Exhibit 10.14
TRADING SERVICE AGREEMENT
THIS AGREEMENT is made and entered into this 17th day of February,
2003, by and between Husker Ag, L.L.C., a Nebraska limited liability company,
with its principal offices located at 00000 Xxxxxxx 00, X.X. Xxx 00, Xxxxxxxxx,
Xxxxxxxx 00000 (hereinafter "Husker Ag"), and Variable Investment Advisors,
Inc., a South Dakota corporation, with its principal offices located at 0000
Xxxxx Xxxxxx Xxxxxx, Xxxxx 000X, Xxxxx Xxxxx, Xxxxx Xxxxxx 00000-0000
(hereinafter "VIA").
WITNESSETH:
WHEREAS, Husker Ag was organized on August 29, 2000 to develop,
construct, own and operate a 20 million gallon per year ethanol plant and
ethanol business near Plainview, Nebraska; and
WHEREAS, Husker Ag has completed a registered public offering of its
membership units, and its membership units are registered with the Securities
and Exchange Commission ("SEC") under Section 12(g) of the Securities Exchange
Act of 0000 (xxx "Xxxxxxxx Xxx"); and
WHEREAS, Husker Ag desires to establish a system to facilitate the
limited trading of membership units among members and non-members of Husker Ag
in compliance with restrictions imposed under the Internal Revenue Code; and
WHEREAS, in order to provide an orderly limited market for its
securities and to comply with both federal and state securities laws, Husker Ag
desires that its members and non-members be able to purchase, sell and transfer
their membership units in Husker Ag in accordance with Rule 3b-16 of the
Exchange Act through means of an "alternative trading system" as defined by Rule
300(a) of Regulation ATS of the Exchange Act; and
WHEREAS, VIA is a broker-dealer registered with the SEC, and National
Association of Securities Dealers, Inc. ("NASD"), and has established an
alternative trading system to trade certain securities; and
WHEREAS, VIA has proposed to operate and administer for Husker Ag an
electronically accessible alternative trading system (the "Trading Service")
which conforms to all applicable state and federal securities laws; and
WHEREAS, Husker Ag has agreed to engage the services of VIA to operate
the Trading Service and VIA desires to provide such services under the terms and
conditions hereinafter described,
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree as follows:
1. Appointment and Acceptance. Subject to the terms and conditions of this
Agreement, Husker Ag appoints VIA as its sole and exclusive agent for the
operation and administration of the Trading Service and VIA accepts such
appointment. The parties understand and agree, however, that this exclusive
appointment shall not prohibit non-alternative trading system transfers of
Husker Ag membership units, as such transfers may be authorized under Husker
Ag's governing operating agreement, and policies and procedures pertaining to
the transfer of membership units.
2. Operation of the Trading Service. VIA shall operate the Trading Service
in accordance with the terms and conditions set forth in the Operational Manual
attached hereto as Exhibit "A" (which may only be amended or modified with the
express prior written consent or direction of Husker Ag) and incorporated herein
by reference, and shall at all times comply with all applicable requirements for
registered broker-dealers and alternative trading systems under the Exchange Act
and state securities laws.
3. Operation of the Trading Service in accordance with Qualified Matching
Service Rules. VIA and Husker Ag acknowledge and agree that the Trading Service
must comply with the qualified matching service rules set forth in 26 CFR Sec.
1.7704-1 of the Treasury Regulations ("Qualified Matching Service Rules").
Husker Ag agrees that it is responsible for determining that the terms and
conditions of the Operational Manual meet the requirements of the Qualified
Matching Service Rules, and VIA covenants that it shall at all times maintain
and operate the Trading Service in compliance with the Operational Manual and
the Qualified Matching Service Rules.
4. Escrow Account. VIA shall establish an escrow account (the "Escrow
Account") with Xxxxxx State Bank located in Xxxxxx, South Dakota, or such other
financial institution which the parties may agree to from time to time (the
"Escrow Agent"), where all funds contributed toward the purchase of Husker's
membership units will be deposited by the buyer of membership units. VIA
covenants that the Escrow Agent shall at all times during the term of this
Agreement be a bank insured by the Federal Deposit Insurance Corporation
("FDIC"); however, the parties agree that any such FDIC insured bank may invest
escrowed funds in obligations of the U.S. Government or its agencies, as
hereinafter provided. VIA shall provide Husker Ag with all relevant information
describing the Escrow Account so that Husker Ag may coordinate and, if
necessary, contract with the Escrow Agent for the completion of all transactions
in a timely and efficient manner. The Escrow Agent shall use reasonable care and
due diligence in the performance of all its duties hereunder and shall invest
all funds held by it under this Agreement in one or more of the following types
of investments (as determined by the Escrow Agent with the approval of Husker
Ag):
a. deposit accounts, including certificates of deposit; or
2
b. directly, or indirectly (i.e., through money market funds) in
obligations of the United States Government or its agencies;
or
c. in money market funds.
