EXHIBIT 10.10
SECOND AMENDED AND RESTATED
JOINT VENTURE AGREEMENT
OF
THE HOPS NORTHEAST FLORIDA JOINT VENTURE NO. III
A FLORIDA GENERAL PARTNERSHIP
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THIS SECOND AMENDED AND RESTATED JOINT VENTURE AGREEMENT, is made and
entered effective as of the 1st day of September, 1995, by and among HOPS OF
NORTHEAST FLORIDA, INC., a corporation organized and existing under the laws of
the State of Florida (hereinafter referred to as "HNEF"), FITCH, INC., a
corporation organized and existing under the laws of the State of Florida
(hereinafter referred to as "FI"), and HNEF AREA MANAGER II, LTD., a limited
partnership, owned primarily by ▇▇▇ ▇▇▇▇▇▇▇, organized and existing under the
laws of the State of Florida (hereinafter referred to as "BARLTD") (HNEF, FI,
and BARLTD are sometimes herein individually referred to as a "Venturer" and
collectively referred to as the "Venturers").
W I T N E S S E T H:
WHEREAS, pursuant to that certain First Amended and Restated Joint
Venture Agreement of the Hops Northeast Florida Joint Venture No. III dated
January 1, 1995 (the "First Amendment"), by and among HNEF, FI, and HNEF Area
Manager, Ltd., a Florida limited partnership ("COSLTD"), HNEF, FI, and COSLTD
formed a joint venture (in the form of a general partnership) under the laws of
the State of Florida for the purpose of owning and operating one or more
restaurants under the Hops System (as described herein) in the "Territory"
described in the Northeast Florida Development Option Agreement dated February
15, 1993, by and between Hops Grill & Bar, Inc. and Fitch ("Fitch"), as amended
by that certain First Amendment to Northeast Florida Development Option
Agreement dated November 10, 1993, by and between Hops and Fitch (the
"Development Option Agreement");
WHEREAS, COSLTD no longer holds its interest or Distributive Share in
the Joint Venture; WHEREAS, HNEF and FI desire to admit BARLTD to the Joint
Venture, with BARLTD to hold a 10% Distributive Share in the Joint Venture,
subject to the terms and conditions set forth herein;
WHEREAS, BARLTD desires to be admitted to the Joint Venture and to hold
a 10% Distributive Share in the Joint Venture, subject to the terms and
conditions set forth herein;
WHEREAS, the Venturers desire to amend and restate the First Amendment
in order to reduce to writing their understandings and agreements with respect
to the matters set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound thereby, agree as set forth herein.
DEFINITIONS
The following definitions shall apply to the following terms as used in
this Agreement:
(1) "Additional Loan(s)" means a loan(s) made to the Joint Venture
pursuant to Section 4(k).
(2) "Agreement" means this Second Amended and Restated Joint Venture
Agreement of September 1, 1995, as amended or modified from time to time in
accordance with Section 18(c) hereof.
(3) "Available Cash" means, at the time of determination, all cash,
demand and time deposits, and marketable securities of the Joint Venture (other
than Capital Contributions to the Joint Venture by the Venturers), including,
without limitation, all cash receipts from conduct of the Joint Venture's
business, insurance proceeds, proceeds from the sale, exchange, condemnation or
other disposition of all or any part of the Joint Venture's property, less the
sum of all funds, reserves and other amounts as the Board of Managers shall deem
reasonable in order to provide for the Joint Venture's business, including,
without limitation, reserves for operating expenses, replacements, capital
improvements and additions relating to the business of the Joint Venture.
(4) "Balance of Required Loans" means the unpaid principal and accrued
interest thereon from time to time due and owing by a Venturer on account of
Required Loans to the Joint Venture pursuant to Section 4(h) hereof.
(5) "▇▇▇▇▇▇▇" means ▇▇▇ ▇▇▇▇▇▇▇.
(6) "▇▇▇▇▇▇▇ Employment Agreement" means the Employment Agreement
among ▇▇▇▇▇▇▇, BARLTD, HNEF, FI and other parties whereby ▇▇▇▇▇▇▇ will be
employed to serve
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as the Area Manager of three restaurants developed or to be developed under the
Development Option Agreement.
(7) "▇▇▇▇▇▇▇ Purchase Agreement" means the Agreement between ▇▇▇▇▇▇▇,
BARLTD, and other parties of even date herewith, which governs the purchase by
▇▇▇▇▇▇▇ of his interest in BARLTD and certain other matters.
(8) "Board of Managers" means the management committee established by
Section 7(a) hereof.
(9) "Capital Contributions" means all cash sums which the Venturers
may have from time to time contributed to the capital of the Joint Venture
pursuant to Sections 4(g) and 4(i) (together with any other contributions of
cash or property to the Joint Venture by the Venturers as authorized herein).
(10) "Code" means the Internal Revenue Code of 1986, as amended and in
effect on the effective date hereof and, to the extent applicable, as
subsequently amended.
(11) "Development Option Agreement" means the Northeast Florida
Development Option Agreement between Hops and Fitch setting forth the rights of
Fitch with respect to the development of restaurants under the Hops System
within the Territory.
(12) "Distributive Share" means the percentages set forth in Article 3
as in effect from time to time.
(13) "Excess Contribution" means any contribution made by a Venturer to
the Joint Venture pursuant to Section 4(j) hereof which is
occasioned by a Non-Contributing Venturer's failure to make Required Loans or
Special Contributions as required herein.
(14) "Excess Loan" means the loan deemed to have been made to a
NonContributing Venturer as a result of an Excess Contribution pursuant to
Section 4(j) hereof.
(15) "FI" means Fitch, Inc., a Florida corporation which is
wholly-owned by Fitch.
(16) "Fitch" means ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ the 100% owner of FI.
(17) "BARLTD" means HNEF Area Manager II, Ltd., a limited partnership
organized and existing under the laws of the State of Florida.
(18) "HNEF" means Hops of Northeast Florida, Inc., a Florida
corporation.
(19) "Hops" means Hops Grill & Bar, Inc., a corporation organized and
existing under the laws of the State of Florida which is the developer and owner
of all rights under the Hops System.
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(20) "Hops System" means the unique system of restaurant development,
theme and operation developed and owned by Hops which is, in part, characterized
by (1) the maintenance of uniform high quality standards in connection with the
preparation and sale of Hops-approved food and beverage products, (2) the
uniform high standards of appearance of the individual restaurant units, (3) the
use of distinctive trademarks, service marks, building designs and advertising
signs representing a uniformly high quality of product and services, and (4) the
undertaking by Hops and its affiliates of the obligation to maintain and enhance
the goodwill and public acceptance of the system (and of Hops' trade names,
service marks, trademarks) by strict adherence to the high standards required by
Hops.
(21) "Initial Capital Contributions" shall have the meaning set forth
in Section 4(g) hereof
(22) "Initial Restaurant" shall mean the first restaurant developed and
opened by the Joint Venture as contemplated herein.
(23) "Joint Venture" means the Joint Venture formed by the Venturers
pursuant to this Agreement and the laws of the State of Florida.
(24) "COSLTD" means HNEF Area Manager, Ltd., a limited partnership
organized and existing under the laws of the State of Florida.
(25) "Non-Contributing Venturer" means a Venturer or assignee who
breaches this Agreement by failing to make any Required Loan or Special
Contribution pursuant to Section 4(j).
(26) "Operating Agreements" mean the agreements to be entered into
between entities to be formed by Hops and Fitch (or their permitted assigns)
governing the development and operation of each restaurant to be opened jointly
by Hops and Fitch (or their permitted assigns) within the Territory pursuant to
the Development Option Agreement.
(27) "Prime Rate" shall be the prime rate of interest as published
from time to time in THE WALL STREET JOURNAL or if THE WALL Street Journal shall
cease to exist or cease to publish a "Prime Rate"; a mutually agreeable
substitute therefore.
(28) "Required Loans" means all amounts agreed to be loaned to the
Joint Venture pursuant to Section 4(h) hereof.
(29) "Special Contribution(s)" means the capital contributions of the
Venturers described in Section 4(i) hereof.
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(30) "Territory" means that geographic territory described in the
Development Option Agreement within which, subject to the terms and conditions
set forth in the Development Option Agreement, Hops and Fitch (through the Joint
Venture or one or more other entities) may develop, own, and operate certain
restaurants under the Hops System.
ARTICLE 1
FORMATION OF THE JOINT VENTURE
(a) The Venturers hereby enter into and form a joint venture (in the
form of a general partnership) under the laws of the State of Florida for
the limited purposes and upon the terms and conditions set forth herein.
(b) The name of the Joint Venture shall be "THE HOPS NORTHEAST FLORIDA
JOINT VENTURE NO. III." The Venturers shall execute all assumed or fictitious
name certificates and take all other action required by law to comply with the
laws of the State of Florida and the assumed name act, fictitious name act or
similar statute in effect in each jurisdiction or political subdivision in which
the Joint Venture proposes to do business.
(c) Except as expressly provided herein to the contrary, the rights
and obligations of the Venturers and the administration, dissolution and
termination of the Joint Venture shall be governed by the laws of the State of
Florida, to the extent the same is not otherwise provided in this Agreement.
(d) The business and purpose of the Joint Venture shall be limited to
the ownership and/or operation of one or more restaurant-bar-microbreweries
under the Hops System (together with any and all other directly or indirectly
related businesses) within the Territory pursuant to the terms of this Agreement
and the Development Option Agreement. The Joint Venture will enter into an
Operating Agreement with Hops governing the establishment and operation of each
restaurant to be opened within the Territory. The Joint Venture may also engage
in any other lawful business to which a general partnership may engage under the
laws of the State of Florida, upon the unanimous approval of the Venturers.
(e) The principal office of the Joint Venture shall be at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ unless and until
relocated by the Board of Managers, but the Joint Venture may have such other
places of business within the United
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States, as the Board of Managers may from time to time determine to be necessary
or appropriate to carry on the business of the Joint Venture.
ARTICLE 2
TERM OF JOINT VENTURE
Subject to the provisions of Article 13 hereof providing for the early
dissolution and liquidation of the Joint Venture, the term of the Joint Venture
shall commence as of the date hereof and terminate on the date twenty (20) years
thereafter; provided, however, that the Joint Venture shall automatically be
renewed for successive one (1) year terms unless a Venturer serves notice upon
the other Venturers to terminate the Joint Venture at the expiration of the
first term of twenty (20) years, or thereafter, at the expiration of any
subsequent one (1) year renewal term, which notice must be given at least one
hundred eighty (180) days prior to the expiration of the initial or a renewal
term.
ARTICLE 3
DISTRIBUTIVE SHARES OF VENTURERS
Subject to adjustments pursuant to other provisions hereof, the
Distributive Shares of the Venturers in the Joint Venture are as follows:
VENTURER DISTRIBUTIVE SHARE
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HNEF 45.9%
FI 44.1%
BARLTD 10.0%
ARTICLE 4
CAPITAL CONTRIBUTIONS AND REQUIRED LOANS
(a) A separate capital account shall be maintained by the Joint
Venture for each Venturer in accordance with Code Sec. 704(b), as amended (or
corresponding sections of later statutes) and Treasury Regulations promulgated
thereunder.
