Watts v. PB Downtown - Complaint 18CV-0671

ELECTRONICALLY
JOSEPH M. SWEENEY, ESQ. (78363) FILED

SCOTT A. MANGUM, ESQ. (260758)
ANDREW J. DITLEVSEN, ESQ. (284911) 10/31/2018 9:45 AM
SWEENEY, MASON, WILSON 4 BOSOMWORTH
A Professional Law Corporation
983 University Avenue, Suite 104C
Los Gatos, CA 95032-7637
Telephone: (408) 356-3000
Facsimile: (408) 354-8839
Attorneys for Henry Watts

7 SUPERIOR COURT OF CALIFORNIA
8 COUNTY OF SAN LIJIS OBISBO

HENRY WATTS, an individual, CASE NO. 18CV-0671
10 Plaintiff.
VERIFIED COMPLAINT for:
1.Breach of Contract;
12 PB DOWNTOVrN, LLC, a California 2. Violation of Cal. Corp. Code tj17704.10
limited liability company; PB [Higuera Commons Project];
13 COMPANIES, LLC, a California limited 3. Violation of Cal. Corp. Code $ 17704.10
liability company; JB DEVCO, LLC, a [Orcutt Project];
14 California limited liability company; 4. Accounting [Orcutt Project]
ORCIJTT CLARK PARTNERS, LLC, a
15 California limited liability company, and
DOES 1-50,
Defendants.
18 Plaintiff HENRY WATTS, hereby alleges as follows:

19 GENERAL ALLEGATIONS
20 1. Plaintiff HENRY WATTS ("Plaintiff', is and at all times mentioned herein was, an
21 individual residing in the County of Santa Clara.

22 2. Defendant PB COMPANIES, LLC ('PB'), is and at all times relevant herein was a
23 California limited liability company, with its principal place of business located at 3480 S. Higuera
24 Street, Ste. 130, San Luis Obispo, California, and doing business in the County of San Luis Obispo,
25 State of California. Plaintiff is informed and believes and thereon alleges that John W. Belsher is the
26 sole manager of PB and has been since at least November 21, 2013. Plaintiff is further informed and
27 believes that Mr. Belsher is an experienced real estate attorney with an active law license (Lic. No.
103088) with a law office located in San Luis Obispo, Californi.
VERIFIED COMPLAINT
3. Defendant PB DOWNTOWN, LLC ("PB Downtown" ), is and at all times relevant
herein v as a California limited liability company with its principal place of business at 3480 S.
Higuera Street, Ste. 130, San Luis Obispo, California, and doing business in the County of San Luis
Obispo, State of California. Plaintiff is informed and believes and thereon alleges PB (controlled by
Belsher) is or was the sole manager of PB Downtov n. Plaintiff is further informed and believes that
PB, through Belsher, transferred its interest in and/or management responsibilities to Defendant JB
DEVCO, LLC, ("JB") which is and at all times relevant herein v:as a California limited liability
company, with its principal place of business at 3480 S. 11iguera Street, Ste. 130, San Luis Obispo,
California, and doing business in the County of San Luis Obispo, State of California. Plaintiff is
10 further informed and believes that JB is owned and controlled bv John W. Belsher
4. Defendant Orcutt Clark Partners, LLC ("OCP"), is and at all times relevant herein
12 was a California limited liability company, with its principal place of business at 3480 S. Higuera
13 Street, Ste. 130, San Luis Obispo, California, and doing business in the County of San Luis Obispo,
14 State of California. Plaintiff is informed and believes and thereon alleges that PB (controlled by
15 Belsher) is the sole manager of OCP.

16 5. Plaintiff is unaware of the true names, capacities, or basis for liability of Defendants
DOES 1 through 50, inclusive, and therefore sues said defendants by their lictitious names. Plaintiff
will amend this Complaint to allege their true names, capacities, or basis for liability when the same
19 has been ascertained. Plaintiff is informed and believes, and thereon alleges, that Defendants DOES
20 1 through 50, inclusive„and each of them, are in some manner liable to Plaintiff.
21 6. At all times relevant to this action, each Defendant, including those fictitiously
22 nained, was the agent, servant, employer, employee, partner, joint venturer, or surety of the other
23 Defendants and was acting within the scope of said agency, employment, partnership, venture, or
suretyship, with the knowledge and consent or ratification of each of the other Defendants in doing
25 the things alleged herein.
26 The Hiauera Commons Proieet

27 7. On or about December 2, 2015, Plaintiff agreed to and did invest $ 300,000.00 with
28 PB in exchange for an assignment of interest in PB Downtov n —the entity held an interest in
VERIFIED COMPLAINT
Higuera Commons, LLC as well as additional consideration outlined below.
8. Higuera Commons, LLC is the development entity engaged in the redevelopment of a
30 space mobile home park and the reconstruction of a historic house into an 8-unit rental with two
structures including a five bedroom house and a three bedroom apartment above six parking spaces
("Higuera Commons Project" ).
9. Plaintiffs investment in the Higuera Commons Project, and thc terms governing that
investment, are reflected in two documents: (a) First Amendment to Operating Agreement for PB
Downtown (the "First Amendment" ), and (b) Investor Agreement, dated December 2, 2015 (the
"Investor Agreement" ). True and correct copies of the First Amendment and Investor Agreement
10 are attached as Exhibit A and Exhibit B, respectively and are incorporated herein by this reference.
10. Pursuant to the terms of the First Amendment, Plaintiff invested $ 300,000.00 with PB
12 Downtown in exchange for a 2% equity interest in that entity. This investment effectively provides
13 Plaintiff with a 2% interest in PB Downtown's interest in Higuera Commons, LLC and any other
interest PB Downtown has in the Higuera Commons Project, which interests are presently unknown
15 to Plaintiff.
16 11. Additionally, and pursuant to the Investment Agreement, Plaintiffs investment was
17 subject to the following material terms:
a. Plaintiff's $ 300,000.00 was entitled to accrue interest at a 5% preferential rate

19 of return from December 2, 2015 (date of investment) until the date the Higuera Commons Project
20 begins to produce cash flow;
21 b. The unpaid accrued preferred return is due and owing at the time of buyout,
22 sale or refinance of PB Dowtttown's interest in the Higuera Commons Project;
23 c. Separately, and independent of the date for repayment on only unpaid accrued
24 preferred interest, the date for repayment of all monies owing to Plaintiff (characterized as a "buy-
out") is "not sooner than twelve months or later than thirty months from the date ot [the Invesunent
26 Agreement]. The buy-out will be based upon return of his $ 300,000 investment plus accrued interest
and 2% of the value of [PB Downtown's] ownership interest in the Project, based upon either an
appraisal or a broker's opinion of value, as the patties agree."
VERIFIED COMPLAINT
12. On September 20, 2018, Plaintiff, through his counsel, sent a demand letter for
payment ("Demand Letter" ). A true and correct copy of the Demand Letter served on
Defendants'ounsel,
Roy Ogden of Ogden & Pricks LLP, is attached hereto as Exhibit C. In prior email
correspondence between Mr. Ogden and Plaintiff, Mr. Ogden confirmed his representation of
Belsher and his related entities, including PB Downtown and PB.
13. To date, PB Downtown has failed and refused to repay any money owed to Plaintiff
in connection with Plaintif1's $ 300,000.00 investment despite its clear obligation to do so no later
than June 2, 2018 ("Investment Maturity Date'.
14. The Investment Maturity Date came and went without any payment or reliable
10 commitment to pay from Defendants. The Demand Letter also appears to have failed to impress
upon Defendants the need to pay Plaintiff the monies indisputably ov ed.
12 15. Regarding the Higuera Commons Project, and as of October 26, 2018, Plaintiff is
13 oived the principal amount of'$300,000.00, plus interest at a rate of 5% ($ 43,524.90 [$ 41.10 per
14 diem * 1,059 days]), and 2% of the value of PB Downtown's interest in the Higuera Commons
15 Project which value and amount are presently unknown to Plaintiff and will be subject to immediate
16 discovery in this matter. Together, Plaintiff is owed the $ 343,524.90, plus 2% of PB Downtown's
interest in the Higuera Commons Project, as of October 26, 2018.
18 The Orcutt Proiect

19 16. Prior to making his investment in the Higuera Commons Project through PB
20 Dov ntown, Plaintiff invested in a separate project owned and controlled by Belsher and/or his
21 related entities. More specifically, Plaintiff invested $ 300,000.00 with PB in exchange I'or the
22 assignment of 1% in Orcutt Clark Partners, LLC ("OCP"') —the entity managed initially by PB (and
23 apparently now by Belsher" s wholly-owned entity JB) and which was a member of Orcutt Partners,
24 LLC (a joint-venture entity set up by PB Companies, LLC and Orcut iVlarketplace, LLC to develop a
24.66 acre parcel for commercial use).
26 17. The terms governing Plaintiff's $ 300,000.00 investment are reflected in a document
27 entitled "Investment Agreement," dated September 2, 2015 ("Orcutt Investment Agreement'. A
28 true and correct copy of the Orcutt Investment Agreement is attached hereto as Exhibit D and
VERIFIED COMPLAINT
incorporated herein by this reference. Pursuant to the Orcutt Investment Agreement, and in addition
to the 1% equity interest in OCP, Plaintiff is entitled to a 100% preferred return over the duration of
the venture.
18. As evidenced by the Demand Letter, Plaintiff has demanded an accounting related to
the Orcutt Project, including specifically as it relates to his investment. In addition to being entitled
to this information by way of his position as a member of OCP, Plaintiff is entitled to this
information under Section ] 6 of OCP's Operating Agreement. A true and correct copy of OCP's
Operating Agreement is attached hereto as Exhibit E and is incorporated herein by this reference.
19. Defendants failed to acknowledge this demand, provide the accounting, or otherwise
10 comply with Section 16 of the Operating Agreement, in gross violation of fiduciary duties owed to
Plaintiff.
12 FIRST CAUSE OF ACTION IHIGUERA COMMONS PORJECTI
13 (Breach of Contract as Against Defendant PB Downtown)
14 20. Plaintiff incorporates herein by reference each and every paragraph hereinabove
15 alleged as though fully set forth herein.
21. On or about December 2, 2015, Plaintiff agreed to and did invest $ 300,000.00 in PB
17 Downtown —which entity held an interest in Higuera Commons, LLC.
18 22. As of October 26, 2018, Plaintiff is owed the principal amount of $ 300,000.00, plus
interest at a rate of'5% ($ 43,524.90 [$ 41.10 per diem * 1,059 daysj), and 2% of the value of PB
20 Dov ntown's interest in the Higuera Commons Project, which value and amount are presently
21 unknown to Plaintiff and will be subject to immediate discovery. Together, Plaintiff is owed
22 $ 343,524.90, plus 2% of PB Downtown's interest in the Higucra Commons Project, as of October

23 26. 2018
24 23. The Investment Maturity Date is June 2, 2018. Defendant failed and refused to pay
25 Plaintiffon or before the Investment Maturity Date.

