EXHIBIT 3(iii)
OPERATING AGREEMENT OF REGISTRANT
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OPERATING AGREEMENT
OF
COR DEVELOPMENT, LLC
This Operating Agreement of COR DEVELOPMENT, LLC (the "Company") is made as
of March 31, 2000, among CORNERSTONE DEVELOPMENT, LLC (the "Initial Member") as
the initial member of the Company, and the Persons who become Members of the
Company in accordance with the provisions hereof and whose names are set forth
as Members on Schedule A hereto.
WHEREAS, this limited liability company has been established for the purpose
of the purchase and development of certain real property, totaling 47 acres
located at the intersection of 137th Street and Nall, Leawood, Kansas (the
"Property"); and
WHEREAS, the Company was formed as a limited liability company pursuant to
the Kansas Limited Liability Company Act, Kan. Stat. Ann. 17-7663, et seq., as
amended from time to time (the "Kansas Act"), by having filed the Articles of
Organization of the Company with the Office of the Secretary of State of the
State of Kansas on March 24, 2000, and entering into this Operating Agreement of
the Company, dated as of March 31, 2000 (the "Agreement"); and
WHEREAS, the Initial Member intends that all limited liability company units
in the Company whether now owned or hereafter acquired (all such units
hereinafter described as the "Units") shall be subject to the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Members hereby agree as
follows:
ARTICLE 1
DEFINED TERMS
Section 1.1 Definitions. Unless the context otherwise requires, the terms
defined in this Article 1 shall, for the purposes of this Agreement, have the
meanings herein specified.
"Additional Members" has the meaning set forth in Section 13.1 hereof.
"Affiliate" means with respect to a specified Person, any Person that
directly or indirectly controls, is controlled by, or is under common control
with, the specified Person. As used in this definition, the term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.
"Agreement" means this Operating Agreement, as amended, modified,
supplemented or restated from time to time.
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"Articles" means the Articles of Organization of the Company and any and all
amendments thereto and restatements thereof filed on behalf of the Company with
the Office of the Secretary of State of the State of Kansas pursuant to the
Kansas Act.
"Capital Account" means, with respect to any Member, the account maintained
for such Member in accordance with the provisions of Section 4.4 hereof.
"Code" means the Internal Revenue Code of 1986, as amended from time to time,
or any corresponding federal tax statute enacted after the date of this
Agreement. A reference to a specific section () of the Code refers not only to
such specific section but also to any corresponding provision of any federal tax
statute enacted after the date of this Agreement, as such specific section or
corresponding provision is in effect on the date of application of the
provisions of this Agreement containing such reference.
"Company" means COR Development, LLC, the limited liability company
heretofore formed and continued under and pursuant to the Kansas Act and this
Agreement.
"Cornerstone Development" means CORnerstone Development, LLC, a Kansas
limited liability company and the initial member of the Company.
"Covered Person" means a Member, any Affiliate of a Member, any officers,
directors, shareholders, partners, members, mangers, employees, representatives
or agents of a Member, or any Manager, employee or agent of the Company or its
Affiliates.
"Fiscal Year" means (i) the period commencing upon the formation of the
Company and ending on December 31, 2000, (ii) any subsequent twelve (12) month
period commencing on January 1 and ending on December 31, or (iii) any portion
of the period described in clause (ii) of this sentence for which the Company is
required to allocate Profits, Losses and other items of Company income, gain,
loss or deduction pursuant to Article 8 hereof.
"Interest" means a Member's limited liability company interest in the Company
which represents such Member's share of the profits and losses of the Company
and/or such Member's rights to receive distributions of the Company's assets in
accordance with the provisions of this Agreement and the Kansas Act.
"Kansas Act" means the Kansas Limited Liability Company Act, Kan. Stat. Ann.
17- 7663, et seq., as amended from time to time.
"Liquidating Trustee" has the meaning set forth in Section 14.3 hereof.
"Major Decisions" has the meaning set forth in Section 6.2 hereof.
"Managers" means the Person(s) selected to manage the affairs of the Company
under Article 6 hereof.
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"Member" means any Person named as a member of the Company on Schedule A
hereto and includes any Person admitted as an Additional Member pursuant to the
provisions of this Agreement, in such Person's capacity as a member of the
Company, and "Members" means two (2) or more of such Persons when acting in
their capacities as Members of the Company. For purposes of the Kansas Act, the
Members shall constitute two (2) classes or groups of Members.
"Percentage Interest" means the Interest of a Member, expressed as a
percentage of total Interests of the Members, as shown on Schedule A hereto, as
such Schedule A may be updated from time to time, or, with respect to a
designation of the Percentage Interests of the Common Units, the Interest of a
holder of a Common Unit, expressed as a percentage of total Interests of the
holderes of all Common Units.
"Person" includes any individual, corporation, association, partnership
(general or limited), joint venture, trust, estate, limited liability company,
or other legal entity or organization.
"Profits" and "Losses" means, for each Fiscal Year, an amount equal to the
Company's taxable income or loss for such Fiscal Year, determined in accordance
with the Code.
"Subsidiary" means one or more limited liability companies or other entities,
more than fifty percent (50%) of the ownership interests of which are owned,
directly or indirectly, by the Company.
"Unanimous Vote" means the written approval of, or the affirmative vote by,
all of the Managers, or one hundred percent (100%) of the Percentage Interests
of the Members voting on any specific matter or issue.
"Units" means the Units of a Member as shown on Schedule A hereto, as such
Schedule A may be updated from time to time.
