EXHIBIT 1 

DECLARATION OF STEPHEN G. PREONAS IN SUPPORT OF 

INTERESTED PARTIES WOMAC PROPERTIES, INC. AND JLG 

ASSOCIATES, LLC’S OPPOSITION TO PLAINTIFF’S MOTION 

FOR PRELIMINARY INJUNCTION AND APPOINTMENT OF 

RECEIVER 

SEC v. SAN FRANCISCO REGIONAL CENTER, 

LLC, et al.

NORTHERN DISTRICT OF CALFORNIA 

CASE NO. No. 3:17-CV-00223-RS 

DESCRIPTION OF DOCUMENT: 

Complaint filed September 10, 2015 in Alameda 

Superior Court Case No. RG 15-785236 Entitled 

WOMAC Properties, Inc., et al. v San Francisco 

Regional Center, LLC

EXHIBIT 1 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 1 of 109
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KENNETH S. KATZ0f1f1 (SBN 103490) 

STEPHEN G. PREONAS (SBN 245334) 

Katzoff & Riggs LLP 

1500 Park Avenue, Suite 300 

Emeryville, CA 94608 

Tel. (510) 597-1990 

Fax. (510) 597-0295 

Attorneys for Plaintiffs 

WOMAC PROPER'J'ff•:S, INC. 

- · and-JtG ASSf:lCTA:TES; bbG----· -----············ 

SEP 1 0 2015 

SUPERIOR COURT OF CALIFORNIA- UNLIMTTED CIVIL JURTSDICTlON 

COUNTY OF ALAMEDA 

WOMAC PROPEKl'lES, INC. a California 

nonprofit public benefit coq,oration, JLG 

ASSOCIATES, LLC, a California limited 

liability comp<u1y 

Plaintiff, 

vs. 

SAN FRANCISCO REGIONAL CENTER, 

LLC, a Califomia li111itcd Uability company, 

THOMAS M. HENDERSON an il1dividual; 

and DOES 1 through 20, inclusive 

Defendants. 

__ .,._, ... , ____ _ 

) Case No. F·.'.'. (~:; ·:~ .1',j: 1;? ["!; :·::i '.:::'. '.;·~: (:: 

) 

) COMPLAINT FOR BREACH OF 

) CONTRACT, INTENTIONAL 

) MlSPRESENTATlON AND 

) MONEVLENT 

) 

) 

) 

) 

) 

) 

) 

) l"ji':·~~ 'l""t\'' (" :< i"" /' i\. 

) 

) 

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) 

GENERAL ALLEGATIONS COMMON TO ALL CAUSES OF ACTION 

1. Plaintiff WOMAC Properties, 111c. ("WOMAC"), is now, and was at all 

times relevant herdn, a California nonprotit public benefit corporation with its principal 

place of business in lhe City of Oakland, Comity of Alameda, State of California. 

COMPLAINT FOR BREACH OF CONTRACT, INTRNTIONAL MISPR~;SENTATJ.ON 

AND MONEY LENT 

I 

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KATZOFF & 

RIGGS LLP 

1500 PARK AVENUE, SUITE 300 

EMERYVILLE, CA 94608 

(510)597-1990 

_______________________________________________________________________ 

COMPLAINT FOR BREACH OF CONTRACT, INTENTIONAL MISPRESENTATION 

AND MONEY LENT 

2

 2. Plaintiff JLG ASSOCIATES, LLC (“JLGA”), is now, and was at all times 

relevant herein, a California limited liability company with its principal place of business 

in the City of Oakland, County of Alameda, and State of California. 

 3. Plaintiffs are informed and believe and thereon allege that defendant SAN 

FRANCISCO REGIONAL CENTER, LLC, (“SFRC”) is a California limited liability 

company with its principal place of business in the City of Oakland, County of Alameda, 

and State of California. 

 4. Plaintiffs are informed and believe and thereon allege that defendant 

THOMAS M. HENDERSON (“Henderson”) is an individual residing in the City of 

Oakland, County of Alameda, State of California and that Henderson is one a managing 

member of defendant SFRC. 

 5. Plaintiffs are informed and believe and thereon allege that SFRC is an 

investment firm that obtains foreign investments, primarily from China, through a U.S. 

Government sponsored program called EB-5. The United States Citizenship and 

Immigration Services (USCIS) administers the EB-5 program with oversight provided by 

the Securities and Exchange Commission (SEC). Under the EB-5 program a “regional 

center” such as SFRC invests foreign capital into U.S. businesses with the goal of 

creating jobs. If SFRC meets the requirements of EB-5 (primarily creating 10 jobs for 

each $500K investment) then the foreign investor can obtain U.S. citizenship. 

 6. The defendants herein identified as defendants DOE 1 through DOE 20, 

inclusive, are other persons responsible for the acts, events, omissions, failures, and 

statements described in this Complaint. Plaintiffs are currently ignorant of the true names 

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KATZOFF & 

RIGGS LLP 

1500 PARK AVENUE, SUITE 300 

EMERYVILLE, CA 94608 

(510)597-1990 

_______________________________________________________________________ 

COMPLAINT FOR BREACH OF CONTRACT, INTENTIONAL MISPRESENTATION 

AND MONEY LENT 

3

and capacities of defendants DOES 1 through DOES 20, inclusive. Said defendants are 

therefore designated by fictitious names. Plaintiff will seek leave to amend this 

Complaint to state the true names and capacities of DOE 1 through DOE 20 when the 

same are ascertained by plaintiffs. Generally, Plaintiff alleges that defendants DOE 1 

through DOE 10 are persons who performed the wrongful acts and omissions alleged 

herein as to Henderson. Defendants DOE 11 through DOE 20 are other persons and/or 

entities whose wrongful acts and omissions have caused harm or damage to Plaintiffs 

alleged herein. 

 7. Plaintiffs are informed and believe and based thereon allege that at all times 

herein mentioned defendants SFRC and Henderson and DOES 1 through 20, inclusive 

(collectively “Defendants”), were the principal, agent, or employee of each other, and 

acting as either such principal or within the course and scope of such employment or 

agency, took some part in the acts or omissions hereinafter set forth by reason of which 

each Defendant is liable to Plaintiffs for the relief prayed for herein. 

 8. This Court has jurisdiction over this case pursuant to California Code of 

Civil Procedure § 410.10. 

 9. Venue is proper under California Code of Civil Procedure § 395(a) because 

Plaintiffs are informed and believe and based thereon alleged that some of the Defendants 

reside in and/or have principal places of business in Alameda County, California. 

 10. A WOMAC affiliated entity is the sole member of JLGA. JLGA is the 

former owner of certain commercial real property located at 800, 850 and 900 Market 

Street in Oakland commonly known as the Jack London Gateway Shopping Center (“the 

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KATZOFF & 

RIGGS LLP 

1500 PARK AVENUE, SUITE 300 

EMERYVILLE, CA 94608 

(510)597-1990 

_______________________________________________________________________ 

COMPLAINT FOR BREACH OF CONTRACT, INTENTIONAL MISPRESENTATION 

AND MONEY LENT 

4

Property”). 

 11. The present dispute arises out of a series of transactions between WOMAC, 

JLGA and SFRC relating to the Property. On or about June 26, 2014 WOMAC and 

SFRC entered into a written operating agreement (“the Operating Agreement”) to form a 

California limited liability company called JL Gateway, LLC (“JL Gateway”). In 

connection with the formation of JL Gateway, WOMAC, JLGA and SFRC agreed that 

JLGA would transfer ownership in the Property from JLGA to JL Gateway. 

 12. On or about December 16, 2014 WOMAC and SFRC agreed to amend the 

Operating Agreement for JL Gateway and enter into an Amended and Restated Operating 

Agreement for JL Gateway (“the Amended Operating Agreement”) which replaced and 

superseded the Operating Agreement. A true and correct copy of the Amended Operating 

Agreement is attached as Exhibit A. Pursuant to the Amended Operating Agreement 

SFRC was to own a 75% interest in JL Gateway and WOMAC was to own the remaining 

25% interest in JL Gateway. 

 13. On or about December 17, 2014, in connection with the formation of JL 

Gateway, the transfer of the interest in the Property from JLGA to JL Gateway and the 

execution of the Amended Operating Agreement allocating a 75% membership interest in 

JL Gateway to SFRC, SFRC executed a promissory note in favor of WOMAC in the 

amount of $3.7M (“the Note”). A true and correct copy of the Note is attached as Exhibit 

B. The Note required SFRC to begin making payments of interest on the Note on 

February 5, 2015 and required the Note to be paid in full by December of 2015. 

 14. In connection with the execution of the Note SFRC and Henderson 

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KATZOFF & 

RIGGS LLP 

1500 PARK AVENUE, SUITE 300 

EMERYVILLE, CA 94608 

(510)597-1990 

_______________________________________________________________________ 

COMPLAINT FOR BREACH OF CONTRACT, INTENTIONAL MISPRESENTATION 

AND MONEY LENT 

5

represented to WOMAC that they intended to raise funds for the rehabilitation of the 

Property through the EB-5 program, and that SFRC intended to and in fact would make 

all required payments of interest and principal due under the Note. 

 15. WOMAC caused the title to the Property to be transferred from JLGA to JL 

Gateway, entered into the Amended Operating Agreement and agreed to form JL 

Gateway with SFRC and grant SFRC a 75% interest in JL Gateway based upon the false 

promises of SFRC and Henderson that they intended to raise funds for the rehabilitation 

of the Property through the EB-5 program, and that SFRC would make all required 

payment of principal and interest due under the Note (“the Misrepresentations”). In 

making the Misrepresentations Henderson and SFRC conspired with one another to 

defraud WOMAC and JLGA of its interest in the Property and fraudulently obtain a 75% 

membership interest in JL Gateway without providing the agreed upon payments due 

under the Note or raising funds to rehabilitate the Property in return. 

 16. The Misrepresentations proved to be false in that SFRC did not intend to 

pay all of the amounts due under the Note and did not intend to raise funds for the 

rehabilitation of the Property through the EB-5 program. Rather, Defendants intended to 

use the Misrepresentations to convince WOMAC to cause JLGA to transfer its interest of 

in the Property to JL Gateway and grant SFRC a controlling interest in JL Gateway, take 

control of the rents and profits of the Property and then disregard the payment obligations 

required by the Note and the promise to rehabilitate the Property. To date SFRC has 

failed to make any of the payments required by the Note or to take action to rehabilitate 

the Property. 

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KATZOFF & 

RIGGS LLP 

1500 PARK AVENUE, SUITE 300 

EMERYVILLE, CA 94608 

(510)597-1990 

_______________________________________________________________________ 

COMPLAINT FOR BREACH OF CONTRACT, INTENTIONAL MISPRESENTATION 

AND MONEY LENT 

6

FIRST CAUSE OF ACTION 

(For Breach of Contract re the Note – WOMAC against SFRC) 

 17. The “General Allegations Common to All Causes of Action” are restated 

and incorporated by this reference. 

 18. SFRC and WOMAC agreed to form JL Gateway and to grant SFRC a 75% 

interest in JL Gateway based upon the promise of SFRC to repay WOMAC $3.7M with 

interest as set forth in the Note. 

 19. WOMAC has fully performed all of the terms, conditions, promises, 

obligations and duties under the Note, except for those terms, conditions, promises, 

obligations and duties which were excused, waived, prevented or delayed by the consent, 

acts or omissions of SFRC. 

 20. SFRC materially breached the Note by failing to make payments of interest 

on the Note as required. 

 21. As a direct, proximate and foreseeable result of SFRC breaches of the Note, 

WOMAC has been damaged according to proof within the unlimited jurisdiction of this 

Court, which at this time is estimated to be at $3,781,091.67. 

 WHEREFORE, WOMAC requests relief as prayed below. 

SECOND CAUSE OF ACTION 

(For Intentional Misrepresentation re the Note and the Amended Operating Agreement – 

WOMAC and JLGA against SFRC and Henderson) 

 22. The “General Allegations Common to All Causes of Action” and the 

allegations in the “First Cause of Action” are restated and incorporated by this reference. 

 23. At the time the Henderson on behalf of SFRC made the Misrepresentations 

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KATZOFF & 

RIGGS LLP 

1500 PARK AVENUE, SUITE 300 

EMERYVILLE, CA 94608 

(510)597-1990 

_______________________________________________________________________ 

COMPLAINT FOR BREACH OF CONTRACT, INTENTIONAL MISPRESENTATION 

AND MONEY LENT 

7

to WOMAC, Henderson knew that the Misrepresentations were false. Henderson 

intended the Misrepresentations to induce WOMAC to enter into the agreement to form 

JL Gateway, to induce JLGA to transfer ownership of the Property to JL Gateway and to 

induce WOMAC to agree that SFRC would obtain a 75% interest in JL Gateway. 

 24. WOMAC and JLGA reasonably relied on the Misrepresentations, by 

entering into the agreement to form JL Gateway, by transferring ownership of the 

Property to JL Gateway and entering into the Amended Operating Agreement that 

provide that SFRC had a 75% interest in JL Gateway. But for the Misrepresentations, 

WOMAC would not have entered the agreement to form JL Gateway, JLGA would not 

have transferred ownership of the Property to JL Gateway and WOMAC would not have 

entered into the Amended Operating Agreement granting SFRC a 75% interest in JL 

Gateway. 

 25. As a direct and proximate result of the Misrepresentations, WOMAC and 

JLGA have suffered damages according to proof within the unlimited jurisdiction of the 

Court, which at this time are estimated to be at least $3,781,091.67. 

 26. By virtue of the false and fraudulent nature of the Misrepresentations, 

WOMAC and JLGA have sustained substantial out-of-pocket losses and are entitled to 

recover damages from SFRC and Henderson in an amount according to proof. 

 27. The aforementioned conduct of SFRC and Henderson included 

intentionally false statements, deceit and concealment of material facts known to 

Henderson and SFRC with the intention on the part of Henderson and SFRC of thereby 

depriving WOMAC and JLGA of property and legal rights, and was despicable conduct 

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KATZOFF & 

RIGGS LLP 

1500 PARK AVENUE, SUITE 300 

EMERYVILLE, CA 94608 

(510)597-1990 

_______________________________________________________________________ 

COMPLAINT FOR BREACH OF CONTRACT, INTENTIONAL MISPRESENTATION 

AND MONEY LENT 

8

that subjected WOMAC and JLGA to unjust hardship in conscious disregard of their 

rights, so as to justify an award to WOMAC and JLGA of exemplary and punitive 

damages. 

28. Defendants SFRC and Henderson willfully, intentionally and knowingly 

agreed and conspired with SFRC other to engage in the alleged unlawful conduct 

described herein, including the Misrepresentations and the breach of the Note. 

29. Defendants SFRC and Henderson did the acts alleged pursuant to and in 

furtherance of their agreement and/or further the conspiracy by cooperating, encouraging, 

ratifying or adopting the acts of the other. 

30. As a direct and proximate result of these acts in furtherance of the 

conspiracy, Plaintiffs have suffered injuries and damages in an amount as yet unknown, 

but to be proven at trial. The wrongful conduct committed pursuant to the conspiracy 

was a substantial factor in causing this harm. 

31. Defendants’ intentional agreement to commit and commission these 

wrongful acts was willful, malicious, oppressive and in conscious disregard of Plaintiffs’ 

rights and Plaintiffs’ are therefore entitled to an award of punitive damages to punish 

Defendants’ wrongful conduct and deter future wrongful conduct. 

 WHEREFORE, Plaintiffs request relief as prayed below. 

THIRD CAUSE OF ACTION 

(Money Lent – WOMAC against SFRC) 

 32. Plaintiffs incorporate all paragraphs contained in the “Allegations Common 

to All Causes of Action,” “First Cause of Action,” “Second Cause of Action” and as if set 

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KATZOFF & 

RIGGS LLP 

1500 PARK AVENUE, SUITE 300 

EMERYVILLE, CA 94608 

(510)597-1990 

_______________________________________________________________________ 

COMPLAINT FOR BREACH OF CONTRACT, INTENTIONAL MISPRESENTATION 

AND MONEY LENT 

9

forth in full herein. 

 33. On or about December 17, 2014 SFRC became indebted to WOMAC in the 

amount of $3,700,000.00 plus interest at the rate of three percent (3%) per year. 

 34. Though demand has been made for payment in full there is due and unpaid 

the sum of $3,700,000.00 for money lent by WOMAC to SFRC at the request of SFRC 

together with interest thereon. 

 WHEREFORE, WOMAC requests relief as prayed below. 

PRAYER FOR RELIEF 

 WHEREFORE, Plaintiffs request the Court to grant relief as follows: 

 Plaintiff requests the following relief: 

1. For damages in the amount of $3,781,091.67. 

2. For prejudgment interest; 

3. For attorney’s fees, if so allowed by the law and the facts; 

4. For cost of suit, if so allowed by the law and the facts; and 

5. For such other relief permitted by law and which the Court deems proper. 

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KATZOFF & 

RIGGS LLP 

1500 PARK AVENUE, SUITE 300 

EMERYVILLE, CA 94608 

(510)597-1990 

_______________________________________________________________________ 

COMPLAINT FOR BREACH OF CONTRACT, INTENTIONAL MISPRESENTATION 

AND MONEY LENT 

10

Dated: September 10, 2015 

KATZOFF & RIGGS LLP 

Attorneys for Plaintiffs WOMAC 

PROPERTIES, INC. and JLG 

ASSOCIATES, LLC 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 11 of 109
EXHIBIT A 

TO COMPLAINT FOR BREACH OF 

CONTRACT, INTENTIONAL 

MISPRESENTATION AND MONEY LENT 

WOMAC PROPERTIES, INC. et al. v. SAN 

FRANCISCO REGIONAL CENTER, LLC, et al.

ALAMEDA COUNTY SUPERIOR COURT 

DESCRIPTION OF DOCUMENT: 

AMENDED AND RESTATED OPERATING 

AGREEMENT FOR JL GATEWAY, LLC 

A CALIFORNIA LIMITED LIABILITY 

COMPANY

EXHIBIT A    

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JL GATEWAY, LLC 

1485\03\1595839.3

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AMENDED AND RESTATED OPERATING AGREEMENT 

FOR

JL GATEWAY, LLC

A CALIFORNIA LIMITED LIABILITY COMPANY

THIS AMENDED AND RESTATED OPERATING AGREEMENT (the 

"Agreement”) is entered into effective as of December __, 2014, 

by SAN FRANCISCO REGIONAL CENTER, LLC, (“SFRC”) a California 

limited liability company and WOMAC PROPERTIES, INC., a 

California nonprofit public benefit corporation, (“WOMAC”) doing 

business in the State of California (hereinafter sometimes 

collectively referred to as “Members”.

