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Proof of Corporation 1, • • OPERATING AGREEMENT OF CAPSTONE — CS, LLC THIS OPERATING AGREEMENT (this "Agreement') is made and entered into as of the 4 day of December, 2008, by and between Capstone — CS, LLC, an Alabama limited liability company (the "Company"), and Capstone Development Corp., an Alabama corporation (such corporation being sometimes referred to as the "Member"). Recitals: WHEREAS, the Member is the sole member of the Company; and WHEREAS, the Company and the Member desire to enter into this Agreement to regulate or establish the affairs of the Company, the conduct of its business, and the relations of the Member with respect thereto, NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants contained herein, the sufficiency of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows: 1. Capital Contributions. The Member has made a capital contribution to the Company in the amount of cash or the fair market value of property set forth in Exhibit "A" attached hereto and incorporated herein by reference. The Member shall not be required to make any additional capital contribution to the Company, except as the Member may determine otherwise. 2. Loans by Member. The Member may, but is not obligated to, loan to the Company from time to time such sums of money bearing such rates of interest and being repayable under such terms and conditions as the Member may determine to be appropriate for the conduct of the Company's business and affairs. 3. Allocation of Profits and Losses. Any and all profits and losses of the Company shall be allocated to the Member without apportionment. 4. Current Distributions. Except as otherwise provided in Paragraph 11 hereof, distributions shall be made to the Member at such times and in such amounts as the Member may determine. 5. Member Management. The Member has the exclusive power, right and authority to manage the Company's business and affairs, and to make all decisions with respect thereto; provided, further, that no other person shall have the power, right or authority to act for or on behalf Operating Agreement - Capstone - CS LLC DOC • • of the Company, to do any act that would be binding on the Company, or to incur any expenditure on behalf of the Company, without the consent of the Member. 6. Action by Written Consent. Any action required or permitted to be taken by the Member may, but need not, be effected in the form of a signed writing evidencing the same. 7. Officers. The Member may appoint one or more individuals as officers of the Company. Any officer appointed by the Member may be removed by the Member at any time with or without cause; provided, however, that such removal shall be without prejudice to the contract rights, if any, of the individual so removed. Each officer, if so appointed, shall have the authority and shall perform the duties as may be specifically delegated to such officer by the Member, and otherwise shall have the authority and shall perform the duties set forth as follows: (a) President. The President shall be the chief administrative officer of the Company and shall have general and active management of such areas and divisions of the business and affairs of the Company as may be designated by the Member. The President may sign (with the Secretary's attestation) on behalf of the Company, any deeds, mortgages, bonds, notes, contracts, leases or other instruments, except where required by law to be otherwise signed and executed, and except where the signing and execution thereof shall be expressly delegated by the Member to some other officer or agent of the Company. (b) Vice-President, In the absence of the President or in the event of his death or inability to act, the Vice - President (or in the event there be more than one Vice- President, the Vice - Presidents in the order determined by the Member) shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. A Vice - President shall perform such other duties as from time to time may be assigned to him or her by the Member or the President. (c) Secretary. The Secretary shall attest the President's duly authorized signature to any deed, mortgage, bond, note, contract, lease or other instrument; shall have responsibility for preparing actions by written consent of the Member and keeping those actions by written consent in one or more books provided for that purpose; have responsibility for authenticating records of the Company; see that all notices are duly given in accordance with the terms and conditions of this Operating Agreement, the Alabama Limited Liability Company Act or as otherwise required by law; be custodian of the Company records; and in general perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him or herby the President or the Member. If there is no Treasurer of the Company, the Secretary shall assume the authority and duties of the Treasurer. (d) Treasurer. The