Section 1.2 Headings. The headings and subheadings in this Agreement are
included for convenience and identification only and are in no way intended to
describe, interpret, define or limit the scope, extent or intent of this
Agreement or any provision hereof.
ARTICLE 2
CONTINUATION AND TERM
Section 2.1 Continuation.
2.1.1 The Members hereby agree to continue the Company as a limited
liability company under and pursuant to the provisions of the Kansas Act and
agree that the rights, duties and liabilities of the Members shall be as
provided in the Kansas Act, except as otherwise provided herein.
2.1.2 The name and mailing address of each Member, the Class of Unit, the
number of Units and Percentage Interest held by each Member and the amount
contributed to the
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capital of the Company by each Member shall be listed on Schedule A attached
hereto. The Members shall be required to update Schedule A from time to time
as necessary to accurately reflect the information therein. Any amendment or
revision to Schedule A made in accordance with this Agreement shall not be
deemed an amendment to this Agreement. Any reference in this Agreement to
Schedule A shall be deemed to be a reference to Schedule A as amended and in
effect from time to time.
Section 2.2 Name. The name of the Company heretofore formed and continued
hereby is COR Development, LLC. The business of the Company may be conducted
upon compliance with all applicable laws under any other name designated by the
Members.
Section 2.3 Term. The term of the Company shall commence on the date the
Articles is filed in the Office of the Secretary of State of the State of Kansas
and shall be shall continue until March 21, 2050, unless terminated sooner by
operation of law or by unanimous consent of the Members or unless reenacted
after such primary term for such additional periods as is unanimously determined
by the Members.
Section 2.4 Registered Agent and Office. The Company's registered agent and
office in Kansas shall be Arthur E. Fillmore, II, 12625 Overbrook Drive,
Leawood, Kansas 66209. At any time, a majority of the Managers may designate
another registered agent and/or registered office.
Section 2.5 Principal Place of Business. The principal place of business of
the Company shall be at 13720 Roe, Leawood, Kansas 66224. At any time, a
majority of the Managers may change the location of the Company's principal
place of business.
Section 2.6 Qualification in Other Jurisdictions. The Managers shall cause
the Company to be qualified, formed or registered under assumed or fictitious
name statutes or similar laws in any jurisdiction in which the Company transacts
business. A Manager shall execute, deliver and file any certificates (and any
amendments and/or restatements thereof) necessary for the Company to qualify to
do business in a jurisdiction in which the Company may wish to conduct business.
The registered agent and registered office of the Company in any such
jurisdiction shall be as designated in the certificate to be filed in each such
jurisdiction.
Section 2.7 No Partnership or Joint Venture. The parties acknowledge that the
Company, as a newly formed Kansas limited liability company, constitutes an
independent and distinct legal entity. Neither this Agreement nor any other
document delivered in connection herewith, nor any prior agreements, actions or
omission shall in any respect be interpreted, deemed or construed as making any
Member a partner or joint venturer with the Company or any other Member or any
of them, and the parties agree not to make any contrary assertion, contention,
claim or counterclaim in any action, suit or other legal proceeding.
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ARTICLE 3
PURPOSE AND POWERS OF THE COMPANY
Section 3.1 Purpose. The Company is formed for the object and purpose of, and
the nature of the business to be conducted and promoted by the Company is, the
development of the Property and such other related actions, products and
services as may be approved from time to time by the requisite vote of the
Members of the Company.
Section 3.2 Powers of the Company.
3.2.1 The Company shall have the power and authority to take any and all
actions necessary, appropriate, proper, advisable, incidental or convenient
to or for the furtherance of the purpose set forth in Section 3.1, including,
but not limited to, the power:
(a) to conduct its business, carry on its operations and have and
exercise the powers granted to a limited liability company by the Kansas
Act in any state, territory, district or possession of the United States,
or in any foreign country that may be necessary, convenient or incidental
to the accomplishment of the purpose of the Company;
(b) to acquire by purchase, lease, contribution of property or
otherwise, own, hold, operate, maintain, finance, improve, lease, sell,
convey, mortgage, transfer, demolish or dispose of any real or personal
property that may be necessary, convenient or incidental to the
accomplishment of the purpose of the Company;
(c) to act as the manager of a Subsidiary and to exercise all of the
powers, duties, rights and responsibilities associated therewith;
(d) to take any and all actions necessary, convenient or appropriate as
a manager of a Subsidiary, including the granting or approval of waivers,
consents or amendments of rights or powers relating thereto and the
execution of appropriate documents to evidence such waivers, consents or
amendments;
(e) to enter into, perform and carry out contracts of any kind,
including, without limitation, contracts with any Member, any Affiliate
thereof, or any agent of the Company necessary to, in connection with,
convenient to, or incidental to the accomplishment of the purpose of the
Company;
(f) to purchase, take, receive, subscribe for or otherwise acquire,
own, hold, vote, use, employ, sell, mortgage, lend, pledge, or otherwise
dispose of, and otherwise use and deal in and with, shares or other
interests in or obligations of domestic or foreign corporations,
associations, general or limited partnerships (including, without
limitation, the power to be admitted as a partner thereof and to exercise
the rights and perform the duties created thereby), trusts, limited
liability
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companies (including, without limitation, the power to be admitted as a
member or appointed as a manager thereof and to exercise the rights and
perform the duties created thereby), or individuals or direct or indirect
obligations of the United States or of any government, state, territory,
governmental district or municipality or of any instrumentality of any of
them;
(g) to lend money for its proper purpose, to invest and reinvest its
funds, to take and hold real and personal property for the payment of
funds so loaned or invested;
(h) to sue and be sued, complain and defend, and participate in
administrative or other proceedings, in its name;
(i) to appoint employees and agents of the Company (who may be
designated as Managers of the Company), and define their duties and fix
their compensation;
(j) to indemnify any Person in accordance with the Kansas Act and to
obtain any and all types of insurance;
(k) to cease its activities and cancel its Articles;
(1) to negotiate, enter into, renegotiate, extend, renew, terminate,
modify, amend, waive, execute, acknowledge or take any other action with
respect to any lease, contract or security agreement in respect of any
assets of the Company;
(m) to borrow money and issue evidences of indebtedness, and to secure
the same by a mortgage, pledge or other lien on the assets of the Company;
(n) to pay, collect, compromise, litigate, arbitrate or otherwise
adjust or settle any and all other claims or demands of or against the
Company or to hold such proceeds against the payment of contingent
liabilities; and
(o) to make, execute, acknowledge and file any and all documents or
instruments necessary, convenient or incidental to the accomplishment of
the purpose of the Company.
