EXHIBIT 2.3
OPERATING AGREEMENT
OF
PORTFOLIO BOOST, L.L.C.
THIS OPERATING AGREEMENT ("Agreement") is made and entered into as of the
21st day of May, 1998, by and among Vacation Partners, Inc., an Iowa corporation
("VPI"); ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇. ▇▇▇▇▇▇▇▇"); ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇. ▇▇▇▇▇▇▇▇");
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ("▇▇. ▇▇▇▇▇▇"); ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ("▇▇. ▇▇▇▇▇▇"); ▇▇. ▇▇▇▇ ▇▇▇▇
("▇▇. ▇▇▇▇"); ▇▇▇▇▇▇▇ ▇▇▇▇ ("▇▇. ▇▇▇▇"); ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇. ▇▇▇▇▇▇▇▇");
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇. ▇▇▇▇▇▇▇▇"); and each person who may hereafter become a
Member (as that term is defined below) of Portfolio Boost, L.L.C. (the
"Company").
WHEREAS, VPI, ▇▇. ▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇. ▇▇▇▇,
▇▇. ▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇ are the Initial Members (as that term is
defined below) of the Company and desire to adopt and enter into this Agreement
to regulate the affairs of the Company, the conduct of its business, and the
relations of its Members.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
set forth below, the Members agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.1 Definitions. The following terms shall have the following meanings for
purposes of this Agreement (unless otherwise expressly provided herein):
(a) "Additional Member" shall mean any Person who or which is issued
Units and is admitted as a Member of the Company pursuant to the procedures
set forth in Section 9.1 below at any time after the date of this
Agreement, other than the Initial Members and any Substitute Members (as
those terms are defined below).
(b) "Adjusted Capital Account" shall mean, with respect to each
Member, the Member's Capital Account (as that term is defined below) as
adjusted by the items described in Sections 1.704-2(g)(1), 1.704-2(i)(5)
and 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Treasury Regulations (as
that term is defined below).
(c) "Articles of Organization" shall mean the Articles of
Organization of the Company, as amended from time to time.
(d) "Capital Account" shall mean, with respect to each Member, the
Capital Contributions (as that term is defined below) to the Company by the
Member as of a given date, adjusted up to the date in question pursuant to
Article VI below.
(e) "Capital Contribution" shall mean any cash, property, or services
rendered, or a promissory note or other binding obligation to contribute
cash or property or to perform services, which a Member contributes to the
capital of the Company in the capacity of a Member, whenever the same be
made.
(f) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, or corresponding provisions of subsequent superseding
federal revenue laws.
(g) "Fiscal Year" shall mean the Company's fiscal year, which shall be
from the first day of January to the last day of December.
(h) "Initial Members" shall mean each of the Members of the Company
identified in Article III below, and "Initial Member" shall mean any one of
them.
(i) "Iowa Act" shall mean the Iowa Limited Liability Company Act,
currently at Chapter 490A of the Code of Iowa, as amended from time to
time.
(j) "Members" shall mean, collectively, each of the Initial Members,
Additional Members and Substitute Members who are, as of a given time, a
member of the Company, whether said members are Voting Members or Nonvoting
Members (as those terms are defined below), and "Member" shall mean any one
of them.
(k) "Net Profits" shall mean, for each Fiscal Year, the income and
gains of the Company determined in accordance with generally accepted
accounting principles consistently applied from year to year employed under
the cash method of accounting and as reported, separately or in the
aggregate, as appropriate, on the Company's information tax return filed
for federal income tax purposes, plus any income exempt from federal income
tax under the Code.
(l) "Net Losses" shall mean, for each Fiscal Year, the losses and
deductions of the Company determined in accordance with generally accepted
accounting principles consistently applied from year to year employed under
the cash method of accounting and as reported, separately or in the
aggregate, as appropriate, on the Company's information tax return filed
for federal income tax purposes, plus any expenditures not deductible in
computing its taxable income and not properly chargeable to Capital
Accounts under the Code.
(m) "Nonvoting Distribution" is defined in Section 7.2 below.
(n) "Nonvoting Distribution Year" is defined in Section 7.2 below.
(o) "Nonvoting Members" shall mean the Persons (as that term is
defined below) who are issued or are otherwise holding Nonvoting Units (as
that term is defined below), and "Nonvoting Member" shall mean any one of
them.
(p) "Nonvoting Units" shall mean Units (as that term is defined
below) issued by the Company which do not entitle the holder thereof to
exercise any voting rights, except only with respect to the Special Voting
Matters (as that term is defined below) or in the event of the occurrence
of a Special Circumstance (as that term is defined below), but in any of
those events only up to the Return Date (as that term is defined below).
(q) "Person" shall mean any individual, general partnership, limited
partnership, limited liability company, joint venture, trust, business
trust, cooperative, association or other entity of whatever nature.
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(r) "Regulatory Allocations" shall mean the allocations pursuant to
Sections 7.1(b), (c), (d) and (e) below.
(s) "Return Date" is defined in Section 6.6 below.
(t) "Special Circumstances" is defined in Section 5.7 below.
(u) "Special Voting Matters" is defined in Section 5.9 below.
(v) "Substitute Member" shall mean any Person who or which is an
assignee of a Unit or Units and who or which has been admitted as a Member
of the Company with respect to such Unit or Units pursuant to the
procedures set forth in Section 8.2 below.
(w) "Treasury Regulations" shall mean the Income Tax Regulations,
including temporary regulations, promulgated under the Code, as such
regulations are amended from time to time.
(x) "Units" shall mean the capital units issued by the Company to its
Members in return for Capital Contributions, whether the same are Nonvoting
Units or Voting Units (as that term is defined below).
(y) "Voting Members" shall mean the Persons who are issued or
are otherwise holding Voting Units, and "Voting Member" shall mean any one
of them..
(z) "Voting Units" shall mean Units issued by the Company which
entitle the holder thereof to exercise voting rights.
ARTICLE II
PURPOSE OF THE COMPANY
----------------------
The Company shall have the authority to engage in any lawful business or
businesses, and to engage in all other activities necessary, customary,
convenient, or incidental to any thereto.
ARTICLE III
UNITS OF INITIAL MEMBERS; CERTIFICATES
--------------------------------------
3.1 Units and Capital Contributions of Initial Members. The names and
addresses of the Initial Members and the number and class of Units to be issued
to each of the Initial Members are as follows:
No. of Units
-----------------
Member Name, Address Voting Nonvoting
-------------------- ------ ---------
a. Vacation Partners, Inc. 100 -0-
1s121 Cantigny
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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b. ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, as -0- 57
joint tenants with full rights of survivorship,
and not as tenants in common
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
c. ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, as -0- 23
joint tenants with full rights of survivorship,
and not as tenants in common
▇▇▇▇▇ ▇▇▇▇▇ ▇
▇.▇. ▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
d. ▇▇. ▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇, as joint -0- 16
tenants with full rights of survivorship, and
not as tenants in common
▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, as joint -0- 4
tenants with full rights of survivorship, and
not as tenants in common
▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
The Capital Contributions to be made by the Initial Members for the above
specified Units are set forth in Schedule 1 attached to this Agreement. The
Company agrees to pay (or to reimburse an Initial Member for) all costs and fees
payable to the issuer of any letter of credit to be provided by an Initial
Member pursuant to Schedule 1 in order to obtain or maintain any such letter of
credit.
The Units of the Initial Members shall not be represented by certificates.
The Initial Members each hereby represent, warrant, acknowledge and agree
that (i) they are making their Capital Contribution to the Company and
purchasing their Units, and are otherwise entering into this Agreement and
becoming a Member of the Company, based solely upon their own independent
knowledge, inquiry, investigation, due diligence, belief and judgment, and (ii)
without limiting the preceding subclause (i), they have not relied upon any
representation or warranty from the Company, any other Initial Member, any
Person affiliated with any other Initial Member, or any other Person with
respect to any act, matter or thing whatsoever involving or relating to the
Company, including, without limitation, the potential success or profitability
of the Company or the likelihood of or amount of any Nonvoting Distributions.
The Initial Members each also acknowledge and understand that the business of
the Company, at least as it relates to serving as the general partner and/or
commodity pool operator of Pools (as that term is defined in Section 4.1(a)
below), is a speculative, volatile, high risk business.
3.2 Certificates of Membership Interest. The Voting Members may authorize
the issue of some or all of the issued Units either with or without
certificates. If Units with certificates are authorized, the certificates shall
be in such form as the Voting Members shall prescribe. Any authorization for
Units without
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certificates shall not affect Units already represented by certificates, if any,
until the certificates are surrendered to the Company. All Units and the
interests represented thereby shall in all events be issued and held upon and
subject to all of the terms and conditions of this Agreement (including, without
limitation, Sections 8.1 and 8.2 below), and the Voting Members may require that
any certificates which may be issued to evidence any Units shall bear a legend
to such effect (in addition to any other legends as the Voting Members may
require).
3.3 Execution of Certificates. All certificates for Units shall be
numbered in the order in which they shall be issued and shall be signed either
by (i) any Voting Member, or (ii) the President or a Vice President and the
Secretary or an Assistant Secretary of the Company, as any of the same may be
appointed pursuant to Section 4.5 below. The signatures of the Voting Member and
the referenced officers upon a certificate may be by facsimiles if the
certificate is countersigned by a transfer agent, or registered by a registrar,
other than the Company itself or an employee of the Company. In case any Voting
Member or officer who has signed or whose facsimile signature has been placed
upon a certificate for the Company shall have ceased to be a Voting Member or
such officer before such certificate is issued, the certificate may be issued by
the Company with the same effect as if he or she were a Voting Member or such
officer, as the case may be, at the date of issue of the certificate.
3.4 Cancellation. Every certificate surrendered to the Company for
exchange or transfer shall be canceled, and no new certificate or certificates
shall be issued in exchange for any existing certificate until such existing
certificate shall have been so canceled, except in cases provided in Section 3.5
below. Provided, however, that the Voting Members may in all events authorize
the issue of Units without certificates in exchange for any surrendered and
canceled certificate. Every certificate surrendered to the Company for transfer
shall be properly endorsed for transfer.
3.5 Lost, Destroyed, or Mutilated Certificates. In the event of the loss,
theft or destruction of any certificate for any Unit, another may be issued in
its place pursuant to such regulations as the Voting Members may establish
concerning proof of such loss, theft or destruction and concerning the giving of
satisfactory indemnity or bond or bonds of indemnity.
3.6 Unit Record and Ownership. A record shall be kept by the Company of
the names and addresses of all Members and the number and class of Units held by
each Member, and if the Units are represented by certificates, the respective
dates thereof and in case of cancellation, the respective dates of cancellation.
The Person in whose name Units stand on the books of the Company shall be deemed
the owner thereof for all purposes as regards the Company.
3.7 Transfers of Units. Transfers of Units shall be made only on the books
of the Company by the record holder thereof, or by such holder's attorney
thereunto authorized by power of attorney duly executed and filed with the
Company, and on surrender of the certificate or certificates for such Units, if
any, properly endorsed for transfer and the payment of all taxes thereon. All
Units and all interests represented thereby shall in all events be transferrable
only upon and subject to all the terms and conditions of this Agreement
(including without limitation, Sections 8.1 and 8.2 below).