R E C I T A L S

WHEREAS, on June 26, 2014, “JL GATEWAY, LLC” (the 

“Company”) was formed as a limited liability company by the 

filing of articles of organization (the “Articles”) with the 

California Secretary of State; 

WHEREAS, the Company is currently governed by that certain 

Operating Agreement, dated as of June 26, 2014, entered into by 

SFRC, as sole member (the “Original Operating Agreement”); 

WHEREAS, SFRC desires to admit WOMAC as a Member of the 

Company, WOMAC desires to be so admitted as a Member of the 

Company, and SFRC, as a Member and the Manager of the Company, 

and WOMAC, as a Member, desire to amend and restate the Original 

Operating Agreement in its entirety on the terms and conditions 

contained herein; 

WHEREAS, SFRC, as a Member and the Manager of the Company, 

and WOMAC, as a Member of the Company, wish to adopt and approve 

an agreement to govern the operations of the Company and document 

the rights and obligations of each Member and Manager with 

respect to the Company;

NOW THEREFORE, in consideration of the premises and the 

mutual covenants and conditions contained herein, WOMAC is hereby 

admitted as a Member of the Company, and the Original Operating 

Agreement is hereby amended and restated in its entirety to 

reflect the agreement of the parties as follows:

A G R E E M E N T

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JL GATEWAY, LLC 

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ARTICLE I

ORGANIZATIONAL MATTERS

1.1 Formation and Purpose. SFRC formed the Company by 

filing the Articles with the California Secretary of State, and 

the Members have entered into this Agreement to define the rights 

and liabilities of the Members. The purpose of the Company is to 

engage in any lawful activity for which a limited liability 

company may be organized under the Act or the laws of the State 

of California, and in particular, to own, operate, and develop

the property commonly known as “Jack London Gateway” shopping 

center in Oakland, California (the “Project”). Unless otherwise 

defined herein, capitalized terms shall have the meanings set 

forth in Section 11.1 hereof. To the extent permitted by the 

Act, this Agreement shall control the rights or obligations of 

any Member.

1.2 Name and Term. The name of the Company shall be “JL 

GATEWAY, LLC” The business of the Company may be conducted under 

that name or, upon compliance with applicable laws, any other 

name that the Members and Managers deem appropriate or advisable. 

The terms of this Agreement shall be co-terminous with the 

existence (including any winding up activities) of the Company. 

1.3 Office, Agent, and Addresses of Members and Manager.

The Company shall maintain an office and registered agent in 

California, and may locate its principal office where the Members 

and Managers may determine. Other offices may also be 

established as needed within and outside California. The 

registered agent shall be as stated in the Articles or as 

otherwise determined by the Members and Managers. The addresses 

of the Members and of the Managers are set forth on Exhibit “A”.

ARTICLE II

CAPITAL CONTRIBUTIONS

2.1 Capital Contributions. Each Member shall contribute 

the amount set forth on Exhibit A as his or her initial Capital 

Contribution. No Member shall be required to make any additional 

Capital Contributions. Additional Capital Contributions may be 

made upon the recommendation of the Managers with the written 

approval of members holding a Majority Interest. Members shall 

have the opportunity, but not the obligation, to participate in 

such additional Capital Contributions on a pro rata basis in 

accordance with their Percentage Interests. All Capital 

Contributions and Percentage Interests, as set forth on Exhibit 

A, shall be adjusted by the Managers on a regular basis. For 

purposes of this Agreement, the term “Capital Contribution” shall 

mean the aggregate fair market value of the cash, property 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 14 of 109
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(including promissory notes) contributed to the Company by 

Members and services rendered (excluding, however, the value of 

any services with respect to which the Member is treated solely 

as an “employee” and not as the equivalent of a partner for 

federal employment tax purposes).

2.2 Capital Accounts. The Company shall establish and 

maintain in accordance with the Regulations, a “Capital Account” 

for each Member, which shall carry over to his transferee if 

transferred in accordance with this Agreement. No Member shall 

be entitled to receive any interest on his Capital Contributions.

ARTICLE III

 MEMBERS

3.1 Limited Liability. Except as required under the Act 

or this Agreement, no Member shall be personally liable for any 

debt, obligation, or liability of the Company, whether that 

liability or obligation arises in contact, tort, or otherwise.

3.2 Admission of Additional Members. Additional Members 

may be admitted to the Company on terms determined by the 

Managers and approved by the unanimous approval of the Members; 

provided, however, that “substitute members” may be admitted only 

in accordance with Article VI.

3.3 Withdrawals, Resignations, and Termination of 

Interest. Any Member may withdraw or resign upon sixty (60) days 

prior written notice to the Company. Such Member’s Membership 

Interest shall be subject to purchase and sale as provided in 

Article VII. Upon a transfer of a Member’s Membership Interest 

in violation of this Agreement, the occurrence of a Dissolution 

Event as to that Member which does not result in the dissolution 

of the Company, or the withdrawal of a Member, the Membership 

Interest of a Member shall be terminated and may be purchased by 

the Company or remaining Members as provided for below in Article 

VI. Each Member acknowledges and agrees that such termination 

and acquisition of a Membership Interest upon the occurrence of 

any of the foregoing events is not unreasonable under the 

circumstances existing as of the date hereof.

3.4 Transactions with the Company. Unless otherwise 

prohibited herein, a Member may lend money to and transact other 

business with the Company if the Manager approves after full 

written disclosure of the Member’s involvement is made to 

members. Each such Member shall have, in such capacity, the same 

rights and obligations with respect thereto as a Person who is 

not a Member.

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Notwithstanding the foregoing, no Member shall be entitled 

to remuneration for acting in the Company business unless: (i) 

the Member renders services to the Company and the value of those 

services is not included as part of that Member’s Capital 

contributions under Article II hereof (i.e., the Member is 

treated solely as an “employee” or independent contractor and not 

as a partner for federal employment tax purposes); or (ii) the 

Member acts in connection with the winding up of the Company’s 

affairs pursuant to Article IX.

3.5 Members Are Not Agents. Pursuant to Section 4.1 and 

the Articles, the management of the Company is vested in the 

Manager. No Member, acting solely in the capacity of a Member, 

is an agent of the Company nor can any Member in such capacity 

bind nor execute any instrument on behalf of the Company.

3.6 Voting Rights. Except as expressly provided herein 

and excluding Members who are the subject of a Dissolution Event 

and assignors of a Membership Interest, Members holding a 

Majority Interest shall have the right to formally approve or 

disapprove matters, as specifically provided for below 

(hereinafter “approval” by Members), including, but not limited 

to, the following: (i) a decision to continue the business of the 

Company after the occurrence of a Dissolution Event; (ii) the 

transfer of a Membership Interest and admission of the assignee 

as a Member of the Company; (iii) a decision to compromise an 

obligation of a Member or return money or property paid or 

distributed in violation of the Act; (iv) the election and 

removal of the Managers; (v) the reorganization or the 

dissolution of the Company; and (vi) limitation imposed on, or 

fees paid to, the Managers. The unanimous consent of all Members 

shall be required to amend the Articles or this Agreement or to 

admit new Members.

3.7 Meetings of Members. Meetings of members may be held 

at such date, time and place within or outside California as the 

Managers may fix from time to time. However, no meetings of the 

Members shall be required. At any Members’ meeting, the Managers 

shall preside at the meeting and appoint a person to act as 

secretary, prepare minutes of the meeting, and maintain the 

minute books of the Company. Unless prohibited by the Act or the 

Articles, meetings of the Members may be called by the Managers, 

or upon written demand of a Member (or group of Members) holding 

more than then percent (10%) of the Percentage interests for the 

purpose of addressing any matters on which the Members may vote.

ARTICLE IV

MANAGEMENT AND CONTROL OF THE COMPANY

4.1 Management of the Company by Managers.

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The business, property, and affairs of the Company shall be 

managed exclusively by the manager(s) selected in accordance with 

Section 4.2 (the “Manager(s)”). Except for situations in which 

the approval of the Members is expressly provided for in the 

Articles of this Agreement, the Managers shall have full, 

complete and exclusive authority, power, and discretion to manage 

and control the business, property and affairs of the Company, to 

make all decisions regarding those matters, and to perform any 

and all the acts customary or incident to the management of the 

Company’s business, property and affairs.

4.2 Election of Managers.

A. Number; Term; and Qualifications. The Company shall 

initially have one (1) Manager. The number of Managers of the 

Company shall be fixed from time to time by Members holding a 

Majority Interest, provided that in no instance shall there be 

less than one Manager and provided further that if the number of 

Managers is reduced or increased, the Articles shall be amended 

as required by the Act. Unless he resigns or is removed, each 

Manager shall hold office until a successor is elected and 

qualified. The Managers shall be elected by the affirmative vote 

or written consent of Members holding a Majority Interest. A 

Manager need not be a Member, an individual, a resident of 

California, or a citizen of the United States.

B. Resignation; Removal; Vacancies. A Manager may resign 

at any time by giving written notice to the Members without 

prejudice to the rights, if any, of the Company under any 

contract to which the Manager is a party. The resignation of any 

Manager shall take effect upon receipt of that notice or at such 

later time as shall be specified in the notice; and, unless 

otherwise specified in the notice, the acceptance of the 

resignation shall not be necessary to make it effective. The 

Manager may be removed at any time, with or without cause, by the 

affirmative vote or written consent of Members holding a Majority 

Interest. The resignation or removal of a Manager shall not 

effect or prejudice the Manager’s rights as a Member or 

otherwise, and shall not constitute a withdrawal of a Member. 

Vacancies shall be filled by the affirmative vote or written 

consent of Members holding a Majority Interest.

4.3 Powers. Subject to the terms of this Agreement, the 

Managers shall manage the business, property and affairs of the 

Company, and shall have all powers needed to do so, including 

without limitation, the power to exercise all of the powers 

described in California Corporations Code Section 17704.07. 

Notwithstanding the foregoing, a Manager shall not have the 

authority hereunder to cause the Company to engage in the 

following transactions without first obtaining the affirmative 

vote or written consent of all of the Members: (i) the Sale, 

exchange or other disposition of all, or substantially all the 

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Company’s assets (unless pursuant to the Company’s duly 

authorized dissolution); (ii) the merger of the Company with 

another limited liability company, limited partnership, 

corporation, general partnership or other person; provided, 

however, no Member shall be required to become personally liable 

(e.g., a general partner), or shall be subjected to an economic 

risks of loss in excess of his or her Capital Contribution, in 

any merger without his express written consent or unless each 

Member is granted dissenter’s rights as described in the Act; 

(iii) the establishment of different classes of Members; (iv) 

transactions between the Company and the Manager or an affiliate 

of the Manager, or transactions in which the Manager has a 

material financial interest; (v) any act which would make it 

impossible to carry on the ordinary business of the Company; (vi) 

the confession of a judgment against the Company; or (vii) any 

other transaction described herein which requires the approval of 

the Members.

4.4 Members have no Managerial Authority. No Member shall 

have the power to participate in the management of the Company 

unless expressly authorized or required by this Agreement, the 

Articles, or Acts. Unless authorized in writing to do so by the 

Managers, no Member shall have any power or authority to bind or 

act on behalf of the Company in any way, to pledge its credit, or 

to render it liable for any purpose. 

4.5 Performance of Duties; Liability of Manager. A 

Manager shall perform his managerial duties in good faith, in a 

manner he reasonably believes to be in the best interests of the 

Company and its Members, and with such care, including reasonable 

inquiry, as an ordinary prudent person in like position would use 

under similar circumstances, and in accordance with the Manager’s 

fiduciary duties to the Company as set forth in Section 17704.09 

of the Act. A Manager who so performs shall not be liable to the 

Company or to any Member for any loss or damage sustained by the 

Company or any Member, unless the loss or damage shall have been 

the result of fraud, deceit, negligence, reckless or intentional 

misconduct, or a knowing violation of law by the Manager. The 

Managers shall be entitled to rely on information, opinions, 

reports, or statements, including financial statements and the 

financial data, from the employees, representatives and agents of 

the Company, its attorneys and accountants, and the Members, 

unless he has knowledge that reliance is unwarranted and that 

reasonable inquiry may be appropriate.

4.6 Devotion of Time; Competing Activities. A Manager 

shall not be required to devote all of his time or business 

efforts to the affairs of the Company, and may devote whatever 

time, effort, and skill, as he deems appropriate for the 

operation of the Company. The Managers and the Members, and 

their employees, representative and agents, may engage or invest 

in, independently or with others, any business activities of any 

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type or description, including without limitation those that 

might be the same as or similar to the Company’s business that 

might be in direct or indirect competition with the Company. 

Neither the Company nor any Member shall have the right in or to 

such other ventures or activities or to the income or proceeds 

derived therefrom. A Manager shall not be obligated to present 

any investment opportunity to prospective economic advantage to 

the Company, even if the opportunity is of a the character that, 

if presented to the Company, could be taken by the Company. A 

Manager shall have the right to hold any investment opportunity 

or prospective economic advantage for his own account or to 

recommend such opportunity to Persons other than the Company. 

The Members acknowledge that the Managers and Affiliates of a 

Manager may own and/or manage the business, including businesses 

that may compete with the Company and for the Manager’s time. 

Except for any violation by the Manager of the obligations 

imposed by Section 17704.09 of the Act, the Members hereby waive 

all rights and claims which they may otherwise have against the 

Manager and his agents, employees, and affiliates as result of 

any such activities.

4.7 Transactions between the Company and the Manager. 

Upon full and complete disclosure to the Members, and the 

approval by disinterested Members holding a Majority Interest, a 

Manager and/or his Affiliate may engage in any transaction 

(including, without limitation, the purchase, sale, lease, or 

exchange of any property or the rendering of any service, or the 

establishment of any salary, other compensation, or other terms 

of employment) with the Company so long as such transaction is 

not expressly prohibited by this Agreement or by Section 17704.09 

of the Act, and the terms and conditions of such transaction, on 

an overall basis, are as fair and reasonable to the Company as 

those that are generally available to parties operating at arm’s 

length.

4.8 Limited Liability. No person who is a Manager or 

officer (or both) of the Company shall be personally liable under 

any judgment of a Court, or in any other manner, for any debt, 

obligation, or liability of the Company, whether that liability 

or obligation arises in contract, tort, or otherwise, solely by 

reason of being a Manager or officer (or both) of the Company.

ARTICLE V

ALLOCATIONS OF NET PROFITS AND NET LOSSES AND DISTRIBUTIONS

5.1 Allocations of Net Losses and Net Profit. Net losses 

shall be allocated to the Members in proportion to their 

Percentage Interests. Notwithstanding the previous sentence, 

loss allocations to a Member shall be made only to the extent 

that such loss allocations will not create a deficit Capital 

Account balance for that Member in excess of an amount, if any, 

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equal to such member’s share of Company “Minimum Gain” (as 

defined in the Regulations) that would be realized on a 

foreclosure of the Company’s property. Any loss not allocated to 

a Member because of the foregoing provision shall be allocated to 

the other Members (to the extent the other Members are not 

limited in respect of the allocation of losses under this Section 

5.1). Any loss reallocated under this Section 5.1 shall be taken 

into account in computing subsequent allocations of income and 

losses pursuant to this Article V, so that the net amount of any 

item so allocated and the income and losses allocated to each 

Member pursuant to this Article V, to the extent possible, shall 

be equal to the net amount that would have been allocated to each 

such Member pursuant to this Article V if no reallocation of 

losses had occurred under this section 5.1. Net profit shall be 

allocated to a Member in proportion to his Percentage Interest. 

The Members are aware of the income tax consequences of the 

allocations made by this Article V and hereby agree to be bound 

by the provisions of this Article V in reporting their share of 

Company income and loss for income tax purposes.

5.2 Special Allocations. Notwithstanding Section 5.1, if 

there is a net decrease in Company Minimum Gain during any fiscal 

Year, each Member shall be specially allocated items of Company 

income and gain for such Fiscal Year (and if necessary, in 

subsequent fiscal years) in an amount equal to the portion of 

such Member’s share of the net decrease in Company Minimum Gain 

that is allocable to the Regulations, and determined in 

accordance with Regulations. Minimum Gain attributable to a 

Members’ “Nonrecourse Debt” (as defined in the Regulations) shall 

also be charged back and specially allocated in accordance with 

the Regulations. This Section 5.2 is intended to comply with the 

minimum gain chargeback requirement contained in the Regulations

and shall be interpreted and applied consistently therewith. 

Notwithstanding Section 5.1, any “Nonrecourse Deductions” (as 

defined in the Regulations) for any fiscal Year or other period 

shall be specially allocated to the Members in proportion to 

their Percentage Interests. Items of Company loss, deduction, or 

Code Section 705(a)(2)(B) expenditures which are attributable to 

Members who bear the economic risk of loss with respect to the 

Members’ Nonrecourse Debt to which such items are attributable 

as, described in the Regulations.

5.3 Qualified Income Offset. Notwithstanding Section 5.1, 

if any event creates a deficit balance in such Member’s Capital 

Account in excess of such Member’s share of Company Minimum Gain, 

items of Company income and gain shall be specially allocated to 

such Member in an amount and manner sufficient to eliminate such 

excess deficit balance as quickly as possible. Any special 

allocations of items of income and gain pursuant to this Section 

5.3 shall be taken into account in computing subsequent 

allocations of income and gain pursuant to this Article V so that 

the net amount of any item so allocated and the income, gain, and 

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losses allocated to each Member pursuant to this Article V to the 

extent possible shall be equal to the net amount that would have 

been allocated to each such Member pursuant to the provisions of 

this Section 5.3 if such expected adjustments, allocations, or 

distributions had not occurred.

5.4 Code Section 704(c) Allocations. Notwithstanding any 

other provision in this Article V, in accordance with Code 

Section 704(c) and the regulations promulgated thereunder, 

income, gain, loss and deduction with respect to any property 

contributed to the capital of the Company shall, solely for tax 

purposes, be allocated among the Members so as to take account of 

any variation between the adjusted basis of such property to the 

Company for federal income tax purposes and its fair market value 

on the date of contribution. Allocations pursuant to this 

Section 5.4 are solely for purposes of federal, state and local 

taxes, and shall not effect or in any way be taken into account 

in computing a Member’s Capital Account of share of profits, 

losses or other items of distributions pursuant to any provisions 

of this Agreement.

5.5 Allocation of Net Profits and Losses. If any 

Membership Interest is transferred, increased or decreased during 

any Fiscal year of the Company, each item of income, gain, loss, 

deduction, or credit of the Company for such Fiscal Year shall be 

assigned pro rata to each day in the particular period of such 

Fiscal Year to which such item is attributable (i.e., the day it 

is accrued or incurred) and allocated to each Member based upon 

his or her respective Membership Interest at the close of such 

day.

