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Sample Business ContractsHome: Sample Business Contracts:
OPERATING AGREEMENT
FOR
OUTBACK/FLEMING'S, LLC
A DELAWARE LIMITED LIABILITY COMPANY
THE SECURITIES REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 NOR REGISTERED NOR QUALIFIED UNDER ANY STATE SECURITIES
LAWS. SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE,
TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS QUALIFIED AND REGISTERED UNDER
APPLICABLE STATE AND FEDERAL SECURITIES LAWS OR UNLESS, IN THE OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY, SUCH QUALIFICATION AND REGISTRATION IS NOT
REQUIRED. ANY TRANSFER OF THE SECURITIES REPRESENTED BY THIS AGREEMENT IS
FURTHER SUBJECT TO OTHER RESTRICTIONS, TERMS AND CONDITIONS WHICH ARE SET FORTH
HEREIN.
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TABLE OF CONTENTS
<CAPTION>
ARTICLE I DEFINITIONS......................................................1
(a) "Act"............................................................1
(b) "Affiliate"......................................................1
(c) "Agreement"......................................................1
(d) "Annual Business Plan"...........................................1
(e) "Assignee".......................................................1
(f) "Bankruptcy".....................................................2
(g) "Capital Account"................................................2
(h) "Capital Contribution"...........................................2
(i) "Certificate"....................................................2
(j) "Code"...........................................................2
(k) "Committee Member"...............................................2
(l) "Company.........................................................2
(m) "Company Minimum Gain"...........................................2
(n) "Distributable Cash".............................................2
(o) "Economic Interest"..............................................2
(p) "Fiscal Year"....................................................2
(q) "Fleming's"......................................................2
(r) "Fleming's" Principals"..........................................3
(s) "Majority Interest"..............................................3
(t) "Management Committee"...........................................3
(u) "Member".........................................................3
(v) "Member Nonrecourse Debt"........................................3
(w) "Member Nonrecourse Deductions"..................................3
(x) "Membership Interest"............................................3
(y) "Net Profits" and "Net Losses"...................................3
(z) "Nonrecourse Liability"..........................................3
(aa) "Outback"........................................................3
(bb) "Percentage Interest"............................................3
(cc) "Person".........................................................4
(dd) "Proprietary Marks"..............................................4
(ee) "Regulations"....................................................4
(ff) "Restaurant".....................................................4
(gg) "System".........................................................4
(hh) "Tax Matters Partner"............................................4
ARTICLE II ORGANIZATIONAL MATTERS...........................................4
2.1 Formation........................................................4
2.2 Name.............................................................4
2.3 Term.............................................................4
2.4 Office and Agent.................................................4
2.5 Addresses of the Members and the Management Committee............4
2.6 Purpose and Business of the Company..............................5
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TABLE OF CONTENTS
(continued)
<CAPTION>
ARTICLE III CAPITAL CONTRIBUTIONS............................................5
3.1 Nature and Amount of Contributions...............................5
3.2 Time for Making Contributions....................................5
3.3 Interest on Capital Contributions................................5
3.4 No Additional Capital Contributions..............................5
3.5 Liability for Certain Obligations................................5
3.6 Documentation....................................................6
3.7 Capital Accounts.................................................6
3.8 Failure to Make Contributions....................................6
ARTICLE IV MEMBERS..........................................................9
4.1 Limited Liability................................................9
4.2 Admission of Additional Members..................................9
4.3 No Withdrawals or Resignations...................................9
4.4 Termination of Membership Interest...............................9
4.5 Transactions With The Company...................................10
4.6 Voting Rights...................................................10
4.7 Meeting of Members..............................................10
ARTICLE V MANAGEMENT AND CONTROL OF THE COMPANY...........................10
5.1 Management of the Company by Management Committee...............10
5.2 Appointment of Management Committee.............................11
A. Number, Appointment and Qualifications...................11
B. Term of Service..........................................11
C. Composition of Committee.................................11
D. Resignation..............................................11
E. Removal..................................................11
F. Vacancies................................................12
5.3 Powers of Management Committee..................................12
A. Powers of Management Committee...........................12
B. Annual Business Plan.....................................12
C. Maximization of Value....................................12
D. Limitations on Power of Management Committee.............12
5.4 Liability of Management Committee...............................13
5.5 Devotion of Time................................................13
5.6 Transactions Between the Company and a Member or Committee
Member..........................................................13
5.7 Officers........................................................14
5.8 President.......................................................14
ARTICLE VI ALLOCATIONS OF NET PROFITS AND NET LOSSES AND
DISTRIBUTIONS...................................................14
6.1 Allocations of Net Profit and Net Loss..........................14
A. Net Loss.................................................14
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TABLE OF CONTENTS
(continued)
<CAPTION>
B. Net Profit...............................................15
6.2 Special Allocations.............................................15
A. Minimum Gain Chargeback..................................15
B. Chargeback of Minimum Gain Attributable to Member
Nonrecourse Debt.........................................15
C. Nonrecourse Deductions...................................15
D. Member Nonrecourse Deductions............................15
E. Qualified Income Offset..................................15
6.3 Code Section 704(c) Allocations.................................16
6.4 Allocation of Net Profits and Losses and Distributions in
Respect of a Transferred Interest...............................16
6.5 Distributions of Distributable Cash by the Company..............16
6.6 Form of Distribution............................................17
6.7 Restriction on Distribution.....................................17
6.8 Return of Distributions.........................................17
6.9 Obligations of Members to Report Allocations....................17