26 24. On September 20, 2018, Plaintiff sent a formal demand letter for payment of the sums
27 due. To date, Defendant has failed and refused to pay the money as demanded, compelling Plaintiff
to commence litigation.
VERIFIED EOMPLAIIVT
25. Plaintiffhas perfoimed all obligation, covenants and conditions required of it under
the First Amendment and Investor Agreement.
26. As a result of PB Downtown's unexcused and unjustifiable breach of the Investor
Agreement and First Amendment, Plaintiff has been damaged in the principal amount of
$ 343,524.90, plus 2% of PB Downtown's interest in the Higuera Commons Project, as of October
26, 2018. In addition, Plaintiff is entitled to contractually accrued interest of $ 41.10 per diem from
October 26, 2018 until the date repayment is made. The value of Plaintiff's 2% interest, due and
owing, is presently unknown to Plaintiff and will be established through discovery in this matter, and
after an appraisal is completed as set forth in the Investor Agreement.
10 WHEREFORE, Plaintiff prays judgment as hereinafter set forth.
SECOND CAUSE OF ACTION IHIGUERA COMMONS PROJECTI

12 (Violation of Cal. Corp. Code Section 17704.10
13 As Against Defendants PB Downtown, LLC, JB Devco, LLC and PB Companies, LLC)
16 28. Pursuant to Cal. Corp. Code ss17704.10, upon the request of a member or transferee,
17 for purposes reasonably related to the interest of that person as a member or transferee, a manager
18 must, at the LLC's expense, promptly deliver to the requesting person a copy of I) a current
19 alphabetical list of the full name and last known business or residence address of each member and
20 of each transferee, together with the contribution and the share in profits and losses of each member
21 and transferee; 2) The LLC's federal, state, and local income tax or information returns and reports,
22 ifany, for the six most recent fiscal years; and 3) any written operating agreement.
23 29. Most recently, but on more than one occasion, Plaintiff requested the foregoing
24 information, including specifically the LLC's federal, state and local income tax returns or related
25 information. OCP and its manager(s) have failed and refused to comply in violation of the cited
26 California Corporate Code.
27 30. Defendants'ailure to comply with the requirements of Cal. Corp. Code $ 17704.10 is
28 unjustified.
VERIFIED COMPLAINT
1 31. Plaintiffv as required to retain the services of an attorney to bring this action and is
2 entitled to an award of attorneys'ees pursuant to Corp Code FI I 7704.10(f).
4 THIRD CAUSE OF ACTION fORCUTT PROJECT)

(Violation of Cal. Corp. Code Section 17704.10
As Against Orcutt Clark Partners, LLC and PB Companies, LLC)
9 33. Pursuant to Cal. Corp. Code $ 17704.10, upon the request of a member or transferee,
10 for purposes reasonably related to the interest of that person as a member or transferee, a manager
11 must, at the LLC's expense, promptly deliver to the requesting person a copy of I) a current
12 alphabetical list of the full name and last known business or residence address of each member and
13 of each transferee, together with the contribution and the share in profits and losses of each member
14 and transferee; 2) The LLC's federal, state, and local income tax or information returns and reports.
15 ifany, for the six most recent fiscal years; and 3) any written operating agreement.
16 34. Most recently, but on more than one occasion, Plaintiff requested the foregoing
17 information, including specifically the LLC's federal, state and local income tax returns or related
18 information. OCP and its manager(s) have failed and refused to comply in violation of the cited
19 California Corporate Code.
20 35. Defendants'ailure to comply with the requirements of Cal. Corp. Code ss17704.10 is
21 unjustified.
22 36. Plaintiff was required to retain the services of an attorney to bring this action and is
23 entitled to an award of attorneys'ees pursuant to Corp Code tj17704.10(f).
25 FOURTH CAUSE OF ACTION fORCUTT PROJECT)

26 (Accounting as Against Orcutt Clark Partners, LLC and PB Companies, LLC)
VERIFIED COMPLAINT
38. Under Section 16 of the OCP Operating Agreement, Plaintiff is indisputably entitled
to an accounting of OCP's activities, including the investment made by Plaintiff.

39. Prior to filing this lawsuit, Plaintiff made demand in writing for said accounting.
40. To date, Defendants refuse to comply with this demand, and have not made the books
and records available for inspection.
41. As hereinabove alleged, Defendants have engaged in certain misconduct, including,
but not limited to, the failure to provide information and afford Plaintiff the opportunity to inspect
OCP's records, annual reports and financial statements. Plaintiff is informed and believes, and based
thereon alleges, that as a result, Defendants retain possession of substantial sums belonging to
10 Plaintiff and have engaged in numerous transactions and experienced various benefits through use of
those funds.
12 42. Defendants'mproper use of Plaintiff"'s funds, and personal benefit experienced by

13 Defendants therefrom, cannot be ascertained without an accounting of Defendants'ctivities which
are maintained exclusively by Defendants.
15 43. Defendants refused to provide accounting when demanded by Plaintiff. Plaintiff is
16 informed and believes and based thereon alleges that Defendants will continue to refuse to provide
financial accounting information. Plaintiff hereby demands that Defendants provide Plaintiff with an
18 accounting as required and as hereinabove alleged.
19 WHFRFFORE, Plaintiff prays judgment as hereinafter set forth.
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VERIFIED COMPLAINT
PRAYER FOR RELIEF
1. General and special damages in an amount according to proof, but in excess of the
jurisdictional minimum of this Court;
2. Prejudgment interest at the contractual rate;
3. Accounting,'.
Reasonable attorneys'ees;
5. Costs of suit incurred;

6. Compensatory and consequential damages in an amount according to proof; and
7. For such other and further relief as the Court deems just and proper.
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11 Dated: October ~, 2018 SWEENEY, MASON, WILSON & BOSOMWORTH

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14 Al&REWJ. DITZ+EN
Attorneys for Plaintiff
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VERIFIED COMPLAINT
VERIFICATION
I, Henry Watts, declare that:
I am an individual over the age of eighteen, a resident of Santa Clara County and the
Plaintiff in the above-captioned action. I have read the attached Verified Complaint and know
the contents thereof;
The matters stated therein are true and correct and of my own knowledge, except as to
those matters which are therein stated upon my information or belief, and as to those matters, I
believe them to be true.
I declare under penalty of perjury, under the laws of the State of California, that the
foregoing is true and correct and that this Verification was executed on this SL day of October,
20 I 8, at Sal1lfvd&, California.
Henry watts
EXHIBIT A
EXHIBIT
FIRST AMENDMENTTO
OPERATING AGREEMENT FOR PB DOWNTOWN, LLC
WHEREAS, the undersigned parties entered into an Operating Agreement dated

May 13, 2015, for PB Downtown, LLC (the "Company" ); and
WHEREAS, the undersigned desire to amend the interests of the parties in the
Company;
NOW, THEREFORE, the undersigned hereby agree as follows:
1. Pensco Trust Company Custodian FBO Henry Watts, IRA shall be added as
a member of the Company with a 2% interest in the Company in return for an
investment of $ 300,000 as evidenced in the Investor Agreement attached
hereto as Exhibit "A".
2. The percentage interests of the partners are amended to be as follows:
John Belsher 49%
Ryan Petetit 49%
Pensco Trust Company Custodian FBO Henry Watts, IRA 2%
3. All other provisions of the Operating Agreement shall remain in full force and
effect,
Dated: December 2, 2015 PB COMPANIES, LLC
By:
John W. @Isher,Managing Member
By.
Manging Member
Ryan Petetit,
Page 1 of 1
EXHIBIT 8
EXHIBIT B
INVESTOR ACREEMENT
( Exhibit "A" to First Amendment to Operating Agreement for PB Downtown, LLC}
Henry Watts and PB Companies, LLC
December 2, 2015
WHERFAS, PB Companies, LLC has formed a development entity named idiguera

Commons, LLC, for the redevelopmentof a 30-space mobilehome park with 30 new two-story
manufactured housing and the reconstruction of an historic house into an 8-unit rental with
two structures, including a five-bedroom house and a three-bedroom apartment above six
parking spaces (the "Project" ) and
WHEREAS, the interest of PB in the Project has been assigned to PB Downtown, LLC
(the "Company" ), an entity wholly owned by PB partners; and
WHEREAS, the site has been cleared of tenants, overcxcavatcd and recompactcd and
the Project infrastructure is presently bemg installed; and
WHEREAS, and the paities hereto wish to provide financing for PB and the Project;
and
WHEREAS, monies invested by investors shall be returned from first Project profits
paid to PB Companies, LLC or its affiliates, which profits are hereby assigned to PENSCO
TRUST COMPANY CUSTODIAN FBO HENRY WATTS, IRA ("Watts" );
NOW, THEREFORE, this deal point memo sets foith the terms of investment by Henry
Watts by and through PENSCO TRUST COMPANY CUSTODIAN FBO HENRY WATTS, IRA. The
terms herein are intended to be complete but may be incorporated into separate documents
as requested by the parties, including an amendment to the Operating Agreement. for the
Company.
1. Investment.
a. Watts will place $ 300,000 with PB upon execuiion of this agreement.

b. The investment will accrue interest at a 5'/e preferential rate of return over
the course of the investment.
(1) The preferential rate will accrue from the start date of the investment until
the date the Project begins to produce cash flow.
(2) The unpaid accrued preferred return will be paid by the Conipany at the time
of buy out, sale or refinance of its interest
c. At the time the Project and the Company receives cash flow from the
investment, Watts will begin to receive his preferential rate of return on a
monthly basis, paid by check or automataic transfer to an account or entity
for his benefit,
d. Watts will receive 2% ownership of and be added as a member of the
Company.
e. Watts willbe bought out of his 2% partnership membership in the Company,
not sooner than twelve months or later than thirty months from the date of
this Agreement. The buy-out will be based upon return of his $ 300,000
investment plus accrued interest and 2e/o of the value of the Company's
EXHIBITA,Page 1 of 3
8-18-282 4r29Phf FRQhf p. 5
ownership interest in the Project, based upon eitheran appraisai or a broker'

opinion of value, as the parties agree.
i. Said valuation shall reflect value of the Proiecr minus Pro)Act costs,
(which are estimated in a pro forms provided to watm.)
2. Repayment ofCapitai
Watts'nvestment shall be returned at the earliest of
a. First money out to the Company from sale of all ore port)on of the Project, or
b. Refinance proceeds to the Company.
sufficient
3. Watts represents that he has irivestment experience end assam (ln excess of Sl
million liquid) t
invest money for use in real estate ventures, undersomds
the risks associated with imresting money for such ventures and is relying upon his
experience as well as the financial strength and investmentknowledge ot PB, rather
than any features, temns or specifics of the Project (See Investor Suitability
Questionnaire attached as Exhl bit A).
PB>rSSCO Txuab Company ynO
AGREED AND ACCEPTED
PENSCO TRUST COMPANY CUSTODIAN PBO IIENRY WATTS, IRA

Sansco Trust Corhirahy
By: Chris rssms
Its: Author| sri
Date Sn»stsri'B
Companies; I.LC
Date i a/s-/r <.
Date t u/s/r .
PB Downtown, LLC
By: Date is/sA

ember
lohn Balsa, Managing Member
EXHIBITA, Page 2 of 3
8-i8-222 4:29PM FROM
EXHIBITA
'INVESTOR'SUITABILITYQIIESTIONNAIBE
The undersigned'nvestor warrants and represents that it has truthfully answered the
questions below, and that based on those warrants and representations, the
inveinment made with PB Companies, LLCI PB Downtown, LLC pursuant to the
.Investor Agreement. can be mad«by the undersigned Investor, Sign sections A and
B below,
A. Financial qualifications:
l. I (we) have a net worth in excess oF $ migion, excluding my (our) prin«ipal
1
residence;
2. I (we) have an annual income in excess of $ 200,000 ($ 300,000 for husband and
wife);
3. I (wc) can afford to risk the funds invested without substantially affectirig our
existing assets and means of support.
4. I (we) have substantial business or financial experience to appreciate the nature of
the investment, or I (we) have and are relying upon unaffiliated professional
advi. ho can»akpgtic)ieigevaluation for me (us).
I sto~r liivestol'.
Sophisticated Investor;
I (we) alone or with my (our) advisors have such knowledge and experience in
financial and busiu«ss matters that I am (we are) capable of evaluating the merits
and ris the prosp«ctjvpjnSSStment,
invest6r Investor
SXHIBITA, Page $ ofg

EXHIBIT
EXHIBIT C
SWEENEY
)if(ASON 983 University Avenue, Suite IQ4C
e'„WILSON Los Gatos, CA 95032-7637
SGSOfv(WORTH Telephone: (408} 356-3QQQ
Facsimile: (408} 354-8839
Joseph M. Sweeney, Esq. )sweeneysmwb.corn
Scott A. Mangum, Esq. smangurn@smwb.corn
September 20, 2018
Via First C/ass Mail and Email
Roy Ogden, Esq.

Ogden 8, Fricks LLP
656 Santa Rosa Street, Suite 2B
San Luis Obispo, California 93401
E; rogden@ogdenfricks.corn
Re: Menry Watts adv. Companies, et al.

