EXHIBIT 10.6
HOPS OF THE ROCKIES
DEVELOPMENT OPTION AGREEMENT
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THIS HOPS OF THE ROCKIES DEVELOPMENT OPTION AGREEMENT
("Agreement") is made effective as of this 1st day of January, 1996, by and
between HOPS GRILL & BAR, INC., a corporation organized and existing under the
laws of the State of Florida (hereinafter referred to as "Hops"), ROCKY MOUNTAIN
RESTAURANT PARTNERS, INC., a corporation organized and existing under the laws
of the State of Florida (hereinafter referred to as "RMRP"), and the
SHAREHOLDERS OF RMRP set forth on EXHIBIT A hereto (the "RMRP Principals").
W I T N E S S E T H:
WHEREAS, the principals of Hops own all of the issued and outstanding
shares of common stock of Hops of the Rockies, Inc., a corporation organized and
existing under the laws of the State of Florida ("HRI");
WHEREAS, as of the date hereof, all of the capital stock of RMRP is
owned by the RMRP Principals in the amounts shown on EXHIBIT A attached hereto,
subject to the limited transfer rights permitted under Section 9(h) hereof;
WHEREAS, HRI, RMRP, Hops Partners, Inc., a Florida corporation
(hereinafter referred to as "HPI"), and Xxxxxx X. Xxxxxxxxxx III, the proposed
Territory Area Manager (hereinafter referred to as "Manager"), are parties to
that certain Limited Partnership Agreement of even date herewith (the
"Partnership Agreement") whereby HRI, RMRP, HPI, and Manager formed Hops of the
Rockies, Ltd., a Florida limited partnership (the "Partnership"), for the
purpose of developing and operating, directly or indirectly, up to three (3)
Hops Grill & Bar restaurants (including, but not necessarily limited to, the
Initial Restaurant (as defined herein)) in the Territory (as defined herein)
pursuant to the terms and conditions contained therein; and
WHEREAS, Hops has agreed to grant to RMRP the option to participate in
the development and operation of the Initial Restaurant and up to two (2)
Additional Restaurant(s) (as defined herein), if any, in the Territory (as
defined herein) pursuant to the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto, intending to be legally bound thereby, agree as follows:
DEFINITIONS
The following definitions shall apply to the following terms as used
in this Agreement:
(1) "Additional Restaurants" means up to two (2) restaurants
(in addition to the Initial Restaurant) to be developed and operated in the
Territory prior to the expiration or termination of RMRP's rights hereunder.
(2) "Hops" means Hops Grill & Bar, Inc., a corporation organized
and existing under the laws of the State of Florida, which is the owner of all
rights under the unique "Hops Grill & Bar" System of restaurant development,
theme and operation.
(3) "Hops Offer" means the notice and information served upon
RMRP by Hops pursuant to Section 2(b).
(4) "Initial Restaurant" means the first restaurant to be
developed and operated, directly or indirectly, by the Partnership as described
in Section 1 hereof.
(5) "New Partnership" shall have the meaning set forth in Section
3(c)(i).
(6) "Operating Agreement" means the agreement(s) to be entered
into by the Partnership (or one or more Second-Tier Partnerships) governing the
development and operation of each restaurant to be developed and operated,
directly or indirectly, by the Partnership within the Territory pursuant to this
Agreement.
(7) "Option Fee" means the fee payable by RMRP to Hops pursuant
to Section 2(e) hereof, for the right to participate in the development and
operation of Additional Restaurants.
(8) "Option Period" shall have the meaning as set forth in Section
2(d).
(9) "Partnership" means the Florida limited partnership formed by
HRI, RMRP, HPI, and Manager pursuant to the Partnership Agreement and the laws
of the State of Florida and known as Hops of the Rockies, Ltd.
(10) "Partnership Agreement" means the agreement pursuant to
which HRI, RMRP, HPI, and Manager formed the Partnership under the laws of the
State of Florida for the purpose of owning and operating, directly or
indirectly, up to three (3) "Hops Grill & Bar" restaurants within the Territory.
(11) "Second-Tier Partnership" means a limited partnership that may
be formed at the sole discretion of Hops and HRI for the purpose of developing
or operating the Initial
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Restaurant or any Additional Restaurant(s) pursuant to this Agreement whereby
(i) HRI will be a general partner who will have a one percent (1.0%) equity
interest in such partnership, (ii) the manager of the Initial Restaurant or any
Additional Restaurant(s) may be a limited partner which may have up to a ten
percent (10.0%) equity interest in such partnership, and (iii) the Partnership
(or a New Partnership in the case of a Special Acceptance as described in
Section 3(c) hereof) will be a limited partner in such partnership that will own
the remaining equity interest in such partnership.
(12) "Special Acceptance" shall have the meaning set forth in
Section 3(c) hereof.
