Exhibit 99.3
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LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
BJ CHICAGO, LLC
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TABLE OF CONTENTS
PAGE
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ARTICLE 1 ORGANIZATION............................................................................................1
1.1 Formation................................................................................................1
1.2 Name.....................................................................................................1
1.3 Principal Place of Business; Other Places of Business....................................................1
1.4 Business Purpose; Business of Members....................................................................1
1.5 Title to Property........................................................................................2
1.6 Articles of Organization.................................................................................2
1.7 Fictitious Business Name Statements......................................................................2
1.8 Designated Agent for Service of Process..................................................................2
1.9 Term.....................................................................................................2
ARTICLE 2 DEFINITIONS.............................................................................................2
2.1 "Account"................................................................................................2
2.2 "Act"....................................................................................................2
2.3 "Additional Capital Contribution"........................................................................2
2.4 "Adjusted Capital Account"...............................................................................3
2.5 "Affiliate"..............................................................................................3
2.6 "Agreement"..............................................................................................3
2.7 "Articles"...............................................................................................3
2.8 "Capital Account"........................................................................................3
2.9 "Capital Contributions"..................................................................................4
2.10 "Cash Available for Distribution"......................................................................4
2.11 "Code".................................................................................................4
2.12 "Company"..............................................................................................4
2.13 "Company Minimum Gain".................................................................................4
2.14 "Company Property".....................................................................................4
2.15 "Depreciation".........................................................................................5
2.16 "Economic Interest"....................................................................................5
2.17 "Gross Asset Value"....................................................................................5
2.18 "Indemnitee"...........................................................................................6
2.19 "Managers".............................................................................................6
2.20 "Member Minimum Gain"..................................................................................6
2.21 "Member Nonrecourse Debt"..............................................................................6
2.22 "Member Nonrecourse Deductions"........................................................................6
2.23 "Member"...............................................................................................6
2.24 "Membership Interest"..................................................................................6
2.25 "Net Profits" or "Net Losses"..........................................................................6
2.26 "Nonrecourse Deductions"...............................................................................7
2.27 "Nonrecourse Liability"................................................................................7
2.28 "Percentage Interest"..................................................................................7
2.29 "Person"...............................................................................................7
2.30 "Proportionate"........................................................................................7
2.31 "Recourse Liability"...................................................................................7
2.32 "Regulations"..........................................................................................7
2.33 "Regulatory Allocations"...............................................................................7
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2.34 "Reserves".............................................................................................8
2.35 "Selling Member".......................................................................................8
2.36 "Terminating Capital Transaction"......................................................................8
2.37 "Transfer".............................................................................................8
ARTICLE 3 CAPITAL, CAPITAL ACCOUNTS AND MEMBERS...................................................................8
3.1 Initial Capital Contributions of Members.................................................................8
3.2 Additional Capital Contributions by Members..............................................................8
3.3 Capital Accounts.........................................................................................8
3.4 Other Matters............................................................................................8
ARTICLE 4 DISTRIBUTIONS OF CASH...................................................................................9
4.1 Distributions in General.................................................................................9
4.2 Order of Distributions...................................................................................9
4.3 Other Provisions.........................................................................................9
ARTICLE 5 ALLOCATIONS OF NET PROFITS AND NET LOSSES..............................................................10
5.1 Allocation of Net Profits and Net Losses................................................................10
5.2 Additional Special Allocations..........................................................................10
5.3 Other Provisions........................................................................................12
ARTICLE 6 OPERATIONS.............................................................................................12
6.1 Management..............................................................................................12
6.2 Compensation of Manager.................................................................................13
6.3 Reimbursement...........................................................................................13
6.4 Records and Reports.....................................................................................13
6.5 Indemnification and Liability of Managers...............................................................14
6.6 Removal and Resignation of Manager......................................................................15
6.7 Time Commitment.........................................................................................15
ARTICLE 7 TRANSFERS OF MEMBERSHIP INTERESTS......................................................................15
7.1 Transfers of Membership Interests.......................................................................15
7.2 Sale or Transfer of a Member's Interest.................................................................15
7.3 Limitation Upon Rights of Transferee....................................................................16
7.4 Other Limitations on Transfers..........................................................................16
ARTICLE 8 DISSOLUTION, LIQUIDATION AND TERMINATION OF THE COMPANY................................................16
8.1 Limitations.............................................................................................16
8.2 Exclusive Causes........................................................................................16
8.3 Liquidation.............................................................................................17
8.4 No Capital Contribution Upon Dissolution................................................................18
ARTICLE 9 OTHER PROVISIONS.......................................................................................18
9.1 Accounting and Fiscal Year..............................................................................18
9.2 Accountants.............................................................................................18
9.3 Bank Accounts...........................................................................................18
9.4 Meetings of Members.....................................................................................18
9.5 Entire Agreement; Binding Provisions; Separability......................................................18
9.6 Further Assurances......................................................................................18
9.7 Notices.................................................................................................19
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9.8 Attorneys' Fees.........................................................................................19
9.9 Tax Matters.............................................................................................19
9.10 Governing Law.........................................................................................19
9.11 Time of Essence.......................................................................................19
9.12 Amendments............................................................................................19
9.13 Counterparts..........................................................................................19
9.14 Titles................................................................................................19
EXHIBIT "A........................................................................................................1
iii
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
BJ CHICAGO, LLC
PREAMBLE
THIS LIMITED LIABILITY COMPANY OPERATING AGREEMENT (this "AGREEMENT")
is made and entered into and effective as of December 20, 2000 by and between
those persons whose names appear on Exhibit "A" to this Agreement, as such may
be amended from time to time. The persons appearing on Exhibit "A," as amended
from time to time, are hereinafter referred to as the "Members."
ARTICLE 1
ORGANIZATION
1.1 FORMATION. The Members hereby form "BJ Chicago, LLC" (the
"Company") under the Act for the purposes and upon the terms and conditions
hereinafter set forth. The rights and liabilities of the Members and of the
Managers of the Company shall be as provided in the Act, except as otherwise
expressly provided herein or in the Articles.
1.2 NAME. The name of the Company shall be "BJ Chicago, LLC" The
Company may also do business at the same time under one or more fictitious names
if the Managers determine that such is in the best interests of the Company. The
Managers may cause a change to the name of the Company from time to time, and
they shall file or cause to be filed the appropriate certificate of amendment to
the Articles.
1.3 PRINCIPAL PLACE OF BUSINESS; OTHER PLACES OF BUSINESS. The
principal office of the Company is located at 0000 Xxxx Xxxxxx Xxxxxxxxx,
Xxxxxxxx, Xxxxxxxxxx 00000, or such other place within the State of California
as the Managers may from time to time designate by notice to the Members.
1.4 BUSINESS PURPOSE; BUSINESS OF MEMBERS. The business purpose
and character of the Company shall be any lawful purpose, including, without
limitation, to purchase and hold for investment shares of common stock or other
securities of Chicago Pizza & Brewery, Incorporated, a California corporation
("Chicago Pizza") (the "Shares"), and to take all actions required, necessary or
desirable in connection therewith. The Company shall have the power to do and
perform all things determined by the Managers to be necessary for, incident to
and connected with or arising out of such activities and shall take such actions
reasonably determined by the Managers to be conducive to the accomplishment of
such purposes and shall not engage in any other business without the approval of
all of the Members.
