COMPANY X, LLC OPERATING AGREEMENT

THIS OPERATING AGREEMENT is as of made this _____ day of January, 2012 by and between JOSEPH POPEYE (“Popeye”) and OLIVE OYL (“Olive Oyl,” and together with Popeye, hereinafter referred to individually as “Member” and collectively as “Members”). BACKGROUND Popeye has a 50% membership interest in Shiver Me Timbers, LLC, a New Jersey limited liability company (the “Company”). Pursuant to a Membership Interest Purchase Agreement dated as of December 31, 2011 Olive Oyl is purchasing a 50% in the Company from Bluto. In connection with such purchase by Olive Oyl, the Operating Agreement for the Company between Popeye and Bluto is terminating and the Members desire to enter into this Operating Agreement to govern their relationship as equal members in the Company. NOW, THEREFORE, in consideration of the premises and of the mutual covenants, conditions and agreements herein contained, the parties hereto, each intending to be legally bound hereby, agree as follows: 1. Formation; Name; and Address. The Company was formed on May 12, 2004 as a New Jersey limited liability company under the New Jersey Limited Liability Company Act (the “Act”). The Company’s address is _________, Spinachville, NJ. 2. Purpose. The purpose of the Company is to own and operate a health and fitness club known as Spinach Athletic Center, engage in any activities incidental or related thereto and engage in any other lawful business and activity permitted to be engaged in by a limited liability company pursuant to the Act or other laws of any other jurisdiction in which the Company may conduct its business. 3. Management of the Company.

(a) Management by Members. Management and control of the business and affairs of the Company shall be vested in the Members. (b) Voting. Each Member shall vote in proportion to his or her Membership Interest (as hereinafter defined). Except with respect to “Major Decisions” as set forth in Section 3(c) below, all decisions shall be made by the consent of Members holding at least a majority of the Membership Interests.

(c) Major Decisions. (c) New Members.000. or require additional capital contributions of the Members. borrow money. No Member shall be entitled to demand or receive the return of his or her capital contribution. (vii) (viii) (ix) set guaranteed payments or other compensation to the Members. admit a new Member. In the event the Members unanimously determine to require capital contributions. and hereby consents to. (ii) (iii) (iv) (v) merge or otherwise combine with another entity. lease or otherwise. voluntarily dissolve or liquidate the Company. sell or otherwise transfer all or substantially all of the assets of the (vi) acquire by purchase. any and all decisions made by the Members in accordance with the terms of this Agreement. Membership Interests and Capital Contributions. the contributions of the other Members shall be considered a loan to the Company repayable before any distributions are made to Members with interest on the outstanding balance accruing at 10% per annum. and the Membership Interests of the then-existing Members shall be adjusted accordingly. the payment of any value for his -2- . (d) Binding Effect of Decisions. 4. No Return of Capital. Each Member shall be bound by. In the event the Members unanimously determine to admit a new Member. The membership or percentage interest of each Member (a “Membership Interest”) is set forth on Exhibit “A” attached hereto and made a part hereof. (a) Membership Interests. (d) No Interest. and a Member fails to make any such capital contribution and continues such failure for five days after receipt of written notice from the Company of such failure. acquire by purchase. lease or otherwise any real property. equipment or other personal property worth in excess of $1. The term Major Decisions shall include any decision to: (i) Company. (b) Capital Contributions. All “Major Decisions” shall require the unanimous approval of the Members. such Member’s Membership Interest shall be determined by the unanimous agreement of the then-existing Members.