(b) There shall be credited to each Venturer's capital account
(i) the amount of money contributed by it to the Joint Venture, (ii) the fair
market value of property contributed by it to the Joint Venture (net of
liabilities secured by such contributed property that the Joint Venture is
considered to assume, or take subject to, under Code Sec. 752, as
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amended (or corresponding sections of later statutes), and (iii) allocations to
it of Joint Venture income and gain (or items thereof), including income and
gain exempt from tax and income and gain, as computed for book purposes, in
accordance with Treas. Reg. Sec. 1.704- 1(b)(2)(iv)(g), as amended, (or
corresponding sections of later regulations), all as set forth pursuant to this
Agreement. No Venturer shall be entitled to contribute property to the Joint
Venture unless such contribution is approved by the Board of Managers.
(c) Each Venturer's capital account shall be decreased by (i)
the amount of money distributed to it by the Joint Venture, (ii) the fair market
value of property distributed to it by the Joint Venture (net of liabilities
secured by such property that such Venturer is considered to assume or take
subject to pursuant to Code Sec. 752, as amended (or corresponding sections of
later statutes)), (iii) allocations to such Venturer of expenditures of the
Joint Venture described in Code Sec. 705(a)(2)(B), as amended (or corresponding
sections of later statutes) and (iv) allocations of Joint Venture loss and
deduction (or items thereof), including losses or deductions, computed for book
purposes, as described in Treas. Reg. Sec. 1.704-1(b)(2)(iv)(g), as amended, (or
corresponding sections of later regulations), all as set forth pursuant to this
Agreement.
(d) An individual tax basis record shall be maintained for each
Venturer. The tax basis record of each Venturer shall be established and shall
be adjusted as of the close of each taxable year of the Joint Venture (or, when
appropriate, as of the close of the taxable year of the Joint Venture for such
Venturer) in accordance with United States federal income tax law and procedure
as the same may exist from time to time.
(e) The manner in which capital accounts are to be maintained pursuant
to Sections 4(a)-(d) is intended to comply with the requirements of Code Sec.
704(b) and the Treasury Regulations promulgated thereunder. If, in the opinion
of the Board of Managers, the manner in which capital accounts are to be
maintained pursuant to the preceding provisions of this Article 4 should be
modified in order to comply with the requirements of Code Sec. 704(b) and the
Treasury Regulations promulgated thereunder, then notwithstanding anything to
the contrary contained in the preceding provisions of this Article 4, the Board
of Managers may, in their sole and unrestricted discretion, alter the method in
which capital accounts are maintained, and the Board of Managers shall have the
right to amend this Agreement without action by the Venturers to reflect any
such change in the manner in which capital accounts are maintained; provided,
however, that any change in the
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manner of maintaining capital accounts shall not materially alter the economic
agreement between the Venturers.
(f) The respective capital accounts of the Venturers shall not bear
interest. The capital of the Joint Venture shall not be withdrawn except as
provided herein. Notwithstanding the foregoing and except as set forth in
Section 4(j) hereof, without the unanimous consent of the Board of Managers, no
Venturer shall be entitled to make further or additional Capital Contributions
other than as specified in Section 4(g) (as opposed to loans) to the Joint
Venture.
(g) [AS THEIR INITIAL CAPITAL CONTRIBUTION, EACH VENTURER SHALL
CONTRIBUTE, IN CASH, TO THE JOINT VENTURE, THE FOLLOWING AMOUNT:
VENTURER INITIAL CAPITAL CONTRIBUTION
-------- ----------------------------
HNEF UP TO U.S. $_______
FI UP TO U.S. $_______
BARLTD UP TO U.S. $______*
* MAY BE CONTRIBUTED IN CASH, SERVICES, ASSUMPTION OF INDEBTEDNESS, OR
AS OTHERWISE DETERMINED BY THE BOARD OF MANAGERS.]
The Venturers shall proportionately contribute their Initial Capital
Contribution to the Joint Venture immediately upon the demand of the Board of
Managers in such installments as shall be designated by the Board of Managers.
(h) (i) In addition to the Initial Capital Contributions set forth
in Section 4(g) hereof, during the period commencing with
the date of this Agreement and ending on the twentieth
anniversary of such date, HNEF and FI agree to loan or cause
to be loaned to the Joint Venture, on an as needed basis,
amounts required for the operation and business activities
of the Joint Venture ("Required Loans"); provided, the
principal amount of such loans shall not exceed in the
aggregate U.S. $200,000, apportioned between HNEF and FI on
a pro rata basis, based upon their then current Distributive
Share, minus the then current outstanding balance of any
Special Contributions made by HNEF or FI pursuant to Section
4(i) hereof prior to the date of each such loan.
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(ii) The Required Loans of Section 4(h)(i) shall be in the nature
of revolving lines of credit to the Joint Venture to be
advanced against a promissory note of the Joint Venture to
HNEF and FI, respectively. Each such advance shall bear
interest from the date advanced until repaid at the Prime
Rate and all principal and any accrued but unpaid interest
not paid pursuant to Section 5(a) hereof, shall become
finally due and payable, if not sooner paid pursuant to
Section 5(a) hereof, at the end of the initial twenty (20)
year term of this Agreement. Upon the expiration of the
initial twenty (20) year term of this Agreement (whether or
not the Agreement is renewed), neither HNEF nor FI shall
have further obligations to make further Required Loans to
the Joint Venture. Accrued interest upon outstanding
advances under the Required Loans, if any, shall be due and
payable on a quarterly basis during the initial twenty (20)
year term of this Agreement with both principal and interest
to be prepaid from Available Cash as set forth in Section
5(a) below.
(iii) The aforesaid Required Loans shall be made to the Joint
Venture upon calls made by the Board of Managers in its
discretion. Upon the issuance of a call for Required Loans
by the Board of Managers, HNEF and FI shall proportionately
make such Required Loans within five (5) business days after
receipt of the notice of such call pursuant to the terms of
Article 14 hereof.
(i) (i) In the event the Initial Capital Contributions, Required
Loans, other loans and receipts from the Joint Ventures'
business are insufficient to meet the cash needs of the
Joint Venture, then the Venturers can agree in writing to
make additional capital contributions to the Joint Venture
in the proportionate amount (measured by the relation of
each Venturers' Distributive Share to 100%) of the cash
needed by the Joint Venture and, upon the written
concurrence of both HNEF and FI, the Board of Managers shall
be entitled to issue a call for such mandatory additional
contributions, which demand shall specify the proportionate
contribution required by each Venturer ("Special
Contributions").
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(ii) Upon the issuance of a call for Special Contributions, each
Venturer shall proportionately make the Special
Contributions within fourteen (14) days after the receipt of
notice of call as provided in Article 14. Each call for
Special Contributions shall designate the purpose or
purposes for which the proceeds of the Special Contributions
will be used. The proceeds from all Special Contributions
shall be used solely for the purposes set out in the call.
(j) (i) If at any time a Venturer shall breach this Agreement by
failing to make its respective Required Loans or Special
Contributions pursuant to the call provisions of this
Article 4 (hereinafter referred to as a "Non-Contributing
Venturer"), such Non-Contributing Venturer shall be
considered in breach of this Agreement and (without
otherwise limiting any other remedies which the other
Venturers may have against such Non-Contributing Venturer)
the other Venturers shall have the right, (but not the
obligation) to make an excess contribution ("Excess
Contribution") to the Joint Venture to cover such unpaid
Required Loans or Special Contributions of the
Non-Contributing Venturer. In the event that both of the
other Venturers elect to make an Excess Contribution, then
such other Venturers shall have the right to do so in
proportion to each of their then current Distributive Share
(without regard to the Distributive Share of the
Non-Contributing Venturer.
(ii) In the event that a Venturer makes an Excess Contribution,
such Excess Contribution shall be deemed to be a loan
("Excess Loan") to the Non-Contributing Venturer by virtue
of whose breach of this Agreement such Excess Contribution
was required. The Excess Loan shall bear interest at a rate
equal to the lesser of (a) the maximum rate permitted under
applicable law or (b) the greater of (i) the Prime Rate plus
two percent (2%) or (ii) ten percent (10%) per annum, and
shall be due and payable upon demand and shall be secured by
a lien and security interest upon any amounts of Available
Cash due the Non- Contributing Venturer. The Excess Loan
shall be an obligation of such
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Non-Contributing Venturer and, if not sooner paid by such
NonContributing Venturer, shall be due and payable out of
the first Available Cash of the Joint Venture pursuant to
the priority set forth in Article 5 below, with the
application of payments thereof to principal and/or interest
being at the sole discretion of the payee thereof. To the
extent of any payments of Excess Loans directly by the Joint
Venture out of Available Cash to any Venturer(s) who made an
Excess Contribution, such Venturer(s) who made the Excess
Contribution(s) shall subrogate all rights which such
Venturer(s) had against the NonContributing Venturer to the
Joint Venture. Any interest on Excess Loans paid by the
Joint Venture shall be charged solely to the capital account
of the Non-Contributing Venturer who occasioned any such
Excess Loan.
(iii) Without limiting any other remedies set forth herein or at
law, if any Excess Loan is not repaid in full by such
Non-Contributing Venturer within one hundred twenty (120)
days after the same has been advanced on its behalf, then
the Distributive Share of such Non-Contributing Venturer
shall (at the option of the Venturers who is/are owed any
such Excess Loan) be reduced and the Distributive Share of
the Venturer(s) making any such Excess Loan shall be
increased as follows: The unpaid balance (including
principal and accrued interest) of any such Excess Loan
shall be divided by a sum equal to (a) the aggregate amount
of all Capital Contributions theretofore made to the Joint
Venture by the Venturers (excluding any such contributions
deemed to have been made on account of any such Excess
Loan), plus (b) the unpaid balance of accrued interest and
principal of any such Excess Loan, less (c) all withdrawals
of capital to all Venturers, in the aggregate. The quotient
thus obtained shall be multiplied by one hundred percent
(100%). The resulting percentage amount will then be
subtracted from such Non-Contributing Venturer's then
existing Distributive Share (provided same shall not be
reduced below zero) and an equivalent amount shall be added
to the respective Distributive
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Share(s) of the Venturer(s) who made any such Excess Loan
(in proportion to the amount of Excess Loans made to such
Venturers). Immediately following such adjustment in the
Distributive Shares of the Venturers, it shall be deemed
that the unpaid balance (including principal and accrued
interest) of any such Excess Loan(s) shall have been
converted into an additional capital contribution by the
Venturer(s) making such Excess Loan(s) and a capital
contribution withdrawal by the Non-Contributing Venturer and
the capital accounts of the Venturers shall be adjusted
accordingly, and the NonContributing Venturer shall have no
further liability to repay such Excess Loan(s). Any
adjustment to the Distributive Shares made under this
Section 4(j) shall act to adjust, in like manner, all
Distributive Shares as set forth in Article 3.