PB
Demand for Repayment
Mr. Ogden:
This firm represents Mr. Henry Watts in connection with his investment of funds into
various development projects owned by John Belsher, Ryan Petetit, PB Downtown, LLC,
Orcutt Partners, LLC and/or numerous of Messrs. Belsher and Petetit's affiliated entities.
Asyou know, Mr. Watts invested a total of $ 600,000 in two development projects
with your clients. Mr. Watts invested $ 300,000 in a trailer park development on Higuera
Street, San Luis Obispo, California pursuant to an Investor Agreement (as amended),
which agreement is attached here as Exhibit "A" (the "Higuera Agreement" ). Mr. Watts
invested another $ 300,000 in a development off Highway 101 and Clark Avenue in
Orcutt, California pursuant to an Investor Agreement (as amended), which agreement
is attached here as Exhibit "8" (the "Orcutt Agreement" ).
Hiauera Street Proiect- Demand for Pavment
Pursuant to the terms of the Higuera Agreement, Mr. Watts maintains a 2%

interest in the Higuera Street development. Furthermore, by its terms, Mr. Watts'nterest
in the development was to be bought out by no later than June 2, 2018 in an amount
equal to $ 300,000, plus interest at a rate of 5'%, pius 2% of the value of your client's
interest in the Higuera Street project. Obviously that date has come and gone with no
payment and your clients are in breach of the Higuera Agreement. Moreover, Mr.
Belsher has been indicating to my client for months that a firm proposal for repayment
would be forthcoming, but to date no substantive proposal has been received, with the
exception of a non-descript email from you indicating your clients'esire to repay Mr.
Watts (which email will be addressed under separate cover).
Recent correspondence received by my client from you indicates that the
current equity in the Higuera Street development is equal to $ 7,800,000. Thus, my client
is presently entitled to payment from yours in an amount equal to $ 497,957.19 (i.e.
$ 300,000 in principal, pius $ 156,000 as 2% equity interest in the property, plus $ 41,957.19
in preferred interest at 5%). Pursuant to Section 1(e) of the Higuera Agreement,
demand is hereby made that within ten (10) days from the date hereof payment be
delivered to my client care of my law firm in the amount of S497.957.19.
In the event payment is not received as demanded herein, my client will take ail
necessary steps to recover the sums now due and owing to him and will seek a full
accounting of his investment.
Orcutt Proiect —Demand for Accountina
In light of the payment issues relating to my client's investment in the Hlguera

Street project, other extraordinarily well-publicized issues pertain to Mr. Belsher and Mr.
Petetit's development habits, Mr. Belsher's recent transfer of a substantial number of
real properties (including purportedly into irrevocable trusts), your clients'reatment of
investor capital, as well as the substantial delays in development of the Orcutt property,
my client suspects that his investment was likely diverted from this project and used for
either other projects in which he did not invest of for Mr. Belsher and Mr. Petetit's own
personal use.
As such, demand is hereby made for a full accounting of the funds invested by
Mr. Watts in the Orcutt Project, including but not limited to the use of such funds and all
back-up documentation supporting, reflecting and evidencing the asserted use.
Please provide such accounting and back-up documentation within ten (10) days from
the date of this letter. In the event a full and complete accounting is not provided, my
client will take appropriate action to investigate the use of his funds and determine your
clients'se thereof.
Thank you for your attention to the above.
Very truly yours,
SWEENEY, MASON, WILSON IL BOSOMWORTH
Encl.
c: Client
EXHIBIT A
EXHIBIT
FIRST AMENDMENTTO
OPERATING AGREEMENT FOR PB DOWNTOWN, LLC
WHEREAS, the undersigned parties entered into an Operating Agreement dated

May 13, 2015, for PB Downtown, LLC (the "Company" ); and
WHEREAS, the undersigned desire to amend the interests of the parties in the
Company;
NOW, THEREFORE, the undersigned hereby agree as follows:
1 Pensco Trust Company Custodian FBO Henry Watts, IRA shall be added as
a member of the Company with a 2% interest in the Company in return for an
investment of $ 300,000 as evidenced in the investor Agreement attached
hereto as Exhibit "A".
2. The percentage interests of the partners are amended to be as follows:
John Belsher 49%
Ryan Petetit 49%
Pensco Trust Company Custodian FBO Henry Watts, IRA 2%
3. All other provisions of the Operating Agreement shall remain in full force and
effect.
Dated December 2, 2015 PB COMPANIES, LLC
By:
John W. @Isher,Managing Member
By:
RyartPetetit, Manging Member
Page 1 of 1
INVESTOR AGREEMENT
"A" to First Amendment to Operating Agreement for PB Downtown, LLC)
( Exhibit
Henry Watts and PB Companies, LLC
December 2, 2015
WHERFAS, PB Companies, I,LC has formed a development entity named Higuera

Commons, LLC, for the redevelopment of a 30-space mobilehome park with 30 new two-story
manufactured housing and the reconstruction of an historic house into an 8-unit rental with
two structures, including a five-bedroom house and a three-bedroom apartment above six
parking spaces (the "Project") and
WHERFAS, the interest of PB in the Project has been assigned to PB Downtown, LLC
(the "Company" ), an entity wholly owned by PB partners; and
WHEREAS, the site has been cleared of tenants, ovcrcxcavated and recompacted and
the Project infrastructure is presently being installed; aiid
WHEREAS, and the patties hereto wish to provide financing for PB and the Project;
and
WHEREAS, monies invested by investors shall be returned from first Project profits
paid to PB Companies, LLC or its affiliates, which profits are hereby assigned to PENSCO
TRUST COMPANY CUSTODIAN FBO HENRY WATTS, IRA ("Watts" );
NOW, THEREFORE, this deal point memo sets forth the terms of investment by Henry
Watts by and through PENSCO TRUST COMPANY CUSTODIAN FBO HENRY WATTS, lRA. The
terms herein are intended to be coniplete but may be incorporated into separate documents
as requested by the parties, including an amendment to the Operating Agreement for the
Company.
1. Investment
a. Watts will place $ 300,000 with PB upon execution of this agreement

b. The investment will accrue interest at a 5% preferential rate of return over
the course of the investment.
(1) The preferential rate will accrue from the start date of the investment until
the date the Project begins to produce cash flow.
(2) The unpaid accrued preferred return will be paid by the Company at the time
of buy out, sale or refinance of its interest
c. At the time the Project and the Company receives cash flow from the
investment, Watts will begin to receive his preferential rate of return on a
monthly basis, paid by check or automaiaic transfer to an account or entity
lor his benefit.
d. Watts will receive 2/n ownership of and be added as a member of the
Company,
e. Watts will be bought out ofhis 2% partnership membership in the Company,
not sooner than twelve months or later than thiity months from the date of
this Agreement. The buy-out will be based upon return of his $ 300,000
investment plus accrued interest and 2% of the value of the Company's
EXHIBITA,Page 1 of 3
8-18-292 4:29PM
ownership Inrerest m the Project, based upon either an appraisal or a broker'

opinion of value, as the parties agree.
i. Said valuation shall reflect valve of the Prelect minus Pro(Act costs,
(which are estimated in a pro forms provided to Watts.)
2. Repayment of CapitaL
Wares'nvestraent shall be returned at the eariiest of
a. First money out to the Company from sale of all ore portion of the Profect; or
b. Refinance proceeds to the Company.
3. Watts represents that he has investment experience and assets (in excess of S1
million liquid) sufflcientro invest money for use in mal estate ventures, understands
the risks associated with hivesting money For such veniures and is relying upon his
experience as well as the financial strength and investment knowledge of PB, rather
than any Futures, terms or specifics of the Prefect (See Investor Suitabgity
Questionnaire*ttached asExhibitAJ,
PF)NECO Tx'ust Company PRO
ACREED Aff9 ACCEPTED oyss~ 'Sggrsoy

P EN SCO TRUST COMPANY CUSTODIAN PEO HENRY WATTS, I RA
oaitsco rrost Con:oany
By: Cans 1 uns
Its; Authorised sionatory
PB Companies; LLC
By ;a jq/J c,
Ryar etetit Managi/Member
Date io/x/"
r
PB Downtown, LLC
Ey: Date /s/sA

Ryan etetit, Manag(/Member
Date /."lot/.c
John BelsQe, Managing Member
EXJJIBJTA, Page 2 of 3
8-I8-222 4:29PM FROM
EXHIBITA
INYESTOR SUITABILITY{)VKSTIONNAIRE
The'undei signed'investor warrants and represents that it has truthfugy answered the
investnient made with PB Companies, LLC/ PB Downtown, LLC pursuant to the
.Investor Agreement. can be made by the undersigned Investor, Sign sections A and
B below.
1 I (we) have a net worth in excess of $ million, excluding my (our) principal
1
residence,'.
I (we) have an annual income in excess of $ 200,000 ($ 300,000 for husband and
wife):
3. I (wc} csn afford to risk the funds invested without substantially affectirig our
existing assets snd means of support,
4. 1(we) have substantial business or financial experience to appreciate the nature of
the investment, or I (we) have and are relying upon unaffiliated professibnal
adv~i ho can~iakpp c evaluation for me (us).
I steer investor
B. Sophisticated Investor:
financial and business inatters that I am (we are) capable of evaluating the merits
j'nvestor
and ris the pros Ivp jnYSbtment.
lnves@r
Pp~ M,l
EXHIBITA, Page 3 of 3
EXHIBIT B
EXHIBIT
INVESTOR ACREEMENT
Henly Watts andPB Companies, LI70
September 2, 2015
Wl IEREAS, PB Companies, LLC ("PB") has entered into a Deai Point. Memo with
Orcutt
Marketplace, I LC ("Orcult Millketplace"), the owner of a 2466 acre site located off Ij
ighvvay
Us101 and clark Ave in orcutt cA (thc "Property" for the
) developlnent of a previously
approved shopping center on the Property with a new entity, Orcutt Partners,
LLC {the
"I'rojcct"); and
WH EEL'AS, Orculi Pariners plans to re-entitle the 24.66 acre parcel for commercial
usrc anil
WHEREAS, Orcutt Partners plans to lease up the commercial site, consisting

market drug center, with a hotel, gas station, and to fill up of the other spaces with
of a
high credit
national tenants, such as Starbucks, Chipolte, and Carl's
jr;
and
WHEREAS, Orcutt Partners will be required by an institutional lender at the time

of
construction Lo provide all capital requirements for the future build
out of the site; and
WI3EREAS, monies invested by lnVeators shall be returned on a first in and first out
basis prior Lo the commencement of consLruction; and
WI3EREAS, PB has expenditures Lo date totaling $ 371,000 directed to

amend the
entitlement for the project,
NOW. THEREFORE, this deal point memo sets forth the terms of participation
in the
development of Lhe Property by Henry Watts by and through the PENSCO TRBST FBO
HENRY
WATTS, IRA ("Watts"), including primarily an investmeni
by Watts or his related trusts and
retirement accounts. The terms herein arc intended to be incorporated into a
formal
partnership aglteement and related promissory notes or other instruments as may be
agreed
upon by Lhe parties.
1. InvcsinlonL
a. Watts will place $ 300,000 with PB upon execution of this agrecmcni..

b. The invest. ment wiil accrue a 100% preferential rate of return over the
duration of the venture.
2. Repaymeni. of Capital.
Watts'nvestment: shall be returned;
a. At the time of a pro rata basis (with other capital invested) or recordation of
aconsLruciion loan; or
b. At timeofsale ofthe Project; or
c. AL the time cash-out funds in any A, D &. C loan are distributed to
PB
Conlpanies.
3. The Parties agree to formalize this agreement in a lormal operating agreement within
60 days of execution of this agreement.
4. Watts shall have one percent (1%) interest in Orcutt Clark Parniers. LLC, the
development entity created by pB Companies to invest in the project. The repayment
of capital and interest thereon shall be applied to his one percent (1v/e) interest
retui n, This investment excludes any residential project developed on the 24.66 acre
parcel,
5. Notwithstanding the agreement to evidence the investment described herein, by

execution of the investor Agreement, the paiaies hereto are committed to the terms
hereof.
6. Watts represents that he has investment experience and assets (in excess of 1
$
million liquid) sufficient to invest money for use in real estate ventures, understands
the risks associated with. investing money for such ventures and is relying upon his
experience as well as the financial si.rength and investment knowledge of'R, rather
than any features, terms or specifics of the project (See investor Suitability
Questionnaire attached as Exhibit A).
7. Watts confirins that he has received no representations regarding the Project other
than its availability as an opportunity.
AGREED AND ACCEPTED
Pensco Trust FBO Heniy Watts, I RA
PB Companies, LLC
te
Ryan etetit, Man
EXHIBI1'
INVESTOR SUITABILITYQUESTIONNAIRE
The undersigned Investor warrants and represents that it has truthfully answered the
investment made with PB Companies, LLC / Qrcutt Clark Partners, LLC pursuant
to the Investor Agreement can be made by the undersigned Investor. Sign sections
A and 8 below.
l. I (we) have a net worth in excess of $ million, excluding my (our) principal
1
residence;
2. I (we) have an annual income in excess of $ 200,000 ($ 300,000 for husband and
wi le);
3. I (we) can afford to risk the funds invested without substantially affecting
our
4. I (we) have substantial business or financial experience to appreciate the nature
of
the investment, or I (we) have and are relying upon unalTiliated professional
advi ir ho c ma su an evaluation for me (us).
n esto Investor
B. Sophisticated Investor;
ln esto
fath
~i
financial and business matters that I am {we are) capable of evaluating the merits
t t.
Investor
EXHIBIT
EXHIBIT D
INVESTOR ACREEMENT
Henry WaLts and PB Companies, CI.C
September 2, 201S
Wl iER EAS, PB Companies, LLC ("PB") has entered into a Deal Point.
Memo with Orcutt
Marketplace, I LC ("Orcutt Marketplace" ), the owner of a 24 66 acre site located
US101 and Clark Ave in Orcutt CA (the "Property"
off Highway
) for the development of a previously
approved shopping center on the Property with a new entity, Orcutt
"Project" ); and Partners, LLC (the
WHEREAS, Orcutt Partners plans to re-entitle the 24,66 acre parcel for
commercial
usc; encl
WHEREAS, Orcutt Partners plans to lease up the commercial site,

consisting of a
market drug center, with a hotel, gas station, and to fillup of the other
spaces with high credit
nations! tenants, such as Starbucks, ChiPoltra and Carl's jr; and
WHEREAS, Orcutt Partners will be required by an institutional lender aL

the time of
construction io provide all capital requirements for the future build out of
the site, and
WHEREAS. n>onies invested by investors shalt be returned on a first
in and first out
basis prior Lo the commencement of construction; and
WHEREAS, PB has expenditures to date totaling $ 371,000 directed to

amend the
entitlement for the project,
NOW, THEREFORE, this deal point n>emo sets forth the terms of
participation in the
development of Lhe Property by Henry Watts by and through the PENSCO TRUST I'BO
WA'I'TS, IRA ("Watts" ), including primarily an HFNRY
investment by Watts m'is related trusts and
retirement accouni.s. The terms herein are intended to be incorporated into
a formal
parLnership agreement and related promissory notes or other instruments as
may be agreed
upon by L.he parties.
1. InvestmenL
a. Watts will place $ 300,000 with PB upon execution of this agreement.