Treasurer shall have charge and custody of and be responsible for all funds and securities of the Company, receive and give receipts for moneys due and payable to the Company from any source whatsoever, and deposit all such moneys in 2 Operating Agreement - Capstone - CS LLC DOC • the name of the Company in such banks, trust companies or other depositories as may be designated by the Member, and in general perform all of the duties incident to the office of Treasurer and such other duties as from time to time maybe assigned to him or her by the President or the Member. If required by the Member, the Treasurer shall give a bond for the faithful discharge of his or her duties in such sum and with such surety or sureties as the Member shall determine. (e) Assistant Secretaries and Assistant Treasurers. The Assistant Secretary, or if there shall be more than one, the Assistant Secretaries in the order determined by the Member, shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary. The Assistant Treasurer, or, if there shall be more than one, the Assistant Treasurers in the order determined by the Member, shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer. The Member may require any Assistant Treasurer to give a bond for the faithful discharge of his or her duties in such sums and with such surety or sureties as the Member shall determine. The Assistant Secretaries and Assistant Treasurers shall all perform such other duties as shall be assigned to them by the Secretary and Treasurer, respectively, or by the President or the Member. The compensation of the officers shall be fixed from time to time by the Member, and no officer shall be prevented from receiving such compensation by reason of the fact that he or she is a shareholder, officer, director, employee, affiliate, or agent of the Member. 8. Indemnification. The Company shall indemnify its members, officers, employees and other agents and make advances for expenses to the maximum extent permitted under Sections 10 -12 -1 et seq. Code of Alabama (1975) as set forth in this Paragraph 8, provided that such indemnification in any given situation is approved by the Member. The Company shall indemnify its members, officers, employees and other agents for and hold them harmless from any liability, whether civil or criminal, and any loss, damage, or expense, including reasonable attorneys' fees, incurred in connection with the ordinary and proper conduct of the Company's business and the preservation of its business and property, or by reason of the fact that such person was a member, officer, employee or other agent; provided the member, officer, employee and other agents to be indemnified acted in good faith and in a manner such person acting believed to be consistent with the provisions of this Agreement; and provided further that with respect to any criminal action or proceeding, the person acting to be indemnified had no reasonable cause to believe the conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon aplea of nolo contendere or its equivalent shall not of itself create a presumption that indemnification is not available hereunder. The obligation of the Company to indemnify any person hereunder shall be satisfied out of Company assets only, and if the assets of the Company are insufficient to satisfy its obligation to indemnify, such person shall not be entitled to contribution from the Member. 9. Cessation of Membership. The Member shall cease to be a member of the Company only upon the occurrence of one or more of the following events: 3 Operating Agreement - Capstone - CS DOC • • • (a) The Member notifies the Company that the Member ceases to be a member by voluntary act; or (b) The Member ceases to be a member of the Company by assigning the Member's entire interest in the Company when any assignee of the interest becomes a member with respect to the assigned interest. 10. Dissolution. The Company shall be dissolved and its affairs shall be wound up only upon the occurrence of one or more of the following events: (a) The written consent of the Member to dissolve; (b) When there is no remaining member, unless the legal existence and business of the Company is continued and one or more new members are appointed by the holders of all of the financial rights in the Company within ninety (90) days after the cessation of membership of the last member, (c) When the Company is not the successor limited liability company in the merger or consolidation with one or more limited liability companies or other entities; or (d) The entry of a decree of judicial dissolution under the Alabama Limited Liability Company Act. 11. Liquidating Distributions Upon the winding up of the Company, the assets of the Company shall be distributed in the following order of priority: (a) To creditors (including the Member as a creditor to the extent otherwise permitted by law), in the order of priority as provided by law, except those liabilities to the member for interim distributions or on account of capital contributions; and (b) To the Member without apportionment. 