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EXHIBIT 10.31.1
UAG CONNECTICUT I, LLC
LIMITED LIABILITY COMPANY AGREEMENT
EFFECTIVE MARCH 1, 2001
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TABLE OF CONTENTS
SECTION 1.........................................................................................................2
FORMATION OF THE LIMITED LIABILITY COMPANY........................................................................2
1.1 FORMATION; FILINGS....................................................................................2
1.2 NAME..................................................................................................2
1.3 TERM..................................................................................................2
1.4 REGISTERED AGENT AND OFFICE...........................................................................2
1.5 PRINCIPAL PLACE OF BUSINESS...........................................................................3
1.6 QUALIFICATION IN OTHER JURISDICTIONS..................................................................3
SECTION 2.........................................................................................................3
PURPOSE AND POWERS................................................................................................3
2.1 BUSINESS PURPOSES.....................................................................................3
2.2 POWERS OF THE COMPANY.................................................................................3
SECTION 3.........................................................................................................4
MEMBERS...........................................................................................................4
3.1 POWERS OF MEMBERS.....................................................................................4
3.2 NO PRIORITY, ETC......................................................................................4
3.3 MEETINGS OF MEMBERS...................................................................................4
3.4 ACTIONS OF MEMBERS WITHOUT A MEETING..................................................................5
3.5 TRADE SECRETS; CONFIDENTIALITY........................................................................5
SECTION 4.........................................................................................................6
MANAGEMENT........................................................................................................6
4.1 THE BOARD.............................................................................................6
4.2 OFFICERS..............................................................................................8
4.3 ACTIONS AND DETERMINATIONS OF THE COMPANY............................................................13
SECTION 5........................................................................................................13
OPERATING POLICIES...............................................................................................13
5.1 ANNUAL BUSINESS PLAN PROCESS.........................................................................13
5.2 INSURANCE............................................................................................14
5.3 FISCAL YEAR..........................................................................................14
5.4 INITIAL ACCOUNTANTS; CHANGE OF ACCOUNTANTS...........................................................14
SECTION 6........................................................................................................14
CAPITAL CONTRIBUTIONS, PERCENTAGE INTERESTS,.....................................................................14
CAPITAL ACCOUNTS AND ADVANCES....................................................................................14
6.1 CAPITAL CONTRIBUTIONS................................................................................14
6.2 MEMBER'S PERCENTAGE INTEREST.........................................................................15
6.3 STATUS OF CAPITAL CONTRIBUTIONS......................................................................15
6.5 NEGATIVE CAPITAL ACCOUNTS............................................................................16
6.6 LOANS FROM MEMBERS...................................................................................16
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SECTION 7........................................................................................................17
ALLOCATIONS OF PROFITS AND LOSSES................................................................................17
7.1 ALLOCATIONS OF NET PROFIT AND NET LOSS...............................................................17
7.2 SPECIAL ALLOCATIONS..................................................................................17
7.4 TRANSFER OR CHANGE IN MEMBER INTERESTS...............................................................20
SECTION 8........................................................................................................20
DISTRIBUTIONS AND WITHHOLDING....................................................................................20
8.1 DISTRIBUTIONS........................................................................................20
8.2 LIMITATIONS ON DISTRIBUTION..........................................................................20
8.3 WITHHOLDING TAXES....................................................................................20
8.4 TAX DISTRIBUTIONS....................................................................................21
8.5 ADJUSTED NET CASH DISTRIBUTIONS......................................................................21
SECTION 9........................................................................................................21
TAX MATTERS......................................................................................................21
9.1 TAX MATTERS MEMBER...................................................................................21
9.3 RIGHT TO MAKE SECTION 754 ELECTION...................................................................23
9.4 TAXATION AS PARTNERSHIP..............................................................................23
SECTION 10.......................................................................................................23
BANKING; ACCOUNTING; BOOKS AND RECORDS...........................................................................23
10.1 BANKING..............................................................................................23
10.2 MAINTENANCE OF BOOKS AND RECORDS; ACCOUNTS AND ACCOUNTING METHOD; INSPECTION.........................23
SECTION 11.......................................................................................................24
REPORTS TO MEMBERS...............................................................................................24
11.1 REPORTS TO CURRENT MEMBERS...........................................................................24
11.2 TAX INFORMATION......................................................................................24
11.3 ADDITIONAL INFORMATION...............................................................................25
SECTION 12.......................................................................................................25
LIABILITY, EXCULPATION AND INDEMNIFICATION.......................................................................25
12.1 LIABILITY............................................................................................25
12.2 EXCULPATION..........................................................................................25
12.3 INDEMNIFICATION......................................................................................27
SECTION 13.......................................................................................................28
TRANSFER OF PERCENTAGE INTERESTS; WITHDRAWAL,....................................................................28
BANKRUPTCY, DISSOLUTION; CERTAIN ADMISSIONS OF MEMBERS...........................................................28
13.1 ADMISSION, SUBSTITUTION AND WITHDRAWAL OF MEMBERS; ASSIGNMENT........................................28
13.2 WITHDRAWAL...........................................................................................29
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SECTION 14.......................................................................................................30
DISSOLUTION AND TERMINATION OF THE COMPANY.......................................................................30
14.1 EVENTS CAUSING DISSOLUTION...........................................................................30
14.2 LIQUIDATION..........................................................................................30
14.3 DISTRIBUTIONS IN CASH OR IN KIND.....................................................................31
14.4 TIME AND MANNER FOR LIQUIDATION, ETC.................................................................31
14.5 TERMINATION..........................................................................................32
14.6 CLAIMS OF THE MEMBERS................................................................................32
SECTION 15.......................................................................................................32
DEFINITIONS......................................................................................................32
15.1 DEFINITIONS..........................................................................................32
SECTION 16.......................................................................................................38
AMENDMENTS; MERGER OR SALE.......................................................................................38
16.1 AMENDMENTS GENERALLY.................................................................................38
16.2 MERGER OR SALE.......................................................................................39
SECTION 17.......................................................................................................39
MISCELLANEOUS PROVISIONS.........................................................................................39
17.1 NOTICES..............................................................................................39
17.2 COUNTERPARTS.........................................................................................39
17.3 TABLE OF CONTENTS AND HEADINGS.......................................................................39
17.4 SUCCESSORS AND ASSIGNS; ASSIGNMENT...................................................................39
17.5 SEVERABILITY.........................................................................................40
17.6 NON-WAIVER...........................................................................................40
17.7 APPLICABLE LAW.......................................................................................40
17.8 WAIVER OF JURY TRIAL.................................................................................40
17.9 SURVIVAL OF CERTAIN PROVISIONS.......................................................................40
17.10 LIMITATION ON DAMAGES; LEGAL DISPUTES................................................................40
17.11 WAIVER OF PARTITION..................................................................................41
17.12 ENTIRE AGREEMENT.....................................................................................41
17.13 FURTHER ACTIONS......................................................................................41
17.14 NO PARTNERSHIP.......................................................................................41
17.15 PLEDGE AGREEMENT.....................................................................................41
The Members..........................................................................................43
INITIAL DIRECTORS................................................................................................44
INITIAL OFFICERS.................................................................................................44
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LIMITED LIABILITY COMPANY AGREEMENT
OF UAG CONNECTICUT I, LLC
This Limited Liability Company Agreement of UAG CONNECTICUT I, LLC (the
"COMPANY") is made and effective as of March 1, 2001, by and between UAG
CONNECTICUT, LLC, a Delaware corporation, ("UAG") and THE MILLER CONTINENTAL
GROUP LLC ("MILLER") (each of the foregoing parties to this Agreement shall be
referred to herein collectively as the "PARTIES"), and the Persons who become
Members of the Company in accordance with the provisions of this Agreement and
whose names are set forth as Members on SCHEDULE A hereto. Certain capitalized
terms used herein without definition have the meanings specified in SECTION 14.
WHEREAS, the Company owns various entities that own and operate factory
authorized retail sales and service Mercedes Benz, Porsche, Audi and Volkswagen
dealerships and a full service automobile body shop located on or around
Commerce Drive, in Fairfield, Connecticut (collectively the "BUSINESS").
WHEREAS, the Company was formed under the Delaware Act in order to hold the
entities that own and operate the Business; and
WHEREAS, the parties hereto desire to establish their respective rights and
obligations as Members of such limited liability company effective as of the
date of this Agreement.
NOW, THEREFORE, in consideration of the agreements and obligations set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Members hereby agree as
follows:
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SECTION 1
FORMATION OF THE LIMITED LIABILITY COMPANY
1.1 FORMATION; FILINGS.
(a) GENERALLY. The Parties agree that the limited liability company
formed pursuant to the provisions of the Delaware Act and upon
its terms, shall be subject to the conditions, and for the
purposes set forth in this Agreement. Each of the Members shall
execute or cause to be executed from time to time all other
instruments, certificates, notices and documents, and shall do or
cause to be done all such filing, recording, publishing and other
acts, in each case, as may be necessary or appropriate from time
to time to comply with all applicable requirements for the
formation and/or operation and, when appropriate, termination of
a limited liability company in the State of Delaware and all
other jurisdictions where the Company shall desire to conduct its
business.
(b) CAPITAL CONTRIBUTIONS. The name, mailing address, Capital
Contribution and Percentage Interest of each Member is listed on
SCHEDULE A attached hereto. The Company shall be required to
update SCHEDULE A from time to time as necessary to reflect
accurately any changes in the information contained therein. Any
reference in this Agreement to Schedule A shall be deemed to be a
reference to Schedule A as amended and in effect from time to
time.
1.2 NAME.
The name of the Company is "UAG CONNECTICUT I, LLC" and its business
shall be carried on in this name with such variations and changes
including, but not limited to "MERCEDES BENZ OF FAIRFIELD," "AUDI OF
FAIRFIELD", "PORSCHE OF FAIRFIELD" and "VOLKSWAGEN OF FAIRFIELD" as the
Board in its sole judgment deems necessary or appropriate to comply
with requirements of the jurisdictions in which the Company's
operations are conducted.
1.3 TERM.
The term of the Company shall commence on the date of the filing of a
Certificate of Formation in the office of the Secretary of State of the
State of Delaware and shall continue until dissolved and liquidated in
accordance with the provisions of Section 13.
1.4 REGISTERED AGENT AND OFFICE.
The registered agent and office of the Company in Delaware shall be The
Corporation Trust Company, Corporation Trust Center, 1209 Orange
Street, Wilmington, Delaware. The registered agent for service of
process on the Company in the State of Delaware shall
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be The Corporation Trust Company. At any time, the Managers of the
Company may designate another registered agent and/or registered
office.
1.5 PRINCIPAL PLACE OF BUSINESS.
The principal place of business of the Company shall be at 165 Commerce
Drive, Fairfield, Connecticut 06430.
1.6 QUALIFICATION IN OTHER JURISDICTIONS.
The Board shall take and/or authorize the taking of such action
necessary to cause the Company to be qualified, formed or registered
under assumed or fictitious name statutes or similar laws in any
jurisdiction in which the Company transacts business and in which such
qualification or registration is required by law or deemed advisable by
the Company. The President or any duly qualified officer of the
Company, as an authorized person within the meaning of the Delaware
Act, shall execute, deliver and file any certificates (and any
amendments and/or restatements thereof) necessary for the Company to
qualify to do business in any jurisdiction in which the Company may
wish to conduct business.
SECTION 2
PURPOSE AND POWERS
2.1 BUSINESS PURPOSES.
The purpose of the Company is to (i) engage for profit in the Business,
(ii) engage for profit in any and all other activities reasonably
related to or incidental to the Business, and (iii) engage for profit
in any other business for which limited liability companies may be
formed under the Delaware Act, whether or not related or incidental to
the Business, as may be determined from time to time by the act of the
Directors constituting fifty and one-tenth percent (50.1%) or more of
the total vote of the Board.
