EXHIBIT 3.2
UAG CONNECTICUT I, LLC
FIRST AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
EFFECTIVE MARCH 1, 2001
TABLE OF CONTENTS
SECTION 1.........................................................................................................2
FORMATION OF THE LIMITED LIABILITY COMPANY........................................................................2
1.1 FORMATION; FILINGS....................................................................................2
1.2 NAME..................................................................................................2
1.3 TERM..................................................................................................2
1.4 REGISTERED AGENT AND OFFICE...........................................................................2
1.5 PRINCIPAL PLACE OF BUSINESS...........................................................................3
1.6 QUALIFICATION IN OTHER JURISDICTIONS..................................................................3
SECTION 2.........................................................................................................3
PURPOSE AND POWERS................................................................................................3
2.1 BUSINESS PURPOSES.....................................................................................3
2.2 POWERS OF THE COMPANY.................................................................................3
SECTION 3.........................................................................................................3
MEMBERS...........................................................................................................3
3.1 POWERS OF MEMBERS.....................................................................................3
3.2 NO PRIORITY, ETC......................................................................................4
3.3 MEETINGS OF MEMBERS...................................................................................4
3.4 ACTIONS OF MEMBERS WITHOUT A MEETING..................................................................5
3.5 TRADE SECRETS; CONFIDENTIALITY........................................................................5
SECTION 4.........................................................................................................5
MANAGEMENT........................................................................................................5
4.1 THE BOARD.............................................................................................5
4.2 OFFICERS..............................................................................................8
4.3 ACTIONS AND DETERMINATIONS OF THE COMPANY............................................................13
SECTION 5........................................................................................................13
OPERATING POLICIES...............................................................................................13
5.1 ANNUAL BUSINESS PLAN PROCESS.........................................................................13
5.2 INSURANCE............................................................................................13
5.3 FISCAL YEAR..........................................................................................14
5.4 INITIAL ACCOUNTANTS; CHANGE OF ACCOUNTANTS...........................................................14
SECTION 6........................................................................................................14
CAPITAL CONTRIBUTIONS, UNITS,....................................................................................14
CAPITAL ACCOUNTS AND ADVANCES....................................................................................14
6.1 CAPITAL CONTRIBUTIONS................................................................................14
6.2 MEMBER'S UNITS.......................................................................................14
6.3 STATUS OF CAPITAL CONTRIBUTIONS......................................................................14
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6.5 NEGATIVE CAPITAL ACCOUNTS............................................................................16
6.6 LOANS FROM MEMBERS...................................................................................16
SECTION 7........................................................................................................16
ALLOCATIONS OF PROFITS AND LOSSES................................................................................16
7.1 ALLOCATIONS OF NET PROFIT AND NET LOSS...............................................................16
7.2 SPECIAL ALLOCATIONS..................................................................................17
7.4 TRANSFER OR CHANGE IN MEMBER INTERESTS...............................................................19
SECTION 8........................................................................................................19
DISTRIBUTIONS AND WITHHOLDING....................................................................................19
8.1 DISTRIBUTIONS........................................................................................19
8.2 LIMITATIONS ON DISTRIBUTION..........................................................................19
8.3 WITHHOLDING TAXES....................................................................................19
8.4 TAX DISTRIBUTIONS....................................................................................20
8.5 ADJUSTED NET CASH DISTRIBUTIONS......................................................................20
SECTION 9........................................................................................................20
TAX MATTERS......................................................................................................20
9.1 TAX MATTERS MEMBER...................................................................................20
9.2 RIGHT TO MAKE SECTION 754 ELECTION...................................................................21
9.3 TAXATION AS PARTNERSHIP..............................................................................21
SECTION 10.......................................................................................................22
BANKING; ACCOUNTING; BOOKS AND RECORDS...........................................................................22
10.1 BANKING..............................................................................................22
10.2 MAINTENANCE OF BOOKS AND RECORDS; ACCOUNTS AND ACCOUNTING METHOD; INSPECTION.........................22
SECTION 11.......................................................................................................22
REPORTS TO MEMBERS...............................................................................................22
11.1 REPORTS TO CURRENT MEMBERS...........................................................................22
11.2 TAX INFORMATION......................................................................................23
11.3 ADDITIONAL INFORMATION...............................................................................23
SECTION 12.......................................................................................................24
LIABILITY, EXCULPATION AND INDEMNIFICATION.......................................................................24
12.1 LIABILITY............................................................................................24
12.2 EXCULPATION..........................................................................................24
12.3 INDEMNIFICATION......................................................................................25
SECTION 13.......................................................................................................27
TRANSFER OF UNITS; WITHDRAWAL,...................................................................................27
BANKRUPTCY, DISSOLUTION; CERTAIN ADMISSIONS OF MEMBERS...........................................................27
13.1 ADMISSION, SUBSTITUTION AND WITHDRAWAL OF MEMBERS; ASSIGNMENT........................................27
13.2 WITHDRAWAL...........................................................................................28
13.3 XXXX OPTION TO PURCHASE..............................................................................28
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SECTION 14.......................................................................................................29
DISSOLUTION AND TERMINATION OF THE COMPANY.......................................................................29
14.1 EVENTS CAUSING DISSOLUTION...........................................................................29
14.2 LIQUIDATION..........................................................................................29
14.3 DISTRIBUTIONS IN CASH OR IN KIND.....................................................................30
14.4 TIME AND MANNER FOR LIQUIDATION, ETC.................................................................30
14.5 TERMINATION..........................................................................................31
14.6 CLAIMS OF THE MEMBERS................................................................................31
SECTION 15.......................................................................................................31
DEFINITIONS......................................................................................................31
15.1 DEFINITIONS..........................................................................................31
SECTION 16.......................................................................................................37
AMENDMENTS; MERGER OR SALE.......................................................................................37
16.1 AMENDMENTS GENERALLY.................................................................................37
16.2 MERGER OR SALE.......................................................................................37
SECTION 17.......................................................................................................38
MISCELLANEOUS PROVISIONS.........................................................................................38
17.1 NOTICES..............................................................................................38
17.2 COUNTERPARTS.........................................................................................38
17.3 TABLE OF CONTENTS AND HEADINGS.......................................................................38
17.4 SUCCESSORS AND ASSIGNS; ASSIGNMENT...................................................................38
17.5 SEVERABILITY.........................................................................................38
17.6 NON-WAIVER...........................................................................................38
17.7 APPLICABLE LAW.......................................................................................39
17.8 WAIVER OF JURY TRIAL.................................................................................39
17.9 SURVIVAL OF CERTAIN PROVISIONS.......................................................................39
17.10 LIMITATION ON DAMAGES; LEGAL DISPUTES................................................................39
17.11 WAIVER OF PARTITION..................................................................................39
17.12 ENTIRE AGREEMENT.....................................................................................39
17.13 FURTHER ACTIONS......................................................................................40
17.14 NO PARTNERSHIP.......................................................................................40
UNITS......................................................................................................41
Member Information.........................................................................................42
INITIAL DIRECTORS................................................................................................43
INITIAL OFFICERS.................................................................................................43
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FIRST AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF UAG CONNECTICUT I, LLC
This Limited Liability Company Agreement of UAG CONNECTICUT I, LLC (the
"COMPANY") is effective as of March 1, 2001 by and between UAG CONNECTICUT, LLC,
a Delaware corporation, ("UAG") and XXXX HOLDINGS LLC ("XXXX") (each of the
foregoing parties to this Agreement shall be referred to herein collectively as
the "PARTIES"), and the Persons who become Members of the Company in accordance
with the provisions of this Agreement. Certain capitalized terms used herein
without definition have the meanings specified in Section 15.
WHEREAS, the Company owns various entities that own and operate factory
authorized retail sales and service Mercedes Benz, Porsche and Audi dealerships
and a full service automobile body shop located on or around Commerce Drive, in
Fairfield, Connecticut (collectively the "BUSINESS").
WHEREAS, the Company was formed under the Delaware Act in order to hold the
entities that own and operate the Business; and
WHEREAS, the Parties hereto desire to establish their respective rights and
obligations as Members of such limited liability company effective as of the
date of this Agreement.
WHEREAS, the Parties wish to amend and restate this Agreement as outlined
herein.
NOW, THEREFORE, in consideration of the agreements and obligations set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Members hereby agree as
follows:
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SECTION 1
FORMATION OF THE LIMITED LIABILITY COMPANY
1.1 FORMATION; FILINGS.
(a) GENERALLY. The Parties agree that the limited liability
company formed pursuant to the provisions of the Delaware Act
and upon its terms, shall be subject to the conditions, and
for the purposes set forth in this Agreement. Each of the
Members shall execute or cause to be executed from time to
time all other instruments, certificates, notices and
documents, and shall do or cause to be done all such filing,
recording, publishing and other acts, in each case, as may be
necessary or appropriate from time to time to comply with all
applicable requirements for the formation and/or operation
and, when appropriate, termination of a limited liability
company in the State of Delaware and all other jurisdictions
where the Company shall desire to conduct its business.
(b) UNITS; NAME; CAPITAL CONTRIBUTIONS. The number of Units,
Voting Units and Non-Voting Units authorized, issued and
outstanding are set forth in Schedule A hereto. The name,
mailing address, Capital Contribution, Voting Units and
Non-Voting Units held by each Member is listed on Schedule B
attached hereto.
1.2 NAME.
The name of the Company is "UAG CONNECTICUT I, LLC" and its business
shall be carried on in this name with such variations and changes
including, but not limited to "MERCEDES BENZ OF FAIRFIELD," "AUDI OF
FAIRFIELD" and "PORSCHE OF FAIRFIELD" as the Board in its sole judgment
deems necessary or appropriate to comply with requirements of the
jurisdictions in which the Company's operations are conducted.
1.3 TERM.
The term of the Company shall commence on the date of the filing of a
Certificate of Formation in the office of the Secretary of State of the
State of Delaware and shall continue until dissolved and liquidated in
accordance with the provisions of Section 13.
1.4 REGISTERED AGENT AND OFFICE.
The registered agent and office of the Company in Delaware shall be The
Corporation Trust Company, Corporation Trust Center, 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxx. The registered agent for service of
process on the Company in the State of Delaware shall be The
Corporation Trust Company. At any time, the Managers of the Company may
designate another registered agent and/or registered office.
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1.5 PRINCIPAL PLACE OF BUSINESS.
The principal place of business of the Company shall be at 000 Xxxxxxxx
Xxxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000.
1.6 QUALIFICATION IN OTHER JURISDICTIONS.
The Board shall take and/or authorize the taking of such action
necessary to cause the Company to be qualified, formed or registered
under assumed or fictitious name statutes or similar laws in any
jurisdiction in which the Company transacts business and in which such
qualification or registration is required by law or deemed advisable by
the Company. The President or any duly qualified officer of the
Company, as an authorized person within the meaning of the Delaware
Act, shall execute, deliver and file any certificates (and any
amendments and/or restatements thereof) necessary for the Company to
qualify to do business in any jurisdiction in which the Company may
wish to conduct business.
SECTION 2
PURPOSE AND POWERS
2.1 BUSINESS PURPOSES.
The purpose of the Company is to (i) engage for profit in the Business,
(ii) engage for profit in any and all other activities reasonably
related to or incidental to the Business, and (iii) engage for profit
in any other business for which limited liability companies may be
formed under the Delaware Act, whether or not related or incidental to
the Business, as may be determined from time to time by the act of the
Directors constituting fifty and one-tenth percent (50.1%) or more of
the total vote of the Board.
2.2 POWERS OF THE COMPANY.
Subject to obtaining any requisite Board approval required by Sections
2.1 or 4.2(e), the Company shall have the power and authority to take
any and all actions necessary, appropriate, proper, advisable,
incidental or convenient to or for the furtherance of the purposes set
forth in Section 2.1, to the extent that the same may be lawfully
exercised by limited liability companies under the Delaware Act.