(13) "System" means a unique system owned by Hops, and associated
with "Hops Grill & Bar" restaurants, which specializes in the sale of high
quality, moderately priced, American food with a microbrewery and includes
proprietary rights in certain valuable trade names, service marks and
trademarks, including the service xxxx "Hops Grill & Bar," designs and color
schemes for restaurant premises, signs, equipment, procedures and formulae for
preparing food and beverage products, specifications for certain food and
beverage products, inventory methods, operating methods, financial control
concepts, training methods and teaching techniques. (14) "Territory" means the
state of Colorado.
1. INITIAL RESTAURANT.
(a) On the date hereof, HRI, RMRP, HPI, and Manager have
executed the Partnership Agreement for the purpose of the development and
operation, direct or indirect, of the Initial Restaurant. It is hereby
contemplated by the parties, subject to Section 1(b) below, that the Initial
Restaurant will be located in the Cherry Creek area of Denver, Colorado and will
be owned indirectly by the Partnership through a Second-Tier Partnership known
as "Hops of Cherry Creek, Ltd." which will initially be owned as follows: HRI
will own a 1.0% interest as the sole general partner; HRI will own a 0.1%
interest as a limited partner; and the Partnership will own a 98.9% interest as
a limited partner. The parties hereby acknowledge that at the sole discretion of
Hops and HRI, up to a ten percent (10.0%) limited partnership interest in Hops
of Cherry Creek, Ltd. may be owned by a manager of the Cherry Creek restaurant
at a future date.
(b) The decision as to the actual location of the Initial
Restaurant shall be made by Hops and HRI in their sole discretion (provided that
Hops and HRI shall, in good faith, consult with RMRP during such search and
prior to committing to any location for the Initial Restaurant). If Hops and HRI
are unable to locate and secure a site for the Initial
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Restaurant within one (1) year of the date of this Agreement, (i) this Agreement
shall become null and void and of no further force or effect, except that RMRP
and its principals shall continue to be bound by the provisions of Section 6
hereof, and (ii) Hops shall promptly refund to RMRP the fee paid with respect to
the Initial Restaurant as set forth in Section 1(c) below, without interest.
(c) Upon the execution of this Agreement, RMRP shall pay to Hops
a fee in the amount of Thirty-Thousand Dollars (U.S.$30,000) for the right to
participate with HRI, through the Partnership (and the Second-Tier Partnership),
in the development and operation of the Initial Restaurant. Such fee, once paid,
shall be non-refundable, except as provided in Section 1(b) above.
(d) Attached hereto as EXHIBIT 1(D) is the form of the Operating
Agreement to which the Partnership (or a Second-Tier Partnership, if
appropriate) shall be subject with respect to the Initial Restaurant and each
Additional Restaurant. The Operating Agreement for each restaurant developed
directly or indirectly by the Partnership shall govern the terms of the
development and operation of each such restaurant and shall set forth the fees
and expenses owing by the Partnership (or the Second-Tier Partnership, if
appropriate) to Hops or its affiliates, successors or assigns.
2. ADDITIONAL RESTAURANTS; GRANT OF OPTION.
(a) [REMOVED AND RESERVED.]
(b) RMRP RIGHT OF FIRST REFUSAL. If, during the Option Period as
described in Section 2(d), Hops desires, directly or indirectly, to develop
Additional Restaurant(s) in the Territory, Hops shall first serve written notice
(hereinafter called the "Hops Offer") to that effect upon RMRP, stating the
proposed location of the Additional Restaurant(s) to be developed, reasonable
demographic information regarding the location, and the estimated capital (both
equity and debt) required to develop and operate such Additional Restaurant(s).
RMRP shall have the option to participate in the development and operation of
any such Additional Restaurant(s) upon the terms set forth in Section 3 hereof
by giving written notice to Hops of the acceptance by RMRP of the Hops Offer and
making payment to Hops of the Option Fee described in Section 2(e) hereof,
within fifteen (15) days after the date of the Hops Offer.
(c) RIGHT OF HOPS TO DEVELOP. In the event that RMRP fails to
timely accept a Hops Offer (or effect a Special Acceptance as that term is
defined in Section 3(c) hereof) or fails to timely negotiate and execute the
agreements necessary to develop and operate such
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Additional Restaurant(s) as provided in Section 4 hereof, Hops shall be free to
develop and operate the Additional Restaurant(s) described in the Hops Offer (i)
on its own, directly or indirectly through one or more subsidiaries or related
entities, or (ii) with any unrelated third party upon such terms as Hops shall,
in its sole discretion, elect.
