Most Popular

Business Contracts
Forms
Immigration
Mock Trial

General Business Contracts

Free Featured LLC Forms

Outback/Fleming's LLC Agreement 10-01-1999

OPERATING AGREEMENT

FOR

OUTBACK/FLEMING'S, LLC

A DELAWARE LIMITED LIABILITY COMPANY

 

THE SECURITIES REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE

SECURITIES ACT OF 1933 NOR REGISTERED NOR QUALIFIED UNDER ANY STATE SECURITIES

LAWS. SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE,

TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS QUALIFIED AND REGISTERED UNDER

APPLICABLE STATE AND FEDERAL SECURITIES LAWS OR UNLESS, IN THE OPINION OF

COUNSEL SATISFACTORY TO THE COMPANY, SUCH QUALIFICATION AND REGISTRATION IS NOT

REQUIRED. ANY TRANSFER OF THE SECURITIES REPRESENTED BY THIS AGREEMENT IS

FURTHER SUBJECT TO OTHER RESTRICTIONS, TERMS AND CONDITIONS WHICH ARE SET FORTH

HEREIN.

 

 

<PAGE> 2

 

TABLE OF CONTENTS

 

<CAPTION>

 

ARTICLE I DEFINITIONS......................................................1

(a) "Act"............................................................1

(b) "Affiliate"......................................................1

(c) "Agreement"......................................................1

(d) "Annual Business Plan"...........................................1

(e) "Assignee".......................................................1

(f) "Bankruptcy".....................................................2

(g) "Capital Account"................................................2

(h) "Capital Contribution"...........................................2

(i) "Certificate"....................................................2

(j) "Code"...........................................................2

(k) "Committee Member"...............................................2

(l) "Company.........................................................2

(m) "Company Minimum Gain"...........................................2

(n) "Distributable Cash".............................................2

(o) "Economic Interest"..............................................2

(p) "Fiscal Year"....................................................2

(q) "Fleming's"......................................................2

(r) "Fleming's" Principals"..........................................3

(s) "Majority Interest"..............................................3

(t) "Management Committee"...........................................3

(u) "Member".........................................................3

(v) "Member Nonrecourse Debt"........................................3

(w) "Member Nonrecourse Deductions"..................................3

(x) "Membership Interest"............................................3

(y) "Net Profits" and "Net Losses"...................................3

(z) "Nonrecourse Liability"..........................................3

(aa) "Outback"........................................................3

(bb) "Percentage Interest"............................................3

(cc) "Person".........................................................4

(dd) "Proprietary Marks"..............................................4

(ee) "Regulations"....................................................4

(ff) "Restaurant".....................................................4

(gg) "System".........................................................4

(hh) "Tax Matters Partner"............................................4

 

ARTICLE II ORGANIZATIONAL MATTERS...........................................4

2.1 Formation........................................................4

2.2 Name.............................................................4

2.3 Term.............................................................4

2.4 Office and Agent.................................................4

2.5 Addresses of the Members and the Management Committee............4

2.6 Purpose and Business of the Company..............................5

 

 

 

i

 

<PAGE> 3

 

TABLE OF CONTENTS

(continued)

 

<CAPTION>

 

ARTICLE III CAPITAL CONTRIBUTIONS............................................5

3.1 Nature and Amount of Contributions...............................5

3.2 Time for Making Contributions....................................5

3.3 Interest on Capital Contributions................................5

3.4 No Additional Capital Contributions..............................5

3.5 Liability for Certain Obligations................................5

3.6 Documentation....................................................6

3.7 Capital Accounts.................................................6

3.8 Failure to Make Contributions....................................6

 

ARTICLE IV MEMBERS..........................................................9

4.1 Limited Liability................................................9

4.2 Admission of Additional Members..................................9

4.3 No Withdrawals or Resignations...................................9

4.4 Termination of Membership Interest...............................9

4.5 Transactions With The Company...................................10

4.6 Voting Rights...................................................10

4.7 Meeting of Members..............................................10

 

ARTICLE V MANAGEMENT AND CONTROL OF THE COMPANY...........................10

5.1 Management of the Company by Management Committee...............10

5.2 Appointment of Management Committee.............................11

 

A. Number, Appointment and Qualifications...................11

B. Term of Service..........................................11

C. Composition of Committee.................................11

D. Resignation..............................................11

E. Removal..................................................11

F. Vacancies................................................12

5.3 Powers of Management Committee..................................12

A. Powers of Management Committee...........................12

B. Annual Business Plan.....................................12

C. Maximization of Value....................................12

D. Limitations on Power of Management Committee.............12

5.4 Liability of Management Committee...............................13

5.5 Devotion of Time................................................13

5.6 Transactions Between the Company and a Member or Committee

Member..........................................................13

5.7 Officers........................................................14

5.8 President.......................................................14

 

ARTICLE VI ALLOCATIONS OF NET PROFITS AND NET LOSSES AND

DISTRIBUTIONS...................................................14

6.1 Allocations of Net Profit and Net Loss..........................14

A. Net Loss.................................................14

 

 

 

ii

<PAGE> 4

 

TABLE OF CONTENTS

(continued)

 

<CAPTION>

 

B. Net Profit...............................................15

 

6.2 Special Allocations.............................................15

A. Minimum Gain Chargeback..................................15

B. Chargeback of Minimum Gain Attributable to Member

Nonrecourse Debt.........................................15

C. Nonrecourse Deductions...................................15

D. Member Nonrecourse Deductions............................15

E. Qualified Income Offset..................................15

6.3 Code Section 704(c) Allocations.................................16

6.4 Allocation of Net Profits and Losses and Distributions in

Respect of a Transferred Interest...............................16

 

6.5 Distributions of Distributable Cash by the Company..............16

6.6 Form of Distribution............................................17

6.7 Restriction on Distribution.....................................17

6.8 Return of Distributions.........................................17

6.9 Obligations of Members to Report Allocations....................17

 

ARTICLE VII TRANSFER AND ASSIGNMENT OF INTERESTS............................17

7.1 Transfer and Assignment of Interests............................17

7.2 Further Restrictions on the Fleming's Principals................18

7.3 Further Restrictions on Transfer of Interests...................18

7.4 Permitted Transfers.............................................18

7.5 Effective Date of Permitted Transfers...........................19

7.6 Substitution of Members.........................................19

7.7 Rights of Legal Representatives.................................19

7.8 No Effect to Transfers in Violation of Agreement................19

7.9 Right of First Refusal..........................................20

7.10 Transfer Permitted After Failure to Elect.......................20

7.11 Purchase and Sale Options.......................................21

A. Options.....................................................21

B. Exercise of Options.........................................21

 

ARTICLE VIII CESSATION OF DEVELOPMENT........................................22

8.1 Cessation of Development........................................22

8.2 Consequences of Cessation.......................................22

 

ARTICLE IX ACCOUNTING, RECORDS, REPORTING BY MEMBERS.......................22

9.1 Books and Records...............................................22

9.2 Delivery to Members and Inspection..............................23

9.3 Annual Statements...............................................23

9.4 Financial and Other Information.................................24

9.5 Filings.........................................................24

9.6 Bank Accounts...................................................24

9.7 Accounting Decisions and Reliance on Others.....................24

 

 

 

iii

<PAGE> 5

 

TABLE OF CONTENTS

(continued)

 

<CAPTION>

 

 

 

9.8 Tax Matters for the Company Handled by Management Committee

and Tax Matters Partner.........................................24

 

ARTICLE X DISSOLUTION AND WINDING UP......................................24

10.1 Dissolution.....................................................24

10.2 Winding Up......................................................25

10.3 Distributions in Kind...........................................25

10.4 Order of Payment Upon Dissolution...............................25

10.5 Limitations on Payments Made in Dissolution.....................25

 

ARTICLE XI INDEMNIFICATION AND INSURANCE...................................26

11.1 Indemnification of Agents.......................................26

11.2 Insurance.......................................................26

 

ARTICLE XII CONFIDENTIALITY AND NON-COMPETITION.............................26

12.1 Noncompetition..................................................26

12.2 Confidentiality.................................................27

 

A. Definition..................................................27

B. No Disclosure, Use or Circumvention.........................27

C. Maintenance of Confidentiality..............................27

 

12.3 Non Solicitation................................................27

12.4 Reasonableness of Restrictions; Reformation; Enforcement........28

12.5 Specific Performance............................................28

 

ARTICLE XIII REPRESENTATIONS AND WARRANTIES..................................28

13.1 Status..........................................................29

13.2 Due Authorization...............................................29

13.3 Other Agreements and Violations of Law..........................29

13.4 No Litigation...................................................29

 

ARTICLE XIV MISCELLANEOUS..........................................................29

14.1 Complete Agreement..............................................29

14.2 Consultation with Attorney......................................29

14.3 Tax Consequences................................................29

14.4 No Assurance of Tax Benefits....................................30

14.5 Binding Effect..................................................30

14.6 Parties in Interest.............................................30

14.7 Pronouns; Statutory References..................................30

14.8 Headings........................................................30

14.9 Interpretation..................................................30

14.10 References to this Agreement....................................30

14.11 Jurisdiction....................................................30

14.12 Exhibits........................................................30

14.13 Additional Documents and Acts...................................30

 

 

 

iv

<PAGE> 6

TABLE OF CONTENTS

(continued)

 

<CAPTION>

 

14.14 Notices.........................................................31

14.15 Amendments......................................................31

14.16 Reliance on Authority of Person Signing Agreement...............31

14.17 Company Property................................................31

14.18 Multiple Counterparts...........................................31

14.19 Attorney Fees...................................................31

14.20 Time is of the Essence..........................................31

14.21 Remedies Cumulative.............................................31

14.22 Severability....................................................31

14.23 Partition.......................................................31

14.24 Waiver..........................................................31

 

 

 

 

 

v

<PAGE> 7

 

 

 

OPERATING AGREEMENT

FOR

OUTBACK/FLEMING'S, LLC

A DELAWARE LIMITED LIABILITY COMPANY

 

This Operating Agreement is made as of October 1, 1999, by and among

the parties listed on the signature pages hereof, with reference to the

following facts:

 

A September 10, 1999, a Certificate of Formation for

OUTBACK/FLEMING'S, LLC, (the "Company"), a limited liability company organized

under the laws of the State of Delaware, was filed with the Delaware Secretary

of State.

 

B The parties desire to adopt and approve a limited liability

company operating agreement for the Company.

 

NOW, THEREFORE, the parties by this Agreement set forth the operating

agreement for the Company under the laws of the State of Delaware upon the terms

and subject to the conditions of this Agreement.

 

ARTICLE I DEFINITIONS

 

When used in this Agreement, the following terms shall have the

meanings set forth below (all terms used in this Agreement that are not defined

in this ARTICLE I shall have the meanings set forth elsewhere in this

Agreement):

 

(a) "Act" shall mean the Delaware Limited Liability

Company Act, as the same may be amended from time to time.

 

(b) "Affiliate" of a Person shall mean any Person,

directly or indirectly, through one or more intermediaries,

controlling, controlled by, or under common control with such Person,

as applicable. The term "control," as used in the immediately preceding

sentence, shall mean with respect to a corporation or limited liability

company the right to exercise, directly or indirectly, more than fifty

percent (50%) of the voting rights attributable to the controlled

corporation or limited liability company, and, with respect to any

individual, partnership, trust, other entity or association, the

possession, directly or indirectly, of the power to direct or cause the

direction of the management or policies of the controlled entity.

 

(c) "Agreement" shall mean this Operating Agreement, as

originally executed and as amended from time to time.

 

(d) "Annual Business Plan" shall mean the detailed

business plan for the Company prepared by the President of the Company

and approved by the Management Committee, no less often than annually,

which plan shall contain an operating budget, a capital budget, cash

flow projections, sources of cash analysis (including analysis of any

intended borrowings or financings), an operating plan (including plans

related to the strategic business plan), and detailed quantifiable

goals for the plan year.

 

<PAGE> 8

 

 

(e) "Assignee" shall mean the owner of an Economic

Interest who has not been admitted as a substitute Member in accordance

with ARTICLE VII.

 

(f) "Bankruptcy" shall mean: (a) the filing of an

application, or consent to, the appointment of a trustee, receiver, or

custodian of other assets; (b) the filing of a voluntary petition in

bankruptcy; (c) the entry of an order for relief in proceedings under

the United States Bankruptcy Code, as amended or superseded from time

to time; (d) the making of a general assignment for the benefit of

creditors; (e) the entry of an order, judgment, or decree by any court

of competent jurisdiction appointing a trustee, receiver, or custodian

of assets unless the proceedings and the person appointed are dismissed

within ninety (90) days; or (f) the failure to pay debts as the debts

become due within the meaning of Section 303(h)(1) of the United States

Bankruptcy Code, as determined by the Bankruptcy Court, or the

admission in writing of inability to pay its debts as they become due.

 

(g) "Capital Account" shall mean with respect to any

Member the capital account that the Company establishes and maintains

for such Member pursuant to SECTION 3.7.

 

(h) "Capital Contribution" shall mean the total amount of

cash and fair market value of property contributed to the capital of

the Company by the Members.

 

(i) "Certificate" shall mean the Certificate of Formation

for the Company originally filed with the Delaware Secretary of State

and as amended from time to time.

 

(j) "Code" shall mean the Internal Revenue Code of 1986,

as amended from time to time, the provisions of succeeding law, and to

the extent applicable, the Regulations.

 

(k) "Committee Member" shall mean the individuals named

to serve on the Management Committee.

 

(l) "Company" shall mean OUTBACK/FLEMING'S, LLC, a

Delaware limited liability company.

