amended and restated operating agreement of...

AMENDED AND RESTATED

OPERATING AGREEMENT

OF

ECHO PARK DOUGLAS, LLC

AMENDED AND RESTATED

OPERATING AGREEMENT

OF

ECHO PARK DOUGLAS, LLC

This Amended and Restated Operating Agreement of Echo Park Douglas, LLC, a limitedliability company (formerly Roseville Gibson West, LLC) organized pursuant to the CaliforniaState Limited Liability Company Act is entered into and shall be effective as of the EffectiveDate, by and among the Company and the persons executing this Agreement as Members, andamends and restates that certain Operating Agreement of Roseville Gibson West, LLC dated May6, 2011.

ARTICLE I - DEFINITIONS. For purposes of this Company Agreement (as defined below),unless the context clearly indicates otherwise, the following terms shall have the followingmeanings:

1.1 Act - The State Limited Liability Act and all amendments thereto.1.2 Additional Member - A Member other than an Initial Member or a SubstituteMember who has acquired a Membership Interest from the Company.

1.3 Admission Agreement - The Agreement between an Additional Member and theCompany described in Article XIII.

1.4Agreement

Affiliate — A company owned by or under common control by any party to this

1.5 Articles - The Articles of Organisation of the Com.pany as properly adopted andamended from time to time by the Members and filed with the Secretary of State.1.6 Assignee - A transferee of a Membership Interest who has not been admitted as aSubstituted Member.

1.7 Bankrupt Member - A Member who: (1) has become the subject of an Order forRelief under the United States Bankruptcy Code, (2) has initiated, either in an originalProceeding or by way of answer in any state insolvency or receivership proceeding, an action forliquidation arrangements, composition, readjustment, dissolution, or similar relief.1.8 Business Day - Any day other than Saturday, Sunday or any legal holidayobserved in the State.

1.9 Capital Account - The account maintained for a Member or Assignee determinedin accordance with Article VIII.

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1.10 Capital Contribution - Any contribution of Property, services or the obligation tocontribute Property or services made by or on behalf of a Member or Assignee.

1.11 Code - The Internal Revenue Code of 1986, as amended from time to time.

1.12 Commitment - The Capital Contributions that a Member or Assignee is obligatedto make.

1.13 Company - Echo Park Douglas, LLC, a limited liability company formed underthe laws of the State, and any successor limited liability company.

1.14 Company Agreement - This Operating Agreement, including all AdmissionAgreements, and amendments adopted in accordance with the Company Agreement and the Act.

1.15 Company Liability - Any enforceable debt or obligation for which the Company isliable or which is secured by any Company Property.

1.16 Company Minimum Gain - An amount determined by first computing for eachCompany Nonrecourse Liability any gain the Company would realize if it disposed of theCompany Property subject to that liability for no consideration other than full satisfaction of theliability, and then aggregating the separately computed gains. The amount of Company MinimumGain includes such minimum gain arising from a conversion, refinancing, or other change to adebt instrument, only to the extent a Member is allocated a share of that minimum gain. For anyTaxable Year, the net increase or decrease in Company Minimum Gain is determined bycomparing the Company Minimum Gain on the last day of the immediately preceding TaxableYear with the Minimum Gain on the last day of the current Taxable Year. Notwithstanding anyprovision to the contrary contained herein, Company Minimum Gain and increases and decreasesin Company Minimum Gain are intended to be computed in accordance with Section 704 of theCode the Regulations issued thereunder, as the same may be issued and interpreted from time totime. A Member's share of Company Minimum Gain at the end of any Taxable Year equals: thesum of Nonrecourse Deductions allocated to that Member (and to that Member's predecessors ininterest) up to that time and the distributions made to that Member (and to that Member'spredecessors in interest) up to that time of proceeds of a nonrecourse liability allocable to anincrease in Company Minimum Gain minus the sum of that Member's (and that Member'spredecessors' in interest) aggregate share of the net decreases in Company Minimum Gain plustheir aggregate share of decreases resulting from revaluations of Company Property subject toone or more Company Nonrecourse Liabilities.

1.17 Company Nonrecourse Liability - A Company Liability to the extent that noMember or Related Person bears the economic risk of loss (as defmed in Section 1.752-2 of theRegulations) with respect to the liability.

1.18 Company Property - Any Property owned by the Company.

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1.19 Contributing Members - Those Members making contributions as a result of thefailure of a Delinquent Member to make the contributions required by the Commitment asdescribed in Article VIII.

1.20 Default Interest Rate - The higher of the legal rate or the then-current prime ratequoted by the largest commercial bank in the jurisdiction of the Principal Office plus threepercent (3%).

1.21 Delinquent Member - A Member or Assignee who has failed to meet theCommitment of that Member or Assignee.

1.22 Distribution - A transfer of Property to a member on account of a MembershipInterest as described in Article IX.

1.23 Disposition (Dispose) - Any sale, assignment, transfer, exchange, mortgage,pledge, grant, hypothecation, or other transfer, absolute or as security or encumbrance (includingdispositions by operation of law).

1.24 Dissociation - Any action which causes a Person to cease to be Member asdescribed in Article XII hereof.

1.25 Dissolution Event - An event, the occurrence of which will result in thedissolution of the Company under Article XIV unless the Members agree to the contrary.1.26 Effective Date - February 27, 2012.

1.27 Immediate Family - A Member's Immediate Family includes the Member'sspouse, children (including natural, adopted and stepchildren), grandchildren, and parents.1.28 Initial Capital Contribution - The Capital Contribution agreed to be made by theInitial Members as described in Article VIII.

1.29 Initial Members - Those persons identified on Exhibit "A" attached hereto andmade a part hereof by this reference who have executed the Company Agreement.

1.30 Majority - The affirmative vote or consent of Members described as a "Majority"in Article VI hereof, with "Majority" specifically defined as the unanimous vote or consent of theMembers.

1.31 Management Right - The right of a Member to participate in the management ofthe Company, including the rights to information and to consent or approve actions of theCompany.

1.32 Managers; Managing Members - In the case that a non-Member is authorized andappointed to manage the affairs of the Company under Article VII hereof, the person(s) orentity(ies) so appointed shall be the Managers. In the case that a Member is appointed to manage-32012-74360.01Tcho Park Douglas LLC

the affairs of the Company under Article VII hereof, the person(s) or entity(ies) so appointedshall be the Managing Member. In cases where the term Managing Member is used and there isno Managing Member the Managers shall have that authority, unless the context or by applicablelaw provides otherwise.

1.33 Member - Initial Member, Substituted Member or Additional Member, and,unless the context expressly indicates to the contrary, includes Managing Members andAssignees (but only to the extent of the Assignee's economic interest, and without vesting in anyAssignees any voting rights or rights, privileges and authorities of membership).1.34 Member Minimum Gain - An amount determined by first computing for eachMember Nonrecourse Liability any gain the Company would realize if it disposed of theCompany Property subject to that liability for no consideration other than full satisfaction of theliability, and then aggregating the separately computed gains. The amount of Member MinimumGain includes such minimum gain arising from a conversion, refinancing, or other change to adebt instrument, only to the extent a Member is allocated a share of that minimum gain. For anyTaxable Year, the net increase or decrease in Member Minimum Gain is determined bycomparing the Member Minimum Gain on the last day of the immediately preceding TaxableYear with the Minimum Gain on the last day of the current Taxable Year. Notwithstanding anyprovision to the contrary contained herein, Member Minimum Gain and increases and decreasesin Member Minimum Gain are intended to be computed in accordance with Section 704 of theCode the Regulations issued thereunder, as the same may be issued and interpreted from time totime.

