EXHIBIT 10.16
__________________________________________
SIXTH AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
BAGEL STORE DEVELOPMENT FUNDING, L.L.C.
___________________________________________
DECEMBER 5, 1997
SIXTH AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
BAGEL STORE DEVELOPMENT FUNDING, L.L.C.
(FORMERLY KNOWN AS
EINSTEIN BROS. EQUITY FUNDING, L.L.C.)
This Sixth Amended and Restated Limited Liability Company Agreement of
Bagel Store Development Funding, L.L.C. (formerly known as Einstein Bros. Equity
Funding, L.L.C.) (the "Company") is made as of December 5, 1997.
RECITALS
The Company was formed pursuant to the Delaware Limited Liability
Company Act, 6 Del.C. (S)18-101, et seq., as amended from time to time (the
"Delaware Act"), on December 7, 1995. Additional Members (as defined herein)
were admitted to the Company on December 29, 1995 and March 8, 1996 pursuant to
an Amended and Restated Limited Liability Company Agreement dated as of December
29, 1995 and a Second Amended and Restated Limited Liability Company Agreement
dated as of March 8, 1996. The Members entered into a Third Amended and
Restated Limited Liability Company Agreement dated as of March 29, 1996, a
Fourth Amended and Restated Limited Liability Company Agreement dated as of July
1, 1996 and a Fifth Amended and Restated Limited Liability Company Agreement
dated as of April 1, 1997 (the "Fifth Amendment and Restated Agreement"). This
Sixth Amended and Restated Limited Liability Company Agreement (the
"Agreement"), dated as of December 5, 1997, amends and restates the Fifth
Amended and Restated Limited Liability Company Agreement.
The Company, pursuant to the terms of this Agreement, shall continue
as a limited liability company under the Delaware Act.
ARTICLE I
DEFINED TERMS
Section 1.1 Definitions. Unless the context otherwise requires, the
terms defined in this Article I shall, for the purposes of this Agreement, have
the meanings herein specified.
"Affiliate" means with respect to a specified Person, any Person that
directly or indirectly controls, is controlled by, or is under common control
with, the
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specified Person. As used in this definition, the term "control" means the
possession, directly or indirectly, of the Power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.
"Agreement" means this Limited Liability Company Agreement, as
amended, modified, supplemented or restated from time to time.
"Area Developer" means a Person who has entered into an area
development agreement with Bagel Corp. and in whom Bagel Corp. has made an
investment in the form of convertible debt.
"Assignee" means any Person who is an assignee of a Member's interest
in the Company, or part thereof, and who does not become a Member pursuant to
Section 13.1 hereof.
"Bagel Corp." means Einstein/Noah Bagel Corp., a Delaware corporation.
"Bagel Partners" means Einstein/Noah Bagel Partners, L.P., a Delaware
limited partnership.
"Bagel Partners Partnership Agreement" means the limited partnership
agreement of Bagel Partners dated as of December 5, 1997, as it may be amended
from time to time.
"Bankruptcy" has the meaning given it in Section 18-101 of the
Delaware Act.
"BCI" means Boston Chicken, Inc., a Delaware corporation.
"Capital Account" means, with respect to any Member or Assignee, the
account maintained for such Member or Assignee in accordance with the provisions
of Section 4.4 hereof.
"Capital Contribution" means, with respect to any Member, the
aggregate amount of money actually contributed to the Company pursuant to
Section 4.1 hereof with respect to the Units held by such Member. In the case
of a Member or Assignee who acquires an interest in the Company by virtue of an
assignment in accordance with the terms of this Agreement, "Capital
Contribution" has the meaning
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set forth in Section 4.4.1 hereof.
"Certificate" means the Certificate of Formation and any and all
amendments thereto and restatements thereof filed on behalf of the Company with
the office of the Secretary of State of the State of Delaware pursuant to the
Delaware Act.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any corresponding federal tax statute enacted after the date of this
Agreement. A reference to a specific section of the Code refers not only to
such specific section but also to any corresponding provision of any federal tax
statute enacted after the date of this Agreement, as such specific section or
corresponding provision is in effect on the date of application of the
provisions of this Agreement containing such reference.
"Company" means Bagel Store Development Funding, L.L.C., the limited
liability company heretofore formed under the name Einstein Bros. Equity
Funding, L.L.C. and continued under and pursuant to the Delaware Act and this
Agreement.
"Covered Person" means a Member, any Manager, any Affiliate of a
Member or of any Manager, any officers, directors, shareholders, partners,
employees, representatives or agents of a Member, any Manager or their
respective Affiliates, any member of the Advisory Committee or designated
alternate to the Advisory Committee, or any officer, employee or agent of the
Company or its Affiliates, including without limitation Bagel Corp. and its
officers, directors, shareholders and employees at any time that Bagel Corp. is
providing services to the Company.
"Delaware Act" means the Delaware Limited Liability Company Act,
6 Del.C. (S) 18-101, et seq., as amended from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Member" means a Member which is (i) an "Employee Benefit Plan"
within the meaning of and subject to the provisions of ERISA, (ii) a "Plan"
within the meaning of and subject to Section 4975 of the Code or (iii) an entity
the assets of which constitute assets of an Employee Benefit Plan or a Plan
under Department of Labor Regulations 29 C.F.R. Section 2510.3-101.
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"Excess Warrants" means warrants to purchase 13,640 shares of common
stock of Bagel Corp. held by the Company as of December 5, 1997.
"Fiscal Year" means the accounting period selected by the Manager or
Managers or any portion of such period for which the Company is required to
allocate Profits, Losses and other items of Company income, gain, loss or
deduction pursuant to Article VIII hereof.
"Gross Asset Value" means, with respect to any asset, such asset's
adjusted basis for federal income tax purposes, except as follows:
(i) the initial Gross Asset Value of any asset
contributed by a Member to the Company shall be the gross
fair market value of such asset, as agreed to by the
contributing Member and the Manager or Managers;
(ii) the Gross Asset Value of all Company assets
shall be adjusted to equal their respective gross fair
market values, as determined by the Manager or Managers, as
of the following times: (a) the acquisition of an additional
interest in the Company by any new or existing Member in
exchange for more than a de minimis Capital Contribution;
(b) the distribution by the Company to a Member or Assignee
of more than a de minimis amount of Company assets as
consideration for an interest in the Company; and (c) the
liquidation of the Company within the meaning of Treasury
Regulation Section 1.704-1(b)(2)(ii)(g); provided, however,
that adjustments pursuant to clause (a) and clause (b) of
this sentence shall be made only if the Manager or Managers
reasonably determine that such adjustments are necessary or
appropriate to reflect the relative economic interests of
the Members and Assignees in the Company; and
(iii) the Gross Asset Value of any Com-
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pany asset distributed to any Member or Assignee shall be
the gross fair market value of such asset on the date of
distribution, as determined by the distributee Member or
Assignee and the Manager or Managers.
