such later date. As soon as any Member ceases to hold any Member Units, Operating Agreement of
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014
DocuSign Envelope ID: 4E37539E-1538-4BBA-95C4-76963FFF82D1 such Person shall no longer be a Member. Any Member who dissociates will continue to be liable for each debt, obligation, or other liability owed, as of the date of dissociation, to the Company or the other Members.
Additionally, any Member who wrongfully dissociates shall be liable to the Company and the other Members for damages caused by the dissociation. A Member who dissociates must divest his, her or its entire Member Units before the effective date of dissociation in accordance with this Agreement and Applicable Law.
(b) In the event of the death of a Member, the Company and its business shall be continued by the remaining Member or Members.
Section 2.06 Certification.
The Company may, but shall not be required to, issue certificates to each Member evidencing the Member Units held by such Member. If no certificates representing Member Units are issued, then each Member's respective Units shall be reflected in the meeting minutes, and in Schedule I.
If certificates representing Member Units are issued in accordance with Section
2.06(a), then in addition to any other legend required by Applicable Law, all certificates representing issued and outstanding Member Units shall bear a legend substantially in the following form:
THE MEMBER UNITS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
AN OPERATING AGREEMENT AMONG THE COMPANY AND ITS MEMBERS, A
COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY
NO TRANSFER, SALE, ASSIGNMENT, GIFT, PLEDGE, ENCUMBRANCE,
HYPOTHECATION, OR OTHER DISPOSITION OF THE MEMBER UNITS
REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF SUCH OPERATING AGREEMENT.
THE MEMBER UNITS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
ANY OTHER APPLICABLE SECURITIES LAWS AND MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, GIFTED, PLEDGED, ENCUMBERED,
HYPOTHECATED, OR OTHERWISE DISPOSED EXCEPT PURSUANT TO (A) A
REGISTRATION STATEMENT EFFECTIVE UNDER SUCH ACT AND LAWS OR (B) AN EXEMPTION FROM REGISTRATION THEREUNDER.
Section 2.07 Meetings.
(a) Meetings of the Members may be called by Class A Members holding 10% or more of the outstanding Member Units.
(b) Written notice stating the place, date, and time of the meeting, the means of electronic video screen communication or transmission, if any, and describing the general nature of the business to be conducted at the meeting, shall be delivered not fewer than 10 days and not more than 60 days before the date of the meeting to each Member, by or at the direction of the Members) calling the meeting. The business to be conducted at such meeting shall be limited to the business described in the notice. The Class A Members may hold meetings at the Company's principal office or at such other place, within or outside the State of California, as the Member(s) calling the meeting may designate in the notice for such meeting. (c) Any Class A Member may participate in a meeting of the Members (i) using conference Operating Agreement of
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DocuSign Envelope ID: 4E37539E-1538-4BBA-95C4-76963FFF82D1 telephone or electronic video screen communication, if all Persons participating in the meeting can talk to and hear each other or (ii) by Electronic Transmission by or to the Company if the Company (A) implements reasonable measures to provide Members, in person or by proxy, a reasonable opportunity to participate and vote, including an opportunity to read or hear the meeting's proceedings substantially concurrently with the proceedings and (B) maintains a record of votes or other action taken by the Class A Members.
Participation in a meeting by such means shall constitute presence in person at such meeting. (d) On any matter that is to be voted on by the Members, a Class A Member may vote in person or by proxy, and such proxy may be granted in writing signed by such Member, using Electronic Transmission authorized by such Member or as otherwise permitted by Applicable Law. Every proxy shall be revocable in the discretion of the Member executing it unless otherwise provided in such proxy; provided, that such right to revocation shall not invalidate or otherwise affect actions taken under such proxy prior to such revocation.
Attendance of a Member at any meeting shall constitute a waiver of notice of such meeting, except where a Member attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. (f) A quorum of any meeting of the Members shall require the presence, whether in person or by proxy, of the Class A Members holding a majority of the outstanding Member Units. Subject to Section
2.08, no action may be taken by the Members unless the appropriate quorum is present at a meeting. (g) Subject to Section 2.08, Section 3.03, Section 8.04, Section 9.01(a), Section 11.08, and any other provision of this Agreement or RULLCA requiring the vote, consent, or approval of a different percentage of the Member Units, no action may be taken by the Members at any meeting at which a quorum is present without the affirmative vote of the Class A Members holding a majority of the outstanding Member Units.
Section 2.08 Action Without Meeting. Notwithstanding the provisions of Section 2.07, any matter that is to be voted on, consented to, or approved by the Class A Members may be taken without a meeting, without prior notice, and without a vote if a written consent is signed and delivered (including by Electronic Transmission) to the Company within 60 days of the record date for that action by all Members entitled to vote on the matter. The Company shall maintain a record of each such action taken by written consent of the Class A Members.
ARTICLE I
MANAGEMENT; VOTING
Section 3.01 Management of the Company. The Company shall be manager-managed by the Managers. Subject to the provisions of and except as otherwise provided by RULLCA or this Agreement, the business, property, activities, and affairs of the Company shall be exclusively managed by the Managers.
The actions of the Managers taken in accordance with the provisions of this Agreement shall bind the Company. No Member of the Company shall have any authority or right to act on behalf of or bind the Company, unless otherwise provided herein or unless specifically authorized by the Managers pursuant to a duly adopted resolution expressly authorizing such action. Except as otherwise set forth herein, all acts of the Managers shall be deemed approved and ratified upon the approval of the majority of the Managers.