including. at -3- . (ii) Notwithstanding the provisions of Section 5(b)(i). relating to a “qualified income offset. (ii) the fair market value of property contributed by such Member to the Company (net of the liabilities secured by such contributed property that the Company assumes or liabilities to which such property is subject). those provisions relating to allocations of income and deductions attributable to non-recourse debt and Member non-recourse debt.704-l(b). all items of income. A capital account (“Capital Account”) shall be established and maintained for each Member in accordance with the requirements of the Internal Revenue Code of 1986 (the “Code”) Section 704(b) and the regulations promulgated thereunder (the “Regulations”).” and Regulations Section 1. 5. shall be made in a manner. gain. Each Member’s Capital Account shall be increased by (i) the amount of money contributed as equity capital by such Member to the Company. Allocations that would conform to those required by a “minimum gain chargeback” (as defined in Regulations Section 1. income and gain of the Company pursuant to Section 6 hereof. and any remaining Net Losses for such fiscal period shall be allocated among the Members in accordance with their respective Membership Interests. (y) the fair market value of the property distributed to such Member by the Company (net of liabilities secured by such distributed property that such Member assumes or liabilities to which such property is subject). relating to the chargeback on account of a decrease in minimum gain attributable to Member non-recourse debt. Net Losses for any fiscal period shall be allocated among those Members having a positive balance in their Capital Accounts in proportion to and to the extent of such positive Capital Account balances.704-2(e). (a) Net Income or Net Loss. as determined by the Company’s accountants in accordance with Code Section 703(a) (for this purpose. and (z) allocations to such Member of Net Losses.704-1(b)(2)(ii)(d). other than items of income or loss specially allocated pursuant to this Agreement. Computation and Allocation of Profits and Losses. Net Income or Net Loss and all tax credits of the Company for each fiscal period shall be allocated among the Members in accordance with their respective Membership Interests. (i) Except as otherwise provided in this Section 5. an amount equal to the Company’s taxable income or loss for such year or period. (iii) Allocations of Company Net Income or Net Loss (or items thereof) shall be made consistent with the requirements of Regulations Section 1. for each fiscal year or other period. “Net Income” and “Net Loss” means. (e) Capital Accounts. loss or deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in Net Income or Net Loss). and (iii) allocations to such Member of Net Income. without limitation.704-2(f)) in addition to the requirements of Regulations Section 1. with the adjustments required to comply with the Capital Account maintenance rules of Regulations Section 1. deductions and expenditures of the Company pursuant to Section 6 hereof.704-2(i)(4).Membership Interest or any of the Company’s assets except as specifically provided in this Agreement. and shall be decreased by (x) the amount of money distributed to such Member by the Company. (b) Allocation of Net Income or Net Loss Generally.

amortization. Distributions. From time to time. other dispositions financings and refinancings or any other source. and in the amounts consistent with those provisions. exchange or other disposition. (B) Second. amount or recipient of any distributions which may have been made with respect to such transferred interests. -4- . revenues and funds received by the Company from all sources. cost recovery deductions or similar allowances. eminent domain. if any. (ii) all cash expenditures incurred incident to the normal operation of the Company. (C) Losses from a Capital Event shall be allocated first among those Members having positive Capital Account balances in proportion to and to the extent of such losses and. of all or substantially all of the assets of the Company (a “Capital Event”) shall be allocated to produce positive capital account balances for the Members in the following order and to the following extent: (A) First. (c) Allocation in the Event of the Transfer of an Interest. would be allocated to the Members in accordance with their respective Membership Interests.704-1(b)(4)(ii). to each Member having a deficit balance in its Capital Account in amount equal to such deficit balance. (b) Distributions of Distributable Cash. Either allocation shall be made without regard to the date. sales. (a) Distributable Cash. and (iii) such reserves as the Members deem reasonably necessary to the proper operation of the Company’s business. Credits shall be allocated as provided in Treasury Regulation Section 1. to the Members in accordance with their respective Membership Interests. thereafter. Distributable Cash shall not be reduced by depreciation. capital improvements. the balance. whether by way of condemnation. “Distributable Cash” shall mean the gross cash proceeds. plus any reduction in reserves previously established. guaranteed payments and contingencies. replacements. provided however. but no less frequently than once a year. that the Company shall allocate the Net Income or Net Loss by closing the Company’s books immediately after the transfer of any interest if requested by the transferor or the transferee within 45 days after the close of the taxable year in which the transfer occurred. the Company shall distribute the Distributable Cash. (iv) Gain from the sale. if any. there shall be allocated to each Member who held the transferred interest during the fiscal year of transfer the product of (i) the Company’s Net Income or Net Loss allocable to such transferred interest for such fiscal year and (ii) a fraction. the numerator of which is the number of days such Member held the transferred interest during such fiscal year and the denominator of which is the total number of days in such fiscal year. including but not limited to expenses. If all or part of a Membership Interest in the Company is transferred in accordance with the terms hereof. less the sum of the following to the extent paid or set aside by the Company: (i) all principal and interest payments on indebtedness of the Company.a time. 6. receipt of casualty insurance proceeds (other than business interruption insurance proceeds) or otherwise. to the Members based upon their respective Membership Interests. Distributable Cash shall include funds received from Company operations.