3.2.2 The Company, and on behalf of the Company, a designated Manager may
enter into and perform the operating agreement of any Subsidiary without any
further act, vote or approval of any Member notwithstanding any other
provision of this Agreement, the Kansas Act or other applicable law. The
Managers may authorize any Person (including, without limitation, any Member
or Manager) to enter into and perform any other document on behalf of the
Company.
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3.2.3 The Company may merge with, or consolidate into, another Kansas
limited liability company or other business entity upon approval by a
majority vote of the Members.
ARTICLE 4
CAPITAL CONTRIBUTIONS, INTERESTS,
CAPITAL ACCOUNTS AND ADVANCES
Section 4.1 Capital Contributions. Each Member has contributed to the capital
of the Company the amount set forth opposite the Member's name on Schedule A
attached hereto. No Member shall be required to make any additional Capital
Contribution to the Company.
Section 4.2 Member's Interest. A Member's Interest shall for all purposes be
personal property. A Member has no interest in specific Company property.
Section 4.3 Status of Capital Contributions. No Member shall receive any
interest, salary or drawing with respect to its Capital Contributions or its
Capital Account or for services rendered on behalf of the Company or otherwise
in his capacity as a Member, except as otherwise specifically provided in this
Agreement. Except as otherwise provided herein and by applicable state law, the
Members shall be liable only to make their Capital Contributions pursuant to
Section 4.1 hereof; and no Member shall be required to lend any funds to the
Company or, after a Member's Capital Contributions have been fully paid pursuant
to Section 4.1 hereof, to make any additional Capital Contributions to the
Company. No Member shall have any personal liability for the repayment of any
Capital Contribution of any other Member.
Section 4.4 Capital Accounts.
4.4.1 An individual Capital Account shall be established and maintained
for each Member. The original Capital Account established for any Member who
acquires an interest in the Company by virtue of an assignment in accordance
with the terms of this Agreement shall be in the same amount as, and shall
replace, the Capital Account of the assignor of such interest and, for
purposes of this Agreement, such Member shall be deemed to have made the
Capital Contributions made by the assignor of such interest (or made by such
assignor's predecessor in interest).
4.4.2 Subject to the provisions of Section 8.1 hereof, the Capital Account
of each Member shall be maintained in accordance with the following
provisions:
(a) to such Member's Capital Account there shall be credited such
Member's Capital Contributions and such Member's distributive share of
Profits; and
(b) to such Member's Capital Account there shall be debited the amount
of such Member's distributive share of Losses.
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ARTICLE 5
MEMBERS
Section 5.1 Classes of Membership.
5.1.1 The Company shall have two (2) classes of membership: Common Units
and Preferred Units. Except as provided in Sections 5.1.2 and 5.1.3, below,
the Members owning interests in the Common Units and the Preferred Units
shall have the exact same rights, powers and duties, including, but not
limited to, sharing of profits, losses and distributions.
5.1.2 Powers, Preferences and Rights of Common Units. The powers,
preferences and rights of the Common Units and the qualifications,
limitations and restrictions thereof, are set forth below.
5.1.2.1 Distributions. Subject to the provisions of Section 5.3 hereof,
the holders of the Common Units shall be entitled to share equally and
ratably in any withdrawals provided or distributions made with respect to
outstanding Common Units, when, as and if any such distributions are
determined by the Managers from funds legally available therefor;
5.1.2.2 Liquidation. Subject to the liquidation preference of the
Preferred Units as set forth in Section 5.1.3.2 hereof, the holders of
Common Units shall be entitled to share equally and ratably in the assets
of the Company to be distributed among the holders of Common Units upon
any liquidation or winding up of the Company, whether voluntary or
involuntary; and
5.1.2.3 Voting Rights. As provided in Section 6.1.2 below, each holder
of Common Units shall be entitled to vote on certain matters and on all
other matters on which Members are entitled to vote under the Kansas Act.
5.1.3 Powers, Preferences and Rights of Preferred Units. The powers,
preferences and rights of the Preferred Units and the qualifications,
limitations and restrictions thereof, are set forth below.
