esl JUL 392015

Transcription

esl JUL 392015

STATE OF INDIANA
)
) SS:
)
COUNTY OF MARION
IN THE MARION SUPERIOR COURT
CAUSE NO.:
#01315 -07 PI 0252'9 2
ANDRETTI SPORTS MARKETING, LLC,
Plaintiff,
vs.
ANDRETTI AUTOSPORT HOLDING
COMPANY, INC. and MICHAEL
esl
JUL 392015
ANDRETTI,
( Q¥ THi MARIDN G!3CUs TUQUS
Defendants.
COMPLAINT FOR DAMAGES,
DECLARATORY RELIEF, AND APPOINTMENT OF RECEIVER
Plaintiff Andretti Sports Marketing, LLC ("ASM"), by counsel, for its Complaint for
Damages, Declaratory Relief, and Appointment of Receiver against Defendants Andretti
Autosport Holding Company, Inc. ("AAHC") and Michael Andretti ("Andretti"), alleges on
knowledge as to itself and its conduct and upon information and belief as to all other matters and
states as follows:
PARTIES. JURISDICTION. AND VENUE
1.
Andretti Sports Marketing, LLC is a limited liability company incorporated imder
the laws of the State of Indiana and having its principal place of business at 7615 Zionsville
Road, Indianapolis, Indiana 46268.
2.
Andretti Autosport Holding Company, Inc. is a corporation organized under the
laws of the State of Indiana and having its principal place of business at 7615 Zionsville Road,
Indianapolis, Indiana 46268.
3.
Michael Andretti is an Indiana citizen. He is Chief Executive Officer of AAHC.
4.
Jurisdiction and venue are proper in this Court because the parties agreed in
Section 9.4 of the Operating Agreement governing the parties' business relationship to submit to
this County and judicial district.
FACTS RELEVANT TO ALL COUNTS
A.
AAHC and ASM Formed and Operated as Separate Legal Entities.
5.
AAHC is a corporation that manages motorsports racing teams owned by AAHC.
AAHC is a successor organization to Andretti Green Racing, Inc.
6.
In 2005, John Lopes ("Lopes") joined Andretti Green Racing, Inc. as Senior Vice
President of Marketing, focusing on race promotions.
7.
Subsequently, the Andretti Green Racing entity was reorganized and, inor around
2009, AAHC was formed.
8.
Lopes served in the role of Chief Marketing Officer/Senior Vice President of the
newly formed AAHC, beginning in 2009.
No non-compete or non-solicitation conditions
existed on Lopes' employment with AAHC.
9.
In or around 2011, Lopes entered into discussions with long-time colleague and
fellow marketing executive, A. Starke Taylor ("Taylor"), regarding formation of a marketing
company. Aware ofthe discussions, Andretti expressed his desire to incorporate the marketing
company within the Andretti company fold.
10.
Arising from these discussions, ASM was formed in 2011. The members of ASM
executed an Operating Agreement (the "Operating Agreement") that became effective January 1,
2012. The Operating Agreement set the core terms of the members' business relationship in
ASM. A true and correct copy of the executed Operating Agreement is attached hereto as
Exhibit A.
11.
By the terms of the Operating Agreement, there are three members of ASM.
AAHC owns a 60% membership interest in ASM, John Lopes owns a 20% membership interest
in ASM, and Starke Taylor owns the final 20% membership interest in ASM. See Ex. A at Ex.
A.
12.
Per Section 4.1 of the Operating Agreement, "[t]he business and affairs of the
Company shall be managed by one or more Managers." As unanimously agreed to by the three
members of ASM, Lopes was named the Manager at the time of execution of the Operating
Agreement. Ex. A at § 4.1.
13.
Lopes, in his role as Manager, appointed Andretti as Chief Executive Officer of
ASM. As Manager, he also appointed himself as President, and appointed Taylor as Chief
Marketing Officer/Senior Vice President, as per the unanimous consent ofthe three members of
ASM and the Operating Agreement.
B.
ASM Operations.
14.
ASM began operations in early2012.
15.
ASM is primarily engaged in operating and promoting motorsports events. The
company has managed a series of high profile clients, including prominent automobile
manufacturers. ASM has also operated a series of high profile race events including Milwaukee
IndyFest, Baltimore Grand Prix, and FIA Formula E Miami E-Prix. In the ordinary course of
ASM's business, ASM routinely and currently holds funds for pre-paid operational expenses,
pursuant to one or more of its client contracts.
16.
The Operating Agreement expressly authorizes Lopes, as Manager, to carry out
the business of ASM: "[T]he Manager shall have full and complete power, authority and
discretion to manage and control the Company and its business and affairs and to make all
incidental decisions, subject only to the power and authority which this Operating Agreement or
the Indiana Act expressly vests in the Members or any number of them and also subject to the
voting requirements of Section 4.3 ...Ex. A at § 4.2(a).
17.
Among the various powers granted in Section 4.2 of the Operating Agreement,
the Manager is authorized:
a.
To demand, sue for, settle, collect, receive and give releases and
discharges for all moneys, debts, accounts, interest, dividends, securities
and other tangible or intangible personal or real property which nowis due
or belongs, or in the future shall be due or belong, to the Company;
(§4.2(a)(iii)).
b.
To settle and pay the Company's debts and obligations; (§ 4.2(a)(iv)).
c.
To engage, employ and dismiss employees, independent contractors,
attorneys, accountants and other persons hired to perform management,
administrative, or other services for and on behalf of the Company, and to
define such persons' respective duties and establish their compensation or
remuneration; (§ 4.2(a)(v)).
d.
To open, maintain, deposit into and withdraw from bank accounts, and, if
desired, to designate other persons to execute checks or drafts on such
accounts; (§ 4.2(a)(ix)).
e.
To commence, prosecute and defend all actions and other proceedings
affecting the Company in anyway; (§ 4.2(a)(xi)).
f.
Generally, to carry on the Company's business in the ordinary course, and
to manage the Company's day-to-day operations and to carry out the
development and expansion of the Company and its business;
(§ 4.2(a)(xiii)).
18.
Lopes carried out his duties as Manager, pursuant to the Operating Agreement,
and ASM became profitable in short order, with substantial net income on a yearly basis.
19.
In 2014, ASM executed a consulting agreement which allowed Taylor to provide
a variety of services to ASM, including business development, business strategy, business
management, management of business fmancials, and employee leadership.
20.
Also in 2014, ASM secured a key contractual arrangement with a major
automobile manufacturer. Under the five-year agreement, the manufacturer agreed to pay ASM
multi-million dollars per year for its services and an AAHC-operated rallycross race team. This
program is profitable and accounts for a majority of ASM's profits.
21.
ASM has had a profitable track record and is projected to be profitable in future
years.
C.
Financial Performance of AAHC.
22.
AAHC has struggled financially in recent years.
23.
AAHC's financial performance relied and currently relies heavily on sponsorship
revenue.
24.
A series of sponsorship defaults combined with business decisions made by
Andretti and AAHC in 2013-2014 put AAHC under financial pressure.
25.
AAHC lost a key sponsor for the 2014 race season and its replacement defaulted,
resulting in the loss of millions of dollars of sponsorship required to allow AAHC to meet its
financial obligations. Additional sponsors also defaulted on their payments to AAHC in 2014,
compounding AAHC's financial struggles.
26.
Upon information and belief, AAHC had projected gross revenue of
approximately $25 million in2014, but experienced at least a $10 million loss.
27.
Upon information and belief, AAHC has projected gross revenue in 2015 of
approximately $25 million and is projected to have at least a $10 million loss.
28.
Upon information and belief, in 2014 and so far in 2015, AAHC and/or Andretti
obtained or borrowed approximately $6 million to $8 million from various sources to cover
AAHC's losses and to operate.
29.
In 2014, AAHC sought money from ASM to further cover AAHC's losses and to
be able to pay AAHC's employees and other operational costs. Andretti and AAHC made
multiple requests of ASM's minority members, asking them to provide super majority support
for ASM to loan AAHC money so AAHC could meet its continuing payroll obligations. ASM's
minority members would not and did not agree to lend money to AAHC or Andretti after
considering theirduty to protect the financial interests of ASM, its business and its employees.
30.
Upon information and belief, AAHC currently has less than $2 million in
unencumbered assets and at least $7 million in debt, plus additional liabilities that may be in
excess of $10 million.
31.
The foregoing and other circumstances have caused immense financial pressure
upon AAHC and Andretti.
32.
Upon information and belief, AAHC is insolvent or in imminent danger of
insolvency and cannot pay its debts as suchdebts come due.
D.
AAHC and Andretti Convert Funds Due and Owing to ASM.
33.
Lopes, based on these and other circumstances, made the decision to resign from
his role of Chief Marketing Officer and Senior Vice President of AAHC on July 10, 2014, to
enable him to concentrate his efforts on ASM business.
34.
Throughout this time period, Andretti's long-time friend and business associate,
JF Thormann, served as Treasurer of both AAHC and ASM. Lori Crane was controller for both
AAHC and ASM.
Andretti and AAHC took advantage of these shared roles to ASM's
detriment.
35.
AAHC improperly withheld funds due to ASM, without approval of ASM's
Manager, Lopes, and without any vote of the membership. These misappropriations were to the
detriment of ASM and for the benefit of AAHC.
36.
For example, during the Third and Fourth Quarters of 2014, AAHC began to
ignore internal financial agreements between AAHC and ASM. ASM employed and managed
AAHC's hospitality and other staff who supported AAHC at races. AAHC stopped previously
agreed upon payments from AAHC to ASM to cover the salaries of those personnel and others.
These payments to ASM were agreed to by all of themembers and ratified by a consistent course
of conduct in the companies' operations together. AAHC, in effect, lent itself money for months
at a time that should have been paid to ASM.
37.
After ASM's counsel informed AAHC's and Andretti's counsel at approximately
3:30 p.m. (ET) on July 29, 2015, that this complaint was ready to be filed, at 5:34 p.m. (ET) on
July 29, 2015, AAHC transferred $137,848 that has been due since July of 2014, to ASM's
account at Chase Bank. However, this $137,848 is not available for ASM's use because AAHC
and/or Andretti have blocked Lopes and Taylor from accessing ASM's account at Chase Bank,
even though Lopes is the Manager of ASM and Taylor is the Treasurer of ASM and the only
parties rightfully entitled to access ASM's bankaccounts.
38.
For the 2014 and 2015 Milwaukee IndyFest race events, AAHC sponsors paid
AAHC for event-based sponsorship that AAHC was to pay ASM. With this understanding,
ASM executed sponsorship contracts with these companies. AAHC retained the sponsorship
dollars for long periods and did not transfer the funds over to ASM per the agreement reached
between all companies. AAHC, in effect, lent itself money for months at a time that should have
been paid to ASM.
39.
After ASM's counsel informed AAHC's and Andretti's counsel at approximately
3:30 p.m. (ET) on July 29, 2015, that this complaint was ready to be filed, at 5:34 p.m. (ET) on
July 29, 2015, AAHC transferred $58,000 that has been due since early July of 2015, to ASM's
bank account at Chase Bank. However, this $58,000 is not available for ASM's use because
AAHC and/or Andretti have blocked Lopes and Taylor from accessing ASM's account at Chase
Bank, even though Lopes is the Manager of ASM and Taylor is the Treasurer of ASM and the
only parties rightfully entitled to access ASM's bank accounts.
40.
Upon information and belief, AAHC did not have the $195,848 that was
transferred from AAHC's account at Chase Bank to ASM's account at Chase Bank at 5:34 p.m.
(ET) on July 29, 2015, and AAHC has likely furthered its insolvency or advanced the imminent
danger of being insolvent as a result of thistransfer.
41.
Payment was also significantly delayed on $30,000 for an important sponsorship
in Milwaukee due to ASM.
42.
Also in 2014, in connection with the Formula E Miami E-Prix event, AAHC
caused FormulaE to withhold millions of dollars in payments to ASM, citing AAHC's failxxre to
pay over $652,000 due to Formula E, despite the fact AAHC and ASM are separate legal
entities. Only after facing the imminent prospect of the 2015 race being shut dovra, just days
before the event, was Formula E forced to pay ASM more than $2 million U.S Dollars, months
after payment was due to ASM and despite AAHC's failure to pay Formula E in a timely
manner.
E.
Lopes Takes Action to Protect ASM.
43.
Seeing the damage being done to ASM and the insolvency of AAHC—which held
a 60% membership interest in ASM—Lopes exercised his authority as Manager to protectASM.
44.
ASM fimds had been held in Chase Bank, the same bank where AAHC and
Andretti held accounts. In or around June, 2014, Lopes had ASM funds moved to Key Bank, to
maintain separation between ASM and AAHC accounts. Later, Lopes also had Lori Crane
removed from ASM account access at Key Bank.
45.
In response, Andretti ordered Lopes' compensation from AAHC stopped and
Andretti, at this time, would not agree to a resolution of ASM members to compensate Lopes
from ASM for his services as president. Subsequently, in November 2014, all three ASM
members agreed thatLopes would be compensated by ASM for his services as president.
46.
Subsequently, Lopes and Taylor retained the law firm, Krieg DeVault LLP, to
advise ASM withrespect to the impact on ASM's business if AAHC declared bankruptcy.
F.
AAHC and Andretti Breach the Operating Agreement.
47.
On July 27, 2015, Andretti sent a letter to Lopes purporting to remove him as
Manager for "cause" pursuant to Section 4.4(c)(iv) of the Operating Agreement. Andretti's
action was without merit and void, as no such cause exists for the removal and the other ASM
members properly asserted this fact in response.
48.
Notwithstanding the meritless termination of Lopes as Manager, AAHC also
purported to appoint Andretti as Manager. The appointment was void because Lopes' removal
was void. Accordingly, the other ASM members objected tothe appointment and, infurtherance
of their objection, immediately provided Andretti notice that he was removed as Manager for
cause pursuant to Section 4.4(c)(iv) of the Operating Agreement, for AAHC and Andretti s
"willful misappropriation of the funds or property of the Company" as detailed above. Ex. A at
§ 4.4(c) (iv).
