1 rev. 12/05/94 rev. 06/02/98 rev. 9/23/01 rev. 1/12/11 rev. 03/05/95 rev. 12/14/98 rev. 08/14/02 rev. 09/12/95 rev. 02/17/99 rev. 4/10/03 rev. 10/08/97 rev. 02/22/00 rev. 1/1/04 rev. 12/01/97 rev. 05/25/00 rev. 2/3/10 rev. 02/10/98 rev. 12/13/00 rev. 8/9/10 BYLAWS OF TACO BELL FRANCHISE MANAGEMENT ADVISORY COUNCIL ARTICLE I NAME SECTION 1.1 NAME. The name of the council shall be the TACO BELL FRANCHISE MANAGEMENT ADVISORY COUNCIL (hereafter referred to as "FRANMAC"). ARTICLE II PURPOSE AND OBJECTIVE SECTION 2.1 PURPOSE. It is the purpose of FRANMAC to enhance the value of a Taco Bell Franchise and improve and strengthen the business operations of the Taco Bell restaurant system, and to facilitate communication between the franchisees and Taco Bell Corp. (hereafter referred to as TBC ) and to serve as an advisory partner to Taco Bell Corp. SECTION 2.2 OBJECTIVE. FRANMAC shall devote its time and effort to giving input on current and future projects and programs. In addition, FRANMAC shall create an array of services which are aimed at making every franchisee in the system more profitable. From time to time, FRANMAC will be called upon to resolve issues of concern to all franchisees by expressing concerns of franchisees to TBC corporate leaders with the aim and hope of effecting changes in practice, policy or direction, if appropriate. FRANMAC Representatives (as defined below), through their knowledge and experience, shall strive to strengthen the Taco Bell system of restaurants and thereby increase the value of the individual franchises. FRANMAC shall direct its own affairs, set its own agendas and priorities, and serve as an independent voice of the Taco Bell franchise community. FRANMAC shall also seek and obtain the opinion and views of the Taco Bell franchisee community and share them with TBC where appropriate. ARTICLE III MEMBERSHIP SECTION 3.1 MEMBERSHIP ELIGIBILITY. All individual Taco Bell franchisees of restaurants located in the United States, and/or a duly authorized representative of any approved legal entity to which Taco Bell franchise rights for any restaurants located in the United States have been effectively assigned, who has an equitable, legal or beneficial ownership in such entity, or the person named in the TBC Assignment as the agent of the franchise owner, shall be members ( Members ) of FRANMAC. Each Member shall be entitled to only one vote at FRANMAC meetings or in FRANMAC elections. SECTION 3.2 MEMBERSHIP DUES. Membership dues ("Membership Dues") shall be assessed on an annual basis in advance for the subsequent year and shall be paid (i.e. actually received by FRANMAC) by December 21 of the current year. Invoices for Membership Dues shall be presented to the members of FRANMAC during the month of September of the then-current year. The amount of Membership Dues may be increased or decreased from time to time upon an affirmative majority vote of FRANMAC Representatives present at any duly called meeting. Only those members who are current in the
2 payment of Membership Dues shall be permitted to serve as Representatives, to serve on FRANMAC committees, or to vote at FRANMAC Members meetings or in FRANMAC elections. SECTION 3.3 FRANCHISE ZONES. Subject to change as provided in this Section 3.3, Members shall be divided into fifteen (15) FRANMAC Zones. The number of FRANMAC zones and zone boundaries may be modified from time to time upon an affirmative vote of two-thirds of all duly elected FRANMAC Representatives. After the annual election of FRANMAC Representatives in even numbered years, or upon a ten percent (10%) or greater variance in the number of Members, which ever event occurs sooner, a Planning Committee, appointed by the President and chaired by the Vice President of Planning, shall meet and review the appropriateness of zone boundaries, and report any redistricting recommendations, if appropriate, at the next regularly scheduled meeting of the full FRANMAC Board (as defined below). SECTION 3.4 FRANMAC REPRESENTATIVES. The Members shall elect a representative from each FRANMAC zone ("FRANMAC Representatives"). The FRANMAC Representatives shall be the members of the FRANMAC board of directors (the "FRANMAC Board"). The term of office for FRANMAC Representatives shall be two (2) years, or until a successor is appointed or elected; provided, however, the term of office of any FRANMAC Representative whose zone is changed as provided in Section 3.3 shall end as of the end of the next FRANMAC Board meeting following the effective date of the zone change as determined by the FRANMAC Board. The term of office for newly elected FRANMAC Representatives commences at the beginning of the first meeting following the annual election. FRANMAC Representatives may succeed themselves in office. FRANMAC Representatives may serve for up to six (6) consecutive years. FRANMAC Representatives serving by appointment for any reason, whose appointment occurred prior to July 1 of any given year, shall count that period as a full year in office. Upon serving a sixth consecutive year, a FRANMAC Representative will not be eligible for reelection