Exhibit 3.72
J-R MOTORS COMPANY NORTH
a Colorado general partnership
FIRST AMENDMENT TO
THE SECOND AMENDED AND RESTATED
PARTNERSHIP AGREEMENT
THIS FIRST AMENDMENT TO THE SECOND AMENDED AND RESTATED
PARTNERSHIP AGREEMENT (the "Amendment") is made as of August 9, 2001, by
and among WOODY CAPITAL INVESTMENT COMPANY III, a Colorado corporation
("Woody"), X. X. XXXXXXX III, INC., a Colorado corporation ("Xxxxxxx") and
R. COOP LIMITED, a Colorado corporation ("Coop"), for the purpose of
amending that certain General Partnership Agreement dated January 1, 1994
(the "Partnership Agreement"), by and between Woody, Xxxxxxx and XXXX RED
LIMITED ("Ruby").
RECITALS
WHEREAS, Ruby and Coop have entered into an assignment of
partnership (the "Assignment") pursuant to which Ruby transferred its
entire interest (the "Partnership Interest") in J-R Motors Company North
(the "Partnership") to Coop;
WHEREAS, Woody, Xxxxxxx and Coop (collectively, the "Partners")
desire to amend the Partnership Agreement to consent to and reflect the
transfer of the Partnership Interest to Coop.
NOW, THEREFORE, in consideration of the mutual covenants and
obliga tions of the parties set forth in the Assignment and in this
Amendment, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree that the
Partnership Agreement shall be amended as follows:
1. Transfer of Partnership Interest. The undersigned
Partners hereby acknowledge and consent to the transfer of the Partnership
Interest from Ruby to Coop and irrevocably waive any and all rights of
first refusal, options to purchase or any other restrictions, limitations,
or other conditions to transfer contained in the Partnership Agreement,
under any other agreements, instruments, or other documents to which the
Partnership is a party or is otherwise bound, and under the Colorado
Revised Uniform Limited Partnership Act (the "Act"), to the extent
applicable, in respect of the transfer of the Partnership Interest.
2. Closing; Further Assurances. All parties hereto agree
that they will execute, acknowledge, and deliver such further instruments
of sale, conveyance, and transfer, and take such other actions as may be
reasonably required in order to transfer the Partnership Interest and
effectively consummate the transaction contem plated hereby.
3. Miscellaneous. Except as modified by this Agreement,
the Partnership Agreement shall remain unchanged and in full force and
effect, and the parties reaffirm and ratify their respective obligations
thereunder. The recitals hereto, which the parties acknowledge are true and
correct, are hereby incorporated herein by reference. This Amendment may be
executed in one or more counterparts, each of which shall be deemed to be
an original, but all of which together shall constitute one and the same
instrument. This Amendment shall be binding upon and inure to the benefit
of the parties hereto and their respective permitted successors, grantees,
heirs, and assigns. This Amendment shall be construed and interpreted in
accordance with, and governed by, the substantive law of the State of
Colorado applicable to agree ments entered into and to be wholly performed
in the state.