Each Member and Manager and their respective officers, directors,
shareholders, co-trustees, employees, agents and Affiliates, and any other
person acting with or through authorization of a Member or Manager, may engage
or invest in, independently or with others, any business activity of any type or
description, including, without limitation, those that might be the same as or
similar to the Company's business and that might be in direct or indirect
competition with the Company; provided, however, that notwithstanding anything
to the contrary in this Agreement, no Member or its officers, directors,
shareholders, co-trustees, employees agents or Affiliates may individually
invest in any equity or debt securities of Chicago Pizza without the written
consent of the other Members, which consent may be
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granted or withheld in their sole and absolute discretion (provided, however,
that The Jacmar Companies shall be permitted to own directly 1,190,200 shares of
common stock of Chicago Pizza). Neither the Company nor any other Member shall
have any right in or to such other ventures or activities or to the income or
proceeds derived therefrom. Subject to the foregoing, no Member or Manager shall
be obligated to present any investment opportunity or prospective economic
advantage to the Company, even if the opportunity is of the character that, if
presented to the Company, could be taken by the Company. Subject to the
foregoing provisions of this Section 1.4, each Member and Manager shall have the
right to hold any investment opportunity or prospective economic advantage for
his or its own account or to recommend such opportunity to a Person or Persons
other than the Company. Subject to the foregoing provisions of this Section 1.4,
each Member acknowledges that the other Members and Managers and their
respective officers, directors, shareholders, co-trustees, employees, agents and
Affiliates own and/or manage other businesses, including businesses that compete
with the Company and for such aforementioned persons' respective time and
resources. Each Member hereby waives any and all rights and claims which he or
it may otherwise have against the other Members and/or Managers and their
respective officers, directors, shareholders, co-trustees, employees, agents and
Affiliates as a result of any such activities.
1.5 TITLE TO PROPERTY. All real and tangible and intangible
personal property of the Company shall be held in the name of the Company.
1.6 ARTICLES OF ORGANIZATION. The Managers shall cause to be filed
Articles and, at the Company's expense, pay appropriate filing fees as required
by the Act. With the approval of all of the Members, or as required by the Act,
the Managers may execute and file amendments to the Articles from time to time
in a form prescribed by the Act.
1.7 FICTITIOUS BUSINESS NAME STATEMENTS. Following the execution
of this Agreement, fictitious business name statements shall be filed and
published when and if the Managers determine it necessary. Any such statement
shall be renewed as required by law.
1.8 DESIGNATED AGENT FOR SERVICE OF PROCESS. The designated agent
for service of process for the Company is Xxxxx X. Xxx Xxxxx, and the address
for service of process on the designated agent is 0000 Xxxx Xxxxxx Xxxxxxxxx,
Xxxxxxxx, Xxxxxxxxxx 00000.
1.9 TERM. The Company shall commence on the date that the Articles
are properly filed, and shall continue until December 31, 2050 unless earlier
terminated pursuant to Section 8.2 hereof or otherwise under the Act.
ARTICLE 2
DEFINITIONS
The following capitalized words and phrases used in this Agreement
shall have the following meanings:
2.1 "ACCOUNT" is defined in Section 9.3 hereof.
2.2 "ACT" means the Delaware Limited Liability Company Act, as
such may be amended from time to time.
2.3 "ADDITIONAL CAPITAL CONTRIBUTION" is defined in Section 3.2
hereof.
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2.4 "ADJUSTED CAPITAL ACCOUNT" means, with respect to any Member,
the balance, if any, in such Person's Capital Account as of the end of the
relevant fiscal year, after giving effect to the following adjustments:
2.4.1 Add to such Capital Account the following items:
(a) The amount, if any, that such Member is obligated
to contribute to the Company upon liquidation of such
Membership or Economic Interest; and
(b) The amount that such Person is obligated to
restore or is deemed to be obligated to restore pursuant to
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
2.4.2 Subtract from such Capital Account such Person's
share of the items described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4),
(5) and (6).
2.5 "AFFILIATE" means a Person that, directly or indirectly,
through one or more intermediaries, has voting control or has its voting
controlled by, or is under common voting control with, the Person specified.
2.6 "AGREEMENT" is defined in the Preamble.
2.7 "ARTICLES" means the articles of organization of the Company
filed under the Act for the purpose of forming the Company as a limited
liability company plus any duly executed and filed amendments.
2.8 "CAPITAL ACCOUNT" means the Capital Account maintained for
each Member in accordance with the following provisions:
2.8.1 To each such Member's Capital Account there shall be
added (a) such Member's Capital Contributions (net of liabilities encumbering
any property contributed that the Company is considered to assume or take
subject to under Code Section 752) and (b) such Member's allocable share of Net
Profits and any items in the nature of income or gain that are specially
allocated to such Person pursuant to Article 5 hereof or other provisions of
this Agreement.
2.8.2 From each such Member's Capital Account there shall
be subtracted (a) the amount of (i) cash and (ii) the Gross Asset Value of any
Company Property distributed to such Member pursuant to any provision of this
Agreement (net of liabilities encumbering the distributed Company Property that
such Member is considered to assume or take subject to under Code Section 752),
(b) such Member's allocable share of Net Losses and any other items in the
nature of expenses or losses that are specially allocated to such Member
pursuant to Article 5 hereof and (c) liabilities of such Member assumed by the
Company or which are secured by any property contributed by such Member to the
Company, calculated by reference to Code Section 752. With respect to
distributions of Company Property, Capital Accounts shall first be adjusted to
reflect the manner in which the unrealized income, gain, loss and deduction
inherent in such property (that has not been previously reflected in Capital
Accounts) would be allocated, pursuant to Article 5 hereof, to the Members if
there were a taxable disposition of such property for its fair market value
(taking Code Section 7701(g) into account) on the date of distribution.
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2.8.3 The Managers, in their discretion and in accordance
with the Code and Regulations, may increase or decrease the Capital Accounts of
the Members to reflect a revaluation of Company Property on the Company's books
and records. Any such adjustments shall be made in accordance with Regulations
Section 1.704-1(b)(2)(iv)(g).
2.8.4 Additional adjustments shall be made to the Capital
Accounts as required by Regulations Sections 1.704-1(b) and 1.704-2 or, as
permitted but not required, in the discretion of the Managers. Adjustments to
Capital Accounts in respect to Company income, gain, loss, deduction and
non-deductible expenditures (or any item thereof) shall be made with reference
to the federal tax treatment of such items (and, in the case of book items, with
reference to federal tax treatment of the corresponding tax items) at the
Company level, without regard to any requisite or elective tax treatment of such
items at the Member level.