(k) Any Venturer may at any time at the request of the Joint Venture
make a loan in addition to those loans identified elsewhere herein ("Additional
Loan") to the Joint Venture to fund the operation and business activities of the
Joint Venture. No Venturer shall be obligated to make an Additional Loan. In the
event an Additional Loan is made to the Joint Venture, the provisions of Article
8 shall govern as to the type, interest rate and manner of repayment of such
Additional Loan.
ARTICLE 5
DISTRIBUTIONS
(a) Subject to the provisions of Article 13 below, Available Cash, if
any, shall be distributed quarterly on or before the last day of the first month
following the end of each calendar quarter (commencing on the last day of the
first month of the calendar quarter immediately following the calendar quarter
in which the Initial Restaurant is opened to the public) in the following
priority:
(i) To pay or provide for all amounts owing to Venturers for
Excess Loans;
(ii) To pay or provide for all other amounts owing to Venturers
for Additional Loans; and
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(iii) To pay or repay all amounts outstanding as Required Loans,
with the application first to accrued interest and the
balance to principal of loans made in accordance with
Section 4(h).
If Available Cash is insufficient to repay all sums owing in respect to Required
Loans, Additional Loans or Excess Loans, Available Cash shall first be applied
pro rata to repay and retire the oldest loans first (with all Excess Loans to be
repaid prior to the payment of any Additional Loans and all Additional Loans
required to be repaid prior to the payment of any Required Loans) and, if any
funds thereafter remain available, such funds shall be applied in a similar
manner to the remaining loans in accordance with the order of the dates on which
they were made; however, as to loans made on the same date, each such loan shall
be repaid in the proportion that such loan bears to the total loans made on said
date. For purposes of priority under this Section 5(a), Required Loans and
Excess Loans made pursuant to the same call under Sections 4(h) or 4(i) shall be
deemed to have been made on the same date although they may have been advanced
on different dates. In addition, at any time when no Excess Loans, Additional
Loans or Required Loans are outstanding, the Board of Managers may make monthly
distributions to BARLTD of up to nine percent (9%) of the net income of the
Joint Venture, each as determined by the internal accountants of the Joint
Venture for purpose of allowing BARLTD to satisfy any corresponding obligation
to make monthly distributions ▇▇▇▇▇▇▇ pursuant to the terms of the ▇▇▇▇▇▇▇
Employment Agreement. Any such distributions to BARLTD at a time when
proportionate distributions are not being made to other Venturers shall be
considered to be an advance against the distributions to which BARLTD are
otherwise entitled from time to time.
(b) During any time when no Excess Loans, Additional Loans or Required
Loans are outstanding, upon the order of the Board of Managers, acting in their
discretion, the Joint Venture may make distributions to the Venturers from
Available Cash in accordance with the Venturers' respective Distributive Shares.
The above notwithstanding, in the event that any Venturer receives an allocation
of income or other gain from the Joint Venture (as shown upon any K-1 or similar
form issued to such Venturer by the Joint Venture) which requires that such
Venturer (or its equity owners) make a payment in cash to the United States
Internal Revenue Service (the "IRS") by reason of the items of allocation from
the Joint Venture, taking into account all other income, credits and deduction
of such Venturer, then the Joint Venture shall distribute cash (to the extent of
Available Cash only) to each
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Venturer in proportion to their Distributive Shares, in an amount so as to
provide the Venturer having the greatest amount of tax liability as a result of
such allocations by the Joint Venture (less amounts distributed to such
Venturers under this Section 5(b) during the preceding twelve months, if any),
an amount of cash sufficient to pay such tax liability. Any distribution
required by the immediately preceding sentence shall be made prior to the date
of the required filing of a tax return, by any Venturer, with the IRS showing
such tax as due and payable.
(c) If any Venturer does not withdraw the whole or any part of its
share of any cash distribution, such Venturer shall not be entitled to receive
any interest thereon, nor shall any such cash not withdrawn be deemed an
increase in such Venturer's Distributive Share of the Joint Venture without the
express written consent of all other Venturers.
ARTICLE 6
ALLOCATIONS OF INCOME, GAIN, LOSS
DEDUCTION AND CREDIT
Each item of income, gain, loss, deduction or credit for each fiscal
year, or portion of a fiscal year, of the Joint Venture shall be allocated among
the Venturers in accordance with their then respective Distributive Shares. Upon
dissolution and liquidation of the Joint Venture pursuant to Article 13 hereof,
gain from the sale, exchange, abandonment, foreclosure or other disposition of
all or any portion of the Joint Venture property or any interest therein shall
be allocated among the Venturers according to the Distributive Share of each.
ARTICLE 7
MANAGEMENT, OPERATION AND CONTROL OF THE JOINT VENTURE
(a) BOARD OF MANAGERS.
(i) Except as provided in Section 7(c) below, the overall
management and control of the Joint Venture shall be vested
in a Board of Managers. The Board of Managers shall be
responsible for making all policy decisions of the Joint
Venture, including (but not limited to) borrowing money,
purchasing assets, and making other capital investments on
behalf of the Joint Venture, negotiating and entering into
contracts or
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agreements on behalf of the Joint Venture, selling or
leasing assets of the Joint Venture, establishing the fiscal
policies of the Joint Venture, establishing the overall
business plan and systems of operation of the Joint Venture,
hiring and terminating any and all employees of the Joint
Venture and establishing and reviewing the salaries of any
and all employees of the Joint Venture.
(ii) Unless increased by the unanimous vote of the Venturers, the
Board of Managers shall consist of two (2) individuals. HNEF
shall have the right to appoint one (1) member of the Board
of Managers, and FI shall have the right to appoint one (1)
member to the Board of Managers. BARLTD shall not have the
right to appoint a member of the Board of Managers. Each
member of the Board of Managers shall serve at the pleasure
of the Venturer by which he was appointed, and each Venturer
may fill vacancies caused by the death, resignation or
removal of a member appointed by that Venturer. The initial
members of the Board of Managers shall be ▇▇▇▇▇ ▇▇▇▇▇
(representing HNEF) and Fitch (representing FI).
(iii) Except as otherwise set forth herein, actions of the Board
of Managers shall be taken only by majority vote of its
members or the written consent of a majority of its members.
Each member of the Board of Managers shall be entitled to
one (1) vote.
(iv) The Board of Managers is granted the right, power and
authority, on behalf of the Joint Venture, to perform all
acts which, in the Board of Managers' sole discretion, are
necessary and/or desirable to carry out the duties and
responsibilities of operating and managing the Joint Venture
and its business. The Board of Managers shall have (but
shall not be limited to) the right, power and authority to
incur reasonable expenses; to employ and dismiss from
employment any and all employees, agents, or independent
contractors; to lease property, to borrow money or to incur
indebtedness at a price, rental, or amount, for cash,
securities or other property, and upon such terms as the
Board of Managers deems proper; to adjust, compromise,
settle or refer to
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arbitration any claim against or in favor of the Joint
Venture or any nominee; to institute, prosecute, defend or
settle any legal proceeding relating to the business or
property of the Joint Venture; to delegate all or any
portion of its powers as set forth in Subsection 7(a)(v)
below and to execute, acknowledge and deliver any and all
instruments to effect any and all of the foregoing.
(v) In its sole discretion, the Board of Managers may designate
one or more of its members or one or more employees or
agents of the Joint Venture to manage the day-to-day
operations of the Joint Venture; provided, however, such
member(s), employee(s) or agent(s) shall at all times be
subject to the supervision and control of the Board of
Managers.
(b) Except as provided in Section 7(c) below, no Venturer shall,
unless authorized by this Agreement or by majority of the Board of Managers,
take any action to bind or obligate the Joint Venture in any manner, including
but not limited to, any of the following:
(i) make, execute or deliver for the Joint Venture any
agreement, contract, note, bond, mortgage, deed of trust,
guaranty, indemnity bond, surety bond or accommodation paper
or accommodation endorsement;
(ii) borrow money in the Joint Venture's name or use the Joint
Venture's property as collateral;
(iii) assign, transfer, pledge or release any claims or debts
owing by or to the Joint Venture;
(iv) cause the Joint Venture to purchase all or any part of the
Joint Venture interest of any Venturer;
(v) assign the Joint Venture's property in trust for creditors
or on the assignee's promise to pay the debts of the Joint
Venture; (vi) dispose of the goodwill of the Joint Venture;
(vii) do any other act which will make it impossible to carry on
the ordinary business of the Joint Venture;
(viii) confess a judgment against the Joint Venture;
(ix) pledge or transfer or allow or cause to become encumbered in
any manner a Venturer's interest in the Joint Venture,
except as permitted in Article 12 hereof;
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(x) do any other act for which unanimity is required by the
other provisions of this Agreement or applicable law; or
(xi) alter the purpose of the Joint Venture.
(c) CONTROL BY VENTURERS. As provided in Section 7(a) above, the
overall management and control of the Joint Venture shall normally be vested in
the Board of Managers. Anything contained to the contrary herein
notwithstanding, however, since the Board of Managers is to consist of two
persons, if the Board of Managers is unable to agree upon any issue or matter
relating directly or indirectly in any way to the Joint Venture, such issue or
matter, shall be decided by the Venturers as provided in Section 7(d) hereof.
Any decision made by the Venturers pursuant to this Section 7(c) shall be
binding in all respects upon the Board of Managers and the Joint Venture and may
be relied upon in all respects by third parties. The Venturers and the Board of
Managers hereby agree to, at all times, abide by and to cause the Joint Venture
to abide by the terms of any decision of the Venturers pursuant to Sections 7(c)
and 7(d) hereof.
(d) ACTION BY THE VENTURERS.
(i) In the exercise of rights, powers and duties hereunder
(specifically including, but in no way limited to the rights
and powers set forth in Section 7(c) above), the Venturers
shall have one (1) vote for each percentage of Distributive
Share owned by such Venturer with any fractional percentage
of ownership rounded to the closest whole percentage point
(i.e. at the time of execution hereof, HNEF shall have 46
votes, FI shall have 44 votes, and BARLTD shall have 10
votes) on all issues, questions, matters and decisions with
respect to the Joint Venture to the extent not otherwise
resolved by the other provisions of this Agreement.
(ii) Actions to be taken by the Venturers herein may be taken
either by majority vote or majority written consent of the
Venturers.
(e) SPECIAL DUTIES OF HNEF. Unless otherwise determined by the Board of
Managers, HNEF shall be responsible for and shall have the authority to conduct
all general administrative matters of the Joint Venture which shall include, but
shall not be limited to, the coordination of:
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(i) all legal and accounting matters on behalf of the Joint
Venture, including the maintenance of the general accounting
systems of the Joint Venture and coordinating the functions
of the accountants and lawyers that will service the Joint
Venture;
(ii) all payroll matters on behalf of the Joint Venture;
(iii) all accounts payable on behalf of the Joint Venture (except
those that must be handled on a local level which shall be
the responsibility of FI);
(iv) all banking and financial matters of the Joint Venture;
(v) all financial reporting to Hops pursuant to the terms of any
Operating Agreement utilizing restaurant and other operating
data to be provided by FI as the operator of the
restaurants; and
(vi) the compliance by the Joint Venture of all administrative
aspects of any Operating Agreement.
