FAMOUS DAVES OF AMERICA INC
FUMUME, LLC OPERATING AGREEMENT
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>3
<FILENAME>c64201ex10-1.txt
<DESCRIPTION>FUMUME, LLC OPERATING AGREEMENT
<TEXT>
<PAGE>   1
                                                                    Exhibit 10.1


                               OPERATING AGREEMENT
                                       OF
                                   FUMUME, LLC


         THIS OPERATING AGREEMENT is entered into this 18th day of May, 2001
and shall become effective on the Effective Date (as defined below), by and
among the undersigned (the "Members") identified on SCHEDULE A attached hereto
and hereby made a part hereof, initially Lifestyle Ventures, LLC, a Tennessee
limited liability company ("Lifestyle"), H&H, Holding Company, LLC, a Delaware
limited liability company ("H&H"), Famous Dave's Ribs-U, Inc., a Minnesota
corporation ("FDU"), and Jack Belz ("Belz"), and all other Persons who may
hereafter become Members (as defined below) with respect to FUMUME, LLC, a
Delaware limited liability company (the "Company").

                                  INTRODUCTION

         A. The Members named above have organized the Company as of the
Effective Date pursuant to the Delaware Limited Liability Company Act, 6 Del. C.
Sections 18-101, et. seq. (the "LLC Act") by filing a Certificate of Formation
with the Delaware Secretary of State.

         B. The Members constitute all of the initial members of the Company.

         C. 6 Del. C. Sections 18-101, et. seq. of the LLC Act authorizes a
limited liability company agreement.

         D. Each Member desires to enter into a limited liability company
agreement, in the form of this Agreement, with respect to the Company.

         NOW, THEREFORE, in consideration of the foregoing facts which are
incorporated herein by reference, the mutual promises of the Members, and the
mutual benefits to be gained by the performance hereof, the Members hereby agree
as follows:

                                    AGREEMENT

                                    ARTICLE 1
                     FORMATION OF LIMITED LIABILITY COMPANY

         1.1 Formation.

                  1.l.1 As of the Effective Date, the initial Members formed the
         Company as a limited liability company under the provisions of the LLC
         Act. The Company's business shall be conducted to comply with the LLC
         Act.

                  1.1.2 A copy of the Certificate is attached hereto as Schedule
         1.1.2 and hereby made a part hereof. The Company's Members shall
         promptly cause to be executed and so filed any amendments to the
         Certificate that may be adopted by the Members or required by law.
<PAGE>   2
                  1.1.3 Except as otherwise provided in this Agreement and the
         Certificate, the rights and liabilities of the Members shall be as
         provided in the LLC Act. The purposes of the Company are set forth in
         Article 4.

         1.2 Term. The term of the Company shall begin on the Effective Date and
continue perpetually unless and until the Company is dissolved upon a
Liquidating Event as provided in ARTICLE 15 herein and its Certificate is
cancelled pursuant to 6 Del. C. Sections 18-201 and 203 or the corresponding
provisions of any succeeding law.

         1.3 Name. The business of the Company shall be conducted under the name
of "FUMUME, LLC," or such other name as the Members may hereafter designate.

         1.4 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") are anticipated to take place at the offices of Maslon
Edelman Borman & Brand, LLP, on or before 10:00 a.m. on May 31, 2001, or such
later date as shall be determined in accordance herein, or such other date as
the Members may unanimously agree (the "Closing Date"). The obligation of any
Member to effect the Closing of the transactions contemplated by this Agreement
is subject to the requirement prior to or at the Closing of all Member Capital
Contributions set forth on Schedule A hereto being finalized and signed by all
parties thereto and delivered to the Company. If this requirement is not
satisfied, this Agreement shall not be effective and no signatory hereto shall
have any recourse or liability to any other signatory to this Agreement.

                                    ARTICLE 2
                     PLACE OF BUSINESS AND AGENT FOR PROCESS

         2.1 Place of Business. The principal executive office of the Company
shall be located at 7657 Anagram Drive, Eden Prairie, MN 55344. The Members may
from time to time change the location of the principal executive office of the
Company and, in such event, the Chief Executive Officer shall give notice to the
Members within 20 days of the effective date of such change. The Members may, in
its discretion, establish additional places of business of the Company.

         2.2 Agent for Process. The name and address of the agent for service of
process on the Company shall be Corporation Trust Company, located at
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle.

                                    ARTICLE 3
                               GENERAL DEFINITIONS

         Wherever used in this Agreement, unless another meaning is explicitly
indicated by the context, the following terms shall have the meanings set forth
below:

         3.1 "Intentionally Omitted'.

         3.2 "Additional Units" has the meaning set forth in Section 5.5.


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<PAGE>   3
         3.3 "Adjusted Capital Contribution" has the meaning set forth in
Section 6.1.7.

         3.4 "Affected Interests" has the meaning set forth in Section 17.1.1.

         3.5 "Affiliate" of a Person means any of the following other Persons:
(a) any Person directly or indirectly controlling, controlled by, or under
common control with such Person; (b) any Person owning or controlling ten
percent (10%) or more of the outstanding voting interest of such Person; (c) any
officer, director, or general partner of such Person; or (d) any Person who is
an officer, director, general partner, trustee, or holder of ten percent (10%)
or more of the voting interest of any Person described in clauses (a) through
(c) of this sentence. For purposes of this definition, the terms "control," "is
controlled by," or "is under common control with" shall mean the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise.

         3.6 "Agreement" or "LLC Agreement" means this Operating Agreement
(including all of its Exhibits and Schedules), as amended from time to time.
This Operating Agreement shall be deemed a "limited liability company agreement"
as defined under 18-l0l(7) of the Delaware Limited Liability Company Act.

         3.7 intentionally omitted.

         3.8 intentionally omitted.

         3.9 "Appraiser" shall have the meaning set forth in Section 17.7.2.

         3.10 intentionally omitted

         3.11 "Bankruptcy" means, with respect to any Person, a "Voluntary
Bankruptcy" or an "Involuntary Bankruptcy."

                  3.11.1 "Voluntary Bankruptcy" means, with respect to any
         Person, the inability of such Person generally to pay such Person's
         debts as such debts become due or an admission in writing by such
         Person of such Person's inability to pay such debts generally or a
         general assignment by such Person for the benefit of creditors; the
         filing of any petition or answer by such Person seeking to adjudicate
         it a bankrupt or insolvent or seeking for such Person any liquidation,
         winding up, reorganization, arrangement, adjustment, protection,
         relief, or composition of such Person or the debts of such Person under
         any law relating to bankruptcy, insolvency, or reorganization or relief
         of debtors, or seeking, consenting to, or acquiescing in the entry of
         an order for relief or the appointment of a receiver, trustee,
         custodian, or other similar official for such Person or for any
         substantial part of such Person's property; or corporate action taken
         by such Person to authorize any of the actions set forth above.

                  3.11.2 "Involuntary Bankruptcy" means, with respect to any
         Person, without the


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<PAGE>   4
         consent or acquiescence of such Person, the entering of an order for
         relief or approving a petition for relief or reorganization or any
         other petition seeking any reorganization, arrangement, composition,
         readjustment, liquidation, dissolution, or other similar relief under
         any present or future bankruptcy, insolvency, or similar statute, law,
         or regulation; or the filing of any such petition against such Person
         which petition shall not be dismissed within 90 days; or, without the
         consent or acquiescence of such Person, the entering of any order
         appointing a trustee, custodian, receiver, or liquidator of such Person
         or of all or any substantial part of such Person's property, which
         order shall not be dismissed within 60 days.

         3.12 "Capital Account" shall have the meaning set forth in Section
6.1.2.

         3.13 "Capital Call" shall have the meaning set forth in Section 6.3.

         3.14 "Capital Contribution" shall have the meaning set forth in Section
6.1.3.

         3.15 "Certificate" shall mean the Certificate of Formation filed on the
Company's behalf with the Delaware Secretary of State on April 9, 2001, and
attached hereto as SCHEDULE 1.1.2, as it may be amended from time to time by
Members holding at least a majority of the Units, pursuant to the LLC Act.

         3.16 "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any corresponding provisions of succeeding law.

         3.17 "Company" means FUMUME, LLC, the Delaware limited liability
company formed as of the Effective Date pursuant to this Agreement and the
Certificate.

         3.18 "Company Property" or "Property" means all of the property,
whether real, personal, or mixed, owned by the Company as of the Effective Date
and all other real and personal property acquired and held from time to time by
the Company and any improvements thereto, and shall include both tangible and
intangible property.

         3.19 "Contribution Agreement" means a written agreement executed by the
Company and a Person desiring to become a Member after the Effective Date,
setting forth the terms of such Person's admission as a Member, including but
not limited to the agreed value of the contribution that shall be made by such
Person to the Company's capital and the number of Units to be issued by the
Company to such Person.

         3.20 "CPA" shall have the meaning set forth in Section 17.7.2.

         3.21 "Depreciation" shall have the meaning set forth in Section 6.1.4.

         3.22 Intentionally omitted

         3.23 "Distribution" means any distribution to the Members of cash or
other assets of the Company made from time to time pursuant to this Agreement's
provisions.


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<PAGE>   5
         3.24 "Effective Date" means May 31, 2001 (subject to the satisfaction
of the requirements of Section 1.4 herein), the effective date of this
Agreement.

         3.25 "Estimated Member Tax Liability" means a Member's proportional
share of Membership Interest multiplied by 50 percent of the taxable income and
gains of the Company as reported on the Company's federal income-tax return for
the Fiscal Year.

         3.26 "Financial Rights" means a Member's rights to: (a) a Capital
Account; (b) an Interest in Company Profits, Losses, and Distributions; and (c)
a Member's limited right (if any) to Transfer such rights according to ARTICLE
13.

         3.27 "Fiscal Year" means (a) each period containing thirteen (13)
periods of four (4) weeks, ending on the Sunday nearest to May 31", that begins
while this Agreement is in effect; or such other time period as may be mutually
agreed upon by the parties, (b) the period of less than thirteen periods
beginning on the Effective Date and ending on the day before the first such
Fiscal Year commences shall be deemed a Fiscal Year, and (c) any period of less
than thirteen (13) periods of four (4) weeks beginning while this Agreement is
in effect and ending on the dissolution of the Company under this Agreement; for
which the Company is required to close its books and allocate Profits, Losses,
and other Company items pursuant to ARTICLE 6

         3.28 "Foreclosure" is defined in Section 17.2.2.

         3.29 "Governance Rights" means all of a Member's rights as a Member,
other than the Member's Financial Rights, and specifically includes a Member's
Voting Interest.

         3.30 "Gross Asset Value" shall have the meaning set forth in Section
6.1.5.

         3.31 "Insolvency" is defined in Section 17.2.4.

         3.32 "Interest" shall have the same meaning as Membership Interest
(defined below).

         3.33 "Involuntary Transfer" shall have the meaning ascribed to it in
Section 17.2.3.

         3.34 "Issuance Items" has the meaning set forth in Section 7.5.2.

         3.35 "LLC Act" means the Delaware Limited Liability Company Act, 6 Del.
C. Sections 18-101, et. seq., as amended from time to time, or any corresponding
provisions of succeeding law.

         3.36 "Liquidating Event" shall have the meaning set forth in Section
16.1.

         3.37 "Loss" and "Losses" shall have the meaning set forth in Section
7.1.

         3.38 "Management Agreement" is that agreement described in Section
9.2.5, and attached to this Agreement as EXHIBIT A.


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         3.39 "Member" or "Members" means the Persons initially signing this
Agreement as Members of the Company under the LLC Act, in their capacity as
Members, and each other Person who shall hereafter be admitted to the Company as
a Member.

         3.40 "Membership Interest" or "Interest" means the entire interest of a
Member in the Company and the appurtenant rights, powers, and privileges (as
defined in Section 5.3) of such Member with respect to the Company.

         3.41 "Minimum Gain Chargeback" is defined in Section 7.5.3.

         3.42 "Net Cash From Operations" means the gross cash proceeds from
Company operations, less the portion thereof used to pay or establish reserves
for all Company expenses, debt payments, capital improvements, replacements, and
contingencies, all as determined by the Members. "Net Cash From Operations"
shall not be reduced by depreciation, amortization, cost-recovery deductions, or
similar allowances, but shall be increased by any reduction of reserves
previously established pursuant to the preceding sentence.

         3.43 "Net Cash From Sales or Refinancing" means the net cash proceeds
from: (a) all sales and other dispositions of Company Property, other than (i) a
sale of all or substantially all of the Company Property or (ii) sales and other
dispositions in the ordinary course of business; and (b) all refinancing of
Company Property; less any portion of either used to establish reserves, all as
determined by the Members.

         3.44 "Officers" means the Chief Executive Officer and the Chief
Financial Officer designated as such by election or appointment of the Members
pursuant to Section 11.1, and any other Person designated as an Officer pursuant
to the LLC Act. The term "Officer" used in this Agreement and in the other
organizational documents relating to the Company has replaced the term "manager"
as used in the LLC Act, and shall have the same meaning and legal significance
as the term "manager" under the LLC Act except that the authority of the
Officers shall be subject to the management of the Members.

         3.45 "Original Capital Contribution" has the meaning set forth in
Section 6.1.6.

         3.46 "Other Liquidating Events" are those events described in Section
17.2.5.

         3.47 "Partnership Minimum Gain" is defined in Section 7.5.3.

         3.48 "Permitted Transfers" are those transfers of Units of Membership
Interest that are described in Section 14.2.

         3.49 "Person" means any individual, partnership, limited liability
company, corporation, trust, or other entity.

         3.50 "Profits" shall have the meaning set forth in Section 7.1.

         3.51 "Property Manager" shall have the meaning set forth in Section
9.2.5.


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         3.52 "Regulations" means the Income Tax Regulations, including
Temporary Regulations, promulgated under the Code, as such regulations may be
amended from time to time, including corresponding provisions of succeeding
regulations.

         3.53 "Regulatory Allocations" are those tax allocations described in
Section 7.6.

         3.54 "Remaining Members" are those Members described in Section
17.10.1.

         3.55 "Tax Matters Partner" and "TMP" are defined in Section 9.6.

         3.56 "Transfer" means, as a noun, any voluntary or involuntary transfer
(by operation of law, Bankruptcy, court order or otherwise), sale, exchange,
assignment, pledge, or other encumbrance, foreclosure of a security interest
upon, or other disposition of an item; or, as a verb, to voluntarily or
involuntarily cause a Transfer of an item. "Transferred" means, as a past
participle or participial adjective, that an item has been the subject of a
Transfer.

         3.57 "Transferring Holder" shall have the meaning set forth in Section
17.1.2.