"Liquidating Trustee" has the meaning set forth in Section 14.3
hereof.
"Majority Vote" means, with respect to any group of Members as of any
particular time, the vote of Members in such group whose Units at such time
exceed one-half of the outstanding Units of all Members in such group at such
time and whose Capital Account balances at such time exceed one-half of the
outstanding Capital Account balances of all Members in such group at such time,
in each case ignoring any Units or Capital Account balances held by Assignees.
"Manager" or "Managers" means the Person or Persons designated by the
Members in Article VI hereof as the manager of the Company within the meaning of
the Delaware Act and shall include all successors appointed pursuant to the
provisions of this Agreement. References to the "Manager", the "Managers" or
the "Manager or Managers" shall all be construed to refer to the Person or
Persons then serving as Managers of the Company.
"Member" means any Person named as a member of the Company on Schedule
A hereto and includes any Person admitted as a Substitute Member pursuant to the
provisions of this Agreement, and "Members" means two or more of such Persons
when acting in their capacities as members of the Company. For purposes of the
Delaware Act, the Members shall constitute one class or group of members.
"Other Business Entity" has the meaning given it in Section 18-209 of
the Delaware Act.
"Permitted Temporary Investments" means Treasury securities, bank
certificates of deposit and time deposits, in each case having a maturity of one
year or less, commercial paper or money-market instruments.
"Person" includes any individual, corporation, association,
partnership (general or limited), joint venture, trust, estate, limited
liability company, or other legal entity or organization.
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"Profits" and "Losses" means, for each Fiscal Year, an amount equal to
the Company's taxable income or loss for such Fiscal Year, determined in
accordance with Section 703(a) of the Code (but including in taxable income or
loss, for this purpose, all items of income, gain, loss or deduction required to
be stated separately pursuant to Section 703(a)(1) of the Code), with the
following adjustments:
(ii) any income of the Company exempt from federal
income tax and not otherwise taken into account in computing
Profits or Losses pursuant to this definition shall be added
to such taxable income or loss;
(iii) any expenditures of the Company described in
Section 705(a)(2)(B) of the Code (or treated as expenditures
described in Section 705(a)(2)(B) of the Code pursuant to
Treasury Regulation Section 1.704-1 (b)(2)(iv)(i)) and not
otherwise taken into account in computing Profits or Losses
pursuant to this definition shall be subtracted from such
taxable income or loss;
(iv) in the event the Gross Asset Value of any Company
asset is adjusted in accordance with paragraph (ii) or
paragraph (iii) of the definition of "Gross Asset Value"
above, the amount of such adjustment shall be taken into
account as gain or loss from the disposition of such asset
for purposes of computing Profits or Losses; and
(v) gain or loss resulting from any disposition of any
asset of the Company with respect to which gain or loss is
recognized for federal income tax purposes shall be computed
by reference to the Gross Asset Value of the asset disposed
of, notwithstanding that the adjusted tax basis of such
asset differs from its
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Gross Asset Value.
"Substitute Member" means a Person who is admitted to the Company as a
Member pursuant to Section 13.1 hereof, and who is named as a Member on Schedule
A to this Agreement.
"Tax Matters Partner" has the meaning set forth in Section 11.1
hereof.
"Treasury Regulations" means the income tax regulations, including
temporary regulations, promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
"Unit" means an interest in the Company representing such fractional
part of the interest of all Members and Assignees pursuant to this Agreement as
is equal to one divided by the total number of Units.
ARTICLE II
CONTINUATION AND TERM
Section II.1 Continuation.
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II.1.1 The Members hereby agree to continue the Company as a
limited liability company under and pursuant to the provisions of the
Delaware Act and agree that the rights, duties and liabilities of the
Members and the Managers shall be as provided in the Delaware Act,
except as otherwise provided herein.
II.1.2 The name and mailing address of each Member and Assignee
shall be listed on Schedule A attached hereto. The Manager or
Managers shall update Schedule A from time to time as necessary to
accurately reflect the information therein. Any amendment or revision
to Schedule A made in accordance with this Agreement shall not be
deemed an amendment to this Agreement. Any reference in this
Agreement to Schedule A shall be deemed to be a reference to Schedule
A as amended and in effect from time to time.
Section II.2 Name. The name of the Company continued hereby is Bagel
Store Development Funding, L.L.C. The business of the Company may be
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conducted upon compliance with all applicable laws under any other name
designated by the Managers. The Managers may amend the Certificate to change the
name of the Company to any name designated by the Managers.
Section II.3 Term. The term of the Company commenced on the date the
Certificate was filed in the office of the Secretary of State of the State of
Delaware and shall continue until December 31, 2005, unless dissolved before
such date in accordance with the provisions of this Agreement.
Section II.4 Registered Agent and Office. The Company's registered
agent and office in Delaware shall be The Corporation Trust Company, Corporation
Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. At any time, the
Managers may designate another registered agent and/or registered office.
Section II.5 Principal Place of Business. The principal place of
business of the Company shall be at 14123 Denver ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇. Upon ten days notice to the Members, the Managers may
change the location of the Company's principal place of business.
Section II.6 Qualification in Other Jurisdictions. The Managers may
cause the Company to be qualified, formed or registered under assumed or
fictitious name statutes or similar laws in any jurisdiction in which the
Company transacts business. Any Manager, as an authorized person, within the
meaning of the Delaware Act, may execute, deliver and file any certificates (and
any amendments and/or restatements thereof) necessary for the Company to qualify
to do business in a jurisdiction in which the Company may wish to conduct
business.
ARTICLE III
PURPOSE AND POWERS OF THE COMPANY
Section III.1 Purpose. The Company is formed for the object and
purpose of, and the nature of the business to be conducted and promoted by the
Company is, (i) investing in equity securities of Area Developers, (ii)
investing in warrants to purchase shares of Bagel Corp. and (iii) engaging in
any and all activities necessary or incidental to the foregoing and any other
legal business.
