EXHIBIT 10.7
LIMITED PARTNERSHIP AGREEMENT
OF
HOPS OF THE ROCKIES, LTD.
(FIRST TIER)
THIS LIMITED PARTNERSHIP AGREEMENT ("Agreement") is entered into and
effective as of the filing of the Certificate of Limited Partnership of Hops of
the Rockies, Ltd., with the Secretary of State of the State of Florida by and
among: HOPS OF THE ROCKIES, INC., a Florida corporation, as General Partner
(hereinafter the "General Partner"), and HOPS PARTNERS, INC., a Florida
corporation (hereinafter "HPI"), ROCKY MOUNTAIN RESTAURANT PARTNERS, INC., a
Florida corporation (hereinafter "RMRP"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ III, an
individual (hereinafter "Manager"), as Limited Partners (HPI, RMRP, and Manager
are hereinafter referred to individually as a "Limited Partner" and collectively
as the "Limited Partners"), and the SHAREHOLDERS OF RMRP identified on the
signature page of this Agreement (the "RMRP Principals"). The General Partner
and the Limited Partners may sometimes be hereinafter referred to as the
"Partners."
W I T N E S S E T H:
WHEREAS, the Partners desire to form a limited partnership under the
laws of the State of Florida for the purpose of owning and operating, directly
or indirectly, up to three (3) restaurants under the Hops System (as described
herein) in the "Territory" described in the Hops of the Rockies Development
Option Agreement among Hops Grill & Bar, Inc. ("Hops"), RMRP and the
shareholders of RMRP of even date herewith (the "Development Option Agreement").
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 are hereby acknowledged, the parties hereto, intending to
be legally bound thereby, agree as set forth herein.
SECTION 1. ORGANIZATION OF THE LIMITED PARTNERSHIP.
(a) FORMATION. The Partners hereby form a limited partnership
(hereinafter the "Partnership") under the Florida Revised Uniform Limited
Partnership Act, which Act, except as otherwise provided herein, shall govern
the rights and obligations of the parties hereto.
(b) NAME. The Partnership name shall be, and the business of the
Partnership shall be conducted under the name, "Hops of the Rockies, Ltd."
(c) PRINCIPAL ADDRESS. The principal office address of the Partnership
in Florida, unless changed by the General Partner upon notice to the Limited
Partners, shall be c/o Hops of the Rockies, Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
(d) PURPOSE AND CHARACTER OF THE BUSINESS OF THE PARTNERSHIP. The
purpose and character of the business of the Partnership shall be:
(i) to own the majority equity ownership, directly or
indirectly, of one or more restaurants that feature a
microbrewery under the Hops System (together with any and
all other directly or indirectly related business) within
the Territory and to exercise majority equity control of
each such restaurant (hereinafter the "Business"); and
(ii) to undertake and carry on all activities necessary or
advisable in connection with the operations and management
of the Business, all upon such terms and conditions as the
General Partner may deem to be in the best interest of the
Partnership subject to the limitations provided herein.
(e) TERM. The Partnership shall commence as of the date of the filing
of the Certificate of Limited Partnership after the execution of the Partnership
Agreement by all the Partners and shall continue for a period ending on the
earliest to occur of the following:
(i) December 31, 2045;
(ii) The date on which substantially all of the property owned by
the Partnership is sold or otherwise disposed of and the
proceeds distributed in accordance with the provisions
hereof;
(iii) The date on which the Partnership is dissolved pursuant to
the provisions hereof; or
(iv) The date on which the Partnership is dissolved by operation
of law or judicial decree.
SECTION 2. CAPITAL OF THE PARTNERSHIP.
(a) GENERAL PARTNER.
(i) The General Partner and its address are set forth in Exhibit
2(a) hereto.
(ii) The General Partner has made or shall immediately make
Capital Contributions to the Partnership as set forth
opposite its name on Exhibit 2(a) hereto. The General
Partner shall NOT have the right to withdraw or reduce its
contribution to capital except upon dissolution or as
otherwise provided in this Agreement or by law.
(b) LIMITED PARTNERS.
(i) The Limited Partners and their addresses are set forth in
Exhibit 2(a) hereto.
(ii) The Limited Partners shall immediately make, or have already
made, Capital Contributions to the Partnership in the
amounts set forth opposite their respective names in Exhibit
2(a) hereto. The Limited Partners shall NOT have the right
to withdraw or reduce their respective
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contributions to capital except upon dissolution or as
otherwise provided in this Agreement or by law.
(c) CAPITAL ACCOUNTS.
(i) CAPITAL ACCOUNT BALANCES. The initial balance in each
Partner's Capital Account shall be equal to the Capital
Contributions made by such Partner.
(ii) Each Partner's Capital Account shall be increased by:
(A) the amount of cash and the Book Value of any property
subsequently CONTRIBUTED to the Partnership by such
Partner (net of liabilities secured by such contributed
property which the Partnership is considered to assume
or take subject to under Code Section 752); and
(B) such Partner's allocated share of Profits; and
(C) any items of income or gain of the Partnership
specially allocated to such Partner.
(iii) Each Partner's Capital Account shall be decreased by:
(A) the amount of cash and the Book Value of any property
DISTRIBUTED to such Partner (net of liabilities secured
by such distributed property which the distributee
Partner is considered to assume or take subject to
under Code Section 752), and
(B) such Partner's share of Losses, and
(C) any items of deduction, loss or deduction specially
allocated to such Partner.
(d) REPAYMENT OF CAPITAL ACCOUNTS AND INTEREST THEREON.
(i) Each Partner shall NOT accrue interest on its Capital
Account.
(ii) Under circumstances involving a return of any Capital
Contribution, no Partner shall have the right to receive
property other than cash, except as may be otherwise
specified by the General Partner.
SECTION 3. PROFITS, LOSSES.
(a) SHARING OF LOSSES. The Partners shall share Losses as follows:
(i) First, to each of the Partners proportionately to the extent
of their respective Positive Capital Account(s), if any,
until such are reduced to zero;
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(ii) Second, to each of the Partners based on their percentage
sharing of losses as described on Exhibit 2(a) hereto (or as
such percentages are changed pursuant to the terms hereof).
(b) SHARING OF PROFITS. The Partners shall share Profits as follows:
(i) First, to the General Partner and Limited Partners in
proportion to their respective Negative Capital Account(s),
if any, until such are equal to zero.
(ii) Second, to each of the Partners based upon their percentage
sharing of profits as described on Exhibit 2(a) (or as such
percentages are changed pursuant to the terms hereof).
SECTION 4. REQUIRED LOANS.
(a) REQUIRED LOANS.
(i) In addition to the initial Capital Contributions of the
Partners as provided in Section 2 above, during the period
commencing with the date of this Agreement and ending on the
twentieth (20th) anniversary of such date, each of the
Partners, except Manager, agrees to loan or cause to be
loaned to the Partnership, on an as needed basis, amounts
required for the operation and business activities of the
Partnership ("Required Loans"); provided, the total
principal amount of all such Required Loans shall not exceed
in the aggregate U.S. $200,000 per restaurant owned, in the
majority, directly or indirectly by the Partnership. All
Required Loans shall be apportioned between the Partners,
except Manager (whose apportioned share of the Required
Loans shall be provided by HPI), on a pro rata basis, based
upon their then-current percentage sharing of Profits.
(ii) The Required Loans shall be in the nature of revolving lines
of credit to the Partnership to be advanced against a
non-negotiable promissory note of the Partnership to each
respective Partner. 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 6(a)(ii)(B) hereof, shall become finally
due and payable, if not sooner paid pursuant to Section
6(a)(ii)(B) hereof, at the end of the twentieth (20th) year
of the term of this Agreement. Upon the expiration of the
twentieth (20th) anniversary of the term of this Agreement
(whether or not the Agreement is renewed), none of the
Partners shall have further obligations to make further
Required Loans to the Partnership. Accrued interest upon
outstanding advances under the Required Loans, if any, shall
be due and payable on a quarterly basis with both principal
and interest to be prepaid from Cash Flow from Operations.
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(iii) The aforesaid Required Loans shall be made to the
Partnership upon calls made by the General Partner. Upon the
issuance of a call for Required Loans each Partner, except
Manager (whose apportioned share of the Required Loans shall
be provided by HPI), shall proportionately make such
Required Loans within five (5) business days after receipt
of the notice of such call.
(b) [REMOVED AND RESERVED.]
SECTION 5. ADDITIONAL CAPITAL CONTRIBUTIONS AND LOANS.
(a) ADDITIONAL RESTAURANTS. If the Partnership shall develop and
operate more than one restaurant as contemplated by the Development Option
Agreement, the Partners, except Manager (whose additional capital contributions
shall be governed by the terms of the Employment Agreement by and among the
Partnership, the General Partner and Manager), shall proportionately contribute
such additional capital to the Partnership as shall be deemed necessary by the
General Partner, consistent with the terms of the Development Option Agreement,
when requested to do so by the General Partner. In the event RMRP shall elect
not to participate in any "Additional Restaurant" (as that term is defined in
the Development Option Agreement) pursuant to the terms of the Development
Option Agreement, such election shall not be considered to be a default under
this Agreement and such Additional Restaurant (and future Additional
Restaurants) will be developed outside of the Partnership as described in the
Development Option Agreement.
(b) ADDITIONAL FUNDING.
(i) If additional funds, over and above: (x) the initial Capital
Contributions of the Partners, (y) Capital Contributions
required for additional restaurants as described in Section
5(a) above, and (z) any other required Capital Contributions
or any Required Loans from any Partner should become
necessary, then the General Partner shall take the following
actions:
(A) Review the need for funding and verify that additional
funds are definitely required;
(B) Utilize any existing and available contingency
financing line to fund the requirement;
(C) Review the project requirements and determine if
aspects of the project can be revised, reduced,
modified, etc.; and
(D) Consider the existing financing and ascertain
feasibility of expanding the available financing,
refinancing, etc. to fund the requirement;
(ii) Upon the accomplishment of the foregoing and if such actions
do not, in the judgment of the General Partner, result in
elimination of the need for additional funding, then the
General Partner may, in its sole
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discretion, demand that the Partners, except for Manager
(whose proportionate share of a Special Contribution (as
defined herein) shall be provided by HPI or the General
Partner), in proportion with their percentage sharing of
Profits, contribute additional capital (a "Special
Contribution") or make additional loans ("Additional Loans")
to the Partnership. Such demand shall be in the form of
verbal or written notice ("Notice") to the Partners
specifying the amount of additional funds that are needed
and whether such additional funds should be contributed to
the Partnership as a Special Contribution or Additional
Loans. No creditor of the Partnership shall have any right
to force the General Partner to send a Notice.