49.
On information and belief, Andretti also solicited one or more employees of ASM
to AAHC, in violation of Section 6.9(b) of the Operating Agreement. This action entitles ASM
or its remaining members to exercise an option to purchase all, and not less than all, of AAHC's
membership interest in ASM, pursuant to Section 6.2(a)(iv) of the Operating Agreement.
COUNT I - CIVIL CONVERSION: PERSONNEL PAYMENTS
(AAHC and Andretti)
ASM, for Count I of its Complaint for Damages, alleges and states:
50.
The allegations contained in paragraphs 1-49 are hereby realleged and
incorporated as if fully set forth herein.
51.
AAHC and Andretti exerted imauthorized control over specific, identifiable
personal property of ASM.
52.
AAHC and Andretti knowingly and intentionally obtained and exercised
unauthorized control over ASM's propertysince at least July, 2014.
53.
AAHC's and Andretti's conduct constitutes conversion under Ind. Code § 35-43-
4-3 and civil conversion under Indiana common law.
54.
ASM has beendamaged by AAHC's and Andretti's conversion of its property.
55.
ASM is entitled to up to three times its damages, attorneys' fees, prejudgment
interest and costs under Ind. Code § 34-24-3-1.
WHEREFORE, Plaintiff Andretti Sports Marketing, LLC prays for judgment against
Defendants Andretti Autosport Holding Company, Inc. and Michael Andretti in an amount
sufficient to compensate Andretti Sports Marketing, LLC for its damages; up to three times those
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damages under Ind. Code § 34-24-3-1; costs; prejudgment interest; attorneys' fees; and all other
just and proper relief.
COUNT II - CIVIL CONVERSION: SPONSORSHIP PAYMENTS
(AAHC and Andretti)
ASM, for Count II of its Complaint for Damages, alleges and states:
56.
57.
AAHC and Andretti exerted unauthorized control over specific, identifiable
personal property of ASM.
58.
AAHC and Andretti knowingly and intentionally obtained and exercised
unauthorized control over ASM's property.
59.
AAHC's and Andretti's conduct constitutes conversion under Ind. Code § 35-43-
4-3 and civil conversion under Indiana corrunon law.
60.
ASM has beendamaged by AAHC's and Andretti's conversion of its property.
61.
ASM is entitled to up to three times its damages, attorneys' fees, prejudgment
interest and costs under Ind. Code § 34-24-3-1.
Defendants Andretti Autosport Holding Company, Inc. and Michael Andretti in an amount
sufficient to compensate Andretti Sports Marketing, LLC for its damages; up to three times those
damages under Ind. Code § 34-24-3-1; costs; prejudgment interest; attorneys' fees; and all other
just and proper relief
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COUNT III - CONSPIRACY TO COMMIT CONVERSION
(AAHC and Andretti)
ASM, for Count III of its Complaint for Damages, alleges and states:
62.
63.
Andretti, AAHC and certain of its officers and agents acted in concert and
conspired to cause AAHC to knowingly and intentionally obtain and exercise unauthorized
control over specific and identifiable funds that became the property of ASM.
64.
Andretti, AAHC and certain of its officers and agents entered into an agreement
to knowingly and intentionally obtain and exercise unauthorized control over ASM's property.
65.
AAHC and Andretti took actions in furtherance of the conspiracy through the
conduct described in this Complaint.
66.
AAHC's and Andretti's knowing and intentional exertion of unauthorized control
over ASM's property was and is vinlawful.
67.
ASM was damaged by the concerted action of Andretti, AAHC and certain of its
officers and agents.
Defendants Andretti Autosport Holding Company, Inc. and Andretti in an amount sufficient to
compensate Andretti Sports Marketing, LLC for its damages; up to three times its damages under
Ind. Code § 34-24-3-1; costs; prejudgment interest; attorneys' fees; and all other justand proper
relief.
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COUNT IV - BREACH OF FIDUCIARY DUTY
(Andretti)
ASM, for Count IV of its Complaint for Damages, alleges and states:
68.
69.
Andretti held a position of trust and confidence, in his relationship as a member of
ASM and as Chief Executive Officer of ASM.
70.
Andretti owed fiduciary duties to ASM to properly safeguard ASM's interests and
to distribute monies received by AAHC and owned by or owed to ASM.
71.
ASM relied upon Andretti to distribute funds received by AAHC, on behalf of
ASM, in the manner delineated in the respective sponsorship agreements and pursuant to the
parties' course of conduct in their operations together, as described in this Complaint.
72.
Subject to a reasonable opportunity for investigation and discovery, upon
information and belief, Andretti breached his fiduciary duties to ASM by, among otherthings,
73.
a.
using ASM funds to pay AAHC obligations,
b.
using ASM funds to pay individual obligations,
c.
failing to observe corporate formalities,
d.
ignoring, controlling and manipulating the corporate form, and
e.
commingling assets.
ASM has suffered damages resulting from Andretti's breach of fiduciary duties,
in an amount to be determined at trial, plus attorneys' fees and costs.
Defendant Michael Andretti in an amount sufficient to compensate Andretti Sports Marketing,
13
LLC for its damages, together with prejudgment interest on the outstanding balance through and
until the date of judgment, costs, attorneys' fees and related charges, and post-judgment interest
at the highest statutory rate permitted by law until the judgment is paid in full, and for all other
just and proper relief.
COUNT V - DECLARATORY JUDGMENT (Ind. Code § 34-14-1-11)
(AAHC and Andretti)
ASM, for Count V of its Complaint for Damages, alleges and states:
74.
incorporated as if folly set forth herein.
75.
There exist numerous controversies among the parties as to application of the
terms of the Operating Agreement.
76.
This Court can and should declare the rights of the parties with respect to the
Operating Agreement as it relatesto these issues, specifically:
a.
Lopes is the Manager of ASM;
b.
No "cause" exists or ever has existed for AAHC or Andretti to remove
Lopes as Manager, under Section 4.4(c) of the Operating Agreement;
c.
Andretti's July 27, 2015 pxirported "removal" of Lopes as Manager is null
and void;
d.
AAHC's July 28, 2015 purported appointment of Andretti as Manager is
mill and void; and
e.
Andretti's actions in soliciting employees of ASM are in violation of
Section 6.9(b) of the Operating Agreement, and entitle ASM or its
remaining members to exercise the Option to purchase all, but not less
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than all, of AAHC's membership interest in ASM, pursuant to Section
6.2(a)(iv) of the Operating Agreement.
77.
Alternatively, this Court can and should declare:
a.
AAHC is insolvent or in imminent danger of insolvency;
b.
With its majority member, AAHC, insolvent or in imminent danger of
insolvency, and the other grounds described in this Complaint, ASM is not
and cannot be a viable entity as a going concern; and
c.
ASM should be judicially dissolved, as provided in Section 8.1(c) of the
Operating Agreement, and under applicable law.
WHEREFORE, Plaintiff Andretti Sports Marketing, LLC respectfully requests the Court
to enter judgment as to Count V;
1)
Declaring Lopes isthe Manager ofASM; no "cause" exists or ever has existed for
AAHC or Andretti to remove Lopes as Manager, under Section 4.4(c) of the
Operating Agreement; Andretti's July 27, 2015 purported "removal" of Lopes as
Manager is null and void; AAHC's July 28, 2015 purported appointment of
Andretti as Manager is null and void; and Andretti's actions in soliciting
employees of ASM are inviolation of Section 6.9(b) of the Operating Agreement,
and entitle ASM or its remaining members to exercise the Option to purchase all,
butnot less than all, of AAHC's membership interest in ASM, pursuant to Section
6.2(a)(iv) of the Operating Agreement.
2)
Or, alternatively, declaring AAHC is insolvent or in inuninent danger of
insolvency; with its majority member, AAHC, insolvent or in imminent danger of
insolvency, and the other grounds described in this Complaint, ASM is not and
cannot be a viable entity as a going concern; and therefore, ASM should be
judicially dissolved, as provided in Section 8.1(c) of the Operating Agreement,
and under applicable law; and
3)
Forall other just and proper relief.
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COUNT VI -APPOINTMENT OF RECEIVER (iND. Code § 32-30-5-1)
(AAHC)
ASM, for Count VI of its Complaint for Damages, alleges and states:
78.
Incorporated as if fully set forth herein.
79.
Under Indiana Code § 32-30-5-1, a receiver may be appointed: "(3) [i]n all
actions when it is shown that the property, fund or rent, and profits in controversy are in danger
of being lost, removed, or materially injured; ... (5) [w]hen a corporation: . . . (B) is insolvent;
[or] (C) is in imminent danger of insolvency ... or (7) [i]n other cases as may be provided by
law or where, in the discretion of the court, it may be necessary to secure ample justice to the
parties."
80.
AAHC has or will have possession of monies and other personal property in
which ASM has an interest, as described in this Complaint, which monies and other personal
property are in danger of being lost, removed, or materially injured.
81.
The appointment of a receiver is necessary to protect and preserve ASM's rights
and interests in the monies and personal property that are or will be in danger of being lost,
removed, or materially injured.
82.
The failure of AAHC to pay the amounts due and owing to ASM when such
amounts were due and owing, the inability of AAHC to pay its debts as such debts come due,
and the other circumstances identified in this Complaint, establishes that AAHC is insolvent or
in imminent danger of insolvency.
83.
For the reasons set forth in this Complaint, justice requires that a receiver be
appointed.
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84.
ASM requests that such receiver be given all powers necessary and usual in such
cases for the protection, possession, control, management, and operation of the business of
AAHC during the pendency of this action including, but not limited to, the power to sell property
of AAHC and to collect the accounts, income, rents, and/or profits of, and from, AAHC's
operations.
WHEREFORE, Plaintiff Andretti Sports Marketing, LLC respectfully requests the Court
1)
2)
appoint a receiver forthwith to take possession of and control, manage, and
operate AAHC's business and property, collect the accounts, income, rents,
and/or profits, if any, and apply the same to payment of costs and expenses of
managing AAHC's business and payment of amounts owed to ASM;
set a hearing on ASM's request for the appointment of a receiver at the earliest
practicable time; and
3)
grant ASM all other relief that is just and proper.
Jury Demand
Andretti Sports Marketing, LLC respectfully demands a jury trial on all claims and issues
so triable.
Respectfully Submitted,
Robert D. MacGill (9989-49)
MarkR. Owens (26195-49)
Brendan W. Miller (27600-49)
BARNES & THORNBURG LLP
11 South Meridian Street
Indieinapolis, Indiana 46204
Phone: (317) 236-1313
Fax: (317)231-7433
Attorneysfor Andretti Sports Marketing, LLC
INDSOl 1524713v2
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EXHIBIT A
OPERATING AGREEMENT
OF
ANDRETTI SPORTS MARKETING, LLC
THE MEMBERSHIP INTERESTS REPRESENTED BY THIS OPERATING AGREEMENT HAVE NOT BEEN
REGISTERED UNDER THE INDIANA UNIFORM SECURITIES ACT, OR THE SECURITIES LAWS OF ANY
OTHER STATE, AND MAY NOT BE PLEDGED, SOLD, OFFERED FOR SALE, TRANSFERRED, OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER OR EXEMPTION
FROM
SUCH ACTS AND ALL APPLICABLE STATE SECURITIES LAWS.
TRANSFER OF THE MEMBERSHIP INTERESTS REPRESENTED BY THIS OPERATING AGREEMENT
ARE FURTHER RESTRICTED BY THE TERMS OF THIS OPERATING AGREEMENT.
OPERATING AGREEMENT
OF
ANDRETTI SPORTS MARKETING, LLC
This Operating Agreement of Andretti Sports Marketing, LLC, an Indiana limited
liability company (the "Company"), is made and entered into as of January 1, 2012, by and
among the parties listed on the attached Exhibit A. as the Members. Certain capitalized terms in
this Operating Agreement are defined in Section 10 below.
RECITALS:
A.
The parties are the sole members of Andretti Sports Marketing, LLC and desire to
set forth in this Operating Agreement their entire agreement and understanding with respect to
the constitution and operation of Andretti Sports Marketing, LLC, as an Indiana limited liability
company.
NOW THEREFORE, for and in consideration of the Recitals set forth above and other
good and valuable consideration, the receipt and adequacy of which are acknowledged, the
parties to this Operating Agreement agree as follows:
1.
FORMATION AND PURPOSE
1.1
Formation. The Company was organized by filing Articles of Organization with
the Indiana Secretary of State on September 6, 2011.
1.2
Purpose. The Company was organized for the purpose of engaging in any
activity within the purposes for which limited liability companies may be formed
under the Indiana Act.
1.3
Name. The name of the Company shall be Andretti Sports Marketing, LLC. The
Company may conduct its business under one or more assumed names, as the
Manager deems appropriate.
1.4
Principal Place of Business. The Company's principal place of business shall be
located at 7615 Zionsville Road, Indianapolis, Indiana 46268. The Company may
establish additional places of business, and may change the location of its
principal place of business or any additional place of business, as the Members
upon a Super Majority Vote deem appropriate.
1.5
Registered Office and Resident Agent. The Company's initial registered office
shall be located at 7615 Zionsville Road, Indianapolis, Indiana 46268, and its
resident agent at such initial registered office shall be John Lopes. The Company
may change either the Company's registered office or its resident agent or both, as
the Members upon a Super Majority Vote deem appropriate. If the Company's
resident agent resigns, the Members upon a Super Majority Vote shall promptly
appoint a successor resident agent and designate a successor registered office. The
Manager shall have the authority to amend the Articles of Organization to reflect
any change in the Company's registered office or resident agent, as approved by
the Members of the Company.
1.6
Duration. Unless its duration is limited in the Articles of Organization, the
Company shall exist perpetually, subject to earlier dissolution in accordance with
the other provisions of this Operating Agreement or the provisions of the Indiana
Act.
1.7
Intention for Limited Liability Company. The Members have formed the
Company as a limited liability company under and pursuant to the Indiana Act.