(d) OPTION PERIOD. For purposes of this Section 2, the Option
Period shall commence upon the effective date of this Agreement and shall expire
upon the earlier of:
(i) the date that is three (3) years from the effective
date of this Agreement;
(ii) the date upon which RMRP accepts the Hops Offer for
the second Additional Restaurant; or
(iii) the date upon which RMRP shall allow any Hops
Offer to expire without acceptance (or without
Special Acceptance as that term is defined in Section
3(c) hereof) or RMRP shall fail to timely negotiate
and execute the agreements necessary to develop and
operate any Additional Restaurant(s) as provided in
Section 4 hereof;
(iv) the date upon which HRI or Hops (or any affiliate or
successor of Hops) shall acquire all or any portion
of the Partnership interest of RMRP;
(v) the date upon which HRI or Hops (or any affiliate or
successor of Hops) shall acquire the direct or
indirect interest of RMRP in any Additional
Restaurant(s); or
(vi) the date of the termination of this Agreement as
provided in Section 5 hereof.
(e) OPTION FEE. RMRP shall pay an Option Fee to Hops with respect
to each Additional Restaurant in which RMRP shall participate pursuant to
Section 2(b) hereof in the following amounts:
(i) U.S. $20,000 for the first Additional Restaurant; and
(ii) U.S. $15,000 for the second Additional Restaurant.
The Option Fee with respect to any Additional Restaurant in which RMRP shall
participate pursuant to Section 2(b) hereof, shall be paid by RMRP with the
acceptance of the Hops Offer as provided in Section 2(b) hereof. All Option
Fees, once paid, shall be non-refundable.
(f) LIMITATION. Anything herein to the contrary notwithstanding,
the option granted to RMRP hereunder shall extend only to a maximum of two (2)
Additional Restaurants (in addition to the Initial Restaurant), if any, to be
developed in the Territory during the Option Period hereof, and except as may
otherwise be agreed by Hops in its sole
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discretion in a future writing, RMRP shall have no rights with respect to any
restaurants other than those specifically provided for herein.
3. EXTENT OF PARTICIPATION.
(a) Except as otherwise specifically set forth in Section 3(c)
below, in the event that RMRP timely accepts a Hops Offer to participate in the
development and operation of the Additional Restaurant(s) pursuant to the
provisions of Section 2(b) hereof, RMRP shall be entitled to participate in the
development and operation of the Additional Restaurant(s) only through the
Partnership (and any associated Second-Tier Partnership designated by Hops or
HRI) unless otherwise approved by Hops, in its sole discretion, upon the terms
provided for in this Agreement and the Partnership Agreement and RMRP shall:
(i) make the additional capital contributions and
loan or guarantee commitments, pro rata with HRI and
HPI (or Hops or an affiliate or successor of Hops),
necessary to fund the development and operation of
any such Additional Restaurant(s); and
(ii) execute the then current agreements requiring
execution by RMRP for the Additional Restaurant(s).
(b) Hops' participation in any Additional Restaurant(s) may, in
the discretion of HRI or Hops, be through HRI, Hops or HRI any affiliate or
successor of Hops.
(c) In the event that RMRP receives any Hops Offer to
participate in the development and operation of any Additional Restaurant(s)
wherein the initial required additional capital contribution to the Partnership
by RMRP would be in excess of Three Hundred Ninety Thousand Dollars
(U.S.$390,000) in order for RMRP to retain its then current percentage interest
in the profits and losses of the Partnership, then (and only in such event) RMRP
shall have the right to accept such offer (hereinafter referred to as an
"Special Acceptance") on the following alternative terms:
(i) RMRP may agree to contribute initial capital in the
amount of (but not less than) Three Hundred Ninety
Thousand Dollars (U.S.$390,000) to a newly formed
Florida limited partnership (the "New Partnership")
with one or more Hops related entity(ies) and receive
its pro-rata interest in the profits and losses of
the New Partnership (which pro-rata interest shall be
determined by dividing the initial required capital
contribution of RMRP, by the initial required capital
contributions of all (including RMRP) partners to the
New Partnership) which pro rata
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interest shall be less than RMRP's percentage
interest in the profits and losses in the
Partnership.
(ii) In the event of a Special Acceptance by RMRP, the New
Partnership shall be formed by and among RMRP and one
or more Hops related entity(ies) (or other parties
chosen by Hops in its sole discretion) by means of a
partnership agreement which shall contain terms which
are substantially similar to the terms of the
Partnership Agreement for the Partnership. The
formation of the New Partnership and the ultimate
terms of the partnership agreement for the New
Partnership shall be in the sole discretion and
control of Hops or the Hops related entity(ies) that
will participate in the New Partnership provided that
(A) the New Partnership shall be formed for the
purpose of developing and operating one Hops Grill &
Bar Restaurant (either directly or through a Second-
Tier Partnership), and (B) the terms of the
partnership agreement for the New Partnership shall
not be substantially less favorable to RMRP than the
terms of the Partnership Agreement for the
Partnership. The interest of RMRP in the New
Partnership shall solely as a limited partner and
Hops shall have the right to designate the sole
general partner(s) and other limited partner(s) of
the New Partnership. Despite the limitation upon the
amount of the initial required capital contribution
by RMRP to the New Partnership, in the partnership
agreement for the New Partnership, RMRP will agree to
be subject to both calls for additional capital and
loans for the New Partnership in a manner
substantially similar to that set forth in the
Partnership Agreement for the Partnership.
