1
EXHIBIT 4.42
OPERATING AGREEMENT
FOR
CHEESEBURGER IN PARADISE, LLC
A DELAWARE LIMITED LIABILITY COMPANY
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS..........................................................................1
(a) "Act"................................................................................1
(b) "Affiliate"..........................................................................1
(c) "Agreement"..........................................................................1
(d) "Annual Business Plan"...............................................................1
(e) "Appraisal Period"...................................................................1
(f) "Assignee"...........................................................................1
(g) "Bankruptcy".........................................................................2
(h) "CHC"................................................................................2
(i) "Capital Account"....................................................................2
(j) "Capital Contribution"...............................................................2
(k) "Certificate"........................................................................2
(l) "Code"...............................................................................2
(m) "Committee Member"...................................................................2
(n) "Company.............................................................................2
(o) "Company Minimum Gain"...............................................................2
(p) "Depreciation".......................................................................2
(q) "Distributable Cash".................................................................2
(r) "Economic Interest"..................................................................3
(s) "Fiscal Year"........................................................................3
(t) "Gross Asset Value"..................................................................3
(u) "MHI"................................................................................3
(v) "MHI Principals".....................................................................3
(w) "Majority Interest"..................................................................3
(x) "Management Committee"...............................................................3
(y) "Member".............................................................................3
(z) "Member Nonrecourse Debt"............................................................4
(aa) "Member Nonrecourse Deductions"......................................................4
(bb) "Member Parent"......................................................................4
(cc) "Membership Interest"................................................................4
(dd) "Net Profits" and "Net Losses".......................................................4
(ee) "Nonrecourse Liability"..............................................................4
(ff) "Outback"............................................................................4
(gg) "Percentage Interest"................................................................4
(hh) "Person".............................................................................5
(ii) "Proprietary Marks"..................................................................5
(jj) "Regulations"........................................................................5
(kk) "Restaurant(s)"......................................................................5
(ll) "Subsidiary Entity"..................................................................5
(mm) "Sublicense Agreement"...............................................................5
(nn) "System".............................................................................5
(oo) "Tax Matters Partner"................................................................5
ARTICLE II ORGANIZATIONAL MATTERS...............................................................5
2.1 Formation............................................................................5
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TABLE OF CONTENTS
(CONTINUED)
2.2 Name.................................................................................5
2.3 Term.................................................................................6
2.4 Office and Agent.....................................................................6
2.5 Addresses of the Members and the Management Committee................................6
2.6 Purpose and Business of the Company..................................................6
ARTICLE III CAPITAL CONTRIBUTIONS................................................................6
3.1 Nature and Amount of Contributions...................................................6
3.2 Time for Making Contributions........................................................6
3.3 Interest on Capital Contributions....................................................6
3.4 No Additional Capital Contributions..................................................7
3.5 Real Estate..........................................................................7
3.6 Capital Accounts.....................................................................7
ARTICLE IV MEMBERS..............................................................................8
4.1 Limited Liability....................................................................8
4.2 Admission of Additional Members......................................................8
4.3 Subsidiary Entities..................................................................8
4.4 No Withdrawals or Resignations.......................................................8
4.5 Termination of Membership Interest...................................................8
4.6 Transactions With The Company........................................................8
4.7 Voting Rights........................................................................8
4.8 MeetingS of Members..................................................................8
ARTICLE V MANAGEMENT AND CONTROL OF THE COMPANY................................................9
5.1 Management of the Company by Management Committee....................................9
5.2 Appointment of Management Committee..................................................9
A. Number, Appointment and Qualifications........................................9
5.3 Powers of Management Committee......................................................10
▇. ▇▇▇▇▇▇ of Management Committee...............................................10
B. Annual Business Plan.........................................................11
C. Maximization of Value........................................................11
D. Limitations on Power of Management Committee.................................11
5.4 Liability of Management Committee Members...........................................12
5.5 Devotion of Time....................................................................12
5.6 Transactions Between the Company and Committee Member...............................12
5.7 Officers............................................................................12
5.8 President...........................................................................12
5.9 CHC Consulting Services.............................................................13
ARTICLE VI ALLOCATIONS OF NET PROFITS AND NET LOSSES AND
DISTRIBUTIONS.......................................................................13
6.1 Allocations of Net Profit and Net Loss..............................................13
A. Net Loss.....................................................................13
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TABLE OF CONTENTS
(CONTINUED)
B. Net Profit...................................................................13
6.2 Special Allocations.................................................................13
A. Minimum Gain Chargeback......................................................14
B. Chargeback of Minimum Gain Attributable to Member Nonrecourse Debt...........14
C. Nonrecourse Deductions.......................................................14
D. Member Nonrecourse Deductions................................................14
E. Qualified Income Offset......................................................14
6.3 Code Section 704(c) Allocations.....................................................14
6.4 Allocation of Net Profits and Losses and Distributions in Respect of a
Transferred Interest.........................................................14
6.5 Distributions of Distributable Cash by the Company..................................15
6.6 Fees to Members.....................................................................15
6.7 Form of Distribution................................................................16
6.8 Restriction on Distribution.........................................................16
6.9 Return of Distributions.............................................................16
6.10 Obligations of Members to Report Allocations........................................16
ARTICLE VII TRANSFER AND ASSIGNMENT OF INTERESTS................................................16
7.1 Transfer and Assignment of Interests................................................16
7.2 Further Restrictions on MHI's Principals............................................17
7.3 Further Restrictions on Transfer of Interests.......................................17
7.4 Permitted Transfers.................................................................18
7.5 Effective Date of Permitted Transfers...............................................18
7.6 Substitution of Members.............................................................18
7.7 Rights of Legal Representatives.....................................................18
7.8 No Effect to Transfers in Violation of Agreement....................................18
7.9 Right of First Refusal..............................................................18
7.10 Transfer Permitted After Failure to Elect...........................................19
ARTICLE VIII CESSATION OF DEVELOPMENT............................................................20
8.1 Cessation of Development............................................................20
8.2 Consequences of Cessation...........................................................20
8.3 Purchase Option on Acquisition of Control...........................................21
ARTICLE IX ACCOUNTING, RECORDS, REPORTING BY MEMBERS...........................................21
9.1 Books and Records...................................................................21
9.2 Delivery to Members and Inspection..................................................22
9.3 Annual Statements...................................................................22
9.4 Financial and Other Information.....................................................23
9.5 Filings.............................................................................23
9.6 Bank Accounts.......................................................................23
9.7 Accounting Decisions and Reliance on Others.........................................23
9.8 Tax Matters for the Company Handled by Management Committee
and Tax Matters Partner.............................................................23
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TABLE OF CONTENTS
(CONTINUED)
ARTICLE X DISSOLUTION AND WINDING UP..........................................................23
10.1 Dissolution.........................................................................23
10.2 Purchase Option on Agreement for Dissolution........................................24
10.3 Purchase Option on Proposed Sale....................................................24
10.4 Winding Up..........................................................................24
10.5 Distributions in Kind...............................................................25
10.6 Order of Payment Upon Dissolution...................................................25
10.7 Limitations on Payments Made in Dissolution.........................................25
ARTICLE XI INDEMNIFICATION AND INSURANCE.......................................................26
11.1 Indemnification of Agents...........................................................26
11.2 Insurance...........................................................................26
ARTICLE XII CONFIDENTIALITY AND NON-COMPETITION.................................................26
12.1 Noncompetition......................................................................26
12.2 Confidentiality.....................................................................27
A. Definition......................................................................27
B. No Disclosure, Use or Circumvention.............................................27
C. Maintenance of Confidentiality..................................................27
12.3 Non-solicitation....................................................................27
12.4 Reasonableness of Restrictions; Reformation; Enforcement............................28
12.5 Specific Performance................................................................28
ARTICLE XIII REPRESENTATIONS AND WARRANTIES......................................................28
13.1 Status..............................................................................29
13.2 Due Authorization...................................................................29
13.3 Other Agreements and Violations of Law..............................................29
13.4 No Litigation.......................................................................29
ARTICLE XIV MISCELLANEOUS..............................................................................29
14.1 Complete Agreement..................................................................29
14.2 Consultation with Attorney..........................................................29
14.3 Tax Consequences....................................................................29
14.4 No Assurance of Tax Benefits........................................................30
14.5 Binding Effect......................................................................30
14.6 Parties in Interest.................................................................30
14.7 Pronouns; Statutory References......................................................30
14.8 Headings............................................................................30
14.9 Interpretation......................................................................30
14.10 References to this Agreement........................................................30
14.11 Jurisdiction........................................................................30
14.12 Exhibits............................................................................30
14.13 Additional Documents and Acts.......................................................30
14.14 Notices.............................................................................31
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TABLE OF CONTENTS
(CONTINUED)
14.15 Amendments..........................................................................31
14.16 Reliance on Authority of Person Signing Agreement...................................31
14.17 Company Property....................................................................31
14.18 Multiple Counterparts...............................................................31
14.19 Attorney Fees.......................................................................31
14.20 Time is of the Essence..............................................................32
14.21 Remedies Cumulative.................................................................32
14.22 Severability........................................................................32
14.23 Partition...........................................................................32
14.24 No Waiver...........................................................................32
14.25 No Denigration......................................................................32
14.26 Contingency.........................................................................32
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OPERATING AGREEMENT
FOR
CHEESEBURGER IN PARADISE, LLC
A DELAWARE LIMITED LIABILITY COMPANY
This Operating Agreement is made as of October 12, 2000, by and among
the parties listed on the signature pages hereof, with reference to the
following facts:
A. On July 24, 2000, a Certificate of Formation for CHEESEBURGER
IN PARADISE, LLC, (the "Company"), a limited liability company organized under
the laws of the State of Delaware, was filed with the Delaware Secretary of
State.
B. The parties desire to adopt and approve a limited liability
company operating agreement for the Company.
NOW, THEREFORE, the parties by this Agreement set forth the operating
agreement for the Company under the laws of the State of Delaware upon the
terms and subject to the conditions of this Agreement.
ARTICLE I. DEFINITIONS
When used in this Agreement, the following terms shall have the
meanings set forth below (all terms used in this Agreement that are not defined
in this ARTICLE I shall have the meanings set forth elsewhere in this
Agreement):
(A) "Act" shall mean the Delaware Limited Liability
Company Act, as the same may be amended from time to time.
(B) "Affiliate" of a Person shall mean any Person,
directly or indirectly, through one or more intermediaries,
controlling, controlled by, or under common control with such Person,
as applicable. The term "control," as used in the immediately
preceding sentence, shall mean with respect to a corporation or
limited liability company the right to exercise, directly or
indirectly, more than fifty percent (50%) of the voting rights
attributable to the controlled corporation or limited liability
company, and, with respect to any individual, partnership, trust,
other entity or association, the possession, directly or indirectly,
of the power to direct or cause the direction of the management or
policies of the controlled entity.
(C) "Agreement" shall mean this Operating Agreement, as
originally executed and as amended from time to time.
(D) "Annual Business Plan" shall mean the detailed
business plan for the Company prepared by the President of the Company
and approved by the Management Committee, no less often than annually,
which plan shall contain an operating budget, a capital budget, cash
flow projections, sources of cash analysis (including analysis of any
intended borrowings or financings), an operating plan (including plans
related to the strategic business plan), and detailed quantifiable
goals for the plan year.
(E) "Appraisal Period" shall have the meaning specified
in Section 8.2A(i)(a) hereof.
(F) "Assignee" shall mean the owner of an Economic
Interest who has not been admitted as a substitute Member in
accordance with ARTICLE VII.
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(G) "Bankruptcy" shall mean: (a) the filing of an
application, or consent to, the appointment of a trustee, receiver, or
custodian of other assets; (b) the filing of a voluntary petition in
bankruptcy; (c) the entry of an order for relief in proceedings under
the United States Bankruptcy Code, as amended or superseded from time
to time; (d) the making of a general assignment for the benefit of
creditors; (e) the entry of an order, judgment, or decree by any court
of competent jurisdiction appointing a trustee, receiver, or custodian
of assets unless the proceedings and the person appointed are
dismissed within ninety (90) days; or (f) the failure to pay debts as
the debts become due within the meaning of Section 303(h)(1) of the
United States Bankruptcy Code, as determined by the Bankruptcy Court,
or the admission in writing of inability to pay its debts as they
become due.
(H) "CHC" shall mean CHEESEBURGER HOLDING COMPANY, LLC,
a Delaware limited liability company whose sole member is MHI.
(I) "Capital Account" shall mean with respect to any
Member the capital account that the Company establishes and maintains
for such Member pursuant to SECTION 3.6.
(J) "Capital Contribution" shall mean the total amount
of cash and fair market value of property contributed to the capital
of the Company by the Members.
(K) "Certificate" shall mean the Certificate of
Formation for the Company originally filed with the Delaware Secretary
of State and as amended from time to time.
(L) "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, the provisions of succeeding law, and to
the extent applicable, the Regulations.
(M) "Committee Member" shall mean the individuals named
to serve on the Management Committee.
(N) "Company" shall mean CHEESEBURGER IN PARADISE, LLC,
a Delaware limited liability company.
(O) "Company Minimum Gain" shall have the meaning
ascribed to the term "Partnership Minimum Gain" in the Regulations
Section 1.704-2(b)(2) and the amount of Company Minimum Gain shall be
determined as provided in Regulations Section 1.704-2(d).
