Document:

Exhibit 10.28

 

SHAREHOLDERS’ AGREEMENT

 

DATE: 22 June, 2004

 

PARTIES:

 

(1)                                  David
Beckham (“Mr Beckham”);

 

(2)                                  Victoria
Beckham (“Mrs Beckham”); and

 

(3)                                  19
Merchandising Limited (Company No. 3695399 ) whose registered office is at 33
Ransomes Dock, 35-37 Parkgate Road, London SW11 4NP (“19”); and

 

(4)                                  Beckham
Brand Limited (Company No. 5133956) whose registered office is at 33 Ransomes
Dock, 35-37 Parkgate Road, London SW11 4NP (“the
Company”).

 

RECITALS:

 

(A)                              The
Company is a private limited company registered in England and has an
authorised share capital of £1,000 divided into 1,000 ordinary shares of
nominal value of £l.00 each of which 2 Shares have been issued and are
registered in the name of 19.

 

(B)                                On
Completion 19 shall pass the Written Resolution under which the 2 issued Shares
registered in the name of 19 and 331 of the authorised but unissued Shares in
the capital of the Company will be redesignated as B Shares and 667 of the
authorised but unissued Shares will be redesignated as A Shares.

 

(C)                                On
Completion, Mr Beckham, Mrs Beckham and 19 shall each subscribe for Shares so
that immediately following Completion they shall each hold the number of Shares
set out opposite their names in Schedule 3.

 

(D)                               The
parties have agreed to participate with each other in respect of the Company
with the intention that they will identify Potential Projects which may,
subject to the terms of this Agreement, be carried out and exploited by the
Company with the assistance of the parties.

 

(E)                                 The
parties have agreed to enter into this Agreement to regulate their relationship
with each other and certain aspects of the affairs of and their dealings with
the Company.

 

OPERATIVE PROVISIONS:

 

1.                                      Definitions
and Interpretations

 

1.1                                 In
this Agreement (which includes the Schedules) the following expressions have
the following meanings unless the context requires otherwise:

 

 

“agreed form” means in the form previously
agreed by or on behalf of the parties to this Agreement;

 

“Agreed Project” means:

 

(a)                                  the
development and exploitation of a range of perfume/fragrance products;

 

(b)                                 the
development and exploitation of a range of diamond jewellery;

 

(c)                                  the
development of the “Beckham Academy” soccer schools; and

 

(d)                                 any
Potential Project which is approved by the Directors pursuant to Clause 4;

 

“the Articles” means the new articles of
association of the Company to be adopted by the Company on completion and as
amended from time to time. Any reference to “an Article” shall mean an article
in the Articles;

 

“A Director” means any Director appointed by
an A Shareholder in accordance with this Agreement and the Articles;

 

“A Shareholder” means the holder for the
time being of any A Shares;

 

“A Shares” means the A ordinary shares of
£1.00 each in the capital of the Company from time to time;

 

“the Auditors” means the Company’s auditors
from time to time;

 

“B Director” means a Director appointed by
the B Shareholders in accordance with this Agreement and the Articles;

 

“Board” means the board of Directors of the
Company from time to time;

 

“B Shareholder” means the holder for the
time being of any B Shares;

 

“B Shares” means the B ordinary shares of
£1.00 each in the capital of the Company from time to time;

 

“the Business” means the business of
developing and exploiting the Agreed Projects and, subject to the provisions of
this Agreement, such other activities as the parties may from time to time
agree;

 

“Business Day” means a day other than a
Saturday or Sunday on which clearing banks are open for business in the City of
London;

 

“Completion” means completion of the
performance by the parties of their respective obligations set out in Clause 3;

 

“Completion Board Meeting Minutes” means the
draft minutes of the meeting of the Board to take place on Completion in
accordance with Clause 3.2 in the agreed form;

 

2

 

“DB Services” shall have the meaning given
to that phrase in Paragraph 1 of Schedule 5;

 

“DB Intellectual Property Rights” shall have
the meaning given to that phrase in Paragraph 8 of Schedule 5;

 

“Encumbrance” means any claim, charge,
mortgage, pledge, trust, security, lien, option, equity, power of sale,
hypothecation or other third party rights, retention of title, right of
pre-emption, right of first refusal or any other security interest of any kind;

 

“Exclusive Period” means a period commencing
on the date of this Agreement and continuing until terminated by either (i) at
least 6 months notice in writing given by the A Shareholders to the B
Shareholder provided that no such notice will be effective to terminate the
Exclusive Period earlier than the date 3 years after the date of this
Agreement; or (ii) notice in writing given by the A Shareholders to the B
Shareholder within 30 days after the A Shareholders become aware of the fact
that Simon Fuller is no longer actively involved in the supervision of Agreed
Projects on behalf of 19 nor any of its Permitted Transferees (which
supervision may for the purposes of this definition include, without
limitation, providing supervision as a manager, director, consultant or
otherwise to 19 or any of its Permitted Transferees);

 

“Fair Value” shall have the meaning given to
that phrase in Clause 12.3;

 

“Group” means the Company and any of its
subsidiaries from time to time;

 

“the Intellectual Property Rights” means
patents, copyright works, databases, including, without limitation, rights of
extraction from such databases, design rights, designs, logos, semiconductor
topography rights, trade secrets, trade marks, service marks, utility models,
mask works, trade and business names (including domain names and e-mail address
names and including rights in any get-up or trade dress) know-how, inventions,
whether registered or unregistered and all other similar proprietary rights
which may subsist now or in the future and existing anywhere in the world
together with all renewals, extensions and revivals thereof;

 

“Lease Arrangement” means any lease,
licence, hire purchase, credit sale, conditional sale or similar agreement or
arrangement;

 

“Option” shall have the meaning given to
that phrase in Clause 12.1;

 

“Option Notice” shall have the meaning given
to that phrase in Clause 12.1;

 

“Option Period” means (i) if at any time
before the date 10 years after the date of this Agreement Simon Fuller shall no
longer be actively involved in the supervision of Agreed Projects on behalf of
19 or any of its Permitted Transferees (which supervision may for the purposes
of this definition include, without limitation, providing supervision as a
manager, director, consultant or otherwise to 19 or any of its Permitted
Transferees) then the 12 month period commencing on the first date the A
Shareholders become aware he is no longer so actively involved and the date one
year after such date; and (ii) if the Option is not exercised within the
aforementioned period, the 12 month period

 

3

 

commencing on
the date 10 years after the date of this Agreement and ending on the date 11
years after the date of this Agreement;

 

“Option Shares” shall have the meaning given
to that phrase in Clause 12.1;

 

“Permitted Transfer” shall have the meaning
given in the Articles;

 

“Permitted Transferee” shall have the
meaning given in the Articles;

 

“Potential Project” means a project to
develop and exploit a range of merchandise, products, services or skills under
a brand name that (save in relation to the “Beckham Academy” or as otherwise
agreed) does not include the name “Beckham”;

 

“Price” shall have the meaning given to that
phrase in Clause 12.3;

 

“the Shares” means all or any of the shares
in the share capital of the Company of whatever class from time to time;

 

“the Shareholders” means all those persons
registered as the holders of shares in the Company’s register of members from
time to time; and

 

“VB Services” shall have the meaning given
to that phrase in Paragraph 1 of Schedule 6;

 

“VB Intellectual Property Rights” shall have
the meaning given to that phrase in Paragraph 8 of Schedule 6;

 

“the Written Resolution” means the written
resolution of the sole member of the Company in the agreed form to be executed
on Completion to redesignate the Company’s ordinary shares as A and B Shares
and to adopt a new memorandum and Articles.

 

1.2                                 Reference
to any statute or statutory provision includes a reference to that statute or
statutory provision as from time to time amended or re-enacted.

 

1.3                                 Words
importing the singular include the plural, words importing any gender include
every gender, and words importing persons include bodies corporate and
unincorporate and (in each case) vice versa.

 

1.4                                 All
warranties, representations, indemnities, covenants, agreements and obligations
given or entered into by more than one person are given or entered into jointly
and severally unless otherwise specified.

 

1.5                                 Unless
otherwise expressly stated references to clauses and schedules are references
to clauses and schedules of this Agreement.

 

1.6                                 References
to persons shall include any individual, any form of body corporate,
unincorporated association, firm, partnership, joint venture, consortium,
association, organisation or trust (in each case whether or not having a
separate legal personality).

 

1.7                                 The
headings shall not affect the interpretation of this Agreement.

 

4

 

2.                                      Subscriptions
for Shares

 

2.1                                 In
consideration for the payment of £333 by Mr Beckham to the Company, Mr Beckham
hereby subscribes for 333 A Shares subject to the Articles and the terms and
conditions of this Agreement.

 

2.2                                 In
consideration for the payment of £333 by Mrs Beckham to the Company, Mrs
Beckham hereby subscribes for 333 A Shares subject to the Articles and the
terms and conditions of this Agreement.

 

2.3                                 In
consideration for the payment of £331 by 19 to the Company, 19 hereby subscribes
for 331 B Shares subject to the Articles and the terms and conditions of this
Agreement.

 

2.4                                 19
hereby waives all rights of pre-emption which may exist in relation to the
subscriptions for Shares referred to in Clauses 2.1 to 2.3, whether under the
Articles or otherwise.

 

3.                                      Completion

 

3.1                                 Completion
shall take place at the registered office of the Company on the day on which
this Agreement is executed (or such later date as may be agreed in writing
between the parties) when the matters listed in Clause 3.2 shall be transacted
and completed by the parties.

 

3.2                                 On
Completion:

 

3.2.1                        Mr.
Beckham shall:

 

(a)                                  deliver
to Mrs. Beckham, 19 and the Company counterparts of this Agreement duly
executed by him;

 

(b)                                 deliver
to the Company a cheque in the sum of £333, being the amount payable by him for
the subscription of Shares referred to in Clause 2,1;

 

3.2.2                        Mrs
Beckham shall:

 

(a)                                  deliver
to Mr Beckham, 19 and the Company counterparts of this Agreement duly executed
by her;

 

(b)                                 deliver
to the Company a cheque in the sum of £333, being the amount payable by her for
the subscription of Shares referred to in Clause 2.2;

 

3.2.3                        19
shall:

 

(a)                                  deliver
to Mr. Beckham, Mrs. Beckham and the Company counterparts of this Agreement
duly executed by it;

 

(b)                                 deliver
to the Company a cheque in the sum of £331, being the amount payable by it for
the subscription of Shares referred to in Clause 2.3;

 

5

 

3.2.4                        the
Company shall:

 

(a)                                  procure
that a meeting of the Board is held to approve:

 

(i)                                     this
Agreement and all other documents referred to in this Agreement;

 

(ii)                                  subject
to the receipt of the relevant subscription monies, the issue and allotment of
new A and B Shares as required pursuant to the terms of this Agreement;

 

(iii)                               the
other matters set out in the Completion Board Meeting Minutes;

 

(b)                                 deliver
to Mr Beckham, Mrs Beckham and 19 counterparts of this Agreement duly executed
by it;

 

(c)                                  deliver
to each of Mr Beckham, Mrs Beckham and 19 share certificates in respect of the
Shares subscribed for by each of them pursuant to Clause 2; and

 

(d)                                 enter
the names of Mr Beckham, Mrs Beckham and 19 in the register of members of the
Company as the holder of the Shares to be issued to them on Completion.

 

4.                                      Projects

 

4.1                                 19
and the Company shall use all reasonable endeavours to identify Potential
Projects and shall liaise with all appropriate third parties to negotiate the
commercial terms of such Potential Projects. Mr Beckham and Mrs Beckham may
also identify and suggest Potential Projects to the Company and shall notify
the B Director as soon as reasonably practicable upon becoming aware of any
proposed Potential Project suggested by any third party.

 

4.2                                 If
any of the parties to this Agreement identify or otherwise become aware of any
Potential Project then that party shall as soon as reasonably practicable
prepare a summary of the main terms of such Potential Project and shall
circulate such summary to each of the Directors. The terms of all new Potential
Projects shall be discussed by the Directors at the next scheduled Board
meeting save that any Director may convene a Board meeting to discuss any
Potential Project in the event of urgency by giving such notice as may be
reasonable in the circumstances of such meeting to each of the other Directors.

 

4.3                                 Any
Director may request such additional information in respect of any Potential
Project as they may reasonably require to assist them in deciding whether to
approve the Potential Project and if such additional information is required
then the Company and/or the party who originally identified or became aware of
the Potential Project will use all reasonable endeavours to provide such
information as soon as practicable. If any further

 

6

 

information is requested at or following the initial Board meeting then
a further Board meeting will be called as soon as reasonably practicable after
any further information has been distributed to the Directors for the purposes
of discussing such information and making a final decision on the Potential
Project.

 

4.4                                 A
Potential Project will only be approved by the Board (and become an “Agreed
Project” for the purposes of this agreement) if:

 

4.4.1                        at
least one A Director and one B Director approve its terms; and

 

4.4.2                        if
the Potential Project will involve the sole endorsement of Mr Beckham then he
approves the Potential Project; and

 

4.4.3                        if
the Potential Project will involve the sole endorsement of Mrs Beckham then she
approves the Potential Project.

 

4.5                                 It
is hereby agreed that all key decisions in respect of any Agreed Project which
involves:

 

4.5.1                        the
sole endorsement of Mr Beckham must be approved by Mr Beckham; and

 

4.5.2                        the
sole endorsement of Mrs Beckham must be approved by Mrs Beckham,

 

provided
always that such approvals are not unreasonably withheld or delayed.

 

4.6                                 Mr
Beckham and Mrs Beckham hereby undertake to the Company and 19 that they shall
not without the prior written consent of each of the Company and 19 during the
Exclusive Period either on their own account or through or in conjunction or
association with or by arrangement with or on behalf of any other person and
whether directly or indirectly pursue or take any action or enter into any
agreement or arrangements to pursue any Potential Project (whether or not such
Potential Project is rejected by the parties in accordance with the preceding
provisions of this Clause 4) other than in conjunction with the Company and in
accordance with the terms of this Agreement.

 

5.                                      Services

 

5.1                                 19
hereby undertakes to the Company and each of the Shareholders that it will
provide to the Company the services set out in Schedule 4 and otherwise comply
with the provisions of Schedule 4.