(iii) Any Special Acceptance by RMRP hereunder shall be
considered an acceptance of a Hops Offer for purposes
of this Agreement and any Additional Restaurant
developed and operated by a New Partnership shall be
considered as one of the two Additional Restaurants
in which RMRP may participate under this Agreement.
Except as specifically set forth herein, all other
provisions of this Agreement relative to the
acceptance of a Hops Offer hereunder shall continue
to apply (including, but not limited to, the payment
of an applicable Option Fee and the execution of
required documents). Any Additional Restaurants
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developed and operated by a New Partnership may, in
Hops discretion, be developed and operated through a
second-tier partnership the ownership of which may
include up to a ten percent (10%) ownership for a
restaurant manager.
(iv) In the event of a Special Acceptance, RMRP shall be
responsible to reimburse to Hops all out of pocket
expenses associated therewith that would not have
been required as the result of an acceptance of a
Hops Offer pursuant to Section 2(b) above.
4. ADDITIONAL RESTAURANT AGREEMENTS.
(a) As soon as possible (but in any event within thirty (30) days)
after acceptance by RMRP of any Hops Offer pursuant to Section 2(b) above, RMRP
shall, in good faith, negotiate and enter into, any amendment to the Partnership
Agreement reasonably requested by Hops or HRI to effectuate the development and
operation of any such Additional Restaurant(s).
(b) In addition to the provisions of Section 4(a) above, in the event
of a Special Acceptance of a Hops Offer as provided in Section 3(c), RMRP shall
also, as soon as possible (but in any event within thirty (30) days execute the
partnership agreement for the New Partnership and any other documents reasonably
requested by Hops as the result of the Special Acceptance.
5. TERMINATION.
(a) Hops shall have the right to terminate this Agreement immediately
upon written notice to RMRP stating the reason for such termination, and RMRP
shall no longer have any rights created by this Agreement in the event of:
(i) the filing by RMRP or any RMRP Principal of a
petition in bankruptcy or an arrangement for the
benefit for reorganization; the filing against RMRP
or any RMRP Principal of a petition in bankruptcy, an
arrangement for the benefit of creditors, or petition
for reorganization, not dismissed within sixty (60)
days of the filing thereof; the making of an
arrangement by RMRP or any RMRP Principal for the
benefit of creditors; or the appointment of a
receiver or trustee for RMRP or any RMRP Principal,
which receiver or trustee shall not have been
dismissed within sixty (60) days of such appointment;
or
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(ii) the breach by RMRP or any RMRP Principal of this
Agreement, the Partnership Agreement or of any other
agreement with HRI, Hops or any affiliate or
successor thereof.
(b) The obligations and limitations of RMRP and the RMRP Principals
pursuant to Section 6 and Section 9(h) below shall survive any termination of
this Agreement.
6. CONFIDENTIALITY; RESTRICTIONS UPON COMPETITION.
(a) CONFIDENTIALITY.
(i) CONFIDENTIAL INFORMATION. For purposes of this
Agreement, the term "Confidential Information" shall
mean any and all information disclosed or made known
to RMRP or the RMRP Principals by Hops (or its
affiliates or successors) or obtained by RMRP or the
RMRP Principals, directly or indirectly, as a
consequence of or through RMRP's association,
dealings, discussions or relationship with Hops (or
its affiliates or successors), which information is
not generally known in the industry in which Hops is
or may become engaged, concerning Hops or Hops'
products, services, operations, processes,
techniques, research, engineering, development,
programming, techniques of application, properties,
constructions, inventions, discoveries, concepts,
ideas, designs, methods, formulas, plans,
organization, accounting, intellectual property,
marketing, selling, purchasing, merchandising,
contracting, leasing, renting, computer programming,
recording, manufacturing, business plan(s),
strategies, negotiations, advertising and/or
promotional concepts or materials, copy, logos,
customers, distributors, suppliers, agents,
employees, representatives, marketing contacts,
prospects, references, business associates or
otherwise associated persons or entities and any and
all other information which may be considered as the
proprietary or intellectual property or trade secret
of Hops under applicable law whether or not such
information was intentionally or unintentionally
disclosed or made known to RMRP or the RMRP
Principals and whether or not such information is
written or complete and as it may exist from time to
time.