(P) "Depreciation" shall mean, with respect to any
Company asset for any Fiscal Year, the depreciation or amortization
allowed or allowable for federal income tax purposes in respect of
such asset for such Fiscal Year, except that if the Gross Asset Value
of an asset differs from its adjusted tax basis for federal income tax
purposes at the beginning of such Fiscal Year, Depreciation shall be
an amount that bears the same ratio to such beginning book value as
the federal income tax depreciation or amortization for such Fiscal
Year bears to such beginning adjusted tax basis and if such adjusted
tax basis is zero, the Depreciation shall be based on the method of
depreciation or amortization utilized in preparing the financial
statements of the Company.
(Q) "Distributable Cash" shall mean the amount of cash
the Company receives from operations, including but not limited to,
from Subsidiary Entities, reduced by scheduled repayments of Equipment
Loans and Company Loans, expenses incurred by the Company pursuant to
the Sublicense Agreement (other than with respect to a breach of the
Sublicense Agreement by the Company), and any other payment
specifically provided for herein to be paid by Company.
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(R) "Economic Interest" shall mean the right to receive
distributions of the Company's assets and allocations of income, gain,
loss, deduction, credit and similar items from the Company pursuant to
this Agreement and the Act, but shall not include any other rights of
a Member, including, without limitation, the right to vote or
participate in the management of the Company.
(S) "Fiscal Year" shall mean the Company's fiscal year,
which shall be the calendar year.
(T) "Gross Asset Value" shall mean, with respect to any
asset of the Company, such asset's adjusted basis for federal income
tax purposes, except as follows: (1) 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 at the time of its contribution as
determined pursuant to SECTION 3.4A: (2) the Gross Asset Values of all
Company assets shall be adjusted to equal their respective gross fair
market values, as reasonably determined by the Management Committee,
immediately prior to the following events - a Capital Contribution
(other than a de minimis Capital Contribution) to the Company by a new
or existing Member as consideration for a Membership Interest, the
distribution by the Company to a Member of more than a de minimus
amount of Company assets as consideration for the redemption of a
Membership Interest, the liquidation of the Company within the meaning
of Regulations Section 1.704-1(b)(2)(ii)(g), and any other event as to
which the Management Committee reasonably determines that an
adjustment is necessary or appropriate to reflect the relative
economic interests of the Members. The Gross Asset Values of Company
assets distributed to any Member shall be the gross fair market values
of such assets as reasonably determined by the Management Committee as
of the date of distribution. The Gross Asset Values of Company assets
shall be increased (or decreased) to reflect any adjustments to the
adjusted basis of such assets pursuant to Code Sections 734(b) or
743(b), but only to the extent that such adjustments are taken into
account in determining Capital Accounts pursuant to Regulations
Section 1.704-1(b)(2)(iv)(m); provided, however, that Gross Asset
Values shall not be adjusted pursuant to this sentence to the extent
that the Management Committee reasonably determines that an adjustment
pursuant to clause (2) above is necessary or appropriate in connection
with a transaction that would otherwise result in an adjustment
pursuant to this sentence. At all times, Gross Asset Values shall be
adjusted by any Depreciation taken into account with respect to the
Company's assets for purposes of computing Net Profit and Net Loss.
Any adjustment to the Gross Asset Values of Company assets shall
require an adjustment to the Members' Capital Accounts.
(U) "MHI" shall mean Margaritaville Holdings, LLC, a
Florida limited liability company and the sole member of CHC.
(V) "MHI Principals" shall mean ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇▇▇.
(W) "Majority Interest" shall mean those Members who
hold at least fifty one percent (51%) of the Percentage Interests
entitled to vote.
(X) "Management Committee" shall mean collectively,
those individuals named as Committee Members of the Company pursuant
to ARTICLE V of this Agreement.
(Y) "Member" shall mean each Person who (a) is an
initial signatory to this Agreement, has been admitted to the Company
as a Member in accordance with the Certificate and this Agreement or
is an Assignee who has become a Member in accordance with ARTICLE VII,
and (b) has not ceased to be a Member in accordance with ARTICLE VII,
or for any other reason.
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(Z) "Member Nonrecourse Debt" shall have the meaning
ascribed to the term "Partner Nonrecourse Debt" in Regulations Section
1.704-2(b)(4).
(AA) "Member Nonrecourse Deductions" shall mean Company
loss, deductions, or Code Section 705(a)(2)(B) expenditures that are
attributable to Member Nonrecourse Debt and shall be determined as
provided in Regulations Section 1.704(2)(i).
(BB) "Member Parent" shall mean MHI with respect to CHC
and OSI with respect to Outback.
(CC) "Membership Interest" shall mean a Member's entire
interest in the Company including the Member's Economic Interest, the
right to vote on or participate in the management, and the right to
receive information concerning the business and affairs, of the
Company.
(DD) "Net Profit" or "Net Loss" shall mean, for each
Fiscal Year, an amount equal to the Company's net income or loss for
such year as determined for federal income tax purposes determined in
accordance with Code Section 703(a) (for this purpose, all items
required to be separately stated pursuant to Code Section (703(a)
shall be included in taxable income or loss), with the following
adjustments: (1) by including as an item of gross income any
tax-exempt income received by the Company; (2) by treating as a
deductible expense any expenditure of the Company described in Code
Section 705(a)(2)(B) (including amounts paid or incurred to organize
the Company (unless an election is made pursuant to Code Section
709(b) or to promote the sale of interests in the Company and by
treating deductions for any losses incurred in connection with the
sale or exchange of Company assets disallowed pursuant to Code Section
267(a)(1) or 707(b) as expenditures described in Code Section
705(a)(2)(B)); (3) in lieu of depreciation or amortization there shall
be taken into account Depreciation; (4) gain or loss resulting from
any disposition of Company assets 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 such asset rather than its
adjusted tax basis; (5) in the event of an adjustment of the Gross
Asset Value of any Company asset which requires that the Capital
Accounts of the Company be adjusted pursuant to Regulations Sections
1.704-1(b)(2)(iv)(e),(f) and (m), the amount of such adjustments is to
be taken into account as additional Net Profit or Net Loss pursuant to
Section 6.1; and (6) excluding any items specially allocated pursuant
to Section 6.2.
(EE) "Nonrecourse Liability" shall have the meaning set
forth in Regulations Section 1.752-1(a)(2).
(FF) "Outback" shall mean OS Tropical, Inc., a Florida
corporation, and a wholly-owned subsidiary of Outback Steakhouse, Inc.
("OSI").
(GG) "Percentage Interest" shall mean the percentage
ownership interest of a Member in the Company, as such percentage may
be adjusted from time to time pursuant to the terms of this Agreement.
The Members' Percentage Interests shall not be adjusted to reflect
additional Capital Contributions unless otherwise agreed in writing by
all Members. The initial Percentage Interests of the Member shall be:
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Percentage
Member Interest
------ --------
Outback 60%
CHC 40%
(HH) "Person" shall mean an individual, partnership,
limited partnership, limited liability company, corporation, trust, estate,
association or any other entity.
(II) "Proprietary Marks" shall mean Newly Developed Marks
(as defined in the Sublicense Agreement)and the marks listed on Exhibit B to
the Sublicense Agreement, and any other marks for which approval is given
under the Sublicense Agreement.
(JJ) "Regulations" shall, unless the context clearly
indicates otherwise, mean the regulations in force as final or temporary that
have been issued by the U.S. Department of Treasury pursuant to its authority
under the Code, and any successor regulations.
(KK) "Restaurant(s)" shall mean the Cheeseburger in
Paradise restaurants developed, owned, franchised and/or operated by the
Company.
(LL) "Subsidiary Entity" shall mean any corporation,
partnership, limited liability company or other entity formed to operate
Restaurants and of which the Company, directly or indirectly, owns an equity
interest.
(MM) "Sublicense Agreement" shall mean that certain
Sublicense Agreement of even date herewith by and among CHC, as Sublicensor,
the Company, as Sublicensee, and MHI and ▇▇▇▇▇ ▇▇▇▇▇▇▇.
(NN) "System" shall mean the Cheeseburger in Paradise
restaurant concept and operating system to be developed by the Company and all
elements thereof including, without limitation, recipes, operating technologies
and Proprietary Marks.
(OO) "Tax Matters Partner" (as defined in Code Section
6231) shall be Outback or its successor as designated pursuant to SECTION 9.8.
ARTICLE II. ORGANIZATIONAL MATTERS
2.1 Formation. The Members have formed a Delaware limited
liability company under the laws of the State of Delaware by filing the
Certificate with the Delaware Secretary of State and entering into this
Agreement, which Agreement shall be deemed effective as of the date the
Certificate was so filed. The rights and liabilities of the Members shall be
determined pursuant to the Act and this Agreement. To the extent that the
rights or obligations of any Member are different by reason of any provision of
this Agreement than they would be in the absence of such provision, this
Agreement shall, to the extent permitted by the Act, control.
2.2 Name. The name of the Company shall be "CHEESEBURGER IN
PARADISE, LLC". The business of the Company may be conducted under that name
or, upon compliance with applicable laws, any other name that the Management
Committee deems appropriate or advisable. The Management Committee shall file
any fictitious name
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certificates and similar filings, and any amendments thereto, that the
Management Committee considers appropriate or advisable.
2.3 Term. The term of this Agreement commenced on the filing of
the Certificate and shall continue until terminated as hereinafter provided.
2.4 Office and Agent. The Company shall continuously maintain a
registered office and agent in the State of Delaware. The registered office and
agent shall be as stated in the Certificate or as otherwise determined by the
Management Committee. The principal office of the Company shall be ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or as the Management
Committee may determine. The Company may also have such offices, anywhere
within and without the State of Delaware, as the Management Committee may
determine from time to time, or the business of the Company may require.
2.5 Addresses of the Members and the Management Committee. The
respective addresses of the Members and the Committee Members are set forth on
EXHIBIT A. A Member or Committee Member may change its address upon notice
thereof to the Management Committee.
2.6 Purpose and Business of the Company. The purpose of the
Company is to engage in any lawful activity for which a limited liability
company may be organized under the Act. Notwithstanding the foregoing, without
the consent of Outback and CHC, the Company shall not engage in any business
other than the following:
A. The establishment, ownership, operation and
franchising of Cheeseburger in Paradise Restaurants utilizing the System
anywhere in the World except Hawaii, Mexico and Japan.
B. Such other activities related or ancillary to and in
furtherance of the foregoing business as may be necessary, advisable, or
appropriate as determined by the Management Committee.
C. This Agreement shall not be deemed or construed to
create a relationship between the Members with respect to any activities
whatsoever except for those activities required for the accomplishment of the
Company's purpose as specified in this SECTION 2.6.
ARTICLE III. CAPITAL CONTRIBUTIONS
3.1 Nature and Amount of Contributions. The amount and nature of
the contributions of the Members are as follows:
Outback $600.00 cash
CHC $400.00 cash
3.2 Time for Making Contributions. The contribution of CHC shall
be made upon execution of this Agreement. The contribution of money by Outback
shall be made at such time(s) as the President of the Company shall request,
consistent with the Annual Business Plan, or as otherwise expressly provided by
this Agreement.
3.3 Interest on Capital Contributions. No Member shall receive,
or be entitled to receive, interest on its contributions to the capital of the
Company. Except as otherwise provided herein, no Member shall have the right to
demand or to receive the return of all or any part of its Capital Account or of
its contributions to the capital of the Company.
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3.4 No Additional Capital Contributions.
A. In no event shall any Member be obligated to make
any additional capital contributions, except as otherwise expressly provided
herein. No Member may make capital contributions to the Company of any property
other than cash unless all Members have agreed in writing to the Gross Asset
Value to be attributed to such property.
B. Outback shall provide all amounts necessary, after
taking into account all other funds and financing available to the Company, for
the establishment of new restaurants approved by the Management Committee.
Funding for new restaurants shall be provided by Outback as follows:
(i) Outback shall provide, either itself or
through a third-party lender, an equipment loan in the amount of Three Hundred
Thousand Dollars ($300,000) for each restaurant ("Equipment Loan"), such
Equipment Loan to bear interest at the then current market rate for such
financing and to be repaid in sixty (60) equal monthly installments of
principal and interest. The Equipment Loan shall be secured by a first priority
security interest in the equipment of the Restaurant for which the Equipment
Loan is provided. Repayments of the Equipment Loan shall not be considered
distributions of Distributable Cash.
(ii) Fifty percent (50%) of the remaining amount
necessary to open a new restaurant (after taking into account the Equipment
Loan) shall be provided by Outback as a capital contribution.
(iii) Fifty percent (50%) of the remaining amount
necessary to open a new restaurant (after taking into account the Equipment
Loan) shall be provided by Outback as a loan to the Company ("Company Loan"),
such Company Loan to bear interest at a variable rate equal to the "Prime Rate"
as reported in the Wall Street Journal from time to time, plus one percent
(1%), such interest rate to be adjusted monthly. The Company Loan shall be
repaid in one hundred twenty (120) equal monthly installments of principal,
plus interest. Repayments of the Company Loan shall not be considered
distributions of Distributable Cash.
3.5 Real Estate. The Company and its Subsidiary Entities shall
not acquire fee ownership of any land or buildings, including buildings
constructed on land held as lessee under a ground lease. The Members agree that
an Affiliate of Outback shall acquire fee ownership of any land acquisition
approved by the Management Committee and shall own all buildings constructed on
land owned in fee or held under a ground lease. The land and buildings shall be
leased by Outback's Affiliate to the Company or its Subsidiary Entities at
arm's length, fair market rental rates based on a creditworthy tenant with a
credit rating similar to Outback.