         3.58 "Unit" or "Membership Unit" means a quantitative measurement of a
Membership Interest. Except as may be otherwise specifically provided herein,
each Unit of the Company shall have equal rights and preferences, without regard
to class; and the number of Units to which the Member is entitled shall not be
affected by either (a) any issuance of new Units to new or existing Members, or
(b) any change in the Capital Account of the Member (other than the effect of an
Additional Capital Contribution made by the Member in exchange for new Units).
The number of Units allocated to each of the Members is set forth in the
Schedule of Members and Units attached hereto as SCHEDULE A, as amended from
time to time. A Member's relative voting power as a Member shall be based on the
number of Units to which the Member is entitled.

         3.59 Intentionally Omitted.

         3.60 "Voluntary Transfer" is defined in Section 17.2.1.

         3.61 "Voting Interest" means a Member's relative voting power as a
Member, the qualitative aspect of which is determined by the number of Units
held by a Member as a fraction of the Company's total outstanding Units in the
hands of all Members.

                                    ARTICLE 4
                                     PURPOSE

         The purpose of the Company shall be to engage in the business of
acquiring, owning, and operating food and entertainment clubs with a live
entertainment format, and otherwise managing the Company Property in furtherance
thereof in full accordance with the Franchise Agreement and Amendment thereto
between the Company's subsidiaries FUMUME II, LLC and FUMUME III, LLC and HCK
Licensing, LLC copies of which are attached hereto as EXHIBIT B. In furtherance
of the Company's purpose, the Company may: (i) finance, acquire, manage, and
hold investment property, real or personal, in fee or by lease, to the extent
the Members


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determine that such investments are in the best interests of the Company, and
may exercise any rights therein as may be necessary or appropriate for such
purposes; (ii) borrow funds and mortgage or otherwise encumber any or all of the
Company Property to secure such borrowing to the extent the Members determine
that such borrowing or encumbrances are in the best interests of the Company;
and (iii) sell or otherwise dispose of all or a portion of the Company's rights
or ownership interests in Company Property to the extent the Members determines
that such dispositions are in the best interests of the Company, subject to
approval of the Members as set forth herein.

                             MEMBERS AND NEW MEMBERS

         5.1 Members. The names and addresses of the Members and the Original
Capital Contribution (as defined in Section 6.1.6) and number of Units of each
of the Members are set forth on SCHEDULE A attached hereto. Upon admission of a
new Member or a change in the Membership Interests of the Members, the Members
shall direct the Chief Executive Officer to prepare an amended SCHEDULE A to be
dated and substituted for the preceding schedule, all without requiring the
preexisting Members to execute a new or restated LLC Agreement or an amendment
to the LLC Agreement then in effect; any such admission of new Members shall
conform to the requirements of Section 5.4.

                  5.1.1    Each Member hereby represents and warrants that
                           neither it nor any of its officers, members,
                           directors, managers, and partners:

                           5.1.1.l  has been convicted, within the past five
                                    years of a felony or misdemeanor in
                                    connection with the offer, sale, or purchase
                                    of a security or franchise, or a felony
                                    involving fraud or deceit, including but not
                                    limited to forgery, embezzlement, obtaining
                                    money under false pretenses, larceny, or
                                    conspiracy to defraud;

                           5.1.1.2  is subject to an effective administrative
                                    order or judgment entered by a state or
                                    federal securities or commodities
                                    administration within ten years that is
                                    based on fraud, deceit, an untrue statement
                                    of a material fact, or an omission to state
                                    a material fact;

                           5.1.1.3  is subject to an order, judgment, or decree
                                    of a court which temporarily, preliminarily,
                                    or permanently restrains or enjoins it from
                                    engaging in or continuing any conduct or
                                    practice in connection with the offer, sale,
                                    or purchase of a security, or the making of
                                    a false filing with a state or federal
                                    securities administration;

                           5.1.1.4  has directly or indirectly made any bribes
                                    or kickbacks to government officials (either
                                    domestic and foreign) or their relatives, or
                                    any other payments to such persons, whether
                                    or not legal, to obtain or retain business
                                    or to receive favorable treatment with
                                    regard to business, nor directly or
                                    indirectly made any bribes or kickbacks to
                                    persons other than government officials, or
                                    to


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                                    relatives of such persons, or any other
                                    payments to such persons or their relatives
                                    whether or not legal, to obtain or retain
                                    business or receive favorable treatment with
                                    regard to business;

                           5.1.1.5  is in violation of the Certificate.

                  5.1.2    No Member shall be admitted, and their Membership
                           Interests shall be subject to automatic repurchase by
                           the Company if they have been admitted as a Member,
                           if they are in violation of Section 5.1.1 and such
                           Member shall be considered a "Disqualified Holder"
                           under the Certificate and their Membership Interests
                           shall be subject to redemption by the Company
                           pursuant to Article 4(B) of the Certificate.

         5.2 Additional Units. The Members may only issue additional Units to
Members in accordance with this Agreement and the Certificate. The Chief
Executive Officer may amend and/or restate Schedule A as a result of such
additional Units and may execute such amended or restated Schedule A for and on
behalf of all Members as if such Members had signed such amended or restated
Agreement. Nothing in this Section 5.2 shall be construed to limit the effect of
Section 5.5, ARTICLE 13 and ARTICLE 16 with respect to the assignment, issuance,
or other transfer of Membership Interests by Members or the Company.

         5.3 Terms of Original Units of Membership Interest.

                  5.3.1 The original Membership Interests reflected in Schedule
         A consist of Units of one class, without series, and shall have the
         rights provided by this Agreement, subject to any statements and
         limitations in the Certificate or this Agreement.

                  5.3.2 Members shall be entitled to vote on all matters in
         proportion to their Membership Interests (i.e., the number of Units
         they hold relative to the number of Units held by other Members),
         except as may be provided otherwise in this Agreement or pursuant to
         the following paragraph.

                  5.3.3 A Member's Financial Rights are as specified in this
         Agreement and, except as otherwise provided, shall be based upon the
         Member's Membership Interest outstanding from time to time.

         5.4 Additional Members.

                  5.4.1 Additional Units may only be granted by the Company to
         new or existing Members upon the unanimous agreement of the Members;
         provided, however, that nothing in this Section shall prevent a Member
         from transferring its respective Membership Interests in accordance
         with this Agreement.

                  5.4.2 Upon approval of the Members, the Chief Executive
         Officer may enter into Contribution Agreements with prospective Members
         providing for one or more classes of Units which may have either Voting
         Rights that are limited (as compared with the original Units) or
         Financial Rights that are limited or preferred (as compared with the


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<PAGE>   10
         original Units), or any combination of such rights. If any such new
         class of Units is issued, this Agreement shall be amended to state the
         rights of such Units.

                  5.4.3 Each additional Member admitted to the Company, or its
         duly authorized attorney-in-fact, shall execute this Agreement and, if
         making a Capital Contribution, shall execute and perform a Contribution
         Agreement delivered to and accepted on behalf of the Company by the
         Officers.

                  5.4.4 Any Person admitted to the Company as a Member shall be
         subject to and bound by all the provisions of this Agreement and any
         amendments thereto or restatements thereof approved as provided herein
         as if originally a party to this Agreement, including specifically the
         requirements of ARTICLE 5 relating to Capital Contributions, and
         ARTICLE 13 relating to restrictions on transfers.

         5.5 Preemptive Rights. If the Company decides to issue or sell any
additional Units or any options or warrants for, or securities convertible into
Units, or any other rights to subscribe for or to purchase Units (all such
Units, options, warrants, securities convertible into Units and other rights
being sometimes hereinafter collectively referred to as "Additional Units"), the
Company shall first offer such Additional Units to each of the Members, pro rata
to its existing Units, upon identical terms and conditions. Such offer shall be
made by written notice given to each of the Members specifying therein the
amount of the Additional Units being offered, the purchase price and other terms
of such offer. Each Member shall have a period of 30 days from and after the
receipt of such notice within which to accept such offer and 60 days to pay for
any such additional Units purchased thereunder. If any Member elects to accept
such offer in whole or in part, it shall so accept by written notice to the
Company given within such 30-day period.

         5.6 Member Restrictions. The Members agree to comply with all
restrictions and obligations imposed by the Certificate, including but not
limited to the forfeiture of Membership Interests and investigation of
governmental authorities relating to liquor licensing.

                                    ARTICLE 6
                                MEMBERS' CAPITAL

         6.1 Definitions Relating to Capital.

                  6.1.1 Intentionally Omitted.

                  6.1.2 "Capital Account" means, with respect to any Member, the
         Capital Account maintained for such Member in accordance with the
         following provisions:

                           6.1.2.1 to each Member's Capital Account there shall
                  be credited such Member's Capital Contributions, such Member's
                  distributive share of Profits, and any items in the nature of
                  income or gain which are specially allocated pursuant to
                  Section 7.5 or Section 7.6, and the amount of any Company
                  liabilities assumed by


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                  such Member or which are secured by any Company Property
                  distributed to such Member;

                           6.1.2.2 to each Member's Capital Account there shall
                  be debited the amount of cash and the Gross Asset Value of any
                  Company Property distributed to such Member pursuant to any
                  provision of this Agreement, such Member's distributive share
                  of Losses, and any items in the nature of deductions or
                  expenses that are specially allocated pursuant to Section 7.5
                  or Section 7.6, and the amount of any liabilities of such
                  Member that are assumed by the Company or secured by any
                  property contributed by such Member to the Company;

                           6.1.2.3 in the event all or any portion of an
                  Interest is Transferred in accordance with the terms of this
                  Agreement, the transferee shall succeed to the transferor's
                  Capital Account to the extent it relates to the Transferred
                  Interest; and

                           6.1.2.4 in determining the amount of any liability
                  for purposes of Sections 6.1.2.1, 6.1.2.2, and 6.1.6, there
                  shall be taken into account Code Section 752(c) and any other
                  applicable provisions of the Code and Regulations.

                  The foregoing provisions and the other provisions of this
         Agreement relating to the maintenance of Capital Accounts are intended
         to comply with Regulations Section 1.704-1(b), and shall be interpreted
         and applied in a manner consistent with such Regulations. In the event
         the Members shall determine that it is prudent to modify the manner in
         which the Capital Accounts or any debits or credits thereto (including
         without limitation debits or credits relating to liabilities that
         either are secured by contributed or distributed property, or are
         assumed by the Company or any Member) are computed in order to comply
         with such Regulations, the Members may make such modification;
         provided, however, that it is not likely to have a material effect on
         the amounts distributable to any Member pursuant to ARTICLE 15 upon the
         dissolution of the Company. The Members also shall: (i) make any
         adjustments that are necessary or appropriate to maintain equality
         between the Capital Accounts of the Members and the amount of capital
         reflected on the Company's balance sheet, as computed for book
         purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(g);
         and (ii) make any appropriate modifications if and when unanticipated
         events might otherwise cause this Agreement not to comply with
         Regulations Section 1.704-1(b).

                  6.1.3 "Capital Contribution" means, with respect to any
         Member, the amount of money and the initial Gross Asset Value of any
         property (other than money) contributed to the Company with respect to
         the Interest held by such Member, and includes an Original Capital
         Contribution under Section 6.2. The principal amount of a promissory
         note that is not readily traded on an established securities market and
         is contributed to the Company by the maker of the note (or a Member
         related to the maker of the note within the meaning of Regulations
         Section 1.704-1(b)(2)(ii)(c)) shall not be included in the Capital
         Account of any Member until the Company makes a taxable disposition of
         the note or until (and to the extent) principal payments are made on
         the note, all in accordance with Regulations Section 1.704-1
         (b)(2)(iv)(d)(2).


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<PAGE>   12
                  6.1.4 "Depreciation" means, for each Fiscal Year, an amount
         equal to the depreciation, amortization, or other cost-recovery
         deduction allowable with respect to an asset for such Fiscal Year,
         except that if the Gross Asset Value of an asset differs from its
         adjusted basis for federal income-tax purposes at the beginning of such
         Fiscal Year, Depreciation shall be an amount which bears the same ratio
         to such beginning Gross Asset Value as the federal income-tax
         depreciation, amortization, or other cost-recovery deduction for such
         Fiscal Year, bears to such beginning adjusted tax basis; provided,
         however; that if the adjusted basis for federal income-tax purposes of
         an asset at the beginning of such Fiscal Year is zero, Depreciation
         shall be determined with reference to such beginning Gross Asset Value
         using any reasonable method selected by the Members.

                  6.1.5 "Gross Asset Value" means, with respect to any asset,
         the asset's adjusted basis for federal income-tax purposes, except as
         follows:

                           6.1.5.1 the initial Gross Asset Value of any asset
                  contributed by a Member to the Company shall be the gross fair
                  market value of such asset, as determined by the contributing
                  Member and the Members;

                           6.1.5.2 the Gross Asset Values of all items of
                  Company Property shall be adjusted to equal their respective
                  gross fair market values, as determined by the Members, as of
                  one of the following times: (A) the acquisition of an
                  additional Interest by any new or existing Member in exchange
                  for more than a de minimis Capital Contribution; (B) the
                  Distribution by the Company to a Member of more than a de
                  minimis amount of Company Property as consideration for an
                  Interest; and (C) the liquidation of the Company within the
                  meaning of Regulations Section 1.704-1 (b)(2)(ii)(g);
                  provided, however, that adjustments pursuant to clauses (A)
                  and (B) above shall be made only if the Members reasonably
                  determine that such adjustments are necessary or appropriate
                  to reflect the relative economic interest of the Members in
                  the Company;

                           6.1.5.3 the Gross Asset Value of any item of Company
                  Property (other than cash) distributed to any Member shall be
                  adjusted to equal the gross fair market value of such asset on
                  the date of Distribution as determined by the distributee and
                  the Members; and

                           6.1.5.4 the Gross Asset Values of Company Property
                  shall be increased (or decreased) to reflect any adjustments
                  to the adjusted basis of such assets pursuant to Code Section
                  734(b) or Code Section 743(b), but only to the extent that
                  such adjustments are taken into account in determining Capital
                  Accounts pursuant to Regulation Section 1.704-1(b)(2)(iv)(m)
                  and Sections 7.1.2 and 7.3.1; provided, however, that Gross
                  Asset Values shall not be adjusted pursuant to this Section to
                  the extent the Members determine that an adjustment pursuant
                  to Section 6.1.5.2 is necessary or appropriate in connection
                  with a transaction that would otherwise result in an
                  adjustment pursuant to this paragraph.


                                       12
<PAGE>   13
                           If the Gross Asset Value of an asset has been
                  determined or adjusted pursuant to Section 6.1.5.1, Section
                  6.1.5.2 or this Section, such Gross Asset Value shall
                  thereafter be adjusted by the Depreciation taken into account
                  with respect to such asset for purposes of computing Profits
                  and Losses.

                  6.1.6 "Original Capital Contribution" means, with respect to
         each Member, the Capital Contribution made by such Member pursuant to
         Section 6.2, reduced by the amount of any liabilities of such Member
         that are (i) assumed by the Company in connection with such Capital
         Contribution or (ii) secured by any property contributed by such Member
         to the Company as a part of such Capital Contribution.