2.8.5 The foregoing provisions and the other provisions of
this Agreement relating to the maintenance of Capital Accounts are intended to
comply with Regulations Sections 1.704-1(b) and 1.704-2 and shall be interpreted
and applied in a manner consistent with such Regulations. In the event that the
Managers shall determine that it is prudent to modify the manner in which the
Capital Accounts, or any additions or subtractions thereto, are computed in
order to comply with such Regulations, the Managers may make such modification,
provided that it is not likely to have a material effect on the amounts
distributable to any Member pursuant to Article 8 hereof upon the dissolution of
the Company. The Managers shall also make (a) any adjustments that are necessary
or appropriate to maintain equality between the Capital Accounts of the Members
and the amount of Company capital reflected on the Company's balance sheet, as
computed for book purposes, in accordance with Regulations Section
1.704-1(b)(2)(iv)(q), and (b) any appropriate modifications in the event that
unanticipated events might otherwise cause this Agreement not to comply with
Regulations Sections 1.704-1(b) and 1.704-2.
2.9 "CAPITAL CONTRIBUTIONS" means the total amount of money or the
Gross Asset Value of property contributed to the capital of the Company by a
Member, whether as an initial Capital Contribution or as an additional Capital
Contribution (including, without limitation, the Additional Capital
Contributions).
2.10 "CASH AVAILABLE FOR DISTRIBUTION" means, with respect to any
fiscal year, all Company cash receipts (including Sale Proceeds, but excluding
any proceeds from a Terminating Capital Transaction), after deducting payments
for operating cash expenses, payments for debt service (including payments on
permitted loans from Members), capital expenditures, reinvestment of cash flow,
financing proceeds and sales proceeds in additional Company Properties, and any
other amounts set aside for the restoration, increase or creation of reasonable
Reserves.
2.11 "CODE" means the Internal Revenue Code of 1986, as amended
from time to time (or any corresponding provisions of succeeding law).
2.12 "COMPANY" is defined in the Preamble.
2.13 "COMPANY MINIMUM GAIN" has the meaning set forth in
Regulations Sections 1.704-2(b)(2) and 1.704-2(d)(1) for the phrase "partnership
minimum gain."
2.14 "COMPANY PROPERTY" means all direct and indirect interests in
real and personal property owned by the Company from time to time, and any
property received in exchange therefor, and shall include both tangible and
intangible property (including cash).
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2.15 "DEPRECIATION" means, for each fiscal year, an amount equal to
the federal income tax depreciation, amortization or other cost recovery
deduction allowable with respect to an asset for such year or other period,
except that (i) with respect to any asset the Gross Asset Value of which differs
from its adjusted tax basis for federal income tax purposes, which difference is
being eliminated by use of the "remedial method" pursuant to Section 1.704-3(d)
of the Regulations, Depreciation for such fiscal year shall be the amount of
book basis recovered for such fiscal year under the rules prescribed by Section
1.704-3(d)(2) of the Regulations, and (ii) with respect to any other asset the
Gross Asset Value of which differs from its adjusted basis for federal income
tax purposes at the beginning of such year, Depreciation shall be an amount that
bears the same ratio to such beginning Gross Asset Value as the federal income
tax depreciation, amortization or other cost recovery deduction for such year or
other period bears to such beginning adjusted tax basis; PROVIDED, HOWEVER, that
if the federal income tax depreciation, amortization or other cost recovery
deduction for such year is zero, Depreciation shall be determined with reference
to such beginning Gross Asset Value using any method selected by the Managers.
2.16 "ECONOMIC INTEREST" means a Person's right to share in the Net
Profits, Net Losses or similar items of, and to receive distributions from, the
Company, but does not include any other rights of a Member, including, without
limitation, the right to vote or to participate in the management of the
Company, or, except as specifically provided in this Agreement or by law, any
right to information concerning the business and affairs of the Company.
2.17 "GROSS ASSET VALUE" means, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as follows:
2.17.1 The initial Gross Asset Value of any asset
contributed by a Member to the Company shall be the gross fair market value of
such asset, as determined by the Managers.
2.17.2 The Gross Asset Values of all Company assets
immediately prior to the occurrence of any event described in subsection (a),
subsection (b), subsection (c) or subsection (d) hereof shall be adjusted to
equal their respective gross fair market values, as determined by the Managers
using such reasonable method of valuation as they may adopt, as of the following
times:
(a) the acquisition of an additional interest in the
Company (other than in connection with the execution of this
Agreement) by a new or existing Member in exchange for more
than a DE MINIMIS Capital Contribution, if the Managers
determine that such adjustment is necessary or appropriate to
reflect the relative economic interests of the Members in the
Company;
(b) the distribution by the Company to a Member of
more than a DE MINIMIS amount of Company property as
consideration for an interest in the Company, if the Managers
determine that such adjustment is necessary or appropriate to
reflect the relative economic interests of the Members in the
Company;
(c) the liquidation of the Company within the meaning
of Regulations Section 1.704-1(b)(2)(ii)(g); and
(d) at such other times as the Managers shall
reasonably determine necessary or advisable in order to comply
with Regulations Sections 1.704-1(b) and 1.704-2.
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2.17.3 The Gross Asset Value of any Company asset
distributed to a Member shall be the gross fair market value of such asset on
the date of distribution as determined by the Managers.
2.17.4 The Gross Asset Values of Company assets shall be
increased (or decreased) to reflect any adjustments to the adjusted basis of
such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to
the extent that such adjustments are taken into account in determining Capital
Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m).
2.17.5 If the Gross Asset Value of a Company asset has been
determined or adjusted pursuant to Section 2.17.1, Section 2.17.2 or Section
2.17.4 hereof, such Gross Asset Value shall thereafter be adjusted by the
Depreciation taken into account with respect to such asset for purposes of
computing Net Income and Net Losses.
2.18 "INDEMNITEE" is defined in Section 6.5 hereof.
2.19 "MANAGERS" means The Jacmar Companies and Golden Resorts
Incorporated.
2.20 "MEMBER MINIMUM GAIN" means an amount, with respect to each
Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if
such Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined
in accordance with Regulations Section 1.704-2(i) with respect to "partner
minimum gain."
2.21 "MEMBER NONRECOURSE DEBT" has the meaning set forth in
Regulations Section 1.704-2(b)(4) for the phrase "partner nonrecourse debt."
2.22 "MEMBER NONRECOURSE DEDUCTIONS" has the meaning set forth in
Regulations Section 1.704-2(i) for the phrase "partner nonrecourse deductions."
2.23 "MEMBER" means a Person who owns a Membership Interest,
including either Manager and a person who holds only an Economic Interest.
Initially, the Members shall be the Persons listed on Exhibit "A."
2.24 "MEMBERSHIP INTEREST" means the entire ownership interest of a
Member in the Company, including, without limitation, the Member's Economic
Interest and any and all rights to vote and otherwise participate in the
Company's affairs and rights to any and all benefits as provided in this
Agreement or by law. The term shall also include any and all obligations to
comply with the terms and provisions of this Agreement or law.
2.25 "NET PROFITS" OR "NET LOSSES" means, for each fiscal year or
other period, an amount equal to the Company's taxable income or loss for such
year or period determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
2.25.1 Any income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing Net Profits or Net
Losses pursuant to this Section 2.28 shall be added to such taxable income or
loss;
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2.25.2 Any expenditure of the Company described in Code
Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken
into account in computing Net Profits or Net Losses pursuant to this Section
2.28, shall be subtracted from such taxable income or loss;
2.25.3 Gain or loss resulting from any disposition of
Company Property where such gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Gross Asset Value of the Company
Property disposed of, notwithstanding that the adjusted tax basis of such
Company Property differs from its Gross Asset Value;
2.25.4 To the extent an adjustment to the adjusted tax basis
of any asset included in Company Property pursuant to Code Section 734(b) is
required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken
into account in determining Capital Accounts as a result of a distribution other
than in liquidation of a Member's Membership Interest, the amount of such
adjustment shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases the basis of the asset)
from the disposition of the asset and shall be taken into account for the
purposes of computing Net Profits and Net Losses.