Whenever this Agreement grants CHC the right to purchase
Outback's Member Interest, such purchase right shall include the right to
purchase all, but not less than all, real estate owned by Outback or an Outback
Affiliate and used as the location of a Restaurant. Said real estate shall be
purchased for its fair market value, with fair market value being determined in
the same manner and using the same procedure as used for the determination of
the fair market value of Outback's Member Interest. Said right to purchase real
estate shall be subject to the same terms, provisions and conditions as CHC's
corresponding right to purchase Outback's Member Interest.
3.6 Capital Accounts. The Company shall establish and maintain an
individual Capital Account for each Member in accordance with Regulations
Section 1.704-1(b)(2)(iv). If a Member transfers all or a part of its
Membership Interest in accordance with this Agreement, such Member's Capital
Account attributable to the transferred Membership Interest shall carry over to
the new owner of such Membership Interest pursuant to Regulations Section
1.704-1(b)(2)(iv)(1).
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ARTICLE IV. MEMBERS
4.1 Limited Liability. Except as expressly set forth in this
Agreement or required by law, no Member shall be personally liable for any
debt, obligation, or liability of the Company, whether that liability or
obligation arises in contract, tort, or otherwise.
4.2 Admission of Additional Members. The Management Committee,
with the approval of a Majority Interest, may admit to the Company additional
Members. Any additional Members shall obtain Membership Interests and will
participate in the management, Net Profits, Net Losses, and distributions of
the Company on such terms as are determined by the Management Committee and
approved by a Majority Interest; provided, however, no Member's Percentage
Interest shall be diluted without the written consent of such Member.
Notwithstanding the foregoing, Assignees may only be admitted as substitute
Members in accordance with ARTICLE VII.
4.3 Subsidiary Entities. The Members agree that the Company will
develop, own and operate Restaurants through subsidiary entities ("Subsidiary
Entity"). The Company shall be the managing general partner or managing member
of each subsidiary. Ownership interests in Subsidiary Entities shall be
provided to each Restaurant's regional operations director and general manager
on such terms as the Management Committee shall establish from time to time.
Such ownership interests shall dilute the Company's ownership interest in the
Subsidiary Entity. The ownership interests of non-members, including but not
limited to, the regional operations director and general manager in each
Restaurant shall not exceed sixteen percent (16%) without the consent of all
Members. The provisions of the organizing and governing documents of each
Subsidiary Entity relating to the Company's right to receive distributions
shall be approved by Outback and CHC.
4.4 No Withdrawals or Resignations. No Member may withdraw or
resign from the Company. If a Member wrongfully withdraws or resigns as a
Member, that Member shall have no right to receive any distribution or any
payment for the fair value of its Membership Interest other than such
distributions or payments as are made to all Members pursuant to this
Agreement.
4.5 Termination of Membership Interest. Upon the transfer of a
Member's Membership Interest in violation of ARTICLE VII, the Membership
Interest of such Member shall be terminated and thereafter that Member shall be
an Assignee only unless such Membership Interest shall be purchased by the
Company and/or remaining Members pursuant to the terms of SECTION 7.8. Each
Member acknowledges and agrees that such termination or purchase of a
Membership Interest upon the occurrence of any of the foregoing events is not
unreasonable under the circumstances existing as of the date hereof.
4.6 Transactions With The Company. Subject to any limitations set
forth in this Agreement, including Section 5.6, and with the prior approval of
the Management Committee, a Member may lend money to and transact other
business with the Company. A Member also may enter into franchise agreements
(and any modifications or renewals thereof) with the Company. Subject to other
applicable law, any Member entering into such transaction(s) with the Company
has the same rights and obligations with respect thereto as a Person who is not
a Member. All such transactions shall comply with the standards contained in
Section 5.6.
4.7 Voting Rights. Except as expressly provided in this Agreement
or the Certificate, Members shall have no voting, approval or consent rights.
Except where this Agreement specifically requires a greater percentage
affirmative vote, in all matters in which a vote, approval or consent of the
Members is required, a vote, consent or approval of a Majority Interest (or, in
instances in which there are defaulting Members, non-defaulting Members who
hold a majority of the Percentage Interests held by all non-defaulting Members)
shall be sufficient to authorize or approve such act. All votes, approvals or
consents of the Members may be given or withheld, conditioned or delayed as the
Members may determine in their sole and absolute discretion.
4.8 Meetings of Members. Meetings of Members may be held at such
date, time and place as the Member calling the meeting may reasonably fix from
time to time. No annual or regular meetings of Members are required.
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Meetings of the Members may be called by any Member holding more than ten
percent (10%) of the Percentage Interests for the purpose of addressing any
matters on which the Members may vote. Written notice of a meeting of Members
shall be sent or otherwise given to each Member not less than seven (7) nor
more than sixty (60) days before the date of the meeting. The notice shall
specify the place, date and hour of the meeting and the general nature of the
business to be transacted.
The actions taken at any meeting of Members, however called
and noticed, and wherever held, have the same validity as if taken at a meeting
duly held after regular call and notice, if a quorum is present either in
person or by proxy, and if, either before or after the meeting, each of the
Members entitled to vote, who was not present in person or by proxy, signs a
written waiver of notice or consents to the holding of the meeting or approves
the minutes of the meeting. All such waivers, consents or approvals shall be
filed with the Company records or made a part of the minutes of the meeting.
Any action that may be taken at a meeting of Members may be
taken without a meeting, if a consent in writing setting forth the action so
taken, is signed and delivered to the Company within sixty (60) days of the
record date for that action by Members having not less than the minimum number
of votes that would be necessary to authorize or take that action at a meeting
at which all Members entitled to vote on that action at a meeting were present
and voted. All such consents shall be filed with the Management Committee or
the secretary, if any, of the Company and shall be maintained in the Company
records. Any Member giving a written consent, or the Member's proxy holders,
may revoke the consent by a writing received by the Management Committee or
secretary, if any, of the Company before written consents of the number of
votes required to authorize the proposed action have been filed.
Unless the consents of all Members entitled to vote have been
solicited in writing, (i) notice of any Member approval of an amendment to the
Certificate or this Agreement, a dissolution of the Company, or a merger of the
Company, without a meeting by less than unanimous written consent, shall be
given at least ten (10) days before the consummation of the action authorized
by such approval, and (ii) prompt notice shall be given of the taking of any
other action approved by Members without a meeting by less than unanimous
written consent, to those Members entitled to vote who have not consented in
writing.
ARTICLE V. MANAGEMENT AND CONTROL OF THE COMPANY
5.1 Management of the Company by Management Committee. The
business, property and affairs of the Company shall be managed exclusively by a
Management Committee consisting of five (5) individuals appointed by the
Members in accordance with SECTION 5.2A. Individuals named to the Management
Committee shall sometimes be referred to herein individually as a "Committee
Member" or collectively as "Committee Members". Except for situations in which
the approval of the Members is required by this Agreement, the Management
Committee shall have full, complete and exclusive authority, power, and
discretion to manage and control the business, property and affairs of the
Company, to make all decisions regarding those matters and to perform any and
all other acts or activities customary or incident to the management of the
Company's business, property and affairs.
5.2 Appointment of Management Committee
A. Number, Appointment and Qualifications. The Company
shall initially have five (5) Committee Members. For so long as the following
are Members, Outback shall name three (3) Committee Members and MHI shall name
two (2) Committee Members. If any of the foregoing cease to be a Member, the
right the Member has to appoint Committee Members shall be transferred to the
successor of such Member if such successor is admitted as a substitute Member.
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(i) Term of Service. Each Committee Member will
serve until his or her death or withdrawal from the Management Committee, or
until his or her removal from the Management Committee by the Member who
appointed him or her.
(ii) Management Committee:
"CHC Appointees" "Outback Appointees"
---------------- --------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇'▇▇▇▇▇▇▇
(iii) Resignation. A Committee Member may resign
at any time by giving written notice to the Members. The resignation of a
Committee Member shall take effect upon receipt of that notice or at such later
time as shall be specified in the notice. Unless otherwise specified in the
notice, the acceptance of the resignation shall not be necessary to make it
effective.
(iv) Removal. Outback Appointees to the
Management Committee may be removed only by Outback, with or without cause.
MHI's Appointees to the Management Committee may be removed only by MHI, with
or without cause.
(v) Vacancies. Vacancies on the Management
Committee shall be filled by the Member who originally appointed the vacating
Committee Member.
5.3 Powers of Management Committee.
▇. ▇▇▇▇▇▇ of Management Committee. Without limiting the
generality of SECTION 5.1, but subject to SECTION 5.3D and to the limitations
set forth elsewhere in this Agreement, the Management Committee shall have all
necessary powers to manage and carry out the purposes, business, property, and
affairs of the Company, including, without limitation, the power to exercise on
behalf and in the name of the Company all of the powers of a natural person,
including, without limitation, the power to:
(i) Authorize the execution and delivery of
agreements; subject to the limitations contained in this Agreement;
(ii) Acquire, purchase, lease, renovate,
improve, alter, rebuild, demolish, replace, and own real property and any other
property or assets that the Management Committee determines is necessary or
appropriate or in the interest of the business of the Company, and to acquire
options for the purchase of any such property;
(iii) Sell, exchange, lease, or otherwise dispose
of the real property and other property and assets owned by the Company, or any
part thereof, or any interest therein; provided, however, the license to use
Proprietary Marks shall not be transferred without the consent of MHI.
(iv) ▇▇▇ on, defend, or compromise any and all
claims or liabilities in favor of or against the Company; submit any or all
such claims or liabilities to arbitration; and confess a judgment against the
Company in connection with any litigation in which the Company is involved
(other than relating to the Management Committee); and
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(v) Retain legal counsel, auditors, and other
professionals in connection with the Company business and to pay therefor such
remuneration as the Management Committee may determine.
B. Annual Business Plan. At least sixty (60) days prior
to the commencement of each Fiscal Year, the President shall submit to the
Management Committee for its approval, the Annual Business Plan for the
Company. The President and Management Committee shall at all times use their
best efforts to operate the Company in conformity with the Annual Business
Plan.
C. Maximization of Value. The Management Committee
shall from time to time evaluate in good faith and present to the Members all
options available to the Company to maximize the value of each Member's
Percentage Interest in the Company, such as, but not limited to, an initial
public offering, strategic sale, or merger into OSI.
D. Limitations on Power of Management Committee.
(i) Limitations on Acts of Management
Committee. Except as otherwise required in this Agreement, the Management
Committee shall act by majority vote. The Management Committee shall not have
authority hereunder to cause the Company to engage in the following without
first obtaining the written consent of a Majority Interest (or such greater
Percentage Interest as is set forth below) of the Members:
(a) Notwithstanding the above, the
sale, exchange or other disposition of all, or substantially all, of the
Company's assets occurring as part of a single transaction or plan, or in a
series of related transactions, and which includes a transfer of the Company's
rights under the Sublicense Agreement, shall require the written consent of
Outback and CHC whether or not in connection with a dissolution; provided,
however, if Outback consents to such a sale, exchange or disposition and CHC
does not, then the sale, exchange or disposition shall not occur, but the fees
provided for in SECTION 6.6 B hereof shall terminate thirty (30) days after
Outback's approval of the sale, exchange or disposition;
(b) The borrowing of money from any
party in excess of $25,000, the issuance of evidences of indebtedness in
connection therewith, the refinancing, increase in the amount of, modification,
amendment, or changing of the terms, or extension of the time for the payment
of any indebtedness or obligation of the Company, and securing such
indebtedness by mortgage, deed of trust, pledge, security interest, or other
lien on Company assets;
(c) Notwithstanding the above, the
merger, reverse merger, consolidation, reorganization or any similar
transaction of the Company with a corporation, another limited liability
company or limited partnership or any other entity shall require the written
consent of Outback and MHI;
(d) Notwithstanding the above, any
amendment to the governing or organizing document of any Subsidiary Entity if
such amendment would modify the Company's ownership interest in the Subsidiary
Entity other than as permitted in SECTION 4.3 or the Company's rights to
distributions from the Subsidiary Entity shall require the written consent of
Outback and CHC;
(ii) Limitation on Execution of Documents. No
Committee Member may execute any document on behalf of the Company or cause the
Company to enter into any agreement or commitment without the prior
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authorization of the Management Committee as provided in this SECTION 5.3.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇ shall be the initial Committee Members authorized
to execute documents on behalf of the Company.
5.4 Liability of Management Committee Members. The Committee
Members shall not be liable to the Company or to any Member for any loss or
damage sustained by the Company or any Member, unless the loss or damage shall
have been the result of fraud, deceit, gross negligence, reckless or
intentional misconduct, breach of fiduciary duty, a knowing violation of law by
a Committee Member or a breach of the Committee Member's obligations under this
Agreement, in which event such Committee Member shall be so liable.
5.5 Devotion of Time. The Committee Members are not obligated to
devote all of their time or business efforts to the affairs of the Company. The
Committee Members shall devote whatever time and effort as is commercially
reasonable for the operation of the Company.
5.6 Transactions between the Company and Committee Member.
Notwithstanding that it may constitute a conflict of interest, a Committee
Member or his or her Affiliate may engage in any transaction (including,
without limitation, the purchase, sale, lease, or exchange of any property or
the rendering of any service) with the Company so long as the terms and
conditions of such transaction, on an overall basis, are fair and reasonable to
the Company and are at least as favorable to the Company as those that are
generally available from Persons capable of similarly performing them and in
similar transactions between parties operating at arm's length, and provided
that a majority of the Committee Members having no interest in such transaction
affirmatively vote or consent in writing to approve the transaction.