5.6 Distributions. Subject to applicable law and this 

Agreement, a Manager may distribute “Distributable Cash” to the 

Members in the following order of priority; (a) to Members in 

proportion to their unreturned Capital Contributions until each 

Member’s Capital Contributions are recovered; and (b) to the 

Members in proportion to their Percentage Interests. All such 

distributions shall be made only to the Persons who are the 

holders of record of the Economic Interest on the actual date of 

distributions. Neither the Company nor the Managers shall incur 

any liability for making distributions in accordance with this 

Section 5.6. A Member, regardless of the nature of the Member’s 

Capital Contribution, has no right to demand and receive any 

distribution from the Company in any form other than money. No 

Member may be compelled to accept from the Company a distribution 

of any asset in kind in lieu of a proportionate distribution of 

money being made to other Members. Except upon a dissolution and 

the winding up of the Company, no member may be compelled to 

accept a distribution of any asset in kind. Except for 

distributions made in violation of the Act or this Agreement, no 

Member or owner of an Economic Interest who is not a Member 

(hereinafter an “Economic Interest Owner”) shall be obligated to 

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return any distribution to the Company or pay the amount of any 

distribution for the account of the Company or to any creditor of 

the Company. The amount of any distribution returned to the 

Company by a Member or Economic Interest Owner or paid by a 

Member or Economic Interest Owner for the account of the Company 

or to a creditor of the Company shall be added to the account or 

accounts from which it was subtracted when it was distributed to 

the Members or Economic Interest Owner.

5.7 Restrictions on Distributions. No distribution shall 

be made if, after giving effect to the distribution; (a) the 

Company would not be able to pay its debts as they become due in 

the usual course of business; (b) the Company’s total assets 

would be less than the sum of its total liabilities plus, unless 

this Agreement provides otherwise, the amount that could be 

needed, if the Company were to be dissolved at the time of the 

distribution, to satisfy the preferential rights of the Members, 

if any, upon dissolution that are superior to the rights of the 

Members receiving the distribution; or (c) the Act. A Manager 

who votes for, or otherwise permits, a distribution in violation 

of this Agreement (or the Act) is personally liable to the 

Company for the amount of the distribution that exceeds what 

could have been distributed without violating this Agreement or 

the Act. 

ARTICLE VI

TRANSFER AND ASSIGNMENT OF INTERESTS

6.1 Transfer or Assignment of Interests. No Member shall 

be entitled to transfer, assign, sell, exchange, encumber or in 

any way alienate all or any part of his or her Membership 

Interest except with the prior written consent of Members holding 

a Majority Interest, which consent may be given or withheld as 

determined by the Members in their sole discretion. Transfers in 

violation of this Article VI shall only be effective to the 

extent set forth in Section 6.4. Any Membership Interest (or 

portion thereof) transferred shall continue to be subject to the 

terms and provisions of this Agreement. Furthermore, and in 

addition to the restrictions contained herein, no Member shall 

transfer, assign, sell, exchange, encumber or in any way alienate 

all or part of his Membership Interest: (i) without first 

complying with all applicable state and federal securities laws, 

and (ii) if the Membership Interest to be transferred, assigned, 

sold or exchanged, when added to the total of all the Membership 

Interests sold or exchanged in the preceding twelve (12) 

consecutive months prior thereto, would cause the termination of 

the Company under the Code, as determined by the Managers. Any 

permitted transfer of all or any portion of a Membership Interest 

shall be effective as of the date immediately following the date 

upon which the requirements of this Agreement have been met.

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6.2 Substitution of Members. A transferee of a 

membership Interest shall have the right to become a substitute 

Member only if (i) the requirements of Section 6.1 are met, (ii) 

such Person agrees to be bound by the terms of this Agreement, 

and (iii) such Person pays any reasonable expenses in connection 

with his or her admission as a new Member. The admission of a 

substitute Member shall not result in the release of a Member who 

assigned the Membership Interest from any liability that such 

Member may have to the Company.

6.3 Family and Affiliate Transfer. The Membership 

Interest of any Member may be transferred, subject to compliance 

with Section 6.1 (i) by inter vivos gift or by testamentary 

transfer to any spouse, parent, sibling, in-law, child or 

grandchild of the Member, or to a trust for the benefit of the 

Member or such spouse, parent, sibling, in-law, child or 

grandchild of the Member, or (ii) to any Affiliate of the 

Member. Any transferee of a Membership Interest transferred 

pursuant to this Section 6.3 shall take such Membership Interest 

subject to the transfer restrictions imposed by this Agreement.

6.4 No Effect to Transfers in Violation of Agreement.

Upon any transfer of a Membership Interest in violation of 

this Article VI, the transferee shall have no right to vote or 

participate in the management of the business, property and 

affairs of the Company or to exercise any rights of a Member. 

Such transferee shall only be entitled to become an Economic 

Interest Owner and thereafter shall only receive the share of one 

or more of the Company’s Net Profits, Net Losses and 

distributions of the Company’s assets to which the transferor of 

such Economic Interest would otherwise be entitled. 

Notwithstanding the immediately preceding sentences, if, in the 

determination of the Managers, a transfer in violation of this 

Article VI would cause the termination of the Company under the 

Code, in the sole discretion of the Managers, the transfer shall 

be null and void and the purported transferee shall not become 

either a member or an Economic Interest Owner. Upon any 

transfer, assignment, conveyance or sale (whether arising out of 

an attempted charge upon that Member’s Economic Interest by 

judicial process, a foreclosure by a creditor of the Member or 

otherwise) of a Member’s Economic Interest which does not at the 

same time transfer the balance of the rights associated with the 

Membership Interest transferred by a Member (including, without 

limitation, the rights of the Members to vote or participate in 

the management of the business, property and affairs of the 

Company), the Company shall purchase from the Member, and the 

Member shall sell to the Company for a purchase price of $200, 

all remaining rights and interests retained by the Member that 

immediately before the transfer, assignment, conveyance or sale 

were associated with the transferred Economic Interest. Such 

purchase and sale shall not, however, result in the release of 

the Member from any liability to the Company as a Member. Each 

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Member acknowledges and agrees that the right of the Company to 

purchase such remaining rights and interests from a Member who 

transfers a Membership Interest in violation of this Article VI 

is not unreasonable under the circumstances existing as of the 

date hereof.

6.5 Right of First Refusal. Each time a Member proposes 

to transfer, assign, convey, sell, encumber or in any way 

alienate all or any part of his Membership Interest (or as 

required by operation of law or another involuntary transfer to 

do so) such Member shall first offer such Membership Interest to 

the Company and the nontransferring Members in accordance with 

the following provisions:

A. Such Member shall deliver a written notice to the 

Company and the other Members stating such Member’s bona fide 

intention to transfer such Membership Interest, the name and 

address of the proposed transferee, the Membership Interest to be 

transferred, and the purchase price and terms of payment for 

which the Member proposes to transfer such Membership Interest.

B. Within thirty (30) days after receipt of the notice 

described in Section 6.5A, each nontransferring Member shall 

notify the Managers in writing of his desire to purchase a 

portion of the Membership Interest being so transferred. The 

failure of any Member to submit a notice within the applicable 

period shall constitute an election on the part of that Member 

not to purchase any of the Membership Interest, which may be so 

transferred. Each Member so electing to purchase shall be 

entitled to purchase a portion of such Membership Interest in the 

same proportion that the Percentage Interest of such Member bears 

to the aggregate of the Percentage Interests of all the Members 

electing to so purchase the Membership Interest being 

transferred. In the event any Member elects to purchase none or 

less than all of his pro rata share of Membership Interest, then 

the other Members can successively and proportionality elect, in 

the same manner as described in Section 7.3 below, to purchase 

the entire Membership Interest. If the notice sets forth noncash 

consideration, the Company and such purchasing Member each may 

elect to pay the consideration in cash equal to the good faith 

estimate of the present fair market value of the noncash 

consideration offered, as determined by the Managers.

C. If the Company or the other Members do not elect to 

purchase or obtain all of the Membership Interest designated in 

such notice, then the transferring Member may transfer the entire 

Membership Interest described in the notice to the proposed 

transferee, providing such transfer (i) is completed within 

thirty (30) days after the expiration of the Company’s and the 

other Members’ right to purchase such Membership Interest, (ii) 

is made on terms no less favorable to the transferring Member

than as designated in the notice, and (iii) all requirements of 

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this Article VI are met. If such Membership Interest is not so 

transferred, the transferring Member must give notice in 

accordance with this Section prior to any other or subsequent 

transfer of such Membership Interest.

ARTICLE VII

CONSEQUENCES OF DEATH, DISSOLUTION,

RETIREMENT OR 

BANKRUPTCY OF MEMBER

7.1 Dissolution Event. Upon the occurrence of a 

Dissolution Event, the Company shall dissolve unless, within 

ninety (90) days of the Dissolution Event, the Members holding a 

Majority of the remaining Membership Interests (the “Remaining 

Members”) consent to the continuation of the business of the 

Company. Upon the withdrawal of a Member under Section 3.3, or 

if the Remaining Members consent to the continuation of the 

business of the Company, the Company and/or the Remaining Members 

shall purchase, and the Member whose actions or conduct resulted 

in the Dissolution Event (“Former Member”) shall sell, the Former 

Member’s Membership Interest (hereinafter “Former Member’s 

Interest”) as provided in this Article VII to avoid dissolution 

of the Company.

7.2 Purchase Price. The purchase price for the Former 

Member’s Interest shall be the Capital Account balance of the 

Former Member as adjusted pursuant to Article II; provided, 

however, that if the Former Member of the Company deems the 

Capital Account balance to vary from the fair market value of the 

Former Member’s Interest by more than ten percent (10%), such 

party be entitled to require an appraisal by providing notice of 

the request for an appraisal within fifteen (15) days after the 

determination by Remaining Members to continue the business of 

the Company. In such event, the value of the Former Member’s 

Interest shall be determined by three (3) independent appraisers, 

one selected by the Former Member (or representative), one 

selected by the Company, and one selected by the two appraisers 

so named. The fair market value of the Former Member’s Interest 

shall be the average of the two appraisals closest in amount to 

each other. The party requesting such appraisal shall pay onehalf of such expense and the Remaining Members shall pay the 

remaining one-half of such expense. Notwithstanding the 

foregoing, if the Dissolution Event results from a breach of this 

Agreement by the Former Member, the purchase price shall be 

reduced by an amount equal to the damages suffered by the Company 

or the Remaining Members as a result of such breach.

7.3 Notice of Intent to Purchase. The Managers shall 

notify in writing the remaining Members of the purchase price of 

the Former Member’s Interest within ten (10) days of its 

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determination, who shall each then notify the managers in writing 

of his desire to purchase a portion of the Former Member’s 

Interest within twenty (20) days of the date notice is given by 

the Managers. The failure of any Remaining Member to submit a 

notice within the applicable twenty (20) day period shall 

constitute an election on the part of the Members not to purchase 

any of the former Member’s Interest. Each Remaining Member so 

electing to purchase shall be entitled to purchase a portion of 

the Former Member’s Interest in the same proportion that the 

Percentage Interest of the Remaining Member bears to the 

aggregate of the Percentage Interests of all of the Remaining 

Members electing to purchase the Former Member’s Interest. If 

any Remaining Member elects to purchase less than all of his pro 

rata share of the Former Member’s Interest, then the Remaining 

Members shall be entitled to elect to purchase that portion of 

the Former Member’s Interest which has not yet been elected for 

purchase as is proportionate to the Percentage Interest held by 

each elected Remaining member, i.e, which bears the same 

proportion that the Percentage Interest of the Remaining Members 

bears to the aggregate of the Percentage Interests of all of the 

Remaining Members electing to purchase the Former Member’s 

Interest. This proportionate right of first refusal shall be 

repeated (using the ten and twenty day notice periods noted 

above) until the Remaining Members: (i) no longer wish to acquire 

any more of the Former Member’s Interest or, if sooner, (ii) have 

elected to acquire one hundred percent of such Former Member’s 

Interest. If the Remaining Members fail to purchase the entire 

interest of the Former Member, the Company shall purchase any 

remaining share of the Former Member’s Interest. 

7.4 Payment of Purchase Price. The purchase price shall be 

paid by the Company or the Remaining Members, as the case may be, 

by either of the following methods, each of which may be selected 

separately by the Company or the remaining Members: (i) the 

Company or the Remaining Members shall at the closing pay in cash 

the total purchase price for the Former Member’s Interest; or 

(ii) the Company or the Remaining Members shall pay at the 

closing one-fifth (1/5) of the purchase price in cash and shall 

pay the balance of the purchase price in four equal annual 

principal installments, plus accrued interest, payable each year 

on the anniversary date of the closing. The unpaid principal 

balance shall accrue interest at the applicable federal rate as 

provided in the Code for the month in which the initial payment 

is made, but the Company and the Remaining Members shall have the 

right to prepay in full or in part at any time without penalty. 

The obligation to pay the balance due shall be evidenced by a 

promissory note, and if purchase by a Remaining Member, secured 

by a pledge of the interest in the Company being purchased.

7.5 Closing Purchase of Former Member’s Interest. The 

closing for the sale of a Former Member’s Interest pursuant to 

this Article VII shall be held at 10:00 a.m. at the principal 

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office of the Company no later than thirty (30) days after the 

date on which the exercising of the right of first refusal noted 

above has been completed, except that if the closing date falls 

on a Saturday, Sunday, or legal holiday, then the closing shall 

be held on the next succeeding business day. At the closing, the 

Former Member shall deliver to the Company or the Remaining 

Members an instrument of transfer (containing warranties of title 

and no encumbrances) conveying the Former Member’s Interest. The 

Former Member, the Company and the Remaining Member shall do all 

things and execute and deliver all papers as may be necessary 

fully to consummate such sale and purchase in accordance with the 

terms and provisions of this Agreement.

ARTICLE VIII

ACCOUNTING, RECORDS, REPORTING BY MEMBERS

8.1 Books and Records. The books and records of the 

Company shall reflect all Company transactions and shall be kept 

in accordance with the accounting methods followed for federal 

income tax purposes. The company shall maintain at its principal 

office in California all of the following: (i) a current list of 

the full name and last known business or residence address of 

each Member and Economic Interest Owner, together with the 

Capital Contributions, Capital Account and Percentage Interest of 

each Member and Economic Interest Owner; (ii) the full name and 

business or residence address of the Managers; (iii) a copy of 

the Articles and any and all amendments thereto together with 

executed copies of any powers of attorney pursuant to which the 

Articles or any amendments thereto have been executed; (iv) 

copies of the Company’s federal, state, and local income tax or 

information returns and reports, if any, for the six most recent 

taxable years; (v) a copy of this Agreement and any and all 

amendments thereto together with executed copes of any powers of 

attorney pursuant to which this Agreement or any amendments 

thereto have been executed; (vi) copies of the financial 

statements of the Company, if any, for the six most recent Fiscal 

Years; and (vii) the Company’s books and records as they relate 

to the internal affairs of the Company for at least the current 

and past four Fiscal Years.

8.2 Delivery to Members and Inspection. Each Member, 

Manager and Economic Interest Owner has the right, upon 

reasonable request for purposes reasonably related to the 

interests of the Person as Member, Manager or Economic Interest 

owner, to (i) inspect and copy during normal business hours any 

of the Company records described in Section 8.1; and (ii) obtain 

from the Managers, promptly after their becoming available, a 

copy of the Company’s federal, state, and local income tax or 

information returns for each Fiscal Year.

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8.3 Annual Statement. A Manager shall prepare and send an 

annual report to each of the Members not less than 120 days after 

the close of each Fiscal Year. The report shall contain a 

balance sheet as of the end of the Fiscal Year and an income 

statement and statement of changes in financial position for the 

Fiscal Year. Such financial statements shall be accompanied by 

the report thereon, if any, of the independent accountants 

engaged by the Company or, if there is no report, the certificate 

of the Managers that the financial statements were prepared 

without audit from the books and records of the Company. The 

Managers shall cause to be prepared at least annually, at the 

Company’s expense, information necessary for the preparation of 

the Members’ and Economic Interest Owners’ federal and state 

income tax returns. The Managers shall send or cause to be sent 

to each Member or Economic Interest Owner within ninety (90) days 

after the end of each taxable year such information as is 

necessary to complete federal and state income tax information 

returns. The Managers, at Company expense, shall cause to be 

prepared and timely filed with the appropriate authorities, the 

income tax returns for the Company, any amendments to, 

restatements of, the Articles, as well as any reports required to 

be filed by the Company with those entities under the Act or 

other then current applicable laws, rules, and regulations. 

8.4 Bank Accounts. The Managers shall maintain the funds 

of the Company in one or more separate bank accounts in the name 

of the Company, and shall not permit the funds of the Company to 

be commingled in any fashion with the funds of any other Person.

8.5 Accounting and Tax Matters. All decisions as to 

accounting matters, except as otherwise specifically set forth 

herein, shall be made by the Managers. The Managers shall from 

time to time cause the Company to make such tax elections as they 

deem to be in the best interests of the Company and the Members. 

The Managers, who shall serve as the “Tax Matters Partner,” as 

defined in Code Section 6231, shall represent the Company at the 

Company’s expense in connection with all examinations of the 

Company’s affairs by tax authorities, including resulting 

judicial and administrative proceedings, and shall expend the 

Company funds for professional services and costs associated 

therewith. The Tax Matters Partner shall oversee the Company tax 

affairs in the overall best interest of the Company. If for any 

reason the Tax Matters Partner can no longer serve in that 

capacity or cease to be a Member or Manager, as the case may be, 

Members holding a Majority interest may designate another to be 

Tax Matters Partner.

ARTICLE IX

DISSOLUTION AND WINDING UP

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9.1 Dissolution. The Company shall be devolved, its 

assets shall be disposed of, and it’s affairs wound up in the 

first to occur of the following: (i) upon the happening of any 

event of dissolution specified in the Articles; (ii) upon the 

entry of a decree of judicial dissolution pursuant to Section 

17707.03 of the California Corporations Code; (iii) upon the vote 

of the Members; (iv) upon the occurrence of a Dissolution Event 

and the failure of the Remaining Members to consent in accordance 

with Section 7.1 to continue the business of the Company within 

ninety (90) days after the occurrence of such event or the 

failure of the Company or the Remaining Members to purchase the 

Former Member’s Interest; or (v) the sale of all or substantially 

all of the assets of the Company. As soon as possible following 

the occurrence of any of the foregoing events, the Managers, or 

if none, the Members, shall execute a Certificate of Dissolution 

in such form as shall be prescribed by the California Secretary 

of State and file the Certificate as required by the Act.

9.2 Winding up. Upon the occurrence of any event 

specified in Section 9.1, the Company shall continue solely for 

the purpose of winding up its affairs in an orderly manner, 

liquidating its assets, and satisfying the claims of its 

creditors. The Managers, or, if none, the Members, shall be 

responsible for overseeing the winding up and liquidation of the 

Company, shall take full account of the liabilities and assets of 

the Company, shall either cause its assets to be sold or 

distributed (and, if sold, as promptly as is consistent with 

obtaining the fair market value thereof), and shall cause the 

proceeds therefrom, to the extent sufficient therefor, to be 

applied and distributed as provided in Section 9.4. The Persons 

winding up the affairs of the Company shall give written notice 

of the commencement of winding up by mail to all known creditors 

and claimants whose addresses appear on the records of the 

Company. The Managers or Members winding up the affairs of the 

Company shall be entitled to reasonable compensation for such 

services. 