 

5.2                                 Mr
Beckham hereby undertakes to the Company each of the Shareholders that he will
provide to the Company the services set out in Schedule 5 and otherwise comply
with the provisions of Schedule 5.

 

5.3                                 Mrs
Beckham hereby undertakes to the Company each of the Shareholders that she will
provide to the Company the services set out in Schedule 6 and otherwise comply
with the provisions of Schedule 6.

 

7

 

6.                                      Directors

 

6.1                                 In
accordance with the Articles but subject to the remaining provisions of this
Clause 6, for so long as any A Shareholder is registered as the owner of 30% or
more of the Company’s issued share capital, such A Shareholder may appoint one
person as an A Director and shall be entitled at any time to remove or
substitute any A Director so appointed by delivering written notice to the
Company at its registered office. If for any reason an A Director resigns or is
removed in accordance with the Articles and this Agreement or otherwise ceases
to be a Director, then the A Shareholder who appointed such A Director shall
(and shall be entitled to), for so long as they continue to be registered as
the holder of 30% or more of the Company’s issued share capital, appoint
another person as an A Director.

 

6.2                                 In
accordance with the Articles but subject to the remaining provisions of this
Clause 6, the holders of a majority of the issued B Shares may appoint one
person as a B Director and shall be entitled at any time to remove or
substitute any B Director so appointed by delivering written notice to the
Company at its registered office. If for any reason a B Director resigns or is
removed in accordance with the Articles and this Agreement or otherwise ceases
to be a Director, the holders of the majority of the issued B Shares shall (and
shall be entitled to) appoint another person as a B Director.

 

6.3                                 The
chairman of the Board shall be any one of the A Directors. If the chairman of
the Board is not present at any Board meeting then for the purposes of that
meeting the chairman shall be any other A Director present at the meeting. The
chairman shall not have a casting vote at any Board meeting.

 

6.4                                 Unless
and until otherwise agreed in writing by the parties the number of Directors
(other than alternate Directors) shall be three and the Board shall be
comprised of a maximum of two A Directors and one B Director. The first A
Directors shall be Mr Beckham and Mrs Beckham and the first B Director shall be
Simon Fuller.

 

6.5                                 Mr
Beckham, Mrs Beckham and 19 hereby agree that it is their intention that for so
long as they or any of their Permitted Transferees remain Shareholders that the
A Directors and B Directors should remain the persons named in Clause 6.4 and
that they will use all reasonable endeavours to procure (so far as they are
legally able) that such persons shall remain Directors of the Company for so
long as they or any of their Permitted Transferees remain Shareholders.

 

6.6                                 If,
notwithstanding Clause 6.5, it becomes necessary for any A and/or B Shareholder
to replace any Director appointed by them then the identity of any new Director
appointed by Shareholders of a particular class shall be subject to the prior
written approval of the Director(s) appointed by Shareholders holding Shares of
a different class (such approval not to be unreasonably withheld or delayed)
who may request such details about the proposed new Director as they may
reasonably require to enable them to make a decision as to their identity. Each
of the Shareholders agrees to consult fully with the other Shareholders prior
to reaching any decision to appoint or remove any Director pursuant to this
Clause 6.

 

8

 

6.7                                 Save
as otherwise provided in this Agreement, each Shareholder shall and shall
procure that any new Director appointed by them pursuant to this Clause 6 shall
(to the extent in each case not inconsistent with his fiduciary duties as
Director) so act and vote in relation to the affairs of the Company as to
ensure in so far as he is able that he and the Company comply with the terms of
this Agreement.

 

6.8                                 If
a Shareholder removes a Director in accordance with its rights to do so under
this Agreement and/or the Articles, it shall be responsible for and shall
indemnify the other Shareholders and the Company against any and all claims by
such Director for unfair or wrongful dismissal or other compensation arising
out of such removal and against any losses, costs or expenses suffered or
reasonably incurred as a result of that removal.

 

6.9                                 Each
of the A and B Directors will be at liberty from time to time to make such
disclosure to the holders of A Shares (in the case of A Directors) and the
holders of B Shares (in the case of B Directors) in relation to the Business or
affairs of the Company as they think fit.

 

7.                                      Directors’
Proceedings

 

7.1                                 The
quorum necessary for the transaction of business of the Directors at a meeting
of the Board shall be two Directors of which at least one must be an A Director
and one must be a B Director. If any meeting of the Board is inquorate then it
will be adjourned for the consideration of the same business until the same
time on the same day at the same place the next following week when any
Director(s) present will constitute a quorum.

 

7.2                                 Subject
always to the provisions of Clause 4, no resolution may be approved at any
Board meeting or any meeting of any committee of the Board unless at least one
A Director and the B Director vote in favour of the resolution.

 

7.3                                 Each
of the Shareholders undertakes to each of the other Shareholders and the
Company that it shall exercise all its powers in relation to the Company so as
to procure (insofar as it is legally able) that during the term of this
Agreement meetings of the Board shall be convened at regular intervals not
exceeding four months and that except in the case of an emergency no less than
five Business Days’ written notice is given to each of the Directors, such
notice to be accompanied by an agenda specifying the business to be transacted
together with copies of any documents to be tabled at the meeting (or, if such
copies are not available, with details of such documents then available).

 

7.4                                 Subject
to the terms of this Agreement and any shareholder consent required by law, the
Board shall in its absolute discretion have the right to:

 

7.4.1                        decide
the management and day to day operation of the Business;

 

7.4.2                        decide
the general policy and strategy of the Company in carrying out the Business;
and

 

7.4.3                        appoint
and dismiss any employees of the Company from time to time.

 

9

 

7.5                                 Each
of the Shareholders undertakes to the others that they shall procure that any
Director appointed by them immediately notifies each other Director and each
Shareholder upon the Company or any member of the Group or any of the Directors
being aware of any threatened or instituted litigation, arbitration or
administrative proceedings or claim adversely affecting the Company or any
member of the Group or any offer or negotiations relating to or likely to lead
to a sale of the Company or an offer for a sale of the Company.

 

8.                                      Reserved
Matters

 

8.1                                 Save
with the prior written consent of each of the Shareholders:

 

8.1.1                        the
Company and the members of the Group shall not conduct any business other than
the Business;

 

8.1.2                        no
alteration shall be made to the memorandum of association or Articles of the
Company or the rights attaching to any Shares in the Company;

 

8.1.3                        no
resolution shall be passed for the winding-up or dissolution of the Company nor
shall any of the Parties present or cause to be presented any petition for the
winding-up, dissolution or administration of the Company (unless in either case
the Company shall have become insolvent);

 

8.1.4                        no
alterations shall be made to the Company’s name;

 

8.1.5                        no
resolution of the Company shall be passed to create, allot or issue any shares
in the Company which have not been created, allotted or issued at the date of
this Agreement or to create options in respect of any such shares or to
purchase, redeem or otherwise reorganise the Company’s share or loan capital;

 

8.1.6                        the
Company shall not issue any debenture or loan stock (whether secured or
unsecured) or create any Encumbrance over all or any part of its undertaking or
assets;

 

8.1.7                        apply
for the admission of any Shares to any recognised investment exchange (as that
term is defined in section 285 of the Financial Services and Markets Act 2000)
or enter into negotiations to effect a sale of the whole or substantially the
whole of the undertaking, business and assets of the Company;

 

8.1.8                        no
alteration shall be made to the Company’s accounting reference date;

 

8.1.9                        the
Company shall not participate in, or terminate any participation in, any
partnership or joint venture nor form any subsidiary or acquire shares in any
company;

 

8.1.10                  the
Company shall not do any of the following:

 

10

 

8.1.10.1                            incur
any Borrowings or factor or discount or assign any book debts of the Company in
aggregate in excess of £50,000;

 

8.1.10.2                            make
any loan or advance or otherwise give credit (other than credit given in the
normal course of the Company’s business) to any person, except for the purpose
of making deposits with its bankers;

 

8.1.10.3                            give
any guarantee, bond or indemnity in respect of or to secure the liabilities or
obligations of any person (other than a wholly owned subsidiary of the
Company);

 

8.1.10.4                            enter
into or make any material change to any contract or transaction with any of the
parties hereto or their respective subsidiaries or holding companies of any of
the parties hereto;

 

8.1.10.5                            enter
into or make any material change to or terminate any contract of employment
with any director of the Company (whatever his title or job description); enter
into any contract of employment with or for the provision of services to the
Company by any specified individual which cannot be terminated on less than 12
months’ notice, without payment of compensation;

 

8.1.10.6                            introduce
any executive or employee stock or share option or profit sharing or bonus
scheme of any nature;

 

8.1.10.7                            change
the Auditors of the Company;

 

8.1.10.8                            effect
any significant change in the accounting principles and practices for the time
being adopted by the Company;

 

8.1.10.9                            begin
or settle any legal or arbitration proceedings (other than routine debt
collection);

 

8.1.10.10                      incur
expenditure exceeding £25,000 on capital account;

 

8.1.10.11                      prepay
any loan;

 

8.1.10.12                      create
or redeem any mortgage, charge, debenture or other security;

 

8.1.10.13                      enter
into any agreement which cannot be terminated by the Company without penalty
within 12 months of its commencement;

 

8.1.10.14                      enter
into any abnormal or unusual contract or commitment, including any which:

 

•             is
outside the ordinary course of business;

 

•             is
unlikely to be profitable;

 

11

 

•             is of a
long-term nature;

 

•             would
have extended payment terms; or

 

•             would
involve a total outlay over the term of the contract in excess of £50,000;

 

8.1.10.15                      make
any claim, disclaimer, surrender, election or consent for tax purposes;

 

8.1.10.16                      grant
any lease or third party rights in respect of the Company’s property other than
to a member of the Group in connection with furtherance of the Company in the
normal course;

 

8.1.10.17                      enter
into any Lease Arrangement in respect of any equipment which would result in a
cost to the Company in excess of in aggregate £10,000 per financial period;

 

8.1.10.18                      transfer
or dispose of the Business or any material part of the Business or any of the
Company’s property other than to a member of the Group;

 

8.1.10.19                      remove
any Director from office other than as permitted by and in accordance with this
Agreement or vary the terms of any Director’s or senior employee’s terms of
employment or pay any director’s fees or bonuses (including employees bonuses);

 

8.1.10.20                      create
any interest over the Company’s property (including a security interest) save
in the normal course;

 

8.1.10.21                      assign,
licence, transfer, dispose of or create any security interest over, or
otherwise deal with any of the Company’s intellectual property except in the
ordinary course of business other than to a member of the Group in connection
with furtherance of the Company in the normal course;

 

8.1.10.22                      apply
for registration of any intellectual property except in the ordinary course of
business;

 

8.1.10.23                      allow
any registration of intellectual property except in the ordinary course of
business to lapse or be cancelled;

 

8.1.10.24                      accept
any restrictions on the use of the Company’s intellectual property except in
the ordinary course of business;

 

8.1.10.25                      instigate
or settle any litigation or arbitration proceedings concerning the Company when
the amount claimed exceeds £10,000; or

 

12

 

References in
this Clause 8 to “Company” shall include a separate and additional reference to
each member of the Group and the Company shall procure, so far as it is able,
that the restrictions imposed on members of the Group shall be observed by each
of them.

 

9.                                      Conduct of
the Company’s Affairs

 

9.1                                 Unless
otherwise agreed between all the Shareholders in writing or except as expressly
provided in this Agreement each of the Shareholders hereby undertakes to the
others that it shall exercise its powers in relation to the Company, including
but not limited to any influence it may have over any Director appointed by
them pursuant to this Agreement and/or the Articles, to procure (insofar as
they are legally able) and the Company undertakes to the Shareholders (insofar
as it is legally able) to procure that it will:

 

9.1.1                        provide
all Shareholders with monthly management accounts within 10 Business Days of
the end of each month;

 

9.1.2                        have
all cheques signed by two nominated signatories, one of whom shall be from time
to time nominated by a majority of the A Shareholders and one of whom shall be
from time to time nominated by a majority of the B Shareholders (and the
Shareholders agree that any signatory from time to time nominated by them shall
be based in or around London, that they shall provide full contact details for
such signatory and that such signatory shall make themselves available to sign
all necessary cheques at all reasonable times upon reasonable notice);

 

9.1.3                        keep
books of account and true and complete records of all its dealings and
transactions and ensure that the books of the Company are written up at regular
intervals;

 

9.1.4                        prepare
its accounts on an historical cost basis and adopt such accounting policies as
from time to time are generally accepted in England and Wales;

 

9.1.5                        transact
all its business on arm’s length terms;

 

9.1.6                        maintain
with a well established and reputable insurer adequate insurance for the full
replacement value of its assets against all risks usually insured by companies
carrying on a similar business;

 

9.1.7                        not
pass at any general meeting any resolution to dismiss any Director of the
Company;

 

9.1.8                        keep
each Shareholder informed of the progress of the Business and furnish each
Shareholder to such extent (and in such form and detail) as it may from time to
time reasonably require, with particulars of any matters concerned with and
arising out of the activities of the Company and/or the Group;

 

9.1.9                        at
the cost of the Company, prepare and deliver to each Shareholder:

 

13

 

9.1.9.1                                  except
in the case of an emergency at least 5 Business Days prior written notice
(including an agenda) of all meetings of the Board;

 

9.1.9.2                                  within
14 Business Days of a Board meeting being held, the minutes of such meeting;

 

9.1.9.3                                  within
seven Business Days of any request by either Shareholder, any

 

9.1.9.4                                  the
annual reports and audited consolidated accounts of the Company and the Group,
together with any management letters in respect thereof, forthwith upon the same
becoming available and, in any event, not later than 120 days following the end
of the financial period to which they relate.

 

9.2                                 In
the event of any breach of the provisions of Clause 9.1.9 and upon giving prior
written notice to the Company, each Shareholder or Director appointed by such
Shareholder shall be entitled to appoint a firm of accountants at the Company’s
expense to examine the books and accounting records of the Company and the
Group and to produce such accounts and other information as such Shareholder
shall request and the Company will provide and will procure that each other
Shareholder of the Company and the Group provides all information requested for
such purpose, together with full and unrestricted access to all relevant books,
records and personnel of the Company and the Group at reasonable times and upon
reasonable notice.