5.7 Officers. The Management Committee may appoint officers at
any time; however, the officers of the Company shall include a President and
such other officers as the Management Committee deems necessary and
appropriate. The compensation of the officers shall be paid by Outback. The
officers shall serve at the pleasure of the Management Committee, subject to
(a) all rights, if any, of an officer under an employment contract, and (b) the
right of a Majority Interest to remove any officer. Any individual may hold any
number of offices. The officers shall exercise such powers and perform such
duties as specified in this Agreement and as shall be determined from time to
time by the Management Committee.
5.8 President. All decisions as to the day to day operations of
the Company shall be made by the President. The President shall execute an
employment agreement acceptable to the President and the Management Committee.
The President shall not, without the approval of the Management Committee (or
the Members if such power is retained by the Members pursuant to this
Agreement):
A. Confess a judgment against the Company;
B. Admit any person as a Member;
C. Declare Bankruptcy on behalf of the Company;
D. Enter into any lease of real or personal property;
E. Enter into any loan transaction or incur any
indebtedness of the Company in excess of $25,000;
F. Execute any franchise agreement;
G. Purchase any real property; or
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H. Undertake any such other matter(s) as may be (i)
prohibited by the Management Committee, or (ii) are reserved to the Management
Committee or the Committee Members.
5.9 CHC Consulting Services. CHC shall provide consulting
services during the Term utilizing a commercially reasonable amount of time of
▇▇▇▇ ▇▇▇▇▇▇ and those to whom he delegates consulting services. The consulting
services shall include communication, telephonically, in person and in writing,
with the Company regarding location of new restaurants, design of new
restaurants, decor of new restaurants, menu design, and food and beverage
selection. CHC shall also be ▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ quality control representative
pursuant to the Sublicense Agreement.
ARTICLE VI. ALLOCATIONS OF NET PROFITS AND NET LOSSES AND DISTRIBUTIONS
6.1 Allocations of Net Profit and Net Loss
A. Net Loss. Net Loss shall be allocated first to
Outback in an amount equal to Outback's positive Capital Account balance until
such Capital Account balance has been reduced to zero, and then to the Members
in proportion to their Percentage Interests. Notwithstanding the previous
sentence, loss allocations to a Member shall be made only to the extent that
such loss allocations will not create a deficit Capital Account balance for
that Member in excess of an amount, if any, equal to such Member's share of
Company Minimum Gain. Any loss not allocated to a Member because of the
foregoing provision shall be allocated to the other Members (to the extent the
other Members are not limited in respect of the allocation of losses under this
SECTION 6.1A). Any loss reallocated under this SECTION 6.1A shall be taken into
account in computing subsequent allocations of income and losses pursuant to
this ARTICLE VI, so that the net amount of any item so allocated and the income
and losses allocated to each Member pursuant to this ARTICLE VI, to the extent
possible, shall be equal to the net amount that would have been allocated to
each such Member pursuant to this ARTICLE VI if no reallocation of losses had
occurred under this SECTION 6.1A.
B. Net Profit. Net Profit shall be allocated to the
Members as follows:
(i) First, Net Profit for each Fiscal Year
shall be allocated to those Members who have received distributions of
Distributable Cash for such Fiscal Year, in an amount equal to the
Distributable Cash received;
(ii) Second, remaining Net Profit for each
Fiscal Year shall be allocated to the Members who have previously received
allocations of Net Loss in proportion to the cumulative allocation of Net Loss
until the Members have been allocated Net Profit equal to the prior allocations
of Net Loss;
(iii) Thereafter, remaining Net Profit shall be
allocated to the Members in accordance with their Percentage Interests.
C. Company Loan. If any Member shall receive an
allocation of Net Profit for any Fiscal Year in excess of (i)
the allocations of Net Loss and (ii) the distributions of
Distributable Cash to such Member for such Fiscal Year, then
the Company shall loan to such Member an amount equal to 40%
of such excess ("Tax Loan"). Notwithstanding the foregoing,
no Tax Loan shall be made or required if an allocation of Net
Profit in excess of (i) the allocation of Net Loss and (ii)
the distributions of Distributable Cash, results from or
arises out of (i) the sale, exchange or other disposition of
all or substantially all of the Company's assets or (ii) the
dissolution or liquidation of the Company. Any such Tax Loan
shall bear interest at a rate equal to the "prime rate" in
effect from time to time as reported in the Wall Street
Journal plus one percent (1%) and shall be repaid in full
prior to any distributions of Distributable Cash to such
Member.
6.2 Special Allocations. Notwithstanding SECTION 6.1:
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A. Minimum Gain Chargeback. If there is a net decrease
in Company Minimum Gain during any Fiscal Year, each Member shall be specially
allocated items of Company income and gain for such Fiscal Year (and, if
necessary, in subsequent fiscal years) in an amount equal to the portion of
such Member's share of the net decrease in Company Minimum Gain that is
allocable to the disposition of Company property subject to a Nonrecourse
Liability, which share of such net decrease shall be determined in accordance
with Regulations Section 1.704-2(g)(2). Allocations pursuant to this SECTION
6.2A shall be made in proportion to the amounts required to be allocated to
each Member under this SECTION 6.2A. The items to be so allocated shall be
determined in accordance with Regulations Section 1.704-2(f). This SECTION 6.2A
is intended to comply with the minimum gain chargeback requirement contained in
Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.
B. Chargeback of Minimum Gain Attributable to Member
Nonrecourse Debt. If there is a net decrease in Company Minimum Gain
attributable to a Member Nonrecourse Debt, during any Fiscal Year, each Member
who has a share of the Company Minimum Gain attributable to such Member
Nonrecourse Debt (which share shall be determined in accordance with
Regulations Section 1.704-2(i)(5)) shall be specially allocated items of
Company income and gain for such Fiscal Year (and, if necessary, in subsequent
Fiscal Years) in an amount equal to that portion of such Member's share of the
net decrease in Company Minimum Gain attributable to such Member Nonrecourse
Debt that is allocable to the disposition of Company property subject to such
Member Nonrecourse Debt (which share of such net decrease shall be determined
in accordance with Regulations Section 1.704-2(i)(5)). Allocations pursuant to
this SECTION 6.2B shall be made in proportion to the amounts required to be
allocated to each Member under this SECTION 6.2B. The items to be so allocated
shall be determined in accordance with Regulations Section 1.704-2(i)(4). This
SECTION 6.2B is intended to comply with the minimum gain chargeback requirement
contained in Regulations Section 1.704-2(i)(4) and shall be interpreted
consistently therewith.
C. Nonrecourse Deductions. Any nonrecourse deductions
(as defined in Regulations Section 1.704-2(b)(1)) for any Fiscal Year or other
period shall be specially allocated to the Members in proportion to their
Percentage Interests.
D. Member Nonrecourse Deductions. Those items of
Company loss, deduction, or Code Section 705(a)(2)(B) expenditures which are
attributable to Member Nonrecourse Debt for any Fiscal Year or other period
shall be specially allocated to the Member who bears the economic risk of loss
with respect to the Member Nonrecourse Debt to which such items are
attributable in accordance with Regulations Sections 1.704-2(b)(4) and
1.704-2(i).
E. Qualified Income Offset. If a Member unexpectedly
receives any adjustments, allocations, or distributions described in
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), or any other event
creates a deficit balance in such Member's Capital Account in excess of such
Member's share of Company Minimum Gain, then items of Company income or gain
shall be specially allocated to such Member in an amount and manner which
complies with the "qualified income offset" rules of Regulations Section
1.704-1(b)(ii)(d).
6.3 Code Section 704(c) Allocations. Notwithstanding any other
provision in this ARTICLE VI, in accordance with Code Section 704(c) and the
Regulations promulgated thereunder, income, gain, loss, and deduction with
respect to any property contributed to the capital of the Company shall, solely
for tax purposes, be allocated among the Members 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 fair market value on the date of
contribution. Allocations pursuant to this SECTION 6.3 are solely for purposes
of federal, state and local taxes. As such, they shall not affect or in any way
be taken into account in computing a Member's Capital Account or share of
profits, losses, or other items of distributions pursuant to any provision of
this Agreement.
6.4 Allocation of Net Profits and Losses and Distributions in
Respect of a Transferred Interest. If any Economic Interest is transferred, or
is increased or decreased by reason of the admission of a new Member or
otherwise,
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during any Fiscal Year of the Company, Net Profit or Net Loss for such Fiscal
Year shall be assigned pro rata to each day in the particular period of such
Fiscal Year to which such item is attributable (i.e., the day on or during
which it is accrued or otherwise incurred) and the amount of each such item so
assigned to any such day shall be allocated to the Member or Assignee based
upon its respective Economic Interest at the close of such day.
However, for the purpose of accounting convenience and
simplicity, the Company shall treat a transfer of, or an increase or decrease
in, an Economic Interest which occurs at any time during a semi-monthly period
(commencing with the semi-monthly period including the date hereof) as having
been consummated on the last day of such semi-monthly period, regardless of
when during such semi-monthly period such transfer, increase, of decrease
actually occurs (i.e., sales and dispositions made during the first fifteen
(15) days of any month will be deemed to have been made on the 15th day of the
month).
Notwithstanding any provision above to the contrary, gain or
loss of the Company realized in connection with a sale or other disposition of
any of the assets of the Company shall be allocated solely to the parties
owning Economic Interests as of the date such sale or other disposition occurs.
6.5 Distributions of Distributable Cash by the Company.
A. Subject to applicable law and any limitations
contained in this Agreement, all Distributable Cash of the Company shall be
distributed to the Members no less frequently than quarterly.
B. Subject to ARTICLE X, all distributions of
Distributable Cash to Members shall be made in accordance with their Percentage
Interests. Notwithstanding the foregoing, in the event the Company receives
licensing fees or royalties or any other form of revenue for use of the
Proprietary Marks on any product sold through a channel of trade other than the
Restaurants, such licensing fees and royalties shall be distributed fifty
percent (50%) to CHC and fifty percent (50%) to Outback.
C. The parties acknowledge and agree that sixteen
percent (16%) of all distributions of Distributable Cash to CHC under any
provision of this Agreement constitute payment of a royalty pursuant to Section
7c of the Sublicense Agreement.
D. All distributions shall be made only to the Persons
who, according to the books and records of the Company, are the holders of
record of the Economic Interests in respect of which such distributions are
made on the actual date of distribution. Subject to SECTION 6.8, neither the
Company nor any Management Committee shall incur any liability for making
distributions in accordance with this SECTION 6.5.
6.6 Fees to Members.
A. The Company shall pay to CHC the sum of Nine Hundred
Eighty Thousand Dollars ($980,000) for its services pursuant to SECTION 5.9 and
shall pay to CHC, pursuant to the Sublicense Agreement, the sum of Twenty
Thousand Dollars ($20,000), as consideration for CHC's license of the
Proprietary Marks. Upon the opening of the Company's twentieth (20th)
Restaurant, the Company shall pay to CHC an additional Nine Hundred Eight
Thousand Dollars ($980,000) for its services pursuant to SECTION 5.9 and shall
pay to CHC, pursuant to the Sublicense Agreement, an additional Twenty Thousand
Dollars ($20,000), as additional consideration for CHC's license of the
Proprietary Marks. Outback shall contribute to the Company the funds required
under this SECTION 6.6(A) as a capital contribution.
B. Subject to SECTION 5.3D(I)(A), the Company shall pay
to CHC a fee equal to one and 68/100 percent (1.68%) of each Restaurant's Net
Sales (hereinafter defined) for its services pursuant to SECTION 5.9. Subject
to
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SECTION 5.3D(i)(a), the Company shall pay to CHC, pursuant to the Sublicense
Agreement, a royalty equal to 32/100 percent (.32%) of each Restaurant's Net
Sales. No fees shall be paid to CHC under this Section with respect to any Net
Sales derived from licensing fees or royalties or any other form of revenue
received by the Company for use of the Proprietary Marks on any product sold
through a channel of trade other than the Restaurants. The fee shall be paid
monthly, within ten business days after each calendar month.
C. The Company shall pay to Outback an accounting and
supervision fee equal to one and six tenths percent (1.6%) of each Restaurant's
Net Sales. The accounting and supervision fee shall be paid monthly within ten
business days after each calendar month.
D. The fees provided for in this SECTION 6.6 shall not
be considered distributions of Distributable Cash to the Members.
E. Net Sales shall mean all revenue (net of credit card
processing fees) from the sale of all services and products and all other
income of every kind and nature related to each Restaurant, whether for cash or
credit and regardless of collection in the case of credit; provided, however,
that "net sales" shall not include (i) any sales taxes or other taxes collected
from customers for transmittal to the appropriate taxing authority or (ii) any
sales recorded for control purposes but for which no payment is received.
6.7 Form of Distribution. Except as provided in SECTION 10.4, a
Member, regardless of the nature of the Member's Capital Contribution, has no
right to demand and receive any distribution from the Company in any form other
than cash. Except as provided in SECTION 10.4, no Member may be compelled to
accept from the Company a distribution of any asset in kind in lieu of a
proportionate distribution of money being made to other Members and no Member
may be compelled to accept a distribution of any asset in kind.
6.8 Restriction on Distributions. No distribution of
Distributable Cash shall be made if, after giving effect to the distribution,
all liabilities of the Company, other than liabilities to Members on account of
their Membership Interests and liabilities for which the recourse of creditors
is limited to specified property of the Company, exceed the fair value of the
assets of the Company, except that the fair value of property that is subject
to a liability for which the recourse of creditors is limited shall be included
in the assets of the Company only to the extent that the fair value of that
property exceeds that liability.