for a period of two (2) years. FRANMAC Representatives must be current in the payment of dues specified in Section 3.2 and must not be an employee, elected officer or director with any quick service advisory organization that directly competes with Taco Bell, except for restaurant systems and other organizations affiliated with Yum! Brands, Inc. SECTION 3.5 FRANMAC ELECTIONS. Elections of FRANMAC Representatives shall be held every year during the month of December, at which time approximately one-half of the FRANMAC Representatives shall be elected as provided in Section 3.3. Subject to Section 3.3, FRANMAC Representatives from FRANMAC Zones designated with odd-numbers shall be elected in even-numbered years and FRANMAC Representatives from FRANMAC Zones designated with odd-numbers shall be elected in even-numbered years. Each Member who operates restaurants in more than one FRANMAC zone may vote in a FRANMAC Representative election only in that zone in which such Member maintains such Member s principal office. No later than October 10 of each year, the Secretary-Treasurer, who shall serve as the elections official, shall send out a general notification to all Members in the zones electing FRANMAC Representatives. The notification shall solicit one nomination for FRANMAC Representative from each Member eligible to vote in each zone electing FRANMAC Representatives. Before a nomination will be accepted, the nominating Member shall have confirmed to FRANMAC the nominee s willingness to serve. Only nominations from current dues paying Members will be considered. No later than November 10 of each year, nominations will be closed. No later than five business days after the closing of nominations, the election ballots, which will be recorded and coded, will be sent out to all Members eligible to vote in zones electing FRANMAC Representatives. Election balloting will be closed on December 21 of each year, and any ballots received which are received after December 21 will not be recorded. Ballots shall be returned as specified in the mailing, and shall be tabulated by the Secretary-Treasurer who shall then not later than December 30 of each year, contact all elected FRANMAC Representatives and promptly thereafter deliver a written
3 BYLAWS OF TACO BELL FRANCHISE MANAGEMENT COUNCIL 3 announcement of the result of the election to all Members in zones electing FRANMAC Representatives including the name, address and telephone number of the FRANMAC Representative elected in their zone, together with a list of the Members in their zone. The FRANMAC Board may, in lieu of the forgoing procedure, designate an outside third party to receive and tabulate ballots and announce the results of the election in accordance with the foregoing procedures. Only the name of the winner of each election shall be announced; vote totals and specific Member votes will not be announced. All nominations, election ballots, and other election information will be kept on file for one year following the election, at FRANMAC s principal office. If an election for a FRANMAC Representative results in a tie, the Secretary-Treasurer shall conduct a runoff election among the nominees receiving the most votes in the election. The runoff election will be held promptly and in any event before January 15 and be administered in accordance with the same or similar procedures as the original election. Members who fail to pay their Membership Dues by the close of balloting in the original election will not be eligible to vote in the runoff election. In the event a runoff election also results in a tie, the winner of the election shall be determined by a coin toss or other similar method conducted by and at the discretion of the Secretary-Treasurer. SECTION 3.6 CRITERIA FOR FRANMAC REPRESENTATIVES. A Member is eligible to serve as a FRANMAC Representative only if such Member satisfies the requirements of Sections 3.1, 3.2 and 3.4. A Member also may only represent the zone in which such Member is eligible to vote. SECTION 3.7 REMOVAL. (a) Any FRANMAC Representative who has missed two FRANMAC Board meetings within one year, may be removed as a FRANMAC Representative upon an affirmative vote of two-thirds of the FRANMAC Representatives at any subsequent FRANMAC Board meeting where a quorum is present. (b) Any FRANMAC Representative shall be automatically removed in the event such FRANMAC Representative or such FRANMAC Representative's approved legal entity no longer owns a valid Taco Bell franchise agreement in the franchise zone which he or she represents. (c) Any FRANMAC Representative may be removed from office for neglect, refusal to perform his or her duties or misconduct, by a two-thirds vote of the FRANMAC membership present at any regular meeting. SECTION 3.8 VACANCIES. Should a vacancy occur in a FRANMAC zone, the President shall appoint a successor to serve the unexpired term of the vacating FRANMAC Representative, subject to approval by an affirmative vote of a majority of the FRANMAC Representatives present at any regular meeting or special meeting of the FRANMAC Board called for that purpose. ARTICLE