 

(m) "Company Minimum Gain" shall have the meaning

ascribed to the term "Partnership Minimum Gain" in the Regulations

Section 1.704-2(d).

 

(n) "Distributable Cash" shall mean the amount of cash

which the Management Committee deems available for distribution to the

Members, taking into account all debts, liabilities, and obligations of

the Company then due, and working capital and other amounts which are

described in the Annual Business Plan, and necessary for the Company's

business or to place into reserves for customary and usual claims with

respect to such business.

 

(o) "Economic Interest" shall mean the right to receive

distributions of the Company's assets and allocations of income, gain,

loss, deduction, credit and similar items from the Company pursuant to

this Agreement and the Act, but shall not include any other rights of a

Member, including, without limitation, the right to vote or participate

in the management of the Company.

 

(p) "Fiscal Year" shall mean the Company's fiscal year,

which shall be the calendar year.

 

(q) "Fleming's" shall mean FPSH Limited Partnership, an

Arizona limited partnership ("FPSH LP") and AWA III Steakhouses, Inc.,

a California corporation ("AWA INC"), individually and collectively.

 

 

2

<PAGE> 9

 

 

(r) "Fleming's Principals" shall mean Paul M. Fleming, A.

William Allen III and Rick Scott, jointly and severally.

 

(s) "Majority Interest" shall mean those Members who hold

at least fifty one percent (51%) of the Percentage Interests entitled

to vote.

 

(t) "Management Committee" shall mean collectively, those

individuals named as Committee Members of the Company pursuant to

ARTICLE V of this Agreement.

 

(u) "Member" shall mean each Person who (a) is an initial

signatory to this Agreement, has been admitted to the Company as a

Member in accordance with the Certificate and this Agreement or is an

Assignee who has become a Member in accordance with ARTICLE VII, and

(b) has not ceased to be a Member in accordance with ARTICLE VII, or

for any other reason.

 

(v) "Member Nonrecourse Debt" shall have the meaning

ascribed to the term "Partner Nonrecourse Debt" in Regulations Section

1.704-2(b)(4).

 

(w) "Member Nonrecourse Deductions" shall mean items of

Company loss, deduction, or Code Section 705(a)(2)(B) expenditures that

are attributable to Member Nonrecourse Debt.

 

(x) "Membership Interest" shall mean a Member's entire

interest in the Company including the Member's Economic Interest, the

right to vote on or participate in the management, and the right to

receive information concerning the business and affairs, of the

Company.

 

(y) "Net Profits" and "Net Losses" shall mean the income,

gain, loss and deductions of the Company in the aggregate or separately

stated, as appropriate, determined in accordance with the method of

accounting at the close of each Fiscal Year on the Company's

information tax return filed for federal income tax purposes.

 

(z) "Nonrecourse Liability" shall have the meaning set

forth in Regulations Section 1.752-1(a)(2).

 

(aa) "Outback" shall mean OS Prime, Inc., a Florida

corporation, and a wholly-owned subsidiary of Outback Steakhouse, Inc.

("OSI").

 

(bb) "Percentage Interest" shall mean the percentage ownership

interest of a Member in the Company, as such percentage may be adjusted

from time to time pursuant to the terms of this Agreement. Each

Member's Percentage Interest shall be equal to the percentage that the

Capital Contribution the Member is obligated to contribute bears to the

total Capital Contributions of all Members. For purposes of determining

Percentage Interests, the System shall have an agreed value of

$13,000,000 and the initial Percentage Interests of the Members shall

be:

 

 

3

<PAGE> 10

 

 

MEMBER PERCENTAGE

INTEREST

 

Outback 50%

FPSH LP 37.5%

AWA INC 12.5%

 

(cc) "Person" shall mean an individual, partnership,

limited partnership, limited liability company, corporation, trust,

estate, association or any other entity.

 

(dd) "Proprietary Marks" shall mean any and all trade

names, service marks and trademarks used in connection with the System.

 

(ee) "Regulations" shall, unless the context clearly

indicates otherwise, mean the regulations in force as final or

temporary that have been issued by the U.S. Department of Treasury

pursuant to its authority under the Code, and any successor

regulations.

 

(ff) "Restaurant(s)" shall mean those certain upscale

steakhouse restaurants developed, owned and/or operated by the Company

utilizing the Fleming's Prime Steakhouse and Wine Bar concept and

operating system.

 

(gg) "System" shall mean the Fleming's Prime Steakhouse

and Wine Bar concept and operating system and all elements thereof

including, without limitation, recipes, operating technologies and

Proprietary Marks.

 

(hh) "Tax Matters Partner" (as defined in Code Section

6231) shall be Outback or its successor as designated pursuant to

SECTION 9.8.

 

ARTICLE II ORGANIZATIONAL MATTERS

 

2.1 FORMATION. The Members have formed a Delaware limited

liability company under the laws of the State of Delaware by filing the

Certificate with the Delaware Secretary of State and entering into this

Agreement, which Agreement shall be deemed effective as of the date the

Certificate was so filed. The rights and liabilities of the Members shall be

determined pursuant to the Act and this Agreement. To the extent that the rights

or obligations of any Member are different by reason of any provision of this

Agreement than they would be in the absence of such provision, this Agreement

shall, to the extent permitted by the Act, control.

 

2.2 NAME. The name of the Company shall be "OUTBACK/FLEMING'S,

LLC". The business of the Company may be conducted under that name or, upon

compliance with applicable laws, any other name that the Management Committee

deems appropriate or advisable. The Management Committee shall file any

fictitious name certificates and similar filings, and any amendments thereto,

that the Management Committee considers appropriate or advisable.

 

2.3 TERM. The term of this Agreement commenced on the filing of

the Certificate and shall continue until terminated as hereinafter provided.

 

 

4

<PAGE> 11

 

 

2.4 OFFICE AND AGENT. The Company shall continuously maintain a

registered office and agent in the State of Delaware. The registered office and

agent shall be as stated in the Certificate or as otherwise determined by the

Management Committee. The principal office of the Company shall be 455 Newport

Center Drive, Newport Beach, California 92660, or as the Management Committee

may determine. The Company may also have such offices, anywhere within and

without the State of Delaware, as the Management Committee may determine from

time to time, or the business of the Company may require.

 

2.5 ADDRESSES OF THE MEMBERS AND THE MANAGEMENT COMMITTEE. The

respective addresses of the Members and the Committee Members are set forth on

EXHIBIT A. A Member or Committee Member may change its address upon notice

thereof to the Management Committee.

 

2.6 PURPOSE AND BUSINESS OF THE COMPANY. The purpose of the

Company is to engage in any lawful activity for which a limited liability

company may be organized under the Act. Notwithstanding the foregoing, without

the consent of a Majority Interest, the Company shall not engage in any business

other than the following:

 

A. The establishment, ownership, operation and franchising of

upscale steakhouse restaurants utilizing the System; and

 

B. Such other activities directly related to and in

furtherance of the foregoing business as may be necessary, advisable, or

appropriate as determined by the Management Committee.

 

C. This Agreement shall not be deemed or construed to create a

relationship between the Members with respect to any activities whatsoever

except for those activities required for the accomplishment of the Company's

purpose as specified in this SECTION 2.6. The Members acknowledge and agree that

upon contribution of the System and Proprietary Marks by Fleming's pursuant to

SECTION 3.1 hereof, the Company shall be the sole and exclusive owner of the

System and the Proprietary Marks and the Members shall have no right, title, or

interest in or to the System or the Proprietary Marks, except as specifically

provided in this Agreement.

 

ARTICLE III. CAPITAL CONTRIBUTIONS

 

3.1 NATURE AND AMOUNT OF CONTRIBUTIONS. The amount and nature of

the contributions of the Members are as follows:

 

Outback $13,000,000 cash

 

Fleming's All and exclusive right, title and interest

in the System (subject only to those certain

non-exclusive, transferable licenses granted

to Fleming Prime Steakhouse I, L.L.C. and

Fleming Prime Steakhouse II, L.L.C.), with a

deemed contribution value of $13,000,000.

 

3.2 TIME FOR MAKING CONTRIBUTIONS. The contribution of Fleming's

shall be made upon execution of this Agreement. The contribution of money by

Outback shall be made at such time(s) as the President of the Company may

request, consistent with the Annual Business Plan.

 

3.3 INTEREST ON CAPITAL CONTRIBUTIONS. No Member shall receive, or

be entitled to receive, interest on its contributions to the capital of the

Company. Except as otherwise provided herein, no Member shall have the right to

demand or to receive the return of all or any part of its Capital Account or of

its contributions to the capital of the Company.

 

 

 

5

<PAGE> 12

 

 

3.4 NO ADDITIONAL CAPITAL CONTRIBUTIONS. In no event shall any

Member be obligated to make any additional capital contributions, except as

otherwise expressly provided herein.

 

3.5 LIABILITY FOR CERTAIN OBLIGATIONS. Fleming's Principals and

Outback covenant and agree that as to any guaranty of any debt, liability, or

obligation of the Company, including, without limitation, material long-term

obligations, such as liability as lessee under leases for Restaurant premises

and liability on loans (collectively "Obligations"), Fleming's Principals and

Outback's parent company, Outback Steakhouse, Inc., a Delaware corporation

("OSI"), shall guarantee such Obligations if required by the third party

creditor; provided however, Fleming's Principals and OSI shall each be

proportionately liable to any third party creditor for only up to fifty percent

(50%) of the outstanding balance under such Obligations and shall not be jointly

and severally liable therefor.

 

3.6 DOCUMENTATION. Fleming's Principals and Outback covenant and

agree that all documentation evidencing any guaranties of the Company's

material, long term obligations, including, without limitation, a Restaurant

premises lease, any promissory notes, and any lease for furniture, fixture and

equipment, shall limit the liability of each of Fleming's Principals and OSI to

proportionately fifty percent (50%) of any amounts outstanding under such

obligations and shall specifically state that Fleming's Principals and OSI shall

not be individually liable for the entire amount thereof, nor jointly and

severally liable therefor. This provision may not be waived without the

unanimous consent of all Members.

 

3.7 CAPITAL ACCOUNTS. The Company shall establish and maintain an

individual Capital Account for each Member in accordance with Regulations

Section 1.704-1(b)(2)(iv). If a Member transfers all or a part of its Membership

Interest in accordance with this Agreement, such Member's Capital Account

attributable to the transferred Membership Interest shall carry over to the new

owner of such Membership Interest pursuant to Regulations Section

1.704-1(b)(2)(iv)(1).

 

3.8 FAILURE TO MAKE CONTRIBUTIONS. If a Member does not timely

contribute capital when required, that Member shall be in default under this

Agreement. In such event, a non-defaulting Member shall send the defaulting

Member written notice of such default, giving such Member fourteen (14) days

from the date such notice is given to contribute the entire amount of its

required Capital Contribution. If the defaulting Member does not contribute its

required capital to the Company within said fourteen (14)-day period, those

non-defaulting Members who hold a majority of the Percentage Interests held by

all non-defaulting Members may elect any one or more of the following remedies:

 

A. One or more non-defaulting Members may advance funds

to the Company to cover those amounts that the defaulting Member fails to

contribute. Amounts that a non-defaulting Member so advances on behalf of the

defaulting Member shall become a loan due and owing from the defaulting Member

to such non-defaulting Member and bear interest at the rate of ten percent (10%)

per annum, payable monthly. All cash distributions otherwise distributable to

the defaulting Member under this Agreement shall instead be paid to the

non-defaulting Members making such advances until such advances and interest

thereon are paid in full. In any event, any such advances shall be evidenced by

a promissory note in a form reasonably acceptable to the non-defaulting Members

and be due and payable by the defaulting Member one (1) year from the date that

such advance was made. Any amounts repaid shall first be applied to costs of

collection, then to interest and thereafter to principal. Effective upon a

Member becoming a defaulting Member, each Member grants to the non-defaulting

Members who advance funds under this SECTION 3.8A a security interest in its

Membership Interest to secure its obligation to repay such advances and agrees

to execute and deliver a promissory note as described herein together with a

security agreement in a form reasonably acceptable to the non-defaulting Members

and such UCC-1 financing statements and assignments of certificates of

membership (or other documents of transfer) as such non-defaulting Members may

reasonably request.

 

 

6

<PAGE> 13

 

 

B. One or more non-defaulting Members may contribute

funds to the capital of the Company to cover those amounts that the defaulting

Member fails to contribute. In such event, the Percentage Interests of all

Members shall be adjusted proportionately to reflect the cumulative total

Capital Contributions each Member has contributed or, with respect to a

non-defaulting Member, which such Member has agreed to contribute.

 

C. The non-defaulting Members who hold a majority of the

Percentage Interests held by all non-defaulting Members may dissolve the

Company, in which event the Company shall be wound-up, liquidated and terminated

pursuant to ARTICLE X.

 

D. The defaulting Member shall lose its voting and

approval rights under the Act, the Certificate and this Agreement.

 

E. The defaulting Member shall lose its ability to

participate in the management and operations of the Company, including, but not

limited to, the right to appoint Committee Members.

 

F. The Company or the non-defaulting Members may

purchase the defaulting Member's entire Membership Interest for an amount equal

to eighty percent (80%) of the Fair Market Value of the Membership Interest.