                  6.1.7 "Adjusted Capital Contribution" means, with respect to a
         Member, the total contribution (in cash or other property) required of
         such Member pursuant to Sections 6.2.1, 6.2, and 6.3 and actually or
         deemed (pursuant to a revaluation under Section 704(b) of the Code)
         contributed by such Member, reduced by any Distribution to such Member
         pursuant to Section 8.2.2.

         6.2 Capital and Interests of Members.

                  6.2.1 The capital of the Company shall be contributed by the
         Members and accepted by the Members at the respective values set forth
         on SCHEDULE A attached hereto. Upon executing this Agreement, each
         Member shall contribute to the Company's capital the amount specified
         following its name on SCHEDULE A as its Original Capital Contribution,
         and shall be credited with the number of Units and Voting Interest set
         forth therein.

                  6.2.2 The Original Capital Contribution and Units of each of
         the Members shall be set forth in SCHEDULE A attached hereto, as
         amended from time to time.

                  6.2.3 Each Member shall contribute from time to time such
         money and property as such Member shall be required to contribute
         pursuant to any Contribution Agreement or other written agreement
         between the Member and the Company, or pursuant to Section 6.3.


         6.3 Additional Capital Contributions.

                  6.3.1     Intentionally omitted

                  6.3.2 FDU (or Famous Dave's of America, Inc. on behalf of FDU
         pursuant to the Guarantee attached hereto as Exhibit D) shall
         contribute additional capital to the Company in such amounts equal to
         the Deficit (as that term is defined in the Management Agreement made
         and entered into by and between the Company and FDU), as needed to the
         extent such Deficit results in a cash flow shortage, but only for so
         long as the Management Agreement or FDU Loss Obligation is not
         terminated pursuant to Section 4 of the Management Agreement or Section
         6.3 herein (each additional FDU obligation incurred hereunder to be a
         "FDU Loss Obligation"). For all contributions made under a FDU Loss
         Obligation, FDU shall contribute an amount equal to the loss obligation
         of


                                       13
<PAGE>   14
         FDU calculated pursuant Section 7.3 herein unless the Members consent
         to a different arrangement. A FDU Loss Obligation shall not be carried
         forward to future Fiscal Years and shall be determined and paid on a
         year by year basis. Upon the occurrence of a FDU Loss Obligation, the
         Chief Executive Officer shall give written notice to FDU. FDU shall
         have 30 days from the receipt of such written notice (such receipt as
         determined under ARTICLE 17) to contribute the FDU Loss Obligation to
         the Company.

                   6.3.3 Termination of FDU Loss Obligation. If there is a
          cumulative Deficit in the Chicago Club (as defined in the Management
          Agreement) at anytime after a period of two (2) continuous Annual
          Periods (as defined in the Management Agreement) for the Chicago Club,
          Company or FDU may terminate the FDU management obligations and rights
          for the Chicago Club and the FDU Loss Obligation hereunder resulting
          from the Chicago Club, upon thirty (30) days prior written notice to
          the other party. If there is a cumulative Deficit, excluding
          Management Fees (as defined in the Management Agreement), at any time
          in the Memphis Club (as defined in the Management Agreement) after a
          period of five (5) continuous Annual Periods for the Memphis Club or a
          cumulative Deficit, excluding Management Fees, at any time in the
          Memphis Club which exceeds two million dollars ($2,000,000), Company
          or FDU may terminate the FDU management obligations and rights for the
          Memphis Club and the FDU Loss Obligation hereunder resulting from the
          Deficit in the Memphis Club, upon thirty (30) days prior written
          notice to the other party.

                   6.3.4 Other FDU Contributions. FDU shall also pay to the
          Company additional capital contributions needed for the initial
          construction of the Memphis Club, only to the extent such building and
          maintenance of the Memphis Club exceeds the two million eight hundred
          thousand dollars ($2,800,000) (the "Budget") to be provided by the
          Company for construction of the Memphis Club; provided, however, that
          (i) the Memphis Club shall be constructed in accordance with the
          Memphis Lease and building plans developed by the Company and FDU
          ("Plans"), and (ii) FDU and Company shall work together in good faith
          to keep the Plans within the Budget; and (iii) FDU shall manage the
          planning and construction of the Memphis Club.

                  6.3.5 Additional Units of Membership Interests may be granted
         only as permitted by 0. If additional Units of Membership Interest are
         granted, SCHEDULE A shall be appropriately amended without the need for
         any amendment to this Agreement.

                  6.3.6 Except as expressly provided herein, or in a
         Contribution Agreement signed by a Member, no Member shall be required
         to make any additional capital contributions.

         6.4 Other Capital Matters.

                  6.4.1 No Return of Capital Contributions. Except as otherwise
         provided in this Agreement, no Member shall demand or receive a return
         of the Member's Capital Contributions or withdraw them from the
         Company. Under any circumstance allowing or requiring a return of any
         Capital Contributions, no Member shall have the right to receive
         Company Property other than cash except as may be specifically provided
         herein.


                                       14
<PAGE>   15
                  6.4.2 No Interest, Salary, or Draw. No Member shall receive
         any interest, salary, or drawing with respect to the Member's Capital
         Contributions or the Member's Capital Account.

                  6.4.3 Limited Liability. The Members shall not be liable for
         the debts, liabilities, contracts, or any other Company obligations,
         except as provided by mandatory law, except an FDU Loss Obligation.
         Except as otherwise provided by any other agreements among the Members
         or mandatory provisions of applicable state law, a Member shall be
         liable only to make the Member's Capital Contributions and shall not be
         required to lend any funds to the Company or, after the Member's
         Original Capital Contribution has been made, to make any additional
         capital contributions to the Company, except for the contributions
         required from FDU for any FDU Loss Obligation.

         6.5 Default by Member. If a Member fails to make any payment or
installment of any Capital Contribution, including without limitation a FDU Loss
Obligation, other obligation hereunder, or under a Contribution Agreement when
any such payment or installment is due, the Members may enforce such obligation
in such manner as may be permitted by law. Without limiting the generality of
the foregoing, the Members may, in their discretion:

                  6.5.1 bring an action at law or in equity to enforce such
         obligation;

                  6.5.2 assess interest on the unpaid amount at the highest
         interest rate then being charged to the Company by any lender, subject
         only to the maximum rate permitted by law; and

                  6.5.3 if the unpaid obligation is a required Capital
         Contribution, require the defaulting Member to unconditionally and
         irrevocably assign to one or more of the remaining Members (determined
         in accordance with Section 6.5.3.1) that portion of such Member's Units
         which bears the same ratio to all of such defaulting Member's Units as
         the remaining amount of unpaid contributions, whether due or not yet
         due, of such defaulting Member bears to the total amount of
         contributions, paid and unpaid, required to be made by such defaulting
         Member; provided, however, that such default shall not theretofore have
         been cured.

                           6.5.3.1 If the Members require assignment of all or a
                  portion of a defaulting Member's Units pursuant to Section
                  6.5.3 above, each remaining Member shall have the right to
                  acquire such Units, determined as aforesaid, in the proportion
                  that such Member's Units bears to the aggregate Units of the
                  remaining Members who desire to participate in such purchase,
                  by paying the Company a cash amount equal to such proportion
                  of the unpaid Capital Contributions, at a price set pursuant
                  to Section 17.7.

         6.6 Intentionally omitted.

         6.7 Transferee Succeeds to Transferor's Capital Account. If any Member
transfers all or a part of such Member's Financial Rights in the Company,
whether or not such transfer is


                                       15
<PAGE>   16
permitted under ARTICLE 13, any transferee from the Member shall succeed to the
Capital Account (including any remaining Capital Contributions) of the
transferor Member to the extent of the Units Transferred, in accordance with
Regulations Section 1.704-1(b)(2)(iv)(1).

         6.8 Intentionally omitted.

                                    ARTICLE 7
                                   ALLOCATIONS

         7.1 Definitions of Profits and Losses.

                  7.1.1 "Profits" and "Losses," respectively, shall mean, for
         each Fiscal Year, an amount equal to the Company's taxable income or
         loss (as the case may be) for such Fiscal Year, determined in
         accordance with Code Section 703(a) (for this purpose, all items of
         income, gain, loss, or deduction required to be stated separately
         pursuant to Code Section 703(a)(1) shall be included in taxable income
         or loss) with the following adjustments:

                           7.1.1.1 any income of the Company that is exempt from
                  federal income tax and not otherwise taken into account in
                  computing Profits or Losses pursuant to this Section shall be
                  added to such taxable income or loss;

                           7.1.1.2 any nondeductible expenditures of the Company
                  described in Code Section 705(a)(2)(B) or treated as Code
                  Section 705(a)(2)(B) expenditures pursuant to Regulations
                  Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into
                  account in computing Profits or Losses pursuant to this
                  Section, shall be subtracted from such taxable income or loss;

                           7.1.1.3 in the event the Gross Asset Value of any
                  Company Property is adjusted pursuant to Section 6.1.5, the
                  amount of such adjustment shall be taken into account as a
                  gain or loss from the disposition of such asset for purposes
                  of computing Profits or Losses;

                           7.1.1.4 gain or loss resulting from any disposition
                  of Company Property with respect to which gain or loss is
                  recognized for federal income-tax purposes shall be computed
                  by reference to the Gross Asset Value of the Company Property
                  disposed of, notwithstanding that the adjusted tax basis of
                  such Company Property differs from its Gross Asset Value;

                           7.1.1.5 in lieu of the depreciation, amortization,
                  and other cost-recovery deductions taken into account in
                  computing such taxable income or loss, there shall be taken
                  into account Depreciation for such Fiscal Year, computed in
                  accordance with Section 6.1.4; and

                           7.1.1.6 to the extent an adjustment to the adjusted
                  tax basis of any Company Property pursuant to Code Section
                  734(b) or Code Section 743(b) is required pursuant to
                  Regulations Section 1.704-1 (b)(2)(iv)(m)(4) to be taken into


                                       16
<PAGE>   17
                  account in determining Capital Accounts as a result of a
                  Distribution other than in liquidation of a Member's Units,
                  the amount of such adjustment shall be treated as an item of
                  gain (if the adjustment increases the basis of the asset) or
                  loss (if the adjustment decreases the basis of the asset) from
                  the disposition of the asset and shall be taken into account
                  for purposes of computing Profits or Losses.

                   7.1.2 Notwithstanding any other provisions of this Section,
          any items that are specially allocated pursuant to Section 7.5,
          Section 7.6, or Section 7.8 shall not be taken into account in
          computing Profits or Losses.

                   7.1.3 The amounts of the items of Company income, gain, loss,
          or deduction available to be specially allocated pursuant to Section
          7.5, Section 7.6, or Section 7.8 shall be determined by applying rules
          analogous to those set forth in subsections through above.

         7.2 Allocation of Profits. After giving effect to the special
allocations set forth in Sections 7.5 and 7.6, the Profits of the Company for
each Fiscal Year for book purposes, whether taxable or nontaxable, shall be
allocated to the Members and their Capital Accounts shall be increased in
accordance with Section 6.1.2, as follows:

                  7.2.1 First, to FDU in an amount equal to the excess, if any
         of (i) the cumulative Losses allocated to FDU pursuant to Section 7.3.1
         hereof for current Fiscal Year, over (ii) the cumulative Profits
         allocated to FDU pursuant to this Section 7.2.1 for the current Fiscal
         Year; and

                  7.2.2 next, if losses have been allocated, pursuant to Section
         7.3.2 for any prior year, to the Members in an aggregate amount equal
         to the cumulative losses allocated according to Section 7.3.3 for all
         prior periods not previously offset by allocations under this Section,
         or by a Minimum Gain Chargeback under Section 75.3, ratably in
         proportion to the Members' respective shares of such losses; and

                  7.2.3 thereafter, to the Members, ratably in proportion to
         their respective number of Units.

         7.3 Allocation of Losses. After giving effect to the special
allocations set forth in Section 7.5, the losses, deductions, and credits of the
Company for each Fiscal Year for book purposes, whether taxable or nontaxable,
shall be allocated to the Members as follows and the Capital Accounts reduced in
accordance with Section 6.1.2, as follows:

                  7.3.1 first, to FDU in an amount equal to all FDU Loss
         Obligations incurred in such Fiscal Year as set forth in Section 6.3.2
         and any amounts paid by FDU pursuant to section 6.3.4.

                  7.3.2 next to the Members in an amount equal to the excess, if
         any, of (i) the cumulative Profits allocated to the Members pursuant to
         Section 7.2.3 for all prior Fiscal Years, over (ii) the cumulative
         Losses allocated to the Members pursuant to this Section 7.3.2 for all
         prior Fiscal Years; and


                                       17
<PAGE>   18
                  7.3.3 next, if income or gains have been allocated pursuant to
         Section 7.2.2 for any prior year, losses shall be allocated first to
         offset any income or gains allocated pursuant to Section 7.2.2 and next
         to offset any income or gains allocated pursuant to Section 7.2.3, in
         each case ratably among the Members in proportion to their respective
         shares of the income or gains being offset; provided, however, that to
         the extent any prior allocation is offset pursuant to this Section,
         such allocation shall be disregarded for purposes of determining
         subsequent allocations pursuant to this Article;

                  7.3.4 next, to the Members, ratably in proportion to their
         respective number of Units, but, with respect to any Member, an amount
         not to exceed the remaining balance of the Member's Capital Account.

         7.4 Proration of Allocations. All Profits, Losses, deductions, and
credits for a Fiscal Year allocable with respect to any Member whose Units may
have been Transferred, forfeited, reduced, or changed during such year shall be
allocated based upon the varying Units of the Members throughout the year. The
precise manner in which such allocation shall be made shall be determined by the
Members and shall be a manner of allocation permitted to be used for federal
income-tax purposes under the Code.

         7.5 Special Allocations. Notwithstanding anything to the contrary in
this ARTICLE 6, the following special allocations shall be made in the following
order:

                  7.5.1 Section 754 Adjustments. To the extent an adjustment to
         the adjusted tax basis of any Company Property pursuant to Code Section
         734(b) or Code Section 743(b) is required pursuant to Regulations
         Section 1.704-1(b)(2)(iv)(m)(2) or Regulations Section 1.704-1
         (b)(2)(iv)(m)(4) to be taken into account in determining Capital
         Accounts as the result of a Distribution to a Member in complete
         liquidation of the Member's Units, the amount of such adjustment to
         Capital Accounts shall be treated as an item of gain (if the adjustment
         increases the basis of the asset) or loss (if the adjustment decreases
         such basis) and such gain or loss shall be specially allocated to the
         Members in accordance with their Units in the Company in the event
         Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Member
         to whom such Distribution was made in the event Regulations Section
         1.704-1(b)(2)(iv)(m)(4) applies.