5.1.3.1 Distributions. Subject to the limitations set forth in this
Agreement, the holders of the Preferred Units shall be entitled to receive
cumulative preferred return per annum as set forth below from funds
legally available therefor, when, as and if declared by the Company's
Board. Such preferred return shall be payable yearly on March 15 (each a
"Distribution Date") of each year (unless such day is not a business day,
in which event on the next succeeding business day) to holders of record
as they appear on the register for the Preferred Units on the March 1
immediately preceding such Distribution Date, commencing on March 15,
2001. The holders of Preferred Units shall be entitled to receive a
cumulative preferred
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return measured at the rate of six and one-half percent (6%), compounded
semi-annually.
The preferred return on the Preferred Units shall accrue from the date
of original issue of each such Unit. The preferred return, if it is not
paid in full in cash on any Distribution Date will cumulate and such
cumulative return shall compound semi-annually until such accumulated
preferred return shall have been paid in full in cash. Any distribution of
such preferred return may be for a portion, or all, of the then
accumulated preferred return. Any accumulated preferred return which is
not paid will continue to cumulate in the manner described above.
No withdrawal shall be provided to, and no distribution shall be made,
to the Common Units, unless, contemporaneously therewith or with respect
to the immediately preceding Distribution Date for the Preferred Units,
the preferred return has been paid or was paid on the Preferred Units and
the Preferred Units have been or were repurchased or retired by the
Company.
5.1.3.2 Preference on Liquidation. In the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company, before
any payment or distribution of the assets of the Company (whether capital
or surplus), or proceeds thereof, shall be made to or set apart for the
holders of the Common Units, the holders of the Preferred Units shall be
entitled to receive payment of the amount of the investment evidenced by
each of the Preferred Units held by them, plus an amount in cash equal to
the accrued and unpaid preferred return thereon. After payment of the full
amount of this liquidation preference to which the holders of the
Preferred Units are entitled, such holders will not be entitled to any
further participation in any distribution of assets of the Company. For
the purposes of this paragraph, neither the merger nor the consolidation
of the Company into or with another limited liability company or a
corporation or the merger or consolidation of any other limited liability
company or a corporation into or with the Company or the sale, transfer or
other disposition of all or substantially all the assets of the Company,
shall be deemed to be a voluntary or involuntary liquidation, dissolution
or winding-up of the Company.
5.1.3.3 Voting. As provided in Section 6.1.2 below, each holder of
Preferred Units shall be entitled to vote on certain matters and on all
other matters on which Members are entitled to vote under the Kansas Act.
Section 5.2 Powers of Members. The Members shall have the power to exercise
any and all rights or powers granted to the Members pursuant to the express
terms of this Agreement or the Kansas Act.
Section 5.3 Partition. Each Member waives any and all rights that he may have
to maintain an action for partition of the Company's property.
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Section 5.4 Annual Meeting. The Members shall hold an annual meeting each
year on the 3rd Thursday of January at 9:00 a.m. for the transaction of such
business as may come before the meeting, the actual date thereof to be set forth
in the notice of meeting.
Section 5.5 Special Meeting. Special meetings of the Members, for any purpose
or purposes, unless otherwise prescribed by law or by the Articles, may be
called by a majority of the Managers, and shall be called by any Manager at the
request in writing of a Member or Members owning not less than twenty-five
percent (25%) of the entire Percentage Interests outstanding. Such request shall
state the purpose or purposes of the proposed meeting. Business transacted at
any special meeting of the Members shall be limited to the purposes stated in
the notice thereof.
Section 5.6 Place of Meeting.
5.6.1 The persons entitled to call a meeting may designate in the notice
of meeting any place within twenty-five (25) miles of Leawood, Kansas unless
otherwise prescribed by law or by the Articles, as the place of meeting for
any annual meeting or for any special meeting of the Members. If no
designation is made in the Notice of Meeting, the place of meeting shall be
the principal office of the Company in the State of Kansas.
5.6.2 A waiver of notice signed by all Members may designate any place,
either within or without the State of Kansas unless otherwise prescribed by
law or the Articles, as the place of holding of such meeting.
Section 5.7 Notice of Meeting.
5.7.1 Written or printed notice stating the place, day and hour of the
meeting, and in the case of a special meeting, the purpose or purposes for
which the meeting is called, shall be delivered not less than five (5) or
more than ten (10) days before the date of the meeting, either by fax
machine, courier, or by first-class mail, by or at the direction of a
Manager, or the persons calling the meeting, to each Member.
5.7.2 If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail, addressed to the Member at his address
as it appears in the membership records of the Company, with postage thereon
prepaid. If delivered otherwise, the notice shall be effective when received.
Section 5.8 Waiver of Notice of Meeting.
5.8.1 Whenever any notice to a Member is required pursuant to the
provisions above, each Member may waive such notice in writing at any time
before or after the time for the delivery of such notice, and such written
waiver of notice shall be equivalent to the timely giving of such notice.
5.8.2 Attendance at any meeting by any Member to whom notice of such
meeting must be given pursuant to the provisions above shall constitute
waiver of notice of such
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meeting by such Member, except when the Member attends such meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business at the meeting because the meeting is not
lawfully called or convened.
Section 5.9 Voting Lists. The Manager having charge of the membership records
for interests of the Company shall make, at least five (5) days before each
meeting of Members, a complete list of the Members entitled to vote at such
meeting, or any adjournment thereof, arranged in alphabetical order, with the
address of each Member and the Class of Units, the number of Units and the
Percentage Interest held by each Member, which list, for a period of five (5)
days prior to such meeting, shall be kept on file at the principal office of the
Company and shall be subject to inspection of any Member during the whole time
of the meeting. The original membership records shall be prima facie evidence as
to who are the Members entitled to examine such list or membership records or to
vote at any meeting of the Members.