9.3 Distribution in Kind. Any noncash asset distributed 

to one or more Members shall first be valued at its fair market 

value to determine the Net Profit or Net Loss that would have 

resulted if such asset were sold for such value, such Net Profit 

or Net Loss shall then be allocated pursuant to Article V, and 

the Members’ Capital Accounts shall be adjusted to reflect such 

allocations. The amount distributed and charged to the Capital 

Account of each Member receiving an interest in such distribution 

asset shall be the fair market value of such interest (net of any 

liability secured by such asset that such Member assumes or takes 

subject to). The fair market value of such asset shall be 

determined by the Managers or by the Members or, if any Member 

objects, by an independent appraiser (any such appraiser must be 

recognized as an expert in valuing the type of asset involved) 

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selected by the Managers or liquidating trustee and approved by 

the Members.

9.4 Order of Payment of Liabilities Upon Dissolution. 

After determining that all known debts and liabilities of the 

Company in the process of winding up, including, without 

limitation, debts and liabilities to Members who are creditors of 

the Company, have been paid or adequately provided for, the 

remaining assets shall be distributed to the Members in 

accordance with their positive Capital Account balances, after 

taking into account income and loss allocations for the Company’s 

taxable year during which liquidation occurs. Such liquidating 

distributions shall be made by the end of the Company’s taxable 

year in which the Company is liquidated, or, if later, within 

ninety (90) days after the date of such liquidation. The payment 

of a debt or liability, whether the whereabouts of the creditors 

is known or unknown, has been adequately provided for either of 

the following means: (i) payment thereof has been assumed or 

guaranteed in good faith by one or more financially responsible 

person or by the United States government or any agency thereof, 

and the provision, including the financial responsibility of the 

Person, was determined in good faith and with reasonable care by 

the Members or the Managers to be adequate at the time of any 

distribution of the assets pursuant to this Section; or (ii) the 

amount of the debt or liability has been deposited as provided in 

Section 2008 of the California Corporations Code. This Section 

9.4 shall not prescribe the exclusive means of making adequate 

provisions for debts and liabilities.

9.5 Compliance with Regulations. All payments to the 

Members upon the winding up and dissolution of the Company shall 

be strictly in accordance with the positive capital account 

balance limitation and other requirements of the Regulations.

9.6 Limitations on Payments Made in Dissolution. Except 

as otherwise specifically provided in this Agreement, each Member 

shall only be entitled to look solely at the assets of the 

Company for the return of his or her positive Capital Account 

balance and shall have no recourse for his or her Capital 

Contribution and/or share of Net Profits (upon dissolution or 

otherwise) against the Managers or any other Member except as 

provided in Article X.

9.7 Certificate of Cancellation. Any Manager or Member 

who filed the Certificate of Dissolution shall cause to be filed 

in the office of, and on a form prescribed by, the California 

Secretary of State, a certificate of cancellation of the Articles 

upon the completion of the winding up of the affairs of the 

Company.

9.8 No action for Dissolution. Except as expressly 

permitted in the Agreement, a Member shall not take any voluntary 

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action that directly causes a Dissolution Event. The Members 

acknowledge that irreparable damage would be done to the goodwill 

and reputation of the Company and its Members if any Member 

should bring an action in court to dissolve the Company under 

circumstances where dissolution is not required by Section 9.1. 

Except where the Managers have failed to liquidate the Company as 

required by the Article IX, each Member hereby waives and 

renounces his right to initiate legal action to seek the 

appointment of a receiver or trustee to liquidate the Company or 

to seek a decree of judicial dissolution of the Company on the 

ground that (a) it is not reasonably practicable to carry on the 

business of the Company in conformity with the Articles of this 

Agreement, or (b) dissolution is reasonably necessary for the 

protection of the rights of interests of the complaining Member. 

Damages for breach of this Section 9.8 shall be monetary damages 

only (and not specific performance), and the damages may be 

offset against distributions by the Company to which such Member 

would otherwise be entitled.

ARTICLE X

INDEMNIFICATION AND INSURANCE

10.1 Indemnification of Agents. The Company shall indemnify 

any person who was or is a party or is threatened to be made a 

party of any threatened, pending or completed action, suit or 

proceeding by reason of the fact that he or she is or was a 

Member, Manager, officer, employee, or agent of the Company or 

that being or having been such a Member, Manager, officer, 

employee or agent, he or she is or was serving at the request of 

the Company as a manger, director, officer, employee or their 

agent of another limited liability company, corporation, 

partnership, joint venture, trust or other enterprise to the 

fullest extent permitted by applicable law in effect on the date 

hereof and to such greater extent as applicable law may hereafter 

from time to time permit. The Managers shall be authorized, on 

behalf of the Company, to enter into indemnity agreements with 

any Person entitled to be indemnified by the Company hereunder, 

upon such terms and conditions as the Managers deem prudent.

10.2 Indemnification by SFRC. In addition to the indemnity 

set forth above, in consideration for WOMAC’s admission to the 

Company, SFRC shall indemnify WOMAC to the extent that WOMAC is a 

party or is threatened to be made a party of any threatened, 

pending or completed action, suit or proceeding by reason of the 

fact that WOMAC is or was a Member to the fullest extent 

permitted by applicable law in effect on the date hereof and to 

such greater extent as applicable law may hereafter from time to 

time permit; provided, however, in no event shall SFRC have any 

obligation to indemnify WOMAC for claims related to WOMAC’s gross 

negligence or willful misconduct.

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10.3 Insurance. The Company shall have the power to 

purchase and maintain insurance on behalf of any Person who is or 

was an agent of the Company against any liability asserted 

against such Person and incurred by such Person in any such 

capacity, or arising out of such Person’s status as an agent, 

whether or not the Company would have the power to indemnify such 

Person against such liability under the provisions of Section 

10.1 or under applicable law.

ARTICLE XI

DEFINITIONS; MISCELLANEOUS

11.1 Definitions. When used in this Agreement, the 

following terms shall have the meanings set forth below. Terms 

not defined in the Section 11.1 shall have the meanings set forth 

elsewhere in this Agreement, or, if not so defined, the meanings 

given to such terms under laws of the State of California.

A. “Act” shall mean the California Revised Uniform 

Limited Liability Company Act, codified in the California 

Corporations Code, Section 17701.01 et seq., as the same may be 

amended from time to time.

B. “Affiliate” shall mean any individual, partnership, 

corporation, trust or other entity or association, directly or 

indirectly, through one or more intermediaries, controlling, 

controlled by, or under common control with the Member. The term 

“control,” as used in the immediately preceding sentence, means, 

with respect to a corporation or limited liability company the 

right to exercise, directly or indirectly, more than fifty 

percent (50%) of the voting rights attributable to the controlled 

corporation or limited liability company, and, with respect to 

any individual, partnership, trust, other entity or association, 

the possession, directly or indirectly, of the power to direct or 

cause the direction of the management or policies of the 

controlled entity.

C. “Bankruptcy” shall mean: (a) the filing of an 

application by a Member for, or his consent to, the appointment 

of a trustee, receiver, or custodian of his other assets; (b) the 

entry of an order for relief with respect to a Member in 

proceedings under the United State Bankruptcy Code, as amended or 

superseded from time to time; (c) the making by a Member of a 

general assignment for the benefit of creditors; (d) the entry of 

an order, judgment, or decree by any court of competent 

jurisdiction appointing a trustee, receiver, or custodian of the 

assets of a Member unless the proceedings and the person 

appointed are dismissed within ninety (90) days; or (e) the 

failure by a Member generally to pay his debts as the debts 

become due within the meaning of Section 303(f)(1) of the United 

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Bankruptcy Code, as determined by the Bankruptcy Court, or the 

admission in writing of his inability to pay his debts as they 

become due.

D. “Code” Shall mean the Internal Revenue Code of 1986, 

as amended from time to time, the provisions of succeeding law, 

and to the extent applicable the Regulations (as defined below).

E. “Dissolution Event” Shall mean with a respect to any 

Member one or more of the following: death, insanity, withdrawal, 

resignation, expulsion, Bankruptcy, dissolution or occurrence of 

any other event which terminates the continued membership of any 

Member unless the other Members consent to continue the business 

of the Company pursuant to Section 9.1.

F. “Distributable Cash” shall mean the amount of cash 

which the Managers deem available for distribution to the 

Members, taking into account all Company debts, liabilities, and 

obligations of the Company then due and amounts which the 

Managers deems necessary to place into reserves for customary and 

usual claims with respect to the Company’s business.

G. “Economic Interest” shall mean a Member’s or Economic 

Interest Owner’s share of one or more of the Company’s Net 

Profits, Net Losses, and distributions of the Company’s assets 

pursuant to this Agreement and the Act, but shall not include any 

other rights of Members, including, without limitation, the right 

to vote or participate in the management, except as provided in 

Section 17704.10 of the Corporations Code, any right to 

information concerning the business and affairs of the Company.

H. “Fiscal Year” shall mean the Company’s fiscal year, 

which shall be the calendar year.

I. “Majority Interest” shall mean one or more Percentage 

Interests of members which taken together exceed fifty percent 

(50%) of the aggregate of all Percentage Interests.

J. “Member” shall mean each Person (said term to include 

all authorized legal representatives) who (a) is an initial 

signatory to this Agreement, has been admitted to the Company as 

a Member in accordance with this Agreement or is an assignee who 

has become a Member in accordance with Article VII and (b) has 

not resigned, withdrawn, been expelled or, if other than an 

individual, dissolved.

K. “Net Profits and Net Losses” shall mean the income, 

gain, loss, deductions, and credits of the Company in the 

aggregate or separately stated, as appropriate, determined in 

accordance with generally accepted accounting principles, 

consistently applied, employed under the method of accounting 

used by the Company at the close of each fiscal year on the 

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Company’s information tax return filed for federal income tax 

purposes.

L. “Percentage Interest” shall mean the percentage of a 

Member set forth opposite the name of such Member under the 

column “Member’s Percentage Interest” in Exhibit “A” hereto, as 

such percentage may be adjusted from time to time pursuant to the 

terms of this Agreement. Percentage Interests shall be 

determined annually, unless otherwise provided herein, in 

accordance with the relative proportions of the Capital Accounts 

of the Members, effective as of the first day of the Company’s 

Fiscal Year but with all distributions under this Agreement to be 

deemed to have occurred on such day immediately prior to 

determination of the Percentage Interest of a Member.

M. “Regulations” shall, unless the context clearly 

indicates otherwise, mean the regulations currently in force as 

final or temporary that have been issued by the U.S. Department 

of Treasury pursuant to its authority under the Code.

11.2 Legends. Each Member understands and agrees that the 

certificates (if any) evidencing the Membership Interest may bear 

the following or a substantially similar legend:

THE SECURITIES REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN 

REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE LAWS OF 

ANY STATE, AND MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED 

AFTER SALE, TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS 

QUALIFIED AND REGISTERED UNDER APPLICABLE STATE AND FEDERAL 

SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL 

SATISFACTORY TO THE COMPANY, SUCH QUALIFICATION AND 

REGISTRATION IS NOT REQUIRED. ANY TRANSFER OF THE 

SECURITIES REPRESENTED BY THIS AGREEMENT IS ALSO SUBJECT TO 

THE RESTRICTIONS, TERMS AND CONDITIONS SET FORTH HEREIN.

11.3 Headings; Interpretation. All headings are inserted 

only for convenience and ease of reference and are not to be 

considered in the construction or interpretation of any provision 

of this Agreement. Numbered or lettered articles, sections and 

subsections herein contained refer to articles, sections and 

subsections of this Agreement unless otherwise expressly stated. 

In the event any claim is made by any Member relating to any 

conflict, omission or ambiguity in this Agreement, no presumption 

of burden of proof or persuasion shall be implied by virtue of 

the fact that this Agreement was prepared by or at the request of 

a particular Member or his counsel. All pronouns and all 

variations thereof shall be deemed to refer to the masculine, 

feminine, or neuter, singular or plural, as the context in which 

they are used may require. Any reference to the Code, the 

Regulations, the Act, Corporations Code or other statutes or laws 

will include all amendments, modifications, or replacements of 

the specific sections and provisions concerned.

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11.4 Jurisdiction. Each Member hereby consents to the 

exclusive jurisdiction of the state and federal courts sitting in 

Alameda County, California in any action on a claim arising out 

of, under, or in connection with the Agreement or the 

transactions contemplated by this Agreement. Each Member further 

agrees that personal jurisdiction over him or her may be effected 

by service of process by registered or certified mail addressed 

as provided in Section 11.7 of this Agreement, and that when so 

made shall be as if served upon him personally within California.

11.5 Severability; Exhibits. If any provision of the 

Agreement or the application of such provision to any person or 

circumstance shall be held invalid, the remainder of this 

Agreement or the application of such provision to persons or 

circumstances other than those to which it is held invalid shall 

not be affected thereby. All Exhibits attached to this Agreement 

are incorporated and shall be treated as if set forth herein.

11.6 Additional Documents and Acts. Each Member agrees to 

execute and deliver such additional documents and instruments and 

to perform such additional acts as may be necessary or 

appropriate to effectuate, carry out and perform all of the 

terms, provisions, and conditions of this Agreement and the 

transactions contemplated hereby.

11.7 Notices. Any notice to be given or to be served upon 

the Company or any party hereto in connection with the Agreement 

must be in writing (which may include facsimile) and will be 

deemed to have been given and received when delivered to the 

address specified by the party to receive the notice. Such 

notices will be given to the Members or Managers at the address 

specified in Exhibit “A” hereto. Any party may, at any time by 

giving five (5) days’ prior written notice to other parties, 

designate any other address in substitution of the foregoing 

address to which such notice will be given.

11.8 Reliance on Authority of Person Signing. If a 

Member is not a natural person, neither the Company nor any 

Member will (a) be required to determine the authority of the 

individual signing this Agreement to make any commitment or 

undertaking on behalf of such entity or to determine any fact or 

circumstance bearing upon the existence of the authority of such 

individual or (b) be responsible for the application or 

distribution of proceeds paid or credited to individuals signing 

this Agreement on behalf of such entity.

11.9 No Interest in Company Property. No Member or 

Economic Interest Owner has any interest in specific property of 

the Company. Without limiting the foregoing, each Member and 

Economic Interest Owner irrevocably waives during the term of the 

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Company any right that he or she may have to maintain any action 

for partition with respect to the property of the Company.

11.10 Attorney’s Fees. In the event that any dispute 

between the Company and the Members or among the Members should 

result in litigation or arbitration, the prevailing party in such 

dispute shall be entitled to recover from the other party all 

reasonable fees, costs and expenses of enforcing any right of the 

prevailing party, including without litigation, reasonable 

attorney’s fees and expenses.

11.11 Time is of the Essence; Remedies Cumulative. All 

dates and times in this Agreement are of the essence. The 

remedies under this Agreement are cumulative and shall not 

exclude any other remedies to which any person may be lawfully 

entitled.

11.12 Special Power of Attorney. Subject to the Act, and 

the limitations of this Agreement each Member grants the Managers 

a special power of attorney irrevocably making, constituting, and 

appointed the Managers as the Member’s attorney in fact, with all 

power and authority to act in the Member’s name and on the 

Member’s behalf to execute, acknowledge and deliver and swear to 

the execution, acknowledgement, delivery and filing of promissory 

notes, security agreements, UCC-1 financing statements, 

assignments of certificates of membership interest, or other 

documents of transfer to be delivered pursuant this Agreement, as 

well as any consent to the representation of the Company by 

counsel. The foregoing special power: (i) is irrevocable except 

upon resignation or removal of Manager as set forth herein, (ii) 

is coupled with an interest, and (iii) shall survive a Member’s 

death, incapacity, or dissolution.

11.13 Binding Effect; Parties in Interest. Subject to the 

provisions of this Agreement relating to transferability, this 

Agreement will be binding upon and inure to the benefit of the 

Members, and their respective successors and assigns. Except as 

expressly provided in the Act, nothing in this Agreement shall 

confer any rights or remedies under or by reason of this 

Agreement of any Persons other than the Members and Managers and 

their respective successors and assigns, nor shall anything in 

this Agreement relieve or discharge the obligation or liability 

of any third person to any party to this Agreement, nor shall any 

provision give any third person any right of subrogation or 

action over or against any party to this Agreement.

11.14 Complete Agreement; Amendments. This Agreement and 

the Articles constitute the complete and exclusive statements of 

agreement among the Members and Managers with respect to the 

subject matter herein and therein and replace and supersede all 

prior written and oral agreements or statements by and among the 

Members and Managers or any of them. No representation, 

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statement, condition or warranty not contained in this Agreement 

or the Articles will be binding on the Members or Managers or 

have any force or effect whatsoever. To the extent that any 

provision of the Articles conflicts with any provision of this 

Agreement, the Articles shall control. All amendments to this 

Agreement must be in writing and signed by all of the Members. 

This Agreement may be executed in two or more counterparts, each 

of which shall be deemed an original, but all of which shall 

constitute one and the same instrument.

11.15 On-Going Community Liaison and Outreach Fee. As of 

the date of this Agreement, the Company and WOMAC have entered 

into a services agreement (the “Community Liaison Agreement”) 

pursuant to which the Company has retained WOMAC to provide 

certain community outreach and marketing services for the benefit 

of the Project, and the community primarily served by the 

Project. As more particularly set forth in the Community Liaison 

Agreement, such services include (but are not limited to), 

working with tenants of the Project, in particular, the grocery 

store operator, in attracting community residents to utilize the 

Project, planning and organizing community events for the benefit 

of the Project and the community, and other marketing assistance 

and community support for the tenants of the Project. In 

consideration for such services provided by WOMAC to the Company, 

the Company shall pay an annual fee to WOMAC in the amount of 

$50,000 per year as more particularly set forth in the Community 

Liaison Agreement (the “Community Liaison Fee”). The Members and 

Manager each agree that the Community Liaison fee is reasonable, 

and that the Community Liaison Agreement is in the best interest 

of the Company. Notwithstanding any provision in this Agreement 

to the contrary, the Members acknowledge that the Community 

Liaison Fee does not constitute a distribution under Article V of 

this Agreement.

11.16 Special Purpose Bankruptcy Remote Entity 

Requirements. Each and all of the provisions set forth in Exhibit 

“B” (the “SPE Provisions”)attached hereto are incorporated herein 

and shall constitute part of this Agreement pursuant to and in 

accordance with the express terms set forth in Exhibit “B”.

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IN WITNESS WHEREOF, all of the Members of JL GATEWAY, LLC,

a California limited liability company, have executed this

Agreement, effective as of P(L Ie. , 2014.

THOMAS HENDERSON for

SAN FRANCISCO REGIONAL CENTER,

LLC, Manager

For WOMAC PROPERTIES INC.

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IN WITNESS WHER~OF, all of the Member~ of JL GATEWAY, LLC,

a California limited liability company, have executed thi~

Agreement, effective as of , 2014.