Except for the administrative fee payable to Hops as part of each Operating
Agreement, HNEF shall receive no direct compensation for such administration and
coordination; however, all costs and expenses payable to third parties relating
to administrative matters of the Joint Venture shall be the sole responsibility
of the Joint Venture. [BY WAY OF EXAMPLE, BUT NOT IN LIMITATION, OF THE ABOVE,
(A) HNEF WILL UNDERTAKE (I) ALL OF THE INTERNAL ACCOUNTING AND BOOKKEEPING OF
THE JOINT VENTURE, INCLUDING THE DAILY MAINTENANCE OF THE JOINT VENTURE'S BOOKS
AND RECORDS AND (II) WILL COORDINATE WITH THE JOINT VENTURE'S ACCOUNTANTS, THE
PREPARATION OF THE JOINT VENTURE'S TAX RETURNS AND THE AUDIT OF THE JOINT
VENTURE'S BOOKS AND RECORDS; AND (B) HNEF SHALL RECEIVE NO COMPENSATION FOR SUCH
INTERNAL ACCOUNTING AND BOOKKEEPING OR FOR THE TIME SPENT BY HNEF IN
COORDINATING WITH THE JOINT VENTURE'S ACCOUNTANTS, HOWEVER, THE JOINT VENTURE
SHALL BE SOLELY RESPONSIBLE FOR ALL FEES AND EXPENSES OWING TO THE JOINT
VENTURE'S ACCOUNTANTS FOR THE PREPARATION OF SUCH TAX RETURNS AND THE CONDUCT OF
THE AUDIT.]
Unless otherwise instructed by the Board of Managers, HNEF shall
undertake its duties pursuant to this Section 7(e) in a manner so as to assure
compliance with the administrative provisions of all Operating Agreements to
which the Joint Venture is a party. The failure by HNEF to cause the Joint
Venture to comply with the administrative provisions of any such Operating
Agreement (unless such non-compliance is waived by Hops) shall be considered a
breach of this Agreement by HNEF.
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(f) SPECIAL DUTIES OF FI. Unless otherwise determined by the Board of
Managers, acting in their sole discretion, FI shall be responsible for
and shall have the authority to conduct all of the operational matters of each
restaurant to be owned and operated by the Joint Venture, which duties shall
include, but shall not be limited to:
(i) the provision or employment of all direct restaurant
management as required by the Operating Agreement relating
to such restaurant or as otherwise necessary for the
operation of any restaurant to be owned and operated by the
Joint Venture;
(ii) the employment, termination and supervision of all
restaurant employees; and
(iii) the compliance by the Joint Venture of all operating aspects
of any Operating Agreement.
FI shall receive no direct compensation for the conduct of such operational
matters; however, all expenses related to the operation of each restaurant to be
owned and operated by the Joint Venture shall be the sole responsibility of the
Joint Venture. [BY WAY OF EXAMPLE, BUT NOT LIMITATION, OF THE ABOVE, (A) FI
SHALL BE RESPONSIBLE FOR THE RECRUITING, HIRING AND ULTIMATE SUPERVISION OF ALL
EMPLOYEES OF EACH RESTAURANT TO BE OPERATED BY THE JOINT VENTURE; AND (B) FI
SHALL RECEIVE NO COMPENSATION FOR ITS RECRUITING, HIRING AND SUPERVISION
ACTIVITIES, HOWEVER, THE JOINT VENTURE SHALL BE SOLELY RESPONSIBLE FOR THE
ACTUAL COMPENSATION (INCLUDING WAGES AND BENEFITS) OF THE EMPLOYEES OF SUCH
RESTAURANTS.]
Unless otherwise instructed by the Board of Managers, FI shall
undertake its duties pursuant to this Section 7(f) in a manner so as to assure
compliance with the operating provisions of all Operating Agreements to which
the Joint Venture is a party. The failure by FI to cause the Joint Venture to
comply with the operating provisions of any such Operating Agreement (unless
such non-compliance is waived by Hops) shall be considered a breach of this
Agreement by FI. FI shall be solely responsible for the cost of any FI
management personnel not directly related to the management of a restaurant
owned by the Joint Venture, if any.
(g) OTHER BUSINESS OF HNEF. The parties hereto acknowledge and agree
that HNEF and its designated member of the Board of Managers are engaged in
other business activities unrelated to the business of the Joint Venture, and
will continue to do so and will devote only such time as is reasonably necessary
to the business of the Joint Venture. The
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parties further acknowledge and agree that certain of the business activities of
HNEF (and Hops) will relate to the operation of other restaurants under the Hops
System or other systems and accordingly, certain of such activities may conflict
with the best interests of FI or the Joint Venture or compete with the business
of the Joint Venture.
(h) EXCLUSIVE BUSINESS OF FI/FITCH. The parties hereto acknowledge and
agree that FI and Fitch shall exclusively devote their time and efforts to the
operation of the restaurants to be owned and operated under the Joint Venture
for a period of two (2) years from the date of the opening of the Initial
Restaurant to the general public. Thereafter, FI and Fitch may have other
business interests and will be required to devote only such time to the Joint
Venture as is reasonably necessary to the business of the Joint Venture.
(i) SPECIAL DUTIES OF BARLTD. Unless otherwise determined by the Board
of Managers acting in their sole discretion, BARLTD in its role as the Area
Manager of the Hops Grill & Bar restaurants in the Territory, shall serve in a
managerial capacity under the direction of the Board of Managers, with respect
to the Hops Grill & Bar restaurant owned and operated by the Joint Venture and
at the specific request of the Board of Managers has employed ▇▇▇▇▇▇▇ for that
purpose. If, for any reason, BARLTD shall become unable to retain the services
of ▇▇▇▇▇▇▇, at the request of the Board of Managers, BARLTD shall attempt to
locate and employ a satisfactory substitute manager, but shall have no liability
to the Joint Venture for the failure to further perform the special duties set
forth herein or for the failure to locate a suitable substitute manager to
perform such services. The Joint Venture shall reimburse BARLTD for its
reasonable expenses in connection with the services to be performed by BARLTD
hereunder and under the ▇▇▇▇▇▇▇ Employment Agreement, including but not limited
to the compensation to be paid to ▇▇▇▇▇▇▇ thereunder.
(j) BANK ACCOUNTS. The Joint Venture will maintain such bank accounts
as the Board of Managers may deem necessary, for the deposit of Joint Venture
funds and for the proper segregation thereof into such separate accounts as may
be deemed appropriate. All withdrawals from any such bank account shall be made
by such persons as are approved in writing by a majority of the Board of
Managers. Joint Venture funds shall not be commingled with those of any other
person or entity.
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ARTICLE 8
LOANS TO JOINT VENTURE; FEES TO VENTURERS
(a) VENTURER LOANS. If any Venturer shall advance any money to the
Joint Venture except as part of such Venturer's Capital Contributions required
by Section 4(g) hereof, or as provided in Section 4(i), the amount of any such
advance shall not increase the Capital Contribution of such Venturer to the
Joint Venture or entitle such Venturer to any increase in such Venturer's
Distributive Share (except to the limited extent expressly provided in Section
4(j)(iii)), but the amount of any such advance shall be deemed to be a loan to
the Joint Venture and an obligation of the Joint Venture to such Venturer. No
Venturer shall be personally obligated to repay or contribute additional capital
to repay any such advance and such advance shall be payable or collectible only
out of Joint Venture assets existing from time to time; provided, however,
nothing contained in this Section 8(a) shall limit the liability of the
Venturers to repay the Balance of Required Loans or to limit the full personal
liability of any Venturer necessitating an Excess Loan to repay such loan.
(b) INTEREST. Loans to the Joint Venture pursuant to Section 8(a) above
(excluding Excess Loans) shall be payable in accordance with Section 5(a) and
shall bear interest at the Prime Rate unless otherwise agreed to by the Venturer
making the loan and the Board of Managers.
(c) FEES TO VENTURERS. Except for distributions made in accordance with
Article 5 of this Agreement and the fees and other payments set forth in the
Development Option Agreement, or the Operating Agreement for any restaurant to
be operated by the Joint Venture, the Venturers shall not be entitled to
receive, directly or indirectly, any fees or other payments from the Joint
Venture without the prior written consent of HNEF and FI. This provision is not
intended to preclude any Venturer (or its affiliates) from serving as a vendor
or service provider to the Joint Venture when approved by the Board of Managers
and such products or services are provided to the Joint Venture on terms that
are no less favorable to the Joint Venture than those available from independent
third party providers.
ARTICLE 9
BOOKS, RECORDS AND TAX MATTERS
(a) Proper and complete records and books of account for the Joint
Venture shall be kept or caused to be kept by the Board of Managers. All
transactions and other matters
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relative to the Joint Venture's business, as are usually entered into records
and books of account maintained by persons engaged in businesses of like
character, shall be entered fully and accurately into the Joint Venture's
records and books of account.
(b) Each Venturer and/or such Venturer's duly authorized
representative, at such Venturer's expense, shall have the right, power and
authority to examine, inspect, copy and verify, at any and all reasonable times,
the books, records and accounts of the Joint Venture.
(c) The books and records of the Joint Venture shall be at all times
maintained at the principal office of the Joint Venture set forth in Section
1(e) above, or at such other place as the Board of Managers may determine from
time to time
(d) The Joint Venture shall be treated as a general partnership for
federal and state tax purposes. The Board of Managers shall cause the Joint
Venture to prepare and file on or before the annual due date a United States
Partnership Return of Income and any necessary state tax returns.
(e) Unless otherwise agreed by the Board of Managers, the Board of
Managers shall cause an audit of the books and records of the Joint Venture to
occur at least annually. Such audit shall be conducted by independent certified
public accountants which are mutually acceptable to the Venturers.
ARTICLE 10
FISCAL YEAR AND BASIS FOR ACCOUNTING
(a) Unless changed by the Board of Managers, the fiscal year of the
Joint Venture shall end on December 31 of each year.
(b) The Joint Venture shall operate and keep its books and records on
such basis as the Board of Managers shall elect.
ARTICLE 11
LIABILITY OF VENTURERS
(a) No Venturer, nor any officer, director, shareholder, trustee,
partner, agent, associate or beneficiary of a Venturer, shall be liable,
responsible or accountable in damages or otherwise to the Joint Venture or the
other Venturer, for any action taken or failure to act (even if such action or
failure to act constituted the simple negligence of the Venturer, or such
officer, director, shareholder, trustee, partner, agent, associate or
beneficiary of such
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Venturer) on behalf of the Joint Venture within the scope of the authority
conferred on the Venturer by this Agreement, unless such act or omission
constitutes a breach of the terms of this Agreement or such act or omission was
performed or omitted fraudulently or constituted gross negligence or willful
malfeasance.