Section 5.10 Quorum.
5.10.1 A majority of the membership interests of the Company entitled to
vote, represented in person or by proxy, shall constitute a quorum at a
meeting of Members, unless otherwise provided in the Articles, but in no
event shall a quorum consist of less than thirty-three and one-third percent
(33 1/3%) of the membership interests entitled to vote at the meeting.
5.10.2 If less than a majority of the membership interests are represented
at a meeting, a majority of the membership interests so represented may
adjourn the meeting from time to time without further notice. At such
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified.
5.10.3 The Members present at a duly organized meeting which begins with a
quorum or obtaining a quorum during the meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough Members
to leave less than a quorum.
Section 5.11 Voting of Interests. Each Member entitled to vote at a meeting
of the Members shall be entitled to vote in person or by proxy, signed by or on
behalf of the Member, based on the voting membership interests held by him and
reflected in the records of the Company prior to such meeting. Such right to
vote shall be subject to the right to close the membership records or to fix a
record date for voting Members.
Section 5.12 Proxies. At all meetings of Members, a Member may vote by proxy,
executed in writing by the Member or by his duly authorized attorney-in-fact;
but no proxy shall be valid after eleven (11) months from this date, unless the
proxy provides for a longer period. Such proxies shall be filed with the Manager
of the Company, designated to accept the proxies, before or at the time of the
meeting.
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ARTICLE 6
MANAGEMENT
Section 6.1 Management of the Company.
6.1.1The business and affairs of the Company shall be managed by the
Managers. Except as otherwise expressly provided herein, whenever this
Agreement requires or permits actions to be taken by the Managers, a majority
of the then serving Managers shall control.
6.1.2 Each Common Unit and Preferred Unit will have one vote with respect
to the management of any significant disposition by, or other significant
action of, the Company identified a Major Decisions in Section 6.2 hereof,
but the managers of the Company will be selected by CORnerstone Development.
If at least one-half of the preferred return on the Preferred Units to be
paid to the holders of these Preferred Units has not been paid by the end of
December 2007, each of the Common Units and the Preferred Units will have one
vote to select the manager with one exception as described in the succeeding
sentence. If the preferred return on the Preferred Units has not been paid
because of the requirements of the financial institution that provided the
permanent financing for the Company, and if the Company has at such time
retained sufficient cash or created a sufficient sinking fun to pay such
preferred returns but for the requirements of said financial institution, the
right to select the managers of the Company will remain with CORnerstone
Development.
6.1.3 Each Manager shall hold office for a period of one year or until the
annual meeting of Members following such one (1) year period and until his
successor has been qualified, unless sooner removed for cause by the Members
at any general or special meeting.
Section 6.2 Management of the Company. The Managers shall be responsible
for and shall have authority for conducting the ordinary and usual business and
affairs of the Company. The Managers are specifically authorized, in the name of
and on behalf of the Company, to:
(a) execute and deliver and cause the Company to execute and deliver
any and all instruments, contracts, documents, certifications and
instruments necessary or convenient in connection with the day-to-day
operations of the Company;
(b) execute and deliver, in furtherance of any or all of the purposes
of the Company, an deed, mortgage, note, bill of sale, contract or other
instrument purporting to convey, exchange or encumber all or any part of
the property owned by the Company, subject to the restrictions below;
(c) borrow money and issue evidences of indebtedness, and assume
existing indebtedness necessary, convenient or incidental to the
accomplishment of the purposes of the Company, subject to the restrictions
below;
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(d) deal with, or otherwise engage in business with, or provide
services to and receive compensation therefor from, any person who
provides any services to, lends money to, sells property to or purchases
property from the Company;
(e) invest Company funds as deemed advisable to the extent such funds
are not then required for Company operations and are not required to be
distributed pursuant to this Operating Agreement;
(f) retain or employ and coordinate the services of employees,
supervisors, accountants, attorneys and other persons necessary or
appropriate to carry out the business and purposes of the Company; and
(g) engage in any kind of activity and perform and carry out such
contracts of any kind necessary to, or in connection with, or incidental
to the accomplishment of, the business or purposes of the Company as may
be lawfully carried on or performed by a limited liability company.
Notwithstanding the foregoing, no act shall be taken, sum expended, decision
made or obligation incurred by the Company or the Managers, with respect to a
matter deemed to be a major decision (hereinafter called "Major Decisions"), as
enumerated below, unless such Major Decision has been approved by a majority of
the Members. The Major Decisions are:
i.The amendment, alteration or revision of this Operating Agreement;
ii.The adoption or assumption of any contractual or other obligation,
the value of which exceeds $5,000,000.00;
iii.The determination whether or not to make distributions to the
Members;
iv.The making of the Company as a surety, guarantor or accommodation
party to any transaction, agreement or obligation;
v.The assignment, transfer, pledge, release or compromise of any claims
or debts due to the Company in excess of $5,000,000.00;
vi.The determination of the compensation, if any, of any Member; and
vii.Any other decision or action which by any provision of this
Operating Agreement is required to be approved by the Members.
Section 6.3 Compensation of the Managers. The compensation of the Managers
shall be determined by the Members.
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Section 6.4 Removal. Any Manager may be removed by CORnerstone Development or
the Members, if they have received the right to select Managers pursuant to
Section 6.1.2, whenever in its or their judgment the best interests of the
Company will be served thereby, but such removal shall be without prejudice to
the contract rights, if any, of the person so removed.