(iii) Upon receipt of the Notice, each Partner, except Manager
(whose proportionate share of a Special Contribution (as
defined herein) shall be provided by HPI or the General
Partner), in proportion with its then percentage sharing of
Profits, SHALL as expeditiously as possible and without a
delay which will harm the Partnership (and in any event
within ten (10) days of the Notice), make such Special
Contribution or Additional Loan as required by the Notice in
proportion to each Partner's percentage sharing of Profits.
With the consent of the General Partner, the Special
Contributions or Additional Loans may be in a series made as
and when the funds become necessary, i.e. monthly to fund
operating shortfalls.
(iv) In the event that any Additional Loan is made to the
Partnership, the provisions of Section 4(a) above will
govern the interest rate of such loan and such Additional
Loan(s) shall be repaid to the Partner(s) from the
distributions of the Partnership in accordance with the
priorities set forth in Section 6 hereof.
(v) In addition to the above, any Partner may, at any time, at
the request of the General Partner make voluntary Additional
Loans to the Partnership which will, for all purposes, be
treated as Additional Loans made pursuant to a Notice given
by the General Partner pursuant to Section 5(b)(ii) above.
(c) DEFAULT IN PAYMENT TO PARTNERSHIP BY PARTNER.
(i) If at any time any Partner shall breach this Agreement by
failing to make its respective Required Loans, Additional
Loans or Special Contributions pursuant to the call
provisions of Section 4 or Section 5 (hereinafter referred
to as a "Non-Contributing Partner"), such Non-Contributing
Partner shall be considered in breach of this Agreement and
(without otherwise limiting any other remedies which the
other Partners may have against such Non-Contributing
Partner) the other Partners, except Manager, shall have the
right (but not the obligation) to make an excess
contribution ("Excess Contribution") to the Partnership to
cover such unpaid Required Loans, Additional Loans or
Special Contributions of the Non-Contributing Partner.
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(ii) In the event that a Partner makes an Excess Contribution,
such Excess Contribution shall be deemed to be a loan
("Excess Loan") to the Non-Contributing Partner 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 distributions to be
made to the Non-Contributing Partner pursuant to this
Limited Partnership Agreement. The Excess Loan shall be an
obligation of such Non-Contributing Partner and, if not
sooner paid by such Non-Contributing Partner, shall be due
and payable out of the first available distributions to be
made to the Non-Contributing Partner by the Partnership,
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 Partnership to any Partner who made an Excess
Contribution, such Partner who made the Excess Contribution
shall subrogate all rights which such Partner had against
the Non-Contributing Partner to the Partnership. Any
interest on Excess Loans paid by the Partnership shall be
charged solely to the capital account of the
Non-Contributing Partner 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 Partner within one hundred twenty (120)
days after the same has been advanced on its behalf, then
the proportionate share of Partnership Profits and Losses of
such Non-Contributing Partner shall (at the option of the
Partner who is owed any such Excess Loan) be reduced and the
proportionate share of Partnership Profits and Losses of the
Partner 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 Partnership by the
Partners (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
Partners, 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 Partner's then existing proportionate share
of Partnership Profits and Losses (provided same shall not
be reduced below zero) and an equivalent amount shall be
added to the respective proportionate share of Partnership
Profits and Losses of the Partner who made any such Excess
Loan. Immediately following such adjustment in the
proportionate share of Partnership Profits and Losses of the
Partners, it shall be deemed that the unpaid balance
(including principal and accrued interest) of any such
Excess Loan shall have been converted into an additional
Capital Contribution by the Partner making such Excess Loan
and a Capital Contribution
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withdrawal by the Non-Contributing Partner and the Capital
Accounts of the Partners shall be adjusted accordingly, and
the Non-Contributing Partner shall have no further liability
to repay such Excess Loan.
SECTION 6. DISTRIBUTIONS.
(a) CASH FLOW FROM OPERATIONS DISTRIBUTIONS.
(i) CASH FLOW FROM OPERATIONS TAX EFFECT. Notwithstanding
anything herein to the contrary, in the event that any
Partner receives an allocation of income, gain, etc. as
shown on the K-1 form or other federal income tax reporting
forms of similar nature prepared by or on behalf of the
Partnership which requires such Partner or its respective
partners or shareholders or ultimate owners to make a
payment in cash to the United States Internal Revenue
Service by reason of the items of allocation from the
Partnership, then the Partnership shall distribute cash, to
or on behalf of such Partner, at least equal to the actual
tax obligation (E.G., the required IRS cash payment) of such
Partner by reason of his/its status as a Partner of the
Partnership, less amounts distributed to such Partners
pursuant to this Section 6 during the past twelve months, if
any, and such distribution shall occur prior to the time
when the returns with the required cash payment are due. Any
such payments by the Partnership required by this Section
6(a)(i) will be treated as a distribution of Cash Flow from
Operations as provided in Section 6(a)(ii) below and shall
reduce any amount otherwise payable. If there is no current
entitlement then the taxes payment would be an advance
against future distributions of Cash Flow from Operations.
(ii) DISTRIBUTION OF CASH FLOW FROM OPERATIONS. Distributions of
Cash Flow from Operations may be made from time to time in
the discretion of the General Partner, in the following
order of priority:
(A) First, the General Partner shall have the right to
distribute monthly to Manager up to ten percent (10%)
of the monthly net profits of the Partnership (as
described in the Employment Agreement between Manager,
the Partnership, the General Partner and HPI) as
determined by the internal accountants of the
Partnership, with such distributions to be an advance
against the proportional distributions to which Manager
is otherwise entitled from time to time;
(B) Second, before any further distribution of Cash Flow
from Operations, the Partnership shall pay in full any
Additional Loans, Excess Loans and Required Loans as
defined herein;
(C) Third, Cash Flow from Operations shall then be
distributed to the General Partner and Limited Partners
proportional in relation to their net Positive Capital
Accounts until reduced to zero;
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(D) Fourth, Cash Flow from Operations shall then be
distributed to the Partners based upon their then
percentage sharing of profits as described on Exhibit
2(a) (or as such percentages are changed pursuant to
the terms hereof).
(b) DISTRIBUTION OF CAPITAL. The General Partner may at anytime
proportionately return to the Partners all or any portion of their respective
Capital Contributions, subject to the limitations provided in the Act.
SECTION 7. CERTAIN RIGHTS AND LIMITATIONS OF THE LIMITED PARTNERS.
(a) NO PARTICIPATION IN THE MANAGEMENT OF PARTNERSHIP BUSINESS.
(i) Except as specifically provided herein, the Limited
Partners, AS LIMITED PARTNERS, shall not take part in, or
interfere in any manner with, the conduct or control of the
Partnership business and the Limited Partners shall not have
any right or authority to act for or bind the Partnership,
AND THE LIMITED PARTNERS SHALL THEREFORE HAVE NO PERSONAL
LIABILITY FOR THE OBLIGATIONS OR LIABILITIES OF THE
PARTNERSHIP SOLEY BY REASON OF THEIR STATUS AS LIMITED
PARTNERS OF THE PARTNERSHIP. Any individual Limited Partner
(or employee, partner, shareholder, officer or director of a
Limited Partner) may be an employee, officer and/or director
of the General Partner and accomplish any duties as such
employee, executive or director in his representative
corporate capacity and not as a limited partner or as an
individual.
(ii) During the term of this Agreement, RMRP hereby agrees that
neither RMRP, any RMRP Principal (as that term is defined in
the Development Option Agreement) nor any affiliate of RMRP
shall in any way engage in or own an interest in any other
business venture of any nature which might be competitive
with the business of the Partnership. The Partnership and/or
the General Partner may engage any Limited Partner or
persons or firms associated with them for specific purposes
and may otherwise deal with such Limited Partner or persons
in firms associated with them on terms and for compensation
to be agreed upon by any such Limited Partner (or persons or
firms associated with them, as the case may be) and the
Partnership or the General Partner, as the case may be.
(iii) EACH Partner, except Manager, MUST CONSENT to the following
matters (which are specifically excluded from the powers of
the General Partner):
(A) the dissolution and winding-up of the Partnership;
(B) a change in the basic nature of the Business of the
Partnership;
(C) the admission, removal or retention of a new General
Partner;
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(D) an amendment to this Partnership Agreement.
All other matters are under the exclusive discretion of
the General Partner.
(b) EXERCISE OF RIGHTS, POWERS AND DUTIES. If a vote of the
Partnership is required in the exercise of rights, powers and duties hereunder,
each of the General Partner and the Limited Partners shall have one (1) vote for
each percentage of interest in Profits owned by such Partner on all issues,
questions, matters and decisions with respect to the Partnership to the extent
not resolved by the provisions of this Agreement, and to such extent such
matters shall be resolved by the vote of a majority in interest of the Partners,
and if the matter cannot be resolved by vote, the matter shall be submitted to
arbitration as provided herein.
SECTION 8. RIGHTS, POWERS AND DUTIES OF THE GENERAL PARTNER.
(a) RIGHTS AND POWERS OF THE GENERAL PARTNER.
(i) Except as otherwise provided herein, the General Partner
shall have the full and exclusive right, power and authority
to manage and control the business and affairs of the
Partnership and to make all decisions regarding the business
of the Partnership, and the General Partner shall have all
of the rights, powers and obligations of a general partner
of a limited partnership under the Act.
(ii) In addition to any other rights and powers which it may
possess, and except as otherwise limited by this Agreement,
the General Partner shall have specific rights and powers
required or appropriate to the management of the Partnership
business which are as follows:
(A) To do all acts and things in the ordinary course of
business related to the business of the Partnership;
(B) To manage, develop, promote, improve, maintain and
service Partnership business;
(C) To acquire and to enter into any contract or policy of
liability and/or other insurance which the General
Partner deems necessary and proper for the protection
of the Partners and the Partnership and for the
conservation of its assets or for any purpose
convenient or beneficial to the Partnership;
(D) To employ from time to time persons, firms or
corporations for the operation and management of the
Partnership business, including, but not limited to,
attorneys, accountants, advisors, supervisors, managers
and personnel, consultants and engineers, on reasonable
terms and for reasonable compensation;
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(E) To compromise, arbitrate, or otherwise adjust claims in
favor of or against the Partnership and to commence or
defend litigation with respect to the Partnership or
any assets of the Partnership;
(F) To make (or elect not to make) elections under the tax
laws of the United States or any other country or any
state as to the treatment of Partnership income, gain,
loss, deduction and credit, and as to all other
relevant matters; and
(G) To perform any and all other acts or activities
customary or incidental to the Partnership purposes and
the foregoing powers and to execute any and all
instruments to effectuate the Partnership purposes and
foregoing powers.
