Exhibit 3.73
SECOND
AMENDED AND RESTATED
PARTNERSHIP AGREEMENT OF
J-R MOTORS COMPANY SOUTH
THIS SECOND AMENDED AND RESTATED PARTNERSHIP AGREE MENT
("Agreement") is entered into to be effective as of the 1st day of May,
1994, by and among WOODY CAPITAL INVESTMENT COMPANY II, a Colorado
corporation ("Woody"), R. L. BUSCHER II, INC., a Colorado corporation
("Buscher"), and C. GARRETT, INC., a Colorado corporation ("Garrett"). This
Agreement amends and restates in its entirety that certain Amended and
Restated Partnership Agreement of J-R Motors Company South effective as of
April 2, 1991. In consideration of the mutual promises contained herein,
the parties agree as follows:
1. Name of Partnership. The name of the Partnership shall be J-R
MOTORS COMPANY SOUTH (the "Partnership") whose purpose shall continue to be
to acquire, own, operate, manage, sell, exchange, dispose of and otherwise
invest in motor vehicle franchises for new and used motor vehicle sales and
service in the Denver Metropolitan Area (the "Dealerships") upon the terms
and conditions set forth-in this Agreement and, except as otherwise
provided in this Agreement, subject to the provisions of the Uniform
Partnership Law of Colorado.
2. Capital Contributions and Sharing Ratios.
a. The Sharing Ratios of the Partners are as
follows:
Sharing
Ratios
Woody - 86%
Buscher - 10%
Garrett - 4%
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100%
b. Any of the Partners may make secured or
unsecured advances to the Partnership by
agreement with the Partnership.
c. If the Partners, by vote of not less than a
majority of the Partner ship Interests,
determine at some future date that the
Partnership requires additional capital
contributions other than as set forth above in
subparagraphs a. and b., then the Partnership
shall notify the Partners in writing of the
total amount of additional capital required and
the date on which such capital is required,
which written notice shall be mailed to the
Partners not less than thirty (30) days prior to
the date on which the additional capital
contributions are to be paid. The Partners shall
have the obligation, within such thirty-day
period to make the additional capital
contributions to the Partnership in the amount
that results from multiplying their pro rata
Sharing Ratios times the total amount of
additional capital required. Any Partner who
fails to contribute all of his portion of the
additional capital within the time period as
specified in the notice shall not share in any
Partnership distributions. If such default
continues for thirty (30) days without being
cured, any undistributed funds of the
Partnership allocated to the defaulting Partner
shall be applied to the obligation of the
defaulting Partner and in addition, the
non-contributing Partner shall execute a demand
promissory note payable to the contributing
Partner having the largest Sharing Ratio (if
there is more than one contributing Partner) in
the amount due from such noncontributing
Partner, which note shall bear interest at the
rate of 4% per annum over the prime rate set
forth in paragraph 18b, and shall be secured by
the interest in the Partnership of the
non-contributing Partner. Any and all
Partnership distributions otherwise due to such
noncontributing Partner shall be distributed to
the contributing Partner having the largest
Sharing Ratio (if there is more than one
contributing Partner) to pay such note, and if a
Partner other than Woody is the noncontributing
Partner, any bonus payments (based upon
profitability of the Partnership) due to the
individual shareholder of such noncontributing
Partner under any Employment Contract with the
Partnership shall also be used to pay such note.
3. Partnership Interests.
The Partnership Interests of the Partners as of the date
of this Agreement are as follows:
Woody - 76%
Buscher - 20%
Garrett - 4%
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4. Allocations. The net profits or net losses of the Partnership
shall be determined on an annual basis in accordance with generally
accepted accounting principles applied on a consistent basis. A separate
capital account shall be maintained for each Partner in accordance with the
requirements of Section 704 (b) of the Internal Revenue Code of 1986 as
amended (the "Code") and any Treasury Regulations promulgated thereunder.
a. The net profits or net losses of the Partnership
for any Fiscal Year shall be allocated as
follows:
(A) First, net income shall be allocated to
each Partner so that the cumulative
allocations of net income under this
clause (A) equal such Partner's
cumulative monthly "Interest Amount"
(as defined in Section 4c below) for
all fiscal years beginning after
December 31, 1993; and
(B) Second, any remaining net income, and
all net losses, shall be allocated to
the Partners, pro rata in accordance
with their Sharing Ratios. In the event
the Sharing Ratios change during any
fiscal year, each Partner's allocable
share of such remaining net profits or
net losses for such fiscal year shall
be determined in accordance with the
interim closing-of the Partnership's
books method of allocation provided
under Treas. Reg. Section
1.706-1(c)(2)(ii).
b. LIFO Allocation. In the event of a recapture of
previous LIFO benefits, each such recapture
shall be allocated among the Partners in the
proportion that the previous LIFO benefit was
allocated among the Partners, with the most
recent LIFO benefits being recaptured first.
c. Interest Amount. The "Interest Amount" for each
Partner shall be computed by the Partnership's
certified public accountants, Morrison, Brown,
Argiz & Co., at the beginning of each month as
the product of (i) such Partner's "Net
Investment" balance on the first day of such
month, multiplied by (ii) one-twelfth (1/12)
multiplied by the sum of (A) the prime rate set
forth in Section 18b below, in effect as of such
day, plus (B) two percentage points (2%). The
"Net Investment" balance of a Partner, as of any
day, shall be (a) the cumulative amount of
capital contributions made to the Partnership by
such Partner, plus (b) the cumulative amount of
net profits of the Partnership allocated to such
Partner, minus (c) the cumulative amount of net
losses of the Partnership allocated to such
Partner, minus (d) the cumulative amount of
distributions made from the Partnership to such
Partner. In the event of a transfer of a
Partnership Interest, the transferring Partner's
Net Investment account shall remain with the
transfer ring Partner, except that for every 1%
Sharing Ratio that Garrett purchases from Woody,
the Net Investment Account of Garrett shall
increase by Twenty Thousand and No/100 Dollars
($20,000.00), and the Net Investment Account of
Woody shall be correspondingly reduced, at the
time of each such purchase.