Section 6.5 Vacancies. A vacancy in any office because of death, resignation,
removal, disqualification or otherwise, may be filled by CORnerstone Development
for the unexpired portion of the term.
Section 6.6 Reliance by Third Parties.
6.6.1 With respect to third parties, no Member is an agent of the
Company's business, and no Member may bind the Company. If a Member purports
to bind the Company, in addition to any other remedy (at law or in equity)
that may be available against such Member, such Member shall be liable for
all damages caused by breaching this Agreement.
6.6.2 Any Person dealing with the Company or any Manager may rely upon a
certificate signed by any Member as to:
(a) the identity of any Manager hereof;
(b) the existence or non-existence of any fact or facts which
constitute a condition precedent to acts by the Managers or in any other
manner germane to the affairs of the Company;
(c) the Persons who are authorized to execute and deliver any
instrument or document of or on behalf of the Company; or
(d) any act or failure to act by the Company or as to any other matter
whatsoever involving the Company or any Member or any Manager.
ARTICLE 7
AMENDMENTS
Section 7.1 Amendments. Any amendment to this Agreement shall be adopted and
be effective as an amendment hereto upon approval by a majority vote of the
Members, provided that such amendment be in writing.
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ARTICLE 8
ALLOCATIONS
Section 8.1 Profits and Losses.
8.1.1 Subject to the allocation rules of Section 8.2 hereof, Profits for
any Fiscal Year shall be allocated among the holders of the Common Units in
proportion to the Percentage Interests of all Common Units; provided,
however, the Company shall allocate the Profits to the holders of the
Preferred Units in accordance with the amount of the preferred return on the
Preferred Units that each such holder receives.
8.1.2 Subject to the allocation rules of Section 8.2 hereof, Losses for
any Fiscal Year shall be allocated among the holders of the Common Units in
proportion to the Percentage Interests of all Common Units.
Section 8.2 Allocation Rules.
8.2.1 Except as otherwise provided in this Agreement, all items of Company
income, gain, loss, deduction and any other allocations not otherwise
provided for shall be divided among the holders of the Common Units in the
same proportions as they share Profits and Losses for the Fiscal Year in
question.
8.2.2 The Members are aware of the income tax consequences of the
allocations made by this Article 8 and hereby agree to be bound by the
provisions of this Article 8 in reporting their shares of Company income and
loss for income tax purposes.
ARTICLE 9
DISTRIBUTIONS
Subject to the terms of Article 5 hereof, distributions to the holders of the
Units shall be made to the extent that a majority of the Managers shall
determine sufficient cash is available for any such distributions and the
continued operation of the Company. Notwithstanding any provision to the
contrary contained in this Agreement, the Company shall not make a distribution
to any Member on account of his interest in the Company if such distribution
would violate the Kansas Act or other applicable law.
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ARTICLE 10
BOOKS AND RECORDS
Section 10.1 Books, Records and Financial Statements.
10.1.1 At all times during the continuance of the Company, the Company
shall maintain, at its principal place of business, separate books of account
for the Company that shall show a true and accurate record of all costs and
expenses incurred, all charges made, all credits made and received and all
income derived in connection with the operation of the Company business in
accordance with generally accepted accounting principles consistently applied
and, to the extent not inconsistent therewith, in accordance with this
Agreement. Such books of account, together with a copy of this Agreement and
the Articles, shall at all times be maintained at the principal place of
business of the Company and shall be open to inspection and examination at
reasonable times by each Member and his duly authorized representative for
any purpose reasonably related to such Member's interest in the Company
within ten (10) business days before or after any date established for any
distribution pursuant to the terms hereof.
10.1.2 The Managers shall prepare and maintain, or cause to be prepared
and maintained, the books of account of the Company.
Section 10.2 Accounting Method. For both financial and tax reporting purposes
and for purposes of determining Profits and Losses, the books and records of the
Company shall be kept on the method of accounting applied in a consistent manner
determined by a majority of the Managers and shall reflect all Company
transactions and be appropriate and adequate for the Company's business.
Section 10.3 Form of Records. The Company may maintain its records in other
than a written form if such form is capable of conversion into written form
within a reasonable time.
ARTICLE 11
TAX MATTERS
Section 11.1 Allocation of Profits and Losses. The Company shall allocate the
Profits and Losses to the holders of the Common Units in proportion to all of
the Percentage Interests of the Common Units. The Company shall allocate the
Profits to the holders of the Preferred Units in accordance with the amount of
the preferred return on the Preferred Units that each such holder receives.
Section 11.2 Taxation as Partnership. Solely for federal and state income tax
purposes, each of the Members recognizes that the Company will be subject to all
provisions of Subchapter K of Chapter 1 of Subtitle A. of the Internal Revenue
Code and shall file the appropriate federal, state and local partnership tax
returns. Each Member shall file federal, state and local income tax returns
which
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are consistent with the corresponding tax returns filed by the Company for that
tax reporting period.
ARTICLE 12
LIABILITY, EXCULPATION AND INDEMNIFICATION
Section 12.1 Liability. Except as otherwise provided by the Kansas Act and
Section 6.6.1 hereof, the debts, obligations and liabilities of the Company,
whether arising in contract, tort or otherwise, shall be solely the debts,
obligations and liabilities of the Company, and no Covered Person shall be
obligated personally for any such debt, obligation or liability of the Company
solely by reason of being a Covered Person.
Section 12.2 Exculpation.