b, The investment will accrue a 100e/o preferential rate of return ovn the
duraLion of the venture.
2. Repayment of Capital.
Watts'nvestment shall be returned:

a. At the time of a pro rata basis (with other capital invested) or recordation of
a construction loan; or
b. At time of sale of the Project; or
c. AL the time cash-out funds in any A, D &. C loan are distributed to
PB
C 0 n'I pa n I os.
3. The Parties agree to formalize this agreement in a formal operating agreement
within
60 days of execution of this agreement.
4. Watts shall have one percent (1%) interest in Orcutt Clark Partners, LLC, the
development entity created by pB Companies to invest in the project. The repayment
of capital and interest thereon shall be applied to his one percent (1%) intei est
return, This investment; excludes any residential project developed on the 24.66 acre
parcel.
5. Notwithstanding the agreement to evidence the investment described herein,

by
execution of the Investor Agreement, the parties hereto are committed to the terms
hereof.
6. Watts represents that he has investment experience and assets (in excess
of $ 1
million liquid) su fficient to invest money for use in real estate ventures, understands
the risks associated with investing inoney for such ventures and is relying
upon his
experience as well as the Rnancial strength and investment knowledge of PB, rather
than any features, terms or specifics of the project (See Investor Suitability
Questiorniaire attached as Fxhibit A).
7. Watts confirms that he has received no representations regarding the Project other
than its availability as an opportunity.
AGREED AND ACCEPTED
Pensco Trust FBO Heniy Watts, I RA
7g KTH
PB Companies, LLC,
te
Ryan ]etetit, Man
EXHIBIT A
INVESTOR SUITABILITYQUESTIONNAIRE
The undersigned Investor warrants and represents that it has truthfully answered the
investment made with PB Companies, LLC I Orcutt Clark Partners, LLC pursuant
to the Investor Agreement can be made by the undersigned Investor. Sign sections
A and B below.
I. I (we) have a net worth in excess of $ million, excluding my {our) principal
1
residence;
2. I (we) have an annual income in excess of $ 200,000 ($ 300,000 I'r husband and
wife);
3. I (we) can afford to risk the funds invested without substantially affecting
our
4. I (we) have substantial business or financial experience to appreciate the nature of
the investment, or 1 {we) have and are relying upon unaAiliated professional
advi ir ho c ma su an evaluation for ine (us).
n es
B. Sophisticated Investor;
In esto
f~lh
~
financial and business matters that I am (we are) capable of evaluating the merits
strr t.
Investor
EXHIBIT
EXHIBIT E
Orcutt Clark Partners,LLC
Partners,LLC
OPERATING AGREEMENT
OPERATING AGREEMENT
OF
Orcutt Clark Partners, LLC
A CALIFORNIA LIMITED LIABILITYCOMPANY
This Operating Agreement of Orcutt Clark Partners, LLC, effective as of the date of
organization of Company on the 10"'ay of November, 2014, governs the relationship between
(and among) Company and the Member or Members if more than one, pursuant to the Act and
the Articles, as either may be amended, supplemented, corrected or restated from time to time
Article 1
Defined Terms
1. The following capitalized terms shall have the meanings specified below. Other
terms defined in the text of this Agreement; and, throughout this Agreement shall have the
meanings respectively ascribed to them.
1,1 "Act" means the Limited Liability Act, as amended from time to time.
1.2 "Adjusted Capital Account Deficit" is intended to comply with Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
1.3 "Agreement" means this Agreement, as amended from time to time.
1.4 "Capital Account" means the account maintained by the Company for each Interest
Holder in accordance with Article 3. An individual Capital Account shall be maintained for each
Member. Capital Accounts shall be maintained in a manner corresponding to the capital of the
Members as reported by the Company for federal income tax purposes, and in accordance with
the requirements of Treas. Reg. %1.704-1(b)(2)(iv). The Interest Holders'espective Capital
Accounts, as of the date of this Agreement, are set forth opposite such Interest Holders'ames
on Exhibit "B" and hereafter each such Interest Holder's Capital Account in the Company shall be
determined as provided in this Agreement. The basis of each Member in the Capital Account in
the Company will be kept by the Company accountant. The basis of a Member's Capital Account
in the Company may be different than the tax basis of a Member's Capital Account as it is
calculated and reported by such Member for tax purposes. Each Member, and not the
Company, will be responsible for calculating and reporting the tax basis of their individual Capital
Account.
1.5 "Capital Contribution" means the total amount of cash and the fair market value of
any other assets contributed (or deemed contributed under Regulation Section 1.704-
1(b)(2)(iv)(d)) to the Company by a Member, net of liabilities assumed or to which the assets are
subject.
1.6 "Cash Flow" means all cash funds derived from operations of the
Company
(including interest received on reserves), without reduction for any non-cash charges, but less
cash funds used to pay current operating expenses, and Tax Distributions and to
pay or establish
reasonable reserves for future expenses, debt payments, capital improvements, and replacements
as determined by the Members. Cash Flow shall be increased by the reduction of any resenre
previously established.
1.7 "Code" means the Internal Revenue Code of 1986, as amended, or any
corresponding provision of any succeeding law.
1.8 "Company" means Orcutt Clark Partners, LLC, a California limited liability
company organized in accordance with this Agreement.
1.9 "Fiscal Year" means a calendar year.
1.10 "Interest" means an Interest Holder's share of the Profits and Losses of, and the
right to receive distributions from the Company.
1.11 "Interest I-lolder" means any Person who holds an Interest, whether as a Member
or as an admitted assignee of a Member.
1.12 "Manager" means a person designated and authorized in the Agreement or his
successors who are elected and qualified under the Agreement to manage the Company or
otherwise to act as agent of Company and to execute management duties as specified in the
Agreement.
1.13 "Member" means each Person signing this Agreement and any Person who
subsequently is admitted as a Member of the Company. "Member" shall not include any Person
who has ceased to be a Member of the Company in accordance with this Agreement or the Act.
Members shall have the rights, duties, and obligations of Members under this Agreement and the
Act, and only Members shall be entitled to participate in the management of the Company and
to vote on Company decisions and matters.
1.14 "Minimum Gain" has the meaning set forth in Regulation Section 1.704-2(d).
Minimum Gain shall be computed separately for each Interest Holder in a manner consistent with
the Regulations under Code Section 704(b).
1.15 "Percentage" means, as to a Member, the percentage set forth after the Member's
name on Exhibit "B", as amended from time to time, and as to an Interest Holder who is not a
Member, the Percentage of the Members whose Interest has been acquired by such Interest
Holder, to the extent the Interest Holder has succeeded to that Member's Interest.
1.16 "Person" means and includes an individual, corporation, partnership, association, a

limited liability company, trust, estate, or other entity.
1.17 "Profit" and "Loss" means, for each Fiscal year of the Company (or other period for
which Profit or Loss must be computed) the Company's taxable income or loss determined in
accordance with Code Section 703(a), with the following adjustments:
(i) All items of income, gain, loss, deduction, or credit required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in
computing taxable income or loss;
(ii) Any tax-exempt income of the Company, not otherwise taken into account
in computing Profit or Loss, shall be included in computing taxable income
or loss;
(iii) Any expenditures of the Company described in Code Section 705(a)(2)(B)

(or treated as such pursuant to Regulation Section 1.704-1(b)(2)(iv)(i)) and
not otherwise taken into account in computing Profit or Loss, shall be
subtracted from taxable income or loss;
(iv) Gain or loss resulting from any taxable disposition of Company property
shall be computed by reference to the adjusted book value of the property
disposed of, notwithstanding the fact that the adjusted book value differs
from the adjusted basis of the property for federal income tax purposes;
1.18 "Refinancing Proceeds" shall mean the excess of gross proceeds of any borrowings
by the Company over the sum of: (i) any amounts used to repay then existing loans of the
Company, including loans from Members and to pay and provide for all debts and obligations of
the Company then due; and (ii) all expenses of such borrowings including, without limitation, alf
commitment fees, broker's commissions, and attorneys, fees.
1.19 Regulation" means the income tax regulations, including any temporary
regulations, from time to time promulgated under the Code.
1.20 "Sale Proceeds" shall mean the excess of all cash receipts arising from the sale of
all or any portion of the Property over the sum of: (i) the amount of cash disbursed or to be
disbursed in connection with or as an expense of such sale or other disposition, and (ii) the amount
necessary for the payment of all debts and obligations of the Company arising from or otherwise
related to such sale or other disposition, including loans from Members, or which the Property is
subject and which are then to be paid.
1.21 "Secretary of State" means the Secretary of State of the State of California.
1.22 "Tax Distribution" means those periodic distributions made in the amounts and at
the times as set forth in Article 4.
1.23"Transfer" means, when used as a noun, any voluntary sale, hypothecation, pledge,
assignment, attachment, or other transfer, and, when used as a verb, means voluntarily to sell,
hypothecate, pledge, assign, or otherwise transfer.
Article 2
Formation, Name, Office, Purpose and Term
2.1 Organization. This Company organized pursuant to the provisions of the

is
Limited Liability Company Act (the "Act") as amended from time to time, and pursuant to Articles
of Organization filed with the Secretary of State on November 10, 2014, as attached hereto as
Exhibit "A". The rights and obligations of the Company and the Members shall be provided in
the Articles of Organization and this Operating Agreement.
2.2 Name of Company. The name of the Company is "Orcutt Clark Partners, LLC,
a California limited liability company". The Company may do business under that name and
under any other name or names upon which the Members unanimously agree. If the Company
does business under a name other than that set forth in its Articles of Organization, as amended,
then the Company shall file a fictitious name certificate as required by law.
2.3 Purpose. The purposes for which the Company is formed are:
(i) To invest in the re-entitlement of a 24,66-acre site located off US HWY101

and Clark Avenue in Orcutt, California for the development of a previously
approved shopping center. The new joint venture formed to re-entitle and
develop the property is Orcutt Partners, LLC.
(ii) This Company is formed to invest in the re-entitlement and development

of the Property or to otherwise develop the Property as the Company may
hereafter determine.
(iii) To enter into and perform contracts of any nature, and do all acts necessary,
convenient, incidental to or connected with the development of the
Property, including without limitation the sale, encumbrance or disposition
of all or substantially all of the property and assets of the Company; and
(iv) To engage in any and alf activities customary or incidental to any of the
foregoing purposes or which may be necessary or advisable to protect and
enhance the investments or businesses of the Company and engage
generally in any activity permitted by California law for limited liability
company purposes.
(v) To have all other powers permitted by the Act.
2.4 Principal Office. The principal office of the Company shall be located at 3480 S.
Higuera St., Suite 130, San I.uis Obispo, CA, or such other place unanimously agreed to by the
Members.
2.5 Resident Agent. The name and address of the Company's resident agent shall be
John W. Belsher, 3480 S. Higuera St., Suite 130, San Luis Obispo, CA, except as otherwise
determined by the Manager.
2.6 Afembers. The name, present mailing address, taxpayer identification number,
and Percentage of each Member are set forth on Exhibit "B" which is attached hereto and
incorporated herein by this reference.
2.7 Conflict between Articles of Organization and this Operating Agreement. If

there isany conflict between the provisions of the Articles of Organization and this Operating
Agreement ("Agreement" ), the terms of the Articles of Organization shall control.
Article 3
Members, Capital and Capital Accounts
3.1 Initial Capital Contributions. Initial Capital Contributions of each Member, as

defined in Section 1.5 above, will be in the amounts set forth in Exhibit "B".
3.2 Allocations. Allocations of the Company's Profit and Loss, as defined in Section
1.17, above, to a Member shall be decreased by: (i) the amount of money distributed to such
Member by the Company; (ii) the fair market value of property distributed to such Member by
the Company (net of any liability secured by such distributed property that such Member is
considered to assume or take subject to under Code 3752); (iii) allocations to such Member of
expenditures described in Code 3705(a)(2)(B).
3.3 Recovery of iklembers Capital Account. Each Member shall be entitled to

recover the amount of such Member's Capital Account solely at the time or times provided for
herein and solely from the assets of the Company.
3.4 No Additional CapitalContributions. No Interest Holder shall be required to
contribute any additional capital to the Company and no Interest Holder shall have any personal
liability for any obligations of the Company.
3.5 No Interest on Capital Contributions. Interest Holders shall not be paid

interest on their Capital Contributions.
3.6 Return of Capital Contributions. Except as otherwise provided in this