5. Cash Distributions of Partnership. Distributions of cash or
other assets by the Partnership shall be made in the following order:
a. First, a monthly payment of Ten Thousand Dollars
($10,000.00) to Woody, which is intended to be a
guaranteed payment within the meaning of Section
707(c) of the Code;
b. Second, distributions in an amount equal to each
Partner's share of the Partnership's annual net
income for income tax purposes as shown on IRS
Form 1065, times the sum of the highest federal
and Colorado income tax rates for individuals,
among the Partners; and
c. Finally, discretionary distributions to the
Partners, pro rata, based upon their Sharing
Ratios, to be made at such times that the
profits and cash flow of the Partnership permit,
in the discretion of the Partners.
6. Accounts. Complete and accurate books of account shall be kept
by the Partnership at the Partnership's principal place of business, and
such books shall be open to inspection by any Partner or by his authorized
representative at any time during ordinary business hours. Such books shall
be kept on the accrual basis in accordance with generally accepted
accounting principles. The Partnership's accounting period shall be the
calendar year.
7. Nominee. Title to all the Partnership's properties shall be
held in the Partnership name, or in the name of any nominee (including any
Partner so acting) designated by the Partners, who shall have power to
enter into nominee agreements with any such person, and such agreements may
contain provisions indemnifying the nominee except for his willful
misconduct.
8. Term. The Partnership commenced on April 2, 1991, and it shall
continue until terminated by the earlier to occur of December 31, 2022 or
upon the withdrawal, corporate dissolution, death, incompetency or
bankruptcy of any Partner, any one of which shall work an immediate
dissolution of the Partnership in all cases, unless the remaining Partners
elect to continue the Partnership within thirty (30) days after the
occurrence of such event.
9. Dissolution and Termination. Notwithstanding any provisions of
the Act, the Partnership shall not be dissolved prior to the occurrence of
a Liquidating Event. The Partnership shall dissolve and commence winding up
and liquidating upon the first to occur of any of the following events
("Liquidating Event"): (i) the close of business on December 31, 2022; (ii)
the sale of all or substantially all of the property and assets of the
Partnership; (iii) a unanimous vote of the Partners to dissolve, wind up
and liquidate; (iv) the happening of an event that makes it impossible or
unlawful for the Partnership to carry on its business; or (v) any event
that causes there to be only one Partner.
a. Upon the happening of a Liquidating Event, the
Partnership shall conduct no business nor engage
in any activity that is not necessary or
appropriate to winding up its business and
liquidat ing, and shall proceed promptly to wind
up its affairs in an orderly manner, to
liquidate its assets, to satisfy the claims of
its creditors and Partners, and to distribute
its remaining assets to its Partners. A managing
partner ("Managing Partner") shall be selected
by vote of the Partners owning the majority of
Partner ship Interests, and shall be responsible
for supervising the winding up and liquidation
and shall dispose of the property of the
Partnership as promptly as is consistent with
obtaining its fair market value. The proceeds of
the disposition of the assets of the Partnership
shall be applied in the following order of
priority:
(1) First, to the payment, in order of
priority, of all Partner ship debts to
creditors other than the Partners;
(2) Next, to the payment, in order of
priority and thereafter pro rata, of
the debts of the Partnership owed to
Partners; and
(3) Any balance to the Partners pro rata in
accordance with the balances in their
capital accounts.
b. If the Partnership is deemed to be liquidated
for federal income tax purposes within the
meaning of Regulation ss.1.704-1(b)(2)(ii)(g),
distributions under this Section 9 shall be made
in compliance with Regulationss.1.704-1 (b) (2)
(ii) (b) (3) to those Partners who have positive
capital accounts. If the capital account of any
Partner has a deficit balance after such
distribution, such Partner shall contribute to
the capital of the Partnership such amount as
will restore such capital account to zero, as
provided in Regulation S1.704-1(b)(2)(ii)(b)(3).
In the discretion of the Managing Partner, a pro
rata portion of the amounts that otherwise would
be distributed to the Partners under this
Section 9 may be (i) withheld to provide a
reasonable reserve for unknown or contingent
liabilities of the Partnership; or (ii)
distributed to a trust created for the benefit
of the Partners for purposes of liquidating
Partnership assets, collecting amounts owed to
the Partnership, or paying contingent or unknown
liabilities of the Partnership. Any amounts so
withheld or distributed to a trust shall be
distributed to the Partners from time to time as
the Managing Partner deems it to be practicable
in the same proportions such amounts would have
ben distribute to the Partners had they not been
withheld or distributed to such a trust.
c. If no Liquidating Event has occurred, but the
Partnership is deemed liquidated for federal
income tax purposes within the meaning of
Regulation ss.1.704-1(b) (2)(ii)(g), the
Partnership shall not be wound up and dissolved
but its assets and liabilities shall be deemed
to have been distributed to the Partners and
contributed to a new partnership which shall
operate and be governed by the terms of this
Agreement.