5. Seller Transaction Fees. The seller of membership units will be
assessed a fee of one and one half percent (1.5%) of the gross sales price to be
paid to the Escrow Agent for payment of VIA and Escrow Agent fees in connection
with each sale of membership units; provided, that the minimum fee will be
$175.00 per transaction. Such fees will be deducted from the sale proceeds owed
to the seller of the membership units at the time of closing, as such closing
procedures are defined and set forth in the Operational Manual attached hereto
as Exhibit "A" and incorporated herein by reference.
6. Transfer Agent. Husker Ag shall designate a transfer agent (the
"Transfer Agent") (which Transfer Agent may be Husker Ag itself) for the
transfer of the membership unit certificates and other necessary documents of
Husker Ag. Husker Ag shall provide VIA and the Escrow Agent with all relevant
information required to complete the transfer of membership units on Husker Ag's
books and records including, but not limited to, the authorized contact person,
mailing and e-mail address of the Transfer Agent, so that the Escrow Agent may
obtain from the Transfer Agent all information and authorizations necessary to
complete sale transactions, and specifically to inform the Escrow Agent when and
to whom payment is to be made.
7. Fees Payable to VIA. For its operation of the Trading Service, VIA
shall be compensated as follows:
a. Initial Set-up Fee. Upon execution of this Agreement, Husker
Ag shall pay to VIA an initial set-up fee of Five Thousand
Five Hundred Fifty and No/100 Dollars ($5,550.00) for program
modifications and implementation of the Trading Service
system.
b. Subscriber Fees. Over the Term (as defined in Paragraph 8) of
this Agreement, Husker Ag shall pay to VIA a subscriber fee on
behalf of each member and holder of membership units of Husker
Ag equal to the following:
(1) For the period commencing with the execution of this
Agreement through December 31, 2003, Ten and No/100
Dollars ($10.00) per member, the total sum to be due
on and determined as of the date of the execution of
this Agreement.
(2) For the period January 1, 2004 through December 31,
2004, and for each successive calendar year
thereafter through the end of the
3
Term, Ten and No/100 Dollars ($10.00) per member, the
total sum to be due on and determined as of January 1
in each year.
8. Term of Agreement. This Agreement shall commence upon its written
execution by Husker Ag and VIA and extend for a period concluding on December
31, 2005, (the "Initial Term"), and shall automatically be renewed for
successive one (1) year periods after December 31, 2005 (each a "Renewal Term",
the Initial Term and each Renewal Term shall be, collectively, the "Term")
unless written notice is provided by either party to the other at least thirty
(30) days prior to the end of such Initial Term or any Renewal Term.
9. Termination. Husker Ag and VIA expressly agree that this Agreement may
be terminated at any time, with or without cause, upon thirty (30) days' written
notice of termination from VIA to Husker Ag or upon thirty (30) days' written
notice of termination from Husker Ag to VIA. It is understood and agreed that,
in order to maintain the trading system for Husker Ag, VIA and the Trading
Service have ongoing expenses throughout the year for which VIA is contractually
liable and that therefore, upon termination of this Agreement by Husker Ag, the
parties agree that VIA shall retain all accrued subscription fees paid by Husker
Ag for the entire year in which the termination occurred. If, however, the
Trading Service becomes inoperable for an unreasonable period of time, or is
suspended for any period of time by a state or federal securities regulator or
other government agency, or in the even of a breach by VIA of this Agreement,
which breach is not cured within five business days after written notice of such
breach by Husker Ag (or such other period as the parties may mutually agree),
Husker Ag and VIA expressly agree that this Agreement may be terminated at any
time thereafter upon five (5) days' written notice of termination from Husker Ag
to VIA. Upon such termination by Husker Ag of this Agreement, VIA shall retain
only a pro rata share (computed to the effective date of termination) of the
subscription fees (as described in Paragraph 7) earned by VIA as of the
termination date and paid by Husker Ag for the year in which the termination
occurred and the balance of the subscription fees for such year shall be
refunded to Husker Ag. If termination would occur during a trading period, VIA
will be obligated to immediately halt any pending transaction and to turn over
all information on pending transactions to Husker Ag. Upon any termination of
this Agreement, VIA shall deliver to Husker Ag true and correct copies of all
information and records regarding the trading activity in Husker Ag membership
units occurring during the term of this Agreement, if not previously delivered
to Husker Ag.