The Members specifically intend and agree that the Company not be a partnership
(including, but not necessarily limited to, a limited partnership) or any other
venture, but a limited liability company under and pursuant to the Indiana Act. No
Member shall be construed to be a partner in the Company or a partner of any
other Member or person, and the Articles of Organization, this Operating
Agreement and the relationships created pursuant to and arising from those
documents shall not be construed to suggest otherwise.
1.8
2.
Taxation as a Partnersliip. The Members intend that the Company shall be
taxed as a partnership, pursuant to Subchapter K of the Code, for federal and state
income tax purposes, and agree to report all Company items of income, gain, loss,
deduction and credit in accordance with that Subchapter.
CAPITAL CONTRIBUTIONS. COMPANY PERCENTAGES AND RELATED
MATTERS
2.1
2.2
Initial Capital Contributions. By the execution of this Operating Agreement,
each Member hereby agrees to make (or confirms that he has made), in the form
of cash, the initial Capital Contribution, if any, set forth opposite his name on
attached Exhibit B ("the "Initial Capital Contribution").
Company Percentages/Membership Interests. The names and addresses of the
Members, and their respective Company Percentages and Membership Interests,
are set forth on the attached Exhibit A.
2.3
Additional Capital Contributions.
(a)
Additional Capital Calls. The Members shall not be obligated to make
capital contributions ("Additional Capital") in excess of the contributions
provided for in Section 2.1; provided, however, if the Members upon a
Super Majority Vote determine that the Company requires additional
funds, over and above the initial Capital Contributions of the Members, in
order to pay the Company's obligations as they become due, the Members
may call upon themselves to contribute their Share of the Additional
Capital. Upon making such a determination, notice thereof shall be given
by the Manager to all the Members in writing at least thirty (30) days prior
to the date on which the Additional Capital is due. The notice shall
describe in reasonable detail the purposes and uses of the Additional
Capital, the amounts of Additional Capital required and the date by which
payment is required. Each Member's "Share" of the Additional Capital
shall equal the product of the Additional Capital multiplied by each
Member's Company Percentage.
(b)
If any Member shall fail to flilfill his Share of the Additional Capital,
written notification of such default (the "DefauU Notice") shall be sent by
the Manager to each Member and, upon receipt of such Default Notice,
such non-defaulting Members shall have the right to advance an amount
equal to the Share of the Additional Capital not made by the defaulting
Member. If more than one non-defaulting Member desires to contribute
the Additional Capital not made by the defaulting Member, such Members
may do so pro rata, in accordance with their respective Company
Percentages in effect at the time. Any contribution made by any Member
to the Company pursuant to this Section 2.3(b) shall be considered a
"loan" to the defaulting Member and shall be due in ninety (90) days from
the date such contribution was to be made by the defaulting Member. Such
loan shall bear interest at a rate equal to the "prime rate" as established by
the Company's principal bank on a per annum basis. In the event that such
loan, including accrued interest, is not repaid in full when due, the
principal amount of such loan shall be credited to the Capital Account of
the Member(s) advancing such "loan", the Membership Interest of such
Member(s), and of all of the other Members, shall immediately be
readjusted to reflect such additional contribution and such "loan" shall
then be canceled. Such adjusted Membership Interests of the Members
shall thereafter supersede the Membership Interests of the capital of the
Company as set forth on Exhibit A hereof and shall be entitled to
distributions with priority over the Members generally in accordance with
Section 3.2 ("Priority Distributions").
2.4
No Third Party Beneficiaries. The obligations undertaken by the Members in
this Operating Agreement, including their obligations, if any, to make Capital
Contributions are for the benefit of the Company and the Members only, and
neither any creditor of the Company or of any Member, nor any other party (other
than a successor in interest to the Company or the Members), shall have the right
to rely on or enforce provisions of this Operating Agreement as a third-party
beneficiary or otherwise. Without limiting the generality of the foregoing, neither
any creditor of the Company or of any Member, nor any other party, may compel
a capitalcall, regardless of whetherthe Company's assets are sufficientto provide
for its liabilities. In addition, the discretions granted to the Manager and the
Members in this Operating Agreement are personal to them, and no receiver,
trustee or liquidator of the Company's business shall have the right or power to
exercise any such discretions.
2.5
Membership Interest Certificates. Membership Interests
represented by a certificate.
shall not be
2.6
Loans to the Company. Borrowed cash may be necessary to provide working
capital for the Company. To meet that need, loans may be obtained from external
sources or the Members.
(a)
External Source Loans. Loans may also be obtained by the Company from
commercial lenders, private sources other than Members and public
sources (i.e., community development entities) on terms acceptable to a
Super Majority Vote of the Members. To the extent representations and
assurances are necessary for a commercial, private party or public agency
lender, such representations and assurances shall be made as required by
each Member (as required by the lender) proportionate to the respective
Membership Interest of each Member.
(b)
Member Loans. Loans may be obtained from one or more Members or (a
"Member Loan") with the consent of a Super Majority Vote of the
Members. If Member Loans are so authorized, all Members will have an
equal opportunity, but not the obligation, to make such Member Loans on
the same terms in proportion to their respective Membership Interest.
Except as provided in 2.3(a) above at the election of the individual or
lender, if loans are made by a Member, such loans shall be respected as
credit and shall not be considered additional equity vis-a-vis the Members.
Unless otherwise agreed to by a Super Majority Vote of the Members, a
Member Loan shall bear interest at a rate equal to the "prime rate" as
established by the Company's principal bank on a per annum basis.
(c)
Potential Adjustment of Membership Interests. With respect to Member
Loans (collectively "Member Loans"), absent other provisions in the loan
documents to the contrary, in the event that the Company has been in
default for more than ninety (90) days on repayment of such loans
including interest thereon and written notice of such continued default has
been provided to all of the Members, the following shall apply: (i) at the
election of the Member making the loan, the Member may cause the
Company to transfer to such Member, in full satisfaction of such defaulted
loan, the principal amount of such loan shall be credited to the Capital
Account of the Member(s) advancing such "loan", (ii) the Membership
Interest of such Member(s), and of all of the other Members, shall
immediately be readjusted to reflect such additional contribution and (iii)
such "loan" shall then be canceled. Such adjusted Membership Interests of
the Members shall thereafter supersede the Membership Interests of the
capital of the Company as set forth on Exhibit A hereof and shall be
entitled to Priority Distributions in accordance with Section 3.2.
3.
ALLOCATIONS AND DISTRIBUTIONS
3.1
Allocations. Except as may be required by the Code or by this Operating
Agreement, the Company's net profits, net losses, and other items of income.
gain, loss, deduction, and credit shall be allocated amongst the Members in
accordance with each Member's Company Percentage.
3.2
Distributions. The Company shall distribute to the Members from time to time
such cash as the Members upon a Super Majority Vote deem to be available for
distribution and not to be required for the Company's cash needs, including
payment or provision for Company liabilities and reasonable reserves for
contingencies. If the Members elect to distribute Excess Cash, it shall be
distributed to the Members in the following order of priority;
(a)
First, to the Members entitled to Priority Distributions as provided in
Sections 2.3(b) and 2.6(c) (if any); and
(b)
Then, to all of the Members, pro rata in accordance with their Company
Percentages.
3.3
Limitations on Distributions. Distributions pursuant to Section 3.2 above, may
be made from any source; provided they do not violate any agreement that the
Company has with any of its creditors or any provision of the Indiana Act.
3.4
Allocation of Profits and Losses.
(a)
Profits. Subject to the special allocations described in Sections 9.12, 9.13
and 9.14 below, all Profits shall be allocated:
(i)
First, to the Members pro rata, in proportion to, and to the extent
of, any Losses previously allocated to them pursuant to Section
3.3(b)(iii) below;
(ii)
Then, to the Members pro rata, in proportion to, and to the extent
of any Losses previously allocated to them pursuant to Section
3.3(b)(ii) below; and
(iii)
Then, to the Members pro rata, in proportion to, their respective
Company Percentages in effect at the time and in accordance with
Section 3.1.
(b)
Losses. Subject to the special allocations described in Sections 9.12, 9.13
and 9.14 below, all Losses shall be allocated'
(i)
First, to the Members pro rata, in proportion to, and to the extent
of, any Profits allocated to them pursuant to Section 3.3(a)(iii)
above;
(ii)
Then, to the Members pro rata, in proportion to, and to the extent
of, the balance in their Adjusted Contribution Accounts; and
(iii)
4.
Then, to the Members pro rata, in proportion to, their respective
Company Percentages in effect at the time.
MANAGEMENT OF THE
COMPANY:
RIGHTS
AND
DUTIES OF THE
MANAGERS
4.1
Management by Managers; Number. The business and affairs of the Company
shall be managed by one or more Managers. The Company shall initially have one
(1) Manager. The Manager need not be residents of the State of Indiana, Members
or natural persons. Initially, the Manager shall be John Lopes.
4.2
Power and Authority.
(a)
Except as otherwise provided in this Operating Agreement, the Manager
shall have full and complete power, authority and discretion to manage
and control the Company and its business and affairs and to make all
incidental decisions, subject only to the power and authority which this
Operating Agreement or the Indiana Act expressly vests in the Members
or any number of them and also subject to the voting requirements of
Section 4.3 below. Without limiting the generality of the immediately
preceding sentence, but subject to any power and authority which this
Operating Agreement or the Indiana Act expressly vests in the Members
or any number of them, the Manager shall have the power, authority and
discretion, for and on behalf of the Company:
(i)
To make capital expenditures for the acquisition of any equipment
necessary for the business of the Company, if less than $10,000;
(ii)
To lease real or personal property, whether the term of such leases
(or any renewals of such leases) extend beyond the Company's
duration;
(iii)
To demand, sue for, settle, collect, receive and give releases and
discharges for all moneys, debts, accounts, interest, dividends,
securities and other tangible or intangible personal or real property
which now is due or belongs, or in the future shall be due or
belong, to the Company;
(iv)
To settle and pay the Company's debts and obligations;
(v)
To engage, employ and dismiss employees, independent
contractors, attorneys, accovintants and other persons hired to
perform management, administrative, or other services for and on
behalf of the Company, and to define such persons' respective
duties and establish their compensation or remuneration;
(vi)
To make temporary advances to employees, representatives or
agents of the Company for business travel and other similar
purposes;
(vii)
To procure and maintain insurance policies for the protection of or
for any purpose beneficial to the Company;
(viii) To procure and maintain insurance on behalf of any Manager
against any liability or expense asserted against or incurred by it, in
any such capacity or arising out of its status as a manager, whether
or not the Company has or could indemnify it against such liability
or expense;
(ix)
To open, maintain, deposit into and withdraw from bank accounts,
and, if desired, to designate other persons to execute checks or
drafts on such accounts;
(x)
To invest Company funds temporarily in (by way of example but
not limitation) time deposits, short-term governmental, obligations,
or commercial paper;
(xi)
To commence, prosecute and defend all actions and other
proceedings affecting the Company in any way;
(xii)
To negotiate, prepare, modify, execute, deliver and award any and
all contracts, agreements and documents to which the Company is
or proposes to become a party in the ordinary course of business, if
less than $10,000;
(xiii)
Generally, to carry on the Company's business in the ordinary
course, and to manage the Company's day-to-day operations and to
carry out the development and expansion of the Company and its
business;
(xiv)
To delegate any of the powers and authority granted to them
pursuant to this Article 4 to any officer of the Company; provided,
however, that in no case shall the Manager be relieved of its duties
to the Company and the Members as the result of any such
delegation; and
(xv)
To negotiate, prepare, modify, change, execute, deliver and, if
appropriate, file or record any and all documents, agreements,
instruments and papers, and to do and perform any and all acts and
deeds, which are or become necessary, proper, convenient or
desirable in cormection with or in fiirtherance of any of the powers
enumerated above or in order to effectuate or carry out the
Company's purpose, as described in Section 1.2 above.
4.3
Standard of Care; Liability; Indemnification.
(a)
Standard of Care. The Manager shall discharge its duties in good faith and
in a manner it reasonably believe is in the best interests of the Company
and its Members. In discharging its duties, the Manager may rely on
information, opinions, reports or statements, including, but not necessarily
limited to, financial statements or other financial data, prepared or
presented by (i) one or more Members or employees of the Company
whom the Manager reasonably believes is reliable and competent with
respect to the matter prepared or presented, or (ii) legal counsel, public
accountants, engineers or other persons as to matters the Manager
reasonably believes are within such person's professional or expert
competency; provided that the Manager does not have knowledge
concerning the matter in question which makes such reliance unwarranted.
(b)
Liability.
(i)
The Manager shall be liable solely to the Company and, derivately,
to its Members for its gross negligence or willfial misconduct. Any
Manager's taking of any action or failure to take any action, or a
Manager's errors in judgment, the effect of which may cause or
result in loss or damage to the Company, if done pursuant to the
provisions of the Indiana Act, the Articles of Organization and this
Operating Agreement, shall be presumed not to constitute gross
negligence or willful misconduct on the part of the Manager.
(ii)
The Members shall look solely to the Company's property for the
return of their Capital Contributions and any Additional Capital
and if the Company's property remaining after payment or
discharge of the Company's debts and liabilities is insufficient to
return such Capital Contributions and any Additional Capital, no
Member shall have recourse against any Manager, except as
provided in Section 4.3(b)(i) above, or any other Member.