2.2 POWERS OF THE COMPANY.
Subject to obtaining any requisite Board approval required by Sections
2.1 or 4.2(e), the Company shall have the power and authority to take
any and all actions necessary, appropriate, proper, advisable,
incidental or convenient to or for the furtherance of the purposes set
forth in Section 2.1, to the extent that the same may be lawfully
exercised by limited liability companies under the Delaware Act.
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SECTION 3
MEMBERS
3.1 POWERS OF MEMBERS.
Except as otherwise expressly provided herein, the Members shall have
no power to transact any business in the Company's name nor have the
power to sign documents for or otherwise bind the Company. Subject to
the provisions of the Delaware Act, the Certificate and this Agreement,
the Members hereby delegate any and all such powers to the Board and
the officers to carry out the business affairs of the Company on the
Members' behalf. Any power not reserved to the Members or delegated to
the officers of the Company, if any, shall remain with the Board.
3.2 NO PRIORITY, ETC.
Except as otherwise provided herein, no Member shall have priority
over any other Member either as to the return of the amount of its
Capital Contribution, if any, to the Company or as to any allocation of
Net Profit and Net Loss.
3.3 MEETINGS OF MEMBERS.
(a) ANNUAL MEETINGS. An annual meeting of the Members for the
election of Directors and the transaction of other proper
business shall be held once a year at a time designated by the
Company.
(b) SPECIAL MEETINGS. Special meetings of the Members, for any
purpose or purposes, may be called by the Company and shall be
called by the Company at the request of Members holding Fifty
Percent (50%) or more of the aggregate Percentage Interests. The
business transacted at any special meeting of Members shall be
limited to the purposes stated in the notice.
(c) PLACE OF MEETING. All meetings of Members shall be held at such
place within or outside the State of Delaware as the Company
shall designate.
(d) NOTICE OF MEETINGS. Notice of all meetings of Members, stating
the time, place and purpose of the meeting, shall be given as
provided in Section 16.1 at least 10 days and not more than 60
days before the meeting. Any adjourned meeting may be adjourned
without further notice, provided that any adjourned session or
sessions are held within 60 days after the date set for the
original meeting. No notice need be given (i) to any Member if a
written waiver of notice, executed before or after the meeting by
such Member or his attorney thereunto duly authorized, is filed
with the records of the meeting, or (ii) to any Member who
attends the meeting without protesting prior thereto or at its
commencement the
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lack of notice to him. A waiver of notice need not specify the
purposes of the meeting.
(e) QUORUM AND VOTING. Members constituting at least 50% of the
Percentage Interests held by all Members must be present in order
to constitute a minimum quorum required for the transaction of
business at any meeting of Members. Any question brought before
any meeting shall be decided by Members who, at the time in
question and in the aggregate, hold, or hold proxies with respect
to, a majority of the aggregate Percentage Interests, unless a
different vote is specifically provided for by this Agreement.
(f) PROXIES. Percentage Interests of Members may be voted in person
or by proxy. A proxy purporting to be executed by or on behalf of
a Member shall be deemed valid unless challenged at or prior to
its exercise and the burden of proving invalidity shall rest on
the challenger.
(g) ELECTRONIC COMMUNICATIONS. Members may participate in any meeting
of Members by means of conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at
the meeting.
3.4 ACTIONS OF MEMBERS WITHOUT A MEETING.
Any action required to be taken at any annual or special meeting of
Members or otherwise, or any action which may be taken at any annual or
special meeting of such Members or otherwise, may be taken without a
meeting and without a vote, if (i) at least two days advance notice of
the intent to take action without a meeting is provided to each Member
and (ii) a consent in writing, setting forth the action so taken, shall
be signed by Members having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting.
The foregoing two day advance notice period shall be deemed waived with
respect to any Member that returns a signed consent to the Company.
Prompt notice of the taking of the action without a meeting by less
than unanimous written consent shall be given to each of those Members
who have not consented in writing.
3.5 TRADE SECRETS; CONFIDENTIALITY.
(a) Each Member, to the extent, if any, that it becomes aware of a
trade secret of the Company, agrees that it will not at any time
reveal, divulge or otherwise make known any such trade secret of
the Company to any Person other than a current officer, employee
or affiliate of the Company, or such other person as the Board
may designate in writing or, with prior notice to the Company,
pursuant to court order or other legal process or the order of
any governmental agency or entity.
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(b) Except as required by applicable law (including reporting
requirements under generally accepted accounting principles),
each Member shall keep secret all material confidential matters
of the Company which are not otherwise in the public domain and
will not intentionally disclose them to anyone outside of the
Company or any Affiliate of the Company during the term of this
Agreement.
SECTION 4
MANAGEMENT
4.1 THE BOARD.
(a) GENERAL. The business and affairs of the Company shall be managed
by or under the direction of a committee of Managers of the
Company (the "BOARD") consisting initially of three (e) natural
persons designated as directors of the Company ("DIRECTORS")
pursuant to the terms of this Agreement. Other than rights and
powers expressly reserved to Members by this Agreement or the
Delaware Act, the Board shall have full, exclusive and complete
discretion to manage and control the business and affairs of the
Company, to make all decisions affecting the business and affairs
of the Company and to take all such actions as it deems necessary
or appropriate to accomplish the purposes of the Company as set
forth herein. Each Director is hereby designated a Manager. The
Directors shall be appointed or elected as provided in Section
4.1(b). Each Director elected shall hold office until a successor
is elected and qualified or until such Director's earlier death,
resignation or removal. Directors need not be Members. No
appointment or election of a Director shall become effective,
however, until the Person named shall have accepted in writing
such appointment and agreed in writing to be bound by the terms
of this Agreement.
(b) INITIAL ELECTION AND APPOINTMENT OF DIRECTORS. UAG shall be
entitled to designate two (2) Directors (the "UAG Designees") and
Miller shall be entitled to designate one (1) Director (the
"Miller Designee"). The initial UAG Designees shall be Robert H.
Kurnick, Jr. and James Davidson and the initial Miller Designee
shall be Richard S. Koppelman UAG shall have the power to remove,
with or without cause a UAG Designee and fill any vacancy created
by the death, resignation or removal of any UAG Designee. Miller
shall have to the power to remove, with or without cause, the
Miller Designee and fill any vacancy created by the death,
resignation or removal of the Miller Designee.
(c) INCREASE OR DECREASE IN SIZE OF BOARD. The size of the Board may
be increased or decreased from time to time only by an amendment
to this Agreement.
(d) RESTRICTIONS ON THE BOARD. The Board shall not: (i) do any act in
contravention of any applicable law or regulation, or provision
of this Agreement; or (ii) admit
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any Person as a Member except as permitted in this Agreement and
the Delaware Act.
(e) MEETINGS OF THE BOARD. The Board may hold meetings, both regular
and special, either within or outside the State of Delaware. The
first meeting of each newly elected Board shall be held
immediately after the annual meeting of Members and at the same
place, and no notice of such meeting shall be necessary to the
newly elected Directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event such
meeting is not held at that time and place, the meeting may be
held at such time and place as shall be specified in a notice
given as hereinafter provided for special meetings of the Board,
or as shall be specified in a written waiver signed by all of the
Directors. Regular meetings of the Board may be held without
notice at such time and at such place as shall from time to time
be determined by the Board. Special meetings of the Board may be
called by any Member on two days' notice to each Director, either
personally, by telephone, by mail, by telegram or by any other
means of communication; special meetings shall be called by any
Member, the Chairman, or the Secretary in like manner and on five
days' notice on the written request of one or more of the
Directors. Notice of a meeting need not be given to any Director
if a written waiver of notice, executed by such Director before
or after the meeting, is filed with the records of the meeting,
or to any Director who attends the meeting without protesting
prior thereto or at its commencement, the lack of notice. A
waiver of notice need not specify the purposes of the meeting.
(f) QUORUM. At all meetings of the Board, two Directors shall
constitute a quorum for the transaction of business. If a quorum
shall not be present at any meeting of the Board, the Directors
present at such meeting may adjourn the meeting from time to
time, without notice other than announcement at the meeting,
until a quorum shall be present. Any action required or permitted
to be taken at any meeting of the Board or of any committee
thereof may be taken without a meeting, and without a vote,
provided that, at least two days advance notice of the intent to
take such action without a meeting and without a vote is given to
each Director, if a consent in writing, setting forth the action
so taken, shall be signed, in the case of action by the Board, by
Directors having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting,
and in the case of action by a committee, by all members of such
committee.
(g) REQUIRED BOARD VOTE. The affirmative vote of a majority of the
Directors present at any meeting at which there are sufficient
Directors present to constitute a quorum ("MAJORITY BOARD VOTE")
shall be the act of the Board, unless another vote is
specifically provided by this Agreement.
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(h) COMMITTEES OF DIRECTORS. The Board may, by resolution passed by a
Majority Board Vote, designate one or more additional committees,
each committee to consist of one or more of the Directors. Any
such committee, to the extent and only to the extent expressly
provided in the resolution of the Board, shall have and may
exercise all the powers and authority of the Board in the
management of the business and affairs of the Company. Each
committee shall keep regular minutes of its meetings and report
the same to the Board when required.
(i) ELECTRONIC COMMUNICATIONS. Members of the Board, or any committee
designated by the Board, may participate in a meeting of the
Board, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at
the meeting.
(j) COMPENSATION OF DIRECTORS. Directors shall not receive
remuneration for services as a Director; provided, that Directors
shall be entitled to reimbursement of reasonable out-of-pocket
expenses incurred in connection with attendance at regular or
special meetings of the Board or any committee thereof.
(k) DIRECTORS NOT AGENTS. The Directors are not agents of the Company
for the purpose of the Company's business and shall not have the
power to sign documents for or otherwise bind the Company.
4.2 OFFICERS.
(a) GENERAL. The designated officers of the Company shall be a
Chairman, a President who shall be the Chief Executive Officer of
the Company, a Secretary and a Treasurer and may include one or
more Vice Presidents, one or more Assistant Secretaries, one or
more Assistant Treasurers, and such other officers as may be
appointed in accordance with the provisions of Section 4.2(k)
(each, an "OFFICER," and together, the "OFFICERS"). Officers may
be, but need not be, Managers.
(b) ELECTION, TERM OF OFFICE, QUALIFICATIONS. Officers shall be
elected by a Majority Board Vote at any regular or special
meeting of the Board, provided that until such elections or
appointments have been made, the Officers shall be the natural
persons designated on SCHEDULE B annexed hereto. Except as
provided in paragraphs (c) and (d) of this Section 4.2, each
Officer shall hold office until his or her successor shall have
been chosen and qualified. Any two offices may be held by the
same Person, but no Officer shall execute, acknowledge or verify
any instrument in more than one capacity if such instrument be
required by law or this Agreement to be executed, acknowledged or
verified by any two or more Officers.
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(c) RESIGNATIONS AND REMOVALS. Any Officer may resign his or her
office at any time by delivering a written resignation to the
President or any Director. Unless otherwise specified therein,
such resignation shall take effect upon delivery. Executive
Officers may be removed from office at any time, with or without
cause, by a Majority Board Vote at any regular meeting or any
special meeting. All other officers may be removed from offices
at any time by the President. Except to the extent expressly
provided in a written agreement with the Company, no Officer
resigning and no Officer removed shall have any right to any
compensation for any period following his resignation or removal
or any right to damages on account of such removal.