(iii) The General Partner shall have all the rights and powers and
be subject to all the liabilities of a partner in a
partnership without limited partners.
(iv) The General Partner shall have the right, in its sole
discretion, to cause the Partnership to invest in one or
more restaurants pursuant to the terms in the Development
Option Agreement. The General Partner shall have the right
to provide the restaurant manager(s) with equity without
payment of substantial capital or loans other than service
contributions to the extent permitted by the Development
Option Agreement.
(b) TRANSACTIONS WITH GENERAL PARTNER.
(i) The Partnership may enter into reasonable arm's-length
transactions, contracts, agreements or arrangements with any
Partner and/or any affiliate of any Partner.
(ii) The Partnership may purchase materials, goods, and supplies,
and may purchase or rent equipment from any Partner and/or
any affiliate of any Partner if approved in advance by the
General Partner. If a Partner and/or affiliate of any
Partner sells, rents or furnishes materials, goods,
supplies, or equipment for the benefit or use, directly or
indirectly, of the Partnership, then the charges, rents and
prices therefor shall be fair and competitive.
(iii) Nothing herein shall preclude reimbursement for reasonable
and necessary out-of-pocket Partnership business expenses
paid by a Partner which are not otherwise provided for in
this Agreement so long as such reimbursements are approved
in advance by the General Partner.
(c) DUTIES AND OBLIGATIONS OF THE GENERAL PARTNER.
(i) With the assistance of such accounting firm as may be
selected by the General Partner, the General Partner shall
prepare, or cause to be prepared, and shall file on or
before the due date (or any extension
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thereof) any United States federal, state or local tax
returns required to be filed by the Partnership. The General
Partner shall cause the Partnership to pay any taxes payable
by the Partnership.
(ii) The General Partner shall manage the Partnership to the best
of its ability and conduct the operations contemplated under
this Agreement in a careful and prudent manner in accordance
with good and traditional business practice.
(iii) The General Partner shall be responsible for and shall have
the authority to conduct all general administrative matters
of the Partnership which shall include, but shall not be
limited to, the coordination of:
(A) all legal and accounting matters on behalf of the
Partnership, including the maintenance of the general
accounting systems of the Partnership and coordinating
the functions of the accountants and lawyers that will
service the Partnership;
(B) all payroll matters on behalf of the Partnership;
(C) all accounts payable matters on behalf of the
Partnership (except those that
must be handled on a local level, which shall be the
responsibility of RMRP);
(D) all banking and financial matters of the Partnership;
(E) all financial reporting to Hops pursuant to the terms
of any Operating Agreement utilizing restaurant and
other operating data to be provided by RMRP as the
operator of the restaurants; and
(F) the compliance by the Partnership of all administrative
aspects of any Operating Agreement.
All costs and expenses payable to third parties relating to
administrative matters of the Partnership shall be the sole
responsibility of the Partnership. [BY WAY OF EXAMPLE, BUT
NOT IN LIMITATION, OF THE ABOVE, THE GENERAL PARTNER WILL
UNDERTAKE (I) ALL OF THE INTERNAL ACCOUNTING AND BOOKKEEPING
OF THE PARTNERSHIP, INCLUDING THE DAILY MAINTENANCE OF THE
PARTNERSHIP'S BOOKS AND RECORDS AND (II) WILL COORDINATE
WITH THE PARTNERSHIP'S ACCOUNTANTS, THE PREPARATION OF THE
PARTNERSHIP'S TAX RETURNS AND THE AUDIT OF THE PARTNERSHIP'S
BOOKS AND RECORDS; AND THE GENERAL PARTNER SHALL RECEIVE NO
COMPENSATION FOR SUCH INTERNAL ACCOUNTING AND BOOKKEEPING OR
FOR THE TIME SPENT BY THE GENERAL PARTNER IN COORDINATING
WITH THE PARTNERSHIP'S ACCOUNTANTS, HOWEVER, THE PARTNERSHIP
SHALL BE SOLELY RESPONSIBLE FOR ALL FEES AND EXPENSES OWING
TO THE PARTNERSHIP'S ACCOUNTANTS FOR THE PREPARATION OF SUCH
TAX RETURNS AND THE CONDUCT OF THE AUDIT.]
(iv) As consideration for the performance of the duties set forth
herein, the General Partner shall be entitled to receive
from the Partnership a monthly operating fee equal to six
percent (6%) of each calendar month's gross sales of the
Partnership. Such fee:
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(A) shall be paid on or before the tenth day of the next
full month immediately following the month to which the
fee relates. Any such fee which is not paid when due
shall bear interest from and after the due dates
thereof at the rate of twelve percent (12%) per annum
or the highest rate permitted by applicable law,
whichever is less; and
(B) shall be in addition to any fee, charge or expense that
shall be owing to the General Partner or Hops (or any
affiliate or successor of Hops) pursuant to the terms
of this Agreement, the Development Option Agreement or
any Operating Agreement related to any restaurant to be
owned or operated by the Partnership.
For purposes of this Section 8(c)(iv) the term "gross sales"
shall mean all receipts (cash, cash equivalents or credit)
or revenues from sales from all business conducted directly
or indirectly by the Partnership and from all services
performed directly or indirectly by the Partnership.
SECTION 9. LIMITED PARTNER SPECIAL PROVISIONS.
(a) DEVELOPMENT OPPORTUNITY. The Partners acknowledge that RMRP
has certain development options on up to three (3) restaurants in the state of
Colorado pursuant to the Development Option Agreement of even date herewith
which shall govern certain of the Partners with respect to the matters set forth
therein. To the extent required by any lender to the Partnership, HPI and RMRP
and the RMRP Principals shall guarantee such financing on a pro rata basis. Any
other third-party financing of the Partnership shall also be so guaranteed.
(b) WITHDRAWAL OF OR DISTRIBUTIONS IN REDUCTION OF CAPITAL
CONTRIBUTIONS.
(i) No Limited Partner shall have the right to withdraw or
reduce its Capital Contribution to the Partnership, except
as a result of the dissolution of the Partnership or as
provided in this Agreement.
(ii) No Limited Partner shall have the right to demand or receive
property other than cash in return for its Capital
Contribution. Any withdrawal or reduction of Partnership
capital actually received by a Partner shall be made in
accordance with this Agreement; provided, however, that no
part of the capital shall be withdrawn unless all
liabilities of the Partnership (except liabilities to
Partners) have been paid, or unless the Partnership has
assets sufficient to secure payment of the same.
(iii) The Limited Partners understand that pursuant to the Act if
the Partnership distributes cash (or other assets), which
causes a reduction of their respective Capital Accounts in
the Partnership below the stated capital of the Partnership
specified in the Affidavit of Capital Contributions, for one
(1) year such Limited Partner may be liable to
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the Partnership for any sum returned to it, but not in
excess of the sum distributed to it which reduced the
Capital Account below the stated capital, with interest, to
discharge Partnership liabilities to all creditors who
extended credit, or whose claims arose, before such return
of capital to such Limited Partner.
(c) NO RIGHT OF PARTITION OR RIGHT TO COMPEL SALE. The Limited Partners
shall not have the right to require the partition of Partnership property or to
compel any sale or appraisal of Partnership assets except as provided in this
Agreement, notwithstanding any provision of law to the contrary.
(d) RIGHT TO LIST OF PARTNERS ON REQUEST. Any Limited Partner shall be
entitled, upon request, to have mailed to it a list of the names, addresses, and
ownership of record of each Partner of the Partnership.
(e) RIGHT TO INFORMATION. Each Limited Partner shall be entitled to (at
such Limited Partner's expense):
(i) inspect the Partnership books kept at the place selected by
the General Partner, during reasonable business hours, upon
reasonable notice, and copy any of them at such Limited
Partner's expense; and
(ii) have, on demand, true and full information of all things
materially affecting the Partnership and a formal accounting
of Partnership affairs whenever circumstances render it just
and reasonable.
(f) ACTS AND EXERCISE OF RIGHTS UNDER THIS AGREEMENT. No act granted
to, or right exercised by, a Limited Partner under this Agreement shall impose
any personal liability on any Limited Partner.
(g) WITHDRAWAL OF A LIMITED PARTNER. No Limited Partner may withdraw
from the Partnership.
(h) STATUS OF RMRP AND THE RMRP PRINCIPALS. Except as otherwise
specifically set forth herein, neither RMRP nor any of the RMRP Principals shall
have any approval or consent rights with respect to the business or operations
of the Partnership (or any Second-Tier Partnership). All business and
operational decisions directly or indirectly affecting the Partnership shall be
solely within the control of the General Partner.
SECTION 10. GENERAL PARTNER SPECIAL PROVISION.
WITHDRAWAL OF A GENERAL PARTNER AND SALE, ASSIGNMENT AND ENCUMBRANCE OF
A GENERAL PARTNER'S INTEREST. The General Partner shall not withdraw from the
Partnership, or resign as the General Partner, without the prior written consent
of the Limited Partners.
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SECTION 11. DISPOSITION OF A PARTNER'S PARTNERSHIP INTEREST
(a) The Partners acknowledge that HPI or the General Partner has
a right to purchase the Partnership Interest of Manager pursuant to an
Employment Agreement of even date herewith (the "Employment Agreement") and the
Partners hereby consent to such purchase and agree to abide by the terms of the
purchase right in the Employment Agreement. The Partners acknowledge and agree
that the limitations on the Manager's Partnership Interest are specified in the
Employment Agreement and the Agreement between Manager, the Partnership and the
General Partner under which his partnership interest was purchased (the
"Purchase Agreement") and included herein by this reference and shall govern
this Agreement. The Partners hereby agree that in the event that HPI or the
General Partner purchases the Partnership Interest of Manager pursuant to the
Purchase Agreement, HPI, in its sole discretion, may select an individual to
assume the responsibilities of Manager and to allocate a Partnership Interest to
such individual, and the Partners hereby agree to execute and deliver any and
all instruments and documents, including any amendment to this Agreement deemed
necessary or appropriate by HPI or the General Partner, to effectuate such
transactions.