Section 3.02 Number of Managers. The Company shall have two (2) Managers. A Manager is not required to be a Member of the Company.
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DocuSign Envelope ID: 4E37539E-1538-4BBA-95C4-76963FFF82D1 Section 3.03 Appointment of Managers. The Class A Members, by majority vote, shall have the right to designate, appoint, remove, and replace all Managers. The Class A Members hereby appoint: (a) Devon Julian; and (b) Julie Le to serve as the initial Managers. The Class A Members shall have the right, at any time, by majority approval, to remove (with or without cause) any Manager and replace said Manager with a new Manager, and/or fill any vacancy of a Manager seat.
Section 3.04 Removal. Each Manager shall serve until his or her successor is designated by the Class A Members as set forth in Section 3.03 or until his or her earlier death, resignation, or removal. Any Manager may resign at any time upon written notice to the Company. Any Manager may be removed by majority vote of the Class A Members, as set forth in Section 3.03 at any time, with or without cause.
Section 3.05 Officers. The Managers may appoint one or more individuals as officers of the Company (the "Officers") as the Managers deem necessary or desirable to carry on the business of the Company and may delegate to such Officers such power and authority as the Managers deem advisable. An Officer is not required to be a Member of the Company. The Managers hereby appoint: (a) Devon Julian as Chief Executive Officer; (b) Devon Julian as Chief Financial Officer and (d) Julie Le as Secretary to serve as the initial Officers. Any individual may hold two or more offices of the Company. Each Officer shall hold office until his or her successor is designated by the Managers or until his or her earlier death, resignation, or removal. Any Officer may resign at any time upon written notice to the Company. Any Officer may be removed by the Managers at any time, with or without cause. A vacancy in any office occurring because of death, resignation, removal, or otherwise may, but need not, be filled by the Managers.
ARTICLE IV
ALLOCATIONS
Section 4.01 Allocation of Profits and Losses.
(a) The Company's profits and losses for each Fiscal Year will be allocated among the Members pro rata in accordance with their respective Percentage Interest. b) Notwithstanding any other provision of this Agreement, "partner nonrecourse deductions" (as defined in Treasury Regulations Section 1.704-2(i)), if any, of the Company shall be allocated for each Fiscal Year to the Member that bears the economic risk of loss within the meaning of Treasury Regulations Section 1.704-2(i) and "nonrecourse deductions" (as defined in Treasury Regulations Section 1.704-2(b)) and "excess nonrecourse liabilities" (as defined in Treasury Regulations Section 1.752-3(a)), if any, shall be allocated to and among the Members in accordance with their Percentage Interests.
This Agreement shall be deemed to include "qualified income offset," "minimum gain chargeback," and "partner nonrecourse debt minimum gain chargeback" provisions within the meaning of Treasury Regulations under Section 704(b) of the Code.
All items of income, gain, loss, deduction, and credit of the Company shall be allocated among the Members for federal, state, and local income tax purposes consistent with the manner that the corresponding items are allocated among the Members pursuant to this Section 4.01, except as may otherwise be provided herein or under the Code.
ARTICLE V
DISTRIBUTIONS
Section 5.01 Distributions.
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DocuSign Envelope ID: 4E37539E-1538-4BBA-95C4-76963FFF82D1 (a) Distributions of Available Cash shall be made to the Members at the times and in the aggregate amounts determined by the Managers of Company. Distributions shall be made to the Members pro rata based on their respective Percentage Interests. (b) Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not make any distribution to Members if such distribution would violate Section 17704.05 of RULLCA or other Applicable Law.
Section 5.02 Tax Advance. To the extent that distributions pursuant to Section 5.01(a) for the current tax year have been insufficient, and provided that the Company has adequate cash available in excess of reasonable reserves as determined by the Managers, the Company shall, before April 15, June 15, September 15 and January 15 of each year (or such other dates by which installment tax contributions may be due), make a distribution in cash in the amount necessary to allow the Members to pay the estimated or actual taxes due on each such date attributable to the income of the Company to be allocated to the
ARTICLE VI
TRANSFERS AND PURCHASES OF MEMBER UNITS
Section 6.01 General Restrictions on Transfer.
(a) Except to Permitted Transferees pursuant to Section 6.02, the Class B Member shall not be permitted to Transfer its Member Units to any Person without the prior written consent of a majority of the Class A Members.
A Class A Member shall be permitted to Transfer its Member Units to any Person only vith the prior consent of a majority of the Managers. Notwithstanding the foregoing, each Class A Membe grees that it will not Transfer all or any portion of his, her or its Member Units in the Company, and th Company agrees that it shall not issue any Member Units:
(i) except as permitted under the Securities Act and other applicable federal or state securities or blue sky laws, and then, with respect to a Transfer of a Member Units, only upon delivery to the Company of an opinion of counsel in form and substance satisfactory to the Company to the effect that such Transfer may be effected without registration under the Securities Act; (ii) if such Transfer or issuance would cause the Company to be considered a "publicly traded partnership" under Section 7704(b) of the Code within the meaning of Treasury Regulations Section
1.7704-1(h)(1)(ii), including the look-through rule in Treasury Regulations Section 1.7704-1(h)(3); (iii) if such Transfer or issuance would affect the Company's existence or qualification as a limited liability company under RULLCA;
(iv) if such Transfer or issuance would cause the Company to lose its status as a partnership for federal income tax purposes;
if such Transfer or issuance would cause the Company to be required to register as an investment company under the Investment Company Act of 1940, as amended; or (vi) if such Transfer or issuance would cause the assets of the Company to be deemed Operating Agreement of
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DocuSign Envelope ID: 4E37539E-1538-4BBA-95C4-76963FFF82D1 "Plan Assets" as defined under the Employee Retirement Income Security Act of 1974 or its accompanying regulations or result in any "prohibited transaction" thereunder involving the Company. (c) Any Transfer or attempted Transfer of any Member Units (in full or in part) in violation of this Agreement shall be null and void, no such Transfer shall be recorded on the Company's books, and the purported Transferee in any such Transfer shall not be treated (and the purported Transferor shall continue to be treated) as the owner of such Member Units for all purposes of this Agreement.