(d) VACANCIES AND NEWLY CREATED OFFICES. If any vacancy shall occur
in any office, other than any Executive Officer, by reason of
death, resignation, removal, disqualification or other cause, or
if any new office shall be created, such vacancies or newly
created offices may be filled by the Board at any regular or
special meeting or, in the case of any office created pursuant to
Section 4.2(k), by any Officer upon whom such power shall have
been conferred by the Board. If any vacancy shall occur in the
office of any Executive Officer, such vacancy shall be filled by
appointment made by a Majority Board Vote.
(e) AUTHORITY OF OFFICERS; CERTAIN ACTS REQUIRING OR MAJORITY BOARD
VOTE. Subject to the provisions of this Agreement and to the
directives and policies of the Board not in conflict with this
Agreement, the President and the other Officers of the Company
shall have the power, acting individually or jointly, to
represent and bind the Company in all matters, in accordance with
the scope of their respective duties subject to the following
restrictions:
(i) The following actions or types of transactions shall not be
taken or consummated by the President or any other Officer,
employee or agent of the Company except pursuant to resolutions,
directions or guidelines adopted by a Majority Board Vote, and
such actions and types of transactions shall not constitute action
by the Company unless such Majority Board Vote is obtained:
(1) The merger, consolidation, reorganization or other business
combination of any kind involving the Company or sale of all
or substantially all the assets of the Company.
(2) Amendments to, or the execution or filing of any document or
agreement of any kind which would affect the terms of the
Certificate.
(3) The issuance or sale, or any agreement to issue or sell,
directly or indirectly, to any Person, by the Company any
interest of any kind in the Company, any rights, options or
warrants or other securities to acquire any
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such interest, or any securities convertible into or
exchangeable or exercisable for such interest; provided,
however, that any such issuance that could or would entitle
such person to the rights of a Member or that would cause
(or entitle) such person to receive an interest (other than
collateral security interests granted by the Company to
secure its obligations) of 5% or more in the assets or
profits of the Company shall also require the approval of
the Members of the Company in accordance with Section
13.1(b).
(4) Any sale or other transfer of assets of the Company not in
the ordinary course of business consistent with past
practices (other than as provided in the approved annual
Business Plan).
(5) The declaration or payment, directly or indirectly, of any
distribution, whether in cash, property or securities or a
combination thereof, with respect to any Percentage Interest
or Capital Contribution.
(6) The redemption, purchase, repurchase, retirement or other
acquisition for value of any of the interests in, or
securities of, the Company.
(7) The dissolution, liquidation, or voluntary bankruptcy of the
Company (other than any right of liquidation expressly
provided for under this Agreement).
(8) Approval of the annual Business Plan.
(9) Any investment in the equity or debt of another corporation
or in any partnership or other enterprise (other than
temporary investments of cash in money market instruments).
(10) Acceptance of annual financial statements.
(11) Approval of policies relating to the investment or
allocation of surplus funds and creation of reserve
accounts.
(12) Any change in the Company's accountants or any change in the
Company's material accounting policies, except as required
by generally accepted accounting principles.
(13) Subject to Section 4.2(e)(ii) below, the making of any
capital expenditure or acquisition of assets by the Company
(including by way of merger) other than capital expenditures
or acquisitions of assets provided for in the then current
approved annual Business Plan (or any permitted deviations
from the capital budget which may be allowed by a current
approved
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Business Plan) provided that, any such capital expenditure
or acquisition shall be the subject of discussion and debate
by the Members prior to it being submitted to the Board for
a vote.
(14) Incurring, creating, assuming or guaranteeing any
indebtedness by the Company, absolute or contingent of any
nature whatsoever (other than indebtedness incurred in the
ordinary course of business consistent with past practice or
as provided for in a current approved Business Plan).
(15) The extension of any material credit, including the lending
of funds by the Company, to another Person, other than in
the normal course of business of the Company.
(16) Election of Executive Officers; the establishment or change
in any Executive Officer's compensation or benefits of any
kind; the establishment or amendment of any employee pension
or other benefit programs of any kind; or action taken under
any employment agreement.
(17) The institution, termination or settlement by the Company of
any litigation where the amount in controversy exceeds
$100,000.
(18) The formation of any Subsidiary.
(19) Any change in the Company's name.
(ii) The following action or type of transaction shall not be
taken or consummated by the President or any other Officer,
employee or agent of the Company except pursuant to resolutions,
directions or guidelines adopted by a unanimous vote of the
Directors, and such action or transaction shall not constitute
action by the Company unless such unanimous vote is obtained:
The making of any capital expenditure which would cause the
net working capital of the Dealership Operating Companies,
in the aggregate, to fall below the levels of minimum net
working capital as is necessary to satisfy the requirements,
in the aggregate, of the Franchise Agreements of the
Dealership Operating Companies.
(f) CHAIRMAN. The Chairman shall be elected by the Board, but shall
have no other duties or powers except as may be determined by the
Board from time to time.
(g) PRESIDENT. From time to time as appropriate, pursuant to Section
4.2(b) the Board shall elect a president of the Company who
(subject to the terms of any applicable employment agreement)
shall serve as such until the earlier of his death or resignation
or his removal in accordance with the terms of this Agreement
(the
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"PRESIDENT"). The President shall be the chief executive officer
of the Company, shall preside at all meetings of the Members, and
shall have the responsibility for managing the day-to-day
business operations and affairs of the Company and supervising
its other Officers, subject to the direction, supervision and
control of the Board. In general, the President shall have such
other powers and (subject to the terms of any applicable
employment agreement) perform such other duties as usually
pertain to the office of the President, and as from time to time
may be assigned to him by the Board, including, without
limitation, the authority to retain and terminate employees of
the Company (other than Officers). The powers and duties of the
President shall at all times be subject to the provisions of
Section 4.2(e).
(h) VICE PRESIDENT. From time to time as appropriate, pursuant to
Section 4.2(b), the Board may elect one or more vice presidents
of the Company (each a "VICE PRESIDENT") who (subject to the
terms of any applicable employment agreement) shall serve as such
until the earlier of such persons death or resignation or his
removal in accordance with the terms of this Agreement. A Vice
President shall have such duties as may be prescribed by the
Board or the President, under whose supervision the Vice
President shall be.
(i) THE SECRETARY AND ASSISTANT SECRETARY. The Secretary shall attend
all meetings of the Board and all meetings of the Members and
record all the proceedings of the meetings and all actions of the
Members, the Board and the committees of the Board in a book to
be kept for that purpose and shall perform like duties for the
standing committees when required. The Secretary shall give, or
cause to be given, notice of all meetings of the Members and
special meetings of the Board, and shall perform such other
duties as may be prescribed by the Board or the President, under
whose supervision the Secretary shall be. The Assistant
Secretary, or if there be more than one, the Assistant
Secretaries in the order determined by the Board (or if there be
no such determination, then in order of their election) shall, in
the absence of the Secretary or in the event of the Secretary's
inability to act, perform the duties and exercise the powers of
the Secretary and shall perform such other duties and have such
other powers as the Board may from time to time prescribe.
(j) THE TREASURER AND ASSISTANT TREASURER. The Treasurer shall have
the custody of the Company's funds and securities and shall keep
full and accurate accounts of receipts and disbursements in books
belonging to the Company and shall deposit all moneys and other
valuable effects in the name and to the credit of the Company in
such depositories as may be designated by the Board. The
Treasurer shall disburse the funds of the Company as may be
ordered by the Board, taking proper vouchers for such
disbursements, and shall render to the President, under whose
supervision the Treasurer shall be, and the Board, at its regular
meetings,
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or when the Board so requires, an account of all of the
Treasurer's transactions and of the financial condition of the
Company. The Assistant Treasurer, or if there shall be more than
one, the Assistant Treasurers in the order determined by the
Board (or if there be no such determination, then in the order of
their election), shall, in the absence of the Treasurer or in the
event of the Treasurer's inability to act, perform the duties and
exercise the powers of the Treasurer and shall perform such other
duties and have such other powers as the Board may from time to
time prescribe.
(k) SUBORDINATE OFFICERS. The Board from time to time may appoint
such other subordinate Officers, or agents as it may deem
advisable, each of whom shall have such title, hold office for
such period, have such authority and perform such duties as the
Board may determine in its sole discretion subject always to the
direction and control of the President. The Board from time to
time may delegate to one or more Officers or agents the power to
appoint any such subordinate Officers or agents and prescribe
their respective rights, terms of office, authorities and duties.
(l) OFFICERS AS AGENTS. The Officers, to the extent of their powers
set forth in this Agreement, are agents of the Company for the
purpose of the Company's business, and the actions of the
Officers taken in accordance with such powers shall bind the
Company.
4.3 ACTIONS AND DETERMINATIONS OF THE COMPANY.
Whenever this Agreement provides that a determination shall be made or
an action shall be taken by the Company, such determination or act may
be made or taken by the Board or, pursuant to this Agreement or with
the required authorization of the Board, by any committee of the Board
or any Officer acting under the supervision of the Board.
SECTION 5
OPERATING POLICIES
5.1 ANNUAL BUSINESS PLAN PROCESS.
The President shall prepare and submit, or cause to have prepared and
submitted, to the Board for its approval (i) a business plan (the
"INITIAL BUSINESS PLAN") on or before April 30, 2001, and (ii) updated
business plans at least sixty (60) days prior to the beginning of each
new Fiscal Year (each such business plan, a "BUSINESS PLAN") covering
the period of the new Fiscal Year (except for the Initial Business
Plan, which shall cover the current Fiscal Year) (such one year period,
the "BUSINESS PLAN PERIOD"). Each such Business Plan shall set forth,
for each of the years covered by the Business Plan Period, the
Company's capital expenditure and expense budgets, anticipated
financing requirements, a detailed financial plan and proforma
financial statements, and shall specify quantitative
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and qualitative goals for the Company and relate the attainment of
those goals to the Company's strategic objectives.
(a) Not more than thirty (30) days following its receipt of an annual
Business Plan, the Board shall identify any additional
information, clarification and/or modification required for its
approval, and the President shall provide such to the Board as
soon as practicable. Any approval granted by the Board shall
apply only to the first year of any Business Plan Period and, in
the event that the annual Business Plan for the next fiscal year
is not approved by the close of the then current Fiscal Year, the
then existing Business Plan shall continue as the approved
Business Plan for a period of not more than 90 days following the
close of the then current Fiscal Year.
(b) The President shall prepare and present, or have prepared and
presented, at each regular meeting of the Board, or at any
special meeting called for this purpose, a review of the
Company's year-to-date progress in comparison to the approved
Business Plan.
5.2 INSURANCE.
The Company will maintain insurance at levels and of types consistent
with what would be deemed commercially reasonable for a company engaged
in business activities substantially similar to that of the Business.
5.3 FISCAL YEAR.
The fiscal year of the Company (the "FISCAL YEAR") shall end on the
31st day of December in each year. The Company shall have the same
fiscal year for income tax and for financial accounting purposes. To
the extent permissible under applicable law, the Fiscal Year may be
changed by a Majority Board Vote.
5.4 INITIAL ACCOUNTANTS; CHANGE OF ACCOUNTANTS.
The Company's independent public accountant as of the Closing shall be
Deloitte & Touche LLP. The Company's independent public accountant may
be changed at any time by a Majority Board Vote.
SECTION 6
CAPITAL CONTRIBUTIONS, PERCENTAGE INTERESTS,
CAPITAL ACCOUNTS AND ADVANCES
6.1 CAPITAL CONTRIBUTIONS.
The value of each Member's initial capital contribution to the Company
shall equal the amount set forth opposite the Member's name on SCHEDULE
A attached hereto. Schedule
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A hereto shall be amended by the Company from time to time to reflect
changes in the Percentage Interests set forth therein resulting from
issuances, redemptions, purchases and sales of membership interests in
the Company pursuant to the terms of this Agreement.