d. Except as otherwise specifically provided in
this Agreement, a Partner has the right to look
only to the assets of the Partnership for a
return of his capital contributions, has no
right to receive anything other than money in a
distribution from the Partnership, and has no
priority over any other Partner with respect to
distributions, allocations, or the return of
capital contributions.
e. Within thirty (30) days of the happening of a
Liquidating Event, the Managing Partner shall
give written notice thereof to each of the
Partners, to all creditors of the Partnership,
to the banks and other financial institutions
with which the Partnership normally does
business, and to all other parties with whom the
Partnership regularly conducts business, and
shall publish notice of dissolu tion in a
newspaper of general circulation in each place
in which the Partnership generally conducts
business.
10. Restriction on Transfer of Interest in the Partnership.
a. Except to the extent otherwise provided in this
Agreement, Garrett shall have no right or
ability to transfer any or all of its interest
in the Partnership until the date that is five
(5) years from the date that Garrett's Sharing
Ratio becomes 20%. If a Partner ("Selling
Partner") either (i) at any time if the Partner
is Woody or Buscher, or (ii) after five (5)
years from the date that Garrett's Sharing Ratio
becomes 20% if the Partner is Garrett, proposes
to transfer any or all of its interest in the
Partnership (to a third party other than a
Partner or a relative of or an affiliate of the
controlling owner of a Partner) now owned or
hereafter acquired, whether by sale, gift or
otherwise, such Partner shall first make a
written offer to sell the same to the
Partnership. The offer shall state (i) that the
Selling Partner has received a bona fide offer
from a responsible prospective non-affiliated
and non-related purchaser (the "offeror") to
acquire all or any portion of such interest in
the Partnership ("Interest") owned by the
Selling Partner and that the Offeror has agreed
to assume the obligations of the Selling Partner
under this Agreement with regard to the Interest
to be sold; (ii) the name and address of the
Offeror; (iii) the Interest which the Selling
Partner desires to dispose of; (iv) the price
(or absence of price in the case of a gift)
currently being offered to the Selling Partner
by the Offeror, including all terms of such
offer; and (v) the proposed closing date of the
transac tion. After receipt of the offer, the
Designated Partner shall have a period of 30
days in which to elect to purchase all of the
offered Interest at the price (or absence of
price in the case of a gift) and upon the terms
and conditions offered by the Offeror.
b. The Designated Partner may assign its purchase
rights and obligations under this Section 10 to
the Partnership, subject to the same periods for
election and payment as set forth in Section 10a
above, upon approval of the Partners (excluding
the offering Partner) owning the majority of
remaining Partnership Interests. The purchasing
Partner or the Partnership shall pay for the
purchased interest as provided for in such offer
of the Offeror, if such offer is accepted.
c. If the Designated Partner or Partnership does
not exercise its right in full, the remaining
Partners (other than the offering Partner) shall
have the right to purchase, at the same price
and upon the same terms and conditions available
to the Designated Partner, all of the Interest
not purchased by the Designated Partner or
Partnership. In any event, all of the offered
Interest must be purchased by the remaining
Partners as a condition to the remaining
Partners acquiring any of the offered Interest.
This right shall be exercisable for a period of
30 days after the Designated Partner's right to
purchase has terminated.
d. The Designated Partner under Section 10 shall be
as follows: (i) if Woody is the Selling Partner,
Buscher is the Designated Partner; (ii) if
Buscher is the Selling Partner, Woody is the
Designated Partner; and (iii) if Garrett is the
Selling Partner, Woody is the Designated
Partner.
e. If all of the offered Interest is not purchased
pursuant to the foregoing provisions, such
offered Interest may be transferred by the
offering Partner only to the Offeror named in
the offer to the Partnership on the same terms
and conditions asset forth in the written offer,
provided that the Offeror agrees to be bound by
the terms and conditions of this Agreement by
executing a copy hereof, and all remaining
Partners consent in writing to the Offeror
becoming a Partner. However, if such transfer is
not made within 30 days following the
termination of the remaining Partners' right to
purchase, a new offer must be made to the
Partnership and the remaining Partners before
the offering Partner can transfer any portion of
his Partnership Interest and the provisions of
this Section 10 shall again apply to such
transfer.
f. No Partner shall pledge or otherwise encumber
its Interest without the written consent of all
the Partners, which consent can be withheld in
the sole discretion of any Partner.
g. Garrett shall not transfer, either for
consideration or by gift, any or all of its
Interest in the Partnership to a relative of or
an affiliate of the controlling owner of Garrett
without the written consent of all the Partners,
which consent of can be withheld in the sole
discretion of any Partner.
11. Purchase of Interest on Death of Individual Partner or of John
A. Elway, Jr. or Rodney L. Buscher or Christopher R. Garrett.
a. Within 90 days after the personal representative
of John A. Elway, Jr., Rodney L. Buscher or
Christopher R. Garrett (the "Decedent") is
qualified, the personal representative shall
make a written offer to sell to the Designated
Partner, at the Purchase Price (as hereinafter
defined in Section 17) determined as of the date
of death, all of the Interest in the Partnership
now owned or hereafter acquired by any
corporation owned directly or indi rectly by the
Decedent as of the date of the Decedent's death.