2.25.5 If the Gross Asset Value of any Company asset is
adjusted in accordance with the terms of this Agreement, the amount of such
adjustment shall be taken into account in the taxable year of such adjustment as
gain or loss from the disposition of such asset for purposes of computing Net
Profits or Net Losses;
2.26 "NONRECOURSE DEDUCTIONS" has the meaning set forth in
Regulations Sections 1.704-2(b)(1) and 1.704-2(c).
2.27 "NONRECOURSE LIABILITY" has the meaning set forth in
Regulations Sections 1.704-2(b)(3) and 1.752-1(a)(2).
2.28 "PERCENTAGE INTEREST" means, with respect to each Member, the
percentage set forth opposite such Member's name on EXHIBIT "A" attached hereto
as it may be amended or supplemented from time to time.
2.29 "PERSON" means and includes an individual, a partnership, a
corporation, a joint venture, a limited liability company, a trust, an
unincorporated organization, a government or any department or agency thereof,
or any entity similar to any of the foregoing.
2.30 "PROPORTIONATE" AND "PROPORTIONATELY" means, when used with
respect to the Members (or a group of them), the proportion that each such
Member's Percentage Interest bears to the total outstanding Percentage Interests
of all Members to whom reference is made.
2.31 "RECOURSE LIABILITY" has the meaning set forth in Regulations
Section 1.752-1(a)(1).
2.32 "REGULATIONS" means temporary and final Treasury Regulations
promulgated under the Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding Treasury Regulations).
2.33 "REGULATORY ALLOCATIONS" is defined in Section 5.2.10 hereof.
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2.34 "RESERVES" means, with respect to any fiscal year or other
period, funds set aside or amounts allocated during such period to reserves that
shall be maintained in amounts reasonably determined by the Managers for working
capital, to pay taxes, insurance, debt service and other costs or expenses
incident to the ownership of the Company Property and the conduct of business by
the Company as contemplated hereunder.
2.35 "SELLING MEMBER" is defined in Section 7.2 hereof.
2.36 "TERMINATING CAPITAL TRANSACTION" means any sale or other
disposition of all or substantially all of the assets of the Company or a
related series of transactions that, taken together, result in the sale or other
disposition of all or substantially all of the assets of the Company.
2.37 "TRANSFER" means a sale, conveyance, exchange, assignment,
pledge, encumbrance, making a gift of, hypothecation or other transfer, or an
agreement to do any of the foregoing.
ARTICLE 3
CAPITAL, CAPITAL ACCOUNTS AND MEMBERS
3.1 INITIAL CAPITAL CONTRIBUTIONS OF MEMBERS. The Members have
made the Capital Contributions set forth opposite their names on EXHIBIT "A"
attached hereto. The initial Capital Contributions shall be used by the Company
to purchase shares of common stock of Chicago Pizza
3.2 ADDITIONAL CAPITAL CONTRIBUTIONS BY MEMBERS.
3.2.1 By reason of their Percentage Interests in the
Company, each Member shall be allocated an interest in the Shares equal to its
Percentage Interest in the Company (with a Member's allocable interest in the
Shares referred to as an "Allocable Share").
3.2.2 If the Members, by unanimous consent, wish to cause
the Company to purchase additional Shares, the Members shall contribute to the
Company cash (the "Additional Capital Contribution") in proportion to their
Percentage Interests, with the aggregate amount of such Additional Capital
Contribution equal to the product of (a) the per share price of the additional
Shares and (b) the number of additional Shares to be issued to the Company.
Concurrent with the receipt of the additional Shares, the Company shall pay the
Additional Capital Contribution to Chicago Pizza in connection with such
purchase.
3.2.3 Notwithstanding anything in this Agreement to the
contrary, no Member nor any other person or persons shall be obligated to
guarantee any Company borrowings. Any amount paid by a Member (or any
stockholder, officer, director, trustee, subsidiary or agent thereof) pursuant
to a guarantee of Company debt or the debt of any project or entity in which the
Company has an interest shall be accounted for as a permitted Member loan to the
Company bearing interest at ten percent (10%) per annum, but not to exceed the
maximum permissible rate under applicable usury laws.
3.3 CAPITAL ACCOUNTS. A Capital Account shall be established and
maintained for each Member in accordance with the terms of this Agreement.
3.4 OTHER MATTERS.
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3.4.1 Except as otherwise provided in this Agreement, a
Member shall not demand or be entitled to receive a return of or interest on its
Capital Contributions or Capital Account, withdraw any portion of its Capital
Contributions or receive any distributions from the Company as a return of
capital on account of such Capital Contributions without, in each instance, the
unanimous consent of the Members. Under circumstances requiring or permitting a
return of its Capital Contributions, a Member shall have the right to receive
property other than cash as set forth in this Agreement or, if not provided
herein, as reasonably determined by the Managers, except as may be specifically
prohibited by law.
3.4.2 Except as otherwise provided by the Act, no Member
shall be liable for the debts, liabilities, contracts or other obligations of
the Company, nor shall any Member be required to lend any funds to the Company.
ARTICLE 4
DISTRIBUTIONS OF CASH
4.1 DISTRIBUTIONS IN GENERAL. Except as otherwise provided in
Article 8 hereof, for any fiscal year all Cash Available for Distribution and
net proceeds from any Terminating Capital Transaction shall be distributed to
the Members at such times and in such amounts as the Managers shall reasonably
determine.
4.2 ORDER OF DISTRIBUTIONS.
4.2.1 CASH AVAILABLE FOR DISTRIBUTION. Subject to Article 8
hereof and Section 4.2.2, any Cash Available for Distribution shall be
distributed to the Members in proportion to their Percentage Interests.
4.2.2 DISTRIBUTION OR SALE OF SHARES. Subject to Article 8
hereof, the Members may, by unanimous consent, require the Company to distribute
all of the Shares to the Members in proportion to their Percentage Interests.
The Members may also, by unanimous consent, cause the Company to sell the Shares
at the Members' direction and distribute the proceeds (the "Sale Proceeds") to
the Members in proportion to their Percentage Interests.
4.2.3 PROCEEDS OF TERMINATING CAPITAL TRANSACTION. Any net
proceeds of a Terminating Capital Transaction shall be applied or distributed as
provided in Section 8.3(c) hereof.
4.3 OTHER PROVISIONS.
4.3.1 All amounts withheld pursuant to the Code or any
provision of any state or local tax law with respect to any allocation, payment
or distribution by the Company to the Members shall be treated as amounts
allocated, paid or distributed, respectively, to the Members pursuant to this
Article 4 and Article 8 hereof for all purposes under this Agreement.