(ii) USE AND DISCLOSURE OF INFORMATION. RMRP and the RMRP
Principals recognize and acknowledge that all and
each item of Hops' Confidential
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Information is a valuable, special, and unique asset
of Hops and the System. RMRP and the RMRP Principals
further recognize and agree that such Confidential
Information must remain confidential in order to
maintain its value to both Hops and to all of the
restaurant operators operating under the System, both
now and in the future. Accordingly, RMRP and the RMRP
Principals will not, directly or indirectly, during
or after the term of this Agreement, compete by use
of, disclose, disseminate, publish or use, or permit
the competition through use of, disclosure,
dissemination, publishing or use of the Confidential
Information, or any part thereof, to or for itself or
any other person, group, firm, corporation,
association, or any other entity for any reason or
purpose whatsoever, except as may be required in the
good faith operation of the Initial Restaurant or
Additional Restaurants. Upon termination of this
Agreement and the Operating Agreements relating to
the Initial Restaurant and each Additional
Restaurant, RMRP and each of the RMRP Principals
shall immediately return to Hops all System manuals
and all other documents, records, notebooks, computer
disks or tape (or other computer storage media) and
similar repositories containing Confidential
Information, including all copies thereof, then in
the possession, control or influence of RMRP or the
RMRP Principals, whether prepared by Hops (or its
affiliates), RMRP or the RMRP Principals or their
respective employees or affiliates or others.
(iii) BREACH OR THREATENED BREACH. In the event of a breach
or threatened breach by RMRP or the RMRP Principals
of the provisions of this Agreement, Hops shall be
entitled to an injunction (without the posting of
bond), restraining RMRP and each of the RMRP
Principals from using any of the Confidential
Information or from rendering any services to any
person, firm, corporation, association, or other
entity to whom any of the Confidential Information
has been disclosed. Nothing herein shall be construed
as prohibiting Hops from pursuing any other remedies
available to it for such breach or threatened breach,
including the recovery of damages from RMRP, the RMRP
Principals and/or any party or parties to whom such
disclosure has been made or who has (have) been in
any way involved in such breach or threatened breach
or
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who has (have) encouraged or solicited such breach or
threatened breach or who has (have) benefitted from
such breach or threatened breach. This agreement by
RMRP and each of the RMRP Principals shall be
construed as an agreement independent of any other
provision of any agreement, and the existence of any
claim or cause of action of RMRP, RMRP Principals or
any other person or entity, whether predicated on
this Agreement or otherwise, shall not constitute a
defense to the enforcement of this Agreement by Hops
or any other person, firm, corporation or entity.
(b) RESTRICTIONS UPON COMPETITION.
(i) [REMOVED AND RESERVED]
(ii) During the term of this Agreement and each Operating
Agreement and for a period of five (5) years
following the termination of the last such Operating
Agreement, RMRP and the RMRP Principals shall not
independently or as a group, directly or indirectly,
within any state of the United States (or similar
jurisdiction within any foreign country) in which
Hops or its affiliates operates or licenses or
otherwise authorizes others to operate restaurants
under the System (the "Restricted Territory"), enter
into or engage in any business in competition with
the business of Hops or its affiliates (or any
operator of restaurants under the Hops System), as it
now exists or may exist in the future, either as an
individual on his own account, or as a partner, joint
venturer, employee, agent, salesman, contractor,
officer, director, stockholder or otherwise. For
purposes of this Section 6(b)(ii), a business shall
be deemed competitive with the business of Hops if it
utilizes, directly or indirectly, a menu, theme,
design, motif, concept, method of operation or other
distinctive characteristic of the Hops System as it
shall exist from time to time. While not limiting the
generality of the preceding sentence, any restaurant
or bar operating its own microbrewery (or affiliated
with an entity which operates a microbrewery) shall
be deemed to be a direct competitor of Hops. This
covenant on the part of RMRP and each of the RMRP
Principals is made by RMRP and each of the RMRP
Principals to induce Hops to enter into this
Agreement with RMRP and to grant RMRP and each of
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the RMRP Principals access to Hops' Confidential
Information and RMRP and each of the RMRP Principals
hereby acknowledges the sufficiency of the
consideration received by him and it for this
covenant. This covenant on the part of RMRP and each
of the RMRP Principals shall be construed as an
agreement independent of any other provision in this
Agreement or any other Agreement between RMRP or the
RMRP Principals and Hops (or any affiliate or
successor of Hops); and the existence of any claim or
cause of action of RMRP or any of the RMRP Principals
against Hops (or any affiliate or successor of Hops),
whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by
Hops of this covenant. It is agreed by the parties
hereto, however, that if any portion of this covenant
is held to be unreasonable, arbitrary or against
public policy, the covenant herein shall be
considered divisible both as to time and geographical
area; and each month of the specified period shall be
deemed a separate period of time, and each state,
county or other political subdivision within the
Restricted Territory shall be deemed a separate
geographical area so that the lesser period of time
or geographical area shall remain effective so long
as the same is not unreasonable, arbitrary, or
against public policy. The parties hereto agree that,
in the event any court determines the specified time
period or the specified geographical area covered by
this covenant to be unreasonable, arbitrary, or
against public policy, a lesser time period or
geographical area which is determined to be
reasonable, non-arbitrary and not against public
policy may be enforced against RMRP and each of the
RMRP Principals. It is further agreed by the parties
hereto that in the event of a breach or violation or
threatened breach or violation by RMRP or any of the
RMRP Principals of the provisions of this covenant,
Hops shall be entitled to an injunction (without the
provision of bond by Hops) restraining RMRP or any
such RMRP Principal from, directly or indirectly,
engaging in business in competition with Hops in
breach or violation of this covenant, and restraining
RMRP or any such RMRP Principal from any direct or
indirect association with any person, firm,
corporation, association, partnership, venture or
other entity engaging
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in business in competition with Hops or its
affiliates in the Restricted Territory, whether
directly or indirectly. Nothing herein shall be
construed as prohibiting Hops from pursuing any other
remedies available to it by law or by this Agreement
for breach, violation or threatened breach or
violation of the provisions of this covenant,
including, by way of illustration and not by way of
limitation, the recovery of damages from RMRP or the
RMRP Principals or any other person, firm,
corporation or entity. The provisions of this
covenant shall survive the termination of this
Agreement for the purpose of providing Hops with the
protection of the covenants of RMRP and each of the
RMRP Principals provided herein.