The Designated Partner shall have the right for
a period of 90 days after receipt of written
notice of the offer to sell to elect to purchase
all of such Interest. The Designated Partner
shall pay for the Interest in the manner set
forth in Section 18. The Closing for the
purchase of such Interest shall not be later
than nine months after the date of death of the
Decedent.
b. The Designated Partner may assign its rights and
obligations under this Section 11 to the
Partnership, including the right to purchase the
Interest, subject to the same periods for
election and payment as set forth in Section 11a
above, upon approval of the Partners (excluding
the Partner owned by the Decedent) owning the
majority of Partnership Interests.
c. If the Designated Partner or Partnership does
not exercise its right in full, the remaining
Partners (other than the Partner previously
owned by the Decedent) shall have the right to
purchase, at the same price and upon the same
terms and conditions available to the Designated
Partner, all of the Interest not purchased by
the Designated Partner or Partnership. In any
event, all of the offered Interest must be
purchased by the remaining Partners as a
condition to the remaining Partners acquiring
any of the offered Interest. This right shall be
exercis able for a period of 30 days after the
Designated Partner's right to purchase has
terminated.
d. The Designated Partner under Section 11 shall be
as follows: (i) if John A. Elway, Jr. is the
Decedent, the Designated Partner shall be
Buscher; (ii) if Rodney L. Buscher is the
Decedent, the Designated Partner shall be Woody;
and (iii) if Christopher R. Garrett is the
Decedent, the Designated Partner shall be woody.
e. In the event that the Designated Partner, the
Partnership, or the remaining Partners (other
than the Partner previously owned by the
Decedent) fail to accept the offer of the
personal representa tive of a Decedent within
the time permitted above, the corpora tion owned
by the Decedent shall remain as an owner of the
Interest. In addition, if the Decedent owned
individually any Interest as of the date of his
death, the Personal Representative may
distribute such Interest to the devisees under
the Decedents will, provided, however, that
before such distribution, the devisee shall
execute a copy of this Partnership Agreement and
agree to become bound by the terms hereof. At
any time com mencing one year after the date of
death of the Decedent through two years after
such date of death, the personal representative
and/or heirs, devisees and successors to a
Decedent shall have a "put" to the Designated
Partner (or the Partnership as assignee) to
require the purchase of the Interest owned
directly by the Decedent or owned by a
corporation or other entity owned by the
Decedent at the Purchase Price as of the date of
the "put", to be paid in accordance with Section
18. If the Partnership or the Designated Partner
do not purchase such Interest within 120 days
from the date of the "put", the Partnership
shall be liquidated as soon as possible, it
being recognized and acknowledged that some time
may be necessary to allow an orderly and
financially advantageous liquidation of the
Partnership, not exceeding, without the consent
of all Partners, nine months from the date of
the "put."
f. The Partners agree to enter into any
shareholders agreements with each Partner which
may be necessary or desirable in order to carry
out the requirements of this Section 11, Section
12, or any other sections of this Agreement.
12. Purchase of Interest Upon Event Causing Change of Control of
Corporate or Other Partner.
a. If an event occurs causing a change of control
(as herein defined) of either (i) a Partner or
(ii) any affiliate of a Partner that owns an
equity interest in J-R Motors Company South,
which is or becomes a corporation, partnership,
association or any other entity, the Partner,
within 30 days of the occurrence of such event,
shall make a written offer to sell to the
Designated Partner at "Adjusted Capital Account
Balance" (as hereafter defined), all of its
Interest in the Partnership owned at the time
such event occurs. The Designated Partner shall
have the right for a period of 75 days after
receipt of such offer to elect to purchase all
or any portion of such Interest. The Designated
Partner shall pay for the purchased Interest
within 90 days after its election, and the
method of payment shall be as set forth in
Section 18.
b. If the Designated Partner does not exercise its
right in full, the Partnership shall have the
right to purchase at the Purchase Price all or
any portion of the Interest not purchased by the
subject to Paragraph (c) below. This right shall
be exercisable for a period of 30 days after the
Designated Partner's right to purchase has
terminated. The purchasing Partnership shall
make payment for any Interest which it elects to
purchase within 10 days after it makes its
election, and the method of payment shall be as
set forth in Section 18.
c. The Designated Partner under this Section 12
shall be as follows: (i) Woody in the case of a
change of control of Garrett, Buscher, or
Buscher's affiliate, or (ii) Buscher in the case
of a change of control of Woody or Woody's
affiliate.
d. To the extent that neither the Partnership nor
the Designated Partner exercise their right to
purchase, the offering Partner shall be free to
retain the offered Interest.
e. For purposes of this Agreement, the term
"control" shall mean the possession, direct or
indirect, of the power to direct or cause the
direction of the management and policies of a
Partner which is a corporation, partnership,
association or similar entity, whether through
the ownership of voting securities, by control
or otherwise.
f. For purposes of this Agreement, "Adjusted
Capital Account Balance" shall be calculated by
the Partnership's certified public accountants,
Morrison Brown Argiz & Co. in accordance with
generally accepted accounted principles as the
sum of (i) such Partner's capital account
balance, plus (ii) the product of (A) one minus
the sum of the highest federal and Colorado
income tax rates then in effect, multiplied by
(B) such Partner's specifically calculated
add-on LIFO reserve.