ARTICLE VII TRANSFER AND ASSIGNMENT OF INTERESTS............................17
7.1 Transfer and Assignment of Interests............................17
7.2 Further Restrictions on the Fleming's Principals................18
7.3 Further Restrictions on Transfer of Interests...................18
7.4 Permitted Transfers.............................................18
7.5 Effective Date of Permitted Transfers...........................19
7.6 Substitution of Members.........................................19
7.7 Rights of Legal Representatives.................................19
7.8 No Effect to Transfers in Violation of Agreement................19
7.9 Right of First Refusal..........................................20
7.10 Transfer Permitted After Failure to Elect.......................20
7.11 Purchase and Sale Options.......................................21
A. Options.....................................................21
B. Exercise of Options.........................................21
ARTICLE VIII CESSATION OF DEVELOPMENT........................................22
8.1 Cessation of Development........................................22
8.2 Consequences of Cessation.......................................22
ARTICLE IX ACCOUNTING, RECORDS, REPORTING BY MEMBERS.......................22
9.1 Books and Records...............................................22
9.2 Delivery to Members and Inspection..............................23
9.3 Annual Statements...............................................23
9.4 Financial and Other Information.................................24
9.5 Filings.........................................................24
9.6 Bank Accounts...................................................24
9.7 Accounting Decisions and Reliance on Others.....................24
iii
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TABLE OF CONTENTS
(continued)
<CAPTION>
9.8 Tax Matters for the Company Handled by Management Committee
and Tax Matters Partner.........................................24
ARTICLE X DISSOLUTION AND WINDING UP......................................24
10.1 Dissolution.....................................................24
10.2 Winding Up......................................................25
10.3 Distributions in Kind...........................................25
10.4 Order of Payment Upon Dissolution...............................25
10.5 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
iv
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TABLE OF CONTENTS
(continued)
<CAPTION>
14.14 Notices.........................................................31
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..........................................31
14.21 Remedies Cumulative.............................................31
14.22 Severability....................................................31
14.23 Partition.......................................................31
14.24 Waiver..........................................................31
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OPERATING AGREEMENT
FOR
OUTBACK/FLEMING'S, LLC
A DELAWARE LIMITED LIABILITY COMPANY
This Operating Agreement is made as of October 1, 1999, by and among
the parties listed on the signature pages hereof, with reference to the
following facts:
A September 10, 1999, a Certificate of Formation for
OUTBACK/FLEMING'S, 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.
<PAGE> 8
(e) "Assignee" shall mean the owner of an Economic
Interest who has not been admitted as a substitute Member in accordance
with ARTICLE VII.
(f) "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.
(g) "Capital Account" shall mean with respect to any
Member the capital account that the Company establishes and maintains
for such Member pursuant to SECTION 3.7.
(h) "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.
(i) "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.
(j) "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.
(k) "Committee Member" shall mean the individuals named
to serve on the Management Committee.
(l) "Company" shall mean OUTBACK/FLEMING'S, LLC, a
Delaware limited liability company.
(m) "Company Minimum Gain" shall have the meaning
ascribed to the term "Partnership Minimum Gain" in the Regulations
Section 1.704-2(d).
(n) "Distributable Cash" shall mean the amount of cash
which the Management Committee deems available for distribution to the
Members, taking into account all debts, liabilities, and obligations of
the Company then due, and working capital and other amounts which are
described in the Annual Business Plan, and necessary for the Company's
business or to place into reserves for customary and usual claims with
respect to such business.
(o) "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.
(p) "Fiscal Year" shall mean the Company's fiscal year,
which shall be the calendar year.
(q) "Fleming's" shall mean FPSH Limited Partnership, an
Arizona limited partnership ("FPSH LP") and AWA III Steakhouses, Inc.,
a California corporation ("AWA INC"), individually and collectively.
2
<PAGE> 9
(r) "Fleming's Principals" shall mean Paul M. Fleming, A.
William Allen III and Rick Scott, jointly and severally.
(s) "Majority Interest" shall mean those Members who hold
at least fifty one percent (51%) of the Percentage Interests entitled
to vote.
(t) "Management Committee" shall mean collectively, those
individuals named as Committee Members of the Company pursuant to
ARTICLE V of this Agreement.
(u) "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.
(v) "Member Nonrecourse Debt" shall have the meaning
ascribed to the term "Partner Nonrecourse Debt" in Regulations Section
1.704-2(b)(4).
(w) "Member Nonrecourse Deductions" shall mean items of
Company loss, deduction, or Code Section 705(a)(2)(B) expenditures that
are attributable to Member Nonrecourse Debt.
(x) "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.
(y) "Net Profits" and "Net Losses" shall mean the income,
gain, loss and deductions of the Company in the aggregate or separately
stated, as appropriate, determined in accordance with the method of
accounting at the close of each Fiscal Year on the Company's
information tax return filed for federal income tax purposes.
(z) "Nonrecourse Liability" shall have the meaning set
forth in Regulations Section 1.752-1(a)(2).
(aa) "Outback" shall mean OS Prime, Inc., a Florida
corporation, and a wholly-owned subsidiary of Outback Steakhouse, Inc.
("OSI").
(bb) "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. Each
Member's Percentage Interest shall be equal to the percentage that the
Capital Contribution the Member is obligated to contribute bears to the
total Capital Contributions of all Members. For purposes of determining
Percentage Interests, the System shall have an agreed value of
$13,000,000 and the initial Percentage Interests of the Members shall
be:
3
<PAGE> 10
MEMBER PERCENTAGE
INTEREST
Outback 50%
FPSH LP 37.5%
AWA INC 12.5%
(cc) "Person" shall mean an individual, partnership,
limited partnership, limited liability company, corporation, trust,
estate, association or any other entity.
(dd) "Proprietary Marks" shall mean any and all trade
names, service marks and trademarks used in connection with the System.
(ee) "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.
(ff) "Restaurant(s)" shall mean those certain upscale
steakhouse restaurants developed, owned and/or operated by the Company
utilizing the Fleming's Prime Steakhouse and Wine Bar concept and
operating system.
(gg) "System" shall mean the Fleming's Prime Steakhouse
and Wine Bar concept and operating system and all elements thereof
including, without limitation, recipes, operating technologies and
Proprietary Marks.
(hh) "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 "OUTBACK/FLEMING'S,
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 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.
