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HomeMy WebLinkAbout20240917 Idaho LLC Operating Agreement Teton View EstatesLIMITED LIABILITY COMPANY OPERATING AGREEMENT Teton View Estates,LLC A Member-Managed Limited Liability Company IDAHO LLC OPERATING AGREEMENT THIS OPERATING AGREEMENT ("Agreement")is made and entered into effective September 17,2024 ("Effective Date"),by and among:H2 Venture Properties LLC,and Kuhn Properties,LLC,(collectively referred to in this agreement as the "Members"). SECTION 1 THE LIMITED LIABILITY COMPANY 1.1 Formation.Effective February 15,2024,the Members formed a limited liability company under the name Teton View Estates,L.L.C.on the terms and conditions in this Operating Agreement (the "Agreement")and pursuant to Chapter 6 Idaho Uniform Limited Liability Company Act (State Law)of the State of Idaho (the "Act").The Members filed with the appropriate agency within the State of Idaho charged with processing and maintaining such records all documentation required for the formation of the Company.The rights and obligations of the parties are as provided in the Act except as otherwise expressly provided in this Agreement. 1.2 Name.The business of the Company will be conducted under the name Teton View Estates,L.L.C.,or such other name upon which the Members may unanimously agree. 1.3 Purpose.The purpose of the Company is to engage in any lawful act or activity for which a Limited Liability Company may be formed within the State of Idaho. 1.4 Subscription Agreement.The Company has entered into a Subscription Agreement with Kuhn Properties,LLC ("Kuhn Properties")dated September 17,2024 ("Subscription Agreement").Under the Subscription Agreement,Kuhn Properties has contributed real property to the Company located in Madison County,Idaho ("Real Property").The Company Notwithstanding any other provision or requirement in this Agreement,the Company and Kuhn Properties agree as follows: o Kuhn Properties will be a 10%member of the Company with voting, management,and economic rights. o The Company will pay Kuhn Properties its return of capital in the amount of $5,000,000 as provided in this section,interest in the amount of $210,000, and profits as provided in section 1.4 of this Agreement. o By October 15,2024 ("Payment Date"),the Company will distribute to Kuhn Properties a cash distribution in the amount of $1,000,000 ("First Distribution Payment").To secure payment of the First Distribution Payment,Company will sign a first position deed of trust that benefits Kuhn Properties and includes the Real Estate. o If the Company fails to pay the First Distribution Payment by the Payment Date,Company shall be in default,and Kuhn Properties shall have a right to foreclose on the Real Estate under the first position deed of trust. Company will pay all attorneys'fees and costs incurred by Kuhn Properties in the foreclosure of the Real Estate. o On the same day that Company has obtained long-term financing for the Project,Kuhn Properties will record a second deed of trust (signed by Company on the same date as the first deed of trust and held by Kuhn Properties in escrow).The second deed of trust will secure the payments under this Subscription Agreement and the Operating Agreement.Kuhn Properties agrees to release each townhome or unit of a multi-family complex on the sale,closing,and payments due to Kuhn Properties from the sales proceeds at closing on each townhome or unit. o By May 1,2025 ("Second Payment Date"),the Company will distribute to Kuhn Properties a second cash distribution in the amount of $1,500,000 ("Second Distribution Payment").If the Company fails to pay the Second Distribution Payment by the Second Payment Date,Company shall be in default,and Kuhn Properties shall have a right to foreclose on the Real Estate under the second position deed of trust.Company will pay all attorneys'fees and costs incurred by Kuhn Properties in the foreclosure of the Real Estate. o Company will construct the number of townhomes and other multi-family complexes in accordance with the plans attached as Schedule 3 to this Agreement ("Project").The Project will be a Condominium Project as provided under the Idaho Condominium Property Act.If the City of Rexburg or Company changes the number of townhomes or other units in a multi- family complex as shown in Exhibit B of this Agreement,Company will provide amended written plans that satisfies Kuhn Properties'requirements. The parties must each sign the amended plans.If the parties are unable to agree on the amended plans,Kuhn Properties shall have the right to void this Agreement and the Operating Agreement.The parties shall act in good faith in determining the amounts to be paid on closing from a townhome or unit in a multi-family complex. o Company will pay to Kuhn Properties the following on the sale of each townhome and each unit of a multi-family unit constructed on the Real Property: Type of Multi #of Multi-Amount due Total Family Unit Family on sale Units Townhome 50 $35,000 $1,750,000 Individual units 108 $8,000 $864,000 of multi-family complex The total amount paid based on the table shall not exceed $2.5 million.The interest of $210,000 will need to be paid on or before December 31,2028. o Company will pay Kuhn Properties 10%of the profits on each town home and each unit of a multi-family