 

10.                               Disposal or
Charging of Shares

 

Save with the
prior written consent of each of the other Shareholders, no Shareholder shall
create or permit or agree to create or permit to subsist any Encumbrance over
or dispose of any legal or beneficial interest in all or any of the Shares held
by it (otherwise than by a transfer of such Shares in accordance with the
provisions of this Agreement and the Articles). Any person who is not a party
to this Agreement in whose favour any such Encumbrance is created or permitted
to subsist or to whom such interest is disposed of shall be required to enter
into a Deed of Adherence in the form set out in Schedule 1 signifying his consent
to be bound by the duties obligations and limitations affecting the Shares as
set out in this Agreement.

 

11.                               Transfer of
Shares

 

11.1                           Save
for any Permitted Transfer and except as permitted by this Agreement and the
Articles or with the prior written consent of each of the other parties to this
Agreement, no Shareholder may transfer any Shares in the Company until the date
three years after the date of this Agreement.

 

11.2                           After
the expiry of the period referred to in Clause 11.1 the rights of the Shareholders
to transfer any Shares or any interest in Shares shall be in accordance with
the provisions of the Articles and subject always to the terms of this
Agreement.

 

14

 

11.3                           In
the event of any sale or transfer by any of the parties to this Agreement
(other than the Company) of their Shares in the Company to any person who is
not a party to this Agreement it shall be a condition of such sale or transfer
that prior to the same being effected the purchaser or transferee shall have
agreed to be bound by the terms and conditions of this Agreement by the
executing a Deed of Adherence in the form set out in Schedule 1. Where any
Shares are issued to any person not a party to this Agreement, it shall be a
condition of such issue that prior to the same being issued such person shall
have agreed to be bound by the terms and conditions of this Agreement by
executing a Deed of Adherence in the form set out in Schedule 1 and any
agreement relating to such issue or an agreement to issue Shares in the future
shall contain an identical obligation and confer a right upon such person to
call for the right to execute the Deed of Adherence. Subject to the provisions
of Clause 18 and save as other wise provided in this Agreement, upon any of the
parties to this Agreement ceasing to be a Shareholder, such person shall cease
to be bound by the provisions of this Agreement (other than any rights or
obligations which have accrued prior to the date of them so ceasing to be a
Shareholder) provided that such person has complied with the provisions of this
clause 11.3.

 

12.                               Option

 

12.1                           In
consideration of the mutual covenants and agreements set out in this Agreement,
it is hereby agreed that provided Mr Beckham and Mrs Beckham shall together
hold 66% or more of the Company’s issued share capital at the relevant time,
they shall have the option (“the Option”)
exercisable at any time during the Option Period, to require 19 to sell all
(but not some only) of any Shares registered in its name at the relevant time (“the Option Shares”) to Mr and/or Mrs
Beckham in equal shares or as they may otherwise nominate. This Option may be
exercised by each of Mr and Mrs Beckham signing and serving a written notice (“an Option Notice”) on 19 in accordance with
the provisions of this Clause 12.

 

12.2                           An
Option Notice may be served by Mr and Mrs Beckham at any time during the Option
Period. If no Option Notice is received by 19 by the end of the Option Period
then the Option shall lapse.

 

12.3                           The
price payable by Mr and Mrs Beckham for the Option Shares upon an exercise of
the Option (“the Price”) shall be
either the price agreed between them and 19, or failing such agreement within
15 Business Days of receipt by 19 of an Option Notice, the fair value (“the Fair Value”) of the Option Shares on
the date on which the Option Notice is served, as determined in accordance with
the remaining provisions of this Clause 12.

 

12.4                           If
the Price cannot be agreed between Mr and Mrs Beckham and 19 within 15 Business
Days of receipt by 19 of an Option Notice then the parties shall appoint an
independent firm of chartered accountants (“the
Valuer”) to determine the Fair Value of the Option Shares. The
identity of the Valuer shall be agreed by Mrs and Mrs Beckham and 19 or in the
absence of agreement within 10 Business Days after the expiry of the 15
Business Day period mentioned above then such firm of independent chartered
accountants as may be nominated by the President for the time being of the
Institute of Chartered

 

15

 

Accountants in England and Wales on the application of any party. The
Valuer must, in determining the Fair Value of the Option Shares, value the
Option Shares as on an arm’s length sale between a willing seller and a willing
buyer, and make the following assumptions:

 

12.4.1                  if
the Company is then carrying on business as a going concern, that it will
continue to do so and that the Company will continue to undertake Agreed
Projects in a similar manner and to a similar extent to that which has applied
prior to the date of valuation and that historic rates of growth will be
capable of being achieved in the future;

 

12.4.2                  that
the Option Shares are capable of being transferred without restriction; and

 

12.4.3                  that
the value of the Option Shares is directly proportionate to the total value of
all the issued Shares of the Company with no discounting to reflect the fact
that they represent a minority of the issued Shares or to reflect the fact that
19 may cease to provide services (whether pursuant to this Agreement or
otherwise) to the Company in the future.

 

12.5                           The
parties shall each use all reasonable endeavours to procure that the Valuer
serves written notice on each of them of the Fair Value as soon as reasonably
practicable. The costs of the Valuer shall be borne solely by Mr and Mrs
Beckham.

 

12.6                           If
the parties agree the Price without reference to the Valuer then the parties
must complete the sale and purchase of the Option Shares on the fifth Business
Day after such Price is agreed (or such other date as the parties may agree in
writing). If the Price is determined by the Valuer in accordance with the
preceding provisions of this Clause 12 then the parties must complete the sale
and purchase of the Option Shares on the fifth Business Day after receipt by
them of the Valuer’s determination of the Fair Value (Or such other date as the
parties may agree in writing).

 

12.7                           Completion
of the sale and purchase of the Option Shares shall take place at the
registered office of the Company (or at such other place as may be agreed by
the parties in writing) at 12 noon on the completion date determined in
accordance with Clause 12.6 when:

 

12.7.1                  19
shall deliver to Mr and Mrs Beckham:

 

(a)                                  duly
executed transfers in respect of the Option Shares registered in its name in
favour of Mr and/or Mrs Beckham (or any third party as they may nominate)
accompanied by the relevant share certificate(s) in relation to the Option
Shares or an indemnity in respect of any lost certificates; and

 

(b)                                 such
other deeds and documents (if any) as may be necessary to transfer to Mr and/or
Mrs Beckham, or any third party as Mr and Mrs Beckham may nominate, the
beneficial ownership of the Option Shares free from all Encumbrances.

 

16

 

12.7.2                  Mr
and Mrs Beckham shall arrange for a sum equal to the Price to be
telegraphically transferred to such account as 19 may nominate in writing.

 

12.8                           If
any of the provisions of Clause 12.7 of this Agreement are not complied with on
the appropriate date for completion of the transfer of the Option Shares then
the party not in default may (without prejudice to his or their other rights
and remedies):

 

12.8.1                  defer
Completion to a date not more than 28 days after such date (as so that the
provisions of this Clause 12.8 shall apply to completion so deferred); or

 

12.8.2                  proceed
to Completion so far as practicable (without prejudice to their rights
hereunder).

 

13.                               Intellectual
Property Rights

 

The
Shareholders shall ensure that the Company shall own all Intellectual Property
Rights which may exist in the name, trademark and logo adopted for use by the
Company. Any name, trademark or logo owned by any of the Shareholders (or any
of their associated companies) prior to the date hereof shall remain the
property of such Shareholder.

 

14.                               Dividend
Policy

 

If in any
accounting period the Company has profits available for distribution, the
Company (so far as it is legally able) and each of the Shareholders shall
procure that those profits are applied in the following order of priority:

 

14.1                           providing
working capital to finance the continuing operations and internal growth of the
Company;

 

14.2                           transfers
to reserves consistent with the normal commercial requirements of businesses
similar to that carried on by the Company; and

 

14.3                           the
payment of cash dividends of at least fifty per cent (50%) of the balance of
such profits available for distribution.

 

15.                               Future
Actions

 

15.1                           The
Shareholders agree to take all reasonable measures and steps within their power
to:

 

15.1.1                  fulfil
the terms of this Agreement;

 

15.1.2                  procure
that the Company shall fulfil the terms of this Agreement; and

 

15.1.3                  promote
the Business.

 

15.2                           The
Shareholders agree, as between themselves, that they shall procure the
convening of all meetings, the giving of all waivers and consents and the
passing of all resolutions and shall otherwise exercise all powers and rights
available to them in order to give effect to

 

17

 

the provisions of this Agreement, including where appropriate the
carrying into effect of the terms as if they were embodied in the Company’s
memorandum of association and/or Articles.

 

15.3                           The
Shareholders agree, as between themselves, that, if any provisions of the
Memorandum of Association of the Company and/or the Articles at any time
conflict with any provisions of this Agreement, the provisions of this
Agreement shall prevail and the Shareholders shall exercise all powers and
rights available to them to procure the amendment of the memorandum of
association and/or the

 

15.4                           Each
of the parties shall, and shall use their respective reasonable endeavours to
procure that any necessary third parties shall, do, execute and perform all
such further deeds, documents, assurances, acts and things as any of the
parties to this Agreement may reasonably require by notice in writing to the
others to carry the provisions of this Agreement and the Articles into full
force and effect.

 

16.                               Further
Funding

 

The Shareholders
intend that they should participate in any further equity or debt financing
(other than as already referred to in this Agreement) in proportion to their
holdings of the issued share capital of the Company at the time of such
financing but nothing in this Agreement shall impose any obligation on any
Shareholder to provide any equity or debt finance other than as already
referred to in this Agreement.

 

17.                               Confidentiality

 

17.1                           Each
of the Shareholders shall at all times use its best endeavours to keep
confidential and not use in any manner not authorised any confidential
information which it or they may acquire in relation to the Company and the
Group or the Business of the Company or the Shareholders except as required in
accordance with an order of a court of competent jurisdiction or any competent
regulatory or governmental body or securities exchange in any relevant
jurisdiction. This obligation of confidentiality and non-use shall not extend
to information which (a) the relevant Shareholder has itself generated
independently of and without relation to the Company or the Company’s business
(unless covered by a separate obligation of confidentiality to the Company);
(b) is in the public domain through no breach of this Agreement; or (c) is
learned from a separate source of information without obligation of
confidentiality to the Company or any of its subsidiaries.

 

17.2                           The
Shareholders shall procure that the Company shall, and shall procure that the
Group shall, use all reasonable endeavours to ensure that the officers,
employees and agents of each of them shall observe a similar obligation of
confidentiality and non-use as the Shareholders pursuant to this Agreement.

 

17.3                           A
Shareholder shall not be in breach of the provisions of this Agreement by
virtue of any Director appointed by a Shareholder disclosing to that
Shareholder any information he properly receives as a Director of the Company,
or any member of the Group, in order that the Shareholder can monitor its
investment.

 

18

 

17.4                           The
obligations of each of the Shareholders contained in Clause 17 shall continue
without limit in point of time but shall cease to apply to information once it
is in the public domain.

 

17.5                           For
the purpose of this clause 17, the expression “Shareholders” shall include the
subsidiary companies of any Shareholder and any other company controlled by
that Shareholder and the employees or agents of that Shareholder and of such
subsidiary or controlled companies.

 

18.                               Announcements

 

Save as may be
required by law or any regulatory authority, no announcement, communication or
circular in connection with the subject matter of this Agreement shall be made
by or on behalf of the parties to this Agreement without the prior written
approval of the other or others (such approval not to be unreasonably withheld
or delayed).

 

19.                               Duration

 

19.1                           This
Agreement shall commence on the date of this Agreement and, subject to Clause
19.2 and the other provisions of this Agreement, shall continue to bind each
Shareholder until such time as such Shareholder ceases to hold any Shares in
the Company. This clause is without prejudice to any rights of the other
parties to this Agreement which shall have accrued prior to such date and
nothing in this Agreement shall affect any liabilities and financial
obligations owed to the Company by the Shareholder which have accrued prior to
the disposal of that Shareholder’s Shares.

 

19.2                           Notwithstanding
Clause 19.1 or any other provision of this Agreement, the provisions of Clauses
17, 18 and 22 shall continue to bind any party to this Agreement who ceases to
hold any Shares and further the provisions of Schedules 5 shall continue to
bind Mr Beckham for the periods set out in Schedule 5 and the provisions of Schedule
6 shall continue to bind Mrs Beckham for the periods set out in Schedule 6.

 

20.                               General

 

20.1                           This
Agreement shall be capable of being amended only by a written document executed
by all the Shareholders at the relevant time and the Company.

 

20.2                           Nothing
in this Agreement shall be deemed to constitute a partnership between the
Shareholders (or any of them) nor constitute any of the Shareholders, the agent
of or any other Shareholder or otherwise entitle any Shareholder to have
authority to bind any other Shareholder for any purpose.

 

20.3                           Each
of the parties shall bear and pay its own legal, accountancy and other fees and
expenses incurred in and incidental to the preparation and implementation of
this Agreement.

 

19

 

20.4                           This
Agreement shall be binding upon and enure for the benefit of the
successors-in-title and permitted assignees of the parties to this Agreement
but more of the Shareholders shall assign or transfer or purport to assign or
transfer any of its rights or obligations under this Agreement without the
prior written consent of each of the other Shareholders and without the
proposed assignee having first executed a Deed of Adherence in the form set out
in Schedule 1.

 

20.5                           No
failure to exercise or delay in exercising any right or remedy under this
Agreement shall constitute a waiver of such right or remedy and no waiver by
either Shareholder of any breach or non-fulfilment by any other Shareholder of
any provision of this Agreement shall be deemed to be a waiver of any
subsequent or other breach of that or any other provision hereof and no single
or partial exercise of any right or remedy under this Agreement shall preclude
or restrict the further exercise of any such right or remedy. The rights and
remedies of the Shareholders provided in this Agreement are cumulative and not
exclusive of any rights and remedies provided by law.

 

20.6                           Save
for any person who enters into a Deed of Adherence upon acquiring any Shares in
accordance with the provisions of this Agreement, the parties agree that the
provisions of this Agreement are personal to them and are not intended to
confer any rights of enforcement on any third party. The Contracts (Rights of
Third Parties) Act 1999 shall not apply to this Agreement or any of its
provisions.