1.35 Member Nonrecourse Liability - Any Company Liability to the extent the liabilityis nonrecourse under state law, and on which a Member or Related Person bears the economicrisk of loss under Section 1.752-2 of the Code because, for example, the Member or RelatedPerson is the creditor or a guarantor.

1.36 Money - Cash or other legal tender of the United States, or any obligation that isimmediately reducible to legal tender without delay or discount. Money shall be considered tohave a fair market value equal to its face amount.

1.37 Net Losses - The losses and deductions of the Company determined in accordancewith accounting principles consistently applied from year to year employed under the method ofaccounting adopted by the Company and as reported separately or in the aggregate, asappropriate, on the tax return of the Company filed for federal income tax purposes.1.38 Net Profits - The income and gains of the Company determined in accordancewith accounting principles consistently applied from year to year employed under the method ofaccounting adopted by the Company and as reported separately or in the aggregate, asappropriate, on the tax return of the Company filed for federal income tax purposes.1.39 Nonrecourse Liabilities - Nonrecourse liabilities include Company NonrecourseLiabilities and Member Nonrecourse Liabilities.

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1.40 Notice - Notice shall be in writing. Notice to the Company shall be consideredgiven when mailed by first class mail postage prepaid addressed to any Manager in care of theCompany at the address of Principal Office. Notice to a Member shall be considered given whenmailed by first class mail postage prepaid addressed to the Member at the address reflected in theCompany Agreement unless the Member has given the Company a Notice of a different address.1.41 Offsettable Decrease - Any allocation that unexpectedly causes or increases adeficit in the Member's Capital Account as of the end of the taxable year to which the allocationrelates attributable to depletion allowances under Section 1.704 (b)(2)(iv)(k) of the Regulations,allocations of loss and deductions under Section 704(e)(2) or 706 of the Code or under Section1.751-1 of the Regulations, or distributions that, as of the end of the year are reasonably expectedto be made to the extent they exceed the offsetting increases to such Member's Capital Accountthat reasonably are expected to occur during or (prior to) the taxable years in which the suchdistributions are expected to be made (other than increases pursuant to a Minimum GainChargeback).

1.42 Organization - A Person other than a natural person. Organization includes,without limitation, corporations (both non-profit and other corporations), partnerships (bothlimited and general), joint ventures, limited liability companies, and unincorporated associations,but the term does not include joint tenancies and tenancies by the entirety.

1.43 Organization Expenses - Those expenses incurred in the organization of theCompany including the costs of preparation of the Company Agreement and Articles.1.44 Permitted Transferee - Any member of the Member's Immediate Family, or anOrganization controlled by such Member or by members of the Member's Immediate Family;provided however that such transferee shall receive an undivided Membership Interest andSharing Ratio of the transferor Member's Membership Interest with no greater rights to vote orotherwise act beyond those rights that constitute the sum of the rights afforded to the transferorMember, unless specifically authorized by the unanimous vote of the other Members and inaccordance with any additional terms and conditions approved by the other Members.

1.45 Person - An individual, trust, estate, or any incorporated or unincorporatedorganization permitted to be a member of a limited liability company under the laws of the State.1.46 Planet Home Living — Shall refer to Planet Home Investments, LLC, Planet HomeDevelopment, LLC and/or any Affiliate thereof.

1.47 Proceeding - Any administrative, judicial, or other adversary proceeding,including, without limitation, litigation, arbitration, administrative adjudication, mediation, andappeal or review of any of the foregoing.

1.48 Property - Any property real or personal, tangible or intangible, including moneyand any legal or equitable interest in such property, but excluding services and promises toperform services in the future.


1.49 Regulations - Except where the context indicates otherwise, the permanent,temporary, proposed, or proposed and temporary regulations of Department of the Treasuryunder the Code as such regulations may be lawfully changed from time to time.

1.50 Related Person - A person having a relationship to a Member that is described inSection 1.752-4(b) of the Regulations.

1.51 Resignation - The act by which a Manager ceases to be a Manager.

1.52 Sales Price — With respect to each Unit Sale, the base purchase price for suchUnit,lalLs lot, view, option, upgrade and or other premiums paid for such unit, less, salesconcessions amounts attributable to such Unit Sale.

1.53 Sharing Ratio - With respect to any Member, a fraction (expressed as apercentage), the numerator of which is the Member's Interest expressed as a percentage, numberof shares, or number of units of a particular Member (or Assignee) and the denominator is thetotal of the Members' Interests (including Assignees) similarly expressed (as a percentage,number of shares, or units).

1.54 State - The State shall be California,

1.55 Substitute Member - An Assignee who has been admitted to all of the rights ofmembership pursuant to the Company Agreement.

1.56 Taxable Year - The taxable year of the Company as determined pursuant toSection 706 of the Code.

1.57 Taxing Jurisdiction - Any state, local, .or foreign government that collects tax,interest or penalties, however designated, on any Member's share of the income or gainattributable to the Company.

ARTICLE II - FORMATION.

2.1 Organisation - The Members hereby organize the Company as a State limitedliability company pursuant to the provisions of the Act.

2.2 Agreement - For and in consideration of the mutual covenants herein containedand for other good and valuable consideration, the receipt and sufficiency of which is herebyacknowledged, the Members executing the Company Agreement hereby agree to the terms andconditions of the Company Agreement, as it may from time to time be amended according to itsterms. It is the express intention of the Members that the Company Agreement shall be the solesource of agreement of the parties, and, except to the extent a provision of the CompanyAgreement expressly incorporates federal income tax rules by reference to sections of the Codeor Regulations or is expressly prohibited or ineffective under the Act, the Company Agreementshall govern, even when inconsistent with, or different than, the provisions of the Act or any- 6 -2012-74360.011Echo Park Douglas LLC

other law or rule. To the extent any provision of the Company Agreement is prohibited orineffective under the Act, the Company Agreement shall be considered amended to the smallestdegree possible in order to make the agreement effective under the Act. In the event the Act issubsequently amended or interpreted in such a way to make any provision of the CompanyAgreement that was formerly invalid valid, such provision shall be considered to be valid fromthe effective date of such interpretation or amendment.

2.3 Name - The name of the Company is Echo Park Douglas, LLC, a Californialimited liability company, and all business of the Company shall be conducted under that name orunder any other name, but in any case, only to the extent permitted by applicable law.

2.42012.

Effective Date - The Company Agreement shall become effective February 27.

2.5 Term - The term of the Company's existence shall be perpetual unless theCompany shall be sooner dissolved and its affairs wound up in accordance with the Act or theCompany Agreement, as it may from time to time be amended.

2.6 Registered Agent and Office - The registered agent for the service of process andthe registered office shall be that Person and location reflected in the Articles as filed in theoffice of the Secretary of State. The Managers, may, from time to time, change the registeredagent or office through appropriate filings with the Secretary of State. In the event the registeredagent ceases to act as such for any reason or the registered office shall change, the Managers shallpromptly designate a replacement registered agent or file a notice of change of address as thecase may be. If the Managers shall fail to designate a replacement registered agent or change ofaddress of the registered office, any Member may designate a replacement registered agent or filea notice of change of address.

2.7 Principal Office - The Principal Office of the Company shall be located at 1048Irvine Avenue #421, Newport Beach, California 92660.