(b) The Joint Venture shall indemnify and hold harmless each member of
the Board of Managers and each Venturer, and each officer, director,
shareholder, trustee, partner, agent, associate or beneficiary thereof, from and
against any loss, expense, damage or injury suffered or sustained by it by
reason of any acts, omissions or alleged acts or omissions (even if such action
or failure to act constituted the simple negligence of such Venturer, or such
officer, director, shareholder, trustee, partner, agent, associate or
beneficiary of such Venturer) arising out of its activities on behalf of the
Joint Venture or in furtherance of the interests of the Joint Venture,
including, but not limited to, any judgment, award, settlement, reasonable
attorney's fees and other costs or expenses incurred in connection with the
defense of any actual or threatened action, proceeding or claim, if the acts,
omissions or alleged acts or omissions upon which such actual or threatened
action, proceeding or claims are based (i) were for a purpose reasonably
believed to be in the best interests of the Joint Venture, (ii) were within the
scope of authority conferred on such indemnified party by this Agreement, (iii)
were not performed or omitted fraudulently or as a result of the gross
negligence or willful malfeasance of such indemnified party, and (iv) did not
constitute a breach of the terms of this Agreement.
ARTICLE 12
DISPOSITION OF A VENTURER'S JOINT VENTURE INTEREST
(a) (i) At no time during the term of this Agreement shall FI,
directly or indirectly, sell, assign, transfer, mortgage,
encumber, pledge or otherwise similarly deal with or dispose
of all or any portion of its interest in the Joint Venture,
without first obtaining the written consent of HNEF, or, in
the absence of such written consent, without first complying
with the terms of this Article 12. Any attempted sale,
assignment, transfer, mortgage, pledge, grant, hypothecation
or other disposition of any interest in the Joint Venture by
FI, in violation of the foregoing provisions of this Section
12(a), shall be null and void and of
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no force or effect. For purposes of this Agreement, the
transfer or distribution, directly or indirectly, of an
equity interest or other rights in or the issuance of
additional securities in FI, other than pursuant to the
provisions of the last paragraph of this Section 12(a)(ii)
below, shall be deemed a disposition of the Joint Venture
interest of FI, and HNEF shall be entitled to purchase the
Joint Venture interest of FI in accordance with the terms of
Section 12(c) hereof.
(ii) Provided that Fitch shall, at all times, retain a minimum o
51% of the equity interest in and absolute voting and other
control of FI, Fitch (or FI) may sell or otherwise assign up
to 49% of the equity of FI to persons who have received the
prior written approval of HNEF (which approval shall not be
unreasonably delayed or withheld). Any such transferee of an
interest in FI may be required, as a condition to the
consent of HNEF, to execute reasonable confidentiality and
transfer agreements as are deemed necessary by HNEF to
assure the compliance by such transferees with the spirit of
this Agreement. Additionally, the Bylaws of FI shall reflect
that the issuance and transfer of shares of stock (or other
equity interests in FI) are restricted by the terms of this
Agreement. The following legend shall appear conspicuously
upon the face of each stock certificate of (or certificate
otherwise representing an interest in) FI: "The transfer of
this stock (or interest) is subject to the terms and
conditions of a Joint Venture Agreement dated September 1,
1995 by and between FI and HNEF and the Bylaws of the
corporation." FI hereby acknowledges that the purpose of the
aforesaid transfer restrictions and procedures is to protect
the trademarks, trade secrets and operating procedures of
Hops and the partnership interests of HNEF contained herein.
FI hereby acknowledges that non-compliance with such
transfer restrictions and procedures shall constitute a
breach of this Agreement by FI. Upon the execution of this
Agreement and periodically thereafter at the reasonable
request of HNEF, FI shall provide HNEF with a photocopy of
its current Bylaws and all issued
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and outstanding stock certificates to demonstrate compliance
with this Agreement.
(b) (i) FI shall not transfer any interest in the Joint Venture for
a period beginning upon the date hereof and ending two (2)
years after the date of the opening of the Initial
Restaurant to the general public, without the express prior
written consent of HNEF. If following the period described
in the immediately preceding sentence, FI desires, directly
or indirectly, to sell, assign, transfer or in any way
dispose of all or any portion of the Joint Venture interest
of FI to any third party, FI shall first serve notice
(hereinafter called an "Offer to Sell") to that effect upon
HNEF. The Offer to Sell shall set forth the amount of Joint
Venture interest of FI desired to be sold or otherwise
disposed of, the price, terms and conditions of such
proposed sale and the name and address of the proposed third
party purchaser (and in the case of a proposed purchaser
that is not a natural person, the principals of such
proposed purchaser), and shall offer to sell such Joint
Venture interest to HNEF at the price and on the terms of
sale described in the Offer to Sell.
(ii) HNEF shall have the absolute right to prohibit the sale of
the Joint Venture interest identified in the Offer to Sell
if HNEF, in its reasonable determination, shall disapprove
of the purchaser identified in the Offer to Sell. In making
such determination, HNEF may consider, among other things,
the reputation, financial position and restaurant operating
experience of the proposed purchaser, as well as concerns as
to the protection of the trade secrets and proprietary
information of the Hops System that result from the
competitive nature of any other business operations directly
or indirectly related to the potential purchaser. FI shall
promptly provide HNEF with any information regarding the
potential purchaser, reasonably requested by HNEF, in order
to evaluate the potential purchaser, including, but not
limited to financial statements and a detailed business
history of such potential purchaser. HNEF will notify FI in
writing of its approval or
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disapproval of any such potential purchaser within sixty
(60) days after receipt by HNEF of the Offer to Sell.
(iii) Whether or not the potential purchaser is approved by HNEF
as provided in Section 12(c) above, HNEF shall have the
first right to purchase all of the Joint Venture interest so
offered by giving notice of acceptance to FI within one
hundred twenty (120) days after receipt by HNEF of the said
Offer to Sell.
(iv) In the event HNEF shall not have disapproved of the
identified in the Offer to Sell as set forth in Section
12(b)(ii) above and HNEF fails or refuses to purchase the
Joint Venture interest of FI as provided in Section
12(b)(iii) above, FI shall be free to sell the Joint Venture
interest so identified in the Offer to Sell to the person or
entity identified in the Offer to Sell on the price and
terms set forth in the Offer to Sell; provided, however,
that FI shall not transfer or otherwise dispose of such
Joint Venture interest to any person or entity other than
the third party identified in the Offer to Sell or for a
price less than or on terms more favorable than those set
forth in the Offer to Sell without first reoffering such
Joint Venture interest to HNEF as set forth in Section
12(b)(i). If FI does not consummate the sale of its Joint
Venture interest so identified in its Offer to Sell within
ninety (90) days after the expiration of the period for
HNEF's acceptance of such Offer to Sell, the provisions of
this Article 12 shall reattach to such interest and such
interest shall not be sold without reoffer to HNEF.
(v) The provisions of this Section 12(b) to the contrary
notwithstanding, FI shall make no transfer of its Joint
Venture interest as provided in this Section 12(b) unless
the person or entity acquiring such interest shall execute
and deliver to HNEF (or Hops) such documentation as HNEF (or
Hops) may reasonably require to assure the confidentiality
of the trade secrets and proprietary information associated
with the Hops System and to make the purchaser a party to
this Agreement (including the transfer restrictions as they
previously related to FI) and all other
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agreements related to the restaurants operated by the Joint
Venture to which FI was (or is) a party.
(c) (i) If FI or Fitch shall breach this Agreement as provided in
Section 15 hereof, FI shall be deemed to have made an Offer
to Sell (which shall be deemed received by HNEF only when
HNEF has actual knowledge of such breach) all of the Joint
Venture interest owned by FI to HNEF for the price and upon
the terms specified in this Section 12(c). HNEF shall have
the right to purchase the Joint Venture interest of FI so
offered by giving notice of acceptance to FI within one
hundred twenty (120) days after the deemed receipt by HNEF
of the Offer to Sell. In the event that HNEF fails or
refuses to purchase all of the Joint Venture interest of FI,
the remaining provisions of this Agreement shall continue to
apply to the Joint Venture interest of FI.
(ii) DETERMINATION OF PURCHASE PRICE AND TERMS. In the event
that the Joint Venture interest of FI is to be purchased
pursuant to the foregoing provisions of this Section 12(c),
the following provisions shall apply:
(A) PRICE. The purchase price of the Joint Venture interest
of FI shall be determined pursuant to Section 12(e)(i)
hereof.
(B) TIME AND METHOD OF PAYMENT. Upon the closing of any sale
pursuant to this Section 12(c), HNEF shall pay the
purchase price for the Joint Venture interest of FI
purchased pursuant to this Section 12(c) as follows:
1) PAYMENT UPON CLOSING. At the option of HNEF, all of
the purchase price or an amount equal to the greater
of:
a) twenty percent (20%) of the purchase price; or
b) $50,000,
shall then be paid in cash.
2) PROMISSORY NOTE. Any part of the purchase price which
is not paid in cash shall be evidenced by a
negotiable promissory note of HNEF payable to and
delivered to FI. The promissory note shall bear
interest at the Prime
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Rate and shall be payable over a period of sixty (60)
months with interest only on a quarterly basis
payable during the first twelve (12) months and
thereafter sixteen (16) equal quarterly payments of
principal (totaling all of the principal due
thereunder) and interest payable during the following
forty-eight (48) months. The promissory note of HNEF
shall provide that more or the entire principal sum
remaining unpaid at any time may be paid at any time
with interest to date of payment only. The promissory
note shall also provide for acceleration of the
maturity of the unpaid principal and accrued interest
at the option of FI upon default in the payment of
any installment of principal or interest for fifteen
(15) days or more.
(d) (i) In the event that Fitch shall die, become permanently
disabled or otherwise involuntarily cease to be in
operational control of FI (such occurrences hereinafter
referred to as a "Buyout Event" or "Buyout Events"), FI
shall sell and HNEF shall purchase all of the Joint Venture
interest of FI for the price set forth in Section 12(e)
hereof and upon the terms set forth in this Section 12(d).
FI shall notify HNEF immediately of the occurrence of a
Buyout Event. The failure of FI to notify HNEF of a Buyout
Event within twenty (20) days of its occurrence shall
constitute a breach of this Agreement by FI. The purchase of
the Joint Venture interest of FI by HNEF, pursuant to this
Section 12(d), shall take place within one hundred eighty
(180) days of the date upon which HNEF receives notice of
the Buyout Event (or if HNEF is not provided with such
notice, such closing shall take place on the date which HNEF
shall demand).
(ii) DETERMINATION OF PURCHASE PRICE AND TERMS. In the event that
the Joint Venture interest of FI is to be purchased pursuant
to the foregoing provisions of this Section 12(d), the
following provisions shall apply:
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(A) PRICE. The purchase price of the Joint Venture interest
of FI shall be determined pursuant to Section 12(e)(ii)
hereof.