Agreement, no Interest Holder shall have the right to receive the return of any Capital Contribution
and no Member shall withdraw any part of its Capital Account, except upon the approval of
seventy percent (70%) of the Members.
3.7 Form of Return on Capital. If an Interest Holder is entitled to receive a return

of a Capital Contribution, except as otherwise expressly provided in this Agreement, the Company
may distribute cash, notes, property, or a combination thereof to the Interest Holder in return of
the Capital Contribution.
3.8 Loans. Without express written consent of all Members, the Company may not
lend money or anything else of value to any Member. The Company may, as determined by the
Members,'orrow money from one or any of the Members or third persons. In the event that a
loan agreement is negotiated with a Member, he shall be entitled to receive interest at prime plus
2% charged by the Bank of America on the date of the loan, and the loan shall be repaid to the
Member, with accrued interest, if any, as soon as the affairs of the Company will permit. Any
loan shall be evidenced by a promissory note obligating the assets of the Company. Interest
and repayment of the amounts so loaned are to be entitled to priority of payment over the division
and distribution of capital contributions and profit among Members.
3.9 Transfer ofinterest. If any Interest is transferred pursuant to the terms of this
Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent the
Capital Account is attributable to the transferred Interest. If the book value of Company
is adjusted pursuant to Section 4.5, the Capital Account of each Interest Holder shall be adjusted
to reflect the aggregate adjustment in the same manner as if the Company had recognized gain
or loss equal to the amount of such aggregate adjustment. It is intended that the Capital
Accounts of all Interest Holders shall be maintained in compliance with the provisions of
Regulation Section 1.704-1(b), and all provisions of this Agreement relating to the maintenance
of Capital Accounts shall be interpreted and applied in a manner consistent with that Regulation.
In the event that the Manager shall determine that it is prudent to modify the manner in which
the Capital Accounts, or any debits or credits thereto (including, without limitation, debits or
credits relating to liabilities that are secured by contributed or distributed property or that are
assumed by the Company or the Interest Holders), are computed in order to comply with such
Regulations, the Manager may make such modification, provided that it is not likely to have a
material effect on the amounts distributable to any Interest Holder pursuant to Section 15 hereof
upon the dissolution of the Company. The Manager also shall (i) make any adjustments that are
necessary or appropriate to maintain equality between the aggregate Capital Accounts of the
Interest Holders and the amount of Company capital reflected on the Company's balance sheet,
as computed for book purposes, in accordance with Regulations Section 1.704(b)(2)(iv)(g), and (ii)
make any appropriate modifications in the event unanticipated events might otherwise cause this
Agreement to fail to comply with Regulations Section 1,704-1(b).
Article 4
Profit, Loss and Distributions
4.1 Distributions. Because the Company has elected to be categorized as a

partnership for both federal and state income tax purposes, the Members will be taxed on a share
of items of profit or loss of the Company. The Members desire that the Company make Tax
Distributions in order to provide all Interest Holders the cash necessary to avoid the imposition of
penalties by federal and state taxing authorities.
4.2 Cash Flour Distribution. The Company may make distributions of Cash Flow to
its Members at such times and in such amounts as seventy percent (70%) of the Members shall
determine. Cash Flow for each taxable year of the Company shall be distributed to the Interest
Holders no later than seventy-five (75) days after the end of the taxable year and shall be
distributed to the Interest Holders in proportion to their Percentages.
4.3 Allocation of Profit or Losses. After giving effect to the special allocations set
forth in Section 4.5, for any Fiscal Year of the Company, Profit or Loss shall be allocated to the
Interest Holders in proportion to their Percentages.
4A Disproportionate Capital Accounts. No interest or additional allocation of

profits, losses, gains, deductions and credits shall inure to any Member by reason of his
Capital Account being proportionately in excess of the Capital Accounts of the other
Members.
4,5 Regulatory Allocations..
qualifiedlncome Offset. No Interest Holder shall be allocated Losses or

deductions if the allocation causes an Interest Holder to have an Adjusted
Capital Account Deficit. If an Interest Holder receives (1) an allocation of
Loss or deduction (or item thereof) or (2) any distribution, which causes the
Interest Holder to have an Adjusted Capital Account Deficit at the end of
any taxable year, then all items of income and gain of the Company
(consisting of a pro rata portion of each item of Company income, including
gross income and gain) for that taxable year shall be allocated to that
Interest Holder, before any other allocation is made of Company items for
that taxable year, in the amount and in proportions required to eliminate
the excess as quickly as possible. This 5ection 4.5(i) is intended to comply
with, and shall be interpreted consistently with, the "qualified income
offset" provisions of the Regulations promulgated under Code Section
704(b).
Atinimum Gain Chargeback Except as set forth in Regulation Section

1.704-2(f)(2), {3) and (4), if, during any taxable year, there is a net decrease
in Minimum Gain, each Interest Holder, prior to any other allocation
pursuant to this Article 4, shall be specially allocated items of gross income
and gain for such taxable year (and, if necessary, subsequent taxable years)
in an amount equal to that Interest Holder's share of the net decrease of
Minimum Gain, computed in accordance with Regulation Section 1.704-
2(g). Allocations of gross income and gain pursuant to this Section 4.5(i)
shall be made first from gain recognized from the disposition of Company
assets subject to non-recourse liabilities (within the meaning of the
Regulations promulgated under Code Section 752), to the extent of the
Minimum Gain attributable to those assets, and thereafter, from a pro rata
portion of the Company's other items of income and gain for the taxable
year. It is the intent of the parties hereto that any allocation pursuant to
this Section 4.5(ii) shall constitute a "minimum gain chargeback" under
Regulation Section 1.704-2(f).
Non-Recourse Deductions. Non-recourse Deductions for a taxable year

or other period shall be specially allocated among the Interest Holders in
proportion to their Percentages.
tktember loan Non-Recourse Deductions. Any Member Loan Non-
recourse Deduction for any taxable year or other period shall be specially
allocated to the Interest Holder who bears the risk of loss with respect to
the loan to which the Member Loan Non-recourse Deduction is attributable
in accordance with Regulation Section 1.704-2(b).
Guaranteed Payments. To the extent any compensation paid to any

Member by the Company, including fees payable to any Member, is
determined by the Internal Revenue Service not to be a guaranteed
payment under Code Section 707{c) or is not paid to the Member other
than in the Person's capacity as a Member within the meaning of Code
Section 707(a), the Member shall be specially allocated gross income of the
Company in an amount equal to the amount of that compensation, and the
Member's Capital Account shall be adjusted to reflect the payment of that
compensation.
(vi) IYithholding. All amounts required to be withheld pursuant to Code

Section 1446 or any other provision of federal, state, or local tax law shall
be treated as amounts actually distributed to the affected Interest Holders
for all purposes under this Agreement.
4.6 Restrictions on blaking Distributions. No distribution of assets may be made

to aMember if, after giving effect to the distribution, all liabilities of the Company, other than
liabilities to Members on account of their capital and income accounts, would exceed the fair
value of the Company assets.
4.7 General Distribution Provisions.
(i) Except as otherwise provided in this Agreement, the timing and amount of
all distributions shall be determined by the Manager.
(ii) If any assets of the Company are distributed in kind to the Interest Holders,
those assets shall be valued on the basis of their fair market value as of the
date of distribution, and any Interest Holder entitled to any interest in those
assets shall receive that interest as a tenant-in-common with all other
Interest Holders so entitled. Unless the Members otherwise agree, the fair
market value of the assets shall be determined by an independent appraiser
who shall be selected by the Members.
(iii) All Profit and Loss shall be allocated, and all distributions shall be made, to
the Peisons shown on the records of the Company to have been Interest
Holders as of the last day of the taxable year for which the allocation or
distribution is to be made. Notwithstanding the foregoing, unless the
Company's taxable year is separated into segments, if there is a Transfer
during the taxable year, the Profit or Loss shall be allocated between the
original Interest Holder and the successor on the basis of the number of
days each was an Interest Holder during the taxable year; provided,
however, the Company's taxable year shall be segregated into two or more
segments in order to account for Profit, Loss, or proceeds attributable to
any extraordinary non-recurring items of the Company.
Article 5
Management, Rights, Powers and Duties
5.1 lktanager. The day-to-day affairs of the Company shall be managed by PB Companies.
LLC, as the Manager of the Company. The Manager will have the authority, including without
limitation, to construct on the Property, to borrow funds in the name of the Company for such
development, improvements, and construction, sign promissory notes on behalf of the Company
and encumber the Property and all other assets of the Company by deed of trust, mortgage or
other form or encumbrance, lien the Company's assets and the Property, develop lots, sell
developed lots and construct and sell structures constructed on the Property, hire and fire all
parties performing services for Company, including without limitation, attorneys, accountants,
architects, surveyors, engineers, land planners, general contractors, sub-contractors, secure funds
on behalf of the Company necessary to meet the business of the Company, and do all other things
necessary to conduct the business of the Company.
5.2 Tax Matters Partner. The Manager is further designated to serve as the Tax Matters
Partner for federal tax purposes until such time as the Members may appoint such other Tax
Matters Partner. The Tax Matters Partner shall be the chief financial officer of the Company and
shall have general control and management of the financial affairs of the Company and all the
powers ordinarily exercised by the treasurer of a company; provided, however, the Tax Matters
Partner, in its capacity as Tax Matters Partner and not as Manager, may not make any purchase,
sale, or make any commitment on behalf of the Company with a value in excess of Five Hundred
Dollars ($ 500.00), including multiple commitments in any thirty (30) day period exceeding such
amount in the aggregate, without the explicit consent of the Members,
5.3 liabilityfor Certain Acts. Manager or anyone else acting on behalf of Manager and
Tax Matters Partner shall not be liable to the Company or to any Member for any loss or damage
sustained by the Company or any Member except loss or damage resulting from (a) intentional
or willful misconduct, (b) knowing violation of law, or (c) a transaction from which such Manager
or Tax Matters Partner received an improper personal benefit, directly or indirectly, in violation or
breach of the provisions of this Operating Agreement. No successor Manager or Tax Matters
Partner shall have any liability for the acts or omissions to act of any prior Manager or Tax Matters
Partner, as applicable, nor shall he be required to inquire into the acts or omissions to act of any
prior Manager or Tax Matters Partner or to make any claim against any prior Manager or Tax
Matters Partner.
5A General Manafter and Other Positions. The Manager may appoint individuals with or
without titles, including the titles of General Manager, Executive Director, President, Vice
President, Treasurer, Secretary, Assistant Secretary and Chief Financial Officer, to act on behalf of
the Company with such power and authority as the Manager may delegate to any such Person,
5.5 limitation on Authority ofMembers.
(i) No Member is an agent of the Company solely by virtue of being a Member,

and no Member has authodty to act for the Company solely by virtue of
being a Member. Unless authorized by the Members, no attorney-in-fact,
employee, or other agent of the Company shall have any power or authority
10
to bind the Company in any way, to pledge its credit, or to render it liable
pecuniarily for any purpose,
(ii) This Section 5.5 supersedes any authority granted to the Members pursuant
to the Act. Any Member who takes any action or binds the Company in
violation of this Section 5.5(i) shall be solely responsible for any loss and
expense incurred by the Company as a result of the unauthorized action
and shall indemnify and hold the Company harmless with respect to the
loss or expense.
5,6 Removal of Manager or Iaa Matters Partner. The Members, at any time and
from time to time and for any reason, may remove the Manager or the Tax Matters Partner then
acting and elect a new Manager or Tax Matters Partner, as the case may be, by the affirmative
vote of Members holding seventy percent (70'/0) or more of the Interests held by the Members.
5.7 Majority of Members Vote Required. Notwithstanding the foregoing, a vote

