EXHIBIT 10.5
LIMITED PARTNERSHIP AGREEMENT
OF
HOPS OF SOUTH FLORIDA, 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
South Florida, Ltd., with the Secretary of State of the State of Florida by and
among: Hops of South Florida, Inc., a Florida corporation, as General Partner
(hereinafter the "General Partner"), and Hops Partners, Inc., a Florida
corporation (hereinafter "HPI"), Toomy CLN, Inc., a Florida corporation
(hereinafter "TC"), and ▇▇▇▇▇ ▇▇▇▇▇▇, an individual (hereinafter "Torrey"), as
Limited Partners (HPI, TN, and Torrey are hereinafter referred to individually
as a "Limited Partner" and collectively as the "Limited Partners"). 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 one or more
restaurants under the Hops System (as described herein) in the "Territory"
described in the South Florida Development Option Agreement between Hops Grill &
Bar, Inc. ("Hops"), ▇▇▇▇▇ ▇▇▇▇▇, an individual ("Toomy"), and TC 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 is 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 South Florida, 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 ▇/▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, 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 that
features a microbrewery (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, 2046;
(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 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.
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(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;
(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.
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(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
Torrey, 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 Torrey (whose apportioned share of the Required
Loans shall be provided by HPI), on a pro rata basis, based upon
their then current 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)(iii)(B) hereof, shall become finally due and
payable, if not sooner paid pursuant to Section 6(a)(iii)(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.
(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 Torrey (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.]
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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 Torrey (whose additional capital contributions shall be
governed by the terms of the Employment Agreement by and among the Partnership,
the General Partner and Torrey), 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 Toomy (or TC) 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 discretion, demand that the Partners,
except for Torrey (whose proportionate share of a Special
Contribution (as defined herein) shall be provided by HPI), in
proportion with their 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 Torrey (whose
proportionate share of a Special Contribution (as defined
herein) shall be provided by HPI), in proportion with its then
sharing of Profits, SHALL as expeditiously as possible and
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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 sharing in the Profits of the
Partnership. 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, e.g. 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 Torrey, 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.
(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 NonContributing 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.
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(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 withdrawal by the
NonContributing 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 (I.E., 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.
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(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 Torrey up to ten percent (10%) of the
monthly net profits of the Partnership (as described in the
Employment Agreement between Torrey, 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 Torrey 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;
(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 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 Partnership Agreement neither Toomy nor
TC (or any other affiliate of Toomy) 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
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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 Limited Partner, except Torrey, 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;
(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
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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;
(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
(herein collectively called "goods") 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
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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 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) SPECIAL DUTIES OF GENERAL PARTNER. 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 TC);
(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 TC as the operator of the
restaurants; and
(F) the compliance by the Partnership of all administrative
aspects of any Operating Agreement.
The General Partner shall receive no direct compensation for
administration and coordination, and 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.]
Hops shall be entitled to receive the compensation set forth in
the Development Option Agreement and the Operating Agreement
relating to each restaurant to be owned and operated by the
Partnership.
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(iv) The General Partner shall undertake its duties pursuant to this
Section in a manner so as to assure compliance with the
administrative provisions of all Operating Agreements to which
an entity owned by the Partnership is a party. The failure by
the General Partner to cause an entity owned by the Partnership
to comply with the administrative provisions of any such
Operating Agreement (unless such non-compliance is waived by
Hops) shall be considered a breach of this Agreement by the
General Partner.
SECTION 9. LIMITED PARTNER SPECIAL PROVISIONS.