13. Purchase of Interest Upon Involuntary Termination of
Employment.
a. Rodney L. Buscher. Within 120 days after Rodney
L. Buscher shall cease to be employed by the
Partnership or J-R Motors Company South, except
a termination of employment caused by (i) the
death of Rodney L. Buscher (which is subject to
Section 11 above) or (ii) the voluntary
termination of employment by Rodney L. Buscher
(which is subject to Section 14 below), then
Woody shall purchase from Buscher, and Buscher
shall sell to the Woody, all of the Interest in
the Partnership then owned by Buscher at the
following "Termination Price": (a) the Purchase
Price as set forth in Section 17 below;
provided, however, that the discount set forth
in paragraph 17b shall only apply if the
termination was for cause under the applicable
Employment Agreement, plus (b) if the
termination was not "for cause" as defined in
the applicable Employment Agreement with Rodney
L. Buscher, $25,000 if Buscher's Sharing Ratio
is 17.5%, $50,000 if Buscher's Sharing Ratio is
15%, $75,000 if Buscher's Sharing Ratio is
12.5%, $100,000 if Buscher's Sharing Ratio is
10%, $125,000 if Buscher's Sharing Ratio, is
7.5%, or $150,000 if Buscher's Sharing Ratio is
5%. Woody may assign its rights and obligations
under this paragraph 13a to the Partnership upon
the approval of the Partners (excluding the
Partner owned by Buscher) owning the majority of
Partnership Interests. The payment of the
Termination Price shall be on the same terms as
the payment of the Purchase Price as set forth
in Section 18.
b. Christopher R. Garrett. Within 120 days after
Christopher R. Garrett shall cease to be
employed by the Partnership, except a.
termination of employment caused by (i) the
death of Christo pher R. Garrett (which is
subject to Section 11 above) or (ii) the
voluntary termination of employment by
Christopher R. Garrett (which is subject to
Section 14 below), then Woody shall purchase
from Garrett, and Garrett shall sell to Woody,
all of the Interest in the Partnership then
owned by Garrett at the following "Termination
Price":
(1) if the termination was "for
cause" as defined in the
applicable Employment Agreement
between the Partnership and
Christopher R. Garrett, (i)
Garrett's "Adjusted Investment
Amount" as -defined below, if
the termination occurs before
the date that is five (5) years
after the date that Garrett's
Sharing Ratio becomes 20%, or
(ii) the Purchase Price as set
forth in Section 17 below if
the termination occurs on or
after the date that is five (5)
years after the date that
Garrett"s Sharing Ratio becomes
20%; or
(2) if the termination was not "for
cause" as defined in the
applicable Employment Agreement
be tween the Partnership and
Christopher R. Garrett, the
Purchase Price as set forth in
Section 17 below. The payment
of the Termination Price shall
be on the same terms as the
payment of the Purchase Price
as set forth in Section 18.
(3) For purposes of this Agreement,
Garrett's "Ad justed Invested
Amount" shall be calculated by
the Partnership's certified
public accountants, Morrison
Brown Argiz & Co. in accordance
with generally accepted
accounted principles, as if the
Partnership closed its books
with respect to Garrett as of
the date of Christopher R.
Garrett's termination, as the
sum of (i) the net amount of
items of the Partnership's
income, gain, loss, and
deduction allocated to
Garrett's capital account
balance, plus (ii) the product
of (A) one minus
the sum of the highest federal
and Colorado income tax rates
then in effect, multiplied by
(B) Garrett's specifically
calculated add-on LIFO reserve,
minus (iii) all distributions
made to Garrett from the
Partnership, plus (iv) the
aggre gate amount of Capital
Contributions made by Garrett
to the Partnership, plus (v)
the purchase price actually
paid by Garrett to Woody to ac
quire Garrett's Interest.
(4) Woody may assign its rights and
obligations under paragraph
13b(2) to the Partnership upon
the approval of the Partners
(excluding the Part ner owned
by Garrett) owning the majority
of Partnership Interests.
14. Purchase of Interest Upon Voluntary Termination of Employment.
Upon any voluntary termination of employment by Rodney L. Buscher from the
Partnership or J-R Motors Company South, then Woody shall have the
continuing option to make a written demand, at any time before the death of
Rodney L. Buscher, to Buscher to purchase all of the Interest in the
Partnership so owned by Buscher as of the date of such termination at the
Purchase Price as set forth in Section 17 and the payment of the Purchase
Price on the terms as set forth in Section 18. Upon any voluntary
termination of employment by Christopher R. Garrett from the Partnership,
then Woody shall have the continuing option to make a written demand, at
any time before the death of Christopher R. Garrett to Garrett to purchase
all of the Interests in the Partnership owned by Garrett as of the date of
such termination as follows: (i) if Christopher R. Garrett terminates
employment before the date that is five years after Garrett's Sharing Ratio
becomes 201%, the purchase price shall be Garrett's "Adjusted Investment
Amount," or (b) if Christopher R. Garrett terminates employment on or after
the date that Garrett's Sharing Ratio becomes 20%, the purchase price shall
be the Purchase Price as set forth in Section 17, with the payment of the
purchase price on the same terms as set forth in Section 18. The demand
shall be binding upon the owner of such Interest, and the closing of the
purchase shall occur no later than 75 days after the Purchase Price has
been calculated. Woody has the right to assign its right to purchase under
this paragraph to the Partnership upon the approval of the Partners
(excluding the Partner owned by the terminated employee) owning the
majority of Partnership Interests. In the event that the Partnership or
Woody do not exercise their rights to purchase the Interest, Buscher or
Garrett, as appropriate, will retain its Interest subject to the terms and
provisions of this Agreement.