Except as provided in Section 9.01(d), no Transfer (including a Permitted Transfer) of Member Units to a Person not already a Member of the Company shall be deemed completed until the prospective Transferee (including a Permitted Transferee) is admitted as a Member of the Company in accordance with Section 2.04.
(e) Except as provided in Section 9.01(d), for the avoidance of doubt, any completed Transfer of a Member Units permitted or authorized by this Agreement shall be deemed a sale, transfer, assignment, or other disposal of such Member Units in its entirety as intended by the parties to such Transfer, and shall not be deemed a sale, transfer, assignment, or other disposal of any less than all of the rights and benefits described in the definition of the term "Member Units," unless otherwise explicitly agreed to by the parties to such Transfer.
Section 6.02 Permitted Transfers. The provisions of Section 6.01(a) shall not apply to any Transfer by any Member of all or any portion of his, her or its Member Units to any of the following (each, a "Permitted Transferee" and any such Transfer to a Permitted Transferee, a "Permitted Transfer"):
(a) if the Member is an entity: any parent corporation, wholly-owned subsidiary, or Affiliate of the Member.
(b) if the Member is a natural person: (i) such Member's Family Member; (ii) a trust under whose beneficiaries are the Member or any Family Member of such Member; (iii) a charitable remainder trust, the income from which will be paid to such Member during such Member's life; (iv) a corporation, partnership, or limited liability company, the Members, partners, or members of which are only such Member or Family Members of such Member; (v) by will or by the laws of intestate succession, to such Member's executors, administrators, testamentary trustees, legatees, or beneficiaries. (c) The Company.
Section 6.03 Death of Member.
Upon the death of a Member, each surviving Member will have thirty (30) days to give written notice to the executors, administrators, trustees, beneficiaries, surviving Spouse, or other legal representatives of the deceased Member that the Member elects to purchase all (but not less than all) of the Member Units owned by the deceased Member at the time of his or her death (the "Deceased Member's Interest") for the Purchase Price. If more than one surviving Member gives notice electing to purchase the Deceased Member's Interest, each of the purchasing Members shall purchase his, her or its pro rata share (based on that Member's Member Units in the Company) of the Deceased Member's Interest.
If no surviving Member delivers notice as required by Section 6.03(a) electing to purchase the Deceased Member's Interest, then the Company shall purchase the Deceased Member's Interest for the Purchase Price, and the Member Units of the surviving Members and any Assignees shall be adjusted pro rata so that the total percentage of all Member Units equals 100%.
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DocuSign Envelope ID: 4E37539E-1538-4BBA-95C4-76963FFF82D1 Except with respect to the death of the last remaining Member, in which case such event shall be subject to Section 9.01(d), the executors, administrators, trustees, beneficiaries, surviving Spouse, or other legal representatives of the deceased Member shall sell the Deceased Member's Interest for the Purchase Price in accordance with the procedures set forth in this Section 6.03.
For any sale and purchase pursuant to this Section 6.03, the purchasers) and seller shall use their best efforts to mutually agree in good faith on the Purchase Price.
Until such time that the Deceased Member's Interest is purchased as provided in this Section 6.03, and except as provided in Section 9.01(d), the executor, administrator, trustee, surviving Spouse, or other legal representative of the deceased Member shall be an Assignee of the Deceased Member's Interest.
Notwithstanding Section 6.03 or Section 6.04, upon the death of Anil Mohan, all Members agree and acknowledge that Anil Mohan Member Units may Transfer to either or both: (i , or (il)
(the "Mohan Permitted Transferees"), provided that: (A) such Transfer does not adversely impact, limit, constrain, or put at risk any of Company's licenses, permits, and/or certifications, including any risk of non- renewal, suspension, and/or cancellation, which risk shall be determined by the Company in its sole discretion, (B) such Transfer does not cause or lead to any investigation, audit, or other inquiry by any governmental body, agency, or authority, and (C) such Landlord's Permitted Transferees inform the Company in writing within forty-five (45) calendar days of the date of death of Anil Mohan how the Member Units will be allocated between and among the Mohan's Permitted Transferees. Should such Transfer violate any subpart in this Section 6.03(f), then such Transfer shall not be allowed, and the Mohan's Member Units shall be subject to the other provisions of Section 6.03 herein. For sake of clarity, the Company shall determine in its sole discretion whether such Transfer of Mohan's Member Units to the Mohan's Permitted Transferees would result in either (A) or (B) indicated herein.
Section 6.04 Right of First Refusal. Except for the Transfers described in Section 6.02, 6.03, and Section 6.05, if any Member, at any time, desires to Transfer all or any of such Member's Member Units, such Member (the "Selling Member") shall first transmit to the Company and each other current Member (as used in this Section 6.04, the "Non-Transferring Members") an offer (the "Offer") to sell such Membership Units (which Offer shall set forth the purchase price for the Membership Units being offered for sale) and, in connection with a Transfer to a Person other than a current Member, such other documents which the Member shall have received from, or entered, with such Person in connection with such Transfer (including, without limitation, a purchase agreement for such Member Units that would be executed if the Members do not exercise the right of first refusal in full).
