EXECUTION COPY
Exhibit 10.4
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THIRD AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
XXXXXX AUTOMOTIVE GROUP L.L.C.
(Formerly known as Xxxxxx Automotive
Oregon L.L.C.)
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Dated as of February 1, 2000
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TABLE OF CONTENTS
ARTICLE I
Definitions and Usage
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SECTION 1.01. Defined Terms..................................................2
SECTION 1.02. Other Definition Provisions...................................10
ARTICLE II
Formation and Business of the Company
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SECTION 2.01. Admission of New Members; Formation and Continuation..........11
SECTION 2.02. Company Name..................................................11
SECTION 2.03. Purpose and Powers............................................11
SECTION 2.04. Registered Agent and Office; Other Offices....................12
SECTION 2.05. Principal Place of Business...................................12
SECTION 2.06. Authorized Persons............................................12
SECTION 2.07. Representations and Warranties................................13
SECTION 2.08. Effectiveness.................................................13
ARTICLE III
Management of the Company
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SECTION 3.01. Board of Directors............................................14
SECTION 3.02. Powers and Procedures of the Board of Directors...............14
SECTION 3.03. Actions Requiring Board Approval; Day-to-Day Authority
of the President and Chief Executive Officer;
Ratified Actions.........................................16
SECTION 3.04. Officers......................................................17
SECTION 3.05. Reliance on Certificates......................................19
ARTICLE IV
Capital Accounts; Additional Capital
Contributions; Withdrawal of Capital;
Percentage Interest Adjustment
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SECTION 4.01. Capital Accounts..............................................20
SECTION 4.02. Additional Capital Contributions..............................21
SECTION 4.03. Withdrawal of Capital; Limitation on
Distributions; Resignation...............................23
SECTION 4.04. Percentage Interest Adjustment................................23
SECTION 4.05. Statements of Percentage Interest.............................24
SECTION 4.06. Issuance of Additional Interests..............................25
SECTION 4.07. Determination of Book Value of Company Assets.................26
ARTICLE V
Allocations
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SECTION 5.01. Allocation of Net Profits and
Net Losses...............................................26
SECTION 5.02. Code Section 704(b) Allocations...............................27
SECTION 5.03. Tax Allocations...............................................28
SECTION 5.04. Partial Year Allocations......................................29
ARTICLE VI
Distributions
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SECTION 6.01. Distributions..................................................29
SECTION 6.02. Repayment of Funds.............................................31
SECTION 6.03. Withholding....................................................31
ARTICLE VII
Transfers of Interests; Tag-Along/
Drag-Along Rights; Purchase of Interests
Upon Termination of Employment;
Options to Purchase Interests
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SECTION 7.01. Transfers of Interests in the Company.........................32
SECTION 7.02. Tag-Along Rights..............................................37
SECTION 7.03. Drag-Along Rights.............................................37
SECTION 7.04. Purchase of Interests Upon Termination of Employment..........38
SECTION 7.05. Options to Purchase Interests.................................42
SECTION 7.06. Fair Market Value.............................................42
SECTION 7.07. Estate Taxes..................................................44
ARTICLE VIII
Initial Public Offering
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SECTION 8.01. AAH's Right to Cause an IPO...................................45
SECTION 8.02. Exchange of Interests.........................................46
SECTION 8.03. Shareholders Agreement........................................47
SECTION 8.04. Other Conversion to a Newco...................................47
SECTION 8.05. Power of Attorney and Proxy...................................47
ARTICLE IX
Certificates, Etc.
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SECTION 9.01. Right to Issue Certificates...................................48
SECTION 9.02. Form of Certificates .........................................48
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SECTION 9.03. Register......................................................48
SECTION 9.04. Issuance......................................................48
SECTION 9.05. Transfer......................................................49
SECTION 9.06. Record Holder.................................................49
SECTION 9.07. Lost, Destroyed or Mutilate Certificates......................49
ARTICLE X
Accounting and Tax Matters;
Transactions with Members
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SECTION 10.01. Fiscal Year..................................................49
SECTION 10.02. Books and Records and Capital Accounts.......................49
SECTION 10.03. Bank Accounts................................................50
SECTION 10.04. Auditors.....................................................50
SECTION 10.05. Tax Matters..................................................50
SECTION 10.06. Business Transactions of a Member with
the Company..............................................51
SECTION 10.07. Liability to Third Parties; Capital
Account Deficits.........................................51
ARTICLE XI
Indemnification of Officers,
Directors and Other Authorized Representatives
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SECTION 11.01. Scope of Indemnification.....................................52
SECTION 11.02. Advancing Expenses...........................................53
SECTION 11.03. Securing of Indemnification Obligations......................53
SECTION 11.04. Scope of Article.............................................54
SECTION 11.05. Assumption by Newco..........................................54
ARTICLE XII
Dissolution and Winding-Up
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SECTION 12.01. Dissolution..................................................54
SECTION 12.02. Winding-Up Affairs and Distribution of Assets................54
ARTICLE XIII
Miscellaneous Provisions
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SECTION 13.01. Entire Agreement.............................................55
SECTION 13.02. Amendments and Modifications.................................55
SECTION 13.03. Severability.................................................56
SECTION 13.04. GOVERNING LAW................................................56
SECTION 13.05. No Waiver of Rights..........................................56
SECTION 13.06. SUBMISSION TO JURISDICTION...................................56
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SECTION 13.07. Specific Performance.........................................57
SECTION 13.08. Counterparts.................................................57
SECTION 13.09. Headings.....................................................57
SECTION 13.10. Binding Agreement .........................................57
SECTION 13.11. Notices......................................................57
SECTION 13.12. Waiver of Partition; Classes or Group of Members.............58
SECTION 13.13. Proxy........................................................58
SCHEDULES
Schedule I Current Members of the Company
Schedule II Members of the Company, Initial Capital
Accounts and Percentage Interests Upon
Effectiveness of Third Amended and
Restated Limited Liability Company
Agreement
Schedule III Percentage Interest Adjustment Formula
Schedule IV Options to Purchase Interests
Schedule V Dealer Principals
Schedule VI Names of Acceptable Designees as Dealer
Directors
EXHIBITS
Exhibit A Form of Shareholders Agreement
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THIRD AMENDED AND RESTATED LIMITED
LIABILITY COMPANY AGREEMENT, dated as of February
1, 2000, of XXXXXX AUTOMOTIVE GROUP L.L.C., a
Delaware limited liability company (the "Company").
Capitalized terms used herein have their respective
meanings as set forth in Section 1.01.
WHEREAS, Xxxxxx Villanova IV L.L.C., a Delaware limited liability
company, caused the Company to be formed under the Delaware Limited Liability
Company Act (6 Del. C. ss. 18-101, et seq., as amended from time to time (the
"Act")) by filing with the Secretary of State of the State of Delaware (the
"Secretary of State") on May 15, 1998, the certificate of formation of the
Company (the "Certificate of Formation") and by entering into the original
limited liability company agreement, dated as of May 15, 1998, of the Company,
which agreement was amended and restated in its entirety pursuant to the First
Amended and Restated Limited Liability Company Agreement dated as of December 4,
1998, and the Second Amended and Restated Limited Liability Company Agreement
dated as of March 18, 1999 (the "Prior LLC Agreement");
WHEREAS, in order to consummate the transactions (collectively, the
"Roll-Up Transaction") contemplated by the Transfer and Exchange Agreement dated
as of February 1, 2000 (the "Transfer and Exchange Agreement"), by and among the
Company, Xxxxxx Automotive Holdings L.L.C., a Delaware limited liability company
(formerly known as Xxxxxx Automotive Group L.L.C., "AAH"), the individuals and
entities listed on Schedule I thereto (collectively, the "Dealers") and the
individuals and entities listed on Schedule II thereto (collectively, the
"Managers"), the Current Members desire to admit AAH, each Dealer that is not a
Current Member (collectively, the "Non-Xxxxxx Oregon Dealers") and each Manager
as a Member of the Company and to amend and restate in its entirety the Prior
LLC Agreement with respect to the conduct of the affairs of the Company and the
Members' respective rights and obligations with regard to their Interests in the
Company;
WHEREAS, AAH, the Dealers and the Managers have entered into the
Transfer and Exchange Agreement and the Escrow Agreement (as defined in the
Transfer and Exchange Agreement) and desire to give full economic effect to the
transactions contemplated thereby, including the Roll-Up Transaction, as of
February 1, 2000 (the "Roll-Up Date"), subject to the occurrence of the Escrow
Release (as defined in the Transfer and Exchange Agreement);
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WHEREAS, the parties are entering into the Roll-Up Transaction for the
purpose, among others, of enhancing the Platform Groups' ability to obtain
financing and make purchases on more attractive terms; and
WHEREAS, the name of the Company as reflected in the Certificate of
Formation is "Xxxxxx Automotive Oregon L.L.C." and, in connection with the
Roll-Up Transaction, the Members of the Company desire to change the name of the
Company to "Xxxxxx Automotive Group L.L.C." by filing a certificate of amendment
to the Certificate of Formation with the Secretary of State (the "Certificate of
Amendment").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties hereby agree as follows:
ARTICLE I
Definitions and Usage
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SECTION 1.01. Defined Terms. The following terms as used in this
Agreement shall have the following meanings:
"AAH" has the meaning set forth in the second recital to this
Agreement.
"AAH LLC Agreement" means the Second Amended and Restated Limited
Liability Company Agreement, dated as of December 31, 1998, of AAH.
"Act" has the meaning set forth in the first recital to this
Agreement.
"Additional Offer" has the meaning set forth in Section 4.02.
"Affiliate" means, with respect to any person, any other person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person. For purposes
of this definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to any
person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such person, whether
through the ownership of voting
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securities, by contract or credit arrangement, as trustee or
executor, or otherwise.
"Agreement" means this Agreement, as amended or supplemented from time
to time.
"Bankruptcy" means, with respect to any Member, any event that causes
such Member to cease to be a member of the Company as provided in ss. 18-304 of
the Act.
"Board of Directors" means the managing body of the Company described
in Article III.
"Book Value" has the meaning set forth in Section 4.07.
"Business Day" means any day, other than a Saturday or Sunday, on
which banks located in New York City are not required or authorized by law to
remain closed.
"Callable Interest" has the meaning set forth in Section 7.04(a).
"Capital Account" has the meaning set forth in Section 4.01.
"Capital Contribution" means a contribution by a Member to the capital
of the Company pursuant to this Agreement.
"Carried Interests" means the economic interests of the Managers
represented by their entitlement to distributions pursuant to Section
6.01(b)(ii)(B).
"Certificate of Amendment" has the meaning set forth in the fifth
recital to this Agreement.
"Certificate of Formation" has the meaning set forth in the first
recital to this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the preamble to this Agreement.
"Current Member" means each person who is a Member of the Company
immediately prior to the effectiveness of this Agreement, which persons are
listed on Schedule I.
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"Dealer Director" means a Director designated by the Dealer Members.
"Dealer Members" means (i) all persons that are Members of the Company
on the date of this Agreement, other than AAH and the Managers, (ii) any person
that is issued new Interests and admitted as a new Member pursuant to Section
4.06(a) other than a Third Party Investor and (iii) any Member that is a
Transferee of a Member described in clause (i) or (ii), other than AAH, any
Affiliate of AAH, the Managers, any senior management employee of the Company or
any Third Party Investor.
"Dealers" has the meaning set forth in the second recital to this
Agreement.
"DGCL" means the General Corporation Law of the State of Delaware (8
Del. X.xx. 101, et seq.), as amended from time to time and any successor statute
thereto.
"Director" has the meaning set forth in Section 3.01(a).
"Drag-Along Notice" has the meaning set forth in Section 7.03.
"Fair Market Value" means the fair market value of an Interest,
determined in accordance with Section 7.06.
"Financing Document" has the meaning set forth in Section 7.04(b)(i).
"Fiscal Year" has the meaning set forth in Section 10.01.
"Xxxxxx XX" means the Xxxxxx Family Partnership, L.P., a Delaware
limited partnership.
"Xxxxxx Percentage" means 2.89%.
"Initial Offer" has the meaning set forth in Section 4.02.
"Interest" means a Member's limited liability company interest in the
Company and such Member's rights and obligations with respect to the Company
pursuant to this Agreement and applicable law.
"Involuntary Transfer" means any Transfer by any Member of Interests,
or of any beneficial interest therein, upon default, foreclosure, forfeit,
bankruptcy (voluntary or
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involuntary), court order, levy of attachment, execution, in connection with
divorce or separation proceedings or otherwise than voluntarily by the
Transferor; provided, however, that a Transfer required pursuant to Section
7.03 shall not be deemed an Involuntary Transfer and provided further,
however, that with respect to a Member that is a natural person, any Transfer
upon the death of such Member shall not be deemed an Involuntary Transfer.
"IPO" has the meaning set forth in Section 8.01.
"IPO Value Distribution Interest" means, with respect to any Member as
of the time of an exchange described in Section 8.02, the percentage described
by:
(A) the amount that hypothetically would be distributable to such
Member pursuant to Section 6.01(b) if the Company were to distribute
an amount of cash equal to the product of (i) the per share price of
the Newco common stock in the IPO and (ii) the number of shares of
Newco outstanding immediately prior to the IPO;
divided by
(B) the product of (i) and (ii) in clause (A) above.
"Xxxxxxxx" means Xxxxx Xxxxxxxx, an individual.
"Xxxxxxxx Percentage" means 1.15%, subject to the vesting of the
Xxxxxxxx Percentage pursuant to Section 9 of the Agreement dated February 1,
2000, between the Company and Xxxxxxxx.
"Liquidating Member" has the meaning set forth in Section 12.02(a).
"Look-Back Threshold" has the meaning set forth in Section
7.04(c)(i)(C).
"Majority in Interest" means, with respect to any group of Members,
the Members who, at the time in question, have Percentage Interests aggregating
more than 50% of all Percentage Interests of such group.
"Management Employee" means any employee of the Company or any
subsidiary of the Company who owns an Interest, whether directly or indirectly,
in the Company.
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"Managers" has the meaning set forth in the second recital to this
Agreement.
"Member" means any person or persons who, from time to time, shall
have acquired an Interest pursuant to and in compliance with the terms of this
Agreement and who shall have been admitted as a Member in accordance with this
Agreement, and shall not have ceased to be a Member under the terms of this
Agreement or any applicable laws.
"Member Nonrecourse Debt" means "partner nonrecourse debt" as defined
in ss. 1.704-2(b)(4) of the Treasury Regulations.
"Merger Conversion" has the meaning set forth in Section 8.04.
"MG Capital Account" of any Member as of the end of any Fiscal Year
(or portion thereof), means such Member's Capital Account balance (whether
positive or negative) as of the end of such Fiscal Year (or portion thereof)
(after all distributions with respect to such year other than any liquidating
distributions, but before any allocations of tax items for such year), increased
by such Member's share of any Minimum Gain of the Company as of the end of such
Fiscal Year (or portion thereof).
"Minimum Gain" has the meaning prescribed by Treasury Regulation
xx.xx. 1.704-2(d) and 1.704-2(i)(3).
"Net Profits" and "Net Losses" means, with respect to any Fiscal Year
(or portion thereof), the net income and net loss of the Company for such Fiscal
Year (or portion thereof) as determined in accordance with the accounting
methods followed by the Company for Federal income tax purposes, including as
income any income that is exempt from tax and described in Section 705(a)(1)(B)
of the Code, treating as deductions items of expenditure described in Section
705(a)(2)(B) of the Code and treating as an item of gain (or loss) the excess
(deficit), if any, of the fair market value of property distributed in such
period over (under) such property's Book Value. Depreciation, depletion,
amortization, income and gain (or loss) with respect to the Company assets shall
be computed with reference to their initial Book Value, as adjusted pursuant to
this Agreement in accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(g).
"Newco" has the meaning set forth in Section 8.01.
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"Non-Xxxxxx Oregon Dealers" has the meaning set forth in the second
recital to this Agreement.
"Nonrecourse Deductions" has the meaning set forth in ss.
1.704-2(b)(1) of the Treasury Regulations and shall be determined in accordance
with ss. 1.704-2(c) of the Treasury Regulations.
"Offer Date" has the meaning set forth in Section 7.01(c)(iii)(D).
"Option Period" has the meaning set forth in Section 7.04(a)(i).
"Percentage Interest" means, with respect to any Member at any time,
the percentage set forth opposite such Member's name on Schedule II hereto under
the heading "Percentage Interest", as such Schedule may be amended by the Board
of Directors from time to time to reflect (i) any adjustments in Percentage
Interests made pursuant to Section 4.04, (ii) any additional Capital
Contributions made pursuant to Section 4.02 unless made by each Member in
proportion to its Percentage Interest, (iii) any repurchase of Interests by the
Company pursuant to Section 7.04 (or otherwise), (iv) the exercise of any option
to purchase Interests pursuant to Section 7.05, (v) any issuance of new
Interests pursuant to Section 4.02(a) or Section 4.06 or (vi) the Transfer of
any Interest, or portion thereof, in accordance with the provisions of this
Agreement if the Transferee of such Interest (or portion thereof) is admitted as
a Member in accordance with Section 7.01(a)(iii).
"Permitted Transferee" means, (i) with respect to AAH, an Affiliate of
AAH, (ii) with respect to a natural person, any (A) corporation, partnership,
limited liability company or other entity controlled solely by such natural
person solely for the benefit of such natural person, his or her spouse, his or
her parents, members of his or her immediate family, or his or her lineal
descendants or ancestors and (B) any trust revocable solely by such natural
person during his lifetime or any irrevocable trust, in either case solely for
the benefit of such natural person, his or her spouse, his or her parents,
members of his or her immediate family, his or her lineal descendants or
ancestors or charity, provided such trust is controlled solely by such natural
person, (iii) with respect to a Dealer that is not a natural person, the natural
person listed on Schedule V that ultimately controls such Dealer or one or more
corporations, partnerships, limited liability companies or other entities each
of which (A) is controlled solely by such Dealer or the natural person listed on
Schedule V that ultimately controls
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such Dealer and (B) wholly owns such Dealer or is wholly owned by such Dealer
or direct or indirect shareholders, members or partners of such Dealer,
provided that in the case of each Transfer pursuant to this clause (iii) the
natural persons that are the ultimate beneficial owners of the Interest owned
by such Dealer prior to such Transfer also are the ultimate beneficial owners,
in the same proportion of ownership, of such Interest following such Transfer
(except to the extent that the Transfer of a natural person's beneficial
ownership in such Interest is permitted by the foregoing clause (ii)) and (iv)
with respect to a Dealer or a natural person that beneficially owns an
interest in a Dealer, to a Dealer listed on (or controlled by an individual
listed on) Schedule V in an arm's-length transaction provided that (A) if the
transferring Dealer or such natural person is (or is controlled directly or
indirectly by) an individual that is an employee of the Company or of an
Affiliate of the Company, such individual first ceases to be employed by the
Company and/or such Affiliate of the Company and (B) such Dealer transfers its
entire Interest to such other Dealer.