 

(i) DETERMINATION OF FAIR MARKET VALUE. For the

purposes of this SECTION 3.8F, the "Fair Market Value" of the Membership

Interest at issue shall be determined in the following manner:

 

(a) The defaulting Member and the

non-defaulting Members shall agree upon the Fair Market Value of the defaulting

Member's Membership Interest within ten (10) days following the date of the

event of default. If there is no agreement on the Fair Market Value, the

defaulting Member and the non-defaulting Members shall agree upon a mutually

acceptable appraiser within fifteen (15) days following the date of the event of

default, or, in the event such persons fail to so agree, two (2) appraisers

shall be appointed within twenty (20) days following the date of the event of

default, one by the defaulting Member, and one by the non-defaulting Members. If

the defaulting Member, on the one hand, or the non-defaulting Members, on the

other hand, fail to appoint an appraiser within the twenty (20) day period

specified herein, the sole appraiser appointed within such twenty (20) day

period shall be the sole appraiser for the purposes of determining Fair Market

Value of the defaulting Member's Membership Interest to be purchased pursuant to

this SECTION 3.8F. The defaulting Member and the non-defaulting Members shall

promptly provide notice of the name of the appraiser so appointed by such party

to the other. A third appraiser, if the initial two appraisers are appointed,

shall be appointed by the mutual agreement of the first two appraisers so

appointed, or, if such first two appraisers fail to agree upon a third appraiser

within thirty (30) days following the date of the event of default, either the

defaulting Member or the non-defaulting Members may demand the appointment of an

appraiser be made by the then director of the Regional Office of the American

Arbitration Association located nearest to the Company's principal office, in

which event the appraiser appointed thereby shall be the third appraiser. Each

of the appraisers shall submit to the defaulting Member and the non-defaulting

Members, within thirty (30) days after the final appraiser has been appointed

("Appraisal Period"), a written appraisal (the "Appraisal") of the Fair Market

Value of the defaulting Member's Membership Interest.

 

(b) In connection with any appraisal

conducted pursuant to this Agreement, the parties hereto agree that any

appraiser appointed hereunder shall be given full access during normal business

hours to all information required and relevant to a valuation of the defaulting

Member's Membership Interest.

 

 

 

7

<PAGE> 14

 

 

(c) If three appraisers are appointed, the

Fair Market Value of the defaulting Member's Interest in question shall be equal

to the numerical average of three appraised determinations; provided, however,

that if the difference between any two appraisals is not more than ten percent

(10%) of the lower of the two, and the third appraisal differs by more than

twenty-five percent (25%) of the lower of the other two appraisals, the

numerical average of such two appraisals shall be determinative.

 

(d) Any appraiser, to be qualified to

conduct an appraisal hereunder, shall be an independent appraiser (i.e., not

affiliated with Outback, Fleming's or the Fleming's Principals), an M.A.I.

appraiser or its equivalent, and shall be reasonably competent as an expert to

appraise the value of the defaulting Member's Percentage Interest. If any

appraiser initially appointed under this Agreement shall, for any reason, be

unable to serve, a successor appraiser shall be promptly appointed in accordance

with the procedures pursuant to which the

predecessor appraiser was appointed.

 

Notwithstanding the foregoing, if the determination of the

Fair Market Value of the defaulting Member's Percentage Interest by appraisal is

not completed and all appraisal reports delivered as provided herein within the

Appraisal Period, then all closing, payment, and similar dates subsequent

thereto shall be automatically extended one (1) day for each day delivery of the

appraisal reports is delayed beyond the end of the Appraisal Period.

 

(e) The cost of the appraiser appointed by

each party shall be borne by each such party. The cost of the third appraiser,

if any, or the sole appraiser, in the event the defaulting Member and the

non-defaulting Members mutually agree upon a single appraiser, shall be borne

equally by the defaulting Member and the

non-defaulting Member.

 

(ii) NOTICE OF INTENT TO PURCHASE. Within thirty

(30) days after the determination of the purchase price of the defaulting

Member's Membership Interest in accordance with SECTION 3.8F(I), each

non-defaulting Member shall notify the defaulting Member in writing of its

desire to purchase a portion of the defaulting Member's Membership Interest. The

failure of any non-defaulting Member to submit a notice within the applicable

period shall constitute an election on the part of the Member not to purchase

any of the defaulting Member's Membership Interest. Each non-defaulting Member

so electing to purchase shall be entitled to purchase a portion of the

defaulting Member's Membership Interest in the same proportion that the

Membership Interest of the non-defaulting Member bears to the aggregate of the

Membership Interests of all of the non-defaulting Members electing to purchase

the defaulting Member's Interest.

 

(iii) ELECTION TO PURCHASE LESS THAN ALL OF THE

DEFAULTING MEMBER'S MEMBERSHIP INTEREST. If any non-defaulting Member elects to

purchase none or less than all of its pro rata share of the defaulting Member's

Membership Interest, then the non-defaulting Members may elect to purchase more

than their pro rata share. If the non-defaulting Members fail to purchase the

entire Membership Interest of the defaulting Member, the Company may purchase

any remaining share of the defaulting Member's Membership Interest. If the

non-defaulting Members and the Company do not elect to purchase all of the

defaulting Member's Membership Interest, such Membership Interest not

purchased shall be that of an Economic Interest only.

 

(iv) PAYMENT OF PURCHASE PRICE. The purchase price

shall be paid by the Company or the non-defaulting Members, as the case may be,

by either of the following methods, each of which may be selected separately

by the Company or the non-defaulting Members:

 

(a) The Company or the non-defaulting

Members shall at the closing pay in cash the total purchase price for the

defaulting Member's Membership Interest; or

 

 

 

8

<PAGE> 15

 

 

(b) The Company or the non-defaulting

Members shall pay at the closing one-fifth (1/5) of the purchase price and the

balance of the purchase price shall be paid in four equal annual principal

installments, plus accrued interest, and be payable each year on the anniversary

date of the closing. The unpaid principal balance shall accrue interest at the

current applicable federal rate as provided in the Code for the month in which

the initial payment is made, but the Company and the non-defaulting Members

shall have the right to prepay in full or in part at any time without penalty.

The obligation of each purchasing non-defaulting Member, and the Company, as

applicable, to pay its portion of the balance due shall be evidenced by a

separate promissory note executed by the respective purchasing non-defaulting

Member or the Company, as applicable. Each such promissory note shall be in an

original principal amount equal to the portion owed by the respective purchasing

non-defaulting Member or the Company, as applicable. The promissory note

executed by each purchasing non-defaulting Member shall be secured by a pledge

of that portion of the defaulting Member's Membership Interest purchased by such

non-defaulting Member.

 

(v) CLOSING OF PURCHASE OF DEFAULTING MEMBER'S

MEMBERSHIP INTEREST. The closing for the sale of a defaulting Member's Interest

pursuant to this SECTION 3.8 shall be held at 10:00 a.m. at the principal office

of Company no later than sixty (60) days after the determination of the purchase

price, except that if the closing date falls on a Saturday, Sunday, or legal

holiday, then the closing shall be held on the next succeeding business day. At

the closing, the defaulting Member or such defaulting Member's legal

representative shall deliver to the Company or the non-defaulting Members an

instrument of transfer (containing warranties of title and no encumbrances)

conveying the defaulting Member's Membership Interest. The defaulting Member or

such defaulting Member's legal representative, the Company and the

non-defaulting Members shall do all things and execute and deliver all papers as

may be necessary fully to consummate such sale and purchase in accordance with

the terms and provisions of this Agreement.

 

(vi) PURCHASE TERMS VARIED BY AGREEMENT. Nothing

contained herein is intended to prohibit Members from agreeing upon other terms

and conditions for the purchase by the Company or any Member of the Membership

Interest of any Member in the Company.

 

Each Member acknowledges and agrees that (i) a default by any Member in

making a required Capital Contribution will result in the Company and the

non-defaulting Members incurring certain costs and other damages in an amount

that would be extremely difficult or impractical to ascertain and (ii) the

remedies described in this SECTION 3.8 bear a reasonable relationship to the

damages which the Members estimate may be suffered by the Company and the

non-defaulting Members by reason of the failure of a defaulting Member to make

any required Capital Contribution and the election of any or all of the above

described remedies is not unreasonable under the circumstances existing as of

the date hereof.

 

The election of the non-defaulting Members to pursue any remedy

provided in this SECTION 3.8 shall not be a waiver or limitation of the right to

pursue an additional or different remedy available hereunder or at law or equity

with respect to any such default.

 

ARTICLE IV MEMBERS

 

4.1 LIMITED LIABILITY. Except as expressly set forth in this

Agreement or required by law, no Member shall be personally liable for any debt,

obligation, or liability of the Company, whether that liability or obligation

arises in contract, tort, or otherwise.

 

4.2 ADMISSION OF ADDITIONAL MEMBERS. The Management Committee,

with the approval of a Majority Interest, may admit to the Company additional

Members. Any additional Members shall obtain Membership Interests and will

participate in the management, Net Profits, Net Losses, and distributions of the

 

 

 

9

<PAGE> 16

 

 

Company on such terms as are determined by the Management Committee and approved

by a Majority Interest. Notwithstanding the foregoing, Assignees may only be

admitted as substitute Members in accordance with ARTICLE VII.

 

4.3 NO WITHDRAWALS OR RESIGNATIONS. No Member may withdraw or

resign from the Company. If a Member wrongfully withdraws or resigns as a

Member, that Member shall have no right to receive any distribution or any

payment for the fair value of its Membership Interest other than such

distributions or payments as are made to all Members pursuant to this Agreement.

 

4.4 TERMINATION OF MEMBERSHIP INTEREST. Upon the transfer of a

Member's Membership Interest in violation of ARTICLE VII, the Membership

Interest of such Member shall be terminated and thereafter that Member shall be

an Assignee only unless such Membership Interest shall be purchased by the

Company and/or remaining Members pursuant to the terms of SECTION 7.8. Each

Member acknowledges and agrees that such termination or purchase of a Membership

Interest upon the occurrence of any of the foregoing events is not unreasonable

under the circumstances existing as of the date hereof.

 

4.5 TRANSACTIONS WITH THE COMPANY. Subject to any limitations set

forth in this Agreement and with the prior approval of the Management Committee,

a Member may lend money to and transact other business with the Company. A

Member also may enter into franchise agreements (and any modifications or

renewals thereof) with the Company. Subject to other applicable law, any Member

entering into such transaction(s) with the Company has the same rights and

obligations with respect thereto as a Person who is not a Member.

 

4.6 VOTING RIGHTS. Except as expressly provided in this Agreement

or the Certificate, Members shall have no voting, approval or consent rights.

Except where this Agreement specifically requires a greater percentage

affirmative vote, in all matters in which a vote, approval or consent of the

Members is required, a vote, consent or approval of a Majority Interest (or, in

instances in which there are defaulting Members, non-defaulting Members who hold

a majority of the Percentage Interests held by all non-defaulting Members) shall

be sufficient to authorize or approve such act. All votes, approvals or consents

of the Members may be given or withheld, conditioned or delayed as the Members

may determine in their sole and absolute discretion.

 

4.7 MEETINGS OF MEMBERS. Meetings of Members may be held at such

date, time and place as the Member calling the meeting may reasonably fix from

time to time. No annual or regular meetings of Members are required. Meetings of

the Members may be called by any Member holding more than ten percent (10%) of

the Percentage Interests for the purpose of addressing any matters on which the

Members may vote. Written notice of a meeting of Members shall be sent or

otherwise given to each Member not less than seven (7) nor more than sixty (60)

days before the date of the meeting. The notice shall specify the place, date

and hour of the meeting and the general nature of the business to be transacted.

 

The actions taken at any meeting of Members, however called

and noticed, and wherever held, have the same validity as if taken at a meeting

duly held after regular call and notice, if a quorum is present either in person

or by proxy, and if, either before or after the meeting, each of the Members

entitled to vote, who was not present in person or by proxy, signs a written

waiver of notice or consents to the holding of the meeting or approves the

minutes of the meeting. All such waivers, consents or approvals shall be filed

with the Company records or made a part of the minutes of the meeting.

 

Any action that may be taken at a meeting of Members may be

taken without a meeting, if a consent in writing setting forth the action so

taken, is signed and delivered to the Company within sixty (60) days of the

record date for that action by Members having not less than the minimum number

of votes that would be necessary to authorize or take that action at a meeting

at which all Members entitled to vote on that action at a meeting were present

and voted. All such consents shall be filed with the Management Committee or the

 

 

 

10

<PAGE> 17

 

 

secretary, if any, of the Company and shall be maintained in the Company

records. Any Member giving a written consent, or the Member's proxy holders, may

revoke the consent by a writing received by the Management Committee or

secretary, if any, of the Company before written consents of the number of votes

required to authorize the proposed action have been filed.

 

Unless the consents of all Members entitled to vote have been

solicited in writing, (i) notice of any Member approval of an amendment to the

Certificate or this Agreement, a dissolution of the Company, or a merger of the

Company, without a meeting by less than unanimous written consent, shall be

given at least ten (10) days before the consummation of the action authorized by

such approval, and (ii) prompt notice shall be given of the taking of any other

action approved by Members without a meeting by less than unanimous written

consent, to those Members entitled to vote who have not consented in writing.

 

ARTICLE V .MANAGEMENT AND CONTROL OF THE COMPANY

 

5.1 MANAGEMENT OF THE COMPANY BY MANAGEMENT COMMITTEE. The

business, property and affairs of the Company shall be managed exclusively by a

Management Committee consisting of five (5) individuals appointed by the Members

in accordance with SECTION 5.2A. Individuals named to the Management Committee

shall sometimes be referred to herein individually as a "Committee Member" or

collectively as "Committee Members". Except for situations in which the approval

of the Members is required by this Agreement, the Management Committee shall

have full, complete and exclusive authority, power, and discretion to manage and

control the business, property and affairs of the Company, to make all decisions

regarding those matters and to perform any and all other acts or activities

customary or incident to the management of the Company's business, property and

affairs.