For a period of thirty (30) days following the date the Company receives the Offer, the Company shall have the option, exercisable by written notice to the Selling Member, to purchase the Membership Units subject to the Offer (or any portion thereof) at a price equal to the purchase price set forth in the Offer for such Membership Units. The Company may purchase all, none, or a portion of the offered Membership Units, as determined by the Board. If the Company does not purchase all of the offered Membership Units, then the remaining Membership Units subject to the Offer shall be offered to the Non- Transferring Members as set forth in Section 6.04(b) below. Execution of the applicable transaction documents for the Membership Units shall be made within thirty (30) days following the date of exercise of the option, with the terms of payment no worse than those contained within the Offer. (b) If the Company does not elect to purchase all of the Membership Units pursuant to Section Operating Agreement of
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6.04(a), then for a subsequent period of fifteen (15) days, the Non-Transferring Members shall have the subsequent right to purchase the Membership Units subject to the Offer (or any remaining portion thereof at a price equal to the purchase price set forth in the Offer for such Membership Units. Each Non- Transferring Member electing to purchase the offered Member Units shall be entitled to purchase a portion of such Membership Units pro rata in the same proportion of the Member's Percentage Interest. In the event any Member elects to purchase none or less than all of its, his, or her pro rata share of such Membership Units, then the other Non-Transferring Members can elect to purchase more than their respective pro rata share.
If, at the end of the option periods described in Sections 6.04(a)-(b), the option has not been exercised either by the Company or the Non-Transferring Members to purchase all of the Selling Member's Units subject to the Offer, the Selling Member shall be free for a period of thirty (30) days thereafter to Transfer the Membership Units subject to the Offer (or any remaining portion thereof) in compliance with the terms of this Agreement. If such Membership Units are not so transferred within such thirty (30) day period, the Selling Member shall not be permitted to sell such Membership Units without again complying with this Section 6.04.
Section 6.05 Drag-Along Rights.
(a) If at any time one or more Class A Members holding not less than 51% Percentage Interest of all Member Units then outstanding (the "Dragging Members") propose a Transfer of all or a portion of their Membership Units to a third Person (a "Qualifying Transfer"), the Dragging Members shall require each of the other Members holding Member Units of the Company who are not Dragging Parties ("Non- Dragging Members") to Transfer the same proportion of their Membership Units to such third Person.
Members, based upon their Percentage Interests. The Dragging Members shall be obligated to ensure that, in the event of the closing of such Qualifying Transfer, the same terms and price will apply to all Members.
The Dragging Members shall provide a written and dated notice ("Drag-Along Notice") of such proposed Qualifying Transfer to each of the Non-Dragging Members not later than 30 calendar days prior to the consummation of the proposed Qualifying Transfer. The Drag-Along Notice shall contain (i) written notice of the exercise of the Dragging Members' rights pursuant to this Section, (ii) the consideration to be paid by the third person, and (iii) the other material terms and conditions of the proposed Qualifying Transfer. At the closing of the Qualifying Transfer, each of the Non-Dragging Members shall deliver to such third Person the certificate or certificates evidencing all of the Member Units to be sold, pursuant to the terms of the proposed Qualifying Transfer and to take all such actions reasonably requested ›y such third Person in order to consummate such Qualifying Transfer. The Dragging Members will bea ll of the costs and expenses incurred in connection with a Qualifying Transfer (except in the case of a sal‹ of all or a material portion of the Company's assets, in which such case such costs and expenses shall be payable by the Company out of the proceeds of such sale.
Notwithstanding anything contrary in this Agreement, including any voting or consent rights granted herein, each Non-Dragging Member shall vote in favor of the transaction and take all actions to waive any dissenter, appraisal, or other similar rights, and shall take all other actions, including without limitation, entering into agreements and delivering certificates and instruments and such other acts as may be reasonably required by the Dragging Members to effectuate the Qualifying Transfer.
ARTICLE VII
EXCULPATION AND INDEMNIFICATION
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DocuSign Envelope ID: 4E37539E-1538-4BBA-95C4-76963FFF82D1 Section 7.01 No Personal Liability; Members; Managers. Except as otherwise provided by RULLCA, by Applicable Law, or expressly in this Agreement, no Member will be obligated personally for any debt, obligation, or liability of the Company or other Members, whether arising in contract, tort, or otherwise, solely by reason of being or acting as a Member. Except as otherwise provided by RULLCA, by Applicable Law, or expressly in this Agreement, no Manager will be obligated personally for any debt, obligation, or liability of the Company, whether arising in contract, tort, or otherwise, solely by reason of being or acting as a Manager.
Section 7.02 Indemnification.