6.9 Return of Distributions. A Member who receives a distribution
in violation of SECTION 6.8, and who knew at the time of the distribution that
the distribution violated SECTION 6.8, shall be liable to the Company for the
amount of the distribution. A Member who receives a distribution in violation
of SECTION 6.8, and who did not know at the time of the distribution that the
distribution violated SECTION 6.8, shall not be liable for the amount of the
distribution. A Member who receives a distribution shall have no liability for
the amount of the distribution after the expiration of three (3) years from the
date of the distribution unless an action to recover the distribution from such
Member is commenced prior to the expiration of said three (3)-year period and
an adjudication of liability against such Member is made in the said action.
6.10 Obligations of Members to Report Allocations. The Members are
aware of the income tax consequences of the allocations made by this ARTICLE VI
and SECTION 10.4 and hereby agree, unless otherwise required by law or by
agreement with government authorities, to report their shares of Company income
and loss for income tax purposes in accordance with the terms of this
Agreement.
ARTICLE VII. TRANSFER AND ASSIGNMENT OF INTERESTS
7.1 Transfer and Assignment of Interests.
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A. General Restriction. Except as otherwise provided in
this ARTICLE VII, a Member shall not be entitled to transfer, assign, convey,
sell, encumber or in any way alienate all or any part of its Membership
Interest (collectively, "transfer") except with the prior written consent of
all Members, which consent may be given or withheld, conditioned or delayed, as
the Members may determine in their sole and absolute discretion.
Notwithstanding any other provision of this Agreement, no transfer whatsoever
shall be made to any person or entity (i) that is a competitor of the
non-Transferor Member, or (ii) has a character or reputation that would, in the
reasonable opinion of the non-Transferor Member, adversely impact the Company
or its business.
B. Transfers of Interests in Members. Without limiting
the generality of the foregoing, the sale or exchange of at least twenty
percent (20%) of the equity or voting stock of a Member, if a Member is a
corporation, or the transfer of an interest or interests of at least twenty
percent (20%) in the capital or profits or voting interest of a Member (whether
accomplished by the sale or exchange of interests or by the admission of new
partners or members), if a Member is a partnership or limited liability
company, or the cumulative transfer of such interests in a Member which
effectively equal the foregoing (including transfer of interests followed by
the incorporation of a Member and subsequent stock transfers, or transfers of
stock followed by the liquidation of a Member and subsequent transfers of
interests) will be deemed to constitute an assignment of a Membership Interest
subject to this ARTICLE VII. After the consummation of any transfer of any part
of a Membership Interest, the Membership Interest so transferred shall continue
to be subject to the terms and provisions of this Agreement and any further
transfers shall be required to comply with all the terms and provisions of this
Agreement.
C. Improper Transfers Void. Transfers in violation of
this ARTICLE VII shall be null and void and the transferee shall not become a
Member or Assignee.
7.2 Further Restrictions on MHI's Principals. CHC, MHI and the
MHI's Principals acknowledge and agree that Outback has entered into this
Agreement in reliance on the agreement of the MHI Principals to restrict
transfer of ownership interests in MHI, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ hereby
represent and warrant to Outback that ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ are members
and managers on the governing board of MHI, and that ▇▇▇▇▇ ▇▇▇▇▇▇▇ is the owner
of a majority of the membership interests of MHI. The ownership of a majority
of the member interests of MHI by ▇▇▇▇▇ ▇▇▇▇▇▇▇ is a material inducement to
Outback entering into this Agreement. Except as provided in SECTION 7.4, ▇▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ hereby covenant and agree that they shall not, in any
manner, transfer, alienate or encumber any of the member interests, or other
voting or ownership interest, in MHI without the prior written consent of
Outback, which consent may be granted or denied in Outback's sole discretion.
Further, MHI, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ hereby covenant and agree that they
shall not in any manner allow any action to be taken that would result in ▇▇▇▇▇
▇▇▇▇▇▇▇, individually, having insufficient voting power to control all material
matters submitted to a vote of MHI's members that relate to CHC or the Company.
Notwithstanding the foregoing, the MHI Principals may make such transfers of
interests in MHI if, prior to such transfer, ▇▇▇▇▇ ▇▇▇▇▇▇▇, individually,
acquires and maintains majority ownership of CHC and sufficient voting power to
control all material matters submitted to a vote of CHC's members, and
following any such transfer, the provisions of this SECTION 7.2 shall apply
with respect to ▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ ownership of CHC.
7.3 Further Restrictions on Transfer of Interests. In addition to
other restrictions found in this Agreement, no Member shall transfer all or any
part of its Membership Interest:
A. Without compliance with all federal and state
securities law, and
B. If the Membership Interest to be transferred, when
added to the total of all other Membership Interests transferred in the
preceding twelve (12) consecutive months prior thereto, would cause the tax
termination of the Company under Code Section 708(b)(1)(B).
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7.4 Permitted Transfers.
A. A Membership Interest may be transferred to any
other Member, subject to compliance with SECTION 7.2 AND 7.3, and without the
prior written consent of the other Members as required by SECTION 7.1.
B. Subject to the restrictions of SECTION 7.2: ▇▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ may make bona fide gifts of interests in MHI to their
respective family members, or to one or more trusts for the benefit of their
family members, for estate planning purposes provided that ▇▇▇▇▇ ▇▇▇▇▇▇▇
remains in compliance with SECTION 7.2 hereof.
7.5 Effective Date of Permitted Transfers. Any permitted transfer
of all or any portion of a Membership Interest or an Economic Interest shall be
effective as of the date provided in SECTION 6.4 following the date upon which
the requirements of SECTIONS 7.1, 7.2 and 7.3 have been met. The Management
Committee shall provide the Members with written notice of such transfer as
promptly as possible after the requirements of SECTIONS 7.1, 7.2 and 7.3 have
been met. Any transferee of a Membership Interest shall take subject to the
restrictions on transfer imposed by this Agreement.
7.6 Substitution of Members. An Assignee shall have the right to
become a substitute Member only if (i) the requirements of SECTIONS 7.1, 7.2
AND 7.3 hereof are met, (ii) the Assignee executes an instrument satisfactory
to the Management Committee accepting and adopting the terms and provisions of
this Agreement, and (iii) the Assignee pays any reasonable expenses in
connection with its admission as a new Member. The admission of an Assignee as
a substitute Member shall not result in the release of the Member which
assigned the Membership Interest from any liability that such Member may have
to the Company.
7.7 Rights of Legal Representatives. If a Member who is an
individual dies or is adjudged by a court of competent jurisdiction to be
incompetent to manage the Member's person or property, the Member's executor,
administrator, guardian, conservator, or other legal representative may
exercise all of the Member's rights for the purpose of settling the Member's
estate or administering the Member's property, including any power the Member
has under the Certificate or this Agreement to give an Assignee the right to
become a Member. If a Member is a corporation, trust, or other entity and is
dissolved or terminated, the powers of that Member may be exercised by its
legal representative or successor.
7.8 No Effect to Transfers in Violation of Agreement. Any
transfer of a Membership Interest in violation of this ARTICLE VII, shall be
null and void and the transferee shall not become a Member or Assignee. The
transferee shall have no right to vote or participate in the management of the
business, property and affairs of the Company or to exercise any rights of a
Member.
Upon and contemporaneously with any transfer (whether arising
out of an attempted charge upon that Member's Economic Interest by judicial
process, a foreclosure by a creditor of the Member or otherwise) of a Member's
Economic Interest which does not at the same time transfer the balance of the
rights associated with the Membership Interest transferred by the Member
(including, without limitation, the rights of the Member to vote or participate
in the management of the business, property and affairs of the Company), the
Company shall purchase from the Member, and the Member shall sell to Company
for a purchase price of one hundred dollars ($100), all remaining rights and
interests retained by the Member that relate to or allow for participation in
the management of the Company or to vote on any matter submitted to Members for
a vote. Such purchase and sale shall not, however, result in the release of the
Member from any liability to the Company as a Member.
7.9 Rights of First Refusal.
A. Mutual Rights. Except for transfers pursuant to
SECTION 7.4, but subject to SECTION 7.1, 7.2 AND 7.3, if a Member (or any
Member Parent) (each a "Transferor") desires to transfer not more than 20% of
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his or its Membership Interest (or, in the case of a Member Parent not more
than 20% of his or its Membership Interest or other voting or ownership
interest in CHC or Outback) to any person or entity, the Transferor shall,
prior to any such Transfer, give the Management Committee written notice of
such desire ("Notice of Transfer"), which notice shall specify the Membership
Interest to be transferred (for purposes of SECTION 7.9A AND 7.9B, "Membership
Interest" shall also mean, in the case of a Member Parent, any membership
interest or other voting or ownership interest in a Member), the identity of
the proposed transferee, the purchase price for the Membership Interest and the
terms for payment of said price, including the treatment of Company liabilities
and the Transferor's liability therefore ("Purchase Price"). Any purported
Notice of Transfer that does not comply with the requirements of this SECTION
7.9A shall be null and void and of no effect hereunder. The Management
Committee shall immediately notify the Members of such Notice of Transfer. Upon
receipt of a proper Notice of Transfer, the other Members shall thereupon have
the right to acquire the portion of the Transferor's Membership Interest as is
specified in the Notice of Transfer, on terms identical to the Purchase Price.
In the event the Purchase Price contains terms that the other Members cannot
reasonably duplicate, the Members shall have the right to substitute the
reasonable cash equivalent thereof. The other Members shall have the right to
purchase the Transferor's Membership Interest specified in the Notice of
Transfer in proportion to the other Member's Percentage Interests or in such
other proportions as the other Members agree.
B. Exercise of Rights.
(i) The purchasing Member(s) shall exercise the
right of first refusal contained herein by mailing written notice thereof
("Notice of Election") to the Transferor within forty (40) days of mailing of
the Notice of Transfer. In the event no purchasing Member(s) mail a Notice of
Election to the Transferor within said 40-day period, the purchase option
contained herein shall lapse (except as otherwise provided in SECTION 7.10). In
the event a Member timely exercises the purchase option contained herein, such
Member shall mail written notice to the Transferor of whether the Member has
elected to purchase the entire Membership Interest of the Transferor or such
portion as was specified in the Notice of Transfer, if less; such notice to be
mailed within ten (10) days of the mailing of the Notice of Election.
(ii) The closing for any purchase hereunder
shall be consummated and closed in the Company's principal office on a date and
at a time designated by the purchasing Member in a notice to the Transferor,
provided such consummation and closing date shall occur within ninety-five (95)
days from the date of mailing of the Notice of Election. At such closing, the
Transferor shall execute and deliver all documents and instruments as are
necessary and appropriate, in the opinion of counsel for the Company, to
effectuate the transfer of the Transferor's Membership Interest in accordance
with the terms of the Notice of Transfer and the purchasing Member shall
deliver the Purchase Price.
7.10 Transfer Permitted After Failure to Elect. Subject to the
foregoing sentence and to SECTION 7.1, 7.2 AND 7.3, in the event a Member does
not elect pursuant to SECTION 7.9 to exercise the purchase option specified
therein, or in the event the closing for any purchase pursuant to SECTION 7.9
does not occur within the time limits specified therein, then the Transferor
shall be free to transfer the exact portion of his, her, or its Membership
Interest as was specified in the Notice of Transfer to the person or entity
identified in the Notice of Transfer in exchange for the exact Purchase Price
as was specified in the Notice of Transfer; PROVIDED, HOWEVER, that the closing
and consummation of such transfer shall occur within one hundred thirty (130)
days after the date of mailing of the Notice of Transfer and provided further
that such transfer must comply with all other requirements of this Article VII.
In the event such transfer is not so closed and consummated within such period,
the purchase option granted in SECTION 7.9 shall again be exercisable and the
Transferor shall make no Transfer of any portion of his Membership Interest, or
any right, title or interest therein, until such Transferor has again complied
with all terms and provisions of this ARTICLE VII. In the event a Member does
not elect pursuant to SECTION 7.9 to exercise the purchase option contained
therein and the Transferor makes a permitted Transfer in
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compliance with the terms and provisions of this ARTICLE VII, then the person
or entity to whom such Membership Interest is transferred shall nevertheless
acquire such Membership Interest subject to the restriction imposed on such
Membership Interest under this ARTICLE VII as to further transfers of such
Membership Interest, and provided further that any such transferee shall agree
in writing to be bound by all terms and provisions of this Agreement.
ARTICLE VIII. CESSATION OF DEVELOPMENT
8.1 Cessation of Development. For purposes of this Agreement the
Company shall be deemed to have ceased development if (i) during the first
three (3) years from the date of this Operating Agreement the Company has not,
in any period of eighteen (18) consecutive months, executed a lease or purchase
contract for a new Restaurant, or, in any period of twenty-four (24)
consecutive months, opened a new Restaurant; or (ii) the Company has not, in
any period of twenty-four (24) consecutive months beginning after the
expiration of three (3) years from the date of this Operating Agreement, opened
three (3) new Restaurants.
8.2 Consequences of Cessation. If the Company ceases development,
the Company shall continue in existence and:
A. CHC shall have the exclusive right and option to
purchase the entire (and not less than the entire) Member Interest of Outback,
for its Fair Market Value.