(iii) RMRP and each of the RMRP Principals hereby
acknowledge that this covenant is a reasonable and
necessary requirement of Hops for the protection of
the legitimate and valid business interests of Hops
and other restaurant operators under the System. RMRP
and each of the RMRP Principals hereby agree that
this covenant is a reasonable and necessary restraint
of trade and does not violate the Xxxxxxx Antitrust
Act, the Florida Antitrust Act or the common law. The
parties hereto specifically acknowledge and agree,
for all purposes, that the specified time period and
the specified geographical area set forth in this
covenant is both reasonable and necessary for the
protection of Hops' interests.
(iv) Should an action have to be brought by Hops against
RMRP or any of the RMRP Principals to enforce this
covenant, the period of restriction shall be deemed
to begin running on the date of entry of an order
granting Hops preliminary injunctive relief and shall
continue uninterrupted for the next succeeding five
(5) year period. RMRP and each of the RMRP Principals
acknowledge and agree that the intent and purpose of
this covenant is to preclude RMRP and each of the
RMRP Principals from competing with Hops for a full
five (5) year period and that such purpose and effect
would be frustrated by measuring the period of
restriction from the date of termination of the last
Operating Agreement where RMRP and each of the RMRP
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Principals failed to honor this covenant until
directed to do so by court order.
(v) The restrictions contained in Section 6(a) above
shall not apply to ownership of less than one percent
(1.0%) of the shares of a company whose shares are
listed and traded on a national securities exchange,
if such shares are owned for investment only, and are
not owned by an officer, director, employee or
consultant of such publicly traded company.
7. DISPUTE RESOLUTION.
(a) In the event there should arise any misunderstanding or
disagreement between 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.
-14-
(b) Arbitration shall proceed in accordance with the rules of the
American Arbitration Association. The arbitration shall be conducted in Tampa,
Florida. The arbitrators shall have all the powers permitted arbitrators under
the laws of the State of Florida. The decision and award of such single
arbitrator, if only one is used, or any two of such board if three are used, as
the case may be, shall be final and binding upon the parties, their heirs, legal
representatives, successors and assigns respectively, and shall have the same
force and effect as though such decision had been handed down by a court of
final jurisdiction. The cost of arbitrator(s) is to be shared equally by the
parties. Each party shall be responsible for and shall pay for the expenses of
presenting its respective case, including depositions, attorney's fees and costs
and witness fees which expenses shall not be subject to award by the
arbitrator(s), nor shall such expenses be subject to award by any court or other
judicial authority. The parties shall deposit, at the beginning of the
arbitration process, with the arbitrator(s) an amount equal to the estimated
costs (including arbitrators' time charges) of the total arbitration.
Arbitrators' time charges shall be at the same rate for all arbitrators. Each of
the parties hereto covenants to abide by any arbitration decision.
(c) In the event that it becomes necessary for any party to this
Agreement to enforce a decision of arbitration through legal proceedings, the
parties hereby agree that the Circuit Court for the Thirteenth Judicial Circuit
in and for Hillsborough County, Florida, Tampa Division, and the United States
District Court for the Middle District of Florida, Tampa Division, shall have
exclusive jurisdiction to hear and determine any such matters. Each party hereby
expressly submits and consents in advance to such jurisdiction and venue in any
action or proceeding whether commenced by or brought against them in either of
such Courts. In any such court proceeding the prevailing party shall be entitled
to reimbursement of all costs and expenses, which may be reasonably incurred or
paid in connection therewith, including without limitation, attorney's fees and
costs at the trial court and appellate court levels.