Section III.2 Powers of the Company. The Company shall have the power
and authority to take any and all actions necessary, appropriate, proper,
advisable, incidental or convenient to or for the furtherance of the purpose set
forth in Section 3.1, including, but not limited to, the power:
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(a) to conduct its business, carry on its operations and
have and exercise the powers granted to a limited liability
company by the Delaware Act in any state, territory, district or
possession of the United States, or in any foreign country that
may be necessary, convenient or incidental to the accomplishment
of the purposes of the Company;
(b) subject to the provisions of Section 3.1, to purchase,
take, receive, subscribe for or otherwise acquire, own, hold,
vote, use, employ, sell, mortgage, lend, pledge or otherwise
dispose of, and otherwise use and deal in and with, shares or
other interests in or obligations of Area Developers and Bagel
Corp., or rights to acquire any of the foregoing;
(c) to purchase, take, receive, subscribe for or otherwise
acquire, own, hold, vote, use, employ, sell, mortgage, lend,
pledge or otherwise dispose of, and otherwise use and deal in and
with Permitted Temporary Investments;
(d) to enter into, perform and carry out contracts of any
kind, including, without limitation, contracts with any Manager
or any Member or any Affiliate of any of them, or any agent of
the Company necessary to, in connection with, convenient to, or
incidental to the accomplishment of the purpose of the Company;
(e) to lend money;
(f) to ▇▇▇ and be sued, complain and defend, and
participate in administrative or other proceedings, in its name;
(g) to elect and designate one or more managers of the
Company in accordance with Article VI hereof and to appoint
officers, employees and agents of the Company, and define their
duties and fix their compensation;
(h) to indemnify any Person in accordance with the Delaware
Act;
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(i) to cease its activities and cancel its Certificate;
(j) to negotiate, enter into, renegotiate, extend, renew,
terminate, modify, amend, waive, execute, acknowledge or take any
other action with respect to any contract or security agree ment
in respect of any assets of the Company;
(k) to borrow money and issue evidences of indebtedness,
and to secure the same by a mortgage, pledge or other lien on the
assets of the Company;
(l) to take actions to protect and preserve the Company's
assets, including insuring the business and assets of the Company
against risks;
(m) to hold Company assets in the name of the Company or in
the name of one or more nominees;
(n) to open one or more bank accounts in the name of the
Company or in any other name in which the Company's funds are to
be held, make deposits therein, draw funds therefrom and deal in
or with the Company's funds;
(o) to make distributions of the Company's funds or assets
to the Members as provided for by this Agreement;
(p) to make such income tax elections as may be
appropriate or desirable, as contemplated by the Code and the
Treasury Regulations; prepare and file tax returns for the
Company with federal, state and local authorities; file amend
ments to such returns; participate in audits of such returns;
consent to extensions relating to such returns; execute documents
relating to the settlement of tax proceedings involving the
Company or its tax returns; participate in administrative and
judicial proceedings, including appeals, relating to the
Company's tax returns or its tax liabilities; and settle issues
relating to the Company's federal and, to the extent required,
state and local income tax returns even though the Members rather
than the Company shall be subject to tax as so determined;
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(q) to pay, collect, compromise, litigate, arbitrate or
otherwise adjust or settle any and all other claims or demands of
or against the Company or to hold such proceeds against the
payment of contingent liabilities; and
(r) to make, execute, acknowledge and file any and all
documents or instruments necessary, convenient or incidental to
the accomplishment of the purposes of the Company.
ARTICLE IV
CAPITAL CONTRIBUTIONS,
UNITS, CAPITAL ACCOUNTS AND ADVANCES
Section IV.1 Capital Contributions. Each Member has contributed to
the capital of the Company the amount set forth opposite the Member's name on
Schedule A attached hereto.
Section IV.2 Units. A Member or Assignee's interest in the Company
shall be represented by the "Unit" or "Units" held by such Member or Assignee.
Each Member or Assignee's respective Units shall be set forth on Schedule A
attached hereto. Each Member hereby agrees that its interest in the Company and
in its Units shall for all purposes be personal property. A Member or Assignee
has no interest in specific Company property.
Section IV.3 Status of Capital Contributions.
IV.3.1 No Member or Assignee shall have the right to withdraw
its Capital Contribution or Capital Account or to receive any
interest, salary or drawing with respect to its Capital Contributions
or its Capital Account or for services rendered on behalf of the
Company or otherwise in its capacity as a Member or Assignee, except
as otherwise specifically provided in this Agreement.
IV.3.2 Except as otherwise provided herein and by applicable
state law, the Members shall be liable only to make their Capital
Contributions pursuant to Section 4.1 hereof, and no Member or
Assignee shall be required to lend any funds to the Company or, after
a Member's Capital Contributions have been fully paid pursuant to
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Section 4.1 hereof, to make any additional Capital Contributions to
the Company. No Member or Assignee shall have any personal liability
for the repayment of any Capital Contribution of any other Member or
Assignee.
Section IV.4 Capital Accounts.
IV.4.1 An individual Capital Account shall be established and
maintained for each Member. The original Capital Account established
for any Member or Assignee who acquires an interest in the Company by
virtue of an assignment in accordance with the terms of this Agreement
shall be in the same amount as, and shall replace, the Capital Account
of the assignor of such interest, and, for purposes of this Agreement,
such Member or Assignee and shall be deemed to have made the Capital
Contributions made by the assignor of such interest (or made by such
assignor's predecessor in interest). To the extent such Member or
Assignee acquires less than the entire interest in the Company of the
assignor of the interest so acquired by such Member or Assignee, the
original Capital Account of such Member or Assignee and its Capital
Contributions shall be in proportion to the interest it acquires, and
the Capital Account of the assignor who retains a partial interest in
the Company, and the amount of its Capital Contributions, shall be
reduced in proportion to the interest it retains.
IV.4.2 The Capital Account of each Member or Assignee shall be
maintained in accordance with the following provisions:
(a) to such Member or Assignee's Capital Account there shall
be credited such Member or Assignee's Capital Contributions,
such Member or Assignee's distributive share of Profits and the
amount of any Company liabilities that are assumed by such Member
or Assignee or that are secured by any Company assets distributed
to such Member or Assignee;
(b) to such Member or Assignee's Capital Account there
shall be debited the amount of cash and the Gross Asset Value of
any Company assets distributed to such Member or Assignee
pursuant to any provision of this Agreement, such Member or
Assignee's distributive share of Losses and the amount of any
liabilities of such Member or Assignee that are
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assumed by the Company or that are secured by any property
contributed by such Member or Assignee to the Company; and
(c) in determining the amount of any liability for purposes
of this Section 4.4.2, there shall be taken into account Section
752(c) of the Code and any other applicable provisions of the
Code and the Treasury Regulations.
Section IV.5 Advances. If any Member or Assignee shall advance any
funds to the Company in excess of its Capital Contributions, the amount of such
advance shall neither increase its Capital Account nor entitle it to any
increase in its share of the distributions of the Company. The amount of any
such advance shall be a debt obligation of the Company to such Member or
Assignee and shall be repaid to it by the Company with interest at a per annum
rate equal to the lesser of (i) the rate of interest publicly announced from
time to time by Bank of America Illinois, Chicago, Illinois (or its successor in
interest), as its Prime Rate (or its equivalent) for United States Dollar Loans,
plus 1%, and (ii) the maximum rate permitted by applicable law, and upon such
other terms and conditions as shall be mutually determined by such Member or
Assignee and the Manager or Managers. Any such advance shall be payable and
collectible only out of Company assets, and the other Members and Assignees
shall not be personally obligated to repay any part thereof.