(c)
Indemnification. The Company shall to the fullest extent authorized or
permitted by the Indiana Act, indemnify, defend and hold harmless the
Manager and its respective members, managers, officers and directors (the
collectively the "Indemnified Party") from and against any and all losses,
damages, liabilities, claims, demands, obligations, fines, penalties,
expenses (including reasonable fees and expenses of attorneys engaged by
the Indemnified Party in defense of any act or omission), judgments or
amounts paid in settlement by the Indemnified Party by reason of any act
performed, or omitted to be performed, by it in connection with the
Company's business or in furtherance of the Company's interests, or in
connection with any proceeding to which the Indemnified Party is a part or
is threatened to be made a part because it is or was the Manager. The
provisions of this Section 4.3(c), however, shall not relieve the Manager of
any liability which it may have (i) pursuant to Section 4.3(b) above for
gross negligence or willful misconduct, (ii) in connection with the receipt
of a financial benefit to which the Manager is not entitled, or (iii) in
connection with a knowing violation of law, and the Manager shall not be
entitled to indemnification with respect to any such matters. The
indemnification afforded pursuant to this Section 4.3(c) shall be limited to
the Company's assets, and the Manager shall not have a claim against any
Member by virtue of this Section 4.3(c), nor shall this Section 4.3(c) be
construed so as to impose any obligation on any Member to make a
Capital Contribution.
4.4
Tenure; Resignation; Removal; Vacancies.
(a)
Tenure. Each person or entity that has been appointed or elected as a
Manager shall hold such office until such time as his, her or its successor
has been duly appointed or elected in accordance with this Operating
Agreement and shall have qualified, or until he, she or it resigns or
otherwise vacates the position.
(b)
Resignation. The Manager may resign at any time by giving thirty (30)
days prior written notice to the other Managers or, if none, to the
Members. Unless otherwise specified in the notice, acceptance of a
Manager's resignation by the other Managers or the Members, as the case
may be, shall not be necessary to make it effective. The resignation of a
Manager who is also a Member shall not affect such Manager's rights as a
Member and shall not constitute the withdrawal of such Manager as a
Member.
(c)
Removal. Any Manager may be removed by the Members, but only for
"Cause." For purposes of this Operating Agreement, "Cause" means (i)
any material breach or material nonperformance by the Manager of his
obligations under this Operating Agreement, which breach is not cured by
the Manager within thirty (30) days after the Manager has received written
notice from the Company specifically setting forth, in reasonable detail,
the Manager's breach or nonperformance, (ii) the Manager's use of illegal
drugs, or his use of alcohol which interferes with the performance of the
Manager's obligations under this Operating Agreement, (iii) the
conviction of the Manager of a felony, which includes but is not limited to
a felony in the nature of theft, dishonesty or fraud (or a written confession
thereof fi-eely and voluntarily given by the Manager), (iv) the Manager's
willful misappropriation of the funds or property of the Company, or (v)
the Manager violates any of the restrictive covenants set forth in this
Operating Agreement. Any Member may remove a Manager for "Cause"
pursuant to subsections (c)(iii) and (iv) above, however, the Members
upon a Super Majority Vote may only remove a Manager for "Cause"
pursuant to subsections (c)(i), (ii) and (v) above.
(d)
Vacancies. Any vacancy in the Manager position occurring as a result of a
Manager's resignation or any other reason whatsoever may be filled by the
consent of a Majority Vote of the Members at a special meeting of the
Members called expressly for that purpose or at the next regular meeting
of the Members. Each person or entity that has been elected to fill a
vacancy in the Manager position shall hold such office until such time as
his, her or its successor shall have been duly appointed or elected in
accordance with this Operating Agreement and shall have qualified, or
until his, her or its earlier resignation or other vacancy.
(e)
Compensation; Reimbursement. The Manager shall not be entitled to any
compensation for managing the affairs of the Company, unless otherwise
agreed to by a Super Majority Vote of the Members. The Manager shall be
entitled to reimbursement from the Company for all valid Company costs
and expenses reasonably incurred and paid for by the Manager on the
Company's behalf. Such costs and expenses may include, but shall not
necessarily be limited to, legal and accounting fees relating to the
organization of the Company, and current and recurring legal and
accounting expenses. The foregoing notwithstanding, a Manager may be
employed or engaged by the Company and provide services to the
Company and to receive compensation therefore, provided such is
pursuant to a written agreement between the Manager and the Company
approved by a Super Majority Vote of the Members.
4.5
Self-Dealing. Any Manager and any Affiliate of any Manager may deal with the
Company, directly or indirectly, as vendor, purchaser, employee, agent or
otherwise, if the Manager has informed the Members of the material terms of such
dealings, and such terms are commercially reasonable under the circumstances.
No contract or other act of the Company shall be voidable or affected in any
manner by the fact that any Manager or his, her or its Affiliate is directly or
indirectly interested in such contract or other act apart from his, her or its interest
as a Manager, nor shall such Manager or his, her or its Affiliate be accountable to
the Company or the other Members with respect to any profits directly or
indirectly realized by reason of such contract or other act, if such contract or other
act was approved in accordance with this Section 4.5.
4.6
Devotion of Time to Company. Each Manager agrees to devote his, her or its
commercially reasonable efforts to the business and welfare of the Company to
achieve the performance and profitability goals established by the Company. It is
understood that no Manager is prohibited from having other business interests and
may engage in other activities in addition to those relating to the Company,
provided such activities do not conflict with or inhibit in any way any Manager's
obligations set forth in the preceding sentence. In the event any Manager decides
to take an active role in any outside business interest(s), in any form or in any
manner whatsoever, such Manager shall fully disclose to the other Managers, in
detail, the terms, conditions and activities of his involvement in the outside
business interest(s). Neither the Company nor any Member shall have any right,
10
by virtue of this Operating Agreement, to share or participate in such other
interests or activities of a Manager or to income or proceeds derived from such
interests or activities. The Manager shall not incur liability to the Company or to
any of the Members as a result of engaging in any other interests or activities. The
provisions of this Section 4.6 shall be subject to those of Section 4.5 above.
4.7
Officers
(a)
Optional Appointment. From time to time, if desired, the Manager may
appoint one or more officers for the Company, which may include a
Chairman, one or more Vice Chairmen, a President (or Chief Executive
Officer), a Treasurer, a Secretary, one or more Vice Presidents, one or
more Assistant Secretaries and one or more Assistant Treasurers. An
officer shall be a natural person, and may, but need not, be a Member or a
Manager. One person may hold two or more offices, but in no event shall
any officer execute, acknowledge or verify any instrument in more than
one capacity. Officers of the Company shall derive their authority only by
way of grant from the Manager or this Operating Agreement, and in no
event shall any officer have authority greater than that granted by this
Operating Agreement to the Manager. Any provision of this Operating
Agreement to the contrary notwithstanding, no provision of this Section
4.7 shall be construed so as to require the Manager to appoint any officer
whatsoever.
(b)
Tenure. The officers of the Company shall be chosen by the Manager, and
each officer shall hold his or her office until his or her successor has been
selected by the Manager or until his or her earlier resignation, removal or
other vacancy. As of the date of this Operating Agreement, the Manager
hereby appoints the following officers of the Company; John Lopes President; Starke Taylor - Chief Marketing Officer; JF Thormann Treasurer and Secretary; and Michael Andretti - Chief Executive Officer.
Notwithstanding anything in this Operating Agreement to the contrary,
none of the aforementioned officers may be removed from their
designated officer position unless approved by a Super Majority Vote of
the Members.
(c)
Resignation. Any officer may resign at any time by giving vmtten notice
to the Manager. Such resignation shall be effective as of the giving of the
notice or at such later time, if any, as may be specified in the notice.
Unless otherwise specified in the notice, acceptance of an officer's
resignation by the Manager shall not be necessary to make it effective.
The resignation of an officer who is also a Member or a Manager shall not
affect such officer's rights and duties as a Member or a Manager and shall
not constitute the withdrawal of such officer as a Member or the
resignation of such officer as a Manager, except as otherwise set forth
herein.
11
(d)
Removal. Subject to Section 4.7(b) above any Manager may remove any
officer, at any time, with or witliout cause. Except as otherwise set forth
herein, the removal of an officer who is also a Member or a Manager shall
not affect such officer's rights and duties as a Member or a Manager and
shall not constitute the withdrawal of such officer as a Member or the
removal or resignation of such officer as a Manager, unless such officer
has also resigned or been removed as a Manager in accordance with this
Operating Agreement.
(e)
Vacancies. Any vacancy in any officer position occurring as the result of
an officer's resignation, removal, death, disability or any other reason
whatsoever may be filled by the Manager. Each person who has been
selected to fill a vacancy in an officer position shall hold his or her office
until his or her successor has been selected by the Manager or until his or
her earlier resignation, removal or other vacancy.
(f)
Chairman (or Chief Executive Officer). If present, the Chairman shall
preside at all meetings of the Manager or the Members, and the Chairman
shall have and exercise and perform such other powers and duties as may
from time to time be assigned to him or her by the Manager or pursuant to
this Operating Agreement.
(g)
Vice-Chairman. In the event of the Chairman's absence or disability, the
Vice Chairman (or, if more than one, the Vice Chairmen, in order of their
rank if and as fixed by the Manager) shall have and shall exercise and
perform all of the powers and duties of the Chairman by the Manager or
pursuant to this Operating Agreement. If present (and assuming the
Chairman is absent or disabled), the Vice Chairman shall preside at all
meetings of the Manager or the Members, and the Vice Chairman shall
have and exercise and perform such other powers and duties as may from
time to time be assigned to him or her by the Manager, the Chairman or
pursuant to this Operating Agreement.
(h)
President. Subject to the powers and duties, if any, assigned to the
Chairman by the Manager or pursuant to this Operating Agreement, and
also subject to any and all restrictions placed on the Manager, the
President shall have general supervision, direction and control of the
Company's business and its day-to-day operations. In the event of the
Chairman's (or the Vice Chairman's) absence or disability, or if no
Chairman (or Vice Chairman) has been appointed, the President shall
preside at all meetings of the Manager or the Members. The President
shall see that all orders and resolutions of the Members and of the
Manager are effected and shall have and shall exercise and perform such
other powers and duties as may firom time to time be assigned to him or
her by the Manager or pursuant to this Operating Agreement.
12
(i)
Vice Presidents. In the event of the President's absence or disability, the
Vice President (or, if more than one, the Vice Presidents, in order of their
rank if and as fixed by the Manager) shall have and shall exercise and
perform all of the powers and duties of the President, subject to any and
all restrictions placed on the President by the Manager or pursuant to this
Operating Agreement. The Vice Presidents shall have and shall exercise
and perform such other powers and duties as may from time to time may
be assigned to them by the Manager or the President or pursuant to this
(j)
Secretary. The Secretary shall attend all meetings of the Manager or the
Members and shall keep or cause to be kept, in his or her custody at the
Company's principal place of business or at such other place as the
Manager may order, a book containing all written consents executed by
the Manager or the Members and the minutes of all meetings of the
Manager or the Members (which minutes shall set forth the place, date,
and hour of the meeting, a copy of the notice of the meeting, the names of
those present at the meeting and a summary of the proceedings of the
meeting). The Secretary shall have and shall exercise and perform such
other powers and duties as may from time to time be assigned to him or
her by the Manager or the President or pursuant to this Operating
Agreement.
(k)
Assistant Secretaries. In the event of the Secretary's absence or disability,
any Assistant Secretary shall act as Secretary in all respects and shall have
and shall exercise and perform all of the powers and duties of the
Secretary, subject to any and all restrictions placed on the Secretary by the
Manager or the President or pursuant to this Operating Agreement. The
Assistant Secretaries shall have and shall exercise and perform such other
powers and duties as may from time to time be assigned to them by the
Manager, the President or the Secretary or pursuant to this Operating
Agreement.
(1)
Treasurer. Subject to the powers and authority of the Manager, the
Treasurer shall have custody of the Company's fonds and securities and
shall keep a full and accurate account of all receipts and disbursements.
The Treasurer shall deposit all monies and other valuables in the name and
to the credit of the Company with such depositories as may be designated
by the Manager, shall disburse the Company's funds as may be ordered by
the Manager, shall render to the Manager and the President, at the request
of any of them, an accounting of all of his or her transactions as Treasurer
and of the Company's financial condition. The Treasurer shall have and
shall exercise and perform such other powers and duties as may from time
to time be assigned to him or her by the Manager or the President or this
13
(m)
Assistant Treasurers. In the event of the Treasurer's absence or disability,
any Assistant Treasurer shall act as Treasurer in all respects and shall have
and shall exercise and perform all of the powers and duties of the
Treasurer, subject to any and all restrictions placed on the Treasurer by the
Manager or the President or pursuant to this Operating Agreement. The
Assistant Treasurers shall have and shall exercise and perform such other
powers and duties as may from time to time be assigned to them by the
Manager, the President or the Treasurer or pursuant to this Operating
Agreement.
(n)
5.
Indemnification of Officers. The Company shall, to the fullest extent
authorized or permitted by the Indiana Act, indemnify, defend and hold
harmless each officer of the Company from and against any and all losses,
damages, liabilities, claims demands, obligations, fines, penalties,
expenses (including reasonable attorneys' fees), judgments or amounts
paid in settlement by an officer by reason of any act performed, or omitted
to be performed, by the officer in connection with the Company's business
interests, if such officer acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company and
its Members. The Provisions of this Section 4.7(n), however, shall not
relieve an officer of any liability which he or she may have (i) for gross
negligence or willful misconduct, (ii) in connection with the receipt of a
financial benefit to which an officer is not entitled, or (iii) in connection
with a knowing violation of law, and an officer shall not be entitled to
indemnification with respect to any such matters. The indemnification
afforded pursuant to this Section 4.7(n) shall be limited to the Company's
assets, and an officer shall not have a claim against any Member or
Manager by virtue of this Section 4.7(n), nor shall this Section 4.7(n) be
construed so as to impose any obligation on any Member or Manager to
make a Capital Contribution.
RIGHTS AND DUTIES OF MEMBERS
5.1
Participation in Management; Voting Rights.
(a)
Except as otherwise provided in this Operating Agreement, the Members
shall have no right to take part in, vote on or interfere in any manner with
the management, conduct or control of the Company or its business and
shall have no right or authority whatsoever to act for or on behalf of, or to
bind, the Company. In addition to the rights of the Members to vote as
provided elsewhere in this Operating Agreement, the Members shall have
the right to vote, in accordance with their Company Percentages, on each
of the following matters:
(i)
(1) to sell all or substantially all of the assets of the Company; (2)
mortgage, grant of security interest, pledge or encumber all or
substantially all of the assets of the Company; (3) any merger of
14
the Company with any other entity; or (4) directly or indirectly
invest in, purchase or otherwise acquire, in one or a series of
transactions, any business, assets, securities or other property of
another person or entity.