                  7.5.2 Allocations Relating to Taxable Issuance of Units. Any
         income, gain, loss, or deduction realized as a direct or indirect
         result of the issuance of a Unit by the Company to a Member (the
         "Issuance Items") shall be allocated among the Members so that, to the
         extent possible, the net amount of such Issuance Items, together with
         all other allocations under this Agreement to each Member, shall be
         equal to the net amount that would have been allocated to each such
         Member if the Issuance Items had not been realized.

                  7.5.3 Minimum Gain Chargeback. "Partnership Minimum Gain"
         within the meaning of Regulations Section 1.704-2(b)(2) means an amount
         of gain that would be realized by the Company on the disposition of
         Company property subject to nonrecourse indebtedness (within the
         meaning of Regulations Section 1.704-2(b)(3)), equal to the


                                       18
<PAGE>   19
         amount by which such nonrecourse indebtedness exceeds the adjusted tax
         basis (or book value, if the property has been properly entered on the
         books of the Company at a value different from its then adjusted tax
         basis) of such property. If for any Fiscal Year, there is a net
         decrease in Partnership Minimum Gain, each Member shall be allocated
         items of Company income and gain in accordance with Regulations Section
         1.704-2(f)(1) (a "Minimum Gain Chargeback") for such year (and for
         subsequent years, if necessary) in an amount equal to such Member's
         share of such net decrease of Partnership Minimum Gain. For this
         purpose, a Member's share of the net decrease in Partnership Minimum
         Gain shall be determined under Regulations Section 1.704-2(g)(2). This
         paragraph is intended to comply with Regulations Section 1.704-2(f)(1)
         and shall be interpreted consistently therewith.

                  7.5.4 Qualified Income Offset. If any Member at any time
         unexpectedly receives any adjustment, allocation, or Distribution
         described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6),
         and if such adjustment, allocation or Distribution results in a
         negative balance in such Member's Capital Account in excess of the sum
         of (i) the amount such Member is obligated to restore to the Company
         under this Agreement or the LLC Act and (ii) the amount such Member is
         deemed to be obligated to restore to the Company pursuant to the
         penultimate sentences of Regulations Sections 1.704-2(g)(1) and
         1.704-2(i)(5), then items of Company income and gain shall be specially
         allocated to such Member so as to eliminate, to the extent required by
         Regulations Section 1.704- 1 (b)(2)(ii)(d), such negative balance in
         his or her Capital Account as quickly as possible.

                  7.5.5 Gross Income Allocation. If any Member would have a
         negative balance in such Member's Capital Account at the end of any
         Fiscal Year in excess of the sum of (i) the amount such Member is
         obligated to restore to the Company under this Agreement and (ii) the
         amount such Member is deemed to be obligated to restore to the Company
         pursuant to the penultimate sentences of Regulations Sections
         1.704-2(g)(1)(ii) and 1.704-2(i)(5), then such Member shall be
         specially allocated items of Company income (including gross income) in
         the amount of such excess as quickly as possible.

         7.6 Curative Allocations. The allocations set forth in paragraphs 7.5.1
and 7.5.2 plus 7.5.3, 7.5.4, and 7.5.5 of Section 7.5 (the "Regulatory
Allocations") are intended to comply with certain requirements of the
Regulations. It is the intent of the Members that, to the extent possible, all
Regulatory Allocations shall be offset either with other Regulatory Allocations
or with special allocations of other items of Company income, gain, loss, or
deduction pursuant to this Section. Therefore, notwithstanding any other
provision of this Article (other than the Regulatory Allocations), the Members
shall make such offsetting special allocations of Company income, gain, loss, or
deduction in whatever manner the Members determines appropriate so that, after
such offsetting allocations are made, each Member's Capital Account balance is,
to the extent possible, equal to the Capital Account balance such Member would
have had if the Regulatory Allocations were not part of the Agreement and all
Company items were allocated pursuant to Sections 7.2, 7.3, and 7.5.1 and 7.5.2.

         7.7 Other Allocation Rules.


                                       19
<PAGE>   20
                  7.7.1 For purposes of determining the Profits, Losses, or any
         other items allocable to any period, those Profits, Losses, and any
         such other items shall be determined on a daily, monthly, or other
         basis, as determined by the Members using any permissible method under
         Code Section 706 and the Regulations thereunder.

                  7.7.2 The Members are aware of the income-tax consequences of
         the allocations made by this Article and hereby agree to be bound by
         the provisions of this Article in reporting their shares of Company
         Profit and Loss for income-tax purposes.

                  7.7.3 Solely for purposes of determining a Member's
         proportionate share of the Company's "excess nonrecourse liabilities"
         within the meaning of Regulations Section 1.752-3(a)(3), the Members'
         interests in Company Profits are in proportion to their Units.

         7.8 Tax Allocations under Code Section 704(c).

                  7.8.1 In accordance with Code Section 704(c) and the
         Regulations 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 initial Gross Asset
         Value (computed in accordance with Section 6.15).

                  7.8.2 In the event the Gross Asset Value of any Company
         Property is adjusted pursuant to Section 6.1.5, then subsequent
         allocations of income, gain, loss, and deduction with respect to such
         asset shall take account of any variation between the adjusted basis of
         such asset for federal income-tax purposes and its Gross Asset Value in
         the same manner as under Code Section 704(c) and the Regulations
         thereunder.

                  7.8.3 Any elections or other decisions relating to such
         allocations shall be made by the Members in any manner that reasonably
         reflects the purpose and intention of this Agreement. Allocations
         pursuant to this Section are solely for purposes of federal, state, and
         local taxes and shall not affect, or in any way be taken into account
         in computing, any Member's Capital Account or share of Profits, Losses,
         other items or Distributions pursuant to any provision of this
         Agreement.

                  7.8.4 Special Fee Allocation. If any fee or other amount
         payable to a Member is determined for income-tax purposes to be a
         payment to such Member of a distributive share of Company income or
         gain (rather than being a fee or expenditure in the nature of an amount
         payable to a Person who is not a Member or other than in such Person's
         capacity as a Member), then such amount shall be treated (for
         income-tax purposes and for purposes of determining Capital Accounts)
         as an allocation of gross income to such Member in the year such amount
         is accrued, and a Distribution in the year such amount is paid. The
         priority of payment of any such item, however, shall be unaffected by
         such treatment.


                                       20
<PAGE>   21
                                    ARTICLE 8
                                  DISTRIBUTIONS

         8.1 Distributions of Net Cash From Operations. Except for a reasonable
cash reserve determined by the Members in its sole discretion, Distributions of
Net Cash from Operations for each Fiscal Year shall be made annually as follows:

                  8.1.1 first, to the Members, in an amount equal to each such
         Member's Estimated Member Tax Liability (to the extent such a
         Distribution is legally permitted); and

                  8.1.2 thereafter, to the Members ratably in proportion to
         their respective Membership Interests.

         8.2 Other Cash Distributions.

                  8.2.1 Distribution of any net proceeds upon the sale,
         exchange, or other disposition of all or substantially all of the
         Company Property shall be made in accordance with Section 16.2.

                  8.2.2 Distributions of Net Cash from Sales or Refinancing
         shall be made to the Members ratably in proportion to their respective
         Membership Interests.

                                    ARTICLE 9
                      MANAGEMENT AND OPERATION OF BUSINESS

         9.1 Management and Control of the Company.

                  9.1.1 Except as otherwise provided in this Agreement, the
         Members shall have the sole and exclusive control of the conduct,
         operations, and management of the Company's business. The Members shall
         manage the affairs of the Company in a prudent and businesslike fashion
         and shall use its best efforts to carry out the Company's purpose and
         business. All actions to be taken by the Members shall be approved or
         consented to by seventy five percent (75%) of the Membership Interests
         and only actions taken in such manner shall be binding upon the
         Company.

                  9.1.2 The Members shall carry out their various duties under
         this Agreement through a Chief Executive Officer, a Chief Financial
         Officer, and such other Officers as it shall deem necessary or
         desirable. The Officers shall be elected and removed by the Members,
         and their duties shall be established by the Members, all as provided
         in this Agreement.

                  9.1.3 The Members and the Officers shall devote such of their
         time as the Members deem necessary to the management and oversight of
         the Company's business.


                                       21
<PAGE>   22
         9.2 Authority of Members. The Members shall have all necessary powers
to carry out the Company's purpose and business, including without limitation
the power to delegate appropriate authority to the Company's Officers; provided,
however, that the Officers shall at all times remain subject to the Members'
supervision. In addition to any other rights and powers that the Members may
possess, the Members shall have all specific rights and powers required or
appropriate in the management of the Company's business, including the
following:

                  9.2.1 to acquire, own, hold, and dispose of items of Company
         Property, any interest therein or appurtenant thereto, whether real,
         personal, or mixed, including the purchase, licensing, franchising,
         lease, development, improvement, maintenance, exchange, trade, or sale
         of any Company Property at such price, rental, or amount for cash,
         securities, or other property and upon such other terms as the Members,
         in its sole discretion, may deem to be in the best interest of the
         Company, but limited to the extent set forth in Section 9.3;

                  9.2.2 to the extent of Company Property, to prosecute, defend,
         settle, or compromise actions or claims at law or in equity at the
         Company's expense as may be necessary or proper to enforce or protect
         the Company's interests; and to satisfy any judgment, decree, decision,
         or settlement of any such suit or claim; first, out of any insurance
         proceeds available therefor, and second, out of the Company's Property
         and income;

                  9.2.3 to enter into and carry out contracts and agreements and
         to do and perform all such other things as may be in furtherance of
         Company's purpose including borrowing or lending on behalf of the
         Company; and to cause the Officers to execute, acknowledge, and deliver
         any and all instruments that may be deemed necessary or convenient to
         effect the foregoing;

                  9.2.4 to acquire and enter into any contract of insurance that
         the Members may deem necessary and proper for the protection of the
         Company or for any purpose beneficial to the Company;

                  9.2.5 to employ, engage, or retain, at the expense of the
         Company, such Persons to perform such services as the Members may deem
         necessary or advisable for the efficient operation of the Company's
         business and to pay to such Persons such compensation as the Members
         shall determine, specifically including the power to contract for the
         management services of any Person (including Members and their
         Affiliates) in operating the Company's assets (a "Property Manager");
         provided, however, that such compensation is at the then prevailing
         rate for the type of services and materials rendered. The Members may
         in any such agreement delegate to the Property Manager the daily
         management of the Company, except for the fundamental duties of the
         Chief Executive Officer and the Chief Financial Officer, as set forth
         in this Agreement. The Company shall enter into a management agreement
         between FDU, the Company, FUMUME II, LLC and FUMUME III, LLC
         substantially in the form attached hereto as EXHIBIT A (the "Management
         Agreement") under which FDU shall be the managing Member primarily
         responsible for carrying out the operations of the Company's
         restaurants and entertainment clubs pursuant to the terms of the
         Management Agreement;


                                       22
<PAGE>   23
                  9.2.6 to cause the Officers to execute and deliver, on behalf
         of the Company, leases, contracts, or agreements of any nature and any
         or all instruments necessary or desirable to effectuate the foregoing
         powers; and

                  9.2.7 to accept and value the Capital Contributions made to
         the Company by Members pursuant to this Agreement.

         9.3 Restrictions on Authority of Members.

                  9.3.1 In addition to other acts expressly prohibited or
         restricted by this Agreement or by law, the Members shall have no
         authority to act on behalf of the Company and is expressly prohibited
         from the following:

                           9.3.1.1 doing any act in contravention of this
                  Agreement;

                           9.3.1.2 admitting any Person as a Member, or
                  admitting additional Members, except as provided in this
                  Agreement;

                           9.3.1.3 performing any act (other than an act
                  required by this Agreement or an act taken in good faith and
                  in reliance upon counsel's opinion) that would, at the time
                  such act occurred, subject any Member to liability as a
                  general partner in any jurisdiction;

                           9.3.1.4 placing a mortgage upon or otherwise
                  encumbering any Company property, other than as security for
                  borrowing permitted under this Article;

                           9.3.1.5 selling, exchanging, or otherwise disposing
                  of all or any substantial portion of the Company's Property
                  except as permitted under the LLC Act;

                           9.3.1.6 voluntarily liquidating the Company or its
                  Affiliates except as permitted by the LLC Act;

                           9.3.1.7 entering into any contract requiring the
                  Company to make payments to any Member or Affiliate thereof
                  for goods or services at other than the usual and customary
                  rates that would be charged for such goods or services in an
                  arms-length transaction;

                           9.3.1.8 selling, exchanging, or otherwise disposing
                  of the Company's interests in one or more of its Affiliates or
                  causing the sale, exchange, or other disposition of all or any
                  substantial portion of the assets of any one or more
                  Affiliates; or

                           9.3.1.9 taking any action that would prevent the
                  Company from being taxed as a partnership under the Code.


                                       23
<PAGE>   24
                           9.3.1.10 Selling or purchasing property from Members
                  or their Affiliates, except for or transaction or a series of
                  transactions valued at less than $5,000.

                           9.3.1.11 Accepting a loan from a Member to the
                  Company, in excess of the Member's Capital Contributions,
                  unless approved by seventy five percent (75%) of the
                  Membership Interests; provided, however, that no such loan may
                  be treated as a Capital Contribution for any purpose or
                  entitle such Member to any increase in the Member's Units or
                  share of Company Profits, Losses, deductions, credits, or
                  Distributions; and further provided that such interest rate on
                  the loan shall be no more than the prime rate plus two (2)
                  percent unless otherwise unanimously agreed to by the Members.

                  9.3.2 All actions prohibited under Section 9.3.1 shall require
         the affirmative vote of Members holding more than seventy percent (75%)
         of the Voting Interests or such larger proportion of the Units as may
         be required by the LLC Act or another provision of this Agreement in a
         particular case; including in any event, however, the Members's
         approving vote which may be given at either a special meeting called by
         either the Officers or the Members on at least ten days' prior written
         notice to all Members, or which may be given by written action signed
         by the requisite number of Members specified above.

         9.4 Obligations of the Members. In addition to the obligations
expressly provided by law or this Agreement, the Members, to the extent of
Company Property, shall:

                  9.4.1 perform or cause the Officers to perform all acts
         necessary or desirable, with respect to the purposes of the Company, to
         lease, sublease, and operate any real estate acquired by the Company;

                  9.4.2 cause to be filed and published all certificates,
         statements, and other instruments required by law for the Company's
         formation, qualification, and operation and for the conduct of its
         business in all appropriate jurisdictions;

                  9.4.3 cause the Company to prepare or have prepared all
         financial and tax statements and reports required under ARTICLE 12; and

                  9.4.4 cause the Company to keep the appropriate records at its
         principal office.

         9.5 Reimbursement of Expenses. The Members, Officers and their
Affiliates shall be reimbursed for all expenses incurred on Company's behalf.

         9.6 "Tax Matters Partner".