4.3.2 Except as provided in Section 4.2.2, no right is
given to any Member to demand and receive property other than cash as provided
in this Agreement. The Managers may determine to make a distribution in kind of
Company Property to the Members, and such Company Property shall be distributed
in such a fashion as to ensure that the fair market value is distributed and
allocated in accordance with this Article 4 and Articles 5 and 8 hereof;
PROVIDED, HOWEVER, that no Member may be compelled to accept a distribution of
any Company Property in kind except (i) upon a dissolution and winding up of the
Company or (ii) where no Member will receive a distribution of money.
9
4.3.3 Notwithstanding any provision to the contrary
contained in this Agreement, neither the Company nor the Managers, on behalf of
the Company, shall make a distribution to any Member or the holder of any
Economic Interest on account of its Membership Interest or Economic Interest in
the Company if such distribution would violate the Act.
4.3.4 In the event that any Member owes any amount to the
Company that is due and unpaid, at the time a payment or distribution would be
payable to such Member under this Article 4, the amount of such distribution
shall be reduced by the amount of such obligation, together with interest
thereon (except where interest is otherwise provided in a separate agreement
with respect to such obligation), from the date such amount became due and
payable to the Company until payment thereof be made, at rate of ten percent
(10%) per annum, but not to exceed the maximum rate for such obligation under
any applicable usury laws, which offset shall be deemed to be a payment to the
Company by such Member and shall be applied first to such interest and then to
such obligation. In the event that a distribution has resulted in an overpayment
to any Member for the fiscal period as a whole, the amount of such overpayment
may be offset against subsequent payments or distributions in the manner
permitted by this Section 4.3.4 or the Member may be required to return the
excess distribution.
ARTICLE 5
ALLOCATIONS OF NET PROFITS AND NET LOSSES
5.1 ALLOCATION OF NET PROFITS AND NET LOSSES. Subject to Sections
5.2 and 5.3 hereof, Net Profits, Net Losses and any other items of income, gain,
loss and deduction for any fiscal year shall be allocated, for purposes of
adjusting the Capital Accounts of the Members, in proportion to the Members'
Percentage Interests.
5.2 ADDITIONAL SPECIAL ALLOCATIONS. Notwithstanding the foregoing
provisions of this Article 5:
5.2.1 Tax items with respect to Company Property that is
contributed to the Company with a Gross Asset Value that varies from its basis
in the hands of the contributing Member immediately preceding the date of
contribution shall be allocated among the Members for income tax purposes
pursuant to Regulations promulgated under Code Section 704(c) so as to take into
account such variation. The Company shall account for such variation under any
method approved under Code Section 704(c) and the applicable Regulations as
chosen by the Managers, including, without limitation, the "traditional method"
as described in Regulations Section 1.704-3(b). If the Gross Asset Value of any
Company asset is adjusted pursuant to Section 2.17.2 hereof, subsequent
allocations of income, gain, loss and deduction with respect to such asset shall
take account of any variation between the adjusted basis of such asset for
federal income tax purposes and its Gross Asset Value in the same manner as
under Code Section 704(c) and the Regulations promulgated thereunder.
Allocations pursuant to this Section 5.2.1 are solely for purposes of federal,
state and local taxes and shall not affect, or in any way be taken into account
in computing, any Member's Capital Account or share of Net Profits, Net Losses
and any other items or distributions pursuant to any provision of this
Agreement.
5.2.2 The Nonrecourse Deductions for each taxable year of
the Company shall be allocated to the Members in proportion to their Percentage
Interests.
5.2.3 If there is a net decrease in Company Minimum Gain
during a Company taxable year, then each Member shall be allocated items of
Company income and gain for such taxable year (and, if necessary, for subsequent
years) in an amount equal to such Member's share of the net decrease in
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Company Minimum Gain, determined in accordance with Regulations Section
1.704-2(g)(2). This Section 5.2.3 is intended to comply with the minimum gain
chargeback requirement of Regulations Section 1.704-2(f) and shall be
interpreted consistently therewith. The allocation otherwise required pursuant
to this Section 5.2.3 shall, however, not apply to a Member to the extent that
the minimum gain chargeback rules are inapplicable in a particular circumstance
as specified in or under the Regulations.
5.2.4 The Member Nonrecourse Deductions shall be allocated
each year to the Member that bears the economic risk of loss (within the meaning
of Regulations Section 1.752-2) for the Member Nonrecourse Debt to which such
Member Nonrecourse Deductions are attributable.
5.2.5 If there is a net decrease in Member Minimum Gain
attributable to a Member Nonrecourse Debt during any Company taxable year, each
Member who has a share of the Member Minimum Gain attributable to such Member
Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(5), shall be specially allocated items of Company income and gain for
such taxable year (and, if necessary, subsequent years) in an amount equal to
such Member's share of the net decrease in Member Minimum Gain attributable to
such Member Nonrecourse Debt, determined in a manner consistent with the
provisions of Regulations Section 1.704-2(g)(2). This Section 5.2.5 is intended
to comply with the partner nonrecourse debt minimum gain chargeback requirement
of Regulations Section 1.704-2(i)(4) and shall be interpreted consistently
therewith.
5.2.6 If any Member unexpectedly receives an adjustment,
allocation or distribution of the type contemplated by Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6) that causes or increases an Adjusted Capital
Account Deficit in such Member's capital account, items of income and gain shall
be allocated to all such Members (in proportion to the amounts of their
respective Adjusted Capital Account Deficits) in an amount and manner sufficient
to eliminate the deficit balances in such Members' Capital Accounts, that are in
excess of such Members' respective Adjusted Capital Account Deficits, as quickly
as possible as of the end of the Company's taxable year to which adjustment,
allocation or distribution relates. It is intended that this Section 5.2.6
qualify and be construed as a "qualified income offset" within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(d).
5.2.7 If the allocation of Net Loss to a Member as provided
in Section 5.1 hereof would create or increase an Adjusted Capital Account
Deficit, there shall be allocated to such Member only that amount of Net Loss as
will not create or increase an Adjusted Capital Account Deficit. The Net Loss
that would, absent the application of the preceding sentence, otherwise be
allocated to such Member shall be allocated to the other Members.
5.2.8 To the extent that an adjustment to the adjusted tax
basis of any Company asset pursuant to Code Section 734(b) or Code Section
743(b) is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) or
Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in
determining Capital Accounts as the result of a distribution to a Member in
complete liquidation of such Member's Membership Interest in the Company, the
amount of such adjustment to the Capital Accounts shall be treated as an item of
gain (if the adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis), and such gain or loss shall be specially
allocated to the Members in accordance with their interests in the Company in
the event that Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the
Members to whom such distribution was made in the event that Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.
5.2.9 The allocations set forth in Sections 5.2.2, 5.2.3,
5.2.4, 5.2.5, 5.2.6, 5.2.7 and 5.2.8 hereof (the "Regulatory Allocations") are
intended to comply with certain requirements of Regulations Sections 1.704-1(b)
and 1.704-2(i). The Regulatory Allocations may not be consistent with
11
the manner in which the Members intend to distribute the cash of the Company or
allocate Company income or loss. Accordingly, the Managers are hereby authorized
to allocate Net Profits, Net Losses and other items of income, gains, loss and
deductions to the Members so as to prevent the Regulatory Allocations from
distorting the manner in which Company distributions will be divided among the
Members. In general, the Members anticipate that this will be accomplished by
specially allocating other Net Profits, Net Losses and other items of income,
gain, loss and deduction to the Members so that, to the extent possible, the net
amount of such allocations of other Net Profits, Net Losses and other items and
the Regulatory Allocations to the Members shall be equal to the net amount that
would have been allocated among the Members if the Regulatory Allocations had
not occurred. However, the Managers shall have discretion to accomplish this
result in any reasonable manner.