10. Trading Service Operating Expenses. All operating costs and expenses
arising out of the operation of the Trading Service shall be borne by VIA. All
services of VIA's officers, directors or employees shall be provided by VIA at
its own expense and not charged to Husker Ag.
11. Representations of VIA. VIA represents and warrants to, and agrees with
Husker Ag that as of the date of execution of this Agreement and during the Term
of this Agreement:
4
a. VIA is a member in good standing with the NASD.
b. VIA, officers, directors and control persons of VIA, and all
persons employed by VIA who will operate the Trading Service,
have all the necessary registrations, licenses and approvals
to allow VIA and all such persons to operate the Trading
Service as required under applicable state and federal
securities laws and regulations.
c. VIA shall maintain its registration with the SEC as an
alternative trading system during the Term of this Agreement.
d. VIA shall comply with all legal requirements for an
alternative trading system, as set forth under the Exchange
Act during the Term of this Agreement.
e. VIA shall comply with all applicable federal and state
securities laws during the Term of this Agreement, including
without limitation, maintaining its registration as a
broker-dealer with the SEC, NASD and applicable states.
f. VIA shall promptly notify Husker Ag in writing of any inquiry
or investigation by any federal or state securities regulator
or any regulator from the Internal Revenue Service regarding
any aspect of the Trading Service.
g. In the event VIA's Trading Service becomes temporarily
inoperable, VIA will make every effort, to the best of its
ability, to rectify the problem associated with the Trading
Service and will make every effort, to the best of its
ability, to facilitate the trading of membership units of
Husker Ag.
h. This Agreement has been duly authorized and approved by the
Board of Directors of VIA, and is a valid and binding
agreement of VIA, enforceable in accordance with its terms.
i. VIA shall maintain accurate and complete books and records
with respect to the Trading Service and all activities covered
under this Agreement, and shall provide Husker Ag with full
access to such information, books and records upon request,
and shall provide any regulatory authority examining Husker Ag
with full access to such information, books and records as
requested or required by such regulatory authority.
12. Representations of Husker Ag. Husker Ag represents and warrants to, and
agrees with VIA that:
5
a. Husker Ag is a duly organized limited liability company,
validly existing and in good standing under the laws of the
State of Nebraska; and
b. This Agreement has been duly authorized and approved by the
Board of Directors of Husker Ag, and is a valid and binding
agreement of Husker Ag, enforceable in accordance with its
terms.
13. VIA's Interaction with Service Users. VIA's only interaction with
members of Husker Ag and other persons and other entities using the Trading
Service ("Service Users") shall be to provide a medium by which Husker Ag
members may sell, purchase and transfer membership units of Husker Ag. VIA shall
not engage in any of the following activities associated with the operation of
the Trading Service:
a. VIA shall not, directly or indirectly, provide to Service
Users investment, tax, accounting or other advice regarding
transactions conducted through the Trading Service unless the
Service User is an actual client of VIA, as evidenced by the
opening of a new account form;
b. VIA shall not be obligated to provide to Service Users any
form of assistance regarding negotiation of membership units
transaction between a buyer and seller of membership units
through the Trading Service;
c. VIA shall not arrange financing for any Service Users for the
sale or purchase of membership units through the Trading
Service; and
d. VIA shall not receive, transfer, hold or handle any funds paid
by or due to Service Users as a result of a sale or exchange
of membership units through the Trading Service.
14. Confidentiality. The parties acknowledge that each shall come into
possession of information that comprises valuable trade secrets and other
confidential information ("Confidential Information"), which is exclusively
owned by the conveying party. Both parties expressly recognize that Confidential
Information is being conveyed to them under conditions of confidentiality, and
agree that they shall not disclose Confidential Information to any third party
during the Term of this Agreement, and for a period of five (5) years following
the termination or expiration of this Agreement; and provided, that VIA shall
not at any time or in any manner disclose or use (including any sale or other
transfer to any third party) the names, addresses or other information
concerning Husker Ag members. The parties may, however, disclose Confidential
Information only to their employees when it is necessary to assure compliance
with other terms and conditions of this Agreement and nothing herein shall
prevent either party from complying with any applicable law, regulation or court
order when required.