IV FRANMAC OFFICERS The following officers shall be elected by a majority vote of the FRANMAC Representatives present at the first FRANMAC Board meeting following annual elections, provided a quorum is present: SECTION 4.1 PRESIDENT. The President shall preside at all meetings of the FRANMAC Board and FRANMAC s Members, and shall be the chief executive officer of the organization. The President shall have general supervision, management, control and oversight of the business of FRANMAC, and shall, in general, perform all the duties usually incident to such office subject to these Bylaws, and the direction of the FRANMAC Board. The President shall, subject to the approval of the FRANMAC Board, have the power to form committees or subcommittees to work on specific matters and to meet with representatives
4 BYLAWS OF TACO BELL FRANCHISE MANAGEMENT COUNCIL 4 of various departments of TBC for the purpose of discussing matters of common interest, and the President shall also appoint the members of each such committee except as hereinafter specifically provided. No FRANMAC Representative shall be elected as President unless such FRANMAC Representative has been an active participant on a FRANMAC committee for at least one year prior to the election to the office of President. Any FRANMAC Representative elected President may succeed himself or herself in office for one (1) additional term of one (1) year. The President is entitled to vote in all matters coming before duly called meetings of the FRANMAC Board so that the interests of the Members from his or her zone are fairly represented. SECTION 4.2 FIRST VICE PRESIDENT. The First Vice President shall discharge the duties of the President in his absence, and shall perform such other duties as shall be required by the FRANMAC Board. The First Vice President shall also serve as chairperson of the Marketing Committee. SECTION 4.3 SECOND VICE PRESIDENT. The Second Vice President shall discharge the duties of President in the absence of the President and the First Vice President, and shall perform such other duties as shall be required by the FRANMAC Board. The Second Vice President shall also serve as chairperson of the Operations Committee. SECTION 4.4 THIRD VICE PRESIDENT. The Third Vice President shall discharge the duties of President in the absence of the President, the First Vice President and the Second Vice President, and shall perform such other duties as shall be required by the FRANMAC Board. The Third Vice President shall also serve as chairperson of the Franchisee Relations Integrated Expansion and Development Committee (the FRIED Committee ). SECTION 4.5 FOURTH VICE PRESIDENT. The Fourth Vice President shall discharge the duties of President in the absence of the President, the First Vice President, the Second Vice President, and the Third Vice President and shall perform such other duties as shall be required by the FRANMAC Board. The Fourth Vice President shall also serve as chairperson of the Franchise Technology Committee (the Technology Committee ). SECTION 4.6 SECRETARY-TREASURER. The Secretary-Treasurer shall be responsible for maintaining FRANMAC s records, minutes, bylaws and Member roster; sending notices for meetings; maintaining control records and operating procedures pertaining to the collection, payment and preservation of FRANMAC funds, including maintenance of a budget on a fiscal year basis; and planning for FRANMAC Member meetings. SECTION 4.7 NOMINATIONS AND ELECTIONS OF OFFICERS. Elections for all officers (including the office of President) shall be conducted at the meeting of the FRANMAC Board held after January 1st of each year. Nominations for the office of President shall be entertained from the FRANMAC Board and shall include the President Elect pursuant to Section 4.8. After the election of the President, the newly elected President will present his or her nominations, and shall entertain other nominations and conduct the election, for FRANMAC s other officers at this meeting. SECTION 4.8 APPOINTMENT OF COMMITTEES. The President shall appoint the members of each standing committee authorized pursuant to Section 6.1 from the elected FRANMAC Representatives. Subcommittees may be formed by any standing committee and members of any such subcommittee shall be appointed by the Chairman of the committee with the consent of the President. Members of any subcommittee need not be FRANMAC Representatives; however, they must be Members in good standing and current in the payment of dues as specified in Section 3.2. SECTION 4.9 PRESIDENT ELECT. For the purpose of achieving an orderly transition in the office of the President, at the August/September FRANMAC Board meeting, the Executive Committee will make a recommendation to the FRANMAC Board for the position of President Elect and nominations from the floor will also be accepted. The FRANMAC Board shall then conduct a vote to elect the President Elect. The President Elect will serve as a voting member of the Executive Committee. The President Elect shall stand for election to President in accordance with Article IV in the upcoming year.
