Membership Agreement – Noble Investement Club

Membership Agreement
PURPOSE The purpose of the Club is to invest assets of the Club in stocks, bonds, notes and other securities (collectively herein referred to as “securities”) for the education and benefit of the Members. GOVERNANCE ELECTIONS Prior to the Annual Meeting, all Members will be given the opportunity to volunteer for any existing Advisor’s position. This will include the current Member holding an Advisor’s position. Should more than one Member volunteer for a given position, a secret ballot will be taken and the Member who receives the most votes will assume the position. This is provided a quorum is represented either directly or indirectly by proxy. Absent Members may vote by proxy. Quorum - A quorum for the transaction of business shall be a majority of the Members. The election of Advisors and the transacting of other business shall be made by a majority of the Members present, provided a quorum is present. Voting Procedures - All decisions that affect the investments of the Club and its assets will be decided by a vote. Each Member’s vote, regardless of his or her percentage of ownership in the Club, will have an equal say in the voting process. All votes will be performed by an open showing of hands for or against an issue, except the election of officers, which will be performed by a secret ballot. All decisions will be based on a majority rule of the Members present and voting, provided there is a quorum, OPERATIONS Management - Each Member shall participate in the management and conduct of the affairs of the Club. Except as otherwise provided herein, all investment decisions shall be made by the Board of Advisors. Buy and/or Sell Action - Buy and/or sell action may be taken after a discussion by the Members and when approved by the Board of Advisors and ratified by the Board of Directors. Brokerage Accounts - The Club shall use the services of Noble FX Inc. or its designee to broker the Club’s securities transactions. Accordingly, the Club will enter into such agreements with Noble FX Inc. and its associates or their designees as may be required or desirable, for the purchase or sale of stocks, bonds and other securities. Stocks, bonds and securities owned by the Club shall be registered in the Club name unless another name shall be designated by the Club. Transfer Agent - Any third party, custodian or Transfer Agent called upon to transfer any stocks, bonds and other securities to or from the accounts in the name of the Club shall be entitled to rely on instructions or assignments signed or purporting to be signed by one of the two Treasurers, without inquiry as to the authority of the person signing or purporting to sign such instruction or assignments or as to the validity of any transfer to or from the accounts in the name of the Club. At the time of transfer, the third party, custodian or transfer agent is entitled to assume (1) that the Club is still in existence and (2) that this Membership Agreement is in full force and effect and has not been amended unless there is written notice to the contrary delivered to said third party, custodian or transfer agent. Broker Restrictions - No Member who is a certified broker or financial planner by trade may be the Club Treasurer. However, the Club may select a commercial broker and enter into such agreements as required for the purchase or sale of stocks, bonds, and other securities. The Treasurer will be the primary Member responsible for the dealing with the banks and brokers. Banking - The Treasurers of the Club shall establish bank account(s) with a bank that meets the approval of the Board of Directors. Either of the two Treasurers may sign on the account and have the authority to draft funds from said accounts for payment of Club obligations. No Advisor of the Club shall have the authority to borrow money or obtain lines of credit without express written approval of the Board of Directors of the Club. This does not, however, apply to credit accounts opened with suppliers where the Board of Advisors shall have authority to approve such transactions. Bank and brokerage account statements shall be available to all Members during normal business hours at the offices of the third party accountant. Bank Account - The Club has chosen Banisi Bank for the Club checking account. Funds shall be withdrawn by check, signed by an authorized Member, usually a Treasurer. Bank statements shall be maintained, and stored by the Treasurer(s). Current statements will be presented for inspections at all meetings. INVESTING GUIDELINES The general strategic goal to be employed in this Investment Club is that one half of all funds contributed for investing be used to purchase “traditional” investments while the remainder half is to be used to loan or invest in “entrepreneurial” businesses such as real estate investing, start- ups and the like. The criteria that follow relate to the traditional component while the entrepreneurial portion is subject to evaluation on a case-by-case basis even if there is no performance history. Each investor shall have the right to “earmark” which of the micro lending options, if any, to invest their funds in. Buy and/or Sell Actions - Buy and/or sell action may be taken after a discussion by the members and when approved by the Board of Advisors at a regular meeting. Criteria for Buying Securities - The goal is to create a portfolio that consists of high quality securities. There will be many criteria used in the final determination of a security purchase. The following are some of the guidelines. Minimum of five years of financial history; Earnings are growing at or better than the rate of sales; Total debt – preferably 33% or less of total assets, or less than industry average; P/E ratio equal to or less than its five year average; Upside potential of 3:1 or better; Past performance and current events indicate the stock will provide an average total annual return of, at least, 14.9% over the next three years. Criteria for Selling Securities - No single reason shall be a determining factor for selling a security. However, the following reasons will be used for discussion. Adverse