SECOND
AMENDED AND RESTATED
PARTNERSHIP AGREEMENT OF
J-R MOTORS COMPANY NORTH
THIS SECOND AMENDED AND RESTATED PARTNERSHIP AGREEMENT
("Agreement") is entered into to be effective as of the 1st day of January,
1994, by and among WOODY CAPITAL INVESTMENT COMPANY III, a Colorado
corporation ("Woody"), X. X. XXXXXXX III, INC., a Colorado corporation
("Xxxxxxx"), and RUBY RED LIMITED, a Colorado corporation ("Ruby"). This
Agreement amends and restates in its entirety that certain Amended and
Restated Partnership Agreement of J-R Motors Company North 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 NORTH (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 - 85%
Xxxxxxx - 10%
Ruby - 5%
----------
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 Partnership 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 - 75%
Xxxxxxx - 20%
Ruby - 5%
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 cumu lative 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 transferring Partner, except that for every 1%
Sharing Ratio that Ruby purchases from Woody, the Net Investment Account of
Ruby shall increase by $27,000, 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 Thirty Thousand
Dollars ($30,000.00) 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 liquidating,
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 Partnership 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 Partnership 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 Regulation ss.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
ss.1.704-1(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 been
distributed 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 dissolution 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, Ruby 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 Ruby's Sharing Ratio becomes 20%. If a Partner ("Selling
Partner") either (i) at any time if the Partner is Woody or Xxxxxxx, or
(ii) after five (5) years from the date that Ruby's Sharing Ratio becomes
20% if the Partner is Ruby, 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
transaction. 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, Xxxxxxx is the
Designated Partner; (ii) if Xxxxxxx is the Selling Partner, Woody is the
Designated Partner; and (iii) if Ruby 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 as set 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) Ruby 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 Ruby 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 Xxxx Xxxxx or Xxxxxx X. Xxxxxxx or Xxx Xxxxxx.
(a) Within 90 days after the personal
representative of Xxxx Xxxxx, Xxxxxx X. Xxxxxxx or Xxx Xxxxxx (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 indirectly by the Decedent as of the date of
the Decedents 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 l1a 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
exercisable 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 Xxxx X. Xxxxx is the Decedent, the Designated Partner
shall be Xxxxxxx; (ii) if Xxxxxx X. Xxxxxxx is the Decedent, the Designated
Partner shall be Woody; and (iii) if Xxx Xxxxxx 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
representative of a Decedent within the time permitted above, the
corporation 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 Decedent's 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
commencing 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 Ruby,
Buscher, or Xxxxxxx'x affiliate, or (ii) Xxxxxxx 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, Xxxxxxxx Xxxxx Xxxxx & 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) Xxxxxx X. Xxxxxxx. Within 120 days after
Xxxxxx X. Xxxxxxx 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 Xxxxxx X. Xxxxxxx (which is subject to Section 11 above) or (ii)
the voluntary termination of employment by Xxxxxx X. Xxxxxxx (which is
subject to Section 14 below), then Woody shall purchase from Xxxxxxx, and
Xxxxxxx shall sell to the Woody, all of the Interest in the Partnership
then owned by Xxxxxxx 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 Xxxxxx X. Xxxxxxx, $25,000 if Xxxxxxx'x Sharing Ratio is
17.5%, $50,000 if Xxxxxxx'x Sharing Ratio is 15%, $75,000 if Xxxxxxx'x
Sharing Ratio is 12.5%, $100,000 if Xxxxxxx'x Sharing Ratio is 10%,
$125,000 if Xxxxxxx'x Sharing Ratio is 7.5%, or $150,000 if Xxxxxxx'x
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 Xxxxxxx) 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) Xxx Xxxxxx. Within 120 days after Xxx Xxxxxx
shall cease to be employed by the Partnership, except a termination of
employment caused by (i) the death of Xxx Xxxxxx (which is subject to
Section 11 above) or (ii) the voluntary termination of employment by Xxx
Xxxxxx (which is subject to Section 14 below), then Woody shall purchase
from Ruby, and Ruby shall sell to Woody, all of the Interest in the
Partnership then owned by Ruby at the following "Termination Price":
(1) if the termination was "for cause" as
defined in the applicable Employment Agreement between the
Partnership and Xxx Xxxxxx, (i) Ruby's "Adjusted Investment
Amount" as defined below, if the termination occurs before the
date that is five (5) years after the date that Ruby'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 Ruby's Sharing Ratio
becomes 20%; or
(2) if the termination was not "for cause" as
defined in the applicable Employment Agreement between the
Partnership and Xxx Xxxxxx, 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, Ruby's
"Adjusted Invested Amount" shall be calculated by the
Partnership's certified public accountants, Xxxxxxxx Xxxxx Xxxxx &
Co. in accordance with generally accepted accounted principles, as
if the Partnership closed its books with respect to Ruby as of the
date of Xxx Xxxxxx'x termination, as the sum of (i) the net amount
of items of the Partnership's income, gain, loss, and deduction
allocated to Ruby'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) Ruby's
specifically calculated add-on LIFO reserve, minus (iii) all
distributions made to Ruby from the Partnership, plus (iv) the
aggregate amount of Capital Contributions made by Ruby to the
Partnership, plus (v) the purchase price actually paid by Ruby to
Woody to acquire Ruby'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 Partner owned by Ruby)
owning the majority of Partnership Interests.