complex on the closing.All expenses to determine profits are to be customary and reasonable.The payments for 10%profits are in addition to the amounts due on the sale of a townhome or unit of a multi-family complex as shown in the table under section 4 of this Agreement.. o Company may pay $2,000 to H2 Venture Properties,LLC on the closing of every townhome or unit of a multi-family complex provided Company first pays Kuhn Properties all amounts due at closing including profit on the townhome or unit. o Company must begin construction on the Project within 90 days of the City of Rexburg's approval of the Project,not to exceed one year from the Effective Date of this Agreement ("Construction Beginning Date").If Company fails to begin such Project on the Construction Beginning Date, Company shall pay Kuhn Properties $250 for each day Company has not begun construction on the Property.For purposes of this paragraph, "construction"means installing significant development improvements on the Real Property. o Company must complete the construction of the Project by December 31, 2027.If not completed,by that date,Company will pay Kuhn Properties $250 per day for each day the construction is not completed,unless Company has paid Kuhn Properties its outstanding balance on its return of capital in the amount of $2,500,000,excluding profit,at which time the Company will have until December 31,2028 to complete construction of the Project.If Company does not complete construction of the Project by December 31,2028 date,Company will pay Kuhn Properties $250 per day for each day the construction is not completed,unless Company and Kuhn Properties have mutually agreed on a different completion date. o Kuhn Properties shall not be personally liable for any financing regarding the Project,or other debts of the Company.This includes but is not limited to any obligation to indemnify the Company or any Member under this Agreement for any claims,debts,or other demands from any third party. o Notwithstanding any other provision under this Agreement,all terms and payments due to Kuhn Properties provided for under this section 1.4 of the Agreement shall have priority over any other terms or payments in this Agreement. 1.5 Office.The Company will maintain its principal business office within the State of Idaho at the following address:1070 Riverwalk Dr,Ste 266,IF,ID 83402 1.6 Registered Agent.H2 Venture Properties is the Company's initial registered agent in the State of Idaho,and the registered office is 1070 Riverwalk Dr,Ste 266,IF,ID 83402. 1.7 Term.The term of the Company commences on February 15,2024 and shall continue perpetually unless sooner terminated as provided in this Agreement. 1.8 Names and Addresses of Members.The Members'names and addresses are attached as Schedule 1 to this Agreement. 1.9 Admission of Additional Members.Except as otherwise expressly provided in this Agreement,no additional members may be admitted to the Company through issuance by the company of a new interest in the Company without the prior unanimous written consent of the Members. 1.10 Conflicts of Interest.If a Member,its members,shareholders,officers, employees,contractors,or agents have a direct or indirect transaction with the Company,that Member shall not represent the Company in the negotiations and shall not vote or take any action for the Company regarding the negotiations or approval of the transaction.The Members who transact business with the Company are the same as those of a person who is not a Member subject to other applicable law.No transaction with the Company shall be voidable solely because a Member,its members, shareholders,officers,employees,contractors,or agents has a direct or indirect interest in the transaction if either:(i)the transaction is fair to the Company and disclosed to the disinterested Member(s)or (ii)the Members holding interests in the Company representing all interests in the Company of the disinterested Members,knowing the material facts of the transaction authorize,approve,or ratify the transaction. SECTION 2 CAPITAL CONTRIBUTIONS 2.1 Initial Contributions.The Members initially shall contribute to the Company capital as described in Schedule 2 attached to this Agreement. 2.2 Additional Contributions.No Member shall be obligated to make any additional contribution to the Company's capital without the prior unanimous written consent of the Members. 2.3 No Interest on Capital Contributions.Members are not entitled to interest or other compensation for or on account of their capital contributions to the Company except to the extent,if any,expressly provided in this Agreement. SECTION 3 ALLOCATION OF PROFITS AND LOSSES;DISTRIBUTIONS 3.1 Profits/Losses.For financial accounting and tax purposes,the Company's net profits or net losses shall be determined on an annual basis and shall be allocated to the Members in proportion to each Member's relative capital interest in the Company as set forth in Schedule 2 as amended from time to time in accordance with U.S. Department of the Treasury Regulation 1.704-1. Notwithstanding the above paragraph in this section 3.1 of this Agreement,for purposes of this Agreement,Kuhn Properties'allocation percentage for profits and losses shall be 10%until the Company has sold all the multi-family units described in section 1.4 of this Agreement and paid Kuhn Properties all payments due under the Subscription Agreement and this Operating Agreement. 