6.2 MEMBER'S PERCENTAGE INTEREST.
A Member's Percentage Interest shall for all purposes be personal
property. A Member has no interest in specific Company property.
6.3 STATUS OF CAPITAL CONTRIBUTIONS.
(a) Except as otherwise expressly provided herein, no Member shall
have the right to withdraw capital from the Company or to receive
any distribution or return of such Member's Capital
Contributions.
(b) No Member shall receive any interest, salary or drawing with
respect to its Capital Contributions, if any, or its Capital
Account or for services rendered on behalf of the Company or
otherwise in its capacity as a Member, except as otherwise
specifically provided in this Agreement.
(c) The Members shall be liable only to make their initial Capital
Contributions pursuant to Section 6.1, and no Member shall be
required to lend any funds to the Company or to make any
additional Capital Contributions to the Company except as
otherwise set forth herein.
6.4 CAPITAL ACCOUNTS.
A separate capital account (each a "CAPITAL ACCOUNT") for each Member
shall be established on the books and records of the Company and such
Capital Accounts shall be maintained for each Member in accordance with
the following provisions:
(a) To each Member's Capital Account there shall be credited such
Member's Capital Contributions, such Member's distributive share
of Net Profit and items in the nature of income or gain which are
specially allocated to such Member pursuant to Section 6.4(f) and
Section 7.2 hereof, and the amount of any Company liabilities
assumed by such Member or which are secured by any Company
property distributed to such Member.
(b) To each Member's Capital Account there shall be debited the
amount of cash and the Gross Asset Value of any Company property
distributed to such Member pursuant to any provision of the
Agreement (including amounts distributed to a Member but required
to be paid on such Member's behalf directly to a creditor or
another party pursuant to a separate agreement), such Member's
distributive share of Net Loss and any items in the nature of
expenses or losses which are specially allocated pursuant to
Section 6.4(f) and Section 7.2 hereof, and the amount of any
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liabilities of such Member assumed by the Company or which are
secured by any property contributed by such Member to the
Company.
(c) In the event all or a portion of a Member's Percentage Interest
is transferred in accordance with the terms of the Agreement, the
transferee shall succeed to the Capital Account of the transferor
to the extent it relates to the transferred Percentage Interest.
(d) In determining the amount of any liability for purposes of
Sections 6.4(a) and 6.4(b) hereof, there shall be taken into
account Code Section 752 and any other applicable provisions of
the Code and Treasury Regulations.
(e) Immediately prior to the occurrence of an event specified in
Treasury Regulation Section 1.704(b)-1(b)(2)(iv)(f)(5)(i) or
(ii), the Capital Accounts of the Members shall be adjusted
(consistent with the provisions hereof and Treasury Regulations
under Section 704 of the Code) upward or downward to reflect any
unrealized gain or unrealized loss attributable to property of
the Company, as if such unrealized gain or unrealized loss had
been recognized upon an actual sale of each asset immediately
prior to such event and had been allocated first to equalize the
Capital Accounts of the Members in proportion to their relative
Percentage Interests, and then to all the Members in accordance
with their Percentage Interests. In determining such unrealized
gain or unrealized loss, the fair market value of the property of
the Company as of any date of determination shall be reasonably
determined by Majority Board Vote. This Section 6.4(e) provision
is intended to meet the requirements of Treas. Reg.
1.704-1(b)(2)(iv)(f).
(f) This Section 6.4 and other provisions of this Agreement relating
to the maintenance of Capital Accounts are intended to comply
with Treasury Regulations Section 1.704-1(b), and shall be
interpreted and applied in a manner consistent with such Treasury
Regulations. Notwithstanding that a particular adjustment is not
set forth in this Section 6.4, the Capital Accounts of the
Members shall be adjusted as required by, and in accordance with,
the capital account maintenance rules of Treasury Regulations
Section 1.704-1(b).
6.5 NEGATIVE CAPITAL ACCOUNTS.
No Member shall be required to make up an Adjusted Capital Account
Deficit nor pay to any Member the amount of any such deficit in any
such account.
6.6 LOANS FROM MEMBERS.
Loans by a Member to the Company shall not be considered Capital
Contributions. If any Member shall advance funds to the Company in
excess of the amounts required hereunder to be contributed by such
Member to the capital of the Company, the making of such advances shall
not result in any increase in the amount of the Capital Account of such
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Member. The amounts of any such advances shall be a debt of the Company
to such Member and shall be payable or collectible only out of the
Company assets in accordance with the terms and conditions upon which
such advances are made. The repayment of loans from a Member to the
Company upon liquidation shall be subject to the order of priority set
forth in Section 13.2.
SECTION 7
ALLOCATIONS OF PROFITS AND LOSSES
7.1 ALLOCATIONS OF NET PROFIT AND NET LOSS.
(a) After giving effect to the special allocations set forth in
Section 6.4(e) and Section 7.2 hereof, Net Profit of the Company
for any Fiscal Year shall be allocated: one hundred percent
(100%) to the Members, in proportion to and to the extent of (A)
the cumulative Net Losses allocated to each Member pursuant to
Section 7.1(c) for all prior Fiscal Years, over (B) the
cumulative Net Profits allocated to each Member pursuant to this
Section 7.1(a)(ii) for all prior Fiscal Years; and (iii) the
balance, if any, among the Members in proportion to their
Percentage Interests.
(b) After giving effect to the special allocations set forth in
Section 6.5(e) and Section 7.2 hereof, Net Losses of the Company
for any Fiscal Year shall be allocated among the Members in
proportion to their Percentage Interests.
(c) Notwithstanding the foregoing provisions of Section 7.1(b), the
Net Losses allocated pursuant to Section 7.1(b) shall not exceed
the maximum amount of Net Losses that can be so allocated without
causing any Member to have an Adjusted Capital Account Deficit at
the end of any Fiscal Year. In the event some but not all of the
Members would have Adjusted Capital Account Deficits as a
consequence of an allocation of Net Losses pursuant to Section
7.1(b) hereof, the limitation set forth in this Section 7.1(c)
shall be applied on a Member by Member basis so as to allocate
the maximum permissible Net Loss amounts to each Member under
Treasury Regulations Section 1.704-1(b)(2)(ii)(d). All Net Loss
amounts in excess of the limitation set forth in this Section
7.1(c) shall be allocated to the Members in accordance with their
Percentage Interests.
7.2 SPECIAL ALLOCATIONS.
(a) Any allocation pursuant to Section 7.1 will be subject to the
following adjustments and special allocations which shall be made
in the following order of priority and prior to any allocation
under Section 7.1:
(i) MINIMUM GAIN CHARGEBACK. Notwithstanding any other
provision of this Section 7.2, if there is a net
decrease in Company Minimum Gain or
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Member Minimum Gain during any Fiscal Year, prior to any
other allocation pursuant hereto, items of Company
income and gain for such Fiscal Year (and, if necessary,
subsequent Fiscal Years) shall be specially allocated
between the Members in accordance with Treasury
Regulations Sections 1.704-2(f) and (i). The items to be
so allocated shall be determined in accordance with
Treasury Regulations Section 1.704-2(f)(6) and
1.704-2(j)(2)(i) through (iii).
(ii) QUALIFIED INCOME OFFSET. If any Member unexpectedly
receives any adjustments, allocations or distributions
described in Treasury Regulations Sections
1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Company
income and gain shall be specially allocated to each
such Member in an amount and manner sufficient to
eliminate, to the extent required by the Treasury
Regulations, the Adjusted Capital Account Deficit of
such Member as quickly as possible, provided that an
allocation pursuant to this Section 7.2(a)(ii) shall be
made only if and to the extent that such Member would
have an Adjusted Capital Account Deficit after all other
allocations provided for in this Section 7.2(a) have
been tentatively made as if this Section 7.2(a)(ii) were
not in the Agreement.
(iii) SPECIAL INCOME ALLOCATION. If any Member has an Adjusted
Capital Account Deficit in its Capital Account at the
end of any Fiscal Year or portion thereof that is in
excess of the sum of (I) the amount such Member is
obligated to restore pursuant to any provision of this
Agreement, and (II) the amount such Member is deemed to
be obligated to restore pursuant to the penultimate
sentences of Treasury Regulations Sections 1.704-2(g)(1)
and 1.704-2(i)(5) of the Regulations, each such Member
shall be specially allocated items of Company income and
gain in the amount of such excess as quickly as
possible, provided that an allocation pursuant to this
Section 7.2(a)(iii) shall be made only if and to the
extent that such Member would have an Adjusted Capital
Account Deficit in excess of such sum after all other
allocations provided for in this Section 7.2(a) have
been made as if this Section 7.2(a)(iii) were not in the
Agreement.
(iv) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions, if any,
for any Fiscal Year shall be allocated (as nearly as
possible) under Treasury Regulations Section 1.704-2(e)
among the Members in proportion to their respective
Percentage Interests.
(v) MEMBER NONRECOURSE DEDUCTIONS. In accordance with the
principles set forth in Treasury Regulations Section
1.704-2(i), any Member Nonrecourse Deductions for any
Fiscal Year shall be allocated to the
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Members in accordance with the ratios in which they
potentially bear the economic risk of loss with respect
to such Member Nonrecourse Debt.
(vi) SECTION 754 ADJUSTMENTS. To the extent an adjustment to
the adjusted tax basis of any Company asset pursuant to
Section 734(b) or 743(b) of the Code is required
pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(m) to be taken into account in
determining Capital Accounts as a result of a
distribution to a Member in complete liquidation of its
interest, the amount of such adjustment to the Capital
Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset), or loss
(if the adjustment decreases such basis), and such item
of gain or loss shall be specially allocated in a manner
consistent with the manner in which the Capital Accounts
of the Members are required to be adjusted pursuant to
such Section of the Regulations.
(b) CURATIVE ALLOCATIONS. It is the intent of the parties
that, to the extent possible, all allocations pursuant
to Sections 7.2(a)(i) through 7.2(a)(vi) (the
"REGULATORY ALLOCATIONS") shall be offset either with
other Regulatory Allocations or with special allocations
of other items of Company income, gain, loss or
deduction pursuant to this Section 7.2(b). Therefore,
notwithstanding any other provision of this Agreement
(other than Sections 7.2(a)(i) through 7.2(a)(vi)), the
Board shall make such offsetting special allocations of
Company income, gain, loss or deductions as are
appropriate so that after such offsetting allocations
are made, each Members Capital Account balance is, to
the extent possible, equal to the Capital Account
balance such Member would have had if Sections 7.2(a)(i)
through 7.2(a)(vi) were not part of this Agreement and
all Company items were allocated pursuant to Section 7.1
of this Agreement.
7.3 TAX ALLOCATIONS.
Items of income, gain, loss, deduction and credit of the Company shall,
for each Fiscal Year, be allocated, for U.S. federal, state and local
income tax purposes, among the Members in the same manner as the items
of income, gain, loss, deduction and credit were allocated to such
Members pursuant to Section 6.5(e), Section 7.1 and Section 7.2 hereof.
Notwithstanding the foregoing, in accordance with Code Section 704(c)
and the Treasury Regulations thereunder, items of income, gain, loss
and deduction with respect to any property contributed to the capital
of the Company shall, solely for tax purposes, be allocated among the
Members so as to take account of any variation between the adjusted tax
basis of such property at the time of contribution to the Company for
federal income tax purposes and its Gross Asset Value at the time of
contribution using the "remedial allocation method" set forth in
Treasury Regulation 1.704-3(d). In the event the Gross Asset Value of
any Company asset is adjusted in accordance with the definition of
Gross Asset Value hereof, subsequent allocations of items of income,
gain, loss, and
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deductions with respect to such asset shall take account of any
variation between the adjusted tax basis of such asset for federal
income tax purposes and its adjusted Gross Asset Value in a manner
consistent with the principles of Code Section 704(c) and the Treasury
Regulations thereunder. Allocations pursuant to this Section 7.3 are
solely for purposes of U.S. federal, state, and local income taxes and
shall not affect, or in any way be taken into account in computing, any
Member's Capital Account or share of Net Profit or Net Loss, other
items, or distributions pursuant to any provision of this Agreement.