To the fullest extent permitted under RULLCA (after waiving all RULLCA restrictions on indemnification, other than those which cannot be eliminated thereunder), as the same now exists or may hereafter be amended, substituted, or replaced (but, in the case of any such amendment, substitution, or replacement, only to the extent that such amendment, substitution, or replacement permits the Company to provide broader indemnification rights than RULLCA permitted the Company to provide before such amendment, substitution, or replacement), the Company shall indemnify, hold harmless, defend, pay, and reimburse any Covered Person against any and all losses, claims, damages, judgments, fines, or liabilities, including reasonable legal fees or other expenses, and any amounts expended in settlement of any claims (collectively, "Losses") to which such Covered Person may become subject by reason of:
any act or omission or alleged act or omission performed or omitted to be performed on behalf of the Company, any Member, the Managers, or any of their respective direct or indirect subsidiaries in connection with the business of the Company; or (il) such Covered Person being or acting in connection with the business of the Company as a member, shareholder, partner, Affiliate, manager, director, officer, employee, agent, or representative of the Company, any Member, the Managers, or any of their respective Affiliates, or such Covered Person serving or having served at the request of the Company as a member, manager, director, officer, employee, agent, or representative of any Person including the Company; provided, that such Loss did not arise from (A) the Covered Person's conduct involving bad faith, willful or intentional misconduct, or a knowing violation of law, (B) a transaction from which such Covered Person derived an improper personal benefit, (C) a circumstance under which the liability provisions for improper distributions of Section 17704.06 of RULLCA are applicable, or (D) a breach of such Covered Person's duties or obligations under Section 17704.09 of RULLCA (taking into account any restriction, expansion, or elimination of such duties and obligations provided for in this Agreement).
The Company shall promptly reimburse (or advance to the extent reasonably required) each Covered Person for reasonable legal or other expenses (as incurred) of such Covered Person in connection with investigating, preparing to defend, or defending any claim, lawsuit, or other proceeding relating to any Losses for which such Covered Person may be indemnified pursuant to this Section 7.02; provided, that if it is finally judicially determined that such Covered Person is not entitled to the indemnification provided by this Section 7.02, then such Covered Person shall promptly reimburse the Company for any reimbursed or advanced expenses.
The provisions of this ARTICLE VII shall survive the dissolution, liquidation, winding up, and termination of the Company.
ARTICLE VII
ACCOUNTING AND TAX MATTERS
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DocuSign Envelope ID: 4E37539E-1538-4BBA-95C4-76963FFF82D1 Inspection Rights. Upon reasonable notice from a Member or Permitted Transferee, the Company shall afford the Member or Permitted Transferee and its respective representatives access during normal business hours to the corporate, financial, and similar records, reports, and documents of the Company, and shall permit the Member or Permitted Transferee and its respective representatives to examine such documents and make copies thereof, in each case to the extent such information is for a purpose reasonably related to the Member's or Permitted Transferee's interest as a Member or Permitted Transferee.
Section 8.02 Income Tax Status. It is the intent of the Company and the Members that the Company shall be treated as a partnership for federal, state, and local income tax purposes. Neither the Company nor any Member shall make an election for the Company to be classified as other than a partnership pursuant to Treasury Regulations Section 301.7701-3.
Section 8.03 Election of Adjusted Basis. In the event of a transfer of all or part of the Interest of a Member, the Managers shall, upon request by a Member, elect, on behalf of the Company, to adjust the basis of the Project pursuant to Section 754 of the Code, provided that no material adverse income tax consequence shall result to the Company or any Member.
Section 8.04 Tax Matters Representative.
(a) The Managers shall select a "Tax Representative," as the "partnership representative" as provided in Code Section 6223(a) (the "Tax Matters Representative"). The Tax Matters Representative can be removed at any time by a vote of all the Members holding the Member Units, and shall resign if it is no longer a Member. In the event of the resignation or removal of the Tax Matters Representative, Members holding all of the Member Units shall select a replacement Tax Matters Representative.
The Tax Representative shall represent the Company (at the Company's expense) in connection with all examinations of the Company's affairs by tax authorities, including resulting judicial and administrative proceedings, and shall expend the Company funds for professional services and costs associated therewith.
The Tax Matters Representative shall oversee the Company tax affairs in the overall best interests of the Company. The Tax Representative shall use best efforts to make tax decisions that are most favorable to Company and the members, taking into account IRC Section 280E.
Section 8.05 Tax Returns.
At the expense of the Company, the Officers will cause the preparation and timely filing returns for such Fiscal Year.
Each Member agrees that such Member shall not treat any Company item on such Member's federal, state, foreign, or other income tax return inconsistently with the treatment of the item on the Company's return.
ARTICLE IX
DISSOLUTION AND LIQUIDATION
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DocuSign Envelope ID: 4E37539E-1538-4BBA-95C4-76963FFF82D1 Section 9.01 Events of Dissolution. The Company shall be dissolved and its affairs wound up only upon the occurrence of any of the following events:
(a) An election to dissolve the Company made by the Class A Members; (b) The sale, exchange, involuntary conversion, or other disposition or Transfer of all or substantially all the assets of the Company;
The passage of 90 consecutive days during which the Company has no Members; provided that upon the death of a natural person who is the sole Member of the Company, the status of the Member, including Member Units, may pass to one or more heirs, successors, and assigns of the Member by will or applicable law. An heir, successor, or assign of the Member's Member Units becomes a substituted Member pursuant to Section 17704.01(c)(4) of RULLCA, subject to administration as provided by applicable law, without the permission or consent of the heirs, successors, or assigns or those administering the estate of the deceased Member; or
(d) The entry of a decree of judicial dissolution under Section 17707.03 of RULLCA.
Section 9.02 Winding Up and Liquidation.
Upon dissolution, the Company shall immediately commence to wind up its affairs in accordance with RULLCA and the provisions of this Article.