ARTICLE III - NATURE OF BUSINESS. The Company may engage in any lawful businesspermitted by the Act or the laws of any jurisdiction in which the Company may do business. TheCompany shall have the authority to do all things necessary or convenient to accomplish itspurpose and operate its business as described in this Article M. The Company exists only for thepurpose specified in this Article III, and may not conduct any other business without theunanimous consent of the Members. The authority granted to the Managers hereunder to bind theCompany shall be limited to actions necessary or convenient to this business.3.1 Primary Purpose - The Company's primary purpose shall be to obtain thenecessary entitlements for the real property located at Douglas/Montana Street, Echo Park,California ("Property"), to build seventeen (17) small lot ordinance, detached homes ("Project").The sole purpose of the Company will be to hold the Property for investment and obtainnecessary entitlements for the Property. Entitlements will be defined as an approved ParcelMap/Tentative Tract Map pursuant to the "Small Lot Ordinance" and any other governmentalapproval required by the city or any governmental body for the development of the Project. The

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intent of the Company and its Members is to procure final engineering and recordation ofapproved subdivision to build out before any sale of the Company Property.

ARTICLE IV - ACCOUNTING AND RECORDS,

4.1 Records to be Maintained - The Company shall maintain the following records atthe Principal Office:

4.1.1 A current list of the full name and last known business address of eachMember partner set forth;

4.1.2 A copy of the Articles of Organization and all amendments thereto,together with executed copies of any powers of attorney pursuant to Which any Articles havebeen executed;

4.1.3 Copies of the Company's federal, foreign, state and local income taxreturns and reports, if any, for the three (3) most recent years;

4.1.4 Copies of the Company Agreement including all amendments thereto;4.1.5 Any financial statements of the Company for the three (3) most recentyears;

4.1.6 A writing or other data compilation from which information can beobtained through retrieval devices into reasonably usable form setting forth the following;

4.1.6.1 The amount of cash and a description and statement of the agreedvalue of the other property or services contributed by each Member and which each Member hasagreed to contribute;

4.1.6.2 The times at which or events on the happening of which anyadditional Commitments agreed to be made by each Member are to be made;

4.1.6.3 Any right of a Member to receive, or of the Company to make,distributions to a Member which include a return of all or any part of the Member's CapitalContribution; and

4.1.6.4 Any events upon the happening of which the Company is to bedissolved and its affairs wound up.

4.2 Reports to Members -

4.2.1 The Managers shall provide reports at least annually to the Members otherthan Assignees at such time and in such manner as the Managers may determine reasonable.

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4.2.2 The Managers shall provide all Members with those information returnsrequired by the Code and the laws of any state by March 1 of each year.

4.2.3 Planet Home Living shall provide to EP Investors I, LLC ("EP Investors")a monthly accounting for the Company, which shall include, but is not limited to a BalanceSheet, Profit and Loss Statement, and an updated Project Budget with accounting for all expensesincurred by the Company coded to their specific budget category. Reports will be provided to EPInvestors by the 10th of the each month for the previous month's reports.

4.3 Accounts - The Managers shall maintain a record of Capital Account for eachMember in accordance with Article VIII.

ARTICLE V - NAMES AND ADDRESSES OF MEMBERS. The names and addresses of theInitial Members are as reflected on Exhibit "A" attached hereto and by this reference made a parthereof as if set forth fully herein.

ARTICLE VI - RIGHTS AND DUTIES OF MEMBERS.

6.1 Management Rights - All Members (other than Assignees) who have notDissociated shall be entitled to vote on any matter submitted to a vote of the Members.Notwithstanding the foregoing, the following actions require the unanimous consent of theMembers:

6.1.1 Any amendment to this Company Agreement;

6.1.2 The continuation of the Company after a Dissolution Event;

6.1.3 The approval of an annual operating budget for Company;

6.1.4 Any capital expenditures of the Company not otherwise approved in anapproved budget in excess of five thousand dollars ($5,000.00) per item; any revision in excessof five thousand dollars ($5,000) to the Company's approved budget;

6.1.5 A sale of the Company's assets not in the ordinary course of business;

6.1.6 Any loans or extensions of credit to Company in excess of five thousanddollars ($5,000.00); and

6.1.7 Any request for capital from the Members beyond their Initial CapitalContribution.

6.3 Liability of Members - No Member shall be liable as such for the liabilities of theCompany. The failure of a limited liability company to observe any formalities or requirementsrelating to the exercise of its powers or management of its business or affairs under this

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agreement or the Act shall not be grounds for imposing personal liability on the Members orManagers for liabilities of the limited liability company.

6.4 Indemnification - The Company shall indemnify the Members, Managers, andagents for all costs, losses, liabilities, and damages paid or accrued by such Member, Manager oragent in connection with the business of the Company, to the fullest extent provided or allowedby the laws of the State.

6.5 Representations and Warranties - Each member, and in the case of anorganization, the person(s) executing the Company Agreement on behalf of the organization,hereby represents and warrants to the Company and each other Member that: (a) if that Memberis an organization, that it is duly organized, validly existing, and in good standing under the lawof its state of organization and that it has full organizational power to execute and agree to theCompany Agreement to perform its obligations hereunder; (b) that the Member is acquiring itsinterest in the Company for the Member's own account as an investment and without an intent todistribute the interest; (c) the Member acknowledges that the interests have not been registeredunder the Securities Act of 1933 or any state securities laws, and may not be resold or transferredby the Member without appropriate registration or the availability of an exemption from suchrequirements.

6.6 Conflicts of Interest -

6.6.1 A Member shall be entitled to enter into transactions that may beconsidered to be competitive with, or a business opportunity that may be beneficial to, theCompany it being expressly understood that some of the Members may enter into transactionsthat are similar to the transactions into which the Company may enter. Notwithstanding theforegoing, Members shall account to the Company and hold as trustee for it any property, profit,or benefit derived by the Member, without the consent of the other Members, in the conduct andwinding up of the Company business or from a use or appropriation by the Member of Companyproperty including information developed exclusively for the Company and opportunitiesexpressly offered to the Company.

6.6.2 The Managers and the Members do not violate a duty or obligation to theCompany merely because the Manager's or Member's conduct furthers its own interest. AManager or Member may lend money to and transact other business with the Company. Therights and obligations of a Manager or Member who lends money to or transacts business withthe Company are the same as those of a person who is not a Manager or Member, subject to otherapplicable law. No transaction with the Company shall be voidable solely because a Manager orMember has a direct or indirect interest in the transaction if either the transaction is fair to theCompany or a disinterested Manager or disinterested Members, in either case knowing thematerial facts of the transaction and the Manager's or Member's interest, authorize, approve, orratify the transaction.

VII - MANAGERS AND OFFICERS.


7.1 Managers - Subject to the terms and conditions of this Company Agreement andthe applicable provisions of the Act, the Managers shall, in general, serve the Company in thesame manner that a board of directors serves its corporation. The ordinary and usual decisionsconcerning the business affairs of the Company shall be made by the Managers. A unanimousvote of the Sharing Ratios of the Members shall have authority to appoint or remove theManagers of the Company. As of the Effective Date, the Managers shall be Planet HomeInvestments, LLC ("PHL Investments") and EP Investors. The Managers may appoint Officers ofthe Company to manage day-to-day operations of Company.