SECTION 3
MEMBERS
3.1 POWERS OF MEMBERS.
Except as otherwise expressly provided herein, the Members shall have
no power to transact any business in the Company's name nor have the
power to sign documents for or otherwise bind the Company. Subject to
the provisions of the Delaware Act, the Certificate and this Agreement,
the Members hereby delegate any and all such powers to
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the Board and the officers to carry out the business affairs of the
Company on the Members' behalf. Any power not reserved to the Members
or delegated to the officers of the Company, if any, shall remain with
the Board.
3.2 NO PRIORITY, ETC.
Except as otherwise provided herein, no Member shall have priority
over any other Member either as to the return of the amount of its
Capital Contribution, if any, to the Company or as to any allocation of
Net Profit and Net Loss.
3.3 MEETINGS OF MEMBERS.
(a) ANNUAL MEETINGS. An annual meeting of the Members for the
election of Directors and the transaction of other proper
business shall be held once a year at a time designated by the
Company.
(b) SPECIAL MEETINGS. Special meetings of the Members, for any
purpose or purposes, may be called by the Company and shall be
called by the Company at the request of Members holding Fifty
Percent (50%) or more of the aggregate Units. The business
transacted at any special meeting of Members shall be limited
to the purposes stated in the notice.
(c) PLACE OF MEETING. All meetings of Members shall be held at
such place within or outside the State of Delaware as the
Company shall designate.
(d) NOTICE OF MEETINGS. Notice of all meetings of Members, stating
the time, place and purpose of the meeting, shall be given as
provided in Section 16.1 at least 10 days and not more than 60
days before the meeting. Any adjourned meeting may be
adjourned without further notice, provided that any adjourned
session or sessions are held within 60 days after the date set
for the original meeting. No notice need be given (i) to any
Member if a written waiver of notice, executed before or after
the meeting by such Member or his attorney thereunto duly
authorized, is filed with the records of the meeting, or (ii)
to any Member who attends the meeting without protesting prior
thereto or at its commencement the lack of notice to him. A
waiver of notice need not specify the purposes of the meeting.
(e) QUORUM AND VOTING. Members constituting at least 50% of the
Voting Units held by all Members must be present in order to
constitute a minimum quorum required for the transaction of
business at any meeting of Members. Any question brought
before any meeting shall be decided by Members who, at the
time in question and in the aggregate, hold, or hold proxies
with respect to, a majority of the aggregate Units, unless a
different vote is specifically provided for by this Agreement.
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(f) PROXIES. Voting Units of Members may be voted in person or by
proxy. A proxy purporting to be executed by or on behalf of a
Member shall be deemed valid unless challenged at or prior to
its exercise and the burden of proving invalidity shall rest
on the challenger.
(g) ELECTRONIC COMMUNICATIONS. Members may participate in any
meeting of Members by means of conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person
at the meeting.
3.4 ACTIONS OF MEMBERS WITHOUT A MEETING.
Any action required to be taken at any annual or special meeting of
Members or otherwise, or any action which may be taken at any annual or
special meeting of such Members or otherwise, may be taken without a
meeting and without a vote, if (i) at least two days advance notice of
the intent to take action without a meeting is provided to each Member
and (ii) a consent in writing, setting forth the action so taken, shall
be signed by Members having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting.
The foregoing two day advance notice period shall be deemed waived with
respect to any Member that returns a signed consent to the Company.
Prompt notice of the taking of the action without a meeting by less
than unanimous written consent shall be given to each of those Members
who have not consented in writing.
3.5 TRADE SECRETS; CONFIDENTIALITY.
(a) Each Member, to the extent, if any, that it becomes aware of a
trade secret of the Company, agrees that it will not at any
time reveal, divulge or otherwise make known any such trade
secret of the Company to any Person other than a current
officer, employee or affiliate of the Company, or such other
person as the Board may designate in writing or, with prior
notice to the Company, pursuant to court order or other legal
process or the order of any governmental agency or entity.
(b) Except as required by applicable law (including reporting
requirements under generally accepted accounting principles),
each Member shall keep secret all material confidential
matters of the Company which are not otherwise in the public
domain and will not intentionally disclose them to anyone
outside of the Company or any Affiliate of the Company during
the term of this Agreement.
SECTION 4
MANAGEMENT
4.1 THE BOARD.
(a) GENERAL. The business and affairs of the Company shall be
managed by or under the direction of a committee of Managers
of the Company (the "BOARD")
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consisting initially of three (e) natural persons designated
as directors of the Company ("DIRECTORS") pursuant to the
terms of this Agreement. Other than rights and powers
expressly reserved to Members by this Agreement or the
Delaware Act, the Board shall have full, exclusive and
complete discretion to manage and control the business and
affairs of the Company, to make all decisions affecting the
business and affairs of the Company and to take all such
actions as it deems necessary or appropriate to accomplish the
purposes of the Company as set forth herein. Each Director is
hereby designated a Manager. The Directors shall be appointed
or elected as provided in Section 4.1(b). Each Director
elected shall hold office until a successor is elected and
qualified or until such Director's earlier death, resignation
or removal. Directors need not be Members. No appointment or
election of a Director shall become effective, however, until
the Person named shall have accepted in writing such
appointment and agreed in writing to be bound by the terms of
this Agreement.
(b) INITIAL ELECTION AND APPOINTMENT OF DIRECTORS. UAG shall be
entitled to designate two (2) Directors (the "UAG Designees")
and Xxxx shall be entitled to designate one (1) Director (the
"Xxxx Designee"). The initial UAG Designees shall be Xxxxxx X.
Xxxxxxx, Xx. and Xxxxx Xxxxxxxx and the initial Xxxx Designee
shall be Xxxxxxx X. Xxxxxxxxx. UAG shall have the power to
remove, with or without cause, a UAG Designee and fill any
vacancy created by the death, resignation or removal of any
UAG Designee. Xxxx shall have to the power to remove, with or
without cause, the Xxxx Designee and fill any vacancy created
by the death, resignation or removal of the Xxxx Designee.
(c) INCREASE OR DECREASE IN SIZE OF BOARD. The size of the Board
may be increased or decreased from time to time only by an
amendment to this Agreement.
(d) RESTRICTIONS ON THE BOARD. The Board shall not: (i) do any act
in contravention of any applicable law or regulation, or
provision of this Agreement; or (ii) admit any Person as a
Member except as permitted in this Agreement and the Delaware
Act.
(e) MEETINGS OF THE BOARD. The Board may hold meetings, both
regular and special, either within or outside the State of
Delaware. The first meeting of each newly elected Board shall
be held immediately after the annual meeting of Members and at
the same place, and no notice of such meeting shall be
necessary to the newly elected Directors in order legally to
constitute the meeting, provided a quorum shall be present. In
the event such meeting is not held at that time and place, the
meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for
special meetings of the Board, or as shall be specified in a
written waiver signed by all of the Directors. Regular
meetings of the Board may be held without notice at such time
and at such place as shall from time to time be determined by
the Board. Special meetings of the Board may be called by any
Member on two days' notice to each Director, either
personally, by telephone,
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by mail, by telegram or by any other means of communication;
special meetings shall be called by any Member, the Chairman,
or the Secretary in like manner and on five days' notice on
the written request of one or more of the Directors. Notice of
a meeting need not be given to any Director if a written
waiver of notice, executed by such Director before or after
the meeting, is filed with the records of the meeting, or to
any Director who attends the meeting without protesting prior
thereto or at its commencement, the lack of notice. A waiver
of notice need not specify the purposes of the meeting.
(f) QUORUM. At all meetings of the Board, two Directors shall
constitute a quorum for the transaction of business. If a
quorum shall not be present at any meeting of the Board, the
Directors present at such meeting may adjourn the meeting from
time to time, without notice other than announcement at the
meeting, until a quorum shall be present. Any action required
or permitted to be taken at any meeting of the Board or of any
committee thereof may be taken without a meeting, and without
a vote, provided that, at least two days advance notice of the
intent to take such action without a meeting and without a
vote is given to each Director, if a consent in writing,
setting forth the action so taken, shall be signed, in the
case of action by the Board, by Directors having not less than
the minimum number of votes that would be necessary to
authorize or take such action at a meeting, and in the case of
action by a committee, by all members of such committee.
(g) REQUIRED BOARD VOTE. The affirmative vote of a majority of the
Directors present at any meeting at which there are sufficient
Directors present to constitute a quorum ("MAJORITY BOARD
VOTE") shall be the act of the Board, unless another vote is
specifically provided by this Agreement.
(h) COMMITTEES OF DIRECTORS. The Board may, by resolution passed
by a Majority Board Vote, designate one or more additional
committees, each committee to consist of one or more of the
Directors. Any such committee, to the extent and only to the
extent expressly provided in the resolution of the Board,
shall have and may exercise all the powers and authority of
the Board in the management of the business and affairs of the
Company. Each committee shall keep regular minutes of its
meetings and report the same to the Board when required.
(i) ELECTRONIC COMMUNICATIONS. Members of the Board, or any
committee designated by the Board, may participate in a
meeting of the Board, or any committee, by means of conference
telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each
other, and such participation in a meeting shall constitute
presence in person at the meeting.
(j) COMPENSATION OF DIRECTORS. Directors shall not receive
remuneration for services as a Director; provided, that
Directors shall be entitled to reimbursement
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of reasonable out-of-pocket expenses incurred in connection
with attendance at regular or special meetings of the Board or
any committee thereof.
(k) DIRECTORS NOT AGENTS. The Directors are not agents of the
Company for the purpose of the Company's business and shall
not have the power to sign documents for or otherwise bind the
Company.
4.2 OFFICERS.
(a) GENERAL. The designated officers of the Company shall be a
Chairman, a President who shall be the Chief Executive Officer
of the Company, a Secretary and a Treasurer and may include
one or more Vice Presidents, one or more Assistant
Secretaries, one or more Assistant Treasurers, and such other
officers as may be appointed in accordance with the provisions
of Section 4.2(k) (each, an "OFFICER," and together, the
"OFFICERS"). Officers may be, but need not be, Managers.
(b) ELECTION, TERM OF OFFICE, QUALIFICATIONS. Officers shall be
elected by a Majority Board Vote at any regular or special
meeting of the Board, provided that until such elections or
appointments have been made, the Officers shall be the natural
persons designated on SCHEDULE B annexed hereto. Except as
provided in paragraphs (c) and (d) of this Section 4.2, each
Officer shall hold office until his or her successor shall
have been chosen and qualified. Any two offices may be held by
the same Person, but no Officer shall execute, acknowledge or
verify any instrument in more than one capacity if such
instrument be required by law or this Agreement to be
executed, acknowledged or verified by any two or more
Officers.
(c) RESIGNATIONS AND REMOVALS. Any Officer may resign his or her
office at any time by delivering a written resignation to the
President or any Director. Unless otherwise specified therein,
such resignation shall take effect upon delivery. Executive
Officers may be removed from office at any time, with or
without cause, by a Majority Board Vote at any regular meeting
or any special meeting. All other officers may be removed from
offices at any time by the President. Except to the extent
expressly provided in a written agreement with the Company, no
Officer resigning and no Officer removed shall have any right
to any compensation for any period following his resignation
or removal or any right to damages on account of such removal.
(d) VACANCIES AND NEWLY CREATED OFFICES. If any vacancy shall
occur in any office, other than any Executive Officer, by
reason of death, resignation, removal, disqualification or
other cause, or if any new office shall be created, such
vacancies or newly created offices may be filled by the Board
at any regular or special meeting or, in the case of any
office created pursuant to Section 4.2(k), by any Officer upon
whom such power shall have been conferred by the Board. If
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any vacancy shall occur in the office of any Executive
Officer, such vacancy shall be filled by appointment made by a
Majority Board Vote.