ARTICLE V
MEMBERS
Section V.1 Powers of Members. The Members shall have the power to
exercise any and all rights or powers granted to the Members pursuant to the
express terms of this Agreement. The Members shall also have the power to
authorize the Manager or Managers, by Majority Vote of the Members, to possess
and exercise any right or power not already vested in the Managers pursuant to
Section 6.4 or any other provision of this Agreement. The Members shall not
have the power to bind the Company.
Section V.2 Partition. Each Member waives, until termination of the
Company, any and all rights that it may have to maintain an action for partition
of the Company's property.
Section V.3 Resignation of Members. A Member may not resign from the
Company without the written consent of the Manager or Managers.
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ARTICLE VI
MANAGERS
Section VI.1 Designation of Managers. The management of the Company's
business shall be vested in one or more Managers designated by the Members as
hereinafter provided. A Manager may be but need not be a Member. The Members
hereby agree to continue Bagel Corp. as the Manager, and Bagel Corp. agrees to
be bound by the terms and conditions of this Agreement.
Section VI.2 Withdrawal of the Managers. Bagel Corp. may not withdraw
or resign as Manager of the Company.
Section VI.3 Power and Authority of the Managers. Subject to the
limitations expressly set forth in this Agreement, the business and affairs of
the Company shall be managed by the Managers, and the Managers shall have full
authority to act for and to bind the Company in all matters in connection with
or relating to the Company's business consistent with the powers of the Company
set forth in Section 3.2. No Person dealing with the Company shall be required
to inquire as to the authority of any Manager or any officer of the Company to
take any action on behalf of the Company.
Section VI.4 Limitations on the Managers' Powers. Notwithstanding the
provisions of Section 6.3, the Managers shall not have the power to take any of
the following actions unless such actions have been approved by a Majority Vote
of the Members (and, in the case of an amendment to this Agreement, such
additional approvals as are required by Section 7.2 hereof):
(a) to make investments other than (i) Permitted
Temporary Investments, (ii) shares or other interests in or
obligations of Area Developers and Bagel Corp. or (iii) rights to
acquire any of the foregoing;
(b) to cause the Company to merge with, or consolidate
into, another Delaware limited liability company or Other
Business Entity;
(c) to determine, at the time such right becomes
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exercisable, whether the Company should exercise the Fund Put
Rights (as defined in the Bagel Partners Partnership Agreement);
(d) to determine, at the time such right becomes
exercisable, whether the Company should exercise any right held
by it to request an Incorporation and Public Offering pursuant to
the Bagel Partners Partnership Agreement;
(e) to determine, at the time such right becomes
exercisable, whether the Company should exercise any right held
by it to request a License Termination;
(f) to determine whether the Company should sell its equity
interests in Bagel Partners;
(g) to determine the vote of the Company with respect to
its equity interests in Bagel Partners;
(h) to resolve any questions with respect to potential
conflicts of interest between ENBC, as manager, on the one hand,
and the Company, on the other hand, as may be presented by ENBC,
as manager, to the Members;
(i) to amend this Agreement; or
(j) to dissolve the Company except as provided in Section
14.2 hereof.
Section VI.5 Reimbursement.
VI.5.1 The Company shall reimburse each Manager for all ordinary
and necessary out-of-pocket expenses incurred by the Manager on behalf
of the Company, including without limitation any fees and expenses (i)
incurred in connection with the organization of the Company or (ii)
incurred in connection with any investment made by the Company.
VI.5.2 Amounts reimbursed pursuant to Section 6.5.1 shall be
treated as expenses of the Company and shall not be deemed to
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constitute a distributive share of Profits or a distribution to any
Manager.
ARTICLE VII
MEETINGS; AMENDMENTS; MERGER
OR CONSOLIDATION
Section VII.1 Meetings of the Members.
VII.1.1 Meetings of the Members may be called by the Managers
and shall state the location of the meeting and the nature of the
business to be transacted. Notice of any such meeting shall be given
to all Members not less than seven business days nor more than thirty
days prior to the date of such meeting. Members may vote in person or
by proxy at such meeting. Whenever a vote, consent or approval of
Members is permitted or required under this Agreement, such vote,
consent or approval may be given at a meeting of Members or may be
given in accordance with the procedure prescribed in Section 7.1.6.
Except as otherwise expressly provided in this Agreement, the Majority
Vote of the Members shall be required to constitute the act of the
Members.
VII.1.2 For the purpose of determining the Members entitled to
vote on, or to vote at, any meeting of the Members or any adjournment
thereof, the Managers may fix, in advance, a date as the record date
for any such determination. Such date shall not be more than thirty
days nor less than ten business days before any such meeting.
VII.1.3 Each Member may authorize any Person to act for it by
proxy on all matters in which a Member is entitled to participate,
including waiving notice of any meeting, or voting or participating at
a meeting. Every proxy must be signed by the Member or its
attorney-in-fact. No proxy shall be valid after the expiration of
eleven months from the date thereof unless otherwise provided in the
proxy. Every proxy shall be revocable at the pleasure of the Member
executing it.
VII.1.4 An affirmative vote of Members holding at least 20%
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of the outstanding Units shall be sufficient to compel a vote of all
the Members on whether to exercise the modified Fund Put Rights and to
compel a vote of the Members with respect to the actions described in
Sections 6.4(d), (e), (f), (g) and (i).
VII.1.5 Each meeting of Members shall be conducted by the
Managers or by such other Person that the Managers designate.
VII.1.6 Any action which may be taken at a meeting of Members
may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so
taken, shall be signed by Members having not less than the minimum
number of votes that would be necessary to authorize or take such
action at a meeting and shall be delivered to the Company by delivery
to its registered office, its principal place of business or to an
officer or agent of the Company having custody of the books in which
proceedings of Members are recorded. Delivery made to the Company's
registered office shall be by hand or by certified or registered mail,
return receipt requested.
Section VII.2 Amendments. Any amendment to this Agreement shall be
adopted and be effective as an amendment hereto only if it receives the approval
of the Manager or Managers and a Majority Vote of the Members; provided,
however, that no such amendment shall (i) extend the term of the Company beyond
that permitted by Section 2.3, (ii) change the purpose of the Company from that
set forth in Section 3.1, (iii) alter the Capital Account of any Member, (iv)
change the allocation provisions of Article VIII hereof, (v) alter the
respective interests of the Members in distributions made by the Company, (vi)
increase the liabilities of any Member beyond those provided for in Section
12.1, (vii) cause the Company to cease to qualify as a limited liability company
under the Delaware Act or (viii) amend this Section 7.2 to delete or alter any
of clauses (i) through (viii), in each case without the consent of any Member
adversely affected thereby, and, in the case of an amendment described in clause
(i), (ii) or (vii), without the consent of all of the Members and, in the case
of an amendment affecting the provisions of Sections 4.1 or 9.1, without the
consent of Members owning two-thirds of the Units. The Manager or Managers may
at any time, without further consent of the Members, prepare a restatement of
this Agreement integrating into a single instrument all of the provisions of
this Agreement which are then in effect as the result of prior amendments
adopted as provided in this Section 7.2.