(b)
(ii)
(1) sell or issue any additional membership interests of the
Company, admit new members, or authorize the transfer of any
membership interests of the Company; (2) any recapitalization of
the membership interests of the Company; (3) the filing of a
registration statement for a public offering of equity or debt of the
Company; or (4) to redeem, repurchase or otherwise acquire any of
the Company's equity interests.
(iii)
An amendment to the Articles of Organization, or an amendment
to this Operating Agreement, as provided in Section 9.5 below.
(iv)
The liquidation, dissolution, recapitalization or commencement of
any bankruptcy, liquidation or similar proceedings with respect to
the Company.
(v)
Authorize any purchase of expenditure, or the entering into
contract for any such purpose, if such transaction is not in the
ordinary course of the Company's business.
(vi)
Any other matters with respect to which this Operating Agreement
expressly contemplates that the Members will have a right to vote.
(vii)
Any transaction with the Company or a transaction connected with
the conduct or winding up of the Company in which a Manager has
a direct or indirect interest or a Manager's use of property of the
Company, as and then only to the extent provided in, and subject
to, the provisions of Section 4.5 above; provided, however, that
prior to vote, such Manager shall disclose all material facts
regarding the transaction and such Manager's interest in the
transaction or all material facts regarding such Manager's personal
use of the Company's property.
Unless a greater or lesser vote is expressly required pursuant to any other
provision of this Operating Agreement, any action which the Members are
required or permitted to take shall require the Super Majority Vote of the
Members and any fewer than that number of Members shall have no
power whatsoever to take any action for or on behalf of, or to bind, the
Company or the Members. Any action by the requisite number of
Members, if taken in conformity with this Operating Agreement, shall
bind all of the Members, and no Member shall have the right to dissent
from such action. Any Member may delegate all or any of his, her or its
voting rights or powers to another Member (but only in writing), in which
15
case any act of the other Members shall be the act of the delegating
Member.
5.2
Withdrawal. No Member shall be entitled to withdraw from the Company unless
approved in writing by a Super Majority Vote of the Members. No withdrawing
Member shall be entitled to a withdrawal distribution unless such distribution has
been approved by a Super Majority Vote the Members which approval may be
subject to such conditions, terms, qualifications as the Members deem
appropriate.
5.3
Limited Liability of Members. No Member shall be personally liable for the
Company's acts, debts or obligations, unless the Indiana Act or any other
provision of this Operating Agreement expressly provides otherwise.
5.4
Reports; Access to Company Information. The Manager shall provide reports
concerning the financial condition and results of the operation of the Company to
the Members after the end of each calendar quarter and shall include a statement
of each Member's share of profits and other items of income, gain, loss, deduction
and credit. The Manager shall also provide the Members with copies of the
Company's most recent annual financial statements and federal, state and local
income tax returns and reports as soon as reasonably practicable after they are
prepared. On reasonable written request by a Member, (i) the Manager shall
provide such Member with information regarding the current state of business and
the financial condition of the Company; (ii) any Member, or his her or its
designated representative, may inspect and copy, at such Member's request, any
of the records maintained pursuant to Section 9.2 below; and (iii) a Member may
obtain such other information regarding the Company's affairs or inspect,
personally or through a representative, during ordinary business hours, such other
books and records of the Company as is just and reasonable. Any Member may
call for a formal accounting of the Company's affairs whenever circumstances
render such request just and reasonable as determined by the Manager.
5.5
Meetings of the Members; Actions by Written Consent.
(a)
Notice of Meeting. The Manager (or the Company's Chairman, President
or Secretary, if they have been appointed) may call, and, at the request of
one or more of the founding Members, as listed as of the date of this
Operating Agreement on Exhibit A, the aggregate of the Company
Percentages of whom is at least five percent (5%), may call, a meeting of
the Members by giving written notice to each Member (with a copy to the
Manager) specifying the date (which may not be less than five (5) business
days after the notice is given, and with respect to a notice which has been
given at the request of one or more Members, may not be more than
fifteen (15) days after the notice is given), time, place and purpose of such
meeting. All meetings shall be held at the Company's principal place of
business unless agreed to otherwise by a Super Majority Vote of the
Members.
16
(b)
Attendance. A Member may participate in a meeting by conference
telephone or similar communications equipment which enables all persons
participating in the meeting to hear each other, and such participation shall
constitute personal attendance at such meeting. In addition, a Member may
attend and vote by proxy. A Member's attendance at a meeting constitutes
waiver of (i) notice of the meeting, unless attendance is for the sole
purpose, announced at the beginning of the meeting, of objecting to the
transaction of any business because the meeting was not called or
convened properly, and (ii) objection to any action taken or consideration
of any matter at the meeting which is not within the purposes described in
the notice of the meeting, unless the Member objects to such action or
consideration when it is first presented at the meeting.
(c)
Minutes. The Chairman, or if no Chairman has been appointed, a person
designated by the Manager, shall preside at all meetings of Members.
Unless a Secretary of the Company has been appointed and is present at
the meeting, the presiding party shall designate a secretary to keep the
minutes of the meeting.
(d)
VotingRequirements. Only those persons who were Members at the close
of business on the last business day prior to the date of the meeting shall
be entitled to vote at a meeting of the Members. Voting shall be by voice
unless a Member requests a ballot, in which event voting shall be by
written ballot. Each ballot shall be signed by the Member who casts it, and
shall be preserved with the minutes of the meeting. No matter may be
approved by the Members except as otherwise provided in this Operating
Agreement.
(e)
Action by Written Consent. Any action which, pursuant to this Operating
Agreement or the Indiana Act, is to be taken by the Members may be
taken, without a meeting of the Members and without a vote, pursuant to a
written consent signed by the requisite number of Members; provided,
however, that the Manager shall promptly notify the Members who did not
consent of the action (which notice shall include a copy of the written
consent). To the extent that the action in question is the execution of a
document or agreement, the execution thereof by all of the Members shall
constitute fulfillment of the requirements of the immediately preceding
sentence.
6.
DISPOSITION
OF
MEMBERSHIP
INTERESTS:
ASSIGNMENT
OF
MEMBERSHIP INTERESTS: ADMISSION OF ADDITIONAL MEMBERS:
RESTRICTIVE COVENANTS
6.1
General.
17
(a)
Except as otherwise specifically provided for in this Operating Agreement
or otherwise consented to in writing by a Super Majority Vote of the
Members, no Member may assign (as defined in Section 6.8 below) all or
any portion of the Member's interest in the Company, whether now owned
or acquired subsequent to the date of this Operating Agreement, for any
reason or purpose whatsoever. Any attempted assignment of a
Membership Interest in violation of this Section 6.1 is null and void and
the assignee or transferee shall have no right to participate in the
management of the business and affairs of the Company or to become a
Member.
(b)
For so long as Andretti Autosport is a Member of the Company, Michael
Andretti shall at all times maintain a majority voting ownership interest in
Andretti Autosport and shall at all times maintain sole control of all
decisions of Andretti Autosport. In the event Michael Andretti violates
this Section 6.1(b) the Company and the other Members shall have an
option to purchase Andretti Autosports' Membership Interest in the
Company pursuant to the procedure set forth in Sections 6.2(b), 6.4 and
6.5
6.2
Involuntary Transfer; Disability; Cessation of Involvement in Company;
Violation of Restrictive Covenants.
(a)
(i) In the event any Member's Membership interest in the Company is the
subject of an involuntary transfer, whether due to bankruptcy, assignment
for benefit of creditors, judicial order, legal process, execution,
attachment, enforcement of a pledge or other encumbrance, or otherwise,
(ii) any Member is rendered Permanently Disabled, (iii) any Member
employed by the Company as an employee or consultant ceases to work
for the Company for any reason, or (iv) any Member is deemed to be in
breach of any of the restrictive covenants set forth in Section 6.9 below,
such Member's (the "Transferor") Membership Interest shall be subject to
the Option of the Company and the Remaining Members in Section 6.2(b)
below. It is understood that Starke Taylor, as a Member, will work for the
Company on a day to day basis pursuant to the terms of an employment
agreement with the Company.
(b)
Upon the occurrence of any event described in Section 6.2(a) above, the
Company and the Members other than the Transferor (the "Remaining
Members") shall have an option (the "Option") to purchase all (but not
less than all) of the Membership Interest of the Transferor (the "Option
Interest") at a purchase price equal to the Fair Market Value (as defined in
Section 6.5 below) associated with such Membership Interest. The
Company or the Remaining Members may exercise the Option as follows:
(i)
The Company shall have a period of one hundred twenty (120)
days after being informed of the occurrence of any event
18
described in Section 6.2(a) above, within which to send to the
Transferor written notice of its decision to exercise the Option.
(ii)
If the Company fails to exercise the Option within the period
provided in Section 6.2(b)(i) above, then the Remaining Members
shall have an additional thirty (30) day period within which to send
to the Transferor written notice of their decision to exercise the
Option with respect to the Option Interest. Each of the Remaining
Members electing to exercise the Option with respect to the Option
Interest shall have the right to purchase an equal percentage of the
Option Interest, based on the number of Remaining Members who
have exercised the Option with respect to the Option Interest. In
the event any Remaining Member does not elect to purchase all, he
is entitled to purchase, the other Remaining Members may
purchase such non-elected portion on an equal basis based on the
number of Remaining Members electing to purchase the nonelected portion.
(iii)
The exercise of the Option by the Company or the Remaining
Members shall, in the aggregate, be for all, but not less than all,
of the Option Interest.
(iv)
If the Company or a Remaining Member fails, for any reason, to
exercise the Option in the manner and within the time periods set
forth in this Section 6.2, or to close the transaction contemplated
by the Option in the manner and within the time periods set forth
in Section 6.4, the Option shall lapse.
(v)
In the event all of the Option Interest is not purchased by the
Company or the Remaining Members, then the Option Interest
not purchased may be transferred to the transferee subject to all
the provisions of this Operating Agreement or will remain with
the Transferor, as applicable. Further, the transferee shall not
have any voting rights as a member of the Company; provided,
however the transferee shall have the economic right to receive
the same pro-rata share of any distribution made by the Company
as to that portion of the Option Interest transferred to the
transferee. The transferee shall execute a counterpart of this
Operating Agreement, the original of which shall be retained as a
part of the Company's records. The failure of the transferee to
execute a counterpart of this Operating Agreement shall not
affect the applicability of this Operating Agreement to the Option
Interest, it being the intention of each Member and the Company
that any and all subsequent owners of a membership interest in
the Company pursuant to any event described in Section 6.2(a)
above shall only receive and own such membership interest
19
subject to the restrictions upon transfer and encumbrance as set
forth in this Operating Agreement to which the Transferor was
subject.
(c)
Notwithstanding anything herein to the contrary, in the event Starke
Taylor ceases to work for the Company as a result of the Company
terminating his employment "For Cause" or he voluntarily ceases to
work for the Company for any reason whatsoever, prior to the second
anniversary date of this Operating Agreement, then Starke Taylor shall
immediately transfer one-half of his Membership Interest to Andretti
Autosport for One Dollar and the other one-half of his Membership
Interest to John Lopes for One Dollar and execute any and all documents
necessary to effectuate such transfers. Furthermore, after the second
anniversary date of this Operating Agreement if Starke Taylor ceases to
work for the Company as a result of the Company terminating his
employment "For Cause", as defined under an employment agreement
with the Company, the purchase price for his Membership shall be equal
to the Fair Market Value associated with such Membership Interest.
(d)
If a Member dies during such time as an offer pursuant to Section 6.2 is
pending, then the offer shall be void and the provisions of Section 6.3
shall apply.
(e)
A Member shall be deemed to be permanently disabled for purposes of
this Operating Agreement if he (1) has been declared legally incompetent
by a final court decree, (2) receives disability insurance from any
disability income insurance policy maintained by the Company for a
period of twelve (12) consecutive months, or (3) has been found to be
disabled pursuant to a disability determination. A disability
determination means a finding that such Member, because of a medically
determinable disease, injury or other mental or physical disability, is
unable to perform substantially all of his regular duties to the Company
and that such disability is determined or reasonably expected to last at
least twelve (12) months. The disability determination will be based on
the written opinion of the physician regularly attending to such Member
whose disability is in question. If a majority of the remaining Members
disagree with the opinion of this physician (the "First Physician"), they
may engage at their own expense another physician (the "Second
Physician") to examine such Member. If the First and Second Physicians
agree in writing that such Member is or is not disabled, their written
opinion is conclusive on the issue of disability. If the First and Second
Physicians disagree on the disability of such Member they must choose a
third consulting physician (whose expense must be borne by the
Company), and the written opinion of a majority of these three
physicians will be conclusive about such Member's disability. The date
20
of any written opinion conclusively finding such Member to be disabled
is the date on which the disability will be deemed to have occurred.
6.3
Death of a Member.
(a)
Upon the death of a Member, such deceased Member's (the "Transferor")
Membership Interest shall be subject to the Option of the Company and
the Remaining Members in Section 6.3(b) below.
(b)
Upon the occurrence of the event described in Section 6.3(a) above, the
Company and the Members other than the Transferor (the "Remaining
Members") shall have an option (the "Option") to purchase all (but not
less than all) of the Membership Interest of the Transferor (the "Option
Interest") at a purchase price equal to the Fair Market Value (as defined in
Section 6.6 below) associated with such Membership Interest. The
Company or the Remaining Members may exercise the Option as follows;
(i)
The Company shall have a period of one hundred twenty (120)
days after being informed of the occurrence of the death of a
Member, within which to send to the Transferor written notice of
its decision to exercise the Option.