12.2.1 Except as provided in Section 6.6.1 hereof, no Covered Person shall
be liable to the Company or any other Covered Person for any loss, damage or
claim incurred by reason of any act or omission performed or omitted by such
Covered Person in good faith on behalf of the Company and in a manner
reasonably believed to be within the scope of authority conferred on such
Covered Person by this Agreement, except that a Covered Person shall be
liable for any such loss, damage or claim incurred by reason of such Covered
Person's willful misconduct.
12.2.2 A Covered Person shall be fully protected in relying in good faith
upon the records of the Company and upon such information, opinions, reports
or statements presented to the Company by any Person as to matters the
Covered Person reasonably believes are within such other Person's
professional or expert competence 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 or any other facts pertinent to the existence and amount of assets
from which distributions to Members might properly be paid.
Section 12.3 Indemnification.
12.3.1 The Company shall, and does hereby indemnify any person made a
party to an action, suit or proceeding, whether civil or criminal, brought to
impose a liability or penalty on such person in his capacity of Manager of
the Company against judgments, fines, amounts paid in settlement and
reasonable expenses, including attorneys' fees, actually or necessarily
incurred as a result of such action, suit or proceeding, or any appeal
therein, if such Manager acted in good faith in the reasonable belief that
such action was in the best interests of the Company, and in criminal actions
or proceedings, without reasonable ground for belief that such action was
unlawful.
12.3.2 Payments made under Section 12.4 may be made prior to the payment
by such Manager of any expenses and not by way of reimbursement, if the
majority of the other Managers deems such payment appropriate. If subsequent
to such payment, such Manager
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is determined, by a court of law or an arbitration proceeding, not to be
entitled to indemnification under Section 12.4, then such Manager repay the
Company the amounts so prepaid without interest. The Manager shall enter a
contract with the Company agreeing to the required repayments prior to the
initial prepayment by the Company of any requested indemnification amounts.
12.3.3 The termination of any such civil or criminal action, suit or
proceeding by judgment, settlement, conviction or upon a plea of nolo
contendere shall not, by itself, create a presumption that any Manager did
not act in good faith in the reasonable belief that such action was in the
best interests of the Company or that he had reasonable ground for belief
that such action was unlawful.
12.3.4 The foregoing rights of indemnification shall apply to the heirs and
personal representatives of any such Manager and shall not be exclusive of
other rights to which any provision of the Articles, this Agreement or a
vote of the Members or Board otherwise apply.
Section 12.4 Expenses. To the fullest extent permitted by applicable law,
expenses (including attorneys' fees) incurred by a Covered Person in defending
any claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Company prior to the final disposition of such claim, demand,
action, suit or proceeding upon receipt by the Company of an undertaking by or
on behalf of the Covered Person to repay such amount if it shall be determined
that the Covered Person is not entitled to be indemnified as authorized in
Section 12.3 hereof.
Section 12.5 Insurance. The Company may purchase and maintain insurance, to
the extent and in such amounts as the Managers shall deem reasonable, on behalf
of Covered Persons and such other Persons as the Board of Members shall
determine, against any liability that may be asserted against or expenses that
may be incurred by any such Person in connection with the activities of the
Company or such indemnities, regardless of whether the Company would have the
power to indemnify such Person against such liability under the provisions of
this Agreement. The Company may enter into indemnity contracts with Covered
Persons and such other Persons as the Board of Members shall determine and adopt
written procedures pursuant to which arrangements are made for the advancement
of expenses and the funding of obligations under Section 12.4 hereof and
containing such other procedures regarding indemnification as are appropriate.
Section 12.6 Outside Businesses. Any Member or Affiliate thereof may engage
in or possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar to the business
of the Company, and the Company and the Members shall have no rights by virtue
of this Agreement in and to such independent ventures or the income or profits
derived therefrom, and the pursuit of any such venture, even if competitive with
the business of the Company, shall not be deemed wrongful or improper. No Member
or Affiliate thereof shall be obligated to present any particular investment
opportunity to the Company even if such opportunity is of a character that, if
presented to the Company, could be taken by the Company, and any Member or
Affiliate thereof shall have the right to take for his own account (individually
or as a partner or fiduciary) or to recommend to others any such particular
investment opportunity.
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ARTICLE 13
ADDITIONAL MEMBERS
Upon approval by a Unanimous Vote of the Members, the Company is authorized
to admit any Person as an additional member of the Company (each, an "Additional
Member" and collectively, the "Additional Members"). Each such Person shall be
admitted as an Additional Member at the time such Person (i) executes this
Agreement or a counterpart of this Agreement and (ii) is named as a Member on
Schedule A hereto. In the event any Additional Members are admitted to the
Company, the Managers shall cause Schedule A to be updated to accurately reflect
the information therein. The fees and expenses, including attorneys' fees,
associated with such admission shall be borne by the Company or the Additional
Member as the Company may determine. Any Additional Members of the Company that
become Additional Members pursuant to the public offering of the Company
pursuant to Form SB-2 shall be deemed to have been simultaneously admitted and
CORnerstone Development, as the sole member at this time, hereby consents to
such Additional Members.
ARTICLE 14
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 14.1 No Dissolution. The Company shall not be dissolved by the
admission of Additional Members in accordance with the terms of this Agreement.