3.2 Distributions.Subject to section 1.4 of this Agreement,the Members shall determine and distribute available funds annually or at more frequent intervals as they see fit.Available funds,as referred to herein,shall mean the net cash of the Company available after appropriate provision for expenses and liabilities,as determined by the Managers.Distributions in liquidation of the Company or in liquidation of a Member's interest shall be made in accordance with the positive capital account balances pursuant to u.S.Department of the Treasury Regulation 1.704.1 (b)(2)(ii)(b)(2).To the extent a Member shall have a negative capital account balance,there shall be a qualified income offset,as set forth in U.S.Department of the Treasury Regulation 1.704.1 (b)(2)(ii)(d). Notwithstanding the above paragraph in this section 3.2 of this Agreement,all distributions to Kuhn Properties as provided in section 1.4 of this Agreement shall take priority over any distributions to the other Members.While Kuhn Properties is still owed money under section 1.4 of this Agreement,all Members of the Company must consent in writing to all other distributions from the Company,except for those under section 1.4 of this Agreement. 3.3 No Right to Demand Return of Capital.Except as provided in section 1.4 of this Agreement regarding Kuhn Properties,no Member has any right to any return of capital or other distribution except as expressly provided in this Agreement.No Member has any drawing account in the Company. SECTION 4 INDEMNIFICATION The Company shall indemnify any person who was or is a party defendant or is threatened to be made a party defendant,pending or completed action,suit or proceeding,whether civil,criminal,administrative,or investigative (other than an action by or in the right of the Company)by reason of the fact that he is or was a Member of the Company,Manager,employee or agent of the Company,or is or was serving at the request of the Company,against expenses (including attorney's fees),judgments,fines, and amounts paid in settlement actually and reasonably incurred in connection with such action,suit or proceeding if the Members determine that he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the Company,and with respect to any criminal action proceeding,has no reasonable cause to believe his/her conduct was unlawful.The termination of any action,suit,or proceeding by judgment,order,settlement,conviction,or upon a plea of "no 10 Contendere"or its equivalent,shall not in itself create a presumption that the person did or did not act in good faith and in a manner which he reasonably believed to be in the best interest of the Company,and,with respect to any criminal action or proceeding, had reasonable cause to believe that his/her conduct was lawful. SECTION 5 POWERS AND DUTIES OF MANAGERS 5.1 Management of Company. 5.1.1 The Members,within the authority granted by the Act and the terms of this Agreement shall have the complete power and authority to manage and operate the Company and make all decisions affecting its business and affairs. 5.1.2 Except as otherwise provided in this Agreement and in section 5.4 of this Agreement,all decisions and documents relating to the management and operation of the Company shall be made and executed by a Majority in Interest of the Members. 5.1.3 Third parties dealing with the Company shall be entitled to rely conclusively upon the power and authority of a Majority in Interest of the Members to manage and operate the business and affairs of the Company. 5.2 Decisions by Members.Whenever in this Agreement reference is made to the decision,consent,approval,judgment,or action of the Members,unless otherwise expressly provided in this Agreement,such decision,consent, approval,judgment,or action shall mean a Majority of the Members. 5.3 Withdrawal by a Member.A Member has no power to withdraw from the Company,except as otherwise provided in Section 8. 5.4 Actions requiring Unanimous Written Consent of Members.The following actions shall require Unanimous Written Consent of the Members: A.The acquisition of Company property greater than $100,000,including without limitation any real property,other than in the ordinary course of business; B.The transfer of any Company property,real or personal,other than in the ordinary course of business and in an arms-length transaction for at least fair market value; C.The mortgage,pledge,or grant of a security interest in any Company property; D.The incurrence or refinance of indebtedness by the Company in excess of $200,000,whether secured or unsecured,and including any indebtedness for money borrowed from a Member; E.Initial purchase orders for the construction of any capital improvement, repair,alteration,or change.Once purchase orders are approved,only items that shall cost in excess of 250,000 Dollars ($250,000). F.Except for payments already agreed to be paid to Kuhn Properties on the Project as provided in section 1.4 of this Agreement,the making of any distribution(s)or withdrawal(s)from the net profits of the Company or the capital account of any Member; G.Any merger or plan of merger,interest exchange or plan of interest exchange,conversion,domestication,transaction of any nature that would involve a conflict of interest by a Member,indemnification of Members or the Company's or a Member's agents or employees,amendment of the articles of organization or this Agreement,general disposition of substantially all the assets of the Company,or dissolution of the Company; I.Sale of all or any substantial part of the assets of the business; J.Amendment of this Agreement;or K.Dissolution and winding up of the Company. SECTION 6 SALARIES,REIMBURSEMENT,AND PAYMENT OF EXPENSES 6.1 Organization Expenses.All expenses incurred in connection with organization of the Company will be paid by the Company. 