(b) (i) At no time during the term of this Agreement shall RMRP,
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 Partnership,
without first obtaining the written consent of the General
Partner, or, in the absence of such written consent, without
first complying with the terms of this Section 11. Any
attempted sale, assignment, transfer, mortgage, pledge,
grant, hypothecation or other disposition of any interest in
the Partnership by RMRP, in violation of the provisions of
this Section 11, shall be null and void and of 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 RMRP, other than pursuant to the provisions of this
Section 11 shall be deemed a disposition of the Partnership
interest of RMRP and the General Partner shall be entitled
to purchase the Partnership interest of RMRP in accordance
with the terms of Section 11(c) hereof.
(ii) Each of the RMRP Principals hereby acknowledges that the
other Partners have consented to the participation of the
RMRP Principals through RMRP as a convenience to the RMRP
Principals. The Partners hereby agree that the RMRP
Principals may provide for the transfer of their equity
interests in RMRP among the RMRP Principals; PROVIDED,
HOWEVER, that one or more of the current RMRP Principals
shall, at all times, retain a minimum of one hundred percent
(100%) of the equity interest in and absolute voting control
of RMRP, unless otherwise consented to by the General
Partner in writing, which consent may be unreasonably
withheld. If consented to by the General Partner, as a
condition to such consent, the General Partner may require
any, any person or entity to which such issuance of or
transfer of an equity interest in RMRP is made to execute
reasonable confidentiality and transfer agreements as are
deemed necessary by the General Partner to assure the
compliance by such transferees with the spirit of this
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Agreement and any agreements related to this Agreement
and/or the Hops System. Additionally, the Bylaws of RMRP
shall reflect that the issuance and transfer of shares of
stock (or other equity interests in RMRP) is 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)
RMRP: "The transfer of this stock (or interest) is subject
to the terms and conditions of a Partnership Agreement dated
January 12, 1996 by and between this corporation and Hops of
the Rockies, Inc. and others and the Bylaws of the
corporation." RMRP 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 affiliates and the partnership
interests of General Partner contained herein. RMRP hereby
acknowledges that non-compliance with such transfer
restrictions and procedures shall constitute an absolute
breach of this Agreement by RMRP. Upon the execution of this
Agreement and periodically thereafter at the reasonable
request of the General Partner, RMRP shall provide the
General Partner with a photocopy of its current Bylaws and
all issued and outstanding stock certificates to demonstrate
compliance with this Agreement.
(c) (i) RMRP shall not transfer any Interest in the Partnership
for a period beginning upon the date hereof and ending three
(3) years after the date of the opening of the initial
restaurant directly or indirectly by the Partnership,
without the express prior written consent of the General
Partner which may be withheld in the discretion of the
General Partner. If following the period described in the
immediately preceding sentence, RMRP desires, directly or
indirectly, to sell, assign, transfer or in any way dispose
of all or any portion of the Partnership Interest of RMRP to
any third party in a BONA FIDE transaction, RMRP shall first
serve notice (hereinafter called an "Offer to Sell") to that
effect upon the General Partner. The Offer to Sell shall set
forth the amount of Partnership Interest of RMRP 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 Partnership interest to HPI at the price and on
the terms of sale described in the Offer to Sell.
(ii) The General Partner shall have the absolute right to
prohibit the sale of the Partnership Interest identified in
the Offer to Sell if the General Partner, in its reasonable
determination, shall disapprove of the purchaser identified
in the Offer to Sell. In making such determination, the
General Partner 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. RMRP shall
promptly provide the General Partner with any information
regarding
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the potential purchaser, reasonably requested by the General
Partner, in order to evaluate the potential purchaser,
including, but not limited to financial statements and a
detailed business history of such potential purchaser. The
General Partner will notify RMRP in writing of its approval
or disapproval of any such potential purchaser within sixty
(60) days after receipt by the General Partner of the Offer
to Sell.
(iii) Whether or not the potential purchaser is approved by the
General Partner as provided in Section 11(c), HPI shall have
the first right to purchase all of the Partnership Interest
so offered by giving notice of acceptance to RMRP within one
hundred twenty (120) days after receipt by the General
Partner of the said Offer to Sell.
(iv) In the event the General Partner shall not have disapproved
of the purchaser identified in the Offer to Sell as set
forth in Section 11(c)(ii) above and HPI fails or refuses to
purchase the Partnership Interest of RMRP as provided in
Section 11(c)(iii) above, RMRP shall be free to sell the
Partnership 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 RMRP shall not transfer or otherwise dispose
of such Partnership 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
Partnership Interest to HPI as set forth in Section
11(c)(i). If RMRP does not consummate the sale of its
Partnership Interest so identified in its Offer to Sell
within ninety (90) days after the expiration of the period
for HPI's acceptance of such Offer to Sell, the provisions
of this Article 11 shall reattach to such Interest and such
Interest shall not be sold without reoffer to HPI.
(v) The provisions of this Section 11(c) to the contrary
notwithstanding, RMRP shall make no transfer of its
Partnership Interest as provided in this Section 11(c)
unless the person or entity acquiring such Interest shall
execute and deliver to the General Partner (or HPI) such
documentation as the General Partner (or HPI) 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
(specifically including but not limited to the transfer
restrictions as they previously related to RMRP and the
purchase option of HPI set forth in Section 11(i) hereof)
and all other agreements related to the restaurants operated
by entities owned by the Partnership to which RMRP was (or
is) a party.
(d) (i) If RMRP or any of the RMRP Principals shall breach this
Agreement, or if the Development Option Agreement shall be
terminated or breached other than by Hops (or any affiliate
thereof), RMRP shall be deemed to have made an Offer to Sell
(which shall be deemed received by the General Partner only
when the General Partner has actual knowledge of such
breach) all of the Partnership Interest owned by RMRP to HPI
for the price and upon the terms specified in this Section
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11(d). HPI shall have the right to purchase the Partnership
Interest of RMRP so offered by giving notice of acceptance
to RMRP within one hundred twenty (120) days after the
deemed receipt by the General Partner of the Offer to Sell.
In the event that HPI fails or refuses to purchase all of
the Partnership Interest of RMRP, the remaining provisions
of this Agreement shall continue to apply to the Partnership
Interest of RMRP.
(ii) DETERMINATION OF PURCHASE PRICE AND TERMS. In the event that
the Partnership Interest of RMRP is to be purchased pursuant
to the foregoing provisions of this Section 11(d), the
following provisions shall apply:
(A) PRICE. The purchase price of the Partnership Interest
of RMRP shall be determined pursuant to Section
11(f)(ii) hereof.
(B) TIME AND METHOD OF PAYMENT. Upon the closing of any
sale pursuant to this Section 11(d), HPI shall pay the
purchase price for the Partnership Interest of RMRP
purchased pursuant to this Section 11(d) as follows:
(1) PAYMENT UPON CLOSING. At the option of HPI, all of
the purchase price or an amount equal to twenty
percent (20%) of the purchase price 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 HPI payable to and
delivered to RMRP. 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 HPI 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 HPI upon default in the
payment of any installment of principal or interest
for fifteen (15) days or more.
(e) [REMOVED AND RESERVED.]
(f) (i) For purposes of this Section 11, the following terms shall
have the following meanings:
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(A) "LPP" means RMRP's percentage sharing of the
Profits of the Partnership as described on Exhibit
2(a) hereof (or as such percentage is changed
pursuant to the terms of this Agreement);
(B) "BV" means the Book Value of the Partnership as
defined in Section 22(b) hereof as of the end of
the month immediately preceding the event (or the
last to occur of the events) which shall cause the
purchase of RMRP's Partnership Interest pursuant to
this Section 11; and
(C) "CF" means the Partnership's Cash Flow from
Operations (as defined in Section 22(e) hereof) for
the most recent 12 months of operations of the
Partnership.
(ii) The purchase price for the Partnership Interest of RMRP to
be purchased pursuant to Section 11(d) above shall be the
lesser of:
(A) LPP x BV; or
(B) LPP x 5 x CF.
(iii) The purchase price for the Partnership Interest of RMRP to
be purchased pursuant to Section 11(c) shall be:
LPP x 5 x CF.
(iv) The purchase price for the Partnership Interest of RMRP
that may purchased pursuant to Section 11(i) only shall be
its "fair market value" which shall be calculated by
determining the fair market value of the Partnership and
multiplying such value by RMRP's then current percentage
sharing of the Profits of the Partnership. The fair market
value of RMRP's Partnership Interest may be determined upon
the mutual agreement of HPI and RMRP at any time during the
period of thirty (30) days after RMRP's receipt of the Call
Notice (as defined below). In the event that HPI and RMRP
are unable to agree upon the fair market value of RMRP's
Partnership Interest during such thirty (30) day period,
then, at the request of HPI, the fair market value of RMRP's
Partnership Interest shall be determined by an appraisal to
be made by an independent appraiser jointly selected by HPI
and RMRP. If HPI and RMRP cannot agree upon an appraiser,
then within forty (40) days of the Call Notice each party
shall select an independent appraiser and within fifty (50)
days of the Call Notice, the two appraisers selected by HPI
and RMRP shall select a third independent appraiser, and the
appraisal shall be made by the third appraiser. HPI and RMRP
shall work together, in good faith, to obtain a final
appraisal, if necessary, within seventy (70) days of the
date of the Call Notice. If an appraisal shall become
necessary pursuant to this Section 11(f)(iv), HPI and RMRP
shall work in good faith with the appraiser performing the
appraisal to obtain a final appraisal within seventy (70)
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days of the Call Notice (or such longer period of time as
the appraiser may advise the parties is required). The
results of such appraisal shall be binding upon RMRP and
each of the RMRP Principals. Notwithstanding any other
provision of this Section 11 to the contrary, if an
appraisal occurs pursuant to this Section 11(f)(iv), HPI
shall have thirty (30) days following the announcement of
the appraisers' decision within which to elect whether or
not to purchase RMRP's Partnership Interest as described in
the Call Notice (as defined below). In the event HPI elects
not to purchase the Partnership Interests of RMRP, the Call
Notice originally issued by HPI shall be deemed null and
void and all provisions of this Section 11 shall continue to
apply to RMRP and its Partnership Interest. In the event of
such an appraisal, each party shall bear its own legal and
other costs and shall split the appraisal fees.
(g) [REMOVED AND RESERVED.]