(e) AUTHORITY OF OFFICERS; CERTAIN ACTS REQUIRING OR MAJORITY
BOARD VOTE. Subject to the provisions of this Agreement and to
the directives and policies of the Board not in conflict with
this Agreement, the President and the other Officers of the
Company shall have the power, acting individually or jointly,
to represent and bind the Company in all matters, in
accordance with the scope of their respective duties subject
to the following restrictions:
(i) The following actions or types of transactions shall not
be taken or consummated by the President or any other Officer,
employee or agent of the Company except pursuant to
resolutions, directions or guidelines adopted by a Majority
Board Vote, and such actions and types of transactions shall
not constitute action by the Company unless such Majority
Board Vote is obtained:
(1) The merger, consolidation, reorganization or other
business combination of any kind involving the
Company or sale of all or substantially all the
assets of the Company.
(2) Amendments to, or the execution or filing of any
document or agreement of any kind which would affect
the terms of the Certificate.
(3) The issuance or sale, or any agreement to issue or
sell, directly or indirectly, to any Person, by the
Company any interest of any kind in the Company,
including, but not limited to, Units, Voting Units or
Non-Voting Units, any rights, options or warrants or
other securities to acquire any such interest, or any
securities convertible into or exchangeable or
exercisable for such interest; provided, however,
that any such issuance that could or would entitle
such person to the rights of a Member or that would
cause (or entitle) such person to receive an interest
(other than collateral security interests granted by
the Company to secure its obligations) of 5% or more
in the assets or profits of the Company shall also
require the approval of the Members of the Company in
accordance with Section 13.1(b).
(4) Any sale or other transfer of assets of the Company
not in the ordinary course of business consistent
with past practices (other than as provided in the
approved annual Business Plan).
(5) The declaration or payment, directly or indirectly,
of any distribution, whether in cash, property or
securities or a combination thereof, with respect to
any Units or Capital Contribution.
9
(6) The redemption, purchase, repurchase, retirement or
other acquisition for value of any of the interests
in, or securities of, the Company.
(7) The dissolution, liquidation, or voluntary bankruptcy
of the Company (other than any right of liquidation
expressly provided for under this Agreement).
(8) Approval of the annual Business Plan.
(9) Any investment in the equity or debt of another
corporation or in any partnership or other enterprise
(other than temporary investments of cash in money
market instruments).
(10) Acceptance of annual financial statements.
(11) Approval of policies relating to the investment or
allocation of surplus funds and creation of reserve
accounts.
(12) Any change in the Company's accountants or any change
in the Company's material accounting policies, except
as required by generally accepted accounting
principles.
(13) Subject to Section 4.2(e)(ii) below, the making of
any capital expenditure or acquisition of assets by
the Company (including by way of merger) other than
capital expenditures or acquisitions of assets
provided for in the then current approved annual
Business Plan (or any permitted deviations from the
capital budget which may be allowed by a current
approved Business Plan) provided that, any such
capital expenditure or acquisition shall be the
subject of discussion and debate by the Members prior
to it being submitted to the Board for a vote.
(14) Incurring, creating, assuming or guaranteeing any
indebtedness by the Company, absolute or contingent
of any nature whatsoever (other than indebtedness
incurred in the ordinary course of business
consistent with past practice or as provided for in a
current approved Business Plan).
(15) The extension of any material credit, including the
lending of funds by the Company, to another Person,
other than in the normal course of business of the
Company.
(16) Election of Executive Officers; the establishment or
change in any Executive Officer's compensation or
benefits of any kind; the establishment or amendment
of any employee pension or other benefit programs of
any kind; or action taken under any employment
agreement.
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(17) The institution, termination or settlement by the
Company of any litigation where the amount in
controversy exceeds $100,000.
(18) The formation of any Subsidiary.
(19) Any change in the Company's name.
(ii) The following action or type of transaction shall not be
taken or consummated by the President or any other Officer,
employee or agent of the Company except pursuant to
resolutions, directions or guidelines adopted by a unanimous
vote of the Directors, and such action or transaction shall
not constitute action by the Company unless such unanimous
vote is obtained:
The making of any capital expenditure which would
cause the net working capital of the Dealership
Operating Companies, in the aggregate, to fall below
the levels of minimum net working capital as is
necessary to satisfy the requirements, in the
aggregate, of the Franchise Agreements of the
Dealership Operating Companies.
(F) CHAIRMAN. The Chairman shall be elected by the Board, but
shall have no other duties or powers except as may be
determined by the Board from time to time.
(g) PRESIDENT. From time to time as appropriate, pursuant to
Section 4.2(b) the Board shall elect a president of the
Company who (subject to the terms of any applicable employment
agreement) shall serve as such until the earlier of his death
or resignation or his removal in accordance with the terms of
this Agreement (the "PRESIDENT"). The President shall be the
chief executive officer of the Company, shall preside at all
meetings of the Members, and shall have the responsibility for
managing the day-to-day business operations and affairs of the
Company and supervising its other Officers, subject to the
direction, supervision and control of the Board. In general,
the President shall have such other powers and (subject to the
terms of any applicable employment agreement) perform such
other duties as usually pertain to the office of the
President, and as from time to time may be assigned to him by
the Board, including, without limitation, the authority to
retain and terminate employees of the Company (other than
Officers). The powers and duties of the President shall at all
times be subject to the provisions of Section 4.2(e).
(h) VICE PRESIDENT. From time to time as appropriate, pursuant to
Section 4.2(b), the Board may elect one or more vice
presidents of the Company (each a "VICE PRESIDENT") who
(subject to the terms of any applicable employment agreement)
shall serve as such until the earlier of such persons death or
resignation or his removal in accordance with the terms of
this Agreement. A Vice President shall have such duties as may
be prescribed by the Board or the President, under whose
supervision the Vice President shall be.
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(i) THE SECRETARY AND ASSISTANT SECRETARY. The Secretary shall
attend all meetings of the Board and all meetings of the
Members and record all the proceedings of the meetings and all
actions of the Members, the Board and the committees of the
Board in a book to be kept for that purpose and shall perform
like duties for the standing committees when required. The
Secretary shall give, or cause to be given, notice of all
meetings of the Members and special meetings of the Board, and
shall perform such other duties as may be prescribed by the
Board or the President, under whose supervision the Secretary
shall be. The Assistant Secretary, or if there be more than
one, the Assistant Secretaries in the order determined by the
Board (or if there be no such determination, then in order of
their election) shall, in the absence of the Secretary or in
the event of the Secretary's inability to act, perform the
duties and exercise the powers of the Secretary and shall
perform such other duties and have such other powers as the
Board may from time to time prescribe.
(j) THE TREASURER AND ASSISTANT TREASURER. The Treasurer shall
have the custody of the Company's funds and securities and
shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Company and shall
deposit all moneys and other valuable effects in the name and
to the credit of the Company in such depositories as may be
designated by the Board. The Treasurer shall disburse the
funds of the Company as may be ordered by the Board, taking
proper vouchers for such disbursements, and shall render to
the President, under whose supervision the Treasurer shall be,
and the Board, at its regular meetings, or when the Board so
requires, an account of all of the Treasurer's transactions
and of the financial condition of the Company. The Assistant
Treasurer, or if there shall be more than one, the Assistant
Treasurers in the order determined by the Board (or if there
be no such determination, then in the order of their
election), shall, in the absence of the Treasurer or in the
event of the Treasurer's inability to act, perform the duties
and exercise the powers of the Treasurer and shall perform
such other duties and have such other powers as the Board may
from time to time prescribe.
(k) SUBORDINATE OFFICERS. The Board from time to time may appoint
such other subordinate Officers, or agents as it may deem
advisable, each of whom shall have such title, hold office for
such period, have such authority and perform such duties as
the Board may determine in its sole discretion subject always
to the direction and control of the President. The Board from
time to time may delegate to one or more Officers or agents
the power to appoint any such subordinate Officers or agents
and prescribe their respective rights, terms of office,
authorities and duties.
(L) OFFICERS AS AGENTS. The Officers, to the extent of their
powers set forth in this Agreement, are agents of the Company
for the purpose of the Company's business, and the actions of
the Officers taken in accordance with such powers shall bind
the Company.
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4.3 ACTIONS AND DETERMINATIONS OF THE COMPANY.
Whenever this Agreement provides that a determination shall be made or
an action shall be taken by the Company, such determination or act may
be made or taken by the Board or, pursuant to this Agreement or with
the required authorization of the Board, by any committee of the Board
or any Officer acting under the supervision of the Board.
SECTION 5
OPERATING POLICIES
5.1 ANNUAL BUSINESS PLAN PROCESS.
The President shall prepare and submit, or cause to have prepared and
submitted, to the Board for its approval (i) a business plan (the
"INITIAL BUSINESS PLAN") on or before March 1, 2001, and (ii) updated
business plans at least sixty (60) days prior to the beginning of each
new Fiscal Year (each such business plan, a "BUSINESS PLAN") covering
the period of the new Fiscal Year (except for the Initial Business
Plan, which shall cover the current Fiscal Year) (such one year period,
the "BUSINESS PLAN PERIOD"). Each such Business Plan shall set forth,
for each of the years covered by the Business Plan Period, the
Company's expense budgets, and a detailed financial plan relating to
such new Fiscal Year for the Company.
(a) Not more than thirty (30) days following its receipt of an
annual Business Plan, the Board shall identify any additional
information, clarification and/or modification required for
its approval, and the President shall provide such to the
Board as soon as practicable. Any approval granted by the
Board shall apply only to the first year of any Business Plan
Period and, in the event that the annual Business Plan for the
next fiscal year is not approved by the close of the then
current Fiscal Year, the then existing Business Plan shall
continue as the approved Business Plan for a period of not
more than 90 days following the close of the then current
Fiscal Year.
(b) The President shall prepare and present, or have prepared and
presented, at each regular meeting of the Board, or at any
special meeting called for this purpose, a review of the
Company's year-to-date progress in comparison to the approved
Business Plan.
5.2 INSURANCE.
The Company will maintain insurance at levels and of types consistent
with what would be deemed commercially reasonable for a company engaged
in business activities substantially similar to that of the Business.
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5.3 FISCAL YEAR.
The fiscal year of the Company (the "FISCAL YEAR") shall end on the
31st day of December in each year. The Company shall have the same
fiscal year for income tax and for financial accounting purposes. To
the extent permissible under applicable law, the Fiscal Year may be
changed by a Majority Board Vote.
5.4 INITIAL ACCOUNTANTS; CHANGE OF ACCOUNTANTS.
The Company's independent public accountant as of the Closing shall be
Deloitte & Touche LLP. The Company's independent public accountant may
be changed at any time by a Majority Board Vote.
SECTION 6
CAPITAL CONTRIBUTIONS, UNITS,
CAPITAL ACCOUNTS AND ADVANCES
6.1 CAPITAL CONTRIBUTIONS.
The value of each Member's initial capital contribution to the Company
shall equal the amount set forth opposite the Member's name on SCHEDULE
B attached hereto.
6.2 MEMBER'S UNITS.
Units held by a Member shall for all purposes be personal property. A
Member has no interest in specific Company property.
6.3 STATUS OF CAPITAL CONTRIBUTIONS.
(a) Except as otherwise expressly provided herein, no Member shall
have the right to withdraw capital from the Company or to
receive any distribution or return of such Member's Capital
Contributions.
(b) No Member shall receive any interest, salary or drawing with
respect to its Capital Contributions, if any, or its Capital
Account or for services rendered on behalf of the Company or
otherwise in its capacity as a Member, except as otherwise
specifically provided in this Agreement.