7.2 Term of Office as Managers - No Manager shall have any contractual right to suchposition. Each Manager shall serve until the earliest of:

72.1 The Dissociation of such Manager if also a Member;

72.2 Removal of the Managers or termination of their term of office.7.3 Authority of Members to Bind the Company - Except as limited by Paragraph 6.1of this Agreement, the Members hereby agree that only the Managers and authorized agents ofthe Company shall have the authority to bind the Company. Subject to the written unanimousconsent of the Managers to take action, each Manager has the power, on behalf of the Company,to do all things necessary or convenient to carry out the business and affairs of the Company,including but not limited to those actions set forth in this Article, Paragraph 7.3, below:

7.3.1 The institution, prosecution and defense of any Proceeding in theCompany's name;

7.3.2 The purchase, receipt, lease or other acquisition, ownership, holding,improvement, use and other dealing with, Property, wherever located;

7.3.3 The sale, conveyance, mortgage, pledge, lease, exchange, and otherdisposition of Property;

7.3.4 The entering into contracts and guaranties; incurring of liabilities;borrowing money, issuance of notes, bonds, and other obligations; and the securing of any of itsobligations by mortgage or pledge of any of its. Property or income;

7.3.5 The lending of money, investment and reinvestment of the Company'sfunds, and receipt and holding of Property as security for repayment, including, withoutlimitation, the loaning money to, and otherwise helping Members, officers, employees, andagents;

7.3.6 The conduct of the Company's business, the establishment of Companyoffices, and the exercise of the powers of the Company within or without the State;

7.3.7 The appointment of employees and agents of the Company, the defining oftheir duties, the establishment of their compensation;- 11 -2012-74360.01 \Echo Park Douglas LLC

7.3.8 The payment or donation, or any other act that furthers the business andaffairs of the Company;

7.3.9 The payment of compensation, or additional compensation to any or allMembers, and employees on account of services previously rendered to the limited liabilitycompany, whether or not an agreement to pay such compensation was made before such serviceswere rendered;

7.3.10 The purchase of insurance on the life of any of its Members, or employeesfor the benefit of the Company;

7.3.11 The participation in partnership agreements, joint ventures, or otherassociations of any kind with any person or persons;

7.3.12 The indemnification of Members or any other Person.7.4 Actions of the Managers - Each Manager when acting under the unanimousapproval or consent of all Managers has the power to bind the Company as provided in thisArticle VII. Any difference arising as to any matter within the authority of the Managers shall bedecided by a unanimous number of the Managers. No act of a Member in contravention of suchdetermination shall bind the Company to Persons having knowledge of such determination.7.5 Managers' Standard of Care - A Manager's duty of care in the discharge of theManager's duties to the Company and the other Members is limited to refraining from engagingin grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law.In discharging its duties, a Manager shall be fully protected in relying in good faith upon therecords required to be maintained under Article IV and upon such information, opinions, reportsor statements by any of its other Managers, Members, or agents, or by any other person, as tomatters the Manager reasonably believes are within such other person's professional or expertcompetence and who has been selected with reasonable care by or on behalf of the Company,including information, opinions, reports or statements as to the value and amount of the assets,liabilities, profits or losses of the Company or any other facts pertinent to the existence andamount of assets from which distributions to members might properly be paid.

7.6 Removal of Manager - Any Manager may be removed by the affirmativeunanimous vote of the Members.

7.7 Project Management - The Company shall designate Planet Home Living asresponsible for management and implementation of the project plan for the Company Property.The Company shall pay a project management fee to Planet Home Living for timelyimplementation and management of the plan, which shall include entitlement, construction andsales management. If any delay is incurred by the Project that impacts the critical path by morethan thirty (30) days, as reasonably determined by EP Investors, the project management fee maybe suspended at EP Investors sole discretion until such work commences again. Planet HomeLiving shall be entitled to and be paid a project management fee in an amount of one hundred122012-74360.01 \Echo Park Douglas LLC

forty thousand dollars ($140,000.00) for Douglas Street, and one hundred eighty thousand dollars($180,000.00) for Montana Street, payable monthly at the rate of fourteen thousand dollars($14,500.00) per month for twenty-two (22) months, commencing and payable March 1, 2012.The management fee is ultimately based on three percent (3%) of the Project Sales Price andshall be adjusted accordingly. Payments are due at the first of the month for the current month'smanagement fee.

7.8 Equity Procurement Fee - GKH Management, LLC ("GKH") shall be paid anEquity Procurement Fee of one and one-half percent (1.5%) of Project Sales Price as set forth inSection IX.

7.9 Services of Planet Home Investments, LLC

7.9.1 Management - Planet Home Living shall be responsible for the day-to-daymanagement of the Project, including project management, accounting and timely reporting ofstatus and progress of the Project. Planet Home Living shall use its best commercial efforts andbe responsible for obtaining construction financing and bonding for the Project.

7.9.2 Construction Financing - Planet Home Living shall deliver to EPInvestors copies of each of the following documents promptly following Planet Home Living'sreceipt of the same from Construction Lender or its counsel: (i) each draft of any preliminary orfinal loan commitment, and (ii) each preliminary and or final draft of all documents orinstruments embodying, evidencing or securing the Construction Loan. The loan commitments,documents and instruments referred to in the preceding (i) and (ii) are collectively referred to asthe. Construction. Loan Documents. Planet Home Living hereby acknowledges and agrees that allConstruction Loan Documents and the final terms and conditions thereof shall be subject to theprior written approval of EP Investors, which shall not be unreasonably withheld. EP Investorsagrees to provide financial information to the prospective lenders but shall not be required topersonally guarantee any Construction Loan. For a Fee of 10% of the total profits of theCompany, EP Investors may, but is not required to, provide a guarantee to the satisfaction of EPInvestors for said Construction Loan. For clarification, if EP Investors is required to guaranteethe Construction Loan, the Profit Split as defined in 9.5.2.1 due to Planet Home Living will bereduced from 40% to 30% and that 10% will be transferred to EP Investors or an Affiliate asdetermined by EP Investors.

7.9.3 Warranty - Planet Home Living shall assume responsibility for all repairsto Units, defined as any residential dwelling constructed, owned or sold by the Company, underwarranty or applicable law, and Planet Home Living agrees to indemnify, defend and hold EPInvestors harmless from any loss, cost, claim or expense (including attorney's fees) incurred byEP Investors and arising from a claim of a Unit owner under a Unit warranty or because of analleged defect (or similar claim) in a Unit.

7.9.4 Bonding — Planet Home Living shall be responsible for obtaining anyimprovement bonds required by any governmental agencies and will be responsible for postingany collateral, letters of credit or personal guarantees for such bonding capacity required by theProject. In the event that Planet Home Living is unable to obtain the required improvement-13 -2012-74360.01Tcho Park Douglas LLC

bonds, EP Investors, or one if its Affiliates, may, but shall not be required to, obtain such bondsand provide any required collateral, letters of credits, or personal guarantee required. If EPInvestors, or one of its affiliates, provides such bonding and/or provides collateral, letters ofcredit, or personal guarantee for any required bonding, EP Investors, or its Affiliates, shallreceive as payment 10% of the face value of the bonds, or forty thousand dollars ($40,000),whichever is greater. This shall not be treated as a project expense, but shall be paid from thefirst proceeds due to Planet Home Living under section 9.5.1

ARTICLE VIII — CONTRIBUTIONS, CAPITAL ACCOUNTS AND BUDGET.8.1 Initial Contributions - Each Initial Member shall make the Capital Contributiondescribed in Section 8.8 below at the time and on the terms specified in Section 8.8 below andshall perform that Member's Commitment. No interest shall accrue on any Capital Contributionand no Member shall have the right to withdraw or be repaid any Capital Contribution except asprovided in this Company Agreement. Each Additional Member shall make the Initial CapitalContribution described in the Admission Agreement. The value of the Additional Member'sInitial Capital Contribution and the time for making such contribution shall be set forth in theAdmission Agreement.