4
<PAGE> 11
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 455 Newport
Center Drive, Newport Beach, California 92660, 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 a Majority Interest, the Company shall not engage in any business
other than the following:
A. The establishment, ownership, operation and franchising of
upscale steakhouse restaurants utilizing the System; and
B. Such other activities directly related 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. The Members acknowledge and agree that
upon contribution of the System and Proprietary Marks by Fleming's pursuant to
SECTION 3.1 hereof, the Company shall be the sole and exclusive owner of the
System and the Proprietary Marks and the Members shall have no right, title, or
interest in or to the System or the Proprietary Marks, except as specifically
provided in this Agreement.
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 $13,000,000 cash
Fleming's All and exclusive right, title and interest
in the System (subject only to those certain
non-exclusive, transferable licenses granted
to Fleming Prime Steakhouse I, L.L.C. and
Fleming Prime Steakhouse II, L.L.C.), with a
deemed contribution value of $13,000,000.
3.2 TIME FOR MAKING CONTRIBUTIONS. The contribution of Fleming's
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 may
request, consistent with the Annual Business Plan.
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.
5
<PAGE> 12
3.4 NO ADDITIONAL CAPITAL CONTRIBUTIONS. In no event shall any
Member be obligated to make any additional capital contributions, except as
otherwise expressly provided herein.
3.5 LIABILITY FOR CERTAIN OBLIGATIONS. Fleming's Principals and
Outback covenant and agree that as to any guaranty of any debt, liability, or
obligation of the Company, including, without limitation, material long-term
obligations, such as liability as lessee under leases for Restaurant premises
and liability on loans (collectively "Obligations"), Fleming's Principals and
Outback's parent company, Outback Steakhouse, Inc., a Delaware corporation
("OSI"), shall guarantee such Obligations if required by the third party
creditor; provided however, Fleming's Principals and OSI shall each be
proportionately liable to any third party creditor for only up to fifty percent
(50%) of the outstanding balance under such Obligations and shall not be jointly
and severally liable therefor.
3.6 DOCUMENTATION. Fleming's Principals and Outback covenant and
agree that all documentation evidencing any guaranties of the Company's
material, long term obligations, including, without limitation, a Restaurant
premises lease, any promissory notes, and any lease for furniture, fixture and
equipment, shall limit the liability of each of Fleming's Principals and OSI to
proportionately fifty percent (50%) of any amounts outstanding under such
obligations and shall specifically state that Fleming's Principals and OSI shall
not be individually liable for the entire amount thereof, nor jointly and
severally liable therefor. This provision may not be waived without the
unanimous consent of all Members.
3.7 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).
3.8 FAILURE TO MAKE CONTRIBUTIONS. If a Member does not timely
contribute capital when required, that Member shall be in default under this
Agreement. In such event, a non-defaulting Member shall send the defaulting
Member written notice of such default, giving such Member fourteen (14) days
from the date such notice is given to contribute the entire amount of its
required Capital Contribution. If the defaulting Member does not contribute its
required capital to the Company within said fourteen (14)-day period, those
non-defaulting Members who hold a majority of the Percentage Interests held by
all non-defaulting Members may elect any one or more of the following remedies:
A. One or more non-defaulting Members may advance funds
to the Company to cover those amounts that the defaulting Member fails to
contribute. Amounts that a non-defaulting Member so advances on behalf of the
defaulting Member shall become a loan due and owing from the defaulting Member
to such non-defaulting Member and bear interest at the rate of ten percent (10%)
per annum, payable monthly. All cash distributions otherwise distributable to
the defaulting Member under this Agreement shall instead be paid to the
non-defaulting Members making such advances until such advances and interest
thereon are paid in full. In any event, any such advances shall be evidenced by
a promissory note in a form reasonably acceptable to the non-defaulting Members
and be due and payable by the defaulting Member one (1) year from the date that
such advance was made. Any amounts repaid shall first be applied to costs of
collection, then to interest and thereafter to principal. Effective upon a
Member becoming a defaulting Member, each Member grants to the non-defaulting
Members who advance funds under this SECTION 3.8A a security interest in its
Membership Interest to secure its obligation to repay such advances and agrees
to execute and deliver a promissory note as described herein together with a
security agreement in a form reasonably acceptable to the non-defaulting Members
and such UCC-1 financing statements and assignments of certificates of
membership (or other documents of transfer) as such non-defaulting Members may
reasonably request.
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<PAGE> 13
B. One or more non-defaulting Members may contribute
funds to the capital of the Company to cover those amounts that the defaulting
Member fails to contribute. In such event, the Percentage Interests of all
Members shall be adjusted proportionately to reflect the cumulative total
Capital Contributions each Member has contributed or, with respect to a
non-defaulting Member, which such Member has agreed to contribute.
C. The non-defaulting Members who hold a majority of the
Percentage Interests held by all non-defaulting Members may dissolve the
Company, in which event the Company shall be wound-up, liquidated and terminated
pursuant to ARTICLE X.
D. The defaulting Member shall lose its voting and
approval rights under the Act, the Certificate and this Agreement.
E. The defaulting Member shall lose its ability to
participate in the management and operations of the Company, including, but not
limited to, the right to appoint Committee Members.
F. The Company or the non-defaulting Members may
purchase the defaulting Member's entire Membership Interest for an amount equal
to eighty percent (80%) of the Fair Market Value of the Membership Interest.
(i) DETERMINATION OF FAIR MARKET VALUE. For the
purposes of this SECTION 3.8F, the "Fair Market Value" of the Membership
Interest at issue shall be determined in the following manner:
(a) The defaulting Member and the
non-defaulting Members shall agree upon the Fair Market Value of the defaulting
Member's Membership Interest within ten (10) days following the date of the
event of default. If there is no agreement on the Fair Market Value, the
defaulting Member and the non-defaulting Members shall agree upon a mutually
acceptable appraiser within fifteen (15) days following the date of the event of
default, or, in the event such persons fail to so agree, two (2) appraisers
shall be appointed within twenty (20) days following the date of the event of
default, one by the defaulting Member, and one by the non-defaulting Members. If
the defaulting Member, on the one hand, or the non-defaulting Members, on the
other hand, fail to appoint an appraiser within the twenty (20) day period
specified herein, the sole appraiser appointed within such twenty (20) day
period shall be the sole appraiser for the purposes of determining Fair Market
Value of the defaulting Member's Membership Interest to be purchased pursuant to
this SECTION 3.8F. The defaulting Member and the non-defaulting Members shall
promptly provide notice of the name of the appraiser so appointed by such party
to the other. A third appraiser, if the initial two appraisers are appointed,
shall be appointed by the mutual agreement of the first two appraisers so
appointed, or, if such first two appraisers fail to agree upon a third appraiser
within thirty (30) days following the date of the event of default, either the
defaulting Member or the non-defaulting Members 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 the Company's principal office, in
which event the appraiser appointed thereby shall be the third appraiser. Each
of the appraisers shall submit to the defaulting Member and the non-defaulting
Members, within thirty (30) days after the final appraiser has been appointed
("Appraisal Period"), a written appraisal (the "Appraisal") of the Fair Market
Value of the defaulting Member's Membership Interest.