7.4 TRANSFER OR CHANGE IN MEMBER INTERESTS.
If the respective interests of the existing Members in the Company
change or if a Company interest is transferred to any other person or
entity, then, for the Fiscal Year of transfer, all income, gains,
losses, deductions, tax credits and other tax incidents resulting from
the operations of the Company shall be allocated, as between the
transferor and the transferee, by taking into account their varying
interests in accordance with Section 706 of the Code.
SECTION 8
DISTRIBUTIONS AND WITHHOLDING
8.1 DISTRIBUTIONS.
The Company shall not make any distributions to its Members except as
determined by the Board in accordance with Section 4.2(e) or except as
otherwise provided herein. Except as otherwise expressly provided
herein, all Distributions shall be made to Members pro rata in
accordance with their respective Percentage Interests.
8.2 LIMITATIONS ON DISTRIBUTION.
Notwithstanding any provision to the contrary contained in this
Agreement, the Company shall not make a distribution to any Member on
account of its interest in the Company if such distribution would
violate Section 18-607 of the Delaware Act.
8.3 WITHHOLDING TAXES.
If the Company is required to withhold any portion of any amounts
distributed or allocated to a Member by applicable U.S. federal, state,
local or foreign tax laws, the Company may withhold such amounts and
make such payments to taxing authorities as are necessary to ensure
compliance with such tax laws. Any funds withheld by reason of this
Section 8.3 shall nonetheless be deemed distributed to the Member in
question for all purposes under this Agreement. If the Company did not
withhold from actual distributions any amounts it was required to
withhold, the Company may, at its option, (i) require the Member to
which the withholding was credited to reimburse the Company for such
withholding; or (ii) reduce any subsequent distributions to such Member
by the amount of such withholding. The obligation of a Member to
reimburse the Company for taxes that were required to be withheld shall
continue after such Member transfers or
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liquidates its interest in the Company. Each Member agrees to furnish
the Company with any representations and forms as shall reasonably be
requested by the Company to assist in determining the extent of, and in
fulfilling, any withholding obligations it may have.
8.4 TAX DISTRIBUTIONS.
The Company shall make cash distributions each year to each Member in
an amount determined by multiplying (i) such Member's taxable income
resulting from the pass through allocations of the Company's income and
gain to such Member by (ii) the highest rate applicable to any of the
Members under applicable state and federal income tax laws.
8.5 ADJUSTED NET CASH DISTRIBUTIONS.
The Company shall distribute the amounts as determined by Section 8.4
above on an annual basis. In addition, the Company shall distribute not
less than Fifty Percent (50%) of the Adjusted Net Cash on, at a
minimum, a quarterly basis to the Members pro rata in accordance with
their respective Percentage Interests. Any Adjusted Net Cash
distribution to Miller shall be net of the (i) amount of the then due
and owing principal and interest payment of Miller to the Company under
the Promissory Note; and (ii) amount of the accrued receivable owing to
the Company as described in this Section 8.5 (collectively, the
"CURRENT MILLER OBLIGATION"). If the Adjusted Net Cash distribution to
Miller is less than the Current Miller Obligation, then the difference
between the Current Miller Obligation and the Adjusted Net Cash
distribution shall be accrued on the Financial Statements, of the
Company as a receivable owing from Miller. The Company shall adjust
this accrual upon a distribution made in accordance with this Section
8.5. Commencing year end 2004, Miller shall, on an annual basis, make a
payment to the Company in the amount of the receivable reflected on the
Company's Financial Statements which payment shall not exceed in any
one calendar year the amount ofAdjusted Net Cash distributions actually
made to Miller pursuant to this Section 8.5. After such payment by
Miller, any receivable remaining on the December 31 Company Financial
Statement of each year shall reduce the capital account of Miller on a
dollar-for-dollar basis and Miller's Percentage Interest shall be
prorationately reduced; provided that for a period of thirty (30) days
thereafter, Miller shall have the right to buy back its Percentage
Interest for the amount that its capital account was reduced.
SECTION 9
TAX MATTERS
9.1 TAX MATTERS MEMBER.
(a) UAG is hereby designated as the initial "Tax Matters Member"
("TMM") of the Company under Section 6231 of the Code and the
Treasury Regulations thereunder. Each Member hereby consents to
such designation and agrees that upon the request of the Company
it will execute, certify, acknowledge, deliver,
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swear to, file and record at the appropriate public offices such
documents as may be necessary or appropriate to evidence such
consent. Upon the resignation or bankruptcy of UAG, or upon the
failure of UAG to carry out the responsibilities of a TMM in a
timely fashion, a successor to serve in such capacity shall be
designated by vote of Members holding a majority of the interests
in the Company. The TMM may employ experienced tax counsel to
represent the Company in connection with any audit or
investigation of the Company by the Internal Revenue Service
("IRS"), and in connection with all subsequent administrative and
judicial proceedings arising out of such audit. The fees and
expenses of such counsel shall be a Company expense and shall be
paid by the Company. Such counsel shall be responsible for
representing the Company; it shall be the responsibility of the
Members, at their own expense, to employ tax counsel to represent
their respective separate interests. The TMM shall keep the
Members informed of all administrative and judicial proceedings as
required by Code Section 6223(g) and shall furnish to each Member
a copy of each notice or other communication received by the TMM
from the IRS except such notice or communication sent directly to
the Members by the IRS. All expenses incurred by the TMM in
serving in such capacity shall be Company expenses and shall be
paid by the Company.
(b) Notwithstanding the foregoing, prior to taking any of the
following actions the Company shall provide notice to the Members
and shall provide the Members with a reasonable period of time in
which to review and approve such action (which approval shall not
be unreasonably withheld):
(i) Any written correspondence or filings and any settlements
in connection with any income tax audit of the Company or
any other tax audit involving material taxes of the
Company, including administrative settlement and judicial
review.
(ii) Except as set forth in Section 9.1(a) and Section 9.2, the
making of any tax election.
(iii) Any adjustment to the capital accounts of the Members in
connection with Section 6.4(e) and Section 6.4(f).
(iv) Approval of any income tax return of the Company and any
other tax return of the Company which reflects the tax
treatment of any item arising in connection with actions
described in Section 4.2(e)(i)(1),(4), (5), (6) or (7) or
4.2(e)(ii) (2), (5) or (7).
(v) Any allocation made pursuant to Section 7.2, and any
decision to revise, alter or otherwise modify the methods
of allocation set forth in Section 7 hereof.
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9.3 RIGHT TO MAKE SECTION 754 ELECTION.
The TMM may make an election under Section 754 of the Code to the
extent requested by any Member. Each Member shall, upon request of the
TMM, at such Member's cost, promptly supply the TMM information
reasonably necessary to give effect to such election.
9.4 TAXATION AS PARTNERSHIP.
The Company shall be treated as a partnership for United States federal
and state income tax purposes and the Members agree not to take any
action inconsistent with the Company's classification as a partnership
for United States federal and State income tax purposes. By executing
this Agreement, each of the Members hereby consents to, and the TMM
shall, take any action necessary, including, without limitation, the
execution of any forms and documents, for the Company to be treated as
a partnership for United States federal and state income tax purposes.
SECTION 10
BANKING; ACCOUNTING; BOOKS AND RECORDS
10.1 BANKING.
All funds of the Company may be deposited in such bank, brokerage or
money market accounts as shall be established by the Company.
Withdrawals from and checks drawn on any such account shall be made
upon the President's signature and/or such other signature or
signatures as the Board may designate.
10.2 MAINTENANCE OF BOOKS AND RECORDS; ACCOUNTS AND ACCOUNTING METHOD;
INSPECTION.
(a) the Company shall keep or cause to be kept at the address of the
Company (or at such other place as the Company shall advise the
Members in writing) full and accurate accounts of the
transactions of the Company in proper books and records of
account which shall set forth all information required by the
Delaware Act. Such books and records shall be maintained on the
basis of United States generally accepted accounting principles,
to the extent that such principles are not inconsistent with the
other provisions of this Agreement. Such books and records shall
be available, upon reasonable notice to the Company, for
inspection and copying at reasonable times during business hours
by a Member or its duly authorized agents or representatives for
any purpose reasonably related to such Member's interest as a
member in the Company.
(b) Employees, agents and representatives of UAG shall have full
access to the plants and properties of the Company and its
Subsidiaries for the purpose of inspecting
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such plants and properties and the operations thereon during
normal business hours, in a manner that does not unduly disrupt
the business or operations of the Company and upon the prior
written notice to the President of the Company of any such
inspection.
SECTION 11
REPORTS TO MEMBERS
11.1 REPORTS TO CURRENT MEMBERS.
(a) The Company shall use its good faith efforts to prepare and mail
to each Member, within 75 days after the end of each Fiscal Year
and 30 days after the end of each quarter thereof other than the
last quarter of the Fiscal Year, a financial report (upon request
of UAG, audited in the case of a report sent as of the end of a
Fiscal Year and unaudited in the case of a report sent as of the
end of a quarter) setting forth as of the end of such Fiscal Year
or quarter (i) the assets and liabilities of the Company as of
the end of such Fiscal Year or quarter, (ii) the income or loss
of the Company for such Fiscal Year or quarter and (iii) the
changes in cash flow during such Fiscal Year or quarter.
(b) The Company shall use its good faith efforts to prepare and mail
to each Member, within 100 days after the end of each Fiscal Year
a financial report setting forth as of the end of such Fiscal
Year such Member's closing Capital Account as of the end of such
Fiscal Year, together with a reconciliation of the changes from
the previous report.
11.2 TAX INFORMATION.
(a) No later than April 10, June 10, September 10 and December 10 of
each Fiscal Year, the Company shall deliver to each Person that
was a Member at any time during the quarter in which or
immediately preceding which such date occurs a statement of such
Person's distributive share, if any, of items of income, gain,
loss, deduction and credit of the Company for such quarter and
such other information as may be reasonably necessary for such
Person to make its estimated tax payments.
(b) As soon as practicable after the end of the Fiscal Year, but in
no event later than 45 days after the end of the Fiscal Year, the
Company shall deliver to each Person that was a Member at any
time during such Fiscal Year a final statement of such Person's
reasonably determined distributive share, if any, of items of
income, gain, loss, deduction and credit of the Company for such
Fiscal Year and such other information as may be reasonably
necessary for such Person to complete its tax returns (including
copies of any tax returns that have been filed by the Company).
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(c) The Company shall provide each Member with a copy of any tax
return described in Section 9.1(b)(iv) hereof for such Member's
review at least twenty (20) business days before the due date of
such tax return.
11.3 ADDITIONAL INFORMATION.
Upon the request of any Member, the Company shall, at the request of a
Member, furnish such additional information about the Company and
distributions from the Company reasonably related to such Member's
interest in the Company. Without limiting the foregoing sentence, the
Company agrees to use its good faith efforts to make available to any
Member which accounts for its interest on the equity method (whether or
not the Company is publicly reporting), such financial information as
may be reasonably required by such Member, it being understood that
such information will be the type of financial information that the
Company would file with the Securities and Exchange Commission if the
Company were subject to the periodic reporting requirements of the
Exchange Act of 1934, as amended. The Company agrees to use its good
faith efforts to provide such information to any such Member at a date
which will allow such Member a reasonable period of time in which to
incorporate such information into any filings to be made by such
Member.