(h) [REMOVED AND RESERVED.]
(i) In the event that the Partnership, directly or indirectly, opens to
the public the Initial Restaurant (as defined in the Development Option
Agreement) and two (2) or more Additional Restaurants (as defined in the
Development Option Agreement), HPI shall have the right, but not the obligation,
at any time and from time to time after the date upon which the second
Additional Restaurant is opened to the general public, upon notice (the "Call
Notice") in accordance with Section 17 hereof to RMRP, to acquire all or any
part of RMRP's Partnership Interest at the purchase price set forth in Section
11(f)(iv) with the terms of purchase to be as otherwise specified in Section
11(d)(ii)(B) hereof. The Call Notice shall set forth (A) the amount of RMRP's
Partnership Interest to be purchased by HPI pursuant to this Section 11(i) and
(B) the date upon which the closing of such purchase shall take place. The
closing of such purchase(s), if any, pursuant to this Section 11(i) shall occur
on a date set forth by HPI which date shall be on or before the date which is
ninety (90) days after the determination of a final purchase price pursuant to
Section 11(f)(iv) whether by the agreement of HPI and RMRP or appraisal.
(j) (i) With respect to the purchase of the Partnership interest
of RMRP pursuant to the terms of Sections 11(d) and 11(i)
hereof, in the event that Hops Grill & Bar, Inc. (the
current owner of the Hops System, as that term is defined in
Section 22(k) hereof) or any affiliate of Hops Grill & Bar,
Inc. or any other entity that has been formed to perpetuate
the development of restaurants under the Hops System
(hereinafter referred to collectively as "Public Hops") has
completed its initial public offering pursuant to a
registration statement filed with and declared effective by
the United States Securities and Exchange Commission, then
at the SOLE DISCRETION of HPI (or its successors or
assigns), HPI (or its successors or assigns) may make
payment of the purchase price for the purchase of RMRP's
partnership under Sections 11(d) and 11(i) hereof by
delivery of stock of Public Hops valued as set forth in
Section 11(j)(ii) hereof.
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(ii) For purposes of determining the number of shares of stock to
be delivered by HPI (or its successors or assigns) to RMRP
pursuant to a purchase of RMRP's Partnership interest to be
paid in Public Hops stock pursuant to Section 11(j)(i), HPI
(or its successors or assigns) shall deliver to RMRP at the
closing of such purchase, the number of shares of Public
Hops common stock determined by dividing (x) the applicable
purchase price as set forth in Section 11(f) hereof by (y)
the mean of the daily averages of the reported high and low
sale prices of Public Hops common stock on its primary
market during each of the preceding five trading days ending
on the day fifth trading day prior to the closing of the
purchase.
(iii) In the event that HPI (or its successors or assigns) elects
to purchase RMRP's Partnership Interest in exchange for
Public Hops common stock pursuant to Section 11(j)(i)
hereof, HPI (or its successors or assigns) shall cause
Public Hops to enter into, effective as of the date of such
closing, a registration rights agreement with RMRP in
substantially the form of the Registration Rights Agreement
attached to this Partnership Agreement as Exhibit 11(j)(iii)
hereto.
(k) (i) If HPI proposes to transfer any of its Partnership
Interest in a "Qualifying Transaction" (as that term is
defined in Section 11(k)(ii) below), then HPI shall permit
RMRP, or cause RMRP to be permitted, to sell, and at HPI's
request RMRP shall sell, for the same proportionate
consideration and otherwise on the same terms and conditions
obtained by HPI in such Qualifying Transaction such portion
of RMRP's current Partnership Interest as is determined by
multiplying RMRP's current percentage share of Profits and
Losses in the Partnership by a fraction, the numerator of
which is shall be the percentage share of Profits and Losses
in the Partnership being sold by HPI in such Qualifying
Transaction and the denominator of which shall be the total
percentage share of Profits and Losses in the Partnership
then held by HPI.
(ii) For purposes of this Section 11(k), the term Qualifying
Transaction shall mean the sale or other transfer for
consideration, at the conclusion of which Hops (whether
through HPI, the General Partner, or any affiliate or
successor of Hops) shall no longer, directly or indirectly
(such as through HPI or the General Partner or any affiliate
or successor of Hops), have at least a 50.01% Interest in
the Profits or Losses of the Partnership. Under no
circumstances shall any transfer of any Interest in the
Partnership by HPI to Hops or any affiliate or successor of
Hops be considered a Qualifying Transaction.
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SECTION 12. DISSOLUTION, LIQUIDATION AND TERMINATION OF THE PARTNERSHIP.
(a) DISSOLUTION OF THE PARTNERSHIP.
(i) The Partnership shall automatically dissolve upon the first
to occur of any of the following events:
(A) The withdrawal, as defined in the Act, of a General
Partner, unless:
(1) the remaining General Partner(s), if any, elect in
writing within ninety (90) days after such event to
reconstitute the Partnership, to continue as the
General Partner(s) and to continue the Partnership
and its business as provided hereinafter; or
(2) if there is no remaining General Partner, within
ninety (90) days after such event, a majority of
the Limited Partners by Interest agree in writing
to reconstitute the Partnership and to elect a
successor general partner, as of the date of the
withdrawal of the General Partner or Partners, to
continue the business of the Partnership, and such
successor general partner agrees in writing to
accept such election as provided hereinafter.
(B) The sale or other disposition, not including an
exchange, of all of the assets of the Partnership
(except under circumstances where all or a portion of
the purchase price is payable after the closing of the
sale or other disposition);
(C) The expiration of the term of the Partnership as set
forth herein;
(D) The execution by those Partners owning at least
fifty-one percent (51%) of the Interest of the
Partnership of an instrument dissolving the
Partnership; or
(E) The occurrence of any other event that would cause the
mandatory dissolution of the Partnership under the Act.
(b) CONTINUATION OF THE PARTNERSHIP.
(i) Notwithstanding anything contained herein to the contrary,
(A) the dissolution and commencement of winding up of a
General Partner that itself is a separate partnership, or
(B) in the case of a General Partner that is a corporation,
the filing of a certificate of dissolution or its equivalent
for such corporation or the revocation and nonreinstatement
of its character, shall not constitute the "withdrawal" of
any such General Partner for purposes of the Act and shall
not consequently cause the dissolution of the Partnership.
In any such event, however, the Interest in the Partnership
of any General Partner with respect to
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which any such event has occurred shall, upon election of a
majority in interest of the Limited Partners, be converted
to that of a Limited Partner, and such Partner shall have
none of the powers of a General Partner under this Agreement
or applicable law, and shall have only the rights and powers
of a Limited Partner in the Partnership with the same rights
of a Limited Partner to share in any Partnership profits,
losses, gains and distributions in accordance with its
Interest.
(ii) Upon the occurrence of the Partnership having no General
Partners, the Limited Partners may, within ninety (90) days
after the occurrence of such event, continue the Partnership
and the Partnership shall continue as a limited partnership
pursuant to this Agreement; provided, however, that the
Limited Partners then shall elect a substitute General
Partner who agrees to act as General Partner and continue
the Partnership. If a substitute General Partner is so
selected and accepts, such substitute General Partner shall
acquire an Interest in the Partnership which will entitle
the substitute General Partner to hold in the aggregate at
least a one percent (1%) Interest, which one percent shall
be transferred by and come from the Interest of the former
General Partner without compensation to the former General
Partner for same. Subject to other written agreements and
exceptions agreed to by the Limited Partners, the substitute
General Partner shall assume from and after the date of
substitution and upon becoming a party of this Partnership
Agreement, all the rights, powers and obligations of the
General Partner under this Partnership Agreement. In the
event a substitute General Partner can not be appointed and
admitted within a reasonable time after the special meeting
called pursuant to this Section, and there is no General
Partner remaining, the Partnership shall be dissolved and
liquidated as provided herein.
(iii) Upon the occurrence of the expiration of the term of the
Partnership, the Partners by majority vote in Interest may
within thirty (30) days after the occurrence of such event,
elect to continue the Partnership. Upon such election, the
Partnership Agreement shall be amended to reflect the new
expiration date of the term of the Partnership as selected
by the Partners and an amended Certificate of Limited
Partnership shall be filed by the General Partner to reflect
same.
(c) ADDITIONAL GENERAL PARTNER. In the event a General Partner's
interest is converted to that of a Limited Partner, a majority of the Limited
Partners may admit an additional General Partner to the Partnership.
(d) DEATH, ETC. OF A LIMITED PARTNER. The death, disability,
dissolution, or adjudication as bankrupt of a Limited Partner shall not dissolve
the Partnership, but the rights of a Limited Partner to share in the Profits and
Losses of the Partnership and to receive distributions of Partnership funds
shall, upon the happening of such an event, devolve upon the Limited Partner's
estate, legal representative or successors in interest, as the case may be,
subject to this Agreement and any other agreement of the Partners, and the
Partnership shall continue as a limited partnership.
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(e) PROVISIONS CUMULATIVE; WAIVER. All provisions of this Agreement
relative to the dissolution, liquidation and termination of the Partnership
shall be cumulative, that is, the exercise or use of one of the provision hereof
shall not preclude the exercise or use of any other provision hereof. Each
Partner expressly waives any right which it might otherwise have to dissolve the
Partnership except as set forth in this Section 12. Nothing contained in this
Section 12 is intended to grant any Partner the right to dissolve the
Partnership at will (by retirement, dissolution, resignation, withdrawal or
otherwise), or to exonerate any Partner from liability to the Partnership and
the remaining Partners if such Partner acts in contravention hereof.
(f) LIQUIDATION.
(i) Upon dissolution of the Partnership, its liabilities shall
be paid in the order provided herein. The General Partner
shall cause the Partnership's property to be sold in such
manner as to obtain the best prices for such property, and
shall cause the cancellation of the Partnership's
Certificate of Limited Partnership. Pending such sales, the
General Partner shall have the right to continue to operate
and otherwise to deal with the Partnership property. In the
event there is no General Partner remaining, the other
Partners by majority vote in Interest shall elect, in
accordance with the provisions hereof, a person to perform
the functions of the General Partner in liquidating the
assets of the Partnership and winding up its affairs. Gain
or loss realized on the sale(s) or other disposition(s) of
the Partnership's assets will be credited to (in the case of
gain) or charged against (in the case of loss) each
Partner's Capital Account to the extent allocable to it
hereunder.