5.2.10 For purposes of determining the Net Profits, Net
Losses and any other items of income, gain, loss and deduction allocable to any
period, Net Profits, Net Losses and any such other items shall be determined on
a daily, monthly or other basis, as determined by the Managers using any
permissible method under Code Section 706 and the Regulations thereunder.
5.3 OTHER PROVISIONS.
5.3.1 For any fiscal year during which any part of a
Membership Interest or Economic Interest is transferred between the Members or
to another Person, the portion of the Net Profits, Net Losses and other items of
income, gain, loss, deduction and credit that are allocable with respect to such
part of a Membership Interest or Economic Interest shall be apportioned between
the transferor and the transferee based on an interim closing of the Company's
books, except as mandated by the Code and the applicable Regulations or, in the
Managers' discretion, as permitted under Code Section 706(d)(2).
5.3.2 Except as provided in Sections 5.2.1 and 5.2.2
hereof, for income tax purposes under the Code and the Regulations each Company
item of income, gain, loss and deduction shall be allocated among the Members as
its correlative item of "book" income, gain, loss or deduction is allocated
pursuant to this Article 5.
5.3.3 In the event that the Code or any Regulations require
allocations of items of income, gain, loss, deduction or credit different from
those set forth in this Article 5, the Managers are hereby authorized to make
new allocations in reliance on the Code and such Regulations.
5.3.4 For purposes of determining a Member's proportional
share of the Company's "excess nonrecourse liabilities" within the meaning of
Regulations Section 1.752-3(a)(3), each Member's interest in Company profits
shall be such Member's Percentage Interest.
5.3.5 The Members acknowledge and are aware of the income
tax consequences of the allocations made by this Article 5 and hereby agree to
be bound by the provisions of this Article 5 in reporting their shares of Net
Profits, Net Losses and other items of income, gain, loss, deduction and credit
for federal, state and local income tax purposes.
ARTICLE 6
OPERATIONS
6.1 MANAGEMENT.
6.1.1 Subject to Section 6.1.2, (i) the business and
affairs of the Company shall be managed exclusively by the Managers, (ii) the
Managers shall have full and complete charge of all the
12
affairs and business of the Company, in all respects and in all matters, and
(iii) except as expressly provided in this Agreement or required by law, the
Members shall have no right to vote on or consent to any other matter, act,
decision or document involving the Company or its business. Any decision of,
determination by, or action to be taken by the Managers shall require the
unanimous consent of the Managers.
6.1.2 Notwithstanding anything to the contrary in this
Agreement, the Members shall, by unanimous consent, have the power to do the
following things without the consent of the Managers:
(a) direct the Company to purchase additional Shares
in accordance with Section 3.2 of this Agreement;
(b) direct the Company to take any of the actions
described in Section 3.4.1;
(c) direct the Company to distribute the Shares, sell
Shares and/or distribute the Sale Proceeds in accordance with
Section 4.2.2;
(d) take such other actions expressly permitted to be
taken under this Agreement by a Member without the consent of
the other Members or the Managers; or
(e) amend this Agreement.
6.2 COMPENSATION OF MANAGER. Except as may be expressly provided
in this Agreement, no Member or Manager shall be entitled to any compensation
for his or her services to the Company or in the conduct of the business of the
Company.
6.3 REIMBURSEMENT. Subject to Article 8 hereof, the Managers shall
be entitled to reimbursement from the Company for all costs and expenses
(including allocable overhead, fees paid to outside consultants, on-site
personnel hired by the Managers and others who are not salaried employees of the
Company at the time of the performance of such services) incurred by them for or
on behalf of the Company.
6.4 RECORDS AND REPORTS.
6.4.1 The Managers shall cause to be kept at the principal
place of business of the Company a current list (including addresses) of the
Members and other Persons holding Economic Interests in the Company, a current
list of Company managers, copies of the Articles and this Agreement (together
with all amendments thereto or hereto), copies of Company tax returns and
financial statements for the six (6) most recent fiscal years, full and proper
ledgers, other books of account, and records of all receipts and disbursements,
other financial activities and the internal affairs of the Company for at least
the current and past four (4) fiscal years, and any other items required by the
Act, and shall provide the following reports or information to all Members:
(a) within one-hundred twenty (120) days after the
end of each fiscal year, annual financial statements,
including a balance sheet, an income statement and a statement
of changes in financial position for the fiscal year;
(b) as soon as reasonably possible following the end
of each fiscal year of the Company, a report that shall
include all necessary tax reporting information required by
the Member for preparation of its federal, state and local
income or franchise tax
13
returns, including each Member's PRO RATA share of Net
Profits, Net Losses and any other items of income, gain, loss
and deduction for such fiscal year; and
(c) promptly after receipt thereof, all other reports
or statements prepared by the Company's accountant.
6.4.2 The Members (personally or through an authorized
representative) may, for purposes reasonably related to their interests, rights
or duties, examine and copy the books and records of the Company at all
reasonable times.
6.5 INDEMNIFICATION AND LIABILITY OF MANAGERS.
6.5.1 The Company shall indemnify and hold harmless each
Manager, its Affiliates, and all officers, directors, shareholders, partners,
members (excluding, for this purpose, other members of the Company),
co-trustees, employees and agents of any of the foregoing (individually, an
"Indemnitee") to the fullest extent permitted by applicable law from and against
any and all losses, claims, demands, costs, damages, liabilities, joint and
several, expenses of any nature (including attorneys' fees and disbursements),
judgments, fines, settlements and other amounts arising from any and all claims,
demands, actions, suits or proceedings, civil, criminal, administrative or
investigative, in which the Indemnitee may be involved, or threatened to be
involved as a party or otherwise, arising out of or incident to the business of
the Company.
6.5.2 Expenses incurred by an Indemnitee in defending any
claim, demand, action, suit or proceeding subject to this Section 6.5 shall be
advanced by the Company prior to the final disposition of such claim, demand,
action, suit or proceeding.
6.5.3 The indemnification provided by this Section 6.5
shall be in addition to any other rights to which an Indemnitee may be entitled
under any agreement, pursuant to a vote of all of the Members, as a matter of
law or equity or otherwise, and shall inure to the benefit of the heirs,
successors, assigns and administrators of the Indemnitee.
6.5.4 Any indemnification provided hereunder shall be
satisfied solely out of the assets of the Company. Neither any Manager nor any
Member shall be subject to personal liability by reason of these indemnification
provisions.
6.5.5 No Indemnitee shall be denied indemnification in
whole or in part under this Section 6.5 by reason of the fact that the
Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the terms
of this Agreement.
6.5.6 The provisions of this Section 6.5 are for the
benefit of the Indemnities and shall not be deemed to create any rights for the
benefit of any other person or entity.