by members with over 50'/o interest in the Company shall be required for the sale of the property
(bulk sale), financing other than financing which distributes funds in accordance with the pro-
forma agreed upon by the members, conditions of approval for permits received for the
development of the Property, and the timing of demolition of the existing structures on the
Property. Notice to tenants to vacate premises as required by law shall not require a vote. No
vote is required if financing (including construction, interim or bridge financing) is consistent with
the pro-forma. While no vote is required, the Manager shall confer with all members on the
design of the development for the Property and take the members input into account in its
decisions regarding the same.
Article 6
Meeting and Voting by Members
6.1. Admission of New Members. Except as otherwise specifically provided for
herein to the contrary, Additional Members may be admitted only upon the unanimous written
consent of all Members.
6.2 liability and Indemnification. No Member shall have any personal liability
whatsoever to the Company, to any Member(s), or to the creditors of the Company for the debts,
obligations or liabilities of the Company, or for any of its losses beyond the amount contributed
by such Member to the capital of the Company. Members are liable to the Company with
to distributions that constitute a return of their contribution to the capital of the Company, as
distinguished from a distribution of profits of the Company, to the extent provided in the Act.
Distributions which constitute the return of Members'ontributions to the capital of the Company
shall be considered received without violation of this Agreement. A Member shall not be liable,
responsible, or accountable, in damages or otherwise, to any other Member or to the Company
for any action taken or any failure to take an action by the Member with respect to Company
matters, except for actions or omissions constituting fraud, gross negligence, or an intentional
breach of this Agreement or applicable law. The Company shall indemnify each Member for any
act performed or omitted by the Member with respect to Company matters, except for actions or
11
omissions constituting fraud, gross negligence, or an intentional breach of this Agreement or
applicable law,
6.3 Voting of Members. A Member shall be entitled to the number of votes
provided in Exhibit "B". A Member may vote in person or by proxy at any meeting of Members,
Except as otherwise provided herein, an affirmative vote of a majority of the votes of the Members
present at a properly called meeting of the Members at which a quorum is present, shall be
required to approve any decision coming before the Members.
6.4 Corporations And Limited Liability Companies Membership interests
standing in the name of a corporation or limited liability company may be voted by such officer,
manager, agent or proxy as the bylaws of such corporation or operating agreement of such limited
liability company may prescribe, or in the absence of such provision, as the Board of Directors of
such corporation or Members of such limited liability company may determine.
6.5 Trusts. Membership interests owned in the name of a trust may be voted by
any trustee of the trust and membership interests in the name of a trustee may be voted by such
trustee or any successor.
6.6 5uccessors. Except as provided in Article 8, no successor to any Member's
Membership Interest and no receiver or pledgee or person holding a security interest in or lien
on a Membership Interest shall have any right or standing to vote such interests, unless admitted
as a Member of the Company.
6.7 Manner of Voting. Voting on any question or in any election may be by voice
vote unless any Member requests that voting be by secret ballot.
6.8 Meetings of Members.
(i) Meetings of Members may be held at such time and place, either within or
without the State of California, as may be determined by the Members.
(ii) Beginning in 2016, an annual meeting of the Members shall be held on or
about the second Tuesday of July in each year or at such time and place as
shall be determined by the Members during any Fiscal Year of the
.
Company.
(iii) Special meetings of the Members may be called by any Member entitled to
vote at the meeting.
(iv) Written notice stating the place, day, and hour of the meeting and, in the
case of a special meeting, the purpose for which the meeting is called, shall
be delivered not less than five (5) days nor more than fifty (50) days before
the date of th'e meeting, either personally or by mail, by or at the direction
of any Member, to each Member of record entitled to vote at such meeting.
A waiver of notice in writing, signed by the Member before, at, or after the
time of the meeting stated in the notice shall be equivalent to the giving of
such notice.
(v) By attending a meeting, a Member waives objection to the lack of notice or
defective notice unless the Member, at the beginning of the meeting,
objects to the holding of the meeting or the transacting of business at the
meeting. A Member who attends a meeting also waives objection to
12
consideration at such meeting of a particular matter not within the purpose
described in the notice unless the Member objects to considering the
matter when it is presented.
6.9 Quorum and Adjournment. Seventy percent (70%) of the Members entitled to
vote shall constitute a quorum at the meeting of the Members. If a quorum is not represented
at any meeting of the Members, such meeting may be adjourned for a period not to exceed sixty
(60) days at any one adjournment; provided, however, that if the adjournment is for more than
thirty (30) days, a notice of the adjourned meeting shall be given to each Member entitled to vote
at the meeting.
6.10 Proxies. A Member may vote by proxy executed in writing by such Member or
such Member's duly authorized attorney-in-fact. Such proxy shall be filed with the Company
before or at the time of the meeting. No proxy shall be valid after eleven (11) months from the
date of its execution, unless otherwise provided in the proxy.
6,11 Informal Action by Members. Any action required or permitted to be taken at
a meeting of the Members may be taken without a meeting if the action is evidenced by one or
more written consents, setting forth the action so taken, signed by all of the Members pursuant
to Section 7-80-711 of the Act and delivered to the Company for inclusion in the minutes or for
filing with the Company's records. Such consent shall have the same force and effect as a
unanimous vote of the Members, and may be stated as such in any document. Action taken
under this Section 5.8 is effective when all Members have signed the consent, unless the consent
specifies a different effective date.
6.12 Power of Attorney-Grant of Power. Each Member constitutes and appoints
the Manager as the Member's true and lawful attorney-in-fact ("Attorney-in-Fact" ), and in the
Member's name, place and stead, to make, execute, sign, acknowledge, and file:
(i) One or more articles of organization;
(ii) Any and all other certificates or other instruments required to be filed by
the Company under the laws of the State of California or of any other state
or jurisdiction, including, without limitation, any certificate or other
instruments necessary in order for the Company to continue to qualify as a
limited liability company under the laws of the State of California, and to
conduct business in California;
(iii) One or more fictitious name certificates;
(iv) All documents which may be required to dissolve and terminate the
Company and to cancel its articles of organization, provided such
dissolution or termination has been duly approved at a meeting of the
Members held in accordance with the terms of this Agreement; and
(v) All state, federal and other tax returns for the Company.
6.13 Irrevocability. The foregoing power of attorney is irrevocable and is coupled
with an interest, and, to the extent permitted by applicable law, shall survive the death or disability
of a Member. It also shall survive the Transfer of an Interest, except that if the transferee is
approved for admission as a Member, this power of attorney shall survive the delivery of the
assignment for the sole purpose of enabling the Attorney-in-Fact to execute, acknowledge and
file any documents needed to effectuate the substitution. Each Member shall be bound by any
representations made by the Attorney-in-Fact acting in good faith pursuant to this power of
attorney, and each Member hereby waives any and all defenses which may be available to contest,
negate or disaffirm the action of the Attorney-in-Fact taken in good faith under this power of
attorney.
Article 7
The Project
7.1 Overvierv. The Company will pursue the re-entitlement and development of an
approximate 24.66-acre property at Clark Avenue and Highway 101 in Orcutt, California (the
"Property" ). The Property will be approved by specific plan amendment and subdivided as a
mixed use project with commercial and residential development of approximately 60,000 sq. ft.
of commercial, 175 PUDs and 75-100 apartments ("Entitlements").
7.2 Acquisition, Development and Construction Plan.