(ii) In settling accounts after dissolution, the assets of the
Partnership shall be paid out in the following priority
order after the allocation of the Partnership Profits and
Losses pursuant to Section 3(a) and 3(b):
(A) to secured parties in repayment of indebtedness owed;
(B) to unsecured third party creditors, in the order of
priority as provided by law;
(C) to the holders of the indebtedness owed for any Partner
financing proportionally until paid in full;
(D) to reserves as specified by the General Partner;
provided, however, that at the expiration of such
period of time as a majority in Interest of the
Partners shall deem advisable, the balance of such
reserves remaining after the payment of such
contingencies shall be distributed in the manner
hereinafter set forth in this Section;
(E) to each Partner (proportional to their respective Net
Capital Investment) the accounts of their respective
Net Capital Investment;
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(F) to distribute all remaining cash proportionately to the
Partners based on their relative positive Capital
Accounts;
(G) to each Partner in accordance with their then sharing
of Profits.
(g) TERMINATION OF PARTNERSHIP.
(i) Upon dissolution and liquidation of the Partnership, the
Partnership shall be terminated as rapidly as business
circumstances will permit.
(ii) After payment of all expenses of liquidation and of all
debts and liabilities of the Partnership in such order or
priority as provided herein, and all resulting items of
Partnership income, gain, loss or deduction are credited or
debited to the capital accounts of the Partners the
Partnership shall be terminated formally for state and
federal purposes.
(h) FINAL ACCOUNTING. Each of the Partners shall be furnished an
audited statement setting forth the assets and liabilities of the Partnership as
of the date of the winding-up of the Partnership's affairs. Upon compliance by
the winding-up General Partner or the dissolution trustee, as the case may be,
the Partners shall cease to be partners and the General Partner or trustee shall
execute and cause to be filed a certificate of cancellation of the Certificate
of Limited Partnership of the Partnership and any and all other documents
necessary with respect to such termination and cancellation.
SECTION 13. REPORTING. The General Partner shall keep all records in accordance
with the provisions of Section 704(b) of the Code and provide monthly updates
regarding actual project costs compared with budget estimates, operations status
reports delineating actual results compared with economic pro forma estimates,
business estimates necessary to achieve break even, and a marketing plan
outlining business prospects.
SECTION 14. POWERS AND COMPLIANCE.
(a) POWERS. The Partnership shall be empowered to do any and all
acts and things necessary, appropriate, incidental to, or convenient for, the
furtherance and accomplishment of the purposes stated in Section 1(d) hereof,
including, but not limited to, the following:
(i) To develop, convey, buy, own, improve, rent, lease, sell,
operate and generally deal in all kinds of property
(personal and real) in any manner or way whatsoever;
(ii) To borrow money and issue evidences of indebtedness and to
secure the same by mortgage, pledge or other lien or
security interest in furtherance of the business and all
purposes of the Partnership;
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(iii) To carry on any other activities and enter into, perform and
carry out contracts of any kind necessary to, in connection
with, or incidental to the accomplishment of the purposes of
the Partnership, specifically including, but not limited to,
the execution and delivery of leases, mortgage documents,
other real property instruments, the execution of contracts
with brokers, contractors, engineers, and architects, and
other related documents;
(iv) To repay in whole or in part, refinance, recast, increase,
modify or extend any mortgages affecting the assets of the
Partnership, and in connection therewith to execute any
extensions, renewals or modifications of such mortgages;
(v) To employ managers, agents and representatives for the
purpose of accomplishing the business of the Partnership and
to pay compensation therefor; and
(vi) To do any and all other acts and things which may be
necessary, incidental to, or convenient to, the conduct and
continuance of the Partnership Business as contemplated
under this Agreement.
(b) CERTIFICATE OF LIMITED PARTNERSHIP. The General Partner may
file this Limited Partnership Agreement and Certificate of Limited Partnership
as the Certificate of Limited Partnership of the Partnership with the Office of
the Secretary of State of the State of Florida, or the General Partner may at
its sole option file a separate Certificate of Limited Partnership disclosing
only the information about this Limited Partnership which is required to be
disclosed by the Florida Statutes. The General Partner shall also file as
appropriate the Affidavit of Capital Contributions certifying the capital
contributions of the Limited Partners.
(c) COMPLIANCE WITH LAW. The General Partner shall from time to
time execute or cause to be executed all such certificates and other documents
and do or cause to be done all such filings, recordings, publications and other
acts necessary (or, in the judgment of the General Partner, appropriate) to
comply with the applicable laws of any jurisdiction in which the Partnership
shall conduct its business.
(d) STATUTORY AGENT. The statutory agent for service of process on the
Partnership is Fowler, White, Gillen, Boggs, ▇▇▇▇▇▇▇▇▇ and Banker, P.A.
(Attention: R. ▇▇▇▇ ▇▇▇▇▇▇, Esq.), whose address is ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇. The statutory agent for service of process may
be changed at any time by act of the General Partner.
SECTION 15. AMENDMENTS.
(a) PROPOSAL AND ADOPTION OF AMENDMENTS GENERALLY.
(i) Any amendment to this Agreement may be proposed by any
Partner.
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(ii) Amendments to this Agreement shall be adopted only if the
General Partners and the Limited Partners, except Manager,
have approved the Amendment.
(iii) The General Partner, without the necessity of signatures of
other Partners, except as required hereunder, shall, as soon
as possible after the adoption and execution of any
amendment to this Agreement, make any filings or
publications required or desirable to reflect such
amendment, including any required filing or recordation of
any certificate of limited partnership or other instrument
or similar document.
SECTION 16. MEETINGS, CONSENTS AND VOTING.
(a) MEETINGS. The General Partner may call a meeting of the Partners at
the principal place of business of the Partnership in Florida.
(b) CONSENTS AND ACTS. Any consent or act of a Partner required by this
Agreement may be given as follows:
(i) by a written consent, given by the Partner, to the act or
thing or consent.
(ii) by the affirmative vote by the Partner to the doing of the
act or thing for which the consent is solicited at any
meeting of the Partners.
(c) VOTING. Each Partner shall be entitled to one vote per percentage
point of Partnership Interest (proportioned for fractions of a percent).
Decisions of the Partnership, except as specifically otherwise provided for in
this Partnership Agreement, shall be accomplished by majority vote of the
Interest of the Partners. Any vote of a Partner may be cast by another Partner
or Person pursuant to a written proxy in favor of such other Partner or Person.
SECTION 17. NOTICE; NOTIFICATION.
(a) MANNER OF NOTICE AND CHANGE OF ADDRESS. Any Notice required or
desired to be made in connection with this Agreement shall be made in
conformance with the definition of same contained herein. Any Partner may, by
Notice to the other Partners, specify any other address for the receipt of
notices, notifications, requests, consents, approvals, waivers or other
communications in connection with this Agreement.
(b) NOTIFICATION TO THE PARTNERSHIP OR THE GENERAL PARTNER. Any Notice
to the Partnership or the General Partner shall be sent to the principal office
of the Partnership, as set forth in this Agreement, or as same may be changed by
Notice of the General Partner.
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SECTION 18. BOOKS AND RECORDS; ACCOUNTING; TAX ELECTIONS; ETC.
(a) CAPITAL TRANSFERS.
(i) Except for any Negative Capital Account or other adverse tax
status of a Partner which shall always remain with the
transferring Partner in a partner to partner transfer until
the Interest of the transferring Partner no longer exists,
if any Partnership Interest or part thereof is transferred
in accordance with the terms of this Agreement, the
transferee shall succeed to the Capital Account of the
transferor to the extent it relates to the transferred
Partnership Interest.
(ii) In the event any assets of the Partnership are distributed
in-kind, the Capital Accounts of the Partners shall be
adjusted prior to any such distribution to reflect how any
resulting Profit and Loss, based on the Book Value of such
asset at the time of distribution, would have been
allocated.
(b) TAX INFORMATION AND ELECTIONS. The General Partner shall use its
best efforts to furnish to the Partners within ninety (90) days of the end of
each Fiscal Year all information necessary to permit the Partners to prepare all
federal, state and local tax returns they are required to file for the Fiscal
Year. The Partnership shall elect to use such methods of depreciation as the
General Partner determines. In the event of a transfer of all or part of the
Interest of any Partner in the Partnership, the Partnership may elect pursuant
to Code Section 754 to adjust the basis of the assets of the Partnership upon
written request of the transferee, unless such election will have a materially
unfavorable effect upon the Partners other than the transferee Partner.
(c) CODE SECTION 754 ELECTION. In the event of a distribution of
property made in the manner provided in Section 734 of the Code, or in the event
of a transfer of any Partnership Interest permitted by this Agreement made in
the manner provided in Section 743 of the Code, the Partners, by majority vote
in Interest, may elect to file an election under Section 754 of the Code in
accordance with the procedures set forth in the applicable regulations
promulgated thereunder.
(d) TAX RETURNS AND AUDIT. The tax returns of the Partnership shall be
prepared by, and the Partnership shall be audited by, the accounting firm
selected by the General Partner.
(e) ALLOCATION IN EVENT OF TRANSFER. Each item of income, gain, loss,
deduction or credit allocable to a Partner's Interest that is transferred in
whole or in part during any year shall, if permitted by law, be allocated
according to the varying ownership Interests of the Partners during the year. In
applying this rule, the General Partner shall choose one of the following two
methods:
(i) prorate the Limited Partnership items over the Limited
Partnership's year by assigning the appropriate portion of
each such item to each day in the period to which it is
attributable; or
(ii) elect to utilize the precise method of an interim closing of
the Limited Partnership's books. If the General Partner
chooses the latter method,
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then any period subject to this method shall be treated as a
fiscal year for purposes hereof.
(f) TAX MATTERS PARTNER. The General Partner and its chief executive
shall be the "Tax Matters Partner" for purposes of the Tax Treatment of
Partnership Items Act of 1982, and shall have the authority to exercise all
functions provided for in said Act, or in regulations promulgated thereunder by
Treasury, including, but not limited to, the extent permitted by such
regulations, the authority to delegate the function of Tax Matters Partner to
any other person. In the event the General Partner resigns as Tax Matters
Partner or its entire Partnership Interest is disposed of or terminated or
changed to a limited partnership interest, a majority in Interest of the
Partners other than the General Partner shall designate another General Partner
who shall become the Tax Matters Partner.
(g) TAX BASIS. An individual tax basis record shall be maintained for
each Partner. The tax basis record of each Partner shall be established and
shall be adjusted as of the close of each taxable year of the Partnership (or,
when appropriate, as of the close of the taxable year of the Partnership for
such Partner) in accordance with United States federal income tax law and
procedure as the same may exist from time to time.