"person" means any individual, corporation, partnership, trust,
association, limited liability company, joint venture, joint-stock company or
any other entity or organization, including a government or governmental agency.
"Platform Groups" means (i) Xxxxxx Automotive Arkansas L.L.C., a
Delaware limited liability company, (ii) Xxxxxx Automotive Atlanta L.L.C., a
Delaware limited liability company, (iii) Xxxxxx Automotive Jacksonville, L.P.,
a Delaware limited partnership, (iv) Xxxxxx Automotive North Carolina L.L.C., a
Delaware limited liability company, Xxxxxx Automotive North Carolina Real Estate
Holdings L.L.C., a Delaware limited liability company, and Camco Finance L.L.C.,
a Delaware limited liability company, (v) Xxxxxx Automotive St. Louis, L.L.C., a
Delaware limited liability company, Xxxxxx Automotive St. Louis Gen. L.L.C., a
Delaware limited liability company, and Xxxxxx Automotive St. Louis LR L.L.C., a
Delaware limited liability company, (vi) Xxxxxx Automotive Tampa, L.P., a
Delaware limited partnership, (vii) Xxxxxx Automotive Texas L.L.C., a Delaware
limited liability company and (viii) (A) prior to the consummation of the
transactions contemplated by this Agreement and the Transfer and Exchange
Agreement, the Company and (B) after the consummation of such transactions, the
subsidiary, division or operating unit of the Company comprising the business
operations conducted by the Company prior to the consummation of such
transactions.
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"Prime Rate" means, at any time, an annual rate of interest equal to
the prime rate announced by Citibank N.A. in New York, New York at such time.
"Prior LLC Agreement" has the meaning set forth in the first recital
to this Agreement.
"Residual Percentage" means 100%, less the Xxxxxx Percentage and the
Xxxxxxxx Percentage.
"Return Target" means cumulative distributions to Members pursuant to
Section 6.01(b)(i) in an amount equal to $376,291,000 plus an 8% per annum
cumulative, compounded return thereon.
"Roll-Up Date" has the meaning set forth in the third recital of this
Agreement.
"Roll-Up Transaction" has the meaning set forth in the second recital
to this Agreement.
"Scheduled Closing Date" has the meaning set forth in Section
7.01(c)(iii)(E).
"Secretary of State" has the meaning set forth in the first recital to
this Agreement.
"Securities Act" means the Securities Act of 1933 and the rules and
regulations of the Securities and Exchange Commission promulgated thereunder.
"Shareholders Agreement" has the meaning set forth in Section 8.01.
"Tag-Along Notice" has the meaning set forth in Section 7.02.
"Target Amount" means, with respect to any Member as of the end of any
Fiscal Year (or portion thereof), the amount that hypothetically would be
distributable to such Member as of the end of such year if the Company were to
(i) sell each of its noncash assets on hand as of the end of such year for an
amount of cash equal to its adjusted Book Value in such asset (as determined
under the principles for the computation of Net Profits and Net Losses), (ii)
pay off all liabilities of the Company and (iii) liquidate, distributing the
proceeds from such sale and all its other assets pursuant to Section 6.01(b)
(taking into account any distributions previously made with respect to such
year); provided, however, that (1) for purposes of computing the aggregate
hypothetical distribution described in clause
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(iii) above the cash assets of the Company shall be deemed to be increased by
the aggregate amount of distributions to Members pursuant to Section
6.01(c)(iv)(A) and shall be deemed to be decreased by the aggregate amount of
gain specially allocated to Members pursuant to Section 5.02(b)(i); and (2)
the Target Amount for any Member that receives any distribution pursuant to
Section 6.01(c)(iv) shall be decreased by the amount of such distribution and
increased by the amount of any gain specially allocated to such Member
pursuant to Section 5.02(b).
"Tax Return" refers to any report, return, information return or other
information required to be supplied to a taxing authority in connection with
Taxes.
"Tax Matters Partner" has the meaning set forth in Section 10.05(d).
"Taxes" refers to all Federal, state, local and foreign taxes,
charges, fees, levies, imposts, duties or other assessments of any kind
whatsoever, imposed or required to be withheld by any Federal, state, local,
foreign, or other governmental authority, including any interest, penalties or
additions thereto, whether disputed or not.
"Third Party Investor" has the meaning set forth in Section 4.06(a).
"Third Party Purchaser" means, with respect to any proposed sale of an
Interest (or portion thereof) by a Member, a person, other than an Affiliate of
such Member, who offers to purchase from such Member such Interest (or such
portion) pursuant to a bona fide, arm's-length written offer.
"Transfer and Exchange Agreement" has the meaning set forth in the
second recital to this Agreement.
"Transfer" means any direct or indirect transfer, sale, conveyance,
assignment, gift, hypothecation, pledge or other disposition, whether voluntary
or by operation of law, of an Interest.
"Transferee" means the transferee of a Transfer.
"Transferor" means the transferor of a Transfer.
"Treasury Regulations" means the Federal income tax regulations
promulgated by the United States Department of the Treasury interpreting the
provisions of the Code.
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SECTION 1.02. Other Definition Provisions. Wherever required by the
context of this Agreement, the singular shall include the plural, and vice
versa, and the masculine gender shall include the feminine and neuter genders,
and vice versa, and references to any agreement, document or instrument shall be
deemed to refer to such agreement, document or instrument as amended,
supplemented or modified from time to time. When used herein, the words
"including", "includes", "included" and "include" are deemed to be followed by
the words "without limitation".
ARTICLE II
Formation and Business of the Company
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SECTION 2.01. Admission of New Members; Formation and Continuation.
The Current Members hereby admit AAH, each Non-Xxxxxx Oregon Dealer and each
Manager as a Member of the Company and, together with AAH, each Non-Xxxxxx
Oregon Dealer and each Manager, hereby amend and restate the Prior LLC Agreement
in its entirety and enter into this Agreement. Each of the Current Members
(other than Xxxxxx Villanova IV L.L.C., which, having obtained the requisite
consent of the Board of Directors pursuant to Section 4.2 of the Prior LLC
Agreement, is withdrawing from the Company effective upon the effectiveness of
this Agreement and agrees that it is entitled to no distribution from the
Company in respect of such withdrawal) shall continue to be a Member of the
Company. Without the need for the consent of any person, upon the effectiveness
of this Agreement, the Members of the Company shall be those persons listed on
Schedule II and their respective initial Capital Accounts and Percentage
Interests shall be as set forth on Schedule II. The Members hereby ratify the
formation of the Company as a limited liability company under the Act and agree
that the rights, duties and liabilities of the Members of the Company shall be
as provided in the Act, except as otherwise provided herein.
SECTION 2.02. Company Name. The name of the Company as reflected in
the Certificate of Formation is "Xxxxxx Automotive Oregon L.L.C.". Upon the
filing of the Certificate of Amendment with the Secretary of State (which the
Board of Directors shall promptly cause to occur), the name of the Company shall
be "Xxxxxx Automotive Group L.L.C.".
SECTION 2.03. Purpose and Powers. (a) The Company has been formed for
the object and purpose of, and the nature of the business to be conducted by the
Company
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is, engaging in any lawful act or activity for which limited liability
companies may be formed under the Act, and engaging in any and all activities
necessary or incidental to the foregoing. The Company shall possess and may
exercise all the powers and privileges granted by the Act or by any other law,
together with any powers incidental thereto, that are necessary or convenient
to the conduct, promotion or attainment of the business, purposes or
activities of the Company. The Company shall be deemed to have for all
purposes, without limitation, any and all of the powers that may be exercised
on behalf of the Company by the persons so authorized pursuant to this
Agreement.
(b) Without limiting the powers and privileges possessed by the
Company as described in paragraph (a) of this Section 2.03, the Company is
authorized to engage in the business of evaluating, acquiring, owning, managing,
operating, financing and disposing of retail automobile and truck dealerships
and of businesses related thereto.
SECTION 2.04. Registered Agent and Office; Other Offices. The
registered agent for service of process is, and the mailing address for the
registered office of the Company in the State of Delaware is in care of, The
Corporation Trust Company, Corporation Trust Center, 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000. The Company shall also maintain
such registered agents and registered offices as may be required under
applicable law in the State of Oregon and in any other jurisdictions in which
the Company conducts business. The Company may also have offices at such other
places within or without the State of Delaware as the Board of Directors may
from time to time designate or the business of the Company may require.
SECTION 2.05. Principal Place of Business. The principal place of
business of the Company shall be located at 0000 Xxxxxxxxx Xxxxx, Xxxxx 000,
Xxxxxx, XX 00000. At any time, the Company may change the location of the
Company's principal place of business; provided, however, that prompt notice of
any such change shall be given to each Member.
SECTION 2.06. Authorized Persons. Each officer of the Company (and any
agent as may from time to time be designated by any officer of the Company for
such purpose) is hereby designated as an authorized person, within the meaning
of the Act, to act individually or collectively solely in connection with
executing, delivering and causing to be filed the Certificate of Amendment (and,
when approved by the Board of Directors, any other amendments to, and/or
13
restatements of, the Certificate of Formation adopted in accordance with the
terms hereof) and, when approved by the Board of Directors, any other
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. The execution and filing of the Certificate of
Formation with the Secretary of State by Xxxx X. Xxxxxxx on or about May 15,
1998 is hereby specifically ratified, adopted and confirmed.
SECTION 2.07. Representations and Warranties. (a) Entities. Each
Member that is a corporation, partnership, limited liability company, trust or
other entity represents and warrants to the Company and to each other Member
that (i) such Member is duly formed or organized, validly existing and in good
standing under the laws of the jurisdiction in which such Member was formed or
organized; (ii) such Member has the full legal right, power and authority
required to enter into, execute and deliver this Agreement and to perform fully
its obligations hereunder; (iii) this Agreement has been duly authorized,
executed and delivered by such Member and is a legal, valid and binding
obligation of such Member enforceable against such Member in accordance with its
terms; and (iv) such Member's authorization, execution, delivery and performance
of this Agreement does not and will not conflict with (A) any law, rule or court
order applicable to such Member, (B) such Member's organizational documents or
(C) any other agreement or arrangement to which such Member is a party or by
which it or its properties are bound.
(b) Natural Persons. Each Member that is a natural person represents
and warrants to the Company and to each other Member that (i) such Member is of
sound mind and has full legal capacity to enter into, execute and deliver this
Agreement and perform fully his or her obligations hereunder; (ii) this
Agreement has been duly executed and delivered by such Member and is a legal,
valid and binding obligation of such Member enforceable against such Member in
accordance with its terms; and (iii) such Member's execution, delivery and
performance of this Agreement does not and will not conflict with (A) any law,
rule or court order applicable to such Member or (B) any other agreement or
arrangement to which such Member is a party or by which such Member or his or
her properties are bound.
SECTION 2.08. Effectiveness. Subject to the occurrence of the Escrow
Release (as defined in the Transfer and Exchange Agreement) this Agreement shall
be effective as of the Roll-Up Date. If the Escrow Release does not occur
14
prior to the Outside Date (as defined in the Transfer and Exchange Agreement),
then this Agreement shall be void without ever becoming effective.
ARTICLE III
Management of the Company
-------------------------
SECTION 3.01. Board of Directors. (a) Appointment. The Company shall
have a Board of Directors. The Board of Directors shall consist of eight
individuals (each, a "Director"), one of whom shall serve as the Chairman of the
Board. Five members of the Board of Directors (including the Chairman of the
Board) shall be designated and may be removed at any time and from time to time
by AAH in its sole discretion. Three members of the Board of Directors shall be
designated and may be removed at any time and from time to time by a Majority in
Interest of the Dealer Members, voting together as a single class, subject in
the case of designation to the consent of AAH (which consent shall not be
unreasonably withheld). AAH agrees that each of the individuals set forth on
Schedule VI is an acceptable designee as a Dealer Director so long as such
individual continues to be employed by the Company or an Affiliate of the
Company. The initial members of the Board of Directors of the Company designated
by AAH shall be Xxxxxxx Xxxxxxx, Xxx X. Xxxx, Xxxx Xxxx, Xxxxx Xxxxxxxx and
Xxxxxx Xxxxxx. The initial members of the Board of Directors designated by the
Dealer Members shall be X.X. Xxxxxx, III, Ben Xxxxx XxXxxxx, Xx. and Xxxxxxx
(X.X.) Tomm.
(b) Management and Control. The property, business and affairs of the
Company shall be managed and conducted by the Board of Directors. None of the
Members, acting individually, and none of the Directors, acting individually,
shall have any right or authority to take any action on behalf of the Company
with respect to third parties or to bind the Company. The Directors and officers
of the Company shall be "managers" of the Company as such term is used in the
Act. The Company may only act and bind itself (i) through the collective action
of five or more Directors or (ii) through the action of the officers, employees,
agent or attorneys-in-fact of the Company if and to the extent authorized by
this Agreement or by the Board of Directors in accordance with the provisions of
this Agreement.
SECTION 3.02. Powers and Procedures of the Board of Directors. (a)
General Procedures. The Board of Directors, on behalf of the Members, shall have
the power
15
(i) to do any and all acts necessary or convenient to or for the furtherance
of the purposes of the Company, (ii) to act on behalf of and bind the Company
and (iii) to appoint persons, with such titles as are set forth in this
Agreement or as the Board of Directors may otherwise select, as officers,
employees, agents or attorneys-in-fact of the Company to act on behalf of and
bind the Company, with such power and authority as is set forth in this
Agreement (with respect to officers of the Company) or as the Board of
Directors may delegate from time to time to any such person; provided,
however, that the Board of Directors shall not delegate its responsibility for
the overall management and supervision of the Company. Any action requiring
the approval of the Board of Directors must be approved by five or more
Directors. Directors may act without a meeting by written consent if at least
five Directors (with at least one of such five Directors being a Dealer
Director) execute a consent in writing to the taking of such action and such
writing or writings are filed with the minutes of the proceedings of the Board
of Directors, or at a meeting (or meetings) of five or more Directors
(attended in person, by proxy or by telephonic or other electronic device;
provided, however, that in lieu of participating in a meeting, a Director can
indicate his or her approval or disapproval in writing (before or after the
meeting) of matters presented at the meeting with the same effect as if he or
she participated in the meeting and took such action in person at the
meeting). Any Director may call a meeting of Directors or propose that the
Board of Directors take action by written consent. At least three Business
Days prior written notice of a proposed meeting or the proposed action by
written consent, as the case may be (or such other notice period as the Board
of Directors may from time to time establish by the approval of at least five
Directors (with at least one of such five Directors being a Dealer Director)),
shall be given to all other Directors by the Director calling the meeting or
proposing the action by written consent, as the case may be, unless such
notice requirement is waived by a written waiver executed by a Director or by
the attendance or participation of such Director in a meeting without
protesting, prior thereto or at the commencement thereof, the lack of adequate
notice. Actions adopted or taken by Directors at a meeting shall be deemed
adopted or taken only by those Directors present at such meeting (in person,
by proxy or by telephonic or other device) who expressly approve of such
actions so adopted or taken (or those who approve of such actions in writing).
Except as expressly provided in this Section 3.02, the Board of Directors
shall otherwise conduct its business in such manner and by such procedures as
a majority of the members of the Board of Directors deem appropriate.
16
(b) Special Procedures. Notwithstanding the foregoing, the approval of
at least five Directors (with at least two of such five Directors being Dealer
Directors) shall be required for the Company directly or indirectly (i) to
engage in or acquire any business other than the businesses of evaluating,
acquiring, owning, managing, operating, financing and disposing of motor vehicle
dealerships and any businesses related or incidental thereto, (ii) to enter into
any material agreement or engage in any material transaction with AAH or any
Affiliate of AAH or (iii) to merge, consolidate, reorganize or convert, other
than as contemplated by Article VIII of this Agreement, unless appropriate
provision is made for the Company or its successor following such merger,
consolidation, reorganization or conversion to be bound by the terms and
conditions of this Agreement or a substitute agreement among the Company or its
successor and the Members that provides the Members with substantially the same
rights as under this Agreement, provided that the Members' Percentage Interests
may be diluted pro rata and their other rights may be adversely affected in such
merger, consolidation, reorganization or conversion, but only to the extent such
dilution or adverse change in such rights would be permitted in connection with
the issuance of additional Interests by the Company in accordance with Section
4.06(a).
SECTION 3.03. Actions Requiring Board Approval; Day-to-Day Authority
of the President and Chief Executive Officer; Ratified Actions. (a) Board
Approval Required. All actions outside the ordinary course of business of the
Company, to be taken by or on behalf of the Company, shall require the approval
of five or more Directors (acting in accordance with the procedures for actions
of the Board of Directors set forth in Section 3.02), and shall not require the
consent or approval of any Member or any other person, except as otherwise
provided in Section 13.02.
(b) President and Chief Executive Officer. The President and Chief
Executive Officer of the Company shall have the power and authority to take (or
authorize other officers, employees or agents of the Company to take) all
actions on behalf of the Company (without the need for the consent or approval
of any Member or any other person) that are within the ordinary course of
business of the Company unless the Board of Directors shall have previously
restricted (specifically or generally) such power and authority of the President
and Chief Executive Officer of the Company.
(c) Certain Ratified and Approved Actions. Without in any way limiting
the generality of the foregoing
17
or anything else contained herein or in any other document, the execution,
delivery and performance by the Company of the Transfer and Exchange Agreement
and the agreements and actions contemplated thereby is specifically approved
and ratified in all respects.
SECTION 3.04. Officers. (a) Appointment and Term of Office. The
officers of the Company shall include a President and Chief Executive Officer
and a Secretary. The Board of Directors may appoint such other officers as it
deems appropriate, including a Chief Operating Officer, one or more Vice
Presidents, a Chief Financial Officer, a Controller, Assistant Controllers and
Assistant Secretaries. Officers shall be appointed from time to time by the
Board of Directors and each officer shall hold office until his or her successor
is appointed or until his or her earlier death or until his or her earlier
resignation or removal in the manner hereinafter provided. Each officer shall
have such authority and shall perform such duties as may be provided in this
Agreement, as the Board of Directors may from time to time prescribe or as set
forth in any employment agreement approved by the Board of Directors between the
Company and any such officer. Any two or more offices may be held by the same
person except for the offices of President and Chief Executive Officer and of
Secretary. With respect to the appointment by the Board of Directors of the
President and Chief Executive Officer, the Chief Operating Officer or the Chief
Financial Officer, the Board of Directors shall give the Dealer Members three
Business Days' prior notice of such proposed appointment, and the Dealer Members
shall have the right to express to the Board of Directors their approval or
disapproval of the individuals to be appointed to such offices, provided that
such approval or disapproval shall in no way be binding upon the Board of
Directors.