A. The site is currently owned by Orcutt Marketplace, LLC.
B, PB Companies, LLC ("PB) and Orcutt Marketplace, LLC ("OMP") have formed a
joint venture, Orcutt Partners, LLC, for the purchase, re-entitlement and
development of the Project.
C. This Company is formed to invest in Orcutt Partners, LLC.
Article 8
Transfer of a Member's Interest
8.1 Provisions Restricting Transfer of Membershipinterests. No transfer of all or
any portion of a Member's Interest or rights in the Company, whether by sale, gift, bequest, legacy,
devise, descent, assignment or otherwise, including transfers by operation of law and transfers by
reason of levy, sequestration, foreclosure, execution, bankruptcy or otherwise, and whether made
voluntarily or involuntarily (any and all of which are referred to in this article as a "transfer"), shall
be valid or effective unless made in accordance with the provisions of this Article 8.
8.2 No Rilihtsof Transferee. Except as specifically set forth below, no Member may
transfer all or any part of such interest in the Company and have the transferee admitted as a
substitute Member in respect of such interest without the prior written consent of seventy percent
(70%) of the Members excluding the transferring Member. Any such transfers or attempted
transfers of a Member's Interest without such consent will be invalid, unenforceable and of no
force and effect, and will not convey on any such transferee, any rights title or interest in the
Company, in the transferring Member's Interest in their Capital Accounts, in and under the
Agreement, the Property, the Projects or any other interest therein whatsoever.
8.3 &rception to Transfer Restrictions. Notwithstanding Section 8.2 above, any
Member may assign to any other Member all or any portion of such Member's right to receive
distributions from the Company, or grant to another Member a security interest in all or any
portion of such Member's right to receive distributions from the Company, and the restrictions
on transfer in this Article 8 shall not apply to any such transaction. However, the Company shall
not be bound by any such assignment and shall have no liability for failing to recognize or honor
14
any such assignment unless the Company has received actual written notice of the assignment
from the assignor and the assignee, including an executed and acknowledged copy of the
assignment. The Company shall not be obligated to recognize or honor any such assignment
unless the assignee pays the Company's reasonable costs and expenses, including attorney's fees,
associated therewith.
8.4 Right of First Refusal-Sale of Member s Interest During life
8,4.1 Should any Member (" Selling Member" ) receive any offer to purchase his
interest in the Company and such Member is desirous, during his lifetime of selling, assigning,
transferring, or otherwise disposing of any or all of his interest in the Company, the Selling
Member shall, prior to selling or otherwise transferring his interest in the Company, first serve
written notice on the Manager of the Company. The notice must specify:
(i) The name and address of the person or firm to whom the Member
intends to sell, assign, or transfer the interest;
(ii) The price or amount to be paid to the Member for the proposed
sale, assignment, or transfer; and
(iii) All other terms and conditions of the proposed sale, assignment or
transfer.
84.2 Within seven (7) days after actual physical receipt by the Manager of any
notice given pursuant to Section 84.1 of this Agreement, the Manger will endorse over his
signature on the original of the notice received by him, the date and time it was actually physically
received by him, and then cause photocopies of the notice as so endorsed to be made and mailed
to each of the Members at their address then appearing on the books and records of the
Company.
8.4.3 Within ten (10) days after the mailing to him by the Manager of the Selling
Member's notice, each Member ("Remaining Member" ) may serve written notice on the Manager
of that Remaining Member's election to purchase a pro rata share of the interest being offered
for sale. Each Remaining Member's pro rata interest in the Selling Members share will be in the
ratio that their respective Percentage of Interest in the Company bears to each other Remaining
Members Percentage of Interest in the Company. If any Remaining Member elects not to purchase
its pro rata share of the Selling Members interest (" Remainder Interest" ), the other Remaining
Members may purchase the Remainder Interest. The intent is to allow one hundred percent
(100%) of the Selling Members share to be purchased by the Remaining Members. The purchase
of the Selling Members interest will then be at the price and on the terms and conditions specified
in the notice served by the Selling Member on the Company.
8.4.4 Should the Purchasing Members fail to elect within the times specified in
this Article 8 to purchase all the interest specified in the notices given by the Selling Member to
the Manager, the Selling Member is under no obligation to sell any of the its interest to the any
of the Purchasing Members but may instead sell them to the person or firm specified in the notice
given by the Selling Member to the Manager at the price and on the terms and conditions
specified in that notice. Such sale must occur within 90 days after the receipt of the original written
notice by the Selling Member referred to in Section 8,4 herein. The Selling Member may not,
however, without giving a new notice of this intention to so do pursuant to Section 8.4 of this
15
Agreement, and after again complying with all the provisions of this Article, sell any or all of the
offered interest to any person or firm or at a lower or higher price or on any terms and conditions
more favorable to himself than those specified in the notice given by Selling Member to the
Company pursuant to Section 8.4 above.
8vk5 The foregoing restrictions of this Article 8 shall not apply to a transfer
during lifetime to a Member's immediate family, or to a trust for the benefit of the Member's
immediate family of all or any part of a Member's Interest in the Company. Subject to their
compliance with all of the terms of this Agreement, and to the limitations set forth herein, any
such transferees shall be entitled to admission as Members without procuring the consent of any
other Member or the Company. Any such new Member shall, however, hold his, her, or its
interest in the interest of the Company subject to all of the provisions, conditions and restrictions
of this entire Agreement, it being understood that the expectations of this Article 8 shall also apply
to transfers from or by such new Members. For the purpose of this Paragraph "immediate
family" is defined as the husband, wife, child, father, mother or grandchild of a Member, trustees
of any of the foregoing, or trustees for any other lineal issue. In addition, any such subsequent
new Member shall execute any and all documents required by the Company in order to insure
that the interest held by such new Member shall be in strict compliance with the terms, covenants
and conditions of this Agreement.
Article 9
Expulsion of a Member
9.1 Causes of Expulsion. A Member shall be expelled from the Company upon the
affirmative vote of the Members holding the majority of votes other than the Member being
expelled, entitled to be vote and upon the occurrence of any of the following events:
(i) If a Member shall violate any material the provisions of this Agreement; or
(ii) If a Member's Membership Interest shall be subject to a charging order or
tax lien, which is not dismissed or resolved to the satisfaction of the Members of the Company
within thirty (30) days after assessment or attachment.
9.2 Notice of Errpulsion. Upon the occurrence of an event described in Section 9.1,
written notice of expulsion shall be given to the violating Member either by serving the same by
personal delivery or by mailing the same by certified mail to his last known place of residence, as
shown on the books of the Company. Upon the receipt of personal notice, or the date of the
postmark for certified mail, the violating Member shall be considered expelled, all rights of
participation, voting and management as a Member of the Company shall cease and the
Remaining Members may purchase the Membership Interest and rights in the Company of the
expelled Member in accordance with Article 12. In the event that the Remaining Members do
not elect to purchase all of the expelled Member's Interest, the expelled Member shall,
nevertheless, have no right to participate in the management of the business and affairs of the
Company, to be a Member or Manager, or to vote on any Company matter, and the share of such
expelled Member shall not be counted or considered for purposes of establishing a quorum of
Members or for any other purpose whatsoever. The expelled Member shall only be entitled to
receive such Member's share of profits or other compensation by way of income and the return
of contributions, and shall be allocated the share of Company income, gain, loss, deduction and
credit that would otherwise be allocated to such Member with respect to such interest,
16
Article 10
Bankruptcy of a Member
10.1 Bankruptcy Defined. A Member shall be considered bankrupt upon.
(i) Filing a voluntary petition in bankruptcy or being adjudicated bankrupt or
insolvent, or filing any petition or answer seeking arrangement, composition, readjustment,
liquidation, dissolution or similar relief under the present or future applicable federal, state or
other statute or law relative to bankruptcy, insolvency, or other relief for debtors, or seeking or
consenting to acquiescence in the appointment of any trustee, receiver, conservator or liquidator,
of said Member or of all or any substantial part of its properties, or its interest in the Company
(the term "acquiescence" includes, but is not limited to, the failure to file a petition or motion to
vacate or discharge any order, judgment or decree providing for such appointment within ten (10)
days after appointment);
(ii) Having a court of competent jurisdiction enter an order, judgment or
decree approving a petition filed against any Member seeking any arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under the present or future applicable
federal, state or other statute or law relating to bankruptcy, insolvency, or other relief for debtors,
or if said Member shall acquiesce in the entry of such order, judgment or decree and such order,
judgment or decree shall remain unvacated and unstayed for an aggregate of ninety (90) days
(whether or not consecutive) from the date of entry thereof, or if any trustee, receiver, conservator,
or liquidator of said Member shall be appointed without the consent or acquiescence of said
Member and such appointment shall remain unvacated and unstayed for an aggregate of sixty
(60) days (whether or not consecutive); or
(iii) Admitting in writing its inability to pay its debts as they accrue; or the
Member files a petition in bankruptcy (or an involuntary petition in bankruptcy is filed against the
Member and the petition is not dismissed within sixty (60) days) or makes an assignment for the
benefit of creditors or otherwise takes any proceeding or enters into any agreement for
compounding its debts other than by the payment of them in the full amount thereof, or is
otherwise regarded as insolvent under any insolvency act.
10.2 Consequences of Bankruptcy. The Effective Date of a Member's bankruptcy shall
be the date that the Members, having learned of the Member's bankruptcy, give notice in writing
to the Member stating that the Member is regarded as bankrupt under this Agreement, such
notice to be served personally or by mailing the same by certified mail to his last known place of
residence. As of the Effective Date of a Member's bankruptcy, the bankrupt Member shall have
no further rights as a Member of the Company, and the Remaining Members may purchase the
Membership Interest and rights in the Company of the bankrupt Member in accordance with
Article 12, In the event that the Remaining Members do not elect to purchase all of the bankrupt
Member's Interest, the bankrupt Member shall, nevertheless, have no right to participate in the
management of the business and affairs of the Company, to be a Member or Manager, or to vote
on any Company matter, and the share of such bankrupt Member shall not be counted or
considered for purposes of establishing a quorum of Members or for any other purpose
whatsoever, The bankrupt Member shall only be entitled to receive such Member's share of
profits or other compensation by way of income and the return of contributions, and shall be
17
allocated the share of Company income, gain, loss, deduction and credit that would otherwise be
allocated to such Member with respect to such interest,
Article 11
Retirement or Resignation of a Member
1'l.1 Right to Retire or Resign. A Member shall have the right, at any time, to retire
or resign as a Member of the Company by giving three (3} months'otice to the Company at the
Company's place of business.
11.2 Consequences of Retirement or Resignation. Upon receipt of the notice of
resignation of a Member pursuant to Section 11.1, the Remaining Members shall either elect or
decline to purchase the Membership Interest and rights of the resigning or retiring Member as
provided in Article 12. In the event that the Remaining Members do not elect to purchase all of
the retiring or resigning Member's Interest, the retiring or resigning Member shall, nevertheless,
have no right to participate in the management of the business and affairs of the Company, to be
a Member or Manager, or to vote on any Company matter, and the share of such retiring or
resigning Member shall not be counted or considered for purposes of establishing a quorum of
Members or for any other purpose whatsoever. The retiring or resigning Member shall only be
entitled to receive such Member's share of profits or other compensation by way of income and
the return of contributions, and shall be allocated the share of Company income, gain, loss,
deduction and credit that would otherwise be allocated to such Member with respect to such
interest.
Article 12
Purchase of Withdrawn Member's Interest.
12.1 Purchase of f4i'thdraeral Niembers interest. The purchase price (" Purchase
Price" ) of the Withdrawal Member's Membership Interest and rights in the Company as a result of
an Expulsion (Article 9}, Bankruptcy (Article 10), Retirement or Resignation of a Member (Article
11) or Death of a Member (Article 13), shall be determined by the mutual and unanimous written
agreement of all Members, or if no unanimous agreement can be reached within ten (10) days of
the occurrence of an event triggering an event set forth in Articles 9, 10, 11 or 13 herein (the
"Effective Date of the Withdrawal), then the Purchase Price shall be equal to the sum of the balance
of the Withdrawal Member's Capital Contribution, pius the product of the book value of the
Company's net assets determined as provided below, after deduction of the Company's liabilities,
less the balance of all Members'apital Contributions, multiplied by the Membef s Percentage of
Interest in the Company, such book value to be determined by the certified public accountants
regularly employed or retained by the Company, in accordance with the customary accounting
principles and method of accounting followed by the Company, except that:
(a) No inclusion of any kind shall be made for goodwill, trade name, or any
similar intangible assets, except that a value of $ 500.00 for organizational
value shall be included;
(b) The Company's real property, whether unimproved or improved, and
including buildings and fixtures thereon, and all leasehold estates, shall be
included at the written appraisal of the fair market value thereof as of the
Effective Date of the Withdrawal ("Appraisal" ). The Appraisal shall be made
18
by an experienced, disinterested and competent appraiser selected in the
following manner: an appraiser shall be selected by the affirmative vote of
a majority of the Remaining Membership Interests within ten (10) days after
the Effective Date of the Withdrawal, and an appraiser shall be selected by
the Withdrawal Member or an agent, personal representative or trustee of
the Withdrawal Member with such ten-day period, and the two appraisers
shall select the appraiser to make the Appraisal. If either of the
Member or the Members shall fail, neglect or refuse to so select an
appraiser within the ten (10) day period, then the Appraisal shall be made
by the appraiser selected by the other. The costs of appraisal shall be paid
one-half (1/2) by the Withdrawal Member and one-half (1/2) by the
Company.
12.2 Purchase Price Determination and Distribution. The Purchase Price shall be
determined as of the close of business on the last day of the month preceding the month of the
Effective Date of the Withdrawal and such determination shall be completed within thirty (30) days
after the delivery of any needed appraisal. Fees and disbursements of any accountants in
making any such determination, if any, shall be paid one-half (1/2) by the Withdrawal Member
and one-half (1/2) by the Company.
12.3 As soon as possible, but no later than three months from the Effective Date of the
Withdrawal, the Company shall elect to pay the Purchase Price by either:
(i) Delivering on such date a lump sum payment in the amount of the Purchase
Price in immediately available funds; or
(ii) Delivering a promissory note in the principal amount of the Purchase Price.
12.4 The note shall provide for payment of principal and interest in twenty (20) equal
quarterly installments with interest on the unpaid principal balance at the rate of four percent
(4%) per annum, with full privilege of prepayment of all or any portion of the principal and
accrued interest at any time without penalty or bonus. Any prepaid sums shall be applied
against the installments hereafter falling due in inverse order of their maturity or against all the
remaining installments equally at the option of the payers. The note shall contain a ten (10)
grace period for each payment, and if any payment is more than ten (10) days delinquent, a
penalty of eight percent (8%) of the delinquent payment shall be assessed. The note will not,
however, be in default until thirty (30) days after a payment is due and unpaid. The note shall
provide that, in case of default at the election of the holder, the entire sum of principal and
interest will immediately be due and payable, and that the makers shall pay reasonable attorneys'ees
to the holder in the event suit is commenced because of default. The note shall be secured
by pledge of the Withdrawal Member's interest being purchased in the transaction to which
a
the Notes relate. The Pledge Holder shall be a neutral escrow company selected jointly by the
19
Company and the Withdrawal Member (or his estate), and the Pledge Agreement shall contain
such other terms and provisions as may be customary and reasonable as determined by the
mutual agreement of the Remaining Members purchasing the interest of the Selling
Member, and the Selling Member (or his estate). As long as no default occurs in payment on
the Note, the Selling Member (or his estate) shall not be entitled to vote any interest in the
Company or in any other way have an interest in the operation and running of the Company,
12.5 Purchase Price 5et Off. The Purchase Price is subject to set off for any damages
incurred as the result of the Withdrawal Member's actions, and nothing in this paragraph is
intended to impair the Company's right to recover damages for the Withdrawal Member's breach
of this Agreement and/or wrongful dissolution of the Company by reason of the Withdrawal
Member's expulsion, retirement, resignation, or bankruptcy.
Article 13
Death of a Member
13.1 Death of a Member. Upon the death of any Member, the interest of that
Deceased Member in the Company shall flow to its estated.
13.2 [Reserved]
13.3 Estate of the Deceased Member. The term "estate of the deceased Member"
as used in this Article shall mean and include as those terms are understood in law:
(i) The duly appointed and qualified executor, executrix, administrator,
administratrix, administrator with the Will annexed, or administratrix with
the Will annexed of the estate of the deceased Member.
(ii) The surviving joint tenant of the deceased Member where interest of the
Company are owned by the deceased Member and a person who is not
active in the business of the Company as joint tenants.
(iii) Any other person who may, because of the community property or other
law of any jurisdiction, acquire without formal probate proceedings any
right, title, or interest in or to the interest of the deceased Member in the
Company by reasons of the death of the deceased Member.
13.4 No Right to Participate. The Deceased Member's estate shall have no right to
participate in the management of the business and affairs of the Company, to be a Member or
Manager, or to vote on any Company matter, and the share of such Deceased Member shall not
be counted or considered for purposes of establishing a quorum of Members or for any other
purpose whatsoever, The Deceased Member estate shall only be entitled to receive its share of
profits or other compensation by way of income and the return of contributions, and shall be
allocated the share of Company income, gain, loss, deduction and credit that would otherwise be
allocated to such Member with respect to such interest.
Article 14
20
Members'ovenants
14.1 ikttembers Personal Debts. In order to protect the properly and assets of the
Company from any claim against any Member for personal debts owed by such Member, each
Member shall promptly pay all debts owing by him or her and shall indemnify the Company from
any claim that might be made to the detriment of the Company by any personal creditor of such
Member.
14.2 Alienation of Iktembership Interest. No Member shall, except as otherwise
specifically provided for in this Agreement, sell, assign, mortgage, or otherwise encumber its
Membership Interest in the Company or in its capital assets or property; or enter into any
agreement of any kind that will result in any person, firm, or other organization becoming claiming
or having any interest in the Company; or do any act detrimental to the best interests of the
Company.
Article 15
Dissolution, Liquidation and Termination of the Company
15.1 Distribution of Proceeds. Any Sale Proceeds, Refinancing Proceeds or net
proceeds upon liquidation of the Company shall be distributed to and among the Members at
such times as shall be determined by the Managers in the following amounts and order of priority;
(i) First, to the establishment of such Reserves as deemed necessary by the
Managers;
(ii) Second, to creditors of the Company other than Members;
(iii) Third, to the Members who have made loans to the Company pro rata
based on the amount of their outstanding loans;
(iv) The balance of any distributions will be made to the Members in
accordance with their Percentage of Interest in the Company.
15.2 Causes of Dissolution. The Company shall be dissolved upon the occurrence of
any of the following events:
(i) At any time by written agreement of seventy percent (70%) of the
Members;
(ii) Upon the occurrence of events or time specified for dissolution in
the Articles of Organization
15,3 Procedure for IVindinIIVp and Dissolution. If the Company is dissolved, the
Manager shall wind up its affairs, unless there is no Manager, in which case, the Members (or the
last Person to be a Member) shall wind up the affairs of the Company, If there are no Remaining
Members, or a Person who last was a Member, the affairs of the Company shall be wound up by
the legal or personal representatives of the Person who last was a Member. On winding up of
the Company, the assets of the Company shall be distributed, first, to creditors of the Company,
including Interest Holders who are creditors, in satisfaction of the liabilities of the Company, and
then to the Interest Holders in accordance with their Percentage of Interest in the Company.
21
15A Filing of Articles of Cancellation. If the Company is dissolved, the Members
shall promptly file Articles of Cancellation with the Secretary of State. If there are no Remaining
Members, the Articles shall be filed by last Person to be a Member. If there are no Remaining
Members, or a Person who last was a Member, the Articles shall be filed by the legal or personal
representatives of the Person who last was a Member.
15.5 Death, Expulsion, Bankruptcy. Retirement or Resignation of a Member;
Continuation of Business. The withdrawal, death, expulsion, bankruptcy, retirement or
resignation of a Member (hereinafter referred to as "Withdrawal" ) shall not cause a dissolution of
the Company, and notwithstanding any such event, the Remaining Members or Member may
continue the business of the Company and purchase the deceased, retired, resigned, expelled or
bankrupt Member's ("Withdrawn Member" ) Membership Interest and rights in the Company.
Article 16
Books, Record, Accounting and Tax Elections
16.1 Bank Accounts. All funds of the Company shall be deposited in a bank account
opened in the Company's name. The Members shall determine the institution or institutions at
which the account will be opened and maintained, the type of account, or accounts if more than
one is approved by the Members, and the Persons who will have authority with respect to the
accounts and the funds therein. One operating account shall be maintained at the Company's
bank, and Manager shall be the signatory on that account. All revenues and expenses shall be
processed through such account.
16.2 Books and Records. The Members shall keep or cause to be kept complete and
accurate books and records of the Company and supporting documentation of the transactions
with respect to the conduct of the Company's business. The books and records shall be
maintained in accordance with sound accounting principles and practices and shall be available
at the Company's principal office for examination by any Member or the Member's duly
authorized representative at any and all reasonable times during normal business hours.
16.3 Accounting period. The annual accounting period of the Company shall be its
taxable year. The Company's taxable year shall be selected by the Members, subject to the
requirements and limitations of the Code.
16A Reports. The Manager shall provide annual and monthly reports detailing all
financial activities of the Company occurring since the last such monthly report to the Members.
Within seventy-five (75) days after the end of each taxable year of the Company, the Members
shall cause to be sent to each Person who was a Member at any time during the taxable year then
ended a complete accounting of the affairs of the Company for the taxable year then ended. In
addition, within seventy five (75) after the end of each taxable year of the Company, or the filing
of the tax return which ever is later, the Members shall cause to be sent to each Person who was
an Interest Holder at any time during the taxable year then ended, that tax information concerning
22
the Company which is necessary for preparing the Interest Holder's income tax returns for that
year.
16.5 Location of Records. The books of the Company shall be maintained at the
business office of the Company as it may change from time to time with appropriate notice to the
Members.
16.6 Access to Records and Accounting. Each Member shall at all times have access
to the books and records of the Company for inspection and copying. Each Member shall also be
entitled:
(i) To obtain from the Members upon reasonable demand for any purpose
such information reasonably related to the Member's Membership Interest
in the Company;
(ii) To have true and full information regarding the state of the business and
financial condition and any other information regarding the affairs of the
Company;
(iii) To have a copy of the Company's federal, state and local income tax returns
for each year promptly after they are available to the Company; and
(iv) To have a formal accounting of the Company affairs whenever
circumstances render an accounting just and reasonable.
16.7 Accounting Rules. The books shall be maintained on a cash basis. The books
shall be closed and balanced at the end of each fiscal year. The Manager may authorize the
preparation of year-end profit-and-loss statements, balance sheet, and tax returns by a public
accountant.
Article 17
General Provisions
17,1 Assurances. Each Member shall execute all such certificates and other
documents and shall do all such filing, recording, publishing, and other acts as the Members deem
appropriate to comply with the requirements of law for the formation and operation of the
Company and to comply with any laws, rules, and regulations relating to the acquisition,
operation, or holding of the assets and property of the Company.
17.2 Notification. Any notice, demand, consent, election, offer, approval, request, or
other communication (collectively, a "notice") required or permitted under this Agreement must
be in writing and either delivered personally or by nationally recognized overnight delivery service
such as FedEx, or sent by certified or registered mail, postage prepaid, return receipt requested.
A notice must be addressed to an Interest Holder at the Interest Holder's address shown on Exhibit
"B" hereto, or to the last known address on the records of
the Company. A notice to the
Company must be addressed to the Company's principal office, A notice will be deemed given
only when acknowledged in writing by the person to whom it is delivered. Any party may
designate, by notice to all of the others, substitute addresses or addressees for notices; and,
thereafter, notices are to be directed to those substitute addresses or addressees. Rejection or
refusal to accept a notice properly given shall constitute receipt hereunder,
17.3 Specific performance. The parties recognize that irreparable injury will result
from a breach of any provision of this Agreement and that money damages will be inadequate to
fully remedy the injury. Accordingly, in the event of a breach or threatened breach of one or
more of the provisions of this Agreement, any party who may be injured (in addition to any other
remedies which may be available to that party) shall be entitled to one or more preliminary or
permanent orders (i) restraining and enjoining any act which would constitute a breach or (ii)
compelling the performance of any obligation which, if not performed, would constitute a breach.
17A Complete Agreement. This Agreement, together with any and all separate
agreements contemplated hereunder, constitutes the complete and exclusive statement of the
agreement among the Members. It supersedes all prior written and oral statements, including
any prior representation, statement, condition, or warranty.
17.5 Amendment. This Agreement may be amended with the written consent of the
Members holding seventy percent (70%) of the Interests then held by the Members.
17.6 Applicable law. All questions concerning the construction, validity, and
interpretation of this Agreement and the performance of the obligations imposed by this
Agreement shall be governed by the internal law, not the law of conflicts, of the State of California.
17,7 Section and Titles. The headings herein are inserted as a matter of convenience
only, and do not define, limit, or describe the scope of this Agreement or the intent of the
provisions hereof.
17.8 Binding Provisions. This Agreement is binding upon, and inures to the benefit
of, the parties hereto and their respective heirs, executors, administrators, personal and legal
representatives, successors, and permitted assigns.
17.9 Jurisdiction and Venue. Any suit involving any dispute or matter arising under
this Agreement may only be brought in the courts of the State of California, County of San Luis
Obispo. All Members hereby consent to the exercise of personal jurisdiction by said court with
respect to any such proceeding.
17.10 Terms. Common nouns and pronouns shall be deemed to refer to the masculine,
feminine, neuter, singular and plural, as the identity of the Person may in the context require,
17,11 Separabi%tlr of Provisions. Each provision of this Agreement shall be
considered separable; and if, for any reason, any, provision or provisions herein are determined
to be invalid and contraqr to any existing or future law, such invalidity shall not impair the
operation of or affect those portions of this Agreement which are valid.
17.12 Counterparts. This Agreement may be executed simultaneously in two or more
counterparts each of which shall be deemed an original, and all of which, when taken together,
constitute one and the same document. The signature of any party to any counterpart shall be
deemed a signature to, and may be appended to, any other counterpart.
17.13 Arbitration. Any dispute, claim or controversy arising out of or relating to this
Agreement or the breach thereof shall be settled by binding arbitration in accordance with the
rules then in effect with the American Arbitration Association. Judgment upon the award
rendered by said arbitration may be entered in any court having jurisdiction thereof. Costs of
arbitration shall be paid by the non-prevailing party. If one Member notifies the other Member
in writing of a dispute, claim, or controversy within six (6) months of the arising of such dispute,
claim, or controversy and requests that the same be arbitrated, no legal action may then be
commenced thereon, except to obtain judgment on the arbitration award.
IN WITNESS WHEREOF, the parties have executed, or caused this Agreement to be
executed, under seal, as of the date set forth above.
PB COMPANIES, LLC
By:
Johl4IV. Belsher, Managing Member
Rtan Petetit, Ma/ging Member