15. Bankruptcy, Levy, Execution. If any, or all of a Partner's
Interest in the Partnership shall be levied upon, sequestered, administered
by a receiver or a trustee in bankruptcy, or sold or proposed to be sold in
foreclosure or execution or under any power of sale contained in a note or
loan agreement, or by operation of law, the holder thereof shall give the
Partnership prompt written notice of such occurrence, and the Partnership
shall, for a period of 60 days after receipt of such notice have, the right
to demand to purchase all or a part of such Interest at the Purchase Price
calculated under Section 17 below by giving notice of such right to the
person then having legal title to such Interest. Such right shall apply
even though the Interest may actually have been sold at the time of
exercise thereof. Upon the exercise of the Partnership's right to purchase,
all the Interest purchased shall be promptly transferred, assigned and
delivered to the Partnership. The Partnership shall make payment in cash
for the Interest it purchases within 60 days after the calculation of the
Purchase Price, in the manner set forth in Section 18 at the discretion of
the Partnership.
16. Other Activities. Except as may be limited by any employment
agreement, consulting agreement or other agreement between a Partner and
the Partnership, each Partner shall be free to engage in or have interests
in other business ventures and activities similar or dissimilar to the
business and activities of the Partnership, and neither the Partnership,
nor any Partner, shall have, by virtue of this Agreement, any right to or
in such other ventures or activities or the profits or income derived
therefrom.
17. Purchase Price. As used herein, the "Purchase Price" of any
Interest in the Partnership shall be the amount as determined from the
Partnership books and records, audited or certified, by the firm of
independent certified public accountants regularly employed by the
Partnership, with the Purchase Price to reflect the following:
a. The amount that would be distributed with
respect to such Interest in liquidation of the
Partnership pursuant to Section 9 of this
Agreement if all of the Partnership's tangible
and intangible assets, including goodwill and
the value of the automobile dealership
franchise, were sold for their fair market
value, the Partnership paid, or reserved for,
all accrued and reasonably anticipated
liabilities, contingent and fixed, and the
balance of the proceeds of such sale were
distributed to the Partners in liquidation of
their interests in the Partnership.
b. In the case of a purchase in accordance with the
provisions of Section 13 (but only if the
involuntary termination was for cause pursuant
to the applicable Employment Agreement), 14 or
15 above, and the purchased Interest was owned
by Woody or Buscher, the amount distributable to
the Partners in liquidation shall then be
reduced by the following discount: if the event
triggering the purchase occurs after April 12,
1996, no discount; if the event triggering the
purchase occurs after April 12, 1995, and before
April 13, 1996, a 5% discount; if the event
triggering the purchase occurs after April 12,
1994 and before April 13, 1995, a 10% discount;
and if the event triggering the purchase occurs
after April 12, 1993 and before April 13, 1994,
a 15% discount.
c. The fair market value shall be determined as
follows: Both of the selling and purchasing
Partners shall use their best efforts to
mutually select an appraiser to value the assets
of the Partner ship, in accordance with Section
17a to calculate the amount of proceeds that
would be distributed with respect to such
Interest in liquidation of the Partnership. The
appraiser shall render an appraisal no later
than 60 days from the date of selection. If any
Partner disagrees with such appraisal, both the
selling and purchasing Partners shall use their
best efforts to mutually select an additional
appraiser, who shall render an appraisal within
45 days from the date of selection. In the event
the two appraisals differ by not more than 10%,
they shall be averaged, and the average amount
used as the fair market value of the assets of
the Partnership. In the event the appraisals
differ by more than 10%, such matter shall be
submitted to arbitration in accordance with
Section 24 below. All appraisers selected shall
be MAI apprais ers or members of a similar
organization approved by the Partners, and such
appraisers shall be instructed to determine the
fair market value of all assets owned by the
Partnership, exclud ing any amount due to the
use of the name "John Elway" or any value
attributable to the consulting or promotional
agreements of John A. Elway, Jr. The fair market
value of the assets determined by such
appraisals shall be reduced to writing by the
appraisers, and a copy shall be forwarded in
accordance with Section 25 below, and to the
Partnership's certified public accountants,
Morrison, Brown Argiz & Co. Such accountants
shall reduce the fair market value so determined
by all accrued and reasonably anticipated
liabilities, contingent and fixed, as computed
on an accrual basis in accordance with good
accounting practices, and shall thereupon
compute the amount of proceeds that would be
distributed to the Partners in liquidation of
their interests in the Partnership.
d. All costs of the Partnership's accountants,
appraisers and legal counsel or other parties or
services in computing the Purchase Price shall
be paid one-half by each Partner.
e. Notwithstanding any shorter period of time
provided for a purchase to occur under Sections
il, 12, 13, 14 or 15 above, such period of time
shall be extended to allow full compliance with
the appraisals and arbitration provisions of
Section 17.
In no event shall the Purchase Price include any amount due to the
use of the name "John Elway," or any value attributable to the consulting
or promotional agreements of John A. Elway, Jr.