THOMAS HENDERSON for

SAN FRANCISCO REG:ONAL CENTER,

LLC, Manager

JL ""~I:iI"'Y. LLC 26

"ll'l))IIS9S3l9J

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EXHIBIT "A"

CAPITAL CONTRIBUTION OF MEMBERS AND ADDRESS OF MEMBERS AND

MANAGER AS OF

JL GATEWAY, LLC

________, 2014

Members'

Names

1. SAN FRANCISCO REGIONAL

CENTER, LLC

2. WOMAC PROPERTIES, INC.

Managers' Names and Addresses

Members'

Capital Contribution

Members'

Percentage Interest

75%

25'15

1. SAN FRANCISCO REGIONAL CENTER, LLC, 419 13TH Street, Suite 888, Oakland, CA

94612.

FAX No. (510) 893-9881

2. WOMAC PROPERTIES INC. 1156 8th Street, Oakland CA 94607

FAX No. (510)

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EXHIBIT "B"

All capitalized terms (other than the term "Company" which shall

have the meaning given to term in the Agreement to which this Exhibit

is attached and forms a part) used but not otherwise defined in this

Exhibit "B" shall have the meanings given to such terms in that certain

Deed of Trust, Assignment of Leases and Rents, Security Agreement and

Fixture Filing, dated as of December ,2014, made by the Company for

the benefit of Thorofare Asset Based Lending Fund III, L.P., a Delaware

limited liability company (together with its successors and assigns,

"Lender") .

Notwithstanding anything to the contrary in this Agreement and

any provision of law that otherwise empowers the Company, and so long

as any Indebtedness remain outstanding and is not discharged in full,

the Company covenants and agrees that it shall be and remain a special

purpose bankruptcy remote entity and shall at all times comply with the

following covenants:

(i) The purpose for which the Company is organi zed

shall be limited to (a) owning, holding, selling, leasing,

transferring, exchanging, operating and managing the Company's interest

in the Trust Property, (b) entering into the Loan, (c) refinancing the

Trust Property in connection with a permitted repayment of the Loan,

and (d) transacting any and all lawful business that is incident,

necessary and appropriate to accomplish the foregoing.

(ii) The Company does not own and will not own any

asset or property other than (i) the Trust Property and (ii) incidental

personal property necessary for and used in connection with the

ownership or operation of the same.

(iii) The Company shall not engage in a business

other than the ownership, operation and management of the Trust

Property and any other property which is hereafter acquired by the

Company with Lender's prior written consent.

(iv)

applicable Manager of

contract or agreement

Guarantor.

Except as provided in this Agreement as to the

the Company, the Company will not enter into any

with any affiliate, Guarantor or any affiliate of

(v) The Company has not incurred and will not incur

any indebtedness, secured or unsecured, other than (1) the Loan and

incidental costs and expenses associated therewith, (2) indebtedness

incurred in the ordinary course of business to vendors and suppliers of

services to the Trust Property (not more than thirty (30) days past

due), and (3) non-delinquent property taxes and assessments.

(vi) The Company has not made and will not make any

loans or advances to any person or entity and shall not acquire

obligations or securities of an affiliate.

Company will pay

shared personnel

JL GATEWAY, LLC

1485\03\1595839.3

(vii) The Company is and will remain solvent and the

its debts and liabilities (including, as applicable,

and overhead expenses) from its assets as the same

28

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 41 of 109
shall become due, provided that this covenant shall not imply any

capital contribution obligation.

(viii) The Company has done or caused to be done and

will do all things necessary to observe organizational formalities and

preserve its existence, and the Company will not amend, modify or

otherwise change the special purpose entity requirements in the

partnership certificate, partnership agreement, articles of

incorporation and bylaws, operating agreement, trust or other

organizational documents of the Company without the written consent of

Lender.

(ix) The Company shall maintain all of its books,

records, financial statements and bank accounts separate from those of

its affiliates. The Company's assets will not be listed as assets on

the financial statement of any other person. The Company shall have

its own separate financial statement. To the extent the Company is

required to file any tax returns, the Company will file its own tax

returns and will not file a consolidated federal income tax return with

any other corporation, except to the extent the Company is a

disregarded entity for tax purposes. The Company shall maintain its

books, records, resolutions and agreements as official records.

(x) The Company will be, and at all times will hold

itself out to the public as, a legal entity separate and distinct from

any other person or entity, shall correct any known misunderstanding

regarding its status as a separate entity, shall conduct business in

its own name and shall not identify itself or any of its affiliates as

a division or part of the other.

(xi) The Company will maintain

the normal obligations reasonably foreseeable in a

and character and in light of its contemplated

provided that this covenant shall not imply any

obligation.

adequate

business

business

capital

capital for

of its size

operations,

contribution

(xii) Neither the Company nor any constituent party

will seek the dissolution, winding up, liquidation, consolidation or

merger, in whole or in part, or, except as permitted under the Loan

Documents, the sale of material assets of the Company.

(xiii) The Company will not commingle the funds and

other assets of the Company with those of any other person, and will

not participate in a cash management system with any person other than

Lender.

(xiv) The Company will not commingle its assets with

those of any other person and will hold all of its assets in its own

name.

(xv) The Company

obligated for the debts of any other

hold itself out as being responsible

any other person.

will not guarantee or become

person and does not and will not

for the debts or obligations of

JL GATEWAY, LLC

1485\03\1595839.3

(xvi) The Company shall not pledge its assets for the

29

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 42 of 109
benefit of any other person, other than with respect to the Loan.

(xvii)Without the unanimous consent of each of the

Company's members, partners or other equity interest holders, as

applicable, the Company shall not file a petition for relief under the

Bankruptcy Code, or under any other present or future state of federal

law regarding bankruptcy, reorganization or other debtor relief law.

JL GATEWAY, LLC

1485\03\[ 595839.3

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Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 43 of 109
EXHIBIT B 

TO COMPLAINT FOR BREACH OF 

CONTRACT, INTENTIONAL 

MISPRESENTATION AND MONEY LENT 

WOMAC PROPERTIES, INC. et al. v. SAN 

FRANCISCO REGIONAL CENTER, LLC, et al.

ALAMEDA COUNTY SUPERIOR COURT 

DESCRIPTION OF DOCUMENT: 

Promissory Note from San Francisco Regional 

Center to WOMAC in the Amount of $3,700,000 

dated December 17, 2014

EXHIBIT B 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 44 of 109
Principal Amount:

PROMISSORY NOTE

$3,700,000.00 Effective Date: December / 2014

FOR VALUE RECEIVED, the undersigned [[SAN FRANCISCO REGIONAL CENTER]], a

California [[limited liability company]] ("Borrolller") promises to pay to the order of WOMAC or its

assignee ("Holder"), the sum of Three Million Seven Hundred Thousand and xx/IOO Dollars

($3,700,000.00), with interest from the date set forth above until paid, at the rate of three percent (3.0%)

per annum, together with applicable fees, costs and attorneys' fees and costs, until repayment in full of all

obligations hereunder.

I. ADVANCES. The funds advanced pursuant to this promissory note ("Promissory Note"

or "Note") are for the purpose of acquiring that certain real property commonly known as 800-900 Market,

Oakland, California ("Property") from Holder. All principal shall be disbursed in one advance, at closing

or pursuant to escrow instructions given by Holder. This Note does not revolve. Any principal repaid by

Borrower shall not be re-advanced by Holder.

. 2. REPAYMENT; INTEREST PAYMENTS; MATURITY. This Note and all amounts

due and owing hereunder shall be repaid as follows:

A. Interest shall be paid montWy commencing on the Sth day of February, 201S,

and continuing on the Fifth (S") day of each month thereafter (each, a "Payment Date") until the Maturity

Date hereof (each such interest payment referred to as an "Interest Paymenf'). Any failure by Borrower

to make an Interest Payment on or before the due date ofsuch payment shall result in an immediate Event

of Default hereunder.

B. Notwithstanding any other provision of this Note, all outstanding principal,

together with accrued and unpaid interest, fees and costs, including but not limited to late charges and all

attorneys' fees and costs (together, "Holder Expenses") that may remain due and nwing (if any), shall be

due and payable in full on December __ 201S, (the "Maturity Date").

3. FIXED INTEREST RATE. The interest rate on this Note shall be fIxed at three percent

(3.00%) per annum. The annual interest rate for this Note is computed based on a 360 day year and a thirty

day month (i.e., the daily interest amount equals the annual interest amount at the stated per annum rate for

principal outstanding, divided by 360; such daily interest amounts summed for thirty days in the period).

Borrower will pay Holder at Holder's address as Holder may designate in writing from time to time. Under

no circumstances will the interest rate on this Note be more than the maximum rate allowed by applicable

law.

4.

penalty.

PREPAYMENTS. Borrower may make prepayments of principal hereunder without

S. EARLY PAYMENTS. So long as Borrower is not in default hereunder, any Interest

Payment received by Holder before a Payment Date will be applied by Holder to outstanding Holder

Expenses, if any, with the remainder to the Interest Payment due as of next occurring Payment Date.

Amounts received in excess of outstanding Holder Expenses (if any) and accrued interest due as of the

Payment Date will be applied to principal. Early Interest Payments will not, unless agreed to by Holder in

writing, relieve Borrower ofBorrower's obligation to continue to make Interest Payments on each Payment

Date. Borrower agrees not to send Holder payments marked "paid in full", "without recourse", or similar

language. If Borrower sends such a payment, Holder may accept it without losing any of Holder's rights

under this Note, and Borrower will remain obligated to pay any further amount owed to Holder.

- I .

Promissory NOle - Jack London Gateway

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 45 of 109
6. LATE CHARGE. Borrower recognizes that delay by Borrower in making the payments

required under this Note, including, but not limited to, payments of interest, will result in Holder incurring

additional expense in servicing this Note, in Inss to Holder ofthe use of the money due, and in frustration

to Holder in meeting its financial commitments. Borrower agrees that if, for any reason, Borrower fails to

make any Interest Payment when due under this Note, Holder shall be entitled to damages for the detriment

caused thereby, but that it is extremely difficult and impracticable to ascertain the extent ofsuch damages.

Borrower therefore agree tbat if a payment is not made when due, Borrower will be charged 5.0% of tbe

unpaid portion of tbe payment, which is a reasonable estimate of such damages. Notwithstanding the

foregoing, the payment of a late charge shall not affect Holder's right to fully enforce the terms of this

Agreement, and shall not operate as forbearance or cause a stay in any right ofHolder hereunder.

7. NO TRANSFER OF BORROWER'S INTEREST. Without the prior written consent

of Holder (which consent will not be unreasonably withheld), Borrower shall not sell, hypothecate,

encumber, assign, contract to sell, grant an option to sell, lease, or otherwise transfer or convey the

Property or any portion thereof or interest therein or suffer its title therein to be divested whether

voluntarily, by operation of law or otherwise. If such an event occurs without Holder's prior written

consent, Holder may, in his sole option and upon written notice to Borrower, accelerate the Maturity Date

ofthe sums secured hereby and declare all sums immediately due and payable.

8. CONDITIONS; REPRESENTATIONS AND WARRANTIES. Borrower hereby

represents and warrants to Holder the following:

A. Due Organization. Borrower is duly existing and in good standing in its

jurisdiction offormation.

B. Authorization. The execution, delivery and performance by Borrower of this

Note and any related loan documents to which it is a party have been duly authorized, and do not (i)

conflict with any of Borrower's organizational documents, or (ii) contravene, conflict with, constitute a

default under or violate any material Requirement of Law.

C. Bankruptcy. No proceedings in bankruptcy or insolvency have ever been

instituted by or against Borrower or any member, manager, partner or afftliate thereof, and no such

proceeding is now pending or contemplated.

D. Solvency. Borrower is, and if there are any general partners or members or

managers ofBorrower, such partners, members or managers are solvent pursuant to the laws ofthe United

States, as reflected by the entries in Borrower's books and records and as reflected by the actual facts.

9. DEFAULT. Each of the following shall constitute an event of default ("Event of

Default") under this Note:

A. Payment Default. Borrower fails to make any Interest Payment wheu due

under this Note, or pay on the Maturity Date all outstanding principal together with accrued interest and

any other sums due and owing as ofthe Maturity Date.

B. Other Defaults. Borrower fails to comply with or to perform any other term,

obligation, covenant or condition contained in this Note or to comply with or to perform any term,

obligation, covenant or condition contained in any other agreement between Holder and Borrower.

C. False StatementslReports. Any warranty, representation or statement made or

furnished to Holder by Borrower or on Borrower's behalf under this Note or the related documents is false

or misleading in any material respect.

D. Insolvency. The insolvency of Borrower, the appointment of a receiver for any

- 2 -

Promissory Note - Jack London Gateway

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 46 of 109
part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or

the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower or

either ofthem.

10. LENDER'S RIGHTS. Upon the occurrence of an Event of Default, Holder may declare

the entire unpaid principal balance under this Note, all accrued unpaid interest and any other sums owing

immediately due and payable without further notice or demand.

II. ATTORNEYS' FEES; EXPENSES. Holder may hire or pay someone else to enforce

its rights under the Note and help collect this Note if Borrower does not pay, and Borrower shall pay such

fees and costs.

12. SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower

and shall inure to the benefit ofHolder and its successors and assigns.

13. TIME OF THE ESSENCE. Time is ofthe essence in performance under this Note.

14. GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will

not affect the rest ofthe Note. Holder may delay or forgo enforcing any of its rights or remedies under this

Note without losing them. Borrower understands and agrees that, with or without notice to Borrower,

Holder may release, substitute, agree not to sue, or deal with anyone or more of Borrower's sureties,

endorsers, or other guarantors on any terms or in any manner Holder may choose; and determine how,

when and what application of payments and credits shall he made on any other indebtedness owing by such

other Borrower. Borrower and any other person who signs or endorses this Note, to the extent allowed by

law, waives any applicable statute oflimitations, presentment, demand for payment, and notice ofdishonor.

Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who

signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from

liability. All such parties agree that Holder may renew or extend (repeatedly and for any length of time)

this loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Holder's

security interest in the collateral; and take any other action deemed necessary by Holder without the

consent of or notice to anyone.

15. GOVERNING LAW. This Note will be governed by the laws ofthe State ofCalifornia

without regard to its conflicts oflaw provisions.

16. CHOICE OF VENUE. !fthere is a lawsuit, Borrower agrees upon Holder's request to

submit to the jurisdiction ofthe State and Federal courts of Alameda County, State ofCalifornia.

17. JURY WAIVER. TO THE EXTENT PERMITTED BY LAW, BORROWER HEREBY

WAIVES THE RIGHT TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR CLAIM

BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, INCLUDING CONTRACT CLAIMS,

TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR

STATUTORY CLATMS. BORROWER RECOGNIZES AND AGREES THAT THE FOREGOING

WAIVER CONSTITUTES A MATERlAL INDUCEMENT FOR HOLDER TO ENTER INTO THlS

AGREEMENT. BORROWER REPRESENTS AND WARRANTS THAT IT HAS REVIEWED TillS

WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY

WAIVES ITS JURY TRIAL RIGHTS, TO THE EXTENT PERMITTED BY LAW, FOLLOWING

CONSULTATION WITH LEGAL COUNSEL.

·3·

Promissory Note -lack London Gateway

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 47 of 109
BORROWER:

[[SAN FRANCISCO REGIONAL CENTER

~~Ch4{ Name: 71/0/7\1'# /t, )f£.;\;bMSO,-v • Title; /?lt9fVt2<SV/V7 /ll,ZAvre.e:.

-4-

Promissory Note - Jack London Gateway

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 48 of 109
EXHIBIT 2 

DECLARATION OF STEPHEN G. PREONAS IN SUPPORT OF 

INTERESTED PARTIES WOMAC PROPERTIES, INC. AND JLG 

ASSOCIATES, LLC’S OPPOSITION TO PLAINTIFF’S MOTION 

FOR PRELIMINARY INJUNCTION AND APPOINTMENT OF 

RECEIVER 

SEC v. SAN FRANCISCO REGIONAL CENTER, 

LLC, et al.

NORTHERN DISTRICT OF CALFORNIA 

CASE NO. No. 3:17-CV-00223-RS 

DESCRIPTION OF DOCUMENT: 

Deed of Trust from JL Gateway LLC to 

Thorofare Asset Based Lending Fund III. LP 

dated December 17, 2014

EXHIBIT 2 

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EXHIBIT 3 

DECLARATION OF STEPHEN G. PREONAS IN SUPPORT OF 

INTERESTED PARTIES WOMAC PROPERTIES, INC. AND JLG 

ASSOCIATES, LLC’S OPPOSITION TO PLAINTIFF’S MOTION 

FOR PRELIMINARY INJUNCTION AND APPOINTMENT OF 

RECEIVER 

SEC v. SAN FRANCISCO REGIONAL CENTER, 

LLC, et al.

NORTHERN DISTRICT OF CALFORNIA 

CASE NO. No. 3:17-CV-00223-RS 

DESCRIPTION OF DOCUMENT: 

Right to Attach Order Entered November 6, 2015 

in Alameda Superior Court Case No. RG 15-

785236 Entitled WOMAC Properties, Inc., et al. v 

San Francisco Regional Center, LLC

EXHIBIT 3 

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Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 65 of 109
EXHIBIT 4 

DECLARATION OF STEPHEN G. PREONAS IN SUPPORT OF 

INTERESTED PARTIES WOMAC PROPERTIES, INC. AND JLG 

ASSOCIATES, LLC’S OPPOSITION TO PLAINTIFF’S MOTION 

FOR PRELIMINARY INJUNCTION AND APPOINTMENT OF 

RECEIVER 

SEC v. SAN FRANCISCO REGIONAL CENTER, 

LLC, et al.

NORTHERN DISTRICT OF CALFORNIA 

CASE NO. No. 3:17-CV-00223-RS 

DESCRIPTION OF DOCUMENT: 

Order Granting Summary Adjudication in 

Alameda Superior Court Case No. RG 15-785236 

Entitled WOMAC Properties, Inc., et al. v San 

Francisco Regional Center, LLC

EXHIBIT 4

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Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 67 of 109
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EXHIBIT 5 

DECLARATION OF STEPHEN G. PREONAS IN SUPPORT OF 

INTERESTED PARTIES WOMAC PROPERTIES, INC. AND JLG 

ASSOCIATES, LLC’S OPPOSITION TO PLAINTIFF’S MOTION 

FOR PRELIMINARY INJUNCTION AND APPOINTMENT OF 

RECEIVER 

SEC v. SAN FRANCISCO REGIONAL CENTER, 

LLC, et al.

NORTHERN DISTRICT OF CALFORNIA 

CASE NO. No. 3:17-CV-00223-RS 

DESCRIPTION OF DOCUMENT: 

Notice from Oakland Redevelopment Agency 

Regarding Jack London Gateway Shopping 

Center dated October 2, 2003

EXHIBIT 5

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 69 of 109
CITY OF OAKLAND AND _1 c- :1 

REDEVELOPMENT AGENCY OF THE C I T Y 0 F 0 A K &,$.,&Qi 

COUNCIL AND AGENCYAGENDA REPORT 

.- , 

'f CLERk 

., I *' :.' , ;. hD 

TO: Office of the City Manager and Agency Administrator 2003 OCT - 2 PI 3: 23 

ATTN: 

FROM: 

DATE: October 14,2003 

RE: 

Deborah Edgerly, Interim City Manager 

Community and Economic Development Committee 

A CITY COUNCIL RESOLUTION AMENDING RESOLUTION NO. 75142 C.M.S TO 

REPLACE COMMUNITY PLAZA DEVELOPERS, LLC, WITH JLG ASSOCIATES, LLC, 

AS PURCHASER AND DEVELOPER OF THE JACK LONDON GATEWAY SHOPPING 

CENTER; AND 

A REDEVELOPMENT AGENCY RESOLUTION AMENDING RESOLUTION NO. 