8.2 Additional Contributions - None, unless the Members unanimously agree to anyadditional capital contributions and a capital call beyond their Initial Capital Contributions. Suchadditional contributions shall be made in the ratio of fifty percent (50%) from EP Investors andfifty percent (50%) from PHL Investments or in such ratios as they may mutually agree. Forexample, if the Project requires an additional one hundred thousand dollars ($100,000.00) infunding, EP Investors would be responsible for fifty thousand dollars ($50,000.00) and PHLInvestments for fifty thousand dollars ($50,000.00) in Additional Contributions. If PHLInvestments failed to make its contribution and EP Investors funded the shortfall, EP Investorswould get its additional one hundred thousand dollars ($100,000) back with the return of theproject capital, according to section 9.5.3.6, it would accrue a Preferred Return on its AdditionalCapital and EP Investors would be entitled to one hundred thousand dollars ($100,000.00) of thefirst proceeds due to PHL Investments under the Allocation of Proceeds.8.3 Enforcement of Commitments - In the event any Member (a Delinquent Member)fails to perform the Delinquent Member's Commitment, the Managers shall give the DelinquentMember a Notice of the failure to meet the Commitment. If the Delinquent Member fails toperform the Commitment (including any costs associated with the failure to demand compliancewith the Commitment and interest on such obligation at the Default Interest Rate) within ten (10)Business Days of the giving of Notice, the Managers may take such action, including but notlimited to enforcing the Commitment in the court of appropriate jurisdiction in the state in whichthe Principal Office is located or the state of the Delinquent Member's address as reflected in theCompany Agreement. Each Member expressly agrees to the jurisdiction of such courts but onlyfor the enforcement of Commitments. The Managers may elect to allow the other Members tocontribute the amount of the Commitment in proportion to such Members' sharing ratios, withthose Members who contribute (Contributing Members) to contribute additional amounts equalto any amount of the Commitment not contributed. The Contributing Members shall be entitledto treat the amounts contributed pursuant to this section as a loan from the Contributing Members

- 14 -2012-74360.0 ITcho Park Douglas LLC

bearing interest at the Default Interest Rate secured by the Delinquent Member's interest in theCompany. Until they are fully repaid the Contributing Members shall be entitled to allDistributions to which the Delinquent Member would have been entitled. Notwithstanding theforegoing, no Commitment or other obligation to make an additional contribution may beenforced by a creditor of the Company unless the Member expressly consents to suchenforcement or to the assignment of the obligation to such creditor.

8.4 Maintenance of Capital Accounts - The Company shall establish and maintainCapital Accounts for each Member and Assignee. Each Member's Capital Account shall beincreased by (1) the amount of any Money actually contributed by the Member to the capital ofthe Company, (2) the fair market value of any Property contributed, as determined by theCompany and the contributing Member at arm's length contributed, as determined by theCompany and the contributing Member at arm's length at the time of contribution (net ofliabilities assumed by the Company or subject to which the company takes such Property, withinthe meaning of Section 752 of the Code), and (3) the Member's share of Net Profits and of anyseparately allocated items of income or gain except adjustments of the Code (including any gainand income from unrealised income with respect to accounts receivable allocated to the Memberto reflect the difference between the book value and tax basis of assets contributed by theMember). Each Member's Capital Account shall be decreased by (1) the amount of any Moneydistributed to the Member by the Company, (2) the fair market value of any Property distributedto the Member (net of liabilities of the Company assumed by the Member or subject to which theMember takes such Property within the meaning of Section 752 of the Code), and (3) theMember's share of Net Losses and of any separately allocated items of deduction or loss(including any loss or deduction allocated to the Member to reflect the difference between thebook value and tax basis of assets contributed by the Member).

8.5 Distribution of Assets - If the Company at any time distributes any of its assets in-kind to any Member, the Capital Account of each Member shall be adjusted to account for theMember's allocable share (as determined under Article IX below) of the Net Profits or NetLosses that would have been realized by the Company had it sold the assets that were distributedat their respective fair market values immediately prior to their distribution.8.6 Sale or Exchange of Interest - In the event of a sale or exchange of some or all of aMember's Interest in the Company, the Capital Account of the Transferring Member shallbecome the capital account of the Assignee, to the extent it relates to the portion of the InterestTransferred.

8.7 Compliance with Section 704(b) of the Code - The provisions of this Article VIIIas they relate to the maintenance of Capital Accounts are intended, and shall be construed, and, ifnecessary, modified to cause the allocations of profits, losses, income, gain and credit pursuant toArticle IX to have substantial economic effect under the Regulations promulgated under Section704(b) of the Code, in light of the distributions made pursuant to Articles IX and XIV and theCapital Contributions made pursuant to this Article VTTT. Notwithstanding anything herein to thecontrary, this Company Agreement shall not be construed as creating a deficit restorationobligation or otherwise personally obligate any Member to make a Capital Contribution in excessof the Initial Contribution.- 15 -2012-74360.01Tcho Park Douglas LLC

8.8 Budget and Funding of Initial Capital - The Project shall be funded by equityinvestments of the Members pursuant to a schedule and Project budget, as mutually agreed by theMembers. The anticipated maximum equity investment contemplated under the terms of thisOperating Agreement is two million six hundred fifty thousand dollars ($2,650,000.00) asdefined in the attached Project budget. EP Investors shall provide ninety-two and one-halfpercent (92.5%) of the total Project capital and PHL Investments shall provide seven and one-half percent (7.5%) of the total Project capital. PHL Investments will contribute seventy-fivepercent (75%) of its capital contribution on or before March 12, 2012 with the remaining twenty-five percent (25%) shall be contributed as needed. EP Investors shall contribute its capitalcontribution as required in monthly draw requests submitted by PHL Investments. The Projectfunds will be drawn by the Company as needed based upon monthly draws or as requiredsubmitted by the first of each month and payable no later than fifteen (15) days thereafter.Business plans, budgets and performance to be provided by Planet Home Living and approved byall Members.

8.9 Required Deposits - The initial deposit of ten thousand dollars ($10,000.00) forDouglas Street is non-refundable on February 13, 2012 with Close of Escrow targeted for March13, 2012. The initial refundable deposit for Montana Street is twenty-five thousand dollars($25,000.00) and is due February 16, 2012. A second deposit of twenty-five thousand dollars($25,000.00) for Montana Street is due sixty (60) days after the initial deposit is due for a totaldeposit of fifty thousand dollars ($50,000.00). The entire Montana Street fifty thousand dollar($50,000.00) deposit is non-refundable at the time the second deposit is made.8.10 Reimbursements - All costs of the Project shall be reimbursed on the unanimousapproval of the Managers. These costs include, but are not necessarily limited to, (i) entityformation, (ii) market studies, (iii) legal, (iv) permits, (v) plan check fees, (vi) entitlement fees,(vii) government related expenses, and (viii) any and all agreed upon Project expenses.Reimbursement of costs to date shall be paid within fifteen (15) days from the execution of thisAgreement.

8.11 Member Loans - Nothing in this Agreement shall prevent any Member orManager from making secured or unsecured loans ("Member Loans") to the Company on suchterms as may be unanimously agreed to by the Managers.

ARTICLE IX - ALLOCATIONS AND DISTRIBUTIONS.

9.1 Allocations of Net Profits and Net Losses from Operations - Except as may berequired by Section 704(c) of the Code, and Sections 9.2, 9.3, 9.4, and 9.5 of this Article IX, netprofits, net losses, and other items of income, gain, loss, deduction and credit shall beapportioned among the Members as follows.