                  9.6.1 If the Company is required by the Code to have a Tax
         Matters Partner, FDU shall serve as "Tax Matters Partner" (the "TM,")
         as defined for federal income-tax purposes under Code Section 623
         1(a)(7), until a new TMP is appointed by the Members.


                                       24
<PAGE>   25
                  9.6.2 If, on advice of counsel, the TMP determines that it is
         in the best interests of the Members that the final results of any
         administrative proceeding be appealed by the institution of legal
         proceedings, the TMP is hereby authorized to commence such legal
         proceedings in such forum as he, on advice of counsel, determines to be
         appropriate. In the event the TMP selects a forum for appeal in which
         he is required to deposit a proportionate share of any disputed tax
         before making such appeal, he must obtain the consent of the Members
         holding seventy five percent (75%) of the Units. If such consent is
         obtained, each of the Members will be required to deposit and pay such
         Member's proportionate share of such disputed tax before participating
         in such appeal. The Members acknowledge that such deposit under current
         law does not earn interest and that a failure to make such a deposit
         may preclude a Member from pursuing any other sort of appeal by court
         action.


                  9.6.3 The TMP shall not be liable to any other Member for any
         action taken with respect to any such administrative proceeding or
         appeal, so long as the TMP is not grossly negligent or guilty of
         willful misconduct. Any costs paid or incurred by the TMP in connection
         with his activities in such capacity shall be reimbursed by the
         Company. Each Member acknowledges that any cost it may incur in
         connection with an audit of such Member's income-tax return, including
         an audit of such Member's investment in the Company, is such Member's
         sole responsibility and obligation; and neither the Company, the
         Members, the Officers, nor the TMP shall be liable to any Member for
         reimbursement or sharing of any such costs.

         9.7 Conflicts of Interest.

                  9.7.1 The Members, Officers, and their Affiliates may not deal
         with, perform other services for, or sell goods or services to the
         Company unless approved by at least seventy five percent (75%) of the
         Members, except for or a transaction or series of transactions valued
         at less than $5,000; provided, however, that the Company may enter into
         the Management Agreement and Bill of Sale with FDU attached hereto as
         Exhibit A, an Equipment Lease with FDU, and a Franchise Agreement and
         Amendment thereto with HCK Licensing, LLC, and any other agreements
         which are part of the Capital Contributions set forth on Schedule A on
         the Effective Date.

         9.8 Other Activities. The Members, Officers and their Affiliates may,
during the term of this Agreement, engage in and possess an interest for their
own accounts in other business ventures of every nature and description; and
neither the Company nor any Member, by virtue of this Agreement shall have any
right in and to such independent venture or any income or profit derived
therefrom.

         9.9 Indemnification. The Company shall indemnify the Members, and
Officers against any loss, claim, or liability incurred by any of them in
connection with the Company's business, including reasonable attorneys' fees;
provided, however, that the Person to be indemnified acted in good faith and was
not grossly negligent or guilty of willful misconduct. Any amount paid to
indemnify a Person, however, shall be paid out of Company Property only, and
Members shall not be liable for such amount to be paid to indemnify a Person
except to the


                                       25
<PAGE>   26
extent of any amount of the Capital Contribution of a Member, including an
Additional Capital Contribution obligation pursuant to a Capital Call, that is
due and owing to the Company and remains unpaid. Neither the Company nor any
Member shall have any claim against the Officers based upon or arising out of
any act or omission of the Officers; provided, however, that such Officer acted
in good faith and was not grossly negligent or guilty of willful misconduct.

         9.10 Liability Under Other Agreements. The obligations of the Members,
Officers, or any of their Affiliates, pursuant to any agreement or contract
entered into in their personal capacity with the Company (whether or not such
agreements are referred to herein) shall be separate and distinct from their
obligations hereunder and any default or failure of performance with respect to
such separate agreements or contracts, unless otherwise specified in this
Agreement, shall have the consequences provided for in such separate agreements
or contracts or by applicable law and shall not constitute a breach hereunder.

         9.11 Execution of Instruments.

                  9.11.1 All deeds, mortgages, bonds, checks, contracts, and
         other instruments pertaining to the business and affairs of the Company
         shall be signed on behalf of the Company by the Chief Executive Officer
         (President), any Vice President, the Chief Financial Officer
         (Treasurer), the Secretary (if any), or by such other person or persons
         as may be designated from time to time by the Members.

                  9.11.2 If a document must be executed by persons holding
         different positions or functions and one person holds such positions or
         exercises such functions, that person may execute the document in more
         than one capacity if the document indicates each such capacity.

         9.12 Advances. The Company may by an act of the Members advance money
to its Officers, or employees to cover expenses that can reasonably be
anticipated to be incurred by them in the performance of their duties and for
which they would be entitled to reimbursement in the absence of an advance.

                                    ARTICLE 10
                              INTENTIONALLY OMITTED

                                   ARTICLE 11
                                    OFFICERS

         11.1 Number and Designation. The Company shall have one or more natural
persons exercising the functions of the position of Chief Executive Officer and
Chief Financial Officer. The Members may elect such other Officers or agents as
it deems necessary for the Company's operation and management, with such powers,
rights, duties, and responsibilities as may be determined by the Members, each
of whom shall have the powers, rights, duties, and responsibilities set forth in
this Agreement unless otherwise determined by the Members. Any of the positions
or functions of those positions may be held by the same person.


                                       26
<PAGE>   27
         11.2 Chief Executive Officer. Unless provided otherwise by a resolution
adopted by the Members, the Chief Executive Officer shall be the chief executive
officer of the Company and: (a) shall have general active management of the
Company's business; (b) shall, when present, preside at all meetings of the
Members; (c) shall see that all orders and resolutions of the Members are
carried into effect; (d) may maintain records of and certify proceedings of the
Members; and (e) shall perform such other duties as may from time to time be
prescribed by the Members. So long as the Company maintains a management
agreement with FDU relating to the management of the Company's restaurant and
entertainment-club operations, the Chief Executive Officer shall be an officer
of FDU.

         11.3 Chief Financial Officer.

                  11.3.1 Unless provided otherwise by a resolution adopted by
         the Members, the Chief Financial Officer shall be the chief financial
         officer of the Company, shall act as the Company's treasurer, and
         shall: (a) keep accurate financial records for the Company; (b) deposit
         all monies, drafts, and checks in the name of and to the credit of the
         Company in such banks and depositories as the Members shall designate
         from time to time; (c) endorse for deposit all notes, checks, and
         drafts received by the Company as ordered by the Members, making proper
         vouchers therefor; (d) disburse Company funds and issue checks and
         drafts in the Company's name, as ordered by the Members; (e) render to
         the Chief Executive Officer and the Members, whenever requested, an
         account of all of such Officer's transactions as treasurer and of the
         Company's financial condition; and (f) perform such other duties as may
         be prescribed by the Members or the Chief Executive Officer from time
         to time.

                  11.3.2 Unless otherwise determined by the Members, the
         treasurer shall also be the Chief Financial Officer of the Company. If
         an Officer other than the treasurer is designated Chief Financial
         Officer, the Chief Financial Officer shall perform such duties as may
         from time to time be assigned by the Members.

         11.4 President. Unless otherwise determined by the Members, the Chief
Executive Officer shall also be the Company's President. If an Officer other
than the Chief Executive Officer is designated President, the President shall
perform such duties as may from time to time be assigned by the Members.

         11.5 Vice Presidents. Any one or more Vice Presidents, if any, may be
designated by the Members as Executive Vice President or Senior Vice President.
During the absence or disability of the President, it shall be the duty of the
highest ranking Executive Vice President, and, in the absence of any such
Officer, it shall be the duty of the highest ranking Senior Vice President or
other Vice President, who shall be present at the time and able to act, to
perform the duties of the president. The determination of who is the highest
ranking of two or more persons holding the same position shall, in the absence
of specific designation of order of rank by the Members, be made on the basis of
the earliest date of appointment or election, or, in the event of simultaneous
appointment or election, on the basis of the longest continuous employment by
the Company.


                                       27
<PAGE>   28
         11.6 Secretary. The Secretary, unless otherwise determined by the
Members, shall attend all meetings of the Members, shall record or cause to be
recorded all proceedings thereof in a book to be kept for that purpose, and may
certify such proceedings. Except as otherwise required or permitted by law or by
this Agreement, the Secretary shall give or cause to be given notice of all
meetings of the Members.


         11.7 Authority and Duties. In addition to the foregoing authority and
duties, all Officers of the Company shall respectively have such authority and
perform such duties in the management of the business of the Company as may be
designated from time to time by the Members. Unless prohibited by a resolution
approved by the Members present, an Officer elected or appointed by the Members
may, without the approval of the Members, delegate some or all of the duties and
powers of a position to other persons.

         11.8 Term.

                  11.8.1 All Officers of the Company shall hold office until
         their respective successors are chosen and have qualified or until
         their earlier death, resignation, or removal.

                  11.8.2 An Officer may resign at any time by giving written
         notice to the Company. The resignation is effective without acceptance
         when the notice is given to the Company, unless a later effective date
         is specified in the notice.

                  11.8.3 An Officer may be removed at any time, with or without
         cause, by a resolution approved by the Members, subject to the
         provisions of this Agreement.

                  11.8.4 Vacancies in a position due to death, resignation,
         removal, disqualification, or other cause may, or in the case of a
         vacancy in the position of Chief Executive Officer or Chief Financial
         Officer shall, be filled for the unexpired portion of the term by an
         individual designated by an act of the Members.

         11.9 Salaries. The salaries of all Officers, if any, shall be fixed by
the Members or by the Chief Executive Officer if authorized by the Members.

                                   ARTICLE 12
                               MEETING OF MEMBERS

          12.1 Place of Meetings. Each meeting of the Company's Members shall be
held in Memphis, Tennessee as designated by the Chief Executive Officer or at
such other place as may be designated by the Chief Executive Officer or the
Members.


                                       28
<PAGE>   29
         12.2 Regular Meetings. Regular meetings of the Members may be held on
an annual or other less frequent basis as determined by the Members; provided,
however, that if a regular meeting has not been held during the immediately
preceding 15 months, a Member or Members owning three percent (3%) or more of
the voting power of all Membership Interests entitled to vote may demand a
regular meeting of Members by written demand given to the Chief Executive
Officer or Chief Financial Officer. If allowed by this Agreement, the Members
entitled to vote shall at each regular meeting transact any business; provided,
however, that no business with respect to which special notice is required by
law shall be transacted unless such notice shall have been given.

         12.3 Special Meetings Special meetings of the Members may be called for
any purpose or purposes at any time by the Chief Executive Officer; by the Chief
Financial Officer; or by one or more Members owning not less than ten percent
(10%) of the voting power of all Membership Interests of the Company entitled to
vote, who shall demand such special meeting by written notice given to the Chief
Executive Officer or the Chief Financial Officer of the Company specifying the
purposes of such meeting.

         12.4 Meetings Held Upon Member Demand. Within 10 days after receipt of
a demand by the Chief Executive Officer or Chief Financial Officer from any
Member or Members entitled to call a meeting of the Members, it shall be the
duty of the Chief Executive Officer to cause a special or regular meeting of
Members, as the case may be, to be duly called and held on notice no later than
30 days after receipt of such demand. If the Chief Executive Officer fails to
cause such a meeting to be called and held as required by this Section, the
Member or Members making the demand may call the meeting by giving notice as
provided in Section 12.6 at the Company's expense.

         12.5 Adjournments. Any meeting of the Members may be adjourned from
time to time to another date, time, and place. If any meeting of the Members is
so adjourned, no notice as to such adjourned meeting need be given if the date,
time, and place at which the meeting will be reconvened are announced at the
time of adjournment.

         12.6 Notice of Meetings. Unless otherwise required by law, and except
as stated in Section 12. 7, written notice of each meeting of the Members,
stating the date, time, and place and, in the case of a special meeting, the
purpose or purposes, shall be given at least ten days and not more than 60 days
prior to the meeting to every owner of Membership Interests entitled to vote at
such meeting except as specified in Section 12.5 or as otherwise permitted by
law. Except as stated in Section 12.7, the business transacted at a special
meeting of Members is limited to the purposes stated in the notice of the
meeting.

         12.7 Waiver of Notice. A Member may waive notice of the date, time,
place, and purpose or purposes of a meeting of Members. A Member's waiver of
notice is effective whether given before, at, or after the meeting, and whether
given in writing, orally, or by attendance. A Member's attendance at a meeting
waives notice of that meeting, unless the Member objects at the beginning of the
meeting to the transaction of business because the meeting is not lawfully
called or convened, or objects before a vote on an item of business because the
item may not lawfully be considered at that meeting and does not participate in
the consideration of the item at that meeting.


                                       29
<PAGE>   30
         12.8 Voting Rights. Except as otherwise provided in this Agreement, a
Member shall have one vote for each Unit of Membership Interest. If a Member
votes without designating the proportion of the Membership Interest voted in a
particular way, the Member is deemed to have voted all of the Membership
Interest in that way.

         12.9 Proxies. A Member may cast or authorize the casting of a vote by
filing a written appointment of a proxy with an Officer of the Company at or
before the meeting at which the appointment is to be effective. The Member may
sign or authorize the written appointment by telegram, cablegram, or other means
of electronic transmission setting forth or submitted with information
sufficient to determine that the Member authorized such transmission. Any copy,
facsimile, telecommunication, or other reproduction of the original of either
the writing or transmission may be used in lieu of the original; provided,
however, that it is a complete and legible reproduction of the entire original.

         12.10 Quorum. The owners of a majority of the voting power of the
Membership Interests entitled to vote at a meeting of the Members are a quorum
for the transaction of business, unless otherwise provided in the Certificate or
this Agreement. If a quorum is present when a duly called or held meeting is
convened, the Members present may continue to transact business until
adjournment, even though the withdrawal of Members originally present leaves
less than the proportion otherwise required for a quorum.

         12.11 Acts of Members. Except as otherwise required by law or specified
in the Certificate or expressly set forth in this Agreement, the Members shall
only take action by the affirmative vote of the owners of seventy-five percent
(75%) of the voting power of the Membership Interests at a duly called meeting.

         12.12 Action Without a Meeting.

                  12.12.1  Any action required or permitted to be taken at a
         meeting of the Members may be taken by written action signed by the
         Members who own voting power equal to the voting power that would be
         required to take the same action at a meeting of Members at which all
         Members were present.

                  12.12.2 A written action is effective when signed by the
         required Members, unless a different effective time is provided in the
         written action. When a written action is to be taken by less than all
         Members, such action shall not be effective unless the text of the
         proposed action shall have been delivered to all Members and no Members
         shall have elected in writing within three days of receipt of the
         proposed action to call a special meeting of the Members with respect
         to such proposed action.