6.5.7 No Manager nor its Affiliates nor the officers,
directors, shareholders, partners, members, co-trustees, employees or agents of
any of the foregoing shall be liable to the Company or to a Member for any
losses sustained or liabilities incurred as a result of any act or omission of
such Manager or any such other person or entity if (i) such Manager or such
other person or entity acted (or failed to act) in good faith and in a manner
believed to be in, or not opposed to, the interests of the Company and (ii) the
conduct of such Manager or such other person or entity did not constitute gross
negligence or willful misconduct.
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6.6 REMOVAL AND RESIGNATION OF MANAGER. A Manager may be removed
at any time, with or without cause, by the affirmative vote of all of the
Members. A Manager may resign at any time without prejudice to any rights of the
Company or any Member as against the resigning Manager, by giving written notice
to the Members.
6.7 TIME COMMITMENT. Each Manager shall devote such time to the
affairs of the Company's business as the Manager in its sole and absolute
discretion determines. No Manager shall be liable to the Company or to any
Member for any loss or damage sustained by the Company or any other Member,
unless the loss or damage shall have been a result of fraud, deceit, gross
negligence, reckless or intentional misconduct, or a knowing violation of the
law by the Manager.
ARTICLE 7
TRANSFERS OF MEMBERSHIP INTERESTS
7.1 TRANSFERS OF MEMBERSHIP INTERESTS. A Member may make or permit
a Transfer, directly or indirectly, by operation of law or otherwise,
voluntarily or involuntarily, of all or any portion of its Membership Interest,
including all or any portion of its Economic Interest, only as follows:
(a) By Transfer to the Company or to any other Member during
lifetime or at death;
(b) By lifetime gift to a spouse or lineal descendant of the
Member or at death by disposition by will, by trust or by the laws of
succession, subject to the provisions of Section 7.3 hereof; or
(c) By Transfer other than at death to any Person other than a
Member, subject to (i) the right of first refusal of the other Members
set forth in Section 7.2 hereof and (ii) the provisions of Section 7.3
hereof.
Any other purported Transfer of a Membership Interest or Economic Interest shall
be null and void AB INITIO. Any purported act in contravention of this Article 7
shall be null and void and of no force whatsoever. A substituted Member may
Transfer the transferred Membership Interest or Economic Interest in the same
manner as an original or the transferring Member.
7.2 SALE OR TRANSFER OF A MEMBER'S INTEREST. Except as otherwise
provided herein and in Section 7.1 hereof, neither any Member nor its heirs,
personal representatives, successors or assigns (a "Selling Member") shall have
the right to sell or Transfer all or any portion of its Membership Interest or
Economic Interest (the "Sale Interest") unless such Selling Member shall first
deliver a notice in writing to the Managers, stating the price, terms and
conditions of such proposed sale or Transfer and the identity of the proposed
transferee. The Managers shall inform the other Members of the proposed sale or
Transfer. For a period of thirty (30) days after receipt of such notice, the
other Members shall have the right to purchase all of the Sale Interest upon the
same terms and conditions. If the other Members or a portion of them elect to
exercise this right, then they shall, unless otherwise agreed by them, each
purchase that portion of the Sale Interest determined by multiplying the entire
Sale Interest by a fraction the numerator of which is that Member's Percentage
Interest and the denominator is the total of all the purchasing Members'
Percentage Interests. If the other Members do not exercise such right as to the
entire Sale Interest within such thirty (30) day period, the Selling Member may
within sixty (60) days thereafter complete the sale or Transfer upon the terms
originally proposed. In the event that the Selling Member does not complete the
sale or transfer of the Sale Interest within such sixty (60) day period, then
the rights of the other Members under this Section 7.2 shall be reinstated and
apply to any subsequent
15
sale or Transfer of all or any portion of the Membership Interest and Economic
Interest of the Selling Member.
7.3 LIMITATION UPON RIGHTS OF TRANSFEREE. A transferee of a
Membership Interest or an Economic Interest shall become a substitute Member
effective only on the following conditions:
(a) The prior written consent of all of the other Members has
been obtained;
(b) The transferee shall consent in writing to be bound by all
the terms and conditions of this Agreement in the place and stead of
the transferor Member;
(c) The transferee shall pay any expenses of the Managers and
the Company in effecting the substitution;
(d) All requirements of the Act, including, if necessary,
amendment to this Agreement and the filing of an amendment to the
Articles, shall have been completed by the transferee, the Company and
the Members; and
(e) The transfer is effected in compliance with all applicable
securities laws.
7.4 OTHER LIMITATIONS ON TRANSFERS. Notwithstanding the other
provisions of this Article 7, no Transfer shall be made of any Membership
Interest or any Economic Interest if such Transfer (a) would result in the
Company being treated as an association taxable as a corporation for federal or
state tax purposes, (b) when considered with all other Transfers of Membership
Interests and Economic Interests within the previous twelve (12) months, would
result in the Company being considered to have terminated within the meaning of
Code Section 708, (c) is effectuated through an "established securities market"
or a "secondary market (or the substantial equivalent thereof)" within the
meaning of Code Section 7704, (d) would otherwise result in the Company being
classified as a "publicly traded partnership" within the meaning of Code Section
7704(b) or (e) would otherwise violate any applicable federal or state
securities laws (including any investor suitability standards). The Members
acknowledge that adequate legal remedies are not likely to exist for any breach
of this Section 7.4 and, accordingly, that the Company and any aggrieved Member
shall have the right to secure injunctive relief in the event of any actual or
threatened breach of a Member's obligations under this Section 7.4.
ARTICLE 8
DISSOLUTION, LIQUIDATION AND TERMINATION OF THE COMPANY
8.1 LIMITATIONS. The Company may be dissolved, liquidated and
terminated pursuant to and only pursuant to the provisions of this Article 8,
and the parties hereto do hereby irrevocably waive any and all other rights that
they may have to cause a dissolution of the Company or a sale or partition of
any or all of the Company's assets.
8.2 EXCLUSIVE CAUSES. The following and only the following events
shall cause the Company to be dissolved, liquidated and terminated:
(a) The election of all of the Members;
(b) The occurrence of a Terminating Capital Transaction;
16
(c) The bankruptcy or dissolution of either Manager, unless
all of the other Members vote to continue the Company within ninety
(90) days of the event described;
(d) Dissolution of the Company by operation of law;
(e) The occurrence of any event that would make it unlawful
for the business of the Company to be carried on; or
(f) The close of business on December 31, 2050.
8.3 LIQUIDATION. In all cases of dissolution of the Company, the
business of the Company shall be continued to the extent necessary to allow an
orderly winding up of its affairs, including the liquidation and termination of
the Company pursuant to the provisions of this Section 8.3, and, as promptly as
practicable, each of the following shall be accomplished:
(a) The Company Property shall be liquidated in an orderly,
businesslike and commercially reasonable manner.
(b) Any Net Profit, Net Loss or other item of income, gain,
loss or deduction realized by the Company upon the sale of the Company
Property or transfer in kind shall be deemed recognized and allocated
to the Members in the manner set forth in Article 5 hereof.