5 BYLAWS OF TACO BELL FRANCHISE MANAGEMENT COUNCIL 5 SECTION 4.10 SUCCESSION. In the event that the President resigns, can no longer serve as a FRANMAC Representative or is otherwise removed or disqualified before completing the term to which he or she was elected or appointed, then, the remainder of his or her term shall be served by the First Vice President who shall automatically become President and resign as First Vice President. If said First Vice President is unable or unwilling to serve, the President shall then be replaced by the Second Vice President. If the said First or Second Vice Presidents are unable or unwilling to serve, the President shall then be replaced by the Third Vice President. SECTIONS 4.11 VACANCIES. A majority of the FRANMAC Representatives at any FRANMAC Board meeting at which a quorum is present may elect a FRANMAC Representative to fill any officer vacancy. SECTION 4.12 QUORUM. A quorum consists of a majority of all duly elected and qualified FRANMAC Representatives. ARTICLE V RESPONSIBILITY OF REPRESENTATIVES SECTION 5.1 ATTENDANCE AT FRANMAC MEETINGS. A FRANMAC Representative has responsibilities and commitments which include attending all FRANMAC Board meetings as well as: (a) Attending on time and remaining for the completion of the full agenda. (b) Respecting the confidentiality of certain discussions, decisions and information. (c) Recognizing that FRANMAC is not a personal forum, but an obligation to represent. (d) Reporting to his or her constituency the results of each FRANMAC Board meeting at meetings to be conducted within their respective zones without delay. (e) Reporting expenses incurred while attending FRANMAC Board meetings, meetings of committees of which he or she is an active member, and open Members meetings. Each FRANMAC Representative shall supply the Secretary-Treasurer with an annual budget projecting costs for their FRANMAC activities. SECTION 6.1 COMMITTEES. ARTICLE VI COMMITTEES AND THEIR FUNCTIONS (a) STANDING COMMITTEES. FRANMAC shall have four standing committees (the Standing Committees ) which will function in the following areas: (i) Marketing (the Marketing Committee ); (ii) Operations (the Operations Committee ); (iii) Franchisee Relations Integrated Expansion and Development (the FRIED Committee ) and (iv) Franchise Technology Committee (the Technology Committee ). (1) Members of Standing Committees. The President or the Chairman of the Standing Committee, with the President s approval, may appoint the members of the applicable Standing Committee from among the FRANMAC Representatives. Except as otherwise provided in Section 6.1(a)(2) below concerning ad-hoc members of Standing Committees, each of the members of the Standing Committee must be a FRANMAC Representative. Each member of the Standing Committee who is a FRANMAC Representative may vote on matters properly before the applicable Standing Committee.