(B) MANNER OF PAYMENT. The purchase price of the Joint
Venture interest of FI to be purchased pursuant to the
provisions of this Section 12(d) shall be paid as
follows:
1) PAYMENT UPON CLOSING. At the option of HNEF, all of
the purchase price or an amount equal to the greater
of
a) twenty percent (20%) of the purchase price;
b) Fifty Thousand Dollars (U.S. $50,000); or
c) one hundred percent (100%) (but not to exceed the
entire purchase price) of all proceeds from life
insurance policies, if any, on the life of Fitch
payable to HNEF by reason of the death of Fitch,
shall then be paid in cash.
2) PROMISSORY NOTE. Any part of the purchase price which
is not then paid in cash shall be evidenced by a
negotiable promissory note of HNEF payable to and
delivered to FI. The promissory note shall bear
interest at the Prime Rate and shall be payable over
a period of sixty (60) months with interest only on a
quarterly basis payable during the first twelve (12)
months and thereafter sixteen (16) equal quarterly
payments of principal (totaling all of the principal
due thereunder) and interest payable during the
following forty-eight (48) months. The promissory
note of HNEF shall provide that more or the entire
principal sum remaining unpaid at any time may be
paid at any time with interest to date of payment
only. The promissory note shall also provide for
acceleration of the maturity of the unpaid principal
and accrued interest at the option of FI upon default
in the payment of any installment of principal or
interest for fifteen (15) days or more.
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(e) (i) The purchase price for the Joint Venture interest of FI to
be purchased pursuant to Section 12(c) above shall be its
"book value." The book value of the Joint Venture interest
of FI shall be the book value of the assets of the Joint
Venture, less its liabilities, multiplied by FI's
Distributive Share as defined in Article 3 hereof (and
subject to adjustments pursuant to the other provisions
hereof).
(ii) The purchase price for the Joint Venture interest of FI to
be purchased pursuant to Section 12(d) above shall be its
"fair market value." The fair market value of the Joint
Venture interest of FI shall be determined by an appraisal
to be made by an appraiser jointly selected by HNEF and FI.
If HNEF and FI cannot agree upon an appraiser, then each
party shall select an appraiser and the two appraisers
selected by the Venturers shall select a third appraiser,
and the appraisal shall be made by the third appraiser. The
appraisal of the third appraiser shall be binding upon the
parties hereto unless patently erroneous. In the event of
such an appraisal, each party shall bear its own legal and
other costs and shall split the appraisal fees.
(f) In the event that the Joint Venture shall elect to obtain insurance
on the life of Fitch to fund the purchase of the Joint Venture interest of FI
pursuant to Section 12(d) or for other reasonable business reasons, Fitch shall
cooperate fully with the Joint Venture in obtaining such insurance including
Fitch's submission to reasonable medical examinations.
ARTICLE 13
DISSOLUTION AND LIQUIDATION
(a) The Joint Venture shall be dissolved upon the first of the
following to occur:
(i) The expiration or non-renewal of the term of the Joint
Venture pursuant to Article 2 hereof;
(ii) The decision of the Board of Managers to dissolve the Joint
Venture;
(iii) The bankruptcy of the Joint Venture;
(iv) The bankruptcy of HNEF;
(v) The liquidation or dissolution of HNEF;
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(vi) The bankruptcy, liquidation or dissolution of FI if HNEF
shall fail or refuse to exercise its purchase option
pursuant to Article 12 hereof;
(vii) The judgment of a court of proper jurisdiction under the
laws of the State of Florida ordering dissolution and
liquidation of the Joint Venture under applicable Florida
statutory or common law; or
(viii) Any event that makes it unlawful for the business of the
Joint Venture to be carried on or for its Venturers to carry
on such business in the Joint Venture.
Each Venturer agrees that dissolution of the Joint Venture by any cause not
hereinabove set forth or referred to in this Section 13(a), whether voluntary or
involuntary, shall be wrongful and in contravention of this Agreement. For
purposes of this Agreement, the "bankruptcy" of a Venturer shall be deemed to
have occurred upon the happening of any of the following:
(i) The filing of an application by the Venturer for, or a
consent to, the appointment of a trustee in bankruptcy or
receiver of such Venturer's interest in the Joint Venture or
of all or substantially all of such Venturer's assets;
(ii) The filing by the Venturer of a voluntary petition in
bankruptcy or the filing of a pleading in any court of
record admitting in writing such Venturer's inability to pay
such Venturer's debts as they come due;
(iii) The making by the Venturer of a general assignment for the
benefit of creditors;
(iv) The filing by the Venturer of an answer admitting the
material allegations of, or such Venturer's consenting to,
or defaulting in answering a bankruptcy petition filed
against such Venturer in any bankruptcy proceeding; or
(v) The entry of an order, judgment or decree by any court of
competent jurisdiction adjudicating the Venturer bankrupt or
appointing a trustee in bankruptcy or receiver of such
Venturer's interest in the Joint Venture or all or
substantially all of such Venturer's assets, and such order,
judgment or decree continuing unstayed and in effect for a
period of ninety (90) days after such entry.
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(b) Upon dissolution of the Joint Venture, it shall be wound up and
liquidated as rapidly as business circumstances will permit. The assets shall be
applied to the following uses in the following order:
(i) To pay or provide for all amounts owing by the Joint Venture
to creditors other than Venturers, and for expenses of
winding up;
(ii) To pay the balance of Excess Loans;
(iii) To pay or provide for the Balance of Required Loans;
(iv) To pay or provide for the balance of Additional Loans;
(v) To pay or provide for all other amounts owing by the Joint
Venture to the Venturers other than for capital and profits;
(vi) To pay each Venturer the credit balance, if any, in such
Venturer's closing capital account as adjusted to the date
of such distribution.
If funds are insufficient to repay all sums owing in respect of each category of
payment specified in the foregoing subsections, then the available funds shall
be applied to discharge all the sums owing as many of said categories as is
possible (commencing with and pursuing the order of priority aforesaid) until
the first category is reached as to which sufficient funds are not available for
complete satisfaction. As to such category, the remaining funds shall be
distributed proportionately in accordance with the ratio of the respective
claims in such category, unless the category involved is Section 13(b)(ii), in
which event, such loans shall be repaid in the order of priority provided in
Section 5(a) under circumstances where Available Cash is insufficient to repay
such loans.
(c) In the event the Joint Venture is "liquidated" within the meaning
of Treasury Regulation Section 1.704-1, (i) distributions shall be made to each
Venturer who has a positive capital account in compliance with Treasury
Regulation Section 1.704(b), and (ii) if any Venturer's capital account has a
deficit balance (after giving effect to all contributions, distributions, and
allocations for all taxable years, including the year during which such
liquidation occurs), such Venturer shall contribute to the capital of the Joint
Venture the amount necessary to restore such deficit balance to zero in
compliance with Treasury Regulation Section 1.704(b).
(d) Except as set forth in Section 13(e) below, the orderly dissolution
and liquidation of the Joint Venture and the winding up of its business shall be
the responsibility of the Board of Managers.
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(e) If dissolution occurs because of the bankruptcy of a Venturer or
any act of a Venturer in contravention of this Agreement or deemed
to be in contravention of this Agreement by the terms hereof, then the Venturer
who did not cause such dissolution shall have the authority to wind up and
liquidate the business of the Joint Venture. In such event, the Venturer with
the authority hereunder to wind up the business and conduct the liquidation of
the Joint Venture shall have all powers conferred upon the Board of Managers,
under the terms of this Agreement to the extent necessary or desirable in the
good faith judgment of such liquidating Venturer, to complete the liquidation of
the Joint Venture as provided for herein, including, but without limiting the
generality of the foregoing, the following specific powers:
(i) The power to continue to manage and operate any business of
the Joint Venture during the period of such liquidation,
including the power to make and enter into sales agreements
and leases or rental contracts covering properties of the
Joint Venture which may extend beyond the period of
liquidation.
(ii) The power to make sales and, incident thereto, to make
deeds, bills of sale, assignments and transfers of assets
and properties of the Joint Venture.
(iii) The power to borrow funds as may, in the good faith judgment
of the liquidating Venturer, be reasonably required to pay
debts and obligations for which the Joint Venture is liable
and operating expenses of the Joint Venture, and to grant
deeds of trust, mortgages, security agreements, pledges and
collateral assignments upon and encumbering any of the Joint
Venture properties as security for repayment of such loans
or as security for payment of any other indebtedness of the
Joint Venture.
(iv) The power to settle, compromise or adjust any claims
asserted to be owing by or to the Joint Venture, and the
right to file, prosecute or defend lawsuits and legal
proceedings in connection with any such matters.
(v) The power to make deeds, bills of sale, assignments and
transfers to the respective Venturers and their successors
in interest incident to final
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distribution of the remaining properties of the Joint
Venture (if any) as provided for herein.
(vi) The power to distribute Joint Venture property in kind at a
value agreed upon by the liquidating Venturer and the party
receiving such property.
If, under the above provisions, properties of the Joint Venture are distributed
in kind to the respective Venturers and/or to their successors in interest
subject to liens or mortgages securing indebtedness of the Joint Venture, and if
thereafter one or more of such Venturers or their successor(s) in interest shall
pay more of such secured indebtedness than the pro rata share thereof
attributable to the undivided interest in such properties thus distributed to or
acquired by such Venturer, that Venturer shall be subrogated to and entitled to
enforce such liens or mortgages as against the interest of the other Venturer or
their successor(s) in interest who has not paid its full pro rata share of such
secured indebtedness to secure repayment to the Venturer to the extent of the
deficiency in the proportionate payments attributable to their undivided
interests which should have been made by the other Venturer or their
successor(s) in interest.
ARTICLE 14
REPRESENTATIONS AND WARRANTIES
(a) REPRESENTATIONS AND WARRANTIES OF HNEF. HNEF hereby represents and
warrants to FI as follows:
(i) DUE INCORPORATION AND QUALIFICATION. HNEF is a corporation
duly incorporated, validly existing and in good standing
under the laws of its state of incorporation; is qualified
to do business in all jurisdictions where the failure to so
qualify would have a material adverse effect upon HNEF or
its business or assets; and has the corporate power and
authority to own, lease and operate all of its properties
and assets and to carry on its business as now conducted.