 

20.7                           If
any of the provisions of this Agreement is found by a court or other competent
authority to be void or unenforceable, such provision shall be deemed to be
deleted from this Agreement and the remaining provisions of this Agreement
shall continue in full force and effect. Notwithstanding the foregoing, the
Shareholders shall thereupon negotiate in good faith in order to agree the
terms of a mutually satisfactory provision to be substituted for the provision
so found to be void or unenforceable.

 

20.8                           This
Agreement (together with all agreements and documents executed
contemporaneously with or contemplated by it) constitutes the entire agreement
between the Shareholders in relation to the subject matter of it and supersedes
all prior agreements and understandings whether oral or written with respect to
it.

 

20.9                           This
Agreement may be executed in any number of counterparts or duplicates, either
in person or by transmitting a signature by facsimile, and each such counterpart
or duplicate shall be an original, but the counterparts or duplicates shall
together constitute one and the same agreement.

 

20.10                     The
Company is excluded from any obligation contained in this Agreement to the
extent that such obligation would constitute an unlawful fetter on the Company’s
statutory powers.

 

21.                               Notices

 

21.1                           Any
notice or other document to be served under the Agreement may be delivered or
sent by hand or first class recorded delivery post to the party to be served at
its address or fax

 

20

 

number appearing in this Agreement or at such other address or fax
number as it may notify to the other parties from time to time,

 

21.2                           Any
notice or document shall be deemed to have been served if delivered by hand, at
the time of delivery if delivered between 10.00am and 5.00pm on any Business
Day and in any other case at 10.00 am on the Business Day following the date of
delivery or if posted, at 10.00 am on the second Business Day after it was put into
the post.

 

21.3                           In
proving service of a notice or document it shall be sufficient to prove that
delivery was made or that the envelope containing the notice or document was
properly addressed and posted as a prepaid recorded delivery letter.

 

22.                               Law and
Jurisdiction

 

22.1                           This
Agreement shall be governed by, and construed in all respects in accordance
with English law.

 

22.2                           In
relation to any legal action or proceedings to enforce this Agreement or
arising out of or in connection with this Agreement (“proceedings”) each of the Shareholders
irrevocably submits to the exclusive jurisdiction of the English courts and
waives any objection to proceedings in those courts on the grounds of venue or
on the grounds that the proceedings have been brought in an inconvenient forum.

 

IN WITNESS
whereof the parties have executed this Deed the day and year first above
written.

 

21

 

SCHEDULE 1

 

Deed of Adherence

 

THIS DEED OF
ADHERENCE is made the           
day of            20      
by of (hereinafter called “the Covenantor”)

 

SUPPLEMENTAL
to a Shareholders Agreement dated the           
day of            2004 and
made between (1) David Beckham, (2) Victoria Beckham, (3) 19 Merchandising
Limited and (4) Beckham Brand Limited (the “Shareholders
Agreement”).

 

WITNESSETH as
follows:

 

1.                                       The
Covenantor hereby confirms that [he] [it] has been supplied with a copy of the
Shareholders Agreement and hereby covenants with each of the parties thereto
from time to time to observe perform and be bound by all the terms of the
Shareholders Agreement which are capable of applying to the Covenantor and
which have not been performed at the date hereof to the intent and effect that
the Covenantor shall be deemed with effect from the date on which the
Covenantor is registered as a member of the Company to be a party to the
Shareholders Agreement and to be [an] [a] [A] [B] Shareholder (as defined in
the Shareholders Agreement).

 

2.                                       This
Deed shall be governed by and construed in accordance with the laws of England.

 

 

EXECUTED as a
deed the day and year first before written

 

22

 

SCHEDULE 2

 

Details of the Company

 

	
  Name:

  	
   

  	
  Beckham Brand Limited

  
	
   

  	
   

  	
   

  
	
  Company Number:

  	
   

  	
  5133956

  
	
   

  	
   

  	
   

  
	
  Registered Office:

  	
   

  	
  33 Ransomes Dock, 35-37 Parkgate Road, London SW11 4NP

  
	
   

  	
   

  	
   

  
	
  Sole Director:

  	
   

  	
  Simon Fuller

  
	
   

  	
   

  	
   

  
	
  Company Secretary:

  	
   

  	
  Paul Bedford

  
	
   

  	
   

  	
   

  
	
  Authorised Share Capital:

  	
   

  	
  £1,000

  
	
   

  	
   

  	
   

  
	
  Issued Share Capital:

  	
   

  	
  £2

  
	
   

  	
   

  	
   

  
	
  Shareholders:

  	
   

  	
  Name

  	
  No of ordinary shares of £1.00 each

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  19 Merchandising Limited

  	
  2

  
	
   

  	
   

  	
   

  
	
  Outstanding Charges Registered at Companies House:

  	
   

  	
  None

  

 

23

 

SCHEDULE 3

 

Allocation of Shares

 

	
  Mr Beckham

  	
   

  	
  333 A Shares

  
	
   

  	
   

  	
   

  
	
  Mrs Beckham

  	
   

  	
  333 A Shares

  
	
   

  	
   

  	
   

  
	
  19

  	
   

  	
  333 B Shares

  

 

24

 

SCHEDULE 4

 

Services to be Provided by 19

 

1.                                       19
shall during the Exclusive Period undertake or provide to the Company the
following services without charge to the Company:

 

(a)                                  business
affairs services;

 

(b)                                 bookkeeping
services;

 

(c)                                  the
negotiation of all agreements between the Company and third parties in relation
to Agreed Projects;

 

(d)                                 the
Supervision of all delivery requirements of the Company pursuant to agreements
with third parties in relation to Agreed Projects;

 

(e)                                  liaising
with all sponsors or suppliers in relation to Agreed Projects;

 

(f)                                    advising
the Company on all Potential Projects; and

 

(g)                                 overseeing
quality control of images, products and services in relation to Agreed Projects.

 

25

 

SCHEDULE 5

 

Services to be Provided by Mr Beckham

 

1.                                       Mr
Beckham shall during the Exclusive Period provide to the Company on an
exclusive basis from time to time upon request his services for the purpose of
performing any functions which may reasonably be required by the Company in
connection with any Agreed Project and such services shall include (but not be
limited to) using all reasonable endeavours to promote and endorse any
merchandise, products, services or skills which form part of or are related to
any Agreed Project including personal appearances at launches, press
conferences and meet and greet sessions and being filmed and/or photographed
for advertising and promotional materials related to the Agreed Projects (“the DB Services”).

 

2.                                       Mr
Beckham hereby agrees that he shall at all times execute and do all such acts,
matters, documents and things as may be necessary or reasonably required by the
Company and/or 19 to allow the Company to fulfil its obligations to any third
parties pursuant to any agreements entered into by the Company with such third
parties (whether or not such obligations arise during or after the Exclusive
Period) and agrees generally to use his best endeavours to procure that the
Company is able to observe and perform all of its obligations under the terms
of any agreement it may enter into with any third party in connection with any
Agreed Project and will indemnify the Company upon demand in respect of any
loss, damage, cost or expense it may suffer as a result of his failure so to
perform.

 

3.                                       Mr
Beckham hereby agrees that he shall not at any time during or after the
Exclusive Period directly or indirectly endorse, promote or publicise any
product, process or thing whatsoever nor enter into any agreement with any
third party to do the same or carry out any other activities which may result
in a breach of the terms of any agreement entered into by the Company with any
third parties in respect of any Agreed Project.

 

4.                                       Mr
Beckham hereby undertakes to and covenants with the Company and 19 that he
shall not, without their prior written consent, at any time during the
Exclusive Period and for a period of two years thereafter either alone or
jointly with, through or on behalf of (whether as director, partner,
shareholder, consultant, manager, employee or agent) any person, directly or
indirectly carry on or be engaged, concerned, or interested in carrying on any
activities in the United Kingdom or any other part of the world where such
activities would or might compete with or adversely affect the conduct or
outcome of any Agreed Projects being undertaken by the Company at the relevant
time.

 

5.                                       Mr
Beckham hereby agrees that when providing the DB Services to the Company under
this agreement he shall provide them faithfully and diligently in such manner
and at such times, dates and locations as the Company may reasonably direct and
to the best of his skill and ability and shall at all times observe and comply
with any reasonable directions given by the Company in connection with any
Agreed Project.

 

26

 

6.                                       It
is hereby acknowledged that no fee shall be payable to Mr Beckham by the
Company in connection with the provision of the DB Services.

 

7.                                       It
is agreed that the Company will pay or reimburse Mr Beckham for all out of
pocket expenses (including any travelling expenses) reasonably and properly
incurred in carrying out the DB Services which are notified in advance to the
Company and approved by at least one A Director and the B Director provided Mr
Beckham provides appropriate receipts or other proof of payment in respect of
such expenses.

 

8.                                       In
consideration of the payment by the Company to Mr Beckham of the sum of £1.00
(receipt of which is hereby acknowledged) Mr Beckham hereby assigns to the
Company absolutely with full title guarantee all future Intellectual Property
Rights which may be created or arise from the provision of the DB Services
under this Agreement (“the DB Intellectual Rights”)
with effect from the date of the creation of the relevant DB Intellectual
Property Rights.

 

9.                                       Mr
Beckham hereby agrees to execute and do all such acts, matters, documents and
things as may be necessary or reasonably required by the Company or 19 to
obtain any protection of the DB Intellectual Property Rights and to vest in the
Company title to such rights in, or relating to, the DB Intellectual Property
Rights and agree that the Company may effect and be responsible for the
registration and other protection of such rights as it thinks fit.

 

10.                                 Mr
Beckham hereby irrevocably and unconditionally grants for the benefit of the
Company and its successors in title all consents required pursuant to the
Copyright Designs and Patents Act 1988 (as amended) and waives in relation to
any Agreed Projects for which he may provide Services any so-called “moral
rights” he now has or may acquire in the future in relation to those Agreed
Projects.

 

11.                                 Mr
Beckham hereby irrevocably appoints the Company to be his attorney in his name
and on his behalf to execute and do any such instrument or thing and generally
to use his name for the purpose of giving the Company the full benefit of
Paragraphs 8 to 10 of this Schedule 5. In favour of any third party a
certificate in writing signed by any Directors or the secretary of the Company
that any instrument or act falls within the authority conferred by this Clause
shall be conclusive evidence that such is the case.

 

27

 

SCHEDULE 6

 

Services to be Provided by Mrs Beckham

 

1.                                       Mrs
Beckham shall during the Exclusive Period provide to the Company on an
exclusive basis from time to time upon request her services for the purpose of
performing any functions which may reasonably be required by the Company in
connection with any Agreed Project and such services shall include (but not be
limited to) using all reasonable endeavours to promote and endorse any
merchandise, products, services or skills which form part of or are related to
any Agreed Project including personal appearances at launches, press
conferences and meet and greet sessions and being filmed and/or photographed
for advertising and promotional materials related to the Agreed Projects (“the VB Services”).

 

2.                                       Mrs
Beckham hereby agrees that she shall at all times execute and do all such acts,
matters, documents and things as may be necessary or reasonably required by the
Company and/or 19 to allow the Company to fulfil its obligations to any third
parties pursuant to any agreements entered into by the Company with such third
parties (whether or not such obligations arise during or after the Exclusive
Period) and agrees generally to use her best endeavours to procure that the
Company is able to observe and perform all of its obligations under the terms
of any agreement it may enter into with any third party in connection with any
Agreed Project and will indemnify the Company upon demand in respect of any
loss, damage, cost or expense it may suffer as a result of her failure so to
perform.

 

3.                                       Mrs
Beckham hereby agrees that she shall not at any time during or after the
Exclusive Period directly or indirectly endorse, promote or publicise any
product, process or thing whatsoever nor enter into any agreement with any
third party to do the same or carry out any other activities which may result
in a breach of the terms of any agreement entered into by the Company with any
third parties in respect of any Agreed Project.

 

4.                                       Mrs
Beckham hereby undertakes to and covenants with the Company and 19 that she
shall not, without their prior written consent, at any time during the
Exclusive Period and for a period of two years thereafter either alone or
jointly with, through or on behalf of (whether as director, partner,
shareholder, consultant, manager, employee or agent) any person, directly or
indirectly carry on or be engaged, concerned, or interested in carrying on any
activities in the United Kingdom or any other part of the world where such
activities would or might compete with or adversely affect the conduct or
outcome of any Agreed Projects being undertaken by the Company at the relevant
time.

 

5.                                       Mrs
Beckham hereby agrees that when providing the VB Services to the Company under
this agreement she shall provide them faithfully and diligently in such manner
and at such times, dates and locations as the Company may reasonably direct and
to the best of her skill and ability and shall at all times observe and comply
with any reasonable directions given by the Company in connection with any
Agreed Project.

 

28

 

6.                                       It
is hereby acknowledged that no fee shall be payable to Mrs Beckham by the
Company in connection with the provision of’ the VB Services.

 

7.                                       It
is agreed that the Company will pay or reimburse Mrs Beckham for all out of
pocket expenses (including any travelling expenses) reasonably and properly
incurred in carrying out the VB Services which are notified in advance to the
Company and approved by at least one A Director and the B Director provided Mrs
Beckham provides appropriate receipts or other proof of payment in respect of
such expenses.

 

8.                                       In
consideration of the payment by the Company to Mrs Beckham of the sum of £1.00
(receipt of which is hereby acknowledged) Mrs Beckham hereby assigns to the
Company absolutely with full title guarantee all future Intellectual Property
Rights which may be created or arise from the provision of the VB Services
under this Agreement (“the DB Intellectual
Rights”) with effect from the date of the creation of the relevant
VB Intellectual Property Rights.

 

9.                                       Mrs
Beckham hereby agrees to execute and do all such acts, matters, documents and
things as may be necessary or reasonably required by the Company or 19 to
obtain any protection of the VB Intellectual Property Rights and to vest in the
Company title to such rights in, or relating to, the VB Intellectual Property
Rights and agree that the Company may effect and be responsible for the
registration and other protection of such rights as it thinks fit.

 

10.                                 Mrs
Beckham hereby irrevocably and unconditionally grants for the benefit of the
Company and its successors in title all consents required pursuant to the
Copyright Designs and Patents Act 1988 (as amended) and waives in relation to
any Agreed Projects for which she may provide Services any so-called “moral
rights” she now has or may acquire in the future in relation to those Agreed
Projects.

