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Exhibit 10.29
JOINT VENTURE AGREEMENT
OF
XXXXXX'X BACK YARD BURGERS JOINT VENTURE IV
THIS JOINT VENTURE AGREEMENT is hereby made and entered into on this
28th day of August, 1998, by and among XXXXXX X. XXXXXX, W. XXXXXXX XXXXXX, BACK
YARD BURGERS INC., a Delaware corporation, XXXXXXXXX X. XXXXX and XXXXXX X.
XXXXX (hereinafter sometimes referred to together as the "Joint Venturers" and
individually as a "Joint Venturer").
ARTICLE I
FORMATION AND PURPOSE
1.01. Formation. The parties hereto hereby form and establish a joint
venture (hereinafter referred to as the "Joint Venture") to be conducted under
the name of XXXXXX'X BACK YARD BURGERS JOINT VENTURE IV.
1.02. Purposes of the Joint Venture. The purposes of the Joint Venture
are:
a. To acquire ownership of certain land and any improvements located at
0000 Xxx Xxxx Xxxx, Xxxxxxxxx, Xxxxxxxx Xxxxxx, Xxxxxxxxx 00000, and being more
particularly described on Exhibit A attached hereto and incorporated herein by
this reference;
b. To construct a restaurant facility and related improvements on such
land;
c. To lease the land, restaurant facility and any other improvements
thereon to Back Yard Burgers, Inc., a Delaware corporation, to be operated
initially as a company-operated Back Yard Burgers restaurant;
d. To mortgage and otherwise encumber the land, improvements and other
real property (but excluding equipment, signage, any and all restaurant and
related equipment and all other items specifically belonging to the tenant) in
connection with such restaurant facility on 0000 Xxx Xxxx Xxxx, Xxxxxxxxx,
Xxxxxxxx Xxxxxx, Xxxxxxxxx 00000 (hereinafter all together sometimes referred to
as the "Project");
e. To sell the Project at some date in the future;
f. To otherwise own, maintain, manage, operate, lease and sell the
Project or any part thereof; and
g. To do all things necessary for or incidental to the foregoing.
The Joint Venture shall not engage in any other business or activity without the
written consent of all Joint Venturers.
1.03. Place of Business. The principal place of business of the Joint
Venture shall be located at 000 Xxxxxxx Xxxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000.
1.04. Term. The term of the Joint Venture shall commence on the date
hereof and shall continue until , 20 , provided, however, that the Joint
Venture shall be dissolved prior to such date upon the sale or disposal of the
Project and the payment or satisfaction of all debts of the Joint Venture. The
termination date may be extended or moved forward by the mutual consent of all
Joint Venturers.
Upon the death, assignment for the benefit of creditors, legal
incapacity, the filing of any proceedings under any bankruptcy or other
insolvency laws by or against a Joint Venturer, or the occurrence of any event
which results in the termination or transfer of the interest of a Joint Venturer
or the dissolution of a Joint Venturer as a matter of law, any remaining Joint
Venturer or Joint Venturers, as the case may be, shall have the right to
continue the business of the Joint Venture, and the Joint Venture shall not, as
a result of any such event, terminate, nor shall a liquidation or winding up of
its affairs be required.
ARTICLE II
JOINT VENTURE CAPITAL
2.01. Capital Accounts. Separate capital accounts shall be maintained
for each Joint Venturer and shall consist of the sum of their respective
contributions to the capital of the Joint Venture plus their share of the
profits of the Joint Venture, less their share of any losses of the Joint
Venture, and less any distributions to or withdrawals made by or attributed to
them from the Joint Venture.