(c) The Members shall be liable only to make their initial Capital
Contributions pursuant to Section 6.1, and no Member shall be
required to lend any funds to the Company or to make any
additional Capital Contributions to the Company except as
otherwise set forth herein.
6.4 CAPITAL ACCOUNTS.
A separate capital account (each a "CAPITAL ACCOUNT") for each Member
shall be established on the books and records of the Company and such
Capital Accounts shall be maintained for each Member in accordance with
the following provisions:
14
(a) To each Member's Capital Account there shall be credited such
Member's Capital Contributions, such Member's distributive
share of Net Profit and items in the nature of income or gain
which are specially allocated to such Member pursuant to
Section 6.4(f) and Section 7.2 hereof, and the amount of any
Company liabilities assumed by such Member or which are
secured by any Company property distributed to such Member.
(b) To each Member's Capital Account there shall be debited the
amount of cash and the Gross Asset Value of any Company
property distributed to such Member pursuant to any provision
of the Agreement (including amounts distributed to a Member
but required to be paid on such Member's behalf directly to a
creditor or another party pursuant to a separate agreement),
such Member's distributive share of Net Loss and any items in
the nature of expenses or losses which are specially allocated
pursuant to Section 6.4(f) and Section 7.2 hereof, and the
amount of any liabilities of such Member assumed by the
Company or which are secured by any property contributed by
such Member to the Company.
(c) In the event all or a portion of the Units held by a Member
are transferred in accordance with the terms of the Agreement,
the transferee shall succeed to the Capital Account of the
transferor to the extent it relates to the transferred Units.
(d) In determining the amount of any liability for purposes of
Sections 6.4(a) and 6.4(b) hereof, there shall be taken into
account Code Section 752 and any other applicable provisions
of the Code and Treasury Regulations.
(e) Immediately prior to the occurrence of an event specified in
Treasury Regulation Section 1.704(b)-1(b)(2)(iv)(f)(5)(i) or
(ii), the Capital Accounts of the Members shall be adjusted
(consistent with the provisions hereof and Treasury
Regulations under Section 704 of the Code) upward or downward
to reflect any unrealized gain or unrealized loss attributable
to property of the Company, as if such unrealized gain or
unrealized loss had been recognized upon an actual sale of
each asset immediately prior to such event and had been
allocated first to equalize the Capital Accounts of the
Members in proportion to their relative Non-Voting Percentage
Interest, and then to all the Members in accordance with their
Non-Voting Percentage Interest. In determining such unrealized
gain or unrealized loss, the fair market value of the property
of the Company as of any date of determination shall be
reasonably determined by Majority Board Vote. This Section
6.4(e) provision is intended to meet the requirements of
Treas. Reg. 1.704-1(b)(2)(iv)(f).
(f) This Section 6.4 and other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended
to comply with Treasury Regulations Section 1.704-1(b), and
shall be interpreted and applied in a manner consistent with
such Treasury Regulations. Notwithstanding that a particular
adjustment is not set forth in this Section 6.4, the Capital
Accounts of the
15
Members shall be adjusted as required by, and in accordance with, the
capital account maintenance rules of Treasury Regulations Section
1.704-1(b).
6.5 NEGATIVE CAPITAL ACCOUNTS.
No Member shall be required to make up an Adjusted Capital Account
Deficit nor pay to any Member the amount of any such deficit in any
such account.
6.6 LOANS FROM MEMBERS.
Loans by a Member to the Company shall not be considered Capital
Contributions. If any Member shall advance funds to the Company in
excess of the amounts required hereunder to be contributed by such
Member to the capital of the Company, the making of such advances shall
not result in any increase in the amount of the Capital Account of such
Member. The amounts of any such advances shall be a debt of the Company
to such Member and shall be payable or collectible only out of the
Company assets in accordance with the terms and conditions upon which
such advances are made. The repayment of loans from a Member to the
Company upon liquidation shall be subject to the order of priority set
forth in Section 13.2.
SECTION 7
ALLOCATIONS OF PROFITS AND LOSSES
7.1 ALLOCATIONS OF NET PROFIT AND NET LOSS.
(a) After giving effect to the special allocations set forth in
Section 6.4(e) and Section 7.2 hereof, Net Profit of the
Company for any Fiscal Year shall be allocated to each Member
by multiplying the Net Profit of the Company for any Fiscal
Year by a fraction, the numerator of which shall be the
cumulative Net Losses allocated to the Member pursuant to
Section 7.1(b) for all prior fiscal years and the denominator
which shall be cumulative Net Losses allocated to all Members
pursuant to Section 7.1(b) for all prior Fiscal Years. The
balance of the Net Profits, if any, shall be allocated among
the Members in proportion to their Non-Voting Percentage
Interest.
(b) After giving effect to the special allocations set forth in
Section 6.4(f) and Section 7.2 hereof, Net Losses of the
Company for any Fiscal Year shall be allocated among the
Members in proportion to their Non-Voting Percentage Interest.
(c) Notwithstanding the foregoing provisions of Section 7.1(b),
the Net Losses allocated pursuant to Section 7.1(b) shall not
exceed the maximum amount of Net Losses that can be so
allocated without causing any Member to have an Adjusted
Capital Account Deficit at the end of any Fiscal Year. In the
event some but not all of the Members would have Adjusted
Capital Account Deficits as a consequence of an allocation of
Net Losses pursuant to Section 7.1(b) hereof, the
16
limitation set forth in this Section 7.1(c) shall be applied
on a Member by Member basis so as to allocate the maximum
permissible Net Loss amounts to each Member under Treasury
Regulations Section 1.704-1(b)(2)(ii)(d). All Net Loss amounts
in excess of the limitation set forth in this Section 7.1(c)
shall be allocated to the Members in proportion to their
Non-Voting Percentage Interest
7.2 SPECIAL ALLOCATIONS.
(a) Any allocation pursuant to Section 7.1 will be subject to the
following adjustments and special allocations which shall be
made in the following order of priority and prior to any
allocation under Section 7.1:
(i) MINIMUM GAIN CHARGEBACK. Notwithstanding any other
provision of this Section 7.2, if there is a net
decrease in Company Minimum Gain or Member Minimum
Gain during any Fiscal Year, prior to any other
allocation pursuant hereto, items of Company income
and gain for such Fiscal Year (and, if necessary,
subsequent Fiscal Years) shall be specially allocated
between the Members in accordance with Treasury
Regulations Sections 1.704-2(f) and (i). The items to
be so allocated shall be determined in accordance
with Treasury Regulations Section 1.704-2(f)(6) and
1.704-2(j)(2)(i) through (iii).
(ii) QUALIFIED INCOME OFFSET. If any Member unexpectedly
receives any adjustments, allocations or
distributions described in Treasury Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6), 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 Adjusted Capital
Account Deficit of such Member as quickly as
possible, provided that an allocation pursuant to
this Section 7.2(a)(ii) shall be made only if and to
the extent that such Member would have an Adjusted
Capital Account Deficit after all other allocations
provided for in this Section 7.2(a) have been
tentatively made as if this Section 7.2(a)(ii) were
not in the Agreement.
(iii) SPECIAL INCOME ALLOCATION. If any Member has an
Adjusted Capital Account Deficit in its Capital
Account at the end of any Fiscal Year or portion
thereof that is in excess of the sum of (I) the
amount such Member is obligated to restore pursuant
to any provision of this Agreement, 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
1.704-2(i)(5) of the Regulations, 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 Section 7.2(a)(iii) shall be made only if and to
the extent that such Member would have an Adjusted
Capital Account Deficit in excess of such sum after
all
17
other allocations provided for in this Section 7.2(a)
have been made as if this Section 7.2(a)(iii) were
not in the Agreement.
(iv) NON-RECOURSE DEDUCTIONS. Non-recourse Deductions, if
any, for any Fiscal Year shall be allocated (as
nearly as possible) under Treasury Regulations
Section 1.704-2(e) among the Members in proportion to
their Non-Voting Percentage Interest.
(v) MEMBER NONRECOURSE DEDUCTIONS. In accordance with the
principles set forth in Treasury Regulations Section
1.704-2(i), any Member Nonrecourse Deductions for any
Fiscal Year shall be allocated to the Members in
accordance with the ratios in which they potentially
bear the economic risk of loss with respect to such
Member Nonrecourse Debt.
(vi) SECTION 754 ADJUSTMENTS. To the extent an adjustment
to the adjusted tax basis of any Company asset
pursuant to Section 734(b) or 743(b) of the Code is
required pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(m) to be taken into account in
determining Capital Accounts as a result of a
distribution to a Member in complete liquidation of
its interest, 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 item of gain or loss shall be specially
allocated in a manner consistent with the manner in
which the Capital Accounts of the Members are
required to be adjusted pursuant to such Section of
the Regulations.
(b) CURATIVE ALLOCATIONS. It is the intent of the parties that, to
the extent possible, all allocations pursuant to Sections
7.2(a)(i) through 7.2(a)(vi) (the "REGULATORY ALLOCATIONS")
shall be offset either with other Regulatory Allocations or
with special allocations of other items of Company income,
gain, loss or deduction pursuant to this Section 7.2(b).
Therefore, notwithstanding any other provision of this
Agreement (other than Sections 7.2(a)(i) through 7.2(a)(vi)),
the Board shall make such offsetting special allocations of
Company income, gain, loss or deductions as are appropriate so
that after such offsetting allocations are made, each Members
Capital Account balance is, to the extent possible, equal to
the Capital Account balance such Member would have had if
Sections 7.2(a)(i) through 7.2(a)(vi) were not part of this
Agreement and all Company items were allocated pursuant to
Section 7.1 of this Agreement.
7.3 TAX ALLOCATIONS.
Items of income, gain, loss, deduction and credit of the Company shall,
for each Fiscal Year, be allocated, for U.S. federal, state and local
income tax purposes, among the Members in the same manner as the items
of income, gain, loss, deduction and credit were allocated to such
Members pursuant to Section 6.4(e), Section 7.1 and Section 7.2
18
hereof. Notwithstanding the foregoing, in accordance with Code Section
704(c) and the Treasury Regulations thereunder, items of income, gain,
loss and deduction with respect to any property contributed to the
capital of the Company shall, solely for tax purposes, be allocated
among the Members so as to take account of any variation between the
adjusted tax basis of such property at the time of contribution to the
Company for federal income tax purposes and its Gross Asset Value at
the time of contribution using the "remedial allocation method" set
forth in Treasury Regulation 1.704-3(d). In the event the Gross Asset
Value of any Company asset is adjusted in accordance with the
definition of Gross Asset Value hereof, subsequent allocations of items
of income, gain, loss, and deductions with respect to such asset shall
take account of any variation between the adjusted tax basis of such
asset for federal income tax purposes and its adjusted Gross Asset
Value in a manner consistent with the principles of Code Section 704(c)
and the Treasury Regulations thereunder. Allocations pursuant to this
Section 7.3 are solely for purposes of U.S. federal, state, and local
income taxes and shall not affect, or in any way be taken into account
in computing, any Member's Capital Account or share of Net Profit or
Net Loss, other items, or distributions pursuant to any provision of
this Agreement.
7.4 TRANSFER OR CHANGE IN MEMBER INTERESTS.
If the respective Units held by the existing Members in the Company
change or if a Unit is transferred to any other person or entity, then,
for the Fiscal Year of transfer, all income, gains, losses, deductions,
tax credits and other tax incidents resulting from the operations of
the Company shall be allocated, as between the transferor and the
transferee, by taking into account their varying interests in
accordance with Section 706 of the Code.
