EXHIBIT 10.9
SECOND AMENDED AND RESTATED
JOINT VENTURE AGREEMENT
OF
THE HOPS NORTHEAST FLORIDA JOINT VENTURE NO. II
A FLORIDA GENERAL PARTNERSHIP
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. II 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
Non-Contributing 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. II." 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
-------- ------------------
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
Non-Contributing 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 Non-Contributing 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
Non-Contributing 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 of
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 purchaser
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)(ii) 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 Taction 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
(ii) 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
------------------- ---------------------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, 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
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------
Printed Name:
My Commission Expires: May 10, 1998
Commission No.: CC 371597
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
Before me personally appeared ▇▇▇▇ ▇▇▇▇ Fitch, 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
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------
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
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------
Printed Name:
My Commission Expires: May 10, 1998
Commission No.: CC 371597
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