the Company shall distribute to each Member on a quarterly basis so as to enable the Members to make timely estimated tax payments. to the extent that the Company has available cash. shall not be liable for the amount of the distribution. A Member who receives a distribution in violation of this Section 6(d). in its sole discretion. for the amount of the distribution after the expiration of three years from the date of the distribution unless an action to recover the distribution from the Member is commenced prior to the expiration of the three-year period and an adjudication of liability against the Member is made in such action. Notwithstanding anything herein to the contrary. the sum of (I) the highest marginal federal income tax rate assessable for such year on the ordinary income of individual taxpayers and (II) the highest combined marginal state and local income tax rates assessable for such year on the ordinary income of individual taxpayers residing within the State of New Jersey. all liabilities of the Company. and who knew at the time of the distribution that the distribution violated this Section 6(d). and liabilities for which the recourse of creditors is limited to specific property of the Company. This Section 6 does not govern payments made by the Company to the Members to the extent such payments constitute either nonpartner capacity payments within the meaning of Code Section 707(a)(1) or guaranteed payments within the meaning of Code Section 707(c). other than liabilities to the Members on account of their Membership Interests. 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 the property exceeds that liability. (e) Guaranteed Payments.(c) Tax Distributions. for any fiscal year. shall be liable to the Company for the amount of the distribution. Regardless of whether any distributions are made pursuant to Section 6(b). Distributions pursuant to this Section 6(c) shall be made to the Members pro rata in proportion to the estimated amount of taxable income to be allocated to each Member. A Member who receives a distribution in violation of this Section 6(d). or any other applicable law. after giving effect to the federal income tax benefit derived from such state and local taxes based on the rate determined in the preceding clause (I). less the amount of any tax distributions made pursuant to this Section 6(c) to such Member for any prior quarter of such fiscal year. “Combined Marginal Rate” shall mean. the Company shall not make a distribution to a Member to the extent that. at the time of the distribution. The Company may pay compensation to one or more of the Members as unanimously determined by the Members as a guaranteed payment pursuant to Code Section 707(c). and who did not know at the time of the distribution that the distribution violated this Section 6(d). shall determine or as set forth. and (ii) the “Combined Marginal Rate” (as defined below) for the current fiscal year. -5- . A Member who receives a distribution from the Company shall have no liability hereunder or under the Act. exceed the fair value of the assets of the Company. (d) Limitation Upon Distributions. The payment may be made periodically during the fiscal year as the Manager. an amount in cash equal to the product of: (i) the estimated amount of the Company taxable income for the current fiscal year through the preceding fiscal quarter. after giving effect to the distribution.