9.1.1 Net Profit Allocations: After give effect to the special allocations set forthin Sections 9.2, 9.3, 9.4, and 9.5, Net Profit for any fiscal year shall be allocated as follows:


9.1.1.1 First, to the Members in proportion to and to the extent of Net Lossallocated to the Members under Section 9.1.2 until the aggregate Net Profit allocated to Membersunder Section 9.1.1 for such fiscal year and all previous fiscal years is equal to the aggregate NetLoss allocated to the Members pursuant to Section 9.1.2 for all previous fiscal years;

9.1.1.2 Second, to the Members proportionately to the extent of interestpaid to Members on any Member Loans;

9.1.1.3 Third, to the Members in proportion to, and to an amount equal tothe distributions to such Member of Preferred Return pursuant to Section 9.5.3.5, until theaggregate allocation of Net Profit pursuant to this Section 9.1.1.3 is equal to the aggregatedistributions of Preferred Return;

9.1.1.4 Fourth, to the Members proportionately and to the extent ofdistributions pursuant to Sections 9.5.3.8

9.1.2 Net Loss Allocations: After give effect to the special allocations set forthin Sections 9.2, 9.3, 9.4, and 9.5 Net Loss for any fiscal year shall be allocated as follows

9.1.2.1 First, among the Members in proportion to and to the extent of NetIncome allocated to the Members under Sections 9.1.1.1 to 9.1.1.4, but in the reverse orderthereof until the aggregate Net Loss allocated pursuant to this Section 9.1.2.1 for such fiscal yearand all previous fiscal years equals the aggregate Net Income allocated to the Members pursuantto Sections 9.1.1.1 to 9.1.1.4 for all previous fiscal years.

9.1.2.2 Then, the remaining Net Loss to the Members in accordance withtheir respective Capital Contribution Ratio (provided that no Net Loss will be allocated to aMember to the extent such allocation will create a negative Capital Account for such Member).9.2 Company Minimum Gain Chargeback - If there is a net decrease in CompanyMinimum Gain for a Taxable Year, each Member must be allocated items of income and gain forthat Taxable Year equal to that Member's share of the net decrease in Company Minimum Gain.A Member's share of the net decrease in Company Minimum Gain is the amount of the total netdecrease multiplied by the Member's percentage share of the Company Minimum Gain at the endof the immediately preceding Taxable Year. A Member's share of any decrease in CompanyMinimum Gain resulting from a revaluation of Company Property equals the increase in theMember's Capital Account attributable to the revaluation to the extent the reduction in minimumgain is caused by the revaluation. A Member is not subject to the Company Minimum GainChargeback Requirement to the extent the Member's share of the net decrease in CompanyMinimum Gain is caused by a guarantee, refinancing, or other change in the debt instrumentcausing it to become partially or wholly a Recourse Liability or a Member Nonrecourse Liability,and the Member bears the economic risk of loss (within the meaning of Section 1.752-2 of theregulations) for the newly guaranteed, refinanced, or otherwise changed liability.

9.3 Member Minimum Gain Chargeback - If during a Taxable Year there is a netdecrease in Member Minimum Gain, any Member with a share of that Member Minimum Gain-17-2012-74360.011Echo Park Douglas LLC

(as determined under Section 1.704-2(i)(5) of the Regulations) as of the beginning of thatTaxable Year must be allocated items of income and gain for that Taxable Year (and, ifnecessary, for succeeding Taxable Years) equal to that Member's share of the net decrease in theCompany Minimum Gain. A Member's share of the net decrease in Member Minimum Gain isdetermined in a manner consistent with the provisions of Paragraph (g)(2) of this Section. AMember is not subject to this Member Minimum Gain Chargeback, however, to the extent thenet decrease in Member Minimum Gain arises because the liability ceases to be MemberNonrecourse Liability due to a conversion, refinancing, or other change in the debt instrumentthat causes it to become partially or wholly a Company Nonrecourse Liability. The amount thatwould otherwise be subject to the Member Minimum Gain Chargeback is added to the Member'sshare of Company Minimum Gain. In addition, rules consistent with those applicable toCompany Minimum Gain shall be applied to determine the shares of Member Minimum Gainand Member Minimum Gain Chargeback to the extent provided under the Regulations issuedpursuant to Section 704(b) of the Code.

9.4 Qualified Income Offset - In the event any Member, in such capacity,unexpectedly receives an Offsettable Decrease, such Member will be allocated items of incomeand gain (consisting of a pro rata portion of each item of partnership income and gain for suchyear) in an amount and manner sufficient to offset such Offsettable Decrease as quickly aspossible.

9.5 Distributions - From time to time, the Managers shall determine in theirreasonable judgment to what extent, if any, the Company's cash on hand exceeds the current andanticipated needs, including, without limitation, needs for operating expenses, debt service,acquisitions, reserves, and mandatory distributions, if any. To the extent such excess Companycash exists, the Managers may make distributions to the Members, as follows and in thefollowing priority:

9.5.1 Preferred Return - Prior to an approved a Tentative Tract Map, but no earlier thannine (9) months, commencing March 1, 2012, a preferred return will accrue on unreturned capitalinvested at the rate of fifteen percent (15%) per annum. After an approved Tentative Tract Map,but no earlier than nine (9) months from March 1, 2012, a preferred return will accrue onunreturned capital invested at a rate of ten percent (10%) per annum.

9.5.2 Profit Splits - In addition to the preferred return in Section 9.5.1, EP Investors andPHL Investments shall be entitled to the profits derived from the Project as further definedbelow, and subject to this Allocations and Distributions section:

9.5.2.1 Assuming a "build out" scenario, profits shall be allocated anddistributed sixty percent (60%) to EP Investors forty percent (40%) to PHL Investments,excluding preferred return and management fees.

9.5.2.2 In the event that the Members sell the Project before a "build out" otherthan what is addressed in section 9.5.2.3 below, profits, which specifically include and take intoaccount both Planet Home Living's three percent (3%) fee and GI H's one and a half percent

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(1.5%) fee, shall be allocated and distributed fifty percent (50%) to EP Investors and fifty percent(50%) to PHL Investments. (Preferred Return shall be paid prior to profit calculation.)

9.5.2.3 In the event that PHL Investments is unable to obtain ConstructionFinancing and Bonding for the Project, and EP Investors is unable or unwilling to satisfy thefinancial requirements to obtain Construction Financing or Bonding, the Company shall sell theProject before "build out", and profits shall be allocated and distributed sixty percent (60%) toEP Investors and forty percent (40%) to PHL Investments. (Preferred Return shall be paid priorto profit calculation.)

9.5.3 Allocation of Proceeds — Sale proceeds from the Project shall be allocated anddistributed:

9.5.3.1 First, to payment of any non-member third party loans obtained by theCompany, including principal, interest and any fees associated with such loan.

9.5.3.2 Second, to closing costs associated with the disposition of the Property.

9.5.3.3 Third, to any interest on said Member Loans made to the Company.

9.5.3.4 Fourth, any Member Loans made to the Company.

9.5.3.5 Fifth, to payment of any unpaid Preferred Return.

9.5.3.6 Sixth, to return of any unreturned capital.

9.5.3.7 Seventh, to the payment of the one and a half percent (1.5%) equityprocurement fee to GKH and any remaining unpaid management fee owed to Planet HomeLiving, paid pan passu.

9.5.3.8 Eighth, paid pursuant to each Member's profit splits as set forth inSection 9.5.2.

9.6 Disposition - If EP Investors and PHL Investments propose to sell the Project atany time, both EP Investors and PHL Investments, LLC shall be required to agree on terms to sellthe Property through a land broker, The Hoffman Company (Bryant Brislin), in order toeffectuate a sale. PHL Investments shall have first right of refusal to purchase Property afterreceipt and review of any and all offers.

9.7 Limitations on Distributions - No distribution shall be declared and paid unless,after the distribution is made, the assets of the Company are in excess of all liabilities of theCompany, except liabilities to Members on account of their Capital Accounts.

ARTICLE X - TAXES.

19 -2012-74360.01 \Echo Park Douglas LLC

10.1 Elections - The Managers may make any tax elections for the Company allowedunder the Code or the tax laws of any state or other jurisdiction having taxing jurisdiction overthe Company.