(b) 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 the defaulting
Member's Membership Interest.
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(c) If three appraisers are appointed, the
Fair Market Value of the defaulting Member's 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 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.
(d) Any appraiser, to be qualified to
conduct an appraisal hereunder, shall be an independent appraiser (i.e., not
affiliated with Outback, Fleming's or the Fleming's Principals), an M.A.I.
appraiser or its equivalent, and shall be reasonably competent as an expert to
appraise the value of the defaulting Member's Percentage 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 the defaulting Member's Percentage 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.
(e) 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 the defaulting Member and the
non-defaulting Members mutually agree upon a single appraiser, shall be borne
equally by the defaulting Member and the
non-defaulting Member.
(ii) NOTICE OF INTENT TO PURCHASE. Within thirty
(30) days after the determination of the purchase price of the defaulting
Member's Membership Interest in accordance with SECTION 3.8F(I), each
non-defaulting Member shall notify the defaulting Member in writing of its
desire to purchase a portion of the defaulting Member's Membership Interest. The
failure of any non-defaulting Member to submit a notice within the applicable
period shall constitute an election on the part of the Member not to purchase
any of the defaulting Member's Membership Interest. Each non-defaulting Member
so electing to purchase shall be entitled to purchase a portion of the
defaulting Member's Membership Interest in the same proportion that the
Membership Interest of the non-defaulting Member bears to the aggregate of the
Membership Interests of all of the non-defaulting Members electing to purchase
the defaulting Member's Interest.
(iii) ELECTION TO PURCHASE LESS THAN ALL OF THE
DEFAULTING MEMBER'S MEMBERSHIP INTEREST. If any non-defaulting Member elects to
purchase none or less than all of its pro rata share of the defaulting Member's
Membership Interest, then the non-defaulting Members may elect to purchase more
than their pro rata share. If the non-defaulting Members fail to purchase the
entire Membership Interest of the defaulting Member, the Company may purchase
any remaining share of the defaulting Member's Membership Interest. If the
non-defaulting Members and the Company do not elect to purchase all of the
defaulting Member's Membership Interest, such Membership Interest not
purchased shall be that of an Economic Interest only.
(iv) PAYMENT OF PURCHASE PRICE. The purchase price
shall be paid by the Company or the non-defaulting Members, as the case may be,
by either of the following methods, each of which may be selected separately
by the Company or the non-defaulting Members:
(a) The Company or the non-defaulting
Members shall at the closing pay in cash the total purchase price for the
defaulting Member's Membership Interest; or
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(b) The Company or the non-defaulting
Members shall pay at the closing one-fifth (1/5) of the purchase price and the
balance of the purchase price shall be paid in four equal annual principal
installments, plus accrued interest, and be payable each year on the anniversary
date of the closing. The unpaid principal balance shall accrue interest at the
current applicable federal rate as provided in the Code for the month in which
the initial payment is made, but the Company and the non-defaulting Members
shall have the right to prepay in full or in part at any time without penalty.
The obligation of each purchasing non-defaulting Member, and the Company, as
applicable, to pay its portion of the balance due shall be evidenced by a
separate promissory note executed by the respective purchasing non-defaulting
Member or the Company, as applicable. Each such promissory note shall be in an
original principal amount equal to the portion owed by the respective purchasing
non-defaulting Member or the Company, as applicable. The promissory note
executed by each purchasing non-defaulting Member shall be secured by a pledge
of that portion of the defaulting Member's Membership Interest purchased by such
non-defaulting Member.
(v) CLOSING OF PURCHASE OF DEFAULTING MEMBER'S
MEMBERSHIP INTEREST. The closing for the sale of a defaulting Member's Interest
pursuant to this SECTION 3.8 shall be held at 10:00 a.m. at the principal office
of Company no later than sixty (60) days after the determination of the purchase
price, except that if the closing date falls on a Saturday, Sunday, or legal
holiday, then the closing shall be held on the next succeeding business day. At
the closing, the defaulting Member or such defaulting Member's legal
representative shall deliver to the Company or the non-defaulting Members an
instrument of transfer (containing warranties of title and no encumbrances)
conveying the defaulting Member's Membership Interest. The defaulting Member or
such defaulting Member's legal representative, the Company and the
non-defaulting Members shall do all things and execute and deliver all papers as
may be necessary fully to consummate such sale and purchase in accordance with
the terms and provisions of this Agreement.
(vi) PURCHASE TERMS VARIED BY AGREEMENT. Nothing
contained herein is intended to prohibit Members from agreeing upon other terms
and conditions for the purchase by the Company or any Member of the Membership
Interest of any Member in the Company.
Each Member acknowledges and agrees that (i) a default by any Member in
making a required Capital Contribution will result in the Company and the
non-defaulting Members incurring certain costs and other damages in an amount
that would be extremely difficult or impractical to ascertain and (ii) the
remedies described in this SECTION 3.8 bear a reasonable relationship to the
damages which the Members estimate may be suffered by the Company and the
non-defaulting Members by reason of the failure of a defaulting Member to make
any required Capital Contribution and the election of any or all of the above
described remedies is not unreasonable under the circumstances existing as of
the date hereof.