12. Choice of Law. This Agreement shall be governed by, construed under, and enforced in accordance with, the laws of the State of Alabama, without regard to any conflict -of -laws rules to the contrary. 13. Entire Agreement; Amendments. This Agreement embodies the entire understanding of the parties with regard to the regulation and establishment of the affairs of the Company, the conduct of its business, and the relations of the Member with respect thereto, and may not be amended or modified except by a written instrument made, executed and delivered by all of the parties hereto. 14. Severability, If any provision of this Agreement or the application thereof to a person or circumstance shall be held by a court of competent jurisdiction to be invalid, illegal or 4 Ming Agreement - Capstone - CS LLC DOC • • unenforceable to any extent, the remainder of this Agreement and the application thereof shall not be affected and shall be enforceable to the fullest extent permitted by law. 15. Heirs, Successors and Assigns. Each and all of the covenants, terms, conditions, provisions and agreements herein contained shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and permitted assigns. 16. Headings. The headings in this Agreement are inserted for convenience of reference only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provisions hereof. 17. Pronouns. All pronouns used in this Agreement shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person or persons may require. 18. Terminology. Unless otherwise indicated, terms used but not specifically defined in this Agreement shall have the meanings ascribed to such terms in the Alabama Limited Liability Company Act. IN WITNESS WHEREOF, the parties have executed this Operating Agreement effective as of the date first written above. COMPANY: CAPSTONE — CS, LLC By: CAPSTONE DEVELOPMENT CORP. Its Sole Member By.74 ob Howland Its Chief Operating Officer MEMBER: CAPSTONE DEVELOPMENT CORP. By: /` /e' Metagetel Rob Howland Its Chief Operating Officer 5 Operating Agreement - Capstone - CS LLC DOC • • • EXHIBIT "A" Name and Address of Capital the Sole Member Contribution Capstone Development Corp. $100.00 431 Office Park Drive Birmingham, AL 35223 Operating Agreement - Capstone - CS LLC DOC • • II81 !jjJIllhihI ci29k. LR200812 P Jefferson Cows This instrument prepared by: ' 1 2/ 11/2-0y ti,;: Instrwreni il y. l Christopher M. Gill, Esq. Judge o IMCKlny Hand Arendall, L.L.C. Post Office Box 123 Mobile, Alabama 36601 (251) 432 -5511 ARTICLES OF ORGANIZATION OF CAPSTONE — CS, LLC TO THE HONORABLE JUDGE OF PROBATE OF JEFFERSON COUNTY, ALABAMA: I, the undersigned organizer, for the purposes of forming a limited liability company under the provisions of the Alabama Limited Liability Company Act, as amended, currently codified at § 10 -12 -1, et. sec ., Code of Alabama (1975), do hereby make these Articles of Organization. Section 1. Name. The name of the limited liability company (the "Company") is: Capstone — CS, LLC Section 2. Purposes. The purposes for which the Company is formed are: (a) To carry on and transact any or all lawful business for which limited liability companies may be organized under the Act, as amended from time to time, and to have and exercise all powers necessary or convenient to effectuate the purposes of the Company. (b) To acquire, by purchase, lease or otherwise, any real or personal property, and to invest, trade, rent out and deal in any real or personal property deemed beneficial to the Company, and to encumber or dispose of any real or personal property at any time owned or held by the Company. (c) To acquire, by purchase, lease, manufacture, or otherwise, any personal property deemed necessary or useful in the equipping, furnishing, improvement, development, or management of any property, real or personal, at any time owned, held, or occupied by the Company, and to invest, trade, and deal in any &45112_1 1 • personal property deemed beneficial to the Company, and to encumber or dispose of any real or personal property, tangible or intangible, at any time owned or held by the Company. (d) To do any and all of the things herein set out and such other things as are incidental or conducive to the attainment of the objectives and purposes of the Company, to the same extent as natural persons might or could do and in any part of the world, as principal, factor, agent, contractor, or otherwise, either alone or in conjunction with any person, firm, association, partnership, corporation, association, limited liability company, cooperative or any other entity of any kind whatsoever, and to have and exercise any and all such powers to the full extent authorized or permitted to a limited liability company under any laws that