3.8 Regulations. The Voting Members may make such other rules and
regulations as they may deem necessary or appropriate concerning the issue,
transfer and registration of Units, so long as such rules and regulations are
not inconsistent with the Articles of Organization, this Agreement or applicable
law.
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ARTICLE IV
RIGHTS AND DUTIES OF MEMBERS
----------------------------
4.1 Management. The business and affairs of the Company shall be managed
under the direction of the Voting Members. Without limiting the generality of
the foregoing, the Voting Members shall have the power and authority, as a
group, on behalf of the Company:
(a) to organize or cause the organization of such number of limited
partnerships or other form of entities as the Voting Members may determine
from time to time to act as commodity pools (individually, a "Pool," and
collectively, the "Pools"), and to cause the Company to be and otherwise
act as and perform all of the duties and obligations of the commodity pool
operator and/or general partner, manager or other agent for such Pools;
(b) to cause the Company to become and otherwise act as and perform
all of the duties and obligations of the commodity pool operator and
general partner, manager or other agent for any existing Pools as the
Voting Members may determine from time to time, including, without
limitation, Corn Belt Commodities Round Trip Limited Partnership, an Iowa
limited partnership;
(c) to cause the Company to be registered or licensed as a commodity
pool operator and/or commodity trading advisor with the Commodity Futures
Trading Commission and the National Futures Association, and to prepare,
execute and file all applications and other documentation as is necessary
or appropriate thereto and to maintain any such registration or license;
(d) to employ or otherwise retain the services of such agents,
employees, managers, accountants, attorneys, consultants, experts and other
Persons (including, without limitation, commodity trading advisors,
introducing brokers, futures commission merchants and floor brokers) as the
Voting Members determine to be necessary or appropriate to carry out the
business and affairs of the Company or any Pool from time to time, whether
or not any such Persons so employed or retained are a Member or are
affiliated or related to any Member, all upon terms satisfactory to the
Voting Members, and to pay such fees, salaries, wages and other
compensation to such Persons from Company funds as the Voting Members shall
determine from time to time;
(e) to pay, extend, renew, modify, adjust, contest, submit to
arbitration, prosecute, defend or compromise, upon such terms as the Voting
Members may determine and upon such evidence as the Voting Members may deem
sufficient, any obligation, suit, liability, cause of action, claim,
counterclaim or other dispute, including, without limitation, taxes, either
in favor of or against the Company and/or any Pool;
(f) to pay any and all fees and to make any and all other
expenditures which the Voting Members deem necessary or appropriate to or
in connection with the organization of the Company or any Pool, the
registration, offering and sale of any securities or other interests in the
Company or any Pool, the carrying out of the Company's obligations and
responsibilities with respect to any Pool, or otherwise to or with the
business and affairs of the Company or any Pool;
(g) to conduct and direct the banking business of the Company and to
invest any funds of the Company that are not required for or are otherwise
not committed to the conduct of the Company's
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business from time to time in such manner as the Voting Members may from
time to time determine, including, without limitation, in certificates of
deposit, commercial paper, treasury bills, "sweep" accounts, and other
investments;
(h) to negotiate, enter into, execute, acknowledge and deliver any
and all contracts, agreements. documents or instruments necessary or
appropriate to carry on the business or purposes of the Company or any
Pool, and with such Persons as the Voting Members shall from time to time
determine, including, without limitation, granting the commodity trading
advisor or advisors of the Company or any Pool a power of attorney to
effect trades on behalf of the Company or any Pool on a discretionary
basis; subscription agreements for any securities or other interests in any
Pools; checks, drafts, notes and other negotiable instruments; mortgages or
deeds of trust; security agreements; financing statements; documents
providing for the acquisition, mortgage or disposition of the Company's
property; assignments; bills of sale; leases; partnership agreements; and
all other contracts, agreements, instruments or documents necessary or
appropriate, in the opinion of the Voting Members, to the business of the
Company or any Pool;
(i) to cause to be paid any and all taxes, charges and assessments
that may be levied, assessed or imposed upon any of the assets of the
Company or any Pool, unless the same are contested in good faith by the
Voting Members;
(j) in connection with any offering of securities or any other
interests in the Company or any Pool, the Voting Members may, on behalf of
the Company and such Pool: (i) cause to be filed one or more Offering
Statements or Registration Statements and related documentation, and all
such amendments thereto as the Voting Members shall deem advisable from
time to time, with the Securities and Exchange Commission, the National
Association of Securities Dealers, Inc. and/or any other domestic or
foreign authorities for the registration and offering of any securities or
other interests in the Company or any Pool in the United States or
elsewhere and one or more Offering Circulars or Prospectuses and amendments
and supplements thereto with the Commodity Futures Trading Commission and
the National Futures Association; (ii) register or otherwise qualify such
securities or other interests for offering and sale under the blue sky and
securities laws of such states of the United States and other domestic or
foreign jurisdictions as the Voting Members shall deem advisable; (iii)
make all such arrangements for the offering and sale of such securities or
other interests as the Voting Members shall deem appropriate, whether
pursuant to a registration of the securities or other interests or
otherwise; and (iv) take all such action with respect to the matters
described in the preceding subclauses (i) through (iii) as the Voting
Members shall deem advisable or appropriate.
(k) to take all such action as the Voting Members deem necessary or
appropriate to avoid the requirement that the Company or any Pool register
as an investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), or to take all such action as the Voting Members
deem necessary or appropriate to register the Company or any such Pool as
an investment company under and to otherwise bring the Company or such Pool
in compliance with the 1940 Act;
(l) to acquire property from any Person as the Voting Members may
determine, and the fact that such Person is a Member or that a Member is
directly or indirectly affiliated or connected with any such Person shall
not prohibit the Voting Members from dealing with that Person;
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(m) to borrow money for the Company from banks, other lending
institutions, a Member, or an affiliate of a Member on such terms as the
Voting Members deem appropriate, and in connection therewith, to mortgage,
encumber and grant security interests in the assets of the Company to
secure repayment of the borrowed sums;
(n) to purchase liability and other insurance to protect the
Company's property and business or any other potential obligations or
liabilities of the Company, including, without limitation, obligations and
liabilities arising under Article XI below;
(o) to hold and own any Company real and/or personal properties in
the name of the Company;
(p) to declare and pay distributions to the Members as described in
Section 7.2 below; and
(q) to do and perform any and all other acts and things whatsoever as
the Voting Members shall from time to time determine to be necessary or
appropriate to carry out any of the foregoing or any other term or
condition of this Agreement, or to the conduct or operation of the
Company's or any Pool's business and affairs from time to time, and not
inconsistent with applicable law, the Articles of Organization or this
Agreement.
4.2 No Liability For Certain Acts. A Member does not, in any way,
guarantee the return of any Member's Capital Contributions or a profit for the
Members from the operations of the Company, except only as expressly provided in
Section 6.6 below with respect to VPI's agreements to pay the Return Amounts to
the Nonvoting Members. A Member is not personally liable for the acts or
omissions of or any debts, obligations, losses, duties or obligations of the
Company, except only to the extent of any unpaid Capital Contribution of the
Member.
4.3 Members Have No Exclusive Duty to Company. A Voting Member, solely by
reason of being a Voting Member, shall not be required to manage the Company as
the Voting Members' sole and exclusive function, and any Member may have other
business interests and may engage in other activities in addition to those
relating to the Company, including interests and activities which are
competitive with the Company or any Pool. Neither the Company nor any Member
shall have any right, by virtue of this Agreement, to share or participate in
any such other investments or activities of any of the Members or to any income,
proceeds or other benefits derived therefrom.
4.4 Salary. The salaries, benefits and all other compensation to be paid
to or received by the Voting Members in consideration of their management
activities on behalf of the Company shall be fixed from time to time by the
Voting Members, and no Voting Member shall be prevented from receiving such
salary, benefits or other compensation by reason of the fact that the Voting
Member is also a Voting Member and/or Nonvoting Member of the Company.
4.5 Officers. The Voting Members may appoint themselves or other
individuals (whether or not employees or Members of the Company) as officers of
the Company, which may include, but shall not be limited to, any one or more of
the following: (a) a President; (b) one or more Vice Presidents; (c) a
Secretary; and (d) a Treasurer. The Voting Members may delegate all or any
portion of their day-to-day management responsibilities to any such officer or
officers, as determined by the Voting Members from time to time, and such
officers shall have the authority to contract for, negotiate on behalf of and
otherwise act for and on behalf of and represent the
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Company as so authorized by the Voting Members. Unless the Voting Members decide
otherwise, if the title is one commonly used for officers of a business
corporation formed under the Iowa Business Corporation Act, the assignment of
such title shall constitute the delegation to such individual of the authority
and duties that are normally associated with that office, and any additional
authority and duties, if any, as may be set forth in the contract or resolution
appointing the officer in question; subject, however, to any specific delegation
of authority and duties or specific restriction on the authority and duties as
may be made under or set forth in any such contract or resolution. The officers
shall in all events be subject to the direction and control of the Voting
Members.
If the Voting Members determine to appoint an officer or officers for the
Company, each such officer shall hold office until his or her successor shall
have been duly chosen and shall qualify or until his or her death or until he or
she shall resign or shall have been removed.
An officer may resign at any time by delivering written notice to the
Secretary, if one has been appointed by the Voting Members, or, in the absence
of a Secretary, to the Voting Members. A resignation is effective when the
notice is delivered to the Secretary or any Voting Member, as the case may be,
unless the notice specifies a later effective date. Any officer may be removed
by the Voting Members at any time, with or without cause, but such removal shall
be without prejudice to the contract rights, if any, of the person so removed.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ is hereby appointed by the Voting Members to be and serve
as the President, Treasurer and Secretary of the Company. As of the date of this
Operating Agreement, there were no other officers of the Company.
4.6 Execution of Documents. Notwithstanding anything in this Agreement
which may appear to be to the contrary, the Voting Members may authorize any
officer or officers or Voting Member or Voting Members to negotiate and enter
into any agreement or contract and to negotiate, execute and deliver any
instrument or document in the name of and on behalf of the Company, and such
authority may be general or confined to specific instances.
4.7 Company Books. The Voting Members shall maintain and preserve at the
principal office of the Company relevant Company documents, including, but not
limited to (i) a current list of the full name and last known business address
of each Member; (ii) a copy of the Articles of Organization and all amendments
thereto; (iii) copies of the Company's federal, state and local income tax
returns and reports, if any, for the three most recent years; (iv) a copy of
this Agreement and all amendments thereto; and (v) copies of any financial
statements of the Company for the three most recent years.
The Voting Members shall also cause such books and records to be kept as
are necessary or appropriate to determine and calculate the various allocations
and distributions which are to be made to the Nonvoting Members pursuant to this
Agreement.