SECTION 12
LIABILITY, EXCULPATION AND INDEMNIFICATION
12.1 LIABILITY.
Except as otherwise provided herein or by the Delaware Act, the debts,
obligations and liabilities of the Company, whether arising in
contract, tort or otherwise, shall be solely the debts, obligations and
liabilities of the Company, and no Covered Person shall be obligated
personally for any such debt, obligation or liability of the Company
solely by reason of being a Covered Person.
12.2 EXCULPATION.
(a) GENERALLY. No Covered Person shall be liable to the Company or
any Member for any act or omission taken or suffered by such
Covered Person in good faith and in the reasonable belief that
such act or omission is in or is not contrary to the best
interests of the Company and is within the scope of authority
granted to such Covered Person by this Agreement, provided that
such act or omission is not in material violation of this
Agreement and does not constitute Disabling Conduct by the
Covered Person. No Member shall be liable to the Company or any
Member for any action taken by any other Member.
(b) RELIANCE GENERALLY. A Covered Person shall incur no liability in
acting upon any signature or writing reasonably believed by it to
be genuine, and may rely on a certificate signed by an executive
officer of any Person in order to ascertain any
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fact with respect to such Person or within such Person's
knowledge and may rely on an opinion of counsel selected by such
Covered Person with respect to legal matters, except to the
extent that such liability resulted from the Covered Person
having engaged in Disabling Conduct. Each Covered Person may act
directly or through its agents or attorneys. Each Covered Person
may consult with counsel, appraisers, engineers, accountants and
other skilled Persons of its choosing, and shall not be liable
for anything done, suffered or omitted in good faith in
reasonable reliance upon the advice of any of such Persons,
except to the extent that such Covered Person engaged in
Disabling Conduct. No Covered Person shall be liable to the
Company or any Member for any error of judgment made in good
faith by a responsible officer or officers of the Covered Person,
except to the extent that such liability resulted from the
Covered Person having engaged in Disabling Conduct. Except as
otherwise provided in this Section 12.2, no Covered Person shall
be liable to the Company or any Member for any mistake of fact or
judgment by the Covered Person in conducting the affairs of the
Company or otherwise acting in respect of and within the scope of
this Agreement, except to the extent that such liability resulted
from the Covered Person having engaged in Disabling Conduct. No
Covered Person shall be liable for the return to any Member of
all or any portion of any Member's Capital Account or Capital
Contributions, except to the extent that such liability resulted
from the Covered Person having engaged in Disabling Conduct.
(c) RELIANCE ON THIS AGREEMENT. To the extent that, at law or in
equity, a Covered Person has duties (including fiduciary duties)
and liabilities relating thereto to the Company or to the
Members, any Covered Person acting under this Agreement or
otherwise shall not be liable to the Company or to any Member for
its good faith reliance on the provisions of this Agreement. The
provisions of this Agreement, to the extent that they restrict
the duties and liabilities of a Covered Person otherwise existing
at law or in equity, are agreed by the Members to replace such
other duties and liabilities of such Covered Person.
(d) STANDARD OF CARE. Whenever in this Agreement a Person is
permitted or required to make a decision (i) except the Directors
in connection with the discharge of their duties as Members of
the Board in its "sole and absolute discretion," "sole
discretion," "discretion" or under a grant of similar authority
or latitude, the Person shall be entitled to consider such
interests and factors as it desires, including its own interests,
and shall have no duty or obligation to give any consideration to
any interest of or factors affecting any other Member, the
Company or any other Person, or (ii) in its "good faith" or under
another express standard, the Person shall act under such express
standard and shall not be subject to any other or different
standard imposed by this Agreement or other applicable law.
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12.3 INDEMNIFICATION.
(a) INDEMNIFICATION GENERALLY. The Company shall and hereby does, to
the fullest extent permitted by applicable law, indemnify, hold
harmless and release each Covered Person from and against all
claims, demands, liabilities, costs, expenses, damages, losses,
suits, proceedings and actions, whether judicial, administrative,
investigative or otherwise, of whatever nature, known or unknown,
liquidated or unliquidated ("CLAIMS"), that may accrue to or be
incurred by any Covered Person, or in which any Covered Person
may become involved, as a party or otherwise, or with which any
Covered Person may be threatened, relating to or arising out of
the business and affairs of, or activities undertaken in
connection with, the Company, or otherwise relating to or arising
out of this Agreement, including, but not limited to, amounts
paid in satisfaction of judgments, in compromise or as fines or
penalties and counsel fees and expenses incurred in connection
with the preparation for or defense or disposition of any
investigation, action, suit, arbitration or other proceeding (a
"PROCEEDING"), whether civil or criminal (all of such Claims and
amounts covered by this Section 12.3. and all expenses referred
to in Section 12.3(c), are referred to as "DAMAGES"), except to
the extent that it shall have been determined ultimately that
such Damages arose from Disabling Conduct of such Covered Person
or that such Covered Person committed a material breach of this
Agreement. The termination of any Proceeding by settlement shall
not, of itself, create a presumption that any Damages relating to
such settlement arose from a material violation of this Agreement
by, or Disabling Conduct of, any Covered Person.
(b) NO DIRECT MEMBER INDEMNITY. Members shall not be required
directly to indemnify any Covered Person.
(c) EXPENSES, ETC. Expenses incurred by a Covered Person in defense
or settlement of any Claim that may be subject to a right of
indemnification hereunder may be advanced by the Company prior to
the final disposition thereof upon receipt of an agreement by or
on behalf of the Covered Person to repay such amount if it shall
be determined ultimately that the Covered Person is not entitled
to be indemnified hereunder. The right of any Covered Person to
the indemnification provided herein shall be cumulative with, and
in addition to, any and all rights to which such Covered Person
may otherwise be entitled by contract or as a matter of law or
equity and shall extend to such Covered Person's successors,
assigns and legal representatives.
(d) NOTICES OF CLAIMS, ETC. Promptly after receipt by a Covered
Person of notice of the commencement of any Proceeding, such
Covered Person shall, if a claim for indemnification in respect
thereof is to be made against the Company, give written notice to
the Company of the commencement of such Proceeding, provided that
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the failure of any Covered Person to give notice as provided
herein shall not relieve the Company of its obligations under
this Section 12.3 except to the extent that the Company is
actually prejudiced by such failure to give notice. In case any
such Proceeding is brought against a Covered Person (other than a
derivative suit in right of the Company), the Company will be
entitled to participate in and to assume the defense thereof to
the extent that the Company may wish, with counsel reasonably
satisfactory to such Covered Person. After notice from the
Company to such Covered Person of the Company's election to
assume the defense thereof (and corresponding expenses), the
Company will not be liable for expenses subsequently incurred by
such Covered Person in connection with the defense thereof. The
Company will not consent to entry of any judgment or enter into
any settlement that does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Covered
Person of a release from all liability in respect to such Claim.
(e) NO WAIVER. Nothing contained in this Section 12.3 shall
constitute a waiver by any Member of any right that it may have
against any party under United States federal or state securities
laws.
SECTION 13
TRANSFER OF PERCENTAGE INTERESTS; WITHDRAWAL,
BANKRUPTCY, DISSOLUTION; CERTAIN ADMISSIONS OF MEMBERS
13.1 ADMISSION, SUBSTITUTION AND WITHDRAWAL OF MEMBERS; ASSIGNMENT.
(a) GENERAL. Except as set forth in this Section 13, no Person may be
admitted to, and no Member may withdraw from, the Company prior
to the dissolution and winding up of the Company. No Member shall
sell, transfer, assign, convey, pledge, mortgage, encumber,
hypothecate or otherwise dispose of all or any part of its
interest in the Company (a "TRANSFER") without first complying
with the provisions of this Section 13.1.
(b) ADMISSION OF NEW MEMBERS AND ISSUANCE OF INTERESTS IN EXCESS OF
5%. Except for Transfers in accordance with Section 13.1(c)
below, no person shall be admitted as a new Member and the
Company shall not authorize the issuance of interest in the
Company of any kind that could or would entitle the recipient
thereof to the rights of a Member or that would cause (or
entitle) such person to receive an interest (other than
collateral security interests granted by the Company to secure
its obligations) of 5% or more in the assets or profits of the
Company unless the written approval of each of the Members of the
Company has been obtained.
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(c) CONDITIONS TO TRANSFER. Any purported Transfer by a Member
pursuant to the terms of this Section 13 shall be subject to the
satisfaction of the following conditions:
(i) the transferring Member or transferee shall
undertake to pay all reasonable expenses incurred by
the Company in connection therewith;
(ii) the Company shall received from the transferring
Member a legal opinion, in form and substance
reasonably satisfactory to the nontransferring
Members, to the effect that the transfer will not
result (directly or indirectly) in (A) a termination
of the Company under any Section of the Code that
would require the non-transferring Members to
recognize gain under Section 731 of the Code, or (B)
treatment of the Company as an entity other than a
partnership for purposes of the Code; and
(iii) the Company shall receive from the Person to whom
such Transfer is to be made (A) such documents,
instruments and certificates as may be requested by
the Company, pursuant to which such transferee shall
agree to be bound by this Agreement, (B) such other
documents, opinions, instruments and certificates as
the Company shall reasonably request and (C) a
counterpart of this Agreement executed by or on
behalf of such Person; and
(iv) any transferee of all or a portion of the Miller
Percentage Interest shall take such Percentage
Interest subject to the Real Property Agreement,
Promissory Note and Pledge Agreement.
(d) COOPERATION BY THE COMPANY. The Company shall provide reasonable
assistance to any Member at such Member's request seeking to sell
its Percentage Interest in compliance with this Agreement,
provided that the Company shall not be required to provide any
confidential information to any prospective purchaser who has not
executed a confidentiality agreement in form reasonably
satisfactory to the Company. Any costs to the Company of
providing such assistance shall be paid by the Member seeking to
sell its Percentage Interest.
(e) PROHIBITED TRANSFERS. No attempted Transfer shall be recognized
by the Company unless effected in accordance with and as
permitted by this Agreement.
13.2 WITHDRAWAL.
No Member shall have the right to withdraw from the Company and no
Member shall take any action to accomplish its voluntary dissolution.
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SECTION 14
DISSOLUTION AND TERMINATION OF THE COMPANY
14.1 EVENTS CAUSING DISSOLUTION.
(a) DISSOLUTION EVENTS. There will be a dissolution of the Company
and its affairs shall be wound up upon the first to occur of any
of the following events:
(i) the written consent of all Members;
(ii) the death, retirement, resignation, expulsion,
bankruptcy or dissolution (any of the foregoing, a
"WITHDRAWAL") of any Member (in such capacity, the
"WITHDRAWING MEMBER") unless, within ninety days
after the occurrence of such an event Members
holding a majority of the Percentage Interests of
all of the remaining Members agree in writing to
continue the business of the Company and to the
appointment, if necessary or desired, effective as
of the date of such event, of one or more new
Members; or
(iii) the entry of a decree of judicial dissolution under
Section 18-802 of the Delaware Act.
(b) If the remaining Members decide to continue the Company pursuant
only to Section 14.1(a)(ii), the Company shall inform the
Withdrawing Member of such decision by written notice delivered
within ninety (90) days of the occurrence of the Withdrawal. If
the Members so elect to continue the Company, the Withdrawing
Member shall no longer be a Member of the Company and the Company
(and/or the other Members) shall make payment in cash in
liquidation of the Withdrawing Member's interest in the Company.