6.2 Salary.No salary will be paid to a Member for the performance of his or her duties under this Agreement unless the salary has been approved in writing by a Majority of the Members. 6.3 Legal and Accounting Services.The Company may obtain legal and accounting services to the extent reasonably necessary for the conduct of the Company's business. SECTION 7 BOOKS OF ACCOUNT,ACCOUNTING REPORTS,TAX RETURNS, FISCAL YEAR,BANKING 7.1 Method of Accounting.The Company will use the method of accounting previously determined by the Members for financial reporting and tax purposes. 7.2 Fiscal Year;Taxable Year.The fiscal year and the taxable year of the Company is the calendar year. 7.3 Capital Accounts.The Company will maintain a Capital Account for each Member on a cumulative basis in accordance with federal income tax accounting principles. 7.4 Banking.All funds of the Company will be deposited in a separate bank account or in an account or accounts of a savings and loan association in the name of the Company as determined by a Majority of the Members.Company funds will be invested or deposited with an institution,the accounts or deposits of which are insured or guaranteed by an agency of the United States government. SECTION 8 TRANSFER OF MEMBERSHIP INTEREST 8.1 Sale or Encumbrance Prohibited.Except as otherwise permitted in this Agreement,no Member may voluntarily or involuntarily transfer,sell,convey,encumber, pledge,assign,or otherwise dispose of (collectively,"Transfer")an interest in the Company without the prior written consent of all of the other non-transferring Members. 8.2 Substituted Parties.Any transfer in which the Transferee becomes a fully substituted Member is not permitted unless and until: 8.2.1 The transferor and assignee execute and deliver to the Company the documents and instruments of conveyance necessary or appropriate in the opinion of counsel to the Company to effect the transfer and to confirm the agreement of the permitted assignee to be bound by the provisions of this Agreement;and 8.2.2 The transferor furnishes to the Company an opinion of counsel,satisfactory to the Company,that the transfer will not cause the Company to terminate for federal income tax purposes or that any termination is not adverse to the Company or the other Members. 8.3 Bankruptcy of Member.On bankruptcy of a Member,the successor in interest to the Member (whether bankruptcy trustee,or otherwise)will receive only the economic right to receive distributions whenever made by the Company and the Member's allocable share of taxable income,gain,loss,deduction,and credit (the "Economic Rights")unless a unanimous written consent of the Members determined on a per capita basis admit the transferee as a fully substituted Member in accordance with the provisions of Section 8.2. 8.3.1 Any transfer of Economic Rights pursuant to Section 8.4 will not include any right to participate in management of the Company,including any right to vote,consent to,and will not include any right to information on the Company or its operations or financial condition.Following any transfer of only the Economic Rights of a Member's Interest in the Company,the transferring Member'S power and right to vote or consent to any matter submitted to the Members will be eliminated,and the Ownership Interests of the remaining Members,for purposes only of such votes,consents,and participation in management,will be proportionately increased until such time,if any,as the transferee of the Economic Rights becomes a fully substituted Member. SECTION 9 DISSOLUTION AND WINDING UP OF THE COMPANY 9.1 Dissolution.The Company will be dissolved on the happening of any of the following events: 9.1.1 Sale,transfer,or other disposition of all or substantially all of the property of the Company; 9.1.2 The agreement of all of the Members; 9.1.3 By operation of law;or 9.1.4 The bankruptcy of a Member,or the occurrence of any event that terminates the continued membership of a Member in the Company,unless there are then remaining at least the minimum number of Members required by law and all of the remaining Members,within 120 days after the date of the event, elect to continue the business of the Company. 