 

5.2 APPOINTMENT OF MANAGEMENT COMMITTEE

 

A. NUMBER, APPOINTMENT AND QUALIFICATIONS. The Company

shall initially have five (5) Committee Members. For so long as the following

are Members, Outback shall name two (2) Committee Members, FPSH LP shall name

one (1) Committee Member, AWA INC shall name one (1) Committee Member, and the

fifth Committee Member (the "Wise Man") shall be named by unanimous consent of

the other four (4) Committee Members. Subject to SECTION 3.8E, if any of the

foregoing cease to be a Member, the right the Member has to appoint Committee

Members shall be transferred to the successor of such Member if such successor

is admitted as a substitute Member. The Wise Man must be (i) independent and not

employed by or have any ownership interest in or licensing or a franchise

relationship with either Member (or its Affiliates), and (ii) possess not less

than ten (10) years of full-time executive level management experience in one or

more casual, fine dining restaurants having at least ten (10) stores under his

or her control or such other qualifications as Outback and Fleming's may agree.

 

(i) TERM OF SERVICE. Each Committee Member (other

than the Wise Man) will serve until his or her death or withdrawal from the

Management Committee, or until his or her removal from the Management Committee

by the Member who appointed him or her. The Wise Man shall serve a one (1) year

term and shall be elected annually by written consent of all of the Committee

Members other than the Wise Man.

 

(ii) Management Committee:

 

<CAPTION>

 

"FPSH LP APPOINTEE" "AWA INC APPOINTEE" "OUTBACK APPOINTEES"

------------------- ------------------- --------------------

 

Paul M. Fleming A. William Allen III Chris Sullivan

Michael O'Donnell

 

 

 

 

11

<PAGE> 18

 

 

The Wise Man shall be appointed within ninety (90) days of execution of this

Agreement.

 

(iii) RESIGNATION. A Committee Member may resign at

any time by giving written notice to the Members. The resignation of a Committee

Member shall take effect upon receipt of that notice or at such later time as

shall be specified in the notice. Unless otherwise specified in the notice, the

acceptance of the resignation shall not be necessary to make it effective.

 

(iv) REMOVAL. The Wise Man may be removed at any

time, with or without cause, by written consent of three (3) of the four (4)

Committee Members other than the Wise Man. Outback Appointees to the Management

Committee may be removed only by Outback, with or without cause. FPSH LP's

Appointee to the Management Committee may be removed only by FPSH LP, with or

without cause. AWA INC's Appointee to the Management Committee may be removed

only by AWA INC, with or without cause.

 

(v) VACANCIES. Vacancies on the Management

Committee shall be filled by the Member who originally appointed the vacating

Committee Member, or, in the case of the Wise Man, by vote or written consent of

all other Committee Members.

 

5.3 POWERS OF MANAGEMENT COMMITTEE.

 

A. POWERS OF MANAGEMENT COMMITTEE. Without limiting the

generality of SECTION 5.1, but subject to SECTION 5.3D and to the limitations

set forth elsewhere in this Agreement, the Management Committee shall have all

necessary powers to manage and carry out the purposes, business, property, and

affairs of the Company, including, without limitation, the power to exercise on

behalf and in the name of the Company all of the powers of a natural person,

including, without limitation, the power to:

 

(i) Authorize the execution and delivery of any

agreement;

 

(ii) Acquire, purchase, lease, renovate, improve,

alter, rebuild, demolish, replace, and own real property and any other property

or assets that the Management Committee determines is necessary or appropriate

or in the interest of the business of the Company, and to acquire options for

the purchase of any such property;

 

(iii) Sell, exchange, lease, or otherwise dispose of

the real property and other property and assets owned by the Company, or any

part thereof, or any interest therein;

 

(iv) Sue on, defend, or compromise any and all

claims or liabilities in favor of or against the Company; submit any or all such

claims or liabilities to arbitration; and confess a judgment against the Company

in connection with any litigation in which the Company is involved (other than

relating to the Management Committee); and

 

(v) Retain legal counsel, auditors, and other

professionals in connection with the Company business and to pay therefor such

remuneration as the Management Committee may determine.

 

B. ANNUAL BUSINESS PLAN. At least sixty (60) days prior

to the commencement of each Fiscal Year, the President shall submit to the

Management Committee for its approval, the Annual Business Plan for the Company.

The President and Management Committee shall at all times use their best efforts

to operate the Company in conformity with the Annual Business Plan.

 

 

 

12

<PAGE> 19

 

 

 

C MAXIMIZATION OF VALUE. The Management Committee shall

from time to time evaluate in good faith and present to the Members all options

available to the Company to maximize the value of each Member's Percentage

Interest in the Company, such as, but not limited to, an initial public

offering, strategic sale, or merger into OSI.

 

D LIMITATIONS ON POWER OF MANAGEMENT COMMITTEE.

 

(i) LIMITATIONS ON ACTS OF MANAGEMENT COMMITTEE.

Except as otherwise required in this Agreement, the Management Committee shall

act by majority vote. The Management Committee shall not have authority

hereunder to cause the Company to engage in the following without first

obtaining the affirmative vote or written consent of a Majority Interest (or

such greater Percentage Interest as is set forth below) of the Members:

 

(a) The operation of any Restaurant other

than in conformity with the operating procedures established pursuant to, or in

accordance with, the System;

 

(b) The sale, exchange or other

disposition of all, or substantially all, of the Company's assets occurring as

part of a single transaction or plan, or in multiple transactions over a six (6)

month period, except in the orderly liquidation and winding up of the business

of the Company upon its duly authorized dissolution;

 

(c) The borrowing of money from any party

in excess of $25,000, the issuance of evidences of indebtedness in connection

therewith, the refinancing, increase in the amount of, modification, amendment,

or changing of the terms, or extension of the time for the payment of any

indebtedness or obligation of the Company, and securing such indebtedness by

mortgage, deed of trust, pledge, security interest, or other lien on Company

assets;

 

(d) The merger of the Company with a

corporation, another limited liability company or limited partnership which is

not an Affiliate of the Company or of any of the Members; provided in no event

shall a Member be required to become a general partner in a merger with a

limited partnership without its express written consent;

 

(e) The merger of the Company with any

general partnership, or with a corporation, limited liability company or limited

partnership which is an Affiliate of the Company or any of the Members, shall

require the affirmative vote or written consent of Members owning a ninety

percent (90%) Percentage Interest;

 

(f) The admission of any person as a

Member, or the establishment of different classes of Members;

 

(g) An alteration of the primary purpose or

business of the Company as set forth in SECTION 2.6;

 

(h) The lending of money by the Company to

any Committee Member, Member, or officer;

 

(i) Any act which would make it impossible

to carry on the ordinary business of the Company;

 

(j) The declaration of Bankruptcy on behalf

of the Company;

 

 

 

13

<PAGE> 20

 

 

(k) The payment of any amount in violation of this

Agreement; and

 

(l) Any other transaction described in this

Agreement as requiring the vote, consent, or approval of the Members.

 

(ii) LIMITATION ON EXECUTION OF DOCUMENTS. No Committee

Member may execute any document on behalf of the Company without the prior

authorization of the Management Committee as provided in this SECTION 5.3.

Michael P. O'Donnell and A. William Allen III shall be the initial Committee

Members authorized to execute documents on behalf of the Company.

 

5.4 LIABILITY OF MANAGEMENT COMMITTEE. The Committee Members shall

not be liable to the Company or to any Member for any loss or damage sustained

by the Company or any Member, unless the loss or damage shall have been the

result of fraud, deceit, gross negligence, reckless or intentional misconduct,

breach of fiduciary duty, a knowing violation of law by a Committee Member or a

breach of the Committee Member's obligations under this Agreement, in which

event such Committee Member shall be so liable.

 

5.5 DEVOTION OF TIME. The Committee Members are not obligated to

devote all of their time or business efforts to the affairs of the Company. The

Committee Members shall devote whatever time, effort, and skill as they deem

appropriate for the operation of the Company.

 

5.6 TRANSACTIONS BETWEEN THE COMPANY AND COMMITTEE MEMBER.

Notwithstanding that it may constitute a conflict of interest, a Committee

Member may engage in any transaction (including, without limitation, the

purchase, sale, lease, or exchange of any property or the rendering of any

service) with the Company so long as the terms and conditions of such

transaction, on an overall basis, are fair and reasonable to the Company and are

at least as favorable to the Company as those that are generally available from

Persons capable of similarly performing them and in similar transactions between

parties operating at arm's length, and provided that a majority of the Committee

Members having no interest in such transaction affirmatively vote or consent in

writing to approve the transaction.

 

5.7 OFFICERS. The Management Committee may appoint officers at any

time. The officers of the Company shall include a President and such other

officers as the Management Committee deems necessary and appropriate. The

officers shall serve at the pleasure of the Management Committee, subject to (a)

all rights, if any, of an officer under an employment contract, and (b) the

right of a Majority Interest to remove any officer. The Management Committee may

determine a reasonable compensation to be paid to each officer so appointed. Any

individual may hold any number of offices. The officers shall exercise such

powers and perform such duties as specified in this Agreement and as shall be

determined from time to time by the Management Committee.

 

5.8 PRESIDENT. All decisions as to the day to day operations of

the Company shall be made by the President. The President shall execute an

Employment Agreement acceptable to the President and the Management Committee.

The initial President shall be A. William Allen III. The President shall not,

without the approval of the Management Committee (or the Members if such power

is retained by the Members pursuant to this Agreement):

 

(i) Confess a judgment against the Company;

 

(ii) Admit any person as a Member;

 

(iii) Declare Bankruptcy on behalf of the Company;

 

(iv) Enter into any lease of real or personal property;

 

 

14

<PAGE> 21

 

 

(v) Enter into any loan transaction or incur any

indebtedness of the Company in excess of $25,000;

 

(vi) Execute any franchise agreement;

 

(vii) Purchase any real property; or

 

(viii) Undertake any such other matter(s) as may be agreed

upon by the Management Committee.

 

ARTICLE VI ALLOCATIONS OF NET PROFITS AND NET LOSSES AND DISTRIBUTIONS

 

6.1 ALLOCATIONS OF NET PROFIT AND NET LOSS

 

A. NET LOSS. Net Loss shall be allocated first to

Outback in an amount equal to Outback's positive Capital Account balance, and

then to the Members in proportion to their Percentage Interests. Notwithstanding

the previous sentence, loss allocations to a Member shall be made only to the

extent that such loss allocations will not create a deficit Capital Account

balance for that Member in excess of an amount, if any, equal to such Member's

share of Company Minimum Gain. Any loss not allocated to a Member because of the

foregoing provision shall be allocated to the other Members (to the extent the

other Members are not limited in respect of the allocation of losses under this

SECTION 6.1A). Any loss reallocated under this SECTION 6.1A shall be taken into

account in computing subsequent allocations of income and losses pursuant to

this ARTICLE VI, so that the net amount of any item so allocated and the income

and losses allocated to each Member pursuant to this ARTICLE VI, to the extent

possible, shall be equal to the net amount that would have been allocated to

each such Member pursuant to this ARTICLE VI if no reallocation of losses had

occurred under this SECTION 6.1A.

 

B. NET PROFIT. Net Profit shall be allocated to the

Members in proportion to their Percentage Interests.

 

6.2 SPECIAL ALLOCATIONS. Notwithstanding SECTION 6.1:

 

A. MINIMUM GAIN CHARGEBACK. If there is a net decrease

in Company Minimum Gain during any Fiscal Year, each Member shall be specially

allocated items of Company income and gain for such Fiscal Year (and, if

necessary, in subsequent fiscal years) in an amount equal to the portion of such

Member's share of the net decrease in Company Minimum Gain that is allocable to

the disposition of Company property subject to a Nonrecourse Liability, which

share of such net decrease shall be determined in accordance with Regulations

Section 1.704-2(g)(2). Allocations pursuant to this SECTION 6.2A shall be made

in proportion to the amounts required to be allocated to each Member under this

SECTION 6.2A. The items to be so allocated shall be determined in accordance

with Regulations Section 1.704-2(f). This SECTION 6.2A is intended to comply

with the minimum gain chargeback requirement contained in Regulations Section

1.704-2(f) and shall be interpreted consistently therewith.

 

B. CHARGEBACK OF MINIMUM GAIN ATTRIBUTABLE TO MEMBER

NONRECOURSE DEBT. If there is a net decrease in Company Minimum Gain

attributable to a Member Nonrecourse Debt, during any Fiscal Year, each Member

who has a share of the Company Minimum Gain attributable to such Member

Nonrecourse Debt (which share shall be determined in accordance with Regulations

Section 1.704-2(i)(5)) shall be specially allocated items of Company income and

gain for such Fiscal Year (and, if necessary, in subsequent Fiscal Years) in an

amount equal to that portion of such Member's share of the net decrease in

Company Minimum Gain attributable to such Member Nonrecourse Debt that is

allocable to the disposition of Company property subject to such Member

 

 

 

15

<PAGE> 22

 

 

 

Nonrecourse Debt (which share of such net decrease shall be determined in

accordance with Regulations Section 1.704-2(i)(5)). Allocations pursuant to this

SECTION 6.2B shall be made in proportion to the amounts required to be allocated

to each Member under this SECTION 6.2B. The items to be so allocated shall be

determined in accordance with Regulations Section 1.704-2(i)(4). This SECTION

6.2B is intended to comply with the minimum gain chargeback requirement

contained in Regulations Section 1.704-2(i)(4) and shall be

interpreted consistently therewith.

 

C. NONRECOURSE DEDUCTIONS. Any nonrecourse deductions

(as defined in Regulations Section 1.704-2(b)(1)) for any Fiscal Year or other

period shall be specially allocated to the Members in proportion to their

Percentage Interests.