8. REPRESENTATIONS AND WARRANTIES. RMRP and each of the RMRP Principals
hereby jointly and severally acknowledge, represent, warrant and agree as
follows:
(a) RMRP and each of the RMRP Principals hereby acknowledge that all
documents, records and books pertaining to the Partnership, the Initial
Restaurant and the proposed Additional Restaurants have been made available for
inspection by them, their attorney, their accountant and/or their other
advisors. RMRP and each of the RMRP Principals or their respective advisors have
had a reasonable opportunity to ask questions
-15-
of and receive answers from representatives of Hops and HRI concerning the
Partnership, the Initial Restaurant and the proposed Additional Restaurants, and
to obtain additional information, to the extent possessed or obtainable without
unreasonable effort or expense, necessary to verify the accuracy of the
information contained in all documents and materials that have been made
available to him and/or his advisors. All such questions have been answered to
the full satisfaction of RMRP and each of the RMRP Principals. No oral
representations have been made or oral information furnished to RMRP or the RMRP
Principals or their respective advisors in connection with his review of the
documents, records and books pertaining to the Partnership, the Initial
Restaurant and the proposed Additional Restaurants that were in any way
inconsistent with such documents, records and books.
(b) RMRP has been advised by Hops and HRI that the Partnership was
formed for the purpose of developing and operating, directly or indirectly, up
to three (3) "Hops Grill & Bar" restaurants in the Territory; provided, however,
that the decision as to the actual development and the timing of the actual
development of the Initial Restaurant and the Additional Restaurants will rest
solely with Hops and HRI and may be influenced by numerous factors beyond the
control of Hops, HRI, and RMRP or the RMRP Principals, some of which may not
relate to the Partnership or its restaurant operations and accordingly, the
Initial Restaurant and the Additional Restaurants may not be built in accordance
with the original schedule, if any, developed by Hops and HRI and, it is
possible that, in a worst case, all or a portion of the Initial Restaurant and
the Additional Restaurants may not be constructed. Additionally, once
constructed, any decision regarding the continued operation of some or all of
the Initial Restaurant or the Additional Restaurants, if any, will rest solely
with HRI and may be influenced by factors unrelated to the business of the
Partnership.
(c) RMRP and each of the RMRP Principals is aware that HRI is an
affiliate of Hops and that as a part of its business operations, Hops will be
actively involved in the development and operation of restaurants other than
those to be owned and operated, directly or indirectly, by the Partnership and
that RMRP shall not have any right in or to any portion of the business
operations or opportunities of Hops or its affiliates or successors other than
those specifically granted to RMRP herein. RMRP and each of the RMRP Principals
acknowledges that some of the restaurants that may be developed, directly or
indirectly, by Hops (other than the Initial Restaurant or the Additional
Restaurants to be developed hereunder) may directly or indirectly compete with
the restaurants to be developed and operated hereunder and may even be located
within the Territory.
-16-
(d) RMRP and each of the RMRP Principals (i) has adequate means of
providing for his or its current needs and possible personal contingencies, (ii)
has no need for liquidity with respect to his or its interest in the
Partnership, (iii) is able to bear the substantial economic risk of holding his
or its interest in the Partnership for an indefinite period, (iv) can afford a
complete loss of his or its contributions to and obligations with respect to the
Partnership, and (v) does not have an overall commitment to assets that are not
readily marketable that is disproportionate to his or its net worth, and RMRP's
purchase of its interest in the Partnership will not cause such overall
commitment to become excessive.
(e) Each of the RMRP Principals hereby represent and warrant that they
are "Accredited Investors" as that terms is defined in Rule 501 of Regulation D
promulgated by the Securities and Exchange Commission under the Securities Act
of 1933, as amended. RMRP and each of the RMRP Principals understands that
neither the offering nor the sale of RMRP's interest in the Partnership has been
registered under the Act or any state securities laws in part, in reliance upon
the representations and warranties of RMRP and each of the RMRP Principals. RMRP
and each of the RMRP Principals further understands that RMRP's interest in the
Partnership will have to be held indefinitely unless (i) the sale or other
transfer thereof is registered under the Act, or (ii) an exemption from such
registration is available. RMRP further understands that (i) HPI has the right
to purchase its interest in the Partnership in the circumstances and on the
terms specified in the Partnership Agreement, and (ii) the transferability of
its interest in the Partnership is subject to the requirements of this Agreement
and the Partnership Agreement.
(f) RMRP's interest in the Partnership is being purchased solely for
its own account and not for the account of any other person and not for
distribution, assignment or resale to others and no other person has a direct or
indirect beneficial interest in RMRP's interest in the Partnership.
(g) RMRP and each of the RMRP Principals hereby confirms to Hops, HRI
and the Partnership that neither the entry of performance of this Agreement or
the Agreements for the Partnership or any Second-Tier Partnership will cause
RMRP or any of the RMRP Principals to breach any existing agreement or
obligation of RMRP or any of the RMRP Principals with any other person or
entity.
-17-
9. MISCELLANEOUS.
(a) Any notice or other communication required or which may be given
hereunder shall be in writing and shall be delivered personally, telegraphed or
telexed, or sent express mail, postage prepaid, and shall be deemed given when
so delivered personally, telegraphed or telexed, or if mailed, two days after
the date of mailing, as follows:
Hops:
0000 Xxxxx Xxxxx Xxxxx Xxxxx Xxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx
RMRP or RMRP Principals:
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
(b) BINDING AGREEMENT. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their successors and assigns; provided,
except as provided in Section 9(h) hereof that this Agreement may not be
assigned by any party without the consent of the other party to this Agreement.