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2.02. Capital Contributions. Each Joint Venturer shall make an initial
capital contribution to the Joint Venture on or before , 199 , as set forth
below beside his, her or its respective name:
JOINT VENTURER INITIAL CAPITAL CONTRIBUTION
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W. Xxxxxxx Xxxxxx $ 75,000.00
Back Yard Burgers, Inc. $ 50,000.00
Xxxxxx X. Xxxxxx $ 25,000.00
Xxxxxxxxx X. Xxxxx $ 25,000.00
Xxxxxx X. Xxxxx $ 25,000.00
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TOTAL $200,000.00
Thereafter, the Joint Venturers each agree to advance to the Joint
Venture, from time to time and as needed to properly carry out the purposes set
out herein, additional capital in cash and in the same proportion as his, her or
its respective percentage interest, as set forth in Article III. Such sums shall
be payable within ten (10) days after notice, and if for any reason, any Joint
Venturer does not contribute his, her or its respective proportionate share,
then, in that event, the Joint Venturers advancing additional funds as a result
of such failure and/or refusal shall be entitled to acquire the proportionate
share of the non-contributing Joint Venturer's interest as the percentage of a
given contributing Joint Venturer's respective interest in the Joint Venture
bears to the total percentage of the interests in the Joint Venture held by all
of the Joint Venturers contributing, provided, however, that the interest
retained by the non-contributing Joint Venturer, after the contribution and
adjustment of relative percentage ownership, shall represent not less than the
same book value (in dollars) as his, her or its interest represented prior to
the contribution by the Joint Venturers, it being the express intention of the
parties hereto that the monetary value of a non-contributing Joint Venturer's
share shall not be diminished by the voluntary contributions of the remaining
Joint Venturers even though the non-contributing Joint Venturer's percentage
interest in the Joint Venture may be adjusted in accordance with the formula set
forth hereinabove. However, the calculation to determine a Joint Venturer's
revised interest in the Joint Venture shall be done without regard to the
unequal allocation of profits and losses for tax purposes and shall be based
solely on the initial and any future contribution to the Joint Venture.
For example, A, B, C, and D each own 25% of the Joint Venture, which
has a book value of $400.00 ($100.00 for each Joint Venturer). The determination
is made that the Joint Venture requires another $400.00 in order to continue
doing business. A, B, and D each agree to contribute $100.00. C refuses. D is
unwilling to contribute any more than his additional $100.00. A and B agree to
contribute an additional $50.00 each to cover the shortfall left by C's refusal.
Immediately after the contribution, the book value of the Joint Venture as a
whole is $800.00. D, having made only his $100.00 additional contribution, now
has an interest in the Joint Venture of $200.00 and is, therefore, still the
owner of 25% of the Joint Venture. C, however, having made no contribution,
still has an investment in the Joint Venture of $100.00, and accordingly, owns
only 12.5% of the Joint Venture, the book value of which is $800.00 after the
contribution. A and B, on the other hand, having contributed an additional
$150.00 each, now have interests in the Joint Venture of $250.00 each, and are,
therefore, the owners of 31.25% of the Joint Venture, respectively (each having
contributed 1/2 of the necessary amount, and each, therefore, being entitled to
1/2 of 12.5% which would otherwise have been left to C had C elected to make his
portion of the contribution). From and after the time of the contributions and
until another contribution is made, the profits and losses of the Joint Venture
will be divided on the basis of the revised percentages, instead of the original
ones.
Any adjustments to the percentage interests of Joint Venturers to be
made pursuant to the requirements of this Section 2.02 shall likewise be made in
Article III.
2.03. Financing. The Managing Joint Venturer shall arrange for such
financing as may be required by the Joint Venture for purposes of acquiring,
constructing, developing, adding to, leasing, and/or operating the Project. The
terms and conditions of all such loans shall be subject to the prior written
approval of all Joint Venturers.
2.04. Obligation of the Joint Venturers. The Joint Venturers shall
endorse, assume, and/or guarantee such obligations of the Joint Venture as the
Joint Venturers may mutually agree upon or as may be required to enable the
Joint Venture to carry out its purposes as set forth herein.
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ARTICLE III
PERCENTAGE INTEREST IN THE JOINT VENTURE
The Joint Venturers shall have and own the respective percentage
interests in the Joint Venture as set forth below:
JOINT VENTURER PERCENTAGE INTEREST
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W. Xxxxxxx Xxxxxx 37.50%
Back Yard Burgers, Inc. 25.00%
Xxxxxx X. Xxxxxx 12.50%
Xxxxxxxxx X. Xxxxx 12.50%
Xxxxxx X. Xxxxx 12.50%
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TOTAL 100.000%
The above percentage interests may be adjusted as provided in Section 2.02 above
or as mutually agreed upon by the parties. References elsewhere in this
Agreement to Article III shall take into account any such adjustments to the
percentage interests.