but not less than all of the Offered Interest. or if no such value is set forth. a “Permitted Transferee”). sale or otherwise. (i) If a Member shall at any time receive a bona fide written offer to purchase all or any portion of such Member’s Membership Interest (the “Offer”) from a person that is not a Permitted Transferee of such Member (a “Third Party”) which such Member desires to accept. at the fair market value). transfer. at the price and upon the terms of the Offer. the Offer. donate or otherwise dispose of. (a) Restrictions on Transfer. assign. or (ii) any inter vivos or testamentary trust or trusts exclusively for the benefit of his or her spouse or descendents (each. If the Offering Member does not sell the Offered Interest within such 90-day period. without needing to obtain the consent of or give prior notice to the Company or the other Member. (i) If the Company does elect to purchase the Offered Interest within the allotted 30-day period. or pledge. transfer all or any part of his Membership Interest by will. devise. whether voluntary or involuntary. Transfer of Membership Interests. or sell. (ii) If the Company does not elect to purchase all of the Offered Interest within the allotted 30-day period. if so assigned) fails to consummate such transaction within 90 days after the date the -6- . the Company may substitute cash for such stock or other securities at the value of such stock or securities as set forth in the Offer. then the Offering Member shall be obligated to sell and the Company (which right the Company may assign to the remaining Member) shall be obligated to purchase the Offered Interest at the price. The Offer Notice shall constitute an offer by the Offering Member to the Company to purchase all. The Company shall have the right. give. to (i) his or her spouse or descendents. the price and the other terms and conditions upon which the purchase of the Offered Interest is to be made.7. exercisable within 30 days after the Offer Notice is given. to purchase all. bequeath. If the Company (or the remaining Member. such Member (the “Offering Member”) shall give written notice of the Offer (the “Offer Notice”) to the other Member setting forth its date. provided that. in any way or manner whatsoever. (c) Right of First Refusal of Third Party Offer. except as expressly provided in this Agreement. as a condition to the transfer becoming effective. and upon the terms of. but not less than all. A Member may. the Offering Member shall not thereafter sell the Offered Interest without first sending another Offer Notice to the Member in the same manner described above. the Permitted Transferee must agree in writing to be bound by and subject to all of the terms and conditions of this Agreement. of the Offered Interest at the same price and upon the same terms as those set forth in the Offer (except that if the Offer provides for the payment of stock or other securities of the Third Party or other entity in consideration of the Offered Interest. (b) Permitted Transfers. the amount of Membership Interest that is the subject of the Offer (the “Offered Interest”). then the Offering Member may sell the Offered Interest to the Third Party within 90 days after the date the Offering Member gave the Offer Notice to the other Member. A purported transfer of any Membership Interest not in conformity with this Agreement shall be null and void and of no effect. deposit or otherwise encumber. No Member shall resign. any of his or her Membership Interest. gift.

immediately upon such acquisition. has been executed by such Third Party. or a joinder hereto. then the Company shall cause a new valuation to be performed as described in Section 7(d)(viii). or (B) the amount of insurance proceeds from any policy (or policies) the Company may have on the life of the Deceased Member pursuant to Section 7(d)(i) (the “Insurance Proceeds”). (i) The Company shall have the right. however. and the balance of the Purchase Price. and the executor or other personal representative of the estate of the Deceased Member (the “Estate”) shall have the obligation to sell. Such insurance shall be purchased from an insurance company or insurance companies mutually satisfactory to the Members. (ii) The purchase price (the "Purchase Price") to be paid for a Deceased Member’s Membership Interest shall be the greater of (A) the Agreed Value (as defined in Section 7(d)(vii) below) as of the date of death of the Deceased Member. the Company shall pay to the Estate at settlement an amount equal to the greater of (I) 20% of the Purchase Price or (II) the Insurance Proceeds. (iii) Any Third Party who acquires a Membership Interest shall. Such insurance shall be separate and apart from any key-man insurance the Company may purchase on the life of a Member. and such new valuation shall be the Agreed Value. to purchase and maintain insurance on the lives of each of the Members.Offering Notice was given (other than due to the actions or inactions of the Offering Member). but not less than all. If the most recent valuation from which the Agreed Value was determined is dated a date more than 15 months prior to the date of death. the Offering Member may sell the Offered Interest to the Third Party pursuant to the Offer. shall be paid in 20 successive equal quarter-annual installments of principal and interest commencing on -7The terms of payment of the Purchase Price shall be as . to sign this Agreement shall not relieve such Third Party from any obligations hereunder. (d) Obligation to Purchase upon the Death of a Member. Failure or refusal. (iii) follows: (A) If the Company receives the Insurance Proceeds within 60 days after the date of the Deceased Member’s death. Upon the death of a Member (in either case. naming itself as beneficiary of such insurance. all. the "Deceased Member"). (ii) The Offering Member may not sell the Offered Interest at a price or upon terms that differ from those set forth in the Offer without first reoffering the Offered Units to the Company pursuant to the procedures set forth above. the Company shall have the obligation to purchase. if any. multiplied by the percentage represented by the Deceased Member’s Membership Interest at such date. in such amounts as the Members shall unanimously agree to be appropriate to fund all or a portion of a purchase under this Section. become bound by the terms of this Agreement and the transfer of the Membership Interest shall not be made on the books of the Company until a copy of this Agreement. upon the unanimous consent of the Members. of the Deceased Member’s Membership Interest at the price and upon the terms set forth below.