 

D. MEMBER NONRECOURSE DEDUCTIONS. Those items of Company

loss, deduction, or Code Section 705(a)(2)(B) expenditures which are

attributable to Member Nonrecourse Debt for any Fiscal Year or other period

shall be specially allocated to the Member who bears the economic risk of loss

with respect to the Member Nonrecourse Debt to which such items are attributable

in accordance with Regulations Section 1.704-2(i).

 

E. QUALIFIED INCOME OFFSET. If a Member unexpectedly

receives any adjustments, allocations, or distributions described in Regulations

Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), or any other event creates a

deficit balance in such Member's Capital Account in excess of such Member's

share of Company Minimum Gain, items of Company income and gain shall be

specially allocated to such Member in an amount and manner sufficient to

eliminate such excess deficit balance as quickly as possible. Any special

allocations of items of income and gain pursuant to this SECTION 6.2E shall be

taken into account in computing subsequent allocations of income and gain

pursuant to this ARTICLE VI so that the net amount of any item so allocated and

the income, gain, and losses allocated to each Member pursuant to this ARTICLE

VI to the extent possible, shall be equal to the net amount that would have been

allocated to each such Member pursuant to the provisions of this ARTICLE VI if

such unexpected adjustments, allocations, or distributions had not occurred.

 

6.3 CODE SECTION 704(C) ALLOCATIONS. Notwithstanding any other

provision in this ARTICLE VI, in accordance with Code Section 704(c) and the

Regulations promulgated thereunder, income, gain, loss, and deduction with

respect to any property contributed to the capital of the Company shall, solely

for tax purposes, be allocated among the Members so as to take account of any

variation between the adjusted basis of such property to the Company for federal

income tax purposes and its fair market value on the date of contribution.

Allocations pursuant to this SECTION 6.3 are solely for purposes of federal,

state and local taxes. As such, they shall not affect or in any way be taken

into account in computing a Member's Capital Account or share of profits,

losses, or other items of distributions pursuant to any provision of this

Agreement.

 

6.4 ALLOCATION OF NET PROFITS AND LOSSES AND DISTRIBUTIONS IN

RESPECT OF A TRANSFERRED INTEREST. If any Economic Interest is transferred, or

is increased or decreased by reason of the admission of a new Member or

otherwise, during any Fiscal Year of the Company, Net Profit or Net Loss for

such Fiscal Year shall be assigned pro rata to each day in the particular period

of such Fiscal Year to which such item is attributable (i.e., the day on or

during which it is accrued or otherwise incurred) and the amount of each such

item so assigned to any such day shall be allocated to the Member or Assignee

based upon its respective Economic Interest at the close of such day.

 

However, for the purpose of accounting convenience and

simplicity, the Company shall treat a transfer of, or an increase or decrease

in, an Economic Interest which occurs at any time during a semi-monthly period

(commencing with the semi-monthly period including the date hereof) as having

been consummated on the last day of such semi-monthly period, regardless of when

during such semi-monthly period such transfer, increase, of decrease actually

occurs (i.e., sales and dispositions made during the first fifteen (15) days of

any month will be deemed to have been made on the 15th day of the month).

 

 

16

<PAGE> 23

 

 

 

Notwithstanding any provision above to the contrary, gain or

loss of the Company realized in connection with a sale or other disposition of

any of the assets of the Company shall be allocated solely to the parties

owning Economic Interests as of the date such sale or other disposition occurs.

 

6.5 DISTRIBUTIONS OF DISTRIBUTABLE CASH BY THE COMPANY.

 

A. Subject to applicable law and any limitations

contained in this Agreement, unless the Company has ceased development of new

Restaurants, as defined in SECTION 8.1, all Distributable Cash of the Company

shall be retained by the Company and used for development of new Restaurants,

except that the Company shall, if Distributable Cash is available, distribute to

each Member cash in an amount equal to thirty-five percent (35%) of the Net

Profits, if any, allocated to such Member. Upon the request of FPSH LP or AWA

INC the Company shall distribute up to an additional ten percent (10%) of the

Net Profits, if any, allocated to such Member; provided however the amount of

any such excess distribution shall be a loan to the Member(s) receiving such

excess distribution. All such loans shall bear interest at the rate of eight

percent (8%) per annum, shall be secured by a first priority security interest

in the debtor Member's Membership Interest, and shall be repaid in full (with

all accrued interest) on the earlier of: (i) five (5) years from the date of the

loan, or (ii) any transfer by the debtor Member of any portion of the debtor

Member's Membership Interest. FPSH LP and AWA INC shall have no right to receive

excess distribution loans once the Company has opened its twentieth (20th)

restaurant. The Management Committee shall make the distributions specified in

this section, not less than once each calendar quarter based on estimated year

to date Net Profits. Distributions for the last calendar quarter of the Fiscal

Year shall be adjusted to reflect any under or over estimating of year to date

Net Profits during prior calendar quarters.

 

B. In the event the Company has ceased development of

new Restaurants as defined in SECTION 8.1, distributions shall be made in

accordance with SECTION 8.2D.

 

C. Subject to SECTION 8.2 AND ARTICLE X, all other

distributions to Members shall be made in accordance with their Percentage

Interests.

 

D All distributions shall be made only to the Persons

who, according to the books and records of the Company, are the holders of

record of the Economic Interests in respect of which such distributions are made

on the actual date of distribution. Subject to SECTION 6.8, neither the Company

nor any Management Committee shall incur any liability for making distributions

in accordance with this SECTION 6.5.

 

6.6 FORM OF DISTRIBUTION. Except as provided in SECTION 8.2 and

SECTION 10.4, a Member, regardless of the nature of the Member's Capital

Contribution, has no right to demand and receive any distribution from the

Company in any form other than cash. Except as provided in SECTION 10.4, no

Member may be compelled to accept from the Company a distribution of any asset

in kind in lieu of a proportionate distribution of money being made to other

Members and no Member may be compelled to accept a distribution of any asset in

kind.

 

6.7 RESTRICTION ON DISTRIBUTIONS. No distribution shall be made

if, after giving effect to the distribution, all liabilities of the Company,

other than liabilities to Members on account of their Membership Interests and

liabilities for which the recourse of creditors is limited to specified property

of the Company, exceed the fair value of the assets of the Company, except that

the fair value of property that is subject to a liability for which the recourse

of creditors is limited shall be included in the assets of the Company only to

the extent that the fair value of that property exceeds that liability.

 

 

 

 

17

<PAGE> 24

 

 

6.8 RETURN OF DISTRIBUTIONS. A Member who receives a distribution

in violation of SECTION 6.7, and who knew at the time of the distribution that

the distribution violated SECTION 6.7, shall be liable to the Company for the

amount of the distribution. A Member who receives a distribution in violation of

SECTION 6.7, and who did not know at the time of the distribution that the

distribution violated SECTION 6.7, shall not be liable for the amount of the

distribution. A Member who receives a distribution shall have no liability for

the amount of the distribution after the expiration of three (3) years from the

date of the distribution unless an action to recover the distribution from such

Member is commenced prior to the expiration of said three (3)-year period and an

adjudication of liability against such Member is made in the said action.

 

6.9 OBLIGATIONS OF MEMBERS TO REPORT ALLOCATIONS. The Members are

aware of the income tax consequences of the allocations made by this ARTICLE VI

and hereby agree to be bound by the provisions of this ARTICLE VI in reporting

their shares of Company income and loss for income tax purposes.

 

ARTICLE VII. TRANSFER AND ASSIGNMENT OF INTERESTS

 

7.1 TRANSFER AND ASSIGNMENT OF INTERESTS.

 

A GENERAL RESTRICTION. Except as otherwise provided in

this ARTICLE VII, until such time as any Member exercises its purchase or put

option pursuant to SECTION 7.11 hereof, a Member shall not be entitled to

transfer, assign, convey, sell, encumber or in any way alienate all or any part

of its Membership Interest (collectively, "transfer") except with the prior

written consent of all Members, which consent may be given or withheld,

conditioned or delayed, as the Members may determine in their sole and absolute

discretion. Without limiting the generality of the foregoing, the sale or

exchange of at least fifty percent (50%) of the voting stock of a Member, if a

Member is a corporation, or the transfer of an interest or interests of at least

fifty percent (50%) in the capital or profits of a Member (whether accomplished

by the sale or exchange of interests or by the admission of new partners or

members), if a Member is a partnership or limited liability company, or the

cumulative transfer of such interests in a Member which effectively equal the

foregoing (including transfer of interests followed by the incorporation of a

Member and subsequent stock transfers, or transfers of stock followed by the

liquidation of a Member and subsequent transfers of interests) will be deemed to

constitute an assignment of a Membership Interest subject to this ARTICLE VII;

provided that transfers among the Fleming's Principals shall be exempt from

these requirements. After the consummation of any transfer of any part of a

Membership Interest, the Membership Interest so transferred shall continue to be

subject to the terms and provisions of this Agreement and any further transfers

shall be required to comply with all the terms and provisions of this Agreement.

 

B IMPROPER TRANSFERS. Transfers in violation of this

ARTICLE VII shall only be effective to the extent set forth in SECTION 7.8.

 

C TERMINATION OF RESTRICTIONS. Upon exercise of a

purchase or put option by any Member pursuant to SECTION 7.11 hereof, all

restrictions on transfers of Membership Interests, pursuant to SECTION 7.1A AND

7.2 hereof shall be of no further force or effect.

 

7.2 FURTHER RESTRICTIONS ON THE FLEMING'S PRINCIPALS. Fleming's

and the Fleming's Principals acknowledge and agree that Outback has entered into

this Agreement in reliance on the personal skill and character of the Fleming's

Principals.

 

 

 

18

<PAGE> 25

 

 

A. AWA INC, A. William Allen III and Rick Scott hereby

represent and warrant to Outback that A. William Allen III (together with his

wife or through a trust controlled by them) and Rick Scott are the sole

shareholders and sole directors of AWA INC. The ownership of all of the capital

stock of AWA INC by A. William Allen III and Rick Scott is a material inducement

to Outback entering into this Agreement. Except as provided in SECTION 7.4, A.

William Allen III and Rick Scott hereby covenant and agree that they shall not,

in any manner, transfer, alienate or encumber any of the capital stock, or other

voting or ownership interest, in AWA INC without the prior written consent of

Outback, which consent may be granted or denied in Outback's sole discretion.

Further, AWA INC, A. William Allen III and Rick Scott hereby covenant and agree

that they shall not in any manner allow any action to be taken that would result

in A. William Allen III, individually, having insufficient voting power to

control all matters submitted to a vote of AWA INC's shareholders.

 

B. FPSH LP, PKCR, LLC ("PKCR") and Paul M. Fleming

hereby represent and warrant to Outback that trusts established for the benefit

of Paul M. Fleming, his spouse and children are the sole members of PKCR and

PKCR is the sole general partner of FPSH LP. The ownership of all of the general

partnership interests of FPSH LP by PKCR and ownership of all of the membership

interests in PKCR by trusts established for the benefit of Paul M. Fleming, his

spouse and children are material inducements to Outback entering into this

Agreement. Except as provided in SECTION 7.4, Paul M. Fleming hereby covenants

and agrees that he shall not, in any manner, transfer, alienate or encumber any

of the membership interests, or other voting or ownership interest, in PKCR

without the prior written consent of Outback, which consent may be granted or

denied in Outback's sole discretion and PKCR hereby covenants and agrees that it

shall not, in any manner, transfer, alienate or encumber any of its partnership

or other ownership or voting interest in FPSH LP without the prior written

consent of Outback which consent may be granted or denied at Outback's sole

discretion FPSH LP, PKCR and Paul M. Fleming covenant and agree that at all

times Paul M. Fleming, individually, or in his capacity as trustee, shall have

sole power to determine all matters submitted to a vote of FPSH LP's partners

and PKCR's members.

 

7.3 FURTHER RESTRICTIONS ON TRANSFER OF INTERESTS. In addition to

other restrictions found in this Agreement, no Member shall transfer all or any

part of its Membership Interest:

 

A. Without compliance with all federal and state

 

securities law, and

 

B. If the Membership Interest to be transferred, when

added to the total of all other Membership Interests transferred in the

preceding twelve (12) consecutive months prior thereto, would cause the tax

termination of the Company under Code Section 708(b)(1)(B).

 

7.4 PERMITTED TRANSFERS.

 

A. A Membership Interest may be transferred to any other

 

Member, subject to compliance with SECTION 7.2 AND 7.3, and without the prior

written consent of the other Members as required by SECTION 7.1.

 

B. Subject to the restrictions of SECTION 7.3: Paul M.

Fleming and PKCR may make bona fide gifts of interests in PKCR or FPSH LP to

Paul M. Fleming's family members, or to one or more trusts for the benefit of

his family members, for estate planning purposes provided that Paul M. Fleming

retains at least a fifty-one percent (51%) ownership and voting interest in PKCR

and PKCR remains the sole general partner of FPSH LP; and A. William Allen III

and Rick Scott may make bona fide gifts of interests in AWA INC to their family

members, or to one or more trusts for the benefit of family members, for estate

planning purposes provided that they collectively retain at least a fifty-one

percent (51%) ownership and voting interest in AWA INC.

 

7.5 EFFECTIVE DATE OF PERMITTED TRANSFERS. Any permitted transfer

of all or any portion of a Membership Interest or an Economic Interest shall be

effective as of the date provided in SECTION 6.4 following the date upon which

the requirements of SECTIONS 7.1, 7.2 and 7.3 have been met. The Management

Committee shall provide the Members with written notice of such transfer as

 

 

 

19

<PAGE> 26

 

 

promptly as possible after the requirements of SECTIONS 7.1, 7.2 and 7.3 have

been met. Any transferee of a Membership Interest shall take subject to the

restrictions on transfer imposed by this Agreement.