may now or hereafter be applicable or available to the Company. The foregoing subsections shall be construed, in the broadest sense, as purposes and powers of the Company in addition to those powers specifically conferred upon the Company by law, and it is hereby expressly provided that the foregoing specific enumeration of purposes and powers shall not be held to limit or restrict in any manner the powers of the Company otherwise granted by law. Nothing herein contained, however, shall be construed as authorizing the Company to carry on the business of banking or that of a trust company, or the business of insurance. Section 3. Name and Address of Organizer. The name and mailing address of the Organizer of the Company are as follows: Kelly T. Fox, Esq. 1200 Park Place Tower 2001 Park Place North Binminghham, Alabama 35203 Section 4. Initial Registered Office and Agent. The physical address of the initial registered office of the Company is as follows: 431 Office Park Drive Birmingham, Alabama 35223 The initial registered agent at such address shall be Lisa J. Johnson. Section 5. Name and Address of Initial Member. The name and mailing address of the initial member of the Company are as follows: Capstone Development Corp. 431 Office Park Drive Birmingham, Alabama 35223 845112_1 2 • Section 6. Member Managed. The Company shall be managed by its members. Section 7. Additional Members. The members of the Company shall have the right to admit additional members in the manner provided in the Company's operating agreement, as amended from time to time. Section 8. Amendment. The Company reserves the right to amend, alter, change or repeal any provision contained in these Articles of Organization in the manner now or hereafter provided by law, and all rights conferred upon members herein are granted subject to this reservation; provided, however, that no such amendment, alteration, change or repeal shall be effective unless conducted in the manner provided in the operating agreement, as amended from time to time. Section 9. Terminology. Whenever the context requires, words used in the singular shall be construed to mean or to include the plural and vice versa, and pronouns of any gender shall be deemed to include and to designate the masculine, feminine or neuter gender. IN WITNESS WHEREOF, the undersigned organizer has executed these Articles of Organization on this the 11 day of December, 2008. . KELLY HER FOX, Organizer 20081211001632300 313 Bk: LR200812 Pg:28549 Jefferson County,Alabaoa 12/11/2008 11:34:49 f1M INC Fes - $51.00 Total of Fees and Taxes - $51.00 LYNN 845112_1 3 • • ACTION BY WRITTEN CONSENT OF THE SOLE SHAREHOLDER AND DIRECTOR OF CAPSTONE DEVELOPMENT CORP. IN LIEU OF A SPECIAL MEETING Pursuant to § 10 -2B -8.21 and § 10-2B -7.04, Code of Alabama (1975), the undersigned, being the sole shareholder and sole member of the Board of Directors of Capstone Development Corp., an Alabama corporation (the "Corporation "), does hereby consent to and adopt the following preambles and resolutions by written consent in lieu of a special meeting: WHEREAS, the Corporation caused, on December 11, 2008, the formation of Capstone - CS, LLC, an Alabama limited liability company ( "College Station "), pursuant to Articles of Organization filed with the Jefferson County Probate Court, with the Corporation designated as the sole member of College Station; WHEREAS, College Station was formed for the purpose of acquiring, owning - and developing the Property (as that term is defined in the hereinafter defined Purchase Agreement); WHEREAS, the Corporation entered into that certain Contract of Sale dated as of March 1, 2007 with TLS Properties, Ltd. ("Seller"), as amended by that certain (i) First Amendment to Contract of Sale dated January 30, 2008, (ii) Second Amendment to Contract of Sale dated April 30, 2008, (iii) Third Amendment to Contract of Sale dated August 26, 2008, (iv) Fourth Amendment to Contract of Sale dated October 13, 2008 and (v) Fifth Amendment to Contract of Sale dated November 24, 2008 (collectively, the "Purchase Agreement"), whereby TLS Properties, Ltd. agreed to sell the Property to the Corporation; WHEREAS, the sole director and shareholder of the Corporation finds it desirable and appropriate that the Corporation, in its capacity as the sole member of College Station, be authorized to cause College Station to purchase and acquire the Property by assigning the Corporation's interest under the Purchase Agreement to College Station pursuant to an assignment and assumption agreement (the "Assignment ") and by causing College Station to perform all of the obligations of the "Purchaser" thereunder; WHEREAS, upon its acquisition of the Property, College Station intends to develop and construct a cottage project on the Property (the "Project "); WHEREAS, in order to enable College Station to purchase and acquire the Property and begin construction