 

11.                                 Mrs
Beckham hereby irrevocably appoints the Company to be her attorney in her name
and on her behalf to execute and do any such instrument or thing and generally
to use her name for the purpose of giving the Company the full benefit of
Paragraphs 8 to 10 of this Schedule 6. In favour of any third party a
certificate in writing signed by any Directors or the secretary of the Company
that any instrument or act falls within the authority conferred by this Clause
shall be conclusive evidence that such is the case.

 

29

 

	
  EXECUTED and DELIVERED

  	
  )

  
	
  as a Deed by

  	
  )

  
	
  DAVID BECKHAM

  	
  )/s/

  
	
  in the presence of:

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  EXECUTED and DELIVERED

  	
  )

  
	
  as a Deed by

  	
  )

  
	
  VICTORIA BECKHAM

  	
  )/s/

  
	
  in the presence of:

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  EXECUTED and DELIVERED

  	
  )/s/ Simon Fuller

  
	
  as a Deed by

  	
  )

  
	
  19 MERCHANDISING LIMITED

  	
  )/s/

  
	
  in the presence of:

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  EXECUTED and DELIVERED

  	
  )

  
	
  as a Deed by

  	
  )

  
	
  BECKHAM BRAND LIMITED

  	
  )/s/

  
	
  in the presence of:

  	
  )/s/

  

 

30EXHIBIT 4.1

 

 

 

 

 

 

 

 

ADESA, INC. 

2005 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

 

 

ADESA, INC.

2005 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

 

TABLE OF CONTENTS

 

	
  INTRODUCTION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  DEFINITIONS AND
  INTERPRETATION

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.1

  	
  Definitions

  	
   

  
	
  Section 1.2

  	
  Rules of
  Construction

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  ELIGIBILITY AND
  PARTICIPATION

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.1

  	
  Initial
  Participation

  	
   

  
	
  Section 2.2

  	
  Change in Eligibility

  	
   

  
	
  Section 2.3

  	
  Transfers from
  Predecessor Plans

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  CONTRIBUTIONS AND
  CREDITS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.1

  	
  Establishment
  of Accounts

  	
   

  
	
  Section 3.2

  	
  Initial Credit to the
  Accounts of Transferred Participants

  	
   

  
	
  Section 3.3

  	
  Elective Deferrals

  	
   

  
	
  Section 3.4

  	
  Employer
  Contribution Credits

  	
   

  
	
  Section 3.5

  	
  Pension Make-Up Credits

  	
   

  
	
  Section 3.6

  	
  Additional Credits and
  Charges to Accounts

  	
   

  
	
  Section 3.7

  	
  Tax Supplement Benefit

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  DISTRIBUTIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.1

  	
  Application of
  Article

  	
   

  
	
  Section 4.2

  	
  Participant
  Distribution Elections

  	
   

  
	
  Section 4.3

  	
  Timing of Distributions

  	
   

  
	
  Section 4.4

  	
  Death of the Participant and
  Beneficiary Designations

  	
   

  
	
  Section 4.5

  	
  Hardship Distributions

  	
   

  
	
  Section 4.6

  	
  Distribution
  on Change of Control Event

  	
   

  
	
  Section 4.7

  	
  Minimum Installment
  Payment

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  PLAN ADMINISTRATION

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.1

  	
  Powers and Responsibilities of the Administrator

  	
   

  
	
  Section
  5.2

  	
  Indemnification
  of Administrator

  	
   

  
	
  Section 5.3

  	
  Claims and Claims Review
  Procedure

  	
   

  
	
  Section 5.4

  	
  Income and Employment Tax
  Withholding

  	
   

  
	
  Section 5.5

  	
  Notices

  	
   

  
				

 

 

	
  ARTICLE VI

  	
  AMENDMENT AND
  TERMINATION OF THE PLAN

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.1

  	
  Nature of Participants’
  Rights

  	
   

  
	
  Section 7.2

  	
  Spendthrift
  Clause

  	
   

  
	
  Section 7.3

  	
  Counterparts

  	
   

  
	
  Section 7.4

  	
  No Enlargement
  of Employment Rights

  	
   

  
	
  Section 7.5

  	
  Limitations on
  Liability

  	
   

  
	
  Section 7.6

  	
  Incapacity of
  Participant or Beneficiary

  	
   

  
	
  Section 7.7

  	
  Corporate
  Successors

  	
   

  
	
  Section 7.8

  	
  Evidence

  	
   

  
	
  Section 7.9

  	
  Action by Employer

  	
   

  
	
  Section 7.10

  	
  Severability

  	
   

  

 

 

The ADESA, Inc. 2005
Supplemental Executive Retirement Plan (“Plan”) has been adopted by ADESA, Inc.
(“Company”), effective March 1, 2005.

 

INTRODUCTION

 

The purpose of this Plan is to provide
supplemental retirement benefits for a select group of management or highly
compensated Employees and to permit covered Employees to increase their
retirement benefits further by making salary reduction deferrals pursuant to
the Plan.  The Employers intend for the
Plan to qualify as an unfunded arrangement maintained for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees within the meaning of Sections 201, 301, and 401 of
Employee Retirement Income Security Act of 1974, as amended.

 

DEFINITIONS AND INTERPRETATION

 

Section
1.1                                      Definitions.  Whenever the initial letter of a word or
phrase is capitalized herein, the following words and phrases shall have the
meanings stated below, unless a different meaning is plainly required by the
context:

 

(a)                                  “Account”
means, with respect to a Participant, the bookkeeping account established by
the Administrator to record the Participant’s interest under the Plan.  “Account” also means, when the context so
permits, the amount credited to such bookkeeping account.  Each Participant’s Account shall consist of
the following sub-Accounts, to the extent applicable:

 

(1)                                  “Deferral
Account” means the Participant’s interest under the Plan attributable to (i)
Elective Deferrals and (ii) non-Grandfathered elective deferrals under a
Predecessor Plan transferred to this Plan pursuant to Section 2.3.

 

(2)                                  “Employer
Contribution Account” means the Participant’s interest under the Plan
attributable to (i) Employer Contribution Credits; (ii) non-Grandfathered
employer contribution credits under a Predecessor Plan transferred to this Plan
pursuant to Section 2.3; and (iii) Pension Make-Up Credits.

 

(3)                                  “Grandfathered
Deferral Account” means the Participant’s interest under the Plan attributable
to Grandfathered elective deferrals under a Predecessor Plan transferred to
this Plan pursuant to Section 2.3.

 

(4)                                  “Grandfathered
Employer Contribution Account” means the Participant’s interest under the Plan
attributable to Grandfathered employer contribution credits under a Predecessor
Plan transferred to this Plan pursuant to Section 2.3.

 

 

(b)                                 “Administrator”
means the Board; provided, however, the Board may delegate one or more
administrative responsibilities under the Plan to any person (including a
committee), in which case such person shall be considered the Administrator
with respect to the delegated responsibility.

 

(c)                                  “Applicable
Form” means the appropriate form, as designated and furnished by the
Administrator, to make an election or provide a notice under the Plan.

 

(d)                                 “Base Salary”
means, for purposes of determining the Employer Contribution Credits with
respect to a Covered Participant for a Plan Year, the Covered Participant’s
gross base salary for the Plan Year, as estimated by the Administrator based on
actual salary through December 1 of the Plan Year and projected salary for the
remainder of the Plan Year, unreduced by Elective Deferrals or salary reduction
contributions pursuant to Code Section 401(k) or 125.  Base Salary for 2005 shall be determined as
if the Plan Year had begun on January 1, 2005.

 

(e)                                  “Beneficiary”
means, with respect to a Participant, the Participant’s beneficiary or
beneficiaries, as determined pursuant to Section 4.4.

 

(f)                                    “Benefit Commencement
Date” means the date as of which a distribution under the Plan is to be made
(or begin, if payable in installments).

 

(g)                                 “Board” means
the Company’s Board of Directors.

 

(h)                                 “Bonus” means,
with respect to a Participant for a Plan Year, the gross annual cash bonus
payable to the Participant under the ADESA Annual Incentive Plan with respect
to services performed during such year, even if such bonus is payable in a
later Plan Year, unreduced by Elective Deferrals or salary reduction
contributions made pursuant to Code Section 401(k) or 125.

 

(i)                                     “Change in
Control Event” means, with respect to a Participant, a change in the ownership
or effective control of a relevant Employer or in the ownership of a
substantial portion of a relevant Employer’s assets, to the extent that such
change is deemed to be an event described in Code Section 409A(a)(2)(A)(v).

 

(j)                                     “Code” means
the Internal Revenue Code of 1986, as amended from time to time.

 

(k)                                  “Company” means
ADESA, Inc.

 

(l)                                     “Compensation”
means, with respect to a Participant for a payroll period, the Participant’s
Gross Compensation for such period, reduced by applicable withholdings and
deductions.

 

(m)                               “Covered
Participant” means, with respect to a Plan Year, a Participant who, on December
1 of such year, is (i) actively employed as an Eligible Employee; (ii) is no
longer actively employed as an Eligible Employee, but who terminated employment

 

 

during such year on account
of death, Disability, or Retirement; or (iii) is on an Employer-approved Disability
leave that began during such year.

 

(n)                                 “Deferral
Election” means a deferral election filed by a Participant pursuant to Section
3.3 on an Applicable Form.

 

(o)                                 “Disability”
means a medical or mental impairment that, in the judgment of the Administrator,
based on medical evidence submitted by the Participant, renders the Participant
unable to perform the material duties of his employment and is expected to last
for a period of at least six months or until the Participant’s earlier death.

 

(p)                                 “Effective Date”
means March 1, 2005, the effective date of the Plan.

 

(q)                                 “Elective
Deferrals” means amounts deferred by a Participant under the Plan pursuant to
the Participant’s Deferral Election.

 

(r)                                    “Eligible
Employee” means any Employee (i) who holds a position listed in Appendix A, as
amended from time to time, or (ii) who does not hold a position listed in
Appendix A but who is designated by the Administrator or the Chairman of the
Company’s Board as an Eligible Employee and who has been notified in writing of
such designation and its effective date.

 

(s)                                  “Employee”
means any individual who is employed by an Employer.

 

(t)                                    “Employer” or “Employers”
means the Company and any Subsidiary that has adopted the Plan with the consent
of the Board.

 

(u)                                 “Employer Contribution
Credit” means, with respect to a Participant, an amount credited to the
Participant’s Employer Contribution Account pursuant to Section 3.4.

 

(v)                                 “ERISA” means
the Employee Retirement Income Security Act of 1974, as amended from time to
time.

 

(w)                               “Fixed
Investment Fund” means an Investment Fund providing for a fixed stated rate of
return, as established by the Administrator from time to time.

 

(x)                                   “Fund” means an
Investment Fund.

 

(y)                                 “Grandfathered”
means, with respect to an amount transferred from a Predecessor Plan, that the
amount was deferred and vested on or before December 31, 2004, that the
arrangement pursuant to which the amount was deferred has not been materially
modified within the meaning of Code Section 409A and the guidance thereunder,
and that the amount is not subject to the provisions of Code Section 409A.

 

(z)                                   “Gross
Compensation” means, with respect to a Participant for a payroll period, the
Participant’s regular base salary for such period, unreduced by Elective
Deferrals and salary reduction contributions pursuant to Code Section 401(k) or
125.

 

 

“Gross Compensation” shall
include holiday pay, vacation pay, floating holiday pay, and sick pay, but
shall exclude fringe benefits (whether or not taxable), disability pay, severance
pay, and other special pay.

 

(aa)                            “Ineligible
401(k) Plan Participant” means, with respect to a Plan Year, a Covered
Participant who did not satisfy the eligibility requirements of the Company’s
qualified Code Section 401(k) Plan for all or part of the Plan Year.

 

(bb)                          “Investment
Credit” means, with respect to an Account, an amount credited to the Account
pursuant to Section 3.6.

 

(cc)                            “Investment
Fund” means a fund established by the Administrator pursuant to Section 3.6 for
the purpose of determining Investment Credits.

 

(dd)                           “Participant”
means an Eligible Employee who has become a Participant pursuant to the
provisions of Article II and whose entire Account has not been distributed.

 

(ee)                            “Participation
Service” means the combined period of participation in this Plan, a Predecessor
Plan, and the Insured Option Plan maintained by ADESA Corporation between March
6, 1998, and March 5, 2001.  “Participation
Service” also includes, in the case of certain Employees, prior service with
ALLETE Corporation or Automotive Finance Corporation, to the extent determined
by the Administrator and communicated to the Employee in writing at the time he
becomes a  Participant.

 

(ff)                                “Pension
Make-Up Credits” means credits to a Participant’s Account pursuant to Section
3.5.

 

(gg)                          “Plan” means
the deferred compensation plan embodied herein, as amended from time to time,
known as the ADESA, Inc. 2005 Supplemental Executive Retirement Plan.

 

(hh)                          “Plan Year”
means the 12-month period beginning each January 1 and ending on the following
December 31, except that the first Plan Year shall begin on the Effective Date
and end on December 31, 2005.

 

(ii)                                  “Predecessor
Plan” means the ADESA Corporation Supplemental Executive Retirement Plan and/or
the Automotive Finance Corporation Supplemental Executive Retirement Plan.

 

(jj)                                  “Retirement”
means Termination of Employment on or after (1) reaching age 65 or (2) reaching
age 55 and completing at least ten years of Participation Service.  In the case of certain Participants
previously employed by ALLETE Corporation, the reference to age 55 in clause
(2) of the preceding sentence shall be deemed a reference to age 50, to the
extent determined by the Administrator and communicated to the Participant in
writing at the time he becomes a Participant.

 

 

(kk)                            “Statutory
Compensation Limit” means, (i) for the Plan Year ending December 31, 2005,
$205,000, and (ii) for any later Plan Year, the Code Section 401(a)(17)
compensation limit in effect for that Plan Year.

 

(ll)                                  “Subsidiary” or
“Subsidiaries” means a corporation, partnership, or limited liability company,
a majority of the outstanding voting stock, general partnership interests, or
membership interests, as the case may be, of which is owned or controlled
directly or indirectly by the Company or by one or more other
Subsidiaries.  For the purposes of this
definition, “voting stock” means stock having voting power for the election of
directors, or trustees, as the case may be, whether at all times or only so
long as no senior class of stock has such voting power by reason of any
contingency.

 

(mm)                      “Terminates
Employment” or “Termination of Employment” means a complete termination of the
employment relationship between the Participant and all Employers.