Each Member has the right, for any purpose reasonably related to the
Member's interest as a member of the Company, and upon reasonable request and
during ordinary business hours, to (i) inspect and copy the above referenced
Company documents at the Member's expense, and (ii) obtain from the Voting
Members, from time to time upon reasonable demand (x) true and full information
regarding the state of the business and financial condition of the Company; (y)
promptly after they become available, a copy of the Company's federal, state and
local income tax returns for each year; and (z) other information regarding the
affairs of the Company as is just and reasonable.
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4.8 Priority and Return of Capital. No Member shall have priority over
any other Member, either as to the return of Capital Contributions or as to Net
Profits, Net Losses or distributions, except only as may be provided with
respect to (i) the payment of the Return Amounts to the Nonvoting Members in
Section 6.6 below, (ii) the allocation of Net Profits and Net Losses in Section
7.1 below, and (iii) distributions in Sections 7.2 and 10.2 below. This Section
4.8 shall also not apply to any loans (as distinguished from Capital
Contributions) which a Member has made to the Company.
4.9 Withdrawal of a Member. A Member may not and does not have the power
or right to withdraw or resign from the Company prior to the dissolution and
winding up of the Company, except only as provided with respect to the Nonvoting
Members in Section 8.4 below.
No Member shall cease to be a member of the Company because of the
occurrence of any act or circumstance, including, without limitation, those
matters specified in Section 490A.712 of the Iowa Act, except only as may be
otherwise expressly provided in this Agreement.
4.10 Member Representative. Any Member that is other than an individual
shall designate and appoint one individual to act as the Member's exclusive
representative of the Member for all purposes related to the Company, including,
without limitation, for purposes of participation of the Member in all meetings
of the Members, the voting of the Units of the Member and the execution of any
written action evidencing action of the Members taken without a meeting. A
Member may change the identity of its representative at any time and from time
to time, in the Member's discretion, but shall provide prompt written notice of
any new representative to the other Members. VPI hereby designates ▇▇▇▇▇▇▇ ▇.
▇▇▇▇ as its initial representative for purposes of the Company.
4.11 Member Authority Limited. Unless expressly authorized to do so by
this Agreement or by the Voting Members or a properly authorized officer of the
Company, no Member, agent, or employee of the Company shall have any power or
authority to bind the Company in any way, to pledge its credit or to render it
liable pecuniarily for any purpose. No Member may delegate to any Person the
Member's rights and powers to manage and control the business and affairs of the
Company, except only (i) with respect to the Voting Members' right to manage the
business and affairs of the Company, as provided in Section 4.5 above regarding
the appointment of officers, and (ii) with respect to the voting of Units, as
provided in Section 5.11 below regarding to the giving of a proxy.
ARTICLE V
MEETINGS OF MEMBERS; VOTING RIGHTS OF MEMBERS;
----------------------------------------------
MANNER OF ACTING OF MEMBERS
---------------------------
5.1 Regular Meetings and Special Meetings of Voting Members. Regular
meetings of the Voting Members shall be held at such place and at such times as
the Voting Members may by resolution fix and determine from time to time. No
notice shall be required for any regular meeting of the Voting Members.
Special meetings of the Voting Members, for any purpose or purposes, unless
otherwise affirmatively required by the Iowa Act, may be called by the President
(if one has been elected), or by any Voting Member or Voting Members holding at
least thirty percent (30%) of the total outstanding Voting Units.
5.2 Place of Meetings. The Voting Members or the President, if the
President is calling the meeting, may designate any place, either within or
outside the State of Iowa, as the place of meeting for any
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regular or special meeting of the Voting Members or any meeting of the Members
as a whole. If no designation is made, the place of meeting shall be the
principal office of the Company.
5.3 Notice of Meetings. Except as provided in Section 5.1 above with
respect to regular meetings of the Voting Members and in Sections 5.4 and 5.12
below, written notice stating the place, day and hour of all meetings of the
Voting Members and, in the case of a special meeting of the Voting Members, the
purpose or purposes for which the meeting is called, shall be given to each
Voting Member not less than ten (10) nor more than fifty (50) days before the
date of the meeting, either personally or by mail, by or at the direction of the
Voting Member or Voting Members or other person calling the meeting. If mailed,
such notice shall be given as provided in Section 12.1 below.
5.4 Meeting of all Members. If all of the Voting Members or Members as a
whole, as the case may be, shall meet at any time and place, either within or
outside of the State of Iowa, and consent to the holding of a meeting at such
time and place, such meeting shall be valid without call or notice, and at such
meeting lawful action may be taken.
5.5 Conduct of Business. At all meetings of the Voting Members or the
Members as a whole, as the case may be, the persons designated by the vote of
the Voting Members holding at least a majority of the total outstanding Voting
Units shall, respectively, preside at the meeting and act as secretary at the
meeting. At all meetings of the Voting Members or the Members as a whole, as the
case may be, business shall be transacted in such order as the person designated
to preside over the meeting may from time to time determine.
The Voting Members may adopt rules and regulations for the conduct of the
meetings of the Voting Members or the Members as a whole, as the case may be,
and for the management of the Company, so long as such rules and regulations are
not inconsistent with the Articles of Organization, this Agreement or the Iowa
Act.
5.6 Record Date. The record date for the purpose of determining the
Voting Members or Members entitled to notice of or to vote at any meeting of the
Voting Members or the Members as a whole, as the case may be, shall be the date
on which notice of the meeting is mailed. A determination of the Voting Members
or Members entitled to notice of or to vote at any meeting of the Voting Members
or Members as a whole, as the case may be, which has been made as provided in
this Section 5.6 shall also apply to any adjournment of such meeting.
5.7 Voting Rights of Members. The Voting Members shall have one vote for
each Unit held by them, and shall be entitled to vote on any matter on which the
vote of the Voting Members or the Members as a whole, as the case may be, is
taken or is required by the Articles of Organization, this Agreement, the Iowa
Act or other applicable law.
Notwithstanding anything in this Agreement or otherwise which may appear to
be to the contrary, the Nonvoting Members shall not have any voting rights with
respect to any act or matter whatsoever, except only that:
(a) Nonvoting Units shall have voting rights as provided in Section
5.9 below with respect to any Special Voting Matters as may be otherwise
submitted for the vote of the Voting Members at any time prior to the
Return Date; and
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(b) Nonvoting Units and Nonvoting Members shall be deemed to be, and
shall be treated for all purposes as, respectively, Voting Units and Voting
Members (except as provided below in this subparagraph (b)) in the event
either of the following circumstances (collectively, the "Special
Circumstances") occur before the Return Date, and in any such event only up
to the Return Date:
(i) the net worth (as that term is defined below in this
Section 5.7) of the Company falls below the sum of $700,000 plus the
amount of any Nonvoting Distributions that are then owed to the
Nonvoting Members (the "Minimum Amount"), and then only for so long as
the net worth of the Company is below the Minimum Amount and in all
events only up to the Return Date; or
(ii) the death or total disability (as that term is defined
below in this Section 5.7) of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, and then only for so
long as ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ is totally disabled, if applicable, and in all
events only up to the Return Date.
Nonvoting Units and the Nonvoting Members shall not, however, be deemed to
be or treated as, respectively, Voting Units and Voting Members
notwithstanding the occurrence of a Special Circumstance, and shall in all
events continue to be treated as Nonvoting Units and Nonvoting Members with
respect to (i) the payment of the Return Amounts to the Nonvoting Members
as provided in Section 6.6 below; (ii) the allocation of Net Profits and
Net Losses under Section 7.1 below; (iii) distributions under Sections 7.2
and 10.2 below; and (iv) the sale and purchase of the Nonvoting Units as
provided in Section 8.4 below.
The Nonvoting Members shall not otherwise participate in the management of the
Company, and, as provided above, shall in all events have no right to
participate in the management of the Company (whether with respect to Special
Voting Matters or in the event of the occurrence of any Special Circumstance) at
any time after the Return Date. Nonvoting Members are also not in any event
agents of the Company for the purpose of its business or affairs or otherwise.
The term "net worth" for purposes of subparagraph (b)(i) above in this
Section 5.7 shall mean the net worth of the Company as determined in accordance
with generally accepted accounting principles, consistently applied with respect
to the Company, as determined by the accountant or accounting firm then
servicing the Company, which determination shall be binding upon the Company and
the Members. The term "total disability" or "totally disabled" for purposes of
subparagraph (b)(ii) above in this Section 5.7 shall mean the inability of ▇▇.
▇▇▇▇ to provide the services required of ▇▇. ▇▇▇▇ by the Company on a
substantially full time basis by reason of any medically determinable physical
or mental impairment which can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not less than three
(3) months. Any such determination shall be made by the Members and must be
based upon an independent third party medical opinion.
A Member may hold both Voting Units and Nonvoting Units. In such event, the
Member shall be a Voting Member with respect to the Member's Voting Units and a
Nonvoting Member with respect to the Member's Nonvoting Units for purposes of
this Agreement.
5.8 Quorum. The Voting Members holding at least a majority of the total
outstanding Voting Units, represented in person or by proxy, shall constitute a
quorum at any meeting of the Members. In the absence of a quorum at any meeting
of the Members, a majority of the outstanding Voting Units so represented
12
may adjourn the meeting from time to time without further notice. At any 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 noticed. The Voting Members present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
during such meeting of the Voting Members whose absence would cause less than a
quorum. The Nonvoting Members holding at least a majority of the total
outstanding Nonvoting Units, represented in person or by proxy, shall constitute
a quorum of the Nonvoting Members for purposes of any meeting of the Nonvoting
Members.
5.9 Manner of Acting. The affirmative vote of the Voting Members holding
at least a majority of the total outstanding Voting Units shall be the act of
the Voting Members with respect to all acts or matters submitted to a vote of
the Voting Members, except only that the Company and the Voting Members shall
not take any of the actions described below (collectively, the "Special Voting
Matters") at any time prior to the Return Date without the additional
affirmative vote of the Nonvoting Members holding at least a majority of the
total outstanding Nonvoting Units:
(i) The sale, lease, exchange or other transfer or disposition
(other than the mortgage, pledge or other grant of security interest) of
all or substantially all of the assets of the Company other than in the
ordinary course of business of the Company;
(ii) The merger or consolidation of the Company with any other
Person, except that all of the Members hereby give their consent to the
merger of Corn Belt Management, Inc., an Iowa corporation, with and into
the Company upon such terms as the Voting Members may determine;
(iii) The voluntary dissolution of the Company;
(iv) The issuance of any Voting Units or Nonvoting Units to any
Initial Member other than the Voting Units and Nonvoting Units specified in
Article III above;
(v) The issuance of any Units to any Additional Members;
(vi) The approval of the assignment of any Units to any Person or
the approval of any Substitute Member for any Units, except for assignments
and transfers by VPI as provided in Section 8.3 below; or
(vii) The amendment of the Articles of Organization of the Company or
this Agreement.
As provided in Section 5.7 above and in this Section 5.9, the Nonvoting Members
shall not have the right to vote on any Special Voting Matter, or any other act
or matter whatsoever, at any time after the Return Date. This Section 5.9 does
not grant Nonvoting Members any rights or privileges of a Voting Member, but
rather only grants Nonvoting Members the right to vote on any Special Voting
Matter as expressly provided above.