9.2 Winding Up.On the dissolution of the Company (if the Company is not continued), the Members must take full account of the Company's assets and liabilities,and the assets will be liquidated as promptly as is consistent with obtaining their fair value,and the proceeds,to the extent sufficient to pay the Company's obligations with respect to the liquidation,will be applied and distributed,after any gain or loss realized in connection with the liquidation has been allocated in accordance with Section 3 of this Agreement,and the Members'Capital Accounts have been adjusted to reflect the allocation and all other transactions through the date of the distribution,in the following order: 9.2.1 To payment and discharge of the expenses of liquidation and of all the Company's debts and liabilities to persons or organizations other than Members; 9.2.2 To the payment and discharge of any Company debts and liabilities owed to Members;and 9.2.3 To Members in the amount of their respective adjusted Capital Account balances on the date of distribution;provided,however,that any then outstanding Default Advances (with interest and costs of collection)first must be repaid from distributions otherwise allocable to the Defaulting Member pursuant to Section 9.2.3. Notwithstanding section 9.2 of this Agreement,upon dissolution and winding up of the Company,the payments due to Kuhn Properties under section 1.4 of this Agreement shall have priority ahead of all Members and other third parties except for bona-fide creditors of the Company excluding any loans to other Members except Kuhn Properties. SECTION 10 GENERAL PROVISIONS 10.1 Amendments.Amendments to this Agreement may be proposed by any Member. A proposed amendment will be adopted and become effective as an amendment only on the written approval of all of the Members. 10.2 Governing Law.This Agreement and the rights and obligations of the parties under it are governed by and interpreted in accordance with the laws of the State of Idaho (without regard to principles of conflicts of law). 10.3 Entire Agreement;Modification.This Agreement constitutes the entire understanding and agreement between the Members with respect to the subject matter of this Agreement.No agreements,understandings,restrictions,representations,or warranties exist between or among the members other than those in this Agreement or referred to or provided for in this Agreement.No modification or amendment of any provision of this Agreement will be binding on any Member unless in writing and signed by all the Members. 10.4 Attorney Fees.In the event of any suit or action to enforce or interpret any provision of this Agreement (or that is based on this Agreement),the prevailing party is entitled to recover,in addition to other costs,reasonable attorney fees in connection with the suit,action,or arbitration,and in any appeals.The determination of who is the prevailing party and the amount of reasonable attorney fees to be paid to the prevailing party will be decided by the court or courts,including any appellate courts,in which the matter is tried,heard,or decided. 10.5 Further Effect.The parties agree to execute other documents reasonably necessary to further effect and evidence the terms of this Agreement,as long as the terms and provisions of the other documents are fully consistent with the terms of this Agreement. 10.6 Severability.If any term or provision of this Agreement is held to be void or unenforceable,that term or provision will be severed from this Agreement,the balance of the Agreement will survive,and the balance of this Agreement will be reasonably construed to carry out the intent of the parties as evidenced by the terms of this Agreement. 10.7 Captions.The captions used in this Agreement are for the convenience of the parties only and will not be interpreted to enlarge,contract,or alter the terms and provisions of this Agreement. 10.8 Notices.All notices required to be given by this Agreement will be in writing and will be effective when actually delivered or,if mailed,when deposited as certified mail, postage prepaid,directed to the addresses first shown above for each Member or to such other address as a Member may specify by notice given in conformance with these provisions to the other Members. 10.9 Disbandment.If for any reason the project is unable to be enacted within the space of 2(Two)Years,all investments will be returned to the party from which they were acquired. IN WITNESS WHEREOF,the parties to this Agreement execute this Operating Agreement as of the date and year first above written. MEMBERS: H2 Venture Properties Printed/Typed Name Kuhn Properties,LLC Printed/Typed Name Signature Listing of Members -Schedule 1 LIMITED LIABILITY COMPANY OPERATING AGREEMENT FOR Teton View Estates,L.L.C. LISTING OF MEMBERS As of the 17th day of September,2024,the following is a list of Members of the Company: NAME H2 Venture Properties LLC ADDRESS 1070 Riverwalk Dr,Ste 266,IF,ID 83402 Kuhn Properties,LLC 1070 Riverwalk Dr,Ste 270,IF,ID 83402 Authorized by Member(s)to provide Member Listing as of this (Day)day of (Month, Year). H2 Venture Properties LLC Printed/Typed Name Kuhn Properties,LLC Printed/Typed Name Signature Listing of Capital Contributions -Schedule 2 LIMITED LIABILITY COMPANY OPERATING AGREEMENT FOR Teton View Estates,L.L.C. CAPITAL CONTRIBUTIONS The description and each individual portion of this initial contribution is as follows: NAME CONTRIBUTION %OWNERSHIP Kuhn Properties,LLC (Member)50%of the Real Property located at 1114 N Yellowstone Hwy, Rexburg,ID 83440 10% H2 Venture Properties LLC (Member)General Contractor of Project, 90% SIGNED AND AGREED this 17th day of Septem~24_/ Kuhn Properties,LLC ~ZL:..::>"'-_- Printed/Typed Name H2 Venture Properties LLC Printed/Typed Name SCHEDULE 3 PLANS FOR CONSTRUCTION OF THE PROJECT