6 BYLAWS OF TACO BELL FRANCHISE MANAGEMENT COUNCIL 6 (2) Ad-Hoc Members of Standing Committees. The Chairman of the Standing Committee may appoint ad-hoc members to the applicable Standing Committee with the approval of the President and the affirmative vote of a majority of the FRANMAC Representatives at a FRANMAC Board meeting at which a quorum is present. Ad-hoc members of any Standing Committee shall not be eligible to vote on matters before the applicable Standing Committee. Adhoc members of any Standing Committee need not be FRANMAC Representatives; however, they must be Members (or employees of Member organizations) in good standing and current in the payment of dues as specified in Section 3.2. (b) SUBCOMMITTEES. The President or the Chairman of the Standing Committee, with the President s approval, may form such subcommittees as they deem advisable ( Subcommittees ). (1) Chairmen of Subcommittees. The Chairman of the applicable Standing Committee, with the approval of the President, shall appoint the Chairman of the Subcommittee from among the FRANMAC Representatives. The Chairman of each Subcommittee must be a FRANMAC Representative. (2) Members of Subcommittees. The Chairman of the applicable Standing Committee may, with the approval of the President, appoint the members of the Subcommittee from among the FRANMAC Representatives. Except as otherwise provided in Section 6.1(b)(3) below concerning ad-hoc members of Subcommittees, each of the members of the Subcommittee must be a FRANMAC Representative. Each member of the Subcommittee who is a FRANMAC Representative may vote on matters properly before the applicable Subcommittee. (3) Ad-Hoc Members of Subcommittees. The Chairman of the applicable Standing Committee may appoint ad-hoc members to the Subcommittee with the approval of the President and the affirmative vote of a majority of the FRANMAC Representatives at a FRANMAC Board meeting at which a quorum is present. Ad-hoc members of any Subcommittee shall not be eligible to vote on matters before the applicable Subcommittee. Ad-hoc members of any Subcommittee need not be FRANMAC Representatives or Members. Ad-hoc members of any Subcommittee need not be FRANMAC Representatives; however, they must be Members (or employees of Member organizations) in good standing and current in the payment of dues as specified in Section 3.2. (c) ADDITIONAL COMMITTEES. The President shall have the power to form additional committees or subcommittees to work on specific matters or to meet with representatives of various departments of TBC for the purpose of discussing matters of common interest, which committees shall report and make recommendations to the President and the FRANMAC Board ( Additional Committees ). (1) Chairman of Additional Committees. The President shall appoint the Chairman of the Additional Committee. If the Chairman of the Additional Committee appointed by the President is someone other than a FRANMAC Representative, such appointment shall require the affirmative vote of two-thirds of the FRANMAC Representatives at a FRANMAC Board meeting at which a quorum is present. (2) Members of Additional Committees. The President shall appoint the members of the Additional Committee from among the FRANMAC Representatives. Except as otherwise provided in Section 6.1(c)(3) below concerning ad-hoc members of Additional Committees, each of the members of the Additional Committee must be a FRANMAC Representative. Each member of the Additional Committee who is a FRANMAC Representative may vote on matters properly before the applicable Additional Committee.
7 BYLAWS OF TACO BELL FRANCHISE MANAGEMENT COUNCIL 7 (3) Ad-Hoc Members of Additional Committees. The President may appoint ad-hoc members to the applicable Additional Committee with the affirmative vote of two-thirds of the FRANMAC Representatives at a FRANMAC Board meeting at which a quorum is present. Adhoc members of any Additional Committee shall not be eligible to vote on matters before the applicable Additional Committee. Ad-hoc members of any Additional Committee need not be FRANMAC Representatives or Members. Ad-hoc members of any Additional Committee need not be FRANMAC Representatives; however, they must be Members (or employees of Member organizations) in good standing and current in the payment of dues as specified in Section 3.2. (d) REMOVAL. The CHAIRMAN, with the approval of the President, may remove regular and ad hoc members appointed by the President or Committee Chairman from Standing Committees, Subcommittees and Additional Committees. (e) EXECUTIVE COMMITTEE. FRANMAC shall also have an Executive Committee consisting of the President, the five officers elected in the manner provided for in Section 4 and the President Elect. The Executive Committee shall have all the power of the FRANMAC Board in between FRANMAC Board meetings permissible by law, and shall report on its proceedings at each FRANMAC Board meeting. (f) FUND OVERSIGHT COMMITTEE. FRANMAC shall have a Fund Oversight Committee as provided for in Section 9.6. SECTION 6.2 NUMBER OF MEETINGS. Each committee shall have at least one meeting per year with its TBC counterparts, such meeting(s) to be scheduled by the applicable committee chairperson. SECTION 6.3 ATTENDANCE AT OTHER COMMITTEE MEETINGS. A FRANMAC Representative may attend any committee meeting although he or she may not be a member of said committee, but all expenses incurred in attending such committee meetings must be borne by the FRANMAC Representative. SECTION 6.4 EX OFFICIO MEMBER. The President shall be an ex officio member of all committees and subcommittees and all expenses incurred by the President in attending committee and subcommittee meetings are to be paid or reimbursed by FRANMAC. SECTION 6.5 PAST PRESIDENT. Any past President who has not been removed from office for cause and who continues to be qualified under Section 3.4 shall, whether or not he or she remains an elected FRANMAC Representative have the right to attend any or all FRANMAC Board and Committee meetings as a non-voting participant for a period of one year following his or her departure from office. The past President's expenses shall be paid for by FRANMAC, in the same manner as for all other FRANMAC Representatives. ARTICLE VII MEETING DATES, LOCATION AND COST SECTION 7.1 MEETINGS. FRANMAC Representatives shall meet at least four times a year or as often as deemed necessary to properly administer the goals and purposes of FRANMAC. There shall be at least one open meeting per year in which all FRANMAC Members shall be invited to participate. SECTION 7.2 COSTS. Reasonable out of pocket travel expenses incurred by FRANMAC Representatives and Committee members while attending meetings and any reasonable costs in polling constituencies in the area represented by a FRANMAC Representative will be reimbursed by FRANMAC upon receipt of appropriate documentation of such expenses. FRANMAC Representatives and Committee members will also receive a per diem as established by the Executive Committee.