(ii)
If the Company fails to exercise the Option within the period
provided in Section 6.3(b)(i) above, then the Remaining Members
shall have an additional thirty (30) day period within which to send
to the Transferor written notice of their decision to exercise the
Option with respect to the Option Interest. Each of the Remaining
Members electing to exercise the Option with respect to the Option
Interest shall have the right to purchase an equal percentage of the
Option Interest, based on the number of Remaining Members who
have exercised the Option with respect to the Option Interest. In
the event any Remaining Member does not elect to purchase all, he
is entitled to purchase, the other Remaining Members may
purchase such non-elected portion on an equal basis based on the
number of Remaining Members electing to purchase the nonelected portion.
(iii)
The exercise of the Option by the Company or the Remaining
Members shall, in the aggregate, be for all, but not less than all,
of the Option Interest.
(iv)
If the Company or a Remaining Member fails, for any reason, to
exercise the Option in the manner and within the time periods set
forth in this Section 6.3, or to close the transaction contemplated
by the Option in the manner and within the time periods set forth
in Section 6.4 the Option shall lapse.
21
(v)
In the event all of the Option Interest is not purchased by the
Company or the Remaining Members, then the Option Interest
not purchased may be transferred to the estate of the Deceased
Member subject to all the provisions of this Operating
Agreement. Further, the estate of the deceased Member shall not
have any voting rights as a member of the Company; provided,
however the estate of the deceased Member shall have the
economic right to receive the same pro-rata share of any
distribution made by the Company as to that portion of the
Option Interest transferred to the estate of the deceased Member.
The personal representative of the estate of the deceased Member
shall execute a counterpart of this Operating Agreement, the
original of which shall be retained as a part of the Company's
records. The failure of the personal representative of the estate of
the deceased Member to execute a counterpart of this Operating
Agreement shall not affect the applicability of this Operating
Agreement to the Option Interest, it being the intention of each
Member and the Company that any and all subsequent owners of
a membership interest in the Company pursuant to the event
described in Section 6.3(a) above shall only receive and own
such membership interest subject to the restrictions upon transfer
and encumbrance as set forth in this Operating Agreement to
which the Transferor was subject.
6.4
Closing.
(a)
The closing of any transfer of a Membership Interest by a Member to the
Company or any Remaining Member pursuant to the provisions of Section
6.2 above shall take place at the Company's principal offices within thirty
(30) days after the Company's and/or the Remaining Members delivery to
the Transferor of its or their election to purchase the Transferor's
Membership Interest. The closing of any transfer of a Membership Interest
by a Member's personal representative to the Company pursuant to the
provisions of Section 6.3 above shall take place at the Company's
principal offices within thirty (30) days after (i) the Fair Market Value is
determined in accordance with the provisions of Section 6.5 below, or (ii)
the date on which written notice of the Fair Market Value is delivered to
such personal representative and the Company, if the Fair Market Value is
determined in accordance with the provisions of Section 6.5. The
foregoing notwithstanding, the closing of any transfer of a Membership
Interest hereunder may occur at such other time and place as the selling
and purchasing parties may agree.
(b)
The purchase price shall be paid in the following manner: At the closing,
the purchasershall pay to the seller in cash, by certified or cashier's check
or wire transfer an amount equal to twenty (20%) percent of the purchase
price and shall also deUver, at the time of said initial cash payment, a
22
promissory note substantially in an amount equal to the unpaid purchase
price, if any, for the seller's Membership Interest providing for the
payment of the balance of the purchase price in equal monthly payments
over a period not to exceed five (5) years, with interest thereon at the
Prime Rate (as defined below) in effect on the date of closing while not in
default and at two (2%) percent in excess of such Prime Rate during any
period of default. The promissory note shall provide for acceleration of the
unpaid balance under the promissory note upon the default of the maker
thereof "Prime Rate" means the Prime Rate of interest as charged by the
Company's principal bank at the time of the closing. The promissory note
shall permit prepayment of the outstanding principal and interest without
penalty at any time. Payment of the promissory note shall be secured by a
lien on the seller's Membership Interest.
6.5
Determination of Fair Market Value. In the event of any purchase and sale of a
Member's Membership Interest pursuant to Sections 6.2 or 6.3 above, the
purchase price to be paid for such Membership Interest pursuant to this Operating
Agreement shall be the Member's Membership Interest multiplied by the Fair
Market Value of the Company, as entered below or on Exhibit C attached hereto
and incorporated herein by reference if entered during the twelve (12) months
preceding the Valuation Date, as defined below, and if not so entered, as
determined as set forth below in this Section 6.5. The Fair Market Value of the
Company shall be the most recent value for the Company as agreed upon by a
Super Majority Vote of the Members, from time to time, and as entered on
Exhibit C for the Company hereto or as reflected in the Company's minute book,
or both. The Members may enter updated values when and as often as they may
agree and each of the Members acknowledge that the failure to adjust the value on
a regular basis may result in the Fair Market Value being higher or lower than is
warranted. If the date of the last entry made on Exhibit C is more than twelve
(12) months prior to the date upon which the respective seller and the respective
purchaser each become obligated to each other, one to sell and the other to
purchase the Membership Interest (the "Valuation Date"), then the Fair Market
Value of the Membership Interest shall mean the agreed upon value as of the
Valuation Date by the respective purchaser and seller. However, in the event the
purchaser and seller do not agree within thirty (30) days of the Valuation Date on
the Fair Market Value of the Membership Interest, the Fair Market Value shall be
then as determined by a "Qualified Appraiser" (i.e., a recognized appraiser having
at least five (5) years experience in appraising comparable companies as the
Company), who shall be selectedby the respective transferorand transferee of the
Membership Interest within the ninety (90) days following the Valuation Date,
and who shall then determine the Fair Market Value of the Membership Interest
within sixty (60) days following such selection, and such determination shall be
final and binding on such parties. In the event such parties are unable to agree
upon a Qualified Appraiser on or before the ninetieth (90th) day following the
Valuation Date, then both parties shall each select a QuaUfied Appraiser who
shall mutually select a third Qualified Appraiser within said ninety (90) day
23
period, who shall then determine the Fair Market Value of the Membership
Interest within sixty (60) days following such selection and such third Qualified
Appraiser's determination shall be final and binding upon the parties. The cost of
the appraiser(s) shall be borne equally between the transferor and transferee.
6.6
Permitted Assignments and Substitute Members.
(a)
Permitted Assignment. Subject to the remaining provisions of this Section
6.6, and subject to the requirements of any lender doing business with the
Company, any Member may assign his Membership Interest, or any
portion thereof, to: (i) any other Member; (ii) the Member's spouse,
siblings, lineal ascendants, or lineal descendants; (iii) an inter vivos or
testamentary trust primarily for the benefit of the persons named in clause
(ii) or for the benefit of the Member, or (iv) if the Member is a Trust, to
the beneficiary thereof, provided that such beneficiary is a natural person
and is a person named in clause (ii); or (v) if the Member is not an
individual, an Affiliate of the Member. Notwithstanding the foregoing, an
assignment of a Membership Interest does not entitle the assignee to
participate in the management and affairs of the Company or to become,
or exercise any rights of, a Member. An assignment of a Membership
Interest merely entitles the assignee, to the extent assigned, to share in the
and to receive the distributions and allocations of income, gain, loss,
deduction, credit or similar items to which the assigning Member would
be entitled pursuant to this Operating Agreement. In no event shall the
Company, the Manager or any Member have any obligation whatsoever to
recognize an assignment of a Membership Interest unless the assignee has
been admitted, in accordance with Section 6.6(b) below, as a substitute
Member in place of the assigning Member to the extent of the
Membership Interest assigned. Until such time as the assignee has been so
admitted, the Company, the Manager and the Members may consider the
assigning Member to be the owner of its Membership Interest for all
purposes relevant to the Articles of Organization, this Operating
Agreement and the Indiana Act, and all distributions relating to the
assigned Membership Interest may be made to the assigning Member, it
being his responsibility to forward the appropriate portion of such
distributions to the assignee.
(b)
Substitute Members. An assignee of a Membership Interest, shall be
admitted as a substitute Member in place of the assigning Member to the
extent of the Membership Interest assigned, only on satisfaction of each of
the following conditions precedent:
(i)
The Manager's consent to such admission in writing (unless such
assignment is made pursuant to Section 6.6(a) in which case no
consent is required;
24
(ii)
The assignee has executed a statement that he, she or it is acquiring
the Membership Interest for his, her or its own account for
investment, and not with a view to distribution thereof;
(iii)
The agreement effecting the assignment is reasonably satisfactory,
in form and substance, to the Manager's and the Company's
counsel and the assigning Member and the assignee have executed
and acknowledged such agreement and such other documents,
instruments and papers as the Manager and the Company's counsel
reasonably deem necessary, proper, convenient or desirable in
order to evidence or effect the assignment or the admission of the
assignee as a substitute Member in place of the assigning Member
to the extent of the Membership Interest assigned;
(iv)
The assignee accepts, adopts and agrees to be bound by all of the
terms and provisions of this Operating Agreement, as it may have
been amended, from and after the effective date of the assignment
as if the assignee had joined in the original execution of this
Operating Agreement (and all subsequent amendments to this
Operating Agreement) as a Member. Such acceptance, adoption
and agreement shall be set forth in a writing, the form and
substance of which shall be reasonably satisfactory to the Manager
and the Company's counsel; and
(v)
The assignee has paid, or acknowledged that he, she or it is
obligated to pay, all reasonable fees and expenses (including,
without limitation, all reasonable attorney fees and expenses)
incurred by the Company in connection with such admission.
The Manager may waive compliance with any or all of the above
requirements, except the requirements set forth in clauses (i) and (iii)
above, as the Manager deems appropriate in his sole discretion.
(c)
Effect ofAssignment. An assignee who is admitted as a substitute Member
in accordance with Section 6.6(b) above has, to the extent assigned, the
rights and powers, and is subject to the restrictions and liabilities, of a
Member under the Articles of Organization, this Operating Agreement and
the Indiana Act. Such an assignee also is liable for any obligations of his,
her or its assignor to make Capital Contributions and to return
distributions, to the extent provided in the Indiana Act or this Operating
Agreement, but shall not be obligated for liabilities unknovm to the
assignee at the time he, she or it became a Member, unless the liabilities
are shown on the Company's financial records.
6.7
Amendment of Operating Agreement to Reflect Assignment. Notwithstanding
Section 9.5 below, the Manager may amend this Operating Agreement to reflect
25
any assignment or admission of a substitute or additional Member accomplished
in accordance with Section 6.
6.8
Definition. As used in this Section 6, the term "assign" means to sell, transfer,
convey, assign, gift, pledge or otherwise dispose of or encumber all or any portion
of a Membership Interest. All derivations of the tenn "assign" shall have similar
meanings, as is appropriate.
6.9
Restrictive Covenants.
(a)
For purposes of this Section 6.9, the following terms shall have the
meaning specified in this Section 6.9:
(i)
"Company Client" means (i) any person or business entity which at
the time has contracted with the Company for the Company to
provide its goods and/or services, (ii) any person or business entity
to which the Company at the time has submitted a written proposal
or is having ongoing communication for the Company to provide
its goods and/or services, or (iii) any person or business entity
which has within twelve (12) months of the termination of this
Agreement, contracted with the Company for the Company to
provide its goods and/or services.
(ii)
"Company Confidential Information" means any secret or
confidential information regarding any pricing formula (which is
based on internal costs), customer history data, customer client
lists, marketing and pricing strategies, financial records, inventory
records, quotations and calculations for the rendering of services,
employee files, costs, uses, methods, technology, trade secrets,
software programs, customers, trade accounts or suppliers (and
pertinent information respecting transactions and prospective
transactions therewith), or services rendered or products sold by
Company.
(iii)
"Financial Interest" means the ownership (either directly,
indirectly or beneficially) of: (i) any shares of stock of a
corporation; (ii) any interest in the capital or profits of a
partnership or joint venture or a sole proprietorship; (iii) any
membership interest in a limited liability company; or (iv) any
other financial interest of any other business entity which is
substantially equivalent to the interests described in (i), (ii) or (iii)
above. Notwithstanding the proceeding, a Financial Interest in any
business entity shall not include the ownership (either, directly,
indirectly or beneficially) of less than five percent (5%) of a
publicly traded company.
26
(iv)
(b)
"Term" means the period in which the subject Member owns a
membership interest in the Company.
Non-Solicitation. Each Member represents, warrants and covenants to the
Company and the other Members that during the Term and for the two (2)
years immediately thereafter, such Member shall not directly, or
indirectly, for himself, or as an agent, independent contractor or
representative of any person or for any business entity: (i) advise, induce
or persuade any person or business not to do business with the Company
or to cancel or fail to renew any contract with the Company; (ii) induce or
attempt to induce, solicit or attempt to solicit, contract with or accept
business from any Company Client for the sale of goods or the providing
of services which are the same as, or similar to, or otherwise competitive
with, the goods or services which the Company renders or provides; (iii)
employ, retain, contract with or interfere with any Member, manager or
employees of the Company with respect to the work performed by such
Member, Manager, or employee for, or on behalf of, the Company; (iv)
solicit, induce, persuade, or advise any employees or personnel of the
Company to terminate any relationship with the Company; or (v) obtain
any type of Financial Interest in any business entity which engages in any
of the foregoing, provided, however, the above restrictions shall not limit
Stark Taylor to have business dealings with PVH Corp., Honda and RPA
& Associates, LLC.
(c)
The Members acknowledge and agree that the Company has expended and
intends to expend, substantial amounts of time, effort and capital to
develop, maintain and safeguard their respective confidential information,
which is unique, private, valuable and confidential. Each Member agrees,
represents, and warrants that during the Term and continuing thereafter, he
shall not, directly or indirectly, use for himself or use for, or disclose to,
any other party other than the Company, any Company Confidential
Information, except in connection with his membership in the Company
and the rendering of services to the Company as a Member and/or
Manager. "Company Confidential Information" does not include
information which becomes generally available to the public other than as
a result of wrongful disclosure hereunder, or becomes available to a
restricted party from a source other than the Company or a Company
Client, if that source is not subject to a confidentiality obligation with
respect to such information.