17
Section VII.3 Merger or Consolidation. The Company may merge with,
or consolidate into, one or more other Delaware limited liability companies or
Other Business Entities only with the approval of the Managers and a Majority
Vote of the Members.
ARTICLE VIII
ALLOCATIONS
Section VIII.1 Profits and Losses. Subject to the allocation
rules of Section 8.2 hereof, Profits and Losses for any Fiscal Year shall be
allocated among the Members and Assignees in proportion to the number of Units
held by each of them; provided, however, that Profits allocable to the Excess
Warrants shall be allocated only to the Members and Assignees who have not
previously defaulted in making Capital Contributions.
Section VIII.2 Allocation Rules.
----------------
VIII.2.1 In the event Members are admitted to the Company
pursuant to this Agreement after March 31, 1996, the Profits or Losses
allocated to the Members and Assignees for each Fiscal Year during
which Members are so admitted shall be allocated among the Members and
Assignees in proportion to the number of Units each holds from time to
time during such Fiscal Year in accordance with Section 706 of the
Code, using any convention permitted by law and selected by the
Managers.
VIII.2.2 For purposes of determining the Profits, Losses or any
other items allocable to any period, Profits, Losses and any such
other items shall be determined on a daily, monthly or other basis, as
determined by the Managers using any method that is permissible under
Section 706 of the Code and the Treasury Regulations thereunder.
VIII.2.3 Except as otherwise provided in this Agreement, all
items of Company income, gain, loss, deduction and any other
allocations not otherwise provided for shall be divided among the
Members and Assignees in the same proportions as they share Profits
and Losses for the Fiscal Year in question.
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Section VIII.3 Tax Allocations.
VIII.3.1 In accordance with Section 704(c) of the Code and the
Treasury Regulations thereunder, income, gain, loss and deduction with
respect to any property contributed to the capital of the Company
shall, solely for income tax purposes, be allocated among the Members
and Assignees so as to take account of any variation between the
adjusted basis of such property to the Company for federal income tax
purposes and its initial Gross Asset Value (computed in accordance
with Section 1.1 hereof).
VIII.3.2 In the event the Gross Asset Value of any Company asset
is adjusted pursuant to paragraph (ii) of the definition of "Gross
Asset Value" contained in Section 1.1 hereof, subsequent allocations
of income, gain, loss and deduction with respect to such asset shall
take account of any variation between the adjusted basis of such asset
for federal income tax purposes and its Gross Asset Value in the same
manner as under Section 704(c) of the Code and the Treasury
Regulations thereunder.
VIII.3.3 Any elections or other decisions relating to allocations
under this Section 8.3, including the selection of any allocation
method permitted under proposed Treasury Regulation Section
1.704-1(c), shall be made by the Managers in any manner that
reasonably reflects the purpose and intention of this Agreement.
Allocations pursuant to this Section 8.3 are solely for purposes of
federal, state and local taxes and shall not affect, or in any way be
taken into account in computing, any Member or Assignee's Capital
Account or share of Profits, Losses, other items or distributions
pursuant to any provision of this Agreement.
ARTICLE IX
DISTRIBUTIONS
Section IX.1 Distributions. Except as otherwise provided in Article
XIV (relating to the dissolution of the Company) or in this Section 9.1, all
distributions shall be made at such times and in such amounts as shall be
determined by the Managers. All distributions shall be made to the Members and
Assignees in proportion to the number of Units held by each of them; provided,
however, that (i)
19
Excess Warrants may be distributed only to the Members and Assignees who have
not previously defaulted in making Capital Contributions and (ii) distributions
may be made in redemption of a Member's or Assignee's Units. Except as provided
in the next sentence, any distributions of cash received by the Company with
respect to its equity interest in any Area Developer, whether or not denominated
as tax distributions, shall be promptly distributed by the Company to the
Members. The proceeds (whether in the form of cash or capital stock of Bagel
Corp.) of any redemption or sale (net of any expenses of such redemption or sale
and after payment of any expenses described in Section 6.5) of any equity
interest in an Area Developer owned by the Company shall be distributed promptly
to the Members.
Section IX.2 Withheld Taxes. All amounts withheld pursuant to the
Code or any provision of any state or local tax law with respect to any Member
or Assignee shall be treated as a Distribution to the respective Member or
Assignee pursuant to this Article IX for all purposes of this Agreement, except
to the extent such amount exceeds the amount distributed (or treated as
distributed) pro rata to the Members and Assignees in accordance with their
Units, which excess shall be treated as a loan to the respective Member or
Assignee and shall be repaid by the respective Member or Assignee receiving such
loan at the time that the Company is required to pay over such amount to any
federal, state or local government. The Managers are authorized to withhold
from distributions, or with respect to allocations, to the Members or Assignees
and to pay over to any federal, state or local government any amounts required
to be so withheld pursuant to the Code or any provision of any other federal,
state or local law and shall allocate such amounts to those Members or Assignees
with respect to which such amounts were withheld. If the Managers conclude that
the Company is required to withhold any amount as described in the preceding
sentence, it shall provide prompt written notice to the Members and Assignees of
the reasons it believes that the Company is required to so withhold and an
explanation of the calculation of the amounts withheld or to be withheld. For
purposes of this Section 9.2, the Company may assume that any Member or Assignee
who fails to provide to the Company satisfactory evidence of his tax status for
United States federal income tax purposes is a foreign person. Each Member
agrees to provide written notice to the Company within sixty days of any change
in such Member's tax status for United States federal income tax purposes.
Section IX.3 Limitations on Distributions. Notwithstanding any
provision to the contrary contained in this Agreement, the Company shall not
make a distribution to any Member or Assignee on account of its interest in the
Company if such distribution would violate Section 18-607 of the Delaware Act
or other applicable law.
20
ARTICLE X
BOOKS AND RECORDS
Section X.1 Books, Records and Financial Statements.
X.1.1 At all times during the continuance of the Company, the
Company shall maintain, at its principal place of business, separate
books of account for the Company that shall show a true and accurate
record of all costs and expenses incurred, all charges made, all
credits made and received and all income derived in connection with
the operation of the Company's business. Such books of account,
together with a copy of this Agreement and of the Certificate, shall
at all times be maintained at the principal place of business of the
Company and shall be open to inspection and examination at reasonable
times by each Member and its duly authorized representative for any
purpose reasonably related to such Member's interest in the Company.
The books of account and the records of the Company shall be examined
by and reported upon as of the end of each Fiscal Year by a firm of
independent certified public accountants selected by the Managers.