(b) Resignation and Removal. Any officer may resign at any time by
giving written notice to the President and Chief Executive Officer or the
Secretary of the Company, and such resignation shall take effect after the
giving of such notice at the time specified therein or, if the time when it
shall become effective is not specified therein, when accepted by action of the
Board of Directors. Except as aforesaid, the acceptance of any such resignation
by action of the Board of Directors shall not be necessary to make it effective.
All officers and agents elected or appointed by the Board of Directors
(including the President and Chief Executive Officer and the Secretary) shall be
subject to removal at any time by the Board of Directors, with or without cause,
subject to the terms of any
18
employment or other agreement approved by the Board of Directors between the
Company and such officer or agent.
(c) Chairman of the Board. The Chairman of the Board shall be a member
of the Board of Directors and shall preside at all meetings of the Board of
Directors and of the Members at which he or she shall be present and shall
perform such duties and exercise such powers as are incident to the office of
chairman of the board of a corporation organized under the DGCL, and shall
perform such other duties and exercise such other powers as may from time to
time be prescribed by the Board of Directors. Initially, Xxxxxx X. Xxxxxx shall
be the Chairman of the Board.
(d) President and Chief Executive Officer. Subject to Section 3.03(b),
the President and Chief Executive Officer shall perform such duties and exercise
such powers as are incident to the office of the president and chief executive
officer of a corporation organized under the DGCL, and shall perform such other
duties and exercise such other powers as may from time to time be prescribed by
the Board of Directors. The President and Chief Executive Officer shall perform
the duties of the Chairman of the Board in the absence of the Chairman of the
Board and shall have the power and authority to conduct the day-to-day
activities of the Company and to take all actions to be taken by or on behalf of
the Company that are contemplated by Section 3.03(b). Initially, Xxxxx Xxxxxxxx
shall be the President and Chief Executive Officer of the Company.
(e) Chief Operating Officer. The Chief Operating Officer, if any,
shall perform such duties and exercise such powers as are incident to the office
of chief operating officer of a corporation organized under the DGCL, and shall
perform such other duties and exercise such other powers as may from time to
time be prescribed by the Board of Directors.
(f) Chief Financial Officer. The Chief Financial Officer, if any,
shall have charge and custody of, and be responsible for, all funds and
securities of the Company and shall deposit all such funds to the credit of the
Company in such banks, trust companies or other depositories as shall be
selected in accordance with the provisions of this Agreement; he or she shall
disburse the funds of the Company as may be ordered by the Board of Directors,
making proper vouchers for such disbursements; and, in general, he or she shall
perform all the duties incident to the office of the chief financial officer of
a corporation organized under the DGCL and such other duties as from time to
time may be assigned to him or her by the Board of Directors or the
19
President and Chief Executive Officer. The duties of the Chief Financial
Officer may be performed by one or more employees or agents of the Company, to
be appointed by the Board of Directors.
(g) Vice President. Each Vice President, if any, shall perform such
duties and exercise such powers as are incident to the office of vice president
of a corporation organized under the DGCL, and shall perform such other duties
and exercise such other powers as may from time to time be prescribed by the
Board of Directors.
(h) Secretary. The Secretary shall keep the records of all meetings
and written actions of Members and of the Board of Directors and shall be the
custodian of all contracts, deeds, documents and all other indicia of title to
properties owned by the Company and of its other records and in general shall
perform all duties and have all powers incident to the office of the secretary
of a corporation organized under the DGCL and shall perform such other duties
and exercise such other powers as may from time to time be prescribed by the
Board of Directors. The duties of the Secretary may be performed by one or more
employees or agents of the Company, to be appointed by the Board of Directors or
the Secretary. Initially, Xxx X. Xxxx shall be the Secretary of the Company.
SECTION 3.05. Reliance on Certificates. Any person dealing with the
Company may rely on a certificate signed by the Secretary or any other officer
of the Company:
(i) as to who the Members hereunder are;
(ii) as to the existence or nonexistence of any fact or facts
which constitute conditions precedent to acts by the Members or in any
other manner germane to the affairs of the Company;
(iii) as to who is authorized to execute and deliver any
instrument or document on behalf of the Company;
(iv) as to the authenticity of any copy of this Agreement and
amendments hereto;
(v) as to any act or failure to act by the Company or as to any
other matter whatsoever involving the Company or any Member (solely
with respect to the activities of the Company); or
20
(vi) as to the authority of the Board of Directors, any officer
of the Company or the Tax Matters Partner to act.
ARTICLE IV
Capital Accounts; Additional Capital
Contributions; Withdrawal of Capital;
Percentage Interest Adjustment
------------------------------
SECTION 4.01. Capital Accounts. (a) A separate capital account (a
"Capital Account") shall be established and maintained for each Member. The
Capital Account of each Member as of the date hereof, after giving effect to the
Roll-Up Transaction and the adjustments referred to in Section 4.01(b), shall
equal the dollar amount set forth opposite such Member's name on Schedule II
under the column captioned "Initial Capital Account". Each Member's Capital
Account shall be increased by: (i) the amount of any cash or the fair market
value of any property (net of any liabilities of the Member assumed by the
Company or secured by such property that the Company is considered to assume or
take subject to under Section 752 of the Code) contributed by the Member to the
Company in accordance with this Article IV and (ii) the amount of Net Profits
(or items thereof) allocated to the Member in accordance with Article V; and
shall be decreased by: (i) the amount of any cash or the fair market value of
any property (net of any liabilities of the Company assumed by the Member or
secured by such property that the Member is considered to assume or take subject
to under Section 752 of the Code) distributed to the Member by the Company and
(ii) the amount of Net Losses (or items thereof) allocated to the Member in
accordance with Article V.
(b) The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with the Treasury Regulations under ss. 704(b) of the Code and shall be
interpreted and applied in a manner consistent with such Treasury Regulations.
Upon the occurrence of any event specified in Treasury Regulations ss.
1.704-1(b)(2)(iv)(f), the Board of Directors may cause the Capital Accounts of
the Members to be adjusted to reflect the fair market value of the Company
assets as provided in such Regulation; provided, however, that the Board of
Directors shall cause the Capital Accounts to be so adjusted (i) in connection
with the Roll-Up Transaction such that, as of the Roll-Up Date, the Members'
Capital Accounts equal the initial capital accounts set forth on Schedule II, as
adjusted by the Board of
21
Directors to reflect any adjustments described in Sections 2.04(b), 2.04(c) or
2.04(d) or as amended pursuant to Section 7.03 of the Transfer and Exchange
Agreement, and (ii) immediately prior to the IPO or Merger Conversion based
upon the valuation of the Company performed by the managing underwriter for
the IPO or the financial advisor retained by the Company in connection with
the Merger Conversion, as the case may be.
SECTION 4.02. Additional Capital Contributions. (a) General. Subject
to Section 4.06, at any time that the Board of Directors determines that the
Company needs additional capital, the Board of Directors may cause the Company
to offer (each, an "Initial Offer") all Members (and if such offer is made to
any Member, it shall be offered to all Members) the opportunity to make
additional Capital Contributions, in proportion to their Percentage Interests,
providing each Member until 5:00 p.m., Eastern Time, on the 10th Business Day
following the day on which such Initial Offer is given to accept or decline in
writing such Initial Offer. The Initial Offer shall set forth the terms of the
additional Capital Contributions, including the total amount of capital to be
raised, the date on which such Capital Contributions will be payable and the
proposed uses of the proceeds. Upon the expiration of such ten Business Day
period, the Company shall offer (each, a "First Additional Offer") to each
Member who has properly given notice of its acceptance of the immediately
preceding Initial Offer, the opportunity to make further additional Capital
Contributions, in proportion to their respective Percentage Interests, in
respect of any Member or Members who failed to timely accept in writing such
Initial Offer. Each such Member shall have until 5:00 p.m., Eastern Time, on the
second Business Day following the day on which such First Additional Offer is
given to accept or decline in writing such First Additional Offer. Upon
expiration of such two Business Day Period, the Company shall offer (each, a
"Second Additional Offer") to each Member who has properly given notice of its
acceptance of the immediately preceding First Additional Offer, the opportunity
to make further additional Capital Contributions, in proportion to their
respective Percentage Interests, in respect of any Member or Members who failed
to timely accept in writing such First Additional Offer made to it. Each Member
receiving a Second Additional Offer shall have until 5:00 p.m., Eastern Time, on
the second Business Day following the day on which such Second Additional Offer
is given to accept or decline in writing such Second Additional Offer. AAH shall
have the right to make Capital Contributions in respect of any Member who failed
timely to accept in writing any Initial Offer, unless and except to the extent
that such Capital
22
Contributions are made by any other Member that shall have accepted a First
Additional Offer or Second Additional Offer. To the extent, if any, that AAH
does not fully exercise the right referred to in the immediately preceding
sentence, the Board of Directors may, in its sole discretion, offer any third
party the right to contribute capital to the Company in an amount not greater
than the difference between (i) the amount of capital that was the subject of
the applicable Initial Offer and (ii) the amount of capital that all Members
agreed to contribute to the Company in respect of such Initial Offer
(including pursuant to any First Additional Offer or Second Additional Offer,
AAH's exercise of all its rights to make Capital Contributions).
(b) Adjustment of Percentage Interests; Rules of Application. In the
event that any additional Capital Contribution is not made in proportion to each
Member's Percentage Interest in the Company, the Members' Percentage Interests
in the Company will be adjusted proportionally by the Board of Directors so as
to reflect such additional Capital Contributions, all prior Capital
Contributions made by the Members, all prior distributions made to the Members
(other than pursuant to Section 6.01(c)(iv)), the Members' initial Capital
Accounts and any other relevant factors (but after giving effect to any other
adjustments to the Members' Percentage Interests made pursuant to this
Agreement), and Schedule II hereof will be amended to reflect the Percentage
Interests of the Members, as determined after giving effect to such factors. If
a Dealer makes any additional Capital Contributions pursuant to this Section
4.02, the portion of such Dealer's Percentage Interest related to such
additional Capital Contributions will not be subject to adjustment under Section
4.04 below. In the event additional Capital Contributions are made by the
Members pursuant to this Section 4.02, the Board of Directors shall amend this
Agreement so that Carried Interests and any other comparable interests in the
Company's profits held by and intended to provide incentives for the Company's
management are not applied to distributions in respect of such additional
Capital Contributions until such time as the Members shall have received
cumulative distributions pursuant to Section 6.01(b)(i) in respect of such
additional Capital Contributions in an amount equal to the amount of such
additional Capital Contributions plus an 8% per annum cumulative, compounded
return thereon. All such additional Capital Contributions shall be payable in
cash on such date as set forth in the notice of the applicable Initial Offer. No
Member shall have any right to contribute capital to the Company except as set
forth in this Section 4.02.
23
SECTION 4.03. Withdrawal of Capital; Limitation on Distributions;
Resignation. No Member shall be entitled to withdraw any part of such Member's
Capital Account or, except as provided in Sections 6.01 and 12.02, to receive
any other distributions from the Company, and no Member shall be entitled to
demand or receive (i) interest on such Member's Capital Account or (ii) any
property from the Company other than cash. No Member may withdraw from the
Company without the prior written consent of the Board of Directors.
SECTION 4.04. Percentage Interest Adjustment. (a) General. In order to
provide an economic incentive to the Dealers to maximize the performance of
their respective affiliated Platform Groups after the Roll-Up Date, (i) as soon
as practicable after (A) the date on which audited Fiscal Year-end financial
statements of the Company for the 2000 Fiscal Year are available and (B) the
date on which audited Fiscal Year-end financial statements of the Company for
each subsequent Fiscal Year are available and (ii) if the IPO is not consummated
in the 2000 Fiscal Year, immediately prior to the consummation of any IPO,
except as otherwise provided in Section 4.02(b) with respect to additional
Capital Contributions, the Percentage Interest of each Dealer will be subject to
upwards or downwards adjustment as appropriate to reflect the relative
performance of such Dealer's affiliated Platform Group as compared to the
performance of the Platform Groups as a whole for the period beginning on
October 1, 1999 (or, with respect to the second adjustment hereunder and any
subsequent adjustments hereunder, from the effective date of the most recent
adjustment) to the adjustment date. Such adjustments will be determined pursuant
to the formula set forth on Schedule III. Each adjustment of Percentage
Interests pursuant to this Section 4.04 will be effective (i) with respect to
annual adjustments, as of the day after the last date covered by the most recent
audited Fiscal Year-end financial statements and (ii) with respect to an
adjustment in connection with any IPO, as of the last day of the month preceding
the date of the preliminary prospectus distributed to prospective investors for
the IPO. Adjustments shall be determined with respect to each Dealer for each
Applicable Period (as defined in Schedule III), including any Applicable Periods
beginning after the date on which a Dealer Transfers all or a portion of its
Interest. The initial Applicable Period shall start on October 1, 1999 and shall
be comprised of the 15 month period ending December 31, 2000; provided that if
the IPO is consummated during the 2000 Fiscal Year, there shall be no adjustment
pursuant to this Section 4.04(a). Upon each adjustment of Percentage Interests
pursuant to this Section 4.04, the
24
Board of Directors shall cause Schedule II hereof to be amended to reflect
each Member's Percentage Interest, as determined after giving effect to such
adjustment.
(b) Record of Percentage Interests; Notification of Adjustment. The
Company shall at all times maintain a written record of each Member's current
Percentage Interest, and shall provide a written notification to each Dealer of
such Dealer's then-current Percentage Interest and a detailed calculation
showing the manner in which such Percentage Interest was calculated within five
Business Days of any Percentage Interest adjustment pursuant to Section 4.04(a).
Any such written notification shall be treated in all respects like a written
statement of Percentage Interests in accordance with the provisions of Section
4.05. The Percentage Interest of each Dealer as determined pursuant to Section
4.04(a) shall be binding and conclusive upon all parties hereto in the absence
of fraud or manifest error.
SECTION 4.05. Statements of Percentage Interest. Within five Business
Days after the written request of any Member, the Company shall provide to such
Member a written statement of such Member's Percentage Interest as of the time
the Company makes such written statement. Pursuant to the Act, no such written
statement shall be deemed to be a certificated security, a negotiable
instrument, a bond or a stock, and no such written statement shall be a vehicle
by which any transfer of any Member's Interest may be effected.
SECTION 4.06. Issuance of Additional Interests. (a) Issuances in
Connection with Acquisitions. The Board of Directors may, in connection with any
acquisition of any retail automobile or truck dealership or any other asset to
be used in the Company's business, cause the Company to issue Interests to the
seller or sellers thereof, or to a third party or parties financing such
acquisition (each, a "Third Party Investor"), and such seller or sellers or
Third Party Investor or Third Party Investors shall thereupon be admitted as
Members of the Company, in each case without the consent of any Member.
(b) Issuances to Senior Management Employees. The Board of Directors
may, in connection with the hiring or compensation of any senior management
employee of the Company (or any subsidiary of the Company), cause the Company to
issue Interests (or options to acquire Interests) to any such employee, and,
upon the acquisition of such Interest, such employee shall be admitted as a
Member of the Company, in each case without the consent of any Member. The
Members anticipate that Interests (or options to acquire
25
Interests) will be issued to senior management employees of the Platform
Groups in such amounts and on such other terms as are reasonable and intended
to provide such employees with incentives to maximize the Company's profits.
(c) Terms of Issuances Pursuant to This Section 4.06. Any issuance of
Interests pursuant to paragraphs (a) or (b) of this Section 4.06 may be on such
terms and conditions as the Board of Directors in its sole discretion
determines, including the Percentage Interest associated with such Interests and
the entitlement of the person to whom such Interests are issued to distributions
under Section 6.01(b)(ii); provided, however, that any such issuance of
Interests shall have the same relative effect on all the then existing Members
(including AAH), (x) except for such differences as are necessary to reflect,
pro rata, the differences in such then existing Members' Percentage Interests
and (y) except for the effect on the Carried Interests of Members entitled to
Carried Interests. In connection with any such issuance of Interests, the
Members' Percentage Interests in the Company will be adjusted so as to reflect
such issuance, and Schedule II hereof will be amended to reflect the Percentage
Interests of the Members and the "Initial Capital Accounts" of any new
"Members". No issuance of Interests pursuant to Section 4.06(a) shall adversely
affect the rights and obligations of the then existing Members with respect to
the Carried Interests and any other comparable interests in the Company's
profits held by and intended to provide incentives for the Company's management.
SECTION 4.07. Determination of Book Value of Company Assets. (a) Book
Value. The initial "Book Value" of any Company asset as of the Roll-Up Date
(taking into account the adjustment in connection with the Roll-Up Transaction
described in Section 4.01(b)) shall be its fair market value on the Roll-Up Date
as determined in good faith by the Board of Directors; provided, however, that
in the case of the assets included within any Platform Group appraised by
Houlihan, Lokey, Xxxxxx & Xxxxx pursuant to Section 2.04 of the Transfer and
Exchange Agreement, the initial Book Values of such assets shall be consistent
with the value of such Platform Group set forth in such appraisal, as adjusted
by the Board of Directors to reflect any adjustments described in Sections
2.04(b), 2.04(c), or 2.04(d) and as amended pursuant to Section 7.03 of the
Transfer and Exchange Agreement.
(b) Adjustment. The Book Values of all of the Company's assets shall
be adjusted by the Company to equal their respective fair market values, as
determined in good
26
faith by the Board of Directors (taking into account, if applicable, the
valuation referred to in clause (ii) of the proviso in Section 4.01(b)), upon
the occurrence of any adjustment of the Capital Accounts of Members pursuant
to Section 4.01(b).
(c) Depreciation and Amortization. The Book Values of the Company's
Assets shall be adjusted as appropriate to reflect any depreciation and
amortization in accordance with the principles for determining the Net Profits
and the Net Losses of the Company.
ARTICLE V
Allocations
-----------
SECTION 5.01. Allocation of Net Profits and Net Losses. (a) Net
Profits. Subject to Section 5.02, the Net Profits of the Company for each Fiscal
Year (or portion thereof) shall, after giving effect to all Capital Account
adjustments attributable to contributions and distributions (other than any
liquidating distributions) made with respect to such year, be allocated among
the Members as follows:
(i) first, to the Members, if any, with negative MG Capital
Account balances in an amount up to such Members' aggregate negative
MG Capital Account balances, in proportion to their respective
negative MG Capital Account balances;
(ii) second, to the Members in the amounts and proportions
necessary to cause their respective MG Capital Account balances (as
adjusted to reflect any allocations for such year pursuant to Section
5.02) to equal their respective Target Amounts as of the end of such
year; and
(iii) third, to the Members in accordance with their respective
Percentage Interests.