and development of the Project, College Station has been negotiating with Seller for a loan in the amount of $6,379,000.00 (the "Loan "); and WHEREAS, the consummation of the aforementioned transactions is deemed to be in the best interests of the Corporation and in the best interests of College Station. NOW, THEREFORE, BE IT RESOLVED, that the sole shareholder and director of the Corporation hereby authorizes, approves and empowers Michael A. Mouron, its President, Resolut ion -Capstone - College Station Execution Version 1 • • and Rob Howland, its Chief Operating Officer (either of which are an "Authorized Representative" and both of which are collectively the "Authorized Representatives "), acting together or alone, to take all such steps and perform all such acts that may be necessary or required to cause the Corporation to assign the Purchase Agreement to College Station and to cause College Station to purchase and acquire the Property, to consummate the Loan and to construct and develop the Project BE IT FURTHER RESOLVED, that the Authorized Representatives, acting together or alone, are hereby authorized, directed and empowered, as duly authorized representatives of the Corporation, to execute and deliver the Assignment on behalf of the Corporation; BE IT FURTHER RESOLVED, that the Authorized Representatives, acting together or alone, are hereby authorized, directed and empowered, as duly authorized representatives of the Corporation in its capacity as the sole member of College Station and on behalf of College Station, to: (a) execute and deliver the Assignment and all other agreements, assignments, instruments or other documents (collectively, the "Property Documents ") that shall be required by the Purchase Agreement t� cause College Station to purchase and acquire the Property; (b) execute and deliver all agreements, assigmnents, instruments, certificates or other documents that shall be required to consummate the Loan, including, without limitation, a vendor's lien deed, a promissory note, and a deed of trust, security agreement and financing statement (collectively, the "Loan Documents "); (c) negotiate with a lender for additional construction financing for the Project, and to execute and deliver all agreements, assignments, instruments, certificates, or other documents that shall be required to consummate such additional construction financing, including, without limitation, a loan agreement, a promissory note, and a deed of trust, security agreement and assignment of rents and leases (collectively, the "Construction Loan Documents"); (d) execute and deliver all agreements, assignments, instruments, certificates or other documents that shall be required to construct and develop the Project (collectively, the "Project Documents ") (the Property Documents, the Loan Documents, the Construction Loan Documents and the Project Documents are sometimes hereinafter collectively referred to as the "Transaction Documents "); (e) to amend, modify, alter, extend, renew, or otherwise change any of the provisions, terms, conditions, covenants or representations contained in the Property Documents, the Loan Documents, the Construction Loan Documents or the Project Documents; Resolution - Capstone - College Station 2 • • BE IT FURTHER RESOLVED, that the Transaction Documents may contain such provisions, terms, conditions, covenants, warranties and representations as the Authorized Representatives, or either of them, in their or his sole and absolute discretion, deem advisable, necessary or expedient; BE IT FURTHER RESOLVED, that the undersigned hereby ratifies, approves and confirms any and all acts and things the Authorized Representatives, or either one of them, have done with regard to the foregoing matters in the past, including without limitation, the execution of the Purchase Agreement, or which the Authorized Representatives, or either one of them, may do in the future relating to or arising from or in connection with the Assignment, the Transaction Documents or these resolutions, and such acts and things of the Authorized Representatives, or either one of them, shall at all times receive the full faith and credit by all persons without the necessity of inquiry by said persons; BE IT FURTHER RESOLVED, that the Authorized Representatives, or either one of them, in their or his sole and absolute discretion, if they or he deems proper and appropriate, may abandon and terminate the foregoing transactions prior to the consummation thereof. IN WITNESS WHEREOF, the undersigned sole shareholder and director of the Corporation has set his hand and seal to this instrument on this the 12 day of December, 2008, and by these presents, has directed the Secretary of the Corporation to place this instrument in the minutes of the official proceedings of the Corporation. SOLE SHAREHOLDER AND DIRECTOR: MICHAEL A. MOURON Resolution - Capstone - College Station 3