B. Determination of Fair Market Value. For the purposes
of this SECTION 8.2, the "Fair Market Value" of the Membership Interest at
issue shall be determined in the following manner:
(i) Outback and CHC shall in good faith attempt
to agree upon the Fair Market Value of Outback's Membership Interest within ten
(10) days following Outback's receipt of CHC's notice of exercise of its
purchase option. If there is no agreement on the Fair Market Value, Outback and
CHC shall in good faith attempt to agree upon a mutually acceptable appraiser
within fifteen (15) days following the date of the notice of exercise. In the
event they fail to so agree, two (2) appraisers shall be appointed within
thirty (30) days following the date of the notice of exercise, one by Outback,
and one by CHC. If Outback, on the one hand, or CHC, on the other hand, fail to
appoint an appraiser within the thirty (30) day period specified herein, the
sole appraiser appointed within such thirty (30) day period shall be the sole
appraiser for the purposes of determining Fair Market Value of Outback's
Membership Interest to be purchased pursuant to this SECTION 8.2. Outback and
CHC shall promptly provide notice of the name of the appraiser so appointed by
such party to the other. The initial two appraisers shall in good faith attempt
to agree on the appointment of a third appraiser within fifteen (15) days of
the expiration of the thirty (30) day period. If the first two appraisers fail
to agree upon a third appraiser within such fifteen (15) day period, either
Outback or CHC may demand the appointment of an appraiser be made by the then
director of the Regional Office of the American Arbitration Association located
nearest to Orlando, Florida, in which event the appraiser appointed thereby
shall be the third appraiser. Each of the appraisers shall submit to Outback
and CHC, within thirty (30) days after the final appraiser has been appointed
("Appraisal Period"), a written appraisal (the "Appraisal") of the Fair Market
Value of Outback's Membership Interest.
(ii) In connection with any appraisal conducted
pursuant to this Agreement, the parties hereto agree that any appraiser
appointed hereunder shall be given full access during normal business hours to
all information required and relevant to a valuation of Outback's Membership
Interest.
(iii) If three appraisers are appointed, the Fair
Market Value of Outback's Membership Interest in question shall be equal to the
numerical average of three appraised determinations; provided, however, that if
the difference between any two appraisals is not more than ten percent (10%) of
the lower of the two, and the third
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appraisal differs by more than twenty-five percent (25%) of the lower of the
other two appraisals, the numerical average of such two appraisals shall be
determinative.
(iv) Any appraiser, to be qualified to conduct
an appraisal hereunder, shall be an independent appraiser (i.e., not affiliated
with Outback, its officers, directors or controlling persons, CHC or the MHI
Principals), an M.A.I. appraiser or its equivalent, and shall be reasonably
competent as an expert to appraise the value of the Membership Interest. If any
appraiser initially appointed under this Agreement shall, for any reason, be
unable to serve, a successor appraiser shall be promptly appointed in
accordance with the procedures pursuant to which the predecessor appraiser was
appointed.
Notwithstanding the foregoing, if the determination of the
Fair Market Value of Outback's Membership Interest by appraisal is not
completed and all appraisal reports delivered as provided herein within the
Appraisal Period, then all closing, payment, and similar dates subsequent
thereto shall be automatically extended one (1) day for each day delivery of
the appraisal reports is delayed beyond the end of the Appraisal Period.
(v) The cost of the appraiser appointed by each
party shall be borne by each such party. The cost of the third appraiser, if
any, or the sole appraiser, in the event Outback and CHC mutually agree upon a
single appraiser, shall be borne equally by Outback and CHC.
C. Exercise of Rights.
(i) CHC shall exercise the purchase option
contained herein by giving written notice thereof ("Notice of Election") to
Outback within sixty (60)days of the date of cessation of development (being
the first day of the calendar month following the expiration of the applicable
period). If not timely and properly exercised as provided in this Section,
CHC's purchase option shall lapse and shall thereafter be null and void.
(ii) The closing for any purchase hereunder
shall be consummated and closed in the Company's principal office on a date and
at a time designated by CHC in a notice to Outback, provided such consummation
and closing date shall occur within ninety (90) days from the end of the
Appraisal Period. At such closing, Outback shall execute and deliver all
documents and instruments as are necessary and appropriate, in the opinion of
counsel for the Company, to effectuate the transfer of Outback's Membership
Interest and CHC shall deliver the purchase price.
8.3 Purchase Option on Acquisition of Control. In event any
person or group of persons acting in concert (other than (i) a person or group
that includes existing members of OSI's executive management as active
participants or (ii) institutional investors who do not take an active role in
management of OSI) acquires sufficient capital stock of OSI to control OSI (but
in no event shall control be deemed to exist with ownership of less than thirty
percent (30%) of OSI's capital stock), CHC shall have the exclusive right and
option to purchase the entire (and not less than the entire) Membership
Interest of Outback for its Fair Market Value. For purposes of this SECTION 8.3
Fair Market Value shall have the same meaning and be determined in the same
manner as provided in SECTION 8.2B. The purchase option provided herein shall
be subject to the same terms and conditions as provided in SECTION 8.2C
(substituting "ninety (90) days from acquisition of control" for "ninety (90)
days of cessation of development" in SECTION 8.2C(I)).
ARTICLE IX. ACCOUNTING, RECORDS, REPORTING BY MEMBERS
9.1 Books and Records. The books and records of the Company shall
be kept, and the financial position and the results of its operations recorded,
in accordance with generally accepted accounting principles ("GAAP"). The books
and records of the Company shall reflect all the Company transactions and shall
be appropriate and adequate for the Company's business. The Company shall
maintain at its principal office all of the following:
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A. A current list of the full name and last known
business or residence address of each Member and Assignee set forth in
alphabetical order, together with the Capital Contributions, Capital Account
and Percentage Interest of each Member and Assignee;
B. A current list of the full name and business or
residence address of each Committee Member;
C. A copy of the Certificate and any and all amendments
thereto together with executed copies of any powers of attorney pursuant to
which the Certificate or any amendments thereto have been executed;
D. Copies of the Company's federal, state, and local
income tax or information returns and reports, if any, for the six (6) most
recent taxable years;
E. A copy of this Agreement and any and all amendments
thereto together with executed copies of any powers of attorney pursuant to
which this Agreement or any amendments thereto have been executed;
F. Copies of the financial statements of the Company,
if any, for the six (6) most recent Fiscal Years; and
G. The Company's books and records as they relate to
the internal affairs of the Company for at least the current and past four (4)
Fiscal Years.
9.2 Delivery to Members and Inspection.
A. Upon the request of any Member or Assignee,
President shall promptly deliver to the requesting Member or Assignee, at the
expense of the Company, a copy of the information required to be maintained
under SECTION 9.1.
B. Each Member, Committee Member and Assignee has the
right, upon reasonable request for purposes reasonably related to the interest
of the Person as Member, Committee Member or Assignee, to:
(i) inspect and copy during normal business
hours any of the Company records described in SECTION 9.1;
(ii) obtain from the Management Committee,
promptly after their becoming available, a copy of the Company's federal,
state, and local income tax or information returns for each Fiscal Year; and
(iii) receive a monthly income statement and cash
flow statement of the Company and a balance sheet of the Company as of the end
of that period. The statements and balance sheet shall be delivered or mailed
to the Members within twenty (20) days after the end of each such period.
C. Any request, inspection or copying by a Member or
Assignee under this SECTION 9.2 may be made by that Person or that Person's
agent or attorney.
9.3 Annual Statements.
A. The Management Committee shall cause an annual
report to be sent to each of the Members not later than ninety (90) days after
the close of the Fiscal Year. The report shall contain a balance sheet as of
the end of the Fiscal Year and an income statement and statement of changes in
financial position for the Fiscal Year. Such financial statements shall be
accompanied by the report thereon, if any, of the independent accountants
engaged by the
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Company or, if there is no report, the certificate of the Management Committee
that the financial statements were prepared without audit from the books and
records of the Company. If the Management Committee determines to have the
Company's financial statements audited, the cost of such audit shall be paid by
the Company.
B. Outback shall cause to be prepared at least
annually, at Outback's expense, information necessary for the preparation of
the Members' and Assignees' federal and state income tax returns. The
Management Committee shall send or cause to be sent to each Member or Assignee
within sixty (60) days after the end of each taxable year such information as
is necessary to complete federal and state income tax or information returns,
and a copy of the Company's federal, state, and local income tax or information
returns for that year.
9.4 Financial and Other Information. The Management Committee
shall provide such financial and other information relating to the Company or
any other Person in which the Company owns, directly or indirectly, an equity
interest, as a Member may request.
9.5 Filings. Outback, at Outback's expense, shall cause the
income tax returns for the Company to be prepared and timely filed with the
appropriate authorities. Outback, , at Company expense, shall also cause to be
prepared and timely filed, with appropriate federal and state regulatory and
administrative bodies, amendments to, or restatements of, the Certificate and
all reports required to be filed by the Company with those entities under the
Act or other then current applicable laws, rules, and regulations. If a
Committee Member is required by the Act to execute or file any document fails,
after demand, to do so within a reasonable period of time or refuses to do so,
any other Committee Member or Member may prepare, execute and file that
document.
9.6 Bank Accounts. The Management Committee shall maintain the
funds of the Company in one or more separate bank accounts in the name of the
Company, and shall not permit the funds of the Company to be commingled in any
fashion with the funds of any other Person.
9.7 Accounting Decisions and Reliance on Others. All decisions as
to accounting matters, except as otherwise specifically set forth herein, shall
be made by the Management Committee. All accounting decisions shall be made in
accordance with GAAP. The Management Committee may rely upon the advice of its
accountants as to whether such decisions are in accordance with GAAP.
9.8 Tax Matters for the Company Handled by Management Committee
and Tax Matters Partner. The Management Committee shall from time to time cause
the Company to make such tax elections it deems to be in the best interests of
the Company and the Members. The Tax Matters Partner shall represent the
Company (at Outback's expense) in connection with all examinations of the
Company's affairs by tax authorities, including resulting judicial and
administrative proceedings, and shall expend the Company funds for professional
services and costs associated therewith. The Tax Matters Partner shall oversee
the Company tax affairs in the overall best interests of the Company but shall
not have the right to agree to extend any statute of limitations without the
approval of a Majority Interest. If for any reason the Tax Matters Partner can
no longer serve in that capacity or ceases to be a Member, as the case may be,
a Majority Interest may designate another Member to be Tax Matters Partner.
ARTICLE X. DISSOLUTION AND WINDING UP
10.1 Dissolution. The Company shall be dissolved, its assets shall
be disposed of, and its affairs wound up on the first to occur of the
following:
A. Subject to SECTION 10.2, the agreement of three (3)
of the five (5) Committee Members to terminate the Company;
B. The entry of a decree of judicial dissolution;
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C. The vote of non-defaulting Members holding a
majority of the Percentage Interests held by all non-defaulting Members;
D. The sale of all or substantially all of the assets
of Company.
Except for the foregoing, the Company shall not dissolve on the
occurrence of any other event.
10.2 Purchase Option on Agreement for Dissolution. In the event of a
determination to dissolve the Company pursuant to SECTION 10.1 A or C, CHC
shall have the exclusive right and option to purchase Outback's Member Interest
for its Fair Market Value. Fair Market Value shall have the same meaning and
shall be determined in the same manner as provided in SECTION 8.2 B hereof.
A. Exercise of Rights.
(i) CHC shall exercise the purchase option
contained herein by giving written notice thereof ("Notice of Election") to
Outback within sixty (60)days of the date of cessation of development (being
the first day of the calendar month following the expiration of the applicable
period). If not timely and properly exercised as provided in this Section,
CHC's purchase option shall lapse and shall thereafter be null and void.
(ii) The closing for any purchase hereunder
shall be consummated and closed in the Company's principal office on a date and
at a time designated by CHC in a notice to Outback, provided such consummation
and closing date shall occur within ninety (90) days from the end of the
Appraisal Period. At such closing, Outback shall execute and deliver all
documents and instruments as are necessary and appropriate, in the opinion of
counsel for the Company, to effectuate the transfer of Outback's Membership
Interest and CHC shall deliver the purchase price.
10.3 Purchase Option on Proposed Sale. In the event Outback
approves a proposed sale, exchange or other disposition of all or substantially
all of the assets of the Company, which includes a transfer of the Company's
rights under the Sublicense Agreement, CHC shall have the exclusive right and
option to purchase Outback's Member Interest for its Fair Market Value. Fair
Market Value shall have the same meaning and shall be determined in the same
manner as provided in SECTION 8.2 B hereof.
A. Exercise of Rights.
(i) CHC shall exercise the purchase option
contained herein by giving written notice thereof ("Notice of Election") to
Outback within sixty (60) days of the date of cessation of development (being
the first day of the calendar month following the expiration of the applicable
period). If not timely and properly exercised as provided in this Section,
CHC's purchase option shall lapse and shall thereafter be null and void.
(ii) The closing for any purchase hereunder
shall be consummated and closed in the Company's principal office on a date and
at a time designated by CHC in a notice to Outback, provided such consummation
and closing date shall occur within ninety (90) days from the end of the
Appraisal Period. At such closing, Outback shall execute and deliver all
documents and instruments as are necessary and appropriate, in the opinion of
counsel for the Company, to effectuate the transfer of Outback's Membership
Interest and CHC shall deliver the purchase price.
10.4 Winding Up. Upon the occurrence of any event specified in
SECTION 10.1, the Company shall continue solely for the purpose of winding up
its affairs in an orderly manner, liquidating its assets, and satisfying the
claims of its creditors. The Management Committee shall be responsible for
overseeing the winding up and liquidation of Company,
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shall take full account of the liabilities of Company and assets, shall,
subject to SECTION 10.4, either cause its assets to be sold or distributed, and
if sold as promptly as is consistent with obtaining the fair market value
thereof, shall cause the proceeds therefrom, to the extent sufficient therefor,
to be applied and distributed as provided in SECTION 10.4. The Persons winding
up the affairs of the Company shall give written notice of the commencement of
winding up by mail to all known Members, creditors and claimants whose
addresses appear on the records of the Company. The Management Committee or
Members winding up the affairs of the Company shall not be entitled to
compensation for such services.