SECTION 8
DISTRIBUTIONS AND WITHHOLDING
8.1 DISTRIBUTIONS.
The Company shall not make any distributions to its Members except as
determined by the Board in accordance with Section 4.2(e) or except as
otherwise provided herein. Except as otherwise expressly provided
herein, all Distributions shall be made to Members pro rata in
accordance with their respective Non-Voting Percentage Interest.
8.2 LIMITATIONS ON DISTRIBUTION.
Notwithstanding any provision to the contrary contained in this
Agreement, the Company shall not make a distribution to any Member on
account of its interest in the Company if such distribution would
violate Section 18-607 of the Delaware Act.
8.3 WITHHOLDING TAXES.
If the Company is required to withhold any portion of any amounts
distributed or allocated to a Member by applicable U.S. federal, state,
local or foreign tax laws, the Company may withhold such amounts and
make such payments to taxing authorities as are necessary to ensure
compliance with such tax laws. Any funds withheld by reason of
19
this Section 8.3 shall nonetheless be deemed distributed to the Member
in question for all purposes under this Agreement. If the Company did
not withhold from actual distributions any amounts it was required to
withhold, the Company may, at its option, (i) require the Member to
which the withholding was credited to reimburse the Company for such
withholding; or (ii) reduce any subsequent distributions to such Member
by the amount of such withholding. The obligation of a Member to
reimburse the Company for taxes that were required to be withheld shall
continue after such Member transfers or liquidates its interest in the
Company. Each Member agrees to furnish the Company with any
representations and forms as shall reasonably be requested by the
Company to assist in determining the extent of, and in fulfilling, any
withholding obligations it may have.
8.4 TAX DISTRIBUTIONS.
At a minimum, the Company shall make annual cash distributions each
year to each Member in an amount determined by multiplying (i) such
Member's taxable income resulting from the pass through allocations of
the Company's income and gain to such Member by (ii) the highest rate
applicable to any of the Members under applicable state and federal
income tax laws.
8.5 ADJUSTED NET CASH DISTRIBUTIONS.
The Company shall distribute the amounts as determined by Section 8.4
above on an annual basis. In addition the Company shall distribute not
less than Fifty Percent (50%) of the Adjusted Net Cash on, at a
minimum, a quarterly basis to the Members in proportion to their
Non-Voting Percentage Interest.
SECTION 9
TAX MATTERS
9.1 TAX MATTERS MEMBER.
(a) UAG is hereby designated as the initial "Tax Matters Member"
("TMM") of the Company under Section 6231 of the Code and the
Treasury Regulations thereunder. Each Member hereby consents
to such designation and agrees that upon the request of the
Company it will execute, certify, acknowledge, deliver, swear
to, file and record at the appropriate public offices such
documents as may be necessary or appropriate to evidence such
consent. Upon the resignation or bankruptcy of UAG, or upon
the failure of UAG to carry out the responsibilities of a TMM
in a timely fashion, a successor to serve in such capacity
shall be designated by vote of Members holding a majority of
the interests in the Company. The TMM may employ experienced
tax counsel to represent the Company in connection with any
audit or investigation of the Company by the Internal Revenue
Service ("IRS"), and in connection with all subsequent
administrative and judicial proceedings arising out of such
audit. The fees and expenses of such counsel shall be a
Company expense and shall be paid by the Company. Such counsel
shall be responsible for representing the Company; it
20
shall be the responsibility of the Members, at their own
expense, to employ tax counsel to represent their respective
separate interests. The TMM shall keep the Members informed of
all administrative and judicial proceedings as required by
Code Section 6223(g) and shall furnish to each Member a copy
of each notice or other communication received by the TMM from
the IRS except such notice or communication sent directly to
the Members by the IRS. All expenses incurred by the TMM in
serving in such capacity shall be Company expenses and shall
be paid by the Company.
(b) Notwithstanding the foregoing, prior to taking any of the
following actions the Company shall provide notice to the
Members and shall provide the Members with a reasonable period
of time in which to review and approve such action (which
approval shall not be unreasonably withheld):
(i) Any written correspondence or filings and any
settlements in connection with any income tax audit
of the Company or any other tax audit involving
material taxes of the Company, including
administrative settlement and judicial review.
(ii) Except as set forth in Section 9.1(a) and Section
9.2, the making of any tax election.
(iii) Any adjustment to the capital accounts of the Members
in connection with Section 6.4(e) and Section 6.4(f).
(iv) Approval of any income tax return of the Company and
any other tax return of the Company which reflects
the tax treatment of any item arising in connection
with actions described in Section 4.2(e)(i)(1),(4),
(5), (6) or (7) or 4.2(e)(ii) (2), (5) or (7).
(v) Any allocation made pursuant to Section 7.2, and any
decision to revise, alter or otherwise modify the
methods of allocation set forth in Section 7 hereof.
9.2 RIGHT TO MAKE SECTION 754 ELECTION.
The TMM may make an election under Section 754 of the Code to the
extent requested by any Member. Each Member shall, upon request of the
TMM, at such Member's cost, promptly supply the TMM information
reasonably necessary to give effect to such election.
9.3 TAXATION AS PARTNERSHIP.
The Company shall be treated as a partnership for United States federal
and state income tax purposes and the Members agree not to take any
action inconsistent with the Company's classification as a partnership
for United States federal and State income tax purposes. By executing
this Agreement, each of the Members hereby consents to, and the
21
TMM shall, take any action necessary, including, without limitation,
the execution of any forms and documents, for the Company to be treated
as a partnership for United States federal and state income tax
purposes.
SECTION 10
BANKING; ACCOUNTING; BOOKS AND RECORDS
10.1 BANKING.
All funds of the Company may be deposited in such bank, brokerage or
money market accounts as shall be established by the Company.
Withdrawals from and checks drawn on any such account shall be made
upon the President's signature and/or such other signature or
signatures as the Board may designate.
10.2 MAINTENANCE OF BOOKS AND RECORDS; ACCOUNTS AND ACCOUNTING METHOD;
INSPECTION.
(a) the Company shall keep or cause to be kept at the address of
the Company (or at such other place as the Company shall
advise the Members in writing) full and accurate accounts of
the transactions of the Company in proper books and records of
account which shall set forth all information required by the
Delaware Act. Such books and records shall be maintained on
the basis of United States generally accepted accounting
principles, to the extent that such principles are not
inconsistent with the other provisions of this Agreement. Such
books and records shall be available, upon reasonable notice
to the Company, for inspection and copying at reasonable times
during business hours by a Member or its duly authorized
agents or representatives for any purpose reasonably related
to such Member's interest as a member in the Company.
(b) Employees, agents and representatives of UAG shall have full
access to the plants and properties of the Company and its
Subsidiaries for the purpose of inspecting such plants and
properties and the operations thereon during normal business
hours, in a manner that does not unduly disrupt the business
or operations of the Company and upon the prior written notice
to the President of the Company of any such inspection.
SECTION 11
REPORTS TO MEMBERS
11.1 REPORTS TO CURRENT MEMBERS.
(a) The Company shall use its good faith efforts to prepare and
mail to each Member, within 90 days after the end of each
Fiscal Year and 45 days after the end of each quarter thereof
other than the last quarter of the Fiscal Year, a financial
report (upon request of UAG, audited in the case of a report
sent as of the end of a Fiscal Year and unaudited in the case
of a report sent as of the end of a quarter) setting
22
forth as of the end of such Fiscal Year or quarter (i) the
assets and liabilities of the Company as of the end of such
Fiscal Year or quarter, (ii) the income or loss of the Company
for such Fiscal Year or quarter and (iii) the changes in cash
flow during such Fiscal Year or quarter.
(b) The Company shall use its good faith efforts to prepare and
mail to each Member, within 100 days after the end of each
Fiscal Year a financial report setting forth as of the end of
such Fiscal Year such Member's closing Capital Account as of
the end of such Fiscal Year, together with a reconciliation of
the changes from the previous report.
11.2 TAX INFORMATION.
(a) No later than April 10, June 10, September 10 and December 10
of each Fiscal Year, the Company shall deliver to each Person
that was a Member at any time during the quarter in which or
immediately preceding which such date occurs a statement of
such Person's distributive share, if any, of items of income,
gain, loss, deduction and credit of the Company for such
quarter and such other information as may be reasonably
necessary for such Person to make its estimated tax payments.
(b) As soon as practicable after the end of the Fiscal Year, but
in no event later than 45 days after the end of the Fiscal
Year, the Company shall deliver to each Person that was a
Member at any time during such Fiscal Year a final statement
of such Person's reasonably determined distributive share, if
any, of items of income, gain, loss, deduction and credit of
the Company for such Fiscal Year and such other information as
may be reasonably necessary for such Person to complete its
tax returns (including copies of any tax returns that have
been filed by the Company).
(c) The Company shall provide each Member with a copy of any tax
return described in Section 9.1(b)(iv) hereof for such
Member's review at least twenty (20) business days before the
due date of such tax return.
11.3 ADDITIONAL INFORMATION.
Upon the request of any Member, the Company shall, at the request of a
Member, furnish such additional information about the Company and
distributions from the Company reasonably related to such Member's
interest in the Company. Without limiting the foregoing sentence, the
Company agrees to use its good faith efforts to make available to any
Member which accounts for its interest on the equity method (whether or
not the Company is publicly reporting), such financial information as
may be reasonably required by such Member, it being understood that
such information will be the type of financial information that the
Company would file with the Securities and Exchange Commission if the
Company were subject to the periodic reporting requirements of the
Exchange Act of 1934, as amended. The Company agrees to use its good
faith efforts to provide such information to any such Member at a date
which will allow such Member a reasonable
23
period of time in which to incorporate such information into any
filings to be made by such Member.
SECTION 12
LIABILITY, EXCULPATION AND INDEMNIFICATION
12.1 LIABILITY.
Except as otherwise provided herein or by the Delaware Act, the debts,
obligations and liabilities of the Company, whether arising in
contract, tort or otherwise, shall be solely the debts, obligations and
liabilities of the Company, and no Covered Person shall be obligated
personally for any such debt, obligation or liability of the Company
solely by reason of being a Covered Person.
12.2 EXCULPATION.
(a) GENERALLY. No Covered Person shall be liable to the Company or
any Member for any act or omission taken or suffered by such
Covered Person in good faith and in the reasonable belief that
such act or omission is in or is not contrary to the best
interests of the Company and is within the scope of authority
granted to such Covered Person by this Agreement, provided
that such act or omission is not in material violation of this
Agreement and does not constitute Disabling Conduct by the
Covered Person. No Member shall be liable to the Company or
any Member for any action taken by any other Member.
(b) RELIANCE GENERALLY. A Covered Person shall incur no liability
in acting upon any signature or writing reasonably believed by
it to be genuine, and may rely on a certificate signed by an
executive officer of any Person in order to ascertain any fact
with respect to such Person or within such Person's knowledge
and may rely on an opinion of counsel selected by such Covered
Person with respect to legal matters, except to the extent
that such liability resulted from the Covered Person having
engaged in Disabling Conduct. Each Covered Person may act
directly or through its agents or attorneys. Each Covered
Person may consult with counsel, appraisers, engineers,
accountants and other skilled Persons of its choosing, and
shall not be liable for anything done, suffered or omitted in
good faith in reasonable reliance upon the advice of any of
such Persons, except to the extent that such Covered Person
engaged in Disabling Conduct. No Covered Person shall be
liable to the Company or any Member for any error of judgment
made in good faith by a responsible officer or officers of the
Covered Person, except to the extent that such liability
resulted from the Covered Person having engaged in Disabling
Conduct. Except as otherwise provided in this Section 12.2, no
Covered Person shall be liable to the Company or any Member
for any mistake of fact or judgment by the Covered Person in
conducting the affairs of the Company or otherwise acting in
respect of and within the scope of this Agreement, except to
the extent that such liability resulted from the Covered
Person having engaged in Disabling Conduct. No Covered Person
shall be liable for the return to any
24
Member of all or any portion of any Member's Capital Account
or Capital Contributions, except to the extent that such
liability resulted from the Covered Person having engaged in
Disabling Conduct.