8 BYLAWS OF TACO BELL FRANCHISE MANAGEMENT COUNCIL 8 ARTICLE VIII AGENDA SECTION 8.1 TIME. As a rule, the agenda for a meeting will be complete and reports from the committees will require a considerable dedication of time for presentation and full discussion. SECTION 8.2 PRESIDENT'S RESPONSIBILITY. The President will issue an agenda to all FRANMAC Representatives at least one week in advance of any FRANMAC Board meeting. All Committee chairpersons will present in writing to the President at least two weeks in advance of any FRANMAC Board meeting those items to be included on the agenda. Other items may be added to the agenda after this date with the consent of the President. SECTION 8.3 OTHER TOPICS. ALL FRANMAC Representatives are encouraged to submit to the President at least two weeks in advance of any FRANMAC Board meeting, any other topics to be included on the agenda which have been raised by their constituents. SECTION 8.4 FORMAL PRESENTATIONS. A summary of any formal presentation to be made at a FRANMAC Board meeting will be distributed to all FRANMAC Representatives at the time of said formal presentation or, if possible, in advance of any such presentation. SECTION 8.5 OTHER FRANCHISE OWNERS. Any Member who is not an elected FRANMAC Representative, and who desires to attend or make a presentation to the FRANMAC Board must make a written request to the President to attend or have such presentation included on the agenda. Such requests must include the reason for attending or the subject matter of his presentation. The President, in his sole discretion, will decide whether or not to allow such attendance at presentation, and he will inform FRANMAC Representatives at the next scheduled meeting of his rejections. SECTION 8.6 TACO BELL REPRESENTATIVES. The President may request the attendance at FRANMAC Board meetings of specific TBC officers or other employees. The President of TBC will be requested to consider each request and determine which officers or other representatives shall attend, with primary consideration given to the attendance by department heads, officers and other representatives having the appropriate knowledge and decision-making authority, including without limitation, representatives from the Marketing, Franchise Development, Operations Services and Purchasing/Distribution departments. ARTICLE IX MISCELLANEOUS SECTION 9.1 AMENDMENTS. Except as specifically provided elsewhere in these Bylaws, the Bylaws of FRANMAC may be modified, amended, or repealed by an affirmative two-thirds vote of the FRANMAC Representatives present at any regular or special meeting of FRANMAC, provided that written notice of the proposed modifications, amendments or repeals are sent to the members with the call for such meeting at least thirty (30) days prior to the date of the meeting. SECTION 9.2 OTHER ISSUES. FRANMAC is not to function as a forum to deal with the defaults of a franchise owner, the issuance of a franchise agreement, nor will FRANMAC concern itself with any area that may conflict with the antitrust laws and regulations, prices, and/or discounts. It is understood that this section does not limit FRANMAC from discussing general policy issues. SECTION 9.3 INDEPENDENT STAFF. FRANMAC has the right to retain independent staff and/or legal counsel in accordance with these Bylaws.