(a) DEVELOPMENT OPPORTUNITY. The Partners acknowledge that TC has certain
development options on restaurants in the South Florida area 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 TC shall guarantee such
financing on a joint and several 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 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:
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(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) SPECIAL DUTIES OF TC. Unless otherwise determined by the General
Partner, TC shall be responsible for and shall have the authority to conduct all
of the operational matters of each restaurant to be owned and operated directly
or indirectly by the Partnership which duties shall include, but shall not be
limited to:
(i) the provision or employment of all direct restaurant management
as required by the Operating Agreement relating to such
restaurant or as otherwise necessary for the operation of any
restaurant to be owned and operated directly or indirectly by
the Partnership;
(ii) the employment, termination and supervision of all restaurant
employees; and
(iii) the compliance by the Partnership and any entities owned by the
Partnership of all operating aspects of any Operating Agreement.
TC shall receive no compensation for the conduct of such operational matters
except as provided hereunder. All expenses related to the operation of each
restaurant to be owned and operated by an entity owned by the Partnership shall
be the sole responsibility of the Partnership or an entity owned by the
Partnership. [BY WAY OF EXAMPLE, BUT NOT LIMITATION, OF THE ABOVE, (I) TC SHALL
BE RESPONSIBLE FOR THE RECRUITING, HIRING AND ULTIMATE SUPERVISION OF ALL
EMPLOYEES OF EACH RESTAURANT TO BE OPERATED BY THE PARTNERSHIP OR AN ENTITY
OWNED BY THE PARTNERSHIP; AND (II) TC SHALL RECEIVE NO COMPENSATION FOR ITS
RECRUITING, HIRING AND SUPERVISION ACTIVITIES, EXCEPT AS PROVIDED HEREUNDER,
HOWEVER, THE PARTNERSHIP OR AN ENTITY OWNED BY THE PARTNERSHIP SHALL BE SOLELY
RESPONSIBLE FOR THE ACTUAL COMPENSATION (INCLUDING WAGES AND BENEFITS) OF THE
EMPLOYEES OF SUCH RESTAURANTS.]
Unless otherwise instructed by the Partnership, TC shall undertake its
duties pursuant to this Section in a manner so as to assure absolute and strict
compliance with the operating provisions of all Operating Agreements to which
the Partnership or an entity owned by the Partnership is a party. The failure by
TC to cause the Partnership or an entity owned by the Partnership to comply with
the operating provisions of any such Operating Agreement (unless such
non-compliance is waived by the Partnership) shall be considered a breach of
this Agreement by TC. TC shall not be deemed to be in default under the
provisions of this Section 9(h) unless TC shall have received at least thirty
(30) days written notice of any alleged default under the terms of any such
Operating Agreement during which thirty (30) day period, if such default was
curable, TC was allowed to attempt to cure any such alleged default. TC shall be
solely responsible for the cost of any TC management personnel not directly
related to the management of a restaurant owned by the Partnership or an entity
owned by the Partnership, if any.
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(i) EXCLUSIVE BUSINESS OF TC/TOOMY. The parties hereto acknowledge and
agree that TC and Toomy shall exclusively devote their time and efforts to the
operation of the restaurants to be owned and operated under entities owned by
the Partnership; provided, however, that this restriction will not be construed
as preventing Toomy from investing his personal assets in any other business
which does not compete with the Business of the Partnership where the form and
manner of such investment will make Toomy a passive investor in such business
and will not require services of any significance on Toomy's part in the
operation of the affairs of such business and which will not interfere with
Toomy's obligations to the Partnership.
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 sell, assign,
encumber, or otherwise dispose of any or all of its Partnership Interest in the
Partnership, or withdraw from the Partnership; or resign as the General Partner
without the prior written consent of the Limited Partners.
SECTION 11. DISPOSITION OF A PARTNER'S PARTNERSHIP INTEREST
(a) The Partners acknowledge that HPI has a right to purchase the
Partnership Interest of Torrey 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
Torrey Partnership Interest are specified in the Employment
Agreement and the Agreement between Torrey under which his
partnership interest was purchased and included herein by this
reference and shall govern this Agreement. The Partners hereby
agree that in the event that HPI purchases the Partnership
Interest of Torrey pursuant to the Employment Agreement, HPI, in
its sole discretion, may select an individual to assume the
responsibilities of Torrey 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, to effectuate such transactions.