 

(nn)                          “Transferred
Participant” means an individual who became a Participant on the Effective Date
and who had an accrued benefit under a Predecessor Plan on the day preceding
the Effective Date.

 

(oo)                          “Trust” means
the ADESA, Inc. 2005 Supplemental Executive Retirement Plan Trust, as amended
from time to time, formerly known as the ADESA Corporation Supplemental
Executive Retirement Plan Trust.

 

(pp)                          “Trustee” means
the trustee of the Trust from time to time.

 

Section
1.2                                      Rules of Construction.  The following rules shall govern the
interpretation of the Plan:

 

(a)                                  The Plan is
intended to comply with (i) Code Section 409A and (ii) the applicable
provisions of ERISA, and it shall be interpreted and administered in accordance
with such intent.

 

(b)                                 Subject to the
provisions of Subsection (a), the Plan shall be construed, regulated, and
administered in accordance with the internal laws of the State of Indiana,
without regard to conflict of law principles.

 

(c)                                  Words used in
the masculine gender shall be deemed to include the feminine, where appropriate,
and vice versa, and words used in the
singular shall be deemed to include the plural, where appropriate, and vice versa.

 

(d)                                 Headings and
subheadings have been inserted for convenience of reference only and shall not
affect the construction of the terms hereof.

 

ELIGIBILITY AND PARTICIPATION

 

Section
1.3                                      Initial Participation.  An Eligible Employee shall become an active
Participant as of the later of (i) the Effective Date or (ii) the date as of
which such person becomes an Eligible Employee. 
An active Participant shall receive Employer Contribution Credits to the
extent provided in Section 3.3 and may (but shall not be required to) make
Elective Deferrals.

 

Section
1.4                                      Change in Eligibility.  A Participant may be removed as an active
Participant by (i) the Administrator or the Chairman of the Company’s Board,
effective as of the date written notice of such decision is provided to the
Participant, or (ii) by Plan amendment, effective as of the latest of adoption
of the amendment, the effective date of the amendment, or date on which notice
of the amendment is provided to the affected Participant.  Upon removal pursuant to the preceding
sentence or upon ceasing to be an Eligible Employee, a Participant shall become
an inactive Participant.  As an inactive
Participant, the Participant’s Elective Deferrals and Employer Contribution
Credits shall cease, but Investment Credits shall continue to be credited to
the Participant’s Accounts in the same manner as if the Participant were an
active Participant until such time as the Participant’s Accounts are
distributed in accordance with the provisions of the Plan.

 

Section
1.5                                      Transfers from Predecessor Plans.  As of the Effective Date, the vested account
balance of each Transferred Participant under the Predecessor Plans shall be
transferred to this Plan, and the Transferred Participant shall not be entitled
to any further benefit under any Predecessor Plan.  At the time of such transfer, the
Administrator shall separately account for each of the following amounts
transferred to the Plan for each Transferred Participant:  (i) Grandfathered amounts attributable to the
Participant’s elective deferrals (including earnings credits with respect to
such elective deferrals), which shall be credited to the Participant’s Grandfathered
Deferral Account, (ii) Grandfathered amounts attributable to employer
contribution credits for the Participant (including earnings credits with
respect to such contribution credits), which shall be credited to the
Participant’s Grandfathered Employer Contribution Account, (iii)  non-Grandfathered amounts attributable to the
Participant’s elective deferrals (including earnings credits with respect to
such elective deferrals), which shall be credited to the Participant’s Deferral
Account, and (iv) non-Grandfathered amounts attributable to employer
contribution credits for the Participant (including earnings credits with
respect to such contribution credits), which shall be credited to the
Participant’s Employer Contribution Account.

 

CONTRIBUTIONS AND CREDITS

 

Section
1.6                                      Establishment of Accounts.  The Administrator shall establish on behalf
of each Participant as of the date he becomes a Participant an Account
consisting of each of the following applicable sub-Accounts:  Deferral Account, Employer Contribution
Account, Grandfathered Deferral Account, and Grandfathered Employer
Contribution Account.  The Administrator
shall credit and charge such Accounts as

 

 

provided in this
Article.  A Participant’s interest in his
Accounts shall be 100% vested at all times.

 

Section
1.7                                      Initial Credit to the Accounts of Transferred
Participants.  As of the
Effective Date, the Administrator shall credit the transferred amounts to the
Accounts of each Transferred Participant as provided in Section 2.3.

 

Section
1.8                                      Elective Deferrals.

 

(a)                                  General
Provisions.  Subject to
the provisions of this Article, a Participant may elect to defer (i) a whole
percentage (up to 25%) of his Gross Compensation for services performed during
a Plan Year and/or (ii) a whole percentage (up to 85%) of his Bonus for
services performed during a Plan Year. 
If a Participant makes a valid Deferral Election pursuant to this
Article, the Bonus or Compensation that would be payable to the Participant in
the absence of his election shall be reduced by the elected amount, and the
reduction amount shall be credited to the Participant’s Deferral Account as of
the payment date for the Compensation or Bonus. 
To make a valid election, a Participant must file a completed Deferral
Election with the Administrator within the period required by this Section.

 

(b)                                 Initial
Deferral Elections Regarding Gross Compensation.  In general, a Participant must file his
Deferral Election with respect to Gross Compensation for a Plan Year before the
beginning of the Plan Year in which the Participant performs the services for
which the Gross Compensation is paid.  In
the first Plan Year of a Participant’s participation, however, the Participant
may file a Deferral Election with respect to Gross Compensation paid for
services performed after the filing date at any time during the first 30 days
of participation and, for 2005, a Participant may file a Deferral Election with
respect to Gross Compensation paid for services performed after the filing date
at any time before March 15, 2005.

 

(c)                                  Initial
Deferral Elections Regarding Bonuses.  Unless a Bonus represents performance-based
compensation based on services performed over a period of at least 12 months
(within the meaning of Code Section 409A(a)(4)(B)(iii)), the provisions of
Subsection (b) shall apply to Deferral Elections with respect to Bonuses.  To the extent that a Bonus represents
performance-based compensation based on services performed over a period of at
least 12 months (within the meaning of Code Section 409A(a)(4)(B)(iii)), the
Participant may file the Deferral Election with respect to such Bonus within
the period prescribed by Subsection (b) or, if later, at least six months
before the end of the applicable performance period.

 

(d)                                 Revocation or
Change of Deferral Elections.  Once made, a deferral election with respect
to Bonuses or Compensation shall remain in effect for future Bonuses and
Compensation, unless the election is revoked or a new election filed pursuant
to this Subsection.  Any revocation of an
existing Deferral Election or new Deferral Election must be filed on an
Applicable Form with the Administrator within the period required by Subsection
(b) or (c), as applicable.

 

 

Section
1.9                                      Employer Contribution Credits.

 

(a)                                  Base Employer
Contribution Credits. Except as otherwise provided in this Section, for
each Plan Year, each Covered Participant’s Employer Contribution Account shall
be credited with Employer Contribution Credits in an amount equal to the sum of
7% of the Participant’s Base Salary up to the Statutory Compensation Limit,
plus 11% of the Participant’s Base Salary in excess of the Statutory
Compensation Limit.  Beginning with the
first calendar month following the calendar month in which a Participant
completes 120 months of Participation Service, the 7% Employer Contribution
Credit required by the preceding sentence shall be increased to 10%, and the
11% Employer Contribution Credit required by the preceding sentence shall be
increased to 14%.  For example, if a
Participant completes 120 months of Participation Service on March 5, 2008, the
Employer Contribution Credit under this Subsection for the 2008 Plan Year shall
be equal to the sum of (i) 7% of his Base Salary for the first three months of
2008, up to one-fourth of the Statutory Compensation Limit, plus 11% of such
Base Salary in excess of such prorated compensation limit, and (ii) 10% of his
Base Salary for the last nine months of 2008, up to three-fourths of such
compensation limit, plus 14% of such Base Salary in excess of such prorated
compensation limit.  

 

(b)                                 Supplemental
Employer Contribution Credits.  In addition to the Employer Contribution
Credit otherwise provided for by this Section, a supplemental Employer
Contribution Credit shall be credited to the Employer Contribution Account of
each Ineligible 401(k) Plan Participant. 
The amount of the Eligible Contribution Credit shall be equal to 4% of
the Participant’s Base Salary for the period during which the Participant is
both a Covered Participant and an Ineligible 401(k) Plan Participant.  

 

(c)                                  Credits for
Individuals Who Become Participants after Beginning of Plan Year.  If an individual becomes a Participant on any
day other than the first day of the Plan Year, such individual’s contribution
under Subsection (a) for that Plan Year, if any, shall be based on that portion
of the individual’s Base Salary that is attributable to the period beginning on
the date on which the individual becomes a Participant and ending on the last
day of that Plan Year.

 

(d)                                 Credits for Covered
Participants Not Actively Employed on December 1 of Plan Year.  The Employer Contribution Credit for a
Covered Participant who is not an active Eligible Employee on December 1 of a
Plan Year shall be the credit under Subsection (a) or (c), as applicable,
multiplied by a fraction, the numerator of which is the number of full and
partial months during the Plan Year in which the Participant was an active
Eligible Employee and the denominator of which is the number of months in the
Plan Year.

 

(e)                                  Special
Provisions Relating to Employer Contribution Credits for 2005.  Employer Contribution Credits pursuant to
this Section for 2005 shall be calculated as if the 2005 Plan Year had begun on
January 1, 2005, and any individual who became a Participant on the Effective
Date had become a Participant on January 1, 2005.

 

 

(f)                                    Timing of
Employer Contribution Credits.  All Employer Contribution Credits with
respect to a Participant for a Plan Year shall be credited to the Participant’s
Employer Contribution Account as of December 1 of the Plan Year.

 

Section
1.10                                Pension Make-Up Credits.  Section 3.2(b) and Schedule 3.2(b) of the
Employee and Director Matters Agreement, dated June 15, 2004, between ADESA,
Inc. and ALLETE, Inc. require the Company to make five annual pension make-up
contributions to the Plan on behalf of the Employees listed in the
Schedule.  At the time such payments are
required, they shall be credited to the Participant’s Employer Contribution
Account.

 

Section
1.11                                Additional Credits and Charges to Accounts.

 

(a)                                  Reduction of
Accounts to Reflect Distributions.  On the date of any distribution with respect
to a Participant under the Plan, his Accounts shall be reduced by the amount of
the distribution.

 

(b)                                 Investment
Credits.  Investment Credits shall be
made to a Participant’s Accounts as provided in following paragraphs of this
Subsection:

 

(1)                                  The
Administrator shall, from time to time, select Investment Funds to be used to
determine Investment Credits under the Plan. 
The Administrator shall provide Participants with information regarding
the Funds and may, in its sole discretion, discontinue, substitute, or add a
Fund as of the first day of any month by providing at least 30 days’ prior
written notice to Participants.

 

(2)                                  Each
Participant may elect for his Accounts to be invested in one or more of the
Investment Funds by filing an Applicable Form with the Administrator.  A Participant may change his investment
election as of the beginning of any calendar month by filing a new Applicable
Form with the Administrator before the first day of such month.  If a Participant does not designate any
Investment Fund, he shall be deemed to have elected the Fixed Interest Fund, to
the extent that such Fund exists, or if such Fund is no longer available, the most
comparable available Investment Fund.

 

(3)                                  It is
anticipated that the Company will contribute to the Trust, not later than 30
days following the date as of which an amount transferred from a Predecessor
Plan, Elective Deferral, Employer Contribution Credit, or Make-Up Pension
Credit is credited to a Participant’s Account (“Contribution Period”), an
amount equal to such credit and that such amount will be invested by the
Trustee pursuant to the Participant’s election. 
If an anticipated contribution and investment are made within the
Contribution Period, the Investment Credits with respect to the affected
Participant’s Accounts shall be the amounts earned by the Trust with respect to
such Accounts, as determined by the Administrator.  If an anticipated contribution and investment
are not made within the

 

 

Contribution Period, the affected Participant’s
Accounts shall be credited with Investment Credits as if such contributions had
been made.

 

(4)                                  It is
anticipated that the Trustee will reinvest Trust assets to reflect a
Participant’s election to change Investment Funds within 30 days after the
effective date of the Participant’s election (“Reinvestment Period”).  If the Trustee changes the investment of
Trust assets to reflect to Participant’s election within the Reinvestment
Period, the Investment Credits with respect to the affected Participant’s
Accounts shall be the amounts earned by the Trust with respect to such
Accounts, as determined by the Administrator. 
If the Trustee does not change the investment of Trust assets to reflect
to Participant’s election within the Reinvestment Period the affected
Participant’s Accounts shall be credited with Investment Credits as if such
reinvestment had been made.

 

(5)                                  For purposes of
determining the Investment Credits with respect to the Fixed Income Fund, the
earnings of such Fund shall be deemed to be the stated rate for the Fund, as in
effect from time to time, rather than the actual return on Trust assets.

 

(6)                                  In determining
Investment Credits to be credited to an Account, the Administrator may make
reasonable estimates and approximations, as it deems appropriate.

 

(c)                                  No Required
Investment. 
Notwithstanding the preceding provisions, neither the Employers nor the
Trustee shall be obligated to invest any funds pursuant to a Participant’s
investment election.  The sole purpose of
such election is to provide a method for determining the Investment Credits
with respect to a Participant’s Accounts. 
Even if anticipated contributions and investments are made, the Participant
shall have no right to such investments, and his sole right to benefits under
the Plan shall be as a general unsecured creditor of the Company (and his
Employer, if his Employer is a Subsidiary).

 

Section
1.12                                Tax Supplement Benefit.  To help pay for any income taxes imposed on a
Participant upon a distribution resulting from a Change in Control Event, the
gross distribution payable to any Participant as a result of a Change in
Control Event shall be increased by 40%.

 

 DISTRIBUTIONS

 

Section
1.13                                Application of Article.  A Participant’s Grandfathered Deferral
Account and Grandfathered Employer Contribution Account shall be subject to the
distribution provisions set out in Appendix B, to the extent that such Accounts
derive from Grandfathered amounts transferred from the ADESA Corporation
Supplemental Executive Retirement Plan, and the distribution provisions set out
in Appendix C, to the extent that such Accounts derive from Grandfathered
amounts transferred from the

 

 

Automotive Finance Corporation
Supplemental Executive Retirement Plan. 
The remaining provisions of this Article shall apply only to the
Participant’s Deferral Account and Employer Contribution Account.