The Managers shall act as liquidator (the "Liquidator") unless the Company is being dissolved pursuant to based on the breach of the Managers, in which case the Liquidator shall be a Person selected by majority of the outstanding Member Units of Company. The Liquidator shall have full power and authority to sell, assign, and encumber any or all of the Company's assets (including the discretion to defer the liquidation of any asset if the immediate sale of the asset would be impractical or cause undue loss to the Members) and to wind up and liquidate the affairs of the Company in an orderly and business- like manner in accordance with RULLCA.
(c) The Liquidator shall give written notice of the commencement of winding up by mail to all known creditors of the Company and claimants against the Company whose addresses appear on the records of the Company.
Section 9.03 Distribution of Assets. The Liquidators shall liquidate the assets of the Company and distribute the proceeds in the following order of priority, unless otherwise required by mandatory provisions of RULLCA or other Applicable Law:
(a) First, to the payment of the Company's known debts and liabilities to its creditors (including Members, if applicable);
(b) Second, to the expenses of liquidation (including sales commissions incident to any sales of assets of the Company;
Third, to the establishment of, and additions to, reserves that are determined by the Liquidators to be reasonably necessary for any contingent unknown liabilities or obligations of the Company; and
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DocuSign Envelope ID: 4E37539E-1538-4BBA-95C4-76963FFF82D1 (d) Fourth, to the Members, in accordance with Section 5.01(a).
Section 9.04 Required Filings. Upon the occurrence of an event described in Section 9.01 and upon ompletion of the distribution of assets as provided in Section 9.03, respectively, the Liquidators shall mak Il necessary filings required by RULLCA, including any required certificate of dissolution or certificat of cancellation.
ARTICLE X
DEFINITIONS
Section 10.01 Definitions. Capitalized terms used herein and not otherwise defined shall have the meanings set forth in this Section 10.01, and when not otherwise defined shall have the meanings set out in RULLCA:
"Affiliates" means, with respect to any Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person. For purposes of this definition, "control" when used with respect to any specified Person, shall mean the power, direct or indirect, to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities or partnership or other ownership interests, by contract or otherwise; and the terms "controlling" and "controlled" shall have correlative meanings.
"Applicable Law" means all applicable provisions of (a) constitutions, treaties, statutes, laws (including the common law), rules, regulations, decrees, ordinances, codes, proclamations, declarations, or orders of any Governmental Authority; (b) any consents or approvals of any Governmental Authority; and (c) any orders, decisions, advisory or interpretative opinions, injunctions, judgments, awards, decrees of, or agreements with, any Governmental Authority.
"Articles of Organization" means the articles of organization of the Company, as they may be amended or restated from time to time.
"Assignee" means a Person who receives a Transfer of (or otherwise owns) all or part of a Member Units, but who has not been admitted to the Company as a Member (or has ceased to be a Member of the Company, and who is subject to Section 17705.02 of RULLCA, with no right to: (a) vote; (b) otherwise participate in the management or conduct of the activities of the Company; or (c) exercise any other Member rights. The Member Units of an Assignee shall not be considered in the voting requirements of the Company.
"Available Cash" means the gross cash proceeds received by the Company less the amounts used to pay Company expenses, used to repay Company debt, used to purchase capital improvements and the amounts set aside as Reserves, all as reasonably determined by the Managers. The Members acknowledge that no assurances can be given with respect to when or whether Available Cash will be available for distributions to the Members.
"Build-Out Costs" shall mean all costs, expenses, and expenditures relating to, arising from, or ancillary building out, renovating, and remodeling the property, including: (i) the monthly rent under the lease for any Company property; (ii) all costs associated with the designs, plans, and City permits associated with completing the local and state license and permitting process; (iii) all costs associated with acquiring a conditional use permit and certificate of occupancy and any other necessary local or state permit, (iv) all build-out and tenant improvements for the Company's property; (iv) all City required inspections, impact fees, site plans; and (v) all signage, fixtures, furnishings, and equipment required and necessary prior to opening.
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DocuSign Envelope ID: 4E37539E-1538-4BBA-95C4-76963FFF82D1 "Class A Member" means collectively the holders of Class A Member Units as set forth in Schedule I.
"Class B Member" means collectively the holders of Class B Member Units as set forth in Schedule I.
"Class A Member Units" represents a Class A Member's entire interest in the Company, including the Member's economic interest and voting interest, and the rights to any and all benefits to which a Class A Member may be entitled as provided in Article II of this Agreement. "Class B Member Units" represents a Class B Member's entire interest in the Company, including the Member's economic interest and voting interest, and the rights to any and all benefits to which a Class B Member may be entitled as provided in Article II of this Agreement. Class B Member Units have no voting rights.
"Code" means the Internal Revenue Code of 1986, as amended. "Covered Person" means (i) each Member; (ii) each Officer of the Company; and (iii) each Manager, officer, director, shareholder, partner, manager, member, Affiliate, employee, agent, or representative of each Member.
"Electronic Transmission" means (a) facsimile telecommunication; (b) email; (c) posting on an electronic message board or network that the Company has designated for communications (together with a separate notice to the recipient of the posting when the transmission is given by the Company; or (d) other means of electronic communication where the recipient has consented to the use of the means of transmission (or, if the transmission is to the Company, the Company has placed in effect reasonable measures to verify that the sender is the Member purporting to send the transmission) and the communication creates a record that is capable of retention, retrieval, and review and may be rendered into clearly legible tangible form.