(b) (i) At no time during the term of this Agreement shall TC, 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 TC, 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 TC, other than pursuant to the
provisions of this Section 11 shall be deemed a disposition of
the Partnership interest of TC and the General Partner shall be
entitled to purchase the Partnership interest of TC in
accordance with the terms of Section 11(c) hereof.
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(ii) Toomy hereby acknowledges that the other Partners have consented
to Toomy's participation in the Partnership through TC as a
convenience to Toomy. Toomy hereby agrees that he shall at all
times remain the sole shareholder of TC unless he obtains the
consent of the General Partner to admit an additional
shareholder to TC (whether through the issuance of stock by TC
or the transfer of stock by Toomy) which consent may be withheld
in the sole discretion of the General Partner. If consented to
by the General Partner, any such additional shareholder in TC
may be required, as a condition to the consent of the General
Partner, 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 Agreement and any agreements related to this Agreement
and/or the Hops System. Additionally, the Bylaws of TC shall
reflect that the issuance and transfer of shares of stock (or
other equity interests in TC) 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) TC: "The transfer of this stock (or
interest) is subject to the terms and conditions of a
Partnership Agreement dated October 7, 1996, by and between this
corporation and Hops of South Florida, Inc. and others and the
Bylaws of the corporation." TC 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. TC hereby acknowledges that
non-compliance with such transfer restrictions and procedures
shall constitute an absolute breach of this Agreement by TC.
Upon the execution of this Agreement and periodically thereafter
at the reasonable request of the General Partner, TC 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) TC shall not transfer any interest in the Partnership for a
period beginning upon the date hereof and ending two (2) 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, TC desires,
directly or indirectly, to sell, assign, transfer or in any way
dispose of all or any portion of the Partnership interest of TC
to any third party, TC 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 TC 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
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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. TC shall promptly provide the General
Partner with any information regarding 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 TC 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 TC 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 TC as provided in Section 11(c)(iii)
above, TC 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 TC 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 TC 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, TC 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 TC
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 TC was
(or is) a party.
(d) (i) If TC or Toomy shall breach this Agreement, or if the
Development Option Agreement shall be terminated or breached
other than by Hops (or any affiliate thereof), or if Toomy shall
breach the Management Agreement, TC 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 TC to HPI
for the price and
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upon the terms specified in this Section 11(d). HPI shall have
the right to purchase the Partnership interest of TC so offered
by giving notice of acceptance to TC 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 TC, the remaining
provisions of this Agreement shall continue to apply to the
Partnership interest of TC.
(ii) DETERMINATION OF PURCHASE PRICE AND TERMS. In the event that the
Partnership interest of TC 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 TC
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 TC 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 the greater of:
.1 twenty percent (20%) of the purchase price; or
.2 the amount of the actual federal income tax
obligation (i.e. the required IRS cash payment)
of TC owing to the Internal Revenue Service as
specified on the federal income tax return for
the calendar year during which the consummation
of the purchase of the Partnership interest of TC
occurs, as the direct result of the purchase of
the Partnership interest of TC (which federal
income tax obligation shall be the minimum
possible tax obligation of TC taking into
consideration all available elections by TC such
as installment sales treatment),
shall then be paid in cash. In the event that the amount of
the cash payment required at closing under Section
11(d)(ii)(B).2 cannot be determined as of the date of the
closing of the sale, HPI shall pay to TC the amount
specified in Section 11(d)(ii)(B).1 at the closing and
after a determination of the amount set forth in Section 11
(d)(ii)(B).2 has been made by TC and agreed upon by HPI, if
the amount set forth in Section 11(d)(ii)(B).2 is greater
than the amount paid to TC pursuant to Section
11(d)(ii)(B).1, then HPI shall pay to TC, the difference
between the amount paid in cash at closing and the amount
determined under Section 11(d)(ii)(B).2.