(c) RELIANCE ON THIS AGREEMENT. To the extent that, at law or in
equity, a Covered Person has duties (including fiduciary
duties) and liabilities relating thereto to the Company or to
the Members, any Covered Person acting under this Agreement or
otherwise shall not be liable to the Company or to any Member
for its good faith reliance on the provisions of this
Agreement. The provisions of this Agreement, to the extent
that they restrict the duties and liabilities of a Covered
Person otherwise existing at law or in equity, are agreed by
the Members to replace such other duties and liabilities of
such Covered Person.
(d) STANDARD OF CARE. Whenever in this Agreement a Person is
permitted or required to make a decision (i) except the
Directors in connection with the discharge of their duties as
Members of the Board in its "sole and absolute discretion,"
"sole discretion," "discretion" or under a grant of similar
authority or latitude, the Person shall be entitled to
consider such interests and factors as it desires, including
its own interests, and shall have no duty or obligation to
give any consideration to any interest of or factors affecting
any other Member, the Company or any other Person, or (ii) in
its "good faith" or under another express standard, the Person
shall act under such express standard and shall not be subject
to any other or different standard imposed by this Agreement
or other applicable law.
12.3 INDEMNIFICATION.
(a) INDEMNIFICATION GENERALLY. The Company shall and hereby does,
to the fullest extent permitted by applicable law, indemnify,
hold harmless and release each Covered Person from and against
all claims, demands, liabilities, costs, expenses, damages,
losses, suits, proceedings and actions, whether judicial,
administrative, investigative or otherwise, of whatever
nature, known or unknown, liquidated or unliquidated
("CLAIMS"), that may accrue to or be incurred by any Covered
Person, or in which any Covered Person may become involved, as
a party or otherwise, or with which any Covered Person may be
threatened, relating to or arising out of the business and
affairs of, or activities undertaken in connection with, the
Company, or otherwise relating to or arising out of this
Agreement, including, but not limited to, amounts paid in
satisfaction of judgments, in compromise or as fines or
penalties and counsel fees and expenses incurred in connection
with the preparation for or defense or disposition of any
investigation, action, suit, arbitration or other proceeding
(a "PROCEEDING"), whether civil or criminal (all of such
Claims and amounts covered by this Section 12.3. and all
expenses referred to in Section 12.3(c), are referred to as
"DAMAGES"), except to the extent that it shall have been
determined ultimately that such Damages arose from Disabling
Conduct of such Covered Person or that such Covered Person
25
committed a material breach of this Agreement. The termination
of any Proceeding by settlement shall not, of itself, create a
presumption that any Damages relating to such settlement arose
from a material violation of this Agreement by, or Disabling
Conduct of, any Covered Person.
(b) NO DIRECT MEMBER INDEMNITY. Members shall not be required
directly to indemnify any Covered Person.
(c) EXPENSES, ETC. Expenses incurred by a Covered Person in
defense or settlement of any Claim that may be subject to a
right of indemnification hereunder may be advanced by the
Company prior to the final disposition thereof upon receipt of
an agreement by or on behalf of the Covered Person to repay
such amount if it shall be determined ultimately that the
Covered Person is not entitled to be indemnified hereunder.
The right of any Covered Person to the indemnification
provided herein shall be cumulative with, and in addition to,
any and all rights to which such Covered Person may otherwise
be entitled by contract or as a matter of law or equity and
shall extend to such Covered Person's successors, assigns and
legal representatives.
(d) NOTICES OF CLAIMS, ETC. Promptly after receipt by a Covered
Person of notice of the commencement of any Proceeding, such
Covered Person shall, if a claim for indemnification in
respect thereof is to be made against the Company, give
written notice to the Company of the commencement of such
Proceeding, provided that the failure of any Covered Person to
give notice as provided herein shall not relieve the Company
of its obligations under this Section 12.3 except to the
extent that the Company is actually prejudiced by such failure
to give notice. In case any such Proceeding is brought against
a Covered Person (other than a derivative suit in right of the
Company), the Company will be entitled to participate in and
to assume the defense thereof to the extent that the Company
may wish, with counsel reasonably satisfactory to such Covered
Person. After notice from the Company to such Covered Person
of the Company's election to assume the defense thereof (and
corresponding expenses), the Company will not be liable for
expenses subsequently incurred by such Covered Person in
connection with the defense thereof. The Company will not
consent to entry of any judgment or enter into any settlement
that does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Covered Person of
a release from all liability in respect to such Claim.
(e) NO WAIVER. Nothing contained in this Section 12.3 shall
constitute a waiver by any Member of any right that it may
have against any party under United States federal or state
securities laws.
26
SECTION 13
TRANSFER OF UNITS; WITHDRAWAL,
BANKRUPTCY, DISSOLUTION; CERTAIN ADMISSIONS OF MEMBERS
13.1 ADMISSION, SUBSTITUTION AND WITHDRAWAL OF MEMBERS; ASSIGNMENT.
(a) GENERAL. Except as set forth in this Section 13, no Person may
be admitted to, and no Member may withdraw from, the Company
prior to the dissolution and winding up of the Company. No
Member shall sell, transfer, assign, convey, pledge, mortgage,
encumber, hypothecate or otherwise dispose of all or any part
of its interest in the Company (a "TRANSFER") without first
complying with the provisions of this Section 13.1.
(b) ADMISSION OF NEW MEMBERS AND ISSUANCE OF INTERESTS No person
shall be admitted as a new Member and the Company shall not
authorize the issuance of interest in the Company of any kind
that could or would entitle the recipient thereof to the
rights of a Member or that would cause (or entitle) such
person to receive an interest (other than collateral security
interests granted by the Company to secure its obligations) in
the assets or profits of the Company unless approved by a
Majority Board Vote as defined in Section 4.1(g).
(c) CONDITIONS TO TRANSFER. Any purported Transfer by a Member
pursuant to the terms of this Section 13 shall be subject to
the satisfaction of the following conditions:
(i) the transferring Member or transferee shall undertake
to pay all reasonable expenses incurred by the
Company in connection therewith;
(ii) the Company shall received from the transferring
Member a legal opinion, in form and substance
reasonably satisfactory to the nontransferring
Members, to the effect that the transfer will not
result (directly or indirectly) in (A) a termination
of the Company under any Section of the Code that
would require the non-transferring Members to
recognize gain under Section 731 of the Code, or (B)
treatment of the Company as an entity other than a
partnership for purposes of the Code; and
(iii) the Company shall receive from the Person to whom
such Transfer is to be made (A) such documents,
instruments and certificates as may be requested by
the Company, pursuant to which such transferee shall
agree to be bound by this Agreement, (B) such other
documents, opinions, instruments and certificates as
the Company shall reasonably request and (C) a
counterpart of this Agreement executed by or on
behalf of such Person; and
27
(d) COOPERATION BY THE COMPANY. The Company shall provide
reasonable assistance to any Member at such Member's request
seeking to sell its Units in compliance with this Agreement,
provided that the Company shall not be required to provide any
confidential information to any prospective purchaser who has
not executed a confidentiality agreement in form reasonably
satisfactory to the Company. Any costs to the Company of
providing such assistance shall be paid by the Member seeking
to sell its Units.
(e) PROHIBITED TRANSFERS. No attempted Transfer shall be
recognized by the Company unless effected in accordance with
and as permitted by this Agreement.
(f) RIGHT OF FIRST REFUSAL. UAG shall have a right of first
refusal to purchase all of the Xxxx interest on the terms that
Xxxx offers such interest to a third party. UAG shall have
twenty (20) days after receipt of written notice from Xxxx
that it intends to sell its interest to exercise this right of
first refusal. If UAG fails to exercise its right, any
attempted Transfer of the Xxxx interest to a third party must
still meet the requirements of this Agreement to become
effective.
13.2 WITHDRAWAL.
No Member shall have the right to withdraw from the Company and no
Member shall take any action to accomplish its voluntary dissolution.
13.3 XXXX OPTION TO PURCHASE.
For a period commencing as of the effective date of this Agreement and
expiring on the twentieth (20th) anniversary of the effective date,
Xxxx shall have the option to purchase up to, but no more than, Fifty
Three Thousand Eight Hundred and Forty (53,840) Voting Units from UAG
for the purchase price of Sixty Eight and 42/100 dollars ($68.42)per
Voting Unit (the "Xxxx Option"). Xxxx may exercise this option in one
or more installments. The intent of the Parties is that Xxxx shall have
the option to purchase up to, but no more than, Twenty Percent (20%) of
the Voting Units of the Company. If, prior to an exercise of the Xxxx
Option, the Members make additional capital contributions to the
Company and Xxxx contributes a percentage that is less than its
Non-Voting Percentage Interest, then upon an exercise of the Xxxx
Option, the option price shall be adjusted to include the differential
between the amount of the actual capital contribution made by Xxxx and
the amount of the capital contribution which would have been made by
Xxxx had it contributed a percentage equal to its Non-Voting Percentage
Interest. Xxxx shall exercise this option upon five (5) days written
notice to UAG and the Company. Upon the exercise of the option provided
for herein, Schedule B attached hereto shall be amended as soon as
practicable to reflect the results of such election.
28
SECTION 14
DISSOLUTION AND TERMINATION OF THE COMPANY
14.1 EVENTS CAUSING DISSOLUTION.
(a) DISSOLUTION EVENTS. There will be a dissolution of the Company
and its affairs shall be wound up upon the first to occur of
any of the following events:
(i) the written consent of all Members;
(ii) the death, retirement, resignation, expulsion,
bankruptcy or dissolution (any of the foregoing, a
"WITHDRAWAL") of any Member (in such capacity, the
"WITHDRAWING MEMBER") unless, within ninety days
after the occurrence of such an event Members holding
a majority of the Units of all of the remaining
Members agree in writing to continue the business of
the Company and to the appointment, if necessary or
desired, effective as of the date of such event, of
one or more new Members; or
(iii) the entry of a decree of judicial dissolution under
Section 18-802 of the Delaware Act.
(b) If the remaining Members decide to continue the Company
pursuant only to Section 14.1(a)(ii), the Company shall inform
the Withdrawing Member of such decision by written notice
delivered within ninety (90) days of the occurrence of the
Withdrawal. If the Members so elect to continue the Company,
the Withdrawing Member shall no longer be a Member of the
Company and the Company (and/or the other Members) shall make
payment in cash in liquidation of the Withdrawing Member's
interest in the Company. Any such payment shall be equal to
the Withdrawing Member's capital account minus any costs, fees
or expenses of the Company and the non-withdrawing members
related to the Withdrawal.