 

7.6 SUBSTITUTION OF MEMBERS. An Assignee shall have the right to

become a substitute Member only if (i) the requirements of SECTIONS 7.1, 7.2 AND

7.3 hereof are met, (ii) the Assignee executes an instrument satisfactory to the

Management Committee accepting and adopting the terms and provisions of this

Agreement, and (iii) the Assignee pays any reasonable expenses in connection

with its admission as a new Member. The admission of an Assignee as a substitute

Member shall not result in the release of the Member who assigned the Membership

Interest from any liability that such Member may have to the Company.

 

7.7 RIGHTS OF LEGAL REPRESENTATIVES. If a Member who is an

individual dies or is adjudged by a court of competent jurisdiction to be

incompetent to manage the Member's person or property, the Member's executor,

administrator, guardian, conservator, or other legal representative may exercise

all of the Member's rights for the purpose of settling the Member's estate or

administering the Member's property, including any power the Member has under

the Certificate or this Agreement to give an Assignee the right to become a

Member. If a Member is a corporation, trust, or other entity and is dissolved or

terminated, the powers of that Member may be exercised by its legal

representative or successor.

 

7.8 NO EFFECT TO TRANSFERS IN VIOLATION OF AGREEMENT. Upon any

transfer of a Membership Interest in violation of this ARTICLE VII, the

remaining Members shall have the right to Purchase the transferred Membership

Interest as provided in SECTION 3.8F of this Agreement. In the event such

Membership Interest is not purchased by the remaining Members, such transferee

shall only be entitled to become an Assignee and thereafter shall only receive

the share of the Company's Net Profits, Net Losses and distributions of the

Company's assets to which the transferor of such Economic Interest would

otherwise be entitled. The transferee shall have no right to vote or participate

in the management of the business, property and affairs of the Company or to

exercise any rights of a Member. Notwithstanding the immediately preceding

sentences, if, in the determination of the Management Committee, a transfer in

violation of this ARTICLE VII would cause the tax termination of the Company

under Code Section 708(b)(1)(B), the transfer shall be null and void and the

purported transferee shall not become either a Member or an Assignee.

 

Upon and contemporaneously with any transfer (whether arising

out of an attempted charge upon that Member's Economic Interest by judicial

process, a foreclosure by a creditor of the Member or otherwise) of a Member's

Economic Interest which does not at the same time transfer the balance of the

rights associated with the Membership Interest transferred by the Member

(including, without limitation, the rights of the Member to vote or participate

in the management of the business, property and affairs of the Company), the

Company shall purchase from the Member, and the Member shall sell to Company for

a purchase price of one hundred dollars ($100), all remaining rights and

interests retained by the Member that immediately before the transfer were

associated with the transferred Economic Interest. Such purchase and sale shall

not, however, result in the release of the Member from any liability to the

Company as a Member.

 

Each Member acknowledges and agrees that the right of the

Company to purchase such rights and interests from a Member who transfers a

Membership Interest in violation of this ARTICLE VII is not unreasonable under

 

the circumstances existing as of the date hereof.

 

7.9 RIGHTS OF FIRST REFUSAL.

 

A. MUTUAL RIGHTS. Until any Member exercises its

purchase or put option pursuant to SECTION 7.11 hereof, except for transfers

pursuant to SECTIONS 3.8F, 4.4, 7.4B OR 7.11, but subject to SECTIONS 7.1, 7.2

AND 7.3, if a Member (or any shareholder of AWA INC or any partner of FPSH LP or

member of PKCR) (each a "Transferor") desires to transfer all or any part of

his, hers, or its Membership Interest (or, in the case of a shareholder of AWA

INC any capital stock or other voting or ownership interest in AWA INC, in the

 

 

 

 

20

<PAGE> 27

 

 

 

case of a partner of FPSH LP any partnership interests in FPSH LP, or in the

case of a member of PKCR any membership interest in PKCR) to any person or

entity, the Transferor shall, prior to any such Transfer, give the Management

Committee written notice of such desire ("Notice of Transfer"), which notice

shall specify the Membership Interest to be transferred (for purposes of SECTION

7.9A AND 7.9B, "Membership Interest" shall also mean, in the case of a

shareholder of AWA INC, any capital stock or other voting or ownership interest

in AWA INC, in the case of a partner of FPSH LP any partnership interest in FPSH

LP, or in the case of a member of PKCR any membership interest in PKCR), the

identity of the proposed transferee, the purchase price for the Membership

Interest and the terms for payment of said price, including the treatment of

Company liabilities and the Transferor's liability therefore ("Purchase Price").

Any purported Notice of Transfer that does not comply with the requirements of

this SECTION 7.9A shall be null and void and of no effect hereunder. The

Management Committee shall immediately notify the Members of such Notice of

Transfer. Upon receipt of a proper Notice of Transfer, the other Members shall

thereupon have the right to acquire the Transferor's entire Membership Interest

or such portion of the Transferor's Membership Interest as is specified in the

Notice of Transfer, on terms identical to the Purchase Price or proportionately

identical if the Members elect to purchase the entire Membership Interest of the

Transferor. In the event the Purchase Price contains terms that the other

Members cannot reasonably duplicate, the Members shall have the right to

substitute the reasonable cash equivalent thereof. The other Members shall have

the right to purchase the Transferor's Membership Interest, or portion thereof,

in proportion to the other Member's Percentage Interests or in such other

proportions as the other Members agree.

 

B. OUTBACK'S RIGHTS. Upon exercise by any Member of a

purchase or put option pursuant to SECTION 7.11, the rights granted to the

Members other than Outback under SECTION 7.9A shall terminate and be of no

further force or effect and subsequent thereto, except for transfers pursuant to

SECTIONS 3.8F, 4.4 OR 7.4B, but subject to SECTIONS 7.1, 7.2, 7.3 AND 7.11, if,

at any time a Member other than Outback (or any shareholder of AWA INC or any

partner of FPSH LP or member of PKCR) (each a "Transferor"), desires to transfer

all or any part of his, hers, or its Membership Interest (or, in the case of a

shareholder of AWA INC any capital stock or other voting or ownership interest

in AWA INC, in the case of a partner of FPSH LP any partnership interests in

FPSH LP, or in the case of a member of PKCR any membership interest in PKCR) to

any person or entity, the Transferor shall, prior to any such Transfer, give

Outback Notice of Transfer, which notice shall specify the Membership Interest

to be transferred, the identity of the proposed transfer, and the Purchase

Price. Any purported Notice of Transfer that does not comply with the

requirements of this SECTION 7.9B shall be null and void and of no effect

hereunder. Upon receipt of a proper Notice of Transfer, Outback shall thereupon

have the right to acquire the Transferor's entire Membership Interest or such

portion of the Transferor's Membership Interest as is specified in the Notice of

Transfer, on terms identical to the Purchase Price or proportionately identical

if Outback elects to purchase the entire Membership Interest of the Transferor.

In the event the Purchase Price contains terms that Outback cannot reasonably

duplicate, Outback shall have the right to substitute the reasonable cash

equivalent thereof.

 

C. EXERCISE OF RIGHTS.

 

(i) The purchasing Member(s) shall exercise the

right of first refusal contained herein by mailing written notice thereof

("Notice of Election") to the Transferor within forty (40) days of mailing of

the Notice of Transfer. In the event no purchasing Member(s) mail a Notice of

Election to the Transferor within said 40-day period, the purchase option

contained herein shall lapse (except as otherwise provided in SECTION 7.10). In

the event a Member timely exercises the purchase option contained herein, such

Member shall mail written notice to the Transferor of whether the Member has

elected to purchase the entire Membership Interest of the Transferor or such

portion as was specified in the Notice of Transfer, if less; such notice to be

mailed within ten (10) days of the mailing of the Notice of Election.

 

 

 

21

<PAGE> 28

 

 

(ii) The closing for any purchase hereunder shall

be consummated and closed in the Company's principal office on a date and at a

time designated by the purchasing Member in a notice to the Transferor, provided

such consummation and closing date shall occur within ninety-five (95) days from

the date of mailing of the Notice of Election. At such closing, the Transferor

shall execute and deliver all documents and instruments as are necessary and

appropriate, in the opinion of counsel for the Company, to effectuate the

transfer of the Transferor's Membership Interest in accordance with the terms of

the Notice of Transfer and the purchasing Member shall deliver the Purchase

Price.

 

7.10 TRANSFER PERMITTED AFTER FAILURE TO ELECT. Subject to SECTION

7.1, 7.2 AND 7.3, in the event a Member does not elect pursuant to SECTION 7.9

to exercise the purchase option specified therein, or in the event the closing

for any purchase pursuant to SECTION 7.9 does not occur within the time limits

specified therein, then the Transferor shall be free to transfer the exact

portion of his, her, or its Membership Interest as was specified in the Notice

of Transfer to the person or entity identified in the Notice of Transfer in

exchange for the exact Purchase Price as was specified in the Notice of

Transfer; PROVIDED, HOWEVER, that the closing and consummation of such transfer

shall occur within one hundred thirty (130) days after the date of mailing of

the Notice of Transfer and provided further that such transfer must comply with

all other requirements of this ARTICLE VII. In the event such transfer is not so

closed and consummated within such period, the purchase option granted in

SECTION 7.9 shall again be exercisable and the Transferor shall make no Transfer

of any portion of his Membership Interest, or any right, title or interest

therein, until such Transferor has again complied with all terms and provisions

of this ARTICLE VII. In the event a Member does not elect pursuant to SECTION

7.9 to exercise the purchase option contained therein and the Transferor makes a

permitted Transfer in compliance with the terms and provisions of this ARTICLE

VII, then the person or entity to whom such Membership Interest is transferred

shall nevertheless acquire such Membership Interest subject to the restriction

imposed on such Membership Interest under this ARTICLE VII as to further

transfers of such Membership Interest, and provided further that any such

transferee shall agree in writing to be bound by all terms and provisions of

this Agreement.

 

7.11 PURCHASE AND SALE OPTIONS.

 

A. OPTIONS.

 

(i) PURCHASE OPTIONS. At any time during the one

(1) year period commencing upon the opening of the Company's twentieth (20th)

Restaurant, Outback shall have the right to purchase:

 

(a) from FPSH LP, and FPSH LP shall have

the obligation to sell to Outback, a Percentage Interest in the Company equal to

thirty percent (30%) of all Percentage Interests in the Company; and

 

(b) from AWA INC and AWA INC shall have

the obligation to sell to Outback, a Percentage Interest in the Company equal to

ten percent (10%) of all Percentage Interests in the Company.

 

(ii) PUT OPTION. At any time during the one (1)

year period commencing upon the opening of the Company's twentieth (20th)

Restaurant:

 

(a) FPSH LP shall have the right to sell

to Outback and Outback shall have the obligation to buy, a Percentage Interest

in the Company equal to thirty (30%) of all Percentage Interests in the Company;

and

 

 

 

22

<PAGE> 29

 

 

(b) AWA INC shall have the right to sell

to Outback and Outback shall have the obligation to buy, a Percentage Interest

in the Company equal to ten percent (10%) of all Percentage Interests in the

Company.

 

(iii) The purchase price to be paid by Outback for

the Percentage Interests purchased shall be made in two installments (an initial

payment and a final payment) and calculated as follows:

 

(a) the initial payment shall be equal to

the Company's annualized after tax net income with respect to all Restaurants

open for eighteen (18) months or more on the date of exercise of the option, for

the twelve (12) months immediately preceding exercise of the purchase or put

option, calculated in accordance with generally accepted accounting principals

("GAAP") (assuming a tax rate equal to OSI's tax rate) multiplied by the

Percentage Interest purchased by Outback and multiplied by seventy five percent

(75%) of OSI's pro forma price/earnings multiple for the twelve (12) months

immediately following the exercise of the purchase or put option; provided,

however, the initial payment shall not be less than five (5) times the Company's

annualized earnings before interest, taxes, depreciation and amortization with

respect to all Restaurants open for eighteen (18) months or more, for the twelve

(12) months immediately preceding the exercise of the purchase or put option,

calculated in accordance with GAAP, multiplied by the Percentage Interest

purchased; and

 

(b) the final payment shall be equal to

the Company's annualized after tax net income, with respect to any of the

Company's Restaurants opened for business prior to the date of exercise of the

Option, but open for less than eighteen (18) months on the date of exercise of

the option, for the twelve (12) months immediately preceding the Valuation Date

(as defined below), calculated in accordance with GAAP (assuming a tax rate

equal to OSI's tax rate) multiplied by the Percentage Interest purchased by

Outback and multiplied by seventy five percent (75%) of OSI's pro forma

price/earnings multiple for the twelve (12) months immediately following the

Valuation Date; provided, however, the final payment shall not be less than five

(5) times the Company's annualized earnings before interest, taxes, depreciation

and amortization with respect to any of the Company's Restaurant opened for

business prior to the date of exercise of the option, but open for less than

eighteen (18) months on the date of exercise of the option, for the twelve (12)

months immediately preceding the Valuation Date, calculated in accordance with

GAAP, multiplied by the Percentage Interest purchased. For the purposes hereof,

the "Valuation Date" shall be the date on which the Company's last Restaurant,

that was open on the date of exercise of the option, has been open for eighteen

(18) months.

 

In determining OSI's pro forma price/earnings multiple for the

following twelve months, (i) OSI's price shall be equal to the weighted average

(based on volume) of OSI's common stock closing price on the NASDAQ National

Market System for the thirty (30) trading days immediately preceding exercise of

the purchase or put option or the Valuation Date, as applicable, and (ii) OSI's

earnings for the twelve months following exercise of the purchase or put option

or the Valuation Date, as applicable, shall be equal to the consensus earnings

per share estimate for such period as reported by First Call. No purchase price

shall be paid for any Restaurant opened for business after the date of exercise

of the option.