9 BYLAWS OF TACO BELL FRANCHISE MANAGEMENT COUNCIL 9 SECTION 9.4 RULES. At all meetings of FRANMAC, Roberts' Rules of Order, Latest Edition, shall control except when in conflict with specific provisions of these Bylaws. SECTION 9.5 INDEMNIFICATION (a) OFFICERS, AGENTS, DIRECTORS OR COMMITTEE MEMBERS. FRANMAC shall indemnify, to the fullest extent provided by law, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of FRANMAC, by reason of the fact that he or she is or was a FRANMAC Representative, or an officer, agent, director, or Committee or subcommittee member of FRANMAC (each an "Indemnified Person"). (b) ADVANCE OF EXPENSES. FRANMAC will reimburse the expenses of any Indemnified Person as they are incurred and in advance of the final disposition of an action, suit or proceeding described in Section 9.5(a), upon receipt of an undertaking by or on behalf of the Indemnified Person to repay the amount if it is ultimately determined by a court of competent jurisdiction that he or she is not entitled to be indemnified by FRANMAC. (c) INSURANCE OR OTHER FINANCIAL ARRANGEMENTS. FRANMAC may, at the discretion of the FRANMAC Board, purchase and maintain insurance or make other financial arrangements on behalf of any person who is or was a FRANMAC Representative or an officer, agent, director or Committee or subcommittee member of FRANMAC or is or was serving at FRANMAC s request as the director, employee, officer, committee member or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against him or her and incurred by him or her acting in any such capacity or arising out of his or her status as such. Such insurance or financial arrangements may be made whether or not FRANMAC would have the power to indemnify such person against such liability under the provisions of this Article. Other financial arrangements may include: the creation of a trust fund, the establishment of a program of self-insurance, the granting of a security interest or lien on any assets of FRANMAC, or the establishment of a letter of credit, guaranty or surety. (d) PURPOSE AND EXCLUSIVITY. The indemnification referred to in various sections of this Article shall be deemed to be in addition to and not in lieu of any other rights to which Indemnified Persons may be entitled under any statute, rule of law or equity, agreement, vote of the FRANMAC Board or otherwise. Section 9.6 FRANMAC SUPPORT FUND. FRANMAC may establish a FRANMAC Support Fund ( FSF ). The purpose of the FSF is to enhance and protect the value of Taco Bell franchises. The FSF is not intended as a rescue or relief fund for franchisees in distress, whether from natural disasters, adverse operating environments or non-systemic supply chain or other difficulties or events. The FSF will be administered and governed by a Fund Oversight Committee. The Fund Oversight Committee will consist of: (i) the FRANMAC President (the President ); (ii) the Chairman of Taco Bell National Purchasing Co-op, Inc. (the Chairman ); and (iii) the FRANMAC Treasurer (the Treasurer ). At any time the FRANMAC Board determines that the Fund Oversight Committee should consider a FSF disbursement, the Committee shall be expanded to twelve members consisting of: (a) the President, the Chairman and the Treasurer; and (b) nine additional members appointed by the FRANMAC Board. The nine additional members must be appointed by the affirmative vote of two-thirds of all duly elected FRANMAC Representatives. Of the nine members of the Fund Oversight Committee appointed by the FRANMAC Board, four appointees must be FRANMAC Representatives, the remaining five appointees must include at least two past Presidents of FRANMAC and must be Members that are not FRANMAC Representatives. All appointees must be Members in good standing. The Chairman of the Fund Oversight Committee must be a FRANMAC Representative. No member of the Fund Oversight Committee may have opted-out of participating in the FSF, without having terminated the member s optout prior to January 1, If the President, Chairman or Treasurer does not participate in the FSF, the next most senior official of the applicable organization shall serve on the Fund Oversight Committee. For example, if the President opted-out of participating in the FSF, then the First Vice President shall serve on the Fund Oversight Committee. If the President and First Vice President have opted-out of participating
10 BYLAWS OF TACO BELL FRANCHISE MANAGEMENT COUNCIL 10 in the FSF, then the Second Vice President shall serve on the Fund Oversight Committee. All members of the Fund Oversight Committee may vote on matters properly before the Committee. The nine appointees shall serve for a term designated by the FRANMAC Board. The FRANMAC Board shall reappoint or select replacements for the Fund Oversight Committee members who have completed their applicable terms, resigned or are otherwise no longer a member of the Fund Oversight Committee. All FSF disbursements must be approved by both: (a) the affirmative vote of at least nine members of the Fund Oversight Committee; and (b) the affirmative vote of at least two-thirds of all duly elected FRANMAC Representatives. This Bylaw Section may only be amended by the affirmative vote of a least two-thirds of all duly elected FRANMAC Representatives.