"Equity Securities" means any and all Member Units of the Company and any securities of the Company convertible into, exchangeable or exercisable for, such Member Units, including, without limitation, any warrants or other rights to acquire such Member Units. "Family Members" means the Member's Spouse, parent, siblings, descendants (including adoptive relationships and stepchildren), and the Spouses of each such natural person. "Fiscal Year" means the calendar year, unless the Company is required or elects to have a taxable year other than the calendar year, in which case Fiscal Year shall be the period that conforms to its taxable "Governmental Authority" means any federal, state, local, or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations, or orders of such organization or authority have the force of law), or any arbitrator, court, or tribunal of competent jurisdiction. "Independent Third Party" means, with respect to any Member, any Person who is not a Permitted Transferee of such Member.
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DocuSign Envelope ID: 4E37539E-1538-4BBA-95C4-76963FFF82D1 "Lien" means any mortgage, pledge, security interest, option, right of first offer, encumbrance, or other restriction or limitation of any nature whatsoever. "Members" means the Class A Member or Class B Member and each Person who is admitted as a Member of the Company after the Effective Date in accordance with the terms of this Agreement and RULLCA, but does not include any Person who ceases to be a Member, and shall not include the Profits Interest Holders. The Members shall constitute "members" (as that term is defined in RULLCA) of the Company.
"Members Schedule" means Schedule I attached hereto.
"Member Units" represent a Member's rights in the Company, including such Member's rights to (a) receive that Member's distributive share of Company assets and items of Company income, gain, loss, and deduction; (b) vote on, consent to, or participate in any Member decisions as provided in this Agreement and RULLCA; and (c) receive any and all other benefits due to a Member under this Agreement and RULLCA.
"Percentage Interest" for each Member is calculated by dividing the number of Member Units held by such Member at the time of determination by the total number of outstanding Member Units at the time of determination.
"Person" means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association, or other entity. "Purchase Price" means the cash price that a willing buyer having all relevant knowledge would pay a willing seller in an arm's length transaction.
" sees means he greate of reserve ash tresses that i reasoners are tale operat ecessary to meet accrued or contingent liabilities o
expenses, and reasonably anticipated working capital requirements. "RULLCA" means the California Revised Uniform Limited Liability Company Act and any successor statute, as it may be amended from time to time. "Securities Act" means the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations thereunder, which shall be in effect at the time. "Spouse" means a spouse, a party to a civil union, a registered domestic partner, a same-sex spouse or partner, or any person in a marital relationship with a Member. "Start Up Expenses" shall mean the start-up capital expenditures and operating expenses of Company, including without limitation: (i) the monthly rent under the lease for any Company property; (ii) all costs associated with the designs, plans, and City permits associated with completing the local and state license and permitting process; (iii) all build-out and tenant improvements for the Company's property; (iv) all City required inspections, impact fees, site plans; (v) all signage, fixtures, furnishings, and equipment required at the property; (vi) all local license and state licensing costs; (vii) all customary expenditures associated with cultivation operations, including expenses for personnel, equipment, lighting, horticulture and agriculture supplies, inventory, and general liability, product liability, and workers compensation insurance: (viii) expenditures related to the initial purchase of cannabis inventory or cannabis products; and Operating Agreement of
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DocuSign Envelope ID: 4E37539E-1538-4BBA-95C4-76963FFF82D1 (ix) such other costs and expenses to ensure the Company maintains compliant cultivation operations until it becomes cash flow positive.
"Transfer" means to sell, transfer, assign, gift, pledge, encumber, hypothecate, or similarly dispose of, directly or indirectly, voluntarily or involuntarily, by operation of law or otherwise, or to enter into any contract, option, or other arrangement or understanding with respect to the sale, transfer, assignment, gift, pledge, encumbrance, hypothecation, or similar disposition of, any Member Units or any interest (including a beneficial interest or "transferable interest" as defined under RULLCA) therein. "Transfer" when used as a noun, and "Transferred" when used to refer to the past tense, shall have correlative meanings. "Transferor" and "Transferee" mean a Person who makes or receives a Transfer, respectively. "Treasury Regulations" means the final or temporary regulations issued by the United States Department of Treasury pursuant to its authority under the Code, and any successor regulations.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Governing Law. All issues and questions arising out of or concerning the application, construction, validity, interpretation, and enforcement of this Agreement shall be governed by and construed in accordance with the internal laws of the State of California, without giving effect to any choice or conflict of law provision or rule (whether of the State of California or any other jurisdiction).
Arbitration. The Parties agree to submit any and all Claims, or any dispute related in any way to this Agreement and the services rendered hereunder, to binding arbitration before JAMS. The arbitration shall be held in accordance with the JAMS then-current Streamlined Arbitration Rules & Procedures (and no other JAMS rules), which currently are available at: https://www.jamsadr.com/rules- streamlined-arbitration. The arbitrator shall be either a retired judge, or an attorney who is experienced in commercial contracts and licensed to practice law in California, selected pursuant to the JAMS rules. The Parties expressly agree that any arbitration shall be conducted in Orange County, California. Each party understands and agrees that by signing this Agreement, such party is waiving the right to a jury. The arbitrator shall apply California substantive law in the adjudication of all Claims. Notwithstanding the foregoing, either party may apply to the Superior Courts located in Orange County, California for a provisional remedy, including but not limited to a temporary restraining order or a preliminary injunction.