5.10 Meetings of Nonvoting Members. The Nonvoting Members of the Company
shall be entitled to attend any meeting of the Voting Members of the Company for
purposes of the Nonvoting Members having the opportunity to question the Voting
Members about the business and affairs of the Company, and the Nonvoting Members
shall be given notice of each regular and special meeting of the Voting Members
in the manner otherwise provided for the giving of notice of a special meeting
of the Voting Members in Section 5.3
13
above. The Nonvoting Members shall not be entitled to vote on any act or matter
submitted to the vote of the Voting Members at any meeting, except only as
expressly provided in Sections 5.7 and 5.9 above.
The Voting Members shall call a special meeting of the Members upon receipt
of a written request for such a special meeting from the Members holding at
least thirty percent (30%) of the total outstanding Units (whether Voting Units
or Nonvoting Units), which written request shall specify the purpose or purposes
of the special meeting. The Voting Members shall call a special meeting of the
Members within thirty (30) days of receipt of such a written notice and shall
provide a notice of the special meeting to all of the Members in the manner
otherwise provided for the giving of notice of a special meeting of the Voting
Members in Section 5.3 above. The Nonvoting Members shall not have the right to
vote on any act or matter submitted to the vote of the Voting Members at any
special meeting of the Members, except only as expressly provided in Sections
5.7 and 5.9 above.
5.11 Proxies. At all meetings of the Voting Members or the Members as a
whole, as the case may be, a Member may vote in person or by proxy executed in
writing by the Member or by a duly authorized attorney-in-fact. Any such proxy
must be filed with the Voting Members before or at the time of the meeting. No
proxy shall be valid after eleven (11) months from the date of its execution,
unless otherwise provided in the proxy.
5.12 Action by Members Without a Meeting; Telephonic Meetings. Action
required or permitted to be taken at a meeting of the Voting Members, the
Nonvoting Members, or the Members as a whole, as the case may be, may be taken
without a meeting and without notice if the action is taken by all of the
Members entitled to vote on the acts or matters in question and is evidenced by
one or more written consents describing the action taken, signed by each Member
entitled to vote and delivered to the Voting Members for filing with the
Company's records. Action taken under this Section 5.12 is effective when all
Members entitled to vote have signed the consent, unless the consent specifies a
different effective date. The record date for determining the Members entitled
to take action without a meeting shall be the date the first Member signs a
written consent.
Members (whether Voting Members and/or Nonvoting Members) may participate
in and hold a meeting by means of conference telephone or similar communications
equipment by means of which all Members participating in the meeting can hear
each other, and participation in such meeting shall constitute attendance and
presence in person at such meeting, except where a Member participates in the
meeting for the express purpose of objecting to the transaction of any business
on the ground that the meeting is not lawfully called or convened.
5.13 Waiver of Notice. When any notice is required to be given to any
Member, a waiver thereof in writing signed by the Member entitled to such
notice, whether before, at, or after the time stated therein, shall be
equivalent to the giving of such notice.
ARTICLE VI
CONTRIBUTIONS TO THE COMPANY; UNITS AND CAPITAL ACCOUNTS
--------------------------------------------------------
6.1 Capital Contributions. Each Initial Member shall contribute such
amount as is set forth in Schedule 1 attached to this Agreement as the Initial
Member's Capital Contribution for their respective Voting Units or Nonvoting
Units, as the case may be, set forth in Article III above. No subsequent Capital
Contributions may be required of any Initial Member, except only as expressly
provided in Section 6.6 below with respect to VPI.
14
6.2 Units. Each Member's Capital Contribution to the Company shall be
represented by either Voting Units or Nonvoting Units. An unlimited number of
both Voting Units and Nonvoting Units are hereby authorized. The Initial Members
shall receive the number of Voting Units and/or Nonvoting Units as set forth in
Article III above. The issuance of any additional Voting Units or Nonvoting
Units to any Initial Member shall be subject to the vote of the Voting Members
who hold at least a majority of the total outstanding Voting Units, and, if the
Units are to be issued to the Initial Member prior to the Return Date, also
subject to the vote of the Nonvoting Members who hold at least a majority of the
total outstanding Nonvoting Units, as is provided in Section 5.9 above.
The issuance of Voting Units and/or Nonvoting Units to an Additional Member
shall be subject to the vote of the Voting Members who hold at least a majority
of the total outstanding Voting Units, and, if the Units are to be issued to the
Additional Member prior to the Return Date, also subject to the vote of the
Nonvoting Members who hold at least a majority of the total outstanding
Nonvoting Units, as is provided in Section 5.9 above and Section 9.1 below.
No Member shall have any preemptive or other right to acquire any Units the
Company may from time to time issue to any Person.
6.3 Capital Accounts.
(a) A separate Capital Account will be maintained for each Member.
Each Member's Capital Account will be increased by (i) the amount of money
contributed by such Member to the Company; (ii) the Gross Asset Value (as
that term is defined in Section 6.5 below) of property contributed by such
Member to the Company (net of liabilities secured by such contributed
property that the Company is considered to assume or take subject to under
Section 752 of the Code); and (iii) the amount of Net Profits allocated to
such Member pursuant to Section 7.1 below. Each Member's Capital Account
will be decreased by (i) the amount of money distributed to such Member by
the Company; (ii) the Gross Asset Value of property distributed to such
Member by the Company (net of liabilities secured by such distributed
property that such Member is considered to assume or take subject to under
Section 752 of the Code); (iii) the amount of Net Losses allocated to such
Member pursuant to Section 7.1 below; and (iv) the Member's share of
expenditures described in Code Section 705(a)(2)(B).
(b) In the event of a permitted sale or exchange of a Unit, the
Capital Account of the transferor shall become the Capital Account of the
transferee to the extent it relates to the transferred Unit, subject to
Section 9.2 below.
(c) The manner in which Capital Accounts are to be maintained
pursuant to this Section 6.3 is intended, and shall be construed, so as to
comply with the requirements of Code Section 704(b) and the Treasury
Regulations promulgated thereunder, and in the event there exists any
inconsistency, the Code and said Treasury Regulations shall control.
(d) Upon liquidation of the Company, liquidating distributions will
be made in accordance with Section 10.2 below.
6.4 No Demand of Member Capital. A Member shall not be entitled to demand
or receive from the Company the liquidation of the Member's Units in the Company
until the Company is dissolved in accordance
15
with the provisions hereof, except only as expressly provided in Sections 6.6
and 8.4 below with respect to the Nonvoting Units.
6.5 Gross Asset Value. "Gross Asset Value" means, with respect to any
asset, the asset's adjusted basis for federal income tax purposes, except as
follows:
(a) The initial Gross Asset Value of any asset contributed by a
Member to the Company shall be the gross fair market value of such asset,
as determined by the Voting Members, provided that (i) the initial Gross
Asset Value of the respective promissory notes contributed to the Company
by certain of the Nonvoting Members shall be deemed to be the principal
amount of the promissory note in question, and (ii) the initial Gross Asset
Value of the assets contributed by VPI shall be deemed to be the amounts
set forth in Schedule 2 attached hereto;
(b) The Gross Asset Values of all Company assets shall be adjusted to
equal their respective gross fair market values, as determined by the
Voting Members, as of the following times: (i) the acquisition of an
additional Unit or Units by any new or existing Members in exchange for
more than a de minimis Capital Contribution; (ii) the distribution by the
Company to a Member of more than a de minimis amount of property as
consideration for a Unit; and (iii) the liquidation of the Company within
the meaning of Section 1.704-1(b)(2)(ii)(g) of the Treasury Regulations;
provided, however, that adjustments pursuant to clauses (i) and (ii) above
shall be made only if the Voting Members reasonably determine that such
adjustments are necessary or appropriate to reflect the relative economic
interests of the Members of the Company;
(c) The Gross Asset Value of any Company asset distributed to any
Member shall be adjusted to equal the gross fair market value of such asset
on the date of distribution as determined by the Voting Members; provided,
however, that the Gross Asset Value of the respective promissory notes
contributed to the Company by the Nonvoting Members shall be deemed to be
the principal amount of the promissory note in question upon its surrender
to the Nonvoting Members pursuant to Section 6.6 below; and
(d) The Gross Asset Values of the Company's assets shall be increased
or decreased, as the case may be, to reflect any adjustments to the
adjusted basis of such assets pursuant to Code Section 734(b) or Code
Section 743(b), but only to the extent that such adjustments are taken into
account in determining Capital Accounts pursuant to Section 1.704-
1(b)(2)(iv)(m) of the Treasury Regulations; provided, however, that Gross
Asset Values shall not be adjusted pursuant to this paragraph 6.5(d) to the
extent that the Voting Members determine that an adjustment pursuant to
paragraph 6.5(b) above is necessary or appropriate in connection with a
transaction that would otherwise result in an adjustment pursuant to this
paragraph 6.5(d).
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to paragraphs 6.5(a) or 6.5(b) above or this paragraph 6.5(d),
such Gross Asset Value shall thereafter be adjusted by the depreciation
taken into account with respect to such asset for purposes of computing Net
Profits and Net Losses.
6.6 Payment of Return Amount to Nonvoting Members. The Company agrees to
pay to each Nonvoting Member, at such time as is determined by the Voting
Members, in their sole discretion, but in all events within thirty (30) days
after December 31, 2001, an amount (the "Return Amount") equal to (i) the
Capital
16
Account of the Nonvoting Member as of the close of the month immediately
preceding the date the Return Amount is paid by the Company, less (ii) the
principal amount of any promissory note given by the Nonvoting Member in
question as part of the Nonvoting Member's Capital Contribution, if any, that
has not been paid by such Nonvoting Member to the Company. The Company also
agrees to release and surrender the respective promissory notes given by certain
of the Nonvoting Members (as described in Schedule 1 attached hereto) to the
applicable Nonvoting Members along with the payment of the Return Amount.
VPI agrees that in the event the Company is unable, for whatever reason, to
pay all or any portion of the Return Amount owed to any Nonvoting Member, VPI
shall, if requested by the Nonvoting Member, in the Nonvoting Member's sole
discretion, contribute to the Company the amount owed by the Company to that
Nonvoting Member under this Section 6.6, which additional Capital Contribution
by VPI shall be utilized by the Company solely to satisfy its obligations to the
Nonvoting Member in question under this Section 6.6. VPI agrees to make any such
additional Capital Contribution to the Company within thirty (30) days of the
request therefor by the Nonvoting Member in question.
This Section 6.6 is solely for the benefit of the Nonvoting Members, and
not for any other Persons, including any creditors of the Company or any Pool.
The term "Return Date" for purposes of this Agreement shall, except as
provided in the following paragraph, mean the date on which the Company has
satisfied its obligations to all of the Nonvoting Members under this Section
6.6.