                  12.12.3 Intentionally omitted.

                                   ARTICLE 13
                          BOOKS OF ACCOUNT AND REPORTS


                                       30
<PAGE>   31
         13.1 Books of Account. The Members shall cause to be kept complete and
accurate accounts of all Company transactions in proper books of account and
shall enter or cause to be entered therein a full and accurate account of each
and every Company transaction in accordance with accounting principles as set
forth in Section 13.2. The Company's books and records shall be closed and
balanced as of the end of each Fiscal Year. The Company's books of account and
other records shall at all times be kept at the Company's principal executive
office and the Members shall have access to and may inspect and copy any of such
books and records at all reasonable times and upon reasonable notice.

         13.2 Accounting Practices. The Company's books of account shall be kept
on the accrual basis, according to generally accepted accounting principles
consistently applied. Such principles shall be applied by the Members upon the
advice of the Company's accountants. The Members shall retain a firm of
independent certified public accountants to assist in the maintenance and
preparation of such books, records, and reports and to periodically audit such
books, records and reports, unless otherwise agreed by the Members.

         13.3 Bank Accounts. The Company shall maintain bank accounts in such
bank or banks as may be selected by the Members. All withdrawals from such bank
accounts shall be made by check or other instrument, signed by such Person or
Persons as the Members may designate.

         13.4 Report to Members. Not later than 60 days after the end of the
Company's Fiscal Year, the Chief Executive Officer shall furnish to each Member
a report of the business and operations of the Company during such Fiscal Year,
which report shall constitute the accounting of the Members for such fiscal
year. The report shall contain financial statements, including statements of
assets and liabilities, income and expenses, Members' equity and changes in
financial position, cash flow, and of the amount and nature of any compensation
paid to the Members, Officers, or any of their Affiliates during the period,
including a description of the services performed in relation thereto, and shall
otherwise be in such form and have such content as the Members deems proper.
Such report shall state income from every source, including net gains from
dispositions or sales of Company Property.

         13.5 Partnership Tax Status and Information.

                  13.5.1 The Members acknowledge that the Company will be
         treated as a "partnership" for income-tax purposes.

                  13.5.2 Not later than 90 days after the end of the Company's
         Fiscal Year, the Chief Financial Officer shall cause to be delivered to
         each Person who was a Member at any time during such Fiscal Year, a
         Form K-l and such other information, if any, with respect to the
         Company as may be necessary for the preparation of such Person's
         federal, state, and local income-tax (or informational) returns,
         including a statement showing such Person's share of income, gain, or
         loss and credits for such Fiscal Year, as determined for federal,
         state, and local income-tax purposes.


                                       31
<PAGE>   32
                   13.5.3 In addition, the Chief Executive Officer shall from
          time to time cause to be delivered to each Member adequate information
          relating to the Company's operations to enable each Member to complete
          and file all federal, state, and local estimated tax returns for which
          the Member may be liable.

         13.6 Tax Basis Elections. In the event of a transfer or repurchase by
the Company or Distribution of Company Property in exchange for all or part of
any Member's Interest, the Company may elect, pursuant to Code Section 754 (or
any successor provision), to adjust the basis of Company Property. Such election
must be agreed to by Members holding more than 75 percent (75%) of the Voting
Interests.

                                   ARTICLE 14
                        TRANSFER OF MEMBERSHIP INTERESTS

         14.1 General Restriction. Except as permitted under this ARTICLE 13, no
part of a Member's Interest may be assigned or otherwise Transferred, whether
voluntarily or involuntarily, nor may a Member enter into a binding agreement to
assign or otherwise transfer all or any part of the Member's Interest. Any
transfer or attempted transfer of all or any portion of an Interest in violation
of this Agreement shall nevertheless be subject to the applicable purchase
options and rights of ARTICLE 16. The Company's records shall be noted to
prevent the sale or assignment of Interests except in accordance with this
ARTICLE 13 and ARTICLE 16.

         14.2 Permitted Transfers. The following Transfers enumerated in
Sections 14.2.1 through 14.2.4 are permitted to the extent provided in this
Section 14.2 (each a "Permitted Transfer"); provided, however, that any such
Permitted Transfer and the parties thereto comply with all of the applicable
conditions pertaining to Permitted Transfers under this ARTICLE 13:

                  14.2.1 All or any portion of a Member's Governance Rights may
         be assigned, without the consent of any other Member, to a
         business-entity Affiliate of the transferring Member;

                  14.2.2 All or any portion of a Member's Financial Rights may
         be assigned, without the consent of any other Member, to another Member
         of the same class; provided, however, that such transferee shall
         thereafter continue to be subject to the options and rights of first
         refusal set forth in ARTICLE 16;

                  14.2.3 All or any portion of a Membership Interest held by
         Belz may be assigned or sold by Belz to any other Person; provided,
         however, that any such transferee shall thereafter become an additional
         Member subject to all provisions of this Agreement and shall not have
         the same continuing rights as Belz under this Section 14.2.3 to
         transfer such Membership Interests, specifically including but not
         limited to transfer restrictions contained in this ARTICLE 13, and
         whose admittance as an additional Member is subject to the applicable
         provisions of 0.

                  14.2.4 In addition, all or any portion of a Member's Interest
         may be assigned if neither the Company nor any of the Members purchase
         the Interest pursuant to ARTICLE 16.


                                       32
<PAGE>   33
         14.3 Conditions to Permitted Transfers. Any Permitted Transfer of all
or any portion of the Units of a Member's Membership Interest under this
Agreement shall be effective only if each of the following conditions is
satisfied:


                  14.3.1 Governance Rights. If the Transfer will include any
         Governance Rights, the Member shall Transfer all such Governance
         Rights, coupled with a simultaneous Transfer to the same transferee of
         all of the Member's Financial Rights relating to such Membership
         Interest.

                  14.3.2 Investment Representations. The Member or the proposed
         transferee shall provide the following documentation to the Members:
         (i) an opinion of counsel (whose fees and expenses shall be borne by
         such Member or transferee), satisfactory in form and substance to the
         Members, to the effect that either (1) the Transfer constitutes an
         exempt transaction and does not require registration under applicable
         securities laws, or (2) the Interest to be Transferred is duly and
         properly registered under all applicable securities laws; (ii) evidence
         satisfactory to the Members that the transferee is eligible to become a
         Member pursuant to this ARTICLE 13 and of the transferee's agreement to
         comply with and be bound by the terms of this Agreement and to execute
         any and all documents that the Members may deem necessary in connection
         with the transfer and/or admission of the proposed transferee as a
         Member; (iii) evidence satisfactory to the Members that the Transfer
         will not impair the ability of the Company to be taxed as a partnership
         for federal income-tax purposes under the Code or to take advantage of
         accelerated depreciation under the Code; (iv) representations in form
         and substance satisfactory to the Members that the transferee is
         acquiring the Interest for his, her, or its own account for investment
         and not with a view to the distribution thereof; and (v) a written
         agreement signed by the transferee that the Interest being acquired
         will in no event be resold unless properly registered under all
         applicable securities laws or exempt therefrom.

                  14.3.3 Other Documents and Expenses. As a condition to
         admission as a Member, any transferee of all or part of the Interest of
         any Member, or the legatee or distributee of all or any part of the
         Interest of any Member, shall execute and acknowledge such instruments,
         in form and substance satisfactory to the Members, as the Members shall
         deem necessary or advisable to effect such admission and to confirm the
         agreement of the person being admitted as such Member to be bound by
         all the terms and provisions of this Agreement. Such transferee,
         legatee, or distributee shall also pay all reasonable expenses in
         connection with such admission as a Member, including but not limited
         to legal fees and the costs of preparing any amendment to this
         Agreement, if necessary or desirable in connection therewith.

                  14.3.4 Effective Date of Transfer. All Transfers of Interests
         occurring during any month shall be deemed effected on the first day of
         the month next following the month in which the Transfer occurs.


                                       33
<PAGE>   34
                  14.3.5 Restriction on Majority Transfer. Notwithstanding the
         foregoing provisions of this ARTICLE 13, no Transfer of a Membership
         Interest may be made if the Interest sought to be Transferred, when
         added to the total of all other Membership Interests Transferred within
         the period of 12 consecutive months prior thereto, would result in the
         termination of the Company under Code Section 708.

         14.4 Acquit Company. In the absence of written notice to the Company of
any assignment of a Membership Interest, any payment by the Company to the
assigning Member or its, administrators or representatives shall acquit the
Company of liability, to the extent of such payment, to any other Person who may
have an interest in such payment by reason of a Transfer by the Member or
otherwise.

         14.5 Involuntary Transfers.

                  14.5.1 Except as expressly permitted by the LLC Act, a
         Member's Voting Rights shall not be subject to involuntary transfer (as
         that term is defined in ARTICLE 16), by operation of law or otherwise,
         and any attempted involuntary transfer shall be void and of no effect.
         If such a transfer is attempted, whether or not permitted by applicable
         law, the affected portion of the Member's Interest shall thereupon be
         subject to the options and rights of first refusal set forth in ARTICLE
         16.

                  14.5.2 If all or any portion of a Member's Financial Rights
         are the subject of a foreclosure of pledge or involuntary transfer (as
         those terms are defined in ARTICLE 16), or if the Member becomes
         insolvent (as that term is defined in ARTICLE 16), the affected portion
         of the Member's Financial Rights shall thereupon be subject to the
         options and rights of first refusal set forth in ARTICLE 16.

         14.6 Restriction on Majority Transfer. Notwithstanding the foregoing
provisions of this Article, no assignment or other Transfer of a Membership
Interest may be made if the Interest sought to be Transferred, when added to the
total of all other Membership Interests Transferred within the period of 12
consecutive months prior thereto, would result in the termination of the Company
under Code Section 708.

         14.7 Prohibited Transfers.

                  14.7.1 Any purported Transfer of an Interest that is not
         permitted under this Article or ARTICLE 16 shall be null and void and
         of no force or effect whatsoever; provided, however, that if the
         Company is required by applicable law to recognize a Transfer that is
         not so permitted (or if the Members in their sole discretion elects to
         recognize a transfer that is not so permitted), the Transferred
         Interest shall be strictly limited to the transferor's Financial Rights
         as provided by this Agreement with respect to the Transferred Interest,
         which may be applied (without limiting any other legal or equitable
         rights of the Company) to satisfy any debts, obligations or liabilities
         for damages that the transferor or transferee of such Interest may have
         to the Company.

                  14.7.2 Subject to ARTICLE 16, in the case of a Transfer or
         attempted Transfer of an Interest that is not permitted hereunder, the
         parties engaging or attempting to


                                       34
<PAGE>   35
         engage in such transfer shall be liable to indemnify and hold harmless
         the Company and the other Members from all cost, liability, and damage
         that any of such indemnified Persons may incur (including without
         limitation incremental tax liabilities, attorneys' fees, and expenses)
         as a result of such transfer or attempted Transfer and efforts to
         enforce the indemnity required hereby.

         14.8 Limited Rights of Unadmitted Transferees. A Person who acquires
any part of an Interest, but is not admitted as a substitute Member: (a) shall
be subject to the restrictions of this ARTICLE 13, (b) shall be entitled only to
allocations and Distributions with respect to such Interest in accordance with
this Agreement, (c) shall have no right to any information or accounting of the
affairs of the Company unless the Person has acquired the Interest as a pledge
of collateral securing debt of the Company, (d) shall not be entitled to inspect
the books or records of the Company unless the Person has acquired the Interest
as a pledge of collateral securing debt of the Company, (e) shall not be
entitled to exercise any Voting Rights, and (f) shall not have any of the other
rights of a Member under the LLC Act or this Agreement.

                                   ARTICLE 15
                             AMENDMENT OF AGREEMENT

         15.1 Amendment Procedure. When circumstances require amendment of this
Agreement to comply with any law, or at any time when Members holding 30 percent
(30%) or more of the aggregate Units may propose an amendment to this Agreement,
then the Chief Executive Officer shall call a special meeting of all Members for
the purpose of considering such proposed amendment. At least 30 days prior to
such meeting, the Members shall deliver to each Member written notice of the
meeting and a statement of the purposes of the amendment and such other matters
as the Members deems material to consideration of the amendment. The amendment
so proposed shall be adopted if approved by Members holding at least seventy
five percent (75%) of the Voting Interest; provided, however, that no Amendment
which affects the Financial Rights or Voting Interest of a Member shall be
effective unless such amendment is approved by the majority of affected Members.
Alternatively, this Agreement may be amended by a written action signed by at
least seventy five percent (75%) of the Members.

         15.2 Attorney-in-Fact. All Members shall be bound by the terms of any
amendment approved in accordance with Section 15.1 and each Member hereby
irrevocably appoints the Chief Executive Officer and his designee as its duly
appointed attorney in fact to execute on behalf of each Member an amendment or
restatement of this Agreement which was approved as provided for in Article
15.1.


                                       35
<PAGE>   36
                                   ARTICLE 16
                                   DISSOLUTION

         16.1 Liquidating Events.

                  16.1.1 The Company shall be dissolved upon the occurrence of
         any of the following events (the "Liquidating Events"):

                           16.1.l.l when the period fixed in the Certificate for
                  the duration of the Company shall expire; or

                           16.1.1.2 by the written agreement of the Members
                  holding more than seventy five percent (75%) of the
                  outstanding Units of the Company.

                           16.1.1.3 the appointment of a receiver or assignment
                  for the benefit of creditors of any substantial part of the
                  Company's property, or the commencement of any proceedings
                  under any bankruptcy, insolvency, reorganization, or
                  arrangement laws by or against Company.

                  16.1.2 As soon as possible following the occurrence of any
         Liquidating Event that causes the Company's dissolution, the
         appropriate representative of the Company shall execute a notice of
         dissolution in such form as shall be prescribed by the Delaware
         Secretary of State, setting forth the information required under the
         LLC Act and shall file that notice with the Secretary of State's
         office.

                  16.1.3 If the Company is dissolved, it shall cease to carry on
         its business upon tiling a notice of dissolution with the Delaware
         Secretary of State, except insofar as may be necessary for the winding
         up of the Company's business, but its separate existence shall continue
         until a certificate of termination has been issued by such Secretary of
         State or until a decree dissolving the Company has been entered by a
         court of competent jurisdiction.