(b) Net Losses. Subject to Section 5.02, the Net Losses of the Company
for each Fiscal Year (or portion thereof) shall, after giving effect to all
Capital Account adjustments attributable to contributions and distributions
(other than any liquidating distributions) made with respect to such year, be
allocated among the Members as follows:
(i) first, to the Members with MG Capital Account balances (as
adjusted to reflect any allocations for such year pursuant to Section
5.02) in excess of their
27
respective Target Amounts, to the extent of and in
proportion to such excess amounts;
(ii) second, to the Members with positive MG Capital Account
balances (as adjusted to reflect any allocations for such year
pursuant to Section 5.02) pro rata to the extent of their respective
MG Capital Account balances; and
(iii) third, to the Members in accordance with their respective
Percentage Interests.
SECTION 5.02. (a) Code Section 704(b) Allocations. Notwithstanding any
other provisions of this Agreement, special allocations of Net Income, Net Loss
or specific items of income, gain, loss or deduction may be required for any
Fiscal Year (or portion thereof) as follows:
(i) Minimum Gain Chargeback. The Company shall allocate items of
Company income and gain among the Members at such times and in such amounts as
necessary to satisfy the minimum gain chargeback requirements of Treasury
Regulation Sections 1.704-2(f) and 1.704-2(i)(4).
(ii) Allocation of Deductions Attributable to Member Nonrecourse
Liabilities. Any Nonrecourse Deductions attributable to a Member Nonrecourse
Debt shall be allocated among the Members that bear the economic risk of loss
for such Member Nonrecourse Debt in accordance with the ratios in which such
Members share such economic risk of loss and in a manner consistent with the
requirements of Treasury Regulation Sections 1.704-2(c), 1.704-2(i)(2) and
1.704-2(j)(1).
(iii) Qualified Income Offset. The Company shall specially allocate
Net Loss and items of income and gain when and to the extent required to satisfy
the "qualified income offset" requirement within the meaning of Treasury
Regulation Section 1.704-1(b)(2)(ii)(d).
(b) Special Allocation upon Disposition of Assets. If any Member has
received any distribution pursuant to Section 6.01(c)(iv) hereof, then upon the
occurrence of any event described in Sections 8.01, 8.02 or 8.04 or any other
disposition of all or substantially all of the Company's assets, then
notwithstanding Section 5.01 hereof, the gain, if any, arising from such event
or disposition shall be allocated (i) first, to each such Member to the extent
of the product of (x) the total distributions received by such Member pursuant
to Section
28
6.01(c)(iv) hereof and (y) 5/9 ths and (ii) second, in accordance with Section
5.01 hereof.
SECTION 5.03. Tax Allocations. (a) The income, gains, losses and
deductions recognized by the Company shall be allocated among the Members, for
United States Federal income tax purposes, to the extent permitted under the
Code and the Treasury Regulations, in the same manner that the corresponding
items are allocated to the Members pursuant to Section 5.01 and 5.02. Except as
otherwise provided below, when the Book Value of a Company asset (including the
assets of the Platform Groups that were indirectly contributed) differs from its
basis for Federal or other income tax purposes, solely for purposes of the
relevant Tax and not for purposes of computing Capital Account balances, income,
gain, loss, deduction and credit shall be allocated among the Members in
accordance with Section 704(c) of the Code and the Treasury Regulations
promulgated thereunder, using the method selected by the Tax Matters Partner.
(b) Notwithstanding the foregoing, any Company asset with respect to
which the items of income, gain, loss, deduction and credit were required
pursuant to the organizational document which governed the Platform Group from
which such asset was acquired (or, in the case of any asset owned by the Company
prior to the Roll-Up Date, pursuant to the Prior LLC Agreement) to be allocated
for Tax purposes in accordance with the method set forth in Section 1.704-3(b)
or 3(c) of the Treasury Regulations shall continue to be subject to allocations
for Tax purposes in accordance with such method in respect of the difference, if
any, between the book value of the Company asset in the hands of such Platform
Group immediately before the Roll-Up Date and its basis for Federal income tax
purposes at such time.
SECTION 5.04. Partial Year Allocations. For purposes of determining
the Net Profits, Net Losses and the items of income, gain, loss and deduction
allocable to each Member:
(a) With respect to the Fiscal Year in which the Roll-Up Transaction
occurs, allocations for the portions of such Fiscal Year occurring before and
after the Roll-Up Transaction shall be determined on the basis of an interim
closing of the Company's books.
(b) If the Percentage Interest of any Member is adjusted pursuant to
Section 4.04 hereof during any Fiscal Year, then allocations for the portions of
such Fiscal Year occurring before and after such adjustment shall be
29
determined on the basis of an interim closing of the Company's books.
(c) Any other partial year Tax allocations shall be made on the basis
of an interim closing of the Company's books or a daily proration, as determined
by the Tax Matters Partner, when required by a short Fiscal Year of the Company,
the entry or withdrawal of a Member, the Transfer of any Interests by or to a
Member or for any other reason determined by the Tax Matters Partner.
ARTICLE VI
Distributions
-------------
SECTION 6.01. Distributions. (a) Generally. Except as set forth in
Section 6.01(c) or (d), distributions shall be made at such time and in such
amounts as determined by the Board of Directors and shall be made among the
Members in cash or other property in amounts determined by the procedures set
forth in Section 6.01(b).
Notwithstanding any provision to the contrary contained in this Agreement, (i)
the Company shall not make a distribution to any Member on account of its
Interest if such distribution would violate the Act or other applicable law
and (ii) the Company shall not be required to distribute any amount to the
extent that the Company could be subject to any liability to refund or repay
such amount or any liability arising out of the event giving rise to such
amount except to Members who have agreed to assume such liability to the
extent of the amount to be distributed in connection with such event.
(b) Distribution Amounts. Subject to Section 6.01(c), any amounts to
be distributed to Members pursuant to Section 6.01(a) shall be distributed among
the Members in accordance with the following order of priority:
(i) first, such distribution shall be apportioned and distributed
to each Member in accordance with its respective Percentage Interest
until the cumulative distributions pursuant to this Section 6.01(b)(i)
are equal to the Return Target; and
(ii) second, the balance of such distribution shall be
apportioned to each Member in accordance with their respective
Percentage Interests and:
(A) the amount so apportioned to Xxxxxx XX shall be
distributed to Xxxxxx XX and the amount
30
so apportioned to Xxxxxxxx shall be distributed to
Xxxxxxxx; and
(B) the amount so apportioned to any Member other than
Xxxxxx XX and Xxxxxxxx shall be distributed to Xxxxxx XX in
accordance with the Xxxxxx Percentage, to Xxxxxxxx in accordance
with the Xxxxxxxx Percentage and to such Member in accordance
with the Residual Percentage.
(c) Tax Distributions. (i) Notwithstanding Section 6.01(a), the
Company shall, as soon as practicable after the close of each Fiscal Year, make
pro rata cash distributions to all Members, regardless of their tax status, in
accordance with their respective Percentage Interests, in amounts intended to
enable each Member (or, in the case of a Member that is a flow-through entity,
the direct or indirect owners of such Member) to discharge its aggregate
federal, state and local income Tax liability arising from the allocations of
taxable income made to them pursuant to Article V for such Fiscal Year (other
than any Atlanta Recapture Taxes (as defined in Section 6.01(c)(iv))). The
amount distributable pursuant to this Section 6.01(c)(i) shall be determined by
the Board of Directors in its reasonable discretion, using a uniform Tax rate
for each Member equal to the maximum combined effective federal, state and local
tax rate for an individual resident in California, Connecticut, New York
State/New York City or Pennsylvania (whichever is highest) for each applicable
type of income and otherwise taking into account such other relevant factors and
simplifying assumptions (other than with respect to the amount of taxable income
allocable by the Company to the Members) as the Board of Directors reasonably
determines to be appropriate for purposes of estimating the Tax liabilities of
the Members. Notwithstanding the foregoing, to the extent, if any, that the
Board of Directors reasonably determines that the distributions pursuant to this
Section 6.01(c), if made, would cause the Company to be or remain in default
under any agreements with lenders or motor vehicle manufacturers (despite
commercially reasonable efforts by the Company to obtain consents or amendments
necessary to permit such Tax distributions), the Company shall be relieved of
its obligations to make such distributions while and to the extent that such
conditions continue to exist.
(ii) The Board of Directors shall make quarterly advances of
distributions described in Section 6.01(c)(i) in order to facilitate payment of
estimated Taxes by the Members for each Fiscal Year. If the aggregate amount so
advanced to a Member in respect of a Fiscal Year is greater
31
than the distribution to which such Member is entitled under Section
6.01(c)(i) in respect of such Fiscal Year, then such Member shall repay to the
Company the amount of such excess distribution within 60 days after the Board
of Directors determines the amount thereof. Alternatively, the Board of
Directors may, at any time, cause the Company to reduce the amount of
distributions otherwise payable to such Member under Section 6.01(a) by the
amount of such excess distribution.
(iii) Notwithstanding the foregoing, no Member shall be entitled to
receive any distribution pursuant to Sections 6.01(c)(i) or 6.01(c)(ii) with
respect to any Fiscal Year to the extent, if any, that such Member has
previously received distributions pursuant to Section 6.01(a) with respect to
such Fiscal Year. Any distribution made to a Member pursuant to Sections
6.01(c)(i) or 6.01(c)(ii) will for all purposes of this Agreement be treated as
an advance against, and shall reduce, any future distribution which such Member
would otherwise be entitled to receive under Section 6.01(b), 6.01(d), 8.02 or
8.04.
(iv) If, in preparation for an IPO, the Company elects to change the
method of inventory accounting for tax purposes used with respect to the
business of Xxxxxx Automotive Atlanta, L.L.C. ("Atlanta") or takes any action in
connection with any IPO or Merger Conversion or takes any action in violation of
Section 10.04(c) hereof which action results in the Company being required to
change such method, and, as a result, any person that was a direct or indirect
member of Atlanta prior to the Roll-Up Date (other than AAH or any Affiliate
thereof) (an "Atlanta Dealer") is or will be required to pay any additional
Taxes that such person would not have been required to pay but for such change
in method of inventory accounting (the amount of which additional Taxes being
determined in accordance with the principles set forth in the second sentence of
Section 6.01(c)(i) but applying tax rates in effect with respect to residents of
Atlanta, Georgia for the taxable period) (such additional Taxes, "Atlanta
Recapture Taxes"):
(A) the Company shall, at the time contemplated by Section 6.01(c)(i)
but subject to the limitations contained in the last sentence of Section
6.01(c)(i), make a cash distribution to each Atlanta Dealer (or if such Atlanta
Dealer is an indirect member of the Company, to the Member or Members of the
Company with respect to which such Atlanta Dealer's Atlanta Recapture Taxes
arise) in an amount equal to the Atlanta Recapture Taxes incurred by such
Atlanta Dealer; provided, however, that the aggregate amount distributable
directly or indirectly to all Atlanta Dealers
32
pursuant to this Section 6.01(c)(iv) shall not exceed $4.5 million; and
(B) upon the occurrence of any transaction described in Section 8.01,
8.02 or 8.04, the number of shares of Newco stock otherwise distributable
directly or indirectly to each Atlanta Dealer shall be ratably reduced by a
number of shares equal to (1) the product of (x) the amount of cash that was
directly or indirectly distributed by the Company to such Atlanta Dealer
pursuant to this Section 6.01(c)(iv) and (y) 4/9 ths divided by (2) the per
share price of the Newco common stock in the IPO; and the aggregate number of
shares determined pursuant to the preceding formula with respect to all Atlanta
Dealers shall be distributed to other Members of the Company in proportion to
the number of shares otherwise distributable to such other Members so that no
such shares will be received, directly or indirectly, by Atlanta Dealers (in
addition to the number of shares that such Members who are not Atlanta Dealers
(or owned directly or indirectly thereby) would otherwise have been entitled to
receive pursuant to Section 8.02 or 8.04); provided, however, that solely for
purposes of Section 8.02, the Capital Account of each Member that received
distributions pursuant to Section 6.01(c)(iv)(A) shall be increased
proportionately by the product, if any, of (x) and (y), above, determined with
respect to such Member (or the direct or indirect owners thereof).
(C) In the event that a transaction described in Section 8.01, 8.02 or
8.04 does not occur, then, notwithstanding any provision in this Agreement to
the contrary and in recognition of the reduction in the Atlanta Dealers'
respective Capital Accounts as a result of distributions pursuant to Section
6.01(c)(iv)(A), the Members acknowledge and agree that the amount otherwise
directly or indirectly distributable to the Atlanta Dealers pursuant to Section
6.01(d) shall be reduced by the product described in clause (1) of Section
6.01(c)(iv)(B) and the allocations pursuant to Article V shall be adjusted as
determined by the Board of Directors to be appropriate to effectuate such
result.
(d) Notwithstanding any other provision of this Agreement (other than
Sections 6.01(c)(iv)(C), 8.02 and 8.04), all amounts distributed in connection
with the sale or other disposition of all or substantially all the assets of the
Company or the dissolution, winding-up or liquidation of the Company shall be
distributed to Members in accordance with their respective Capital Account
balances, as adjusted for all Company operations up to and including the date of
such distribution, pursuant to Section 12.02(b).
33
SECTION 6.02. Repayment of Funds. Except as otherwise may be provided
by law, Section 6.01(a)(ii), Section 6.01(c)(ii) or 6.03, no Member shall be
required to repay to the Company any funds distributed to it pursuant to this
Agreement.
SECTION 6.03. Withholding. Notwithstanding any other provision of this
Agreement, the Company is authorized to take any and all actions that are
determined by it to be necessary or appropriate to insure that the Company
satisfies any and all withholding and Tax payment obligations under the Code or
other applicable law. Without limiting the generality of the foregoing, the
Company may withhold any amount that it determines is required to be withheld
from any amount distributable to any Member pursuant to this Article VI;
provided, however, that such amount shall be deemed to have been distributed to
such Member for all purposes of this Agreement. In the event that the Company
withholds or pays Tax in respect of any Member for any period in excess of the
amount of cash otherwise distributable to such Member for such period pursuant
to this Agreement (or there is a determination by any taxing authority that the
Company should have withheld or paid any Tax for any period in excess of the
Tax, if any, that it actually withheld or paid for such period) and the Company
pays the amount of such additional Tax, such excess amount (or such additional
amount) shall be treated as a recourse loan to such Member that shall bear
interest at the Prime Rate plus 5% (but in no event more than the highest lawful
rate).
ARTICLE VII
Transfers of Interests; Tag-Along/
Drag-Along Rights; Purchase of Interests
Upon Termination of Employment;
Options to Purchase Interests
-----------------------------
SECTION 7.01. Transfers of Interests in the Company. (a) Generally.
(i) No Member may Transfer all or any portion of its Interest (or any beneficial
interest therein) unless (A) such Transfer is in accordance with this Article
VII or Article VIII, (B) the Transferor gives the Company not less than 10
Business Days prior written notice of such Transfer (unless greater prior notice
is required by this Agreement, in which case the Transferor shall give such
greater notice), (C) all required consents of motor vehicle manufacturers, as
shall be determined by the Board of Directors, have been obtained and (D) except
for a Transfer in accordance with the first sentence of Section 7.01(c)(iv)
34
or Article VIII, the Transferee executes and delivers a counterpart of the
signature page of this Agreement (or other appropriate assumption agreement)
and any other agreements, documents or instruments as the Company may
reasonably require. The parties will cooperate to obtain any motor vehicle
manufacturer consents that may be required for any Transfer pursuant to this
Article VII. Any Transfer made in violation of this Section 7.01(a) shall be
null and void and shall be subject to paragraph (d) of this Section 7.01.
(ii) Whenever a Transfer or purchase (other than any Transfer or
purchase pursuant to Section 7.01(c)(i) or (iv)) is to be consummated by any
person on a specified date under this Article VII, such Transfer or purchase
shall take place at 10:00 a.m. on such date (or, if such date is not a Business
Day, the next following Business Day) at the New York offices of Cravath, Swaine
& Xxxxx or at such other time, date and place as the Company and the parties to
the transaction may agree. The consideration for such Transfer or purchase shall
be paid by delivery to the Transferor of a certified or bank check made payable
to such Transferor or by wire transfer in immediately available funds to a bank
account designated by such Transferor, as the parties to such transaction may
agree, against due execution and delivery of the agreements, documents and
instruments specified in Section 7.01(a)(i)(C) and of such other agreements,
documents and instruments as the Board of Directors or the parties to such
transaction may reasonably require.
(iii) Upon compliance with the requirements of Section 7.01(a), each
Transferee of an Interest shall have all of the economic rights, and shall be
subject to the restrictions and obligations, of its Transferor hereunder to the
extent specified in the agreements or instruments between the parties, and shall
succeed to the portion of the Transferor's Percentage Interest (including any
adjustment thereto pursuant to Section 4.04(a) effected after the date of such
Transfer), Capital Account and the portion of such Transferor's Minimum Gain
attributable thereto. Such Transferee shall be admitted as a Member only with
the prior written consent of the Board of Directors in its sole discretion;
provided, however, that any Transferee pursuant to Sections 7.01(b), 7.01(c)(i),
7.01(c)(iii), 7.02 or 7.03 shall, upon request to the Company of the applicable
Transferor or Transferee, be admitted as Member without the prior consent of any
person. If a Transferor has Transferred its entire Interest in the Company
pursuant to this Article VII and the Transferee is admitted as a Member,
35
immediately following such admission, such Transferor shall
cease to be a Member.
(b) Transfers by AAH. Subject to Section 7.01(a) and, with respect to
a Transfer to any person other than a Permitted Transferee of AAH, Section 7.02,
AAH (and its Permitted Transferees) shall have the right to Transfer at any time
all or any portion of its Interest (including any beneficial interest therein)
to any person without the prior consent of any person.
(c) Transfers by Other Members. (i) Subject to Sections 7.01(a) and
7.01(e), each Member shall have the right to Transfer at any time all or any
portion of its Interest (including any beneficial interest therein) to any
Permitted Transferee of such Member without the prior consent of any person.
(ii) Prior to the fifth anniversary of the date of this Agreement, no
Member other than AAH (or AAH's Permitted Transferees) shall have the right to
Transfer all or any portion of its Interest (including any beneficial interest
therein) to any person except (A) in accordance with Sections 7.01(a) and
7.01(e) and pursuant to Section 7.01(c)(i) or (iv), Section 7.02, Section 7.03,
Section 7.04 or Article VIII or (B) with the prior written consent of the Board
of Directors in its sole discretion.