14. Purchase of Interest Upon Voluntary Termination of
Employment. Upon any voluntary termination of employment by Xxxxxx X.
Xxxxxxx 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 Xxxxxx X. Xxxxxxx, to Xxxxxxx to purchase all of the Interest in
the Partnership so owned by Xxxxxxx 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 Xxx Xxxxxx from the Partnership, then Woody
shall have the continuing option to make a written demand, at any time
before the death of Xxx Xxxxxx to Xxxx to purchase all of the Interests in
the Partnership owned by Ruby as of the date of such termination as
follows: (i) if Xxx Xxxxxx terminates employment before the date that is
five years after Ruby's Sharing Ratio becomes 20%, the purchase price shall
be Ruby's "Adjusted Investment Amount," or (b) if Xxx Xxxxxx terminates
employment on or after the date that Ruby'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,
Xxxxxxx or Xxxx, 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 Xxxxxxx, 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
Partnership, 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 appraisers 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, excluding any amount due to the use of the name "Xxxx Xxxxx"
or any value attributable to the consulting or promotional agreements of
Xxxx X. Xxxxx, Xx. 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, Xxxxxxxx, Xxxxx Xxxxx & 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 11, 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 "Xxxx Xxxxx," or any value attributable to the
consulting or promotional agreements of Xxxx Xxxxx.
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. Prepayment 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 occurrence 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 Xxxxxxx is the Electing Partner, Xxxxxxx can give notice only
to Woody as the Responding Partner. Ruby can not become an Electing Partner
until the date that is five (5) years from the date that Ruby's Sharing
Ratio becomes 20%, and if Ruby thereafter is the Electing Partner, Ruby 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 l1(a) 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) Xxxxxx X. Xxxxxxx 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 Xxxx Xxxxx 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
Xxxxxxx.
(a) Woody grants to Xxxxxxx the option to
purchase an additional Interest in the Partnership from it in such amount
as will make Xxxxxxx 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 Xxxxxxx 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
contribu tions 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 Xxxxxxx at the time of
exercise of the option.
or
(2) an amount equal to (a) the total capital
contribu tions 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 Xxxxxxx at
the time of exercise of the option.
The option may be exercised by Xxxxxxx 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
Xxxxxxx 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 Xxxxxxx may borrow the funds for such option exercise, but any
pledge by Xxxxxxx 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 Xxxxxxx:
X. X. Xxxxxxx, XX, Inc.
ATTN: Xxxxxx X. Xxxxxxx
0000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
FAX: (000) 000-0000
(2) If intended for Woody:
Woody Capital Investment Company, III
ATTN: Xxxx X. Xxxxx, Xx.
0000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
FAX: (000) 000-0000
(3) If intended for Ruby:
Ruby Red Limited
ATTN: Xxx Xxxxxx
0000 Xxxx 000xx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
FAX: (000) 000-0000
(4) If intended for the Partnership:
J-R Motors Company North
00000 Xxxx Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
FAX: (000) 000-0000
With a copy to:
Xxxxxxx X. Xxxxxxxx, Esq.
Xxxxxxxxxx Xxxxx Xxxxxx & Xxxxxxxxxx, P.C.
000 Xxxxxxxxxxx Xx., Xxxxx #0000
Xxxxxx, Xxxxxxxx 00000
FAX: (000) 000-0000
(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
representatives and assigns, except as above set forth.
(g) This Agreement may be executed in any number
of counter parts, each of which shall be considered an original.