(d)
Upon any Member ceasing to own a membership interest in the Company,
for any reason whatsoever, such Member agrees to promptly return to the
Company all Company Confidential Information, including all written or
other tangible evidence of Company Confidential Information which is in
the possession and/or under the control of such Member. In addition, such
Member agrees he will not make, cause to be made, or retain any copies,
reproductions, or summaries (including handwritten summaries) of any
27
such Company Confidential Information and materials. In addition, such
Member shall immediately return all property that belongs to the
Company, which includes but is not limited to computer, cell phone and
credit cards.
(e)
Iniunctive Relief.
(i)
The Members acknowledge and agree that a breach of any term of
this Section 6.9 by a Member will result in irreparable harm to the
Company and that money damages, in and of themselves, are not
adequate relief The Members further acknowledge and agree that
injunctive relief is the only appropriate and proper type of relief to
prevent irreparable harni for a breach of any term of this Section
6.9. The Members agree that in the event of a breach of this
Section 6.9, or in the event that such breach appears to be
imminent, the Company shall be entitled to obtain a temporary
restraining order or preliminary injunction without notice. In
addition, the Company may seek all other legal and equitable
remedies afforded it by law as a result of a breach of this Section
6.9, including, but not limited to, permanent injunctions, money
damages and reimbursement of all expenses, reasonable costs and
attorneys' fees incurred by it in seeking any such remedy. Further,
the Members agree to waive any requirement for security or
posting of any bond in coimection with any such remedy.
(ii)
The Members agree that all actions or proceedings for injunctive
relief pursuant to this Section 6.9 shall be litigated in courts having
situs within Marion County, State of Indiana. The Members hereby
consent and submit to the jurisdiction of any local, state or federal
court located within said county and state. Each Member hereby
waives any right he may have to transfer or change the venue of
any litigation brought against such Member by the Company in
accordance with this Section 6.9.
(iii)
If any court or tribunal of competent jurisdiction shall refuse to
enforce the covenants set forth in this Section 6.9 because the time
limitation, scope of the business, or geographic scope applicable
thereto is deemed unreasonable, it is expressly understood and
agreed that such covenant shall not be void but that for the purpose
of such proceedings such time limitations, scope of business or
geographic scope shall only be reduced to the extent necessary to
permit the enforcement of such covenant.
6.10
Bring Along Right. Whenever any person or entity not a Member of the
Company as of the date of this Agreement (the "Offeror") makes an offer or series
of related offers to purchase from the Members sufficient Membership Interests to
enable the Offeror to own in the aggregate more than fifty (50%) percent of all
28
Membership Interests in a transaction or series of related transactions, the
Members shall have the right to require the other Members to sell their
Membership Interests to the Offeror upon the terms and conditions of this Section
and such other Members shall sell their Membership Interests. The purchase price
and payment terms as contained in the proposed offer or series of related offers
giving the Offeror voting control of the Company shall apply to the purchase of
the other Member's Membership Interests. The Members receiving the offer shall
exercise this bring along right by delivering to the other Members written notice
of the demand within ninety (90) days of entering into a definitive purchase
agreement to sell their Membership Interests to the Offeror.
6.11
Tag Aiong Right. Whenever any person or entity not a Member of the Company
as of the date of this Agreement (the "Offeror") makes an offer or series of related
offers to purchase from the Members sufficient Membership Interests to enable
the Offeror to own in the aggregate more than fifty (50%) percent of the
Membership Interests in a transaction or series of related transactions, then the
other Members shall have the right to require the Offeror to purchase their
Membership Interests upon the terms and conditions set forth in Section 6.10
above and the other Members shall sell their Membership Interests. The other
Members shall exercise this tag-along right by delivering to the receiving
Members and the Offeror written notice of its intentions within thirty (30) days of
receiving written notification of the purchase from the Offeror. Failure of the
other Members to deliver the required notice of acceptance or rejection within the
thirty (30) day notice period specified in the preceding sentence shall be deemed
to be a rejection of the purchase offer.
6.12
For purposes of Sections 6.2, 6.3 and 6.9 above the term "Member" shall include
Michael Andretti.
6.13
License Fee. In the event Andretti Autosport or Michael Andretti through another
entity no longer holds a Membership Interest in the Company, the Company shall
have the option to either (a) license the use of the Andretti name firom Michael
Andretti or (b) to cease using the Andretti name by transitioning to a new
company name within twelve months of the date Andretti Autosport or Michael
Andretti through another entity no longer holds a Membership Interest in the
Company. The Company shall have sixty (60) days to elect either of the options
set forth above. In the event the Company elects option (a) in a timely manner,
then the Company agrees to pay Michael Andretti an annual license fee equal to
two percent of gross revenue received fi-om each project of the Company less any
revenue received to cover pass through project costs (not operating costs of the
Company) associated with the project. The Company shall pay such license fee on
the first day of each calendar quarter during the term of each project for the prior
calendar quarter and accompanied with each license fee payment shall be a
financial report detailing the calculation of the license fee. Michael Andretti and
his representatives, at their expense, shall have the right to audit the Company's
book and records to verify the license fee to be paid hereunder and Michael
29
Andretti and his representatives agree to maintain such audit in the strictest
confidence.
7.
NOTICES
7.1
Manner of Delivery. Any notice, election, demand, request, consent, approval,
concurrence or other communication (collectively, a "notice") given or made
under the provision of this Operating Agreement shall be deemed to have been
sufficiently given or made for all pvirposes only if it is in writing and it is: (a)
delivered personally to the party to whom it is directed, (b) sent by first class mail
or overnight express mail, postage and charges pre-addressed to the party to
whom it is directed, at his address set forth opposite his name on the attached
Exhibit A: or (c) telecopied to the party to whom it is directed, at his address set
forth opposite his name on the attached Exhibit A. Counsel for a party hereto may
give notices on behalf of its client with the same effect as if such notice had been
given by such party.
7.2
Date. Unless any other provision of this Operating Agreement expressly provides
to the contrary, any notice:
(a)
given or made in the manner indicated in Section 7.1(a) above shall be
deemed to have been given or made on the day on which such notice was
actually delivered to an adult residing or employed at the address of the
intended recipient, but if such day was not a business day, such notice
shall be deemed to have been given or made on the first business day
following such day.
(b)
given or made in the marmer indicated in Section 7.1(b) above shall be
deemed to have been given or made on the third business day after the day
on which it was deposited in a regularly maintained receptacle for the
deposit of the United States' mail, or in the case of overnight express mail,
on the business day immediately following the day on which it was
deposited in a regularly maintained receptacle for the deposit of overnight
express mail, provided that the notice is subsequently delivered by the
U.S. Post Office or the courier service to the designated address in the
ordinary course of business; and
(c)
given or made in the manner indicated in Section 7.1(c) above shall be
deemed to have been given or made on receipt by the transmitting part of
printed confirmation that the transmission was received, provided, that if
the transmission occvirs after 4:30 p.m. EST or EDT (as appropriate) or on
a non-business day, the notice shall be deemed to have been given or made
on the first business day to follow such transmission. Notwithstanding the
immediately preceding sentence, if the intendedrecipient actually receives
a notice before the date on which such notice is deemed to have been
given or made, as specified above, the date of actual receipt shall be the
30
date on which such notice is deemed to have been given or made for the
purposes of this Operating Agreement.
7.3
8.
Change of Address. Any Member, any Manager or the Company may change
his address for purposes of this Operating Agreement by giving the Manager and
the Company notice of such change in the manner provided in Section 7.1 above.
DISSOLUTION
8.1
Events of Dissolution. The Company shall be dissolved and its affairs wound
upon the occurrence of any of the following events, whichever occurs first:
(a)
The expiration of the period fixed for the Company's duration set forth in
its Articles of Organization, if any;
8.2
(b)
The Super Majority Vote of the Members; or
(c)
The entry of a decree ofjudicial dissolution.
Winding Up and Liquidating Distributions. Upon the dissolution of the
Company pursuant to Section8.1 above or otherwise, the Manager shall file a
Certificate of Dissolution for the Company with the Indiana Secretary of State and
shall wind up the Company's affairs in accordance with the provisions of the
Indiana Act. Once the Company's affairs have been wound up, the Managershall
proceed with an orderly liquidation of the Company's assets. On completion of
such liquidation, the Manager shall file all tax returns and pay all tax obligations
required by applicable Indiana law, and within a reasonable time, the Manager
shall furnish each Member with a statement prepared by the Company's
accountants, which shall set forth the assets and liabilities of the Company as of
the date of dissolution and the proceeds and expenses of the Company's
liquidation. The Manager shall apply or distribute the proceeds of the liquidation
in the following order of priority:
(a)
First, to the Company's creditors, whether they are or are not Members, to
the extent permitted by applicable law, in satisfaction of the debts and
liabilities of the Company and the expenses of liquidation. At the same
time, the Manager shall establish such reserves as they reasonably deem
necessary, and in such amounts as they reasonably deem necessary, for
any contingent or unforeseen debts, liabilities or obligations of the
Company. On the expiration of the period described above, the Manager
shall distribute the balance of such reserves in accordance with the
remaining provisions of this Section 8.2;
(b)
Then to the Members in satisfaction of any liabilities for distributions
under Section 3.1 above; and
(c)
Finally, to the Members pro-rata in accordance with their Company
Percentages.
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9.
MISCELLANEOUS
9.1
Fiscal Year. The Company's fiscal year shall be the calendar year.
9.2
Books and Records. The Manager shall cause the Company to keep records and
books of account in which shall be entered fiilly and accurately all transactions
and other matters relative to the Company's business as are usually entered in
records and books of account maintained by persons engaged in business of a like
character to the Company's business. The Company's records and books of
account shall be made available to the Members as required by the Indiana Act
and upon their reasonable request. The Company's books shall be kept on such
method of accounting as the Manager deems appropriate. The Company's books
shall be maintained in a full and accurate manner at its principal place of business
or at such other location or locations as the Manager deems appropriate, and each
and every transaction of the Company shall be entered fully and accurately in
such books. The Company shall keep the following records at its registered office;
(i) a copy of the Company's federal, state and local tax returns and financial
statements for the Company's last three (3) fiscal years; (ii) a current and accurate
list of each Member and the Manager, including his full name and last known
address; (iii) a copy of this Operating Agreement and the Articles of Organization
including all amendments and restatements; and (iv) copies of records that would
enable a Member to determine his relative share of the Company's distributions
and his relative voting rights, to the extent such information is not ascertainable
from the records required to be maintained pursuant to clauses (i), (ii) and (iii) of
this Section 9.2.
9.3
Financial Statements. At the Company's expense, the Manager shall cause to be
prepared and distributed to all of the Members (i) all appropriate information
relating to the Company that is necessary for the preparation of the Members'
federal income tax returns and (ii) an armual report for the Company, containing
financial statements prepared on the basis of accounting then used by the
Company.
9.4
Governing Law. This Operating Agreement shall be deemed to have been
entered into within the State of Indiana. The Operating Agreement shall be
construed and enforced in accordance with the laws of the State of Indiana,
without regard to its conflict of laws principles. Each Member hereby irrevocably
submits itself to the exclusive personal jurisdiction of the Federal and State courts
sitting in Marion County, Indiana.
9.5
Amendments. Except to the extent that another provision of this Operating
Agreement expressly provides to the contrary, any amendment to this Operating
Agreement must be approved, in writing, by a Super Majority Vote of the
Members.
9.6
Binding Effect. Except to the extent that another provision of this Operating
Agreement expressly provides to the contrary, this Operating Agreement shall be
32
binding on and inure to the benefit of the parties to it and their respective estates,
personal representatives, executors, administrators, heirs, devisees, successors and
permitted assigns.
9.7
Severabilitv. The provisions of this Operating Agreement shall be severable.
Any section, paragraph, clause or provision of this Operating Agreement which is
found to be unenforceable or invalid shall not affect the enforceability or validity
of any other section, paragraph, clause or provision of this Operating Agreement.
9.8
Construction. The parties acknowledge that they each participated in the
drafting of this Operating Agreement and the negotiation of its provisions. This
Operating Agreement shall not be construed for or against any party, regardless of
whether some parties had a greater degree of participation than others. This
Operating Agreement sets forth the entire understanding and agreement of the
parties with respect to its subject matter and supersedes all prior understandings
and agreements, whether written or oral, with respect to its subject matter.
9.9
Pronouns. References in this Operating Agreement to a Member or any other
person in the singular or plural or as him, her, it, or other like references, shall
also, where the context so requires, be deemed to include the singular or the plural
reference, or the masculine, feminine or neuter reference, as the case may be.
9.10
Counterparts and Facsimile Signatures. This Operating Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original and all of which together shall constitute one instrument. Copies (whether
facsimile, photostatic or otherwise) of signatures to this Operating Agreement
shall be deemed to be originals and may be relied on to the same extent as the
originals.
9.11
Tax Matters Partner. The Members shall designate the person or entity who
will serve as the Company's "Tax Matters Partner" for purposes of Code Section
6231(a)(7), and the Members shall have the power and authority to remove and
replace the Tax Matters Partner in their discretion. The Tax Matters Partner shall
have the powers and duties provided for in such Code Section and in the related
Treasury Regulations. The Tax Matters Partner shall promptly send the Members
copies of any notices received from the Internal Revenue Service with respect to
the Company and shall keep advised as to the status of any Company issues or
proceedings before the Internal Revenue Service. The Tax Matters Partner shall
have no liability to the Company or any Member for any acts or omissions in its
capacity as the Tax Matters Partner. The Company shall reimburse the Tax
Matters Partner for all costs and expenses reasonably incurred by it on behalf of
the Company. The Company shall indemnify, defend and hold harmless the Tax
Matters Partner from and against any and all claims, liabilities, costs and expenses
(including reasonable attorney fees and court costs) incurred by him, her or it as a
consequence of serving or acting as a Tax Matters Partner. The Members hereby
designate the Manager as the Tax Matters Partner.