Notwithstanding the foregoing, however, the obligations of the Company and
VPI under this Section 6.6 with respect to each Nonvoting Member are subject to
and conditioned upon the Nonvoting Member in question being in full compliance
with all of the terms and conditions of this Agreement and any promissory note
given by such Nonvoting Member to the Company, and in the event a Nonvoting
Member is in breach or default under this Agreement or any such promissory note,
the Company and VPI shall not be required to pay the Return Amount to such
Nonvoting Member unless and until such Nonvoting Member has cured all such
breaches or defaults. In this circumstance, the term "Return Date" for purposes
of this Agreement shall mean the date on which the Company has satisfied its
obligations under this Section 6.6 to only the Nonvoting Members who are not in
breach or default under this Agreement or any promissory notes given by such
Nonvoting Members.
ARTICLE VII
ALLOCATIONS AND INCOME TAX; DISTRIBUTIONS
-----------------------------------------
7.1 Allocations of Profits and Losses from Operations.
(a) Except as otherwise expressly provided in this Section 7.1 and as
may be otherwise required by Section 704(c) of the Code, the Net Losses and
Net Profits of the Company for each Fiscal Year shall be allocated as
follows. The Net Losses of the Company for each Fiscal Year shall be
allocated (i) first to the Voting Members, pro rata based upon the
respective number of Voting Units held by the Voting Members, but only up
to the amount of the respective Capital Accounts of the Voting Members (the
"First Loss Allocation"); (ii) if any Net Losses remain after the First
Loss Allocation, then to the Nonvoting Members who have contributed cash to
the Company, pro rata based upon the respective number of Nonvoting Units
held by such Nonvoting Members, but only up to the amount of such Nonvoting
Members' respective cash contributions to the Company (the "Second Loss
Allocation");
17
(iii) if any Net Losses remain after the Second Loss Allocation, then to
the Nonvoting Members whose Capital Contribution to the Company includes a
promissory note, pro rata based upon the respective number of Nonvoting
Units held by such Nonvoting Members, but only up to the amount of the
respective Capital Accounts of such Nonvoting Members (the "Third Loss
Allocation"). The Net Profits of the Company for each Fiscal Year shall be
allocated (i) first to the Nonvoting Members who received a Third Loss
Allocation, if any, pro rata based upon the respective number of Nonvoting
Units held by such Nonvoting Members, up to the amount of their respective
Third Loss Allocations (the "First Profit Allocation"); (ii) if any Net
Profits remain after the First Profit Allocation, then to the Nonvoting
Members who received a Second Loss Allocation, if any, pro rata based upon
the respective number of Nonvoting Units held by such Nonvoting Members, up
to the amount of their respective Second Loss Allocations (the "Second
Profit Allocation"); (iii) if any Net Profits remain after the Second
Profit Allocation, then to the Voting Members, pro rata based upon the
respective number of Voting Units held by the Voting Members, up to the
amount of their respective First Loss Allocations, if any (the "Third
Profit Allocation"); and (iv) if any Net Profits remain after the Third
Profit Allocation, then to the Nonvoting Members, pro rata based upon the
respective number of Nonvoting Units held by the Nonvoting Members, in an
aggregate amount equal to twenty-eight percent (28%) of the Net Profits,
with the balance of the Net Profits to then be allocated to the Voting
Members, pro rata based upon the respective number of Voting Units held by
the Voting Members. For purposes of allocating the Net Losses and the Net
Profits to the Nonvoting Members pursuant to any of the foregoing, however,
any income and gains or losses and deductions, as the case may be, of the
Company related to or otherwise arising from Corn Belt Commodities Round
Trip Limited Partnership, an Iowa limited partnership for which the Company
will serve as the general partner and commodity pool operator, shall be
excluded, with all Net Profits or Net Losses, as the case may be, related
to or otherwise arising from Corn Belt Commodities Round Trip Limited
Partnership to in all events be allocated solely to the Voting Members pro
rata based upon the respective number of Voting Units held by the Voting
Members. Any credit available for income tax purposes shall be allocated
among the Members in like fashion. Notwithstanding the foregoing or any
other term or condition of this Section 7.1 or of this Agreement which may
appear to be the contrary, however, no Net Losses of the Company shall be
allocated to the Nonvoting Members with respect to any Fiscal Year
commencing after the Return Date.
(b) Notwithstanding paragraph 7.1(a) above, no loss shall be
allocated to a Member if such allocation would cause such Member's Adjusted
Capital Account to become negative or to increase the negative balance
thereof.
(c)(1) In the event any Member unexpectedly receives any adjustments,
allocations or distributions described in Section 1.704-1(b)(2)(ii)(d)(4),
(5) or (6) of the Treasury Regulations, items of Company income and gain
shall be specially allocated to each such Member in an amount and manner
sufficient to eliminate, to the extent required by the Treasury
Regulations, the deficit balance of the Adjusted Capital Account of such
Member as quickly as possible, provided that an allocation pursuant to this
paragraph 7.1(c)(1) shall only be made if and to the extent such Member
would have a deficit balance in its Adjusted Capital Account after all
other allocations provided for in this Section 7.1 have been made as if
this paragraph 7.1(c)(1) were not in this Agreement.
(2) In the event any Member has a deficit Capital Account at the end
of any Fiscal Year which is in excess of the sum of (i) the amount such
Member is obligated to restore pursuant to any provision of this Agreement,
if any, and (ii) the amount such Member is deemed to be obligated to
restore pursuant to the penultimate sentences of Treasury Regulations
Sections 1.704-2(g)(1) and 1.704-
18
2(i)(5), each such Member shall be specially allocated items of Company
income and gain in the amount of such excess as quickly as possible,
provided that an allocation pursuant to this paragraph 7.1(c)(2) shall be
made only if and to the extent that such Member would have a deficit
Capital Account in excess of such sum after all other allocations provided
for in this Section 7.1 have been made as if paragraph 7.1(c)(1) above and
this paragraph 7.1(c)(2) were not in this Agreement.
(d)(1) Except as otherwise provided in Section 1.704-2(f) of the
Treasury Regulations, and notwithstanding any other provision of this
Section 7.1, if there is a net decrease in partnership minimum gain during
any Fiscal Year, each Member shall be specially allocated items of Company
income and gain for such Fiscal Year (and, if necessary, subsequent Fiscal
Years) in an amount equal to such Member's share of the net decrease in
partnership minimum gain, determined in accordance with Treasury Regulation
Section 1.704-2(g). Allocations pursuant to the previous sentence shall be
made in proportion to the respective amounts required to be allocated to
each Member pursuant thereto. The items to be so allocated shall be
determined in accordance with Section 1.704-2(f)(6) and 1.704-2(j)(2) of
the Treasury Regulations. This paragraph 7.1(d)(1) is intended to comply
with the minimum gain chargeback requirement in Section 1.704-2(f) of the
Treasury Regulations and shall be interpreted consistently therewith.
(2) Except as otherwise provided in Section 1.704-2(i)(4) of the
Treasury Regulations, and notwithstanding any other provision of this
Section 7.1, if there is a net decrease in partner nonrecourse debt minimum
gain attributable to a partner nonrecourse debt during any Fiscal Year,
each Member who has a share of the partner nonrecourse debt minimum gain
attributable to such partner nonrecourse debt, determined in accordance
with Section 1.704-2(i)(5) of the Treasury Regulations, shall be specially
allocated items of Company income and gain for such Fiscal Year (and, if
necessary, subsequent Fiscal Years) in an amount equal to such Member's
share of the net decrease in partner nonrecourse debt minimum gain
attributable to such partner nonrecourse debt, determined in accordance
with Treasury Regulation Section 1.704-2(i)(4). Allocations pursuant to the
previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Member pursuant thereto. The items to be
so allocated shall be determined in accordance with Sections 1.704-2(i)(4)
and 1.704-2(j)(2) of the Treasury Regulations. This paragraph 7.1(d)(2) is
intended to comply with the minimum gain chargeback requirement in Section
1.704-2(i)(4) of the Treasury Regulations and shall be interpreted
consistently therewith.
(3) Nonrecourse deductions for any Fiscal Year shall be specially
allocated among the Members pro rata based upon the respective number of
Units held by the Members.
(4) Any partner nonrecourse deductions for any Fiscal Year shall be
specially allocated to the Member who bears the economic risk of loss with
respect to the partner nonrecourse debt to which such partner nonrecourse
deductions are attributable in accordance with Treasury Regulation Section
1.704-2(i)(1).
(e) To the extent an adjustment to the adjusted tax basis of any
Company asset pursuant to Code Section 734(b) or Code Section 743(b) is
required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to
be taken into account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if
the adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis) and such gain or loss shall be specially
19
allocated to the Member in a manner consistent with the manner in which
their Capital Accounts are required to be adjusted pursuant to such Section
of the Treasury Regulations.
(f) Notwithstanding any other provision of this Agreement, the
Regulatory Allocations shall be taken into account in allocating items of
income, gain, loss and deduction among the Members so that, to the extent
possible, the net amount of such allocations of other items and the
Regulatory Allocations to each Member shall be equal to the net amount that
would have been allocated to each such Member if the Regulatory Allocations
had not occurred. For purposes of applying the foregoing sentence,
allocations pursuant to this paragraph 7.1(f) shall only be made with
respect to allocations pursuant to paragraph 7.1(e) hereof to the extent
the Voting Members reasonably determine that such allocations will
otherwise be inconsistent with the economic agreement among the parties to
this Agreement.
(g) The Voting Members shall have reasonable discretion, with
respect to each Fiscal Year, to (i) apply the provisions of paragraph
7.1(f) hereof in whatever order is likely to minimize the economic
distortions that might otherwise result from the Regulatory Allocations,
and (ii) divide all allocations pursuant to paragraph 7.1(f) hereof among
the Members in a manner that is likely to minimize such economic
distortions.
7.2 Distributions. The Nonvoting Members shall be entitled to receive a
distribution (each, a "Nonvoting Distribution") from the Company with respect to
the Fiscal Years of the Company ending December 31, 1998, December 31, 1999,
December 31, 2000, December 31, 2001, December 31, 2002, December 31, 2003 and
December 31, 2004 (individually, a "Nonvoting Distribution Year," and
collectively, the "Nonvoting Distribution Years"), in an amount equal to twenty-
eight percent (28%) of the Net Profits of the Company, if any, for the Nonvoting
Distribution Year in question; provided, however, that "Net Profits" for this
purpose shall be determined excluding the income and gains and the losses and
deductions of the Company related to or otherwise arising from Corn Belt
Commodities Round Trip Limited Partnership, an Iowa limited partnership for
which the Company will serve as the general partner and commodity pool operator.