10.5 Distributions in Kind. Any non-cash asset distributed to one
or more Members shall first be valued at its fair market value to determine the
Net Profit or Net Loss that would have resulted if such asset were sold for
such value, such Net Profit or Net Loss shall then be allocated pursuant to
ARTICLE VI, and the Members' Capital Accounts shall be adjusted to reflect such
allocations. The amount distributed and charged to the Capital Account of each
Member receiving an interest in such distributed asset shall be the fair market
value of such interest (net of any liability secured by such asset that such
Member assumes or takes subject to). The fair market value of such asset shall
be determined by the Management Committee or by the Members or if any Member
objects by an independent appraiser (any such appraiser must be recognized as
an expert in valuing the type of asset involved) selected by the Management
Committee or liquidating trustee and approved by the Members.
10.6 Order of Payment Upon Dissolution. After determining that all
known debts and liabilities of the Company, including, without limitation,
debts and liabilities to Members who are creditors of the Company, have been
paid or adequately provided for, the remaining assets shall be distributed as
follows:
A. Upon dissolution of the Company (other than in
connection with a sale of all or substantially all of the Company's assets to a
third party and other than in connection with a termination resulting from one
Member's purchase of all or part of the other Member's Membership Interest),
all assets of the Company shall be liquidated; provided, however, that no
transfer of the License to the Proprietary Marks shall be made except in
connection with and as part of a sale of the Restaurants to a purchaser who
will continue to operate the Restaurants as Cheeseburger in Paradise
Restaurants. All proceeds from liquidation of the Company assets shall be
distributed (i) to Outback until Outback shall have received an amount equal to
Outback's Capital Contributions, and (ii) then to the Members in accordance
with and to the extent of their positive Capital Account balances after giving
effect to the allocation of Net Profit or Net Loss resulting from such
liquidation, and (iii) thereafter to the Members in accordance with their
Percentage Interests. Such liquidating distributions shall be made by the end
of the Company's taxable year in which the Company is liquidated, or, if later,
within ninety (90) days after the date of such liquidation.
B. Upon dissolution of the Company in connection with a
sale of all or substantially all of the Company's assets to a third party all
proceeds from liquidation of the Company's assets shall be distributed to the
Members in accordance with and to the extent of their positive Capital Account
balances after giving effect to the allocation of Net Profit or Net Loss
resulting from such liquidation, and (iii) thereafter, to the Members in
accordance with their Percentage Interests. Such liquidating distributions
shall be made by the end of the Company's taxable year in which the Company is
liquidated, or, if later, within ninety (90) days after the date of such
liquidation.
Notwithstanding the provisions of Article VI, Net
Loss, Net Profit and, to the extent necessary, items of gross income or
deduction for such Fiscal Year shall be allocated to the Members in order to
ensure that the distributions made pursuant to this SECTION 10.6 are in
accordance with the positive Capital Account balances of the Members (after
taking into account all appropriate adjustments to the Capital Accounts,
including adjustments that would be made as a result of such distributions).
10.7 Limitations on Payments Made in Dissolution. Except
for the liability of the Management Committee pursuant to SECTION 5.4 or as
otherwise specifically provided in this Agreement, each Member shall only be
entitled to
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look solely at the assets of the Company for the return of its
Capital Contributions and positive Capital Account balance and shall have no
recourse for its Capital Contribution, positive Capital Account balance and/or
share of Net Profits (upon dissolution or otherwise) against the Management
Committee or any other Member.
ARTICLE XI. INDEMNIFICATION AND INSURANCE
11.1 Indemnification of Agents. Unless the Committee Members may
be liable to the Company for any event described in SECTION 5.4, the Company
shall defend and indemnify any Member or Committee Member and may indemnify any
other Person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding by reason of the
fact that it, he or she is or was a Member, Committee Member, officer, employee
or other agent of the Company or that, being or having been such a Member,
Committee Member, officer, employee or agent, it, he or she is or was serving
at the request of the Company as a manager, member, director, officer, employee
or other agent of another limited liability company, corporation, partnership,
joint venture, trust or other enterprise (all such persons being referred to
hereinafter as an "agent"), to the fullest extent permitted by applicable law
in effect on the date hereof and to such greater extent as applicable law may
hereafter from time to time permit. The Management Committee shall be
authorized, on behalf of the Company, to enter into indemnity agreements from
time to time with any Person entitled to be indemnified by the Company
hereunder, upon such terms and conditions as the Management Committee deems
appropriate in its business judgment.
11.2 Insurance. The Company shall purchase and maintain insurance
on behalf of all Committee Members and may do so for any Person who is or was
an agent of the Company against any liability asserted against such Committee
Member or Person and incurred by such Committee Member or Person in any such
capacity, or arising out of such Person's status as an agent, whether or not
the Company would have the power to indemnify such Person against such
liability under the provisions of SECTION 11.1 or under applicable law.
ARTICLE XII. CONFIDENTIALITY AND NON-COMPETITION
12.1 Noncompetition.
A. So long as CHC is a Member and for a period of three
(3) years commencing upon the date CHC ceases to be a Member, CHC, MHI and the
MHI Principals (and their respective Affiliates) shall not, individually or
jointly with others, directly or indirectly, whether for their own account or
for that of any other Person, operate, engage in, own or hold any ownership
interest in, have any interest in or lend any assistance to any restaurant, or
Person or entity engaged in a business owning, operating or controlling
restaurants which have a theme, decor, menu, identifying marks, or style of
cuisine the same as or similar to the Company's Restaurants, and shall not act
as an officer, director, employee, partner, independent contractor, consultant,
principal, agent, or in any other capacity for, nor lend any assistance
(financial or otherwise) or cooperation to any such restaurant or Person or
entity; provided, however, it shall not be a violation of this Section for CHC,
MHI and/or the MHI Principals to own, in the aggregate, not more than one
percent (1%) of the outstanding shares of any class of securities traded on the
New York Stock Exchange, the American Stock Exchange or the NASD National
Market System. Notwithstanding the foregoing, if CHC ceases to be a Member for
any reason other than (i) a purchase of CHC's Member Interest, or (ii) a sale
of all or substantially all of the Company's assets, or (iii) any merger,
reorganization, recapitalization, reverse merger or other similar transaction
involving the Company, the foregoing restriction on CHC, MHI and the MHI
Principals shall apply for a period of one (1) year from the date CHC ceases to
be a Member. The parties acknowledge and agree that MHI currently holds an
interest in the Margaritaville restaurant concept with locations in New
Orleans, Key West and Orlando (Universal Studios). Outback agrees that the
Margaritaville restaurant concept as currently operated in Orlando (Universal
Studios) with the following criteria: (i) a large scale "eatertainment" concept
with entertainment elements constructed as part of the interior of the
building, (ii) featuring live entertainment, (iii) having a size of not less
than 7,500 square feet, and (iv) having an interior improvement cost (excluding
cost of land and building) of not less than
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$300 per square foot, is not competitive with the Company's Restaurants and
will not violate this SECTION 12.1A. MHI and the MHI Principals shall have the
right to continue to operate the Margaritaville restaurants in New Orleans, Key
West and Orlando (Universal Studios) and open additional "Margaritaville"
restaurants which meet all the criteria specified in (i) through (iv), but
shall not have the right to operate or license others to operate any
Margaritaville restaurant (other than the New Orleans and Key West locations)
that does not meet all the criteria of (i) through (iv). Notwithstanding the
foregoing, MHI and the MHI Principals shall have the right to operate or
license others to operate Margaritaville restaurants which meet the criteria of
(i), (ii) and (iii), but not (iv), in the Caribbean, which shall mean the
countries of Jamaica, Cayman Islands, St. Lucia, Dominican Republic, Dominica,
Barbados, Antigua, Grenada, St. Maarten, Turks and Caicos Islands, British
Virgin Islands, U.S. Virgin Islands and Cuba.
B. So long as Outback is a Member, and for a period of
one (1) year thereafter, Outback (and its Affiliates) shall not, individually
or jointly with others, directly or indirectly, whether for its own account or
for that of any other Person, operate, engage in, own or hold any ownership
interest in, have any interest in or lend any assistance to, any restaurant
having a theme, decor, menu or style of cuisine the same as or similar to the
Company's Restaurants.
12.2 Confidentiality.
A. Definition. For the purpose of this Agreement,
"Proprietary Information" shall include all information designated by any
Member, either orally or in writing, as confidential or proprietary, or which
reasonably would be considered proprietary or confidential to the business
contemplated by this Agreement, including but not limited to suppliers,
customers, trade or industrial practices, marketing and technical plans,
technology, personnel, organization or internal affairs, plans for products and
ideas, recipes, menus, wine lists and proprietary techniques and other trade
secrets. Notwithstanding the foregoing, "Proprietary Information" shall not
include information which (i) has entered the public domain or became known
other than due to a breach of any obligation of confidentiality owed to the
owner of such information; (ii) was known by the recipient prior to the
disclosure of such information; (iii) became known to the recipient from a
source other than a Member or its Affiliate, provided there was no breach of an
obligation of confidentiality owed to said Member or its Affiliate; or (iv) was
independently developed by the party receiving such information.
B. No Disclosure, Use, or Circumvention. No Member or
its Affiliates shall disclose any Proprietary Information to any third parties
(other than their professional and financial advisors and other than existing
or permitted franchisees) and will not use any Proprietary Information in that
Member's or Affiliate's business or any affiliated business without the prior
written consent of the other Member, and then only to the extent specified in
that consent. Consent may be granted or withheld at the sole discretion of any
Member. No Member shall contact any suppliers, customers, employees, affiliates
or associates to circumvent the purposes of this provision.
C. Maintenance of Confidentiality. Each Member shall
take all steps reasonably necessary or appropriate to maintain the strict
confidentiality of the Proprietary Information and to assure compliance with
this Agreement.
12.3 Non-solicitation. During the term of this Agreement and, with
respect to each Member, for a period two (2) years following the earlier of (A)
the date that the Member transfers all of its Membership Interest in the
Company or (B) the dissolution of the Company pursuant to ARTICLE X, the Member
shall not offer employment to any employee of the Company or of a Member, or
their Affiliates, or otherwise solicit or induce any employee of any of them to
terminate their employment, nor shall any of the MHI Principals or the officers
and directors of Outback act as an officer, director, employee, partner,
independent contractor, consultant, principal, agent, proprietor, owner or part
owner, or in any other capacity, for any person or entity which solicits
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or otherwise induces any employee of the Company or of a Member, or their
Affiliates, to terminate their employment with such entity.
12.4 Reasonableness of Restrictions; Reformation; Enforcement. The
parties hereto recognize and acknowledge that the geographical and time
limitations contained in SECTION 12.1, 12.2 AND 12.3 hereof are reasonable and
properly required for the adequate protection of the Company's and Members'
interests. It is agreed by the parties hereto that, if any portion of the
restrictions contained in SECTION 12.1, 12.2 OR 12.3 are held to be
unreasonable, arbitrary, or against public policy, then the restrictions shall
be considered divisible, both as to the time and to the geographical area, with
each month of the specified period being deemed a separate period of time and
each radius mile or other portion of the restricted territory being deemed a
separate geographical area, so that the longest period of time and largest
geographical area shall remain effective so long as the same is not
unreasonable, arbitrary, or against public policy. The parties hereto agree
that in the event any court of competent jurisdiction determines the specified
period or the specified geographical area of the restricted territory to be
unreasonable, arbitrary, or against public policy, a lesser time period or
geographical area which is the longest period of time and largest geographical
area determined to be reasonable, nonarbitrary, and not against public policy
may be enforced. If any of the covenants contained herein are violated and if
any court action is instituted by the Company or a Member to prevent or enjoin
such violation, then the period of time during which the business activities
shall be restricted, as provided in this Agreement, shall be lengthened by a
period of time equal to the period between the date of the breach of the terms
or covenants contained in this Agreement and the date on which the decree of
the court disposing of the issues upon the merits shall become final and not
subject to further appeal.
In the event it is necessary for the Company or a Member to initiate
legal proceedings to enforce, interpret or construe any of the covenants
contained in SECTION 12.1, 12.2 OR 12.3 hereof, the prevailing party in such
proceedings shall be entitled to receive from the nonprevailing party, in
addition to all other remedies, all costs, including reasonable attorneys'
fees, of such proceedings including appellate proceedings.
12.5 Specific Performance. The parties agree that a breach of any
of the covenants contained SECTION 12.1, 12.2 AND 12.3 hereof will cause
irreparable injury to the Company or a Member for which the remedy at law will
be inadequate and would be difficult to ascertain. Therefore, in the event of
the breach or threatened breach of any such covenants, the Company or injured
Member shall be entitled, in addition to any other rights and remedies it may
have at law or in equity, to obtain an injunction to restrain any threatened or
actual activities in violation of any such covenants. The parties hereby
consent and agree that temporary and permanent injunctive relief may be granted
in any proceedings which might be brought to enforce any such covenants without
the necessity of proof of actual damages, and in the event the Company or
Member does apply for such an injunction, that the Company or Member has an
adequate remedy at law shall not be raised as a defense.