(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 TC.
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
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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) (i) In the event that Toomy shall die, become permanently disabled
or otherwise involuntarily cease to be in operational control of
TC (such occurrences hereinafter referred to as a "Buyout Event"
or "Buyout Events"), TC shall sell and HPI shall purchase all of
the Partnership interest of TC for the price set forth in
Section 11(f)(iii) hereof and upon the terms set forth in this
Section 11(e). TC shall notify HPI immediately of the occurrence
of a Buyout Event. The failure of TC to notify HPI of a Buyout
Event within thirty (30) days of its occurrence shall constitute
a breach of this Agreement by TC. The purchase of the
Partnership interest of TC by HPI, pursuant to this Section
11(e), shall take place within one hundred eighty (180) days of
the date upon which HPI receives notice of the Buyout Event (or
if HPI is not provided with such notice, such closing shall take
place on the date which HPI shall demand).
(ii) DETERMINATION OF PURCHASE PRICE AND TERMS. In the event that the
Partnership interest of TC is to be purchased pursuant to the
foregoing provisions of this Section 11(e), the following
provisions shall apply:
(A) PRICE. The purchase price of the Partnership interest of TC
shall be determined pursuant to Section 11(f)(iii) hereof.
(B) MANNER OF PAYMENT. The purchase price of the Partnership
interest of TC to be purchased pursuant to the provisions
of this Section 11(e) shall be paid as follows:
(1) PAYMENT UPON CLOSING. At the option of HPI, all of the
purchase price or an amount equal to the greater of:
.1 twenty percent (20%) of the purchase price;
.2 Fifty Thousand Dollars (U.S. $50,000), not to
exceed the purchase price; or
.3 one hundred percent (100%) (but not to exceed
the entire purchase price) of all proceeds from
life insurance policies, if any, on the life of
Toomy payable to the Partnership or any Partner
other than TC by reason of the death of Toomy,
shall then be paid in cash.
(2) PROMISSORY NOTE. Any part of the purchase price which
is not then paid in cash shall be evidenced by a
negotiable promissory note of HPI payable to and
delivered to TC. 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
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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.
(f) (i) For purposes of this Section 11, the following terms shall have
the following meanings:
(A) "TPP" means TC'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
TC'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 TC to be
purchased pursuant to Section 11(d) above shall be the lesser
of:
(A) TPP x BV; or
(B) TPP x 5 x CF.
(iii) The purchase price for the Partnership interest of TC to be
purchased pursuant to Sections 11(c) and 11(e) shall be:
TPP x 5 x CF.
(iv) The purchase price for the Partnership Interest of TC 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
TC's then current percentage sharing of the Profits of the
Partnership. The fair market value of TC's Partnership Interest
may be determined upon the mutual agreement of HPI and TC at any
time during the period of thirty (30) days after TC's receipt of
the Call Notice (as defined below). In the event that HPI and TC
are unable to agree upon the fair market value of TC's
Partnership Interest during such thirty (30) day period, then,
at the
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request of HPI, the fair market value of TC's Partnership
Interest shall be determined by an appraisal to be made by an
independent appraiser jointly selected by HPI and TC. If HPI and
TC 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 TC shall select a third
independent appraiser, and the appraisal shall be made by the
third appraiser. HPI and TC 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 TC
shall work in good faith with the appraiser performing the
appraisal to obtain a final appraisal within seventy (70) 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 Toomy. 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 TC's Partnership Interest as described in the Call
Notice (as defined below). In the event HPI elects not to
purchase the Partnership Interests of TC, 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 TC 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) In the event that the Partnership or any Partner shall elect to obtain
insurance on the life of Toomy, to fund the purchase of the Partnership interest
of TC pursuant to this Section 11 or for other reasonable business reasons, TC
shall cooperate fully in obtaining such insurance including Toomy's submission
to reasonable medical examinations.