Any such payment shall be equal to the Withdrawing Member's
capital account minus any costs, fees or expenses of the Company
and the non-withdrawing members related to the Withdrawal.
14.2 LIQUIDATION.
Upon dissolution of the Company, the Person or Persons approved as
provided in Section 14.4(b) to carry out the winding up of the Company
(in such capacity, the "LIQUIDATING TRUSTEE") and shall proceed,
subject to the provisions herein, to liquidate the Company and apply
the proceeds of such liquidation, or at the discretion of the Members
to distribute Company assets, in the following order of priority:
(a) First, to creditors (including creditors that are also Members)
in satisfaction of debts and liabilities of the Company, whether
by payment or the making of reasonable provision for payment
(including any loans or advances that may have
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been made by any of the Members to the Company), and the expenses
of liquidation, whether by payment or the making of reasonable
provision for payments, any such reasonable reserves (which may be
funded by a liquidating trust) to be established by the
Liquidating Trustee, as the case may be, in amounts deemed by it
to be reasonably necessary for the payment of the Company's
expenses, liabilities and other obligations (whether fixed or
contingent); and
(b) Second, to the Members in proportion to, and to the extent of,
each Member's Capital Account, as such Capital Account has been
adjusted pursuant to Section 6.4, any remainder to be distributed
among the Members in accordance with their respective Percentage
Interests.
14.3 DISTRIBUTIONS IN CASH OR IN KIND.
(a) Upon the dissolution of the Company, the Liquidating Trustee
shall use its good faith efforts to liquidate all of the Company
assets in an orderly manner and apply the proceeds of such
liquidation as set forth in Section 14.2, or if in the good faith
business judgment of the Liquidating Trustee a Company asset
should not be liquidated, the Liquidating Trustee shall allocate,
on the basis of the Value of any Company assets not sold or
otherwise disposed of, any unrealized gain or loss based on such
Value to the Members' Capital Accounts as though the assets in
question had been sold on the date of distribution and, after
giving effect to any such adjustment, distribute said assets in
accordance with Section 14.2, provided that the Liquidating
Trustee will in good faith attempt to liquidate sufficient
Company assets to satisfy in cash (or make reasonable provision
for) the debts and liabilities referred to in paragraph First of
Section 14.2.
14.4 TIME AND MANNER FOR LIQUIDATION, ETC.
(a) A reasonable time period shall be allowed for the orderly winding
up and liquidation of the assets of the Company and the discharge
of liabilities to creditors so as to enable the Liquidating
Trustee to seek to minimize potential losses upon such
liquidation. The provisions of this Agreement shall remain in
full force and effect during the period of winding up and until
the filing of a certificate of cancellation of the Company with
the Secretary of State of the State of Delaware.
(b) In the event of a liquidation of the Company, the Members shall
jointly approve the Person to act as Liquidating Trustee and
shall be entitled to direct the manner and timing under which
such Liquidating Trustee shall proceed to liquidate the Company.
All Members shall be promptly informed of any directions given by
another Member to the Liquidating Trustee and of the progress of
the liquidation.
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14.5 TERMINATION.
Upon completion of the foregoing, the Liquidating Trustee shall
execute, acknowledge and cause to be filed a certificate of
cancellation of the Company with the Secretary of State of the State of
Delaware.
14.6 CLAIMS OF THE MEMBERS.
The Members and former Members shall, other than for a breach of this
Agreement, gross negligence or willful misconduct, look solely to the
Company's assets for the return of their Capital Contributions, and if
the assets of the Company remaining after payment of or due provision
for all debts, liabilities and obligations of the Company are
insufficient to return such Capital Contributions, the Members and
former Members shall have no recourse against any Member, any Manager
or any Member's or Manager's Affiliates.
SECTION 15
DEFINITIONS
15.1 DEFINITIONS.
Unless the context otherwise requires, the terms defined in this
Section 15.1 shall, for the purposes of this Agreement, have the
meanings herein specified.
"ADJUSTED CAPITAL ACCOUNT DEFICIT" shall mean, with respect to any
Member, the deficit balance, if any, in such Member's Capital Account
as of the end of the relevant Fiscal Year after giving effect to the
following adjustments: (a) credit to such Capital Account any amounts
that such Member is obligated to restore pursuant to the penultimate
sentences of Treasury Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5); and (b) debit to such Capital Account the items
described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5)
and (6). This definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d)
of the Treasury Regulations and shall be interpreted consistently
therewith.
"ADJUSTED NET CASH" means an amount that is reasonably determined by
the Chief Financial Officer of United Auto Group, Inc. and the
President of the Company.
"AFFILIATE" of any entity or Person shall mean any other entity or
person Controlling, Controlled by, or under Common Control with, such
entity or Person.
"AGREEMENT" shall mean this Limited Liability Company Agreement, as
amended, modified, supplemented or restated from time to time.
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"ASSOCIATE" shall have the meaning ascribed to such term in Rule 12b-2
of the Securities Exchange Act of 1934, as amended.
"BUSINESS" is defined in the Recitals to this Agreement.
"BUSINESS DAY" shall mean any day on which banks located in New York
City are not required or authorized by law to remain closed.
"CAPITAL ACCOUNT" shall mean, with respect to any Member, the account
maintained for such Member in accordance with the provisions of Section
6.4.
"CAPITAL CONTRIBUTION" shall mean, with respect to any Member, the
amount of money and the Gross Asset Value of property (other than
money) contributed by such Member to the Company pursuant to Article VI
hereof and as set forth on Schedule A.
"CERTIFICATE" shall mean the Company's Certificate of Formation and any
and all amendments thereto and restatements thereof filed on behalf of
the Company with the office of the Secretary of State of the State of
Delaware pursuant to the Delaware Act.
"CLAIMS" shall have the meaning set forth in Section 12.3(a).
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMPANY MINIMUM GAIN" shall have the meaning of "partnership minimum
gain" set forth in Treasury Regulations Sections 1.704-2(b)(2) and
1.704-2(d).
"CONTROL" (including the terms "Controlling", "Controlled by" and
"under common Control with") means the possession, directly or
indirectly, or the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of
securities, by contract or otherwise.
"COVERED PERSON" shall mean a Member, a Manager, a Director, an
Officer, any Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control
with the Company, a Member or a Manager; any officers, directors,
shareholders, controlling Persons, partners, employees, representatives
or agents of a Member or a Manager, or their respective Affiliates; or
any officer, employee or agent of the Company or its Affiliates; or any
Person who was, at the time of the act or omission in question, such a
Person.
"DAMAGES" shall have the meaning set forth in Section 12.3(a).
"DEALERSHIP OPERATING COMPANIES" shall mean UAG Fairfield CV, LLC, UAG
Fairfield CM, LLC, UAG Fairfield CA, LLC and UAG Fairfield CP, LLC and
all their successors.
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"DELAWARE ACT" shall mean the Delaware Limited Liability Company Act, 6
Del. C. " 18-101, et seq., as amended from time to time.
"DEPRECIATION" shall mean, for each Fiscal Year, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable
with respect to an asset for such Fiscal Year, except that if the Gross
Asset Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such Fiscal Year, Depreciation
shall be an amount which bears the same ratio to such beginning Gross
Asset Value as the federal income tax depreciation, amortization, or
other cost recovery deduction for such Fiscal Year bears to such
beginning adjusted tax basis; provided, however, that if the adjusted
basis for federal income tax purposes of an asset at the beginning of
such Fiscal Year is zero, Depreciation shall be determined with
reference to such beginning Gross Asset Value using any reasonable
method selected by the Member.
"DIRECTORS" shall have the meaning set forth in Section 4.1(a).
"DISABLING CONDUCT" shall mean conduct that constitutes fraud, a
willful violation of this Agreement or law, gross negligence or
reckless disregard of duty in the conduct of the duties of the Person
referred to which results in a material loss to the Company.
"EXECUTIVE OFFICER" shall mean the President of the Company and all
officers and employees of the Company who directly report to, or are
directly supervised by, the President.
"FINANCIAL STATEMENTS" with respect to the Company shall mean the
financial statements of the Company that reflect the assets,
liabilities, retained capital, operations and cash flows of the
Company.
"FISCAL YEAR" shall have the meaning set forth in Section 5.4.
"FRANCHISE AGREEMENTS" means, with respect to the Dealership Operating
Companies, the agreements entered into with each respective
manufacturer which serve to establish the rights and obligations of the
Dealership Operating Companies and manufacturers to each other with
respect to the sale and service of new motor vehicles.
"GROSS ASSET VALUE" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any asset contributed by a
Member to the Company shall be the fair market value of such
asset at the time it is accepted by the Company, unreduced
by any liability secured by such asset, as determined by the
Members.
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(b) The Gross Asset Values of all Company assets shall be
adjusted to equal their respective fair market values,
unreduced by any liabilities secured by such assets, as
determined by the Members as of the following times: (i) the
acquisition of an additional interest in the Company by any
new or existing Member in exchange for more than a de
minimis Capital Contribution; (ii) the distribution by the
Company to a Member of more than a de minimis amount of
Property as consideration for an interest in the Company;
and (iii) the liquidation of the Company within the meaning
of Treasury Regulations Section 1.704-1(b)(2)(ii)(g).
(c) The Gross Asset Values of any Company asset distributed to
any Member shall be adjusted to equal the fair market value
of such asset, unreduced by any liability secured by such
asset, on the date of distribution as determined by the
Members.
(d) The Gross Asset Values of the Company assets shall be
increased (or decreased) to reflect any adjustments to the
adjusted basis of such assets pursuant to Code Section
734(b) or Code Section 743(b); but only to the extent that
such adjustments are taken into account in determining
Capital Accounts pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(m) and paragraph (vi) of the definition of
"Net Profits" and "Net Losses".
If the Gross Asset Value of an asset has been determined or
adjusted pursuant to paragraphs (a), (b) or (d) of this
definition, such Gross Asset Value shall thereafter be
adjusted by the Depreciation taken into account with respect
to such asset for purposes of computing Net Profits and Net
Losses.
"LIQUIDATING TRUSTEE" shall have the meaning set forth in Section 14.2.
"MAJORITY IN INTEREST OF THE MEMBERS" shall mean the written consent,
or vote at a duly called meeting of Members, of Members holding a
majority of Percentage Interests held by all Members.
"MANAGER" shall mean a "manager" (within the meaning of the Delaware
Act) of the Company.
"MEMBER" shall mean any Person named as a member of the Company on
Schedule A hereto or admitted subsequently as an additional Member
pursuant to the provisions of this Agreement, in such Person's capacity
as a member of the Company, and "Members" shall mean two or more of
such Persons when acting in their capacities as members of the Company.
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"MEMBER MINIMUM GAIN" shall mean a Member's share of Company Minimum
Gain as set forth in Treasury Regulations Section 1.704-2(g) and member
nonrecourse debt minimum gain as described in Treasury Regulations
Section 1.704-2(i).
"MEMBER NONRECOURSE DEBT" shall have the meaning of "partner
nonrecourse debt" as set forth in Treasury Regulations Section
1.704-2(b)(4).
"MEMBER NONRECOURSE DEDUCTIONS" shall have the meaning of "partner
nonrecourse deductions" set forth in Treasury Regulations Section
1.704-2(i).
"NONRECOURSE DEDUCTIONS" shall have the meaning set forth in Treasury
Regulations Section 1.704-2(b)(1).