(iii) On and after the fifth anniversary of the date of this
Agreement, each Member other than AAH (or AAH's Permitted Transferees) shall
have the right to Transfer at any time all or any portion of its Interest
(including any beneficial interest therein) in accordance with Section 7.01(a),
subject to this Section 7.01(c)(iii) and Section 7.01(e). If such a Member
proposes to Transfer all (or any portion) of its Interest other than pursuant to
Section 7.01(c)(i) or (iv), Section 7.02, Section 7.03, Section 7.04 or Article
VIII and such Member has identified a Third Party Purchaser for such Interest
(or such portion), such Member shall deliver to AAH a notice setting forth in
reasonable detail:
(A) the name and business background of the Third Party
Purchaser;
(B) the amount and form of the prospective purchase price of such
Interest (or such portion);
(C) all other material terms and conditions of the proposed
Transfer;
36
(D) such Member's offer, irrevocable by its terms for 15 days
following the date such notice is delivered (the "Offer Date"), to
sell to AAH such Interest (or such portion) for a purchase price, in
cash, equal to the price to be paid by such Third Party Purchaser and
on such other terms and conditions not less favorable to AAH than
those offered by such Third Party Purchaser; provided that if the
prospective purchase price is to be paid in non-cash consideration,
the Board of Directors in good faith shall determine the fair market
value of such non-cash consideration in accordance with Section
7.06(c) and AAH shall be offered the right to purchase such Interest
for a cash purchase price equal to such fair market value; and
(E) closing arrangements and a closing date (the "Scheduled
Closing Date") not less than 30 nor more than 60 days following the
Offer Date, for any purchase that may be effected by AAH pursuant to
this Section 7.01(c)(iii); provided that such time period may be
extended to the extent necessary to resolve any dispute regarding the
fair market value of non-cash consideration in accordance with Section
7.06(c).
Acceptance of an offer pursuant to this Section 7.01(c)(iii) shall be
evidenced by a notice signed by AAH and delivered to the Transferring Member
prior to the expiration of the subject offer to AAH. Upon delivery, such
acceptance shall constitute a binding commitment to purchase the Interest (or
such portion); provided, however, that AAH may assign its rights under this
Section 7.01(c)(iii) to any person. In the event that no acceptance is given
or acceptance is given but AAH fails (without fault of the Member proposing to
Transfer all (or any portion) of its Interest) to consummate the purchase of
such Interest (or such portion) by the Scheduled Closing Date or, solely if
necessary to obtain any consent of motor vehicle manufacturers to such
purchase, by the date that is 120 days following the Scheduled Closing Date,
then, without prejudice to such Member's rights against AAH, such Interest (or
such portion) may be sold to (but only to) the identified Third Party
Purchaser within 45 days from the expiration of such offer by such Member to
AAH (or the failure of AAH to consummate the purchase of such Interest);
provided, however, that such sale shall be upon terms and conditions not more
favorable to such Third Party Purchaser than those set forth in such Member's
offer to AAH and provided further that such sale may be postponed for up to an
additional 120 days solely if necessary to obtain any consent of motor vehicle
manufacturers to the sale. If at the end of such period, such Member shall not
have completed the sale of such Interest (or such portion),
37
it shall no longer be permitted to sell such Interest without again fully
complying with the provisions of this Section 7.01(c)(iii).
(iv) In addition, with the written consent of the Board of Directors,
which shall not be unreasonably withheld, and subject to Sections 7.01(a) and
7.01(e), each Member may pledge all or any part of such Member's Interest as
security for the payment or performance of recourse debts or recourse
obligations of such Member and to assign all or any part of such Member's rights
to share in the profits and losses of the Company, to receive distributions and
to receive allocations of income, gain, loss, deduction, credit or similar items
to which the Member is entitled (collectively, "Economic Rights"). A secured
party foreclosing on its security interest in any Interests pledged to it in
compliance with this Section 7.01(c)(iv) shall be treated as an assignee of all
of the Economic Rights of the pledging Member, without the need for approval of
such assignment by the Board of Directors, and the pledging Member shall cease
to have the right to exercise any rights as a Member upon the effectiveness of
such transfer in foreclosure; provided, however, that the secured party (A)
shall execute and deliver a counterpart of the signature page of this Agreement
(or other appropriate assumption agreement) and any other agreements, documents
or instruments as the Company may reasonably request and (B) shall not become a
Member (or have any of the rights of Members other than Economic Rights) unless
and until such secured party is admitted as a Member with the consent of the
Board of Directors pursuant to Section 7.01(a); and provided further, however,
that any such foreclosure shall be subject to Section 7.01(e).
(d) Involuntary and Impermissible Transfers. If an Involuntary
Transfer or a Transfer in violation of this Agreement shall occur with respect
to any Member other than AAH and such Transfer has not been cured within 30 days
after notice has been given by AAH to the Transferor or the Transferee, AAH
shall have the right, exercisable by delivery of written notice to such
Transferee within 90 days following the earlier to occur of (x) AAH's receipt of
notice of such event from the Transferor or (y) AAH's obtaining actual knowledge
of such event from any other source, to purchase all of the Interest acquired
directly or indirectly by such Transferee at a purchase price equal to the Fair
Market Value thereof, determined in good faith by the Board of Directors as of
the date of such event. The closing date of any purchase described in this
Section 7.01(d) shall be on the 30th day after a determination of the Fair
Market Value of the Interest to be
38
purchased is made, provided that such purchase may be postponed by AAH for up
to an additional 120 days solely if necessary to obtain any consent of a motor
vehicle manufacturer to the purchase.
(e) Publicly Traded Partnership. Notwithstanding anything in this
Agreement, in order to avoid the treatment of the Company as a "publicly traded
partnership" within the meaning of Section 7704 of the Code, (i) unless waived
in writing by the Tax Matters Partner in its sole discretion, no Transfer of all
or any part of a Member's Interest may be made if such Transfer would result in
the Company having more than 100 members (as determined in accordance with
Treasury Regulation Section 1.7704-1(h)) and (ii) no Transfer, or attempted
Transfer, of all or any part of a Member's Interest may be made through the
facilities of any "established securities market" or any "secondary market" (as
such terms are defined for purposes of Section 7704(b) of the Code).
SECTION 7.02. Tag-Along Rights. Subject to Sections 7.01(a), if AAH
desires to Transfer all (or any portion) of its Interest to a prospective
Transferee (or Transferees) other than to a Permitted Transferee of AAH or
pursuant to Section 8.01, AAH shall, as a condition to such Transfer, (i)
provide a notice to all other Members in writing (a "Tag-Along Notice") of the
material terms of the proposed Transfer at least 30 days prior to such Transfer
and (ii) permit all other Members (or cause all other Members to be permitted)
to sell (either to the prospective Transferee of AAH's Interest or to another
financially reputable Transferee reasonably acceptable to such other Members)
the same portion of their respective Interests at the same relative price
(taking into consideration the size and type of Interest of each such other
Member, but without applying any discount due to any Member's lack of control
with respect to the Company) in the same form of consideration and otherwise on
substantially similar terms as the sale by AAH, which sale shall take place on
the date AAH's Interest (or such portion) is Transferred to such Transferee (or
Transferees). Each Member shall have 15 days from the date of receipt of a
Tag-Along Notice to exercise its right to sell pursuant to clause (ii) above by
delivering written notice to AAH of its intent to exercise such right. The right
of the Members to sell pursuant to the above provisions shall terminate if not
exercised within such 15-day period. Each Member electing to exercise its right
to sell pursuant to the above provisions shall share, on a pro rata basis (based
on the relationship the sale price for the Interests being sold by such Member
bears to the aggregate sale price for all Interests being sold to
39
such Transferee), the legal, investment banking and other expenses of AAH
incurred in connection with such Transfer, other than any expenses payable to
AAH or to any Affiliate of AAH or the Company.
SECTION 7.03. Drag-Along Rights. If at any time AAH desires to
Transfer all (or any portion) of its Interest in accordance with Section 7.01(a)
to any Third Party Purchaser (or Third Party Purchasers), AAH shall have the
right to require that all other Members Transfer the same portion of their
respective Interests to such Third Party Purchaser (or Third Party Purchasers)
at the same relative price (taking into consideration the size and type of
Interest of each such other Member, but without applying any discount due to any
Member's lack of control with respect to the Company) in the same form of
consideration and otherwise on substantially similar terms as the sale by AAH.
AAH shall provide a notice to the Company in writing (the "Drag- Along Notice")
of such sale at least 30 days prior to the date of closing thereof, and the
Drag-Along Notice shall identify such Third Party Purchaser (or Third Party
Purchasers), all material terms of the sale and the date of closing. The Company
shall promptly notify each Member (other than AAH) of its receipt of the
Drag-Along Notice. Upon the closing of any sale by AAH of all (or such portion)
of its Interest as described in a Drag-Along Notice, such Third Party Purchaser
(or Third Party Purchasers) shall pay to each Member the consideration payable
to such Member in connection with such sale of all (or such portion) of the
Interests of such Member to such Third Party Purchaser (or Third Party
Purchasers), net of such Member's proportionate share (based on the relationship
the sale price for the Interests being sold by such member bears to the
aggregate sale price for all Interests being sold to such Transferee) of the
legal, investment banking and other expenses of AAH incurred in connection with
such sale, other than any expenses payable to AAH or to any Affiliate of AAH or
the Company, and the Interests (or such portion) of all such Members shall be
deemed Transferred to such Third Party Purchaser (or Third Party Purchasers).
SECTION 7.04. Purchase of Interests Upon Termination of Employment.
(a) Generally. (i) Upon the termination of employment with the Company or any of
its subsidiaries of any Management Employee for any reason, the Company shall
have an option to purchase all (or any portion) of the Interest held directly or
indirectly by (x) such Management Employee (or, if such Management Employee's
employment was terminated by death, such Management Employee's estate) and (y)
each Permitted Transferee of such Management Employee (other than a
40
Permitted Transferee that is a Management Employee or an entity wholly owned
by a Management Employee, provided such Management Employee is an executive
officer of the Company or a Platform Group) (all such Interests being referred
to as the "Callable Interests"), at a purchase price equal to the Fair Market
Value of such Interest (or such portion) as of the date of such termination of
employment (or, in the event such purchase is postponed pursuant to Section
7.04(b)(ii), as of the date of the purchase by the Company of such Interest
(or such portion)), as determined by the Board of Directors in its good faith
judgment in accordance with Section 7.06, increased by the sum of all Capital
Contributions, and decreased by the sum of all distributions, made in respect
of such Interest (or such portion) after such termination date through the
date on which the notice required by the following sentence is given by the
Company. The Company shall have three months from such termination date (such
three-month period being referred to as the "Option Period") during which to
give notice in writing to such Management Employee (or such Management
Employee's estate) of its election to exercise or not to exercise such option
(an "Exercise Notice"). Except as otherwise provided in Section 7.04(b), such
Management Employee shall have no rights of any kind as a Member under this
Agreement with respect to the Callable Interests after an Exercise Notice is
given, including rights to make Capital Contributions or to receive
distributions. Subject to Section 7.04(b), the completion of a Transfer
pursuant to this Section 7.04(a)(i) shall take place on the 20th Business Day
following the date of receipt by the Management Employee (or his or her estate
and, if applicable, his or her Permitted Transferees) of the notice required
to be given pursuant to this Section 7.04(a)(i); provided that such period may
be postponed by the Company to the extent necessary to resolve a dispute
regarding the Fair Market Value of a Callable Interest (or portion thereof)
pursuant to Section 7.06(b).
(ii) Subject to Section 7.01(a) and any restriction contained in any
other agreement to which the Company or its Affiliates are party, the Company
may assign its rights under this Section 7.04(a) to any person.
(iii) Upon any Transfer of any Interest pursuant to this Section 7.04,
the Percentage Interests of the Members will be adjusted as determined by the
Board of Directors so as to reflect such Transfer (including any adjustments to
the Members' Percentage Interests necessary to reflect any adjustment to the
Transferor's Percentage Interest required to be effected pursuant to Section
4.04(a) with respect to any Applicable Period (as defined in Schedule III)
ending on
41
a date after the date of such Transfer), and Schedule II hereof will be
amended to reflect the Percentage Interest of the Members, after giving effect
to such adjustment.
(iv) This Section 7.04(a)(iv) applies to each Management Employee who
(A) receives an Exercise Notice from the Company pursuant to Section 7.04(a)(i)
above in connection with his termination by the Company "for cause" or his
voluntary resignation from the Company, and (B) at the time of the termination
of his employment, is a Member of the Company or is the beneficial owner of
interests in a Member of the Company and is not bound by a non-competition
restriction contained in a consulting or employment agreement between such
Management Employee and the Company or any of its subsidiaries (each, a
"Terminated Member"); provided, however, that this Section 7.04(a)(iv) shall not
apply to any Management Employee that is an Affiliate of AAH (including for this
purpose any member of the Board of Directors designated by AAH). With respect to
any Terminated Member whose Callable Interest the Company elects to purchase
pursuant to Section 7.04(a)(i), such Terminated Member shall agree in writing
that (i) he shall not compete, directly or indirectly (including as an employee,
proprietor, owner, partner, shareholder, member, joint venturer or agent of, or
as a consultant to, any person or entity which competes), with the retail motor
vehicle business of the Company or any of its subsidiaries within 50 miles of
any motor vehicle dealership owned by the Company or any of its subsidiaries
where such Terminated Member worked during the year prior to the date of the
termination of his employment and (ii) he shall not violate Section 10.06(c)
(with respect to each Terminated Member, a "Non-Compete Covenant"). The
Terminated Member shall provide such written agreement in a form reasonably
satisfactory to the Company on or prior to the date on which the Company
completes its purchase of the Terminated Member's Callable Interest pursuant to
Section 7.04(a) or 7.04(b); provided that if such Terminated Member does not
provide such written agreement on or prior to such date, the Company's purchase
of the Terminated Member's Callable Interest still shall be deemed completed on
such date but the Company shall not be obligated to pay the purchase price for
such Callable Interest until the Terminated Member delivers such written
agreement. A Terminated Member's Non- Compete Covenant shall become effective on
the date the Exercise Notice is delivered to the Terminated Employee pursuant to
Section 7.04(a)(i) and shall terminate on the first anniversary of such date.
(b) Certain Restrictions on Payments. (i) Notwithstanding any other
provision of this
42
Section 7.04, the Company shall not be permitted to complete a purchase of any
Callable Interest (or portion) from any person if and to the extent (A) such
purchase would result in a violation of, or a default or an event of default
under, any bona fide term or provision imposed on the Company by another party
in any credit agreement, indenture, guaranty, security agreement or other
agreement governing indebtedness of the Company or any of its subsidiaries
from time to time, in each case as the same may be amended, modified or
supplemented from time to time (each, a "Financing Document"), and
notwithstanding its reasonable efforts the Company has not been able to have
such term or provision amended or waived, (B) a default has occurred under any
Financing Document and is continuing, (C) such purchase would, in the
reasonable opinion of the Board of Directors, be imprudent in view of the
financial condition (present or projected) of the Company and its
subsidiaries, taken as a whole, or the anticipated impact of such purchase on
the Company's or any of its subsidiaries' ability to meet their respective
obligations under any Financing Document, (D) any required consent of a motor
vehicle manufacturer, as shall be determined by the Board of Directors from
time to time, has not been obtained or (E) the Company is not permitted to
complete such purchase under applicable law.
(ii) If and to the extent the completion of a purchase otherwise
permitted under Section 7.04(a), and for which an exercise notice has been
properly given by the Company, is not permitted under Section 7.04(b)(i), the
Company shall provide written notice thereof to such Management Employee (or his
or her estate and, if applicable, his or her Permitted Transferees), and such
purchase will be postponed and will take place without the application of
further conditions or impediments (other than as set forth in Section 7.04(a) or
in this Section 7.04(b)) at the first opportunity thereafter when the Company
has funds legally available therefor and when such purchase is not prohibited by
Section 7.04(b)(i).
(iii) If the Company's purchase of a Management Employee's Callable
Interest is postponed pursuant to Section 7.04(b)(ii), then such Management
Employee's rights as a Member shall be automatically reinstated for the duration
of such postponement except for (x) any voting rights (except pursuant to the
second proviso in Section 13.02) under this Agreement, including pursuant to
Section 3.01, (y) any rights to make additional Capital Contributions pursuant
to Section 4.02 and (z) any rights to Transfer all or any portion of its
Interest pursuant to Section 7.01 except for a Transfer (I) made with the prior
written consent of the Board of Directors or (II) in
43
accordance with Article VIII. Notwithstanding anything herein to the contrary,
under no circumstances shall such Management Employee be entitled to receive
any interest on the purchase price as a result of a postponement pursuant to
Section 7.04(b)(ii).
(c) "Look-Back" Adjustment. (i) The Company shall pay to a Management
Employee whose employment with the Company or any of its subsidiaries is
terminated on account of the Management Employee's death or is terminated by the
Company other than "for cause" the additional consideration described in Section
7.04(c)(ii) below in the event that:
(A) the Company exercises its option under Section 7.04(a)(i) in
respect of all or a portion of such Management Employee's
Callable Interest (the "Acquired Interest");
(B) within twelve months following the date on which the Company pays
to such Management Employee or his estate in cash the purchase
price for the Acquired Interest in accordance with Section
7.04(a), (1) the Company consummates a merger or other business
combination with an unaffiliated third party or completes the
sale to such a third party of all or substantially all of its
assets or (2) the Company consummates the IPO; and
(C) the amount such Management Employee would have received as a
result of such merger, business combination, sale or IPO with
respect to the Acquired Interest had such Acquired Interest not
been purchased by the Company (the "Sale Value"), is greater than
the sum of (x) the amount such Management - Employee received
pursuant to Section 7.04(a)(i) for such Acquired Interest, and
(y) an amount calculated in the - same manner as interest on such
amount at the Prime Rate (such sum, the "Look-Back ---------
Threshold").
(ii) If all the conditions set forth in Section 7.01(c)(i) are
satisfied with respect to a Management Employee, then such Management Employee
shall be entitled to receive an amount equal to the excess of the Sale Value of
such Acquired Interest over the Look-Back Threshold with respect to such
Acquired Interest. Such additional consideration with respect to the Acquired
Interest shall be paid to the Management Employee no later
44
than 20 Business Days following the date on which such merger, business
combination, sale or IPO is consummated.
(iii) For purposes of this Section 7.04, "cause" shall mean any of the
following: (i) the Management Employee is convicted of a felony; (ii) the
continued failure by the Management Employee to substantially perform his duties
under his employment arrangement or agreement relating to the Company or its
subsidiaries (other than any such failure due to total physical or mental
disability as determined by an independent physician reasonably satisfactory to
the Company) after the Management Employee has received notice from the Company
describing his failure to substantially perform his duties in sufficient detail
to give the Management Employee the opportunity to cure such failure and such
Management Employee thereafter either (x) does not promptly take reasonable
steps to cure such failure or (y) does not cure such failure within ninety (90)
days; or (iii) the Management Employee is guilty of gross neglect or gross
misconduct in carrying out his duties under his employment arrangement or
agreement with the Company or its subsidiaries and, after the Management
Employee has received notice from the Company describing his gross neglect or
gross misconduct in sufficient detail to give the Management Employee the
opportunity to cure such deficiencies, such Management Employee thereafter
either (x) does not promptly take reasonable steps to cure such deficiencies or
(y) does not cure such deficiencies within ninety (90) days.