(ii) AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. (A) HNEF has
full corporate power and authority required to enter into,
execute and deliver this Agreement and any other agreement
contemplated hereby and to perform fully HNEF's obligations
hereunder and thereunder. (B)
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The execution and delivery by HNEF of this Agreement and any
other agreement contemplated hereby and the transactions
contemplated hereby and thereby have been duly authorized by
all requisite corporate and, if necessary, stockholder
action. (C) No other corporate proceedings on the part of
HNEF are necessary to authorize this Agreement and any other
agreement contemplated hereby or to consummate the
transactions contemplated hereby and thereby. (D) This
Agreement has been duly executed and delivered by HNEF and
constitutes the valid and binding obligation of HNEF,
enforceable against HNEF in accordance with its terms. (E)
The execution and delivery of this Agreement and any
agreement contemplated hereby, the consummation of the
transactions contemplated hereby and thereby, and the
performance by HNEF of this Agreement in accordance with its
terms and conditions will not 1) conflict with or result in
the breach or violation of any of the terms or conditions of
the Articles of Incorporation or Bylaws of HNEF; 2) violate
any statute, regulation, order, judgment or decree of any
court or governmental or regulatory body applicable to HNEF
or any of its properties or assets; or 3) require notice to
or the consent of any party to or result in a violation or
breach of, constitute (with or without due notice or lapse
of time or both) a default under, or give any party the
right to terminate or accelerate the performance of the
obligations of HNEF with respect to the terms, provisions or
conditions of any indenture, agreement or other instrument
to which HNEF is a party or by which HNEF or any of its
properties or assets are bound.
(iii) CONSENTS AND APPROVALS. No filing with, and no permit,
authorization, consent or approval of, any public body or
public authority is necessary for the consummation by HNEF
of the transactions contemplated by this Agreement and any
other agreements contemplated hereby, except for the failure
to obtain filings, permits, authorizations, consents or
approvals, which would not adversely affect the business or
assets of HNEF or the ability of HNEF to perform any
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of its obligations under this Agreement or any other
agreement contemplated hereby and which would not prevent or
delay in any respect the consummation of the transactions
contemplated hereby or thereby.
(iv) COMPLIANCE WITH LAWS. HNEF is in material compliance with
all provisions of law, statutes, ordinances, rules,
regulations, judgments, writs, injunctions, decrees and
standards promulgated by the government of the United States
of America or by any state or municipality thereof or by any
court, agency, instrumentality, regulatory authority or
commission of any of the foregoing, including, but not
limited to, compliance with all labor laws, all
environmental laws, all laws relating to the promotion of
occupational safety, all laws relating to healthcare and all
laws relating to the promotion of occupational safety, all
laws relating to healthcare and all laws relating to
discrimination in employment or employment practices.
(v) NO BROKER. No broker, finder, agent or similar intermediary
has acted for or on behalf of HNEF in connection with this
Agreement or the transactions contemplated hereby, and no
broker, finder, agent or similar intermediary is entitled to
any broker's, finder's or similar fee or other commission in
connection therewith based on any agreement, arrangement or
understanding with HNEF or any action taken by HNEF.
(b) REPRESENTATIONS AND WARRANTIES OF FI. FI hereby represents and
warrants to HNEF as follows:
(i) DUE INCORPORATION AND QUALIFICATION. FI is a corporation
duly incorporated, validly existing and in good standing
under the laws of its state of incorporation; is qualified
to do business in all jurisdictions where the failure to so
qualify would have a material adverse effect upon FI or its
business or assets; and has the corporate power and
authority to own, lease and operate all of its properties
and assets and to carry on its business as now conducted.
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(ii) AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. (A) FI has full
corporate power and authority required to enter into,
execute and deliver this Agreement and any other agreement
contemplated hereby and to perform fully FI's obligations
hereunder and thereunder. (B) The execution and delivery by
FI of this Agreement and any other agreement contemplated
hereby and the transactions contemplated hereby and thereby
have been duly authorized by all requisite corporate and, if
necessary, stockholder action. (C) No other corporate
proceedings on the part of FI are necessary to authorize
this Agreement and any other agreement contemplated hereby
or to consummate the transactions contemplated hereby and
thereby. (D) This Agreement has been duly executed and
delivered by FI and constitutes the valid and binding
obligation of FI, enforceable against FI in accordance with
its terms. (E) The execution and delivery of this Agreement
and any agreement contemplated hereby, the consummation of
the transactions contemplated hereby and thereby, and the
performance by FI of this Agreement in accordance with its
terms and conditions will not 1) conflict with or result in
the breach or violation of any of the terms or conditions of
the Articles of Incorporation or Bylaws of FI; 2) violate
any statute, regulation, order, judgment or decree of any
court or governmental or regulatory body applicable to FI or
any of its properties or assets; or 3) require notice to or
the consent of any party to or result in a violation or
breach of, constitute (with or without due notice or lapse
of time or both) a default under, or give any party the
right to terminate or accelerate the performance of the
obligations of FI with respect to the terms, provisions or
conditions of any indenture, agreement or other instrument
to which FI is a party or by which FI or any of its
properties or assets are bound.
(iii) CONSENTS AND APPROVALS. No filing with, and no permit,
authorization, consent or approval of, any public body or
public authority is necessary for the consummation by FI of
the transactions contemplated by this Agreement and any
other agreements
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contemplated hereby, except for the failure to obtain
filings, permits, authorizations, consents or approvals,
which would not adversely affect the business or assets of
FI or the ability of FI to perform any of its obligations
under this Agreement or any other agreement contemplated
hereby and which would not prevent or delay in any respect
the consummation of the transactions contemplated hereby or
thereby.
(iv) COMPLIANCE WITH LAWS. FI is in material compliance with all
provisions of law, statutes, ordinances, rules, regulations,
judgments, writs, injunctions, decrees and standards
promulgated by the government of the United States of
America or by any state or municipality thereof or by any
court, agency, instrumentality, regulatory authority or
commission of any of the foregoing, including, but not
limited to, compliance with all labor laws, all
environmental laws, all laws relating to the promotion of
occupational safety, all laws relating to healthcare and all
laws relating to the promotion of occupational safety, all
laws relating to healthcare and all laws relating to
discrimination in employment or employment practices.
(v) NO BROKER. No broker, finder, agent or similar intermediary
has acted for or on behalf of FI in connection with this
Agreement or the transactions contemplated hereby, and no
broker, finder, agent or similar intermediary is entitled to
any broker's, finder's or similar fee or other commission in
connection therewith based on any agreement, arrangement or
understanding with FI or any action taken by FI.
ARTICLE 15
BREACHES AND REMEDIES
(a) BREACH BY FI. FI shall be in breach of this Agreement upon the
occurrence of any of the following:
(i) If FI shall fail to comply with or violate any agreement or
covenant contained in this Agreement (specifically
including, but not limited to, the violation of any transfer
restriction contained in Section 12 hereof),
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which failure to comply shall continue for a period of
thirty (30) days after notice from HNEF specifying such
failure.
(ii) The breach by FI or Fitch (or any permitted assignee of
Fitch under the Development Option Agreement) of any other
joint venture or similar agreement relating, directly or
indirectly, to the operation of a restaurant under the Hops
System, which failure to comply shall continue for a period
of thirty (30) days after notice from HNEF or Hops.
(iii) The breach by FI of the Development Option Agreement or any
Operating Agreement for any restaurant, which failure to
comply shall continue for a period of thirty (30) days after
notice from HNEF or Hops.
(iv) If any material representation or warranty of FI contained
herein shall be untrue.
(v) Either FI or Fitch shall make an assignment for the benefit
of creditors, or shall admit in writing its (or his)
inability to pay its (or his) debts as they become due, or
shall file a voluntary petition in bankruptcy, or shall be
adjudicated as bankrupt or insolvent, or shall file any
petition or answer seeking for itself (or himself) any
reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present
or future statute, law or regulation pertinent to such
circumstances, or shall file any answer admitting or not
contesting the material allegations of a petition filed
against either FI or Fitch in any such proceedings, or shall
seek or consent to or acquiesce in the appointment of any
trustee, receiver, or liquidator of either FI or Fitch or of
all or any substantial part of either of their properties;
or FI or its directors or majority shareholders shall take
any action initiating the dissolution or liquidation of FI
or FI shall be involuntarily dissolved by authorities in the
jurisdiction of its incorporation and shall not be
reinstated within thirty (30) days of notice from HNEF
hereunder.
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(vi) Twenty (20) days shall have expired after the commencement
of an action against FI or Fitch seeking reorganization,
arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future
statute, law or regulation without such action being
dismissed or all orders or proceedings thereunder affecting
the operations or the business of FI or Fitch being stayed;
or a stay of any such order or proceedings shall thereafter
be set aside and the action setting it aside shall not be
timely appealed.
(vii) Twenty (20) days shall have expired after the appointment,
without the consent or acquiescence of FI or Fitch, of any
trustee, receiver or liquidator of all or any substantial
part of the properties of FI or Fitch without such
appointment being vacated.
(b) BREACH BY HNEF. HNEF shall be in breach of this Agreement upon the
occurrence of any of the following
(i) If HNEF shall fail to comply with or violate any agreement
or covenant contained in this Agreement, which failure to
comply shall continue for a period of thirty (30) days after
notice from FI specifying such failure.
(ii) The breach by HNEF of the Development Option Agreement or
any Operating Agreement for any restaurant.
(iii) If any material representation or warranty of HNEF contained
herein shall be untrue.
(iv) If HNEF shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay
its debts as they become due, or shall file a voluntary
petition in bankruptcy, or shall be adjudicated as bankrupt
or insolvent, or shall file any petition or answer seeking
for itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief
under any present or future statute, law or regulation
pertinent to such circumstances, or shall file any answer
admitting or not contesting the material allegations of a
petition filed against HNEF in any such proceedings, or
shall seek or consent to or acquiesce in the appointment of
any trustee, receiver, or liquidator of HNEF or of all or
any substantial part of either of its
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properties; or HNEF or its directors or majority
shareholders shall take any action initiating the
dissolution or liquidation of HNEF or HNEF shall be
involuntarily dissolved by authorities in the jurisdiction
of its incorporation and shall not be reinstated within
thirty (30) days of notice from FI hereunder.
(v) Twenty (20) days shall have expired after the commencement
of an action against HNEF seeking reorganization,
arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future
statute, law or regulation without such action being
dismissed or all orders or proceedings thereunder affecting
the operations or the business of HNEF being stayed; or a
stay of any such order or proceedings shall thereafter be
set aside and the action setting it aside shall not be
timely appealed.
(vi) Twenty (20) days shall have expired after the appointment,
without the consent or acquiescence of HNEF, of any trustee,
receiver or liquidator of all or any substantial part of the
properties of HNEF without such appointment being vacated.
(c) CERTAIN REMEDIES.
(i) REMEDIES AVAILABLE TO HNEF. Upon any breach of this
Agreement by FI, HNEF may:
(A) exercise its right to purchase the Joint Venture
interest of FI as provided in Section 12(c) hereof; and
(B) seek any and all other remedies available under
applicable law or equity, including, but not limited to,
money damages.
(ii) REMEDIES AVAILABLE TO FI. Upon any breach of this Agreement
by HNEF, FI may seek any and all other remedies available
under applicable law or equity, including, but not limited
to, money damages.
(iii) CUMULATION OF REMEDIES. None of the rights, remedies,
privileges, or powers of the parties expressly provided for
herein shall be exclusive, but each of them shall be
cumulative with and in addition to every other right,
remedy, privilege, and power now or hereafter existing in
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favor of such parties, whether at law or in equity, by
statute or otherwise.