"NET PROFIT" or "NET LOSS" shall mean, for each Fiscal Year, an amount
equal to the Company's taxable income or loss for such Fiscal Year,
determined in accordance with Code Section 703(a) (for this purpose,
all items of income, gain, loss, or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in
taxable income or loss), with the following adjustments:
(a) any income of the Company that is exempt from federal income
tax and not otherwise taken into account in computing Net
Profits or Net Losses pursuant to this definition shall be
added to such taxable income or loss;
(b) any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(i), and not otherwise taken into account
in computing Net Profits or Net Losses pursuant to this
definition shall be subtracted from such taxable income or
loss;
(c) in the event the Gross Asset Value of any Company asset is
adjusted pursuant to paragraphs (b) or (c) of the definition
of "Gross Asset Value," the amount of such adjustment shall
be taken into account as gain or loss from the disposition
of such asset for purposes of computing Net Profits or Net
Losses;
(d) gain or loss resulting from any disposition of property with
respect to which gain or loss is recognized for federal
income tax purposes shall be computed by reference to the
Gross Asset Value of property disposed of, notwithstanding
that the adjusted tax basis of such property differs from
its Gross Asset Value;
(e) in lieu of depreciation, amortization, and other cost
recovery deductions taken into account in computing such
taxable income or loss there shall be taken into account
Depreciation with respect to each asset of the Company
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for such Fiscal Year, computed in accordance with the
definition of "Depreciation" above;
(f) to the extent an adjustment to the adjusted tax basis of any
Company asset pursuant to Code Section 734(b) or Code
Section 743(b) is required pursuant to Treasury Regulations
1.704-1(b)(2)(iv)(m)(4) to be taken into account in
determining Capital Accounts as a result of a distribution
other than in complete liquidation of a Member's Interest,
the amount of such adjustment shall be treated as an item of
gain (if the adjustment increases the basis of the asset) or
loss (if the adjustment decreases the basis of the asset)
from the disposition of the asset and shall be taken into
account for purposes of computing Net Profits or Net Losses;
and
(g) notwithstanding any other provision of this definition, any
items which are specially allocated pursuant to Section
7.2(a) of this Agreement shall not be taken into account in
computing Net Profits or Net Losses.
The amounts of the items of Company income, gain, loss, or
deduction available to be specially allocated pursuant to
Sections 7.2(a) hereof shall be determined by applying rules
analogous to those set forth in paragraphs (a) through (f) above.
"OFFICER" shall have the meaning set forth in Section 4.2(a).
"PERCENTAGE INTEREST" shall mean a Member's limited liability company
interest in the Company which represents such Member's share of the
profits and, if applicable, losses of the Company and such Member's
rights to receive distributions of the Company's assets in accordance
with the provisions of this Agreement and the Delaware Act.
"PERIOD" shall mean, for the first period, the period commencing on the
date of this Agreement and ending on the next Adjustment Date. All
succeeding Periods shall commence on the day after an Adjustment Date
and end on the next Adjustment Date.
"PERSON" shall mean any individual, corporation, association,
partnership (general or limited), joint venture, trust, joint-stock
company, estate, limited liability company, unincorporated organization
or other legal entity or organization.
"PLEDGE AGREEMENT" shall mean the Pledge Agreement dated March 1, 2001
by and between Miller, the Company and AGR.
"PROCEEDING" shall have the meaning set forth in Section 12.3(a).
"PROMISSORY NOTE" shall mean the promissory note attached hereto as
Schedule C.
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"REAL PROPERTY AGREEMENT" shall mean that certain letter agreement
dated March ____, 2001 by and between the Members, the Company,
Automotive Group Realty, LLC and UAG Realty, LLC.
"SECRETARY" shall mean the person or persons duly appointed as
Secretary of the Company.
"SUBSIDIARY" of any Person shall mean a corporation or other entity a
majority of whose capital stock with voting power or the majority
ownership interest of which is at the time owned or controlled,
directly or indirectly, by such Person.
"TMM" shall have the meaning set forth in Section 9.1(a).
"TRANSFER" shall have the meaning set forth in Section 13.1(a).
"TREASURER" shall mean the person or persons duly appointed as
Treasurer of the Company.
"TREASURY REGULATIONS" shall mean the Income Tax Regulations, including
Temporary Regulations, promulgated under the Code, as the same may be
amended hereafter from time to time (including corresponding provisions
of succeeding Income Tax Regulations).
"WITHHELD AMOUNT" shall have the meaning set forth in Section 7.4(c).
SECTION 16
AMENDMENTS; MERGER OR SALE
16.1 AMENDMENTS GENERALLY.
Notwithstanding any other provision of this Agreement, the terms of
this Agreement shall not be amended except in a writing signed by all
Members, provided that, without the consent of any of the Members, the
Company:
(i) may enter into agreements with Persons who are transferees of the
interests in the Company of Members, pursuant to the terms of
this Agreement, providing in substance that such Persons will be
bound by this Agreement; and
(ii) may amend this Agreement as may be required to implement (A)
transfers of interests of Members or (B) any admission of new
Members.
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16.2 MERGER OR SALE.
The Company may merge with, or consolidate into, a Delaware limited
liability company or another business entity (as defined in Section
18-209(a) of the Delaware Act) or may sell all or substantially all of
its assets only upon the approval of the Company and all Members of the
Company.
SECTION 17
MISCELLANEOUS PROVISIONS
17.1 NOTICES.
Each notice relating to this Agreement shall be in writing and shall be
delivered (a) in person, by registered or certified mail, private
courier or (b) by telecopy or other facsimile transmission, confirmed
by telephone to an executive officer of the recipient. In addition, all
notices to any Member shall be addressed to such Member at their
respective addresses set forth on Schedule A or at such other address
as the Member may have designated by notice in writing. Any Member may
designate a new address by notice to that effect given to the Company.
The Company may designate a new address by notice to that effect given
to each Member. Unless otherwise specifically provided in this
Agreement, a notice given in accordance with the foregoing clause (a)
shall be deemed to have been effectively given when mailed by
registered or certified mail, return receipt requested, to the proper
address, or when delivered in person. Any notice to the Company or to a
Member by telecopy or other facsimile transmission shall be deemed to
be given when sent and confirmed by telephone in accordance with the
foregoing clause (b).
17.2 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of which taken together shall
constitute a single agreement.
17.3 TABLE OF CONTENTS AND HEADINGS.
The table of contents and the headings and subheadings of the sections
of this Agreement are inserted for convenience and identification only
and are in no way intended to describe, interpret, define or limit the
scope, extent or intent of this Agreement or any provision thereof.
17.4 SUCCESSORS AND ASSIGNS; ASSIGNMENT.
This Agreement shall inure to the benefit of the Members and the
Covered Persons, and shall be binding upon the parties, and their
respective successors and permitted assigns.
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17.5 SEVERABILITY.
Every provision of this Agreement is intended to be severable. If any
term or provision of this Agreement is illegal or invalid for any
reason whatsoever, such term or provision will be enforced to the
maximum extent permitted by law and, in any event, such illegality or
invalidity shall not affect the validity of the remainder of the
Agreement.
17.6 NON-WAIVER.
No provision of this Agreement shall be deemed to have been waived
except if the giving of such waiver is contained in a written notice
given to the party claiming such waiver and no such waiver shall be
deemed to be a waiver of any other or further obligation or liability
of the party or parties in whose favor the waiver was given.
17.7 APPLICABLE LAW.
This agreement and the rights and obligations of the parties hereunder
shall be interpreted and enforced in accordance with and governed by
the laws of the state of Delaware, and all rights and remedies shall be
governed by such laws without regard to principles of conflict of laws.
17.8 WAIVER OF JURY TRIAL.
Each party to this Agreement waives to the fullest extent permitted by
applicable law any right it may have to a trial by jury in respect of
any action, suit or proceeding arising out of or relating to this
Agreement.
17.9 SURVIVAL OF CERTAIN PROVISIONS.
The obligations of each Member pursuant to Sections 6.5 and 12.3 shall
survive the termination or expiration of this Agreement and the
winding-up, liquidation and dissolution of the Company.
17.10 LIMITATION ON DAMAGES; LEGAL DISPUTES.
(a) In no event will any party to this Agreement be liable to any
other party for special, indirect, punitive or incidental
damages, or any other consequential damages except for lost
profits and lost savings, even if such party has been advised of
the possibility of such damages resulting from the breach by it
of any of its obligations hereunder or from the use of any
confidential or other information.
(c) Subject to the limitations of subsection (a), immediately above,
the rights and remedies of the parties under this Agreement are
cumulative and are not exclusive of any rights or remedies which
the parties would otherwise have for equitable relief, including
the remedies of specific performance and injunction.
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17.11 WAIVER OF PARTITION.
Except as may otherwise be provided by law in connection with the
winding-up, liquidation and dissolution of the Company, each Member
hereby irrevocably waives any and all rights that it may have to
maintain an action for partition of any of the Company's property.
17.12 ENTIRE AGREEMENT.
This Agreement and the Transaction Agreement and agreements executed in
connection therewith constitute the entire agreement among the Members
with respect to the subject matter hereof, and supersede any prior
agreement or understanding among them with respect to such subject
matter.
17.13 FURTHER ACTIONS.
Each Member shall execute and deliver such other certificates,
agreements and documents, and take such other actions, as may
reasonably be requested by the Company in connection with the formation
of the Company and the achievement of its purposes, including, without
limitation all such agreements, certificates, tax statements and other
documents as may be required to be filed in respect of the Company.
17.14 NO PARTNERSHIP.
Nothing contained in this Agreement shall be deemed or construed to
make any Member partners or joint venturers with each other, for any
purposes other than for federal and state tax purposes. The only
business association to be formed by the Members will be the Company,
which will be a limited liability company under Delaware law, to be
organized pursuant to this Agreement. The Company shall not be a
general partnership, a limited partnership or a joint venture, and no
Member shall be considered a partner or joint venturer of or with any
other Member for any purposes other than for federal and state tax
purposes.
17.15 PLEDGE AGREEMENT.
Miller has pledged it Percentage Interest as security for its
obligations under this Agreement, the Real Property Agreement and the
Promissory Note in accordance with the Pledge Agreement.
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IN WITNESS WHEREOF, the undersigned have duly executed this Limited Liability
Company Agreement of UAG CONNECTICUT I, LLC effective as of the day and year
first above written.
UAG CONNECTICUT, LLC
BY: /S/ ROBERT H. KURNICK, JR.
--------------------------
NAME: ROBERT H. KURNICK, JR.
TITLE: ASSISTANT SECRETARY
THE MILLER CONTINENTAL GROUP LLC
BY: /S/ RICHARD S. KOPPELMAN
------------------------
NAME: RICHARD S. KOPPELMAN
TITLE: MANAGER
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SCHEDULE A
THE MEMBERS
- --------------------------------------------------------------------------------------------------------------------------
NAME INITIAL CAPITAL ACCOUNT PERCENTAGE INTEREST
- --------------------------------------------------------------------------------------------------------------------------
UAG Connecticut, LLC $21,027,512 80.0%
C/o United Auto Group, Inc.
13400 West Outer Drive
Detroit, MI 48239
- --------------------------------------------------------------------------------------------------------------------------
$5, 256,878(1) 20.0%
The Miller Continental Group LLC
342 West Putnam Avenue
Greenwich, CT 06830
- --------------------------------------------------------------------------------------------------------------------------
(1) Comprised of $1,082,800 cash investment and $4,174,078 obligation of Miller
to Company as evidenced by the promissory note attached as Schedule C
hereto.
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SCHEDULE B
INITIAL DIRECTORS
Robert H. Kurnick, Jr.
James R. Davidson
Richard S. Koppelman
INITIAL OFFICERS
Chairman Samuel X. DiFeo
President A. Andrew Shapiro
Vice President R. Whitfield Ramonat
Secretary/Treasurer Scott Carlsson
Assistant Treasurer James R. Davidson
Assistant Secretary Robert H. Kurnick, Jr.
Assistant Secretary Sandra K. Nieman
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