the such note or any such other promissory note pertaining to such subordination as the Company’s lenders or bonding companies may request from time to time. and such payment shall applied against the installments in the inverse order of maturity. and if and when Insurance Proceeds are received. the Estate shall deliver an assignment evidencing the transfer of the Membership Interest to the Company. (vi) The obligation evidenced by such note shall be secured by a pledge of the Deceased Member’s Membership Interest. and continuing of the first date of each of the 19 successive calendar quarters thereafter. Each of the Members agrees that his or her Estate will execute such subordination agreements to that effect as the Company’s lenders or bonding companies may request from time to time and agrees to such amendments to. (B) If the Company does not receive the Insurance Proceeds within the 120-day period. claims and encumbrances (other than the lien of the Estate as described above). shall execute such documents as may reasonably be requested by the Estate to grant and evidence such pledge. the Company shall pay them to the Estate. The transfer of such Membership Interest be free and clear of all liens. or (C) within 60 days after the date of the Deceased Member’s death if the Company does not own insurance on the life of the Deceased Member. the Company shall pay to the Estate at settlement an amount equal to 20% of the Purchase Price and the balance of the Purchase Price shall be paid in 20 successive equal quarterannual installments of principal and interest commencing on the first date of the first calendar quarter after the settlement date. as amended.the first date of the first calendar quarter after the settlement date. as maker of the such note. (vii) At settlement. The Company. (iv) Settlement for the purchase and sale of the Deceased Member’s Membership Interest shall occur: (A) within 20 days after the receipt by the Company of the Insurance Proceeds if such proceeds are received within 60 days after the date of death. and continuing of the first date of each of the 19 successive calendar quarters thereafter. or legends on. or if no Insurance Proceeds are to be collected. (C) The interest rate on the quarter annual installments shall be at the lowest applicable Federal rate as defined in Section 1274(d) of the Internal Revenue Code of 1986. -8- . The Company and the Members agree that the Company will not permit payments on such note to be subordinated to the Company's lenders or bonding companies except to the extent that such distributions can be prohibited in the event of a payment default by the Company on its loans. or (B) within 20 days after the expiration of the 60-day period if the Insurance Proceeds are not received within the 60-day period. (v) The portion of the Purchase Price payable over the 20 quarterly installment shall be evidenced by a promissory note that reasonably reflects the term of this Agreement.