15. Indemnification. Each party hereby agrees to indemnify and hold
harmless (the "Indemnitor") the other party (the "Indemnitee") against and in
respect of (i) any
6
liability, loss, claim, damages or deficiencies resulting directly or indirectly
from any misrepresentation, breach or nonfulfillment of any provision of this
Agreement by the Indemnitor, and (ii) any actions, suits, demands, assessments,
costs and expenses, including without limitation reasonable attorneys' fees,
brought any third party directly or indirectly resulting from any
misrepresentation, breach or nonfulfillment of any provision of this Agreement
by the Indemnitor, or caused by any fraudulent or negligent act of the
Indemnitor with respect to such party's obligations under this Agreement.
16. Miscellaneous Provisions.
a. Benefit. This Agreement shall bind the parties hereto and
shall inure to and be binding upon the respective legal
representatives, successors, heirs and assigns.
b. Entire Agreement;Waiver. This instrument contains the entire
agreement of the parties. It may not be changed orally but
only by an agreement in writing signed by the party against
whom the enforcement of any waiver, change, modification,
extension or discharge is sought. A waiver of any term or
provision shall not be construed as a waiver of any other term
or provision or as a waiver of subsequent performance of the
same provision in this Agreement.
c. Severability. The parties agree that if any part, term,
paragraph or provision of this Agreement is in any manner held
to be invalid, illegal, void or in any manner unenforceable,
or to be in conflict with any applicable state or federal law,
then the validity of the remaining portions or provisions of
this Agreement shall not be affected, and such part, term,
paragraph or provision shall be construed and enforced in a
manner designed to effectuate the intent expressed in this
Agreement to the maximum extent permitted by law.
d. Assignment. Except as otherwise provided in this Agreement,
this Agreement is made for the personal benefit of the parties
hereto, and neither party may assign this Agreement, or any
part thereof, or delegate any duty or obligation imposed by
this Agreement without the express written consent of the
other party hereto.
e. Captions. The captions and titles utilized in this Agreement
are for convenience of reference only, and shall not be deemed
to define or limit any of the terms, conditions, or provisions
of this Agreement.
f. Governing Law; Forum. This Agreement and all obligations
created hereunder or required to be created hereby shall be
governed by and construed and enforced in accordance with the
laws of the State of South Dakota.
7
g. Notices. Any notice, statement or demand required or permitted
to be given under this Agreement shall be in writing, sent by
first class mail or hand delivered, addressed, as the case may
be, to Husker Ag or VIA at their respective addresses set
forth above, or to such other address as Husker Ag or VIA
shall designate and, unless earlier received, shall be deemed
to have been received on the date five (5) days after it shall
have been mailed, as aforesaid, in any post office or branch
post office regularly maintained by the United States
Government.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and first above written.
HUSKER AG, L.L.C.
By /s/ O. XXXXX XXXXXX
-----------------------------------
O. Xxxxx Xxxxxx
Its Chairman and President
VARIABLE INVESTMENT ADVISORS, INC.
By /s/ XXXXXXX X. XXXXXX
-----------------------------------
President
STATE OF Nebraska )
SS
COUNTY OF Xxxxxx )
On this the 17th day of February, 2003, before me, the undersigned
officer, personally appeared O. Xxxxx Xxxxxx, who acknowledged himself to be the
Chairman and President of Husker Ag, L.L.C., a limited liability company, and
that he, as such Chairman and President being authorized so to do, executed the
foregoing instrument for the purposes therein contained, by signing the name of
the limited liability company by himself as a duly authorized officer of Husker
Ag, L.L.C.
8
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ XXXXX XXXXXXXX
---------------------------------
NOTARY PUBLIC
(SEAL)
My Commission Expires: 0-00-00
0
XXXXX XX XXXXX XXXXXX )
SS
COUNTY OF MINNEHAHA )
On this the 24th day of February, 2003, before me, the undersigned
officer, personally appeared Xxxxxxx X. Xxxxxx, who acknowledged himself to be
the President of Variable Investment Advisors, Inc., a corporation, and that he,
as such President being authorized so to do, executed the foregoing instrument
for the purposes therein contained, by signing the name of the corporation by
himself as President.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ XXXXXXX X. XXXX
---------------------------------
NOTARY PUBLIC
(SEAL)
My Commission Expires: 8-14-2003
10