Each Nonvoting Distribution shall be made pro rata based upon the respective
number of Nonvoting Units held by the Nonvoting Members. Each Nonvoting
Distribution shall be paid by the Company within thirty (30) days following the
close of the Nonvoting Distribution Year in question, and a Nonvoting
Distribution shall be deemed to be "owed" to the Nonvoting Members for purposes
of this Agreement, if otherwise payable, effective as of the last day of the
Nonvoting Distribution Year in question. No Nonvoting Distributions need be paid
by the Company, however, unless otherwise approved by the Voting Members, until
after the close of the December 31, 2001 Nonvoting Distribution Year, at which
time the Nonvoting Members shall be paid (without interest) all of the Nonvoting
Distributions which have accrued and are payable, if any, with respect to each
Nonvoting Distribution Year through December 31, 2001; provided, however, that
the Voting Members shall, if requested by a Nonvoting Member, pay a portion of
the Nonvoting Distribution payable by the Company with respect to any of the
Nonvoting Distribution Years ending on December 31, 1998, December 31, 1999,
December 31, 2000, or December 31, 2001 in an amount equal to the tax liability
of the Nonvoting Member in question for such Nonvoting Distribution. Losses in a
subsequent Nonvoting Distribution Year shall not affect any Nonvoting
Distributions payable with respect to prior Nonvoting Distribution Years.
The Nonvoting Members shall not be entitled to any other distributions from
the Company for any other purpose whatsoever or at any other time whatsoever.
20
All distributions of cash or other property to the Voting Members shall be
made to the Voting Members pro rata based upon the respective number of Voting
Units held by the Voting Members. All distributions to the Voting Members shall
be made in such amounts and at such times as are determined by the Voting
Members from time to time; provided, however, that no distribution shall be made
to the Voting Members during any Nonvoting Distribution Year in an amount which
would cause the net worth (as that term is defined in Section 5.7 above) of the
Company to fall below the Minimum Amount (as that term is also defined in
Section 5.7 above). The Nonvoting Members acknowledge and agree, however, that
the Voting Members may, at any time prior to March 31, 1999, declare and pay a
distribution to VPI in such amount so as to cause the Capital Contribution of
VPI to be anywhere between $170,000 and $180,000, even if such distribution
would otherwise be prohibited or restricted by the preceding sentence.
Notwithstanding the foregoing, all distributions, whether Nonvoting
Distributions or distributions to the Voting Members, shall in all events be
subject to Section 7.3 below.
All amounts withheld pursuant to the Code or any provisions of state or
local tax law with respect to any payment or distribution to the Members from
the Company shall be treated as amounts distributed to the relevant Member or
Members pursuant to this Section 7.2.
The last day of the Nonvoting Distribution Year in question shall be the
record date for the determination of the Nonvoting Members entitled to receive
payment of any Nonvoting Distribution. The date on which the resolution
declaring a distribution to the Voting Members is adopted by the Voting Members
shall be the record date for the determination of the Voting Members entitled to
receive payment of any distribution to the Voting Members.
This Section 7.2 is not applicable to distributions payable to the Members
upon the dissolution of the Company, which distributions are governed by Section
10.2 below.
7.3 Limitation Upon Distributions. No distribution shall be declared and
paid to either the Nonvoting Members or the Voting Members if, after the
distribution is made: (a) the Company would not be able to pay its debts as they
became due in the usual course of business, or (b) the Company's total assets
would be less than the sum of its total liabilities, plus the amount that would
be needed (if any), if the Company were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of Members
whose preferential rights are superior to the rights of the Members receiving
the distribution.
7.4 Interest on and Return of Capital Contributions. No Member shall be
entitled to interest on its Capital Contribution or to return of its Capital
Contribution, except only as expressly provided in Section 6.6 above with
respect to the payment of the Return Amounts to the Nonvoting Members.
7.5 Loans to Company. Nothing in this Agreement shall prevent any Member
from making secured or unsecured loans to the Company by agreement with the
Company.
7.6 Returns and Other Elections. The Voting Members shall cause the
preparation and timely filing of all tax returns required to be filed by the
Company pursuant to the Code and all other tax returns deemed necessary and
required in each jurisdiction in which the Company does business. Copies of such
returns shall be furnished to the Members within a reasonable time after the end
of the Company's Fiscal Year. All elections permitted to be made by the Company
under federal or state laws shall be made by the Voting Members.
21
7.7 Tax Matters Partner. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ is hereby designated the Tax
Matters Partner of the Company for purposes of Chapter 63 of the Code and the
Treasury Regulations thereunder. The Tax Matters Partner may be changed from
time to time by the Voting Members.
ARTICLE VIII
TRANSFERABILITY AND SUBSTITUTE MEMBERS
--------------------------------------
8.1 Assignment of Units. Except as provided in Sections 8.3 and 8.4
below, no Member may assign any of its Units, in whole or in part, or pledge,
grant a security interest, lien or other encumbrance in or against any or all of
the Member's Units, or any right or interest therein or thereunder, except with
the prior vote or written consent of the Voting Members holding at least a
majority of the total outstanding Voting Units, and, if the assignment is to
occur prior to the Return Date, also the prior vote or written consent of the
Nonvoting Members holding at least a majority of the total outstanding Nonvoting
Units. Except as provided in Section 8.3 below, an assignment of a Unit (even if
made in accordance with the preceding sentence) does not entitle the assignee to
participate in the management and affairs of the Company or to become a
Substitute Member or to otherwise exercise any rights of a Member (including,
without limitation, the right to vote and to receive notice of meetings), but
rather only entitles the assignee to receive, to the extent assigned, only the
distributions to which the assignor would otherwise be entitled to with respect
to the Unit in question. Notwithstanding the foregoing or any other term or
condition of this Agreement which may appear to be to the contrary, no Member
shall in any event assign or have the right to assign a Unit, or any portion
thereof, if such assignment would result in the termination of the Company or
the Company's tax year for federal income tax purposes or violate or cause the
Company to violate any applicable law or governmental rule or regulation,
including, without limitation, any applicable federal or state securities law,
rule or regulation.
8.2 Right of Assignee to Become a Substitute Member. Except as provided
in Section 8.3 below, an assignee of a Unit may become a Substitute Member only
if the proposed Substitute Member executes an agreement accepting and adopting
the terms of the Articles of Organization and this Agreement, and if the Voting
Members holding at least a majority of the total outstanding Voting Units
consent thereto in writing, and, if the substitution is to occur prior to the
Return Date, the Nonvoting Members holding at least a majority of the total
outstanding Nonvoting Units also consent thereto in writing (in each case
including in such calculation the Unit or Units which have been assigned, which
may be voted by the Member which assigned such Unit or Units) . Any such consent
may be withheld in a Member's sole discretion. A Substitute Member shall be
admitted as a Member upon the later to occur of the events specified in the
preceding sentence. Section 903 of the Iowa Act shall apply to any such
transfers, except as expressly modified hereby. An assignee of a Unit who has
become a Substitute Member as to that Unit has the rights and powers, and is
subject to the restrictions and liabilities, of a Member as to such Unit under
the Articles of Organization, this Agreement and the Iowa Act.
8.3 VPI Assignment Rights. Notwithstanding Sections 8.1 and 8.2 above,
VPI may from time to time assign any or all of its Units, in whole or in part,
without the consent of any of the other Voting Members or any Nonvoting Members,
to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, the spouse of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, any lineal descendent of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, or to a trust for the benefit of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, his spouse, any of his lineal descendants, ▇▇▇▇▇ ▇▇▇▇ or ▇▇▇▇▇▇
▇▇▇▇. VPI may also cause any such assignee of any of its Units to be a
Substitute Member with respect to the Units without the vote or consent or any
other Voting Members or any Nonvoting Members; provided, however, that ▇▇▇▇▇▇▇
▇. ▇▇▇▇, his spouse, his lineal descendants, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ or the
trust, as the case may be, shall take all such Units subject to all of the terms
and conditions
22
of this Agreement and the provisions of the Articles of Organization and shall
execute an agreement accepting and adopting the terms and conditions of this
Agreement and the Articles of Organization.
8.4 Repurchase of Nonvoting Units by the Company. Provided the Company
has complied with its obligations under Section 6.6 above, each of the Nonvoting
Members agree that they shall be deemed, without notice to or further action on
their part, to have sold and transferred all of their respective Nonvoting Units
to the Company for the aggregate price of $1.00 simultaneously with their
receipt of the Nonvoting Distribution payable, if any, with respect to the final
Nonvoting Distribution Year (or if a Nonvoting Distribution is not payable with
respect to such final Nonvoting Distribution Year, simultaneously with the close
of such Nonvoting Distribution Year). The sale and transfer of the Nonvoting
Units pursuant to this Section 8.4 shall not be subject to the prior consent or
vote of any of the other Nonvoting Members or any Voting Members, whether under
Sections 8.1 or 8.2 above or any other provision of this Agreement.
ARTICLE IX
ADDITIONAL MEMBERS AND ALLOCATIONS
----------------------------------
9.1 Admission of Additional Members. A Person may, subject to the terms
and conditions of this Agreement, become an Additional Member in the Company by
the sale of such number of Voting Units and/or Nonvoting Units and for such
Capital Contribution and upon such other terms and conditions as the Voting
Members holding at least a majority of the total outstanding Voting Units shall
determine, and, if the Units are to be issued prior to the Return Date, as the
Nonvoting Members holding at least a majority of the total outstanding Nonvoting
Units shall also determine. An Additional Member shall be admitted as a member
of the Company upon receipt by the Company of the Additional Member's Capital
Contribution. No subsequent Capital Contributions may be required of any
Additional Member unless otherwise agreed as a condition to the issuance of
Units to such Additional Member.
9.2 Allocations to Assignees and to Additional and Substitute Members.
No assignee pursuant to Sections 8.1 or 8.3 above, Additional Member or
Substitute Member shall be entitled to any retroactive allocation of losses,
income or expense deductions incurred by the Company. The Voting Members may, at
their option, at the time an assignee, Additional Member or Substitute Member is
admitted, close the Company books (as though the Company's tax year had ended)
or make pro rata allocations of loss, income and expense deductions to the
assignee, Additional Member or Substitute Member for that portion of the
Company's Fiscal Year in which the assignee, Additional Member or Substitute
Member was admitted, in accordance with the provisions of Section 706(d) of the
Code and the Treasury Regulations promulgated thereunder.
ARTICLE X
DISSOLUTION AND TERMINATION
---------------------------
10.1 Dissolution. The Company shall be dissolved upon the occurrence of
any of the following events:
(a) at the time or on the happening of an event specified in the
Iowa Act, the Articles of Organization or this Agreement to cause
dissolution, if any; or
23
(b) upon the affirmative vote of the Voting Members holding at
least a majority of the total outstanding Voting Units, and, if the
dissolution is to occur prior to the Return Date, also with the affirmative
vote of the Nonvoting Members holding at least a majority of the total
outstanding Nonvoting Units.
10.2 Distribution of Assets Upon Dissolution. In settling accounts after
dissolution, the assets of the Company shall be distributed in the following
order:
(a) to creditors, including Members who are creditors (to the
extent permitted by law) in satisfaction of the liabilities of the Company,
other than for distributions to Members under Sections 490A.803 or 490A.805
of the Iowa Act;
(b) to Members and former Members in satisfaction of liabilities
for distributions under Sections 490A.803 or 490A.805 of the Iowa Act,
including, without limitation, any Nonvoting Distributions owed the
Nonvoting Members;
(c) to Members of the Company in proportion to, and to the extent
of, the positive balances in their respective Capital Accounts, as
determined after taking into account all Capital Account adjustments for
the Company's Fiscal Year in which the liquidation occurs, and with respect
to the Nonvoting Members, after deducting from their respective Capital
Accounts the principal amount of any promissory note given by the Nonvoting
Member as part of the Nonvoting Member's Capital Contribution to the
Company, if any, that has not been paid by such Nonvoting Member to the
Company; and then
(d) to the Voting Members of the Company pro rata based upon the
respective number of Voting Units held by the Voting Partners.