each side shall select one doctor and those two doctors shall select a third to serve as the independent medical doctor. (f) Triggered Transfer Between Members. The most recent valuation of the Company using this methodology shall be the "Agreed Value. the Disabled Member shall be obligated to sell and the Company shall be obligated to buy all of the Disabled Member’s Membership Interest at the Agreed Value as of the date of exercise. the date of a Deceased Member’s death). and upon the exercise of such right. The Company and the Members covenant and agree to use their best efforts to determine the value of the Company as of December 31st of each year no later than February 15th of the following year. and in the same manner as described in Sections 7(d)(iii) through 7(d)(vii) within 60 days of the date the Company gives the Disabled Member the written notice described above. The Disabled Member shall continue to receive his or her then current guaranteed payment during the Disability Period. the prior Agreed Value shall be increased by [3%] for each full 15 month period since the date the last Agreed Value was determined. to purchase all. but not less than all. The Disabled Member shall recuse himself or herself from any vote as a member of the Company taken to decide whether the Company shall exercise its option to purchase the Disabled Member’s Membership Interest. As of the date of this Agreement. the “Triggering Member”) may. such Member is unable to properly perform a significant portion of the duties performed by him or her for the Company immediately prior to the inception of the disability and such disability continues for a period of 180 consecutive days. (e) Right to Purchase upon Disability of Member. trigger a Member buy-out by giving written notice (the “Buy-Out Notice”) to the other Member (the “Recipient Offer”) of an offer of a price (the “Buy-Out Price”) by which the Triggering Member would be willing to either (A) purchase all of the Recipient Member’s Membership Interest or (B) -9- ." If the most recent valuation is dated a date more than 15 months prior to a date on which the Agreed Value is to be determined (i. exercisable at any time.000. in the opinion of an independent medical doctor mutually agreeable to the Company and the affected Member or his or her personal representative. If the parties are unable to agree on an independent medical doctor. due to physical or mental reasons. the Company shall have the right. (i) If a Member becomes Disabled (as defined in Section 7(e) (iii) below).(viii) The "Agreed Value" means the value of the Company as determined by this Section 7(d)(viii). after such Member has become Disabled. and from time to time. and such new valuation shall be the "Agreed Value" in respect of such date. the Agreed Value is $400. it must send written notice to the Disabled Member or his or her personal representative of its intent to exercise such right. for any reason. of the Membership Interest of such Member (the “Disabled Member”). (i) At any time after the first anniversary date of the date of this Agreement. (ii) If the Company desires to exercise such right.e. (iii) A Member shall be "Disabled" if. but not the obligation. a Member (in such instance. or a total of 225 days in any 365-day period (the "Disability Period").

the Trigging Member may elect to purchase the Recipient Member’s Membership Interest at the Buy-Out Price by giving the Recipient Member notice of such election (the “Reverse Election Notice”) within 30 days after the allotted 90-day period expires. . which right shall be exercisable by giving the Triggering Member notice of the Recipient Member’s election (the “Election Notice”) within 30 days after the Buy-Out Notice is given is given. (D) The portion of the purchase price payable over the 20 quarterly installment shall be evidenced by a promissory note that reasonably reflects the term of this Agreement. the terms of payment of the buy-out shall be as follows: (A) Settlement shall occur within 60 days after the Election Notice or Reversed Election Notice. the Recipient Member may purchase the Triggering Member’s Membership Interest at one-half of the Buy-Out Price by giving the Triggering Member a Reverse Election Notice within 30 days after the allotted 90-day period expires. (iii) If the Recipient Member elects within the allotted 30-day period to sell his or her Membership Interest to the Triggering Member or fails to send an Election Notice within the allotted 30-day period. (ii) If the Recipient Member elects within the allotted 30-day period to purchase the Triggering Member’s Membership Interest. as the case may be.10 - . then the Triggering Member shall be obligated to purchase and the Recipient Member shall be obligated to sell all of the Recipient Member’s Membership Interest at the Buy-Out Price. then the Triggering Member shall be obligated to sell and the Recipient Member shall be obligated to purchase all of the Triggering Member’s Membership Interest at the Buy-Out Price. If the Recipient Member fails to consummate such transaction within 90 days after the date the Election Notice was given (other than due to the actions or inactions of the Triggering Member). The Recipient Member shall have the right to elect to either sell all of his or her Membership Interest to the Triggering Member at the Buy-Out Price or purchase all of the Triggering Member’s Membership Interest at the BuyOut Price. (B) The purchasing Member shall pay to the selling Member at settlement an amount equal to 20% of the purchase price and the balance of the purchase price shall be paid in 20 successive equal quarter-annual installments of principal and interest commencing on the first date of the first calendar quarter after the settlement date. has been given. as amended. If the Triggering Member fails to consummate such transaction within 90 days after the date the Election Notice was given (other than due to the actions or inactions of the Recipient Member). (iv) For any purchase and sale pursuant to Sections 7(f)(ii) or (iii).sell all of his or her Membership Interest to the Recipient Member. and continuing of the first date of each of the 19 successive calendar quarters thereafter. (C) The interest rate on the quarter annual installments shall be at the lowest applicable Federal rate as defined in Section 1274(d) of the Internal Revenue Code of 1986.