ARTICLE IV
PROFITS, LOSSES, AND DISTRIBUTIVE SHARES OF TAX ITEMS
4.01. Allocation of Profits and Losses. The Joint Venture's net profits
and losses for each fiscal year of the Joint Venture and each item of income,
gain, loss, deduction, or credit entering into the computation thereof, shall be
allocated to the Joint Venturers, both for income tax and book purposes, as
follows:
a. Net profits shall be allocated among the Joint Venturers in the same
proportion as distributable income for such fiscal year as distributed pursuant
to Section 4.02 hereof.
b. Net losses shall be allocated among the Joint Venturers in the
following manner and order of priority:
(i) To the Joint Venturers in proportion to their respective
capital accounts and to the extent of any positive balance in such capital
account; and then
(ii) To the Joint Venturers in accordance with their
respective percentage interests as set forth in Article III hereof.
c. Any tax credits available to the Joint Venture shall be allocated to
the Joint Venturers in accordance with their respective percentage interests as
set forth in Article III hereof.
d. Gain from the sale or exchange of all or any part of the Project
shall be allocated among the Joint Venturers in the following manner and order
of priority:
(i) To the Joint Venturers in proportion to any negative
balances in the respective capital accounts, to the extent of such negative
balances; and then
(ii) The balance, if any, to the Joint Venturers in accordance
with their respective percentage interests as set forth in Article III hereof.
4.02. Distributable Income. The distributable income derived by the
Joint Venture shall be determined as of the end of each fiscal year of the Joint
Venture and shall be the net profits and losses derived by the Joint Venture
during each such year from its activities as ascertained through the use of
sound cash basis accounting practices, consistently applied, increased by:
a. Depreciation and other non-cash charges deducted in computing the
net profits derived by the Joint Venture from the operation of leasing of the
Project; and
b. Any cash that becomes available during each such fiscal year by
reason of the reduction in any reserves referred to below in paragraphs (d) and
(e); and decreased by:
c. Principal payments made on any debts of the Joint Venture with
respect to the Project during each such fiscal year;
d. Additions to any reserves deemed necessary by the Joint Venturers
during such fiscal year for capital improvements and/or asset replacements with
respect to the Project; and
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e. Additions to any reserves deemed necessary by the Joint Venturers
during each such fiscal year to meet working capital requirements of the Project
and any contingent or unforeseen liabilities of the Joint Venture with respect
to the Project and the Joint Venture.
4.03. Distribution of Distributable Income. Income distributions for
each fiscal year shall be apportioned and distributed to the Joint Venturers in
accordance with their respective percentage interests as set forth in Article
III hereof. The Joint Venturers may, in their sole discretion, make estimated
distributions of distributable income on a monthly basis after the payment of
all just debts.
4.04. Distribution of Proceeds of Refinancing, Sale, or Liquidation.
The net cash proceeds to the Joint Venture resulting from (a) the refinancing of
any loan or mortgage on, or the sale, exchange, condemnation (or similar eminent
domain taking), casualty, or other disposition of all, or any substantial part
of, the Project or any other assets of the Joint Venture, or (b) from the
liquidation of the assets of the Joint Venture following the dissolution of the
Joint Venture, shall be distributed and applied in the following manner and
order of priority:
a. To the payment of debts and liabilities of the Joint Venture, other
than items referred to in the succeeding clauses of this Section;
b. To the establishment of any reserves deemed necessary for any
contingent or unforeseen liabilities or obligations of the Joint Venture;
c. To the repayment of any liabilities or debts of the Joint Venture,
other than capital accounts, to any of the Joint Venturers;
d. The balance, if any, to the Joint Venturers in accordance with the
respective percentage interests as set forth in Article III hereof.
4.05. Profits and Losses. The terms "Net Profits" and "Net Losses" as
used in this Agreement shall mean net profits and net losses, respectively,
including capital gains and losses, as determined on and reflected by the Joint
Venture's annual federal income tax return, taking into account all items of
income and deduction reports on Schedule K of such return and after deduction of
the amount of all guaranteed payments due under Article VI hereof.
ARTICLE V
LEGAL TITLE TO THE PROJECT
The Joint Venturers agree that the legal title to the Joint Venture
property and assets, including the Project, shall remain in the name of the
Joint Venture.