"A"
EXHIBIT “A"
EXHIBIT
TO OPERATING AGREEMENT
AGREEMENT OF
Orcutt
Orcqtt Clark Partners,
Partners, LLC
LLC
[ARTICLES OF INCORPORATION]
[ARTICLES INCORPORATION]
84!83/2888 28:84 18883888338 PABF 82!03
)Litic)es of Organization
~ of a Limited Llobiiity
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filinc slang with
Company {L
in California. yOu Ceh
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more information,
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LLC Addresses San Luis (3bi~so CA 93401

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EXHIBIT "B"
TO OPERATING AGREEMENT
OF
Orcutt Clark Partners, LLC
Name, Address and Taxpayer Percentage .. CaPital

Initial
Voting
Identification Number of and Interest percentage
Contribution
Member in Company
PB Companies, LLC
3480 S. Higuera Street, Suite 130 100o/ $ 1,000 100%
San Luis Obispo, CA 93401
27

Watts v. PB Downtown - Complaint 18CV-0671

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Watts v. PB Downtown - Complaint 18CV-0671

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ELECTRONICALLY

JOSEPH M. SWEENEY, ESQ. (78363) FILED

Attorneys for Henry Watts

8 COUNTY OF SAN LIJIS OBISBO

18 Plaintiff HENRY WATTS, hereby alleges as follows:

21 individual residing in the County of Santa Clara.

103088) with a law office located in San Luis Obispo, Californi.

15 Belsher) is the sole manager of OCP.

25 the things alleged herein.

26 The Hiauera Commons Proieet

28 PB in exchange for an assignment of interest in PB Downtov n —the entity held an interest in

8. Higuera Commons, LLC is the development entity engaged in the redevelopment of a

("Higuera Commons Project" ).

a. Plaintiff's $ 300,000.00 was entitled to accrue interest at a 5% preferential rate

20 begins to produce cash flow;

appraisal or a broker's opinion of value, as the patties agree."

than June 2, 2018 ("Investment Maturity Date'.

interest in the Higuera Commons Project, as of October 26, 2018.

18 The Orcutt Proiect

24.66 acre parcel for commercial use).

27 entitled "Investment Agreement," dated September 2, 2015 ("Orcutt Investment Agreement'. A

17 Downtown —which entity held an interest in Higuera Commons, LLC.

22 $ 343,524.90, plus 2% of PB Downtown's interest in the Higucra Commons Project, as of October

25 Plaintiffon or before the Investment Maturity Date.

26. As a result of PB Downtown's unexcused and unjustifiable breach of the Investor

10 WHEREFORE, Plaintiff prays judgment as hereinafter set forth.

SECOND CAUSE OF ACTION IHIGUERA COMMONS PROJECTI

15 alleged as though fully set forth herein.

26 California Corporate Code.

2 entitled to an award of attorneys'ees pursuant to Corp Code FI I 7704.10(f).

3 WHEREFORE, Plaintiff prays judgment as hereinafter set forth.

4 THIRD CAUSE OF ACTION fORCUTT PROJECT)

8 alleged as though fully set forth herein.

19 California Corporate Code.

24 WHEREFORE, Plaintiff prays judgment as hereinafter set forth.

25 FOURTH CAUSE OF ACTION fORCUTT PROJECT)

to an accounting of OCP's activities, including the investment made by Plaintiff.

and records available for inspection.

41. As hereinabove alleged, Defendants have engaged in certain misconduct, including,

12 42. Defendants'mproper use of Plaintiff"'s funds, and personal benefit experienced by

15 43. Defendants refused to provide accounting when demanded by Plaintiff. Plaintiff is

18 accounting as required and as hereinabove alleged.

19 WHFRFFORE, Plaintiff prays judgment as hereinafter set forth.

5. Costs of suit incurred;

11 Dated: October ~, 2018 SWEENEY, MASON, WILSON & BOSOMWORTH

the contents thereof;

believe them to be true.

WHEREAS, the undersigned parties entered into an Operating Agreement dated

2. The percentage interests of the partners are amended to be as follows:

John Belsher 49%

Ryan Petetit 49%

Pensco Trust Company Custodian FBO Henry Watts, IRA 2%

Dated: December 2, 2015 PB COMPANIES, LLC

WHERFAS, PB Companies, LLC has formed a development entity named idiguera

a. Watts will place $ 300,000 with PB upon execuiion of this agreement.

ownership interest in the Project, based upon eitheran appraisai or a broker'

Watts'nvestment shall be returned at the earliest of

PENSCO TRUST COMPANY CUSTODIAN PBO IIENRY WATTS, IRA

Date i a/s-/r <.

By: Date is/sA

lohn Balsa, Managing Member

SXHIBITA, Page $ ofg

September 20, 2018

Via First C/ass Mail and Email