(c) AMENDMENT. This Agreement may be amended only by an instrument in
writing executed by all of the parties to this Agreement.
(d) ENTIRE AGREEMENT. This Agreement, including the exhibits and other
documents referred to herein which form a part hereof, contains the entire
understanding of the parties with respect to the transactions contemplated
hereby and supersede all prior arrangements or understandings with respect
thereto. There are no restrictions, agreements, promises, warranties, covenants,
or undertakings other than those expressly set forth herein or therein.
(e) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
(f) GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Florida (regardless of the laws that might be applicable under
principles of conflicts of law) as to all matters including, but not limited to,
matters of validity, construction, effect and performance.
-18-
(g) SEPARABILITY. If any section, subsection or other provision of this
Agreement, or the application of such section, subsection or provision, is held
invalid, then the remainder of this Agreement and the application of such
section, subsection or provision to person or circumstance other than those with
respect to which it is held invalid, shall not be affected thereby.
(h) ASSIGNMENT. Except as provided in this Section 9(h), neither this
Agreement nor the rights hereunder may be assigned by RMRP. RMRP hereby agrees
that the RMRP Principals may provide for the transfer of their equity interests
in RMRP among the RMRP Principals; PROVIDED, HOWEVER, that one or more of the
RMRP Principals shall, at all times, retain a minimum of one hundred percent
(100%) of the equity interest in and absolute voting and other control of RMRP,
unless otherwise consented to by Hops in writing (or its successor or assigns),
which consent may be unreasonably withheld. Additionally, the Bylaws of RMRP
shall reflect that the issuance and transfer of shares of stock (or other equity
interests in such corporation) is restricted by the terms of this Agreement and
the following legend shall appear conspicuously upon the face of each stock
certificate of (or certificate otherwise representing an interest in) such
corporation: "The transfer of this stock (or interest) is subject to the terms
and conditions of a Development Option Agreement dated effective as of January
1, 1996 by and between RMRP, RMRP Principals, and Hops and the Bylaws of the
corporation." RMRP hereby acknowledges that the purpose of the aforesaid
transfer restrictions and procedures is to protect the trademarks, trade secrets
and operating procedures of Hops. RMRP and each of the RMRP Principals hereby
acknowledges that non-compliance with the transfer restrictions and procedures
set forth in this Section 9(h) shall constitute a breach of this Agreement by
RMRP.
[SIGNATURE BLOCKS ON FOLLOWING PAGE]
-19-
IN WITNESS WHEREOF, the undersigned have entered into this Agreement as
of the date first above written.
WITNESS: HOPS:
HOPS GRILL & BAR, INC.
/s/ XXXXXXX XXXXXXX By: /s/ XXXXX X. XXXXX
----------------------------- ------------------------------------
/s/ R. XXXX XXXXXX Xxxxx X. Xxxxx, President
-----------------------------
As to Hops
RMRP:
ROCKY MOUNTAIN RESTAURANT
PARTNERS, INC.
/s/ XXXX X. XXXXXX By: /s/ X. XXXXXX XXXXXXX
----------------------------- -----------------------------------
X. Xxxxx Xxxxxxx, President
As to RMRP
RMRP PRINCIPALS:
/s/ XXXX X. XXXXXX /s/ X. XXXXX XXXXXXX
----------------------------- ---------------------------------------
X. Xxxxx Xxxxxxx, Individually
/s/ XXXX X. XXXXXX /s/ XXXXXXX X. XXXXX, XX.
----------------------------- ---------------------------------------
Xxxxxxx X. Xxxxx, Xx., Individually
/s/ XXXX X. XXXXXX /s/ XXXX X. XXXXXXX
----------------------------- ---------------------------------------
Xxxx X. Xxxxxxx, Individually
/s/ XXXXX XXXXXXXX
---------------------------------------
Xxxxx XxxXxxxx, Individually
/s/ XXXXXX X. XXXXXXX
---------------------------------------
Xxxxxx X. Xxxxxxx, Individually
/s/ XXXXXX X. XXXXXXX
---------------------------------------
Xxxxxx X. Xxxxxxx, Individually
-20-
EXHIBIT A
"RMRP PRINCIPALS"
(LIST OF SHAREHOLDERS OF ROCKY MOUNTAIN RESTAURANT PARTNERS, INC.)
PERCENTAGE OF
NAME OWNERSHIP
---- -------------
X. Xxxxx Xxxxxxx 37%
Xxxxxxx X. Xxxxx, Xx. 37%
Xxxx X. Xxxxxxx 13%
Xxxxx XxxXxxxx 4.4%
Xxxxxx X. Xxxxxxx 4.3%
Xxxxxx X. Xxxxxxx 4.3%