upon receipt of an undertaking by or on behalf of the Indemnified Person to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Company as authorized hereby. as maker of the such note. as the case may be (an “Indemnified Person”). or (iii) the entry of a decree of judicial dissolution under the Act. no person that is or was a Member or employee of the Company shall be entitled to indemnification hereunder. (a) Events of Dissolution. Dissolution. and the receipt of the proceeds of such disposition. to the fullest extent now or hereafter permitted to be provided by the Act. suit or proceeding. fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action. claims and encumbrances (other than the lien of the selling Member as described above). 9. or employee of the Company. to indemnify any person that is or was an employee of the Company. against expenses (including attorneys’ fees). Expenses (including attorneys’ fees) incurred by an Indemnified Person in defending a civil. or other disposition by the Company of all or substantially all of the Company’s assets. Indemnification. judgments. if it is judicially determined that such person is guilty of gross negligence. Upon an Event of Dissolution. whether civil. by reason of the fact that he or she is or was a Member. suit or proceeding. Notwithstanding the foregoing. The purchasing Member. The Company shall continue until dissolved upon the earliest to occur of the following events (the “Events of Dissolution”): (i) the sale. (F) At settlement. the Members shall take full account of the assets and liabilities of the Company as of the date of such Event of Dissolution and shall proceed with reasonable promptness to liquidate the Company’s assets and . may be paid by the Company in advance of the final disposition of such action. The Company shall indemnify any person that is or was a Member and shall have the power. the unanimous consent of the Members to terminate and dissolve (b) Liquidating Distributions. criminal. criminal. bad faith. administrative or investigative action.(E) The obligation evidenced by such note shall be secured by a pledge of the selling Member’s Membership Interest. shall execute such documents as may reasonably be requested by the selling Member to grant and evidence such pledge. fraud or willful misconduct in the discharge of such person’s duties to the Company. administrative or investigative. suit or proceeding. 8. or (ii) the Company. The transfer of such Membership Interest be free and clear of all liens. and such person shall not be deemed an Indemnified Person. but not the obligation. suit or proceeding for which the Indemnified Person could be entitled to indemnification under this Section 8. the selling Member shall deliver an assignment evidencing the transfer of the Membership Interest to the purchasing Member.11 - . exchange. in each case who was or is a party or is threatened to be made a party to any threatened. pending or completed action.

Olive Oyl hereby is designated as the “tax matters partner” of the Company. and make copies of the books and records of the Company. 11. to examine. shall be distributed to the Members in accordance with their Membership Interests. or due provisions for. Assets remaining after such payments and provisions have been made. after payment of. and Reports.12 - . The books and records of the Company shall be maintained on the method of accounting chosen by the Members and shall show all items of income and expense. review. and obligations of the Company. and for a period of two years thereafter. shall have the right at all times during usual business hours and upon reasonable notice. accountant and other advisors. review. or otherwise engage in the business of operating a health and fitness or athletic club within 100 miles of any Company facility. Tax Matters Member. and the Certificate of Formation shall have been cancelled in the manner provided by the Act. . or as a member. shall have been distributed to the Members as set forth above. shareholder (other than as the holder of five percent or less of an exchange listed stock) or other owner. The Company shall terminate when all of the assets of the Company have been converted into cash. he or she shall not. Pursuant to Code Section 6231(a)(7). including all items relating to such liquidation and all reserves that the Members determine. Each Member shall maintain all information relating to the Company contained in such reports and books and records in strict confidence. All information pertaining to Net Income and Net Loss of the Company needed by the Members for income tax purposes shall be prepared by the Company’s independent certified public accountants. all debts. in their discretion. Each Member hereby covenants and agrees that: (a) Non-Competition. (c) Termination. Each Member and his or her respective attorney. Restrictive Covenants. or as an agent for any person or entity other than the Company. The cash proceeds from such liquidation. (c) Books and Records. can or will no longer serve as “tax matters partner.terminate its business in accordance with the Act. or joint venture. audit and copying. shall be applied first to the payment of the Company’s debts and obligations. All books and records of the Company shall be kept at the Company principal office. to be appropriate. During such time that such Member shall be a member of the Company. 12. together with any other net assets of the Company. either for his or her own account. audit. audit or copying shall bear all of the expenses incurred by such Member and the Company in any such examination. partner. a new tax matters partner” shall be selected by the Members. directly or indirectly. (b) Accounting Method. review. The Company shall keep full and accurate books and records of the Company. liabilities. the net proceeds therefrom. In the event she. as well as any other liquid assets of the Company. Accounting and Tax Matters (a) Fiscal Year. and furnished to each Member after the end of each fiscal year of the Company by no later than March 30 of the following year. The Company’s fiscal year shall be the calendar year. Each Member making such examination. 10. for any reason.