The election of the non-defaulting Members to pursue any remedy
provided in this SECTION 3.8 shall not be a waiver or limitation of the right to
pursue an additional or different remedy available hereunder or at law or equity
with respect to any such default.
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
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<PAGE> 16
Company on such terms as are determined by the Management Committee and approved
by a Majority Interest. Notwithstanding the foregoing, Assignees may only be
admitted as substitute Members in accordance with ARTICLE VII.
4.3 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.
4.4 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.
4.5 TRANSACTIONS WITH THE COMPANY. Subject to any limitations set
forth in this Agreement 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.
4.6 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.
4.7 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. 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
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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 two (2) Committee Members, FPSH LP shall name
one (1) Committee Member, AWA INC shall name one (1) Committee Member, and the
fifth Committee Member (the "Wise Man") shall be named by unanimous consent of
the other four (4) Committee Members. Subject to SECTION 3.8E, 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. The Wise Man must be (i) independent and not
employed by or have any ownership interest in or licensing or a franchise
relationship with either Member (or its Affiliates), and (ii) possess not less
than ten (10) years of full-time executive level management experience in one or
more casual, fine dining restaurants having at least ten (10) stores under his
or her control or such other qualifications as Outback and Fleming's may agree.
(i) TERM OF SERVICE. Each Committee Member (other
than the Wise Man) 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. The Wise Man shall serve a one (1) year
term and shall be elected annually by written consent of all of the Committee
Members other than the Wise Man.
(ii) Management Committee:
<CAPTION>
"FPSH LP APPOINTEE" "AWA INC APPOINTEE" "OUTBACK APPOINTEES"
------------------- ------------------- --------------------
Paul M. Fleming A. William Allen III Chris Sullivan
Michael O'Donnell
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<PAGE> 18
The Wise Man shall be appointed within ninety (90) days of execution of this
Agreement.
(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. The Wise Man may be removed at any
time, with or without cause, by written consent of three (3) of the four (4)
Committee Members other than the Wise Man. Outback Appointees to the Management
Committee may be removed only by Outback, with or without cause. FPSH LP's
Appointee to the Management Committee may be removed only by FPSH LP, with or
without cause. AWA INC's Appointee to the Management Committee may be removed
only by AWA INC, with or without cause.
(v) VACANCIES. Vacancies on the Management
Committee shall be filled by the Member who originally appointed the vacating
Committee Member, or, in the case of the Wise Man, by vote or written consent of
all other Committee Members.
5.3 POWERS OF MANAGEMENT COMMITTEE.
A. POWERS 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 any
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;
(iv) Sue 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
(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.
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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 affirmative vote or written consent of a Majority Interest (or
such greater Percentage Interest as is set forth below) of the Members:
(a) The operation of any Restaurant other
than in conformity with the operating procedures established pursuant to, or in
accordance with, the System;
(b) 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 multiple transactions over a six (6)
month period, except in the orderly liquidation and winding up of the business
of the Company upon its duly authorized dissolution;
(c) 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;
(d) The merger of the Company with a
corporation, another limited liability company or limited partnership which is
not an Affiliate of the Company or of any of the Members; provided in no event
shall a Member be required to become a general partner in a merger with a
limited partnership without its express written consent;
(e) The merger of the Company with any
general partnership, or with a corporation, limited liability company or limited
partnership which is an Affiliate of the Company or any of the Members, shall
require the affirmative vote or written consent of Members owning a ninety
percent (90%) Percentage Interest;
(f) The admission of any person as a
Member, or the establishment of different classes of Members;
(g) An alteration of the primary purpose or
business of the Company as set forth in SECTION 2.6;
(h) The lending of money by the Company to
any Committee Member, Member, or officer;
(i) Any act which would make it impossible
to carry on the ordinary business of the Company;
(j) The declaration of Bankruptcy on behalf
of the Company;
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(k) The payment of any amount in violation of this
Agreement; and
(l) Any other transaction described in this
Agreement as requiring the vote, consent, or approval of the Members.
(ii) LIMITATION ON EXECUTION OF DOCUMENTS. No Committee
Member may execute any document on behalf of the Company without the prior
authorization of the Management Committee as provided in this SECTION 5.3.
Michael P. O'Donnell and A. William Allen III shall be the initial Committee
Members authorized to execute documents on behalf of the Company.
5.4 LIABILITY OF MANAGEMENT COMMITTEE. 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, effort, and skill as they deem
appropriate 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 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. The officers of the Company shall include a President and such other
officers as the Management Committee deems necessary and appropriate. 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. The Management Committee may
determine a reasonable compensation to be paid to each officer so appointed. 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 initial President shall be A. William Allen III. 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):
(i) Confess a judgment against the Company;
(ii) Admit any person as a Member;
(iii) Declare Bankruptcy on behalf of the Company;
(iv) Enter into any lease of real or personal property;
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(v) Enter into any loan transaction or incur any
indebtedness of the Company in excess of $25,000;
(vi) Execute any franchise agreement;
(vii) Purchase any real property; or
(viii) Undertake any such other matter(s) as may be agreed
upon by the Management Committee.
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, 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 in proportion to their Percentage Interests.
6.2 SPECIAL ALLOCATIONS. Notwithstanding SECTION 6.1:
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
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<PAGE> 22
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 Section 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, items of Company income and gain shall be
specially allocated to such Member in an amount and manner sufficient to
eliminate such excess deficit balance as quickly as possible. Any special
allocations of items of income and gain pursuant to this SECTION 6.2E shall be
taken into account in computing subsequent allocations of income and gain
pursuant to this ARTICLE VI so that the net amount of any item so allocated and
the income, gain, 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 the provisions of this ARTICLE VI if
such unexpected adjustments, allocations, or distributions had not occurred.
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, 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).