(c) The proceeds of sale of Company assets and all other
assets of the Company shall be applied in the order of priority as
follows:
(1) to payment of all Company secured debts to third
parties and Members, unless such secured indebtedness is
assumed by a purchaser of the encumbered property or the
conveyance of the encumbered property to such purchaser is
made subject to such indebtedness;
(2) to payment of all Company unsecured debts other
than to the Members;
(3) to payment of all Company unsecured debts owed to
the Members;
(4) to the establishment of any necessary Reserves;
(5) finally, to the Members with positive balances in
their Capital Accounts, in proportion to and to the extent
thereof.
However, in the event that the Managers determine that an immediate sale of all
or any portion of the Company's assets would cause undue loss to the Members,
the Managers, in order to avoid such loss, may, after giving notice to the
Members, to the extent not then prohibited by the Act, either (i) defer
liquidation of and withhold from distribution for a reasonable time any Company
assets except those necessary to satisfy the Company's debts and obligations or
(ii) distribute such assets to the Members in kind. If any assets are to be
distributed in kind, such assets shall be distributed on the basis of the net
fair market value thereof, and any Member entitled to any interest in such
assets shall receive an interest therein as a tenant-in-common with all other
Members so entitled.
17
8.4 NO CAPITAL CONTRIBUTION UPON DISSOLUTION. Each Member shall
look solely to the assets of the Company for all distributions with respect to
the Company, its Capital Contribution thereto, its Capital Account, its share of
Net Profits or Net Losses or other items and shall have no recourse therefor
(upon dissolution or otherwise) against any Member or Manager. No Member or
Manager shall be obligated to restore to the Company any negative balance that
may exist or continue in such Member's Capital Account.
ARTICLE 9
OTHER PROVISIONS
9.1 ACCOUNTING AND FISCAL YEAR. Subject to Code Section 448, the
books of the Company shall be kept on such method of accounting for tax and
financial reporting purposes as may be approved by all of the Members. Unless
otherwise required by the Code, the fiscal year of the Company shall begin on
January 1 and end on December 31 of each year.
9.2 ACCOUNTANTS. The Managers shall select and retain a certified
public accounting firm to prepare the Company's tax returns, to prepare the
annual financial statements (which need not be audited) and to give advice with
respect to the maintenance of the Company's books and records.
9.3 BANK ACCOUNTS. The Managers shall, on behalf of the Company,
maintain a commercial checking account or accounts (collectively, the "Account")
in such bank or banks as the Managers shall determine from time to time. All
funds of the Company shall be promptly deposited in the Account, and no funds
other than funds of the Company shall be deposited in the Account. The funds in
the Account shall be used solely for the business of the Company, and all
withdrawals from the Account shall be made only on checks signed by the Managers
or such other Person(s) as the Managers shall designate.
9.4 MEETINGS OF MEMBERS. Formal meetings of the Members need not
be held. Votes, consents and actions of the Members may, where required by this
Agreement or the Act, be given or obtained by written instrument or by voice
vote at an informal meeting of the Members called upon reasonable notice and
held pursuant to procedures consistent with those pertaining to partnerships. No
Member shall have the right to call or demand a meeting of the Members for any
purpose.
9.5 ENTIRE AGREEMENT; BINDING PROVISIONS; SEPARABILITY. This
Agreement constitutes the entire agreement between and among the parties hereto
pertaining to the subject matter hereof and fully supersedes any and all prior
agreements or understandings between or among the parties hereto pertaining to
the subject matter hereof. The covenants and agreements contained in this
Agreement shall be binding upon, and inure to the benefit of, the heirs,
executors, administrators, personal representatives, successors and permitted
assigns of the respective parties hereto. Each provision of this Agreement shall
be considered separable, and, if for any reason any provision or provisions
hereof are determined to be invalid and contrary to any existing or future law,
such invalidity shall not impair the operation or effect of those portions of
this Agreement that are valid.
9.6 FURTHER ASSURANCES. Each of the parties hereto does hereby
covenant and agree on behalf of itself, its successors and its assigns, without
further consideration, to prepare, execute, acknowledge, file, record, publish
and deliver such other instruments, documents and statements, and to take such
other action as may be required by law or necessary to effectively carry out the
purposes of this Agreement.
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9.7 NOTICES. Any notice, consent, payment, demand or communication
required or permitted to be given by any provision of this Agreement shall be in
writing and shall be delivered personally to the person or to an officer of the
person to whom the same is directed, or sent by registered or certified mail,
return receipt requested, addressed as follows: if to the Company, to the
Company at the address set forth in Section 1.3 hereof, or to such other address
as the Company may from time to time specify by notice to the Members; if to a
Member, to such Member at the address set forth in EXHIBIT "A", or to such other
address as such Member may from time to time specify by notice to the Company.
Any such notice shall be deemed to be delivered, given and received for all
purposes as of the date so delivered, if delivered personally, or if sent by
registered or certified mail, postage and charges prepaid and properly
addressed, on the date of receipt or refusal indicated on the return receipt.
9.8 ATTORNEYS' FEES. In the event that any action or proceeding is
filed by any Member or by the Company as against the Company or any other Member
to enforce any of the covenants or conditions hereof, the party in whose favor
final judgment shall be entered shall be entitled to have and recover of and
from the other reasonable attorneys' fees to be fixed by the court wherein said
judgment be entered.
9.9 TAX MATTERS. The Jacmar Companies shall be designated and
shall operate as "tax matters partner" (as defined in Code Section 6231), to
oversee or handle matters relating to taxation of the Company. The Jacmar
Companies may make all Company elections for federal income and all other tax
purposes.
9.10 GOVERNING LAW. This Agreement, including its existence,
validity, construction and operating effect, and the rights of each of the
parties hereto, shall be governed by and construed in accordance with the laws
of the State of Delaware (without regard to its principles of conflicts of law).
9.11 TIME OF ESSENCE. Time is of the essence of this Agreement.
9.12 AMENDMENTS. No amendments to this Agreement shall be effective
without the prior written approval of all of the Members.
9.13 COUNTERPARTS. This Agreement may be executed in counterparts,
all of which together shall constitute one agreement binding on all parties
hereto, notwithstanding that all of the parties have not signed the same
counterpart.
9.14 TITLES. Article and Section titles are for descriptive
purposes only and shall not control or alter the meaning of this Agreement as
set forth in the text.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
19
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
THE JACMAR COMPANIES
By: /s/ Xxxxx X. Xxx Xxxxx
--------------------------------------------
Xxxxx X. Xxx Xxxxx, President
GOLDEN RESORTS, INC.
By: /s/ Xxxxx X. Xxxxxxxxxx
--------------------------------------------
Name: Xxxxx X. Xxxxxxxxxx
------------------------------
Title: President
------------------------------
20
EXHIBIT "A"
MEMBERS, CAPITAL CONTRIBUTIONS
AND PERCENTAGE INTERESTS
------------------------------------------------------------ --------------------- --------------------
CAPITAL PERCENTAGE
NAMES AND ADDRESSES OF MEMBERS CONTRIBUTION INTEREST
------------------------------------------------------------ --------------------- --------------------
The Jacmar Companies $1,000,000 50%
0000 Xxxx Xxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000
------------------------------------------------------------ --------------------- --------------------
Golden Resorts Incorporated $1,000,000 50%
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
------------------------------------------------------------ --------------------- --------------------
$2,000,000 100%
========== ====
------------------------------------------------------------ --------------------- --------------------