 

Section
1.14                                Participant Distribution Elections.

 

(a)                                    Subject to the following provisions of this
Article, distribution of a Participant’s Deferral Account and Employer
Contribution Account shall be made as elected by the Participant under this
Section.  To be effective, a Participant
distribution election must be filed with the Administrator on an Applicable
Form within the required filing period.

 

(b)                                 At the time he
makes a Deferral Election under the Plan, a Participant shall elect how the
amounts subject to the Deferral Election (including all Investment Credits with
respect thereto) shall be distributed from the Plan.  The Participant may elect as the Distribution
Commencement Date for such amounts either (i) the first day of the month
occurring at least 30 days after his Termination of Employment or (ii) the
earlier of such date and a specified date that is at least five years after the
date of his election.  The Participant
may elect for distribution of such amounts to be made (i) a lump sum payment,
(ii) in substantially equal annual installments (not to exceed ten), or (iii)
in a combination of such methods; provided, however, a distribution as of a
designated date must be made in a lump sum. 
If the Participant elects for an amount to be distributed in
installments, the first installment shall be paid as of the Distribution Commencement
Date, and remaining installments shall be paid as of the next following
anniversaries of that date.  The amount
of each such installment shall determined by dividing the amounts subject to
the installment election by the number of remaining installments (including the
installment being calculated).  For
example, if a Participant elects three annual installments, the first
installment shall be one-third of the amount subject to the election, the
second installment shall be one-half of the remaining amount subject to the
election, and the third installment shall be the entire remaining amount
subject to the election.

 

(c)                                  An individual
shall make an election within 30 days after becoming a Participant regarding
the form in which amounts derived from Employer Contribution Credits shall be
distributed.  In the case of an
individual who first becomes a Participant as of the Effective Date, such
election shall include the form in which any amounts derived from non-Grandfathered
amounts transferred to his Accounts pursuant to Section 2.3 and Pension Make-Up
Contribution Credits shall be distributed. 
The Distribution Commencement Date for such amounts shall be the first
day of the month occurring at least 30 days after the Participant’s Termination
of Employment.   The Participant may
elect for distribution of such amounts to be made (i) as a lump sum payment,
(ii) in substantially equal annual installments (not to exceed ten), or (iii)
in a combination of such methods.  If the
Participant elects for an amount to be distributed in installments, the first
installment shall be paid as of the Distribution Commencement Date, and
remaining installments shall be paid as of the next following anniversaries of
that date.  The amount of each such
installment shall determined by dividing the amounts subject to the installment
election by the number of remaining installments (including the installment
being calculated).  A Participant may
make a new distribution election for future

 

 

Employer Contribution
credits, effective as of the first day of the next following Plan Year, by
filing a new election form with the Administrator before the beginning of that
Plan Year.

 

Section
1.15                                Timing of Distributions.  In general, distributions pursuant to the
Plan shall be made (or begin, if payable in installments) on or as soon as
administratively feasible after the Benefit Commencement Date.  Notwithstanding any other provision of the
Plan, if a Participant who is a key employee (within the meaning of Code
Section 416(i)), becomes entitled to a distribution on account of Termination
of Employment for a reason other than death or disability (within the meaning
of Code Section 409A(a)(2)(C)), to the extent required by Section 409A,
distributions pursuant to the Plan shall be made (or begin, if payable in
installments), six months after the Participant’s Termination of Employment
(or, if earlier, as soon as feasible following the Participant’s death).

 

Section
1.16                                Death of the Participant and Beneficiary Designations.

 

(a)                                  Form and Time
of Payment.  If a
Participant dies before his Benefit Commencement Date, his Accounts shall be
distributed to his Beneficiary in the same form and manner as they would have
been distributed to the Participant, if he had lived.  If a Participant dies after his Benefit
Commencement Date, his remaining Accounts shall be distributed to his
Beneficiary in the form and manner of distribution in effect on the date of his
death.

 

(b)                                 Designation of
Beneficiaries.  A
Participant may designate a primary and contingent beneficiary or beneficiaries
on an Applicable Form.  The Participant
may change such designation at any time and for any reason.  If the Participant does not designate a
beneficiary, or if the Participant’s designation is for any reason illegal or
ineffective, or if the designated beneficiary(ies) do not survive the
Participant, the Participant’s beneficiary shall be (i) his surviving spouse,
if he is survived by his spouse; (ii) if there is no surviving spouse, his duly
appointed and qualified executor or other personal representative to be
distributed in accordance with the Participant’s will or applicable intestacy
law; or (iii) if there is no such representative duly appointed and qualified
within 60 days after the Participant’s death, then such persons who would be
entitled to share in the distribution of his estate under the applicable
intestacy law in the proportions required by such law.  The Administrator may determine the identity
of the beneficiaries, and in so doing may act and rely upon any information
that it may deem reliable upon reasonable inquiry, and upon any affidavit,
certificate, or other document believed by it to be genuine, and upon any
evidence believed by it to be sufficient.

 

Section
1.17                                Hardship Distributions.  Notwithstanding the preceding provisions of
this Article, a Participant shall be entitled to early distribution of his
Accounts upon the occurrence of an unforeseeable emergency (within the meaning
of Code Section 409A(a)(2)(B)(ii)) to the extent that such distribution is
permitted by this Section and Code Section 409A.  In general, an “unforeseeable emergency” is a
severe financial hardship to the Participant resulting from an illness or
accident of the Participant, his spouse, or his dependent (within the meaning of
Code Section 152(a)).  A distribution

 

 

may be made on account of
unforeseeable emergency only if the amounts distributed do not exceed the
amounts necessary to satisfy the emergency, plus amounts necessary to pay taxes
reasonably anticipated as a result of the distribution, after taking into
account the extent to which the severe financial hardship is or may be relieved
through reimbursement or compensation by insurance or otherwise or by
liquidation of the Participant’s assets (to the extent that the liquidation of
such assets would not itself cause severe financial hardship).  A Participant must request a distribution
pursuant to this Section by filing an Applicable Form with the Administrator
and providing such information as the Administrator reasonably requests.  If the Administrator determines, in its sole
discretion, that the requirements of this Section and Code Section 409A permit
a requested distribution, such distribution shall be made to the Participant in
a lump sum as soon as administratively feasible after the distribution is
approved.

 

Section
1.18                                Distribution on Change of Control Event.  As soon as administratively feasible
following any Change of Control Event with respect to a Participant, the
Participant’s entire Accounts shall be distributed to him in a lump sum
payment.

 

Section
1.19                                Minimum Installment Payment.  Notwithstanding a Participant’s election, the
minimum amount of any elected installment payment shall be equal to the lesser
of (i) the Participant’s remaining Accounts or (ii) $100,000.  

 

PLAN ADMINISTRATION

 

Section
1.20                                Powers and Responsibilities of the Administrator.  The Administrator shall have full
responsibility and discretionary authority to administer the Plan, including
(but not limited to) the following:

 

(a)                                  to interpret
Plan documents, decide all questions relating to an individual’s eligibility to
participate in the Plan, require information from a Participant or Beneficiary,
determine whether a Participant has Terminated Employment, determine the
amount, manner, and timing of distributions under the Plan, resolve any claim
for benefits in accordance with Section 5.3, and appoint or employ advisors,
including legal counsel, to render advice with respect to any of the it
responsibilities under the Plan.

 

(b)                                 to maintain
sufficient records to determine each Participant’s eligibility to participate
and the adjustments to his Accounts; and

 

(c)                                  to create forms
and adopt rules as it deems necessary, desirable, or appropriate in the
administration of the Plan.

 

When making a determination
or calculation, the Administrator shall be entitled to rely upon information
furnished by a Participant or Beneficiary, the Employers, or the legal counsel
of an Employer.  Subject to a claimant’s
appeal right under Section 5.3, all acts and decisions of the Administrator
shall be final, binding, and conclusive.

 

 

Section
1.21                                Indemnification of
Administrator.  The
Administrator shall be indemnified and held harmless by the Employers with
respect to any actual or alleged breach of responsibilities performed or to be
performed hereunder.

 

Section
1.22                                Claims and Claims Review Procedure.

 

(a)                                  Defined Terms.  For purposes of this Section, the following
terms shall have the meanings set out below:

 

(1)                                  “Benefit Claim”
means a request or claim for a benefit under the Plan, including a claim for a
greater benefits than have been paid.

 

(2)                                  “Denial” or “Denied”
refers to any of the following:  a
denial, reduction, termination, or failure to provide or make payment (in whole
or in part) of a benefit, including determinations based on eligibility.

 

(b)                                 Initial Claim
Filing. All Benefit Claims must be in accordance with procedures established
by the Administrator from time to time. 
A Benefit Claim and any appeal thereof may be filed by the claimant or
his authorized representative.

 

(c)                                  Initial Review
of Benefit Claim.  The
Administrator shall provide the claimant with written or electronic notice of
its approval or Denial of a properly filed Benefit Claim within 90 days after
receiving the claim, unless special circumstances require an extension of the
decision period.  If special
circumstances require an extension of the time for processing the claim, the
initial 90-day period may be extended for up to an additional 90 days.  If an extension of the initial 90-day period
is required, the Administrator shall provide written notice of the required
extension before the end of the initial 90-day period, which shall (i) specify
the circumstances requiring an extension and (ii) the date by which the Administrator
expects to make a decision.

 

(d)                                 Initial Denial
of Benefit Claim.  If a
Benefit Claim is Denied, the Administrator shall provide the claimant with
written or electronic notice containing (i) the specific reasons for the
Denial, (ii) references to the applicable Plan provisions on which the Denial
is based, (iii) a description of any additional material or information needed
and why such material or information is necessary, and (iv) a description of
the applicable review process and time limits.

 

(e)                                  Appeal of a
Claim Denial.  A claimant
may appeal the Denial of a claim for benefits by filing a written appeal with
the Administrator within 60 days after the claimant receives written or
electronic notice of the Denial.  The
claimant’s appeal shall be deemed filed on receipt by the Administrator.  If a claimant does not file a timely appeal,
the Administrator’s decision shall be deemed final, conclusive, and binding on
all persons.

 

(f)                                    Decision of
Appeal.  The Administrator shall
provide the claimant with written or electronic notice of its decision on
appeal within 60 days after receipt of the claimant’s appeal request, unless
special circumstances require an extension of this time period.  If special circumstances require an extension
of the time to process the appeal,

 

 

the processing period may be
extended for up to an additional 60 days. 
If an extension is required, the Administrator shall provide written
notice of the required extension to the claimant before the end of the original
60-day period, which shall specify the circumstances requiring an extension and
the date by which the Administrator expects to make a decision.  If the Benefits Claim is Denied on appeal,
the Administrator shall provide the claimant with written or electronic notice
containing a statement that the claimant is entitled to receive, upon request
and free of charge, reasonable access to and copies of all documents, records,
and other information relevant to the Benefits Claim, as well as the specific
reasons for the Denial on appeal and references to the applicable Plan
provisions on which the Denial is based. 
The Administrator’s decision on appeal shall be final, conclusive, and
binding on all persons, subject to the claimant’s right to file a civil actions
pursuant to ERISA Section 502(a).

 

Section
1.23                                Income and Employment Tax Withholding.  The Employers or the Trustee shall withhold
from any benefits payable under the Plan such amounts as they deem necessary to
satisfy applicable income and employment tax withholding.

 

Section
1.24                                Notices.  Any notice or document required to be
provided to the Administrator shall be properly provided, only if personally
delivered to or mailed, by registered mail, postage pre-paid, to the following:

 

Corporate
Benefits Manager

ADESA,
Inc.

13085
Hamilton Crossing Boulevard

Carmel,
Indiana  46032

 

or as otherwise provided in written notice to the
Participant.

 

Any notice or document
required to be provided to the Participant or Beneficiary shall be properly
given or filed, only if delivered to the Participant or if mailed by first
class mail to the Participant or Beneficiary at his most recent home  address, as listed on the records of the
Employer.

 

AMENDMENT AND TERMINATION OF THE PLAN

 

The Company shall have the
right to amend or terminate the Plan at any time: provided, however, no such
amendment of termination shall (i) result in an acceleration of benefit
payments in violation of Code Section 409A and the guidance thereunder, (ii)
result in any other violation of Section 409A or the guidance thereunder, or
(iii) reduce the amount allocated to a Participant’s Accounts as of the date of
the amendment or termination or adversely affect the Participant’s rights with
respect to such Accounts.

 

 

MISCELLANEOUS

 

Section
1.25                                Nature of Participants’ Rights.  The Company and a Participant’s Employer (if
the Participant is employed by a Subsidiary) shall be responsible for the
payment of all benefits under the Plan with respect to that Participant, to the
extent that such benefits are not payable from the Trust.  The Employers shall not have any obligation
to set aside assets for the provision of benefits under the Plan and, if any
such funds are contributed to the Trust, they shall remain subject to the
claims of the Employers’ creditors.  No
Participant or Beneficiary shall have any rights to any assets of an Employer
or the Trust other than as a general creditor of the Company and his Employer.

 

Section
1.26                                Spendthrift Clause.  No benefit or interest available hereunder
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors of a
Participant or Beneficiary, either voluntarily or involuntarily.

 

Section
1.27                                Counterparts.  This Plan may be executed in any number of
counterparts, each of which shall constitute but one and the same instrument
and may be sufficiently evidenced by any one counterpart.

 

Section
1.28                                No Enlargement of Employment Rights.  Nothing contained in the Plan shall be
construed as a contract of employment between an Employer and any person, nor
shall the Plan be deemed to give any person the right to be retained in the
employ of an Employer or limit the right of an Employer to employ or discharge
any person with or without cause, or to discipline any Employee.

 

Section
1.29                                Limitations on Liability.  Notwithstanding any of the preceding
provisions of the Plan, none of the Employers, the Administrator, and each
individual acting as an employee or agent of any of them shall be liable to any
Participant or Beneficiary for any claim, loss, liability, or expense incurred
in connection with the Plan, except when the same shall have been judicially
determined to be due to the gross negligence or willful misconduct of such
person.