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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, unless the Company has ceased development of new
Restaurants, as defined in SECTION 8.1, all Distributable Cash of the Company
shall be retained by the Company and used for development of new Restaurants,
except that the Company shall, if Distributable Cash is available, distribute to
each Member cash in an amount equal to thirty-five percent (35%) of the Net
Profits, if any, allocated to such Member. Upon the request of FPSH LP or AWA
INC the Company shall distribute up to an additional ten percent (10%) of the
Net Profits, if any, allocated to such Member; provided however the amount of
any such excess distribution shall be a loan to the Member(s) receiving such
excess distribution. All such loans shall bear interest at the rate of eight
percent (8%) per annum, shall be secured by a first priority security interest
in the debtor Member's Membership Interest, and shall be repaid in full (with
all accrued interest) on the earlier of: (i) five (5) years from the date of the
loan, or (ii) any transfer by the debtor Member of any portion of the debtor
Member's Membership Interest. FPSH LP and AWA INC shall have no right to receive
excess distribution loans once the Company has opened its twentieth (20th)
restaurant. The Management Committee shall make the distributions specified in
this section, not less than once each calendar quarter based on estimated year
to date Net Profits. Distributions for the last calendar quarter of the Fiscal
Year shall be adjusted to reflect any under or over estimating of year to date
Net Profits during prior calendar quarters.
B. In the event the Company has ceased development of
new Restaurants as defined in SECTION 8.1, distributions shall be made in
accordance with SECTION 8.2D.
C. Subject to SECTION 8.2 AND ARTICLE X, all other
distributions to Members shall be made in accordance with their Percentage
Interests.
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 FORM OF DISTRIBUTION. Except as provided in SECTION 8.2 and
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.
6.7 RESTRICTION ON DISTRIBUTIONS. No distribution 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.
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6.8 RETURN OF DISTRIBUTIONS. A Member who receives a distribution
in violation of SECTION 6.7, and who knew at the time of the distribution that
the distribution violated SECTION 6.7, shall be liable to the Company for the
amount of the distribution. A Member who receives a distribution in violation of
SECTION 6.7, and who did not know at the time of the distribution that the
distribution violated SECTION 6.7, 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.
6.9 OBLIGATIONS OF MEMBERS TO REPORT ALLOCATIONS. The Members are
aware of the income tax consequences of the allocations made by this ARTICLE VI
and hereby agree to be bound by the provisions of this ARTICLE VI in reporting
their shares of Company income and loss for income tax purposes.
ARTICLE VII. TRANSFER AND ASSIGNMENT OF INTERESTS
7.1 TRANSFER AND ASSIGNMENT OF INTERESTS.
A GENERAL RESTRICTION. Except as otherwise provided in
this ARTICLE VII, until such time as any Member exercises its purchase or put
option pursuant to SECTION 7.11 hereof, 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. Without limiting the generality of the foregoing, the sale or
exchange of at least fifty percent (50%) of the voting stock of a Member, if a
Member is a corporation, or the transfer of an interest or interests of at least
fifty percent (50%) in the capital or profits 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;
provided that transfers among the Fleming's Principals shall be exempt from
these requirements. 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.
B IMPROPER TRANSFERS. Transfers in violation of this
ARTICLE VII shall only be effective to the extent set forth in SECTION 7.8.
C TERMINATION OF RESTRICTIONS. Upon exercise of a
purchase or put option by any Member pursuant to SECTION 7.11 hereof, all
restrictions on transfers of Membership Interests, pursuant to SECTION 7.1A AND
7.2 hereof shall be of no further force or effect.
7.2 FURTHER RESTRICTIONS ON THE FLEMING'S PRINCIPALS. Fleming's
and the Fleming's Principals acknowledge and agree that Outback has entered into
this Agreement in reliance on the personal skill and character of the Fleming's
Principals.
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A. AWA INC, A. William Allen III and Rick Scott hereby
represent and warrant to Outback that A. William Allen III (together with his
wife or through a trust controlled by them) and Rick Scott are the sole
shareholders and sole directors of AWA INC. The ownership of all of the capital
stock of AWA INC by A. William Allen III and Rick Scott is a material inducement
to Outback entering into this Agreement. Except as provided in SECTION 7.4, A.
William Allen III and Rick Scott hereby covenant and agree that they shall not,
in any manner, transfer, alienate or encumber any of the capital stock, or other
voting or ownership interest, in AWA INC without the prior written consent of
Outback, which consent may be granted or denied in Outback's sole discretion.
Further, AWA INC, A. William Allen III and Rick Scott hereby covenant and agree
that they shall not in any manner allow any action to be taken that would result
in A. William Allen III, individually, having insufficient voting power to
control all matters submitted to a vote of AWA INC's shareholders.
B. FPSH LP, PKCR, LLC ("PKCR") and Paul M. Fleming
hereby represent and warrant to Outback that trusts established for the benefit
of Paul M. Fleming, his spouse and children are the sole members of PKCR and
PKCR is the sole general partner of FPSH LP. The ownership of all of the general
partnership interests of FPSH LP by PKCR and ownership of all of the membership
interests in PKCR by trusts established for the benefit of Paul M. Fleming, his
spouse and children are material inducements to Outback entering into this
Agreement. Except as provided in SECTION 7.4, Paul M. Fleming hereby covenants
and agrees that he shall not, in any manner, transfer, alienate or encumber any
of the membership interests, or other voting or ownership interest, in PKCR
without the prior written consent of Outback, which consent may be granted or
denied in Outback's sole discretion and PKCR hereby covenants and agrees that it
shall not, in any manner, transfer, alienate or encumber any of its partnership
or other ownership or voting interest in FPSH LP without the prior written
consent of Outback which consent may be granted or denied at Outback's sole
discretion FPSH LP, PKCR and Paul M. Fleming covenant and agree that at all
times Paul M. Fleming, individually, or in his capacity as trustee, shall have
sole power to determine all matters submitted to a vote of FPSH LP's partners
and PKCR's members.
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).
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 7.3: Paul M.
Fleming and PKCR may make bona fide gifts of interests in PKCR or FPSH LP to
Paul M. Fleming's family members, or to one or more trusts for the benefit of
his family members, for estate planning purposes provided that Paul M. Fleming
retains at least a fifty-one percent (51%) ownership and voting interest in PKCR
and PKCR remains the sole general partner of FPSH LP; and A. William Allen III
and Rick Scott may make bona fide gifts of interests in AWA INC to their family
members, or to one or more trusts for the benefit of family members, for estate
planning purposes provided that they collectively retain at least a fifty-one
percent (51%) ownership and voting interest in AWA INC.