X.1.2 The Managers shall prepare and maintain, or cause to be
prepared and maintained, the books of account of the Company and shall
use their best efforts to cause the following documents to be
transmitted to each Member at the times hereinafter set forth:
(a) Within four months after the close of each Fiscal Year,
the following financial information:
(i) an audited balance sheet of the Company as of
the beginning and close of such Fiscal Year;
(ii) an audited statement of operations of the Company
for such Fiscal Year;
(iii) a statement of such Member's Capital Account as
of the close of such Fiscal Year, and changes therein during
such Fiscal Year; and
21
(iv) a statement showing the Partnership Value (as
defined in the Bagel Partners Partnership Agreement), based
upon information received by the Company from Bagel
Partners.
(b) As soon as reasonably practicable after the close of
each Fiscal Quarter, the following Financial Information:
(i) an unaudited interim statement of operations of
the Company as of the beginning and close of such Fiscal
Quarter;
(ii) all reports and other information provided the
Company pursuant to Section 8.2. of the Bagel Partners
Partnership Agreement; and
(iii) a statement of such Member's Capital Account as
of the close of such Fiscal Quarter, and changes therein, if
any, during such Fiscal Quarter.
(c) Within three months after the close of each Fiscal
Year, a statement indicating such Member's share of each item of
Company income, gain, loss, deduction or credit for such Fiscal
Year for income tax purposes.
X.1.3 All information contained in any statement or other
document distributed to any Member pursuant to Section 10.1.2 shall be
deemed accurate, binding and conclusive with respect to such Member
unless written objection is made thereto by such Member to the Company
within 20 business days after the receipt of such statement or other
document by such Member.
Section X.2 Accounting Method. For both financial and tax reporting
purposes and for purposes of determining Profits and Losses, the books and
records of the Company shall be kept on the accrual method of accounting applied
in a consistent manner and shall reflect all Company transactions and be
appropriate and
22
adequate for the Company's business.
Section X.3 Confidentiality. Each Member and each Manager hereby
covenant and agree that so long as such Member holds Units, or so long as such
Manager serves as a Manager, and for a period of three years thereafter, such
Member or Manager will hold in confidence all financial and other information
concerning the Company, Bagel Corp. and the Area Developers in which the Company
is an investor and will not, without the prior consent of Bagel Corp., disclose
any of such information to any person. The preceding sentence shall not apply
to information which (i) is disclosed in a printed publication available to the
public, or is otherwise in the public domain through no act of such Member or
Manager or the employees or agents of such Member or Manager or other person or
entity which has received such information from or through such Member or
Manager or (ii) is required to be disclosed by proper order of a court of
applicable jurisdiction after adequate notice to Bagel Corp. sufficient to
permit Bagel Corp. to seek a protective order therefor, the imposition of which
protective order such Member or Manager agrees to approve and support. Each
Member or Manager acknowledges that Bagel Corp. and the Area Developers are
intended third party beneficiaries of the covenants in this Section 10.3 and can
enforce such covenants directly against such Member and Manager.
ARTICLE XI
TAX MATTERS
Section XI.1 Tax Matters Partner.
XI.1.1 The Managers are hereby authorized to designate a Member
of the Company to serve as the tax matters partner of the Company for
purposes of Section 6231(a)(7) of the Code (the "Tax Matters
Partner"). The Tax Matters Partner shall have the power to manage and
control, on behalf of the Company, any administrative proceeding at
the Company level with the Internal Revenue Service relating to the
determination of any item of Company income, gain, loss, deduction or
credit for federal income tax purposes. The Tax Matters Partner may be
a Manager if the Manager is a Member.
XI.1.2 The Tax Matters Partner shall, within ten days of the
receipt of any notice from the Internal Revenue Service in any
administrative proceeding at the Company level relating to the
determination of any Company item of income, gain, loss, deduction or
credit, mail a
23
copy of such notice to each Member and Assignee.
XI.1.3 The Managers may at any time hereafter designate a new
Tax Matters Partner; provided, however, that only a Member may be
designated as the Tax Matters Partner of the Company.
Section XI.2 Right to Make Tax Elections. The Managers may, in their
discretion, make or revoke, on behalf of the Company, any tax election under the
Code or the Treasury Regulations, or under state, local or foreign law.
ARTICLE XII
LIABILITY, EXCULPATION AND INDEMNIFICATION
Section XII.1 Liability.
XII.1.1 Except as otherwise provided by the Delaware Act, the
debts, obligations and liabilities of the Company, whether arising in
contract, tort or otherwise, shall be solely the debts, obligations
and liabilities of the Company, and no Covered Person shall be
obligated personally for any such debt, obligation or liability of the
Company solely by reason of being a Covered Person.
XII.1.2 Except as otherwise expressly required by law, a Member,
in its capacity as such, shall have no liability in excess of (i) the
amount of its Capital Contributions, (ii) its share of any assets and
undistributed profits of the Company, (iii) its obligation to make
other payments expressly provided for in this Agreement, and (iv) the
amount of any distributions wrongfully distributed to it.
Section XII.2 Exculpation.
XII.2.1 No Covered Person shall be liable to the Company or any
other Covered Person for any loss, damage or claim incurred by reason
of any act or omission performed or omitted by such Covered
24
Person in good faith on behalf of the Company and in a manner
reasonably believed to be within the scope of authority conferred on
such Covered Person by this Agreement, except that a Covered Person
shall be liable for any such loss, damage or claim incurred by reason
of such Covered Person's gross negligence or willful misconduct.
XII.2.2 A Covered Person shall be fully protected in relying in
good faith upon the records of the Company and upon such information,
opinions, reports or statements presented to the Company by any Person
(including any tax advisor) as to matters the Covered Person
reasonably believes are within such other Person's professional or
expert competence and who has been selected with reasonable care by or
on behalf of the Company, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities,
Profits or Losses or any other facts pertinent to the existence and
amount of assets from which distributions to Members might properly
be paid.
Section XII.3 Duties of Covered Persons.
XII.3.1 In accordance with Section 18-1101(c)(2) of the Delaware
Act the duties and liabilities of the Managers and the Members, in
their capacities as such, shall be limited to those set forth in this
Agreement.
XII.3.2 To the extent that a Covered Person has duties and
liabilities relating to the Company or its Members or to any other
Covered Person, a Covered Person acting under this Agreement shall not
be liable to the Company or its Members or to any other Covered Person
for its good faith reliance on the provisions of this Agreement. The
provisions of this Agreement, to the extent that they restrict the
duties and liabilities of a Covered Person otherwise existing at law
or in equity, are agreed by the parties hereto to replace such other
duties and liabilities of such Covered Person.