(h) COMPLIANCE WITH CODE SECTION 704(B). The manner in which Capital
Accounts are to be maintained pursuant to Section 2 is intended to comply with
the requirements of Code Sec. 704(b), as amended, and the Treasury Regulations
promulgated thereunder (or corresponding sections of later statutes and
regulations).
(i) COMPLIANCE WITH TIMING REQUIREMENTS OF REGULATIONS. In the event
the Partnership is "liquidated" within the meaning of Treasury Regulation
Section 1.704-1(b)(2)(ii)(g) (or corresponding sections of later regulations)
distributions shall be made to the General Partner and the Limited Partners as
set forth in Section 12 who have Positive Capital Accounts in compliance with
Treasury Regulation Section 1.704-1(b)(2)(ii)(b)(2) (or corresponding sections
of later regulations).
(j) BASIS ALLOCATIONS. The basis (or cost) of any Partnership Code
Section 38 property shall be allocated among the General Partner and the Limited
Partners in accordance with Treasury Regulation Section 1.46-3(f)(2)(i). All tax
credits shall be allocated among the General Partner and the Limited Partners in
accordance with applicable law.
(k) ADDITIONAL LIMITED PARTNERS. In the event additional Partners are
admitted to the Partnership pursuant to the provisions hereof on different dates
during any fiscal year, the Profits (or Losses) allocated to the Partners for
each such fiscal year shall be allocated among the Partners in proportion to the
Partnership Interest each holds from time to time during such fiscal year in
accordance with Code Section 706, using any convention permitted by law and
selected by the General Partner.
(l) ALLOCATION TIMING. For purposes of determining the Profits, Losses
or any other items allocable to any period, Profits, Losses, and any such other
items shall be determined on a daily, monthly, or other basis, as determined by
the General Partner using any permissible method under Code Section 706 and the
Treasury Regulations thereunder.
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(m) COMPLIANCE WITH TIMING REQUIREMENTS OF REGULATIONS. In the event
the Partnership is "liquidated" within the meaning of Treasury Regulation
Section 1.704-1(b)(2)(ii)(g):
(i) distributions shall be made to the General Partner and the
Limited Partners who have Positive Capital Accounts in
compliance with Treasury Regulation Section
1.704-1(b)(2)(ii)(b)(2), and
(ii) if any Partner'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 Partner shall
not contribute to the capital of the Partnership the amount
necessary to restore such deficit balance to zero in
compliance with Treasury Regulation Section
1.704-1(b)(2)(ii)(b)(3).
(n) QUALIFIED INCOME OFFSET. In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in Treasury
Regulation Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or
1.704-1(b)(2)(ii)(d)(6) ("Unexpected Adjustments"), items of Partnership income
and gain shall be specially allocated to such Partner in an amount and manner
sufficient to eliminate the deficit balances in such Partner's capital account
created by such Unexpected Adjustments as quickly as possible. Any special
allocations of items of income or gain pursuant to this Section shall be taken
into account in computing subsequent credits of Profits or Minimum Gain so that
the net amount of any items so allocated and the Profits or Losses or Minimum
Gain, to the extent possible, be equal to the net amount that would have been
allocated to each such Partner if such Unexpected Adjustments had not occurred.
(o) ACCOUNTING.
(i) The fiscal year of the Partnership shall end on the last day
of December of each year.
(ii) The books of account of the Partnership shall be kept and
maintained at all times at the principal place of business
of the Partnership or at another place or places approved by
the General Partner. The books of account shall be
maintained according to generally accepted accounting
principles, consistently applied, and shall show all items
of income and expense.
SECTION 19. INDEMNITIES.
(a) The General Partner and its affiliates or agents, employees,
directors or officers shall not be liable, responsible or accountable in damages
or otherwise to the Partnership or any of the Partners for any act or omission
performed or omitted in good faith on behalf of the Partnership and in a manner
reasonably believed by it or them to be within the scope of the authority
granted to a General Partner by this Agreement and in the best interests of the
Partnership, including, but not limited to, errors of judgment, except for bad
faith or willful misconduct. For purpose of this provision, any action or
omission taken on advice of counsel for the Partnership shall be deemed as
having been taken in good faith; provided,
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however, that the absence of such advice shall not be deemed to constitute
evidence of other than good faith.
(b) The Limited Partners and their affiliates or agents,
employees, directors or officers shall not be liable, responsible or accountable
in damages or otherwise to the Partnership or any of the Partners for any act or
omission performed or omitted in good faith on behalf of the Partnership and in
a manner reasonably believed by it or them to be in the best interests of the
Partnership, including, but not limited to, errors of judgment. For purposes of
this provision, any action or omission taken on advice of counsel shall be
deemed in the best interest of the Partnership.
(c) The Partnership, or its receiver, custodian or trustee, shall (from
the assets of the Partnership, no Limited Partner being obligated to contribute
to the Partnership for such purpose) indemnify, save harmless and pay all
judgments and claims against any Partner, or its affiliates or agents,
employees, directors or officers, from and with respect to any liability or
damage (including all liabilities under federal and state securities laws)
incurred by reason of any action, inaction or decision performed or made in
connection with the business of the Partnership, including, but not limited to,
errors of judgment, provided that such actions, inactions or decisions were
reasonably believed by the Partner, or its affiliates or agents, employees,
directors or officers, to be in the best interests of the Partnership and,
provided further that, with regard to General Partners, such actions, inactions,
or decisions were reasonably believed by the General Partner, or its affiliates
or agents, employees, director or officers, to be within the scope of its or
their authority under this Agreement. This indemnification shall include the
payment of all attorneys' fees and other expenses incurred by the Partner, or
its affiliates or agents, employees, directors and officers, in connection with
the defense of any such claim made against it or them, including, without
limitation, any claim asserted by any Limited Partner individually, as a class
action or as a Partnership derivative action.
SECTION 20. ARBITRATION.
(a) In the event there should arise any misunderstanding or
disagreement between any of the parties as to the compliance with the terms and
conditions of this Agreement, or as to whether either party 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
parties within thirty (30) days after either party seeking arbitration delivers
notice of same to the other party, shall be submitted to a single arbitrator, if
the parties agree upon one; otherwise, to a board of three arbitrators, of whom
one shall be selected by each party 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 parties fails to timely select an arbitrator, the
arbitrator that was timely selected shall be the sole arbitrator. If neither
party timely selects an arbitrator, the first arbitrator selected thereafter
shall be the sole arbitrator, no others being appointed. Where each of the
parties 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 party 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
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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 parties, 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) is to be shared equally by the
parties. Each party 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 arbitrator(s) 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 parties 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
parties 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 party hereby
expressly submits and consents in advance to such jurisdiction and 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, 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.
SECTION 21. MISCELLANEOUS PROVISIONS.
(a) BINDING PROVISIONS. The covenants and agreements contained herein
shall be binding upon and shall inure to the benefit of the heirs, personal
representatives, permitted successors and permitted assigns of the respective
parties hereto.
(b) APPLICABLE LAW. This Agreement shall be construed and interpreted
in accor- dance with the laws of the State of Florida. Venue shall be in
Hillsborough County, Florida for both arbitration and legal proceedings.
(c) SEPARABILITY OF PROVISIONS. If any provision or provisions
hereof are determined to be invalid and contrary to any existing or future law,
such invalidity shall not impair the operation of, or affect those portions of,
this Agreement that are valid.
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(d) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
among the parties. This Agreement supersedes any prior agreement or
understanding among the parties and may not be modified or amended in any manner
other than as set forth herein.
(e) SECTION TITLES. Section titles are for convenience of reference
only and shall not control or alter the meaning of this Agreement as set forth
in the text.
(f) WAIVER OF APPRAISAL. If any individual Partner, if any,
shall die, any inventory and appraisement of the property of the Partnership
right provided for under Florida law, or any similar provision of law which may
be enacted in substitution therefor, is hereby waived by all Partners and the
Interest of such Partner in the Partnership shall be settled and disposed of as
provided in this Partnership Agreement.
(g) FURTHER ACTION. Each Partner shall execute and deliver all
documents, provide all information and take or forebear from all such action as
may be necessary or appropriate to achieve the purposes of this Partnership
Agreement.
(h) REFERENCE TO STATUTORY OR REGULATORY PROVISIONS. All reference to
statutory or regulatory provisions shall be deemed to include reference to
corresponding provisions of subsequent law or regulation.
(i) TRIAL BY JURY WAIVER. The Partners waive trial by jury to the
extent permitted by law.
(j) LEGAL REPRESENTATION. The General Partner shall select an
attorney or attorneys to represent the Partnership. Individual attorneys for
each Partner are not prohibited from representing, and are entitled to
represent, the Partnership and each Partner, from time to time, subject to
itemization of all charges and strict allocation of those legal services
provided to the Partnership and those legal services provided to a Partner.
Itemized ▇▇▇▇▇▇▇▇ shall be available for review by any Partner. In the event
that any dispute arises between or among the Partners, each Partner hereby
agrees that any law firm that has rendered or is rendering legal services to the
Partnership or HPI (or any affiliate of the Partnership or HPI) may continue
such representation of the Partnership or HPI (or any affiliate of the
Partnership or HPI), and may represent the Partnership or HPI (or any affiliate
of the Partnership or HPI) in such dispute, and each Partner hereby waives any
actual or potential future conflict of interest that may arise as a result of
such law firm's representation of the Partnership or HPI (or any affiliate of
the Partnership or HPI) in connection with any such dispute.
SECTION 22. DEFINED TERMS. The defined terms used in this Agreement shall,
unless the context otherwise requires, have the meanings specified in this
Section. The singular shall include the plural and the masculine gender shall
include the feminine and neuter and vice versa, as the context requires.
(a) "Act" means the Florida Revised Uniform Limited Partnership Act,
as amended.