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
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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 who 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. Upon any
transfer of a Membership Interest in violation of this ARTICLE VII, the
remaining Members shall have the right to Purchase the transferred Membership
Interest as provided in SECTION 3.8F of this Agreement. In the event such
Membership Interest is not purchased by the remaining Members, such transferee
shall only be entitled to become an Assignee and thereafter shall only receive
the share of the Company's Net Profits, Net Losses and distributions of the
Company's assets to which the transferor of such Economic Interest would
otherwise be entitled. 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. Notwithstanding the immediately preceding
sentences, if, in the determination of the Management Committee, a transfer in
violation of this ARTICLE VII would cause the tax termination of the Company
under Code Section 708(b)(1)(B), the transfer shall be null and void and the
purported transferee shall not become either a Member or an Assignee.
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 immediately before the transfer were
associated with the transferred Economic Interest. Such purchase and sale shall
not, however, result in the release of the Member from any liability to the
Company as a Member.
Each Member acknowledges and agrees that the right of the
Company to purchase such rights and interests from a Member who transfers a
Membership Interest in violation of this ARTICLE VII is not unreasonable under
the circumstances existing as of the date hereof.
7.9 RIGHTS OF FIRST REFUSAL.
A. MUTUAL RIGHTS. Until any Member exercises its
purchase or put option pursuant to SECTION 7.11 hereof, except for transfers
pursuant to SECTIONS 3.8F, 4.4, 7.4B OR 7.11, but subject to SECTIONS 7.1, 7.2
AND 7.3, if a Member (or any shareholder of AWA INC or any partner of FPSH LP or
member of PKCR) (each a "Transferor") desires to transfer all or any part of
his, hers, or its Membership Interest (or, in the case of a shareholder of AWA
INC any capital stock or other voting or ownership interest in AWA INC, in the
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case of a partner of FPSH LP any partnership interests in FPSH LP, or in the
case of a member of PKCR any membership interest in PKCR) 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
shareholder of AWA INC, any capital stock or other voting or ownership interest
in AWA INC, in the case of a partner of FPSH LP any partnership interest in FPSH
LP, or in the case of a member of PKCR any membership interest in PKCR), 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 Transferor's entire Membership Interest
or such portion of the Transferor's Membership Interest as is specified in the
Notice of Transfer, on terms identical to the Purchase Price or proportionately
identical if the Members elect to purchase the entire Membership Interest of the
Transferor. 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, or portion thereof,
in proportion to the other Member's Percentage Interests or in such other
proportions as the other Members agree.
B. OUTBACK'S RIGHTS. Upon exercise by any Member of a
purchase or put option pursuant to SECTION 7.11, the rights granted to the
Members other than Outback under SECTION 7.9A shall terminate and be of no
further force or effect and subsequent thereto, except for transfers pursuant to
SECTIONS 3.8F, 4.4 OR 7.4B, but subject to SECTIONS 7.1, 7.2, 7.3 AND 7.11, if,
at any time a Member other than Outback (or any shareholder of AWA INC or any
partner of FPSH LP or member of PKCR) (each a "Transferor"), desires to transfer
all or any part of his, hers, or its Membership Interest (or, in the case of a
shareholder of AWA INC any capital stock or other voting or ownership interest
in AWA INC, in the case of a partner of FPSH LP any partnership interests in
FPSH LP, or in the case of a member of PKCR any membership interest in PKCR) to
any person or entity, the Transferor shall, prior to any such Transfer, give
Outback Notice of Transfer, which notice shall specify the Membership Interest
to be transferred, the identity of the proposed transfer, and the Purchase
Price. Any purported Notice of Transfer that does not comply with the
requirements of this SECTION 7.9B shall be null and void and of no effect
hereunder. Upon receipt of a proper Notice of Transfer, Outback shall thereupon
have the right to acquire the Transferor's entire Membership Interest or such
portion of the Transferor's Membership Interest as is specified in the Notice of
Transfer, on terms identical to the Purchase Price or proportionately identical
if Outback elects to purchase the entire Membership Interest of the Transferor.
In the event the Purchase Price contains terms that Outback cannot reasonably
duplicate, Outback shall have the right to substitute the reasonable cash
equivalent thereof.
C. 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.
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(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 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 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.
7.11 PURCHASE AND SALE OPTIONS.
A. OPTIONS.
(i) PURCHASE OPTIONS. At any time during the one
(1) year period commencing upon the opening of the Company's twentieth (20th)
Restaurant, Outback shall have the right to purchase:
(a) from FPSH LP, and FPSH LP shall have
the obligation to sell to Outback, a Percentage Interest in the Company equal to
thirty percent (30%) of all Percentage Interests in the Company; and
(b) from AWA INC and AWA INC shall have
the obligation to sell to Outback, a Percentage Interest in the Company equal to
ten percent (10%) of all Percentage Interests in the Company.
(ii) PUT OPTION. At any time during the one (1)
year period commencing upon the opening of the Company's twentieth (20th)
Restaurant:
(a) FPSH LP shall have the right to sell
to Outback and Outback shall have the obligation to buy, a Percentage Interest
in the Company equal to thirty (30%) of all Percentage Interests in the Company;
and
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(b) AWA INC shall have the right to sell
to Outback and Outback shall have the obligation to buy, a Percentage Interest
in the Company equal to ten percent (10%) of all Percentage Interests in the
Company.