ARTICLE VI
DUTIES, REPRESENTATIONS AND POWERS OF JOINT VENTURERS
6.01. Duties of Managing Joint Venturers. Xxxxxx X. Xxxxxx shall be
Managing Joint Venturer for the Joint Venture. Except as may be limited by the
provisions of this Agreement, she shall have the authority to act on behalf of
the Joint Venture and to act alone without the joinder of any other Joint
Venturer. The Managing Joint Venturers shall be reimbursed for all reasonable,
direct, out-of-pocket costs and expenses which they may incur in performing her
duties. However, in no event shall the Managing Joint Venturer be paid a fee for
such services. Further, all reimbursements shall be for direct costs, and not
for any items such as conventions, out-of-state trips, seminars which the
Managing Joint Venturer could claim would make her a better manager of the Joint
Venture or would help educate her about certain matters important to the Joint
Venture. Her duties shall include the following:
a. Managing the day-to-day activities of the Joint Venture;
b. Keeping the books of account and financial statements with respect
to all transactions of the Joint Venture and the Project;
c. Arranging for any financing required by the Joint Venture and
negotiating the terms of any sale made by or to the Joint Venture, all subject
to the approval of the other Joint Venturers;
d. Negotiating the terms of any lease to or by the Joint Venture;
e. Executing the documents on behalf of the Joint Venture relating to
its operations or the Project;
f. Signing checks on behalf of the Joint Venture;
g. Preparing, filing, and delivering in a timely manner all tax returns
required for the Joint Venture; and
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h. Performing all other day-to-day duties required to maintain and
operate the Joint Venture. The Managing Joint Venturer may also from time to
time delegate any or all of her duties under 6.01.b and 6.01.g above to another
Joint Venturer (including Back Yard Burgers, Inc.), provided such Joint Venturer
agrees to properly carry them out until otherwise directed by the Managing Joint
Venturer, or hire some outside firm or person to keep and prepare those items
set forth in 6.01.b and 6.01.g above. The Joint Venture shall pay all
reasonable, direct, out-of-pocket costs incurred for preparing those items set
forth in 6.01.b and 6.01.g above.
Should Xxxxxx X. Xxxxxx be unable, incapable or unwilling to serve as
Managing Joint Venturer, then shall thereupon be the successor Managing
Joint Venturer of the Joint Venture and shall have all of the powers, duties,
rights and authority as the original Managing Joint Venturer.
6.02. Back Yard Burgers, Inc. Back Yard Burgers, Inc., a Delaware
corporation, is a Joint Venturer but is also the tenant under a lease which the
Joint Venture (as landlord) anticipates entering into in , 199 V . Under
such lease, Back Yard Burgers, Inc. will lease the Project for fifteen years
(from the completion of the building and improvements) and also have three
five-year renewal options. If Back Yard Burgers, Inc. fails to pay any amounts
due under the Lease, then it shall thereupon forfeit to the Joint Venture its
Joint Venture interest and may thereafter have no ownership interest or voting
rights in the Joint Venture; however, notwithstanding the foregoing, any funds
in its capital account shall be applied to help offset any obligations and
amounts owed by Back Yard Burgers, Inc. under the lease. However, this
forfeiture shall not relieve Back Yard Burgers, Inc. from any guaranties
(including without limitation any loan guaranties), liabilities, or other
obligations arising out of the Joint Venture or otherwise for which it may have
been liable or responsible (in whole or in part) prior to the forfeiture.
This Joint Venture is not a partnership or joint venture in the
operation of a restaurant, but is a joint venture in the ownership and leasing
of real property and constructing a restaurant building and related improvements
thereon. Back Yard Burgers, Inc. is solely responsible for operating the
restaurant on the real property comprising the Project in accordance with the
terms of its lease and shall in no way be construed to be the agent of the Joint
Venture in the operation of such restaurant. Likewise, this Agreement gives the
Joint Venture no agency rights to act for Back Yard Burgers, Inc. in the actual
operation of the restaurant.
6.03. Powers of Joint Venturers.
a. Unanimous Consent. The following powers may be exercised only upon
the consent of all of the Joint Venturers:
1. The power to borrow money on the general credit of the Joint
Venture in any amount, or to create, assume, or incur any indebtedness to any
person or entity;
2. The power to make loans in any amount, to guarantee obligations
of any person or entity, or to make any other pledge or extension of credit;
3. The power to purchase or otherwise acquire any other property
except in the ordinary course of business of the Joint Venture;
4. The power to sell, encumber, mortgage, or refinance any mortgage
on any of the Joint Venture property;
5. The power to confess any judgment against the Joint Venture, or
to create, assume, incur, or consent to any charge (including any mortgage or
deed of trust, pledge, encumbrance, or security interest of any kind) upon any
property or assets of the Joint Venture; and
6. The power to make any expenditure of capital improvement or
renovation funds or any other expenditures except for routine day-to-day
maintenance and operation of the Project.
b. Majority. Except for those powers set forth in Section 6.03.a above
and the other powers and duties specifically designated or assigned to a Joint
Venturer or to the Managing Joint Venturer elsewhere in this Agreement, all
other actions and powers of the Joint Venture shall require the consent of a
majority of the percentage ownership (as set forth in Article III) of the Joint
Venture.
c. Specifically Authorized Actions. Notwithstanding anything else
contained in this Agreement, all of the Joint Venturers hereby agree and consent
to the following actions by the Joint Venture:
1. Purchasing the land for the Project and borrowing such funds as
are necessary to fund the purchase.