SECTION 7.05. Options to Purchase Interests. The Company and each
Member hereby acknowledges and agrees that those persons listed on Schedule IV
have the right to purchase Interests in the Company on the terms set forth on
Schedule IV. At the time of any such purchase of Interests, the Board of
Directors shall amend Schedule II hereof to reflect the Percentage Interests of
the Members, as determined after giving effect to such purchase.
SECTION 7.06. Fair Market Value. (a) In determining the "Fair Market
Value" of an Interest (or any portion thereof) pursuant to Section 7.01(d),
Section 7.04 or Section 7.07, the Board of Directors shall give due
consideration to such factors as it deems appropriate, including the earnings
and certain other financial and operating information of the Company and its
subsidiaries in recent periods (including its margins), its potential value and
that of its subsidiaries as a whole, the tax basis of its assets, its future
prospects (including growth prospects) and business strength and that of its
subsidiaries and the industries in which they compete, its history and
management and that of its subsidiaries, the
45
general condition of the securities markets and the fair market value of
securities of privately-owned companies engaged in businesses similar to the
Company, but without applying any discount due to any Member's minority
position or lack of control with respect to the Company or with respect to the
lack of liquidity of, or absence of a market for, Interests in the Company.
Subject to Section 7.06(b), the Fair Market Value as determined in good faith
by the Board of Directors shall be binding and conclusive upon all parties
hereto.
(b) Callable Interests. At any time when this Agreement requires the
Board of Directors to determine the Fair Market Value of a Callable Interest (or
portion thereof) pursuant to Section 7.04(a) or of a Deceased Member's Interest
(or portion thereof) pursuant to Section 7.07, the Board of Directors shall
promptly make such determination and notify the applicable Member or Members
thereof. If the Interest (or portion thereof) being valued by the Board of
Directors represents a Percentage Interest of 2% or greater or is beneficially
owned by one of the individuals listed on Schedule V hereto or by the estate of
one of the individuals listed on Schedule V hereto, the applicable Member may in
good faith disagree with a valuation proposed by the Board of Directors, in
which case the valuation in question shall be determined in accordance with the
procedure provided in Section 7.06(d).
(c) Non-Cash Consideration. If the Board of Directors is required to
determine the fair market value of non-cash consideration pursuant to Section
7.01(c)(iii)(D), the Board of Directors shall make such determination in good
faith, after consultation with an independent nationally recognized investment
banking, accounting or valuation firm selected by the Board of Directors, and
promptly notify the applicable Member thereof. If the Interest being offered to
AAH pursuant to section 7.01(c)(iii) represents a Percentage Interest of 2% or
greater or is beneficially owned by one of the individuals listed on Schedule V
hereto or by the estate of one of the individuals listed on Schedule V hereto,
the applicable Member offering the Interest may in good faith disagree with the
valuation of such non-cash consideration by the Board of Directors, in which
case the valuation in question shall be determined in accordance with the
procedure provided in Section 7.06(d). In all other cases, the valuation by the
Board of Directors shall be conclusive and binding on all the parties.
(d) Dispute Resolution. If the Board of Directors and the disagreeing
Member are unable to reach agreement within thirty days regarding a disputed
valuation
46
pursuant to Sections 7.06(b) or (c), such valuation shall be promptly
determined by a nationally recognized investment banking, accounting or
valuation firm (other than Xxxxxxxx Xxxxx Xxxxxx & Xxxxx Financial Advisors
Inc. or any successor thereto) selected by the Company with the consent of the
disagreeing Member. If the Company and the disagreeing Member fail to reach
agreement on such a firm within ten days, then within ten days of such failure
the Company shall select one such firm and the disagreeing Member shall select
another such firm, and promptly thereafter the two firms so selected shall
jointly designate an independent nationally recognized investment banking,
accounting or valuation firm, and such third firm shall determine the
valuation in question. If either the Company or the disagreeing Member fails
to select its independent nationally recognized investment banking, accounting
or valuation firm within such ten day period in accordance with the
immediately preceding sentence, such party shall be deemed to have agreed that
the firm selected within such ten day period by the other party shall
determine the valuation in question. The determination of the investment
banking, accounting or valuation firm selected pursuant to this Section
7.06(d) to determine the valuation in question shall be conclusive and binding
on all parties. The fees and expenses of the firm or firms performing a
valuation pursuant to the foregoing procedures shall be borne by the Company
if the final valuation is higher than the valuation by the Board of Directors
by more than 10% and otherwise shall be borne by the disagreeing Member or
Members.
SECTION 7.07. Estate Taxes. (a) In the event that:
(i) an executive officer of the Company or a Platform Group dies
while such individual directly or indirectly owns an Interest (such
individual, a "Deceased Member");
(ii) following the death of such Deceased Member, the Company
does not offer to purchase either (A) the Deceased Member's entire
Interest, for a cash purchase price equal to at least the Fair Market
Value of such Interest, or (B) a portion of the Deceased Member's
Interest having a Fair Market Value at least equal to the aggregate
federal and state estate taxes payable by the Deceased Member's estate
in respect of such Interest (the "Estate Taxes"), for a cash purchase
price equal to at least such Fair Market Value;
then the Company shall offer to loan to the Deceased Member's estate, on the
terms set forth in Section 7.07(b)
47
(an "Estate Tax Loan"), an amount equal to the lesser of (x) the Fair Market
Value of the Deceased Member's Interest and (y) the amount of the Deceased
Member's Estate Taxes. The Fair Market Value of a Deceased Member's Interest
or a portion thereof shall be measured for purposes of this Section 7.07 as of
the date of death of the Deceased Member.
(b) An Estate Tax Loan (i) shall bear interest at a per annum rate
equal to the higher of the Prime Rate or the Company's then current cost of
borrowed funds (as reasonably determined by the Board of Directors), with such
interest payable on the last day of each calendar quarter, (ii) shall be payable
in full (together with all accrued and unpaid interest thereon) on the later of
(A) the second anniversary of the date on which the Estate Tax Loan is made by
the Company and (B) the sixth anniversary of the date of this Agreement, and
(iii) shall be secured by a pledge of the Deceased Member's entire Interest. As
a condition precedent to the Company's obligation to make an Estate Tax Loan,
the Deceased Member's estate shall execute (x) a loan agreement and related note
reflecting the terms specified above in a form requested by the Company and
reasonably satisfactory to the Deceased Member's estate, (y) all security
documents requested by the Company in order to create the Company's security
interest in the Deceased Member's Interest and to perfect such security interest
and (z) such other agreements, documents and instruments reasonably requested by
the Company in connection with the Estate Tax Loan.
ARTICLE VIII
Initial Public Offering
-----------------------
SECTION 8.01. AAH's Right to Cause an IPO. If at any time AAH desires
to cause (A) a Transfer of all or a substantial portion of (x) the assets of the
Company or (y) the Members' Interests in the Company to a newly organized stock
corporation or other business entity ("Newco"), (B) a merger or consolidation of
the Company into or with a Newco as provided under ss. 18-209 of the Act or
otherwise, (C) the conversion of the Company into a corporation or other type of
entity as provided under ss. 18-216 of the Act or otherwise or (D) another
restructuring of all or substantially all of the assets of or Members' Interests
in the Company into a Newco, in any case in anticipation of an initial public
offering of equity securities registered under the Securities Act of a Newco
comprising all or any part of the motor vehicle dealerships and related
businesses owned directly or indirectly by the
48
Company (an "IPO"), each Member shall take such steps to effect such transfer,
merger, consolidation or other restructuring as may be requested by AAH,
including Transferring or tendering such Member's Interests to Newco in
exchange or consideration for shares of capital stock or other equity
interests of Newco, in an amount to be determined in accordance with the
formula set forth in Section 8.02, and entering into a Shareholders Agreement
in the form attached hereto as Exhibit A (the "Shareholders Agreement").
Except to the extent provided in the Shareholders Agreement, each Member shall
be entitled as a holder of shares of capital stock or other equity interests
in Newco to only those rights to which a common stockholder of a corporation
is entitled under the laws of the jurisdiction in which Newco is organized.
Any conversion of the Company into a Newco or other transaction in
anticipation of an IPO shall take legal effect as soon as practicable
following AAH's delivery of notice to the other Members of its intention to
exercise its rights pursuant to this Section 8.01. AAH and the Company shall
endeavor to cause the IPO and any transaction described in this Section 8.01
to occur reasonably contemporaneously. Because certain components of the
formula set forth in Section 8.02 may not be determinable at the time of the
conversion of the Company into a Newco, the contemporaneous issuance of shares
of Newco capital stock or other equity interests to Members in exchange for
their Interests shall not be a condition precedent to any such conversion.
Upon consummation of the IPO contemplated above, this Agreement shall
automatically terminate and be of no further force or effect; provided that
those provisions of this Agreement necessary to administer the Company's
outstanding accounting and tax matters (including Section 6.01(c)) with
respect to periods prior to effectiveness of the IPO shall survive such
termination and shall remain in effect following effectiveness of the IPO
solely for such purpose.
SECTION 8.02. Exchange of Interests. (a) Subject to Section
6.01(c)(iv), if AAH exercises its rights pursuant to Section 8.01, each Member
shall receive, in exchange for such Member's Interests, that number of shares of
capital stock (or other equity interests) of Newco equal to:
(x) the sum of:
(A) 33 1/3% of the amount of such Member's
Capital Account as of the time of the
conversion of the Company into a Newco; and
49
(B) the product of (I) such Member's IPO Value
Distribution Interest at the time of the conversion
of the Company into a Newco and (II) the difference
between (i) the product of the per share price of
the Newco common stock in the IPO and the number of
shares of Newco outstanding immediately prior to
the IPO and (ii) 331/3% of the aggregate amount of
all Members' Capital Accounts as of the time of the
conversion of the Company into a Newco;
divided by:
(y) the per share price of the Newco common stock in the IPO.
(b) Notwithstanding the foregoing, the Board of Directors may replace
the shares of capital stock (or other equity interests) of Newco that the
Managers would otherwise be entitled to receive with respect to their Carried
Interests under the formula set forth in Section 8.02(a) with an alternative
form of equity interest in, or incentive compensation payable by, Newco that the
Board of Directors determines is desirable under the circumstances in order to
provide appropriate incentives to the Managers after the IPO. In such event, the
formula set forth in Section 8.02(a) will be applied without regard to the
Carried Interests of the Managers (and any Capital Account balances associated
therewith). Any change in the consideration received by the Managers for the
Carried Interests pursuant to this Section 8.02(b) shall have the same impact on
the Dealer Members as it has on AAH, except for such differences as are
necessary to reflect, pro rata, the differences in such parties' Capital
Accounts and Percentage Interests.
(c) Newco shall issue shares of capital stock (or other equity
interests) of Newco in accordance with this Section 8.02 as soon as practical
after all components of the formula set forth above are determinable by the
Board of Directors. Subject to Section 8.02(b), each Member shall receive the
same form of equity interest of Newco.
SECTION 8.03. Shareholders Agreement. Immediately prior to the
consummation of the IPO, the parties to this Agreement shall cause Newco to
execute and deliver the Shareholders Agreement.
SECTION 8.04. Other Conversion to a Newco. If at any time AAH desires
to convert the Company into a Newco in
50
contemplation of a possible merger, consolidation, reorganization or other
business combination (a "Merger Conversion"), the terms and provisions of
Sections 8.01 and 8.02 shall apply to such Merger Conversion with such changes
as shall be necessary to reflect the change from an IPO to a Merger
Conversion.
SECTION 8.05. Power of Attorney and Proxy. Upon its admission as a
Member, each Member other than AAH hereby makes, constitutes and appoints AAH,
with full power of substitution and resubstitution, its true and lawful
attorney, for it and in its name, place and stead and for its use and benefit,
to act as its proxy in respect of (A) any vote or approval of Members required
to give effect to this Article VIII, including any vote or approval required
under ss. 18-209 of the Act, (B) the execution and delivery, on behalf of such
Member, of the signature page of the Shareholders' Agreement (or other
appropriate assumption agreement relating to the subject matter thereof) and (C)
the execution and delivery of any other document, or the granting of any other
approval, reasonably required in connection with an IPO or Merger Conversion and
not inconsistent with Sections 8.01, 8.02, 8.03 and 8.04. The proxy granted
pursuant to this Section 8.05 is a special proxy coupled with an interest and is
irrevocable until the fifth anniversary of the date hereof.
ARTICLE IX
Certificates, Etc.
------------------
SECTION 9.01. Right to Issue Certificates. If at any time the Board of
Directors determines that it is in the best interests of the Company to issue
certificates attesting to the ownership of Interests by Members, the provisions
of this Article IX shall thereafter apply (and prior to such determination by
the Board of Directors, if any, this Article IX shall have no force or effect).
SECTION 9.02. Form of Certificates. Certificates attesting to the
ownership of Interests shall be in such form as shall be approved by the Board
of Directors and shall state that the Company is a limited liability company
formed under the laws of the State of Delaware, the name of the Member to whom
such certificate is issued and that the certificates represent limited liability
company interests within the meaning of ss. 18-702(c) of the Act. Each such
certificate shall be signed by the President and Chief Executive Officer or the
Chief Operating Officer or the
51
Chief Financial Officer of the Company and by the Secretary or an Assistant
Secretary of the Company.
SECTION 9.03. Register. The transfer register or transfer books and
blank share certificates shall be kept by the Secretary of the Company or by any
transfer agent or registrar designated by the Board of Directors for that
purpose.
SECTION 9.04. Issuance. The certificates of the Company shall be
numbered and registered in the share register or transfer books of the Company
as they are issued.
SECTION 9.05. Transfer. Subject to all provisions hereof relating to
Transfers of Interests, if the Company shall issue certificates in accordance
with the provisions of this Section, Transfers of Interests shall be made on the
register or transfer books of the Company upon surrender of the certificate
therefor, endorsed by the person named in the certificate or by an attorney
lawfully constituted in writing.
SECTION 9.06. Record Holder. The Company shall be entitled to treat
the person in whose name any certificates issued by the Company stand on the
books of the Company as the absolute owner thereof, and shall not be bound to
recognize any equitable or other claim to, or interest in, such Interest on the
part of any other person.
SECTION 9.07. Lost, Destroyed or Mutilated Certificates. The holder of
any certificates issued by the Company shall immediately notify the Company of
any loss, destruction or mutilation of such certificates, and the Board of
Directors may cause a new certificate or certificates to be issued to such
holder, in case of mutilation of the certificate, upon the surrender of the
mutilated certificate or, in the case of loss or destruction of the certificate,
upon satisfactory proof of such loss or destruction and, if the Board of
Directors shall so determine, the granting of an indemnity and/or the deposit of
a bond in such form and in such sum, and with such surety or sureties, as the
Board of Directors may direct.
52
ARTICLE X
Accounting and Tax Matters;
Transactions with Members
-------------------------
53
SECTION 10.01. Fiscal Year. Unless otherwise required by the Code, the
fiscal year of the Company for financial reporting and tax purposes (the "Fiscal
Year") shall end on the last day of December in each year and shall begin on the
first day of January in each year; provided, however, that the first Fiscal Year
of the Company shall be deemed to have commenced on the date the Certificate of
Formation was filed with the Secretary of State and to have ended on the last
day of December in the same calendar year.
SECTION 10.02. Books and Records and Capital Accounts. The Company
shall maintain complete and accurate books and records at the Company's
principal place of business showing the names, addresses and Interests of each
of the Members, all receipts and expenditures, assets and liabilities, profits
and losses, and all other records necessary for recording the Company's business
and affairs, including a record of the Capital Account of each Member. Each
Member and its designees shall have the right, on reasonable notice and during
normal business hours, to inspect on a reasonable basis the books and records of
the Company. The Company shall maintain two sets of books. One set of books
shall be kept on the basis of generally accepted accounting principles and the
other shall be kept on the basis of Federal income tax principles (including ss.
704(b) of the Code).
SECTION 10.03. Bank Accounts. The Company shall maintain one or more
accounts with such bank or banks as the Board of Directors may determine from
time to time. The President and Chief Executive Officer and such other persons
as the Board of Directors shall designate shall be authorized signatories for
such accounts.
SECTION 10.04. (a) Auditors. Xxxxxx Xxxxxxxx LLP shall be appointed as
the Company's initial auditors, and any successors to Xxxxxx Xxxxxxxx LLP shall
be appointed by the Board of Directors; provided, however, that any such
successor shall be an accounting firm of recognized national standing in the
United States of America.
(b) Financial Statements. Each Member shall be entitled to receive,
and the Company shall timely furnish to each Member, (i) quarterly consolidated
and consolidating financial statements and reports of the Company and (ii)
annual audited consolidated and consolidating financial statements of the
Company.
(c) Accounting Methods. Prior to the occurrence of any IPO or Merger
Conversion or any steps preparatory to any IPO or Merger Conversion, the Company
agrees to utilize
54
the same inventory accounting methods for tax purposes as were used by the
respective Platform Groups for tax purposes prior to the Roll-Up Date, except
for such changes as may be required by any change in applicable tax laws or by
any taxing authority in an audit.
SECTION 10.05. Tax Matters. (a) Tax Elections. Except as otherwise
expressly provided herein, the Board of Directors shall make all elections and
determinations required or permitted to be made by the Company for applicable
Tax purposes, including any election under Section 754 of the Code and the
methods of accounting and depreciation to be utilized by the Company for Tax
purposes.
(b) Treatment as a Partnership. The Members agree that the Company
shall be treated as a partnership for purposes of United States Federal, state
and local income and other taxes, and further agree not to take any position or
make any election, in any Tax Return or otherwise, inconsistent therewith except
as may be required in connection with a transaction described in Article VIII.
(c) Tax Returns. The Board of Directors shall cause all required Tax
Returns to be filed with the appropriate office of the Internal Revenue Service
or any other relevant taxing authority, as the case may be. As promptly as
reasonably practicable after the end of each Fiscal Year (but in any event not
more than 90 days after the end of such Fiscal Year), the Board of Directors
shall cause the Company to deliver to each Member a copy of such Member's
Federal income tax Schedule K-1 for such Fiscal Year and such other tax
information as the Tax Matters Partner determines to be appropriate to enable
the Members to prepare and file their respective Tax Returns.
(d) Designation of Tax Matters Partner. AAH shall be the "Tax Matters
Partner" of the Company as defined in ss. 6231(a)(7) of the Code, and shall
manage all administrative and judicial proceedings conducted with respect to the
Company by the Internal Revenue Service or other Taxing authorities. All
expenses incurred by AAH while acting in such capacity shall be paid or
reimbursed by the Company.