14.2 LIQUIDATION.
Upon dissolution of the Company, the Person or Persons approved as
provided in Section 14.4(b) to carry out the winding up of the Company
(in such capacity, the "LIQUIDATING TRUSTEE") and shall proceed,
subject to the provisions herein, to liquidate the Company and apply
the proceeds of such liquidation, or at the discretion of the Members
to distribute Company assets, in the following order of priority:
(a) First, to creditors (including creditors that are also
Members) in satisfaction of debts and liabilities of the
Company, whether by payment or the making of reasonable
provision for payment (including any loans or advances that
may have been made by any of the Members to the Company), and
the expenses of liquidation, whether by payment or the making
of reasonable provision for payments, any such reasonable
reserves (which may be funded by a liquidating
29
trust) to be established by the Liquidating Trustee, as the
case may be, in amounts deemed by it to be reasonably
necessary for the payment of the Company's expenses,
liabilities and other obligations (whether fixed or
contingent); and
(b) Second, to the Members in proportion to, and to the extent of,
each Member's Capital Account, as such Capital Account has
been adjusted pursuant to Section 6.4, any remainder to be
distributed among the Members in accordance with their
respective Voting Percentage Interest; provided that, prior to
such distribution, Xxxx shall be entitled to exercise the
option referenced in Section 13.3, if such option is in
effect, in order to increase his Voting Percentage Interest up
to, but no more than Twenty Percent (20%)
14.3 DISTRIBUTIONS IN CASH OR IN KIND.
(a) Upon the dissolution of the Company, the Liquidating Trustee
shall use its good faith efforts to liquidate all of the
Company assets in an orderly manner and apply the proceeds of
such liquidation as set forth in Section 14.2, or if in the
good faith business judgment of the Liquidating Trustee a
Company asset should not be liquidated, the Liquidating
Trustee shall allocate, on the basis of the Value of any
Company assets not sold or otherwise disposed of, any
unrealized gain or loss based on such Value to the Members'
Capital Accounts as though the assets in question had been
sold on the date of distribution and, after giving effect to
any such adjustment, distribute said assets in accordance with
Section 14.2, provided that the Liquidating Trustee will in
good faith attempt to liquidate sufficient Company assets to
satisfy in cash (or make reasonable provision for) the debts
and liabilities referred to in paragraph First of Section
14.2.
14.4 TIME AND MANNER FOR LIQUIDATION, ETC.
(a) A reasonable time period shall be allowed for the orderly
winding up and liquidation of the assets of the Company and
the discharge of liabilities to creditors so as to enable the
Liquidating Trustee to seek to minimize potential losses upon
such liquidation. The provisions of this Agreement shall
remain in full force and effect during the period of winding
up and until the filing of a certificate of cancellation of
the Company with the Secretary of State of the State of
Delaware.
(b) In the event of a liquidation of the Company, the Members
shall jointly approve the Person to act as Liquidating Trustee
and shall be entitled to direct the manner and timing under
which such Liquidating Trustee shall proceed to liquidate the
Company. All Members shall be promptly informed of any
directions given by another Member to the Liquidating Trustee
and of the progress of the liquidation.
30
14.5 TERMINATION.
Upon completion of the foregoing, the Liquidating Trustee shall
execute, acknowledge and cause to be filed a certificate of
cancellation of the Company with the Secretary of State of the State of
Delaware.
14.6 CLAIMS OF THE MEMBERS.
The Members and former Members shall, other than for a breach of this
Agreement, gross negligence or willful misconduct, look solely to the
Company's assets for the return of their Capital Contributions, and if
the assets of the Company remaining after payment of or due provision
for all debts, liabilities and obligations of the Company are
insufficient to return such Capital Contributions, the Members and
former Members shall have no recourse against any Member, any Manager
or any Member's or Manager's Affiliates.
SECTION 15
DEFINITIONS
15.1 DEFINITIONS.
Unless the context otherwise requires, the terms defined in this
Section 15.1 shall, for the purposes of this Agreement, have the
meanings herein specified.
"ADJUSTED CAPITAL ACCOUNT DEFICIT" shall mean, with respect to any
Member, the deficit balance, if any, in such Member's Capital Account
as of the end of the relevant Fiscal Year after giving effect to the
following adjustments: (a) credit to such Capital Account any amounts
that such Member is obligated to restore pursuant to the penultimate
sentences of Treasury Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5); and (b) debit to such Capital Account the items
described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5)
and (6). This definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d)
of the Treasury Regulations and shall be interpreted consistently
therewith.
"ADJUSTED NET CASH" means an amount that is reasonably determined by
the Chief Financial Officer of United Auto Group, Inc. and the
President of the Company.
"AFFILIATE" of any entity or Person shall mean any other entity or
person Controlling, Controlled by, or under Common Control with, such
entity or Person.
"AGREEMENT" shall mean this Limited Liability Company Agreement, as
amended, modified, supplemented or restated from time to time.
"ASSOCIATE" shall have the meaning ascribed to such term in Rule 12b-2
of the Securities Exchange Act of 1934, as amended.
31
"BUSINESS" is defined in the Recitals to this Agreement.
"BUSINESS DAY" shall mean any day on which banks located in New York
City are not required or authorized by law to remain closed.
"CAPITAL ACCOUNT" shall mean, with respect to any Member, the account
maintained for such Member in accordance with the provisions of Section
6.4.
"CAPITAL CONTRIBUTION" shall mean, with respect to any Member, the
amount of money and the Gross Asset Value of property contributed by
such Member to the Company pursuant to Article VI hereof and as set
forth on Schedule B.
"CERTIFICATE" shall mean the Company's Certificate of Formation and any
and all amendments thereto and restatements thereof filed on behalf of
the Company with the office of the Secretary of State of the State of
Delaware pursuant to the Delaware Act.
"CLAIMS" shall have the meaning set forth in Section 12.3(a).
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMPANY MINIMUM GAIN" shall have the meaning of "partnership minimum
gain" set forth in Treasury Regulations Sections 1.704-2(b)(2) and
1.704-2(d).
"CONTROL" (including the terms "Controlling", "Controlled by" and
"under common Control with") means the possession, directly or
indirectly, or the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of
securities, by contract or otherwise.
"COVERED PERSON" shall mean a Member, a Manager, a Director, an
Officer, any Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control
with the Company, a Member or a Manager; any officers, directors,
shareholders, controlling Persons, partners, employees, representatives
or agents of a Member or a Manager, or their respective Affiliates; or
any officer, employee or agent of the Company or its Affiliates; or any
Person who was, at the time of the act or omission in question, such a
Person.
"DAMAGES" shall have the meaning set forth in Section 12.3(a).
"DEALERSHIP OPERATING COMPANIES" shall mean UAG Fairfield CM, LLC, UAG
Fairfield CA, LLC and UAG Fairfield CP, LLC and all their successors.
"DELAWARE ACT" shall mean the Delaware Limited Liability Company Act, 6
Del. C. " 18-101, et seq., as amended from time to time.
32
"DEPRECIATION" shall mean, for each Fiscal Year, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable
with respect to an asset for such Fiscal Year, except that if the Gross
Asset Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such Fiscal Year, Depreciation
shall be an amount which bears the same ratio to such beginning Gross
Asset Value as the federal income tax depreciation, amortization, or
other cost recovery deduction for such Fiscal Year bears to such
beginning adjusted tax basis; provided, however, that if the adjusted
basis for federal income tax purposes of an asset at the beginning of
such Fiscal Year is zero, Depreciation shall be determined with
reference to such beginning Gross Asset Value using any reasonable
method selected by the Member.
"DIRECTORS" shall have the meaning set forth in Section 4.1(a).
"DISABLING CONDUCT" shall mean conduct that constitutes fraud, a
willful violation of this Agreement or law, gross negligence or
reckless disregard of duty in the conduct of the duties of the Person
referred to which results in a material loss to the Company.
"EXECUTIVE OFFICER" shall mean the President of the Company and all
officers and employees of the Company who directly report to, or are
directly supervised by, the President.
"FINANCIAL STATEMENTS" with respect to the Company shall mean the
financial statements of the Company that reflect the assets,
liabilities, retained capital, operations and cash flows of the
Company.
"FISCAL YEAR" shall have the meaning set forth in Section 5.4.
"FRANCHISE AGREEMENTS" means, with respect to the Dealership Operating
Companies, the agreements entered into with each respective
manufacturer which serve to establish the rights and obligations of the
Dealership Operating Companies and manufacturers to each other with
respect to the sale and service of new motor vehicles.
"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
fair market value of such asset at the time it is
accepted by the Company, unreduced by any liability
secured by such asset, as determined by the Members.
(b) The Gross Asset Values of all Company assets shall be
adjusted to equal their respective fair market
values, unreduced by any liabilities secured by such
assets, as determined by the Members as of the
following times: (i) the acquisition of an additional
interest in the Company by any new or existing Member
in exchange for more than a de minimis Capital
33
Contribution; (ii) the distribution by the Company to
a Member of more than a de minimis amount of Property
as consideration for an interest in the Company; and
(iii) the liquidation of the Company within the
meaning of Treasury Regulations Section
1.704-1(b)(2)(ii)(g).
(c) The Gross Asset Values of any Company asset
distributed to any Member shall be adjusted to equal
the fair market value of such asset, unreduced by any
liability secured by such asset, on the date of
distribution as determined by the Members.
(d) The Gross Asset Values of the Company assets shall be
increased (or decreased) 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
Treasury Regulations Section 1.704-1(b)(2)(iv)(m) and
paragraph (vi) of the definition of "Net Profits" and
"Net Losses".
If the Gross Asset Value of an asset has been
determined or adjusted pursuant to paragraphs (a),
(b) or (d) of this definition, 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.
"LIQUIDATING TRUSTEE" shall have the meaning set forth in Section 14.2.
"MAJORITY IN INTEREST OF THE MEMBERS" shall mean the written consent,
or vote at a duly called meeting of Members, of Members holding a
majority of Units held by all Members.
"MANAGER" shall mean a "manager" (within the meaning of the Delaware
Act) of the Company.
"MEMBER" shall mean any Person named as a member of the Company on
Schedule A hereto or admitted subsequently as an additional Member
pursuant to the provisions of this Agreement, in such Person's capacity
as a member of the Company, and "Members" shall mean two or more of
such Persons when acting in their capacities as members of the Company.
"MEMBER MINIMUM GAIN" shall mean a Member's share of Company Minimum
Gain as set forth in Treasury Regulations Section 1.704-2(g) and member
nonrecourse debt minimum gain as described in Treasury Regulations
Section 1.704-2(i).
"MEMBER NONRECOURSE DEBT" shall have the meaning of "partner
nonrecourse debt" as set forth in Treasury Regulations Section
1.704-2(b)(4).
34
"MEMBER NONRECOURSE DEDUCTIONS" shall have the meaning of "partner
nonrecourse deductions" set forth in Treasury Regulations Section
1.704-2(i).
"NONRECOURSE DEDUCTIONS" shall have the meaning set forth in Treasury
Regulations Section 1.704-2(b)(1).
"NET PROFIT" or "NET LOSS" shall mean, for each Fiscal Year, an amount
equal to the Company's taxable income or loss for such Fiscal Year,
determined in accordance with Code Section 703(a) (for this purpose,
all items of income, gain, loss, or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in
taxable income or loss), with the following adjustments:
(a) any income of the Company that is exempt from federal
income tax and not otherwise taken into account in
computing Net Profits or Net Losses pursuant to this
definition shall be added to such taxable income or
loss;
(b) any expenditures of the Company described in Code
Section 705(a)(2)(B) or treated as Code Section
705(a)(2)(B) expenditures pursuant to Treasury
Regulations Section 1.704-1(b)(2)(iv)(i), and not
otherwise taken into account in computing Net Profits
or Net Losses pursuant to this definition shall be
subtracted from such taxable income or loss;
(c) in the event the Gross Asset Value of any Company
asset is adjusted pursuant to paragraphs (b) or (c)
of the definition of "Gross Asset Value," the amount
of such adjustment shall be taken into account as
gain or loss from the disposition of such asset for
purposes of computing Net Profits or Net Losses;
(d) gain or loss resulting from any disposition of
property with respect to which gain or loss is
recognized for federal income tax purposes shall be
computed by reference to the Gross Asset Value of
property disposed of, notwithstanding that the
adjusted tax basis of such property differs from its
Gross Asset Value;
(e) in lieu of depreciation, amortization, and other cost
recovery deductions taken into account in computing
such taxable income or loss there shall be taken into
account Depreciation with respect to each asset of
the Company for such Fiscal Year, computed in
accordance with the definition of "Depreciation"
above;
(f) 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 Regulations 1.704-1(b)(2)(iv)(m)(4) to be
taken into account in determining Capital Accounts as
a result of a distribution other than in complete
liquidation of a Member's Interest, the amount of
such
35
adjustment shall be treated as an item of gain (if
the adjustment increases the basis of the asset) or
loss (if the adjustment decreases the basis of the
asset) from the disposition of the asset and shall be
taken into account for purposes of computing Net
Profits or Net Losses; and
(g) notwithstanding any other provision of this
definition, any items which are specially allocated
pursuant to Section 7.2(a) of this Agreement shall
not be taken into account in computing Net Profits or
Net Losses.