JLG ASSOCIATES, LLC, AS PURCHASER AND DEVELOPER OF THE JACK 

LONDON GATEWAY SHOPPING CENTER 

99-34 C.MS TO REPLACE COMMUNITY PLAZA DEVELOPERS, LLC, WITH 

SUMMARY 

Staff recommends that the Redevelopment Agency and City Council approve a request to replace 

Community Plaza Developers, LLC (CPD) with JLG Associates, LLC (JLG) in order to facilitate the sale 

of Jack London Gateway Shopping Center (Center) to JLG. 

CPD has managed the property for the Agency, which currently owns the Center, since 1998. Resolutions 

by the City Council and Agency, approved in 1999, authorized staff to sell the Center, then known as the 

Acorn Plaza Shopping Center, to CPD through a Development and Disposition Agreement (DDA). CPD is 

a limited liability corporation composed of for-profit subsidiaries of East Bay Asian Local Development 

Corporation (EBALDC) and Westside Economic Development Corporation (WEDC), and Portfolio 

Properties, Inc. (PPI). 

Due to on-going problems with WEDC, City staff have continued working with EBALDC and PPI, who 

have requested approval to proceed with the sale of the Center to JLG. This new partnership will be 

comprised of subsidiaries of EBALDC, PPI and a new community-based member, West Oakland 

Marketplace Advancement Company (WOMAC). EBALDCPPI and WEDC are currently negotiating the 

terms for the dissolution of CPD. As of this writing, no settlement has been reached. However, the action 

recommended in this report is to authorize staff to negotiate an agreement with new entity JLG, and any 

failure amongst the members of CPD to resolve issues regarding a settlement will not impede the ability of 

JLG to proceed with the purchase and rehabilitation of the Center. 

FISCAL IMPACT 

No new fiscal impact is expected as a result of this action. Grant and loan funding for the project has 

already been allocated. Additional discussion of the sources and uses of the previously approved funding is 

provided in the Project Description section of this report. 

BACKGROUND 

The Jack London Gateway Shopping Center was constructed in 1983 by a non-profit entity, the Greater 

Acorn Community Improvement Association, and financed by a federal Economic Development 

c: 

Item: J 

C&ED Committee 

October 14. 2003 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 70 of 109
Deborah Edgerly 

October 14,2003 Page No. 2 

Administration grant and an Agency loan. The Center was established with a grocery store serving as the 

anchor tenant, but the Center and grocery store struggled financially during the first few years of 

operations. 

The Agency subsidized the Center throughout the mid-l980’s, investing nearly $6 million before 

reassuming ownership of the property through a quit claim in 1986. The Agency sold the Center to a 

private investor, Alex Hahn, in 1989 for $1.91 million, ofwhich $600,000 in proceeds were returned to the 

federal funding source. After Hahn closed the grocery store due to low sales, the Agency responded to 

concerns from the community about the deterioration of the Center and lack of a grocery store and reacquired the property for $2.97 million in December 1996. 

The Agency commissioned a market study to determine the viability of a grocery store in the Center. The 

study found that a grocery store was feasible. The Agency then approved up to $230,000 for emergency 

repairs, operation and maintenance costs, bringing the total Agency investment in the Center to $8.7 

million as of December 1998. 

In early 1997, the Agency issued a Request for Proposals (RFP) for a new ownerioperator for the Center. 

CPD’s proposal was approved by Council in July 1997 as a result of that process. CPD is a limited liability 

corporation composed of PPI and subsidiaries of EBALDC and WEDC. EBALDC brings significant 

property development experienc-both commercial and residential-to the partnership, while PPI has 

experience as a commercial property management firm. WEDC’s role was to provide a connection to the 

surrounding community and assume responsibility for fundraising from foundations. CPD received strong 

support from the community, particularly since the surrounding neighborhood had not had a full-service 

grocery store since 1996. 

CPD entered into an Exclusive Negotiating Agreement with the Agency in November 1997, and executed 

an interim Operating and Management Agreement for $700,000 with the Agency in October 1998. In 

1999, the Agency and Council approved resolutions to sell the Center to CPD for $2.97 million through a 

DDA, allow CPD to assume $4.2 million in existing EEC Flagship funds and lend an additional $1.3 

million in EEC hnds (pending approval by HUD), divided evenly between grant and loan funds. More 

details regarding the project’s financing are provided in the Project Description section of this report and in 

the attachments. 

Under this new management, the Center has proven successful, and Gateway Foods, a full-service grocery, 

has been the anchor tenant since 1999. Numerous improvements, financed from the Center’s cash flow and 

Section 108EDI funds, have been undertaken. These include accessibility improvements, signage to 

promote the visibility of the Center, and parking lot repaving, as well as tenant improvements to individual 

stores. Aside from the first year of operations, revenue has exceeded expenses since CPD took over 

management of the Center (see Attachment A). The Center has also performed well in terms ofjob 

creation, meeting 96% of its job creation goals under the HUD Section 108 program as of May 2003 (see 

Attachment B). 

However, the relationship between WEDC and EBALDUPPI has become strained over time, resulting in a 

delay in the sale of the Center. Their partnership agreement called for WEDC to raise donations for capital 

contributions for the Center, which WEDC failed to do. Therefore, City staff requested that EBALDC and 

PPI seek another community-based member. They have proposed to substitute WOMAC for WEDC as 

their community-based member and form JLG, a new partnership. If the Council and Agency approve this 

action, the Agency would then sell the Center to KG. WOMAC members are affiliated with the Council 

Item: S 

C&ED Committee 

October 14,2003 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 71 of 109
Deborah Edgerly 

October 14,2003 Page No. 3 

of Acorn Residents (CAM), which has long-standing ties to the Acorn neighborhood, and have been 

involved with the Center in the past in an advisory capacity. 

CPD’s members are currently negotiating the terms for the termination of the organization, although no 

settlement has been reached to date. However, since the action recommended in this report is to authorize 

staff to negotiate an agreement with new entity JLG, any failure amongst the members of CPD to resolve 

issues regarding a settlement will not impede the ability of JLG to proceed with the purchase and 

rehabilitation of the Center. 

KEY ISSUES AND IMPACTS 

CPD has progressed substantially in addressing the key issues regarding the Center’s operations identified 

by staff in 1999, including reestablishment of a full-service grocery store and other neighborhood-serving 

retail, job creation, and improvement of the neighborhood. CPD has attracted a variety of tenants that serve 

the needs of the surrounding community, including not only the grocery store, hut also a credit union and 

other retail establishments. They have also undertaken some of the necessary improvements to tenant and 

common area spaces, and have further plans for the revitalization of the Center. 

However, sufficient progress towards the goal of promoting community ownership of the Center has not 

been achieved. This is primarily due to WEDC’s inability to meet its fundraising responsibilities for the 

Center. In addition, there have been significant disagreements between WEDC and the other members 

regarding each member’s role, relationship with the grocery store, and funding. The proposed action will 

allow the partnership to replace the existing community-based member with WOMAC and to move 

forward with the acquisition and further revitalization of the Center, facilitating its rehabilitation and 

helping it continue to become a better community resource for the neighborhood. 

The partnership agreement currently under negotiation between the members and WOMAC includes 

provisions for eventual transition of ownership to WOMAC. These provisions ensure that the goal of 

eventual ownership by a community organization as approved by the Agency in 1999 is preserved. 

PROJECT DESCRIPTION 

Jack London Gateway Shopping Ccnter Description 

Since assuming responsibility for operating the Center, CPI) has proven to be a good manager of the 

Center, responding to community concerns and making thc Ccntcr cconomically viable. Thc Center 

includes 50,086 square feet ofretail space and an additional 5,400 square feet oispacc leased to long-term 

fast food tenants Kentucky Fried Chicken and Mcl>onald’s. The 7.4 acre sitc has 481 parking spaccs. 

Landscaping has been added to the reccntly repaired parking area. Signage for thc Center was added this 

year to increase the visibility of the Ccntcr and its merchants, and improvements have been made to the 

interior of stores, the roof and the general accessibility ofthc Center. 

Gateway Foods, a full-service grocery store occupyng approximately 20,UOO square tect and run by Scan 

I.oloee, has served as the anchor tenant in the Center sincc 1999, providing residents with rcady access to 

fresh produce and meats, as well as other goccry items (including a variety of ethnic foods). In 200 I, the 

People’s Community I’artncrship Federal Credit Union opcned for business at the Center, becoming thc 

only financial institution in Oakland wcst of Interstate 980. Othcr stores are smaller community-sening 

retail, including a shoe store, discount clothing outlet, restaurants and a florist. Only one storefront is 

currently vacant. 

Item. 5 

C&EU (:omrniocc 

October 14. 20113 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 72 of 109
Deborah Edgerly 

October 14.2003 Page No. 4 

The Center has met approximately 96% of its job creation goals as of May 2003, and additional jobs are 

expected to be generated through the planned rehabilitation of the Center’s original faqade. Future ideas 

for development at the Center, which would be privately financed, include additional development on a 

portion of the lot. Development of residential units has also been identified as a possibility. If successful, 

this would further revitalize the Center as a mixed use asset to the West Oakland neighborhood, and 

generate additional construction and retail employment and services. 

Description of Prouosed JLG Associates. LLC Partnershiu 

CPD was selected to assume the operation and ownership of the Center via the WP process in 1997 

because it included a financially viable plan for maintaining a grocery store in the Center and drawing other 

retailers to serve the community. Each member also brought to the team valuable experience in one or 

more facets of running a community-serving shopping center. JLG retains the two performing members of 

the partnership, EBALDC and PPI, allowing them to capitalize on the momentum they have already begun 

at the Center with a new community member, WOMAC. 

EBALDC, formed in 1975, is a community economic development organization dedicated to the 

betterment of the East Bay community, particularly the low-income and Asian and Pacific Islander 

population, through development of physical, human and economic assets for individuals and community 

organizations. EBALDC has developed over six hundred units of affordable housing as well as 190,000 

square feet of retail and office space in Oakland and Emeryville. EBALDC brings valuable development 

expertise to the partnership and has experience dealing with the complex hiring and other requirements 

imposed by use of federal funds. PPI is an experienced property management firm, with offices in 

Oakland. PPI handles the day to day management of the Center, and has done a remarkable job of 

recruiting and retaining commercial tenants (including the grocery), negotiating leases, collecting rents and 

maintaining the Center over the last six years. 

WOMAC is affiliated with the Council of Acorn Residents (CAN), providing a valuable link to residents 

within the neighborhood. Its principals include a core group of community organizers that have been active 

in advising and promoting the revitalization of the nearby Acorn housing development. WOMAC’s 

principals have also served on the Center’s Community Advisory Board as voting members for over three 

years, and thus are already familiar with the operations of the Center. 

WOMAC’s primary responsibility in the partnership at first will be marketing and promotions, with the 

goal of improving relations between residents and Center merchants. WOMAC has proposed to reduce 

commercial tenant turnover and increase profits through a community consultation process geared towards 

familiarizing merchants with the needs of residents, educating community members on handling their 

personal finances, and providing a conduit for linking merchants and community organizations. The 

organization will guide future development efforts at the Center so that it remains viable and benefits the 

surrounding West Oakland community (see Attachment C for WOMAC “Concept Statement”). 

The City and Agency are asked to approve the sale of the Center to JLG rather than CPD. This action will 

allow staff to move forward with executing the Development and Disposition Agreement (DDA) per 1999 

authorization from the Agency, and sell the Center to JLG. JLG will assume responsibility for ownership 

of the Center, in addition to maintaining its role in its operations and management, with additional guidance 

and input ffom new member WOMAC. In accordance with the actions approved by City Council and the 

Agency in 1999, EBALDC or its affiliate will have 55% membership interest in the Center, PPI or its 

affiliate will have a 20% interest and the WOMAC as the community member will have a 25% interest. 

Item: 5 

C&ED Committee 

October 14.2003 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 73 of 109
Deborah Edgerly 

October 14,2003 Page No. 5 

As mentioned in the “Key Issues’’ section of this report, WOMAC members will receive training to 

increase their capacity in property management and commercial and housing development from EBALDC 

and PPI. The partnership agreement between WOMAC, EBALDC and PPI will include provisions guiding 

the eventual transition of ownership from JLG to WOMAC, fulfilling the goal of eventual ownership by a 

West Oakland-based community group. 

Center Finances and Rehabilitation Costs 

In fiscal year 1999 ~ 2000, Agency Resolution 99-34 C.M.S. and Council Resolution 75142 C.M.S. 

authorized the sale of the Center to CPD for $2.97 million through a DDA and allowed CPD to assume a 

total of $5.5 million in Enhanced Enterprise Community (EEC) Flagship/HUD Section 108 program funds. 

Of the $5.5 million in requested EEC funds, $4.2 million had been approved in fiscal year 1996-1997 per 

Agency Resolution 96-61 C.M.S. for the acquisition and partial improvement of the Center by the Agency. 

This loan, if Council approves the action recommended in this report, will be assumed by JLG instead. 

Pending HUD approval, the remaining $1.3 million in EEC loan and grant funds that was authorized by 

Council and the Agency in fiscal year 1999-2000 will be assumed by JLG once approval is given to 

proceed with the sale of the Center to the newly reconstituted partnership. JLG will be responsible for 

repayment of at least $1.47 million, to be repaid from cash flow under the terms approved in Agency 

Resolution 99-34 C.M.S. This figure represents the $2.97 million Section 108 loan minus $1.5 million in 

debt service that will be paid by revenue from the property tax increment, business license fees and sales 

tax generated by the Center, committed by the Agency and City in 1999 to repay the remaining balance. 

Per the EEC program, half of the EEC funds will be provided in the form of an EEC Section 108 Loan and 

the other halfwill be provided as an Economic Development Initiative (EDI) Grant. A detailed Project 

Development Budget, including sources and uses and an accounting of funds spent for work completed to 

date, is provided as Attachment D. 

108 Loan 

ED1 Grant $2,530,000 

Redevelopment Funds $1,067,114 

Shopping Center Revenue $ 666,384 

Heron Foundation $ 100,000 

City NCR Grant $ 10,000 

Overage (capital to be raised) $ 269.954 

Total: $7,528,073 

USES 

$2,970,000 Acquisition 

$2,904,497 Construction Costs 

$1.653.576 Soft Costs 

$7,528,073 Total 

In 2002, the Center generated a net cash flow of $131,000, prior to payment of debt service. As of June 30, 

2003, the Center’s year-to-date net income before debt service was $155,492, exceeding budget projections 

by 19%. 

Once a loan agreement for the remaining Section 108 loadgrant funds of $1.3 million is approved by HUD, 

and the ownership of the Center transferred to JLG, the planned rehabilitation of the Center’s favade will 

commence. 

On-Going Role of the Arencv 

Although the Agency will cease to have an ownership interest in the Center, and the on-going responsibility 

for its operation and maintenance, it will maintain an active role both as a lender and through on-going 

i7 

Item: J 

C&ED Committee 

October 14,2003 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 74 of 109
monitoring of the Center’s performance in job creation required by the HUD Section 108 program. The 

Development and Disposition Agreement adopted will include provisions for repayment of the loan and a 

requirement that the Center include a full-service grocery as long as the Acorn Urban Renewal Plan 

remains in effect. Transfer of the property to ownership by WOMAC would also require the approval of 

the Agency Administrator, and would not occur until WOMAC can buy out the other partners and 

demonstrate their ability to operate the Center effectively. The Agency will maintain the right of reentry in 

the event of default on the part of JLG, including a provision for resale of the property to recover costs. 

SUSTAINABLE OPPORTUNITIES 

The project will continue to provide and expand Opportunities to promote economic, social and 

environmental stability. Economic opportunities have primarily appeared in the form ofjobs from the 

Center (mostly retail, but also some construction). In addition, the opening of the Credit Union in the 

Center provides an opportunity for residents to have a viable banking option in their community, and 

encourages investment in West Oakland. 

Social sustainability is promoted through increasing opportunities for residents of West Oakland to shop in 

their neighborhood for groceries, clothing and other basic necessities. A local community organization, 

WOMAC, will have substantial involvement in guiding the future of the shopping center. The 

rehabilitation of the Center will enhance the appearance of the neighborhood. JLG will also be encouraged 

to have its contractors use environmentally sensitive materials. 

DISABILITY AND SENIOR CITIZEN ACCESS 

With accessibility improvements undertaken at Gateway Foods and repairs to the Center’s parking lot, the 

Center should now be fully accessible to persons with disabilities. If additional issues arise, JLG will he 

responsible for implementing an appropriate response. Seniors living in private units and several 

affordable housing complexes near the Center will benefit from ready access to groceries, as well as retail 

and financial services. 

RECOMMENDATION AND RATIONALE 

Staff recommends that the Redevelopment Agency and City Council approve a request to replace 

Community Plaza Developers, LLC with JLG Associates, LLC in order to facilitate the sale of Jack 

London Gateway Shopping Center to JLG. 

This action retains successful members EBALDC and PPI from the original CPD partnership selected to 

own and operate the Center, allowing them to build on the momentum achieved at the Center, while adding 

a new community member, WOMAC. It will allow JLG to take over ownership of the Center from the 

Agency, allow the Agency and JLG to execute agreements required for the remaining funding needed for 

extensive rehabilitation efforts at the Center, and provide a path to eventual community-based ownership of 

the Center. 

ALTERNATIVE RECOMMENDATION 

None recommended. The Agency does not want to have continued responsibility for owning a shopping 

center. One possible alternative would be for the Agency to issue a new RFP for the 

2, 

C&ED 

Item: - 

Committee 

October 14,2003 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 75 of 109
Deborah Edgerly 

October 14,2003 Page No. 7 

ownership and operation of the site. However, staff does not believe that this would be a superior 

alternative, since the managing and real estate partners have performed admirably in operating the 

Center to date, and are prepared to move forward quickly with the rehabilitation of the Center. In 

addition, the new community partner promises to take an active role in bridging communications gaps 

between merchants and local residents and advocating that the Center meets the needs of the 

surrounding neighborhood. In addition, the recommended action will facilitate eventual communitybased ownership of the Center. Issuing a new RFP would delay the rehabilitation of the Center, 

endanger the momentum created there thus far, and not necessarily provide better results. 

ACTION REQUESTED OF THE CITY COUNCIL 

Staff recommends that the Redevelopment Agency and City Council approve a request to replace 

Community Plaza Developers, LLC with JLG Associates, LLC in order to facilitate the sale of Jack 

London Gateway Shopping Center to JLG. 