 

B. EXERCISE OF OPTION.

 

(i) EXERCISE NOTICE. Outback's purchase options,

as described in SECTION 7.11(A)(I)(A) AND (B) may be exercised independently.

FPSH LP's and AWA INC's put options as described in SECTION 7.11(A)(II)(A) AND

(B) may be exercised independently. Upon the exercise of a purchase option or

put option, the exercising Member shall give the other Members written notice

thereof. The written notice (the "Exercise Notice") shall state the purchase

price, a detailed explanation of the valuation methodology and supporting

information utilized in arriving at said purchase price. The other Member shall

have a period of thirty (30) days in which to agree to the purchase price or

 

 

 

23

<PAGE> 30

 

 

 

assert any challenges to the calculation of the purchase price. If the Members

cannot agree on the purchase price calculation forty-five (45) days from receipt

of the Exercise Notice, the calculation shall be determined by the Company's

independent certified public accountants.

 

(ii) CLOSING OF OPTION EXERCISE. The closing for

the purchase by Outback pursuant to this SECTION 7.11 shall be held at 10:00

a.m. at the principal office of Company no later than thirty (30) days after the

determination of the initial payment, except that if the closing date falls on a

Saturday, Sunday, or legal holiday, then the closing shall be held on the next

succeeding business day. At the closing, the selling Member(s) shall deliver to

Outback an instrument of transfer (containing warranties of title and no

encumbrances) conveying the Percentage Interest(s) sold. The selling Member(s)

and Outback shall do all things and execute and deliver all papers as may be

necessary fully to consummate such sale and purchase in accordance with the

terms and provisions of this Agreement.

 

(iii) PAYMENT OF PURCHASE PRICE. Outback shall pay

the initial payment in cash at closing and the final payment in cash within

thirty (30) days of the determination of the final payment.

 

ARTICLE VIII. CESSATION OF DEVELOPMENT

 

8.1 CESSATION OF DEVELOPMENT. For purposes of this Agreement the

Company shall be deemed to have ceased development if the Company has not, in

any period of eighteen (18) consecutive months, opened a new Restaurant or

executed a lease or purchase contract for a new Restaurant.

 

8.2 CONSEQUENCES OF CESSATION. If the Company ceases development,

the Company shall continue in existence and:

 

A. All rights to further development of the Fleming's

Prime Steakhouse concept, including the System, shall be distributed and

assigned to Fleming's,

 

B. All existing Company Restaurants and all restaurants

utilizing the System owned and operated by OSI or any of its Affiliates, shall

receive a perpetual, royalty free license to use the Fleming's Prime Steakhouse

concept and System,

 

C. The Company shall remain entitled to continue to

collect royalties for the use of the System from any franchisee of the Company

utilizing the System on the date of cessation, and

 

D. All Distributable Cash shall be distributed to the

Members in accordance with their Percentage Interests no less frequently than

quarterly.

 

ARTICLE IX. ACCOUNTING, RECORDS, REPORTING BY MEMBERS

 

9.1 BOOKS AND RECORDS. The books and records of the Company shall

be kept, and the financial position and the results of its operations recorded,

in accordance with the accounting methods followed for federal income tax

purposes. The books and records of the Company shall reflect all the Company

transactions and shall be appropriate and adequate for the Company's business.

The Company shall maintain at its principal office all of the following:

 

A. A current list of the full name and last known

business or residence address of each Member and Assignee set forth in

alphabetical order, together with the Capital Contributions, Capital Account and

Percentage Interest of each Member and Assignee;

 

 

 

24

<PAGE> 31

 

 

B. A current list of the full name and business or

residence address of each Committee Member;

 

C. A copy of the Certificate and any and all amendments

thereto together with executed copies of any powers of attorney pursuant to

which the Certificate or any amendments thereto have been executed;

 

D. Copies of the Company's federal, state, and local

income tax or information returns and reports, if any, for the six (6) most

recent taxable years;

 

E. A copy of this Agreement and any and all amendments

thereto together with executed copies of any powers of attorney pursuant to

which this Agreement or any amendments thereto have been executed;

 

F. Copies of the financial statements of the Company, if

 

any, for the six (6) most recent Fiscal Years; and

 

G. The Company's books and records as they relate to the

internal affairs of the Company for at least the current and past four (4)

Fiscal Years.

 

9.2 DELIVERY TO MEMBERS AND INSPECTION.

 

A. Upon the request of any Member or Assignee, President

shall promptly deliver to the requesting Member or Assignee, at the expense of

the Company, a copy of the information required to be maintained under SECTION

9.1.

 

B. Each Member, Committee Member and Assignee has the

right, upon reasonable request for purposes reasonably related to the interest

of the Person as Member, Committee Member or Assignee, to:

 

(i) inspect and copy during normal business hours

any of the Company records described in SECTION 9.1;

 

(ii) obtain from the Management Committee, promptly

after their becoming available, a copy of the Company's federal, state, and

local income tax or information returns for each Fiscal Year; and

 

(iii) receive a monthly income statement of the

Company and a balance sheet of the Company as of the end of that period. The

statement and balance sheet shall be delivered or mailed to the Members within

twenty (20) days after the end of each such period.

 

C. Any request, inspection or copying by a Member or

Assignee under this SECTION 9.2 may be made by that Person or that Person's

agent or attorney.

 

9.3 ANNUAL STATEMENTS.

 

A. The Management Committee shall cause an annual report

to be sent to each of the Members not later than ninety (90) days after the

close of the Fiscal Year. The report shall contain a balance sheet as of the end

of the Fiscal Year and an income statement and statement of changes in financial

position for the Fiscal Year. Such financial statements shall be accompanied by

the report thereon, if any, of the independent accountants engaged by the

Company or, if there is no report, the certificate of the Management Committee

that the financial statements were prepared without audit from the books and

records of the Company.

 

 

 

25

<PAGE> 32

 

 

B. The Management Committee shall cause to be prepared

at least annually, at Company expense, information necessary for the preparation

of the Members' and Assignees' federal and state income tax returns. The

Management Committee shall send or cause to be sent to each Member or Assignee

within sixty (60) days after the end of each taxable year such information as is

necessary to complete federal and state income tax or information returns, and a

copy of the Company's federal, state, and local income tax or information

returns for that year.

 

9.4 FINANCIAL AND OTHER INFORMATION. The Management Committee

shall provide such financial and other information relating to the Company or

any other Person in which the Company owns, directly or indirectly, an equity

interest, as a Member may request.

 

9.5 FILINGS. The Management Committee, at Company expense, shall

cause the income tax returns for the Company to be prepared and timely filed

with the appropriate authorities. The Management Committee, at Company expense,

shall also cause to be prepared and timely filed, with appropriate federal and

state regulatory and administrative bodies, amendments to, or restatements of,

the Certificate and all reports required to be filed by the Company with those

entities under the Act or other then current applicable laws, rules, and

regulations. If a Committee Member is required by the Act to execute or file any

document fails, after demand, to do so within a reasonable period of time or

refuses to do so, any other Committee Member or Member may prepare, execute and

file that document.

 

9.6 BANK ACCOUNTS. The Management Committee shall maintain the

funds of the Company in one or more separate bank accounts in the name of the

Company, and shall not permit the funds of the Company to be commingled in any

fashion with the funds of any other Person.

 

9.7 ACCOUNTING DECISIONS AND RELIANCE ON OTHERS. All decisions as

to accounting matters, except as otherwise specifically set forth herein, shall

be made by the Management Committee. The Management Committee may rely upon the

advice of its accountants as to whether such decisions are in accordance with

accounting methods followed for federal income tax purposes.

 

9.8 TAX MATTERS FOR THE COMPANY HANDLED BY MANAGEMENT COMMITTEE

AND TAX MATTERS PARTNER. The Management Committee shall from time to time cause

the Company to make such tax elections it deems to be in the best interests of

the Company and the Members. The Tax Matters Partner shall represent the Company

(at the Company's expense) in connection with all examinations of the Company's

affairs by tax authorities, including resulting judicial and administrative

proceedings, and shall expend the Company funds for professional services and

costs associated therewith. The Tax Matters Partner shall oversee the Company

tax affairs in the overall best interests of the Company but shall not have the

right to agree to extend any statute of limitations without the approval of a

Majority Interest. If for any reason the Tax Matters Partner can no longer serve

in that capacity or ceases to be a Member, as the case may be, a Majority

Interest may designate another Member to be Tax Matters Partner.

 

ARTICLE X. DISSOLUTION AND WINDING UP

 

10.1 DISSOLUTION. The Company shall be dissolved, its assets shall

be disposed of, and its affairs wound up on the first to occur of the following:

 

A. The agreement of three (3) of the four (4) Committee

Members other than the Wise Man to terminate the Company;

 

B. The entry of a decree of judicial dissolution;

 

 

 

 

26

<PAGE> 33

 

 

C. The vote of non-defaulting Members holding a majority

of the Percentage Interests held by all non-defaulting Members pursuant to

SECTION 3.8C;

 

D. The sale of all or substantially all of the assets of

Company.

 

Except for the foregoing, the Company shall not dissolve on the

occurrence of any other event.

 

10.2 WINDING UP. Upon the occurrence of any event specified in

SECTION 10.1, the Company shall continue solely for the purpose of winding up

its affairs in an orderly manner, liquidating its assets, and satisfying the

claims of its creditors. The Management Committee shall be responsible for

overseeing the winding up and liquidation of Company, shall take full account of

the liabilities of Company and assets, shall, subject to SECTION 10.4, either

cause its assets to be sold or distributed, and if sold as promptly as is

consistent with obtaining the fair market value thereof, shall cause the

proceeds therefrom, to the extent sufficient therefor, to be applied and

distributed as provided in SECTION 10.4. The Persons winding up the affairs of

the Company shall give written notice of the commencement of winding up by mail

to all known creditors and claimants whose addresses appear on the records of

the Company. The Management Committee or Members winding up the affairs of the

Company shall not be entitled to compensation for such services.

 

10.3 DISTRIBUTIONS IN KIND. Except for a distribution of the System

to Fleming's pursuant to SECTION 8.2 OR 10.4 any non-cash asset distributed to

one or more Members shall first be valued at its fair market value to determine

the Net Profit or Net Loss that would have resulted if such asset were sold for

such value, such Net Profit or Net Loss shall then be allocated pursuant to

ARTICLE VI, and the Members' Capital Accounts shall be adjusted to reflect such

allocations. The amount distributed and charged to the Capital Account of each

Member receiving an interest in such distributed asset shall be the fair market

value of such interest (net of any liability secured by such asset that such

Member assumes or takes subject to). The fair market value of such asset shall

be determined by the Management Committee or by the Members or if any Member

objects by an independent appraiser (any such appraiser must be recognized as an

expert in valuing the type of asset involved) selected by the Management

Committee or liquidating trustee and approved by the Members.

 

10.4 ORDER OF PAYMENT UPON DISSOLUTION. After determining that all

known debts and liabilities of the Company, including, without limitation, debts

and liabilities to Members who are creditors of the Company, have been paid or

adequately provided for, the remaining assets shall be distributed as follows:

 

A. Upon dissolution of the Company (other than in

connection with a sale of all or substantially all of the Company's assets to a

third party and other than in connection with a termination resulting from one

Member's purchase of all or part of the other Member's Membership Interest) the

System shall be distributed to Fleming's, as valued at its deemed contribution

value, and all other assets of the Company shall be liquidated. All other

proceeds from liquidation of the Company assets shall be distributed (i) to

Outback until Outback shall have received an amount equal to Outback's Capital

Contributions, and (ii) thereafter to the Members in accordance with their

positive Capital Account balances after giving effect to the allocation of Net

Profit or Net Loss resulting from such liquidation. Such liquidating

distributions shall be made by the end of the Company's taxable year in which

the Company is liquidated, or, if later, within ninety (90) days after the date

of such liquidation.

 

B. Upon dissolution of the Company in connection with a

sale of all or substantially all of the Company's assets to a third party all

proceeds from liquidation of the Company's assets shall be distributed to the

Members in accordance with their positive Capital Account balances after giving

effect to the allocation of Net Profit or Net Loss resulting from such

 

 

 

27

<PAGE> 34

 

 

liquidation, it being the intent of the Members that distributions shall be the

same as if distributed pursuant to Percentage Interests. Such liquidating

distributions shall be made by the end of the Company's taxable year in which

the Company is liquidated, or, if later, within ninety (90) days after the date

of such liquidation.

 

10.5 LIMITATIONS ON PAYMENTS MADE IN DISSOLUTION. Except for the

liability of the Management Committee pursuant to SECTION 5.4 or as otherwise

specifically provided in this Agreement, each Member shall only be entitled to

look solely at the assets of the Company for the return of its Capital

Contributions and positive Capital Account balance and shall have no recourse

for its Capital Contribution, positive Capital Account balance and/or share of

Net Profits (upon dissolution or otherwise) against the Management Committee or

any other Member.

 

ARTICLE XI. INDEMNIFICATION AND INSURANCE

 

11.1 INDEMNIFICATION OF AGENTS. Unless the Committee Members may be

liable to the Company for any event described in SECTION 5.4, the Company shall

defend and indemnify any Member or Committee Member and may indemnify any other

Person who was or is a party or is threatened to be made a party to any

threatened, pending or completed action, suit or proceeding by reason of the

fact that it is or was a Member, Committee Member, officer, employee or other

agent of the Company or that, being or having been such a Member, Committee

Member, officer, employee or agent, it is or was serving at the request of the

Company as a manager, member, director, officer, employee or other agent of

another limited liability company, corporation, partnership, joint venture,

trust or other enterprise (all such persons being referred to hereinafter as an

"agent"), to the fullest extent permitted by applicable law in effect on the

date hereof and to such greater extent as applicable law may hereafter from time

to time permit. The Management Committee shall be authorized, on behalf of the

Company, to enter into indemnity agreements from time to time with any Person

entitled to be indemnified by the Company hereunder, upon such terms and

conditions as the Management Committee deems appropriate in its business

judgment.