changes in management; Declining profit margin; Deteriorating financial condition; Competition affecting profits; Dependence on a single product; To balance the portfolio or to purchase a better stock. Diversification - In order to lower the risk in the portfolio, diversification by industry and by company size should be used. However, quality of the companies will override diversification. No stock or industry should dominate the total value of the portfolio. Dividends - Since education and portfolio growth are primary goals, all dividends will be reinvested. If a dividend paying stock has a reinvestment program, and we elect to use it, the Club will be instructed to use the dividend to purchase fractional shares of stock. How to Present New Securities - Searching out securities for the Club is part of the responsibilities of each Member. If you have found a security that you wish to present at a Club meeting, please follow these procedures: Complete a security selection guide to ensure the stock meets the Club’s buying criteria; Contact the President to have your Securities Report placed on the agenda; Keep the report brief and to the point when making your presentation; Provide copies of your security report to all in attendance. Investing – How Often - Unless it would cause an undo hardship on the Club, securities will be purchased at least once every quarter. This may include new securities or securities currently held by the Club. Market Orders - Market orders are restrictions or qualifiers placed on buy and sell orders given to brokers. The Club shall use these market orders, from time to time, upon a majority vote of the Board of Directors. Sharing Profits & Losses - Net profits and losses of the Club shall inure to, and be borne by, the Members, in proportion to the balances in their capital accounts. Any tax liability, stemming from annual capital gains, shall be divided, in proportion to the capital account balances, and is the responsibility of each Member to pay. Speculating - Speculating is considered any non-fundamental approach to investing in the stock market, along with market timing, short buying or selling, purchasing IPOs, short term holding of stocks, etc. Stock Certificates - On occasion, the Club will invest in DRIP plans that allow us to purchase stock directly through a company. In these cases, the stock certificates will be registered in the Club’s name and retained by the Club for safekeeping. In the event the Club does not provide a safekeeping device, certificates will be kept in a locked fire safe at the home of a Member to be decided at the Annual Meeting, or at a special meeting. When the Club purchases stocks that do not have DRIP plans, the stock certificates shall be registered in street name and kept by the brokerage. Allocation of Investment-Related Costs - Investor Members ARE allowed to make additional contributions to the Club. These additional contributions shall be added to the previously made monthly required contributions and used to calculate each Member’s claim on the invested assets of the Club and to allocate certain expenses, including brokerage fees amongst Members. A Member's "membership percentage" shall the calculated as follows: the Member’s total capital contributions divided by the total contributed capital shown on the books of the Club. Transfer of a Member's membership in the Club may only take place upon approval of the Board of Advisors and ratified by the Board of Directors. ACCOUNTING & TAX PROVISIONS Accounting - The Club shall have a tax year beginning January 1 and ending December 31 of each year. Accordingly, the Club shall be known as a calendar year taxpayer. The books of the Club shall be maintained on a cash basis with income being recognized when it is received, and expenses recognized when they are paid. Each calendar year, a full and complete account of the condition of the Club shall be made to the Members. The Club shall utilize the services of Professional Business Services, Inc. or its designee to carry out all necessary or desirable bookkeeping and tax preparation functions. Property - Title to all property purchased or leased for the Club shall be titled in the name of the Club. Officers are hereby granted authority to lease equipment on behalf of the Club in due course of business. FINANCE Fees - - Upon joining the Club, each individual member must pay a lifetime membership fee of $500. 00 From this amount 100.00 refundable deposit cover membership in Noble Real Estate & Development Credit Union Voluntary Additional Contributions - Members may make additional contributions to the Club at or before the monthly meeting or at any time the Treasurers choose to accept it. Any additional contributions can be made in any amounts acceptable to the Treasurer. Since each Member is allotted the same voting power, there are no restrictions on the amount of additional contributions that any Member may make. When cash is required to meet a withdrawal, if necessary, the Board of Advisors will determine the assets to be sold before the date of the preparation of the liquidating value statement used to determine the value of the withdrawal. The Club shall make every attempt to liquidate the Member’s assets as quickly as possible but the Club reserves the right to have the period of sixty (60) days after receiving a withdrawal notice to pay the Member in full. Loans – Loans to Members may be approved from time to time as circumstances arise but must be approved by the Board of Advisors and ratified by the Board of Directors. Loans can only be made to Members for up to, and not to exceed, fifty percent (50%), of the Member’s capital account. Members will also be required to pay any and all necessary and required document preparation fees and interest on said loans in an amount to be determined at the time by current market rates. Distributions – From time to time distributions may be made from profits, sale of assets, or other sources. Before payment, distributions shall be approved by the Board of Advisors and shall be paid to each Member in proportion to their membership percentage as reported by the Club in its last, most recent periodic