ARTICLE 16
NOTICE
All notices or requests provided for or permitted to be given pursuant
to this Agreement must be in writing and shall only be effective if given or
served (i) by United States mail, addressed to the person or entity to be
notified, postpaid, and certified with return receipt requested or (ii) by hand
delivering such notice to the person or entity at the address of such party
against written receipt thereof. All notices given or served pursuant hereto
shall be deemed given and effective upon receipt by the person to be notified or
delivery at the address of such party. All notices to any of the Venturers shall
be addressed to them at their respective addresses set forth below their names
on the signature page hereof. By giving to the other Venturers at least ten (10)
days written notice thereof in the manner hereinabove provided, each Venturer
and its respective successors and assigns shall have the right to change its
addresses for purposes of notice.
ARTICLE 17
DISPUTE RESOLUTION
(a) In the event there should arise any misunderstanding or
disagreement between the Venturers as to the compliance with the terms and
conditions of this Agreement, or as to whether any Venturer has grounds
hereunder entitling it to terminate this Agreement, or any other dispute related
to this Agreement including arbitrability of the dispute, it is mutually agreed
that such differences, if they cannot be satisfactorily resolved between the
Venturers within thirty (30) days after the Venturer seeking arbitration
delivers notice of same to the other Venturers, shall be submitted to a single
arbitrator, if the Venturers agree upon one; otherwise, to a board of three
arbitrators, of whom one shall be selected by HNEF and one of whom shall be
selected by FI within twenty (20) days after such 30-day period, and a third
arbitrator shall be selected by these two selected arbitrators. If one of the
Venturers fails to timely select an arbitrator, the arbitrator that was timely
selected shall be the sole arbitrator. If neither HNEF nor FI timely selects an
arbitrator, the first arbitrator selected thereafter shall be the sole
arbitrator, no others being appointed. Where each of HNEF and
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FI timely selects an arbitrator, said arbitrators will have ten (10) days from
the end of the twenty (20) day period to select the third arbitrator. In the
event the arbitrators are unable to timely agree on the third arbitrator, either
HNEF or FI may petition any official of the American Arbitration Association for
appointment of the third arbitrator, and the parties agree to accept any
arbitrator appointed by such official subject to the limitations hereof.
Arbitrators must be reasonably independent of the parties and their principals.
Persons who are hereby expressly disqualified to serve as arbitrators are
principals of the parties, relatives of said principals, employees of the
parties or said principals, persons not residing within 100 miles of Tampa,
Florida, attorneys, accountants and other business persons having professional
or business relationships with the parties or said principals.
(b) Arbitration shall proceed in accordance with the rules of the
American Arbitration Association. The arbitration shall be conducted in Tampa,
Florida. The arbitrators shall have all the powers permitted arbitrators under
the laws of the State of Florida. The decision and award of such single
arbitrator, if only one is used, or any two of such board if three are used, as
the case may be, shall be final and binding upon the Venturers, their heirs,
legal representatives, successors and assigns respectively, and shall have the
same force and effect as though such decision had been handed down by a court of
final jurisdiction. The cost of arbitrator(s) shall be shared equally by the
Venturers involved in such dispute. Each Venturer shall be responsible for and
shall pay for the expenses of presenting its respective case, including
depositions, attorney's fees and costs and witness fees which expenses shall not
be subject to award by the arbitrator(s), nor shall such expenses be subject to
award by any court or other judicial authority. The parties shall deposit, at
the beginning of the arbitration process, with the arbitrators an amount equal
to the estimated costs (including arbitrators' time charges) of the total
arbitration. Arbitrators' time charges shall be at the same rate for all
arbitrators. Each of the Venturers hereto covenants to abide by any arbitration
decision.
(c) In the event that it becomes necessary for any party to this
Agreement to enforce a decision of arbitration through legal proceedings, the
Venturers hereby agree that the Circuit Court for the Thirteenth Judicial
Circuit in and for Hillsborough County, Florida, Tampa Division, and the United
States District Court for the Middle District of Florida, Tampa Division, shall
have exclusive jurisdiction to hear and determine any such matters. Each
Venturer hereby expressly submits and consents in advance to such jurisdiction
and
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venue in any action or proceeding whether commenced by or brought against them
in either of such Courts. In any such court proceeding the prevailing party
shall be entitled to reimbursement of all costs and expenses, including
attorney's fees which may be reasonably incurred or paid in connection
therewith, including without limitation, attorney's fees and costs at the trial
court and appellate court levels.
ARTICLE 18
MISCELLANEOUS
(a) This Agreement shall be governed, interpreted and construed under
the laws of the State of Florida.
(b) This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto, and their respective heirs, executors, legal
representatives, successors and assigns; however, this Section 18(b) does not
constitute a consent to any assignment, transfer or other disposition of a Joint
Venture interest or to the substitution of any assignee or transferee as a
substituted Venturer herein other than pursuant to and in accordance with the
other provisions of this Agreement.
(c) This Agreement may be amended only by written instrument signed by
all Venturers.
(d) This Agreement may be executed in counterparts, each of which
shall be deemed an original.
(e) This Agreement contains the entire agreement of the parties hereto.
All prior written or oral agreements between the parties as to the formation of
the Joint Venture and the rules governing its operation are revoked and
superseded by this Agreement.
(f) The captions used in this Agreement are for convenience only and
shall not be construed in interpreting this Agreement. 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 the masculine,
the feminine or the neuter gender shall include the masculine, feminine and
neuter. The term "person" means any natural person, corporation, partnership,
trust or other entity.
(g) All references to Articles within this Agreement shall be deemed to
be a cumulative reference to all sections within that Article and all references
to sections within
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this Agreement shall be deemed to be cumulative references to all subsections
within that section.
(h) In the event of a transfer (which is not void under Section 12(b)
hereof) of all or part of the interest of a Venturer in the Joint Venture by
sale or exchange or dissolution of a Venturer, the Joint Venture at the request
of the transferring Venturer or other successor in interest, shall cause the
Venturer to elect, pursuant to Section 754 of the Code, or corresponding
provision of subsequent law, to adjust the basis of the Joint Venture property
as provided by Sections 734 or 743 of the Code. All other elections required or
permitted to be made by the Joint Venture under the Code shall be made by a
majority vote of the Board of Managers as they deem appropriate. Each of the
Venturers will upon request supply the information necessary to properly give
effect to any such election.
(i) All remedies shall be cumulative and not alternative.
(j) (i) The parties hereto hereby acknowledge that this Second
Amendment and Restatement results from the reorganization
effective September 1, 1995 of the three current joint
ventures which own and operate "Hops Grill & Bar
Restaurants" in northeast Florida, known as "The Hops
Northeast Florida Joint Venture No.I, The Hops Northeast
Florida Joint Venture No. II, and The Hops Northeast Florida
Joint Venture No. III," (collectively referred to as the
Northeast Florida Joint Ventures"). Pursuant to this
reorganization, the parties to this Second Amended and
Restated Joint Venture Agreement, together with others, have
entered into the agreements set forth on EXHIBIT A hereto
(hereinafter referred to as the "Reorganization Documents").
The parties to this Second Amended and Restated Joint
Venture Agreement do, for all purposes, hereby acknowledge
and consent to the actions taken pursuant to the terms of
the Reorganization Documents.
(i) The parties hereto further acknowledge that prior to the
execution of the Reorganization Documents, ▇▇▇ ▇▇▇▇▇▇▇, the
principal limited partner of BARLTD and the Area Manager of
the restaurants owned by the Northeast Florida Joint
Ventures was a valuable employee of one or more affiliates
of Hops Grill & Bar, Inc. and that Hops Grill & Bar, Inc.
has consented to the employment of ▇▇. ▇▇▇▇▇▇▇ as the Area
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Manager of the Northeast Florida Joint Ventures with the
understanding that ▇▇. ▇▇▇▇▇▇▇ may be called upon from time
to time during the term of this Agreement to provide
services to Hops Grill & Bar, Inc. or one or more of its
affiliates, which services are beyond the scope of this
Agreement. The parties hereto acknowledge that ▇▇. ▇▇▇▇▇▇▇
may be called upon by Hops Grill & Bar, Inc. or one or more
of its affiliates to provide services to one or more
entities that are independent of the Northeast Florida Joint
Ventures, in the event that such services are requested of
and consented to by ▇▇. ▇▇▇▇▇▇▇, the parties hereto hereby
consent to the provision of such services by ▇▇. ▇▇▇▇▇▇▇. In
addition, in the event that ▇▇. ▇▇▇▇▇▇▇ shall provide any
such services to Hops Grill & Bar, Inc. or its affiliates,
the other parties to this Agreement shall have no rights in,
or with respect to, any other business or venture for whom
▇▇. ▇▇▇▇▇▇▇ provides such services as the result of the
provision of such services by ▇▇. ▇▇▇▇▇▇▇.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and in the year first above written.
WITNESSES: HOPS OF NORTHEAST FLORIDA, INC.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------- -----------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇, President
---------------------
As to HNEF Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
"HNEF"
FITCH, INC.
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ J. CAMP FITCH
--------------- ------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ Fitch, President
---------------------
As to FI Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
"FI"
HNEF AREA MANAGER II, LTD.
By: Hops of Northeast Florida, Inc.,
its General Partner
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------- -----------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇, President
---------------------
As to BARLTD Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇
"BARLTD"
-▇▇-
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Before me personally appeared ▇▇▇▇▇ ▇. ▇▇▇▇▇, President of HOPS OF
NORTHEAST FLORIDA, INC., a corporation existing under the laws of Florida, to me
known to be the person described in and who executed the foregoing and
acknowledged the execution thereof to be his one act and deed as such officer as
the act and deed of said corporation for the uses and purposes therein
mentioned.
Witness my signature and official seal this 11TH day of JANUARY , 1996.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Notary Public
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------
Printed Name:
My Commission Expires: May 10, 1998
Commission No.: CC 371597
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
Before me personally appeared ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, President of FITCH,
INC., a corporation existing under the laws of Florida, to me known to be the
person described in and who executed the foregoing and acknowledged the
execution thereof to be his one act and deed as such officer as the act and deed
of said corporation for the uses and purposes therein mentioned.
Witness my signature and official seal this 11TH day of JANUARY , 1996.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Notary Public
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------
Printed Name:
My Commission Expires: May 10, 1998
Commission No.: CC 371597
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STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
Before me personally appeared ▇▇▇▇▇ ▇. ▇▇▇▇▇, President of HOPS OF
NORTHEAST FLORIDA, INC. which is the General Partner of HNEF AREA MANAGER II,
LTD., a limited partnership organized and existing under the laws of Florida, to
me known to be the person described in and who executed the foregoing and
acknowledged the execution thereof to be his one act and deed as such officer as
the act and deed of said corporation for the uses and purposes therein
mentioned.
Witness my signature and official seal this 11TH day of JANUARY , 1996.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Notary Public
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------
Printed Name:
My Commission Expires: May 10, 1998
Commission No.: CC 371597
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