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2. Constructing a restaurant facility and any needed improvements
therewith on the land.
3. Borrowing such funds as are necessary from financial institutions
(including The Bank of Nashville in Nashville, Tennessee) to help finance the
purchase of the land, the construction of the restaurant facility and needed
improvements, and to obtain permanent financing, and granting such financial
institutions (including The Bank of Nashville) deeds of trust, assignments of
rents and security agreements on the land and/or Project to secure such loans.
4. Leasing the Project to Back Yard Burgers, Inc. for a fifteen year
initial term, together with the option for three five-year renewal terms.
Notwithstanding anything else herein contained, all of the Joint Venturers
hereby specifically authorize the Managing Joint Venturer, Xxxxxx X. Xxxxxx (or
as the successor Managing Joint Venturer if she is unable, incapable or
unwilling to serve), to execute on behalf of the Joint Venture any and all
documents needed to accomplish and effectuate the foregoing actions, including
without limitation any settlement statement, closing statement, commitment
letter, affidavit, promissory note, lease agreement, guaranty, unlimited
guaranty, subordination, nondisturbance and attornment agreement, and deed of
trust, assignment of rents and security agreement, whether any of the foregoing
related to the purchase of the land and/or the financing thereof, the
construction financing, and/or the permanent financing. All of the Joint
Venturers specifically authorize the Managing Joint Venturer to execute the
foregoing documents on behalf of the Joint Venture without the necessity or
signature of any other Joint Venturer, although any Joint Venturer may join in
their execution if he, she or it so desires.
6.04. Deadlock. In the event a Joint Venturer(s) shall refuse to
consent to the exercise of any power set forth in Section 6.03.a when the
majority of the percentage ownership (as set forth in Article III) of the Joint
Venture have so agreed or consented, or in the event the Joint Venturers are
divided on a material issue and cannot agree on the conduct of the business and
affairs of the Joint Venture, then a deadlock between the Joint Venturers shall
be deemed to have occurred. Upon the occurrence of a deadlock, the other Joint
Venturers (hereinafter referred to as the "Offerors") may elect to purchase the
Joint Venture interest of the Joint Venturer(s) refusing to consent to the
exercise of such power or to proposals relative to the conduct of the business
and affairs of the Joint Venture (hereinafter referred to as the "Offeree") at
the price calculated as the Offeree's percentage interest in the total value (as
determined solely by the Offerors without the need for outside assistance) of
all of the assets of the Joint Venture, but such total value shall never be less
than their book value. The Offerors shall notify the Offeree in writing of the
election to purchase, stating the total value of all of the assets of the Joint
Venture, and the price offered for the Offeree's Joint Venture interest
expressed as the Offeree's percentage interest in the Joint Venture (as set
forth in Article III) multiplied by the total value of all of the assets of the
Joint Venture. The Offeree shall have the right to buy the interest of the
Offerors on the same terms based upon the Offerors' percentage interests in the
total value of all Joint Venture assets (as stated by the Offerors), or to sell
the Offeree's interest to the Offerors at the designated price and terms,
whichever the Offeree may elect. The Offeree shall have thirty (30) days from
the receipt of such offer to make his, her or its election, that is, either to
buy such interest of the Offerors or to sell his, her or its own interest, which
shall be made in writing executed by the Offeree and stating the nature of the
election. A Joint Venturer who is then obligated to purchase the interest of
another Joint Venturer pursuant to the provisions hereof shall have twenty (20)
days from the date of receipt of the written election from such other Joint
Venturer to pay the specified price and satisfy the terms of such purchase.
Should a Joint Venturer who has received an offer to buy fail to make
the election required herein in a timely fashion, then such non-responding party
will be deemed to have elected and agreed to sell, as the case may be, according
to the terms of the offer. No offers under this Section may be revoked in an
attempt to try to defeat the provisions of this Section.