10.2 Taxes of Taxing Jurisdiction - To the extent that the laws of any TaxingJurisdiction requires, each Member requested to do so by the Managers will submit an agreementindication that the Member will make timely income tax payments to the Taxing Jurisdiction andthat the Member accepts personal jurisdiction of the Taxing Jurisdiction with regard to thecollection of income taxes attributable to the Member's income, and interest, and penaltiesassessed on such income. If the Member fails to provide such agreement, the Company maywithhold and pay over to such Taxing Jurisdiction the amount of tax, penalty and interestdetermined under the laws of the Taxing Jurisdiction with respect to such income. Any suchpayments with respect to the income of a Member shall be treated as a distribution for purposesof Article ix. The Managers may, where permitted by the rules of any Taxing Jurisdiction, file acomposite, combined or aggregate tax return reflecting the income of the Company and pay thetax, interest and penalties of some or all of the Members on such income to the TaxingJurisdiction, in which case the Company shall inform the Members of the amount of such taxinterest and penalties so paid.

10.3 Tax Matters Partner - Michael Marini shall act as tax matters partners of theCompany pursuant to Section 6231(a)(7) of the Code. Any Manager or Member designated as taxmatters partner shall take such action as may be necessary to cause each other Member to becomea notice partner within the meaning of Section 6223 of the Code. Any Manager or Member whois designated tax matter partner may not take any action contemplated by Section 6222 throughSection 6232 of the Code without the consent of the Managers.

10.4 Accrual Method of Accounting - The records of the Company shall be maintainedon an accrual method of accounting.

ARTICLE XI - DISPOSITION OF MEMBERSHIP INTERESTS.

11.1 Disposition - Any Member or Assignee may dispose of all or a portion of theMember's or Assignee's Membership Interest only upon compliance with this Section 11.1 andthe unanimous approval of all Members and Managers. No Membership Interest shall beDisposed of:

11.1.1 If such disposition, alone or when combined with other transactions,would result in a termination of the Company within the meaning of Section 708 of the Code;

11.1.2 Without an opinion of counsel satisfactory to the Managers that suchassignment is subject to an effective registration under, or exempt from the registrationrequirements of, the applicable state and federal securities laws;

11.1.3 Unless and until the Company receives from the Assignee the informationand agreements that the Managers may reasonably require, including but not limited to any


taxpayer identification number and any agreement that may be required by any TaxingJurisdiction;

11.1.5 As to the disposition of more than an Assignee's interest in theMembership interest, the Assignee shall not be admitted as a Member or Substitute Member,without having complied with the provisions of Article XIII, below.

11.2 Dispositions not in Compliance with this Article Void - Any attemptedDisposition of a Membership Interest, or any part thereof, not in compliance with this Article isnull and void ab initio.

11.3 No Member shall have any right or power to sell, mortgage, hypothecate or assignits Membership Interest, or any portion thereof, other than pursuant to Section 11.1, nor shall anyMember have the right to substitute another person or party in its place or stead without thewritten consent of all other Members, which consent may be granted or withheld in each suchMember's sold and absolute discretion. Any purported transfer in violation of the terms hereofshall be null and void.

ARTICLE XII - DISSOCIATION OF A MEMBER. Subject to the terms and provisions of aMember Buy Sell Agreement, as it may from time to time be amended, entered by and among theMembers with reference to their interests in this Company:

12.1 Dissociation - A Person shall cease to be a Member upon the happening of any ofthe following events:

12.1.1 The bankruptcy of a Member;

12.1.2 In the case of a Member who is a natural person, the death of the Memberor the entry of an order by a court of competent jurisdiction adjudicating the Memberincompetent to manage the Member's person estate;

12.1.3 In the case of a Member who is acting as a Member by virtue of being atrustee of a trust, the termination of the trust (but not merely the substitution of a new trustee);

12.1.4 In the case of a Member that is a separate Organization other than acorporation, the dissolution and commencement of winding up of the separate Organization;

12.1.5 In the case of a Member that is a corporation, the filing of a certificate ofdissolution, or its equivalent, for the corporation or the revocation of its charter; or

12.1.6 In the case of an estate, the distribution by the fiduciary of the estate'sentire interest in the limited liability company.


ARTICLE XIII - ADMISSION OF ASSIGNEES AND ADDITIONAL MEMBERS.Subject to the terms and provisions of a Member Buy Sell Agreement, as it may from time totime be amended, entered by and among the Members with reference to their interests in thisCompany:

13.1 Rights of Assignees - The Assignee of a Membership Interest has no right toparticipate in the management of the business and affairs of the Company or to become aMember. The Assignee is only entitled to receive the Distributions and return of capital, and tobe allocated the Net Profits and Net Losses attributable to the Membership Interest.

13.2 Admission of Substitute Members - An Assignee of a Membership Interest shallbe admitted as a Substitute Member and admitted to all the rights of the Member who initiallyassigned the Membership Interest only with the unanimous approval of all the Managers and aunanimous approval of the Members. The Managers may grant or withhold the approval of suchadmission for any reason in their sole and absolute discretion. If so admitted, the SubstituteMember has all the rights and powers and is subject to all the restrictions and liabilities of theMember originally assigning the Membership Interest. The admission of a Substitute Member,without more, shall not release the Member originally assigning the Membership Interest fromany liability to Company that may have existed prior to the approval.

13.3 Admission of Permitted Transferees - Notwithstanding Section 13.2 hereof, theMembership Interest of any Member shall be transferable without the consent of the Managers orany of the Members if (i) the transfer occurs by reason of or incident to the death, dissolution,divorce, liquidation, merger or termination of the transferor Member, and (ii) the Transferee is aPermitted Transferee.

13.4 Admission of Additional Members - The Managers may permit the admission ofAdditional Members and determine the Capital Contributions of such Members. Notwithstandingthe foregoing, the Additional Members may not become Managers unless and until selected tosuch position as provided in this Company Agreement.

ARTICLE XIV - DISSOLUTION AND WINDING UP. Subject to the terms and provisionsof a Member Buy Sell Agreement, as it may from time to time be amended, entered by andamong the Members with reference to their interests in this Company:

14.1 Dissolution - The Company shall be dissolved and its affairs wound up, upon thefirst to occur of the following events (which, unless the Members agree to continue the business,shall constitute Dissolution Events):

14.1.1 The expiration of the Term, unless the business of the Company iscontinued with the unanimous consent of the Members;

14.1.2 The unanimous written consent of all of the Members;

2012-74360.011Echo Park Douglas LLC

14.1.3 The Dissociation of any Managing Member, unless the business of theCompany is continued with the consent of all of the Managers and unanimous consent of theMembers within ninety (90) days after such Dissociation.

14.2 Effect of Dissolution - Upon dissolution, the Company shall cease carrying on asdistinguished from the winding up of the Company business, but the Company is not terminated,but continues until the winding up of the affairs of the Company is completed and the Certificateof Dissolution has been issued by the Secretary of State.

14.3 Distribution of Assets on Dissolution - Upon the winding up of the Company, theCompany Property shall be distributed:

14.3.1 To creditors, including Members who are creditors, to the extentpermitted by law, in satisfaction of Company Liabilities;

14.3.2 After making the allocations set forth in Article IX, to the Members inaccordance with positive Capital Account balances taking into account all Capital Accountadjustments for the Company's taxable year in which the liquidation occurs. Liquidation proceedsshall be paid within sixty (60) days of the end of the Company's taxable year or, if later, withinninety (90) days after the date of liquidation. Such distributions shall be in cash or Property(which need not be distributed proportionately) or partly in both, as determined by the Managers.

14.4 Winding Up and Certificate of Dissolution The winding up of a limited liabilitycompany shall be completed when all debts, liabilities, and obligations of the limited liabilitycompany have been paid and discharged or reasonably adequate provision therefor has beenmade, and all of the remaining property and assets of the limited liability company have beendistributed to the members. Upon the completion of winding up of the Company, a certificate ofdissolution shall be delivered to the Secretary of State for filing. The certificate of dissolutionshall set forth the information required by the Act.