XII.3.3 The Members expressly acknowledge that Bagel Corp. and
its Affiliates have or will have area development, franchise, lending,
real estate and other relationships with the Area Developers in which
the Company will invest and that Bagel Corp. will have a conflict of
interest in making determinations as Manager as to the Area Developers
in which the Company will invest, the amount of any such
25
investment and any negotiated terms of such investment. The Members
hereby (i) agree that Bagel Corp. may act in its own interest in
making determinations as Manager in any situation in which such a
conflict is present, (ii) ratify and approve all such determinations
made by Bagel Corp. as Manager, (iii) waive any rights they have or
may receive by reason of such conflicts of interest or such
determinations made by Bagel Corp. as Manager and any right to receive
notice of or disclosure concerning any such conflicts of interest or
determinations, and (iv) covenant not to ▇▇▇ Bagel Corp. in connection
with any such determinations or any matter or thing based upon or
arising out of any such determinations.
XII.3.4 Whenever in this Agreement a Covered Person is permitted
or required to make a decision (i) in its "discretion" or under a
grant of similar authority or latitude, the Covered Person shall be
entitled to consider any such interests and factors as it desires,
including its own interests, and shall have no duty or obligation to
give any consideration to any interest of or factors affecting the
Company or any other Person, or (ii) in its "good faith" or under
another express standard, the Covered Person shall act under such
express standard and shall not be subject to any other or different
standard imposed by this Agreement or other applicable law.
Section XII.4 Indemnification. To the fullest extent permitted by
applicable law, a Covered Person shall be entitled to indemnification from the
Company for any loss, damage or claim incurred by such Covered Person by reason
of any act or omission performed or omitted by such Covered Person in good faith
on behalf of the Company and in a manner reasonably believed to be within the
scope of authority conferred on such Covered Person by this Agreement, except
that no Covered Person shall be entitled to be indemnified in respect of any
loss, damage or claim incurred by such Covered Person by reason of gross
negligence or willful misconduct with respect to such acts or omissions;
provided, however, that any indemnity under this Section 12.4 shall be provided
out of and to the extent of Company assets only, and no Covered Person shall
have any personal liability on account thereof.
Section XII.5 Expenses. To the fullest extent permitted by applicable
law, expenses (including legal fees) incurred by a Covered Person in defending
any claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Company prior to the final disposition of such claim, demand,
action, suit or proceed-
26
ing upon receipt by the Company of an undertaking by or on behalf of the Covered
Person to repay such amount if it shall be determined that the Covered Person is
not entitled to be indemnified as authorized in Section 12.4 hereof.
Section XII.6 Outside Businesses. Any Member, Manager or Affiliate
thereof may engage in or possess an interest in other business ventures of any
nature or description, independently or with others, similar or dissimilar to
the business of the Company, and the Company, the Members and the Managers shall
have no rights by virtue of this Agreement in and to such independent ventures
or the income or profits derived therefrom, and the pursuit of any such venture,
even if competitive with the business of the Company, shall not be deemed
wrongful or improper. No Member, Manager or Affiliate thereof shall be
obligated to present any particular investment opportunity to the Company even
if such opportunity is of a character that, if presented to the Company, could
be taken by the Company, and any Member, Manager or Affiliate thereof shall have
the right to take for its own account (individually or as a partner or
fiduciary) or to recommend to others any such particular investment opportunity.
ARTICLE XIII
ASSIGNABILITY AND SUBSTITUTE MEMBERS
Section XIII.1 Assignability of Units.
XIII.1.1 No Member may assign the whole or any part of its Units
or other interests in the Company without the approval of the
Managers, which approval and favorable vote may be given or withheld
in the sole and absolute discretion of the Managers. If the required
approval and favorable vote is obtained for any such assignment, such
assignment shall, nevertheless, not entitle the Assignee to become a
Substitute Member or to be entitled to exercise or receive any of the
rights, powers or benefits of a Member other than the right to receive
distributions to which the assigning Member would be entitled, unless
the assigning Member designates, in a written instrument delivered to
the Managers, its Assignee to become a Substitute Member and such
designation is approved by the Managers, which approval and favorable
vote may be given or withheld in the sole and absolute discretion of
the Managers; and provided further, that such Assignee shall not
become a Substitute Member without having first executed an instrument
reasonably satisfactory to the Managers
27
accepting and agreeing to the terms and conditions of this Agreement,
including a counterpart signature page to this Agreement, and without
having paid to the Company a fee sufficient to cover all reasonable
expenses of the Company in connection with such Assignee's admission
as a Substitute Member. If a Member assigns all of its interest in the
Company and the Assignee of such interest is entitled to become a
Substitute Member pursuant to this Section, such Assignee shall be
admitted to the Company effective immediately prior to the effective
date of the assignment, and, immediately following such admission, the
assigning Member shall cease to be a member of the Company.
XIII.1.2 Notwithstanding anything to the contrary herein,
(i) the Managers shall not cause or permit Units to become traded on
an established securities market and (ii) the Managers shall withhold
their consent to any Transfer that, to the Managers' knowledge after
reasonable inquiry, would otherwise be accomplished by a trade on a
secondary market (or the substantial equivalent thereof). For purposes
of this subsection the terms "traded on an established securities
market" and "secondary market (or the substantial equivalent thereof)"
shall have the meanings set forth in Sections 469(k)(2) and 7704 of
the Code and any regulations promulgated thereunder that are in effect
at the time of the proposed Transfer.
Section XIII.2 Recognition of Assignment by Company. No assignment,
or any part thereof, that is in violation of this Article XIII shall be valid or
effective, and neither the Company nor the Members shall recognize the same for
the purpose of making distributions pursuant to Section 9.1 hereof with respect
to such Company interest or part thereof. Neither the Company nor the
nonassigning Members shall incur any liability as a result of refusing to make
any such distributions to the assignee of any such invalid assignment.
Section XIII.3 Indemnification. In the case of an assignment or
attempted assignment of an interest in the Company that has not received the
consent required by Section 13.1 hereof, the parties engaging or attempting to
engage in such assignment shall be liable to indemnify and hold harmless the
Company, the Managers, the other Members and the respective Covered Persons of
the Company, the Managers and the other Members from all costs, liabilities and
damages that any of such indemnified Persons may incur (including, without
limitation, incremental tax liability and lawyers' fees and expenses) as a
result of such assignment or attempted
28
assignment and efforts to enforce the indemnity granted hereby.
Section XIII.4 Effective Date of Assignment. Any valid assignment of a
Member's interest in the Company, or part thereof, pursuant to the provisions of
Section 13.1 hereof shall be effective as of the close of business on the last
day of the calendar month in which the other Members give their written consent
to such assignment (or the last day of the calendar month in which such
assignment occurs, if later). The Company shall, from the effective date of such
assignment, thereafter pay all further distributions on account of the Company
interest (or part thereof) so assigned, to the Assignee of such interest, or
part thereof. As between any Member and its Assignee, Profits and Losses for the
Fiscal Year of the Company in which such assignment occurs shall be apportioned
for federal income tax purposes in accordance with any convention permitted
under Section 706(d) of the Code and selected by the Managers in their
discretion.