(iii) The purchase price to be paid by Outback for
the Percentage Interests purchased shall be made in two installments (an initial
payment and a final payment) and calculated as follows:
(a) the initial payment shall be equal to
the Company's annualized after tax net income with respect to all Restaurants
open for eighteen (18) months or more on the date of exercise of the option, for
the twelve (12) months immediately preceding exercise of the purchase or put
option, calculated in accordance with generally accepted accounting principals
("GAAP") (assuming a tax rate equal to OSI's tax rate) multiplied by the
Percentage Interest purchased by Outback and multiplied by seventy five percent
(75%) of OSI's pro forma price/earnings multiple for the twelve (12) months
immediately following the exercise of the purchase or put option; provided,
however, the initial payment shall not be less than five (5) times the Company's
annualized earnings before interest, taxes, depreciation and amortization with
respect to all Restaurants open for eighteen (18) months or more, for the twelve
(12) months immediately preceding the exercise of the purchase or put option,
calculated in accordance with GAAP, multiplied by the Percentage Interest
purchased; and
(b) the final payment shall be equal to
the Company's annualized after tax net income, with respect to any of the
Company's Restaurants opened for business prior to the date of exercise of the
Option, but open for less than eighteen (18) months on the date of exercise of
the option, for the twelve (12) months immediately preceding the Valuation Date
(as defined below), calculated in accordance with GAAP (assuming a tax rate
equal to OSI's tax rate) multiplied by the Percentage Interest purchased by
Outback and multiplied by seventy five percent (75%) of OSI's pro forma
price/earnings multiple for the twelve (12) months immediately following the
Valuation Date; provided, however, the final payment shall not be less than five
(5) times the Company's annualized earnings before interest, taxes, depreciation
and amortization with respect to any of the Company's Restaurant opened for
business prior to the date of exercise of the option, but open for less than
eighteen (18) months on the date of exercise of the option, for the twelve (12)
months immediately preceding the Valuation Date, calculated in accordance with
GAAP, multiplied by the Percentage Interest purchased. For the purposes hereof,
the "Valuation Date" shall be the date on which the Company's last Restaurant,
that was open on the date of exercise of the option, has been open for eighteen
(18) months.
In determining OSI's pro forma price/earnings multiple for the
following twelve months, (i) OSI's price shall be equal to the weighted average
(based on volume) of OSI's common stock closing price on the NASDAQ National
Market System for the thirty (30) trading days immediately preceding exercise of
the purchase or put option or the Valuation Date, as applicable, and (ii) OSI's
earnings for the twelve months following exercise of the purchase or put option
or the Valuation Date, as applicable, shall be equal to the consensus earnings
per share estimate for such period as reported by First Call. No purchase price
shall be paid for any Restaurant opened for business after the date of exercise
of the option.
B. EXERCISE OF OPTION.
(i) EXERCISE NOTICE. Outback's purchase options,
as described in SECTION 7.11(A)(I)(A) AND (B) may be exercised independently.
FPSH LP's and AWA INC's put options as described in SECTION 7.11(A)(II)(A) AND
(B) may be exercised independently. Upon the exercise of a purchase option or
put option, the exercising Member shall give the other Members written notice
thereof. The written notice (the "Exercise Notice") shall state the purchase
price, a detailed explanation of the valuation methodology and supporting
information utilized in arriving at said purchase price. The other Member shall
have a period of thirty (30) days in which to agree to the purchase price or
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assert any challenges to the calculation of the purchase price. If the Members
cannot agree on the purchase price calculation forty-five (45) days from receipt
of the Exercise Notice, the calculation shall be determined by the Company's
independent certified public accountants.
(ii) CLOSING OF OPTION EXERCISE. The closing for
the purchase by Outback pursuant to this SECTION 7.11 shall be held at 10:00
a.m. at the principal office of Company no later than thirty (30) days after the
determination of the initial payment, except that if the closing date falls on a
Saturday, Sunday, or legal holiday, then the closing shall be held on the next
succeeding business day. At the closing, the selling Member(s) shall deliver to
Outback an instrument of transfer (containing warranties of title and no
encumbrances) conveying the Percentage Interest(s) sold. The selling Member(s)
and Outback shall do all things and execute and deliver all papers as may be
necessary fully to consummate such sale and purchase in accordance with the
terms and provisions of this Agreement.
(iii) PAYMENT OF PURCHASE PRICE. Outback shall pay
the initial payment in cash at closing and the final payment in cash within
thirty (30) days of the determination of the final payment.
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 the Company has not, in
any period of eighteen (18) consecutive months, opened a new Restaurant or
executed a lease or purchase contract for a new Restaurant.
8.2 CONSEQUENCES OF CESSATION. If the Company ceases development,
the Company shall continue in existence and:
A. All rights to further development of the Fleming's
Prime Steakhouse concept, including the System, shall be distributed and
assigned to Fleming's,
B. All existing Company Restaurants and all restaurants
utilizing the System owned and operated by OSI or any of its Affiliates, shall
receive a perpetual, royalty free license to use the Fleming's Prime Steakhouse
concept and System,
C. The Company shall remain entitled to continue to
collect royalties for the use of the System from any franchisee of the Company
utilizing the System on the date of cessation, and
D. All Distributable Cash shall be distributed to the
Members in accordance with their Percentage Interests no less frequently than
quarterly.
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 the accounting methods followed for federal income tax
purposes. 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:
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;
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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 of the
Company and a balance sheet of the Company as of the end of that period. The
statement 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
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.
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B. The Management Committee shall cause to be prepared
at least annually, at Company 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. The Management Committee, at Company expense, shall
cause the income tax returns for the Company to be prepared and timely filed
with the appropriate authorities. The Management Committee, 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. The Management Committee may rely upon the
advice of its accountants as to whether such decisions are in accordance with
accounting methods followed for federal income tax purposes.
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 the Company'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. The agreement of three (3) of the four (4) Committee
Members other than the Wise Man 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 pursuant to
SECTION 3.8C;
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 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, 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 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.
10.3 DISTRIBUTIONS IN KIND. Except for a distribution of the System
to Fleming's pursuant to SECTION 8.2 OR 10.4 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.
10.4 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) the
System shall be distributed to Fleming's, as valued at its deemed contribution
value, and all other assets of the Company shall be liquidated. All other
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) thereafter to the Members in accordance with their
positive Capital Account balances after giving effect to the allocation of Net
Profit or Net Loss resulting from such liquidation. 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 their positive |