SECTION 10.06. Business Transactions of a Member with the Company. (a)
Except to the extent provided in this Agreement, a Member may lend money to,
borrow money from, act as a surety, guarantor or endorser for, guarantee or
assume one or more specific obligations of, provide collateral for, and transact
other business with the Company and, subject to other applicable law, has the
same rights
55
and obligations with respect to any such matter as a person who is not a Member.
(b) Each Member is free to engage directly, or indirectly through any
other person, in any business that is the same or similar to any business
engaged in by the Company, and no Member shall have any duty or obligation to
bring any "corporate opportunity" to the Company; provided that no Member or
controlled Affiliate thereof shall establish or acquire a motor vehicle
dealership within 75 miles of a motor vehicle dealership then owned or operated
by the Company without the approval of the Board of Directors (including at
least two Dealer Directors).
(c) No Member (or if such Member is not a natural person, any natural
person that owns a beneficial interest in such Member) shall, during the time
such Member is a Member and for one (1) year after such Member ceases to be a
Member or such natural person ceases to own a beneficial interest in such
Member, (i) directly or indirectly employ, solicit, entice or encourage to leave
the employ of the Company or any of its subsidiaries, any person who is, or at
any time during the preceding twelve months was, employed by, or otherwise
engaged to perform services for, the Company or any of its subsidiaries or (ii)
otherwise intentionally interfere with the relationship of the Company or any of
its subsidiaries with any person who is employed by or otherwise engaged to
perform services for the Company or any of its subsidiaries; provided, however,
that the restrictions set forth in this Section 10.06(c) shall not apply to AAH,
any Affiliate of AAH or to any Member or natural person who is bound by a
non-solicitation restriction contained in a consulting or employment agreement
between such Member or natural person and the Company or its subsidiaries.
SECTION 10.07. Liability to Third Parties; Capital Account Deficits.
Except as may be otherwise provided by the Act or herein, 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
Member shall be obligated personally for any such debt, obligation or liability
of the Company solely by reason of being a Member. No Member shall be liable to
make up any deficit in its Capital Account.
56
ARTICLE XI
Indemnification of Officers,
Directors and Other Authorized Representatives
----------------------------------------------
SECTION 11.01. Scope of Indemnification. (a) General Rule. To the
fullest extent permitted by law, the Company shall indemnify an indemnified
representative on an after-tax basis against any liability incurred in condition
with any proceeding in which the indemnified representative may be involved as a
party or otherwise by reason of the fact that such person is or was serving in
an indemnified capacity, including liabilities resulting from any actual or
alleged breach or neglect of duty, error, misstatement or misleading statement
or act giving rise to strict or products liability; provided that no indemnity
shall be payable hereunder against any liability incurred by such indemnified
representative by reason of (i) fraud, wilful violation of law, gross negligence
or its material breach of this Agreement or its bad faith or (ii) the receipt by
such indemnified representative from the Company of a personal benefit to which
such indemnified representative is or was not legally entitled.
(b) Partial Payment. If an indemnified representative is entitled to
indemnification in respect of a portion, but not all, of any liabilities to
which such indemnified representative may be subject, the Company shall
indemnify such indemnified representative to the maximum extent legally
permissible for such liabilities.
(c) Presumption. The termination of a proceeding by judgment, order,
settlement or conviction or upon a plea of nolo contendere or its equivalent
shall not of itself create a presumption that the indemnified representative is
not entitled to indemnification under this Section 11.01.
(d) Definitions. For purposes of this Article XI: (i) "indemnified
capacity" means any and all past, present and future service by an indemnified
representative in one or more capacities as a Member, Director, officer,
employee or agent of the Company, or, at the request of the Company, as a
member, director, officer, employee, agent, fiduciary or trustee of another
limited liability company, corporation, partnership, joint venture, trust,
employee benefit plan or other entity or enterprise, (ii) "indemnified
representative" means any and all Members, Directors and officers of the
Company, all members, shareholders, partners, directors, officers, employees or
agents of any Member, all directors and officers of any Platform Group and any
other person designated as an
57
indemnified representative by the Board of Directors (which may, but need not,
include any person serving, at the request of the Company, as a member,
director, officer, employee, agent, fiduciary or trustee of another limited
liability company, corporation, partnership, joint venture, trust, employee
benefit plan or other entity or enterprise), (iii) "liability" means any
damage, judgment, amount paid in settlement, fine, penalty, punitive damages,
excise tax assessed with respect to any employee benefit plan, or cost or
expense of any nature (including attorneys' fees and disbursements) and (iv)
"proceeding" means any threatened, pending or completed action, suit, appeal
or other proceeding of any nature, whether civil, criminal, administrative or
investigative, whether formal or informal, and whether brought by or in the
right of the Company, its Members or otherwise.
SECTION 11.02. Advancing Expenses. To the fullest extent permitted by
law, the Company may pay the expenses (including attorneys' fees and
disbursements) incurred in good faith by an indemnified representative in
advance of the final disposition of a proceeding upon receipt of an undertaking
by or on behalf of the indemnified representative to repay the amount if it is
ultimately determined that such person is not entitled to be indemnified by the
Company pursuant to this Article XI.
SECTION 11.03. Securing of Indemnification Obligations. To further
effect, satisfy or secure the indemnification obligations provided in this
Article XI or otherwise, the Company may maintain insurance, obtain a letter of
credit, act as self-insurer, create a reserve, trust, escrow, cash collateral or
other fund or account, enter into indemnification agreements, pledge or grant a
security interest in any assets or properties of the Company, or use any other
mechanism or arrangement whatsoever in such amounts, at such costs, and upon
such other terms and conditions as the Board of Directors shall deem
appropriate.
SECTION 11.04. Scope of Article. The rights granted by this Article XI
shall not be deemed exclusive of any other rights to which those seeking
indemnification, contribution or advancement of expenses may be entitled under
any statute, agreement, vote of Members or disinterested Members of otherwise,
both as to action in an indemnified capacity and as to action in any other
capacity. The indemnification, contribution and advancement of expenses provided
by or granted pursuant to this Article XI shall continue as to a person who has
ceased to be an indemnified representative in respect of matters arising
58
prior to such time, and shall inure to the benefit of the successors, heirs,
executors, administrators and personal representatives of such a person.
SECTION 11.05. Assumption by Newco. Upon conversion of the Company
into a Newco pursuant to Article VIII, the Newco shall assume all of the
obligations of the Company under this Article XI and under Section 5.07 of the
Transfer and Exchange Agreement.
ARTICLE XII
Dissolution and Winding-Up
--------------------------
SECTION 12.01. Dissolution. The Company shall be dissolved upon the
earliest to occur of any of the following: (a) the sale, transfer or other
disposition of all or substantially all the non-cash assets of the Company, (b)
the decision of the Board of Directors to dissolve the Company or (c) the entry
of a decree of judicial dissolution under ss. 18-802 of the Act. The Bankruptcy,
death, retirement, resignation, expulsion or dissolution of a Member or the
occurrence of any other event which terminates the continued membership of a
Member in the Company shall not in and of itself cause a dissolution of the
Company to occur (and the Company, without such Member, shall continue), unless
there are no remaining Members of the Company.
SECTION 12.02. Winding-Up Affairs and Distribution of Assets. (a) Upon
dissolution of the Company, one or more Members appointed by the Board of
Directors or, in the case of dissolution where the Company has (or had) only one
remaining Member, such remaining Member, shall be the liquidating trustee for
the Company (the "Liquidating Member") and shall proceed to wind up the affairs
of the Company, liquidate the remaining property and assets of the Company and
wind up and terminate the business of the Company. The Liquidating Member shall
cause a full accounting of the assets and liabilities of the Company to be taken
and, unless all the Members otherwise agree, shall cause the assets to be
liquidated and the business to be wound up as promptly as possible by selling
the Company assets and distributing the net proceeds therefrom in accordance
with Section 12.02(b).
(b) Unless and to the extent otherwise required by the Act or any
other applicable law or Article VIII hereof, the proceeds of any such
liquidation shall be applied in the following order of priority: (i) first, to
59
creditors of the Company (including Members who are creditors, to the extent
permitted by law) in satisfaction of the liabilities of the Company (whether
by payment or the making of reasonable provision for payment thereof) and (ii)
second, to the Members in proportion to and in satisfaction of their
respective Capital Accounts.
ARTICLE XIII
Miscellaneous Provisions
SECTION 13.01. Entire Agreement. This Agreement sets forth the entire
understanding among the parties relating to the subject matter contained herein
and merges all prior discussions among them.
SECTION 13.02. Amendments and Modifications. This Agreement may be
amended or modified at any time and from time to time by the written consent of
AAH and a Majority in Interest of the Dealer Members; provided, however, that
the Board of Directors may amend or modify this Agreement at any time and from
time to time without the consent of any Member in order to effect any issuance
of Interests (or options to acquire Interests) or any adjustment to the
Percentage Interests pursuant to Article IV (each, a "Permitted Modification");
provided, further, that any modification or amendment (a) (i) increasing the
amount of Capital Contributions required to be made by any Member or that would
require any Member to make a loan to the Company, (ii) resulting in a loss of
any Member's limited liability status or (iii) modifying or amending this
Section 13.02, shall require the written consent of each Member affected
thereby, or (b) except for a Permitted Modification, altering or changing the
powers, preferences or rights of any Dealer Members so as to affect them
adversely shall require the written consent of a Majority in Interest of the
Dealer Members so adversely affected by the modification or amendment. Subject
to any mandatory provisions of the Act or applicable law to the contrary, any
amendment or modification so adopted shall be binding upon the Company and all
the Members except as otherwise provided in this Section 13.02.
SECTION 13.03. Severability. If any one or more of the provisions
contained in this Agreement or in any document executed in connection herewith
shall be invalid, illegal or unenforceable in any respect under any applicable
law, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired; provided,
however, that in such
60
case the Board of Directors shall endeavor to amend or modify this Agreement
(subject to the terms, conditions and requirements set forth in Section 13.02)
to achieve to the extent reasonably practicable the purpose of the invalid
provision.
SECTION 13.04. GOVERNING LAW. THIS AGREEMENT AND ALL ACTIONS
CONTEMPLATED HEREBY SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES).
SECTION 13.05. No Waiver of Rights. No failure or delay on the part of
any party in the exercise of any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power or
right preclude other or further exercise thereof or of any other right or power.
The waiver by any party or parties hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any other or
subsequent breach hereunder. All rights and remedies existing under this
Agreement are cumulative and are not exclusive of any rights or remedies
otherwise available.
SECTION 13.06. SUBMISSION TO JURISDICTION. ANY AND ALL SUITS, LEGAL
ACTIONS OR PROCEEDINGS ARISING OUT OF THIS AGREEMENT SHALL BE BROUGHT IN THE
SUPERIOR COURT OR THE COURT OF CHANCERY OF THE STATE OF DELAWARE, THE UNITED
STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE, THE SUPREME COURT OF THE
STATE OF NEW YORK, NEW YORK COUNTY OR THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND EACH MEMBER HEREBY SUBMITS TO AND ACCEPTS THE
EXCLUSIVE JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF SUCH SUITS, LEGAL
ACTIONS OR PROCEEDINGS. IN ANY SUCH SUIT, LEGAL ACTION OR PROCEEDING, EACH
MEMBER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS AND
AGREES THAT SERVICE THEREOF MAY BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED
TO IT AT ITS ADDRESS SET FORTH IN THE BOOKS AND RECORDS OF THE COMPANY. TO THE
FULLEST EXTENT PERMITTED BY LAW, EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
SUIT, LEGAL ACTION OR PROCEEDING IN ANY SUCH COURT AND HEREBY FURTHER WAIVES ANY
CLAIM THAT ANY SUIT, LEGAL ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
SECTION 13.07. Specific Performance. The parties hereto hereby declare
that irreparable damage would occur as a result of the failure of any party
hereto to perform any of its obligations under this Agreement in accordance with
61
the specific terms hereof. Therefore, all parties hereto shall have the right
to specific performance of the obligations of the other parties under this
Agreement and if any party hereto shall institute any action or proceeding to
enforce the provisions hereof, any person against whom such action or
proceeding is brought hereby waives the claim or defense therein that such
party has an adequate remedy at law. The right to specific performance should
be in addition to any other remedy to which a party hereto may be entitled at
law or in equity.
SECTION 13.08. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
SECTION 13.09. Headings. The Article, Section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
SECTION 13.10. Binding Agreement. Except as expressly provided herein,
the covenants and agreements contained herein shall be binding upon, and inure
to the benefit of, the estate, heirs, legal representatives, successors and
permitted assigns of the respective Members.
SECTION 13.11. Notices. All notices and other communications required
or permitted by this Agreement shall be made in writing and any such notice or
communication shall be deemed given or delivered when delivered in person,
transmitted by telecopier, or one Business Day after it has been sent by a
nationally recognized overnight courier, at the address or addresses for notices
to the recipient designated on Schedule II. Communications by telecopier also
shall be sent concurrently by first class mail or nationally recognized
overnight courier, but shall in any event be effective as stated above;
provided, however, that any and all Initial Offers, First Additional Offers and
Second Additional Offers delivered by the Company to the Members pursuant to
Section 4.02(a) shall be delivered both by telecopier and by nationally
recognized overnight courier. Each Member may from time to time change its
address for notices under this Section 13.11 by giving at least five days'
written notice of such changed address to the Company.
SECTION 13.12. Waiver of Partition; Classes or Group of Members. Each
Member hereby waives any and all rights, if any, that such Member may have to
maintain an action for partition of the Company's property. The Company
62
shall have one class or group of Members for all purposes under the Act,
including, without limitation, ss. 18-209 thereof.
SECTION 13.13. Proxy. Upon its admission as a Member, (i) each Manager
hereby makes, constitutes and appoints AAH, with full power of substitution and
resubstitution, its true and lawful attorney, for it and in its name, place and
stead and for its use and benefit, to act as its proxy in respect of all
Interests which such Manager now or hereafter may own or hold, including,
without limitation, the right to vote such Interest at any annual, general or
special meeting of Members, to consent to any action by written consent of
Members and to grant any other consent or approval required or sought from
Members, under this Agreement or applicable law and (ii) each Manager authorizes
such attorney-in-fact to take any further action which such attorney-in-fact
shall consider necessary or advisable in connection with any of the foregoing,
hereby giving such attorney-in-fact full power and authority to do and perform
each and every act or thing whatsoever requisite or advisable to be done in and
about the foregoing as fully as such Member might or could do if personally
present, and hereby ratifying and confirming all that such attorney-in- fact
shall lawfully do or cause to be done by virtue hereof; provided, however, that
the power of attorney granted under this Section 13.13 may not be used to amend
this Agreement under Section 13.02 or to exercise the rights of any Member under
Section 4.02. Each such Manager hereby further affirms that any such proxy
hereby granted shall be irrevocable and shall be deemed coupled with an
interest. Each Manager agrees to execute and deliver any further powers of
attorney, consents, proxies or other agreements necessary or appropriate to give
effect to this Section 13.13.
63
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed as of the day and year first written above.
XXXXXX AUTOMOTIVE HOLDINGS L.L.C.,
by
----------------------------
Name:
Title:
XXXXXX VILLANOVA IV L.L.C.,
by
----------------------------
Name:
Title:
NORTH POINT FORD, INC.,
by /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Secretary
NORTH POINT, INC.,
by /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Secretary
PRESTIGE, INC.,
by /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Secretary
64
PREMIER AUTOPLAZA, INC.,
by /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Secretary
XXXXXXX AUTO MALL, INC.,
by /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Secretary
HOPE AUTO COMPANY,
by /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Secretary
XXXXXX MANAGEMENT SERVICES, INC.,
by
----------------------------
Name:
Title:
XXXXXX CHEVROLET, INC.,
by
----------------------------
Name:
Title:
SPECTRUM SOUND & ACCESSORIES, INC.,
by
----------------------------
Name:
Title:
65
XXXXXX XXXXXXXX AUTOMOBILES, INC.,
by
----------------------------
Name:
Title:
XXXXXX LUXURY IMPORTS, INC.,
by
----------------------------
Name:
Title:
XXXXXX ATLANTA IMPORTS, INC.,
by
----------------------------
Name:
Title:
SPECTRUM LEASING, INC.,
by
----------------------------
Name:
Title:
XXXXXX XXXXXX,
/s/ Xxxxxx Xxxxxx
-----------------------------------
X. X. XXXXX,
/s/ X. X. Xxxxx
-----------------------------------
XXXXXXX X. XXXXXXXXX,
/s/ Xxxxxxx X. Xxxxxxxxx
-----------------------------------
66
XXXXXX X. XXXXXXXXX
/s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------
XXXXX XXXXXXX,
/s/ Xxxxx Xxxxxxx
-----------------------------------
XXXXXXXX X. XXXXXX,
/s/ Xxxxxxxx X. Xxxxxx
-----------------------------------
XXXXX X. XXXXXXXX,
/s/ Xxxxx X. Xxxxxxxx
-----------------------------------
XXXXXXX X. XXXXXXXX,
/s/ Xxxxxxx X. XxXxxxxx
-----------------------------------
XXXXXX X. XXXXX,
/s/ Xxxxxx X. Xxxxx
-----------------------------------
XXXXX X. XXXXX,
/s/ Xxxxx X. Xxxxx
-----------------------------------
XXXXXXX X. XXXXX,
/s/ Xxxxxxx X. Xxxxx
-----------------------------------
67
XXXXXX X. XXXXX, XX.,
/s/ Xxxxxx X. Xxxxx, Xx.
