UMBERTO HAUPPAUGE, LLC
OPERATING AGREEMENT (hereinafter called this “Agreement”) dated as of October 14, 1997, between SBARRO NEW HYDE PARK, INC., a New York corporation (referred to as “SBARRO”), and UMBERTO CORTEO, an individual residing at 1 Prince Path, Old Westbury, New York 11568 (referred to as “CORTEO” or “Umberto Corteo”). CORTEO and SBARRO are sometimes referred to collectively as “Members” and individually as “Member”.
WHEREAS, the parties have agreed to organize and operate a limited liability Company (“Company”) in accordance with the terms and subject to the conditions set forth in this Agreement; and
WHEREAS, the Members believe that entering into this Agreement will promote their mutual interests by providing for the governance of the Company; and imposing certain restrictions and obligations and certain rights and privileges with respect to the ownership and operation of the Company; and
WHEREAS, the parties contemplate the creation of a series of affiliated entities to engage in the ownership and operation of casual restaurants serving pizza and Italian food products (“Business”); and
WHEREAS, each other business entity is expected to be the owner and operator of individual restaurants engaged in the Business (individually “Restaurant” and collectively “Restaurants”); and
WHEREAS, the parties contemplate that each Restaurant to be developed will be a separate, affiliated entity, which may be a corporation, limited liability company (“LLC”), joint venture or otherwise to be owned by the Company or the Members (each a “Subsidiary” and collectively “Subsidiaries”); and
WHEREAS, a Subsidiary is expected to be the licensee of the service mark and other intellectual property rights used in the operation of the Business; and
WHEREAS, the parties agree that the operation of the Company and each affiliate or Subsidiary will be governed by this Agreement, or if necessary or desirable, by an agreement providing for rights, liabilities and control which are substantially identical to those contained in this Agreement; and
WHEREAS, the Members believe that entering into this Agreement will promote their mutual interests by arranging for the capitalization of the Company and Subsidiaries as provided herein thus enabling the Company and/or Affiliates or Subsidiaries to operate the Business; providing for the governance of the Company and/or Affiliates or Subsidiaries; and imposing certain restrictions and obligations and certain rights and privileges on the ownership and operation of the Company and Subsidiaries.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein set forth, the parties hereto agree as follows:
SECTION 1. Definitions
Wherever used in this Agreement, the following capitalized terms shall have the meanings respectively assigned to them below:
(a) “Business” shall mean the operation of a restaurant business, including as a licensor of restaurants, which operates or franchises a food service business, promoting or similarly selling pizza and Italian food items.
(b) “Encumbrance” shall mean any mortgage, pledge, negative pledge, security interest, hypothecation, lien, possibility of reversion, restriction on voting or use, claim, option, lease, charge, right of first refusal, restrictive covenant or other third party interest commonly known as an encumbrance; and “Encumber” shall mean the creation of any Encumbrance.
(c) “Legal Representative” shall mean any attorney-in-fact, executor, administrator, trustee, committee, receiver, pledgee, guardian or conservator of a Member.
(d) “Notice of Purchase” shall mean the notice required by this Agreement to be given by a Member electing to purchase any Offered Interest from a Selling Member.
(e) “Notice of Third Party Offer” shall mean the notice required by this Agreement to be given by a Selling Member in connection with a proposed sale under a Third Party Offer.
(f) “Offered Interest” shall mean the portion of an Interest owned or held by a Member which the Member wishes to Transfer or Encumber.
(g) “Private Sale Price” shall mean the price per percentage Interest to be paid by the Third Party at the time of closing of the Transfer in the Third Party Offer.
(h) “Members” shall mean any one or more of SBARRO, CORTEO or a person or entity who at any time succeeds to the Interest of an original Member after compliance with, or as permitted by, Section 11.
(i) “Third Party Offer” shall mean a bona fide offer made in writing to a Selling Member by any firm, entity or other person (any such firm, entity or other person being referred to as a “Third Party”) to purchase an Interest in a private sale from the Selling
Member, which offer (i) must provide that the purchase price is to be paid entirely in cash, in United States currency only, at the time of the closing of the Transfer, (ii) must have been accepted by such Selling Member (subject, however, to the right of the other Members or the Companies to purchase some or all of such Interest pursuant to the terms of this Agreement) and (iii) must also provide that such Transfer is to be consummated only within the time parameters described herein for such contemplated private sale.
(j) “Transfer” shall mean any sale, transfer, assignment, gift, seizure under levy or attachment or execution, disposition to a Legal Representative in bankruptcy or in an assignment for the benefit of creditors or otherwise, bequest by will or distribution under the laws of intestacy (in which event an attempted “Transfer” shall be deemed to have occurred on the date of death, foreclosure or other disposition, whether voluntarily or involuntarily, including by operation of law) or other transaction commonly known as a transfer (including any transfer of any limited or partial right or interest), but shall not include an Encumbrance.