ARTICLE XV - AMENDMENT.

15.1 Company Agreement May Be Modified - The Company Agreement may bemodified as provided in this Article XV (as the same may, from time to time be amended). NoMember or Manager shall have any vested rights in the Company Agreement which may not bemodified through an amendment to the Company Agreement.

15.2 Amendment or Modification of Company Agreement - The Company Agreementmay be amended or modified from time to time only by the unanimous vote of the Members andManagers.

ARTICLE XVI - MISCELLANEOUS PROVISIONS.

16.1 Entire Agreement - The Company Agreement represents the entire agreementamong all the Members and between the Members and the Company.

- 23 -2012-74360.011Echo Park Douglas LLC

16.2 No Partnership Intended for Non-Tax Purposes - The Members have formed theCompany under the Act, and expressly do not intend hereby to fonn a partnership under eitherthe State Uniform Partnership Act nor the State Uniform Limited Partnership Act. The Membersdo not intend to be partners one to another, or partners as to any third party. To the extent anyMember, by word or action, represents to another person that any other Member is a partner orthat the Company is a partnership, the Member making such wrongful representation shall beliable to any other Member who incurs personal liability by reason of such wrongfulrepresentation.

16.3 Rights of Creditors and Third Parties under Company Agreement - The CompanyAgreement is entered into among the Company and the Members for the exclusive benefit of theCompany, its Members, and their successors and assignees. The Company Agreement isexpressly not intended for the benefit of any creditor of the Company or any other Person. Exceptand only to the extent provided by applicable statute, no such creditor or third party shall haveany rights under the Company Agreement or any agreement between the Company and anyMember with respect to any Capital Contribution or otherwise.

16.4 Counterparts - This Agreement (or any telephonic facsimile thereof) may beexecuted in more than one counterpart and all such counterparts when taken together shallconstitute a complete. Agreement, binding on all of the parties hereto.

16.5 Binding Effect - This Agreement shall be binding upon all of the parties and theirexecutors, administrators, representatives, permitted assigns and other successors.

16.6 Construction - This Agreement shall not be construed against the party preparingit, but shall be construed as if all parties prepared this Agreement and in accordance with thelaws of the State of California.

16.7 Attorneys Fees - Should suit be brought to enforce or interpret any part of thisAgreement, the "prevailing party" shall be entitled to recover, as an element of costs of suit andnot as damages, reasonable attorneys' fees to be fixed by the court, including all costs andexpenses of any appellate court proceedings. The "prevailing party" shall be the party entitled torecover his costs of suit, regardless of whether such suit proceeds to final judgment. A party notentitled to recover his costs shall not be entitled to recover attorneys' fees. No sum for attorneys'fees shall be counted in calculating the amount of a judgment for the purposes of determining if aparty is entitled to recover costs or attorneys' fees.

16.8 Captions, Gender and Number - The title or section headings of the variousprovisions of this Agreement are intended solely for convenience of reference and shall not inany manner amplify, limit or modify or otherwise be used in the interpretation of any of saidprovisions. As used in this Agreement, the masculine, feminine or neuter gender, and the singularor plural number, shall be deemed to include the other whenever the context so indicates orrequires.

16.9 Severability - If any provision of this Agreement as applied to either party or toany circumstance shall be adjudged by a court of competent jurisdiction to be void or


unenforceable for any reason, the same shall in no way affect (to the maximum extent

permissible by law) any other provision of this Agreement, the application of any such provision

under circumstances different from those adjudicated by the court, or the validity or

enforceability of the Agreement as a whole.

16.10 Further Assurances - Each party agrees to timely perform any further acts and

execute and deliver all documents, including documents relating to government approvals, which

may be reasonably necessary to carry out the provisions and purposes of this Agreement.

16.11 Non-Waiver - Except as specifically provided otherwise herein, any waiver by any

party of a breach of any provision of this Agreement shall not operate as or be construed to be a

waiver of any other breach of any other provision of this Agreement, and the failure by either

party to exercise any right under this Agreement shall not be deemed to be a waiver of such right.

16.12 Authorization - Each signatory hereto hereby represents that it is a duly authorized

officer or agent of its representing principal and has the authority to enter into this Agreement.

16.13 Arbitration of Disputes - ANY DISPUTE UNDER THIS AGREEMENT

SHALL BE BROUGHT IN ORANGE COUNTY, CALIFORNIA, AND SHALL BE

DECIDED BY BINDING ARBITRATION IN ACCORDANCE WITH THECOMMERCIAL ARBITRATION RULES OF THE JUDICIAL ARBITRATION AND

MEDIATION SERVICES ("JAMS") BEFORE AN ARBITRATOR SELECTED FROMI HE RETIRED JUDGES PANEL OF THE ARBITRATORS OF JAMS. IN ADDITION

TO THE JAMS RULES, THE PARTIES AGREE THAT THIS AGREEMENT SHALL

BE SUBJECT TO THE DISCOVERY PROVISIONS OF THE CALIFORNIA CODE OFCIVIL PROCEDURE (" CCP"), AND PARTICULARLY CCP SECTION 1283.05. THE

FEE PAYABLE TO JAMS TO INITIATE THE ARBITRATION SHALL BE REMITTED

BY THE REQUESTING PARTY, PROVIDED, HOWEVER, THAT THE COSTS OFARBITRATION SHALL ULTIMATELY BE BORNE AS DETERMINED BY THEARBITRATOR. THE PARTIES AGREE THAT THE DETERMINATION OF THEARBITRATOR AND AWARD, IF ANY, MAY BE ENTERED WITH ANY COURTHAVING JURISDICTION AND THE DETERMINATION AND AWARD, IF ANY, MAY.THEN BE ENFORCED AMONG THE PARTIES, WITHOUT FURTHEREVIDENTIARY PROCEEDINGS, AS IF ENTERED BY A COURT AT THECONCLUSION OF. A JUDICIAL PROCEEDING IN WHICH NO APPEAL WASTAKEN.

NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVEANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE"ARBITRATION OF DISPUTES" PROVISION DECIDED BY NEUTRALARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UPANY RIGHTS YOU MIGHT POSSESS TO HAVE TH E DISPUTE LITIGATED IN ACOURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU AREGIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESSSUCH RIGHTS ARE SPECIFICALLY INCLUDED IN THIS "ARBITRATION OF


DISPUTES" PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER

AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE

UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE.

YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY.

WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT

DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION

OF DISPUTES" PROVISION TO NEUTRAL ARBITRATION. BY PLACING THEIR

INITIALS HERE:

EP Investors PAL Investments

THE PARTIES AGREE TO ARBITRATION AS SET FORTH ABOVE.

[Signature page follows.]

2012-74360.01Tcho Park Douglas LLC

IN WITNESS WHEREOF, we have hereunto set out hand and seals effective as of the

Effective Date.

PLANET HOME INVESTMENTS, LLC,a California limited liability company

B :1 Marini

Its Manager

By: David FrenchIts Manager

EP INVESTORS I, LLC,a California limited liability company

By: GKH Management, LLCA Delaware limited liability companyIts: Manager

By Bradley WillardIts Managing Member

- 27-


EXHIBIT "A"

Members'Names and Addresses

Capital Contribution Ratio % Interest andInitial Sharing Ratios

Planet Home Investuients, LLC1048 Irvine Avenue #421Newport Beach, CA 92660

7.5% 50%

EP Investors I, LLC2212 Dupont St, Ste 'A'Irvine, CA 92612

92.5% 50%

Total100% 100%