-----------------------------------
XXXX X. XXXXX,
/s/ Xxxx X. Xxxxx
-----------------------------------
XXXX X. XXXX,
/s/ Xxxx X. Xxxx
-----------------------------------
CHARLIE (C.B.) TOMM,
/s/ Charlie (C.B.) Tomm
-----------------------------------
CROWN NORTH CAROLINA, LLC,
by /s/ Xxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Manager
DEALER GROUP LLC,
by
------------------------------
Name:
Title:
XXXX X. XXXXX,
/s/ Xxxx X. Xxxxx
-----------------------------------
68
J.I.W. ENTERPRISES, INC.,
by /s/ X.X. Xxxxxx
------------------------------
Name: X.X. Xxxxxx
Title: President
XXXXX XXXXXXX PONTIAC, INC.,
by
------------------------------
Name:
Title:
XXXXX XXXXXXX NISSAN, INC.,
by
------------------------------
Name:
Title:
XXX XXXXX,
/s/ Xxx Xxxxx
-----------------------------------
XXXX XXXXXX,
/s/ Xxxx Xxxxxx
-----------------------------------
XXXXXX FAMILY PARTNERSHIP, L.P.,
by
----------------------------
Name:
Title:
XXXXX XXXXXXXX,
/s/ Xxxxx Xxxxxxxx
-----------------------------------
Schedule I
----------
Current Members
of the Company
--------------
1. Xxxxxx Villanova IV L.L.C.
2. Dealer Group LLC
Schedule II
-----------
Members of the Company,
Initial Capital Accounts
and Percentage Interests
Upon Effectiveness of Third
Amended and Restated Limited
Liability Company Agreement
---------------------------
Initial
Capital Percentage
Member Account Interest
------ ------- --------
1. Xxxxxx Automotive Holdings L.L.C
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 19312....................... $194,996,287 59.08%
2. North Point Ford, Inc
0000 Xxxxxxx Xxxx
Xxxxx Xxxxxx Xxxx, XX 72231............ 4,785,493 1.45%
3. North Point, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxx, XX 72117..................... 329,203 0.10%
4. Premier Autoplaza, Inc.
0000 X. Xxxxxxxxxxx Xxxx
Xxxxxx Xxxx, XX 72221.................. 1,714,266 0.52%
5. Prestige, Inc.
0000 Xxxxxx Xxxx
Xxxxx Xxxxxx Xxxx, XX 72231............ 1,931,059 0.59%
6. McLarty Auto Mall, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxx, XX 75503.................... 1,025,749 0.31%
7. Hope Auto Company
0000 X. Xxxxxx
Xxxx, XX 71802-0619.................... 50,183 0.02%
8. Xxxxxx Management Services, Inc.
00 Xxxx Xxxxx Xxxxx Xxxx
Xxxxxxx, XX 30305...................... 660,564 0.20%
9. Xxxxxx Chevrolet, Inc.
0000 Xxxxxxxxxxxx Xxxxxxx
Xxxxxxx, XX 30315...................... 17,901,278 5.42%
10. Spectrum Sound & Accessories, Inc.
0000 Xxxxxxxxxxxx Xxxxxxx
Xxxxxxx, XX 30315...................... 1,321,128 0.40%
11. Xxxxxx Xxxxxxxx Automobiles, Inc.
0000 Xxxx Xxxxxxx
Xxxxxxxx, XX 30062..................... 3,236,762 0.98%
12. Nalley Luxury Imports, Inc.
0000 Xxxx Xxxxxxx
Xxxxxxxx, XX 30062..................... 6,011,130 1.82%
13. Nalley Atlanta Imports, Inc.
00 Xxxx Xxxxx Xxxxx Xxxx
Xxxxxxx, XX 30305...................... 1,453,240 0.44%
2
Initial
Capital Percentage
Member Account Interest
------ ------- --------
14. Spectrum Leasing, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 30315.......................... 132,113 0.04%
15. Xxxxxx Xxxxxx
X.X. Xxx 00000
Xxxxxxxxxxxx, XX 32245-6469............... 17,769,343 5.38%
16. X.X. Xxxxx
0000 Xxxxx Xxxxx
Xxxxxxxxxxxx, XX 32216..................... 480,253 0.15%
17. Xxxxxxx X. Xxxxxxxxx
0000 Xxxxx Xxxx Xxxxx
Xxxx Xx. Xxxxx, XX 34986................... 120,063 0.04%
18. Xxxxxx X. Xxxxxxxxx
0000 Xxxxxxxx Xxxxx
Xxxx Xx. Xxxxx, XX 34986................... 960,505 0.29%
19. Xxxxx Xxxxxxx
0000 Xxxxxxx Xxxxxx Xx. X.
Xxxxxxxxxxxx, XX 32224..................... 240,126 0.07%
20. Xxxxxxxx X. Xxxxxx
000X Xxxxxxxxx Xxx
Xxxxxxxxxxxx, XX 32207..................... 480,253 0.15%
21. Xxxxx X. Xxxxxxxx
00000 Xxxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 32223..................... 180,095 0.05%
22. Xxxxxxx X. XxXxxxxx
0000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 32227..................... 216,594 0.07%
23. Xxxxxx X. Xxxxx
00000 Xxxxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 32224..................... 240,126 0.07%
24. Xxxxx X. Xxxxx
00000 Xxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 32224..................... 480,253 0.16%
25. Xxxxxxx X. Xxxxx
00000 Xxxxxxxx Xxxx
Xxxxxxxxxxxx, XX 32224..................... 406,294 0.12%
26. Xxxxxx X. Xxxxx, Xx.
000 Xxxxxxxxx Xxx. X
Xxxxxxxxxxxx, XX 32311..................... 120,063 0.04%
27. Xxxx X. Xxxxx
0000 Xxxxxxxxx Xxxxx Xxxxx
Xxxxxxxxxxxx Xxxxx, XX 32250............... 120,063 0.04%
28. Xxxx X. Xxxx
00000 Xxxxxxxxx Xxxx. Xxxxx
Xxxxxxxxxxxx, XX 32225..................... 240,126 0.07%
3
Initial
Capital Percentage
Member Account Interest
------ ------- --------
29. Charlie (C.B.) Tomm
000 Xxxxxx Xxx
Xxxxxxxx Xxxxx, XX 32233................... 1,478,217 0.45%
30. Crown North Carolina, LLC
0000 X. Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 27407.......................17,127,276 5.19%
31. Dealer Group LLC
Xxxxxxxx Xxxxxxxx Plaza
0 Xxxxxxxxx Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 97258.........................16,263,661 4.93%
32. Xxxx X. Xxxxx
00000 Xxxxx Xxxxxx Xxxx
Xx. Xxxxx, XX 63141........................ 6,356,175 1.93%
33. J.I.W. Enterprises, Inc
c/o Xxxxxxx X. Xxxxxx
000000 Xxxxxxxxx Xxxxx
Xxxxx, XX 33168............................15,098,860 4.57%
34. Xxxxx XxXxxxx Pontiac, Inc.
0000 Xxxx Xxxxxxx Xxxxxxx
Xxxxxx, XX 75062........................... 9,592,299 2.91%
35. Xxxxx XxXxxxx Nissan, Inc.
0000 Xxxx Xxxxxxx Xxxxxxx
Xxxxxx, XX 75062........................... 4,069,289 1.23%
36. Xxx Xxxxx
0000 Xxxx Xxxxxxx Xxxxxxx
Xxxxxx, XX 75062........................... 976,207 0.30%
37. Xxxx Xxxxxx
c/o Xxxxx XxXxxxx Nissan
00000 Xxxx Xxxxxxx
Xxxxxxx, XX 77034.......................... 976,207 0.30%
38. Xxxxx Xxxxxxxx
c/o Asbury Automotive Group
0000 Xxxxxxxxx Xxxxx
Xxxxxx, XX 19312........................... 0 0.00%
39. Xxxxxx Family Partnership, L.P.
c/o Asbury Automotive Group
0000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 19312........................... 508,312 0.15%
Schedule III
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Percentage Interest
Adjustment Formula
Pursuant to Section 4.04 of this Agreement, the Percentage Interest of
each Dealer will be adjusted with respect to each Applicable Period as follows:
1. Same Store EBITDA Adjustment. Each such Dealer's
Percentage Interest shall be increased or decreased, as
applicable, by an amount equal to the Dealer's Same
Store EBITDA Adjustment for the Applicable Period,
which is determined as follows:
(i) first, divide the absolute value of the EBITDA
Percentage Change for the Dealer's Affiliated Platform Group for the
Applicable Period, by the sum of the absolute values of the EBITDA
Percentage Change for all Platform Groups for the Applicable Period;
(ii) second, subtract from the EBITDA Percentage Change for
the Dealer's Affiliated Platform Group for the Applicable Period, the
product of (x) the amount yielded by clause (i) and (y) the aggregate
sum of the values of the EBITDA Percentage Change for all Platform
Groups for the Applicable Period;
(iii) third, multiply the amount yielded by
clause (ii), by two;
(iv) fourth, multiply the amount yielded by clause (iii), by
75% (such product, the "Platform Same Store EBITDA Adjustment"); and
(v) fifth, multiply the Platform Same Store EBITDA
Adjustment by such Dealer's Pro Rata Share.
2. Acquisition Adjustment. Each such Dealer's Percentage
Interest shall be increased or decreased, as
applicable, by an amount equal to the Dealer's
Acquisition Adjustment for the Applicable Period, which
is determined as follows:
(i) first, divide (x) the Net Acquired EBITDA for the
Dealer's Affiliated Platform Group for the Applicable Period, by (y)
the aggregate sum of the Net Acquired EBITDA for all the Platform
Groups for the Applicable Period;
(ii) second, divide (x) the amount yielded by
clause (i), by (y) the largest amount yielded by
2
clause (i) for any single Platform Group for the
Applicable Period;
(iii) third, divide (x) the amount yielded by
clause (ii) by (y) two;
(iv) fourth, subtract .25 from the amount yielded
by clause (iii);
(v) fifth, multiply (x) the amount yielded by
clause (iv) by (y) eight;
(vi) sixth, divide (x) the absolute value of the amount
yielded by clause (v), by (y) the sum of the absolute values of the
amount yielded by clause (v) for all Platform Groups for the
Applicable Period;
(vii) seventh, subtract the product of (x) clause (vi) and
(y) the sum of clause (ii) for all Platform Groups for the Applicable
Period, from the amount yielded by clause (ii) for the Dealer's
Affiliated Platform Group for the Applicable Period;
(viii) eighth, multiply the amount yielded by
clause (vii), by 25% (such product, the "Platform
Acquisition Adjustment"); and
(ix) ninth, multiply the Platform Acquisition
Adjustment by such Dealer's Pro Rata Share.
3. Adjustment Cap; Other Adjustment. In the event that an
adjustment, taken together with the aggregate amount of
all other adjustments made pursuant to this
Schedule III to such Dealer's Percentage Interest, of a
Dealer's Percentage Interest provided for under this
Schedule III would result in such Percentage Interest
being increased or decreased by more than 20% of such
Dealer's Percentage Interest originally received in the
Roll-Up Transaction as such original Percentage
Interest (i.e., the Percentage Interest related to such
Dealer's initial Interest received in the Roll-Up
Transaction) has been adjusted as of the end of such
Applicable Period pursuant to this Agreement (other
than pursuant to Section 4.04 thereof) (the "Original
Percentage Interest"), then:
(i) the Percentage Interest of such Dealer (the "Adjusted
Dealer") shall be increased or decreased, as the case may be, by the
greatest amount that will cause the Adjusted Dealer's Percentage
Interest not to
3
increase or decrease by more than 20% of such Dealer's
Original Percentage Interest; and
(ii) the Percentage Interests of all other Dealers shall be
appropriately adjusted pro rata to take into account the amount of
the additional adjustment that such Adjusted Dealer's Percentage
Interest would have been adjusted, but for the operation of clause
(i) of this Section 3.
4. Equitable Modification by the Board of Directors;
Annex A. (a) In the event that the Board of Directors
determines in good faith that the application of this
Schedule III results in an adjustment with respect to
the Percentage Interest of a Member that (i) is
unintended by, and not in conformity with, the original
intent of Section 4.04 and Schedule III and (ii) is
grossly unfair or inequitable to such Member, the Board
of Directors shall have the power and authority to
equitably modify this Schedule III solely to the extent
necessary to rectify such unfairness or inequity.
(b) Annex A is attached hereto to illustrate the intended
effect of the adjustment formula set forth in this Schedule III,
provided that to the extent this Schedule III and Annex A are in
conflict, this Schedule III shall control.
5. Certain Definitions
"Acquisition" means an acquisition by the
Affiliated Platform Group on or after October 1, 1999 of an entity or
group of assets comprising a business engaged in the sale of trucks
or automobiles or related businesses; provided, however, that such
Affiliated Platform Group may elect to exempt any such acquisition
from the definition of Acquisition until such time that is six months
after the date of consummation of such Acquisition to accommodate
higher multiple Acquisitions predicated on a performance improvement
plan.
"Acquired EBITDA" means, for any Platform Group,
for any Applicable Period, the portion, if any, of such Platform
Group's EBITDA for such Applicable Period that is attributable to any
Acquisition or Acquisitions made by such Platform Group on or after
October 1, 1999 hereof.
"Acquisition Capital Charge" means, with respect to
each Acquisition, the Cost of Capital for such Acquisition, prorated
(based on a year of
4
365 days) for any Applicable Period of less than a fiscal year and
for any Acquisition initially completed during the Applicable Period.
"Affiliated Platform Group" means the Platform
Group in which such Dealer prior to the Roll-Up Date owned a Dealer
Transferred Interest (as defined in the Transfer and Exchange
Agreement) or, in the case of Dealer Group LLC, owned an Interest.
"Applicable Period" means each, if applicable, of
(i) the interim period beginning on October 1, 1999 and ending at the
end of the fiscal year in which the Roll-Up occurs (the "Roll-Up
Year"), (ii) any complete fiscal year after the Roll-Up Date and
(iii) the interim period beginning on the first day of a fiscal year
occurring after the Roll-Up Year in which the IPO is consummated and
ending on the last day of the month in such fiscal year preceding the
date of the preliminary prospectus distributed to prospective
investors for the IPO. If the IPO is consummated in 2000, there shall
be no adjustment pursuant to Section 4.04(a) and this Schedule III.
"Capital Charge" means, with respect to any
Affiliated Platform Group for any Applicable Period, the aggregate
sum of the Acquisition Capital Charges for the Applicable Period for
each Acquisition completed by the Affiliated Platform Group during
the period beginning on October 1, 1999 and ending on the last day of
the Applicable Period.
"Cost of Capital" means, with respect to an
Acquisition, the sum of (x) the product of 20.77% and the portion of
the Transaction Value of such Acquisition funded with equity capital
and (y) the product of 10% and the portion of the Transaction Value
of such Acquisition funded with debt capital.
"EBITDA" means, with respect to any Affiliated
Platform Group for any Applicable Period, the earnings of such person
before non-floor plan interest, taxes, depreciation and amortization
expenses for such Applicable Period; provided, however, that expenses
related to investments in new motor vehicle sales franchises (but not
renovations or relocations) will not be included in EBITDA until such
date that is six months after the opening of such franchise;
provided, further, that with respect to any sale or other disposition
of a motor vehicle franchise by such Affiliated Platform Group (an
"Asset Sale") during any
5
Applicable Period, the EBITDA for such Affiliated Platform Group for
such Applicable Period and all subsequent Applicable Periods shall be
calculated as if such motor vehicle franchise had not been owned by
such Affiliated Platform Group or the Company as of the beginning of
such Applicable Period. EBITDA as of September 30, 1999, and as of
the end of each Applicable Period shall be determined on a basis and
using a methodology consistent with the EBITDA for each Platform
Group determined and used by the Appraiser (as defined in the
Transfer and Exchange Agreement) to value each Platform Group as
described in Section 2.04(a) of the Transfer and Exchange Agreement.
"EBITDA Percentage Change" means, with respect to
any Affiliated Platform Group for any Applicable Period, the
percentage increase or decrease of Same Store EBITDA Percentage of
such Platform Group for the Applicable Period in question as compared
to Same Store EBITDA Percentage of such Platform Group (i) for the
previous Applicable Period or (ii) in the case of the first
Applicable Period following the Closing Date, as determined for
purposes of the appraisal described in Section 2.04 of the Transfer
and Exchange Agreement of such Platform Group; provided, that if
there is an Asset Sale during any Applicable Period, the applicable
motor vehicle franchise will be deemed for the purpose of calculating
the EBITDA Percentage Change for such Applicable Period to not have
been owned by the Company or such Affiliated Platform Group at any
time during the previous Applicable Period.
"Net Acquired EBITDA" means, with respect to each
Platform Group for any Applicable Period, such Platform Group's
Acquired EBITDA for the Applicable Period less the Platform Group's
Capital Charge for the Applicable Period.
"Pro Rata Share" means with respect to each Dealer
a fraction (a) the numerator of which equals the Percentage Interest
of the Dealer as of the date of this Agreement and (b) the
denominator of which equals the aggregate Percentage Interest of all
the Dealers associated with such Dealer's Affiliated Platform Group
as of the date of this Agreement.
"Same Store EBITDA Percentage" means, with respect
to any Platform Group for any Applicable Period, the EBITDA of the
Affiliated Platform Group for the Applicable Period that is
attributable to
6
automobile sales franchises (including without limitation, automobile
financing and used car sales businesses) owned as of September 30,
1999 expressed as a percentage of the total EBITDA of the Company for
such Applicable Period that is attributable to automobile sales
franchises owned as of September 30, 1999.
"Transaction Value" means, with respect to an
Acquisition, the aggregate amount of consideration paid by a Platform
Group to complete such Acquisition.
Schedule IV
-----------
Options to Purchase Interests
-----------------------------
Option
Grant Value/ Date Option
Name Purchase Price1 is Exercisable2
---- -------------- --------------
Xxxxx Xxxxxxxx (TDB) 1/3 per year
Xxx Xxxxxx $200,000 1/3 per year
Xxx XxXxxxxxxx 50,000 1/3 per year
Xxxxxxx Xxxxxxxx 50,000 1/2 per year
Xxx Xxxxxxx 75,000 1/3 per year
Xxxxxx Xxxxxxx 125,000 1/3 per year
Xxxx Xxx 175,000 1/2 per year
Xxxxx Xxxxxxxxxx 50,000 1/3 per year
Xxx Xxxxxx 75,000 1/2 per year
Xxxxxxx X. Xxxxx 50,000 1/3 per year
Xxxxx, Xxxxx 50,000 1/3 per year
Director Fixed
Operations 75,000 1/3 per year
Director Variable
Operations 75,000 1/3 per year
Director Planning
and Strategy 75,000 1/3 per year
Director Retail
Finance 75,000 1/3 per year
--------
1 The exercise price for each option is listed under the column captioned
"Option Grant Value". Upon payment of such exercise price, the optionee will
receive a Membership Interest in the Company which will be equal to the
Membership Interest such optionee would have had if, on the date such option was
granted, such optionee had made a Capital Contribution to the Company in an
amount equal to such exercise price. This Membership Interest will reflect the
optionee's percentage of ownership in the Company based on the optionee's
exercise price in relation to the total pro forma fair market value of the
Company as of December 31, 1998, which was $314.654 million.
2 Options began to vest as of January 1, 1999.
Schedule V
----------
Dealer Principals
-----------------
Ben Xxxxx XxXxxxx, Xx.
Xxxxx X. Xxxxxxxx
Xxxx Xxxxx
Xxxxxx Xxxxxx
X.X. Xxxxxx, III
Xxxxxx X. XxXxxxx
Xxxxx Xxxxxxxx
Xxxxxxx X. Xxxxxx
Schedule VI
-----------
Names of Acceptable Designees as
Dealer Directors
----------------
Ben Xxxxx XxXxxxx, Xx.
Xxxxx X. Xxxxxxxx
Xxxx Xxxxx
Xxxxxx Xxxxxx
X.X. Xxxxxx, III
Xxxxxx X. XxXxxxx
Xxxxx Xxxxxxxx
Xxxxxxx X. Xxxxxx
Xxxxxxx (X.X.) Tomm
Exhibit A
---------
Form of Shareholders' Agreement
-------------------------------