ARTICLE XIII. REPRESENTATIONS AND WARRANTIES
Each Member warrants and represents to the other Member (each of which
warranties and representations shall be deemed to be a continuing warranty and
representation and covenant that such warranties and representations shall
remain true and correct at all times during the term of the Company) that:
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13.1 Status. If an entity, such Member is duly organized, validly
existing and in good standing under the laws of its state of formation, and
each has the power under its organizational documents and adequate authority to
execute, deliver, and perform this Agreement which upon such execution and
delivery will be a legal, valid, and binding obligation of such party
enforceable in accordance with its terms (subject only to the application of
bankruptcy, reorganization, insolvency or other similar laws regarding the
rights of creditors generally and the exercise of judicial discretion in
equity).
13.2 Due Authorization. The execution, delivery and performance of
this Agreement by a Member which is an entity have been duly authorized by all
requisite corporate, partnership or other organizational action of such party
and, as of the date hereof, do not require the consent or approval of any
Person that has not been obtained and are not in contravention of or in
conflict with any term or provision of the organizational documents of such
party.
13.3 Other Agreements and Violations of Law. The execution,
delivery and performance of this Agreement by such Member will not breach or
constitute a default under any agreement, indenture, undertaking or other
instrument to which such party or any affiliate of such party is a party or by
which any of such persons or any of their respective properties may be bound or
affected, which breach or default would have a materially adverse effect on the
financial condition of such Member or on the financial condition, properties or
operations of the Company. Other than as contemplated by this Agreement such
execution, delivery, and performance will not result in the creation or
imposition of (or the obligation to create or impose) any lien or encumbrance
on any of the Company property nor, to the knowledge of such party, constitute
or result in the violation of any law.
13.4 No Litigation. There is no litigation or administrative or
other proceeding or tax audit pending, or, to the knowledge of such Member,
threatened against or affecting such Member, or any of its affiliates, or any
of their respective properties, which, if determined adversely, would have a
materially adverse effect on the financial condition, properties or operations
of the Company. As of the date hereof, neither such Member, nor, to the
knowledge of such Member, any affiliate of such Member is in default with
respect to any order, writ, injunction, decree or demand of any court of other
governmental or regulatory authority which might in any way adversely affect
the Company.
ARTICLE XIV. MISCELLANEOUS
14.1 Complete Agreement. This Agreement and the Certificate
constitute the complete and exclusive statement of agreement among the Members
with respect to the subject matter herein and therein and replace and supersede
all prior written and oral agreements or statements by and among the Members or
any of them. No representation, statement, condition or warranty not contained
in this Agreement or the Certificate will be binding on the Members or
Management Committee or have any force or effect whatsoever. To the extent that
any provision of the Certificate conflicts with any provision of this
Agreement, the Certificate shall control.
14.2 Consultation with Attorney. Each Member has been advised to
consult with its own attorney regarding all legal matters concerning an
investment in the Company and the tax consequences of participating in the
Company, and has done so, to the extent it considers necessary.
14.3 Tax Consequences. Each Member acknowledges that the tax
consequences to it of investing in the Company will depend on its particular
circumstances, and neither the Company, the Management Committee, the Members,
nor the partners, shareholders, members, agents, officers, directors,
employees, Affiliates, or consultants of any of them will be responsible or
liable for the tax consequences to it, him or her of an investment in the
Company. It, he or she will look solely to, and rely upon, its, his or her own
advisers with respect to the tax consequences of this investment.
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14.4 No Assurance of Tax Benefits. Each Member acknowledges that
there can be no assurance that the Code or the Regulations will not be amended
or interpreted in the future in such a manner so as to deprive the Company and
the Members of some or all of the tax benefits they might now receive, nor that
some of the deductions claimed by the Company or the allocations of items of
income, gain, loss, deduction, or credit among the Members may not be
challenged by the Internal Revenue Service.
14.5 Binding Effect. Subject to the provisions of this Agreement
relating to transferability, this Agreement will be binding upon and inure to
the benefit of the Members, and their respective successors and assigns.
14.6 Parties in Interest. Except as expressly provided in the Act,
nothing in this Agreement shall confer any rights or remedies under or by
reason of this Agreement on any Persons other than the Members and their
respective successors and assigns nor shall anything in this Agreement relieve
or discharge the obligation or liability of any third person to any party to
this Agreement, nor shall any provision give any third person any right of
subrogation or action over or against any party to this Agreement.
14.7 Pronouns; Statutory References. All pronouns and all
variations thereof shall be deemed to refer to the masculine, feminine, or
neuter, singular or plural, as the context in which they are used may require.
Any reference to the Code, the Regulations, the Act or other statutes or laws
will include all amendments, modifications, or replacements of the specific
sections and provisions concerned.
14.8 Headings. All headings herein are inserted only for
convenience and ease of reference and are not to be considered in the
construction or interpretation of any provision of this Agreement.
14.9 Interpretation. In the event any claim is made by any Member
relating to any conflict, omission or ambiguity in this Agreement, no
presumption or burden of proof or persuasion shall be implied by virtue of the
fact that this Agreement was prepared by or at the request of a particular
Member or its counsel.
14.10 References to this Agreement. Numbered or lettered articles,
sections and subsections herein contained refer to articles, sections and
subsections of this Agreement unless otherwise expressly stated.
14.11 Jurisdiction. Each Member hereby consents to the exclusive
jurisdiction of the state and federal courts sitting in Delaware in any action
on a claim arising out of, under or in connection with this Agreement or the
transactions contemplated by this Agreement. Each Member further agrees that
personal jurisdiction over it, him or her may be effected by service of process
by registered or certified mail addressed as provided in SECTION 14.14 of this
Agreement, and that when so made shall be as if served upon it, him or her
personally within the Member's state of residence.
14.12 Exhibits. All Exhibits attached to this Agreement are
incorporated and shall be treated as if set forth herein.
14.13 Additional Documents and Acts. Each Member agrees to execute
and deliver such additional documents and instruments and to perform such
additional commercially reasonable acts as may be necessary or appropriate to
effectuate, carry out and perform all of the terms, provisions, and conditions
of this Agreement and the transactions contemplated hereby.
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14.14 Notices.
A. All notices required or permitted shall be in
writing and may be communicated in person, by recognized national overnight
delivery service or by mail. Notice shall be deemed to be delivered three (3)
business days after being deposited in the United States mail addressed to the
respective Member at its mailing address as designated in the records of the
Membership, with postage thereon prepaid, registered or certified mail, return
receipt requested, or if personally delivered or sent by overnight delivery
service, when received. Notices to a dissolved or bankrupt Member shall be
delivered in the same manner to the last known address of its registered agent
or receiver, as the case may be.
B. While all notices, demands and requests shall be
effective as provided in SECTION 14.4A above, the time period in which a
response to any such notice, demand or request must be given shall commence to
run from the date of receipt appearing on the return receipt or other evidence
of delivery of the notice, and the time period in which a response to a demand
or request must be given shall commence to run from the date of receipt on the
return receipt or other evidence of delivery of the notice. Rejection or other
refusal to accept or the inability to deliver because of changed address of
which no notice was given shall be deemed to be receipt of the notice, demand
or request sent.
C. By giving to the other Members at least thirty (30)
days' prior written notice thereof, each Member and its successors and assigns
shall have the right from time to time and at any time during the term of this
Agreement to change their addresses and each shall have the right to specify as
its address any other address within the United States of America.
14.15 Amendments. All amendments to this Agreement must be in
writing and signed by all of the Members.
14.16 Reliance on Authority of Person Signing Agreement If a Member
is not a natural person, neither the Company nor any Member will: (A) be
required to determine the authority of the individual signing this Agreement to
make any commitment or undertaking on behalf of such entity or to determine any
fact or circumstance bearing upon the existence of the authority of such
individual; or (B) be responsible for the application or distribution of
proceeds paid or credited to individuals signing this Agreement on behalf of
such entity.
14.17 Company Property. All property contributed to the Company or
acquired with Company funds shall be held and titled in the name of the Company
and not individually by or for any Member.
14.18 Multiple Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
14.19 Attorney's Fees. In the event that any dispute between the
Company and the Members or among the Members should result in litigation or
arbitration, the prevailing party in such dispute shall be entitled to recover
from the other party all reasonable fees, costs and expenses of enforcing any
right of the prevailing party, including without limitation, reasonable
attorneys' fees and expenses, all of which shall be deemed to have accrued upon
the commencement of such action and shall be paid whether or not such action is
prosecuted to judgment. Any judgment or order entered in such action shall
contain a specific provision providing for the recovery of attorney's fees and
costs incurred in enforcing such judgment and an award of prejudgment interest
from the date of the breach at the maximum rate of interest allowed by law. For
the purposes of this Section: (a) attorney's fees shall include, without
limitation, fees incurred in the following: (1) postjudgment motions; (2)
contempt proceedings; (3) garnishment, levy, and debtor and third-party
examinations; (4) discovery; and (5) bankruptcy litigation; and (b) prevailing
party shall mean the party which is determined in the proceeding to have
prevailed or which prevails by dismissal, default or otherwise.
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14.20 Time is of the Essence. All dates and times in this Agreement
are of the essence.
14.21 Remedies Cumulative. The remedies under this Agreement are
cumulative and shall not exclude any other remedies to which any Party may be
lawfully entitled.
14.22 Severability. Each article, section, subsection, and lesser
section of this Agreement constitutes a separate and distinct undertaking,
covenant or provision hereof. In the event that any provision of this Agreement
shall be determined to be invalid or unenforceable, such provision shall be
deemed limited by construction in scope and effect to the minimum extent
necessary to render the same valid and enforceable, and, in the event such a
limiting construction is impossible, such invalid or unenforceable provision
shall be deemed severed from this Agreement, but every other provision of this
Agreement shall remain in full force and effect.
14.23 Partition. The Members hereby agree that no Members, nor any
successor in interest of any Members, shall have the right to have Company
assets partitioned, or to file a complaint or institute any proceedings of law
or equity to have a Company asset partitioned, and each Member, on behalf of
itself, its successors and assigns, hereby waives any such rights.
14.24 No Waiver. The failure of any Member to insist upon strict
performance of a covenant hereunder or any obligation hereunder shall not be a
waiver of such Member's right to demand compliance therewith in the future.
14.25 No Denigration. No Member shall denigrate or cause the
denigration of any other Member, the MHI Principals, ISI, the Proprietary ▇▇▇▇
or the Restaurants and shall not take any other action that is harmful or
potentially harmful to or which disparages, ridicules or demeans the goodwill
or reputation of any of the foregoing.
14.26 Contingency. This Operating Agreement and the Sublicense
Agreement are contingent upon the parties reaching agreement, within ninety
(90) days of the execution of this Operating Agreement, on the final design of
the Restaurant and the use of Licensed Marks pursuant to the Sublicense
Agreement. The parties agree to cooperate and negotiate in good faith to reach
such agreement. In the event the parties cannot reach agreement on the final
design of the Restaurant and the use of the Licensed Marks within such time
period, Outback shall have the right and option to terminate this Operating
Agreement and the Sublicense Agreement by giving written notice of termination
to CHC within said ninety (90) day period. Upon such termination all fees paid
by Outback to CHC and MHI pursuant to this Operating Agreement and the
Sublicense Agreement shall be immediately refunded to Outback and thereafter
the parties shall have no further rights or obligations under this Operating
Agreement or the Sublicense Agreement.
All of the Members of OUTBACK/CHEESEBURGER IN PARADISE, LLC, a
Delaware limited liability company, have executed this Agreement, effective as
of the date written above.
ATTEST MEMBERS:
"OUTBACK"
OS TROPICAL, INC.,
a Florida corporation
By: By:
------------------------------- ---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Chief Executive Officer
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"CHC"
CHEESEBURGER HOLDINGS, LLC, a Delaware
limited liability company
By:
-----------------------------
Title:
--------------------------
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CONSENT OF OUTBACK STEAKHOUSE, INC.
The undersigned, the sole shareholder of OS TROPICAL, INC.,
("Outback") which is a member in CHEESEBURGER IN PARADISE, LLC, a Delaware
limited liability company hereby agrees to be bound by and comply with the
provisions of that certain Operating Agreement of CHEESEBURGER IN PARADISE, LLC
(the "Agreement") expressly stated to be applicable to it in its capacity as
the parent of Outback or as otherwise expressly provided in the Agreement. The
undersigned agrees, solely for the benefit of CHC, MHI and the MHI Principals,
to be responsible for Outback's performance of its duties under this Agreement.
DATED this 12th day of October, 2000.
ATTEST OUTBACK STEAKHOUSE, INC.,
a Delaware corporation
By: By:
------------------------------- ---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Chief Executive Officer
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CONSENT OF MHI PRINCIPALS
▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇, being members in MARGARITAVILLE
HOLDINGS, LLC which is the sole member of CHEESEBURGER HOLDINGS, LLC a member
in CHEESEBURGER IN PARADISE, LLC, a Delaware limited liability company, hereby
agree to be bound by, and comply with the provisions of that certain Operating
Agreement of CHEESEBURGER IN PARADISE, LLC (the "Agreement") expressly stated
to be applicable to them in their individual capacity, as members of
Margaritaville Holdings, LLC, or as "MHI Principals" (as such term is defined
in the Agreement) or as otherwise expressly provided in the Agreement.
DATED this 12th day of October, 2000.
WITNESSES:
--------------------------------- -------------------------------
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EXHIBIT A
MEMBERS:
OS Tropical, Inc. CHEESEBURGER HOLDINGS, LLC.
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COMMITTEE MEMBERS:
Outback Appointees: CHC Appointees:
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ADDRESS FOR OUTBACK APPOINTEES: ADDRESS FOR CHC APPOINTEES:
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