Section 14.2 Events Causing Dissolution. The Company shall be dissolved and
its affairs shall be wound up upon the occurrence of any of the following
events:
14.2.1 upon approval by a Unanimous Vote of the Members;
14.2.2 the death, retirement, resignation, expulsion, bankruptcy or
dissolution of a Member or the occurrence of any other event under the Kansas
Act that terminates the continued membership of a Member in the Company
unless, within ninety (90) days after the occurrence of such an event to the
extent that all of the Managers agree in writing to discontinue the business
of the Company; provided, however if the Managers shall take no action, they
shall be deemed to have agreed to the continuance of the business of the
Company; or
14.2.3 the entry of a decree of judicial dissolution in accordance with
the provisions the Kansas Act.
Section 14.3 Liquidation. Upon dissolution of the Company, the Person or
Persons approved by the Members to carry out the winding up of the Company (in
such capacity, the "Liquidating Trustee"), shall immediately commence to wind up
the Company's affairs; provided, however, that a reasonable time shall be
allowed for the orderly liquidation of the assets of the Company and the
satisfaction of liabilities to creditors so as to enable the Members to minimize
the normal losses attendant upon a liquidation. The Members shall continue to
share Profits and Losses during
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liquidation in the same proportions, as specified in Article 8 hereof; as
before liquidation. The proceeds of liquidation shall be distributed in the
following order and priority:
14.3.1 to creditors of the Company, including Members who are creditors,
to the extent otherwise permitted by law, in satisfaction of the liabilities
of the Company (whether by payment or the making of reasonable provision for
payment thereof); and
14.3.2 subject to liquidation preference of the Preferred Units as set
forth in Section 5.1.3.2 hereof, to the Members in accordance with their
Capital Account balances, after giving effect to all contributions,
distributions and allocations for all periods.
Section 14.4 Termination. The Company shall terminate when all of the assets
of the Company, after payment of or due provision for all debts, liabilities and
obligations of the Company, shall have been distributed to the Members in the
manner provided for in this Article 14 and the Articles shall have been canceled
in the manner required by the Kansas Act.
Section 14.5 Claims of the Members. The Members and former Members shall look
solely to the Company's assets for the return of their Capital Contributions,
and if the assets of the Company remaining after payment of or due provision for
all debts, liabilities and obligations of the Company are insufficient to return
such Capital Contributions, the Members and former Members shall have no
recourse against the Company or any other Member.
ARTICLE 15
SALE, ENCUMBRANCE OR TRANSFER OF UNITS
Members shall have the right to sell, transfer, assign, or otherwise dispose
of his Common Units during his lifetime to any Person, without the prior written
consent of the Company and the other Members.
ARTICLE 16
CERTIFICATES FOR INTERESTS
Every Member in the Company shall be entitled to have a certificate, signed
by a Manager of the Company.
ARTICLE 17
RECORD DATE
Section 17.1 Fixing of Record Date. The majority of the Managers is
authorized, from time to time, to fix in advance a date, no more than ten (10)
nor less than five (5) days before the date of any meeting of Members, or not
more than ten (10) days prior to the date for the payment of any distribution or
the date for the allotment of rights, or the date when any change or conversion
of or
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exchange of membership interests shall go into effect, or a date in connection
with the obtaining of the consent of Members for any purpose, as a record date
for the determination of the Members entitled to notice of and to vote at any
such meeting and any adjournment thereof, or entitled to receive payment of any
distribution, or to any such allotment, or to exercise the rights in respect of
any such consent.
ARTICLE 18
MISCELLANEOUS
Section 18.1 Notices. All notices provided for in this Agreement shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:
18.1.1 if given to the Company, at the address specified in Section 2.5
hereof; or
18.1.2 if given to any Member, at the address set forth opposite his name
on Schedule A attached hereto, or at such other address as such Member may
hereafter designate by written notice to the Company.
18.1.3 All such notices shall be deemed to have been given when received.
Section 18.2 Failure to Pursue Remedies. The failure of any party to seek
redress for violation of, or to insist upon the strict performance of, any
provision of this Agreement shall not prevent a subsequent act, which would have
originally constituted a violation, from having the effect of an original
violation.
Section 18.3 Cumulative Remedies. The rights and remedies provided by this
Agreement are cumulative and the use of any one right or remedy by any party
shall not preclude or waive his right to use any or all other remedies. Said
rights and remedies are given in addition to any other rights the parties may
have by law, statute, ordinance or otherwise.
Section 18.4 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of all of the parties and, to the extent permitted by this
Agreement, their successors, legal representatives and assigns.
Section 18.5 Interpretation. Throughout this Agreement, nouns, pronouns and
verbs shall be construed as masculine, feminine, neuter, singular or plural,
whichever shall be applicable. All references herein to "Articles," "Sections"
and "Paragraphs" shall refer to corresponding provisions of this Agreement.
Section 18.6 Severability. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision were omitted.
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Section 18.7 Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all parties hereto had signed the same
document. All counterparts shall be construed together and shall constitute one
instrument.
Section 18.8 Integration. This Agreement constitutes the entire agreement
among the parties hereto pertaining to the subject matter hereof and supersedes
all prior agreements and understandings pertaining thereto.
Section 18.9 Governing Law. This Agreement and the rights of the parties
hereunder shall be interpreted in accordance with the laws of the State of
Kansas, and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
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IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the
date first above stated
MEMBER:
CORNERSTONE DEVELOPMENT, LLC
By: /s/ Robert M. Adams
Name: Robert M. Adams
Title: Manager
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SCHEDULE A
Member Initial Capital Contribution Member Class,
and value Number of Units and
Percentage Interest
CORnerstone Development, LLC $10.00 Common
13720 Roe 1 Unit
Leawood, Kansas 66224 100%