Respectfulfi suwitted, 

DANIEL * VANDERP EM 

Housing, Economic Development and 

Redevelopment Director 

Prepared by: 

Roy L. Schweyer, Director 

Housing and Community Development 

Christia Mulvey, Housing Development 

Coordinator 

APPROVED AND FORWARDED TO THE 

COMMUNITY AND ECONOMIC 

DEVELOPMENT COMMITTEE 

Attachments 

Item: 5 

C&ED Committee 

October 14,2003 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 76 of 109
ATTACHMENT A 

Jack London Gateway Shopping Center 

9 

Year-to-Date Budget Report (as of June 30,2003) 

Annual Asset and Liability Statements for 1999 - 2002 

Item: 

C&ED Committee 

October 14,2003 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 77 of 109
Acorn Shopping Canter 

Budget Compsrilion ==pork 

6/30/1003 

Acorn Shopping Plaza 

8,886 

1,191 

3,210 

0 

0 

1,550 

1,778 

2,704 

1.260 

2,600 

11,241 

I,1P1 

3.220 

5.832 

0 

1,550 

1,700 

2,704 

1,260 

2,551 

(2.3551 

0 

0 

15,8121 

0 

0 

78 

0 

0 

47 

1211 

0 

0 

11001 

f.. 

0 

5 

0 

0 

2 

AngCl'II Discount Clothing 2,421 2.363 58 2 

Xaini The Poinr 2,044 1.044 0 0 

e Track Shoes 0 1.76~ 11,7601 1100) 

HcDonald*a 3,895 3.895 0 0 

Xentusky Izied Chicken 5.108 5,108 0 0 

i ................................................ 

16,651 

229 

840 

186 

0 

354 

377 

496 

160 

654 

566 

46,121 

240 

840 

1,469 

0 

360 

360 

600 

160 

630 

540 

614 410 161 

0 480 14801 

660 660 0 

800 800 0 

1211 

15) 

0 

1871 

.*. 

(21 

5 

1171 

0 

4 

5 

(11 

11001 

0 

0 

................................................ 

5.936 7,159 (1.82~ 1a41 

53.311 

7.146 

1.220 

19.160 

8.680 

9.300 

10.803 

16,224 

7,560 

15,606 

17.111 

12.265 

474 

23,370 

30,648 

............ 

214.885 

1.589 

840 

7.603 

4,538 

1,195 

1,119 

3.394 

2,312 

3.810 

4,079 

2.611 

2,400 

3.300 

4.923 

.. 

0.916 

67,446 

1,116 

3.210 

34,991 

0 

9,300 

10,200 

16,224 

7,560 

15,318 

14.178 

12,264 

10,560 

13.370 

30,648 

........... 

262,418 

rll.1111 (211 

0 0 

0 0 

15,832) 1111 

8.680 I** 

0 0 

603 6 

0 0 

0 0 

288 1 

2.934 21 

I 0 

110,086) 1961 

0 0 

0 0 

................ 

117,541) I11 

1.440 

5.040 

8,811 

0 

2,160 

2,160 

3,600 

3,160 

3,780 

3,140 

2,520 

2,8110 

3,960 

6.800 

46,554 

149 10 

14.2001 (811 

11,211) 1141 

4,538 *.* 

135 6 

59 1 

12061 I61 

182 6 

30 1 

839 26 

94 4 

14801 1171 

(Gal 1111 

la3 I 

................ 

16081 (11 

................................................................................................ 

................................................................................................ 

0 0 0 f.. 13.543 0 11.543 +** 

12091 0 1209) **f 144 0 214 f.. 0 0 0 *. 25 0 25 .f* ................................................................................................ 

41,384 54.180 (11,7961 I211 304,643 308,982 (4,1191 (11 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 78 of 109
1.019 

11671 

0 

1,044 

1,338 

0 

353 

8,678 

11,094I 

0 

1.100 

80 

0 

795 

0 

19 

0 

38 

1.205 

..__.__..___._ 

15.518 

1.000 I191 I31 

0 167 .*. 

0 0 *** 

1,118 71 7 

2.700 362 13 

15 15 100 

350 131 (11 

8.190 14881 I61 

500 1,594 319 

0 0 *. 

1.400 100 14 

80 0 0 

100 100 100 

75 (7101 19601 

100 100 100 

30 11 37 

1.500 1.500 100 

0 I381 ... 1,115 10 1 

._..._...._...._.._..___ ______ 18,383 2.865 16 

0 10 10 100 

371 

7,900 

104 

1,775 

134 

0 

0 

50 

5.000 

..______._ __.. 

15.240 

277 

0 

0 

0 

0 

200 

0 

35 

5.000 

.....- 5.511 

0 

(7,9001 

(100 

11~1751 

11341 

100 

0 

I151 

0 

. . . . -. . . 

19.7181 

0 

f.. .* 

.(I. 

.*. 

100 

*.* 

I431 

0 

11761 

IUII(TWISTIuTX~ EXS.HI(SE3 

Tenent Rdations 0 0 0 ... Advertising L Promotion 0 0 0 *.* 

nsrksking 0 0 0 ... X.eg.1 Pee 0 300 300 100 

accounting PSS 1.000 1.000 0 0 

Bank charge 0 0 0 *.* 

Po'tage L neuvsry 0 15 15 I00 

6.717 6,000 

I111 0 

196 1.400 

6,265 6,708 

14.416 16,ZOO 

0 150 

3.118 2,100 

48,166 (8.469 

114,6541 5.000 

3.118 115 

6.000 8.400 

' 480 480 

156 600 

795 450 

0 600 

1.088 1,156 

0 9,000 

38 0 

9,610 9,673 

...-.._..._. 

85,918 

0 

1.660 

15.800 

104 

1,177 

13 4 

(I 

0 

197 

30,000 

. . . . . . , 

50,171 

150 

1,646 

0 

5.160 

6,000 

5 

0 

. ._ 

i16.611 

60 

1,661 

0 

0 

0 

0 

1.100 

13,000 

110 

30,000 

. 

46,131 

0 

0 

7.500 

1,800 

6,000 

0 

90 

17371 I121 

a1 ... 1.104 86 

443 7 

1.784 11 

150 100 

11,318) 1631 

203 0 

19.654 393 

(1,903) 19991 

1.400 19 

0 0 

444 71 

(3C51 (771 

600 100 

68 6 

9,000 100 

(381 *f* 

53 1 

._.._._._._. ...... 

30,693 16 

60 100 

a 0 

115,800~ 0.. 

(100 *** 

12,1771 *** 

11341 .** 

' 1.100 100 

13.000 100 

1871 1411 

0 0 

(150) f*f 

11.6461 *** 

7,590 100 

13,3601 11871 

0 0 

(51 ff. 90 100 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 79 of 109
Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 80 of 109
I 

n sopping Center 

RSSTS 

CRSH 

;I Petty Cash I 100 

Cash-Onion Bank of CR R,Bk 

Total Cash 27,4¶4 

!m"Ts fMXIVRBLE 

RIR-M.N.Roaa'r Pizza 8,174 

Cash F1oH-DeveIopmt.Rcct W1,m 

R/R City of Oakland . I42 

NIR ia,w 

RIR Security Deposits PY 3,788 

Total Receivables 42k, 121 

ConstruaQw ,Cost 5 1,281 

hart. Bef. Leasing Con4 i1,6501 (1,6581 

Tutal Rssets 451.246 

UABILITIES & DUERS BlTy 

RcMLp(Ts PRYRBLE 

Tenant Security Deposit5 3, 

Total Rccnunts Payable 37,862 

Total Liabilities 37,862 

hers' Contribution 72 386 

Cuulative Profit/Loss 210,358 

MRS' WITRL 

24 744 Total Equity 

YIU Net Incoir 131,440 

Total Liabilities b Eqty. - 451,246 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 81 of 109
CASH 

Petty Cash 

Cash-!Jnion Bank of M 

Total Cazh 

FEmimTs HECEIVRBLE 

UIR-lk.X.Rosa'r Pizza 

Cash FlorDevelopint , kt 

WR City of Oakland 

NIA 

Rorn Shopping Center 

12/31/2881 

12,111 

0,174 

142 

(8,838) 

=, 

Total Receivables ' s, 291 

Construction Costs 1,281 

Rsort. Def. Leasing Gaia (l,f&B) If,558) 

Total Asset; 1 ' - jae, 0441 

URBIUTIES & gEERs m 

h#MS PRYRBLE 

Tenant Security Deposits 25, ,597 

Total Rccmts Payable 

ON6 NUI DEBT 

Total Liabilitirs =,m 

hws'hntribution 72= 

'otal Equity 106,KU 

CWRS WITFA. 

hiulativr PMfit/Loss 33,647 

111 Net Income 176,711 

otal Liabllities & Eqty. - d35,041 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 82 of 109
Rcorn Shopping Center 

12/31/68 

CRSH 

. Cash-Union Bank of CR 

Petty Cash I 188 

46,746 

Total Cash 46,846 

lmmrs RECEIVRBLE 

RIff-i%M.Rosa's Pizza 0,174 

Cash FlowDevelopint.kt 81,025 

NIA 44m 

Total Receivables 85,759 

Costruction Costs 375 

RIP& Def. Learing Coil (1,6581 (1,6581 

Total Rssetg i 131,338 _- . . 

LIABILITIES & OWNERS Em 

m PRYRBLE 

Tenant Security Deposits a,a7 

Total hounts Payable 25,237 

WmPIDEBT 

Total Liabilities 25,297 

Omers'Contribution 7p 

coMRs'wpIT.@d. 

Cuiulativr Prufitllori 188,463) 

Total Equity 116,0831 

Ym Net Incoie 122,115 

Total Liabilities & Eqty. P 131,D 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 83 of 109
CASH 

_. Cash-Unian Bank of CR 

Petty Cash 

Total Cash 

lwYMf5 REEIVABLE 

NIR 

Total Receivables 

Acorn Shopping Center 

12/31/99 

$ I0R 

14,263) 

(4.1631 

(420) 

Total Aasetr (4,583) 

.<', 

Accm PAYRBLE 

Tenant Security rleparits 

-qtal Rccaunts Payable 

LONG mpI DEBT 

Total Liahrlities 

Onncri' Contribution 

Curulat ivr Prof i t/Lorr 

Total Equity 

Ym Net Incoae 

Total Liabilities k Eqty. 

LIPJILITIES 4 WERS EQTI 

H,5M 

11,500 

OUNERS'CAPITRL 

11,500 

12,386 

(37,208) 

35,178 

(51,2611 

(4,5831 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 84 of 109
ATTACHMENT B 

Jack London Gateway Shopping Center 

. HUD Section 108 Performance - May 2003 Jobs Creation Status of Center 

Item: 5 

C&ED Committee 

October 14,2003 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 85 of 109
REGULAR HUD-108. EEC HUD-108IEDI AND FLAGSHIP LOAN JOB CREATION MATRIX 

May 2003 (Excerpt) 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 86 of 109
ATTACHMENT C 

Jack London Gateway Shopping Center 

. West Oakland Marketplace Advancement Company (WOMAC) - 

DRAFT Concept Statement 

Item: 5 

C&ED Committee 

October 14, 2003 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 87 of 109
Bringing Residents and Merchants Together 

A Concept Statement 

Draft 6/3/03 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 88 of 109
.O.AO 

Introduction 

The concepts of mixed use and 

citizen participation have been 

central to quality urban 

planning theory for decades. 

But practice has often been 

otherwise. Inner city low 

income communities are 

frequently as far removed from 

these ideals as can be 

imagined. Too often, inner city 

residents are disempowered 

and cut out of the decisionmaking process, while 

commercial development takes 

place in islands cut off from the 

community. The unfortunate 

result is often minority and lowincome neighborhoods that are 

without reasonable access to 

competitive vendors, and 

merchants who feel besieged 

rather than supported by their 

customers. Merchants and 

residents live in a state of 

uneasy truce. In moments of 

social crisis, pent-up 

resentments may flare to the 

surface, resulting in the 

destruction and looting of 

commercial establishments, 

after which the community's 

isolation from the normal 

competitive marketplace only 

deepens. 

Here in West Oakland, 

California, we have a historic 

opportunity to build on a 

different, more positive model. 

At the center of the West 

Oakland district stands the 

Acorn residential community 

(formally known now as the 

Town Center and Courtyards at 

Acorn). Originally conceived as 

middle-class housing, the Acorn 

community fell under 

irresponsible private ownership 

some decades ago and 

deteriorated over the course of 

time into a dilapidated, highcrime, high-problem area whose 

blight became notorious 

throughout the City of Oakland. 

The adjacent shopping area 

became a dismal panorama of 

broken glass, boarded-up 

windows, litter, and abandoned 

signage. 

About a dozen years ago, a 

movement for community 

renewal began in the heart of 

the Acorn residential 

community. A handful of black 

women residents, with the 

support of some key allies, 

initiated a long, slow, often 

painful, but ultimately 

successful community 

renaissance. Organizing unit by 

unit, walking endless miles 

within the community, 

organizing hundreds of 

meetings, confronting private 

owners, managers, and public 

agencies from the neighborhood 

level all the way up to the 

federal housing authorities, 

these tireless, fearless 

organizers have wrought a 

remarkable physical and moral 

Bringing Residents and Merchants Together 

Concept Statement 6/3/03 Page 2 of 7 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 89 of 109
transformation in the Acorn 

community. The irreparably 

deteriorated housing units have 

been demolished. All the 

remaining units have been 

thoroughly upgraded and 

renovated. The grounds have 

been cleaned up, landscaped, 

and secured. New ownership 

and management are in place. 

Most important, the residents' 

own association, inspired by the 

goal of one day winning full 

tenant ownership and selfmanagement, has become the 

virtual government of the 

community, resulting in a 

vibrant, cohesive, morally 

invested group of residents. 

Acorn today has become a 

desirable place to live and there 

is a waiting list to get in. 

Unfortunately the adjacent 

shopping area (here termed the 

Acorn Marketplace) has 

remained on the margins of the 

Acorn community's renaissance. 

Despite the advantage of close 

physical proximity - the shops 

are within easy walking distance 

from the center of the Acorn 

residential area -the merchant 

community has not been able to 

achieve the kind of acceptance 

that would translate into 

commercial stability. The 

residential community has not 

embraced the Acorn 

Marketplace with unqualified 

enthusiasm. As a result, the 

store vacancy rate remains too 

high. There is too much 

turnover and delinquency in 

rent payments. Many of the 

merchants are dissatisfied with 

aspects of their lessor's 

management policies. Although 

there has been some progress, 

the consensus is that the Acorn 

Marketplace is just not working 

as it should, and that unless 

there is a serious reorganization, the advances made in 

recent years are liable to 

evaporate and leave the 

marketplace area blighted once 

again. 

What WOMAC Proposes 

WOMAC is the core group of 

community organizers who 

have created the Acorn 

renaissance over the course of 

the past dozen years. 

(Biographies are in the 

Appendix.) WOMAC brings to 

the table more than a century 

of black woman-years of 

experience in the West Oakland 

district, resulting in a weilearned prominence today as 

community representatives and 

moral leaders. Everyone in 

Acorn knows the WOMAC 

principals and everyone who 

knows them, respects them. 

There is no group of people in 

West Oakland as well acquainted with all the members of this 

community, and more experienced in dealing with all the 

private and public powers who 

impinge on it, than the WOMAC 

principals. 

WOMAC was formed for the 

specific purpose of bringing the 

residential community and the 

adjacent merchant community 

closer together for the mutual 

benefit. It is obvious that both 

sides have something to gain 

Bringing Residents and Merchants Together 

Concept Statement 6/3/03 Page 3 of 7 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 90 of 109
from a closer relationship. The 

residents of the community 

want, need, and deserve a 

selection of shops and services 

that meet their needs and 

preferences at competitive 

prices. The merchants want, 

need and deserve a customer 

base that is loyal, respectful of 

property, and financially 

responsible. Closer integration 

between the residential and 

commercial aspects of the 

community is a sound policy 

that will improve the quality of 

life for all participants. 

Toward this end, and in 

partnership with other 

responsible developers, and to 

the extent of its available 

resources, WOMAC proposes: 

Community Consultation. 

Too often merchants have no 

idea whether the community 

where they open their shop 

really needs them and wants 

them. The blindfolded hit-ormiss method of commercial 

investment can result in a 

surplus of one kind of vendor 

(for example, fast food) and a 

shortage of others equally vital 

to the community (for example, 

banks, or vendors of fresh 

vegetables). WOMAC proposes 

to initiate a community 

consultation process to give 

voice to the community 

residents' perceived needs for 

the kinds of stores and services 

they want in their immediate 

neighborhood. Merchants 

considering locating in the 

Acorn marketplace can obtain a 

direct hearing by the 

community's residents and can 

get an immediate sounding 

about their commercial 

prospects, resulting in 

enormous potential savings. 

Franchisors can obtain guidance 

in selecting franchisees who 

have community support. 

Established merchants can get 

feedback from the community 

about the level of customer 

satisfaction and obtain specific 

recommendations and 

comments about their products 

and services. 

Community Education. 

Many aspects of the commercial 

relationship are partly or wholly 

under the control of the 

customer. For example, if 

merchants provide waste 

receptacles, it is up to the 

customers to use them. It is up 

to customers to return shopping 

carts to the stores. Customers 

can speed transactions by 

knowing their payment options 

and by proficiency in using 

credit cards, debit cards, and 

checks. Customers who engage 

in shoplifting drive up prices 

and cause tension in the 

shopping atmosphere. 

WOMAC'S principals know about 

the demoralizing effect of litter 

in the residential community 

and have waged an effective 

campaign to eliminate it there. 

WOMAC's people can help get 

shopping carts out of the 

residential premises and back 

into the stores. One of the key 

elements in the Acorn renaissance is resident education, 

including education about 

handling personal finances, 

organized by WOMAC principals. 

Bringing Residents and Merchants Together 

Concept Statement 6/3/03 Page 4 of 7 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 91 of 109
WOMAC'S leadership teaches 

that petty crime, including 

shoplifting, degrades the 

individual, the family, and the 

whole community. WOMAC 

brings a powerful moral 

influence that can reduce 

merchantjcommunity friction 

and smooth the transaction 

stream for both sides. 

Building Good Will. 

WOMAC can help build good will 

between merchants and 

community members in a 

variety of ways. WOMAC's 

informal community grapevine 

can often be more effective in 

bringing customers to a store 

than any amount of advertising. 

Where merchants offer free or 

reduced goods or services, 

WOMAC can provide volunteers 

to help distribute them or to 

bring customers to the 

marketplace. Where the 

community needs donations for 

special causes or events, 

WOMAC can advise the 

merchants specifically what is 

wanted, by whom, for what, 

and when. WOMAC can 

encourage merchants to list job 

openings First in the local 

community and to rely primarily 

on local recommendations in 

filling vacancies. WOMAC can 

advise merchants about 

deserving young people for 

scholarships and other awards. 

WOMAC can bestow community 

recognition on deserving 

merchants, and help merchants 

become more active and 

involved members of the 

community, thereby building 

priceless long-term good will. 