ARTICLE XIV
DISSOLUTION, LIQUIDATION AND TERMINATION
Section XIV.1 No Dissolution. The Company shall not be dissolved by
the admission of Substitute Members in accordance with the terms of this
Agreement.
Section XIV.2 Events Causing Dissolution. The Company shall be
dissolved and its affairs shall be wound up only upon the occurrence of any of
the following events:
(i) the expiration of the term of the Company, as
provided in Section 2.3 hereof;
(ii) the approval of the Managers and a Majority Vote
of the Members to dissolve the Company;
(iii) the entry of a decree of judicial dissolution
under Section 18-802 of the Delaware Act; or
(iv) by the Managers at any time that the assets of the
Company consist only of cash, Permitted Temporary
Investments, a warrant to
29
purchase stock of Bagel Corp., stock of Bagel Corp. or any
combination of the foregoing.
Section XIV.3 Notice of Dissolution. Upon the dissolution of the
Company, the Person or Persons approved by a Majority Vote of the Members to
carry out the winding up of the Company (the "Liquidating Trustee") shall
promptly notify the Members of such dissolution.
Section XIV.4 Liquidation. Upon dissolution of the Company, the
Liquidating Trustee shall immediately commence to wind up the Company's affairs;
provided, however, that a reasonable time shall be allowed for the orderly
liquidation of the assets of the Company and the satisfaction of liabilities to
creditors so as to enable the Members to minimize the normal losses attendant
upon a liquidation. The Members and Assignees shall continue to share Profits
and Losses during liquidation in the same proportions, as specified in Article
VIII hereof, as before liquidation. Each Member shall be furnished with a
statement prepared by the Company's certified public accountants that shall set
forth the assets and liabilities of the Company as of the date of dissolution.
The proceeds of liquidation shall be distributed, as realized, in the following
order and priority:
(i) to creditors of the Company, including the
Managers or Members or Assignees who are creditors, to the
extent otherwise permitted by law, in satisfaction of the
liabilities of the Company (whether by payment or the
making of reasonable provision for payment thereof), other
than liabilities for distributions to Members or Assignees;
and
(ii) to distribute to the Members and Assignees the
remaining proceeds of liquidation in accordance with their
Capital Account balances, after giving effect to all Capital
Contributions, distributions and allocations for all
periods. If any Member is owed a Capital Account balance
pursuant to Section 4.1.3, such Member shall share in the
remaining proceeds of liquidation in the proportion that
such Member's Capital Account balance determined in
accordance with Section 4.1.3 compares to
30
the aggregate Capital Account balances of all of the other
Members, but such Member shall not be entitled to receive
more than the amount determined in accordance with Section
4.1.3.
Section XIV.5 Termination. The Company shall terminate when all of
the assets of the Company, after payment of or due provision for all debts,
liabilities and obligations of the Company, shall have been distributed to the
Members and Assignees in the manner provided for in this Article XIV, and the
Certificate shall have been canceled in the manner required by the Delaware Act.
Section XIV.6 Claims of the Members. The Members and Assignees shall
look solely to the Company's assets for the return of their Capital
Contributions, and if the assets of the Company remaining after payment of or
due provision for all debts, liabilities and obligations of the Company are
insufficient to return such Capital Contributions, the Members and Assignees
shall have no recourse against the Company or any other Member or the Manager.
ARTICLE XV
MISCELLANEOUS
Section XV.1 Notices. All notices provided for in this Agreement
shall be in writing, duly signed by the party giving such notice, and shall be
sent by Federal Express or other reliable overnight courier, sent by fax or
mailed by registered or certified mail, return receipt requested, as follows:
(i) if given to the Company, in care of the Managers
at the address of the Company's principal place of
business, with a copy to Bagel Corp. at its mailing address
set forth on Schedule A attached hereto;
(ii) if given to the Managers, at their mailing
addresses set forth on Schedule A attached hereto, with a
copy to Bagel Corp.; or
31
(iii) if given to any Member at the address set forth
opposite its name on Schedule A attached hereto, or at such
other address as such Member may hereafter designate by
written notice to the Company.
Each such notice shall be deemed to have been given upon the earlier
of the receipt of such notice by the intended recipient thereof, two days after
it is sent by Federal Express or other reliable overnight courier or sent by
fax, or five days after it is mailed by registered or certified mail, return
receipt requested.
Section XV.2 Annual Information Session. The Manager of the Company
shall hold an annual information session of Members ("Annual Information
Session") to provide Members with information regarding the operations and
financial condition of the Company and Bagel Partners. The Annual Information
Session shall be held once per fiscal year on such date and at such time as
shall be designated from time to time by the Manager. Written notice of the
Annual Information Session stating the place, date and hour of the Annual
Information Session shall be given to each Member not less than ten nor more
than ninety days before the date of the Annual Information Session.
Section XV.3 Failure to Pursue Remedies. The failure of any party to
seek redress for violation of, or to insist upon the strict performance of, any
provision of this Agreement shall not prevent a subsequent act, which would have
originally constituted a violation, from having the effect of an original
violation.
Section XV.4 Cumulative Remedies; Limitation on Damages. The rights
and remedies provided by this Agreement are cumulative and the use of any one
right or remedy by any party shall not preclude or waive its right to use any or
all other remedies. Said rights and remedies are given in addition to any other
rights the parties may have by law, statute, ordinance or otherwise.
Notwithstanding anything to the contrary herein, no party hereto shall be liable
for consequential, indirect, incidental, special, speculative, exemplary or
punitive damages (including, but not limited to, loss of revenue or profit)
whether such claim alleges breach of contract, tortious conduct including, but
not limited to, negligence, or any other theory.
Section XV.5 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of all of the parties and, to the extent permitted by this
Agreement, their successors, legal representatives and assigns.
32
Section XV.6 Captions. The captions herein are inserted for
convenience of reference only and shall not affect the construction of this
Agreement.
Section XV.7 Pronouns and Plurals. Whenever the context may require,
any pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa.
Section XV.8 Severability. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision were omitted.
Section XV.9 Counterparts. This Agreement may be executed in any
number of counterparts with the same effect as if all parties hereto had signed
the same document. All counterparts shall be construed together and shall
constitute one instrument.
Section XV.10 Integration. This Agreement constitutes the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements and understandings pertaining thereto.
Section XV.11 Governing Law. This Agreement and the rights of the
parties hereunder shall be interpreted in accordance with the laws of the State
of Delaware, and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
33
This Agreement is accepted and agreed to by:
MANAGER:
EINSTEIN/NOAH BAGEL CORP.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
34
SCHEDULE A
MANAGER
Name Mailing Address
---- ---------------
Einstein/Noah Bagel Corp. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
MEMBERS
Mailing Capital Number
Name Address Contribution of Units
---- ------- ------------ --------
ASSIGNEES
Mailing Capital Number
Name Address Contribution of Units
---- ------- ------------ --------
1