(b) "Book Value" means, with respect to any asset of the Partnership,
the adjusted basis of the asset for Federal income tax purposes, except as
follows:
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(i) The initial Book Value of any asset contributed by a Partner
to the Partnership shall be the gross fair market value of
such asset, as determined by the contributing Partner and
the Partnership;
(ii) The Book Values of all Partnership assets shall be adjusted
to equal their respective gross fair market values, as
determined by accountants, appraisers or valuation
consultants designated by the General Partner in accordance
with Code Section 704 and 7701(g) as of the following times:
(A) Acquisition of an additional interest in the
Partnership by any new or existing Partner in exchange
for more than a de minimus capital contribution if, at
the time of such acquisition, the Partnership assets
have appreciated by more than a de minimus amount since
acquisition of such Partnership assets;
(B) The liquidation of a Partner's interest in the
Partnership, other than on dissolution of the
Partnership, in exchange for more than a de minimus
distribution of money by the partnership if, at the
time of distribution, the Partnership assets have
appreciated by more than a de minimus amount;
(C) Distribution, other than on dissolution of the
Partnership, by the Partnership to a Partner of more
than a de minimus amount of Partnership assets other
than money, if the Partners reasonably determine that
such adjustment is necessary or appropriate to reflect
the relative economic interests of the Partners; or
(D) The termination of the Partnership for Federal income
tax purposes pursuant to Code Section 708(b)(1),
constituting a liquidation of the Partnership within
the meaning of Treasury Regulation Section
1.704-1(b)(2)(ii)(g).
(iii) The Book Value of any Partnership asset distributed to any
Partner shall be the gross fair market value, determined as
described above, of such asset on the date of distribution;
and
(iv) If the Book Value of an asset has been determined or
adjusted pursuant to Section 22(b)(i) or Section 22(b)(ii)
above, such Book Value shall thereafter be adjusted by the
Depreciation taken into account with respect to such asset
for purposes of computing Profits and Losses.
(c) "by the Partners" means by vote of a majority in total Interest of
the Partners.
(d) "Capital Account", as to any Partner, means such partner's capital
account as provided in Section 2 hereof.
(e) "Cash Flow from Operations" means the excess of cash revenues of
the Partnership over cash payments by the Partnership made in the ordinary
course of business, including,
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but not limited to cash receipts and payments generated by the operations of the
business of the Partnership, but determined as follows:
(i) Depreciation and amortization shall not be considered as a
deduction.
(ii) Principal debt reduction of any liability shall be
considered as a deduction.
(iii) Amounts paid for capital expenditures shall be considered as
a deduction, unless paid for by funds provided from
insurance or unless provided for by a Capital Contribution.
(iv) Any amount of compensation, fringe benefit or return on net
capital investment paid a Partner, who is acting in a
capacity other than as a Partner, pursuant to an employment
or other agreement with the Partnership shall be treated as
an expense of the Partnership in determining Cash Flow from
Operations.
(v) Any amounts set aside by the Partners for the restoration or
creation of reserves in amounts determined by the Partners,
to provide for working capital, payment of indebtedness,
expenses or contingencies of the Partnership, or in
connection with the property of the Partnership shall be
excluded.
(vi) Amounts paid to Manager pursuant to Section 6(a)(ii)(A)
hereof shall be considered as a deduction to the extent
considered as an advance against future distributions to
Manager.
(vii) Cash Flow from Operations shall not include net cash
proceeds received by the Partnership from (1) sales and
other dispositions of Partnership assets, proceeds of
mortgage financing and refinancing, proceeds of condemnation
awards, insurance proceeds, and other similar items
attributable to capital; or (2) all principal and interest
payments with respect to any note or other obligation
received by the Partnership in connection with sales and
other dispositions of Partnership assets; or (3) sales of
easements, rights of way or similar interests; in any such
case less any portion which is reinvested, used to pay
Partnership expenses, debt payments and fees or is used to
establish reserves, all as determined by the General
Partner.
(f) "Certificate of Limited Partnership" means the Certificate of
Limited Partnership as originally filed with the Secretary of State of the State
of Florida and as amended from time to time.
(g) "Code" means the United States Internal Revenue Code of 1986, as
amended (or any corresponding provision of succeeding law).
(h) "Development Option Agreement" means the Hops of the Rockies
Development Option Agreement setting forth the rights with respect to the
development of restaurants under the Hops System within the Territory.
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(i) "Fiscal Year" means, with respect to the Partnership, the calendar
year.
(j) "General Partner" means Hops of the Rockies, Inc., or any successor
General Partner or other general partner.
(k) "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.
(l) "Interest," "Limited Partnership Interest," "General Partnership
Interest" and "Partnership Interest" means the entire ownership interest (which
may, either for its Capital Account or its interest in Profits, Losses,
distributable cash flow, etc., be expressed as a percentage) of a Partner at any
particular time, including the rights and obligations of such Partner under this
Agreement and the Act.
(m) "Limited Partner" means RMRP, HPI, Manager, and any Person who is a
Limited Partner at the time of reference thereto, in such Person's capacity as a
Limited Partner in the Partnership.
(n) "Negative Capital Account" means, as to a Partner at a point in
time, the amount, if any, by which (a) the sum of the aggregate Losses and
distributions allocated to such Partner prior to such point in time exceeds (b)
the sum of the aggregate Capital Contributions of such Partner, the aggregate
operating Profits and gains allocated prior to such point in time to such
Partner.
(o) "Net Capital Investment" means the contributions made pursuant to
Section 2 reduced by distributions of capital.
(p) "Notice" means a writing, containing the information required by
this Agreement or otherwise desired to be communicated to any Person in
connection with this Partnership, sent by courier, telecopier, hand delivery or
registered or certified mail, return receipt requested, postage prepaid, to such
Person at the address of such Person specified in Exhibit 2(a) hereto if such
Person is a Partner or as changed by such Partner by Notice hereunder, and if
such Person is not a Partner, then at the last known address for such Person;
provided, however, that any communication containing the information sent to the
Person and actually received by the Person shall constitute Notice for all
purposes of this Agreement as of the date of receipt by the Person. Each such
notice shall be deemed delivered:
(i) on the date delivered to the said address if by hand
delivery,
(ii) on the date upon which it is transmitted by telecopier, if
sent by telecopier, to the proper telephone fax number of
the recipient, and
-36-
(iii) on the date upon which the return receipt is signed or
delivery is refused or the notice is designated by the
postal authorities as not deliverable, as the case may be,
if mailed by registered certified mail.
(q) "Partner" or "Partners" mean each and every General Partner,
Limited Partner, Substitute General Partner, Substitute Limited Partner,
Additional Limited Partner, Additional General Partner, Successor General
Partner, Successor Limited Partner and Special Limited Partner.
(r) "Partnership" means the Limited Partnership formed hereby, as said
Limited Partnership may from time to time be constituted.
(s) "Person" means any individual, partnership (other than this
Partnership), corporation, trust or other entity.
(t) "Positive Capital Account" means, as to a Partner at any point in
time, the amount, if any, by which (1) the sum of the aggregate Capital
Contributions of such Partner, the aggregate Profits and gains allocated prior
to such point in time to such Partner exceeds (2) the sum of aggregate Losses,
losses and distributions allocated prior to such point in time to such Partner.
(u) "Prime Rate" means the rate of interest published in THE WALL
STREET JOURNAL as the base rate on corporate loans posted by at least 75% of the
nations 30 largest banks.
(v) "Profits or Losses" for any Fiscal Year or other period shall mean
the taxable income or loss of the Partnership for such year as determined for
Federal income tax purposes, in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss or deduction required to be separately
stated pursuant to Code Section 703(a)(1) shall be included in taxable income or
loss) with the following adjustments:
(i) Any income of the Partnership that is exempt from Federal
income tax shall be added to such taxable income or loss;
(ii) Gain or loss resulting from any disposition of Partnership
property with respect to which gain or loss is recognized
for Federal income tax purposes shall be computed with
reference to the Book Value of the property disposed of;
(iii) In lieu of the depreciation, amortization and other cost
recovery deduction taken into account in computing such
taxable income or loss, Depreciation shall be taken into
account for such fiscal year.
(iv) Any expenditure of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv) and not otherwise taken into account in
computing Profits and Losses shall be subtracted from such
taxable income or loss;
(v) In the event the Book Value of any Partnership asset is
adjusted pursuant to the provisions hereof, the amount of
such adjustment shall
-37-
be taken into account as gain or loss from the disposition
of such asset for purposes of computing Profits or Losses;
(vi) Notwithstanding the foregoing, any items which are specially
allocated shall not be taken into account in computing
Profits or Losses; and
(vii) Any amount of compensation, fringe benefit or return on net
capital investment paid to a Partner for any Fiscal Year
pursuant to an employment or other agreement with the
Partnership shall be treated as an expense of the
Partnership in computing Profits or Losses for such Year.
(w) "Reserves" means all Partnership reserves established for
reasonable Partnership purposes, including, but not limited to, accrued or
deferred expenses and other working capital needs, improvements, contingent
liabilities, taxes and purchases.
(x) "Territory" means that geographic territory described in the
Development Option Agreement.
[SIGNATURE ON FOLLOWING PAGES]
-38-
IN WITNESS WHEREOF, the General Partner and the Limited Partners have
executed this Limited Partnership Agreement effective as of the filing of the
Certificate of Limited Partnership. The execution by the undersigned constitutes
an affirmation under penalties of perjury that the facts stated herein are true.
HOPS OF THE ROCKIES, INC.,
a Florida corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, President
"GENERAL PARTNER"
HOPS PARTNERS, INC.,
a Florida corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, President
"HPI"
ROCKY MOUNTAIN RESTAURANT PARTNERS,
INC., a Florida corporation
By: /s/ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇, President
"RMRP"
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ III
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ III, individually
"LIMITED PARTNERS"
-39-
RMRP PRINCIPALS:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------- ---------------------------------------
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Individually
-----------------------------
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
----------------------------- -------------------------------------
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Individually
-----------------------------
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------- -------------------------------------
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Individually
-----------------------------
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------- -------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Individually
-----------------------------
------------------------------ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
------------------------------ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Individually
------------------------------ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
------------------------------ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Individually
-40-
EXHIBIT 2(A)
GENERAL PARTNER:
================================================================================
CAPITAL
NAME AND ADDRESS CONTRIBUTION % OF PROFITS % OF LOSSES
-------------------------------------------------------------------------------
Hops of the Rockies, Inc. $1.00 1.0% 1.0%
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
================================================================================
LIMITED PARTNERS:
================================================================================
CAPITAL
NAMES AND ADDRESSES CONTRIBUTION % OF PROFITS % OF LOSSES
--------------------------------------------------------------------------------
Hops Partners, Inc. $50.00 50.0% 50.0%
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
Rocky Mountain Restaurant Partners,
Inc. $39.00 39.0% 39.0%
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ III $10.00 10.0% 10.0%
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
================================================================================