 

Section
1.30                                Incapacity of Participant or
Beneficiary.  If any
person entitled to receive a distribution under the Plan is physically or
mentally incapable of personally receiving and giving a valid receipt for any
payment due (unless prior claim therefor shall have been made by a duly
qualified guardian or other legal representative), then, unless and until claim
therefor shall have been made by a duly appointed guardian or other legal
representative of such person, the Administrator may provide for such payment
or any part thereof to be made to any other person or institution then
contributing toward or providing for the care and maintenance of such
person.  Any such payment shall be a
payment for the account of such person and a complete discharge of any
liability of the Employers and the Plan.

 

 

Section
1.31                                Corporate Successors.  The Plan shall not be automatically
terminated by a transfer or sale of assets of the Company or by the merger or
consolidation of the Company into or with any other corporation or other entity
(“Transaction”), but the Plan shall be continued after the Transaction only if
and to the extent that the transferee, purchaser, or successor entity agrees to
continue the Plan.

 

Section
1.32                                Evidence.  Evidence required of anyone under the Plan
may be by certificate, affidavit, document, or other information that is
signed, made, or presented by the proper party or parties and that the person
relying thereon considers pertinent and reliable.

 

Section
1.33                                Action by Employer.  Any action required of or permitted by an
Employer under the Plan shall be by resolution of its board of directors or by
a person or persons authorized by resolution of such board to act on its behalf
with respect to the Plan.

 

Section
1.34                                Severability.  If any provision of the Plan is held to be
illegal or invalid for any reason, such illegality or invalidity shall not
affect the remaining provisions of the Plan, and the Plan shall be construed
and endorsed as if such illegal or invalid provisions had never been contained
in the Plan.

 

To signify the adoption of
the ADESA, Inc. 2005 Supplemental Executive Retirement Plan, the duly
authorized Chief Executive Officer of ADESA, Inc. has signed this document on
the date specified below.

 

ADESA, Inc.

 

	
  Date: March 28, 2005

  	
  By:

  	
  David G. Gartzke

  

 

 

APPENDIX A 

 

COVERED POSITIONS

 

All employees of an Employer
at pay grade 15 or higher.

 

 

APPENDIX B

 

Distribution Provisions Applicable to Grandfathered Deferral Account
and Grandfathered Employer Contribution Account Derived From Amounts
Transferred From

ADESA Corporation Supplemental Executive Retirement Plan

 

ARTICLE IVB

DISTRIBUTIONS

 

4.1B                         Application
of Article.  This Article,
rather than Article IV of the Plan, shall apply to the distribution of a
Participant’s Grandfathered Deferral Account and Grandfathered Employer
Contribution Account to the extent that such Accounts derive from amounts
transferred to the Plan from the ADESA Corporation Supplemental Executive
Retirement Plan.  All amounts credited to
the Covered Accounts were deferred and vested before January 1, 2005, and the
ADESA Corporation Supplemental Executive Retirement Plan (including the
provisions of this Article IVB governing Covered Accounts) has not been
materially modified within the meaning of Code Section 409A and the guidance
thereunder on or after October 3, 2004. 
Therefore, the amounts governed by this Article are not subject to the
provisions of Code Section 409A.

 

4.2B                         For purposes of
this Article, the following terms shall have the meanings specified below:

 

(a)                               “Covered
Accounts” means the Accounts subject to this Article.

 

(b)                                 “Predecessor
Plan” means the ADESA Corporation Supplemental Executive Retirement Plan.

 

4.3B                         Time of
Payment of Covered Accounts.  A Participant’s
Covered Accounts shall be or shall commence to be distributed to or for the
benefit of a Participant (or his designated beneficiary) within a reasonable
period following the earlier of (i) the date on which the Participant
terminates employment with all the Employers or (ii) the effective date of any
Change in Control of the Company (as defined in the Predecessor Plan).

 

4.4B                         Manner
of Payment of Benefits.  A
Participant’s Covered Accounts shall be distributed in cash in:

 

(a)                    A
single lump sum payment;

 

(b)                   Annual
installment payments over a period not in excess of ten years; or

 

(c)                    A
combination of the methods specified in subsections (a) and (b).

 

4.5B                         Benefit
Payment Elections.  A
Participant may elect the manner in which his Covered Accounts will be
distributed under Section 4.4B in accordance with the terms and conditions of
this Section.  To elect annual
installment payments under Subsection 4.4B(b) or a combination of a single lump
sum payment and annual installment payments under Subsection 4.4B(c), a
Participant must file an election form

 

 

with the Administrator (on a form or forms prescribed by the
Administrator).  To be effective, the
Participant’s election of a payment method must be filed with the Administrator
prior to the beginning of the calendar year in which the Participant becomes
entitled to a payment of benefits under this Article.  If no election is made or if the election is
not timely or properly made, distribution will be made in the form of a single
lump sum payment.  Any election
effectively made for purposes of this Section shall remain in effect until such
time as it is superseded by a subsequent election effectively made for purposes
of this Section.

 

4.6B                         Death
of the Participant and Beneficiary Elections.

 

(a)                    Form
and Time of Payment.  In the event a
Participant dies prior to the time his Covered Accounts commence to be
distributed, his Covered Accounts shall be paid to his designated beneficiary
or beneficiaries in accordance with the benefit election in effect for such
Participant as of the date of death.  Such
distribution shall be made as soon as practicable following the Participant’s
death.  In the event a Participant dies
after the distribution of his Covered Accounts has commenced, his remaining
Covered Accounts, if any, shall be paid to his designated beneficiary or
beneficiaries in accordance with the method of distribution being used prior to
the Participant’s death.

 

(b)                   Designation
of Beneficiaries.  The Participant
may designate a primary and contingent beneficiary or beneficiaries on forms
provided by the Administrator.  Such
designation may be changed at any time for any reason by the Participant.  If the Participant fails to designate a
beneficiary, or if such designation shall for any reason be illegal or
ineffective, or if the designated beneficiary(ies) shall not survive the
Participant, his Covered Accounts shall be paid (i) to his surviving spouse;
(ii) if there is no surviving spouse, to the duly appointed and qualified
executor or other personal representative of the Participant to be distributed
in accordance with the Participant’s will or applicable intestacy law; or (iii)
in the event that there shall be no such representative duly appointed and
qualified within 60 days after the date of death of the Participant, then to
such persons as, at the date of his death, who would be entitled to share in
the distribution of the Participant’s estate under the provisions of the
applicable statutes then in force governing the descent of intestate property,
in the proportions specified in such statute.  The Administrator may determine the identity
of the distributees, and in so doing may act and rely upon any information it
may deem reliable upon reasonable inquiry, and upon any affidavit, certificate,
or other document believed by it to be genuine, and upon any evidence believed
by it to be sufficient.

 

4.7B                         Advance
Payments to Participants.  The
Administrator may make payment to a Participant in advance of the date such
payment is due pursuant to Section 4.3B (an “Advance Payment”), to the extent
(i) funds of the Employers are available for such purpose; (ii) the
Administrator determines that the Participant has suffered an unforeseeable
emergency which has caused a need for an Advance Payment; and (iii) the waiver
by the Administrator of the election to defer Compensation under the Plan is
insufficient, as determined by the Administrator in its discretion, to satisfy
such hardship.  For purposes of this
Section, an unforeseeable emergency is a severe financial hardship to a
Participant resulting from a sudden and unexpected illness or accident of the
Participant or of a dependent of the Participant (as defined in Code section
152(a)), loss of the

 

 

Participant’s property due to casualty, or other similar extraordinary
and unforeseen circumstances arising as a result of events beyond the control
of the Participant.  The circumstances
that will constitute an unforeseeable emergency will depend upon the facts of
each case; however, the Administrator shall not grant any waiver of a
Participant’s deferral election or make an Advance Payment to the extent that
his hardship may be relieved (i) through reimbursement or compensation by
insurance or otherwise; (ii) by liquidation of the Participant’s assets, to the
extent liquidation of such assets would not itself cause severe financial
hardship; or (iii) by cessation of salary reduction contributions under any
Code Sec. 401(k) plan.  An unforeseeable
emergency shall not include the need to send the Participant’s child to college
or the desire to purchase a home.  An
Advance Payment made under this Section shall be made only to the extent
reasonably needed to satisfy the emergency need.

 

 

APPENDIX C 

 

Distribution Provisions Applicable to Grandfathered Deferral Account
and Grandfathered Employer Contribution Account Derived From Grandfathered
Amounts Transferred From the Automotive Finance Corporation Supplemental
Executive Retirement Plan

 

ARTICLE IVC

DISTRIBUTIONS

 

Application of Article.  This Article,
rather than Article IV of the Plan, shall apply to the distribution of a
Participant’s Grandfathered Deferral Account and Grandfathered Employer
Contribution Account to the extent that such Accounts derive from amounts
transferred to the Plan from the Automotive Finance Corporation Supplemental
Executive Retirement Plan.  All amounts
credited to the Covered Accounts were deferred and vested before January 1,
2005, and the Automotive Finance Corporation Supplemental Executive Retirement
Plan (including the provisions of this Article IVC governing Covered Accounts)
has not been materially modified within the meaning of Code Section 409A and
the guidance thereunder on or after October 3, 2004.  Therefore, the amounts governed by this
Article are not subject to the provisions of Code Section 409A.

 

Definitions.  For purposes
of this Article, the following terms shall have the meanings specified below:

 

Section 1.35                                “Covered
Accounts” means the Accounts subject to this Article.

 

Section 1.36                                “Predecessor
Plan” means the Automotive Finance Corporation Supplemental Executive
Retirement Plan.

 

Time of Payment of Benefits.  A Participant’s Covered Accounts shall be or
shall commence to be distributed to or for the benefit of a Participant (or his
designated beneficiary) within a reasonable period following the earliest of
(i) the date on which the Participant terminates employment with all the
Employers, (ii) the date on which the Participant is no longer eligible to
participate in the Plan, or (iii) the effective date of any Change in Control
of the Company (as defined in the Predecessor Plan).

 

Manner of Payment of Benefits.  A Participant’s Covered Accounts shall be
distributed in cash in:

 

Section 1.37                                A single lump
sum payment;

 

Section 1.38                                Annual
installment payments over a period not in excess of ten years; or

 

Section 1.39                                A combination
of the methods specified in subsections (a) and (b).

 

 

Benefit Payment Elections.  A Participant may elect the manner in which
his Covered Accounts will be distributed under Section 4.4C in accordance with
the terms and conditions of this Section. 
To elect annual installment payments under Subsection 4.4C(b) or a
combination of a single lump sum payment and annual installment payments under
Subsection 4.4C(c), a Participant must file an election form with the
Administrator (on a form or forms prescribed by the Administrator).  To be effective, the Participant’s election
of a payment method must be filed with the Administrator prior to the beginning
of the calendar year in which the Participant becomes entitled to a payment of
benefits under this Article.  If no
election is made or if the election is not timely or properly made,
distribution will be made in the form of a single lump sum payment.  Any election effectively made for purposes of
this Section shall remain in effect until such time as it is superseded by a
subsequent election effectively made for purposes of this Section.

 

Death of the Participant and Beneficiary Designations.

 

Section 1.40                                Form and Time
of Payment.  In the
event a Participant dies prior to the time his Covered Accounts commence to be
distributed, his Covered Accounts shall be paid to his designated beneficiary
or beneficiaries in accordance with the benefit election in effect for such
Participant as of the date of death, or in a single lump sum in the event no such
benefit election is in effect as of such date. 
Such distribution shall be made as soon as practicable following the
Participant’s death.  In the event a
Participant dies after the distribution of his Covered Accounts has commenced,
his remaining Covered Accounts, if any, shall be paid to his designated
beneficiary or beneficiaries in accordance with the method of distribution
being used prior to the Participant’s death.

 

Section 1.41                                Designation of
Beneficiaries.  The
Participant may designate a primary and contingent beneficiary or beneficiaries
on forms provided by the Administrator. 
Such designation may be changed at any time for any reason by the
Participant.  If the Participant fails to
designate a beneficiary, or if such designation shall for any reason be illegal
or ineffective, or if the designated beneficiary(ies) shall not survive the
Participant, his Covered Accounts shall be paid (i) to his surviving spouse;
(ii) if there is no surviving spouse, to the duly appointed and qualified
executor or other personal representative of the Participant to be distributed
in accordance with the Participant’s will or applicable intestacy law; or (iii)
in the event that there shall be no such representative duly appointed and
qualified within 60 days after the date of death of the Participant, then to
such persons as, at the date of his death, who would be entitled to share in
the distribution of the Participant’s estate under the provisions of the
applicable statutes then in force governing the descent of intestate property,
in the proportions specified in such statute. 
The Administrator may determine the identity of the distributees, and in
so doing may act

 

 

and rely upon any
information it may deem reliable upon reasonable inquiry, and upon any
affidavit, certificate, or other document believed by it to be genuine, and
upon any evidence believed by it to be sufficient.

 

Advance Payments to Participants.  The Administrator may make payment to a
Participant in advance of the date such payment is due pursuant to Section 4.3C
(an “Advance Payment”), to the extent (i) funds of the Employers are available
for such purpose; (ii) the Administrator determines that the Participant has
suffered an unforeseeable emergency which has caused a need for an Advance
Payment; and (iii) the waiver by the Administrator of the election to defer
Compensation under the Plan is insufficient, as determined by the Administrator
in its discretion, to satisfy such hardship. 
For purposes of this Section, an unforeseeable emergency is a severe
financial hardship to a Participant resulting from a sudden and unexpected
illness or accident of the Participant or of a dependent of the Participant (as
defined in Code Section 152(a)), loss of the Participant’s property due to
casualty, or other similar extraordinary and unforeseen circumstances arising
as a result of events beyond the control of the Participant.  The circumstances that will constitute an
unforeseeable emergency will depend upon the facts of each case; however, the
Administrator shall not grant any waiver of a Participant’s deferral election
or make an Advance Payment to the extent that his hardship may be relieved (i)
through reimbursement or compensation by insurance or otherwise; (ii) by
liquidation of the Participant’s assets, to the extent liquidation of such
assets would not itself cause severe financial hardship; or (iii) by cessation
of salary reduction contributions under any Code Sec. 401(k) plan.  An unforeseeable emergency shall not include
the need to send the Participant’s child to college or the desire to purchase a
home.  An Advance Payment made under this
Section shall be made only to the extent reasonably needed to satisfy the
emergency need.

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