(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 six (6) 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 sixth Additional
Restaurant is opened to the general public, upon notice (the "Call Notice") in
accordance with Section 17 hereof to TC, to acquire all or any part of TC'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 TC'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 TC or appraisal.
(j) (i) With respect to the purchase of the Partnership interest of TC
pursuant to the terms of Sections 11(d), 11(e), 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
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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 TC's
partnership under Sections 11(d), 11(e) and 11(i) hereof by
delivery of stock of Public Hops valued as set forth in Section
11(j)(i) hereof.
(ii) For purposes of determining the number of shares of stock to be
delivered by HPI (or its successors or assigns) to TC pursuant
to a purchase of TC'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 TC 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 TC'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 TC in substantially the form of the Registration
Rights Agreement attached to this Partnership Agreement as
Exhibit 11(j)(iii) hereto.
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
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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
percent (50%) 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 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.
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(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.
(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;
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(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;
(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 a statement
setting forth the assets and liabilities of the Partnership as of the date of
the winding-up of the Partnership's affairs. Any Partner may, at its sole cost,
cause an audit of such statement to be conducted by an independent certified
public accountant. 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.
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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;
(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.
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SECTION 15. AMENDMENTS.
(a) PROPOSAL AND ADOPTION OF AMENDMENTS GENERALLY.
(i) Any amendment to this Agreement may be proposed by any Partner.
(ii) Amendments to this Agreement shall be adopted only if the
General Partners and the Limited Partners, except Torrey, 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, 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
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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.
(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
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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, 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
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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 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.
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(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
accordance 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.
(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.
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(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:
(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
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(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, 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 Torrey 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 Torrey.
(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
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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 South Florida Development
Option Agreement setting forth the rights with respect to the development of
restaurants under the Hops System within the Territory.
(i) "Fiscal Year" means, with respect to the Partnership, the calendar
year.
(j) "General Partner" means Hops of South Florida, 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 Hops Partners, Toomy CLN, Inc., and Torrey 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) "Management Agreement" means the Management Agreement dated as of
October 7, 1996, by and between Hops of Southeast Florida, Ltd. and Toomy.
(o) "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.
(p) "Net Capital Investment" means the contributions made pursuant to
Section 2 reduced by distributions of capital.
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(q) "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
(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.
(r) "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 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
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(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.
(s) "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.
(t) "Partnership" means the Limited Partnership formed hereby, as said
Limited Partnership may from time to time be constituted.
(u) "Person" means any individual, partnership (other than this
Partnership), corporation, trust or other entity.
(v) "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.
(w) "Prime Rate" means the rate of interest published in the Wall Street
Journal as the base rate on corporate loans at large U.S. money center
commercial banks.
(x) "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.
(y) "Territory" means that geographic territory described in the
Development Option Agreement.
[SIGNATURE BLOCKS ON FOLLOWING PAGE]
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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 SOUTH FLORIDA, INC.,
a Florida corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, President
"GENERAL PARTNER"
HOPS PARTNERS, INC.,
a Florida corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, President
"HPI"
TOOMY CLN, INC.,
a Florida corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------
▇▇▇▇▇ ▇▇▇▇▇, President
"TC"
▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, individually
"LIMITED PARTNERS"
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EXHIBIT 2(A)
GENERAL PARTNER:
=========================================================================
Capital
NAME AND ADDRESS Contribution % of Profits % of Losses
-------------------------------------------------------------------------
Hops of South Florida, Inc. $10.00 1.0% 1.0%
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
=========================================================================
LIMITED PARTNERS:
=========================================================================
Capital
NAMES AND ADDRESSES Contribution % of Profits % of Losses
-------------------------------------------------------------------------
Hops Partners, Inc. $490.00 74.0% 74.0%
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------------------------------------------
Toomy CLN, Inc. $390.00 15.0% 15.0%
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ $100.00 10.0% 10.0%
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
=========================================================================