10.3 Articles of Dissolution. When all debts, liabilities and
obligations have been paid and discharged or reasonably adequate provisions have
been made therefor and all of the remaining property and assets have been
distributed to the Members, articles of dissolution shall be executed and filed
with the Iowa Secretary of State. Thereafter, the existence of the Company shall
cease, except for the purpose of suits, other proceedings and appropriate action
as may be expressly provided in the Iowa Act. The Voting Members shall
thereafter have authority to distribute any Company property discovered after
dissolution, convey real estate and take such other action as may be necessary
on behalf of and in the name of the Company.
10.4 Winding Up. Except as provided by law, upon dissolution each Member
shall look solely to the assets of the Company for the return of its Capital
Account. If the Company property remaining after the payment or discharge of the
debts and liabilities of the Company is insufficient to return the Capital
Account of a Member, such Member shall have no recourse against the Company or
any other Member. Further, no Member shall be required to restore any deficit in
the Member's Capital Account and such deficit shall not be treated as an asset
of the Company. The winding up of the affairs of the Company and the
distribution of its assets shall be conducted exclusively by the Voting Members,
who are hereby authorized to take all actions necessary to accomplish such
distribution, including without limitation, selling any Company assets the
Voting Members deem necessary or appropriate to sell.
24
ARTICLE XI
INDEMNIFICATION
---------------
Each person who is or was a Member of the Company who is made a party to or
a witness in, or is threatened to be made a party to or a witness in, any
threatened, pending or completed claim, action, suit or proceeding, whether
civil, criminal, administrative or investigative (including a grand jury
proceeding) and whether formal or informal, by reason of the fact that such
person (i) is or was a Member of the Company; or (ii) while a Member of the
Company, is or was serving at the request of the Company as a manager, member,
director, officer, general partner, partner, trustee, employee or agent of
another individual, person, limited liability company, corporation, limited
partnership, partnership, joint venture, trust, employee benefit plan or other
entity or enterprise, shall be indemnified and held harmless by the Company with
respect to such claim, action, suit or proceeding to the maximum extent that a
corporation has authority to indemnify a director of the corporation by or under
the Iowa Business Corporation Act or other applicable law, as the same now
exists or as it may hereafter be amended or changed (but, in the case of any
such amendment or change, only to the extent that such amendment or change
empowers the Company to provide broader indemnification than said law empowered
the Company to provide prior to such amendment or change). Any such
indemnification shall include, without limitation, indemnification against
reasonable costs and expenses (including attorneys' fees), judgments, fines,
penalties (including an excise tax assessed with respect to an employee benefit
plan) and amounts paid in settlement actually and reasonably incurred by such
person in connection with any such claim, action, suit or proceeding or any
appeal thereof. A person's right to such indemnification (except with respect to
proceedings seeking to enforce indemnification under this Article) shall,
however, be conditional upon the Company being afforded the opportunity to
participate directly on behalf of such person in such claim, action, suit or
proceeding or any settlement discussions relating thereto, and with respect to
any settlement or other nonadjudicated disposition of any threatened or pending
claim, action, suit or proceeding, entitlement to indemnification shall be
further conditional upon the prior approval by the Company of the proposed
settlement or nonadjudicated disposition. Approval or disapproval by the Company
of any proposed settlement or other nonadjudicated disposition shall not subject
the Company to any liability to or require indemnification or reimbursement of
any party who the Company would not otherwise have been required to indemnify or
reimburse.
The right to indemnification conferred in this Article shall include the
right to payment or reimbursement by the Company of reasonable expenses incurred
in connection with any such claim, action, suit or proceeding in advance of its
final disposition; provided, however, that the payment or reimbursement of such
expenses in advance of the final disposition of such claim, action, suit or
proceeding shall be made only upon delivery to the Company of (i) a written
undertaking by or on behalf of the person claiming indemnification under this
Article to repay all amounts so advanced if it shall ultimately be determined
that such person is not entitled to be indemnified under this Article or
otherwise, and (ii) a written affirmation of such person's good faith belief
that such person has met the applicable standard of conduct necessary to require
indemnification by the Company pursuant to this Article or otherwise.
The provisions of this Article shall be deemed a contract between the
Company and each Member who is a member of the Company at any time while this
Article and the relevant provisions of the Iowa Limited Liability Company Act or
other applicable law are in effect, and any repeal or modification of the Iowa
Limited Liability Company Act or other applicable law or of this Article shall
not adversely affect any rights or obligations then existing with respect to any
state of facts then or theretofore existing or any claim, action, suit or
proceeding theretofore or thereafter brought or threatened based in whole or in
part upon any such state of facts.
25
The Company may, by action of the Voting Members of the Company, provide
indemnification to such of the officers, employees and agents of the Company to
such extent and to such effect as the Voting Members shall determine to be
appropriate and authorized by applicable law, as the same now exists or as it
may hereafter be amended.
Except only as may be limited by the affirmative requirements of applicable
law, the indemnification and advancement of expenses provided by or granted
pursuant to this Article shall not be deemed exclusive of any other rights which
a person seeking indemnification or advancement of expenses may have or
hereafter acquire or become entitled to under any statute, provision of the
Articles of Organization or Operating Agreement of the Company, agreement, vote
of Members or otherwise.
This Article shall be applicable to all claims, actions, suits or
proceedings commenced after the effective date hereof, whether arising from acts
or omissions occurring before or after the effective date hereof. Each person
who is now serving or who shall hereafter serve as a Member of the Company shall
be deemed to be doing so in reliance upon the rights of indemnification provided
for in this Article, and such rights of indemnification shall continue as to a
person who has ceased to be a Member, and shall inure to the benefit of the
heirs, executors, legal or personal representatives, administrators, and
successors of such a person. If this Article or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify each Member of the Company to the maximum
extent permitted by any applicable portion of this Article that shall not have
been invalidated.
Notwithstanding anything in this Article to the contrary, the Company shall
(except with respect to proceedings initiated to enforce rights of
indemnification to which a person is entitled under this Article or otherwise)
indemnify a person in connection with a claim, action, suit or proceeding (or
part thereof) initiated by such person only if the initiation of such claim,
action, suit or proceeding (or part thereof) was authorized by the Voting
Members of the Company.
The Company may purchase and maintain insurance, at its expense, to protect
itself and any person who is or was a Member, officer, employee or agent of the
Company, or while a Member of the Company, is or was serving at the request of
the Company as a manager, member, director, officer, general partner, partner,
trustee, employee or agent of another individual, person, limited liability
company, corporation, limited partnership, partnership, joint venture, trust,
employee benefit plan or other entity or enterprise against any liability
asserted against such person and incurred by such person in such capacity, or
arising out of such person's status as such, whether or not the Company would
have the power to indemnify such person against such liability under the
provisions of this Article, the Iowa Limited Liability Company Act or otherwise.
The Company may create a trust fund, grant a security interest and/or use other
means (including, without limitation, letters of credit, surety bonds and/or
similar arrangements), as well as enter into contracts providing for
indemnification to the maximum extent permitted by law and including as a part
thereof any or all of the foregoing, to ensure the payment of such sums as may
be necessary to effect full indemnification. The Company's obligation to make
indemnification and pay expenses pursuant to this Article shall be in excess of
any insurance purchased and maintained by the Company and such insurance shall
be primary. To the extent that indemnity or expenses of the person entitled to
indemnification and payment of expenses pursuant to this Article are paid on
behalf of or to such person by such insurance, such payments shall be deemed to
be in satisfaction of the Company's obligation to such person to make
indemnification and pay expenses pursuant to this Article.
26
ARTICLE XII
MISCELLANEOUS PROVISIONS
------------------------
12.1 Notices. Any notice, demand, or communication desired or required to
be given under this Agreement shall be deemed to have been sufficiently given or
served for all purposes when delivered personally (including delivery by a
recognized courier service such as Airborne Express or Federal Express) to the
party or to an executive officer of the party to whom the same is directed, or
when deposited in the United States mail, sent registered or certified mail,
postage and charges prepaid, addressed to the Company or to the Member in
question at the address of the Member as it appears in the Company's records.
12.2 Application of Iowa Law. This Agreement, and the application and
interpretation hereof, shall be governed exclusively by its terms and by the
laws of the State of Iowa, and specifically the Iowa Act.
12.3 Waiver of Action for Partition. Each Member irrevocably waives any
right that it may have to maintain any action for partition with respect to the
property of the Company.
12.4 Execution of Additional Instruments. Each Member hereby agrees to
execute such other and further statements of interest and holdings,
designations, powers of attorney and other instruments necessary to comply with
any laws, rules or regulations, or to evidence the Members' authority hereunder.
12.5 Construction. Whenever the singular number is used in this Agreement
and when required by the context, the same shall include the plural, and the
masculine gender shall include the feminine and neuter gender and vice versa.
12.6 Headings. The headings in this Agreement are inserted for convenience
of reference only and are in no way intended to and do not describe, interpret,
define, or limit the scope, extent or intent of this Agreement or any provision
hereof.
12.7 Waivers. The failure of any party to seek redress for violation of or
to require or insist upon the strict performance of any covenant or condition of
this Agreement shall not prevent a subsequent act, which would have originally
constituted a violation, from having the effect of an original violation.
12.8 Rights and Remedies Cumulative. 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 the 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, in equity or otherwise.
12.9 Severability. If any provision of this Agreement or the application
thereof to any Person or circumstance shall be held to be invalid, illegal or
unenforceable to any extent, the remainder of this Agreement and the application
thereof shall not be affected thereby and shall be enforceable to the fullest
extent permitted by law. In the event any provision of this Agreement is held to
be unenforceable as written, but enforceable if modified, then such provision
shall be deemed to be amended to such extent as shall be necessary for such
provision to be enforceable and it shall be enforced to that extent.
12.10 Heirs, Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the Members and their respective heirs,
successors, legal representatives and permitted assigns.
27
Nothing in this Agreement, express or implied, is intended to confer upon any
Person other than the Members and their respective heirs, successors, legal
representatives and permitted assigns any rights, remedies, liabilities or
obligations under or by reason of this Agreement.
12.11 Creditors. None of the provisions of this Agreement shall be for the
benefit of or enforceable by any creditor of the Company.
12.12 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same instrument.
12.13 Entire Agreement. The Articles of Organization, this Agreement and
all other exhibits and schedules hereto constitute the entire agreement among
the Members pertaining to the subject matters hereof and supersede all
negotiations, preliminary agreements and all prior or contemporaneous
discussions and understandings of the Members or any of them in connection with
the subject matters hereof. All exhibits and schedules are incorporated into
this Agreement as if set forth in their entirety and constitute a part hereof.