Liability of Members. trade secrets. contracts or other obligations of the Company and each Member’s liability shall be further limited by the Act. are reasonable and necessary in order to protect the legitimate interests of the Company. liabilities. in view of the nature of the business in which the Company will be engaged.13 - . profits and other benefits arising directly from such violation. (c) two business days after having been sent by registered or certified mail. Each Member hereby acknowledges that the restrictions contained in this Section 11.(b) Non-Disclosure. Each Member therefore acknowledges that. requests and other communications to any party hereto or to the Company required or permitted hereunder must be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified. procedures. said covenants and restrictions of this Agreement shall nevertheless be effective for such period of time and for such area as may be determined to be reasonable by a court of competent jurisdiction. and that any violation thereof would result in irreparable injuries to the Company. (bi) when sent by confirmed email or facsimile if sent during normal business hours of the recipient. If for any reason any section or portion of a section of this Section 10 shall be invalid or unenforceable. with written verification of receipt. preliminary and permanent injunctive relief from the such Member as well as damages and an equitable accounting of all earnings. marketing and pricing policies. in the event of a violation of any of these restrictions by a Member. such Member shall not disclose. it is agreed that the same shall not affect any other section or portion thereof. return receipt requested. research or development projects or results not in the public domain. business policies. then on the next business day. Except as expressly set forth herein. and that if such invalidity or enforceability is due to the unreasonableness of the time or geographical area covered by the said covenants and restrictions. communicate or divulge to any person or entity other than the Company. the Company shall be entitled to obtain from any court of competent jurisdiction emergency. or (d) one business day after deposit with a nationally recognized overnight courier. All communications shall be sent to the party to be notified at the following addressed: If to the Company: Shiver Me Timbers. LLC Fax: If to Popeye: Joseph Popeye Fax: . the Members shall have no liability for the debts. if not. techniques. 14. any confidential information regarding the business methods. specifying next day delivery. At all times from and after the day hereof. Notices. (c) Remedies. postage prepaid. All notices. or other knowledge or processes used or developed by the Company in or for its business or any other confidential information relating to or dealing with the business operations or activities of the Company. 13. but the remaining covenants and restrictions or portions thereof shall remain in full force and effect. which rights will be cumulative and in addition to any other rights or remedies to which the Company may be entitled from such Member.

The provisions of this Agreement are independent of and separable from each other. successors and assigns. IN WITNESS WHEREOF. JOSEPH POPEYE OLIVE OYL . This Agreement contains the entire understanding among the parties hereto with respect to the subject matter hereof. 16. Binding Effect. The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof. inducements or conditions. Provisions Separable. This Agreement shall be governed by and construed in accordance with the substantive laws of the State of New Jersey without regard to any conflict of law provisions. 18. the undersigned have hereunto set their hands and seals as of the day and year first above written. Entire Agreement. 17.14 - . express of implied. except as herein contained. Controlling Law. 15. and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part. oral or written. This Agreement shall be legally binding upon the parties and their respective heirs. and supersedes all prior and contemporaneous agreements and understandings.If to Olive Oyl: Olive Oyl Fax: Any party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this Section for the giving of notice.

15 - .EXHIBIT “A” Membership Interests Member Joseph Popeye Olive Oyl Membership Interest 50% 50% .

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