The amounts of the items of Company income, gain, loss, or
deduction available to be specially allocated pursuant to
Sections 7.2(a) hereof shall be determined by applying rules
analogous to those set forth in paragraphs (a) through (f)
above.
"NON-VOTING PERCENTAGE INTEREST" shall mean the percentage of the total
Non-Voting Units held by a Member.
"NON-VOTING UNITS" shall mean the class of Units for which the holder
thereof is not entitled to vote for or against matters submitted to a
vote of the Members in accordance with this Agreement.
"OFFICER" shall have the meaning set forth in Section 4.2(a).
"PERIOD" shall mean, for the first period, the period commencing on the
date of this Agreement and ending on the next Adjustment Date. All
succeeding Periods shall commence on the day after an Adjustment Date
and end on the next Adjustment Date.
"PERSON" shall mean any individual, corporation, association,
partnership (general or limited), joint venture, trust, joint-stock
company, estate, limited liability company, unincorporated organization
or other legal entity or organization.
"PROCEEDING" shall have the meaning set forth in Section 12.3(a).
"SECRETARY" shall mean the person or persons duly appointed as
Secretary of the Company.
"SUBSIDIARY" of any Person shall mean a corporation or other entity a
majority of whose capital stock with voting power or the majority
ownership interest of which is at the time owned or controlled,
directly or indirectly, by such Person.
"TMM" shall have the meaning set forth in Section 9.1(a).
"TRANSFER" shall have the meaning set forth in Section 13.1(a).
"TREASURER" shall mean the person or persons duly appointed as
Treasurer of the Company.
36
"TREASURY REGULATIONS" shall mean the Income Tax Regulations, including
Temporary Regulations, promulgated under the Code, as the same may be
amended hereafter from time to time (including corresponding provisions
of succeeding Income Tax Regulations).
"UNITS" shall mean the total limited liability company interests of the
Company, which shall be comprised of Voting Units and Non-Voting Units
in accordance with this Agreement. The number of Units, Voting Units
and Non-Voting Units authorized to be issued and outstanding is
specified in Schedule A, as amended from time to time in accordance
with this Agreement.
"VOTING UNITS" shall mean the class of Units for which the holder
thereof is entitled to vote for or against matters submitted to a vote
of the Members in accordance with this Agreement.
"VOTING PERCENTAGE INTEREST" shall mean the percentage of the total
Voting Units held by a Member.
"WITHHELD AMOUNT" shall have the meaning set forth in Section 7.4(c).
SECTION 16
AMENDMENTS; MERGER OR SALE
16.1 AMENDMENTS GENERALLY.
Notwithstanding any other provision of this Agreement, the terms of
this Agreement shall not be amended except in a writing signed by all
Members, provided that, without the consent of any of the Members, the
Company:
(i) may enter into agreements with Persons who are transferees of
the interests in the Company of Members, pursuant to the terms
of this Agreement, providing in substance that such Persons
will be bound by this Agreement; and
(ii) may amend this Agreement as may be required to implement (A)
transfers of interests of Members or (B) any admission of new
Members.
16.2 MERGER OR SALE.
The Company may merge with, or consolidate into, a Delaware limited
liability company or another business entity (as defined in Section
18-209(a) of the Delaware Act) or may sell all or substantially all of
its assets only upon the approval of the Company and all Members of the
Company.
37
SECTION 17
MISCELLANEOUS PROVISIONS
17.1 NOTICES.
Each notice relating to this Agreement shall be in writing and shall be
delivered (a) in person, by registered or certified mail, private
courier or (b) by telecopy or other facsimile transmission, confirmed
by telephone to an executive officer of the recipient. In addition, all
notices to any Member shall be addressed to such Member at their
respective addresses set forth on Schedule A or at such other address
as the Member may have designated by notice in writing. Any Member may
designate a new address by notice to that effect given to the Company.
The Company may designate a new address by notice to that effect given
to each Member. Unless otherwise specifically provided in this
Agreement, a notice given in accordance with the foregoing clause (a)
shall be deemed to have been effectively given when mailed by
registered or certified mail, return receipt requested, to the proper
address, or when delivered in person. Any notice to the Company or to a
Member by telecopy or other facsimile transmission shall be deemed to
be given when sent and confirmed by telephone in accordance with the
foregoing clause (b).
17.2 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of which taken together shall
constitute a single agreement.
17.3 TABLE OF CONTENTS AND HEADINGS.
The table of contents and the headings and subheadings of the sections
of this Agreement are inserted for convenience and identification only
and are in no way intended to describe, interpret, define or limit the
scope, extent or intent of this Agreement or any provision thereof.
17.4 SUCCESSORS AND ASSIGNS; ASSIGNMENT.
This Agreement shall inure to the benefit of the Members and the
Covered Persons, and shall be binding upon the parties, and their
respective successors and permitted assigns.
17.5 SEVERABILITY.
Every provision of this Agreement is intended to be severable. If any
term or provision of this Agreement is illegal or invalid for any
reason whatsoever, such term or provision will be enforced to the
maximum extent permitted by law and, in any event, such illegality or
invalidity shall not affect the validity of the remainder of the
Agreement.
17.6 NON-WAIVER.
No provision of this Agreement shall be deemed to have been waived
except if the giving of such waiver is contained in a written notice
given to the party claiming such waiver and no such waiver shall be
deemed to be a waiver of any other or further obligation or liability
of the party or parties in whose favor the waiver was given.
38
17.7 APPLICABLE LAW.
This agreement and the rights and obligations of the parties hereunder
shall be interpreted and enforced in accordance with and governed by
the laws of the state of Delaware, and all rights and remedies shall be
governed by such laws without regard to principles of conflict of laws.
17.8 WAIVER OF JURY TRIAL.
Each party to this Agreement waives to the fullest extent permitted by
applicable law any right it may have to a trial by jury in respect of
any action, suit or proceeding arising out of or relating to this
Agreement.
17.9 SURVIVAL OF CERTAIN PROVISIONS.
The obligations of each Member pursuant to Sections 6.5 and 12.3 shall
survive the termination or expiration of this Agreement and the
winding-up, liquidation and dissolution of the Company.
17.10 LIMITATION ON DAMAGES; LEGAL DISPUTES.
(a) In no event will any party to this Agreement be liable to any
other party for special, indirect, punitive or incidental
damages, or any other consequential damages except for lost
profits and lost savings, even if such party has been advised
of the possibility of such damages resulting from the breach
by it of any of its obligations hereunder or from the use of
any confidential or other information.
(b) Subject to the limitations of subsection (a), immediately
above, the rights and remedies of the parties under this
Agreement are cumulative and are not exclusive of any rights
or remedies which the parties would otherwise have for
equitable relief, including the remedies of specific
performance and injunction.
17.11 WAIVER OF PARTITION.
Except as may otherwise be provided by law in connection with the
winding-up, liquidation and dissolution of the Company, each Member
hereby irrevocably waives any and all rights that it may have to
maintain an action for partition of any of the Company's property.
17.12 ENTIRE AGREEMENT.
This Agreement and the Transaction Agreement and agreements executed in
connection therewith constitute the entire agreement among the Members
with respect to the subject matter hereof, and supersede any prior
agreement or understanding among them with respect to such subject
matter.
39
17.13 FURTHER ACTIONS.
Each Member shall execute and deliver such other certificates,
agreements and documents, and take such other actions, as may
reasonably be requested by the Company in connection with the formation
of the Company and the achievement of its purposes, including, without
limitation all such agreements, certificates, tax statements and other
documents as may be required to be filed in respect of the Company.
17.14 NO PARTNERSHIP.
Nothing contained in this Agreement shall be deemed or construed to
make any Member partners or joint venturers with each other, for any
purposes other than for federal and state tax purposes. The only
business association to be formed by the Members will be the Company,
which will be a limited liability company under Delaware law, to be
organized pursuant to this Agreement. The Company shall not be a
general partnership, a limited partnership or a joint venture, and no
Member shall be considered a partner or joint venturer of or with any
other Member for any purposes other than for federal and state tax
purposes.
Units
IN WITNESS WHEREOF, the undersigned have duly executed this Limited Liability
Company Agreement of UAG CONNECTICUT I, LLC on the 1st day of April, 2003 and
made effective as of March 1, 2001.
UAG CONNECTICUT, LLC
BY: /S/ XXXXXX X. XXXXXXX, XX.
NAME: XXXXXX X. XXXXXXX, XX.
TITLE: ASSISTANT SECRETARY
XXXX HOLDINGS LLC
BY: /S/ XXXXX X. XXXX
NAME: XXXXX X. XXXX
TITLE: MEMBER
40
SCHEDULE A
UNITS
o Number of Units authorized, issued and outstanding:
five hundred thousand (500,000)
o Number of Voting Units authorized, issued and outstanding:
four hundred thousand (400,000)
o Number of Non-Voting Units authorized, issued and outstanding:
one hundred thousand (100,000)
41
Schedule B
MEMBER INFORMATION
Voting Non-Voting
Capital Voting Percentage Non-Voting Percentage
Name/Address Contribution Units Interest Units Interest
----------------------------------- ------------------- -------------- ------------------- ---------------- -------------------
UAG Connecticut, LLC
0000 Xxxxxxxxx Xxxx $25,578,000 373,840 93.46% 80,000 80%
Xxxxxxxxxx Xxxxx, XX
00000-0000
----------------------------------- ------------------- -------------- ------------------- ---------------- -------------------
Xxxx Holdings LLC
000 Xxxx Xxxxxx Xxx 6.54% 20,000 20%
Greenwich, CT 1,791,000(1) 26,160
06830
----------------------------------- ------------------- -------------- ------------------- ---------------- -------------------
TOTAL $ 27,369,000 400,000 100% 100,000 100%
----------------------------------- ------------------- -------------- ------------------- ---------------- -------------------
(1) $1,003,800 contributed in cash at closing and $788,000 credited from
earnings that would otherwise have been distributed had the transaction closed
on March 1, 2001.
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SCHEDULE C
INITIAL DIRECTORS
Xxxxxx X. Xxxxxxx, Xx.
-------------------------------------------------------------- -----------------------------------------------------------
Xxxxx X. Xxxxxxxx
-------------------------------------------------------------- -----------------------------------------------------------
Xxxxxxx X. Xxxxxxxxx
-------------------------------------------------------------- -----------------------------------------------------------
INITIAL DIRECTORS
Chairman Xxxxxx X. XxXxx
-------------------------------------------------------------- -----------------------------------------------------------
President A. Xxxxxx Xxxxxxx
-------------------------------------------------------------- -----------------------------------------------------------
Vice President X. Xxxxxxxxx Ramonat
-------------------------------------------------------------- -----------------------------------------------------------
Secretary/Treasurer Xxxxx Xxxxxxxx
-------------------------------------------------------------- -----------------------------------------------------------
Assistant Treasurer Xxxxx X. Xxxxxxxx
-------------------------------------------------------------- -----------------------------------------------------------
Assistant Secretary Xxxxxx X. Xxxxxxx, Xx.
-------------------------------------------------------------- -----------------------------------------------------------
Assistant Secretary Xxxxxx Xxxxx
-------------------------------------------------------------- -----------------------------------------------------------
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