12.14 Federal Income Tax Elections. The Voting Members, on behalf of the
Company, may make all elections for federal income tax purposes, including, but
not limited to, the following:
(a) To the extent permitted by applicable law and regulations,
elect to use an accelerated depreciation method on any depreciable unit of
the assets of the Company; and
(b) In case of a transfer of a Unit of any Member, the Company may
elect, pursuant to Sections 734, 743 and 754 of the Code, to adjust the
basis of the assets of the Company.
12.15 Indemnification. In addition to any other indemnities provided for
in this Agreement or otherwise available at law, in equity or otherwise, each
Member shall defend, indemnify and hold the Company and each of the other
Members harmless from and against any loss, claim, liability, damage, cost or
expense (including, without limitation, court costs and reasonable attorneys'
fees) arising in connection with or resulting from any breach of warranty,
misrepresentation or nonfulfillment of any agreement on the part of the Member
under this Agreement.
IN WITNESS WHEREOF, each Member has entered into this Agreement as of the
day and year first above written.
VACATION PARTNERS, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ /s/ ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇, President ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇. ▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Schedule 1 - Capital Contributions of the Initial Members
Schedule 2 - Gross Asset Value of Assets Contributed by VPI
29
SCHEDULE 1
This Schedule 1 is a part of that certain Operating Agreement (the "Agreement")
of Portfolio Boost, L.L.C. (the "Company") dated as of May 21, 1998. Capitalized
terms not otherwise defined in this Schedule 1 shall have the meanings given
them in the Agreement.
1. Vacation Partners, Inc. ("VPI"). The Capital Contribution of VPI for the
Voting Units set forth in Section 3.1 of the Agreement shall be and
constitute the assets which shall be transferred and conveyed to the
Company pursuant to the merger of Corn Belt Management, Inc., an Iowa
corporation, with and into the Company, which merger shall be effectuated
as soon as is reasonably practical following the execution of the Agreement
by all of the Initial Members. The assets of Corn Belt Management, Inc.
shall be deemed to be the Capital Contribution of VPI because of and
pursuant to the ownership of all of the issued and outstanding shares of
stock of both VPI and Corn Belt Management, Inc. by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇. VPI
shall be admitted as a Voting Member of the Company with respect to all of
the Voting Units set forth in Section 3.1 of the Agreement effective upon
the date of the filing of Articles of Merger with the Iowa Secretary of
State with respect to the merger of Corn Belt Management, Inc. with and
into the Company. VPI shall be entitled to a distribution from the Company
in such amount so as to cause the Capital Contribution of VPI to be
anywhere between $170,000 and $180,000, as provided in Section 7.2 of the
Agreement.
2. ▇▇. ▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇. The Capital Contribution of ▇▇. ▇▇▇▇▇▇▇▇ and
▇▇. ▇▇▇▇▇▇▇▇ for the Nonvoting Units to be issued to them as set forth in
Section 3.1 of the Agreement shall be (i) $300,000 in cash or other
immediately available funds; and (ii) a demand promissory note from ▇▇.
▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇ to the Company in the aggregate principal amount
of $100,000 (the "▇▇▇▇▇▇▇▇ Promissory Note"), such promissory note to be in
the form attached to this Schedule 1 as Exhibit "A." The ▇▇▇▇▇▇▇▇
Promissory Note shall be secured by a letter of credit in the amount of
$100,000 from a bank or other financial institution satisfactory to the
Company and upon terms and conditions otherwise satisfactory to the
Company. The terms and conditions of the letter of credit must, at a
minimum, be sufficient so as to allow the ▇▇▇▇▇▇▇▇ Promissory Note to be
considered as an asset of the Company for purposes of calculating the
Company's net worth. ▇▇. ▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇ shall be admitted as a
Nonvoting Member of the Company effective upon receipt by the Company of
both the $300,000 referred to in subclause (i) above and the issuance to
the Company of both the ▇▇▇▇▇▇▇▇ Promissory Note and the letter of credit
which is to secure the ▇▇▇▇▇▇▇▇ Promissory Note as provided above.
3. ▇▇. ▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇. The Capital Contribution of ▇▇. ▇▇▇▇▇▇ and ▇▇.
▇▇▇▇▇▇ for the Nonvoting Units to be issued to them as set forth in Section
3.1 of the Agreement shall be $130,000 in cash or other immediately
available funds. ▇▇. ▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇ shall be admitted as a Nonvoting
Member of the Company upon receipt by the Company of the $130,000 referred
to above.
4. ▇▇. ▇▇▇▇ and ▇▇. ▇▇▇▇. The Capital Contribution of ▇▇. ▇▇▇▇ and ▇▇. ▇▇▇▇
for the Nonvoting Units to be issued to them as set forth in Section 3.1 of
the Agreement shall be a demand promissory note from ▇▇. ▇▇▇▇ and ▇▇. ▇▇▇▇
to the Company in the aggregate principal amount of $450,000 (the "▇▇▇▇
Promissory Note"), such promissory note to be in the form attached to this
Schedule 1 as Exhibit "A." The ▇▇▇▇ Promissory Note shall be secured by a
letter of credit in the amount of $450,000 from a bank or other financial
institution satisfactory to the Company and upon terms and conditions
otherwise satisfactory to the Company. The terms and conditions of the
letter of credit must, at a minimum, be sufficient so as to allow the ▇▇▇▇
Promissory Note to be considered as an asset of the Company for purposes of
calculating the Company's net worth. ▇▇. ▇▇▇▇ and ▇▇. ▇▇▇▇ shall be
admitted as a Nonvoting Member of the Company effective upon receipt by the
Company of the ▇▇▇▇ Promissory Note and the letter of credit which is to
secure the ▇▇▇▇ Promissory Note as provided above.
5. ▇▇. ▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇. The Capital Contribution of ▇▇. ▇▇▇▇▇▇▇▇ and
▇▇. ▇▇▇▇▇▇▇▇ for the Nonvoting Units to be issued to them as set forth in
Section 3.1 of the Agreement shall be a demand promissory note from ▇▇.
▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇ to the Company in the aggregate principal amount
of $100,000 (the "▇▇▇▇▇▇▇▇ Promissory Note"), such promissory note to be in
the form attached to this Schedule 1 as Exhibit "A." The ▇▇▇▇▇▇▇▇
Promissory Note shall be secured by a letter of credit in the amount of
$100,000 from a bank or other financial institution satisfactory to the
Company and upon terms and conditions otherwise satisfactory to the
Company. The terms and conditions of the letter of credit must, at a
minimum, be sufficient so as to allow the ▇▇▇▇▇▇▇▇ Promissory Note to be
considered as an asset of the Company for purposes of calculating the
Company's net worth. ▇▇. ▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇ shall be admitted as a
Nonvoting Member of the Company effective upon receipt by the Company of
the ▇▇▇▇▇▇▇▇ Promissory Note and the letter of credit which is to secure
the ▇▇▇▇▇▇▇▇ Promissory Note as provided above.
VACATION PARTNERS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ /s/ ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇, President ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇
Date: May 21, 1998 Date: May 21, 1998
/s/ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Date: May 21, 1998 Date: May 21, 1998
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇. ▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇
Date: May 21, 1998 Date: May 21, 1998
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
Date: May 21, 1998 Date: May 21, 1998
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Date: May 21, 1998
$ , 1998
------------ -------------------------------
Date
PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned, jointly and severally, promise to pay
to the order of Portfolio Boost, L.L.C. (including its successors and assigns,
the "Company"), at such place as the Company shall from time to time direct, the
principal sum of $_________, without interest, except as provided below.
Principal shall be payable in full upon the demand of the Company, which demand
may be made to either or both of the undersigned at any time and for whatever
reason. The Company shall also have the right to demand, from time to time and
for whatever reason, payment of only a portion of the principal.
All payments shall be applied first in payment of any and all costs and
expenses incurred by the Company which the undersigned are obligated to pay
pursuant to this Note or any agreement or document securing this Note, and the
remainder in reduction of principal.
Payments of principal not made upon demand shall bear interest at the rate
of fifteen percent (15%) per annum from the date of the demand until paid. The
undersigned, jointly and severally, agree to pay attorneys' fees and all costs
and expenses, including court costs, incurred by the Company in connection with
any efforts to collect, enforce or otherwise protect or realize upon this Note
or any collateral securing this Note.
This Note is secured by a letter of credit in the amount of $______ and
issued to the Company by _____________________________ on or around the date
hereof (the "Letter of Credit"), and by all other existing and future liens and
security interests created by security agreements, mortgages or any other
collateral or security documents or agreements now or hereafter between or among
the Company and either or both of the undersigned or the Company and any
endorsers, sureties or guarantors of this Note.
Presentment, demand, protest, notice of demand or protest, notice of
nonpayment and all other notices whatsoever are hereby waived by the undersigned
and by all persons otherwise obligated hereunder, whether as makers, endorsers,
guarantors, sureties or otherwise. Without affecting the liability of any maker,
endorser, surety, guarantor or other person obligated hereunder, the Company
may, without notice, renew or extend the time for payment, accept partial
payments, release or impair any collateral or other security for the payment of
this Note, or release or agree not to ▇▇▇ any party liable or obligated on this
Note. The Company is not required to first resort to any collateral or other
security for payment before bringing an action hereon against either or both of
the undersigned or any endorser, surety, guarantor or other person.
EXHIBIT "A"
TO
SCHEDULE 1
This Note shall be governed by and construed in accordance with the laws of
the State of Iowa, but without regard to provisions thereof relating to
conflicts of law.
In the event any provision of this Note is held invalid, illegal or
unenforceable, in whole or in part, the remaining provisions of this Note shall
not be affected thereby and shall continue to be valid and enforceable. In the
event any provision of this Note is held to be invalid, illegal or unenforceable
as written, but valid, legal and enforceable if modified, then such provision
shall be deemed to be amended to such extent as shall be necessary for such
provision to be valid, legal and enforceable and it shall be enforced to that
extent.
The undersigned, jointly and severally, hereby represent and warrant to the
Company that (i) this Note constitutes the legal, valid and binding obligation
of both of the undersigned, enforceable against both of the undersigned in
accordance with its terms; (ii) the Letter of Credit can be drawn upon by the
Company upon demand and without satisfaction of any conditions other than a
certification by the Company that a demand has been made under this Note which
has not been satisfied by the undersigned; (iii) the Letter of Credit shall
remain in place (through renewals or otherwise) and shall stand as collateral
and security for this Note until this Note has been paid in full or has
otherwise been released by the Company; and (iv) the Letter of Credit
constitutes the legal, valid and binding obligation of both of the undersigned
and of ____________________________, enforceable in accordance with its terms.
This Note is given as partial consideration for the nonvoting units to be
issued to the undersigned by the Company pursuant to the May 21, 1998 Operating
Agreement of the Company, and this Note is also subject to the terms and
conditions of said Operating Agreement.
The undersigned each hereby acknowledge receipt of a copy of this Note.
____________________________
____________________________