          16.2 Distributions on Liquidation.

                  16.2.1 Upon the occurrence of a Liquidating Event, the
         Company's business shall be wound up, the Members (or other Person
         designated by all of the Members) shall take full account of the
         Company Property and liabilities, and all Property (tangible and
         intangible) shall be liquidated as promptly as is consistent with
         obtaining the fair value thereof, except as stated herein. If any
         Property is not sold, or returned to a Member as expressly provided
         herein, gain or loss shall be allocated to the Members in accordance
         with ARTICLE 6 as if such Property had been sold, at its fair market
         value at the time of the liquidation. If any Property is distributed to
         a Member, rather than sold, the Distribution shall be treated as a
         Distribution equal to the fair market value of the Property at the time
         of the liquidation, The Property of the Company shall be applied and
         distributed in the following order of priority:


                                       36
<PAGE>   37
                           16.2.1.1 The following Members shall have the
                  following Property returned to them to the extent it exists on
                  the date of liquidation:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
MEMBER         PROPERTY
--------------------------------------------------------------------------------
<S>            <C>
Lifestyle      Memphis lease rights contributed to the Company
--------------------------------------------------------------------------------
FDU            Chicago lease rights contributed to the Company
               Chicago Liquor License
               Servicemark License Agreement rights contributed to the Company.
               Equipment Lease Rights contributed to the Company
--------------------------------------------------------------------------------
H&H            Rights contributed to the Company pursuant to the
               Contribution Agreement between the Company and H&H.
--------------------------------------------------------------------------------
</TABLE>

                           16.2.1.2 to the payment of all debts and liabilities
                  of the Company, including all fees due the Members, Officers,
                  and any of their Affiliates, and including any loans or
                  advances that may have been made by the Members of the
                  Company, in the order of priority as provided by law;

                           16.2.1.3 to the establishment of any reserves deemed
                  necessary by the Members or other Person winding up the
                  Company's affairs for any contingent liabilities or
                  obligations of the Company;

                           16.2.1.4 to the Members, ratably in proportion to the
                  credit balances in their respective Capital Accounts, in an
                  amount equal to the aggregate credit balances in the Capital
                  Accounts after and including all allocations to the Members
                  under ARTICLE 6, including the allocation of any Profit or
                  Loss from the sale, exchange, or other disposition (including
                  a deemed sale pursuant to this Section) of the Company's
                  Property; and

                           16.2.1.5 finally, to the Members in accordance with
                  their respective number of Units.

                  16.2.2 The Company may offset any amount due a Member under
         this Section 16.2.2 by the amounts of (i) any debts owed the Company by
         the Member, and (ii) any damages suffered by the Company as a result of
         that Member's breach (if any) of this Agreement.

                                   ARTICLE 17
                         RIGHTS, OPTIONS, AND VALUATION
                     RESULTING FROM TRANSFERS OR WITHDRAWALS

         17.1 Affected Interests and Transferring Holders.

                  17.1.1 Apart from Section 14.2, this Article shall apply to
         "Affected Interests," which shall mean:


                                       37
<PAGE>   38
                           17.1.l.1 all or any portion of a Member's Financial
                  Rights Transferred (including attempted transfers) in
                  violation of this Agreement;

                           17.1.1.2 a Member's entire Membership Interest in the
                  event of either (i) a termination of the Member's membership,
                  whether or not a dissolution occurs, or (ii) an attempt to
                  transfer a Membership Interest, Units, or Governance Rights in
                  violation of this Agreement or as set forth in Section 17.2;
                  and

                           17.1.1.3 a Member's entire Membership Interest in the
                  event such Interest becomes subject to the right of the
                  Company or any other Member to purchase such Interest under
                  this Article for any other reason.

                  17.1.2 "Transferring Holder" shall mean: (a) a Member whose
         Affected Interest is being terminated or is the subject of a proposed
         or attempted transfer, as the case may be; (b) any non-Member
         transferee holding an Affected Interest; and (c) any legal
         representative of either (a) or (b) above.

         17.2 Events Creating Option To Buy. If any of the following events
occurs or is attempted or proposed, the Company and the Members shall have the
option and the right to buy the Affected Interest of the Transferring Holder and
that Transferring Holder shall be obligated to sell the Affected Interest
pursuant to the terms and conditions of this ARTICLE 16:

                  17.2.1 "Voluntary Transfer." A voluntary transfer shall occur
         if (i) an Affected Interest is sold, exchanged, pledged, encumbered,
         given, gifted, or Transferred, with or without full consideration to a
         non-Member; or (ii) an agreement is entered into to do any of the
         foregoing; provided, however, that if the voluntary transfer is a
         Permitted Transfer under Section 14.2, it shall not be an event
         creating an immediate option to buy the Affected Interest.

                  17.2.2 "Foreclosure of Pledge." Foreclosure of a pledge shall
         occur if (i) any non-Member attempts to gain absolute rights to an
         Affected Interest as a result of default under a security interest,
         whether pursuant to the Uniform Commercial Code or otherwise and
         regardless of whether the security interest is termed as a pledge,
         collateral, a conditional assignment, an outright assignment, or in any
         equivalent manner and regardless of whether the security interest is
         perfected; (ii) an agreement is entered into to do any of the foregoing
         except as permitted by Section 14.2; or (iii) the foreclosure is termed
         a repossession, cancellation, enforcement, foreclosure, or similar
         term.

                  17.2.3 "Involuntary Transfer." An involuntary transfer shall
         occur if a non-Member attempts to gain absolute rights to an Affected
         Interest by (i) sale pursuant to a levy of execution, (ii) garnishment,
         (iii) attachment, (iv) property division or settlement in a
         marital-dissolution proceeding, (v) the dissolution of a Member that is
         a corporation, trust, or other business entity, or (vi) other legal
         process, including without limitation bankruptcy or receivership
         proceedings intended to transfer the Affected Interest to a non-Member.


                                       38
<PAGE>   39
                  17.2.4 "Insolvency." A Transferring Holder shall be considered
         insolvent upon filing a petition for bankruptcy or being the subject of
         a petition for involuntary bankruptcy (which involuntary petition is
         not dismissed within forty-five days of filing), or if a receiver,
         whether permanent or temporary, of a Transferring Holder's property or
         any part thereof, shall be appointed by a court of competent authority,
         or if a Transferring Holder shall make a general assignment for the
         benefit of creditors, or if any judgment against a Transferring Holder
         remains unsatisfied or unbonded of record for thirty days or longer.

                  17.2.5 "Other Liquidating Event." Any other Liquidating Event
         (as defined in ARTICLE 15) that is voluntarily caused by a Member and
         requires dissolution of the Company under the LLC Act, whether or not
         dissolution occurs.

         17.3 Notice To Company and Members. Each Transferring Holder shall give
written notice to the Company and to the other Members within 30 days of the
occurrence of any event described in Section 17.2. Such notice shall be sent,
return receipt requested, to a Company Officer other than the Transferring
Holder, at the Company's principal administrative office. The Company's
Secretary (or Chief Executive Officer) shall also send the notice to each Member
at the most recent address reflected on the Company's records or such other
residential address as the party giving notice has reason to know is more
current. Such notices shall contain the following information:

                  17.3.1 Notice of Voluntary Transfer. Any notice of voluntary
         transfer shall identify the transferee to whom the Transferring Holder
         desires to sell, exchange, or give an Affected Interest, a description
         of the Affected Interest and the consideration, if any, for the
         transfer. The notice shall also identify all pertinent terms of the
         transfer. A copy of all agreements and documents pertinent to the
         transfer shall be attached to the notice.

                  17.3.2 Notice of Foreclosure of Pledge. Any notice of
         foreclosure of pledge of an Affected Interest shall identify to whom
         the Member pledged the Affected Interest, a description of the Affected
         Interest, the reason for the foreclosure, and shall identify all
         material terms of the pledge agreement and the foreclosure. A copy of
         all agreements and documents relating to the pledge shall be attached
         to the notice.

                  17.3.3 Notice of Involuntary Transfer. Any notice of
         involuntary transfer shall identify the order, decree, or directive
         requiring the involuntary transfer of an Affected Interest, a
         description of the Affected Interest, the reason for the involuntary
         transfer and the pertinent terms of the involuntary transfer. A copy of
         the relevant order, decree, or directive shall be attached to the
         notice.

                  17.3.4 Notice of Insolvency. Any notice of insolvency shall
         identify the manner in which the Transferring Holder is deemed
         insolvent (as defined in Section 17.2.4) and shall identify any trustee
         or fiduciary appointed with regard to the Transferring Holder. A copy
         of any petition for bankruptcy, petition for involuntary bankruptcy,
         order appointing a receiver, whether permanent or temporary, order
         creating an assignment for the benefit of the Transferring Holder's
         creditors and/or any judgment against the


                                       39
<PAGE>   40
          Transferring Holder that has remained unsatisfied or unbonded for a
          period of 30 days or longer shall be attached to the notice.

                  17.3.5 Notice of Liquidating Event. A notice of Liquidating
         Event shall identify all pertinent details of the Liquidating Event.

                  17.3.6 Notice of Other Liquidating Event. A notice of any
         other Liquidating Event (within the meaning of Section 16.1) shall
         specify the date, the cause, and a description of the Liquidating
         Event.

         17.4 Company's Option To Purchase.

                  17.4.1 For the period commencing upon the occurrence of an
         event giving rise to an option to buy, as specified in Section 17.2,
         and continuing thereafter until 30 days after the receipt by the
         Company of notice of the event giving rise to the option, which notice
         is in substantial compliance with the provisions of Section 17.3, the
         Company shall have the option to purchase all, but not less than all,
         of the Affected Interest of a Transferring Holder, which option and
         right to purchase are at the price and according to the terms and
         conditions provided in this ARTICLE 16.

                  17.4.2 The Company may exercise its right and option to
         purchase by giving notice to the Transferring Holder and to the other
         Members of its intention to exercise its right and option before the
         expiration of the 30 day period from the date notice is given to the
         Company. In no event shall the Transferring Holder vote in its capacity
         as a Member, on the question of whether the Company will elect to
         exercise its option.

         17.5 Members' Option To Purchase.

                  17.5.1 If the Company does not exercise its option to purchase
         within the option period provided in Section 17.4, the remaining
         Members shall have, for a 30-day period thereafter, the option and
         right to collectively purchase all, but not less than all, of the
         Affected Interest, which option and right to purchase are at the price
         and according to the terms and conditions provided in this ARTICLE 16.
         Each Member (other than the Transferring Holder) shall have the option
         and right to purchase that fraction of the Affected Interest, which the
         number of Units owned by each bears to the total number of Units owned
         by all such other Members (excluding any Interest held by the
         Transferring Holder), provided all of such Affected Interest is
         purchased by the Members. If any Member does not exercise its rights
         under this Section, such other Members wishing to exercise their rights
         under this Section shall be entitled to purchase the remainder of the
         Affected Interest ratably with any other Members exercising their
         rights herein in proportion to their Membership Interests provided all,
         but not less than all of, such Affected Interests are purchased.

                  17.5.2 Members shall exercise their purchase option by giving
         notice to the Transferring Holder and to the other Members and the
         Company of their intention to exercise their purchase option within the
         30-day period.


                                       40
<PAGE>   41
         17.6 Failure of Company and Members To Exercise Option.

                  17.6.1 If the Company does not exercise its purchase option as
         provided for in Section 17.4, and if the Members do not exercise their
         purchase option as provided for in Section 17.5, then the Transferring
         Holder shall be free to retain or dispose the Affected Interest
         identified in the notice given pursuant to Section 17.3.

                  17.6.2 In the event that a disposition of the Affected
         Interest is not made in accordance with the notice given pursuant to
         Section 17.3, within thirty (30) days of the date of said notice, and
         the Company is not liquidated under Section 16.2 during that period,
         then the provisions and conditions of this Agreement (including without
         limitation Section 17.6 and this ARTICLE 16) shall continue to apply to
         the Affected Interest. If a disposition of the Affected Interest is
         completed in accordance with the notice provided given pursuant to
         Section 17.3, the Affected Interest and said transferee shall be
         subject to the provisions and conditions of this Agreement (including
         without limitation Section 17.6 and this ARTICLE 16), even if said
         transferee has not executed this Agreement.

         17.7 Purchase Price. In the event of a purchase and sale of an Affected
Interest pursuant to the provisions of this Agreement, it is agreed that, for
the purpose of determining the purchase price, the value of the Affected
Interest shall be the total price offered by the bona fide purchaser for value,
or if there is no bona fide purchaser, its fair market value, determined by
agreement or appraisal as follows:

                  17.7.1 Agreement. The parties to the purchase and sale shall
         attempt to agree upon the fair market value of the Affected Interest,
         within 15 days of the date of notice of exercise of the option to
         purchase.

                  17.7.2 Appraisal. If the parties are unable to agree upon a
         valuation within the applicable period, the value of the Affected
         Interest shall be determined by appraisal as follows. The Transferring
         Holder shall name one certified public accountant (the "CPA") and one
         licensed real estate appraiser (the "Appraiser"), and the acquiring
         party (the Company or other Members, as the case may be) shall
         collectively name one CPA and one Appraiser. The CPAs and Appraisers
         shall jointly determine the fair market value of the Affected Interest,
         with the Appraisers determining the fair market value of all real
         estate and the CPAs determining the Affected Interest's share of the
         net value of the Company's liabilities and Property, excluding any
         goodwill, using the Appraisers' valuation for all real estate. If the
         two CPAs and two Appraisers cannot agree upon the relevant value within
         30 days, the two appointed CPAs shall appoint a third CPA or the two
         appointed Appraisers shall appoint a third Appraiser (or both, as
         needed) who, within 15 days, shall make a determination of fair market
         value of the Affected Interest, and which determination shall be final.

                  17.7.3 Valuation Standard. For purposes of this Agreement, the
         fair market value of an Affected Interest shall be the cash price that
         would be payable by a reasonable seller to an unrelated reasonable
         buyer for said Affected Interest, without a discount for


                                       41
<PAGE>   42
         minority interest or a premium for majority interest, except that a
         discount shall be applied for any lack of Governance Rights.

         17.8 Purchase Price under Foreclosure Pledge. Notwithstanding anything
to the contrary contained in this Agreement, the purchase price in the event of
a foreclosure of a pledge of an Affected Interest shall be not less than the
amount necessary to obtain said Affected Interest free and clear of any rights,
liens, or encumbrances in favor of the person attempting to foreclose upon such
Affected Interest.

         17.9 Closing Date and Terms of Purchase.

                  17.9.1 Closing Date. In the event of a sale and purchase of an
         Affected Interest pursuant to the terms of this Agreement, the sale and
         purchase shall close on a reasonable date, at a reasonable place, and
         at a reasonable time to be selected by the purchasing party, which
         shall be no later than 90 days after notice of exercise of an option to
         purchase.

                  17.9.2 Offset of Purchase Price. The Company (or any
         purchasing Members) may offset the purchase price of an Affected
         Interest by the amounts of any debts or damages described in Section
         16.2.2, and such offset may be used first to reduce amounts due at
         closing under Section 17.9.3 below, and then the first payments due on
         any promissory note delivered under Section 17.9.4 below.

                  17.9.3 Cash Payment at Closing. Subject to Section 17.9.2
         above, on the date of closing, the purchasing party (which may be the
         Company, a single Member, or several Members, in which case they shall
         be collectively referred to as the "purchasing party") shall pay to the
         Transferring Holder an amount of cash equal to 25 percent (25%) of the
         purchase price of the Affected Interest at the closing and the
         remaining amount owing shall be paid to the Transferring Holder
         annually in five equal annual installments together with simple
         interest at a rate of eight percent (8%) (or the applicable federal
         rate in effect under Code Section 1274(d) as of the closing date if
         greater), commencing on the first anniversary of the closing date.