33
9.12
Special Allocations. Special allocations of items of income, gain, loss and
deduction shall be made in the following order and priority;
(a)
Company and Member Minimum Gain Chargebacks. Any provision of
this Operating Agreement to the contrary notwithstanding, if there is a net
decrease in either Company or Member Minimum Gain any taxable year
of the Company or other period for which allocation of Profits and Losses
are made, and if such decrease is not the result of any of the circumstances
described in Treasury Regulations Sections 1.704-2(f)(2) or (3) or 1.7042(i)(4), then Profits for that period (and, if necessary, subsequent periods)
shall be specially and specifically allocated to the Members in an amount
equal to each Member's share of the net decrease in Company or Member
Minimum Gain, as the case may be. The provisions of this Section 9.12(a)
are intended to comply, and shall be interpreted consistently, with
Treasury Regulations Sections 1.704-2(f)(l) and 1.704-2(i)(4),
respectively.
(b)
Qualified Income Offset. Profits (including, without limitation, gross
income) shall be specially and specifically allocated to any Member who
unexpectedly receives any adjustment, allocation or distribution described
in Treasury Regulations Sections 1.704-l(b)(2)(ii)(d)(4), (5) or (6) in an
amoimt and manner sufficient to eliminate, to the extent required by the
Treasury Regulations, the deficit balance in such Member's Capital
Account, if any, as quickly as possible. The provisions of this
Section 9.12(b) are intended to comply with the quahfied income offset
requirement of, and shall be interpreted consistently with, Treasury
Regulations Section 1.704-l(b)(2)(ii)(d).
9.13
Curative Allocations. The allocations set forth in Section 9.12(a) and 9.12(b)
above are intended to comply with certain requirements of Treasury Regulations
Sections 1.704-1 and 1.704-2, but may not be consistent with the manner in which
the Members intend to share the economic benefits of the Company. To ensure
that the Members' economic intentions are not distorted, the Manager may
request a waiver of the minimum gain chargeback rules pursuant to Treasury
Regulations Sections 1.704-2(f)(4) and 1.704-2(i)(4), if the Manager deems it
appropriate in their sole discretion. In addition, the Manager may allocate items
not subject to Section 9.12 among the Members in such a maimer as is necessary
to prevent the allocations described in Section 9.12 from distorting the manner in
which Company distributions would be divided among the Members pursuant to
Article 3 above, if the Manager deems it appropriate in their sole discretion. The
Manager may accomplish this result in any reasonable manner that is consistent
with Code Section 704 and the related Treasury Regulations, as the Manager
deems appropriate in his sole discretion.
9.14
Tax Allocations.
34
(a)
Generally. Except as provided below, or as otherwise required by the
Code or regulations promulgated thereunder. Company, income, gain,
loss, deduction, credit and other items, as computed for Federal income
tax purposes, shall be allocated among the Members in the same manner
as corresponding book items are allocated pursuant to Section 3.3, 9.12
and 9.13.
(b)
Section 704(c) Allocations. Profits and Losses with respect to any property
contributed to the Company shall be allocated, solely for tax purposes,
among the Members in accordance with the traditional method of making
Code Section 704(c)allocations, described in Treasury Regulations Section
1.704-3(b). Allocations made pursuant to this Section 9.14(b) shall be for
federal, state and local tax purposes only, and shall not affect, or in any
way be taken into account in computing, any Member's Capital Account
or share of distributions under any provision of this Operating Agreement.
9.15
Attorneys' Fees. In the event of any action or proceeding brought by any Member
against the Company or any other Member for any matter arising out of or in any
way relating to this Operating Agreement, the non-prevailing party in such action or
proceeding shall pay all costs, expenses and reasonable attorneys' fees incurred by
the prevailing party in connection with such action or proceeding.
9.16
Dispute Resolution.
(a)
Notwithstanding anything to the contrary in this Agreement, if at any time
the Members are deadlocked as a result of being unable to reach mutual agreement as to
those actions requiring unanimous consent under this Agreement, the Members agree to
meet in good faith over a period of not less than forty-five (45) days and to use their best
efforts during such period of time to resolve such deadlock. In the event the Members
are unsuccessful in resolving such deadlock, the Members agree to attempt to resolve the
same through non-binding mediation with a neutral mediator mutually satisfactory to the
Members. In the event the Members are unable to agree upon a neutral mediator within
ten (10) days after either party initiating such mediation by notifying the other party of
same in writing, then each Member shall select a "QuaUfied Mediator" (i.e. a mediator
having at least five years of experience mediating events of deadlock between partners)
within thirty (30) days following such ten day period. During this thirty (30) day period
the Qualified Mediators selected by the Members shall mutually select a Qualified
Mediator, who shall then mediate within thirty (30) of being selected the issues causing
deadlock between the Members.
(b)
If at any time the Members are unable to resolve such deadlock in
accordance with Section 9.16(a), then any Member (the "Offeror") may give written
notice to the other Member (the "Offeree") stating irrevocably for sixty (60) days the
price per membership interest that the Offeror is willing either (i) to pay for the Offeree's
entire interest in the Company, or (ii) to accept from the Offeree for the Offerer's entire
interest if the Offeree so elects. The Offeree must elect in writing within sixty (60) days
35
of receipt of tlie notice either (i) to sell such interest to the Offerer or (ii) to have the
Offeree purchase the interest of the Offeror for the price specified in the notice. If the
Offeree fails to make an election within the time limit, then the Offeree shall be deemed
to have declined the offer to purchase the Offerer's interest and the Offeror shall be
obligated to cause the Offeror to purchase the interest of the Offeree for the price
specified in the notice. The closing for the purchase of the interest pursuant to this
Section 9.16(b) shall take place within thirty (30) days after the identity of the selling
Member has been determined. At the closing, an amount equal to twenty (20%) percent
of the purchase price shall be paid and the remaining balance shall be payable pursuant to
the terms of a promissory note to be issued by the non-selling Member pursuant to which
the remaining balance of the purchase price shall accrue interest at a rate equal to the
prime rate of interest charged from time to time by the Company's principal bank plus
one (1%) percent and the principal balance shall be payable in four (4) equal annual
installments commencing on that date which is one (1) year following the closing. At the
closing, the non-selling Member shall cause the Company to obtain releases of the selling
Member (and Affiliates) from any personal guarantee and indemnify the selling Member
from any direct or indirect liabilities of the Company. At closing, the selling Member
shall deliver a duly executed assignment of its interest in the Company. No other
purchase under this Agreement shall occur between the date of the Offerer's written
notice and the closing. At closing, the selling Member shall resign as an employee or
officer of the Company, if applicable, when the selling Member's interest is transferred
with no further liability to the Company. In addition, the selling Member shall repay all
loans from the Company to such selling Member and the Company shall repay all loans
from the selling Member to the Company.
10.
DEFINITIONS
10.1
Definitions. As used in this Operating Agreement, the following terms shall have
the following meanings:
(a)
An "Affiliate''' of a person is (i) any person who, directly or indirectly,
controls, is controlled by or is under common control with such person,
(ii) if such person is an entity, any officer, director, general partner,
manager or trustee, or (iii) any person who is an officer, director, general
partner, manager or trustee, or who, directly or indirectly, controls, is
controlled by or is under common control with any person described in
clauses (i) or (ii) of this sentence. For the purposes of this definition, the
term "control" means to own or to have power to vote or direct the vote of
at least ten percent (10%) of the outstanding voting securities of another
person.
(b)
"Andretti Autosport" means Andretti Autosport Holding Company, Inc.,
an Indiana corporation and a Member of the Company.
36
(c)
"Articles of Organization" means the Articles of Organization of Andretti
Sports Marketing, LLC, filed with the Indiana Secretary of State, as the
same may be amended or restated from time to time.
(d)
"'Capital Account" means, with respect to each Member, a single capital
account which shall be established for such Member and which shall be
maintained for such Member in accordance with the Treasury Regulations
Section 1.704-l(b)(2)(iv).
(e)
''Capital Contribution" means anything of value that a Member
contributes to the Company's capital, whether in the form of cash,
property (tangible or intangible), services or a promissory note or other
binding obligation to contribute cash or property or to perform services,
whenever made.
(f)
''Code" means the Internal Revenue Code of 1986, as amended, or
corresponding provisions of subsequent superseding federal revenue laws.
(g)
"Company means Andretti Sports Marketing, LLC, a limited liability
company organized under the laws of the State of Indiana pursuant to the
Articles of Organization and this Operating Agreement.
(h)
"Company Minimum Gain" has the meaning assigned to the term
partnership minimum gain in Treasury Regulations Sections 1.704-2(b)(2)
and 1.704-2(d)(l). Generally speaking, Company Minimum Gain equals
the excess of the amount by which a non-recourse liability exceeds the
adjusted tax basis of the Company property it encumbers.
(i)
"Company Percentage" means a Member's right to a specified percentage
of the Company's capital, profits, losses and distributions as set forth on
the attached Exhibit A, except as otherwise provided in Section 3.1.
(j)
"Excess Cash" means, at any time, that portion of the cash and cash
equivalent assets of the Company which the Manager determines, exceeds
the amount of cash needed by the Company to (i) remain "solvent", (ii)
maintain adequate working capital and reserves, and (iii) conduct its
business and carry out its purposes as described in Section 1.2 above. In
making this determination, the Manager shall take into account the
Company's then current and foreseeable sources of, and needs for, cash.
For the purposes of this definition, the Company is "solvent" if it is
capable of paying its debts as they become due in the usual course of
business or the value of its assets are equal to or greater than the sum of its
liabilities.
(k)
"Indiana Act" means the Indiana Business Flexibility Act, as it
may be amended from time to time.
37
(1)
"Majority Vote" means the affirmative vote of one or more Members, the
aggregate of the Company Percentages of which is greater than fifty
percent (50%).
(m)
''Manager" (or ''Managers") means the person(s) or entity(ies) appointed,
elected or otherwise designated as the manager of the Company pursuant
to Section 4 above.
(n)
"Member" means each person or entity that has executed this Operating
Agreement as a Member, as well as each person or entity that may become
a Member by both (i) fulfilling the applicable requirements set forth on
this Operating Agreement with respect to the admission of such person or
entity as a Member, and (ii) accepting, adopting and agreeing to be bound
by all of the terms and provisions of this Operating Agreement, as it may
have been amended or restated, from and after the date of his, her or its
admission to the Company as a Member, as if such person or entity had
joined in the original execution of this Operating Agreement (and all
amendments and restatements) as a Member.
(o)
"Membership Interest" means, with respect to each Member, such
Member's entire rights and interest in the Company and the Company's
property, assets, capital and business, including, but not limited to, such
Member's right to receive distributions of the Company's assets and any
right to participate in the management of the Company's affairs all as and
to the extent provided in this Operating Agreement and the Indiana Act.
(p)
"Member Minimum Gain" means an amount, with respect to each Member
non-recourse debt, equal to the Company Minimum Gain that would result
if such Member non-recourse debt were treated as a non-recourse liability,
determined
in
accordance
with
Treasury
Regulations
Section 1.704-2(i)(3).
(q)
"Operating Agreement" (or "Agreement") means this Operating
Agreement of Andretti Sports Marketing, LLC, as it may be amended or
restated fi-om time to time.
(r)
"Profits" and "Losses" mean, for each taxable year of the Company or
other period, an amount equal to the Company's federal taxable income'or
loss (as is appropriate) for such year or other period, as determined in
accordance with Code Section 703(a) (including all items of income, gain,
loss or deduction required to be stated separately under Section 703(a)(1)
of the Code, with the following adjustments:
(i)
Any income of the Company which is exempt from federal income
tax and not otherwise taken into account in computing Profits or
Losses shall be added to taxable income or loss; and
38
(ii)
Any expenditures of the Company described in Code Section
705(a)(2)(B), and any other items treated as Code Section
705(a)(2)(B) expenditures pursuant to Treasury Regulations
Section 1.704-I(b)(2)(iv)(i), which are not otherwise taken into
account in computing Profits or Losses shall be subtracted from
taxable income or loss.
(s)
"Super Majority Vote" means the affirmative vote of one or more
Members, the aggregate of the Company Percentages of which at least
eighty percent (80%).
(t)
"Treasury Regulations" includes proposed, temporary and final
regulations promulgated under the Code in effect as of the date of the
filing of the Articles of Organization and the corresponding sections of
any regulations subsequently issued that amend or supersede such
regulations.
[remainder ofthe page is intentionally left blank]
[signatures are on thefollowing page]
39
WHEREOF, the undersigned have executed this Operating Agreement of Andretti
Sports Marketing, LLC, as of the date first written above.
MANAGER:
John J. Lopes
MBE
ANDRETTTAUTO
COMPANY, INC
dian^c
Michael Andretti, President
John J. Lopes
A. St^e TayW^
40
EXHIBIT A
Company Percentage/
Membership Interest
Members
Andretti Autosport Holding Company, Inc.
60%
7615 Zionsville Road
Indianapolis, Indiana 46268
Attention: Michael Andretti
John J. Lopes
20%
A. Starke Taylor
20%
6826 Windemere Drive
Zionsville, Indiana 46077
41
EXHIBIT B
Members
Initial Capital Contribution
Andretti Autosport Holding Company, Inc.
$600.00
Attention: Michael Andretti
John J. Lopes
$200.00
A. Starke Taylor
$200.00
6826 Windemere Drive
Zionsville, Indiana 46077
42
EXHIBIT C
Fair Market Value
The undersigned hereby agree that for purposes of Section 6.5 of the Operating
Agreement for Andretti Sports Marketing, LLC dated as of September 6, 2011, for the period
commencing January 1, 2012, the Company's fair market value, without any type of discount,
shall be: $
.
COMPANY:
ANDRETTI SPORTS MARKETING, LLC, a
Indiana limited liability compan)
By:
Andretti Mtospoi
its Mana^r
John J. Looes
j^Starke Taylor
MEMBERS;
andrettiAutosp^t^o
COMFA
Michael
John J.
A. Stance Taylor
43

esl JUL 392015

Transcription

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