18. Payment of Purchase Price.
a. Payment of the Purchase Price shall be in cash;
or
b. Payment of the Purchase Price shall be made by a
cash payment of at least one-fourth of the
Purchase Price and simultaneous execution by the
purchaser(s) of a promissory note payable to the
order of the seller for the balance of the
Purchase Price. Such note shall provide for
equal quarterly payments of principal and
accrued interest over four' years, with interest
to be at the floating U. S. prime rate as
published daily by the Wall Street Journal (i.e.
the base rate on corporate loans posted by at
least 75% of the nation's 30 largest banks), to
be adjusted on the day of any change in such
prime rate, plus one percent per annum. Prepay
ment without penalty shall be allowed at any
time. The note shall be secured by the
Partnership Interest being acquired, and the
Partnership Interest shall not be released until
the full purchase price for all of the acquired
Partnership Interest have been paid.
19. "PUT and "CALL" Provision.
a. Operation. In addition to the rights and
obligations set forth in other paragraphs of
this Agreement, but subject to the limitations
in paragraph 19b below, any Partner may compel
the purchase or sale of all of Interest owned by
the other Partner in the following manner. The
Partner wishing to invoke the procedures set
forth in this Section 19 (the "Electing
Partner") shall give notice to the "Responding
Partner", containing a statement of the Electing
Partner's intent to rely on this Section 19, an
offer to purchase all the interest beneficially
owned by the Responding Partner for a specified
purchase price payable at the closing in cash or
certified funds, and an acknowledgment from a
commercial bank acting as escrow agent that the
total purchase price for all the Partnership
Interest that the Electing Partner is offering
to purchase has been deposited with such
commercial bank. The Responding Partner shall
have an option, for a period of 120 days after
the date such notice is given, either to sell to
the Electing Partner all of the Partnership
Interest owned beneficially by the Responding
Partner, or to purchase all Interest owned
beneficially by the Electing Partner upon the
same terms. The Responding Partner shall give
notice of Responding Partner's response to the
Electing Partner within said 120 day period, and
failure to respond shall be deemed to be an
election by the Responding Partner to sell to
the Electing Partner. The closing for the
purchase and sale of Interest pursuant to this
Section 19 shall take place not later than 30
days after the date notice of response is given.
At the closing, the purchasing Partner shall
also purchase all indebtedness of the
Partnership to the selling Partner, for the
outstanding principal amount thereof plus
accrued and unpaid interest thereon. In
addition, the selling Partner shall also repay
any and all obligations of the Partnership which
such selling Partner shall have personally
guaranteed on behalf of the Partnership, and all
collateral given by the selling Partner to
secure such obligations shall have been released
by the secured lender. The provisions of
Sections 11, 12, 13, 14 and 15 shall take
priority over this Section 19 and a notice
invoking the provisions of this Section 19 may
not be given after the occur rence of an event
described in Sections 11, 12 , 13 , 14 or 15 ,
until such time as the time periods specified in
such paragraphs have expired.
b. Limitations. If Woody is the Electing Partner,
Woody can give notice to any other Partner as
the Responding Partner. If Buscher is the
Electing Partner, Buscher can give notice only
to Woody as the Responding Partner. Garrett
cannot become an Electing Partner until the date
that is five (5) years from the date that
Garrett's Sharing Ratio becomes 20%, and if
Garrett thereafter is the Electing Partner,
Garrett can give notice only to Woody as the
Responding Partner.
c. Assignment. The purchasing Partner may assign
its rights and obligations under this Section 19
to the Partnership, including the right to
purchase the Interest, subject to the same
periods for election and payment as set forth in
Section 11a above, upon approval of the Partners
(excluding the Partner owned by the selling
Partner) owning the majority of Partnership
Interests.
20. Operations of the Partnership. The Partners agree to the
following regarding the operations of the Partnership during the term of
this Agreement:
a. Cash distributions shall be made by the
Partnership to the Partners in accordance with
the provisions of Section 5 hereto.
b. The Partners shall .vote on business issues
based upon their respective Partnership
Interests. Major decisions concerning the
expansion of the Partnership's operations by
adding an additional dealership shall be subject
to the agreement of the Partners holding a
majority of the total Partnership Interests. In
addition, any increase in the capital loans or
increase in other debt of the Partnership, and
any change in the ownership of the Partnership
not contemplated by this Agreement, shall be
subject to the unanimous agreement of all
corporate Partners that are owned by individuals
personally liable for the repayment of such
loans or debt, if any.
c. Rodney L. Buscher shall be hired as the
President and Chief operating officer of the
Partnership pursuant to a separate Employment
Agreement which shall exclude other business
interests (other than related entities), and
require full time, effort, and dedication to the
business of the Partnership, until such time as
the principal's respective capital investments
are repaid, or unless otherwise mutually agreed
to by the principals, in writing.
d. The Partnership shall enter into a Promotion
Agreement with John A. Elway, Jr. to provide
promotion and advertising services to the
Partnership.
21. Additional Partners. Prior to becoming an owner of a
Partnership Interest, the transferee of such Partnership Interest shall
execute a copy of this Agreement indicating the date thereof, in the space
provided at the end of this Agreement and thereafter shall have all the
rights and obligations of a Partner under this Agreement. No evidence of
any transfer of a Partnership Interest shall be issued to any transferee
until such transferee shall have complied with the terms of this Agreement.
No Partnership Interest shall be reflected on the books of the Partnership
until all applicable provisions of this Agreement have been complied with.
The admission of any new Partner may require the consent of the Franchisor
prior to being admitted as a Partner.
22. Take-Along Provision. Notwithstanding any other provision of
this Agreement, in the event that Partner(s) owning more than 50% of the of
Partnership Interests determine to transfer their Partnership Interest in
the same transaction, any other Partner shall have the right, at its
discretion, to participate in such transfer upon the same terms and
conditions as the transferring Partner (s). The intent of this provision is
to require that all Partners have the opportunity to participate in any
change of control of the Partnership.