ARTICLE VII
TRANSFERS OF JOINT VENTURERS' INTERESTS
7.01. Transfers of the Joint Venturers' Interests.
a. In General. Except in accordance with the procedures set forth in
Section 7.03 and elsewhere herein, no Joint Venturer may sell, transfer (whether
by operation of law or otherwise), assign, encumber, or allow to be encumbered
his, her or its interest in the Joint Venture, or admit additional Joint
Venturers, without the prior written consent of all of the other Joint
Venturers. Any attempt to transfer or encumber any interest in the Joint Venture
in violation of this Article shall be null and void.
b. Family Dispositions. Notwithstanding anything else herein contained,
the requirements of Section 7.01.a and Section 7.03 shall not apply to spousal
transfers, whether by voluntary action or otherwise, transfers by reason of
death, or transfers into a trust for the sole benefit of the individual
transferor and/or his or her family members of the first or second degree.
However, no Joint Venturer shall make any disposition which would cause the
Joint Venture to be treated as an association taxable as a corporation for
federal income tax purposes.
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7.02. Obligations and Rights of Transferees.
a. Any person or entity which acquires in any manner whatsoever any
interest in the Joint Venture, irrespective of whether such person has accepted
and adopted in writing the terms and provisions of this Agreement, shall be
deemed by the acceptance of the enefit of the acquisition thereof to have agreed
to, and shall, be subject to and bound by all the obligations of this Agreement
that any predecessor in interest of such a person or entity was subject to or
bound by.
b. The person or entity acquiring an interest in the Joint Venture
shall have only such rights, and shall be subject to all of the obligations, as
are set forth in this Agreement; and, without limiting the generality of the
foregoing, such a person or entity shall not have any right to have the value of
his, her or its interest ascertained or receive the value of such interest or,
in lieu thereof, profits attributable to any right in the Joint Venture, except
as herein set forth.
7.03. Right of First Refusal. If any Joint Venturer or his, her or its
heirs, successors or representatives should desire at any time to transfer or
dispose of any or all of his, her or its interest in the Joint Venture, such
Joint Venturer, or other party, shall first offer to sell the same to the other
Joint Venturers on a pro-rata basis, or as the other Joint Venturers may
otherwise agree. The offer, which shall be given in writing to the other Joint
Venturers, shall state the sale price asked and the terms of the payment for
such interest. Within thirty (30) days after any such offer, the other Joint
Venturers may, at their option, elect to purchase the interest offered on a
pro-rata basis, or as they may otherwise agree among themselves. To exercise the
option to purchase, the other Joint Venturers shall give written notice of such
intention to the offering Joint Venturer, or other party. If the other Joint
Venturers fail to purchase the interest so offered, the offering Joint Venturer,
or other party, shall then have the right for a period of one hundred eighty
(180) days thereafter to offer such interest to any person or entity, but still
shall not sell such interest without giving the other Joint Venturers the right
to purchase such interest as hereinbefore set out within thirty (30) days at the
price and on the terms being offered by such person or entity. The offering
Joint Venturer shall give the other Joint Venturers written notice of such offer
to purchase that he, she or it proposes to accept, and this notice shall be
accompanied by a copy of the offer to purchase, which shall be in writing and
shall specify the exact interest to be purchased, the purchase price, the
payment terms (if any), and the name and address of the party making the offer
to purchase, and such offer to purchase must be bona fide.
7.04. Death or Legal Incompetency. Upon the death or legal incompetency
of an individual Joint Venturer, his or her personal representative shall have
all of the rights of a Joint Venturer for the sole purpose of settling and
managing his or her estate and such power as the decedent or incompetent
possessed to constitute a successor as an assignee of his or her interest in the
Joint Venture, subject to the provisions contained in Section 7.03 above, and
the other provisions in this Agreement.
7.05. Execution of Documents by Transferees. The transferees of any
interest in the Joint Venture must agree to execute any and all documents
requested by the Joint Venture and other Joint Venturers consistent with the
terms and intent of this Agreement and to be bound by the terms hereof before
becoming a Joint Venturer.
ARTICLE VIII
BANK ACCOUNTS, BOOKS, AND REPORTS, ETC.
8.01. Bank Accounts. The funds of the Joint Venture shall be kept in a
separate bank account or accounts in the name of the Joint Venture, at The Bank
of Nashville in Nashville, Tennessee, or such other financial institution as may
be designated by the Joint Venturers. All withdrawals from such account or
accounts shall be made only upon the signature of those persons shown on the
account signature card who have been designated by the Joint Venture.