                  17.9.4 Promissory Note (or Notes) at Closing.

                           17.9.4.1 In the case of a single purchasing party,
                  the purchasing party shall execute a promissory note for the
                  remaining balance of the purchase price, which note shall
                  contain the provisions of and be in the form of that note
                  attached hereto as SCHEDULE 17.9.4.

                           17.9.4.2 In the event of a purchase by more than one
                  purchasing party, the purchasing parties shall execute
                  separate notes for their proportionate shares of the unpaid
                  purchase price, which notes shall be pursuant to the terms of
                  and in the form of the note attached hereto as SCHEDULE
                  17.9.4.

                  17.9.5 Transfer and Pledge of Affected Interest.


                                       42
<PAGE>   43
                           17.9.5.1 Upon delivery of the cash payment at closing
                  and delivery of the installment note or notes specified in
                  Section 17.9.4, the Affected Interest shall be assigned to the
                  purchasing party or parties with all necessary instruments
                  required to complete the transfer of the Affected Interest on
                  the Company's required records.

                           17.9.5.2 Once the Affected Interest has been
                  Transferred, the Affected Interest shall be pledged by the
                  purchasing party or parties to the Transferring Holder, to be
                  held as collateral security for the payment of said notes
                  pursuant to the provisions of the Pledge Agreement (attached
                  hereto as SCHEDULE 17.9.5), which each purchasing party shall
                  execute on the date of closing. The purchasing party or
                  parties shall have the right, while said pledge is effective,
                  to vote any pledged Voting Right and to receive Distributions
                  (other than liquidating Distributions under Section 14.5).

                  17.9.6 Guaranty Contribution Agreement. In the event a
         Member's Membership Interest is purchased under this ARTICLE 16, and
         the former Member is required to pay a Company debt because of the
         former Member's guaranty of the debt, the remaining Members agree to
         contribute toward said payment by reimbursing said former Member for
         their respective shares of said payment, reduced by any amounts due the
         Company under Section 17.9.2 that have not been paid or offset against
         the purchase price. Each Member's share of said payment shall be that
         fraction of said payment which the Units held by each Member bears to
         the total of Units owned by all Members.

         17.10 Tag-Along and Drag-Along Options. If there is a Voluntary
Transfer of Affected Interests representing either: (1) greater than seventy
five percent (75%) of the total Membership Interests held by all Members, or (2)
greater than seventy five percent (75%) of the aggregate Voting Interests held
by all Members, then the delivery of notice pursuant to Section 17.3 shall,
after the expiration of the Company's option described in Section 17.4, and in
addition to the Members' options described under Section 17.5, create the
following options for the Members:

                  17.10.1 Tag-Along Option. At the option of each Member other
         than the Transferring Holder (collectively, the "Remaining Members"),
         the Transferring Holder agrees to condition its sale to the proposed
         transferee upon the transferee's acquisition of a "proportionate share"
         of the Units of Membership Interest of the Remaining Members who
         exercise this Tag-Along Option, at the same per-Unit price and under
         the same terms and conditions involved in the sale of the Affected
         Interests by the Transferring Holder. For purposes of this Section
         17.10.1, a "proportionate share" shall mean the percentage equal to the
         number of Units of Membership Interest that are Affected Interests
         divided by the total number of Units of Membership Interest held by the
         Transferring Holder. Remaining Members shall exercise this option by
         complying with the provisions of Section 17.5 with respect to the
         exercise period and manner of notification; and

                  17.10.2 Drag-Along Option. In connection with any sale
         triggering a Tag-Along Option pursuant to Section 17.10.1 above, the
         Transferring Holder shall have the option to require that one or more
         Remaining Members sell a "proportionate share" of their Units of
         Membership Interest to the proposed transferee at the same per-Unit
         price


                                       43
<PAGE>   44
         and under the same terms and conditions involved in the sale of the
         Affected Interests by the Transferring Holder. For purposes of this
         Section 17.10.2, a "proportionate share" shall mean the percentage
         equal to the number of Units of Membership Interest that are Affected
         Interests divided by the total number of Units of Membership Interest
         held by the Transferring Holder. The Transferring Holder shall exercise
         this option by reference to the option period and manner of
         notification provided for in Section 17.5.

                                   ARTICLE 18
                                  MISCELLANEOUS

         18.1 Notices.

                           18.1.1 All notices required to be given by this
                  Agreement shall be made in writing either:

                           18.1.1.1 by personal delivery to the party requiring
                  notice; or

                           18.1.1.2 by mailing the notice in the U.S. mail to
                  the last known address of the party requiring notice, by
                  certified or registered mail, return receipt requested and
                  postage prepaid; or

                           18.1.1.3 by national recognized courier or confirmed
                  facsimile.

                  18.1.2 The effective date of the notice shall be the earlier
         of (a) the date actually received by the recipient, (b) the date of the
         written receipt of any personal delivery pursuant to Section 18.1.1.1
         above, (c) the date of the return receipt in Section 18.1.1.2 above or
         (d) the date which is three "postal days" after such notice is sent by
         certified mail, postage prepaid, return receipt requested, to a Member
         at the address as shown from time to time on the records of the Company
         where "postal days" is a day on which the US. Postal Service delivers
         mail.

                  18.1.3 Such notices will be given to a Member at the address
         specified in the Company's required records. Any Member or the Company
         may, at any time by giving five days' prior written notice to the other
         Members and the Company, designate any other address in substitution of
         the foregoing address to which such notice will be given.

                  18.1.4 All notices, offers, demands, certificates, or other
         communications required or permitted under this Agreement shall be in
         writing, signed by the Person giving the same. Any Member may specify a
         different address by notice to the Chief Executive Officer.

         18.2 Consent and Waiver. No consent under and no waiver of any
provision of this Agreement on any one occasion shall constitute a consent under
or waiver of any other provision on said occasion or on any other occasion, nor
shall it constitute a consent under or waiver of the consented-to or waived
provision on any other occasion. No consent or waiver shall be enforceable
unless it is in writing and signed by the party against whom such consent or
waiver is sought to be enforced.


                                       44
<PAGE>   45
         18.3 Entire Agreement. Except for the Company's Certificate and the
Contribution Agreements of the initial Members, this Agreement constitutes the
entire agreement among the parties with respect to the Company. It supersedes
any prior agreement or understanding among them, and it may not be modified or
amended in any manner other than as set forth herein.

         18.4 Governing Law. This Agreement and the rights of the parties
hereunder shall be governed by, interpreted, and enforced in accordance with the
laws of the State of Delaware. without regard to such state's law concerning
conflicts of law.

         18.5 Binding Effect. Except as herein otherwise specifically provided,
this Agreement shall be binding upon and inure to the benefit of the Members and
their legal representatives, heirs, administrators, executors, successors, and
permitted assigns.

         18.6 Number and Gender. Wherever from the context it appears
appropriate, each term stated in either the singular or the plural shall include
the singular and the plural and pronouns stated in either the masculine, the
feminine or the neuter gender shall include the masculine, feminine, and neuter.

         18.7 Interpretation. All references herein to Articles, Sections, and
paragraphs refer to Articles, Sections, and paragraphs of this Agreement. All
headings are for reference purposes only and shall not affect the interpretation
of this Agreement.

         18.8 Severability. If any provision of this Agreement or the
application of such provision to any Person or circumstances, shall be held
invalid, the remainder of the Agreement, or the application of such provision to
Persons or circumstances other than those to which it is held invalid, shall not
be affected thereby.

         18.9 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement binding
on all Members. Each Member shall become bound by this Agreement immediately
upon signing any counterpart, independently of the signature of any other
Member. Nevertheless, in making proof hereof it will be necessary to produce
only one copy hereof signed by the party to be charged.

         18.10 Right to Specific Performance. In view of the fact that the
Membership Interests subject to this Agreement are of a closely held limited
liability company, and in view of the purposes of this Agreement, it is agreed
that the remedy at law for failure of any party to perform would be inadequate
and that the injured party or parties, at their option, shall have the right to
compel the specific performance of this Agreement in a court of competent
jurisdiction, to the extent permitted by the LLC Act and other applicable law,
and not expressly prohibited by this Agreement.

         18.11 Additional Documents and Acts. Each Member agrees to execute and
deliver such additional documents and instruments and to perform such additional
acts as may be necessary or appropriate to effectuate, carry out, and perform
all of the terms, provisions, and conditions of this Agreement and the
transactions contemplated hereby.


                                       45
<PAGE>   46
         18.12 No Third-Party Beneficiary. This Agreement is made solely and
specifically among and for the benefit of the parties hereto, and their
respective successors and assigns, and no other person will have any rights,
interest, or claims hereunder or be entitled to any benefits under or on account
of this Agreement as a third-party beneficiary or otherwise.

         18.13 Non-binding Mediation. If within 30 days, the Members have not
been able to resolve in good faith any claim, dispute, or disagreement between
Members arising out of or relating to this Agreement, then any Member may elect,
by written notice to the other Members, to submit such matter to non-binding
mediation pursuant to the commercial mediation rules of the American Arbitration
Association then in effect. If a Member makes such election, the other Members
shall submit to the mediation. The decision of the mediator shall not be binding
upon the Members; and the mediator shall not have the authority to impose a
settlement upon the Members, but shall attempt to assist the Members to reach a
satisfactory resolution of such matter.

         18.14 Arbitration.

                  18.14.1 Any controversy or claim arising out of this Agreement
         that is not resolved by the Members and, if applicable, the Company
         (the "disputants") by mediation as set forth above, shall be resolved
         pursuant to informal arbitration by an arbitrator selected under the
         commercial arbitration rules of the American Arbitration Association
         then in effect. The exclusive venue for any such arbitration shall be
         as follows: (i) if H&H or Lifestyle commences any arbitration then such
         arbitration shall take place in Minneapolis, Minnesota; and (ii) if FDU
         commences any arbitration then such arbitration shall take place in
         Memphis, Tennessee. Notwithstanding the foregoing, no disputant shall
         be required to seek arbitration regarding any cause of action that
         would entitle such disputant to injunctive relief.

                  18.14.2 Each of the disputants shall be entitled to present
         evidence and argument to the arbitrator. The arbitrator shall have the
         right only to interpret and apply the provisions of this Agreement
         (including other applicable agreements) and may not change any of such
         provisions. The arbitrator shall permit reasonable prehearing discovery
         of facts, to the extent necessary to establish a claim or a defense to
         a claim, subject to supervision by the arbitrator.

                  18.14.3 The determination of the arbitrator shall be
         conclusive and binding upon the parties and judgment upon the same may
         be entered in any court having jurisdiction thereof. The arbitrator
         shall give written notice to the disputants stating the arbitrator's
         determination, and shall furnish to each disputant a signed copy of
         such determination. The expenses of arbitration shall be borne equally
         by the opposing disputants or as the arbitrator shall otherwise
         equitably determine.

         18.15 Litigation Expense. Subject to the agreements and requirements
for mediation and arbitration set out in Section 18.14, if any disputant is made
or shall become a party to any litigation or arbitration (including, without
limitation, to enforce an arbitration decision or the arbitration requirements
of 18.14-b) commenced by or against another disputant involving the enforcement
of any of the rights or remedies of such disputant arising out of this
Agreement,


                                       46
<PAGE>   47
then the prevailing disputant in such litigation or arbitration shall receive
from the other disputant all reasonable costs, including without limitation
reasonable attorneys' fees to be fixed by the court or arbitrator (as
applicable), incurred by the prevailing disputant in such litigation, with
interest thereon from the date of judgment or arbitrator's decision at the rate
of ten percent (10%) or, if less, the maximum rate permitted by law.

          18.16 Power of Attorney.

                   18.16.1 Each Member hereby irrevocably appoints the Chief
          Executive Officer or its duly appointed designee to act as its lawful
          attorney-in-fact with full power of substitution, for him and in his
          name, place, and stead for his use and benefit to sign and
          acknowledge, file, and record:

                           18.16.1.1 This Agreement and, if deemed appropriate
                  by the Chief Executive Officer, a separate Certificate of
                  Formation, as well as any amendments to either of them, under
                  the laws of the State of Delaware, or the laws of any other
                  state in which such instrument is required to be filed;

                           18.16.1.2 Any other instrument which may be required
                  to be executed or filed by the Company under the laws of any
                  state or by any governmental agency, or which the Chief
                  Executive Officer deems it advisable to file;

                           18.16.1.3 Any documents which may be required to
                  effect the continuation of the Company, the admission of
                  Original, Additional, or Substitute Member, or the dissolution
                  and termination of the Company, provided such continuation,
                  admission, or dissolution and termination are in accordance
                  with the terms of this Agreement as amended.

                  18.16.2 The foregoing grant of authority: (i) is a Power of
         Attorney coupled with an interest, is irrevocable, and shall survive
         the death or dissolution of the Member, as applicable; (ii) may be
         exercised by the Chief Executive Officer for each Member by a facsimile
         signature of one of its officers or by listing all of the Members
         executing any instrument with a single signature of one of its officers
         acting as attorney-in-fact for all of them; (iii) shall survive the
         delivery of an assignment by a Member of the whole or any portion of
         his interest, except that where the assignee thereof has been approved
         by the Chief Executive Officer for admission to the company as a
         Substitute Member, the Power of Attorney shall survive the delivery of
         such assignment for the sole purpose of enabling the Chief Executive
         Officer to execute, acknowledge, and file any instrument necessary to
         effect such substitution.

         18.17. Isaac Hayes Insurance. Isaac Hayes shall be named as an
additional insured on any liability insurance carried by Company.


                                       47
<PAGE>   48
         IN WITNESS WHEREOF, the undersigned Members have duly executed this
Agreement effective as of the date first above written.


                                     MEMBERS

                                     LIFESTYLE VENTURES, LLC
                                     a Tennessee limited liability company


                                     By: /s/ Andrew Revella
                                        ----------------------------------------
                                     Name:  Andrew Revella
                                          --------------------------------------
                                     Title: President and Chief Manager
                                           -------------------------------------

                                     H&H, HOLDING COMPANY, LLC
                                     a Delaware limited liability company


                                     By: /s/ Isaac Hayes
                                        ----------------------------------------
                                     Name:   Isaac Hayes
                                          --------------------------------------
                                     Title:  Chief Manager
                                           -------------------------------------

                                     FAMOUS DAVE'S-U, INC.
                                     a Minnesota corporation


                                     By: /s/ Martin J. O'Dowd
                                        ----------------------------------------
                                     Name:   Martin J. O'Dowd
                                          --------------------------------------
                                     Title:  President & Chief Executive Officer
                                           -------------------------------------


                                     JACK BELZ

                                     /s/ Jack Belz
                                     -------------------------------------------
                                     /s/ Jack Belz


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