report regarding accumulated capital contributions which determines each Member’s percentage of membership. In the event that the Club ceases operations, distributions of cash and property shall be made to the Members after all creditors and suppliers are paid. Such a distribution shall be made to the Members in proportion to their membership percentages. ADDITIONAL PROVISIONS Club Records - The Club Secretary must maintain all records for the Club as required by law. This may include, but not be limited to, a list of all Members including their addresses and membership percentage, records of membership transfers, minutes of all Member meetings, bank statements, reports to government authorities and accounting records. These records are to be kept at the principal office of the Club and may be reviewed by any Member by giving at least one day's notice to the Club's Secretary. Authority - Board of Advisors of the Club and/or any Member of the Club may have authority to transact any business or enter into any transaction of the Club or further its financial interest in the due course of business with one exception: No Member has authority to obtain loans, lines of credit or commit the Club to any bank or lending institution without prior written approval of Board of Advisors and ratified by the Board of Directors of the Club. Disputes - In the event of a dispute between the Members regarding this Membership Agreement or any matter regarding the Club, the dispute shall be presented to the Board of Advisors for resolution. If the dispute involves any Board Member then those Board Members involved in the dispute shall be excluded from voting on the matter. If the decision of the Board of Advisors still does not resolve the dispute then the matter shall be presented to the Board of Directors for resolution. If the decision of the Board of Directors still does not resolve the dispute then the matter shall be submitted to arbitration according to the rules of the American Arbitration Association. The arbitration or mediation service hearing the dispute shall be agreed in advance upon by the Members affected by the outcome of the dispute. The cost of the arbitration/mediation shall be borne by the losing Member(s) jointly and severally. If the dispute cannot be settled by arbitration, the matter may go to a court with jurisdiction in such matters. If the matter goes before a court, then the Members individually shall bear the cost of the proceedings. The prevailing party may seek reimbursement of expenses related to the court proceedings. Changes - This document is the only agreement between the Members of the Club and replaces any verbal or written agreement between Members. It cannot be replaced, amended or altered in any way without the approval of the Board of Advisors and ratified by the Board of Directors of the Club. If any provision of this Membership Agreement is determined to be legally unenforceable then that provision only shall be stricken from the agreement, leaving the remainder of the agreement in force. Implementing Club Resolutions - Any Member responsible for carrying out a Club resolution (i.e., depositing Club dues, buying and selling a stock, etc.) will do so the first business day after the meeting (or whenever stipulated by the resolution), or recruit another Member to assist in the timely completion of the assignment. INVOLUNTARY TERMINATION Forbidden Acts – No Member Shall: Have the right or authority to bind or obligate the Club to any extent whatsoever with regard to any other matter outside the scope of the Club business. Without an affirmative vote of the Board of Advisors and ratified by the Board of Directors of the Club, no Member shall be allowed to assign, transfer, pledge, mortgage or sell all or part of their interest in the Club to any other Member or other person whomsoever, or enter into any agreement as the result of which any persons not a Member shall have any interest in the Club. Use the Club name, credit or property for other than Club/Membership purposes. Do any act detrimental to the interest of the Club or which would make it impossible to carry on the business or affairs of the Club. Arrears - After each meeting, any Member in arrears will be posted in the Secretary’s report and will become an official record of the Club. Any Member who is in arrears for more than sixty- one (61) days will be automatically withdrawn from the Club. Any Member who fails to comply with the monthly deposit requirement shall be considered to have withdrawn from the Club, unless otherwise determined by a majority vote of the Board of Advisors of the Club. Removal of a Member - Any Member may be removed by agreement of an absolute majority of Members or at the discretion of the Board of Directors. Written notice of a meeting where removal of a Member is to be considered shall include a specific reference to this matter. The removal shall become effective upon payment of the value of the removed Member's capital account, which shall be in accordance with the provisions on full withdrawal of a Member. EXECUTION This Membership Agreement is hereby declared and shall be binding upon the Members and their respective heirs, executors, administrators, and personal representatives. As evidenced by their signatures below, the Members of the Club hereby adopt this Membership Agreement in its entirety and agree to be bound by its terms. Each Member hereby acknowledges that he/she has utilized, or has had the opportunity to utilize, the services of other professional advisors including legal counsel, concerning the execution of this MEMBERSHIP AGREEMENT. Further, irrespective of whether such advice is deemed unnecessary, actually sought, utilized or ignored, Member hereby warrants that Member is of sufficient business acumen to execute this MEMBERSHIP AGREEMENT and make it binding. Member understands, recognizes, and agrees that there are certain risks, dangers, and perils inherent in the operation of an investment club and by joining this Club, Member agrees to assume these risks being under no compulsion or duress. The signatures need not be notarized.
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