8.02. Fiscal Year. The fiscal year of the Joint Venture shall be the
calendar year.
8.03. Books of Accounts. As provided in Section 6.01., the Joint
Venture's books of accounts and financial statements shall be maintained by the
Managing Joint Venturer accordingly and shall be made available to any Joint
Venturer for review at reasonable times. However, the Managing Joint Venturer
may delegate her duty to maintain the books of account and financial statements
to another Joint Venturer (including Back Yard Burgers, Inc.), provided such
Joint Venturer agrees to properly maintain them until otherwise directed by the
Managing Joint Venturer, or may hire some outside firm or person to maintain
them, but they shall still be made available to any Joint Venturer for review at
reasonable times.
8.04. Method of Accounting. The Joint Venture's books of accounts shall
be maintained and kept in accordance with generally accepted accounting
principles, except as may be specified otherwise herein.
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8.05. Tax Returns. The Managing Joint Venturer shall cause tax returns
of the Joint Venture to be filed on a timely basis and shall, promptly after the
preparation thereof, transmit full and complete copies of the returns to each
Joint Venturer. The Managing Joint Venturer may from time to time delegate her
duties under this paragraph of Section 8.05 to another Joint Venturer (including
Back Yard Burgers, Inc.), provided such Joint Venturer agrees to properly
perform such duties timely and properly, or may hire an outside person or entity
to prepare, transmit and file the tax returns.
Xxxxxx X. Xxxxxx is hereby appointed as "tax matters partner" (as
defined in Section 6231(1)(7) of the Internal Revenue Code of 1986, as amended)
for the Joint Venture and shall have all requisite authority and powers
necessary to carry out her duties as tax matters partner, notwithstanding
anything else herein contained. She shall be entitled to reimbursement for all
reasonable expenses incurred in carrying out her duties as tax matters partner.
If Xxxxxx X. Xxxxxx is unable, incapable or unwilling to serve as "tax matters
partner," then shall be the successor if Xxxxxx X. Xxxxxx is unable,
incapable or unwilling to so serve.
8.06. Certain Tax Provisions. Pursuant to Section 754 of the Internal
Revenue Code of 1986, as amended, in the event of a transfer or sale of a Joint
Venture interest or the death of the Joint Venturer, the Joint Venture shall
make the necessary Section 754 election with the Internal Revenue Service for an
adjustment to the basis of the Joint Venture assets as provided by Section 734
and 743 of the Internal Revenue Code.
The Managing Joint Venturer, on behalf of the Joint Venturers, shall
cause to be filed a proper election in accordance with Section 709(b) of the
Internal Revenue Code of 1986, as amended, to provide for the amortization of
organization expenses over a period of sixty (60) months.
ARTICLE IX
TERMINATION
9.01. Liquidation Distribution. Upon the termination of the Joint
Venture, the Joint Venturers shall proceed to liquidate the Joint Venture, and
all proceeds of such liquidation shall be applied and distributed in the manner
set forth in Section 4.04 hereof, subject, however, to the provisions of SS.
61-1-137, of the Tennessee Code Annotated.
9.02. Reasonable Time for Liquidation. A reasonable time shall be
allowed for the orderly liquidation of the Joint Venture's assets in order to
minimize losses normally attendant upon such liquidation.
9.03. Date of Dissolution. The Joint Venture shall terminate and
dissolve when all property owned by the Joint Venture shall have been sold or
otherwise disposed of and the debts of the Joint Venture have been paid or
satisfied.
ARTICLE X
MISCELLANEOUS
10.01. Notices. Any notice or other communication provided for or
required by this Agreement shall be in writing and shall be deemed to have been
given when delivered by hand or upon deposit in the United States mail,
certified, postage prepaid, return receipt requested, properly addressed to the
Joint Venturer to which such notice is intended to be given at such address as
such Joint Venturer may have previously furnished in writing to the Joint
Venture or to such Joint Venturer's last known address.
10.02. Partition. The Joint Venturers hereby mutually waive any right
of partition which they may have with respect to the Project and any other Joint
Venture assets.
10.03. Fees and Commissions. Each Joint Venturer hereby represents and
warrants to the other Joint Venturers that there are no claims for brokerage or
other commissions or finders or other similar fees in connection with the
transactions covered by this Agreement. Each Joint Venturer hereby agrees to
indemnify and hold harmless the others from and against all liabilities, costs,
damages, and expenses from any such claims incurred by him, her or it.