23. Option to Purchase Additional Partnership Interest by Buscher.
a. Woody grants to Buscher the option to purchase
an additional Interest in the Partnership from
it in such amount as will make Buscher the owner
of up to 33 1/3% of the total Partnership
Interests and Sharing Ratios of the Partnership.
This option shall commence on the date that
Buscher owns a 20% Sharing Ratio and shall
terminate in any event on October 12, 1994. The
exercise price for this option shall be the
greater of the following amounts:
(1) an amount equal to (a) the total
capital contributions of Woody to the
Partnership, plus (b) interest on such
total capital contributions from the
date each contribution was made at 3%
over prime as determined in section 18
compounded annually; such sum of (a)
and (b) to be divided by (c) the
percentage interest owned by Woody, and
then (d) multiplied by the percentage
interest being acquired by Buscher at
the time of exercise of the option.
or
(2) an amount equal to (a) the total
capital contributions of Woody to the
Partnership, plus (b) Woody,'s share of
the undistributed net profits of the
Partnership at the time of exercise of
the option; such sum of (a) and (b) to
be divided by (c) the percentage
interest then owned by Woody, and then
(d) multiplied by the percentage
interest being acquired by Buscher at
the time of exercise of the option.
The option may be exercised by Buscher in whole
or in part, and, if exercised in part, shall
continue until October 12, 1994; provided,
however, that each and every exercise of the
option by Buscher is subject to the consent of
Woody, which may be granted or withheld in the
sole discretion of Woody.
b. All payments shall be in cash or certified
funds, and Buscher may borrow the funds for such
option exercise, but any pledge by Buscher of
his Partnership Interest or shares of stock in a
Partner, may be subject to the consent of the
franchisor.
24. Arbitration. The Partners hereby submit all controversies,
claims and matters of difference to arbitration in Denver, Colorado,
according to the rules and practices of The American Arbitration
Association from time to time in force except that, if such rules and
practices shall conflict with the Colorado Rules of Civil Procedure or
Federal Rules of Evidence, such Colorado and Federal rules shall govern.
This submission and agreement to arbitrate shall be specifically
enforceable. Without limiting the generality of the foregoing, the
following shall be considered controversies for this purpose: (i) all
questions relating to the breach of any obligation, warranty or condition
hereunder; (ii) all questions relating to representations, negotiations and
other proceedings leading to the execution hereof; (iii) failure of any
Partner to deny or reject a claim or demand of any other Partner; and (iv)
all questions as to whether the right to arbitrate any question exists.
Arbitration may proceed in the absence of any Partner if notice of the
proceedings has been given to such Partner. The Partners agree to abide by
all awards rendered in such proceedings. Such awards shall be final and
binding on all Partners to the extent and in the manner provided by the
Colorado Rules of Civil Procedure. All awards may be filed with the Clerk
of the District Court in Denver, Colorado, as a basis of judgment and of
the issuance of execution for its collection, and, at the election of the
Partner making such filing, with the clerk of one or more other courts,
state or federal, having jurisdiction over the Partner against whom such an
award is rendered or his property. No Partner shall be considered in
default hereunder during the pendency of arbitration proceedings relating
to such default.
25. General Provisions.
a. All notices under the provisions of this
Agreement shall be given (i) by facsimile
transmission effective one business day after
being sent, or (ii) by registered mail or
certified mail, first class postage prepaid, to
be effective two business days after mailing,
and shall be mailed to the addresses as follows:
(1) If intended for Buscher:
R. L. Buscher, II, Inc.
ATTN: Rodney L. Buscher
4545 South High Street
Englewood, Colorado 80110
FAX: (303) 762-1597
(2) If intended for Woody:
Woody Capital Investment Company, II
ATTN: John A. Elway, Jr.
4763 South Elizabeth Court
Englewood, Colorado 80110
FAX: (303) 761-2760
(3) It intended for Garrett:
C. Garrett, Inc.
ATTN: Christopher R. Garrett
16326 East Prentice Circle
Aurora, Colorado 80015
FAX: (303) 792-1148
(4) If intended for the Partnership:
J-R Motors Company South
10030 East Arapahoe Road
Englewood, Colorado 80111
FAX: (303) 792-1148
With a copy to:
Michael J. Sternick, Esq.
Brownstein Hyatt Farber & Strickland, P.C.
410 Seventeenth St., Suite #2200
Denver, Colorado 80202
FAX: (303) 623-1956
b. In computing any period of time under this
Agreement, the date of the act, event or default
from which the designated period of time begins
to run shall not be included. The last day of
the period so computed shall be included, unless
it is a Saturday, Sunday or legal holiday, in
which event the period shall run until the end
of the next day which is not a Saturday, Sunday
or legal holiday.
c. This instrument contains the entire agreement
among the parties.
d. This Agreement may be amended by the vote of the
Partners owning a majority of the total
Interests in the Partnership. No rights
hereunder may be waived, except by an instrument
in writing signed by the party sought to be
charged with such waiver.
e. This Agreement shall be construed in accordance
with, and governed by, the laws of Colorado.
f. This Agreement shall be binding upon and shall
inure to the benefit of the Partners and their
respective personal representa tives and
assigns, except as above set forth.
g. This Agreement may be executed in any number of
counterparts, each of which shall be considered
an original.