 

11.2 INSURANCE. The Company shall have the power to purchase and

maintain insurance on behalf of any Person who is or was an agent of the Company

against any liability asserted against such Person and incurred by such Person

in any such capacity, or arising out of such Person's status as an agent,

whether or not the Company would have the power to indemnify such Person against

such liability under the provisions of SECTION 11.1 or under applicable law.

 

ARTICLE XII. CONFIDENTIALITY AND NON-COMPETITION

 

12.1 NONCOMPETITION.

 

A. Subject to SUBSECTION C below, so long as FPSH LP and

AWA INC are Members and with respect to each of them for three (3) years

thereafter, they, the Fleming's Principals (and their respective Affiliates)

shall not, individually or jointly with others, directly or indirectly, whether

for their own account or for that of any other Person, operate, engage in, own

or hold any ownership interest in, have any interest in or lend any assistance

to any steakhouse restaurant, or Person or entity engaged in a business owning,

operating or controlling steakhouse restaurants, other than the Company's

Restaurants and six Fleming's Prime Steakhouse restaurants currently owned or

under development by Fleming Prime Steakhouse I, L.L.C. ("FPSI") and Fleming

Prime Steakhouse II, L.L.C. ("FPSII"), and shall not act as an officer,

director, employee, partner, independent contractor, consultant, principal,

agent, or in any other capacity for, nor lend any assistance (financial or

otherwise) or cooperation to any such steakhouse restaurant or Person or entity.

The restriction contained herein shall be deemed to apply to A. William Allen

III and Rick Scott for so long as AWA INC is a Member and for three (3) years

thereafter and to Paul M. Fleming for so long as FPSH LP is a Member and for

 

 

 

28

<PAGE> 35

 

 

 

three (3) years thereafter. For the purposes of this SECTION 12.1, the term

"steakhouse restaurant" shall mean any restaurant for which: (i) the word

"steak" or any variation thereof is in its name; or (ii) the sale of steak or

prime rib is specified in its advertising or marketing efforts; or (iii) the

sale of steak and prime rib constitutes thirty five percent (35%) or more of its

entree sales, computed on a dollar basis.

 

B. Subject to SUBSECTION D below, so long as Outback is

a Member, and for a period of one (1) year thereafter, Outback (and its

Affiliates) shall not, individually or jointly with others, directly or

indirectly, whether for its own account or for that of any other Person,

operate, engage in, own or hold any ownership interest in, have any interest in

or lend any assistance to: any steakhouse restaurant having a per person check

average between $40.00 and $55.00, or Person or entity engaged in a business

owning, operating or controlling steakhouse restaurants, having a per person

check average between $40.00 and $55.00, other than the Company's Restaurants,

franchisees of the Company, and the Restaurants currently owned or under

development by Outback, FPSI or FPSII.

 

C. In the event the Company has ceased development, as

defined in ARTICLE VIII and the System has been distributed and assigned back to

Fleming's, then the restrictions on FPSH LP, AWA INC, Paul M. Fleming, Rick

Scott and A. William Allen III contained in paragraph (A) hereof shall not apply

and instead FPSH LP, AWA INC, Paul M. Fleming, Rick Scott and A. William Allen

III and their respective Affiliates, shall not for a period of three (3) years

from the date of assignment of the System back to Fleming's, individually or

jointly with others, directly or indirectly, whether for their own account or

for that of any other Person, operate, engage in, own or hold any ownership

interest in, have any interest in or lend any assistance to, and shall not act

as an officer, director, employee, partner, independent contractor, consultant,

principal, agent, or in any other capacity for, nor lend any assistance

(financial or otherwise) or cooperation to: (i) any steakhouse restaurant with a

per person average check between $40 and $55 or Person or entity engaged in a

business owning, operating or controlling steakhouse restaurants with a per

person average check between $40 and $55 and located within 30 miles of any

restaurant operating and utilizing the System on the date of cessation; or (ii)

any steakhouse restaurant , wherever located, with a per person average check

below $40 or more than $55.

 

D. In the event the Company has ceased development, as

defined in ARTICLE VIII and the System has been distributed and assigned back to

Fleming's, then the restrictions on Outback (and its Affiliates) contained in

paragraph (B) hereof shall not apply and instead Outback (and its Affiliates)

shall not, for a period of one (1) year from the date of assignment of the

System back to Fleming's, individually or jointly with others, directly or

indirectly, whether for its own account or for that of any other Person,

operate, engage in, own or hold any ownership interest in, have any interest in

or lend any assistance to: any steakhouse restaurant having a per person check

average between $40.00 and $55.00, or Person or entity engaged in a business

owning, operating or controlling steakhouse restaurants, having a per person

check average between $40.00 and $55.00, other than the Company's Restaurants,

franchisees of the Company, and the Restaurants currently owned or under

development by Outback, FPSI or FPSII.

 

E. None of the restrictions in this SECTION 12.1 shall

be interpreted to apply to Paul M. Fleming's ownership interest in any Z' Tejas

or Roaring Fork restaurants as those restaurants are currently operated.

 

12.2 CONFIDENTIALITY.

 

A. DEFINITION. For the purpose of this Agreement,

"Proprietary Information" shall include all information designated by any

Member, either orally or in writing, as confidential or proprietary, or which

reasonably would be considered proprietary or confidential to the business

contemplated by this Agreement, including but not limited to suppliers,

customers, trade or industrial practices, marketing and technical plans,

technology, personnel, organization or internal affairs, plans for products and

ideas, recipes, menus, wine lists and proprietary techniques and other trade

secrets. Notwithstanding the foregoing, "Proprietary Information" shall not

 

 

 

 

29

<PAGE> 36

 

 

include information which (i) has entered the public domain or became known

other than due to a breach of any obligation of confidentiality owed to the

owner of such information; (ii) was known prior to the disclosure of such

information; (iii) became known to the recipient from a source other than a

Member or its Affiliate, provided there was no breach of an obligation of

confidentiality owed to said Member or its Affiliate; or (iv) was independently

developed by the party receiving such information.

 

B. NO DISCLOSURE, USE, OR CIRCUMVENTION. No Member or

its Affiliates shall disclose any Proprietary Information to any third parties

(other than existing or permitted franchisees) and will not use any Proprietary

Information in that Member's or Affiliate's business or any affiliated business

without the prior written consent of the other Member, and then only to the

extent specified in that consent. Consent may be granted or withheld at the sole

discretion of any Member. No Member shall contact any suppliers, customers,

employees, affiliates or associates to circumvent the purposes of this

provision.

 

C. MAINTENANCE OF CONFIDENTIALITY. Each Member shall

take all steps reasonably necessary or appropriate to maintain the strict

confidentiality of the Proprietary Information and to assure compliance with

this Agreement.

 

12.3 NON SOLICITATION. During the term of this Agreement and, with

respect to each Member, for a period two (2) years following the earlier of (A)

the date that the Member transfers all of its Membership Interest in the Company

or (B) the dissolution of the Company pursuant to ARTICLE X, the Member shall

not offer employment to any employee of the Company or of a Member, or their

Affiliates, or otherwise solicit or induce any employee of any of them to

terminate their employment, nor shall any of the Fleming's Principals act as an

officer, director, employee, partner, independent contractor, consultant,

principal, agent, proprietor, owner or part owner, or in any other capacity, for

any person or entity which solicits or otherwise induces any employee of the

Company or of a Member, or their Affiliates, to terminate their employment with

such entity.

 

12.4 REASONABLENESS OF RESTRICTIONS; REFORMATION; ENFORCEMENT. The

parties hereto recognize and acknowledge that the geographical and time

limitations contained in SECTION 12.1, 12.2 AND 12.3 hereof are reasonable and

properly required for the adequate protection of the Company's and Members'

interests. It is agreed by the parties hereto that if any portion of the

restrictions contained in SECTION 12.1, 12.2 OR 12.3 are held to be

unreasonable, arbitrary, or against public policy, then the restrictions shall

be considered divisible, both as to the time and to the geographical area, with

each month of the specified period being deemed a separate period of time and

each radius mile or other portion of the restricted territory being deemed a

separate geographical area, so that the longest period of time and largest

geographical area shall remain effective so long as the same is not

unreasonable, arbitrary, or against public policy. The parties hereto agree that

in the event any court of competent jurisdiction determines the specified period

or the specified geographical area of the restricted territory to be

unreasonable, arbitrary, or against public policy, a lesser time period or

geographical area which is the longest period of time and largest geographical

area determined to be reasonable, nonarbitrary, and not against public policy

may be enforced. If any of the covenants contained herein are violated and if

any court action is instituted by the Company or a Member to prevent or enjoin

such violation, then the period of time during which the business activities

shall be restricted, as provided in this Agreement, shall be lengthened by a

period of time equal to the period between the date of the breach of the terms

or covenants contained in this Agreement and the date on which the decree of the

court disposing of the issues upon the merits shall become final and not subject

to further appeal.

 

In the event it is necessary for the Company or a Member to initiate

legal proceedings to enforce, interpret or construe any of the covenants

contained in SECTION 12.1, 12.2 OR 12.3 hereof, the prevailing party in such

proceedings shall be entitled to receive from the non-prevailing party, in

addition to all other remedies, all costs, including reasonable attorneys' fees,

of such proceedings including appellate proceedings.

 

 

 

30

<PAGE> 37

 

 

12.5 SPECIFIC PERFORMANCE. The parties agree that a breach of any

of the covenants contained SECTION 12.1, 12.2 AND 12.3 hereof will cause

irreparable injury to the Company or a Member for which the remedy at law will

be inadequate and would be difficult to ascertain and therefore, in the event of

the breach or threatened breach of any such covenants, the Company or injured

Member shall be entitled, in addition to any other rights and remedies it may

have at law or in equity, to obtain an injunction to restrain any threatened or

actual activities in violation of any such covenants. The parties hereby consent

and agree that temporary and permanent injunctive relief may be granted in any

proceedings which might be brought to enforce any such covenants without the

necessity of proof of actual damages, and in the event the Company or Member

does apply for such an injunction, that the Company or Member has an adequate

remedy at law shall not be raised as a defense. ARTICLE XIII. REPRESENTATIONS

AND WARRANTIES

 

Each Member warrants and represents to the other Members (each of which

warranties and representations shall be deemed to be a continuing warranty and

representation and covenant that such warranties and representations shall

remain true and correct at all times during the term of the Company) that:

 

13.1 STATUS. If an entity, such Member is duly organized, validly

existing and in good standing under the laws of its state of formation, and each

has the power under its organizational documents and adequate authority to

execute, deliver, and perform this Agreement which upon such execution and

delivery will be a legal, valid, and binding obligation of such party

enforceable in accordance with its terms (subject only to the application of

bankruptcy, reorganization, insolvency or other similar laws regarding the

rights of creditors generally and the exercise of judicial discretion in

equity).

 

13.2 DUE AUTHORIZATION. The execution, delivery and performance of

this Agreement by a Member who is an entity have been duly authorized by all

requisite corporate, partnership or other organizational action of such party

and, as of the date hereof, do not require the consent or approval of any person

that has not been obtained and are not in contravention of or in conflict with

any term or provision of the organizational documents of such party.

 

13.3 OTHER AGREEMENTS AND VIOLATIONS OF LAW. The execution,

delivery and performance of this Agreement by such Member will not breach or

constitute a default under any agreement, indenture, undertaking or other

instrument to which such party or any affiliate of such party is a party or by

which any of such persons or any of their respective properties may be bound or

affected, which breach or default would have a materially adverse effect on the

financial condition of such Member or on the financial condition, properties or

operations of the Company. Other than as contemplated by this Agreement such

execution, delivery, and performance will not result in the creation or

imposition of (or the obligation to create or impose) any lien or encumbrance on

any of the Company property nor, to the knowledge of such party, constitute or

result in the violation of any law.

 

13.4 NO LITIGATION. There is no litigation or administrative or

other proceeding or tax audit pending, or, to the knowledge of such Member,

threatened against or affecting such Member, or any of its affiliates, or any of

their respective properties, which, if determined adversely, would have a

materially adverse effect on the financial condition, properties or operations

of the Company. As of the date hereof, neither such Member, nor, to the

knowledge of such Member, any affiliate of such Member is in default with

respect to any order, writ, injunction, decree or demand of any court of other

governmental or regulatory authority which might in any way adversely affect the

Company.

 

ARTICLE XIV. MISCELLANEOUS

 

 

 

31

<PAGE> 38

 

 

14.1 COMPLETE AGREEMENT. This Agreement and the Certificate

constitute the complete and exclusive statement of agreement among the Members

with respect to the subject matter herein and therein and replace and supersede

all prior written and oral agreements or statements by and among the Members or

any of them. No representation, statement, condition or warranty not contained

in this Agreement or the Certificate will be binding on the Members or

Management Committee or have any force or effect whatsoever. To the extent that

any provision of the Certificate conflicts with any provision of this Agreement,

the Certificate shall control.

 

14.2 CONSULTATION WITH ATTORNEY. Each Member has been advised to

consult with its own attorney regarding all legal matters concerning an

investment in the Company and the tax consequences of participating in the

Company, and has done so, to the extent it considers necessary.

 

14.3 T