The application for or enforcement of any provisional remedy by a party shall not operate as a waiver of the Agreement to submit a dispute to binding arbitration pursuant to this provision. In no event shall a Claim be adjudicated in Federal District Court. In the event that either party commences a Claim in Federal District Court or moves to remove such action to Federal District Court, the Parties hereby mutually agree to stipulate to a dismissal of such Federal Claim with prejudice. After a demand for arbitration has been filed and served, the Parties may engage in reasonable discovery in the form of requests for documents, interrogatories, requests for admission, and depositions. The arbitrator shall resolve any disputes concerning discovery. The arbitrator shall award costs and reasonable attorneys' fees to the prevailing party, as determined by the arbitrator, to the extent permitted by California law. The arbitrator's decision shall be final and binding upon the Parties. The arbitrator's decision shall include the arbitrator's findings of fact and conclusions of law and shall be issued in writing within thirty (30) days of the commencement of the arbitration proceedings. The prevailing party may submit the arbitrator's decision to Superior Courts located in Orange County for an entry of judgment thereon.
Section 11.03 Waiver. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No failure to exercise, or delay in exercising, any right, remedy, power, or privilege arising from this Agreement shall operate or be construed Operating Agreement of
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DocuSign Envelope ID: 4E37539E-1538-4BBA-95C4-76963FFF82D1 as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege.
Section 11.04 Notices. All notices, requests, consents, claims, demands, waivers, and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt; (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or email of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next business day if sent after normal business hours of the recipient; or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 11.04):
If to the Company: To Company's principal office
Attn: Julie Le
If to a Member: To the Member's respective mailing address as set forth on the Members Schedule.
Section 11.05 Remedies. In the event of any actual or prospective breach or default by any party, the other parties shall be entitled to equitable relief, including remedies in the nature of injunction and specific performance, awarded by a court of competent jurisdiction (without being required to post a bond or other security or to establish any actual damages). In this regard, the parties acknowledge and agree that they will be irreparably damaged in the event this Agreement is not specifically enforced, since (among other things) the Member Units are not readily marketable. All remedies hereunder are cumulative and not exclusive, may be exercised concurrently, and nothing herein shall be deemed to prohibit or limit any party from pursuing any other remedy or relief available at law or in equity for any actual or prospective breach or default, including recovery of damages. In addition, the parties hereby waive and renounce any defense to such equitable relief that an adequate remedy at law may exist.
Section 11.06 Severability. If any term or provision of this Agreement is held to be invalid, illegal, or unenforceable under Applicable Law in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.
Section 11.07 Successors and Assigns. Subject to the restrictions on Transfers set forth herein, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, and permitted assigns.
Section 11.08 Amendment. Except as otherwise provided by this Agreement, no provision of this Agreement may be amended or modified except by an instrument in writing executed by the Company majority of the outstanding Member Units of Company. Any such written amendment or modification will be binding upon the Company and each Member.
Section 11.09 Headings. The headings in this Agreement are inserted for convenience or reference only and are in no way intended to describe, interpret, define, or limit the scope, extent, or intent of this Agreement or any provision of this Agreement.
Section 11.10 Counterparts. This Agreement may be executed in counterparts, each of which shall be Operating Agreement of
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DocuSign Envelope ID: 4E37539E-1538-4BBA-95C4-76963FFF82D1 deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, email, or other means of Electronic Transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
Section 11.11 Entire Agreement. This Agreement, together with the Articles of Organization and all related exhibits and schedules, constitutes the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein and therein, and supersedes all prior and contemporaneous understandings, agreements, records, representations, and warranties, both written and oral, whether express or implied, with respect to such subject matter.
Section 11.12 No Third-Party Beneficiaries. Except as provided in ARTICLE VII, which shall be for the benefit of and enforceable by Covered Persons as described therein, this Agreement is for the sole benefit of the parties hereto (and their respective heirs, executors, administrators, legal representatives, successors, and permitted assigns) and nothing herein, express or implied, is intended to or shall confer upon any other Person, including any creditor of the Company, any legal or equitable right, benefit, or remedy of any nature whatsoever under or by reason of this Agreement.
Each Member who has a spouse on the date of this Agreement shall cause such Member's spouse to execute and deliver to the company a spousal consent in the form of Schedule II attached to this Agreement (a "Spousal Consent"), pursuant to which the spouse acknowledges that he or she has read and understood the Agreement and agrees to be bound by its terms and conditions. If any Member should marry or engage in a marital relationship following the date of this Agreement, such Member shall cause his or her spouse to execute and deliver to the Company a Spousal Consent within thirty (30) calendar days thereof.
[signatures on following page]
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DocuSign Envelope ID: 4E37539E-1538-4BBA-95C4-76963FFF82D1 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the effective date first written above by their respective officers thereunto duly authorized.
COMPANY:
Culture Barstow on the 15, LLC
("Company")
By:
Name: Devon
Title: CEO
CLASS A MEMBERS:
• DocuSigned by:
-juliele
Julie Le -5BA56098C30F4A4...
Devon Jule
•DocuSigned by:
ANIL MOHAN.
Anil K. Mula 303F2F9118841...
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DocuSign Envelope ID: 4E37539E-1538-4BBA-95C4-76963FFF82D1
SCHEDULE I
MEMBER'S SCHEDULE
Member Address Capital Contribution Member Percentage
Units Interest
Julie Le 12 windrow Rd, Tu98Ö% C8r927Bảild-Out
Costs 325 Class A 32.5%
Units
Devon Julian Sweat Equity
325 Class A 32.5%
Units
Anil k. Mohan 13825 Pamlico rd.Apple Valley, ca 92307
350 Class A 35%
Units
Exhibit A
Form of Joinder Page 1 of 1
032