10.04. Waiver. If the Joint Venture or a Joint Venturer consents to or
waives, either expressly or by implication, a breach or default by another Joint
Venturer in the performance of the obligations hereunder, such consent or waiver
shall not be deemed or construed to be a consent to or waiver of any other
breach or default in the performance of the same or any other obligations
hereunder of such Joint Venturer. Failure on the part of the Joint Venture or a
Joint Venturer to complain of any act of another Joint Venturer or to declare a
Joint Venturer in breach or default, irrespective of how long such failure
continues, shall not constitute a waiver by the Joint Venture or such Joint
Venturer of any rights hereunder.
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10.05. Severability. If any provision of this Agreement or the
application thereof shall be determined by any court of competent jurisdiction
to be invalid and unenforceable to any extent, the remainder of this Agreement
and the application of the other provisions shall be valid and shall be enforced
to the fullest extent permitted by law. If any provision is determined to be
invalid or unenforceable, that provision shall be modified in such a way so that
it becomes valid and enforceable but reflects its original meaning and intent as
closely as possible.
10.06. Binding Effect. This Agreement shall inure to the benefit of and
be binding upon the Joint Venturers and their heirs, successors and assigns.
10.07. Counterparts. This Agreement may be executed in counterparts,
with all such counterparts together to be considered to be one complete
document.
10.08. Construction of Agreement.
a. The captions contained in this Agreement are inserted only as a
matter of convenience and in no way define, limit, extend, or describe the scope
of this Agreement or the intent of any provision thereof.
b. None of the provisions of this Agreement shall be for the benefit of
or enforceable by any creditor of the Joint Venture.
c. This Agreement shall be interpreted, construed, and enforced in
accordance with the laws of the State of Tennessee. Each Joint Venturer and his,
her, or its heirs, successors, assigns and personal and legal representatives,
hereby submits to the jurisdiction and venue of the courts in Nashville,
Davidson County, Tennessee, both federal and state, and agrees that any legal
action arising out of the Joint Venture, this Agreement, the Project, or a
dispute between Joint Venturers, shall be brought in a federal or state court in
Nashville, Davidson County, Tennessee, whichever is applicable.
10.09. Other Activities of Joint Venturers. Any Joint Venturer may
engage in other business ventures of every nature, including, but not limited
to, the ownership, development, management, and leasing of real estate wherever
located (including without limitation the leasing of other property to Back Yard
Burgers, Inc., for another company-operated Back Yard Burgers restaurant) and
the ownership and operation of restaurants and restaurant franchises wherever
located (including without limitation Back Yard Burgers restaurants), and
neither the Joint Venture nor any of the other Joint Venturers shall have any
right in such independent ventures or the income and profits derived therefrom
by virtue of this Joint Venture.
10.10. Entire Agreement. This Agreement is intended by the Joint
Venturers to be the final expression of their agreement and as the complete and
exclusive statement of the terms thereof notwithstanding any representations or
statements to the contrary heretofore made. This Agreement may be amended only
by a writing signed by all then-current Joint Venturers at the time of such
amendment.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.
[SIGNATURES ON THE NEXT PAGE]
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JOINT VENTURERS:
Address: ---------------------------------
000 Xxxxxxx Xxxxxxx XXXXXX X. XXXXXX
Xxxxxxxxx, Xxxxxxxxx 00000
SSN: ###-##-####
BACK YARD BURGERS, INC.
Address:
0000 Xxxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxxxx 00000 By:
EIN: 00-0000000 ------------------------------
XXXXXXXXX M. MICHAEL, Chairman
and Chief Executive Officer
Address: ---------------------------------
000 Xxxxxxx Xxxxxxx W. XXXXXXX XXXXXX
Xxxxxxxxx, Xxxxxxxxx 00000
SSN: ###-##-####
Address:
---------------------------------
--------------------------- XXXXXXXXX X. XXXXX
---------------------------
SSN:
-----------------------
Address:
-------------------------------
--------------------------- XXXXXX X. XXXXX
---------------------------
SSN:
-----------------------
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EXHIBIT A
LEGAL DESCRIPTION
Land in Davidson County, Tennessee, being Lot No. 2 as shown on the
Plan of Gowda's Two Lot Subdivision of record in Book 8250, page 947, Register's
Office for said County.
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