Other Services. Many 

marketplace developments 

today include police and 

security services, and some also 

include a variety of social 

service agencies. Because of its 

close community roots, WOMAC 

is well positioned to advise on 

the need for such services and 

to build acceptance for agencies 

that fill a real community need. 

Many commercial developments 

today include set-asides for 

low-income housing, either 

immediately or as part of future 

expansion. WOMAC is the ideal 

partner and consultant for this 

type of development. In 

today's uncertain economic and 

political climate, economic 

actors have to anticipate crisis 

situations and emergencies. 

Because of its intimate 

knowledge of the community 

and its deep community roots, 

WOMAC is a reliable crisis 

management partner. In these 

and other ways, WOMAC can 

leverage its principals' decades 

of experience with residential 

community-building into a 

valuable resource for 

community-conscious 

commercial develoDers. 

What WOMAC Needs 

WOMAC's principals are 

community organizers and have 

a very broad range of 

experience in consensus 

building and in advocacy before 

private and governmental 

bodies. However, WOMAC's 

Bringing Residents and Merchants Together 

Concept Statement 6/3/03 Page 5 of 7 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 92 of 109
principals are not real estate 

developers, merchandising 

specialists, or commercial 

leasing managers. In order for 

WOMAC to succeed, the 

merchant side of the table must 

perform in an optimum manner. 

Therefore, the success of 

WOMAC's involvement in 

advancing togetherness 

between the residential and the 

commercial communities of the 

West Oakland district requires 

WOMAC to enter into partnership with an entity or entities 

having the requisite commercial 

development and commercial 

management experience. 

WOMAC at this time has 

minimal financial resources. 

The principals of WOMAC 

continue to invest major 

portions of their time as 

volunteers in the nonprofit 

Acorn Residents' Council (CARI) 

and in WOHDI, a nonprofit 

entity designed to share the 

Acorn experience with other 

nonprofit residential community 

organizing projects. They 

maintain jobs and/or small 

businesses of their own for 

economic survival. Therefore, 

the success of WOMAC requires 

an infusion of sufficient funds to 

permit the WOMAC principals, 

or some of them, to rely on 

their WOMAC commitment as 

the principal, or substantially 

principal, source of their 

income. Issues such as the 

availability of suitable office 

space, equipment, staffing, and 

other startup and operating 

expenses will also have to be 

resolved before WOMAC can 

become an operational entity. 

Conclusion: A Historic 

Opportunity 

A central asset of the Acorn 

residential community and the 

Acorn marketplace area is their 

physical proximity. One only 

has to cross Market Street. The 

potential for a close and 

mutually satisfactory relationship certainly exists. To make 

that potential into a reality, 

merchants and the community 

need to enter into a conscious, 

planned partnership having 

specific program components 

and definable goals. The goal is 

to build an organizational 

bridge across Market Street. 

The pillar of that bridge on the 

community side has been abuilding for the past dozen 

years. It is the Acorn residents' 

association, built by the core 

group of community organizers 

who brought about the Acorn 

renaissance. Now these 

community activists, organized 

under the banner of WOMAC, 

stand ready to extend a hand of 

cooperation to the merchant 

community on the other side of 

the street. This is a historic 

opportunity for the entire West 

Oakland district and for the City 

of Oakland. 

Bringing Residents and Merchants Together 

Concept Statement 6/3/03 Page 6 of 7 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 93 of 109
momno 

Appendix: 

WOMAC's Principals 

[Names, photos, short sketches 

of WOMAC officers and 

directors] 

Bringing Residents and Merchants Together 

Concept Statement 6/3/03 Page 7 of 7 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 94 of 109
momno 

Appendix: The Principals of WOMAC 

The principals in the formation of WOMAC are long-time West Oakland community 

activists who are also the principals of WOHDI, the non-profit development entity, 

and of CARI (the Acorn Residents Council, also nonprofit). 

WOMAC Management Board 

* IANET L. PAnERSON, MANAGER 

- MARILYN HARRIS 

- GERMAINE DAVIS 

- MATTIE WHITFIELD 

* ERNESTINE NATHANIEL 

- ELEXIE BERRI 

- CONNIE PARKER 

Board of Directors of WOHDI: 

- IANET L. PATTERSON, PRESIDENT 

- MARILYN HARRIS, VICE PRESIDENT 

- GERMAINE DAVIS, SECRETARY 

* MATIE WHITFIELD, TREASURY 

Board of Directors of CARI (ACORN RESIDENTS COUNCIL) 

* JANET L. PATTERSON, PRESIDENT 

* 

- 

- CHIQUITA JOHNSON, TREASURER 

* MATTIE WHITFIELD, PARLIAMENTARIAN 

MARILYN HARRIS, 1ST VICE CHAIR 

GAIL BETY REYNOLDS, 2ND VICE CHAIR 

All members of the Board of Directors of the two nonprofit corporations and the 

Manager and members of the Management Board of WOMAC were founding members 

of the Acorn Residents' Council and and are elected courtyard representatives of the 

Town Center &Courtyards at Acorn currently. In addition, Janet Patterson and 

Marilyn Harris are members of the ownership board of the Town Center & Courtyards 

at Acorn. All of the board members are very active in the Acorn &West Oakland 

Communities. 

Taking an active role in mixed income and ownership development projects, the 

active residents and board members formed WOHDI in August 2001 and became part 

of the Bridge Corporation team. As such, this residents' group was instrumental in 

Bringing Residents and Merchants Together 

Concept Statement Appendix Page i 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 95 of 109
obtaining, publicizing, and starting up two Hope IV housing development projects, 

namely the ChestnutILinden Development and the Mandela Development. 

The principals have worked closely with other CBOs, foundations, and and private 

employers in an effort to obtain the maximum resources to meet the West Oakland 

community's needs. 

Toward that end, the principals (particularly Janet Patterson, Marilyn Harris, Mattie 

Whitfeld, Ernestine Nathaniel, and Germaine Davis) have for about seven years 

played an active role in the Community Development Block Grant board process. 

They have been involved in numerous funding recommendations and decisions 

affecting the community. 

This group of principals has also been actively involved in numerous other 

community initiatives over the past twelve years, including: 

- Community Policing 

- CAA board 

- Enhance Empowerment Committee 

- Enterprise Zone process 

- 

- Street planning processes 

* Seventh Street NCR project 

- McClymonds Initiatives 

- MTC Eighth Street Corridor improvement 

- Stopping the closing of the Market Street exit w/Cal Trains process 

- Workforce Investment Advisory 

- Advisory Committee on Youth to to the Police Department 

- Khadafy Foundation 

* Advisory board to lack London Gateway 

East Bay MUD'S Community Board 

As community leaders, the principals of WOMAC are also actively involved in local 

Churches, including Greater St. Paul, Zion Tabernacle Baptist, True Vine, and Victory 

Mission. 

Bringing Residents and Merchants Together 

Concept Statement Appendix Page ii 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 96 of 109
ATTACHMENT D 

Jack London Gateway Shopping Center 

. Project Development Budget 

C&ED 

Item: 5 

Committee 

October 14,2003 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 97 of 109
Description p~~ 

WSXN ~~~ ~ 

~ Cost to Date I 

Budget Actual ! Complete 

Cost to 

$2,970,000 $2,970,000 ~~ $0- 

~~~~~~~~~~ 

51,461 ~ p~~~ 1502 ENTITLEMENT FEES 

$6.732 56,732~ 

3002 PARKING 8 LANDSCAPE 

3798 CONTINGENCY 

~~~~ $1,539 ~ ~ ~~~ ~ 

$0 

~~ , 

. ~~~ ~~ ~ 

5000 PROJECT DEVELOPMENT ~ 

5004 ARCHITECT - ROOF ~~ ~~. $13,285 1 ~~ ~__________ $13.285 $0 

5005 ARCHITECT - PARKING LOT 1 $71,495 $71.495~ $0 

~ 5362 ~~ LEGAL-PROJECTTIFTELOPMENT $i05,000 $8o;ll I $24,889 

5001 ARCHITECT - BASE CONTRACT $131,575 $110,658 $20,917 

5003 ARCHITECT - ADDlTlONA~SERVlCE $69,639 $59.022~. $10.617 

 CONSULTANT- ADA $4000 $3,274 $726 

5109 BLUEPRINT-DELIVERY $3.500 i $2?204-p-$1,296 

5460 INSUm-N LIABILITY ~~~~ $25,000 $3,331~ $21,669 

5461 INSURANCE-B!LDERRlSK ~~ $25,000 $0 $25,000 

5463 ACCOUNTING AND AUDITING ~pp~p~ ___________ $12,750 ~ $750 I $12,000 

598 CONTINGENCY - $100.000 $0 ' $100,000 

~~ - p~ 

5900 OVERHEA~~ 

5901 DEVELOPER FEE ! $380,000 -EEALDC ~. ~~ 

5904 ADMINISTRATIVE 

5950 ~PP~sAL,~LEGAL,~TITLE~~ 

6012 ESCROWmlTLE FEES-LOAN 

618mPLACEMENT RESERVE ~~ $50,000 

6498 CONTINGENCY ~ ~~ ~~ ~ ~ ~ ~ ~ ~- ~~~ $12,000 

6600 INTEREST EXPENSE 

6610 PREDEVELOPMEN~AN INTEREST ~ ~pp~ $6.000 ~~ $4,500 ' $1,500 

6620 C~NST,RUCTION LOAN INTEREST ~~ $50,000 $50.000 

I $30,000 1 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 98 of 109
TOTAL CONSTRUCTION BUDGET $7,528,073 

TOTAL CONSTRUCTION CAPITAL S7,343,498 I 

ICAPITAL REQUIRED (TO BE RAISED BY CPD) $184,575 1 I 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 99 of 109
-.7 

OAKLAND CITY COUNCIL 

RESOLUTION No. C.M.S. 

A RESOLUTION AMENDING RESOLUTION NO. 75142 C.M.S TO 

REPLACE COMMUNITY PLAZA DEVELOPERS, LLC, WITH JLG 

ASSOCIATES, LLC, AS PURCHASER AND DEVELOPER OF 

THE JACK LONDON GATEWAY SHOPPING CENTER 

WHEREAS, on December 26,1996, the Redevelopment Agency of the City 

of Oakland acquired the Acorn Plaza Shopping Center at 900 Market Street, now 

known as the Jack London Gateway Shopping Center (the "Center" or the 

"Project"), to develop a new shopping center to provide jobs primarily within 

Oakland's Enhanced Enterprise Community ("EEC) areas and maintain services 

provided by the community shopping center: and 

WHEREAS, on November 4, 1997, the City Council, through Resolution 

No. 73913 C.M.S., authorized $4.2 million in HUD EEC funding to the Agency, of 

which $2.1 million was an EEC Section 108 loan, and $2.1 million was an 

Economic Development Initiative ("EDI") loan and grant, toward the acquisition and 

rehabilitation of the Center; and 

WHEREAS, Community Plaza Developers, LLC ("CPD") was selected 

through an RFP to manage, acquire, and develop the Center; and 

WHEREAS, CPD's members include East Bay Asian Local Development 

Corporation ("EBALDC"), Portfolio Properties, Inc. ("PPI"), and Westside Economic 

Development Corporation ('WEDC); and 

WHEREAS, on July 20, 1999, through Resolution No. 99-34 C.M.S., the 

Agency authorized the Agency Administrator or his designee to negotiate and 

enter into a Disposition and Development Agreement ("DDA) with CPD for the 

sale and rehabilitation of the Center: and 

WHEREAS, on July 20, 1999, through Resolution No. 75142 C.M.S., the 

City Council consented to the sale of the Center to CPD, authorized an additional 

$1.3 million in Section 108 and ED1 funding for the Center (pending approval by 

HUD), authorized the assignment of the Section 108 loan and the Economic 5- 1 Development Initiative funding (which was entirely converted 

DEVELOPMENT CmE 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 100 of 109
terms of Resolution No. 73913 C.M.S.) to CPD, and authorized the transfer of 

sales tax revenue from the Center to the Agency for five years to repay the Section 

108 loan; and 

WHEREAS, EBALDC and PPI are forming a new entity, JLG Associates, 

LLC, of which they are members, which will include West Oakland Marketplace 

Advancement Company ('WOMAC") in place of WEDC as the community 

member; and 

WHEREAS, the execution of the DDA and funding documents have been 

delayed pending resolution of issues related to the composition of the purchasing 

and development entity; now, therefore, be it 

RESOLVED: That the City Council hereby amends Resolution No. 75142 

C.M.S. to approve the sale of the Center and authorize the making of the Section 

108 loan and ED1 grant to JLG Associates, LLC, or an affiliated entity approved by 

the City Manager or her designee in her discretion; and be it further 

RESOLVED: That the City Council hereby affirms its appointment of the 

City Manager and her designee as agent of the City to conduct negotiations, 

execute documents, administer funding, extend or modify the repayment terms, 

and take any other action with respect to, Project funding and the Center 

consistent with this Resolution and its basic purpose. 

IN COUNCIL, OAKLAND, CALIFORNIA, ,2003 

PASSED BY THE FOLLOWING VOTE: 

AYES- BROOKS, BRUNNER, CHANG, NADEL, QUAN, REID, WAN, AND PRESIDENT 

DE LA FUENTE. 

NOESABSENTABSTENTIONATTEST: 

CEDA FLOYD 

City Clerk for the City of Oakland 

s. ' 

COMMUNIN 13 ECONWIC 

DEVELOPMENT CMTE 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 101 of 109
d - 

n TOVED AS TOFRXB -,l 5 . 

J 1 P 

0 

<it 

3 --n-< 

w b \Agency Couns -*A,,, 

\ /I+<( 

(J -0c ~ 

+ -4 

+ c, 

REDEVELOPMENT A/ AGENCY 

OF THE CITY OF OAKLAND 

57 

RESOLUTION No. C.M.S. 3- ?A 

A RESOLUTION AMENDING RESOLUTION NO. 99-34 C.M.S TO 

REPLACE COMMUNITY PLAZA DEVELOPERS, LLC, WITH JLG 

ASSOCIATES, LLC, AS PURCHASER AND DEVELOPER OF 

THE JACK LONDON GATEWAY SHOPPING CENTER 

WHEREAS, on December 26,1996, the Redevelopment Agency acquired 

the Acorn Plaza Shopping Center at 900 Market Street, now known as the Jack 

London Gateway Shopping Center (the "Center" or the "Project"), to develop a new 

shopping center to provide jobs primarily within Oakland's Enhanced Enterprise 

Community ("EEC) areas and maintain services provided by the community 

shopping center; and 

WHEREAS, on November 4, 1997, the City Council of the City of Oakland, 

through Resolution No. 73913 C.M.S., authorized $4.2 million in HUD EEC funding 

to the Agency, of which $2.1 million was an EEC Section 108 loan, and $2.1 

million was an Economic Development Initiative ("EDI") loan and grant, toward the 

acquisition and rehabilitation of the Center; and 

WHEREAS, Community Plaza Developers, LLC ("CPD) was selected 

through an RFP to manage, acquire, and develop the Center; and 

WHEREAS, CPD's members include East Bay Asian Local Development 

Corporation ("EBALDC), Portfolio Properties, Inc. ("PPI"), and Westside Economic 

Development Corporation ("WEDC"); and 

WHEREAS, on July 20, 1999, through Resolution No. 99-34 C.M.S., the 

Agency authorized the Agency Administrator or his or her designee to negotiate 

and enter into a Disposition and Development Agreement ("DDA) with CPD for 

the sale and rehabilitation of the Center: and 

WHEREAS, on July 20, 1999, through Resolution No. 75142 C.M.S., the 

City Council authorized an additional $1.3 million in Section 108 and ED1 funding 

for the Center, and authorized the assignment of the Section 108 loan (pending 

amroval bv HUD) and the Economic Development Initiative fundinq (which was 

s. a eniirely converted to a grant per the terms of Resolution No. 7391fC.M.S.) to 

CPD; and COMMUNW & ECoNOMlC 

DEVELOPMENT CMTE 

OCT 14 200 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 102 of 109
WHEREAS, the Agency through Resolution No. 99-34 C.M.S. authorized 

the Agency Administrator to assign the Section 108 and ED1 funding to CPD; and 

WHEREAS, the Agency through Resolution No. 99-34 C.M.S. also 

authorized a dedication of $1.5 million in proceeds from Acorn Redevelopment 

funds to repay $1.5 million of the HUD Section 108 loan, and an Agency grant in 

the amount of $439,500 from Acorn Redevelopment funds for the rehabilitation of 

the Center (which grant amount has since been spent by the Agency in 

rehabilitating the Center); and 

WHEREAS, EBALDC and PPI are forming a new entity, JLG Associates, 

LLC, of which they are members, which will include West Oakland Marketplace 

Advancement Company (“WOMAC”) in place of WEDC as the community 

member; and 

WHEREAS, the execution of the DDA and funding documents have been 

delayed pending resolution of issues related to the composition of the purchasing 

and development entity; now, therefore, be it 

RESOLVED: That the Redevelopment Agency hereby amends Resolution 

No. 99-34 C.M.S. to authorize the sale of the Center and the provision of Agency 

financial assistance to the Project to JLG Associates, LLC, or an affiliated entity 

approved by the Agency Administrator or her designee in her discretion; and be it 

further 

RESOLVED: That the Agency hereby affirms its appointment of the 

Agency Administrator and her designee as agent of the Agency to conduct 

negotiations, execute documents, administer funding, extend or modify the 

repayment terms, and take any other action with respect to the DDA, Project 

funding, and the Center consistent with this Resolution and its basic purpose. 

IN AGENCY, OAKLAND, CALIFORNIA, ,2003 

PASSED BY THE FOLLOWING VOTE: 

AYES- BROOKS, BRUNNER, CHANG, NADEL. QUAN, REID, WAN, AND 

CHAIRPERSON DE LA FUENTE, 

NOESABSENTABSTENTIONATTEST: 

CEDA FLOYD - - Secretarv of the Redeveloment / 

’of the City of Oakland 

COMIVILliW” h, ECONOMIC 

DEVELOPMENT CMTE 

OCT 14 2003 

Case 3:17-cv-00223-RS Document 68-1 Filed 02/15/17 Page 103 of 109
EXHIBIT 6 

DECLARATION OF STEPHEN G. PREONAS IN SUPPORT OF 

INTERESTED PARTIES WOMAC PROPERTIES, INC. AND JLG 

ASSOCIATES, LLC’S OPPOSITION TO PLAINTIFF’S MOTION 

FOR PRELIMINARY INJUNCTION AND APPOINTMENT OF 

RECEIVER 

SEC v. SAN FRANCISCO REGIONAL CENTER, 

LLC, et al.

NORTHERN DISTRICT OF CALFORNIA 

CASE NO. No. 3:17-CV-00223-RS 

DESCRIPTION OF DOCUMENT: 

Order to Show Cause in Alameda Superior Court 

Case No. RG 15-785236 Entitled WOMAC 

Properties, Inc., et al. v San Francisco Regional 

Center, LLC

EXHIBIT 6

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